Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-51806 November 8, 1988
CIVIL AERONAUTICS ADMINISTRATION, petitioner,
vs.
COURT OF APPEALS and ERNEST E. SIMKE, respondents.
The Solicitor General for petitioner.
Ledesma, Guytingco, Veleasco & Associates for respondent Ernest E. Simke.

CORTES, J.:
Assailed in this petition for review on certiorari is the decision of the Court of Appeals affirming
the trial court decision which reads as follows:
WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff the amount of
P15,589.55 as full reimbursement of his actual medical and hospital expenses, with interest at the
legal rate from the commencement of the suit; the amount of P20,200.00 as consequential
damages; the amount of P30,000.00 as moral damages; the amount of P40,000.00 as exemplary
damages; the further amount of P20,000.00 as attorney's fees and the costs [Rollo, p. 24].
The facts of the case are as follows:
Private respondent is a naturalized Filipino citizen and at the time of the incident was the
Honorary Consul Geileral of Israel in the Philippines.
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 better view of the
incoming passengers, he and his group proceeded to the viewing deck or terrace of the airport.
While walking on the terrace, then filled with other people, private respondent slipped over an
elevation about four (4) inches high at the far end of the terrace. As a result, private respondent fell
on his back and broke his thigh bone.
The next day, December 14, 1968, private respondent was operated on for about three hours.

Private respondent then filed an action for damages based on quasi-delict with the Court of First
Instance of Rizal, Branch VII against petitioner Civil Aeronautics Administration or CAA as the
entity empowered "to administer, operate, manage, control, maintain and develop the Manila
International Airport ... ." [Sec. 32 (24), R.A. 776].
Said claim for damages included, aside from the medical and hospital bills, consequential
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 cancelled because of his
accident [Record on Appeal, p. 5].
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 same court a
Motion for, Reconsideration but this was denied.
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 cannot be sued without its consent, which was not
given in this case.
2. The Court of Appeals gravely erred in finding that the injuries of 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 area of the
terrace of the fold) MIA building is dangerous just because said respondent tripped over it is
manifestly mistaken circumstances that justify a review by this Honorable Court of the said
finding of fact of respondent appellate court (Garcia v. Court of Appeals, 33 SCRA 622; Ramos v.
CA, 63 SCRA 331.)
3. The Court of Appeals gravely erred in ordering petitioner to pay actual, consequential, moral
and exemplary damages, as well as attorney's fees to respondent Simke although there was no
substantial and competent proof to support said awards I Rollo, pp. 93-94 1.
I
Invoking the rule that the State cannot be sued without its consent, petitioner contends that being
an agency of the government, it cannot be made a party-defendant in this case.
This Court has already held otherwise in the case of National Airports Corporation v. Teodoro, Sr.
[91 Phil. 203 (1952)]. Petitioner contends that the said ruling does not apply in this case because:
First, in the Teodoro case, the CAA was sued only in a substituted 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 based on a quasi-delict. Third, there is no
specific provision in Republic Act No. 776, the 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.
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 it stated
that:
xxx xxx xxx
... To all legal intents and practical purposes, the National Airports Corporation is dead and the
Civil Aeronautics Administration is its heir or legal representative, acting by the law of its creation
upon its own rights and in its own name. The better practice there should have been to make the
Civil Aeronautics Administration the third party defendant instead of the National Airports
Corporation. [National Airports Corp. v. Teodoro, supra, p. 208.]
xxx xxx xxx
Second, the Teodoro case did not make any qualification or limitation as to whether or not 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 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 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 SCRA 4561 finds relevance and
applicability to the present case.
Third, it has already been settled in the Teodoro case that the CAA as an agency is not immune
from suit, it being engaged in functions pertaining to a private entity.
xxx xxx xxx
The Civil Aeronautics Administration comes under the category of a private 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 the promotion of travel and the convenience of the travelling public. It is
engaged in an enterprise which, far from being the exclusive prerogative of state, may, more than
the construction of public roads, be undertaken by private concerns. [National Airports Corp. v.
Teodoro, supra, p. 207.]
xxx xxx xxx
True, the law prevailing in 1952 when the Teodoro case was promulgated was Exec. Order 365

(Reorganizing the Civil Aeronautics Administration and Abolishing the National Airports
Corporation). Republic Act No. 776 (Civil Aeronautics Act of the Philippines), subsequently
enacted on June 20, 1952, did not alter the character of the CAA's objectives under Exec, Order
365. The pertinent provisions cited in the Teodoro case, particularly Secs. 3 and 4 of Exec. Order
365, which led the Court to consider the CAA in the category of a private entity were retained
substantially in Republic Act 776, Sec. 32 (24) and (25).<re||an1w> Said Act provides:
Sec. 32. Powers and Duties of the Administrator. Subject to the general control and supervision
of the Department Head, the Administrator shall have among others, the following powers and
duties:
xxx xxx xxx
(24) To administer, operate, manage, control, maintain and develop the Manila International
Airport and all government-owned aerodromes except those controlled or operated by the Armed
Forces of the Philippines including such powers and duties as: (a) to plan, design, construct, equip,
expand, improve, repair or alter aerodromes or such structures, improvement or air navigation
facilities; (b) to enter into, make and execute contracts of any kind with any person, firm, or public
or private corporation or entity; ... .
(25) To determine, fix, impose, collect and receive landing fees, parking space fees, royalties on
sales or deliveries, direct or indirect, to any aircraft for its use of aviation gasoline, oil and
lubricants, spare parts, accessories and supplies, tools, other royalties, fees or rentals for the use of
any of the property under its management and control.
xxx xxx xxx
From the foregoing, it can be seen that the CAA is tasked with private or non-governmental
functions which operate to remove it from the purview of the rule on State immunity from suit.
For the correct rule as set forth in the Tedoro case states:
xxx xxx xxx
Not all government entities, whether corporate or non-corporate, are immune from suits.
Immunity functions suits is determined by the character of the objects for which the entity was
organized. The rule is thus stated in Corpus Juris:
Suits against State agencies with relation to matters in which they have assumed to act in private
or non-governmental capacity, and various suits against certain corporations created by the state
for public purposes, but to engage in matters partaking more of the nature of ordinary business
rather than functions of a governmental or political character, are not regarded as suits against the
state. The latter is true, although the state may own stock or property of such a corporation for by
engaging in business operations through a corporation, the state divests itself so far of its
sovereign character, and by implication consents to suits against the corporation. (59 C.J., 313)

[National Airport Corporation v. Teodoro, supra, pp. 206-207; Emphasis supplied.]

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 Philippine
National Railways, although owned and operated by the government, was not immune from suit as
it does not exercise sovereign but purely proprietary and business 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 from suit accorded to government agencies
performing strictly governmental functions.
II
Petitioner tries to escape liability on the ground that there was no basis for a finding of negligence.
There can be no negligence on its part, it alleged, because the elevation in question "had a
legitimate purpose for being on the terrace and was never intended to trip down people and injure
them. It was there for no other purpose but to drain water on the floor area of the terrace" [Rollo,
P. 99].
To determine whether or not the construction of the elevation was done in a negligent manner, the
trial court conducted an ocular inspection of the premises.
xxx xxx xxx
... This Court after its ocular inspection found the elevation shown in Exhs. A or 6-A where
plaintiff slipped to be a step, a dangerous sliding step, and the proximate cause of plaintiffs
injury...
xxx xxx xxx
This Court during its ocular inspection also observed the dangerous and defective condition of the
open terrace which has remained unrepaired through the years. It has observed the lack of
maintenance and upkeep of the MIA terrace, typical of many government buildings and offices.
Aside from the litter allowed to accumulate in the terrace, pot holes cause by missing tiles
remained unrepaired and unattented. The several elevations shown in the exhibits presented were
verified by this Court during the ocular inspection it undertook. Among these elevations is the one
(Exh. A) where plaintiff slipped. This Court also observed the other hazard, the slanting or sliding
step (Exh. B) as one passes the entrance door leading to the terrace [Record on Appeal, U.S., pp.
56 and 59; Emphasis supplied.]
The Court of Appeals further noted that:
The inclination itself is an architectural anomaly for as stated by the 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. (tsn, p.

35, Id.) [rollo, p. 29.]

These factual findings are binding and conclusive upon this Court. Hence, the CAA cannot
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 or air navigation
facilities [Section 32, supra, R.A. 776]. In the discharge of this obligation, the CAA is duty-bound
to exercise due diligence in overseeing the construction and maintenance of the viewing deck or
terrace of the airport.
It must be borne in mind that pursuant to Article 1173 of the Civil Code, "(t)he fault or 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 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 would be to look to where the planes and
the incoming passengers are and not to look down on the floor or pavement of the viewing deck.
The CAA should have thus made sure that no dangerous obstructions or elevations exist on the
floor of the deck to prevent any undue harm to the public.
The legal foundation of CAA's liability for quasi-delict can be found in Article 2176 of the Civil
Code which provides that "(w)hoever by act or omission causes damage to another, 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 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 to warrant a finding of liability based on quasidelict upon CAA.
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, 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 cause of his injury, contributed to his own
damage, the proximate cause of the plaintiffs own injury being the defendant's lack of due care. In
the instant case, no contributory negligence can be imputed to the private respondent, considering
the following test formulated in the early case of Picart v. Smith, 37 Phil. 809 (1918):
The test by which to determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent man would have used in the same situation? If not, then he is guilty of
negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary
conduct of the discreet paterfamilias of the Roman law. The existence of the negligence in a given
case is not determined by reference to the 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 that.

The question as to what would constitute the conduct of a prudent man 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 much can be
profitably said: Reasonable men-overn their conduct by the circumstances which are before them
or known to them. They are not, and are not supposed to be omniscient of the future. Hence they
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 consideration, foresee harm as a result of the
course actually pursued' If so, it was the duty of the actor to take precautions to guard against that
harm. Reasonable foresight of harm, followed by the ignoring of the suggestion born of this
prevision, is always necessary before negligence can be held to exist.... [Picart v. Smith, supra, p.
813; Emphasis supplied.]
The private respondent, who was the plaintiff in the case before the lower court, could not have
reasonably foreseen the harm that would befall him, considering the attendant factual
circumstances. Even if the private respondent had been looking where he was going, the step in
question could not easily be noticed because of its construction. As the trial court found:
In connection with the incident testified to, a sketch, Exhibit O, shows a section of the floorings
oil which plaintiff had tripped, This sketch reveals two pavements adjoining each other, one being
elevated by four and one-fourth inches than the other. From the architectural standpoint the higher,
pavement is a step. However, unlike a step 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. Obviously, plaintiff had stepped on the
inclination because had his foot landed on the lower pavement he would not have lost his balance.
The same sketch shows that both pavements including the inclined portion are tiled in red cement,
and as shown by the photograph Exhibit A, the 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. There was no warning sign to
direct one's attention to the change in the elevation of the floorings. [Rollo, pp. 2829.]
III
Finally, petitioner appeals to this Court the award of damages to private respondent. The liability
of CAA to answer for damages, whether actual, moral or exemplary, cannot be seriously doubted
in view of one conferment of the power to sue and be sued upon it, which, as held in the case of
Rayo v. Court of First Instance, supra, includes liability on a claim for quasi-dilict. In the
aforestated case, the liability of the National Power Corporation to answer for damages resulting
from its act of sudden, precipitate and simultaneous opening of the Angat Dam, which caused the
death of several residents of the area and the destruction of properties, was upheld since the o,rant
of the power to sue and be sued upon it necessarily implies that it can be held answerable for its
tortious acts or any wrongful act for that matter.

With respect to actual or compensatory damages, the law mandates that the same be proven.
Art. 2199.
Except as provided by law or by stipulation, one are entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual on compensatory damages [New Civil Code].
Private respondent claims P15,589.55 representing medical and hospitalization bills. This Court
finds the same to have been duly proven through the testimony of Dr. Ambrosio Tangco, the
physician who attended to private respondent (Rollo, p. 26) and who Identified Exh. "H" which
was his bill for professional services [Rollo, p. 31].
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 also
been duly proven. Private respondent had adequately shown the existence of such losses and the
amount thereof in the testimonies before the trial court [CA decision, p. 81. At any rate, the
findings of the Court of Appeals with respect to this are findings of facts [One Heart Sporting
Club, Inc. v. Court of Appeals, G.R. Nos. 5379053972, Oct. 23, 1981, 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 31, 1987,152 SCRA 585].
With respect to the P30,000.00 awarded as moral damages, the Court holds private respondent
entitled thereto because of the physical suffering and physical injuries caused by the negligence of
the CAA [Arts. 2217 and 2219 (2), New Civil Code].
With respect to the award of exemplary damages, the Civil Code explicitly, states:
Art. 2229.
Exemplary or corrective damages, are imposed, by way of example or correction
for the public good, in addition to the moral, liquidated or compensatory
Art. 2231.
In quasi-delicts, exemplary damages may be granted if the defendant acted with
gross negligence.
Gross negligence which, according to the Court, is equivalent to the term "notorious 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 directing the attention of the viewers to
the change in the elevation of the floorings notwithstanding its knowledge of the hazard posed by
such elevation [Rollo, pp. 28-29; Record oil Appeal, p. 57]. The wanton disregard by the CAA of
the safety of the people using the viewing deck, who are charged an admission fee, including the
petitioner who paid the entrance fees to get inside the vantage place [CA decision, p. 2; Rollo, p.
25] and are, therefore, entitled to expect a facility that is properly and safely maintained
justifies the award of exemplary damages against the CAA, as a deterrent and by way of example
or correction for the public good. The award of P40,000.00 by the trial court as exemplary

damages appropriately underscores the point that as an entity changed with providing service to
the public, the CAA. like all other entities serving the public. has the obligation to provide the
public with reasonably safe service.
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.
THIRD DIVISION
[G.R. No. 107271. September 10, 2003]
CITY OF CALOOCAN and NORMA M. ABRACIA, petitioners, vs. HON. MAURO T.
ALLARDE, Presiding Judge of Branch 123, RTC of Caloocan City, ALBERTO A. CASTILLO,
Deputy Sheriff of Branch 123, RTC of Caloocan City, and DELFINA HERNANDEZ SANTIAGO
and PHILIPPINE NATIONAL BANK (PNB), respondents.
DECISION
CORONA, J.:
Assailed in this petition for certiorari is the decision[1] dated August 31, 1992, of the Court of
Appeals in CA G.R. SP No. 27423, ordering the Regional Trial Court of Caloocan City, Branch
123, to implement an alias writ of execution dated January 16, 1992. The dispositive portion read
as follows:
WHEREFORE the petition is hereby granted ordering the Regional Trial Court of Kaloocan City,
Branch 123, to immediately effect the alias writ of execution dated January 16, 1992 without
further delay.
Counsel for the respondents are warned that a repetition of their contemptuous act to delay the
execution of a final and executory judgment will be dealt with more severely.
SO ORDERED.[2]
It is important to state at the outset that the dispute between petitioner and private respondent has
been litigated thrice before this Court: first, in G.R. No. L-39288-89, entitled Heirs of Abelardo
Palomique, et al. vs. Marcial Samson, et al., decided on January 31, 1985; second, in G.R. No.

98366, entitled City Government of Caloocan vs. Court of Appeals, et al., resolved on May 16,
1991, and third, in G.R. No. 102625, entitled Santiago vs. Sto. Tomas, et al., decided on August 1,
1995. This is not to mention the numerous concurrent efforts by the City Government of Caloocan
to seek relief from other judicial and quasi-judicial bodies. The present petition for certiorari is the
fourth time we are called upon to resolve the dispute.
The factual and procedural antecedents follow.
Sometime in 1972, Marcial Samson, City Mayor of Caloocan City, through Ordinance No. 1749,
abolished the position of Assistant City Administrator and 17 other positions from the plantilla of
the local government of Caloocan. Then Assistant City Administrator Delfina Hernandez Santiago
and the 17 affected employees of the City Government assailed the legality of the abolition before
the then Court of First Instance (CFI) of Caloocan City, Branch 33.
In 1973, the CFI declared the abolition illegal and ordered the reinstatement of all the dismissed
employees and the payment of their back salaries and other emoluments. The City Government of
Caloocan appealed to the Court of Appeals. Respondent Santiago and her co-parties moved for the
dismissal of the appeal for being dilatory and frivolous but the appellate court denied their motion.
Thus, they elevated the case on certiorari before this Court, docketed as G.R. No. L-39288-89,
Heirs of Abelardo Palomique, et al. vs. Marcial Samson, et al. In our Resolution dated January 31,
1985, we held that the appellate court erred in not dismissing the appeal, and that the appeal of the
City Government of Caloocan was frivolous and dilatory. In due time, the resolution lapsed into
finality and entry of judgment was made on February 27, 1985.
In 1986, the City Government of Caloocan paid respondent Santiago P75,083.37 in partial
payment of her backwages, thereby leaving a balance of P530,761.91. Her co-parties were paid in
full.[3] In 1987, the City of Caloocan appropriated funds for her unpaid back salaries. This was
included in Supplemental Budget No. 3 for the fiscal year 1987. Surprisingly, however, the City
later refused to release the money to respondent Santiago.
Respondent Santiago exerted effort for the execution of the remainder of the money judgment but
she met stiff opposition from the City Government of Caloocan. On February 12, 1991, Judge
Mauro T. Allarde, RTC of Caloocan City, Branch 123, issued a writ of execution for the payment
of the remainder of respondent Santiagos back salaries and other emoluments.[4]
For the second time, the City Government of Caloocan went up to the Court of Appeals and filed a
petition for certiorari, prohibition and injunction to stop the trial court from enforcing the writ of
execution. The CA dismissed the petition and affirmed the order of issuance of the writ of
execution.[5] One of the issues raised and resolved therein was the extent to which back salaries
and emoluments were due to respondent Santiago. The appellate court held that she was entitled to
her salaries from October, 1983 to December, 1986.
And for the second time, the City Government of Caloocan appealed to this Court in G.R. No.
98366, City Government of Caloocan vs. Court of Appeals, et al. The petition was dismissed,
through our Resolution of May 16, 1991, for having been filed late and for failure to show any
reversible error on the part of the Court of Appeals. The resolution subsequently attained finality
and the corresponding entry of judgment was made on July 29, 1991.
On motion of private respondent Santiago, Judge Mauro T. Allarde ordered the issuance of an alias
writ of execution on March 3, 1992. The City Government of Caloocan moved to reconsider the
order, insisting in the main that respondent Santiago was not entitled to backwages from 1983 to
1986. The court a quo denied the motion and forthwith issued the alias writ of execution. Unfazed,

the City Government of Caloocan filed a motion to quash the writ, maintaining that the money
judgment sought to be enforced should not have included salaries and allowances for the years
1983-1986. The trial court likewise denied the motion.
On July 27, 1992, Sheriff Alberto A. Castillo levied and sold at public auction one of the motor
vehicles of the City Government of Caloocan, with plate no. SBH-165, for P100,000. The
proceeds of the sale were turned over to respondent Santiago in partial satisfaction of her claim,
thereby leaving a balance of P439,377.14, inclusive of interest. Petitioners filed a motion
questioning the validity of the auction sale of the vehicle with plate no. SBH-165, and a
supplemental motion maintaining that the properties of the municipality were exempt from
execution. In his Order dated October 1, 1992, Judge Allarde denied both motions and directed the
sheriff to levy and schedule at public auction three more vehicles of the City of Caloocan - [6]
ONE (1) Unit Motor Vehicle (Hunter Station Wagon); Motor No. C-240-199629; Chassis No.
MBB-910369C;
ONE (1) Unit Motor Vehicle (Hunter Series 11-Diesel); Engine No. 4FB1-174328, Chassis No.
MBB-910345C; Plate No. SDL-653;
ONE (1) Unit Motor Vehicle (Hunter Series 11-Diesel); Engine No. 4FB-165196; Chassis No.
MBB 910349C.
All the vehicles, including that previously sold in the auction sale, were owned by the City and
assigned for the use of herein petitioner Norma Abracia, Division Superintendent of Caloocan
City, and other officials of the Division of City Schools.
Meanwhile, the City Government of Caloocan sought clarification from the Civil Service
Commission (CSC) on whether respondent Santiago was considered to have rendered services
from 1983-1986 as to be entitled to backwages for that period. In its Resolution No. 91-1124, the
CSC ruled in the negative.
On November 22, 1991, private respondent Santiago challenged the CSC resolution before this
Court in G.R. No. 102625, Santiago vs. Sto. Tomas, et al. On July 8, 1993, we initially dismissed
the petition for lack of merit; however, we reconsidered the dismissal of the petition in our
Resolution dated August 1, 1995, this time ruling in favor of respondent Santiago:
The issue of petitioner Santiagos right to back salaries for the period from October 1983 to
December 1986 having been resolved in G.R. No. 98366 on 16 May 1991, CSC Resolution No.
91-1124 promulgated later on 24 September 1991 in particular, its ruling on the extent of
backwages due petitioner Santiago was in fact moot and academic at the time of its promulgation.
CSC Resolution No. 91-1124 could not, of course, set aside what had been judicially decided with
finality x x x x the court considers that resort by the City Government of Caloocan to respondent
CSC was but another attempt to deprive petitioner Santiago of her claim to back salaries x x x and
a continuation of the Citys abuse and misuse of the rules of judicial procedure. The Citys acts have
resulted in wasting the precious time and resources of the courts and respondent CSC.
(Underscoring supplied).
On October 5, 1992, the City Council of Caloocan passed Ordinance No. 0134, Series of 1992,
which included the amount of P439,377.14 claimed by respondent Santiago as back salaries, plus
interest.[7] Pursuant to the subject ordinance, Judge Allarde issued an order dated November 10,
1992, decreeing that:
WHEREFORE, the City Treasurer (of Caloocan), Norberto Azarcon is hereby ordered to deliver
to this Court within five (5) days from receipt hereof, (a) managers check covering the amount of

P439,378.00 representing the back salaries of petitioner Delfina H. Santiago in accordance with
Ordinance No. 0134 S. 1992 and pursuant to the final and executory decision in these cases.
Then Caloocan Mayor Macario A. Asistio, Jr., however, refused to sign the check intended as
payment for respondent Santiagos claims. This, despite the fact that he was one of the signatories
of the ordinance authorizing such payment. On April 29, 1993, Judge Allarde issued another order
directing the Acting City Mayor of Caloocan, Reynaldo O. Malonzo, to sign the check which had
been pending before the Office of the Mayor since December 11, 1992. Acting City Mayor
Malonzo informed the trial court that he could not comply with the order since the subject check
was not formally turned over to him by the City Mayor who went on official leave of absence on
April 15, 1993, and that he doubted whether he had authority to sign the same.[8]
Thus, in an order dated May 7, 1993, Judge Allarde ordered Sheriff Alberto A. Castillo to
immediately garnish the funds of the City Government of Caloocan corresponding to the claim of
respondent Santiago.[9] On the same day, Sheriff Alberto A. Castillo served a copy of the Notice
of Garnishment on the Philippine National Bank (PNB), Sangandaan Branch, Caloocan City.
When PNB immediately notified the City of Caloocan of the Notice of Garnishment, the City
Treasurer sent a letter-advice informing PNB that the order of garnishment was illegal, with a
warning that it would hold PNB liable for any damages which may be caused by the withholding
of the funds of the city. PNB opted to comply with the order of Judge Allarde and released to the
Sheriff a managers check amounting to P439,378. After 21 long years, the claim of private
respondent Santiago was finally settled in full.
On June 4, 1993, however, while the instant petition was pending, the City Government of
Caloocan filed yet another motion with this Court, a Motion to Declare in Contempt of Court; to
Set Aside the Garnishment and Administrative Complaint against Judge Allarde, respondent
Santiago and PNB. Subsequently, the City Government of Caloocan filed a Supplemental Petition
formally impleading PNB as a party-respondent in this case.
The instant petition for certiorari is directed this time against the validity of the garnishment of the
funds of the City of Caloocan, as well as the validity of the levy and sale of the motor vehicles
belonging to the City of Caloocan. More specifically, petitioners insist that Judge Allarde gravely
abused his discretion in:
(a) ordering the garnishment of the funds of the City of Caloocan deposited with the PNB, since it
is settled that public funds are beyond the reach of garnishment and even with the appropriation
passed by the City Council, the authority of the Mayor is still needed for the release of the
appropriation;
(b) ordering the levy and sale at public auction of three (3) motor vehicles owned by the City of
Caloocan, which vehicles are necessary for public use and cannot be attached nor sold in an
execution sale to satisfy a money judgment against the City of Caloocan;
(c) peremptorily denying petitioner City of Caloocans urgent motions to vacate and set aside the
auction sale of the motor vehicle with PLATE NO. SBH-165, notwithstanding that the auction sale
by the Sheriff was tainted with serious irregularities, more particularly:
i. non-compliance with the mandatory posting of the notice of sale;
ii. non-observance of the procedure that a sale through public auction has to be made and
consummated at the time of the auction, at the designated place and upon actual payment of the
purchase price by the winning bidder;
iii. violation of Sec. 21, Rule 39 of the Rules of Court to the effect that sale of personal property

capable of manual delivery must be sold within the view of those attending the sale; and,
iv. the Sheriffs Certificate of Sale contained false narration of facts respecting the actual time of
the public auction;
(d) the enforcement of the levy made by the Sheriff covering the three (3) motor vehicles based on
an alias writ that has long expired.
The petition has absolutely no merit. The trial court committed no grave abuse of discretion in
implementing the alias writ of execution to settle the claim of respondent Santiago, the satisfaction
of which petitioner had been maliciously evading for 21 years.
Petitioner argues that the garnishment of its funds in PNB was invalid inasmuch as these were
public funds and thus exempt from execution. Garnishment is considered a specie of attachment
by means of which the plaintiff seeks to subject to his claim property of the defendant in the hands
of a third person, or money owed by such third person or garnishee to the defendant.[10]
The rule is and has always been that all government funds deposited in the PNB or any other
official depositary of the Philippine Government by any of its agencies or instrumentalities,
whether by general or special deposit, remain government funds and may not be subject to
garnishment or levy, in the absence of a corresponding appropriation as required by law:[11]
Even though the rule as to immunity of a state from suit is relaxed, the power of the courts ends
when the judgment is rendered. Although the liability of the state has been judicially ascertained,
the state is at liberty to determine for itself whether to pay the judgment or not, and execution
cannot issue on a judgment against the state. Such statutes do not authorize a seizure of state
property to satisfy judgments recovered, and only convey an implication that the legislature will
recognize such judgment as final and make provision for the satisfaction thereof.[12]
The rule is based on obvious considerations of public policy. The functions and public services
rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects, as appropriated by law.[13]
However, the rule is not absolute and admits of a well-defined exception, that is, when there is a
corresponding appropriation as required by law. Otherwise stated, the rule on the immunity of
public funds from seizure or garnishment does not apply where the funds sought to be levied
under execution are already allocated by law specifically for the satisfaction of the money
judgment against the government. In such a case, the monetary judgment may be legally enforced
by judicial processes.
Thus, in the similar case of Pasay City Government, et al. vs. CFI of Manila, Br. X, et al.,[14]
where petitioners challenged the trial courts order garnishing its funds in payment of the contract
price for the construction of the City Hall, we ruled that, while government funds deposited in the
PNB are exempt from execution or garnishment, this rule does not apply if an ordinance has
already been enacted for the payment of the Citys obligations
Upon the issuance of the writ of execution, the petitioner-appellants moved for its quashal alleging
among other things the exemption of the government from execution. This move on the part of
petitioner-appellants is at first glance laudable for all government funds deposited with the
Philippine National Bank by any agency or instrumentality of the government, whether by way of
general or special deposit, remain government funds and may not be subject to garnishment or
levy. But inasmuch as an ordinance has already been enacted expressly appropriating the amount
of P613,096.00 as payment to the respondent-appellee, then the herein case is covered by the
exception to the general rule x x x x

In the instant case, the City Council of Caloocan already approved and passed Ordinance No.
0134, Series of 1992, allocating the amount of P439,377.14 for respondent Santiagos back salaries
plus interest. Thus this case fell squarely within the exception. For all intents and purposes,
Ordinance No. 0134, Series of 1992, was the corresponding appropriation as required by law. The
sum indicated in the ordinance for Santiago were deemed automatically segregated from the other
budgetary allocations of the City of Caloocan and earmarked solely for the Citys monetary
obligation to her. The judgment of the trial court could then be validly enforced against such
funds.
Indeed, this conclusion is further buttressed by the Certification issued on December 23, 1992 by
Norberto C. Azarcon, City Treasurer of Caloocan:
CERTIFICATION
This is to certify that according to the records available in this Office the claim for backwages of
the HON. JUDGE DELFINA H. SANTIAGO has been properly obligated and can be collected in
accordance with existing accounting and auditing rules and regulations.
This is to certify further that in case the claim is not collected within the present fiscal year, such
claim shall be entered in the books of Accounts Payable and can still be collected in the next fiscal
year x x x x (Underscoring supplied)
Petitioners reliance on Municipality of Makati vs. Court of Appeals, et al.,[15] and Commissioner
of Public Highways vs. San Diego,[16] does not help their cause.[17] Both cases implicitly
affirmed that public funds may be garnished if there is a statute which appropriated the amount so
garnished. Thus, in Municipality of Makati, citing San Diego, we unequivocally held that:
In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution,
unless otherwise provided by statute x x x x
Similarly, we cannot agree with petitioners argument that the appropriation ordinance of the City
Council did not authorize PNB to release the funds because only the City Mayor could authorize
the release thereof. A valid appropriation of public funds lifts its exemption from execution. Here,
the appropriation passed by the City Council of Caloocan providing for the payment of backwages
to respondent was duly approved and signed by both the council and then Mayor Macario Asistio,
Jr. The mayors signature approving the budget ordinance was his assent to the appropriation of
funds for respondent Santiagos backwages. If he did not agree with such allocation, he could have
vetoed the item pursuant to Section 55 of the Local Government Code.[18] There was no such
veto.
In view of the foregoing discourse, we dismiss petitioners unfounded assertion, probably made
more out of sheer ignorance of prevailing jurisprudence than a deliberate attempt to mislead us,
that the rule that public funds (are) beyond the reach of levy and garnishment is not qualified by
any condition.[19]
We now come to the issue of the legality of the levy on the three motor vehicles belonging to the
City of Caloocan which petitioners claimed to be exempt from execution, and which levy was
based on an alias writ that had purportedly expired. Suffice it to say that Judge Allarde, in his
Order dated November 10, 1992,[20] already lifted the levy on the three vehicles, thereby
formally discharging them from the jurisdiction of the court and turning them over to the City
Government of Caloocan:
x x x x the levy of the three (3) vehicles made by Sheriff Alberto Castillo pursuant to the Orders of
this Court dated October 1 and 8, 1992 is hereby lifted and the said Sheriff is hereby ordered to

return the same to the City Government in view of the satisfaction of the decision in these cases x
xxx
It is thus unnecessary for us to discuss a moot issue.
We turn to the third issue raised by petitioners that the auction sale by Sheriff Alberto A. Castillo
of the motor vehicle with plate no. SBH-165 was tainted with serious irregularities. We need not
emphasize that the sheriff enjoys the presumption of regularity in the performance of the functions
of his office. This presumption prevails in the absence of substantial evidence to the contrary and
cannot be overcome by bare and self-serving allegations. The petitioners failed to convince us that
the auction sale conducted by the sheriff indeed suffered from fatal flaws. No evidence was
adduced to prove that the sheriff had been remiss in the performance of his duties during the
public auction sale. Indeed it would be injudicious for us to assume, as petitioners want us to do,
that the sheriff failed to follow the established procedures governing public auctions.
On the contrary, a review of the records shows that the sheriff complied with the rules on public
auction. The sale of the Citys vehicle was made publicly in front of the Caloocan City Hall on the
date fixed in the notice July 27, 1992. In fact, petitioners in their Motion to Declare in Contempt
of Court; to Set Aside the Garnishment and Administrative Complaint admitted as much:
On July 27, 1992, by virtue of an alias writ of execution issued by the respondent court, a vehicle
owned by the petitioner xxx was levied and sold at public auction for the amount of P100,000.00
and which amount was immediately delivered to the private respondent x x x x[21]
Hence, petitioners cannot now be heard to impugn the validity of the auction sale.
Petitioners, in desperation, likewise make much of the proceedings before the trial court on
October 8, 1992, wherein petitioner Norma Abracia, Superintendent of the Division of City
Schools of Caloocan, was commanded to appear and show cause why she should not be cited in
contempt for delaying the execution of judgment. This was in connection with her failure (or
refusal) to surrender the three motor vehicles assigned to the Division of City Schools to the
custody of the sheriff. Petitioner Abracia, assisted by Mr. Ricardo Nagpacan of the Division of
City Schools, appeared during the hearing but requested a ten-day period within which to refer the
matter of contempt to a counsel of her choice. The request was denied by Judge Allarde in his
assailed order dated October 8, 1992. Thus petitioner Abracia claimed, inter alia, that: (a) she was
denied due process; (b) the silence of the order of Judge Allarde on her request for time violated
an orderly and faithful recording of the proceedings, and (c) she was coerced into agreeing to
surrender the vehicles.
We do not think so. What violates due process is the absolute lack of opportunity to be heard. That
opportunity, the Court is convinced, was sufficiently accorded to petitioner Abracia. She was
notified of the contempt charge against her; she was effectively assisted by counsel when she
appeared during the hearing on October 8, 1992; and she was afforded ample opportunity to
answer and refute the charge against her. The circumstance that she opted not to avail of her
chance to be heard on that occasion by asking for an extension of time within which to hire a
counsel of her choice, a request denied by the trial court, did not transgress nor deprive her of her
right to due process.
Significantly, during the hearing on October 8, 1992, Mr. Nagpacan manifested in open court that,
after conferring with petitioner Abracia, the latter was willing to surrender these vehicles into the
custody of the sheriff on the condition that the standing motion (for contempt) be withdrawn.[22]
Her decision was made freely and voluntarily, and after conferring with her counsel. Moreover, it

was petitioner Abracia herself who imposed the condition that respondent Santiago should
withdraw her motion for contempt in exchange for her promise to surrender the subject vehicles.
Thus, petitioner Abracias claim that she was coerced into surrendering the vehicles had no basis.
Even assuming ex gratia argumenti that there indeed existed certain legal infirmities in connection
with the assailed orders of Judge Allarde, still, considering the totality of circumstances of this
case, the nullification of the contested orders would be way out of line. For 21 long years, starting
1972 when this controversy started up to 1993 when her claim was fully paid out of the garnished
funds of the City of Caloocan, respondent Santiago was cruelly and unjustly deprived of what was
due her. It would be, at the very least, merciless and unchristian to make private respondent refund
the City of Caloocan the amount already paid to her, only to force her to go through the same
nightmare all over again.
At any rate, of paramount importance to us is that justice has been served. No right of the public
was violated and public interest was preserved.
Finally, we cannot simply pass over in silence the deplorable act of the former Mayor of Caloocan
City in refusing to sign the check in payment of the Citys obligation to private respondent. It was
an open defiance of judicial processes, smacking of political arrogance, and a direct violation of
the very ordinance he himself approved. Our Resolution in G.R. No. 98366, City Government of
Caloocan vs. Court of Appeals, et al., dated May 16, 1991, dismissing the petition of the City of
Caloocan assailing the issuance of a writ of execution by the trial court, already resolved with
finality all impediments to the execution of judgment in this case. Yet, the City Government of
Caloocan, in a blatant display of malice and bad faith, refused to comply with the decision. Now,
it has the temerity to come to this Court once more and continue inflicting injustice on a hapless
citizen, as if all the harm and prejudice it has already heaped upon respondent Santiago are still
not enough.
This Court will not condone the repudiation of just obligations contracted by municipal
corporations. On the contrary, we will extend our aid and every judicial facility to any citizen in
the enforcement of just and valid claims against abusive local government units.
WHEREFORE, the petition is hereby DISMISSED for utter lack of merit. The assailed orders of
the trial court dated October 1, 1992, October 8, 1992 and May 7, 1993, respectively, are
AFFIRMED.
Petitioners and their counsels are hereby warned against filing any more pleadings in connection
with the issues already resolved with finality herein and in related cases.
Costs against petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 159402

