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Republic of the Philippines On August 29, 1970, the trial court, through Judge Rafael S.

Sison, rendered a decision


SUPREME COURT declaring Lot No. 1, with an area of 701.9064 hectares, to be the private property of the
Manila plaintiff, "being covered by a possessory information title in the name of his predecessor-
in-interest" and declaring said lot excluded from the NARRA settlement reservation. The
FIRST DIVISION court declared the rest of the property claimed by plaintiff, i.e. Lots 2, 3 and 4, reverted to
the public domain.

G.R. No. 70853 March 12, 1987


A motion to intervene and to set aside the decision of August 29, 1970 was filed by eighty-
six (86) settlers, together with the barrio council of Pag-asay, alleging among other things
REPUBLIC OF THE PHILIPPINES, petitioner-appellee, that intervenors had been in possession of the land in question for more than twenty (20)
vs. years under claim of ownership.
PABLO FELICIANO and INTERMEDIATE APPELLATE COURT, respondents-
appellants.
On January 25, 1971, the court a quo reconsidered its decision, reopened the case and
directed the intervenors to file their corresponding pleadings and present their evidence; all
evidence already presented were to remain but plaintiff, as well as the Republic of the
Philippines, could present additional evidence if they so desire. The plaintiff presented
YAP, J.: additional evidence on July 30, 1971, and the case was set for hearing for the reception of
intervenors' evidence on August 30 and August 31, 1971.
Petitioner seeks the review of the decision of the Intermediate Appellate Court dated April
30, 1985 reversing the order of the Court of First Instance of Camarines Sur, Branch VI, On August 30, 1971, the date set for the presentation of the evidence for intervenors, the
dated August 21, 1980, which dismissed the complaint of respondent Pablo Feliciano for latter did not appear but submitted a motion for postponement and resetting of the hearing
recovery of ownership and possession of a parcel of land on the ground of non-suability of on the next day, August 31, 1971. The trial court denied the motion for postponement and
the State. allowed plaintiff to offer his evidence "en ausencia," after which the case would be deemed
submitted for decision. On the following day, August 31, 1971, Judge Sison rendered a
decision reiterating his decision of August 29, 1970.
The background of the present controversy may be briefly summarized as follows:
A motion for reconsideration was immediately filed by the intervenors. But before this
On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First motion was acted upon, plaintiff filed a motion for execution, dated November 18, 1971.
Instance of Camarines Sur against the Republic of the Philippines, represented by the On December 10, 1971, the lower court, this time through Judge Miguel Navarro, issued
Land Authority, for the recovery of ownership and possession of a parcel of land, an order denying the motion for execution and setting aside the order denying intervenors'
consisting of four (4) lots with an aggregate area of 1,364.4177 hectares, situated in the motion for postponement. The case was reopened to allow intervenors to present their
Barrio of Salvacion, Municipality of Tinambac, Camarines Sur. Plaintiff alleged that he evidence. Unable to secure a reconsideration of Judge Navarro's order, the plaintiff went to
bought the property in question from Victor Gardiola by virtue of a Contract of Sale dated the Intermediate Appellate Court on a petition for certiorari. Said petition was, however,
May 31, 1952, followed by a Deed of Absolute Sale on October 30, 1954; that Gardiola denied by the Intermediate Appellate Court, and petitioners brought the matter to this
had acquired the property by purchase from the heirs of Francisco Abrazado whose title to Court in G.R. No. 36163, which was denied on May 3, 1973 Consequently, the case was
the said property was evidenced by an informacion posesoria that upon plaintiff's purchase remanded to the court a quo for further proceedings.
of the property, he took actual possession of the same, introduced various improvements
therein and caused it to be surveyed in July 1952, which survey was approved by the
Director of Lands on October 24, 1954; that on November 1, 1954, President Ramon On August 31, 1970, intervenors filed a motion to dismiss, principally on the ground that
Magsaysay issued Proclamation No. 90 reserving for settlement purposes, under the the Republic of the Philippines cannot be sued without its consent and hence the action
administration of the National Resettlement and Rehabilitation Administration (NARRA), a cannot prosper. The motion was opposed by the plaintiff.
tract of land situated in the Municipalities of Tinambac and Siruma, Camarines Sur, after
which the NARRA and its successor agency, the Land Authority, started sub-dividing and On August 21, 1980, the trial court, through Judge Esteban Lising, issued the questioned
distributing the land to the settlers; that the property in question, while located within the order dismissing the case for lack of jurisdiction. Respondent moved for reconsideration,
reservation established under Proclamation No. 90, was the private property of plaintiff and while the Solicitor General, on behalf of the Republic of the Philippines filed its opposition
should therefore be excluded therefrom. Plaintiff prayed that he be declared the rightful thereto, maintaining that the dismissal was proper on the ground of non-suability of the
and true owner of the property in question consisting of 1,364.4177 hectares; that his title State and also on the ground that the existence and/or authenticity of the purported
of ownership based on informacion posesoria of his predecessor-in-interest be declared possessory information title of the respondents' predecessor-in-interest had not been
legal valid and subsisting and that defendant be ordered to cancel and nullify all awards to demonstrated and that at any rate, the same is not evidence of title, or if it is, its efficacy
the settlers. has been lost by prescription and laches.

The defendant, represented by the Land Authority, filed an answer, raising by way of Upon denial of the motion for reconsideration, plaintiff again went to the Intermediate
affirmative defenses lack of sufficient cause of action and prescription. Appellate Court on petition for certiorari. On April 30, 1985, the respondent appellate court
\rendered its decision reversing the order of Judge Lising and remanding the case to the actual possession of a piece of land, established through an ex parte proceeding
court a quo for further proceedings. Hence this petition. conducted in accordance with prescribed rules. 7 Such inscription merely furnishes, at
best, prima facieevidence of the fact that at the time the proceeding was held, the claimant
was in possession of the land under a claim of right as set forth in his application. 8 The
We find the petition meritorious. The doctrine of non-suability of the State has proper
application in this case. The plaintiff has impleaded the Republic of the Philippines as possessory information could ripen into a record of ownership after the lapse of 20 years
defendant in an action for recovery of ownership and possession of a parcel of land, (later reduced to 10 years), upon the fulfillment of the requisites prescribed in Article 393 of
bringing the State to court just like any private person who is claimed to be usurping a the Spanish Mortgage Law.
piece of property. A suit for the recovery of property is not an action in rem, but an action in
personam. 1 It is an action directed against a specific party or parties, and any judgment There is no showing in the case at bar that the informacion posesoria held by the
therein binds only such party or parties. The complaint filed by plaintiff, the private respondent had been converted into a record of ownership. Such possessory information,
respondent herein, is directed against the Republic of the Philippines, represented by the therefore, remained at best mere prima facie evidence of possession. Using this
Land Authority, a governmental agency created by Republic Act No. 3844. possessory information, the respondent could have applied for judicial confirmation of
imperfect title under the Public Land Act, which is an action in rem. However, having failed
By its caption and its allegation and prayer, the complaint is clearly a suit against the State, to do so, it is rather late for him to pursue this avenue at this time. Respondent must also
which under settled jurisprudence is not permitted, except upon a showing that the State contend, as the records disclose, with the fact admitted by him and stated in the decision
has consented to be sued, either expressly or by implication through the use of statutory of the Court a quo that settlers have been occupying and cultivating the land in question
since even before the outbreak of the war, which puts in grave doubt his own claim of
language too plain to be misinterpreted.2 There is no such showing in the instant case.
Worse, the complaint itself fails to allege the existence of such consent. This is a fatal possession.
defect, 3 and on this basis alone, the complaint should have been dismissed.
Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion
posesoria registered in the Office of the Register of Deed of Camarines Sur on September
The failure of the petitioner to assert the defense of immunity from suit when the case was
tried before the court a quo, as alleged by private respondent, is not fatal. It is now settled 23, 1952 was a "reconstituted" possessory information; it was "reconstituted from the
duplicate presented to this office (Register of Deeds) by Dr. Pablo Feliciano," without the
that such defense "may be invoked by the courts sua sponte at any stage of the
proceedings." 4 submission of proof that the alleged duplicate was authentic or that the original thereof was
lost. Reconstitution can be validly made only in case of loss of the original. 10 These
circumstances raise grave doubts as to the authenticity and validity of the "informacion
Private respondent contends that the consent of petitioner may be read from the posesoria" relied upon by respondent Feliciano. Adding to the dubiousness of said
Proclamation itself, when it established the reservation " subject to private rights, if any document is the fact that "possessory information calls for an area of only 100
there be. " We do not agree. No such consent can be drawn from the language of the hectares," 11 whereas the land claimed by respondent Feliciano comprises 1,364.4177
Proclamation. The exclusion of existing private rights from the reservation established by hectares, later reduced to 701-9064 hectares. Courts should be wary in accepting
Proclamation No. 90 can not be construed as a waiver of the immunity of the State from "possessory information documents, as well as other purportedly old Spanish titles, as
suit. Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly. but proof of alleged ownership of lands.
must be construed in strictissimi juris. 5Moreover, the Proclamation is not a legislative act.
The consent of the State to be sued must emanate from statutory authority. Waiver of
State immunity can only be made by an act of the legislative body. WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed
decision of the Intermediate Appellate Court, dated April 30, 1985, and affirming the order
of the court a quo, dated August 21, 1980, dismissing the complaint filed by respondent
Neither is there merit in respondent's submission, which the respondent appellate court Pablo Feliciano against the Republic of the Philippines. No costs.
sustained, on the basis of our decision in the Begosa case, 6 that the present action is not
a suit against the State within the rule of State immunity from suit, because plaintiff does
not seek to divest the Government of any of its lands or its funds. It is contended that the SO ORDERED.
complaint involves land not owned by the State, but private land belonging to the plaintiff,
hence the Government is not being divested of any of its properties. There is some
sophistry involved in this argument, since the character of the land sought to be recovered
still remains to be established, and the plaintiff's action is directed against the State
precisely to compel the latter to litigate the ownership and possession of the property. In
other words, the plaintiff is out to establish that he is the owner of the land in question
based, incidentally, on an informacion posesoria of dubious value, and he seeks to
establish his claim of ownership by suing the Republic of the Philippines in an action in
personam.

The inscription in the property registry of an informacion posesoria under the Spanish
Mortgage Law was a means provided by the law then in force in the Philippines prior to the
transfer of sovereignty from Spain to the United States of America, to record a claimant's
Republic of the Philippines On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the
SUPREME COURT complaint) purportedly corning from petitioner Moreau as the commanding general of the
Manila U.S. Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining the
change of the private respondent's employment status and requesting concurrence
FIRST DIVISION therewith. The letter did not carry his signature but was signed by W.B. Moore, Jr. "by
direction," presumably of Moreau.

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


On the basis of these antecedent facts, the private respondent filed in the Court of First
Instance of Olongapo City a for damages against the herein petitioners on November 8,
DALE SANDERS, AND A.S. MOREAU, JR, petitioners, 1976.8 The plaintiffs claimed that the letters contained libelous imputations that had
vs. exposed them to ridicule and caused them mental anguish and that the prejudgment of the
HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance grievance proceedings was an invasion of their personal and proprietary rights.
of Zambales, Olongapo City, ANTHONY M. ROSSI and RALPH L.
WYERS, respondents.
The private respondents made it clear that the petitioners were being sued in their private
or personal capacity. However, in a motion to dismiss filed under a special appearance,
the petitioners argued that the acts complained of were performed by them in the
discharge of their official duties and that, consequently, the court had no jurisdiction over
CRUZ, J.: them under the doctrine of state immunity.

The basic issue to be resolved in this case is whether or not the petitioners were After extensive written arguments between the parties, the motion was denied in an order
performing their official duties when they did the acts for which they have been sued for dated March 8, 1977, 9 on the main ground that the petitioners had not presented any
damages by the private respondents. Once this question is decided, the other answers will evidence that their acts were official in nature and not personal torts, moreover, the
fall into place and this petition need not detain us any longer than it already has. allegation in the complaint was that the defendants had acted maliciously and in bad faith.
The same order issued a writ of preliminary attachment, conditioned upon the filing of a
P10,000.00 bond by the plaintiffs, against the properties of petitioner Moreau, who
Petitioner Sanders was, at the time the incident in question occurred, the special services allegedly was then about to leave the Philippines. Subsequently, to make matters worse
director of the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the for the defendants, petitioner Moreau was declared in a default by the trial court in its order
commanding officer of the Subic Naval Base, which includes the said station. 2 Private dated August 9, 1977. The motion to lift the default order on the ground that Moreau's
respondent Rossi is an American citizen with permanent residence in the Philippines, 3 as failure to appear at the pre-trial conference was the result of some misunderstanding, and
so was private respondent Wyer, who died two years ago. 4 They were both employed as the motion for reconsideration of the denial of the motion to dismiss, which was filed by the
gameroom attendants in the special services department of the NAVSTA, the former petitioner's new lawyers, were denied by the respondent court on September 7, 1977.
having been hired in 1971 and the latter in 1969. 5
This petition for certiorari, prohibition and preliminary injunction was thereafter filed before
On October 3, 1975, the private respondents were advised that their employment had this Court, on the contention that the above-narrated acts of the respondent court are
been converted from permanent full-time to permanent part-time, effective October 18, tainted with grave abuse of discretion amounting to lack of jurisdiction.
1975. 6 Their reaction was to protest this conversion and to institute grievance proceedings
conformably to the pertinent rules and regulations of the U.S. Department of Defense. The
result was a recommendation from the hearing officer who conducted the proceedings for We return now to the basic question of whether the petitioners were acting officially or only
the reinstatement of the private respondents to permanent full-time status plus backwages. in their private capacities when they did the acts for which the private respondents have
The report on the hearing contained the observation that "Special Services management sued them for damages.
practices an autocratic form of supervision." 7
It is stressed at the outset that the mere allegation that a government functionary is being
In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), sued in his personal capacity will not automatically remove him from the protection of the
Sanders disagreed with the hearing officer's report and asked for the rejection of the law of public officers and, if appropriate, the doctrine of state immunity. By the same token,
abovestated recommendation. The letter contained the statements that: a ) "Mr. Rossi the mere invocation of official character will not suffice to insulate him from suability and
tends to alienate most co-workers and supervisors;" b) "Messrs. Rossi and Wyers have liability for an act imputed to him as a personal tort committed without or in excess of his
proven, according to their immediate supervisors, to be difficult employees to supervise;" authority. These well-settled principles are applicable not only to the officers of the local
and c) "even though the grievants were under oath not to discuss the case with anyone, state but also where the person sued in its courts pertains to the government of a foreign
(they) placed the records in public places where others not involved in the case could state, as in the present case.
hear."
The respondent judge, apparently finding that the complained acts
were prima facie personal and tortious, decided to proceed to trial to determine inter
alia their precise character on the strength of the evidence to be submitted by the parties.
The petitioners have objected, arguing that no such evidence was needed to substantiate payment of damages, such award will have to be satisfied not by the petitioners in their
their claim of jurisdictional immunity. Pending resolution of this question, we issued a personal capacities but by the United States government as their principal. This will require
temporary restraining order on September 26, 1977, that has since then suspended the that government to perform an affirmative act to satisfy the judgment, viz, the appropriation
proceedings in this case in the court a quo. of the necessary amount to cover the damages awarded, thus making the action a suit
against that government without its consent.
In past cases, this Court has held that where the character of the act complained of can be
determined from the pleadings exchanged between the parties before the trial, it is not There should be no question by now that such complaint cannot prosper unless the
necessary for the court to require them to belabor the point at a trial still to be conducted. government sought to be held ultimately liable has given its consent to' be sued. So we
Such a proceeding would be superfluous, not to say unfair to the defendant who is have ruled not only in Baer but in many other decisions where we upheld the doctrine of
subjected to unnecessary and avoidable inconvenience. state immunity as applicable not only to our own government but also to foreign states
sought to be subjected to the jurisdiction of our courts. 15
Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the
commanding general of the Olongapo Naval Base should not have been denied because it The practical justification for the doctrine, as Holmes put it, is that "there can be no legal
had been sufficiently shown that the act for which he was being sued was done in his right against the authority which makes the law on which the right depends.16 In the case
official capacity on behalf of the American government. The United States had not given its of foreign states, the rule is derived from the principle of the sovereign equality of states
consent to be sued. It was the reverse situation in Syquia v. Almeda Lopez," where we which wisely admonishes that par in parem non habet imperium and that a contrary
sustained the order of the lower court granting a where we motion to dismiss a complaint attitude would "unduly vex the peace of nations." 17 Our adherence to this precept is
against certain officers of the U.S. armed forces also shown to be acting officially in the formally expressed in Article II, Section 2, of our Constitution, where we reiterate from our
name of the American government. The United States had also not waived its immunity previous charters that the Philippines "adopts the generally accepted principles of
from suit. Only three years ago, in United States of America v. Ruiz, 12 we set aside the international law as part of the law of the land.
denial by the lower court of a motion to dismiss a complaint for damages filed against the
United States and several of its officials, it appearing that the act complained of was All this is not to say that in no case may a public officer be sued as such without the
governmental rather than proprietary, and certainly not personal. In these and several
previous consent of the state. To be sure, there are a number of well-recognized
other cases 13 the Court found it redundant to prolong the other case proceedings after it exceptions. It is clear that a public officer may be sued as such to compel him to do an act
had become clear that the suit could not prosper because the acts complained of were required by law, as where, say, a register of deeds refuses to record a deed of sale; 18 or
covered by the doctrine of state immunity. to restrain a Cabinet member, for example, from enforcing a law claimed to be
unconstitutional; 19 or to compel the national treasurer to pay damages from an already
It is abundantly clear in the present case that the acts for which the petitioners are being appropriated assurance fund; 20 or the commissioner of internal revenue to refund tax
called to account were performed by them in the discharge of their official duties. Sanders, over-payments from a fund already available for the purpose; 21 or, in general, to secure a
as director of the special services department of NAVSTA, undoubtedly had supervision judgment that the officer impleaded may satisfy by himself without the government itself
over its personnel, including the private respondents, and had a hand in their employment, having to do a positive act to assist him. We have also held that where the government
work assignments, discipline, dismissal and other related matters. It is not disputed that itself has violated its own laws, the aggrieved party may directly implead the government
the letter he had written was in fact a reply to a request from his superior, the other even without first filing his claim with the Commission on Audit as normally required, as the
petitioner, for more information regarding the case of the private respondents. 14 Moreover, doctrine of state immunity "cannot be used as an instrument for perpetrating an
even in the absence of such request, he still was within his rights in reacting to the hearing injustice." 22
officer's criticism—in effect a direct attack against him—-that Special Services was
practicing "an autocratic form of supervision." This case must also be distinguished from such decisions as Festejo v.
Fernando, 23 where the Court held that a bureau director could be sued for damages on a
As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for personal tort committed by him when he acted without or in excess of authority in forcibly
concurrence with the conversion of the private respondents' type of employment even taking private property without paying just compensation therefor although he did convert it
before the grievance proceedings had even commenced. Disregarding for the nonce the into a public irrigation canal. It was not necessary to secure the previous consent of the
question of its timeliness, this act is clearly official in nature, performed by Moreau as the state, nor could it be validly impleaded as a party defendant, as it was not responsible for
immediate superior of Sanders and directly answerable to Naval Personnel in matters the defendant's unauthorized act.
involving the special services department of NAVSTA In fact, the letter dealt with the
financial and budgetary problems of the department and contained recommendations for The case at bar, to repeat, comes under the rule and not under any of the recognized
their solution, including the re-designation of the private respondents. There was nothing exceptions. The government of the United States has not given its consent to be sued for
personal or private about it. the official acts of the petitioners, who cannot satisfy any judgment that may be rendered
against them. As it is the American government itself that will have to perform the
Given the official character of the above-described letters, we have to conclude that the affirmative act of appropriating the amount that may be adjudged for the private
petitioners were, legally speaking, being sued as officers of the United States government. respondents, the complaint must be dismissed for lack of jurisdiction.
As they have acted on behalf of that government, and within the scope of their authority, it
is that government, and not the petitioners personally, that is responsible for their acts.
Assuming that the trial can proceed and it is proved that the claimants have a right to the
The Court finds that, even under the law of public officers, the acts of the petitioners are
protected by the presumption of good faith, which has not been overturned by the private
respondents. Even mistakes concededly committed by such public officers are not
actionable as long as it is not shown that they were motivated by malice or gross
negligence amounting to bad faith.24 This, to, is well settled .25 Furthermore, applying now
our own penal laws, the letters come under the concept of privileged communications and
are not punishable, 26 let alone the fact that the resented remarks are not defamatory by
our standards. It seems the private respondents have overstated their case.

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

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

We appreciate the assistance foreign decisions offer us, and not only from the United
States but also from Spain and other countries from which we have derived some if not
most of our own laws. But we should not place undue and fawning reliance upon them and
regard them as indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments We live in a different ambience
and must decide our own problems in the light of our own interests and needs, and of our
qualities and even idiosyncrasies as a people, and always with our own concept of law and
justice.

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

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

SO ORDERED.
Republic of the Philippines Thereafter, questions arose as to the wisdom of having the area declared as a forest
SUPREME COURT reserve or allow the same to be awarded to the most qualified bidder. On June 7, 1961,
Manila then President Carlos P. Garcia issued a directive to the Director of the Bureau of
Forestry, which read as follows:
SECOND DIVISION
It is desired that the area formerly covered by the Naval Reservation be
G.R. No. L- 24548 October 27, 1983 made a forest reserve for watershed purposes. Prepare and submit
immediately a draft of a proclamation establishing the said area as a
watershed forest reserve for Olongapo, Zambales. It is also desired that
WENCESLAO VlNZONS TAN, THE DIRECTOR OF FORESTRY, APOLONIO THE the bids received by the Bureau of Forestry for the issuance of the
SECRETARY OF AGRICULTURE AND NATURAL RESOURCES JOSE Y. timber license in the area during the public bidding conducted last May
FELICIANO, respondents-appelllees, 22, 1961 be rejected in order that the area may be reserved as above
vs. stated. ...
THE DIRECTOR OF FORESTRY, APOLONIO RIVERA, THE SECRETARY OF
AGRICULTURE AND N ATURAL RESOURCES JOSE Y. FELICIANO, respon dents-
appellees,RAVAGO COMMERCIAL CO., JORGE LAO HAPPICK and ATANACIO (SGD) CARLOS P GARCIA
MALLARI, intervenors,
On August 3, 1961, Secretary Cesar M. Fortich of Agriculture and Natural Resources
sustained the findings and re comendations of the Director of Forestry who concluded that
Camito V Pelianco Jr. for petitioner-appellant.
"it would be beneficial to the public interest if the area is made available for exploitation
under certain conditions," and
Solicitor General for respondent Director.
We quote:
Estelito P. Mendoza for respondent Ravago Comm'l Co.
Respectfully forwarded to the honorable, the Executive Secretary
Anacleto Badoy for respondent Atanacio Mallari. Malacanang. Manila inviting particular attention to the comment and
recommendation of the Director of Forestry in the proceeding in
Mariano de Joya, Jr. for respondent Jorge Lao Happick, Jr. indorsement in which this Of fice fully concurs.

The observations of responsible forest officials are most revealing of


their zeal to promote forest conservation and watershed protection
especially in Olongapo, Zambales area. In convincing fashion, they
MAKASIAR, J: have demonstrated that to declare the forest area involved as a forest
reserve ratify than open it for timber exploitation under license and
This is an appeal from the order dated January 20, 1965 of the then Court of First Instance regulation would do more harm than of to the public interest. To convert
of Manila, Branch VII, in Civil Case No. 56813, a petition for certiorari, prohibition and the area into a forest reserve without an adequate forest protection
mandamus with preliminary prohibitory injunction (p. 2. rec.), which dismissed the petition force, would make of it a 'Free Zone and Logging Paradise,' to the ever
of petitioner-appellant Wenceslao Vinzons Tan on the ground that it does not state a 'Problem Loggers' of Dinalupihan, Bataan . . . an open target of timber
sufficient cause of action, and upon the respondents-appellees' (Secretary of Agriculture smugglers, kaingineros and other forms of forest vandals and
and Natural resources and the Director of Forestry) motion to dismiss (p. 28, rec.). despoilers. On the other hand, to award the area, as planned, to a
reputable and responsible licensee who shall conduct logging
operations therein under the selective logging method and who shall be
Sometime in April 1961, the Bureau of Forestry issued Notice No. 2087, advertising for obliged to employ a sufficient number of forest guards to patrol and
public bidding a certain tract of public forest land situated in Olongapo, Zambales, provided protect the forest consecration and watershed protection.
tenders were received on or before May 22, 1961 (p. 15, CFI rec.). This public forest land,
consisting of 6,420 hectares, is located within the former U.S. Naval Reservation
comprising 7,252 hectares of timberland, which was turned over by the United States Worthy of mention is the fact that the Bureau of Forestry had already
Government to the Philippine Government (P. 99, CFI rec.). conducted a public bidding to determine the most qualified bidder to
whom the area advertised should be awarded. Needless to stress, the
decision of the Director of Forestry to dispose of the area thusly was
On May 5, 1961, petitioner-appellant Wenceslao Vinzons Tan submitted his application in arrived at after much thought and deliberation and after having been
due form after paying the necessary fees and posting tile required bond therefor. Nine convinced that to do so would not adversely affect the watershed in that
other applicants submitted their offers before the deadline (p. 29, rec.). sector. The result of the bidding only have to be announced. To be
sure, some of the participating bidders like Mr. Edgardo Pascual, went
to much expense in the hope of winning a virgin forest concession. To SUBJECT: Revocation of General Memorandum Order No 46 dated
suddenly make a turn about of this decision without strong justifiable May 30, 1963 —
grounds, would cause the Bureau of Forestry and this Office no end of
embarrassment.
1. In order to acquaint the undersigned with the volume and Nature of
the work of the Department, the authority delegated to the Director of
In view of the foregoing, it is earnestly urged that the Director of forestry under General Memorandum Order No. 46, dated May 30,
Forestry be allowed to proceed with the announcement of the results of 1963, to grant (a) new ordinary timber licenses where the area covered
the bidding for the subject forest area (p. 13, CFI rec.). thereby is not more than 3,000 hectares each; and (b) the extension of
ordinary timber licenses for areas not exceeding 3,000 hectares each is
The Office of the President in its 4th Indorsement dated February 2, 1962, signed by Atty. hereby revoked. Until further notice, the issuance of' new licenses ,
Juan Cancio, Acting Legal Officer, "respectfully returned to the Honorable Secretary of the including amendments thereto, shall be signed by the secretary of
Department of Agriculture and Natural Resources for appropriate action," the papers Agriculture and Natural Resources.
subject of Forestry Notice No. 2087 which was referred to the Bureau of Forestry for
decision (p. 14, CFI rec.). 2. This Order shall take effect immediately and all other previous
orders, directives, circulars, memoranda, rules and regulations
Finally, of the ten persons who submitted proposed the area was awarded to herein inconsistent with this Order are hereby revoked (p. 268, CFl rec.;
petitioner-appellant Wenceslao Vinzons Tan, on April 15, 1963 by the Bureau of Forestry Emphasis supplied).
(p. 17, CFI rec.). Against this award, bidders Ravago Commercial Company and Jorge Lao
Happick filed motions for reconsideration which were denied by the Director of Forestry on On the same date that the above-quoted memorandum took effect, December 19, 1963,
December 6, 1963. Ordinary Timber License No. 20-'64 (NEW) dated April 22, 1963, in the name of
Wenceslao Vinzons Tan, was signed by then Acting Director of Forestry Estanislao R.
On May 30, 1963, the Secretary of Agriculture and Natural Resources Benjamin M. Gozon Bernal without the approval of the Secretary of Agriculture and Natural Resources. On
— who succeeded Secretary Cesar M. Fortich in office — issued General Memorandum January 6, 1964, the license was released by the Office of the Director of Forestry (p. 30,
Order No. 46, series of 1963, pertinent portions of which state: CFI rec.; p. 77, rec.). It was not signed by the Secretary of Agriculture and Natural
Resources as required by Order No. 60 aforequoted.

xxx xxx xxx


On February 12, 1964, Ravago Commercial Company wrote a letter to the Secretary of
Agriculture and Natural Resources shall be considered by tile Natural Resources praying
SUBJECT: ... ... ... that, pending resolution of the appeal filed by Ravago Commercial Company and Jorge
Lao Happick from the order of the Director of Forestry denying their motion for
(D)elegation of authority to the Director of Forestry to grant ordinary reconsideration, OTI No. 20-'64 in the name of Wenceslao V. Tan be cancelled or revoked
timber licenses. on the ground that the grant thereof was irregular, anomalous and contrary to existing
forestry laws, rules and regulations.
1. ... ... ...
On March 9, 1964, acting on the said representation made by Ravago Commercial
Company, the Secretary of Agriculture and Natural Resources promulgated an order
2. The Director of Forestry is hereby authorized to grant (a) new declaring Ordinary Timber License No. 20-'64 issued in the name of Wenceslao Vinzons
ordinary timber licenses where the area covered thereby is not more Tan, as having been issued by the Director of Forestry without authority, and is therefore
than 3,000 hectares each; and (be the extension of ordinary timber void ab initio. The dispositive portion of said order reads as follows:
licenses for areas not exceeding 5,000 hectares each;
WHEREFORE, premises considered, this Office is of the opinion and
3. This Order shall take effect immediately (p. 267, CFI rec.). so holds that O.T. License No. 20-'64 in the name of Wenceslao
Vinzons Tan should be, as hereby it is, REVOKED AND DECLARED
Thereafter, Jose Y. Feliciano was appointed as Acting secretary of Agriculture and Natural without force and effect whatsoever from the issuance thereof.
Resources, replacing secretary Benjamin M. Gozon. Upon assumption of office he
Immediately promulgate on December 19, 19b3 General memorandum Order No. 60, The Director of Forestry is hereby directed to stop the logging
revoking the authority delegated to the Director of Forestry, under General Memorandum operations of Wenceslao Vinzons Tan, if there be any, in the area in
order No. 46, to grant ordinary timber licenses, which order took effect on the same day, question and shall see to it that the appellee shall not introduce any
December 19, 1963. Pertinent portions of the said Order read as follows: further improvements thereon pending the disposition of the appeals
filed by Ravago Commercial Company and Jorge lao Happick in this
xxx xxx xxx case" (pp. 30-31, CFI rec.).
Petitioner-appellant moved for a reconsideration of the order, but the Secretary of without their consent; (3) that the petitioner has not exhausted all available administrative
Agriculture and Natural Resources denied the motion in an Order dated March 25, 1964, remedies; (4) that the petition does not state a cause of action; and (5) that purely
wherein this paragraph appears: administrative and discretionary functions of administrative officials may not be interfered
with by the courts. The Secretary of Agriculture and Natural Resources joined the motion
In this connection, it has been observed by the Acting Director of to dismiss when in his answer of May 18, 1964, he avers the following special and
Forestry in his 2nd indorsement of February 12, 1964, that the area in affirmative defenses: (1) that the court has no jurisdiction to entertain the action for
question composes of water basin overlooking Olongapo, including the certiorari, prohibition and mandamus; (2) that the petitioner has no cause of action; (3) that
proposed Olongapo watershed Reservation; and that the United States venue is improperly laid; (4) that the State is immune from suit without its consent; (5) that
as well as the Bureau of Forestry has earmarked this entire watershed the court has no power to interfere in purely administrative functions; and (6) that the
for a watershed pilot forest for experiment treatment Concerning cancellation of petitioner's license was dictated by public policy (pp. 172-177, rec.).
erosion and water conservation and flood control in relation to wise Intervenors also filed their respective answers in intervention with special and affirmative
utilization of the forest, denudation, shifting cultivation, increase or defenses (pp. 78-79, rec.). A hearing was held on the petition for the issuance of writ of
preliminary injunction, wherein evidence was submitted by all the parties including the
decrease of crop harvest of agricultural areas influenced by the
watershed, etc. .... (pp. 3839, CFI rec.; p. 78, rec.). intervenors, and extensive discussion was held both orally and in writing.

On April 11, 1964, the Secretary of Agriculture and Natural Resources, acting on the After the said hearing, on January 20, 1965, the court a quo, from the evidence received,
resolved not only the question on the issuance of a writ of preliminary injunction but also
separate appeals filed by Jorge Lao Happick and Ravago Commercial Company, from the
order of the Director of Forestry dated April 15, 1963, awarding to Wenceslao Vinzons Tan the motion to dismiss, declared that the petition did not state a sufficient cause of action,
and dismissed the same accordingly. To justify such action, the trial court, in its order
the area under Notive No. 2087, and rejecting the proposals of the other applicants
covering the same area, promulgated an order commenting that in view of the dismissing the petition, stated that "the court feels that the evidence presented and the
observations of the Director of Forestry just quoted, "to grant the area in question to any of extensive discussion on the issuance of the writ of preliminary mandatory and prohibitory
the parties herein, would undoubtedly adversely affect public interest which is paramount injunction should also be taken into consideration in resolving not only this question but
to private interests," and concluding that, "for this reason, this Office is of the opinion and also the motion to dismiss, because there is no reason to believe that the parties will
so holds, that without the necessity of discussing the appeals of the herein appellants, the change their stand, arguments and evidence" (p. 478, CFI rec.). His motion for
said appeals should be, as hereby they are, dismissed and this case is considered a reconsideration having been denied (p. 488, CFI rec.), petitioner-appellant Wenceslao
closed matter insofar as this Office is concerned" (p. 78, rec.). Vinzons Tan appealed directly to this Court.

On April 18, 1964, on the basis of the denial of his motion for reconsideration by the I
Secretary of Agriculture and Natural Resources, petitioner-appellant filed the instant case
before tile court a quo (Court of First Instance, Manila), Special Civil Action No. 56813, a Petitioner-appellant now comes before this Court, claiming that the trial court erred in:
petition for certiorari, prohibition and mandamus with preliminary prohibitory injunction (pp.
1-12, CFI rec.). Petitioner-appellant claims that the respondents-appellees "unlawfully, (1) holding that the petition does not state a sufficient cause of action:
illegally whimsically, capriciously and arbitrarily acted without or in excess of their and
jurisdiction, and/or with grave abuse of discretion by revoking a valid and existing timber
license without just cause, by denying petitioner-appellant of the equal protection of the
laws, by depriving him of his constitutional right to property without due process of law, and (2) dismissing the petition [p.27,rec. ].
in effect, by impairing the obligation of contracts" (P. 6, CFI rec.). Petitioner-appellant
prayed for judgment making permanent the writ of preliminary injunction against the He argues that the sole issue in the present case is, whether or not the facts in the petition
respondents- appellees; declaring the orders of the Secretary of Agriculture and Natural constitute a sufficient cause of action (p. 31, rec.). Petitioner-appellant, in his brief,
Resources dated March 9, March 25, and April 11, 1964, as well as all his acts and those presented a lengthy discussion on the definition of the term cause of action wherein he
of the Director of Forestry implementing said orders, and all the proceedings in connection contended that the three essential elements thereon, — namely, the legal right of the
therewith, null and void, unlawful and of no force and effect; ordering the Director of plaintiff, the correlative obligation of the defendants and the act or omission of the
Forestry to renew OTI No. 20-'64 upon expiration, and sentencing the respondents, jointly defendant in violation of that right — are satisfied in the averments of this petition (pp. 31-
and severally, to pay the petitioner-appellant the sum of Two Hundred Thousand Pesos 32, rec.). He invoked the rule that when the ground for dismissal is that the complaint
(P200,000.000) by way of pecuniary damage, One Hundred Thousand Pesos states no cause of action, such fact can be determined only from the facts alleged in the
(P100,000.00) by way of moral and exemplary damages, and Thirty Thousand Pesos complaint and from no other, and the court cannot consider other matters aliunde He
(P30,000-00) as attorney's fees and costs. The respondents-appellees separately filed further invoked the rule that in a motion to dismiss based on insufficiency of cause of
oppositions to the issuance of the writ of preliminary injunction, Ravago Commercial action, the facts alleged in the complaint are deemed hypothetically admitted for the
Company, Jorge Lao, Happick and Atanacio Mallari, presented petitions for intervention purpose of the motion (pp. 32-33, rec.).
which were granted, and they too opposed the writ.
A perusal of the records of the case shows that petitioner-appellant's contentions are
The Director of Forestry in his motion to dismiss dated April 24, 1964, alleges the following untenable. As already observed, this case was presented to the trial court upon a motion
grounds: (1) that the court has no jurisdiction; (2) that the respondents may not be sued to dismiss for failure of the petition to state a claim upon which relief could be granted
(Rule 16 [g], Revised Rules of Court), on the ground that the timber license relied upon by action. Existence of a cause of action or lack of it is determined be a
the petitioner- appellant in his petition was issued by the Director of Forestry without reference to the facts averred in the challenged pleading. The question
authority and is therefore void ab initio. This motion supplanted the general demurrer in an raised in the motion is purely one of law. This legal issue was fully
action at law and, as a rule admits, for the purpose of the motion, ail facts which are well discussed in said motion and the opposition thereto. In this posture,
pleaded however while the court must accept as true all well pleaded facts, the motion oral arguments on the motion are reduced to an unnecessary ceremony
does not admit allegations of which the court will take judicial notice are not true, nor does and should be overlooked. And, correctly so, because the other
the rule apply to legally impossible facts, nor to facts inadmissible in evidence, nor to facts intendment of the law in requiring hearing on a motion, i.e., 'to avoid
which appear by record or document included in the pleadings to be unfounded (Vol. 1, surprises upon the opposite party and to give to the latter time to study
Moran's Comments on the Rules of Court, 1970 ed., p. 505, citing cases). and meet the arguments of the motion,' has been sufficiently met. And
then, courts do not exalt form over substance (Emphasis supplied).
It must be noted that there was a hearing held in the instant case wherein answers were
interposed and evidence introduced. In the course of the hearing, petitioner-appellant had Furthermore even if the complaint stated a valid cause of action, a motion to dismiss for-
the opportunity to introduce evidence in support of tile allegations iii his petition, which he insufficiency of cause of action will be granted if documentary evidence admitted by
readily availed of. Consequently, he is estopped from invoking the rule that to determine stipulation disclosing facts sufficient to defeat the claim enabled the court to go beyond
the sufficiency of a cause of action on a motion to dismiss, only the facts alleged in the disclosure in the complaint (LOCALS No. 1470, No. 1469, and No. 1512 of the
complaint must be considered. If there were no hearing held, as in the case of Cohen vs. International Longshoremen's Association vs. Southern Pacific Co., 6 Fed. Rules Service,
U.S. CCA Minn 1942,129 F. 2d 733), "where the case was presented to District Court upon p. 107; U.S. Circuit Court of Appeals, Fifth Circuit, Dec. 7, 1952; 131 F. 2d 605). Thus,
a motion to dismiss because of alleged failure of complaint to state a claim upon which although the evidence of the parties were presented on the question of granting or denying
relief could be granted, and no answer was interposed and no evidence introduced, the petitioner-appellant's application for a writ of preliminary injunction, the trial court correctly
only facts which the court could properly consider in passing upon the motion were those applied said evidence in the resolution of the motion to dismiss. Moreover, in applying said
facts appearing in the complaint, supplemented be such facts as the court judicially knew. evidence in the resolution of the motion to dismiss, the trial court, in its order dismissing
the petition, pointed out that, "there is no reason to believe that the parties will change their
In Llanto vs. Ali Dimaporo, et al. (16 SCRA 601, March 31, 1966), this Court, thru Justice stand, arguments and evidence" (p. 478, CFI rec.). Petitioner-appellant did not interpose
Conrado V. Sanchez, held that the trial court can properly dismiss a complaint on a motion any objection thereto, nor presented new arguments in his motion for reconsideration (pp.
to dismiss due to lack of cause of action even without a hearing, by taking into 482-484, CFI rec.). This omission means conformity to said observation, and a waiver of
consideration the discussion in said motion and the opposition thereto. Pertinent portion of his right to object, estopping him from raising this question for the first time on appeal. " I
said decision is hereby quoted: question not raised in the trial court cannot be raised for the first time on appeal" (Matienzo
vs. Servidad, Sept. 10, 1981, 107 SCRA 276).

Respondents moved to dismiss. Ground therefor is lack of cause of


action. The Court below granted the motion, dismissed the petition. The Moreover, petitioner-appellant cannot invoke the rule that, when the ground for asking
motion to reconsider failed. Offshoot is this appeal. dismissal is that the complaint states no cause of action, its sufficiency must be
determined only from the allegations in the complaint. "The rules of procedure are not to
be applied in a very rigid, technical sense; rules of procedure are used only to help secure
1. The threshold questions are these: Was the substantial justice. If a technical and rigid enforcement of the rules is made, their aim
dismissal order issued without any hearing on the would be defeated. Where the rules are merely secondary in importance are made to
motion to dismiss? Is it void? override the ends of justice; the technical rules had been misapplied to the prejudice of the
substantial right of a party, said rigid application cannot be countenanced" (Vol. 1,
WE go to the record. The motion to dismiss was filed on February 1, Francisco, Civil Procedure, 2 ed., 1973, p. 157, citing cases).
1961 and set for hearing on February 10 following. On February 8,
1961 petitioner's counsel telegraphed the court, (r)equest What more can be of greater importance than the interest of the public at large, more
postponement motion dismissal till written opposition filed.' He did not particularly the welfare of the inhabitants of Olongapo City and Zambales province, whose
appear at the scheduled hearing. But on March 4, 1961, he followed up lives and properties are directly and immediately imperilled by forest denudation.
his wire, with his written opposition to the motion to dismiss. Adverting
to the 5-page motion to dismiss and the 6-page opposition thereto, We
find that the arguments pro and con on the question of the board's The area covered by petitioner-appellant's timber license practically comprises the entire
power to abolish petitioner's position to discussed the problem said Olongapo watershed (p. 265, CFI rec.). It is of public knowledge that watersheds serves as
profusely cited authorities. The May 15, 1961 8-page court order recited a defense against soil erosion and guarantees the steady supply of water. As a matter of
at length the said arguments and concluded that petitioner made no general policy, the Philippine Constitution expressly mandated the conservation and
case. proper utilization of natural resources, which includes the country's watershed. Watersheds
in the Philippines had been subjected to rampant abusive treatment due to various
unscientific and destructive land use practices. Once lush watersheds were wantonly
One good reason for the statutory requirement of hearing on a motion deforested due to uncontrolled timber cutting by licensed concessionaries and illegal
as to enable the suitors to adduce evidence in support of their opposing loggers. This is one reason why, in paragraph 27.of the rules and regulations included in
claims. But here the motion to dismiss is grounded on lack of cause of the ordinary timber license it is stated:
The terms and conditions of this license are subject to change at the state what is the area covered of commmercial and operable forest
discretion of the Director of Forestry, and that this license may be made (Exh. Ravago Also Annex B of the petition, which was marked as
to expire at an earlier date, when public interests so require (Exh. D, p. Exhibit B, states:
22, CFI rec.).
Under Notice No. 2087, a tract of public forest
Considering the overriding public interest involved in the instant case, We therefore take containing 6,420 hectares located in Olongapo,
judicial notice of the fact that, on April 30, 1964, the area covered by petitioner-appellant's Zambales was declared available for timber
timber license has been established as the Olongapo Watershed Forest Reserve by virtue utilization and development. Pursuant to this Notice,
of Executive Proclamation No. 238 by then President Diosdado Macapagal which in parts there were received bid proposals from the following
read as follows: persons: ...

Pursuant to the provisions of Section 1824 of the Revised Wherefore, confirming the findings of said Committee, the area
Administrative Code, as amended, 1, Diosdado Macapagal, President described in Notice No. 2087 shall be awarded, as it is hereby awarded
of the Philippines do hereby withdraw from entry, sale, or settlement to Wenceslao Vinzons Tan, subject to the following conditions: ... ...
and establish as Olongapo Watershed Forest Reserve for watershed,
soil protection, and timber production purposes, subject to private In the second place, at the time it was released to the petitioner, the
rights, if any there be, under the administration and control of the Acting Director of Forestry had no more authority to grant any license.
Director of Forestry, xx the following parcels of land of the public The license was signed by the Acting Director of Forestry on December
domain situated in the municipality of Olongapo, province of Zambales, 19, 1963, and released to the petitioner on January 6, 1964 (Exh.
described in the Bureau of Forestry map No. FR-132, to wit: ... ... (60 RavaGo The authority delegated to the Director of Forestry to grant a
O.G. No. 23, 3198).
new ordinary timber license was contained in general memorandum
order No. 46 dated May 30, 1963. This was revoked by general
Petitioner-appellant relies on Ordinary Timber License No. 20-'64 (NEW) for his alleged memorandum order No. 60, which was promulgated on December 19,
right over the timber concession in question. He argues thus: "The facts alleged in the 1963. In view thereof, the Director of Forestry had no longer any
petition show: (1) the legal right of the petitioner to log in the area covered by his timber authority to release the license on January 6, 1964, and said license is
license; (2) the legal or corresponding obligation on the part of the respondents to give therefore void ab initio (pp. 479480, CFI rec.).
effect, recognize and respect the very timber license they issued to the petitioner; and (3)
the act of the respondents in arbitrarily revoking the timber license of the petitioner without The release of the license on January 6, 1964, gives rise to the impression that it was
giving him his day in court and in preventing him from using and enjoying the timber
ante-dated to December 19, 1963 on which date the authority of the Director of Forestry
license issued to him in the regular course of official business" (p. 32, rec.). was revoked. But, what is of greatest importance is the date of the release or issuance,
and not the date of the signing of the license. While petitioner-appellant's timber license
In the light of petitioner-appellant's arguments, it is readily seen that the whole controversy might have been signed on December 19, 1963 it was released only on January 6, 1964.
hinges on the validity or invalidity of his timber license. Before its release, no right is acquired by the licensee. As pointed out by the trial court, the
Director of Forestry had no longer any authority to release the license on January 6, 1964.
WE fully concur with the findings of the trial court that petitioner- appellant's timber license Therefore, petitioner-appellant had not acquired any legal right under such void license.
was signed and released without authority by then Acting Director Estanislao R. Bernal of This is evident on the face of his petition as supplemented by its annexes which includes
Forestry, and is therefore void ab initio. WE hereby quote such findings: Ordinary Timber License No. 20-'64 (NEW). Thus, in the case of World Wide Insurance &
Surety Co., Inc. vs. Macrohon, et al. (105 Phil. 250, Feb. 28, 1959), this Court held that if
from the face of the complaint, as supplemented by its annexes, plaintiff is not the owner,
In the first place, in general memorandum order No. 46 dated May 30, or entitled to the properties it claims to have been levied upon and sold at public auction by
1963, the Director of Forestry was authorized to grant a new ordinary the defendants and for which it now seeks indemnity, the said complaint does not give
timber license only where the area covered thereby was not more than plaintiff any right of action against the defendants. In the same case, this Court further held
3,000 hectares; the tract of public forest awarded to the petitioner that, in acting on a motion to dismiss, the court cannot separate the complaint from its
contained 6,420 hectares (Exhs. 2-A and 2-B Ravago, embodied in annexes where it clearly appears that the claim of the plaintiff to be the A owner of the
Annex B; Exh. B). The petitioner contends that only 1,756 hectares of properties in question is predicated on said annexes. Accordingly, petitioner-appellant's
the said area contain commercial and operable forest; the authority petition must be dismissed due to lack of cause of action.
given to the Director of Forestry to grant a new ordinary timber license
of not more than 3,000 hectares does not state that the whole area
II
should be commercial and operable forest. It should be taken into
consideration that the 1,756 hectares containing commercial and
operable forest must have been distributed in the whole area of 6,420 Petitioner-appellant, in his petition, alleged that he has exhausted all his administrative
hectares. Besides the license states, 'Please see attached sketch and remedies to no avail as respondents-appellees have failed, neglected, refused and
technical description,' gives an area of 6,420 hectares and does not continue to refuse to allow petitioner-appellant to continue operation in the area covered by
his timber license. He further alleged that he has neither recourse by way of appeal, nor judgment or decisions of the courts are subject to be reviewed and
any plain, speedy and adequate remedy in the ordinary course of law except thru this modified by them" (emphasis supplied).
special civil action, as the last official act of the respondent-appellee Secretary of
Agriculture and Natural Resources in declaring void the timber license referred to above
Moreover, this being a special civil action, petitioner-appellant must allege and prove that
after denying petitioner-appellant's motion for reconsideration, is the last administrative act. he has no other speedy and adequate remedy (Diego vs. The Court of Appeals, et al., 54
Petitioner-appellant relies on the case of Demaisip vs. The Court of Appeals, et al. (106 Off. Gaz., No. 4, 956). In the case at bar, petitioner- appellant's speedy and adequate
Phil. 237, Sept. 24, 1959), wherein it was held that the failure of the plaintiff to appeal from remedy is an appeal to the President of the Philippines.
the adverse decision of the Secretary to the President cannot preclude the plaintiff from
taking court action in view of the theory that the Secretary of a department is merely an
alter-ego of the President. The presumption is that the action of the Secretary bears the Accordingly, "it is settled to the point of being elementary that the only question involved n
implied sanction of the President unless the same is disapproved by the latter (Villena vs. certiorari is jurisdiction, either want of jurisdiction or excess thereof, and abuse of
the Secretary of Interior, 67 Phil. 451; p. 7, CFI rec.). discretion shall warrant the issuance of the extraordinary remedy of certiorari when the
same is so grave as when the power is exercised in an arbitrary or despotic manner by
reason of passion, prejudice or personal hostility, and it must be so patent and gross as to
To this We cannot agree. Petitioner-appellant did not appeal the order of the respondent amount to an evasion of positive duty, or to a virtual refusal to perform a duty enjoined, or
Secretary of Agriculture and Natural Resources to the President of the Philippines, who to act at all in contemplation of law" FS Divinagracia Agro-Commercial Inc. vs. Court of
issued Executive Proclamation No. 238 withdrawing the area from private exploitation, and Appeals, 104 SCRA 191 [April .1, 1981]). The foregoing is on the assumption that there is
establishing it as the Olongapo Watershed Forest Reserve. Considering that the President
any irregularity, albeit there is none in the acts or omissions of the respondents-appellees.
has the power to review on appeal the orders or acts of the respondents-appellees, the certiorari is not a substitute for appeal as held time and again by this Court (People vs.
failure of the petitioner-appellant to take that appeal is failure on his part to exhaust his
Villanueva, 110 SCRA 465), "it being a time honored and well known principle that before
administrative remedies. Thus, this Court, in the case of Calo vs. Fuertes (5 SCRA 399, seeking judicial redress, a party must first exhaust the administrative remedies available"
400, June 29, 1962), held that: (Garcia vs. Teehankee, 27 SCRA 944, April 18, 1969).

At any rate, the appellant's contention that, as the Secretary of


Moreover, from the decision of the Secretary of Agriculture and Natural Resources
Agriculture and Natural Resources is the alter ego of the President and complained of, petitioners had a plain, speedy and adequate remedy by appealing
his acts or decisions are also those of the latter, he need not appeal therefrom to the Chief Executive. In other words, before filing the present action for
from the decision or opinion of the former to the latter, and that, such certiorari in the court below, they should have availed of this administrative remedy and
being the case, after he had appealed to the Secretary of Agriculture their failure to do so must be deemed fatal to their case [Calo vs. Fuertes, et al., G.R. No.
and Natural Resources from the decision or opinion of the Director of L-16537, June 29,1962]. To place petitioners' case beyond the pale of this rule, they must
Lands he had exhausted the administrative remedies, is untenable. show that their case falls — which it does not — within the cases where, in accordance
with our decisions, the aggrieved party need not exhaust administrative remedies within
The withdrawal of the appeal taken to the President of the Philippines is his reach in the ordinary course of the law [Tapales vs. The President and the Board of
tantamount to not appealing all thereto. Such withdrawal is fatal, Regents of the U.P., G.R. No. L-17532, March 30, 1963; Mangubat vs. Osmena, G.R. No.
because the appeal to the President is the last step he should take in L- 12837, April 30, 1959; Baguio vs. Hon. Jose Rodriguez, G. R. No. L-11078, May 27,
an administrative case. 1959; Pascual vs. Provincial Board, G.R. No. L-11959, Oct. 31, 1959; Marinduque Iron
Mines, etc. vs. Secretary of Public Works, G.R. No. L-15982, May 31, 1963; Alzate vs.
Aldaba, G.R. No. L-14407, Feb. 29, 1960 and Demaisip vs. Court of Appeals, G.R. No. L-
In 1912, in the case of Lamb vs. Phipps (22 Phil. 491-92, July 22, 1912), this Court
stressed the doctrine of exhaustion of administrative remedies, thus: 13000, Sept. 25, 1959] (Ganob vs. Ramas, 27 SCRA 1178, April 28, 1969).

