Republic of the Philippines although the petitioners are the public officials who were
SUPREME COURT named as respondents 1 in a mandamus suit below. Such is
Manila
SECOND DIVISION
G.R. No. L-30044 December 19, 1973
LORENZO SAYSON, as Highway Auditor, Bureau of
Public Highways, Cebu First Engineering District;
CORNELIO FORNIER, as Regional Supervising Auditor,
Eastern Visayas Region; ASTERIO, BUQUERON,
ADVENTOR FERNANDEZ, MANUEL S. LEPATAN,
RAMON QUIRANTE, and TEODULFO
REGIS, petitioners,
vs.
FELIPE SINGSON, as sole owner and proprietor of
Singkier Motor Service, respondent.
Office of the Solicitor General Felix V. Makasiar and
Solicitor Bernardo P. Pardo for petitioners.
Teodoro Almase and Casiano U. Laput for respondent.
FERNANDO, J.:
The real party in interest before this Court in
this certiorari proceeding to review a decision of the Court
of First Instance of Cebu is the Republic of the Philippines,
1
the contention of the then Solicitor General, now Associate
Justice, Felix V. Makasiar, 2 for as he did point out, what is
involved is a money claim against the government,
predicated on a contract. The basic doctrine of non-suability
of the government without its consent is thus decisive of the
controversy. There is a governing statute that is
controlling. 3 Respondent Felipe Singson, the claimant, for
reasons known to him, did not choose to abide by its terms.
That was a fatal misstep. The lower court, however, did not
see it that way. We cannot affirm its decision.
As found by the lower court, the facts are the following: "In
January, 1967, the Office of the District Engineer
requisitioned various items of spare parts for the repair of a
D-8 bulldozer, ... . The requisition (RIV No. 67/0331) was
signed by the District Engineer, Adventor Fernandez, and
the Requisitioning Officer (civil engineer), Manuel S.
Lepatan. ... It was approved by the Secretary of Public
Works and Communications, Antonio V. Raquiza. It is noted
in the approval of the said requisition that "This is an
exception to the telegram dated Feb. 21, 1967 of the
Secretary of Public Works and Communications." ... So, a
canvass or public bidding was conducted on May 5, 1967 ...
. The committee on award accepted the bid of the Singkier
Motor Service [owned by respondent Felipe Singson] for the
sum of P43,530.00. ... Subsequently, it was approved by the
Secretary of Public Works and Communications; and on
May 16, 1967 the Secretary sent a letter-order to the
Singkier Motor Service, Mandaue, Cebu requesting it to
immediately deliver the items listed therein for the lot price
of P43,530.00. ... It would appear that a purchase order
signed by the District Engineer, the Requisitioning Officer
and the Procurement Officer, was addressed to the Singkier
Motor Service. ... In due course the Voucher No. 07806
reached the hands of Highway Auditor Sayson for pre-audit.
He then made inquiries about the reasonableness of the
price. ... Thus, after finding from the indorsements of the
Division Engineer and the Commissioner of Public
Highways that the prices of the various spare parts are just
and reasonable and that the requisition was also approved
by no less than the Secretary of Public Works and
Communications with the verification of V.M. Secarro a
representative of the Bureau of Supply Coordination,
Manila, he approved it for payment in the sum of
P34,824.00, with the retention of 20% equivalent to
P8,706.00. ... His reason for withholding the 20% equivalent
to P8,706.00 was to submit the voucher with the supporting
papers to the Supervising Auditor, which he did. ... The
voucher ... was paid on June 9, 1967 in the amount of
P34,824.00 to the petitioner [respondent Singson]. On June
10,1967, Highway Auditor Sayson received a telegram from
Supervising Auditor Fornier quoting a telegraphic message
of the General Auditing Office which states: "In view of
excessive prices charge for purchase of spare parts and
equipment shown by vouchers already submitted this Office
direct all highway auditors refer General Office payment
similar nature for appropriate action." ... In the interim it
would appear that when the voucher and the supporting
papers reached the GAO, a canvass was made of the spare
parts among the suppliers in Manila, particularly, the USI
(Phil.), which is the exclusive dealer of the spare parts of
the caterpillar tractors in the Philippines. Said firm thus
submitted its quotations at P2,529.64 only which is
P40,000.00 less than the price of the Singkier. ... In view of
2
the overpricing the GAO took up the matter with the
Secretary of Public Works in a third indorsement of July 18,
1967. ... The Secretary then circularized a telegram holding
the district engineer responsible for overpricing." 4 What is
more, charges for malversation were filed against the
district engineer and the civil engineer involved. It was the
failure of the Highways Auditor, one of the petitioners before
us, that led to the filing of the mandamus suit below, with
now respondent Singson as sole proprietor of Singkier
Motor Service, being adjudged as entitled to collect the
balance of P8,706.00, the contract in question having been
upheld. Hence this appeal by certiorari.
1. To state the facts is to make clear the solidity of the stand
taken by the Republic. The lower court was unmindful of the
fundamental doctrine of non-suability. So it was stressed in
the petition of the then Solicitor General Makasiar. Thus: "It
is apparent that respondent Singson's cause of action is a
money claim against the government, for the payment of
the alleged balance of the cost of spare parts supplied by
him to the Bureau of Public Highways. Assuming
momentarily the validity of such claim, although as will be
shown hereunder, the claim is void for the cause or
consideration is contrary to law, morals or public policy,
mandamus is not the remedy to enforce the collection of
such claim against the State but a ordinary action for
specific performance ... . Actually, the suit disguised as one
for mandamus to compel the Auditors to approve the
vouchers for payment, is a suit against the State, which
cannot prosper or be entertained by the Court except with
the consent of the State ... . In other words, the respondent
should have filed his claim with the General Auditing Office,
under the provisions of Com. Act 327 ... which prescribe the
conditions under which money claim against the the lower court could not legally act on the matter. What
government may be transpired was anything but that. It is quite obvious then
filed ...." 5 Commonwealth Act No. 327 is quite explicit. It is that it does not have the imprint of validity.
therein provided: "In all cases involving the settlement of
accounts or claims, other than those of accountable officers, WHEREFORE, the decision of the Court of First Instance of
the Auditor General shall act and decide the same within Cebu of September 4, 1968 is reversed and set aside, and
sixty days, exclusive of Sundays and holidays, after their the suit for mandamus filed against petitioners, respondents
presentation. If said accounts or claims need reference to below, is dismissed. With costs against respondent Felipe
other persons, office or offices, or to a party interested, the Singson.
period aforesaid shall be counted from the time the last
comment necessary to a proper decision is received by Zaldivar (Chairman), Barredo, Antonio, Fernandez and
him." 6 Thereafter, the procedure for appeal is indicated: Aquino, JJ., concur.
"The party aggrieved by the final decision of the Auditor
General in the settlement of an account or claim may, within
thirty days from receipt of the decision, take an appeal in
writing: (a) To the President of the United States, pending
the final and complete withdrawal of her sovereignty over
the Philippines, or (b) To the President of the Philippines, or
(c) To the Supreme Court of the Philippines if the appellant
is a private person or entity." 7

