Sunteți pe pagina 1din 22

G.R. No.

L-41299 February 21, 1983 telegram was received by said counsel on July 23, 1968 (Exhibit
"G " and "G-1 "). To this telegraphic answer, Atty. Ignacio sent a
SOCIAL SECURITY SYSTEM, petitioner, telegraphic reply suggesting instead that a representative of the
vs. SSS be sent to him because his clients were the aggrieved parties
COURT OF APPEALS, DAVID B. CRUZ, SOCORRO (Exhibit-. "G-2"). Nothing came out of the telegraphic
CONCIO CRUZ, and LORNA C. CRUZ, respondents. communications between the parties and the second and third
The Solicitor General for petitioner. publications of the notice of foreclosure were published
successively in the Sunday Chronicle in its issues of July 21 and
Eribert D. Ignacio for respondents David Cruz, Socorro Concio 28, 1968 (Exhibits "N-1 " and "O-1"). 4
Cruz and Lorna Cruz.
On July 24, 1968, the Cruz spouses, together with their daughter
Lorna C. Cruz, instituted before the Court of First Instance of
MELENCIO-HERRERA, J.: Rizal an action for damages and attorney's fees against the Social
Security System (SSS) and the Provincial Sheriff of Rizal
This Petition for Review on certiorari of the Decision of the Court alleging, among other things, that they had fully and religiously
of Appeals 1 stems from the following facts, as narrated by the paid their monthly amortizations and had not defaulted in any
Trial Court, adopted by the Court of Appeals, and quoted by both payment.
petitioner 2 and private respondents 3:
In its Answer, with counterclaim, the SSS stressed its right to
Sometime in March, 1963 the spouses David B. Cruz and Socorro foreclose the mortgage executed in its favor by private
Concio Cruz applied for and were granted a real estate loan by the respondents by virtue of the automatic acceleration clause
SSS with their residential lot located at Lozada Street, Sto. provided in the mortgage contract, even after private respondents
Rosario, Pateros, Rizal covered by Transfer Certificate of Title had paid their amortization installments. In its counterclaim, the
No. 2000 of the Register of Deeds of Rizal as collateral. Pursuant SSS prayed for actual and other damages, as well as attorney's
to this real estate ban said spouses executed on March 26, 1963 fees, for malicious and baseless statements made by private
the corresponding real estate mortgage originally in the amount of respondents and published in the Manila Chronicle.
P39,500.00 which was later increased to P48,000.00 covering the
aforementioned property as shown in their mortgage contract, On September 23, 1968, the Trial Court enjoined the SSS from
Exhibit A and 1. From the proceeds of the real estate loan the holding the sale at public auction of private respondent's property
mortgagors constructed their residential house on the mortgaged upon their posting of a P2,000.00 bond executed in favor of the
property and were furnished by the SSS with a passbook to record SSS.
the monthly payments of their amortizations (Exhibits B and B- The Trial Court rendered judgment on March 5, 1971, the
1). The mortgagors, plaintiffs herein, complied with their monthly dispositive portion of which reads:
payments although there were times when delays were incurred in
their monthly payments which were due every first five (5) days WHEREFORE, judgment is rendered against defendant SSS,
of the month (Exhibits 3-A to 3-N). On July 9, 1968, defendant directing it to pay plaintiffs the following amounts:(a) P2,500.00
SSS filed an application with the Provincial Sheriff of Rizal for as actual damage;
the foreclosure of the real estate mortgage executed by the (b) P35,000.00 as moral damage;
plaintiffs on the ground, among others: (c) P10,000.00 as exemplary or corrective damages; and
(d) P5,000.00 as attorney's fees.
That the conditions of the mortgage have been broken since
October, 1967 with the default on the part of the mortgagor to pay Defendant SSS shall
in full the installments then due and payable on the principal debt further pay the costs. 5
and the interest thereon, and, all of the monthly installments due In respect of the moral and temperate damages awarded, the Trial
and payable thereafter up to the present date; … Court stated:
That by the terms of the contract herein above referred to, the With respect to moral and temperate damages, the Court holds
indebtedness to the mortgagee as of June, 1968 amounts to Ten that the first publication of the notice was made in good faith but
Thousand Seven Hundred Two Pesos & 58/100 (P10,702.58), committed by defendant SSS in gross negligence considering the
Philippine Currency, excluding interests thereon, plus 20% of the personnel at its command and the ease with which verifications of
total amount of the indebtedness as attorney's fees, also secured the actual defaulting mortgagors may be made. On this initial
by the said mortgage. (Exhibit "C ") publication of the notice of foreclosure (Exhibits "M" and "M-
Pursuant to this application for foreclosure, the notice of the 1"), the Court believes plaintiffs are entitled to the amount of
Sheriff's Sale of the mortgaged property was initially published in P5,000.00. The second publication of the notice of foreclosure is
the Sunday Chronicle in its issue of July 14, 1968 announcing the another matter. There was already notice by plaintiffs to
sale at public auction of the said mortgaged property. After this defendant SSS that there was no reason for the foreclosure of
first publication of the notice, and before the second publication their mortgaged property as they were never in default. Instead of
of the notice, plaintiff herein thru counsel formally wrote taking any corrective measure to rectify its error, defendant SSS
defendant SSS, a letter dated July 19, 1968 and received on the adopted a position of righteousness and followed the same course
same date by said entity demanding, among others, for said of action contending that no error has open committed. This act of
defendant SSS to withdraw the foreclosure and discontinue the defendant indeed was deliberate, calculated to cow plaintiffs into
publication of the notice of sale of their property claiming that submission, and made obviously with malice. On this score, the
plaintiffs were up-to-date in the payment of their monthly Court believes defendant SSS should pay and indemnify plaintiffs
amortizations (Exhibits "E" and "E-1"). In answer to this letter jointly in the sum of P10,000.00. Lastly, on the third publication
defendant SSS sent a telegram to Atty. Eriberto Ignacio of the notice of foreclosure, the Court finds this continued
requesting him to come to their office for a conference. This publication an outright disregard for the reputation and standing
of plaintiffs. The publication having reached a bigger segment of circumstance to mitigate the liability of
society and also done with malice and callous disregard for the petitioner;
rights of its clients, defendant SSS should compensate plaintiffs
jointly in the sum of P20,000.00. All in all, plaintiffs are entitled V. Respondent Court of Appeals erred in not
to P35,000.00 by way of moral damages. 6 holding that petitioner is not liable for
damages not being a profit-oriented
On appeal, the Court of Appeals affirmed the lower Court governmental institution but one performing
judgment in a Decision promulgated on March 14, 1975, but upon governmental functions petitions. 8
SSS's Motion for Reconsideration, modified the judgment by the
elimination of the P5,000.00 moral damages awarded on account For failure of the First Division to obtain concurrence of the five
of the initial publication of the foreclosure notice. To quote: remaining members (Justices Plana and Gutierrez, Jr. could take
no part), the case was referred to the Court en banc.
xxx xxx xxx
The pivotal issues raised are: (1) whether the Cruz spouses had, in
After a re-examination of the evidence, we fact, violated their real estate mortgage contract with the SSS as
find that the negligence of the appellant is not would have warranted the publications of the notices of
so gross as to warrant moral and temperate foreclosure; and (2) whether or not the SSS can be held liable for
damages. The amount of P5,000.00 should be damages.
deducted from the total damages awarded to
the plaintiffs. The first issue revolves around the question of appreciation of the
evidence by the lower Court as concurred in by the Court of
WHEREFORE, the decision promulgated on Appeals. The appraisal should be left undisturbed following the
March 14, 1975 is hereby maintained with the general rule that factual findings of the Court of Appeals are not
sole modification that the amount of subject to review by this Court, the present case not being one of
P5,000.00 awarded on account of the initial the recognized exceptions to that rule. 9 Accordingly, we are
publication is eliminated so that the said upholding the finding of the Court of Appeals that the SSS
amount should be deducted from the total application for foreclosure was not justified, particularly
damages awarded to the plaintiffs. considering that the real estate loan of P48,000.00 obtained by the
Cruzes in March, 1963, was payable in 15 years with a monthly
SO ORDERED. 7 amortization of P425.18, and that as of July 14, 1968, the date of
In so far as exemplary and corrective damages are concerned, the the first notice of foreclosure and sale, the outstanding obligation
Court of Appeals had this to say. was still P38,875.06 and not P10,701.58, as published.