When a plain, adequate and speedy remedy is afforded by and within III
the executive department of the government the courts will not interfere
until at least that remedy has been exhausted. Jao Igco vs. Shuster, 10 Petitioner-appellant not only failed to exhaust his administrative remedies, but also failed to
Phil. Rep. 448; Ekiu vs. U.S., 142 U.S. 651; U.S. vs. Sing Tuck, 194 note that his action is a suit against the State which, under the doctrine of State immunity
U.S. 161; U.S. vs. Ju Toy 198 U.S. 253; Chill Yow vs. U.S., 28 Sup. Ct. from suit, cannot prosper unless the State gives its consent to be sued Kawananakoa vs.
Rep. 201). The administrative remedies afforded by law must first be Polybank, 205 U.S. 349; Siren vs. U.S., 7 Wall. 152; Sec. 16, Art. XV, 1973 Constitution).
exhausted before resort can be had to the courts, especially when the
administrative remedies are by law exclusive and final. Some matters
The respondents-appellees, in revoking the petitioner-appellant's timber license, were
and some questions are by law delegated entirely and absolutely to the acting within the scope of their authority. Petitioner-appellant contends that "this case is
discretion of particular branches of the executive department of the
not a suit against the State but an application of a sound principle of law whereby
government. When the law confers exclusive and final jurisdiction upon administrative decisions or actuations may be reviewed by the courts as a protection
the executive department of the government to dispose of particular afforded the citizens against oppression" (p. 122, CFI rec.). But, piercing the shard of his
questions, their judgments or the judgments of that particular contention, We find that petitioner-appellant's action is just an attempt to circumvent the
department are no more reviewable by the courts than the final rule establishing State exemption from suits. He cannot use that principle of law to profit at
the expense and prejudice of the State and its citizens. The promotion of public welfare V
and the protection of the inhabitants near the public forest are property, rights and interest
of the State. Accordingly, "the rule establishing State exeraiption from suits may not be As provided in the aforecited provision, timber licenses are subject to the authority of the
circumvented by directing the action against the officers of the State instead of against the
Director of Forestry. The utilization and disposition of forest resources is directly under the
State itself. In such cases the State's immunity may be validly invoked against the action control and supervision of the Director of Forestry. However, "while Section 1831 of the
as long as it can be shown that the suit really affects the property, rights, or interests of the Revised Administrative Code provides that forest products shall be cut, gathered and
State and not merely those of the officer nominally made party defendant" (SINCO, Phil. removed from any forest only upon license from the Director of Forestry, it is no less true
Political Law, 10th ed., p. 35; Salgado vs. Ramos, 64 Phil. 724; see also Angat River that as a subordinate officer, the Director of Forestry is subject to the control of the
Irrigation System vs. Angat River Workers' Union, G.R. No. L-10943-44, Dec. 28, 1957, Department Head or the Secretary of Agriculture and Natural Resources (See. 79[c], Rev.
102 Phil. 789, 800-802; Mobil PhiL vs. Customs Arrastre Service, 18 SCRA 1120, 1121- Adm. Code), who, therefore, may impose reasonable regulations in the exercise of the
1125; Bureau of Printing vs. Bureau of Printing Employees' Association, 1 SCRA 340, 341, powers of the subordinate officer" (Director of Forestry vs. Benedicto, 104 SCRA 309, May
343). 5, 1981). The power of control of the Department Head over bureaus and offices includes
the power to modify, reverse or set aside acts of subordinate officials (Province of
Both the Secretary of Agriculture and Natural Resources and the Director of Forestry acted Pangasinan vs. Secretary of Public Works and Communications, 30 SCRA 134, Oct. 31,
in their capacity as officers of the State, representatives of the sovereign authority 1969; Montano vs. Silvosa, 97 Phil. 143, 144, 147-148). Accordingly, respondent-appellee
discharging governmental powers. A private individual cannot issue a timber license. Secretary of Agriculture and Natural Resources has the authority to revoke, on valid
grounds, timber licenses issued by the Director of Forestry. There being supporting
Consequently, a favorable judgment for the petitioner-appellant would result in the evidence, the revocation of petitioner-appellant's timber license was a wise exercise of the
power of the respondent- appellee (Secretary of Agriculture and Natural Resources) and
government losing a substantial part of its timber resources. This being the case,
petitioner-appellant's action cannot prosper unless the State gives its consent to be sued. therefore, valid.

IV Thus, "this Court had rigorously adhered to the principle of conserving forest resources, as
corollary to which the alleged right to them of private individuals or entities was
meticulously inquired into and more often than not rejected. We do so again" (Director of
Granting arguendo, that petitioner-appellant's timber license is valid, still respondents- Forestry vs. Benedicto, supra). WE reiterate Our fidelity to the basic policy of conserving
appellees can validly revoke his timber license. As pointed out earlier, paragraph 27 of the the national patrimony as ordained by the Constitution.
rules and regulations included in the ordinary timber license states: "The terms and
conditions of this license are subject to change at the discretion of the Director of Forestry,
and that this license may be made to expire at an earlier date, when public interests so WHEREFORE, IN VIEW OF ALL THE FOREGOING, THE ORDER APPEALED FROM IS
HEREBY .AFFIRMED IN TOTO. COSTS AGAINST PETITIONER-APPELLANT.
require" (Exh. D, p. 22, CFI rec.). A timber license is an instrument by which the State
regulates the utilization and disposition of forest resources to the end that public welfare is
promoted. A timber license is not a contract within the purview of the due process clause; it SO ORDERED,
is only a license or privilege, which can be validly withdrawn whenever dictated by public
interest or public welfare as in this ceise

"A license is merely a permit or privilege to do what otherwise would be unlawful, and is
not a contract between the authority, federal, state, or municipal, granting it and the person
to whom it is granted; neither is it property or a property right, nor does it create a vested
right; nor is it taxation" (37 C.J. 168). Thus, this Court held that the granting of license does
not create irrevocable rights, neither is it property or property rights (People vs. Ong Tin 54
O.G. 7576). In the case of Pedro vs. Provincial Board of Rizal (56 Phil. 123), it was held
that:

A license authorizing the operation and exploitation of a cockpit is not


property of which the holder may not be deprived without due process
of law, but a mere privilege which may be revoked when public
interests so require.

The welfare of the people is the supreme law. Thus, no franchise or right can be availed of
to defeat the proper exercise of police power (Surigao Electric Co., Inc. vs. Municipality of
Surigao, 24 SCRA 898, Aug. 30, 1968). The State has inherent power enabling it to
prohibit all things hurtful to comfort, safety, and welfare of society (Edu vs. Ericta, 35
SCRA 481, Oct. 24,1970).
FIRST DIVISION DECISION

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


GRIÑO-AQUINO, J.:
VETERANS MANPOWER AND PROTECTIVE SERVICES, INC., Petitioner, v. THE
COURT OF APPEALS, THE CHIEF OF PHILIPPINE CONSTABULARY and PHILIPPINE
CONSTABULARY SUPERVISORY UNIT FOR SECURITY AND INVESTIGATION This is a petition for review on certiorari of the decision dated August 11, 1989, of the
AGENCIES (PC-SUSIA), Respondents. Court of Appeals in CA-G.R. SP No. 15990, entitled "The Chief of Philippine Constabulary
(PC) and Philippine Constabulary Supervisor Unit for Security and Investigation Agencies
Franciso A. Lava, Jr. and Andresito X. Fornier for Petitioner. (PC-SUSIA) v. Hon. Omar U. Amin and Veterans Manpower and Protective Services, Inc.
(VMPSI)," lifting the writ of preliminary injunction which the Regional Trial Court had issued
to the PC-SUSIA enjoining them from committing acts that would result in the cancellation
SYLLABUS or non-renewal of the license of VMPSI to operate as a security agency.chanrobles virtual
lawlibrary

1. POLITICAL LAW; IMMUNITY FROM SUIT; THE PHILIPPINE CONSTABULARY CHIEF On March 28, 1988, VMPSI filed a complaint in the Regional Trial Court at Makati, Metro
AND THE PC-SUSIA MAY NOT BE SUED WITHOUT THE CONSENT OF THE STATE. Manila, praying the court to:jgc:chanrobles.com.ph
— The State may not be sued without its consent (Article XVI, Section 3, of the 1987
Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being "A. Forthwith issue a temporary restraining order to preserve the status quo, enjoining the
instrumentalities of the national government exercising a primarily governmental function defendants, or any one acting in their place or stead, to refrain from committing acts that
of regulating the organization and operation of private detective, watchmen, or security would result in the cancellation or non-renewal of VMPSI’s license;
guard agencies, said official (the PC Chief) and agency (PC-SUSIA) may not be sued
without the Government’s consent, especially in this case because VMPSI’s complaint "B. In due time, issue a writ of preliminary injunction to the same effect;
seeks not only to compel the public respondents to act in a certain way, but worse,
because VMPSI seeks actual and compensatory damages in the sum of P1,000,000.00, "C. Render decision and judgment declaring null and void the amendment of Section 4 of
exemplary damages in the same amount, and P200,000.00 as attorney’s fees from said R.A. No. 5487, by PD No. 11 exempting organizations like PADPAO from the prohibition
public respondents. Even if its action prospers, the payment of its monetary claims may that no person shall organize or have an interest in more than one agency, declaring
not be enforced because the State did not consent to appropriate the necessary funds for PADPAO as an illegal organization existing in violation of said prohibition, without the
that purpose. illegal exemption provided in PD No. 11; declaring null and void Section 17 of R.A. No.
5487 which provides for the issuance of rules and regulations in consultation with
2. ID.; ID.; PUBLIC OFFICIAL MAY BE SUED IN HIS PERSONAL CAPACITY IF HE PADPAO, declaring null and void the February 1, 1982 directive of Col. Sabas V. Edadas,
ACTS, AMONG OTHERS BEYOND THE SCOPE OF HIS AUTHORITY; CASE AT BAR. in the name of the then PC Chief, requiring all private security agencies/security forces
— A public official may sometimes be held liable in his personal or private capacity if he such as VMPSI to join PADPAO as a prerequisite to secure/renew their licenses, declaring
acts in bad faith, or beyond the scope of his authority or jurisdiction (Shauf v. Court of that VMPSI did not engage in ‘cut-throat competition’ in its contract with MWSS, ordering
Appeals, supra), however, since the acts for which the PC Chief and PC-SUSIA are being defendants PC Chief and PC-SUSIA to renew the license of VMPSI; ordering the
called to account in this case, were performed by them as part of their official duties, defendants to refrain from further harassing VMPSI and from threatening VMPSI with
without malice, gross negligence, or bad faith, no recovery may be had against them in cancellations or non-renewal of license, without legal and justifiable cause; ordering the
their private capacities. defendants to pay to VMPSI the sum of P1,000,000.00 as actual and compensatory
damages, P1,000,000.00 as exemplary damages, and P200,000.00 as attorney’s fees and
3. ID.; ID.; CONSENT TO BE SUED MUST EMANATE FROM A LEGISLATIVE ACT. — expenses of litigation; and granting such further or other reliefs to VMPSI as may be
Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be deemed lawful, equitable and just." (pp. 55-56, Rollo.)
lightly inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority, hence, The constitutionality of the following provisions of R.A. 5487 (otherwise known as the
from a legislative act, not from a mere memorandum. Without such consent, the trial court "Private Security Agency Law"), as amended, is questioned by VMPSI in its
did not acquire jurisdiction over the public respondents. complaint:chanrobles.com.ph : virtual law library

4. ID.; ID.; REASONS BEHIND. — The state immunity doctrine rests upon reasons of "SECTION 4. Who may Organize a Security or Watchman Agency. — Any Filipino citizen
public policy and the inconvenience and danger which would flow from a different rule. "It or a corporation, partnership, or association, with a minimum capital of five thousand
is obvious that public service would be hindered, and public safety endangered, if the pesos, one hundred per cent of which is owned and controlled by Filipino citizens may
supreme authority could be subjected to suits at the instance of every citizen, and, organize a security or watchman agency: Provided, That no person shall organize or have
consequently, controlled in the use and disposition of the means required for the proper an interest in, more than one such agency except those which are already existing at the
administration of the government" (Siren v. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 promulgation of this Decree: . . ." (As amended by P.D. Nos. 11 and 100.)
SCRA 477).
"SECTION 17. Rules and Regulations by Chief, Philippine Constabulary. — The Chief of
the Philippine Constabulary, in consultation with the Philippine Association of Detective
and Protective Agency Operators, Inc. and subject to the provision of existing laws, is VMPSI’s license already expired on March 31, 1988, hence, the restraining order or
hereby authorized to issue the rules and regulations necessary to carry out the purpose of preliminary injunction would not serve any purpose because there was no more license to
this Act."cralaw virtua1aw library be cancelled (Annex H, Petition). Respondent VMPSI opposed the motion.

VMPSI alleges that the above provisions of R.A. No. 5487 violate the provisions of the On April 18, 1988, the lower court denied VMPSI’s application for a writ of preliminary
1987 Constitution against monopolies, unfair competition and combinations in restraint of injunction for being premature because it "has up to May 31, 1988 within which to file its
trade, and tend to favor and institutionalize the Philippine Association of Detective and application for renewal pursuant to Section 2 (e) of Presidential Decree No. 199, . . ." (p.
Protective Agency Operators, Inc. (PADPAO) which is monopolistic because it has an 140, Rollo.).chanrobles.com : virtual law library
interest in more than one security agency.
On May 23, 1988, VMPSI reiterated its application for the issuance of a writ of preliminary
Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph (g) of the injunction because PC-SUSIA had rejected payment of the penalty for its failure to submit
Modifying Regulations on the Issuance of License to Operate and Private Security its application for renewal of its license and the requirements therefor within the prescribed
Licenses and Specifying Regulations for the Operation of PADPAO issued by then PC period in Section 2(e) of the Revised Rules and Regulations Implementing R.A. 5487, as
Chief Lt. Gen. Fidel V. Ramos, through Col. Sabas V. Edades, requiring that "all private amended by P.D. 1919 (Annex M, Petition).
security agencies/company security forces must register as members of any PADPAO
Chapter organized within the Region where their main offices are located . . ." (pp. 5-6, On June 10, 1998, the RTC-Makati issued a writ of preliminary injunction upon a bond of
Complaint in Civil Case No. 88-471). As such membership requirement in PADPAO is P100,000.00, restraining the defendants, or any one acting in their behalf, from cancelling
compulsory in nature, it allegedly violates legal and constitutional provisions against or denying renewal of VMPSI’s license, until further orders from the court.
monopolies, unfair competition and combinations in restraint of trade.chanrobles.com :
virtual law library The PC Chief and PC-SUSIA filed a Motion for Reconsideration of the above order, but it
was denied by the court in its Order of August 10, 1988 (Annex R, Petition).
On May 12, 1986, a Memorandum of Agreement was executed by PADPAO and the PC
Chief, which fixed the minimum monthly contract rate per guard for eight (8) hours of On November 3, 1988, the PC Chief and PC-SUSIA sought relief by a petition
security service per day at P2,255.00 within Metro Manila and P2,215.00 outside of Metro for certiorari in the Court of Appeals.
Manila (Annex B, Petition).
On August 11, 1989, the Court of Appeals granted the petition. The dispositive portion of
On June 29, 1987, Odin Security Agency (Odin) filed a complaint with PADPAO accusing its decision reads:jgc:chanrobles.com.ph
VMPSI of cut-throat competition by undercutting its contract rate for security services
rendered to the Metropolitan Waterworks and Sewerage System (MWSS), charging said "WHEREFORE, the petition for certiorari filed by petitioners PC Chief and PC-SUSIA is
customer lower than the standard minimum rates provided in the Memorandum of hereby GRANTED, and the RTC-Makati, Branch 135, is ordered to dismiss the complaint
Agreement dated May 12, 1986. filed by respondent VMPSI in Civil Case No. 88-471, insofar as petitioners PC Chief and
PC-SUSIA are concerned, for lack of jurisdiction. The writ of preliminary injunction issued
PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO Committee on on June 10, 1988, is dissolved." (pp. 295-296, Rollo.)
Discipline recommended the expulsion of VMPSI from PADPAO and the cancellation of its
license to operate a security agency (Annex D, Petition). VMPSI came to us with this petition for review.

The PC-SUSIA made similar findings and likewise recommended the cancellation of The primary issue in this case is whether or not VMPSI’s complaint against the PC Chief
VMPSI’s license (Annex E, Petition). and PC-SUSIA is a suit against the State without its consent.

As a result, PADPAO refused to issue a clearance/certificate of membership to VMPSI The answer is yes.
when it requested one.
The State may not be sued without its consent (Article XVI, Section 3, of the 1987
VMPSI wrote the PC Chief on March 10, 1988, requesting him to set aside or disregard the Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being
findings of PADPAO and consider VMPSI’s application for renewal of its license, even instrumentalities of the national government exercising a primarily governmental function
without a certificate of membership from PADPAO (Annex F, Petition). of regulating the organization and operation of private detective, watchmen, or security
guard agencies, said official (the PC Chief) and agency (PC-SUSIA) may not be sued
As the PC Chief did not reply, and VMPSI’s license was expiring on March 31, 1988, without the Government’s consent, especially in this case because VMPSI’s complaint
VMPSI filed Civil Case No. 88-471 in the RTC-Makati, Branch 135, on March 28, 1988 seeks not only to compel the public respondents to act in a certain way, but worse,
against the PC Chief and PC-SUSIA. On the same date, the court issued a restraining because VMPSI seeks actual and compensatory damages in the sum of P1,000,000.00,
order enjoining the PC Chief and PC-SUSIA "from committing acts that would result in the exemplary damages in the same amount, and P200,000.00 as attorney’s fees from said
cancellation or non-renewal of VMPSI’s license" (Annex G, Petition). public respondents. Even if its action prospers, the payment of its monetary claims may
not be enforced because the State did not consent to appropriate the necessary funds for
The PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the Issuance of Writ that purpose.chanroblesvirtualawlibrary
of Preliminary Injunction, and Motion to Quash the Temporary Restraining Order," on the
grounds that the case is against the State which had not given consent thereto and that Thus did we hold in Shauf v. Court of Appeals, 191 SCRA 713:jgc:chanrobles.com.ph
for as against the inconvenience that may be cause [by] private parties, the loss of
"While the doctrine appears to prohibit only suits against the state without its consent, it is governmental efficiency and the obstacle to the performance of its multifarious functions
also applicable to complaints filed against officials of the state for acts allegedly performed are far greater if such a fundamental principle were abandoned and the availability of
by them in the discharge of their duties. The rule is that if the judgment against such judicial remedy were not thus restricted. With the well known propensity on the part of our
officials will require the state itself to perform an affirmative act to satisfy the same, such as people to go to court, at the least provocation, the loss of time and energy required to
the appropriation of the amount needed to pay the damages awarded against them, the defend against law suits, in the absence of such a basic principle that constitutes such an
suit must be regarded as against the state itself although it has not been formally effective obstacles, could very well be imagined." (citing Providence Washington Insurance
impleaded." (Emphasis supplied.) Co. v. Republic, 29 SCRA 598.)cralawnad

A public official may sometimes be held liable in his personal or private capacity if he acts WHEREFORE, the petition for review is DENIED and the judgment appealed from is
in bad faith, or beyond the scope of his authority or jurisdiction (Shauf v. Court of Appeals, AFFIRMED in toto. No costs.
supra), however, since the acts for which the PC Chief and PC-SUSIA are being called to
account in this case, were performed by them as part of their official duties, without malice, SO ORDERED.
gross negligence, or bad faith, no recovery may be had against them in their private
capacities.

We agree with the observation of the Court of Appeals that the Memorandum of
Agreement dated May 12, 1986 does not constitute an implied consent by the State to be
sued:jgc:chanrobles.com.ph

"The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief in
relation to the exercise of a function sovereign in nature. The correct test for the
application of state immunity is not the conclusion of a contract by the State but the legal
nature of the act. This was clearly enunciated in the case of United States of America v.
Ruiz where the Hon. Supreme Court held:jgc:chanrobles.com.ph

"‘The restrictive application of State immunity is proper only when the proceedings arise
out of commercial transactions of the foreign sovereign, its commercial activities or
economic affairs. Stated differently, a State may be said to have descended to the level of
an individual and can thus be deemed to have tacitly given its consent to be sued only
when it enters into a business contract. It does not apply where the contract relates to the
exercise of its functions.’ (136 SCRA 487, 492.)

"In the instant case, the Memorandum of Agreement entered into by the PC Chief and
PADPAO was intended to professionalize the industry and to standardize the salaries of
security guards as well as the current rates of security services, clearly, a governmental
function. The execution of the said agreement is incidental to the purpose of R.A. 5487, as
amended, which is to regulate the organization and operation of private detective,
watchmen or security guard agencies. (Emphasis ours.)" (pp. 258-259, Rollo.)

Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be
lightly inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority, hence,
from a legislative act, not from a mere memorandum. Without such consent, the trial court
did not acquire jurisdiction over the public respondents.

The state immunity doctrine rests upon reasons of public policy and the inconvenience and
danger which would flow from a different rule. "It is obvious that public service would be
hindered, and public safety endangered, if the supreme authority could be subjected to
suits at the instance of every citizen, and, consequently, controlled in the use and
disposition of the means required for the proper administration of the government" (Siren v.
U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA 477). In the same vein, this Court in
Republic v. Purisima (78 SCRA 470, 473) rationalized:jgc:chanrobles.com.ph

"Nonetheless, a continued adherence to the doctrine of nonsuability is not to be deplored


EN BANC
On July 2, 1993, at about 5:50 p.m., BIR Deputy
LIWAYWAY VINZONS-CHATO, G.R. No. 141309 Commissioner Victor A. Deoferio, Jr. sent via telefax a copy of RMC 37-
Petitioner, 93 to Fortune Tobacco but it was addressed to no one in
particular. On July 15, 1993, Fortune Tobacco received, by ordinary
Present: mail, a certified xerox copy of RMC 37-93. On July 20, 1993,
PUNO, C.J., respondent filed a motion for reconsideration requesting the recall of
QUISUMBING, RMC 37-93, but was denied in a letter dated July 30, 1993. The same
YNARES-SANTIAGO, letter assessed respondent for ad valorem tax deficiency amounting
CARPIO, to P9,598,334.00 (computed on the basis of RMC 37-93) and
AUSTRIA-MARTINEZ, demanded payment within 10 days from receipt thereof. On August 3,
CORONA,* 1993, respondent filed a petition for review with the Court of Tax
- versus - CARPIO MORALES, Appeals (CTA), which on September 30, 1993, issued an injunction
AZCUNA, enjoining the implementation of RMC 37-93. In its decision
TINGA, dated August 10, 1994, the CTA ruled that RMC 37-93 is defective,
CHICO-NAZARIO, invalid, and unenforceable and further enjoined petitioner from
VELASCO, JR., collecting the deficiency tax assessment issued pursuant to RMC No.
NACHURA, 37-93. This ruling was affirmed by the Court of Appeals, and finally by
REYES, this Court in Commissioner of Internal Revenue v. Court of Appeals. It
LEONARDO-DE CASTRO, and was held, among others, that RMC 37-93, has fallen short of the
BRION, JJ. requirements for a valid administrative issuance.

FORTUNE TOBACCO CORPORATION, Promulgated: On April 10, 1997, respondent filed before the RTC a
Respondent. complaint for damages against petitioner in her private
December 23, 2008 capacity. Respondent contended that the latter should be held liable for
x-----------------------------------------------------------------------------------------x damages under Article 32 of the Civil Code considering that the
RESOLUTION issuance of RMC 37-93 violated its constitutional right against
deprivation of property without due process of law and the right to equal
NACHURA, J.: protection of the laws.

Petitioner filed a motion to dismiss contending that: (1)


It is a fundamental principle in the law of public officers that a duty owing to the public in respondent has no cause of action against her because she issued
general cannot give rise to a liability in favor of particular individuals. [1] The failure to RMC 37-93 in the performance of her official function and within the
perform a public duty can constitute an individual wrong only when a person can show scope of her authority. She claimed that she acted merely as an agent
that, in the public duty, a duty to himself as an individual is also involved, and that he has of the Republic and therefore the latter is the one responsible for her
suffered a special and peculiar injury by reason of its improper performance or non- acts; (2) the complaint states no cause of action for lack of allegation of
performance.[2] malice or bad faith; and (3) the certification against forum shopping was
signed by respondents counsel in violation of the rule that it is the
By this token, the Court reconsiders its June 19, 2007 Decision[3] in this case. plaintiff or the principal party who should sign the same.

As culled from the said decision, the facts, in brief, are as follows: On September 29, 1997, the RTC denied petitioners motion to
dismiss holding that to rule on the allegations of petitioner would be to
On June 10, 1993, the legislature enacted Republic Act No. prematurely decide the merits of the case without allowing the parties to
7654 (RA 7654), which took effect on July 3, 1993. Prior to its present evidence. It further held that the defect in the certification
effectivity, cigarette brands Champion, Hope, and More were against forum shopping was cured by respondents submission of the
considered local brands subjected to an ad valorem tax at the rate of corporate secretarys certificate authorizing its counsel to execute the
20-45%. However, on July 1, 1993, or two days before RA 7654 took certification against forum shopping. x x x x
effect, petitioner issued RMC 37-93 reclassifying Champion, Hope, and
More as locally manufactured cigarettes bearing a foreign xxxx
brand subject to the 55% ad valorem tax. RMC 37-93 in effect
subjected Hope, More, and Champion cigarettes to the provisions of The case was elevated to the Court of Appeals via a petition
RA 7654, specifically, to Sec. 142, (c)(1) on locally manufactured for certiorari under Rule 65. However, same was dismissed on the
cigarettes which are currently classified and taxed at 55%, and which ground that under Article 32 of the Civil Code, liability may arise even if
imposes an ad valorem tax of 55% provided that the minimum tax shall the defendant did not act with malice or bad faith. The appellate court
not be less than Five Pesos (P5.00) per pack. ratiocinated that Section 38, Book I of the Administrative Code is the
general law on the civil liability of public officers while Article 32 of the deciding upon the opening or closing of highways, but it is not a duty to
Civil Code is the special law that governs the instant any particular individual of the community.
case. Consequently, malice or bad faith need not be alleged in the
complaint for damages. It also sustained the ruling of the RTC that the These illustrations might be greatly extended, but it is
defect of the certification against forum shopping was cured by the believed that they are sufficient to define the general doctrine.
submission of the corporate secretarys certificate giving authority to its
counsel to execute the same.[4] [Citations and underscoring omitted.] 2. Of Duties to Individuals. The second class above referred
to includes those who, while they owe to the public the general duty of
a proper administration of their respective offices, yet become, by
In the aforesaid June 19, 2007 Decision, we affirmed the disposition of the Court of reason of their employment by a particular individual to do some act for
Appeals (CA) and directed the trial court to continue with the proceedings in Civil Case No. him in an official capacity, under a special and particular obligation to
97-341-MK.[5] him as an individual. They serve individuals chiefly and usually receive
their compensation from fees paid by each individual who employs
them.
Petitioner, on July 20, 2007, subsequently moved for the reconsideration of the said
decision.[6] After respondent filed its comment, the Court, in its April 14, A sheriff or constable in serving civil process for a private
2008 Resolution,[7] denied with finality petitioners motion for reconsideration. suitor, a recorder of deeds in recording the deed or mortgage of an
individual, a clerk of court in entering up a private judgment, a notary
Undaunted, petitioner filed, on April 29, 2008 her Motion to Refer [the case] to the public in protesting negotiable paper, an inspector of elections in
Honorable Court En Banc.[8] She contends that the petition raises a legal question that is passing upon the qualifications of an elector, each owes a general duty
novel and is of paramount importance. The earlier decision rendered by the Court will send of official good conduct to the public, but he is also under a special duty
a chilling effect to public officers, and will adversely affect the performance of duties of to the particular individual concerned which gives the latter a peculiar
superior public officers in departments or agencies with rule-making and quasi-judicial interest in his due performance.[12]
powers. With the said decision, the Commissioner of Internal Revenue will have reason to
hesitate or refrain from performing his/her official duties despite the due process
safeguards in Section 228 of the National Internal Revenue Code. [9] Petitioner hence In determining whether a public officer is liable for an improper performance or non-
moves for the reconsideration of the June 19, 2007 Decision.[10] performance of a duty, it must first be determined which of the two classes of duties is
involved. For, indeed, as the eminent Floyd R. Mechem instructs, [t]he liability of a public
In its June 25, 2008 Resolution,[11] the Court referred the case to the En Banc. Respondent officer to an individual or the public is based upon and is co-extensive with his duty to the
consequently moved for the reconsideration of this resolution. individual or the public. If to the one or the other he owes no duty, to that one he can incur
no liability.[13]
We now resolve both motions.
Stated differently, when what is involved is a duty owing to the public in general, an
There are two kinds of duties exercised by public officers: the duty owing to the public individual cannot have a cause of action for damages against the public officer, even
collectively (the body politic), and the duty owing to particular individuals, thus: though he may have been injured by the action or inaction of the officer. In such a case,
there is damage to the individual but no wrong to him. In performing or failing to perform a
1. Of Duties to the Public. The first of these classes public duty, the officer has touched his interest to his prejudice; but the officer owes no
embraces those officers whose duty is owing primarily to the public duty to him as an individual.[14] The remedy in this case is not judicial but political.[15]
collectively --- to the body politic --- and not to any particular individual;
who act for the public at large, and who are ordinarily paid out of the The exception to this rule occurs when the complaining individual suffers
public treasury. a particular or special injury on account of the public officers improper performance or non-
performance of his public duty. An individual can never be suffered to sue for an injury
The officers whose duties fall wholly or partially within this which, technically, is one to the public only; he must show a wrong which he specially
class are numerous and the distinction will be readily recognized. Thus, suffers, and damage alone does not constitute a wrong.[16] A contrary precept (that an
the governor owes a duty to the public to see that the laws are properly individual, in the absence of a special and peculiar injury, can still institute an action
executed, that fit and competent officials are appointed by him, that against a public officer on account of an improper performance or non-performance of a
unworthy and ill-considered acts of the legislature do not receive his duty owing to the public generally) will lead to a deluge of suits, for if one man might have
approval, but these, and many others of a like nature, are duties which an action, all men might have the likethe complaining individual has no better right than
he owes to the public at large and no one individual could single himself anybody else.[17] If such were the case, no one will serve a public office. Thus, the rule
out and assert that they were duties owing to him alone. So, members restated is that an individual cannot have a particular action against a public officer without
of the legislature owe a duty to the public to pass only wise and proper a particular injury, or a particular right, which are the grounds upon which all actions are
laws, but no one person could pretend that the duty was owing to founded.[18]
himself rather than to another. Highway commissioners owe a duty that Juxtaposed with Article 32[19] of the Civil Code, the principle may now translate into the rule
they will be governed only by considerations of the public good in that an individual can hold a public officer personally liable for damages on account of an
act or omission that violates a constitutional right only if it results in a particular wrong or
injury to the former. This is consistent with this Courts pronouncement in its June 19, alleged therein. However, the hypothetical admission is limited to the relevant and material
2007 Decision (subject of petitioners motion for reconsideration) that Article 32, in fact, facts well-pleaded in the complaint and inferences deducible therefrom. The admission
allows a damage suit for tort for impairment of rights and liberties. [20] does not extend to conclusions or interpretations of law; nor does it cover allegations of
fact the falsity of which is subject to judicial notice. [29]

It may be recalled that in tort law, for a plaintiff to maintain an action for damages for the The complaint may also be dismissed for lack of cause of action if it is obvious
injuries of which he complains, he must establish that such injuries resulted from a breach from the complaint and its annexes that the plaintiff is not entitled to any relief. [30]
of duty which the defendant owed the plaintiff, meaning a concurrence of injury to the
plaintiff and legal responsibility by the person causing it. Indeed, central to an award of tort The June 19, 2007 Decision and the dissent herein reiterates that under Article 32 of the
damages is the premise that an individual was injured in contemplation of law. [21] Thus, Civil Code, the liability of the public officer may accrue even if he/she acted in good faith,
in Lim v. Ponce de Leon,[22] we granted the petitioners claim for damages because he, in as long as there is a violation of constitutional rights, citing Cojuangco, Jr. v. Court of
fact, suffered the loss of his motor launch due to the illegal seizure thereof. In Cojuangco, Appeals,[31] where we said:
Jr. v. Court of Appeals,[23] we upheld the right of petitioner to the recovery of damages as
there was an injury sustained by him on account of the illegal withholding of his horserace Under the aforecited article, it is not necessary that the public
prize winnings. officer acted with malice or bad faith. To be liable, it is enough that
there was a violation of the constitutional rights of petitioners, even on
In the instant case, what is involved is a public officers duty owing to the public in general. the pretext of justifiable motives or good faith in the performance of
The petitioner, as the then Commissioner of the Bureau of Internal Revenue, is being duties.[32]
taken to task for Revenue Memorandum Circular (RMC) No. 37-93 which she issued
without the requisite notice, hearing and publication, and which, in Commissioner of
Internal Revenue v. Court of Appeals,[24] we declared as having fallen short of a valid and
effective administrative issuance.[25] A public officer, such as the petitioner, vested with The complaint in this case does not impute bad faith on the petitioner. Without
quasi-legislative or rule-making power, owes a duty to the public to promulgate rules which any allegation of bad faith, the cause of action in the respondents complaint (specifically,
are compliant with the requirements of valid administrative regulations. But it is a duty paragraph 2.02 thereof) for damages under Article 32 of the Civil Code would be premised
owed not to the respondent alone, but to the entire body politic who would be affected, on the findings of this Court in Commissioner of Internal Revenue v. Court of Appeals (CIR
directly or indirectly, by the administrative rule. v. CA),[33] where we ruled that RMC No. 37-93, issued by petitioner in her capacity as
Commissioner of Internal Revenue, had fallen short of a valid and effective administrative
issuance. This is a logical inference. Without the decision in CIR v. CA, the bare
Furthermore, as discussed above, to have a cause of action for damages against the allegations in the complaint that respondents rights to due process of law and to equal
petitioner, respondent must allege that it suffered a particular or special injury on account protection of the laws were violated by the petitioners administrative issuance would be
of the non-performance by petitioner of the public duty. A careful reading of the complaint conclusions of law, hence not hypothetically admitted by petitioner in her motion to
filed with the trial court reveals that no particular injury is alleged to have been sustained dismiss.
by the respondent. The phrase financial and business difficulties [26] mentioned in the
complaint is a vague notion, ambiguous in concept, and cannot translate into a particular But in CIR v. CA, this Court did not declare RMC 37-93 unconstitutional; certainly
injury. In contrast, the facts of the case eloquently demonstrate that the petitioner took not from either the due process of law or equal protection of the laws perspective. On due
nothing from the respondent, as the latter did not pay a single centavo on the tax process, the majority, after determining that RMC 37-93 was a legislative rule, cited an
assessment levied by the former by virtue of RMC 37-93. earlier Revenue Memorandum Circular (RMC No. 10-86) requiring prior notice before
RMCs could become operative. However, this Court did not make an express finding of
With no particular injury alleged in the complaint, there is, therefore, no delict or wrongful violation of the right to due process of law. On the aspect of equal protection, CIR v.
act or omission attributable to the petitioner that would violate the primary rights of the CA said: Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of
respondent. Without such delict or tortious act or omission, the complaint then fails to state taxation; a statement that does not amount to a positive indictment of petitioner for
a cause of action, because a cause of action is the act or omission by which a party violation of respondents constitutional right. Even if one were to ascribe a constitutional
violates a right of another.[27] infringement by RMC 37-93 on the non-uniformity of tax provisions, the nature of the
constitutional transgression falls under Section 28, Article VInot Section 1, Article IIIof the
A cause of action exists if the following elements are present: (1) a right in favor of the Constitution.
plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such right; and This Courts own summation in CIR v. CA: All taken, the Court is convinced that
(3) an act or omission on the part of such defendant violative of the right of the plaintiff or the hastily promulgated RMC 37-93 has fallen short of a valid and effective administrative
constituting a breach of the obligation of defendant to plaintiff for which the latter may issuance, does not lend itself to an interpretation that the RMC is unconstitutional. Thus,
maintain an action for recovery of damages.[28] the complaints reliance on CIR v. CAwhich is cited in, and a copy of which is annexed to,
the complaintas suggestive of a violation of due process and equal protection, must fail.

The remedy of a party whenever the complaint does not allege a cause of action is to set Accordingly, from the foregoing discussion, it is obvious that paragraph 2.02 of
up this defense in a motion to dismiss, or in the answer. A motion to dismiss based on the respondents complaint loses the needed crutch to sustain a valid cause of action against
failure to state a cause of action in the complaint hypothetically admits the truth of the facts
the petitioner, for what is left of the paragraph is merely the allegation that only At this point, a brief examination of relevant American jurisprudence may be instructive.
respondents Champion, Hope and More cigarettes were reclassified.
42 U.S. Code 1983, a provision incorporated into the Civil Rights Act of 1871, presents a
If we divest the complaint of its reliance on CIR v. CA, what remains of parallel to our own Article 32 of the Civil Code, as it states:
respondents cause of action for violation of constitutional rights would be paragraph 2.01,
which reads: Every person who, under color of any statute, ordinance,
regulation, custom, usage, or any State or Territory, subjects, or causes
2.01. On or about July 1, 1993, defendant issued Revenue to be subjected, any citizen of the United States or other person within
Memorandum Circular No. 37-93 (hereinafter referred to as RMC No. the jurisdiction thereof to the deprivation of any rights, privileges or
37-93) reclassifying specifically Champion, Hope and More as locally immunities secured by the Constitution and laws, shall be liable to the
manufactured cigarettes bearing a foreign brand. A copy of the party injured in an action at law, suit in equity or other proper
aforesaid circular is attached hereto and made an integral part hereof proceeding for redress.
as ANNEX A. The issuance of a circular and its implementation
resulted in the deprivation of property of plaintiff. They were done
without due process of law and in violation of the right of plaintiff to the This provision has been employed as the basis of tort suits by many petitioners intending
equal protection of the laws. (Italics supplied.) to win liability cases against government officials when they violate the constitutional rights
of citizens.

But, as intimated above, the bare allegations, done without due process of law and in Webster Bivens v. Six Unknown Named Agents of Federal Bureau of Investigation, [36] has
violation of the right of plaintiff to the equal protection of the laws are conclusions of emerged as the leading case on the victims entitlement to recover money damages for any
law.They are not hypothetically admitted in petitioners motion to dismiss and, for purposes injuries suffered as a result of flagrant and unconstitutional abuses of administrative
of the motion to dismiss, are not deemed as facts. power. In this case, federal narcotics officers broke into Bivens home at 6:30 a.m.without a
search warrant and in the absence of probable cause. The agents handcuffed Bivens,
In Fluor Daniel, Inc. Philippines v. EB. Villarosa & Partners Co., Ltd.,[34] this Court declared searched his premises, employed excessive force, threatened to arrest his family,
that the test of sufficiency of facts alleged in the complaint as constituting a cause of action subjected him to a visual strip search in the federal court house, fingerprinted,
is whether or not, admitting the facts alleged, the court could render a valid verdict in photographed, interrogated and booked him. When Bivens was brought before a United
accordance with the prayer of the complaint. In the instant case, since what remains of the States Commissioner, however, charges against him were dismissed. On the issue of
complaint which is hypothetically admitted, is only the allegation on the reclassification of whether violation of the Fourth Amendment by a federal agent acting under color of
respondents cigarettes, there will not be enough facts for the court to render a valid authority gives rise to a cause of action for damages consequent upon his constitutional
judgment according to the prayer in the complaint. conduct, the U.S. Supreme Court held that Bivens is entitled to recover damages for
injuries he suffered as a result of the agents violation of the Fourth Amendment.
Furthermore, in an action for damages under Article 32 of the Civil Code premised on
violation of due process, it may be necessary to harmonize the Civil Code provision with A number of subsequent decisions have upheld Bivens. For instance, in Scheuer v.
subsequent legislative enactments, particularly those related to taxation and tax Rhodes,[37] a liability suit for money damages was allowed against Ohio Governor James
collection. Judicial notice may be taken of the provisions of the National Internal Revenue Rhodes by petitioners who represented three students who had been killed by Ohio
Code, as amended, and of the law creating the Court of Tax Appeals. Both statutes National Guard troops at Kent State University as they protested against U.S. involvement
provide ample remedies to aggrieved taxpayers; remedies which, in fact, were availed of in Vietnam. In Wood v. Strickland,[38] local school board members were sued by high
by the respondentwithout even having to pay the assessment under protestas recounted school students who argued that they had been deprived of constitutional due process
by this Court in CIR v. CA, viz.: rights when they were expelled from school for having spiked a punch bowl at a school
function without the benefit of a full hearing. In Butz v. Economou,[39] Economou, whose
In a letter, dated 19 July 1993, addressed to the appellate registration privilege as a commodities futures trader was suspended, without prior
division of the BIR, Fortune Tobacco requested for a review, warning, by Secretary of Agriculture Earl Butz, sued on a Bivens action, alleging that the
reconsideration and recall of RMC 37-93. The request was denied suspension was aimed at chilling his freedom of expression right under the First
on 29 July 1993. The following day, or on 30 July 1993, the CIR Amendment. A number of other cases[40] with virtually the same conclusion followed.
assessed Fortune Tobacco for ad valorem tax deficiency amounting
to P9,598,334.00. However, it is extremely dubious whether a Bivens action against government tax officials
and employees may prosper, if we consider the pronouncement of the U.S. Supreme
On 03 August 1993, Fortune Tobacco filed a petition for Court in Schweiker v. Chilicky,[41] that a Bivens remedy will not be allowed when other
review with the CTA.[35] meaningful safeguards or remedies for the rights of persons situated as (is the plaintiff) are
available. It has also been held that a Bivens action is not appropriate in the civil service
system[42] or in the military justice system.[43]
The availability of the remedies against the assailed administrative action, the opportunity
to avail of the same, and actual recourse to these remedies, contradict the respondents In Frank Vennes v. An Unknown Number of Unidentified Agents of the United
claim of due process infringement. States of America,[44] petitioner Vennes instituted a Bivens action against agents of the
Internal Revenue Service (IRS) who alleged that he (Vennes) owed $250,000 in tax
liability, instituted a jeopardy assessment, confiscated Vennes business, forced a total
asset sale, and put Vennes out of business, when in fact he owed not a Section 227. Satisfaction of Judgment Recovered Against
dime. The U.S. Court of Appeals, Eighth Circuit, ruled: any Internal Revenue Officer. When an action is brought against any
Internal Revenue officer to recover damages by reason of any act done
The district court dismissed these claims on the ground that a in the performance of official duty, and the Commissioner is notified of
taxpayers remedies under the Internal Revenue Code preclude such such action in time to make defense against the same, through the
a Bivens action. Vennes cites to us no contrary authority, and we have Solicitor General, any judgment, damages or costs recovered in such
found none. Though the Supreme Court has not addressed this precise action shall be satisfied by the Commissioner, upon approval of the
question, it has strongly suggested that the district court correctly Secretary of Finance, or if the same be paid by the person sued shall
applied Bivens: be repaid or reimbursed to him.

When the design of a Government program No such judgment, damages or costs shall be paid or reimbursed in
suggests that Congress has provided what it behalf of a person who has acted negligently or in bad faith, or with
considers adequate remedial mechanisms for willful oppression.
constitutional violations that may occur in the course
of its administration, we have not created
additional Bivens remedies. Because the respondents complaint does not impute negligence or bad faith to the
petitioner, any money judgment by the trial court against her will have to be assumed by
xxxx the Republic of the Philippines. As such, the complaint is in the nature of a suit against the
State.[46]
Congress has provided specific and meaningful remedies for
taxpayers who challenge overzealous tax assessment and collection WHEREFORE, premises considered, we GRANT petitioners motion for reconsideration of
activities. A taxpayer may challenge a jeopardy assessment both the June 19, 2007 Decision and DENY respondents motion for reconsideration of the June
administratively and judicially, and may sue the government for a tax 25, 2008 Resolution. Civil Case No. CV-97-341-MK, pending with
refund, and have authorized taxpayer actions against the United the Regional Trial Court of Marikina City, is DISMISSED.
States to recover limited damages resulting from specific types of
misconduct by IRS employees. These carefully crafted legislative
remedies confirm that, in the politically sensitive realm of taxation,
Congresss refusal to permit unrestricted damage action by taxpayers SO ORDERED.
has not been inadvertent. Thus, the district court correctly dismissed
Venness Bivens claims against IRS agents for their tax assessment
and collection activities.

In still another Bivens action, instituted by a taxpayer against IRS employees for alleged
violation of due process rights concerning a tax dispute, the U.S. District Court of
Minnesota said:

In addition, the (Tax) Code provides taxpayers with remedies, judicial


and otherwise, for correcting and redressing wrongful acts taken by IRS
employees in connection with any collection activities. Although these
provisions do not provide taxpayers with an all-encompassing remedy
for wrongful acts of IRS personnel, the rights established under the
Code illustrate that it provides all sorts of rights against the overzealous
officialdom, including, most fundamentally, the right to sue the
government for a refund if forced to overpay taxes, and it would make
the collection of taxes chaotic if a taxpayer could bypass the remedies
provided by Congress simply by bringing a damage suit against IRS
employees.[45]

American jurisprudence obviously validates the contention of the petitioner.

Finally, we invite attention to Section 227, Republic Act No. 8424 (Tax Reform Act of
1997), which provides:
Republic of the Philippines 983. These complaints though separately filed have a common/similar
SUPREME COURT cause of action. ...
Manila
5. Respondent corporation filed separate answers to each of these
SECOND DIVISION eleven complaints. Apart from traversing the material averments in the
complaints and setting forth counterclaims for damages respondent
G.R. No. L-55273-83 December 19, 1981 corporation invoked in each answer a special and affirmative defense
that "in the operation of the Angat Dam," it is "performing a purely
governmental function", hence it "can not be sued without the express
GAUDENCIO RAYO, BIENVINIDO PASCUAL, TOMAS MANUEL, MARIANO CRUZ, consent of the State." ...
PEDRO BARTOLOME, BERNARDINO CRUZ JOSE PALAD , LUCIO FAJARDO,
FRANCISCO RAYOS, ANGEL TORRES, NORBERTO TORRES, RODELIO JOAQUIN,
6. On motion of the respondent corporation a preliminary hearing was
PEDRO AQUINO, APOLINARIO BARTOLOME, MAMERTO BERNARDO, CIRIACO
CASTILLO, GREGORIO CRUZ, SIMEON ESTRELLA, EPIFANIO MARCELO, held on its affirmative defense as though a motion to dismiss were filed.
Petitioners opposed the prayer for dismissal and contended that
HERMOGENES SAN PEDRO, JUAN SANTOS, ELIZABETH ABAN, MARCELINA
BERNABE, BUENAVENTURA CRUZ, ANTONIO MENESES, ROMAN SAN PEDRO, respondent corporation is performing not governmental but
LOPEZ ESPINOSA, GODOFREDO PUNZAL, JULIANA GARCIA, LEBERATO merely proprietary functions and that under its own organic act, Section
SARMIENTO, INOCENCIO DE LEON, CARLOS CORREA, REYNALDO CASIMIRO, 3 (d) of Republic Act No. 6395, it can sue and be sued in any court. ...
ANTONIO GENER, GAUDENCIO CASTILLO, MATIAS PEREZ, CRISPINIANO TORRES,
CRESENCIO CRUZ, PROTACIO BERNABE, MARIANO ANDRES, CRISOSTOMO 7. On July 29, 1980 petitioners received a copy of the questioned order
CRUZ, MARCOS EUSTAQUIO, PABLO LEGASPI, VICENTE PASCUAL, ALEJANDRA of the respondent Court dated December 21, 1979 dismissing all their
SISON, EUFRACIO TORRES, ROGELIO BARTOLOME, RODOLFO BERNARDO, complaints as against the respondent corporation thereby leaving the
APOLONIO CASTILLO, MARCELINO DALMACIO, EUTIQUIO LEGASPI, LORENZO superintendent of the Angat Dam, Benjamin Chavez, as the sole party-
LUCIANO and GREGORIO PALAD, petitioners, defendant. ...
vs.
COURT OF FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA, and
8. On August 7, 1980 petitioners filed with the respondent Court a
NATIONAL POWER CORPORATION, respondents. motion for reconsideration of the questioned order of dismissal. ...

9. The respondent Court denied petitioners' motion for reconsideration


in its order dated October 3, 1980. ... Hence, the present petition for
ABAD SANTOS, J.: review on certiorari under Republic Act No. 5440. (Rollo, pp. 3-6.)

The relevant antecedents of this case are narrated in the petition and have not been The Order of dismissal dated December 12, 1979, reads as follows:
controverted, namely:
Under consideration is a motion to dismiss embodied as a special
3. At about midnight on October 26, 1978, during the height of that affirmative defense in the answer filed by defendant NPC on the
infamous typhoon "KADING" the respondent corporation, acting grounds that said defendant performs a purely governmental function in
through its plant superintendent, Benjamin Chavez, opened or caused the operation of the Angat Dam and cannot therefore be sued for
to be opened simultaneously all the three floodgates of the Angat Dam. damages in the instant cases in connection therewith.
And as a direct and immediate result of the sudden, precipitate and
simultaneous opening of said floodgates several towns in Bulacan were Plaintiffs' opposition to said motion to discuss, relying on Sec. 3 (d) of
inundated. Hardest-hit was Norzagaray. About a hundred of its Republic Act 6396 which imposes on the NPC the power and liability to
residents died or were reported to have died and properties worth sue and be sued in any court, is not tenable since the same refer to
million of pesos destroyed or washed away. This flood was
such matters only as are within the scope of the other corporate powers
unprecedented in Norzagaray. of said defendant and not matters of tort as in the instant cases. It being
an agency performing a purely governmental function in the operation
4. Petitioners, who were among the many unfortunate victims of that of the Angat Dam, said defendant was not given any right to commit
man-caused flood, filed with the respondent Court eleven complaints wrongs upon individuals. To sue said defendant for tort may require the
for damages against the respondent corporation and the plant express consent of the State.
superintendent of Angat Dam, Benjamin Chavez, docketed as Civil
Cases Nos. SM-950 951, 953, 958, 959, 964, 965, 966, 981, 982 and WHEREFORE, the cases against defendant NPC are hereby
dismissed. (Rollo, p. 60.)
The Order dated October 3, 1980, denying the motion for reconsideration filed by the
plaintiffs is pro forma; the motion was simply denied for lack of merit. (Rollo, p. 74.)

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

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

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

1. Whether respondent National Power Corporation performs a governmental function with


respect to the management and operation of the Angat Dam; and

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

The petition is highly impressed with merit.

It is not necessary to write an extended dissertation on whether or not the NPC performs a
governmental function with respect to the management and operation of the Angat Dam. It
is sufficient to say that the government has organized a private corporation, put money in it
and has allowed it to sue and be sued in any court under its charter. (R.A. No. 6395, Sec.
3 (d).) As a government owned and controlled corporation, it has a personality of its own,
distinct and separate from that of the Government. (See National Shipyards and Steel
Corp. vs. CIR, et al., L-17874, August 31, 1963, 8 SCRA 781.) Moreover, the charter
provision that the NPC can "sue and be sued in any court" is without qualification on the
cause of action and accordingly it can include a tort claim such as the one instituted by the
petitioners.