2. With the facts undisputed and the statute far from

indefinite or ambiguous, the appealed decision defies
explanation. It would be to disregard a basic corollary of the
cardinal postulate of non-suability. It is true that once
consent is secured, an action may be filed. There is nothing
to prevent the State, however, in such statutory grant, to
require that certain administrative proceedings be had and
be exhausted. Also, the proper forum in the judicial
hierarchy can be specified if thereafter an appeal would be
taken by the party aggrieved. Here, there was no ruling of
the Auditor General. Even had there been such, the court to
which the matter should have been elevated is this Tribunal;

3

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. R-5977, dismissing
the plaintiff's complaint.
Victoria Amigable, the appellant herein, is the registered
owner of Lot No. 639 of the Banilad Estate in Cebu City as
shown by Transfer Certificate of Title No. T-18060, which
superseded Transfer Certificate of Title No. RT-3272 (T-
3435) issued to her by the Register of Deeds of Cebu on
February 1, 1924. No annotation in favor of the government
of any right or interest in the property appears at the back of
4
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.
5
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 As regards the claim for damages, the plaintiff is entitled
unthinkable then that precisely because there thereto in the form of legal interest on the price of the land
was a failure to abide by what the law from the time it was taken up to the time that payment is
requires, the government would stand to made by the government. 3 In addition, the government
benefit. It is just as important, if not more so, should pay for attorney's fees, the amount of which should
that there be fidelity to legal norms on the part be fixed by the trial court after hearing.
of officialdom if the rule of law were to be
maintained. It is not too much to say that when WHEREFORE, the decision appealed from is hereby set
the government takes any property for public aside and the case remanded to the court a quo for the
use, which is conditioned upon the payment of determination of compensation, including attorney's fees, to
just compensation, to be judicially which the appellant is entitled as above indicated. No
ascertained, it makes manifest that it submits pronouncement as to costs.
to the jurisdiction of a court. There is no
thought then that the doctrine of immunity Concepcion, C.J., Reyes, J.B.L., Zaldivar, Castro,
from suit could still be appropriately invoked. Fernando, Teehankee, Barredo, Villamor and Makasiar JJ.,
concur.
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

6
 At times material to this case, the United States of America
had a naval base in Subic, Zambales. The base was one of
Republic of the Philippines those provided in the Military Bases Agreement between
SUPREME COURT the Philippines and the United States.
Manila
Sometime in May, 1972, the United States invited the
EN BANC submission of bids for the following projects

G.R. No. L-35645 May 22, 1985 1. Repair offender system, Alava Wharf at the U.S. Naval
Station Subic Bay, Philippines.
UNITED STATES OF AMERICA, CAPT. JAMES E.
GALLOWAY, WILLIAM I. COLLINS and ROBERT 2. Repair typhoon damage to NAS Cubi shoreline; repair
GOHIER,petitioners, typhoon damage to shoreline revetment, NAVBASE Subic;
vs. and repair to Leyte Wharf approach, NAVBASE Subic Bay,
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court Philippines.
of First Instance of Rizal and ELIGIO DE GUZMAN &
CO., INC., respondents. Eligio de Guzman & Co., Inc. responded to the invitation
and submitted bids. Subsequent thereto, the company
Sycip, Salazar, Luna & Manalo & Feliciano Law for received from the United States two telegrams requesting it
petitioners. to confirm its price proposals and for the name of its
bonding company. The company complied with the
Albert, Vergara, Benares, Perias & Dominguez Law requests. [In its complaint, the company alleges that the
Office for respondents. 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
ABAD SANTOS, J.: tested because the case has not reached the trial stage.]

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:
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

7
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
8
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 non-
governmental acts (Rollo, p. 20.) However, the respondent
judge also said: "It is the Court's considered opinion that
entering into a contract for the repair of wharves or
shoreline is certainly not a governmental function altho it
may partake of a public nature or character. As aptly
pointed out by plaintiff's counsel in his reply citing the ruling
in the case of Lyons, Inc., [104 Phil. 594 (1958)], and which
this Court quotes with approval, viz.:
It is however contended that when a sovereign
state enters into a contract with a private
person, the state can be sued upon the theory
that it has descended to the level of an
individual from which it can be implied that it
has given its consent to be sued under the
contract. ...
xxx xxx xxx
We agree to the above contention, and
considering that the United States
government, through its agency at Subic Bay,
entered into a contract with appellant for
stevedoring and miscellaneous labor services
within the Subic Bay Area, a U.S. Naval
Reservation, it is evident that it can bring an
action before our courts for any contractual
liability that that political entity may assume
under the contract. The trial court, therefore,
has jurisdiction to entertain this case ... (Rollo,
pp. 20-21.)
The reliance placed on Lyons by the respondent judge is
misplaced for the following reasons:
In Harry Lyons, Inc. vs. The United States of America,
supra, plaintiff brought suit in the Court of First Instance of
Manila to collect several sums of money on account of a
contract between plaintiff and defendant. The defendant
9
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
10
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 forjure
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
11
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
12
unduly upon our sovereignty and dignity as a nation. Its
application will particularly discourage Filipino or domestic
contractors from transacting business and entering into
contracts with United States authorities or facilities in the
Philippines whether naval, air or ground forces-because the
difficulty, if not impossibility, of enforcing a validly executed
contract and of seeking judicial remedy in our own courts
for breaches of contractual obligation committed by agents
of the United States government, always, looms large,
thereby hampering the growth of Filipino enterprises and
creating a virtual monopoly in our own country by United
States contractors of contracts for services or supplies with
the various U.S. offices and agencies operating in the
Philippines.
The sanctity of upholding agreements freely entered into by
the parties cannot be over emphasized. Whether the parties
are nations or private individuals, it is to be reasonably
assumed and expected that the undertakings in the
contract will be complied with in good faith.
One glaring fact of modern day civilization is that a big and
powerful nation, like the United States of America, can
always overwhelm small and weak nations. The declaration
in the United Nations Charter that its member states are
equal and sovereign, becomes hollow and meaningless
because big nations wielding economic and military
superiority impose upon and dictate to small nations,
subverting their sovereignty and dignity as nations. Thus,
more often than not, when U.S. interest clashes with the
interest of small nations, the American governmental
agencies or its citizens invoke principles of international law
for their own benefit.
In the case at bar, the efficacy of the contract between the
U.S. Naval authorities at Subic Bay on one hand, and
herein private respondent on the other, was honored more
in the breach than in the compliance The opinion of the
majority will certainly open the floodgates of more violations
of contractual obligations. American authorities or any
foreign government in the Philippines for that matter,
dealing with the citizens of this country, can conveniently
seek protective cover under the majority opinion. The result
is disastrous to the Philippines.
This opinion of the majority manifests a neo-colonial
mentality. It fosters economic imperialism and foreign
political ascendancy in our Republic.
The doctrine of government immunity from suit cannot and
should not serve as an instrument for perpetrating an
injustice on a citizen (Amigable vs. Cuenca, L-26400,
February 29, 1972, 43 SCRA 360; Ministerio vs. Court of
First Instance, L-31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the
United States government, through its naval authorities at
Subic Bay, should be held amenable to lawsuits in our
country like any other juristic person.
The invocation by the petitioner United States of America is
not in accord with paragraph 3 of Article III of the original
RP-US Military Bases Agreement of March 14, 1947, which
states that "in the exercise of the above-mentioned rights,
powers and authority, the United States agrees that the
powers granted to it will not be used unreasonably. . ."
(Emphasis supplied).
13
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
14
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.
15
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 forces-because the
difficulty, if not impossibility, of enforcing a validly executed
contract and of seeking judicial remedy in our own courts
for breaches of contractual obligation committed by agents
of the United States government, always, looms large,
thereby hampering the growth of Filipino enterprises and
creating a virtual monopoly in our own country by United
States contractors of contracts for services or supplies with
the various U.S. offices and agencies operating in the
Philippines.
The sanctity of upholding agreements freely entered into by
the parties cannot be over emphasized. Whether the parties
are nations or private individuals, it is to be reasonably
assumed and expected that the undertakings in the
contract will be complied with in good faith.
One glaring fact of modern day civilization is that a big and
powerful nation, like the United States of America, can
always overwhelm small and weak nations. The declaration
16
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
17
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 * He signed before he left.
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).

Footnotes

18

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.
19
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
20
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
21
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
22
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
23
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 non-suability. That is hardly fair, at least in
democratic societies, for the state is not an unfeeling tyrant
unmoved by the valid claims of its citizens. In fact, the
doctrine is not absolute and does not say the state may not
be sued under any circumstance. On the contrary, the rule
24
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
25
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
26
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
27
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
28
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
29
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
30
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
31
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.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr.,
Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento,
Cortes, Grio-Aquino, Medialdea and Regalado, JJ.,
concur.
 Republic of the Philippines Civil Case No. 0034 entitled Republic of the Philippines,
SUPREME COURT plaintiff, v. Roberto S. Benedicto, et al., defendants, is a
Manila complaint for reconveyance, reversion, accounting,
reconstitution and damages. The case is one of several
SECOND DIVISION suits involving ill-gotten or unexplained wealth that
petitioner Republic, through the PCGG, filed with the
G.R. No. 129406 March 6, 2006 Sandiganbayan against private respondent Roberto S.
Benedicto and others pursuant to Executive Order (EO) No.
REPUBLIC OF THE PHILIPPINES represented by the 14,3 series of 1986.
PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT (PCGG), Petitioner, Pursuant to its mandate under EO No. 1,4 series of 1986,
vs. the PCGG issued writs placing under sequestration all
SANDIGANBAYAN (SECOND DIVISION) and ROBERTO business enterprises, entities and other properties, real and
S. BENEDICTO, Respondents. personal, owned or registered in the name of private
respondent Benedicto, or of corporations in which he
DECISION appeared to have controlling or majority interest. Among the
properties thus sequestered and taken over by PCGG fiscal
GARCIA, J.: agents were the 227 shares in NOGCCI owned by private
respondent Benedicto and registered in his name or under
Before the Court is this petition for certiorari under Rule 65 the names of corporations he owned or controlled.
of the Rules of Court to nullify and set aside the March 28,
19951 and March 13, 19972 Resolutions of the Following the sequestration process, PCGG representatives
Sandiganbayan, Second Division, in Civil Case No. 0034, sat as members of the Board of Directors of NOGCCI,
insofar as said resolutions ordered the Presidential which passed, sometime in October 1986, a resolution
Commission on Good Government (PCGG) to pay private effecting a corporate policy change. The change consisted
respondent Roberto S. Benedicto or his corporations the of assessing a monthly membership due of P150.00 for
value of 227 shares of stock of the Negros Occidental Golf each NOGCCI share. Prior to this resolution, an investor
and Country Club, Inc. (NOGCCI) at P150,000.00 per purchasing more than one NOGCCI share was exempt from
share, registered in the name of said private respondent or paying monthly membership due for the second and
his corporations. subsequent shares that he/she owned.

The facts:

32
Subsequently, on March 29, 1987, the NOGCCI Board
passed another resolution, this time increasing the monthly
membership due from P150.00 to P250.00 for each share.
As sequestrator of the 227 shares of stock in question,
PCGG did not pay the corresponding monthly membership
due thereon totaling P2,959,471.00. On account thereof,
the 227 sequestered shares were declared delinquent to be
disposed of in an auction sale.
Apprised of the above development and evidently to
prevent the projected auction sale of the same shares,
PCGG filed a complaint for injunction with the Regional Trial
Court (RTC) of Bacolod City, thereat docketed as Civil Case
No. 5348. The complaint, however, was dismissed, paving
the way for the auction sale for the delinquent 227 shares of
stock. On August 5, 1989, an auction sale was conducted.
On November 3, 1990, petitioner Republic and private
respondent Benedicto entered into a Compromise
Agreement in Civil Case No. 0034. The agreement
contained a general release clause5 whereunder petitioner
Republic agreed and bound itself to lift the sequestration on
the 227 NOGCCI shares, among other Benedictos
properties, petitioner Republic acknowledging that it was
within private respondent Benedictos capacity to acquire
the same shares out of his income from business and the
exercise of his profession.6 Implied in this undertaking is the
recognition by petitioner Republic that the subject shares of
stock could not have been ill-gotten.
33
In a decision dated October 2, 1992, the Sandiganbayan
approved the Compromise Agreement and accordingly
rendered judgment in accordance with its terms.
In the process of implementing the Compromise
Agreement, either of the parties would, from time to time,
move for a ruling by the Sandiganbayan on the proper
manner of implementing or interpreting a specific provision
therein.
On February 22, 1994, Benedicto filed in Civil Case No.
0034 a "Motion for Release from Sequestration and Return
of Sequestered Shares/Dividends" praying, inter alia, that
his NOGCCI shares of stock be specifically released from
sequestration and returned, delivered or paid to him as part
of the parties Compromise Agreement in that case. In a
Resolution7 promulgated on December 6, 1994, the
Sandiganbayan granted Benedictos aforementioned motion
but placed the subject shares under the custody of its Clerk
of Court, thus:
WHEREFORE, in the light of the foregoing, the said "Motion
for Release From Sequestration and Return of Sequestered
Shares/Dividends" is hereby GRANTED and it is directed
that said shares/dividends be delivered/placed under the
custody of the Clerk of Court, Sandiganbayan, Manila
subject to this Courts disposition.
On March 28, 1995, the Sandiganbayan came out with the
herein first assailed Resolution,8 which clarified its
aforementioned December 6, 1994 Resolution and directed
the immediate implementation thereof by requiring PCGG,
among other things:
(b) To deliver to the Clerk of Court the 227 sequestered
shares of [NOGCCI] registered in the name of nominees of
ROBERTO S. BENEDICTO free from all liens and
encumbrances, or in default thereof, to pay their value at
P150,000.00 per share which can be deducted from [the
Republics] cash share in the Compromise Agreement.
[Words in bracket added] (Emphasis Supplied).
Owing to PCGGs failure to comply with the above directive,
Benedicto filed in Civil Case No. 0034 a Motion for
Compliance dated July 25, 1995, followed by an Ex-Parte
Motion for Early Resolution dated February 12, 1996. Acting
thereon, the Sandiganbayan promulgated yet another
Resolution9 on February 23, 1996, dispositively reading:
WHEREFORE, finding merit in the instant motion for early
resolution and considering that, indeed, the PCGG has not
shown any justifiable ground as to why it has not complied
with its obligation as set forth in the Order of December 6,
1994 up to this date and which Order was issued pursuant
to the Compromise Agreement and has already become
final and executory, accordingly, the Presidential
Commission on Good Government is hereby given a final
extension of fifteen (15) days from receipt hereof within
which to comply with the Order of December 6, 1994 as
stated hereinabove.
On April 1, 1996, PCGG filed a Manifestation with Motion for
Reconsideration,10 praying for the setting aside of the
Resolution of February 23, 1996. On April 11, 1996, private
respondent Benedicto filed a Motion to Enforce Judgment
Levy. Resolving these two motions, the Sandiganbayan, in
its second assailed Resolution11 dated March 13, 1997,
34
denied that portion of the PCGGs Manifestation with Motion
for Reconsideration concerning the subject 227 NOGCCI
shares and granted Benedictos Motion to Enforce
Judgment Levy.
Hence, the Republics present recourse on the sole issue of
whether or not the public respondent Sandiganbayan,
Second Division, gravely abused its discretion in holding
that the PCGG is at fault for not paying the membership
dues on the 227 sequestered NOGCCI shares of stock, a
failing which eventually led to the foreclosure sale thereof.
The petition lacks merit.
To begin with, PCGG itself does not dispute its being
considered as a receiver insofar as the sequestered 227
NOGCCI shares of stock are concerned.12 PCGG also
acknowledges that as such receiver, one of its functions is
to pay outstanding debts pertaining to the sequestered
entity or property,13 in this case the 227 NOGCCI shares in
question. It contends, however, that membership dues
owing to a golf club cannot be considered as an outstanding
debt for which PCGG, as receiver, must pay. It also claims
to have exercised due diligence to prevent the loss through
delinquency sale of the subject NOGCCI shares,
specifically inviting attention to the injunctive suit, i.e., Civil
Case No. 5348, it filed before the RTC of Bacolod City to
enjoin the foreclosure sale of the shares.
The filing of the injunction complaint adverted to, without
more, cannot plausibly tilt the balance in favor of PCGG. To
the mind of the Court, such filing is a case of acting too little
and too late. It cannot be over-emphasized that it behooved
the PCGGs fiscal agents to preserve, like a responsible
father of the family, the value of the shares of stock under
their administration. But far from acting as such father, what
the fiscal agents did under the premises was to allow the
element of delinquency to set in before acting by embarking
on a tedious process of going to court after the auction sale
had been announced and scheduled.
The PCGGs posture that to the owner of the sequestered
shares rests the burden of paying the membership dues is
untenable. For one, it lost sight of the reality that such dues
are basically obligations attached to the shares, which, in
the final analysis, shall be made liable, thru delinquency
sale in case of default in payment of the dues. For another,
the PCGG as sequestrator-receiver of such shares is, as
stressed earlier, duty bound to preserve the value of such
shares. Needless to state, adopting timely measures to
obviate the loss of those shares forms part of such duty and
due diligence.
The Sandiganbayan, to be sure, cannot plausibly be faulted
for finding the PCGG liable for the loss of the 227 NOGCCI
shares. There can be no quibbling, as indeed the graft court
so declared in its assailed and related resolutions
respecting the NOGCCI shares of stock, that PCGGs fiscal
agents, while sitting in the NOGCCI Board of Directors
agreed to the amendment of the rule pertaining to
membership dues. Hence, it is not amiss to state, as did the
Sandiganbayan, that the PCGG-designated fiscal agents,
no less, had a direct hand in the loss of the sequestered
shares through delinquency and their eventual sale through
public auction. While perhaps anti-climactic to so mention it
at this stage, the unfortunate loss of the shares ought not to
35
have come to pass had those fiscal agents prudently not
agreed to the passage of the NOGCCI board resolutions
charging membership dues on shares without playing
representatives.
Given the circumstances leading to the auction sale of the
subject NOGCCI shares, PCGGs lament about public
respondent Sandiganbayan having erred or, worse still,
having gravely abused its discretion in its determination as
to who is at fault for the loss of the shares in question can
hardly be given cogency.
For sure, even if the Sandiganbayan were wrong in its
findings, which does not seem to be in this case, it is a well-
settled rule of jurisprudence that certiorari will issue only to
correct errors of jurisdiction, not errors of judgment.
Corollarily, errors of procedure or mistakes in the courts
findings and conclusions are beyond the corrective hand of
certiorari.14 The extraordinary writ of certiorari may be
availed only upon a showing, in the minimum, that the
respondent tribunal or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion.15
The term "grave abuse of discretion" connotes capricious
and whimsical exercise of judgment as is equivalent to
excess, or a lack of jurisdiction.16 The abuse must be so
patent and gross as to amount to an evasion of a positive
duty or a virtual refusal to perform a duty enjoined by law, or
to act at all in contemplation of law as where the power is
exercised in an arbitrary and despotic manner by reason of
passion or hostility.17 Sadly, this is completely absent in the
present case. For, at bottom, the assailed resolutions of the
Sandiganbayan did no more than to direct PCGG to comply
with its part of the bargain under the compromise
agreement it freely entered into with private respondent
Benedicto. Simply put, the assailed resolutions of the
Sandiganbayan have firm basis in fact and in law.
Lest it be overlooked, the issue of liability for the shares in
question had, as both public and private respondents
asserted, long become final and executory. Petitioners
narration of facts in its present petition is even misleading
as it conveniently fails to make reference to two (2)
resolutions issued by the Sandiganbayan. We refer to that
courts resolutions of December 6, 199418 and February 23,
199619 as well as several intervening pleadings which
served as basis for the decisions reached therein. As it
were, the present petition questions only and focuses on
the March 28, 199520 and March 13, 199721 resolutions,
which merely reiterated and clarified the graft courts
underlying resolution of December 6, 1994. And to place
matters in the proper perspective, PCGGs failure to comply
with the December 6, 1994 resolution prompted the
issuance of the clarificatory and/or reiteratory resolutions
aforementioned.
In a last-ditch attempt to escape liability, petitioner Republic,
through the PCGG, invokes state immunity from suit. 22 As
argued, the order for it to pay the value of the delinquent
shares would fix monetary liability on a government agency,
thus necessitating the appropriation of public funds to
satisfy the judgment claim.23 But, as private respondent
Benedicto correctly countered, the PCGG fails to take stock
of one of the exceptions to the state immunity principle, i.e.,
when the government itself is the suitor, as in Civil Case No.
36
0034. Where, as here, the State itself is no less the plaintiff
in the main case, immunity from suit cannot be effectively
invoked.24 For, as jurisprudence teaches, when the State,
through its duly authorized officers, takes the initiative in a
suit against a private party, it thereby descends to the level
of a private individual and thus opens itself to whatever
counterclaims or defenses the latter may have against
it.25 Petitioner Republics act of filing its complaint in Civil
Case No. 0034 constitutes a waiver of its immunity from
suit. Being itself the plaintiff in that case, petitioner Republic
cannot set up its immunity against private respondent
Benedictos prayers in the same case.
In fact, by entering into a Compromise Agreement with
private respondent Benedicto, petitioner Republic thereby
stripped itself of its immunity from suit and placed itself in
the same level of its adversary. When the State enters into
contract, through its officers or agents, in furtherance of a
legitimate aim and purpose and pursuant to constitutional
legislative authority, whereby mutual or reciprocal benefits
accrue and rights and obligations arise therefrom, the State
may be sued even without its express consent, precisely
because by entering into a contract the sovereign descends
to the level of the citizen. Its consent to be sued is implied
from the very act of entering into such contract, 26 breach of
which on its part gives the corresponding right to the other
party to the agreement.
Finally, it is apropos to stress that the Compromise
Agreement in Civil Case No. 0034 envisaged the immediate
recovery of alleged ill-gotten wealth without further litigation
by the government, and buying peace on the part of the
aging Benedicto.27 Sadly, that stated objective has come to
naught as not only had the litigation continued to ensue, REYNATO S .PUNO
but, worse, private respondent Benedicto passed away on Associate Justice
May 15, 2000,28 with the trial of Civil Case No. 0034 still in Chairperson, Second Division
swing, so much so that the late Benedicto had to be
substituted by the administratrix of his estate. 29 C E R T I F I C AT I O N

WHEREFORE, the instant petition is hereby DISMISSED. Pursuant to Article VIII, Section 13 of the Constitution, and
the Division Chairman's Attestation, it is hereby certified that
SO ORDERED. the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of
CANCIO C. GARCIA the opinion of the Court.
Associate Justice
ARTEMIO V. PANGANIBAN
WE CONCUR: Chief Justice

REYNATO S. PUNO
Associate Justice
Chairperson

ANGELINA SANDOVAL- RENATO C.

GUTIERREZ CORONA
Associate Justice Asscociate Justice

ADOLFO S. AZCUNA
Associate Justice

AT T E S TAT I O N

I attest that the conclusions in the above decision were

reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

37
 The Attorney-General on behalf of the defendant urges that
the trial court erred: (a) in finding that the collision between
Republic of the Philippines the plaintiff's motorcycle and the ambulance of the General
SUPREME COURT Hospital was due to the negligence of the chauffeur; (b) in
Manila holding that the Government of the Philippine Islands is
liable for the damages sustained by the plaintiff as a result
EN BANC of the collision, even if it be true that the collision was due to
the negligence of the chauffeur; and (c) in rendering
G.R. No. L-11154 March 21, 1916 judgment against the defendant for the sum of P14,741.

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 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,

38
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.
39
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 twenty-one days while the remainder of the six months
was spent in his home, would not prevent recovery for the
whole time. We, therefore, find that the amount of damages
sustained by the plaintiff, without any fault on his part, is
P18,075.
As the negligence which caused the collision is a tort
committed by an agent or employee of the Government, the
inquiry at once arises whether the Government is legally-
liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
An Act authorizing E. Merritt to bring suit against the
Government of the Philippine Islands and authorizing
the Attorney-General of said Islands to appear in said
suit.
Whereas a claim has been filed against the
Government of the Philippine Islands by Mr. E.
Merritt, of Manila, for damages resulting from a
collision between his motorcycle and the ambulance
40
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
41
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
42
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:
43
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
44
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
45
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.
Arellano, C. J., Torres, Johnson, and Moreland, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-30098 February 18, 1970
THE COMMISSIONER OF PUBLIC HIGHWAYS and the
AUDITOR GENERAL, petitioners,
vs.
HON. LOURDES P. SAN DIEGO as Presiding Judge of
the Court of First Instance of Rizal, Branch IX, sitting in
Quezon City, TESTATE ESTATE OF N. T. HASHIM
(Special Proceedings No. 71131 of the Court of First
Instance of Manila) represented by its Judicial
Administrator, Tomas N. Hashim, TOMAS N. HASHIM,
personally, and as Judicial Administrator of the Estate
of Hashim, Special Proceedings No. 71131 of the Court
of ]First instance of Manila, ALL THE LEGAL OR
TESTAMENTARY HEIRS of the Estate of Hashim,
MANUELA C. FLORENDO, personally as Deputy Clerk,
Court of First Instance of Rizal, Quezon City, Branch IX,
BENJAMIN GARCIA as "Special Sheriff" appointed by
respondent Judge Lourdes P. San Diego, BENJAMIN V.
CORUA, personally and as Chief Documentation Staff,
Legal Department, Philippine National Bank, and the
PHILIPPINE NATIONAL BANK, respondents.
Office of the Solicitor General for petitioners.
46
Paredes, Poblador, Nazareno, Abada and Tomacruz for
respondent Judge Lourdes P. San Diego.
Jesus B. Santos for respondent Testate estate of N. T.
Hashim.
Jose A. Buendia for respondent Manuela C. Florendo.
Emata, Magkawas and Associates for respondent legal heir
Jose H. Hashim.
Alberto O. Villaraza for respondents Estate of N.T. Hashim
and Tomas N. Hashim.
Conrado E. Medina for respondent Philippine National
Bank.
Benjamin V. Corua for and in his own behalf.
TEEHANKEE, J.:
In this special civil action for certiorari and prohibition, the
Court declares null and void the two questioned orders of
respondent Court levying upon funds of petitioner Bureau of
Public Highways on deposit with the Philippine National
Bank, by virtue of the fundamental precept that government
funds are not subject to execution or garnishment.
The background facts follow:
On or about November 20, 1940, the Government of the
Philippines filed a complaint for eminent domain in the
Court of First Instance of Rizal1 for the expropriation of a
parcel of land belonging to N. T. Hashim, with an area of
14,934 square meters, needed to construct a public road,
now known as Epifanio de los Santos Avenue. On
November 25, 1940, the Government took possession of
the property upon deposit with the City Treasurer of the sum
of P23,413.64 fixed by the Court therein as the provisional
value of all the lots needed to construct the road, including
Hashim's property. The records of the expropriation case
were destroyed and lost during the second world war, and
neither party took any step thereafter to reconstitute the
proceedings.
In 1958, however, the estate of N.T. Hashim, deceased,
through its Judicial Administrator, Tomas N. Hashim, filed a
money claim with the Quezon City Engineer's Office in the
sum of P522,620.00, alleging said amount to be the fair
market value of the property in question, now already
converted and used as a public highway. Nothing having
come out of its claim, respondent estate filed on August 6,
1963, with the Court of First Instance of Rizal, Quezon City
Branch, assigned to Branch IX, presided by respondent
judge,2 a complaint for the recovery of the fair market price
of the said property in the sum of P672,030.00 against the
Bureau of Public Highways, which complaint was amended
on August 26, 1963, to include as additional defendants, the
Auditor General and the City Engineer of Quezon City.3
The issues were joined in the case with the filing by then
Solicitor General Arturo A. Alafriz of the State's answer,
stating that the Hashim estate was entitled only to the sum
47
of P3,203.00 as the fair market value of the property at the
time that the State took possession thereof on November
25, 1940, with legal interest thereon at 6% per annum, and
that said amount had been available and tendered by
petitioner Bureau since 1958. The parties thereafter worked
out a compromise agreement, respondent estate having
proposed on April 28, 1966, a payment of P14.00 per sq. m.
for its 14,934 sq.m.-parcel of land or the total amount of
P209,076.00, equivalent to the land's total assessed
value,4 which was confirmed, ratified and approved in
November, 1966 by the Commissioner of Public Highways
and the Secretary of Public Works and Communications.
On November 7, 1966, the Compromise Agreement
subscribed by counsel for respondent estate and by then
Solicitor General Antonio P. Barredo, now a member of this
Court, was submitted to the lower Court and under date of
November 8, 1966, respondent judge, as prayed for,
rendered judgment approving the Compromise Agreement
and ordering petitioners, as defendants therein, to pay
respondent estate as plaintiff therein, the total sum of
P209,076.00 for the expropriated lot.
On October 10, 1968, respondent estate filed with the lower
Court a motion for the issuance of a writ of execution,
alleging that petitioners had failed to satisfy the judgment in
its favor. It further filed on October 12, 1968, an ex-
parte motion for the appointment of respondent Benjamin
Garcia as special sheriff to serve the writ of execution. No
opposition having been filed by the Solicitor General's office
to the motion for execution at the hearing thereof on
October 12, 1968, respondent judge, in an order dated
October 14, 1968, granted both motions.
On the same date, October 14, 1968, respondent Garcia,
as special sheriff, forthwith served a Notice of Garnishment,
together with the writ of execution dated October 14, 1968,
issued by respondent Manuela C. Florendo as Deputy Clerk
of Court, on respondent Philippine National Bank, notifying
said bank that levy was thereby made upon funds of
petitioners Bureau of Public Highways and the Auditor
General on deposit, with the bank to cover the judgment of
P209,076.00 in favor of respondent estate, and requesting
the bank to reply to the garnishment within five days. On
October 16, 1968, three days before the expiration of the
five-day deadline, respondent Benjamin V. Corua in his
capacity as Chief, Documentation Staff, of respondent
bank's Legal Department, allegedly acting in excess of his
authority and without the knowledge and consent of the
Board of Directors and other ranking officials of respondent
bank, replied to the notice of garnishment that in
compliance therewith, the bank was holding the amount of
P209,076.00 from the account of petitioner Bureau of Public
Highways. Respondent bank alleged that when it was
served with Notice to Deliver Money signed by respondent
Garcia, as special sheriff, on October 17, 1968, it sent a
letter to the officials of the Bureau of Public Highways
notifying them of the notice of garnishment.
Under date of October 16, 1968, respondent estate further
filed with the lower Court an ex-parte motion for the
issuance of an order ordering respondent bank to release
and deliver to the special sheriff, respondent Garcia, the
garnished amount of P209,076.00 deposited under the
account of petitioner Bureau, which motion was granted by
respondent judge in an order of October 18, 1968. On the
same day, October 18, 1968, respondent Corua allegedly
48
taking advantage of his position, authorized the issuance of
a cashier's check of the bank in the amount of P209,076.00,
taken out of the funds of petitioner Bureau deposited in
current account with the bank and paid the same to
respondent estate, without notice to said petitioner.
Later on December 20, 1968, petitioners, through then
Solicitor General Felix V. Makasiar, wrote respondent bank
complaining that the bank acted precipitately in having
delivered such a substantial amount to the special sheriff
without affording petitioner Bureau a reasonable time to
contest the validity of the garnishment, notwithstanding the
bank's being charged with legal knowledge that government
funds are exempt from execution or garnishment, and
demanding that the bank credit the said petitioner's account
in the amount of P209,076.00, which the bank had allowed
to be illegally garnished. Respondent bank replied on
January 6, 1969 that it was not liable for the said
garnishment of government funds, alleging that it was not
for the bank to decide the question of legality of the
garnishment order and that much as it wanted to wait until it
heard from the Bureau of Public Highways, it was "helpless
to refuse delivery under the teeth" of the special order of
October 18, 1968, directing immediate delivery of the
garnished amount.
Petitioners therefore filed on January 28, 1969 the present
action against respondents, in their capacities as above
stated in the title of this case, praying for judgment
declaring void the question orders of respondent Court.
Petitioners also sought the issuance of a writ of preliminary
mandatory injunction for the immediate reimbursement of
the garnished sum of P209,076.00, constituting funds of
petitioner Bureau on deposit with the Philippine National
Bank as official depository of Philippine Government funds,
to the said petitioner's account with the bank, so as to
forestall the dissipation of said funds, which the government
had allocated to its public highways and infrastructure
projects. The Court ordered on January 31, 1969 the
issuance of the writ against the principal respondents
solidarily, including respondent judge therein so that she
would take forthwith all the necessary measures and
processes to compel the immediate return of the said
government funds to petitioner Bureau's account with
respondent bank.5
In compliance with the writ, respondent bank restored the
garnished sum of P209,076.00 to petitioner Bureau's
account with it.6 The primary responsibility for the
reimbursement of said amount to petitioner Bureau's
account with the respondent bank, however, rested solely
on respondent estate, since it is the judgment creditor that
received the amount upon the questioned execution.
Strangely enough, as appears now from respondent bank's
memorandum in lieu of oral argument,7 what respondent
bank did, acting through respondent Corua as its counsel,
was not to ask respondent estate to reimburse it in turn in
the same amount, but to file with the probate court with
jurisdiction over respondent estate, 8 a motion for the estate
to deposit the said amount with it, purportedly in compliance
with the writ. Respondent estate thereupon deposited with
respondent bank as a savings account the sum of
P125,446.00, on which the bank presumably would pay the
usual interest, besides. As to the balance of P83,630.00,
this sum had been in the interval paid as attorney's fees to
49
Atty. Jesus B. Santos, counsel for the estate, by the
administrator, allegedly without authority of the probate
court.9 Accordingly, respondent estate has not reimbursed
the respondent bank either as to this last amount, and the
bank has complacently not taken any steps in the lower
court to require such reimbursement.
The ancillary questions now belatedly raised by the State
may readily be disposed of. Petitioners may not invoke the
State's immunity from suit, since the case below was but a
continuation in effect of the pre-war expropriation
proceedings instituted by the State itself. The expropriation
of the property, which now forms part of Epifanio, de los
Santos Avenue, is a fait accompli and is not questioned by
the respondent state. The only question at issue was the
amount of the just compensation due to respondent estate
in payment of the expropriated property, which properly
pertained to the jurisdiction of the lower court. 10 It is
elementary that in expropriation proceedings, the State
precisely submits to the Court's jurisdiction and asks the
Court to affirm its lawful right to take the property sought to
be expropriated for the public use or purpose described in
its complaint and to determine the amount of just
compensation to be paid therefor.
Neither may the State impugn the validity of the
compromise agreement executed by the Solicitor General
on behalf of the State with the approval of the proper
government officials, on the ground that it was executed
only by the lawyer of respondent estate, without any
showing of having been specially authorized to bind the
estate thereby, because such alleged lack of authority may
be questioned only by the principal or client, and
respondent estate as such principal has on the contrary
confirmed and ratified the compromise agreement. 11 As a
matter of fact, the Solicitor General, in representation of the
State, makes in the petition no prayer for the annulment of
the compromise agreement or of the respondent court's
decision approving the same.
On the principal issue, the Court holds that respondent
Court's two questioned orders (1) for execution of the
judgment, in pursuance whereof respondent deputy clerk
issued the corresponding writ of execution and respondent
special sheriff issued the notice of garnishment, and (2) for
delivery of the garnished amount of P209,076.00 to
respondent estate as judgment creditor through respondent
special sheriff, are null and void on the fundamental ground
that government funds are not subject to execution or
garnishment.
1. As early as 1919, the Court has pointed out that although
the Government, as plaintiff in expropriation proceedings,
submits itself to the jurisdiction of the Court and thereby
waives its immunity from suit, the judgment that is thus
rendered requiring its payment of the award determined as
just compensation for the condemned property as a
condition precedent to the transfer to the title thereto in its
favor, cannot be realized upon execution. 12 The Court there
added that it is incumbent upon the legislature to
appropriate any additional amount, over and above the
provisional deposit, that may be necessary to pay the award
determined in the judgment, since the Government cannot
keep the land and dishonor the judgment.
50
In another early case, where the government by an act of
the Philippine Legislature, expressly consented to be sued
by the plaintiff in an action for damages and waived its
immunity from suit, the Court adjudged the Government as
not being legally liable on the complaint, since the State
under our laws would be liable only for torts caused by its
special agents, specially commissioned to carry out the acts
complained of outside of such agents' regular duties. We
held that the plaintiff would have to look to the legislature for
another legislative enactment and appropriation of sufficient
funds, if the Government intended itself to be legally liable
only for the damages sustained by plaintiff as a result of the
negligent act of one of its employees. 13
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.
Thus, as pointed out by the Court in Belleng vs.
Republic, 14 while the State has given its consent to be sued
in compensation cases, the pauper-claimant therein must
look specifically to the Compensation Guarantee Fund
 provided by the Workmen's Compensation Act for the
corresponding disbursement in satisfaction of his claim,
since the State in Act 3083, the general law waiving its
immunity from suit "upon any money claim involving liability
arising from contract express or implied," imposed the
limitation in Sec. 7 thereof that "no execution shall issue
upon any judgment rendered by any Court against the
Government of the (Philippines) under the provisions of this
Act;" and that otherwise, the claimant would have to
prosecute his money claim against the State under
Commonwealth Act 327.
This doctrine was again stressed by. the Court in Republic
vs. Palacio, 15 setting aside as null and void the order of
garnishment issued by the sheriff pursuant to the lower
Court's writ of execution on funds of the Pump Irrigation
Trust Fund in the account of the Government's Irrigation
Service Unit with the Philippine National Bank. The Court
emphasized then and re-emphasizes now that judgments
against the State or its agencies and instrumentalities in
cases where the State has consented to be sued, operate
merely to liquidate and establish the plaintiff's claim; such
judgments may not be enforced by writs of execution or
garnishment and it is for the legislature to provide for their
payment through the corresponding appropriation, as
indicated in Act 3083.
2. Respondent bank and its Chief, Documentation Staff,
respondent Corua have advanced two specious arguments to
justify their wrongful delivery of the garnished public funds to
respondent estate. Their first contention that the said
government funds by reason of their being deposited by
petitioner Bureau under a current account subject to withdrawal
51
by check, instead of being deposited as special trust funds, "lost
their kind and character as government funds," 16 is untenable.
As the official depositary of the Philippine Government,
respondent bank and its officials should be the first ones to
know that all government funds deposited with it by any agency
or instrumentality of the government, whether by way of general
or special deposit, remain government funds, since such
government agencies or instrumentalities do not have any non-
public or private funds of their own.
Their second contention that said government funds lost
their character as such "the moment they were deposited
with the respondent bank", 17 since the relation between a
depositor and a depository bank is that of creditor and
debtor, is just as untenable, absolutely. Said respondents
shockingly ignore the fact that said government funds were
deposited with respondent bank as the official depositary of
the Philippine Government. Assuming for the nonce the
creation of such relationship of creditor and debtor,
petitioner Bureau thereby held a credit against respondent
bank whose obligation as debtor was to pay upon demand
of said petitioner-creditor the public funds thus deposited
with it; even though title to the deposited funds passes to
the bank under this theory since the funds become mingled
with other funds which the bank may employ in its ordinary
business, what was garnished was not the bank's own
funds but the credit of petitioner bureau against the bank to
receive payment of its funds, as a consequence of which
respondent bank delivered to respondent estate the
garnished amount of P209,076.00 belonging to said
petitioner. Petitioner bureau's credit against respondent
bank thereby never lost its character as a credit
representing government funds thus deposited. The
moment the payment is made by respondent bank on such
deposit, what it pays out represents the public funds thus
deposited which are not garnishable and may be expended
only for their legitimate objects as authorized by the
corresponding legislative appropriation. Neither respondent
bank nor respondent Corua are the duly authorized
disbursing officers and auditors of the Government to
authorize and cause payment of the public funds of
petitioner Bureau for the benefit or private persons, as they
wrongfully did in this case.
3. Respondents bank and Corua next pretend that refusal
on their part to obey respondent judge's order to deliver the
garnished amount, "which is valid and binding unless
annulled, would have exposed them for contempt of
court." 18 They make no excuse for not having asked the
lower court for time and opportunity to consult petitioner
Bureau or the Solicitor General with regard to the
garnishment and execution of said deposited public funds
which were allocated to specific government projects, or for
not having simply replied to the sheriff that what they held
on deposit for petitioner Bureau were non-garnishable
government funds. They have not given any cogent reason
or explanation, charged as they were with knowledge of
the nullity of the writ of execution and notice of garnishment
against government funds, for in the earlier case
of Republic vs. Palacio, supra, they had then prudently and
timely notified the proper government officials of the
attempted levy on the funds of the Irrigation Service Unit
deposited with it, thus enabling the Solicitor General to take
the corresponding action to annul the garnishment for
their failure to follow the same prudent course in this case.
Indeed, the Court is appalled at the improper haste and lack
52
of circumspection with which respondent Corua and other
responsible officials of respondent bank precipitately
allowed the garnishment and delivery of the large amount
involved, all within the period of just four days, even before
the expiration of the five-day reglementary period to reply to
the sheriff's notice of garnishment. Failure on the State's
part to oppose the issuance of the writ of execution, which
was patently null and void as an execution against
government funds, could not relieve them of their own
responsibility.
4. Respondents bank and Corua further made common
cause with respondent estate beyond the legal issues that
should solely concern them, by reason of their having
wrongfully allowed the garnishment and delivery of
government funds, instead assailing petitioners for not
having come to court with "clean hands" and asserting that
in fairness, justice and equity, petitioners should not
impede, obstruct or in any way delay the payment of just
compensation to the land owners for their property that was
occupied way back in 1940. This matter of payment of
respondent estate's judgment credit is of no concern to
them as custodian and depositary of the public funds
deposited with them, whereby they are charged with the
obligation of assuring that the funds are not illegally or
wrongfully paid out.
Since they have gone into the records of the expropriation
case, then it should be noted that they should have
considered the vital fact that at the time that the
compromise agreement therein was executed in November,
1966, respondent estate was well aware of the fact that the
funds for the payment of the property in the amount of
P209,076.00 still had to be released by the Budget
Commissioner and that at the time of the garnishment,
respondent estate was still making the necessary
representations for the corresponding release of such
amount, pursuant to the Budget Commissioner's favorable
recommendation.19 And with regard to the merits of the
case, they should have likewise considered that respondent
estate could have no complaint against the fair attitude of
the authorities in not having insisted on their original stand
in their answer that respondent estate was entitled only to
the sum of P3,203.00 as the fair market value of the
property at the time the State took possession thereof on
November 25, 1940, with legal interests thereon, but rather
agreed to pay therefor the greatly revised and increased
amount of P209,076.00 at P14.00 per square meter, not to
mention the consequential benefits derived by said
respondent from the construction of the public highway with
the resultant enhanced value of its remaining properties in
the area.
5. The manner in which respondent bank's counsel and
officials proceeded to comply with the writ of preliminary
mandatory injunction issued by the Court commanding
respondent estate, its judicial administrator and
respondents bank and Corua, in solidum, to reimburse
forthwith the account of petitioner Bureau in the garnished
amount of P209,076.00, does not speak well of their fidelity
to the bank's interests. For while respondent bank had
restored with its own funds the said amount of P209,076.00
to petitioner Bureau's account, it has not required
respondent estate as the party primarily liable therefor as
the recipient of the garnished amount to reimburse it in turn
in this same amount. Rather, said bank officials have
53
allowed respondent estate to keep all this time the whole
amount of P209,076.00 wrongfully garnished by it. For as
stated above, respondent bank allowed respondent estate
merely to deposit with it as a savings account, of
respondent estate, the lesser sum of P125,446.00 on which
the bank presumably has paid and continues paying
respondent estate, besides the usual interest rates on such
savings accounts, and neither has it taken any steps to
require reimbursement to it from respondent estate of the
remainder of P83,630.00 which respondent estate of its
own doing and responsibility paid by way of attorney's fees.
It thus appears that all this time, respondent bank has not
been reimbursed by respondent estate as the party
primarily liable for the whole amount of P209,076.00
wrongfully and illegally garnished and received by
respondent estate. This grave breach of trust and
dereliction of duty on the part of respondent bank's officials
should be brought to the attention of respondent bank's
Board of Directors and management for the appropriate
administrative action and other remedial action for the bank
to recover the damages it has been made to incur thereby.
6. The Solicitor General has likewise questioned the legality
of respondent Court's Order of October 14, 1968,
appointing respondent Garcia as "special sheriff" for the
purpose of effecting service of the writ of execution,
simply on respondent estate's representation that it was
desirable "for a speedy enforcement of the writ."
The Court finds this general practice of the lower courts of
appointing "special sheriffs" for the service of writs of
execution to be unauthorized by law. The duty of executing
all processes" of the courts in civil cases, particularly, writs
of execution, devolves upon the sheriff or his deputies,
under Section 183 of the Revised Administrative Code and
Rule 39, section 8 of the Rules of Court. Unlike the service
of summons which may be made, aside from the sheriff or
other proper court officers, "for special reasons by any
person especially authorized by the judge of the court
issuing the summons" under Rule 14, section 5 of the Rules
of Court, the law requires that the responsibility of serving
writs of execution, which involve the taking delivery of
money or property in trust for the judgment creditor, should
be carried out by regularly bonded sheriffs or other proper
court officers. (Sections 183 and 330, Revised
Administrative Code). The bond required by law of the
sheriff is conditioned inter alia, "for the delivery or payment
to the Government, or the persons entitled thereto, of all the
property or sums of money that shall officially come into his
or their (his deputies') hands" (Section 330, idem), and thus
avoids the risk of embezzlement of such properties and
moneys.
Section 185 of the Revised Administrative Code restrictively
authorizes the judge of the Court issuing the process or writ
to deputize some suitable person only "when the sheriff is
party to any action or proceeding or is otherwise
incompetent to serve process therein." The only other
contingency provided by law is when the office of sheriff is
vacant, and the judge is then authorized, "in case of
emergency, (to) make a temporary appointment to the office
of sheriff ... pending the appointment and qualification of the
sheriff in due course; and he may appoint the deputy clerk
of the court or other officer in the government service to act
in said capacity." (Section 189, idem).
54
None of the above contingencies having been shown to be
present, respondent Court's order appointing respondent
Garcia as "special sheriff" to serve the writ of execution was
devoid of authority.
7. No civil liability attaches, however, to respondents special
sheriff and deputy clerk, since they acted strictly pursuant to
orders issued by respondent judge in the discharge of her
judicial functions as presiding judge of the lower court, and
respondent judge's immunity from civil responsibility covers
them, although the said orders are herein declared null and
void. 20
ACCORDINGLY, the writs of certiorari and prohibition are
granted. The respondent court's questioned Orders of
October 14, and 18, 1968, are declared null and void, and
all further proceedings in Civil Case No. Q-7441 of the
Court of First Instance of Rizal, Quezon City, Branch IX are
abated. The writ of preliminary mandatory injunction
heretofore issued is made permanent, except as to
respondent judge who is excluded therefrom, without
prejudice to any cause of action that private respondents
may have, inter se. Respondent estate and respondent
Tomas N. Hashim as prayed for by respondent Philippine
National Bank in its Answer, are ordered jointly and
severally to reimburse said respondent bank in the amount
of P209,076.00 with legal interest until the date of actual
reimbursement. Respondents Estate of N. T. Hashim,
Philippine National Bank and Benjamin Corua are ordered
jointly to pay treble costs.
The Clerk of Court is directed to furnish copies of this
decision to the Board of Directors and to the president of
respondent Philippine National Bank for their information
and appropriate action. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,

Zaldivar, Sanchez, Castro, Fernando and Villamor. JJ.,
concur.

Barredo, J., took no part.

55