The Court finds no extenuating circumstances The appellant was not justified in applying for
to mitigate the irresponsible action of the extrajudicial foreclosure of the mortgage
defendant SSS and for this reason, said contract executed in its favor by the spouses,
defendant should pay exemplary and David B. Cruz and Socorro Concio-Cruz,
corrective damages in the sum of Exh. 'A'. While it is true that the payments of
P10,000.00 ... the monthly installments were previously not
regular, it is a fact that as of June 30, 1968 the
Upon denial of its Motion for Reconsideration by respondent appellee, David B. Cruz and Socorro Concio-
Court, the SSS filed this Petition alleging —. Cruz were up-to-date and current in the
I. Respondent Court of Appeals erred in not payment of their monthly installments.
finding that under Condition No. 10 of the Having accepted the prior late payments of
Mortgage contract, which is a self-executing, the monthly installments, the appellant could
automatic acceleration clause, all no longer suddenly and without prior notice to
amortizations and obligations of the the mortgagors apply for the extra-judicial
mortgagors become ipso jure due and foreclosure of the mortgage in July 1968. 10
demandable if they at any time fail to pay any A similar conclusion was reached by the trial Court.
of the amortizations or interest when due;
Defendant's contention that there was clerical
II. Respondent Court of Appeals erred in error in the amount of the mortgage loan due
holding that a previous notice to the as of June, 1968 as per their application for
mortgagor was necessary before the mortgage foreclosure of real estate mortgage is a naive
could be foreclosed; attempt to justify an untenable position. As a
III. Respondent Court of Appeals erred in not matter of fact plaintiffs were able to establish
holding that, assuming that there was that the mortgagor who actually committed
negligence committed by subordinate the violation of her mortgage loan was a
employees of the SSS in staking 'Socorro C. certain 'Socorro J. Cruz' who was in arrears in
Cruz' for 'Socorro J. Cruz' as the defaulting the amount of P10,702.58 at the time the
borrower, the fault cannot be attributed to the application for foreclosure of real estate
SSS, much less should the SSS be made liable mortgage was filed Exhibits "BB" and "EE").
for their acts done without its knowledge and Defendant mortgagee must have committed
authority; an error in picking the record of plaintiff
'Socorro C. Cruz' instead of the record of
IV. Respondent Court of Appeals erred in 'Socorro J. Cruz'. Defendant SSS, however,
holding that there is no extenuating denied having committed any error and insists
that their motion for foreclosure covers the In so far as it is argued that to hold the SSS liable for damages
real estate mortgage of spouses David E. Cruz would be to deplete the benefit funds available for its covered
and Socorro C. Cruz. This Court is members, suffice it to say, that expenditures of the System are not
nonetheless convinced that the foreclosure confined to the payment of social security benefits. For example,
proceedings should have been on the real the System also has to pay the salaries of its personnel. Moreover,
estate mortgage of 'Socorro J. Cruz' who was drawing a parallel with the NASSCO and the Virginia Tobacco
in arrears as of June, 1968 in the amount of Administration, whose funds are in the nature of public funds, it
P10,701.58, the exact amount mentioned in has been held that those funds may even be made the object of a
the application for foreclosure of real estate notice of garnishment. 18
mortgage by defendant SSS. 11
What is of paramount importance in this controversy is that an
We come now to the amendability of the SSS to judicial action injustice is not perpetrated and that when damage is caused a
and legal responsibility for its acts. To our minds, there should be citizen, the latter should have a right of redress particularly when
no question on this score considering that the SSS is a juridical it arises from a purely private and contractual relationship
entity with a personality of its own. 12 It has corporate powers between said individual and the System.
separate and distinct from the Government. 13 SSS' own organic
act specifically provides that it can sue and be sued in We find, however, that under the circumstances of the case, the
Court. 14 These words "sue and be sued" embrace all civil SSS cannot be held liable for the damages as awarded by the Trial
process incident to a legal action. 15 So that, even assuming that Court and the Appellate Tribunal.
the SSS, as it claims, enjoys immunity from suit as an entity As basis for the award of actual damages, the Trial Court relied
performing governmental functions, by virtue of the explicit on the alleged expenses incurred by private respondents for the
provision of the aforecited enabling law, the Government must be wardrobe they were supposed to use during their trip abroad,
deemed to have waived immunity in respect of the SSS, although which was allegedly aborted because of the filing of the
it does not thereby concede its liability. That statutoy law has foreclosure application by the SSS. We find the foregoing too
given to the private-citizen a remedy for the enforcement and speculative. There could have been other reasons why the trip did
protection of his rights. The SSS thereby has been required to not materialize. Moreover, it appears that private respondents'
submit to the jurisdiction of the Courts, subject to its right to passports had already expired but that they made no effort to
interpose any lawful defense. Whether the SSS performs secure new passports. 19 Nor did they secure the necessary visas
governmental or proprietary functions thus becomes unnecessary from the local consulates of foreign countries they intended to
to belabor. For by that waiver, a private citizen may bring a suit visit for their trip abroad. 20
against it for varied objectives, such as, in this case, to obtain
compensation in damages arising from contract 16 and even for Nor can the SSS be held liable for moral and temperate damages.
tort. As concluded by the Court of Appeals "the negligence of the
appellant is not so gross as to warrant moral and temperate
A recent case squarely in point anent the principle, involving the damages", 21 except that, said Court reduced those damages by
National Power Corporation, is that of Rayo vs. Court of First only P5,000.00 instead of eliminating them. Neither can we agree
Instance of Bulacan, 110 SCRA 457 (1981), wherein this Court, with the findings of both the Trial Court and respondent Court
speaking through Mr. Justice Vicente Abad Santos, ruled: that the SSS had acted maliciously or in bad faith. The SSS was
It is not necessary to write an extended of the belief that it was acting in the legitimate exercise of its
dissertation on whether or not the NPC right under the mortgage contract in the face of irregular
performs a governmental function with payments made by private respondents, and placed reliance on the
respect to the management and operation of automatic acceleration clause in the contract. The filing alone of
the Angat Dam. It is sufficient to say that the the foreclosure application should not be a ground for an award of
government has organized a private moral damages in the same way that a clearly unfounded civil
corporation, put money in it and has snowed it action is not among the grounds for moral damages. 22
to sue and be sued in any court under its With the ruling out of compensatory, moral and temperate
charter. (R.A. No. 6395, Sec. 3[d]). As a damages, the grant of exemplary or corrective damages should
government owned and controlled also be set aside. 23 Moreover, no proof has been submitted that
corporation, it has a personality of its own, the SSS had acted in a wanton, reckless and oppressive
distinct and separate from that of the manner. 24
Government. (See National Shipyards and
Steel Corp. vs. CIR, et al., L-17874, August However, as found by both the Trial and Appellate Courts, there
31, 1963, 8 SCRA 78 1). Moreover, the was clear negligence on the part of SSS when they mistook the
charter provision that the NPC can 'sue and be loan account of Socorro J. Cruz for that of private respondent
sued in any court' is without qualification on Socorro C. Cruz. Its attention was called to the error, but it
the cause of action and accordingly it can adamantly refused to acknowledge its mistake. The SSS can be
include a tort claim such as the one instituted held liable for nominal damages. This type of damages is not for
by the petitioners. the purpose of indemnifying private respondents for any loss
suffered by them but to vindicate or recognize their rights which
The proposition that the SSS is not profit-oriented was rejected in have been violated or invaded by petitioner SSS. 25
the case of SSS Employees' Association vs. Hon. Soriano. 17 But
even conceding that the SSS is not, in the main, operated for The circumstances of the case also justify the award of attorney's
profit, it cannot be denied that, in so far as contractual loan fees, as granted by the Trial and Appellate Courts, particularly
agreements with private parties are concerned, the SSS enters into considering that private respondents were compelled to litigate
them for profit considering that the borrowers pay interest, which for the prosecution of their interests. 26
is money paid for the use of money, plus other charges.
WHEREFORE, the judgment sought to be reviewed is hereby listed BREDCO lots could have been gotten
modified in that petitioner SSS shall pay private respondents: illegally. It is to be observed, on the other
P3,000.00 as nominal damages; and P5,000.00 as attorney's fees. hand, that the titles mentioned in aforesaid
Annex of the complaint covering the lots in
Costs against petitioner Social Security System. question are not registered in the names of
SO ORDERED. any of the defendants but in the name of
Bacolod Real Estate Development
Corporation.
G.R. No. 85284 February 28, 1990
2. Similarly, the shares of stock in Bacolod
REPUBLIC OF THE PHILIPPINES, petitioner Real Estate Development Corporation
vs. appealing under PERSONAL PROPERTY on
SANDIGANBAYAN, Third Division, SIMPLICIO A. page two of Annex A of the complaint t are '
PALANCA in his own behalf as a stockholder of Bacolod Real carried not in the names of any of the
Estate Development Corporation (BREDCO), and other defendants, but in the name of Marsteel
stockholders similarly situated, respondents. Consolidated Inc. and were acquired under the
Hilado, Hagad & Hilado for private respondents. circumstances averred more in detail in the
accompanying Answer in Intervention by
RESOLUTION reason of which detail shares should not be
involved in the present action.
3. If intervention is allowed, intervenors are
PADILLA, J.:
prepared to prove that if ever any of the
This is a petition for certiorari to annul and set aside the defendants through Marsteel Consolidated,
resolution of the Sandiganbayan (Third Division), dated 3 June Inc. and Marsteel Corporation came to have
1988, granting the private respondents' motion to intervene in any interest in Bacolod Real Estate
Civil Case No. 0025 and admitting their answer in intervention, Development Corporation, it was only by way
as well as its resolution, dated 25 August 1988, denying the of accommodation on the part of BREDCO
petitioner's motion for reconsideration; PROHIBITION to order stockholders who transferred their
the respondent court to cease and desist from proceeding with the shareholdings aggregating 70% of the
intervention filed with it; and alternatively, mandamus to compel subscribed capital to enable Marsteel
the respondent court to dismiss the intervention case. Consolidated to secure adequate financing for
the reclamation and port development
The antecedents are as follows: project . 4
On 29 July 1987, the Republic of the Philippines, as Plaintiff, The foregoing allegations were further expanded and elaborated
through its governmental instrumentality the Presidential in the private respondents' Answer in Intervention.
Commission on Good Government (PCGG) filed with the
respondent Sandiganbayan a complaint against Ferdinand E. On 2 December 1987, petitioner filed its Reply 5 to Answer In
Marcos, et al. for reconveyance, reversion, accounting, restitution Intervention, while private respondents filed a "Rejoinder to
and damages, docketed therein as Civil Case No. 0025 (PCGG Reply With Motion To Release BREDCO Lots 6 and also a
No. 26). 1 "Motion To Calendar For Hearing" the motion to release
BREDCO lots. 7
On or about 3 September 1987, before the said Civil Case No.
0025 could be set for hearing, private respondent Simplicio A. On 22 January 1988, respondent court promulgated a
Palanca in his own behalf as a stockholder of Bacolod Real Estate resolution 8 holding in abeyance action on the private
Development Corporation (BREDCO) and other stockholders respondents' "Rejoinder to Reply with Motion to Release
similarly situated, filed with the respondent Sandiganbayan a BREDCO lots", and set the Motion for Leave to Intervene for
"Motion For Leave To Intervene" 2 attaching thereto their hearing on 2 February 1988.
"Answer in Intervention ." 3
On 11 March 1988, respondent court issued an order 9 giving
In their motion, private respondents alleged that they be — petitioner fifteen (1 5) days from 11 March 1988 within which to
file its opposition and/or comment on the motion to intervene and
... allowed to intervene in the present action and to file the giving the private respondents in turn ten (10) days within which
Answer in intervention hereto attached as Annex 'A', the said to file their reply thereto.
stockholders having a legal interest in the matter in litigation and
in the disposition of the properties listed in Annex 'A' of the On 23 March 1988, petitioner filed its Motion to Dismiss
Complaint as BREDCO LOTS and shares of stock in Bacolod "Answer In Intervention," on the grounds that; (1) respondent
Real Estate Development Corporation. court lacks jurisdiction and (2) intervenors have no legal interest
in the matter in litigation, 10 which the private respondents
In justification, it is further respectfully alleged that. opposed. 11
1. Close examination of the Complaint, in On 6 June 1988, respondent court promulgated a Resolution dated
particular par. 12 thereto under 'V. SPECIFIC 3 June 1988 12 granting the private respondents' motion to
AVERMENTS OF DEFENDANTS' intervene and admitting their Answer in Intervention.
ILLEGAL ACTS', makes no mention at all
about BREDCO being the subject of any Petitioner moved for reconsideration but this was denied by
anomalous transaction engaged in by any of respondent court in its resolution of 25 August 1989. 13
the defendants, in consequence of which the
Hence, the instant petition. respondent court committed grave abuse of discretion amounting
to lack or excess of its jurisdiction in rendering the questioned
The petitioner, through the Solicitor General, contends that in resolutions.
issuing the questioned resolutions granting the Motion to
Intervene and admitting the Answer-in-Intervention, respondent The jurisdiction of the Sandiganbayan has already been settled
Sandiganbayan acted in contravention of a national or public in Presidential Commission on Good Government vs. Hon.
policy embedded in Executive Order Nos. 1, 2, 4 and related Emmanuel G. Penal, etc., et al. 15 where the Court held that —
issuances, or otherwise acted in a way not in accord with law or
with the applicable decisions of this Court, because: ... Under Section 2 of the President's
Executive Order No. 14 issued on May 7,
(a) Petitioner, being the sovereign state, cannot be sued without 1986, all cases of the Commission regarding
its consent, and the Intervention is, in legal effect, a suit or 'the funds, Moneys, Assets, and Properties
counter- suit against the sovereign state, the Republic of the Illegally Acquired or I Misappropriated by
Philippines; Former President Ferdinand Marcos, Mrs.
Imelda Romualdez Marcos, their Close
(b) The cause of action of intervenors does not fall within the Relatives, Subordinates, Business Associates,
jurisdiction of the Sandiganbayan as expressly spelled out in P.D. Dummies, Agents, or Nominees whether civil
No. 1606 and Executive Order No. 14; or criminal, are lodged within the 'exclusive
(c) Intervenors have no legal interest in the matter in litigation, and original jurisdiction of the
and the subject matter is not in custodia legis of respondent court; Sandiganbayan' and all incidents arising
and from, incidental to, or related to, such cases
necessarily fall likewise under the
(d) Intervenors' claims, as contained in their Motion for Sandiganbayan's exclusive and original
Intervention and Answer-in-Intervention, are claims between jurisdiction, subject to review on certiorari
and/or among Ferdinand and Imelda Marcos and their cronies, exclusively by the Supreme Court. (emphasis
i.e., "members of their immediate family close relatives, supplied)
subordinates, and/or business associates, dummies, agents and
nominees" and are cognizable not by respondent court but by the In reiterating the aforequoted ruling in six (6) subsequent
regular courts or other for a Even if there would be multiple cases 16 which were decided jointly, again, the Court held that-
litigations, as among themselves, the legal effect remains, i.e., ... the exclusive jurisdiction conferred on the
that there is only one case filed by the Republic against the named Sandiganbayan would evidently extend not
defendants in Civil Case No. 0025, grounded on causes of action only to the principal causes of action, i.e., the
entirely distinct from any cause of action which intervenors may recovery of alleged ill-gotten wealth, but also
have against Mr. Marcos and his cronies. to 'all incidents arising from, incidental to, or
The petition is not impressed with merit. related to, such cases,' such as the dispute
over the sale of the shares, the propriety of the
The Rules of Court permit an aggrieved party, generally, to take a issuance of ancillary writs or provisional
cause and apply for relief with the appellate courts by way of remedies relative thereto, the sequestration
either of two distinct and dissimilar modes through the broad thereof, which may not be made the subject of
process of appeal or the limited special civil action of certiorari. separate actions or proceedings in another
An appeal brings up for review errors of judgment committed by forum.
a court of competent jurisdiction over the subject of the suit or the
persons of the parties or any such error committed by the court in Intervention is not an independent action, but is ancillary and
the exercise of its jurisdiction amounting to nothing more than an supplemental to an existing litigation. 17 Hence, the private
error of judgment. On the other hand, the writ of certiorari issues respondents' action for intervention in Civil Case No. 0025, not
for the correction of errors of jurisdiction only or grave abuse of being an independent action, is merely incidental to, or related to,
discretion amounting to lack or excess of jurisdiction. The writ of the said civil case. Since the respondent Sandiganbayan has the
certiorari cannot legally be used for any other purpose. In terms exclusive and original jurisdiction over Civil Case No. 0025, it
of its function, the writ of certiorari serves to keep a lower court has likewise original and exclusive jurisdiction over the private
within the bounds of its jurisdiction or to prevent it from respondents' action for intervention therein.
committing such a grave abuse of discretion amounting to excess Now, considering that respondent Sandiganbayan has jurisdiction
of jurisdiction or to relieve parties from arbitrary acts of courts — not only over Civil Case No. 0025 but also over the private
acts which courts have no power or authority in law to respondents' action for intervention, any error or irregularity that
perform. 14 it may have committed in rendering its questioned resolutions, in
Hence, the main issue to be resolved in the present case, which is the exercise of its jurisdiction, amounts to an error of judgment,
principally a petition for certiorari to annul and set aside the which is not correctable in the present petition for certiorari but
questioned resolutions of respondent court is, whether or not the by appeal.
Sandiganbayan has jurisdiction over the action for intervention, Accordingly, this case may be dismissed outright without the
or if it has, whether respondent court acted with grave abuse of Court having to pass upon the other issues raised in the petition.
discretion amounting to lack or excess of its jurisdiction in However, considering that the litigation below is of great public
rendering the questioned resolutions. interest and involves a matter of public policy, the Court has
In the present case, petitioner merely contends that the cause of decided to review the other errors allegedly committed by
action of intervenors does not fall within the jurisdiction of the respondent court in rendering its questioned resolutions.
Sandiganbayan as expressly spelled out in Presidential Decree
No. 1606 and Executive Order No. 14; it does not claim that
In this jurisdiction, the law on "intervention" is found in the Rules owners of existing interests in the project.' Section 2, Rule 12,
of Court. 18 Thus, a person may, before or during a trial, be Revised Rules of Court, provides that a person may be permitted
permitted by the court, in its discretion, to intervene in an action, 'to intervene in an action, if he has legal interest in the matter in
if he has legal interest in the matter in litigation, or in the success litigation.'
of either of the parties or an interest against both, or when he is so
situated as to be adversely affected by a distribution or other As a general rule the right to intervene exists in favor of one who
disposition of property in the custody of the court or of an officer claims to be the owner or to have some interest in the property
thereof. 19 which is the subject of litigation, and this without particular
regard to the value of the property or the right claimed therein. A
The Court is not impressed with the contention of petitioner that third party may intervene in a sequestration suit involving title to
the intervenors have no legal interest in the matter in litigation. In personal property, and have his claims to the possession of the
this connection, it would suffice to quote what the respondent property vindicated therein So, in an action for possession of real
court said in holding that the intervenors have a legal interest in or personal property, an intervenor may be admitted on the
the matter in litigation. Thus — ground that he is an owner thereof, either to assist in the defense,
or to claim the property for himself, or to obtain some other relief
Has Palanca shown a proper case for intervention by him and his germane to the action.' (59 Am Jur 2d, Parties, Sec. 152, p. 585,
co-stockholders who are similarly situated as he is?
Secondly, the same Section 2, Rule 12, further provides that
A narration of the pertinent facts alleged by Palanca and the intervention by a person may be permitted 'when he is so situated
plaintiff indicates the answer. as to be adversely affected by a distribution or other disposition of
In 1961, BREDCO was awarded by Bacolod City a contract to property in the custody of the court or of an officer thereof.' On
undertake the reclamation and port development of the city. As of this point, the Supreme Court observed:
1975, a sizeable portion of land had already been reclaimed from We shall now speak of the case where the stranger desires to
the sea and corresponding torrens titles issued in BREDCO's intervene for the purpose of asserting a property right in the res,
name. or thing, which is the subject-matter of the ligitation, without
In that year, BREDCO engaged MARSTEEL as a contractor to becoming a formal plaintiff or defendant, and without acquiring
complete the project with power to negotiate in its name or jointly the control over the course of a litigation, which is conceded to
and/or severally with BREDCO for loans to finance the the main actions (sic) therein. The mode of intervention to which
reclamation and port development, and to mortgage all reclaimed reference is now made is denominated in equity procedure the
lots and other assets of the project as security. For its services, intervention pro interesse suo and is somewhat analogous to the
MARSTEEL shall receive 65% of the excess of all revenues over trial of a right of property in an action of law, its purpose being to
all disbursements. Accordingly, BREDCO conveyed to enable a person whose property gets into the clutches of a court,
MARSTEEL 65% of each lot already reclaimed and that to be in a controversy between others, to go into court and to procure it
reclaimed. or its proceeds to be surrendered to him. It often happens that a
person who really owns property, or has a superior lien or other
In 1977, MARSTEEL assigned to MCI, which owned 100% of its interest in it, sees a litigation spring up between others who assert
capital stock, all its rights, interests, obligations, and undertakings rights in or concerning it. If the court takes possession of the res,
in the project. To enable MCI to expand its base of negotiation for or otherwise gets jurisdiction over it in such a controversy, the
loans needed in the reclamation and port development the real owner is not compelled to stand Idly by and see the property
BREDCO stockholders transferred to MCI their respective shares disposed of without asserting his rights. Though it be granted that
of stock amounting to 70% of the capital stock of BREDCO. In the litigation would not be technically binding on him, because of
return, they 'shall be entitled to a share of 35% in excess of all his not being a party, yet it might well happen that complications
revenues over all disbursements of the projects,' it being would ensue whereby his rights would be materially prejudiced.
understood that payment of the corresponding share shall be due For instance, the subject-matter of the litigation might consist of a
to BREDCO stockholders as owners of existing interests in the fund to he distributed, and the conditions might be such that if it
project, regardless of the fact that by implementation of this were turned over to the particular litigant who should appear to
AGREEMENT, they ceased to be stockholders of BREDCO. have the better right in the original action, the person really
In September 1986, the Presidential Commission on Good having a superior title might be left without redress. Accordingly
Government (PCGG) sequestered all assets, properties, records provision is made whereby persons who have not been joined as
and documents' of MARSTEEL, MCI, and BREDCO'. In July parties in the original proceedings may intervene and assert a
1987, the complaint at bar was filed and expanded in March right antagonistic or superior to that of one or both of the parties.
1988. The pleadings, original and expanded, allege that the (Bosworth vs. Terminal etc. Assoc. of St. Louis, 174 U.S.
defendants, acting singly or collectively, amassed ill-gotten 182,187, 43 L. ed., 941, 943). As regards the right to intervene in
wealth listed in Annex 'A' thereof, among which are the this manner, it may be stated that if the party desiring to intervene
BREDCO lots and shares of stock, and pray that the ill-gotten shows a legitimate and proper interest in the fund or property in
wealth be reconveyed to the plaintiff, plus damages. Significantly, question, the motion to intervene should be granted, especially if
however, the bodies of the complaints do not mention anything such interest cannot be otherwise properly protected. (Joaquin v.
about BREDCO, its project, lots, and stocks, nor about MCI. Herrera, 37 Phil. 705, 722-724)