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

SO ORDERED.
Republic of the Philippines Baniña Sr. died as a result of the injuries they sustained and four (4) others suffered
SUPREME COURT varying degrees of physical injuries.
Manila
On December 11, 1966, the private respondents instituted a compliant for damages
FIRST DIVISION against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver,
respectively, of the passenger jeepney, which was docketed Civil Case No. 2183 in the
G.R. No. L-52179 April 8, 1991 Court of First Instance of La Union, Branch I, San Fernando, La Union. However, the
aforesaid defendants filed a Third Party Complaint against the petitioner and the driver of a
dump truck of petitioner.
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner
vs.
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIÑA, IAUREANO BANIÑA, Thereafter, the case was subsequently transferred to Branch IV, presided over by
respondent judge and was subsequently docketed as Civil Case No. 107-Bg. By virtue of a
JR., SOR MARIETA BANIÑA, MONTANO BANIÑA, ORJA BANIÑA, AND LYDIA R.
BANIÑA, respondents. court order dated May 7, 1975, the private respondents amended the complaint wherein
the petitioner and its regular employee, Alfredo Bislig were impleaded for the first time as
defendants. Petitioner filed its answer and raised affirmative defenses such as lack of
Mauro C. Cabading, Jr. for petitioner. cause of action, non-suability of the State, prescription of cause of action and the
Simeon G. Hipol for private respondent. negligence of the owner and driver of the passenger jeepney as the proximate cause of
the collision.

In the course of the proceedings, the respondent judge issued the following questioned
orders, to wit:
MEDIALDEA, J.:
(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo Balagot;
This is a petition for certiorari with prayer for the issuance of a writ of preliminary
mandatory injunction seeking the nullification or modification of the proceedings and the (2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of San
orders issued by the respondent Judge Romeo N. Firme, in his capacity as the presiding Fernando, La Union and Bislig and setting the hearing on the affirmative defenses only
judge of the Court of First Instance of La Union, Second Judicial District, Branch IV, with respect to the supposed lack of jurisdiction;
Bauang, La Union in Civil Case No. 107-BG, entitled "Juana Rimando Baniña, et al. vs.
Macario Nieveras, et al." dated November 4, 1975; July 13, 1976; August 23,1976;
February 23, 1977; March 16, 1977; July 26, 1979; September 7, 1979; November 7, 1979 (3) Order dated August 23, 1976 deferring there resolution of the grounds for the Motion to
Dismiss until the trial;
and December 3, 1979 and the decision dated October 10, 1979 ordering defendants
Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and severally, the
plaintiffs for funeral expenses, actual damages consisting of the loss of earning capacity of (4) Order dated February 23, 1977 denying the motion for reconsideration of the order of
the deceased, attorney's fees and costs of suit and dismissing the complaint against the July 13, 1976 filed by the Municipality and Bislig for having been filed out of time;
Estate of Macario Nieveras and Bernardo Balagot.
(5) Order dated March 16, 1977 reiterating the denial of the motion for reconsideration of
The antecedent facts are as follows: the order of July 13, 1976;

Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under (6) Order dated July 26, 1979 declaring the case deemed submitted for decision it
and in accordance with the laws of the Republic of the Philippines. Respondent Honorable appearing that parties have not yet submitted their respective memoranda despite the
Judge Romeo N. Firme is impleaded in his official capacity as the presiding judge of the court's direction; and
Court of First Instance of La Union, Branch IV, Bauang, La Union. While private
respondents Juana Rimando-Baniña, Laureano Baniña, Jr., Sor Marietta Baniña, Montano
(7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration
Baniña, Orja Baniña and Lydia R. Baniña are heirs of the deceased Laureano Baniña Sr. and/or order to recall prosecution witnesses for cross examination.
and plaintiffs in Civil Case No. 107-Bg before the aforesaid court.

On October 10, 1979 the trial court rendered a decision, the dispositive portion is
At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a
hereunder quoted as follows:
passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario
Nieveras, a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino
Velasquez and a dump truck of the Municipality of San Fernando, La Union and driven by IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the
Alfredo Bislig. Due to the impact, several passengers of the jeepney including Laureano plaintiffs, and defendants Municipality of San Fernando, La Union and Alfredo Bislig are
ordered to pay jointly and severally, plaintiffs Juana Rimando-Baniña, Mrs. Priscilla B.
Surell, Laureano Baniña Jr., Sor Marietta Baniña, Mrs. Fe B. Soriano, Montano Baniña, Stated in simple parlance, the general rule is that the State may not be sued except when
Orja Baniña and Lydia B. Baniña the sums of P1,500.00 as funeral expenses and it gives consent to be sued. Consent takes the form of express or implied consent.
P24,744.24 as the lost expected earnings of the late Laureano Baniña Sr., P30,000.00 as
moral damages, and P2,500.00 as attorney's fees. Costs against said defendants.
Express consent may be embodied in a general law or a special law. The standing consent
of the State to be sued in case of money claims involving liability arising from contracts is
The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo found in Act No. 3083. A special law may be passed to enable a person to sue the
Balagot. government for an alleged quasi-delict, as in Merritt v. Government of the Philippine
Islands (34 Phil 311). (see United States of America v. Guinto, G.R. No. 76607, February
SO ORDERED. (Rollo, p. 30) 26, 1990, 182 SCRA 644, 654.)

Petitioner filed a motion for reconsideration and for a new trial without prejudice to another Consent is implied when the government enters into business contracts, thereby
descending to the level of the other contracting party, and also when the State files a
motion which was then pending. However, respondent judge issued another order dated
November 7, 1979 denying the motion for reconsideration of the order of September 7, complaint, thus opening itself to a counterclaim. (Ibid)
1979 for having been filed out of time.
Municipal corporations, for example, like provinces and cities, are agencies of the State
when they are engaged in governmental functions and therefore should enjoy the
Finally, the respondent judge issued an order dated December 3, 1979 providing that if
defendants municipality and Bislig further wish to pursue the matter disposed of in the sovereign immunity from suit. Nevertheless, they are subject to suit even in the
performance of such functions because their charter provided that they can sue and be
order of July 26, 1979, such should be elevated to a higher court in accordance with the
Rules of Court. Hence, this petition. sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39)

Petitioner maintains that the respondent judge committed grave abuse of discretion A distinction should first be made between suability and liability. "Suability depends on the
consent of the state to be sued, liability on the applicable law and the established facts.
amounting to excess of jurisdiction in issuing the aforesaid orders and in rendering a
decision. Furthermore, petitioner asserts that while appeal of the decision maybe available, The circumstance that a state is suable does not necessarily mean that it is liable; on the
the same is not the speedy and adequate remedy in the ordinary course of law. other hand, it can never be held liable if it does not first consent to be sued. Liability is not
conceded by the mere fact that the state has allowed itself to be sued. When the state
does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it
On the other hand, private respondents controvert the position of the petitioner and allege can, that the defendant is liable." (United States of America vs. Guinto, supra, p. 659-660)
that the petition is devoid of merit, utterly lacking the good faith which is indispensable in a
petition for certiorari and prohibition. (Rollo, p. 42.) In addition, the private respondents
stress that petitioner has not considered that every court, including respondent court, has Anent the issue of whether or not the municipality is liable for the torts committed by its
the inherent power to amend and control its process and orders so as to make them employee, the test of liability of the municipality depends on whether or not the driver,
conformable to law and justice. (Rollo, p. 43.) acting in behalf of the municipality, is performing governmental or proprietary functions. As
emphasized in the case of Torio vs. Fontanilla (G. R. No. L-29993, October 23, 1978. 85
SCRA 599, 606), the distinction of powers becomes important for purposes of determining
The controversy boils down to the main issue of whether or not the respondent court the liability of the municipality for the acts of its agents which result in an injury to third
committed grave abuse of discretion when it deferred and failed to resolve the defense of persons.
non-suability of the State amounting to lack of jurisdiction in a motion to dismiss.
Another statement of the test is given in City of Kokomo vs. Loy, decided by the Supreme
In the case at bar, the respondent judge deferred the resolution of the defense of non- Court of Indiana in 1916, thus:
suability of the State amounting to lack of jurisdiction until trial. However, said respondent
judge failed to resolve such defense, proceeded with the trial and thereafter rendered a
decision against the municipality and its driver. Municipal corporations exist in a dual capacity, and their functions are twofold. In one they
exercise the right springing from sovereignty, and while in the performance of the duties
pertaining thereto, their acts are political and governmental. Their officers and agents in
The respondent judge did not commit grave abuse of discretion when in the exercise of its such capacity, though elected or appointed by them, are nevertheless public functionaries
judgment it arbitrarily failed to resolve the vital issue of non-suability of the State in the performing a public service, and as such they are officers, agents, and servants of the
guise of the municipality. However, said judge acted in excess of his jurisdiction when in state. In the other capacity the municipalities exercise a private, proprietary or corporate
his decision dated October 10, 1979 he held the municipality liable for the quasi-delict right, arising from their existence as legal persons and not as public agencies. Their
committed by its regular employee. officers and agents in the performance of such functions act in behalf of the municipalities
in their corporate or individual capacity, and not for the state or sovereign power." (112
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 N.E., 994-995) (Ibid, pp. 605-606.)
of the Constitution, to wit: "the State may not be sued without its consent."
It has already been remarked that municipal corporations are suable because their
charters grant them the competence to sue and be sued. Nevertheless, they are generally
not liable for torts committed by them in the discharge of governmental functions and can
be held answerable only if it can be shown that they were acting in a proprietary capacity.
In permitting such entities to be sued, the State merely gives the claimant the right to show
that the defendant was not acting in its governmental capacity when the injury was
committed or that the case comes under the exceptions recognized by law. Failing this, the
claimant cannot recover. (Cruz, supra, p. 44.)

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

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

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

After a careful examination of existing laws and jurisprudence, We arrive at the


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

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

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

SO ORDERED.
Republic of the Philippines On November 10, 1998, the RTC denied the ATOs motion for a preliminary
Supreme Court hearing of the affirmative defense.
Manila
After the RTC likewise denied the ATOs motion for reconsideration on December
THIRD DIVISION 10, 1998, the ATO commenced a special civil action for certiorari in the CA to assail the
RTCs orders. The CA dismissed the petition for certiorari, however, upon its finding that
the assailed orders were not tainted with grave abuse of discretion. [3]
AIR TRANSPORTATION OFFICE, G.R. No. 159402
Petitioner, Subsequently, February 21, 2001, the RTC rendered its decision on the
Present: merits,[4] disposing:

BRION, Acting Chairperson,** WHEREFORE, the judgment is rendered ORDERING the defendant Air
- versus - BERSAMIN, Transportation Office to pay the plaintiffs DAVID and ELISEA RAMOS
ABAD,*** the following: (1) The amount of P778,150.00 being the value of the
VILLARAMA, JR., and parcel of land appropriated by the defendant ATO as embodied in the
SERENO, JJ. Deed of Sale, plus an annual interest of 12% from August 11, 1995, the
SPOUSES DAVID* and date of the Deed of Sale until fully paid; (2) The amount of P150,000.00
ELISEA RAMOS, Promulgated: by way of moral damages and P150,000.00 as exemplary damages; (3)
Respondents. February 23, 2011 the amount of P50,000.00 by way of attorneys fees plus P15,000.00
representing the 10, more or less, court appearances of plaintiffs
x-----------------------------------------------------------------------------------------x
counsel; (4) The costs of this suit.
RESOLUTION
SO ORDERED.
BERSAMIN, J.:
In due course, the ATO appealed to the CA, which affirmed the RTCs decision on May 14,
2003,[5] viz:
The States immunity from suit does not extend to the petitioner because it is an agency of
the State engaged in an enterprise that is far from being the States exclusive prerogative. IN VIEW OF ALL THE FOREGOING, the appealed decision is
[1] hereby AFFIRMED, with MODIFICATION that the awarded cost therein
Under challenge is the decision promulgated on May 14, 2003, by which the
is deleted, while that of moral and exemplary damages is reduced
Court of Appeals (CA) affirmed with modification the decision rendered on February 21,
to P30,000.00 each, and attorneys fees is lowered to P10,000.00.
2001 by the Regional Trial Court, Branch 61 (RTC), in Baguio City in favor of the
No cost.
respondents.[2] SO ORDERED.
Antecedents
Hence, this appeal by petition for review on certiorari.
Spouses David and Elisea Ramos (respondents) discovered that a portion of their land
registered under Transfer Certificate of Title No. T-58894 of the Baguio City land records Issue
with an area of 985 square meters, more or less, was being used as part of the runway
and running shoulder of the Loakan Airport being operated by petitioner Air Transportation The only issue presented for resolution is whether the ATO could be sued without the
Office (ATO). On August 11, 1995, the respondents agreed after negotiations to convey
States consent.
the affected portion by deed of sale to the ATO in consideration of the amount
of P778,150.00. However, the ATO failed to pay despite repeated verbal and written
demands.
Ruling
Thus, on April 29, 1998, the respondents filed an action for collection against the
The petition for review has no merit.
ATO and some of its officials in the RTC (docketed as Civil Case No. 4017-R and
entitled Spouses David and Elisea Ramos v. Air Transportation Office, Capt. Panfilo
The immunity of the State from suit, known also as the doctrine of sovereign immunity or
Villaruel, Gen. Carlos Tanega, and Mr. Cesar de Jesus). non-suability of the State, is expressly provided in Article XVI of the 1987 Constitution, viz:
In their answer, the ATO and its co-defendants invoked as an affirmative defense Section 3. The State may not be sued without its consent.
the issuance of Proclamation No. 1358, whereby President Marcos had reserved certain
parcels of land that included the respondents affected portion for use of
The immunity from suit is based on the political truism that the State, as a
the Loakan Airport. They asserted that the RTC had no jurisdiction to entertain the action sovereign, can do no wrong. Moreover, as the eminent Justice Holmes said
without the States consent considering that the deed of sale had been entered into in the
in Kawananakoa v. Polyblank:[6]
performance of governmental functions.
The territory [of Hawaii], of course, could waive its exemption (Smith v. character. Apropos, the lower court erred in applying the High Courts
Reeves, 178 US 436, 44 L ed 1140, 20 Sup. Ct. Rep. 919), and it took ruling in National Airports Corporation vs. Teodoro (91 Phil.
no objection to the proceedings in the cases cited if it could have done 203 [1952]), arguing that in Teodoro, the matter involved the collection
so. xxx But in the case at bar it did object, and the question raised is of landing and parking fees which is a proprietary function, while the
whether the plaintiffs were bound to yield. Some doubts have been case at bar involves the maintenance and operation of aircraft and air
expressed as to the source of the immunity of a sovereign power from navigational facilities and services which are governmental functions.
suit without its own permission, but the answer has been public
property since before the days of Hobbes. Leviathan, chap. 26, 2. A We are not persuaded.
sovereign is exempt from suit, not because of any formal
conception or obsolete theory, but on the logical and practical Contrary to appellants conclusions, it was not merely the
ground that there can be no legal right as against the authority collection of landing and parking fees which was declared as
that makes the law on which the right depends. Car on peut bien proprietary in nature by the High Court in Teodoro, but management
recevoir loy d'autruy, mais il est impossible par nature de se donner and maintenance of airport operations as a whole, as well. Thus, in the
loy. Bodin, Republique, 1, chap. 8, ed. 1629, p. 132; Sir John Eliot, De much later case of Civil Aeronautics Administration vs. Court of
Jure Maiestatis, chap. 3. Nemo suo statuto ligatur Appeals (167 SCRA 28 [1988]), the Supreme Court, reiterating the
necessitative. Baldus, De Leg. et Const. Digna Vox, 2. ed. 1496, fol. pronouncements laid down in Teodoro, declared that the CAA
51b, ed. 1539, fol. 61.[7] (predecessor of ATO) is an agency not immune from suit, it being
engaged in functions pertaining to a private entity. It went on to explain
Practical considerations dictate the establishment of an immunity from suit in in this wise:
favor of the State. Otherwise, and the State is suable at the instance of every other
individual, government service may be severely obstructed and public safety endangered xxx
because of the number of suits that the State has to defend against. [8] Several justifications
have been offered to support the adoption of the doctrine in the Philippines, but that The Civil Aeronautics Administration comes
offered in Providence Washington Insurance Co. v. Republic of the Philippines [9] is the under the category of a private entity. Although not a
most acceptable explanation, according to Father Bernas, a recognized commentator on body corporate it was created, like the National
Constitutional Law,[10] to wit: Airports Corporation, not to maintain a necessary
function of government, but to run what is essentially
[A] continued adherence to the doctrine of non-suability is not to a business, even if revenues be not its prime
be deplored for as against the inconvenience that may be caused objective but rather the promotion of travel and the
private parties, the loss of governmental efficiency and the obstacle to convenience of the travelling public. It is engaged in
the performance of its multifarious functions are far greater if such a an enterprise which, far from being the exclusive
fundamental principle were abandoned and the availability of judicial prerogative of state, may, more than the construction
remedy were not thus restricted. With the well-known propensity on the of public roads, be undertaken by private concerns.
part of our people to go to court, at the least provocation, the loss of [National Airports Corp. v. Teodoro, supra, p. 207.]
time and energy required to defend against law suits, in the absence of
such a basic principle that constitutes such an effective obstacle, could xxx
very well be imagined.
True, the law prevailing in 1952 when
An unincorporated government agency without any separate juridical personality the Teodoro case was promulgated was Exec. Order
of its own enjoys immunity from suit because it is invested with an inherent power of 365 (Reorganizing the Civil Aeronautics
sovereignty. Accordingly, a claim for damages against the agency cannot prosper; Administration and Abolishing the National Airports
otherwise, the doctrine of sovereign immunity is violated. [11] However, the need to Corporation). Republic Act No. 776 (Civil Aeronautics
distinguish between an unincorporated government agency performing governmental Act of the Philippines), subsequently enacted on June
function and one performing proprietary functions has arisen. The immunity has been 20, 1952, did not alter the character of the CAAs
upheld in favor of the former because its function is governmental or incidental to such objectives under Exec. Order 365. The pertinent
function;[12] it has not been upheld in favor of the latter whose function was not in pursuit of provisions cited in the Teodoro case, particularly
a necessary function of government but was essentially a business. [13] Secs. 3 and 4 of Exec. Order 365, which led the Court
to consider the CAA in the category of a private entity
Should the doctrine of sovereignty immunity or non-suability of the State be were retained substantially in Republic Act 776, Sec.
extended to the ATO? 32(24) and (25). Said Act provides:

In its challenged decision,[14] the CA answered in the negative, holding: Sec. 32. Powers and Duties of the
Administrator. Subject to the general control and
On the first assignment of error, appellants seek to impress supervision of the Department Head, the Administrator
upon Us that the subject contract of sale partook of a governmental
shall have among others, the following powers and corporation, the state divests itself so
duties: far of its sovereign character, and by
implication consents to suits against
xxx the corporation. (59 C.J., 313)
(24) To administer, operate, manage, control, [National Airports Corporation v.
maintain and develop the Manila International Airport Teodoro, supra, pp. 206-207; Italics
and all government-owned aerodromes except those supplied.]
controlled or operated by the Armed Forces of the
Philippines including such powers and duties as: (a) to This doctrine has been reaffirmed in the recent
plan, design, construct, equip, expand, improve, repair case of Malong v. Philippine National Railways [G.R.
or alter aerodromes or such structures, improvement or No. L-49930, August 7, 1985, 138 SCRA 63], where it
air navigation facilities; (b) to enter into, make and was held that the Philippine National Railways,
execute contracts of any kind with any person, firm, or although owned and operated by the government,
public or private corporation or entity; was not immune from suit as it does not exercise
sovereign but purely proprietary and business
(25) To determine, fix, impose, collect and functions. Accordingly, as the CAA was created to
receive landing fees, parking space fees, royalties on undertake the management of airport operations
sales or deliveries, direct or indirect, to any aircraft for which primarily involve proprietary functions, it cannot
its use of aviation gasoline, oil and lubricants, spare avail of the immunity from suit accorded to
parts, accessories and supplies, tools, other royalties, government agencies performing strictly
fees or rentals for the use of any of the property under governmental functions.[15]
its management and control.
In our view, the CA thereby correctly appreciated the juridical character of the
xxx ATO as an agency of the Government not performing a purely governmental or sovereign
function, but was instead involved in the management and maintenance of
From the foregoing, it can be seen that the the Loakan Airport, an activity that was not the exclusive prerogative of the State in its
CAA is tasked with private or non-governmental sovereign capacity. Hence, the ATO had no claim to the States immunity from suit. We
functions which operate to remove it from the purview uphold the CAs aforequoted holding.
of the rule on State immunity from suit. For the correct
rule as set forth in the Teodoro case states: We further observe the doctrine of sovereign immunity cannot be successfully
invoked to defeat a valid claim for compensation arising from the taking without just
xxx compensation and without the proper expropriation proceedings being first resorted to of
the plaintiffs property.[16] Thus, in De los Santos v. Intermediate Appellate Court,[17] the trial
Not all government entities, whether corporate courts dismissal based on the doctrine of non-suability of the State of two cases (one of
or non-corporate, are immune from suits. Immunity which was for damages) filed by owners of property where a road 9 meters wide and
from suits is determined by the character of the 128.70 meters long occupying a total area of 1,165 square meters and an artificial creek
objects for which the entity was organized. The rule is 23.20 meters wide and 128.69 meters long occupying an area of 2,906 square meters had
thus stated in Corpus Juris: been constructed by the provincial engineer of Rizal and a private contractor without the
owners knowledge and consent was reversed and the cases remanded for trial on the
Suits against State agencies with merits. The Supreme Court ruled that the doctrine of sovereign immunity was not an
relation to matters in which they have instrument for perpetrating any injustice on a citizen. In exercising the right of eminent
assumed to act in private or non- domain, the Court explained, the State exercised its jus imperii, as distinguished from its
governmental capacity, and various proprietary rights, or jus gestionis; yet, even in that area, where private property had been
suits against certain corporations taken in expropriation without just compensation being paid, the defense of immunity from
created by the state for public suit could not be set up by the State against an action for payment by the owners.
purposes, but to engage in matters
partaking more of the nature of Lastly, the issue of whether or not the ATO could be sued without the States
ordinary business rather than consent has been rendered moot by the passage of Republic Act No. 9497, otherwise
functions of a governmental or known as the Civil Aviation Authority Act of 2008.
political character, are not regarded
as suits against the state. The latter is R.A. No. 9497 abolished the ATO, to wit:
true, although the state may own
stock or property of such a Section 4. Creation of the Authority. There is hereby created an
corporation for by engaging in independent regulatory body with quasi-judicial and quasi-legislative
business operations through a powers and possessing corporate attributes to be known as the Civil
Aviation Authority of the Philippines (CAAP), herein after referred to as
the Authority attached to the Department of Transportation and
Communications (DOTC) for the purpose of policy coordination. For
this purpose, the existing Air transportation Office created under
the provisions of Republic Act No. 776, as amended is hereby
abolished.
xxx

Under its Transitory Provisions, R.A. No. 9497 established in place of the ATO the Civil
Aviation Authority of the Philippines (CAAP), which thereby assumed all of the ATOs
powers, duties and rights, assets, real and personal properties, funds, and revenues, viz:

CHAPTER XII
TRANSITORTY PROVISIONS
Section 85. Abolition of the Air Transportation Office. The Air
Transportation Office (ATO) created under Republic Act No. 776, a
sectoral office of the Department of Transportation and
Communications (DOTC), is hereby abolished.

All powers, duties and rights vested by law and exercised by


the ATO is hereby transferred to the Authority.

All assets, real and personal properties, funds and revenues


owned by or vested in the different offices of the ATO are transferred
to the Authority. All contracts, records and documents relating to
the operations of the abolished agency and its offices and branches
are likewise transferred to the Authority. Any real property owned
by the national government or government-owned corporation or
authority which is being used and utilized as office or facility by the
ATO shall be transferred and titled in favor of the Authority.
Section 23 of R.A. No. 9497 enumerates the corporate powers vested in the
CAAP, including the power to sue and be sued, to enter into contracts of every class, kind
and description, to construct, acquire, own, hold, operate, maintain, administer and lease
personal and real properties, and to settle, under such terms and conditions most
advantageous to it, any claim by or against it.[18]

With the CAAP having legally succeeded the ATO pursuant to R.A. No. 9497, the
obligations that the ATO had incurred by virtue of the deed of sale with the Ramos
spouses might now be enforced against the CAAP.

WHEREFORE, the Court denies the petition for review on certiorari, and affirms the
decision promulgated by the Court of Appeals.

No pronouncement on costs of suit.

SO ORDERED.
Republic of the Philippines allowances to which they are entitled but which until now they have been deprived of as
SUPREME COURT enumerated under Sec. 5 of DBM CCC No. 10 and you are further directed to cause their
Manila inclusion in the Provident Fund Membership, retroactive from the date of their
appointments up to the present or until their separation from the service. 11
THIRD DIVISION
Thereafter, a Notice of Garnishment12 was issued against the funds of NEA with
G.R. No. 154200 July 24, 2007 Development Bank of the Philippines (DBP) to the extent of ₱16,581,429.00.

NATIONAL ELECTRIFICATION ADMINISTRATION and its BOARD OF NEA filed a Motion to Quash Writs of Execution/Garnishment, 13 claiming that the garnished
public funds are exempt from execution under Section 414 of Presidential Decree (P.D.)
ADMINISTRATORS, Petitioners,
vs. No. 1445,15 but manifesting that it is willing to pay the claims of Morales, et al.,16 only that it
has no funds to cover the same, although it already requested the Department of Budget
DANILO MORALES, Respondent.
and Management (DBM) for a supplemental budget.17

DECISION
In its Order of May 17, 2000, the RTC denied the Motion to Quash but, at the same time,
held in abeyance the implementation of the Writ of Execution, thus:
AUSTRIA-MARTINEZ, J>:
WHEREFORE, the motion to quash writs of execution/ garnishment is DENIED but the
The sole issue for resolution in the Petition for Review on Certiorari1 before us is whether implementation of the judgment is placed on hold for ninety (90) days reckoned from this
the Court of Appeals (CA) committed an error of law in its July 4, 2002 Decision 2 in CA- day. The respondents are directed to formally inform this Court and the petitioners
G.R. SP No. 62919 in ordering the implementation of a writ of execution against the funds of the prospect of obtaining funds from Department of Budget and Management
of the National Electrification Administration (NEA). within 30 days from receipt and every 30 days thereafter, until the 90 day period has
lapsed.
There being no dispute as to the facts,3 the following findings of the CA are adopted:4
The motion to direct DBP to release to the petitioners the NEA funds garnished earlier
5
Danilo Morales and 105 other employees (Morales, et al.) of the NEA filed with the amounting to ₱16,591.429 is also DENIED.
Regional Trial Court (RTC), Branch 88, Quezon City, a class suit 6 against their employer
for payment of rice allowance, meal allowance, medical/dental/optical allowance, children’s SO ORDERED.18 (Emphasis ours)
allowance and longevity pay purportedly authorized under Republic Act (R.A.) No.
6758.7 In its December 16, 1999 Decision,8 the RTC ordered NEA, thus:
Morales, et al. filed a Partial Motion for Reconsideration19 but the RTC denied it.20

WHEREFORE, foregoing considered, the petition is hereby GRANTED directing the


respondent NEA, its Board of Administrators to forthwith settle the claims of the petitioners Meanwhile, in a letter dated June 28, 2000, former DBM Secretary Benjamin E. Diokno
and other employees similarly situated and extend to them the benefits and allowances to informed NEA Administrator Conrado M. Estrella III of the denial of the NEA request for a
which they are entitled but which until now they have been deprived of as enumerated supplemental budget on the ground that the claims under R.A. No. 6758 which the RTC
under Section 5 of DBM CCC No. 10 and their inclusion in the Provident Funds had ordered to be settled cannot be paid because Morales, et al. are not "incumbents of
Membership, retroactive from the date of their appointments up to the present or until their positions as of July 1, 1989 who are actually receiving and enjoying such benefits." 21
separation from the service.
Moreover, in an Indorsement dated March 23, 2000, the Commission on Audit (COA)
No costs. advised NEA against making further payments in settlement of the claims of Morales, et
al.. Apparently, COA had already passed upon claims similar to those of Morales, et al.
in its earlier "Decision No. 95-074" dated January 25, 1995. Portions of the Indorsement
SO ORDERED.9 read as follows:

Upon motion of Morales, et al., the RTC issued a Writ of Execution dated February 22, This Office concurs with the above view. The court may have exceeded its jurisdiction
2000,10 which reads: when it entertained the petition for the entitlement of the after-hired employees
which had already been passed upon by this Commission in COA Decision No. 95-
NOW, THEREFORE, you are hereby directed to cause respondents National 074 dated January 25, 1995. There, it was held that: "the adverse action of this
Electrification Administration (NEA) and its Board of Administrators with principal office Commission sustaining the disallowance made by the Auditor, NEA, on the payment of
address at 1050 CDC Bldg., Quezon Avenue, Quezon City to forthwith settle the claims of fringe benefits granted to NEA employees hired from July 1, 1989 to October 31, 1989 is
the petitioners and other employees similarly situated and extend to them the benefits and hereby reconsidered. Accordingly, subject disallowance is lifted."
Thus, employees hired after the extended date of October 31, 1989, pursuant to the "The universal rule that where the State gives its consent to be sued by private parties
above COA decision cannot defy that decision by filing a petition for mandamus in either by general or special law, it may limit claimant's action only up to the completion of
the lower court. Presidential Decree No. 1445 and the 1987 Constitution prescribe proceedings anterior to the stage of execution and the power of the court ends when the
that the only mode for appeal from decisions of this Commission is on certiorari to judgment is rendered, since government funds and properties may not be seized under
the Supreme Court in the manner provided by law and the Rules of Court. Clearly, writs of execution or garnishment to satisfy such judgment, is based on obvious
the lower court had no jurisdiction when it entertained the subject case of considerations of public policy. Disbursements of public funds must be covered by the
mandamus. And void decisions of the lower court can never attain finality, much corresponding appropriation as required by law. The functions and public services
less be executed. Moreover, COA was not made a party thereto, hence, it cannot be rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of
compelled to allow the payment of claims on the basis of the questioned decision. public funds from their legitimate and specific objects as appropriated by law."

PREMISES CONSIDERED, the auditor of NEA should post-audit the disbursement Moreover, it is settled jurisprudence that upon determination of State liability, the
vouchers on the bases of this Commission's decision particularly the above-cited COA prosecution, enforcement or satisfaction thereof must still be pursued in accordance with
Decision No. 94-074 [sic] and existing rules and regulations, as if there is no decision of the rules and procedures laid down in P.D. No. 1445, otherwise known as the Government
the court in the subject special civil action for mandamus. At the same time, management Auditing Code of the Philippines (Department of Agriculture v. NLRC, 227 SCRA 693, 701-
should be informed of the intention of this Office to question the validity of the court 02 [1993] citing Republic v. Villasor, 54 SCRA 84 [1973]). All money claims against the
decision before the Supreme Court through the Office of the Solicitor General. 22 (Emphasis Government must "first be filed with the Commission on Audit which must act upon it within
ours) sixty days. Rejection of the claim will authorize the claimant to elevate the matter to the
Supreme Court on certiorari and in effect sue the State thereby (P.D. 1445, Sections 49-
50)."
Parenthetically, the records at hand do not indicate when Morales, et al. were appointed.
Even the December 16, 1999 RTC Decision is vague for it merely states that they were
appointed after June 30, 1989, which could mean that they were appointed either before WHEREFORE, foregoing considered, petition to cite respondents in contempt of court is
the cut-off date of October 31, 1989 or after.23 Thus, there is not enough basis for this premature, hence the same is hereby DENIED.
Court to determine that the foregoing COA Decision No. 95-074 adversely affects
Morales, et al..Moreover, the records do not show whether COA actually questioned the SO ORDERED.26 (Emphasis ours)
December 16, 1999 RTC Decision before this Court.

Subsequently, the RTC issued an Order dated January 8, 2001, denying the Motion for an
On July 18, 2000, Morales, et al. filed a Motion for an Order to Implement Writ of
Order to Implement Writ of Execution, citing the same SC Administrative Circular No. 10-
Execution, pointing out that the reason cited in the May 17, 2000 RTC Order for 2000.
suspension of the implementation of the writ of execution no longer exists given that DBM
already denied NEA’s request for funding. 24 They also filed a Petition to Cite NEA Board of
Administrators Mario Tiaoqui, Victoria Batungbacal, Federico Puno and Remedios Upon a Petition for Certiorari27 filed by Morales, et al., the CA rendered the July 4, 2002
Macalingcag in Contempt of Court25 for allegedly withholding appropriations to cover their Decision assailed herein, the decretal portion of which reads:
claims.
WHEREFORE, the petition is hereby GRANTED. The Order dated January 8, 2001 and
Acting first on the petition for contempt, the RTC issued a Resolution dated December 11, the Resolution of December 11, 2000 of the public respondent Judge are declared NULL
2000, to wit: and VOID.

The court is aware of its order dated May 17, 2000, particularly the directive upon Accordingly, the respondent judge is directed to implement the Writ of Execution relative
respondents to inform this court and the petitioners of the prospect of obtaining funds from thereto.
the Department of Budget and Management within the period specified. From the
comments of the respondents, it appears they did or are doing their best to secure SO ORDERED..28
the needed funds to satisfy the judgment sought to be enforced. In this
regard, Administrative Circular No. 10-2000 of the Supreme Court provides:
The CA held that NEA can no longer take shelter under the provisions of P.D. No. 1445
and SC Administrative Circular No. 10-2000 because it is a government-owned or
"In order to prevent possible circumvention of the rules and procedures of the Commission controlled corporation (GOCC) created under P.D. No. 269, effective August 6,
on Audit, judges are hereby enjoined to observe utmost caution, prudence and 1973.29 Citing Philippine National Bank v. Court of Industrial Relations,30 the CA held that,
judiciousness in the issuance of writs of execution to satisfy money judgments against as such GOCC, petitioner NEA may be subjected to court processes just like any other
government agencies and local government units. corporation; specifically, its properties may be proceeded against by way of garnishment or
levy.31
Judges should bear in mind that in Commissioner of Public Highways v. San Diego (31
SCRA 617, 625 [1970], this Court explicitly stated:
NEA and its Board of Directors (petitioners) immediately filed herein petition for review. It is under Sec. 5 of DBM CCC No. 10 and x x x to cause their inclusion in the Provident Fund
their contention that the CA erred in directing implementation of the writ of execution on Membership."35 Worse, it countenanced the issuance of a notice of garnishment against
two grounds: first, execution is premature as Morales, et al. (respondents) have yet to file the funds of petitioners with DBP to the extent of ₱16,581,429.00 even when no such
their judgment claim with the COA in accordance with P.D. No. 1445 and SC amount was awarded in its December 16, 1999 Decision.
Administrative Circular No. 10-2000;32 and second, execution is not feasible without DBM
as an indispensable party to the petition for certiorari for it is said department which can However, in its subsequent Orders dated May 17, 2000 and January 8, 2001, the RTC
certify that funds are available to cover the judgment claim. 33 attempted to set matters right by directing the parties to now await the outcome of the legal
processes for the settlement of respondents’ claims.
The petition is meritorious.
That is only right.
Indeed, respondents cannot proceed against the funds of petitioners because the
December 16, 1999 RTC Decision sought to be satisfied is not a judgment for a specific
Without question, petitioner NEA is a GOCC36 -- a juridical personality separate and
sum of money susceptible of execution by garnishment; it is a special judgment requiring distinct from the government, with capacity to sue and be sued. 37 As such GOCC,
petitioners to settle the claims of respondents in accordance with existing regulations of
petitioner NEA cannot evade execution; its funds may be garnished or levied upon in
the COA. satisfaction of a judgment rendered against it. 38 However, before execution may proceed
against it, a claim for payment of the judgment award must first be filed with the COA. 39
In its plain text, the December 16, 1999 RTC Decision merely directs petitioners to "settle
the claims of [respondents] and other employees similarly situated." 34 It does not require
Under Commonwealth Act No. 327,40 as amended by Section 26 of P.D. No. 1445, it is the
petitioners to pay a certain sum of money to respondents. The judgment is only for the COA which has primary jurisdiction to examine, audit and settle "all debts and claims of
performance of an act other than the payment of money, implementation of which is any sort" due from or owing the Government or any of its subdivisions, agencies and
governed by Section 11, Rule 39 of the Rules of Court, which provides: instrumentalities, including government-owned or controlled corporations and their
subsidiaries.41 With respect to money claims arising from the implementation of R.A. No.
Section 11. Execution of special judgments. - When a judgment requires the performance 6758, their allowance or disallowance is for COA to decide, subject only to the remedy of
of any act other than those mentioned in the two preceding sections, a certified copy of the appeal by petition for certiorari to this Court.42
judgment shall be attached to the writ of execution and shall be served by the officer upon
the party against whom the same is rendered, or upon any other person required thereby, All told, the RTC acted prudently in halting implementation of the writ of execution to allow
or by law, to obey the same, and such party or person may be punished for contempt if he the parties recourse to the processes of the COA. It may be that the tenor of the March 23,
disobeys such judgment. 2000 Indorsement issued by COA already spells doom for respondents’ claims; but it is not
for this Court to preempt the action of the COA on the post-audit to be conducted by it per
Garnishment cannot be employed to implement such form of judgment. Under Section 9 of its Indorsement dated March 23, 2000.1avvphi1
Rule 39, to wit:
In fine, it was grave error for the CA to reverse the RTC and direct immediate
Section 9. Execution of judgments for money, how enforced. - implementation of the writ of execution through garnishment of the funds of petitioners,

xxxx WHEREFORE, the petition is GRANTED. The July 4, 2002 Decision of the Court of
Appeals is REVERSED andSET ASIDE. The Resolution dated December 11, 2000 and
(c) Garnishment of debts and credits. - The officer may levy on debts due the judgment Order dated January 8, 2001 of the Regional Trial Court, Branch 88, Quezon City in
obligor and other credits, including bank deposits, financial interests, royalties, Special Civil Action No. Q-99-38275 are REINSTATED.
commissions and other personal property not capable of manual delivery in the possession
or control of third parties. Levy shall be made by serving notice upon the person owing SO ORDERED.
such debts or having in his possession or control such credits to which the judgment
obligor is entitled. The garnishment shall cover only such amount as will satisfy the
judgment and all lawful fees.

Garnishment is proper only when the judgment to be enforced is one for payment of a sum
of money.

The RTC exceeded the scope of its judgment when, in its February 22, 2000 Writ of
Execution, it directed petitioners to "extend to [respondents] the benefits and allowances to
which they are entitled but which until now they have been deprived of as enumerated
FIRST DIVISION After reaching an accord on the issues to be considered by the arbitration panel, the
parties scheduled the dates of hearings and of submission of simultaneous memoranda.[6]

On 13 March 1995, NIA filed a Motion to Dismiss [7]alleging lack of jurisdiction over
the disputes. NIA contended that there was no agreement with HYDRO to submit the
[G.R. No. 129169. November 17, 1999] dispute to CIAC for arbitration considering that the construction contract was executed in
1978 and the project completed in 1982, whereas the Construction Industry Arbitration
Law creating CIAC was signed only in 1985; and that while they have agreed to arbitration
as a mode of settlement of disputes, they could not have contemplated submission of their
disputes to CIAC. NIA further argued that records show that it had not voluntarily submitted
NATIONAL IRRIGATION ADMINISTRATION (NIA), petitioner, vs. HONORABLE itself to arbitration by CIAC citing TESCO Services, Inc. v. Hon. Abraham Vera, et
COURT OF APPEALS (4th Division), CONSTRUCTION INDUSTRY al.,[8] wherein it was ruled:
ARBITRATION COMMISSION, and HYDRO RESOURCES CONTRACTORS
CORPORATION, respondents.
CIAC did not acquire jurisdiction over the dispute arising from the sub-contract agreement
between petitioner TESCO and private respondent LAROSA. The records do not show
DECISION that the parties agreed to submit the disputes to arbitration by the CIAC xxxx. While both
DAVIDE, JR., C.J.: parties in the sub-contract had agreed to submit the matter to arbitration, this was only
between themselves, no request having been made by both with the CIAC. Hence, as
already stated, the CIAC, has no jurisdiction over the dispute. xxxx. Nowhere in the said
In this special civil action for certiorari under Rule 65 of the Rules of Court, the article (sub-contract) does it mention the CIAC, much less, vest jurisdiction with the CIAC.
National Irrigation Administration (hereafter NIA), seeks to annul and set aside the
Resolutions[1]of the Court of Appeals in CA-GR. SP No. 37180 dated 28 June 1996 and 24
On 11 April 1995, the arbitral body issued an order [9] which deferred the
February 1997, which dismissed respectively NIAs petition
determination of the motion to dismiss and resolved to proceed with the hearing of the
for certiorari and prohibition against the Construction Industry Arbitration Commission
case on the merits as the grounds cited by NIA did not seem to be indubitable. NIA filed a
(hereafter CIAC), and the motion for reconsideration thereafter filed.
motion for reconsideration of the aforesaid Order. CIAC in denying the motion for
Records show that in a competitive bidding held by NIA in August 1978, Hydro reconsideration ruled that it has jurisdiction over the HYDROs claim over NIA pursuant to
Resources Contractors Corporation (hereafter HYDRO) was awarded Contract MPI-C-2 E.O 1008 and that the hearing should proceed as scheduled. [10]
for the construction of the main civil works of the Magat River Multi-Purpose Project. The
On 26 May 1996, NIA filed with the Court of Appeals an original action
contract provided that HYDRO would be paid partly in Philippine pesos and partly in U.S.
of certiorari and prohibition with prayer for restraining order and/or injunction, seeking to
dollars. HYDRO substantially completed the works under the contract in 1982 and final
annul the Orders of the CIAC for having been issued without or in excess of jurisdiction. In
acceptance by NIA was made in 1984. HYDRO thereafter determined that it still had an
support of its petition NIA alleged that:
account receivable from NIA representing the dollar rate differential of the price escalation
for the contract.[2] A
After unsuccessfully pursuing its case with NIA, HYDRO, on 7 December 1994, filed
with the CIAC a Request for Adjudication of the aforesaid claim. HYDRO nominated six RESPONDENT CIAC HAS NO AUTHORITY OR JURIDICTION TO HEAR AND TRY THIS
arbitrators for the arbitration panel, from among whom CIAC appointed Engr. Lauro M. DISPUTE BETWEEN THE HEREIN PARTIES AS E.O. NO. 1008 HAD NO
Cruz. On 6 January 1995, NIA filed its Answer wherein it questioned the jurisdiction of the RETROACTIVE EFFECT.
CIAC alleging lack of cause of action, laches and estoppel in view of HYDROs alleged
failure to avail of its right to submit the dispute to arbitration within the prescribed period as B
provided in the contract. On the same date, NIA filed a Compliance wherein it nominated
six arbitrators, from among whom CIAC appointed Atty. Custodio O. Parlade, and made a
counterclaim for P1,000,000 as moral damages; at least P100,000 as exemplary THE DISPUTE BETWEEN THE PARTIES SHOULD BE SETTLED IN ACCORDANCE
damages; P100,000 as attorneys fees; and the costs of the arbitration. [3] WITH GC NO. 25, ART. 2046 OF THE CIVIL CODE AND R.A. NO. 876 THE
GOVERNING LAWS AT THE TIME CONTRACT WAS EXECUTED AND TERMINATED.
The two designated arbitrators appointed Certified Public Accountant Joven B.
Joaquin as Chairman of the Arbitration Panel. The parties were required to submit copies
C
of the evidence they intended to present during the proceedings and were provided the
draft Terms of Reference.[4]
E.O. NO. 1008 IS A SUBSTANTIVE LAW, NOT MERELY PROCEDURAL AS RULED BY
At the preliminary conference, NIA through its counsel Atty. Joy C. Legaspi of the THE CIAC.
Office of the Government Corporate Counsel, manifested that it could not admit the
genuineness of HYDROs evidence since NIAs records had already been destroyed. NIA
requested an opportunity to examine the originals of the documents which HYDRO agreed D
to provide.[5]
AN INDORSEMENT OF THE AUDITOR GENERAL DECIDING A CONTROVERSY IS A 45 and Rule 65, respectively, of the 1997 Rules of Civil Procedure. [19] Rule 45 is clear that
DECISION BECAUSE ALL THE ELEMENTS FOR JUDGMENT ARE THERE; THE decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless of
CONTROVERSY, THE AUTHORITY TO DECIDE AND THE DECISION. IF IT IS NOT the nature of the action or proceedings involved, may be appealed to this Court by filing a
APPEALED SEASONABLY, THE SAME BECOMES FINAL. petition for review, which would be but a continuation of the appellate process over the
original case.[20] Under Rule 45 the reglementary period to appeal is fifteen (15) days from
E notice of judgment or denial of motion for reconsideration. [21]
In the instant case the Resolution of the Court of Appeals dated 24 February 1997
NIA HAS TIMELY RAISED THE ISSUE OF JURISDICTION. IT DID NOT WAIVE NOR IS denying the motion for reconsideration of its Resolution dated 28 June 1997 was received
IT ESTOPPED FROM ASSAILING THE SAME. by NIA on 4 March1997.Thus, it had until 19 March 1997 within which to perfect its
appeal. NIA did not appeal. What it did was to file an original action for certiorari before this
Court, reiterating the issues and arguments it raised before the Court of Appeals.
F
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner
THE LEGAL DOCTRINE THAT JURISDICTION IS DETERMINED BY THE STATUTE IN must show that he has no plain, speedy and adequate remedy in the ordinary course of
FORCE AT THE TIME OF THE COMMENCEMENT OF THE ACTION DOES NOT ONLY law against its perceived grievance.[22] A remedy is considered plain, speedy and adequate
APPLY TO THE INSTANT CASE.[11] if it will promptly relieve the petitioner from the injurious effects of the judgment and the
acts of the lower court or agency.[23] In this case, appeal was not only available but also a
speedy and adequate remedy.
The Court of Appeals, after finding that there was no grave abuse of discretion on the
part of the CIAC in issuing the aforesaid Orders, dismissed the petition in its Resolution Obviously, NIA interposed the present special civil action of certiorari not because it
dated 28 June 1996. NIAs motion for reconsideration of the said decision was likewise is the speedy and adequate remedy but to make up for the loss, through omission or
denied by the Court of Appeals on 26 February 1997. oversight, of the right of ordinary appeal. It is elementary that the special civil action
of certiorari is not and cannot be a substitute for an appeal, where the latter remedy is
On 2 June 1997, NIA filed before us an original action for certiorari and prohibition available, as it was in this case. A special civil action under Rule 65 of the Rules of Court
with urgent prayer for temporary restraining order and writ of preliminary injunction, praying will not be a cure for failure to timely file a petition for review on certiorari under Rule 45 of
for the annulment of the Resolutions of the Court of Appeals dated 28 June 1996 and 24 the Rules of Court. [24] Rule 65 is an independent action that cannot be availed of as a
February 1997. In the said special civil action, NIA merely reiterates the issues it raised substitute for the lost remedy of an ordinary appeal, including that under Rule
before the Court of Appeals. [12] 45,[25] especially if such loss or lapse was occasioned by ones own neglect or error in the
We take judicial notice that on 10 June 1997, CIAC rendered a decision in the main choice of remedies.[26]
case in favor of HYDRO.[13] NIA assailed the said decision with the Court of Appeals. In For obvious reasons the rules forbid recourse to a special civil action for certiorari if
view of the pendency of the present petitions before us the appellate court issued a appeal is available, as the remedies of appeal and certiorari are mutually exclusive and not
resolution dated 26 March 1998 holding in abeyance the resolution of the same until after alternative or successive.[27] Although there are exceptions to the rules, none is present in
the instant petitions have been finally decided. [14] the case at bar. NIA failed to show circumstances that will justify a deviation from the
At the outset, we note that the petition suffers from a procedural defect that warrants general rule as to make available a petition for certiorari in lieu of taking an appropriate
its outright dismissal. The questioned resolutions of the Court of Appeals have already appeal.
become final and executory by reason of the failure of NIA to appeal therefrom. Instead of Based on the foregoing, the instant petition should be dismissed.
filing this petition for certiorari under Rule 65 of the Rules of Court, NIA should have filed a
timely petition for review under Rule 45. In any case, even if the issue of technicality is disregarded and recourse under Rule
65 is allowed, the same result would be reached since a review of the questioned
There is no doubt that the Court of Appeals has jurisdiction over the special civil resolutions of the CIAC shows that it committed no grave abuse of discretion.
action for certiorari under Rule 65 filed before it by NIA. The original jurisdiction of the
Court of Appeals over special civil actions for certiorari is vested upon it under Section 9(1) Contrary to the claim of NIA, the CIAC has jurisdiction over the
of B.P. 129. This jurisdiction is concurrent with the Supreme Court [15] and with the Regional controversy. Executive Order No.1008, otherwise known as the Construction Industry
Trial Court.[16] Arbitration Law which was promulgated on 4 February 1985, vests upon CIAC original and
exclusive jurisdiction over disputes arising from, or connected with contracts entered into
Thus, since the Court of Appeals had jurisdiction over the petition under Rule 65, any by parties involved in construction in the Philippines, whether the dispute arises before or
alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment after the completion of the contract, or after the abandonment or breach thereof. The
which are reviewable by timely appeal and not by a special civil action of certiorari.[17] If the disputes may involve government or private contracts. For the Board to acquire
aggrieved party fails to do so within the reglementary period, and the decision accordingly jurisdiction, the parties to a dispute must agree to submit the same to voluntary
becomes final and executory, he cannot avail himself of the writ of certiorari, his arbitration.[28]
predicament being the effect of his deliberate inaction.[18]
The complaint of HYDRO against NIA on the basis of the contract executed between
The appeal from a final disposition of the Court of Appeals is a petition for review them was filed on 7 December 1994, during the effectivity of E.O. No. 1008. Hence, it is
under Rule 45 and not a special civil action under Rule 65 of the Rules of Court, now Rule
well within the jurisdiction of CIAC. The jurisdiction of a court is determined by the law in of Reference of the arbitration proceeding, and examining the documents submitted by
force at the time of the commencement of the action. [29] HYDRO after NIA asked for the originals of the said documents. [32]

NIAs argument that CIAC had no jurisdiction to arbitrate on contract which preceded As to the defenses of laches and prescription, they are evidentiary in nature which
its existence is untenable. E.O. 1008 is clear that the CIAC has jurisdiction over all could not be established by mere allegations in the pleadings and must not be resolved in
disputes arising from or connected with construction contract whether the dispute arises a motion to dismiss. Those issues must be resolved at the trial of the case on the merits
before or after the completion of the contract. Thus, the date the parties entered into a wherein both parties will be given ample opportunity to prove their respective claims and
contract and the date of completion of the same, even if these occurred before the defenses.[33] Under the rule[34] the deferment of the resolution of the said issues was, thus,
constitution of the CIAC, did not automatically divest the CIAC of jurisdiction as long as the in order. An allegation of prescription can effectively be used in a motion to dismiss only
dispute submitted for arbitration arose after the constitution of the CIAC. Stated differently, when the complaint on its face shows that indeed the action has already prescribed. [35] In
the jurisdiction of CIAC is over the dispute, not the contract; and the instant dispute having the instant case, the issue of prescription and laches cannot be resolved on the basis
arisen when CIAC was already constituted, the arbitral board was actually exercising solely of the complaint. It must, however, be pointed that under the new rules,[36] deferment
current, not retroactive, jurisdiction. As such, there is no need to pass upon the issue of of the resolution is no longer permitted. The court may either grant the motion to dismiss,
whether E.O. No. 1008 is a substantive or procedural statute. deny it, or order the amendment of the pleading.

NIA also contended that the CIAC did not acquire jurisdiction over the dispute since it WHEREFORE, the instant petition is DISMISSED for lack of merit. The Court of
was only HYDRO that requested for arbitration. It asserts that to acquire jurisdiction over a Appeals is hereby DIRECTED to proceed with reasonable dispatch in the disposition of
case, as provided under E.O. 1008, the request for arbitration filed with CIAC should be C.A. G.R. No. 44527 and include in the resolution thereof the issue of laches and
made by both parties, and hence the request by one party is not enough. prescription.
It is undisputed that the contracts between HYDRO and NIA contained an arbitration SO ORDERED.
clause wherein they agreed to submit to arbitration any dispute between them that may
arise before or after the termination of the agreement. Consequently, the claim of HYDRO
having arisen from the contract is arbitrable. NIAs reliance with the ruling on the case of
Tesco Services Incorporated v. Vera,[30] is misplaced.