February 23, 2011

AIR TRANSPORTATION OFFICE, Petitioner,

vs.
SPOUSES DAVID* ELISEA RAMOS, Respondents.
RESOLUTION
BERSAMIN, J.:
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.
Under challenge is the decision promulgated on May 14, 2003,1 by which the Court of Appeals
(CA) affirmed with modification the decision rendered on February 21, 2001 by the Regional Trial
Court, Branch 61 (RTC), in Baguio City in favor of the respondents.2
Antecedents
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 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 Office (ATO). On August 11,
1995, the respondents agreed after negotiations to convey 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.
Thus, on April 29, 1998, the respondents filed an action for collection against the 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 Villaruel, Gen. Carlos Tanega, and Mr.
Cesar de Jesus).
In their answer, the ATO and its co-defendants invoked as an affirmative defense 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 Loakan Airport. They asserted that the
RTC had no jurisdiction to entertain the action without the States consent considering that the
deed of sale had been entered into in the performance of governmental functions.
On November 10, 1998, the RTC denied the ATOs motion for a preliminary hearing of the
affirmative defense.
After the RTC likewise denied the ATOs motion for reconsideration on December 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
Subsequently, February 21, 2001, the RTC rendered its decision on the merits,4 disposing:

WHEREFORE, the judgment is rendered ORDERING the defendant Air Transportation Office to
pay the plaintiffs DAVID and ELISEA RAMOS the following: (1) The amount of P778,150.00
being the value of the parcel of land appropriated by the defendant ATO as embodied in the Deed
of Sale, plus an annual interest of 12% from August 11, 1995, the date of the Deed of Sale until
fully paid; (2) The amount of P150,000.00 by way of moral damages and P150,000.00 as
exemplary damages; (3) 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 counsel; (4) The costs of this
suit.
SO ORDERED.
In due course, the ATO appealed to the CA, which affirmed the RTCs decision on May 14,
2003,5 viz:
IN VIEW OF ALL THE FOREGOING, the appealed decision is hereby AFFIRMED, with
MODIFICATION that the awarded cost therein is deleted, while that of moral and exemplary
damages is reduced to P30,000.00 each, and attorneys fees is lowered to P10,000.00.
No cost.
SO ORDERED.
Hence, this appeal by petition for review on certiorari.
Issue
The only issue presented for resolution is whether the ATO could be sued without the States
consent.
Ruling
The petition for review has no merit.
The immunity of the State from suit, known also as the doctrine of sovereign immunity or nonsuability of the State, is expressly provided in Article XVI of the 1987 Constitution, viz:
Section 3. The State may not be sued without its consent.
The immunity from suit is based on the political truism that the State, as a sovereign, can do no
wrong. Moreover, as the eminent Justice Holmes said in Kawananakoa v. Polyblank:6
The territory [of Hawaii], of course, could waive its exemption (Smith v. Reeves, 178 US 436, 44
L ed 1140, 20 Sup. Ct. Rep. 919), and it took no objection to the proceedings in the cases cited if it

could have done so. xxx But in the case at bar it did object, and the question raised is whether the
plaintiffs were bound to yield. Some doubts have been expressed as to the source of the immunity
of a sovereign power from suit without its own permission, but the answer has been public
property since before the days of Hobbes. Leviathan, chap. 26, 2. A sovereign is exempt from suit,
not because of any formal conception or obsolete theory, but on the logical and practical ground
that there can be no legal right as against the authority that makes the law on which the right
depends. "Car on peut bien recevoir loy d'autruy, mais il est impossible par nature de se donner
loy." Bodin, Republique, 1, chap. 8, ed. 1629, p. 132; Sir John Eliot, De Jure Maiestatis, chap. 3.
Nemo suo statuto ligatur necessitative. Baldus, De Leg. et Const. Digna Vox, 2. ed. 1496, fol. 51b,
ed. 1539, fol. 61.7
Practical considerations dictate the establishment of an immunity from suit in 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 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 offered in Providence Washington Insurance Co. v. Republic
of the Philippines9 is "the most acceptable explanation," according to Father Bernas, a recognized
commentator on Constitutional Law,10 to wit:
[A] continued adherence to the doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental efficiency and the
obstacle to the performance of its multifarious functions are far greater if such a fundamental
principle were abandoned and the availability of judicial remedy were not thus restricted. With the
well-known propensity on the part of our people to go to court, at the least provocation, the loss of
time and energy required to defend against law suits, in the absence of such a basic principle that
constitutes such an effective obstacle, could very well be imagined.
An unincorporated government agency without any separate juridical personality of its own enjoys
immunity from suit because it is invested with an inherent power of sovereignty. Accordingly, a
claim for damages against the agency cannot prosper; otherwise, the doctrine of sovereign
immunity is violated.11 However, the need to distinguish between an unincorporated government
agency performing governmental function and one performing proprietary functions has arisen.
The immunity has been upheld in favor of the former because its function is governmental or
incidental to such function;12 it has not been upheld in favor of the latter whose function was not
in pursuit of a necessary function of government but was essentially a business.13
Should the doctrine of sovereignty immunity or non-suability of the State be extended to the ATO?
In its challenged decision,14 the CA answered in the negative, holding:
On the first assignment of error, appellants seek to impress upon Us that the subject contract of
sale partook of a governmental character. Apropos, the lower court erred in applying the High
Courts ruling in National Airports Corporation vs. Teodoro (91 Phil. 203 [1952]), arguing that
in Teodoro, the matter involved the collection of landing and parking fees which is a proprietary

function, while the case at bar involves the maintenance and operation of aircraft and air
navigational facilities and services which are governmental functions.
We are not persuaded.
Contrary to appellants conclusions, it was not merely the collection of landing and parking fees
which was declared as proprietary in nature by the High Court in Teodoro, but management and
maintenance of airport operations as a whole, as well. Thus, in the much later case of Civil
Aeronautics Administration vs. Court of Appeals (167 SCRA 28 [1988]), the Supreme Court,
reiterating the pronouncements laid down in Teodoro, declared that the CAA (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 in this wise:
xxx
The Civil Aeronautics Administration comes under the category of a private 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 the promotion of travel and the convenience of the travelling public. It is
engaged in an enterprise which, far from being the exclusive prerogative of state, may, more than
the construction of public roads, be undertaken by private concerns. [National Airports Corp. v.
Teodoro, supra, p. 207.]
xxx
True, the law prevailing in 1952 when the Teodoro case was promulgated was Exec. Order 365
(Reorganizing the Civil Aeronautics Administration and Abolishing the National Airports
Corporation). Republic Act No. 776 (Civil Aeronautics Act of the Philippines), subsequently
enacted on June 20, 1952, did not alter the character of the CAAs objectives under Exec. Order
365. The pertinent provisions cited in the Teodoro case, particularly Secs. 3 and 4 of Exec. Order
365, which led the Court to consider the CAA in the category of a private entity were retained
substantially in Republic Act 776, Sec. 32(24) and (25). Said Act provides:
Sec. 32. Powers and Duties of the Administrator. Subject to the general control and supervision
of the Department Head, the Administrator shall have among others, the following powers and
duties:
xxx
(24) To administer, operate, manage, control, maintain and develop the Manila International
Airport and all government-owned aerodromes except those controlled or operated by the Armed
Forces of the Philippines including such powers and duties as: (a) to plan, design, construct, equip,
expand, improve, repair or alter aerodromes or such structures, improvement or air navigation
facilities; (b) to enter into, make and execute contracts of any kind with any person, firm, or public

or private corporation or entity;

(25) To determine, fix, impose, collect and receive landing fees, parking space fees, royalties on
sales or deliveries, direct or indirect, to any aircraft for its use of aviation gasoline, oil and
lubricants, spare parts, accessories and supplies, tools, other royalties, fees or rentals for the use of
any of the property under its management and control.
xxx
From the foregoing, it can be seen that the CAA is tasked with private or non-governmental
functions which operate to remove it from the purview of the rule on State immunity from suit.
For the correct rule as set forth in the Teodoro case states:
xxx
Not all government entities, whether corporate or non-corporate, are immune from suits.
Immunity from suits is determined by the character of the objects for which the entity was
organized. The rule is thus stated in Corpus Juris:
Suits against State agencies with relation to matters in which they have assumed to act in private
or non-governmental capacity, and various suits against certain corporations created by the state
for public purposes, but to engage in matters partaking more of the nature of ordinary business
rather than functions of a governmental or political character, are not regarded as suits against the
state. The latter is true, although the state may own stock or property of such a corporation for by
engaging in business operations through a corporation, the state divests itself so far of its
sovereign character, and by implication consents to suits against the corporation. (59 C.J., 313)
[National Airports Corporation v. Teodoro, supra, pp. 206-207; Italics supplied.]
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 63], where it was held that the Philippine National
Railways, although owned and operated by the government, was not immune from suit as it does
not exercise sovereign but purely proprietary and business 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 from suit accorded to government agencies
performing strictly governmental functions.15
In our view, the CA thereby correctly appreciated the juridical character of the 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 the Loakan Airport, an activity that was not the
exclusive prerogative of the State in its sovereign capacity. Hence, the ATO had no claim to the
States immunity from suit. We uphold the CAs aforequoted holding.
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 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 courts dismissal based on the doctrine of
non-suability of the State of two cases (one of which was for damages) filed by owners of
property where a road 9 meters wide and 128.70 meters long occupying a total area of 1,165
square meters and an artificial creek 23.20 meters wide and 128.69 meters long occupying an area
of 2,906 square meters had 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 merits. The Supreme Court ruled that the doctrine of sovereign immunity was not an
instrument for perpetrating any injustice on a citizen. In exercising the right of eminent domain,
the Court explained, the State exercised its jus imperii, as distinguished from its proprietary rights,
or jus gestionis; yet, even in that area, where private property had been taken in expropriation
without just compensation being paid, the defense of immunity from suit could not be set up by
the State against an action for payment by the owners.
Lastly, the issue of whether or not the ATO could be sued without the State s consent has been
rendered moot by the passage of Republic Act No. 9497, otherwise known as the Civil Aviation
Authority Act of 2008.
R.A. No. 9497 abolished the ATO, to wit:
Section 4. Creation of the Authority. There is hereby created an independent regulatory body
with quasi-judicial and quasi-legislative 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.1avvphi1
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

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-52179

April 8, 1991

MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner

vs.
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIA, IAUREANO BANIA, JR.,
SOR MARIETA BANIA, MONTANO BANIA, ORJA BANIA, AND LYDIA R. BANIA,
respondents.
Mauro C. Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.

MEDIALDEA, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary mandatory

injunction seeking the nullification or modification of the proceedings and the orders issued by the
respondent Judge Romeo N. Firme, in his capacity as the presiding judge of the Court of First
Instance of La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil Case No.
107-BG, entitled "Juana Rimando Bania, et al. vs. Macario Nieveras, et al." dated November 4,
1975; July 13, 1976; August 23,1976; February 23, 1977; March 16, 1977; July 26, 1979;
September 7, 1979; November 7, 1979 and December 3, 1979 and the decision dated October 10,
1979 ordering defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay,
jointly and severally, the plaintiffs for funeral expenses, actual damages consisting of the loss of
earning capacity of the deceased, attorney's fees and costs of suit and dismissing the complaint
against the Estate of Macario Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under and
in accordance with the laws of the Republic of the Philippines. Respondent Honorable Judge
Romeo N. Firme is impleaded in his official capacity as the presiding judge of the Court of First
Instance of La Union, Branch IV, Bauang, La Union. While private respondents Juana RimandoBania, Laureano Bania, Jr., Sor Marietta Bania, Montano Bania, Orja Bania and Lydia R.
Bania are heirs of the deceased Laureano Bania Sr. and plaintiffs in Civil Case No. 107-Bg
before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a
passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario Nieveras, a
gravel and sand truck driven by Jose Manandeg and owned by Tanquilino Velasquez and a dump
truck of the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to the
impact, several passengers of the jeepney including Laureano Bania Sr. died as a result of the
injuries they sustained and four (4) others suffered varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a compliant for damages against the
Estate of Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of the passenger
jeepney, which was docketed Civil Case No. 2183 in the Court of First Instance of La Union,
Branch I, San Fernando, La Union. However, the aforesaid defendants filed a Third Party
Complaint against the petitioner and the driver of a dump truck of petitioner.
Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent judge
and was subsequently docketed as Civil Case No. 107-Bg. By virtue of a court order dated May 7,
1975, the private respondents amended the complaint wherein the petitioner and its regular
employee, Alfredo Bislig were impleaded for the first time as defendants. Petitioner filed its
answer and raised affirmative defenses such as lack of cause of action, non-suability of the State,
prescription of cause of action and the negligence of the owner and driver of the passenger
jeepney as the proximate cause of the collision.
In the course of the proceedings, the respondent judge issued the following questioned orders, to
wit:

(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo Balagot;
(2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of San
Fernando, La Union and Bislig and setting the hearing on the affirmative defenses only with
respect to the supposed lack of jurisdiction;
(3) Order dated August 23, 1976 deferring there resolution of the grounds for the Motion to
Dismiss until the trial;
(4) Order dated February 23, 1977 denying the motion for reconsideration of the order of July
13, 1976 filed by the Municipality and Bislig for having been filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for reconsideration of the
order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for decision it appearing that
parties have not yet submitted their respective memoranda despite the court's direction; and
(7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration and/or
order to recall prosecution witnesses for cross examination.
On October 10, 1979 the trial court rendered a decision, the dispositive portion is hereunder
quoted as follows:
IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the plaintiffs,
and defendants Municipality of San Fernando, La Union and Alfredo Bislig are ordered to pay
jointly and severally, plaintiffs Juana Rimando-Bania, Mrs. Priscilla B. Surell, Laureano Bania
Jr., Sor Marietta Bania, Mrs. Fe B. Soriano, Montano Bania, Orja Bania and Lydia B. Bania
the sums of P1,500.00 as funeral expenses and P24,744.24 as the lost expected earnings of the late
Laureano Bania Sr., P30,000.00 as moral damages, and P2,500.00 as attorney's fees. Costs
against said defendants.
The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo Balagot.
SO ORDERED. (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without prejudice to another
motion which was then pending. However, respondent judge issued another order dated November
7, 1979 denying the motion for reconsideration of the order of September 7, 1979 for having been
filed out of time.
Finally, the respondent judge issued an order dated December 3, 1979 providing that if defendants
municipality and Bislig further wish to pursue the matter disposed of in the order of July 26, 1979,

such should be elevated to a higher court in accordance with the Rules of Court. Hence, this
petition.
Petitioner maintains that the respondent judge committed grave abuse of discretion amounting to
excess of jurisdiction in issuing the aforesaid orders and in rendering a decision. Furthermore,
petitioner asserts that while appeal of the decision maybe available, the same is not the speedy and
adequate remedy in the ordinary course of law.
On the other hand, private respondents controvert the position of the petitioner and allege that the
petition is devoid of merit, utterly lacking the good faith which is indispensable in a petition for
certiorari and prohibition. (Rollo, p. 42.) In addition, the private respondents stress that petitioner
has not considered that every court, including respondent court, has the inherent power to amend
and control its process and orders so as to make them conformable to law and justice. (Rollo, p.
43.)
The controversy boils down to the main issue of whether or not the respondent court committed
grave abuse of discretion when it deferred and failed to resolve the defense of non-suability of the
State amounting to lack of jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the defense of non-suability of
the State amounting to lack of jurisdiction until trial. However, said respondent judge failed to
resolve such defense, proceeded with the trial and thereafter rendered a decision against the
municipality and its driver.
The respondent judge did not commit grave abuse of discretion when in the exercise of its
judgment it arbitrarily failed to resolve the vital issue of non-suability of the State in the guise of
the municipality. However, said judge acted in excess of his jurisdiction when in his decision
dated October 10, 1979 he held the municipality liable for the quasi-delict committed by its
regular employee.
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the
Constitution, to wit: "the State may not be sued without its consent."
Stated in simple parlance, the general rule is that the State may not be sued except when it gives
consent to be sued. Consent takes the form of express or implied consent.
Express consent may be embodied in a general law or a special law. The standing consent of the
State to be sued in case of money claims involving liability arising from contracts is found in Act
No. 3083. A special law may be passed to enable a person to sue the government for an alleged
quasi-delict, as in Merritt v. Government of the Philippine Islands (34 Phil 311). (see United States
of America v. Guinto, G.R. No. 76607, February 26, 1990, 182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts, thereby descending to the
level of the other contracting party, and also when the State files a complaint, thus opening itself

to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies of the State when they
are engaged in governmental functions and therefore should enjoy the sovereign immunity from
suit. Nevertheless, they are subject to suit even in the performance of such functions because their
charter provided that they can sue and be sued. (Cruz, Philippine Political Law, 1987 Edition, p.
39)
A distinction should first be made between suability and liability. "Suability depends on the
consent of the state to be sued, liability on the applicable law and the established facts. The
circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it
can never be held liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable."
(United States of America vs. Guinto, supra, p. 659-660)
Anent the issue of whether or not the municipality is liable for the torts committed by its
employee, the test of liability of the municipality depends on whether or not the driver, acting in
behalf of the municipality, is performing governmental or proprietary functions. As emphasized in
the case of Torio vs. Fontanilla (G. R. No. L-29993, October 23, 1978. 85 SCRA 599, 606), the
distinction of powers becomes important for purposes of determining the liability of the
municipality for the acts of its agents which result in an injury to third persons.
Another statement of the test is given in City of Kokomo vs. Loy, decided by the Supreme Court
of Indiana in 1916, thus:
Municipal corporations exist in a dual capacity, and their functions are twofold. In one they
exercise the right springing from sovereignty, and while in the performance of the duties
pertaining thereto, their acts are political and governmental. Their officers and agents in such
capacity, though elected or appointed by them, are nevertheless public functionaries performing a
public service, and as such they are officers, agents, and servants of the state. In the other capacity
the municipalities exercise a private, proprietary or corporate right, arising from their existence as
legal persons and not as public agencies. Their officers and agents in the performance of such
functions act in behalf of the municipalities in their corporate or individual capacity, and not for
the state or sovereign power." (112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable because their charters grant
them the competence to sue and be sued. Nevertheless, they are generally not liable for torts
committed by them in the discharge of governmental functions and can be held answerable only if
it can be shown that they were acting in a proprietary capacity. In permitting such entities to be
sued, the State merely gives the claimant the right to show that the defendant was not acting in its
governmental capacity when the injury was committed or that the case comes under the exceptions
recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p. 44.)

In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way
to the Naguilian river to get a load of sand and gravel for the repair of San Fernando's municipal
streets." (Rollo, p. 29.)
In the absence of any evidence to the contrary, the regularity of the performance of official duty is
presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule
that the driver of the dump truck was performing duties or tasks pertaining to his office.
We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte, the District
Engineer, and the Provincial Treasurer (102 Phil 1186) that "the construction or maintenance of
roads in which the truck and the driver worked at the time of the accident are admittedly
governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at the conclusion that
the municipality cannot be held liable for the torts committed by its regular employee, who was
then engaged in the discharge of governmental functions. Hence, the death of the passenger
tragic and deplorable though it may be imposed on the municipality no duty to pay monetary
compensation.
All premises considered, the Court is convinced that the respondent judge's dereliction in failing to
resolve the issue of non-suability did not amount to grave abuse of discretion. But said judge
exceeded his jurisdiction when it ruled on the issue of liability.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is hereby
modified, absolving the petitioner municipality of any liability in favor of private respondents.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. Nos. 89898-99

October 1, 1990

MUNICIPALITY OF MAKATI, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as Judge
RTC of Makati, Branch CXLII ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and
SHERIFF SILVINO R. PASTRANA, respondents.

Defante & Elegado for petitioner.

Roberto B. Lugue for private respondent Admiral Finance Creditors' Consortium, Inc.
RESOLUTION

CORTS, J.:
The present petition for review is an off-shoot of expropriation proceedings initiated by petitioner
Municipality of Makati against private respondent Admiral Finance Creditors Consortium, Inc.,
Home Building System & Realty Corporation and one Arceli P. Jo, involving a parcel of land and
improvements thereon located at Mayapis St., San Antonio Village, Makati and registered in the
name of Arceli P. Jo under TCT No. S-5499.
It appears that the action for eminent domain was filed on May 20, 1986, docketed as Civil Case
No. 13699. Attached to petitioner's complaint was a certification that a bank account (Account No.
S/A 265-537154-3) had been opened with the PNB Buendia Branch under petitioner's name
containing the sum of P417,510.00, made pursuant to the provisions of Pres. Decree No. 42. After
due hearing where the parties presented their respective appraisal reports regarding the value of
the property, respondent RTC judge rendered a decision on June 4, 1987, fixing the appraised
value of the property at P5,291,666.00, and ordering petitioner to pay this amount minus the
advanced payment of P338,160.00 which was earlier released to private respondent.
After this decision became final and executory, private respondent moved for the issuance of a
writ of execution. This motion was granted by respondent RTC judge. After issuance of the writ of
execution, a Notice of Garnishment dated January 14, 1988 was served by respondent sheriff
Silvino R. Pastrana upon the manager of the PNB Buendia Branch. However, respondent sheriff
was informed that a "hold code" was placed on the account of petitioner. As a result of this, private
respondent filed a motion dated January 27, 1988 praying that an order be issued directing the
bank to deliver to respondent sheriff the amount equivalent to the unpaid balance due under the
RTC decision dated June 4, 1987.
Petitioner filed a motion to lift the garnishment, on the ground that the manner of payment of the
expropriation amount should be done in installments which the respondent RTC judge failed to
state in his decision. Private respondent filed its opposition to the motion.
Pending resolution of the above motions, petitioner filed on July 20, 1988 a "Manifestation"
informing the court that private respondent was no longer the true and lawful owner of the subject
property because a new title over the property had been registered in the name of Philippine
Savings Bank, Inc. (PSB) Respondent RTC judge issued an order requiring PSB to make available
the documents pertaining to its transactions over the subject property, and the PNB Buendia

Branch to reveal the amount in petitioner's account which was garnished by respondent sheriff. In
compliance with this order, PSB filed a manifestation informing the court that it had consolidated
its ownership over the property as mortgagee/purchaser at an extrajudicial foreclosure sale held on
April 20, 1987. After several conferences, PSB and private respondent entered into a compromise
agreement whereby they agreed to divide between themselves the compensation due from the
expropriation proceedings.
Respondent trial judge subsequently issued an order dated September 8, 1988 which: (1) approved
the compromise agreement; (2) ordered PNB Buendia Branch to immediately release to PSB the
sum of P4,953,506.45 which corresponds to the balance of the appraised value of the subject
property under the RTC decision dated June 4, 1987, from the garnished account of petitioner;
and, (3) ordered PSB and private respondent to execute the necessary deed of conveyance over the
subject property in favor of petitioner. Petitioner's motion to lift the garnishment was denied.
Petitioner filed a motion for reconsideration, which was duly opposed by private respondent. On
the other hand, for failure of the manager of the PNB Buendia Branch to comply with the order
dated September 8, 1988, private respondent filed two succeeding motions to require the bank
manager to show cause why he should not be held in contempt of court. During the hearings
conducted for the above motions, the general manager of the PNB Buendia Branch, a Mr. Antonio
Bautista, informed the court that he was still waiting for proper authorization from the PNB head
office enabling him to make a disbursement for the amount so ordered. For its part, petitioner
contended that its funds at the PNB Buendia Branch could neither be garnished nor levied upon
execution, for to do so would result in the disbursement of public funds without the proper
appropriation required under the law, citing the case of Republic of the Philippines v. Palacio
[G.R. No. L-20322, May 29, 1968, 23 SCRA 899].
Respondent trial judge issued an order dated December 21, 1988 denying petitioner's motion for
reconsideration on the ground that the doctrine enunciated in Republic v. Palacio did not apply to
the case because petitioner's PNB Account No. S/A 265-537154-3 was an account specifically
opened for the expropriation proceedings of the subject property pursuant to Pres. Decree No. 42.
Respondent RTC judge likewise declared Mr. Antonio Bautista guilty of contempt of court for his
inexcusable refusal to obey the order dated September 8, 1988, and thus ordered his arrest and
detention until his compliance with the said order.
Petitioner and the bank manager of PNB Buendia Branch then filed separate petitions for certiorari
with the Court of Appeals, which were eventually consolidated. In a decision promulgated on June
28, 1989, the Court of Appeals dismissed both petitions for lack of merit, sustained the jurisdiction
of respondent RTC judge over the funds contained in petitioner's PNB Account No. 265-537154-3,
and affirmed his authority to levy on such funds.
Its motion for reconsideration having been denied by the Court of Appeals, petitioner now files the
present petition for review with prayer for preliminary injunction.
On November 20, 1989, the Court resolved to issue a temporary restraining order enjoining

respondent RTC judge, respondent sheriff, and their representatives, from enforcing and/or
carrying out the RTC order dated December 21, 1988 and the writ of garnishment issued pursuant
thereto. Private respondent then filed its comment to the petition, while petitioner filed its reply.
Petitioner not only reiterates the arguments adduced in its petition before the Court of Appeals, but
also alleges for the first time that it has actually two accounts with the PNB Buendia Branch, to
wit:
xxx xxx xxx
(1) Account No. S/A 265-537154-3 exclusively for the expropriation of the subject property,
with an outstanding balance of P99,743.94.
(2) Account No. S/A 263-530850-7 for statutory obligations and other purposes of the
municipal government, with a balance of P170,098,421.72, as of July 12, 1989.
xxx xxx xxx
[Petition, pp. 6-7; Rollo, pp. 11-12.]
Because the petitioner has belatedly alleged only in this Court the existence of two bank accounts,
it may fairly be asked whether the second account was opened only for the purpose of
undermining the legal basis of the assailed orders of respondent RTC judge and the decision of the
Court of Appeals, and strengthening its reliance on the doctrine that public funds are exempted
from garnishment or execution as enunciated in Republic v. Palacio [supra.] At any rate, the Court
will give petitioner the benefit of the doubt, and proceed to resolve the principal issues presented
based on the factual circumstances thus alleged by petitioner.
Admitting that its PNB Account No. S/A 265-537154-3 was specifically opened for expropriation
proceedings it had initiated over the subject property, petitioner poses no objection to the
garnishment or the levy under execution of the funds deposited therein amounting to P99,743.94.
However, it is petitioner's main contention that inasmuch as the assailed orders of respondent RTC
judge involved the net amount of P4,965,506.45, the funds garnished by respondent sheriff in
excess of P99,743.94, which are public funds earmarked for the municipal government's other
statutory obligations, are exempted from execution without the proper appropriation required
under the law.
There is merit in this contention. The funds deposited in the second PNB Account No. S/A 263530850-7 are public funds of the municipal government. In this jurisdiction, well-settled is the rule
that public funds are not subject to levy and execution, unless otherwise provided for by statute
[Republic v. Palacio, supra.; The Commissioner of Public Highways v. San Diego, G.R. No. L30098, February 18, 1970, 31 SCRA 616]. More particularly, the properties of a municipality,
whether real or personal, which are necessary for public use cannot be attached and sold at
execution sale to satisfy a money judgment against the municipality. Municipal revenues derived

from taxes, licenses and market fees, and which are intended primarily and exclusively for the
purpose of financing the governmental activities and functions of the municipality, are exempt
from execution [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52 (1926):
The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950); Municipality of San
Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25, 1984, 130 SCRA 56]. The foregoing rule
finds application in the case at bar. Absent a showing that the municipal council of Makati has
passed an ordinance appropriating from its public funds an amount corresponding to the balance
due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in Account
No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of
petitioner deposited in Account No. S/A 263-530850-7.
Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse.
Where a municipality fails or refuses, without justifiable reason, to effect payment of a final
money judgment rendered against it, the claimant may avail of the remedy of mandamus in order
to compel the enactment and approval of the necessary appropriation ordinance, and the
corresponding disbursement of municipal funds therefor [See Viuda De Tan Toco v. The
Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco v.
Gonzales, 108 Phil. 247 (1960)].
In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner.
No appeal was taken therefrom. For three years now, petitioner has enjoyed possession and use of
the subject property notwithstanding its inexcusable failure to comply with its legal obligation to
pay just compensation. Petitioner has benefited from its possession of the property since the same
has been the site of Makati West High School since the school year 1986-1987. This Court will not
condone petitioner's blatant refusal to settle its legal obligation arising from expropriation
proceedings it had in fact initiated. It cannot be over-emphasized that, within the context of the
State's inherent power of eminent domain,
. . . [j]ust compensation means not only the correct determination of the amount to be paid to the
owner of the land but also the payment of the land within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered "just" for the property owner is
made to suffer the consequence of being immediately deprived of his land while being made to
wait for a decade or more before actually receiving the amount necessary to cope with his loss
[Cosculluela v. The Honorable Court of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA
393, 400. See also Provincial Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037,
August 27, 1987, 153 SCRA 291].
The State's power of eminent domain should be exercised within the bounds of fair play and
justice. In the case at bar, considering that valuable property has been taken, the compensation to
be paid fixed and the municipality is in full possession and utilizing the property for public
purpose, for three (3) years, the Court finds that the municipality has had more than reasonable
time to pay full compensation.
WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to immediately

pay Philippine Savings Bank, Inc. and private respondent the amount of P4,953,506.45. Petitioner
is hereby required to submit to this Court a report of its compliance with the foregoing order
within a non-extendible period of SIXTY (60) DAYS from the date of receipt of this resolution.
The order of respondent RTC judge dated December 21, 1988, which was rendered in Civil Case
No. 13699, is SET ASIDE and the temporary restraining order issued by the Court on November
20, 1989 is MADE PERMANENT.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-46930 June 10, 1988
DALE SANDERS, AND A.S. MOREAU, JR, petitioners,
vs.
HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of
Zambales, Olongapo City, ANTHONY M. ROSSI and RALPH L. WYERS, respondents.

CRUZ, J.:
The basic issue to be resolved in this case is whether or not the petitioners were performing their
official duties when they did the acts for which they have been sued for damages by the private
respondents. Once this question is decided, the other answers will fall into place and this petition
need not detain us any longer than it already has.
Petitioner Sanders was, at the time the incident in question occurred, the special services director
of the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the commanding
officer of the Subic Naval Base, which includes the said station. 2 Private respondent Rossi is an
American citizen with permanent residence in the Philippines, 3 as so was private respondent
Wyer, who died two years ago. 4 They were both employed as gameroom attendants in the special
services department of the NAVSTA, the former having been hired in 1971 and the latter in 1969.
5
On October 3, 1975, the private respondents were advised that their employment had been
converted from permanent full-time to permanent part-time, effective October 18, 1975. 6 Their
reaction was to protest this conversion and to institute grievance proceedings conformably to the

pertinent rules and regulations of the U.S. Department of Defense. The result was a
recommendation from the hearing officer who conducted the proceedings for the reinstatement of
the private respondents to permanent full-time status plus backwages. The report on the hearing
contained the observation that "Special Services management practices an autocratic form of
supervision." 7
In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), Sanders
disagreed with the hearing officer's report and asked for the rejection of the abovestated
recommendation. The letter contained the statements that: a ) "Mr. Rossi tends to alienate most coworkers and supervisors;" b) "Messrs. Rossi and Wyers have proven, according to their immediate
supervisors, to be difficult employees to supervise;" and c) "even though the grievants were under
oath not to discuss the case with anyone, (they) placed the records in public places where others
not involved in the case could hear."
On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the
complaint) purportedly corning from petitioner Moreau as the commanding general of the U.S.
Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining the change of the
private respondent's employment status and requesting concurrence therewith. The letter did not
carry his signature but was signed by W.B. Moore, Jr. "by direction," presumably of Moreau.
On the basis of these antecedent facts, the private respondent filed in the Court of First Instance of
Olongapo City a for damages against the herein petitioners on November 8, 1976. 8 The plaintiffs
claimed that the letters contained libelous imputations that had exposed them to ridicule and
caused them mental anguish and that the prejudgment of the grievance proceedings was an
invasion of their personal and proprietary rights.
The private respondents made it clear that the petitioners were being sued in their private or
personal capacity. However, in a motion to dismiss filed under a special appearance, the
petitioners argued that the acts complained of were performed by them in the discharge of their
official duties and that, consequently, the court had no jurisdiction over them under the doctrine of
state immunity.
After extensive written arguments between the parties, the motion was denied in an order dated
March 8, 1977, 9 on the main ground that the petitioners had not presented any evidence that their
acts were official in nature and not personal torts, moreover, the allegation in the complaint was
that the defendants had acted maliciously and in bad faith. The same order issued a writ of
preliminary attachment, conditioned upon the filing of a P10,000.00 bond by the plaintiffs, against
the properties of petitioner Moreau, who allegedly was then about to leave the Philippines.
Subsequently, to make matters worse for the defendants, petitioner Moreau was declared in a
default by the trial court in its order dated August 9, 1977. The motion to lift the default order on
the ground that Moreau's failure to appear at the pre-trial conference was the result of some
misunderstanding, and the motion for reconsideration of the denial of the motion to dismiss, which
was filed by the petitioner's new lawyers, were denied by the respondent court on September 7,
1977.

