Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 101949 December 1, 1994 THE HOLY SEE, petitioner, vs. THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents. Padilla Law Office for petitioner. Siguion Reyna, Montecillo & Ongsiako for private respondent.

QUIASON, J.: This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court, Branch 61, Makati, Metro Manila in Civil Case No. 90-183. The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil Case No. 90-183, while the Order dated September 19, 1991 denied the motion for reconsideration of the June 20,1991 Order. Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is represented in the Philippines by the Papal Nuncio. Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate business. This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot 5A, Transfer Certificate of Title No. 390440) located in the Municipality of Paraaque, Metro Manila and registered in the name of petitioner. Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of Title Nos. 271108 and 265388 respectively and registered in the name of the Philippine Realty Corporation (PRC). The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the sellers. Later, Licup assigned his rights to the sale to private respondent. In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to who of the parties has the responsibility of evicting and clearing the land of squatters.

Complicating the relations of the parties was the sale by petitioner of Lot 5-A to Tropicana Properties and Development Corporation (Tropicana). I On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch 61, Makati, Metro Manila for annulment of the sale of the three parcels of land, and specific performance and damages against petitioner, represented by the Papal Nuncio, and three other defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil Case No. 90-183). The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square meters; (2) the agreement to sell was made on the condition that earnest money of P100,000.00 be paid by Licup to the sellers, and that the sellers clear the said lots of squatters who were then occupying the same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in the same month, Licup assigned his rights over the property to private respondent and informed the sellers of the said assignment; (5) thereafter, private respondent demanded from Msgr. Cirilos that the sellers fulfill their undertaking and clear the property of squatters; however, Msgr. Cirilos informed private respondent of the squatters' refusal to vacate the lots, proposing instead either that private respondent undertake the eviction or that the earnest money be returned to the latter; (6) private respondent counterproposed that if it would undertake the eviction of the squatters, the purchase price of the lots should be reduced from P1,240.00 to P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of P100,000.00 and wrote private respondent giving it seven days from receipt of the letter to pay the original purchase price in cash; (8) private respondent sent the earnest money back to the sellers, but later discovered that on March 30, 1989, petitioner and the PRC, without notice to private respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers' transfer certificate of title over the lots were cancelled, transferred and registered in the name of Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it and thus enriched itself at the expense of private respondent; (10) private respondent demanded the rescission of the sale to Tropicana and the reconveyance of the lots, to no avail; and (11) private respondent is willing and able to comply with the terms of the contract to sell and has actually made plans to develop the lots into a townhouse project, but in view of the sellers' breach, it lost profits of not less than P30,000.000.00. Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and the PRC on the one hand, and Tropicana on the other; (2) the reconveyance of the lots in question; (3) specific performance of the agreement to sell between it and the owners of the lots; and (4) damages. On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint petitioner for lack of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an improper party. An opposition to the motion was filed by private respondent. On June 20, 1991, the trial court issued an order denying, among others, petitioner's motion to dismiss after finding that petitioner "shed off [its] sovereign immunity by entering into the business contract in question" (Rollo, pp. 20-21). On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991, petitioner filed a "Motion for a Hearing for the Sole Purpose of Establishing Factual Allegation for claim of Immunity as a Jurisdictional Defense." So as to facilitate the determination of its defense of sovereign immunity, petitioner prayed that a hearing be conducted to allow it to establish certain

facts upon which the said defense is based. Private respondent opposed this motion as well as the motion for reconsideration. On October 1, 1991, the trial court issued an order deferring the resolution on the motion for reconsideration until after trial on the merits and directing petitioner to file its answer (Rollo, p. 22). Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of sovereign immunity only on its own behalf and on behalf of its official representative, the Papal Nuncio. On December 9, 1991, a Motion for Intervention was filed before us by the Department of Foreign Affairs, claiming that it has a legal interest in the outcome of the case as regards the diplomatic immunity of petitioner, and that it "adopts by reference, the allegations contained in the petition of the Holy See insofar as they refer to arguments relative to its claim of sovereign immunity from suit" (Rollo, p. 87). Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance with the resolution of this Court, both parties and the Department of Foreign Affairs submitted their respective memoranda. II A preliminary matter to be threshed out is the procedural issue of whether the petition for certiorari under Rule 65 of the Revised Rules of Court can be availed of to question the order denying petitioner's motion to dismiss. The general rule is that an order denying a motion to dismiss is not reviewable by the appellate courts, the remedy of the movant being to file his answer and to proceed with the hearing before the trial court. But the general rule admits of exceptions, and one of these is when it is very clear in the records that the trial court has no alternative but to dismiss the complaint (Philippine National Bank v. Florendo, 206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]. In such a case, it would be a sheer waste of time and energy to require the parties to undergo the rigors of a trial. The other procedural question raised by private respondent is the personality or legal interest of the Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp. 186-190). In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. In the United States, the procedure followed is the process of "suggestion," where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a "suggestion" that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]). In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a

letter directly to the Secretary of Labor and Employment, informing the latter that the respondentemployer could not be sued because it enjoyed diplomatic immunity. InWorld Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae. In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity. In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved. III The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a foreign state enjoying sovereign immunity. On the other hand, private respondent insists that the doctrine of non-suability is not anymore absolute and that petitioner has divested itself of such a cloak when, of its own free will, it entered into a commercial transaction for the sale of a parcel of land located in the Philippines. A. The Holy See Before we determine the issue of petitioner's non-suability, a brief look into its status as a sovereign state is in order. Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as the Holy See, was considered a subject of International Law. With the loss of the Papal States and the limitation of the territory under the Holy See to an area of 108.7 acres, the position of the Holy See in International Law became controversial (Salonga and Yap, Public International Law 36-37 [1992]). In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City. It also recognized the right of the Holy See to receive foreign diplomats, to send its own diplomats to foreign countries, and to enter into treaties according to International Law (Garcia, Questions and Problems In International Law, Public and Private 81 [1948]). The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to the Holy See absolute and visible independence and of guaranteeing to it indisputable sovereignty also in the field of international relations" (O'Connell, I International Law 311 [1965]). In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood is vested in the Holy See or in the Vatican City. Some writers even suggested that the treaty created two international persons the Holy See and Vatican City (Salonga and Yap, supra, 37).

The Vatican City fits into none of the established categories of states, and the attribution to it of "sovereignty" must be made in a sense different from that in which it is applied to other states (Fenwick, International Law 124-125 [1948]; Cruz, International Law 37 [1991]). In a community of national states, the Vatican City represents an entity organized not for political but for ecclesiastical purposes and international objects. Despite its size and object, the Vatican City has an independent government of its own, with the Pope, who is also head of the Roman Catholic Church, as the Holy See or Head of State, in conformity with its traditions, and the demands of its mission in the world. Indeed, the world-wide interests and activities of the Vatican City are such as to make it in a sense an "international state" (Fenwick, supra., 125; Kelsen, Principles of International Law 160 [1956]). One authority wrote that the recognition of the Vatican City as a state has significant implication that it is possible for any entity pursuing objects essentially different from those pursued by states to be invested with international personality (Kunz, The Status of the Holy See in International Law, 46 The American Journal of International Law 308 [1952]). Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and not in the name of the Vatican City, one can conclude that in the Pope's own view, it is the Holy See that is the international person. The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government since 1957 (Rollo, p. 87). This appears to be the universal practice in international relations. B. Sovereign Immunity As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted principles of International Law. Even without this affirmation, such principles of International Law are deemed incorporated as part of the law of the land as a condition and consequence of our admission in the society of nations (United States of America v. Guinto, 182 SCRA 644 [1990]). There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis (United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International Law 194 [1984]). Some states passed legislation to serve as guidelines for the executive or judicial determination when an act may be considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act of 1976, which defines a commercial activity as "either a regular course of commercial conduct or a particular commercial transaction or act." Furthermore, the law declared that the "commercial character of the activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose." The Canadian Parliament enacted in 1982 an Act to Provide For State Immunity in Canadian Courts. The Act defines a "commercial activity" as any particular transaction, act or conduct or any regular course of conduct that by reason of its nature, is of a "commercial character." The restrictive theory, which is intended to be a solution to the host of problems involving the issue of sovereign immunity, has created problems of its own. Legal treatises and the decisions in

countries which follow the restrictive theory have difficulty in characterizing whether a contract of a sovereign state with a private party is an act jure gestionis or an act jure imperii. The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely connected with the discharge of governmental functions. This is particularly true with respect to the Communist states which took control of nationalized business activities and international trading. This Court has considered the following transactions by a foreign state with private parties as acts jure imperii: (1) the lease by a foreign government of apartment buildings for use of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of public bidding for the repair of a wharf at a United States Naval Station (United States of America v. Ruiz, supra.); and (3) the change of employment status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]). On the other hand, this Court has considered the following transactions by a foreign state with private parties as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting of three restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to American servicemen and the general public (United States of America v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]). The operation of the restaurants and other facilities open to the general public is undoubtedly for profit as a commercial and not a governmental activity. By entering into the employment contract with the cook in the discharge of its proprietary function, the United States government impliedly divested itself of its sovereign immunity from suit. In the absence of legislation defining what activities and transactions shall be considered "commercial" and as constituting acts jure gestionis, we have to come out with our own guidelines, tentative they may be. Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit. As held in United States of America v. Guinto, (supra): There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied. In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate business, surely the said transaction can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and subsequent disposal of Lot 5-A were made for profit but claimed that it acquired said property for the site of its mission or the Apostolic Nunciature in the Philippines. Private respondent failed to dispute said claim. Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not for commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or

personal, in a receiving state, necessary for the creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in the Philippines on November 15, 1965. In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and administrative jurisdiction of the receiving state over any real action relating to private immovable property situated in the territory of the receiving state which the envoy holds on behalf of the sending state for the purposes of the mission. If this immunity is provided for a diplomatic envoy, with all the more reason should immunity be recognized as regards the sovereign itself, which in this case is the Holy See. The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by private respondent in its complaint (Rollo, pp. 26, 27). The issue of petitioner's non-suability can be determined by the trial court without going to trial in the light of the pleadings, particularly the admission of private respondent. Besides, the privilege of sovereign immunity in this case was sufficiently established by the Memorandum and Certification of the Department of Foreign Affairs. As the department tasked with the conduct of the Philippines' foreign relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has formally intervened in this case and officially certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156-157). The determination of the executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the courts (International Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so as not to embarrass the executive arm of the government in conducting the country's foreign relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration Commission and in World Health Organization, we abide by the certification of the Department of Foreign Affairs. Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing to establish the facts alleged by petitioner in its motion. In view of said certification, such procedure would however be pointless and unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994). IV Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign sovereign can ask his own government to espouse his cause through diplomatic channels. Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of its espousal on the relations between the Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected Readings on Protection by

Law of Private Foreign Investments 905, 919 [1964]). Once the Philippine government decides to espouse the claim, the latter ceases to be a private cause. According to the Permanent Court of International Justice, the forerunner of the International Court of Justice: By taking up the case of one of its subjects and by reporting to diplomatic action or international judicial proceedings on his behalf, a State is in reality asserting its own rights its right to ensure, in the person of its subjects, respect for the rules of international law (The Mavrommatis Palestine Concessions, 1 Hudson, World Court Reports 293, 302 [1924]). WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90-183 against petitioner is DISMISSED.