The 1988 CIAC Rules of Procedure which were applied by this Court in Tesco case
had been duly amended by CIAC Resolutions No. 2-91 and 3-93, Section 1 of Article III of
which read as follows:

Submission to CIAC Jurisdiction - An arbitration clause in a construction contract or a


submission to arbitration of a construction contract or a submission to arbitration of a
construction dispute shall be deemed an agreement to submit an existing or future
controversy to CIAC jurisdiction, notwithstanding the reference to a different arbitration
institution or arbitral body in such contract or submission. When a contract contains a
clause for the submission of a future controversy to arbitration, it is not necessary for the
parties to enter into a submission agreement before the claimant may invoke the
jurisdiction of CIAC.

Under the present Rules of Procedure, for a particular construction contract to fall
within the jurisdiction of CIAC, it is merely required that the parties agree to submit the
same to voluntary arbitration.Unlike in the original version of Section 1, as applied in
the Tesco case, the law as it now stands does not provide that the parties should agree to
submit disputes arising from their agreement specifically to the CIAC for the latter to
acquire jurisdiction over the same. Rather, it is plain and clear that as long as the parties
agree to submit to voluntary arbitration, regardless of what forum they may choose, their
agreement will fall within the jurisdiction of the CIAC, such that, even if they specifically
choose another forum, the parties will not be precluded from electing to submit their
dispute before the CIAC because this right has been vested upon each party by law, i.e.,
E.O. No. 1008.[31]
Moreover, it is undeniable that NIA agreed to submit the dispute for arbitration to the
CIAC. NIA through its counsel actively participated in the arbitration proceedings by filing
an answer with counterclaim, as well as its compliance wherein it nominated arbitrators to
the proposed panel, participating in the deliberations on, and the formulation of, the Terms
Republic of the Philippines 7. Ordering the dismissal of the defendants' counterclaim for lack of
SUPREME COURT factual and legal basis. (p. 101, Record on Appeal; p. 103. Rollo.)
Manila
Culled from the text of the assailed disposition are the facts of the case at bar which are
THIRD DIVISION hereunder adopted verbatim:

The case arose from a collision of a passenger express train of


defendant Philippine National Railways, (PNR) coming from San
G.R. No. 70547 January 22, 1993 Fernando, La Union and bound for Manila and a passenger bus of
Baliwag Transit, Inc. which was on its way to Hagonoy, Bulacan, from
Manila, but upon reaching the railroad crossing at Barrio Balungao,
PHILIPPINE NATIONAL RAILWAYS and HONORIO CABARDO, petitioners, Calumpit, Bulacan at about 1:30 in the afternoon of August 10, 1974,
vs. got stalled and was hit by defendant's express train causing damages
INTERMEDIATE APPELLATE COURT, and BALIWAG TRANSIT, INC., respondents. to plaintiff's bus and its passengers, eighteen (18) of whom died and
fifty-three (53) others suffered physical injuries. Plaintiff alleging that the
The Solicitor General for petitioner. proximate cause of the collision was the negligence and imprudence of
defendant PNR and its locomotive engineer, Honorio Cirbado, in
operating its passenger train in a busy intersection without any bars,
Leopoldo Sta. Maria for private respondents. semaphores, signal lights, flagman or switchman to warn the public of
approaching train that would pass through the crossing, filed the instant
action for Damages against defendants. The defendants, in their
Answer traversed the material allegation of the Complaint and as
affirmative defense alleged that the collision was caused by the
MELO, J.: negligence, imprudence and lack of foresight of plaintiff's bus driver,
Romeo Hughes.
The imputation of culpa on the part of herein petitioners as a result of the collision between
its strain, bound for Manila from La Union, with a Baliwag transit bus at the railroad At the pre-trial conference held on June 23, 1976, the parties agreed on
crossing on the road going to Hagonoy, Bulacan on August l0, 1974, is the subject of the a partial stipulation of facts and issues which as amplified at the
petition at bar directed against the judgment of affirmance rendered by respondent court, continuation of the pre-trial conference, on July 12, 1976, are as
through the Fourth Civil Cases Division (Sison, Bidin (P), Veloso, JJ.), vis-a-vis the follows:
decretal portion handed down by the court of origin in:

1 That plaintiff is a duly constituted corporation


1. Ordering the defendants, jointly and severally to pay the plaintiff the registered with the Securities and Exchange
amount of P179,511.52 as actual damages. Commission engaged in the business of
transportation and operating public utility buses for
2. Ordering the defendants jointly and severally to pay the plaintiff the public with lines covering Manila, Caloocan City,
P436,642.03 as reimbursement for the damages paid by the plaintiff to Quezon City, Malabon, Rizal, Bulacan, Pampanga
death, injury and damage claimants. and Nueva Ecija, and particularly from Manila to
Hagonoy, Bulacan and return in the month of
August, l974 passing thru the town of Calumpit
3. Ordering the defendants jointly and severally to pay exemplary
Bulacan, temporarily while the bridge at Hagonoy,
damages in the amount of P50, 000.00 to the plaintiff.
Bulacan was under construction;

4. Ordering the defendants jointly and severally to pay the plaintiff


2 That defendant Philippine National Railways is a
attorney's fees in the amount of P5, 000.00.
purely government owned and controlled
corporation duly registered and existing virtue of
5. Ordering the defendants, jointly and severally to pay the plaintiff Presidential Decree No. 741, with capacity to sue
interest at the legal rate on the above amounts due the plaintiff from and be sued, and is likewise engaged in transporting
August 10, 1974 until fully paid. passengers and cargoes by trains and buses and
that, it operates a train line between San Fernando,
6. Ordering the defendants to pay the cost of this suit. La Union and Manila particularly Passenger Express
Train with Body No. 73, passing along the
intersection of Barrio Balungao, Calumpit, Bulacan,
in going to San Fernando, La Union from Manila and crossing bar, however, during the pre-war days
return; there was a railroad crossing bar at said
intersection; that, however, there was only one sign
of railroad crossing "Stop, Look and Listen" placed
3. That on August 10, 1974, at about 1:20 o'clock in
the afternoon, a Baliuag Transit Bus with Body No. on a concrete slab and attached to a concrete post
1066 and Plate No. XS-929 PUB-Bulacan '74 was existing at the approach of the railroad track from
driven by its authorized driver Romeo Hughes and the Highway going towards Hagonoy, Bulacan and
PNR Train No. 73 was operated by Train Engineer that after the said railroad track there was a
Honorio Cabardo alias Honorio Cirbado and at the designated jeep parking area at the right side in the
railroad intersection at Barrio Balungao, Calumpit, direction from the Highway to Hagonoy Bulacan;
Bulacan, said passenger train No. 73 hit and
bumped the right mid portion of the plaintiff's 9. That the train No. 73 driven by Train Engineer
passenger bus No. 1066, while the rear portion of Honorio Cabardo alias Honorio Cirbado stopped
said bus was at the railroad track and its direction after passing the railroad crossing at a distance of
was towards Hagonoy, Bulacan at about 1:30 about 50 meters from the said intersection after the
o'clock in the afternoon; collision on August, 1974;

4. That at the time of the collision there was a slight 10. That the expected time of arrival of said Train
rainfall in the vicinity of the scene of the accident No. 73 in Manila was 2:41 P.M. and its departure
and that there was at said intersection no bars, time from San Fernando, La Union was 9:00 A.M.
semaphores, and signal lights that would warn the and its expected arrival at Calumpit, Bulacan was
public of the approaching train that was about to 1:41 P.M. with no stop at Calumpit, Bulacan.
pass through the intersection and likewise there was
no warning devices to passing trains showing that SIMPLIFICATION OF ISSUES
they were about to pass an intersection in going to
Manila from San Fernando, La Union and back;
11. That the principal issue in the instant case is
who between the driver Romeo Hughes of Baliuag
5. That on account of said collision, the Baliuag Transit, Incorporated and the train engineer Honorio
Transit Bus with Body No. 1066 driven by Romeo
Cabardo alias Honorio Cirbado of the Philippine
Hughes was damaged and eighteen (18) of its National Railways was negligent or whether or not
passengers died and the rest who were more than both are negligent; that likewise which of said
fifty three (53) passengers suffered physical injuries; companies was negligent at said railroad
intersection;
6. That after the investigation the Chief of Police of
Calumpit, Bulacan, filed a criminal case of Reckless 12. That another additional issue is whether the
Imprudence Causing Multiple Homicide with Multiple Baliuag Transit Incorporated has exercised the
Physical Injuries and Damage to Property against diligence of a good father of the family in the
Romeo Hughes y Parfan, driver of the Baliuag selection and supervision of its employees. (pp.
Transit bus docketed under Crim. Case No. 2392; 85-87, Record on Appeal). ( Annex A, Petition; pp.
while the train Engineer Honorio Cabardo alias
79-82, Rollo)
Honorio Cirbado was not included as an accused in
said case, although his train No. 73 was the one that
hit and bumped the right rear portion of the said bus; In addition, respondent court deemed it necessary to reflect the salient findings of the case
for damages as formulated by the trial court:
7. That immediately after the said accident Major
Manuel A. Macam, Chief of the Municipal Police of Posed for resolution are the following issues: Who between the driver
Calumpit, Bulacan, together with some of his Romeo Hughes of the Baliuag Transit Incorporated and Honorio
policemen conducted an investigation of the Cabardo, train Engineer of the Philippine National Railways was
accident; negligent in the operation of their respective vehicles, or whether or
both were negligent? Could either of the companies Baliuag Transit
Incorporated and the Philippine National Railways be held accountable
8. That at the railroad crossing in Calumpit, Bulacan for the collision because of negligence?
where the accident took place there is no railroad
The defendants presented several statements or affidavits of alleged bus; several passengers were injured and at least 20 died; such facts
witnesses to the collision, specifically Exhibits 2, 3, 4, 5, 6, 11, 13, 14, conclusively indicate that the train was speeding, because if it were
15, 16, 17, 18 and 19; the Court is at a loss as to why the persons who moving at moderate speed, it would not run some 190 meters after
gave the said statements were not presented as witnesses during the impact and throw the bus at quite a distance especially so when it is
trial of the claimed that the train's emergency brakes were applied.
case, as aptly said, the statements are hearsay evidence (Azcueta v.
Cabangbang, — 45 O.G. 144); at most they be taken as proof only of Further, the train was an express train; its departure was 9:00 A.M. at
the fact that statements of said persons were taken and that San Fernando, La Union and expected in Manila at 2:41 P.M.; the
investigation was conducted of the incident; the Court cannot consider collision occurred at 1:30 P.M. or 4 1/2 hours after it left La Union;
the averments in said statements as testimonies or evidence of truth. surely, the train could have not negotiated such a distance in so short a
time if it were not running at fast speed.
Defendants endeavored to show that the proximate and immediate
cause of the collision was the negligence of the bus driver because the It may be argued that a railroad is not subject to the same restrictions to
driver did not make a stop before ascending the railtrack; he did not the speed of its train as a motorists (Mckelvey v. Delaware L. and W.R.
heed the warning or shoutings of bystanders and passengers and Co. 253 App. D.V. 109, 300 NYS 1263 ); but it does not follow that a
proceeded in traversing the railtrack at a fast speed; that the bus driver train will be permitted to run fast under all conditions at any rate of
was in fact violating Section 42(d) of R.A. 4136, otherwise known as the
speed it may choose. It must regulate its speed with proper regard for
Land Transportation and Traffic Code for failure to "stop, look, and the safety of human life and property (Johnson v. Southern Pacific
listen" at the intersection, before crossing the railtrack; that it is
Company (Cal. App. 288 p. 81), considering the surrounding
incumbent upon him to take the necessary precautions at the circumstances particularly the nature of the locality (Atchinson, T. and
intersection because the railroad track is in itself a warning; and the bus SFR Co. v. Nicks (Arts) 165 p. 2d 167).
driver ignored such a warning and must assume the responsibility for
the result of the motion taken by him (U.S. v. Mananquil, 42 Phil. 90)
Cabardo's route included the passage over the said intersection; he
could have noticed that it is a very busy intersection because the
Except the testimony of the train engineer Cabardo, there is no crossroad leads to the Calumpit Poblacion as well as to the neighboring
admissible evidence to show that indeed, the bus driver did not take the town of Hagonoy; there was a parking lot by the side of the track
necessary precaution in traversing the track. Note that he first noticed whereat passengers board jeepneys for the neighboring barrios and
the bus when it was only 15 meters away from him; he could not have towns; stalls abound in the vicinity and bystanders congregate nearby.
possibly noticed the position of the bus before negotiating the track. A prudent train operator must, under the circumstances, slacken his
speed almost for the protection of motorists and pedestrians, not only
On the other hand, it was shown by plaintiff that the bus driver Romeo when a collision is inevitable but even if no hindrance is apparent on
Hughes took the necessary precautions in traversing the track. the way;

The bus driver had stopped before traversing the track and in fact Moreover, there was an intermittent rain at the time of the collision (see
asked the conductor to alight and made a "Look and Listen" before stipulation of facts and photographs); the condition of the weather was
proceeding; the conductor had done just that and made a signal to such that even if for this reason alone, the train engineer should have
proceed when he did not see any oncoming train. (TSN, October 2l, foreseen that danger of collision lurked because of poor visibility of
1976, p. 4); plaintiff's bus drivers and conductors are enjoined to slippery road; he should have taken extra precaution by considerably
observe such a precautionary measure in seminars conducted by the slackening its speed. This he failed to do even if the nature of his job
company. (TSN, September 23, 1976. pp. 26-27). required him to observe care exercised by a prudent man.

The evidence disclosed that the train was running fast because by his Contributory negligence may not be ascribed to the bus driver; it was
own testimony, the train engineer had testified that before reaching the evident that he had taken the necessary precautions before passing
station of Calumpit the terrain was downgrade and levelled only after over the railway track; if the bus was hit, it was for reasons beyond the
passing the Calumpit bridge (TSN, July 28, 1976, p. 14 ); the tendency control of the bus driver because he had no place to go; there were
of the train, coming from a high point is to accelerate as the gravity will vehicles to his left which prevented him in swerving towards that
necessarily make it so, especially when it is pulling seven coaches direction; his bus stalled in view of the obstructions in his front where a
loaded with goods and passengers. sand and gravel truck stopped because of a jeep maneuvering into a
garage up front. All the wheels at the bus have already passed the rail
Moreover, upon impact, the bus loaded with passengers was dragged portion of the track and only the rear portion of the bus' body occupied
and thrown into a ditch several meters away; the train had stopped only or covered the railtrack. This was evident because the part of the bus
after the engine portion was about 190 meters away from the fallen hit by the train was the rear since the bus fell on a nearby ditch.
Otherwise, if the bus was really hit in mid-body, the bus could have become imperative, because of the prevailing circumstances in the
been halved into two because of the force of the impact. place.

The stipulation of facts between the parties show that there was no A railroad company has been adjudged guilty of negligence and civilly
crossing bar at the railroad intersection at Calumpit, Bulacan at the time liable for damages when it failed to install semaphores, or where it does
of collision (par. 8, Stipulation of Facts); the plaintiff contended and the not see to it that its flagman or switchman comply with their duties
defendants did not deny, that there were no signal lights, semaphores, faithfully, to motorist injured by a crossing train as long as he had
flagman or switchman thereat; the absence of such devices, the plaintiff crossed without negligence on his part (Lilius vs. MRR, 39 Phil. 758).
argues constitute negligence on the part of the Philippine National (Decision, pages 94-100, R A.; pp. 83-89, Rollo).
Railways.
On the aspect of whether the Philippine National Railways enjoys immunity from suit,
A railroad is not required to have a gate (crossing bar) or a flagman, or respondent court initially noted that an exculpation of this nature that was raised for the
to maintain signals at every intersection; only at such places reasonably first time on appeal may no longer be entertained in view of the proscription under Section
necessary; what is considered reasonably necessary will depend on the 2, Rule 9 of the Revised Rules of Court, apart from the fact that the lawyer of petitioner
amount of travel upon the road, the frequency with which trains pass agreed to stipulate inter alia that the railroad company had capacity to sue and be sued.
over it and the view which could be obtained of trains as they approach This being so, respondent court continued, PNR was perforce estopped from disavowing
the crossing, and other conditions (Pari v. Los Angeles, Ry. Corporation the prejudicial repercussion of an admission in judicio. Even as the laws governing the
(Cal A2d) 128 p2d 563; Swdyk v. Indiana Harbor Belt R. Co. 148 F. 2d creation and rehabilitation of the PNR were entirely mute on its power to sue and be sued,
795, and others). respondent court nonetheless opined that such prerogative was implied from the general
power to transact business pertinent or indispensable to the attainment of the goals of the
railroad company under Section 4 of Republic Act No. 4156 as amended by Republic Act
As has been amply discussed, the crossroad at the intersection at
Calumpit is one which is a busy thoroughfare; it leads to the Poblacion No. 6366:
at Calumpit and other barrios as well as the town of Hagonoy; the
vicinity is utilized as a parking and waiting area for passengers of Sec. 4 General Powers — The Philippine National Railways shall have
jeepneys that ply between the barrios, clearly, the flow of vehicular the following general powers:
traffic thereat is huge. It can be said also that, since there is no other
railtrack going North except that one passing at Calumpit, trains pass
(a) To do all such other things and to transact all such business directly
over it frequently; or indirectly necessary, incidental or conducive to the attainment of the
purpose of the corporation; and
A portion of the intersection is being used as a parking area with stalls
and other obstructions present making it difficult, if not impossible, to
(b) Generally, to exercise all powers of a railroad corporation under the
see approaching trains (see photographs). Corporation law.

The failure of the Philippine National Railways to put a cross bar, or in conjunction with Section 2(b) of Presidential Decree No. 741:
signal light, flagman or switchman, or semaphores is evidence of
negligence and disregard of the safety of the public, even if there is no
law or ordinance requiring it, because public safety demands that said (b) To own or operate railroad transways, bus lines, trucklines,
devices or equipments be installed, in the light of aforesaid subways, and other kinds of land transportation, vessels, and pipelines,
jurisprudence. In the opinion of this Court the X sign or the presence of for the purpose of transporting for consideration, passengers, mail and
"STOP, LOOK, LISTEN" warnings would not be sufficient protection of property between any points in the Philippines;
the motoring public as well as the pedestrians, in the said intersection;
Thus, respondent court utilized the doctrine of implied powers announced in National
The parties likewise have stipulated that during the pre-war days, there Airports Corporation vs. Teodoro, Sr. and Philippine Airlines, Inc. (91 Phil. 203 [1952]), to
was a railroad crossing bar at the said intersection (Par-8, Stipulation of the effect that the power to sue and be sued is implicit from the faculty to transact private
Facts). It appears that it was a self imposed requirement which has business. At any rate, respondent court characterized the railroad company as a private
been abandoned. In a case it was held that where the use of a flagman entity created not to discharge a governmental function but, among other things, to operate
was self imposed, the abandonment thereof may constitute negligence. a transport service which is essentially a business concern, and thus barred from invoking
(Fleming v. Missouri and A. Ry. Co. 198 ARDC 290, 128 S.W. 2d 286 immunity from suit.
and others; cited in Sec. 1082 SCRWARTZ, Vol. 2). Similarly, the
abandonment by the PNR of the use of the crossing bar at the In brushing aside petitioners' asseveration that the bus driver outraced the train at the
intersection at Calumpit constitutes negligence, as its installation has crossing, respondent court observed that the bus was hit by the train at its rear portion
then protruding over the tracks as the bus could not move because another truck at its
front was equally immobile due to a jeep maneuvering into a nearby parking area. Under The PNR Charter, Republic Act No. 4156, as amended by Republic Act
these tight conditions, respondent court blamed the train engineer who admitted to have No. 6366 and Presidential Decree No. 741, provides that the PNR is a
seen the maneuvering jeep at a distance (TSN, July 28, 1976, page 18) and had the last government instrumentality under government ownership during its 50-
clear chance to apply the brakes, knowing fully well that the vehicles following the jeep year term, 1964 to 2014. It is under the Office of the President of the
could not move away from the path of the train. Apart from these considerations, it was Philippines. Republic Act No. 6366 provides:
perceived below that the train was running fast during the entire trip since the train stopped
190 meters from the point of impact and arrived at Calumpit, Bulacan earlier than its Sec. 1-a. Statement of policy. — The Philippine
expected time of arrival thereat. National Railways, being a factor for socio-economic
development and growth, shall be a part of the
Moreover, respondent court agreed with the conclusion reached by the trial court that the infrastructure program of the government and as
absence of a crossing bar, signal light, flagman or switchman to warn the public of an such shall remain in and under government
approaching train constitutes negligence per the pronouncement of this Court in Lilius vs. ownership during its corporate existence. The
Manila Railroad Company (59 Phil 758 [1934]). Philippine National Railways must be administered
with the view of serving the interests of the public by
Concerning the exercise of diligence normally expected of an employer in the selection providing them the maximum of service and, while
and supervision of its employees, respondent court expressed the view that PNR was aiming at its greatest utility by the public, the
economy of operation must be ensured so that
remiss on this score since it allowed Honorio Cabardo, who finished only primary
education and became an engineer only through sheer experience, to operate the service can be rendered at the minimum passenger
and freight prices possible.
locomotive, not to mention the fact that such plea in avoidance was not asserted in the
answer and was thus belatedly raised on appeal.
The charter also provides:
Petitioner moved to reconsider, but respondent court was far from persuaded. Hence, the
petition before Us which, in essence, incorporates similar disputations anent PNR's Sec. 4. General powers. — The Philippine National
immunity from suit and the attempt to toss the burden of negligence from the train engineer Railways shall have the following general powers:
to the bus driver of herein private respondent.
(a) To do all such other things and to transact all
The bone of contention for exculpation is premised on the familiar maxim in political law such business directly or indirectly necessary,
that the State, by virtue of its sovereign nature and as reaffirmed by constitutional precept, incidental or conducive to the attainment of the
is insulated from suits without its consent (Article 16, Section 3, 1987 Constitution). purpose of the corporation; and
However, equally conceded is the legal proposition that the acquiescence of the State to
be sued can be manifested expressly through a general or special law, or indicated
(b) Generally, to exercise all powers of a railroad
implicitly, as when the State commences litigation for the purpose of asserting an corporation under the Corporation Law. (This refers
affirmative relief or when it enters into a contract (Cruz,Philippine Political Law, 1991
to Sections 81 to 102 of the Corporation Law on
edition, page 33; Sinco, Philippine Political Law, Eleventh Edition, 1962, page 34). When railroad corporations, not reproduced in the
the State participates in a covenant, it is deemed to have descended from its superior Corporation Code.)
position to the level of an ordinary citizen and thus virtually opens itself to judicial process.
Of course, We realize that this Court qualified this form of consent only to those contracts
concluded in a proprietary capacity and therefore immunity will attach for those contracts Section 36 of the Corporation Code provides that every corporation has the power to sue
entered into in a governmental capacity, following the ruling in the 1985 case of United and be sued in its corporate name. Section 13(2) of the Corporation Law provides that
States of America vs. Ruiz (136 SCRA 487 [1985]; cited by Cruz, supra at pages 36-37). every corporation has the power to sue and be sued in any court.
But the restrictive interpretation laid down therein is of no practical worth nor can it give
rise to herein petitioner PNR's exoneration since the case of Malong vs. Philippine National A sovereign is exempt from suit, not because of any formal conception
Railways (138 SCRA 63, [1985]); 3 Padilla, 1987 Constitution with Comments and Cases, or obsolete theory, but on the logical and practical ground that there
1991 edition, page 644), decided three months after Ruiz was promulgated, was can be no legal right as against the authority that makes the law on
categorical enough to specify that the Philippine National Railways "is not performing any which the right depends (Justice Holmes in Kawananakoa vs.
governmental function" (supra, at page 68). Polyblank, 205 U.S. 353, 51 L. 3d 834).

In Malong, Justice Aquino, speaking for the Court en banc, declared: The public service would be hindered, and public safety endangered, if
the supreme authority could be subjected to suit at the instance of
The Manila Railroad Company, the PNR's predecessor, as a common every citizen and, consequently, controlled in the use and disposition of
carrier, was not immune from suit under Act No. 1510, its charter. the means required for the proper administration of the Government
(The Siren vs. U.S., 7 Wall. 152, 19 L. ed. 129). (at pp. 904, 6 L ed. 244, cited in Manila Hotel Employees Association vs.
65-66). Manila Hotel Company, et al., 73 Phil. 374, 388). The Manila Hotel case
also relied on the following rulings:
To the pivotal issue of whether the State acted in a sovereign capacity when it organized
the PNR for the purpose of engaging in transportation, Malong continued to hold that: By engaging in a particular business through the
instrumentality of a corporation, the government
. . . in the instant case the State divested itself of its sovereign capacity divests itself pro hac vice of its sovereign character,
so as to render the corporation subject to the rules
when it organized the PNR which is no different from its predecessor,
the Manila Railroad Company. The PNR did not become immune from of law governing private corporations.
suit. It did not remove itself from the operation of Articles 1732 to 1766
of the Civil Code on common carriers. When the State acts in its proprietary capacity, it is
amenable to all the rules of law which bind private
The correct rule is that "not all government entities, whether corporate individuals.
or noncorporate, are immune from suits. Immunity from suit is
determined by the character of the objects for which the entity was There is not one law for the sovereign and another
organized." (Nat. Airports Corp. vs. Teodoro and Phil. Airlines, Inc., 91 for the subject, but when the sovereign engages in
Phil. 203, 206; Santos vs. Santos, 92 Phil. 281, 285; Harry Lyons, Inc. business and the conduct of business enterprises,
vs. USA, 104 Phil. 593). and contracts with individuals, whenever the
contract in any form comes before the courts, the
Suits against State agencies with respect to matters in which they have rights and obligation of the contracting parties must
assumed to act in a private or nongovernmental capacity are not suits be adjusted upon the same principles as if both
against the State (81 C.J.S. 1319). contracting parties were private persons. Both stand
upon equality before the law, and the sovereign is
merged in the dealer, contractor and suitor (People
Suits against State agencies with relation to matters vs. Stephens, 71 N.Y. 549).
in which they have assumed to act in a private or
nongovernmental capacity, and various suits against
certain corporations created by the State for public It should be noted that in Philippine National Railways vs. Union de
purposes, but to engage in matters partaking more Maquinistas, etc., L-31948, July 25, 1978, 84 SCRA 223, it was held
of the nature of ordinary business rather than that the PNR funds could be garnished at the instance of a labor union.
functions of a governmental or political character,
are not regarded as suits against the State. It would be unjust if the heirs of the victim of an alleged negligence of
the PNR employees could not sue the PNR for damages. Like any
The latter is true, although the State may own the private common carrier, the PNR is subject to the obligations of
stock or property of such a corporation, for by persons engaged in that private enterprise. It is not performing any
governmental function.
engaging in business operations through a
corporation the State divests itself so far of its
sovereign character, and by implicating consents to Thus, the National Development Company is not immune from suit. It
suits against the corporation. (81 C.J.S. 1319). does not exercise sovereign functions. It is an agency for the
performance of purely corporate, proprietary or business functions
The foregoing rule was applied to State Dock Commissions carrying on (National Development Company vs. Tobias, 117 Phil. 703, 705 and
cases cited therein; National Development Company vs. NDC
business relating to pilots, terminals and transportation (Standard Oil
Co. of New Jersey vs. U.S., 27 Fed. 2nd 370) and to State Highways Employees and Workers' Union, L-32387, August 19, 1975, 66 SCRA
Commissions created to build public roads and given appropriations in 18l, 184).
advance to discharge obligations incurred in their behalf (Arkansas
State Highway Commission vs. Dodge, 26 SW 2nd 879 and State Other government agencies not enjoying immunity from suit are the
Highway Commission of Missouri vs. Bates, 296 SW 418, cited in Social Security System (Social Security System vs. Court of Appeals,
National Airports case). L-41299, February 21, 1983, 120 SCRA 707) and the Philippine
National Bank (Republic vs. Philippine National Bank, 121 Phil. 26). (at
The point is that when the government enters into a commercial pp. 66-68).
business it abandons its sovereign capacity and is to be treated like any
other private corporation (Bank of the U.S. vs. Planters' Bank, 9 Wheat.
We come now to the question of whether respondent court properly agreed with the trial
court in imputing negligence on the part of the train engineer and his employer.

It was demonstrated beyond cavil in the course of the pre-trial hearings held for the
purpose of stipulating on crucial facts that the bus was hit on the rear portion thereof after
it crossed the railroad tracks. Then, too the train engineer was frank enough to say that he
saw the jeep maneuvering into a parking area near the crossing which caused the
obstruction in the flow of traffic such that the gravel and sand truck including the bus of
herein private respondent were not able to move forward or to take the opposite lane due
to other vehicles. The unmindful demeanor of the train engineer in surging forward despite
the obstruction before him is definitely anathema to the conduct of a prudent person
placed under the same set of perceived danger. Indeed:

When it is apparent, or when in the exercise of reasonable diligence


commensurate with the surroundings it should be apparent, to the
company that a person on its track or to get on its track is unaware of
his danger or cannot get out of the way, it becomes the duty of the
company to use such precautions, by warnings, applying brakes, or
otherwise, as may be reasonably necessary to avoid injury to him.
(65 Am. Jur., Second Edition. p. 649).

Likewise, it was established that the weather condition was characterized with intermittent
rain which should have prompted the train engineer to exercise extra precaution. Also, the
train reached Calumpit, Bulacan ahead of scheduled arrival thereat, indicating that the
train was travelling more than the normal speed of 30 kilometers per hour. If the train were
really running at 30 kilometers per hour when it was approaching the intersection, it would
probably not have travelled 190 meters more from the place of the accident (page 10, Brief
for Petitioners). All of these factors, taken collectively, engendered the concrete and yes,
correct conclusion that the train engineer was negligent who, moreover, despite the last
opportunity within his hands vis-a-vis the weather condition including the presence of
people near the intersection, could have obviated the impending collision had he
slackened his speed and applied the brakes (Picart vs. Smith, 37 Phil. 809 [1918]).Withal,
these considerations were addressed to the trial judge who, unlike appellate magistrates,
was in a better position to assign weight on factual questions. Having resolved the
question of negligence between the train engineer and the bus driver after collating the
mass of evidence, the conclusion reached thereafter thus commands great respect
especially so in this case where respondent court gave its nod of approval to the findings
of the court of origin (Co vs. Court of Appeals, 193 SCRA 198; 206 [1991]); Amigo vs.
Teves, 50 O.G. 5799; Regalado, Remedial Law Compendium, Fifth edition, page 353).

What exacerbates against petitioners' contention is the authority in this jurisdiction to the
effect that the failure of a railroad company to install a semaphore or at the very least, to
post a flagman or watchman to warn the public of the passing train amounts to negligence
(Lilius vs. Manila Railroad Company, 59 Phil. 758 [1934]).

WHEREFORE, the petition is hereby DISMISSED and the decision of respondent court
AFFIRMED.

SO ORDERED.
Republic of the Philippines the prayer for dismissal. Reconsideration of this order having been also denied by the
SUPREME COURT court in banc, the petitioners brought the case to this Court through the present petition for
Manila certiorari and prohibition.

EN BANC We find the petition to be meritorious.

G.R. No. L-15751 January 28, 1961 The Bureau of Printing is an office of the Government created by the Administrative Code
of 1916 (Act No. 2657). As such instrumentality of the Government, it operates under the
BUREAU OF PRINTING, SERAFIN SALVADOR and MARIANO LEDESMA, petitioners, direct supervision of the Executive Secretary, Office of the President, and is "charged with
the execution of all printing and binding, including work incidental to those processes,
vs.
THE BUREAU OF PRINTING EMPLOYEES ASSOCIATION (NLU), PACIFICO required by the National Government and such other work of the same character as said
Bureau may, by law or by order of the (Secretary of Finance) Executive Secretary, be
ADVINCULA, ROBERTO MENDOZA, PONCIANO ARGANDA and TEODULO
TOLERAN, respondents. authorized to undertake . . .." (See. 1644, Rev. Adm. Code). It has no corporate existence,
and its appropriations are provided for in the General Appropriations Act. Designed to
meet the printing needs of the Government, it is primarily a service bureau and obviously,
Office of the Solicitor General for petitioners. not engaged in business or occupation for pecuniary profit.
Eulogio R. Lerum for respondents.
It is true, as stated in the order complained of, that the Bureau of Printing receives outside
GUTIERREZ DAVID, J.: jobs and that many of its employees are paid for overtime work on regular working days
and on holidays, but these facts do not justify the conclusion that its functions are
This is a petition for certiorari and prohibition with preliminary injunction to annul Certain "exclusively proprietary in nature." Overtime work in the Bureau of Printing is done only
orders of the respondent Court of Industrial Relations and to restrain it from further when the interest of the service so requires (sec. 566, Rev. Adm. Code). As a matter of
proceeding in the action for unfair labor practice pending before it on the ground of lack of administrative policy, the overtime compensation may be paid, but such payment is
jurisdiction. Giving due course to the petition, this Court ordered the issuance of the writ of discretionary with the head of the Bureau depending upon its current appropriations, so
preliminary injunction prayed for without bond. that it cannot be the basis for holding that the functions of said Bureau are wholly
proprietary in character. Anent the additional work it executes for private persons, we find
that such work is done upon request, as distinguished from those solicited, and only "as
The action in question was — upon complaint of the respondents Bureau of Printing the requirements of Government work will permit" (sec. 1654, Rev. Adm. Code), and "upon
Employees Association (NLU) Pacifico Advincula, Roberto Mendoza, Ponciano Arganda terms fixed by the Director of Printing, with the approval of the Department Head" (sec.
and Teodulo Toleran — filed by an acting prosecutor of the Industrial Court against herein 1655, id.). As shown by the uncontradicted evidence of the petitioners, most of these
petitioner Bureau of Printing, Serafin Salvador, the Acting Secretary of the Department of works consist of orders for greeting cards during Christmas from government officials, and
General Services, and Mariano Ledesma the Director of the Bureau of Printing. The for printing of checks of private banking institutions. On those greeting cards, the
complaint alleged that Serafin Salvador and Mariano Ledesma have been engaging in Government seal, of which only the Bureau of Printing is authorized to use, is embossed,
unfair labor practices by interfering with, or coercing the employees of the Bureau of and on the bank cheeks, only the Bureau of Printing can print the reproduction of the
Printing particularly the members of the complaining association petition, in the exercise of official documentary stamps appearing thereon. The volume of private jobs done, in
their right to self-organization an discriminating in regard to hire and tenure of their comparison with government jobs, is only one-half of 1 per cent, and in computing the
employment in order to discourage them from pursuing the union activities. costs for work done for private parties, the Bureau does not include profit because it is not
allowed to make any. Clearly, while the Bureau of Printing is allowed to undertake private
Answering the complaint, the petitioners Bureau of Printing, Serafin Salvador and Mariano printing jobs, it cannot be pretended that it is thereby an industrial or business concern.
Ledesma denied the charges of unfair labor practices attributed to the and, by way of The additional work it executes for private parties is merely incidental to its function, and
affirmative defenses, alleged, among other things, that respondents Pacifico Advincula, although such work may be deemed proprietary in character, there is no showing that the
Roberto Mendoza Ponciano Arganda and Teodulo Toleran were suspended pending result employees performing said proprietary function are separate and distinct from those
of an administrative investigation against them for breach of Civil Service rules and employed in its general governmental functions.
regulations petitions; that the Bureau of Printing has no juridical personality to sue and be
sued; that said Bureau of Printing is not an industrial concern engaged for the purpose of From what has been stated, it is obvious that the Court of Industrial Relations did not
gain but is an agency of the Republic performing government functions. For relief, they acquire jurisdiction over the respondent Bureau of Printing, and is thus devoid of any
prayed that the case be dismissed for lack of jurisdiction. Thereafter, before the case could authority to take cognizance of the case. This Court has already held in a long line of
be heard, petitioners filed an "Omnibus Motion" asking for a preliminary hearing on the decisions that the Industrial Court has no jurisdiction to hear and determine the complaint
question of jurisdiction raised by them in their answer and for suspension of the trial of the for unfair labor practice filed against institutions or corporations not organized for profit
case on the merits pending the determination of such jurisdictional question. The motion and, consequently, not an industrial or business organization. This is so because the
was granted, but after hearing, the trial judge of the Industrial Court in an order dated Industrial Peace Act was intended to apply only to industrial employment, and to govern
January 27, 1959 sustained the jurisdiction of the court on the theory that the functions of the relations between employers engaged in industry and occupations for purposes of
the Bureau of Printing are "exclusively proprietary in nature," and, consequently, denied gain, and their industrial employees. (University of the Philippines, et al. vs. CIR, et al.,
G.R. No. L-15416, April 28, 1960; University of Sto. Tomas vs. Villanueva, et al., G.R. No.
L-13748, October 30, 1959; La Consolacion College vs. CIR, G.R. No. L-13282, April 22,
1960; See also the cases cited therein.) .

Indeed, as an office of the Government, without any corporate or juridical personality, the
Bureau of Printing cannot be sued. (Sec. 1, Rule 3, Rules of Court). Any suit, action or
proceeding against it, if it were to produce any effect, would actually be a suit, action or
proceeding against the Government itself, and the rule is settled that the Government
cannot be sued without its consent, much less over its objection. (See Metran vs. Paredes,
45 Off. Gaz. 2835; Angat River Irrigation System, et al. vs. Angat River Workers' Union, et.
al., G.R. Nos. L-10943-44, December 28, 1957).

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

Bengzon, Bautista Angelo, Labrador, Paredes and Dizon, JJ., concur.


Reyes, J.B.L., J., concurs in the result.
Republic of the Philippines the subject shipment as made of synthetic (polyethylene) woven fabric classifiable under
SUPREME COURT Tariff Heading No. 51.04-B at 100% ad valorem. Thus, Bagong Buhay Trading was
Manila 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
HIRD DIVISION 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
G.R. No. 42204 January 21, 1993 reconsideration but the same was denied on January 22, 1973. 7

HON. RAMON J. FAROLAN, JR., in his capacity as Commissioner of From the Commissioner of Customs, private respondent elevated his case before the
Customs, petitioner, Court of Tax Appeals. Upon review, the Court of Tax Appeals reversed the decision of the
vs. Commissioner of Customs. It ruled that the Commissioner erred in imputing fraud upon
COURT OF TAX APPEALS and BAGONG BUHAY TRADING, respondents. 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
The Solicitor General for petitioner. 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
Jorge G. Macapagal counsel for respondent. 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
Aurea Aragon-Casiano for Bagong Buhay Trading.
Thereafter, the Commissioner of Customs moved for reconsideration. On November 19,
1975, the Court of Tax Appeals denied said motion for reconsideration. 9

ROMERO, J.: 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
This is a petition for review on certiorari which seeks to annul and set aside the decision of exposed to the natural elements, we ordered the release of the goods on June 2, 1986.
the Court of Tax Appeals dated December 27, 1974 (CTA Case No. 2490) reversing the Consequently, on July 26, 1986, private respondent posted a cash bond of P149,443.36 to
decision of the Commissioner of Customs which affirmed the decision of the Collector of secure the release of 64 bales10 out of the 80 bales11 originally delivered on January 30,
Customs.1 1972. Sixteen bales12 remain missing.

The undisputed facts are as follows: 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
On January 30, 1972, the vessel S/S "Pacific Hawk" with Registry No. 170 arrived at the condition. Consequently, private respondent demands that the Bureau of Customs be
Port of Manila carrying, among others, 80 bales of screen net consigned to Bagong Buhay ordered to pay for damages for the 43,050 yards 13 it actually lost.14
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 Hence, this petition, the issues being; a) whether or not the shipment in question is subject
kilograms valued at $3,750.00 and classified under Tariff Heading No. 39.06-B of the Tariff to forfeiture under Section 2530-M subparagraphs (3), (4) and (5) of the Tariff and
and Customs Code2 at 35% ad valorem. Since the customs examiner found the subject Customs Code; b) whether or not the shipment in question falls under Tariff Heading No.
shipment reflective of the declaration, Bagong Buhay paid the duties and taxes due in the 39.06-B (should be 39.02-B) of the Tariff and Customs Code subject to ad valorem duty of
amount of P11,350.00 which was paid through the Bank of Asia under Official Receipt No. 35% instead of Tariff Heading No. 51.04-B with ad valorem of 100% and c) whether or not
042787 dated February 1, 1972. Thereafter, the customs appraiser made a return of duty. the Collector of Customs may be held liable for the 43,050 yards actually lost by private
respondent.
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 Section 2530, paragraph m, subparagraphs (3), (4) and (5) states:
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 Sec. 2530. Property Subject to Forfeiture Under Tariff and Customs
rolls.3 Re-appraised, the shipment was valued at $37,560.00 or $10.15 per yard instead of Law. — Any vehicle, vessel or aircraft, cargo, article and other objects
$.075 per yard as previously declared. Furthermore, the Collector of Customs determined shall, under the following conditions be subjected to forfeiture:
xxx xxx xxx 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
m. Any article sought to be imported or exported. charged with the wrongful making thereof because such entry or declaration merely
restated faithfully the data found in the corresponding certificate of origin, 17 certificate of
manager of the shipper,18 the packing lists 19 and the bill of lading20 which were all
xxx xxx xxx prepared by its
suppliers abroad. If, at all, the wrongful making or falsity of the documents above-
(3) On the strength of a false declaration or affidavit mentioned can only be attributed to Bagong Buhay's foreign suppliers or shippers.
or affidavit executed by the owner, importer,
exporter or consignee concerning the importation of With regard to the second requirement on falsity, it bears mentioning that the evidence on
such article; 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
(4) On the strength of a false invoice or other knowledge of any falsity on the subject importation.
document executed by the owner, importer, exporter
or consignee concerning the importation or Since private respondent's misdeclaration can be traced directly to its foreign suppliers,
exportation of such article; and. Section 2530, paragraph m, subparagraphs (3) and (4) cannot find application.

(5) Through any other practice or device contrary Applying subparagraph (5), fraud must be committed by an importer/consignee to evade
to law by means of which such articles was entered payment of the duties due.21 We support the stance of the Court of Tax Appeals that the
through a custom-house to the prejudice of Commissioner of Customs failed to show that fraud had been committed by the private
government. (Emphasis supplied). 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
Petitioner contends that there has been a misdeclaration as to the quantity in rolls of the order to induce another to give up some right.22 As explained earlier, the import entry was
shipment in question, the undisputed fact being that the said shipment consisted of 1,600 prepared on the basis of the shipping documents provided by the foreign supplier or
rolls and not 500 rolls as declared in the import entry. We agree with the contention of the shipper. Hence, Bagong Buhay Trading can be considered to have acted in good faith
petitioner. In declaring the weight of its shipment in an import entry, through its customs when it relied on these documents.
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 Proceeding now to the question of the correct classification of the questioned shipments,
private respondent. Had it not been for a re-examination and re-appraisal of the shipment petitioner contends that the same falls under Tariff Heading No. 51.04 being a "synthetic
by the Collector of Customs which yielded a difference of 823 kilograms, the government (polyethylene) woven fabric." On the other hand, private respondent contends that these
would have lost revenue derived from customs duties. fall under Tariff Heading No. 39.06 (should be 39.02), having been found to be made of
polyethylene plastic.
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, Heading No. 39.02 of the Tariff and Customs Code provides:
exporter or consignee as set forth in Section 2530, paragraph m, subparagraph (3), and/or
(4).
39.02 — Polymerisation and copolymerisation products (for example,
polyethylene, polytetrahaloethylene, polyisobutylene, polystyrene,
In defense of its position denying the commission of misdeclaration, private respondent polyvinyl chloride, polyvinyl acetate, polyvinyl chloroacetate and other
contends that its import entry was based solely on the shipping documents and that it had polyvinyl derivatives, polyacrylic and polymethacrylic derivatives,
no knowledge of any flaw in the said documents at the time the entry was filed. For this coumaroneindene resins).
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 The principal products included in this heading are:

Private respondent's argument is persuasive. Under Section 2530, paragraph m, (1) Polymerization products of ethylene or its substitution derivatives,
subparagraphs (3) and (4), the requisites for forfeiture are: (1) the wrongful making by the particularly the halogen derivatives.
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 Examples of these are polyethylene, polytetrafluro-ethylene and
the importation or exportation of merchandise; and (2) that such declaration, affidavit, polychlorotrifluro-ethylene. Their characteristic is that they are
invoice, letter or paper is false.16 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: 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
51.04. — Woven fabrics of man-made fibers (continuous) including 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
woven fabrics of monofil or strip of heading No. 51.01 or 51.02.
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
This heading covers woven fabrics (as described in Part [I] [C] of the
General Explanatory Note on Section XI) made of yarns of continuous
On this point, the political doctrine that "the state may not be sued without its consent,"
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, categorically applies.30 As an unincorporated government agency without any separate
furnishing fabrics, tyre fabrics, tent fabrics, parachute fabrics, juridical personality of its own, the Bureau of Customs enjoys immunity from suit. Along
etc.24 (Emphasis supplied) 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
To correctly classify the subject importation, we need to refer to chemical analysis respondent's claim for damages against the Commissioner of Customs must fail.
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 sample25 and "the result is that the WHEREFORE, the decision of the respondent Court of Tax Appeals is AFFIRMED. The
attached sample submitted under Entry No. 8651 was found to be made wholly of Collector of Customs is directed to expeditiously re-compute the customs duties applying
Polyethylene plastic."26 Tariff Heading 39.02 at the rate of 35% ad valorem on the 13,600 kilograms of
polyethylene plastic imported by private respondent.

A similar result conducted by the Adamson University Testing Laboratories provides as


follows: SO ORDERED.

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
FIRST DIVISION DECISION

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


GRIÑO-AQUINO, J.:
VETERANS MANPOWER AND PROTECTIVE SERVICES, INC., Petitioner, v. THE
COURT OF APPEALS, THE CHIEF OF PHILIPPINE CONSTABULARY and PHILIPPINE
CONSTABULARY SUPERVISORY UNIT FOR SECURITY AND INVESTIGATION This is a petition for review on certiorari of the decision dated August 11, 1989, of the
AGENCIES (PC-SUSIA), Respondents. Court of Appeals in CA-G.R. SP No. 15990, entitled "The Chief of Philippine Constabulary
(PC) and Philippine Constabulary Supervisor Unit for Security and Investigation Agencies
Franciso A. Lava, Jr. and Andresito X. Fornier for Petitioner. (PC-SUSIA) v. Hon. Omar U. Amin and Veterans Manpower and Protective Services, Inc.
(VMPSI)," lifting the writ of preliminary injunction which the Regional Trial Court had issued
to the PC-SUSIA enjoining them from committing acts that would result in the cancellation
SYLLABUS or non-renewal of the license of VMPSI to operate as a security agency.chanrobles virtual
lawlibrary

1. POLITICAL LAW; IMMUNITY FROM SUIT; THE PHILIPPINE CONSTABULARY CHIEF On March 28, 1988, VMPSI filed a complaint in the Regional Trial Court at Makati, Metro
AND THE PC-SUSIA MAY NOT BE SUED WITHOUT THE CONSENT OF THE STATE. Manila, praying the court to:jgc:chanrobles.com.ph
— The State may not be sued without its consent (Article XVI, Section 3, of the 1987
Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being "A. Forthwith issue a temporary restraining order to preserve the status quo, enjoining the
instrumentalities of the national government exercising a primarily governmental function defendants, or any one acting in their place or stead, to refrain from committing acts that
of regulating the organization and operation of private detective, watchmen, or security would result in the cancellation or non-renewal of VMPSI’s license;
guard agencies, said official (the PC Chief) and agency (PC-SUSIA) may not be sued
without the Government’s consent, especially in this case because VMPSI’s complaint "B. In due time, issue a writ of preliminary injunction to the same effect;
seeks not only to compel the public respondents to act in a certain way, but worse,
because VMPSI seeks actual and compensatory damages in the sum of P1,000,000.00, "C. Render decision and judgment declaring null and void the amendment of Section 4 of
exemplary damages in the same amount, and P200,000.00 as attorney’s fees from said R.A. No. 5487, by PD No. 11 exempting organizations like PADPAO from the prohibition
public respondents. Even if its action prospers, the payment of its monetary claims may that no person shall organize or have an interest in more than one agency, declaring
not be enforced because the State did not consent to appropriate the necessary funds for PADPAO as an illegal organization existing in violation of said prohibition, without the
that purpose. illegal exemption provided in PD No. 11; declaring null and void Section 17 of R.A. No.
5487 which provides for the issuance of rules and regulations in consultation with
2. ID.; ID.; PUBLIC OFFICIAL MAY BE SUED IN HIS PERSONAL CAPACITY IF HE PADPAO, declaring null and void the February 1, 1982 directive of Col. Sabas V. Edadas,
ACTS, AMONG OTHERS BEYOND THE SCOPE OF HIS AUTHORITY; CASE AT BAR. in the name of the then PC Chief, requiring all private security agencies/security forces
— A public official may sometimes be held liable in his personal or private capacity if he such as VMPSI to join PADPAO as a prerequisite to secure/renew their licenses, declaring
acts in bad faith, or beyond the scope of his authority or jurisdiction (Shauf v. Court of that VMPSI did not engage in ‘cut-throat competition’ in its contract with MWSS, ordering
Appeals, supra), however, since the acts for which the PC Chief and PC-SUSIA are being defendants PC Chief and PC-SUSIA to renew the license of VMPSI; ordering the
called to account in this case, were performed by them as part of their official duties, defendants to refrain from further harassing VMPSI and from threatening VMPSI with
without malice, gross negligence, or bad faith, no recovery may be had against them in cancellations or non-renewal of license, without legal and justifiable cause; ordering the
their private capacities. defendants to pay to VMPSI the sum of P1,000,000.00 as actual and compensatory
damages, P1,000,000.00 as exemplary damages, and P200,000.00 as attorney’s fees and
3. ID.; ID.; CONSENT TO BE SUED MUST EMANATE FROM A LEGISLATIVE ACT. — expenses of litigation; and granting such further or other reliefs to VMPSI as may be
Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be deemed lawful, equitable and just." (pp. 55-56, Rollo.)
lightly inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority, hence, The constitutionality of the following provisions of R.A. 5487 (otherwise known as the
from a legislative act, not from a mere memorandum. Without such consent, the trial court "Private Security Agency Law"), as amended, is questioned by VMPSI in its
did not acquire jurisdiction over the public respondents. complaint:chanrobles.com.ph : virtual law library

4. ID.; ID.; REASONS BEHIND. — The state immunity doctrine rests upon reasons of "SECTION 4. Who may Organize a Security or Watchman Agency. — Any Filipino citizen
public policy and the inconvenience and danger which would flow from a different rule. "It or a corporation, partnership, or association, with a minimum capital of five thousand
is obvious that public service would be hindered, and public safety endangered, if the pesos, one hundred per cent of which is owned and controlled by Filipino citizens may
supreme authority could be subjected to suits at the instance of every citizen, and, organize a security or watchman agency: Provided, That no person shall organize or have
consequently, controlled in the use and disposition of the means required for the proper an interest in, more than one such agency except those which are already existing at the
administration of the government" (Siren v. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 promulgation of this Decree: . . ." (As amended by P.D. Nos. 11 and 100.)
SCRA 477).
"SECTION 17. Rules and Regulations by Chief, Philippine Constabulary. — The Chief of
the Philippine Constabulary, in consultation with the Philippine Association of Detective
and Protective Agency Operators, Inc. and subject to the provision of existing laws, is VMPSI’s license already expired on March 31, 1988, hence, the restraining order or
hereby authorized to issue the rules and regulations necessary to carry out the purpose of preliminary injunction would not serve any purpose because there was no more license to
this Act."cralaw virtua1aw library be cancelled (Annex H, Petition). Respondent VMPSI opposed the motion.