This petition for certiorari, prohibition and preliminary injunction was thereafter filed before this
Court, on the contention that the above-narrated acts of the respondent court are tainted with grave
abuse of discretion amounting to lack of jurisdiction.
We return now to the basic question of whether the petitioners were acting officially or only in
their private capacities when they did the acts for which the private respondents have sued them
for damages.
It is stressed at the outset that the mere allegation that a government functionary is being sued in
his personal capacity will not automatically remove him from the protection of the law of public
officers and, if appropriate, the doctrine of state immunity. By the same token, the mere invocation
of official character will not suffice to insulate him from suability and liability for an act imputed
to him as a personal tort committed without or in excess of his authority. These well-settled
principles are applicable not only to the officers of the local state but also where the person sued in
its courts pertains to the government of a foreign state, as in the present case.
The respondent judge, apparently finding that the complained acts were prima facie personal and
tortious, decided to proceed to trial to determine inter alia their precise character on the strength of
the evidence to be submitted by the parties. The petitioners have objected, arguing that no such
evidence was needed to substantiate their claim of jurisdictional immunity. Pending resolution of
this question, we issued a temporary restraining order on September 26, 1977, that has since then
suspended the proceedings in this case in the court a quo.
In past cases, this Court has held that where the character of the act complained of can be
determined from the pleadings exchanged between the parties before the trial, it is not necessary
for the court to require them to belabor the point at a trial still to be conducted. Such a proceeding
would be superfluous, not to say unfair to the defendant who is subjected to unnecessary and
avoidable inconvenience.
Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the commanding
general of the Olongapo Naval Base should not have been denied because it had been sufficiently
shown that the act for which he was being sued was done in his official capacity on behalf of the
American government. The United States had not given its consent to be sued. It was the reverse
situation in Syquia v. Almeda Lopez," where we sustained the order of the lower court granting a
where we motion to dismiss a complaint against certain officers of the U.S. armed forces also
shown to be acting officially in the name of the American government. The United States had also
not waived its immunity from suit. Only three years ago, in United States of America v. Ruiz, 12
we set aside the denial by the lower court of a motion to dismiss a complaint for damages filed
against the United States and several of its officials, it appearing that the act complained of was
governmental rather than proprietary, and certainly not personal. In these and several other cases
13 the Court found it redundant to prolong the other case proceedings after it had become clear
that the suit could not prosper because the acts complained of were covered by the doctrine of
state immunity.

It is abundantly clear in the present case that the acts for which the petitioners are being called to
account were performed by them in the discharge of their official duties. Sanders, as director of
the special services department of NAVSTA, undoubtedly had supervision over its personnel,
including the private respondents, and had a hand in their employment, work assignments,
discipline, dismissal and other related matters. It is not disputed that the letter he had written was
in fact a reply to a request from his superior, the other petitioner, for more information regarding
the case of the private respondents. 14 Moreover, even in the absence of such request, he still was
within his rights in reacting to the hearing officer's criticismin effect a direct attack against him
-that Special Services was practicing "an autocratic form of supervision."
As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for
concurrence with the conversion of the private respondents' type of employment even before the
grievance proceedings had even commenced. Disregarding for the nonce the question of its
timeliness, this act is clearly official in nature, performed by Moreau as the immediate superior of
Sanders and directly answerable to Naval Personnel in matters involving the special services
department of NAVSTA In fact, the letter dealt with the financial and budgetary problems of the
department and contained recommendations for their solution, including the re-designation of the
private respondents. There was nothing personal or private about it.
Given the official character of the above-described letters, we have to conclude that the petitioners
were, legally speaking, being sued as officers of the United States government. As they have acted
on behalf of that government, and within the scope of their authority, it is that government, and not
the petitioners personally, that is responsible for their acts. Assuming that the trial can proceed and
it is proved that the claimants have a right to the payment of damages, such award will have to be
satisfied not by the petitioners in their personal capacities but by the United States government as
their principal. This will require that government to perform an affirmative act to satisfy the
judgment, viz, the appropriation of the necessary amount to cover the damages awarded, thus
making the action a suit against that government without its consent.
There should be no question by now that such complaint cannot prosper unless the government
sought to be held ultimately liable has given its consent to' be sued. So we have ruled not only in
Baer but in many other decisions where we upheld the doctrine of state immunity as applicable not
only to our own government but also to foreign states sought to be subjected to the jurisdiction of
our courts. 15
The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right
against the authority which makes the law on which the right depends. 16 In the case of foreign
states, the rule is derived from the principle of the sovereign equality of states which wisely
admonishes that par in parem non habet imperium and that a contrary attitude would "unduly vex
the peace of nations." 17 Our adherence to this precept is formally expressed in Article II, Section
2, of our Constitution, where we reiterate from our previous charters that the Philippines "adopts
the generally accepted principles of international law as part of the law of the land.

All this is not to say that in no case may a public officer be sued as such without the previous
consent of the state. To be sure, there are a number of well-recognized exceptions. It is clear that a
public officer may be sued as such to compel him to do an act required by law, as where, say, a
register of deeds refuses to record a deed of sale; 18 or to restrain a Cabinet member, for example,
from enforcing a law claimed to be unconstitutional; 19 or to compel the national treasurer to pay
damages from an already appropriated assurance fund; 20 or the commissioner of internal revenue
to refund tax over-payments from a fund already available for the purpose; 21 or, in general, to
secure a judgment that the officer impleaded may satisfy by himself without the government itself
having to do a positive act to assist him. We have also held that where the government itself has
violated its own laws, the aggrieved party may directly implead the government even without first
filing his claim with the Commission on Audit as normally required, as the doctrine of state
immunity "cannot be used as an instrument for perpetrating an injustice." 22
This case must also be distinguished from such decisions as Festejo v. Fernando, 23 where the
Court held that a bureau director could be sued for damages on a personal tort committed by him
when he acted without or in excess of authority in forcibly taking private property without paying
just compensation therefor although he did convert it into a public irrigation canal. It was not
necessary to secure the previous consent of the state, nor could it be validly impleaded as a party
defendant, as it was not responsible for the defendant's unauthorized act.
The case at bar, to repeat, comes under the rule and not under any of the recognized exceptions.
The government of the United States has not given its consent to be sued for the official acts of the
petitioners, who cannot satisfy any judgment that may be rendered against them. As it is the
American government itself that will have to perform the affirmative act of appropriating the
amount that may be adjudged for the private respondents, the complaint must be dismissed for
lack of jurisdiction.
The Court finds that, even under the law of public officers, the acts of the petitioners are protected
by the presumption of good faith, which has not been overturned by the private respondents. Even
mistakes concededly committed by such public officers are not actionable as long as it is not
shown that they were motivated by malice or gross negligence amounting to bad faith. 24 This, to,
is well settled . 25 Furthermore, applying now our own penal laws, the letters come under the
concept of privileged communications and are not punishable, 26 let alone the fact that the
resented remarks are not defamatory by our standards. It seems the private respondents have
overstated their case.
A final consideration is that since the questioned acts were done in the Olongapo Naval Base by
the petitioners in the performance of their official duties and the private respondents are
themselves American citizens, it would seem only proper for the courts of this country to refrain
from taking cognizance of this matter and to treat it as coming under the internal administration of
the said base.
The petitioners' counsel have submitted a memorandum replete with citations of American cases,
as if they were arguing before a court of the United States. The Court is bemused by such attitude.

While these decisions do have persuasive effect upon us, they can at best be invoked only to
support our own jurisprudence, which we have developed and enriched on the basis of our own
persuasions as a people, particularly since we became independent in 1946.
We appreciate the assistance foreign decisions offer us, and not only from the United States but
also from Spain and other countries from which we have derived some if not most of our own
laws. But we should not 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

SUPREME COURT
Manila
EN BANC

G.R. No. 84607

March 19, 1993

REPUBLIC OF THE PHILIPPINES, GEN. RAMON MONTANO, GEN. ALFREDO LIM, GEN.
ALEXANDER AGUIRRE, COL. EDGAR DULA TORRES, COL. CEZAR NAZARENO, MAJ.
FILEMON GASMEN, PAT. NICANOR ABANDO, PFC SERAFIN CEBU, JR., GEN. BRIGIDO
PAREDES, COL. ROGELIO MONFORTE, PFC ANTONIO LUCERO, PAT. JOSE MENDIOLA,
PAT. NELSON TUASON, POLICE CORPORAL PANFILO ROGOS, POLICE LT. JUAN B.
BELTRAN, PAT. NOEL MANAGBAO, MARINE THIRD CLASS TRAINEE (3CT) NOLITO
NOGATO, 3CT ALEJANDRO B. NAGUIO, JR., EFREN ARCILLAS, 3CT AGERICO LUNA,

3CT BASILIO BORJA, 3CT MANOLITO LUSPO, 3CT CRISTITUTO GERVACIO, 3CT
MANUEL DELA CRUZ, JR., MARINE (CDC) BN., (CIVIL DISTURBANCE CONTROL),
MOBILE DISPERSAL TEAM (MDT), LT. ROMEO PAQUINTO, LT. LAONGLAANG GOCE,
MAJ. DEMETRIO DE LA CRUZ, POLICE CAPTAIN RODOLFO NAVAL, JOHN DOE,
RICHARD DOE, ROBERTO DOE AND OTHER DOES, petitioners,
vs.
HON. EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch IX, ERLINDA C.
CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA EVANGELIO,
ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM, PURITA YUMUL,
MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES AND CARMENCITA
ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their capacity as heirs of the
deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO BAUTISTA, DANTE
EVANGELIO, ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES, RONILO
DOMUNICO) respectively; and (names of sixty-two injured victims) EDDIE AGUINALDO,
FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA,
ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO
LABAMBA, JR., EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO
TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA, LUISITO DACO,
BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA, CARLOS SIRAY,
JOSE PERRAS, TOMAS VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS,
FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS
MENDOZA, VICTORIANO QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO
TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA
ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO,
FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS
SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES,
RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO
SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO,
ARMANDO MATIENZO, CARLO MEDINA, LITO NOVENARIO, and ROSELLA ROBALE,
respondents.
G.R. No. 84645

March 19, 1993

ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA

EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM, PURITA
YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES AND
CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their
capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO
GRAMPA, ANGELITO GUTIERREZ, BERNABE LAKINDANUM, ROBERTO YUMUL,
LEOPOLDO ALONZO, ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES,
RONILO DOMUNICO) respectively; and (names of sixty-two injured victims) EDDIE
AGUINALDO, FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE
MENSOLA, ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ,
HONORIO LABAMBA, JR. EFREN MACARAIG, SOLOMON MANALOTO, ROMEO

DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA,

LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA,
CARLOS SIRAY, JOSE PERRAS TOMAS VALLOS, ARNOLD ENAJE, MARIANITA
DIMAPILIS, FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE
GUIA, ELVIS MENDOZA, VICTORINO QUIJANO, JOEY ADIME, RESIENO ADUL,
ALBERTO TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE,
BENILDA ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME
CALDETO, FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN
DELOS SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES,
RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO
SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO,
ARMANDO MATIENZO, CARLO MEDINA, LITO NOVENARIO, ROSELLA ROBALE,
petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, and HONORABLE EDILBERTO G. SANDOVAL,
Regional Trial Court of Manila, Branch 9, respondents.
The Solicitor General for the Republic of the Philippines.
Structural Alternative Legal Assistance for Grassroots for petitioners in 84645 & private
respondents in 84607.

CAMPOS, JR., J.:

People may have already forgotten the tragedy that transpired on January 22, 1987. It is quite
ironic that then, some journalists called it a Black Thursday, as a grim reminder to the nation of
the misfortune that befell twelve (12) rallyists. But for most Filipinos now, the Mendiola massacre
may now just as well be a chapter in our history books. For those however, who have become
widows and orphans, certainly they would not settle for just that. They seek retribution for the
lives taken that will never be brought back to life again.
Hence, the heirs of the deceased, together with those injured (Caylao group), instituted this
petition, docketed as G.R. No. 84645, under Section 1 of Rule 65 of the Rules of Court, seeking
the reversal and setting aside of the Orders of respondent Judge Sandoval, 1 dated May 31 and
August 8, 1988, dismissing the complaint for damages of herein petitioners against the Republic
of the Philippines in Civil Case No. 88-43351.
Petitioner, the Republic of the Philippines, through a similar remedy, docketed as G.R. No. 84607,
seeks to set aside the Order of respondent Judge dated May 31, 1988, in Civil Case No. 88-43351
entitled "Erlinda Caylao, et al. vs. Republic of the Philippines, et al."
The pertinent portion of the questioned Order 2 dated May 31, 1988, reads as follows:

With respect however to the other defendants, the impleaded Military Officers, since they are
being charged in their personal and official capacity, and holding them liable, if at all, would not
result in financial responsibility of the government, the principle of immunity from suit can not
conveniently and correspondingly be applied to them.
WHEREFORE, the case as against the defendant Republic of the Philippines is hereby dismissed.
As against the rest of the defendants the motion to dismiss is denied. They are given a period of
ten (10) days from receipt of this order within which to file their respective pleadings.
On the other hand, the Order 3, dated August 8, 1988, denied the motions filed by both parties, for
a reconsideration of the abovecited Order, respondent Judge finding no cogent reason to disturb
the said order.
The massacre was the culmination of eight days and seven nights of encampment by members of
the militant Kilusang Magbubukid sa Pilipinas (KMP) at the then Ministry (now Department) of
Agrarian Reform (MAR) at the Philippine Tobacco Administration Building along Elliptical Road
in Diliman, Quezon City.
The farmers and their sympathizers presented their demands for what they called "genuine
agrarian reform". The KMP, led by its national president, Jaime Tadeo, presented their problems
and demands, among which were: (a) giving lands for free to farmers; (b) zero retention of lands
by landlords; and (c) stop amortizations of land payments.
The dialogue between the farmers and the MAR officials began on January 15, 1987. The two
days that followed saw a marked increase in people at the encampment. It was only on January 19,
1987 that Jaime Tadeo arrived to meet with then Minister Heherson Alvarez, only to be informed
that the Minister can only meet with him the following day. On January 20, 1987, the meeting was
held at the MAR conference room. Tadeo demanded that the minimum comprehensive land
reform program be granted immediately. Minister Alvarez, for his part, can only promise to do his
best to bring the matter to the attention of then President Aquino, during the cabinet meeting on
January 21, 1987.
Tension mounted the following day. The farmers, now on their seventh day of encampment,
barricaded the MAR premises and prevented the employees from going inside their offices. They
hoisted the KMP flag together with the Philippine flag.
At around 6:30 p.m. of the same day, Minister Alvarez, in a meeting with Tadeo and his leaders,
advised the latter to instead wait for the ratification of the 1987 Constitution and just allow the
government to implement its comprehensive land reform program. Tadeo, however, countered by
saying that he did not believe in the Constitution and that a genuine land reform cannot be realized
under a landlord-controlled Congress. A heated discussion ensued between Tadeo and Minister
Alvarez. This notwithstanding, Minister Alvarez suggested a negotiating panel from each side to
meet again the following day.

On January 22, 1987, Tadeo's group instead decided to march to Malacaang to air their demands.
Before the march started, Tadeo talked to the press and TV media. He uttered fiery words, the
most telling of which were:
". . . inalis namin ang barikada bilang kahilingan ng ating Presidente, pero kinakailangan alisin din
niya ang barikada sa Mendiola sapagkat bubutasin din namin iyon at dadanak ang dugo . . . ." 4
The farmers then proceeded to march to Malacaang, from Quezon Memorial Circle, at 10:00 a.m.
They were later joined by members of other sectoral organizations such as the Kilusang Mayo
Uno (KMU), Bagong Alyansang Makabayan (BAYAN), League of Filipino Students (LFS) and
Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML).
At around 1:00 p.m., the marchers reached Liwasang Bonifacio where they held a brief program.
It was at this point that some of the marchers entered the eastern side of the Post Office Building,
and removed the steel bars surrounding the garden. Thereafter, they joined the march to
Malacaang. At about 4:30 p.m., they reached C.M. Recto Avenue.
In anticipation of a civil disturbance, and acting upon reports received by the Capital Regional
Command (CAPCOM) that the rallyists would proceed to Mendiola to break through the police
lines and rush towards Malacaang, CAPCOM Commander General Ramon E. Montao
inspected the preparations and adequacy of the government forces to quell impending attacks.
OPLAN YELLOW (Revised) was put into effect. Task Force Nazareno under the command of
Col. Cesar Nazareno was deployed at the vicinity of Malacaang. The civil disturbance control
units of the Western Police District under Police Brigadier General Alfredo S. Lim were also
activated.
Intelligence reports were also received that the KMP was heavily infiltrated by CPP/NPA elements
and that an insurrection was impending. The threat seemed grave as there were also reports that
San Beda College and Centro Escolar University would be forcibly occupied.
In its report, the Citizens' Mendiola Commission (a body specifically tasked to investigate the
facts surrounding the incident, Commission for short) stated that the government anti-riot forces
were assembled at Mendiola in a formation of three phalanges, in the following manner:
(1) The first line was composed of policemen from police stations Nos. 3, 4, 6, 7, 8, 9 and 10 and
the Chinatown detachment of the Western Police District. Police Colonel Edgar Dula Torres,
Deputy Superintendent of the Western Police District, was designated as ground commander of the
CDC first line of defense. The WPD CDC elements were positioned at the intersection of
Mendiola and Legarda Streets after they were ordered to move forward from the top of Mendiola
bridge. The WPD forces were in khaki uniform and carried the standard CDC equipment
aluminum shields, truncheons and gas masks.
(2) At the second line of defense about ten (10) yards behind the WPD policemen were the

elements of the Integrated National Police (INP) Field Force stationed at Fort Bonifacio from the
61st and 62nd INP Field Force, who carried also the standard CDC equipment truncheons,
shields and gas masks. The INP Field Force was under the command of Police Major Demetrio
dela Cruz.
(3) Forming the third line was the Marine Civil Disturbance Control Battalion composed of the
first and second companies of the Philippine Marines stationed at Fort Bonifacio. The marines
were all equipped with shields, truncheons and M-16 rifles (armalites) slung at their backs, under
the command of Major Felimon B. Gasmin. The Marine CDC Battalion was positioned in line
formation ten (10) yards farther behind the INP Field Force.
At the back of the marines were four (4) 6 x 6 army trucks, occupying the entire width of
Mendiola street, followed immediately by two water cannons, one on each side of the street and
eight fire trucks, four trucks on each side of the street. The eight fire trucks from Fire District I of
Manila under Fire Superintendent Mario C. Tanchanco, were to supply water to the two water
cannons.
Stationed farther behind the CDC forces were the two Mobile Dispersal Teams (MDT) each
composed of two tear gas grenadiers, two spotters, an assistant grenadier, a driver and the team
leader.
In front of the College of the Holy Spirit near Gate 4 of Malacaang stood the VOLVO Mobile
Communications Van of the Commanding General of CAPCOM/INP, General Ramon E.
Montao. At this command post, after General Montao had conferred with TF Nazareno
Commander, Colonel Cezar Nazareno, about the adequacy and readiness of his forces, it was
agreed that Police General Alfredo S. Lim would designate Police Colonel Edgar Dula Torres and
Police Major Conrado Francisco as negotiators with the marchers. Police General Lim then
proceeded to the WPD CDC elements already positioned at the foot of Mendiola bridge to relay to
Police Colonel Torres and Police Major Francisco the instructions that the latter would negotiate
with the marchers. 5 (Emphasis supplied)
The marchers, at around 4:30 p.m., numbered about 10,000 to 15,000. From C.M. Recto Avenue,
they proceeded toward the police lines. No dialogue took place between the marchers and the antiriot squad. It was at this moment that a clash occurred and, borrowing the words of the
Commission "pandemonium broke loose". The Commission stated in its findings, to wit:
. . . There was an explosion followed by throwing of pillboxes, stones and bottles. Steel bars,
wooden clubs and lead pipes were used against the police. The police fought back with their
shields and truncheons. The police line was breached. Suddenly shots were heard. The
demonstrators disengaged from the government forces and retreated towards C.M. Recto Avenue.
But sporadic firing continued from the government forces.
After the firing ceased, two MDTs headed by Lt. Romeo Paquinto and Lt. Laonglaan Goce sped
towards Legarda Street and lobbed tear gas at the remaining rallyist still grouped in the vicinity of

Mendiola. After dispersing the crowd, the two MDTs, together with the two WPD MDTs,
proceeded to Liwasang Bonifacio upon order of General Montao to disperse the rallyists
assembled thereat. Assisting the MDTs were a number of policemen from the WPD, attired in
civilian clothes with white head bands, who were armed with long firearms. 6 (Emphasis ours)
After the clash, twelve (12) marchers were officially confirmed dead, although according to
Tadeo, there were thirteen (13) dead, but he was not able to give the name and address of said
victim. Thirty-nine (39) were wounded by gunshots and twelve (12) sustained minor injuries, all
belonging to the group of the marchers.
Of the police and military personnel, three (3) sustained gunshot wounds and twenty (20) suffered
minor physical injuries such as abrasions, contusions and the like.
In the aftermath of the confrontation, then President Corazon C. Aquino issued Administrative
Order No. 11, 7 (A.O. 11, for brevity) dated January 22, 1987, which created the Citizens'
Mendiola Commission. The body was composed of retired Supreme Court Justice Vicente Abad
Santos as Chairman, retired Supreme Court Justice Jose Y. Feria and Mr. Antonio U. Miranda,
both as members. A.O. 11 stated that the Commission was created precisely for the "purpose of
conducting an investigation of the disorder, deaths, and casualties that took place in the vicinity of
Mendiola Bridge and Mendiola Street and Claro M. Recto Avenue, Manila, in the afternoon of
January 22, 1987". The Commission was expected to have submitted its findings not later than
February 6, 1987. But it failed to do so. Consequently, the deadline was moved to February 16,
1987 by Administrative Order No. 13. Again, the Commission was unable to meet this deadline.
Finally, on February 27, 1987, it submitted its report, in accordance with Administrative Order No.
17, issued on February 11, 1987.
In its report, the Commission recapitulated its findings, to wit:
(1) The march to Mendiola of the KMP led by Jaime Tadeo, together with the other sectoral
groups, was not covered by any permit as required under Batas Pambansa Blg. 880, the Public
Assembly Act of 1985, in violation of paragraph (a) Section 13, punishable under paragraph (a),
Section 14 of said law.
(2) The crowd dispersal control units of the police and the military were armed with .38 and .45
caliber handguns, and M-16 armalites, which is a prohibited act under paragraph 4(g), Section 13,
and punishable under paragraph (b), Section 14 of Batas Pambansa Blg. 880.
(3) The security men assigned to protect the WPD, INP Field Force, the Marines and supporting
military units, as well as the security officers of the police and military commanders were in
civilian attire in violation of paragraph (a), Section 10, Batas Pambansa 880.
(4) There was unnecessary firing by the police and military crowd dispersal control units in
dispersing the marchers, a prohibited act under paragraph (e), Section 13, and punishable under
paragraph (b), Section 14, Batas Pambansa Blg. 880.

(5) The carrying and use of steel bars, pillboxes, darts, lead pipe, wooden clubs with spikes, and
guns by the marchers as offensive weapons are prohibited acts punishable under paragraph (g),
Section 13, and punishable under paragraph (e), Section 14 of Batas Pambansa Blg. 880.
(6) The KMP farmers broke off further negotiations with the MAR officials and were determined
to march to Malacaang, emboldened as they are, by the inflammatory and incendiary utterances
of their leader, Jaime Tadeo "bubutasin namin ang barikada . . Dadanak and dugo . . . Ang
nagugutom na magsasaka ay gagawa ng sariling butas. . .
(7) There was no dialogue between the rallyists and the government forces. Upon approaching
the intersections of Legarda and Mendiola, the marchers began pushing the police lines and
penetrated and broke through the first line of the CDC contingent.
(8) The police fought back with their truncheons and shields. They stood their ground but the
CDC line was breached. There ensued gunfire from both sides. It is not clear who started the
firing.
(9) At the onset of the disturbance and violence, the water cannons and tear gas were not put into
effective use to disperse the rioting crowd.
(10) The water cannons and fire trucks were not put into operation because (a) there was no order
to use them; (b) they were incorrectly prepositioned; and (c) they were out of range of the
marchers.
(11) Tear gas was not used at the start of the disturbance to disperse the rioters. After the crowd
had dispersed and the wounded and dead were being carried away, the MDTs of the police and the
military with their tear gas equipment and components conducted dispersal operations in the
Mendiola area and proceeded to Liwasang Bonifacio to disperse the remnants of the marchers.
(12) No barbed wire barricade was used in Mendiola but no official reason was given for its
absence. 8
From the results of the probe, the Commission recommended 9 the criminal prosecution of four
unidentified, uniformed individuals, shown either on tape or in pictures, firing at the direction of
the marchers. In connection with this, it was the Commission's recommendation that the National
Bureau of Investigation (NBI) be tasked to undertake investigations regarding the identities of
those who actually fired their guns that resulted in the death of or injury to the victims of the
incident. The Commission also suggested that all the commissioned officers of both the Western
Police District and the INP Field Force, who were armed during the incident, be prosecuted for
violation of paragraph 4(g) of Section 13, Batas Pambansa Blg. 880, the Public Assembly Act of
1985. The Commission's recommendation also included the prosecution of the marchers, for
carrying deadly or offensive weapons, but whose identities have yet to be established. As for
Jaime Tadeo, the Commission said that he should be prosecuted both for violation of paragraph

(a), Section 13, Batas Pambansa Blg. 880 for holding the rally without a permit and for violation
of Article 142, as amended, of the Revised Penal Code for inciting to sedition. As for the
following officers, namely: (1) Gen. Ramon E. Montao; (2) Police Gen. Alfredo S. Lim; (3)
Police Gen. Edgar Dula Torres; (4) Police Maj. Demetrio dela Cruz; (5) Col. Cezar Nazareno; and
(5) Maj. Felimon Gasmin, for their failure to make effective use of their skill and experience in
directing the dispersal operations in Mendiola, administrative sanctions were recommended to be
imposed.
The last and the most significant recommendation of the Commission was for the deceased and
wounded victims of the Mendiola incident to be compensated by the government. It was this
portion that petitioners (Caylao group) invoke in their claim for damages from the government.
Notwithstanding such recommendation, no concrete form of compensation was received by the
victims. Thus, on July 27, 1987, herein petitioners, (Caylao group) filed a formal letter of demand
for compensation from the Government. 10 This formal demand was indorsed by the office of the
Executive Secretary to the Department of Budget and Management (DBM) on August 13, 1987.
The House Committee on Human Rights, on February 10, 1988, recommended the expeditious
payment of compensation to the Mendiola victims. 11
After almost a year, on January 20, 1988, petitioners (Caylao group) were constrained to institute
an action for damages against the Republic of the Philippines, together with the military officers,
and personnel involved in the Mendiola incident, before the trial court. The complaint was
docketed as Civil Case No. 88-43351.
On February 23, 1988, the Solicitor General filed a Motion to Dismiss on the ground that the State
cannot be sued without its consent. Petitioners opposed said motion on March 16, 1988,
maintaining that the State has waived its immunity from suit and that the dismissal of the instant
action is contrary to both the Constitution and the International Law on Human Rights.
Respondent Judge Sandoval, in his first questioned Order, dismissed the complaint as against the
Republic of the Philippines on the ground that there was no waiver by the State. Petitioners
(Caylao group) filed a Motion for Reconsideration therefrom, but the same was denied by
respondent judge in his Order dated August 8, 1988. Consequently, Caylao and her co-petitioners
filed the instant petition.
On the other hand, the Republic of the Philippines, together with the military officers and
personnel impleaded as defendants in the court below, filed its petition for certiorari.
Having arisen from the same factual beginnings and raising practically identical issues, the two (2)
petitions were consolidated and will therefore be jointly dealt with and resolved in this Decision.
The resolution of both petitions revolves around the main issue of whether or not the State has
waived its immunity from suit.

Petitioners (Caylao group) advance the argument that the State has impliedly waived its sovereign
immunity from suit. It is their considered view that by the recommendation made by the
Commission for the government to indemnify the heirs and victims of the Mendiola incident and
by the public addresses made by then President Aquino in the aftermath of the killings, the State
has consented to be sued.
Under our Constitution the principle of immunity of the government from suit is expressly
provided in Article XVI, Section 3. The principle is based on the very essence of sovereignty, and
on the practical ground that there can be no legal right as against the authority that makes the law
on which the right depends. 12 It also rests on reasons of public policy that public service
would be hindered, and the public endangered, if the sovereign authority could be subjected to law
suits at the instance of every citizen and consequently controlled in the uses and dispositions of the
means required for the proper administration of the government. 13
This is not a suit against the State with its consent.
Firstly, the recommendation made by the Commission regarding indemnification of the heirs of
the deceased and the victims of the incident by the government does not in any way mean that
liability automatically attaches to the State. It is important to note that A.O. 11 expressly states that
the purpose of creating the Commission was to have a body that will conduct an "investigation of
the disorder, deaths and casualties that took place." 14 In the exercise of its functions, A.O. 11
provides guidelines, and what is relevant to Our discussion reads:
1
Its conclusions regarding the existence of probable cause for the commission of any offense
and of the persons probably guilty of the same shall be sufficient compliance with the rules on
preliminary investigation and the charges arising therefrom may be filed directly with the proper
court. 15
In effect, whatever may be the findings of the Commission, the same shall only serve as the cause
of action in the event that any party decides to litigate his/her claim. Therefore, the Commission is
merely a preliminary venue. The Commission is not the end in itself. Whatever recommendation it
makes cannot in any way bind the State immediately, such recommendation not having become
final and, executory. This is precisely the essence of it being a fact-finding body.
Secondly, whatever acts or utterances that then President Aquino may have done or said, the same
are not tantamount to the State having waived its immunity from suit. The President's act of
joining the marchers, days after the incident, does not mean that there was an admission by the
State of any liability. In fact to borrow the words of petitioners (Caylao group), "it was an act of
solidarity by the government with the people". Moreover, petitioners rely on President Aquino's
speech promising that the government would address the grievances of the rallyists. By this alone,
it cannot be inferred that the State has admitted any liability, much less can it be inferred that it has
consented to the suit.
Although consent to be sued may be given impliedly, still it cannot be maintained that such

consent was given considering the circumstances obtaining in the instant case.
Thirdly, the case does not qualify as a suit against the State.
Some instances when a suit against the State is proper are: 16
(1) When the Republic is sued by name;
(2) When the suit is against an unincorporated government agency;
(3) When the, suit is on its face against a government officer but the case is such that ultimate
liability will belong not to the officer but to the government.
While the Republic in this case is sued by name, the ultimate liability does not pertain to the
government. Although the military officers and personnel, then party defendants, were discharging
their official functions when the incident occurred, their functions ceased to be official the
moment they exceeded their authority. Based on the Commission findings, there was lack of
justification by the government forces in the use of firearms. 17 Moreover, the members of the
police and military crowd dispersal units committed a prohibited act under B.P. Blg. 880 18 as
there was unnecessary firing by them in dispersing the marchers. 19
As early as 1954, this Court has pronounced that an officer cannot shelter himself by the plea that
he is a public agent acting under the color of his office when his acts are wholly without authority.
20 Until recently in 1991, 21 this doctrine still found application, this Court saying that immunity
from suit cannot institutionalize irresponsibility and non-accountability nor grant a privileged
status not claimed by any other official of the Republic. The military and police forces were
deployed to ensure that the rally would be peaceful and orderly as well as to guarantee the safety
of the very people that they are duty-bound to protect. However, the facts as found by the trial
court showed that they fired at the unruly crowd to disperse the latter.
While it is true that nothing is better settled than the general rule that a sovereign state and its
political subdivisions cannot be sued in the courts except when it has given its consent, it cannot
be invoked by both the military officers to release them from any liability, and by the heirs and
victims to demand indemnification from the government. The principle of state immunity from
suit does not apply, as in this case, when the relief demanded by the suit requires no affirmative
official action on the part of the State nor the affirmative discharge of any obligation which
belongs to the State in its political capacity, even though the officers or agents who are made
defendants claim to hold or act only by virtue of a title of the state and as its agents and servants.
22 This Court has made it quite clear that even a "high position in the government does not confer
a license to persecute or recklessly injure another." 23
The inescapable conclusion is that the State cannot be held civilly liable for the deaths that
followed the incident. Instead, the liability should fall on the named defendants in the lower court.
In line with the ruling of this court in Shauf vs. Court of Appeals, 24 herein public officials,

having been found to have acted beyond the scope of their authority, may be held liable for
damages.
WHEREFORE, finding no reversible error and no grave abuse of discretion committed by
respondent Judge in issuing the questioned orders, the instant petitions are hereby DISMISSED.
SO ORDERED.
Narvasa, C.J., Cruz, Felicia
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-5156

March 11, 1954

CARMEN FESTEJO, demandante-apelante,

vs.
ISAIAS FERNANDO, Director de Obras Publicas, demandado-apelado.
D. Eloy B. Bello en representacion de la apelante.
El Procurador General Sr. Pompeyo Diaz y el Procurador Sr. Antonio A. Torres en representacion
del apelado.
DIOKNO, J.:
Carmen Festejo, duea de unos terrenos azucareros, de un total de unas 9 hectareas y media de
superfice, demando a "Isaias Fernando Director, Bureau of public Works, que como tal Director de
Obras Publicas tiene a su cargo los sistemas y proyectos de irrigacion y es el funcionario
responsable de la construccion de los sistemas de irrigacion en el pais," alegando que
The defendant, as Director of the Bureau of Public Works, without authority obtained first from
the Court of First Instance of Ilocos Sur, without obtaining first a right of way, and without the
consent and knowledge of the plaintiff, and against her express objection unlawfully took
possession of portions of the three parcels of land described above, and caused an irrigation canal
to be constructed on the portion of the three parcels of land on or about the month of February
1951 the aggregate area being 24,179 square meters to the damage and prejudice of the plaintiff.
----- R. on A., p. 3.
causando a ella variados daos y perjuicios. Pidio, en su consecuencia, sentencia condenando el
demandado:

. . . to return or cause to be returned the possession of the portions of land unlawfully occupied and
appropriated in the aggregate area of 24,179 square meters and to return the land to its former
condition under the expenses of the defendant. . . .
In the remote event that the portions of land unlawfully occupied and appropriated can not be
returned to the plaintiff, then to order the defendant to pay to the plaintiff the sum of P19,343.20
as value of the portions totalling an area of 24,179 square meters; ---- R. on A., p. 5.
y ademas a pagar P9,756.19 de daos y P5,000 de honorarios de abogado, con las costas R. on A.,
pp. 5-6.
El demandado, por medio del Procurador General, presento mocion de sobreseimiento de la
demanda por el fundamento de que el Juzgado no tiene jurisdiccion para dictar sentencia valida
contra el, toda vez que judicialmente la reclamacion es contra la Republica de Filipinas, y esta no
ha presentado su consentimiento a la demanda. El Juzgado inferior estimo la mocion y sobreseyo
la demanda sin perjuicio y sin costas.
En apelacion, la demandante sostiene que fue un error considerar la demanda como una contra la
Republica y sobreseer en su virtud la demanda.
La mocion contra "Isaias Fernando, Director de Obras Publicas, encargado y responsable de la
construccion de los sistemas de irrigacion en Filipinas" es una dirigida personalmente contra el,
por actos que asumio ejecutar en su concepto oficial. La ley no le exime de responsabilidad por las
extralimitaciones que cometa o haga cometer en el desempeo de sus funciones oficiales. Un caso
semejante es el de Nelson vs. Bobcock (1933) 18 minn. 584, NW 49, 90 ALR 1472. Alli el
Comisionado de Carreteras, al mejorar un trozo de la carretera ocupo o se apropio de terrenos
contiguos al derecho de paso. El Tribunal Supremo del Estado declaro que es personalmente
responsable al dueo de los daos causados. Declaro ademas que la ratificacion de lo que hicieron
sus subordinados era equivalente a una orden a los mismos. He aqui lo dijo el Tribunal.
We think the evidence and conceded facts permitted the jury in finding that in the trespass on
plaintiff's land defendant committed acts outside the scope of his authority. When he went outside
the boundaries of the right of way upon plaintiff's land and damaged it or destroyed its former
condition an dusefulness, he must be held to have designedly departed from the duties imposed on
him by law. There can be no claim that he thus invaded plaintiff's land southeasterly of the right of
way innocently. Surveys clearly marked the limits of the land appropriated for the right of way of
this trunk highway before construction began. . . .
"Ratification may be equivalent to command, and cooperation may be inferred from acquiescence
where there is power to restrain." It is unnecessary to consider other cases cited, . . ., for as before
suggested, the jury could find or infer that, in so far as there was actual trespass by appropriation
of plaintiff's land as a dumping place for the rock to be removed from the additional appropriated
right of way, defendant planned, approved, and ratified what was done by his subordinates.
Nelson vs. Bobcock, 90 A.L.R., 1472, 1476, 1477.