LIANG V PEOPLE
Facts: Petitioner is an economist for ADB who was charged by the Metropolitan TC of Mandaluyong City for allegedly uttering defamatory words against her fellow worker w/ 2 counts of grave oral defamation. MeTC judge then received an office of protocol from the Department of Foreign Affairs, stating that petitioner is covered by immunity from legal process under section 45 of the agreement bet ADB & the govt. MeTC judge, w/o notice, dismissed the two criminal cases. Prosecution filed writ of mandamus & certiorari and ordered the MeTC to enforce the warrant of arrest. Issues: WON the petitioner is covered by immunity under the agreement and that no preliminary investigation was held before the criminal cases were filed in court. Ratio: He is not covered by immunity because the commission of a crime is part of the performance of official duty. Courts cannot blindly adhere and take on its face the communication from the DFA that a certain person is covered by immunity. That a person is covered by immunity is preliminary. Due process is right of the accused as much as the prosecution. Slandering a person is not covered by the agreement because our laws do not allow the commission of a crime such as defamation in the name of official duty. Under Vienna convention on Diplomatic Relations, commission of a crime is not part of official duty. On the contention that there was no preliminary investigation conducted, suffice it to say that preliminary investigation isnt a matter of right in cases cognizable by the MeTC such as the one at bar. Being purely a statutory right, preliminary investigation may be invoked only when specifically granted by law. The rule on criminal procedure is clear than no preliminary investigation is required in cases falling w/in the jurisdiction of the MeTC. Besides, the absence of preliminary investigation doesnt affect the courts jurisdiction nor does it impair the validity of the information or otherwise render it defective.

G.R. Nos. 97468-70 September 2, 1993 SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER represented by its Chief, DR. FLOR J. LACANILAO, petitioner, vs. DANILO ACOSTA in his capacity as Labor Arbiter of the National Labor Relations Commission, Regional Arbitration, Branch VI, CORAZON CANTO, DAN BALIAO, ELIZABETH

SUPETRAN, CARMELITA FERRER, CATHRYN CONTRADOR, and DORIC VELOSO, respondents. Hector P. Teodosio for petitioner. Cirilo Ganzon, Jr. for private respondents.

VITUG, J.: This is an original petition for certiorari and prohibition, with a prayer for the issuance of a restraining order, to set aside the order of respondent labor arbiter, dated 20 September 1990, denying herein petitioner's motion to dismiss the cases subject matter of the petition for lack of jurisdiction. Two labor cases, docketed as RAB Case No. VI- 0156-86 and RAB case No. VI - 0214-86, were filed by the herein private respondents against the petitioner, Southeast Asian Fisheries Development Center (SEAFDEC), before the National Labor Relations Commission (NLRC), Regional Arbitration Branch, Iloilo City. In these cases, the private respondents claim having been wrongfully terminated from their employment by the petitioner. On 22 August 1990, the petitioner, contending to be an international inter-government organization, composed of various Southeast Asian countries, filed a Motion to Dismiss, challenging the jurisdiction of the public respondent in taking cognizance of the above cases. On 20 September 1990, the public respondent issued the assailed order denying the Motion to Dismiss. In due course, a Motion for Reconsideration was interposed but the same, in an order, dated 07 January 1991, was likewise denied. Hence, the instant petition. This Court, on 20 March 1991, issued the temporary restraining order prayed for. The private respondents, as well as respondent labor arbiter, allege that the petitioner is not immune from suit and assuming that if, indeed, it is an international organization, it has, however, impliedly, if not expressly, waived its immunity by belatedly raising the issue of jurisdiction. The Solicitor General, on his part, filed a Manifestation and Motion, which the Court granted, praying that he be excused from filing his comment for respondent Labor Arbiter, he not being in agreement with the latter's position on this matter. On 30 March 1992, this Court dismissed the instant petition in a resolution which reads: . . . Considering the allegations, issues and arguments adduced in the petition for certiorari as well as the separate comments thereon of the public and private respondents, and the consolidated reply thereto of the petitioner, the Court RESOLVED to dismiss the petition for failure to sufficiently show that the questioned judgment is tainted with grave abuse of discretion. The temporary restraining order issued on March 20, 1991 is hereby LIFTED effective immediately. In time, the petitioner moved for a reconsideration, arguing that the ground for its seeking the allowance of the petition is the labor arbiter's lack of jurisdiction over the dispute.

The court is now asked to rule upon the motion for reconsideration. We rule for the petitioner. It is beyond question that petitioner SEAFDEC is an international agency enjoying diplomatic immunity. This, we have already held in Southeast Asian Fisheries Development Center-Aquaculture Department vs. National Labor Relations Commission, G.R. No. 86773, 206 SCRA 283/1992; see also Lacanilao v. de Leon, G.R. No. 76532, 147 SCRA, 286/1987/, where we said Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent NLRC. It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan, Kingdom of Laos, Malaysia, Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and Republic of Vietnam . . . . The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January 16, 1968. Its purpose is as follows: The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-operation among the member governments of the Center, hereinafter called the 'Members', and through collaboration with international organizations and governments external to the Center. (Agreement Establishing the SEAFDEC, Art. 1; . . .). SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala Lumpur, Malaysia as one of the principal departments of SEAFDEC. . . . to be established in Iloilo for the promotion of research in aquaculture. Paragraph 1, Article 6 of the Agreement establishing mandates: 1. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council. Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located. As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International Law (p. 83,1956 ed.): Permanent international commissions and administrative bodies have been created by the agreement of a considerable number of States for a variety of international purposes, economic or social and mainly non-political. Among the notable instances are the International Labor Organization, the International Institute of Agriculture, the International Danube Commission. In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical

personality independent of the municipal law of the State where they are situated. As such, according to one leading authority they must be deemed to possess a species of international personality of their own. (Salonga and Yap, Public International Law, 83 [1956 ed.] Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one Director in governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1,. . .), and that its national laws and regulations shall apply only insofar as its contributions to SEAFDEC of "an agreed amount of money, movable and immovable property and services necessary for the establishment and operation of the Center" are concerned (Art. 11, ibid). It expressly waived the application of the Philippine laws on the disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292). The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD in Opinion No. 139, Series of 1984 4. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such objection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states. In the case at bar, for instance, the entertainment by the National Labor Relations Commission of Mr. Madamba's reinstatement cases would amount to interference by the Philippine Government in the management decisions of the SEARCA governing board; even worse, it could compromise the desired impartiality of the organization since it will have to suit its actuations to the requirements of Philippine law, which may not necessarily coincide with the interests of the other member-states. It is precisely to forestall these possibilities that in cases where the extent of the immunity is specified in the enabling instruments of international organizations (jurisdictional immunity, is specified in the enabling instruments of international organizations), jurisdictional immunity from the host country is invariably among the first accorded. (See Jenks, Id.; See Bowett. The Law of International Institutions. pp. 284-285). At its Sixth Meeting held at Kuala Lumpur, Malaysia, on 3 to 7 July 1973, the SEAFDEC Council approved the formal establishment of its Aquaculture Department in the province of Iloilo, Philippines, to promote research in Aquaculture as so expressed in the "Whereas" Clauses of Presidential Decree No. 292 issued on 13 September 1973 1. Furthermore, Section 2 of the same decree had provided for the autonomous character of SEAFDEC, thus: . . . .All funds received by the Department shall be receipted and disbursed in accordance with the Agreement establishing the Southeast Asian Fisheries Development Center and pertinent resolutions duly approved by the SEAFDEC Council. As aptly pointed out by Associate Justice Isagani Cruz of this Court

Certain administrative bodies created by agreement among states may be vested with international personality when two conditions concur, to wit:, that their purposes are mainly non-political and that they are autonomous,i.e., not subject to the control of any state. 2

Anent the issue of waiver of immunity, suffice it to say at the moment that the petitioner has timely raised the issue of jurisdiction. While the petitioner did not question the public respondent's lack of jurisdiction at the early stages of the proceedings, it, nevertheless, did so before it rested its case and certainly well before the proceedings thereat had terminated. WHEREFORE, our resolution, dated 30 March 1992, dismissing the petition for certiorari, is hereby reconsidered, and another is entered (a) granting due course to the petition; (b) setting aside the order, dated 20 September 1990, of the public respondent; and (c) enjoining the public respondent from further proceeding with RAB Case No. VI-0156-86 and RAB Case No. VI-0214-86. No costs. SO ORDERED.

G.R. No. 106483 May 22, 1995 ERNESTO L. CALLADO, petitioner, vs. INTERNATIONAL RICE RESEARCH INSTITUTE, respondent.

ROMERO, J.: Did the International Rice Research Institute (IRRI) waive its immunity from suit in this dispute which arose from an employer-employee relationship? We rule in the negative and vote to dismiss the petition. Ernesto Callado, petitioner, was employed as a driver at the IRRI from April 11, 1983 to December 14, 1990. On February 11, 1990, while driving an IRRI vehicle on an official trip to the Ninoy Aquino International Airport and back to the IRRI, petitioner figured in an accident. Petitioner was informed of the findings of a preliminary investigation conducted by the IRRI's Human Resource Development Department Manager in a Memorandum dated March 5, 1990. 1 In view of the aforesaid findings, he was charged with: (1) Driving an institute vehicle while on official duty under the influence of liquor; (2) Serious misconduct consisting of your failure to report to your supervisors the failure of your vehicle to start because of a problem with the car battery which, you alleged, required you to overstay in Manila for more than six (6) hours, whereas, had you reported the matter to IRRI, Los Baos by telephone, your problem could have been solved within one or two hours;
(3) Gross and habitual neglect of your duties.
2

In a Memorandum dated March 9, 1990, petitioner submitted his answer and defenses to the charges against him.3 After evaluating petitioner's answer, explanations and other evidence, IRRI issued a Notice of Termination to petitioner on December 7, 1990. 4 Thereafter, petitioner filed a complaint on December 19, 1990 before the Labor Arbiter for illegal dismissal, illegal suspension and indemnity pay with moral and exemplary damages and attorney's fees. On January 2, 1991, private respondent IRRI, through counsel, wrote the Labor Arbiter to inform him that the Institute enjoys immunity from legal process by virtue of Article 3 of Presidential Decree No. 1620, 5 and that it invokes such diplomatic immunity and privileges as an international organization in the instant case filed by petitioner, not having waived the same. 6 IRRI likewise wrote in the same tenor to the Regional Director of the Department of Labor and Employment. 7 While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an Order issued by the Institute on August 13, 1991 to the effect that "in all cases of termination, respondent IRRI waives its immunity," 8 and, accordingly, considered the defense of immunity no longer a legal obstacle in resolving the case. The dispositive portion of the Labor arbiter's decision dated October 31, 1991, reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent to reinstate complainant to his former position without loss or ( sic) seniority rights and privileges within five (5) days from receipt hereof and to pay his full backwages from March 7, 1990 to October 31, 1991, in the total amount of P83,048.75 computed on the basis of his last monthly salary. 9