VMPSI alleges that the above provisions of R.A. No. 5487 violate the provisions of the On April 18, 1988, the lower court denied VMPSI’s application for a writ of preliminary
1987 Constitution against monopolies, unfair competition and combinations in restraint of injunction for being premature because it "has up to May 31, 1988 within which to file its
trade, and tend to favor and institutionalize the Philippine Association of Detective and application for renewal pursuant to Section 2 (e) of Presidential Decree No. 199, . . ." (p.
Protective Agency Operators, Inc. (PADPAO) which is monopolistic because it has an 140, Rollo.).chanrobles.com : virtual law library
interest in more than one security agency.
On May 23, 1988, VMPSI reiterated its application for the issuance of a writ of preliminary
Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph (g) of the injunction because PC-SUSIA had rejected payment of the penalty for its failure to submit
Modifying Regulations on the Issuance of License to Operate and Private Security its application for renewal of its license and the requirements therefor within the prescribed
Licenses and Specifying Regulations for the Operation of PADPAO issued by then PC period in Section 2(e) of the Revised Rules and Regulations Implementing R.A. 5487, as
Chief Lt. Gen. Fidel V. Ramos, through Col. Sabas V. Edades, requiring that "all private amended by P.D. 1919 (Annex M, Petition).
security agencies/company security forces must register as members of any PADPAO
Chapter organized within the Region where their main offices are located . . ." (pp. 5-6, On June 10, 1998, the RTC-Makati issued a writ of preliminary injunction upon a bond of
Complaint in Civil Case No. 88-471). As such membership requirement in PADPAO is P100,000.00, restraining the defendants, or any one acting in their behalf, from cancelling
compulsory in nature, it allegedly violates legal and constitutional provisions against or denying renewal of VMPSI’s license, until further orders from the court.
monopolies, unfair competition and combinations in restraint of trade.chanrobles.com :
virtual law library The PC Chief and PC-SUSIA filed a Motion for Reconsideration of the above order, but it
was denied by the court in its Order of August 10, 1988 (Annex R, Petition).
On May 12, 1986, a Memorandum of Agreement was executed by PADPAO and the PC
Chief, which fixed the minimum monthly contract rate per guard for eight (8) hours of On November 3, 1988, the PC Chief and PC-SUSIA sought relief by a petition
security service per day at P2,255.00 within Metro Manila and P2,215.00 outside of Metro for certiorari in the Court of Appeals.
Manila (Annex B, Petition).
On August 11, 1989, the Court of Appeals granted the petition. The dispositive portion of
On June 29, 1987, Odin Security Agency (Odin) filed a complaint with PADPAO accusing its decision reads:jgc:chanrobles.com.ph
VMPSI of cut-throat competition by undercutting its contract rate for security services
rendered to the Metropolitan Waterworks and Sewerage System (MWSS), charging said "WHEREFORE, the petition for certiorari filed by petitioners PC Chief and PC-SUSIA is
customer lower than the standard minimum rates provided in the Memorandum of hereby GRANTED, and the RTC-Makati, Branch 135, is ordered to dismiss the complaint
Agreement dated May 12, 1986. filed by respondent VMPSI in Civil Case No. 88-471, insofar as petitioners PC Chief and
PC-SUSIA are concerned, for lack of jurisdiction. The writ of preliminary injunction issued
PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO Committee on on June 10, 1988, is dissolved." (pp. 295-296, Rollo.)
Discipline recommended the expulsion of VMPSI from PADPAO and the cancellation of its
license to operate a security agency (Annex D, Petition). VMPSI came to us with this petition for review.

The PC-SUSIA made similar findings and likewise recommended the cancellation of The primary issue in this case is whether or not VMPSI’s complaint against the PC Chief
VMPSI’s license (Annex E, Petition). and PC-SUSIA is a suit against the State without its consent.

As a result, PADPAO refused to issue a clearance/certificate of membership to VMPSI The answer is yes.
when it requested one.
The State may not be sued without its consent (Article XVI, Section 3, of the 1987
VMPSI wrote the PC Chief on March 10, 1988, requesting him to set aside or disregard the Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being
findings of PADPAO and consider VMPSI’s application for renewal of its license, even instrumentalities of the national government exercising a primarily governmental function
without a certificate of membership from PADPAO (Annex F, Petition). of regulating the organization and operation of private detective, watchmen, or security
guard agencies, said official (the PC Chief) and agency (PC-SUSIA) may not be sued
As the PC Chief did not reply, and VMPSI’s license was expiring on March 31, 1988, without the Government’s consent, especially in this case because VMPSI’s complaint
VMPSI filed Civil Case No. 88-471 in the RTC-Makati, Branch 135, on March 28, 1988 seeks not only to compel the public respondents to act in a certain way, but worse,
against the PC Chief and PC-SUSIA. On the same date, the court issued a restraining because VMPSI seeks actual and compensatory damages in the sum of P1,000,000.00,
order enjoining the PC Chief and PC-SUSIA "from committing acts that would result in the exemplary damages in the same amount, and P200,000.00 as attorney’s fees from said
cancellation or non-renewal of VMPSI’s license" (Annex G, Petition). public respondents. Even if its action prospers, the payment of its monetary claims may
not be enforced because the State did not consent to appropriate the necessary funds for
The PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the Issuance of Writ that purpose.chanroblesvirtualawlibrary
of Preliminary Injunction, and Motion to Quash the Temporary Restraining Order," on the
grounds that the case is against the State which had not given consent thereto and that Thus did we hold in Shauf v. Court of Appeals, 191 SCRA 713:jgc:chanrobles.com.ph
for as against the inconvenience that may be cause [by] private parties, the loss of
"While the doctrine appears to prohibit only suits against the state without its consent, it is governmental efficiency and the obstacle to the performance of its multifarious functions
also applicable to complaints filed against officials of the state for acts allegedly performed are far greater if such a fundamental principle were abandoned and the availability of
by them in the discharge of their duties. The rule is that if the judgment against such judicial remedy were not thus restricted. With the well known propensity on the part of our
officials will require the state itself to perform an affirmative act to satisfy the same, such as people to go to court, at the least provocation, the loss of time and energy required to
the appropriation of the amount needed to pay the damages awarded against them, the defend against law suits, in the absence of such a basic principle that constitutes such an
suit must be regarded as against the state itself although it has not been formally effective obstacles, could very well be imagined." (citing Providence Washington Insurance
impleaded." (Emphasis supplied.) Co. v. Republic, 29 SCRA 598.)cralawnad

A public official may sometimes be held liable in his personal or private capacity if he acts WHEREFORE, the petition for review is DENIED and the judgment appealed from is
in bad faith, or beyond the scope of his authority or jurisdiction (Shauf v. Court of Appeals, AFFIRMED in toto. No costs.
supra), however, since the acts for which the PC Chief and PC-SUSIA are being called to
account in this case, were performed by them as part of their official duties, without malice, SO ORDERED.
gross negligence, or bad faith, no recovery may be had against them in their private
capacities.

We agree with the observation of the Court of Appeals that the Memorandum of
Agreement dated May 12, 1986 does not constitute an implied consent by the State to be
sued:jgc:chanrobles.com.ph

"The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief in
relation to the exercise of a function sovereign in nature. The correct test for the
application of state immunity is not the conclusion of a contract by the State but the legal
nature of the act. This was clearly enunciated in the case of United States of America v.
Ruiz where the Hon. Supreme Court held:jgc:chanrobles.com.ph

"‘The restrictive application of State immunity is proper only when the proceedings arise
out of commercial transactions of the foreign sovereign, its commercial activities or
economic affairs. Stated differently, a State may be said to have descended to the level of
an individual and can thus be deemed to have tacitly given its consent to be sued only
when it enters into a business contract. It does not apply where the contract relates to the
exercise of its functions.’ (136 SCRA 487, 492.)

"In the instant case, the Memorandum of Agreement entered into by the PC Chief and
PADPAO was intended to professionalize the industry and to standardize the salaries of
security guards as well as the current rates of security services, clearly, a governmental
function. The execution of the said agreement is incidental to the purpose of R.A. 5487, as
amended, which is to regulate the organization and operation of private detective,
watchmen or security guard agencies. (Emphasis ours.)" (pp. 258-259, Rollo.)

Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be
lightly inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority, hence,
from a legislative act, not from a mere memorandum. Without such consent, the trial court
did not acquire jurisdiction over the public respondents.

The state immunity doctrine rests upon reasons of public policy and the inconvenience and
danger which would flow from a different rule. "It is obvious that public service would be
hindered, and public safety endangered, if the supreme authority could be subjected to
suits at the instance of every citizen, and, consequently, controlled in the use and
disposition of the means required for the proper administration of the government" (Siren v.
U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA 477). In the same vein, this Court in
Republic v. Purisima (78 SCRA 470, 473) rationalized:jgc:chanrobles.com.ph

"Nonetheless, a continued adherence to the doctrine of nonsuability is not to be deplored


Republic of the Philippines Service is a unit of the Bureau of Custom, set up under Customs Administrative Order No.
SUPREME COURT 8-62 of November 9, 1962 (Annex "A" to Motion to Dismiss, pp. 13-15, Record an Appeal).
Manila It follows that the defendants herein cannot he sued under the first two abovementioned
categories of natural or juridical persons.
EN BANC
Nonetheless it is urged that by authorizing the Bureau of Customs to engage in arrastre
G.R. No. L-23139 December 17, 1966 service, the law thereby impliedly authorizes it to be sued as arrastre operator, for the
reason that the nature of this function (arrastre service) is proprietary, not governmental.
Thus, insofar as arrastre operation is concerned, appellant would put defendants under the
MOBIL PHILIPPINES EXPLORATION, INC., plaintiff-appellant, third category of "entities authorized by law" to be sued. Stated differently, it is argued that
vs. while there is no law expressly authorizing the Bureau of Customs to sue or be sued, still
CUSTOMS ARRASTRE SERVICE and BUREAU of CUSTOMS, defendants-appellees. its capacity to be sued is implied from its very power to render arrastre service at the Port
of Manila, which it is alleged, amounts to the transaction of a private business.
BENGZON, J.P., J.:
The statutory provision on arrastre service is found in Section 1213 of Republic Act 1937
Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville" sometime in (Tariff and Customs Code, effective June 1, 1957), and it states:
November of 1962, consigned to Mobil Philippines Exploration, Inc., Manila. The shipment
arrived at the Port of Manila on April 10, 1963, and was discharged to the custody of the SEC. 1213. Receiving, Handling, Custody and Delivery of Articles.—The Bureau
Customs Arrastre Service, the unit of the Bureau of Customs then handling arrastre of Customs shall have exclusive supervision and control over the receiving,
operations therein. The Customs Arrastre Service later delivered to the broker of the handling, custody and delivery of articles on the wharves and piers at all ports of
consignee three cases only of the shipment. entry and in the exercise of its functions it is hereby authorized to acquire, take
over, operate and superintend such plants and facilities as may be necessary for
On April 4, 1964 Mobil Philippines Exploration, Inc., filed suit in the Court of First Instance the receiving, handling, custody and delivery of articles, and the convenience and
of Manila against the Customs Arrastre Service and the Bureau of Customs to recover the comfort of passengers and the handling of baggage; as well as to acquire fire
value of the undelivered case in the amount of P18,493.37 plus other damages. protection equipment for use in the piers: Provided, That whenever in his
judgment the receiving, handling, custody and delivery of articles can be carried
on by private parties with greater efficiency, the Commissioner may, after public
On April 20, 1964 the defendants filed a motion to dismiss the complaint on the ground bidding and subject to the approval of the department head, contract with any
that not being persons under the law, defendants cannot be sued. private party for the service of receiving, handling, custody and delivery of
articles, and in such event, the contract may include the sale or lease of
After plaintiff opposed the motion, the court, on April 25, 1964, dismissed the complaint on government-owned equipment and facilities used in such service.
the ground that neither the Customs Arrastre Service nor the Bureau of Customs is suable.
Plaintiff appealed to Us from the order of dismissal. In Associated Workers Union, et al. vs. Bureau of Customs, et al., L-21397, resolution of
August 6, 1963, this Court indeed held "that the foregoing statutory provisions authorizing
Raised, therefore, in this appeal is the purely legal question of the defendants' suability the grant by contract to any private party of the right to render said arrastre services
under the facts stated. necessarily imply that the same is deemed by Congress to be proprietary or non-
governmental function." The issue in said case, however, was whether laborers engaged
in arrastre service fall under the concept of employees in the Government employed in
Appellant contends that not all government entities are immune from suit; that defendant governmental functions for purposes of the prohibition in Section 11, Republic Act 875 to
Bureau of Customs as operator of the arrastre service at the Port of Manila, is discharging the effect that "employees in the Government . . . shall not strike," but "may belong to any
proprietary functions and as such, can be sued by private individuals. labor organization which does not impose the obligation to strike or to join in strike," which
prohibition "shall apply only to employees employed in governmental functions of the
The Rules of Court, in Section 1, Rule 3, provide: Government . . . .

SECTION 1. Who may be parties.—Only natural or juridical persons or entities Thus, the ruling therein was that the Court of Industrial Relations had jurisdiction over the
authorized by law may be parties in a civil action. subject matter of the case, but not that the Bureau of Customs can be sued. Said issue of
suability was not resolved, the resolution stating only that "the issue on the personality or
lack of personality of the Bureau of Customs to be sued does not affect the jurisdiction of
Accordingly, a defendant in a civil suit must be (1) a natural person; (2) a juridical person
the lower court over the subject matter of the case, aside from the fact that amendment
or (3) an entity authorized by law to be sued. Neither the Bureau of Customs nor (a fortiori)
may be made in the pleadings by the inclusion as respondents of the public officers
its function unit, the Customs Arrastre Service, is a person. They are merely parts of the
deemed responsible, for the unfair labor practice acts charged by petitioning Unions".
machinery of Government. The Bureau of Customs is a bureau under the Department of
Finance (Sec. 81, Revised Administrative Code); and as stated, the Customs Arrastre
Now, the fact that a non-corporate government entity performs a function proprietary in Clearly, therefore, although said arrastre function may be deemed proprietary, it is a
nature does not necessarily result in its being suable. If said non-governmental function is necessary incident of the primary and governmental function of the Bureau of Customs, so
undertaken as an incident to its governmental function, there is no waiver thereby of the that engaging in the same does not necessarily render said Bureau liable to suit. For
sovereign immunity from suit extended to such government entity. This is the doctrine otherwise, it could not perform its governmental function without necessarily exposing itself
recognized in Bureau of Printing, et al. vs. Bureau of Printing Employees Association, et to suit. Sovereign immunity, granted as to the end, should not be denied as to the
al., L-15751, January 28, 1961: necessary means to that end.

The Bureau of Printing is an office of the Government created by the And herein lies the distinction between the present case and that of National Airports
Administrative Code of 1916 (Act No. 2657). As such instrumentality of the Corporation vs. Teodoro, 91 Phil. 203, on which appellant would rely. For there, the Civil
Government, it operates under the direct supervision of the Executive Secretary, Aeronautics Administration was found have for its prime reason for existence not a
Office of the President, and is "charged with the execution of all printing and governmental but a proprietary function, so that to it the latter was not a mere incidental
binding, including work incidental to those processes, required by the National function:
Government and such other work of the same character as said Bureau may, by
law or by order of the (Secretary of Finance) Executive Secretary, be authorized Among the general powers of the Civil Aeronautics Administration are, under
to undertake . . . ." (Sec. 1644, Rev. Adm. Code.) It has no corporate existence, Section 3, to execute contracts of any kind, to purchase property, and to grant
and its appropriations are provided for in the General Appropriations Act. concessions rights, and under Section 4, to charge landing fees, royalties on
Designed to meet the printing needs of the Government, it is primarily a service
sales to aircraft of aviation gasoline, accessories and supplies, and rentals for the
bureau and, obviously, not engaged in business or occupation for pecuniary use of any property under its management.
profit.

These provisions confer upon the Civil Aeronautics Administration, in our opinion,
xxx xxx xxx
the power to sue and be sued. The power to sue and be sued is implied from the
power to transact private business. . . .
. . . Clearly, while the Bureau of Printing is allowed to undertake private printing
jobs, it cannot be pretended that it is thereby an industrial or business concern. xxx xxx xxx
The additional work it executes for private parties is merely incidental to its
function, and although such work may be deemed proprietary in character, there
is no showing that the employees performing said proprietary function are The Civil Aeronautics Administration comes under the category of a private
separate and distinct from those emoloyed in its general governmental functions. entity. Although not a body corporate it was created, like the National Airports
Corporation, not to maintain a necessary function of government, but to run what
is essentially a business, even if revenues be not its prime objective but rather
xxx xxx xxx the promotion of travel and the convenience of the travelling public. . . .

Indeed, as an office of the Government, without any corporate or juridical Regardless of the merits of the claim against it, the State, for obvious reasons of public
personality, the Bureau of Printing cannot be sued (Sec. 1, Rule 3, Rules of policy, cannot be sued without its consent. Plaintiff should have filed its present claim to
Court.) Any suit, action or proceeding against it, if it were to produce any effect, the General Auditing Office, it being for money under the provisions of Commonwealth Act
would actually be a suit, action or proceeding against the Government itself, and
327, which state the conditions under which money claims against the Government may
the rule is settled that the Government cannot be sued without its consent, much be filed.
less over its objection. (See Metran vs. Paredes, 45 Off. Gaz. 2835; Angat River
Irrigation System, et al. vs. Angat River Workers Union, et al., G.R. Nos. L-
10943-44, December 28, 1957.) It must be remembered that statutory provisions waiving State immunity from suit are
strictly construed and that waiver of immunity, being in derogation of sovereignty, will not
be lightly inferred. (49 Am. Jur., States, Territories and Dependencies, Sec. 96, p. 314;
The situation here is not materially different. The Bureau of Customs, to repeat, is part of
Petty vs. Tennessee-Missouri Bridge Com., 359 U.S. 275, 3 L. Ed. 804, 79 S. Ct. 785).
the Department of Finance (Sec. 81, Rev. Adm. Code), with no personality of its own apart From the provision authorizing the Bureau of Customs to lease arrastre operations to
from that of the national government. Its primary function is governmental, that of private parties, We see no authority to sue the said Bureau in the instances where it
assessing and collecting lawful revenues from imported articles and all other tariff and undertakes to conduct said operation itself. The Bureau of Customs, acting as part of the
customs duties, fees, charges, fines and penalties (Sec. 602, R.A. 1937). To this function, machinery of the national government in the operation of the arrastre service, pursuant to
arrastre service is a necessary incident. For practical reasons said revenues and customs express legislative mandate and as a necessary incident of its prime governmental
duties can not be assessed and collected by simply receiving the importer's or ship agent's function, is immune from suit, there being no statute to the contrary.
or consignee's declaration of merchandise being imported and imposing the duty provided
in the Tariff law. Customs authorities and officers must see to it that the declaration tallies
with the merchandise actually landed. And this checking up requires that the landed WHEREFORE, the order of dismissal appealed from is hereby affirmed, with costs against
merchandise be hauled from the ship's side to a suitable place in the customs premises to appellant. So ordered.
enable said customs officers to make it, that is, it requires arrastre operations. 1
Republic of the Philippines Private respondent then filed an action for damages based on quasi-delict with the Court of
SUPREME COURT First Instance of Rizal, Branch VII against petitioner Civil Aeronautics Administration or
Manila CAA as the entity empowered "to administer, operate, manage, control, maintain and
develop the Manila International Airport ... ." [Sec. 32 (24), R.A. 776].
THIRD DIVISION
Said claim for damages included, aside from the medical and hospital bills, consequential
G.R. No. L-51806 November 8, 1988 damages for the expenses of two lawyers who had to go abroad in private respondent's
stead to finalize certain business transactions and for the publication of notices
announcing the postponement of private respondent's daughter's wedding which had to be
CIVIL AERONAUTICS ADMINISTRATION, petitioner, cancelled because of his accident [Record on Appeal, p. 5].
vs.
COURT OF APPEALS and ERNEST E. SIMKE, respondents.
Judgment was rendered in private respondent's favor prompting petitioner to appeal to the
Court of Appeals. The latter affirmed the trial court's decision. Petitioner then filed with the
The Solicitor General for petitioner. same court a Motion for, Reconsideration but this was denied.

Ledesma, Guytingco, Veleasco & Associates for respondent Ernest E. Simke. Petitioner now comes before this Court raising the following assignment of errors:

1. The Court of Appeals gravely erred in not holding that the present
the CAA is really a suit against the Republic of the Philippines which
CORTES, J.: cannot be sued without its consent, which was not given in this case.

Assailed in this petition for review on certiorari is the decision of the Court of Appeals 2. The Court of Appeals gravely erred in finding that the injuries of
affirming the trial court decision which reads as follows: respondent Ernest E. Simke were due to petitioner's negligence —
although there was no substantial evidence to support such finding; and
that the inference that the hump or elevation the surface of the floor
WHEREFORE, judgment is hereby rendered ordering defendant to pay area of the terrace of the fold) MIA building is dangerous just because
plaintiff the amount of P15,589.55 as full reimbursement of his actual said respondent tripped over it is manifestly mistaken — circumstances
medical and hospital expenses, with interest at the legal rate from the that justify a review by this Honorable Court of the said finding of fact of
commencement of the suit; the amount of P20,200.00 as consequential respondent appellate court (Garcia v. Court of Appeals, 33 SCRA 622;
damages; the amount of P30,000.00 as moral damages; the amount of Ramos v. CA, 63 SCRA 331.)
P40,000.00 as exemplary damages; the further amount of P20,000.00
as attorney's fees and the costs [Rollo, p. 24].
3. The Court of Appeals gravely erred in ordering petitioner to pay
actual, consequential, moral and exemplary damages, as well as
The facts of the case are as follows: attorney's fees to respondent Simke — although there was no
substantial and competent proof to support said awards I Rollo, pp. 93-
Private respondent is a naturalized Filipino citizen and at the time of the incident was the 94 1.
Honorary Consul Geileral of Israel in the Philippines.
I
In the afternoon of December 13, 1968, private respondent with several other persons
went to the Manila International Airport to meet his future son-in-law. In order to get a Invoking the rule that the State cannot be sued without its consent, petitioner contends that
better view of the incoming passengers, he and his group proceeded to the viewing deck being an agency of the government, it cannot be made a party-defendant in this case.
or terrace of the airport.
This Court has already held otherwise in the case of National Airports Corporation v.
While walking on the terrace, then filled with other people, private respondent slipped over Teodoro, Sr. [91 Phil. 203 (1952)]. Petitioner contends that the said ruling does not apply
an elevation about four (4) inches high at the far end of the terrace. As a result, private in this case because: First, in the Teodoro case, the CAA was sued only in a substituted
respondent fell on his back and broke his thigh bone. capacity, the National Airports Corporation being the original party. Second, in the Teodoro
case, the cause of action was contractual in nature while here, the cause of action is
The next day, December 14, 1968, private respondent was operated on for about three based on a quasi-delict. Third, there is no specific provision in Republic Act No. 776, the
hours. law governing the CAA, which would justify the conclusion that petitioner was organized for
business and not for governmental purposes. [Rollo, pp. 94-97].
Such arguments are untenable. of a private entity were retained substantially in Republic Act 776, Sec. 32 (24) and
(25).<äre||anº•1àw> Said Act provides:
First, the Teodoro case, far from stressing the point that the CAA was only substituted for
the National Airports Corporation, in fact treated the CAA as the real party in interest when Sec. 32. Powers and Duties of the Administrator. Subject to the general
it stated that: — control and supervision of the Department Head, the Administrator
shall have among others, the following powers and duties:
xxx xxx xxx
xxx xxx xxx
... To all legal intents and practical purposes, the National Airports
Corporation is dead and the Civil Aeronautics Administration is its heir (24) To administer, operate, manage, control, maintain and develop the
or legal representative, acting by the law of its creation upon its own Manila International Airport and all government-owned aerodromes
rights and in its own name. The better practice there should have been except those controlled or operated by the Armed Forces of the
to make the Civil Aeronautics Administration the third party defendant Philippines including such powers and duties as: (a) to plan, design,
instead of the National Airports Corporation. [National Airports Corp. v. construct, equip, expand, improve, repair or alter aerodromes or such
Teodoro, supra, p. 208.] structures, improvement or air navigation facilities; (b) to enter into,
make and execute contracts of any kind with any person, firm, or public
xxx xxx xxx or private corporation or entity; ... .

Second, the Teodoro case did not make any qualification or limitation as to whether or not (25) To determine, fix, impose, collect and receive landing fees, parking
space fees, royalties on sales or deliveries, direct or indirect, to any
the CAA's power to sue and be sued applies only to contractual obligations. The Court in
the Teodoro case ruled that Sections 3 and 4 of Executive Order 365 confer upon the aircraft for its use of aviation gasoline, oil and lubricants, spare parts,
accessories and supplies, tools, other royalties, fees or rentals for the
CAA, without any qualification, the power to sue and be sued, albeit only by implication.
Accordingly, this Court's pronouncement that where such power to sue and be sued has use of any of the property under its management and control.
been granted without any qualification, it can include a claim based on tort or quasi-delict
[Rayo v. Court of First Instance of Bulacan, G.R. Nos. 55273-83, December 19,1981, 1 1 0 xxx xxx xxx
SCRA 4561 finds relevance and applicability to the present case.
From the foregoing, it can be seen that the CAA is tasked with private or non-
Third, it has already been settled in the Teodoro case that the CAA as an agency is not governmental functions which operate to remove it from the purview of the rule on State
immune from suit, it being engaged in functions pertaining to a private entity. immunity from suit. For the correct rule as set forth in the Tedoro case states:

xxx xxx xxx xxx xxx xxx

The Civil Aeronautics Administration comes under the category of a Not all government entities, whether corporate or non-corporate, are
private entity. Although not a body corporate it was created, like the immune from suits. Immunity functions suits is determined by the
National Airports Corporation, not to maintain a necessary function of character of the objects for which the entity was organized. The rule is
government, but to run what is essentially a business, even if revenues thus stated in Corpus Juris:
be not its prime objective but rather the promotion of travel and the
convenience of the travelling public. It is engaged in an enterprise
Suits against State agencies with relation to matters
which, far from being the exclusive prerogative of state, may, more than in which they have assumed to act in private or non-
the construction of public roads, be undertaken by private concerns.
governmental capacity, and various suits against
[National Airports Corp. v. Teodoro, supra, p. 207.] certain corporations created by the state for public
purposes, but to engage in matters partaking more
xxx xxx xxx of the nature of ordinary business rather than
functions of a governmental or political character,
True, the law prevailing in 1952 when the Teodoro case was promulgated was Exec. Order are not regarded as suits against the state. The
365 (Reorganizing the Civil Aeronautics Administration and Abolishing the National latter is true, although the state may own stock or
Airports Corporation). Republic Act No. 776 (Civil Aeronautics Act of the Philippines), property of such a corporation for by engaging in
subsequently enacted on June 20, 1952, did not alter the character of the CAA's objectives business operations through a corporation, the state
under Exec, Order 365. The pertinent provisions cited in the Teodoro case, particularly divests itself so far of its sovereign character, and by
Secs. 3 and 4 of Exec. Order 365, which led the Court to consider the CAA in the category implication consents to suits against the corporation.
(59 C.J., 313) [National Airport Corporation v. These factual findings are binding and conclusive upon this Court. Hence, the CAA cannot
Teodoro, supra, pp. 206-207; Emphasis supplied.] disclaim its liability for the negligent construction of the elevation since under Republic Act
No. 776, it was charged with the duty of planning, designing, constructing, equipping,
expanding, improving, repairing or altering aerodromes or such structures, improvements
This doctrine has been reaffirmed in the recent case of Malong v. Philippine National
Railways [G.R. No. L-49930, August 7, 1985, 138 SCRA 631, where it was held that the or air navigation facilities [Section 32, supra, R.A. 776]. In the discharge of this obligation,
Philippine National Railways, although owned and operated by the government, was not the CAA is duty-bound to exercise due diligence in overseeing the construction and
immune from suit as it does not exercise sovereign but purely proprietary and business maintenance of the viewing deck or terrace of the airport.
functions. Accordingly, as the CAA was created to undertake the management of airport
operations which primarily involve proprietary functions, it cannot avail of the immunity It must be borne in mind that pursuant to Article 1173 of the Civil Code, "(t)he fault or
from suit accorded to government agencies performing strictly governmental functions. negligence of the obligor consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the person, of the time
II and of the place." Here, the obligation of the CAA in maintaining the viewing deck, a facility
open to the public, requires that CAA insure the safety of the viewers using it. As these
people come to the viewing deck to watch the planes and passengers, their tendency
Petitioner tries to escape liability on the ground that there was no basis for a finding of would be to look to where the planes and the incoming passengers are and not to look
negligence. There can be no negligence on its part, it alleged, because the elevation in down on the floor or pavement of the viewing deck. The CAA should have thus made sure
question "had a legitimate purpose for being on the terrace and was never intended to trip that no dangerous obstructions or elevations exist on the floor of the deck to prevent any
down people and injure them. It was there for no other purpose but to drain water on the undue harm to the public.
floor area of the terrace" [Rollo, P. 99].
The legal foundation of CAA's liability for quasi-delict can be found in Article 2176 of the
To determine whether or not the construction of the elevation was done in a negligent Civil Code which provides that "(w)hoever by act or omission causes damage to another,
manner, the trial court conducted an ocular inspection of the premises. there being fault or negligence, is obliged to pay for the damage done... As the CAA knew
of the existence of the dangerous elevation which it claims though, was made precisely in
xxx xxx xxx accordance with the plans and specifications of the building for proper drainage of the
open terrace [See Record on Appeal, pp. 13 and 57; Rollo, p. 391, its failure to have it
repaired or altered in order to eliminate the existing hazard constitutes such negligence as
... This Court after its ocular inspection found the elevation shown in to warrant a finding of liability based on quasi-delict upon CAA.
Exhs. A or 6-A where plaintiff slipped to be a step, a dangerous sliding
step, and the proximate cause of plaintiffs injury...
The Court finds the contention that private respondent was, at the very least, guilty of
contributory negligence, thus reducing the damages that plaintiff may recover,
xxx xxx xxx unmeritorious. Contributory negligence under Article 2179 of the Civil Code contemplates
a negligent act or omission on the part of the plaintiff, which although not the proximate
This Court during its ocular inspection also observed the dangerous cause of his injury, contributed to his own damage, the proximate cause of the plaintiffs
and defective condition of the open terrace which has remained own injury being the defendant's lack of due care. In the instant case, no contributory
unrepaired through the years. It has observed the lack of maintenance negligence can be imputed to the private respondent, considering the following test
and upkeep of the MIA terrace, typical of many government buildings formulated in the early case of Picart v. Smith, 37 Phil. 809 (1918):
and offices. Aside from the litter allowed to accumulate in the terrace,
pot holes cause by missing tiles remained unrepaired and unattented. The test by which to determine the existence of negligence in a
The several elevations shown in the exhibits presented were verified by particular case may be stated as follows: Did the defendant in doing the
this Court during the ocular inspection it undertook. Among these alleged negligent act use that reasonable care and caution which an
elevations is the one (Exh. A) where plaintiff slipped. This Court also ordinarily prudent man would have used in the same situation? If not,
observed the other hazard, the slanting or sliding step (Exh. B) as one then he is guilty of negligence. The law here in effect adopts the
passes the entrance door leading to the terrace [Record on Appeal, standard supposed to be supplied by the imaginary conduct of the
U.S., pp. 56 and 59; Emphasis supplied.] discreet paterfamilias of the Roman law. The existence of the
negligence in a given case is not determined by reference to the
The Court of Appeals further noted that: personal judgment of the actor in the situation before him. The law
considers what would be reckless, blameworthy, or negligent in the
man of ordinary intelligence and prudence and determines liability by
The inclination itself is an architectural anomaly for as stated by the that.
said witness, it is neither a ramp because a ramp is an inclined surface
in such a way that it will prevent people or pedestrians from sliding. But
if, it is a step then it will not serve its purpose, for pedestrian purposes. The question as to what would constitute the conduct of a prudent man
(tsn, p. 35, Id.) [rollo, p. 29.] in a given situation must of course be always determined in the light of
human experience and in view of the facts involved in the particular
case. Abstract speculations cannot be here of much value but this Art. 2199. Except as provided by law or by stipulation, one are entitled
much can be profitably said: Reasonable men-overn their conduct by to an adequate compensation only for such pecuniary loss suffered by
the circumstances which are before them or known to them. They are him as he has duly proved. Such compensation is referred to as actual
not, and are not supposed to be omniscient of the future. Hence they on compensatory damages [New Civil Code].
can be expected to take care only when there is something before them
to suggest or warn of danger. Could a prudent man, in the case under Private respondent claims P15,589.55 representing medical and hospitalization bills. This
consideration, foresee harm as a result of the course actually pursued' Court finds the same to have been duly proven through the testimony of Dr. Ambrosio
If so, it was the duty of the actor to take precautions to guard against Tangco, the physician who attended to private respondent (Rollo, p. 26) and who Identified
that harm. Reasonable foresight of harm, followed by the ignoring of the Exh. "H" which was his bill for professional services [Rollo, p. 31].
suggestion born of this prevision, is always necessary before
negligence can be held to exist.... [Picart v. Smith, supra, p. 813;
Emphasis supplied.] Concerning the P20,200.00 alleged to have been spent for other expenses such as the
transportation of the two lawyers who had to represent private respondent abroad and the
publication of the postponement notices of the wedding, the Court holds that the same had
The private respondent, who was the plaintiff in the case before the lower court, could not also been duly proven. Private respondent had adequately shown the existence of such
have reasonably foreseen the harm that would befall him, considering the attendant factual losses and the amount thereof in the testimonies before the trial court [CA decision, p. 81.
circumstances. Even if the private respondent had been looking where he was going, the At any rate, the findings of the Court of Appeals with respect to this are findings of facts
step in question could not easily be noticed because of its construction. As the trial court
[One Heart Sporting Club, Inc. v. Court of Appeals, G.R. Nos. 5379053972, Oct. 23, 1981,
found: 108 SCRA 4161 which, as had been held time and again, are, as a general rule,
conclusive before this Court [Sese v. Intermediate Appellate Court, G.R. No. 66186, July
In connection with the incident testified to, a sketch, Exhibit O, shows a 31, 1987,152 SCRA 585].
section of the floorings oil which plaintiff had tripped, This sketch
reveals two pavements adjoining each other, one being elevated by With respect to the P30,000.00 awarded as moral damages, the Court holds private
four and one-fourth inches than the other. From the architectural
respondent entitled thereto because of the physical suffering and physical injuries caused
standpoint the higher, pavement is a step. However, unlike a step by the negligence of the CAA [Arts. 2217 and 2219 (2), New Civil Code].
commonly seen around, the edge of the elevated pavement slanted
outward as one walks to one interior of the terrace. The length of the
inclination between the edges of the two pavements is three inches. With respect to the award of exemplary damages, the Civil Code explicitly, states:
Obviously, plaintiff had stepped on the inclination because had his foot
landed on the lower pavement he would not have lost his balance. The Art. 2229. Exemplary or corrective damages, are imposed, by way of
same sketch shows that both pavements including the inclined portion example or correction for the public good, in addition to the moral,
are tiled in red cement, and as shown by the photograph Exhibit A, the liquidated or compensatory
lines of the tilings are continuous. It would therefore be difficult for a
pedestrian to see the inclination especially where there are plenty of
persons in the terrace as was the situation when plaintiff fell down. Art. 2231. In quasi-delicts, exemplary damages may be granted if the
There was no warning sign to direct one's attention to the change in the defendant acted with gross negligence.
elevation of the floorings. [Rollo, pp. 2829.]
Gross negligence which, according to the Court, is equivalent to the term "notorious
III negligence" and consists in the failure to exercise even slight care [Caunan v. Compania
General de Tabacos, 56 Phil. 542 (1932)] can be attributed to the CAA for its failure to
remedy the dangerous condition of the questioned elevation or to even post a warning sign
Finally, petitioner appeals to this Court the award of damages to private respondent. The directing the attention of the viewers to the change in the elevation of the floorings
liability of CAA to answer for damages, whether actual, moral or exemplary, cannot be notwithstanding its knowledge of the hazard posed by such elevation [Rollo, pp. 28-29;
seriously doubted in view of one conferment of the power to sue and be sued upon it, Record oil Appeal, p. 57]. The wanton disregard by the CAA of the safety of the people
which, as held in the case of Rayo v. Court of First Instance, supra, includes liability on a using the viewing deck, who are charged an admission fee, including the petitioner who
claim for quasi-dilict. In the aforestated case, the liability of the National Power Corporation paid the entrance fees to get inside the vantage place [CA decision, p. 2; Rollo, p. 25] and
to answer for damages resulting from its act of sudden, precipitate and simultaneous are, therefore, entitled to expect a facility that is properly and safely maintained — justifies
opening of the Angat Dam, which caused the death of several residents of the area and the award of exemplary damages against the CAA, as a deterrent and by way of example
the destruction of properties, was upheld since the o,rant of the power to sue and be sued or correction for the public good. The award of P40,000.00 by the trial court as exemplary
upon it necessarily implies that it can be held answerable for its tortious acts or any damages appropriately underscores the point that as an entity changed with providing
wrongful act for that matter. service to the public, the CAA. like all other entities serving the public. has the obligation to
provide the public with reasonably safe service.
With respect to actual or compensatory damages, the law mandates that the same be
proven.
Finally, the award of attorney's fees is also upheld considering that under Art. 2208 (1) of
the Civil Code, the same may be awarded whenever exemplary damages are awarded, as
in this case, and,at any rate, under Art. 2208 (11), the Court has the discretion to grant the
same when it is just and equitable.

However, since the Manila International Airport Authority (MIAA) has taken over the
management and operations of the Manila International Airport [renamed Ninoy Aquino
International Airport under Republic Act No. 6639] pursuant to Executive Order No. 778 as
amended by executive Orders Nos. 903 (1983), 909 (1983) and 298 (1987) and under
Section 24 of the said Exec. Order 778, the MIAA has assumed all the debts, liabilities and
obligations of the now defunct Civil Aeronautics Administration (CAA), the liabilities of the
CAA have now been transferred to the MIAA.

WHEREFORE, finding no reversible error, the Petition for review on certiorari is DENIED
and the decision of the Court of Appeals in CA-G.R. No. 51172-R is AFFIRMED.

SO ORDERED.
Republic of the Philippines In line with Memorandum No. 171-C, the DOH, through former Undersecretary Ma.
SUPREME COURT Margarita M. Galon (Galon), issued Memorandum No. 209 series of 2000, 10 inviting
Manila representatives of 24 accredited drug companies, including herein respondent Phil
Pharmawealth, Inc. (PPI) to a meeting on October 27, 2000. During the meeting,
SECOND DIVISION Undersecretary Galon handed them copies of a document entitled "Report on Violative
Products"11 issued by the Bureau of Food and Drugs12 (BFAD), which detailed violations or
adverse findings relative to these accredited drug companies’ products. Specifically, the
G.R. No. 182358 February 20, 2013 BFAD found that PPI’s products which were being sold to the public were unfit for human
consumption.
DEPARTMENT OF HEALTH, THE SECRETARY OF HEALTH, and MA. MARGARITA M.
GALON, Petitioners, During the October 27, 2000 meeting, the 24 drug companies were directed to submit
vs. within 10 days, or until November 6, 2000, their respective explanations on the adverse
PHIL PHARMA WEALTH, INC., Respondent. findings covering their respective products contained in the Report on Violative Products.

DECISION Instead of submitting its written explanation within the 10-day period as required, PPI
belatedly sent a letter13 dated November 13, 2000 addressed to Undersecretary Galon,
DEL CASTILLO, J.: informing her that PPI has referred the Report on Violative Products to its lawyers with
instructions to prepare the corresponding reply. However, PPI did not indicate when its
reply would be submitted; nor did it seek an extension of the 10-day period, which had
The state may not be sued without its consent. Likewise, public officials may not be sued previously expired on November 6, 2000, much less offer any explanation for its failure to
for acts done in the perfom1ance of their official functions or within the scope of their timely submit its reply. PPI’s November 13, 2000 letter states:
authority.
Madam,
This Petition for Review on Certiorari1 assails the October 25, 2007 Decision2 of the Court
of Appeals (CA) in CA-G.R. CV No. 85670, and its March 31, 2008 Reso1ution3 denying
petitioners' Motion for Reconsideration. 4 This refers to your directive on 27 October 2000, on the occasion of the meeting with
selected accredited suppliers, during which you made known to the attendees of your
requirement for them to submit their individual comments on the Report on Violative
Factual Antecedents Products (the "Report") compiled by your office and disseminated on that date.

On December 22, 1998, Administrative Order (AO) No. 27 series of 19985 was issued by In this connection, we inform you that we have already instructed our lawyers to prepare
then Department of Health (DOH) Secretary Alfredo G. Romualdez (Romualdez). AO 27 on our behalf the appropriate reply to the Report furnished to us. Our lawyers in time shall
set the guidelines and procedure for accreditation of government suppliers of revert to you and furnish you the said reply.
pharmaceutical products for sale or distribution to the public, such accreditation to be valid
for three years but subject to annual review.
Please be guided accordingly.
On January 25, 2000, Secretary Romualdez issued AO 10 series of 20006 which amended
AO 27. Under Section VII7 of AO 10, the accreditation period for government suppliers of Very truly yours,
pharmaceutical products was reduced to two years. Moreover, such accreditation may be
recalled, suspended or revoked after due deliberation and proper notice by the DOH (signed)
Accreditation Committee, through its Chairman. ATTY. ALAN A.B. ALAMBRA

Section VII of AO 10 was later amended by AO 66 series of 2000, 8 which provided that the Vice-President for Legal and Administrative Affairs14
two-year accreditation period may be recalled, suspended or revoked only after due
deliberation, hearing and notice by the DOH Accreditation Committee, through its
Chairman. In a letter-reply15 dated November 23, 2000 Undersecretary Galon found "untenable" PPI’s
November 13, 2000 letter and therein informed PPI that, effective immediately, its
accreditation has been suspended for two years pursuant to AO 10 and Memorandum No.
On August 28, 2000, the DOH issued Memorandum No. 171-C9 which provided for a list 171-C.
and category of sanctions to be imposed on accredited government suppliers of
pharmaceutical products in case of adverse findings regarding their products
(e.g. substandard, fake, or misbranded) or violations committed by them during their In another December 14, 2000 letter16 addressed to Undersecretary Galon, PPI through
accreditation. counsel questioned the suspension of its accreditation, saying that the same was made
pursuant to Section VII of AO 10 which it claimed was patently illegal and null and void
because it arrogated unto the DOH Accreditation Committee powers and functions which products which posed a serious health risk to the public. By exercising DOH’s mandate to
were granted to the BFAD under Republic Act (RA) No. 372017 and Executive Order (EO) promote health, it cannot be said that petitioners committed grave abuse of discretion.
No. 175.18 PPI added that its accreditation was suspended without the benefit of notice
and hearing, in violation of its right to substantive and administrative due process. It thus
In a January 8, 2001 Order,23 the trial court partially granted PPI’s prayer for a temporary
demanded that the DOH desist from implementing the suspension of its accreditation, restraining order, but only covering PPI’s products which were not included in the list of
under pain of legal redress. violative products or drugs as found by the BFAD.

On December 28, 2000, PPI filed before the Regional Trial Court of Pasig City a
In a Manifestation and Motion24 dated July 8, 2003, petitioners moved for the dismissal of
Complaint19 seeking to declare null and void certain DOH administrative issuances, with Civil Case No. 68200, claiming that the case was one against the State; that the Complaint
prayer for damages and injunction against the DOH, former Secretary Romualdez and was improperly verified; and lack of authority of the corporate officer to commence the suit,
DOH Undersecretary Galon. Docketed as Civil Case No. 68200, the case was raffled to as the requisite resolution of PPI’s board of directors granting to the commencing officer –
Branch 160. On February 8, 2002, PPI filed an Amended and Supplemental PPI’s Vice President for Legal and Administrative Affairs, Alan Alambra, – the authority to
Complaint,20 this time impleading DOH Secretary Manuel Dayrit (Dayrit). PPI claimed that file Civil Case No. 68200 was lacking. To this, PPI filed its Comment/Opposition. 25
AO 10, Memorandum No. 171-C, Undersecretary Galon’s suspension order contained in
her November 23, 2000 letter, and AO 14 series of 200121 are null and void for being in
contravention of Section 26(d) of RA 3720 as amended by EO 175, which states as Ruling of the Regional Trial Court
follows:
In a June 14, 2004 Order,26 the trial court dismissed Civil Case No. 68200, declaring the
SEC. 26. x x x case to be one instituted against the State, in which case the principle of state immunity
from suit is applicable.
(d) When it appears to the Director [of the BFAD] that the report of the Bureau that any
article of food or any drug, device, or cosmetic secured pursuant to Section twenty-eight of PPI moved for reconsideration,27 but the trial court remained steadfast.28
this Act is adulterated, misbranded, or not registered, he shall cause notice thereof to be
given to the person or persons concerned and such person or persons shall be given an PPI appealed to the CA.
opportunity to be heard before the Bureau and to submit evidence impeaching the
correctness of the finding or charge in question.
Ruling of the Court of Appeals
For what it claims was an undue suspension of its accreditation, PPI prayed that AO 10,
Memorandum No. 171-C, Undersecretary Galon’s suspension order contained in her Docketed as CA-G.R. CV No. 85670, PPI’s appeal centered on the issue of whether it was
November 23, 2000 letter, and AO 14 be declared null and void, and that it be awarded proper for the trial court to dismiss Civil Case No. 68200.
moral damages of ₱5 million, exemplary damages of ₱1 million, attorney’s fees of ₱1
million, and costs of suit. PPI likewise prayed for the issuance of temporary and permanent The CA, in the herein assailed Decision,29 reversed the trial court ruling and ordered the
injunctive relief. remand of the case for the conduct of further proceedings. The CA concluded that it was
premature for the trial court to have dismissed the Complaint. Examining the Complaint,
In their Amended Answer,22 the DOH, former Secretary Romualdez, then Secretary Dayrit, the CA found that a cause of action was sufficiently alleged – that due to defendants’
and Undersecretary Galon sought the dismissal of the Complaint, stressing that PPI’s (petitioners’) acts which were beyond the scope of their authority, PPI’s accreditation as a
accreditation was suspended because most of the drugs it was importing and government supplier of pharmaceutical products was suspended without the required
distributing/selling to the public were found by the BFAD to be substandard for human notice and hearing as required by Section 26(d) of RA 3720 as amended by EO 175.
consumption. They added that the DOH is primarily responsible for the formulation, Moreover, the CA held that by filing a motion to dismiss, petitioners were deemed to have
planning, implementation, and coordination of policies and programs in the field of health; hypothetically admitted the allegations in the Complaint – which state that petitioners were
it is vested with the comprehensive power to make essential health services and goods being sued in their individual and personal capacities – thus negating their claim that Civil
available to the people, including accreditation of drug suppliers and regulation of Case No. 68200 is an unauthorized suit against the State.
importation and distribution of basic medicines for the public.
The CA further held that instead of dismissing the case, the trial court should have
Petitioners added that, contrary to PPI’s claim, it was given the opportunity to present its deferred the hearing and resolution of the motion to dismiss and proceeded to trial. It
side within the 10-day period or until November 6, 2000, but it failed to submit the required added that it was apparent from the Complaint that petitioners were being sued in their
comment/reply. Instead, it belatedly submitted a November 13, 2000 letter which did not private and personal capacities for acts done beyond the scope of their official functions.
even constitute a reply, as it merely informed petitioners that the matter had been referred Thus, the issue of whether the suit is against the State could best be threshed out during
by PPI to its lawyer. Petitioners argued that due process was afforded PPI, but because it trial on the merits, rather than in proceedings covering a motion to dismiss.
did not timely avail of the opportunity to explain its side, the DOH had to act immediately –
by suspending PPI’s accreditation – to stop the distribution and sale of substandard drug The dispositive portion of the CA Decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order dated June 14, 2004 of the legitimate claim against it by simply invoking its nonsuability. We have had occasion to
Regional Trial Court of Pasig City, Branch 160, is hereby REVERSED and SET- explain in its defense, however, that a continued adherence to the doctrine of non-suability
ASIDE. ACCORDINGLY, this case is REMANDED to the trial court for further cannot be deplored, for the loss of governmental efficiency and the obstacle to the
proceedings. performance of its multifarious functions would be far greater in severity than the
inconvenience that may be caused private parties, if such fundamental principle is to be
SO ORDERED.30 abandoned and the availability of judicial remedy is not to be accordingly restricted.

The rule, in any case, is not really absolute for it does not say that the state may not be
Petitioners sought, but failed, to obtain a reconsideration of the Decision. Hence, they filed
the present Petition. sued under any circumstance. On the contrary, as correctly phrased, the doctrine only
conveys, ‘the state may not be sued without its consent;’ its clear import then is that the
State may at times be sued. The State’s consent may be given either expressly or
Issue impliedly. Express consent may be made through a general law or a special law. x x x
Implied consent, on the other hand, is conceded when the State itself commences
Petitioners now raise the following lone issue for the Court’s resolution: litigation, thus opening itself to a counterclaim or when it enters into a contract. In this
situation, the government is deemed to have descended to the level of the other
contracting party and to have divested itself of its sovereign immunity. This rule, x x x is
Should Civil Case No. 68200 be dismissed for being a suit against the State? 31 not, however, without qualification. Not all contracts entered into by the government
operate as a waiver of its non-suability; distinction must still be made between one which is
Petitioners’ Arguments executed in the exercise of its sovereign function and another which is done in its
proprietary capacity.33
Petitioners submit that because PPI’s Complaint prays for the award of damages against
the DOH, Civil Case No. 68200 should be considered a suit against the State, for it would As a general rule, a state may not be sued. However, if it consents, either expressly or
require the appropriation of the needed amount to satisfy PPI’s claim, should it win the impliedly, then it may be the subject of a suit.34 There is express consent when a law,
case. Since the State did not give its consent to be sued, Civil Case No. 68200 must be either special or general, so provides. On the other hand, there is implied consent when
dismissed. They add that in issuing and implementing the questioned issuances, individual the state "enters into a contract or it itself commences litigation."35 However, it must be
petitioners acted officially and within their authority, for which reason they should not be clarified that when a state enters into a contract, it does not automatically mean that it has
held to account individually. waived its non-suability. 36 The State "will be deemed to have impliedly waived its non-
suability [only] if it has entered into a contract in its proprietary or private capacity.
[However,] when the contract involves its sovereign or governmental capacity[,] x x x no
Respondent’s Arguments such waiver may be implied."37 "Statutory provisions waiving [s]tate immunity are
construed in strictissimi juris. For, waiver of immunity is in derogation of sovereignty." 38
Apart from echoing the pronouncement of the CA, respondent insists that Civil Case No.
68200 is a suit against the petitioners in their personal capacity for acts committed outside The DOH can validly invoke state immunity.
the scope of their authority.

a) DOH is an unincorporated agency which performs sovereign or governmental


Our Ruling functions.

The Petition is granted. In this case, the DOH, being an "unincorporated agency of the government" 39 can validly
invoke the defense of immunity from suit because it has not consented, either expressly or
The doctrine of non-suability. impliedly, to be sued. Significantly, the DOH is an unincorporated agency which performs
functions of governmental character.
The discussion of this Court in Department of Agriculture v. National Labor Relations
Commission32 on the doctrine of non-suability is enlightening. The ruling in Air Transportation Office v. Ramos40 is relevant, viz:

The basic postulate enshrined in the constitution that ‘(t)he State may not be sued without An unincorporated government agency without any separate juridical personality of its own
its consent,’ reflects nothing less than a recognition of the sovereign character of the State enjoys immunity from suit because it is invested with an inherent power of sovereignty.
and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction Accordingly, a claim for damages against the agency cannot prosper; otherwise, the
of courts. It is based on the very essence of sovereignty. x x x [A] sovereign is exempt doctrine of sovereign immunity is violated. However, the need to distinguish between an
from suit, not because of any formal conception or obsolete theory, but on the logical and unincorporated government agency performing governmental function and one performing
practical ground that there can be no legal right as against the authority that makes the law proprietary functions has arisen. The immunity has been upheld in favor of the former
on which the right depends. True, the doctrine, not too infrequently, is derisively called ‘the because its function is governmental or incidental to such function; it has not been upheld
royal prerogative of dishonesty’ because it grants the state the prerogative to defeat any
in favor of the latter whose function was not in pursuit of a necessary function of likewise be dismissed for being a suit against the state which absolutely did not give its
government but was essentially a business. 41 consent to be sued. Based on the foregoing considerations, and regardless of the merits of
PPI’s case, this case deserves a dismissal. Evidently, the very foundation of Civil Case No.
68200 has crumbled at this initial juncture.
b) The Complaint seeks to hold the DOH solidarily and jointly liable with the other
defendants for damages which constitutes a charge or financial liability against the
state. PPI was not denied due process.