La doctrina sobre la responsabilidad civil de los funcionarios en casos parecidos se resume como
sigue:
Ordinarily the officer or employee committing the tort is personally liable therefor, and may be
sued as any other citizen and held answerable for whatever injury or damage results from his
tortious act. 49 Am. Jur. 289.
. . . If an officer, even while acting under color of his office, exceeds the power conferred on him
by law, he cannot shelter himself under the plea that he is a public agent. 43 Am. Jur. 86.
It is a general rule that an officer-executive, administrative quasi-judicial, ministerial, or otherwise
who acts outside the scope of his jurisdiction and without authorization of law may thereby render
himself amenable to personal liability in a civil suit. If he exceed the power conferred on him by
law, he cannot shelter himself by the plea that he is a public agent acting under the color of his
office, and not personally. In the eye of the law, his acts then are wholly without authority. 43
Am. Jur. 89-90.
El articulo 32 del Codigo Civil dice a su vez:
ART. 32. Any public officer or emplyee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages:
xxx

xxx

xxx

(6) The right against deprivation of property without due process of law;
xxx

xxx

xxx

In any of the cases referred to this article, whether or not the defendant's acts or omission
constitutes a criminal offense, the aggrieved party has a right ot commence an entirely separate
and distinct civil action for damages, and for other relief. Such civil action shall proceed
independently of any criminal prosecution (if the latter be instituted), and may be proved by a
preponderance of evidence.
The inmdemnity shall include moral damages Exemplary damages may also be adjudicated.
Veanse tambien Lung vs. Aldanese, 45 Phil., 784; Syquia vs. Almeda, No. L-1648, Agosto 17,
1947; Marquez vs. Nelson, No. L-2412, Septiembre 1950.
Se revoca la orden apelada y se ordena la continuacion de la tramitacion de la demanda conforme
proveen los reglamentos. Sin especial pronunciamiento en cuanto a las costas. Asi se ordena.

Padilla, Reyes, Jugo, Bautista Angelo and Labrador, MM., estan conformes.

Separate Opinions
CONCEPCION, J., dissenting:
To my mind, the allegations of the complaint lead to no other conclusion than that appellee Isaias
Fernando is a party in this case, not in his personal capacity, but as an officer of the Government.
According to said pleading the defendant is "Isaias Fernando, Director, Bureau of Public Works."
Moreover, in paragraphs 4 and 5 of the complaint, it is alleged:
4. That the defendant as Director of the Bureau of Public Works, is in charge of irrigation projects
and systems, and the official responsible for the construction of irrigation system in the
Philippines;
5. That the defendant, as Director of the Bureau of Public Works, without authority obtained first
from the Court of First Instance of Ilocos Sur, without obtaining first a right of way, and without
the consent and knowledge of the plaintiff, and against her express objection, unlawfully took
possession of portions of the three parcels of land described above, and caused an irrigation canal
to be constructed on the portion of the three parcels of land on or about the month of February
1951 the aggregate area being 24,179 square meters to the damage and prejudice of the plaintiff.
(Emphasis supplied.)
The emphasis thus placed upon the allegation that the acts complained of were performed by said
defendant "as Director of the Bureau of Public Works," clearly shows that the designation of his
office was included in the title of the case to indicate that he was being sued in his official
capacity. This conclusion is bolstered up by the fact that, among other things, plaintiff prays, in the
complaint, for a judgment
Ordering the defendant to return or caused to be returned the possession of the portions of land
unlawfully occupied and appropriated in the aggregate area of 24,179 square meters and to return
the land to its former condition under the expense of the defendant. (Paragraph a, of the
complaint).
We take judicial notice of the fact that the irrigation projects and system reffered to in the
complaint of which the defendant, Isaias Fernando, according to the same pleading, is "in
charge" and for which he is "responsible" as Director of the Bureau of Public Works are
established and operated with public funds, which pursuant to the Constitution, must be
appropriated by law. Irrespective of the manner in which the construction may have been
undertaken by the Bureau of Public Works, the system or canal is, therefore, a property of the
Government. Consequently, in praying that possession of the portions of land occupied by the
irrigation canal involved in the present case be returned to plaintiff therein, and that said land be
restored to its former condition, plaintiff seeks to divest the Government of its possession of said

irrigation canal, and, what is worse, to cause said property of the Government to be removed or
destroyed. As held in Syquia vs. Lopez (47 Off. Gaz., 665), the Government is, accordingly, "the
real party in interest as defendant" in the case at bar. In other words, the same partakes of the
nature of a suit against the state and may not be maintained without its consent.
Hence I am constrained to dissent.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 76607

February 26, 1990

UNITED STATES OF AMERICA, FREDERICK M. SMOUSE AND YVONNE REEVES,

petitioners,
vs.
HON. ELIODORO B. GUINTO, Presiding Judge, Branch LVII, Regional Trial Court, Angeles
City, ROBERTO T. VALENCIA, EMERENCIANA C. TANGLAO, AND PABLO C. DEL
PILAR, respondents.
G.R. No. 79470 February 26, 1990
UNITED STATES OF AMERICA, ANTHONY LAMACHIA, T/SGT. USAF, WILFREDO
BELSA, PETER ORASCION AND ROSE CARTALLA, petitioners,
vs.
HON. RODOLFO D. RODRIGO, as Presiding Judge of Branch 7, Regional Trial Court
(BAGUIO CITY), La Trinidad, Benguet and FABIAN GENOVE, respondents.
G.R. No. 80018 February 26, 1990
UNITED STATES OF AMERICA, TOMI J. KINGI, DARREL D. DYE and STEVEN F.
BOSTICK, petitioners,
vs.
HON. JOSEFINA D. CEBALLOS, As Presiding Judge, Regional Trial Court, Branch 66, Capas,
Tarlac, and LUIS BAUTISTA, respondents.
G.R. No. 80258 February 26, 1990
UNITED STATES OF AMERICA, MAJOR GENERAL MICHAEL P. C. CARNS, AIC ERNEST
E. RIVENBURGH, AIC ROBIN BLEVINS, SGT. NOEL A. GONZALES, SGT. THOMAS
MITCHELL, SGT. WAYNE L. BENJAMIN, ET AL., petitioners,

vs.
HON. CONCEPCION S. ALARCON VERGARA, as Presiding Judge, Branch 62 REGIONAL
TRIAL COURT, Angeles City, and RICKY SANCHEZ, FREDDIE SANCHEZ AKA FREDDIE
RIVERA, EDWIN MARIANO, AKA JESSIE DOLORES SANGALANG, ET AL., respondents.
Luna, Sison & Manas Law Office for petitioners.

CRUZ, J.:
These cases have been consolidated because they all involve the doctrine of state immunity. The
United States of America was not impleaded in the complaints below but has moved to dismiss on
the ground that they are in effect suits against it to which it has not consented. It is now contesting
the denial of its motions by the respondent judges.
In G.R. No. 76607, the private respondents are suing several officers of the U.S. Air Force
stationed in Clark Air Base in connection with the bidding conducted by them for contracts for
barber services in the said base.
On February 24, 1986, the Western Pacific Contracting Office, Okinawa Area Exchange, U.S. Air
Force, solicited bids for such contracts through its contracting officer, James F. Shaw. Among
those who submitted their bids were private respondents Roberto T. Valencia, Emerenciana C.
Tanglao, and Pablo C. del Pilar. Valencia had been a concessionaire inside Clark for 34 years; del
Pilar for 12 years; and Tanglao for 50 years.
The bidding was won by Ramon Dizon, over the objection of the private respondents, who
claimed that he had made a bid for four facilities, including the Civil Engineering Area, which was
not included in the invitation to bid.
The private respondents complained to the Philippine Area Exchange (PHAX). The latter, through
its representatives, petitioners Yvonne Reeves and Frederic M. Smouse explained that the Civil
Engineering concession had not been awarded to Dizon as a result of the February 24, 1986
solicitation. Dizon was already operating this concession, then known as the NCO club
concession, and the expiration of the contract had been extended from June 30, 1986 to August 31,
1986. They further explained that the solicitation of the CE barbershop would be available only by
the end of June and the private respondents would be notified.
On June 30, 1986, the private respondents filed a complaint in the court below to compel PHAX
and the individual petitioners to cancel the award to defendant Dizon, to conduct a rebidding for
the barbershop concessions and to allow the private respondents by a writ of preliminary
injunction to continue operating the concessions pending litigation. 1
Upon the filing of the complaint, the respondent court issued an ex parte order directing the

individual petitioners to maintain the status quo.

On July 22, 1986, the petitioners filed a motion to dismiss and opposition to the petition for
preliminary injunction on the ground that the action was in effect a suit against the United States
of America, which had not waived its non-suability. The individual defendants, as official
employees of the U.S. Air Force, were also immune from suit.
On the same date, July 22, 1986, the trial court denied the application for a writ of preliminary
injunction.
On October 10, 1988, the trial court denied the petitioners' motion to dismiss, holding in part as
follows:
From the pleadings thus far presented to this Court by the parties, the Court's attention is called by
the relationship between the plaintiffs as well as the defendants, including the US Government, in
that prior to the bidding or solicitation in question, there was a binding contract between the
plaintiffs as well as the defendants, including the US Government. By virtue of said contract of
concession it is the Court's understanding that neither the US Government nor the herein principal
defendants would become the employer/s of the plaintiffs but that the latter are the employers
themselves of the barbers, etc. with the employer, the plaintiffs herein, remitting the stipulated
percentage of commissions to the Philippine Area Exchange. The same circumstance would
become in effect when the Philippine Area Exchange opened for bidding or solicitation the
questioned barber shop concessions. To this extent, therefore, indeed a commercial transaction has
been entered, and for purposes of the said solicitation, would necessarily be entered between the
plaintiffs as well as the defendants.
The Court, further, is of the view that Article XVIII of the RP-US Bases Agreement does not cover
such kind of services falling under the concessionaireship, such as a barber shop concession. 2
On December 11, 1986, following the filing of the herein petition for certiorari and prohibition
with preliminary injunction, we issued a temporary restraining order against further proceedings in
the court below. 3
In G.R. No. 79470, Fabian Genove filed a complaint for damages against petitioners Anthony
Lamachia, Wilfredo Belsa, Rose Cartalla and Peter Orascion for his dismissal as cook in the U.S.
Air Force Recreation Center at the John Hay Air Station in Baguio City. It had been ascertained
after investigation, from the testimony of Belsa Cartalla and Orascion, that Genove had poured
urine into the soup stock used in cooking the vegetables served to the club customers. Lamachia,
as club manager, suspended him and thereafter referred the case to a board of arbitrators
conformably to the collective bargaining agreement between the Center and its employees. The
board unanimously found him guilty and recommended his dismissal. This was effected on March
5, 1986, by Col. David C. Kimball, Commander of the 3rd Combat Support Group, PACAF Clark
Air Force Base. Genove's reaction was to file Ms complaint in the Regional Trial Court of Baguio
City against the individual petitioners. 4

On March 13, 1987, the defendants, joined by the United States of America, moved to dismiss the
complaint, alleging that Lamachia, as an officer of the U.S. Air Force stationed at John Hay Air
Station, was immune from suit for the acts done by him in his official capacity. They argued that
the suit was in effect against the United States, which had not given its consent to be sued.
This motion was denied by the respondent judge on June 4, 1987, in an order which read in part:
It is the understanding of the Court, based on the allegations of the complaint which have been
hypothetically admitted by defendants upon the filing of their motion to dismiss that although
defendants acted initially in their official capacities, their going beyond what their functions called
for brought them out of the protective mantle of whatever immunities they may have had in the
beginning. Thus, the allegation that the acts complained of were illegal, done. with extreme bad
faith and with pre-conceived sinister plan to harass and finally dismiss the plaintiff, gains
significance. 5
The petitioners then came to this Court seeking certiorari and prohibition with preliminary
injunction.
In G.R. No. 80018, Luis Bautista, who was employed as a barracks boy in Camp O' Donnell, an
extension of Clark Air Base, was arrested following a buy-bust operation conducted by the
individual petitioners herein, namely, Tomi J. King, Darrel D. Dye and Stephen F. Bostick, officers
of the U.S. Air Force and special agents of the Air Force Office of Special Investigators (AFOSI).
On the basis of the sworn statements made by them, an information for violation of R.A. 6425,
otherwise known as the Dangerous Drugs Act, was filed against Bautista in the Regional Trial
Court of Tarlac. The above-named officers testified against him at his trial. As a result of the filing
of the charge, Bautista was dismissed from his employment. He then filed a complaint for
damages against the individual petitioners herein claiming that it was because of their acts that he
was removed. 6
During the period for filing of the answer, Mariano Y. Navarro a special counsel assigned to the
International Law Division, Office of the Staff Judge Advocate of Clark Air Base, entered a
special appearance for the defendants and moved for an extension within which to file an "answer
and/or other pleadings." His reason was that the Attorney General of the United States had not yet
designated counsel to represent the defendants, who were being sued for their official acts. Within
the extended period, the defendants, without the assistance of counsel or authority from the U.S.
Department of Justice, filed their answer. They alleged therein as affirmative defenses that they
had only done their duty in the enforcement of the laws of the Philippines inside the American
bases pursuant to the RP-US Military Bases Agreement.
On May 7, 1987, the law firm of Luna, Sison and Manas, having been retained to represent the
defendants, filed with leave of court a motion to withdraw the answer and dismiss the complaint.
The ground invoked was that the defendants were acting in their official capacity when they did
the acts complained of and that the complaint against them was in effect a suit against the United

States without its consent.

The motion was denied by the respondent judge in his order dated September 11, 1987, which
held that the claimed immunity under the Military Bases Agreement covered only criminal and not
civil cases. Moreover, the defendants had come under the jurisdiction of the court when they
submitted their answer. 7
Following the filing of the herein petition for certiorari and prohibition with preliminary
injunction, we issued on October 14, 1987, a temporary restraining order. 8
In G.R. No. 80258, a complaint for damages was filed by the private respondents against the
herein petitioners (except the United States of America), for injuries allegedly sustained by the
plaintiffs as a result of the acts of the defendants. 9 There is a conflict of factual allegations here.
According to the plaintiffs, the defendants beat them up, handcuffed them and unleashed dogs on
them which bit them in several parts of their bodies and caused extensive injuries to them. The
defendants deny this and claim the plaintiffs were arrested for theft and were bitten by the dogs
because they were struggling and resisting arrest, The defendants stress that the dogs were called
off and the plaintiffs were immediately taken to the medical center for treatment of their wounds.
In a motion to dismiss the complaint, the United States of America and the individually named
defendants argued that the suit was in effect a suit against the United States, which had not given
its consent to be sued. The defendants were also immune from suit under the RP-US Bases Treaty
for acts done by them in the performance of their official functions.
The motion to dismiss was denied by the trial court in its order dated August 10, 1987, reading in
part as follows:
The defendants certainly cannot correctly argue that they are immune from suit. The allegations,
of the complaint which is sought to be dismissed, had to be hypothetically admitted and whatever
ground the defendants may have, had to be ventilated during the trial of the case on the merits.
The complaint alleged criminal acts against the individually-named defendants and from the
nature of said acts it could not be said that they are Acts of State, for which immunity should be
invoked. If the Filipinos themselves are duty bound to respect, obey and submit themselves to the
laws of the country, with more reason, the members of the United States Armed Forces who are
being treated as guests of this country should respect, obey and submit themselves to its laws. 10
and so was the motion for reconsideration. The defendants submitted their answer as required but
subsequently filed their petition for certiorari and prohibition with preliminary injunction with this
Court. We issued a temporary restraining order on October 27, 1987. 11
II
The rule that a state may not be sued without its consent, now expressed in Article XVI, Section 3,
of the 1987 Constitution, is one of the generally accepted principles of international law that we

have adopted as part of the law of our land under Article II, Section 2. This latter provision merely
reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended to
manifest our resolve to abide by the rules of the international community.
Even without such affirmation, we would still be bound by the generally accepted principles of
international law under the doctrine of incorporation. Under this doctrine, as accepted by the
majority of states, such principles are deemed incorporated in the law of every civilized state as a
condition and consequence of its membership in the society of nations. Upon its admission to such
society, the state is automatically obligated to comply with these principles in its relations with
other states.
As applied to the local state, the doctrine of state immunity is based on the justification given by
Justice Holmes that "there can be no legal right against the authority which makes the law on
which the right depends." 12 There are other practical reasons for the enforcement of the doctrine.
In the case of the foreign state sought to be impleaded in the local jurisdiction, the added
inhibition is expressed in the maxim par in parem, non habet imperium. All states are sovereign
equals and cannot assert jurisdiction over one another. A contrary disposition would, in the
language of a celebrated case, "unduly vex the peace of nations." 13
While the doctrine appears to prohibit only suits against the state without its consent, it is also
applicable to complaints filed against officials of the state for acts allegedly performed by them in
the discharge of their duties. The rule is that if the judgment against such officials will require the
state itself to perform an affirmative act to satisfy the same, such as the appropriation of the
amount needed to pay the damages awarded against them, the suit must be regarded as against the
state itself although it has not been formally impleaded. 14 In such a situation, the state may move
to dismiss the complaint on the ground that it has been filed without its consent.
The doctrine is sometimes derisively called "the royal prerogative of dishonesty" because of the
privilege it grants the state to defeat any legitimate claim against it by simply invoking its nonsuability. That is hardly fair, at least in democratic societies, for the state is not an unfeeling tyrant
unmoved by the valid claims of its citizens. In fact, the doctrine is not absolute and does not say
the state may not be sued under any circumstance. On the contrary, the rule says that the state may
not be sued without its consent, which clearly imports that it may be sued if it consents.
The consent of the state to be sued may be manifested expressly or impliedly. Express consent
may be embodied in a general law or a special law. Consent is implied when the state enters into a
contract or it itself commences litigation.
The general law waiving the immunity of the state from suit is found in Act No. 3083, under
which the Philippine government "consents and submits to be sued upon any moneyed claim
involving liability arising from contract, express or implied, which could serve as a basis of civil
action between private parties." In Merritt v. Government of the Philippine Islands, 15 a special
law was passed to enable a person to sue the government for an alleged tort. When the government
enters into a contract, it is deemed to have descended to the level of the other contracting party

and divested of its sovereign immunity from suit with its implied consent. 16 Waiver is also
implied when the government files a complaint, thus opening itself to a counterclaim. 17
The above rules are subject to qualification. Express consent is effected only by the will of the
legislature through the medium of a duly enacted statute. 18 We have held that not all contracts
entered into by the government will operate as a waiver of its non-suability; distinction must be
made between its sovereign and proprietary acts. 19 As for the filing of a complaint by the
government, suability will result only where the government is claiming affirmative relief from
the defendant. 20
In the case of the United States of America, the customary rule of international law on state
immunity is expressed with more specificity in the RP-US Bases Treaty. Article III thereof
provides as follows:
It is mutually agreed that the United States shall have the rights, power and authority within the
bases which are necessary for the establishment, use, operation and defense thereof or appropriate
for the control thereof and all the rights, power and authority within the limits of the territorial
waters and air space adjacent to, or in the vicinity of, the bases which are necessary to provide
access to them or appropriate for their control.
The petitioners also rely heavily on Baer v. Tizon, 21 along with several other decisions, to
support their position that they are not suable in the cases below, the United States not having
waived its sovereign immunity from suit. It is emphasized that in Baer, the Court held:
The invocation of the doctrine of immunity from suit of a foreign state without its consent is
appropriate. More specifically, insofar as alien armed forces is concerned, the starting point is
Raquiza v. Bradford, a 1945 decision. In dismissing a habeas corpus petition for the release of
petitioners confined by American army authorities, Justice Hilado speaking for the Court, cited
Coleman v. Tennessee, where it was explicitly declared: 'It is well settled that a foreign army,
permitted to march through a friendly country or to be stationed in it, by permission of its
government or sovereign, is exempt from the civil and criminal jurisdiction of the place.' Two
years later, in Tubb and Tedrow v. Griess, this Court relied on the ruling in Raquiza v. Bradford
and cited in support thereof excerpts from the works of the following authoritative writers: Vattel,
Wheaton, Hall, Lawrence, Oppenheim, Westlake, Hyde, and McNair and Lauterpacht. Accuracy
demands the clarification that after the conclusion of the Philippine-American Military Bases
Agreement, the treaty provisions should control on such matter, the assumption being that there
was a manifestation of the submission to jurisdiction on the part of the foreign power whenever
appropriate. More to the point is Syquia v. Almeda Lopez, where plaintiffs as lessors sued the
Commanding General of the United States Army in the Philippines, seeking the restoration to
them of the apartment buildings they owned leased to the United States armed forces stationed in
the Manila area. A motion to dismiss on the ground of non-suability was filed and upheld by
respondent Judge. The matter was taken to this Court in a mandamus proceeding. It failed. It was
the ruling that respondent Judge acted correctly considering that the 4 action must be considered
as one against the U.S. Government. The opinion of Justice Montemayor continued: 'It is clear that

the courts of the Philippines including the Municipal Court of Manila have no jurisdiction over the
present case for unlawful detainer. The question of lack of jurisdiction was raised and interposed
at the very beginning of the action. The U.S. Government has not given its consent to the filing of
this suit which is essentially against her, though not in name. Moreover, this is not only a case of a
citizen filing a suit against his own Government without the latter's consent but it is of a citizen
firing an action against a foreign government without said government's consent, which renders
more obvious the lack of jurisdiction of the courts of his country. The principles of law behind this
rule are so elementary and of such general acceptance that we deem it unnecessary to cite
authorities in support thereof then came Marvel Building Corporation v. Philippine War Damage
Commission, where respondent, a United States Agency established to compensate damages
suffered by the Philippines during World War II was held as falling within the above doctrine as
the suit against it would eventually be a charge against or financial liability of the United States
Government because ... , the Commission has no funds of its own for the purpose of paying
money judgments.' The Syquia ruling was again explicitly relied upon in Marquez Lim v. Nelson,
involving a complaint for the recovery of a motor launch, plus damages, the special defense
interposed being 'that the vessel belonged to the United States Government, that the defendants
merely acted as agents of said Government, and that the United States Government is therefore the
real party in interest.' So it was in Philippine Alien Property Administration v. Castelo, where it
was held that a suit against Alien Property Custodian and the Attorney General of the United
States involving vested property under the Trading with the Enemy Act is in substance a suit
against the United States. To the same effect is Parreno v. McGranery, as the following excerpt
from the opinion of justice Tuazon clearly shows: 'It is a widely accepted principle of international
law, which is made a part of the law of the land (Article II, Section 3 of the Constitution), that a
foreign state may not be brought to suit before the courts of another state or its own courts without
its consent.' Finally, there is Johnson v. Turner, an appeal by the defendant, then Commanding
General, Philippine Command (Air Force, with office at Clark Field) from a decision ordering the
return to plaintiff of the confiscated military payment certificates known as scrip money. In
reversing the lower court decision, this Tribunal, through Justice Montemayor, relied on Syquia v.
Almeda Lopez, explaining why it could not be sustained.
It bears stressing at this point that the above observations do not confer on the United States of
America a blanket immunity for all acts done by it or its agents in the Philippines. Neither may the
other petitioners claim that they are also insulated from suit in this country merely because they
have acted as agents of the United States in the discharge of their official functions.
There is no question that the United States of America, like any other state, will be deemed to have
impliedly waived its non-suability if it has entered into a contract in its proprietary or private
capacity. It is only when the contract involves its sovereign or governmental capacity that no such
waiver may be implied. This was our ruling in United States of America v. Ruiz, 22 where the
transaction in question dealt with the improvement of the wharves in the naval installation at
Subic Bay. As this was a clearly governmental function, we held that the contract did not operate
to divest the United States of its sovereign immunity from suit. In the words of Justice Vicente
Abad Santos:

The traditional rule of immunity exempts a State from being sued in the courts of another State
without its consent or waiver. This rule is a necessary consequence of the principles of
independence and equality of States. However, the rules of International Law are not petrified;
they are constantly developing and evolving. And because the activities of states have multiplied,
it has been necessary to distinguish them between sovereign and governmental acts (jure
imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State
immunity now extends only to acts jure imperii The restrictive application of State immunity is
now the rule in the United States, the United kingdom and other states in Western Europe.
xxx xxx xxx
The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs.
Stated differently, a State may be said to have descended to the level of an individual and can thus
be deemed to have tacitly given its consent to be sued only when it enters into business contracts.
It does not apply where the contract relates to the exercise of its sovereign functions. In this case
the projects are an integral part of the naval base which is devoted to the defense of both the
United States and the Philippines, indisputably a function of the government of the highest order;
they are not utilized for nor dedicated to commercial or business purposes.
The other petitioners in the cases before us all aver they have acted in the discharge of their
official functions as officers or agents of the United States. However, this is a matter of evidence.
The charges against them may not be summarily dismissed on their mere assertion that their acts
are imputable to the United States of America, which has not given its consent to be sued. In fact,
the defendants are sought to be held answerable for personal torts in which the United States itself
is not involved. If found liable, they and they alone must satisfy the judgment.
In Festejo v. Fernando, 23 a bureau director, acting without any authority whatsoever, appropriated
private land and converted it into public irrigation ditches. Sued for the value of the lots invalidly
taken by him, he moved to dismiss the complaint on the ground that the suit was in effect against
the Philippine government, which had not given its consent to be sued. This Court sustained the
denial of the motion and held that the doctrine of state immunity was not applicable. The director
was being sued in his private capacity for a personal tort.
With these considerations in mind, we now proceed to resolve the cases at hand.
III
It is clear from a study of the records of G.R. No. 80018 that the individually-named petitioners
therein were acting in the exercise of their official functions when they conducted the buy-bust
operation against the complainant and thereafter testified against him at his trial. The said
petitioners were in fact connected with the Air Force Office of Special Investigators and were
charged precisely with the function of preventing the distribution, possession and use of prohibited
drugs and prosecuting those guilty of such acts. It cannot for a moment be imagined that they were

acting in their private or unofficial capacity when they apprehended and later testified against the
complainant. It follows that for discharging their duties as agents of the United States, they cannot
be directly impleaded for acts imputable to their principal, which has not given its consent to be
sued. As we observed in Sanders v. Veridiano: 24
Given the official character of the above-described letters, we have to conclude that the petitioners
were, legally speaking, being sued as officers of the United States government. As they have acted
on behalf of that government, and within the scope of their authority, it is that government, and not
the petitioners personally, that is responsible for their acts.
The private respondent invokes Article 2180 of the Civil Code which holds the government liable
if it acts through a special agent. The argument, it would seem, is premised on the ground that
since the officers are designated "special agents," the United States government should be liable
for their torts.
There seems to be a failure to distinguish between suability and liability and a misconception that
the two terms are synonymous. Suability depends on the consent of the state to be sued, liability
on the applicable law and the established facts. The circumstance that a state is suable does not
necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first
consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be
sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance
to prove, if it can, that the defendant is liable.
The said article establishes a rule of liability, not suability. The government may be held liable
under this rule only if it first allows itself to be sued through any of the accepted forms of consent.
Moreover, the agent performing his regular functions is not a special agent even if he is so
denominated, as in the case at bar. No less important, the said provision appears to regulate only
the relations of the local state with its inhabitants and, hence, applies only to the Philippine
government and not to foreign governments impleaded in our courts.
We reject the conclusion of the trial court that the answer filed by the special counsel of the Office
of the Sheriff Judge Advocate of Clark Air Base was a submission by the United States
government to its jurisdiction. As we noted in Republic v. Purisima, 25 express waiver of
immunity cannot be made by a mere counsel of the government but must be effected through a
duly-enacted statute. Neither does such answer come under the implied forms of consent as earlier
discussed.
But even as we are certain that the individual petitioners in G.R. No. 80018 were acting in the
discharge of their official functions, we hesitate to make the same conclusion in G.R. No. 80258.
The contradictory factual allegations in this case deserve in our view a closer study of what
actually happened to the plaintiffs. The record is too meager to indicate if the defendants were
really discharging their official duties or had actually exceeded their authority when the incident in
question occurred. Lacking this information, this Court cannot directly decide this case. The

needed inquiry must first be made by the lower court so it may assess and resolve the conflicting
claims of the parties on the basis of the evidence that has yet to be presented at the trial. Only after
it shall have determined in what capacity the petitioners were acting at the time of the incident in
question will this Court determine, if still necessary, if the doctrine of state immunity is applicable.
In G.R. No. 79470, private respondent Genove was employed as a cook in the Main Club located
at the U.S. Air Force Recreation Center, also known as the Open Mess Complex, at John Hay Air
Station. As manager of this complex, petitioner Lamachia is responsible for eleven diversified
activities generating an annual income of $2 million. Under his executive management are three
service restaurants, a cafeteria, a bakery, a Class VI store, a coffee and pantry shop, a main cashier
cage, an administrative office, and a decentralized warehouse which maintains a stock level of
$200,000.00 per month in resale items. He supervises 167 employees, one of whom was Genove,
with whom the United States government has concluded a collective bargaining agreement.
From these circumstances, the Court can assume that the restaurant services offered at the John
Hay Air Station partake of the nature of a business enterprise undertaken by the United States
government in its proprietary capacity. Such services are not extended to the American servicemen
for free as a perquisite of membership in the Armed Forces of the United States. Neither does it
appear that they are exclusively offered to these servicemen; on the contrary, it is well known that
they are available to the general public as well, including the tourists in Baguio City, many of
whom make it a point to visit John Hay for this reason. All persons availing themselves of this
facility pay for the privilege like all other customers as in ordinary restaurants. Although the prices
are concededly reasonable and relatively low, such services are undoubtedly operated for profit, as
a commercial and not a governmental activity.
The consequence of this finding is that the petitioners cannot invoke the doctrine of state
immunity to justify the dismissal of the damage suit against them by Genove. Such defense will
not prosper even if it be established that they were acting as agents of the United States when they
investigated and later dismissed Genove. For that matter, not even the United States government
itself can claim such immunity. The reason is that by entering into the employment contract with
Genove in the discharge of its proprietary functions, it impliedly divested itself of its sovereign
immunity from suit.
But these considerations notwithstanding, we hold that the complaint against the petitioners in the
court below must still be dismissed. While suable, the petitioners are nevertheless not liable. It is
obvious that the claim for damages cannot be allowed on the strength of the evidence before us,
which we have carefully examined.
The dismissal of the private respondent was decided upon only after a thorough investigation
where it was established beyond doubt that he had polluted the soup stock with urine. The
investigation, in fact, did not stop there. Despite the definitive finding of Genove's guilt, the case
was still referred to the board of arbitrators provided for in the collective bargaining agreement.
This board unanimously affirmed the findings of the investigators and recommended Genove's
dismissal. There was nothing arbitrary about the proceedings. The petitioners acted quite properly

in terminating the private respondent's employment for his unbelievably nauseating act. It is
surprising that he should still have the temerity to file his complaint for damages after committing
his utterly disgusting offense.
Concerning G.R. No. 76607, we also find that the barbershops subject of the concessions granted
by the United States government are commercial enterprises operated by private person's. They
are not agencies of the United States Armed Forces nor are their facilities demandable as a matter
of right by the American servicemen. These establishments provide for the grooming needs of
their customers and offer not only the basic haircut and shave (as required in most military
organizations) but such other amenities as shampoo, massage, manicure and other similar
indulgences. And all for a fee. Interestingly, one of the concessionaires, private respondent
Valencia, was even sent abroad to improve his tonsorial business, presumably for the benefit of his
customers. No less significantly, if not more so, all the barbershop concessionaires are under the
terms of their contracts, required to remit to the United States government fixed commissions in
consideration of the exclusive concessions granted to them in their respective areas.
This being the case, the petitioners cannot plead any immunity from the complaint filed by the
private respondents in the court below. The contracts in question being decidedly commercial, the
conclusion reached in the United States of America v. Ruiz case cannot be applied here.
The Court would have directly resolved the claims against the defendants as we have done in G.R.
No. 79470, except for the paucity of the record in the case at hand. The evidence of the alleged
irregularity in the grant of the barbershop concessions is not before us. This means that, as in G.R.
No. 80258, the respondent court will have to receive that evidence first, so it can later determine
on the basis thereof if the plaintiffs are entitled to the relief they seek. Accordingly, this case must
also be remanded to the court below for further proceedings.
IV
There are a number of other cases now pending before us which also involve the question of the
immunity of the United States from the jurisdiction of the Philippines. This is cause for regret,
indeed, as they mar the traditional friendship between two countries long allied in the cause of
democracy. It is hoped that the so-called "irritants" in their relations will be resolved in a spirit of
mutual accommodation and respect, without the inconvenience and asperity of litigation and
always with justice to both parties.
WHEREFORE, after considering all the above premises, the Court hereby renders judgment as
follows:
1. In G.R. No. 76607, the petition is DISMISSED and the respondent judge is directed to
proceed with the hearing and decision of Civil Case No. 4772. The temporary restraining order
dated December 11, 1986, is LIFTED.
2.