The NLRC found merit in private respondent' s appeal and, finding that IRRI did not waive its immunity, ordered the aforesaid decision of the Labor Arbiter set aside and the complaint dismissed. 10 Hence, this petition where it is contended that the immunity of the IRRI as an international organization granted by Article 3 of Presidential Decree No. 1620 may not be invoked in the case at bench inasmuch as it waived the same by virtue of its Memorandum on "Guidelines on the handling of dismissed employees in relation to P.D. 1620." 11 It is also petitioner's position that a dismissal of his complaint before the Labor Arbiter leaves him no other remedy through which he can seek redress. He further states that since the investigation of his case was not referred to the Council of IRRI Employees and Management (CIEM), he was denied his constitutional right to due process. We find no merit in petitioner's arguments. IRRI's immunity from suit is undisputed. Presidential Decree No. 1620, Article 3 provides: Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as that immunity has been

expressly waived by the Director-General of the Institute or his authorized representatives. In the case of International Catholic Migration Commission v. Hon. Calleja, et al. and Kapisanan ng Manggagawa at TAC sa IRRI v. Secretary of Labor and Employment and IRRI, 12 the Court upheld the constitutionality of the aforequoted law. After the Court noted the letter of the Acting Secretary of Foreign Affairs to the Secretary of Labor dated June 17, 1987, where the immunity of IRRI from the jurisdiction of the Department of Labor and Employment was sustained, the Court stated that this opinion constituted "a categorical recognition by the Executive Branch of the Government that . . . IRRI enjoy(s) immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts in order not to embarass a political department of Government. 13 We cited the Court's earlier pronouncement in WHO v. Hon. Benjamin Aquino, et al., 14 to wit:
It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government . . . or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . . as to embarass the executive arm of the government in conducting foreign relations, it is accepted doctrine that in such cases the judicial department of (this) government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction. 15

Further, we held that "(t)he raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to . . . and IRRI is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered the performance of their functions. 16

The grant of immunity to IRRI is clear and unequivocal and an express waiver by its DirectorGeneral is the only way by which it may relinquish or abandon this immunity. On the matter of waiving its immunity from suit, IRRI had, early on, made its position clear. Through counsel, the Institute wrote the Labor Arbiter categorically informing him that the Institute will not waive its diplomatic immunity. In the second place, petitioner's reliance on the Memorandum with "Guidelines in handling cases of dismissal of employees in relation to P.D. 1620" dated July 26, 1983, is misplaced. The Memorandum reads, in part: Time and again the Institute has reiterated that it will not use its immunity under P.D. 1620 for the purpose of terminating the services of any of its employees. Despite continuing efforts on the part of IRRI to live up to this undertaking, there appears to be apprehension in the minds of some IRRI employees. To help allay these fears the

following guidelines will be followed hereafter by the Personnel/Legal Office while handling cases of dismissed employees. xxx xxx xxx 2. Notification/manifestation to MOLE or labor arbiter If and when a dismissed employee files a complaint against the Institute contesting the legality of dismissal, IRRI's answer to the complaint will: 1. Indicate in the identification of IRRI that it is an international organization operating under the laws of the Philippines including P.D. 1620. and 2. Base the defense on the merits and facts of the case as well as the legality of the cause or causes for termination. 3) Waiving immunity under P.D. 1620
If the plaintiff's attorney or the arbiter, asks if IRRI will waive its immunity we may reply that the Institute will be happy to do so, as it has in the past in the formal manner required thereby reaffirming our commitment to abide by the laws of the Philippines and our full faith in the integrity and impartially of the legal system. 17 (Emphasis in this paragraphs ours)

From the last paragraph of the foregoing quotation, it is clear that in cases involving dismissed employees, the Institute may waive its immunity, signifying that such waiver is discretionary on its part. We agree with private respondent IRRI that this memorandum cannot, by any stretch of the imagination, be considered the express waiver by the Director-General. Respondent Commission has quoted IRRI's reply thus:
The 1983 . . . is an internal memo addressed to Personnel and Legal Office and was issued for its guidance in handling those cases where IRRI opts to waive its immunity. It is not a declaration of waiver for all cases. This is apparent from the use of the permissive term "may" rather than the mandatory term "shall" in the last paragraph of the memo. Certainly the memo cannot be considered as the express waiver by the Director General as contemplated by P.D. 1620, especially since the memo was issued by a former Director-General. At the very least, the express declaration of the incumbent Director-general supersedes the 1983 memo and should be accorded greater respect. It would be equally important to point out that the Personnel and Legal Office has been non-existent since 1988 as a result of major reorganization of the IRRI. Cases of IRRI before DOLE are handled by an external Legal Counsel as in this particular case. 18 (Emphasis supplied)

The memorandum, issued by the former Director-General to a now-defunct division of the IRRI, was meant for internal circulation and not as a pledge of waiver in all cases arising from dismissal of employees. Moreover, the IRRI's letter to the Labor Arbiter in the case at bench made in 1991 declaring that it has no intention of waiving its immunity, at the very least, supplants any pronouncement of alleged waiver issued in previous cases. Petitioner's allegation that he was denied due process is unfounded and has no basis.

It is not denied that he was informed of the findings and charges resulting from an investigation conducted of his case in accordance with IRRI policies and procedures. He had a chance to comment thereon in a Memorandum he submitted to the Manager of the Human Resource and Development Department. Therefore, he was given proper notice and adequate opportunity to refute the charges and findings, hereby fulfilling the basic requirements of due process. Finally, on the issue of referral to the Council of IRRI Employees and Management (CIEM), petitioner similarly fails to persuade the Court. The Court, in the Kapisanan ng mga Manggagawa at TAC sa IRRI case, 19 held: Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had been organized a forum for better managementemployee relationship as evidenced by the formation of the Council of IRRI Employees and Management (CIEM) wherein "both management and employees were and still are represented for purposes of maintaining mutual and beneficial cooperation between IRRI and its employees." The existence of this Union factually and tellingly belies the argument that Pres. Decree No. Decree No. 1620, which grants to IRRI the status, privileges and immunities of an international organization, deprives its employees of the right to self-organization. We have earlier concluded that petitioner was not denied due process, and this, notwithstanding the non-referral to the Council of IRRI Employees and Management. Private respondent correctly pointed out that petitioner, having opted not to seek the help of the CIEM Grievance Committee, prepared his answer by his own self. 20 He cannot now fault the Institute for not referring his case to the CIEM. IN VIEW OF THE FOREGOING, the petition for certiorari is DISMISSED. No costs. SO ORDERED.

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

ROMERO, J.:

This is a petition for review on certiorari which seeks to annul and set aside the decision of the Court of Tax Appeals dated December 27, 1974 (CTA Case No. 2490) reversing the decision of the Commissioner of Customs which affirmed the decision of the Collector of Customs. 1 The undisputed facts are as follows: On January 30, 1972, the vessel S/S "Pacific Hawk" with Registry No. 170 arrived at the Port of Manila carrying, among others, 80 bales of screen net consigned to Bagong Buhay Trading (Bagong Buhay). Said importation was declared through a customs broker under Entry No. 8651-72 as 80 bales of screen net of 500 rolls with a gross weight of 12,777 kilograms valued at $3,750.00 and classified under Tariff Heading No. 39.06-B of the Tariff and Customs Code 2 at 35% ad valorem. Since the customs examiner found the subject shipment reflective of the declaration, Bagong Buhay paid the duties and taxes due in the amount of P11,350.00 which was paid through the Bank of Asia under Official Receipt No. 042787 dated February 1, 1972. Thereafter, the customs appraiser made a return of duty. Acting on the strength of an information that the shipment consisted of "mosquito net" made of nylon dutiable under Tariff Heading No. 62.02 of the Tariff and Customs Code, the Office of the Collector of Customs ordered a re-examination of the shipment. A report on the re-examination revealed that the shipment consisted of 80 bales of screen net, each bale containing 20 rolls or a total of 1,600 rolls. 3 Re-appraised, the shipment was valued at $37,560.00 or $10.15 per yard instead of $.075 per yard as previously declared. Furthermore, the Collector of Customs determined the subject shipment as made of synthetic (polyethylene) woven fabric classifiable under Tariff Heading No. 51.04-B at 100% ad valorem. Thus, Bagong Buhay Trading was assessed P272,600.00 as duties and taxes due on the shipment in question. 4 Since the shipment was also misdeclared as to quantity and value, the Collector of Customs forfeited the subject shipment in favor of the government. 5 Private respondent then appealed the decision of the Collector of Customs by filing a petition for review with the Commissioner of Customs. On November 25, 1972 the Commissioner affirmed the Collector of Customs. 6 Private respondent moved for reconsideration but the same was denied on January 22, 1973. 7 From the Commissioner of Customs, private respondent elevated his case before the Court of Tax Appeals. Upon review, the Court of Tax Appeals reversed the decision of the Commissioner of Customs. It ruled that the Commissioner erred in imputing fraud upon private respondent because fraud is never presumed and thus concluded that the forfeiture of the articles in question was not in accordance with law. Moreover, the appellate court stated that the imported articles in question should be classified as "polyethylene plastic" at the rate of 35%ad valorem instead of "synthetic (polyethylene) woven fabric" at the rate of 100% ad valorem based upon the results conducted by the Bureau of Customs Laboratory. Consequently, the Court of Tax Appeals ordered the release of the said article upon payment of the corresponding duties and taxes. (C.T.A. Case No. 2490). 8 Thereafter, the Commissioner of Customs moved for reconsideration. On November 19, 1975, the Court of Tax Appeals denied said motion for reconsideration. 9 On August 20, 1976, private respondent filed a petition asking for the release of the questioned goods which this Court denied. After several motions for the early resolution of this case and for the release of goods and in view of the fact that the goods were being exposed to the natural elements, we ordered the release of the goods on June 2, 1986. Consequently, on July 26, 1986, private respondent posted a cash bond of P149,443.36 to secure the release of 64 bales 10 out of the 80 bales 11 originally delivered on January 30, 1972. Sixteen bales 12 remain missing.

Private respondent alleges that of the 143,454 yards (64 bales) released to Bagong Buhay, only 116,950 yards were in good condition and the 26,504 yards were in bad condition. Consequently, private respondent demands that the Bureau of Customs be ordered to pay for damages for the 43,050 yards 13 it actually lost. 14 Hence, this petition, the issues being; a) whether or not the shipment in question is subject to forfeiture under Section 2530-M subparagraphs (3), (4) and (5) of the Tariff and Customs Code; b) whether or not the shipment in question falls under Tariff Heading No. 39.06-B (should be 39.02-B) of the Tariff and Customs Code subject to ad valorem duty of 35% instead of Tariff Heading No. 51.04-B with ad valorem of 100% and c) whether or not the Collector of Customs may be held liable for the 43,050 yards actually lost by private respondent. Section 2530, paragraph m, subparagraphs (3), (4) and (5) states: Sec. 2530. Property Subject to Forfeiture Under Tariff and Customs Law. Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the following conditions be subjected to forfeiture: xxx xxx xxx m. Any article sought to be imported or exported. xxx xxx xxx (3) On the strength of a false declaration or affidavit or affidavit executed by the owner, importer, exporter or consignee concerning the importation of such article; (4) On the strength of a false invoice or other document executed by the owner, importer, exporter or consignee concerning the importation or exportation of such article; and. (5) Through any other practice or device contrary to law by means of which such articles was entered through a custom-house to the prejudice of government. (Emphasis supplied). Petitioner contends that there has been a misdeclaration as to the quantity in rolls of the shipment in question, the undisputed fact being that the said shipment consisted of 1,600 rolls and not 500 rolls as declared in the import entry. We agree with the contention of the petitioner. In declaring the weight of its shipment in an import entry, through its customs broker as 12,777 kilograms when in truth and in fact the actual weight is 13,600 kilograms, an apparent misdeclaration as to the weight of the questioned goods was committed by private respondent. Had it not been for a re-examination and re-appraisal of the shipment by the Collector of Customs which yielded a difference of 823 kilograms, the government would have lost revenue derived from customs duties. Although it is admitted that indeed there was a misdeclaration, such violation, however, does not warrant forfeiture for such act was not committed directly by the owner, importer, exporter or consignee as set forth in Section 2530, paragraph m, subparagraph (3), and/or (4). In defense of its position denying the commission of misdeclaration, private respondent contends that its import entry was based solely on the shipping documents and that it had no knowledge of