Under these alleged facts, Palanca has established a proper case Here, the BREDCO lots and stocks were sequestered and are now
for intervention. Firstly, he and his co-stockholders have a legal in custodia legis (Bernas, The Constitution of the Republic of the
interest in the matter in litigation, namely, their 70% of the capital Philippines, An Annotated Text, 1987 ed., p. 129, footnote 42).
stock of BREDCO, which they transferred to MCI by way of From the facts averred by Palanca and the plaintiff, it is easy to
alleged accommodation, or its equivalent of 35% of the excess of see that in the event We decide to order the reconveyance of those
all revenues over all disbursements, to which they are entitled 'as assets to the plaintiff, Palanca and his co-stockholders in
BREDCO stand to be adversely affected.
And thirdly, the legal interest of Palanca and his co-stockholders asked no affirmative relief against any party in the answer in
in the matter in litigation and the possibility of a judgment intervention. x x x. Clearly, this is not a case where the State
ordering reconveyance in favor of the plaintiff, invest them with takes the initiative in an action against a private party by filing a
legal interest in the success of the defendants, at least insofar as complaint in intervention, thereby surrendering its privileged
the BREDCO lots and shares are concerned. Section 2, Rule 12, position and coming down to the level of the defendants what
also permits intervention by a person who has legal interest in the happened in the case of Froilan vs. Pan Oriental Shipping Co., et
success of either of the parties. 20 al.-95 Phil. 905 cited by the plaintiff but one where the State, as
one of the defendants merely resisted a claim against it precisely
The petitioner's contention that the State cannot be sued without on the ground, among others, of its privileged position which
its consent and that private respondents' action for intervention is, exempts it from suit. (emphasis supplied).
in legal effect, a suit or counter-suit against the sovereign is also
untenable. In the present case, the private respondents intervened in Civil
Case No. 0025 merely to unite with the defendants therein in
The Rules of Court 21 provide that the intervention shall be made resisting the claims of petitioner, as plaintiff, and for that reason
by complaint filed and served in regular form, and may be asked for no affirmative relief against any party in their answer
answered as if it where an original complaint; but where the in intervention. In other words, this is not a case where the private
intervenor unites with the defendant in resisting the claims of the respondents take the initiative in an action against petitioner by
plaintiff, the intervention may be made in the form of an answer filing a complaint in intervention or a complaint. As observed by
to the complaint. In order words, a third person who makes respondent Sandiganbayan:
himself a party to an existing litigation, may either join the
plaintiff in claiming what is sought in the filing a complaint in In intervening, Palanca and his co-
intervention, or by uniting with the defendant in resisting the stockholders have for their purpose to exclude
claims of the plaintiff, by filing an answer in intervention. the BREDCO lots and stocks or, at least, their
35% interest in the BREDCO project from
In Froilan v. Pan Oriental Shipping Co., 22 the plaintiff therein any possible judgment directing reconveyance
Fernando A. Froilan filed a complaint against the defendant, Pan of the alleged ill-gotten wealth to the plaintiff.
Oriental Shipping Co. The Republic of the Philippines intervened They do not pray for damages against the
by filing a complaint in intervention. Thereafter, the defendant latter. In effect, they occupy a defensive
filed its answer to the complaint in intervention, and set up a position as regards those shares of stock or
counterclaim against the Republic of the Philippines. The trial interest. The fact that they interjected
court dismissed the defendants counterclaim against the Republic themselves into his litigation at their own
on the ground, among others, that the state is immune from suit. initiative does not alter the essential nature of
On appeal, this Court held that the dismissal of the counterclaim their intervention." 24
was untenable, because by filing its complaint in intervention the
Government in effect waived its right to non-suability. Private respondents' action for intervention in Civil Case No.
0025 is not, therefore, a suit or counter-suit against petitioner
In another case, Lim vs. Brownell, Jr. and Kagawa, 23 the Republic of the Philippines.
plaintiff Benito E. Lim, as administrator of the intestate estate of
Arsenia Enriquez, filed a complaint in the Court of First Instance Having arrived at the above conclusions, the Court finds no need
of Manila against the Alien Property Administrator (later to further discuss the petitioner's pretense that the private
substituted by the Attorney General of the United States) for the respondents' claims are claims as between and/or among
recovery of four (4) parcels of land (which were subsequently Ferdinand and Imelda Marcos, et al., and that the same is not
transferred to the Republic of the Philippines) with a prayer for cognizable by respondent Sandiganbayan but by the regular
the payment of back rentals. The Republic of the Philippines courts. It suffices to state that, as already stated, in intervening in
intervened in the case. The defendant Attorney General of the Civil Case No. 0025, private respondents merely joined the
United States and the defendant- intervenor Republic of the defendants therein in resisting the claims of petitioner, as
Philippines each filed an answer, alleging by way of affirmative plaintiff, and that they asked no affirmative relief against any
defense, among others, that the lower court had no jurisdiction party in their answer in intervention. They do not appear to have
over the claim for rentals since the action in that regard any controversy with the defendants, Ferdinand and Imelda
constituted a suit against the Republic to which it had not given Marcos, et al.
its consent. The trial court dismissed the complaint for lack of
jurisdiction. On appeal, this Court affirmed, with the following ACCORDINGLY, the petition in the present case is hereby
reasons: DISMISSED.

The claim for damages for the use of the property against the SO ORDERED.
intervenor defendant Republic of the Philippines to which it was
transferred, likewise, cannot be maintained because of the
immunity of the state from suit. The claim obviously constitutes a
charge against, or financial liability to, the Government and
consequently cannot be entertained by the courts except with the
consent of said government. (Syquia vs. Almeda Lopez, 84 Phil.
312; 47 Off. Gaz., 665; Compania General de Tabacos vs. Govt.
of the PI 45 Phil., 663). Plaintiff argues that by its intervention,
the Republic of the Philippines, in effect, waived its right of non-
suability, but it will be remembered that the Republic intervened
in the case merely to unite with the defendant Attorney General of
the United States in resisting plaintiffs claims, and for that reason
G.R. No. L-55963 December 1, 1989 P3,389.00 which the parents of the deceased
had spent for the hospitalization and burial of
SPOUSES JOSE FONTANILLA AND VIRGINIA the deceased Francisco Fontanilla; and to pay
FONTANILLA, petitioners, the costs. (Brief for the petitioners spouses
vs. Fontanilla, p. 4; Rollo, p. 132)
HONORABLE INOCENCIO D. MALIAMAN and
NATIONAL IRRIGATION ADMINISTRATION, respondents. Respondent National Irrigation Administration filed on April 21,
1980, its motion for reconsideration of the aforesaid decision
G.R. No. L-61045 December 1, 1989 which respondent trial court denied in its Order of June 13, 1980.
NATIONAL IRRIGATION ADMINISTRATION, appellant, Respondent National Irrigation Administration thus appealed said
vs. decision to the Court of Appeals (C.A.-G.R. No. 67237- R) where
SPOUSES JOSE FONTANILLA and VIRGINIA it filed its brief for appellant in support of its position.
FONTANILLA, appellees. Instead of filing the required brief in the aforecited Court of
Cecilio V. Suarez, Jr. for Spouses Fontanilla. Appeals case, petitioners filed the instant petition with this Court.

Felicisimo C. Villaflor for NIA. The sole issue for the resolution of the Court is: Whether or not
the award of moral damages, exemplary damages and attorney's
fees is legally proper in a complaint for damages based on quasi-
PARAS, J.: delict which resulted in the death of the son of herein petitioners.

In G.R. No. L-55963, the petition for review on certiorari seeks Petitioners allege:
the affirmance of the decision dated March 20, 1980 of the then 1. The award of moral damages is specifically
Court of First Instance of Nueva Ecija, Branch VIII, at San Jose allowable. under paragraph 3 of Article 2206
City and its modification with respect to the denial of petitioner's of the New Civil Code which provides that
claim for moral and exemplary damages and attorneys fees. the spouse, legitimate and illegitimate
In G.R. No. 61045, respondent National Irrigation Administration descendants and ascendants of the deceased
seeks the reversal of the aforesaid decision of the lower court. may demand moral damages for mental
The original appeal of this case before the Court of Appeals was anguish by reason of the death of the
certified to this Court and in the resolution of July 7, 1982, it was deceased. Should moral damages be granted,
docketed with the aforecited number. And in the resolution of the award should be made to each of
April 3, this case was consolidated with G.R. No. 55963. petitioners-spouses individually and in
varying amounts depending upon proof of
It appears that on August 21, 1976 at about 6:30 P.M., a pickup mental and depth of intensity of the same,
owned and operated by respondent National Irrigation which should not be less than P50,000.00 for
Administration, a government agency bearing Plate No. IN-651, each of them.
then driven officially by Hugo Garcia, an employee of said
agency as its regular driver, bumped a bicycle ridden by 2. The decision of the trial court had made an
Francisco Fontanilla, son of herein petitioners, and Restituto impression that respondent National Irrigation
Deligo, at Maasin, San Jose City along the Maharlika Highway. Administration acted with gross negligence
As a result of the impact, Francisco Fontanilla and Restituto because of the accident and the subsequent
Deligo were injured and brought to the San Jose City Emergency failure of the National Irrigation
Hospital for treatment. Fontanilla was later transferred to the Administration personnel including the driver
Cabanatuan Provincial Hospital where he died. to stop in order to give assistance to the,
victims. Thus, by reason of the gross
Garcia was then a regular driver of respondent National Irrigation negligence of respondent, petitioners become
Administration who, at the time of the accident, was a licensed entitled to exemplary damages under Arts.
professional driver and who qualified for employment as such 2231 and 2229 of the New Civil Code.
regular driver of respondent after having passed the written and
oral examinations on traffic rules and maintenance of vehicles 3. Petitioners are entitled to an award of
given by National Irrigation Administration authorities. attorney's fees, the amount of which (20%)
had been sufficiently established in the
The within petition is thus an off-shot of the action (Civil Case hearing of May 23, 1979.
No. SJC-56) instituted by petitioners-spouses on April 17, 1978
against respondent NIA before the then Court of First Instance of 4. This petition has been filed only for the
Nueva Ecija, Branch VIII at San Jose City, for damages in purpose of reviewing the findings of the lower
connection with the death of their son resulting from the court upon which the disallowance of moral
aforestated accident. damages, exemplary damages and attorney's
fees was based and not for the purpose of
After trial, the trial court rendered judgment on March 20, 1980 disturbing the other findings of fact and
which directed respondent National Irrigation Administration to conclusions of law.
pay damages (death benefits) and actual expenses to petitioners.
The dispositive portion of the decision reads thus: The Solicitor General, taking up the cudgels for public respondent
National Irrigation Administration, contends thus:
. . . . . Judgment is here rendered ordering the
defendant National Irrigation Administration 1. The filing of the instant petition is rot
to pay to the heirs of the deceased P12,000.00 proper in view of the appeal taken by
for the death of Francisco Fontanilla; respondent National Irrigation Administration
to the Court of Appeals against the judgment was not its special agent but a regular driver
sought to be reviewed. The focal issue raised of the vehicle.
in respondent's appeal to the Court of Appeals
involves the question as to whether or not the The sole legal question on whether or not petitioners may be
driver of the vehicle that bumped the victims entitled to an award of moral and exemplary damages and
was negligent in his operation of said vehicle. attorney's fees can very well be answered with the application of
It thus becomes necessary that before Arts. 2176 and 2180 of theNew Civil Code.
petitioners' claim for moral and exemplary Art. 2176 thus provides:
damages could be resolved, there should first
be a finding of negligence on the part of Whoever by act omission causes damage to
respondent's employee-driver. In this regard, another, there being fault or negligence, is
the Solicitor General alleges that the trial obliged to pay for damage done. Such fault or
court decision does not categorically contain negligence, if there is no pre-existing
such finding. cotractual relation between the parties, is
called a quasi-delict and is governed by the
2. The filing of the "Appearance and Urgent provisions of this Chapter
Motion For Leave to File Plaintiff-Appellee's
Brief" dated December 28, 1981 by Paragraphs 5 and 6 of Art. 21 80 read as follows:
petitioners in the appeal (CA-G.R. No. 67237- Employers shall be liable for the damages
R; and G. R. No.61045) of the respondent caused by their employees and household
National Irrigation Administration before the helpers acting within the scope of their
Court of Appeals, is an explicit admission of assigned tasks, even the though the former are
said petitioners that the herein petition, is not not engaged in any business or industry.
proper. Inconsistent procedures are manifest
because while petitioners question the The State is responsible in like manner when
findings of fact in the Court of Appeals, they it acts through a special agent.; but not when
present only the questions of law before this the damage has been caused by the official to
Court which posture confirms their admission whom the task done properly pertains, in
of the facts. which case what is provided in Art. 2176 shall
be applicable.
3. The fact that the parties failed to agree on
whether or not negligence caused the The liability of the State has two aspects. namely:
vehicular accident involves a question of fact
1. Its public or governmental aspects where it
which petitioners should have brought to the
is liable for the tortious acts of special agents
Court of Appeals within the reglementary
only.
period. Hence, the decision of the trial court
has become final as to the petitioners and for 2. Its private or business aspects (as when it
this reason alone, the petition should be engages in private enterprises) where it
dismissed. becomes liable as an ordinary employer. (p.
961, Civil Code of the Philippines; Annotated,
4. Respondent Judge acted within his
Paras; 1986 Ed. ).
jurisdiction, sound discretion and in
conformity with the law. In this jurisdiction, the State assumes a limited liability for the
damage caused by the tortious acts or conduct of its special agent.
5. Respondents do not assail petitioners' claim
to moral and exemplary damages by reason of Under the aforequoted paragrah 6 of Art. 2180, the State has
the shock and subsequent illness they suffered voluntarily assumed liability for acts done through special agents.
because of the death of their son. Respondent The State's agent, if a public official, must not only be specially
National Irrigation Administration, however, commissioned to do a particular task but that such task must be
avers that it cannot be held liable for the foreign to said official's usual governmental functions. If the
damages because it is an agency of the State State's agent is not a public official, and is commissioned to
performing governmental functions and driver perform non-governmental functions, then the State assumes the
Hugo Garcia was a regular driver of the role of an ordinary employer and will be held liable as such for its
vehicle, not a special agent who was agent's tort. Where the government commissions a private
performing a job or act foreign to his usual individual for a special governmental task, it is acting through a
duties. Hence, the liability for the tortious act special agent within the meaning of the provision. (Torts and
should. not be borne by respondent Damages, Sangco, p. 347, 1984 Ed.)
government agency but by driver Garcia who
should answer for the consequences of his act. Certain functions and activities, which can be performed only by
the government, are more or less generally agreed to be
6. Even as the trial court touched on the "governmental" in character, and so the State is immune from tort
failure or laxity of respondent National liability. On the other hand, a service which might as well be
Irrigation Administration in exercising due provided by a private corporation, and particularly when it
diligence in the selection and supervision of collects revenues from it, the function is considered a
its employee, the matter of due diligence is "proprietary" one, as to which there may be liability for the torts
not an issue in this case since driver Garcia of agents within the scope of their employment.
The National Irrigation Administration is an agency of the the hood, the fender and a crack on the radiator as shown by the
government exercising proprietary functions, by express investigation report (Exhibit "E"). (Emphasis supplied) [page 29,
provision of Rep. Act No. 3601. Section 1 of said Act provides: Rollo]
Section 1. Name and domicile.-A body It should be emphasized that the accident happened along the
corporate is hereby created which shall be Maharlika National Road within the city limits of San Jose City,
known as the National Irrigation an urban area. Considering the fact that the victim was thrown 50
Administration, hereinafter called the NIA for meters away from the point of impact, there is a strong indication
short, which shall be organized immediately that driver Garcia was driving at a high speed. This is confirmed
after the approval of this Act. It shall have its by the fact that the pick-up suffered substantial and heavy damage
principal seat of business in the City of as above-described and the fact that the NIA group was then "in a
Manila and shall have representatives in all hurry to reach the campsite as early as possible", as shown by
provinces for the proper conduct of its their not stopping to find out what they bumped as would have
business. been their normal and initial reaction.
Section 2 of said law spells out some of the NIA's proprietary Evidently, there was negligence in the supervision of the driver
functions. Thus- for the reason that they were travelling at a high speed within the
city limits and yet the supervisor of the group, Ely Salonga, failed
Sec. 2. Powers and objectives.-The NIA shall to caution and make the driver observe the proper and allowed
have the following powers and objectives: speed limit within the city. Under the situation, such negligence is
(a) x x x x x x x x x x x x x x x x x x further aggravated by their desire to reach their destination
without even checking whether or not the vehicle suffered
(b) x x x x x x x x x x x x x x x x x x damage from the object it bumped, thus showing imprudence and
(c) To collect from the users of each irrigation reckelessness on the part of both the driver and the supervisor in
system constructed by it such fees as may be the group.
necessary to finance the continuous operation Significantly, this Court has ruled that even if the employer can
of the system and reimburse within a certain prove the diligence in the selection and supervision (the latter
period not less than twenty-five years cost of aspect has not been established herein) of the employee, still if he
construction thereof; and ratifies the wrongful acts, or take no step to avert further damage,
(d) To do all such other tthings and to transact the employer would still be liable. (Maxion vs. Manila Railroad
all such business as are directly or indirectly Co., 44 Phil. 597).
necessary, incidental or conducive to the Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-
attainment of the above objectives. 26810, August 31, 1970, 34 SCRA 618), this Court held that a
Indubitably, the NIA is a government corporation with juridical driver should be especially watchful in anticipation of others who
personality and not a mere agency of the government. Since it is a may be using the highway, and his failure to keep a proper look
corporate body performing non-governmental functions, it now out for reasons and objects in the line to be traversed constitutes
becomes liable for the damage caused by the accident resulting negligence.
from the tortious act of its driver-employee. In this particular Considering the foregoing, respondent NIA is hereby directed to
case, the NIA assumes the responsibility of an ordinary employer pay herein petitioners-spouses the amounts of P12,000.00 for the
and as such, it becomes answerable for damages. death of Francisco Fontanilla; P3,389.00 for hospitalization and
This assumption of liability, however, is predicated upon the burial expenses of the aforenamed deceased; P30,000.00 as moral
existence of negligence on the part of respondent NIA. The damages; P8,000.00 as exemplary damages and attorney's fees of
negligence referred to here is the negligence of supervision. 20% of the total award.

At this juncture, the matter of due diligence on the part of SO ORDERED.


respondent NIA becomes a crucial issue in determining its
liability since it has been established that respondent is a
government agency performing proprietary functions and as such,
it assumes the posture of an ordinary employer which, under Par.
5 of Art. 2180, is responsible for the damages caused by its
employees provided that it has failed to observe or exercise due
diligence in the selection and supervision of the driver.
It will be noted from the assailed decision of the trial court that
"as a result of the impact, Francisco Fontanilla was thrown to a
distance 50 meters away from the point of impact while Restituto
Deligo was thrown a little bit further away. The impact took place
almost at the edge of the cemented portion of the road."
(Emphasis supplied,) [page 26, Rollo]
The lower court further declared that "a speeding vehicle coming
in contact with a person causes force and impact upon the vehicle
that anyone in the vehicle cannot fail to notice. As a matter of
fact, the impact was so strong as shown by the fact that
the vehicle suffered dents on the right side of the radiator guard,
G.R. No. 74135 May 28, 1992 conclusively proven when on February 7, 1978, petitioner M. H.
Wylie wrote her a letter of apology for the "inadvertent"
M. H. WYLIE and CAPT. JAMES WILLIAMS, petitioners, publication. The private respondent then commenced an action
vs. for damages in the Court of First Instance of Zambales (now
AURORA I. RARANG and THE HONORABLE Regional Trial Court) against
INTERMEDIATE APPELLATE COURT, respondents. M. H. Wylie, Capt. James Williams and the U. S. Naval Base. She
alleged that the article constituted false, injurious, and malicious
defamation and libel tending to impeach her honesty, virtue and
GUTIERREZ, JR., J.: reputation exposing her to public hatred, contempt and ridicule;
The pivotal issue in this petition centers on the extent of the and that the libel was published and circulated in the English
"immunity from suit" of the officials of a United States Naval language and read by almost all the U. S. Naval Base personnel.
Base inside Philippine territory. She prayed that she be awarded P300,000.00 as moral damages;
exemplary damages which the court may find proper; and
In February, 1978, petitioner M. H. Wylie was the assistant P50,000.00 as attorney's fees.
administrative officer while petitioner Capt. James Williams was
the commanding officer of the U. S. Naval Base in Subic Bay, In response to the complaint, the defendants filed a motion to
Olongapo City. Private respondent Aurora I. Rarang was an dismiss anchored on three grounds:
employee in the office of the Provost Marshal assigned as 1. Defendants M. H. Wylie and Capt. James
merchandise control guard. Williams acted in the performance of their
M. H. Wylie, in his capacity as assistant administrative officer of official functions as officers of the United
the U.S. Naval Station supervised the publication of the "Plan of States Navy and are, therefore, immune from
the Day" (POD) which was published daily by the US Naval Base suit;
station. The POD featured important announcements, necessary 2. The United States Naval Base is an
precautions, and general matters of interest to military personnel. instrumentality of the US government which
One of the regular features of the POD was the "action line cannot be sued without its consent; and
inquiry." On February 3, 1978, the POD published, under the
"NAVSTA ACTION LINE INQUIRY" the following: 3. This Court has no jurisdiction over the
subject matter as well as the parties in this
Question: I have observed that Merchandise case. (Record on Appeal, pp. 133-134)
Control inspector/inspectress are (sic)
consuming for their own benefit things they The motion was, however, denied.
have confiscated from Base Personnel. The In their answer, the defendants reiterated the lack of jurisdiction
observation is even more aggravated by of the court over the case.
consuming such confiscated items as
cigarettes and food stuffs PUBLICLY. This is In its decision, the trial court ruled that the acts of defendants M.
not to mention "Auring" who is in herself, a H. Wylie and Cpt. James Williams were not official acts of the
disgrace to her division and to the Office of government of the United States of America in the operation and
the Provost Marshal. In lieu of this control of the Base but personal and tortious acts which are
observation, may I therefore, ask if the head exceptions to the general rule that a sovereign country cannot be
of the Merchandise Control Division is aware sued in the court of another country without its consent. In short,
of this malpractice? the trial court ruled that the acts and omissions of the two US
officials were not imputable against the US government but were
Answer: Merchandise Control Guards and all done in the individual and personal capacities of the said officials.
other personnel are prohibited from The trial court dismissed the suit against the US Naval Base. The
appropriating confiscated items for their own dispositive portion of the decision reads as follows:
consumption or use. Two locked containers
are installed at the Main Gate area for deposit WHEREFORE, judgment is hereby rendered
of confiscated items and the OPM evidence in favor of the plaintiff and against the
custodian controls access to these containers. defendants jointly and severally, as follows:
Merchandise Control Guards are permitted to 1) Ordering defendants M. H. Wylie and Capt.
eat their meals at their worksite due to heavy James Williams to pay the plaintiff Aurora
workload. Complaints regarding merchandise Rarang the sum of one hundred thousand
control guards procedure or actions may be (P100,000.00) pesos by way of moral and
made directly at the Office of the Provost exemplary damages;
Marshal for immediate and necessary action.
Specific dates and time along with details of 2) Ordering defendants M. H. Wylie and Capt.
suspected violations would be most James Williams to pay the plaintiff the sum of
appreciated. Telephone 4-3430/4-3234 for thirty thousand (P30,000.00) pesos by way of
further information or to report noted or attorney's fees and expenses of litigation; and
suspected irregularities. Exhibits E & E-1. 3) To pay the costs of this suit.
(Rollo, pp. 11-12)
Counterclaims are dismissed.
The private respondent was the only one who was named
"Auring" in the Office of the Provost Marshal. That the private Likewise, the suit against the U.S. Naval Base
respondent was the same "Auring" referred to in the POD was is ordered dismissed. (Record on Appeal, p.
154)
On appeal, the petitioners reiterated their stance that they are There are other practical reasons for the
immune from suit since the subject publication was made in their enforcement of the doctrine. In the case of the
official capacities as officers of the U. S. Navy. They also foreign state sought to be impleaded in the
maintained that they did not intentionally and maliciously cause local jurisdiction, the added inhibition is
the questioned publication. expressed in the maxim par in parem, non
habet imperium. All states are sovereign
The private respondent, not satisfied with the amount of damages equals and cannot assert jurisdiction over one
awarded to her, also appealed the trial court's decision. another. A contrary disposition would, in the
Acting on these appeals, the Intermediate Appellate Court, now language of a celebrated case, "unduly vex the
Court of Appeals, modified the trial court's decision, to wit: peace of nations." (Da Haber v. Queen of
Portugal, 17 Q. B. 171)
WHEREFORE, the judgment of the court
below is modified so that the defendants are While the doctrine appears to prohibit only
ordered to pay the plaintiff, jointly and suits against the state without its consent, it is
severally, the sum of P175,000.00 as moral also applicable to complaints filed against
damages and the sum of P60,000.00 as officials of the state for acts allegedly
exemplary damages. The rest of the judgment performed by them in the discharge of their
appealed from is hereby affirmed in toto. duties. The rule is that if the judgment against
Costs against the defendants-appellants. such officials will require the state itself to
(Rollo, p. 44) perform an affirmative act to satisfy the same,
such as the appropriation of the amount
The appellate court denied a motion for reconsideration filed by needed to pay the damages awarded against
the petitioners. them, the suit must be regarded as against the
Hence, this petition. state itself although it has not been formally
impleaded. (Garcia v. Chief of Staff, 16 SCRA
In a resolution dated March 9, 1987, we gave due course to the 120) In such a situation, the state may move
petition. to dismiss the complaint on the ground that it
has been filed without its consent.
The petitioners persist that they made the questioned publication
in the performance of their official functions as administrative The doctrine is sometimes derisively called
assistant, in the case of M. H. Wylie, and commanding officer, in "the royal prerogative of dishonesty" because
the case of Capt. James Williams of the US Navy assigned to the of the privilege it grants the state to defeat any
U. S. Naval Station, Subic Bay, Olongapo City and were, legitimate claim against it by simply invoking
therefore, immune from suit for their official actions. its non-suability. That is hardly fair, at least in
democratic societies, for the state is not an
In the case of United States of America v. Guinto (182 SCRA 644
unfeeling tyrant unmoved by the valid claims
[1990]), we discussed the principle of the state immunity from
of its citizens. In fact, the doctrine is not
suit as follows:
absolute and does not say the state may not be
The rule that a state may not be sued without sued under any circumstance. On the contrary,
its consent, now expressed in Article XVI, the rule says that the state may not be sued
Section 3, of the 1987 Constitution, is one of without its consent, which clearly imports that
the generally accepted principles of it may be sued if it consents.
international law that we have adopted as part
The consent of the state to be sued may be
of the law of our land under Article II, Section
manifested expressly or impliedly. Express
2.
consent may be embodied in a general law or
xxx xxx xxx a special law. Consent is implied when the
state enters into a contract it itself commences
Even without such affirmation, we would still litigation.
be bound by the generally accepted principles
of international law under the doctrine of xxx xxx xxx
incorporation. Under this doctrine, as
The above rules are subject to qualification.
accepted by the majority of states, such
Express consent is effected only by the will of
principles are deemed incorporated in the law
the legislature through the medium of a duly
of every civilized state as a condition and
enacted statute. (Republic v. Purisima, 78
consequence of its membership in the society
SCRA 470) We have held that not all
of nations. Upon its admission to such society,
contracts entered into by the government will
the state is automatically obligated to comply
operate as a waiver of its non-suability;
with these principles in its relations with other
distinction must be made between its
states.
sovereign and proprietary acts. (United States
As applied to the local state, the doctrine of of America v. Ruiz, 136 SCRA 487) As for the
state immunity is based on the justification filing of a complaint by the government,
given by Justice Holmes that "there can be no suability will result only where the
legal right against the authority which makes government is claiming affirmative relief
the law on which the right depends." from the defendant. (Lim v. Brownell, 107
(Kawanakoa v. Polybank, 205 U.S. 349) Phil. 345) (at pp. 652-655)
In the same case we had opportunity to discuss extensively the and of such general acceptance that we deem it unnecessary to
nature and extent of immunity from suit of United States cite authorities in support thereof."
personnel who are assigned and stationed in Philippine territory,
to wit: xxx xxx xxx

In the case of the United States of America, the customary rule of It bears stressing at this point that the above
international law on state immunity is expressed with more observations do not confer on the United
specificity in the RP-US Bases Treaty. Article III thereof provides States of America a blanket immunity for all
as follows: acts done by it or its agents in the Philippines.
Neither may the other petitioners claim that
It is mutually agreed that the United States shall have the rights, they are also insulated from suit in this
power and authority within the bases which are necessary for the country merely because they have acted as
establishment, use, operation and defense thereof or appropriate agents of the United States in the discharge of
for the control thereof and all the rights, power and authority their official functions.
within the limits of the territorial waters and air space adjacent to,
or in the vicinity of, the bases which are necessary to provide There is no question that the United States of
access to them or appropriate for their control. America, like any other state, will be deemed
to have impliedly waived its non-suability if it
The petitioners also rely heavily on Baer v. Tizon, (57 SCRA 1) has entered into a contract in its proprietary or
along with several other decisions, to support their position that private capacity. It is only when the contract
they are not suable in the cases below, the United States not involves its sovereign or governmental
having waived its sovereign immunity from suit. It is emphasized capacity that no such waiver may be implied.
that in Baer, the Court held: This was our ruling in United States of
America v. Ruiz, (136 SCRA 487) where the
The invocation of the doctrine of immunity from suit of a foreign transaction in question dealt with the
state without its consent is appropriate. More specifically, insofar improvement of the wharves in the naval
as alien armed forces is concerned, the starting point is Raquiza installation at Subic Bay. As this was a clearly
v. Bradford, a 1945 decision. In dismissing a habeas governmental function, we held that the
corpus petition for the release of petitioners confined by contract did not operate to divest the United
American army authorities, Justice Hilado, speaking for the States of its sovereign immunity from suit. In
Court, cited Coleman v. Tennessee, where it was explicitly the words of Justice Vicente Abad Santos:
declared: "It is well settled that a foreign army, permitted to
march through a friendly country or to be stationed in it, by • The traditional rule of immunity excepts a
permission of its government or sovereign, is exempt from the State from being sued in the courts of another
civil and criminal jurisdiction of the place." Two years later, State without its consent or waiver. This rule
in Tubb and Tedrow v. Griess, this Court relied on the ruling is a necessary consequence of the principles
in Raquiza v. Bradford and cited in support thereof excerpts from of independence and equality of States.
the works of the following authoritative writers: Vattel, Wheaton, However, the rules of International Law are
Hall, Lawrence, Oppenheim, Westlake, Hyde, and McNair and not petrified; they are constantly developing
Lauterpacht. Accuracy demands the clarification that after the and evolving. And because the activities of
conclusion of the Philippine-American Military Bases states have multiplied, it has been necessary
Agreement, the treaty provisions should control on such matter, to distinguish them –– between sovereign and
the assumption being that there was a manifestation of the governmental acts (jure imperii) and private,
submission to jurisdiction on the part of the foreign power commercial and proprietary acts (jure
whenever appropriate. More to the point is Syquia v. Almeda gestionis). The result is that State immunity
Lopez, where plaintiffs as lessors sued the Commanding General now extends only to acts jure imperii. The
of the United States Army in the Philippines, seeking the restrictive application of State immunity is
restoration to them of the apartment buildings they owned leased now the rule in the United States, the United
to the United States armed forces station in the Manila area. A Kingdom and other states in Western Europe.
motion to dismiss on the ground of non-suability was filed and
upheld by respondent Judge. The matter was taken to this Court xxx xxx xxx
in a mandamus proceeding. It failed. It was the ruling that The restrictive application
respondent Judge acted correctly considering that the "action of State immunity is
must be considered as one against the U.S. Government." The proper only when the
opinion of Justice Montemayor continued: "It is clear that the proceedings arise out of
courts of the Philippines including the Municipal Court of Manila commercial transactions
have no jurisdiction over the present case for unlawful detainer. of the foreign sovereign,
The question of lack of jurisdiction was raised and interposed at its commercial activities
the very beginning of the action. The U.S. Government has not or economic affairs. Stated
given its consent to the filing of this suit which is essentially differently, a State may be
against her, though not in name. Moreover, this is not only a case said to have descended to
of a citizen filing a suit against his own Government without the the level of an individual
latter's consent but it is of a citizen filing an action against a and can thus be deemed to
foreign government without said government's consent, which have tacitly given its
renders more obvious the lack of jurisdiction of the courts of his consent to be sued only
country. The principles of law behind this rule are so elementary when it enters into
business contracts. It does
not apply where the There is no question, therefore, that the two (2) petitioners
contract relates to the actively participated in screening the features and articles in the
exercise of its sovereign POD as part of their official functions. Under the rule that U.S.
functions. In this case the officials in the performance of their official functions are immune
projects are an integral from suit, then it should follow that the petitioners may not be
part of the naval base held liable for the questioned publication.
which is devoted to the
defense of both the United It is to be noted, however, that the petitioners were sued in their
States and the Philippines, personal capacities for their alleged tortious acts in publishing a
indisputably a function of libelous article.
the government of the The question, therefore, arises –– are American naval officers
highest order; they are not who commit a crime or tortious act while discharging official
utilized for nor dedicated functions still covered by the principle of state immunity from
to commercial or business suit? Pursuing the question further, does the grant of rights,
purposes. power, and authority to the United States under the RP-US Bases
The other petitioners in the cases before us all Treaty cover immunity of its officers from crimes and torts? Our
aver they have acted in the discharge of their answer is No.
official functions as officers or agents of the Killing a person in cold blood while on patrol duty, running over
United States. However, this is a matter of a child while driving with reckless imprudence on an official trip,
evidence. The charges against them may not or slandering a person during office hours could not possibly be
be summarily dismissed on their mere covered by the immunity agreement. Our laws and, we presume,
assertion that their acts are imputable to the those of the United States do not allow the commission of crimes
United States of America, which has not given in the name of official duty.
its consent to be sued. In fact, the defendants
are sought to be held answerable for personal The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991]
torts in which the United States itself is not gives the law on immunity from suit of public officials:
involved. If found liable, they and they alone The general rule is that public officials can be held personally
must satisfy the judgment. (At pp. 655-658) accountable for acts claimed to have been performed in
In the light of these precedents, we proceed to resolve the present connection with official duties where they have acted ultra
case. vires or where there is showing of bad faith.

The POD was published under the direction and authority of the Moreover, the petitioner's argument that the immunity proviso
commanding officer, U.S. Naval Station Subic Bay. The under Section 4(a) of Executive Order No. 1 also extends to him
administrative assistant, among his other duties, is tasked to is not well-taken. A mere invocation of the immunity clause does
prepare and distribute the POD. On February 3, 1978, when the not ipso facto result in the charges being automatically dropped.
questioned article was published in the POD, petitioner Capt. In the case of Presidential Commission on Good Government
James Williams was the commanding officer while petitioner v. Peña (159 SCRA 556 [1988] then Chief Justice Claudio
M.H. Wylie was the administrative assistant of the US Naval Teehankee, added a clarification of the immunity accorded PCGG
Station at Subic bay. officials under Section 4(a) of Executive Order No. 1 as follows:
The NAVSTA ACTION LINE INQUIRY is a regular feature of With respect to the qualifications expressed by Mr. Justice
the POD. It is a telephone answering device in the office of the Feliciano in his separate opinion, I just wish to point out two
Administrative Assistant. The Action Line is intended to provide things: First, the main opinion does not claim absolute immunity
personnel access to the Commanding Officer on matters they feel for the members of the Commission. The cited section of
should be brought to his attention for correction or investigation. Executive Order No. 1 provides the Commission's members
The matter of inquiry may be phoned in or mailed to the POD. immunity from suit thus: "No civil action shall lie against the
(TSN, September 9, 1980, pp. 12-13, Jerry Poblon) According to Commission or any member thereof for anything done or omitted
M. H. Wylie, the action line naming "Auring" was received about in the discharge of the task contemplated by this order." No
three (3) weeks prior to its being published in the POD on absolute immunity like that sought by Mr. Marcos in his
February 3, 1978. It was forwarded to Rarang's office of Constitution for himself and his subordinates is herein
employment, the Provost Marshal, for comment. The Provost involved. It is understood that the immunity granted the members
Marshal office's response ". . . included a short note stating that if of the Commission by virtue of the unimaginable magnitude of its
the article was published, to remove the name." (Exhibit 8-A, p. task to recover the plundered wealth and the State's exercise of
5) The Provost Marshal's response was then forwarded to the police power was immunity from liability for damages in the
executive officer and to the commanding officer for approval. The official discharge of the task granted the members of the
approval of the Commanding officer was forwarded to the office Commission much in the same manner that judges are immune
of the Administrative Assistant for inclusion in the POD. A from suit in the official discharge of the functions of their office.
certain Mrs. Dologmodin, a clerk typist in the office of the . . . (at pp. 581-582
Administrative Assistant prepared the smooth copy of the POD.
Finally, M. H. Wylie, the administrative assistant signed the Immunity from suit cannot institutionalize irresponsibility and
smooth copy of the POD but failed to notice the reference to non-accountability nor grant a privileged status not claimed by
"Auring" in the action line inquiry. (Exh. 8-A, pp. 4-5, Questions any other official of the Republic. (id., at page 586)
Nos. 14-15).
Where the petitioner exceeds his authority as Solicitor General,
acts in bad faith, or, as contended by the private respondent,
"maliciously conspir(es) with the PCGG commissioners in Indeed the imputation of theft contained in the POD dated
persecuting respondent Enrile by filing against him an evidently February 3, 1978 is a defamation against the character and
baseless suit in derogation of the latter's constitutional rights and reputation of the private respondent. Petitioner Wylie himself
liberties" (Rollo, p. 417), there can be no question that a admitted that the Office of the Provost Marshal explicitly
complaint for damages does not confer a license to persecute or recommended the deletion of the name Auring if the article were
recklessly injure another. The actions governed by Articles 19, 20, published. The petitioners, however, were negligent because
21, and 32 of the Civil Code on Human Relations may be taken under their direction they issued the publication without deleting
against public officers or private citizens alike. . . . (pp. 289-291) the name "Auring." Such act or omission is ultra vires and cannot
be part of official duty. It was a tortious act which ridiculed the
We apply the same ruling to this case. private respondent. As a result of the petitioners' act, the private
The subject article in the US Newsletter POD dated February 3, respondent, according to the record, suffered besmirched
1978 mentions a certain "Auring" as ". . a disgrace to her division reputation, serious anxiety, wounded feelings and social
and to the Office of the Provost Marshal." The same article humiliation, specially so, since the article was baseless and false.
explicitly implies that Auring was consuming and appropriating The petitioners, alone, in their personal capacities are liable for
for herself confiscated items like cigarettes and foodstuffs. There the damages they caused the private respondent.
is no question that the Auring alluded to in the Article was the WHEREFORE, the petition is hereby DISMISSED. The
private respondent as she was the only Auring in the Office of the questioned decision and resolution of the then Intermediate
Provost Marshal. Moreover, as a result of this article, the private Appellate Court, now Court of Appeals, are AFFIRMED.
respondent was investigated by her supervisor. Before the article
came out, the private respondent had been the recipient of
commendations by her superiors for honesty in the performance AIR TRANSPORTATIONG.R. No. 159402
of her duties. OFFICE,
Petitioner, Present:
It may be argued that Captain James Williams as commanding
officer of the naval base is far removed in the chain of command BRION, Acting
from the offensive publication and it would be asking too much to
hold him responsible for everything which goes wrong on the Chairperson,**
- versus - BERSAMIN,
base. This may be true as a general rule. In this particular case,
however, the records show that the offensive publication was sent ABAD,***
to the commanding officer for approval and he approved it. The VILLARAMA, JR., and
factual findings of the two courts below are based on the records. SERENO, JJ.
The petitioners have shown no convincing reasons why our usual SPOUSES DAVID* and
respect for the findings of the trial court and the respondent court ELISEA RAMOS, Promulgated:
should be withheld in this particular case and why their decisions Respondents. February 23, 2011
should be reversed. x------------------------------------------------------------------------------
-----------x
Article 2176 of the Civil Code prescribes a civil liability for
damages caused by a person's act or omission constituting fault or
RESOLUTION
negligence, to wit:
Art. 2176. Whoever by act or omission, BERSAMIN, J.:
causes damage to another, there being fault or
negligence is obliged to pay for the damage
done. Such fault or negligence, if there is no
pre-existing contractual relation between the The States immunity from suit does not extend to the petitioner
parties, is called a quasi-delict and is
governed by the provisions of this Chapter. because it is an agency of the State engaged in an enterprise that
"Fault" or "negligence" in this Article covers not only acts "not
is far from being the States exclusive prerogative.
punishable by law" but also acts criminal in character, whether
intentional or voluntary or negligent." (Andamo v. Intermediate
Appellate Court, 191 SCRA 195 [1990]).
Moreover, Article 2219(7) of the Civil Code provides that moral Under challenge is the decision promulgated on May 14, 2003,
damages may be recovered in case of libel, slander or any other
form of defamation. In effect, the offended party in these cases is [1] by which the Court of Appeals (CA) affirmed with
given the right to receive from the guilty party moral damages for
injury to his feelings and reputation in addition to punitive or modification the decision rendered on February 21, 2001 by the
exemplary damages. (Occena v. Icamina, 181 SCRA 328 [1990]).
In another case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72 Regional Trial Court, Branch 61 (RTC), in Baguio City in favor
[1963], we ruled that the allegation of forgery of documents could
be a defamation, which in the light of Article 2219(7) of the Civil of the respondents.[2]
Code could by analogy be ground for payment of moral damages,
considering the wounded feelings and besmirched reputation of Antecedents
the defendants.
Spouses David and Elisea Ramos (respondents) discovered that a upon its finding that the assailed orders were not tainted with

portion of their land registered under Transfer Certificate of Title grave abuse of discretion.[3]

No. T-58894 of the Baguio City land records with an area of 985

square meters, more or less, was being used as part of the runway Subsequently, February 21, 2001, the RTC rendered its decision

and running shoulder of the Loakan Airport being operated by on the merits,[4] disposing:

petitioner Air Transportation Office (ATO). On August 11, 1995,


WHEREFORE, the judgment is
the respondents agreed after negotiations to convey the affected rendered ORDERING the defendant Air
Transportation Office to pay the plaintiffs
portion by deed of sale to the ATO in consideration of the amount DAVID and ELISEA RAMOS the following:
(1) The amount of P778,150.00 being the
of P778,150.00. However, the ATO failed to pay despite repeated value of the parcel of land appropriated by the
defendant ATO as embodied in the Deed of
verbal and written demands. Sale, plus an annual interest of 12% from
August 11, 1995, the date of the Deed of Sale
until fully paid; (2) The amount
of P150,000.00 by way of moral damages
Thus, on April 29, 1998, the respondents filed an action for and P150,000.00 as exemplary damages; (3)
the amount of P50,000.00 by way of
collection against the ATO and some of its officials in the RTC attorneys fees plus P15,000.00 representing
the 10, more or less, court appearances of
(docketed as Civil Case No. 4017-R and entitled Spouses David plaintiffs counsel; (4) The costs of this suit.

and Elisea Ramos v. Air Transportation Office, Capt. Panfilo SO ORDERED.

Villaruel, Gen. Carlos Tanega, and Mr. Cesar de Jesus).

In due course, the ATO appealed to the CA, which affirmed the

In their answer, the ATO and its co-defendants invoked as an RTCs decision on May 14, 2003,[5] viz:

affirmative defense the issuance of Proclamation No. 1358,


IN VIEW OF ALL THE FOREGOING, the
whereby President Marcos had reserved certain parcels of land appealed decision is hereby AFFIRMED,
with MODIFICATION that the awarded cost
that included the respondents affected portion for use of therein is deleted, while that of moral and
exemplary damages is reduced to P30,000.00
the Loakan Airport. They asserted that the RTC had no each, and attorneys fees is lowered
to P10,000.00.
jurisdiction to entertain the action without the States consent No cost.
SO ORDERED.
considering that the deed of sale had been entered into in the

performance of governmental functions.


Hence, this appeal by petition for review on certiorari.
On November 10, 1998, the RTC denied the ATOs motion for a

preliminary hearing of the affirmative defense. Issue

The only issue presented for resolution is whether the ATO could

After the RTC likewise denied the ATOs motion for be sued without the States consent.

reconsideration on December 10, 1998, the ATO commenced a Ruling

special civil action for certiorari in the CA to assail the RTCs The petition for review has no merit.

orders. The CA dismissed the petition for certiorari, however,


The immunity of the State from suit, known also as the doctrine in Providence Washington Insurance Co. v. Republic of the

of sovereign immunity or non-suability of the State, is expressly Philippines[9] is the most acceptable explanation, according to

provided in Article XVI of the 1987 Constitution, viz: Father Bernas, a recognized commentator on Constitutional Law,

[10] to wit:
Section 3. The State may not be sued without
its consent.
[A] continued adherence to the doctrine of
non-suability is not to be deplored for as
against the inconvenience that may be caused
The immunity from suit is based on the political truism that the private parties, the loss of governmental
efficiency and the obstacle to the performance
State, as a sovereign, can do no wrong. Moreover, as the eminent of its multifarious functions are far greater if
such a fundamental principle were abandoned
Justice Holmes said in Kawananakoa v. Polyblank:[6] and the availability of judicial remedy were
not thus restricted. With the well-known
propensity on the part of our people to go to
The territory [of Hawaii], of course, could court, at the least provocation, the loss of time
waive its exemption (Smith v. Reeves, and energy required to defend against law
178 US 436, 44 L ed 1140, 20 Sup. Ct. Rep. suits, in the absence of such a basic principle
919), and it took no objection to the that constitutes such an effective obstacle,
proceedings in the cases cited if it could have could very well be imagined.
done so. xxx But in the case at bar it did
object, and the question raised is whether the
plaintiffs were bound to yield. Some doubts
have been expressed as to the source of the An unincorporated government agency without any separate
immunity of a sovereign power from suit
without its own permission, but the answer juridical personality of its own enjoys immunity from suit
has been public property since before the
days of Hobbes. Leviathan, chap. 26, 2. A because it is invested with an inherent power of
sovereign is exempt from suit, not because
of any formal conception or obsolete sovereignty. Accordingly, a claim for damages against the agency
theory, but on the logical and practical
ground that there can be no legal right as cannot prosper; otherwise, the doctrine of sovereign immunity is
against the authority that makes the law on
which the right depends. Car on peut bien violated.[11] However, the need to distinguish between an
recevoir loy d'autruy, mais il est impossible
par nature de se donner unincorporated government agency performing governmental
loy. Bodin, Republique, 1, chap. 8, ed. 1629,
p. 132; Sir John Eliot, De Jure Maiestatis, function and one performing proprietary functions has arisen. The
chap. 3. Nemo suo statuto ligatur
necessitative. Baldus, De Leg. et Const. immunity has been upheld in favor of the former because its
Digna Vox, 2. ed. 1496, fol. 51b, ed. 1539,
fol. 61.[7] function is governmental or incidental to such function; [12] it

has not been upheld in favor of the latter whose function was not

Practical considerations dictate the establishment of an immunity in pursuit of a necessary function of government but was

essentially a business.[13]
from suit in favor of the State. Otherwise, and the State is suable

at the instance of every other individual, government service may

be severely obstructed and public safety endangered because of Should the doctrine of sovereignty immunity or non-suability of

the number of suits that the State has to defend against. the State be extended to the ATO?

[8] Several justifications have been offered to support the

adoption of the doctrine in the Philippines, but that offered


Act 776, Sec. 32(24) and (25). Said Act
In its challenged decision,[14] the CA answered in the negative, provides:

holding: Sec. 32. Powers and Duties of the


Administrator. Subject to the general control
On the first assignment of error, appellants seek to and supervision of the Department Head, the
impress upon Us that the subject contract of sale Administrator shall have among others, the
partook of a governmental character. Apropos, the following powers and duties:
lower court erred in applying the High Courts ruling
in National Airports Corporation vs. Teodoro (91 Phil. xx
203 [1952]), arguing that in Teodoro, the matter (24) To administer, operate, manage, control,
involved the collection of landing and parking fees maintain and develop the Manila
which is a proprietary function, while the case at bar International Airport and all government-
involves the maintenance and operation of aircraft and owned aerodromes except those controlled or
air navigational facilities and services which are operated by the Armed Forces of the
governmental functions. Philippines including such powers and duties
as: (a) to plan, design, construct, equip,
We are not persuaded. expand, improve, repair or alter aerodromes
or such structures, improvement or air
Contrary to appellants conclusions, it was not merely navigation facilities; (b) to enter into, make
the collection of landing and parking fees which was and execute contracts of any kind with any
declared as proprietary in nature by the High Court person, firm, or public or private corporation
in Teodoro, but management and maintenance of airport or entity;
operations as a whole, as well. Thus, in the much later
case of Civil Aeronautics Administration vs. Court of (25) To determine, fix, impose, collect and
Appeals (167 SCRA 28 [1988]), the Supreme Court, receive landing fees, parking space fees,
reiterating the pronouncements laid down in Teodoro, royalties on sales or deliveries, direct or
declared that the CAA (predecessor of ATO) is an indirect, to any aircraft for its use of aviation
agency not immune from suit, it being engaged in gasoline, oil and lubricants, spare parts,
functions pertaining to a private entity. It went on to accessories and supplies, tools, other
explain in this wise: royalties, fees or rentals for the use of any of
the property under its management and
The Civil Aeronautics Administration comes control.
under the category of a private
entity. Although not a body corporate it was xxx
created, like the National Airports
Corporation, not to maintain a necessary From the foregoing, it can be seen that the
function of government, but to run what is CAA is tasked with private or non-
essentially a business, even if revenues be not governmental functions which operate to
its prime objective but rather the promotion remove it from the purview of the rule on
of travel and the convenience of the travelling State immunity from suit. For the correct rule
public. It is engaged in an enterprise which, as set forth in the Teodoro case states:
far from being the exclusive prerogative of
state, may, more than the construction of xxx
public roads, be undertaken by private
concerns. [National Airports Corp. v. Not all government entities, whether
Teodoro, supra, p. 207.] corporate or non-corporate, are immune from
suits. Immunity from suits is determined by
xxx the character of the objects for which the
entity was organized. The rule is thus stated
True, the law prevailing in 1952 when in Corpus Juris:
the Teodoro case was promulgated was Exec.
Order 365 (Reorganizing the Civil Suits against State agencies with
Aeronautics Administration and Abolishing relation to matters in which they
the National Airports Corporation). Republic have assumed to act in private or
Act No. 776 (Civil Aeronautics Act of non-governmental capacity, and
the Philippines), subsequently enacted various suits against certain
on June 20, 1952, did not alter the character corporations created by the state for
of the CAAs objectives under Exec. Order public purposes, but to engage in
365. The pertinent provisions cited in matters partaking more of the
the Teodoro case, particularly Secs. 3 and 4 of nature of ordinary business rather
Exec. Order 365, which led the Court to than functions of a governmental or
consider the CAA in the category of a private political character, are not regarded
entity were retained substantially in Republic as suits against the state. The latter
is true, although the state may own
stock or property of such a
corporation for by engaging in 1,165 square meters and an artificial creek 23.20 meters wide and
business operations through a
corporation, the state divests itself 128.69 meters long occupying an area of 2,906 square meters had
so far of its sovereign character, and
by implication consents to suits been constructed by the provincial engineer of Rizal and a private
against the corporation. (59 C.J.,
313) [National Airports Corporation contractor without the owners knowledge and consent was
v. Teodoro, supra, pp. 206-207;
Italics supplied.] reversed and the cases remanded for trial on the merits. The

This doctrine has been reaffirmed in the Supreme Court ruled that the doctrine of sovereign immunity was
recent case of Malong v. Philippine National
Railways [G.R. No. L-49930, August 7, 1985, not an instrument for perpetrating any injustice on a citizen. In
138 SCRA 63], where it was held that the
Philippine National Railways, although exercising the right of eminent domain, the Court explained, the
owned and operated by the government, was
not immune from suit as it does not exercise State exercised its jus imperii, as distinguished from its
sovereign but purely proprietary and business
functions. Accordingly, as the CAA was proprietary rights, or jus gestionis; yet, even in that area, where
created to undertake the management of
airport operations which primarily involve private property had been taken in expropriation without just
proprietary functions, it cannot avail of the
immunity from suit accorded to government compensation being paid, the defense of immunity from suit
agencies performing strictly governmental
functions.[15] could not be set up by the State against an action for payment by

the owners.

In our view, the CA thereby correctly appreciated the juridical

character of the ATO as an agency of the Government not Lastly, the issue of whether or not the ATO could be sued without

performing a purely governmental or sovereign function, but was the States consent has been rendered moot by the passage of

instead involved in the management and maintenance of Republic Act No. 9497, otherwise known as the Civil Aviation

the Loakan Airport, an activity that was not the exclusive Authority Act of 2008.

prerogative of the State in its sovereign capacity. Hence, the ATO

had no claim to the States immunity from suit. We uphold the R.A. No. 9497 abolished the ATO, to wit:

CAs aforequoted holding. Section 4. Creation of the Authority. There is


hereby created an independent regulatory
body with quasi-judicial and quasi-legislative
powers and possessing corporate attributes to
We further observe the doctrine of sovereign immunity cannot be be known as the Civil Aviation Authority of
the Philippines (CAAP), herein after referred
successfully invoked to defeat a valid claim for compensation to as the Authority attached to the Department
of Transportation and Communications
arising from the taking without just compensation and without the (DOTC) for the purpose of policy
coordination. For this purpose, the existing
proper expropriation proceedings being first resorted to of the Air transportation Office created under
the provisions of Republic Act No. 776, as
plaintiffs property.[16] Thus, in De los Santos v. Intermediate amended is hereby abolished.
xxx
Appellate Court,[17] the trial courts dismissal based on the

doctrine of non-suability of the State of two cases (one of which


Under its Transitory Provisions, R.A. No. 9497 established in
was for damages) filed by owners of property where a road 9
place of the ATO the Civil Aviation Authority of the Philippines
meters wide and 128.70 meters long occupying a total area of
(CAAP), which thereby assumed all of the ATOs powers, duties WHEREFORE, the Court denies the petition for review

and rights, assets, real and personal properties, funds, and on certiorari, and affirms the decision promulgated by the Court

revenues, viz: of Appeals.

CHAPTER XII
TRANSITORTY PROVISIONS No pronouncement on costs of suit.
Section 85. Abolition of the Air
Transportation Office. The Air Transportation
Office (ATO) created under Republic Act No.
776, a sectoral office of the Department of SO ORDERED.
Transportation and Communications
(DOTC), is hereby abolished. G.R. No. L-61744 June 25, 1984

All powers, duties and rights vested by law MUNICIPALITY OF SAN MIGUEL, BULACAN, petitioner,
and exercised by the vs.
ATO is hereby transferred to the Authority. HONORABLE OSCAR C. FERNANDEZ, in his capacity as
the Presiding Judge, Branch IV, Baliuag, Bulacan, The
PROVINCIAL SHERIFF of Bulacan, MARGARITA D. VDA.
All assets, real and personal properties, DE IMPERIO, ADORACION IMPERIO, RODOLFO
funds and revenues owned by or vested in IMPERIO, CONRADO IMPERIO, ERNESTO IMPERIO,
the different offices of the ATO are ALFREDO IMPERIO, CARLOS IMPERIO, JR., JUAN
transferred to the Authority. All contracts, IMPERIO and SPOUSES MARCELO PINEDA and
records and documents relating to the LUCILA PONGCO, respondents.
operations of the abolished agency and its Pascual C. Liatchko for petitioner.
offices and branches are likewise transferred
to the Authority. Any real property owned The Solicitor General and Marcelo Pineda for respondents.
by the national government or
government-owned corporation or
authority which is being used and RELOVA, J.:
utilized as office or facility by the ATO shall
In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio,
be transferred and titled in favor of the
et al. vs. Municipal Government of San Miguel, Bulacan, et al.",
Authority.
the then Court of First Instance of Bulacan, on April 28, 1978,
rendered judgment holding herein petitioner municipality liable to
Section 23 of R.A. No. 9497 enumerates the corporate powers
private respondents, as follows:
vested in the CAAP, including the power to sue and be sued, to WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs and against the defendant
enter into contracts of every class, kind and description, Municipal Government of San Miguel Bulacan, represented by
Mayor Mar Marcelo G. Aure and its Municipal Treasurer:
to construct, acquire, own, hold, operate, maintain, administer and
1. ordering the partial revocation of the Deed of Donation
lease personal and real properties, and to settle, under such terms signed by the deceased Carlos Imperio in favor of the
Municipality of San Miguel Bulacan, dated October 27,
1947 insofar as Lots Nos. 1, 2, 3, 4 and 5, Block 11 of
and conditions most advantageous to it, any claim by or against it.
Subdivision Plan Psd-20831 are concerned, with an
[18] aggregate total area of 4,646 square meters, which lots
are among those covered and described under TCT No.
T-1831 of the Register of Deeds of Bulacan in the name
of the Municipal Government of San Miguel Bulacan,
With the CAAP having legally succeeded the ATO pursuant to 2. 2. ordering the defendant to execute the corresponding
Deed of Reconveyance over the aforementioned five
R.A. No. 9497, the obligations that the ATO had incurred by lots in favor of the plaintiffs in the proportion of the
undivided one-half (½) share in the name of plaintiffs
virtue of the deed of sale with the Ramos spouses might now be Margarita D. Vda. de Imperio, Adoracion, Rodolfo,
Conrado, Ernesto, Alfredo, Carlos, Jr. and Juan, all
enforced against the CAAP. surnamed Imperio, and the remaining undivided one-
half (½) share in favor of plaintiffs uses Marcelo E.
Pineda and Lucila Pongco;
3. 3. ordering the defendant municipality to pay to the
plaintiffs in the proportion mentioned in the
immediately preceding paragraph the sum of to submit their written compliance, (p. 24,
P64,440.00 corresponding to the rentals it has collected Rollo)
from the occupants for their use and occupation of the
premises from 1970 up to and including 1975, plus When the treasurers (provincial and municipal) failed to comply
interest thereon at the legal rate from January 1970 until with the order of September 13, 1982, respondent judge issued an
fully paid; order for their arrest and that they will be release only upon
compliance thereof.
4. 4. ordering the restoration of ownership and possession
over the five lots in question in favor of the plaintiffs in Hence, the present petition on the issue whether the funds of the
the same proportion aforementioned; Municipality of San Miguel, Bulacan, in the hands of the
provincial and municipal treasurers of Bulacan and San Miguel,
5. 5. ordering the defendant to pay the plaintiffs the sum respectively, are public funds which are exempt from execution
of P3,000.00 for attomey's fees; and to pay the cost of for the satisfaction of the money judgment in Civil Case No. 604-
suit. B.
The counterclaim of the defendant is hereby Well settled is the rule that public funds are not subject to levy
ordered dismissed for lack of evidence and execution. The reason for this was explained in the case of
presented to substantiate the same. Municipality of Paoay vs. Manaois, 86 Phil. 629 "that they are
held in trust for the people, intended and used for the
SO ORDERED. (pp. 11-12, Rollo) accomplishment of the purposes for which municipal
The foregoing judgment became final when herein petitioner's corporations are created, and that to subject said properties and
appeal was dismissed due to its failure to file the record on appeal public funds to execution would materially impede, even defeat
on time. The dismissal was affirmed by the then Court of Appeals and in some instances destroy said purpose." And, in Tantoco vs.
in CA-G.R. No. SP-12118 and by this Court in G.R. No. 59938. Municipal Council of Iloilo, 49 Phil. 52, it was held that "it is the
Thereafter, herein private respondents moved for issuance of a settled doctrine of the law that not only the public property but
writ of execution for the satisfaction of the judgment. Respondent also the taxes and public revenues of such corporations Cannot be
judge, on July 27, 1982, issued an order, to wit: seized under execution against them, either in the treasury or
when in transit to it. Judgments rendered for taxes, and the
Considering that an entry of judgment had proceeds of such judgments in the hands of officers of the law, are
already been made on June 14, 1982 in G. R. not subject to execution unless so declared by statute." Thus, it is
No. L-59938 and; clear that all the funds of petitioner municipality in the possession
Considering further that there is no opposition of the Municipal Treasurer of San Miguel, as well as those in the
to plaintiffs' motion for execution dated July possession of the Provincial Treasurer of Bulacan, are also public
23, 1983; funds and as such they are exempt from execution.

Let a writ of execution be so issued, as prayed Besides, Presidential Decree No. 477, known as "The Decree on
for in the aforestated motion. (p. 10, Rollo) Local Fiscal Administration", Section 2 (a), provides:

Petitioner, on July 30, 1982, filed a Motion to Quash the writ of SEC. 2. Fundamental Principles. — Local
execution on the ground that the municipality's property or funds government financial affairs, transactions, and
are all public funds exempt from execution. The said motion to operations shall be governed by the
quash was, however, denied by the respondent judge in an order fundamental principles set forth hereunder:
dated August 23, 1982 and the alias writ of execution stands in (a) No money shall be paid out of the treasury
full force and effect. except in pursuance of a lawful appropriation
On September 13, 1982, respondent judge issued an order which or other specific statutory authority.
in part, states: xxx xxx xxx
It is clear and evident from the foregoing that Otherwise stated, there must be a corresponding appropriation in
defendant has more than enough funds to the form of an ordinance duly passed by the Sangguniang Bayan
meet its judgment obligation. Municipal before any money of the municipality may be paid out. In the
Treasurer Miguel C, Roura of San Miguel, case at bar, it has not been shown that the Sangguniang Bayan has
Bulacan and Provincial Treasurer of Bulacan passed an ordinance to this effect.
Agustin O. Talavera are therefor hereby
ordered to comply with the money judgment Furthermore, Section 15, Rule 39 of the New Rules of Court,
rendered by Judge Agustin C. Bagasao against outlines the procedure for the enforcement of money judgment:
said municipality. In like manner, the (a) By levying on all the property of the
municipal authorities of San Miguel, Bulacan debtor, whether real or personal, not otherwise
are likewise ordered to desist from plaintiffs' exempt from execution, or only on such part
legal possession of the property already of the property as is sufficient to satisfy the
returned to plaintiffs by virtue of the alias writ judgment and accruing cost, if he has more
of execution. than sufficient property for the purpose;
Finally, defendants are hereby given an (b) By selling the property levied upon;
inextendible period of ten (10) days from
receipt of a copy of this order by the Office of (c) By paying the judgment-creditor so much
the Provincial Fiscal of Bulacan within which of the proceeds as will satisfy the judgment
and accruing costs; and
(d) By delivering to the judgment-debtor the
excess, if any, unless otherwise, directed by
judgment or order of the court.
The foregoing has not been followed in the case at bar.
ACCORDINGLY, the petition is granted and the order of
respondent judge, dated July 27, 1982, granting issuance of a writ
of execution; the alias writ of execution, dated July 27, 1982; and
the order of respondent judge, dated September 13, 1982,
directing the Provincial Treasurer of Bulacan and the Municipal
Treasurer of San Miguel, Bulacan to comply with the money
judgments, are SET ASIDE; and respondents are hereby enjoined
from implementing the writ of execution.
SO ORDERED.