In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829-R(298) is

DISMISSED.
3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C-87 is DISMISSED.
The temporary restraining order dated October 14, 1987, is made permanent.
4. In G.R. No. 80258, the petition is DISMISSED and the respondent court is directed to
proceed with the hearing and decision of Civil Case No. 4996. The temporary restraining order
dated October 27, 1987, is LIFTED.
All without any pronouncement as to costs.
SO ORDERED.
Veterans Manpower and Protective Services, Inc. v. CA
G.R. No. 91359, September 25, 1992
Grino-Aquino, J.
Facts:
The constitutionality of the following provisions of R.A. 5487(otherwise known as the
Private Security Agency Law), as amended, is questioned by VMPSI in its complaint:
SEC. 4. Who may Organize a Security or Watchman Agency. - Any Filipino citizen or a
corporation, partnership, or association, with a minimum capital of five thousand pesos, one
hundred per cent of which is owned and controlled by Filipino citizens may organize a security or
watchman agency: Provided, That no person shall organize or have aninterest in, more than one
such agency except those which are alreadyexisting at the promulgation of this Decree: x x x.
(As amended by P.D. Nos. 11 and 100.)
SEC. 17. Rules and Regulations by Chief, Philippine Constabulary. -The Chief of the Philippine
Constabulary, in consultation with thePhilippine Association of Detective and Protective Agency
Operators,Inc. and subject to the provision of existing laws, is hereby authorized to issue the rules
and regulations necessary to carry out the purpose of this Act.
VMPSI alleges that the above provisions of R.A. No. 5487 violate the provisions of the 1987
Constitution against monopolies, unfair competition and combinations in restraint of trade, and
tend to favor and institutionalize the Philippine Association of Detective and Protective Agency
Operators, Inc. (PADPAO) which is monopolistic because it has an interest in more than one
security agency.
Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph (g) of the
Modifying Regulations on the Issuance of License to Operate and Private Security Licenses and
Specifying Regulations for the Operation of PADPAO issued by then PC Chief Lt. Gen. Fidel V.
Ramos, through Col. Sabas V. Edades, requiring that all private security agencies/company

security forces must register as members of any PADPAO Chapter organized within the Region
where their main offices are located.... As such membership requirement in PADPAO is
compulsory in nature, it allegedly violates legal and constitutional provisions against monopolies,
unfair competition and combinations in restraint of trade.
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 security service
per day at P2,255.00 within Metro Manila and P2,215.00 outside of Metro Manila.
On June 29, 1987, Odin Security Agency (Odin) filed a complaint with PADPAO accusing VMPSI
of cut-throat competition by undercutting its contract rate for security services rendered to the
Metropolitan Waterworks and Sewerage System (MWSS), charging said customer lower than the
standard minimum rates provided in the Memorandum of Agreement dated May 12, 1986.
PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO Committee on
Discipline recommended the expulsion of VMPSI from PADPAO and the cancellation of its
license to operate a security agency (Annex D, Petition).
The PC-SUSIA made similar findings and likewise recommended the cancellation of VMPSIs
license.
As a result, PADPAO refused to issue a clearance/certificate of membership to VMPSI when it
requested one.
VMPSI wrote the PC Chief on March 10, 1988, requesting him to set aside or disregard the
findings of PADPAO and consider VMPSIs application for renewal of its license, even without
a certificate of membership from PADPAO
Issue:
whether or not VMPSIs complaint against the PC Chief and PC-SUSIA is a suit
against the State without its consent
Held:
Yes. 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
instrumentalities of the national government exercising a primarily governmental function 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 without the
Governments consent, especially in this case because VMPSIs complaint 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, exemplary damages in the same amount, and
P200,000.00 as attorneys fees from said 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 that purpose.
While the doctrine of state immunity appears to prohibit only suits against the state without its
consent, it is also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment against such
officials will require the state itself to perform an affirmative act to satisfy the same, such as the
appropriation of the amount needed to pay the damages awarded against them, the suit must be
regarded as against the state itself although it has not been formally impleaded.
A public official may sometimes be held liable in his personal or private capacity if he acts in bad
faith, or beyond the scope of his authority or jurisdiction, 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, gross negligence, or bad faith, no recovery may be had against
them in their private capacities.
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.
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 sovereign functions.
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.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-23139

December 17, 1966

MOBIL PHILIPPINES EXPLORATION, INC., plaintiff-appellant,

vs.
CUSTOMS ARRASTRE SERVICE and BUREAU of CUSTOMS, defendants-appellees.
Alejandro Basin, Jr. and Associates for plaintiff-appellant.

Felipe T. Cuison for defendants-appellees.

BENGZON, J.P., J.:
Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville" sometime in
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 Customs
Arrastre Service, the unit of the Bureau of Customs then handling arrastre operations therein. The
Customs Arrastre Service later delivered to the broker of the consignee three cases only of the
shipment.
On April 4, 1964 Mobil Philippines Exploration, Inc., filed suit in the Court of First Instance of
Manila against the Customs Arrastre Service and the Bureau of Customs to recover the value of
the undelivered case in the amount of P18,493.37 plus other damages.
On April 20, 1964 the defendants filed a motion to dismiss the complaint on the ground that not
being persons under the law, defendants cannot be sued.
After plaintiff opposed the motion, the court, on April 25, 1964, dismissed the complaint on the
ground that neither the Customs Arrastre Service nor the Bureau of Customs is suable. Plaintiff
appealed to Us from the order of dismissal.
Raised, therefore, in this appeal is the purely legal question of the defendants' suability under the
facts stated.
Appellant contends that not all government entities are immune from suit; that defendant Bureau
of Customs as operator of the arrastre service at the Port of Manila, is discharging proprietary
functions and as such, can be sued by private individuals.
The Rules of Court, in Section 1, Rule 3, provide:
SECTION 1. Who may be parties.Only natural or juridical persons or entities authorized by
law may be parties in a civil action.
Accordingly, a defendant in a civil suit must be (1) a natural person; (2) a juridical person or (3) an
entity authorized by law to be sued. Neither the Bureau of Customs nor (a fortiori) its function
unit, the Customs Arrastre Service, is a person. They are merely parts of the 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 Service is a unit of the Bureau
of Custom, set up under Customs Administrative Order No. 8-62 of November 9, 1962 (Annex
"A" to Motion to Dismiss, pp. 13-15, Record an Appeal). It follows that the defendants herein
cannot he sued under the first two abovementioned categories of natural or juridical persons.
Nonetheless it is urged that by authorizing the Bureau of Customs to engage in arrastre 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 third category of "entities authorized by
law" to be sued. Stated differently, it is argued that while there is no law expressly authorizing the
Bureau of Customs to sue or be sued, still 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.
The statutory provision on arrastre service is found in Section 1213 of Republic Act 1937 (Tariff
and Customs Code, effective June 1, 1957), and it states:
SEC. 1213. Receiving, Handling, Custody and Delivery of Articles.The Bureau of Customs
shall have exclusive supervision and control over the receiving, handling, custody and delivery of
articles on the wharves and piers at all ports of 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 the receiving, handling, custody and delivery of articles, and the convenience and
comfort of passengers and the handling of baggage; as well as to acquire fire 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 bidding and subject to the approval of the department head, contract with any
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 government-owned equipment and facilities
used in such service.
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 the grant by
contract to any private party of the right to render said arrastre services 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 governmental functions for purposes of the prohibition
in Section 11, Republic Act 875 to the effect that "employees in the Government . . . shall not
strike," but "may belong to any 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 Government . . . .
Thus, the ruling therein was that the Court of Industrial Relations had jurisdiction over the 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 the lower court over the subject
matter of the case, aside from the fact that amendment may be made in the pleadings by the
inclusion as respondents of the public officers deemed responsible, for the unfair labor practice
acts charged by petitioning Unions".
Now, the fact that a non-corporate government entity performs a function proprietary in nature

does not necessarily result in its being suable. If said non-governmental function is undertaken as
an incident to its governmental function, there is no waiver thereby of the sovereign immunity
from suit extended to such government entity. This is the doctrine recognized in Bureau of
Printing, et al. vs. Bureau of Printing Employees Association, et al., 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 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, 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 authorized to undertake . . . ." (Sec. 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, not engaged in business or occupation for pecuniary profit.
xxx

xxx

xxx

. . . 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. 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 separate and distinct from those emoloyed in its general governmental functions.
xxx

xxx

xxx

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 situation here is not materially different. The Bureau of Customs, to repeat, is part of the
Department of Finance (Sec. 81, Rev. Adm. Code), with no personality of its own apart from that
of the national government. Its primary function is governmental, that of assessing and collecting
lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines
and penalties (Sec. 602, R.A. 1937). To this function, arrastre service is a necessary incident. For
practical reasons said revenues and customs duties can not be assessed and collected by simply
receiving the importer's or ship agent's 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 merchandise be hauled from the ship's side to a suitable place in the customs
premises to enable said customs officers to make it, that is, it requires arrastre operations.1

Clearly, therefore, although said arrastre function may be deemed proprietary, it is a necessary
incident of the primary and governmental function of the Bureau of Customs, so that engaging in
the same does not necessarily render said Bureau liable to suit. For otherwise, it could not perform
its governmental function without necessarily exposing itself to suit. Sovereign immunity, granted
as to the end, should not be denied as to the necessary means to that end.
And herein lies the distinction between the present case and that of National Airports Corporation
vs. Teodoro, 91 Phil. 203, on which appellant would rely. For there, the Civil Aeronautics
Administration was found have for its prime reason for existence not a governmental but a
proprietary function, so that to it the latter was not a mere incidental function:
Among the general powers of the Civil Aeronautics Administration are, under Section 3, to
execute contracts of any kind, to purchase property, and to grant concessions rights, and under
Section 4, to charge landing fees, royalties on sales to aircraft of aviation gasoline, accessories and
supplies, and rentals for the use of any property under its management.
These provisions confer upon the Civil Aeronautics Administration, in our opinion, the power to
sue and be sued. The power to sue and be sued is implied from the power to transact private
business. . . .
xxx

xxx

xxx

The Civil Aeronautics Administration comes under the category of a private 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 the promotion of travel and the convenience of the travelling public. . . .
Regardless of the merits of the claim against it, the State, for obvious reasons of public policy,
cannot be sued without its consent. Plaintiff should have filed its present claim to the General
Auditing Office, it being for money under the provisions of Commonwealth Act 327, which state
the conditions under which money claims against the Government may be filed.
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; Petty vs. TennesseeMissouri Bridge Com., 359 U.S. 275, 3 L. Ed. 804, 79 S. Ct. 785). From the provision authorizing
the Bureau of Customs to lease arrastre operations to private parties, We see no authority to sue
the said Bureau in the instances where it undertakes to conduct said operation itself. The Bureau of
Customs, acting as part of the machinery of the national government in the operation of the
arrastre service, pursuant to express legislative mandate and as a necessary incident of its prime
governmental function, is immune from suit, there being no statute to the contrary.
WHEREFORE, the order of dismissal appealed from is hereby affirmed, with costs against
appellant. So ordered.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Zaldivar and Sanchez, JJ., concur.
Makalintal, J., concurs in the result.
Castro, J., reserves his vote.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-15751

January 28, 1961

BUREAU OF PRINTING, SERAFIN SALVADOR and MARIANO LEDESMA, petitioners,

vs.
THE BUREAU OF PRINTING EMPLOYEES ASSOCIATION (NLU), PACIFICO
ADVINCULA, ROBERTO MENDOZA, PONCIANO ARGANDA and TEODULO TOLERAN,
respondents.
Office of the Solicitor General for petitioners.
Eulogio R. Lerum for respondents.
GUTIERREZ DAVID, J.:
This is a petition for certiorari and prohibition with preliminary injunction to annul Certain orders
of the respondent Court of Industrial Relations and to restrain it from further proceeding in the
action for unfair labor practice pending before it on the ground of lack of jurisdiction. Giving due
course to the petition, this Court ordered the issuance of the writ of preliminary injunction prayed
for without bond.
The action in question was upon complaint of the respondents Bureau of Printing Employees
Association (NLU) Pacifico Advincula, Roberto Mendoza, Ponciano Arganda and Teodulo
Toleran filed by an acting prosecutor of the Industrial Court against herein petitioner Bureau of
Printing, Serafin Salvador, the Acting Secretary of the Department of General Services, and
Mariano Ledesma the Director of the Bureau of Printing. The complaint alleged that Serafin
Salvador and Mariano Ledesma have been engaging in unfair labor practices by interfering with,
or coercing the employees of the Bureau of Printing particularly the members of the complaining
association petition, in the exercise of their right to self-organization an discriminating in regard to
hire and tenure of their employment in order to discourage them from pursuing the union
activities.

Answering the complaint, the petitioners Bureau of Printing, Serafin Salvador and Mariano
Ledesma denied the charges of unfair labor practices attributed to the and, by way of affirmative
defenses, alleged, among other things, that respondents Pacifico Advincula, Roberto Mendoza
Ponciano Arganda and Teodulo Toleran were suspended pending result of an administrative
investigation against them for breach of Civil Service rules and 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 gain but is an agency of the Republic
performing government functions. For relief, they prayed that the case be dismissed for lack of
jurisdiction. Thereafter, before the case could be heard, petitioners filed an "Omnibus Motion"
asking for a preliminary hearing on the question of jurisdiction raised by them in their answer and
for suspension of the trial of the case on the merits pending the determination of such
jurisdictional question. The motion was granted, but after hearing, the trial judge of the Industrial
Court in an order dated January 27, 1959 sustained the jurisdiction of the court on the theory that
the functions of the Bureau of Printing are "exclusively proprietary in nature," and, consequently,
denied the prayer for dismissal. Reconsideration of this order having been also denied by the court
in banc, the petitioners brought the case to this Court through the present petition for certiorari and
prohibition.
We find the petition to be meritorious.
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 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, 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 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, not engaged in business or occupation for pecuniary profit.
It is true, as stated in the order complained of, that the Bureau of Printing receives outside 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 "exclusively proprietary in
nature." Overtime work in the Bureau of Printing is done only when the interest of the service so
requires (sec. 566, Rev. Adm. Code). As a matter of administrative policy, the overtime
compensation may be paid, but such payment is discretionary with the head of the Bureau
depending upon its current appropriations, so 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 requirements of Government work will permit" (sec. 1654, Rev. Adm.
Code), and "upon terms fixed by the Director of Printing, with the approval of the Department
Head" (sec. 1655, id.). As shown by the uncontradicted evidence of the petitioners, most of these
works consist of orders for greeting cards during Christmas from government officials, and for

printing of checks of private banking institutions. On those greeting cards, the Government seal,
of which only the Bureau of Printing is authorized to use, is embossed, and on the bank cheeks,
only the Bureau of Printing can print the reproduction of the official documentary stamps
appearing thereon. The volume of private jobs done, in comparison with government jobs, is only
one-half of 1 per cent, and in computing the 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 printing jobs, it cannot be pretended that it is thereby an industrial
or business concern. 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 separate and distinct from those
employed in its general governmental functions.
From what has been stated, it is obvious that the Court of Industrial Relations did not acquire
jurisdiction over the respondent Bureau of Printing, and is thus devoid of any authority to take
cognizance of the case. This Court has already held in a long line of decisions that the Industrial
Court has no jurisdiction to hear and determine the complaint for unfair labor practice filed against
institutions or corporations not organized for profit and, consequently, not an industrial or business
organization. This is so because the Industrial Peace Act was intended to apply only to industrial
employment, and to govern the relations between employers engaged in industry and occupations
for purposes of 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.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-55273-83

December 19, 1981

GAUDENCIO RAYO, BIENVINIDO PASCUAL, TOMAS MANUEL, MARIANO CRUZ,

PEDRO BARTOLOME, BERNARDINO CRUZ JOSE PALAD , LUCIO FAJARDO,
FRANCISCO RAYOS, ANGEL TORRES, NORBERTO TORRES, RODELIO JOAQUIN,
PEDRO AQUINO, APOLINARIO BARTOLOME, MAMERTO BERNARDO, CIRIACO
CASTILLO, GREGORIO CRUZ, SIMEON ESTRELLA, EPIFANIO MARCELO,
HERMOGENES SAN PEDRO, JUAN SANTOS, ELIZABETH ABAN, MARCELINA
BERNABE, BUENAVENTURA CRUZ, ANTONIO MENESES, ROMAN SAN PEDRO, LOPEZ
ESPINOSA, GODOFREDO PUNZAL, JULIANA GARCIA, LEBERATO SARMIENTO,
INOCENCIO DE LEON, CARLOS CORREA, REYNALDO CASIMIRO, ANTONIO GENER,
GAUDENCIO CASTILLO, MATIAS PEREZ, CRISPINIANO TORRES, CRESENCIO CRUZ,
PROTACIO BERNABE, MARIANO ANDRES, CRISOSTOMO CRUZ, MARCOS
EUSTAQUIO, PABLO LEGASPI, VICENTE PASCUAL, ALEJANDRA SISON, EUFRACIO
TORRES, ROGELIO BARTOLOME, RODOLFO BERNARDO, APOLONIO CASTILLO,
MARCELINO DALMACIO, EUTIQUIO LEGASPI, LORENZO LUCIANO and GREGORIO
PALAD, petitioners,
vs.
COURT OF FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA, and NATIONAL
POWER CORPORATION, respondents.

ABAD SANTOS, J.:

The relevant antecedents of this case are narrated in the petition and have not been controverted,
namely:
3. At about midnight on October 26, 1978, during the height of that infamous typhoon
"KADING" the respondent corporation, acting through its plant superintendent, Benjamin Chavez,
opened or caused to be opened simultaneously all the three floodgates of the Angat Dam. And as a
direct and immediate result of the sudden, precipitate and simultaneous opening of said floodgates
several towns in Bulacan were inundated. Hardest-hit was Norzagaray. About a hundred of its
residents died or were reported to have died and properties worth million of pesos destroyed or
washed away. This flood was unprecedented in Norzagaray.

4. Petitioners, who were among the many unfortunate victims of that man-caused flood, filed
with the respondent Court eleven complaints for damages against the respondent corporation and
the plant superintendent of Angat Dam, Benjamin Chavez, docketed as Civil Cases Nos. SM-950
951, 953, 958, 959, 964, 965, 966, 981, 982 and 983. These complaints though separately filed
have a common/similar cause of action. ...
5. Respondent corporation filed separate answers to each of these eleven complaints. Apart
from traversing the material averments in the complaints and setting forth counterclaims for
damages respondent corporation invoked in each answer a special and affirmative defense that "in
the operation of the Angat Dam," it is "performing a purely governmental function", hence it "can
not be sued without the express consent of the State." ...
6. On motion of the respondent corporation a preliminary hearing was held on its affirmative
defense as though a motion to dismiss were filed. Petitioners opposed the prayer for dismissal and
contended that respondent corporation is performing not governmental but merely proprietary
functions and that under its own organic act, Section 3 (d) of Republic Act No. 6395, it can sue
and be sued in any court. ...
7. On July 29, 1980 petitioners received a copy of the questioned order of the respondent Court
dated December 21, 1979 dismissing all their complaints as against the respondent corporation
thereby leaving the superintendent of the Angat Dam, Benjamin Chavez, as the sole partydefendant. ...
8. On August 7, 1980 petitioners filed with the respondent Court a motion for reconsideration of
the questioned order of dismissal. ...
9. The respondent Court denied petitioners' motion for reconsideration in its order dated
October 3, 1980. ... Hence, the present petition for review on certiorari under Republic Act No.
5440. (Rollo, pp. 3-6.)
The Order of dismissal dated December 12, 1979, reads as follows:
Under consideration is a motion to dismiss embodied as a special affirmative defense in the
answer filed by defendant NPC on the grounds that said defendant performs a purely
governmental function in the operation of the Angat Dam and cannot therefore be sued for
damages in the instant cases in connection therewith.
Plaintiffs' opposition to said motion to discuss, relying on Sec. 3 (d) of Republic Act 6396 which
imposes on the NPC the power and liability to sue and be sued in any court, is not tenable since
the same refer to such matters only as are within the scope of the other corporate powers of said
defendant and not matters of tort as in the instant cases. It being an agency performing a purely
governmental function in the operation of the Angat Dam, said defendant was not given any right
to commit wrongs upon individuals. To sue said defendant for tort may require the express consent

of the State.
WHEREFORE, the cases against defendant NPC are hereby dismissed. (Rollo, p. 60.)
The Order dated October 3, 1980, denying the motion for reconsideration filed by the plaintiffs is
pro forma; the motion was simply denied for lack of merit. (Rollo, p. 74.)
The petition to review the two orders of the public respondent was filed on October 16, 1980, and
on October 27, 1980, We required the respondents to comment. It was only on April 13, 1981,
after a number of extensions, that the Solicitor General filed the required comment. (Rollo, pp.
107-114.)
On May 27, 1980, We required the parties to file simultaneous memoranda within twenty (20)
days from notice. (Rollo, p. 115.) Petitioners filed their memorandum on July 22, 1981. (Rollo, pp.
118-125.) The Solicitor General filed a number of motions for extension of time to file his
memorandum. We granted the seventh extension with a warning that there would be no further
extension. Despite the warning the Solicitor General moved for an eighth extension which We
denied on November 9, 1981. A motion for a ninth extension was similarly denied on November
18, 1981. The decision in this case is therefore, without the memorandum of the Solicitor General.
The parties are agreed that the Order dated December 21, 1979, raises the following issues:
1. Whether respondent National Power Corporation performs a governmental function with
respect to the management and operation of the Angat Dam; and
2. Whether the power of respondent National Power Corporation to sue and be sued under its
organic charter includes the power to be sued for tort.
The petition is highly impressed with merit.
It is not necessary to write an extended dissertation on whether or not the NPC performs a
governmental function with respect to the management and operation of the Angat Dam. It is
sufficient to say that the government has organized a private corporation, put money in it and has
allowed it to sue and be sued in any court under its charter. (R.A. No. 6395, Sec. 3 (d).) As a
government owned and controlled corporation, it has a 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

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-33112 June 15, 1978
PHILIPPINE NATIONAL BANK, petitioner,
vs.
HON. JUDGE JAVIER PABALAN, Judge of the Court of First Instance, Branch III, La Union,
AGOO TOBACCO PLANTERS ASSOCIATION, INC., PHILIPPINE VIRGINIA TOBACCO
ADMINISTRATION, and PANFILO P. JIMENEZ, Deputy Sheriff, La Union, respondents.
Conrado E. Medina, Edgardo M. Magtalas & Walfrido Climaco for petitioner.
Felimon A. Aspirin fit respondent Agoo 'Tobacco Planters Association, Inc.
Virgilio C. Abejo for respondent Phil. Virginia Tobacco Administration.

FERNANDO, Acting C.J.:

The reliance of petitioner Philippine National Bank in this certiorari and prohibition proceeding
against respondent Judge Javier Pabalan who issued a writ of execution, 1 followed thereafter by a
notice of garnishment of the funds of respondent Philippine Virginia Tobacco Administration, 2
deposited with it, is on the fundamental constitutional law doctrine of non-suability of a state, it
being alleged that such funds are public in character. This is not the first time petitioner raised that
issue. It did so before in Philippine National Bank v. Court of industrial Relations, 3 decided only
last January. It did not meet with success, this Court ruling in accordance with the two previous
cases of National Shipyard and Steel Corporation 4 and Manila Hotel Employees Association v.
Manila Hotel Company, 5 that funds of public corporations which can sue and be sued were not
exempt from garnishment. As respondent Philippine Virginia Tobacco Administration is likewise a
public corporation possessed of the same attributes, 6 a similar outcome is indicated. This petition
must be dismissed.
It is undisputed that the judgment against respondent Philippine Virginia Tobacco Administration
had reached the stage of finality. A writ of execution was, therefore, in order. It was accordingly
issued on December 17, 1970. 7 There was a notice of garnishment for the full amount mentioned
in such writ of execution in the sum of P12,724,66. 8 In view of the objection, however, by

petitioner Philippine National Bank on the above ground, coupled with an inquiry as to whether or
not respondent Philippine Virginia Tobacco Administration had funds deposited with petitioner's
La Union branch, it was not until January 25, 1971 that the order sought to be set aside in this
certiorari proceeding was issued by respondent Judge. 9 Its dispositive portion reads as follows:
Conformably with the foregoing, it is now ordered, in accordance with law, that sufficient funds of
the Philippine Virginia Tobacco Administration now deposited with the Philippine National Bank,
La Union Branch, shall be garnished and delivered to the plaintiff immediately to satisfy the Writ
of Execution for one-half of the amount awarded in the decision of November 16, 1970." 10
Hence this certiorari and prohibition proceeding.
As noted at the outset, petitioner Philippine National Bank would invoke the doctrine of nonsuability. It is to be admitted that under the present Constitution, what was formerly implicit as a
fundamental doctrine in constitutional law has been set forth in express terms: "The State may not
be sued without its consent." 11 If the funds appertained to one of the regular departments or
offices in the government, then, certainly, such a provision would be a bar to garnishment. Such is
not the case here. Garnishment would lie. Only last January, as noted in the opening paragraph of
this decision, this Court, in a case brought by the same petitioner precisely invoking such a
doctrine, left no doubt that the funds of public corporations could properly be made the object of a
notice of garnishment. Accordingly, this petition must fail.
1. The alleged grave abuse of discretion, the basis of this certiorari proceeding, was sought to be
justified on the failure of respondent Judge to set aside the notice of garnishment of funds
belonging to respondent Philippine Virginia Tobacco Administration. This excerpt from the
aforecited decision of Philippine National Bank v. Court of Industrial Relations makes manifest
why such an argument is far from persuasive. "The premise that the funds could be spoken as
public character may be accepted in the sense that the People Homesite and Housing Corporation
was a government-owned entity. It does not follow though that they were exempt. from
garnishment. National Shipyard and Steel Corporation v. Court of Industrial Relations is squarely
in point. As was explicitly stated in the opinion of the then Justice, later Chief Justice,
Concepcion: "The allegation to the effect that the funds of the NASSCO are public funds of the
government, and that, as such, the same may not be garnished, attached or levied upon, is
untenable for, as a government owned and controlled corporation, the NASSCO has a personality
of its own. distinct and separate from that of the Government. It has pursuant to Section 2 of
Executive Order No. 356, dated October 23, 1950 ... , pursuant to which The NASSCO has been
established all the powers of a corporation under the Corporation Law ... ." Accordingly, it may
be sue and be sued and may be subjected to court processes just like any other corporation
(Section 13, Act No. 1459, as amended.)" ... To repeat, the ruling was the appropriate remedy for
the prevailing party which could proceed against the funds of a corporate entity even if owned or
controlled by the government." 12
2. The National Shipyard and Steel Corporation decision was not the first of its kind. The ruling
therein could be inferred from the judgment announced in Manila Hotel Employees Association v.
Manila Hotel Company, decided as far back as 1941. 13 In the language of its ponente Justice
Ozaeta "On the other hand, it is well-settled that when the government enters into commercial

business, it abandons its sovereign capacity and is to be treated like any other corporation. (Bank
of the United States v. Planters' Bank, 9 Wheat. 904, 6 L.ed. 244). By engaging in a particular
business thru the instrumentality of a corporation, the government divests itself pro hac vice of its
sovereign character, so as to render the corporation subject to the rules of law governing private
corporations." 14 It is worth mentioning that Justice Ozaeta could find support for such a
pronouncement from the leading American Supreme Court case of united States v. Planters' Bank,
15 with the opinion coming from the illustrious Chief Justice Marshall. It was handed down more
than one hundred fifty years ago, 1824 to be exact. It is apparent, therefore, that petitioner Bank
could it legally set forth as a bar or impediment to a notice of garnishment the doctrine of nonsuability.
WHEREFORE, this petition for certiorari and prohibition is dismissed. No costs.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 104269

November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.
Roy Lago Salcedo for private respondents.

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

The Department of Agriculture (herein petitioner) and Sultan Security Agency entered into a
contract 3 on 01 April 1989 for security services to be provided by the latter to the said
governmental entity. Save for the increase in the monthly rate of the guards, the same terms and
conditions were also made to apply to another contract, dated 01 May 1990, between the same
parties. Pursuant to their arrangements, guards were deployed by Sultan Agency in the various
premises of the petitioner.
On 13 September 1990, several guards of the Sultan Security Agency filed a complaint for
underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift
differential pay, holiday pay and overtime pay, as well as for damages, 4 before the Regional
Arbitration Branch X of Cagayan de Oro City, docketed as NLRC Case No. 10-09-00455-90 (or
10-10-00519-90, its original docket number), against the Department of Agriculture and Sultan
Security Agency.
The Executive Labor Arbiter rendered a decision on 31 May finding herein petitioner and jointly
and severally liable with Sultan Security Agency for the payment of money claims, aggregating
P266,483.91, of the complainant security guards. The petitioner and Sultan Security Agency did
not appeal the decision of the Labor Arbiter. Thus, the decision became final and executory.
On 18 July 1991, the Labor Arbiter issued a writ of execution. 5 commanding the City Sheriff to
enforce and execute the judgment against the property of the two respondents. Forthwith, or on 19
July 1991, the City Sheriff levied on execution the motor vehicles of the petitioner, i.e. one (1)
unit Toyota Hi-Ace, one (1) unit Toyota Mini Cruiser, and one (1) unit Toyota Crown. 6 These
units were put under the custody of Zacharias Roa, the property custodian of the petitioner,
pending their sale at public auction or the final settlement of the case, whichever would come first.
A petition for injunction, prohibition and mandamus, with prayer for preliminary writ of
injunction was filed by the petitioner with the National Labor Relations Commission (NLRC),
Cagayan de Oro, alleging, inter alia, that the writ issued was effected without the Labor Arbiter
having duly acquired jurisdiction over the petitioner, and that, therefore, the decision of the Labor
Arbiter was null and void and all actions pursuant thereto should be deemed equally invalid and of
no legal, effect. The petitioner also pointed out that the attachment or seizure of its property would
hamper and jeopardize petitioner's governmental functions to the prejudice of the public good.
On 27 November 1991, the NLRC promulgated its assailed resolution; viz:
WHEREFORE, premises considered, the following orders are issued:
1. The enforcement and execution of the judgments against petitioner in NLRC RABX Cases
Nos. 10-10-00455-90; 10-10-0481-90 and 10-10-00519-90 are temporarily suspended for a period
of two (2) months, more or less, but not extending beyond the last quarter of calendar year 1991 to
enable petitioner to source and raise funds to satisfy the judgment awards against it;
2.

Meantime, petitioner is ordered and directed to source for funds within the period above-

stated and to deposit the sums of money equivalent to the aggregate amount. it has been adjudged
to pay jointly and severally with respondent Sultan Security Agency with the Regional Arbitration
Branch X, Cagayan de Oro City within the same period for proper dispositions;
3. In order to ensure compliance with this order, petitioner is likewise directed to put up and
post sufficient surety and supersedeas bond equivalent to at least to fifty (50%) percent of the total
monetary award issued by a reputable bonding company duly accredited by the Supreme Court or
by the Regional Trial Court of Misamis Oriental to answer for the satisfaction of the money claims
in case of failure or default on the part of petitioner to satisfy the money claims;
4. The City Sheriff is ordered to immediately release the properties of petitioner levied on
execution within ten (10) days from notice of the posting of sufficient surety or supersedeas bond
as specified above. In the meanwhile, petitioner is assessed to pay the costs and/or expenses
incurred by the City Sheriff, if any, in connection with the execution of the judgments in the
above-stated cases upon presentation of the appropriate claims or vouchers and receipts by the city
Sheriff, subject to the conditions specified in the NLRC Sheriff, subject to the conditions specified
in the NLRC Manual of Instructions for Sheriffs;
5. The right of any of the judgment debtors to claim reimbursement against each other for any
payments made in connection with the satisfaction of the judgments herein is hereby recognized
pursuant to the ruling in the Eagle Security case, (supra). In case of dispute between the judgment
debtors, the Executive Labor Arbiter of the Branch of origin may upon proper petition by any of
the parties conduct arbitration proceedings for the purpose and thereby render his decision after
due notice and hearings;
7. Finally, the petition for injunction is Dismissed for lack of basis. The writ of preliminary
injunction previously issued is Lifted and Set Aside and in lieu thereof, a Temporary Stay of
Execution is issued for a period of two (2) months but not extending beyond the last quarter of
calendar year 1991, conditioned upon the posting of a surety or supersedeas bond by petitioner
within ten (10) days from notice pursuant to paragraph 3 of this disposition. The motion to admit
the complaint in intervention is Denied for lack of merit while the motion to dismiss the petition
filed by Duty Sheriff is Noted
SO ORDERED.
In this petition for certiorari, the petitioner charges the NLRC with grave abuse of discretion for
refusing to quash the writ of execution. The petitioner faults the NLRC for assuming jurisdiction
over a money claim against the Department, which, it claims, falls under the exclusive jurisdiction
of the Commission on Audit. More importantly, the petitioner asserts, the NLRC has disregarded
the cardinal rule on the non-suability of the State.
The private respondents, on the other hand, argue that the petitioner has impliedly waived its
immunity from suit by concluding a service contract with Sultan Security Agency.

The basic postulate enshrined in the constitution that "(t)he State may not be sued without its
consent," 7 reflects nothing less than a recognition of the sovereign character of the State and an
express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. 8
It is based on the very essence of sovereignty. As has been aptly observed, by Justice Holmes, a
sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the
logical and practical ground that there can be no legal right as against the authority that makes the
law on which the right depends. 9 True, the doctrine, not too infrequently, is derisively called "the
royal prerogative of dishonesty" because it grants the state the prerogative to defeat any legitimate
claim against it by simply invoking its non-suability. 10 We have had occasion, to explain in its
defense, however, that a continued adherence to the doctrine of non-suability cannot be deplored,
for the loss of governmental efficiency and the obstacle to the performance of its multifarious
functions would be far greater in severity than the inconvenience that may be caused private
parties, if such fundamental principle is to be abandoned and the availability of judicial remedy is
not to be accordingly restricted. 11
The rule, in any case, is not really absolute for it does not say that the state may not be sued under
any circumstances. On the contrary, as correctly phrased, the doctrine only conveys, "the state may
not be sued without its consent;" its clear import then is that the State may at times be sued. 12
The States' consent may be given expressly or impliedly. Express consent may be made through a
general law 13 or a special law. 14 In this jurisdiction, the general law waiving the immunity of
the state from suit is found in Act No. 3083, where the Philippine government "consents and
submits to be sued upon any money claims involving liability arising from contract, express or
implied, which could serve as a basis of civil action between private parties." 15 Implied consent,
on the other hand, is conceded when the State itself commences litigation, thus opening itself to a
counterclaim 16 or when it enters into a contract. 17 In this situation, the government is deemed to
have descended to the level of the other contracting party and to have divested itself of its
sovereign immunity. This rule, relied upon by the NLRC and the private respondents, is not,
however, without qualification. Not all contracts entered into by the government operate as a
waiver of its non-suability; distinction must still be made between one which is executed in the
exercise of its sovereign function and another which is done in its proprietary capacity. 18
In the Unites States of America vs. Ruiz, 19 where the questioned transaction dealt with
improvements on the wharves in the naval installation at Subic Bay, we held:
The traditional rule of immunity exempts a State from being sued in the courts of another State
without its consent or waiver. This rule is a necessary consequence of the principles of
independence and equality of States. However, the rules of International Law are not petrified;
they are constantly developing and evolving. And because the activities of states have multiplied,
it has been necessary to distinguish them between sovereign and governmental acts ( jure
imperii) and private, commercial and proprietary act ( jure gestionisis). The result is that State
immunity now extends only to acts jure imperii. The restrictive application of State immunity is
now the rule in the United States, the United Kingdom and other states in Western Europe.
xxx xxx xxx

The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs.
Stated differently, a state may be said to have descended to the level of an individual and can this
be deemed to have actually given its consent to be sued only when it enters into business
contracts. It does not apply where the contracts relates to the exercise of its sovereign functions. In
this case the projects are an integral part of the naval base which is devoted to the defense of both
the United States and the Philippines, indisputably a function of the government of the highest
order; they are not utilized for not dedicated to commercial or business purposes.
In the instant case, the Department of Agriculture has not pretended to have assumed a capacity
apart from its being a governmental entity when it entered into the questioned contract; nor that it
could have, in fact, performed any act proprietary in character.
But, be that as it may, the claims of private respondents, i.e. for underpayment of wages, holiday
pay, overtime pay and similar other items, arising from the Contract for Service, clearly constitute
money claims. Act No. 3083, aforecited, gives the consent of the State to be "sued upon any
moneyed claim involving liability arising from contract, express or implied, . . . Pursuant,
however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.")
No. 1145, the money claim first be brought to the Commission on Audit. Thus, in Carabao, Inc.,
vs. Agricultural Productivity Commission, 20 we ruled:
(C)laimants have to prosecute their money claims against the Government under Commonwealth
Act 327, stating that Act 3083 stands now merely as the general law waiving the State's immunity
from suit, subject to the general limitation expressed in Section 7 thereof that "no execution shall
issue upon any judgment rendered by any Court against the Government of the (Philippines), and
that the conditions provided in Commonwealth Act 327 for filing money claims against the
Government must be strictly observed."
We fail to see any substantial conflict or inconsistency between the provisions of C.A. No. 327
and the Labor Code with respect to money claims against the State. The Labor code, in relation to
Act No. 3083, provides the legal basis for the State liability but the prosecution, enforcement or
satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in
C.A. No. 327, as amended by P.D. 1445.
When the state gives its consent to be sued, it does thereby necessarily consent to unrestrained
execution against it. tersely put, when the State waives its immunity, all it does, in effect, is to give
the other party an opportunity to prove, if it can, that the State has a liability. 21 In Republic vs.
Villasor 22 this Court, in nullifying the issuance of an alias writ of execution directed against the
funds of the Armed Forces of the Philippines to satisfy a final and executory judgment, has
explained, thus
The universal rule that where the State gives its consent to be sued by private parties either by
general or special law, it may limit the claimant's action "only up to the completion of proceedings

anterior to the stage of execution" and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized under writs or execution or
garnishment to satisfy such judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the correspondent appropriation as required by
law. The functions and public services rendered by the State cannot be allowed to be paralyzed or
disrupted by the diversion of public funds from their legitimate and specific objects, as
appropriated by law. 23
WHEREFORE, the petition is GRANTED. The resolution, dated 27 November 1991, is hereby
REVERSED and SET ASIDE. The writ of execution directed against the property of the
Department of Agriculture is nullified, and the public respondents are hereby enjoined
permanently from doing, issuing and implementing any and all writs of execution issued pursuant
to the decision rendered by the Labor Arbiter against said petitioner.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

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

REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I,
THE PROVINCIAL SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE
SHERIFF OF THE CITY OF MANILA, THE CLERK OF COURT, Court of First Instance of
Cebu, P. J. KIENER CO., LTD., GAVINO UNCHUAN, AND INTERNATIONAL
CONSTRUCTION CORPORATION, respondents.
Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo for petitioner.
Andres T. Velarde and Marcelo B. Fernan for respondents.

FERNANDO, J.:
The Republic of the Philippines in this certiorari and prohibition proceeding challenges the

validity of an order issued by respondent Judge Guillermo P. Villasor, then of the Court of First
Instance of Cebu, Branch I, 1 declaring a decision final and executory and of an alias writ of
execution directed against the funds of the Armed Forces of the Philippines subsequently issued in
pursuance thereof, the alleged ground being excess of jurisdiction, or at the very least, grave abuse
of discretion. As thus simply and tersely put, with the facts being undisputed and the principle of
law that calls for application indisputable, the outcome is predictable. The Republic of the
Philippines is entitled to the writs prayed for. Respondent Judge ought not to have acted thus. The
order thus impugned and the alias writ of execution must be nullified.
In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set
forth thus: "7. On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in
favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction
Corporation, and against the petitioner herein, confirming the arbitration award in the amount of
P1,712,396.40, subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable
Guillermo P. Villasor, issued an Order declaring the aforestated decision of July 3, 1961 final and
executory, directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila to execute the
said decision. 9. Pursuant to the said Order dated June 24, 1969, the corresponding Alias Writ of
Execution [was issued] dated June 26, 1969, .... 10. On the strength of the afore-mentioned Alias
Writ of Execution dated June 26, 1969, the Provincial Sheriff of Rizal (respondent herein) served
notices of garnishment dated June 28, 1969 with several Banks, specially on the "monies due the
Armed Forces of the Philippines in the form of deposits sufficient to cover the amount mentioned
in the said Writ of Execution"; the Philippine Veterans Bank received the same notice of
garnishment on June 30, 1969 .... 11. The funds of the Armed Forces of the Philippines on deposit
with the Banks, particularly, with the Philippine Veterans Bank and the Philippine National Bank
[or] their branches are public funds duly appropriated and allocated for the payment of pensions of
retirees, pay and allowances of military and civilian personnel and for maintenance and operations
of the Armed Forces of the Philippines, as per Certification dated July 3, 1969 by the AFP
Controller,..." 2. The paragraph immediately succeeding in such petition then alleged: "12.
Respondent Judge, Honorable Guillermo P. Villasor, acted in excess of jurisdiction [or] with grave
abuse of discretion amounting to lack of jurisdiction in granting the issuance of an alias writ of
execution against the properties of the Armed Forces of the Philippines, hence, the Alias Writ of
Execution and notices of garnishment issued pursuant thereto are null and void." 3 In the answer
filed by respondents, through counsel Andres T. Velarde and Marcelo B. Fernan, the facts set forth
were admitted with the only qualification being that the total award was in the amount of
P2,372,331.40. 4
The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and
prohibition proceeding. What was done by respondent Judge is not in conformity with the dictates
of the Constitution. .
It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty
that the state as well as its government is immune from suit unless it gives its consent. It is readily
understandable why it must be so. In the classic formulation of Holmes: "A sovereign is exempt
from suit, not because of any formal conception or obsolete theory, but on the logical and practical

ground that there can be no legal right as against the authority that makes the law on which the
right depends." 5 Sociological jurisprudence supplies an answer not dissimilar. So it was indicated
in a recent decision, Providence Washington Insurance Co. v. Republic of the Philippines, 6 with
its affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for
as against the inconvenience that may be caused private parties, the loss of governmental
efficiency and the obstacle to the performance of its multifarious functions are far greater if such a
fundamental principle were abandoned and the availability of judicial remedy were not thus
restricted. With the well known propensity on the part of our people to go to court, at the least
provocation, the loss of time and energy required to defend against law suits, in the absence of
such a basic principle that constitutes such an effective obstacle, could very well be imagined." 7
This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised
charter. It is therein expressly provided: "The State may not be sued without its consent." 8 A
corollary, both dictated by logic and sound sense from a basic concept is that public funds cannot
be the object of a garnishment proceeding even if the consent to be sued had been previously
granted and the state liability adjudged. Thus in the recent case of Commissioner of Public
Highways v. San Diego, 9 such a well-settled doctrine was restated in the opinion of Justice
Teehankee: "The universal rule that where the State gives its consent to be sued by private parties
either by general or special law, it may limit claimant's action 'only up to the completion of
proceedings anterior to the stage of execution' and that the power of the Courts ends when the
judgment is rendered, since government funds and properties may not be seized under writs of
execution or garnishment to satisfy such judgments, is based on obvious considerations of public
policy. Disbursements of public funds must be covered by the corresponding appropriation as
required by law. The functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects,
as appropriated by law." 10 Such a principle applies even to an attempted garnishment of a salary
that had accrued in favor of an employee. Director of Commerce and Industry v. Concepcion, 11
speaks to that effect. Justice Malcolm as ponente left no doubt on that score. Thus: "A rule which
has never been seriously questioned, is that money in the hands of public officers, although it may
be due government employees, is not liable to the creditors of these employees in the process of
garnishment. One reason is, that the State, by virtue of its sovereignty, may not be sued in its own
courts except by express authorization by the Legislature, and to subject its officers to garnishment
would be to permit indirectly what is prohibited directly. Another reason is that moneys sought to
be garnished, as long as they remain in the hands of the disbursing officer of the Government,
belong to the latter, although the defendant in garnishment may be entitled to a specific portion
thereof. And still another reason which covers both of the foregoing is that every consideration of
public policy forbids it." 12
In the light of the above, it is made abundantly clear why the Republic of the Philippines could
rightfully allege a legitimate grievance.
WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside
both the order of June 24, 1969 declaring executory the decision of July 3, 1961 as well as the
alias writ of execution issued thereunder. The preliminary injunction issued by this Court on July

12, 1969 is hereby made permanent.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 101949

December 1, 1994

THE HOLY SEE, petitioner,

vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of
Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents.
Padilla Law Office for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set
aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court, Branch
61, Makati, Metro Manila in Civil Case No. 90-183.
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil
Case No. 90-183, while the Order dated September 19, 1991 denied the motion for reconsideration
of the June 20,1991 Order.
Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is
represented in the Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real
estate business.
This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot

5-A, Transfer Certificate of Title No. 390440) located in the Municipality of Paraaque, Metro
Manila and registered in the name of petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of Title
Nos. 271108 and 265388 respectively and registered in the name of the Philippine Realty
Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent
to the sellers. Later, Licup assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose
as to who of the parties has the responsibility of evicting and clearing the land of squatters.
Complicating the relations of the parties was the sale by petitioner of Lot 5-A to Tropicana
Properties and Development Corporation (Tropicana).
I
On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch
61, Makati, Metro Manila for annulment of the sale of the three parcels of land, and specific
performance and damages against petitioner, represented by the Papal Nuncio, and three other
defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil Case No.
90-183).
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the
PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square
meters; (2) the agreement to sell was made on the condition that earnest money of P100,000.00 be
paid by Licup to the sellers, and that the sellers clear the said lots of squatters who were then
occupying the same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in the same month,
Licup assigned his rights over the property to private respondent and informed the sellers of the
said assignment; (5) thereafter, private respondent demanded from Msgr. Cirilos that the sellers
fulfill their undertaking and clear the property of squatters; however, Msgr. Cirilos informed
private respondent of the squatters' refusal to vacate the lots, proposing instead either that private
respondent undertake the eviction or that the earnest money be returned to the latter; (6) private
respondent counterproposed that if it would undertake the eviction of the squatters, the purchase
price of the lots should be reduced from P1,240.00 to P1,150.00 per square meter; (7) Msgr.
Cirilos returned the earnest money of P100,000.00 and wrote private respondent giving it seven
days from receipt of the letter to pay the original purchase price in cash; (8) private respondent
sent the earnest money back to the sellers, but later discovered that on March 30, 1989, petitioner
and the PRC, without notice to private respondent, sold the lots to Tropicana, as evidenced by two
separate Deeds of Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers'
transfer certificate of title over the lots were cancelled, transferred and registered in the name of
Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it and thus enriched
itself at the expense of private respondent; (10) private respondent demanded the rescission of the
sale to Tropicana and the reconveyance of the lots, to no avail; and (11) private respondent is

willing and able to comply with the terms of the contract to sell and has actually made plans to
develop the lots into a townhouse project, but in view of the sellers' breach, it lost profits of not
less than P30,000.000.00.
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and
the PRC on the one hand, and Tropicana on the other; (2) the reconveyance of the lots in question;
(3) specific performance of the agreement to sell between it and the owners of the lots; and (4)
damages.
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint
petitioner for lack of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for
being an improper party. An opposition to the motion was filed by private respondent.
On June 20, 1991, the trial court issued an order denying, among others, petitioner's motion to
dismiss after finding that petitioner "shed off [its] sovereign immunity by entering into the
business contract in question" (Rollo, pp. 20-21).
On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991,
petitioner filed a "Motion for a Hearing for the Sole Purpose of Establishing Factual Allegation for
claim of Immunity as a Jurisdictional Defense." So as to facilitate the determination of its defense
of sovereign immunity, petitioner prayed that a hearing be conducted to allow it to establish
certain facts upon which the said defense is based. Private respondent opposed this motion as well
as the motion for reconsideration.
On October 1, 1991, the trial court issued an order deferring the resolution on the motion for
reconsideration until after trial on the merits and directing petitioner to file its answer (Rollo, p.
22).
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of
sovereign immunity only on its own behalf and on behalf of its official representative, the Papal
Nuncio.
On December 9, 1991, a Motion for Intervention was filed before us by the Department of Foreign
Affairs, claiming that it has a legal interest in the outcome of the case as regards the diplomatic
immunity of petitioner, and that it "adopts by reference, the allegations contained in the petition of
the Holy See insofar as they refer to arguments relative to its claim of sovereign immunity from
suit" (Rollo, p. 87).
Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance
with the resolution of this Court, both parties and the Department of Foreign Affairs submitted
their respective memoranda.
II

A preliminary matter to be threshed out is the procedural issue of whether the petition for
certiorari under Rule 65 of the Revised Rules of Court can be availed of to question the order
denying petitioner's motion to dismiss. The general rule is that an order denying a motion to
dismiss is not reviewable by the appellate courts, the remedy of the movant being to file his
answer and to proceed with the hearing before the trial court. But the general rule admits of
exceptions, and one of these is when it is very clear in the records that the trial court has no
alternative but to dismiss the complaint (Philippine National Bank v. Florendo, 206 SCRA 582
[1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]. In such a case, it would be a
sheer waste of time and energy to require the parties to undergo the rigors of a trial.
The other procedural question raised by private respondent is the personality or legal interest of
the Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp.
186-190).
In Public International Law, when a state or international agency wishes to plead sovereign or
diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued
to convey to the court that said defendant is entitled to immunity.
In the United States, the procedure followed is the process of "suggestion," where the foreign state
or the international organization sued in an American court requests the Secretary of State to make
a determination as to whether it is entitled to immunity. If the Secretary of State finds that the
defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a
"suggestion" that the defendant is entitled to immunity. In England, a similar procedure is
followed, only the Foreign Office issues a certification to that effect instead of submitting a
"suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign
Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).
In the Philippines, the practice is for the foreign government or the international organization to
first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how
the Philippine Foreign Office conveys its endorsement to the courts varies. In International
Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign
Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter
that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World
Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the
trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked
the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the
Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" to
respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and
Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved
with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said
Department to file its memorandum in support of petitioner's claim of sovereign immunity.

In some cases, the defense of sovereign immunity was submitted directly to the local courts by the
respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v.
Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182
SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign
Office, the courts can inquire into the facts and make their own determination as to the nature of
the acts and transactions involved.
III
The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a
foreign state enjoying sovereign immunity. On the other hand, private respondent insists that the
doctrine of non-suability is not anymore absolute and that petitioner has divested itself of such a
cloak when, of its own free will, it entered into a commercial transaction for the sale of a parcel of
land located in the Philippines.
A.

The Holy See

Before we determine the issue of petitioner's non-suability, a brief look into its status as a
sovereign state is in order.
Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as
the Holy See, was considered a subject of International Law. With the loss of the Papal States and
the limitation of the territory under the Holy See to an area of 108.7 acres, the position of the Holy
See in International Law became controversial (Salonga and Yap, Public International Law 36-37
[1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the
exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City. It also
recognized the right of the Holy See to receive foreign diplomats, to send its own diplomats to
foreign countries, and to enter into treaties according to International Law (Garcia, Questions and
Problems In International Law, Public and Private 81 [1948]).
The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to the
Holy See absolute and visible independence and of guaranteeing to it indisputable sovereignty
also in the field of international relations" (O'Connell, I International Law 311 [1965]).
In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood is
vested in the Holy See or in the Vatican City. Some writers even suggested that the treaty created
two international persons the Holy See and Vatican City (Salonga and Yap, supra, 37).
The Vatican City fits into none of the established categories of states, and the attribution to it of
"sovereignty" must be made in a sense different from that in which it is applied to other states
(Fenwick, International Law 124-125 [1948]; Cruz, International Law 37 [1991]). In a community
of national states, the Vatican City represents an entity organized not for political but for

ecclesiastical purposes and international objects. Despite its size and object, the Vatican City has
an independent government of its own, with the Pope, who is also head of the Roman Catholic
Church, as the Holy See or Head of State, in conformity with its traditions, and the demands of its
mission in the world. Indeed, the world-wide interests and activities of the Vatican City are such as
to make it in a sense an "international state" (Fenwick, supra., 125; Kelsen, Principles of
International Law 160 [1956]).
One authority wrote that the recognition of the Vatican City as a state has significant implication
that it is possible for any entity pursuing objects essentially different from those pursued by
states to be invested with international personality (Kunz, The Status of the Holy See in
International Law, 46 The American Journal of International Law 308 [1952]).
Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy
See and not in the name of the Vatican City, one can conclude that in the Pope's own view, it is the
Holy See that is the international person.
The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The
Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the
Philippine government since 1957 (Rollo, p. 87). This appears to be the universal practice in
international relations.
B.

Sovereign Immunity

As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally
accepted principles of International Law. Even without this affirmation, such principles of
International Law are deemed incorporated as part of the law of the land as a condition and
consequence of our admission in the society of nations (United States of America v. Guinto, 182
SCRA 644 [1990]).
There are two conflicting concepts of sovereign immunity, each widely held and firmly
established. According to the classical or absolute theory, a sovereign cannot, without its consent,
be made a respondent in the courts of another sovereign. According to the newer or restrictive
theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure
imperii of a state, but not with regard to private acts or acts jure gestionis
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public
International Law 194 [1984]).
Some states passed legislation to serve as guidelines for the executive or judicial determination
when an act may be considered as jure gestionis. The United States passed the Foreign Sovereign
Immunities Act of 1976, which defines a commercial activity as "either a regular course of
commercial conduct or a particular commercial transaction or act." Furthermore, the law declared
that the "commercial character of the activity shall be determined by reference to the nature of the
course of conduct or particular transaction or act, rather than by reference to its purpose." The
Canadian Parliament enacted in 1982 an Act to Provide For State Immunity in Canadian Courts.

The Act defines a "commercial activity" as any particular transaction, act or conduct or any
regular course of conduct that by reason of its nature, is of a "commercial character."
The restrictive theory, which is intended to be a solution to the host of problems involving the
issue of sovereign immunity, has created problems of its own. Legal treatises and the decisions in
countries which follow the restrictive theory have difficulty in characterizing whether a contract of
a sovereign state with a private party is an act jure gestionis or an act jure imperii.
The restrictive theory came about because of the entry of sovereign states into purely commercial
activities remotely connected with the discharge of governmental functions. This is particularly
true with respect to the Communist states which took control of nationalized business activities
and international trading.
This Court has considered the following transactions by a foreign state with private parties as acts
jure imperii: (1) the lease by a foreign government of apartment buildings for use of its military
officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of public bidding for the repair of a
wharf at a United States Naval Station (United States of America v. Ruiz, supra.); and (3) the
change of employment status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]).
On the other hand, this Court has considered the following transactions by a foreign state with
private parties as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting of
three restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay Air
Station in Baguio City, to cater to American servicemen and the general public (United States of
America v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops
in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]).
The operation of the restaurants and other facilities open to the general public is undoubtedly for
profit as a commercial and not a governmental activity. By entering into the employment contract
with the cook in the discharge of its proprietary function, the United States government impliedly
divested itself of its sovereign immunity from suit.
In the absence of legislation defining what activities and transactions shall be considered
"commercial" and as constituting acts jure gestionis, we have to come out with our own
guidelines, tentative they may be.
Certainly, the mere entering into a contract by a foreign state with a private party cannot be the
ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the
foreign state is engaged in the activity in the regular course of business. If the foreign state is not
engaged regularly in a business or trade, the particular act or transaction must then be tested by its
nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure
imperii, especially when it is not undertaken for gain or profit.
As held in United States of America v. Guinto, (supra):
There is no question that the United States of America, like any other state, will be deemed to have

impliedly waived its non-suability if it has entered into a contract in its proprietary or private
capacity. It is only when the contract involves its sovereign or governmental capacity that no such
waiver may be implied.
In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate
business, surely the said transaction can be categorized as an act jure gestionis. However,
petitioner has denied that the acquisition and subsequent disposal of Lot 5-A were made for profit
but claimed that it acquired said property for the site of its mission or the Apostolic Nunciature in
the Philippines. Private respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation
was made not for commercial purpose, but for the use of petitioner to construct thereon the official
place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or
personal, in a receiving state, necessary for the creation and maintenance of its diplomatic
mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This
treaty was concurred in by the Philippine Senate and entered into force in the Philippines on
November 15, 1965.
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and
administrative jurisdiction of the receiving state over any real action relating to private immovable
property situated in the territory of the receiving state which the envoy holds on behalf of the
sending state for the purposes of the mission. If this immunity is provided for a diplomatic envoy,
with all the more reason should immunity be recognized as regards the sovereign itself, which in
this case is the Holy See.
The decision to transfer the property and the subsequent disposal thereof are likewise clothed with
a governmental character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the squatters living
thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact
that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to
leave the premises, has been admitted by private respondent in its complaint (Rollo, pp. 26, 27).
The issue of petitioner's non-suability can be determined by the trial court without going to trial in
the light of the pleadings, particularly the admission of private respondent. Besides, the privilege
of sovereign immunity in this case was sufficiently established by the Memorandum and
Certification of the Department of Foreign Affairs. As the department tasked with the conduct of
the Philippines' foreign relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the
Department of Foreign Affairs has formally intervened in this case and officially certified that the
Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the
Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities
of a diplomatic mission or embassy in this country (Rollo, pp. 156-157). The determination of the
executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic
immunity is a political question that is conclusive upon the courts (International Catholic
Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is

recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so
as not to embarrass the executive arm of the government in conducting the country's foreign
relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International
Catholic Migration Commission and in World Health Organization, we abide by the certification
of the Department of Foreign Affairs.
Ordinarily, the procedure would be to remand the case and order the trial court to conduct a
hearing to establish the facts alleged by petitioner in its motion. In view of said certification, such
procedure would however be pointless and unduly circuitous (Ortigas & Co. Ltd. Partnership v.
Judge Tirso Velasco, G.R. No. 109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its grievances. Under
both Public International Law and Transnational Law, a person who feels aggrieved by the acts of
a foreign sovereign can ask his own government to espouse his cause through diplomatic
channels.
Private respondent can ask the Philippine government, through the Foreign Office, to espouse its
claims against the Holy See. Its first task is to persuade the Philippine government to take up with
the Holy See the validity of its claims. Of course, the Foreign Office shall first make a
determination of the impact of its espousal on the relations between the Philippine government
and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected
Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the
Philippine government decides to espouse the claim, the latter ceases to be a private cause.
According to the Permanent Court of International Justice, the forerunner of the International
Court of Justice:
By taking up the case of one of its subjects and by reporting to diplomatic action or international
judicial proceedings on his behalf, a State is in reality asserting its own rights its right to
ensure, in the person of its subjects, respect for the rules of international law (The Mavrommatis
Palestine Concessions, 1 Hudson, World Court Reports 293, 302 [1924]).
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90183 against petitioner is DISMISSED.
SO ORDERED.

Today is Friday, September 18, 2015

search
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-35645 May 22, 1985
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and
ROBERT GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO
DE GUZMAN & CO., INC., respondents.
Sycip, Salazar, Luna & Manalo & Feliciano Law for petitioners.
Albert, Vergara, Benares, Perias & Dominguez Law Office for respondents.

ABAD SANTOS, J.:

This is a petition to review, set aside certain orders and restrain the respondent judge from trying
Civil Case No. 779M of the defunct Court of First Instance of Rizal.
The factual background is as follows:
At times material to this case, the United States of America had a naval base in Subic, Zambales.
The base was one of those provided in the Military Bases Agreement between the Philippines and
the United States.
Sometime in May, 1972, the United States invited the submission of bids for the following
projects
1.

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

2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline
revetment, NAVBASE Subic; and repair to Leyte Wharf approach, NAVBASE Subic Bay,
Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent thereto,
the company received from the United States two telegrams requesting it to confirm its price

proposals and for the name of its bonding company. The company complied with the requests. [In
its complaint, the company alleges that the United States had accepted its bids because "A request
to confirm a price proposal confirms the acceptance of a bid pursuant to defendant United States'
bidding practices." (Rollo, p. 30.) The truth of this allegation has not been tested because the case
has not reached the trial stage.]
In June, 1972, the company received a letter which was signed by Wilham I. Collins, Director,
Contracts Division, Naval Facilities Engineering Command, Southwest Pacific, Department of the
Navy of the United States, who is one of the petitioners herein. The letter said that the company
did not qualify to receive an award for the projects because of its previous unsatisfactory
performance rating on a repair contract for the sea wall at the boat landings of the U.S. Naval
Station in Subic Bay. The letter further said that the projects had been awarded to third parties. In
the abovementioned Civil Case No. 779-M, the company sued the United States of America and
Messrs. James E. Galloway, William I. Collins and Robert Gohier all members of the Engineering
Command of the U.S. Navy. The complaint is to order the defendants to allow the plaintiff to
perform the work on the projects and, in the event that specific performance was no longer
possible, to order the defendants to pay damages. The company also asked for the issuance of a
writ of preliminary injunction to restrain the defendants from entering into contracts with third
parties for work on the projects.
The defendants entered their special appearance for the purpose only of questioning the
jurisdiction of this court over the subject matter of the complaint and the persons of defendants,
the subject matter of the complaint being acts and omissions of the individual defendants as agents
of defendant United States of America, a foreign sovereign which has not given her consent to this
suit or any other suit for the causes of action asserted in the complaint." (Rollo, p. 50.)
Subsequently the defendants filed a motion to dismiss the complaint which included an opposition
to the issuance of the writ of preliminary injunction. The company opposed the motion. The trial
court denied the motion and issued the writ. The defendants moved twice to reconsider but to no
avail. Hence the instant petition which seeks to restrain perpetually the proceedings in Civil Case
No. 779-M for lack of jurisdiction on the part of the trial court.
The petition is highly impressed with merit.
The traditional rule of State immunity exempts a State from being sued in the courts of another
State without its consent or waiver. This rule is a necessary consequence of the principles of
independence and equality of States. However, the rules of International Law are not petrified;
they are constantly developing and evolving. And because the activities of states have multiplied,
it has been necessary to distinguish them-between sovereign and governmental acts (jure imperii)
and private, commercial and proprietary acts (jure gestionis). The result is that State immunity
now extends only to acts jure imperil The restrictive application of State immunity is now the rule
in the United States, the United Kingdom and other states in western Europe. (See Coquia and
Defensor Santiago, Public International Law, pp. 207-209 [1984].)

The respondent judge recognized the restrictive doctrine of State immunity when he said in his
Order denying the defendants' (now petitioners) motion: " A distinction should be made between a
strictly governmental function of the sovereign state from its private, proprietary or nongovernmental acts (Rollo, p. 20.) However, the respondent judge also said: "It is the Court's
considered opinion that entering into a contract for the repair of wharves or shoreline is certainly
not a governmental function altho it may partake of a public nature or character. As aptly pointed
out by plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594
(1958)], and which this Court quotes with approval, viz.:
It is however contended that when a sovereign state enters into a contract with a private person,
the state can be sued upon the theory that it has descended to the level of an individual from which
it can be implied that it has given its consent to be sued under the contract. ...
xxx xxx xxx
We agree to the above contention, and considering that the United States government, through its
agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous
labor services within the Subic Bay Area, a U.S. Naval Reservation, it is evident that it can bring
an action before our courts for any contractual liability that that political entity may assume under
the contract. The trial court, therefore, has jurisdiction to entertain this case ... (Rollo, pp. 20-21.)
The reliance placed on Lyons by the respondent judge is misplaced for the following reasons:
In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court of
First Instance of Manila to collect several sums of money on account of a contract between
plaintiff and defendant. The defendant filed a motion to dismiss on the ground that the court had
no jurisdiction over defendant and over the subject matter of the action. The court granted the
motion on the grounds that: (a) it had no jurisdiction over the defendant who did not give its
consent to the suit; and (b) plaintiff failed to exhaust the administrative remedies provided in the
contract. The order of dismissal was elevated to this Court for review.
In sustaining the action of the lower court, this Court said:
It appearing in the complaint that appellant has not complied with the procedure laid down in
Article XXI of the contract regarding the prosecution of its claim against the United States
Government, or, stated differently, it has failed to first exhaust its administrative remedies against
said Government, the lower court acted properly in dismissing this case.(At p. 598.)
It can thus be seen that the statement in respect of the waiver of State immunity from suit was
purely gratuitous and, therefore, obiter so that it has no value as an imperative authority.
The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs.
Stated differently, a State may be said to have descended to the level of an individual and can thus

be deemed to have tacitly given its consent to be sued only when it enters into business contracts.
It does not apply where the contract relates to the exercise of its sovereign functions. In this case
the projects are an integral part of the naval base which is devoted to the defense of both the
United States and the Philippines, indisputably a function of the government of the highest order;
they are not utilized for nor dedicated to commercial or business purposes.
That the correct test for the application of State immunity is not the conclusion of a contract by a
State but the legal nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case
the plaintiffs leased three apartment buildings to the United States of America for the use of its
military officials. The plaintiffs sued to recover possession of the premises on the ground that the
term of the leases had expired. They also asked for increased rentals until the apartments shall
have been vacated.
The defendants who were armed forces officers of the United States moved to dismiss the suit for
lack of jurisdiction in the part of the court. The Municipal Court of Manila granted the motion to
dismiss; sustained by the Court of First Instance, the plaintiffs went to this Court for review on
certiorari. In denying the petition, this Court said:
On the basis of the foregoing considerations we are of the belief and we hold that the real party
defendant in interest is the Government of the United States of America; that any judgment for
back or Increased rentals or damages will have to be paid not by defendants Moore and Tillman
and their 64 co-defendants but by the said U.S. Government. On the basis of the ruling in the case
of Land vs. Dollar already cited, and on what we have already stated, the present action must be
considered as one against the U.S. Government. It is clear hat the courts of the Philippines
including the Municipal Court of Manila have no jurisdiction over the present case for unlawful
detainer. The question of lack of jurisdiction was raised and interposed at the very beginning of the
action. The U.S. Government has not , given its consent to the filing of this suit which is
essentially against her, though not in name. Moreover, this is not only a case of a citizen filing a
suit against his own Government without the latter's consent but it is of a citizen filing an action
against a foreign government without said government's consent, which renders more obvious the
lack of jurisdiction of the courts of his country. The principles of law behind this rule are so
elementary and of such general acceptance that we deem it unnecessary to cite authorities in
support thereof. (At p. 323.)
In Syquia,the United States concluded contracts with private individuals but the contracts
notwithstanding the States was not deemed to have given or waived its consent to be sued for the
reason that the contracts were for jure imperii and not for jure gestionis.
WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside
and Civil Case No. is dismissed. Costs against the private respondent.
Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, * Escolin, Relova, Gutierrez, Jr.,
De la Fuente, Cuevas and Alampay, JJ., concur.

Fernando, C.J., took no part.

Separate Opinions

MAKASIAR, J., dissenting:

The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI
(now RTC) of Rizal be allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered
into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved
stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch
as ". . . the United States Government. through its agency at Subic Bay, entered into a contract
with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S.
Navy Reservation, it is evident that it can bring an action before our courts for any contractual
liability that that political entity may assume under the contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of
a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to
have entered into a contract and thus waived the mantle of sovereign immunity from suit and
descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its
act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).
Justice and fairness dictate that a foreign government that commits a breach of its contractual
obligation in the case at bar by the unilateral cancellation of the award for the project by the
United States government, through its agency at Subic Bay should not be allowed to take undue
advantage of a party who may have legitimate claims against it by seeking refuge behind the
shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case,
helpless and without redress in his own country for violation of his rights committed by the agents
of the foreign government professing to act in its name.
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda
Lopez, 84 Phil. 312, 325:
Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice,
such rule is inapplicable to cases in which the foreign government enters into private contracts
with the citizens of the court's jurisdiction. A contrary view would simply run against all principles
of decency and violative of all tenets of morals.

Moral principles and principles of justice are as valid and applicable as well with regard to private
individuals as with regard to governments either domestic or foreign. Once a foreign government
enters into a private contract with the private citizens of another country, such foreign government
cannot shield its non-performance or contravention of the terms of the contract under the cloak of
non-jurisdiction. To place such foreign government beyond the jurisdiction of the domestic courts
is to give approval to the execution of unilateral contracts, graphically described in Spanish as
'contratos leoninos', because one party gets the lion's share to the detriment of the other. To give
validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that
all parties in a private contract, including governments and the most powerful of them, are
amenable to law, and that such contracts are enforceable through the help of the courts of justice
with jurisdiction to take cognizance of any violation of such contracts if the same had been entered
into only by private individuals.
Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction
impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly
discourage Filipino or domestic contractors from transacting business and entering into contracts
with United States authorities or facilities in the Philippines whether naval, air or ground forcesbecause the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking
judicial remedy in our own courts for breaches of contractual obligation committed by agents of
the United States government, always, looms large, thereby hampering the growth of Filipino
enterprises and creating a virtual monopoly in our own country by United States contractors of
contracts for services or supplies with the various U.S. offices and agencies operating in the
Philippines.
The sanctity of upholding agreements freely entered into by the parties cannot be over
emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed
and expected that the undertakings in the contract will be complied with in good faith.
One glaring fact of modern day civilization is that a big and powerful nation, like the United
States of America, can always overwhelm small and weak nations. The declaration in the United
Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless
because big nations wielding economic and military superiority impose upon and dictate to small
nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S.
interest clashes with the interest of small nations, the American governmental agencies or its
citizens invoke principles of international law for their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on
one hand, and herein private respondent on the other, was honored more in the breach than in the
compliance The opinion of the majority will certainly open the floodgates of more violations of
contractual obligations. American authorities or any foreign government in the Philippines for that
matter, dealing with the citizens of this country, can conveniently seek protective cover under the
majority opinion. The result is disastrous to the Philippines.

This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism
and foreign political ascendancy in our Republic.
The doctrine of government immunity from suit cannot and should not serve as an instrument for
perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43
SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States government, through
its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any
other juristic person.
The invocation by the petitioner United States of America is not in accord with paragraph 3 of
Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that
"in the exercise of the above-mentioned rights, powers and authority, the United States agrees that
the powers granted to it will not be used unreasonably. . ." (Emphasis supplied).
Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968
to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and
maintain sound employment practices which will assure equality of treatment of all employees ...
and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will
be mutually beneficial and will strengthen the democratic institutions cherished by both
Governments, ... the United States Government agrees to accord preferential employment of
Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for
civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May
27, 1968).
Neither does the invocation by petitioners of state immunity from suit express fidelity to
paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968 which directs that "
contractors and concessionaires performing work for the U.S. Armed Forces shall be required by
their contract or concession agreements to comply with all applicable Philippine labor laws and
regulations, " even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply
any waiver by either of the two Governments of such immunity under international law."
Reliance by petitioners on the non-suability of the United States Government before the local
courts, actually clashes with No. III on respect for Philippine law of the Memorandum of
Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which
stresses that "it is the duty of members of the United States Forces, the civilian component and
their dependents, to respect the laws of the Republic of the Philippines and to abstain from any
activity inconsistent with the spirit of the Military Bases Agreement and, in particular, from any
political activity in the Philippines. The United States shag take all measures within its authority to
insure that they adhere to them (Emphasis supplied).
The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV
on the economic and social improvement of areas surrounding the bases, which directs that

"moreover, the United States Forces shall procure goods and services in the Philippines to the
maximum extent feasible" (Emphasis supplied).
Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with
the discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the
discussions shall be conducted on the basis of the principles of equality of treatment, the right to
organize, and bargain collectively, and respect for the sovereignty of the Republic of the
Philippines" (Emphasis supplied)
The majority opinion seems to mock the provision of paragraph 1 of the joint statement of
President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the
United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall
be under the command of a Philippine Base Commander, " which is supposed to underscore the
joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under
which "they affirm that sovereign equality, territorial integrity and political independence of all
States are fundamental principles which both countries scrupulously respect; and that "they
confirm that mutual respect for the dignity of each nation shall characterize their friendship as
well as the alliance between their two countries. "
The majority opinion negates the statement on the delineation of the powers, duties and
responsibilities of both the Philippine and American Base Commanders that "in the performance
of their duties, the Philippine Base Commander and the American Base Commander shall be
guided by full respect for Philippine sovereignty on the one hand and the assurance of
unhampered U.S. military operations on the other hand and that "they shall promote cooperation
understanding and harmonious relations within the Base and with the general public in the
proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes,
January 7, 1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos
P. Romulo, Emphasis supplied).

Separate Opinions
MAKASIAR, J., dissenting:
The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI
(now RTC) of Rizal be allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered
into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved
stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch
as ". . . the United States Government. through its agency at Subic Bay, entered into a contract

with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S.
Navy Reservation, it is evident that it can bring an action before our courts for any contractual
liability that that political entity may assume under the contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of
a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to
have entered into a contract and thus waived the mantle of sovereign immunity from suit and
descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its
act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).
Justice and fairness dictate that a foreign government that commits a breach of its contractual
obligation in the case at bar by the unilateral cancellation of the award for the project by the
United States government, through its agency at Subic Bay should not be allowed to take undue
advantage of a party who may have legitimate claims against it by seeking refuge behind the
shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case,
helpless and without redress in his own country for violation of his rights committed by the agents
of the foreign government professing to act in its name.
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda
Lopez, 84 Phil. 312, 325:
Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice,
such rule is inapplicable to cases in which the foreign government enters into private contracts
with the citizens of the court's jurisdiction. A contrary view would simply run against all principles
of decency and violative of all tenets of morals.
Moral principles and principles of justice are as valid and applicable as well with regard to private
individuals as with regard to governments either domestic or foreign. Once a foreign government
enters into a private contract with the private citizens of another country, such foreign government
cannot shield its non-performance or contravention of the terms of the contract under the cloak of
non-jurisdiction. To place such foreign government beyond the jurisdiction of the domestic courts
is to give approval to the execution of unilateral contracts, graphically described in Spanish as
'contratos leoninos', because one party gets the lion's share to the detriment of the other. To give
validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that
all parties in a private contract, including governments and the most powerful of them, are
amenable to law, and that such contracts are enforceable through the help of the courts of justice
with jurisdiction to take cognizance of any violation of such contracts if the same had been entered
into only by private individuals.
Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction
impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly
discourage Filipino or domestic contractors from transacting business and entering into contracts
with United States authorities or facilities in the Philippines whether naval, air or ground forcesbecause the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking

judicial remedy in our own courts for breaches of contractual obligation committed by agents of
the United States government, always, looms large, thereby hampering the growth of Filipino
enterprises and creating a virtual monopoly in our own country by United States contractors of
contracts for services or supplies with the various U.S. offices and agencies operating in the
Philippines.
The sanctity of upholding agreements freely entered into by the parties cannot be over
emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed
and expected that the undertakings in the contract will be complied with in good faith.
One glaring fact of modern day civilization is that a big and powerful nation, like the United
States of America, can always overwhelm small and weak nations. The declaration in the United
Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless
because big nations wielding economic and military superiority impose upon and dictate to small
nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S.
interest clashes with the interest of small nations, the American governmental agencies or its
citizens invoke principles of international law for their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on
one hand, and herein private respondent on the other, was honored more in the breach than in the
compliance The opinion of the majority will certainly open the floodgates of more violations of
contractual obligations. American authorities or any foreign government in the Philippines for that
matter, dealing with the citizens of this country, can conveniently seek protective cover under the
majority opinion. The result is disastrous to the Philippines.
This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism
and foreign political ascendancy in our Republic.
The doctrine of government immunity from suit cannot and should not serve as an instrument for
perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43
SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States government, through
its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any
other juristic person.
The invocation by the petitioner United States of America is not in accord with paragraph 3 of
Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that
"in the exercise of the above-mentioned rights, powers and authority, the United States agrees that
the powers granted to it will not be used unreasonably. . ." (Emphasis supplied).
Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968
to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and
maintain sound employment practices which will assure equality of treatment of all employees ...

and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will
be mutually beneficial and will strengthen the democratic institutions cherished by both
Governments, ... the United States Government agrees to accord preferential employment of
Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for
civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May
27, 1968).
Neither does the invocation by petitioners of state immunity from suit express fidelity to
paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968 which directs that "
contractors and concessionaires performing work for the U.S. Armed Forces shall be required by
their contract or concession agreements to comply with all applicable Philippine labor laws and
regulations, " even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply
any waiver by either of the two Governments of such immunity under international law."
Reliance by petitioners on the non-suability of the United States Government before the local
courts, actually clashes with No. III on respect for Philippine law of the Memorandum of
Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which
stresses that "it is the duty of members of the United States Forces, the civilian component and
their dependents, to respect the laws of the Republic of the Philippines and to abstain from any
activity inconsistent with the spirit of the Military Bases Agreement and, in particular, from any
political activity in the Philippines. The United States shag take all measures within its authority to
insure that they adhere to them (Emphasis supplied).
The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV
on the economic and social improvement of areas surrounding the bases, which directs that
"moreover, the United States Forces shall procure goods and services in the Philippines to the
maximum extent feasible" (Emphasis supplied).
Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with
the discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the
discussions shall be conducted on the basis of the principles of equality of treatment, the right to
organize, and bargain collectively, and respect for the sovereignty of the Republic of the
Philippines" (Emphasis supplied)
The majority opinion seems to mock the provision of paragraph 1 of the joint statement of
President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the
United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall
be under the command of a Philippine Base Commander, " which is supposed to underscore the
joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under
which "they affirm that sovereign equality, territorial integrity and political independence of all
States are fundamental principles which both countries scrupulously respect; and that "they
confirm that mutual respect for the dignity of each nation shall characterize their friendship as
well as the alliance between their two countries. "

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

Today is Friday, September 18, 2015

search
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 70853

March 12, 1987

REPUBLIC OF THE PHILIPPINES, petitioner-appellee,

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

YAP, J.:
Petitioner seeks the review of the decision of the Intermediate Appellate Court dated April 30,
1985 reversing the order of the Court of First Instance of Camarines Sur, Branch VI, dated August
21, 1980, which dismissed the complaint of respondent Pablo Feliciano for recovery of ownership
and possession of a parcel of land on the ground of non-suability of the State.
The background of the present controversy may be briefly summarized as follows:
On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First Instance
of Camarines Sur against the Republic of the Philippines, represented by the Land Authority, for
the recovery of ownership and possession of a parcel of land, consisting of four (4) lots with an

aggregate area of 1,364.4177 hectares, situated in the Barrio of Salvacion, Municipality of

Tinambac, Camarines Sur. Plaintiff alleged that he bought the property in question from Victor
Gardiola by virtue of a Contract of Sale dated May 31, 1952, followed by a Deed of Absolute Sale
on October 30, 1954; that Gardiola had acquired the property by purchase from the heirs of
Francisco Abrazado whose title to the said property was evidenced by an informacion posesoria
that upon plaintiff's purchase of the property, he took actual possession of the same, introduced
various improvements therein and caused it to be surveyed in July 1952, which survey was
approved by the Director of Lands on October 24, 1954; that on November 1, 1954, President
Ramon Magsaysay issued Proclamation No. 90 reserving for settlement purposes, under the
administration of the National Resettlement and Rehabilitation Administration (NARRA), a tract
of land situated in the Municipalities of Tinambac and Siruma, Camarines Sur, after which the
NARRA and its successor agency, the Land Authority, started sub-dividing and distributing the
land to the settlers; that the property in question, while located within the reservation established
under Proclamation No. 90, was the private property of plaintiff and should therefore be excluded
therefrom. Plaintiff prayed that he be declared the rightful and true owner of the property in
question consisting of 1,364.4177 hectares; that his title of ownership based on informacion
posesoria of his predecessor-in-interest be declared legal valid and subsisting and that defendant
be ordered to cancel and nullify all awards to the settlers.
The defendant, represented by the Land Authority, filed an answer, raising by way of affirmative
defenses lack of sufficient cause of action and prescription.
On August 29, 1970, the trial court, through Judge Rafael S. Sison, rendered a decision declaring
Lot No. 1, with an area of 701.9064 hectares, to be the private property of the plaintiff, "being
covered by a possessory information title in the name of his predecessor-in-interest" and declaring
said lot excluded from the NARRA settlement reservation. The court declared the rest of the
property claimed by plaintiff, i.e. Lots 2, 3 and 4, reverted to the public domain.
A motion to intervene and to set aside the decision of August 29, 1970 was filed by eighty-six (86)
settlers, together with the barrio council of Pag-asay, alleging among other things that intervenors
had been in possession of the land in question for more than twenty (20) years under claim of
ownership.
On January 25, 1971, the court a quo reconsidered its decision, reopened the case and directed the
intervenors to file their corresponding pleadings and present their evidence; all evidence already
presented were to remain but plaintiff, as well as the Republic of the Philippines, could present
additional evidence if they so desire. The plaintiff presented additional evidence on July 30, 1971,
and the case was set for hearing for the reception of intervenors' evidence on August 30 and
August 31, 1971.
On August 30, 1971, the date set for the presentation of the evidence for intervenors, the latter did
not appear but submitted a motion for postponement and resetting of the hearing on the next day,
August 31, 1971. The trial court denied the motion for postponement and allowed plaintiff to offer
his evidence "en ausencia," after which the case would be deemed submitted for decision. On the

following day, August 31, 1971, Judge Sison rendered a decision reiterating his decision of August
29, 1970.
A motion for reconsideration was immediately filed by the intervenors. But before this motion was
acted upon, plaintiff filed a motion for execution, dated November 18, 1971. On December 10,
1971, the lower court, this time through Judge Miguel Navarro, issued an order denying the
motion for execution and setting aside the order denying intervenors' motion for postponement.
The case was reopened to allow intervenors to present their evidence. Unable to secure a
reconsideration of Judge Navarro's order, the plaintiff went to the Intermediate Appellate Court on
a petition for certiorari. Said petition was, however, denied by the Intermediate Appellate Court,
and petitioners brought the matter to this Court in G.R. No. 36163, which was denied on May 3,
1973 Consequently, the case was remanded to the court a quo for further proceedings.
On August 31, 1970, intervenors filed a motion to dismiss, principally on the ground that the
Republic of the Philippines cannot be sued without its consent and hence the action cannot
prosper. The motion was opposed by the plaintiff.
On August 21, 1980, the trial court, through Judge Esteban Lising, issued the questioned order
dismissing the case for lack of jurisdiction. Respondent moved for reconsideration, while the
Solicitor General, on behalf of the Republic of the Philippines filed its opposition thereto,
maintaining that the dismissal was proper on the ground of non-suability of the State and also on
the ground that the existence and/or authenticity of the purported possessory information title of
the respondents' predecessor-in-interest had not been demonstrated and that at any rate, the same
is not evidence of title, or if it is, its efficacy has been lost by prescription and laches.
Upon denial of the motion for reconsideration, plaintiff again went to the Intermediate Appellate
Court on petition for certiorari. On April 30, 1985, the respondent appellate court rendered its
decision reversing the order of Judge Lising and remanding the case to the court a quo for further
proceedings. Hence this petition.
We find the petition meritorious. The doctrine of non-suability of the State has proper application
in this case. The plaintiff has impleaded the Republic of the Philippines as defendant in an action
for recovery of ownership and possession of a parcel of land, bringing the State to court just like
any private person who is claimed to be usurping a piece of property. A suit for the recovery of
property is not an action in rem, but an action in personam. 1 It is an action directed against a
specific party or parties, and any judgment therein binds only such party or parties. The complaint
filed by plaintiff, the private respondent herein, is directed against the Republic of the Philippines,
represented by the Land Authority, a governmental agency created by Republic Act No. 3844.
By its caption and its allegation and prayer, the complaint is clearly a suit against the State, which
under settled jurisprudence is not permitted, except upon a showing that the State has consented to
be sued, either expressly or by implication through the use of statutory language too plain to be
misinterpreted. 2 There is no such showing in the instant case. Worse, the complaint itself fails to
allege the existence of such consent. This is a fatal defect, 3 and on this basis alone, the complaint

should have been dismissed.

The failure of the petitioner to assert the defense of immunity from suit when the case was tried
before the court a quo, as alleged by private respondent, is not fatal. It is now settled that such
defense "may be invoked by the courts sua sponte at any stage of the proceedings." 4
Private respondent contends that the consent of petitioner may be read from the Proclamation
itself, when it established the reservation " subject to private rights, if any there be. " We do not
agree. No such consent can be drawn from the language of the Proclamation. The exclusion of
existing private rights from the reservation established by Proclamation No. 90 can not be
construed as a waiver of the immunity of the State from suit. Waiver of immunity, being a
derogation of sovereignty, will not be inferred lightly. but must be construed in strictissimi juris. 5
Moreover, the Proclamation is not a legislative act. The consent of the State to be sued must
emanate from statutory authority. Waiver of State immunity can only be made by an act of the
legislative body.
Neither is there merit in respondent's submission, which the respondent appellate court sustained,
on the basis of our decision in the Begosa case, 6 that the present action is not a suit against the
State within the rule of State immunity from suit, because plaintiff does not seek to divest the
Government of any of its lands or its funds. It is contended that the complaint involves land not
owned by the State, but private land belonging to the plaintiff, hence the Government is not being
divested of any of its properties. There is some sophistry involved in this argument, since the
character of the land sought to be recovered still remains to be established, and the plaintiff's
action is directed against the State precisely to compel the latter to litigate the ownership and
possession of the property. In other words, the plaintiff is out to establish that he is the owner of
the land in question based, incidentally, on an informacion posesoria of dubious value, and he
seeks to establish his claim of ownership by suing the Republic of the Philippines in an action in
personam.
The inscription in the property registry of an informacion posesoria under the Spanish Mortgage
Law was a means provided by the law then in force in the Philippines prior to the transfer of
sovereignty from Spain to the United States of America, to record a claimant's actual possession of
a piece of land, established through an ex parte proceeding conducted in accordance with
prescribed rules. 7 Such inscription merely furnishes, at best, prima facie evidence of the fact that
at the time the proceeding was held, the claimant was in possession of the land under a claim of
right as set forth in his application. 8 The possessory information could ripen into a record of
ownership after the lapse of 20 years (later reduced to 10 years), upon the fulfillment of the
requisites prescribed in Article 393 of the Spanish Mortgage Law.
There is no showing in the case at bar that the informacion posesoria held by the respondent had
been converted into a record of ownership. Such possessory information, therefore, remained at
best mere prima facie evidence of possession. Using this possessory information, the respondent
could have applied for judicial confirmation of imperfect title under the Public Land Act, which is
an action in rem. However, having failed to do so, it is rather late for him to pursue this avenue at

this time. Respondent must also contend, as the records disclose, with the fact admitted by him
and stated in the decision of the Court a quo that settlers have been occupying and cultivating the
land in question since even before the outbreak of the war, which puts in grave doubt his own
claim of possession.
Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion posesoria
registered in the Office of the Register of Deed of Camarines Sur on September 23, 1952 was a
"reconstituted" possessory information; it was "reconstituted from the duplicate presented to this
office (Register of Deeds) by Dr. Pablo Feliciano," without the submission of proof that the
alleged duplicate was authentic or that the original thereof was lost. Reconstitution can be validly
made only in case of loss of the original. 10 These circumstances raise grave doubts as to the
authenticity and validity of the "informacion posesoria" relied upon by respondent Feliciano.
Adding to the dubiousness of said document is the fact that "possessory information calls for an
area of only 100 hectares," 11 whereas the land claimed by respondent Feliciano comprises
1,364.4177 hectares, later reduced to 701-9064 hectares. Courts should be wary in accepting
"possessory information documents, as well as other purportedly old Spanish titles, as proof of
alleged ownership of lands.
WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed decision of
the Intermediate Appellate Court, dated April 30, 1985, and affirming the order of the court a quo,
dated August 21, 1980, dismissing the complaint filed by respondent Pablo Feliciano against the
Republic of the Philippines. No costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 90478

November 21, 1991

REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD

GOVERNMENT), petitioner,
vs.
SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR. and DOMINADOR R. SANTIAGO,
respondents.
Dominador R. Santiago for and in his own behalf and as counsel for respondent Tantoco, Jr.

NARVASA, J.:p
Private respondents Bienvenido R. Tantoco, Jr. and Dominador R. Santiago together with
Ferdinand E. Marcos, Imelda R. Marcos, Bienvenido R. Tantoco, Sr., Gliceria R. Tantoco, and
Maria Lourdes Tantoco-Pineda-are defendants in Civil Case No. 0008 of the Sandiganbayan. The
case was commenced on July 21, 1987 by the Presidential Commission on Good Government
(PCGG) in behalf of the Republic of the Philippines. The complaint which initiated the action was
denominated one "for reconveyance, reversion, accounting, restitution and damages," and was
avowedly filed pursuant to Executive Order No. 14 of President Corazon C. Aquino.
After having been served with summons, Tantoco, Jr. and Santiago, instead of filing their answer,
jointly filed a "MOTION TO STRIKE OUT SOME PORTIONS OF THE COMPLAINT AND
FOR BILL OF PARTICULARS OF OTHER PORTIONS" dated Nov. 3, 1987. 1 The PCGG filed
an opposition thereto, 2 and the movants, a reply to the opposition. 3 By order dated January 29,
1988, the Sandiganbayan, in order to expedite proceedings and accommodate the defendants, gave
the PCGG forty-five (45) days to expand its complaint to make more specific certain allegations. 4
Tantoco and Santiago then presented a "motion for leave to file interrogatories under Rule 25 of
the Rules of Court" dated February 1, 1988, and "Interrogatories under Rule 25." 5 Basically, they
sought an answer to the question: "Who were the Commissioners of the PCGG (aside from its
Chairman, Hon. Ramon Diaz, who verified the complaint) who approved or authorized the
inclusion of Messrs. Bienvenido R. Tantoco, Jr. and Dominador R. Santiago as defendants in the . .
case?" 6 The PCGG responded by filing a motion dated February 9, 1988 to strike out said motion
and interrogatories as being impertinent, "queer," "weird," or "procedurally bizarre as the purpose
thereof lacks merit as it is improper, impertinent and irrelevant under any
guise." 7
On March 18, 1988, in compliance with the Order of January 29, 1988, the PCGG filed an
Expanded Complaint. 8 As this expanded complaint, Tantoco and Santiago reiterated their motion
for bill of particulars, through a Manifestation dated April 11, 1988. 9
Afterwards, by Resolution dated July 4, 1988, 10 the Sandiganbayan denied the motion to strike
out, for bill of particulars, and for leave to file interrogatories, holding them to be without legal
and factual basis. Also denied was the PCGG's motion to strike out impertinent pleading dated
February 9, 1988. The Sandiganbayan declared inter alia the complaint to be "sufficiently definite
and clear enough," there are adequate allegations . . which clearly portray the supposed
involvement and/or alleged participation of defendants-movants in the transactions described in
detail in said Complaint," and "the other matters sought for particularization are evidentiary in
nature which should be ventilated in the pre-trial or trial proper . ." It also opined that "(s)ervice of
interrogatories before joinder of issue and without leave of court is premature . . (absent) any
special or extraordinary circumstances . . which would justify . . (the same)."
Tantoco and Santiago then filed an Answer with Compulsory Counterclaim under date of July 18,

1988. 11 In response, the PCGG presented a "Reply to Answer with Motion to Dismiss
Compulsory Counterclaim " 12
The case was set for pre-trial on July 31, 1989. 13 On July 25, 1989, the PCGG submitted its
PRE-TRIAL. 14 The pre-trial was however reset to September 11, 1989, and all other parties were
required to submit pre-trial briefs on or before that date. 15
On July 27, 1989 Tantoco and Santiago filed with the Sandiganbayan a pleading denominated
"Interrogatories to Plaintiff," 16 and on August 2, 1989, an "Amended Interrogatories to Plaintiff"'
17 as well as a Motion for Production and Inspection of Documents. 18
The amended interrogatories chiefly sought factual details relative to specific averments of
PCGG's amended complaint, through such questions, for instance, as
1. In connection with the allegations . . in paragraph 1 . ., what specific property or properties
does the plaintiff claim it has the right to recover from defendants Tantoco, Jr. and Santiago for
being ill-gotten?
3. In connection with the allegations . . in paragraph 10 (a) . . what specific act or acts . . were
committed by defendants Tantoco, Jr. and Santiago in "concert with" defendant Ferdinand Marcos
and in furtherance or pursuit, of the alleged systematic plan of said defendant Marcos to
accumulate ill-gotten wealth?"
5. In connection with . . paragraph 13 . ., what specific act or acts of the defendants Tantoco, Jr.
and Santiago . . were committed by said defendants as part, or in furtherance, of the alleged plan
to conceal assets of defendants Ferdinand and Imelda Marcos?
7. In connection with . . paragraph 15(c) . . is it plaintiff's position or theory of the case that
Tourist Duty Free Shops, Inc., including all the assets of said corporation, are beneficially owned
by either or both defendants Ferdinand and Imelda Marcos and that the defendants Tantoco, Jr. and
Santiago, as well as, the other stockholders of record of the same corporation are mere "dummies"
of said defendants Ferdinand and /or Imelda R. Marcos?
On the other hand, the motion for production and inspection of documents prayed for examination
and copying of
1) the "official records and other evidence" on the basis of which the verification of the
Amended Complaint asserted that the allegations thereof are "true and correct;"
2) the documents listed in PCGG's Pre-Trial Brief as those "intended to be presented and . .
marked as exhibits for the plaintiff;" and
3) "the minutes of the meeting of the PCGG which chronicles the discussion (if any) and the
decision (of the Chairman and members) to file the complaint" in the case at bar.

By Resolutions dated August 21, 1989 and August 25, 1989, the Sandiganbayan admitted the
Amended Interrogatories and granted the motion for production and inspection of documents
(production being scheduled on September 14 and 15, 1989), respectively.
On September 1, 1989, the PCGG filed a Motion for Reconsideration of the Resolution of August
25, 1989 (allowing production and inspection of documents). It argued that
1) since the documents subject thereof would be marked as exhibits during the pre-trial on
September 11, 1989 anyway, the order for "their production and inspection on September 14 and
15, are purposeless and unnecessary;"
2) movants already know of the existence and contents of the document which "are clearly
described . . (in) plaintiff's Pre-Trial Brief;"
3) the documents are "privileged in character" since they are intended to be used against the
PCGG and/or its Commissioners in violation of Section 4, Executive Order No. 1, viz.:
(a) No civil action shall lie against the Commission or any member thereof for anything done or
omitted in the discharge of the task contemplated by this Order.
(b) No member or staff of the Commission shall be required to testify or produce evidence in any
judicial, legislative, or administrative proceeding concerning matters within its official
cognizance.
It also filed on September 4, 1989 an opposition to the Amended Interrogatories, 19 which the
Sandiganbayan treated as a motion for reconsideration of the Resolution of August 21, 1989
(admitting the Amended Interrogatories). The opposition alleged that
1) the interrogatories "are not specific and do not name the person to whom they are
propounded . .," or "who in the PCGG, in particular, . . (should) answer the interrogatories;"
2) the interrogatories delve into "factual matters which had already been decreed . . as part of
the proof of the Complaint upon trial . .;"
3) the interrogatories "are frivolous" since they inquire about "matters of fact . . which
defendants . . sought to . . (extract) through their aborted Motion for Bill of Particulars;"
4) the interrogatories "are really in the nature of a deposition, which is prematurely filed and
irregularly utilized . . (since) the order of trial calls for plaintiff to first present its evidence."
Tantoco and Santiago filed a reply and opposition on September 18, 1989.
After hearing, the Sandiganbayan promulgated two (2) Resolutions on September 29, 1989, the

first, denying reconsideration (of the Resolution allowing production of documents), and the
second, reiterating by implication the permission to serve the amended interrogatories on the
plaintiff (PCGG). 20
Hence, this petition for certiorari.
The PCGG contends that said orders, both dated September 29, 1989, should be nullified because
rendered with grave abuse of discretion amounting to excess of jurisdiction. More particularly, it
claims
a)

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

1) that said interrogatories are not specific and do not name the particular individuals to whom
they are propounded, being addressed only to the PCGG;
2) that the interrogatories deal with factual matters which the Sandiganbayan (in denying the
movants' motion for bill of particulars) had already declared to be part of the PCGG's proof upon
trial; and
3) that the interrogatories would make PCGG Commissioners and officers witnesses, in
contravention of Executive Order No. 14 and related issuances; and
b)

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

1)

that movants had not shown any good cause therefor;

2) that some documents sought to be produced and inspected had already been presented in
Court and marked preliminarily as PCGG's exhibits, and the movants had viewed, scrutinized and
even offered objections thereto and made comments thereon; and
3)

that the other documents sought to be produced are either

(a) privileged in character or confidential in nature and their use is proscribed by the immunity
provisions of Executive Order No. 1, or
(b) non-existent, or mere products of the movants' suspicion and fear.
This Court issued a temporary restraining order on October 27, 1989, directing the Sandiganbayan
to desist from enforcing its questioned resolutions of September 29, 1989 in Civil Case No. 0008.
21
After the issues were delineated and argued at no little length by the parties, the Solicitor General
withdrew "as counsel for plaintiff . . with the reservation, however, conformably with Presidential
Decree No. 478, the provisions of Executive Order No. 292, as well as the decisional law of

'Orbos v. Civil Service Commission, et al.,' (G.R. No. 92561, September 12, 1990) 22 to submit
his comment/observation on incidents/matters pending with this . . Court if called for by
circumstances in the interest of the Government or if he is so required by the Court." 23 This, the
Court allowed by Resolution dated January 21, 1991. 24
Subsequently, PCGG Commissioner Maximo A. Maceren advised the Court that the cases from
which the Solicitor General had withdrawn would henceforth be under his (Maceren's) charge
"and/or any of the following private attorneys: Eliseo B. Alampay, Jr., Mario E. Ongkiko, Mario
Jalandoni and such other attorneys as it may later authorize." 25
The facts not being in dispute, and it appearing that the parties have fully ventilated their
respective positions, the Court now proceeds to decide the case.
Involved in the present proceedings are two of the modes of discovery provided in the Rules of
Court: interrogatories to parties , 26 and production and inspection of documents and things. 27
Now, it appears to the Court that among far too many lawyers (and not a few judges), there is, if
not a regrettable unfamiliarity and even outright ignorance about the nature, purposes and
operation of the modes of discovery, at least a strong yet unreasoned and unreasonable
disinclination to resort to them which is a great pity for the intelligent and adequate use of the
deposition-discovery mechanism, coupled with pre-trial procedure, could, as the experience of
other jurisdictions convincingly demonstrates, effectively shorten the period of litigation and
speed up adjudication. 28 Hence, a few words about these remedies is not at all inappropriate.
The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential
function is accomplished by first, the ascertainment of all the material and relevant facts from the
pleadings and from the evidence adduced by the parties, and second, after that determination of
the facts has been completed, by the application of the law thereto to the end that the controversy
may be settled authoritatively, definitely and finally.
It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with
assuring that all the facts are indeed presented to the Court; for obviously, to the extent that
adjudication is made on the basis of incomplete facts, to that extent there is faultiness in the
approximation of objective justice. It is thus the obligation of lawyers no less than of judges to see
that this objective is attained; that is to say, that there no suppression, obscuration,
misrepresentation or distortion of the facts; and that no party be unaware of any fact material a
relevant to the action, or surprised by any factual detail suddenly brought to his attention during
the trial. 29
Seventy-one years ago, in Alonso v. Villamor, 30 this Court described the nature and object of
litigation and in the process laid down the standards by which judicial contests are to be conducted
in this jurisdiction. It said:
A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the
subtle art of movement and position, entraps and destroys the other. It is, rather a contest in which

each contending party fully and fairly lays before the court the facts in issue and then brushing
aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure,
asks that justice be done on the merits. Lawsuits, unlike duels, are not to be won by a rapier's
thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great
hindrance and chief enemy, deserves scant consideration from courts. There should be no vested
right in technicalities. . . .
The message is plain. It is the duty of each contending party to lay before the court the facts in
issue-fully and fairly; i.e., to present to the court all the material and relevant facts known to him,
suppressing or concealing nothing, nor preventing another party, by clever and adroit manipulation
of the technical rules of pleading and evidence, from also presenting all the facts within his
knowledge.
Initially, that undertaking of laying the facts before the court is accomplished by the pleadings
filed by the parties; but that, only in a very general way. Only "ultimate facts" are set forth in the
pleadings; hence, only the barest outline of the facfual basis of a party's claims or defenses is
limned in his pleadings. The law says that every pleading "shall contain in a methodical and
logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading
relies for his claim or defense, as the case may be, omitting the statement of mere evidentiary
facts." 31
Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally
or "not averred with sufficient definiteness or particularity to enable . . (an adverse party) properly
to prepare his responsive pleading or to prepare for trial," a bill of particulars seeking a "more
definite statement" may be ordered by the court on motion of a party. The office of a bill of
particulars is, however, limited to making more particular or definite the ultimate facts in a
pleading It is not its office to supply evidentiary matters. And the common perception is that said
evidentiary details are made known to the parties and the court only during the trial, when proof is
adduced on the issues of fact arising from the pleadings.
The truth is that "evidentiary matters" may be inquired into and learned by the parties before the
trial. Indeed, it is the purpose and policy of the law that the parties before the trial if not indeed
even before the pre-trial should discover or inform themselves of all the facts relevant to the
action, not only those known to them individually, but also those known to adversaries; in other
words, the desideratum is that civil trials should not be carried on in the dark; and the Rules of
Court make this ideal possible through the deposition-discovery mechanism set forth in Rules 24
to 29. The experience in other jurisdictions has been that ample discovery before trial, under
proper regulation, accomplished one of the most necessary of modern procedure: it not only
eliminates unessential issue from trials thereby shortening them considerably, but also requires
parties to play the game with the cards on the table so that the possibility of fair settlement before
trial is measurably increased. . ." 32
As just intimated, the deposition-discovery procedure was designed to remedy the conceded
inadequacy and cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and

fact revelation theretofore performed primarily by the pleadings.

The various modes or instruments of discovery are meant to serve (1) as a device, along with the
pre-trial hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2)
as a device for ascertaining the facts relative to those issues. The evident purpose is, to repeat, to
enable parties, consistent with recognized privileges, to obtain the fullest possible knowledge of
the issues and facts before trials and thus prevent that said trials are carried on in the dark. 33
To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad
as when the interrogated party is called as a witness to testify orally at trial. The inquiry extends to
all facts which are relevant, whether they be ultimate or evidentiary, excepting only those matters
which are privileged. The objective is as much to give every party the fullest possible information
of all the relevant facts before the trial as to obtain evidence for use upon said trial. The principle
is reflected in Section 2, Rule 24 (governing depositions) 34 which generally allows the
examination of a deponent
1) "regarding any matter, not privileged, which is relevant to the subject of the pending action,
whether relating to the claim or defense of any other party;"
2)

as well as:

(a) "the existence, description, nature, custody, condition and location of any books, documents,
or other tangible things" and
(b) "the identity and location of persons having knowledge of relevant facts."
What is chiefly contemplated is the discovery of every bit of information which may be useful in
the preparation for trial, such as the identity and location of persons having knowledge of relevant
facts; those relevant facts themselves; and the existence, description, nature, custody, condition,
and location of any books, documents, or other tangible things. Hence, "the deposition-discovery
rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of
"fishing expedition" serve to preclude a party from inquiring into the facts underlying his
opponent's case. Mutual knowledge of all the relevant facts gathered by both parties is essential to
proper litigation. To that end, either party may compel the other to disgorge whatever facts he has
in his possession. The deposition-discovery procedure simply advances the stage at which the
disclosure can be compelled from the time of trial to the period preceding it, thus reducing the
possibility, of surprise, . . . 35
In line with this principle of according liberal treatment to the deposition-discovery mechanism,
such modes of discovery as (a) depositions (whether by oral examination or written
interrogatories) under Rule 24, (b) interrogatories to parties under Rule 25, and (c) requests for
admissions under Rule 26, may be availed of without leave of court, and generally, without court
intervention. The Rules of Court explicitly provide that leave of court is not necessary to avail of
said modes of discovery after an answer to the complaint has been served. 36 It is only when an

answer has not yet been filed (but after jurisdiction has been obtained over the defendant or
property subject of the action) that prior leave of court is needed to avail of these modes of
discovery, the reason being that at that time the issues are not yet joined and the disputed facts are
not clear. 37
On the other hand, leave of court is required as regards discovery by (a) production or inspection
of documents or things in accordance with Rule 27, or (b) physical and mental examination of
persons under Rule 28, which may be granted upon due application and a showing of due cause.
To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the
law imposes serious sanctions on the party who refuses to make discovery, such as dismissing the
action or proceeding or part thereof, or rendering judgment by default against the disobedient
party; contempt of court, or arrest of the party or agent of the party; payment of the amount of
reasonable expenses incurred in obtaining a court order to compel discovery; taking the matters
inquired into as established in accordance with the claim of the party seeking discovery; refusal to
allow the disobedient party support or oppose designated claims or defenses; striking out
pleadings or parts thereof; staying further proceedings. 38
Of course, there are limitations to discovery, even when permitted to be undertaken without leave
and without judicial intervention. "As indicated by (the) Rules . . ., limitations inevitably arise
when it can be shown that the examination is being conducted in bad faith or in such a manner as
to annoy, embarass, or oppress the person subject to the inquiry. 39 And . . . further limitations
come into existence when the inquiry touches upon the irrelevant or encroaches upon the
recognized domains of privilege." 40
In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired
into are otherwise relevant and not privileged, and the inquiry is made in good faith and within the
bounds of the law.
It is in light of these broad principles underlying the deposition-discovery mechanism, in relation
of course to the particular rules directly involved, that the issues in this case will now be resolved.
The petitioner's objections to the interrogatories served on it in accordance with Rule 25 of the
Rules of Court cannot be sustained.
It should initially be pointed out as regards the private respondents "Motion for Leave to File
Interrogatories" dated February 1, 1988 41 that it was correct for them to seek leave to serve
interrogatories, because discovery was being availed of before an answer had been served. In such
a situation, i.e., "after jurisdiction has been obtained over any defendant or over property subject
of the action" but before answer, Section 1 of Rule 24 (treating of depositions), in relation to
Section 1 of Rule 25 (dealing with interrogatories to parties) explicitly requires "leave of court."
42 But there was no need for the private respondents to seek such leave to serve their "Amended
Interrogatories to Plaintiff" (dated August 2, 1989 43) after they had filed their answer to the
PCGG's complaint, just as there was no need for the Sandiganbayan to act thereon.

1. The petitioner's first contention that the interrogatories in question are defective because
they (a) do not name the particular individuals to whom they are propounded, being addressed
only to the PCGG, and (b) are "fundamentally the same matters . . (private respondents) sought to
be clarified through their aborted Motion . . for Bill of Particulars" are untenable and quickly
disposed of.
The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states
that if the party served with interrogatories is a juridical entity such as "a public or private
corporation or a partnership or association," the same shall be "answered . . by any officer thereof
competent to testify in its behalf." There is absolutely no reason why this proposition should not
be applied by analogy to the interrogatories served on the PCGG. That the interrogatories are
addressed only to the PCGG, without naming any specific commissioner o officer thereof, is
utterly of no consequence, and may not be invoked as a reason to refuse to answer. As the rule
states, the interrogatories shall be answered "by any officer thereof competent to testify in its
behalf."
That the matters on which discovery is desired are the same matters subject of a prior motion for
bill of particulars addressed to the PCGG's amended complaint and denied for lack of merit
is beside the point. Indeed, as already pointed out above, a bill of particulars may elicit only
ultimate facts, not so-called evidentiary facts. The latter are without doubt proper subject of
discovery. 44
Neither may it be validly argued that the amended interrogatories lack specificity. The merest
glance at them disproves the argument. The interrogatories are made to relate to individual
paragraphs of the PCGG's expanded complaint and inquire about details of the ultimate facts
therein alleged. What the PCGG may properly do is to object to specific items of the
interrogatories, on the ground of lack of relevancy, or privilege, or that the inquiries are being
made in bad faith, or simply to embarass or oppress it. 45 But until such an objection is presented
and sustained, the obligation to answer subsists.
2. That the interrogatories deal with factual matters which will be part of the PCGG's proof
upon trial, is not ground for suppressing them either. As already pointed out, it is the precise
purpose of discovery to ensure mutual knowledge of all the relevant facts on the part of all parties
even before trial, this being deemed essential to proper litigation. This is why either party may
compel the other to disgorge whatever facts he has in his possession; and the stage at which
disclosure of evidence is made is advanced from the time of trial to the period preceding it.
3. Also unmeritorious is the objection that the interrogatories would make PCGG
Commissioners and officers witnesses, in contravention of Executive Order No. 14 and related
issuances. In the first place, there is nothing at all wrong in a party's making his adversary his
witness .46 This is expressly allowed by Section 6, Rule 132 of the Rules of Court, viz.:
Sec. 6.

Direct examination of unwilling or hostile witnesses. A party may . . . call an adverse

party or an officer, director, or managing agent of a public or private corporation or of a

partnership or association which is an adverse party, and interrogate him by leading questions and
contradict and impeach him in all respects as if he had been called by the adverse party, and the
witness thus called may be contradicted and impeached by or on behalf of the adverse party also,
and may be cross-examined by the adverse party only upon the subject-matter of his examination
in chief.
The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart
from the fact that the information sought is immaterial since they are evidently meant to establish
a claim against PCGG officers who are not parties to the action. It suffices to point out that
"fishing expeditions" are precisely permitted through the modes of discovery. 47 Moreover, a
defendant who files a counterclaim against the plaintiff is allowed by the Rules to implead persons
(therefore strangers to the action) as additional defendants on said counterclaim. This may be done
pursuant to Section 14, Rule 6 of the Rules, to wit:
Sec. 14. Bringing new parties. When the presence of parties other than those to the original
action is required for the granting of complete relief in the determination of a counterclaim or
cross-claim, the court shall order them to be brought in as defendants, if jurisdiction over them can
be obtained."
The PCGG's assertion that it or its members are not amenable to any civil action "for anything
done or omitted in the discharge of the task contemplated by . . (Executive) Order (No. 1)," is not
a ground to refuse to answer the interrogatories. The disclosure of facto relevant to the action and
which are not self-incriminatory or otherwise privileged is one thing; the matter of whether or not
liability may arise from the facts disclosed in light of Executive Order
No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the
action.
The apprehension has been expressed that the answers to the interrogatories may be utilized as
foundation for a counterclaim against the PCGG or its members and officers. They will be. The
private respondents have made no secret that this is in fact their intention. Withal, the Court is
unable to uphold the proposition that while the PCGG obviously feels itself at liberty to bring
actions on the basis of its study and appreciation of the evidence in its possession, the parties sued
should not be free to file counterclaims in the same actions against the PCGG or its officers for
gross neglect or ignorance, if not downright bad faith or malice in the commencement or initiation
of such judicial proceedings, or that in the actions that it may bring, the PCGG may opt not to be
bound by rule applicable to the parties it has sued, e.g., the rules of discovery.
So, too, the PCGG's postulation that none of its members may be "required to testify or produce
evidence in any judicial . . proceeding concerning matters within its official cognizance," has no
application to a judicial proceeding it has itself initiated. As just suggested, the act of bringing suit
must entail a waiver of the exemption from giving evidence; by bringing suit it brings itself within
the operation and scope of all the rules governing civil actions, including the rights and duties
under the rules of discovery. Otherwise, the absurd would have to be conceded, that while the

parties it has impleaded as defendants may be required to "disgorge all the facts" within their
knowledge and in their possession, it may not itself be subject to a like compulsion.
The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its
consent. But it is axiomatic that in filing an action, it divests itself of its sovereign character and
sheds its immunity from suit, descending to the level of an ordinary litigant. The PCGG cannot
claim a superior or preferred status to the State, even while assuming to represent or act for the
State. 48
The suggestion 49 that the State makes no implied waiver of immunity by filing suit except when
in so doing it acts in, or in matters concerning, its proprietary or non-governmental capacity, is
unacceptable; it attempts a distinction without support in principle or precedent. On the contrary

The consent of the State to be sued may be given expressly or impliedly. Express consent may be
manifested either through a general law or a special law. Implied consent is given when the State
itself commences litigation or when it enters into a contract. 50
The immunity of the State from suits does not deprive it of the right to sue private parties in its
own courts. The state as plaintiff may avail itself of the different forms of actions open to private
litigants. In short, by taking the initiative in an action against the private parties, the state
surrenders its privileged position and comes down to the level of the defendant. The latter
automatically acquires, within certain limits, the right to set up whatever claims and other defenses
he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-37, citing
U.S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899)" 51
It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus
imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has
been held that where private property has been taken in expropriation without just compensation
being paid, the defense of immunity from suit cannot be set up by the State against an action for
payment by the owner. 52
The Court also finds itself unable to sustain the PCGG's other principal contention, of the nullity
of the Sandiganbayan's Order for the production and inspection of specified documents and things
allegedly in its possession.
The Court gives short shrift to the argument that some documents sought to be produced and
inspected had already been presented in Court and marked preliminarily as PCGG's exhibits, the
movants having in fact viewed, scrutinized and even offered objections thereto and made
comments thereon. Obviously, there is nothing secret or confidential about these documents. No
serious objection can therefore be presented to the desire of the private respondents to have copies
of those documents in order to study them some more or otherwise use them during the trial for
any purpose allowed by law.

The PCGG says that some of the documents are non-existent. This it can allege in response to the
corresponding question in the interrogatories, and it will incur no sanction for doing so unless it is
subsequently established that the denial is false.
The claim that use of the documents is proscribed by Executive Order No. 1 has already been dealt
with. The PCGG is however at liberty to allege and prove that said documents fall within some
other privilege, constitutional or statutory.
The Court finally finds that, contrary to the petitioner's theory, there is good cause for the
production and inspection of the documents subject of the motion dated August 3, 1989. 53 Some
of the documents are, according to the verification of the amended complaint, the basis of several
of the material allegations of said complaint. Others, admittedly, are to be used in evidence by the
plaintiff. It is matters such as these into which inquiry is precisely allowed by the rules of
discovery, to the end that the parties may adequately prepare for pre-trial and trial. The only other
documents sought to be produced are needed in relation to the allegations of the counterclaim.
Their relevance is indisputable; their disclosure may not be opposed.
One last word. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and
operation of the modes of discovery earlier
mentioned, 54 there also appears to be a widely entertained idea that application of said modes is a
complicated matter, unduly expensive and dilatory. Nothing could be farther from the truth. For
example, as will already have been noted from the preceding discussion, all that is entailed to
activate or put in motion the process of discovery by interrogatories to parties under Rule 25 of the
Rules of Court, is simply the delivery directly to a party of a letter setting forth a list of least
questions with the request that they be answered individually. 55 That is all. The service of such a
communication on the party has the effect of imposing on him the obligation of answering the
questions "separately and fully in writing underoath," and serving "a copy of the answers on the
party submitting the interrogatories within fifteen (15) days after service of the interrogatories . . ."
56 The sanctions for refusing to make discovery have already been mentioned. 57 So, too,
discovery under Rule 26 is begun by nothing more complex than the service on a party of a letter
or other written communication containing a request that specific facts therein set forth and/or
particular documents copies of which are thereto appended, be admitted in writing. 58 That is all.
Again, the receipt of such a communication by the party has the effect of imposing on him the
obligation of serving the party requesting admission with "a sworn statement either denying
specifically the matters of which an admission is requested or setting forth in detail the reasons
why he cannot truthfully either admit or deny those matters," failing in which "(e)ach of the
matters of which admission is requested shall be deemed admitted." 59 The taking of depositions
in accordance with Rule 24 (either on oral examination or by written interrogatories) while
somewhat less simple, is nonetheless by no means as complicated as seems to be the lamentably
extensive notion.
WHEREFORE, the petition is DENIED, without pronouncement as to costs. The temporary
restraining order issued on October 27, 1989 is hereby LIFTED AND SET ASIDE.

SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado
and Davide, Jr., JJ., concur.
Melencio-Herrera, J., I also join Justice Cruz's concurrence.
Romero, J., took no part.

Separate Opinions

CRUZ, J., concurring:

I am delighted to concurr with Mr. Justice Andres R. Narvasa in his scholarly ponencia which,
besides reaching a conclusion sustained by the applicable law and jurisprudence, makes for
reading both pleasurable and instructive. One function of the court not generally appreciated is to
educate the reader on the intricacies and even the mustique of the law. The opinion performs this
function with impressive expertise and makes the modes of discovery less esoteric or inaccessible
to many members of the bar.

# Separate Opinions
CRUZ, J., concurring:
I am delighted to concurr with Mr. Justice Andres R. Narvasa in his scholarly ponencia which,
besides reaching a conclusion sustained by the applicable law and jurisprudence, makes for coding
both pleasurable and instructive. One function of the court not generally appreciated is to educate
the reader on the intricacies and even the mustique of the law. The opinion performs this function
with impressive expertise and makes the modes of discovery less esoteric or inaccessible to many
members of the bar.

Republic of the Philippines

SUPREME COURT

Manila
EN BANC

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

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

MAKALINTAL, J.:p
This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R5977, dismissing the plaintiff's complaint.
Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad
Estate in Cebu City as shown by Transfer Certificate of Title No. T-18060, which superseded
Transfer Certificate of Title No. RT-3272 (T-3435) issued to her by the Register of Deeds of Cebu
on February 1, 1924. No annotation in favor of the government of any right or interest in the
property appears at the back of the certificate. Without prior expropriation or negotiated sale, the
government used a portion of said lot, with an area of 6,167 square meters, for the construction of
the Mango and Gorordo Avenues.
It appears that said avenues were already existing in 1921 although "they were in bad condition
and very narrow, unlike the wide and beautiful avenues that they are now," and "that the tracing of
said roads was begun in 1924, and the formal construction in
1925." *
On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment
of the portion of her lot which had been appropriated by the government. The claim was indorsed
to the Auditor General, who disallowed it in his 9th Indorsement dated December 9, 1958. A copy
of said indorsement was transmitted to Amigable's counsel by the Office of the President on
January 7, 1959.
On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended on
April 17, 1959 upon motion of the defendants, against the Republic of the Philippines and Nicolas
Cuenca, in his capacity as Commissioner of Public Highways for the recovery of ownership and
possession of the 6,167 square meters of land traversed by the Mango and Gorordo Avenues. She
also sought the payment of compensatory damages in the sum of P50,000.00 for the illegal

occupation of her land, moral damages in the sum of P25,000.00, attorney's fees in the sum of
P5,000.00 and the costs of the suit.
Within the reglementary period the defendants filed a joint answer denying the material
allegations of the complaint and interposing the following affirmative defenses, to wit: (1) that the
action was premature, the claim not having been filed first with the Office of the Auditor General;
(2) that the right of action for the recovery of any amount which might be due the plaintiff, if any,
had already prescribed; (3) that the action being a suit against the Government, the claim for moral
damages, attorney's fees and costs had no valid basis since as to these items the Government had
not given its consent to be sued; and (4) that inasmuch as it was the province of Cebu that
appropriated and used the area involved in the construction of Mango Avenue, plaintiff had no
cause of action against the defendants.
During the scheduled hearings nobody appeared for the defendants notwithstanding due notice, so
the trial court proceeded to receive the plaintiff's evidence ex parte. On July 29, 1959 said court
rendered its decision holding that it had no jurisdiction over the plaintiff's cause of action for the
recovery of possession and ownership of the portion of her lot in question on the ground that the
government cannot be sued without its consent; that it had neither original nor appellate
jurisdiction to hear, try and decide plaintiff's claim for compensatory damages in the sum of
P50,000.00, the same being a money claim against the government; and that the claim for moral
damages had long prescribed, nor did it have jurisdiction over said claim because the government
had not given its consent to be sued. Accordingly, the complaint was dismissed. Unable to secure a
reconsideration, the plaintiff appealed to the Court of Appeals, which subsequently certified the
case to Us, there being no question of fact involved.
The issue here is whether or not the appellant may properly sue the government under the facts of
the case.
In the case of Ministerio vs. Court of First Instance of Cebu, 1 involving a claim for payment of
the value of a portion of land used for the widening of the Gorordo Avenue in Cebu City, this
Court, through Mr. Justice Enrique M. Fernando, held that where the government takes away
property from a private landowner for public use without going through the legal process of
expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the
government without thereby violating the doctrine of governmental immunity from suit without its
consent. We there said: .
... . If the constitutional mandate that the owner be compensated for property taken for public use
were to be respected, as it should, then a suit of this character should not be summarily dismissed.
The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating
an injustice on a citizen. Had the government followed the procedure indicated by the governing
law at the time, a complaint would have been filed by it, and only upon payment of the
compensation fixed by the judgment, or after tender to the party entitled to such payment of the
amount fixed, may it "have the right to enter in and upon the land so condemned, to appropriate
the same to the public use defined in the judgment." If there were an observance of procedural

regularity, petitioners would not be in the sad plaint they are now. It is unthinkable then that
precisely because there was a failure to abide by what the law requires, the government would
stand to benefit. It is just as important, if not more so, that there be fidelity to legal norms on the
part of officialdom if the rule of law were to be maintained. It is not too much to say that when the
government takes any property for public use, which is conditioned upon the payment of just
compensation, to be judicially ascertained, it makes manifest that it submits to the jurisdiction of a
court. There is no thought then that the doctrine of immunity from suit could still be appropriately
invoked.
Considering that no annotation in favor of the government appears at the back of her certificate of
title and that she has not executed any deed of conveyance of any portion of her lot to the
government, the appellant remains the owner of the whole lot. As registered owner, she could
bring an action to recover possession of the portion of land in question at anytime because
possession is one of the attributes of ownership. However, since restoration of possession of said
portion by the government is neither convenient nor feasible at this time because it is now and has
been used for road purposes, the only relief available is for the government to make due
compensation which it could and should have done years ago. To determine the due compensation
for the land, the basis should be the price or value thereof at the time of the taking. 2
As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on
the price of the land from the time it was taken up to the time that payment is made by the
government. 3 In addition, the government should pay for attorney's fees, the amount of which
should be fixed by the trial court after hearing.
WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the court
a quo for the determination of compensation, including attorney's fees, to which the appellant is
entitled as above indicated. No pronouncement as to costs

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-11154

March 21, 1916

E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.
Crossfield and O'Brien for plaintiff.
Attorney-General Avancea for defendant..

TRENT, J.:
This is an appeal by both parties from a judgment of the Court of First Instance of the city of
Manila in favor of the plaintiff for the sum of P14,741, together with the costs of the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general damages which
the plaintiff suffered to P5,000, instead of P25,000 as claimed in the complaint," and (2) "in
limiting the time when plaintiff was entirely disabled to two months and twenty-one days and
fixing the damage accordingly in the sum of P2,666, instead of P6,000 as claimed by plaintiff in
his complaint."
The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in finding that
the collision between the plaintiff's motorcycle and the ambulance of the General Hospital was
due to the negligence of the chauffeur; (b) in holding that the Government of the Philippine
Islands is liable for the damages sustained by the plaintiff as a result of the collision, even if it be
true that the collision was due to the negligence of the chauffeur; and (c) in rendering judgment
against the defendant for the sum of P14,741.
The trial court's findings of fact, which are fully supported by the record, are as follows:
It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a
motorcycle, was going toward the western part of Calle Padre Faura, passing along the west side
thereof at a speed of ten to twelve miles an hour, upon crossing Taft Avenue and when he was ten
feet from the southwestern intersection of said streets, the General Hospital ambulance, upon
reaching said avenue, instead of turning toward the south, after passing the center thereof, so that
it would be on the left side of said avenue, as is prescribed by the ordinance and the Motor Vehicle
Act, turned suddenly and unexpectedly and long before reaching the center of the street, into the
right side of Taft Avenue, without having sounded any whistle or horn, by which movement it
struck the plaintiff, who was already six feet from the southwestern point or from the post place
there.
By reason of the resulting collision, the plaintiff was so severely injured that, according to Dr.
Saleeby, who examined him on the very same day that he was taken to the General Hospital, he
was suffering from a depression in the left parietal region, a would in the same place and in the
back part of his head, while blood issued from his nose and he was entirely unconscious.
The marks revealed that he had one or more fractures of the skull and that the grey matter and
brain was had suffered material injury. At ten o'clock of the night in question, which was the time
set for performing the operation, his pulse was so weak and so irregular that, in his opinion, there
was little hope that he would live. His right leg was broken in such a way that the fracture
extended to the outer skin in such manner that it might be regarded as double and the would be
exposed to infection, for which reason it was of the most serious nature.
At another examination six days before the day of the trial, Dr. Saleeby noticed that the plaintiff's

leg showed a contraction of an inch and a half and a curvature that made his leg very weak and
painful at the point of the fracture. Examination of his head revealed a notable readjustment of the
functions of the brain and nerves. The patient apparently was slightly deaf, had a light weakness in
his eyes and in his mental condition. This latter weakness was always noticed when the plaintiff
had to do any difficult mental labor, especially when he attempted to use his money for
mathematical calculations.
According to the various merchants who testified as witnesses, the plaintiff's mental and physical
condition prior to the accident was excellent, and that after having received the injuries that have
been discussed, his physical condition had undergone a noticeable depreciation, for he had lost the
agility, energy, and ability that he had constantly displayed before the accident as one of the best
constructors of wooden buildings and he could not now earn even a half of the income that he had
secured for his work because he had lost 50 per cent of his efficiency. As a contractor, he could no
longer, as he had before done, climb up ladders and scaffoldings to reach the highest parts of the
building.
As a consequence of the loss the plaintiff suffered in the efficiency of his work as a contractor, he
had to dissolved the partnership he had formed with the engineer. Wilson, because he was
incapacitated from making mathematical calculations on account of the condition of his leg and of
his mental faculties, and he had to give up a contract he had for the construction of the Uy Chaco
building."
We may say at the outset that we are in full accord with the trial court to the effect that the
collision between the plaintiff's motorcycle and the ambulance of the General Hospital was due
solely to the negligence of the chauffeur.
The two items which constitute a part of the P14,741 and which are drawn in question by the
plaintiff are (a) P5,000, the award awarded for permanent injuries, and (b) the P2,666, the amount
allowed for the loss of wages during the time the plaintiff was incapacitated from pursuing his
occupation. We find nothing in the record which would justify us in increasing the amount of the
first. As to the second, the record shows, and the trial court so found, that the plaintiff's services as
a contractor were worth P1,000 per month. The court, however, limited the time to two months
and twenty-one days, which the plaintiff was actually confined in the hospital. In this we think
there was error, because it was clearly established that the plaintiff was wholly incapacitated for a
period of six months. The mere fact that he remained in the hospital only two months and twentyone days while the remainder of the six months was spent in his home, would not prevent recovery
for the whole time. We, therefore, find that the amount of damages sustained by the plaintiff,
without any fault on his part, is P18,075.
As the negligence which caused the collision is a tort committed by an agent or employee of the
Government, the inquiry at once arises whether the Government is legally-liable for the damages
resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:

An Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and
authorizing the Attorney-General of said Islands to appear in said suit.
Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E.
Merritt, of Manila, for damages resulting from a collision between his motorcycle and the
ambulance of the General Hospital on March twenty-fifth, nineteen hundred and thirteen;
Whereas it is not known who is responsible for the accident nor is it possible to determine the
amount of damages, if any, to which the claimant is entitled; and
Whereas the Director of Public Works and the Attorney-General recommended that an Act be
passed by the Legislature authorizing Mr. E. Merritt to bring suit in the courts against the
Government, in order that said questions may be decided: Now, therefore,
By authority of the United States, be it enacted by the Philippine Legislature, that:
SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city
of Manila against the Government of the Philippine Islands in order to fix the responsibility for the
collision between his motorcycle and the ambulance of the General Hospital, and to determine the
amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and
the Attorney-General of the Philippine Islands is hereby authorized and directed to appear at the
trial on the behalf of the Government of said Islands, to defendant said Government at the same.
SEC. 2. This Act shall take effect on its passage.
Enacted, February 3, 1915.
Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it
also concede its liability to the plaintiff? If only the former, then it cannot be held that the Act
created any new cause of action in favor of the plaintiff or extended the defendant's liability to any
case not previously recognized.
All admit that the Insular Government (the defendant) cannot be sued by an individual without its
consent. It is also admitted that the instant case is one against the Government. As the consent of
the Government to be sued by the plaintiff was entirely voluntary on its part, it is our duty to look
carefully into the terms of the consent, and render judgment accordingly.
The plaintiff was authorized to bring this action against the Government "in order to fix the
responsibility for the collision between his motorcycle and the ambulance of the General Hospital
and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account
of said collision, . . . ." These were the two questions submitted to the court for determination. The
Act was passed "in order that said questions may be decided." We have "decided" that the accident
was due solely to the negligence of the chauffeur, who was at the time an employee of the

defendant, and we have also fixed the amount of damages sustained by the plaintiff as a result of
the collision. Does the Act authorize us to hold that the Government is legally liable for that
amount? If not, we must look elsewhere for such authority, if it exists.
The Government of the Philippine Islands having been "modeled after the Federal and State
Governments in the United States," we may look to the decisions of the high courts of that country
for aid in determining the purpose and scope of Act No. 2457.
In the United States the rule that the state is not liable for the torts committed by its officers or
agents whom it employs, except when expressly made so by legislative enactment, is well settled.
"The Government," says Justice Story, "does not undertake to guarantee to any person the fidelity
of the officers or agents whom it employs, since that would involve it in all its operations in
endless embarrassments, difficulties and losses, which would be subversive of the public interest."
(Claussen vs. City of Luverne, 103 Minn., 491, citing U. S. vs. Kirkpatrick, 9 Wheat, 720; 6 L.
Ed., 199; and Beers vs. States, 20 How., 527; 15 L. Ed., 991.)
In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to recover damages from the
state for personal injuries received on account of the negligence of the state officers at the state
fair, a state institution created by the legislature for the purpose of improving agricultural and
kindred industries; to disseminate information calculated to educate and benefit the industrial
classes; and to advance by such means the material interests of the state, being objects similar to
those sought by the public school system. In passing upon the question of the state's liability for
the negligent acts of its officers or agents, the court said:
No claim arises against any government is favor of an individual, by reason of the misfeasance,
laches, or unauthorized exercise of powers by its officers or agents. (Citing Gibbons vs. U. S., 8
Wall., 269; Clodfelter vs. State, 86 N. C., 51, 53; 41 Am. Rep., 440; Chapman vs. State, 104 Cal.,
690; 43 Am. St. Rep., 158; Green vs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27 Am. St.
Rep., 203; Story on Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals to sue the state where the cause of
action arises out of either fort or contract, the rule is stated in 36 Cyc., 915, thus:
By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede
its liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause
not previously recognized. It merely gives a remedy to enforce a preexisting liability and submits
itself to the jurisdiction of the court, subject to its right to interpose any lawful defense.
In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the Act of
1913, which authorized the bringing of this suit, read:
SECTION 1. Authority is hereby given to George Apfelbacher, of the town of Summit,
Waukesha County, Wisconsin, to bring suit in such court or courts and in such form or forms as he
may be advised for the purpose of settling and determining all controversies which he may now

have with the State of Wisconsin, or its duly authorized officers and agents, relative to the mill
property of said George Apfelbacher, the fish hatchery of the State of Wisconsin on the Bark
River, and the mill property of Evan Humphrey at the lower end of Nagawicka Lake, and relative
to the use of the waters of said Bark River and Nagawicka Lake, all in the county of Waukesha,
Wisconsin.
In determining the scope of this act, the court said:
Plaintiff claims that by the enactment of this law the legislature admitted liability on the part of the
state for the acts of its officers, and that the suit now stands just as it would stand between private
parties. It is difficult to see how the act does, or was intended to do, more than remove the state's
immunity from suit. It simply gives authority to commence suit for the purpose of settling
plaintiff's controversies with the estate. Nowhere in the act is there a whisper or suggestion that
the court or courts in the disposition of the suit shall depart from well established principles of
law, or that the amount of damages is the only question to be settled. The act opened the door of
the court to the plaintiff. It did not pass upon the question of liability, but left the suit just where it
would be in the absence of the state's immunity from suit. If the Legislature had intended to
change the rule that obtained in this state so long and to declare liability on the part of the state, it
would not have left so important a matter to mere inference, but would have done so in express
terms. (Murdock Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N.E., 854; 8 L. R. A., 399.)
In Denning vs. State (123 Cal., 316), the provisions of the Act of 1893, relied upon and
considered, are as follows:
All persons who have, or shall hereafter have, claims on contract or for negligence against the
state not allowed by the state board of examiners, are hereby authorized, on the terms and
conditions herein contained, to bring suit thereon against the state in any of the courts of this state
of competent jurisdiction, and prosecute the same to final judgment. The rules of practice in civil
cases shall apply to such suits, except as herein otherwise provided.
And the court said:
This statute has been considered by this court in at least two cases, arising under different facts,
and in both it was held that said statute did not create any liability or cause of action against the
state where none existed before, but merely gave an additional remedy to enforce such liability as
would have existed if the statute had not been enacted. (Chapman vs. State, 104 Cal., 690; 43 Am.
St. Rep., 158; Melvin vs. State, 121 Cal., 16.)
A statute of Massachusetts enacted in 1887 gave to the superior court "jurisdiction of all claims
against the commonwealth, whether at law or in equity," with an exception not necessary to be
here mentioned. In construing this statute the court, in Murdock Grate Co. vs. Commonwealth
(152 Mass., 28), said:
The statute we are discussing disclose no intention to create against the state a new and heretofore

unrecognized class of liabilities, but only an intention to provide a judicial tribunal where well
recognized existing liabilities can be adjudicated.
In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by the terms of the
statute of New York, jurisdiction of claims for damages for injuries in the management of the
canals such as the plaintiff had sustained, Chief Justice Ruger remarks: "It must be conceded that
the state can be made liable for injuries arising from the negligence of its agents or servants, only
by force of some positive statute assuming such liability."
It being quite clear that Act No. 2457 does not operate to extend the Government's liability to any
cause not previously recognized, we will now examine the substantive law touching the
defendant's liability for the negligent acts of its officers, agents, and employees. Paragraph 5 of
article 1903 of the Civil Code reads:
The state is liable in this sense when it acts through a special agent, but not when the damage
should have been caused by the official to whom properly it pertained to do the act performed, in
which case the provisions of the preceding article shall be applicable.
The supreme court of Spain in defining the scope of this paragraph said:
That the obligation to indemnify for damages which a third person causes to another by his fault
or negligence is based, as is evidenced by the same Law 3, Title 15, Partida 7, on that the person
obligated, by his own fault or negligence, takes part in the act or omission of the third party who
caused the damage. It follows therefrom that the state, by virtue of such provisions of law, is not
responsible for the damages suffered by private individuals in consequence of acts performed by
its employees in the discharge of the functions pertaining to their office, because neither fault nor
even negligence can be presumed on the part of the state in the organization of branches of public
service and in the appointment of its agents; on the contrary, we must presuppose all foresight
humanly possible on its part in order that each branch of service serves the general weal an that of
private persons interested in its operation. Between these latter and the state, therefore, no
relations of a private nature governed by the civil law can arise except in a case where the state
acts as a judicial person capable of acquiring rights and contracting obligations. (Supreme Court
of Spain, January 7, 1898; 83 Jur. Civ., 24.)
That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault
or negligence; and whereas in the first article thereof. No. 1902, where the general principle is laid
down that where a person who by an act or omission causes damage to another through fault or
negligence, shall be obliged to repair the damage so done, reference is made to acts or omissions
of the persons who directly or indirectly cause the damage, the following articles refers to this
persons and imposes an identical obligation upon those who maintain fixed relations of authority
and superiority over the authors of the damage, because the law presumes that in consequence of
such relations the evil caused by their own fault or negligence is imputable to them. This legal
presumption gives way to proof, however, because, as held in the last paragraph of article 1903,
responsibility for acts of third persons ceases when the persons mentioned in said article prove

that they employed all the diligence of a good father of a family to avoid the damage, and among
these persons, called upon to answer in a direct and not a subsidiary manner, are found, in addition
to the mother or the father in a proper case, guardians and owners or directors of an establishment
or enterprise, the state, but not always, except when it acts through the agency of a special agent,
doubtless because and only in this case, the fault or negligence, which is the original basis of this
kind of objections, must be presumed to lie with the state.
That although in some cases the state might by virtue of the general principle set forth in article
1902 respond for all the damage that is occasioned to private parties by orders or resolutions
which by fault or negligence are made by branches of the central administration acting in the name
and representation of the state itself and as an external expression of its sovereignty in the exercise
of its executive powers, yet said article is not applicable in the case of damages said to have been
occasioned to the petitioners by an executive official, acting in the exercise of his powers, in
proceedings to enforce the collections of certain property taxes owing by the owner of the
property which they hold in sublease.
That the responsibility of the state is limited by article 1903 to the case wherein it acts through a
special agent (and a special agent, in the sense in which these words are employed, is one who
receives a definite and fixed order or commission, foreign to the exercise of the duties of his office
if he is a special official) so that in representation of the state and being bound to act as an agent
thereof, he executes the trust confided to him. This concept does not apply to any executive agent
who is an employee of the acting administration and who on his own responsibility performs the
functions which are inherent in and naturally pertain to his office and which are regulated by law
and the regulations." (Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.)
That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a
decision, among others, of the 18th of May, 1904, in a damage case, the responsibility of the state
is limited to that which it contracts through a special agent, duly empowered by a definite order or
commission to perform some act or charged with some definite purpose which gives rise to the
claim, and not where the claim is based on acts or omissions imputable to a public official charged
with some administrative or technical office who can be held to the proper responsibility in the
manner laid down by the law of civil responsibility. Consequently, the trial court in not so
deciding and in sentencing the said entity to the payment of damages, caused by an official of the
second class referred to, has by erroneous interpretation infringed the provisions of articles 1902
and 1903 of the Civil Code. (Supreme Court of Spain, July 30, 1911; 122 Jur. Civ., 146.)
It is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable,
according to the above quoted decisions of the Supreme Court of Spain, for the acts of its agents,
officers and employees when they act as special agents within the meaning of paragraph 5 of
article 1903, supra, and that the chauffeur of the ambulance of the General Hospital was not such
an agent.
For the foregoing reasons, the judgment appealed from must be reversed, without costs in this
instance. Whether the Government intends to make itself legally liable for the amount of damages

above set forth, which the plaintiff has sustained by reason of the negligent acts of one of its
employees, by legislative enactment and by appropriating sufficient funds therefor, we are not
called upon to determine. This matter rests solely with the Legislature and not with the courts.