any flaw in the said documents at the time the entry was filed. For this reason, private respondent believes that if there was any discrepancy in the quantity of the goods as declared and as examined, such discrepancy should not be attributed to Bagong Buhay. 15 Private respondent's argument is persuasive. Under Section 2530, paragraph m, subparagraphs (3) and (4), the requisites for forfeiture are: (1) the wrongful making by the owner, importer, exporter or consignees of any declaration or affidavit, or the wrongful making or delivery by the same persons of any invoice, letter or paper all touching on the importation or exportation of merchandise; and (2) that such declaration, affidavit, invoice, letter or paper is false. 16 In the case at bar, although it cannot be denied that private respondent caused to be prepared through its customs broker a false import entry or declaration, it cannot be charged with the wrongful making thereof because such entry or declaration merely restated faithfully the data found in the corresponding certificate of origin, 17certificate of manager of the shipper, 18 the packing lists 19 and the bill of lading 20 which were all prepared by its suppliers abroad. If, at all, the wrongful making or falsity of the documents above-mentioned can only be attributed to Bagong Buhay's foreign suppliers or shippers. With regard to the second requirement on falsity, it bears mentioning that the evidence on record, specifically, the decisions of the Collector of Customs and the Commissioner of Customs, do not reveal that the importer or consignee, Bagong Buhay Trading had any knowledge of any falsity on the subject importation. Since private respondent's misdeclaration can be traced directly to its foreign suppliers, Section 2530, paragraph m, subparagraphs (3) and (4) cannot find application. Applying subparagraph (5), fraud must be committed by an importer/consignee to evade payment of the duties due. 21 We support the stance of the Court of Tax Appeals that the Commissioner of Customs failed to show that fraud had been committed by the private respondent. The fraud contemplated by law must be actual and not constructive. It must be intentional fraud, consisting of deception willfully and deliberately done or resorted to in order to induce another to give up some right. 22 As explained earlier, the import entry was prepared on the basis of the shipping documents provided by the foreign supplier or shipper. Hence, Bagong Buhay Trading can be considered to have acted in good faith when it relied on these documents. Proceeding now to the question of the correct classification of the questioned shipments, petitioner contends that the same falls under Tariff Heading No. 51.04 being a "synthetic (polyethylene) woven fabric." On the other hand, private respondent contends that these fall under Tariff Heading No. 39.06 (should be 39.02), having been found to be made of polyethylene plastic. Heading No. 39.02 of the Tariff and Customs Code provides: 39.02 Polymerisation and copolymerisation products (for example, polyethylene, polytetrahaloethylene, polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl acetate, polyvinyl chloroacetate and other polyvinyl derivatives, polyacrylic and polymethacrylic derivatives, coumaroneindene resins). The principal products included in this heading are: (1) Polymerization products of ethylene or its substitution derivatives, particularly the halogen derivatives.

Examples of these are polyethylene, polytetrafluro-ethylene and polychlorotrifluroethylene. Their characteristic is that they are translucent, flexible and light in weight. They are used largely for insulating electric wire. 23

On the other hand, Tariff Heading No. 51.04 provides: 51.04. Woven fabrics of man-made fibers (continuous) including woven fabrics of monofil or strip of heading No. 51.01 or 51.02.
This heading covers woven fabrics (as described in Part [I] [C] of the General Explanatory Note on Section XI)made of yarns of continuous man-made fibers, or of monofil or strip of heading 51.01 and 51.02; it includes a very large variety of dress fabrics, linings, curtain materials, furnishing fabrics, tyre fabrics, tent fabrics, parachute fabrics, etc. 24 (Emphasis supplied)

To correctly classify the subject importation, we need to refer to chemical analysis submitted before the Court of Tax Appeals. Mr. Norberto Z. Manuel, an Analytical Chemist of the Bureau of Customs and an Assistant to the Chief of the Customs Laboratory, testified that a chemical test was conducted on the sample 25 and "the result is that the attached sample submitted under Entry No. 8651 was found to be made wholly of Polyethylene plastic." 26 A similar result conducted by the Adamson University Testing Laboratories provides as follows:
The submitted sample, being insoluble in 10% sodium carbonate; hydrochloric acid, glacial acetic acid, toluene, acetone, formic acid, and nitric acid, does not belong to the man-made fibers, i.e., cellulosic and alginate rayons, poly (vinyl chloride), polyacrylonitrile, copolymer or polyester silicones including Dolan, Dralon, Orlin, PAN, Redon, Courtelle, etc., Tarylene, Dacron; but it is a type of plastic not possessing, the properties of the man-made fibers. 27 (Emphasis supplied)

Consequently, the Court of Tax Appeals, relying on the laboratory findings of the Bureau of Customs and Adamson University correctly classified the questioned shipment as polyethylene plastic taxable under Tariff Heading No. 39.02 instead of synthetic (polyethylene) woven fabric under Tariff Heading 51.04, to wit:
While it is true that the finding and conclusion of the Collector of Customs with respect to classification of imported articles are presumptively correct, yet as matters that require laboratory tests or analysis to arrive at the proper classification, the opinion of the Collector must yield to the finding of an expert whose opinion is based on such laboratory test or analysis unless such laboratory analysis is shown to be erroneous. And this is especially so in this case where the test and analysis were made in the laboratory of the Bureau of Customs itself. It has not been shown why such laboratory finding was disregarded. There is no claim or pretense that an error was committed by the laboratory technician. Significantly, the said finding of the Chief, Customs Laboratory finds support in the "REPORT OF ANALYSIS" submitted by the Adamson University Testing Laboratories, dated September 21, 1966. 28

On the third issue, we opine that the Bureau of Customs cannot be held liable for actual damages that the private respondent sustained with regard to its goods. Otherwise, to permit private respondent's claim to prosper would violate the doctrine of sovereign immunity. Since it demands that the Commissioner of Customs be ordered to pay for actual damages it sustained, for which ultimately liability will fall on the government, it is obvious that this case has been converted technically into a suit against the state. 29

On this point, the political doctrine that "the state may not be sued without its consent," categorically applies. 30 As an unincorporated government agency without any separate juridical personality of its own, the Bureau of Customs enjoys immunity from suit. Along with the Bureau of Internal Revenue, it is invested with an inherent power of sovereignty, namely, taxation. As an agency, the Bureau of Customs performs the governmental function of collecting revenues which is definitely not a proprietary function. Thus, private respondent's claim for damages against the Commissioner of Customs must fail. WHEREFORE, the decision of the respondent Court of Tax Appeals is AFFIRMED. The Collector of Customs is directed to expeditiously re-compute the customs duties applying Tariff Heading 39.02 at the rate of 35% ad valorem on the 13,600 kilograms of polyethylene plastic imported by private respondent. SO ORDERED. G.R. No. 97882 August 28, 1996 THE CITY OF ANGELES, Hon. ANTONIO ABAD SANTOS, in his capacity as MAYOR of Angeles City, and the SANGGUNIANG PANLUNGSOD OF THE CITY OF ANGELES, petitioners, vs. COURT OF APPEALS and TIMOG SILANGAN DEVELOPMENT CORPORATION, respondents.

PANGANIBAN, J.:p In resolving this petition, the Court addressed the questions of whether a donor of open spaces in a residential subdivision can validly impose conditions on the said donation; whether the city government as donee can build and operate a drug rehabilitation center on the donated land intended for open space; and whether the said donation may be validly rescinded by the donor. Petitioners claim they have the right to construct and operate a drug rehabilitation center on the donated land in question, contrary to the provisions stated in the amended Deed of Donation. On the other hand, private respondent, owner/developer of the Timog Park residential subdivision in Angeles City, opposed the construction and now, the operation of the said center on the donated land, which is located within said residential subdivision. Before us is a petition for review on certiorari assailing the Decision 1 of the Court of Appeals 2 dated October 31, 1990, which affirmed the decision 3 of the Regional Trial Court of Angeles City Branch 56, 4 dated February 15, 1989. The Antecedents In a Deed of Donation dated March 9, 1984, subsequently superseded by a Deed of Donation dated September 27, 1984, which in turn was superseded by an Amended Deed of Donation dated November 26, 1984, private respondent donated to the City of Angeles, 51 parcels of land situated in Barrio Pampang, City of Angeles, with an aggregate area of 50,676 square meters, more or less, part of a bigger area also belonging to private respondent. The amended deed 5 provided, among others, that:

2. The properties donated shall be devoted and utilized solely for the site of the Angeles City Sports Center (which excludes cockfighting) pursuant to the plans to be submitted within six (6) months by the DONEE to the DONOR for the latter's approval, which approval shall not be unreasonably withheld as long as entire properties donated are developed as a Sports Complex. Any change or modification in the basic design or concept of said Sports Center must have the prior written consent of the DONOR. 3. No commercial building, commercial complex, market or any other similar complex, mass or tenament (sic) housing/building(s) shall be constructed in the properties donated nor shall cockfighting, be allowed in the premises. 4. The construction of the Sports Center shall commence within a period of one (1) year from March 9, 1984 and shall be completed within a period of five (5) years from March 9, 1984. xxx xxx xxx 6. The properties donated (which is more than five (5) percent of the total land area of the DONOR's subdivision) shall constitute the entire open space for DONOR's subdivision and all other lands or areas previously reserved or designated, including Lot 1 and Lot 2A of Block 72 and the whole Block 29 are dispensed with, and rendered free, as open spaces, and the DONEE hereby agrees to execute and deliver all necessary consents, approvals, endorsements, and authorizations to effect the foregoing. 7. The properties donated are devoted and described as "open spaces" of the DONOR's subdivision, and to this effect, the DONEE, upon acceptance of this donation, releases the DONOR and/or assumes any and all obligations and liabilities appertaining to the properties donated. 8. Any substantial breach of the foregoing provisos shall entitle the DONOR to revoke or rescind this Deed of Donation, and in such eventuality, the DONEE agrees to vacate and return the premises, together with all improvements, to the DONOR peacefully without necessity of judicial action. On July 19, 1988, petitioners started the construction of a drug rehabilitation center on a portion of the donated land. Upon learning thereof, private respondent protested such action for being violative of the terms and conditions of the amended deed and prejudicial to its interest and to those of its clients and residents. Private respondent also offered another site for the rehabilitation center. However, petitioners ignored the protest, maintaining that the construction was not violative of the terms of the donation. The alternative site was rejected because, according to petitioners, the site was too isolated and had no electric and water facilities. On August 8, 1988, private respondent filed a complaint with the Regional Trial Court, Branch 56, in Angeles City against the petitioners, alleging breach of the conditions imposed in the amended deed of donation and seeking the revocation of the donation and damages, with preliminary injunction and/or temporary restraining order to halt the construction of the said center. On August 10, 1988, the trial court issued a temporary restraining order to enjoin the petitioners from further proceeding with the construction of the center, which at that time was already 40% complete.