Moreover, it is settled that if a Complaint seeks to "impose a charge or financial liability However, we cannot end without a discussion of PPI’s contention that it was denied due
against the state,"42 the defense of non-suability may be properly invoked. In this case, PPI process when its accreditation was suspended "without due notice and hearing." It is
specifically prayed, in its Complaint and Amended and Supplemental Complaint, for the undisputed that during the October 27, 2000 meeting, Undersecretary Galon directed
DOH, together with Secretaries Romualdez and Dayrit as well as Undersecretary Galon, to representatives of pharmaceutical companies, PPI included, to submit their comment
be held jointly and severally liable for moral damages, exemplary damages, attorney’s fees and/or reactions to the Report on Violative Products furnished them within a period of 10
and costs of suit.43 Undoubtedly, in the event that PPI succeeds in its suit, the government days. PPI, instead of submitting its comment or explanation, wrote a letter addressed to
or the state through the DOH would become vulnerable to an imposition or financial charge Undersecretary Galon informing her that the matter had already been referred to its lawyer
in the form of damages. This would require an appropriation from the national treasury for the drafting of an appropriate reply. Aside from the fact that the said letter was belatedly
which is precisely the situation which the doctrine of state immunity aims to protect the submitted, it also failed to specifically mention when such reply would be forthcoming.
state from. Finding the foregoing explanation to be unmeritorious, Undersecretary Galon ordered the
suspension of PPI’s accreditation for two years. Clearly these facts show that PPI was not
The mantle of non-suability extends to complaints filed against public officials for denied due process. It was given the opportunity to explain its side. Prior to the suspension
acts done in the performance of their official functions. of its accreditation, PPI had the chance to rebut, explain, or comment on the findings
contained in the Report on Violative Products that several of PPI’s products are not fit for
human consumption. However, PPI squandered its opportunity to explain. Instead of
As regards the other petitioners, to wit, Secretaries Romualdez and Dayrit, and complying with the directive of the DOH Undersecretary within the time allotted, it instead
Undersecretary Galon, it must be stressed that the doctrine of state immunity extends its haughtily informed Undersecretary Galon that the matter had been referred to its lawyers.
protective mantle also to complaints filed against state officials for acts done in the Worse, it impliedly told Undersecretary Galon to just wait until its lawyers shall have
discharge and performance of their duties. 44 "The suability of a government official prepared the appropriate reply. PPI however failed to mention when it will submit its
depends on whether the official concerned was acting within his official or jurisdictional "appropriate reply" or how long Undersecretary Galon should wait. In the meantime, PPI’s
capacity, and whether the acts done in the performance of official functions will result in a drugs which are included in the Report on Violative Products are out and being sold in the
charge or financial liability against the government." 45 Otherwise stated, "public officials market. Based on the foregoing, we find PPI’s contention of denial of due process totally
can be held personally accountable for acts claimed to have been performed in connection unfair and absolutely lacking in basis. At this juncture, it would be trite to mention that "[t]he
with official duties where they have acted ultra vires or where there is showing of bad essence of due process in administrative proceedings is the opportunity to explain one’s
faith."46 Moreover, "[t]he rule is that if the judgment against such officials will require the side or seek a reconsideration of the action or ruling complained of. As long as the parties
state itself to perform an affirmative act to satisfy the same, such as the appropriation of are given the opportunity to be heard before judgment is rendered, the demands of due
the amount needed to pay the damages awarded against them, the suit must be regarded process are sufficiently met. What is offensive to due process is the denial of the
as against the state x x x. In such a situation, the state may move to dismiss the opportunity to be heard. The Court has repeatedly stressed that parties who chose not to
[C]omplaint on the ground that it has been filed without its consent." 47 avail themselves of the opportunity to answer charges against them cannot complain of a
denial of due process."50
It is beyond doubt that the acts imputed against Secretaries Romualdez and Dayrit, as well
as Undersecretary Galon, were done while in the performance and discharge of their Incidentally, we find it inieresting that in the earlier case of Department q( Health v. Phil
official functions or in their official capacities, and not in their personal or individual Pharmawealth, Inc. 51respondent filed a Complaint against DOH anchored on the same
capacities. Secretaries Romualdez and Dayrit were being charged with the issuance of the issuances which it assails in the present case. In the earlier case of Department of Health
assailed orders. On the other hand, Undersecretary Galon was being charged with v. Phil Pharmawealth, Jnc., 52 PPI submitted to the DOH a request for the inclusion of its
implementing the assailed issuances. By no stretch of imagination could the same be products in the list of accredited drugs as required by AO 27 series of 1998 which was
categorized as ultra vires simply because the said acts are well within the scope of their later amended by AO 10 series of 2000. In the instant case, however, PPI interestingly
authority. Section 4 of RA 3720 specifically provides that the BFAD is an office under the claims that these issuances are null and void.
Office of the Health Secretary. Also, the Health Secretary is authorized to issue rules and
regulations as may be necessary to effectively enforce the provisions of RA 3720. 48 As
regards Undersecretary Galon, she is authorized by law to supervise the offices under the WHEREFORE, premises considered, the Petition is GRANTED. Civil Case No. 68200 is
DOH’s authority,49 such as the BFAD. Moreover, there was also no showing of bad faith on ordered DISMISSED.
their part. The assailed issuances were not directed only against PPI. The suspension of
PPI’s accreditation only came about after it failed to submit its comment as directed by SO ORDERED.
Undersecretary Galon. It is also beyond dispute that if found wanting, a financial charge
will be imposed upon them which will require an appropriation from the state of the needed
amount. Thus, based on the foregoing considerations, the Complaint against them should
Republic of the Philippines On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the
SUPREME COURT complaint) purportedly corning from petitioner Moreau as the commanding general of the
Manila U.S. Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining the
change of the private respondent's employment status and requesting concurrence
FIRST DIVISION therewith. The letter did not carry his signature but was signed by W.B. Moore, Jr. "by
direction," presumably of Moreau.

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


On the basis of these antecedent facts, the private respondent filed in the Court of First
Instance of Olongapo City a for damages against the herein petitioners on November 8,
DALE SANDERS, AND A.S. MOREAU, JR, petitioners, 1976.8 The plaintiffs claimed that the letters contained libelous imputations that had
vs. exposed them to ridicule and caused them mental anguish and that the prejudgment of the
HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance grievance proceedings was an invasion of their personal and proprietary rights.
of Zambales, Olongapo City, ANTHONY M. ROSSI and RALPH L.
WYERS, respondents.
The private respondents made it clear that the petitioners were being sued in their private
or personal capacity. However, in a motion to dismiss filed under a special appearance,
the petitioners argued that the acts complained of were performed by them in the
discharge of their official duties and that, consequently, the court had no jurisdiction over
CRUZ, J.: them under the doctrine of state immunity.

The basic issue to be resolved in this case is whether or not the petitioners were After extensive written arguments between the parties, the motion was denied in an order
performing their official duties when they did the acts for which they have been sued for dated March 8, 1977, 9 on the main ground that the petitioners had not presented any
damages by the private respondents. Once this question is decided, the other answers will evidence that their acts were official in nature and not personal torts, moreover, the
fall into place and this petition need not detain us any longer than it already has. allegation in the complaint was that the defendants had acted maliciously and in bad faith.
The same order issued a writ of preliminary attachment, conditioned upon the filing of a
P10,000.00 bond by the plaintiffs, against the properties of petitioner Moreau, who
Petitioner Sanders was, at the time the incident in question occurred, the special services allegedly was then about to leave the Philippines. Subsequently, to make matters worse
director of the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the for the defendants, petitioner Moreau was declared in a default by the trial court in its order
commanding officer of the Subic Naval Base, which includes the said station. 2 Private dated August 9, 1977. The motion to lift the default order on the ground that Moreau's
respondent Rossi is an American citizen with permanent residence in the Philippines, 3 as failure to appear at the pre-trial conference was the result of some misunderstanding, and
so was private respondent Wyer, who died two years ago. 4 They were both employed as the motion for reconsideration of the denial of the motion to dismiss, which was filed by the
gameroom attendants in the special services department of the NAVSTA, the former petitioner's new lawyers, were denied by the respondent court on September 7, 1977.
having been hired in 1971 and the latter in 1969. 5
This petition for certiorari, prohibition and preliminary injunction was thereafter filed before
On October 3, 1975, the private respondents were advised that their employment had this Court, on the contention that the above-narrated acts of the respondent court are
been converted from permanent full-time to permanent part-time, effective October 18, tainted with grave abuse of discretion amounting to lack of jurisdiction.
1975. 6 Their reaction was to protest this conversion and to institute grievance proceedings
conformably to the pertinent rules and regulations of the U.S. Department of Defense. The
result was a recommendation from the hearing officer who conducted the proceedings for We return now to the basic question of whether the petitioners were acting officially or only
the reinstatement of the private respondents to permanent full-time status plus backwages. in their private capacities when they did the acts for which the private respondents have
The report on the hearing contained the observation that "Special Services management sued them for damages.
practices an autocratic form of supervision." 7
It is stressed at the outset that the mere allegation that a government functionary is being
In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), sued in his personal capacity will not automatically remove him from the protection of the
Sanders disagreed with the hearing officer's report and asked for the rejection of the law of public officers and, if appropriate, the doctrine of state immunity. By the same token,
abovestated recommendation. The letter contained the statements that: a ) "Mr. Rossi the mere invocation of official character will not suffice to insulate him from suability and
tends to alienate most co-workers and supervisors;" b) "Messrs. Rossi and Wyers have liability for an act imputed to him as a personal tort committed without or in excess of his
proven, according to their immediate supervisors, to be difficult employees to supervise;" authority. These well-settled principles are applicable not only to the officers of the local
and c) "even though the grievants were under oath not to discuss the case with anyone, state but also where the person sued in its courts pertains to the government of a foreign
(they) placed the records in public places where others not involved in the case could state, as in the present case.
hear."
The respondent judge, apparently finding that the complained acts
were prima facie personal and tortious, decided to proceed to trial to determine inter
alia their precise character on the strength of the evidence to be submitted by the parties.
The petitioners have objected, arguing that no such evidence was needed to substantiate payment of damages, such award will have to be satisfied not by the petitioners in their
their claim of jurisdictional immunity. Pending resolution of this question, we issued a personal capacities but by the United States government as their principal. This will require
temporary restraining order on September 26, 1977, that has since then suspended the that government to perform an affirmative act to satisfy the judgment, viz, the appropriation
proceedings in this case in the court a quo. of the necessary amount to cover the damages awarded, thus making the action a suit
against that government without its consent.
In past cases, this Court has held that where the character of the act complained of can be
determined from the pleadings exchanged between the parties before the trial, it is not There should be no question by now that such complaint cannot prosper unless the
necessary for the court to require them to belabor the point at a trial still to be conducted. government sought to be held ultimately liable has given its consent to' be sued. So we
Such a proceeding would be superfluous, not to say unfair to the defendant who is have ruled not only in Baer but in many other decisions where we upheld the doctrine of
subjected to unnecessary and avoidable inconvenience. state immunity as applicable not only to our own government but also to foreign states
sought to be subjected to the jurisdiction of our courts. 15
Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the
commanding general of the Olongapo Naval Base should not have been denied because it The practical justification for the doctrine, as Holmes put it, is that "there can be no legal
had been sufficiently shown that the act for which he was being sued was done in his right against the authority which makes the law on which the right depends.16 In the case
official capacity on behalf of the American government. The United States had not given its of foreign states, the rule is derived from the principle of the sovereign equality of states
consent to be sued. It was the reverse situation in Syquia v. Almeda Lopez," where we which wisely admonishes that par in parem non habet imperium and that a contrary
sustained the order of the lower court granting a where we motion to dismiss a complaint attitude would "unduly vex the peace of nations." 17 Our adherence to this precept is
against certain officers of the U.S. armed forces also shown to be acting officially in the formally expressed in Article II, Section 2, of our Constitution, where we reiterate from our
name of the American government. The United States had also not waived its immunity previous charters that the Philippines "adopts the generally accepted principles of
from suit. Only three years ago, in United States of America v. Ruiz, 12 we set aside the international law as part of the law of the land.
denial by the lower court of a motion to dismiss a complaint for damages filed against the
United States and several of its officials, it appearing that the act complained of was All this is not to say that in no case may a public officer be sued as such without the
governmental rather than proprietary, and certainly not personal. In these and several
previous consent of the state. To be sure, there are a number of well-recognized
other cases 13 the Court found it redundant to prolong the other case proceedings after it exceptions. It is clear that a public officer may be sued as such to compel him to do an act
had become clear that the suit could not prosper because the acts complained of were required by law, as where, say, a register of deeds refuses to record a deed of sale; 18 or
covered by the doctrine of state immunity. to restrain a Cabinet member, for example, from enforcing a law claimed to be
unconstitutional; 19 or to compel the national treasurer to pay damages from an already
It is abundantly clear in the present case that the acts for which the petitioners are being appropriated assurance fund; 20 or the commissioner of internal revenue to refund tax
called to account were performed by them in the discharge of their official duties. Sanders, over-payments from a fund already available for the purpose; 21 or, in general, to secure a
as director of the special services department of NAVSTA, undoubtedly had supervision judgment that the officer impleaded may satisfy by himself without the government itself
over its personnel, including the private respondents, and had a hand in their employment, having to do a positive act to assist him. We have also held that where the government
work assignments, discipline, dismissal and other related matters. It is not disputed that itself has violated its own laws, the aggrieved party may directly implead the government
the letter he had written was in fact a reply to a request from his superior, the other even without first filing his claim with the Commission on Audit as normally required, as the
petitioner, for more information regarding the case of the private respondents. 14 Moreover, doctrine of state immunity "cannot be used as an instrument for perpetrating an
even in the absence of such request, he still was within his rights in reacting to the hearing injustice." 22
officer's criticism—in effect a direct attack against him—-that Special Services was
practicing "an autocratic form of supervision." This case must also be distinguished from such decisions as Festejo v.
Fernando, 23 where the Court held that a bureau director could be sued for damages on a
As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for personal tort committed by him when he acted without or in excess of authority in forcibly
concurrence with the conversion of the private respondents' type of employment even taking private property without paying just compensation therefor although he did convert it
before the grievance proceedings had even commenced. Disregarding for the nonce the into a public irrigation canal. It was not necessary to secure the previous consent of the
question of its timeliness, this act is clearly official in nature, performed by Moreau as the state, nor could it be validly impleaded as a party defendant, as it was not responsible for
immediate superior of Sanders and directly answerable to Naval Personnel in matters the defendant's unauthorized act.
involving the special services department of NAVSTA In fact, the letter dealt with the
financial and budgetary problems of the department and contained recommendations for The case at bar, to repeat, comes under the rule and not under any of the recognized
their solution, including the re-designation of the private respondents. There was nothing exceptions. The government of the United States has not given its consent to be sued for
personal or private about it. the official acts of the petitioners, who cannot satisfy any judgment that may be rendered
against them. As it is the American government itself that will have to perform the
Given the official character of the above-described letters, we have to conclude that the affirmative act of appropriating the amount that may be adjudged for the private
petitioners were, legally speaking, being sued as officers of the United States government. respondents, the complaint must be dismissed for lack of jurisdiction.
As they have acted on behalf of that government, and within the scope of their authority, it
is that government, and not the petitioners personally, that is responsible for their acts.
Assuming that the trial can proceed and it is proved that the claimants have a right to the
The Court finds that, even under the law of public officers, the acts of the petitioners are
protected by the presumption of good faith, which has not been overturned by the private
respondents. Even mistakes concededly committed by such public officers are not
actionable as long as it is not shown that they were motivated by malice or gross
negligence amounting to bad faith.24 This, to, is well settled .25 Furthermore, applying now
our own penal laws, the letters come under the concept of privileged communications and
are not punishable, 26 let alone the fact that the resented remarks are not defamatory by
our standards. It seems the private respondents have overstated their case.

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

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

We appreciate the assistance foreign decisions offer us, and not only from the United
States but also from Spain and other countries from which we have derived some if not
most of our own laws. But we should not place undue and fawning reliance upon them and
regard them as indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments We live in a different ambience
and must decide our own problems in the light of our own interests and needs, and of our
qualities and even idiosyncrasies as a people, and always with our own concept of law and
justice.

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

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

SO ORDERED.
Republic of the Philippines Counselor, GS17109, in the Base Education Office at Clark Air Base, for which she is
SUPREME COURT eminently qualified. As found by the trial court, she received a Master of Arts degree from
Manila the University of Sto. Tomas, Manila, in 1971 and has completed 34 semester hours in
psychology-guidance and 25 quarter hours in human behavioral science; she has also
SECOND DIVISION completed all course work in human behavior and counseling psychology for a doctoral
degree; she is a civil service eligible; and, more importantly, she had functioned as a
Guidance Counselor at the Clark Air Base at the GS 1710-9 level for approximately four
G.R. No. 90314 November 27, 1990 years at the time she applied for the same position in 1976. 4

LOIDA Q. SHAUF and JACOB SHAUF, Petitioners, By reason of her non-selection to the position, petitioner Loida Q. Shauf filed an equal
vs. employment opportunity complaint against private respondents, for alleged discrimination
HON. COURT OF APPEALS, DON E. DETWILER and ANTHONY PERSI, Respondents. against the former by reason of her nationality and sex. The controversy was investigated
by one Rudolph Duncan, an appeals and grievance examiner assigned to the Office of
REGALADO, J.: Civilian Personnel Operations, Appellate Division, San Antonio, Texas, U.S.A. and what
follows are taken from his findings embodied in a report duly submitted by him to the Equal
Opportunity Officer on February 22, 1977.5
In this petition for review on certiorari, petitioners would have us reverse and set aside the
decision rendered by respondent Court of Appeals on August 22, 1989, in CA-G.R. CV No.
17932, entitled "Loida Shauf and Jacob Shauf, Plaintiffs-Appellants, versus Don Detwiler On or about October 1976, the position of Guidance Counselor, GS 1710-9, became
and Anthony Persi, Defendants-Appellants,"1 dismissing petitioners’ complaint for damages vacant in the Base Education Office, Clark Air Base. A standard Form 52 was submitted to
filed before the Regional Trial Court, Branch LVI, Angeles City, in Civil Case No. 2783 the Civilian Personnel Office to fill said position. The Civilian Personnel Division took
thereof, and its subsequent resolution denying petitioners’ motion for the reconsideration of immediate steps to fill the position by advertisement in the Clark Air Base Daily Bulletin
its aforesaid decision. #205 dated October 21, 1976. As a result of the advertisement, one application was
received by the Civilian Personnel Office and two applications were retrieved from the
applicants supply file in the Civilian Personnel Office. These applications were that of Mrs.
As found by respondent court,2 Clark Air Base is one of the bases established and Jean Hollenshead, an employee of the DOD Schools at Clark Air Base, Mrs. Lydia B.
maintained by the United States by authority of the agreement between the Philippines Gaillard, an unemployed dependent, and Mrs. Loida Q. Shauf. All three applications were
and the United States concerning military bases which entered into force on March 26, reviewed and their experiences were considered qualifying for the advertised position.
1947.
On November 11, 1976, the application of Loida Q. Shauf was referred to Mr. Anthony
The Third Combat Support Group, a unit of Clark Air Base, maintains a Central Civilian Persi, with the applications of Mrs. Jean Hollenshead and Mrs. Lydia Gaillard, to be
Personnel Office (CCPO) charged with the responsibility for civilian personnel considered for the position of Guidance Counselor, GS 1710-9, Mr. Persi, after review of
management and administration. It is through its civilian personnel officer that the base the applications, stated that upon screening the applications he concluded that two
commander is responsible for direction and administration of civilian personnel program, applicants had what he considered minimum qualifications for the position. The two
including advising management and operating officials on civilian personnel matters. applicants were Mrs. Hollenshead and Mrs. Gaillard. In the case of Loida Q. Shauf, Mr.
Acting for the commander, the civilian personnel officer is the administrative official in Persi felt that her application was quite complete except for a reply to an inquiry form
charge of the activities of the CCPO, and the commander relies on him to carry out all attached to the application. This inquiry form stated that the National Personnel Records
aspects of the civilian personnel program. The CCPO personnel program encompasses Center, St. Louis, Missouri, was unable to find an official personnel folder for Loida Q.
placement and staffing, position management and classification. Shauf. Mr. Persi said that as a result of the National Personnel Records Center, GSA, not
being able to find any records on Loida Q. Shauf, this raised some questions in his mind
The Third Combat Support Group also maintains an Education Branch, Personnel as to the validity of her work experience. As a result of his reservations on Loida Q.
Division, which provides an education program for military personnel, U.S. civilian Shauf’s work experience and his conclusions that the two other applications listed
employees, and adult dependents, assigned or attached to Clark Air Base. Its head, the minimum qualifications, Mr. Persi decided to solicit additional names for consideration.
education director, is responsible directly to the base director of personnel for
administering the education services program for Clark Air Base. In this capacity, and Subsequently in his correspondence dated November 12, 1976, Mr. Persi returned the
within broad agency policies, is delegated to him the full responsibility and authority for the three applications to the Civilian Personnel Office without a selection decision. Mr. Persi
technical, administrative and management functions of the program. As part of his duties, also requested in his correspondence that the Civilian Personnel Office initiate immediate
the education director provides complete academic and vocational guidance for military inquiry to the Central Oversea Rotation and Recruiting Office (CORRO) for the submission
dependents, including counseling, testing and test interpretation. During the time material of a list of highly qualified candidates. He further stated in his correspondence that the
to the complaint, private respondent Don Detwiler was civilian personnel officer, while three applicants who had indicated an interest would be considered with the CORRO input
private respondent Anthony Persi was education director. 3 for selection.

Petitioner Loida Q. Shauf, a Filipino by origin and married to an American who is a As a result of Mr. Persi’s request, an AF Form 1188 "Oversea Civilian Personnel Request"
member of the United States Air Force, applied for the vacant position of Guidance was submitted to CORRO on November 12, 1976. This request in fact asked for one
Guidance Counselor, GS 1710-9. The form listed the fact that local candidates are as Civil Case No. 2783, for the alleged discriminatory acts of herein private respondents in
available. However, instead of getting a list of candidates for consideration, Mr. Persi was maliciously denying her application for the GS 1710-9 position.
informed by CORRO, through the Civilian Personnel Office in their December 15, 1976
message that a Mr. Edward B. Isakson from Loring AFB, Maine, was selected for the
Private respondents, as defendants in Civil Case No. 2783, filed a motion to dismiss on the
position. Mr. Persi stated, when informed of CORRO’s selection, that he had heard of Mr. ground that as officers of the United States Armed Forces performing official functions in
Isakson and, from what he had heard, Mr. Isakson was highly qualified for the position; accordance with the powers vested in them under the Philippine-American Military Bases
therefore, he wished to have the selection stand. This statement was denied by Mr. Persi. Agreement, they are immune from suit. The motion to dismiss was denied by the trial
Mr. Isakson was placed on the rolls at Clark Air Base on January 24, 1977. 6 court. A motion for reconsideration was likewise denied.

Said examiner, however, also stated in his findings that, by reason of petitioner Loida Q. Consequently, private respondents filed an Answer reiterating the issue of jurisdiction and
Shauf’s credentials which he recited therein, she is and was at the time of the alleging, inter alia, that defendant Persi’s request to Central Oversea Rotation and
vacancy,7 highly qualified for the position of Guidance Counselor, GS 1710-9. In Recruiting Office (CORRO) was not for appointment of a person to the position of
connection with said complaint, a Notice of Proposed Disposition of Discrimination Guidance Counselor, GS 1710-9, but for referrals whom defendant Persi would consider
Complaint, dated May 16, 1977, 8 was served upon petitioner Loida Q. Shauf stating that together with local candidates for the position; that the extension of the employment of
because the individual selected did not meet the criteria of the qualification requirements, it Mrs. Abalato was in accordance with applicable regulation and was not related to plaintiff
was recommended "that an overhire GS 1710-9 Assistant Education Advisor position be Loida Q. Shauf’s discrimination complaint; that the decision was a joint decision of
established for a 180 day period. x x x. The position should be advertised for local
management and CCPO reached at a meeting on June 29, 1977 and based on a letter of
procurement on a best qualified basis with the stipulation that if a vacancy occurs in a the deputy director of civilian personnel, Headquarters Pacific Air Forces, dated June 15,
permanent GS 1710-9 position the selectee would automatically be selected to fill the
1977; and that the ruling was made known to and amplified by the director and the deputy
vacancy. If a position is not vacated in the 180 day period the temporary overhire would be director of civilian personnel in letters to petitioner Loida Q. Shauf dated August 30, 1977
released but would be selected to fill a future vacancy if the selectee is available." and September 19, 1977.

During that time, private respondents already knew that a permanent GS 1710-9 position
The parties submitted a Partial Stipulation of Facts in the court a quo providing, in part, as
would shortly be vacant, that is, the position of Mrs. Mary Abalateo whose appointment follows:
was to expire on August 6, 1977 and this was exactly what private respondent Detwiler
had in mind when he denied on June 27, 1977 Mrs. Abalateo’s request for extension of
March 31, 1977. However, private respondents deny that Col. Charles J. Corey a) In October 1976, the position of guidance counselor, GS-1710-9, at Clark Air
represented to petitioner Loida Q. Shauf that she would be appointed to the overhire Base was vacant;
position and to a permanent GS 1710-9 position as soon as it became vacant, which
allegedly prompted the latter to accept the proposed disposition. b) Plaintiff Loida Q, Shauf, a qualified dependent locally available, was among
those who applied for said vacant position of guidance counselor, GS-1710-9;
Contrary to her expectations, petitioner Loida Q. Shauf was never appointed to the position
occupied by Mrs. Abalateo whose appointment was extended indefinitely by private c) Plaintiff Loida Q. Shauf at the time she filed her aforesaid application was
respondent Detwiler.9 qualified for the position of guidance counselor, GS-1710-9;

Feeling aggrieved by what she considered a shabby treatment accorded her, petitioner d) Civilian Personnel Office accomplished and forwarded to CORRO an AF Form
Loida Q. Shauf wrote the U.S. Civil Service Commission questioning the qualifications of 1188 covering the position of guidance counselor, GS-1710-9, applied for by
Edward Isakson. Thereafter, said commission sent a communication addressed to private plaintiff Loida Q. Shauf;
respondent Detwiler,10 finding Edward Isakson not qualified to the position of Guidance
Counselor, GS 1710-9, and requesting that action be taken to remove him from the
position and that efforts be made to place him in a position for which he qualifies. e) U.S. Department of Defense Instructions (DODI) No. 1400.23 under Policy
Petitioner Loida Q. Shauf avers that said recommendation was ignored by private and Procedures provides that-
respondent Detwiler and that Isakson continued to occupy said position of guidance
counselor. "Where qualified dependents of military or civilian personnel of the Department of Defense
are locally available for appointment to positions in foreign areas which are designated for
Petitioner Loida Q. Shauf likewise wrote the Base Commander of Clark Air Base U.S. citizen occupancy and for which recruitment outside the current work force is
requesting a hearing on her complaint for discrimination. Consequently, a hearing was appropriate, appointment to the position will be limited to such dependents unless
held on March 29, 1978 before the U.S. Department of Air Force in Clark Air Base.11 precluded by treaties or other agreements which provide for preferential treatment for local
nationals."
Before the Department of Air Force could render a decision, petitioner Loida Q. Shauf filed
a complaint for damages, dated April 27, 1978, against private respondents Don Detwiler And Air Force Regulation 40-301 dated 12 May 1976 in par. 2 c (1) thereof provides that-
and Anthony Persi before the Regional Trial Court, Branch LVI at Angeles City, docketed
"c. Selection or Referral of Eligible Applicants From the 50 States: In their appeal, plaintiffs-appellants (herein petitioners) raised the following assignment of
errors:
(1)CORRO makes selection, except as provided in (3) below, for oversea
positions of Grades GS-11 and below (and wage grade equivalents) for which it 1. Lower court gravely erred in holding that the actual and exemplary damages
has received an AF Form 1188, and for higher grade positions if requested by and attorney’s fees may be paid in Philippine Pesos based on the exchange rate
the oversea activity."12 prevailing during October 1976 as determined by the Central Bank;

Likewise, a Supplement to Partial Stipulation of Facts was filed by the parties on October 2. Lower court gravely erred in limiting the amount of moral and exemplary
6, 1978, which reads: damages recoverable by plaintiff to P100,000.0015

1. Under date of 30 September 1978, plaintiff Loida Q. Shauf through her counsel, Quasha On the other hand, defendants-appellants (private respondents herein) argued that:
Asperilla Ancheta Valmonte Peña & Marcos, lodged an appeal before the Civil Service
Commission, Appeals Review Board, from the decision of the Secretary of the Air Force 1. The trial court erred in not dismissing the complaint on the ground that
dated 1 September 1978 affirming the EEO Complaints Examiner’s Findings and defendants-appellants, as officers/officials of the United States Armed Forces,
Recommended Decision in the Discrimination Complaint of Mrs. Loida Q. Shauf, No. SF are immune from suit for acts done or statements made by them in the
071380181 dated 3 July 1978, x x x;
performance of their official governmental functions in accordance with the
powers possessed by them under the Philippine-American Military Bases
2. The aforesaid appeal has not been decided up to now by the Civil Service Commission, Agreement of 1947, as amended;
Appeals Review Board; and
2. The trial court erred in not dismissing the complaint for a) non-exhaustion of
3. Plaintiff Loida Q. Shauf has not instituted any action before any federal district court of administrative remedies; and b) lack of jurisdiction of the trial court over the
the United States impugning the validity of the decision of the Secretary of the Air Force subject matter of the case in view of the exclusive jurisdiction of an appropriate
dated 1 September 1978 affirming the EEO Complaints Examiner’s Findings and U.S. District Court over an appeal from an agency decision on a complaint of
Recommended Decision in the Discrimination Complaint of Mrs. Loida Q. Shauf, No. SF discrimination under the U.S. Federal Law on Equality of opportunity for civilian
071380181 dated 3 July 1978.13 employees;

Thereafter, on March 8, 1988, the trial court rendered judgment in favor of herein petitioner 3. The trial court erred in holding that plaintiff-appellant Loida Q. Shauf was
Loida Q. Shauf, the dispositive portion of which reads: refused appointment as guidance counselor by the defendants-appellants on
account of her six (female), color (brown), and national origin (Filipino by birth)
and that the trial court erred in awarding damages to plaintiffs-appellants.16
WHEREFORE, judgment is hereby rendered ordering the defendants jointly and severally
to pay the plaintiffs:
As stated at the outset, respondent Court of Appeals reversed the decision of the trial
1) The amount $39,662.49 as actual damages or its equivalent in Philippine court, dismissed herein petitioners’complaint and denied their motion for reconsideration.
Hence this petition, on the basis of he following grounds:
pesos in October 1976 as reported by the Central Bank of the Philippines or any
authorized agency of the Government;
The respondent Honorable Court of Appeals has decided a question of substance not in
2) The amount of P100,000.00 as moral and exemplary damages; accord with law and/or with applicable decisions of this Honorable Court. Respondent
court committed grave error in dismissing plaintiffs-appellants’ complaint and-

3) Twenty (20%) percent of $39,662.49 or its equivalent in Philippine Pesos in


October 1976 as reported by the Central Bank of the Philippines or any (a) in holding that private respondents are immune from suit for discriminatory
authorized agency of the Government, as attorney’s gees, and; acts performed without or in excess of, their authority as officers of the U.S.
Armed Forces;

4) Cost(s) of suit.
(b) for applying the doctrine of state immunity from suit when it is clear that the
suit is not against the U.S. Government or its Armed Forces; and
SO ORDERED.14
(c) for failing to recognize the fact that the instant action is a pure and simple
Both parties appealed from the aforecited decision to respondent Court of Appeals. case for damages based on the discriminatory and malicious acts committed by
private respondents in their individual capacity who by force of circumstance and
accident are officers of the U.S. Armed Forces, against petitioner Loida Shauf
solely on account of the latter’s sex (female), color (brown), and national origin In the case of Baer, etc. vs. Tizon, etc., et al.,23 it was ruled that:
(Filipino).17
There should be no misinterpretation of the scope of the decision reached by this Court.
Petitioners aver that private respondents are being sued in their private capacity for Petitioner, as the Commander of the United States Naval Base in Olongapo, does not
discriminatory acts performed beyond their authority, hence the instant action is not a suit possess diplomatic immunity. He may therefore be proceeded against in his personal
against the United States Government which would require its consent. capacity, or when the action taken by him cannot be imputed to the government which he
represents.
Private respondents, on the other hand, claim that in filing the case, petitioners sought a
judicial review by a Philippine court of the official actuations of respondents as officials of a Also, in animos, et al. Vs. Philippine Veterans Affairs Office, et al.,24 we held that:
military unit of the U.S. Air Force stationed at Clark Air Base. The acts complained of were
done by respondents while administering the civil service laws of the United States. The "x x x it is equally well-settled that where a litigation may have adverse consequences on
acts sued upon being a governmental activity of respondents, the complaint is barred by
the public treasury, whether in the disbursements of funds or loss of property, the public
the immunity of the United States, as a foreign sovereign, from suit without its consent and official proceeded against not being liable in his personal capacity, then the doctrine of
by the immunity of the officials of the United States armed forces for acts committed in the
non-suability may appropriately be invoked. It has no application, however, where the suit
performance of their official functions pursuant to the grant to the United States armed against such a functionary had to be instituted because of his failure to comply with the
forces of rights, power and authority within the bases under the Military Bases Agreement. duty imposed by statute appropriating public funds for the benefit of plaintiff or petitioner. x
It is further contended that the rule allowing suits against public officers and employees for x x.
unauthorized acts, torts and criminal acts is a rule of domestic law, not of international law.
It applies to cases involving the relations between private suitors and their government or
state, not the relations between one government and another from which springs the The aforecited authorities are clear on the matter. They state that the doctrine of immunity
doctrine of immunity of a foreign sovereign. from suit will not apply and may not be invoked where the public official is being sued in his
private and personal capacity as an ordinary citizen. The cloak of protection afforded the
officers and agents of the government is removed the moment they are sued in their
I. The rule that a state may not be sued without its consent, now expressed in Article XVI, individual capacity. This situation usually arises where the public official acts without
Section 3, of the 1987 Constitution, is one of the generally accepted principles of authority or in excess of the powers vested in him. It is a well-settled principle of law that a
international law that we have adopted as part of the law of our land under Article II,
public official may be liable in his personal private capacity for whatever damage he may
Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935 and have caused by his act done with malice and in bad faith, or beyond the scope of his
1973 Constitutions and also intended to manifest our resolve to abide by the rules of the
authority or jurisdiction.25
international community.18

The agents and officials of the United States armed forces stationed in Clark Air Base are
While the doctrine appears to prohibit only suits against the state without its consent, it is no exception to this rule. In the case of United States of America, et al. Vs. Guinto, etc., et
also applicable to complaints filed against officials of the state for acts allegedly performed
al., ante,26 we declared:
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 It bears stressing at this point that the above observation do not confer on the United
suit must be regarded as against the state itself although it has been formally States of America blanket immunity for all acts done by it or its agents in the Philippines.
impleaded.19 It must be noted, however, that the rule is not also all-encompassing as to be Neither may the other petitioners claim that they are also insulated from suit in this country
applicable under all circumstances. merely because they have acted as agents of the United States in the discharge of their
official functions.
It is a different matter where the public official is made to account in his capacity as such
for acts contrary to law and injurious to the rights of plaintiff. As we clearly set forth by II. The court below, in finding that private respondents are guilty of discriminating against
Justice Zaldivar in Director of the Bureau of Telecommunications, et al. Vs. Aligaen, etc., petitioner Loida Q. Shauf on account of her sex, color and origin, categorically emphasized
et al.:20 "Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts that:
of government officials or officers are not acts of the State, and an action against the
officials or officers by one whose rights have been invaded or violated by such acts, for the There is ample evidence to sustain plaintiffs’ complaint that plaintiff Loida Q. Shauf was
protection of his rights, is not a suit against the State within the rule of immunity of the refused appointment as Guidance Counselor by the defendants on account of her sex,
State from suit. In the same tenor, it has been said that an action at law or suit in equity color and origin.
against a State officer or the director of a State department on the ground that, while
claiming to act for the State, he violates or invades the personal and property rights of the
plaintiff, under an unconstitutional act or under an assumption of authority which he does She is a female, brown in color and a Filipino by origin, although married to an American
not have, is not a suit against the State within the constitutional provision that the State who is a member of the United States Air Force. She is qualified for the vacant position of
may not be sued without its consent."21 The rationale for this ruling is that the doctrine of Guidance Counselor in the office of the education director at Clark Air Base. She received
state immunity cannot be used as an instrument for perpetrating an injustice.22 a Master of Arts Degree from the University of Santo Tomas, Manila, in 1971 and has
completed 34 semester hours in psychology-guidance and 25 quarter hours in human
behavioral science. She has also completed all course work in human behavior and To rebut the evidence of the plaintiffs, defendant cited the findings and conclusions of Mr.
counseling psychology for a doctoral degree. She is a civil service eligible. More important, Rudolph Duncan, who was appointed to investigate plaintiff Loida Q. Shauf’s complaint for
she had functioned as a Guidance Counselor at the Clark Air Base at the GS-1710-9 level discrimination and Col. Charles J. Corey, Vice Commander, Third Combat Support Group
for approximately four years at the time she applied for the same position in 1976. that defendants were not guilty of Discrimination.

In filling the vacant position of Guidance Counselor, defendant Persi did not even consider It is pointed out, however, that Mr. Rudolph Duncan found plaintiff loida Q. Shauf to be
the application of plaintiff Loida Q. Shauf, but referred the vacancy to CORRO which highly qualified for the position of Guidance Counselor at the GS-1710-9 level and that
appointed Edward B. Isakson who was not eligible to the position. management should have hired a local applicant. While Col. Corey characterized the act of
defendant Persi as sloppy and recommend that he be reprimanded. In any event their
In defending his act, defendant Persi gave as his excuse that there was a question in his findings and conclusions are not binding with this Court.
mind regarding validity of plaintiff Loida Q. Shauf’s work experience because of lack of
record. But his assertion is belied by the fact that plaintiff Loida Q. Shauf had previously To blunt the accusation of discrimination against them, defendants maintained that the
been employed as Guidance Counselor at the Clark Air Base in 1971 and this would have extension of the appointment of Mrs. Mary Abalateo was a joint decision of management
come out if defendant Persi had taken the trouble of interviewing her. Nor can defendant and Central Civilian Personnel Office, Clark Air Base. Nonetheless, having earlier rejected
free himself from any blame for the non-appointment of plaintiff Loida Q. Shauf by claiming by himself the request for extension of the services of Mrs. Mary Abalateo, defendant
that it was CORRO that appointed Edward B. Isakson. This would not have happened if Detwiler should not have concurred to such an extension as the reversal of his stand gave
defendant Persi adhered to the regulation that limits the appointment to the position of added substance to the charge of discrimination against him.
Guidance Counselor, GS-1710-9 to qualified dependents of military personnel of the
Department of Defense who are locally available like the plaintiff Loida Q. Shauf. He To further disprove the charge that the defendants discriminated against plaintiff Loida Q.
should not have referred the matter to CORRO. Furthermore, defendant Persi should have Shauf for her non-appointment as Guidance Counselor on account of her being a Filipino
protested the appointment of Edward B. Isakson who was ineligible for the position. He,
and a female, counsel for the defendants cited the following: (1) that Mrs. Mary Abalateo
however, remained silent because he was satisfied with the appointment. whose appointment was extended by the defendant Detwiler is likewise a female and a
Filipino by origin; (2) that there are Filipinos employed in the office of the defendant Persi;
Likewise, the acts of the defendant Detwiler in rejecting the appointment of plaintiff Loida and (3) that there were two other women who applied in 1976 with the plaintiff Loida Q.
Q. Shauf were undoubtedly discriminatory. Shauf for the position of Guidance Counselor.

Plaintiff Loida Q. Shauf twice applied for the position of Guidance Counselor sometime in The contention of the defendants based on the allegations enumerated in Nos. 1 and 2 of
1975 and in October 1978. Although she was qualified for the postision, her appointment the preceding paragraph is without merit as there is no evidence to show that Mrs. Mary
was rejected ny the defendant Detwiler. The two who were appointed, a certain Petrucci Abalateo and the Filipinos in the office of the defendant Persi were appointed by the
and Edward B. Isakson, were ordered removed by the U.S. Civil Service Commission. defendants. Moreover, faced with a choice between plaintiff Loida Q. Shauf or Mrs. Mary
Instead of replacing Petrucci with the plaintiff Loida Q. Shauf, the defendant Detwiler had Abalateo, it was to be expected that defendant Detwiler chose to retain Mrs. Mary
the position vacated by Petrucci abolished. And in the case of Edward Isakson, the Abalateo as Guidance Counselor in retaliation for the complaint of discrimination filed
defendant Detwiler ignored the order of the U.S. Civil Service Commission to have him against him by plaintiff Loida Q. Shauf. Finally, as to the contention based on the allegation
removed according to the testimony of plaintiff Loida Q. Shauf. in No. 3 of the preceding paragraph that there were two other women applicants in 1976
with plaintiff Loida Q. Shauf, the record reveals that they had minimum qualifications unlike
In connection with her complaint against the defendants, plaintiff Loida Q. Shauf was plaintiff Loida Q. Shauf who was highly qualified. 27
presented a Notice of Proposed Disposition of her Discrimination Complaint by Col.
Charles J. Corey, Vice Commander, Third Combat Support Group, Clark Air Base, which Elementary is the rule that the conclusions and findings of fact of the trial court are entitled
would entitle her to a temporary appointment as Guidance Counselor with the implied to great weight on appeal and should not be disturbed unless for strong and cogent
assurance that she would be appointed in a permanent capacity in the event of a vacancy. reasons.28 Absent any substancial proof, therefore, that the trial court’s decision was
grounded entirely on speculations, surmises or conjectures, the same must be accorded
At the time of the issuance of said Notice, defendants knew that there would be a vacancy full consideration and respect. This should be so because the trial court is, after all, in a
in a permanent position as Guidance Counselor occupied by Mrs. Mary Abalateo and it much better position to observe and correctly appreciate the respective parties’ evidence
as they were presented.29
was understood between Col. Corey and plaintiff Loida Q. Shauf that this position would
be reserved for her. Knowing this arrangement, defendant Detwiler rejected the request for
extension of services of Mrs. Mary Abalateo. However, after plaintiff Loida Q. Shauf In the case at bar, there is nothing in the record which suggests any arbitrary, irregular or
consented to the terms of the Notice of Proposed Disposition of her Discrimination abusive conduct or motive on the part of the trial judge in ruling that private respondents
Complaint, defendant Detwiler extended the services of Mrs. Mary Abalateo indefinitely. committed acts of discrimination for which they should be held personally liable. His
This act barred plaintiff Loida Q. Shauf from applying for the position of Mrs. Mary conclusion on the matter is sufficiently borne out by the evidence on record. We are thus
Abalateo. constrained to uphold his findings of fact.
Respondent Court of Appeals, in its questioned decision, states that private respondents On review of his record, we find that Mr. Isakson has a bachelor’s degree but he does not
did, in fact, discriminate against petitioner Loida Q. Shauf. However, it deemed such acts show completion of a teacher education program. To qualify for Guidance Counselor on
insufficient to prevent an application of the doctrine of state immunity, contrary to the the basis of coursework and semester hour credit, he would need to have 24 semester
findings made by the trial court. It reasons out that "the parties invoked are all American hours in Education and 12 semester hours in a combination of Psychology and Guidance
citizens (although plaintiff is a Filipina by origin) and the appointment of personnel inside subjects directly related to education. We do not find that he meets these requirements.
the base is clearly a sovereign act of the United States. This is an internal affair in which
we cannot interfere without having to touch some delicate constitutional issues." 30 In other We can appreciate the fact that Mr. Isakson may be working toward meeting the Guidance
words, it believes that the alleged discriminatory acts are not so grave in character as Counselor requirements. Nonetheless, he does not appear to meet them at this time. We
would justify the award of damages. must, therefore, request that action be taken to remove him from the position and that
efforts be made to place him in a position for which he qualifies. 32
In view of the apparent discrepancy between the findings of fact of respondent Court of
Appeals and the trial court, we are tasked to review the evidence in order to arrive at the 3. Letter of the Staff Judge Advocate of the Department of the Airforce addressed to Mr.
correct findings based on the record. A consideration of the evidence presented supports Detwiler, dated January 25, 1977 (Exhibit "L").
our view that the court a quo was correct in holding herein private respondents personally
liable and in ordering the indemnification of petitioner Loida Q. Shauf. The records are
clear that even prior to the filing of the complaint in this case, there were various reports 1. The attached memo from Captain John Vento of this office is forwarded for
and communications issued on the matter which, while they make no categorical your review and any action you deem appropriate. I concur with his conclusion
statement of the private respondents’ liability, nevertheless admit of facts from which the that there is no evidence of sex or ethnic bias in this matter. I also concur,
intent of private respondents to discriminate against Loida Q. Shauf is easily discernible. however, that there were certain irregularities in the handling of this selection.
Witness the following pertinent excerpts from the documents extant in the folder of
Plaintiff’s Exhibits: xxx

1. Notice of Proposed Disposition of Discrimination Complaint, dated May 16, 1977 3. Considering the above, it is most unfortunate that the filing of this latest
(Exhibit "G"). Guidance Counselor vacancy was not handled wholly in accordance with
prescribed policies and regulations. This is not to suggest that Mrs. Shauf should
B. Mr. Anthony Persi was totally inept in the recruitment practices employed in attempting necessarily have been hired. But, she and other qualified candidates should have
on fill the GS 1710-9 Assistant Education applicable DOD regulations. In addition, he failed been given the consideration to which they were entitled. (At no time now or in
to conduct an interview of qualified personnel in the local environment and when the the past have Mrs. Shauf’s qualifications ever been questioned.) Had that
qualifications of the complainant (sic) were questioned by Mr. Persi he did not request a happened and management chose to select some qualified candidate other than
review by the CCPO nor request an interview with the complainant (sic). Mr. Persi failed to Mrs. Shauf, there would be no basis for her complaint.
follow Department of Defense Instructions Number 1400.23, under Policy and Procedures
which states-"Where qualified dependents of military or civilian personnel of the 4. It is my understanding that Mrs. Shauf has filed a formal EEO complaint. While
Department of Defense are locally available for appointment to positions in foreign areas I am convinced that there was no discrimination in this case, my experience with
which are designated for US citizen occupancy and for which recruitment outside the EEO complaints teaches me that, if Civil Service Commission finds that
current work force is appropriate, appointment to the positions will be limited to such nonselection resulted from any kind of management malpractice, it is prone to
dependents unless precluded by treaties or other agreements which provide for brand it as a "discriminatory practice." This usually results in a remedial order
preferential treatment for local nationals." Attachment to Air Force Supplement to FFM which can often be distasteful to management. x x x. 33
213.2106 (b) (6) lists the positions of Guidance Counsellor, GS 1710-9, as positions to be
filled by locally available dependents. An added point is the lack of qualifications of the
individual selected for the GS 1710-9 positions as outlined under X-118 Civil Service The initial burden is on the plaintiff to establish a prima facie case or discrimination. Once
Handbook. x x x31 the discriminatory act is proven, the burden shifts to the defendant to articulate some
legitimate, undiscriminatory reason for the plaintiff’s rejection.34 Any such justification is
wanting in the case at bar, despite the prima facie case for petitioner Loida Q. Shauf.
2. Letter of the Director of the U.S. Civil Service Commission, San Francisco Region, Private respondents’ defense is based purely on outright denials which are insufficient to
dated October 27, 1977, addressed to Mr. Don Detwiler, concerning Mr. Edward B. discharge the onus probandi imposed upon them. They equally rely on the assertion that
Isakson whose file was reviewed by the Commission (Exhibit "K"). they are immune from suit by reason of their official functions. As correctly pointed out by
petitioners in their Memorandum, the mere invocation by private respondents of the official
The position of Guidance Counsellor is one for which the Commission has established a character of their duties cannot shield them from liability especially when the same were
mandatory education requirement that may not be waived. An individual may not be clearly done beyond the scope of their authority, again citing the Guinto, case, supra:
assigned to such a position without meeting the minimum qualification requirements. The
requirements, as given in Handbook X-118, are completion of all academic requirements The other petitioners in the case before us all aver they have acted in the discharge of
for a bachelor’s degree from an accredited college or university and successful completion their official functions as officers or agents of the United States. However, this is a matter
of a teacher education program under an "approved program" or successful completion of of evidence. The charges against them may not be summarily dismissed on their mere
required kinds of courses.
assertion that their acts are imputable to the United States of America, which has not given IV. Finally, private respondents postulate that petitioner Loida Q. Shauf failed to avail
its consent to be sued. In fact, the defendants are sought to be held answerable for herself of her remedy under the United States federal legislation on equality of opportunity
personal torts in which the United States itself is not involved. If found liable, they and they for civilian employees, which is allegedly exclusive of any other remedy under American
alone must satisfy the judgment. law, let alone remedies before a foreign court and under a foreign law such as the Civil
Code of the Philippines.
III. Article XIII, Section 3, of the 1987 Constitution provides that the State shall afford full
protection to labor, local and overseas, organized and unorganized, and promote full In a letter of the Department of the Air Force in Washington, D.C., dated September 1,
employment and equality of employment opportunities for all. This is a carry-over from 1978 and addressed to petitioner Loida Q. Shauf, 40 the appeal rights of the latter from the
Article II, Section 9, of the 1973 Constitution ensuring equal work opportunities regardless Air Force decision were enumerated as follows:
of sex, race, or creed.
-You may appeal to the Civil Service Commission within 15 calendar days of
Under the Constitution of the United States, the assurance of equality in employment and receipt of the decision. Your appeal should be addressed to the Civil Service
work opportunities regardless of sex, race, or creed is also given by the equal protection Commission, Appeals Review Board, 1990 E Street, N.Q., Washington, D.C.
clause of the Bill of Rights. The 14th Amendment, in declaring that no state shall deprive a 20415. The appeal and any representation in support thereof must be submitted
person of his life, liberty, or property without due process of law or deny to any person in duplicate.
within its jurisdiction the equal protection of the laws, undoubtedly intended not only that
there should be no arbitrary spoliation of property, but that equal protection and security -In lieu of an appeal to the Commission you may file a civil action in an
should be given to all under like circumstances in the enjoyment of their personal and civil appropriate U.S. District Court within 30 days of receipt of the decision.
rights, and that all persons should be equally entitled to pursue their happiness ands
acquire and enjoy property. It extends its protection to all persons without regard to race,
color, or class. It means equality of opportunity to all in like circumstances.35 -If you elect to appeal to the Commission’s Appeals Review Board, you may file a
civil action in a U.S. District Court within 30 days of receipt of the Commission’s
final decision.
The words "life, liberty, and property" as used in constitutions are representative terms and
are intended to cover every right to which a member of the body politic in entitled under the
law. These terms include the right of self-defense, freedom of speech, religious and -A civil action may also be filed anytime after 180 days of the date of initial
political freedom, exemption from arbitrary arrests, the right to freely buy and sell as others appeal to the Commission, if a final decision has not been rendered.
may, the right to labor, to contract, to terminate contracts, to acquire property, and the right
to all our liberties, personal, civil and political-in short, all that makes life worth living. 36 As earlier noted, in a Supplement to Partial Stipulation of Facts filed by the parties on
October 6, 1978, it was manifested to the trial court that an appeal was lodged by counsel
There is no doubt that private respondents Persi and Detwiler, in committing the acts for petitioners on September 30, 1978 before the Civil Service Commission. Appeals
complained of have, in effect, violated the basic constitutional right of petitioner Loida Q. Review Board from the decision of the Secretary of the Air Force in the discrimination case
Shauf to earn a living which is very much an integral aspect of the right to life. For this, filed by petitioner Loida Q. Shauf, No. SF 071380181. Said appeal has not been decided
they should be held accountable. up to now.