However, the trial court denied the prayer for preliminary injunction based on the prohibition in Presidential Decree No. 1818. In their Answer with counterclaim, petitioners admitted the commencement of the construction but alleged inter aliathat the conditions imposed in the amended deed were contrary to Municipal Ordinance No. 1, Series of 1962, otherwise known as the Subdivision Ordinance of the Municipality of Angeles. 6 On October 15, 1988, private respondent filed a Motion for Partial Summary Judgment on the ground that the main defense of the petitioners was anchored on a pure question of law and that their legal position was untenable. The petitioners opposed, contending that they had a meritorious defense as (1) private respondents had no right to dictate upon petitioners what to do with the donated land and how to do it so long as the purpose remains for public use; and (2) the cause of action of the private respondent became moot and academic when the Angeles City Council repealed the resolution providing for the construction of said drug rehabilitation center and adopted a new resolution changing the purpose and usage of said center to a "sports development and youth center" in order to conform with the sports complex project constructed on the donated land. On February 15, 1989, the trial court rendered its decision, in relevant part reading as follows: . . . the Court finds no inconsistency between the conditions imposed in the Deeds of Donation and the provision of the Subdivision Ordinance of the City of Angeles requiring subdivisions in Angeles City to reserve at least one (1) hectare in the subdivision as suitable sites known as open spaces for parks, playgrounds, playlots and/or other areas to be rededicated to public use. On the contrary, the condition requiring the defendant city of Angeles to devote and utilize the properties donated to it by the plaintiff for the site of the Angeles City Sports Center conforms with the requirement in the Subdivision Ordinance that the subdivision of the plaintiff shall be provided with a playground or playlot, among others. On the other hand the term "public use'" in the Subdivision Ordinance should not be construed to include a Drug Rehabilitation Center as that would be contrary to the primary purpose of the Subdivision Ordinance requiring the setting aside of a portion known as "Open Space" for park, playground and playlots, since these are intended primarily for the benefit of the residents of the subdivision. While laudable to the general public, a Drug Rehabilitation Center in a subdivision will be a cause of concern and constant worry to its residents. As to the third issue in paragraph (3), the passage of the Ordinance changing the purpose of the building constructed in the donated properties from a Drug Rehabilitation Center to a Sports Center comes too late. It should have been passed upon the demand of the plaintiff to the defendant City of Angeles to stop the construction of the Drug Rehabilitation Center, not after the complaint was filed. Besides, in seeking the revocation of the Amended Deed of Donation, plaintiff also relies on the failure of the defendant City of Angeles to submit the plan of the proposed Sports Center within six (6) months and construction of the same within five years from March 9, 1984, which are substantial violations of the conditions imposed in the Amended Deed of Donation.

The dispositive portion of the RTC decision reads: WHEREFORE, judgment is hereby rendered: (1) Enjoining defendants, its officers, employees and all persons acting on their behalf to perpetually cease and desist from constructing a Drug Rehabilitation Center or any other building or improvement on the Donated Land. (2) Declaring the amended Deed of Donation revoked and rescinded and ordering defendants to peacefully vacate and return the Donated Land to plaintiff, together with all the improvements existing thereon. And, (3) Denying the award of compensatory or actual and exemplary damages including attorney's fees. NO PRONOUNCEMENT AS TO COST. In March 1989, petitioners fried their Notice of Appeal. On April 15, 1989 while the appeal was pending, petitioners inaugurated the Drug Rehabilitation Center. 7 On April 26, 1991, the respondent Court rendered the assailed Decision affirming the ruling of the trial court. Subsequently, the petitioners motion for re-consideration was also denied for lack of merit. Consequently, this Petition for Review. The Issues The key issues 8 raised by petitioners may be restated as follows: I. Whether a subdivision owner/developer is legally bound under Presidential Decree No. 1216 to donate to the city or municipality the "open space" allocated exclusively for parks, playground and recreational use. II. Whether the percentage of the "open space" allocated exclusively for parks, playgrounds and recreational use is to be based on the "gross area" of the subdivision or on the total area reserved for "open space". III. Whether private respondent as subdivision owner/developer may validly impose conditions in the Amended Deed of Donation regarding the use of the "open space" allocated exclusively for parks and playgrounds.. IV. Whether or not the construction of the Drug Rehabilitation Center on the donated "open space" may be enjoined. V. Whether the donation by respondents subdivision owner/developer of the "open space" of its subdivision in favor of petitioner City of Angeles may be revoked for alleged violation of the Amended Deed of Donation. Central to this entire controversy is the question of whether the donation of the open space may be revoked at all.

First Issue: Developer Legally Bound to Donate Open Space The law involved in the instant case is Presidential Decree No. 1216, dated October 14, 1977, 9 which reads: PRESIDENTIAL DECREE NO. 1216 Defining "Open Space" In Residential Subdivisions And Amending Section 31 Of Presidential Decree No. 957 Requiring Subdivision Owners To Provide Roads, Alleys, Sidewalks And Reserve Open Space For Parks Or Recreational Use. WHEREAS, there is a compelling need to create and maintain a healthy environment in human settlements by providing open spaces, roads, alleys and sidewalks as may be deemed suitable to enhance the quality of life of the residents therein; WHEREAS, such open spaces, roads, alleys and sidewalks in residential subdivisions are for public use and are, therefore, beyond the commerce of men; WHEREAS, pursuant to Presidential Decree No. 953 at least thirty percent (30%) of the total area of a subdivision must be reserved, developed and maintained as open space for parks and recreational areas, the cost of which will ultimately be borne by the lot buyers which thereby increase the acquisition price of subdivision lots beyond the reach of the common mass; WHEREAS, thirty percent (30%) required open space can be reduced to a level that will make the subdivision industry viable and the price of residential lots within the means of the low income group at the same time preserve the environmental and ecological balance through rational control of land use and proper design of space and facilities; WHEREAS, pursuant to Presidential Decree No. 757, government efforts in housing, including resources, functions and activities to maximize results have been concentrated into one single agency, namely, the National Housing Authority; NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree: Sec. 1. For purposes of this Decree, the term "open apace" shall mean an area reserved exclusively for parks, playgrounds, recreational uses, schools, roads, places of worship, hospitals, health centers, barangay centers and other similar facilities and amenities. Sec. 2. Section 31 of Presidential Decree No. 957 is hereby amended to read as follows: Sec. 31. Roads, Alleys, Sidewalks and Open Spaces The owner as developer of a subdivision shall provide adequate roads, alleys and sidewalks. For subdivision projects one (1) hectare or more, the owner or developer shall reserve thirty percent (30%) of the gross area for open space. Such open space shall have the following

standards allocated exclusively for parks, playgrounds and recreational use: a. 9% of gross area for high density or social housing (66 to 100 family lots per gross hectare). b. 7% of gross area for medium-density or economic housing (21 to 65 family lots per gross hectare). c. 3.5% of gross area for low-density or open market housing (20 family lots and below per gross hectare). These areas reserved for parks, playgrounds and recreational use shall be nonalienable public lands, and non-buildable. The plans of the subdivision project shall include tree planting on such parts of the subdivision as may be designated by the Authority. Upon their completion certified to by the Authority, the roads, alleys, sidewalks and playgrounds shall be donated by the owner or developer to the city or municipality and it shall be mandatory for the local governments to accept provided, however, that the parks and playgrounds maybe donated to the Homeowners Association of the project with the consent of the city or municipality concerned. No portion of the parks and playgrounds donated thereafter shall be converted to any other purpose or purposes. Sec. Sections 2 and 5 of Presidential Decree No. 953 are hereby repealed and other laws, decrees, executive orders, institutions, rules and regulations or parts thereof inconsistent with these provisions are also repealed or amended accordingly. Sec. 4. This Decree shall take effect immediately. Pursuant to the wording of Sec. 31 of P.D. 957 as above amended by the aforequoted P.D. No. 1216, private respondent is under legal obligation to donate the open space exclusively allocated for parks, playgrounds and recreational use to the petitioner. This can be clearly established by referring to the original provision of Sec. 31 of P.D. 957, which reads as follows: Sec. 31. Donation of roads and open spaces to local government The registered owner developer of the subdivision or condominium project, upon completion of the development of said project may, at his option, convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the project is located. Upon acceptance of he donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless after hearing, the proposed conversion is approved by the Authority. (Emphasis supplied) It will be noted that under the aforequoted original provision, it was optional on the part of the owner or developer to donate the roads and spaces found within the project to the city or municipality where the project is located. Elsewise stated, there was no legal obligation to make the donation.

However, said Sec. 31 as amended now states in its last paragraph: Upon their completion . . ., the roads, alleys, sidewalks and playgrounds shall be donated by the owner or developer to the city or municipality and it shall be mandatory for the local government to accept; provided, however, that the parks and playgrounds may be donated to the Homeowners Association of the project with the consent of the city or must concerned. . . . It is clear from the aforequoted amendment that it is no longer optional on the part of the subdivision owner/developer to donate the grounds; rather there is now a legal obligation to donate the same. Although there is a proviso a proviso that the donation of the parks and playgrounds may be made to the homeowners association of the project with the consent of the city of municipality, concerned, nonetheless, the owner/developer is still obligated under the law to donate. Such option does not change the mandatory hectare of the provision. The donation has to be made regardless of which donee is picked by the owner/developer. The consent requirement before the same can be donated to the homeowners" association emphasizes this point. Second Issue: Percentage of Area for Parks and Playgrounds Petitioners contend that the 3.5% to 9% allotted by Sec. 31 for parks, playgrounds and recreational uses should be based on the gross area of the entire subdivision, and not merely on the area of the open space alone, as contended by private respondent and as decided by the respondent Court. 10 The petitioners are correct. The language of Section 31 of P.D. 957 as amended by Section 2 of P.D. 1216 is wanting in clarity and exactitude, but it can be easily inferred that the phrase "gross area" refers to the entire subdivision area. The said phrase was used four times in the same section in two sentences, the first of which reads: . . . For subdivision projects one (1) hectare or more, the owner or more, the owner or developer shall reserve thirty percent (30%) of the gross area for open space, . . . Here, the phrase "30% of the gross area" refers to the total area of the subdivision, not of the open space. Otherwise, the definition of "open space" would be circular. Thus, logic dictates that the same basis be applied in the succeeding instances where the phrase "open space" is used, i.e., "9% of gross area... 7% of gross area... 3.5% of gross area..." Moreover, we agree with petitioners that construing the 3.5% to 9% as applying to the totality of the open space would result in far too small an area being devoted for parks, playgrounds, etc., thus rendering meaningless and defeating the purpose of the statute. This becomes clear when viewed in the light of the original requirement of P.D. 953 ("Requiring the Planting of Trees in Certain Places, etc."), section 2 of which reads: Sec. 2. Every owner of land subdivided into commerce/residential/industrial lots after the effectivity of this Decree shall reserve, develop and maintain not less than thirty percent (30%) of the total area of the subdivision, exclusive of roads, service streets and alleys, as open space for parks and recreational areas. No plan for a subdivision shall be approved by the Land Registration Commission or any office or agency of the government unless at least thirty percent (30%) of the total area of the subdivision, exclusive, of roads, service streets and alleys, is reserved as open space for parks and recreational areas . . .

To our mind, it is clear that P.D. 1216 was an attempt to achieve a happy compromise and a realistic balance between the imperatives of environmental planning and the need to maintain economic feasibility in subdivision and housing development, by reducing the required area for parks, playgrounds and recreational uses from thirty percent (30%) to only 3.5% 9% of the entire area of the subdivision. Third Issue: Imposition of Conditions in Donation of Open Space Petitioners argue that since the private respondent is required by law to donate the parks and playgrounds, it has no right to impose the condition in the Amended Deed of Donation that "the properties donated shall be devoted and utilized solely for the site of the Angeles City Sports Center." It cannot prescribe any condition as to the use of the area donated because the use of the open spaces already governed by P.D. 1216. In other words, the donation should be absolute. Consequently, the conditions in the amended deed which were allegedly violated aredeemed not written. Such being the case, petitioners cannot be considered to have committed any violation of the terms and conditions of the said amended deed, as the donation is deemed unconditional, and it follows that there is no basis for revocation of the donation. However, the general law on donations does not prohibit the imposition of conditions on a donation so long as the conditions are not illegal or impossible. 11 In regard to donations of open spaces, P.D. 1216 itself requires among other things that the recreational areas to be donated be based, as aforementioned, on a percentage (3.5% 7%, or 9%) of the total area of the subdivision depending on whether the division is low , medium , or highdensity. It further declares that such open space devoted to parks, playgrounds and recreational areas are non-alienable public land and non-buildable. However, there is no prohibition in either P.D. 957 or P.D. 1216 against imposing conditions on such donation. We hold that any condition may be imposed in the donation, so long as the same is not contrary to law, morals, good customs, public order or public policy. The contention of petitioners that the donation should be unconditional because it is mandatory has no basis in law. P.D. 1216 does not provide that the donation the open space for parks and playgrounds should be unconditional. To rule that it should be so is tantamount to unlawfully expanding, the provisions of the decree. 12 In the case at bar, one of the conditions imposed in the Amended Deed of Donation is that the donee should build a sports complex on the donated land. Since P.D. 1216 clearly requires that the 3.5% to 9% of the gross area alloted for parks and playgrounds is "non-buildable", then the obvious question arises whether or not such condition was validly imposed and is binding on the donee. It is clear that the "non-buildable" character applies only to the 3.5% to 9% area set by law. If there is any excess land over and above the 3.5% to 9% required by the decree, which is also used or allocated for parks, playgrounds and recreational purposes, it is obvious that such excess area is not covered by the non-buildability restriction. In the instant case, if there be an excess, then the donee would not be barred from developing and operating a sports complex thereon, and the condition in the amended deed would then be considered valid and binding. To determine if the over 50,000 square meter area donated pursuant to the amended deed would yield an excess over the area required by the decree, it is necessary to determine under which density category the Timog Park subdivision falls. If the subdivision falls under the low density or open market housing category, with 20 family lots or below per gross hectare, the developer will need to allot only 3.5% of gross area for parks and

playgrounds, and since the donated land constitutes "more than five (5) percent of the total land area of the subdivision 13 there would therefore be an excess of over 1.5% of gross area which would not be non-buildable. Petitioners, on the other hand, alleged (and private respondent did not controvert) that the subdivision in question is a "medium-density or economic housing" subdivision based on the sizes of the family lots donated in the amended deed, 14 for which category the decree mandates that not less than 7% of gross area be set aside. Since the donated land constitutes only a little more than 5% of the gross area of the subdivision, which is less than the area required to be allocated for non-buildable open space, therefore there is no "excess land" to speak of. This then means that the condition to build a sports complex on the donated land is contrary to law and should be considered as not imposed. Fourth Issue: Injunction vs. Construction of the Drug Rehabilitation Center Petitioners argue that the court cannot enjoin the construction of the drug rehabilitation center because the decision of the court came only after the construction of the center was completed and, based on jurisprudence, there can be no injunction unction of events that have already transpired. 15 Private respondent, on the other hand, counters that the operation of the center is a continuing act which would clearly cause injury to private respondent, its clients, and residents of the subdivision, and thus, a proper subject of injunction. 16 Equity should move in to granting of the injunctive relief if persistent repetition of the wrong is threatened. In light of Sec. 31 of P.D. 957, as amended, declaring the open space for parks, playgrounds and recreational area as non-buildable, it appears indubitable that the construction and operation of a drug rehabilitation center on the land in question is a continuing violation of the law and thus should be enjoined. Furthermore, the factual background of this case warrants that this Court rule against petitioners on this issue. We agree with and affirm the Court's finding that petitioners committed acts mocking the judicial system. 18 . . . When a writ of preliminary injunction was sought for by the appellee (private respondent) to enjoin the appellants [petitioners herein] from further continuing with the construction of the appellants the said center, the latter resisted and took refuge under the provisions of Presidential Decree No. 1818 (which prohibits writs of preliminary injunction) to continue with the construction of the building. Yet, the appellants also presented "City Council Resolution No. 227 which allegedly repealed the previous Resolution authorizing the City Government to construct a Drug Rehabilitation Center on the donated property, by "changing the purpose and usage of the Drug Rehabilitation Center to Sports Development and Youth Center to make it conform to the Sports Complex Project therein". Under this Resolution No. 227, the appellants claimed that they have abandoned all plans for the construction of the Drug Rehabilitation Nonetheless, when judgment was finally rendered on February 15, 1989, the appellants were quick to state that they have not after all abandoned their plans for the center as they have in fact inaugurated the same April 15, 1989. In plain and simple terms, this act is a mockery of our judicial system perpetrated by the appellants. For them to argue that the court deal on their Drug Rehabilitation Center is not only preposterous but also ridiculous. It is interesting to observe that under the appealed decision the appellants and their officers, employees and all other persons acting on their behalf were perpetually

enjoined to cease and desist from constructing a Drug Rehabilitation Center on the donated property. Under Section 4 of Rule 39 of the Rules of Court, it is provided that: Sec. 4 A judgment in an action for injunction shall not be stayed after its rendition and before an appeal is taken or during the tendency of an appeal . Accordingly, a judgment restraining a party from doing a certain act is enforceable and shall remain in full force and effect appeal. In the case at bar, the cease and desist order therefore still stands. Appellants persistence and continued construction and, subsequent, operation of the Drug Rehabilitation Center violate the express terms of the writ of injunction lawfully issued by the lower court. This Court finds no cogent reason to reverse the above mentioned findings of the respondent court. The allegation of the petitioners that the construction of the center was finished before the judgment of the trial court was rendered deserves scant consideration because it is self-serving and is completely unsupported by other evidence. The fact remains that the trial court rendered judgment enjoining the construction of the drug rehabilitation center, revoking the donation and ordering the return of the donated land. In spite of such injunction, petitioners publicly flaunted their disregard thereof with the subsequent inauguration of the center on August 15, 1989. The operation o the center, after inauguration, is even more censurable Fifth Issue: Revocation of a Mandatory Donation Because of Noncompliance With an Illegal Condition The private respondent contends that the building of said drug rehabilitation center is violative of the Amended Deed of Donation. Therefore, under Article 764 of the New Civil Code and stipulation no. 8 of the amended deed, private respondent is empowered to revoke the donation when the donee has failed to comply with any of the conditions imposed in the deed. We disagree. Article 1412 of the Civil Code which provides that: If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed: (1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking; comes into play here. Both petitioners and private respondents are in violation of P.D. 957 as amended, for donating and accepting a donation of open space less than that required by law, and for agreeing to build and operate a sports complex on the non-buildable open space so donated; and petitioners, for constructing a drug rehabilitation center on the same nonbuildable area. Moreover, since the condition to construct a sport complex on the donated land has previously been shown to be contrary to law, therefore, stipulation no. 8 of the amended deed cannot be implemented because (1) no validstipulation of the amended deed had been breached, and (2) it is highly improbable that the decree would have allowed the return of the donated land for open space

under any circumstance, considering the non-alienable character of such open space, in the light of the second Whereas clause of P.D. 1216 which declares that . . . such open spaces, roads, alleys and sidewalks in residential subdivisions are for public use and are, therefore, beyond the commerce of men. Further, as a matter of public policy, private respondent cannot be allowed to evade its statutory obligation to donate the required open space through the expediency of invoking petitioners breach of the aforesaid condition. It is a familiar principle that the courts will not aid either party to enforce an illegal contract, but will leave them both where they find them. Neither party can recover damages from the other arising from the act contrary to law, or plead the same as a cause of action or as a defense. Each must bear the consequences of his own acts. 19 There is therefore no legal basis whatsoever to revoke the donation of the subject open space and to return the donated land to private respondent. The donated land should remain with the donee as the law clearly intended such open spaces to be perpetually part of the public domain, non-alienable and permanently devoted to public use as such parks, playgrounds or recreation areas. Removal/Demolition of Drug Rehabilitation Center Inasmuch as the construction and operation of the drug rehabilitation center has been established to law, the said center should be removed or demolished. At this juncture, we hasten to add that this Court is and has always been four-square behind the government's efforts to eradicate the drug scourge in this country. But the end never justifies the means, and however laudable the purpose of the construction in question, this Court cannot and will not countenance an outright and continuing violation of the laws of the land, especially when committed by public officials. In theory, the cost of such demolition, and the reimbursement of the public funds expended in the construction thereof, should be borne by the officials of the City Angeles who ordered and directed such construction. This Court has time and again ruled that public officials are not immune from damages in their personal capacities arising from acts done in bad faith. Otherwise stated, a public official may be liable in his personal capacity for whatever damage he may have caused by his act done with malice and in bad faith or beyond the scope of his authority or jurisdiction. 20 In the instant case, the public officials concerned deliberately violated the law and persisted in their violations, going so far as attempting to deceive the courts by their pretended change of purpose and usage for the enter, and "making a mockery of the judicial system". Indisputably, said public officials acted beyond the scope of their authority and jurisdiction and with evident bad faith. However, as noted by the trial court21, the petitioners mayor and members of the Sangguniang Panlungsod of Angeles City were sued only in theirofficial capacities, hence, they could not be held personally liable without first giving them their day in court. Prevailing jurisprudence 22 holding that public officials are personally liable for damages arising from illegal acts done in bad faith are premised on said officials having been sued both in their official and personal capacities. After due consideration of the circumstances, we believe that the fairest and most equitable solution is to have the City of Angeles, donee of the subject open space and, ostensibly, the main beneficiary of the construction and operation of the proposed drug rehabilitation center, undertake the demolition and removal of said center, and if feasible, recover the cost thereof from the city officials concerned. WHEREFORE, the assailed Decision of the Court of appeals hereby MODIFIED as follows: (1) Petitioners are hereby ENJOINED perpetually from operating the drug rehabilitation center or any other such facility on the donated open space.

(2) Petitioner City of Angeles is ORDERED to undertake and removal of said drug rehabilitation center within a period of three (3) months from finality of this Decision, and thereafter, to devote public use as a park, playground or other recreational use. (3) The Amended Deed of Donation dated November 26, 1984 is hereby declared valid and subsisting, except that the stipulations or conditions therein concerning the construction of the Sports Center or Complex are hereby declared void and as if not imposed, and therefore of no force and effect. No Costs. SO ORDERED. G.R. No. 74135 May 28, 1992 M. H. WYLIE and CAPT. JAMES WILLIAMS, petitioners, vs. AURORA I. RARANG and THE HONORABLE INTERMEDIATE APPELLATE COURT, respondents.