While we recognize petitioner Loida Q. Shauf’s entitlement to an award of moral damages, Furthermore, it is basic that remedial statutes are to be construed liberally. The term
we however find no justification for the award of actual or compensatory damages, based "may," as used in adjective rules, is only permissive and not mandatory, and we see no
on her supposedly unearned income from March, 1975 up to April, 1978 in the total reason why the so-called rules on the above procedural options communicated to said
amount of $39,662.49, as erroneously granted by the trial court. petitioner should depart from this fundamental . petitioner Loida Q. Shauf is not limited to
these remedies, but is entitled as a matter of plain and simple justice to choose that
remedy, not otherwise proscribed, which will best advance and protect her interests. There
Evidence that the plaintiff could have bettered her position had it not been for the is, thus, nothing to enjoin her from seeking redress in Philippine courts which should not be
defendants’ wrongful act cannot serve as basis for an award of damages, because it is
ousted of jurisdiction on the dubious and inconclusive representations of private
highly speculative.37 Petitioner Loida Q. Shauf’s claim is merely premised on the possibility respondents on that score.
that had she been employed, she would have earned said amount. But, the undeniable
fact remains that she was never so employed. Petitioner never acquired any vested right to
the salaries pertaining to the position of GS 1710-9 to which she was never appointed. WHEREFORE, the challenged decision and resolution of respondent Court of Appeals in
Damages which are merely possible are speculative. 38 In determining actual damages, the CA-G.R. CV No. 17932 are hereby ANNULLED and SET ASIDE. Private respondents are
court cannot rely on speculation, conjecture or guesswork. Without the actual proof of loss, hereby ORDERED, jointly and severally, to pay petitioners the sum of P100,000.00 as
the award of actual damages is erroneous.39 Consequently, the award of actual damages moral damages, P20,000.00 as and for attorney’s fees, and the costs of suit.
made by the trial court should be deleted. Attorney’s fees, however, may be granted and
we believe that an award thereof in the sum of P20,000.00 is reasonable under the SO ORDERED.
circumstances.1âwphi1
Republic of the Philippines Merchandise Control Guards are permitted to eat their meals at their
SUPREME COURT worksite due to heavy workload. Complaints regarding merchandise
Manila control guards procedure or actions may be made directly at the Office
of the Provost Marshal for immediate and necessary action. Specific
THIRD DIVISION 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)

G.R. No. 74135 May 28, 1992 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
M. H. WYLIE and CAPT. JAMES WILLIAMS, petitioners, POD was conclusively proven when on February 7, 1978, petitioner M. H. Wylie wrote her
vs. a letter of apology for the "inadvertent" publication. The private respondent then
AURORA I. RARANG and THE HONORABLE INTERMEDIATE APPELLATE commenced an action for damages in the Court of First Instance of Zambales (now
COURT, respondents. 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
GUTIERREZ, JR., J.: damages; exemplary damages which the court may find proper; and P50,000.00 as
attorney's fees.
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 response to the complaint, the defendants filed a motion to dismiss anchored on three
grounds:
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 1. Defendants M. H. Wylie and Capt. James Williams acted in the
Subic Bay, Olongapo City. Private respondent Aurora I. Rarang was an employee in the performance of their official functions as officers of the United States
office of the Provost Marshal assigned as merchandise control guard. Navy and are, therefore, immune from suit;

M. H. Wylie, in his capacity as assistant administrative officer of the U.S. Naval Station 2. The United States Naval Base is an instrumentality of the US
supervised the publication of the "Plan of the Day" (POD) which was published daily by the government which cannot be sued without its consent; and
US Naval Base station. The POD featured important announcements, necessary
precautions, and general matters of interest to military personnel. One of the regular 3. This Court has no jurisdiction over the subject matter as well as the
features of the POD was the "action line inquiry." On February 3, 1978, the POD parties in this case. (Record on Appeal, pp. 133-134)
published, under the "NAVSTA ACTION LINE INQUIRY" the following:
The motion was, however, denied.
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 In their answer, the defendants reiterated the lack of jurisdiction of the court over the case.
more aggravated by consuming such confiscated items as cigarettes
and food stuffs PUBLICLY. This is not to mention "Auring" who is in In its decision, the trial court ruled that the acts of defendants M. H. Wylie and Cpt. James
herself, a disgrace to her division and to the Office of the Provost Williams were not official acts of the government of the United States of America in the
Marshal. In lieu of this observation, may I therefore, ask if the head of operation and control of the Base but personal and tortious acts which are exceptions to
the Merchandise Control Division is aware of this malpractice? 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
Answer: Merchandise Control Guards and all other personnel are officials were not imputable against the US government but were done in the individual and
prohibited from appropriating confiscated items for their own personal capacities of the said officials. The trial court dismissed the suit against the US
consumption or use. Two locked containers are installed at the Main Naval Base. The dispositive portion of the decision reads as follows:
Gate area for deposit of confiscated items and the OPM evidence
custodian controls access to these containers. 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 generally accepted principles of international law that we have
the plaintiff Aurora Rarang the sum of one hundred thousand adopted as part of the law of our land under Article II, Section 2.
(P100,000.00) pesos by way of moral and exemplary damages;
xxx xxx xxx
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
Even without such affirmation, we would still be bound by the generally
attorney's fees and expenses of litigation; and accepted principles of international law under the doctrine of
incorporation. Under this doctrine, as accepted by the majority of
3) To pay the costs of this suit. states, such principles are deemed incorporated in the law of every
civilized state as a condition and consequence of its membership in the
Counterclaims are dismissed. 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.
Likewise, the suit against the U.S. Naval Base is ordered dismissed.
(Record on Appeal, p. 154)
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
On appeal, the petitioners reiterated their stance that they are immune from suit since the right against the authority which makes the law on which the right
subject publication was made in their official capacities as officers of the U. S. Navy. They depends." (Kawanakoa v. Polybank, 205 U.S. 349) There are other
also maintained that they did not intentionally and maliciously cause the questioned practical reasons for the enforcement of the doctrine. In the case of the
publication. foreign state sought to be impleaded in the local jurisdiction, the added
inhibition is expressed in the maxim par in parem, non habet imperium.
The private respondent, not satisfied with the amount of damages awarded to her, also All states are sovereign equals and cannot assert jurisdiction over one
appealed the trial court's decision. 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)
Acting on these appeals, the Intermediate Appellate Court, now Court of Appeals, modified
the trial court's decision, to wit:
While the doctrine appears to prohibit only suits against the state
without its consent, it is also applicable to complaints filed against
WHEREFORE, the judgment of the court below is modified so that the officials of the state for acts allegedly performed by them in the
defendants are ordered to pay the plaintiff, jointly and severally, the discharge of their duties. The rule is that if the judgment against such
sum of P175,000.00 as moral damages and the sum of P60,000.00 as officials will require the state itself to perform an affirmative act to
exemplary damages. The rest of the judgment appealed from is hereby satisfy the same, such as the appropriation of the amount needed to
affirmed in toto. Costs against the defendants-appellants. (Rollo, p. 44) pay the damages awarded against them, the suit must be regarded as
against the state itself although it has not been formally impleaded.
The appellate court denied a motion for reconsideration filed by the petitioners. (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.
Hence, this petition.

The doctrine is sometimes derisively called "the royal prerogative of


In a resolution dated March 9, 1987, we gave due course to the petition. dishonesty" because of the privilege it grants the state to defeat any
legitimate claim against it by simply invoking its non-suability. That is
The petitioners persist that they made the questioned publication in the performance of hardly fair, at least in democratic societies, for the state is not an
their official functions as administrative assistant, in the case of M. H. Wylie, and unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the
commanding officer, in the case of Capt. James Williams of the US Navy assigned to the doctrine is not absolute and does not say the state may not be sued
U. S. Naval Station, Subic Bay, Olongapo City and were, therefore, immune from suit for under any circumstance. On the contrary, the rule says that the state
their official actions. may not be sued without its consent, which clearly imports that it may
be sued if it consents.
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 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
The rule that a state may not be sued without its consent, now
itself commences litigation.
expressed in Article XVI, Section 3, of the 1987 Constitution, is one of
xxx xxx xxx from the works of the following authoritative writers:
Vattel, Wheaton, Hall, Lawrence, Oppenheim,
The above rules are subject to qualification. Express consent is Westlake, Hyde, and McNair and Lauterpacht.
Accuracy demands the clarification that after the
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 conclusion of the Philippine-American Military Bases
that not all contracts entered into by the government will operate as a Agreement, the treaty provisions should control on
waiver of its non-suability; distinction must be made between its such matter, the assumption being that there was a
sovereign and proprietary acts. (United States of America v. Ruiz, 136 manifestation of the submission to jurisdiction on the
SCRA 487) As for the filing of a complaint by the government, suability part of the foreign power whenever appropriate.
will result only where the government is claiming affirmative relief from More to the point is Syquia v. Almeda Lopez, where
the defendant. (Lim v. Brownell, 107 Phil. 345) (at pp. 652-655) plaintiffs as lessors sued the Commanding General
of the United States Army in the Philippines, seeking
the restoration to them of the apartment buildings
In the same case we had opportunity to discuss extensively the nature and extent of they owned leased to the United States armed
immunity from suit of United States personnel who are assigned and stationed in forces station in the Manila area. A motion to
Philippine territory, to wit: dismiss on the ground of non-suability was filed and
upheld by respondent Judge. The matter was taken
In the case of the United States of America, the customary rule of to this Court in a mandamus proceeding. It failed. It
international law on state immunity is expressed with more specificity in was the ruling that respondent Judge acted correctly
the RP-US Bases Treaty. Article III thereof provides as follows: 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
It is mutually agreed that the United States shall courts of the Philippines including the Municipal
have the rights, power and authority within the Court of Manila have no jurisdiction over the present
bases which are necessary for the establishment, case for unlawful detainer. The question of lack of
use, operation and defense thereof or appropriate jurisdiction was raised and interposed at the very
for the control thereof and all the rights, power and beginning of the action. The U.S. Government has
authority within the limits of the territorial waters and not given its consent to the filing of this suit which is
air space adjacent to, or in the vicinity of, the bases essentially against her, though not in name.
which are necessary to provide access to them or Moreover, this is not only a case of a citizen filing a
appropriate for their control. suit against his own Government without the latter's
consent but it is of a citizen filing an action against a
The petitioners also rely heavily on Baer v. Tizon, (57 SCRA 1) along foreign government without said government's
with several other decisions, to support their position that they are not consent, which renders more obvious the lack of
suable in the cases below, the United States not having waived its jurisdiction of the courts of his country. The
sovereign immunity from suit. It is emphasized that in Baer, the Court principles of law behind this rule are so elementary
held: and of such general acceptance that we deem it
unnecessary to cite authorities in support thereof."
The invocation of the doctrine of immunity from suit
of a foreign state without its consent is appropriate. xxx xxx xxx
More specifically, insofar as alien armed forces is
concerned, the starting point is Raquiza It bears stressing at this point that the above observations do not confer
v. Bradford, a 1945 decision. In dismissing a habeas on the United States of America a blanket immunity for all acts done by
corpus petition for the release of petitioners confined it or its agents in the Philippines. Neither may the other petitioners claim
by American army authorities, Justice Hilado, that they are also insulated from suit in this country merely because
speaking for the Court, cited Coleman they have acted as agents of the United States in the discharge of their
v. Tennessee, where it was explicitly declared: "It is official functions.
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 There is no question that the United States of America, like any other
exempt from the civil and criminal jurisdiction of the state, will be deemed to have impliedly waived its non-suability if it has
place." Two years later, in Tubb and Tedrow entered into a contract in its proprietary or private capacity. It is only
v. Griess, this Court relied on the ruling in Raquiza when the contract involves its sovereign or governmental capacity that
v. Bradford and cited in support thereof excerpts 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 The POD was published under the direction and authority of the commanding officer, U.S.
dealt with the improvement of the wharves in the naval installation at Naval Station Subic Bay. The administrative assistant, among his other duties, is tasked to
Subic Bay. As this was a clearly governmental function, we held that prepare and distribute the POD. On February 3, 1978, when the questioned article was
the contract did not operate to divest the United States of its sovereign published in the POD, petitioner Capt. James Williams was the commanding officer while
immunity from suit. In the words of Justice Vicente Abad Santos: petitioner M.H. Wylie was the administrative assistant of the US Naval Station at Subic
bay.
The traditional rule of immunity excepts a State from
being sued in the courts of another State without its The NAVSTA ACTION LINE INQUIRY is a regular feature of the POD. It is a telephone
consent or waiver. This rule is a necessary answering device in the office of the Administrative Assistant. The Action Line is intended
consequence of the principles of independence and to provide personnel access to the Commanding Officer on matters they feel should be
equality of States. However, the rules of brought to his attention for correction or investigation. The matter of inquiry may be phoned
International Law are not petrified; they are in or mailed to the POD. (TSN, September 9, 1980, pp. 12-13, Jerry Poblon) According to
constantly developing and evolving. And because M. H. Wylie, the action line naming "Auring" was received about three (3) weeks prior to its
the activities of states have multiplied, it has been being published in the POD on February 3, 1978. It was forwarded to Rarang's office of
necessary to distinguish them –– between sovereign employment, the Provost Marshal, for comment. The Provost Marshal office's
and governmental acts (jure imperii) and private, response ". . . included a short note stating that if the article was published, to remove the
commercial and proprietary acts (jure gestionis). name." (Exhibit 8-A, p. 5) The Provost Marshal's response was then forwarded to the
The result is that State immunity now extends only executive officer and to the commanding officer for approval. The approval of the
to acts jure imperii. The restrictive application of Commanding officer was forwarded to the office of the Administrative Assistant for
State immunity is now the rule in the United States, inclusion in the POD. A certain Mrs. Dologmodin, a clerk typist in the office of the
the United Kingdom and other states in Western Administrative Assistant prepared the smooth copy of the POD. Finally, M. H. Wylie, the
Europe. 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).
xxx xxx xxx
There is no question, therefore, that the two (2) petitioners actively participated in
The restrictive application of State immunity is screening the features and articles in the POD as part of their official functions. Under the
proper only when the proceedings arise out of rule that U.S. officials in the performance of their official functions are immune from suit,
commercial transactions of the foreign sovereign, its then it should follow that the petitioners may not be held liable for the questioned
commercial activities or economic affairs. Stated publication.
differently, a State may be said to have descended
to the level of an individual and can thus be deemed It is to be noted, however, that the petitioners were sued in their personal capacities for
to have tacitly given its consent to be sued only their alleged tortious acts in publishing a libelous article.
when it enters into business contracts. It does not
apply where the contract relates to the exercise of The question, therefore, arises –– are American naval officers who commit a crime or
its sovereign functions. In this case the projects are tortious act while discharging official functions still covered by the principle of state
an integral part of the naval base which is devoted
immunity from suit? Pursuing the question further, does the grant of rights, power, and
to the defense of both the United States and the authority to the United States under the RP-US Bases Treaty cover immunity of its officers
Philippines, indisputably a function of the
from crimes and torts? Our answer is No.
government of the highest order; they are not
utilized for nor dedicated to commercial or business
purposes. 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
The other petitioners in the cases before us all aver they have acted in United States do not allow the commission of crimes in the name of official duty.
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 The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991] gives the law on immunity
that their acts are imputable to the United States of America, which has from suit of public officials:
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 The general rule is that public officials can be held personally
not involved. If found liable, they and they alone must satisfy the accountable for acts claimed to have been performed in connection
judgment. (At pp. 655-658) with official duties where they have acted ultra vires or where there is
showing of bad faith.
In the light of these precedents, we proceed to resolve the present case.
xxx xxx xxx We apply the same ruling to this case.

Moreover, the petitioner's argument that the immunity proviso under The subject article in the US Newsletter POD dated February 3, 1978 mentions a certain
Section 4(a) of Executive Order No. 1 also extends to him is not well- "Auring" as ". . a disgrace to her division and to the Office of the Provost Marshal." The
taken. A mere invocation of the immunity clause does not ipso same article explicitly implies that Auring was consuming and appropriating for herself
facto result in the charges being automatically dropped. 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
In the case of Presidential Commission on Good Government
v. Peña (159 SCRA 556 [1988] then Chief Justice Claudio Teehankee, was investigated by her supervisor. Before the article came out, the private respondent
added a clarification of the immunity accorded PCGG officials under had been the recipient of commendations by her superiors for honesty in the performance
Section 4(a) of Executive Order No. 1 as follows: of her duties.

With respect to the qualifications expressed by Mr. 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
Justice Feliciano in his separate opinion, I just wish
to point out two things: First, the main opinion does too much to hold him responsible for everything which goes wrong on the base. This may
not claim absolute immunity for the members of the be true as a general rule. In this particular case, however, the records show that the
Commission. The cited section of Executive Order offensive publication was sent to the commanding officer for approval and he approved it.
No. 1 provides the Commission's members The factual findings of the two courts below are based on the records. The petitioners have
immunity from suit thus: "No civil action shall lie shown no convincing reasons why our usual respect for the findings of the trial court and
against the Commission or any member thereof for the respondent court should be withheld in this particular case and why their decisions
should be reversed.
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 Article 2176 of the Civil Code prescribes a civil liability for damages caused by a person's
himself and his subordinates is herein involved. It is act or omission constituting fault or negligence, to wit:
understood that the immunity granted the members
of the Commission by virtue of the unimaginable Art. 2176. Whoever by act or omission, causes damage to another,
magnitude of its task to recover the plundered
there being fault or negligence is obliged to pay for the damage done.
wealth and the State's exercise of police power was Such fault or negligence, if there is no pre-existing contractual relation
immunity from liability for damages in the official
between the parties, is called a quasi-delict and is governed by the
discharge of the task granted the members of the provisions of this Chapter.
Commission much in the same manner that judges
are immune from suit in the official discharge of the
functions of their office. "Fault" or "negligence" in this Article covers not only acts "not punishable by law" but also
. . . (at pp. 581-582) acts criminal in character, whether intentional or voluntary or negligent." (Andamo v.
Intermediate Appellate Court, 191 SCRA 195 [1990]).
xxx xxx xxx
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
Immunity from suit cannot institutionalize irresponsibility and non- party in these cases is given the right to receive from the guilty party moral damages for
accountability nor grant a privileged status not claimed by any other injury to his feelings and reputation in addition to punitive or exemplary damages. (Occena
official of the Republic. (id., at page 586) 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
Where the petitioner exceeds his authority as Solicitor General, acts in defamation, which in the light of Article 2219(7) of the Civil Code could by analogy be
bad faith, or, as contended by the private respondent, "maliciously ground for payment of moral damages, considering the wounded feelings and besmirched
conspir(es) with the PCGG commissioners in persecuting respondent reputation of the defendants.
Enrile by filing against him an evidently baseless suit in derogation of
the latter's constitutional rights and liberties" (Rollo, p. 417), there can Indeed the imputation of theft contained in the POD dated February 3, 1978 is a
be no question that a complaint for damages does not confer a license defamation against the character and reputation of the private respondent. Petitioner Wylie
to persecute or recklessly injure another. The actions governed by himself admitted that the Office of the Provost Marshal explicitly recommended the
Articles 19, 20, 21, and 32 of the Civil Code on Human Relations may deletion of the name Auring if the article were published. The petitioners, however, were
be taken against public officers or private citizens alike. . . . (pp. 289-
negligent because under their direction they issued the publication without deleting the
291) 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.
THIRD DIVISION 4. Unichem has not been sequestered. Only the shares of Cojuangco in Unichem
were sequestered; and
G.R. No. 142476 March 20, 2001
5. But no one, not even the owner, Faysound Ltd., came forward or questioned
REPUBLIC OF THE PHILIPPINES, petitioner, before the Sandiganbayan the legality of PCGG's sequestration of the aircraft.
vs.
THE HONORABLE SANDIGANBAYAN (FIRST DIVISION), respondent. On March 20, 1989, or two (2) years after the lease of the Falcon Falcon jet expired, the
PCGG filed with the Sandiganbayan a "Motion For Authority To Sell Sequestered Aircraft
SANDOVAL-GUTIERREZ, J.: Pending Litigation" on the ground that it is fast deteriorating. The Sandiganbayan, in its
Resolution dated May 18, 1989, denied PCGG's motion, holding that it found "no
justification prima facie or otherwise xxx for the seizure from the lessee." Forthwith, the
The issue in the petition is whether or not the Republic of the Philippines may withdraw PCGG filed with this Court a petition for certiorari (G.R. No. 88336) alleging in the main
funds derived from the sale of an erroneously sequestered aircraft and ordered by this that the Sandiganbayan acted with grave abuse of discretion in denying its motion to sell
Court to be deposited in escrow for the benefit of the person who may be legally entitled to the aircraft and praying that the Resolution of May 18, 1989 be nullified. On June 6, 1989,
the funds. this Court issued a temporary restraining order directing the Sandiganbayan to cease and
desist from enforcing its assailed May 18, 1989 Resolution. This TRO aimed to "prevent
Before us is the petition for certiorari and mandamus under Section 65 of the 1997 Rules the Sandiganbayan from taking further actions proceeding upon or pursuant to its
of Procedure, as amended, filed by the Republic of the Philippines (Republic) assailing the assumption that the airplane has been unlawfully sequestered and should not be in, the
Resolution of the Sandiganbayan dated September 3, 1999 in Civil Case No. 0033, custody of the PCGG, since that was the bone of contention to be resolved at that posture
"Republic of the Philippines vs. Eduardo M. Cojuangco, Jr., et al." and its Resolution dated of the case."
February 17, 2000.1âwphi1.nêt
Relying on the temporary restraining order issued by this Court, the PCGG, on September
On July 31, 1987, petitioner Republic and the Presidential Commission on Good 28, 1989, sold the aircraft to Walter Fuller Aircraft, Inc., (Fuller Aircraft), a US corporation,
Government (PCGG) filed with respondent Sandiganbayan the said Civil Case No. 0033 for US $7,138,168.65 which was deposited in escrow with the PNB. 1 The sale was without
for reconveyance, reversion, accounting, restitution and damages against Eduardo authority from the Sandiganbayan.
Cojuangco, Jr. and 60 other defendants. On the strength of this complaint, the PCGG
issued several sequestration orders, one of which covers an aircraft, more particularly On December 26, 1990, the Supreme Court en banc dismissed PCGG's petition in G.R.
described as follows: No. 88336, now in 192 SCRA 743, holding that "the decision to sell the aircraft is not within
the limited administrative powers of the PCGG but requires the sanction of the
Avions Dassault - Breguet Falcon 50 Sandiganbayan which can grant or withhold the same in the exercise of sound discretion
and on the basis of the evidence before it." The dispositive portion of this Court's Decision
reads:
Jet Model - 1982
'WHEREFORE, the petition at bar is hereby DISMISSED. The PCGG is hereby
Manufacturer's Serial No. 082 ordered to deposit the proceeds of the sale of the subject aircraft under a special
time deposit with the Philippine National Bank for the account of the
Cert. of Reg. No. RP-C754 Sandiganbayan in escrow for the person or persons, natural or juridical, who may
be adjudged lawfully entitled thereto. The Solicitor General is also ordered to
submit to this Court, within ten (10) days from notice hereof, certified true copies
The records show that: of the bill of the sale and all other pertinent documents regarding the sale of said
aircraft to Walter Fuller Aircraft, Inc."2
1. The Falcon jet was leased by the United Coconut Chemicals Inc. (Unichem)
from Faysound Ltd., a company in the United States; According to petitioner Republic, the Certificate of Time Deposit No. 463109 dated July 28,
1999 shows that as of that date, the amount of US$8,568,905.55 was deposited with the
2. The lease over the aircraft lapsed in 1987, at which time the aircraft should PNB for the account of the Sandiganbayan in trust for the beneficial owner. 3
have been returned by Unichem to Faysound Ltd., its owner-lessor;
Meanwhile, Faysound Ltd., filed with the District Court of Arkansas in the United States an
3. In Civil Case No. 0033, Cojuangco or any of the defendants has not claimed action (No. LR-C-89-834) to recover the Falcon jet from Fuller Aircraft, the buyer in the
ownership or interest in the Falcon jet; 1989 PCGG sale.
In a judgment dated October 29, 1990, the District Court ordered that title to the Falcon jet
be returned by Fuller Aircraft to Faysound, Ltd., thus: 718,193.01 interest through October 27, 1992 at $3,555.41 per day ($1,297.275
divided by 365 days x 202 days)

"Pursuant to the Memorandum Opinion filed contemporaneously herewith, $13,945,443.01


summary judgment is hereby granted in favor of plaintiff Faysound Limited. On
the motion for summary judgment filed by defendant Walter Fuller Aircraft Sales,
Inc., the same is hereby denied and judgment on said motion is rendered in favor
of plaintiff Faysound Limited.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Defendants,


In conformity with this ruling, title to the Falcon 50, which is the subject of this jointly and severally, shall pay post judgment interest at the legal rate of 3.385%
litigation, is vested in the plaintiff Faysound Limited free and clear of any and all per annum pursuant to 18 U.S.C. & 1961 from and after October 28, 1993, until
encumbrances save for the costs of any repairs made on said plane by the such time as this Judgment is satisfied in full. 11
Falcon Jet Corporation. The claim for storage charged on behalf of Falcon Jet is
denied since Faysound bears no responsibility for the presence of the plane at
the Falcon Jet facility in Little Rock Arkansas. At any rate, Falcon Jet interpled On October 14, 1996, the PCGG, in order to settle the money judgment against it, entered
the plane into the custody of the Court and under these circumstances cannot into an "Agreement"6with Fuller Aircraft providing, among others, that the Republic of the
claim storage for the plane. Storage charges may be claimed by Falcon jet Philippines agreed to pay Fuller $11 million on October 15, 1996 and $3 million, in equal
against Faysound Limited beginning with the date of this judgment."4 monthly installments, beginning November 15, 1996 and ending October 15, 1997 in
settlement of Fuller Aircraft's claim which, per decision of the Texas Court, amounts to
$14,928,457.29.
Considering that it was deprived of the aircraft sold to it, Fuller Aircraft sued the Republic
and PCGG for breach of warranty with damages (No. CA3-90-2785-R) in the District Court
of Texas, Dallas Division. On December 2, 1993, this court rendered against the Republic On April 13, 1998, the PCGG filed with the Sandiganbayan an "Ex-Parte Motion to
and PCGG a decisions5 which partly reads: Withdraw" dated April 7, 1998 wherein it sought that:

"BE IT REMEMBERED, in accordance with the Court's findings of Fact and "… the plaintiff's Urgent Motion to Withdraw Funds Deposited in Escrow dated
Conclusions of Law, made on the 21st day of October, 1993, as follows: October 9, 1996, be deemed withdrawn and the PNB be immediately directed to
release the funds on deposit to the Bureau of Treasury for transmission to Walter
Fuller Sales, Inc., with the above Agreement and decisions of the US Federal
"IT IS ORDERED, ADJUDGED, AND DECREED, that judgment be and the same Courts,"
is hereby entered in favor of the Plaintiff Walter Fuller Aircraft Sales, Inc. and
against the Defendants The Republic of the Philippines and the Presidential
Commission on Good Government, jointly and severally, in the amount of On September 3, 1999, the Sandiganbayan issued the first questioned Resolution denying
Fourteen Million Nine-Hundred Twenty-Eight Thousand Four Hundred Fifty- petitioner's motion to release the "Falcon Jet escrow account" because: (a) it does not
seven Dollars and Twenty-Nine Cents ($14,928,457.29). The principal amount of appear from the records that the person lawfully entitled to the escrow deposit has been
this judgment includes pre-judgment interest at the rate of 10% compounded on determined; (b) the motion contravenes the ruling of the Supreme Court in Republic v.
the attorney's fees award, for the period from April 9, 1990, through October 27, Sandiganbayan7 requiring the PCGG to deposit the proceeds of the sale of the
1993, as follows: sequestered aircraft with the PNB; and (c) although the records disclose two authenticated
copies of foreign judgments,8 there is no indication that copies of the deed of sale of the
aircraft and the compromise agreement have been duly authenticated.
$9,750,000.00
The PCGG then filed a motion for reconsideration but the same was denied by the
975,000.00 interest through April 1991 Sandiganbayan in its Resolution dated February 17, 2000.

$10,725,000.00 Hence, the instant petition. Petitioner Republic contends that respondent Sandiganbayan
gravely abused its discretion when it denied PCGG'S motion to release the funds
1,072,500.00 interest through April 1992 deposited in escrow with the PNB to the Bureau of Treasury for transmission to Fuller
Aircraft.1âwphi1.nêt
$11,795,000.00
The Sandiganbayan failed to file a comment on the instant petition. Thus, this Court has no
1,179,750.00 interest through April 1993 way of determining why it failed to resolve in more than one decade who is lawfully entitled
to the escrow deposit.
$12,977,250.00
As shown by the records, Faysound Ltd. is the owner of the Falcon jet. In fact, this is WHEREFORE, the petition is GRANTED. The challenged Resolutions dated September 3,
admitted by petitioner Republic itself. As mentioned earlier, Cojuangco or any of the 1999 and February 17, 2000 are REVERSED and SET ASIDE. Respondent
defendants in Civil Case No. 0033 has no interest in it. Clearly, this aircraft was Sandiganbayan is directed to order the release of the subject escrow account to the PCGG
erroneously sequestered. It is thus patently illegal for the PCGG to sell it to Fuller Aircraft. for transmission to Walter Fuller Aircraft Sales, Inc. Within ten (10) days from its
compliance, the PCGG is ordered to submit to the Sandiganbayan the corresponding
Petitioner does not disclaim its financial obligation to Fuller Aircraft under the "Agreement." report. No costs.
Because of its failure to fulfill the same, petitioner, as previously stated, filed with the
Sandiganbayan a motion for the release of the escrow deposit to the Bureau of Treasury SO ORDERED.
for transmittal to Fuller Aircraft. Petitioner alleged that for the delay in the final settlement
of its financial liability, the Government of the Philippines must pay an interest surcharge in
favor of Fuller Aircraft in the sum of US$2,000.00 a day Moreover, petitioner is under
heavy diplomatic pressure.

Considering the circumstances obtaining in this case, we rule that petitioner Republic
cannot be held liable under the "Agreement." It must be stressed that petitioner did not
authorize the PCGG to enter into such contract with Fuller Aircraft. Granting that the
PCGG was so authorized, however, it exceeded its authority. Worse, the sale of the
aircraft was without the approval of the Sandiganbayan. This Court, in G.R. No. 88336,
held:

"x x x From the preceding discussion of the cases hereinbefore cited and the
contending submissions of the parties in the present recourse, we cannot but
make the observation that the decision to sell the aircraft is not within the limited
administrative powers of the PCGG but requires the sanction of the
Sandiganbayan which can grant or withhold the same in the exercise of sound
discretion and on the basis of the evidence before it. Without such approval by
the judicial authority concerned, and no abuse of discretion on its part having
been established, it irresistibly follows that any sale of said aircraft under the
circumstances obtaining in this case would constitute a prohibited and invalid
disposition by the PCGG." (Underscoring supplied.)

Moreover, inasmuch as the sale of the aircraft by the PCGG to Fuller Aircraft is void, it
follows that the "Agreement" between the PCGG and Fuller Aircraft is likewise a nullity.

Correspondingly, petitioner Republic cannot be bound by the terms of the said


"Agreement" and thus, there can be no cause of action against it.

In Chavez vs. Sandiganbayan,9 this Court ruled that the PCGG or any of its member may
be held civilly liable if they did not act in good faith and within the scope of their authority in
the performance of their official duties. Likewise, in Director of Bureau of Communications
vs. Aligaen,10 this Court held that unauthorized acts by its government officials or officers
are not acts of the State.

Petitioner must, therefore, take immediate appropriate action against the PCGG personnel
involved in the unauthorized sale of the aircraft.

Meanwhile, it is the legal duty of petitioner Republic to return to Fuller Aircraft, through the
PCGG, the escrow deposit in the sum of US $8,568,905.55 as of July 1999. Otherwise,
petitioner may enrich itself unjustly and may be held liable for keeping the said amount
indefinitely to the prejudice of Fuller Aircraft whose right to the escrow deposit has not
been questioned by any party in Civil Case No. 0033.
Republic of the Philippines 7 May 1987 a complaint1 with the Regional Trial Court of her place of residence — Cavite
SUPREME COURT — against Bradford for damages due to the oppressive and discriminatory acts committed
Manila by the latter in excess of her authority as store manager of the NEX JUSMAG. The
complaint, docketed as Civil Case No. 224-87 and subsequently raffled off to Branch 22 at
EN BANC Imus, Cavite, alleges the following, material operative facts:

xxx xxx xxx

G.R. No. 79253 March 1, 1993 3. That on January 22, 1987, after working as the duty ID checker from
7:45 to 11:45 a.m., plaintiff went shopping and left the store at l2:00
noon of that day;
UNITED STATES OF AMERICA and MAXINE BRADFORD, petitioners,
vs.
HON. LUIS R. REYES, as Presiding Judge of Branch 22, Regional Trial Court of 4. That on the way to her car while already outside the store, Mrs. Yong
Cavite, and NELIA T. MONTOYA, respondents. Kennedy, also an ID checker, upon the instruction of the store
manager, Ms. Maxine Bradford, approached plaintiff and informed her
that she needed to search her bags;
Luna, Sison & Manas for petitioners.
5. That plaintiff went to defendant, who was then outside the store
Evelyn R. Dominguez for private respondent. talking to some men, to protest the search but she was informed by the
defendant that the search is to be made on all Jusmag employees that
day;

DAVIDE, JR., J.: 6. That the search was thereafter made on the person, car and bags of
the plaintiff by Mrs. Yong Kennedy in the presence of the defendant
and numerous curious onlookers;
This is a petition for certiorari and prohibition under Rule 65 of the Rules of Court.
Petitioners would have Us annul and set aside, for having been issued with grave abuse of
discretion amounting to lack of jurisdiction, the Resolution of 17 July 1987 of Branch 22 of 7. That having found nothing irregular on her person and belongings,
the Regional Trial Court (RTC) of Cavite in Civil Case No. 224-87. The said resolution plaintiff was allowed to leave the premises;
denied, for lack of merit, petitioners' motion to dismiss the said case and granted the
private respondent's motion for the issuance of a writ of preliminary attachment. Likewise 8. That feeling aggrieved, plaintiff checked the records and discovered
sought to be set aside is the writ of attachment subsequently issued by the RTC on 28 July that she was the only one whose person and belonging was (sic)
1987. searched that day contrary to defendant's allegation as set forth in par.
5 hereof and as evidenced by the memorandum dated January 30,
The doctrine of state immunity is at the core of this controversy. 1987 made by other Filipino Jusmag employees, a photocopy of which
is hereto attached as ANNEX "A" and made integral (sic) part hereof:
The readings disclose the following material operative facts:
9. That moreover, a check with Navy Exchange Security Manager, R.L.
Roynon on January 27, 1987 was made and she was informed by Mr.
Private respondent, hereinafter referred to as Montoya, is an American citizen who, at the Roynon that it is a matter of policy that customers and employees of
time material to this case, was employed as an identification (I.D.) checker at the U.S. NEX Jusmag are not searched outside the store unless there is a very
Navy Exchange (NEX) at the Joint United States Military Assistance Group (JUSMAG) strong evidence of a wrongdoing;
headquarters in Quezon City. She is married to one Edgardo H. Montoya, a Filipino-
American serviceman employed by the U.S. Navy and stationed in San Francisco,
California. Petitioner Maxine Bradford, hereinafter referred to as Bradford, is likewise an 10. That plaintiff knows of no circumstances sufficient to trigger
American citizen who was the activity exchange manager at the said JUSMAG suspicion of a wrongdoing on her part but on the other hand, is aware
Headquarters. of the propensity of defendant to lay suspicion on Filipinos for theft
and/or shoplifting;
As a consequence of an incident which occurred on 22 January 1987 whereby her body
and belongings were searched after she had bought some items from the retail store of the 11. That plaintiff formally protested the illegal search on February 14,
NEX JUSMAG, where she had purchasing privileges, and while she was already at the 1987 in a letter addressed to Mr. R.L. Roynon, a photocopy of which is
parking area, Montoya filed on
hereto attached as ANNEX "B" and made integral (sic) part hereof; but Bases Agreement of 1947. Thereunder, "it is mutually agreed that the United States shall
no action was undertaken by the said officer; have the rights, power and authority within the bases which are necessary for the
establishment, use and operation and defense thereof or appropriate for the control
thereof." The 1979 amendment of the Military Bases Agreement made it clear that the
12. That the illegal search on the person and belongings of the plaintiff
in front of many people has subjected the plaintiff to speculations of United States shall have "the use of certain facilities and areas within the bases and shall
theft, shoplifting and such other wrongdoings and has exposed her to have effective command and control over such facilities and over United States personnel,
contempt and ridicule which was caused her undue embarrassment employees, equipment and material." JUSMAG maintains, at its Quezon City
and indignity; headquarters, a Navy Exchange referred to as the NEX-JUSMAG. Checking of purchases
at the NEX is a routine procedure observed at base retail outlets to protect and safeguard
merchandise, cash and equipment pursuant to paragraphs 2 and 4(b) of NAVRESALEACT
13. That since the act could not have been motivated by other (sic) SUBIC INST. 5500.1.7 Thus, Bradford's order to have purchases of all employees checked
reason than racial discrimination in our own land, the act constitute (sic) on 22 January 1987 was made in the exercise of her duties as Manager of the NEX-
a blow to our national pride and dignity which has caused the plaintiff a JUSMAG.
feeling of anger for which she suffers sleepless nights and wounded
feelings;
They further claimed that the Navy Exchange (NAVEX), an instrumentality of the U.S.
Government, is considered essential for the performance of governmental functions. Its
14. That considering the above, plaintiff is entitled to be compensated mission is to provide a convenient and reliable source, at the lowest practicable cost, of
by way of moral damages in the amount of P500,000.00; articles and services required for the well-being of Navy personnel, and of funds to be
used for the latter's welfare and recreation. Montoya's complaint, relating as it does to the
15. That to serve as a deterrent to those inclined to follow the mission, functions and responsibilities of a unit of the United States Navy, cannot then be
oppressive act of the defendant, exemplary damages in the amount of allowed. To do so would constitute a violation of the military bases agreement. Moreover,
P100,000.00 should also be awarded.2 the rights, powers and authority granted by the Philippine government to the United States
within the U.S. installations would be illusory and academic unless the latter has effective
command and control over such facilities and over American personnel, employees,
She then prayed for judgment ordering Bradford to pay her P500,000.00 as moral equipment and material. Such rights, power and authority within the bases can only be
damages, P100,000.00 as exemplary damages and reasonable attorney's fees plus the exercised by the United States through the officers and officials of its armed forces, such
costs of the suit.3 as Bradford. Baer vs. Tizon8 and United States of America vs.
Ruiz9 were invoked to support these claims.
Summons and a copy of the complaint were served on Bradford on 13 May 1987. In
response thereto, she filed two (2) motions for extension of time to file her Answer which On 6 July 1987, Montoya filed a motion for preliminary attachment 10 on the ground that
were both granted by the trial court. The first was filed through Atty. Miguel Famularcano, Bradford was about to depart from the country and was in the process of removing and/or
Jr., who asked for a 20-day extension from 28 May 1987. The second, filed through the disposing of her properties with intent to defraud her creditors. On 14 July 1987, Montoya
law firm of Luna, Sison and Manas, sought a 15-day extension from 17 June 1987.4 Thus, filed her opposition to the motion to dismiss 11 alleging therein that the grounds proffered in
Bradford had up to 1 July 1987 to file her Answer. Instead of doing so, however, she, the latter are bereft of merit because (a) Bradford, in ordering the search upon her person
together with the government of the United States of America (hereinafter referred to as and belongings outside the NEX JUSMAG store in the presence of onlookers, had
the public petitioner), filed on 25 June 1987, also through the law firm of Luna, Sison and committed an improper, unlawful and highly discriminatory act against a Filipino employee
Manas, a Motion to Dismiss5 based on the following grounds: and had exceeded the scope of her authority; (b) having exceeded her authority, Bradford
cannot rely on the sovereign immunity of the public petitioner because her liability is
1) (This) action is in effect a suit against the United States of America, a personal; (c) Philippine courts are vested with jurisdiction over the case because Bradford
foreign sovereign immune from suit without its consent for the cause of is a civilian employee who had committed the challenged act outside the U.S. Military
action pleaded in the complaint; and Bases; such act is not one of those exempted from the jurisdiction of Philippine courts; and
(d) Philippine courts can inquire into the factual circumstances of the case to determine
whether or not Bradford had acted within or outside the scope of her authority.
2) Defendant, Maxine Bradford, as manager of the US Navy Exchange
Branch at JUSMAG, Quezon City, is immune from suit for act(s) done
by her in the performance of her official functions under the Philippines- On 16 July 1987, public petitioner and Bradford filed a reply to Montoya's opposition and
United States Military Assistance Agreement of 1947 and Military an opposition to the motion for preliminary attachment. 12
Bases Agreement of 1947, as amended.6
On 17 July 1987, 13 the trial court 14 resolved both the motion to dismiss and the motion for
In support of the motion, the petitioners claimed that JUSMAG, composed of an Army, preliminary attachment in this wise:
Navy and Air Group, had been established under the Philippine-United States Military
Assistance Agreement entered into on 21 March 1947 to implement the United States' On the motion to dismiss, the grounds and arguments interposed for
program of rendering military assistance to the Philippines. Its headquarters in Quezon the dismissal of this case are determined to be not indubitable. Hence,
City is considered a temporary installation under the provisions of Article XXI of the Military the motion is denied for lack of merit.
The motion for preliminary attachment is granted in the interest of WHEREFORE, judgment is hereby rendered for the plaintiff and
justice, upon the plaintiff's filing of a bond in the sum of P50,000.00. against the defendant Maxine Bradford assessing the latter to pay unto
the former the sums of P300,000.00 for moral damages, P100,000.00
for exemplary damages and P50,000.00 for actual expenses and
Upon Montoya's filing of the required bond, the trial court issued on 28 July 1987 an
Order 15 decreeing the issuance of a writ of attachment and directing the sheriff to serve attorney's fees.
the writ immediately at the expense of the private respondent. The writ of attachment was
issued on that same date. 16 No costs.

Instead of filing a motion to reconsider the last two (2) orders, or an answer — insofar as SO ORDERED. 24
Bradford is concerned — both the latter and the public petitioner filed on 6 August 1987
the instant petition to annul and set aside the above Resolution of 17 July 1987 and the Bradford received a copy of the decision on 21 September 1987. On that same date, she
writ of attachment issued pursuant thereto. As grounds therefor, they allege that:
and the public petitioner filed with this Court a Petition for Restraining Order 25 which
sought to have the trial court's decision vacated and to prevent the execution of the same;
10. The respondent judge committed a grave abuse of discretion it was also prayed that the trial court be enjoined from continuing with Civil Case No. 224-
amounting to lack of jurisdiction in denying the motion to dismiss the 87. We noted this pleading in the Resolution of 23 September 1987. 26
complaint in Civil Case No. 224-87 "for lack of merit." For the action
was in effect a suit against the United States of America, a foreign In the meantime, since no motion for reconsideration or appeal had been interposed by
sovereign immune from suit without its consent for the cause of action
Bradford challenging the 10 September 1987 Decision which she had received on 21
pleaded in the complaint, while its co-petitioner was immune from suit September 1987, respondent Judge issued on 14 October 1987 an order directing that an
for act(s) done by her in the performance of her official functions as entry of final judgment be made. A copy thereof was received by Bradford on 21 October,
manager of the US Navy Exchange Branch at the Headquarters of 1987. 27
JUSMAG, under the Philippines-United States Military Assistance
Agreement of 1947 and Military Bases Agreement of 1947, as
amended. 17 Also on 14 October 1987, Montoya filed her Comment with Opposition to the Petition for
Restraining Order. 28Respondent Judge had earlier filed his own Comment to the petition
on 14 September 1987. 29
On 5 August 1987, the trial court set Civil Case No. 224-87 for pre-trial and trial on 27
August 1987 at 9:30 a.m. 18
On 27 October 1987, Montoya filed before the trial court a motion for the execution of the
Decision of 10 September 1987 which petitioners opposed on the ground that although this
On 12 August 1987, this Court resolved to require the respondents to comment on the Court had not yet issued in this case a temporary restraining order, it had nevertheless
petition. 19 resolved to require the respondents to comment on the petition. It was further averred that
execution thereof would cause Bradford grave injury; moreover, enforcement of a writ of
On 19 August 1987, petitioners filed with the trial court a Motion execution may lead to regrettable incidents and unnecessarily complicate the situation in
to Suspend Proceedings 20 which the latter denied in its Order of 21 August 1987. 21
view of the public petitioner's position on the issue of the immunity of its employees. In its
Resolution of 11 November 1987, the trial court directed the issuance of a writ of
In the meantime, however, for failure to file an answer, Bradford was declared in default in execution. 30
Civil Case No. 224-87 and Montoya was allowed to present her evidence ex-parte. 22 She
thus took the witness stand and presented Mrs. Nam Thi Moore and Mrs. Miss Yu as her Consequently, the petitioners filed on 4 December 1987, a Manifestation and Motion
witnesses. reciting the foregoing incidents obtaining before the trial court and praying that their
petition for a restraining order be resolved. 31
23
On 10 September 1987, the trial court rendered its decision in Civil Case No. 224-87,
the dispositive portion of which reads: On 7 December 1987, this Court issued a Temporary Restraining Order "ENJOINING the
respondents and the Provincial Sheriff of Pasig, Metro Manila, from enforcing the Decision
Prescinding from the foregoing, it is hereby determined that the dated September 10, 1987, and the Writs of Attachment and Execution issued in Civil
unreasonable search on the plaintiff's person and bag caused (sic) Case No. 224-87." 32
done recklessly and oppressively by the defendant, violated, impaired
and undermined the plaintiff's liberty guaranteed by the Constitution, On 28 November 1988, after the private respondent filed a Rejoinder to the Consolidated
entitling her to moral and exemplary damages against the defendant. Reply to the Comments filed by the petitioners, this Court gave due course to the petition
The search has unduly subjected the plaintiff to intense humiliation and and required the parties to submit their respective memoranda-Petitioners filed their
indignities and had consequently ridiculed and embarrassed publicly Memorandum on 8 February
said plaintiff so gravely and immeasurably. 1989 33 while private respondent filed her Memorandum on 14 November
1990. 34
The kernel issue presented in this case is whether or not the trial court committed grave A careful review of the records of this case and a judicious scrutiny of the arguments of
abuse of discretion in denying the motion to dismiss based on the following grounds: (a) both parties yield nothing but the weakness of the petitioners' stand. While this can be
the complaint in Civil Case No. 224-87 is in effect a suit against the public petitioner, a easily demonstrated, We shall first consider some procedural matters.
foreign sovereign immune from suit which has not given consent to such suit and (b)
Bradford is immune from suit for acts done by her in the performance of her official Despite the fact that public petitioner was not impleaded as a defendant in Civil Case No.
functions as manager of the U.S. Navy Exchange of JUSMAG pursuant to the Philippines- 224-87, it nevertheless joined Bradford in the motion to dismiss — on the theory that the
United States Military Assistance Agreement of 1947 and the Military Bases Agreement of suit was in effect against it — without, however, first having obtained leave of court to
1947, as amended. intervene therein. This was a procedural lapse, if not a downright improper legal tack.
Since it was not impleaded as an original party, the public petitioner could, on its own
Aside from maintaining the affirmative view, the public petitioner and Bradford even go volition, join in the case only by intervening therein; such intervention, the grant of which is
further by asserting that even if the latter's act were ultra vires she would still be immune discretionary upon the court, 37 may be allowed only upon a prior motion for leave with
from suit for the rule that public officers or employees may be sued in their personal notice to all the parties in the action. Of course, Montoya could have also impleaded the
capacity for ultra vires and tortious acts is "domestic law" and not applicable in public petitioner as an additional defendant by amending the complaint if she so believed
International Law. It is claimed that the application of the immunity doctrine does not turn that the latter is an indispensible or necessary party.
upon the lawlessness of the act or omission attributable to the foreign national for if this
were the case, the concept of immunity would be meaningless as inquiry into the Since the trial court entertained the motion to dismiss and the subsequent pleadings filed
lawlessness or illegality of the act or omission would first have to be made before
by the public petitioner and Bradford, it may be deemed to have allowed the public
considering the question of immunity; in other words, immunity will lie only if such act or petitioner to intervene. Corollarily, because of its voluntary appearance, the public
omission is found to be lawful.
petitioner must be deemed to have submitted itself to the jurisdiction of the trial court.