GUTIERREZ, JR., J.: The pivotal issue in this petition centers on the extent of the "immunity from suit" of the officials of a United States Naval Base inside Philippine territory. In February, 1978, petitioner M. H. Wylie was the assistant administrative officer while petitioner Capt. James Williams was the commanding officer of the U. S. Naval Base in Subic Bay, Olongapo City. Private respondent Aurora I. Rarang was an employee in the office of the Provost Marshal assigned as merchandise control guard. M. H. Wylie, in his capacity as assistant administrative officer of the U.S. Naval Station supervised the publication of the "Plan of the Day" (POD) which was published daily by the US Naval Base station. The POD featured important announcements, necessary precautions, and general matters of interest to military personnel. One of the regular features of the POD was the "action line inquiry." On February 3, 1978, the POD published, under the "NAVSTA ACTION LINE INQUIRY" the following: Question: I have observed that Merchandise Control inspector/inspectress are (sic) consuming for their own benefit things they have confiscated from Base Personnel. The observation is even more aggravated by consuming such confiscated items as cigarettes and food stuffs PUBLICLY. This is not to mention "Auring" who is in herself, a disgrace to her division and to the Office of the Provost Marshal. In lieu of this observation, may I therefore, ask if the head of the Merchandise Control Division is aware of this malpractice? Answer: Merchandise Control Guards and all other personnel are prohibited from appropriating confiscated items for their own consumption or use. Two locked containers are installed at the Main Gate area for deposit of confiscated items and the OPM evidence custodian controls access to these containers.

Merchandise Control Guards are permitted to eat their meals at their worksite due to heavy workload. Complaints regarding merchandise control guards procedure or actions may be made directly at the Office of the Provost Marshal for immediate and necessary action. Specific dates and time along with details of suspected violations would be most appreciated. Telephone 4-3430/4-3234 for further information or to report noted or suspected irregularities. Exhibits E & E-1. (Rollo, pp. 11-12) The private respondent was the only one who was named "Auring" in the Office of the Provost Marshal. That the private respondent was the same "Auring" referred to in the POD was conclusively proven when on February 7, 1978, petitioner M. H. Wylie wrote her a letter of apology for the "inadvertent" publication. The private respondent then commenced an action for damages in the Court of First Instance of Zambales (now Regional Trial Court) against M. H. Wylie, Capt. James Williams and the U. S. Naval Base. She alleged that the article constituted false, injurious, and malicious defamation and libel tending to impeach her honesty, virtue and reputation exposing her to public hatred, contempt and ridicule; and that the libel was published and circulated in the English language and read by almost all the U. S. Naval Base personnel. She prayed that she be awarded P300,000.00 as moral damages; exemplary damages which the court may find proper; and P50,000.00 as attorney's fees. In response to the complaint, the defendants filed a motion to dismiss anchored on three grounds: 1. Defendants M. H. Wylie and Capt. James Williams acted in the performance of their official functions as officers of the United States Navy and are, therefore, immune from suit; 2. The United States Naval Base is an instrumentality of the US government which cannot be sued without its consent; and 3. This Court has no jurisdiction over the subject matter as well as the parties in this case. (Record on Appeal, pp. 133-134) The motion was, however, denied. In their answer, the defendants reiterated the lack of jurisdiction of the court over the case. In its decision, the trial court ruled that the acts of defendants M. H. Wylie and Cpt. James Williams were not official acts of the government of the United States of America in the operation and control of the Base but personal and tortious acts which are exceptions to the general rule that a sovereign country cannot be sued in the court of another country without its consent. In short, the trial court ruled that the acts and omissions of the two US officials were not imputable against the US government but were done in the individual and personal capacities of the said officials. The trial court dismissed the suit against the US Naval Base. The dispositive portion of the decision reads as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants jointly and severally, as follows: 1) Ordering defendants M. H. Wylie and Capt. James Williams to pay the plaintiff Aurora Rarang the sum of one hundred thousand (P100,000.00) pesos by way of moral and exemplary damages;

2) Ordering defendants M. H. Wylie and Capt. James Williams to pay the plaintiff the sum of thirty thousand (P30,000.00) pesos by way of attorney's fees and expenses of litigation; and 3) To pay the costs of this suit. Counterclaims are dismissed. Likewise, the suit against the U.S. Naval Base is ordered dismissed. (Record on Appeal, p. 154) On appeal, the petitioners reiterated their stance that they are immune from suit since the subject publication was made in their official capacities as officers of the U. S. Navy. They also maintained that they did not intentionally and maliciously cause the questioned publication. The private respondent, not satisfied with the amount of damages awarded to her, also appealed the trial court's decision. Acting on these appeals, the Intermediate Appellate Court, now Court of Appeals, modified the trial court's decision, to wit: WHEREFORE, the judgment of the court below is modified so that the defendants are ordered to pay the plaintiff, jointly and severally, the sum of P175,000.00 as moral damages and the sum of P60,000.00 as exemplary damages. The rest of the judgment appealed from is hereby affirmed in toto. Costs against the defendantsappellants. (Rollo, p. 44) The appellate court denied a motion for reconsideration filed by the petitioners. Hence, this petition. In a resolution dated March 9, 1987, we gave due course to the petition. The petitioners persist that they made the questioned publication in the performance of their official functions as administrative assistant, in the case of M. H. Wylie, and commanding officer, in the case of Capt. James Williams of the US Navy assigned to the U. S. Naval Station, Subic Bay, Olongapo City and were, therefore, immune from suit for their official actions. In the case of United States of America v. Guinto (182 SCRA 644 [1990]), we discussed the principle of the state immunity from suit as follows: The rule that a state may not be sued without its consent, now expressed in Article XVI, Section 3, of the 1987 Constitution, is one of the generally accepted principles of international law that we have adopted as part of the law of our land under Article II, Section 2. xxx xxx xxx Even without such affirmation, we would still be bound by the generally accepted principles of international law under the doctrine of incorporation. Under this doctrine, as accepted by the majority of states, such principles are deemed incorporated in the

law of every civilized state as a condition and consequence of its membership in the society of nations. Upon its admission to such society, the state is automatically obligated to comply with these principles in its relations with other states. As applied to the local state, the doctrine of state immunity is based on the justification given by Justice Holmes that "there can be no legal right against the authority which makes the law on which the right depends." (Kawanakoa v. Polybank, 205 U.S. 349) There are other practical reasons for the enforcement of the doctrine. In the case of the foreign state sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another. A contrary disposition would, in the language of a celebrated case, "unduly vex the peace of nations." (Da Haber v. Queen of Portugal, 17 Q. B. 171) While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state itself although it has not been formally impleaded. (Garcia v. Chief of Staff, 16 SCRA 120) In such a situation, the state may move to dismiss the complaint on the ground that it has been filed without its consent. The doctrine is sometimes derisively called "the royal prerogative of dishonesty" because of the privilege it grants the state to defeat any legitimate claim against it by simply invoking its non-suability. That is hardly fair, at least in democratic societies, for the state is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine is not absolute and does not say the state may not be sued under any circumstance. On the contrary, the rule says that the state may not be sued without its consent, which clearly imports that it may be sued if it consents. The consent of the state to be sued may be manifested expressly or impliedly. Express consent may be embodied in a general law or a special law. Consent is implied when the state enters into a contract it itself commences litigation. xxx xxx xxx The above rules are subject to qualification. Express consent is effected only by the will of the legislature through the medium of a duly enacted statute. (Republic v. Purisima, 78 SCRA 470) We have held that not all contracts entered into by the government will operate as a waiver of its non-suability; distinction must be made between its sovereign and proprietary acts. (United States of America v. Ruiz, 136 SCRA 487) As for the filing of a complaint by the government, suability will result only where the government is claiming affirmative relief from the defendant. (Lim v. Brownell, 107 Phil. 345) (at pp. 652-655) In the same case we had opportunity to discuss extensively the nature and extent of immunity from suit of United States personnel who are assigned and stationed in Philippine territory, to wit:

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

a foreign government without said government's consent, which renders more obvious the lack of jurisdiction of the courts of his country. The principles of law behind this rule are so elementary and of such general acceptance that we deem it unnecessary to cite authorities in support thereof." xxx xxx xxx It bears stressing at this point that the above observations do not confer on the United States of America a blanket immunity for all acts done by it or its agents in the Philippines. Neither may the other petitioners claim that they are also insulated from suit in this country merely because they have acted as agents of the United States in the discharge of their official functions. There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied. This was our ruling in United States of America v. Ruiz, (136 SCRA 487) where the transaction in question dealt with the improvement of the wharves in the naval installation at Subic Bay. As this was a clearly governmental function, we held that the contract did not operate to divest the United States of its sovereign immunity from suit. In the words of Justice Vicente Abad Santos: The traditional rule of immunity excepts a State from being sued in the courts of another State without its consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. And because the activities of states have multiplied, it has been necessary to distinguish them between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperii. The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in Western Europe. xxx xxx xxx The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In this case the projects are an integral part of the naval base which is devoted to the defense of both the United States and the Philippines, indisputably a function of the government of the highest order; they are not utilized for nor dedicated to commercial or business purposes.

The other petitioners in the cases before us all aver they have acted in the discharge of their official functions as officers or agents of the United States. However, this is a matter of evidence. The charges against them may not be summarily dismissed on their mere assertion that their acts are imputable to the United States of America, which has not given its consent to be sued. In fact, the defendants are sought to be held answerable for personal torts in which the United States itself is not involved. If found liable, they and they alone must satisfy the judgment. (At pp. 655-658) In the light of these precedents, we proceed to resolve the present case. The POD was published under the direction and authority of the commanding officer, U.S. Naval Station Subic Bay. The administrative assistant, among his other duties, is tasked to prepare and distribute the POD. On February 3, 1978, when the questioned article was published in the POD, petitioner Capt. James Williams was the commanding officer while petitioner M.H. Wylie was the administrative assistant of the US Naval Station at Subic bay. The NAVSTA ACTION LINE INQUIRY is a regular feature of the POD. It is a telephone answering device in the office of the Administrative Assistant. The Action Line is intended to provide personnel access to the Commanding Officer on matters they feel should be brought to his attention for correction or investigation. The matter of inquiry may be phoned in or mailed to the POD. (TSN, September 9, 1980, pp. 12-13, Jerry Poblon) According to M. H. Wylie, the action line naming "Auring" was received about three (3) weeks prior to its being published in the POD on February 3, 1978. It was forwarded to Rarang's office of employment, the Provost Marshal, for comment. The Provost Marshal office's response ". . . included a short note stating that if the article was published, to remove the name." (Exhibit 8-A, p. 5) The Provost Marshal's response was then forwarded to the executive officer and to the commanding officer for approval. The approval of the Commanding officer was forwarded to the office of the Administrative Assistant for inclusion in the POD. A certain Mrs. Dologmodin, a clerk typist in the office of the Administrative Assistant prepared the smooth copy of the POD. Finally, M. H. Wylie, the administrative assistant signed the smooth copy of the POD but failed to notice the reference to "Auring" in the action line inquiry. (Exh. 8-A, pp. 4-5, Questions Nos. 14-15). There is no question, therefore, that the two (2) petitioners actively participated in screening the features and articles in the POD as part of their official functions. Under the rule that U.S. officials in the performance of their official functions are immune from suit, then it should follow that the petitioners may not be held liable for the questioned publication. It is to be noted, however, that the petitioners were sued in their personal capacities for their alleged tortious acts in publishing a libelous article. The question, therefore, arises are American naval officers who commit a crime or tortious act while discharging official functions still covered by the principle of state immunity from suit? Pursuing the question further, does the grant of rights, power, and authority to the United States under the RP-US Bases Treaty cover immunity of its officers from crimes and torts? Our answer is No. Killing a person in cold blood while on patrol duty, running over a child while driving with reckless imprudence on an official trip, or slandering a person during office hours could not possibly be covered by the immunity agreement. Our laws and, we presume, those of the United States do not allow the commission of crimes in the name of official duty. The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991] gives the law on immunity from suit of public officials:

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

The subject article in the US Newsletter POD dated February 3, 1978 mentions a certain "Auring" as ". . a disgrace to her division and to the Office of the Provost Marshal." The same article explicitly implies that Auring was consuming and appropriating for herself confiscated items like cigarettes and foodstuffs. There is no question that the Auring alluded to in the Article was the private respondent as she was the only Auring in the Office of the Provost Marshal. Moreover, as a result of this article, the private respondent was investigated by her supervisor. Before the article came out, the private respondent had been the recipient of commendations by her superiors for honesty in the performance of her duties. It may be argued that Captain James Williams as commanding officer of the naval base is far removed in the chain of command from the offensive publication and it would be asking too much to hold him responsible for everything which goes wrong on the base. This may be true as a general rule. In this particular case, however, the records show that the offensive publication was sent to the commanding officer for approval and he approved it. The factual findings of the two courts below are based on the records. The petitioners have shown no convincing reasons why our usual respect for the findings of the trial court and the respondent court should be withheld in this particular case and why their decisions should be reversed. Article 2176 of the Civil Code prescribes a civil liability for damages caused by a person's act or omission constituting fault or negligence, to wit: Art. 2176. Whoever by act or omission, causes damage to another, there being fault or negligence is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter. "Fault" or "negligence" in this Article covers not only acts "not punishable by law" but also acts criminal in character, whether intentional or voluntary or negligent." (Andamo v. Intermediate Appellate Court, 191 SCRA 195 [1990]). Moreover, Article 2219(7) of the Civil Code provides that moral damages may be recovered in case of libel, slander or any other form of defamation. In effect, the offended party in these cases is given the right to receive from the guilty party moral damages for injury to his feelings and reputation in addition to punitive or exemplary damages. (Occena v. Icamina, 181 SCRA 328 [1990]). In another case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72 [1963], we ruled that the allegation of forgery of documents could be a defamation, which in the light of Article 2219(7) of the Civil Code could by analogy be ground for payment of moral damages, considering the wounded feelings and besmirched reputation of the defendants. Indeed the imputation of theft contained in the POD dated February 3, 1978 is a defamation against the character and reputation of the private respondent. Petitioner Wylie himself admitted that the Office of the Provost Marshal explicitly recommended the deletion of the name Auring if the article were published. The petitioners, however, were negligent because under their direction they issued the publication without deleting the name "Auring." Such act or omission is ultra vires and cannot be part of official duty. It was a tortious act which ridiculed the private respondent. As a result of the petitioners' act, the private respondent, according to the record, suffered besmirched reputation, serious anxiety, wounded feelings and social humiliation, specially so, since the article was baseless and false. The petitioners, alone, in their personal capacities are liable for the damages they caused the private respondent. WHEREFORE, the petition is hereby DISMISSED. The questioned decision and resolution of the then Intermediate Appellate Court, now Court of Appeals, are AFFIRMED.

G.R. No. L-60413 October 31, 1990 REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. SOFRONIO G. SAYO, Judge, Br. I, C I, Nueva Vizcaya, HEIRS OF CASIANO SANDOVAL, HEIRS OF LIBERATO BAYAUA, JOSE C. REYES, and PHILIPPINE CACAO AND FARM PRODUCTS, INC., respondents. Celso D. Gangan respondent Heirs of Liberato Bayaua. Acosta & Associates fox Phil. Cacao and Farm Products, Inc. Jose Reyes & Associates for Heirs of Casiano Sandoval, et al.

NARVASA, J.: Sought to be annulled and set aside in this special civil action of certiorari is the decision of respondent Judge Sofronio G. Sayo rendered on March 5, 1981 in Land Registration Case No. N109, LRC Record No. 20850, confirming, by virtue of a compromise agreement, the title of the private respondents over a tract of land. The spouses, Casiano Sandoval and Luz Marquez, filed an original application for registration of a tract of land identified as Lot No. 7454 of the Cadastral Survey of Santiago, BL Cad. 211 (July 17, 1961) and having an area of 33,950 hectares. The land was formerly part of the Municipality of Santiago, Province of Isabela, but had been transferred to Nueva Vizcaya in virtue of Republic Act No. 236. Oppositions were filed by the Government, through the Director of Lands and the Director of Forestry, and some others, including the Heirs of Liberato Bayaua. 1 In due course, an order of general default was thereafter entered on December 11, 1961 against the whole world except the oppositors. The case dragged on for about twenty (20) years until March 3, 1981 when a compromise agreement was entered into by and among all the parties, assisted by their respective counsel, namely: the Heirs of Casiano Sandoval (who had since died), the Bureau of Lands, the Bureau of Forest Development, the Heirs of Liberato Bayaua, and the Philippine Cacao and Farm Products, Inc. Under the compromise agreement, the Heirs of Casiano Sandoval (as applicants) renounced their claims and ceded 1) in favor of the Bureau of Lands, an area of 4,109 hectares; 2) in favor of the Bureau of Forest Development, 12,341 hectares; 3) in favor of the Heirs of Liberato Bayaua, 4,000 hectares; and 4) in favor of Philippine Cacao & Farm Products, Inc., 8,000 hectares. The remaining area of 5,500 hectares was, under the compromise agreement, adjudicated to and acknowledged as owned by the Heirs of Casiano Sandoval, but out of this area, 1,500 hectares were

assigned by the Casiano Heirs to their counsel, Jose C. Reyes, in payment of his attorney's fees. In consideration of the areas respectively allocated to them, all the parties also mutually waived and renounced all their prior claims to and over Lot No. 7454 of the Santiago Cadastre. In a decision rendered on March 5, 1981, the respondent Judge approved the compromise agreement and confirmed the title and ownership of the parties in accordance with its terms. The Solicitor General, in behalf of the Republic of the Philippines, has taken the present recourse in a bid to have that decision of March 5, 1981 annulled as being patently void and rendered in excess of jurisdiction or with grave abuse of discretion. The Solicitor General contends that 1) no evidence whatever was adduced by the parties in support of their petitions for registration; 2) neither the Director of Lands nor the Director of Forest Development had legal authority to enter into the compromise agreement; 3) as counsel of the Republic, he should have been but was not given notice of the compromise agreement or otherwise accorded an opportunity to take part therein; 4) that he was not even served with notice of the decision approving the compromise; it was the Sangguniang Panlalawigan of Quirino Province that drew his attention to the "patently erroneous decision" and requested him to take immediate remedial measures to bring about its annulment. The respondents maintain, on the other hand, that the Solicitor General's arguments are premised on the proposition that Lot 7454 is public land, but it is not. According to them, as pointed out in the application for registration, the private character of the land is demonstrated by the following circumstances, to wit: 1) the possessory information title of the applicants and their predecessors-in-interest; 2) the fact that Lot 7454 was never claimed to be public land by the Director of Lands in the proper cadastral proceedings; 3) the pre-war certification of the National Library dated August 16, 1932 to the effect that the (Estadistica de Propiedades) of Isabela issued in 1896 and appearing in the Bureau of Archives, the property in question was registered under the 'Spanish system of land registration as private property owned by Don Liberato Bayaua, applicants' predecessors-in-interest; 4) the proceeding for registration, brought under Act 496 (the Torrens Act) presupposes that there is already a title to be confirmed by the court, distinguishing it from proceedings under the Public Land Act where the presumption is always that the land involved belongs to the State. Under the Regalian Doctrine 2 all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. Hence it is that all applicants in land registration proceedings have the burden of overcoming the presumption that the land thus sought to be registered forms part of the public domain. 3 Unless the applicant succeeds in showing by clear and convincing evidence that the property involved was acquired by him or his ancestors either by composition title from the Spanish Government or by possessory information title, or any other means for the proper acquisition of public lands, the property must be held to be part of the public domain . 4 The applicant must present competent and persuasive proof to substantiate his claim; he

may not rely on general statements, or mere conclusions of law other than factual evidence of possession and title. 5 In the proceeding at bar, it appears that the principal document relied upon and presented by the applicants for registration, to prove the private character of the large tract of land subject of their application, was a photocopy of a certification of the National Library dated August 16, 1932 (already above mentioned) to the effect that according to the Government's (Estadistica de Propiedades) of Isabela issued in 1896, the property in question was registered under the Spanish system of land registration as private property of Don Liberato Bayaua. But, as this Court has already had occasion to rule, that Spanish document, the (Estadistica de Propiedades,) cannot be considered a title to property, it not being one of the grants made during the Spanish regime, and obviously not constituting primary evidence of ownership. 6 It is an inefficacious document on which to base any finding of the private character of the land in question. And, of course, to argue that the initiation of an application for registration of land under the Torrens Act is proof that the land is of private ownership, not pertaining to the public domain, is to beg the question. It is precisely the character of the land as private which the applicant has the obligation of establishing. For there can be no doubt of the intendment of the Land Registration Act, Act 496, that every applicant show a proper title for registration; indeed, even in the absence of any adverse claim, the applicant is not assured of a favorable decree by the Land Registration Court, if he fails to establish a proper title for official recognition. It thus appears that the decision of the Registration Court a quo is based solely on the compromise agreement of the parties. But that compromise agreement included private persons who had not adduced any competent evidence of their ownership over the land subject of the registration proceeding. Portions of the land in controversy were assigned to persons or entities who had presented nothing whatever to prove their ownership of any part of the land. What was done was to consider the compromise agreement as proof of title of the parties taking part therein, a totally unacceptable proposition. The result has been the adjudication of lands of no little extension to persons who had not submitted any substantiation at all of their pretensions to ownership, founded on nothing but the agreement among themselves that they had rights and interests over the land. The assent of the Directors of Lands and Forest Development to the compromise agreement did not and could not supply the absence of evidence of title required of the private respondents. As to the informacion posesoria invoked by the private respondents, it should be pointed out that under the Spanish Mortgage Law, it was considered a mode of acquiring title to public lands, subject to two (2) conditions: first, the inscription thereof in the Registry of Property, and second, actual, public, adverse, and uninterrupted possession of the land for twenty (20) years (later reduced to ten [10] years); but where, as here, proof of fulfillment of these conditions is absent, the informacion posesoria cannot be considered as anything more thanprima facie evidence of possession. 7 Finally, it was error to disregard the Solicitor General in the execution of the compromise agreement and its submission to the Court for approval. It is, after all, the Solicitor General, who is the principal counsel of the Government; this is the reason for our holding that "Court orders and decisions sent to the fiscal, acting as agent of the Solicitor General in land registration cases, are not binding until they are actually received by the Solicitor General." 8 It thus appears that the compromise agreement and the judgment approving it must be, as they are hereby, declared null and void, and set aside. Considerations of fairness however indicate the remand of the case to the Registration Court so that the private parties may be afforded an opportunity to establish by competent evidence their respective claims to the property.

WHEREFORE, the decision of the respondent Judge complained of is ANNULLED and SET ASIDE. Land Registration Case No. N-109 subject of the petition is REMANDED to the court of origin which shall conduct further appropriate proceedings therein, receiving the evidence of the parties and thereafter rendering judgment as such evidence and the law may warrant. No pronouncement as to costs. SO ORDERED.