On the other hand, Montoya submits that Bradford is not covered by the protective mantle
Moreover, the said motion does not specify any of the grounds for a motion to dismiss
of the doctrine of sovereign immunity from suit as the latter is a mere civilian employee of enumerated in Section 1, Rule 16 of the Rules of Court. It merely recites state immunity on
JUSMAG performing non-governmental and proprietary functions. And even assuming
the part of the public petitioner and immunity on the part of Bradford for the reason that the
arguendo that Bradford is performing governmental functions, she would still remain act imputed to her was done in the performance of her official functions. The upshot of this
outside the coverage of the doctrine of state immunity since the act complained of is ultra contention is actually lack of cause of action — a specific ground for dismissal under the
vires or outside the scope of her authority. What is being questioned is not the fact of aforesaid Rule — because assuming arguendo that Montoya's rights had been violated by
search alone, but also the manner in which the same was conducted as well as the fact of the public petitioner and Bradford, resulting in damage or injury to the former, both would
discrimination against Filipino employees. Bradford's authority to order a search, it is not be liable therefor, and no action may be maintained thereon, because of the principle
asserted, should have been exercised with restraint and should have been in accordance of state immunity.
with the guidelines and procedures laid down by the cited "NAVRESALEACT, Subic Inst."
Moreover, ultra vires acts of a public officer or employee, especially tortious and criminal
acts, are his private acts and may not be considered as acts of the State. Such officer or The test of the sufficiency of the facts to constitute a cause of action is whether or not,
employee alone is answerable for any liability arising therefrom and may thus be admitting the facts alleged in the complaint, the court could render a valid judgment upon
proceeded against in his personal capacity. the same, in accordance with the prayer in the complaint. 38

Montoya further argues that both the acts and person of Bradford are not exempt from the A motion to dismiss on the ground of failure to state a cause of action hypothetically admits
Philippine courts' jurisdiction because (a) the search was conducted in a parking lot at the truth of the allegations in the complaint.
Scout Borromeo, Quezon City, outside the JUSMAG store and, therefore, outside the
territorial control of the U.S. Military Bases in the Philippines; (b) Bradford does not In deciding a motion to dismiss, a court may grant, deny, allow amendments to the
possess diplomatic immunity under Article 16(b) of the 1953 Military Assistance pleadings or defer the hearing and determination of the same if the ground alleged does
Agreement creating the JUSMAG which provides that only the Chief of the Military not appear to be indubitable. 39 In the instant case, while the trial court concluded that "the
Advisory Group and not more than six (6) other senior members thereof designated by him grounds and arguments interposed for the dismissal" are not "indubitable," it denied the
will be accorded diplomatic immunity; 35 and (c) the acts complained of do not fall under motion for lack of merit. What the trial court should have done was to defer there solution
those offenses where the U.S. has been given the right to exercise its jurisdiction (per on the motion instead of denying it for lack of merit.
Article 13 of the 1947 Military Bases Agreement, as amended by the, Mendez-Blair Notes
of 10 August 1965). 36
In any event, whatever may or should have been done, the public petitioner and Bradford
were not expected to accept the verdict, making their recourse to this Court via the instant
Finally, Montoya maintains that at the very least, Philippine courts may inquire into the petition inevitable. Thus, whether the trial court should have deferred resolution on or
factual circumstances of the case to determine whether petitioner Bradford is immune from denied outright the motion to dismiss for lack of merit is no longer pertinent or relevant.
suit or exempt from Philippine jurisdiction. To rule otherwise would render the Philippine
courts powerless as they may be easily divested of their jurisdiction upon the mere
invocation of this principle of immunity from suit. The complaint in Civil Case No. 224-87 is for damages arising from what Montoya
describes as an "illegal search" on her "person and belongings" conducted outside the
JUSMAG premises in front of many people and upon the orders of Bradford, who has the immunity cannot be used as an instrument for perpetrating an
propensity for laying suspicion on Filipinos for theft or shoplifting. It is averred that the said injustice. 45
search was directed only against Montoya.
In the case of Baer, etc. vs. Tizon, etc., et al., 46 it was ruled that:
Howsoever viewed, it is beyond doubt that Montoya's cause of action is premised on the
theory that the acts complained of were committed by Bradford not only outside the scope
There should be no misinterpretation of the scope of
of her authority — or more specifically, in her private capacity — but also outside the the decision reached by this Court. Petitioner, as the
territory where she exercises such authority, that is, outside the NEX-JUSMAG —
Commander of the United States Naval Base in
particularly, at the parking area which has not been shown to form part of the facility of Olongapo, does not possess diplomatic immunity.
which she was the manager. By their motion to dismiss, public petitioner and Bradford are He may therefore be proceeded against in his
deemed to have hypothetically admitted the truth of the allegation in the complaint which personal capacity, or when the action taken by him
support this theory. cannot be imputed to the government which he
represents.
The doctrine of state immunity and the exceptions thereto are summarized in Shauf
vs. Court of Appeals, 40 thus: Also, in Animos, et al. vs. Philippine Veterans Affairs Office, et al., 47
we held that:

I. The rule that a state may not be sued without its consent, now . . . it is equally well-settled that where a litigation
expressed in Article XVI Section 3, of the 1987 Constitution, is one of
may have adverse consequences on the public
the generally accepted principles of international law that we have treasury, whether in the disbursements of funds or
adopted as part of the law of our land under Article II, Section 2. This loss of property, the public official proceeded against
latter provision merely reiterates a policy earlier embodied in the 1935 not being liable in his personal capacity, then the
and 1973 Constitutions and also intended to manifest our resolve to doctrine of non-suability may appropriately be
abide by the rules of the international community. 41 invoked. It has no application, however, where the
suit against such a functionary had to be instituted
While the doctrine appears to prohibit only suits against the state because of his failure to comply with the duty
without its consent, it is also applicable to complaints filed against imposed by statute appropriating public funds for the
officials of the state for acts allegedly performed by them in the benefit of plaintiff or petitioner. . . . .
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 The aforecited authorities are clear on the matter. They state that the
satisfy the same, such as the appropriation of the amount needed to doctrine of immunity from suit will not apply and may not be invoked
pay the damages awarded against them, the suit must be regarded as
where the public official is being sued in his private and personal
against the state itself although it has not been formally impleaded. 42 It capacity as an ordinary citizen. The cloak of protection afforded the
must be noted, however, that the rule is not so all-encompassing as to
officers and agents of the government is removed the moment they are
be applicable under all circumstances. sued in their individual capacity. This situation usually arises where the
public official acts without authority or in excess of the powers vested in
It is a different matter where the public official is made to account in his him. It is a well-settled principle of law that a public official may be liable
capacity as such for acts contrary to law and injurious to the rights of in his personal private capacity for whatever damage he may have
plaintiff. As was clearly set forth by Justice Zaldivar in Director of the caused by his act done
Bureau of Telecommunications, et al. vs. Aligaen, etc., et with malice and in bad faith, or beyond the scope of his authority or
al. 43 "Inasmuch as the State authorizes only legal acts by its officers, jurisdiction. 48
unauthorized acts of government officials or officers are not acts of the
State, and an action against the officials or officers by one whose rights The agents and officials of the United States armed forces stationed in
have been invaded or violated by such acts, for the protection of his Clark Air Base are no exception to this rule. In the case of United
rights, is not a suit against the State within the rule of immunity of the
States of America, et al. vs. Guinto, etc., et al., ante, 49 we declared:
State from suit. In the same tenor, it has been said that an action at law
or suit in equity against a State officer or the director of a State
department on the ground that, while claiming to act or the State, he It bears stressing at this point that the above
violates or invades the personal and property rights of the plaintiff, observations do not confer on the United States of
under an unconstitutional act or under an assumption of authority which America Blanket immunity for all acts done by it or
he does not have, is not a suit against the State within its agents in the Philippines. Neither may the other
the constitutional provision that the State may not be sued without its petitioners claim that they are also insulated from
consent." 44 The rationale for this ruling is that the doctrinaire of state suit in this country merely because they have acted
as agents of the United States in the discharge of State outside his official
their official functions. functions (Emphasis supplied).

Since it is apparent from the complaint that Bradford was sued in her private or personal There can be no doubt that on the basis of the allegations in the complaint, Montoya has a
capacity for acts allegedly done beyond the scope and even beyond her place of official sufficient and viable cause of action. Bradford's purported non-suability on the ground of
functions, said complaint is not then vulnerable to a motion to dismiss based on the state immunity is then a defense which may be pleaded in the answer and proven at the
grounds relied upon by the petitioners because as a consequence of the hypothetical trial.
admission of the truth of the allegations therein, the case falls within the exception to the
doctrine of state immunity. Since Bradford did not file her Answer within the reglementary period, the trial court
correctly declared her in default upon motion of the private respondent. The judgment then
In the recent cases of Williams vs. Rarang 50 and Minucher vs. Court of Appeals, 51 this rendered against her on 10 September 1987 after the ex parte reception of the evidence
Court reiterated this exception. In the former, this Court observed: for the private respondent and before this Court issued the Temporary Restraining Order
on 7 December 1987 cannot be impugned. The filing of the instant petition and the
knowledge thereof by the trial court did not prevent the latter from proceeding with Civil
There is no question, therefore, that the two (2) petitioners actively
participated in screening the features and articles in the POD as part of Case No.
their official functions. Under the rule that U.S. officials in the 224-87. "It is elementary that the mere pendency of a special civil action for certiorari,
performance of their official functions are immune from suit, then it commenced in relation to a case pending before a lower Court, does not interrupt the
should follow that petitioners may not be held liable for the questioned course of the latter when there is no writ of injunction restraining it." 53
publication.
WHEREFORE, the instant petition is DENIED for lack of merit. The Temporary Restraining
It is to be noted, however, that the petitioners were sued in their Order of 7 December 1987 is hereby LIFTED.
personal capacities for their alleged tortious acts in publishing a libelous
article. Costs against petitioner Bradford.

The question, therefore, arises — are American naval officers who SO ORDERED.
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.

In the latter, even on the claim of diplomatic immunity — which Bradford does not in fact
pretend to have in the instant case as she is not among those granted diplomatic immunity
under Article 16(b) of the 1953 Military Assistance Agreement creating the JUSMAG 52 —
this Court ruled:

Even Article 31 of the Vienna Convention on Diplomatic Relations


admits of exceptions. It reads:

1. A diplomatic agent shall enjoy immunity from the


criminal jurisdiction of the receiving State. He shall
also enjoy immunity from its civil and administrative
jurisdiction except in the case of:

xxx xxx xxx

(c) an action relating to any


professional or commercial
activity exercised by the
diplomatic agent in the receiving
Republic of the Philippines ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA
SUPREME COURT EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM,
Manila PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES
AND CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their
EN BANC capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ,
DIONESIO GRAMPA, ANGELITO GUTIERREZ, BERNABE LAKINDANUM, ROBERTO
YUMUL, LEOPOLDO ALONZO, ADELFA ARIBE, DANILO ARJONA, VICENTE
CAMPOMANES, RONILO DOMUNICO) respectively; and (names of sixty-two injured
victims) EDDIE AGUINALDO, FELICISIMO ALBASIA, NAPOLEON BAUTISTA,
G.R. No. 84607 March 19, 1993 DANILO CRUZ, EDDIE MENSOLA, ALBERT PITALBO, VICENTE ROSEL, RUBEN
CARRIEDO, JOY CRUZ, HONORIO LABAMBA, JR. EFREN MACARAIG, SOLOMON
MANALOTO, ROMEO DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY
REPUBLIC OF THE PHILIPPINES, GEN. RAMON MONTANO, GEN. ALFREDO LIM, CLEMENTE, GERARDO COYOCA, LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR
GEN. ALEXANDER AGUIRRE, COL. EDGAR DULA TORRES, COL. CEZAR FONTANILLA, WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS TOMAS VALLOS,
NAZARENO, MAJ. FILEMON GASMEN, PAT. NICANOR ABANDO, PFC SERAFIN ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO ANGELES, MARCELO
CEBU, JR., GEN. BRIGIDO PAREDES, COL. ROGELIO MONFORTE, PFC ANTONIO ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS MENDOZA, VICTORINO
LUCERO, PAT. JOSE MENDIOLA, PAT. NELSON TUASON, POLICE CORPORAL QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO TARSONA, CARLOS
PANFILO ROGOS, POLICE LT. JUAN B. BELTRAN, PAT. NOEL MANAGBAO, ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA ALONUEVO, EMMA
MARINE THIRD CLASS TRAINEE (3CT) NOLITO NOGATO, 3CT ALEJANDRO B. ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO,
NAGUIO, JR., EFREN ARCILLAS, 3CT AGERICO LUNA, 3CT BASILIO BORJA, 3CT RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS, MARIO
MANOLITO LUSPO, 3CT CRISTITUTO GERVACIO, 3CT MANUEL DELA CRUZ, JR., DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES, RAMIRO JAMIL,
MARINE (CDC) BN., (CIVIL DISTURBANCE CONTROL), MOBILE DISPERSAL TEAM JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO SANTOS, EMIL
(MDT), LT. ROMEO PAQUINTO, LT. LAONGLAANG GOCE, MAJ. DEMETRIO DE LA SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO, ARMANDO
CRUZ, POLICE CAPTAIN RODOLFO NAVAL, JOHN DOE, RICHARD DOE, ROBERTO MATIENZO, CARLO MEDINA, LITO NOVENARIO, ROSELLA ROBALE, petitioners,
DOE AND OTHER DOES, petitioners, vs.
vs. REPUBLIC OF THE PHILIPPINES, and HONORABLE EDILBERTO G. SANDOVAL,
HON. EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch IX, Regional Trial Court of Manila, Branch 9, respondents.
ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA
EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM,
PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES The Solicitor General for the Republic of the Philippines.
AND CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their
capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, Structural Alternative Legal Assistance for Grassroots for petitioners in 84645 &
DIONESIO BAUTISTA, DANTE EVANGELIO, ADELFA ARIBE, DANILO ARJONA, private respondents in 84607.
VICENTE CAMPOMANES, RONILO DOMUNICO) respectively; and (names of sixty-
two injured victims) EDDIE AGUINALDO, FELICISIMO ALBASIA, NAPOLEON
BAUTISTA, DANILO CRUZ, EDDIE MENSOLA, ALBERT PITALBO, VICENTE ROSEL,
RUBEN CARRIEDO, JOY CRUZ, HONORIO LABAMBA, JR., EFREN MACARAIG,
SOLOMON MANALOTO, ROMEO DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY CAMPOS, JR., J.:
CLEMENTE, GERARDO COYOCA, LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR
FONTANILLA, WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS, TOMAS VALLOS, People may have already forgotten the tragedy that transpired on January 22, 1987.
ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO ANGELES, MARCELO It is quite ironic that then, some journalists called it a Black Thursday, as a grim
ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS MENDOZA, VICTORIANO
reminder to the nation of the misfortune that befell twelve (12) rallyists. But for most
QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO TARSONA, CARLOS Filipinos now, the Mendiola massacre may now just as well be a chapter in our
ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA ALONUEVO, EMMA
history books. For those however, who have become widows and orphans, certainly
ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO, they would not settle for just that. They seek retribution for the lives taken that will
RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS, MARIO never be brought back to life again.
DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES, RAMIRO JAMIL,
JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO SANTOS, EMIL
SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO, ARMANDO Hence, the heirs of the deceased, together with those injured (Caylao group),
MATIENZO, CARLO MEDINA, LITO NOVENARIO, and ROSELLA instituted this petition, docketed as G.R. No. 84645, under Section 1 of Rule 65 of the
ROBALE, respondents. Rules of Court, seeking the reversal and setting aside of the Orders of respondent
Judge Sandoval,1 dated May 31 and August 8, 1988, dismissing the complaint for
damages of herein petitioners against the Republic of the Philippines in Civil Case No. 88-
G.R. No. 84645 March 19, 1993 43351.
Petitioner, the Republic of the Philippines, through a similar remedy, docketed as G.R. No. ensued between Tadeo and Minister Alvarez. This notwithstanding, Minister Alvarez
84607, seeks to set aside the Order of respondent Judge dated May 31, 1988, in Civil suggested a negotiating panel from each side to meet again the following day.
Case No. 88-43351 entitled "Erlinda Caylao, et al. vs. Republic of the Philippines, et al."
On January 22, 1987, Tadeo's group instead decided to march to Malacañang to air their
The pertinent portion of the questioned Order 2 dated May 31, 1988, reads as follows: demands. Before the march started, Tadeo talked to the press and TV media. He uttered
fiery words, the most telling of which were:
With respect however to the other defendants, the impleaded Military ". . . inalis namin ang barikada bilang kahilingan ng ating Presidente, pero kinakailangan
alisin din niya ang barikada sa Mendiola sapagkat bubutasin din namin iyon at dadanak
Officers, since they are being charged in their personal and official
capacity, and holding them liable, if at all, would not result in financial ang dugo . . . ."4
responsibility of the government, the principle of immunity from suit can
not conveniently and correspondingly be applied to them. The farmers then proceeded to march to Malacañang, from Quezon Memorial Circle, at
10:00 a.m. They were later joined by members of other sectoral organizations such as the
WHEREFORE, the case as against the defendant Republic of the Kilusang Mayo Uno (KMU), Bagong Alyansang Makabayan (BAYAN), League of Filipino
Students (LFS) and Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML).
Philippines is hereby dismissed. As against the rest of the defendants
the motion to dismiss is denied. They are given a period of ten (10)
days from receipt of this order within which to file their respective At around 1:00 p.m., the marchers reached Liwasang Bonifacio where they held a brief
pleadings. program. It was at this point that some of the marchers entered the eastern side of the
Post Office Building, and removed the steel bars surrounding the garden. Thereafter, they
On the other hand, the Order3 , dated August 8, 1988, denied the motions filed by both joined the march to Malacañang. At about 4:30 p.m., they reached C.M. Recto Avenue.
parties, for a reconsideration of the abovecited Order, respondent Judge finding no cogent
reason to disturb the said order. In anticipation of a civil disturbance, and acting upon reports received by the Capital
Regional Command (CAPCOM) that the rallyists would proceed to Mendiola to break
The massacre was the culmination of eight days and seven nights of encampment by through the police lines and rush towards Malacañang, CAPCOM Commander General
members of the militant Kilusang Magbubukid sa Pilipinas (KMP) at the then Ministry (now Ramon E. Montaño inspected the preparations and adequacy of the government forces to
Department) of Agrarian Reform (MAR) at the Philippine Tobacco Administration Building quell impending attacks.
along Elliptical Road in Diliman, Quezon City.
OPLAN YELLOW (Revised) was put into effect. Task Force Nazareno under the command
The farmers and their sympathizers presented their demands for what they called "genuine of Col. Cesar Nazareno was deployed at the vicinity of Malacañang. The civil disturbance
agrarian reform". The KMP, led by its national president, Jaime Tadeo, presented their control units of the Western Police District under Police Brigadier General Alfredo S. Lim
problems and demands, among which were: (a) giving lands for free to farmers; (b) zero were also activated.
retention of lands by landlords; and (c) stop amortizations of land payments.
Intelligence reports were also received that the KMP was heavily infiltrated by CPP/NPA
The dialogue between the farmers and the MAR officials began on January 15, 1987. The elements and that an insurrection was impending. The threat seemed grave as there were
two days that followed saw a marked increase in people at the encampment. It was only also reports that San Beda College and Centro Escolar University would be forcibly
on January 19, 1987 that Jaime Tadeo arrived to meet with then Minister Heherson occupied.
Alvarez, only to be informed that the Minister can only meet with him the following day. On
January 20, 1987, the meeting was held at the MAR conference room. Tadeo demanded In its report, the Citizens' Mendiola Commission (a body specifically tasked to investigate
that the minimum comprehensive land reform program be granted immediately. Minister the facts surrounding the incident, Commission for short) stated that the government anti-
Alvarez, for his part, can only promise to do his best to bring the matter to the attention of riot forces were assembled at Mendiola in a formation of three phalanges, in the following
then President Aquino, during the cabinet meeting on January 21, 1987. manner:

Tension mounted the following day. The farmers, now on their seventh day of (1) The first line was composed of policemen from police stations Nos.
encampment, barricaded the MAR premises and prevented the employees from going 3, 4, 6, 7, 8, 9 and 10 and the Chinatown detachment of the Western
inside their offices. They hoisted the KMP flag together with the Philippine flag. Police District. Police Colonel Edgar Dula Torres, Deputy
Superintendent of the Western Police District, was designated as
At around 6:30 p.m. of the same day, Minister Alvarez, in a meeting with Tadeo and his ground commander of the CDC first line of defense. The WPD CDC
elements were positioned at the intersection of Mendiola and Legarda
leaders, advised the latter to instead wait for the ratification of the 1987 Constitution and
just allow the government to implement its comprehensive land reform program. Tadeo, Streets after they were ordered to move forward from the top of
Mendiola bridge. The WPD forces were in khaki uniform and carried the
however, countered by saying that he did not believe in the Constitution and that a genuine
land reform cannot be realized under a landlord-controlled Congress. A heated discussion standard CDC equipment — aluminum shields, truncheons and gas
masks.
(2) At the second line of defense about ten (10) yards behind the WPD After the firing ceased, two MDTs headed by Lt. Romeo
policemen were the elements of the Integrated National Police (INP) Paquinto and Lt. Laonglaan Goce sped towards Legarda Street and
Field Force stationed at Fort Bonifacio from the 61st and 62nd INP lobbed tear gas at the remaining rallyist still grouped in the vicinity of
Field Force, who carried also the standard CDC equipment — Mendiola. After dispersing the crowd, the two MDTs, together with the
truncheons, shields and gas masks. The INP Field Force was under the two WPD MDTs, proceeded to Liwasang Bonifacio upon order of
command of Police Major Demetrio dela Cruz. General Montaño to disperse the rallyists assembled thereat. Assisting
the MDTs were a number of policemen from the WPD, attired in civilian
(3) Forming the third line was the Marine Civil Disturbance Control clothes with white head bands, who were armed with long
Battalion composed of the first and second companies of the Philippine firearms.6 (Emphasis ours)
Marines stationed at Fort Bonifacio. The marines were all equipped with
shields, truncheons and M-16 rifles (armalites) slung at their After the clash, twelve (12) marchers were officially confirmed dead, although according to
backs, under the command of Major Felimon B. Gasmin. The Marine Tadeo, there were thirteen (13) dead, but he was not able to give the name and address of
CDC Battalion was positioned in line formation ten (10) yards farther said victim. Thirty-nine (39) were wounded by gunshots and twelve (12) sustained minor
behind the INP Field Force. injuries, all belonging to the group of the marchers.

At the back of the marines were four (4) 6 x 6 army trucks, occupying Of the police and military personnel, three (3) sustained gunshot wounds and twenty (20)
the entire width of Mendiola street, followed immediately by two water suffered minor physical injuries such as abrasions, contusions and the like.
cannons, one on each side of the street and eight fire trucks, four trucks
on each side of the street. The eight fire trucks from Fire District I of In the aftermath of the confrontation, then President Corazon C. Aquino issued
Manila under Fire Superintendent Mario C. Tanchanco, were to supply Administrative Order No. 11,7 (A.O. 11, for brevity) dated January 22, 1987, which created
water to the two water cannons.
the Citizens' Mendiola Commission. The body was composed of retired Supreme Court
Justice Vicente Abad Santos as Chairman, retired Supreme Court Justice Jose Y. Feria
Stationed farther behind the CDC forces were the two Mobile Dispersal and Mr. Antonio U. Miranda, both as members. A.O. 11 stated that the Commission was
Teams (MDT) each composed of two tear gas grenadiers, two spotters, created precisely for the "purpose of conducting an investigation of the disorder, deaths,
an assistant grenadier, a driver and the team leader. and casualties that took place in the vicinity of Mendiola Bridge and Mendiola Street and
Claro M. Recto Avenue, Manila, in the afternoon of January 22, 1987". The Commission
was expected to have submitted its findings not later than February 6, 1987. But it failed to
In front of the College of the Holy Spirit near Gate 4 of Malacañang
stood the VOLVO Mobile Communications Van of the Commanding do so. Consequently, the deadline was moved to February 16, 1987 by Administrative
Order No. 13. Again, the Commission was unable to meet this deadline. Finally, on
General of CAPCOM/INP, General Ramon E. Montaño. At this
command post, after General Montaño had conferred with TF Nazareno February 27, 1987, it submitted its report, in accordance with Administrative Order No. 17,
Commander, Colonel Cezar Nazareno, about the adequacy and issued on February 11, 1987.
readiness of his forces, it was agreed that Police General Alfredo S.
Lim would designate Police Colonel Edgar Dula Torres and Police In its report, the Commission recapitulated its findings, to wit:
Major Conrado Franciscoas negotiators with the marchers. Police
General Lim then proceeded to the WPD CDC elements already (1) The march to Mendiola of the KMP led by Jaime Tadeo, together
positioned at the foot of Mendiola bridge to relay to Police Colonel with the other sectoral groups, was not covered by any permit as
Torres and Police Major Francisco the instructions that the latter would required under Batas Pambansa Blg. 880, the Public Assembly Act of
negotiate with the marchers.5 (Emphasis supplied) 1985, in violation of paragraph (a) Section 13, punishable under
paragraph (a), Section 14 of said law.
The marchers, at around 4:30 p.m., numbered about 10,000 to 15,000. From C.M. Recto
Avenue, they proceeded toward the police lines. No dialogue took place between the (2) The crowd dispersal control units of the police and the military were
marchers and the anti-riot squad. It was at this moment that a clash occurred and, armed with .38 and .45 caliber handguns, and M-16 armalites, which is
borrowing the words of the Commission "pandemonium broke loose". The Commission a prohibited act under paragraph 4(g), Section 13, and punishable
stated in its findings, to wit:
under paragraph (b), Section 14 of Batas Pambansa Blg. 880.

. . . There was an explosion followed by throwing of pillboxes, stones (3) The security men assigned to protect the WPD, INP Field Force, the
and bottles. Steel bars, wooden clubs and lead pipes were used Marines and supporting military units, as well as the security officers of
against the police. The police fought back with their shields and the police and military commanders were in civilian attire in violation of
truncheons. The police line was breached. Suddenly shots were heard. paragraph (a), Section 10, Batas Pambansa 880.
The demonstrators disengaged from the government forces and
retreated towards C.M. Recto Avenue. But sporadic firing continued
from the government forces.
(4) There was unnecessary firing by the police and military crowd 13, Batas Pambansa Blg. 880, the Public Assembly Act of 1985. The Commission's
dispersal control units in dispersing the marchers, a prohibited act recommendation also included the prosecution of the marchers, for carrying deadly or
under paragraph (e), Section 13, and punishable under paragraph (b), offensive weapons, but whose identities have yet to be established. As for Jaime Tadeo,
Section 14, Batas Pambansa Blg. 880. the Commission said that he should be prosecuted both for violation of paragraph (a),
Section 13, Batas Pambansa Blg. 880 for holding the rally without a permit and for
(5) The carrying and use of steel bars, pillboxes, darts, lead pipe, violation of Article 142, as amended, of the Revised Penal Code for inciting to sedition. As
wooden clubs with spikes, and guns by the marchers as offensive for the following officers, namely: (1) Gen. Ramon E. Montaño; (2) Police Gen. Alfredo S.
weapons are prohibited acts punishable under paragraph (g), Section Lim; (3) Police Gen. Edgar Dula Torres; (4) Police Maj. Demetrio dela Cruz; (5) Col. Cezar
13, and punishable under paragraph (e), Section 14 of Batas Nazareno; and (5) Maj. Felimon Gasmin, for their failure to make effective use of their skill
Pambansa Blg. 880. and experience in directing the dispersal operations in Mendiola, administrative sanctions
were recommended to be imposed.

(6) The KMP farmers broke off further negotiations with the MAR
officials and were determined to march to Malacañang, emboldened as The last and the most significant recommendation of the Commission was for the
they are, by the inflammatory and incendiary utterances of their leader, deceased and wounded victims of the Mendiola incident to be compensated by the
Jaime Tadeo — "bubutasin namin ang barikada . . Dadanak and dugo . government. It was this portion that petitioners (Caylao group) invoke in their claim for
. . Ang nagugutom na magsasaka ay gagawa ng sariling butas. . . damages from the government.

(7) There was no dialogue between the rallyists and the government Notwithstanding such recommendation, no concrete form of compensation was received
forces. Upon approaching the intersections of Legarda and Mendiola, by the victims. Thus, on July 27, 1987, herein petitioners, (Caylao group) filed a formal
the marchers began pushing the police lines and penetrated and broke letter of demand for compensation from the Government. 10 This formal demand was
indorsed by the office of the Executive Secretary to the Department of Budget and
through the first line of the CDC contingent.
Management (DBM) on August 13, 1987. The House Committee on Human Rights, on
February 10, 1988, recommended the expeditious payment of compensation to the
(8) The police fought back with their truncheons and shields. They Mendiola victims. 11
stood their ground but the CDC line was breached. There ensued
gunfire from both sides. It is not clear who started the firing.
After almost a year, on January 20, 1988, petitioners (Caylao group) were constrained to
institute an action for damages against the Republic of the Philippines, together with the
(9) At the onset of the disturbance and violence, the water cannons and military officers, and personnel involved in the Mendiola incident, before the trial court. The
tear gas were not put into effective use to disperse the rioting crowd. complaint was docketed as Civil Case No. 88-43351.

(10) The water cannons and fire trucks were not put into operation On February 23, 1988, the Solicitor General filed a Motion to Dismiss on the ground that
because (a) there was no order to use them; (b) they were incorrectly the State cannot be sued without its consent. Petitioners opposed said motion on March
prepositioned; and (c) they were out of range of the marchers. 16, 1988, maintaining that the State has waived its immunity from suit and that the
dismissal of the instant action is contrary to both the Constitution and the International Law
(11) Tear gas was not used at the start of the disturbance to disperse on Human Rights.
the rioters. After the crowd had dispersed and the wounded and dead
were being carried away, the MDTs of the police and the military with Respondent Judge Sandoval, in his first questioned Order, dismissed the complaint as
their tear gas equipment and components conducted dispersal against the Republic of the Philippines on the ground that there was no waiver by the
operations in the Mendiola area and proceeded to Liwasang Bonifacio State. Petitioners (Caylao group) filed a Motion for Reconsideration therefrom, but the
to disperse the remnants of the marchers. same was denied by respondent judge in his Order dated August 8, 1988. Consequently,
Caylao and her co-petitioners filed the instant petition.
(12) No barbed wire barricade was used in Mendiola but no official
reason was given for its absence.8 On the other hand, the Republic of the Philippines, together with the military officers and
personnel impleaded as defendants in the court below, filed its petition for certiorari.
From the results of the probe, the Commission recommended9 the criminal prosecution of
four unidentified, uniformed individuals, shown either on tape or in pictures, firing at the Having arisen from the same factual beginnings and raising practically identical issues, the
direction of the marchers. In connection with this, it was the Commission's two (2) petitions were consolidated and will therefore be jointly dealt with and resolved in
recommendation that the National Bureau of Investigation (NBI) be tasked to undertake this Decision.
investigations regarding the identities of those who actually fired their guns that resulted in
the death of or injury to the victims of the incident. The Commission also suggested that all
the commissioned officers of both the Western Police District and the INP Field Force, who The resolution of both petitions revolves around the main issue of whether or not the State
has waived its immunity from suit.
were armed during the incident, be prosecuted for violation of paragraph 4(g) of Section
16
Petitioners (Caylao group) advance the argument that the State has impliedly waived its Some instances when a suit against the State is proper are:
sovereign immunity from suit. It is their considered view that by the recommendation made
by the Commission for the government to indemnify the heirs and victims of the Mendiola (1) When the Republic is sued by name;
incident and by the public addresses made by then President Aquino in the aftermath of
the killings, the State has consented to be sued.
(2) When the suit is against an unincorporated government agency;
Under our Constitution the principle of immunity of the government from suit is expressly
provided in Article XVI, Section 3. The principle is based on the very essence of (3) When the, suit is on its face against a government officer but the case is such that
sovereignty, and on the practical ground that there can be no legal right as against the ultimate liability will belong not to the officer but to the government.
authority that makes the law on which the right depends. 12 It also rests on reasons of
public policy — that public service would be hindered, and the public endangered, if the While the Republic in this case is sued by name, the ultimate liability does not pertain to
sovereign authority could be subjected to law suits at the instance of every citizen and the government. Although the military officers and personnel, then party defendants, were
consequently controlled in the uses and dispositions of the means required for the proper discharging their official functions when the incident occurred, their functions ceased to be
administration of the government. 13 official the moment they exceeded their authority. Based on the Commission findings,
there was lack of justification by the government forces in the use of firearms. 17 Moreover,
This is not a suit against the State with its consent. the members of the police and military crowd dispersal units committed a prohibited act
under B.P. Blg. 880 18 as there was unnecessary firing by them in dispersing the
marchers. 19
Firstly, the recommendation made by the Commission regarding indemnification of the
heirs of the deceased and the victims of the incident by the government does not in any
way mean that liability automatically attaches to the State. It is important to note that A.O. As early as 1954, this Court has pronounced that an officer cannot shelter himself by the
11 expressly states that the purpose of creating the Commission was to have a body that plea that he is a public agent acting under the color of his office when his acts are wholly
will conduct an "investigation of the disorder, deaths and casualties that took place." 14 In without authority. 20 Until recently in 1991, 21 this doctrine still found application, this Court
the exercise of its functions, A.O. 11 provides guidelines, and what is relevant to Our saying that immunity from suit cannot institutionalize irresponsibility and non-accountability
discussion reads: nor grant a privileged status not claimed by any other official of the Republic. The military
and police forces were deployed to ensure that the rally would be peaceful and orderly as
well as to guarantee the safety of the very people that they are duty-bound to protect.
1 Its conclusions regarding the existence of probable cause for the However, the facts as found by the trial court showed that they fired at the unruly crowd to
commission of any offense and of the persons probably guilty of the disperse the latter.
same shall be sufficient compliance with the rules on preliminary
investigation and the charges arising therefrom may be filed directly
with the proper court. 15 While it is true that nothing is better settled than the general rule that a sovereign state and
its political subdivisions cannot be sued in the courts except when it has given its consent,
it cannot be invoked by both the military officers to release them from any liability, and by
In effect, whatever may be the findings of the Commission, the same shall only serve as the heirs and victims to demand indemnification from the government. The principle of
the cause of action in the event that any party decides to litigate his/her claim. Therefore, state immunity from suit does not apply, as in this case, when the relief demanded by the
the Commission is merely a preliminary venue. The Commission is not the end in itself. suit requires no affirmative official action on the part of the State nor the affirmative
Whatever recommendation it makes cannot in any way bind the State immediately, such
discharge of any obligation which belongs to the State in its political capacity, even though
recommendation not having become final and, executory. This is precisely the essence of the officers or agents who are made defendants claim to hold or act only by virtue of a title
it being a fact-finding body.
of the state and as its agents and servants. 22 This Court has made it quite clear that even
a "high position in the government does not confer a license to persecute or recklessly
Secondly, whatever acts or utterances that then President Aquino may have done or said, injure another." 23
the same are not tantamount to the State having waived its immunity from suit. The
President's act of joining the marchers, days after the incident, does not mean that there
The inescapable conclusion is that the State cannot be held civilly liable for the deaths that
was an admission by the State of any liability. In fact to borrow the words of petitioners followed the incident. Instead, the liability should fall on the named defendants in the lower
(Caylao group), "it was an act of solidarity by the government with the people". Moreover, court. In line with the ruling of this court in Shauf vs. Court of Appeals, 24 herein public
petitioners rely on President Aquino's speech promising that the government would officials, having been found to have acted beyond the scope of their authority, may be held
address the grievances of the rallyists. By this alone, it cannot be inferred that the State liable for damages.
has admitted any liability, much less can it be inferred that it has consented to the suit.

WHEREFORE, finding no reversible error and no grave abuse of discretion committed by


Although consent to be sued may be given impliedly, still it cannot be maintained that such respondent Judge in issuing the questioned orders, the instant petitions are hereby
consent was given considering the circumstances obtaining in the instant case. DISMISSED.

Thirdly, the case does not qualify as a suit against the State.
SO ORDERED.
SECOND DIVISION The TRO expired on March 28, 1988. The following day, GABI was finally evicted by
NPDC.
G.R. No. 102667 February 23, 2000
GABI's action for damages and injunction was subsequently dismissed by the RTC, ruling
AMADO J. LANSANG, petitioner, that the complaint was actually directed against the State which could not be sued without
its consent. Moreover, the trial court ruled that GABI could not claim damages under the
vs.
COURT OF APPEALS, GENERAL ASSEMBLY OF THE BLIND, INC., and JOSE alleged oral lease agreement since GABI was a mere accommodation concessionaire. As
such, it could only recover damages upon proof of the profits it could realize from the
IGLESIAS, respondents.
conclusion. The trial court noted that no such proof was presented.1âwphi1.nêt

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

Before us is a petition to review the decision of the Court of Appeals in C.A. G.R. CV No.
27244, which set aside the ruling of the Regional Trial Court, Manila, Branch 8, in Civil The Court of Appeals ruled that the mere allegation that a government official is being
Case No. 88-43887, and ordered petitioner Amado J. Lansang to pay private respondent sued in his official capacity is not enough to protect such official from liability for acts done
Jose Iglesias P50,000.00 in moral damages, P10,000.00 in exemplary damages and without or in excess of his authority.7 Granting that petitioner had the authority to evict
GABI from Rizal Park, "the abusive and capricious manner in which that authority was
P5,000.00 in attorney's fees.
exercised amounted to a legal wrong for which he must now be held liable for
damages"8 according to the Court of Appeals.
Like public streets, public parks are beyond the commerce of man. However, private
respondents were allegedly awarded a "verbal contract of lease" in 1970 by the National
The Court of Appeals noted that, as the trial court observed, the eviction of GABI came at
Parks Development Committee (NPDC), a government initiated civic body engaged in the
development of national parks, including Rizal Park,1 but actually administered by high the heels of two significant incidents. First, after private respondent Iglesias extended
monetary support to striking workers of the NPDC, and second, after Iglesias sent the
profile civic leaders and journalists. Whoever in NPDC gave such "verbal" accommodation
to private respondents was unclear, for indeed no document or instrument appears on Tanodbayan, a letter on November 26, 1987, denouncing alleged graft and corruption in
record to show the grantor of the verbal license to private respondents to occupy a portion the NPDC.9 These, according to the Court of Appeals, should not have been taken against
of the government park dedicated to the national hero's memory. GABI, which had been occupying Rizal Park for nearly 20 years. GABI was evicted
purportedly for violating its verbal agreement with NPDC. 10 However, the Court of Appeals
pointed out that NPDC failed to present proof of such violation. 11
Private respondents were allegedly given office and library space as well as kiosks area
selling food and drinks. One such kiosk was located along T.M. Kalaw St., in front of the
Army and Navy Club. Private respondent General Assembly of the Blind, Inc. (GABI) was The Court of Appeals found petitioner liable for damages under Articles 19, 21, and 24 of
to remit to NPDC, 40 percent of the profits derived from operating the kiosks, 2 without the Civil Code.12
again anything shown in the record who received the share of the profits or how they were
used or spent. The Court of Appeals absolved from liability all other persons impleaded in GABI's
complaint since it appeared that they were merely acting under the orders of petitioner.
With the change of government after the EDSA Revolution, the new Chairman of the The new officers of NPDC, additionally impleaded by GABI, were likewise absolved from
NPDC, herein petitioner, sought to clean up Rizal Park. In a written notice dated February liability, absent any showing that they participated in the acts complained of. Petitioner was
23, 1988 and received by private respondents on February 29, 1988, petitioner terminated ordered to pay private respondent Iglesias moral and exemplary damages and attorney's
the so-called verbal agreement with GABI and demanded that the latter vacate the fees.
premises and the kiosks it ran privately within the public park. 3 In another notice dated
March 5, 1988, respondents were given until March 8, 1988 to vacate. 4 Hence, this petition, in which petitioner raises the following issues:

The latter notice was signed by private respondent Iglesias, GABI president, allegedly to I. WHETHER OR NOT RESPONDENT COURT ERRED IN NOT HOLDING
indicate his conformity to its contents. However, Iglesias, who is totally blind, claims that he THAT PRIVATE RESPONDENTS' COMPLAINT AGAINST PETITIONER, AS
was deceived into signing the notice. He was allegedly told by Ricardo Villanueva, then CHAIRMAN OF NPDC, AND HIS CO-DEFENDANTS IN CIVIL CASE NO. 88-
chief warden of Rizal Park, that he was merely acknowledging receipt of the notice. 43887, IS IN EFFECT A SUIT AGAINST THE STATE WHICH CANNOT BE
Although blind, Iglesias as president was knowledgeable enough to run GABI as well as its SUED WITHOUT ITS CONSENT.
business.
II. WHETHER OR NOT RESPONDENT COURT ERRED IN NOT HOLDING
On the day of the supposed eviction, GABI filed an action for damages and injunction in THAT PETITIONER'S ACT OF TERMINATING RESPONDENT GABI'S
the Regional Trial Court against petitioner, Villanueva, and "all persons acting on their CONCESSION IS VALID AND DONE IN THE LAWFUL PERFORMANCE OF
behalf".5 The trial court issued a temporary restraining order on the same day.6 OFFICIAL DUTY.13
Petitioner insists that the complaint filed against him is in reality a complaint against the We are convinced that petitioner is being sued not in his capacity as NPDC chairman but
State, which could not prosper without the latter's consent. He anchors his argument on in his personal capacity. The complaint filed by private respondents in the RTC merely
the fact that NPDC is a government agency, and that when he ordered the eviction of identified petitioner as chairman of the NPDC, but did not categorically state that he is
GABI, he was acting in his capacity as chairman of NPDC. Petitioner avers that the mere being sued in that capacity.19 Also, it is evident from paragraph 4 of said complaint that
allegation that he was being sued in his personal capacity did not remove the case from petitioner was sued allegedly for having personal motives in ordering the ejectment of
the coverage of the law of public officers and the doctrine of state immunity. GABI from Rizal Park.

Petitioner points out that Iglesias signed the notice of eviction to indicate his conformity 4. Defendant AMADO J. LANSANG, JR., the Chairman of the National Parks
thereto. He contends that as evidence of private respondents' bad faith, they sued Development Committee, acting under the spirit of revenge, ill-will, evil motive
petitioner instead of complying with their undertaking to vacate their library and kiosk at and personal resentment against plaintiff JOSE IGLESIAS, served on the plaintiff
Rizal Park. corporation a letter, dated February 23, 1988 terminating plaintiffs lease
agreement with a demand for the plaintiff corporation to vacate its office
Petitioner adds that during the actual eviction, no untoward incident occurred. GABI's premises. . .20 (Emphasis supplied.)
properties were properly inventoried and stored.
The parties do not dispute that it was petitioner who ordered the ejectment of GABI from
According to petitioner, the Court of Appeals' observation that the eviction was prompted their office and kiosk at Rizal Park. There is also no dispute that petitioner, as chairman of
by Iglesias' support for striking NPDC workers and the letter-complaint sent to the the NPDC which was the agency tasked to administer Rizal Park, had the authority to
Tanodbayan is merely conjectural. terminate the agreement with GABI21 and order the organization's ejectment. The question
now is whether or not petitioner abused his authority in ordering the ejectment of private
respondents.
Finally, petitioner avers that the move to evict GABI and award the spaces it occupied to
another group was an executive policy decision within the discretion of NPDC. GABI's
possession of the kiosks as concessionaire was by mere tolerance of NPDC and, thus, We find, however, no evidence of such abuse of authority on record. As earlier stated,
such possession may be withdrawn at any time, with or without cause. Rizal Park is beyond the commerce of man and, thus, could not be the subject of a lease
contract. Admittedly, there was no written contract. That private respondents were allowed
to occupy office and kiosk spaces in the park was only a matter of accommodation by the
On the other hand, private respondents aver that petitioner acted beyond the scope of his previous administrator. This being so, also admittedly, petitioner may validly discontinue
authority when he showed malice and bad faith in ordering GABI's ejectment from Rizal the accommodation extended to private respondents, who may be ejected from the park
Park. Quoting from the decision of the Court of Appeals, private respondents argue that when necessary. Private respondents cannot and does not claim a vested right to continue
petitioner is liable for damages for performing acts "to injure an individual rather than to to occupy Rizal Park.
discharge a public duty."14
The Court of Appeals awarded private respondent Iglesias moral and exemplary damages
While private respondents recognize the authority of petitioner to terminate the agreement and attorney's fees. However, we find no evidence on record to support Iglesias' claim that
with GABI "if [the contract] is prejudicial to the interest of the NPDC," 15 they maintain that he suffered moral injury as a result of GABI's ejectment from Rizal Park. Absent any
petitioner's personal interest, and not that of the NPDC, was the root cause of GABI's satisfactory proof upon which the Court may base the amount of damages suffered, the
ejecment. award of moral damages cannot be sustained. 22

The doctrine of state immunity from suit applies to complaints filed against public officials Neither can we sustain the award of exemplary damages, which may only be awarded in
for acts done in the performance of their duties. The rule is that the suit must be regarded addition to moral, temperate, liquidated, or compensatory damages. 23 We also disallow the
as one against the state where satisfaction of the judgment against the public official award for attorney's fees, which can only be recovered per stipulation of the parties, which
concerned will require the state itself to perform a positive act, such as appropriation of the is absent in this case. There is no showing that any of the exceptions justifying the award
amount necessary to pay the damages awarded to the plaintiff. 16 of attorney's fees absent a stipulation is present in this case. 24

The rule does not apply where the public official is charged in his official capacity for acts WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in
that are unlawful and injurious to the rights of others.17 Public officials are not exempt, in CA-G.R. CV No. 27244 is hereby SET ASIDE, and the DISMISSAL of the complaint for
their personal capacity, from liability arising from acts committed in bad faith. 18 damages by the trial court for want of merit is AFFIRMED. No costs.

Neither does it apply where the public official is clearly being sued not in his official SO ORDERED.1âwphi1.nêt
capacity but in his personal capacity, although the acts complained of may have been
committed while he occupied a public position.
12. Only products accredited by the Committee shall be allowed to
SECOND DIVISION be procured by the DOH and all other entities under its
jurisdiction.[5] (Underscoring supplied)
THE DEPARTMENT OF HEALTH, G.R. No. 169304
SECRETARY MANUEL M. DAYRIT, On May 9, 2000[6] and May 29, 2000,[7] respondent submitted to petitioner DOH a
USEC. MA. MARGARITA GALON and Present: request for the inclusion of additional items in its list of accredited drug products, including
USEC. ANTONIO M. LOPEZ, the antibiotic Penicillin G Benzathine. Based on the schedule provided by petitioner DOH,
Petitioners, QUISUMBING, J., Chairperson, it appears that processing of and release of the result of respondents request were due on
CARPIO, September 2000, the last month of the quarter following the date of its filing.[8]
CARPIO MORALES,
- versus - TINGA, and Sometime in September 2000, petitioner DOH, through petitioner Antonio M.
VELASCO, JR., JJ. Lopez, chairperson of the pre-qualifications, bids and awards committee, issued an
Invitation for Bids[9] for the procurement of 1.2 million units vials of Penicillin G Benzathine
PHIL. PHARMAWEALTH, INC., Promulgated: (Penicillin G Benzathine contract).
Respondent. March 13, 2007
Despite the lack of response from petitioner DOH regarding respondents request
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x for inclusion of additional items in its list of accredited products, respondent submitted its
bid for the Penicillin G Benzathine contract. When the bids were opened on October 11,
2000, only two companies participated, with respondent submitting the lower bid at P82.24
DECISION per unit, compared to Cathay/YSS Laboratories (YSS) bid of P95.00 per unit. In view,
however, of the non-accreditation of respondents Penicillin G Benzathine product, the
contract was awarded to YSS.
CARPIO MORALES, J.:
Respondent thus filed a complaint[10] for injunction, mandamus and damages with
Assailed via petition for review are issuances of the Court of Appeals in CA-G.R. prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order
SP No. 84457, to wit: a) Decision[1] dated May 12, 2005 which affirmed the order issued by with the Regional Trial Court of Pasig City praying, inter alia, that the trial court nullify the
Judge Leoncio M. Janolo, Jr. of the Regional Trial Court of Pasig City, Branch 264 denying award of the Penicillin G Benzathine contract (IFB No. 2000-10-11 [14]) to YSS
petitioners motion to dismiss Civil Case No. 68208; and b) Resolution [2] dated August 9, Laboratories, Inc. and direct defendant DOH, defendant Romualdez,
2005 which denied petitioners motion for reconsideration. defendant Galon and defendant Lopez to declare plaintiff Pharmawealth as

Phil. Pharmawealth, Inc. (respondent) is a domestic corporation engaged in the


business of manufacturing and supplying pharmaceutical products to government hospitals the lowest complying responsible bidder for the Benzathine contract, and that they
in the Philippines. accordingly award the same to plaintiff company and adjudge defendants Romualdez,
Galon and Lopez liable, jointly and severally to plaintiff, for [the therein specified
On December 22, 1998, then Secretary of Health Alberto G. Romualdez, Jr. damages].[11]
issued Administrative Order (A.O.) No. 27,[3] Series of 1998, outlining the guidelines and
procedures on the accreditation of government suppliers for pharmaceutical products. In their Comment,[12] petitioner DOH, Secretary Alberto Romualdez, Jr. who was
later succeeded by petitioner Secretary Manuel M. Dayrit, and individual petitioners
A.O. No. 27 was later amended by A.O. No. 10, [4] Series of 2000, providing for Undersecretaries Margarita Galon and Antonio Lopez argued for the dismissal of the
additional guidelines for accreditation of drug suppliers aimed at ensuring that only complaint for lack of merit in view of the express reservation made by petitioner DOH to
qualified bidders can transact business with petitioner Department of Health (DOH). Part V accept or reject any or all bids without incurring liability to the bidders, they positing that
of A.O. No. 10 reads, in part: government agencies have such full discretion.

Petitioners subsequently filed a Manifestation and Motion [13] (motion to dismiss)


1. Drug Manufacturer, Drug Trader and Drug Importer praying for the outright dismissal of the complaint based on the doctrine of state
shall be allowed to apply for accreditation. immunity. Additionally, they alleged that respondents representative was not duly
authorized by its board of directors to file the complaint.
2. Accreditation shall be done by the Central Office-
Department of Health. To petitioners motion to dismiss, respondent filed its
comment/opposition[14] contending, in the main, that the doctrine of state immunity is not
3. A separate accreditation is required for the drug applicable considering that individual petitioners are being sued both in their official and
suppliers and for their specific products. personal capacities, hence, they, not the state, would be liable for damages.

xxxx By Order of December 8, 2003, the trial court[15] denied petitioners motion to
dismiss.
Their motion for reconsideration having been denied, [16] petitioners filed a petition It is a different matter where the public official is made to
for certiorari[17] with the Court of Appeals, before which they maintained that the suit is account in his capacity as such for acts contrary to law and injurious
against the state. to the rights of plaintiff. As was clearly set forth by Justice Zaldivar
in Director of the Bureau of Telecommunications, et al. vs. Aligaen,
By the assailed Decision[18] of May 12, 2005, the Court of Appeals affirmed the etc., et al.,[29] Inasmuch as the State authorizes only legal acts
trial courts Order. And by Resolution of August 9, 2005, it denied petitioners motion for by its officers, unauthorized acts of government officials or
reconsideration. officers are not acts of the State, and an action against the
officials or officers by one whose rights have been invaded or
Hence, the instant petition for review which raises the sole issue of whether the violated by such acts, for the protection of his rights, is not a
Court of Appeals erred in upholding the denial of petitioners motion to dismiss. suit against the State within the rule of immunity of the State
from suit. In the same tenor, it has been said that an action at
The petition fails. law or suit in equity against a State officer or the director of a
State department on the ground that, while claiming to act for
The suability of a government official depends on whether the official concerned the State, he violates or invades the personal and property
was acting within his official or jurisdictional capacity, and whether the acts done in the rights of the plaintiff, under an unconstitutional act or under an
performance of official functions will result in a charge or financial liability against the assumption of authority which he does not have, is not a suit
government. In the first case, the Constitution itself assures the availability of judicial against the State within the constitutional provision that the
review,[19] and it is the official concerned who should be impleaded as the proper party. [20] State may not be sued without its consent. The rationale for this
ruling is that the doctrine of state immunity cannot be used as an
In its complaint, respondent sufficiently imputes grave abuse of discretion against instrument for perpetrating an injustice. (Emphasis and
petitioners in their official capacity. Since judicial review of acts alleged to have been underscoring supplied)
tainted with grave abuse of discretion is guaranteed by the Constitution, it necessarily
follows that it is the official concerned who should be impleaded as defendant or Hence, the rule does not apply where the public official is charged in his official
respondent in an appropriate suit.[21] capacity for acts that are unauthorized or unlawful and injurious to the rights of
others.Neither does it apply where the public official is clearly being sued not in his official
Moreover, part of the reliefs prayed for by respondent is the enjoinment of the capacity but in his personal capacity, although the acts complained of may have been
implementation, as well as the nullification of the award to YSS, the grant of which may not committed while he occupied a public position. [30]
be enforced against individual petitioners and their successors except in their official
capacities as officials of the DOH.[22] In the present case, suing individual petitioners in their personal capacities for
damages in connection with their alleged act of illegal[ly] abus[ing] their official positions to
As regards petitioner DOH, the defense of immunity from suit will not avail make sure that plaintiff Pharmawealth would not be awarded the Benzathine contract
despite its being an unincorporated agency of the government, for the only causes of [which act was] done in bad faith and with full knowledge of the limits and breadth of their
action directed against it are preliminary injunction and mandamus. Under Section 1, Rule powers given by law[31] is permissible, in consonance with the foregoing principles. For an
58[23] of the Rules of Court, preliminary injunction may be directed against a party or a officer who exceeds the power conferred on him by law cannot hide behind the plea of
court, agency or a person. Moreover, the defense of state immunity from suit does not sovereign immunity and must bear the liability personally.[32]
apply in causes of action which do not seek to impose a charge or financial liability against
the State.[24] It bears stressing, however, that the statements in the immediately foregoing
paragraph in no way reflect a ruling on the actual liability of petitioners to respondent. The
As regards individual petitioners suability for damages, the following discussion mere allegation that a government official is being sued in his personal capacity does not
on the applicability of the defense of state immunity from suit is relevant. automatically remove the same from the protection of the doctrine of state
immunity.Neither, upon the other hand, does the mere invocation of official character
The rule that a state may not be sued without its consent, now embodied in suffice to insulate such official from suability and liability for an act committed without or in
Section 3, Article XVI of the 1987 Constitution, is one of the generally accepted principles excess of his or her authority.[33] These are matters of evidence which should be presented
of international law, which we have now adopted as part of the law of the land. [25] and proven at the trial.

While the doctrine of state immunity appears to prohibit only suits against the WHEREFORE, the petition is DENIED. The assailed Decision dated May 12,
state without its consent, it is also applicable to complaints filed against officials of the 2005 and Resolution dated August 9, 2005 issued by the Court of Appeals
state for acts allegedly performed by them in the discharge of their duties. [26] The suit is are AFFIRMED.
regarded as one against the state where satisfaction of the judgment against the officials
will require the state itself to perform a positive act, such as the appropriation of the SO ORDERED.
amount necessary to pay the damages awarded against them. [27]

The rule, however, is not so all-encompassing as to be applicable under all


circumstances. Shauf v. Court of Appeals[28] elucidates: