A.M. No. 93-7-696-0 February 21, 1995
In the aggregate, he has initiated or spawned in
In Re JOAQUIN T. BORROMEO, Ex Rel. Cebu City Chapter of the Integrated
Bar of the Philippines.
RESOLUTION
PER CURIAM:
It is said that a little learning is a dangerous thing; and that he who acts as his
own lawyer has a fool for a client. There would seem to be more than a grain of
truth in these aphorisms; and they appear to find validation in the proceeding at
bench, at least.
The respondent in this case, Joaquin T. Borromeo, is not a lawyer but has
apparently read some law books, and ostensibly come to possess some
superficial awareness of a few substantive legal principles and procedural rules.
Incredibly, with nothing more than this smattering of learning, the respondent
has, for some sixteen (16) years now, from 1978 to the present, been instituting
and prosecuting legal proceedings in various courts, dogmatically pontificating
on errors supposedly committed by the courts, including the Supreme Court. In
the picturesque language of former Chief Justice Enrique M. Fernando, he has
"with all the valor of ignorance," 1 been verbally jousting with various adversaries
in diverse litigations; or in the words of a well-known song, rushing into arenas
"where angels fear to tread." Under the illusion that his trivial acquaintance with
the law had given him competence to undertake litigation, he has ventured to
represent himself in numerous original and review proceedings. Expectedly, the
results have been disastrous. In the process, and possibly in aid of his
interminable and quite unreasonable resort to judicial proceedings, he has seen
fit to compose and circulate many scurrilous statements against courts, judges
and their employees, as well as his adversaries, for which he is now being called
to account.
Respondent Borromeo's ill-advised incursions into lawyering were generated by
fairly prosaic transactions with three (3) banks which came to have calamitous
consequences for him chiefly because of his failure to comply with his
contractual commitments and his stubborn insistence on imposing his own terms
and conditions for their fulfillment. These banks were: Traders Royal Bank (TRB),
United Coconut Planters Bank (UCPB), Security Bank & Trust Co. (SBTC).
Borromeo obtained loans or credit accommodation from them, to secure which
he constituted mortgages over immovables belonging to him or members of his
family, or third persons. He failed to pay these obligations, and when demands
were made for him to do so, laid down his own terms for their satisfaction which
were quite inconsistent with those agreed upon with his obligees or prescribed by
law. When, understandably, the banks refused to let him have his way, he
brought suits right and left, successively if not contemporaneously, against said
banks, its officers, and even the lawyers who represented the banks in the
actions brought by or against him. He sued, as well, the public prosecutors, the
Judges of the Trial Courts, and the Justices of the Court of Appeals and the
Supreme Court who at one time or another, rendered a judgment, resolution or
order adverse to him, as well as the Clerks of Court and other Court employees
signing the notices thereof.
different fora the astounding number of no less-than fifty (50) original or review
proceedings, civil, criminal, administrative. For some sixteen (16) years now, to
repeat, he has been continuously cluttering the Courts with his repetitive, and
quite baseless if not outlandish complaints and contentions.
I. CASES INVOLVING TRADERS

ROYAL BANK (TRB)
The first bank that Joaquin T. Borromeo appears to have dealt with was the
Traders Royal Bank (TRB). On June 2, 1978, he got a loan from it in the sum of
P45,000.00. This he secured by a real estate mortgage created over two parcels
of land covered by TCT No. 59596 and TCT No. 59755 owned, respectively, by
Socorro Borromeo-Thakuria (his sister) and Teresita Winniefred Lavarino. On
June 16, 1978, Borromeo obtained a second loan from TRB in the amount of
P10,000.00, this time giving as security a mortgage over a parcel of land owned
by the Heirs of Vicente V. Borromeo, covered by TCT No. RT-7634. Authority to
mortgage these three lots was vested in him by a Special Power of Attorney
executed by their respective owners.
Additionally, on April 23, 1980, Borromeo obtained a Letter of Credit from TRB in
the sum of P80,000.00, in consideration of which he executed a Trust Receipt
(No. 595/80) falling due on July 22, 1980.2
Borromeo failed to pay the debts as contracted despite demands therefor.
Consequently, TRB caused the extra-judicial foreclosure of the mortgages given
to secure them. At the public sale conducted by the sheriff on September 7,
1981, the three mortgaged parcels of land were sold to TRB as the highest
bidder, for P73,529.09.
Within the redemption period, Borromeo made known to the Bank his intention to
redeem the properties at their auction price. TRB manager Blas C. Abril however
made clear that Borromeo would also have to settle his outstanding account
under Trust Receipt No. 595/80 (P88,762.78), supra. Borromeo demurred, and
this disagreement gave rise to a series of lawsuits commenced by him against
the Bank, its officers and counsel, as aforestated.
A. CIVIL CASES
1. RTC Case No. R-22506; CA G.R.

CV No. 07015; G.R. No. 83306
On October 29, 1982 Borromeo filed a complaint in the Cebu City Regional Trial
Court for specific performance and damages against TRB and its local manager,
Blas Abril, docketed as Civil Case No. R-22506. The complaint sought to compel
defendants to allow redemption of the foreclosed properties only at their auction
price, with stipulated interests and charges, without need of paying the obligation
secured by the trust receipt above mentioned. Judgment was rendered in his
favor on December 20, 1984 by Branch 23 of the Cebu City RTC; but on
defendants' appeal to the Court of Appeals — docketed as CA-G.R. CV No.
07015 — the judgment was reversed, by decision dated January 27, 1988. The
Court of Appeals held that the "plaintiff (Borromeo) has lost his right of
redemption and can no longer compel defendant to allow redemption of the
properties in question."
1
Borromeo elevated the case to this court where his appeal was docketed as G.R.
No. 83306. By Resolution dated August 15, 1988, this Court's First Division
denied his petition for review "for failure . . . to sufficiently show that the
respondent Court of Appeals had committed any reversible error in its questioned
judgment, it appearing on the contrary that the said decision is supported by
substantial evidence and is in accord with the facts and applicable law."
Reconsideration was denied, by Resolution dated November 23, 1988. A second
motion for reconsideration was denied by Resolution dated January 30, 1989, as
was a third such motion, by Resolution dated April 19, 1989. The last resolution
also directed entry of judgment and the remand of the case to the court of origin
for prompt execution of judgment. Entry of judgment was made on May 12, 1989.
By Resolution dated August 7, 1989, the Court denied another motion of
Borromeo to set aside judgment; and by Resolution dated December 20, 1989,
the Court merely noted without action his manifestation and motion praying that
the decision of the Court of Appeals be overturned, and declared that "no further
motion or pleading . . . shall be entertained . . . ."
2. RTC Case No. CEB 8750;
 motion, dismissed on September 9, 1991 by the RTC (Branch 145) on the ground
CA-G.R. SP No. 22356
The ink was hardly dry on the resolutions just mentioned before Borromeo
initiated another civil action in the same Cebu City Regional Court by which he
attempted to litigate the same issues. The action, against the new TRB Branch
Manager, Jacinto Jamero, was docketed as Civil Case No. CEB-8750. As might
have been anticipated, the action was, on motion of the defense, dismissed by
Order dated May 18, 1990,3 on the ground of res judicata, the only issue raised
in the second action — i.e., Borromeo's right to redeem the lots foreclosed by
TRB — having been ventilated in Civil Case No. R-22506 (Joaquin T. Borromeo
vs. Blas C. Abril and Traders Royal Bank) (supra) and, on appeal, decided with
finality by the Court of Appeals and the Supreme Court in favor of defendants
therein.
The Trial Court's judgment was affirmed by the Court of Appeals in CA-G.R. SP
No. 22356.
3. RTC Case No. CEB-9485;
 sought in Civil Case No. CEB-9485, and the factual bases of the two cases were
CA-G.R. SP No. 28221
In the meantime, and during the pendency of Civil Case No. R-22506, TRB
consolidated its ownership over the foreclosed immovables. Contending that act
of consolidation amounted to a criminal offense, Borromeo filed complaints in the
Office of the City Prosecutor of Cebu against the bank officers and lawyers.
These complaints were however, and quite correctly, given short shrift by that
Office. Borromeo then filed suit in the Cebu City RTC, this time not only against
the TRB, TRB officers Jacinto Jamero and Arceli Bustamante, but also against
City Prosecutor Jufelinito Pareja and his assistants, Enriqueta Belarmino and
Eva A. Igot, and the TRB lawyers, Mario Ortiz and the law, firm, HERSINLAW.
The action was docketed as Civil Case No. CEB-9485. The complaint charged
Prosecutors Pareja, Belarmino and Igot with manifest partiality and bias for
dismissing the criminal cases just mentioned; and faulted TRB and its manager,
Jamero, as well as its lawyers, for consolidating the titles to the foreclosed
properties in favor of the bank despite the pendency of Case No. R-22506. This
action also failed. On defendants' motion, it was dismissed on February 19, 1992
by the RTC. (Branch 22) on the ground of res judicata (being identical with Civil
Case Nos. R-22506 and CEB-8750, already decided with finality in favor of
TRB), and lack of cause of action (as to defendants Pareja, Belarmino and Igot).
Borromeo's certiorari petition to the Court of Appeals (CA G.R. SP No. 28221)
was dismissed by that Court's 16th Division4 on October 6, 1992, for the reason
that the proper remedy was appeal.
4. RTC Case No. CEB-10368;

CA-G.R. SP No. 27100
Before Case No. CEB-9845 was finally decided, Borromeo filed, on May 30,
1991, still another civil action for the same cause against TRB, its manager,
Jacinto Jamero, and its lawyers, Atty. Mario Ortiz and the HERSINLAW law
office. This action was docketed as Civil Case No. CEB-10368, and was
described as one for "Recovery of Sums of Money, Annulment of Titles with
Damages." The case met the same fate as the others. It was, on defendants'
of litis pendentia.
The RTC ruled that —
Civil Case No. CEB-9485 will readily show that the defendants therein, namely
the Honorable Jufelinito Pareja, Enriqueta Belarmino, Eva Igot, Traders Royal
Bank, Arceli Bustamante, Jacinto Jamero, Mario Ortiz and HERSINLAW are the
same persons or nearly all of them who are impleaded as defendants in the
present Civil Case No. CEB-10368, namely, the Traders Royal Bank, Jacinto
Jamero, Mario Ortiz and HERSINLAW. The only difference is that more
defendants were impleaded in Civil Case No. CEB-9485, namely, City
Prosecutor Jufelinito Pareja and his assistants Enriqueta Belarmino and Eva
Igot. The inclusion of the City Prosecutor and his two assistants in Civil Case No.
CEB-9485 was however merely incidental as apparently they had nothing to do
with the questioned transaction in said case. . . .
The Court likewise found that the reliefs prayed for were the same as those
essentially the same — the alleged fraudulent foreclosure and consolidation of
the three properties mortgaged years earlier by Borromeo to TRB.
For some reason, the Order of September 9, 1991 was set aside by an Order
rendered by another Judge on November 11, 1991 6 — the Judge who previously
heard the case having inhibited himself; but this Order of November 11, 1991
was, in turn, nullified by the Court of Appeals (9th Division), by Decision
promulgated on March 31, 1992 in CA-G.R. SP No. 27100 (Traders Royal Bank
vs. Hon. Celso M. Gimenez, etc. and Joaquin T. Borromeo), 7 which decision
also directed dismissal of Borromeo's complaint.
5. RTC Case No. CEB-6452
When a new branch manager, Ronald Sy, was appointed for TRB, Cebu City,
Borromeo forthwith made that event the occasion for another new action, against
TRB, Ronald Sy, and the bank's attorneys — Mario Ortiz, Honorato
Hermosisima, Jr., Wilfredo Navarro and HERSINLAW firm. This action was
2
docketed as Civil Case No. CEB-6452, and described as one for "Annulment of
Title with Damages." The complaint, dated October 20, 1987, again involved the
foreclosure of the three (3) immovables above mentioned, and was anchored on
the alleged malicious, deceitful, and premature consolidation of titles in TRB's
favor despite the pendency of Civil Case No. 22506. On defendant's motion, the
trial court 8 dismissed the case on the ground of prematurity, holding that "(a)t
this point . . ., plaintiff's right to seek annulment of defendant Traders Royal
Bank's title will only accrue if and when plaintiff will ultimately and finally win Civil
Case No. R-22506."
6. RTC Case No. CEB-8236
Having thus far failed in his many efforts to demonstrate to the courts the "merit"
of his cause against TRB and its officers and lawyers, Borromeo now took a
different tack by also suing (and thus also venting his ire on) the members of the
appellate courts who had ruled adversely to him. He filed in the Cebu City RTC,
Civil Case No. CEB-8236, impleading as defendants not only the same parties
he had theretofore been suing — TRB and its officers and lawyers
(HERSINLAW, Mario Ortiz) — but also the Chairman and Members of the First
Division of the Supreme Court who had repeatedly rebuffed him in G.R. No.
83306 (SEE sub-head I, A, 1, supra), as well as the Members of the 5th, 9th and
10th Divisions of the Court of Appeals who had likewise made dispositions
unfavorable to him. His complaint, dated August 22, 1989, aimed to recover
damages from the defendants Justices for —
. . . maliciously and deliberately stating blatant falsehoods and disregarding
evidence and pertinent laws, rendering manifestly unjust and biased resolutions
and decisions bereft of signatures, facts or laws in support thereof, depriving
plaintiff of his cardinal rights to due process and against deprivation of property
without said process, tolerating, approving and legitimizing the patently illegal,
fraudulent, and contemptuous acts of defendants TRB, (which) constitute a)
GRAVE DERELICTION OF DUTY AND ABUSE OF POWER emanating from the
people, b) FLAGRANT VIOLATIONS OF THE CONSTITUTION, CARDINAL
PRIMARY RIGHTS DUE PROCESS, ART. 27, 32, CIVIL CODE, Art. 208, REV.
PENAL CODE, and R.A. 3019, for which defendants must be held liable under
said laws.
The complaint also prayed for reconveyance of the "fake titles obtained
fraudulently by TRB/HERSINLAW," and recovery of "100,000.00 moral damages;
30,000.00 exemplary damages; and P5,000.00 litigation expenses." This action,
too, met a quick and unceremonious demise. On motion of defendants TRB and
HERSINLAW, the trial court, by Order dated November 7, 1989,9 dismissed the
case.
7. RTC Case No. CEB-13069
It appears that Borromeo filed still another case to litigate the same cause
subject of two (2) prior actions instituted by him. This was RTC Case No.
CEB-13069, against TRB and the latter's lawyers, Wilfredo Navarro and Mario
Ortiz. The action was dismissed in an Order dated October 4, 1993, 10 on the
ground of res judicata — the subject matter being the same as that in Civil Case
No. R-22506, decision in which was affirmed by the Court of Appeals in CA-G.R.
CV No. 07015 as well as by this Court in G.R. No. 83306 11 — and litis pendentia
— the subject matter being also the same as that in Civil Case No. CEB-8750,
decision in which was affirmed by the Court of Appeals in CA G.R. SP No.
22356.12
8. RTC Criminal Case No. CBU-19344;

CA-G.R. SP No. 28275; G.R. No. 112928
On April 17, 1990 the City Prosecutor of Cebu City filed an information with the
RTC of Cebu (Branch 22) against Borromeo charging him with a violation of the
Trust Receipts Law.13 The case was docketed as Criminal Case No. CBU-19344.
After a while, Borromeo moved to dismiss the case on the ground of denial of his
right to a speedy trial. His motion was denied by Order of Judge Pampio A.
Abarintos dated April 10, 1992. In the same order, His Honor set an early date for
Borromeo's arraignment and placed the case "under a continuous trial system on
the dates as may be agreed by the defense and prosecution." Borromeo moved
for reconsideration. When his motion was again found without merit, by Order
dated May 21, 1992, he betook himself to the Court of Appeals on a special civil
action of certiorari, to nullify these adverse orders, his action being docketed as
CA-G.R. SP No. 28275.
Here again, Borromeo failed. The Court of Appeals declared that the facts did not
show that there had been unreasonable delay in the criminal action against him,
and denied his petition for being without merit. 14
Borromeo then filed a petition for review with this Court (G.R. No. 112928), but
by resolution dated January 31, 1994, the same was dismissed for failure of
Borromeo to comply with the requisites of Circulars Numbered 1-88 and 19-91.
His motion for reconsideration was subsequently denied by Resolution dated
March 23, 1994.
a. Clarificatory Communications to

Borromeo Re "Minute Resolutions"
He next filed a Manifestation dated April 6, 1994 calling the Resolution of March
23, 1994 "Un-Constitutional, Arbitrary and tyrannical and a gross travesty of
'Justice,'" because it was "signed only by a mere clerk and . . . (failed) to state
clear facts and law," and "the petition was not resolved on MERITS nor by any
Justice but by a mere clerk." 15
The Court responded with another Resolution, promulgated on June 22, 1994,
and with some patience drew his attention to the earlier resolution "in his own
previous case (Joaquin T. Borromeo vs. Court of Appeals and Samson Lao, G.R.
No. 82273, 1 June 1990; 186 SCRA 1) 16 and on the same issue he now raises."
Said Resolution of June 22, 1994, after reiterating that the notices sent by the
Clerk of Court of the Court En Banc or any of the Divisions simply advise of and
quote the resolution actually adopted by the Court after deliberation on a
particular matter, additionally stated that Borromeo "knew, as well, that the
communications (notices) signed by the Clerk of Court start with the opening
clause —
Quoted hereunder, for your information, is a resolution of the First Division of this
Court dated. _________,
3
thereby indisputably showing that it is not the Clerk of Court who prepared or
signed the resolutions."
This was not, by the way, the first time that the matter had been explained to
Borromeo. The record shows that on July 10, 1987, he received a letter from
Clerk of Court Julieta Y. Carreon (of this Court's Third Division) dealing with the
subject, in relation to G.R. No. 77243. 17 The same matter was also dealt with in
the letter received by him from Clerk of Court Luzviminda D. Puno, dated April 4,
1989, and in the letter to him of Clerk of Court (Second Division) Fermin J.
Garma, dated May 19, 1989.18 And the same subject was treated of in another
Resolution of this Court, notice of which was in due course served on him, to wit:
that dated July 31, 1989, in G.R. No. 87897.19
B. CRIMINAL CASES
Mention has already been made of Borromeo's attempt — with "all the valor of
ignorance" — to fasten not only civil, but also criminal liability on TRB, its officers
and lawyers. 20 Several other attempts on his part to cause criminal prosecution
of those he considered his adversaries, will now be dealt with here.
1. I. S. Nos. 90-1187 and 90-1188
On March 7, 1990, Borromeo filed criminal complaints with the Office of the Cebu
City Prosecutor against Jacinto Jamero (then still TRB Branch Manager), "John
Doe and officers of Traders Royal Bank." The complaints (docketed as I.S. Nos.
90-1187-88) accused the respondents of "Estafa and Falsification of Public
Documents." He claimed, among others that the bank and its officers, thru its
manager, Jacinto Jamero, sold properties not owned by them: that by fraud,
deceit and false pretenses, respondents negotiated and effected the purchase of
the (foreclosed) properties from his (Borromeo's) mother, who "in duress, fear
and lack of legal knowledge," agreed to the sale thereof for only P671,000.00,
although in light of then prevailing market prices, she should have received
P588,030.00 more.
In a Joint Resolution dated April 11, 1990, 21 the Cebu City Fiscal's office
dismissed the complaints observing that actually, the Deed of Sale was not
between the bank and Borromeo's mother, but between the bank and Mrs.
Thakuria (his sister), one of the original owners of the foreclosed properties; and
that Borromeo, being a stranger to the sale, had no basis to claim injury or
prejudice thereby. The Fiscal ruled that the bank's ownership of the foreclosed
properties was beyond question as the matter had been raised and passed upon
in a judicial litigation; and moreover, there was no proof of the document
allegedly falsified nor of the manner of its falsification.
a. I.S. Nos. 87-3795 and 89-4234
Evidently to highlight Borromeo's penchant for reckless filing of unfounded
complaints, the Fiscal also adverted to two other complaints earlier filed in his
Office by Borromeo — involving the same foreclosed properties and directed
against respondent bank officers' predecessors (including the former Manager,
Ronald Sy) and lawyers — both of which were dismissed for lack of merit. These
were:
a. I. S. No. 87-3795 (JOAQUIN T. BORROMEO vs. ATTY. MARIO ORTIZ and
RONALD SY) for "Estafa Through Falsification of Public Documents, Deceit and
False Pretenses." — This case was dismissed by Resolution dated January 19,
1988 of the City Prosecutor's Office because based on nothing more than a letter
dated June 4, 1985, sent by Bank Manager Ronald Sy to the lessee of a portion
of the foreclosed immovables, advising the latter to remit all rentals to the bank
as new owner thereof, as shown by the consolidated title; and there was no
showing that respondent Atty. Ortiz was motivated by fraud in notarizing the deed
of sale in TRB's favor after the lapse of the period of redemption, or that Ortiz
had benefited pecuniarily from the transaction to the prejudice of complainant;
and
b. I.S. No. 89-4234 (JOAQUIN T. BORROMEO vs. RONALD SY, ET AL.) for
"Estafa Through False Pretenses and Falsification of Public Documents." — This
case was dismissed by Resolution dated January 31, 1990.
2. I.S.Nos. 88-205 to 88-207
While Joaquin Borromeo's appeal (G.R. No. 83306) was still pending before the
Supreme Court, 22 an affidavit was executed in behalf of TRB by Arceli
Bustamante, in connection with the former's fire insurance claim over property
registered in its name — one of two immovables formerly owned by Socorro B.
Thakuria (Joaquin Borromeo's sister) and foreclosed by said bank. 23 In that
affidavit, dated September 10, 1987, Bustamante stated that "On 24 June 1983,
TRB thru foreclosure acquired real property together with the improvements
thereon which property is located at F. Ramos St., Cebu City covered by TCT
No. 87398 in the name or TRB." The affidavit was notarized by Atty. Manuelito B.
Inso.
Claiming that the affidavit was "falsified and perjurious" because the claim of title
by TRB over the foreclosed lots was a "deliberate, wilful and blatant fasehood in
that, among others: . . . the consolidation was premature, illegal and invalid,"
Borromeo filed a criminal complaint with the Cebu City Fiscal's Office against the
affiant (Bustamante) and the notarizing lawyer (Atty. Inso) for "falsification of
public document, false pretenses, perjury." On September 28, 1988, the Fiscal's
Office dismissed the complaint. 24 It found no untruthful statements in the affidavit
or any malice in its execution, considering that Bustamante's statement was
based on the Transfer Certificate of Title in TRB's file, and thus the document
that Atty. Inso notarized was legally in order.
3. OMB-VIS-89-00136
This Resolution of this Court (First Division) in G.R. No. 83306 dated August 15,
1988 — sustaining the judgment of the Court of Appeals (10th Division) of
January 27, 1988 in CA-G.R. CV No. 07015, supra, was made the subject of a
criminal complaint by Borromeo in the Office of the Ombudsman, Visayas,
docketed as OMB-VIS-89-00136. His complaint — against "Supreme Court
Justice (First Div.) and Court of Appeals Justice (10th Div)" — was dismissed for
lack of merit in a Resolution issued on February 14, 1990 25 which, among other
things, ruled as follows:
It should be noted and emphasized that complainant has remedies available
under the Rules of Court, particularly on civil procedure and existing laws. It is
not the prerogative of this Office to make a review of Decisions and Resolutions
4
of judicial courts, rendered within their competence. The records do not warrant
this Office to take further proceedings against the respondents.
In addition, Sec. 20. of R.A. 6770, "the Ombudsman Act states that the Office of
the Ombudsman may not conduct the necessary investigation of any
administrative act or omission complained of if it believes that (1) the
complainant had adequate remedy in another judicial or quasi-judicial body;" and
Sec. 21 the same law provides that the Office of the Ombudsman does not have
disciplinary authority over members of the Judiciary.
II. CASES INVOLVING UNITED COCONUT
 The Appellate Court's decision was, in turn, affirmed by this Court (Third Division)
PLANTERS BANK (UCPB)
As earlier stated, 26 Borromeo (together with a certain Mercader) also borrowed
money from the United Coconut Planters Bank (UCPB) and executed a real
estate mortgage to secure repayment thereof. The mortgage was constituted
over a 122-square-meter commercial lot covered by TCT No. 75680 in
Borromeo's name. This same lot was afterwards sold on August 7, 1980 by
Borromeo to one Samson K. Lao for P170,000.00, with a stipulation for its
repurchase (pacto de retro) by him (Borromeo, as the vendor). The sale was
made without the knowledge and consent of UCPB.
A. CIVIL CASES
Now, just as he had defaulted in the payment of the loans and credit
accommodations he had obtained from the Traders Royal Bank, Borromeo failed
in the fulfillment of his obligations to the UCPB.
Shortly after learning of Borromeo's default, and obviously to obviate or minimize
the ill effects of the latter's delinquency, Lao applied with the same bank (UCPB)
for a loan, offering the property he had purchased from Borromeo as collateral.
UCPB was not averse to dealing with Lao but imposed several conditions on
him, one of which was for Lao to consolidate his title over the property. Lao
accordingly instituted a suit for consolidation of title, docketed as Civil Case No.
R-21009. However, as will shortly be narrated, Borromeo opposed the
consolidation prayed for. As a result, UCPB cancelled Lao's application for a loan
and itself commenced proceedings foreclose the mortgage constituted by
Borromeo over the property.
This signaled the beginning of court battles waged by Borromeo not only against
Lao, but also against UCPB and the latter's lawyers, battles which he (Borromeo)
fought contemporaneously with his court war with Traders Royal Bank.
1. RTC Case No. R-21009; AC-G.R.
 Ybañez, presiding). These processes were brought to the attention of this Court's
No. CV-07396; G.R. No. 82273
The first of this new series of court battles was, as just stated, the action initiated
by Samson Lao in the Regional Trial Court of Cebu (Branch 12), docketed as
Case No. R-21009, for consolidation of title in his favor over the 122-square-
meter lot subject of the UCPB mortgage, in accordance with Article 1007 of the
Civil Code. In this suit Lao was represented by Atty. Alfredo Perez, who was later
substituted by Atty. Antonio Regis. Borromeo contested Lao's application.
Judgment was in due course rendered by the RTC (Branch 12, Hon. Francis
Militante, presiding) denying consolidation because the transaction between the
parties could not be construed as a sale with pacto de retro being in law an
equitable mortgage; however, Borromeo was ordered to pay Lao the sum of
P170,000.00, representing the price stipulated in the sale a retro, plus the
amounts paid by Lao for capital gains and other taxes in connection with the
transaction (P10,497.50).
Both Lao and Borromeo appealed to the Court of Appeals. Lao's appeal was
dismissed for failure of his lawyer to file brief in his behalf. Borromeo's appeal —
AC-G.R. No. CV-07396 — resulted in a Decision by the Court of Appeals dated
December 14, 1987, affirming the RTC's judgment in toto.
in a four-page Resolution dated September 13, 1989, promulgated in G.R. No.
82273 — an appeal also taken by Borromeo. Borromeo filed a motion for
reconsideration on several grounds, one of which was that the resolution of
September 13, 1989 was unconstitutional because contrary to "Sec. 4 (3), Art.
VIII of the Constitution," it was not signed by any Justice of the Division, and
there was "no way of knowing which justices had deliberated and voted thereon,
nor of any concurrence of at least three of the members." Since the motion was
not filed until after there had been an entry of judgment, Borromeo having failed
to move for reconsideration within the reglementary period, the same was simply
noted without action, in a Resolution dated November 27, 1989.
Notices of the foregoing Resolutions were, in accordance with established rule
and practice, sent to Borromeo over the signatures of the Clerk of Court and
Assistant Clerk of Court (namely: Attys. Julieta Y. CARREON and Alfredo
MARASIGAN, respectively).
a. RTC Case No. CEB-8679
Following the same aberrant pattern of his judicial campaign against Traders
Royal Bank, Borromeo attempted to vent his resentment even against the
Supreme Court officers who, as just stated, had given him notices of the adverse
dispositions of this Court's Third Division. He filed Civil Case No. CEB-8679 in
the Cebu City RTC (CFI) for recovery of damages against "Attys. Julieta Y.
Carreon and Alfredo Marasigan, Division Clerk of Court and Asst. Division Clerk
of Court, Third Division, and Atty. Jose I. Ilustre, Chief of Judicial Records Office."
He charged them with usurpation of judicial functions, for allegedly "maliciously
and deviously issuing biased, fake, baseless and unconstitutional 'Resolution'
and 'Entry of Judgment' in G.R. No. 82273."
Summonses were issued to defendants by RTC Branch 18 (Judge Rafael R.
Third Division. The latter resolved to treat the matter as an incident in G.R. No.
82273, and referred it to the Court En Banc on April 25, 1990. By Resolution
(issued in said G.R. No. 82273, supra) dated June 1, 1990, the Court En Banc
ordered Judge Ybañez to quash the summonses, to dismiss Civil Case No.
CEB-8679, and "not to issue summons or otherwise to entertain cases of similar
nature which may in the future be filed in his court." Accordingly, Judge Ibañez
issued an Order on June 6, 1990 quashing the summonses and dismissing the
complaint in said Civil Case No. CEB-8679.
5
The Resolution of June 1, 1990 27 explained to Borromeo in no little detail the
nature and purpose of notices sent by the Clerks of Court of decisions or
resolutions of the Court En Banc or the Divisions, in this wise:
This is not the first time that Mr. Borromeo has filed charges/complaints against
officials of the Court. In several letter complaints filed with the courts and the
Ombudsman, Borromeo had repeatedly alleged that he "suffered injustices,"
because of the disposition of the four (4) cases he separately appealed to this
Court which were resolved by minute resolutions, allegedly in violation of
Sections 4 (3), 13 and 14 of Article VIII of the 1987 Constitution. His invariable
complaint is that the resolutions which disposed of his cases do not bear the
signatures of the Justices who participated in the deliberations and resolutions
and do not show that they voted therein. He likewise complained that the
resolutions bear no certification of the Chief Justice and that they did not state
the facts and the law on which they were based and were signed only by the
Clerks of Court and therefore "unconstitutional, null and void."
xxx xxx xxx
The Court reminds all lower courts, lawyers, and litigants that it disposes of the
bulk of its cases by minute resolutions and decrees them as final and executory,
as were a case is patently without merit, where the issues raised are factual in
nature, where the decision appealed from is in accord with the facts of the case
and the applicable laws, where it is clear from the records that the petition is filed
merely to forestall the early execution of judgment and for non-compliance with
the rules. The resolution denying due course always gives the legal basis. As
emphasized in In Re: Wenceslao Laureta, 148 SCRA 382, 417 [1987], "[T]he
Court is not 'duty bound' to render signed Decisions all the time. It has ample
discretion to formulate Decisions and/or Minute Resolutions, provided a legal
basis is given, depending on its evaluation of a case" . . . This is the only way
whereby it can act on all cases filed before it and, accordingly, discharge its
constitutional functions. . . .
. . . (W)hen the Court, after deliberating on a petition and any subsequent
pleadings, manifestations, comments, or motions decides to deny due course to
the petition and states that the questions raised are factual, or no reversible error
in the respondent court's decision is shown, or for some other legal basis stated
in the resolution, there is sufficient compliance with the constitutional requirement
. . . (of Section 14, Article VIII of the Constitution "that no petition for review or
motion for reconsideration shall be refused due course or denied without stating
the legal basis thereof").
For a prompt dispatch of actions of the Court, minute resolutions are
promulgated by the Court through the Clerk of Court, who takes charge of
sending copies thereof to the parties concerned by quoting verbatim the
resolution issued on a particular case. It is the Clerk of Court's duty to inform the
parties of the action taken on their cases quoting the resolution adopted by the
Court. The Clerk of Court never participates in the deliberations of a case. All
decisions and resolutions are actions of the Court. The Clerk of Court merely
transmits the Court's action. This was explained in the case — G.R. No. 56280,
"Rhine Marketing Corp. v. Felix Gravante, et al.," where, in a resolution dated
July 6, 1981, the Court
said — "[M]inute resolutions of this Court denying or dismissing unmeritorious
petitions like the petition in the case at bar, are the result of a thorough
deliberation among the members of this Court, which does not and cannot
delegate the exercise of its judicial functions to its Clerk of Court or any of its
subalterns, which should be known to counsel. When a petition is denied or
dismissed by this Court, this Court sustains the challenged decision or order
together with its findings of facts and legal conclusions.
Minute resolutions need not be signed by the members of the Court who took
part in the deliberations of a case nor do they require the certification of the Chief
Justice. For to require members of the Court to sign all resolutions issued would
not only unduly delay the issuance of its resolutions but a great amount of their
time would be spent on functions more properly performed by the Clerk of Court
and which time could be more profitably used in the analysis of cases and the
formulation of decisions and orders of important nature and character. Even with
the use of this procedure, the Court is still struggling to wipe out the backlogs
accumulated over the years and meet the ever increasing number of cases
coming to it. . . .
b. RTC CIVIL CASE NO. CEB-(6501)

6740; G.R. No. 84054
It is now necessary to digress a little and advert to actions which, while having no
relation to the UCPB, TRB or SBTC, are relevant because they were the
predicates for other suits filed by Joaquin Borromeo against administrative
officers of the Supreme Court and the Judge who decided one of the cases
adversely to him.
The record shows that on or about December 11, 1987, Borromeo filed a civil
action for damages against a certain Thomas B. Tan and Marjem Pharmacy,
docketed as Civil Case No. CEB-6501. On January 12, 1988, the trial court
dismissed the case, without prejudice, for failure to state a cause of action and
prematurity (for non-compliance with P.D. 1508).
What Borromeo did was simply to re-file the same complaint with the same
Court, on March 18, 1988. This time it was docketed as Civil Case No.
CEB-6740, and assigned to Branch 17 of the RTC of Cebu presided by Hon.
Mario Dizon. Again, however, on defendants' motion, the trial court dismissed the
case, in an order dated May 28, 1988. His first and second motions for
reconsideration having been denied, Borromeo filed a petition for review before
this Court, docketed as G.R. No. 84054 (Joaquin T. Borromeo vs. Tomas Tan and
Non. Mario Dizon).
In a Resolution dated August 3, 1988, the Court required petitioner to comply
with the rules by submitting a verified statement of material dates and paying the
docket and legal research fund fees; it also referred him to the Citizens Legal
Assistance Office for help in the case. His petition was eventually dismissed by
Resolution of the Second Division dated November 21, 1988, for failure on his
part to show any reversible error in the trial court's judgment. His motion for
reconsideration was denied with finality, by Resolution dated January 18, 1989.
6
Borromeo wrote to Atty. Fermin J. Garma (Clerk of Court of the Second Division)
on April 27, 1989 once more remonstrating that the resolutions received by him
had not been signed by any Justice, set forth no findings of fact or law, and had
no certification of the Chief Justice. Atty. Garma replied to him on May 19, 1989,
pointing out that "the minute resolutions of this Court denying dismissing
petitions, like the petition in the case at bar, which was denied for failure of the
counsel and/or petitioner to sufficiently show that the Regional Trial Court of
Cebu, Branch 17, had committed any reversible error in the questioned judgment
[resolution dated November 21, 1988], are the result of a thorough deliberation
among the members of this Court, which does not and cannot delegate the
exercise of its judicial function to its Clerk of Court or any of its subalterns. When
the petition is denied or dismissed by the Court, it sustains the challenged
decision or order together with its findings of facts and legal conclusions."
Borromeo obviously had learned nothing from the extended Resolution of June
1, 1990 in G.R. No. 82273, supra (or the earlier communications to him on the
same subject) which had so clearly pointed out that minute resolutions of the
Court are as much the product of the Members' deliberations as full-blown
decisions or resolutions, and that the intervention of the Clerk consists merely in
the ministerial and routinary function of communicating the Court's action to the
parties concerned.
c. RTC Case No. CEB-9042
What Borromeo did next, evidently smarting from this latest judicial rebuff, yet
another in an already long series, was to commence a suit against Supreme
Court (Second Division) Clerk of Court Fermin J. Garma and Assistant Clerk of
Court Tomasita Dris. They were the officers who had sent him notices of the
unfavorable resolutions in G.R. No. 84054, supra. His suit, filed on June 1, 1990,
was docketed as Case No. CEB-9042 (Branch 8, Hon. Bernardo Salas
presiding). Therein he complained essentially of the same thing he had been
harping on all along: that in relation to G.R. No. 91030 — in which the Supreme
Court dismissed his petition for "technical reasons" and failure to demonstrate
any reversible error in the challenged judgment — the notice sent to him — of
the "unsigned and unspecific" resolution of February 19, 1990, denying his
motion for reconsideration — had been signed only by the defendant clerks of
court and not by the Justices. According to him, he had thereupon written letters
to defendants demanding an explanation for said "patently unjust and un-
Constitutional resolutions," which they ignored; defendants had usurped judicial
functions by issuing resolutions signed only by them and not by any Justice, and
without stating the factual and legal basis thereof; and defendants' "wanton,
malicious and patently abusive acts" had caused him "grave mental anguish,
severe moral shock, embarrassment, sleepless nights and worry;" and
consequently, he was entitled to moral damages of no less than P20,000.00 and
exemplary damages of P10,000.00, and litigation expenses of P5,000.00.
On June 8, 1990, Judge Renato C. Dacudao ordered the records of the case
transmitted to the Supreme Court conformably with its Resolution dated June 1,
1990 in G.R. No. 82273, entitled "Joaquin T. Borromeo vs. Hon. Court of Appeals
and Samson-Lao," supra — directing that all complaints against officers of that
Court be forwarded to it for appropriate action. 28
Borromeo filed a "Manifestation/Motion" dated June 27, 1990 asking the Court to
"rectify the injustices" committed against him in G.R. Nos. 83306, 84999, 87897,
77248 and 84054. This the Court ordered expunged from the record (Resolution,
July 19, 1990).
2. RTC Case No. R-21880; CA-G.R.

CV No. 10951; G.R. No. 87897
Borromeo also sued to stop UCPB from foreclosing the mortgage on his
property. In the Cebu City RTC, he filed a complaint for "Damages with
Injunction," which was docketed as Civil Case No. R-21880 (Joaquin T.
Borromeo vs. United Coconut Planters Bank, et al.). Named defendants in the
complaint were UCPB, Enrique Farrarons (UCPB Cebu Branch Manager) and
Samson K. Lao. UCPB was represented in the action by Atty. Danilo Deen, and
for a time, by Atty. Honorato Hermosisima (both being then resident partners of
ACCRA Law Office). Lao was represented by Atty. Antonio Regis. Once again,
Borromeo was rebuffed. The Cebu RTC (Br. 11, Judge Valeriano R. Tomol, Jr.
presiding) dismissed the complaint, upheld UCPB's right to foreclose, and
granted its counterclaim for moral damages in the sum of P20,000.00; attorney's
fees amounting to P10,000.00; and litigation expenses of P1,000.00.
Borromeo perfected an appeal to the Court of Appeals where it was docketed as
CA-G.R. CV No. 10951. That Court, thru its Ninth Division (per Martinez, J.,
ponente, with de la Fuente and Pe, JJ., concurring), dismissed his appeal and
affirmed the Trial Court's judgment.
Borromeo filed a petition far review with the Supreme Court which, in G.R. No.
87897 dismissed it for insufficiency in form and substance and for being "largely
unintelligible." Borromeo's motion for reconsideration was denied by Resolution
dated June 25, 1989. A second motion for reconsideration was denied in a
Resolution dated July 31, 1989 which directed as well entry of judgment (effected
on August 1, 1989). In this Resolution, the Court (First Division) said:
The Court considered the Motion for Reconsideration dated July 4, 1989 filed by
petitioner himself and Resolved to DENY the same for lack of merit, the motion
having been filed without "express leave of court" (Section 2, Rule 52, Rules of
Court) apart from being a reiteration merely of the averments of the Petition for
Review dated April 14, 1989 and the Motion for Reconsideration dated May 25,
1989. It should be noted that petitioner's claims have already been twice rejected
as without merit, first by the Regional Trial Court of Cebu and then by the Court
of Appeals. What petitioner desires obviously is to have a third ruling on the
merits of his claims, this time by this Court. Petitioner is advised that a review of
a decision of the Court of Appeals is not a matter of right but of sound judicial
discretion and will be granted only when there is a special and important reason
therefor (Section 4, Rule 45); and a petition for review may be dismissed
summarily on the ground that "the appeal is without merit, or is prosecuted
manifestly for delay or the question raised is too unsubstantial to require
consideration" (Section 3, Rule 45), or that only questions of fact are raised in
the petition, or the petition otherwise fails to comply with the formal requisites
7
prescribed therefor (Sections 1 and 2, Rule 45; Circular No. 1-88). Petitioner is
further advised that the first sentence of Section 14, Article VIII of the 1987
Constitution refers to a decision, and has no application to a resolution as to
which said section pertinently provides that a resolution denying a motion for
reconsideration need state only the legal basis therefor; and that the resolution of
June 26, 1989 denying petitioner's first Motion for Reconsideration dated May
25, 1989 does indeed state the legal reasons therefor. The plain and patent
signification of the grounds for denial set out in the Resolution of June 26, 1989
is that the petitioner's arguments — aimed at the setting aside of the resolution
denying the petition for review and consequently bringing about a review of the
decision of the Court of Appeals — had failed to persuade the Court that the
errors imputed to the Court of Appeals had indeed been committed and
therefore, there was no cause to modify the conclusions set forth in that
judgment; and in such a case, there is obviously no point in reproducing and
restating the conclusions and reasons therefor of the Court of Appeals.
Premises considered, the Court further Resolved to DIRECT ENTRY OF
JUDGMENT.
On August 13, 1989 Borromeo wrote to Atty. Estrella C. Pagtanac, then the Clerk
of Court of the Court's First Division, denouncing the resolution above mentioned
as "a LITANY OF LIES, EVASIONS, and ABSURD SELF-SERVING LOGIC from
a Supreme Court deluded and drunk with power which it has forgotten emanates
from the people," aside from being "patently UNCONSTITUTIONAL for absence
of signatures and facts and law: . . . and characterizing the conclusions therein
as "the height of ARROGANCE and ARBITRARINESS assuming a KING-LIKE
AND EVEN GOD-LIKE
POWER totally at variance and contradicted by . . . CONSTITUTIONAL
provisions . . ." To the letter Borromeo attached copies of (1) his "Open Letter to
the Ombudsman" dated August 10, 1989 protesting the Court's "issuing
UNSIGNED, UNSPECIFIC, and BASELESS 'MINUTE RESOLUTIONS;'" (2) his
"Open Letter of Warning" dated August 12, 1989; and (3) a communication of
Domingo M. Quimlat, News Ombudsman, Phil. Daily Inquirer, dated August 10,
1989. His letter was ordered expunged from the record because containing
"false, impertinent and scandalous matter (Section 5, Rule 9 of the Rules of
Court)." Another letter of the same ilk, dated November 7, 1989, was simply
"NOTED without action" by Resolution promulgated on December 13, 1989.
3. RTC Case No. CEB-4852; CA G.R.
 advised and . . . (had) no hand in the filing of (said) Civil Case CEB 8178 before
SP No. 14519; G.R. No. 84999
In arrant disregard of established rule and practice, Borromeo filed another
action to invalidate the foreclosure effected at the instance of UCPB, which he
had unsuccessfully tried to prevent in Case No. CEB-21880. This was Civil Case
No. CEB-4852 of the Cebu City RTC (Joaquin T. Borromeo vs. UCPB, et al.) for
"Annulment of Title with Damages." Here, UCPB was represented by Atty.
Laurence Fernandez, in consultation with Atty. Deen.
On December 26, 1987, the Cebu City RTC (Br. VII, Hon. Generoso A. Juaban,
presiding) dismissed the complaint on the ground of litis pendentia and ordered
Borromeo to pay attorney's fees (P5,000.00) and litigation expenses (P1,000.00).
Borromeo instituted a certiorari action in the Court of Appeals to annul this
judgment (CA G.R. SP No. 14519); but his action was dismissed by the Appellate
Court on June 7, 1988 on account of his failure to comply with that Court's
Resolution of May 13, 1988 for submission of certified true copies of the Trial
Court's decision of December 26, 1987 and its Order of February 26, 1988, and
for statement of "the dates he received . . . (said) decision and . . . order."
Borromeo went up to this Court on appeal, his appeal being docketed as G.R.
No. 84999. In a Resolution dated October 10, 1988, the Second Division
required comment on Borromeo's petition for review by the respondents therein
named, and required Borromeo to secure the services of counsel. On November
9, 1988, Atty. Jose L. Cerilles entered his appearance for Borromeo. After due
proceedings, Borromeo's petition was dismissed, by Resolution dated March 6,
1989 of the Second Division for failure to sufficiently show that the Court of
Appeals had committed any reversible error in the questioned judgment. His
motion for reconsideration dated April 4, 1989, again complaining that the
resolution contained no findings of fact and law, was denied.
a. RTC Case No. CEB-8178
Predictably, another action, Civil Case No. CEB-8178, was commenced by
Borromeo in the RTC of Cebu City, this time against the Trial Judge who had
lately rendered judgment adverse to him, Judge Generoso Juaban. Also
impleaded as defendants were UCPB, and Hon. Andres Narvasa (then
Chairman, First Division), Estrella G. Pagtanac and Marissa Villarama (then,
respectively, Clerk of Court and Assistant Clerk of Court of the First Division),
and others. Judge German G. Lee of Branch 15 of said Court — to which the
case was raffled — caused issuance of summonses which were in due course
served on September 22, 1989, among others, on said defendants in and of the
Supreme Court. In an En Banc Resolution dated October 2, 1989 — in G.R. No.
84999 — this Court, required Judge Lee and the Clerk of Court and Assistant
Clerk of Court of the Cebu RTC to show cause why no disciplinary action should
be taken against them for issuing said summonses.
Shortly thereafter, Atty. Jose L. Cerilles — who, as already stated, had for a time
represented Borromeo in G.R. No. 84999 — filed with this Court his withdrawal
of appearance, alleging that there was "no compatibility" between him and his
client, Borromeo — because "Borromeo had been filing pleadings, papers; etc.
without . . . (his) knowledge and advice" — and declaring that he had "not
the Regional Trial Court in Cebu. On the other hand, Judge Lee, in his
"Compliance" dated October 23, 1989, apologized to the Court and informed it
that he had already promulgated an order dismissing Civil Case No. CEB-8178
on motion of the principal defendants therein, namely, Judge Generoso Juaban
and United Coconut Planters Bank (UCPB). Atty. Cerilles' withdrawal of
appearance, and Judge Lee's compliance, were noted by the Court in its
Resolution dated November 29, 1989.
4. RTC Case No. CEB-374; CA-G.R.

CV No. 04097; G.R. No. 77248
8
It is germane to advert to one more transaction between Borromeo and Samson
K. Lao which gave rise to another action that ultimately landed in this Court. 29
The transaction involved a parcel of land of Borromeo's known as the "San Jose
Property" (TCT No. 34785). Borromeo sued Lao and another person (Mariano
Logarta) in the Cebu Regional Trial Court on the theory that his contract with the
latter was not an absolute sale but an equitable mortgage. The action was
docketed as Case No. CEB-374. Judgment was rendered against him by the
Trial Court (Branch 12) declaring valid and binding the purchase of the property
by Lao from him, and the subsequent sale thereof by Lao to Logarta. Borromeo
appealed to the Court of Appeals, but that Court, in CA-G.R. CV No. 04097,
affirmed the Trial Court's judgment, by Decision promulgated on October 10,
1986.
Borromeo came up to this Court. on appeal, his review petition being docketed
as G.R. No. 77248. By Resolution of the Second Division of March 16, 1987,
however, his petition was denied for the reason that "a) the petition as well as the
docket and legal research fund fees were filed and paid late; and (b) the issues
raised are factual and the findings thereon of the Court of Appeals are final." He
moved for reconsideration; this was denied by Resolution dated June 3, 1987.
He thereafter insistently and persistently still sought reconsideration of said
adverse resolutions through various motions and letters, all of which were
denied. One of his letters — inter alia complaining that the notice sent to him by
the Clerk of Court did not bear the signature of any Justice — elicited the
following reply from Atty. Julieta Y. Carreon, Clerk of Court of the Third Division,
dated July 10, 1987, reading as follows:
Dear Mr. Borromeo:
This refers to your letter dated June 9, 1987 requesting for a copy of the actual
resolution with the signatures of all the Justices of the Second Division in Case
G.R. No. 77243 whereby the motion for reconsideration of the dismissal of the
petition was denied for lack of merit.
In connection therewith, allow us to cite for your guidance, Resolution dated July
6, 1981 in G.R. No. 56280, Rhine Marketing Corp. v. Felix Gravante, Jr., et al.,
wherein the Supreme Court declared that "(m)inute resolutions of this Court
denying or dismissing unmeritorious petitions like the petition in the case at bar,
are the result of a thorough deliberation among the members of this Court, which
does not and cannot delegate the exercise of its judicial functions to its Clerk of
Court or any of its subalterns, which should be known to counsel. When a
petition is denied or dismissed by this Court, this Court sustains the challenged
decision or order together with its findings of facts and legal conclusions." It is
the Clerk of Court's duty to notify the parties of the action taken on their case by
quoting the resolution adopted by the Court.
Very truly yours,
JULIETA Y. CARREON
B. CRIMINAL CASES
Just as he had done with regard to the cases involving the Traders Royal Bank,
and similarly without foundation, Borromeo attempted to hold his adversaries in
the cases concerning the UCPB criminally liable.
1. Case No; OMB-VIS-89-00181
In relation to the dispositions made of Borromeo's appeals and other attempts to
overturn the judgment of the RTC in Civil Case No. 21880, 30 Borromeo filed with
the Office of the Ombudsman (Visayas) on August 18, 1989, a complaint against
the Chairman and Members of the Supreme Court's First Division; the Members
of the Ninth Division of the Court of Appeals, Secretary of Justice Sedfrey
Ordoñez, Undersecretary of Justice Silvestre Bello III, and Cebu City Prosecutor
Jufelinito Pareja, charging them with violations of the Anti-Graft and Corrupt
Practices Act and the Revised Penal Code.
By Resolution dated January 12, 1990, 31 the Office of the Ombudsman
dismissed Borromeo's complaint, opining that the matters therein dealt with had
already been tried and their merits determined by different courts including the
Supreme Court (decision, June 26, 1989, in G.R. No. 87987). The resolution
inter alia stated that, "Finally, we find it unreasonable for complainant to dispute
and defiantly refuse to acknowledge the authority of the decree rendered by the
highest tribunal of the land in this case. . . ."
2. Case No. OMB-VIS-90-00418
A second complaint was filed by Borromeo with the Office of the Ombudsman
(Visayas), dated January 12, 1990, against Atty. Julieta Carreon, Clerk of Court
of the Third Division, Supreme Court, and others, charging them with a violation
of R.A. 3019 (and the Constitution, the Rules of Court, etc.) for supposedly
usurping judicial functions in that they issued Supreme Court resolutions
(actually, notices of resolutions) in connection with G.R. No. 82273 which did not
bear the justices' signatures. 32 In a Resolution dated March 19, 1990, the Office
of the Ombudsman dismissed his complaint for "lack of merit" declaring inter alia
that "in all the questioned actuations of the respondents alleged to constitute
usurpation . . . it cannot be reasonably and fairly inferred that respondents really
were the ones rendering them," and "it is not the prerogative of this office to
review the correctness of judicial resolutions." 33
III. CASES INVOLVING SECURITY

BANK & TRUST CO. (SBTC)
A. CIVIL CASES
1. RTC Case No. 21615; CA-

G.R. No. 20617; G.R. No. 94769
The third banking institution which Joaquin T. Borromeo engaged in running court
battles, was the Security Bank & Trust Company (SBTC). From it Borromeo had
obtained five (5) loans in the aggregate sum of P189,126.19, consolidated in a
single Promissory Note on May 31, 1979. To secure payment thereof, Summa
Insurance Corp. (Summa) issued a performance bond which set a limit of
P200,000.00 on its liability thereunder. Again, as in the case of his obligations to
Traders Royal Bank and UCPB, Borromeo failed to discharge his contractual
obligations. Hence, SBTC brought an action in the Cebu City RTC against
Borromeo and Summa for collection.
The action was docketed as Civil Case No. R-21615, and was assigned to
Branch 10, Judge Leonardo Cañares, presiding. Plaintiff SBTC was represented
9
by Atty. Edgar Gica, who later withdrew and was substituted by the law firm,
HERSINLAW. The latter appeared in the suit through Atty. Wilfredo Navarro.
Judgment by default was rendered in the case on January 5, 1989; both
defendents were sentenced to pay to SBTC, solidarily, the amount of
P436,771.32; 25% thereof as attorney's fees (but in no case less than
P20,000.00); and P5,000.00 as litigation expenses; and the costs. A writ of
execution issued in due course pursuant to which an immovable of Borromeo
was levied on, and eventually sold at public auction on October 19, 1989 in favor
of the highest bidder, SBTC.
On February 5, 1990, Borromeo filed a motion to set aside the judgment by
default, but the same was denied on March 6, 1990. His Motion for
Reconsideration having likewise been denied, Borromeo went to the Court of
Appeals for relief (CA-G.R. No. 20617), but the latter dismissed his petition.
Failing in his bid for reconsideration, Borromeo appealed to this Court on
certiorari — his appeal being docketed as G.R. No. 94769. On September 17,
1990, this Court dismissed his petition, and subsequently denied with finality his
motion for reconsideration. Entry of Judgment was made on December 26, 1990.
However, as will now be narrated, and as might now have been anticipated in
light of his history of recalcitrance and bellicosity, these proceedings did not
signify the end of litigation concerning Borromeo's aforesaid contractual
commitments to SBTC, but only marked the start of another congeries of actions
and proceedings, civil and criminal concerning the same matter, instituted by
Borromeo.
2. RTC Case No. CEB-9267
While G.R. No. 94769 was yet pending in the Supreme Court, Borromeo
commenced a suit of his own in the Cebu RTC against SBTC; the lawyers who
represented it in Civil Case No. R-21625 — HERSINLAW, Atty. Wilfredo
Navarro, Atty. Edgar Gica; and even the Judge who tried and disposed of the
suit, Hon. Leonardo Cañares. He denominated his action, docketed as Civil Case
No. CEB-9267, as one for "Damages from Denial of Due Process, Breach of
Contract, Fraud, Unjust Judgment, with Restraining Order and Injunction." His
complaint accused defendants of "wanton, malicious and deceitful acts" in
"conniving to deny plaintiff due process and defraud him through excessive
attorney's fees," which acts caused him grave mental and moral shock, sleepless
nights, worry, social embarrassment and severe anxiety for which he sought
payment of moral and exemplary damages as well as litigation expenses.
By Order dated May 21, 1991, the RTC of Cebu City, Branch 16 (Hon. Godardo
Jacinto, presiding) granted the demurrer to evidence filed by defendants and
dismissed the complaint, holding that "since plaintiff failed to introduce evidence
to support . . . (his) causes of action asserted . . ., it would be superfluous to still
require defendants to present their own evidence as there is nothing for them to
controvert."
2. RTC Case No. CEB-10458;
CA-G.R. CV No. 39047
Nothing daunted, and running true to form, Borromeo filed on July 2, 1991 still
another suit against the same parties — SBTC, HERSINLAW, and Judge
Cañares — but now including Judge Godardo Jacinto, 34 who had rendered the
latest judgment against him. This suit, docketed as Civil Case No. CEB-10458,
was, according to Borromeo, one "for Damages (For Unjust Judgment and
Orders, Denial of Equal Protection of the Laws Violation of the Constitution,
Fraud and Breach of Contract)." Borromeo faulted Judges Cañares and Jacinto
"for the way they decided the two cases (CVR-21615 & CEB NO. 9267)," and
contended that defendants committed "wanton, malicious, and unjust acts" by
"conniving to defraud plaintiff and deny him equal protection of the laws and due
process," on account of which he had been "caused untold mental anguish,
moral shock, worry, sleepless nights, and embarrassment for which the former
are liable under Arts. 20, 21, 27, and 32 of the Civil Code."
The defendants filed motions to dismiss. By Order dated August 30, 1991, the
RTC of Cebu City, Branch 15 (Judge German G. Lee, Jr., presiding) dismissed
the complaint on grounds of res judicata, immunity of judges from liability in the
performance of their official functions, and lack of jurisdiction.
Borromeo took an appeal to the Court of Appeals, which docketed it as CA-G.R.
CV No. 39047.
In the course thereof, he filed motions to cite Atty. Wilfredo F. Navarro, lawyer of
SBTC, for contempt of court. The motions were denied by Resolution of the
Court of Appeals (Special 7th Division) dated April 13, 1993. 35 Said the Court:
Stripped of their disparaging and intemperate innuendoes, the subject motions,
in fact, proffer nothing but a stark difference in opinion as to what can, or cannot,
be considered res judicata under the circumstances.
xxx xxx xxx
By their distinct disdainful tenor towards the appellees, and his apparent
penchant for argumentum ad hominen, it is, on the contrary the appellant who
precariously treads the acceptable limits of argumentation and personal
advocacy. The Court, moreover, takes particular note of the irresponsible leaflets
he admits to have authored and finds them highly reprehensible and needlessly
derogatory to the dignity, honor and reputation of the Courts. That he is not a
licensed law practitioner is, in fact, the only reason that his otherwise
contumacious behavior is presently accorded the patience and leniency it
probably does not deserve. Considering the temperament he has, by far,
exhibited, the appellant is, however, sufficiently warned that similar displays in
the future shall accordingly be dealt with with commensurate severity.
IV. OTHER CASES
A. RTC Case No. CEB-2074; CA-G.R,

CV No. 14770; G.R. No. 98929
One other case arising from another transaction of Borromeo with Samson K.
Lao is pertinent. This is Case No. CEB-2974 of the Regional Trial Court of Cebu.
It appears that sometime in 1979, Borromeo was granted a loan of P165,000.00
by the Philippine Bank of Communications (PBCom) on the security of a lot
belonging to him in San Jose Street, Cebu City, covered by TCT No. 34785.36
Later, Borromeo obtained a letter of credit in the amount of P37,000.00 from
Republic Planters Bank, with Samson Lao as co-maker. Borromeo failed to pay
his obligations; Lao agreed to, and did pay Borromeo's obligations to both banks
10
(PBCom and Republic), in consideration of which a deed of sale was executed in
his favor by Borromeo over two (2) parcels of land, one of which was that
mortgaged to PBCom, as above stated. Lao then mortgaged the land to PBCom
as security for his own loan in the amount of P240,000.00.
Borromeo subsequently sued PBCom, some of its personnel, and Samson Lao
in the Cebu Regional Trial Court alleging that the defendants had conspired to
deprive him of his property. Judgment was rendered against him by the Trial
Court. Borromeo elevated the case to the Court of Appeals where his appeal was
docketed as CA-G.R. CV No. 14770. On March 21, 1990, said Court rendered
judgment affirming the Trial Court's decision, and on February 7, 1991, issued a
Resolution denying Borromeo's motion for reconsideration. His appeal to this
Court, docketed as G.R. No. 98929, was given short shrift. On May 29, 1991, the
Court (First Division) promulgated a Resolution denying his petition for review
"for being factual and for failure . . . to sufficiently show that respondent court had
committed any reversible error in its questioned judgment."
Stubbornly, in his motion for reconsideration, he insisted the notices of the
resolutions sent to him were unconstitutional and void because bearing no
signatures of the Justices who had taken part in approving the resolution therein
mentioned.
B. RTC Case No. CEB-11528
What would seem to be the latest judicial dispositions rendered against
Borromeo, at least as of date of this Resolution, are two orders issued in Civil
Case No. CEB-11528 of the Regional Trial Court at Cebu City (Branch 18), which
was yet another case filed by Borromeo outlandishly founded on the theory that
a judgment promulgated against him by the Supreme Court (Third Division) was
wrong and "unjust." Impleaded as defendant in the action was former Chief
Justice Marcelo B. Fernan, as Chairman of the Third Division at the time in
question. On August 31, 1994 the presiding judge, Hon. Galicano O. Arriesgado,
issued a Resolution inter alia dismissing Borromeo's complaint "on grounds of
lack of jurisdiction and res judicata." His Honor made the following pertinent
observations:
. . . (T)his Court is of the well-considered view and so holds that this Court has
indeed no jurisdiction to review, interpret or reverse the judgment or order of the
Honorable Supreme Court. The acts or omissions complained of by the plaintiff
against the herein defendant and the other personnel of the highest Court of the
land as alleged in paragraphs 6 to 12 of plaintiff's complaint are certainly beyond
the sphere of this humble court to consider and pass upon to determine their
propriety and legality. To try to review, interpret or reverse the judgment or order
of the Honorable Supreme Court would appear not only presumptuous but also
contemptuous. As argued by the lawyer for the defendant, a careful perusal of
the allegations in the complaint clearly shows that all material allegations thereof
are directed against a resolution of the Supreme Court which was allegedly
issued by the Third Division composed of five (5) justices. No allegation is made
directly against defendant Marcelo B. Fernan in his personal capacity. That being
the case, how could this Court question the wisdom of the final order or judgment
of the Supreme Court (Third Division) which according to the plaintiff himself had
issued a resolution denying plaintiffs petition and affirming the Lower Court's
decision as reflected in the "Entry of Judgment." Perhaps, if there was such
violation of the Rules of Court, due process and Sec. 14, Art. 8 of the
Constitution by the defendant herein, the appropriate remedy should not have
been obtained before this Court. For an inferior court to reverse, interpret or
review the acts of a superior court might be construed to a certain degree as a
show of an uncommon common sense. Lower courts are without supervising
jurisdiction to interpret or to reverse the judgment of the higher courts.
Borromeo's motion for reconsideration dated September 20, 1994 was denied
"for lack of sufficient factual and legal basis" by an Order dated November 15,
1994.
V. ADMINISTRATIVE CASE No. 3433
A. Complaint Against Lawyers

of his Court Adversaries
Borromeo also initiated administrative disciplinary proceedings against the
lawyers who had appeared for his adversaries — UCPB and Samson K. Lao —
in the actions above mentioned, and others. As already mentioned, these
lawyers were: Messrs. Laurence Fernandez, Danilo Deen, Honorato
Hermosisima, Antonio Regis, and Alfredo Perez. His complaint against them,
docketed as Administrative Case No. 3433, prayed for their disbarment.
Borromeo averred that the respondent lawyers connived with their clients in (1)
maliciously misrepresenting a deed of sale with pacto de retro as a genuine sale,
although it was actually an equitable mortgage; (2) fraudulently depriving
complainant of his proprietary rights subject of the Deed of Sale; and (3) defying
two lawful Court orders, all in violation of their lawyer's oath to do no falsehood
nor consent to the doing of any in Court. Borromeo alleged that respondents
Perez and Regis falsely attempted to consolidate title to his property in favor of
Lao.
B. Answer of Respondent Lawyers
The respondent lawyers denounced the disbarment complaint as "absolutely
baseless and nothing but pure harassment." In a pleading dated July 10, 1990,
entitled "Comments and Counter Motion to Cite Joaquin Borromeo in Contempt
of Court;" July 10, 1990, filed by the Integrated Bar of the Philippines Cebu City
Chapter, signed by Domero C. Estenzo (President), Juliano Neri (Vice-
President), Ulysses Antonio C. Yap (Treasurer); Felipe B. Velasquez (Secretary),
Corazon E. Valencia (Director), Virgilio U. Lainid (Director), Manuel A. Espina
(Director), Ildefonsa A. Ybañez (Director), Sylvia G. Almase (Director), and Ana
Mar Evangelista P. Batiguin (Auditor). The lawyers made the following
observations:
It is ironic. While men of the legal profession regard members of the Judiciary
with deferential awe and respect sometimes to the extent of cowering before the
might of the courts, here is a non-lawyer who, with gleeful abandon and
unmitigated insolence, has cast aspersions and shown utter disregard to the
authority and name of the courts.
And lawyers included. For indeed, it is very unfortunate that here is a non-lawyer
who uses the instruments of justice to harass lawyers and courts who crosses
11
his path more especially if their actuations do not conform with his whims and
caprices.
Adverting to letters publicly circulated by Borromeo, inter alia charging then Chief
Justice Marcelo B. Fernan with supposed infidelity and violation of the
constitution, etc., the lawyers went on to say the following:
The conduct and statement of Borromeo against this Honorable Court, and other
members of the Judiciary are clearly and grossly disrespectful, insolent and
contemptuous. They tend to bring dishonor to the Judiciary and subvert the
public confidence on the courts. If unchecked, the scurrilous attacks will
undermine the dignity of the courts and will result in the loss of confidence in the
country's judicial system and administration of justice.
. . . (S)omething should be done to protect the integrity of the courts and the
legal profession. So many baseless badmouthing have been made by Borromeo
against this Honorable Court and other courts that for him to go scot-free would
certainly be demoralizing to members of the profession who afforded the court
with all the respect and esteem due them.
Subsequently, in the same proceeding; Borromeo filed another pleading
protesting the alleged "refusal" of the Cebu City Chapter of the Integrated Bar of
the Philippines to act on his disbarment cases "filed against its members."
C. Decision of the IBP
On March 28, 1994, the National Executive Director, IBP (Atty. Jose Aguila
Grapilon) transmitted to this Court the notice and copy of the decision in the
case, reached after due investigation, as well as the corresponding records in
seven (7) volumes. Said decision approved and adopted the Report and
Recommendation dated December 15, 1993 of Atty. Manuel P. Legaspi,
President, IBP, Cebu City Chapter, representing the IBP Commission on Bar
Discipline, recommending dismissal of the complaint as against all the
respondents and the issuance of a "warning to Borromeo to be more cautious
and not be precipitately indiscriminate in the filing of administrative complaints
against lawyers." 37
VI. SCURRILOUS WRITINGS
Forming part of the records of several cases in this Court are copies of letters
("open" or otherwise), "circulars," flyers or leaflets harshly and quite
unwarrantedly derogatory of the many court judgments or directives against him
and defamatory of his adversaries and their lawyers and employees, as well as
the judges and court employees involved in the said adverse dispositions —
some of which scurrilous writings were adverted to by the respondent lawyers in
Adm. Case No. 3433, supra. The writing and circulation of these defamatory
writing were apparently undertaken by Borromeo as a parallel activity to his
"judicial adventures." The Court of Appeals had occasion to refer to his "apparent
penchant for argumentum ad hominen" and of the "irresponsible leaflets he
admits to have authored . . . (which were found to be) highly reprehensible and
needlessly derogatory to the dignity, honor and reputation of the Courts."
In those publicly circulated writings, he calls judges and lawyers ignorant,
corrupt, oppressors, violators of the Constitution and the laws, etc.
Sometime in July, 1990, for instance, he wrote to the editor of the "Daily Star" as
regards the reported conferment on then Chief Justice Marcelo B. Fernan of an
"Award from the University of Texas for his contributions in upholding the Rule of
Law, Justice, etc.," stressing that Fernan "and the Supreme Court persist in
rendering rulings patently violative of the Constitution, Due Process and Rule of
Law, particularly in their issuance of so-called Minute Resolutions devoid of
FACT or LAW or SIGNATURES . . ." He sent a copy of his letter in the Supreme
Court.
He circulated an "OPEN LETTER TO SC justices, Fernan," declaring that he had
"suffered INJUSTICE after INJUSTICE from you who are sworn to render TRUE
JUSTICE but done the opposite, AND INSTEAD OF RECTIFYING THEM,
labeled my cases as 'frivolous, nuisance, and harassment suits' while failing to
refute the irrefutable evidences therein . . .;" in the same letter, he specified what
he considered to be some of "the terrible injustices inflicted on me by this Court."
In another letter to Chief Justice Fernan, he observed that "3 years after EDSA,
your pledges have not been fulfilled. Injustice continues and as you said, the
courts are agents of oppression, instead of being saviours and defenders of the
people. The saddest part is that (referring again to minute resolutions) even the
Supreme Court, the court of last resort, many times, sanctions injustice and the
trampling of the rule of law and due process, and does not comply with the
Constitution when it should be the first to uphold and defend it . . . ." Another
circulated letter of his, dated June 21, 1989 and captioned, "Open Letter to
Supreme Court Justices Marcelo Fernan and Andres Narvasa," repeated his
plaint of having "been the victim of many . . . 'Minute Resolutions' . . . which in
effect sanction the theft and landgrabbing and arson of my properties by
TRADERS ROYAL BANK, UNITED COCONUT PLANTERS BANK, AND one
TOMAS B. TAN — all without stating any FACT or LAW to support your dismissal
of . . . (my) cases, despite your firm assurances (Justice Fernan) that you would
cite me such facts or laws (during our talk in your house last March 12 1989);"
and that "you in fact have no such facts or laws but simply want to ram down a
most unjust Ruling in favor of a wrongful party. . . ."
In another flyer entitled in big bold letters, "A Gov't That Lies! Blatant attempt to
fool people!" he mentions what he regards as "The blatant lies and contradictions
of the Supreme Court, CA to support the landgrabbing by Traders Royal Bank of
Borromeos' Lands." Another flyer has at the center the caricature of a person,
seated on a throne marked Traders Royal Bank, surrounded by such statements
as, "Sa TRB para kami ay royalty. Nakaw at nakaw! Kawat Kawat! TRB WILL
STEAL!" etc Still another "circular" proclaims: "So the public may know: Supreme
Court minute resolutions w/o facts, law, or signatures violate the Constitution"
and ends with the admonition: "Supreme Court, Justice Fernan: STOP
VIOLATING THE CHARTER." 38
One other "circular" reads:
SC, NARVASA — TYRANTS!!!
— CODDLERS OF CROOKS!
— VIOLATOR OF LAWS
by: JOAQUIN BORROMEO
12
NARVASA's SC has denied being a DESPOT nor has it shielded CROOKS in the
judiciary. Adding "The SCRA (SC Reports) will attest to this continuing vigilance
Of the supreme Court." These are lame, cowardly and self-serving denials and
another "self-exoneration" belied by evidence which speak for themselves (Res
Ipsa Loquitor) (sic) — the SCRA itself.
It is pure and simply TYRANNY when Narvasa and associates issued
UNSIGNED, UNCLEAR, SWEEPING "Minute Resolutions" devoid of CLEAR
FACTS and LAWS in patent violation of Secs. 4(3), 14, Art. 8 of the Constitution.
It is precisely through said TYRANNICAL, and UNCONSTITUTIONAL sham
rulings that Narvasa & Co. have CODDLED CROOKS like crony bank TRB,
UCPB, and SBTC, and through said fake resolutions that Narvasa has LIED or
shown IGNORANCE of the LAW in ruling that CONSIGNATION IS NECESSARY
IN RIGHT OF REDEMPTION (GR 83306). Through said despotic resolutions,
NARVASA & CO. have sanctioned UCPB/ACCRA's defiance of court orders and
naked land grabbing — What are these if not TYRANNY? (GR 84999).
Was it not tyranny for the SC to issue an Entry of Judgment without first resolving
the motion for reconsideration (G.R No. 82273). Was it not tyranny and abuse of
power for the SC to order a case dismissed against SC clerks (CEBV-8679) and
declare justices and said clerks "immune from suit" — despite their failure to file
any pleading? Were Narvasa & Co. not in fact trampling on the rule of law and
rules of court and DUE PROCESS in so doing? (GR No. 82273).
TYRANTS will never admit that they are tyrants. But their acts speak for
themselves! NARVASA & ASSOC: ANSWER AND REFUTE THESE SERIOUS
CHARGES OR RESIGN!!
IMPEACH NARVASA
• ISSUING UNSIGNED, SWEEPING, UNCLEAR, UNCONSTITUTIONAL
"MINUTE RESOLUTIONS" VIOLATIVE OF SECS. 4(3), 14, ART. 8, Constitution
• VIOLATING RULES OF COURT AND DUE PROCESS IN ORDERING CASE
AGAINST SC CLERKS (CEB-8679) DISMISSED DESPITE THE LATTER'S
FAILURE TO FILE PLEADINGS; HENCE IN DEFAULT
• CORRUPTION AND/OR GROSS IGNORANCE OF THE LAW IN RULING,
THAT CONSIGNATION IS NECESSARY IN RIGHT OF REDEMPTION,
CONTRADICTING LAW AND SC'S OWN RULINGS — TO ALLOW CRONY
BANK TRB TO STEALS LOTS WORTH P3 MILLION
• CONDONING CRONY BANK UCPB'S DEFIANCE OF TWO LAWFUL COURT
ORDERS AND STEALING OF TITLE OF PROPERTY WORTH P4 MILLION
• BEING JUDGE AND ACCUSED AT THE SAME TIME AND PREDICTABLY
EXONERATING HIMSELF AND FELLOW CORRUPT JUSTICES
• DECLARING HIMSELF, JUSTICES, and even MERE CLERKS TO BE
IMMUNE FROM SUIT AND UN-ACCOUNTABLE TO THE PEOPLE and
REFUSING TO ANSWER AND REFUTE CHARGES AGAINST HIMSELF
JOAQUIN T. BORROMEO
Mabolo, Cebu City
Te. 7-56-49.
VI. IMMEDIATE ANTECEDENTS 
 with its annexes, on Joaquin T. Borromeo at his address at Mabolo, Cebu City;
OF PROCEEDINGS AT BAR
A. Letter of Cebu City Chapter

IBP, dated June 21, 1992
Copies of these circulars evidently found their way into the hands, among others,
of some members of the Cebu City Chapter of the Integrated Bar of the
Philippines. Its President thereupon addressed a letter to this Court, dated June
21, 1992, which (1) drew attention to one of them — that last quoted, above — " .
. . .sent to the IBP Cebu City Chapter and probably other officers . . . in Cebu,"
described as containing "highly libelous and defamatory remarks against the
Supreme Court and the whole justice system"— and (2) in behalf of the
Chapter's "officers and members," strongly urged the Court "to impose sanctions
against Mr. Borromeo for his condemnable act."
B. Resolution of July 22, 1993
Acting thereon, the Court En Banc issued a Resolution on July 22, 1993,
requiring comment by Borromeo on the letter, notice of which was sent to him by
the Office of the Clerk of Court. The resolution pertinently reads as follows:
xxx xxx xxx
The records of the Court disclose inter alia that as early as April 4, 1989, the
Acting Clerk of Court, Atty. Luzviminda D. Puno, wrote a four page letter to Mr.
Borromeo concerning G.R. No. 83306 (Joaquin T. Borromeo vs. Traders Royal
Bank [referred to by Borromeo in the "circular" adverted to by the relator herein,
the IBP Cebu City Chapter]) and two (2) other cases also filed with the Court by
Borromeo: G.R. No. 77248 (Joaquin T. Borromeo v. Samson Lao and Mariano
Logarta) and G.R. No. 84054 (Joaquin T. Borromeo v. Hon. Mario Dizon and
Tomas Tan), all resolved adversely to him by different Divisions of the Court. In
that letter Atty. Puno explained to Borromeo very briefly the legal principles
applicable to his cases and dealt with the matters mentioned in his circular.
The records further disclose subsequent adverse rulings by the Court in other
cases instituted by Borromeo in this Court, i.e., G.R. No. 87897 (Joaquin T.
Borromeo v. Court of Appeals, et al.) and No. 82273 (Joaquin T. Borromeo v.
Court of Appeals and Samson Lao), as well as the existence of other
communications made public by Borromeo reiterating the arguments already
passed upon by the court in his cases and condemning the court's rejection of
those arguments.
Acting on the letter dated June 21, 1993 of the Cebu City Chapter of the
Integrated Bar of the Philippines thru its above named, President, and taking
account of the related facts on record, the Court Resolved:
1) to REQUIRE:
(a) the Clerk of Court (1) to DOCKET the matter at bar as a proceeding for
contempt against Joaquin T. Borromeo instituted at the relation of said Cebu City
Chapter, Integrated Bar of the Philippines, and (2) to SEND to the City Sheriff,
Cebu City, notice of this resolution and copies of the Chapter's letter dated June
21, 1993 together with its annexes; and
(b) said City Sheriff of Cebu City to CAUSE PERSONAL SERVICE of said notice
of resolution and a copy of the Chapter's letter dated June 21, 1993, together
and
13
2) to ORDER said Joaquin T. Borromeo, within ten (10) days from receipt of such
notice and the IBP Chapter's letter of June 21, 1993 and its annexes, to file a
comment on the letter and its annexes as well as on the other matters set forth in
this resolution, serving copy thereof on the relator, the Cebu City Chapter of the
Integrated Bar of the Philippines, Palace of Justice Building, Capitol, Cebu City.
SO ORDERED.
1. Atty. Puno's Letter of April 4, 1989
Clerk of Court Puno's letter to Borromeo of April 4, 1989, referred to in the first
paragraph of the resolution just mentioned, explained to Borromeo for perhaps
the second time, precisely the principles and established practice relative to
"minute resolutions" and notices thereof, treated of in several other
communications and resolutions sent to him by the Supreme Court, to wit: the
letter received by him on July 10, 1987, from Clerk of Court Julieta Y. Carreon (of
this Court's Third Division) (in relation to G.R No. 77243 39) the letter to him of
Clerk of Court (Second Division) Fermin J. Garma, dated May 19,
1989, 40 and three resolutions of this Court, notices of which were in due course
served on him, to wit: that dated July 31, 1989, in G.R. No. 87897; 41 that dated
June 1, 1990 in G.R. No. 82274 (186 SCRA 1), 42 and that dated June 11, 1994
in G. R. No. 112928. 43
C. Borromeo's Comment of August 27, 1993
In response to the Resolution of July 22, 1993, Borromeo filed a Comment dated
August 27, 1993 in which he alleged the following:
1) the resolution of July 22, 1993 (requiring comment) violates the Constitution
which requires "signatures and concurrence of majority of members of the High
Court;" hence, "a certified copy duly signed by Justices is respectfully
requested;"
2) the Chief Justice and other Members of the Court should inhibit themselves
"since they cannot be the Accused and Judge at the same time, . . . (and) this
case should be heard by an impartial and independent body;"
3) the letter of Atty. Legaspi "is not verified nor signed by members of said (IBP
Cebu Chapter) Board; . . . is vague, unspecific, and sweeping" because failing to
point out "what particular statements in the circular are allegedly libelous and
condemnable;" and does not appear that Atty. Legaspi has authority to speak or
file a complaint "in behalf of those accused in the "libelous circular;"
4) in making the circular, he (Borromeo) "was exercising his rights of freedom of
speech, of expression, and to petition the government for redress of grievances
as guaranteed by the Constitution (Sec. 4, Art. III) and in accordance with the
accountability of public officials;" the circular merely states the truth and asks for
justice based on the facts and the
law; . . . it is not libelous nor disrespectful but rather to be commended and
encouraged; . . . Atty. Legaspi . . . should specify under oath which statements
are false and lies;
5) he "stands by the charges in his circular and is prepared to support them with
pertinent facts, evidence and law;" and it is "incumbent on the Hon. Chief Justice
and members of the High Court to either refute said charges or dispense the
justice that they are duty bound to dispense.
D. Resolution of September 30, 1993
After receipt of the comment, and desiring to accord Borromeo the fullest
opportunity to explain his side, and be reprsented by an attorney, the Court
promulgated the following Resolution on September 30, 1993, notice of which
was again served on him by the Office of the Clerk of Court.
. . . The return of service filed by Sheriff Jessie A. Belarmino, Office of the Clerk
of Court Regional Trial Court of Cebu City, dated August 26, 1993, and the
Comment of Joaquin Borromeo, dated August 27, 1993, on the letter of
President Manuel P. Legaspi of the relator dated June 21, 1993, are both
NOTED. After deliberating on the allegations of said Comment, the Court
Resolved to GRANT Joaquin T. Borromeo an additional period of fifteen (15)
days from notice hereof within which to engage the services or otherwise seek
the assistance of a lawyer and submit such further arguments in addition to or in
amplification of those set out in his Comment dated August 27, 1993, if he be so
minded.
SO ORDERED.
E. Borromeo's Supplemental Comment

of October 15, 1992
Borromeo filed a "Supplemental Comment" dated October 15, 1992, reiterating
the arguments and allegations in his Comment of August 27, 1993, and setting
forth "additional arguments and amplification to . . . (said) Comment," viz.:
1) the IBP and Atty. Legaspi have failed "to specify and state under oath the
alleged 'libelous' remarks contained in the circular . . .; (they should) be ordered
to file a VERIFIED COMPLAINT . . .(failing in which, they should) be cited in
contempt of court for making false charges and wasting the precious time of this
Highest Court by filing a baseless complaint;
2) the allegations in their circular are not libelous nor disrespectful but "are based
on the TRUTH and the LAW", namely:
a) "minute resolutions" bereft of signatures and clear facts and laws are patent
violations of Secs. 4(32), 13, 14, Art. VIII of the Constitution;
b) there is no basis nor thruth to this Hon. Court's affirmation to the Appelate
Court's ruling that the undersigned "lost" his right of redemption price, since no
less than this Hon. Court has ruled in many rulings that CONSIGNATION IS
UNNECESSARY in right of redemption;
c) this Hon. Court has deplorably condoned crony banks TRB and UCPB's
frauds and defiance of court orders in G.R. Nos. 83306 and 878997 and 84999.
F. Borromeo's "Manifestation" of

November 26, 1993
Borromeo afterwards filed a "Manifestation" under date of November 26, 1993,
adverting to "the failure of the IBP and Atty. Legaspi to substantiate his charges
under oath and the failure of the concerned Justices to refute the charges in the
alledged "libelous circular" and, construing these as "and admission of the thruth
in said circular," theorized that it is "incumbent on the said Justices to rectify their
grave as well as to dismiss Atty. Legaspi's baseless and false charges."
VII. THE COURT CONCLUSIONS
14
A. Respondent's Liability
 His claim — that the letter of Atty. Legaspi "is not verified nor signed by members
for Contempt of Court
Upon the indubitable facts on record, there can scarcely be any doubt of
Borromeo's guilt of contempt, for abuse of and interference with judicial rules and
processes, gross disrespect to courts and judges and improper conduct directly
impeding, obstructing and degrading the administration of justice.44 He has
stubbornly litigated issues already declared to be without merit, obstinately
closing his eyes to the many rulings rendered adversely to him in many suits and
proceedings, rulings which had become final and executory, obdurately and
unreasonably insisting on the application of his own individual version of the
rules, founded on nothing more than his personal (and quite erroneous) reading
of the Constitution and the law; he has insulted the judges and court officers,
including the attorneys appearing for his adversaries, needlessly overloaded the
court dockets and sorely tried the patience of the judges and court employees
who have had to act on his repetitious and largely unfounded complaints,
pleadings and motions. He has wasted the time of the courts, of his adversaries,
of the judges and court employees who have had the bad luck of having to act in
one way or another on his unmeritorious cases. More particularly, despite his
attention having been called many times to the egregious error of his theory that
the so-called "minute resolutions" of this Court should contain findings of fact and
conclusions of law, and should be signed or certified by the Justices
promulgating the same, 45 he has mulishly persisted in ventilating that self-same
theory in various proceedings, causing much loss of time, annoyance and
vexation to the courts, the court employees and parties involved.
1. Untenability of Proffered Defenses
The first defense that he proffers, that the Chief Justice and other Members of
the Court should inhibit themselves "since they cannot be the Accused and
Judge at the same time . . . (and) this case should be heard by an impartial and
independent body, is still another illustration of an entirely unwarranted, arrogant
and reprehensible assumption of a competence in the field of the law: he again
uses up the time of the Court needlessly by invoking an argument long since
declared and adjudged to be untenable. It is axiomatic that the "power or duty of
the court to institute a charge for contempt against itself, without the intervention
of the fiscal or prosecuting officer, is essential to the preservation of its dignity
and of the respect due it from litigants, lawyers and the public. Were the
intervention of the prosecuting officer required and judges obliged to file
complaints for contempts against them before the prosecuting officer, in order to
bring the guilty to justice, courts would be inferior to prosecuting officers and
impotent to perform their functions with dispatch and absolute independence.
The institution of charges by the prosecuting officer is not necessary to hold
persons guilty of civil or criminal contempt amenable to trial and punishment by
the court. All that the law requires is that there be a charge in writing duly filed in
court and an opportunity to the person charged to be heard by himself or
counsel. The charge may be made by the fiscal, by the judge, or even by a
private person. . . ." 46
of said (IBP Cebu Chapter) Board; . . . is vague, unspecific, and sweeping"
because failing to point out what particular statements in the circular are
allegedly libelous and condemnable;" and it does not appear that Atty. Legaspi
has authority to speak or file a complaint "in behalf of those accused in the
'libelous' circular" — is in the premises, plainly nothing but superficial
philosophizing, deserving no serious treatment.
Equally as superficial, and sophistical, is his other contention that in making the
allegations claimed to be contumacious, he "was exercising his rights of freedom
of speech, of expression, and to petition the government for redress of
grievances as guaranteed by the Constitution (Sec. 4, Art. III) and in accordance
with the accountablity of public officials." The constitutional rights invoked by him
afford no justification for repetitious litigation of the same causes and issues, for
insulting lawyers, judges, court employees; and other persons, for abusing the
processes and rules of the courts, wasting their time, and bringing them into
disrepute and disrespect.
B. Basic Principles Governing

the Judicial Function
The facts and issues involved in the proceeding at bench make necessary a
restatement of the principles governing finality of judgments and of the
paramount need to put an end to litigation at some point, and to lay down definite
postulates concerning what is perceived to be a growing predilection on the part
of lawyers and litigants — like Borromeo — to resort to administrative
prosecution (or institution of civil or criminal actions) as a substitute for or
supplement to the specific modes of appeal or review provided by law from court
judgments or orders.
1. Reason for courts; Judicial 

Hierarchy
Courts exist in every civilized society for the settlement of controversies. In every
country there is a more or less established hierarchical organization of courts,
and a more or less comprehensive system of review of judgments and final
orders of lower courts.
The judicial system in this jurisdiction allows for several levels of litigation, i.e.,
the presentation of evidence by the parties — a trial or hearing in the first
instance — as well as a review of the judgments of lower courts by higher
tribunals, generally by consideration anew and ventilation of the factual and legal
issues through briefs or memoranda. The procedure for review is fixed by law,
and is in the very nature of things, exclusive to the courts.
2. Paramount Need to end 

Litigation at Some Point
It is withal of the essence of the judicial function that at some point, litigation
must end. Hence, after the procedures and processes for lawsuits have been
undergone, and the modes of review set by law have been exhausted, or
terminated, no further ventilation of the same subject matter is allowed. To be
sure, there may be, on the part of the losing parties, continuing disagreement
with the verdict, and the conclusions therein embodied. This is of no moment,
15
indeed, is to be expected; but, it is not their will, but the Court's, which must
prevail; and, to repeat, public policy demands that at some definite time, the
issues must be laid to rest and the court's dispositions thereon accorded
absolute finality. 47 As observed by this Court in Rheem of the Philippines v.
Ferrer, a 1967 decision, 48 a party "may think highly of his intellectual
endowment. That is his privilege. And he may suffer frustration at what he feels is
others' lack of it. This is his misfortune. Some such frame of mind, however,
should not be allowed to harden into a belief that he may attack a court's
decision in words calculated to jettison the time-honored aphorism that courts are
the temples of right."
3. Judgments of Supreme Court 
 measure passed by Congress and approved by the President. If there has been
Not Reviewable
The sound, salutary and self-evident principle prevailing in this as in most
jurisdictions, is that judgments of the highest tribunal of the land may not be
reviewed by any other agency, branch, department, or official of Government.
Once the Supreme Court has spoken, there the matter must rest. Its decision
should not and cannot be appealed to or reviewed by any other entity, much less
reversed or modified on the ground that it is tainted by error in its findings of fact
or conclusions of law, flawed in its logic or language, or otherwise erroneous in
some other respect. 49 This, on the indisputable and unshakable foundation of
public policy, and constitutional and traditional principle.
In an extended Resolution promulgated on March 12, 1987 in In Re: Wenceslao
Laureta — involving an attempt by a lawyer to prosecute before the Tanod bayan
"members of the First Division of this Court collectively with having knowingly
and deliberately rendered an 'unjust extended minute Resolution' with deliberate
bad faith in violation of Article 204 of the Revised penal Code ". . . and for
deliberatly causing "undue injury" to respondent . . . and her co-heirs because of
the "unjust Resolution" promulgated, in violation of the Anti-Graft and Corrupt
Practices Act . . . — the following pronouncements were made in reaffirmation of
established doctrine: 50
. . . As aptly declared in the Chief Justice's Statement of December 24, 1986,
which the Court hereby adopts in toto, "(I)t is elementary that the Supreme Court
is supreme — the third great department of government entrusted exclusively
with the judicial power to adjudicate with finality all justiciable disputes, public
and private. No other department or agency may pass upon its judgments or
declare them "unjust." It is elementary that "(A)s has ever been stressed since
the early case of Arnedo vs. Llorente (18 Phil. 257, 263 [1911]) "controlling and
irresistible reasons of public policy and of sound practice in the courts demand
that at the risk of occasional error, judgments of courts determining controversies
submitted to them should become final at some definite time fixed by law, or by a
rule of practice recognized by law, so as to be thereafter beyond the control even
of the court which rendered them for the purpose of correcting errors of fact or of
law, into which, in the opinion of the court it may have fallen. The very purpose
for which the courts are organized is to put an end to controversy, to decide the
questions submitted to the litigants, and to determine the respective rights of the
parties. (Luzon Brokerage Co., Inc. vs. Maritime Bldg., Co., Inc., 86 SCRA 305,
316-317)
xxx xxx xxx
Indeed, resolutions of the Supreme Court as a collegiate court, whether an en
banc or division, speak for themselves and are entitled to full faith and credence
and are beyond investigation or inquiry under the same principle of
conclusiveness of enrolled bills of the legislature. (U.S. vs. Pons, 34 Phil. 729;
Gardiner, et al. vs. Paredes, et al., 61 Phil. 118; Mabanag vs. Lopez Vito, 78 Phil.
1) The Supreme Court's pronouncement of the doctrine that "(I)t is well settled
that the enrolled bill . . . is conclusive upon the courts as regards the tenor of the
any mistake in the printing of the bill before it was certified by the officers of
Congress and approved by the Executive [as claimed by petitioner-importer who
unsuccessfully sought refund of margin fees] — on which we cannot speculate,
without jeopardizing the principle of separation of powers and undermining one
of the cornerstones of our democractic system — the remedy is by amendment
or curative legislation, not by judicial decree" is fully and reciprocally applicable
to Supreme Court orders, resolutions and decisions, mutatis mutandis. (Casco
Phil. Chemical Co., Inc. vs. Gimenez, 7 SCRA 347, 350. (Citing Primicias vs.
Paredes, 61 Phil. 118, 120; Mabanag vs. Lopez Vito, 78 Phil. 1; Macias vs.
Comelec, 3 SCRA 1).
The Court has consistently stressed that the "doctrine of separation of powers
calls for the executive, legislative and judicial departments being left alone to
discharge their duties as they see fit" (Tan vs. Macapagal, 43 SCRA 677). It has
thus maintained in the same way that the judiciary has a right to expect that
neither the President nor Congress would cast doubt on the mainspring of its
orders or decisions, it should refrain from speculating as to alleged hidden forces
at work that could have impelled either coordinate branch into acting the way it
did. The concept of separation of powers presupposes mutual respect by and
between the three departments of the government. (Tecson vs. Salas, 34 SCRA
275, 286-287).
4. Final and Executory Judgments of

Lower Courts Not Reviewable

Even by Supreme Court
In respect of Courts below the Supreme Court, the ordinary remedies available
under law to a party who is adversely affected by their decisions or orders are a
motion for new trial (or reconsideration) under Rule 37, and an appeal to either
the Court of Appeals or the Supreme Court, depending on whether questions of
both fact and law, or of law only, are raised, in accordance with fixed and familiar
rules and conformably with the hierarchy of courts. 51 Exceptionally, a review of a
ruling or act of a court on the ground that it was rendered without or in excess of
its jurisdiction, or with grave abuse of discretion, may be had through the special
civil action of certiorari or prohibition pursuant to Rule 65 of the Rules of Court.
However, should judgments of lower courts — which may normally be subject to
review by higher tribunals — become final and executory before, or without,
exhaustion of all recourse of appeal, they, too, become inviolable, impervious to
16
modification. They may, then, no longer be reviewed, or in anyway modified
directly or indirectly, by a higher court, not even by the Supreme Court, much
less by any other official, branch or department of Government. 52
C. Administrative Civil or Criminal Action
 conclusions of law, or both. If he does proceed despite that impediment,
against Judge. Not Substitute for Appeal;
 whatever determination he makes could well set off a proliferation of
Proscribed by Law and Logic
Now, the Court takes judicial notice of the fact that there has been of late a
regrettable increase in the resort to administrative prosecution — or the
institution of a civil or criminal action — as a substitute for or supplement to
appeal. Whether intended or not, such a resort to these remedies operates as a
form of threat or intimidation to coerce judges into timorous surrender of their
prerogatives, or a reluctance to exercise them. With rising frequency,
administrative complaints are being presented to the Office of the Court
Administrator; criminal complaints are being filed with the Office of the
Ombudsman or the public prosecutor's office; civil actions for recovery of
damages commenced in the Regional Trial Courts against trial judges, and
justices of the Court of Appeals and even of the Supreme Court.
1. Common Basis of Complaints
 who does so "in any case submitted to him for decision" and even then, it is not
Against Judges
Many of these complaints set forth a common indictment: that the respondent
Judges or Justices rendered manifestly unjust judgments or interlocutory orders
53 — i.e., judgments or orders which are allegedly not in accord with the
evidence, or with law or jurisprudence, or are tainted by grave abuse of
discretion — thereby causing injustice, and actionable and compensable injury to
the complainants (invariably losing litigants). Resolution of complaints of this sort
quite obviously entails a common requirement for the fiscal, the Ombudsman or
the Trial Court: a review of the decision or order of the respondent Judge or
Justice to determine its correctness or erroneousness, as basic premise for a
pronouncement of liability.
2. Exclusivity of Specific Procedures for
 more so a member of the Supreme Court for official acts done by him in good
Correction of Judgments and Orders
The question then, is whether or not these complaints are proper; whether or not
in lieu of the prescribed recourses for appeal or review of judgments and orders
of courts, a party may file an administrative or criminal complaint against the
judge for rendition of an unjust judgment, or, having opted for appeal, may
nonetheless simultaneously seek also such administrative or criminal remedies.
Given the nature of the judicial function, the power vested by the Constitution in
the Supreme Court and the lower courts established by law, the question submits
to only one answer: the administrative or criminal remedies are neither
alternative nor cumulative to judicial review where such review is available, and
must wait on the result thereof.
Simple reflection will make this proposition amply clear, and demonstrate that
any contrary postulation can have only intolerable legal implications. Allowing a
party who feels aggrieved by a judicial order or decision not yet final and
executory to mount an administrative, civil or criminal prosecution for unjust
judgment against the issuing judge would, at a minimum and as an
indispensable first step, confer the prosecutor (or Ombudsman) with an
incongruous function pertaining, not to him, but to the courts: the determination
of whether the questioned disposition is erroneous in its findings of fact or
administrative or criminal litigation, a possibility here after more fully explored.
Such actions are impermissible and cannot prosper. It is not, as already pointed
out, within the power of public prosecutors, or the Ombudsman or his deputies,
directly or vicariously, to review judgments or final orders or resolutions of the
Courts of the land. The power of review — by appeal or special civil action — is
not only lodged exclusively in the Courts themselves but must be exercised in
accordance with a well-defined and long established hierarchy, and long-
standing processes and procedures. No other review is allowed; otherwise
litigation would be interminable, and vexatiously repetitive.
These principles were stressed in In Re: Wenceslao Laureta, supra. 54
Respondents should know that the provisions of Article 204 of the Revised Penal
Code as to "rendering knowingly unjust judgment," refer to an individual judge
the prosecutor who would pass judgment on the "unjustness" of the decision
rendered by him but the proper appellate court with jurisdiction to review the
same, either the Court of Appeals and/or the Supreme Court. Respondents
should likewise know that said penal article has no application to the members of
a collegiate court such as this Court or its Divisions who reach their conclusions
in consultation and accordingly render their collective judgment after due
deliberation. It also follows, consequently, that a charge of violation of the Anti-
Graft and Corrupt Practices Act on the ground that such a collective decision is
"unjust" cannot prosper.
xxx xxx xxx
To subject to the threat and ordeal of investigation and prosecution, a judge,
faith and in the regular exercise of official duty and judicial functions is to subvert
and undermine that very independence of the judiciary, and subordinate the
judiciary to the executive. "For it is a general principle of the highest importance
to the proper administration of justice that a judicial officer in exercising the
authority vested in him, shall be free to act upon his own convictions, without
apprehension of personal consequences to himself. Liability to answer to
everyone who might feel himself aggrieved by the action of the judge would be
inconsistent with the possession of this freedom, and would destroy that
independence without which no judiciary can be either respectable or
useful." (Bradley vs. Fisher, 80 U. S. 335).
xxx xxx xxx
To allow litigants to go beyond the Court's resolution and claim that the members
acted "with deliberate bad faith" and rendered an "unjust resolution" in disregard
or violation of the duty of their high office to act upon their own independent
consideration and judgment of the matter at hand would be to destroy the
authenticity, integrity and conclusiveness of such collegiate acts and resolutions
17
and to disregard utterly the presumption of regular performance of official duty.
To allow such collateral attack would destroy the separation of powers and
undermine the role of the Supreme Court as the final arbiter of all justiciable
disputes.
Dissatisfied litigants and/or their counsels cannot without violating the separation
of powers mandated by the Constitution relitigate in another forum the final
judgment of this Court on legal issues submitted by them and their adversaries
for final determination to and by the Supreme Court and which fall within the
judicial power to determine and adjudicate exclusively vested by the Constitution
in the Supreme Court and in such inferior courts as may be established by law.
This is true, too, as regards judgments, otherwise appealable, which have
become final and executory. Such judgments, being no longer reviewable by
higher tribunals, are certainly not reviewable by any other body or authority.
3. Only Courts Authorized, under Fixed
 or the Court of Appeals would have an inevitable result: given the antecedents,
Rules to Declare Judgments or Orders
 the verdict of conviction would be set aside and the correctness of the judgment
Erroneous or Unjust
To belabor the obvious, the determination of whether or not a judgement or order
is unjust — or was (or was not) rendered within the scope of the issuing judge's
authority, or that the judge had exceeded his jurisdiction and powers or
maliciously delayed the disposition of a case — is an essentially judicial function,
lodged by existing law and immemorial practice in a hierarchy of courts and
ultimately in the highest court of the land. To repeat, no other entity or official of
the Government, not the prosecution or investigation service or any other branch;
nor any functionary thereof, has competence to review a judicial order or
decision — whether final and executory or not — and pronounce it erroneous so
as to lay the basis for a criminal or administrative complaint for rendering an
unjust judgment or order. That prerogative belongs to the courts alone.
4. Contrary Rule Results in Circuitousness
 Criminal Prosecution
and Leads to Absurd Consequences
Pragmatic considerations also preclude prosecution for supposed rendition of
unjust judgments or interlocutory orders of the type above described, which, at
bottom, consist simply of the accusation that the decisions or interlocutory orders
are seriously wrong in their conclusions of fact or of law, or are tainted by grave
abuse of discretion — as distinguished from accusations of corruption, or
immorality, or other wrongdoing. To allow institution of such proceedings would
not only be legally improper, it would also result in a futile and circuitous
exercise, and lead to absurd consequences.
Assume that a case goes through the whole gamut of review in the judicial
hierarchy; i.e., a judgment is rendered by a municipal trial court; it is reviewed
and affirmed by the proper Regional Trial Court; the latter's judgment is appealed
to and in due course affirmed by the Court of Appeals; and finally, the appellate
court's decision is brought up to and affirmed by the Supreme Court. The
prosecution of the municipal trial court judge who rendered the original decision
(for knowingly rendering a manifestly unjust judgment) would appear to be out of
the question; it would mean that the Office of the Ombudsman or of the public
prosecutor would have to find, at the preliminary investigation, not only that the
judge's decision was wrong and unjust, but by necessary implication that the
decisions or orders of the Regional Trial Court Judge, as well as the Justices of
the Court of Appeals and the Supreme Court who affirmed the original judgment
were also all wrong and unjust — most certainly an act of supreme arrogance
and very evident supererogation. Pursuing the proposition further, assuming that
the public prosecutor or Ombudsman should nevertheless opt to undertake a
review of the decision in question — despite its having been affirmed at all three
(3) appellate levels — and thereafter, disagreeing with the verdict of all four (4)
courts, file an information in the Regional Trial Court against the Municipal Trial
Court Judge, the fate of such an indictment at the hands of the Sandiganbayan
or the Regional Trial Court would be fairly predictable.
Even if for some reason the Municipal Trial Court Judge is convicted by the
Sandiganbayan or a Regional Trial Court, the appeal before the Supreme Court
in question, already passed upon and finally resolved by the same appellate
courts, would necessarily be sustained.
Moreover, in such a scenario, nothing would prevent the Municipal Trial Judge, in
his turn, from filing a criminal action against the Sandiganbayan Justices, or the
Regional Trial Court Judge who should convict him of the offense, for knowingly
rendering an unjust judgment, or against the Justices of the Court of Appeals or
the Supreme Court who should affirm his conviction.
The situation is ridiculous, however the circumstances of the case may be
modified, and regardless of whether it is a civil, criminal or administrative
proceeding that is availed of as the vehicle to prosecute the judge for supposedly
rendering an unjust decision or order.
5. Primordial Requisites for Administrative

This is not to say that it is not possible at all to prosecute judges for this
impropriety, of rendering an unjust judgment or interlocutory order; but, taking
account of all the foregoing considerations, the indispensable requisites are that
there be a final declaration by a competent court in some appropriate proceeding
of the manifestly unjust character of the challenged judgment or order, and there
be also evidence of malice or bad faith, ignorance or inexcusable negligence, on
the part of the judge in rendering said judgement or order. That final declaration
is ordinarily contained in the judgment rendered in the appellate proceedings in
which the decision of the trial court in the civil or criminal action in question is
challenged.
What immediately comes to mind in this connection is a decision of acquittal or
dismissal in a criminal action, as to which — the same being unappealable — it
would be unreasonable to deny the State or the victim of the crime (or even
public-spirited citizens) the opportunity to put to the test of proof such charges as
they might see fit to press that it was unjustly rendered, with malice or by
deliberate design, through inexcusable ignorance or negligence, etc. Even in this
case, the essential requisite is that there be an authoritative judicial
pronouncement of the manifestly unjust character of the judgment or order in
18
question. Such a pronouncement may result from either (a) an action of certiorari
or prohibition in a higher court impugning the validity of the; judgment, as having
been rendered without or in excess of jurisdiction, or with grave abuse of
discretion; e.g., there has been a denial of due process to the prosecution; or (b)
if this be not proper, an administrative proceeding in the Supreme Court against
the judge precisely for promulgating an unjust judgment or order. Until and
unless there is such a final, authoritative judicial declaration that the decision or
order in question is "unjust," no civil or criminal action against the judge
concerned is legally possible or should be entertained, for want of an
indispensable requisite.
D. Judges Must be Free from
 the hope that the repeated rebuffs he suffered, with the attendant lectures on the
Influence or Pressure
Judges must be free to judge, without pressure or influence from external forces
or factors. They should not be subject to intimidation, the fear of civil, criminal or
administrative sanctions for acts they may do and dispositions they may make in
the performance of their duties and functions. Hence it is sound rule, which must
be recognized independently of statute, that judges are not generally liable for
acts done within the scope of their jurisdiction and in good faith.
This Court has repeatedly and uniformly ruled that a judge may not be held
administratively accountable for every erroneous order or decision he renders. 55
To hold otherwise would be nothing short of harassment and would make his
position doubly unbearable, for no one called upon to try the facts or interpret the
law in the process of administering justice can be infallible in his judgment. 56 The
error must be gross or patent, deliberate and malicious, or incurred with evident
bad faith; 57 it is only in these cases that administrative sanctions are called for
as an imperative duty of the Supreme Court.
As far as civil or criminal liability is concerned, existing doctrine is that "judges of
superior and general jurisdiction are not liable to respond in civil action for
damages for what they may do in the exercise of their judicial functions when
acting within their legal powers and jurisdiction."58 Based on Section 9, Act No.
190, 59 the doctrine is still good law, not inconsistent with any subsequent
legislative issuance or court rule: "No judge, justice of the peace or assessor
shall be liable to a civil action for the recovery of damages by reason of any
judicial action or judgment rendered by him in good faith, and within the limits of
his legal powers and jurisdiction."
Exception to this general rule is found in Article 32 of the Civil Code, providing
that any public officer or employee, or any private individual, who directly or
indirectly obstructs, defeats, violates or in any manner impedes or impairs any of
the enumerated rights and liberties of another person — which rights are the
same as those guaranteed in the Bill of Rights (Article III of the Constitution); —
shall be liable to the latter for damages. However, such liability is not
demandable from a judge unless his act or omission constitutes a violation of the
Penal Code or other penal statute. But again, to the extent that the offenses
therein described have "unjust judgment or "unjust interlocutory order" for an
essential element, it need only be reiterated that prosecution of a judge for any of
them is subject to the caveat already mentioned: that such prosecution cannot
be initiated, much less maintained, unless there be a final judicial
pronouncement of the unjust character of the decision or order in issue.
E. Afterword
Considering the foregoing antecedents and long standing doctrines, it may well
be asked why it took no less than sixteen (16) years and some fifty (50) grossly
unfounded cases lodged by respondent Borromeo in the different rungs of the
Judiciary before this Court decided to take the present administrative measure.
The imposition on the time of the courts and the unnecessary work occasioned
by respondent's crass adventurism are self-evident and require no further
elaboration. If the Court, however, bore with him with Jobian patience, it was in
error of his ways, would somehow seep into his understanding and deter him
from further forays along his misguided path. After all, as has repeatedly been
declared, the power of contempt is exercised on the preservative and not the
vindictive principle. Unfortunately the Court's forbearance had no effect on him.
Instead, the continued leniency and tolerance extended to him were read as
signs of weakness and impotence. Worse, respondent's irresponsible audacity
appears to have influenced and emboldened others to just as flamboyantly
embark on their own groundless and insulting proceedings against the courts,
born of affected bravado or sheer egocentrism, to the extent of even involving
the legislative and executive departments, the Ombudsman included, in their
assaults against the Judiciary in pursuit of personal agendas. But all things, good
or bad, must come to an end, and it is time for the Court to now draw the line,
with more promptitude, between reasoned dissent and self-seeking pretense.
The Court accordingly serves notice to those with the same conceit or delusions
that it will henceforth deal with them, decisively and fairly, with a firm and even
hand, and resolutely impose such punitive sanctions as may be appropriate to
maintain the integrity and independence of the judicial institutions of the country.
WHEREFORE, Joaquin T. Borromeo is found and declared GUILTY of
constructive contempt repeatedly committed over time, despite warnings and
instructions given to him, and to the end that he may ponder his serious errors
and grave misconduct and learn due respect for the Courts and their authority,
he is hereby sentenced to serve a term of imprisonment of TEN (10) DAYS in the
City Jail of Cebu City and to pay a fine of ONE THOUSAND PESOS (P1,000.00).
He is warned that a repetition of any of the offenses of which he is herein found
guilty, or any similar or other offense against courts, judges or court employees,
will merit further and more serious sanctions.
IT IS SO ORDERED.
FIRST DIVISION
A.M. MTJ-98-1147. July 2, 1998
JESUS S. CONDUCTO, complainant, vs. JUDGE ILUMINADO C. MONZON,
Respondent.
RESOLUTION
DAVIDE, JR., J.:
19
In a sworn letter-complaint dated 14 October 1996,1 complainant charged
respondent Judge Iluminado C. Monzon of the Municipal Trial Court in Cities,
San Pablo City, with ignorance of law, in that he deliberately refused to suspend
a barangay chairman who was charged before his court with the crime of
unlawful appointment under Article 244 of the Revised Penal Code.
The factual antecedents recited in the letter-complaint are not controverted.
On 30 August 1993, complainant filed a complaint with the Sangguniang
Panlungsod of San Pablo City against one Benjamin Maghirang, the barangay
chairman of Barangay III-E of San Pablo City, for abuse of authority, serious
irregularity and violation of law in that, among other things, said respondent
Maghirang appointed his sister-in-law, Mrs. Florian Maghirang, to the position of
barangay secretary on 17 May 1989 in violation of Section 394 of the Local
Government Code. At the same time, complainant filed a complaint for violation
of Article 244 of the Revised Penal Code with the Office of the City Prosecutor
against Maghirang, which was, however, dismissed2 on 30 September 1993 on
the ground that Maghirangs sister-in-law was appointed before the effectivity of
the Local Government Code of 1991, which prohibits a punong barangay from
appointing a relative within the fourth civil degree of consanguinity or affinity as
barangay secretary. The order of dismissal was submitted to the Office of the
Deputy Ombudsman for Luzon.
On 22 October 1993, complainant obtained Opinion No. 246, s. 19933 from
Director Jacob Montesa of the Department of Interior and Local Government,
which declared that the appointment issued by Maghirang to his sister-in-law
violated paragraph (2), Section 95 of B.P. Blg. 337, the Local Government Code
prior to the Local Government Code of 1991.
In its Revised Resolution of 29 November 1993,4 the Office of the Deputy
Ombudsman for Luzon dismissed the case, but ordered Maghirang to replace his
sister-in-law as barangay secretary.
On 20 December 1993, complainant moved that the Office of the Deputy
Ombudsman for Luzon reconsider5 the order of 29 November 1993, in light of
Opinion No. 246, s. 1993 of Director Montesa.
Acting on the motion, Francisco Samala, Graft Investigation Officer II of the
Office of the Deputy Ombudsman for Luzon, issued an order6 on 8 February
1994 granting the motion for reconsideration and recommending the filing of an
information for unlawful appointment (Article 244 of the Revised Penal Code)
against Maghirang. The recommendation was duly approved by Manuel C.
Domingo, Deputy Ombudsman for Luzon.
In a 3rd indorsement dated 4 March 1994,7 the Deputy Ombudsman for Luzon
transmitted the record of the case to the Office of the City Prosecutor of San
Pablo City and instructed the latter to file the corresponding information against
Maghirang with the proper court and to prosecute the case. The information for
violation of Article 244 of the Revised Penal Code was forthwith filed with the
Municipal Trial Court in Cities in San Pablo City and docketed as Criminal Case
No. 26240. On 11 April 1994, the presiding judge, respondent herein, issued a
warrant for the arrest of Maghirang, with a recommendation of a P200.00 bond
for his provisional liberty.
With prior leave from the Office of the Deputy Ombudsman for Luzon, on 4 May
1995, the City Prosecutor filed, in Criminal Case No. 26240, a motion for the
suspension8 of accused Maghirang pursuant to Section 13 of R.A. No. 3019, as
amended, which reads, in part:
SEC. 13. Any incumbent public officer against whom any criminal prosecution
under a valid information under this Act or under Title 7, Book II of the Revised
Penal Code or for any offense involving fraud upon government or public funds
or property whether as a single or as complex offense and in whatever stage of
execution and mode of participation, is pending in Court, shall be suspended
from office.
In his Order of 30 June 1995,9 respondent judge denied the motion for
suspension on the ground that:
[T]he alleged offense of UNLAWFUL APPOINTMENT under Article 244 of the
Revised Penal Code was committed on May 17, 1989, during [Maghirangs]
terms (sic) of office from 1989 to 1994 and said accused was again re-elected as
Barangay Chairman during the last Barangay Election of May 9, 1994, hence,
offenses committed during previous term is (sic) not a cause for removal (Lizarez
v. Hechanova, et al., G.R. No. L-22059, May 17, 1965); an order of suspension
from office relating to a given term may not be the basis of contempt with respect
to ones (sic) assumption of the same office under a new term (Oliveros v.
Villaluz, G.R. No. L-34636, May 30, 1971) and, the Court should never remove a
public officer for acts done prior to his present term of office. To do otherwise
would deprieve (sic) the people of their right to elect their officer. When the
people have elected a man to office, it must be assumed that they did this with
knowledge of his life and character, and that they disregarded or forgave his fault
or misconduct (sic), if he had been guilty if any. (Aguinaldo v. Santos, et al., G.R.
No. 94115, August 21, 1992).
The prosecution moved for reconsideration10 of the order, alleging that the court
had confused removal as a penalty in administrative cases and the temporary
removal from office (or suspension) as a means of preventing the public official,
while the criminal case against him is pending, from exerting undue influence,
intimidate (sic) witnesses which may affect the outcome of the case; the former is
a penalty or sanction whereas the latter is a mere procedural remedy.
Accordingly, while a re-elected public official cannot be administratively punished
by removing him from office for offenses committed during his previous term,
said public official can be temporarily removed to prevent him from wielding
undue influence which will definitely be a hindrance for justice to take its natural
course. The prosecution then enumerated the cases decided by this Court
reiterating the rule that what a re-election of a public official obliterates are only
administrative, not criminal, liabilities, incurred during previous terms.
11cräläwvirtualibräry
In his order of 3 August 1995,12 respondent denied the motion for
reconsideration, thus:
There is no dispute that the suspension sought by the prosecution is premised
upon the act charged allegedly committed during the accused [sic] previous term
as Barangay Chairman of Brgy. III-E. San Pablo City, who was subsequently re-
20
elected as Barangay Chairman again during the last Barangay Election of May 9,
1994. Certainly, had not the accused been re-elected the prosecution will not file
the instant motion to suspend him as there is no legal basis or the issue has
become academic.
The instant case run [sic] parallel with the case of Lizares vs. Hechanova, et al.,
L-22059, May 17, 1966, 17 SCRA 58, wherein the Supreme Court subscribed to
the rule denying the right to remove from office because of misconduct during a
prior term.
It is opined by the Court that preventive suspension is applicable only if there is
[sic] administrative case filed against a local official who is at the same time
criminally charged in Court. At present, the records of the Court shows [sic] that
there is no pending administrative case existing or filed against the accused.
It was held in the concluding paragraph of the decision by the Honorable
Supreme Court in Lizares v. Hechanova, et al., that Since petitioner, having been
duly re-elected, is no longer amenable to administrative sanctions for any acts
committed during his former tenure, the determination whether the respondent
validly acted in imposing upon him one months suspension for act [sic] done
during his previous term as mayor is now merely of theoretical interest.
Complainant then moved that respondent inhibit himself from Criminal Case No.
26240. In his order of 21 September 1995,13 respondent voluntarily inhibited
himself. The case was assigned to Judge Adelardo S. Escoses per order of
Executive Judge Bienvenido V. Reyes of the Regional Trial Court of San Pablo
City.
On 15 October 1996, complainant filed his sworn letter-complaint with the Office
of the Court Administrator.
In his comment dated 14 February 1997, filed in compliance with the resolution
of this Court of 27 January 1997, respondent asserted that he had been
continuously keeping abreast of legal and jurisprudential development [sic] in the
law since he passed the 1955 Bar Examinations; and that he issued the two
challenged orders only after due appreciation of prevailing jurisprudence on the
matter, citing authorities in support thereof. He thus prayed for dismissal of this
case, arguing that to warrant a finding of ignorance of law and abuse of authority,
the error must be so gross and patent as to produce an inference of ignorance or
bad faith or that the judge knowingly rendered an unjust decision.14 He
emphasized, likewise, that the error had to be so grave and on so fundamental a
point as to warrant condemnation of the judge as patently ignorant or negligent;15
otherwise, to hold a judge administratively accountable for every erroneous ruling
or decision he renders, assuming that he has erred, would be nothing short of
harassment and that would be intolerable.16cräläwvirtualibräry
Respondent further alleged that he earned complainants ire after denying the
latters Motion for the Suspension of Barangay Chairman Maghirang, which was
filed only after Maghirang was re-elected in 1994; and that complainant made
inconsistent claims, concretely, while in his letter of 4 September 1995
requesting respondent to inhibit from the case, complainant declared that he
believed in respondents integrity, competence and dignity, after he denied the
request, complainant branded respondent as a judge of poor caliber and
understanding of the law, very incompetent and has no place in Court of Justice.
Finally, respondent Judge avowed that he would not dare soil his judicial robe at
this time, for he had only three (3) years and nine (9) months more before
reaching the compulsory age of retirement of seventy (70); and that for the last
25 years as municipal judge in the seven (7) towns of Laguna and as presiding
judge of the MTCC, San Pablo City, he had maintained his integrity.
In compliance with the Courts resolution of 9 March 1998, the parties, by way of
separate letters, informed the Court that they agreed to have this case decided
on the basis of the pleadings already filed, with respondent explicitly specifying
that only the complaint and the comment thereon be considered.
The Office of the Court Administrator (OCA) recommends that this Court hold
respondent liable for ignorance of the law and that he be reprimanded with a
warning that a repetition of the same or similar acts in the future shall be dealt
with more severely. In support thereof, the OCA makes the following findings and
conclusions:
The claim of respondent Judge that a local official who is criminally charged can
be preventively suspended only if there is an administrative case filed against
him is without basis. Section 13 of RA 3019 (Anti-Graft and Corrupt Practices
Act) states that:
Suspension and loss of benefits Any incumbent public officer against whom any
criminal prosecution under a valid information under this Act or under Title 7,
Book II of the Revised Penal Code or for any offense involving fraud upon
government or public funds or property whether as a simple or as a complex
offense and in whatever stage of execution and mode of participation, is pending
in court, shall be suspended from office.
It is well settled that Section 13 of RA 3019 makes it mandatory for the
Sandiganbayan (or the Court) to suspend any public officer against whom a valid
information charging violation of this law, Book II, Title 7 of the RPC, or any
offense involving fraud upon government or public funds or property is filed in
court. The court trying a case has neither discretion nor duty to determine
whether preventive suspension is required to prevent the accused from using his
office to intimidate witnesses or frustrate his prosecution or continue committing
malfeasance in office. All that is required is for the court to make a finding that
the accused stands charged under a valid information for any of the above-
described crimes for the purpose of granting or denying the sought for
suspension. (Bolastig vs. Sandiganbayan, G.R. No. 110503 [August 4, 1994],
235 SCRA 103).
In the same case, the Court held that as applied to criminal prosecutions under
RA 3019, preventive suspension will last for less than ninety (90) days only if the
case is decided within that period; otherwise, it will continue for ninety (90) days.
Barangay Chairman Benjamin Maghirang was charged with Unlawful
Appointment, punishable under Article 244, Title 7, Book II of the Revised Penal
Code. Therefore, it was mandatory on Judge Monzons part, considering the
Motion filed, to order the suspension of Maghirang for a maximum period of
ninety (90) days. This, he failed and refused to do.
21
Judge Monzons contention denying complainants Motion for Suspension
because offenses committed during the previous term (is) not a cause for
removal during the present term is untenable. In the case of Rodolfo E.
Aguinaldo vs. Hon. Luis Santos and Melvin Vargas, 212 SCRA 768, the Court
held that the rule is that a public official cannot be removed for administrative
misconduct committed during a prior term since his re-election to office operates
as a condonation of the officers previous misconduct committed during a prior
term, to the extent of cutting off the right to remove him therefor. The foregoing
rule, however, finds no application to criminal cases x x x (Underscoring
supplied)
Likewise, it was specifically declared in the case of Ingco vs. Sanchez, G.R. No.
L-23220, 18 December 1967, 21 SCRA 1292, that The ruling, therefore, that
when the people have elected a man to office it must be assumed that they did
this with knowledge of his life and character and that they disregarded or forgave
his faults or misconduct if he had been guilty of any refers only to an action for
removal from office and does not apply to a criminal case. (Underscoring ours)
Clearly, even if the alleged unlawful appointment was committed during
Maghirangs first term as barangay chairman and the Motion for his suspension
was only filed in 1995 during his second term, his re-election is not a bar to his
suspension as the suspension sought for is in connection with a criminal case.
Respondents denial of complainants Motion for Reconsideration left the
complainant with no other judicial remedy. Since a case for Unlawful
Appointment is covered by Summary Procedure, complainant is prohibited from
filing a petition for certiorari, mandamus or prohibition involving an interlocutory
order issued by the court. Neither can he file an appeal from the courts adverse
final judgment, incorporating in his appeal the grounds assailing the interlocutory
orders, as this will put the accused in double jeopardy.
All things considered, while concededly, respondent Judge manifested his
ignorance of the law in denying complainants Motion for Suspension of Brgy.
Chairman Maghirang, there was nothing shown however to indicate that he
acted in bad faith or with malice. Be that as it may, it would also do well to note
that good faith and lack of malicious intent cannot completely free respondent
from liability.
This Court, in the case of Libarios and Dabalos, 199 SCRA 48, ruled:
In the absence of fraud, dishonesty or corruption, the acts of a judge done in his
judicial capacity are not subject to disciplinary action, even though such acts may
be erroneous. But, while judges should not be disciplined for inefficiency on
account merely of occasional mistakes or errors of judgment, yet, it is highly
imperative that they should be conversant with basic principles.
A judge owes it to the public and the administration of justice to know the law he
is supposed to apply to a given controversy. He is called upon to exhibit more
than a cursory acquaintance with the statutes and procedural rules. There will be
faith in the administration of justice only if there be a belief on the part of litigants
that the occupants of the bench cannot justly be accused of a deficiency in their
grasp of legal principles.
The findings and conclusions of the Office of the Court Administrator are in order.
However, the penalty recommended, i.e., reprimand, is too light, in view of the
fact that despite his claim that he has been continuously keeping abreast of legal
and jurisprudential development [sic] in law ever since he passed the Bar
Examinations in 1995, respondent, wittingly or otherwise, failed to recall that as
early as 18 December 1967 in Ingco v. Sanchez,17 this Court explicitly ruled that
the re-election of a public official extinguishes only the administrative, but not the
criminal, liability incurred by him during his previous term of office, thus:
The ruling, therefore, that -- when the people have elected a man to his office it
must be assumed that they did this with knowledge of his life and character and
that they disregarded or forgave his faults or misconduct if he had been guilty of
any -- refers only to an action for removal from office and does not apply to a
criminal case, because a crime is a public wrong more atrocious in character
than mere misfeasance or malfeasance committed by a public officer in the
discharge of his duties, and is injurious not only to a person or group of persons
but to the State as a whole. This must be the reason why Article 89 of the
Revised Penal Code, which enumerates the grounds for extinction of criminal
liability, does not include reelection to office as one of them, at least insofar as a
public officer is concerned. Also, under the Constitution, it is only the President
who may grant the pardon of a criminal offense.
In Ingco, this Court did not yield to petitioners insistence that he was benefited by
the ruling in Pascual v. Provincial Board of Nueva Ecija18 that a public officer
should never be removed for acts done prior to his present term of office, as
follows:
There is a whale of a difference between the two cases. The basis of the
investigation which has been commenced here, and which is sought to be
restrained, is a criminal accusation the object of which is to cause the indictment
and punishment of petitioner-appellant as a private citizen; whereas in the cases
cited, the subject of the investigation was an administrative charge against the
officers therein involved and its object was merely to cause his suspension or
removal from public office. While the criminal cases involves the character of the
mayor as a private citizen and the People of the Philippines as a community is a
party to the case, an administrative case involves only his actuations as a public
officer as [they] affect the populace of the municipality where he serves.
19cräläwvirtualibräry
Then on 20 June 1969, in Luciano v. The Provincial Governor, et al.,20 this Court
likewise categorically declared that criminal liabilities incurred by an elective
public official during his previous term of office were not extinguished by his re-
election, and that Pascual v. Provincial Governor and Lizares v. Hechanova
referred only to administrative liabilities committed during the previous term of an
elective official, thus:
1. The first problem we are to grapple with is the legal effect of the reelection of
respondent municipal officials. Said respondents would want to impress upon us
the fact that in the last general elections of November 14,1967 the Makati
electorate reelected all of them, except that Vice-Mayor Teotimo Gealogo, a
councilor prior thereto, was elevated to vice-mayor. These respondents contend
22
that their reelection erected a bar to their removal from office for misconduct
committed prior to November 14, 1967. It is to be recalled that the acts averred in
the criminal information in Criminal Case 18821 and for which they were
convicted allegedly occurred on or about July 26, 1967, or prior to the 1967
elections. They ground their position on Pascual vs. Provincial Board of Nueva
Ecija, 106 Phil. 466, and Lizares vs. Hechanova, 17 SCRA 58.
A circumspect view leaves us unconvinced of the soundness of respondents'
position. The two cases relied upon have laid down the precept that a reelected
public officer is no longer amenable to administrative sanctions for acts
committed during his former tenure. But the present case rests on an entirely
different factual and legal setting. We are not here confronted with administrative
charges to which the two cited cases refer. Here involved is a criminal
prosecution under a special statute, the Anti-Graft and Corrupt Practices Act
(Republic Act 3019).
Then again, on 30 May 1974, in Oliveros v. Villaluz,21 this Court held:
I can be deemed to apply only to his administrative and not to his criminal guilt. As
The first question presented for determination is whether a criminal offense for
violation of Republic Act 3019 committed by an elective officer during one term
may be the basis of his suspension in a subsequent term in the event of his
reelection to office.
Petitioner concedes that "the power and authority of respondent judge to
continue trying the criminal case against petitioner may not in any way be
affected by the fact of petitioner's reelection," but contends that "said
respondent's power to preventively suspend petitioner under section 13 of
Republic Act 3019 became inefficacious upon petitioner's reelection" arguing that
the power of the courts cannot be placed over that of sovereign and supreme
people who ordained his return to office.
Petitioner's reliance on the loose language used in Pascual vs. Provincial Board
of Nueva Ecija that "each term is separate from other terms and that the
reelection to office operates as a condonation of the officer's previous
misconduct to the extent of cutting off the right to remove him therefor" is
misplaced.
The Court has in subsequent cases made it clear that the Pascual ruling (which
dealt with administrative liability) applies exclusively to administrative and not to
criminal liability and sanctions. Thus, in Ingco vs. Sanchez the Court ruled that
the reelection of a public officer for a new term does not in any manner wipe out
the criminal liability incurred by him in a previous term.
In Luciano vs. Provincial Governor the Court stressed that the cases of Pascual
and Lizares are authority for the precept that "a reelected public officer is no
longer amenable to administrative sanctions for acts committed during his former
tenure" but that as to criminal prosecutions, particularly, for violations of the Anti-
Graft and Corrupt Practices Act, as in the case at bar, the same are not barred by
reelection of the public officer, since, inter alia, one of the penalties attached to
the offense is perpetual disqualification from public office and it "is patently
offensive to the objectives and the letter of the Anti-Graft and Corrupt Practice
Act . . . that an official may amass wealth thru graft and corrupt practices and
thereafter use the same to purchase reelection and thereby launder his evil
acts."
Punishment for a crime is a vindication for an offense against the State and the
body politic. The small segment of the national electorate that constitutes the
electorate of the municipality of Antipolo has no power to condone a crime
against the public justice of the State and the entire body politic. Reelection to
public office is not provided for in Article 89 of the Revised Penal Code as a
mode of extinguishing criminal liability incurred by a public officer prior to his
reelection. On the contrary, Article 9 of the Anti-Graft Act imposes as one of the
penalties in case of conviction perpetual disqualification from public office and
Article 30 of the Revised Penal Code declares that such penalty of perpetual
disqualification entails "the deprivation of the public offices and employments
which the offender may have held, even if conferred by popular election."
It is manifest then, that such condonation of an officer's fault or misconduct
during a previous expired term by virtue of his reelection to office for a new term
succinctly stated in then Solicitor General (now Associate Justice) Felix Q.
Antonio's memorandum for the State, "to hold that petitioner's reelection erased
his criminal liability would in effect transfer the determination of the criminal
culpability of an erring official from the court to which it was lodged by law into
the changing and transient whim and caprice of the electorate. This cannot be
so, for while his constituents may condone the misdeed of a corrupt official by
returning him back to office, a criminal action initiated against the latter can only
be heard and tried by a court of justice, his nefarious act having been committed
against the very State whose laws he had sworn to faithfully obey and uphold. A
contrary rule would erode the very system upon which our government is based,
which is one of laws and not of men."
Finally, on 21 August 1992, in Aguinaldo v. Santos,22 this Court stated:
Clearly then, the rule is that a public official cannot be removed from
administrative misconduct committed during a prior term, since his re-election to
office operates as a condonation of the officers previous misconduct to the extent
of cutting off the right to remove him therefor. The foregoing rule, however, finds
no application to criminal cases pending against petitioner for acts he may have
committed during the failed coup.
Thus far, no ruling to the contrary has even rippled the doctrine enunciated in the
above-mentioned cases. If respondent has truly been continuously keeping
abreast of legal and jurisprudential development [sic] in the law, it was impossible
for him to have missed or misread these cases. What detracts from his claim of
assiduity is the fact that he even cited the cases of Oliveros v. Villaluz and
Aguinaldo v. Santos in support of his 30 June 1995 order. What is then evident is
that respondent either did not thoroughly read these cases or that he simply
miscomprehended them. The latter, of course, would only manifest either
incompetence, since both cases were written in plain and simple language
thereby foreclosing any possibility of misunderstanding or confusion; or
deliberate disregard of a long settled doctrine pronounced by this Court.
23
While diligence in keeping up-to-date with the decisions of this Court is a
commendable virtue of judges -- and, of course, members of the Bar --
comprehending the decisions is a different matter, for it is in that area where
ones competence may then be put to the test and proven. Thus, it has been said
that a judge is called upon to exhibit more than just a cursory acquaintance with
statutes and procedural rules; it is imperative that he be conversant with basic
legal principles and aware of well-settled and authoritative doctrines.23 He should
strive for excellence, exceeded only by his passion for truth, to the end that he
be the personification of justice and the Rule of Law.24cräläwvirtualibräry
Needless to state, respondent was, in this instance, wanting in the desired level
of mastery of a revered doctrine on a simple issue.
On the other hand, if respondent judge deliberately disregarded the doctrine laid
down in Ingco v. Sanchez and reiterated in the succeeding cases of Luciano v.
Provincial Governor, Oliveros v. Villaluz and Aguinaldo v. Santos, it may then be
said that he simply wished to enjoy the privilege of overruling this Courts
doctrinal pronouncements. On this point, and as a reminder to all judges, it is
apropos to quote what this Court said sixty-one years ago in People v. Vera:
25cräläwvirtualibräry
As already observed by this Court in Shioji vs. Harvey [1922], 43 Phil., 333, 337),
and reiterated in subsequent cases if each and every Court of First Instance
could enjoy the privilege of overruling decisions of the Supreme Court, there
would be no end to litigation, and judicial chaos would result. A becoming
modesty of inferior courts demands conscious realization of the position that they
occupy in the interrelation and operation of the integrated judicial system of the
nation.
Likewise, in Luzon Stevedoring Corp. v. Court of Appeals:26cräläwvirtualibräry
The spirit and initiative and independence on the part of men of the robe may at
times be commendable, but certainly not when this Court, not once but at least
four times, had indicated what the rule should be. We had spoken clearly and
unequivocally. There was no ambiguity in what we said. Our meaning was clear
and unmistakable. We did take pains to explain why it must be thus. We were
within our power in doing so. It would not be too much to expect, then, that
tribunals in the lower rungs of the judiciary would at the very least, take notice
and yield deference. Justice Laurel had indicated in terms too clear for
misinterpretation what is expected of them. Thus: A becoming modesty of inferior
court[s] demands conscious realization of the position that they occupy in the
interrelation and operation of the integrated judicial system of the nation.27 In the
constitutional sense, respondent Court is not excluded from such a category. The
grave abuse of discretion is thus manifest.
In Caram Resources Corp. v. Contreras,28 this Court affirmed that by tradition
and in our system of judicial administration, this Court has the last word on what
the law is, and that its decisions applying or interpreting the Constitution and
laws form part of this countrys legal system.29 All other courts should then be
guided by the decisions of this Court. To judges who find it difficult to do so, Vivo
v. Cloribel30 warned:
Now, if a Judge of a lower Court feels, in the fulfillment of his mission of deciding
cases, that the application of a doctrine promulgated by this Superiority is against
his way of reasoning, or against his conscience, he may state his opinion on the
matter, but rather than disposing of the case in accordance with his personal
views he must first think that it is his duty to apply the law as interpreted by the
Highest Court of the Land, and that any deviation from the principle laid down by
the latter would unavoidably cause, as a sequel, unnecessary inconveniences,
delays and expenses to the litigants. And if despite of what is here said, a Judge,
still believes that he cannot follow Our rulings, then he has no other alternative
than to place himself in the position that he could properly avoid the duty of
having to render judgment on the case concerned (Art. 9, C.C.), and he has only
one legal way to do that.
Finally, the last sentence of Canon 18 of the Canons of Judicial Ethics directs a
judge to administer his office with due regard to the integrity of the system of the
law itself, remembering that he is not a depository of arbitrary power, but a judge
under the sanction of law.
That having been said, we cannot but conclude that the recommended penalty of
reprimand is not commensurate with the misdeed committed. A fine of
P5,000.00, with a warning that a commission of similar acts in the future shall be
dealt with more severely is, at the very least, appropriate, considering
respondent is due for compulsory retirement on 29 November 2000 and that this
is his first offense.
WHEREFORE, for incompetence as a result of ignorance of a settled doctrine
interpreting a law, or deliberate disregard of such doctrine in violation of Canon
18 of the Canons of Judicial Ethics, respondent Judge Iluminado C. Monzon is
hereby FINED in the amount of Five Thousand Pesos (P5,000.00) and warned
that the commission of similar acts in the future shall be dealt with more severely.
SO ORDERED.
Bellosillo, Vitug, Panganiban, and Quisumbing, JJ., concur.
EN BANC
A.M. No. 133-J May 31, 1982
BERNARDITA R. MACARIOLA, complainant,
vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of
Leyte, respondent.
MAKASIAR, J:
In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged
respondent Judge Elias B. Asuncion of the Court of First Instance of Leyte, now
Associate Justice of the Court of Appeals, with "acts unbecoming a judge."
The factual setting of the case is stated in the report dated May 27, 1971 of then
Associate Justice Cecilia Muñoz Palma of the Court of Appeals now retired
24
Associate Justice of the Supreme Court, to whom this case was referred on
October 28, 1968 for investigation, thus:
Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for
partition filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto
Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs, against Bernardita R.
Macariola, defendant, concerning the properties left by the deceased Francisco
Reyes, the common father of the plaintiff and defendant.
In her defenses to the complaint for partition, Mrs. Macariola alleged among
other things that; a) plaintiff Sinforosa R. Bales was not a daughter of the
deceased Francisco Reyes; b) the only legal heirs of the deceased were
defendant Macariola, she being the only offspring of the first marriage of
Francisco Reyes with Felisa Espiras, and the remaining plaintiffs who were the
children of the deceased by his second marriage with Irene Ondez; c) the
properties left by the deceased were all the conjugal properties of the latter and
his first wife, Felisa Espiras, and no properties were acquired by the deceased
during his second marriage; d) if there was any partition to be made, those
conjugal properties should first be partitioned into two parts, and one part is to be
adjudicated solely to defendant it being the share of the latter's deceased
mother, Felisa Espiras, and the other half which is the share of the deceased
Francisco Reyes was to be divided equally among his children by his two
marriages.
On June 8, 1963, a decision was rendered by respondent Judge Asuncion in
Civil Case 3010, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a
preponderance of evidence, finds and so holds, and hereby renders judgment (1)
Declaring the plaintiffs Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes,
Adela Reyes and Priscilla Reyes as the only children legitimated by the
subsequent marriage of Francisco Reyes Diaz to Irene Ondez; (2) Declaring the
plaintiff Sinforosa R. Bales to have been an illegitimate child of Francisco Reyes
Diaz; (3) Declaring Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and 1/4
of Lot 1145 as belonging to the conjugal partnership of the spouses Francisco
Reyes Diaz and Felisa Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No.
3416 as belonging to the spouses Francisco Reyes Diaz and Irene Ondez in
common partnership; (5) Declaring that 1/2 of Lot No. 1184 as belonging
exclusively to the deceased Francisco Reyes Diaz; (6) Declaring the defendant
Bernardita R. Macariola, being the only legal and forced heir of her mother Felisa
Espiras, as the exclusive owner of one-half of each of Lots Nos. 4474, 4475,
4892, 5265, 4803, 4581, 4506; and the remaining one-half (1/2) of each of said
Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and one-half (1/2) of one-
fourth (1/4) of Lot No. 1154 as belonging to the estate of Francisco Reyes Diaz;
(7) Declaring Irene Ondez to be the exclusive owner of one-half (1/2) of Lot No.
2304 and one-half (1/2) of one-fourth (1/4) of Lot No. 3416; the remaining one-
half (1/2) of Lot 2304 and the remaining one-half (1/2) of one-fourth (1/4) of Lot
No. 3416 as belonging to the estate of Francisco Reyes Diaz; (8) Directing the
division or partition of the estate of Francisco Reyes Diaz in such a manner as to
give or grant to Irene Ondez, as surviving widow of Francisco Reyes Diaz, a
hereditary share of. one-twelfth (1/12) of the whole estate of Francisco Reyes
Diaz (Art. 996 in relation to Art. 892, par 2, New Civil Code), and the remaining
portion of the estate to be divided among the plaintiffs Sinforosa R. Bales, Luz R.
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, Priscilla Reyes and
defendant Bernardita R. Macariola, in such a way that the extent of the total
share of plaintiff Sinforosa R. Bales in the hereditary estate shall not exceed the
equivalent of two-fifth (2/5) of the total share of any or each of the other plaintiffs
and the defendant (Art. 983, New Civil Code), each of the latter to receive equal
shares from the hereditary estate, (Ramirez vs. Bautista, 14 Phil. 528; Diancin
vs. Bishop of Jaro, O.G. [3rd Ed.] p. 33); (9) Directing the parties, within thirty
days after this judgment shall have become final to submit to this court, for
approval a project of partition of the hereditary estate in the proportion above
indicated, and in such manner as the parties may, by agreement, deemed
convenient and equitable to them taking into consideration the location, kind,
quality, nature and value of the properties involved; (10) Directing the plaintiff
Sinforosa R. Bales and defendant Bernardita R. Macariola to pay the costs of
this suit, in the proportion of one-third (1/3) by the first named and two-thirds
(2/3) by the second named; and (I 1) Dismissing all other claims of the parties
[pp 27-29 of Exh. C].
The decision in civil case 3010 became final for lack of an appeal, and on
October 16, 1963, a project of partition was submitted to Judge Asuncion which
is marked Exh. A. Notwithstanding the fact that the project of partition was not
signed by the parties themselves but only by the respective counsel of plaintiffs
and defendant, Judge Asuncion approved it in his Order dated October 23, 1963,
which for convenience is quoted hereunder in full:
The parties, through their respective counsels, presented to this Court for
approval the following project of partition:
COMES NOW, the plaintiffs and the defendant in the above-entitled case, to this
Honorable Court respectfully submit the following Project of Partition:
l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively to
Bernardita Reyes Macariola;
2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along the
eastern part of the lot shall be awarded likewise to Bernardita R. Macariola;
3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes Bales;
4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along the
western part of the lot shall likewise be awarded to Sinforosa Reyes-Bales;
5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in
equal shares;
6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the
portions awarded under item (2) and (4) above shall be awarded to Luz Reyes
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in
equal shares, provided, however that the remaining portion of Lot No. 3416 shall
belong exclusively to Priscilla Reyes.
25
WHEREFORE, it is respectfully prayed that the Project of Partition indicated
above which is made in accordance with the decision of the Honorable Court be
approved.
Tacloban City, October 16, 1963.
(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City
(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City
While the Court thought it more desirable for all the parties to have signed this
Project of Partition, nevertheless, upon assurance of both counsels of the
respective parties to this Court that the Project of Partition, as above- quoted,
had been made after a conference and agreement of the plaintiffs and the
defendant approving the above Project of Partition, and that both lawyers had
represented to the Court that they are given full authority to sign by themselves
the Project of Partition, the Court, therefore, finding the above-quoted Project of
Partition to be in accordance with law, hereby approves the same. The parties,
therefore, are directed to execute such papers, documents or instrument
sufficient in form and substance for the vesting of the rights, interests and
participations which were adjudicated to the respective parties, as outlined in the
Project of Partition and the delivery of the respective properties adjudicated to
each one in view of said Project of Partition, and to perform such other acts as
are legal and necessary to effectuate the said Project of Partition.
SO ORDERED.
Given in Tacloban City, this 23rd day of October, 1963.
(SGD) ELIAS B. ASUNCION Judge
EXH. B.
The above Order of October 23, 1963, was amended on November 11, 1963,
only for the purpose of giving authority to the Register of Deeds of the Province
of Leyte to issue the corresponding transfer certificates of title to the respective
adjudicatees in conformity with the project of partition (see Exh. U).
One of the properties mentioned in the project of partition was Lot 1184 or rather
one-half thereof with an area of 15,162.5 sq. meters. This lot, which according to
the decision was the exclusive property of the deceased Francisco Reyes, was
adjudicated in said project of partition to the plaintiffs Luz, Anacorita Ruperto,
Adela, and Priscilla all surnamed Reyes in equal shares, and when the project of
partition was approved by the trial court the adjudicatees caused Lot 1184 to be
subdivided into five lots denominated as Lot 1184-A to 1184-E inclusive (Exh. V).
Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge
Asuncion's court (Exhs. F, F-1 and V-1), while Lot 1184-E which had an area of
2,172.5556 sq. meters was sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2)
who was issued transfer certificate of title No. 2338 of the Register of Deeds of
the city of Tacloban (Exh. 12).
On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E
with an area of around 1,306 sq. meters to Judge Asuncion and his wife, Victoria
S. Asuncion (Exh. 11), which particular portion was declared by the latter for
taxation purposes (Exh. F).
On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their
respective shares and interest in Lot 1184-E to "The Traders Manufacturing and
Fishing Industries Inc." (Exit 15 & 16). At the time of said sale the stockholders of
the corporation were Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime
Arigpa Tan, Judge Asuncion, and the latter's wife, Victoria S. Asuncion, with
Judge Asuncion as the President and Mrs. Asuncion as the secretary (Exhs. E-4
to E-7). The Articles of Incorporation of "The Traders Manufacturing and Fishing
Industries, Inc." which we shall henceforth refer to as "TRADERS" were
registered with the Securities and Exchange Commission only on January 9,
1967 (Exh. E) [pp. 378-385, rec.].
Complainant Bernardita R. Macariola filed on August 9, 1968 the instant
complaint dated August 6, 1968 alleging four causes of action, to wit: [1] that
respondent Judge Asuncion violated Article 1491, paragraph 5, of the New Civil
Code in acquiring by purchase a portion of Lot No. 1184-E which was one of
those properties involved in Civil Case No. 3010 decided by him; [2] that he
likewise violated Article 14, paragraphs I and 5 of the Code of Commerce,
Section 3, paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and
Corrupt Practices Act, Section 12, Rule XVIII of the Civil Service Rules, and
Canon 25 of the Canons of Judicial Ethics, by associating himself with the
Traders Manufacturing and Fishing Industries, Inc., as a stockholder and a
ranking officer while he was a judge of the Court of First Instance of Leyte; [3]
that respondent was guilty of coddling an impostor and acted in disregard of
judicial decorum by closely fraternizing with a certain Dominador Arigpa Tan who
openly and publicly advertised himself as a practising attorney when in truth and
in fact his name does not appear in the Rolls of Attorneys and is not a member of
the Philippine Bar; and [4] that there was a culpable defiance of the law and utter
disregard for ethics by respondent Judge (pp. 1-7, rec.).
Respondent Judge Asuncion filed on September 24, 1968 his answer to which a
reply was filed on October 16, 1968 by herein complainant. In Our resolution of
October 28, 1968, We referred this case to then Justice Cecilia Muñoz Palma of
the Court of Appeals, for investigation, report and recommendation. After
hearing, the said Investigating Justice submitted her report dated May 27, 1971
recommending that respondent Judge should be reprimanded or warned in
connection with the first cause of action alleged in the complaint, and for the
second cause of action, respondent should be warned in case of a finding that
he is prohibited under the law to engage in business. On the third and fourth
causes of action, Justice Palma recommended that respondent Judge be
exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477,
rec.), complainant herein instituted an action before the Court of First Instance of
Leyte, entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et
al., defendants," which was docketed as Civil Case No. 4235, seeking the
annulment of the project of partition made pursuant to the decision in Civil Case
No. 3010 and the two orders issued by respondent Judge approving the same,
as well as the partition of the estate and the subsequent conveyances with
damages. It appears, however, that some defendants were dropped from the civil
case. For one, the case against Dr. Arcadio Galapon was dismissed because he
was no longer a real party in interest when Civil Case No. 4234 was filed, having
26
already conveyed on March 6, 1965 a portion of lot 1184-E to respondent Judge
and on August 31, 1966 the remainder was sold to the Traders Manufacturing
and Fishing Industries, Inc. Similarly, the case against defendant Victoria
Asuncion was dismissed on the ground that she was no longer a real party in
interest at the time the aforesaid Civil Case No. 4234 was filed as the portion of
Lot 1184 acquired by her and respondent Judge from Dr. Arcadio Galapon was
already sold on August 31, 1966 to the Traders Manufacturing and Fishing
industries, Inc. Likewise, the cases against defendants Serafin P. Ramento,
Catalina Cabus, Ben Barraza Go, Jesus Perez, Traders Manufacturing and
Fishing Industries, Inc., Alfredo R. Celestial and Pilar P. Celestial, Leopoldo
Petilla and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty.
Zotico A. Tolete were dismissed with the conformity of complainant herein,
plaintiff therein, and her counsel.
On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance
of Leyte, who was directed and authorized on June 2, 1969 by the then
Secretary (now Minister) of Justice and now Minister of National Defense Juan
Ponce Enrile to hear and decide Civil Case No. 4234, rendered a decision, the
dispositive portion of which reads as follows:
A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION
(1) declaring that only Branch IV of the Court of First Instance of Leyte has
jurisdiction to take cognizance of the issue of the legality and validity of the
Project of Partition [Exhibit "B"] and the two Orders [Exhibits "C" and "C- 3"]
approving the partition;
(2) dismissing the complaint against Judge Elias B. Asuncion;
(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge
Elias B. Asuncion,
(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for moral
damages;
(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for
exemplary damages;
(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal damages;
and
(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.
B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR
HERSELF AND FOR THE HEIRS OF THE DECEASED GERARDO VILLASIN
— respondent's order dated October 23, 1963 and the amended order dated
(1) Dismissing the complaint against the defendants Mariquita Villasin and the
heirs of the deceased Gerardo Villasin;
(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of
Gerardo Villasin the cost of the suit.
C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES, ET AL.,
WHO WERE PLAINTIFFS IN CIVIL CASE NO. 3010 —
(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R.
Herrer, Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng and Ruperto O.
Reyes.
D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO —
(1) Dismissing the complaint against Bonifacio Ramo;
(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the
suit.
SO ORDERED [pp. 531-533, rec.]
It is further disclosed by the record that the aforesaid decision was elevated to
the Court of Appeals upon perfection of the appeal on February 22, 1971.
I
WE find that there is no merit in the contention of complainant Bernardita R.
Macariola, under her first cause of action, that respondent Judge Elias B.
Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring
by purchase a portion of Lot No. 1184-E which was one of those properties
involved in Civil Case No. 3010. 'That Article provides:
Article 1491. The following persons cannot acquire by purchase, even at a public
or judicial action, either in person or through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts,
and other officers and employees connected with the administration of justice,
the property and rights in litigation or levied upon an execution before the court
within whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession [emphasis
supplied].
The prohibition in the aforesaid Article applies only to the sale or assignment of
the property which is the subject of litigation to the persons disqualified therein.
WE have already ruled that "... for the prohibition to operate, the sale or
assignment of the property must take place during the pendency of the litigation
involving the property" (The Director of Lands vs. Ababa et al., 88 SCRA 513,
519 [1979], Rosario vda. de Laig vs. Court of Appeals, 86 SCRA 641, 646
[1978]).
In the case at bar, when the respondent Judge purchased on March 6, 1965 a
portion of Lot 1184-E, the decision in Civil Case No. 3010 which he rendered on
June 8, 1963 was already final because none of the parties therein filed an
appeal within the reglementary period; hence, the lot in question was no longer
subject of the litigation. Moreover, at the time of the sale on March 6, 1965,
November 11, 1963 approving the October 16, 1963 project of partition made
pursuant to the June 8, 1963 decision, had long become final for there was no
appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965
directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon
who earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs,
namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of
the decision in Civil Case No. 3010. It may be recalled that Lot 1184 or more
specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes,
Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project
27
of partition, and the same was subdivided into five lots denominated as Lot 1184-
A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr.
Galapon for which he was issued TCT No. 2338 by the Register of Deeds of
Tacloban City, and on March 6, 1965 he sold a portion of said lot to respondent
Judge and his wife who declared the same for taxation purposes only. The
subsequent sale on August 31, 1966 by spouses Asuncion and spouses
Galapon of their respective shares and interest in said Lot 1184-E to the Traders
Manufacturing and Fishing Industries, Inc., in which respondent was the
president and his wife was the secretary, took place long after the finality of the
decision in Civil Case No. 3010 and of the subsequent two aforesaid orders
therein approving the project of partition.
While it appears that complainant herein filed on or about November 9 or 11,
1968 an action before the Court of First Instance of Leyte docketed as Civil Case
No. 4234, seeking to annul the project of partition and the two orders approving
the same, as well as the partition of the estate and the subsequent conveyances,
the same, however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a portion
of Lot 1184-E from Dr. Arcadio Galapon; hence, after the finality of the decision
which he rendered on June 8, 1963 in Civil Case No. 3010 and his two
questioned orders dated October 23, 1963 and November 11, 1963. Therefore,
the property was no longer subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no
longer alter, change or affect the aforesaid facts — that the questioned sale to
respondent Judge, now Court of Appeals Justice, was effected and
consummated long after the finality of the aforesaid decision or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having
taken place over one year after the finality of the decision in Civil Case No. 3010
as well as the two orders approving the project of partition, and not during the
pendency of the litigation, there was no violation of paragraph 5, Article 1491 of
the New Civil Code.
It is also argued by complainant herein that the sale on July 31, 1964 of Lot
1184-E to Dr. Arcadio Galapon by Priscilla Reyes, Adela Reyes and Luz R.
Bakunawa was only a mere scheme to conceal the illegal and unethical transfer
of said lot to respondent Judge as a consideration for the approval of the project
of partition. In this connection, We agree with the findings of the Investigating
Justice thus:
And so we are now confronted with this all-important question whether or not the
acquisition by respondent of a portion of Lot 1184-E and the subsequent transfer
of the whole lot to "TRADERS" of which respondent was the President and his
wife the Secretary, was intimately related to the Order of respondent approving
the project of partition, Exh. A.
Respondent vehemently denies any interest or participation in the transactions
between the Reyeses and the Galapons concerning Lot 1184-E, and he insists
that there is no evidence whatsoever to show that Dr. Galapon had acted, in the
purchase of Lot 1184-E, in mediation for him and his wife. (See p. 14 of
Respondent's Memorandum).
xxx xxx xxx
On this point, I agree with respondent that there is no evidence in the record
showing that Dr. Arcadio Galapon acted as a mere "dummy" of respondent in
acquiring Lot 1184-E from the Reyeses. Dr. Galapon appeared to this
investigator as a respectable citizen, credible and sincere, and I believe him
when he testified that he bought Lot 1184-E in good faith and for valuable
consideration from the Reyeses without any intervention of, or previous
understanding with Judge Asuncion (pp. 391- 394, rec.).
On the contention of complainant herein that respondent Judge acted illegally in
approving the project of partition although it was not signed by the parties, We
quote with approval the findings of the Investigating Justice, as follows:
1. I agree with complainant that respondent should have required the signature
of the parties more particularly that of Mrs. Macariola on the project of partition
submitted to him for approval; however, whatever error was committed by
respondent in that respect was done in good faith as according to Judge
Asuncion he was assured by Atty. Bonifacio Ramo, the counsel of record of Mrs.
Macariola, That he was authorized by his client to submit said project of partition,
(See Exh. B and tsn p. 24, January 20, 1969). While it is true that such written
authority if there was any, was not presented by respondent in evidence, nor did
Atty. Ramo appear to corroborate the statement of respondent, his affidavit being
the only one that was presented as respondent's Exh. 10, certain actuations of
Mrs. Macariola lead this investigator to believe that she knew the contents of the
project of partition, Exh. A, and that she gave her conformity thereto. I refer to the
following documents:
1) Exh. 9 — Certified true copy of OCT No. 19520 covering Lot 1154 of the
Tacloban Cadastral Survey in which the deceased Francisco Reyes holds a "1/4
share" (Exh. 9-a). On tills certificate of title the Order dated November 11, 1963,
(Exh. U) approving the project of partition was duly entered and registered on
November 26, 1963 (Exh. 9-D);
2) Exh. 7 — Certified copy of a deed of absolute sale executed by Bernardita
Reyes Macariola on October 22, 1963, conveying to Dr. Hector Decena the one-
fourth share of the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the
vendee stated that she was the absolute owner of said one-fourth share, the
same having been adjudicated to her as her share in the estate of her father
Francisco Reyes Diaz as per decision of the Court of First Instance of Leyte
under case No. 3010 (Exh. 7-A). The deed of sale was duly registered and
annotated at the back of OCT 19520 on December 3, 1963 (see Exh. 9-e).
In connection with the abovementioned documents it is to be noted that in the
project of partition dated October 16, 1963, which was approved by respondent
on October 23, 1963, followed by an amending Order on November 11, 1963, Lot
1154 or rather 1/4 thereof was adjudicated to Mrs. Macariola. It is this 1/4 share
in Lot 1154 which complainant sold to Dr. Decena on October 22, 1963, several
days after the preparation of the project of partition.
Counsel for complainant stresses the view, however, that the latter sold her one-
fourth share in Lot 1154 by virtue of the decision in Civil Case 3010 and not
because of the project of partition, Exh. A. Such contention is absurd because
28
from the decision, Exh. C, it is clear that one-half of one- fourth of Lot 1154
belonged to the estate of Francisco Reyes Diaz while the other half of said one-
fourth was the share of complainant's mother, Felisa Espiras; in other words, the
decision did not adjudicate the whole of the one-fourth of Lot 1154 to the herein
complainant (see Exhs. C-3 & C-4). Complainant became the owner of the entire
one-fourth of Lot 1154 only by means of the project of partition, Exh. A.
Therefore, if Mrs. Macariola sold Lot 1154 on October 22, 1963, it was for no
other reason than that she was wen aware of the distribution of the properties of
her deceased father as per Exhs. A and B. It is also significant at this point to
state that Mrs. Macariola admitted during the cross-examination that she went to
Tacloban City in connection with the sale of Lot 1154 to Dr. Decena (tsn p. 92,
November 28, 1968) from which we can deduce that she could not have been
kept ignorant of the proceedings in civil case 3010 relative to the project of
partition.
Complainant also assails the project of partition because according to her the
properties adjudicated to her were insignificant lots and the least valuable.
Complainant, however, did not present any direct and positive evidence to prove
the alleged gross inequalities in the choice and distribution of the real properties
when she could have easily done so by presenting evidence on the area,
location, kind, the assessed and market value of said properties. Without such
evidence there is nothing in the record to show that there were inequalities in the
distribution of the properties of complainant's father (pp. 386389, rec.).
Finally, while it is. true that respondent Judge did not violate paragraph 5, Article
1491 of the New Civil Code in acquiring by purchase a portion of Lot 1184-E
which was in litigation in his court, it was, however, improper for him to have
acquired the same. He should be reminded of Canon 3 of the Canons of Judicial
Ethics which requires that: "A judge's official conduct should be free from the
appearance of impropriety, and his personal behavior, not only upon the bench
and in the performance of judicial duties, but also in his everyday life, should be
beyond reproach." And as aptly observed by the Investigating Justice: "... it was
unwise and indiscreet on the part of respondent to have purchased or acquired a
portion of a piece of property that was or had been in litigation in his court and
caused it to be transferred to a corporation of which he and his wife were ranking
officers at the time of such transfer. One who occupies an exalted position in the
judiciary has the duty and responsibility of maintaining the faith and trust of the
citizenry in the courts of justice, so that not only must he be truly honest and just,
but his actuations must be such as not give cause for doubt and mistrust in the
uprightness of his administration of justice. In this particular case of respondent,
he cannot deny that the transactions over Lot 1184-E are damaging and render
his actuations open to suspicion and distrust. Even if respondent honestly
believed that Lot 1184-E was no longer in litigation in his court and that he was
purchasing it from a third person and not from the parties to the litigation, he
should nonetheless have refrained from buying it for himself and transferring it to
a corporation in which he and his wife were financially involved, to avoid possible
suspicion that his acquisition was related in one way or another to his official
actuations in civil case 3010. The conduct of respondent gave cause for the
litigants in civil case 3010, the lawyers practising in his court, and the public in
general to doubt the honesty and fairness of his actuations and the integrity of
our courts of justice" (pp. 395396, rec.).
II
With respect to the second cause of action, the complainant alleged that
respondent Judge violated paragraphs 1 and 5, Article 14 of the Code of
Commerce when he associated himself with the Traders Manufacturing and
Fishing Industries, Inc. as a stockholder and a ranking officer, said corporation
having been organized to engage in business. Said Article provides that:
Article 14 — The following cannot engage in commerce, either in person or by
proxy, nor can they hold any office or have any direct, administrative, or financial
intervention in commercial or industrial companies within the limits of the
districts, provinces, or towns in which they discharge their duties:
1. Justices of the Supreme Court, judges and officials of the department of public
prosecution in active service. This provision shall not be applicable to mayors,
municipal judges, and municipal prosecuting attorneys nor to those who by
chance are temporarily discharging the functions of judge or prosecuting
attorney.
xxx xxx xxx
5. Those who by virtue of laws or special provisions may not engage in
commerce in a determinate territory.
It is Our considered view that although the aforestated provision is incorporated
in the Code of Commerce which is part of the commercial laws of the Philippines,
it, however, partakes of the nature of a political law as it regulates the
relationship between the government and certain public officers and employees,
like justices and judges.
Political Law has been defined as that branch of public law which deals with the
organization and operation of the governmental organs of the State and define
the relations of the state with the inhabitants of its territory (People vs. Perfecto,
43 Phil. 887, 897 [1922]). It may be recalled that political law embraces
constitutional law, law of public corporations, administrative law including the law
on public officers and elections. Specifically, Article 14 of the Code of Commerce
partakes more of the nature of an administrative law because it regulates the
conduct of certain public officers and employees with respect to engaging in
business: hence, political in essence.
It is significant to note that the present Code of Commerce is the Spanish Code
of Commerce of 1885, with some modifications made by the "Commission de
Codificacion de las Provincias de Ultramar," which was extended to the
Philippines by the Royal Decree of August 6, 1888, and took effect as law in this
jurisdiction on December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on
from the United States to the Republic of the Philippines, Article 14 of this Code
of Commerce must be deemed to have been abrogated because where there is
change of sovereignty, the political laws of the former sovereign, whether
compatible or not with those of the new sovereign, are automatically abrogated,
unless they are expressly re-enacted by affirmative act of the new sovereign.
29
Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912])
that:
By well-settled public law, upon the cession of territory by one nation to another,
either following a conquest or otherwise, ... those laws which are political in their
nature and pertain to the prerogatives of the former government immediately
cease upon the transfer of sovereignty. (Opinion, Atty. Gen., July 10, 1899).
While municipal laws of the newly acquired territory not in conflict with the, laws
of the new sovereign continue in force without the express assent or affirmative
act of the conqueror, the political laws do not. (Halleck's Int. Law, chap. 34, par.
14). However, such political laws of the prior sovereignty as are not in conflict
with the constitution or institutions of the new sovereign, may be continued in
force if the conqueror shall so declare by affirmative act of the commander-in-
chief during the war, or by Congress in time of peace. (Ely's Administrator vs.
United States, 171 U.S. 220, 43 L. Ed. 142). In the case of American and Ocean
Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief
Justice Marshall said:
On such transfer (by cession) of territory, it has never been held that the relations
of the inhabitants with each other undergo any change. Their relations with their
former sovereign are dissolved, and new relations are created between them and
the government which has acquired their territory. The same act which transfers
their country, transfers the allegiance of those who remain in it; and the law
which may be denominated political, is necessarily changed, although that which
regulates the intercourse and general conduct of individuals, remains in force,
until altered by the newly- created power of the State.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that:
"It is a general principle of the public law that on acquisition of territory the
previous political relations of the ceded region are totally abrogated. "
There appears no enabling or affirmative act that continued the effectivity of the
aforestated provision of the Code of Commerce after the change of sovereignty
from Spain to the United States and then to the Republic of the Philippines.
Consequently, Article 14 of the Code of Commerce has no legal and binding
effect and cannot apply to the respondent, then Judge of the Court of First
Instance, now Associate Justice of the Court of Appeals.
It is also argued by complainant herein that respondent Judge violated
paragraph H, Section 3 of Republic Act No. 3019, otherwise known as the Anti-
Graft and Corrupt Practices Act, which provides that:
Sec. 3. Corrupt practices of public officers. — In addition to acts or omissions of
public officers already penalized by existing law, the following shall constitute
corrupt practices of any public officer and are hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or pecuniary interest in any business,
contract or transaction in connection with which he intervenes or takes part in his
official capacity, or in which he is prohibited by the Constitution or by any Iaw
from having any interest.
Respondent Judge cannot be held liable under the aforestated paragraph
because there is no showing that respondent participated or intervened in his
official capacity in the business or transactions of the Traders Manufacturing and
Fishing Industries, Inc. In the case at bar, the business of the corporation in
which respondent participated has obviously no relation or connection with his
judicial office. The business of said corporation is not that kind where respondent
intervenes or takes part in his capacity as Judge of the Court of First Instance. As
was held in one case involving the application of Article 216 of the Revised Penal
Code which has a similar prohibition on public officers against directly or
indirectly becoming interested in any contract or business in which it is his official
duty to intervene, "(I)t is not enough to be a public official to be subject to this
crime; it is necessary that by reason of his office, he has to intervene in said
contracts or transactions; and, hence, the official who intervenes in contracts or
transactions which have no relation to his office cannot commit this
crime.' (People vs. Meneses, C.A. 40 O.G. 11th Supp. 134, cited by Justice
Ramon C. Aquino; Revised Penal Code, p. 1174, Vol. 11 [1976]).
It does not appear also from the records that the aforesaid corporation gained
any undue advantage in its business operations by reason of respondent's
financial involvement in it, or that the corporation benefited in one way or another
in any case filed by or against it in court. It is undisputed that there was no case
filed in the different branches of the Court of First Instance of Leyte in which the
corporation was either party plaintiff or defendant except Civil Case No. 4234
entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa O. Bales, et al.,"
wherein the complainant herein sought to recover Lot 1184-E from the aforesaid
corporation. It must be noted, however, that Civil Case No. 4234 was filed only
on November 9 or 11, 1968 and decided on November 2, 1970 by CFI Judge
Jose D. Nepomuceno when respondent Judge was no longer connected with the
corporation, having disposed of his interest therein on January 31, 1967.
Furthermore, respondent is not liable under the same paragraph because there
is no provision in both the 1935 and 1973 Constitutions of the Philippines, nor is
there an existing law expressly prohibiting members of the Judiciary from
engaging or having interest in any lawful business.
It may be pointed out that Republic Act No. 296, as amended, also known as the
Judiciary Act of 1948, does not contain any prohibition to that effect. As a matter
of fact, under Section 77 of said law, municipal judges may engage in teaching or
other vocation not involving the practice of law after office hours but with the
permission of the district judge concerned.
Likewise, Article 14 of the Code of Commerce which prohibits judges from
engaging in commerce is, as heretofore stated, deemed abrogated automatically
upon the transfer of sovereignty from Spain to America, because it is political in
nature.
Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code
against the purchase by judges of a property in litigation before the court within
whose jurisdiction they perform their duties, cannot apply to respondent Judge
because the sale of the lot in question to him took place after the finality of his
decision in Civil Case No. 3010 as well as his two orders approving the project of
partition; hence, the property was no longer subject of litigation.
30
In addition, although Section 12, Rule XVIII of the Civil Service Rules made
pursuant to the Civil Service Act of 1959 prohibits an officer or employee in the
civil service from engaging in any private business, vocation, or profession or be
connected with any commercial, credit, agricultural or industrial undertaking
without a written permission from the head of department, the same, however,
may not fall within the purview of paragraph h, Section 3 of the Anti-Graft and
Corrupt Practices Act because the last portion of said paragraph speaks of a
prohibition by the Constitution or law on any public officer from having any
interest in any business and not by a mere administrative rule or regulation.
Thus, a violation of the aforesaid rule by any officer or employee in the civil
service, that is, engaging in private business without a written permission from
the Department Head may not constitute graft and corrupt practice as defined by
law.
On the contention of complainant that respondent Judge violated Section 12,
Rule XVIII of the Civil Service Rules, We hold that the Civil Service Act of 1959
(R.A. No. 2260) and the Civil Service Rules promulgated thereunder, particularly
Section 12 of Rule XVIII, do not apply to the members of the Judiciary. Under
said Section 12: "No officer or employee shall engage directly in any private
business, vocation, or profession or be connected with any commercial, credit,
agricultural or industrial undertaking without a written permission from the Head
of Department ..."
It must be emphasized at the outset that respondent, being a member of the
Judiciary, is covered by Republic Act No. 296, as amended, otherwise known as
the Judiciary Act of 1948 and by Section 7, Article X, 1973 Constitution.
Under Section 67 of said law, the power to remove or dismiss judges was then
vested in the President of the Philippines, not in the Commissioner of Civil
Service, and only on two grounds, namely, serious misconduct and inefficiency,
and upon the recommendation of the Supreme Court, which alone is authorized,
upon its own motion, or upon information of the Secretary (now Minister) of
Justice to conduct the corresponding investigation. Clearly, the aforesaid section
defines the grounds and prescribes the special procedure for the discipline of
judges.
And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the
Supreme Court can discipline judges of inferior courts as well as other personnel
of the Judiciary.
It is true that under Section 33 of the Civil Service Act of 1959: "The
Commissioner may, for ... violation of the existing Civil Service Law and rules or
of reasonable office regulations, or in the interest of the service, remove any
subordinate officer or employee from the service, demote him in rank, suspend
him for not more than one year without pay or fine him in an amount not
exceeding six months' salary." Thus, a violation of Section 12 of Rule XVIII is a
ground for disciplinary action against civil service officers and employees.
However, judges cannot be considered as subordinate civil service officers or
employees subject to the disciplinary authority of the Commissioner of Civil
Service; for, certainly, the Commissioner is not the head of the Judicial
Department to which they belong. The Revised Administrative Code (Section 89)
and the Civil Service Law itself state that the Chief Justice is the department
head of the Supreme Court (Sec. 20, R.A. No. 2260) [1959]); and under the 1973
Constitution, the Judiciary is the only other or second branch of the government
(Sec. 1, Art. X, 1973 Constitution). Besides, a violation of Section 12, Rule XVIII
cannot be considered as a ground for disciplinary action against judges because
to recognize the same as applicable to them, would be adding another ground
for the discipline of judges and, as aforestated, Section 67 of the Judiciary Act
recognizes only two grounds for their removal, namely, serious misconduct and
inefficiency.
Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the
Commissioner of Civil Service who has original and exclusive jurisdiction "(T)o
decide, within one hundred twenty days, after submission to it, all administrative
cases against permanent officers and employees in the competitive service, and,
except as provided by law, to have final authority to pass upon their removal,
separation, and suspension and upon all matters relating to the conduct,
discipline, and efficiency of such officers and employees; and prescribe
standards, guidelines and regulations governing the administration of
discipline" (emphasis supplied). There is no question that a judge belong to the
non-competitive or unclassified service of the government as a Presidential
appointee and is therefore not covered by the aforesaid provision. WE have
already ruled that "... in interpreting Section 16(i) of Republic Act No. 2260, we
emphasized that only permanent officers and employees who belong to the
classified service come under the exclusive jurisdiction of the Commissioner of
Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-Angco vs.
Castillo, 9 SCRA 619 [1963]).
Although the actuation of respondent Judge in engaging in private business by
joining the Traders Manufacturing and Fishing Industries, Inc. as a stockholder
and a ranking officer, is not violative of the provissions of Article 14 of the Code
of Commerce and Section 3(h) of the Anti-Graft and Corrupt Practices Act as well
as Section 12, Rule XVIII of the Civil Service Rules promulgated pursuant to the
Civil Service Act of 1959, the impropriety of the same is clearly unquestionable
because Canon 25 of the Canons of Judicial Ethics expressly declares that:
A judge should abstain from making personal investments in enterprises which
are apt to be involved in litigation in his court; and, after his accession to the
bench, he should not retain such investments previously made, longer than a
period sufficient to enable him to dispose of them without serious loss. It is
desirable that he should, so far as reasonably possible, refrain from all relations
which would normally tend to arouse the suspicion that such relations warp or
bias his judgment, or prevent his impartial attitude of mind in the administration of
his judicial duties. ...
WE are not, however, unmindful of the fact that respondent Judge and his wife
had withdrawn on January 31, 1967 from the aforesaid corporation and sold their
respective shares to third parties, and it appears also that the aforesaid
corporation did not in anyway benefit in any case filed by or against it in court as
there was no case filed in the different branches of the Court of First Instance of
Leyte from the time of the drafting of the Articles of Incorporation of the
31
corporation on March 12, 1966, up to its incorporation on January 9, 1967, and
the eventual withdrawal of respondent on January 31, 1967 from said
corporation. Such disposal or sale by respondent and his wife of their shares in
the corporation only 22 days after the incorporation of the corporation, indicates
that respondent realized that early that their interest in the corporation
contravenes the aforesaid Canon 25. Respondent Judge and his wife therefore
deserve the commendation for their immediate withdrawal from the firm after its
incorporation and before it became involved in any court litigation
III
With respect to the third and fourth causes of action, complainant alleged that
respondent was guilty of coddling an impostor and acted in disregard of judicial
decorum, and that there was culpable defiance of the law and utter disregard for
ethics. WE agree, however, with the recommendation of the Investigating Justice
that respondent Judge be exonerated because the aforesaid causes of action
are groundless, and WE quote the pertinent portion of her report which reads as
follows:
The basis for complainant's third cause of action is the claim that respondent
associated and closely fraternized with Dominador Arigpa Tan who openly and
publicly advertised himself as a practising attorney (see Exhs. I, I-1 and J) when
in truth and in fact said Dominador Arigpa Tan does not appear in the Roll of
Attorneys and is not a member of the Philippine Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was an "impostor"
and claims that all the time he believed that the latter was a bona fide member of
the bar. I see no reason for disbelieving this assertion of respondent. It has been
shown by complainant that Dominador Arigpa Tan represented himself publicly
as an attorney-at-law to the extent of putting up a signboard with his name and
the words "Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it was but
natural for respondent and any person for that matter to have accepted that
statement on its face value. "Now with respect to the allegation of complainant
that respondent is guilty of fraternizing with Dominador Arigpa Tan to the extent
of permitting his wife to be a godmother of Mr. Tan's child at baptism (Exh. M &
M-1), that fact even if true did not render respondent guilty of violating any canon
of judicial ethics as long as his friendly relations with Dominador A. Tan and
family did not influence his official actuations as a judge where said persons
were concerned. There is no tangible convincing proof that herein respondent
gave any undue privileges in his court to Dominador Arigpa Tan or that the latter
benefitted in his practice of law from his personal relations with respondent, or
that he used his influence, if he had any, on the Judges of the other branches of
the Court to favor said Dominador Tan.
Of course it is highly desirable for a member of the judiciary to refrain as much as
possible from maintaining close friendly relations with practising attorneys and
litigants in his court so as to avoid suspicion 'that his social or business relations
or friendship constitute an element in determining his judicial course" (par. 30,
Canons of Judicial Ethics), but if a Judge does have social relations, that in itself
would not constitute a ground for disciplinary action unless it be clearly shown
that his social relations be clouded his official actuations with bias and partiality
in favor of his friends (pp. 403-405, rec.).
In conclusion, while respondent Judge Asuncion, now Associate Justice of the
Court of Appeals, did not violate any law in acquiring by purchase a parcel of
land which was in litigation in his court and in engaging in business by joining a
private corporation during his incumbency as judge of the Court of First Instance
of Leyte, he should be reminded to be more discreet in his private and business
activities, because his conduct as a member of the Judiciary must not only be
characterized with propriety but must always be above suspicion.
WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT
OF APPEALS IS HEREBY REMINDED TO BE MORE DISCREET IN HIS
PRIVATE AND BUSINESS ACTIVITIES.
SO ORDERED.
G.R. No. 104768 July 21, 2003
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
SANDIGANBAYAN, MAJOR GENERAL JOSEPHUS Q. RAMAS and
ELIZABETH DIMAANO, Respondents.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari seeking to set aside the
Resolutions of the Sandiganbayan (First Division)1 dated 18 November 1991 and
25 March 1992 in Civil Case No. 0037. The first Resolution dismissed petitioner’s
Amended Complaint and ordered the return of the confiscated items to
respondent Elizabeth Dimaano, while the second Resolution denied petitioner’s
Motion for Reconsideration. Petitioner prays for the grant of the reliefs sought in
its Amended Complaint, or in the alternative, for the remand of this case to the
Sandiganbayan (First Division) for further proceedings allowing petitioner to
complete the presentation of its evidence.
Antecedent Facts
Immediately upon her assumption to office following the successful EDSA
Revolution, then President Corazon C. Aquino issued Executive Order No. 1
("EO No. 1") creating the Presidential Commission on Good Government
("PCGG"). EO No. 1 primarily tasked the PCGG to recover all ill-gotten wealth of
former President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates. EO No. 1 vested the PCGG with the power
"(a) to conduct investigation as may be necessary in order to accomplish and
carry out the purposes of this order" and the power "(h) to promulgate such rules
and regulations as may be necessary to carry out the purpose of this order."
Accordingly, the PCGG, through its then Chairman Jovito R. Salonga, created an
AFP Anti-Graft Board ("AFP Board") tasked to investigate reports of unexplained
wealth and corrupt practices by AFP personnel, whether in the active service or
retired.2
32
Based on its mandate, the AFP Board investigated various reports of alleged
unexplained wealth of respondent Major General Josephus Q. Ramas
("Ramas"). On 27 July 1987, the AFP Board issued a Resolution on its findings
and recommendation on the reported unexplained wealth of Ramas. The
relevant part of the Resolution reads:
III. FINDINGS and EVALUATION:
Evidence in the record showed that respondent is the owner of a house and lot
located at 15-Yakan St., La Vista, Quezon City. He is also the owner of a house
and lot located in Cebu City. The lot has an area of 3,327 square meters.
The value of the property located in Quezon City may be estimated modestly at
₱700,000.00.
The equipment/items and communication facilities which were found in the
premises of Elizabeth Dimaano and were confiscated by elements of the PC
Command of Batangas were all covered by invoice receipt in the name of CAPT.
EFREN SALIDO, RSO Command Coy, MSC, PA. These items could not have
been in the possession of Elizabeth Dimaano if not given for her use by
respondent Commanding General of the Philippine Army.
Aside from the military equipment/items and communications equipment, the
raiding team was also able to confiscate money in the amount of ₱2,870,000.00
and $50,000 US Dollars in the house of Elizabeth Dimaano on 3 March 1986.
Affidavits of members of the Military Security Unit, Military Security Command,
Philippine Army, stationed at Camp Eldridge, Los Baños, Laguna, disclosed that
Elizabeth Dimaano is the mistress of respondent. That respondent usually goes
and stays and sleeps in the alleged house of Elizabeth Dimaano in Barangay
Tengga, Itaas, Batangas City and when he arrives, Elizabeth Dimaano embraces
and kisses respondent. That on February 25, 1986, a person who rode in a car
went to the residence of Elizabeth Dimaano with four (4) attache cases filled with
money and owned by MGen Ramas.
Sworn statement in the record disclosed also that Elizabeth Dimaano had no
visible means of income and is supported by respondent for she was formerly a
mere secretary.
Taking in toto the evidence, Elizabeth Dimaano could not have used the military
equipment/items seized in her house on March 3, 1986 without the consent of
respondent, he being the Commanding General of the Philippine Army. It is also
impossible for Elizabeth Dimaano to claim that she owns the ₱2,870,000.00 and
$50,000 US Dollars for she had no visible source of income.
This money was never declared in the Statement of Assets and Liabilities of
respondent. There was an intention to cover the existence of these money
because these are all ill-gotten and unexplained wealth. Were it not for the
affidavits of the members of the Military Security Unit assigned at Camp Eldridge,
Los Baños, Laguna, the existence and ownership of these money would have
never been known.
The Statement of Assets and Liabilities of respondent were also submitted for
scrutiny and analysis by the Board’s consultant. Although the amount of
₱2,870,000.00 and $50,000 US Dollars were not included, still it was disclosed
that respondent has an unexplained wealth of ₱104,134. 60.
IV. CONCLUSION:
In view of the foregoing, the Board finds that a prima facie case exists against
respondent for ill-gotten and unexplained wealth in the amount of ₱2,974,134.00
and $50,000 US Dollars.
V. RECOMMENDATION:
Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas (ret.) be
prosecuted and tried for violation of RA 3019, as amended, otherwise known as
"Anti-Graft and Corrupt Practices Act" and RA 1379, as amended, otherwise
known as "The Act for the Forfeiture of Unlawfully Acquired Property."3
Thus, on 1 August 1987, the PCGG filed a petition for forfeiture under Republic
Act No. 1379 ("RA No. 1379") 4 against Ramas.
Before Ramas could answer the petition, then Solicitor General Francisco I.
Chavez filed an Amended Complaint naming the Republic of the Philippines
("petitioner"), represented by the PCGG, as plaintiff and Ramas as defendant.
The Amended Complaint also impleaded Elizabeth Dimaano ("Dimaano") as co-
defendant.
The Amended Complaint alleged that Ramas was the Commanding General of
the Philippine Army until 1986. On the other hand, Dimaano was a confidential
agent of the Military Security Unit, Philippine Army, assigned as a clerk-typist at
the office of Ramas from 1 January 1978 to February 1979. The Amended
Complaint further alleged that Ramas "acquired funds, assets and properties
manifestly out of proportion to his salary as an army officer and his other income
from legitimately acquired property by taking undue advantage of his public office
and/or using his power, authority and influence as such officer of the Armed
Forces of the Philippines and as a subordinate and close associate of the
deposed President Ferdinand Marcos."5
The Amended Complaint also alleged that the AFP Board, after a previous
inquiry, found reasonable ground to believe that respondents have violated RA
No. 1379.6 The Amended Complaint prayed for, among others, the forfeiture of
respondents’ properties, funds and equipment in favor of the State.
Ramas filed an Answer with Special and/or Affirmative Defenses and
Compulsory Counterclaim to the Amended Complaint. In his Answer, Ramas
contended that his property consisted only of a residential house at La Vista
Subdivision, Quezon City, valued at ₱700,000, which was not out of proportion to
his salary and other legitimate income. He denied ownership of any mansion in
Cebu City and the cash, communications equipment and other items confiscated
from the house of Dimaano.
Dimaano filed her own Answer to the Amended Complaint. Admitting her
employment as a clerk-typist in the office of Ramas from January-November
1978 only, Dimaano claimed ownership of the monies, communications
equipment, jewelry and land titles taken from her house by the Philippine
Constabulary raiding team.
After termination of the pre-trial,7 the court set the case for trial on the merits on
9-11 November 1988.
33
On 9 November 1988, petitioner asked for a deferment of the hearing due to its
lack of preparation for trial and the absence of witnesses and vital documents to
support its case. The court reset the hearing to 17 and 18 April 1989.
On 13 April 1989, petitioner filed a motion for leave to amend the complaint in
order "to charge the delinquent properties with being subject to forfeiture as
having been unlawfully acquired by defendant Dimaano alone x x x."8
Nevertheless, in an order dated 17 April 1989, the Sandiganbayan proceeded
with petitioner’s presentation of evidence on the ground that the motion for leave
to amend complaint did not state when petitioner would file the amended
complaint. The Sandiganbayan further stated that the subject matter of the
amended complaint was on its face vague and not related to the existing
complaint. The Sandiganbayan also held that due to the time that the case had
been pending in court, petitioner should proceed to present its evidence.
After presenting only three witnesses, petitioner asked for a postponement of the
trial.
On 28 September 1989, during the continuation of the trial, petitioner manifested
its inability to proceed to trial because of the absence of other witnesses or lack
of further evidence to present. Instead, petitioner reiterated its motion to amend
the complaint to conform to the evidence already presented or to change the
averments to show that Dimaano alone unlawfully acquired the monies or
properties subject of the forfeiture.
The Sandiganbayan noted that petitioner had already delayed the case for over
a year mainly because of its many postponements. Moreover, petitioner would
want the case to revert to its preliminary stage when in fact the case had long
been ready for trial. The Sandiganbayan ordered petitioner to prepare for
presentation of its additional evidence, if any.
During the trial on 23 March 1990, petitioner again admitted its inability to
present further evidence. Giving petitioner one more chance to present further
evidence or to amend the complaint to conform to its evidence, the
Sandiganbayan reset the trial to 18 May 1990. The Sandiganbayan, however,
hinted that the re-setting was without prejudice to any action that private
respondents might take under the circumstances.
However, on 18 May 1990, petitioner again expressed its inability to proceed to
trial because it had no further evidence to present. Again, in the interest of
justice, the Sandiganbayan granted petitioner 60 days within which to file an
appropriate pleading. The Sandiganbayan, however, warned petitioner that
failure to act would constrain the court to take drastic action.
Private respondents then filed their motions to dismiss based on Republic v.
Migrino.9 The Court held in Migrino that the PCGG does not have jurisdiction to
investigate and prosecute military officers by reason of mere position held
without a showing that they are "subordinates" of former President Marcos.
On 18 November 1991, the Sandiganbayan rendered a resolution, the
dispositive portion of which states:
WHEREFORE, judgment is hereby rendered dismissing the Amended
Complaint, without pronouncement as to costs. The counterclaims are likewise
dismissed for lack of merit, but the confiscated sum of money, communications
equipment, jewelry and land titles are ordered returned to Elizabeth Dimaano.
The records of this case are hereby remanded and referred to the Hon.
Ombudsman, who has primary jurisdiction over the forfeiture cases under R.A.
No. 1379, for such appropriate action as the evidence warrants. This case is also
referred to the Commissioner of the Bureau of Internal Revenue for a
determination of any tax liability of respondent Elizabeth Dimaano in connection
herewith.
SO ORDERED.
On 4 December 1991, petitioner filed its Motion for Reconsideration.
In answer to the Motion for Reconsideration, private respondents filed a Joint
Comment/Opposition to which petitioner filed its Reply on 10 January 1992.
On 25 March 1992, the Sandiganbayan rendered a Resolution denying the
Motion for Reconsideration.
Ruling of the Sandiganbayan
The Sandiganbayan dismissed the Amended Complaint on the following
grounds:
(1.) The actions taken by the PCGG are not in accordance with the rulings of the
Supreme Court in Cruz, Jr. v. Sandiganbayan10 and Republic v. Migrino11 which
involve the same issues.
(2.) No previous inquiry similar to preliminary investigations in criminal cases was
conducted against Ramas and Dimaano.
(3.) The evidence adduced against Ramas does not constitute a prima facie case
against him.
(4.) There was an illegal search and seizure of the items confiscated.
The Issues
Petitioner raises the following issues:
A. RESPONDENT COURT SERIOUSLY ERRED IN CONCLUDING THAT
PETITIONER’S EVIDENCE CANNOT MAKE A CASE FOR FORFEITURE AND
THAT THERE WAS NO SHOWING OF CONSPIRACY, COLLUSION OR
RELATIONSHIP BY CONSANGUINITY OR AFFINITY BY AND BETWEEN
RESPONDENT RAMAS AND RESPONDENT DIMAANO NOTWITHSTANDING
THE FACT THAT SUCH CONCLUSIONS WERE CLEARLY UNFOUNDED AND
PREMATURE, HAVING BEEN RENDERED PRIOR TO THE COMPLETION OF
THE PRESENTATION OF THE EVIDENCE OF THE PETITIONER.
B. RESPONDENT COURT SERIOUSLY ERRED IN HOLDING THAT THE
ACTIONS TAKEN BY THE PETITIONER, INCLUDING THE FILING OF THE
ORIGINAL COMPLAINT AND THE AMENDED COMPLAINT, SHOULD BE
STRUCK OUT IN LINE WITH THE RULINGS OF THE SUPREME COURT IN
CRUZ, JR. v. SANDIGANBAYAN, 194 SCRA 474 AND REPUBLIC v. MIGRINO,
189 SCRA 289, NOTWITHSTANDING THE FACT THAT:
1. The cases of Cruz, Jr. v. Sandiganbayan, supra, and Republic v. Migrino,
supra, are clearly not applicable to this case;
2. Any procedural defect in the institution of the complaint in Civil Case No. 0037
was cured and/or waived by respondents with the filing of their respective
answers with counterclaim; and
34
3. The separate motions to dismiss were evidently improper considering that they
were filed after commencement of the presentation of the evidence of the
petitioner and even before the latter was allowed to formally offer its evidence
and rest its case;
C. RESPONDENT COURT SERIOUSLY ERRED IN HOLDING THAT THE
ARTICLES AND THINGS SUCH AS SUMS OF MONEY, COMMUNICATIONS
EQUIPMENT, JEWELRY AND LAND TITLES CONFISCATED FROM THE
HOUSE OF RESPONDENT DIMAANO WERE ILLEGALLY SEIZED AND
THEREFORE EXCLUDED AS EVIDENCE.12
The Court’s Ruling
First Issue: PCGG’s Jurisdiction to Investigate Private Respondents
This case involves a revisiting of an old issue already decided by this Court in
Cruz, Jr. v. Sandiganbayan13 and Republic v. Migrino.14
The primary issue for resolution is whether the PCGG has the jurisdiction to
investigate and cause the filing of a forfeiture petition against Ramas and
Dimaano for unexplained wealth under RA No. 1379.
We hold that PCGG has no such jurisdiction.
The PCGG created the AFP Board to investigate the unexplained wealth and
corrupt practices of AFP personnel, whether in the active service or retired.15 The
PCGG tasked the AFP Board to make the necessary recommendations to
appropriate government agencies on the action to be taken based on its findings.
16 The PCGG gave this task to the AFP Board pursuant to the PCGG’s power
under Section 3 of EO No. 1 "to conduct investigation as may be necessary in
order to accomplish and to carry out the purposes of this order." EO No. 1 gave
the PCGG specific responsibilities, to wit:
SEC. 2. The Commission shall be charged with the task of assisting the
President in regard to the following matters:
(a) The recovery of all ill-gotten wealth accumulated by former President
Ferdinand E. Marcos, his immediate family, relatives, subordinates and close
associates, whether located in the Philippines or abroad, including the takeover
and sequestration of all business enterprises and entities owned or controlled by
them, during his administration, directly or through nominees, by taking undue
advantage of their public office and/ or using their powers, authority, influence,
connections or relationship.
(b) The investigation of such cases of graft and corruption as the President may
assign to the Commission from time to time.
x x x.
The PCGG, through the AFP Board, can only investigate the unexplained wealth
and corrupt practices of AFP personnel who fall under either of the two
categories mentioned in Section 2 of EO No. 1. These are: (1) AFP personnel
who have accumulated ill-gotten wealth during the administration of former
President Marcos by being the latter’s immediate family, relative, subordinate or
close associate, taking undue advantage of their public office or using their
powers, influence x x x;17 or (2) AFP personnel involved in other cases of graft
and corruption provided the President assigns their cases to the PCGG.18
Petitioner, however, does not claim that the President assigned Ramas’ case to
the PCGG. Therefore, Ramas’ case should fall under the first category of AFP
personnel before the PCGG could exercise its jurisdiction over him. Petitioner
argues that Ramas was undoubtedly a subordinate of former President Marcos
because of his position as the Commanding General of the Philippine Army.
Petitioner claims that Ramas’ position enabled him to receive orders directly from
his commander-in-chief, undeniably making him a subordinate of former
President Marcos.
We hold that Ramas was not a "subordinate" of former President Marcos in the
sense contemplated under EO No. 1 and its amendments.
Mere position held by a military officer does not automatically make him a
"subordinate" as this term is used in EO Nos. 1, 2, 14 and 14-A absent a showing
that he enjoyed close association with former President Marcos. Migrino
discussed this issue in this wise:
A close reading of EO No. 1 and related executive orders will readily show what
is contemplated within the term ‘subordinate.’ The Whereas Clauses of EO No. 1
express the urgent need to recover the ill-gotten wealth amassed by former
President Ferdinand E. Marcos, his immediate family, relatives, and close
associates both here and abroad.
EO No. 2 freezes ‘all assets and properties in the Philippines in which former
President Marcos and/or his wife, Mrs. Imelda Marcos, their close relatives,
subordinates, business associates, dummies, agents, or nominees have any
interest or participation.’
Applying the rule in statutory construction known as ejusdem generis that is-
‘[W]here general words follow an enumeration of persons or things by words of a
particular and specific meaning, such general words are not to be construed in
their widest extent, but are to be held as applying only to persons or things of the
same kind or class as those specifically mentioned [Smith, Bell & Co, Ltd. vs.
Register of Deeds of Davao, 96 Phil. 53, 58, citing Black on Interpretation of
Laws, 2nd Ed., 203].’
[T]he term "subordinate" as used in EO Nos. 1 & 2 refers to one who enjoys a
close association with former President Marcos and/or his wife, similar to the
immediate family member, relative, and close associate in EO No. 1 and the
close relative, business associate, dummy, agent, or nominee in EO No. 2.
xxx
It does not suffice, as in this case, that the respondent is or was a government
official or employee during the administration of former President Marcos. There
must be a prima facie showing that the respondent unlawfully accumulated
wealth by virtue of his close association or relation with former Pres. Marcos and/
or his wife. (Emphasis supplied)
Ramas’ position alone as Commanding General of the Philippine Army with the
rank of Major General19 does not suffice to make him a "subordinate" of former
President Marcos for purposes of EO No. 1 and its amendments. The PCGG has
to provide a prima facie showing that Ramas was a close associate of former
President Marcos, in the same manner that business associates, dummies,
agents or nominees of former President Marcos were close to him. Such close
35
association is manifested either by Ramas’ complicity with former President
Marcos in the accumulation of ill-gotten wealth by the deposed President or by
former President Marcos’ acquiescence in Ramas’ own accumulation of ill-gotten
wealth if any.
This, the PCGG failed to do.
Petitioner’s attempt to differentiate the instant case from Migrino does not
convince us. Petitioner argues that unlike in Migrino, the AFP Board Resolution
in the instant case states that the AFP Board conducted the investigation
pursuant to EO Nos. 1, 2, 14 and 14-A in relation to RA No. 1379. Petitioner
asserts that there is a presumption that the PCGG was acting within its
jurisdiction of investigating crony-related cases of graft and corruption and that
Ramas was truly a subordinate of the former President. However, the same AFP
Board Resolution belies this contention. Although the Resolution begins with
such statement, it ends with the following recommendation:
V. RECOMMENDATION:
Wherefore it is recommended that Maj. Gen. Josephus Q. Ramas (ret.) be
prosecuted and tried for violation of RA 3019, as amended, otherwise known as
"Anti-Graft and Corrupt Practices Act" and RA 1379, as amended, otherwise
known as "The Act for the Forfeiture of Unlawfully Acquired Property."20
Thus, although the PCGG sought to investigate and prosecute private
respondents under EO Nos. 1, 2, 14 and 14-A, the result yielded a finding of
violation of Republic Acts Nos. 3019 and 1379 without any relation to EO Nos. 1,
2, 14 and 14-A. This absence of relation to EO No. 1 and its amendments proves
fatal to petitioner’s case. EO No. 1 created the PCGG for a specific and limited
purpose, and necessarily its powers must be construed to address such specific
and limited purpose.
Moreover, the resolution of the AFP Board and even the Amended Complaint do
not show that the properties Ramas allegedly owned were accumulated by him in
his capacity as a "subordinate" of his commander-in-chief. Petitioner merely
enumerated the properties Ramas allegedly owned and suggested that these
properties were disproportionate to his salary and other legitimate income
without showing that Ramas amassed them because of his close association
with former President Marcos. Petitioner, in fact, admits that the AFP Board
resolution does not contain a finding that Ramas accumulated his wealth
because of his close association with former President Marcos, thus:
10. While it is true that the resolution of the Anti-Graft Board of the New Armed
Forces of the Philippines did not categorically find a prima facie evidence
showing that respondent Ramas unlawfully accumulated wealth by virtue of his
close association or relation with former President Marcos and/or his wife, it is
submitted that such omission was not fatal. The resolution of the Anti-Graft Board
should be read in the context of the law creating the same and the objective of
the investigation which was, as stated in the above, pursuant to Republic Act
Nos. 3019 and 1379 in relation to Executive Order Nos. 1, 2, 14 and 14-a;21
(Emphasis supplied)
Such omission is fatal. Petitioner forgets that it is precisely a prima facie showing
that the ill-gotten wealth was accumulated by a "subordinate" of former President
Marcos that vests jurisdiction on PCGG. EO No. 122 clearly premises the creation
of the PCGG on the urgent need to recover all ill-gotten wealth amassed by
former President Marcos, his immediate family, relatives, subordinates and close
associates. Therefore, to say that such omission was not fatal is clearly contrary
to the intent behind the creation of the PCGG.
In Cruz, Jr. v. Sandiganbayan,23 the Court outlined the cases that fall under the
jurisdiction of the PCGG pursuant to EO Nos. 1, 2,24 14,25 14-A:26
A careful reading of Sections 2(a) and 3 of Executive Order No. 1 in relation with
Sections 1, 2 and 3 of Executive Order No. 14, shows what the authority of the
respondent PCGG to investigate and prosecute covers:
(a) the investigation and prosecution of the civil action for the recovery of ill-
gotten wealth under Republic Act No. 1379, accumulated by former President
Marcos, his immediate family, relatives, subordinates and close associates,
whether located in the Philippines or abroad, including the take-over or
sequestration of all business enterprises and entities owned or controlled by
them, during his administration, directly or through his nominees, by taking
undue advantage of their public office and/or using their powers, authority and
influence, connections or relationships; and
(b) the investigation and prosecution of such offenses committed in the
acquisition of said ill-gotten wealth as contemplated under Section 2(a) of
Executive Order No. 1.
However, other violations of the Anti-Graft and Corrupt Practices Act not
otherwise falling under the foregoing categories, require a previous authority of
the President for the respondent PCGG to investigate and prosecute in
accordance with Section 2 (b) of Executive Order No. 1. Otherwise, jurisdiction
over such cases is vested in the Ombudsman and other duly authorized
investigating agencies such as the provincial and city prosecutors, their
assistants, the Chief State Prosecutor and his assistants and the state
prosecutors. (Emphasis supplied)
The proper government agencies, and not the PCGG, should investigate and
prosecute forfeiture petitions not falling under EO No. 1 and its amendments.
The preliminary investigation of unexplained wealth amassed on or before 25
February 1986 falls under the jurisdiction of the Ombudsman, while the authority
to file the corresponding forfeiture petition rests with the Solicitor General.27 The
Ombudsman Act or Republic Act No. 6770 ("RA No. 6770") vests in the
Ombudsman the power to conduct preliminary investigation and to file forfeiture
proceedings involving unexplained wealth amassed after 25 February 1986.28
After the pronouncements of the Court in Cruz, the PCGG still pursued this case
despite the absence of a prima facie finding that Ramas was a "subordinate" of
former President Marcos. The petition for forfeiture filed with the Sandiganbayan
should be dismissed for lack of authority by the PCGG to investigate
respondents since there is no prima facie showing that EO No. 1 and its
amendments apply to respondents. The AFP Board Resolution and even the
Amended Complaint state that there are violations of RA Nos. 3019 and 1379.
Thus, the PCGG should have recommended Ramas’ case to the Ombudsman
36
who has jurisdiction to conduct the preliminary investigation of ordinary
unexplained wealth and graft cases. As stated in Migrino:
[But] in view of the patent lack of authority of the PCGG to investigate and cause
the prosecution of private respondent for violation of Rep. Acts Nos. 3019 and
1379, the PCGG must also be enjoined from proceeding with the case, without
prejudice to any action that may be taken by the proper prosecutory agency. The
rule of law mandates that an agency of government be allowed to exercise only
the powers granted to it.
Petitioner’s argument that private respondents have waived any defect in the
filing of the forfeiture petition by submitting their respective Answers with
counterclaim deserves no merit as well.
Petitioner has no jurisdiction over private respondents. Thus, there is no
jurisdiction to waive in the first place. The PCGG cannot exercise investigative or
prosecutorial powers never granted to it. PCGG’s powers are specific and
limited. Unless given additional assignment by the President, PCGG’s sole task
is only to recover the ill-gotten wealth of the Marcoses, their relatives and
cronies.29 Without these elements, the PCGG cannot claim jurisdiction over a
case.
Private respondents questioned the authority and jurisdiction of the PCGG to
investigate and prosecute their cases by filing their Motion to Dismiss as soon as
they learned of the pronouncement of the Court in Migrino. This case was
decided on 30 August 1990, which explains why private respondents only filed
their Motion to Dismiss on 8 October 1990. Nevertheless, we have held that the
parties may raise lack of jurisdiction at any stage of the proceeding.30 Thus, we
hold that there was no waiver of jurisdiction in this case. Jurisdiction is vested by
law and not by the parties to an action.31
Consequently, the petition should be dismissed for lack of jurisdiction by the
PCGG to conduct the preliminary investigation. The Ombudsman may still
conduct the proper preliminary investigation for violation of RA No. 1379, and if
warranted, the Solicitor General may file the forfeiture petition with the
Sandiganbayan.32 The right of the State to forfeit unexplained wealth under RA
No. 1379 is not subject to prescription, laches or estoppel.33
Second Issue: Propriety of Dismissal of Case
 Complaint.38 The Sandiganbayan correctly observed that a case already pending
Before Completion of Presentation of Evidence
Petitioner also contends that the Sandiganbayan erred in dismissing the case
before completion of the presentation of petitioner’s evidence.
We disagree.
Based on the findings of the Sandiganbayan and the records of this case, we
find that petitioner has only itself to blame for non-completion of the presentation
of its evidence. First, this case has been pending for four years before the
Sandiganbayan dismissed it. Petitioner filed its Amended Complaint on 11
August 1987, and only began to present its evidence on 17 April 1989. Petitioner
had almost two years to prepare its evidence. However, despite this sufficient
time, petitioner still delayed the presentation of the rest of its evidence by filing
numerous motions for postponements and extensions. Even before the date set
for the presentation of its evidence, petitioner filed, on 13 April 1989, a Motion for
Leave to Amend the Complaint.34 The motion sought "to charge the delinquent
properties (which comprise most of petitioner’s evidence) with being subject to
forfeiture as having been unlawfully acquired by defendant Dimaano alone x x x."
The Sandiganbayan, however, refused to defer the presentation of petitioner’s
evidence since petitioner did not state when it would file the amended complaint.
On 18 April 1989, the Sandiganbayan set the continuation of the presentation of
evidence on 28-29 September and 9-11 October 1989, giving petitioner ample
time to prepare its evidence. Still, on 28 September 1989, petitioner manifested
its inability to proceed with the presentation of its evidence. The Sandiganbayan
issued an Order expressing its view on the matter, to wit:
The Court has gone through extended inquiry and a narration of the above
events because this case has been ready for trial for over a year and much of the
delay hereon has been due to the inability of the government to produce on
scheduled dates for pre-trial and for trial documents and witnesses, allegedly
upon the failure of the military to supply them for the preparation of the
presentation of evidence thereon. Of equal interest is the fact that this Court has
been held to task in public about its alleged failure to move cases such as this
one beyond the preliminary stage, when, in view of the developments such as
those of today, this Court is now faced with a situation where a case already in
progress will revert back to the preliminary stage, despite a five-month pause
where appropriate action could have been undertaken by the plaintiff Republic.35
On 9 October 1989, the PCGG manifested in court that it was conducting a
preliminary investigation on the unexplained wealth of private respondents as
mandated by RA No. 1379.36 The PCGG prayed for an additional four months to
conduct the preliminary investigation. The Sandiganbayan granted this request
and scheduled the presentation of evidence on 26-29 March 1990. However, on
the scheduled date, petitioner failed to inform the court of the result of the
preliminary investigation the PCGG supposedly conducted. Again, the
Sandiganbayan gave petitioner until 18 May 1990 to continue with the
presentation of its evidence and to inform the court of "what lies ahead insofar as
the status of the case is concerned x x x."37 Still on the date set, petitioner failed
to present its evidence. Finally, on 11 July 1990, petitioner filed its Re-Amended
for years would revert to its preliminary stage if the court were to accept the Re-
Amended Complaint.
Based on these circumstances, obviously petitioner has only itself to blame for
failure to complete the presentation of its evidence. The Sandiganbayan gave
petitioner more than sufficient time to finish the presentation of its evidence. The
Sandiganbayan overlooked petitioner’s delays and yet petitioner ended the long-
string of delays with the filing of a Re-Amended Complaint, which would only
prolong even more the disposition of the case.
Moreover, the pronouncements of the Court in Migrino and Cruz prompted the
Sandiganbayan to dismiss the case since the PCGG has no jurisdiction to
investigate and prosecute the case against private respondents. This alone
would have been sufficient legal basis for the Sandiganbayan to dismiss the
forfeiture case against private respondents.
37
Thus, we hold that the Sandiganbayan did not err in dismissing the case before
completion of the presentation of petitioner’s evidence.
Third Issue: Legality of the Search and Seizure
Petitioner claims that the Sandiganbayan erred in declaring the properties
confiscated from Dimaano’s house as illegally seized and therefore inadmissible
in evidence. This issue bears a significant effect on petitioner’s case since these
properties comprise most of petitioner’s evidence against private respondents.
Petitioner will not have much evidence to support its case against private
respondents if these properties are inadmissible in evidence.
On 3 March 1986, the Constabulary raiding team served at Dimaano’s residence
a search warrant captioned "Illegal Possession of Firearms and Ammunition."
Dimaano was not present during the raid but Dimaano’s cousins witnessed the
raid. The raiding team seized the items detailed in the seizure receipt together
with other items not included in the search warrant. The raiding team seized
these items: one baby armalite rifle with two magazines; 40 rounds of 5.56
ammunition; one pistol, caliber .45; communications equipment, cash consisting
of ₱2,870,000 and US$50,000, jewelry, and land titles.
Petitioner wants the Court to take judicial notice that the raiding team conducted
the search and seizure "on March 3, 1986 or five days after the successful EDSA
revolution."39 Petitioner argues that a revolutionary government was operative at
that time by virtue of Proclamation No. 1 announcing that President Aquino and
Vice President Laurel were "taking power in the name and by the will of the
Filipino people."40 Petitioner asserts that the revolutionary government effectively
withheld the operation of the 1973 Constitution which guaranteed private
respondents’ exclusionary right.
Moreover, petitioner argues that the exclusionary right arising from an illegal
search applies only beginning 2 February 1987, the date of ratification of the
1987 Constitution. Petitioner contends that all rights under the Bill of Rights had
already reverted to its embryonic stage at the time of the search. Therefore, the
government may confiscate the monies and items taken from Dimaano and use
the same in evidence against her since at the time of their seizure, private
respondents did not enjoy any constitutional right.
Petitioner is partly right in its arguments.
The EDSA Revolution took place on 23-25 February 1986. As succinctly stated in
President Aquino’s Proclamation No. 3 dated 25 March 1986, the EDSA
Revolution was "done in defiance of the provisions of the 1973 Constitution."41
The resulting government was indisputably a revolutionary government bound by
no constitution or legal limitations except treaty obligations that the revolutionary
government, as the de jure government in the Philippines, assumed under
international law.
The correct issues are: (1) whether the revolutionary government was bound by
the Bill of Rights of the 1973 Constitution during the interregnum, that is, after the
actual and effective take-over of power by the revolutionary government following
the cessation of resistance by loyalist forces up to 24 March 1986 (immediately
before the adoption of the Provisional Constitution); and (2) whether the
protection accorded to individuals under the International Covenant on Civil and
Political Rights ("Covenant") and the Universal Declaration of Human Rights
("Declaration") remained in effect during the interregnum.
We hold that the Bill of Rights under the 1973 Constitution was not operative
during the interregnum. However, we rule that the protection accorded to
individuals under the Covenant and the Declaration remained in effect during the
interregnum.
During the interregnum, the directives and orders of the revolutionary
government were the supreme law because no constitution limited the extent and
scope of such directives and orders. With the abrogation of the 1973 Constitution
by the successful revolution, there was no municipal law higher than the
directives and orders of the revolutionary government. Thus, during the
interregnum, a person could not invoke any exclusionary right under a Bill of
Rights because there was neither a constitution nor a Bill of Rights during the
interregnum. As the Court explained in Letter of Associate Justice Reynato S.
Puno:42
A revolution has been defined as "the complete overthrow of the established
government in any country or state by those who were previously subject to it" or
as "a sudden, radical and fundamental change in the government or political
system, usually effected with violence or at least some acts of violence." In
Kelsen's book, General Theory of Law and State, it is defined as that which
"occurs whenever the legal order of a community is nullified and replaced by a
new order . . . a way not prescribed by the first order itself."
It was through the February 1986 revolution, a relatively peaceful one, and more
popularly known as the "people power revolution" that the Filipino people tore
themselves away from an existing regime. This revolution also saw the
unprecedented rise to power of the Aquino government.
From the natural law point of view, the right of revolution has been defined as "an
inherent right of a people to cast out their rulers, change their policy or effect
radical reforms in their system of government or institutions by force or a general
uprising when the legal and constitutional methods of making such change have
proved inadequate or are so obstructed as to be unavailable." It has been said
that "the locus of positive law-making power lies with the people of the state" and
from there is derived "the right of the people to abolish, to reform and to alter any
existing form of government without regard to the existing constitution."
xxx
It is widely known that Mrs. Aquino’s rise to the presidency was not due to
constitutional processes; in fact, it was achieved in violation of the
provisions of the 1973 Constitution as a Batasang Pambansa resolution
had earlier declared Mr. Marcos as the winner in the 1986 presidential
election. Thus it can be said that the organization of Mrs. Aquino’s Government
which was met by little resistance and her control of the state evidenced by the
appointment of the Cabinet and other key officers of the administration, the
departure of the Marcos Cabinet officials, revamp of the Judiciary and the Military
signaled the point where the legal system then in effect, had ceased to be
obeyed by the Filipino. (Emphasis supplied)
38
To hold that the Bill of Rights under the 1973 Constitution remained operative
during the interregnum would render void all sequestration orders issued by the
Philippine Commission on Good Government ("PCGG") before the adoption of
the Freedom Constitution. The sequestration orders, which direct the freezing
and even the take-over of private property by mere executive issuance without
judicial action, would violate the due process and search and seizure clauses of
the Bill of Rights.
During the interregnum, the government in power was concededly a
revolutionary government bound by no constitution. No one could validly
question the sequestration orders as violative of the Bill of Rights because there
was no Bill of Rights during the interregnum. However, upon the adoption of the
Freedom Constitution, the sequestered companies assailed the sequestration
orders as contrary to the Bill of Rights of the Freedom Constitution.
In Bataan Shipyard & Engineering Co. Inc. vs. Presidential Commission on Good
Government,43 petitioner Baseco, while conceding there was no Bill of Rights
during the interregnum, questioned the continued validity of the sequestration
orders upon adoption of the Freedom Constitution in view of the due process
clause in its Bill of Rights. The Court ruled that the Freedom Constitution, and
later the 1987 Constitution, expressly recognized the validity of sequestration
orders, thus:
If any doubt should still persist in the face of the foregoing considerations as to
the validity and propriety of sequestration, freeze and takeover orders, it should
be dispelled by the fact that these particular remedies and the authority of the
PCGG to issue them have received constitutional approbation and sanction. As
already mentioned, the Provisional or "Freedom" Constitution recognizes the
power and duty of the President to enact "measures to achieve the mandate of
the people to . . . (r)ecover ill-gotten properties amassed by the leaders and
supporters of the previous regime and protect the interest of the people through
orders of sequestration or freezing of assets or accounts." And as also already
adverted to, Section 26, Article XVIII of the 1987 Constitution treats of, and
ratifies the "authority to issue sequestration or freeze orders under Proclamation
No. 3 dated March 25, 1986."
The framers of both the Freedom Constitution and the 1987 Constitution were
fully aware that the sequestration orders would clash with the Bill of Rights. Thus,
the framers of both constitutions had to include specific language recognizing the
validity of the sequestration orders. The following discourse by Commissioner
Joaquin G. Bernas during the deliberations of the Constitutional Commission is
instructive:
FR. BERNAS: Madam President, there is something schizophrenic about the
arguments in defense of the present amendment.
For instance, I have carefully studied Minister Salonga’s lecture in the Gregorio
Araneta University Foundation, of which all of us have been given a copy. On the
one hand, he argues that everything the Commission is doing is traditionally
legal. This is repeated by Commissioner Romulo also. Minister Salonga spends
a major portion of his lecture developing that argument. On the other hand,
almost as an afterthought, he says that in the end what matters are the results
and not the legal niceties, thus suggesting that the PCGG should be allowed to
make some legal shortcuts, another word for niceties or exceptions.
Now, if everything the PCGG is doing is legal, why is it asking the CONCOM for
special protection? The answer is clear. What they are doing will not stand the
test of ordinary due process, hence they are asking for protection, for exceptions.
Grandes malos, grandes remedios, fine, as the saying stands, but let us not say
grandes malos, grande y malos remedios. That is not an allowable extrapolation.
Hence, we should not give the exceptions asked for, and let me elaborate and
give three reasons:
First, the whole point of the February Revolution and of the work of the
CONCOM is to hasten constitutional normalization. Very much at the heart of the
constitutional normalization is the full effectivity of the Bill of Rights. We cannot,
in one breath, ask for constitutional normalization and at the same time ask for a
temporary halt to the full functioning of what is at the heart of constitutionalism.
That would be hypocritical; that would be a repetition of Marcosian protestation of
due process and rule of law. The New Society word for that is "backsliding." It is
tragic when we begin to backslide even before we get there.
Second, this is really a corollary of the first. Habits tend to become ingrained.
The committee report asks for extraordinary exceptions from the Bill of Rights for
six months after the convening of Congress, and Congress may even extend this
longer.
Good deeds repeated ripen into virtue; bad deeds repeated become vice. What
the committee report is asking for is that we should allow the new government to
acquire the vice of disregarding the Bill of Rights.
Vices, once they become ingrained, become difficult to shed. The practitioners of
the vice begin to think that they have a vested right to its practice, and they will
fight tooth and nail to keep the franchise. That would be an unhealthy way of
consolidating the gains of a democratic revolution.
Third, the argument that what matters are the results and not the legal niceties is
an argument that is very disturbing. When it comes from a staunch Christian like
Commissioner Salonga, a Minister, and repeated verbatim by another staunch
Christian like Commissioner Tingson, it becomes doubly disturbing and even
discombobulating. The argument makes the PCGG an auctioneer, placing the
Bill of Rights on the auction block. If the price is right, the search and seizure
clause will be sold. "Open your Swiss bank account to us and we will award you
the search and seizure clause. You can keep it in your private safe."
Alternatively, the argument looks on the present government as hostage to the
hoarders of hidden wealth. The hoarders will release the hidden health if the
ransom price is paid and the ransom price is the Bill of Rights, specifically the
due process in the search and seizure clauses. So, there is something positively
revolving about either argument. The Bill of Rights is not for sale to the highest
bidder nor can it be used to ransom captive dollars. This nation will survive and
grow strong, only if it would become convinced of the values enshrined in the
Constitution of a price that is beyond monetary estimation.
For these reasons, the honorable course for the Constitutional Commission is to
delete all of Section 8 of the committee report and allow the new Constitution to
39
take effect in full vigor. If Section 8 is deleted, the PCGG has two options. First, it
can pursue the Salonga and the Romulo argument — that what the PCGG has
been doing has been completely within the pale of the law. If sustained, the
PCGG can go on and should be able to go on, even without the support of
Section 8. If not sustained, however, the PCGG has only one honorable option, it
must bow to the majesty of the Bill of Rights.
The PCGG extrapolation of the law is defended by staunch Christians. Let me
conclude with what another Christian replied when asked to toy around with the
law. From his prison cell, Thomas More said, "I'll give the devil benefit of law for
my nation’s safety sake." I ask the Commission to give the devil benefit of law for
our nation’s sake. And we should delete Section 8.
Thank you, Madam President. (Emphasis supplied)
Despite the impassioned plea by Commissioner Bernas against the amendment
excepting sequestration orders from the Bill of Rights, the Constitutional
Commission still adopted the amendment as Section 26,44 Article XVIII of the
1987 Constitution. The framers of the Constitution were fully aware that absent
Section 26, sequestration orders would not stand the test of due process under
the Bill of Rights.
Thus, to rule that the Bill of Rights of the 1973 Constitution remained in force
during the interregnum, absent a constitutional provision excepting sequestration
orders from such Bill of Rights, would clearly render all sequestration orders void
during the interregnum. Nevertheless, even during the interregnum the Filipino
people continued to enjoy, under the Covenant and the Declaration, almost the
same rights found in the Bill of Rights of the 1973 Constitution.
The revolutionary government, after installing itself as the de jure government,
assumed responsibility for the State’s good faith compliance with the Covenant
to which the Philippines is a signatory. Article 2(1) of the Covenant requires each
signatory State "to respect and to ensure to all individuals within its territory and
subject to its jurisdiction the rights45 recognized in the present Covenant." Under
Article 17(1) of the Covenant, the revolutionary government had the duty to
insure that "[n]o one shall be subjected to arbitrary or unlawful interference with
his privacy, family, home or correspondence."
The Declaration, to which the Philippines is also a signatory, provides in its
Article 17(2) that "[n]o one shall be arbitrarily deprived of his property." Although
the signatories to the Declaration did not intend it as a legally binding document,
being only a declaration, the Court has interpreted the Declaration as part of the
generally accepted principles of international law and binding on the State.46
Thus, the revolutionary government was also obligated under international law to
observe the rights47 of individuals under the Declaration.
The revolutionary government did not repudiate the Covenant or the Declaration
during the interregnum. Whether the revolutionary government could have
repudiated all its obligations under the Covenant or the Declaration is another
matter and is not the issue here. Suffice it to say that the Court considers the
Declaration as part of customary international law, and that Filipinos as human
beings are proper subjects of the rules of international law laid down in the
Covenant. The fact is the revolutionary government did not repudiate the
Covenant or the Declaration in the same way it repudiated the 1973 Constitution.
As the de jure government, the revolutionary government could not escape
responsibility for the State’s good faith compliance with its treaty obligations
under international law.
It was only upon the adoption of the Provisional Constitution on 25 March 1986
that the directives and orders of the revolutionary government became subject to
a higher municipal law that, if contravened, rendered such directives and orders
void. The Provisional Constitution adopted verbatim the Bill of Rights of the 1973
Constitution.48 The Provisional Constitution served as a self-limitation by the
revolutionary government to avoid abuses of the absolute powers entrusted to it
by the people.
During the interregnum when no constitution or Bill of Rights existed, directives
and orders issued by government officers were valid so long as these officers did
not exceed the authority granted them by the revolutionary government. The
directives and orders should not have also violated the Covenant or the
Declaration. In this case, the revolutionary government presumptively sanctioned
the warrant since the revolutionary government did not repudiate it. The warrant,
issued by a judge upon proper application, specified the items to be searched
and seized. The warrant is thus valid with respect to the items specifically
described in the warrant.
However, the Constabulary raiding team seized items not included in the warrant.
As admitted by petitioner’s witnesses, the raiding team confiscated items not
included in the warrant, thus:
Direct Examination of Capt. Rodolfo Sebastian
AJ AMORES
Q. According to the search warrant, you are supposed to seize only for weapons.
What else, aside from the weapons, were seized from the house of Miss
Elizabeth Dimaano?
A. The communications equipment, money in Philippine currency and US dollars,
some jewelries, land titles, sir.
Q. Now, the search warrant speaks only of weapons to be seized from the house
of Elizabeth Dimaano. Do you know the reason why your team also seized other
properties not mentioned in said search warrant?
A. During the conversation right after the conduct of said raid, I was informed that
the reason why they also brought the other items not included in the search
warrant was because the money and other jewelries were contained in attaché
cases and cartons with markings "Sony Trinitron", and I think three (3) vaults or
steel safes. Believing that the attaché cases and the steel safes were containing
firearms, they forced open these containers only to find out that they contained
money.
xxx
Q. You said you found money instead of weapons, do you know the reason why
your team seized this money instead of weapons?
A. I think the overall team leader and the other two officers assisting him decided
to bring along also the money because at that time it was already dark and they
40
felt most secured if they will bring that because they might be suspected also of
taking money out of those items, your Honor.49
Cross-examination
Atty. Banaag
Q. Were you present when the search warrant in connection with this case was
applied before the Municipal Trial Court of Batangas, Branch 1?
A. Yes, sir.
Q. And the search warrant applied for by you was for the search and seizure of
five (5) baby armalite rifles M-16 and five (5) boxes of ammunition?
A. Yes, sir.
xxx
AJ AMORES
Q. Before you applied for a search warrant, did you conduct surveillance in the
house of Miss Elizabeth Dimaano?
A. The Intelligence Operatives conducted surveillance together with the MSU
elements, your Honor.
Q. And this party believed there were weapons deposited in the house of Miss
Elizabeth Dimaano?
A. Yes, your Honor.
Q. And they so swore before the Municipal Trial Judge?
A. Yes, your Honor.
Q. But they did not mention to you, the applicant for the search warrant, any
other properties or contraband which could be found in the residence of Miss
Elizabeth Dimaano?
A. They just gave us still unconfirmed report about some hidden items, for
instance, the communications equipment and money. However, I did not include
that in the application for search warrant considering that we have not
established concrete evidence about that. So when…
Q. So that when you applied for search warrant, you had reason to believe that
only weapons were in the house of Miss Elizabeth Dimaano?
A. Yes, your Honor.50
xxx
Q. You stated that a .45 caliber pistol was seized along with one armalite rifle
M-16 and how many ammunition?
A. Forty, sir.
Q. And this became the subject of your complaint with the issuing Court, with the
fiscal’s office who charged Elizabeth Dimaano for Illegal Possession of Firearms
and Ammunition?
A. Yes, sir.
Q. Do you know what happened to that case?
A. I think it was dismissed, sir.
Q. In the fiscal’s office?
A. Yes, sir.
Q. Because the armalite rifle you seized, as well as the .45 caliber pistol had a
Memorandum Receipt in the name of Felino Melegrito, is that not correct?
A. I think that was the reason, sir.
Q. There were other articles seized which were not included in the search
warrant, like for instance, jewelries. Why did you seize the jewelries?
A. I think it was the decision of the overall team leader and his assistant to bring
along also the jewelries and other items, sir. I do not really know where it was
taken but they brought along also these articles. I do not really know their reason
for bringing the same, but I just learned that these were taken because they
might get lost if they will just leave this behind.
xxx
Q. How about the money seized by your raiding team, they were not also
included in the search warrant?
A. Yes sir, but I believe they were also taken considering that the money was
discovered to be contained in attaché cases.1âwphi1 These attaché cases were
suspected to be containing pistols or other high powered firearms, but in the
course of the search the contents turned out to be money. So the team leader
also decided to take this considering that they believed that if they will just leave
the money behind, it might get lost also.
Q. That holds true also with respect to the other articles that were seized by your
raiding team, like Transfer Certificates of Title of lands?
A. Yes, sir. I think they were contained in one of the vaults that were opened.51
It is obvious from the testimony of Captain Sebastian that the warrant did not
include the monies, communications equipment, jewelry and land titles that the
raiding team confiscated. The search warrant did not particularly describe these
items and the raiding team confiscated them on its own authority. The raiding
team had no legal basis to seize these items without showing that these items
could be the subject of warrantless search and seizure.52 Clearly, the raiding
team exceeded its authority when it seized these items.
The seizure of these items was therefore void, and unless these items are
contraband per se,53 and they are not, they must be returned to the person from
whom the raiding seized them. However, we do not declare that such person is
the lawful owner of these items, merely that the search and seizure warrant could
not be used as basis to seize and withhold these items from the possessor. We
thus hold that these items should be returned immediately to Dimaano.
WHEREFORE, the petition for certiorari is DISMISSED. The questioned
Resolutions of the Sandiganbayan dated 18 November 1991 and 25 March 1992
in Civil Case No. 0037, remanding the records of this case to the Ombudsman
for such appropriate action as the evidence may warrant, and referring this case
to the Commissioner of the Bureau of Internal Revenue for a determination of
any tax liability of respondent Elizabeth Dimaano, are AFFIRMED.
SO ORDERED.
Bellosillo, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr. and Azcuna,
JJ., concur.
Davide, Jr., C.J., in the result. I concur with Mr. Justice Vitug in his concurring
opinion.
Puno and Vitug, JJ., see separate opinion
Panganiban, J., in the result.
Quisumbing and Sandoval-Gutierrez, JJ., on official leave.
41
Ynares-Santiago, J., in the result. I concur in the separate opinion of J. Reynato
Puno.
Tinga, J., separate opinion reserved.
EN BANC
[G.R. No. 122156. February 3, 1997.]
MANILA PRINCE HOTEL, Petitioner, v. GOVERNMENT SERVICE INSURANCE
SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION
and OFFICE OF THE GOVERNMENT CORPORATE COUNSEL, Respondents.
SYLLABUS
1. POLITICAL LAW; CONSTITUTION; DEFINED. — A constitution is a system of
fundamental laws for the governance and administration of a nation. It is
supreme, imperious, absolute and unalterable except by the authority from which
it emanates. It has been defined as the fundamental and paramount law of the
nation. It prescribes the permanent framework of a system of government,
assigns to the different departments their respective powers and duties, and
establishes certain fixed principles on which government is founded. The
fundamental conception in other words is that it is a supreme law to which all
other laws must conform and in accordance with which all private rights must be
determined and all public authority administered.
2. ID.; ID.; DEEMED WRITTEN IN EVERY STATUTE AND CONTRACT. —
Under the doctrine of constitutional supremacy, if a law or contract violates any
norm of the constitution that law or contract whether promulgated by the
legislative or by the executive branch or entered into by private persons for
private purposes is null and void and without any force and effect. Thus, since
the Constitution is the fundamental, paramount and supreme law of the nation, it
is deemed written in every statute and contract. Adhering to the doctrine of
constitutional supremacy, the subject constitutional provision is, as it should be,
impliedly written in the bidding rules issued by respondent GSIS, lest the bidding
rules be nullified for being violative of the Constitution. It is a basic principle in
constitutional law that all laws and contracts must conform with the fundamental
law of the land. Those which violate the Constitution lose their reason for being.
3. ID.; ID.; CONSIDERED SELF-EXECUTING RATHER THAN NON-SELF-
EXECUTING. — In case of doubt, the Constitution should be considered self-
executing rather than non-self-executing . . . Unless the contrary is clearly
intended, the provisions of the Constitution should be considered self-executing,
as a contrary rule would give the legislature discretion to determine when, or
whether, they shall be effective. These provisions would be subordinated to the
will of the lawmaking body, which could make them entirely meaningless by
simply refusing to pass the needed implementing statute. (Cruz, Isagani A.,
Constitutional Law, 1993 ed., pp. 8-10)
4. ID.; ID.; SELF-EXECUTING PROVISIONS; LEGISLATURE NOT
PRECLUDED FROM ENACTING LAWS ENFORCING PROVISIONS. — Quite
apparently, Sec. 10, second par., of Art. XII is couched in such a way as not to
make it appear that it is non-self-executing but simply for purposes of style. But,
certainly, the legislature is not precluded from enacting further laws to enforce
the constitutional provision so long as the contemplated statute squares with the
Constitution. Minor details may be left to the legislature without the self-executing
nature of constitutional provisions. The omission from a constitution of any
express provision for a remedy for enforcing a right or liability is not necessarily
an indication that it was not intended to be self-executing. The rule is that a self-
executing provision of the constitution does not necessarily exhaust legislative
power on the subject, but any legislation must be in harmony with the
constitution, further the exercise of constitutional right and make it more
available. Subsequent legislation however does not necessarily mean that the
subject constitutional provision is not, by itself, fully enforceable.
5. ID.; ID.; ID.; A PROVISION MAY BE SELF-EXECUTING IN ONE PART AND
NON-SELF-EXECUTING IN ANOTHER. — Respondents also argue that the
non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the
tenor of the first and third paragraphs of the same section which undoubtedly are
not self-executing. The argument is flawed. If the first and third paragraphs are
not self-executing because Congress is still to enact measures to encourage the
formation and operation of enterprises fully owned by Filipinos, as in the first
paragraph, and the State still needs legislation to regulate and exercise authority
over foreign investments within its national jurisdiction, as in the third paragraph,
then a fortiori, by the same logic, the second paragraph can only be self-
executing as it does not by its language require any legislation in order to give
preference to qualified Filipinos in the grant of rights, privileges and concessions
covering the national economy and patrimony. A constitutional provision may be
self-executing in one part and non-self-executing in another.
6. ID.; ID.; NATIONAL PATRIMONY; PROVISION ON PREFERENCE TO
QUALIFIED FILIPINOS, SELF-EXECUTING. — Sec. 10, second par., Art. XII of
the 1987 Constitution is a mandatory, positive command which is complete in
itself and which needs no further guidelines or implementing laws or rules for its
enforcement. From its very words the provision does not require any legislation
to put it in operation. It is per se judicially enforceable. When our Constitution
mandates that [i]n the grant of rights, privileges, and concessions covering
national economy and patrimony, the State shall give preference to qualified
Filipinos, it means just that — qualified Filipinos shall be preferred. And when our
Constitution declares that a right exists in certain specified circumstances an
42
action may be maintained to enforce such right notwithstanding the absence of
any legislation on the subject; consequently, if there is no statute especially
enacted to enforce such constitutional right, such right enforces itself by its own
inherent potency and puissance and from which all legislations must take their
bearings. Where there is a right there is a remedy. Ubi jus ibi remedium.
7. ID.; ID.; ID.; INCLUDES THE NATIONAL, RESOURCES AND CULTURAL,
HERITAGE. — When the Constitution speaks of national patrimony, it refers not
only to the natural resources of the Philippines, as the Constitution could have
very well used the term natural resources, but also to the cultural heritage of the
Filipinos.
8. ID.; ID.; ID.; MANILA HOTEL CORPORATION, EMBRACED THEREIN;
FILIPINO FIRST POLICY PROVISION, APPLICABLE IN SALES OF HOTEL
STOCKS. — For more than eight (8) decades Manila Hotel has bore mute
witness to the triumphs and failures, loves and frustrations of the Filipinos; its
existence is impressed with public interest; its own historicity associated with our
struggle for sovereignty, independence and nationhood. Verily, Manila Hotel has
become part of our national economy and patrimony. For sure, 51% of the equity
of the MHC comes within the purview of the constitutional shelter for it comprises
the majority and controlling stock, so that anyone who acquires or owns the 51%
will have actual control and management of the hotel. In this instance, 51% of
the MHC cannot be disassociated from the hotel and the land on which the hotel
edifice stands. Consequently, we cannot sustain respondents’ claim that the
Filipino First Policy provision is not applicable since what is being sold is only
51% of the outstanding shares of the corporation, not the Hotel building nor the
land upon which the building stands.
9. ID.; STATE; SALE BY THE GSIS OF 51% OF ITS SHARE IN MANILA HOTEL
CORP., A STATE ACTION, SUBJECT TO CONSTITUTIONAL COMMAND. — In
constitutional jurisprudence, the acts of persons distinct from the government are
considered "state action" covered by the Constitution (1) when the activity it
engages in is a" public function", (2) when the government is so-significantly
involved with the private actor as to make the government responsible for his
action; and. (3) when the government has approved or authorized the action. It is
evident that the act of respondent GSIS in selling 51% of its share in respondent
MHC comes under the second and third categories of "state action." Without
doubt therefore the transaction, although entered into by respondent GSIS, is in
fact a transaction of the State and therefore subject to the constitutional
command.
10. ID.; CONSTITUTION; WHEN THE CONSTITUTION ADDRESSES THE
STATE, IT REFERS TO BOTH PEOPLE AND GOVERNMENT. — When the
Constitution addresses the State it refers not only to the people but also to the
government as elements of the State. After all, government is composed of three
(3) divisions of power — legislative, executive and judicial. Accordingly, a
constitutional mandate directed to the State is correspondingly directed to the
three (3) branches of government. It is undeniable that in this case the subject
constitutional injunction is addressed among others to the Executive Department
and respondent GSIS, a government instrumentality deriving its authority from
the State.
11. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED
FILIPINOS; SALE OF STOCKS OF MANILA HOTEL CORPORATION BY THE
GSIS; FILIPINOS ALLOWED TO MATCH THE BID OF FOREIGN ENTITY. — In
the instant case, where a foreign firm submits the highest bid in a public bidding
concerning the grant of rights, privileges and concessions covering the national
economy and patrimony, thereby exceeding the bid of a Filipino, there is no
question that the Filipino will have to be allowed to match the bid of the foreign
entity. And if the Filipino matches the bid of a foreign firm the award should go to
the Filipino. It must be so if we are to give life and meaning to the Filipino First
Policy provision of the 1987 Constitution. For, while this may neither be expressly
stated nor contemplated in the bidding rules, the constitutional fiat is omnipresent
to be simply disregarded. To ignore it would be to sanction a perilous skirting of
the basic law.
12. REMEDIAL LAW; ACTIONS; FOREIGN BIDDERS WITHOUT CAUSE OF
ACTION AGAINST GSIS BEFORE ACCEPTANCE OF BID. — The argument of
respondents that petitioner is now estopped from questioning the sale to Renong
Berhad since petitioner was well aware from the beginning that a foreigner could
participate in the bidding is meritless. Undoubtedly, Filipinos and foreigners alike
were invited to the bidding. But foreigners may be awarded the sale only if no
Filipino qualifies, or if the qualified Filipino fails to match the highest bid tendered
by the foreign entity. In the case before us, while petitioner was already preferred
at the inception of the bidding because of the constitutional mandate, petitioner
had not yet matched the bid offered by Renong Berhad. Thus it did not have the
right or personality then to compel respondent GSIS to accept its earlier bid.
Rightly, only after it had matched the bid of the foreign firm and the apparent
disregard by respondent GSIS of petitioner’s matching bid did the latter have a
cause of action.
13. ID.; SPECIAL CIVIL ACTION, CERTIORARI; FAILURE OF THE GSIS TO
EXECUTE CORRESPONDING DOCUMENTS WHERE PETITIONER HAD
MATCHED THE BID PRICE BY FOREIGN BIDDER, A GRAVE ABUSE OF
DISCRETION. — Since petitioner has already matched the bid price tendered by
Renong Berhad pursuant to the bidding rules, respondent GSIS is left with no
alternative but to award to petitioner the block of shares of MHC and to execute
the necessary agreements and documents to effect the sale in accordance not
only with the bidding guidelines and procedures but with the Constitution as well.
The refusal of respondent GSIS to execute the corresponding documents with
petitioner as provided in the bidding rules after the latter has matched the bid of
the Malaysian firm clearly constitutes grave abuse of discretion.
43

14. ID.; SUPREME COURT; DUTY BOUND TO MAKE SURE THAT
CONTRACTS DO NOT VIOLATE THE CONSTITUTION OR THE LAWS. —
While it is no business of the Court to intervene in contracts of the kind referred
to or set itself up as the judge of whether they are viable or attainable, it is its
bounden duty to make sure that they do not violate the Constitution or the laws,
or are not adopted or implemented with grave abuse of discretion amounting to
lack or excess of jurisdiction. It will never shirk that duty, no matter how buffeted
by winds of unfair and ill-informed criticism. Indeed, the Court will always defer to
the Constitution in the proper governance of a free society; after all, there is
nothing so sacrosanct in any economic policy as to draw itself beyond judicial
review when the Constitution is involved.
PADILLA, J., concurring opinion:chanrob1es virtual 1aw library
1. POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION,
CONSTRUED. — A study of the 1935 Constitution, where the concept of
"national patrimony" originated, would show that its framers decided to adopt the
even more comprehensive expression "Patrimony of the Nation" in the belief that
the phrase encircles a concept embracing not only the natural resources of the
country but practically everything that belongs to the Filipino people, the tangible
and the material as well as the intangible and the spiritual assets and
possessions of the people. It is to be noted that the framers did not stop with
conservation. They knew that conservation alone does not spell progress; and
that this may be achieved only through development as a correlative factor to
assure to the people not only the exclusive ownership, but also the exclusive
benefits of their national patrimony. Moreover, the concept of national patrimony
has been viewed as referring not only to our rich natural resources but also to the
cultural heritage of our race. There is no doubt in my mind that the Manila Hotel
is very much a part of our national patrimony and, as such deserves
constitutional protection as to who shall own it and benefit from its operation.
This institution has played an important role in our nation’s history, having been
the venue of many a historical event, and serving as it did, and as it does, as the
Philippine Guest House for visiting foreign heads of state, dignitaries, celebrities,
and others.
2. ID.; ID.; MANILA HOTEL, PART OF OUR NATIONAL PATRIMONY. — There is
no doubt in my mind that the Manila Hotel is very much a part of our national
patrimony and, as such, deserves constitutional protection as to who shall own it
and benefit from its operation. This institution has played an important role in our
nation’s history, having been the venue of many a historical event, and serving
as it did, and as it does, as the Philippine Guest House for visiting foreign heads
of state, dignitaries. celebrities, and others.
3. ID.; ID.; PREFERENCE TO QUALIFIED FILIPINOS; APPLIED TO SALES OF
SHARE OF STOCKS OF MANILA HOTEL. — "Preference to qualified Filipinos,"
to be meaningful, must refer not only to things that are peripheral, collateral, or
tangential. It must touch and affect the very "heart of the existing order." In the
field of public bidding in the acquisition of things that pertain to the national
patrimony, preference to qualified Filipinos must allow a qualified Filipino to
match or equal the higher bid of a non-Filipino, the preference shall not operate
only when the bids of the qualified Filipino and the non-Filipino are equal in
which case, the award should undisputedly be made to the qualified Filipino. The
Constitutional preference should give the qualified Filipino an opportunity to
match or equal the higher bid of the non-Filipino bidder if the preference of the
qualified Filipino bidder is to be significant at all. While government agencies,
including the courts should re-condition their thinking to such a trend, and make it
easy and even attractive for foreign investors to come to our shores, yet we
should not preclude ourselves from reserving to us Filipinos certain areas where
our national identity, culture and heritage are involved. In the hotel industry, for
instance, foreign investors have established themselves creditably, such as in
the Shangri-La, the Nikko, the Peninsula, and Mandarin Hotels. This should not
stop us from retaining 51% of the capital stock of the Manila Hotel Corporation in
the hands of Filipinos. This would be in keeping with the intent of the Filipino
people to preserve our national patrimony, including our historical and cultural
heritage in the hands of Filipinos.
VITUG, J., separate opinion:chanrob1es virtual 1aw library
1. POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY; PROVISION
GIVING PREFERENCE TO QUALIFIED FILIPINOS, SELF-EXECUTORY. — The
provision in our fundamental law which provides that" (i)n the grant of rights,
privileges, and concessions covering the national economy and patrimony, the
State shall give preference to qualified Filipinos" is self-executory. The provision
verily does not need, although it can obviously be amplified or regulated by, an
enabling law or a set of rules.
2. ID.; ID.; ID.; PATRIMONY INCLUDES CULTURAL HERITAGE OF THE
COUNTRY; MANILA HOTEL, EMBRACED THEREIN. — The term "patrimony"
does not merely refer to the country’s natural resources but also to its cultural
heritage. A "historical landmark," to use the words of Mr. Justice Justo P. Torres,
Jr., Manila Hotel has now indeed become part of Philippine heritage.
3. ADMINISTRATIVE LAW; GOVERNMENT SERVICE INSURANCE SYSTEM;
SALE OF ITS SHARE IN MANILA HOTEL CORPORATION, AN ACT OF THE
STATE; CONSTITUTIONAL REQUIREMENT SHOULD BE COMPLIED WITH.
— The act of the Government Service Insurance System ("GSIS"), a government
entity which derives its authority from the State, in selling 51% of its share in
MHC should be considered an act of the State subject to the Constitutional
mandate.
44
4. POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY; PREFERENCE
TO QUALIFIED FILIPINOS; DOES NOT REFER TO ALLOWING QUALIFIED
FILIPINOS TO MATCH FOREIGN BID. — On the pivotal issue of the degree of
"preference to qualified Filipinos" I find it somewhat difficult to take the same path
traversed by the forceful reasoning of Justice Puno. In the particular case before
us, the only meaningful preference, it seems, would really be to allow the
qualified Filipino to match the foreign bid for, as a practical matter, I cannot see
any bid that literally calls for millions of dollars to be at par (to the last cent) with
another. The magnitude of the bids is such that it becomes hardly possible for
the competing bids to stand exactly "equal" which alone, under the dissenting
view, could trigger the right of preference.
MENDOZA, J., separate opinion:chanrob1es virtual 1aw library
POLITICAL LAW; CONSTITUTION; NATIONAL PATRIMONY; PREFERENCE
TO QUALIFIED FILIPINOS; FILIPINO BIDDERS SHOULD BE ALLOWED TO
EQUAL BID OF FOREIGN FIRM IN SALE OF STOCKS OF MANILA HOTEL
CORPORATION. — I take the view that in the context of the present controversy
the only way to enforce the constitutional mandate that" [i]n the grant of rights,
privileges and concessions covering the national patrimony the State shall give
preference to qualified Filipinos" is to allow petitioner Philippine corporation to
equal the bid of the Malaysian firm Renong Berhad for the purchase of the
controlling shares of stocks in the Manila Hotel Corporation. Indeed, it is the only
way a qualified Filipino or Philippine corporation can be given preference in the
enjoyment of a right, privilege or concession given by the State, by favoring it
over a foreign national or corporation. Under the rules on public bidding of the
Government Service and Insurance System, if petitioner and the Malaysian firm
had offered the same price per share, "priority [would be given] to the bidder
seeking the larger ownership interest in MHC," so that if petitioner bid for more
shares, it would be preferred to the Malaysian corporation for that reason and not
because it is a Philippine corporation. Consequently, it is only in cases like the
present one, where an alien corporation is the highest bidder, that preferential
treatment of the Philippine corporation is mandated not by declaring it winner but
by allowing it "to match the highest bid in terms of price per share" before it is
awarded the shares of stocks. That, to me, is what "preference to qualified
Filipinos" means in the context of this case — by favoring Filipinos whenever
they are at a disadvantage vis-a-vis foreigners.
TORRES, JR., J., separate opinion:chanrob1es virtual 1aw library
POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION; MANILA
HOTEL, EMBRACED WITHIN THE MEANING THEREOF; SALE OF ITS
STOCKS SHOULD BE LIMITED TO QUALIFIED FILIPINOS. — Section 10,
Article XII of the 1987 Constitution should be read in conjunction with Article II of
the same Constitution pertaining to "Declaration of Principles and State Policies"
which ordain — "The State shall develop a self-reliant and independent national
economy, effectively controlled by Filipinos." (Sec. 19), Interestingly, the matter of
giving preference to "qualified Filipinos" was one of the highlights in the 1987
Constitution Commission proceedings. The nationalistic provisions of the 1987
Constitution reflect the history and spirit of the Malolos Constitution of 1898, the
1935 Constitution and the 1973 Constitution. I subscribe to the view that history,
culture, heritage, and tradition are not legislated and is the product of events,
customs, usages and practices. It is actually a product of growth and acceptance
by the collective mores of a race. It is the spirit and soul of a people. The Manila
Hotel is part of our history, culture and heritage. Every inch of the Manila Hotel is
witness to historic events (too numerous to mention) which shaped our history for
almost 84 years. The history of the Manila Hotel should not be placed in the
auction block of a purely business transaction, where profit subverts the
cherished historical values of our people. The Filipino should be first under his
Constitution and in his own land.
PUNO, J., dissenting opinion:chanrob1es virtual 1aw library
1. POLITICAL LAW; CONSTITUTION; AS A RULE PROVISIONS THEREOF
ARE SELF-EXECUTING. — A Constitution provides the guiding policies and
principles upon which is built the substantial foundation and general framework
of the law and government. As a rule, its provisions are deemed self-executing
and can be enforced without further legislative action. Some of its provisions,
however, can be implemented only through appropriate laws enacted by the
Legislature, hence not self-executing. Courts as a rule consider the provisions of
the Constitution as self-executing, rather than as requiring future legislation for
their enforcement. The reason is not difficult to discern For if they are not treated
as self-executing, the mandate of the fundamental law ratified by the sovereign
people can be easily ignored and nullified by Congress. Suffused with wisdom of
the ages is the unyielding rule that legislative actions may give breath to
constitutional rights but congressional inaction should not suffocate them.
2. ID.; ID.; PROVISIONS ARE NOT SELF-EXECUTING WHERE IT MERELY
ANNOUNCES A POLICY AND EMPOWERS THE LEGISLATURE TO ENACT
LAWS TO CARRY THE POLICY INTO EFFECT. — Contrariwise, case law lays
down the rule that a constitutional provision is not self-executing where it merely
announces a policy and its language empowers the Legislature to prescribe the
means by which the policy shall be carried into effect.
3. ID.; ID.; FIRST PARAGRAPH OF SECTION 10, ARTICLE 12 NOT SELF-
EXECUTING. — The first paragraph directs Congress to reserve certain areas of
investments in the country to Filipino citizens or to corporations sixty per cent of
whose capital stock is owned by Filipinos. It further commands Congress to
enact laws that will encourage the formation and operation of one hundred
percent Filipino-owned enterprises. In checkered contrast, the second paragraph
orders the entire State to give preference to qualified Filipinos in the grant of
rights and privileges covering the national economy and patrimony. The third
45
paragraph also directs the State to regulate foreign investments in line with our
national goals and well-set priorities. The first paragraph of Section 10 is not self-
executing. By its express text, there is a categorical command for Congress to
enact laws restricting foreign ownership in certain areas of investments in the
country and to encourage the formation and operation of wholly-owned Filipino
enterprises.
4. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED FILIPINOS
UNDER PARAGRAPHS 2 AND 3 OF SECTION 10, ARTICLE 12, SELF-
EXECUTING. — The second and third paragraphs of Section 10 are different.
They are directed to the State and not to Congress alone which is but one of the
three great branches of our government. Their coverage is also broader for they
cover "the national economy and patrimony" and "foreign investments within [the]
national jurisdiction" and not merely "certain areas of investments." Beyond
debate, they cannot be read as granting Congress the exclusive power to
implement by law the policy of giving preference to qualified Filipinos in the
conferral of rights and privileges covering our national economy and patrimony.
Their language does not suggest that any of the State agency or instrumentality
has the privilege to hedge or to refuse its implementation for any reason
whatsoever. Their duty to implement is unconditional and it is now. The second
and the third paragraphs of Section 10, Article XII are thus self-executing.
5. ID.; ID.; ID.; MANILA HOTEL CORPORATION, PART OF THE NATIONAL
PATRIMONY. — The second issue is whether the sale of a majority of the stocks
of the Manila Hotel Corporation involves the disposition of part of our national
patrimony. The records of the Constitutional Commission show that the
Commissioners entertained the same view as to its meaning. According to
Commissioner Nolledo, "patrimony" refers not only to our rich natural resources
but also to the cultural heritage of our race. By this yardstick, the sale of Manila
Hotel falls within the coverage of the constitutional provision giving preferential
treatment to qualified Filipinos in the grant of rights involving our national
patrimony.
6. ID.; STATE; GSIS, EMBRACED WITHIN THE MEANING THEREOF. — The
third issue is whether the constitutional command to the State includes the
respondent GSIS. A look at its charter will reveal that GSIS is a government-
owned and controlled corporation that administers funds that come from the
monthly contributions of government employees and the government. The funds
are held in trust for a distinct purpose which cannot be disposed of indifferently.
They are to be used to finance the retirement, disability and life insurance
benefits of the employees and the administrative and operational expenses of
the GSIS. Excess funds, however, are allowed to be invested in business and
other ventures for the benefit of the employees. The GSIS is not a pure private
corporation. It is essentially a public corporation created by Congress and
granted an original charter to serve a public purpose. It is subject to the
jurisdictions of the Civil Service Commission and the Commission on Audit. As a
state-owned and controlled corporation, it is skin-bound to adhere to the policies
spelled out in the Constitution especially those designed to promote the general
welfare of the people. One of these policies is the Filipino First policy which the
people elevated as a constitutional command.
7. ID.; CONSTITUTION; PROVISIONS THEREOF DEEMED INCLUDED IN ALL
LEGISLATIONS AND ALL STATE ACTIONS. — The constitutional command to
enforce the Filipino First policy is addressed to the State and not to Congress
alone. Hence, the word "laws" should not be understood as limited to legislations
but all state actions which include applicable rules and regulations adopted by
agencies and instrumentalities of the State in the exercise of their rule-making
power.
8. ID.; ID.; NATIONAL PATRIMONY; PREFERENCE TO QUALIFIED FILIPINOS;
STATE NOT PROHIBITED FROM GRANTING RIGHTS TO FOREIGN FIRM IN
THE ABSENCE OF QUALIFIED FILIPINOS. — In the absence of qualified
Filipinos, the State is not prohibited from granting these rights, privileges and
concessions to foreigners if the act will promote the weal of the nation.
9. ID.; ID.; ID.; ID.; CASE AT BAR. — The right of preference of petitioner arises
only if it tied the bid of Renong Berhad. In that instance, all things stand equal,
and petitioner, as a qualified Filipino bidder, should be preferred. It is with deep
regret that I cannot subscribe to the view that petitioner has a right to match the
bid of Renong Berhad. Petitioner’s submission must be supported by the rules
but even if we examine the rules inside-out a thousand times, they can not justify
the claimed right. Under the rules, the right to match the highest bid arises only
"if for any reason, the highest bidder cannot be awarded the block of shares . . ."
No reason has arisen that will prevent the award to Renong Berhad. It deserves
the award as a matter of right for the rules clearly did not give to the petitioner as
a qualified Filipino the privilege to match the higher bid of a foreigner. What the
rules did not grant, petitioner cannot demand. Our sympathies may be with
petitioner but the court has no power to extend the latitude and longtitude of the
right of preference as defined by the rules. We are duty-bound to respect that
determination even if we differ with the wisdom of their judgment. The right they
grant may be little but we must uphold the grant for as long as the right of
preference is not denied. It is only when a State action amounts to a denial of the
right that the Court can come in and strike down the denial as unconstitutional.
10. REMEDIAL LAW; ACTIONS; ESTOPPEL; PARTY ESTOPPED FROM
ASSAILING THE WINNING BID OF FOREIGN FIRM FROM BEING AWARE OF
THE RULES AND REGULATIONS OF THE BIDDINGS IT AGREED TO
RESPECT. — I submit that petitioner is estopped from assailing the winning bid
of Renong Berhad. Petitioner was aware of the rules and regulations of the
bidding. It knew that the rules and regulations do not provide that a qualified
Filipino bidder can match the winning bid after submitting an inferior bid. It knew
that the bid was open to foreigners and that foreigners qualified even during the
46
first bidding. Petitioner cannot be allowed to repudiate the rules which it agreed
to respect. It cannot be allowed to obey the rules when it wins and disregard
them when it loses. If sustained, petitioners’ stance will wreak havoc on the
essence of bidding.
PANGANIBAN, J., separate dissenting opinion:chanrob1es virtual 1aw library
POLITICAL LAW; CONSTITUTION; PATRIMONY OF THE NATION;
PREFERENCE TO QUALIFIED FILIPINOS; LOSING FILIPINO NOT GIVEN
RIGHT TO EQUAL THE HIGHEST FOREIGN BID. — The majority contends the
Constitution should be interpreted to mean that, after a bidding process is
concluded, the losing Filipino bidder should be given the right to equal the
highest foreign bid, and thus to win. However, the Constitution [Sec. 10 (2), Art.
XII] simply states that "in the grant of rights . . . covering the national economy
and patrimony, the State shall give preference to qualified Filipinos." The majority
concedes that there is no law defining the extent or degree of such preference.
Specifically, no statute empowers a losing Filipino bidder to increase his bid and
equal that of the winning foreigner. In the absence of such empowering law, the
majority’s strained interpretation, I respectfully submit, constitutes unadulterated
judicial legislation, which makes bidding a ridiculous sham where no Filipino can
lose and where no foreigner can win. Only in the Philippines! Aside from being
prohibited by the Constitution, such judicial legislation is short-sighted and,
viewed properly, gravely prejudicial to long-term Filipino interests. In the absence
of a law specifying the degree or extent of the "Filipino First" policy of the
Constitution, the constitutional preference for the "qualified Filipinos" may be
allowed only where all the bids are equal. In this manner, we put the Filipino
ahead without self-destructing him and without being unfair to the foreigner. In
short, the Constitution mandates a victory for the qualified Filipino only when the
scores are tied. But not when the ballgame is over and the foreigner clearly
posted the highest score.
DECISION
BELLOSILLO, J.:
The Filipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of
rights, privileges, and concessions covering the national economy and patrimony,
the State shall give preference to qualified Filipinos, 1 is invoked by petitioner in
its bid to acquire 51% of the shares of the Manila Hotel Corporation (MHC) which
owns the historic Manila Hotel. Opposing, respondents maintain that the
provision is not self-executing but requires an implementing legislation for its
enforcement. Corollarily, they ask whether the 51% shares form part of the
national economy and patrimony covered by the protective mantle of the
Constitution.
The controversy arose when respondent Government Service Insurance System
(GSIS), pursuant to the privatization program of the Philippine Government under
Proclamation No. 50 dated 8 December 1986, decided to sell through public
bidding 30% to 51% of the issued and outstanding shares of respondent MHC.
The winning bidder, or the eventual "strategic partner," is to provide management
expertise and/or an international marketing/ reservation system, and financial
support to strengthen the profitability and performance of the Manila Hotel. 2 In a
close bidding held on 18 September 1995 only two (2) bidders participated:
petitioner Manila Prince Hotel Corporation, a Filipino corporation, which offered
to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong
Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for
the same number of shares at P44.00 per share, or P2.42 more than the bid of
petitioner.
Pertinent provisions of the bidding rules prepared by respondent GSIS state —
I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC —
1. The Highest Bidder must comply with the conditions set forth below by
October 23, 1995 (reset to November 3, 1995) or the Highest Bidder will lose the
right to purchase the Block of Shares and GSIS will instead offer the Block of
Shares to the other Qualified Bidders:chanrob1es virtual 1aw library
a. The Highest Bidder must negotiate and execute with the GSIS/MHC the
Management Contract, International Marketing/Reservation System Contract or
other type of contract specified by the Highest Bidder in its strategic plan for the
Manila Hotel . . . .
b. The Highest Bidder must execute the Stock Purchase and Sale Agreement
with GSIS . . . .
K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER —
The Highest Bidder will be declared the Winning Bidder/Strategic Partner after
the following conditions are met
a. Execution of the necessary contracts with GSIS/MHC not later than October
23, 1995 (reset to November 3, 1995); and
b. Requisite approvals from the GSIS/MHC and COP (Committee on
Privatization)/ OGCC (Office of the Government Corporate Counsel) are
obtained." 3
47
Pending the declaration of Renong Berhard as the winning bidder/strategic
partner and the execution of the necessary contracts, petitioner in a letter to
respondent GSIS dated 28 September 1995 matched the bid price of P44.00 per
share tendered by Renong Berhad. 4 In a subsequent letter dated 10 October
1995 petitioner sent a manager’s check issued by Philtrust Bank for Thirty-three
Million Pesos (P33,000,000.00) as Bid Security to match the bid of the Malaysian
Group, Messrs. Renong Berhad . . . . 5 which respondent GSIS refused to
accept.
On 17 October 1995, perhaps apprehensive that respondent GSIS has
disregarded the tender of the matching bid and that the sale of 51% of the MHC
may be hastened by respondent GSIS and consummated with Renong Berhad,
petitioner came to this Court on prohibition and mandamus. On 18 October 1995
the Court issued a temporary restraining order enjoining respondents from
perfecting and consummating the sale to the Malaysian firm.
On 10 September 1996 the instant case was accepted by the Court En Banc
after it was referred to it by the First Division. The case was then set for oral
arguments with former Chief Justice Enrique M. Fernando and Fr. Joaquin G.
Bernas, S.J., as amici curiae.
In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987
Constitution and submits that the Manila Hotel has been identified with the
Filipino nation and has practically become a historical monument which reflects
the vibrancy of Philippine heritage and culture. It is a proud legacy of an earlier
generation of Filipinos who believed in the nobility and sacredness of
independence and its power and capacity to release the full potential of the
Filipino people. To all intents and purposes, it has become a part of the national
patrimony. 6 Petitioner also argues that since 51% of the shares of the MHC
carries with it the ownership of the business of the hotel which is owned by
respondent GSIS, a government-owned and controlled corporation, the hotel
business of respondent GSIS being a part of the tourism industry is
unquestionably a part of the national economy. Thus, any transaction involving
51% of the shares of stock of the MHC is clearly covered by the term national
economy, to which Sec. 10, second par., Art. XII, 1987 Constitution, applies. 7
It is also the thesis of petitioner that since Manila Hotel is part of the national
patrimony and its business also unquestionably part of the national economy
petitioner should be preferred after it has matched the bid offer of the Malaysian
firm. For the bidding rules mandate that if for any reason, the Highest Bidder
cannot be awarded the Block of Shares, GSIS may offer this to the other
Qualified Bidders that have validly submitted bids provided that these Qualified
Bidders are willing to match the highest bid in terms of price per share. 8
Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of
the 1987 Constitution is merely a statement of principle and policy since it is not
a self-executing provision and requires implementing legislation(s). . . . Thus, for
the said provision to operate, there must be existing laws "to lay down conditions
under which business may be done." 9
Second, granting that this provision is self-executing, Manila Hotel does not fall
under the term national patrimony which only refers to lands of the public
domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna and all
marine wealth in its territorial sea, and exclusive marine zone as cited in the first
and second paragraphs of Sec. 2, Art. XII, 1987 Constitution. According to
respondents, while petitioner speaks of the guests who have slept in the hotel
and the events that have transpired therein which make the hotel historic, these
alone do not make the hotel fall under the patrimony of the nation. What is more,
the mandate of the Constitution is addressed to the State, not to respondent
GSIS which possesses a personality of its own separate and distinct from the
Philippines as a State.chanrobles
Third, granting that the Manila Hotel forms part of the national patrimony, the
constitutional provision invoked is still inapplicable since what is being sold is
only 51% of the outstanding shares of the corporation, not the hotel building nor
the land upon which the building stands. Certainly, 51% of the equity of the MHC
cannot be considered part of the national patrimony. Moreover, if the disposition
of the shares of the MHC is really contrary to the Constitution, petitioner should
have questioned it right from the beginning and not after it had lost in the bidding.
Fourth, the reliance by petitioner on par. V., subpar. J. 1, of the bidding rules
which provides that if for any reason, the Highest Bidder cannot be awarded the
Block of Shares, GSIS may offer this to the other Qualified Bidders that have
validly submitted bids provided that these Qualified Bidders are willing to match
the highest bid in terms of price per share, is misplaced. Respondents postulate
that the privilege of submitting a matching bid has not yet arisen since it only
takes place if for any reason, the Highest Bidder cannot be awarded the Block of
Shares. Thus the submission by petitioner of a matching bid is premature since
Renong Berhad could still very well be awarded the block of shares and the
condition giving rise to the exercise of the privilege to submit a matching bid had
not yet taken place.
Finally, the prayer for prohibition grounded on grave abuse of discretion should
fail since respondent GSIS did not exercise its discretion in a capricious,
whimsical manner, and if ever it did abuse its discretion it was not so patent and
gross as to amount to an evasion of a positive duty or a virtual refusal to perform
a duty enjoined by law. Similarly, the petition for mandamus should fail as
petitioner has no clear legal right to what it demands and respondents do not
have an imperative duty to perform the act required of them by petitioner.
48
We now resolve. A constitution is a system of fundamental laws for the
governance and administration of a nation. It is supreme, imperious, absolute
and unalterable except by the authority from which it emanates. It has been
defined as the fundamental and paramount law of the nation. 10 It prescribes the
permanent framework of a system of government, assigns to the different
departments their respective powers and duties, and establishes certain fixed
principles on which government is founded. The fundamental conception in other
words is that it is a supreme law to which all other laws must conform and in
accordance with which all private rights must be determined and all public
authority administered. 11 Under the doctrine of constitutional supremacy, if a
law or contract violates any norm of the constitution that law or contract whether
promulgated by the legislative or by the executive branch or entered into by
private persons for private purposes is null and void and without any force and
effect. Thus, since the Constitution is the fundamental paramount and supreme
law of the nation, it is deemed written in every statute and contract.
Admittedly, some constitutions are merely declarations of policies and principles.
Their provisions command the legislature to enact laws and carry out the
purposes of the framers who merely establish an outline of government providing
for the different departments of the governmental machinery and securing certain
fundamental and inalienable rights of citizens. 12 A provision which lays down a
general principle, such as those found in Art. II of the 1987 Constitution, is
usually not self-executing. But a provision which is complete in itself and
becomes operative without the aid of supplementary or enabling legislation, or
that which supplies sufficient rule by means of which the right it grants may be
enjoyed or protected, is self-executing. Thus a constitutional provision is self-
executing if the nature and extent of the right conferred and the liability imposed
are fixed by the constitution itself, so that they can be determined by an
examination and construction of its terms, and there is no language indicating
that the subject is referred to the legislature for action. 13
As against constitutions of the past, modern constitutions have been generally
drafted upon a different principle and have often become in effect extensive
codes of laws intended to operate directly upon the people in a manner similar to
that of statutory enactments, and the function of constitutional conventions has
evolved into one more like that of a legislative body. Hence, unless it is expressly
provided that a legislative act is necessary to enforce a constitutional mandate,
the presumption now is that all provisions of the constitution are self-executing. If
the constitutional provisions are treated as requiring legislation instead of self-
executing, the legislature would have the power to ignore and practically nullify
the mandate of the fundamental law. 14 This can be cataclysmic. That is why the
prevailing view is, as it has always been, that —
. . . in case of doubt, the Constitution should be considered self-executing rather
than non-self-executing. . . . Unless the contrary is clearly intended, the
provisions of the Constitution should be considered self-executing, as a contrary
rule would give the legislature discretion to determine when, or whether, they
shall be effective. These provisions would be subordinated to the will of the
lawmaking body, which could make them entirely meaningless by simply refusing
to pass the needed implementing statute. 15
Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is
clearly not self-executing, as they quote from discussions on the floor of the 1986
Constitutional Commission —
MR. RODRIGO. Madam President, I am asking this question as the Chairman of
the Committee on Style. If the wording of "PREFERENCE" is given to
"QUALIFIED FILIPINOS," can it be understood as a preference to qualified
Filipinos vis-a-vis Filipinos who are not qualified. So, why do we not make it
clear? To qualified Filipinos as against aliens?
THE PRESIDENT. What is the question of Commissioner Rodrigo? Is it to
remove the word "QUALIFIED?"
MR. RODRIGO. No, no, but say definitely "TO QUALIFIED FILIPINOS" as
against whom? As against aliens or over aliens?
MR. NOLLEDO. Madam President, I think that is understood. We use the word
"QUALIFIED" because the existing laws or prospective laws will always lay down
conditions under which business may be done. For example, qualifications on
capital, qualifications on the setting up of other financial structures, et cetera
(Emphasis supplied by respondents).
MR RODRIGO. It is just a matter of style.
MR. NOLLEDO. Yes. 16
Quite apparently, Sec. 10, second par., of Art. XII is couched in such a way as
not to make it appear that it is non-self-executing but simply for purposes of style.
But, certainly, the legislature is not precluded from enacting further laws to
enforce the constitutional provision so long as the contemplated statute squares
with the Constitution. Minor details may be left to the legislature without the self-
executing nature of constitutional provisions.
In self-executing constitutional provisions, the legislature may still enact
legislation to facilitate the exercise of powers directly granted by the constitution,
further the operation of such a provision, prescribe a practice to be used for its
enforcement, provide a convenient remedy for the protection of the rights
secured or the determination thereof, or place reasonable safeguards around the
exercise of the right. The mere fact that legislation may supplement and add to or
prescribe a penalty for the violation of a self-executing constitutional provision
does not render such a provision ineffective in the absence of such legislation.
49
The omission from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was not
intended to be self-executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on the subject, but
any legislation must be in harmony with the constitution, further the exercise of
constitutional right and make it more available. 17 Subsequent legislation
however does not necessarily mean that the subject constitutional provision is
not, by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of Sec. 10, second
par., of Art. XII is implied from the tenor of the first and third paragraphs of the
same section which undoubtedly are not self-executing. 18 The argument is
flawed. If the first and third paragraphs are not self-executing because Congress
is still to enact measures to encourage the formation and operation of enterprises
fully owned by Filipinos, as in the first paragraph, and the State still needs
legislation to regulate and exercise authority over foreign investments within its
national jurisdiction, as in the third paragraph, then a fortiori, by the same logic,
the second paragraph can only be self-executing as it does not by its language
require any legislation in order to give preference to qualified Filipinos in the
grant of rights, privileges and concessions covering the national economy and
patrimony. A constitutional provision may be self-executing in one part and non-
self-executing in another. 19
Even the cases cited by respondents holding that certain constitutional
provisions are merely statements of principles and policies, which are basically
not self-executing and only placed in the Constitution as moral incentives to
legislation, not as judicially enforceable rights — are simply not in point. Basco v.
Philippine Amusements and Gaming Corporation 20 speaks of constitutional
provisions on personal dignity, 21 the sanctity of family life, 22 the vital role of the
youth in nation-building, 23 the promotion of social justice, 24 and the values of
education. 25 Tolentino v. Secretary of Finance 26 refers to constitutional
provisions on social justice and human rights 27 and on education. 28 Lastly,
Kilosbayan, Inc. v. Morato 29 cites provisions on the promotion of general
welfare, 30 the sanctity of family life, 31 the vital role of the youth in nation-
building 32 and the promotion of total human liberation and development. 33 A
reading of these provisions indeed clearly shows that they are not judicially
enforceable constitutional rights but merely guidelines for legislation. The very
terms of the provisions manifest that they are only principles upon which
legislations must be based. Res ipsa loquitur.
On the other hand, Sec. 10, second par., Art. XII of the 1987 Constitution is a
mandatory, positive command which is complete in itself and which needs no
further guidelines or implementing laws or rules for its enforcement. From its very
words the provision does not require any legislation to put it in operation. It is per
se judicially enforceable. When our Constitution mandates that [i]n the grant of
rights, privileges, and concessions covering national economy and patrimony, the
State shall give preference to qualified Filipinos, it means just that — qualified
Filipinos shall be preferred. And when our Constitution declares that a right exists
in certain specified circumstances an action may be maintained to enforce such
right notwithstanding the absence of any legislation on the subject; consequently,
if there is no statute especially enacted to enforce such constitutional right, such
right enforces itself by its own inherent potency and puissance, and from which
all legislations must take their bearings. Where there is a right there is a remedy.
Ubi jus ibi remedium.
As regards our national patrimony, a member of the 1986 Constitutional
Commission 34 explains —
The patrimony of the Nation that should be conserved and developed refers not
only to our rich natural resources but also to the cultural heritage of our race. It
also refers to our intelligence in arts, sciences and letters. Therefore, we should
develop not only our lands, forests, mines and other natural resources but also
the mental ability or faculty of our people.
We agree. In its plain and ordinary meaning, the term patrimony pertains to
heritage. 35 When the Constitution speaks of national patrimony, it refers not
only to the natural resources of the Philippines, as the Constitution could have
very well used the term natural resources, but also to the cultural heritage of the
Filipinos.
Manila Hotel has become a landmark — a living testimonial of Philippine
heritage. While it was restrictively an American hotel when it first opened in 1912,
it immediately evolved to be truly Filipino. Formerly a concourse for the elite, it
has since then become the venue of various significant events which have
shaped Philippine history. It was called the Cultural Center of the 1930’s. It was
the site of the festivities during the inauguration of the Philippine Commonwealth.
Dubbed as the Official Guest House of the Philippine Government it plays host to
dignitaries and official visitors who are accorded the traditional Philippine
hospitality. 36
The history of the hotel has been chronicled in the book The Manila Hotel: The
Heart and Memory of a City. 37 During World War II the hotel was converted by
the Japanese Military Administration into a military headquarters. When the
American forces returned to recapture Manila the hotel was selected by the
Japanese together with Intramuros as the two (2) places for their final stand.
Thereafter, in the 1950’s and 1960’s, the hotel became the center of political
activities, playing host to almost every political convention. In 1970 the hotel
reopened after a renovation and reaped numerous international recognitions, an
acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the
site of a failed coup d’etat where an aspirant for vice-president was "proclaimed"
President of the Philippine Republic.
50
For more than eight (8) decades Manila Hotel has bore mute witness to the
triumphs and failures, loves and frustrations of the Filipinos; its existence is At least 60 percent, Madam President.
impressed with public interest; its own historicity associated with our struggle for
sovereignty, independence and nationhood. Verily, Manila Hotel has become part MR. DAVIDE.
of our national economy and patrimony. For sure, 51% of the equity of the MHC
comes within the purview of the constitutional shelter for it comprises the majority Is that the intention?
and controlling stock, so that anyone who acquires or owns the 51% will have
actual control and management of the hotel. In this instance, 51% of the MHC MR MONSOD.
cannot be disassociated from the hotel and the land on which the hotel edifice
stands. Consequently, we cannot sustain respondents’ claim that the Filipino Yes, because, in fact, we would be limiting it if we say that the preference should
First Policy provision is not applicable since what is being sold is only 51% of the only be 100-percent Filipino.
outstanding shares of the corporation, not the Hotel building nor the land upon
which the building stands. 38 MR. DAVIDE.

The argument is pure sophistry. The term qualified Filipinos as used in our I want to get that meaning clear because "QUALIFIED FILIPINOS" may refer
Constitution also includes corporations at least 60% of which is owned by only to individuals and not to juridical personalities or entities.
Filipinos. This is very clear from the proceedings of the 1986 Constitutional
Commission — MR. MONSOD.

THE PRESIDENT. We agree, Madam President. 39

Commissioner Davide is recognized. x x x

MR. DAVIDE.
MR. RODRIGO.
I would like to introduce an amendment to the Nolledo amendment. And the
amendment would consist in substituting the words "QUALIFIED FILIPINOS" Before we vote, may I request that the amendment be read again.
with the following: "CITIZENS OF THE PHILIPPINES OR CORPORATIONS OR
ASSOCIATIONS WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY MR. NOLLEDO.
OWNED BY SUCH CITIZENS."cralaw virtua1aw library
The amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES AND
x x x CONCESSIONS COVERING THE NATIONAL ECONOMY AND PATRIMONY,
THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS." And the
word "Filipinos" here, as intended by the proponents, will include not only
MR. MONSOD. individual Filipinos but also Filipino-controlled entities or entities fully-controlled
by Filipinos. 40
Madam President, apparently the proponent is agreeable, but we have to raise a
question. Suppose it is a corporation that is 80-percent Filipino, do we not give it The phrase preference to qualified Filipinos was explained thus —
preference?
MR. FOZ.
MR. DAVIDE.
Madam President, I would like to request Commissioner Nolledo to please
The Nolledo amendment would refer to an individual Filipino. What about a restate his amendment so that I can ask a question.
corporation wholly owned by Filipino citizens?
MR. NOLLEDO.
MR. MONSOD.
51
"IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING
THE NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE
PREFERENCE TO QUALIFIED FILIPINOS."cralaw virtua1aw library
MR. FOZ.
In connection with that amendment, if a foreign enterprise is qualified and a
Filipino enterprise is also qualified, will the Filipino enterprise still be given a
preference?
MR. NOLLEDO.
Obviously.
MR. FOZ.
If the foreigner is more qualified in some aspects than the Filipino enterprise, will
the Filipino still be preferred?
MR. NOLLEDO.
The answer is "yes."cralaw virtua1aw library
MR. FOZ.
Thank you. 41
Expounding further on the Filipino First Policy provision Commissioner Nolledo
continues —
MR NOLLEDO.
Yes, Madam President. Instead of "MUST," it will be "SHALL — THE STATE
SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS." This embodies the
so-called "Filipino First" policy. That means that Filipinos should be given
preference in the grant of concessions, privileges and rights covering the
national patrimony. 42
The exchange of views in the sessions of the Constitutional Commission
regarding the subject provision was still further clarified by Commissioner
Nolledo 43 —
"Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino" bias in all
economic concerns. It is better known as the FILIPINO FIRST Policy. . . . This
provision was never found in previous Constitutions. . . .
The term "qualified Filipinos" simply means that preference shall be given to
those citizens who can make a viable contribution to the common good, because
of credible competence and efficiency. It certainly does NOT mandate the
pampering and preferential treatment to Filipino citizens or organizations that are
incompetent or inefficient, since such an indiscriminate preference would be
counterproductive and inimical to the common good.
In the granting of economic rights, privileges, and concessions, when a choice
has to be made between a "qualified foreigner" and a "qualified Filipino," the
latter shall be chosen over the former."cralaw virtua1aw library
Lastly, the word qualified is also determinable. Petitioner was so considered by
respondent GSIS and selected as one of the qualified bidders. It was pre-
qualified by respondent GSIS in accordance with its own guidelines so that the
sole inference here is that petitioner has been found to be possessed of proven
management expertise in the hotel industry, or it has significant equity ownership
in another hotel company, or it has an overall management and marketing
proficiency to successfully operate the Manila Hotel. 44
The penchant to try to whittle away the mandate of the Constitution by arguing
that the subject provision is not self-executory and requires implementing
legislation is quite disturbing. The attempt to violate a clear constitutional
provision — by the government itself — is only too distressing. To adopt such a
line of reasoning is to renounce the duty to ensure faithfulness to the
Constitution. For, even some of the provisions of the Constitution which evidently
need implementing legislation have juridical life of their own and can be the
source of a judicial remedy. We cannot simply afford the government a defense
that arises out of the failure to enact further enabling, implementing or guiding
legislation. In fine, the discourse of Fr. Joaquin G. Bernas, S.J., on constitutional
government is apt —
The executive department has a constitutional duty to implement laws, including
the Constitution, even before Congress acts — provided that there are
discoverable legal standards for executive action. When the executive acts, it
must be guided by its own understanding of the constitutional command and of
applicable laws. The responsibility for reading and understanding the
Constitution and the laws is not the sole prerogative of Congress. If it were, the
executive would have to ask Congress, or perhaps the Court, for an
interpretation every time the executive is confronted by a constitutional
command. That is not how constitutional government operates. 45
Respondents further argue that the constitutional provision is addressed to the
State, not to respondent GSIS which by itself possesses a separate and distinct
personality. This argument again is at best specious. It is undisputed that the
sale of 51% of the MHC could only be carried out with the prior approval of the
State acting through respondent Committee on Privatization. As correctly pointed
52
out by Fr. Joaquin G. Bernas, S.J., this fact alone makes the sale of the assets of
respondents GSIS and MHC a "state action." In constitutional jurisprudence, the
acts of persons distinct from the government are considered "state action"
covered by the Constitution (1) when the activity it engages in is a "public
function;" (2) when the government is so-significantly involved with the private
actor as to make the government responsible for his action; and, (3) when the
government has approved or authorized the action. It is evident that the act of
respondent GSIS in selling 51% of its share in respondent MHC comes under the
second and third categories of "state action." Without doubt therefore the
transaction, although entered into by respondent GSIS, is in fact a transaction of
the State and therefore subject to the constitutional command. 46
When the Constitution addresses the State it refers not only to the people but
also to the government as elements of the State. After all, government is
composed of three (3) divisions of power — legislative, executive and judicial.
Accordingly, a constitutional mandate directed to the State is correspondingly
directed to the three (3) branches of government. It is undeniable that in this
case the subject constitutional injunction is addressed among others to the
Executive Department and respondent GSIS, a government instrumentality
deriving its authority from the State.
It should be stressed that while the Malaysian firm offered the higher bid it is not
yet the winning bidder. The bidding rules expressly provide that the highest
bidder shall only be declared the winning bidder after it has negotiated and
executed the necessary contracts, and secured the requisite approvals. Since
the Filipino First Policy provision of the Constitution bestows preference on
qualified Filipinos the mere tending of the highest bid is not an assurance that
the highest bidder will be declared the winning bidder. Resultantly, respondents
are not bound to make the award yet, nor are they under obligation to enter into
one with the highest bidder. For in choosing the awardee respondents are
mandated to abide by the dictates of the 1987 Constitution the provisions of
which are presumed to be known to all the bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy, the subject constitutional
provision is, as it should be, impliedly written in the bidding rules issued by
respondent GSIS, lest the bidding rules be nullified for being violative of the
Constitution. It is a basic principle in constitutional law that all laws and contracts
must conform with the fundamental law of the land. Those which violate the
Constitution lose their reason for being.
Paragraph V. J. 1 of the bidding rules provides that [i]f for any reason the Highest
Bidder cannot be awarded the Block of Shares, GSIS may offer this to other
Qualified Bidders that have validly submitted bids provided that these Qualified
Bidders are willing to match the highest bid in terms of price per share. 47
Certainly, the constitutional mandate itself is reason enough not to award the
block of shares immediately to the foreign bidder notwithstanding its submission
of a higher, or even the highest, bid. In fact, we cannot conceive of a stronger
reason than the constitutional injunction itself.
In the instant case, where a foreign firm submits the highest bid in a public
bidding concerning the grant of rights, privileges and concessions covering the
national economy and patrimony, thereby exceeding the bid of a Filipino, there is
no question that the Filipino will have to be allowed to match the bid of the
foreign entity. And if the Filipino matches the bid of a foreign firm the award
should go to the Filipino. It must be so if we are to give life and meaning to the
Filipino First Policy provision of the 1987 Constitution. For, while this may neither
be expressly stated nor contemplated in the bidding rules, the constitutional fiat
is omnipresent to be simply disregarded. To ignore it would be to sanction a
perilous skirting of the basic law.
This Court does not discount the apprehension that this policy may discourage
foreign investors. But the Constitution and laws of the Philippines are understood
to be always open to public scrutiny. These are given factors which investors
must consider when venturing into business in a foreign jurisdiction. Any person
therefore desiring to do business in the Philippines or with any of its agencies or
instrumentalities is presumed to know his rights and obligations under the
Constitution and the laws of the forum
The argument of respondents that petitioner is now estopped from questioning
the sale to Renong Berhad since petitioner was well aware from the beginning
that a foreigner could participate in the bidding is meritless. Undoubtedly,
Filipinos and foreigners alike were invited to the bidding. But foreigners may be
awarded the sale only if no Filipino qualifies, or if the qualified Filipino fails to
match the highest bid tendered by the foreign entity. In the case before us, while
petitioner was already preferred at the inception of the bidding because of the
constitutional mandate, petitioner had not yet matched the bid offered by Renong
Berhad. Thus it did not have the right or personality then to compel respondent
GSIS to accept its earlier bid. Rightly, only after it had matched the bid of the
foreign firm and the apparent disregard by respondent GSIS of petitioner’s
matching bid did the latter have a cause of action.
Besides, there is no time frame for invoking the constitutional safeguard unless
perhaps the award has been finally made. To insist on selling the Manila Hotel to
foreigners when there is a Filipino group willing to match the bid of the foreign
group is to insist that government be treated as any other ordinary market player,
and bound by its mistakes or gross errors of judgment, regardless of the
consequences to the Filipino people. The miscomprehension of the Constitution
is regrettable. Thus we would rather remedy the indiscretion while there is still an
opportunity to do so than let the government develop the habit of forgetting that
the Constitution lays down the basic conditions and parameters for its actions.
53
Since petitioner has already matched the bid price tendered by Renong Berhad
pursuant to the bidding rules, respondent GSIS is left with no alternative but to
award to petitioner the block of shares of MHC and to execute the necessary
agreements and documents to effect the sale in accordance not only with the
bidding guidelines and procedures but with the Constitution as well. The refusal
of respondent GSIS to execute the corresponding documents with petitioner as
provided in the bidding rules after the latter has matched the bid of the Malaysian
firm clearly constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine nationalism. It is embodied in
the 1987 Constitution not merely to be used as a guideline for future legislation
but primarily to be enforced; so must it be enforced. This Court as the ultimate
guardian of the Constitution will never shun, under any reasonable circumstance,
the duty of upholding the majesty of the Constitution which it is tasked to defend.
It is worth emphasizing that it is not the intention of this Court to impede and
diminish, much less undermine, the influx of foreign investments. Far from it, the
Court encourages and welcomes more business opportunities but avowedly
sanctions the preference for Filipinos whenever such preference is ordained by
the Constitution. The position of the Court on this matter could have not been
more appropriately articulated by Chief Justice Narvasa —
As scrupulously as it has tried to observe that it is not its function to substitute its
judgment for that of the legislature or the executive about the wisdom and
feasibility of legislation economic in nature, the Supreme Court has not been
spared criticism for decisions perceived as obstacles to economic progress and
development . . . in connection with a temporary injunction issued by the Court’s
First Division against the sale of the Manila Hotel to a Malaysian Firm and its
partner, certain statements were published in a major daily to the effect that that
injunction "again demonstrates that the Philippine legal system can be a major
obstacle to doing business here."cralaw virtua1aw library
Let it be stated for the record once again that while it is no business of the Court
to intervene in contracts of the kind referred to or set itself up as the judge of
whether they are viable or attainable, it is its bounden duty to make sure that
they do not violate the Constitution or the laws, or are not adopted or
implemented with grave abuse of discretion amounting to lack or excess of
jurisdiction. It will never shirk that duty, no matter how buffeted by winds of unfair
and ill-informed criticism. 48
Privatization of a business asset for purposes of enhancing its business viability
and preventing further losses, regardless of the character of the asset, should
not take precedence over non-material values. A commercial, nay even a
budgetary, objective should not be pursued at the expense of national pride and
dignity. For the Constitution enshrines higher and nobler non-material values.
Indeed, the Court will always defer to the Constitution in the proper governance
of a free society; after all, there is nothing so sacrosanct in any economic policy
as to draw itself beyond judicial review when the Constitution is involved. 49
Nationalism is inherent in the very concept of the Philippines being a democratic
and republican state, with sovereignty residing in the Filipino people and from
whom all government authority emanates. In nationalism, the happiness and
welfare of the people must be the goal. The nation-state can have no higher
purpose. Any interpretation of any constitutional provision must adhere to such
basic concept. Protection of foreign investments, while laudable, is merely a
policy. It cannot override the demands of nationalism. 50
The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity
to be sold to the highest bidder solely for the sake of privatization. We are not
talking about an ordinary piece of property in a commercial district. We are
talking about a historic relic that has hosted many of the most important events in
the short history of the Philippines as a nation. We are talking about a hotel
where heads of states would prefer to be housed as a strong manifestation of
their desire to cloak the dignity of the highest state function to their official visits
to the Philippines. Thus the Manila Hotel has played and continues to play a
significant role as an authentic repository of twentieth century Philippine history
and culture. In this sense, it has become truly a reflection of the Filipino soul — a
place with a history of grandeur; a most historical setting that has played a part in
the shaping of a country. 51chanroblesvirtuallawlibrary:red
This Court cannot extract rhyme nor reason from the determined efforts of
respondents to sell the historical landmark — this Grand Old Dame of hotels in
Asia — to a total stranger. For, indeed, the conveyance of this epic exponent of
the Filipino psyche to alien hands cannot be less than mephistophelian for it is, in
whatever manner viewed, a veritable alienation of a nation’s soul for some
pieces of foreign silver. And so we ask: What advantage, which cannot be
equally drawn from a qualified Filipino, can be gained by the Filipinos if Manila
Hotel — and all that it stands for — is sold to a non-Filipino? How much of
national pride will vanish if the nation’s cultural heritage is entrusted to a foreign
entity? On the other hand, how much dignity will be preserved and realized if the
national patrimony is safekept in the hands of a qualified, zealous and well-
meaning Filipino? This is the plain and simple meaning of the Filipino First Policy
provision of the Philippine Constitution. And this Court, heeding the clarion call of
the Constitution and accepting the duty of being the elderly watchman of the
nation, will continue to respect and protect the sanctity of the Constitution.
WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM,
MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and
OFFICE OF THE GOVERNMENT CORPORATE COUNSEL are directed to
CEASE and DESIST from selling 51% of the shares of the Manila Hotel
Corporation to RENONG BERHAD, and to ACCEPT the matching bid of
petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject
54
51% of the shares of the Manila Hotel Corporation at P44.00 per share and
thereafter to execute the necessary agreements and documents to effect the
sale, to issue the necessary clearances and to do such other acts and deeds as
may be necessary for the purpose.
SO ORDERED
Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ.,
concur.
G.R. No. 213948
KNIGHTS OF RIZAL, Petitioner.
vs.
DMCI HOMES, INC., DMCI PROJECT DEVELOPERS, INC., CITY OF MANILA,
NATIONAL COMMISSION FOR CULTURE AND THE ARTS, NATIONAL
HISTORICAL COMMISSION OF THE PHILIPPINES, Respondents.
DECISION
CARPIO, J.:
Bury me in the ground, place a stone and a cross over it.
 Subsequently, both the City of Manila and DMCI-PDI sought the opinion or the
My name, the date of my birth, and of my death. Nothing more.
 National Historical Commission of the Philippines (NHCP) on the matter. In the
If you later wish to surround my grave with a fence, you may do so.
 letter10 dated 6 November 2012 from NHCP I Chairperson Dr. Maria Serena I.
No anniversaries. I prefer Paang Bundok.
- Jose Rizal
The Case
Before this Court is a Petition for Injunction, with Applications for Temporary
Restraining Order, Writ of Preliminary Injunction, and Others 1 filed by the
Knights of Rizal (KOR) seeking, among others, for an order to stop the
construction of respondent DMCI Homes, Inc. 's condominium development
project known as the Torre de Manila. In its Resolution dated 25 November 2014,
the Court resolved to treat the petition as one for mandamus. 2
The Facts
On 1 September 2011, DMCI Project Developers, Inc. (DMCI-PDI) 3 acquired a
7,716.60-square meter lot in the City of Manila, located near Taft Avenue, Ermita,
beside the former Manila Jai-Alai Building and Adamson University.4 The lot was
earmarked for the construction of DMCI-PDI's Torre de Manila condominium
project.
On 2 April 2012, DMCI-PDI secured its Barangay Clearance to start the
construction of its project. It then obtained a Zoning Permit from the City of
Manila's City Planning and Development Office (CPDO) on 19 June 2012.5
Then, on 5 July 2012, the City of Manila's Office of the Building Official granted
DMCI-PDI a Building Permit, allowing it to build a "Forty Nine (49) Storey w/
Basement & 2 penthouse Level Res'l./Condominium" on the property. 6
On 24 July 2012, the City Council of Manila issued Resolution No. 121 enjoining
the Office of the Building Official to temporarily suspend the Building Permit of
DMCI-PDI, citing among others, that "the Torre de Manila Condominium, based
on their development plans, upon completion, will rise up high above the back of
the national monument, to clearly dwarf the statue of our hero, and with such
towering heights, would certainly ruin the line of sight of the Rizal Shrine from the
frontal Roxas Boulevard vantage point[.]"7
Building Official Melvin Q. Balagot then sought the opinion of the City of Manila's
City Legal Officer on whether he is bound to comply with Resolution No. 121.8 In
his letter dated 12 September 2012, City Legal Officer Renato G. Dela Cruz
stated that there is "no legal justification for the temporary suspension of the
Building Permit issued in favor of [DMCI-PDI]" since the construction "lies outside
the Luneta Park" and is "simply too far to I be a repulsive distraction or have an
objectionable effect on the artistic and historical significance" of the Rizal
Monument. 9 He also pointed out that "there is no showing that the [area of
subject property has been officially declared as an anthropological or
archeological area. Neither has it ' been categorically designated by the National
Historical Institute as a heritage zone, a cultural property, a historical landmark or
even a national treasure."
Diokno addressed to DMCI-PDI and the letter 11 dated 7 November 2012 from
NHCP Executive Director III Ludovico D. Bado)f addressed to then Manila Mayor
Alfredo S. Lim, the NHCP maintained that the Torre de Manila project site is
outside the boundaries of the Rizal f.ark and well to the rear of the Rizal
Monument, and thus, cannot possibly obstruct the frontal view of the National
Monument.
On 26 November 2013, following an online petition against the Torre de Manila
project that garnered about 7,800 signatures, the City Council of Manila issued
Resolution No. 146, reiterating its directive in Resolution No. 121 1 enjoining the
City of Manila's building officials to temporarily suspend ~MCI-PDI's Building
Permit. 12
In a letter to Mayor Joseph Ejercito Estrada dated 18 December 2013, DMCI-
PIDI President Alfredo R. Austria sought clarification on the controversy
surrounding its Zoning Permit. He stated that since the CPDO granted its Zoning
Permit, DMCI-PDI continued with the application for the Building Permit, which
was granted, and did not deem it necessary to go through the process of
appealing to the local zoning board. He then expressed DMCI-PDI's willingness
to comply with the process if the City of Manila deemed it necessary. 13
On 23 December 2013, the Manila Zoning Board of Adjustments and Appeals
(MZBAA) issued Zoning Board Resolution No. 06, Series of 2013, 14
recommending the approval of DMCI-PDI's application for variance. ;The MZBAA
noted that the Torre de Manila project "exceeds the prescribed maximum
Percentage of Land Occupancy (PLO) and exceeds the prescribeµ Floor Area
Ratio (FAR) as stipulated in Article V, Section 17 of City Ordinance No. 8119[.]"
55
However, the MZBAA still recommended the approval of the variance subject to
the five conditions set under the same resolution.
After some clarification sought by DMCI-PDI, the MZBAA issued Zoning Board
Resolution No. 06-A, Series of 2013, 15 on 8 January 2014, amending condition
(c) in the earlier resolution. 16
On 16 January 2014, the City Council of Manila issued Resolution No. 5, Series
of 2014, 17 adopting Zoning Board Resolution Nos. 06 and 06- A. The City
Council resolution states that "the City Council of Manila find[ s] no cogent
reason to deny and/or reverse the aforesaid recommendation of the [MZBAA]
and hereby ratif[ies] and confirm[s] all previously issued permits, licenses and
approvals issued by the City [Council] of Manila for Torre de Manila[.]"
Arguments of the KOR
On 12 September 2014, the KOR, a "civic, patriotic, cultural, nonpartisan, non-
sectarian and non-profit organization" 18 created under Republic Act No. 646, 19
filed a Petition for Injunction seeking a temporary restraining I order, and later a
permanent injunction, against the construction of DMCIPDI's Torre de Manila
condominium project. The KOR argues that the subject matter of the present suit
is one of "transcendental importance, paramount public interest, of overarching
significance to society, or with far-reaching implication" involving the desecration
of the Rizal Monument.
The KOR asserts that the completed Torre de Manila structure will "[stick] out like
a sore thumb, [dwarf] all surrounding buildings within a radius of two kilometer/s"
and "forever ruin the sightline of the Rizal Monument in Luneta Park: Torre de
Manila building would loom at the back I and overshadow the entire monument,
whether up close or viewed from a distance. ''20
Further, the KOR argues that the Rizal Monument, as a National Treasure, is
entitled to "full protection of the law"21 and the national government must abate
the act or activity that endangers the nation's cultural heritage "even against the
wishes of the local government hosting it." 22
Next, the KOR contends that the project is a nuisance per se23 because "[t]he
despoliation of the sight view of the Rizal Monument is a situation that annoy's or
offends the senses' of every Filipino who honors the memory of the National
Hero Jose Rizal. It is a present, continuing, worsening and aggravating status or
condition. Hence, the PROJECT is a nuisance per se. It deserves I to be abated
summarily, even without need of judicial proceeding. "24
The KOR also claims that the Torre de Manila project violates the NHCP's
Guidelines on Monuments Honoring National Heroes, Illustrious Filipinos and
Other Personages, which state that historic monuments should assert a visual
"dominance" over its surroundings,25 as well as the country's commitment under
the International Charter for the Conservation and Restoration of Monuments
and Sites, otherwise known as the Venice Charter. 26
Lastly, the KOR claims that the DMCI-PDI's construction was commenced and
continues in bad faith, and is in violation of the City of Manila's zoning ordinance.
27
Arguments of DMCI-PDI
In its Comment, DMCI-PDI argues that the KOR's petition should be dismissed
on the following grounds:
I.
THXS HONORABLE COURT HAS NO JURISDICTION OVER THIS ACTION.
II.
KOR HAS NO LEGAL RIGHT OR INTEREST TO FILE OR PR0SECUTE THIS
ACTION.
III.
TORRE DE MANILA IS NOT A NUISANCE PER SE.
IV.
DMCI-PDI ACTED IN GOOD FAITH IN CONSTRUCTING TORRE DE MANILA;
AND
V.
KOR IS NOT ENTITLED TO A TEMPORARY RESTRAINING ORPER AND/OR A
WRIT OF PRELIMINARY INJUNCTION. 28
First, DMCI-PDI asserts that the Court has no original jurisdiction over actions for
injunction.29 Even assuming that the Court has concurrent jurisdiction, DMCI-PDI
maintains that the petition should still have been filed with the Regional Trial
Court under the doctrine of hierarchy of courts and because the petition involves
questions of fact. 30
DMCI-PDI also contends that the KOR's petition is in actuality an opposition' or
appeal from the exemption granted by the City of Manila's MZBAA, a matter
which is also not within the jurisdiction of the Court. 31 DMCI-PDI claims that the
proper forum should be the MZBAA, and should the KOR fail there, it should
appeal the same to the Housing and Land Use Regulatory Board (HLURB). 32
DMCI-PDI further argues that since the Rizal Monument has been declared a
National Treasure, the power to issue a cease and desist order is lodged with the
"appropriate cultural agency" under Section 25 of Republic Act No. li0066 or the
National Cultural Heritage Act of 2009. 33 Moreover, DMCI-PDI asserts that the
KOR availed of the wrong remedy since an action for injunction is not the proper
remedy for abatement of a nuisance. 34
Second, DMCI-PDI maintains that the KOR has no standing to institute this
proceeding because it is not a real party in interest in this case. The purposes of
the KOR as a public corporation do not include the preservation of the Rizal
Monument as a cultural or historical heritage site.35 The KOR has also not shown
that it suffered an actual or threatened injury as a result of the alleged illegal
conduct of the City of Manila. If there is any injury to the KOR at all, the same
was caused by the private conduct of a private entity and not the City of Manila.
36
Third, DMCI-PDI argues that the Torre de Manila is not a nuisance per se. DMCI-
PDI reiterates that it obtained all the necessary permits, licenses, clearances,
and certificates for its construction. 37 It also refutes the KOR's claim that the
Torre de Manila would dwarf all other structures around it; considering that there
are other tall buildings even closer to the Rizal Monument itself, namely, the Eton
Baypark Tower at the corner of Roxas Boulevard and T.M. Kalaw Street (29
storeys; 235 meters from the Rizal Monument) and Sunview Palace at the corner
56
of M.H. Del Pilar and T.M. Kalaw Streets (42 storeys; 250 meters from the Rizal
Monument). 38
Fourth, DMCI-PDI next argues that it did not act in bad faith when it started
construction of its Torre de Manila project. Bad faith cannot be attributed to it
since it was within the "lawful exercise of [its] rights." 39 The KOR failed to
present any proof that DMCI-PDI did not follow the proper procedure and zoning
restrictions of the City of Manila. Aside from obtaining all the necessary permits
from the appropriate government agencies,40 DMCI-PDI also sought clarification
on its right to build on its site from the Office of the City Legal Officer of Manila,
the Manila CPDO, and the NHCP.41 Moreover, even if the KOR proffered such
proof, the Court would be 1 in no position to declare DMCI-PDI's acts as illegal
since the Court is not a trier of facts. 42
Finally, DMCI-PDI opposes the KOR's application for a Temporary Restraining
Order (TRO) and writ of preliminary injunction. DMCI-PDI asserts that the KOR
has failed to establish "a clear and unmistakable right to enjoin I the construction
of Torre de Manila, much less request its demolitior."43 DMCI-PDI further argues
that it "has complied with all the legal requirements for the construction of Torre
de Manila x x x [and] has violated o right of KOR that must be protected. Further,
KOR stands to suffer o damage because of its lack of direct pecuniary interest in
this petiti1 on. To grant the KOR's application for injunctive relief would constitute
an unjust taking of property without due process of law. "44
Arguments of the City of Manila
In its Comment, the City of Manila argues that the writ of mandamus cannot
issue "considering that no property or substantive rights whatsoever in favor of
[the KOR] is being affected or x x x entitled to judicial protection[.]"45
The City of Manila also asserts that the "issuance and revocation of a Building
Permit undoubtedly fall under the category of a discretionary act or duty
performed by the proper officer in light of his meticulous appraisal and evaluation
of the pertinent supporting documents of the application in accordance with the
rules laid out under the National Building Code [and] Presidential Decree No.
1096,"46 while the remedy of mandamus is available only to compel the
performance of a ministerial duty. 47
Further, the City of Manila maintains that the construction of the Torre de Manila
did not violate any existing law, since the "edifice [is] well behind (some 789
meters away) the line of sight of the Rizal Monument."48 It adds that the City of
Manila's "prevailing Land Use and Zoning Ordinance [Ordinance No. 8119] x xx
allows an adjustment in Floor Area Ratios thru the [MZBAA] subject to further
final approval of the City Council."49 The City Council adopted the MZBAA's
favorable: recommendation in its Resolution No. 5, ratifying all the licenses and
permits issued to DMCI-PDI for its Torre de Manila project.
In its Position Paper dated 15 July 2015, the City of Manila admitted that the
Zoning Permit issued to DMCI-PDI was "in breach of certain provisions of City
Ordinance No. 8119."50 It maintained, however, 1 that the deficiency is
"procedural in nature and pertains mostly td the failure of [DMCI-PDI] to comply
with the stipulations that allow an excess in the [FAR] provisions." 51 Further, the
City of Manila argued that the MZBAA, when it recommended the allowance of
the project's variance, imposed certain conditions upon the Torre de Manila
project in order to mitigate the possible adverse effects of an excess FAR. 52
The Issue
The issues raised by the parties can be summed up into one main point: Can the
Court issue a writ of mandamus against the officials of the City of Manila to stop
the construction of DMCI-PDI's Torre de Manila project?
The Court's Ruling
The petition for mandamus lacks merit and must be dismissed.
There is no law prohibiting the construction of the Torre de Manila.
In Manila Electric Company v. Public Service Commission,53 the Court held that
"what is not expressly or impliedly prohibited by law may be done, except
when the act is contrary to morals, customs and I public order." This
principle is fundamental in a democratic society, to protect the weak against the
strong, the minority against the majority, and the individual citizen against the
government. In essence, this principle, which is the foundation of a civilized
society under the rule of law, prescribes that the freedom to act can be curtailed
only through law. Without this principle, the rights, freedoms, and civil liberties of
citizens can be arbitrarily and whimsically trampled upon by the shifting passions
of those who can spout the loudest, or those who can gather the biggest crowd
or the most number of Internet trolls. In other instances,54 the Court has allowed
or upheld actions that were not expressly prohibited by statutes when it
determined that these acts were not contrary to morals, customs, and public
order, or that upholding the same would lead to a more equitable solution to the
controversy. However, it is the law itself - Articles 130655 and 1409(1)56 of the
Civil Code - which prescribes that acts not contrary to morals, good customs,
public order, or public policy are allowed if also not contrary to law.
In this case, there is no allegation or proof that the Torre de Manila project is
"contrary to morals, customs, and public order" or that it brings harm, danger, or
hazard to the community. On the contrary, the City of Manila has determined that
DMCI-PDI complied with the standards set under the pertinent laws and local
ordinances to construct its Torre de Manila project.
There is one fact that is crystal clear in this case. There is no law prohibiting the
construction of the Torre de Manila due to its effect on the background "view,
vista, sightline, or setting" of the Rizal Monument.
Specifically, Section 47 reads:
SEC. 47. Historical Preservation and Conservation Standards. - Historic site and
facilities shall be conserved and preserved. These shall, to the extent possible,
be made accessible for the educational and cultural enrichment of the general
public.
The following shall guide the development of historic sites and facilities:
1. Sites with historic buildings or places shall be developed to conserve and
enhance their heritage values.
2. Historic sites and facilities shall be adaptively re-used.
3. Any person who proposes to add, to alter, or partially demolish a designated
heritage property will require the approval of the City Planning and Development
Office (CPDO) and shall be required to prepare a heritage impact statement that
57
will demonstrate to the satisfaction of CPDO that the proposal will not adversely
impact the heritage significance of the property and shall submit plans for review
by the CPDO in coordination with the National Historical Institute (NHI).
4. Any proposed alteration and/or re-use of designated heritage properties shall
be evaluated based on criteria established by the heritage significance of the
particular property or site.
5. Where an owner of a heritage property applies for approval to demolish a
designated heritage property or properties, the owner shall be required to
provide evidence to satisfaction that demonstrates that rehabilitation and re-use
of the property is not viable.
6. Any designated heritage property which is to be demolished or significantly
altered shall be thoroughly documented for archival purposes with! a history,
photographic records, and measured drawings, in accordance with accepted
heritage recording guidelines, prior to demolition or alteration.
7. Residential and commercial infill in heritage areas will be sensitive to the
existing scale and pattern of those areas, which maintains the existing landscape
and streetscape qualities of those areas, and which does not result in the loss of
any heritage resources.
8. Development plans shall ensure that parking facilities (surface lots residential
garages, stand-alone parking garages and parking components as parts of larger
developments) are compatibly integrated into heritage areas, and/or are
compatible with adjacent heritage resources.
9. Local utility companies (hydro, gas, telephone, cable) shall be required to
place metering equipment, transformer boxes, power lines, conduit, equipment
boxes, piping, wireless telecommunication towers and other utility equipment and
devices in locations which do not detract from the visual character of heritage
resources, and which do not have a negative impact on its architectural integrity.
10. Design review approval shall be secured from the CPDO for any alteration of
the heritage property to ensure that design guidelines and standards are met and
shall promote preservation and conservation of the heritage property. (Emphasis
supplied)
It is clear that the standards laid down in Section 47 of Ordinance No. 8119 only
serve as guides, as it expressly states that "the following shall guide
the :development of historic sites and facilities." A guide simply sets a direction
'or gives an instruction to be followed by prope1iy owners and developers in
order to conserve and enhance a property's heritage values.
On the other hand, Section 48 states:
SEC. 48. Site Performance Standards. - The City considers it in the public
interest that all projects are designed and developed in a safe, efficient and
aesthetically pleasing manner. Site development shall consider the
environmental character and limitations of the site and its adjacent properties. All
project elements shall be in complete harmony according to good design
principles and the subsequent development must be visually pleasing as well as
efficiently functioning especially in relation to the adjacent properties and
bordering streets.
The design, construction, operation and maintenance of every facility shall be in
harmony with the existing and intended character of its neighborhood. It shall not
change the essential character of the said area but will be a substantial
improvement to the value of the properties in the neighborhood in particular and
the community in general.
Furthermore, designs should consider the following:
1. Sites, buildings and facilities shall be designed and developed with1 regard to
safety, efficiency and high standards of design. The natural environmental
character of the site and its adjacent properties shall be considered in the site
development of each building and facility.
2. The height and bulk of buildings and structures shall be so designed that it
does not impair the entry of light and ventilation, cause the loss I of privacy and/
or create nuisances, hazards or inconveniences to adjacent developments.
3. Abutments to adjacent properties shall not be allowed without the neighbor's
prior written consent which shall be required by the City Planning and
Development Office (CPDO) prior to the granting of a Zoning Permit (Locational
Clearance).
4. The capacity of parking areas/lots shall be per the minimum requirements of
the National Building Code. These shall be located, developed and landscaped
in order to enhance the aesthetic quality of the facility. In no case, shall parking
areas/lots encroach into street rights-of-way and shall follow the Traffic Code as
set by the City.
5. Developments that attract a significant volume of public modes of
transportation, such as tricycles, jeepneys, buses, etc., shall provide on-site
parking for the same. These shall also provide vehicular loading and unloading
bays so as street traffic flow will not be impeded.
6. Buffers, silencers, mufflers, enclosures and other noise-absorbing I materials
shall be provided to all noise and vibration-producing machinery. Noise levels
shall be maintained according to levels specified in DENR DA9 No. 30 -
Abatement of Noise and Other Forms of Nuisance as Defined by Law.
7. Glare and heat from any operation or activity shall not be radiated, seen or felt
from any point beyond the limits of the property.
8. No large commercial signage and/or pylon, which will be detrimental to
the skyline, shall be allowed.
9. Design guidelines, deeds of restriction, property management plans and other
regulatory tools that will ensure high quality developments shall be required from
developers of commercial subdivisions and condominiums. These shall be
submitted to the City Planning and Development Office (CPDO) for review and
approval. (Emphasis supplied)
Se9tion 4 7 of Ordinance No. 8119 specifically regulates the "development of
historic sites and facilities." Section 48 regulates "large commercial signage
and/or pylon." There is nothing in Sections 47 and 48 of Ordinance No. 8119
that disallows the construction of a building outside the boundaries of a
historic site or facility, where such building may affect the1 background of a
historic site. In this case, the Torre de Manila stands 870 meters outside and to
the rear of the Rizal Monument and "cannot possibly obstruct the front view of
58
the [Rizal] Monument." 57 Likewise, ;the Torre de Manila is not in an area that has
been declared as an "anthropological or archeological area" or in an area
designated as a heritage zone, cultural property, historical landmark, or a
national treasure by the NHCP. 58
Section 15, Article XIV of the Constitution, which deals with the subject of arts
and culture, provides that "[t]he State shall conserve, promote and popularize the
nation's historical and cultural heritage and resources x x x." Since this provision
is not self-executory, Congress passed laws dealing with the preservation and
conservation of our cultural heritage.
One such law is Republic Act No. 10066,59 or the National Cultural Heritage Act
of 2009, which empowers the National Commission for Culture and the Arts and
other cultural agencies to issue a cease and desist order "when the physical
integrity of the national cultural treasures or important cultural properties [is]
found to be in danger of destruction or significant alteration from its original
state."60 This law declares that the State should protect the "physical integrity" of
the heritage property or building if there is "danger of destruction or significant
alteration from its original state." Physical integrity refers to the structure
itself - how strong and sound the structure is. The same law does not
mention that another project, building, or property, not itself a heritage property
or building, may be the subject of a cease and desist order when it adversely
affects the background view, vista, or sightline of a heritage property or building.
Thus, Republic Act No. 10066 cannot apply to the Torre de Manila condominium
project.
Mandamus does not lie against the City of Manila.
The Constitution states that "[n]o person shall be deprived of life, liberty or
1property without due process of law x x x." 61 It is a fundamental principle that
no property shall be taken away from an individual without due process, whether
substantive or procedural. The dispossession of property, or in this case the
stoppage of the construction of a building in one's own property would violate
substantive due process.
The Rules on Civil Procedure are clear that mandamus only issues when there is
a clear legal duty imposed upon the office or the officer sought to be compelled
to perform an act, and when the party seeking mandamus has a clear legal right
to the performance of such act.
In the present case, nowhere is it found in Ordinance No. 8119 or in any law,
ordinance, or rule for that matter, that the construction of a building outside the
Rizal Park is prohibited if the building is within the background sightline or view of
the Rizal Monument. Thus, there is no legal duty on the part of the City of Manila
"to consider," in the words of the Dissenting Opinion, "the standards set
under Ordinance No. 8119" in relation to the applications of DMCI-PDI for the
Torre de Manila since under the ordinance these standards can never be
applied outside the boundaries of Rizal Park. While the Rizal Park has been
declared a National Historical Site, the area where Torre de Manila is being built
is a privately-owned property that is "not pap: of the Rizal Park that has been
declared as a National Heritage Site in 1095," and the Torre de Manila area is in
fact "well-beyond" the Rizal Park, according to NHCP Chairperson Dr. Maria
Serena I. Diokno. 62 Neither has the area of the Torre de Manila been designated
as a "heritage zone, a cultural property, a historical landmark or even a national
treasure."63
Also, to declare that the City of Manila failed to consider the standards under
Ordinance No. 8119 would involve making a finding of fact. A finding lot fact
requires notice, hearing, and the submission of evidence to ascertain compliance
with the law or regulation. In such a case, it is the Regional Trial Court which has
the jurisdiction to hear the case, receive evidence, make a proper finding of fact,
and determine whether the Torre de Manila project properly complied with the
standards set by the ordinance. In Meralco v. Public Service Commission, 64 we
held that it is the cardinal right of a party in trials and administrative proceedings
to be heard, which includes the right of the party interested or affected to present
his own case and submit evidence in support thereof and to have such evidence
presented considered by the proper court or tribunal.
To compel the City of Manila to consider the standards under Ordinance No.
8119 to the Torre de Manila project will be an empty exercise since these
standards cannot apply outside of the Rizal Park - and the Torre de Manila is
outside the Rizal Park. Mandamus will lie only if the officials
The KOR also invokes this Court's exercise of its extraordinary certiorari power
of review under Section 1, Article VIII65 of the Constitution. However, this Court
can only exercise its extraordinary certiorari power if the City of Manila, in issuing
the required permits and licenses, gravely abused its discretion amounting to
lack or excess of jurisdiction. Tellingly, neither the majority nor minority opinion
in this case has found that the City of Manila committed grave abuse of
discretion in issuing the permits and licenses to DMCI-PDI. Thus, there is no
justification at all for this Court to exercise its extraordinary certiorari power.
Moreover, the exercise of this Court's extraordinary certiorari power is limited to
actual cases and controversies that necessarily involve a violation of the
Constitution or the determination of the constitutionality or validity of a
governmental act or issuance. Specific violation of a statute that does not raise
the issue of constitutionality or validity of the statute cannot, as a rule, be the
subject of the Court's direct exercise of its expanded certiorari power. Thus, the
KOR's recourse lies with other judicial remedies or proceedings allowed under
the Rules of Court.
In Association of Medical Clinics for Overseas Workers, Inc. v. GCC Approved
Medical Centers Association, Inc., 66 we held that in cases where the question of
constitutionality of a governmental action is raised, the judicial power that the
courts exercise is likewise identified as the power of judicial review - the power to
review the constitutionality of the actions of other branches of government. As a
rule, as required by the hierarchy of courts principle, these cases are filed with
the lowest court with jurisdiction over the 1subject matter. The judicial review that
the courts undertake requires:
1) there be an actual case or controversy calling for the exercise of judicial
power;
59
2) the person challenging the act must have "standing" to challenge; he must
have a personal and substantial interest in the case such that he has sustained,
or will sustain, direct injury as a result of its enforcement;
3) the question of constitutionality must be raised at the earliest possible
opportunity; and
4) the issue of constitutionality must be the very lismota of the case.
The lower court's decision under the constitutional scheme reaches the Supreme
Court through the appeal process, through a petition for review on certiorari
under Rule 45 of the Rules of Court.
In the present case, the KOR elevated this case immediately to this Court in an
original petition for injunction which we later on treated as one for mandamus
under Rule 65. There is, however, no clear legal duty on the City of Manila to
consider the provisions of Ordinance No. 8119 for applications for permits to
build outside the protected areas of the Rizal Park. Even if there were such legal
duty, the determination of whether the City of .Manila failed to abide by this legal
duty would involve factual matters which have not been admitted or established
in this case. Establishing factual matters is not within the realm of this Court.
Findings of fact are the province of the trial courts.
There is no standard in Ordinance No. 8119 for defining or determining the
background sightline that is supposed to be protected or that is part of the
"physical integrity" of the Rizal Monument. How far should a building like the
Torre de Manila be from the Rizal Monument - one, two, three, four, or five
kilometers? Even the Solicitor General, during the Oral Arguments, conceded
that the ordinance does not prescribe how sightline is determined, neither is
there any way to measure by metes and bounds whether al construction that is
not part of the historic monument itself or is outside the protected area can
be said to violate the Rizal Monument's physicalintegrity, except only to say
"when you stand in front of the Rizal Monument, there can be no doubt that your
view is marred and impaired." This kind of a standard has no parameters and
can include a sightline or a construction as far as the human eyes can see when
standing in front of the Rizal Monument. Obviously, this Court cannot apply such
a subjective and non-uniform standard that adversely affects property rights
several kilometers away from a historical sight or facility.
The Dissenting Opinion claims that "the City, by reason of a mistaken or
erroneous construction of its own Ordinance, had failed to consider its duties
under [Ordinance No. 8119] when it issued permits in DMCI-PDI's favor."
However, MZBAA Zoning Board Resolution Nos. 06 and 06-A67 easily dispel this
claim. According to the resolutions, the City of Manila, through the MZBAA, acted
on DMCI-PDI's application for variance under the powers and standards set forth
in Ordinance No. 8119.
Without further proof that the MZBAA acted whimsically, capriciously, or
arbitrarily in issuing said resolution, the Court should respect MZBAA's exercise
of discretion. The Court cannot "substitute its I judgment :for that of said officials
who are in a better position to consider and weigh the same in the light of the
authority specifically vested in them by law." 68 Since the Court has "no
supervisory power over the proceedings I and actions of the administrative
departments of the government," it "should not generally interfere with purely
administrative and discretionary functions.; 69 The power of the Court in
mandamus petitions does not extend "to direct the exercise of judgment or
discretion in a particular way or the retraction or reversal of an action
already taken in the exercise of either."70
Still, the Dissenting Opinion insists on directing the re-evaluation by the City of
Manila, through the CPDO, of the permits previously issued in favor of the Torre
de Manila project to determine compliance with the standards ]under Ordinance
No. 8119. It also declares that the circumstances in this case warrant the
prohacvice conversion of the proceedings in the issuance of the permits into a
"contested case" necessitating notice and hearing with all the parties involved.
Prohac vice means a specific decision does not constitute a precedent because
the decision is for the specific case only, not to be followed in other cases. A
prohac vice decision violates statutory law - Article 8 of the Civil Code - which
states that "judicial decisions applying or interpreting the laws or the Constitution
shall form part of the legal system of the Philippines." The decision of the Court
in this case cannot be prohac vice because by mandate bf the law
everydecision of the Court forms part of the legal system of the Philippines. If
another case comes up with the same facts as the present case, that case must
be decided in the same way as this case to comply with the constitutional
mandate of equal protection of the law. Thus, a prohac vice decision also violates
the equal protection clause of the Constitution.
It is the policy of the courts not to interfere with the discretionary executive acts
of the executive branch unless there is a clear showing of grave abuse of
discretion amounting to lack or excess of jurisdiction. Mandamus does not lie
against the legislative and executive branches or their members acting in the
exercise of their official discretionary functions. This emanates from the respect
accorded by the judiciary to said branches as co-equal entities under the
principle of separation of powers.
In De Castro v. Salas,71 we held that no rule of law is better established than the
one that provides that mandamus will not issue to control the discretion of an
officer or a court when honestly exercised and when such power and authority is
not abused.
In exceptional cases, the Court has granted a prayer for mandamus to compel
action in matters involving judgment and discretion, only "to act, but not to act
lone way or the other," 72 and only in cases where there has been a clear
showing of grave abuse of discretion, manifest injustice, or palpable
excess of authority.73
In this case, there can be no determination by this Court that the City of Manila
had been negligent or remiss in its duty under Ordinance No. 8119 considering
that this determination will involve questions of fact. DMCI- PDI had been issued
the proper permits and had secured all approvals and licenses months before
the actual construction began. Even the KOR could not point to any law that
respondent City of Manila had violated and could only point to declarations of
policies by the NHCP and the Venice Charter which do not constitute clear legal
bases for the issuance of a writ of mandam1s.
60
The Venice Charter is merely a codification of guiding principles for the
preservation and restoration of ancient monuments, sites, and buildings. It brings
I together principles in the field of historical conservation and restoration that
have been developed, agreed upon, and and laid down by experts over the
years. Each country, however, remains "responsible for applying the plan within
the framework of its own culture and traditions."74
The Venice Charter is not a treaty and therefore does not become enforceable
as law. The Philippines is not legally bound to follow its directive, as in fact, these
are not directives but mere guidelines - a set of the best practices and
techniques that have been proven over the years to be the most effective in
preserving and restoring historical monuments, sites and buildings.
The City of Manila concedes that DMCI-PDI's Zoning Permit was granted without
going through the process under Ordinance No. 8119. However, the same was
properly rectified when, faced with mounting opposition, DMCI-PDI itself sought
clarification from the City of Manila and immediately began complying with the
procedure for applying for a variance. The MZBAA did subsequently recommend
the approval of the variance and the City Council of Manila approved the same,
ratifying the licenses and permits already given to DMCI-PDI. Such ratification
was well within the right of the City Council of Manila. The City Council of Manila
could have denied the application had it seen any reason to do so. Again, the
ratification is a function of the City Council of Manila, an exercise of its
discretion1 and well within the authority granted it by law and the City's own
Ordinance No. 8119.
The main purpose of zoning is the protection of public safety, health,
convenience, and welfare. There is no indication that the Torre de Manila project
brings any harm, danger, or hazard to the people in the surrounding areas
except that the building allegedly poses an unsightly view on the taking of photos
or the visual appreciation of the Rizal Monument by locals and tourists. In fact,
the Court must take the approval of the MZBAA, and its subsequent ratification
by the City Council of Manila, as the duly authorized exercise of discretion by the
city officials. Great care must be taken that the Court does not unduly tread upon
the local government's performance of its duties. It is not for this Court to dictate
upon the other branches bf the government how their discretion must be
exercised so long as these branches do not commit grave abuse of discretion
amounting to lack or excess of jurisdiction.
Likewise, any violation of Ordinance No. 8119 must be determined in the proper
case and before the proper forum. It is not within the power of this Court in this
case to make such determination. Without such determination, this Court cannot
simply declare that the City of Manila had failed to consider its duties under
Ordinance No. 8119 when it issued the permits in DMCI-PDI's favor without
making a finding of fact how the City of Manila failed "to consider" its duties with
respect to areas outside the boundaries of the Rizal Park. In the first place, this
Court has no jurisdiction to make findings of fact in an original action like this
before this Court. Moreover the City of Manila could not legally apply standards
to sites outside the area covered by the ordinance that prescribed the standards.
With this, I taken in light of the lack of finding that there was grave abuse of
discretion I on the part of the City of Manila, there is no basis to issue the writ of
mandamus against the City of Manila.
During the Oral Arguments, it was established that the granting of a variance
neither uncommon nor irregular. On the contrary, current practice has made
granting of a variance the rule rather than the exception:
JUSTICE CARPIO: Let's go to Ordinance 8119. For residential condominium that
stand alone, in other words not part of a commercial complex or an industrial
complex ...
ATTY. FLAMINIANO: Yes, Your Honor.
JUSTICE CARPIO: The [Floor Area Ratio (FAR)] is uniform for the entire City of
Manila, the FAR 4, correct? ATTY. FLAMINIANO: I believe so, Your Honor, it's
FAR 4.
JUSTICE CARPIO: So it's FAR 4 for all residential condominium complex or
industrial projects.
ATTY. FLAMINIANO: There might be, the FAR might be different when it comes
to condominiums in commercial areas, Your Honor.
JUSTICE CARPIO: Yes, I'm talking of stand-alone ...
ATTY. FLAMINIANO: Yes, Your Honor.
JUITICE CARPIO: ... residential condominiums...
ATTY. FLAMINIANO: Uniform at FAR 4, Your Honor.
JUSTICE CARPIO: And the percentage of land occupancy is always 60 percent.
ATTY. FLAMINIANO: 60 percent correct, Your Honor.
JUSTICE CARPIO: Okay ... how many square meters is this Torre de Manila?
xxx
ATTY. FLAMINIANO: The land area, Your Honor, it's almost 5,000 ... 5,556.
JUSTICE CARPIO: So, it's almost half a hectare.
ATTY. FLAMINIANO: Yes, Your Honor.
JUSTICE CARPIO: And at FAR 4, it can only build up to 18 storeys, I mean at
FAR 4, is that correct?
ATTY. FLAMINIANO: If the 60 percent of the lot...
JUSTICE CARPIO: Yes, but that is a rule.
ATTY. FLAMINIANO: That is a rule, that's the rule, Your Honor.
JUSTICE CARPIO: 60 percent of...
ATTY. FLAMINIANO: Of the land area.
JUSTICE CARPIO: ... buildable, the rest not buildable.
ATTY. FLAMINIANO: Yes, Your Honor.
JUSTICE CARPIO: Okay, so if you look around here in the City of Manila
anywhere you go, you look at stand alone residential condominium buildings...
ATTY. FLAMINIANO: There's a lot of them, Your Honor.
JUSTICE CARPIO: It's always not FAR 4, it's more than FAR 4.
ATTY. FLAMINIANO: Yes, Your Honor.
JUSTICE CARPIO: And the buildable area is to the edge of the property ...it's not
60 percent, correct?
ATTY. FLAMINIANO: Yes, Your Honor.
JUSTICE CARPIO: So, if you look at all the ... residential buildings in the
last ten years, they [have] all variances. They did not follow the original
61
FAR 4 or the 60 percent (of land occupancy). Every residential building that
stand alone was a variance. ATTY. FLAMINIANO: That's correct, Your
Honor.
JUSTICE CARPIO: So the rule really in the City of Manila is variance, and
the exception which is never followed is FAR 4.
ATTY. FLAMINIANO: FAR 4, it appears to be that way, Your Honor.
xxxx
JUSTICE CARPIO: Every developer will have to get a variance because it
doesn't make sense to follow FAR 4 because the land is so expensive and
if you can build only two storeys on a 1,000-square meter lot, you will
surely lose money, correct? ATTY. FLAMINIANO: Exactly, Your Honor. 75
(Emphasis supplied)
This, the MZBAA's grant of the variance cannot be used as a basis to grant
the mandamus petition absent any clear finding that said act amo'1nted to
"grave abuse of discretion, manifest injustice, or palpable excess of
authority."
The KOR is Estopped from Questioning the
 Torre de Manila is Not a Nuisance Per Se.
Torre de Manila Construction.
The KOR is now estopped from questioning the construction of the Torre de
Manila project. The KOR itself came up with the idea to build a structure right
behind the Rizal Monument that would dwarf the Rizal Monument.
In the mid-1950s, the Jose Rizal National Centennial Commission (JRNCC) l
formulated a plan to build an Educational Center within the Rizal Park. In July
1955, the KOR proposed the inclusion of a national theater on the site of the
Educational Center. The JRNCC adopted the proposal. The following[ year, a law
- Republic Act No. 142776 - authorized the establishment of the Jose Rizal
National Cultural Shrine consisting of a national theater, a national museum, and
a national library on a single site. 77
To be built on the open space right behind the 12.7 meter high Rizal Monument
were: the KOR's proposed nationaltheater, standing 29.25 meters high and 286
meters in distance from the Rizal Monument; the nationallibrary, standing 25 .6
meters high and 180 meters in distance from the Rizal ;Monument, with its rear
along San Luis Street (now T.M. Kalaw Street); and facing it, the
nationalmuseum, at 19.5 meters high and 190 meters in I distance from the Rizal
Monument, with its back along P. Burgos Street. 78
However, several sectors voiced their objections to the construction for various
reasons. Among them, the need to preserve the open space of the park, the high
cost of construction, the desecration of the park's hallowed grounds, and the
fact that the proposed cultural center including the 129.25 meter high
national theater proposed by the KOR would dwarf the 12.7 meter high
Rizal Monument. 79 The JRNCC revised the plan and only the National Library -
which still stands today - was built. 80
According to the NHCP, the KOR even proposed to build a Rizal Center on the
park as recently as 2013.81 The proposal was disapproved by the NHCR and the
Department of Tourism.
Surely, as noble as the KOR's intentions were, its proposed center would have
dwarfed the Rizal Monument with its size and proximity.
In contrast, the Torre de Manila is located well outside the Rizal Park, and to the
rear of the Rizal Monument - approximately 870 meters from the Rizal Monument
and 3 0 meters from the edge of Rizal Park. 82
It is a basic principle that "one who seeks equity and justice must come to court
with clean hands. "83 In Jenosa v. Delariarte, 84 the Court reiterated ,that he who
seeks equity must do equity, and he who comes into equity must come with
clean hands. This "signifies that a litigant may be denied relief by a court of
equity on the ground that his conduct has been inequitable, unfair and dishonest,
or fraudulent, or deceitful as to the controversy in issue. " 85 Thus, the KOR,
having earlier proposed a national theater a mere 286meters in distance from the
back of the Rizal Monument that would have dwarfed the Rizal Monument,
comes to this I Court with unclean hands. It is now precluded from "seeking any
equitable refuge" 86 from the Court. The KOR's petition should be dismissed on
this ground alone.
In its petition, the KOR claims that the Torre de Manila is a nuisance perse that
deserves to be summarily abated even without judicial proceedings. 87 However,
during the Oral Arguments, counsel for the KOR argued that the KOR now
believes that the Torre de Manila is a nuisance per accidens and not a nuisance
perse. 88
Article 694 of the Civil Code defines a nuisance as any act, omission,
establishment, business, condition of property, or anything else which: (1) injures
or endangers the health or safety of others; (2) annoys or offends the senses; (3)
shocks, defies or disregards decency or morality; (4) obstructs or interferes with
the free passage of any public highway or street, or any body of water; or (5)
hinders or impairs the use of property.
Thy Court recognizes two kinds of nuisances. The first, nuisance perse, is on
"recognized as a nuisance under any and all circumstances, because it
constitutes a direct menace to public health or safety, and, for that reason, may
be abated summarily under the undefined law of necessity." 89 The second,
nuisance peraccidens, is that which "depends upon certain conditions and
circumstances, and its existence being a question of fact, it cannot be abated
without due hearing thereon in a tribunal authorized to decide whether such a
thing in law constitutes a nuisance. "90
It can easily be gleaned that the Torre de Manila is not a nuisance per se. The
Torre de Manila project cannot be considered as a "direct menace to I public
health or safety." Not only is a condominium project commonplace in the City of
Manila, DMCI-PDI has, according to the proper government agencies, complied
with health and safety standards set by law. DMCI-PDI has been granted the
following permits and clearances prior to starting the project: (1) Height
Clearance Permit from the Civil Aviation Authority of the Philippines;91 (2)
Development Permit from the HLURB;92 (3) Zoning Certification from the
HLURB;93 (4) Certificate of Environmental Compliance Commitment from the
Environment Management Bureau of the Department of Environment and
62
Natural Resources;94 (5) Barangay Clearance95 (6) Zoning Permit;96 (7) Building
Permit;97 (8) and Electrical and Mechanical Permit.98
Later, DMCI-PDI also obtained the right to build under a variance recommended
by the MZBAA and granted by the City Council of Manila. Thus, there can be no
doubt that the Torre de Manila project is not a nuisance perse.
On the other hand, the KOR now claims that the Torre de Manila is a nuisance
peraccidens.
By definition, a nuisance peraccidens is determined based on its surrounding
conditions and circumstances. These conditions and circumstances must be well
established, not merely alleged. The Court cannot simply accept these conditions
and circumstances as established facts as the KOR would have us do in this
case. 99 The KOR itself concedes that the question of whether the Torre de
Manila is a nuisance peraccidens is a question of fact. 100
The authority to decide when a nuisance exists is an authority to find facts, to
estimate their force, and to apply rules of law to the case thus made. 101 1lhis
Court is no such authority. It is not a trier of facts. It cannot simply take the
allegations in the petition and accept these as facts, more so in this case where
these allegations are contested by the respondents.
The task to receive and evaluate evidence is lodged with the trial courts. The
question, then, of whether the Torre de Manila project is a nuisance peraccidens
must be settled after due proceedings brought before the proper Regional Trial
Court. The KOR cannot circumvent the process in the guise be protecting
national culture and heritage.
The TRO must be lifted.
Injunctive reliefs are meant to preserve substantive rights and prevent further
injury102 until final adjudication on the merits of the case. In the present case,
since the legal rights of the KOR are not well-defined, clear, and certain, the
petition for mandamus must be dismissed and the TRO lifted.
The general rule is that courts will not disturb the findings of I administrative
agencies when they are supported by substantial evidence. In this case, DMCI-
PDI already acquired vested rights in the various permits, licenses, or even
variances it had applied for in order to build a 49-storey building which is, and
had been, allowed by the City of Manila's zoning ordinance.
As we have time and again held, courts generally hesitate to review discretionary
decisions or actions of administrative agencies in the absence of proof that such
decisions or actions were arrived at with grave abuse of discretion amounting to
lack or excess of jurisdiction.
In JRS Business Corp. v. Montesa, 103 we held that mandamus is the proper
remedy if it could be shown that there was neglect on the part of a tribunal in the
performance of an act which the law specifically enjoins as a duty, or there was
an unlawful exclusion of a party from the use and enjoyment be a right to which
he is clearly entitled. Only specific legal rights may be enforced by mandamus if
they are clear and certain. If the legal rights of th6 petitioner are not well-defined,
definite, clear, and certain, 104 the petition must be dismissed. Stated otherwise,
the writ never issues in doubtful cases. It neither confers powers nor imposes
duties. It is simply a command to exercise a power already possessed and to
perform a duty already imposed. 105
In sum, bearing in mind the Court does not intervene in discretionary acts of the
executive department in the absence of grave abuse of discretion, 106 and
considering that mandamus may only be issued to enforce a clear and certain
legal right, 107 the present special civil action for mandamus must be dismissed
and the TRO issued earlier must be lifted.
A FINAL WORD
It had been Rizal’s wish to die facing the rising sun. In his Mi Ultimo Adios, the
poem he left for his family the night before he was executed, Rizal wrote:
Yo muero cuando veo que el cielo se colora

Y al fin anuncia el dia tras lobrego capuz 108
[Ako’y mamamatay, ngayong namamalas

na sa Silanganan ay namamanaag

yaong maligayang araw na sisikat

sa likod ng luksang nagtabing na ulap.] 109
[I die just when I see the dawn break,
Through the gloom of night, to herald the day] 110
Yet at the point of his execution, he was made to stand facing West towards
Manila Bay, with his back to the firing squad, like the traitor the colonial
government wished to portray him. He asked to face his executioners, facing the
East where the sun would be rising since it was early morning, but the Spanish
captain did not allow it. As he was shot and a single bullet struck his frail body,
Rizal forced himself, with his last remaining strength, to turn around to face the
East and thus he fell on his back with] his face to the sky and the rising sun.
Then, the Spanish captain approached Rizal and finished him off with one pistol
shot to his head.
Before his death, Rizal wrote a letter to his family. He asked for a simple tomb,
marked with a cross and a stone with only his name and the date of his birth and
death; no anniversary celebrations; and interment at Paang Bundok (now, the
Manila North Cemetery). Rizal never wanted his grave to be a burden to future
generations.
The letter never made it to his family and his wishes were not carried out. The
letter was discovered many years later, in 1953. By then, his remains had been
entombed at the Rizal Monument, countless anniversaries had been .
celebrated, with memorials and monuments built throughout the world.
Rizal's wish was unmistakable: to be buried without pomp or pageantry; to the
point of reaching oblivion or obscurity in the future. 111 For Rizal's life was never
about fame or vainglory, but for the country he loved dearly and for which he
gave up his life.
The Rizal Monument is expressly against Rizal' s own wishes. That Rizal's statue
now stands facing West towards Manila Bay, with Rizal's back to the East, adds
salt to the wound. If we continue the present orientation of Rizal's statue, with
Rizal facing West, we would be like the Spanish captain who refused Rizal's
request to die facing the rising sun in the East. On the other hand, if Rizal' s
statue is made to face East, as Rizal had desired when he was about to be shot,
63
the background - the blue sky above Manila Bay - would forever be clear of
obstruction, and we would be faithful to Rizal's dying wish.
WHEREFORE, the petition for mandamus is DISMISSED for lack of merit. The
Temporary Restraining Order issued by the Court on 16 June 2015 is LIFTED
effective immediately.
SO ORDERED.
EN BANC
G.R No. 187167 August 16, 2011
PROF. MERLIN M. MAGALLONA, AKBAYAN PARTY-LIST REP. RISA
HONTIVEROS, PROF. HARRY C. ROQUE, JR., AND UNIVERSITY OF THE
PHILIPPINES COLLEGE OF LAW STUDENTS, ALITHEA BARBARA ACAS,
VOLTAIRE ALFERES, CZARINA MAY ALTEZ, FRANCIS ALVIN ASILO,
SHERYL BALOT, RUBY AMOR BARRACA, JOSE JAVIER BAUTISTA,
ROMINA BERNARDO, VALERIE PAGASA BUENAVENTURA, EDAN MARRI
CAÑETE, VANN ALLEN DELA CRUZ, RENE DELORINO, PAULYN MAY
DUMAN, SHARON ESCOTO, RODRIGO FAJARDO III, GIRLIE FERRER,
RAOULLE OSEN FERRER, CARLA REGINA GREPO, ANNA MARIE CECILIA
GO, IRISH KAY KALAW, MARY ANN JOY LEE, MARIA LUISA MANALAYSAY,
MIGUEL RAFAEL MUSNGI, MICHAEL OCAMPO, JAKLYN HANNA PINEDA,
WILLIAM RAGAMAT, MARICAR RAMOS, ENRIK FORT REVILLAS, JAMES
MARK TERRY RIDON, JOHANN FRANTZ RIVERA IV, CHRISTIAN RIVERO,
DIANNE MARIE ROA, NICHOLAS SANTIZO, MELISSA CHRISTINA SANTOS,
CRISTINE MAE TABING, VANESSA ANNE TORNO, MARIA ESTER
VANGUARDIA, and MARCELINO VELOSO III, Petitioners,
vs.
HON. EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY,
HON. ALBERTO ROMULO, IN HIS CAPACITY AS SECRETARY OF THE
DEPARTMENT OF FOREIGN AFFAIRS, HON. ROLANDO ANDAYA, IN HIS
CAPACITY AS SECRETARY OF THE DEPARTMENT OF BUDGET AND
MANAGEMENT, HON. DIONY VENTURA, IN HIS CAPACITY AS
ADMINISTRATOR OF THE NATIONAL MAPPING & RESOURCE
INFORMATION AUTHORITY, and HON. HILARIO DAVIDE, JR., IN HIS
CAPACITY AS REPRESENTATIVE OF THE PERMANENT MISSION OF THE
REPUBLIC OF THE PHILIPPINES TO THE UNITED NATIONS, Respondents.
DECISION
CARPIO, J.:
The Case
This original action for the writs of certiorari and prohibition assails the
constitutionality of Republic Act No. 95221 (RA 9522) adjusting the country’s
archipelagic baselines and classifying the baseline regime of nearby territories.
The Antecedents
In 1961, Congress passed Republic Act No. 3046 (RA 3046)2 demarcating the
maritime baselines of the Philippines as an archipelagic State.3 This law followed
the framing of the Convention on the Territorial Sea and the Contiguous Zone in
1958 (UNCLOS I),4 codifying, among others, the sovereign right of States parties
over their "territorial sea," the breadth of which, however, was left undetermined.
Attempts to fill this void during the second round of negotiations in Geneva in
1960 (UNCLOS II) proved futile. Thus, domestically, RA 3046 remained
unchanged for nearly five decades, save for legislation passed in 1968 (Republic
Act No. 5446 [RA 5446]) correcting typographical errors and reserving the
drawing of baselines around Sabah in North Borneo.
In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute
now under scrutiny. The change was prompted by the need to make RA 3046
compliant with the terms of the United Nations Convention on the Law of the Sea
(UNCLOS III),5 which the Philippines ratified on 27 February 1984.6 Among
others, UNCLOS III prescribes the water-land ratio, length, and contour of
baselines of archipelagic States like the Philippines7 and sets the deadline for the
filing of application for the extended continental shelf.8 Complying with these
requirements, RA 9522 shortened one baseline, optimized the location of some
basepoints around the Philippine archipelago and classified adjacent territories,
namely, the Kalayaan Island Group (KIG) and the Scarborough Shoal, as
"regimes of islands" whose islands generate their own applicable maritime
zones.
Petitioners, professors of law, law students and a legislator, in their respective
capacities as "citizens, taxpayers or x x x legislators,"9 as the case may be,
assail the constitutionality of RA 9522 on two principal grounds, namely: (1) RA
9522 reduces Philippine maritime territory, and logically, the reach of the
Philippine state’s sovereign power, in violation of Article 1 of the 1987
Constitution,10 embodying the terms of the Treaty of Paris11 and ancillary treaties,
12 and (2) RA 9522 opens the country’s waters landward of the baselines to
maritime passage by all vessels and aircrafts, undermining Philippine
sovereignty and national security, contravening the country’s nuclear-free policy,
and damaging marine resources, in violation of relevant constitutional provisions.
13
In addition, petitioners contend that RA 9522’s treatment of the KIG as "regime of
islands" not only results in the loss of a large maritime area but also prejudices
the livelihood of subsistence fishermen.14 To buttress their argument of territorial
diminution, petitioners facially attack RA 9522 for what it excluded and included –
its failure to reference either the Treaty of Paris or Sabah and its use of UNCLOS
III’s framework of regime of islands to determine the maritime zones of the KIG
and the Scarborough Shoal.
Commenting on the petition, respondent officials raised threshold issues
questioning (1) the petition’s compliance with the case or controversy
requirement for judicial review grounded on petitioners’ alleged lack of locus
standi and (2) the propriety of the writs of certiorari and prohibition to assail the
constitutionality of RA 9522. On the merits, respondents defended RA 9522 as
the country’s compliance with the terms of UNCLOS III, preserving Philippine
territory over the KIG or Scarborough Shoal. Respondents add that RA 9522
does not undermine the country’s security, environment and economic interests
or relinquish the Philippines’ claim over Sabah.
64
Respondents also question the normative force, under international law, of
petitioners’ assertion that what Spain ceded to the United States under the
Treaty of Paris were the islands and all the waters found within the boundaries of
the rectangular area drawn under the Treaty of Paris.
We left unacted petitioners’ prayer for an injunctive writ.
The Issues
The petition raises the following issues:
1. Preliminarily –
1. Whether petitioners possess locus standi to bring this suit; and
2. Whether the writs of certiorari and prohibition are the proper remedies to assail
the constitutionality of RA 9522.
2. On the merits, whether RA 9522 is unconstitutional.
The Ruling of the Court
On the threshold issues, we hold that (1) petitioners possess locus standi to
bring this suit as citizens and (2) the writs of certiorari and prohibition are proper
remedies to test the constitutionality of RA 9522. On the merits, we find no basis
to declare RA 9522 unconstitutional.
On the Threshold Issues
Petitioners Possess Locus
Standi as Citizens
Petitioners themselves undermine their assertion of locus standi as legislators
and taxpayers because the petition alleges neither infringement of legislative
prerogative15 nor misuse of public funds,16 occasioned by the passage and
implementation of RA 9522. Nonetheless, we recognize petitioners’ locus standi
as citizens with constitutionally sufficient interest in the resolution of the merits of
the case which undoubtedly raises issues of national significance necessitating
urgent resolution. Indeed, owing to the peculiar nature of RA 9522, it is
understandably difficult to find other litigants possessing "a more direct and
specific interest" to bring the suit, thus satisfying one of the requirements for
granting citizenship standing.17
The Writs of Certiorari and Prohibition
Are Proper Remedies to Test
the Constitutionality of Statutes
In praying for the dismissal of the petition on preliminary grounds, respondents
seek a strict observance of the offices of the writs of certiorari and prohibition,
noting that the writs cannot issue absent any showing of grave abuse of
discretion in the exercise of judicial, quasi-judicial or ministerial powers on the
part of respondents and resulting prejudice on the part of petitioners.18
Respondents’ submission holds true in ordinary civil proceedings. When this
Court exercises its constitutional power of judicial review, however, we have, by
tradition, viewed the writs of certiorari and prohibition as proper remedial vehicles
to test the constitutionality of statutes,19 and indeed, of acts of other branches of
government.20 Issues of constitutional import are sometimes crafted out of
statutes which, while having no bearing on the personal interests of the
petitioners, carry such relevance in the life of this nation that the Court inevitably
finds itself constrained to take cognizance of the case and pass upon the issues
raised, non-compliance with the letter of procedural rules notwithstanding. The
statute sought to be reviewed here is one such law.
RA 9522 is Not Unconstitutional
RA 9522 is a Statutory Tool
to Demarcate the Country’s
Maritime Zones and Continental
Shelf Under UNCLOS III, not to
Delineate Philippine Territory
Petitioners submit that RA 9522 "dismembers a large portion of the national
territory"21 because it discards the pre-UNCLOS III demarcation of Philippine
territory under the Treaty of Paris and related treaties, successively encoded in
the definition of national territory under the 1935, 1973 and 1987 Constitutions.
Petitioners theorize that this constitutional definition trumps any treaty or
statutory provision denying the Philippines sovereign control over waters, beyond
the territorial sea recognized at the time of the Treaty of Paris, that Spain
supposedly ceded to the United States. Petitioners argue that from the Treaty of
Paris’ technical description, Philippine sovereignty over territorial waters extends
hundreds of nautical miles around the Philippine archipelago, embracing the
rectangular area delineated in the Treaty of Paris.22
Petitioners’ theory fails to persuade us.
UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a
multilateral treaty regulating, among others, sea-use rights over maritime zones
(i.e., the territorial waters [12 nautical miles from the baselines], contiguous zone
[24 nautical miles from the baselines], exclusive economic zone [200 nautical
miles from the baselines]), and continental shelves that UNCLOS III delimits.23
UNCLOS III was the culmination of decades-long negotiations among United
Nations members to codify norms regulating the conduct of States in the world’s
oceans and submarine areas, recognizing coastal and archipelagic States’
graduated authority over a limited span of waters and submarine lands along
their coasts.
On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III
States parties to mark-out specific basepoints along their coasts from which
baselines are drawn, either straight or contoured, to serve as geographic starting
points to measure the breadth of the maritime zones and continental shelf. Article
48 of UNCLOS III on archipelagic States like ours could not be any clearer:
Article 48. Measurement of the breadth of the territorial sea, the contiguous zone,
the exclusive economic zone and the continental shelf. – The breadth of the
territorial sea, the contiguous zone, the exclusive economic zone and the
continental shelf shall be measured from archipelagic baselines drawn in
accordance with article 47. (Emphasis supplied)
Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III
States parties to delimit with precision the extent of their maritime zones and
continental shelves. In turn, this gives notice to the rest of the international
community of the scope of the maritime space and submarine areas within which
States parties exercise treaty-based rights, namely, the exercise of sovereignty
over territorial waters (Article 2), the jurisdiction to enforce customs, fiscal,
65
immigration, and sanitation laws in the contiguous zone (Article 33), and the right
to exploit the living and non-living resources in the exclusive economic zone
(Article 56) and continental shelf (Article 77).
Even under petitioners’ theory that the Philippine territory embraces the islands
and all the waters within the rectangular area delimited in the Treaty of Paris, the
baselines of the Philippines would still have to be drawn in accordance with RA
9522 because this is the only way to draw the baselines in conformity with
UNCLOS III. The baselines cannot be drawn from the boundaries or other
portions of the rectangular area delineated in the Treaty of Paris, but from the
"outermost islands and drying reefs of the archipelago."24
UNCLOS III and its ancillary baselines laws play no role in the acquisition,
enlargement or, as petitioners claim, diminution of territory. Under traditional
international law typology, States acquire (or conversely, lose) territory through
occupation, accretion, cession and prescription,25 not by executing multilateral
treaties on the regulations of sea-use rights or enacting statutes to comply with
the treaty’s terms to delimit maritime zones and continental shelves. Territorial
claims to land features are outside UNCLOS III, and are instead governed by the
rules on general international law.26
RA 9522’s Use of the Framework
of Regime of Islands to Determine the
Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent
with the Philippines’ Claim of Sovereignty
Over these Areas
Petitioners next submit that RA 9522’s use of UNCLOS III’s regime of islands
framework to draw the baselines, and to measure the breadth of the applicable
maritime zones of the KIG, "weakens our territorial claim" over that area.27
Petitioners add that the KIG’s (and Scarborough Shoal’s) exclusion from the
Philippine archipelagic baselines results in the loss of "about 15,000 square
nautical miles of territorial waters," prejudicing the livelihood of subsistence
fishermen.28 A comparison of the configuration of the baselines drawn under RA
3046 and RA 9522 and the extent of maritime space encompassed by each law,
coupled with a reading of the text of RA 9522 and its congressional deliberations,
vis-à-vis the Philippines’ obligations under UNCLOS III, belie this view.1avvphi1
The configuration of the baselines drawn under RA 3046 and RA 9522 shows
that RA 9522 merely followed the basepoints mapped by RA 3046, save for at
least nine basepoints that RA 9522 skipped to optimize the location of
basepoints and adjust the length of one baseline (and thus comply with UNCLOS
III’s limitation on the maximum length of baselines). Under RA 3046, as under RA
9522, the KIG and the Scarborough Shoal lie outside of the baselines drawn
around the Philippine archipelago. This undeniable cartographic fact takes the
wind out of petitioners’ argument branding RA 9522 as a statutory renunciation of
the Philippines’ claim over the KIG, assuming that baselines are relevant for this
purpose.
Petitioners’ assertion of loss of "about 15,000 square nautical miles of territorial
waters" under RA 9522 is similarly unfounded both in fact and law. On the
contrary, RA 9522, by optimizing the location of basepoints, increased the
Philippines’ total maritime space (covering its internal waters, territorial sea and
exclusive economic zone) by 145,216 square nautical miles, as shown in the
table below:29
Extent of maritime area using RA 3046, as amended, taking into account the
Treaty of Paris’ delimitation (in square nautical miles)
Extent of maritime area using RA 9522, taking into account UNCLOS III (in
square nautical miles)
Internal or archipelagic waters
166,858
171,435
Territorial Sea
274,136
32,106
Exclusive Economic Zone
382,669
TOTAL
440,994
66
586,210
Thus, as the map below shows, the reach of the exclusive economic zone drawn
under RA 9522 even extends way beyond the waters covered by the rectangular
demarcation under the Treaty of Paris. Of course, where there are overlapping
exclusive economic zones of opposite or adjacent States, there will have to be a
delineation of maritime boundaries in accordance with UNCLOS III.30
Further, petitioners’ argument that the KIG now lies outside Philippine territory
because the baselines that RA 9522 draws do not enclose the KIG is negated by
RA 9522 itself. Section 2 of the law commits to text the Philippines’ continued
claim of sovereignty and jurisdiction over the KIG and the Scarborough Shoal:
SEC. 2. The baselines in the following areas over which the Philippines
likewise exercises sovereignty and jurisdiction shall be determined as
"Regime of Islands" under the Republic of the Philippines consistent with Article
121 of the United Nations Convention on the Law of the Sea (UNCLOS):
a) The Kalayaan Island Group as constituted under Presidential Decree No.
1596 and
b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)
Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part
of the Philippine archipelago, adverse legal effects would have ensued. The
Philippines would have committed a breach of two provisions of UNCLOS III.
First, Article 47 (3) of UNCLOS III requires that "[t]he drawing of such baselines
shall not depart to any appreciable extent from the general configuration of the
archipelago." Second, Article 47 (2) of UNCLOS III requires that "the length of
the baselines shall not exceed 100 nautical miles," save for three per cent (3%)
of the total number of baselines which can reach up to 125 nautical miles.31
Although the Philippines has consistently claimed sovereignty over the KIG32 and
the Scarborough Shoal for several decades, these outlying areas are located at
an appreciable distance from the nearest shoreline of the Philippine archipelago,
33 such that any straight baseline loped around them from the nearest basepoint
will inevitably "depart to an appreciable extent from the general configuration of
the archipelago."
The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-
Santiago, took pains to emphasize the foregoing during the Senate deliberations:
What we call the Kalayaan Island Group or what the rest of the world call[] the
Spratlys and the Scarborough Shoal are outside our archipelagic baseline
because if we put them inside our baselines we might be accused of violating the
provision of international law which states: "The drawing of such baseline shall
not depart to any appreciable extent from the general configuration of the
archipelago." So sa loob ng ating baseline, dapat magkalapit ang mga islands.
Dahil malayo ang Scarborough Shoal, hindi natin masasabing malapit sila sa atin
although we are still allowed by international law to claim them as our own.
This is called contested islands outside our configuration. We see that our
archipelago is defined by the orange line which [we] call[] archipelagic baseline.
Ngayon, tingnan ninyo ang maliit na circle doon sa itaas, that is Scarborough
Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or the Spratlys.
Malayo na sila sa ating archipelago kaya kung ilihis pa natin ang dating
archipelagic baselines para lamang masama itong dalawang circles, hindi na sila
magkalapit at baka hindi na tatanggapin ng United Nations because of the rule
that it should follow the natural configuration of the archipelago.34 (Emphasis
supplied)
Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS III’s
limits.1avvphi1 The need to shorten this baseline, and in addition, to optimize the
location of basepoints using current maps, became imperative as discussed by
respondents:
[T]he amendment of the baselines law was necessary to enable the Philippines
to draw the outer limits of its maritime zones including the extended continental
shelf in the manner provided by Article 47 of [UNCLOS III]. As defined by R.A.
3046, as amended by R.A. 5446, the baselines suffer from some technical
deficiencies, to wit:
1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to
Tongquil Point) is 140.06 nautical miles x x x. This exceeds the maximum length
allowed under Article 47(2) of the [UNCLOS III], which states that "The length of
such baselines shall not exceed 100 nautical miles, except that up to 3 per cent
of the total number of baselines enclosing any archipelago may exceed that
length, up to a maximum length of 125 nautical miles."
2. The selection of basepoints is not optimal. At least 9 basepoints can be
skipped or deleted from the baselines system. This will enclose an additional
2,195 nautical miles of water.
3. Finally, the basepoints were drawn from maps existing in 1968, and not
established by geodetic survey methods. Accordingly, some of the points,
particularly along the west coasts of Luzon down to Palawan were later found to
be located either inland or on water, not on low-water line and drying reefs as
prescribed by Article 47.35
Hence, far from surrendering the Philippines’ claim over the KIG and the
Scarborough Shoal, Congress’ decision to classify the KIG and the Scarborough
Shoal as "‘Regime[s] of Islands’ under the Republic of the Philippines consistent
with Article 121"36 of UNCLOS III manifests the Philippine State’s responsible
observance of its pacta sunt servanda obligation under UNCLOS III. Under
Article 121 of UNCLOS III, any "naturally formed area of land, surrounded by
water, which is above water at high tide," such as portions of the KIG, qualifies
under the category of "regime of islands," whose islands generate their own
applicable maritime zones.37
Statutory Claim Over Sabah under
RA 5446 Retained
Petitioners’ argument for the invalidity of RA 9522 for its failure to textualize the
Philippines’ claim over Sabah in North Borneo is also untenable. Section 2 of RA
5446, which RA 9522 did not repeal, keeps open the door for drawing the
baselines of Sabah:
Section 2. The definition of the baselines of the territorial sea of the Philippine
Archipelago as provided in this Act is without prejudice to the delineation of
the baselines of the territorial sea around the territory of Sabah, situated in
67
North Borneo, over which the Republic of the Philippines has acquired
dominion and sovereignty. (Emphasis supplied)
UNCLOS III and RA 9522 not
Incompatible with the Constitution’s
Delineation of Internal Waters
As their final argument against the validity of RA 9522, petitioners contend that
the law unconstitutionally "converts" internal waters into archipelagic waters,
hence subjecting these waters to the right of innocent and sea lanes passage
under UNCLOS III, including overflight. Petitioners extrapolate that these
passage rights indubitably expose Philippine internal waters to nuclear and
maritime pollution hazards, in violation of the Constitution.38
Whether referred to as Philippine "internal waters" under Article I of the
Constitution39 or as "archipelagic waters" under UNCLOS III (Article 49 [1]), the
Philippines exercises sovereignty over the body of water lying landward of the
baselines, including the air space over it and the submarine areas underneath.
UNCLOS III affirms this:
Article 49. Legal status of archipelagic waters, of the air space over archipelagic
waters and of their bed and subsoil. –
1. The sovereignty of an archipelagic State extends to the waters enclosed
by the archipelagic baselines drawn in accordance with article 47, described
as archipelagic waters, regardless of their depth or distance from the coast.
2. This sovereignty extends to the air space over the archipelagic waters,
as well as to their bed and subsoil, and the resources contained therein.
xxxx
4. The regime of archipelagic sea lanes passage established in this Part shall
not in other respects affect the status of the archipelagic waters, including
the sea lanes, or the exercise by the archipelagic State of its sovereignty
over such waters and their air space, bed and subsoil, and the resources
contained therein. (Emphasis supplied)
The fact of sovereignty, however, does not preclude the operation of municipal
and international law norms subjecting the territorial sea or archipelagic waters to
necessary, if not marginal, burdens in the interest of maintaining unimpeded,
expeditious international navigation, consistent with the international law
principle of freedom of navigation. Thus, domestically, the political branches of
the Philippine government, in the competent discharge of their constitutional
powers, may pass legislation designating routes within the archipelagic waters to
regulate innocent and sea lanes passage.40 Indeed, bills drawing nautical
highways for sea lanes passage are now pending in Congress.41
In the absence of municipal legislation, international law norms, now codified in
UNCLOS III, operate to grant innocent passage rights over the territorial sea or
archipelagic waters, subject to the treaty’s limitations and conditions for their
exercise.42 Significantly, the right of innocent passage is a customary
international law,43 thus automatically incorporated in the corpus of Philippine
law.44 No modern State can validly invoke its sovereignty to absolutely forbid
innocent passage that is exercised in accordance with customary international
law without risking retaliatory measures from the international community.
The fact that for archipelagic States, their archipelagic waters are subject to both
the right of innocent passage and sea lanes passage45 does not place them in
lesser footing vis-à-vis continental coastal States which are subject, in their
territorial sea, to the right of innocent passage and the right of transit passage
through international straits. The imposition of these passage rights through
archipelagic waters under UNCLOS III was a concession by archipelagic States,
in exchange for their right to claim all the waters landward of their baselines,
regardless of their depth or distance from the coast, as archipelagic waters
subject to their territorial sovereignty. More importantly, the recognition of
archipelagic States’ archipelago and the waters enclosed by their baselines as
one cohesive entity prevents the treatment of their islands as separate islands
under UNCLOS III.46 Separate islands generate their own maritime zones,
placing the waters between islands separated by more than 24 nautical miles
beyond the States’ territorial sovereignty, subjecting these waters to the rights of
other States under UNCLOS III.47
Petitioners’ invocation of non-executory constitutional provisions in Article II
(Declaration of Principles and State Policies)48 must also fail. Our present state
of jurisprudence considers the provisions in Article II as mere legislative guides,
which, absent enabling legislation, "do not embody judicially enforceable
constitutional rights x x x."49 Article II provisions serve as guides in formulating
and interpreting implementing legislation, as well as in interpreting executory
provisions of the Constitution. Although Oposa v. Factoran50 treated the right to a
healthful and balanced ecology under Section 16 of Article II as an exception, the
present petition lacks factual basis to substantiate the claimed constitutional
violation. The other provisions petitioners cite, relating to the protection of marine
wealth (Article XII, Section 2, paragraph 251 ) and subsistence fishermen (Article
XIII, Section 752 ), are not violated by RA 9522.
In fact, the demarcation of the baselines enables the Philippines to delimit its
exclusive economic zone, reserving solely to the Philippines the exploitation of all
living and non-living resources within such zone. Such a maritime delineation
binds the international community since the delineation is in strict observance of
UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the
international community will of course reject it and will refuse to be bound by it.
UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III
creates a sui generis maritime space – the exclusive economic zone – in waters
previously part of the high seas. UNCLOS III grants new rights to coastal States
to exclusively exploit the resources found within this zone up to 200 nautical
miles.53 UNCLOS III, however, preserves the traditional freedom of navigation of
other States that attached to this zone beyond the territorial sea before UNCLOS
III.
RA 9522 and the Philippines’ Maritime Zones
Petitioners hold the view that, based on the permissive text of UNCLOS III,
Congress was not bound to pass RA 9522.54 We have looked at the relevant
provision of UNCLOS III55 and we find petitioners’ reading plausible.
Nevertheless, the prerogative of choosing this option belongs to Congress, not to
this Court. Moreover, the luxury of choosing this option comes at a very steep
68
price. Absent an UNCLOS III compliant baselines law, an archipelagic State like
the Philippines will find itself devoid of internationally acceptable baselines from
where the breadth of its maritime zones and continental shelf is measured. This
is recipe for a two-fronted disaster: first, it sends an open invitation to the
seafaring powers to freely enter and exploit the resources in the waters and
submarine areas around our archipelago; and second, it weakens the country’s
case in any international dispute over Philippine maritime space. These are
consequences Congress wisely avoided.
The enactment of UNCLOS III compliant baselines law for the Philippine
archipelago and adjacent areas, as embodied in RA 9522, allows an
internationally-recognized delimitation of the breadth of the Philippines’ maritime
zones and continental shelf. RA 9522 is therefore a most vital step on the part of
the Philippines in safeguarding its maritime zones, consistent with the
Constitution and our national interest.
WHEREFORE, we DISMISS the petition.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
RENATO C. CORONA
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-26379 December 27, 1969
WILLIAM C. REAGAN, ETC., petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
Quasha, Asperilla, Blanco, Zafra and Tayag for petitioner.
 was made to a member of the United States Armed Forces or a citizen of the
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General
Felicisimo R. Rosete, Solicitor Lolita O. Gal-lang and Special Attorney Gamaliel
H. Mantolino for respondent.
FERNANDO, J.:
A question novel in character, the answer to which has far-reaching implications,
is raised by petitioner William C. Reagan, at one time a civilian employee of an
American corporation providing technical assistance to the United States Air
Force in the Philippines. He would dispute the payment of the income tax
assessed on him by respondent Commissioner of Internal Revenue on an
amount realized by him on a sale of his automobile to a member of the United
States Marine Corps, the transaction having taken place at the Clark Field Air
Base at Pampanga. It is his contention, seriously and earnestly expressed, that
in legal contemplation the sale was made outside Philippine territory and
therefore beyond our jurisdictional power to tax.
Such a plea, far-fetched and implausible, on its face betraying no kinship with
reality, he would justify by invoking, mistakenly as will hereafter be more fully
shown an observation to that effect in a 1951 opinion, 1 petitioner ignoring that
such utterance was made purely as a flourish of rhetoric and by way of
emphasizing the decision reached, that the trading firm as purchaser of army
goods must respond for the sales taxes due from an importer, as the American
armed forces being exempt could not be taxed as such under the National
Internal Revenue Code.2 Such an assumption, inspired by the commendable aim
to render unavailing any attempt at tax evasion on the part of such vendee,
found expression anew in a 1962 decision,3 coupled with the reminder however,
to render the truth unmistakable, that "the areas covered by the United States
Military Bases are not foreign territories both in the political and geographical
sense."
As thus clarified, it is manifest that such a view amounts at most to a legal fiction
and is moreover obiter. It certainly cannot control the resolution of the specific
question that confronts us. We declare our stand in an unequivocal manner. The
sale having taken place on what indisputably is Philippine territory, petitioner's
liability for the income tax due as a result thereof was unavoidable. As the Court
of Tax Appeals reached a similar conclusion, we sustain its decision now before
us on appeal.
In the decision appealed from, the Court of Tax Appeals, after stating the nature
of the case, started the recital of facts thus: "It appears that petitioner, a citizen of
the United States and an employee of Bendix Radio, Division of Bendix Aviation
Corporation, which provides technical assistance to the United States Air Force,
was assigned at Clark Air Base, Philippines, on or about July 7, 1959 ... . Nine
(9) months thereafter and before his tour of duty expired, petitioner imported on
April 22, 1960 a tax-free 1960 Cadillac car with accessories valued at $6,443.83,
including freight, insurance and other charges."4 Then came the following: "On
July 11, 1960, more than two (2) months after the 1960 Cadillac car was
imported into the Philippines, petitioner requested the Base Commander, Clark
Air Base, for a permit to sell the car, which was granted provided that the sale
United States employed in the U.S. military bases in the Philippines. On the
same date, July 11, 1960, petitioner sold his car for $6,600.00 to a certain Willie
Johnson, Jr. (Private first class), United States Marine Corps, Sangley Point,
Cavite, Philippines, as shown by a Bill of Sale . . . executed at Clark Air Base. On
the same date, Pfc. Willie (William) Johnson, Jr. sold the car to Fred Meneses for
P32,000.00 as evidenced by a deed of sale executed in Manila."5
As a result of the transaction thus made, respondent Commissioner of Internal
Revenue, after deducting the landed cost of the car as well as the personal
exemption to which petitioner was entitled, fixed as his net taxable income
arising from such transaction the amount of P17,912.34, rendering him liable for
income tax in the sum of P2,979.00. After paying the sum, he sought a refund
from respondent claiming that he was exempt, but pending action on his request
for refund, he filed the case with the Court of Tax Appeals seeking recovery of
the sum of P2,979.00 plus the legal rate of interest.
As noted in the appealed decision: "The only issue submitted for our resolution is
whether or not the said income tax of P2,979.00 was legally collected by
69
respondent for petitioner."6 After discussing the legal issues raised, primarily the
contention that the Clark Air Base "in legal contemplation, is a base outside the
Philippines" the sale therefore having taken place on "foreign soil", the Court of
Tax Appeals found nothing objectionable in the assessment and thereafter the
payment of P2,979.00 as income tax and denied the refund on the same. Hence,
this appeal predicated on a legal theory we cannot accept. Petitioner cannot
make out a case for reversal.
1. Resort to fundamentals is unavoidable to place things in their proper
perspective, petitioner apparently feeling justified in his refusal to defer to basic
postulates of constitutional and international law, induced no doubt by the weight
he would accord to the observation made by this Court in the two opinions earlier
referred to. To repeat, scant comfort, if at all is to be derived from such an obiter
dictum, one which is likewise far from reflecting the fact as it is.
Nothing is better settled than that the Philippines being independent and
sovereign, its authority may be exercised over its entire domain. There is no
portion thereof that is beyond its power. Within its limits, its decrees are supreme,
its commands paramount. Its laws govern therein, and everyone to whom it
applies must submit to its terms. That is the extent of its jurisdiction, both
territorial and personal. Necessarily, likewise, it has to be exclusive. If it were not
thus, there is a diminution of its sovereignty.
It is to be admitted that any state may, by its consent, express or implied, submit
to a restriction of its sovereign rights. There may thus be a curtailment of what
otherwise is a power plenary in character. That is the concept of sovereignty as
auto-limitation, which, in the succinct language of Jellinek, "is the property of a
state-force due to which it has the exclusive capacity of legal self-determination
and self-restriction."7 A state then, if it chooses to, may refrain from the exercise
of what otherwise is illimitable competence.
Its laws may as to some persons found within its territory no longer control. Nor
does the matter end there. It is not precluded from allowing another power to
participate in the exercise of jurisdictional right over certain portions of its
territory. If it does so, it by no means follows that such areas become impressed
with an alien character. They retain their status as native soil. They are still
subject to its authority. Its jurisdiction may be diminished, but it does not
disappear. So it is with the bases under lease to the American armed forces by
virtue of the military bases agreement of 1947. They are not and cannot be
foreign territory.
Decisions coming from petitioner's native land, penned by jurists of repute, speak
to that effect with impressive unanimity. We start with the citation from Chief
Justice Marshall, announced in the leading case of Schooner Exchange v.
M'Faddon,8 an 1812 decision: "The jurisdiction of the nation within its own
territory is necessarily exclusive and absolute. It is susceptible of no limitation not
imposed by itself. Any restriction upon it, deriving validity from an external
source, would imply a diminution of its sovereignty to the extent of the restriction,
and an investment of that sovereignty to the same extent in that power which
could impose such restriction." After which came this paragraph: "All exceptions,
therefore, to the full and complete power of a nation within its own territories,
must be traced up to the consent of the nation itself. They can flow from no other
legitimate source."
Chief Justice Taney, in an 1857 decision,9 affirmed the fundamental principle of
everyone within the territorial domain of a state being subject to its commands:
"For undoubtedly every person who is found within the limits of a government,
whether the temporary purposes or as a resident, is bound by its laws." It is no
exaggeration then for Justice Brewer to stress that the United States government
"is one having jurisdiction over every foot of soil within its territory, and acting
directly upon each [individual found therein]; . . ."10
Not too long ago, there was a reiteration of such a view, this time from the pen of
Justice Van Devanter. Thus: "It now is settled in the United States and
recognized elsewhere that the territory subject to its jurisdiction includes the land
areas under its dominion and control the ports, harbors, bays, and other in
closed arms of the sea along its coast, and a marginal belt of the sea extending
from the coast line outward a marine league, or 3 geographic miles."11 He could
cite moreover, in addition to many American decisions, such eminent treatise-
writers as Kent, Moore, Hyde, Wilson, Westlake, Wheaton and Oppenheim.
As a matter of fact, the eminent commentator Hyde in his three-volume work on
International Law, as interpreted and applied by the United States, made clear
that not even the embassy premises of a foreign power are to be considered
outside the territorial domain of the host state. Thus: "The ground occupied by an
embassy is not in fact the territory of the foreign State to which the premises
belong through possession or ownership. The lawfulness or unlawfulness of acts
there committed is determined by the territorial sovereign. If an attache commits
an offense within the precincts of an embassy, his immunity from prosecution is
not because he has not violated the local law, but rather for the reason that the
individual is exempt from prosecution. If a person not so exempt, or whose
immunity is waived, similarly commits a crime therein, the territorial sovereign, if
it secures custody of the offender, may subject him to prosecution, even though
its criminal code normally does not contemplate the punishment of one who
commits an offense outside of the national domain. It is not believed, therefore,
that an ambassador himself possesses the right to exercise jurisdiction, contrary
to the will of the State of his sojourn, even within his embassy with respect to
acts there committed. Nor is there apparent at the present time any tendency on
the part of States to acquiesce in his exercise of it."12
2. In the light of the above, the first and crucial error imputed to the Court of Tax
Appeals to the effect that it should have held that the Clark Air Force is foreign
soil or territory for purposes of income tax legislation is clearly without support in
law. As thus correctly viewed, petitioner's hope for the reversal of the decision
completely fades away. There is nothing in the Military Bases Agreement that
lends support to such an assertion. It has not become foreign soil or territory.
This country's jurisdictional rights therein, certainly not excluding the power to
tax, have been preserved. As to certain tax matters, an appropriate exemption
was provided for.
Petitioner could not have been unaware that to maintain the contrary would be to
defy reality and would be an affront to the law. While his first assigned error is
70
thus worded, he would seek to impart plausibility to his claim by the ostensible
invocation of the exemption clause in the Agreement by virtue of which a
"national of the United States serving in or employed in the Philippines in
connection with the construction, maintenance, operation or defense of the
bases and residing in the Philippines only by reason of such employment" is not
to be taxed on his income unless "derived from Philippine source or sources
other than the United States sources."13 The reliance, to repeat, is more
apparent than real for as noted at the outset of this opinion, petitioner places
more faith not on the language of the provision on exemption but on a sentiment
given expression in a 1951 opinion of this Court, which would be made to yield
such an unwarranted interpretation at war with the controlling constitutional and
international law principles. At any rate, even if such a contention were more
adequately pressed and insisted upon, it is on its face devoid of merit as the
source clearly was Philippine.
In Saura Import and Export Co. v. Meer,14 the case above referred to, this Court
affirmed a decision rendered about seven months previously,15 holding liable as
an importer, within the contemplation of the National Internal Revenue Code
provision, the trading firm that purchased army goods from a United States
government agency in the Philippines. It is easily understandable why. If it were
not thus, tax evasion would have been facilitated. The United States forces that
brought in such equipment later disposed of as surplus, when no longer needed
for military purposes, was beyond the reach of our tax statutes.
Justice Tuason, who spoke for the Court, adhered to such a rationale, quoting
extensively from the earlier opinion. He could have stopped there. He chose not
to do so. The transaction having occurred in 1946, not so long after the liberation
of the Philippines, he proceeded to discuss the role of the American military
contingent in the Philippines as a belligerent occupant. In the course of such a
dissertion, drawing on his well-known gift for rhetoric and cognizant that he was
making an as if statement, he did say: "While in army bases or installations
within the Philippines those goods were in contemplation of law on foreign soil."
It is thus evident that the first, and thereafter the controlling, decision as to the
liability for sales taxes as an importer by the purchaser, could have been reached
without any need for such expression as that given utterance by Justice Tuason.
Its value then as an authoritative doctrine cannot be as much as petitioner would
mistakenly attach to it. It was clearly obiter not being necessary for the resolution
of the issue before this Court.16 It was an opinion "uttered by the way."17 It could
not then be controlling on the question before us now, the liability of the petitioner
for income tax which, as announced at the opening of this opinion, is squarely
raised for the first time.18
On this point, Chief Justice Marshall could again be listened to with profit. Thus:
"It is a maxim, not to be disregarded, that general expressions, in every opinion,
are to be taken in connection with the case in which those expressions are used.
If they go beyond the case, they may be respected, but ought not to control the
judgment in a subsequent suit when the very point is presented for decision."19
Nor did the fact that such utterance of Justice Tuason was cited in Co Po v.
Collector of Internal Revenue,20 a 1962 decision relied upon by petitioner, put a
different complexion on the matter. Again, it was by way of pure embellishment,
there being no need to repeat it, to reach the conclusion that it was the
purchaser of army goods, this time from military bases, that must respond for the
advance sales taxes as importer. Again, the purpose that animated the
reiteration of such a view was clearly to emphasize that through the employment
of such a fiction, tax evasion is precluded. What is more, how far divorced from
the truth was such statement was emphasized by Justice Barrera, who penned
the Co Po opinion, thus: "It is true that the areas covered by the United States
Military Bases are not foreign territories both in the political and geographical
sense."21
Justice Tuason moreover made explicit that rather than corresponding with
reality, what was said by him was in the way of a legal fiction. Note his stress on
"in contemplation of law." To lend further support to a conclusion already
announced, being at that a confirmation of what had been arrived at in the earlier
case, distinguished by its sound appreciation of the issue then before this Court
and to preclude any tax evasion, an observation certainly not to be taken literally
was thus given utterance.
This is not to say that it should have been ignored altogether afterwards. It could
be utilized again, as it undoubtedly was, especially so for the purpose intended,
namely to stigmatize as without support in law any attempt on the part of a
taxpayer to escape an obligation incumbent upon him. So it was quoted with that
end in view in the Co Po case. It certainly does not justify any effort to render
futile the collection of a tax legally due, as here. That was farthest from the
thought of Justice Tuason.
What is more, the statement on its face is, to repeat, a legal fiction. This is not to
discount the uses of a fictio juris in the science of the law. It was Cardozo who
pointed out its value as a device "to advance the ends of justice" although at
times it could be "clumsy" and even "offensive".22 Certainly, then, while far from
objectionable as thus enunciated, this observation of Justice Tuason could be
misused or misconstrued in a clumsy manner to reach an offensive result. To
repeat, properly used, a legal fiction could be relied upon by the law, as
Frankfurter noted, in the pursuit of legitimate ends.23 Petitioner then would be
well-advised to take to heart such counsel of care and circumspection before
invoking not a legal fiction that would avoid a mockery of the law by avoiding tax
evasion but what clearly is a misinterpretation thereof, leading to results that
would have shocked its originator.
The conclusion is thus irresistible that the crucial error assigned, the only one
that calls for discussion to the effect that for income tax purposes the Clark Air
Force Base is outside Philippine territory, is utterly without merit. So we have
said earlier.
3. To impute then to the statement of Justice Tuason the meaning that petitioner
would fasten on it is, to paraphrase Frankfurter, to be guilty of succumbing to the
vice of literalness. To so conclude is, whether by design or inadvertence, to
misread it. It certainly is not susceptible of the mischievous consequences now
sought to be fastened on it by petitioner.
71
That it would be fraught with such peril to the enforcement of our tax statutes on
the military bases under lease to the American armed forces could not have been
within the contemplation of Justice Tuason. To so attribute such a bizarre
consequence is to be guilty of a grave disservice to the memory of a great jurist.
For his real and genuine sentiment on the matter in consonance with the
imperative mandate of controlling constitutional and international law concepts
was categorically set forth by him, not as an obiter but as the rationale of the
decision, in People v. Acierto24 thus: "By the [Military Bases] Agreement, it should
be noted, the Philippine Government merely consents that the United States
exercise jurisdiction in certain cases. The consent was given purely as a matter
of comity, courtesy, or expediency over the bases as part of the Philippine
territory or divested itself completely of jurisdiction over offenses committed
therein."
Nor did he stop there. He did stress further the full extent of our territorial
jurisdiction in words that do not admit of doubt. Thus: "This provision is not and
can not on principle or authority be construed as a limitation upon the rights of
the Philippine Government. If anything, it is an emphatic recognition and
reaffirmation of Philippine sovereignty over the bases and of the truth that all
jurisdictional rights granted to the United States and not exercised by the latter
are reserved by the Philippines for itself."25
It is in the same spirit that we approach the specific question confronting us in
this litigation. We hold, as announced at the outset, that petitioner was liable for
the income tax arising from a sale of his automobile in the Clark Field Air Base,
which clearly is and cannot otherwise be other than, within our territorial
jurisdiction to tax.
4. With the mist thus lifted from the situation as it truly presents itself, there is
nothing that stands in the way of an affirmance of the Court of Tax Appeals
decision. No useful purpose would be served by discussing the other assigned
errors, petitioner himself being fully aware that if the Clark Air Force Base is to be
considered, as it ought to be and as it is, Philippine soil or territory, his claim for
exemption from the income tax due was distinguished only by its futility.
There is further satisfaction in finding ourselves unable to indulge petitioner in his
plea for reversal. We thus manifest fealty to a pronouncement made time and
time again that the law does not look with favor on tax exemptions and that he
who would seek to be thus privileged must justify it by words too plain to be
mistaken and too categorical to be misinterpreted.26 Petitioner had not done so.
Petitioner cannot do so.
WHEREFORE, the decision of the Court of Tax Appeals of May 12, 1966 denying
the refund of P2,979.00 as the income tax paid by petitioner is affirmed. With
costs against petitioner.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Teehankee,
JJ., concur.
Reyes, J.B.L., J., concurs in the result.
Barredo, J., took no part.
LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs-Appellees, vs.
NATIONAL COCONUT CORPORATION, ET AL., Defendants, NATIONAL
COCONUT CORPORATION and BOARD OF LIQUIDATORS, Defendants-
Appellants.
DECISION
BAUTISTA ANGELO, J.:
Plaintiffs herein are court stenographers assigned in Branch VI of the Court of
First Instance of Manila. During the pendency of Civil Case No. 2293 of said
court, entitled Francisco Sycip vs. National Coconut Corporation, Assistant
Corporate Counsel Federico Alikpala, counsel for Defendant, requested said
stenographers for copies of the transcript of the stenographic notes taken by
them during the hearing. Plaintiffs complied with the request by delivering to
Counsel Alikpala the needed transcript containing 714 pages and thereafter
submitted to him their bills for the payment of their fees. The National Coconut
Corporation paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo
A. Matoto for said transcript at the rate of P1 per page.
Upon inspecting the books of this corporation, the Auditor General disallowed the
payment of these fees and sought the recovery of the amounts paid. On January
19, 1953, the Auditor General required the Plaintiffs to reimburse said amounts
on the strength of a circular of the Department of Justice wherein the opinion was
expressed that the National Coconut Corporation, being a government entity,
was exempt from the payment of the fees in question. On February 6, 1954, the
Auditor General issued an order directing the Cashier of the Department of
Justice to deduct from the salary of Leopoldo T. Bacani the amount of P25 every
payday and from the salary of Mateo A. Matoto the amount of P10 every payday
beginning March 30, 1954. To prevent deduction of these fees from their salaries
and secure a judicial ruling that the National Coconut Corporation is not a
government entity within the purview of section 16, Rule 130 of the Rules of
Court, this action was instituted in the Court of First Instance of Manila.
Defendants set up as a defense that the National Coconut Corporation is a
government entity within the purview of section 2 of the Revised Administrative
Code of 1917 and, hence, it is exempt from paying the stenographers’ fees under
Rule 130 of the Rules of Court. After trial, the court found for the Plaintiffs
declaring (1) “that Defendant National Coconut Corporation is not a government
entity within the purview of section 16, Rule 130 of the Rules of Court; chan
roblesvirtualawlibrary(2) that the payments already made by said Defendant to
Plaintiffs herein and received by the latter from the former in the total amount of
P714, for copies of the stenographic transcripts in question, are valid, just and
legal; chan roblesvirtualawlibraryand (3) that Plaintiffs are under no obligation
whatsoever to make a refund of these payments already received by them.” This
is an appeal from said decision.
Under section 16, Rule 130 of the Rules of Court, the Government of the
Philippines is exempt from paying the legal fees provided for therein, and among
these fees are those which stenographers may charge for the transcript of notes
taken by them that may be requested by any interested person (section 8). The
72
fees in question are for the transcript of notes taken during the hearing of a case
in which the National Coconut Corporation is interested, and the transcript was
requested by its assistant corporate counsel for the use of said corporation.
On the other hand, section 2 of the Revised Administrative Code defines the
scope of the term “Government of the Republic of the Philippines” as
follows:chanroblesvirtuallawlibrary
“‘The Government of the Philippine Islands’ is a term which refers to the
corporate governmental entity through which the functions of government are
exercised throughout the Philippine Islands, including, save as the contrary
appears from the context, the various arms through which political authority is
made effective in said Islands, whether pertaining to the central Government or
to the provincial or municipal branches or other form of local government.”
The question now to be determined is whether the National Coconut Corporation
may be considered as included in the term “Government of the Republic of the
Philippines” for the purposes of the exemption of the legal fees provided for in
Rule 130 of the Rules of Court.
As may be noted, the term “Government of the Republic of the Philippines” refers
to a government entity through which the functions of government are exercised,
including the various arms through which political authority is made effective in
the Philippines, whether pertaining to the central government or to the provincial
or municipal branches or other form of local government. This requires a little
digression on the nature and functions of our government as instituted in our
Constitution.
To begin with, we state that the term “Government” may be defined as “that
institution or aggregate of institutions by which an independent society makes
and carries out those rules of action which are necessary to enable men to live in
a social state, or which are imposed upon the people forming that society by
those who possess the power or authority of prescribing them” (U.S. vs. Dorr, 2
Phil., 332). This institution, when referring to the national government, has
reference to what our Constitution has established composed of three great
departments, the legislative, executive, and the judicial, through which the
powers and functions of government are exercised. These functions are
twofold:chanroblesvirtuallawlibrary constitute and ministrant. The former are
those which constitute the very bonds of society and are compulsory in nature;
chan roblesvirtualawlibrarythe latter are those that are undertaken only by way of
advancing the general interests of society, and are merely optional. President
Wilson enumerates the constituent functions as
follows:chanroblesvirtuallawlibrary
“‘(1) The keeping of order and providing for the protection of persons and
property from violence and robbery.
‘(2) The fixing of the legal relations between man and wife and between parents
and children.
‘(3) The regulation of the holding, transmission, and interchange of property, and
the determination of its liabilities for debt or for crime.
‘(4) The determination of contract rights between individuals.
‘(5) The definition and punishment of crime.
‘(6) The administration of justice in civil cases.
‘(7) The determination of the political duties, privileges, and relations of citizens.
‘(8) Dealings of the state with foreign powers:chanroblesvirtuallawlibrary the
preservation of the state from external danger or encroachment and the
advancement of its international interests.’“ (Malcolm, The Government of the
Philippine Islands, p. 19.)
The most important of the ministrant functions are:chanroblesvirtuallawlibrary
public works, public education, public charity, health and safety regulations, and
regulations of trade and industry. The principles deter mining whether or not a
government shall exercise certain of these optional functions
are:chanroblesvirtuallawlibrary (1) that a government should do for the public
welfare those things which private capital would not naturally undertake and (2)
that a government should do these things which by its very nature it is better
equipped to administer for the public welfare than is any private individual or
group of individuals. (Malcolm, The Government of the Philippine Islands, pp.
19-20.)
From the above we may infer that, strictly speaking, there are functions which
our government is required to exercise to promote its objectives as expressed in
our Constitution and which are exercised by it as an attribute of sovereignty, and
those which it may exercise to promote merely the welfare, progress and
prosperity of the people. To this latter class belongs the organization of those
corporations owned or controlled by the government to promote certain aspects
of the economic life of our people such as the National Coconut Corporation.
These are what we call government-owned or controlled corporations which may
take on the form of a private enterprise or one organized with powers and formal
characteristics of a private corporations under the Corporation Law.
The question that now arises is:chanroblesvirtuallawlibrary Does the fact that
these corporation perform certain functions of government make them a part of
the Government of the Philippines?
The answer is simple:chanroblesvirtuallawlibrary they do not acquire that status
for the simple reason that they do not come under the classification of municipal
or public corporation. Take for instance the National Coconut Corporation. While
it was organized with the purpose of “adjusting the coconut industry to a position
independent of trade preferences in the United States” and of providing
“Facilities for the better curing of copra products and the proper utilization of
coconut by-products”, a function which our government has chosen to exercise
to promote the coconut industry, however, it was given a corporate power
separate and distinct from our government, for it was made subject to the
provisions of our Corporation Law in so far as its corporate existence and the
powers that it may exercise are concerned (sections 2 and 4, Commonwealth Act
No. 518). It may sue and be sued in the same manner as any other private
corporations, and in this sense it is an entity different from our government. As
this Court has aptly said, “The mere fact that the Government happens to be a
majority stockholder does not make it a public corporation” (National Coal Co. vs.
Collector of Internal Revenue, 46 Phil., 586-587). “By becoming a stockholder in
the National Coal Company, the Government divested itself of its sovereign
73
character so far as respects the transactions of the corporation cralaw . Unlike
the Government, the corporation may be sued without its consent, and is subject
to taxation. Yet the National Coal Company remains an agency or instrumentality
of government.” (Government of the Philippine Islands vs. Springer, 50 Phil.,
288.)
To recapitulate, we may mention that the term “Government of the Republic of
the Philippines” used in section 2 of the Revised Administrative Code refers only
to that government entity through which the functions of the government are
exercised as an attribute of sovereignty, and in this are included those arms
through which political authority is made effective whether they be provincial,
municipal or other form of local government. These are what we call municipal
corporations. They do not include government entities which are given a
corporate personality separate and distinct from the government and which are
governed by the Corporation Law. Their powers, duties and liabilities have to be
determined in the light of that law and of their corporate charters. They do not
therefore come within the exemption clause prescribed in section 16, Rule 130 of
our Rules of Court.
“Public corporations are those formed or organized for the government of a
portion of the State.” (Section 3, Republic Act No. 1459, Corporation Law).
“‘The generally accepted definition of a municipal corporation would only include
organized cities and towns, and like organizations, with political and legislative
powers for the local, civil government and police regulations of the inhabitants of
the particular district included in the boundaries of the corporation.’ Heller vs.
Stremmel, 52 Mo. 309, 312.”
“In its more general sense the phrase ‘municipal corporation’ may include both
towns and counties, and other public corporations created by government for
political purposes. In its more common and limited signification, it embraces only
incorporated villages, towns and cities. Dunn vs. Court of County Revenues, 85
Ala. 144, 146, 4 So. 661.” (McQuillin, Municipal Corporations, 2nd ed., Vol. 1, p.
385.)
“We may, therefore, define a municipal corporation in its historical and strict
sense to be the incorporation, by the authority of the government, of the
inhabitants of a particular place or district, and authorizing them in their corporate
capacity to exercise subordinate specified powers of legislation and regulation
with respect to their local and internal concerns. This power of local government
is the distinctive purpose and the distinguishing feature of a municipal
corporation proper.” (Dillon, Municipal Corporations, 5th ed., Vol. I, p. 59.)
It is true that under section 8, Rule 130, stenographers may only charge as fees
P0.30 for each page of transcript of not less than 200 words before the appeal is
taken and P0.15 for each page after the filing of the appeal, but in this case the
National Coconut Corporation has agreed and in fact has paid P1.00 per page
for the services rendered by the Plaintiffs and has not raised any objection to the
amount paid until its propriety was disputed by the Auditor General. The payment
of the fees in question became therefore contractual and as such is valid even if
it goes beyond the limit prescribed in section 8, Rule 130 of the Rules of Court.
As regards the question of procedure raised by Appellants, suffice it to say that
the same is insubstantial, considering that this case refers not to a money claim
disapproved by the Auditor General but to an action of prohibition the purpose of
which is to restrain the officials concerned from deducting from Plaintiffs’ salaries
the amount paid to them as stenographers’ fees. This case does not come under
section 1, Rule 45 of the Rules of Court relative to appeals from a decision of the
Auditor General.
Wherefore, the decision appealed from is affirmed, without pronouncement as to
costs.
G.R. No. L-21484 November 29, 1969
THE AGRICULTURAL CREDIT and COOPERATIVE FINANCING
ADMINISTRATION (ACCFA), petitioner,
vs.
ACCFA SUPERVISORS' ASSOCIATION, ACCFA WORKERS' ASSOCIATION,
and THE COURT OF INDUSTRIAL RELATIONS, respondents.
Deogracias E. Lerma and Esmeraldo U. Guloy for petitioner Agricultural Credit
and Cooperative Financing Administration.

Office of the Agrarian Counsel, Department of Justice for petitioner Agricultural
Credit Administration

J. C. Espinas and Associates for respendents Confederation of Unions in
Government Corporations Offices, et al. Mariano B. Tuason for respondent Court
of Industrial Relations.
MAKALINTAL, J.:
These are two separate appeals by certiorari from the decision dated March 25,
1963 (G.R. No. L-21484) and the order dated May 21, 1964 (G.R. No. L-23605)
as affirmed by the resolutions en banc, of the Court of Industrial Relations, in
Cases Nos. 3450-ULP and 1327-MC, respectively. The parties, except the
Confederation of Unions in Government Corporations and Offices (CUGCO),
being practically the same and the principal issues involved related, only one
decision is now rendered in these two cases.
The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a
government agency created under Republic Act No. 821, as amended. Its
administrative machinery was reorganized and its name changed to Agricultural
Credit Administration (ACA) under the Land Reform Code (Republic Act No.
3844). On the other hand, the ACCFA Supervisors' Association (ASA) and the
ACCFA Workers' Association (AWA), hereinafter referred to as the Unions, are
labor organizations composed of the supervisors and the rank-and-file
employees, respectively, in the ACCFA (now ACA).
G.R. No. L-21484
On September 4, 1961 a collective bargaining agreement, which was to be
effective for a period of one (1) year from July 1, 1961, was entered into by and
between the Unions and the ACCFA. A few months thereafter, the Unions started
protesting against alleged violations and non-implementation of said agreement.
Finally, on October 25, 1962 the Unions declared a strike, which was ended
when the strikers voluntarily returned to work on November 26, 1962.
74
On October 30, 1962 the Unions, together with its mother union, the
Confederation of Unions in Government Corporations and Offices (CUGCO),
filed a complaint with the Court of Industrial Relations against the ACCFA (Case
No. 3450-ULP) for having allegedly committed acts of unfair labor practice,
namely: violation of the collective bargaining agreement in order to discourage
the members of the Unions in the exercise of their right to self-organization,
discrimination against said members in the matter of promotions, and refusal to
bargain. The ACCFA denied the charges and interposed as affirmative and
special defenses lack of jurisdiction of the CIR over the case, illegality of the
bargaining contract, expiration of said contract and lack of approval by the office
of the President of the fringe benefits provided for therein. Brushing aside the
foregoing defenses, the CIR in its decision dated March 25, 1963 ordered the
ACCFA:
1. To cease and desist from committing further acts tending to discourage the
members of complainant unions in the exercise of their right to self-organization;
2. To comply with and implement the provision of the collective bargaining
contract executed on September 4, 1961, including the payment of P30.00 a
month living allowance;
3. To bargain in good faith and expeditiously with the herein complainants.
The ACCFA moved to reconsider but was turned down in a resolution dated April
25, 1963 of the CIR en banc. Thereupon it brought this appeal by certiorari.
The ACCFA raises the following issues in its petition, to wit:
1. Whether or not the respondent court has jurisdiction over this case, which in
turn depends on whether or not ACCFA exercised governmental or proprietary
functions.
2. Whether or not the collective bargaining agreement between the petitioner and
the respondent union is valid; if valid, whether or not it has already lapsed; and if
not, whether or not its (sic) fringe benefits are already enforceable.
3. Whether or not there is a legal and/or factual basis for the finding of the
respondent court that the petitioner had committed acts of unfair labor practice.
4. Whether or not it is within the competence of the court to enforce the collective
bargaining agreement between the petitioner and the respondent unions, the
same having already expired.
G.R. No. L-23605
During the pendency of the above mentioned case (G.R. No. L-21484),
specifically on August 8, 1963, the President of the Philippines signed into law
the Agricultural Land Reform Code (Republic Act No. 3844), which among other
things required the reorganization of the administrative machinery of the
Agricultural Credit and Cooperative Financing Administration (ACCFA) and
changed its name to Agricultural Credit Administration (ACA). On March 17, 1964
the ACCFA Supervisors' Association and the ACCFA Workers' Association filed a
petition for certification election with the Court of Industrial Relations (Case No.
1327-MC) praying that they be certified as the exclusive bargaining agents for
the supervisors and rank-and-file employees, respectively, in the ACA. The trial
Court in its order dated March 30, 1964 directed the Manager or Officer-in-
Charge of the ACA to allow the posting of said order "for the information of all
employees and workers thereof," and to answer the petition. In compliance
therewith, the ACA, while admitting most of the allegations in the petition, denied
that the Unions represented the majority of the supervisors and rank-and-file
workers, respectively, in the ACA. It further alleged that the petition was
premature, that the ACA was not the proper party to be notified and to answer
the petition, and that the employees and supervisors could not lawfully become
members of the Unions, nor be represented by them. However, in a joint
manifestation of the Unions dated May 7, 1964, with the conformity of the ACA
Administrator and of the Agrarian Counsel in his capacity as such and as counsel
for the National Land Reform Council, it was agreed "that the union petitioners in
this case represent the majority of the employees in their respective bargaining
units" and that only the legal issues raised would be submitted for the resolution
of the trial Court.
Finding the remaining grounds for ACA's opposition to the petition to be without
merit, the trial Court in its order dated May 21, 1964 certified "the ACCFA
Workers' Association and the ACCFA Supervisors' Association as the sole and
exclusive bargaining representatives of the rank-and-file employees and
supervisors, respectively, of the Agricultural Credit Administration." Said order
was affirmed by the CIR en banc in its resolution dated August 24, 1964.
On October 2, 1964 the ACA filed in this Court a petition for certiorari with urgent
motion to stay the CIR order of May 21, 1964. In a resolution dated October 6,
1964, this Court dismissed the petition for "lack of adequate allegations," but the
dismissal was later reconsidered when the ACA complied with the formal
requirement stated in said resolution. As prayed for, this Court ordered the CIR to
stay the execution of its order of May 21, 1964.
In this appeal, the ACA in effect challenges the jurisdiction of the CIR to entertain
the petition of the Unions for certification election on the ground that it (ACA) is
engaged in governmental functions. The Unions join the issue on this single
point, contending that the ACA forms proprietary functions.
Under Section 3 of the Agricultural Land Reform Code the ACA was established,
among other governmental agencies,1 to extend credit and similar assistance to
agriculture, in pursuance of the policy enunciated in Section 2 as follows:
SEC. 2. Declaration of Policy. — It is the policy of the State:
(1) To establish owner-cultivatorships and the economic family-size farm as the
basis of Philippine agriculture and, as a consequence, divert landlord capital in
agriculture to industrial development;
(2) To achieve a dignified existence for the small farmers free from pernicious
institutional restraints and practices;
(3) To create a truly viable social and economic structure in agriculture conducive
to greater productivity and higher farm incomes;
(4) To apply all labor laws equally and without discrimination to both industrial
and agricultural wage earners;
(5) To provide a more vigorous and systematic land resettlement program and
public land distribution; and
(6) To make the small farmers more independent, self-reliant and responsible
citizens, and a source of genuine strength in our democratic society.
75
The implementation of the policy thus enunciated, insofar as the role of the ACA
therein is concerned, is spelled out in Sections 110 to 118, inclusive, of the Land
Reform Code. Section 110 provides that "the administrative machinery of the
ACCFA shall be reorganized to enable it to align its activities with the
requirements and objective of this Code and shall be known as the Agricultural
Credit Administration." Under Section 112 the sum of P150,000,000 was
appropriated out of national funds to finance the additional credit functions of the
ACA as a result of the land reform program laid down in the Code. Section 103
grants the ACA the privilege of rediscounting with the Central Bank, the
Development Bank of the Philippines and the Philippine National Bank. Section
105 directs the loaning activities of the ACA "to stimulate the development of
farmers' cooperatives," including those "relating to the production and marketing
of agricultural products and those formed to manage and/or own, on a
cooperative basis, services and facilities, such as irrigation and transport
systems, established to support production and/or marketing of agricultural
products." Section 106 deals with the extension by ACA of credit to small farmers
in order to stimulate agricultural production. Sections 107 to 112 lay down certain
guidelines to be followed in connection with the granting of loans, such as
security, interest and supervision of credit. Sections 113 to 118, inclusive, invest
the ACA with certain rights and powers not accorded to non-governmental
entities, thus:
SEC. 113. Auditing of Operations. — For the effective supervision of farmers'
cooperatives, the head of the Agricultural Credit Administration shall have the
power to audit their operations, records and books of account and to issue
subpoena and subpoena duces tecum to compel the attendance of witnesses
and the production of books, documents and records in the conduct of such audit
or of any inquiry into their affairs. Any person who, without lawful cause, fails to
obey such subpoena or subpoena duces tecum shall, upon application of the
head of Agricultural Credit Administration with the proper court, be liable to
punishment for contempt in the manner provided by law and if he is an officer of
the Association, to suspension or removal from office.
SEC. 114. Prosecution of officials. — The Agricultural Credit Administration,
through the appropriate provincial or city fiscal, shall have the power to file and
prosecute any and all actions which it may have against any and all officials or
employees of farmers' cooperatives arising from misfeasance or malfeasance in
office.
SEC. 115. Free Notarial Service. — Any justice of the peace, in his capacity as
notary ex-officio, shall render service free of charge to any person applying for a
loan under this Code either in administering the oath or in the acknowledgment
of instruments relating to such loan.
SEC. 116. Free Registration of Deeds. — Any register of deeds shall accept for
registration, free of charge any instrument relative to a loan made under this
Code.
SEC. 117. Writing-off Unsecured and Outstanding Loans. — Subject to the
approval of the President upon recommendation of the Auditor General, the
Agricultural Credit Administration may write-off from its books, unsecured and
outstanding loans and accounts receivable which may become uncollectible by
reason of the death or disappearance of the debtor, should there be no visible
means of collecting the same in the foreseeable future, or where the debtor has
been verified to have no income or property whatsoever with which to effect
payment. In all cases, the writing-off shall be after five years from the date the
debtor defaults.
SEC. 118. Exemption from Duties, Taxes and Levies. — The Agricultural Credit
Administration is hereby exempted from the payment of all duties, taxes, levies,
and fees, including docket and sheriff's fees, of whatever nature or kind, in the
performance of its functions and in the exercise of its powers hereunder.
The power to audit the operations of farmers' cooperatives and otherwise inquire
into their affairs, as given by Section 113, is in the nature of the visitorial power of
the sovereign, which only a government agency specially delegated to do so by
the Congress may legally exercise.
On March 19, 1964 Executive Order No. 75 was promulgated. It is entitled:
"Rendering in Full Force and Effect the Plan of Reorganization Proposed by the
Special Committee on Reorganization of Agencies for Land Reform for the
Administrative Machinery of the Agricultural Land Reform Code," and contains
the following pertinent provisions:
Section 3. The Land Reform Project Administration2 shall be considered a single
organization and the personnel complement of the member agencies including
the legal officers of the Office of the Agrarian Counsel which shall provide legal
services to the LRPA shall be regarded as one personnel pool from which the
requirements of the operations shall be drawn and subject only to the civil
service laws, rules and regulations, persons from one agency may be freely
assigned to positions in another agency within the LRPA when the interest of the
service so demands.
Section 4. The Land Reform Project Administration shall be considered as one
organization with respect to the standardization of job descriptions position
classification and wage and salary structures to the end that positions involving
the same or equivalent qualifications and equal responsibilities and effort shall
have the same remuneration.
Section 5. The Civil Service laws, rules and regulations with respect to
promotions, particularly in the consideration of person next in rank, shall be
made applicable to the Land Reform Project Administration as a single agency
so that qualified individuals in one member agency must be considered in
considering promotion to higher positions in another member agency.
The implementation of the land reform program of the government according to
Republic Act No. 3844 is most certainly a governmental, not a proprietary,
function; and for that purpose Executive Order No. 75 has placed the ACA under
the Land Reform Project Administration together with the other member
agencies, the personnel complement of all of which are placed in one single pool
and made available for assignment from one agency to another, subject only to
Civil Service laws, rules and regulations, position classification and wage
structures.
76
The appointing authority in respect of the officials and employees of the ACA is
the President of the Philippines, as stated in a 1st indorsement by his office to
the Chairman of the National Reform Council dated May 22, 1964, as follows:
Appointments of officials and employees of the National Land Reform Council
and its agencies may be made only by the President, pursuant to the provisions
of Section 79(D) of the Revised Administrative Code. In accordance with the
policy and practice, such appointments should be prepared for the signature of
the Executive Secretary, "By Authority ofthe President".3
When the Agricultural Reform Code was being considered by the Congress, the
nature of the ACA was the subject of the following exposition on the Senate floor:
Senator Tolentino: . . . . "The ACA is not going to be a profit making institution. It
is supposed to be a public service of the government to the lessees and farmer-
owners of the lands that may be bought after expropriation from owners. It is the
government here that is the lender. The government should not exact a higher
interest than what we are telling a private landowner now in his relation to his
tenants if we give to their farmers a higher rate of interest . . . ." (pp. 17 & 18,
Senate Journal No. 16, July 3, 1963)
The reason is obvious, to pinpoint responsibility for many losses in the
government, in order to avoid irresponsible lending of government money — to
pinpoint responsibility for many losses . . . .
Senator Manglapus: ". . . But assuming that hypothesis, that is the reason why
we are appropriating P150,000,000.00 for the Agricultural Credit Administration
which will go to intensified credit operations on the barrio level . . ." (p. 3, Senate
Journal No. 7).
That it is the reason why we are providing for the expansion of the ACCFA and
the weeding out of the cooperative activity of the ACCFA and turning this over to
the Agricultural Productivity Commission, so that the Agricultural Credit
Administration will concentrate entirely on the facilitation of credit on the barrio
level with the massive support of 150 million provided by the government. . . .
(pp. 4 & 5 of Senate Journal No. 7, July 3, 1963)
. . . But by releasing them from this situation, we feel that we are putting them in
a much better condition than that in which they are found by providing them with
a business-like way of obtaining credit, not depending on a paternalistic system
but one which is business-like — that is to say, a government office, which on the
barrio level will provide them that credit directly . . . . (p. 40, Senate Journal No.
7, July 3, 1963) (emphasis supplied).
The considerations set forth above militate quite strongly against the recognition
of collective bargaining powers in the respondent Unions within the context of
Republic Act No. 875, and hence against the grant of their basic petition for
certification election as proper bargaining units. The ACA is a government office
or agency engaged in governmental, not proprietary functions. These functions
may not be strictly what President Wilson described as "constituent" (as
distinguished from "ministrant"),4 such as those relating to the maintenance of
peace and the prevention of crime, those regulating property and property rights,
those relating to the administration of justice and the determination of political
duties of citizens, and those relating to national defense and foreign relations.
Under this traditional classification, such constituent functions are exercised by
the State as attributes of sovereignty, and not merely to promote the welfare,
progress and prosperity of the people — these letter functions being ministrant
he exercise of which is optional on the part of the government.
The growing complexities of modern society, however, have rendered this
traditional classification of the functions of government quite unrealistic, not to
say obsolete. The areas which used to be left to private enterprise and initiative
and which the government was called upon to enter optionally, and only
"because it was better equipped to administer for the public welfare than is any
private individual or group of individuals,"5 continue to lose their well-defined
boundaries and to be absorbed within activities that the government must
undertake in its sovereign capacity if it is to meet the increasing social challenges
of the times. Here as almost everywhere else the tendency is undoubtedly
towards a greater socialization of economic forces. Here of course this
development was envisioned, indeed adopted as a national policy, by the
Constitution itself in its declaration of principle concerning the promotion of social
justice.
It was in furtherance of such policy that the Land Reform Code was enacted and
the various agencies, the ACA among them, established to carry out its
purposes. There can be no dispute as to the fact that the land reform program
contemplated in the said Code is beyond the capabilities of any private
enterprise to translate into reality. It is a purely governmental function, no less
than, say, the establishment and maintenance of public schools and public
hospitals. And when, aside from the governmental objectives of the ACA, geared
as they are to the implementation of the land reform program of the State, the
law itself declares that the ACA is a government office, with the formulation of
policies, plans and programs vested no longer in a Board of Governors, as in the
case of the ACCFA, but in the National Land Reform Council, itself a government
instrumentality; and that its personnel are subject to Civil Service laws and to
rules of standardization with respect to positions and salaries, any vestige of
doubt as to the governmental character of its functions disappears.
In view of the foregoing premises, we hold that the respondent Unions are not
entitled to the certification election sought in the Court below. Such certification is
admittedly for purposes of bargaining in behalf of the employees with respect to
terms and conditions of employment, including the right to strike as a coercive
economic weapon, as in fact the said unions did strike in 1962 against the
ACCFA (G.R. No. L-21824).6 This is contrary to Section 11 of Republic Act No.
875, which provides:
SEC. 11. Prohibition Against Strike in the Government — The terms and
conditions of employment in the Government, including any political subdivision
or instrumentality thereof, are governed by law and it is declared to be the policy
of this Act that employees therein shall not strike for the purposes of securing
changes or modification in their terms and conditions of employment. Such
employees may belong to any labor organization which does not impose the
obligation to strike or to join in strike: Provided, However, that this section shall
77
apply only to employees employed in governmental functions of the Government
including but not limited to governmental corporations.7
With the reorganization of the ACCFA and its conversion into the ACA under the
Land Reform Code and in view of our ruling as to the governmental character of
the functions of the ACA, the decision of the respondent Court dated March 25,
1963, and the resolution en banc affirming it, in the unfair labor practice case
filed by the ACCFA, which decision is the subject of the present review in G. R.
No. L-21484, has become moot and academic, particularly insofar as the order to
bargain collectively with the respondent Unions is concerned.
What remains to be resolved is the question of fringe benefits provided for in the
collective bargaining contract of September 4, 1961. The position of the ACCFA
in this regard is that the said fringe benefits have not become enforceable
because the condition that they should first be approved by the Office of the
President has not been complied with. The Unions, on the other hand, contend
that no such condition existed in the bargaining contract, and the respondent
Court upheld this contention in its decision.
It is to be listed that under Section 3, Article XIV, of the agreement, the same
"shall not become effective unless and until the same is duly ratified by the Board
of Governors of the Administration." Such approval was given even before the
formal execution of the agreement, by virtue of "Resolution No. 67, Regular
Meeting No. 7, FY 1960-61, held on August 17, 1961," but with the proviso that
"the fringe benefits contained therein shall take effect only if approved by the
office of the President." The condition is, therefore, deemed to be incorporated
into the agreement by reference.
On October 23, 1962 the Office of the President, in a letter signed by the
Executive Secretary, expressed its approval of the bargaining contract "provided
the salaries and benefits therein fixed are not in conflict with applicable laws and
regulations, are believed to be reasonable considering the exigencies of the
service and the welfare of the employees, and are well within the financial ability
of the particular corporation to bear."
On July 1, 1963 the ACCFA management and the Unions entered into an
agreement for the implementation of the decision of the respondent Court
concerning the fringe benefits, thus:
In the meantime, only Cost of Living Adjustment, Longevity Pay, and Night
Differential Benefits accruing from July 1, 1961 to June 30, 1963 shall be paid to
all employees entitled thereto, in the following manner:
A) The sum of P180,000 shall be set aside for the payment of:
1) Night differential benefits for Security Guards.
2) Cost of Living Adjustment and Longevity Pay.
3) The unpaid balance due employees on Item A (1) and (2) this paragraph shall
be paid in monthly installments as finances permit but not beyond December 20,
1963.
3. All benefits accruing after July 1, 1963, shall be allowed to accumulate but
payable only after all benefits accruing up to June 30, 1963, as per CIR decision
hereinabove referred to shall have been settled in full; provided, however, that
commencing July 1, 1963 and for a period of only two (2) months thereafter
(during which period the ACCFA and the Unions shall negotiate a new Collective
Bargaining Agreement) the provisions of the September 4, 1961 Collective
Bargaining Agreement shall be temporarily suspended, except as to Cost of
Living Adjustment and "political" or non-economic privileges and benefits
thereunder.
On July 24, 1963 the ACCFA Board of Governors ratified the agreement thus
entered into, pursuant to the provision thereof requiring such ratification, but with
the express qualification that the same was "without prejudice to the pending
appeal in the Supreme Court . . . in Case No. 3450-ULP." The payment of the
fringe benefits agreed upon, to our mind, shows that the same were within the
financial capability of the ACCFA then, and hence justifies the conclusion that
this particular condition imposed by the Office of the President in its approval of
the bargaining contract was satisfied.
We hold, therefore, that insofar as the fringe benefits already paid are
concerned, there is no reason to set aside the decision of the respondent Court,
but that since the respondent Unions have no right to the certification election
sought by them nor, consequently, to bargain collectively with the petitioner, no
further fringe benefits may be demanded on the basis of any collective
bargaining agreement.
The decisions and orders appealed from are set aside and/or modified in
accordance with the foregoing pronouncements. No costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez, Castro, Teehankee and
Barredo, JJ., concur.
Zaldivar, J., concurs in the result.
THIRD DIVISION
[G.R. No. 143377. February 20, 2001.]
SHIPSIDE INCORPORATED, Petitioner, v. THE HON. COURT OF
APPEALS [Special Former Twelfth Division], HON. REGIONAL
TRIAL COURT, BRANCH 26 (San Fernando City, La Union) & The
REPUBLIC OF THE PHILIPPINES, Respondents.
DECISION
MELO, J.:
Before the Court is a petition for certiorari filed by Shipside
Incorporated under Rule 65 of the 1997 Rules on Civil Procedure
against the resolutions of the Court of Appeals promulgated on
November 4, 1999 and May 23, 2000, which respectively, dismissed a
78
petition for certiorari and prohibition and thereafter denied a motion
for reconsideration.chanrob1es virtua1 1aw 1ibrary
The antecedent facts are undisputed:chanrob1es virtual 1aw library
On October 29, 1958, Original Certificate of Title No. 0-381 was issued
in favor of Rafael Galvez, over four parcels of land — Lot 1 with 6, 571
square meters; Lot 2, with 16,777 square meters; Lot 3 with 1,583
square meters; and Lot 4, with 508 square meters.
On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in
favor of Filipina Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda
Balatbat in a deed of sale which was inscribed as Entry No. 9115 OCT
No. 0-381 on August 10, 1960. Consequently, Transfer Certificate No.
T-4304 was issued in favor of the buyers covering Lots No. 1 and 4.
Lot No. 1 is described as:chanrob1es virtua1 1aw 1ibrary
A parcel of land (Lot 1, Plan PSU-159621, L.R. Case No. N-361; L.R.C.
Record No. N-14012, situated in the Barrio of Poro, Municipality of San
Fernando, Province of La Union, bounded on the NE, by the Foreshore;
on the SE, by Public Land and property of the Benguet Consolidated
Mining Company; on the SW, by properties of Rafael Galvez (US
Military Reservation Camp Wallace) and Policarpio Munar; and on the
NW, by an old Barrio Road. Beginning at a point marked "1" on plan,
being S. 74 deg. 11’W., 2670.36 from B.L.L.M. 1, San Fernando,
thence
S. 66 deg. 19’E., 134.95 m. to point 2; S. 14 deg. 57’W., 11.79 m. to
point 3;
S. 12 deg. 45’W., 27.00 m. to point 4; S. 12 deg. 45’W, 6.90 m. to
point 5;
N. 69 deg., 32’W., 106.00 m. to point 6; N. 52 deg., 21’W., 36.85 m.
to point 7;
N. 21 deg. 31’E., 42.01 m. to the point of beginning; containing an
area of SIX THOUSAND FIVE HUNDRED AND SEVENTY-ONE (6,571)
SQUARE METERS, more or less. All points referred to are indicated on
the plan; and marked on the ground; bearings true, date of survey,
February 4-21, 1957.
Lot No. 4 has the following technical description:chanrob1es virtual
1aw library
A parcel of land (Lot 4, Plan PSU-159621, L.R. Case No. N-361 L.R.C.
Record No. N-14012), situated in the Barrio of Poro, Municipality of
San Fernando, La Union. Bounded on the SE by the property of the
Benguet Consolidated Mining Company; on the S. by property of
Pelagia Carino; and on the NW by the property of Rafael Galvez (US
Military Reservation, Camp Wallace). Beginning at a point marked "1"
on plan, being S. deg. 24’W. 2591.69 m. from B.L.L.M. 1, San
Fernando, thence S. 12 deg. 45’W., 73.03 m. to point 2; N. 79 deg.
59’W., 13.92 m. to point 3; N. 23 deg. 26’E., 75.00 m. to the point of
beginning; containing an area of FIVE HUNDRED AND EIGHT (508)
SQUARE METERS, more or less. All points referred to are indicated in
the plan and marked on the ground; bearings true, date of survey,
February 4-21, 1957.
On August 16, 1960, Mamaril, Et. Al. sold Lots No. 1 and 4 to Lepanto
Consolidated Mining Company. The deed of sale covering the aforesaid
property was inscribed as Entry No. 9173 on TCT No. T-4304.
Subsequently, Transfer Certificate No. T-4314 was issued in the name
of Lepanto Consolidated Mining Company as owner of Lots No. 1 and
4.
On February 1, 1963, unknown to Lepanto Consolidated Mining
Company, the Court of First Instance of La Union, Second Judicial
District, issued an Order in Land Registration Case No. N-361 (LRC
Record No. N-14012) entitled "Rafael Galvez, Applicant, Eliza Bustos,
Et Al., Parties-In-Interest; Republic of the Philippines, Movant"
declaring OCT No. 0-381 of the Registry of Deeds for the Province of
La Union issued in the name of Rafael Galvez, null and void, and
ordered the cancellation thereof.
The Order pertinently provided:chanrob1es virtual 1aw library
Accordingly, with the foregoing, and without prejudice on the rights of
incidental parties concerned herein to institute their respective
appropriate actions compatible with whatever cause they may have, it
is hereby declared and this court so holds that both proceedings in
Land Registration Case No. N-361 and Original Certificate No. 0-381 of
the Registry of Deeds for the province of La Union issued in virtue
79
thereof and registered in the name of Rafael Galvez, are null and void;
the Register of Deeds for the Province of La Union is hereby ordered to
cancel the said original certificate and/or such other certificates of title
issued subsequent thereto having reference to the same parcels of
land; without pronouncement as to costs.chanrob1es virtua1 1aw
1ibrary
On October 28, 1963, Lepanto Consolidated Mining Company sold to
herein petitioner Lots No. 1 and 4, with the deed being entered in TCT
NO. 4314 as entry No. 12381. Transfer Certificate of Title No. T-5710
was thus issued in favor of the petitioner which starting since then
exercised proprietary rights over Lots No. 1 and 4.
In the meantime, Rafael Galvez filed his motion for reconsideration
against the order issued by the trial court declaring OCT No. 0-381
null and void. The motion was denied on January 25, 1965. On appeal,
the Court of Appeals ruled in favor of the Republic of the Philippines in
a Resolution promulgated on August 14, 1973 in CA-G.R. No. 36061-
R.
Thereafter, the Court of Appeals issued an Entry of Judgment,
certifying that its decision dated August 14, 1973 became final and
executory on October 23, 1973.
On April 22, 1974, the trial court in L.R.C. Case No. N-361 issued a
writ of execution of the judgment which was served on the Register of
Deeds, San Fernando, La Union on April 29, 1974.
Twenty four long years thereafter, on January 14, 1999, the Office of
the Solicitor General received a letter dated January 11, 1999 from Mr.
Victor G. Floresca, Vice-President, John Hay Poro Point Development
Corporation, stating that the aforementioned orders and decision of
the trial court in L.R.C. No. N-361 have not been executed by the
Register of Deeds, San Fernando, La Union despite receipt of the writ
of execution.
On April 21, 1999, the Office of the Solicitor General filed a complaint
for revival of judgment and cancellation of titles before the Regional
Trial Court of the First Judicial Region (Branch 26, San Fernando, La
Union) docketed therein as Civil Case No. 6346 entitled, "Republic of
the Philippines, Plaintiff, versus Heirs of Rafael Galvez, represented by
Teresita Tan, Reynaldo Mamaril, Elisa Bustos, Erlinda Balatbat, Regina
Bustos, Shipside Incorporated and the Register of Deeds of La Union,
Defendants."cralaw virtua1aw library
The evidence shows that the impleaded defendants (except the
Register of Deeds of the province of La Union) are the successors-in-
interest of Rafael Galvez (not Reynaldo Galvez as alleged by the
Solicitor General) over the property covered by OCT No. 0-381,
namely: (a) Shipside Inc. which is presently the registered owner in
fee simple of Lots No. 1 and 4 covered by TCT No. T-5710, with a total
area of 7,079 square meters; (b) Elisa Bustos, Jesusito Galvez, and
Teresita Tan who are the registered owners of Lot No. 2 of OCT No.
0-381; and (c) Elisa Bustos, Filipina Mamaril, Regina Bustos and
Erlinda Balatbat who are the registered owners of Lot No. 3 of OCT No.
0-381, now covered by TCT No. T-4916, with an area of 1,583 square
meters.
In its complaint in Civil Case No. 6346, the Solicitor General argued
that since the trial court in LRC Case No. 361 had ruled and declared
OCT No. 0-381 to be null and void, which ruling was subsequently
affirmed by the Court of Appeals, the defendants-successors-in-
interest of Rafael Galvez have no valid title over the property covered
by OCT No. 0-381, and the subsequent Torrens titles issued in their
names should be consequently cancelled.
On July 22, 1999, petitioner Shipside, Inc. filed its Motion to Dismiss,
based on the following grounds: (1) the complaint stated no cause of
action because only final and executory judgments may be subject of
an action for revival of judgment; (2) the plaintiff is not the real party-
in-interest because the real property covered by the Torrens titles
sought to be cancelled, allegedly part of Camp Wallace (Wallace Air
Station), were under the ownership and administration of the Bases
Conversion Development Authority (BCDA) under Republic Act No.
7227; (3) plaintiff’s cause of action is barred by prescription; (4)
twenty-five years having lapsed since the issuance of the writ of
execution, no action for revival of judgment may be instituted because
under Paragraph 3 of Article 1144 of the Civil Code, such action may
be brought only within ten (10) years from the time the judgment had
been rendered.
An opposition to the motion to dismiss was filed by the Solicitor
General on August 23, 1999, alleging among others, that: (1) the real
80
party-in-interest is the Republic of the Philippines; and (2) prescription
does not run against the State.
On August 31, 1999, the trial court denied petitioner’s motion to
dismiss and on October 14, 1999, its motion for reconsideration was
likewise turned down.
On October 21, 1999, petitioner instituted a petition for certiorari and
prohibition with the Court of Appeals, docketed therein as CA-G.R. SP
No. 55535, on the ground that the orders of the trial court denying its
motion to dismiss and its subsequent motion for reconsideration were
issued in excess of jurisdiction.
On November 4, 1999, the Court of Appeals dismissed the petition in
CA-G.R. SP No. 55535 on the ground that the verification and
certification in the petition, under the signature of Lorenzo Balbin, Jr.,
was made without authority, there being no proof therein that Balbin
was authorized to institute the petition for and in behalf and of
petitioner.chanrob1es virtua1 1aw 1ibrary
On May 23, 2000, the Court of Appeals denied petitioner’s motion for
reconsideration on the grounds that: (1) a complaint filed on behalf of
a corporation can be made only if authorized by its Board of Directors,
and in the absence thereof, the petition cannot prosper and be granted
due course; and (2) petitioner was unable to show that it had
substantially complied with the rule requiring proof of authority to
institute an action or proceeding.
Hence, the instant petition.
In support of its petition, Shipside, Inc. asseverates that:chanrob1es
virtual 1aw library
1. The Honorable Court of Appeals gravely abused its discretion in
dismissing the petition when it made a conclusive legal presumption
that Mr. Balbin had no authority to sign the petition despite the clarity
of laws, jurisprudence and Secretary’s certificate to the contrary;
2. The Honorable Court of Appeals abused its discretion when it
dismissed the petition, in effect affirming the grave abuse of discretion
committed by the lower court when it refused to dismiss the 1999
Complaint for Revival of a 1973 judgment, in violation of clear laws
and jurisprudence.
Petitioner likewise adopted the arguments it raised in the petition and
comment/reply it filed with the Court of Appeals, attached to its
petition as Exhibit "L" and "N", respectively.
In his Comment, the Solicitor General moved for the dismissal of the
instant petition based on the following considerations: (1) Lorenzo
Balbin, who signed for and in behalf of petitioner in the verification
and certification of non-forum shopping portion of the petition, failed
to show proof of his authorization to institute the petition for certiorari
and prohibition with the Court of Appeals, thus the latter court acted
correctly in dismissing the same; (2) the real party-in-interest in the
case at bar being the Republic of the Philippines, its claims are
imprescriptible.
In order to preserve the rights of herein parties, the Court issued a
temporary restraining order on June 26, 2000 enjoining the trial court
from conducting further proceedings in Civil Case No. 6346.
The issues posited in this case are: (1) whether or not an
authorization from petitioner’s Board of Directors is still required in
order for its resident manager to institute or commence a legal action
for and in behalf of the corporation; and (2) whether or not the
Republic of the Philippines can maintain the action for revival of
judgment herein.
We find for Petitioner.
Anent the first issue:chanrob1es virtual 1aw library
The Court of Appeals dismissed the petition for certiorari on the
ground that Lorenzo Balbin, the resident manager for petitioner, who
was the signatory in the verification and certification on non-forum
shopping, failed to show proof that he was authorized by petitioner’s
board of directors to file such a petition.
A corporation, such as petitioner, has no power except those expressly
conferred on it by the Corporation Code and those that are implied or
incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and
81
agents. Thus, it has been observed that the power of a corporation to
sue and be sued in any court is lodged with the board of directors that
exercises its corporate powers (Premium Marble Resources, Inc. v. CA,
264 SCRA 11 [1996]). In turn, physical acts of the corporation, like
the signing of documents, can be performed only by natural persons
duly authorized for the purpose by corporate by-laws or by a specific
act of the board of directors.
It is undisputed that on October 21, 1999, the time petitioner’s
Resident Manager Balbin filed the petition, there was no proof
attached thereto that Balbin was authorized to sign the verification
and non-forum shopping certification therein, as a consequence of
which the petition was dismissed by the Court of Appeals. However,
subsequent to such dismissal, petitioner filed a motion for
reconsideration, attaching to said motion a certificate issued by its
board secretary stating that on October 11, 1999, or ten days prior to
the filing of the petition, Balbin had been authorized by petitioner’s
board of directors to file said petition.
The Court has consistently held that the requirement regarding
verification of a pleading is formal, not jurisdictional (Uy v. LandBank,
G.R. No. 136100, July 24, 2000). Such requirement is simply a
condition affecting the form of the pleading, non-compliance with
which does not necessarily render the pleading fatally defective.
Verification is simply intended to secure an assurance that the
allegations in the pleading are true and correct and not the product of
the imagination or a matter of speculation, and that the pleading is
filed in good faith. The court may order the correction of the pleading
if verification is lacking or act on the pleading although it is not
verified, if the attending circumstances are such that strict compliance
with the rules may be dispensed with in order that the ends of justice
may thereby be served.
On the other hand, the lack of certification against forum shopping is
generally not curable by the submission thereof after the filing of the
petition. Section 5, Rule 45 of the 1997 Rules of Civil Procedure
provides &t the failure of the petitioner to submit the required
documents that should accompany the petition, including the
certification against forum shopping, shall be sufficient ground for the
dismissal thereof. The same rule applies to certifications against forum
shopping signed by a person on behalf of a corporation which are
unaccompanied by proof that said signatory is authorized to file a
petition on behalf of the corporation.
In certain exceptional circumstances, however, the Court has allowed
the belated filing of the certification. In Loyola v. Court of Appeals, et.
al. (245 SCRA 477 [1995]), the Court considered the filing of the
certification one day after the filing of an election protest as
substantial compliance with the requirement. In Roadway Express,
Inc. v. Court of Appeals, et. al. (264 SCRA 696 [1996]), the Court
allowed the filing of the certification 14 days before the dismissal of
the petition. In Uy v. Landbank, supra, the Court had dismissed Uy’s
petition for lack of verification and certification against non-forum
shopping. However, it subsequently reinstated the petition after Uy
submitted a motion to admit certification and non-forum shopping
certification. In all these cases, there were special circumstances or
compelling reasons that justified the relaxation of the rule requiring
verification and certification on non-forum shopping.
In the instant case, the merits of petitioner’s case should be
considered special circumstances or compelling reasons that justify
tempering the requirement in regard to the certificate of non-forum
shopping. Moreover, in Loyola, Roadway, and Uy, the Court excused
non-compliance with the requirement as to the certificate of non-
forum shopping. With more reason should we allow the instant petition
since petitioner herein did submit a certification on non-forum
shopping, failing only to show proof that the signatory was authorized
to do so. That petitioner subsequently submitted a secretary’s
certificate attesting that Balbin was authorized to file an action on
behalf of petitioner likewise mitigates this oversight.
It must also be kept in mind that while the requirement of the
certificate of non-forum shopping is mandatory, nonetheless the
requirements must not be interpreted too literally and thus defeat the
objective of preventing the undesirable practice of forum-shopping
(Bernardo v. NLRC, 255 SCRA 108 [1996]). Lastly, technical rules of
procedure should be used to promote, not frustrate justice. While the
swift unclogging of court dockets is a laudable objective, the granting
of substantial justice is an even more urgent ideal.
Now to the second issue:chanrob1es virtual 1aw library
82
The action instituted by the Solicitor General in the trial court is one
for revival of judgment which is governed by Article 1144(3) of the
Civil Code and Section 6, Rule 39 of the 1997 Rules on Civil Procedure.
Article 1144(3) provides that an action upon a judgment "must be
brought within 10 years from the time the right of action accrues." On
the other hand, Section 6, Rule 39 provides that a final and executory
judgment or order may be executed on motion within five (5) years
from the date of its entry, but that after the lapse of such time, and
before it is barred by the statute of limitations, a judgment may be
enforced by action. Taking these two provisions into consideration, it is
plain that an action for revival of judgment must be brought within ten
years from the time said judgment becomes final.
From the records of this case, it is clear that the judgment sought to
be revived became final on October 23, 1973. On the other hand, the
action for revival of judgment was instituted only in 1999, or more
than twenty-five (25) years after the judgment had become final.
Hence, the action is barred by extinctive prescription considering that
such an action can be instituted only within ten (10) years from the
time the cause of action accrues.
The Solicitor General, nonetheless, argues that the State’s cause of
action in the cancellation of the land title issued to petitioner’s
predecessor-in-interest is imprescriptible because it is included in
Camp Wallace, which belongs to the government.
The argument is misleading.
While it is true that prescription does not run against the State, the
same may not be invoked by the government in this case since it is no
longer interested in the subject matter. While Camp Wallace may have
belonged to the government at the time Rafael Galvez’s title was
ordered cancelled in Land Registration Case No. N-361, the same no
longer holds true today.
Republic Act No. 7227, otherwise known as the Bases Conversion and
Development Act of 1992, created the Bases Conversion and
Development Authority. Section 4 pertinently provides:chanrob1es
virtua1 1aw 1ibrary
SECTION 4. Purposes of the Conversion Authority. — The Conversion
Authority shall have the following purposes:chanrob1es virtual 1aw
library
(a) To own, hold and/or administer the military reservations of John
Hay Air Station, Wallace Air Station, O’Donnell Transmitter Station,
San Miguel Naval Communications Station, Mt. Sta. Rita Station
(Hermosa, Bataan) and those portions of Metro Manila military camps
which may be transferred to it by the President;
Section 2 of Proclamation No. 216, issued on July 27, 1993, also
provides:chanrob1es virtual 1aw library
SECTION 2. Transfer of Wallace Air Station Areas to the Bases
Conversion and Development Authority. — All areas covered by the
Wallace Air Station as embraced and defined by the 1947 Military
Bases Agreement between the Philippines and the United States of
America, as amended, excluding those covered by Presidential
Proclamations and some 25-hectare area for the radar and
communication station of the Philippine Air Force, are hereby
transferred to the Bases Conversion Development Authority . . .
With the transfer of Camp Wallace to the BCDA, the government no
longer has a right or interest to protect. Consequently, the Republic is
not a real party in interest and it may not institute the instant action.
Nor may it raise the defense of imprescriptibility, the same being
applicable only in cases where the government is a party in interest.
Under Section 2 of Rule 3 of the 1997 Rules of Civil Procedure, "every
action must be prosecuted or defended in the name of the real party in
interest." To qualify a person to be a real party in interest in whose
name an action must be prosecuted, he must appear to be the present
real owner of the right sought to enforced (Pioneer Insurance v. CA,
175 SCRA 668 [1989]). A real party in interest is the party who stands
to be benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit. And by real interest is meant a
present substantial interest, as distinguished from a mere expectancy,
or a future, contingent, subordinate or consequential interest (Ibonilla
v. Province of Cebu, 210 SCRA 526 [1992]). Being the owner of the
areas covered by Camp Wallace, it is the Bases Conversion and
Development Authority, not the Government, which stands to be
benefited if the land covered by TCT No. T-5710 issued in the name of
petitioner is cancelled.
83

Nonetheless, it has been posited that the transfer of military
reservations and their extensions to the BCDA is basically for the
purpose of accelerating the sound and balanced conversion of these
military reservations into alternative productive uses and to enhance
the benefits to be derived from such property as a measure of
promoting the economic and social development, particularly of
Central Luzon and, in general, the country’s goal for enhancement
(Section 2, Republic Act No. 7227). It is contended that the transfer of
these military reservations to the Conversion Authority does not
amount to an abdication on the part of the Republic of its interests,
but simply a recognition of the need to create a body corporate which
will act as its agent for the realization of its program. It is
consequently asserted that the Republic remains to be the real party
in interest and the Conversion Authority merely its agent.
We, however, must not lose sight of the fact that the BCDA is an entity
invested with a personality separate and distinct from the government.
Section 3 of Republic Act No. 7227 reads:chanrob1es virtual 1aw
library
SECTION 3. Creation of the Bases Conversion and Development
Authority. — There is hereby created a body corporate to be known as
the Conversion Authority which shall have the attribute of perpetual
succession and shall be vested with the powers of a corporation.
It may not be amiss to state at this point that the functions of
government have been classified into governmental or constituent and
proprietary or ministrant. While public benefit and public welfare,
particularly, the promotion of the economic and social development of
Central Luzon, may be attributable to the operation of the BCDA, yet it
is certain that the functions performed by the BCDA are basically
proprietary in nature. The promotion of economic and social
development of Central Luzon, in particular, and the country’s goal for
enhancement, in general, do not make the BCDA equivalent to the
Government. Other corporations have been created by government to
act as its agents for the realization of its programs, the SSS, GSIS,
NAWASA and the NIA, to count a few, and yet, the Court has ruled
that these entities, although performing functions aimed at promoting
public interest and public welfare, are not government-function
corporations invested with governmental attributes. It may thus be
said that the BCDA is not a mere agency of the Government but a
corporate body performing proprietary functions.
Moreover, Section 5 of Republic Act No. 7227 provides:chanrob1es
virtual 1aw library
SECTION 5. Powers of the Conversion Authority. — To carry out its
objectives under this Act, the Conversion Authority is hereby vested
with the following powers:chanrob1es virtual 1aw library
(a) To succeed in its corporate name, to sue and be sued in such
corporate name and to adopt, alter and use a corporate seal which
shall be judicially noticed;cralawred
Having the capacity to sue or be sued, it should thus be the BCDA
which may file an action to cancel petitioner’s title, not the Republic,
the former being the real party in interest. One having no right or
interest to protect cannot invoke the jurisdiction of the court as a
party plaintiff in an action (Ralla v. Ralla, 199 SCRA 495 [1991]). A
suit may be dismissed if the plaintiff or the defendant is not a real
party in interest. If the suit is not brought in the name of the real
party in interest, a motion to dismiss may be filed, as was done by
petitioner in this case, on the ground that the complaint states no
cause of action (Tanpingco v. IAC, 207 SCRA 652 [1992]).
However, E.B. Marcha Transport Co., Inc. v. IAC (147 SCRA 276
[1987]) is cited as authority that the Republic is the proper party to
sue for the recovery of possession of property which at the time of the
institution of the suit was no longer held by the national government
but by the Philippine Ports Authority. In E.B. Marcha, the Court
ruled:chanrob1es virtual 1aw library
It can be said that in suing for the recovery of the rentals, the
Republic of the Philippines, acted as principal of the Philippine Ports
Authority, directly exercising the commission it had earlier conferred
on the latter as its agent. We may presume that, by doing so, the
Republic of the Philippines did not intend to retain the said rentals for
its own use, considering that by its voluntary act it had transferred the
land in question to the Philippine Ports Authority effective July 11,
1974. The Republic of the Philippines had simply sought to assist, not
supplant, the Philippine Ports Authority, whose title to the disputed
property it continues to recognize. We may expect then that the said
84
rentals, once collected by the Republic of the Philippines, shall be
turned over by it to the Philippine Ports Authority conformably to the
purposes of P.D. No. 857.
E.B. Marcha is, however, not on all fours with the case at bar. In the
former, the Court considered the Republic a proper party to sue since
the claims of the Republic and the Philippine Ports Authority against
the petitioner therein were the same. To dismiss the complaint in E.B.
Marcha would have brought needless delay in the settlement of the
matter since the PPA would have to refile the case on the same claim
already litigated upon. Such is not the case here since to allow the
government to sue herein enables it to raise the issue of
imprescriptibility, a claim which is not available to the BCDA. The rule
that prescription does not run against the State does not apply to
corporations or artificial bodies created by the State for special
purposes, it being said that when the title of the Republic has been
divested, its grantees, although artificial bodies of its own creation, are
in the same category as ordinary persons (Kingston v. LeHigh Valley
Coal Co., 241 Pa 469). By raising the claim of imprescriptibility, a claim
which cannot be raised by the BCDA, the Government not only assists
the BCDA, as it did in E.B. Marcha, it even supplants the latter, a
course of action proscribed by said case.
Moreover, to recognize the Government as a proper party to sue in this
case would set a bad precedent as it would allow the Republic to
prosecute, on behalf of government-owned or controlled corporations,
causes of action which have already prescribed, on the pretext that
the Government is the real party in interest against whom prescription
does not run, said corporations having been created merely as agents
for the realization of government programs.
Parenthetically, petitioner was not a party to the original suit for
cancellation of title commenced by the Republic twenty-seven years
for which it is now being made to answer, nay, being made to suffer
financial losses.
It should also be noted that petitioner is unquestionably a buyer in
good faith and for value, having acquired the property in 1963, or 5
years after the issuance of the original certificate of title, as a third
transferee. If only not to do violence and to give some measure of
respect to the Torrens System, petitioner must be afforded some
measure of protection.chanrob1es virtua1 1aw 1ibrary
One more point.
Since the portion in dispute now forms part of the property owned and
administered by the Bases Conversion and Development Authority, it is
alienable and registerable real property.
We find it unnecessary to rule on the other matters raised by the
herein parties.
WHEREFORE, the petition is hereby granted and the orders dated
August 31, 1999 and October 4, 1999 of the Regional Trial Court of the
First National Judicial Region (Branch 26, San Fernando, La Union) in
Civil Case No. 6346 entitled "Republic of the Philippines, Plaintiff,
versus Heirs of Rafael Galvez, et. al., Defendants" as well as the
resolutions promulgated on November 4, 1999 and May 23, 2000 by
the Court of Appeals (Twelfth Division) in CA-G.R. SP No. 55535
entitled "Shipside, Inc., Petitioner versus Hon. Alfredo Cajigal, as
Judge, RTC, San Fernando, La Union, Branch 26, and the Republic of
the Philippines, Respondents" are hereby reversed and set aside. The
complaint in Civil Case No. 6346, Regional Trial Court, Branch 26, San
Fernando City, La Union entitled "Republic of the Philippines, Plaintiff,
versus Heirs of Rafael Galvez, Et. Al." is ordered dismissed, without
prejudice to the filing of an appropriate action by the Bases
Development and Conversion Authority.
SO ORDERED.chanrob1es virtua1 1aw 1ibrary
Panganiban, Gonzaga-Reyes and Sandoval-Gutierrez, JJ., concur.
EN BANC
G.R. No. L-11154 March 21, 1916
E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.
Crossfield and O'Brien for plaintiff.

Attorney-General Avanceña for defendant..
TRENT, J.:
This is an appeal by both parties from a judgment of the Court of First Instance of
the city of Manila in favor of the plaintiff for the sum of P14,741, together with the
costs of the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general
damages which the plaintiff suffered to P5,000, instead of P25,000 as claimed in
85
the complaint," and (2) "in limiting the time when plaintiff was entirely disabled to
two months and twenty-one days and fixing the damage accordingly in the sum
of P2,666, instead of P6,000 as claimed by plaintiff in his complaint."
The Attorney-General on behalf of the defendant urges that the trial court erred:
(a) in finding that the collision between the plaintiff's motorcycle and the
ambulance of the General Hospital was due to the negligence of the chauffeur;
(b) in holding that the Government of the Philippine Islands is liable for the
damages sustained by the plaintiff as a result of the collision, even if it be true
that the collision was due to the negligence of the chauffeur; and (c) in rendering
judgment against the defendant for the sum of P14,741.
The trial court's findings of fact, which are fully supported by the record, are as
follows:
It is a fact not disputed by counsel for the defendant that when the plaintiff, riding
on a motorcycle, was going toward the western part of Calle Padre Faura,
passing along the west side thereof at a speed of ten to twelve miles an hour,
upon crossing Taft Avenue and when he was ten feet from the southwestern
intersection of said streets, the General Hospital ambulance, upon reaching said
avenue, instead of turning toward the south, after passing the center thereof, so
that it would be on the left side of said avenue, as is prescribed by the ordinance
and the Motor Vehicle Act, turned suddenly and unexpectedly and long before
reaching the center of the street, into the right side of Taft Avenue, without having
sounded any whistle or horn, by which movement it struck the plaintiff, who was
already six feet from the southwestern point or from the post place there.
By reason of the resulting collision, the plaintiff was so severely injured that,
according to Dr. Saleeby, who examined him on the very same day that he was
taken to the General Hospital, he was suffering from a depression in the left
parietal region, a would in the same place and in the back part of his head, while
blood issued from his nose and he was entirely unconscious.
The marks revealed that he had one or more fractures of the skull and that the
grey matter and brain was had suffered material injury. At ten o'clock of the night
in question, which was the time set for performing the operation, his pulse was
so weak and so irregular that, in his opinion, there was little hope that he would
live. His right leg was broken in such a way that the fracture extended to the
outer skin in such manner that it might be regarded as double and the would be
exposed to infection, for which reason it was of the most serious nature.
At another examination six days before the day of the trial, Dr. Saleeby noticed
that the plaintiff's leg showed a contraction of an inch and a half and a curvature
that made his leg very weak and painful at the point of the fracture. Examination
of his head revealed a notable readjustment of the functions of the brain and
nerves. The patient apparently was slightly deaf, had a light weakness in his
eyes and in his mental condition. This latter weakness was always noticed when
the plaintiff had to do any difficult mental labor, especially when he attempted to
use his money for mathematical calculations.
According to the various merchants who testified as witnesses, the plaintiff's
mental and physical condition prior to the accident was excellent, and that after
having received the injuries that have been discussed, his physical condition had
undergone a noticeable depreciation, for he had lost the agility, energy, and
ability that he had constantly displayed before the accident as one of the best
constructors of wooden buildings and he could not now earn even a half of the
income that he had secured for his work because he had lost 50 per cent of his
efficiency. As a contractor, he could no longer, as he had before done, climb up
ladders and scaffoldings to reach the highest parts of the building.
As a consequence of the loss the plaintiff suffered in the efficiency of his work as
a contractor, he had to dissolved the partnership he had formed with the
engineer. Wilson, because he was incapacitated from making mathematical
calculations on account of the condition of his leg and of his mental faculties, and
he had to give up a contract he had for the construction of the Uy Chaco
building."
We may say at the outset that we are in full accord with the trial court to the
effect that the collision between the plaintiff's motorcycle and the ambulance of
the General Hospital was due solely to the negligence of the chauffeur.
The two items which constitute a part of the P14,741 and which are drawn in
question by the plaintiff are (a) P5,000, the award awarded for permanent
injuries, and (b) the P2,666, the amount allowed for the loss of wages during the
time the plaintiff was incapacitated from pursuing his occupation. We find nothing
in the record which would justify us in increasing the amount of the first. As to the
second, the record shows, and the trial court so found, that the plaintiff's services
as a contractor were worth P1,000 per month. The court, however, limited the
time to two months and twenty-one days, which the plaintiff was actually confined
in the hospital. In this we think there was error, because it was clearly
established that the plaintiff was wholly incapacitated for a period of six months.
The mere fact that he remained in the hospital only two months and twenty-one
days while the remainder of the six months was spent in his home, would not
prevent recovery for the whole time. We, therefore, find that the amount of
damages sustained by the plaintiff, without any fault on his part, is P18,075.
As the negligence which caused the collision is a tort committed by an agent or
employee of the Government, the inquiry at once arises whether the Government
is legally-liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
An Act authorizing E. Merritt to bring suit against the Government of the
Philippine Islands and authorizing the Attorney-General of said Islands to appear
in said suit.
Whereas a claim has been filed against the Government of the Philippine Islands
by Mr. E. Merritt, of Manila, for damages resulting from a collision between his
motorcycle and the ambulance of the General Hospital on March twenty-fifth,
nineteen hundred and thirteen;
Whereas it is not known who is responsible for the accident nor is it possible to
determine the amount of damages, if any, to which the claimant is entitled; and
Whereas the Director of Public Works and the Attorney-General recommended
that an Act be passed by the Legislature authorizing Mr. E. Merritt to bring suit in
the courts against the Government, in order that said questions may be decided:
Now, therefore,
86
By authority of the United States, be it enacted by the Philippine Legislature,
that:
SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First
Instance of the city of Manila against the Government of the Philippine Islands in
order to fix the responsibility for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the amount of the
damages, if any, to which Mr. E. Merritt is entitled on account of said collision,
and the Attorney-General of the Philippine Islands is hereby authorized and
directed to appear at the trial on the behalf of the Government of said Islands, to
defendant said Government at the same.
SEC. 2. This Act shall take effect on its passage.
Enacted, February 3, 1915.
Did the defendant, in enacting the above quoted Act, simply waive its immunity
from suit or did it also concede its liability to the plaintiff? If only the former, then it
cannot be held that the Act created any new cause of action in favor of the
plaintiff or extended the defendant's liability to any case not previously
recognized.
All admit that the Insular Government (the defendant) cannot be sued by an
individual without its consent. It is also admitted that the instant case is one
against the Government. As the consent of the Government to be sued by the
plaintiff was entirely voluntary on its part, it is our duty to look carefully into the
terms of the consent, and render judgment accordingly.
The plaintiff was authorized to bring this action against the Government "in order
to fix the responsibility for the collision between his motorcycle and the
ambulance of the General Hospital and to determine the amount of the
damages, if any, to which Mr. E. Merritt is entitled on account of said collision, . . .
." These were the two questions submitted to the court for determination. The Act
was passed "in order that said questions may be decided." We have "decided"
that the accident was due solely to the negligence of the chauffeur, who was at
the time an employee of the defendant, and we have also fixed the amount of
damages sustained by the plaintiff as a result of the collision. Does the Act
authorize us to hold that the Government is legally liable for that amount? If not,
we must look elsewhere for such authority, if it exists.
The Government of the Philippine Islands having been "modeled after the
Federal and State Governments in the United States," we may look to the
decisions of the high courts of that country for aid in determining the purpose and
scope of Act No. 2457.
In the United States the rule that the state is not liable for the torts committed by
its officers or agents whom it employs, except when expressly made so by
legislative enactment, is well settled. "The Government," says Justice Story,
"does not undertake to guarantee to any person the fidelity of the officers or
agents whom it employs, since that would involve it in all its operations in
endless embarrassments, difficulties and losses, which would be subversive of
the public interest." (Claussen vs. City of Luverne, 103 Minn., 491, citing U. S.
vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers vs. States, 20 How., 527;
15 L. Ed., 991.)
In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to recover
damages from the state for personal injuries received on account of the
negligence of the state officers at the state fair, a state institution created by the
legislature for the purpose of improving agricultural and kindred industries; to
disseminate information calculated to educate and benefit the industrial classes;
and to advance by such means the material interests of the state, being objects
similar to those sought by the public school system. In passing upon the question
of the state's liability for the negligent acts of its officers or agents, the court said:
No claim arises against any government is favor of an individual, by reason of
the misfeasance, laches, or unauthorized exercise of powers by its officers or
agents. (Citing Gibbons vs. U. S., 8 Wall., 269; Clodfelter vs. State, 86 N. C., 51,
53; 41 Am. Rep., 440; Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158;
Green vs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27 Am. St. Rep., 203;
Story on Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals to sue the state
where the cause of action arises out of either fort or contract, the rule is stated in
36 Cyc., 915, thus:
By consenting to be sued a state simply waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or create any cause of action in his favor,
or extend its liability to any cause not previously recognized. It merely gives a
remedy to enforce a preexisting liability and submits itself to the jurisdiction of the
court, subject to its right to interpose any lawful defense.
In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16,
1915, the Act of 1913, which authorized the bringing of this suit, read:
SECTION 1. Authority is hereby given to George Apfelbacher, of the town of
Summit, Waukesha County, Wisconsin, to bring suit in such court or courts and
in such form or forms as he may be advised for the purpose of settling and
determining all controversies which he may now have with the State of
Wisconsin, or its duly authorized officers and agents, relative to the mill property
of said George Apfelbacher, the fish hatchery of the State of Wisconsin on the
Bark River, and the mill property of Evan Humphrey at the lower end of
Nagawicka Lake, and relative to the use of the waters of said Bark River and
Nagawicka Lake, all in the county of Waukesha, Wisconsin.
In determining the scope of this act, the court said:
Plaintiff claims that by the enactment of this law the legislature admitted liability
on the part of the state for the acts of its officers, and that the suit now stands
just as it would stand between private parties. It is difficult to see how the act
does, or was intended to do, more than remove the state's immunity from suit. It
simply gives authority to commence suit for the purpose of settling plaintiff's
controversies with the estate. Nowhere in the act is there a whisper or
suggestion that the court or courts in the disposition of the suit shall depart from
well established principles of law, or that the amount of damages is the only
question to be settled. The act opened the door of the court to the plaintiff. It did
not pass upon the question of liability, but left the suit just where it would be in
the absence of the state's immunity from suit. If the Legislature had intended to
change the rule that obtained in this state so long and to declare liability on the
87
part of the state, it would not have left so important a matter to mere inference,
but would have done so in express terms. (Murdock Grate Co. vs.
Commonwealth, 152 Mass., 28; 24 N.E., 854; 8 L. R. A., 399.)
In Denning vs. State (123 Cal., 316), the provisions of the Act of 1893, relied
upon and considered, are as follows:
All persons who have, or shall hereafter have, claims on contract or for
negligence against the state not allowed by the state board of examiners, are
hereby authorized, on the terms and conditions herein contained, to bring suit
thereon against the state in any of the courts of this state of competent
jurisdiction, and prosecute the same to final judgment. The rules of practice in
civil cases shall apply to such suits, except as herein otherwise provided.
And the court said:
This statute has been considered by this court in at least two cases, arising
under different facts, and in both it was held that said statute did not create any
liability or cause of action against the state where none existed before, but
merely gave an additional remedy to enforce such liability as would have existed
if the statute had not been enacted. (Chapman vs. State, 104 Cal., 690; 43 Am.
St. Rep., 158; Melvin vs. State, 121 Cal., 16.)
A statute of Massachusetts enacted in 1887 gave to the superior court
"jurisdiction of all claims against the commonwealth, whether at law or in equity,"
with an exception not necessary to be here mentioned. In construing this statute
the court, in Murdock Grate Co. vs. Commonwealth (152 Mass., 28), said:
The statute we are discussing disclose no intention to create against the state a
new and heretofore unrecognized class of liabilities, but only an intention to
provide a judicial tribunal where well recognized existing liabilities can be
adjudicated.
In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by
the terms of the statute of New York, jurisdiction of claims for damages for
injuries in the management of the canals such as the plaintiff had sustained,
Chief Justice Ruger remarks: "It must be conceded that the state can be made
liable for injuries arising from the negligence of its agents or servants, only by
force of some positive statute assuming such liability."
It being quite clear that Act No. 2457 does not operate to extend the
Government's liability to any cause not previously recognized, we will now
examine the substantive law touching the defendant's liability for the negligent
acts of its officers, agents, and employees. Paragraph 5 of article 1903 of the
Civil Code reads:
The state is liable in this sense when it acts through a special agent, but not
when the damage should have been caused by the official to whom properly it
pertained to do the act performed, in which case the provisions of the preceding
article shall be applicable.
The supreme court of Spain in defining the scope of this paragraph said:
That the obligation to indemnify for damages which a third person causes to
another by his fault or negligence is based, as is evidenced by the same Law 3,
Title 15, Partida 7, on that the person obligated, by his own fault or negligence,
takes part in the act or omission of the third party who caused the damage. It
follows therefrom that the state, by virtue of such provisions of law, is not
responsible for the damages suffered by private individuals in consequence of
acts performed by its employees in the discharge of the functions pertaining to
their office, because neither fault nor even negligence can be presumed on the
part of the state in the organization of branches of public service and in the
appointment of its agents; on the contrary, we must presuppose all foresight
humanly possible on its part in order that each branch of service serves the
general weal an that of private persons interested in its operation. Between these
latter and the state, therefore, no relations of a private nature governed by the
civil law can arise except in a case where the state acts as a judicial person
capable of acquiring rights and contracting obligations. (Supreme Court of Spain,
January 7, 1898; 83 Jur. Civ., 24.)
That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which
arise out of fault or negligence; and whereas in the first article thereof. No. 1902,
where the general principle is laid down that where a person who by an act or
omission causes damage to another through fault or negligence, shall be obliged
to repair the damage so done, reference is made to acts or omissions of the
persons who directly or indirectly cause the damage, the following articles refers
to this persons and imposes an identical obligation upon those who maintain
fixed relations of authority and superiority over the authors of the damage,
because the law presumes that in consequence of such relations the evil caused
by their own fault or negligence is imputable to them. This legal presumption
gives way to proof, however, because, as held in the last paragraph of article
1903, responsibility for acts of third persons ceases when the persons mentioned
in said article prove that they employed all the diligence of a good father of a
family to avoid the damage, and among these persons, called upon to answer in
a direct and not a subsidiary manner, are found, in addition to the mother or the
father in a proper case, guardians and owners or directors of an establishment or
enterprise, the state, but not always, except when it acts through the agency of a
special agent, doubtless because and only in this case, the fault or negligence,
which is the original basis of this kind of objections, must be presumed to lie with
the state.
That although in some cases the state might by virtue of the general principle set
forth in article 1902 respond for all the damage that is occasioned to private
parties by orders or resolutions which by fault or negligence are made by
branches of the central administration acting in the name and representation of
the state itself and as an external expression of its sovereignty in the exercise of
its executive powers, yet said article is not applicable in the case of damages
said to have been occasioned to the petitioners by an executive official, acting in
the exercise of his powers, in proceedings to enforce the collections of certain
property taxes owing by the owner of the property which they hold in sublease.
That the responsibility of the state is limited by article 1903 to the case wherein it
acts through a special agent (and a special agent, in the sense in which these
words are employed, is one who receives a definite and fixed order or
commission, foreign to the exercise of the duties of his office if he is a special
official) so that in representation of the state and being bound to act as an agent
88
thereof, he executes the trust confided to him. This concept does not apply to
any executive agent who is an employee of the acting administration and who on
his own responsibility performs the functions which are inherent in and naturally
p e r t a i n t o h i s o ff i c e a n d w h i c h a r e r e g u l a t e d b y l a w a n d t h e
regulations." (Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.)
That according to paragraph 5 of article 1903 of the Civil Code and the principle
laid down in a decision, among others, of the 18th of May, 1904, in a damage
case, the responsibility of the state is limited to that which it contracts through a
special agent, duly empowered by a definite order or commission to perform
some act or charged with some definite purpose which gives rise to the claim,
and not where the claim is based on acts or omissions imputable to a public
official charged with some administrative or technical office who can be held to
the proper responsibility in the manner laid down by the law of civil responsibility.
Consequently, the trial court in not so deciding and in sentencing the said entity
to the payment of damages, caused by an official of the second class referred to,
has by erroneous interpretation infringed the provisions of articles 1902 and
1903 of the Civil Code. (Supreme Court of Spain, July 30, 1911; 122 Jur. Civ.,
146.)
It is, therefore, evidence that the State (the Government of the Philippine Islands)
is only liable, according to the above quoted decisions of the Supreme Court of
Spain, for the acts of its agents, officers and employees when they act as special
agents within the meaning of paragraph 5 of article 1903, supra, and that the
chauffeur of the ambulance of the General Hospital was not such an agent.
For the foregoing reasons, the judgment appealed from must be reversed,
without costs in this instance. Whether the Government intends to make itself
legally liable for the amount of damages above set forth, which the plaintiff has
sustained by reason of the negligent acts of one of its employees, by legislative
enactment and by appropriating sufficient funds therefor, we are not called upon
to determine. This matter rests solely with the Legislature and not with the courts.
Arellano, C. J., Torres, Johnson, and Moreland, JJ., concur.
EN BANC
G.R. No. L-35645 May 22, 1985
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I.
COLLINS and ROBERT GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of
Rizal and ELIGIO DE GUZMAN & CO., INC., respondents.
Sycip, Salazar, Luna & Manalo & Feliciano Law for petitioners.
Albert, Vergara, Benares, Perias & Dominguez Law Office for respondents.
ABAD SANTOS, J.:
This is a petition to review, set aside certain orders and restrain the respondent
judge from trying Civil Case No. 779M of the defunct Court of First Instance of
Rizal.
The factual background is as follows:
At times material to this case, the United States of America had a naval base in
Subic, Zambales. The base was one of those provided in the Military Bases
Agreement between the Philippines and the United States.
Sometime in May, 1972, the United States invited the submission of bids for the
following projects
1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic Bay,
Philippines.
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to
shoreline revetment, NAVBASE Subic; and repair to Leyte Wharf approach,
NAVBASE Subic Bay, Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids.
Subsequent thereto, the company received from the United States two telegrams
requesting it to confirm its price proposals and for the name of its bonding
company. The company complied with the requests. [In its complaint, the
company alleges that the United States had accepted its bids because "A
request to confirm a price proposal confirms the acceptance of a bid pursuant to
defendant United States' bidding practices." (Rollo, p. 30.) The truth of this
allegation has not been tested because the case has not reached the trial stage.]
In June, 1972, the company received a letter which was signed by Wilham I.
Collins, Director, Contracts Division, Naval Facilities Engineering Command,
Southwest Pacific, Department of the Navy of the United States, who is one of
the petitioners herein. The letter said that the company did not qualify to receive
an award for the projects because of its previous unsatisfactory performance
rating on a repair contract for the sea wall at the boat landings of the U.S. Naval
Station in Subic Bay. The letter further said that the projects had been awarded
to third parties. In the abovementioned Civil Case No. 779-M, the company sued
the United States of America and Messrs. James E. Galloway, William I. Collins
and Robert Gohier all members of the Engineering Command of the U.S. Navy.
The complaint is to order the defendants to allow the plaintiff to perform the work
on the projects and, in the event that specific performance was no longer
possible, to order the defendants to pay damages. The company also asked for
the issuance of a writ of preliminary injunction to restrain the defendants from
entering into contracts with third parties for work on the projects.
The defendants entered their special appearance for the purpose only of
questioning the jurisdiction of this court over the subject matter of the complaint
and the persons of defendants, the subject matter of the complaint being acts
and omissions of the individual defendants as agents of defendant United States
of America, a foreign sovereign which has not given her consent to this suit or
any other suit for the causes of action asserted in the complaint." (Rollo, p. 50.)
Subsequently the defendants filed a motion to dismiss the complaint which
included an opposition to the issuance of the writ of preliminary injunction. The
company opposed the motion. The trial court denied the motion and issued the
writ. The defendants moved twice to reconsider but to no avail. Hence the instant
petition which seeks to restrain perpetually the proceedings in Civil Case No.
779-M for lack of jurisdiction on the part of the trial court.
The petition is highly impressed with merit.
89
The traditional rule of State immunity exempts a State from being sued in the
courts of another State without its consent or waiver. This rule is a necessary
consequence of the principles of independence and equality of States. However,
the rules of International Law are not petrified; they are constantly developing
and evolving. And because the activities of states have multiplied, it has been
necessary to distinguish them-between sovereign and governmental acts (jure
imperii) and private, commercial and proprietary acts (jure gestionis). The result
is that State immunity now extends only to acts jure imperil The restrictive
application of State immunity is now the rule in the United States, the United
Kingdom and other states in western Europe. (See Coquia and Defensor
Santiago, Public International Law, pp. 207-209 [1984].)
The respondent judge recognized the restrictive doctrine of State immunity when
he said in his Order denying the defendants' (now petitioners) motion: " A
distinction should be made between a strictly governmental function of the
sovereign state from its private, proprietary or non- governmental acts (Rollo, p.
20.) However, the respondent judge also said: "It is the Court's considered
opinion that entering into a contract for the repair of wharves or shoreline is
certainly not a governmental function altho it may partake of a public nature or
character. As aptly pointed out by plaintiff's counsel in his reply citing the ruling in
the case of Lyons, Inc., [104 Phil. 594 (1958)], and which this Court quotes with
approval, viz.:
It is however contended that when a sovereign state enters into a contract with a
private person, the state can be sued upon the theory that it has descended to
the level of an individual from which it can be implied that it has given its consent
to be sued under the contract. ...
xxx xxx xxx
We agree to the above contention, and considering that the United States
government, through its agency at Subic Bay, entered into a contract with
appellant for stevedoring and miscellaneous labor services within the Subic Bay
Area, a U.S. Naval Reservation, it is evident that it can bring an action before our
courts for any contractual liability that that political entity may assume under the
contract. The trial court, therefore, has jurisdiction to entertain this case ... (Rollo,
pp. 20-21.)
The reliance placed on Lyons by the respondent judge is misplaced for the
following reasons:
In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit
in the Court of First Instance of Manila to collect several sums of money on
account of a contract between plaintiff and defendant. The defendant filed a
motion to dismiss on the ground that the court had no jurisdiction over defendant
and over the subject matter of the action. The court granted the motion on the
grounds that: (a) it had no jurisdiction over the defendant who did not give its
consent to the suit; and (b) plaintiff failed to exhaust the administrative remedies
provided in the contract. The order of dismissal was elevated to this Court for
review.
In sustaining the action of the lower court, this Court said:
It appearing in the complaint that appellant has not complied with the procedure
laid down in Article XXI of the contract regarding the prosecution of its claim
against the United States Government, or, stated differently, it has failed to first
exhaust its administrative remedies against said Government, the lower court
acted properly in dismissing this case.(At p. 598.)
It can thus be seen that the statement in respect of the waiver of State immunity
from suit was purely gratuitous and, therefore, obiter so that it has no value as an
imperative authority.
The restrictive application of State immunity is proper only when the proceedings
arise out of commercial transactions of the foreign sovereign, its commercial
activities or economic affairs. Stated differently, a State may be said to have
descended to the level of an individual and can thus be deemed to have tacitly
given its consent to be sued only when it enters into business contracts. It does
not apply where the contract relates to the exercise of its sovereign functions. In
this case the projects are an integral part of the naval base which is devoted to
the defense of both the United States and the Philippines, indisputably a function
of the government of the highest order; they are not utilized for nor dedicated to
commercial or business purposes.
That the correct test for the application of State immunity is not the conclusion of
a contract by a State but the legal nature of the act is shown in Syquia vs. Lopez,
84 Phil. 312 (1949). In that case the plaintiffs leased three apartment buildings to
the United States of America for the use of its military officials. The plaintiffs sued
to recover possession of the premises on the ground that the term of the leases
had expired. They also asked for increased rentals until the apartments shall
have been vacated.
The defendants who were armed forces officers of the United States moved to
dismiss the suit for lack of jurisdiction in the part of the court. The Municipal
Court of Manila granted the motion to dismiss; sustained by the Court of First
Instance, the plaintiffs went to this Court for review on certiorari. In denying the
petition, this Court said:
On the basis of the foregoing considerations we are of the belief and we hold
that the real party defendant in interest is the Government of the United States of
America; that any judgment for back or Increased rentals or damages will have to
be paid not by defendants Moore and Tillman and their 64 co-defendants but by
the said U.S. Government. On the basis of the ruling in the case of Land vs.
Dollar already cited, and on what we have already stated, the present action
must be considered as one against the U.S. Government. It is clear hat the
courts of the Philippines including the Municipal Court of Manila have no
jurisdiction over the present case for unlawful detainer. The question of lack of
jurisdiction was raised and interposed at the very beginning of the action. The
U.S. Government has not , given its consent to the filing of this suit which is
essentially against her, though not in name. Moreover, this is not only a case of a
citizen filing a suit against his own Government without the latter's consent but it
is of a citizen filing an action against a foreign government without said
government's consent, which renders more obvious the lack of jurisdiction of the
courts of his country. The principles of law behind this rule are so elementary and
90
of such general acceptance that we deem it unnecessary to cite authorities in
support thereof. (At p. 323.)
In Syquia,the United States concluded contracts with private individuals but the
contracts notwithstanding the States was not deemed to have given or waived its
consent to be sued for the reason that the contracts were for jure imperii and not
for jure gestionis.
WHEREFORE, the petition is granted; the questioned orders of the respondent
judge are set aside and Civil Case No. is dismissed. Costs against the private
respondent.
Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, * Escolin, Relova,
Gutierrez, Jr., De la Fuente, Cuevas and Alampay, JJ., concur.
Fernando, C.J., took no part.
Separate Opinions
MAKASIAR, J., dissenting:
The petition should be dismissed and the proceedings in Civil Case No. 779-M in
the defunct CFI (now RTC) of Rizal be allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where the
contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant
(U.S. Government) involved stevedoring and labor services within the Subic Bay
area, this Court further stated that inasmuch as ". . . the United States
Government. through its agency at Subic Bay, entered into a contract with
appellant for stevedoring and miscellaneous labor services within the Subic Bay
area, a U.S. Navy Reservation, it is evident that it can bring an action before our
courts for any contractual liability that that political entity may assume under the
contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the
acceptance of a bid of a private company for the repair of wharves or shoreline in
the Subic Bay area, it is deemed to have entered into a contract and thus waived
the mantle of sovereign immunity from suit and descended to the level of the
ordinary citizen. Its consent to be sued, therefore, is implied from its act of
entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).
Justice and fairness dictate that a foreign government that commits a breach of
its contractual obligation in the case at bar by the unilateral cancellation of the
award for the project by the United States government, through its agency at
Subic Bay should not be allowed to take undue advantage of a party who may
have legitimate claims against it by seeking refuge behind the shield of non-
suability. A contrary view would render a Filipino citizen, as in the instant case,
helpless and without redress in his own country for violation of his rights
committed by the agents of the foreign government professing to act in its name.
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia
vs. Almeda Lopez, 84 Phil. 312, 325:
Although, generally, foreign governments are beyond the jurisdiction of domestic
courts of justice, such rule is inapplicable to cases in which the foreign
government enters into private contracts with the citizens of the court's
jurisdiction. A contrary view would simply run against all principles of decency
and violative of all tenets of morals.
Moral principles and principles of justice are as valid and applicable as well with
regard to private individuals as with regard to governments either domestic or
foreign. Once a foreign government enters into a private contract with the private
citizens of another country, such foreign government cannot shield its non-
performance or contravention of the terms of the contract under the cloak of non-
jurisdiction. To place such foreign government beyond the jurisdiction of the
domestic courts is to give approval to the execution of unilateral contracts,
graphically described in Spanish as 'contratos leoninos', because one party gets
the lion's share to the detriment of the other. To give validity to such contract is to
sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties
in a private contract, including governments and the most powerful of them, are
amenable to law, and that such contracts are enforceable through the help of the
courts of justice with jurisdiction to take cognizance of any violation of such
contracts if the same had been entered into only by private individuals.
Constant resort by a foreign state or its agents to the doctrine of State immunity
in this jurisdiction impinges unduly upon our sovereignty and dignity as a nation.
Its application will particularly discourage Filipino or domestic contractors from
transacting business and entering into contracts with United States authorities or
facilities in the Philippines whether naval, air or ground forces-because the
difficulty, if not impossibility, of enforcing a validly executed contract and of
seeking judicial remedy in our own courts for breaches of contractual obligation
committed by agents of the United States government, always, looms large,
thereby hampering the growth of Filipino enterprises and creating a virtual
monopoly in our own country by United States contractors of contracts for
services or supplies with the various U.S. offices and agencies operating in the
Philippines.
The sanctity of upholding agreements freely entered into by the parties cannot
be over emphasized. Whether the parties are nations or private individuals, it is
to be reasonably assumed and expected that the undertakings in the contract will
be complied with in good faith.
One glaring fact of modern day civilization is that a big and powerful nation, like
the United States of America, can always overwhelm small and weak nations.
The declaration in the United Nations Charter that its member states are equal
and sovereign, becomes hollow and meaningless because big nations wielding
economic and military superiority impose upon and dictate to small nations,
subverting their sovereignty and dignity as nations. Thus, more often than not,
when U.S. interest clashes with the interest of small nations, the American
governmental agencies or its citizens invoke principles of international law for
their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval authorities
at Subic Bay on one hand, and herein private respondent on the other, was
honored more in the breach than in the compliance The opinion of the majority
will certainly open the floodgates of more violations of contractual obligations.
91
American authorities or any foreign government in the Philippines for that matter,
dealing with the citizens of this country, can conveniently seek protective cover
under the majority opinion. The result is disastrous to the Philippines.
This opinion of the majority manifests a neo-colonial mentality. It fosters
economic imperialism and foreign political ascendancy in our Republic.
The doctrine of government immunity from suit cannot and should not serve as
an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca,
L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance,
L-31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States
government, through its naval authorities at Subic Bay, should be held amenable
to lawsuits in our country like any other juristic person.
The invocation by the petitioner United States of America is not in accord with
paragraph 3 of Article III of the original RP-US Military Bases Agreement of
March 14, 1947, which states that "in the exercise of the above-mentioned rights,
powers and authority, the United States agrees that the powers granted to it will
not be used unreasonably. . ." (Emphasis supplied).
Nor is such posture of the petitioners herein in harmony with the amendment
dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which
recognizes "the need to promote and maintain sound employment practices
which will assure equality of treatment of all employees ... and continuing
favorable employer-employee relations ..." and "(B)elieving that an agreement
will be mutually beneficial and will strengthen the democratic institutions
cherished by both Governments, ... the United States Government agrees to
accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S.
Forces in the Philippines shall fill the needs for civilian employment by employing
Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).
Neither does the invocation by petitioners of state immunity from suit express
fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968
which directs that " contractors and concessionaires performing work for the U.S.
Armed Forces shall be required by their contract or concession agreements to
comply with all applicable Philippine labor laws and regulations, " even though
paragraph 2 thereof affirms that "nothing in this Agreement shall imply any
waiver by either of the two Governments of such immunity under international
law."
Reliance by petitioners on the non-suability of the United States Government
before the local courts, actually clashes with No. III on respect for Philippine law
of the Memorandum of Agreement signed on January 7, 1979, also amending
RP-US Military Bases Agreement, which stresses that "it is the duty of members
of the United States Forces, the civilian component and their dependents, to
respect the laws of the Republic of the Philippines and to abstain from any
activity inconsistent with the spirit of the Military Bases Agreement and, in
particular, from any political activity in the Philippines. The United States shag
take all measures within its authority to insure that they adhere to them
(Emphasis supplied).
The foregoing duty imposed by the amendment to the Agreement is further
emphasized by No. IV on the economic and social improvement of areas
surrounding the bases, which directs that "moreover, the United States Forces
shall procure goods and services in the Philippines to the maximum extent
feasible" (Emphasis supplied).
Under No. VI on labor and taxation of the said amendment of January 6, 1979 in
connection with the discussions on possible revisions or alterations of the
Agreement of May 27, 1968, "the discussions shall be conducted on the basis of
the principles of equality of treatment, the right to organize, and bargain
collectively, and respect for the sovereignty of the Republic of the
Philippines" (Emphasis supplied)
The majority opinion seems to mock the provision of paragraph 1 of the joint
statement of President Marcos and Vice-President Mondale of the United States
dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty
extends over the bases and that Its base shall be under the command of a
Philippine Base Commander, " which is supposed to underscore the joint
Communique of President Marcos and U.S. President Ford of December 7,
1975, under which "they affirm that sovereign equality, territorial integrity and
political independence of all States are fundamental principles which both
countries scrupulously respect; and that "they confirm that mutual respect for the
dignity of each nation shall characterize their friendship as well as the alliance
between their two countries. "
The majority opinion negates the statement on the delineation of the powers,
duties and responsibilities of both the Philippine and American Base
Commanders that "in the performance of their duties, the Philippine Base
Commander and the American Base Commander shall be guided by full respect
for Philippine sovereignty on the one hand and the assurance of unhampered
U.S. military operations on the other hand and that "they shall promote
cooperation understanding and harmonious relations within the Base and with
the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex
covered by the exchange of notes, January 7, 1979, between Ambassador
Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis
supplied).
Separate Opinions
MAKASIAR, J., dissenting:
The petition should be dismissed and the proceedings in Civil Case No. 779-M in
the defunct CFI (now RTC) of Rizal be allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where the
contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant
(U.S. Government) involved stevedoring and labor services within the Subic Bay
area, this Court further stated that inasmuch as ". . . the United States
Government. through its agency at Subic Bay, entered into a contract with
appellant for stevedoring and miscellaneous labor services within the Subic Bay
area, a U.S. Navy Reservation, it is evident that it can bring an action before our
92
courts for any contractual liability that that political entity may assume under the
contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the
acceptance of a bid of a private company for the repair of wharves or shoreline in
the Subic Bay area, it is deemed to have entered into a contract and thus waived
the mantle of sovereign immunity from suit and descended to the level of the
ordinary citizen. Its consent to be sued, therefore, is implied from its act of
entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).
Justice and fairness dictate that a foreign government that commits a breach of
its contractual obligation in the case at bar by the unilateral cancellation of the
award for the project by the United States government, through its agency at
Subic Bay should not be allowed to take undue advantage of a party who may
have legitimate claims against it by seeking refuge behind the shield of non-
suability. A contrary view would render a Filipino citizen, as in the instant case,
helpless and without redress in his own country for violation of his rights
committed by the agents of the foreign government professing to act in its name.
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia
vs. Almeda Lopez, 84 Phil. 312, 325:
Although, generally, foreign governments are beyond the jurisdiction of domestic
courts of justice, such rule is inapplicable to cases in which the foreign
government enters into private contracts with the citizens of the court's
jurisdiction. A contrary view would simply run against all principles of decency
and violative of all tenets of morals.
Moral principles and principles of justice are as valid and applicable as well with
regard to private individuals as with regard to governments either domestic or
foreign. Once a foreign government enters into a private contract with the private
citizens of another country, such foreign government cannot shield its non-
performance or contravention of the terms of the contract under the cloak of non-
jurisdiction. To place such foreign government beyond the jurisdiction of the
domestic courts is to give approval to the execution of unilateral contracts,
graphically described in Spanish as 'contratos leoninos', because one party gets
the lion's share to the detriment of the other. To give validity to such contract is to
sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties
in a private contract, including governments and the most powerful of them, are
amenable to law, and that such contracts are enforceable through the help of the
courts of justice with jurisdiction to take cognizance of any violation of such
contracts if the same had been entered into only by private individuals.
Constant resort by a foreign state or its agents to the doctrine of State immunity
in this jurisdiction impinges unduly upon our sovereignty and dignity as a nation.
Its application will particularly discourage Filipino or domestic contractors from
transacting business and entering into contracts with United States authorities or
facilities in the Philippines whether naval, air or ground forces-because the
difficulty, if not impossibility, of enforcing a validly executed contract and of
seeking judicial remedy in our own courts for breaches of contractual obligation
committed by agents of the United States government, always, looms large,
thereby hampering the growth of Filipino enterprises and creating a virtual
monopoly in our own country by United States contractors of contracts for
services or supplies with the various U.S. offices and agencies operating in the
Philippines.
The sanctity of upholding agreements freely entered into by the parties cannot
be over emphasized. Whether the parties are nations or private individuals, it is
to be reasonably assumed and expected that the undertakings in the contract will
be complied with in good faith.
One glaring fact of modern day civilization is that a big and powerful nation, like
the United States of America, can always overwhelm small and weak nations.
The declaration in the United Nations Charter that its member states are equal
and sovereign, becomes hollow and meaningless because big nations wielding
economic and military superiority impose upon and dictate to small nations,
subverting their sovereignty and dignity as nations. Thus, more often than not,
when U.S. interest clashes with the interest of small nations, the American
governmental agencies or its citizens invoke principles of international law for
their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval authorities
at Subic Bay on one hand, and herein private respondent on the other, was
honored more in the breach than in the compliance The opinion of the majority
will certainly open the floodgates of more violations of contractual obligations.
American authorities or any foreign government in the Philippines for that matter,
dealing with the citizens of this country, can conveniently seek protective cover
under the majority opinion. The result is disastrous to the Philippines.
This opinion of the majority manifests a neo-colonial mentality. It fosters
economic imperialism and foreign political ascendancy in our Republic.
The doctrine of government immunity from suit cannot and should not serve as
an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca,
L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance,
L-31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States
government, through its naval authorities at Subic Bay, should be held amenable
to lawsuits in our country like any other juristic person.
The invocation by the petitioner United States of America is not in accord with
paragraph 3 of Article III of the original RP-US Military Bases Agreement of
March 14, 1947, which states that "in the exercise of the above-mentioned rights,
powers and authority, the United States agrees that the powers granted to it will
not be used unreasonably. . ." (Emphasis supplied).
Nor is such posture of the petitioners herein in harmony with the amendment
dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which
recognizes "the need to promote and maintain sound employment practices
which will assure equality of treatment of all employees ... and continuing
favorable employer-employee relations ..." and "(B)elieving that an agreement
will be mutually beneficial and will strengthen the democratic institutions
cherished by both Governments, ... the United States Government agrees to
accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S.
93
Forces in the Philippines shall fill the needs for civilian employment by employing
Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).
Neither does the invocation by petitioners of state immunity from suit express
fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968
which directs that " contractors and concessionaires performing work for the U.S.
Armed Forces shall be required by their contract or concession agreements to
comply with all applicable Philippine labor laws and regulations, " even though
paragraph 2 thereof affirms that "nothing in this Agreement shall imply any
waiver by either of the two Governments of such immunity under international
law."
Reliance by petitioners on the non-suability of the United States Government
before the local courts, actually clashes with No. III on respect for Philippine law
of the Memorandum of Agreement signed on January 7, 1979, also amending
RP-US Military Bases Agreement, which stresses that "it is the duty of members
of the United States Forces, the civilian component and their dependents, to
respect the laws of the Republic of the Philippines and to abstain from any
activity inconsistent with the spirit of the Military Bases Agreement and, in
particular, from any political activity in the Philippines. The United States shag
take all measures within its authority to insure that they adhere to them
(Emphasis supplied).
The foregoing duty imposed by the amendment to the Agreement is further
emphasized by No. IV on the economic and social improvement of areas
surrounding the bases, which directs that "moreover, the United States Forces
shall procure goods and services in the Philippines to the maximum extent
feasible" (Emphasis supplied).
Under No. VI on labor and taxation of the said amendment of January 6, 1979 in
connection with the discussions on possible revisions or alterations of the
Agreement of May 27, 1968, "the discussions shall be conducted on the basis of
the principles of equality of treatment, the right to organize, and bargain
collectively, and respect for the sovereignty of the Republic of the
Philippines" (Emphasis supplied)
The majority opinion seems to mock the provision of paragraph 1 of the joint
statement of President Marcos and Vice-President Mondale of the United States
dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty
extends over the bases and that Its base shall be under the command of a
Philippine Base Commander, " which is supposed to underscore the joint
Communique of President Marcos and U.S. President Ford of December 7,
1975, under which "they affirm that sovereign equality, territorial integrity and
political independence of all States are fundamental principles which both
countries scrupulously respect; and that "they confirm that mutual respect for the
dignity of each nation shall characterize their friendship as well as the alliance
between their two countries. "
The majority opinion negates the statement on the delineation of the powers,
duties and responsibilities of both the Philippine and American Base
Commanders that "in the performance of their duties, the Philippine Base
Commander and the American Base Commander shall be guided by full respect
for Philippine sovereignty on the one hand and the assurance of unhampered
U.S. military operations on the other hand and that "they shall promote
cooperation understanding and harmonious relations within the Base and with
the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex
covered by the exchange of notes, January 7, 1979, between Ambassador
Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis
supplied).
Footnotes
G.R. No. 129406 March 6, 2006
REPUBLIC OF THE PHILIPPINES represented by the PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT (PCGG), Petitioner,
vs.
SANDIGANBAYAN (SECOND DIVISION) and ROBERTO S. BENEDICTO,
Respondents.
DECISION
GARCIA, J.:
Before the Court is this petition for certiorari under Rule 65 of the Rules of Court
to nullify and set aside the March 28, 19951 and March 13, 19972 Resolutions of
the Sandiganbayan, Second Division, in Civil Case No. 0034, insofar as said
resolutions ordered the Presidential Commission on Good Government (PCGG)
to pay private respondent Roberto S. Benedicto or his corporations the value of
227 shares of stock of the Negros Occidental Golf and Country Club, Inc.
(NOGCCI) at P150,000.00 per share, registered in the name of said private
respondent or his corporations.
The facts:
Civil Case No. 0034 entitled Republic of the Philippines, plaintiff, v. Roberto S.
Benedicto, et al., defendants, is a complaint for reconveyance, reversion,
accounting, reconstitution and damages. The case is one of several suits
involving ill-gotten or unexplained wealth that petitioner Republic, through the
PCGG, filed with the Sandiganbayan against private respondent Roberto S.
Benedicto and others pursuant to Executive Order (EO) No. 14,3 series of 1986.
Pursuant to its mandate under EO No. 1,4 series of 1986, the PCGG issued writs
placing under sequestration all business enterprises, entities and other
properties, real and personal, owned or registered in the name of private
respondent Benedicto, or of corporations in which he appeared to have
controlling or majority interest. Among the properties thus sequestered and taken
over by PCGG fiscal agents were the 227 shares in NOGCCI owned by private
respondent Benedicto and registered in his name or under the names of
corporations he owned or controlled.
Following the sequestration process, PCGG representatives sat as members of
the Board of Directors of NOGCCI, which passed, sometime in October 1986, a
resolution effecting a corporate policy change. The change consisted of
assessing a monthly membership due of P150.00 for each NOGCCI share. Prior
to this resolution, an investor purchasing more than one NOGCCI share was
94
exempt from paying monthly membership due for the second and subsequent
shares that he/she owned.
Subsequently, on March 29, 1987, the NOGCCI Board passed another
resolution, this time increasing the monthly membership due from P150.00 to
P250.00 for each share.
As sequestrator of the 227 shares of stock in question, PCGG did not pay the
corresponding monthly membership due thereon totaling P2,959,471.00. On
account thereof, the 227 sequestered shares were declared delinquent to be
disposed of in an auction sale.
Apprised of the above development and evidently to prevent the projected
auction sale of the same shares, PCGG filed a complaint for injunction with the
Regional Trial Court (RTC) of Bacolod City, thereat docketed as Civil Case No.
5348. The complaint, however, was dismissed, paving the way for the auction
sale for the delinquent 227 shares of stock. On August 5, 1989, an auction sale
was conducted.
On November 3, 1990, petitioner Republic and private respondent Benedicto
entered into a Compromise Agreement in Civil Case No. 0034. The agreement
contained a general release clause5 whereunder petitioner Republic agreed and
bound itself to lift the sequestration on the 227 NOGCCI shares, among other
Benedicto’s properties, petitioner Republic acknowledging that it was within
private respondent Benedicto’s capacity to acquire the same shares out of his
income from business and the exercise of his profession.6 Implied in this
undertaking is the recognition by petitioner Republic that the subject shares of
stock could not have been ill-gotten.
In a decision dated October 2, 1992, the Sandiganbayan approved the
Compromise Agreement and accordingly rendered judgment in accordance with
its terms.
In the process of implementing the Compromise Agreement, either of the parties
would, from time to time, move for a ruling by the Sandiganbayan on the proper
manner of implementing or interpreting a specific provision therein.
On February 22, 1994, Benedicto filed in Civil Case No. 0034 a "Motion for
Release from Sequestration and Return of Sequestered Shares/Dividends"
praying, inter alia, that his NOGCCI shares of stock be specifically released from
sequestration and returned, delivered or paid to him as part of the parties’
Compromise Agreement in that case. In a Resolution7 promulgated on December
6, 1994, the Sandiganbayan granted Benedicto’s aforementioned motion but
placed the subject shares under the custody of its Clerk of Court, thus:
WHEREFORE, in the light of the foregoing, the said "Motion for Release From
Sequestration and Return of Sequestered Shares/Dividends" is hereby
GRANTED and it is directed that said shares/dividends be delivered/placed
under the custody of the Clerk of Court, Sandiganbayan, Manila subject to this
Court’s disposition.
On March 28, 1995, the Sandiganbayan came out with the herein first assailed
Resolution,8 which clarified its aforementioned December 6, 1994 Resolution and
directed the immediate implementation thereof by requiring PCGG, among other
things:
(b) To deliver to the Clerk of Court the 227 sequestered shares of [NOGCCI]
registered in the name of nominees of ROBERTO S. BENEDICTO free from all
liens and encumbrances, or in default thereof, to pay their value at P150,000.00
per share which can be deducted from [the Republic’s] cash share in the
Compromise Agreement. [Words in bracket added] (Emphasis Supplied).
Owing to PCGG’s failure to comply with the above directive, Benedicto filed in
Civil Case No. 0034 a Motion for Compliance dated July 25, 1995, followed by an
Ex-Parte Motion for Early Resolution dated February 12, 1996. Acting thereon,
the Sandiganbayan promulgated yet another Resolution9 on February 23, 1996,
dispositively reading:
WHEREFORE, finding merit in the instant motion for early resolution and
considering that, indeed, the PCGG has not shown any justifiable ground as to
why it has not complied with its obligation as set forth in the Order of December
6, 1994 up to this date and which Order was issued pursuant to the Compromise
Agreement and has already become final and executory, accordingly, the
Presidential Commission on Good Government is hereby given a final extension
of fifteen (15) days from receipt hereof within which to comply with the Order of
December 6, 1994 as stated hereinabove.
On April 1, 1996, PCGG filed a Manifestation with Motion for Reconsideration,10
praying for the setting aside of the Resolution of February 23, 1996. On April 11,
1996, private respondent Benedicto filed a Motion to Enforce Judgment Levy.
Resolving these two motions, the Sandiganbayan, in its second assailed
Resolution11 dated March 13, 1997, denied that portion of the PCGG’s
Manifestation with Motion for Reconsideration concerning the subject 227
NOGCCI shares and granted Benedicto’s Motion to Enforce Judgment Levy.
Hence, the Republic’s present recourse on the sole issue of whether or not the
public respondent Sandiganbayan, Second Division, gravely abused its
discretion in holding that the PCGG is at fault for not paying the membership
dues on the 227 sequestered NOGCCI shares of stock, a failing which eventually
led to the foreclosure sale thereof.
The petition lacks merit.
To begin with, PCGG itself does not dispute its being considered as a receiver
insofar as the sequestered 227 NOGCCI shares of stock are concerned.12
PCGG also acknowledges that as such receiver, one of its functions is to pay
outstanding debts pertaining to the sequestered entity or property,13 in this case
the 227 NOGCCI shares in question. It contends, however, that membership
dues owing to a golf club cannot be considered as an outstanding debt for which
PCGG, as receiver, must pay. It also claims to have exercised due diligence to
prevent the loss through delinquency sale of the subject NOGCCI shares,
specifically inviting attention to the injunctive suit, i.e., Civil Case No. 5348, it filed
before the RTC of Bacolod City to enjoin the foreclosure sale of the shares.
The filing of the injunction complaint adverted to, without more, cannot plausibly
tilt the balance in favor of PCGG. To the mind of the Court, such filing is a case of
acting too little and too late. It cannot be over-emphasized that it behooved the
PCGG’s fiscal agents to preserve, like a responsible father of the family, the
value of the shares of stock under their administration. But far from acting as
95
such father, what the fiscal agents did under the premises was to allow the
element of delinquency to set in before acting by embarking on a tedious
process of going to court after the auction sale had been announced and
scheduled.
The PCGG’s posture that to the owner of the sequestered shares rests the
burden of paying the membership dues is untenable. For one, it lost sight of the
reality that such dues are basically obligations attached to the shares, which, in
the final analysis, shall be made liable, thru delinquency sale in case of default in
payment of the dues. For another, the PCGG as sequestrator-receiver of such
shares is, as stressed earlier, duty bound to preserve the value of such shares.
Needless to state, adopting timely measures to obviate the loss of those shares
forms part of such duty and due diligence.
The Sandiganbayan, to be sure, cannot plausibly be faulted for finding the
PCGG liable for the loss of the 227 NOGCCI shares. There can be no quibbling,
as indeed the graft court so declared in its assailed and related resolutions
respecting the NOGCCI shares of stock, that PCGG’s fiscal agents, while sitting
in the NOGCCI Board of Directors agreed to the amendment of the rule
pertaining to membership dues. Hence, it is not amiss to state, as did the
Sandiganbayan, that the PCGG-designated fiscal agents, no less, had a direct
hand in the loss of the sequestered shares through delinquency and their
eventual sale through public auction. While perhaps anti-climactic to so mention
it at this stage, the unfortunate loss of the shares ought not to have come to pass
had those fiscal agents prudently not agreed to the passage of the NOGCCI
board resolutions charging membership dues on shares without playing
representatives.
Given the circumstances leading to the auction sale of the subject NOGCCI
shares, PCGG’s lament about public respondent Sandiganbayan having erred or,
worse still, having gravely abused its discretion in its determination as to who is
at fault for the loss of the shares in question can hardly be given cogency.
For sure, even if the Sandiganbayan were wrong in its findings, which does not
seem to be in this case, it is a well-settled rule of jurisprudence that certiorari will
issue only to correct errors of jurisdiction, not errors of judgment. Corollarily,
errors of procedure or mistakes in the court’s findings and conclusions are
beyond the corrective hand of certiorari.14 The extraordinary writ of certiorari may
be availed only upon a showing, in the minimum, that the respondent tribunal or
officer exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion.15
The term "grave abuse of discretion" connotes capricious and whimsical exercise
of judgment as is equivalent to excess, or a lack of jurisdiction.16 The abuse must
be so patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law
as where the power is exercised in an arbitrary and despotic manner by reason
of passion or hostility.17 Sadly, this is completely absent in the present case. For,
at bottom, the assailed resolutions of the Sandiganbayan did no more than to
direct PCGG to comply with its part of the bargain under the compromise
agreement it freely entered into with private respondent Benedicto. Simply put,
the assailed resolutions of the Sandiganbayan have firm basis in fact and in law.
Lest it be overlooked, the issue of liability for the shares in question had, as both
public and private respondents asserted, long become final and executory.
Petitioner’s narration of facts in its present petition is even misleading as it
conveniently fails to make reference to two (2) resolutions issued by the
Sandiganbayan. We refer to that court’s resolutions of December 6, 199418 and
February 23, 199619 as well as several intervening pleadings which served as
basis for the decisions reached therein. As it were, the present petition questions
only and focuses on the March 28, 199520 and March 13, 199721 resolutions,
which merely reiterated and clarified the graft court’s underlying resolution of
December 6, 1994. And to place matters in the proper perspective, PCGG’s
failure to comply with the December 6, 1994 resolution prompted the issuance of
the clarificatory and/or reiteratory resolutions aforementioned.
In a last-ditch attempt to escape liability, petitioner Republic, through the PCGG,
invokes state immunity from suit.22 As argued, the order for it to pay the value of
the delinquent shares would fix monetary liability on a government agency, thus
necessitating the appropriation of public funds to satisfy the judgment claim.23
But, as private respondent Benedicto correctly countered, the PCGG fails to take
stock of one of the exceptions to the state immunity principle, i.e., when the
government itself is the suitor, as in Civil Case No. 0034. Where, as here, the
State itself is no less the plaintiff in the main case, immunity from suit cannot be
effectively invoked.24 For, as jurisprudence teaches, when the State, through its
duly authorized officers, takes the initiative in a suit against a private party, it
thereby descends to the level of a private individual and thus opens itself to
whatever counterclaims or defenses the latter may have against it.25 Petitioner
Republic’s act of filing its complaint in Civil Case No. 0034 constitutes a waiver of
its immunity from suit. Being itself the plaintiff in that case, petitioner Republic
cannot set up its immunity against private respondent Benedicto’s prayers in the
same case.
In fact, by entering into a Compromise Agreement with private respondent
Benedicto, petitioner Republic thereby stripped itself of its immunity from suit and
placed itself in the same level of its adversary. When the State enters into
contract, through its officers or agents, in furtherance of a legitimate aim and
purpose and pursuant to constitutional legislative authority, whereby mutual or
reciprocal benefits accrue and rights and obligations arise therefrom, the State
may be sued even without its express consent, precisely because by entering
into a contract the sovereign descends to the level of the citizen. Its consent to
be sued is implied from the very act of entering into such contract,26 breach of
which on its part gives the corresponding right to the other party to the
agreement.
Finally, it is apropos to stress that the Compromise Agreement in Civil Case No.
0034 envisaged the immediate recovery of alleged ill-gotten wealth without
further litigation by the government, and buying peace on the part of the aging
Benedicto.27 Sadly, that stated objective has come to naught as not only had the
litigation continued to ensue, but, worse, private respondent Benedicto passed
96
away on May 15, 2000,28 with the trial of Civil Case No. 0034 still in swing, so
much so that the late Benedicto had to be substituted by the administratrix of his
estate.29
WHEREFORE, the instant petition is hereby DISMISSED.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
G.R. No. L-23139 December 17, 1966
MOBIL PHILIPPINES EXPLORATION, INC., plaintiff-appellant,
vs.
CUSTOMS ARRASTRE SERVICE and BUREAU of CUSTOMS, defendants-
appellees.
Alejandro Basin, Jr. and Associates for plaintiff-appellant.
 to be sued is implied from its very power to render arrastre service at the Port of
Felipe T. Cuison for defendants-appellees.
BENGZON, J.P., J.:
Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville"
sometime in November of 1962, consigned to Mobil Philippines Exploration, Inc.,
Manila. The shipment arrived at the Port of Manila on April 10, 1963, and was
discharged to the custody of the Customs Arrastre Service, the unit of the Bureau
of Customs then handling arrastre operations therein. The Customs Arrastre
Service later delivered to the broker of the consignee three cases only of the
shipment.
On April 4, 1964 Mobil Philippines Exploration, Inc., filed suit in the Court of First
Instance of Manila against the Customs Arrastre Service and the Bureau of
Customs to recover the value of the undelivered case in the amount of
P18,493.37 plus other damages.
On April 20, 1964 the defendants filed a motion to dismiss the complaint on the
ground that not being persons under the law, defendants cannot be sued.
After plaintiff opposed the motion, the court, on April 25, 1964, dismissed the
complaint on the ground that neither the Customs Arrastre Service nor the
Bureau of Customs is suable. Plaintiff appealed to Us from the order of
dismissal.
Raised, therefore, in this appeal is the purely legal question of the defendants'
suability under the facts stated.
Appellant contends that not all government entities are immune from suit; that
defendant Bureau of Customs as operator of the arrastre service at the Port of
Manila, is discharging proprietary functions and as such, can be sued by private
individuals.
The Rules of Court, in Section 1, Rule 3, provide:
SECTION 1. Who may be parties.—Only natural or juridical persons or entities
authorized by law may be parties in a civil action.
Accordingly, a defendant in a civil suit must be (1) a natural person; (2) a juridical
person or (3) an entity authorized by law to be sued. Neither the Bureau of
Customs nor (a fortiori) its function unit, the Customs Arrastre Service, is a
person. They are merely parts of the machinery of Government. The Bureau of
Customs is a bureau under the Department of Finance (Sec. 81, Revised
Administrative Code); and as stated, the Customs Arrastre Service is a unit of the
Bureau of Custom, set up under Customs Administrative Order No. 8-62 of
November 9, 1962 (Annex "A" to Motion to Dismiss, pp. 13-15, Record an
Appeal). It follows that the defendants herein cannot he sued under the first two
abovementioned categories of natural or juridical persons.
Nonetheless it is urged that by authorizing the Bureau of Customs to engage in
arrastre service, the law thereby impliedly authorizes it to be sued as arrastre
operator, for the reason that the nature of this function (arrastre service) is
proprietary, not governmental. Thus, insofar as arrastre operation is concerned,
appellant would put defendants under the third category of "entities authorized by
law" to be sued. Stated differently, it is argued that while there is no law
expressly authorizing the Bureau of Customs to sue or be sued, still its capacity
Manila, which it is alleged, amounts to the transaction of a private business.
The statutory provision on arrastre service is found in Section 1213 of Republic
Act 1937 (Tariff and Customs Code, effective June 1, 1957), and it states:
SEC. 1213. Receiving, Handling, Custody and Delivery of Articles.—The Bureau
of Customs shall have exclusive supervision and control over the receiving,
handling, custody and delivery of articles on the wharves and piers at all ports of
entry and in the exercise of its functions it is hereby authorized to acquire, take
over, operate and superintend such plants and facilities as may be necessary for
the receiving, handling, custody and delivery of articles, and the convenience
and comfort of passengers and the handling of baggage; as well as to acquire
fire protection equipment for use in the piers: Provided, That whenever in his
judgment the receiving, handling, custody and delivery of articles can be carried
on by private parties with greater efficiency, the Commissioner may, after public
bidding and subject to the approval of the department head, contract with any
private party for the service of receiving, handling, custody and delivery of
articles, and in such event, the contract may include the sale or lease of
government-owned equipment and facilities used in such service.
In Associated Workers Union, et al. vs. Bureau of Customs, et al., L-21397,
resolution of August 6, 1963, this Court indeed held "that the foregoing statutory
provisions authorizing the grant by contract to any private party of the right to
render said arrastre services necessarily imply that the same is deemed by
Congress to be proprietary or non-governmental function." The issue in said
case, however, was whether laborers engaged in arrastre service fall under the
concept of employees in the Government employed in governmental functions
for purposes of the prohibition in Section 11, Republic Act 875 to the effect that
"employees in the Government . . . shall not strike," but "may belong to any labor
organization which does not impose the obligation to strike or to join in strike,"
which prohibition "shall apply only to employees employed in governmental
functions of the Government . . . .
Thus, the ruling therein was that the Court of Industrial Relations had jurisdiction
over the subject matter of the case, but not that the Bureau of Customs can be
97
sued. Said issue of suability was not resolved, the resolution stating only that
"the issue on the personality or lack of personality of the Bureau of Customs to
be sued does not affect the jurisdiction of the lower court over the subject matter
of the case, aside from the fact that amendment may be made in the pleadings
by the inclusion as respondents of the public officers deemed responsible, for the
unfair labor practice acts charged by petitioning Unions".
Now, the fact that a non-corporate government entity performs a function
proprietary in nature does not necessarily result in its being suable. If said non-
governmental function is undertaken as an incident to its governmental function,
there is no waiver thereby of the sovereign immunity from suit extended to such
government entity. This is the doctrine recognized in Bureau of Printing, et al. vs.
Bureau of Printing Employees Association, et al., L-15751, January 28, 1961:
The Bureau of Printing is an office of the Government created by the
Administrative Code of 1916 (Act No. 2657). As such instrumentality of the
Government, it operates under the direct supervision of the Executive Secretary,
Office of the President, and is "charged with the execution of all printing and
binding, including work incidental to those processes, required by the National
Government and such other work of the same character as said Bureau may, by
law or by order of the (Secretary of Finance) Executive Secretary, be authorized
to undertake . . . ." (Sec. 1644, Rev. Adm. Code.) It has no corporate existence,
and its appropriations are provided for in the General Appropriations Act.
Designed to meet the printing needs of the Government, it is primarily a service
bureau and, obviously, not engaged in business or occupation for pecuniary
profit.
xxx xxx xxx
. . . Clearly, while the Bureau of Printing is allowed to undertake private printing
jobs, it cannot be pretended that it is thereby an industrial or business concern.
The additional work it executes for private parties is merely incidental to its
function, and although such work may be deemed proprietary in character, there
is no showing that the employees performing said proprietary function are
separate and distinct from those emoloyed in its general governmental functions.
xxx xxx xxx
Indeed, as an office of the Government, without any corporate or juridical
personality, the Bureau of Printing cannot be sued (Sec. 1, Rule 3, Rules of
Court.) Any suit, action or proceeding against it, if it were to produce any effect,
would actually be a suit, action or proceeding against the Government itself, and
the rule is settled that the Government cannot be sued without its consent, much
less over its objection. (See Metran vs. Paredes, 45 Off. Gaz. 2835; Angat River
Irrigation System, et al. vs. Angat River Workers Union, et al., G.R. Nos.
L-10943-44, December 28, 1957.)
The situation here is not materially different. The Bureau of Customs, to repeat,
is part of the Department of Finance (Sec. 81, Rev. Adm. Code), with no
personality of its own apart from that of the national government. Its primary
function is governmental, that of assessing and collecting lawful revenues from
imported articles and all other tariff and customs duties, fees, charges, fines and
penalties (Sec. 602, R.A. 1937). To this function, arrastre service is a necessary
incident. For practical reasons said revenues and customs duties can not be
assessed and collected by simply receiving the importer's or ship agent's or
consignee's declaration of merchandise being imported and imposing the duty
provided in the Tariff law. Customs authorities and officers must see to it that the
declaration tallies with the merchandise actually landed. And this checking up
requires that the landed merchandise be hauled from the ship's side to a suitable
place in the customs premises to enable said customs officers to make it, that is,
it requires arrastre operations.1
Clearly, therefore, although said arrastre function may be deemed proprietary, it
is a necessary incident of the primary and governmental function of the Bureau
of Customs, so that engaging in the same does not necessarily render said
Bureau liable to suit. For otherwise, it could not perform its governmental function
without necessarily exposing itself to suit. Sovereign immunity, granted as to the
end, should not be denied as to the necessary means to that end.
And herein lies the distinction between the present case and that of National
Airports Corporation vs. Teodoro, 91 Phil. 203, on which appellant would rely. For
there, the Civil Aeronautics Administration was found have for its prime reason
for existence not a governmental but a proprietary function, so that to it the latter
was not a mere incidental function:
Among the general powers of the Civil Aeronautics Administration are, under
Section 3, to execute contracts of any kind, to purchase property, and to grant
concessions rights, and under Section 4, to charge landing fees, royalties on
sales to aircraft of aviation gasoline, accessories and supplies, and rentals for
the use of any property under its management.
These provisions confer upon the Civil Aeronautics Administration, in our opinion,
the power to sue and be sued. The power to sue and be sued is implied from the
power to transact private business. . . .
xxx xxx xxx
The Civil Aeronautics Administration comes under the category of a private entity.
Although not a body corporate it was created, like the National Airports
Corporation, not to maintain a necessary function of government, but to run what
is essentially a business, even if revenues be not its prime objective but rather
the promotion of travel and the convenience of the travelling public. . . .
Regardless of the merits of the claim against it, the State, for obvious reasons of
public policy, cannot be sued without its consent. Plaintiff should have filed its
present claim to the General Auditing Office, it being for money under the
provisions of Commonwealth Act 327, which state the conditions under which
money claims against the Government may be filed.
It must be remembered that statutory provisions waiving State immunity from suit
are strictly construed and that waiver of immunity, being in derogation of
sovereignty, will not be lightly inferred. (49 Am. Jur., States, Territories and
Dependencies, Sec. 96, p. 314; Petty vs. Tennessee-Missouri Bridge Com., 359
U.S. 275, 3 L. Ed. 804, 79 S. Ct. 785). From the provision authorizing the Bureau
of Customs to lease arrastre operations to private parties, We see no authority to
sue the said Bureau in the instances where it undertakes to conduct said
operation itself. The Bureau of Customs, acting as part of the machinery of the
98
national government in the operation of the arrastre service, pursuant to express
legislative mandate and as a necessary incident of its prime governmental
function, is immune from suit, there being no statute to the contrary.
WHEREFORE, the order of dismissal appealed from is hereby affirmed, with
costs against appellant. So ordered.
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Zaldivar and Sanchez,
JJ., concur.
Makalintal, J., concurs in the result.
Castro, J., reserves his vote.
G.R. No. L-33112 June 15, 1978
PHILIPPINE NATIONAL BANK, petitioner,
vs.
HON. JUDGE JAVIER PABALAN, Judge of the Court of First Instance,
Branch III, La Union, AGOO TOBACCO PLANTERS ASSOCIATION, INC.,
PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, and PANFILO P.
JIMENEZ, Deputy Sheriff, La Union, respondents.
Conrado E. Medina, Edgardo M. Magtalas & Walfrido Climaco for petitioner.
Felimon A. Aspirin fit respondent Agoo 'Tobacco Planters Association, Inc.
Virgilio C. Abejo for respondent Phil. Virginia Tobacco Administration.
FERNANDO, Acting C.J.:
The reliance of petitioner Philippine National Bank in this certiorari and
prohibition proceeding against respondent Judge Javier Pabalan who issued a
writ of execution, 1 followed thereafter by a notice of garnishment of the funds of
respondent Philippine Virginia Tobacco Administration, 2 deposited with it, is on
the fundamental constitutional law doctrine of non-suability of a state, it being
alleged that such funds are public in character. This is not the first time petitioner
raised that issue. It did so before in Philippine National Bank v. Court of industrial
Relations, 3 decided only last January. It did not meet with success, this Court
ruling in accordance with the two previous cases of National Shipyard and Steel
Corporation 4 and Manila Hotel Employees Association v. Manila Hotel Company,
5 that funds of public corporations which can sue and be sued were not exempt
from garnishment. As respondent Philippine Virginia Tobacco Administration is
likewise a public corporation possessed of the same attributes,6 a similar
outcome is indicated. This petition must be dismissed.
It is undisputed that the judgment against respondent Philippine Virginia Tobacco
Administration had reached the stage of finality. A writ of execution was,
therefore, in order. It was accordingly issued on December 17, 1970. 7 There was
a notice of garnishment for the full amount mentioned in such writ of execution in
the sum of P12,724,66. 8 In view of the objection, however, by petitioner
Philippine National Bank on the above ground, coupled with an inquiry as to
whether or not respondent Philippine Virginia Tobacco Administration had funds
deposited with petitioner's La Union branch, it was not until January 25, 1971
that the order sought to be set aside in this certiorari proceeding was issued by
respondent Judge.9 Its dispositive portion reads as follows: Conformably with the
foregoing, it is now ordered, in accordance with law, that sufficient funds of the
Philippine Virginia Tobacco Administration now deposited with the Philippine
National Bank, La Union Branch, shall be garnished and delivered to the plaintiff
immediately to satisfy the Writ of Execution for one-half of the amount awarded
in the decision of November 16, 1970." 10 Hence this certiorari and prohibition
proceeding.
As noted at the outset, petitioner Philippine National Bank would invoke the
doctrine of non-suability. It is to be admitted that under the present Constitution,
what was formerly implicit as a fundamental doctrine in constitutional law has
been set forth in express terms: "The State may not be sued without its consent."
11 If the funds appertained to one of the regular departments or offices in the
government, then, certainly, such a provision would be a bar to garnishment.
Such is not the case here. Garnishment would lie. Only last January, as noted in
the opening paragraph of this decision, this Court, in a case brought by the same
petitioner precisely invoking such a doctrine, left no doubt that the funds of public
corporations could properly be made the object of a notice of garnishment.
Accordingly, this petition must fail.
1. The alleged grave abuse of discretion, the basis of this certiorari proceeding,
was sought to be justified on the failure of respondent Judge to set aside the
notice of garnishment of funds belonging to respondent Philippine Virginia
Tobacco Administration. This excerpt from the aforecited decision of Philippine
National Bank v. Court of Industrial Relations makes manifest why such an
argument is far from persuasive. "The premise that the funds could be spoken as
public character may be accepted in the sense that the People Homesite and
Housing Corporation was a government-owned entity. It does not follow though
that they were exempt. from garnishment. National Shipyard and Steel
Corporation v. Court of Industrial Relations is squarely in point. As was explicitly
stated in the opinion of the then Justice, later Chief Justice, Concepcion: "The
allegation to the effect that the funds of the NASSCO are public funds of the
government, and that, as such, the same may not be garnished, attached or
levied upon, is untenable for, as a government owned and controlled corporation,
the NASSCO has a personality of its own. distinct and separate from that of the
Government. It has — pursuant to Section 2 of Executive Order No. 356, dated
October 23, 1950 ... , pursuant to which The NASSCO has been established —
all the powers of a corporation under the Corporation Law ... ." Accordingly, it
may be sue and be sued and may be subjected to court processes just like any
other corporation (Section 13, Act No. 1459, as amended.)" ... To repeat, the
ruling was the appropriate remedy for the prevailing party which could proceed
against the funds of a corporate entity even if owned or controlled by the
government." 12
2. The National Shipyard and Steel Corporation decision was not the first of its
kind. The ruling therein could be inferred from the judgment announced in Manila
Hotel Employees Association v. Manila Hotel Company, decided as far back as
1941. 13 In the language of its ponente Justice Ozaeta "On the other hand, it is
well-settled that when the government enters into commercial business, it
abandons its sovereign capacity and is to be treated like any other corporation.
99
(Bank of the United States v. Planters' Bank, 9 Wheat. 904, 6 L.ed. 244). By
engaging in a particular business thru the instrumentality of a corporation, the
government divests itself pro hac vice of its sovereign character, so as to render
the corporation subject to the rules of law governing private corporations." 14 It is
worth mentioning that Justice Ozaeta could find support for such a
pronouncement from the leading American Supreme Court case of united States
v. Planters' Bank, 15 with the opinion coming from the illustrious Chief Justice
Marshall. It was handed down more than one hundred fifty years ago, 1824 to be
exact. It is apparent, therefore, that petitioner Bank could it legally set forth as a
bar or impediment to a notice of garnishment the doctrine of non-suability.
WHEREFORE, this petition for certiorari and prohibition is dismissed. No costs.
Barredo, Antonio, Aquino, and Santos, JJ., concur
G.R. No. L-31635 August 31, 1971
ANGEL MINISTERIO and ASUNCION SADAYA, petitioners,
vs.
THE COURT OF FIRST INSTANCE OF CEBU, Fourth Branch, Presided by
the Honorable, Judge JOSE C. BORROMEO, THE PUBLIC HIGHWAY
COMMISSIONER, and THE AUDITOR GENERAL, respondents.
Eriberto Seno for petitioners.
Office of the Solicitor General Felix Q. Antonio, Acting First Assistant Solicitor
General Antonio A. Torres and Solicitor Norberto P. Eduardo for respondents.
FERNANDO, J.:
What is before this Court for determination in this appeal by certiorari to review a
decision of the Court of First Instance of Cebu is the question of whether or not
plaintiffs, now petitioners, seeking the just compensation to which they are
entitled under the Constitution for the expropriation of their property necessary
for the widening of a street, no condemnation proceeding having been filed,
could sue defendants Public Highway Commissioner and the Auditor General, in
their capacity as public officials without thereby violating the principle of
government immunity from suit without its consent. The lower court, relying on
what it considered to be authoritative precedents, held that they could not and
dismissed the suit. The matter was then elevated to us. After a careful
consideration and with a view to avoiding the grave inconvenience, not to say
possible injustice contrary to the constitutional mandate, that would be the result
if no such suit were permitted, this Court arrives at a different conclusion, and
sustains the right of the plaintiff to file a suit of this character. Accordingly, we
reverse.
Petitioners as plaintiffs in a complaint filed with the Court of First Instance of
Cebu, dated April 13, 1966, sought the payment of just compensation for a
registered lot, containing an area of 1045 square meters, alleging that in 1927
the National Government through its authorized representatives took physical
and material possession of it and used it for the widening of the Gorordo Avenue,
a national road, Cebu City, without paying just compensation and without any
agreement, either written or verbal. There was an allegation of repeated
demands for the payment of its price or return of its possession, but defendants
Public Highway Commissioner and the Auditor General refused to restore its
possession. It was further alleged that on August 25, 1965, the appraisal
committee of the City of Cebu approved Resolution No. 90, appraising the
reasonable and just price of Lot No. 647-B at P50.00 per square meter or a total
price of P52,250.00. Thereafter, the complaint was amended on June 30, 1966 in
the sense that the remedy prayed for was in the alternative, either the restoration
of possession or the payment of the just compensation.
In the answer filed by defendants, now respondents, through the then Solicitor
General, now Associate Justice, Antonio P. Barredo, the principal defense relied
upon was that the suit in reality was one against the government and therefore
should be dismissed, no consent having been shown. Then on July 11, 1969, the
parties submitted a stipulation of facts to this effect: "That the plaintiffs are the
registered owners of Lot 647-B of the Banilad estate described in the Survey
plan RS-600 GLRO Record No. 5988 and more particularly described in Transfer
Certificate of Title No. RT-5963 containing an area of 1,045 square meters; That
the National Government in 1927 took possession of Lot 647-B Banilad estate,
and used the same for the widening of Gorordo Avenue; That the Appraisal
Committee of Cebu City approved Resolution No. 90, Series of 1965 fixing the
price of Lot No. 647-B at P50.00 per square meter; That Lot No. 647-B is still in
the possession of the National Government the same being utilized as part of the
Gorordo Avenue, Cebu City, and that the National Government has not as yet
paid the value of the land which is being utilized for public use."1
The lower court decision now under review was promulgated on January 30,
1969. As is evident from the excerpt to be cited, the plea that the suit was
against the government without its consent having been manifested met with a
favorable response. Thus: "It is uncontroverted that the land in question is used
by the National Government for road purposes. No evidence was presented
whether or not there was an agreement or contract between the government and
the original owner and whether payment was paid or not to the original owner of
the land. It may be presumed that when the land was taken by the government
the payment of its value was made thereafter and no satisfactory explanation
was given why this case was filed only in 1966. But granting that no
compensation was given to the owner of the land, the case is undoubtedly
against the National Government and there is no showing that the government
has consented to be sued in this case. It may be contended that the present
case is brought against the Public Highway Commissioner and the Auditor
General and not against the National Government. Considering that the herein
defendants are sued in their official capacity the action is one against the
National Government who should have been made a party in this case, but, as
stated before, with its consent."2
Then came this petition for certiorari to review the above decision. The principal
error assigned would impugn the holding that the case being against the national
government which was sued without its consent should be dismissed, as it was
in fact dismissed. As was indicated in the opening paragraph of this opinion, this
100
assignment of error is justified. The decision of the lower court cannot stand. We
shall proceed to explain why.
1. The government is immune from suit without its consent.3 Nor is it
indispensable that it be the party proceeded against. If it appears that the action,
would in fact hold it liable, the doctrine calls for application. It follows then that
even if the defendants named were public officials, such a principle could still be
an effective bar. This is clearly so where a litigation would result in a financial
responsibility for the government, whether in the disbursements of funds or loss
of property. Under such circumstances, the liability of the official sued is not
personal. The party that could be adversely affected is government. Hence the
defense of non-suability may be interposed.4
So it has been categorically set forth in Syquia v. Almeda Lopez:5 "However, and
this is important, where the judgment in such a case would result not only in the
recovery of possession of the property in favor of said citizen but also in a charge
against or financial liability to the Government, then the suit should be regarded
as one against the government itself, and, consequently, it cannot prosper or be
validly entertained by the courts except with the consent of said Government."6
2. It is a different matter where the public official is made to account in his
capacity as such for acts contrary to law and injurious to the rights of plaintiff. As
was clearly set forth by Justice Zaldivar in Director of the Bureau of
Telecommunications v. Aligean:7 "Inasmuch as the State authorizes only legal
acts by its officers, unauthorized acts of government officials or officers are not
acts of the State, and an action against the officials or officers by one whose
rights have been invaded or violated by such acts, for the protection of his rights,
is not a suit against the State within the rule of immunity of the State from suit. In
the same tenor, it has been said that an action at law or suit in equity against a
State officer or the director of a State department on the ground that, while
claiming to act for the State, he violates or invades the personal and property
rights of the plaintiff, under an unconstitutional act or under an assumption of
authority which he does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its consent."8
3. It would follow then that the prayer in the amended complaint of petitioners
being in the alternative, the lower court, instead of dismissing the same, could
have passed upon the claim of plaintiffs there, now petitioners, for the recovery
of the possession of the disputed lot, since no proceeding for eminent domain,
as required by the then Code of Civil Procedure, was instituted.9 However, as
noted in Alfonso v. Pasay City, 10 this Court speaking through Justice
Montemayor, restoration would be "neither convenient nor feasible because it is
now and has been used for road purposes." 11 The only relief, in the opinion of
this Court, would be for the government "to make due compensation, ..." 12 It was
made clear in such decision that compensation should have been made "as far
back as the date of the taking." Does it result, therefore, that petitioners would be
absolutely remediless since recovery of possession is in effect barred by the
above decision? If the constitutional mandate that the owner be compensated for
property taken for public use 13 were to be respected, as it should, then a suit of
this character should not be summarily dismissed. The doctrine of governmental
immunity from suit cannot serve as an instrument for perpetrating an injustice on
a citizen. Had the government followed the procedure indicated by the governing
law at the time, a complaint would have been filed by it, and only upon payment
of the compensation fixed by the judgment, or after tender to the party entitled to
such payment of the amount fixed, may it "have the right to enter in and upon the
land so condemned" to appropriate the same to the public use defined in the
judgment." 14 If there were an observance of procedural regularity, petitioners
would not be in the sad plaint they are now. It is unthinkable then that precisely
because there was a failure to abide by what the law requires, the government
would stand to benefit. It is just as important, if not more so, that there be fidelity
to legal norms on the part of officialdom if the rule of law were to be maintained.
It is not too much to say that when the government takes any property for public
use, which is conditioned upon the payment of just compensation, to be judicially
ascertained, it makes manifest that it submits to the jurisdiction of a court. There
is no thought then that the doctrine of immunity from suit could still be
appropriately invoked. 15
Accordingly, the lower court decision is reversed so that the court may proceed
with the complaint and determine the compensation to which petitioners are
entitled, taking into account the ruling in the above Alfonso case: "As to the value
of the property, although the plaintiff claims the present market value thereof, the
rule is that to determine due compensation for lands appropriated by the
Government, the basis should be the price or value at the time that it was taken
from the owner and appropriated by the Government." 16
WHEREFORE, the lower court decision of January 30, 1969 dismissing the
complaint is reversed and the case remanded to the lower court for proceedings
in accordance with law.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Teehankee, Villamor and
Makasiar, JJ., concur.
Concepcion, C.J., and Barredo, J., took no part.
SECOND DIVISION
G.R. No. 206484, June 29, 2016
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS
(DOTC), Petitioner, v. SPOUSES VICENTE ABECINA AND MARIA
CLEOFE ABECINA, Respondents.
DECISION
BRION, J.:
This petition for review on certiorari seeks to reverse and set aside the
March 20, 2013 decision of the Court of Appeals (CA) in CA-G.R. CV
No. 937951 affirming the decision of the Regional Trial Court (RTC) of
Daet, Camarines Norte, Branch 39, in Civil Case No. 7355.2 The RTC
ordered the Department of Transportation and Communications
(DOTC) to vacate the respondents' properties and to pay them actual
and moral damages.
101
ANTECEDENTS
Respondent spouses Vicente and Maria Cleofe Abecina (respondents/
spouses Abecina) are the registered owners of five parcels of land in
Sitio Paltik, Barrio Sta. Rosa, Jose Panganiban, Camarines Norte. The
properties are covered by Transfer Certificates of Title (TCT) Nos.
T-25094, T-25095, T-25096, T-25097, and T-25098.3chanrobleslaw
In February 1993, the DOTC awarded Digitel Telecommunications
Philippines, Inc. (Digitel) a contract for the management, operation,
maintenance, and development of a Regional Telecommunications
Development Project (RTDP) under the National Telephone Program,
Phase I, Tranche 1 (NTPI-1)4chanrobleslaw
The DOTC and Digitel subsequently entered into several Facilities
Management Agreements (FMA) for Digitel to manage, operate,
maintain, and develop the RTDP and NTPI-1 facilities comprising local
telephone exchange lines in various municipalities in Luzon. The FMAs
were later converted into Financial Lease Agreements (FLA) in 1995.
Later on, the municipality of Jose Panganiban, Camarines Norte,
donated a one thousand two hundred (1,200) square-meter parcel of
land to the DOTC for the implementation of the RDTP in the
municipality. However, the municipality erroneously included portions
of the respondents' property in the donation. Pursuant to the FLAs,
Digitel constructed a telephone exchange on the property which
encroached on the properties of the respondent spouses.
5
chanrobleslaw
Sometime in the mid-1990s, the spouses Abecina discovered Digitel's
occupation over portions of their properties. They required Digitel to
vacate their properties and pay damages, but the latter refused,
insisting that it was occupying the property of the DOTC pursuant to
their FLA.
On April 29, 2003, the respondent spouses sent a final demand letter
to both the DOTC and Digitel to vacate the premises and to pay unpaid
rent/damages in the amount of one million two hundred thousand
pesos (P1,200,000.00). Neither the DOTC nor Digitel complied with
the demand.
On September 3, 2003, the respondent spouses filed an accion
publiciana complaint6 against the DOTC and Digitel for recovery of
possession and damages. The complaint was docketed as Civil Case
No. 7355.
In its answer, the DOTC claimed immunity from suit and ownership
over the subject properties.7 Nevertheless, during the pre-trial
conference, the DOTC admitted that the Abecinas were the rightful
owners of the properties and opted to rely instead on state immunity
from suit.8chanrobleslaw
On March 12, 2007, the respondent spouses and Digitel executed a
Compromise Agreement and entered into a Contract of Lease. The RTC
rendered a partial decision and approved the Compromise Agreement
on March 22, 2007.9chanrobleslaw
On May 20, 2009, the RTC rendered its decision against the DOTC.10 It
brushed aside the defense of state immunity. Citing Ministerio v. Court
of First Instance11 and Amigable v. Cuenca,12 it held that government
immunity from suit could not be used as an instrument to perpetuate
an injustice on a citizen.13chanrobleslaw
The RTC held that as the lawful owners of the properties, the
respondent spouses enjoyed the right to use and to possess them -
rights that were violated by the DOTC's unauthorized entry,
construction, and refusal to vacate. The RTC (1) ordered the
Department - as a builder in bad faith -to forfeit the improvements
and vacate the properties; and (2) awarded the spouses with
P1,200,000.00 as actual damages, P200,000.00 as moral damages,
and P200,000.00 as exemplary damages plus attorney's fees and
costs of suit.
The DOTC elevated the case to the CA arguing: (1) that the RTC never
acquired jurisdiction over it due to state immunity from suit; (2) that
the suit against it should have been dismissed after the spouses
Abecina and Digitel executed a compromise agreement; and (3) that
the RTC erred in awarding actual, moral, and exemplary damages
against it.14 The appeal was docketed as CA-G.R. CV No. 93795.
On March 20, 2013, the CA affirmed the RTC's decision but deleted the
award of exemplary damages. The CA upheld the RTC's jurisdiction
over cases for accion publiciana where the assessed value exceeds
102
P20,000.00.15 It likewise denied the DOTC's claim of state immunity
from suit, reasoning that the DOTC removed its cloak of immunity
after entering into a proprietary contract - the Financial Lease
Agreement with Digitel.16 It also adopted the RTC's position that state
immunity cannot be used to defeat a valid claim for compensation
arising from an unlawful taking without the proper expropriation
proceedings.17 The CA affirmed the award of actual and moral
damages due to the DOTC's neglect to verify the perimeter of the
telephone exchange construction but found no valid justification for
the award of exemplary damages.18chanrobleslaw
On April 16, 2013, the DOTC filed the present petition for review on
certiorari.
THE PARTIES' ARGUMENTS
The DOTC asserts that its Financial Lease Agreement with Digitel was
entered into in pursuit of its governmental functions to promote and
develop networks of communication systems.19 Therefore, it cannot be
interpreted as a waiver of state immunity.
The DOTC also maintains that while it was regrettable that the
construction of the telephone exchange erroneously encroached on
portions of the respondent's properties, the RTC erred in ordering the
return of the property.20 It argues that while the DOTC, in good faith
and in the performance of its mandate, took private property without
formal expropriation proceedings, the taking was nevertheless an
exercise of eminent domain.21chanrobleslaw
Citing the 2007 case of Heirs of Mateo Pidacan v. Air Transportation
Office (ATO),22 the Department prays that instead of allowing recovery
of the property, the case should be remanded to the RTC for
determination of just compensation.
On the other hand, the respondents counter that the state immunity
cannot be invoked to perpetrate an injustice against its citizens.23
They also maintain that because the subject properties are titled, the
DOTC is a builder in bad faith who is deemed to have lost the
improvements it introduced.24 Finally, they differentiate their case
from Heirs of Mateo Pidacan v. ATO because Pidacan originated from a
complaint for payment of the value of the property and rentals while
their case originated from a complaint for recovery of possession and
damages.25cralawredchanrobleslaw
OUR RULING
We find no merit in the petition.
The State may not be sued without its consent.26 This fundamental
doctrine stems from the principle that there can be no legal right
against the authority which makes the law on which the right depends.
27
This generally accepted principle of law has been explicitly
expressed in both the 197328 and the present Constitutions.
But as the principle itself implies, the doctrine of state immunity is not
absolute. The State may waive its cloak of immunity and the waiver
may be made expressly or by implication.
Over the years, the State's participation in economic and commercial
activities gradually expanded beyond its sovereign function as
regulator and governor. The evolution of the State's activities and
degree of participation in commerce demanded a parallel evolution in
the traditional rule of state immunity. Thus, it became necessary to
distinguish between the State's sovereign and governmental acts (jure
imperii) and its private, commercial, and proprietary acts (jure
gestionis). Presently, state immunity restrictively extends only to acts
jure imperii while acts jure gestionis are considered as a waiver of
immunity.29chanrobleslaw
The Philippines recognizes the vital role of information and
communication in nation building.30 As a consequence, we have
adopted a policy environment that aspires for the full development of
communications infrastructure to facilitate the flow of information into,
out of, and across the country.31 To this end, the DOTC has been
mandated with the promotion, development, and regulation of
dependable and coordinated networks of communication.
32
chanrobleslaw
The DOTC encroached on the respondents' properties when it
constructed the local telephone exchange in Daet, Camarines Norte.
The exchange was part of the RTDP pursuant to the National
Telephone Program. We have no doubt that when the DOTC
constructed the encroaching structures and subsequently entered into
103
the FLA with Digitel for their maintenance, it was carrying out a
sovereign function. Therefore, we agree with the DOTC's contention
that these are acts jure imperii that fall within the cloak of state
immunity.
However, as the respondents repeatedly pointed out, this Court has
long established in Ministerio v CFI,33Amigable v. Cuenca,34 the 2010
case Heirs of Pidacan v. ATO,35 and more recently in Vigilar v. Aquino36
that the doctrine of state immunity cannot serve as an instrument for
perpetrating an injustice to a citizen.
The Constitution identifies the limitations to the awesome and near-
limitless powers of the State. Chief among these limitations are the
principles that no person shall be deprived of life, liberty, or property
without due process of law and that private property shall not be taken
for public use without just compensation.37 These limitations are
enshrined in no less than the Bill of Rights that guarantees the citizen
protection from abuse by the State.
Consequently, our laws38 require that the State's power of eminent
domain shall be exercised through expropriation proceedings in court.
Whenever private property is taken for public use, it becomes the
ministerial duty of the concerned office or agency to initiate
expropriation proceedings. By necessary implication, the filing of a
complaint for expropriation is a waiver of State immunity.
If the DOTC had correctly followed the regular procedure upon
discovering that it had encroached on the respondents' property, it
would have initiated expropriation proceedings instead of insisting on
its immunity from suit. The petitioners would not have had to resort to
filing its complaint for reconveyance. As this Court said in
Ministerio:ChanRoblesVirtualawlibrary
It is unthinkable then that precisely because there was a failure to
abide by what the law requires, the government would stand to
benefit. It is just as important, if not more so, that there be fidelity to
legal norms on the part of officialdom if the rule of law were to be
maintained. It is not too much to say that when the government
takes any property for public use, which is conditioned upon
the payment of just compensation, to be judicially ascertained,
it makes manifest that it submits to the jurisdiction of a court.
There is no thought then that the doctrine of immunity from suit could
still be appropriately invoked.39 [Emphasis supplied]
We hold, therefore, that the Department's entry into and taking of
possession of the respondents' property amounted to an implied
waiver of its governmental immunity from suit.
We also find no merit in the DOTC's contention that the RTC should not
have ordered the reconveyance of the respondent spouses' property
because the property is being used for a vital governmental function,
that is, the operation and maintenance of a safe and efficient
communication system.40chanrobleslaw
The exercise of eminent domain requires a genuine necessity to take
the property for public use and the consequent payment of just
compensation. The property is evidently being used for a public
purpose. However, we also note that the respondent spouses willingly
entered into a lease agreement with Digitel for the use of the subject
properties.
If in the future the factual circumstances should change and the
respondents refuse to continue the lease, then the DOTC may initiate
expropriation proceedings. But as matters now stand, the respondents
are clearly willing to lease the property. Therefore, we find no genuine
necessity for the DOTC to actually take the property at this point.
Lastly, we find that the CA erred when it affirmed the RTC's decision
without deleting the forfeiture of the improvements made by the DOTC
through Digitel. Contrary to the RTC's findings, the DOTC was not a
builder in bad faith when the improvements were constructed. The CA
itself found that the Department's encroachment over the
respondents' properties was a result of a mistaken implementation of
the donation from the municipality of Jose Panganiban.41chanrobleslaw
Good faith consists in the belief of the builder that the land he is
building on is his and [of] his ignorance of any defect or flaw in his
title.42 While the DOTC later realized its error and admitted its
encroachment over the respondents' property, there is no evidence
that it acted maliciously or in bad faith when the construction was
done.
Article 52743 of the Civil Code presumes good faith. Without proof that
the Department's mistake was made in bad faith, its construction is
presumed to have been made in good faith. Therefore, the forfeiture
104
of the improvements in favor of the respondent spouses is
unwarranted.
WHEREFORE, we hereby DENY the petition for lack of merit. The
May 20, 2009 decision of the Regional Trial Court in Civil Case No.
7355, as modified by the March 20, 2013 decision of the Court of
Appeals in CA-G.R. CV No. 93795, is AFFIRMED with further
MODIFICATION that the forfeiture of the improvements made by the
DOTC in favor of the respondents is DELETED. No costs.
SO ORDERED.chanRoblesvirtualLawlibrary
Carpio, (Chairperson), Mendoza, and Leonen, JJ., concur.
Del Castillo, J., on leave.
FIRST DIVISION
[G.R. No. L-29993. October 23, 1978.]
LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE
GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS,
MAXIMO MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY,
RAMON TULAGAN, all Members of the Municipal Council of
Malasiqui in 1959, Malasiqui, Pangasinan, Petitioners, v.
ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO,
ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS
and ROBERTO, all surnamed FONTANILLA, and THE
HONORABLE COURT OF APPEALS, Respondents.
[G.R. No. L-30183. October 23, 1978.]
MUNICIPALITY OF MALASIQUI, Petitioner, v. ROSALINA,
ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA,
ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and
ROBERTO, all surnamed FONTANILLA, and the Honorable
COURT OF APPEALS, Respondents.
Julian M. Armas, Assistant Provincial Fiscal, for Petitioners.
Isidoro L. Padilla for Respondents.
SYNOPSIS
Pursuant to Section 2282 of the Revised Administrative Code, the
Municipal Council of Malasiqui, Pangasinan, resolved to celebrate the
town fiesta and created a "Town Fiesta Executive Committee" to
undertake, manage and supervise the festivities. The Executive
Committee created a sub-committee on "Entertainment and Stage",
which constructed two stages, one for the "zarzuela" and another for
"cancionan." During the program people went up the "zarzuela" stage
and before the play was over the stage collapsed, pinning underneath
one of the performers, resulting in his death.
The heirs of the deceased sued the municipality and the councilors for
damages. The municipality invoked inter alia the principal defense that
the holding of a town fiesta was an exercise of its governmental
function from which no liability can arise to answer for the negligence
of any of its agents. The councilors maintained that they merely acted
as agents of the municipality in carrying out the municipal ordinance.
The trial court dismissed the complaint of a finding that the petitioners
exercised due diligence and care of a good father of a family in
selecting a competent man to construct the stage and if it collapsed it
was due to forces beyond the control of the committee on
entertainment and stage.
The Court of Appeals reversed the decision stating that petitioners
were guilty of negligence when they failed to take the necessary
measures to prevent the mounting of onlookers on the stage resulting
in the collapse thereof.
The Supreme Court held that the holding of a town fiesta though not
for profit is a proprietary function for which a municipality is liable for
damages to third persons ex contractu or ex delicto; that under the
principle of respondeat superior the principal is liable for the
negligence of its agents acting within the scope of their assigned
tasks; and that the municipal councilors have a personally distinct and
separate from the municipality, hence, as a rule they are not co-
responsible in an action for damages for tort or negligence unless they
acted in bad faith or have directly participated in the commission of
the wrongful act.
Appealed decision affirmed with modification.
105

SYLLABUS
1. POLITICAL LAW; MUNICIPAL CORPORATIONS; MUNICIPALITIES
MAY SUE AND BE SUED. — Under Philippine laws municipalities are
political bodies corporate and as such are endowed with the faculties
of municipal corporations to be exercised by and through their
respective municipal governments in conformity with law, and in their
proper corporate name, they may inter alia, sue and be sued, and
contract and be contracted with.
2. ID.; ID.; dual CHARACTER OF MUNICIPALITIES. — Municipal
corporations exist in a dual capacity and their powers are twofold in
character — public, governmental or political on the one hand,
corporate private, or proprietary on the other hand. Governmental
powers are those exercised by the corporation in administering the
powers of the state and promoting the public welfare and they include
the legislative, judicial, public, and political. Municipal powers on the
other hand are exercised for the special benefit and advantage of the
community and include those which are ministerial, private and
corporate.
3. ID.; ID.; ID.; TEST; RULE IN DETERMINING NATURE OF FUNCTION
PERFORMED. — A municipal corporation proper has a public character
as regards the state at large insofar as it is its agent in government,
and private insofar as it is to promote local necessities and
conveniences for its own community (McQuillin on Municipal
Corporations). Stated differently, "Municipal corporations exist in a
dual capacity and their functions are twofold. In one way they exercise
the right springing from sovereignty, and while in the performance of
the duties pertaining thereto, their acts are political and governmental.
Their officers and agents in such capacity, though elected or appointed
by them, are nevertheless public functionaries performing a public
service, and as such they are officers, agents, and servants of the
state. In the other capacity the municipalities exercise a private,
proprietary or corporate right, arising from their existence as legal
persons and not as public agencies. Their officers and agents in the
performance of such functions act in behalf of the municipalities in
their corporate or individual capacity, and not for the state or
sovereign power." (City of Kokomo v. Boy, 112 NE 994).
4. ID.; ID.; ID.; LIABILITY; RULE ON LIABILITY OF MUNICIPAL
CORPORATIONS. — If the injury is caused in the course of the
performance of a governmental function or duty no recovery, as a rule,
can be had from the municipality unless there is an existing statute on
the matter, nor from its officers, so long as they performed their duties
honestly and in good faith or that they did not act wantonly and
maliciously. With respect to proprietary functions, the settled rule is
that a municipal corporation can be held liable to third persons ex
contractu or ex delicto. The rule of law is a general one, that the
superior or employer must answer civilly for the negligence or want of
skill of his agent or servant in the course or line of his employment, by
which another, who is free from contributory fault, is injured. Municipal
corporations under the conditions herein stated, fall within the
operation of this rule of law, and are liable, accordingly, to civil actions
for damages when the requisite elements of liability coexist (Dillion on
Municipal Corporations). There can be no hard and fast rule for
purposes of determining the true nature of an undertaking or function
of a municipality; the surrounding circumstances of a particular case
are to be considered and will be decisive. The basic element, however
beneficial to the public the undertaking may be, is that it is
governmental in essence, otherwise the function becomes private or
proprietary in character.
5. ID.; ID.; ID.; SECTION 2282, REVISED ADMINISTRATIVE CODE
MERELY AUTHORITATIVE; HOLDING FIESTAS, PROPRIETARY IN
CHARACTER. — Section 2282 of the Revised Administrative Code
simply gives authority to the municipality to celebrate a yearly fiesta
but it does not impose upon it a duty to observe one. Holding a fiesta
even if the purpose is to commemorate a religious or historical event
of the town is in essence an act for the special benefit of the
community and not for the general welfare of the public performed in
pursuance of a policy of the state. It is an exercise of a private
proprietary function. The mere fact that the celebration was not to
secure profit or gain but merely to provide entertainment to the town
inhabitants is not a conclusive test that the same is governmental in
character.
6. ID.; ID.; RESPONDEAT SUPERIOR; MUNICIPALITY LIABLE FOR
DAMAGES COMMITTED BY ITS AGENTS. — The municipality cannot
evade responsibility for the death of a stage performer arising from
faulty construction of the stage by the chairman of the entertainment
and stage committee appointed by the municipal council, in connection
106
with a town fiesta, because under the doctrine of respondeat superior,
a municipality is responsible or liable for the negligence of its agent
acting within his assigned tasks.
7. ID.; ID.; ID.; LIABILITY RESTS ON NEGLIGENCE. — The failure of
the municipality or its agents despite the necessary means within its
command, to prevent the onlookers from mounting on the stage
resulting in its collapse and death of one of the performers constitutes
negligence from which liability arises. Liability rests on negligence
which is "the want of such care as a person of ordinary prudence
would exercise under the circumstances of the case."cralaw virtua1aw
library
8. ID.; ID.; ID.; LIABILITY OF MUNICIPALITY TO "INVITEE." — Where
a municipality, in connection with the celebration of a town fiesta,
accepted the donation of the services of an "extravaganza troupe" and
constructed precisely a "zarzuela stage" for the purpose, the
participants in the stage show had the right to expect that the
municipality would build or put up a stage or platform strong enough
to sustain the weight or burden of the performance and take the
necessary measures to insure the personal safety of the participants.
9. ID.; ID.; ID.; ARTICLE 27 OF THE NEW CIVIL CODE, NOT
APPLICABLE. — Article 27 of the New Civil Code which allows action
for damages against a public servant or employee who refuses or
neglect without just cause to perform his duties covers a case of non-
feasance or non-performance by a public officer of his official duty; it
does not apply to a case of negligence or misfeasance in carrying out
an official duty.
10. ID.; ID.; ID.; MUNICIPAL COUNCILORS NOT LIABLE FOR
DAMAGES ARISING FROM THE WRONGFUL ACT OF THE MUNICIPAL
OFFICIALS UNLESS THEY PARTICIPATED IN THE COMMISSION
THEREOF. — The celebration of a town fiesta by a municipality is not a
governmental function. The legal consequence is that the municipality
stands on the same footing as an ordinary private corporation with the
municipal council acting as its board of directors. It is an elementary
principle that a corporation has a personality separate and distinct
from its officers, directors, or persons composing it and the latter are
not as a rule co-responsible in an action for damages for tort or
negligence (culpa acquiliana) committed by the corporation’s
employees or agents unless there is a showing of bad faith or gross or
wanton negligence on their part.
DECISION
MUÑOZ PALMA, J.:
These Petitions for review present the issue of whether or not the
celebration of a town fiesta authorized by a municipal council under
Sec. 2282 of the Municipal Law as embodied in the Revised
Administrative Code is a governmental or a corporate or proprietary
function of the municipality.
A resolution of that issue will lead to another, viz: the civil liability for
damages of the Municipality of Malasiqui, and the members of the
Municipal Council of Malasiqui, province of Pangasinan, for a death
which occurred during the celebration of the town fiesta on January
22, 1959, and which was attributed to the negligence of the
municipality and its council members.cralawnad
The following facts are not in dispute:chanrob1es virtual 1aw library
On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan,
passed Resolution No. 159 whereby "it resolved to manage the 1959
Malasiqui town fiesta celebration on January 21, 22, and 23, 1959."
Resolution No. 182 was also passed creating the "1959 Malasiqui Town
Fiesta Executive Committee" which in turn organized a subcommittee
on entertainment and stage, with Jose Macaraeg as Chairman. The
council appropriated the amount of P100.00 for the construction of 2
stages, one for the "zarzuela" and another for the "cancionan." Jose
Macaraeg supervised the construction of the stage and as constructed
the stage for the "zarzuela" was "5-1/2 meters by 8 meters in size,
had a wooden floor high at the rear and was supported by 24 bamboo
posts — 4 in a row in front, 4 in the rear and 5 on each side — with
bamboo braces." 1
The "zarzuela" entitled "Midas Extravanganza" was donated by an
association of Malasiqui employees of the Manila Railroad Company in
Caloocan, Rizal. The troupe arrived in the evening of January 22 for
107
the performance and one of the members of the group was Vicente
Fontanilla. The program started at about 10:15 o’clock that evening
with some speeches, and many persons went up the stage. The
"zarzuela" then began but before the dramatic part of the play was
reached, the stage collapsed and Vicente Fontanilla who was at the
rear of the stage was pinned underneath. Fontanilla was taken to the
San Carlos General Hospital where he died in the afternoon of the
following day.
The heirs of Vicente Fontanilla filed a complaint with the Court of First
Instance of Manila on September 11, 1959 to recover damages.
Named party-defendants were the Municipality of Malasiqui, the
Municipal Council of Malasiqui and all the individual members of the
Municipal Council in 1959.
Answering the complaint defendant municipality invoked inter alia the
principal defense that as a legally and duly organized public
corporation it performs sovereign functions and the holding of a town
fiesta was an exercise of its governmental functions from which no
liability can arise to answer for the negligence of any of its agents.
The defendant councilors in turn maintained that they merely acted as
agents of the municipality in carrying out the municipal ordinance
providing for the management of the town fiesta celebration and as
such they are likewise not liable for damages as the undertaking was
not one for profit; furthermore. they had exercised due care and
diligence in implementing the municipal ordinance. 2
After trial, the Presiding Judge, Hon. Gregorio T. Lantin, narrowed the
issue to whether or not the defendants exercised due diligence in the
construction of the stage. From his findings he arrived at the
conclusion that the Executive Committee appointed by the municipal
council had exercised due diligence and care like a good father of the
family in selecting a competent man to construct a stage strong
enough for the occasion and that if it collapsed that was due to forces
beyond the control of the committee on entertainment, consequently,
the defendants were not liable for damages for the death of Vicente
Fontanilla. The complaint was accordingly dismissed in a decision
dated July 10, 1962. 3
The Fontanillas appealed to the Court of Appeals. In a decision
promulgated on October 31, 1968, the Court of Appeals through its
Fourth Division composed at the time of Justices Salvador V. Esguerra,
Nicasio A. Yatco and Eulogio S. Serrano reversed the trial court’s
decision and ordered all the defendants-appellees to pay jointly and
severally the heirs of Vicente Fontanilla the sums of P12,000.00 by
way of moral and actual damages: P1,200.00 as attorney’s fees; and
the costs. 4
The case is now before Us on various assignments of errors all of
which center on the proposition stated at the opening sentence of this
Opinion and which We repeat:chanrobles virtual lawlibrary
Is the celebration of a town fiesta an undertaking in the exercise of a
municipality’s governmental or public function or is it of a private or
proprietary character?
1. Under Philippine laws municipalities are political bodies corporate
and as such as endowed with the faculties of municipal corporations to
be exercised by and through their respective municipal governments in
conformity with law, and in their proper corporate name, they may,
inter alia, sue and be sued, and contract and be contracted with. 5
The powers of a municipality are twofold in character — public,
governmental, or political on the one hand, and corporate, private, or
proprietary on the other. Governmental powers are those exercised by
the corporation in administering the powers of the state and
promoting the public welfare and they include the legislative, judicial,
public, and political, Municipal powers on the other hand are exercised
for the special benefit and advantage of the community and include
those which are ministerial, private and corporate. 6
As to when a certain activity is governmental and when proprietary or
private, that is generally a difficult matter to determine. The evolution
of the municipal law in American Jurisprudence, for instance, has
shown that none of the tests which have evolved and are stated in
textbooks have set down a conclusive principle or rule, so that each
case will have to be determined on the basis of attending
circumstances.
In McQuillin on Municipal Corporations, the rule is stated thus: "A
municipal corporation proper has . . . a public character as regards the
state at large insofar as it is its agent in government, and private (so-
108
cases) insofar as it is to promote local necessities and conveniences
for its own community." 7
Another statement of the test is given in City of Kokomo v. Loy,
decided by the Supreme Court of Indiana in 1916,
thus:jgc:chanrobles.com.ph
"Municipal corporations exist in a dual capacity, and their functions are
twofold. In one they exercise the right springing from sovereignty, and
while in the performance of the duties pertaining thereto, their acts
are political and governmental. Their officers and agents in such
capacity, though elected or appointed by them, are nevertheless public
functionaries performing a public service, and as such they are
officers, agents, and servants of the state. In the other capacity the
municipalities exercise a private, proprietary or corporate right, arising
from their existence as legal persons and not as public agencies. Their
officers and agents in the performance of such functions act in behalf
of the municipalities in their corporate or individual capacity, and not
for the state or sovereign power." (112 N.E., 994-995)chanrobles law
library
In the early Philippine case of Mendoza v. de Leon, 1916, the Supreme
Court, through Justice Grant T. Trent, relying mainly on American
Jurisprudence classified certain activities of the municipality as
governmental, e.g.: regulations against fire, disease, preservation of
public peace, maintenance of municipal prisons, establishment of
schools, post-offices, etc. while the following are corporate or
proprietary in character, viz: municipal waterwork, slaughterhouses,
markets, stables, bathing establishments, wharves, ferries, and
fisheries. 8 Maintenance of parks, golf courses, cemeteries and
airports among others, are also recognized as municipal or city
activities of a proprietary character. 9
2. This distinction of powers becomes important for purposes of
determining the liability of the municipality for the acts of its agents
which result in an injury to third persons.
If the injury is caused in the course of the performance of a
governmental function or duty no recovery, as a rule, can be had from
the municipality unless there is an existing statute on the matter, 10
nor from its officers, so long as they performed their duties honestly
and in good faith or that they did not act wantonly and maliciously. 11
In Palafox, Et. Al. v. Province of Ilocos Norte, Et Al., 1958, a truck
driver employed by the provincial government of Ilocos Norte ran over
Proceto Palafox in the course of his work at the construction of a road.
The Supreme Court in affirming the trial court’s dismissal of the
complaint for damages held that the province could not be made liable
because its employee was in the performance of a governmental
function — the construction and maintenance of roads — and however
tragic and deplorable it may be, the death of Palafox imposed on the
province no duty to pay monetary consideration. 12
With respect to proprietary functions, the settled rule is that a
municipal corporation can be held liable to third persons ex contractu
13 or ex delicto. 14
"Municipal corporations are subject to be sued upon contracts and in
tort. . . .
x x x
"The rule of law is a general one, that the superior or employer must
answer civilly for the negligence or want of skill of its agent or servant
in the course or line of his employment, by which another, who is free
from contributory fault, is injured. Municipal corporations under the
conditions herein stated, fall within the operation of this rule of law,
and are liable, accordingly, to civil actions for damages when the
requisite elements of liability coexist . . ." (Dillon on Municipal
Corporations, 5th ed. Secs, 1610, 1647, cited in Mendoza v. de Leon,
supra, 514)
3. Coming to the case before Us, and applying the general tests given
above, We hold that the holding of the town fiesta in 1959 by the
municipality of Malasiqui Pangasinan, was an exercise of a private or
proprietary function of the municipality.
Section 2282 of the Chapter on Municipal Law of the Revised
Administrative Code provides:jgc:chanrobles.com.ph
"Section 2282. Celebration of fiesta. — A fiesta may be held in each
municipality not oftener than once a year upon a date fixed by the
municipal council. A fiesta shall not be held upon any other date than
that lawfully fixed therefor, except when, for weighty reasons, such as
109
typhoons, inundations, earthquakes, epidemics, or other public
calamities, the fiesta cannot be held in the date fixed, in which case it
may be held at a later date in the same year, by resolution of the
council."cralaw virtua1aw library
This provision simply gives authority to the municipality to accelebrate
a yearly fiesta but it does not impose upon it a duty to observe one.
Holding a fiesta even if the purpose is to commemorate a religious or
historical event of the town is in essence an act for the special benefit
of the community and not for the general welfare of the public
performed in pursuance of a policy of the state. The mere fact that the
celebration, as claimed, was not to secure profit or gain but merely to
provide entertainment to the town inhabitants is not a conclusive test.
For instance, the maintenance of parks is not a source of income for
the town, nonetheless it is private undertaking as distinguished from
the maintenance of public schools, jails, and the like which are for
public service.chanrobles.com.ph : virtual law library
As stated earlier, there can be no hard and fast rule for purposes of
determining the true nature of an undertaking or function of a
municipality; the surrounding circumstances of a particular case are to
be considered and will be decisive. The basic element, however
beneficial to the public the undertaking may be, is that it is
governmental in essence, otherwise, the function becomes private or
proprietary in character. Easily, no governmental or public policy of the
state is involved in the celebration of a town fiesta. 15
4. It follows that under the doctrine of respondent superior, petitioner-
municipality is to be held liable for damages for the death of Vicente
Fontanilla if that was attributable to the negligence of the
municipality’s officers, employees, or agents.
"Art. 2176, Civil Code: Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. . . ."cralaw virtua1aw library
"Art. 2180. Civil Code: The obligation imposed by article 2176 is
demandable not only for one’s own acts or omission, but also for those
of persons for whom one is responsible . . ."cralaw virtua1aw library
On this point, the Court of Appeals found and held that there was
negligence.
The trial court gave credence to the testimony of Angel Novado, a
witness of the defendants (now petitioners), that a member of the
"extravaganza troupe" removed two principal braces located on the
front portion of the stage and used them to hang the screen or
"telon", and that when many people went up the stage the latter
collapsed. This testimony was not believed however by respondent
appellate court, and rightly so. According to said defendants, those
two braces were "mother" or "principal" braces located semi-diagonally
from the front ends of the stage to the front posts of the ticket booth
located at the rear of the stage and were fastened with a bamboo
twine. 16 That being the case, it becomes incredible that any person in
his right mind would remove those principal braces and leave the front
portion of the stage practically unsupported. Moreover, if that did
happen, there was indeed negligence as there was lack of supervision
over the use of the stage to prevent such an occurrence.
At any rate, the guitarist who was pointed to by Novado as the person
who removed the two bamboo braces denied having done so. The
Court of Appeals said. "Amor by himself alone could not have removed
the two braces which must be about ten meters long and fastened
them on top of the stage for the curtain. The stage was only five and a
half meters wide Surely, it would be impractical and unwieldy to use a
ten meter bamboo pole, much more two poles, for the stage curtain."
17
The appellate court also found that the stage was not strong enough
considering that only P100.00 was appropriate for the construction of
two stages and while the floor of the "zarzuela" stage was of wooden
planks, the posts and braces used were of bamboo material. We
likewise observe that although the stage was described by the
petitioners as being supported by "24" posts, nevertheless there were
only 4 in front, 4 at the rear, and 5 on each side. Where were the rest?
chanrobles.com:cralaw:red
The Court of Appeals thus concluded:jgc:chanrobles.com.ph
"The court a quo itself attributed the collapse of the stage to the great
number of onlookers who mounted the stage. The municipality and/or
its agents had the necessary means within its command to prevent
such an occurrence. Having failed to take the necessary steps to
maintain the safety of the stage for the use of the participants in the
110
stage presentation prepared in connection with the celebration of the
town fiesta, particularly, in preventing nonparticipants or spectators
from mounting and accumulating on the stage which was not
constructed to meet the additional weight, the defendants-appellees
were negligent and are liable for the death of Vicente Fontanilla." (pp.
30-31, rollo, L-29993)
The findings of the respondent appellate court that the facts as
presented to it establish negligence as a matter of law and that the
Municipality failed to exercise the due diligence of a good father of the
family, will not disturbed by Us in the absence of a clear showing of an
abuse of discretion or a gross misapprehension of facts. 18
Liability rests on negligence which is "the want of such care as a
person of ordinary prudence would exercise under the circumstances
of the case." 19
Thus, private respondents argue that the "Midas Extravaganza" which
was to be performed during the town fiesta was a "donation" offered
by an association of Malasiqui employees of the Manila Railroad Co. in
Caloocan, and that when the Municipality of Malasiqui accepted the
donation of services and constructed precisely a "zarzuela stage" for
the purpose, the participants in the stage show had the right to expect
that the Municipality through its "Committee on entertainment and
stage" would build or put up a stage or platform strong enough to
sustain the weight or burden of the performance and take the
necessary measures to insure the personal safety of the participants.
20 We agree.
Quite relevant to that argument is the American case of Sanders v.
City of Long Beach, 1942, which was an action against the city for
injuries sustained from a fall when plaintiff was descending the steps
of the city auditorium. The city was conducting a "Know your City
Week" and one of the features was the showing of a motion picture in
the city auditorium to which the general public was invited and plaintiff
Sanders was one of those who attended. In sustaining the award for
damages in favor of plaintiff, the District Court of Appeal, Second
district, California, held inter alia that the "Know your City Week" was
a "proprietary activity" and not a "governmental one" of the city, that
defendant owed to plaintiff, an "invitee", the duty of exercising
ordinary care for her safety, and plaintiff was entitled to assume that
she would not be exposed to a danger (which in this case consisted of
lack of sufficient illumination of the premises) that would come to her
through a violation of defendant’s duty. 21
We can say that the deceased Vicente Fontanilla was similarly situated
as Sanders. The Municipality of Malasiqui resolved to celebrate the
town fiesta in January of 1959; it created a committee in charge of the
entertainment and stage; an association of Malasiqui residents
responded to the call for the festivities and volunteered to present a
stage show; Vicente Fontanilla was one of the participants who like
Sanders had the right to expect that he would be exposed to danger
on that occasion.chanrobles virtual lawlibrary
Lastly, petitioner or appellant Municipality cannot evade responsibility
and/or liability under the claim that it was Jose Macaraeg who
constructed the stage. The municipality acting through its municipal
council appointed Macaraeg as chairman of the sub-committee on
entertainment and in charge of the construction of the "zarzuela"
stage. Macaraeg acted merely as an agent of the Municipality. Under
the doctrine of respondent superior mentioned earlier, petitioner is
responsible or liable for the negligence of its agent acting within his
assigned tasks. 22
". . . when it is sought to render a municipal corporation liable for the
act of servants or agents, a cardinal inquiry is, whether they are the
servants or agents of the corporation. If the corporation appoints or
elects them, can control them in the discharge of their duties, can
continue or remove them, can hold them responsible for the manner in
which they discharge their trust, and if those duties relate to the
exercise of corporate powers, and are for the peculiar benefit of the
corporation in its local or special interest, they may justly be regarded
as its agents or servants, and the maxim of respondent superior
applies.." . . (Dillon on Municipal Corporations, 5th Ed., Vol. IV, p.
2879)
5. The remaining question to be resolved centers on the liability of the
municipal councilors who enacted the ordinance and created the fiesta
committee.
The Court of Appeals held the councilors jointly and solidarily liable
with the municipality for damages under Article 27 of the Civil Code
which provides that "any person suffering material or moral loss
because a public servant or employee refuses or neglects, without just
111
cause, to perform his official duty may file an action for damages and
other relief against the latter." 23
In their Petition for review the municipal councilors allege that the
Court of Appeals erred in ruling that the holding of a town fiesta is not
a governmental function and that there was negligence on their part
for not maintaining and supervising the safe use of the stage, in
applying Article 27 of the Civil Code against them, and in not holding
Jose Macaraeg liable for the collapse of the stage and the consequent
death of Vicente Fontanilla. 24
We agree with petitioners that the Court of Appeals erred in applying
Article 27 of the Civil Code against them, for this particular article
covers a case of non-feasance or non-performance by a public officer
of his official duty; it does not apply to a case of negligence or
misfeasance in carrying out an official duty.
If We are led to set aside the decision of the Court of Appeals insofar
as these petitioners are concerned, it is because of plain error
committed by respondent court which however is not invoked in
petitioners’ brief.
In Miguel v. The Court of Appeals, Et Al., the Court, through Justice,
now Chief Justice, Fred Ruiz Castro, held that the Supreme Court is
vested with ample authority to review matters not assigned as errors
in an appeal if it finds that their consideration and resolution are
indispensable or necessary in arriving at a just decision in a given
case, and that this is authorized under Sec. 7, Rule 51 of the Rules of
Court. 25 We believe that this pronouncement can well be applied in
the instant case.chanrobles virtual lawlibrary
The Court of Appeals in its decision now under review held that the
celebration of a town fiesta by the Municipality of Malasiqui was not a
governmental function. We upheld that ruling. The legal consequence
thereof is that the Municipality stands on the same footing as an
ordinary private corporation with the municipal council acting as its
board of directors. It is an elementary principle that a corporation has
a personality, separate and distinct from its officers, directors, or
persons composing it 26 and the latter are not as a rule co-responsible
in an action for damages for tort or negligence (culpa aquiliana)
committed by the corporation’s employees or agents unless there is a
showing of bad faith or gross or wanton negligence on their part. 27
x x x
"The ordinary doctrine is that a Director, merely by reason of his
office, is not personally liable for the torts of his corporation; he must
be shown to have personally voted for or otherwise participated in
them.." . . (Fletcher Cyclopedia Corporations, Vol. 3A, Chapt. 11, p.
207)
"Officers of a corporation ‘are not held liable for the negligence of the
corporation merely because of their official relation to it, but because
of some wrongful or negligent act by such officer amounting to a
breach of duty which resulted in an injury . . . To make an officer of a
corporation liable for the negligence of the corporation there must
have been upon his part such a breach of duty as contributed to, or
helped to bring about, the injury; that is to say, he must be a
participant in the wrongful act.." . . (pp. 207-208, ibid.)
x x x
"Directors who merely employ one to give n fireworks exhibition on
the corporate grounds are not personally liable for the negligent acts
of the exhibitor." (p. 211, ibid.)
On these principles We absolve the municipal councilors from any
liability for the death of Vicente Fontanilla. The records do not show
that said petitioners directly participated in the defective construction
of the "zarzuela" stage or that they personally permitted spectators to
go up the platform.
6. One last point We have to resolve is on the award of attorney’s fees
by respondent court. Petitioner-municipality assails the award.
Under paragraph 11, Art. 2208 of the Civil Code attorney’s fees and
expenses of litigation may be granted when the court deems it just
and equitable. In this case of Vicente Fontanilla, although respondent
appellate court failed to state the grounds for awarding attorney’s
fees, the records show however that attempts were made by plaintiffs,
now private respondents, to secure an extrajudicial compensation from
the municipality; that the latter gave promises and assurances of
112
assistance but failed to comply; and it was only eight months after the
incident that the bereaved family of Vicente Fontanilla was compelled
to seek relief from the courts to ventilate what was believed to be a
just cause. 28
We hold, therefore, that there is no error committed in the grant of
attorney’s fees which after all is a matter of judicial discretion. The
amount of P1,200.00 is fair and reasonable.
PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court
of Appeals insofar as the Municipality of Malasiqui is concerned
(L-30183), and We absolve the municipal councilors from liability and
SET ASIDE the judgment against them (L-29993).
Without pronouncement as to costs.
SO ORDERED.
G.R. No. L-52179 April 8, 1991
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner
vs.
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIÑA, IAUREANO
BANIÑA, JR., SOR MARIETA BANIÑA, MONTANO BANIÑA, ORJA BANIÑA,
AND LYDIA R. BANIÑA, respondents.
Mauro C. Cabading, Jr. for petitioner.
 prescription of cause of action and the negligence of the owner and driver of the
Simeon G. Hipol for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary
mandatory injunction seeking the nullification or modification of the proceedings
and the orders issued by the respondent Judge Romeo N. Firme, in his capacity
as the presiding judge of the Court of First Instance of La Union, Second Judicial
District, Branch IV, Bauang, La Union in Civil Case No. 107-BG, entitled "Juana
Rimando Baniña, et al. vs. Macario Nieveras, et al." dated November 4, 1975;
July 13, 1976; August 23,1976; February 23, 1977; March 16, 1977; July 26,
1979; September 7, 1979; November 7, 1979 and December 3, 1979 and the
decision dated October 10, 1979 ordering defendants Municipality of San
Fernando, La Union and Alfredo Bislig to pay, jointly and severally, the plaintiffs
for funeral expenses, actual damages consisting of the loss of earning capacity
of the deceased, attorney's fees and costs of suit and dismissing the complaint
against the Estate of Macario Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation
existing under and in accordance with the laws of the Republic of the Philippines.
Respondent Honorable Judge Romeo N. Firme is impleaded in his official
capacity as the presiding judge of the Court of First Instance of La Union, Branch
IV, Bauang, La Union. While private respondents Juana Rimando-Baniña,
Laureano Baniña, Jr., Sor Marietta Baniña, Montano Baniña, Orja Baniña and
Lydia R. Baniña are heirs of the deceased Laureano Baniña Sr. and plaintiffs in
Civil Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred
involving a passenger jeepney driven by Bernardo Balagot and owned by the
Estate of Macario Nieveras, a gravel and sand truck driven by Jose Manandeg
and owned by Tanquilino Velasquez and a dump truck of the Municipality of San
Fernando, La Union and driven by Alfredo Bislig. Due to the impact, several
passengers of the jeepney including Laureano Baniña Sr. died as a result of the
injuries they sustained and four (4) others suffered varying degrees of physical
injuries.
On December 11, 1966, the private respondents instituted a compliant for
damages against the Estate of Macario Nieveras and Bernardo Balagot, owner
and driver, respectively, of the passenger jeepney, which was docketed Civil
Case No. 2183 in the Court of First Instance of La Union, Branch I, San
Fernando, La Union. However, the aforesaid defendants filed a Third Party
Complaint against the petitioner and the driver of a dump truck of petitioner.
Thereafter, the case was subsequently transferred to Branch IV, presided over by
respondent judge and was subsequently docketed as Civil Case No. 107-Bg. By
virtue of a court order dated May 7, 1975, the private respondents amended the
complaint wherein the petitioner and its regular employee, Alfredo Bislig were
impleaded for the first time as defendants. Petitioner filed its answer and raised
affirmative defenses such as lack of cause of action, non-suability of the State,
passenger jeepney as the proximate cause of the collision.
In the course of the proceedings, the respondent judge issued the following
questioned orders, to wit:
(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo
Balagot;
(2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality
of San Fernando, La Union and Bislig and setting the hearing on the affirmative
defenses only with respect to the supposed lack of jurisdiction;
(3) Order dated August 23, 1976 deferring there resolution of the grounds for the
Motion to Dismiss until the trial;
(4) Order dated February 23, 1977 denying the motion for reconsideration of the
order of July 13, 1976 filed by the Municipality and Bislig for having been filed out
of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for
reconsideration of the order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for decision
it appearing that parties have not yet submitted their respective memoranda
despite the court's direction; and
113
(7) Order dated September 7, 1979 denying the petitioner's motion for
reconsideration and/or order to recall prosecution witnesses for cross
examination.
On October 10, 1979 the trial court rendered a decision, the dispositive portion is
hereunder quoted as follows:
IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for
the plaintiffs, and defendants Municipality of San Fernando, La Union and Alfredo
Bislig are ordered to pay jointly and severally, plaintiffs Juana Rimando-Baniña,
Mrs. Priscilla B. Surell, Laureano Baniña Jr., Sor Marietta Baniña, Mrs. Fe B.
Soriano, Montano Baniña, Orja Baniña and Lydia B. Baniña the sums of
P1,500.00 as funeral expenses and P24,744.24 as the lost expected earnings of
the late Laureano Baniña Sr., P30,000.00 as moral damages, and P2,500.00 as
attorney's fees. Costs against said defendants.
The Complaint is dismissed as to defendants Estate of Macario Nieveras and
Bernardo Balagot.
SO ORDERED. (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without prejudice
to another motion which was then pending. However, respondent judge issued
another order dated November 7, 1979 denying the motion for reconsideration of
the order of September 7, 1979 for having been filed out of time.
Finally, the respondent judge issued an order dated December 3, 1979 providing
that if defendants municipality and Bislig further wish to pursue the matter
disposed of in the order of July 26, 1979, such should be elevated to a higher
court in accordance with the Rules of Court. Hence, this petition.
Petitioner maintains that the respondent judge committed grave abuse of
discretion amounting to excess of jurisdiction in issuing the aforesaid orders and
in rendering a decision. Furthermore, petitioner asserts that while appeal of the
decision maybe available, the same is not the speedy and adequate remedy in
the ordinary course of law.
On the other hand, private respondents controvert the position of the petitioner
and allege that the petition is devoid of merit, utterly lacking the good faith which
is indispensable in a petition for certiorari and prohibition. (Rollo, p. 42.) In
addition, the private respondents stress that petitioner has not considered that
every court, including respondent court, has the inherent power to amend and
control its process and orders so as to make them conformable to law and
justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether or not the respondent
court committed grave abuse of discretion when it deferred and failed to resolve
the defense of non-suability of the State amounting to lack of jurisdiction in a
motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the defense of
non-suability of the State amounting to lack of jurisdiction until trial. However,
said respondent judge failed to resolve such defense, proceeded with the trial
and thereafter rendered a decision against the municipality and its driver.
The respondent judge did not commit grave abuse of discretion when in the
exercise of its judgment it arbitrarily failed to resolve the vital issue of non-
suability of the State in the guise of the municipality. However, said judge acted
in excess of his jurisdiction when in his decision dated October 10, 1979 he held
the municipality liable for the quasi-delict committed by its regular employee.
The doctrine of non-suability of the State is expressly provided for in Article XVI,
Section 3 of the Constitution, to wit: "the State may not be sued without its
consent."
Stated in simple parlance, the general rule is that the State may not be sued
except when it gives consent to be sued. Consent takes the form of express or
implied consent.
Express consent may be embodied in a general law or a special law. The
standing consent of the State to be sued in case of money claims involving
liability arising from contracts is found in Act No. 3083. A special law may be
passed to enable a person to sue the government for an alleged quasi-delict, as
in Merritt v. Government of the Philippine Islands (34 Phil 311). (see United
States of America v. Guinto, G.R. No. 76607, February 26, 1990, 182 SCRA 644,
654.)
Consent is implied when the government enters into business contracts, thereby
descending to the level of the other contracting party, and also when the State
files a complaint, thus opening itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies of
the State when they are engaged in governmental functions and therefore should
enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit
even in the performance of such functions because their charter provided that
they can sue and be sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability
depends on the consent of the state to be sued, liability on the applicable law
and the established facts. The circumstance that a state is suable does not
necessarily mean that it is liable; on the other hand, it can never be held liable if
it does not first consent to be sued. Liability is not conceded by the mere fact that
the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the
defendant is liable." (United States of America vs. Guinto, supra, p. 659-660)
Anent the issue of whether or not the municipality is liable for the torts committed
by its employee, the test of liability of the municipality depends on whether or not
the driver, acting in behalf of the municipality, is performing governmental or
proprietary functions. As emphasized in the case of Torio vs. Fontanilla (G. R.
No. L-29993, October 23, 1978. 85 SCRA 599, 606), the distinction of powers
becomes important for purposes of determining the liability of the municipality for
the acts of its agents which result in an injury to third persons.
Another statement of the test is given in City of Kokomo vs. Loy, decided by the
Supreme Court of Indiana in 1916, thus:
Municipal corporations exist in a dual capacity, and their functions are twofold. In
one they exercise the right springing from sovereignty, and while in the
performance of the duties pertaining thereto, their acts are political and
governmental. Their officers and agents in such capacity, though elected or
appointed by them, are nevertheless public functionaries performing a public
114
service, and as such they are officers, agents, and servants of the state. In the
other capacity the municipalities exercise a private, proprietary or corporate right,
arising from their existence as legal persons and not as public agencies. Their
officers and agents in the performance of such functions act in behalf of the
municipalities in their corporate or individual capacity, and not for the state or
sovereign power." (112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable because
their charters grant them the competence to sue and be sued. Nevertheless, they
are generally not liable for torts committed by them in the discharge of
governmental functions and can be held answerable only if it can be shown that
they were acting in a proprietary capacity. In permitting such entities to be sued,
the State merely gives the claimant the right to show that the defendant was not
acting in its governmental capacity when the injury was committed or that the
case comes under the exceptions recognized by law. Failing this, the claimant
cannot recover. (Cruz, supra, p. 44.)
In the case at bar, the driver of the dump truck of the municipality insists that "he
was on his way to the Naguilian river to get a load of sand and gravel for the
repair of San Fernando's municipal streets." (Rollo, p. 29.)
In the absence of any evidence to the contrary, the regularity of the performance
of official duty is presumed pursuant to Section 3(m) of Rule 131 of the Revised
Rules of Court. Hence, We rule that the driver of the dump truck was performing
duties or tasks pertaining to his office.
We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte,
the District Engineer, and the Provincial Treasurer (102 Phil 1186) that "the
construction or maintenance of roads in which the truck and the driver worked at
the time of the accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at the
conclusion that the municipality cannot be held liable for the torts committed by
its regular employee, who was then engaged in the discharge of governmental
functions. Hence, the death of the passenger –– tragic and deplorable though it
may be –– imposed on the municipality no duty to pay monetary compensation.
All premises considered, the Court is convinced that the respondent judge's
dereliction in failing to resolve the issue of non-suability did not amount to grave
abuse of discretion. But said judge exceeded his jurisdiction when it ruled on the
issue of liability.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent
court is hereby modified, absolving the petitioner municipality of any liability in
favor of private respondents.
SO ORDERED.
G.R. No. 161657 October 4, 2007
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
HON. VICENTE A. HIDALGO, in his capacity as Presiding Judge of the
Regional Trial Court of Manila, Branch 37, CARMELO V. CACHERO, in his
capacity as Sheriff IV, Regional Trial Court of Manila, and TARCILA
LAPERAL MENDOZA, Respondents.
DECISION
GARCIA, J.:
Via this verified petition for certiorari and prohibition under Rule 65 of the Rules
of Court, the Republic of the Philippines ("Republic," for short), thru the Office of
the Solicitor General (OSG), comes to this Court to nullify and set aside the
decision dated August 27, 2003 and other related issuances of the Regional Trial
Court (RTC) of Manila, Branch 37, in its Civil Case No. 99-94075. In directly
invoking the Court’s original jurisdiction to issue the extraordinary writs of
certiorari and prohibition, without challenge from any of the respondents, the
Republic gave as justification therefor the fact that the case involves an over
TWO BILLION PESO judgment against the State, allegedly rendered in blatant
violation of the Constitution, law and jurisprudence.
By any standard, the case indeed involves a colossal sum of money which, on
the face of the assailed decision, shall be the liability of the national government
or, in fine, the taxpayers. This consideration, juxtaposed with the constitutional
and legal questions surrounding the controversy, presents special and
compelling reasons of public interests why direct recourse to the Court should be
allowed, as an exception to the policy on hierarchy of courts.
At the core of the litigation is a 4,924.60-square meter lot once covered by
Transfer Certificate of Title (TCT) No. 118527 of the Registry of Deeds of Manila
in the name of the herein private respondent Tarcila Laperal Mendoza
(Mendoza), married to Perfecto Mendoza. The lot is situated at No. 1440 Arlegui
St., San Miguel, Manila, near the Malacañang Palace complex. On this lot,
hereinafter referred to as the Arlegui property, now stands the Presidential
Guest House which was home to two (2) former Presidents of the Republic and
now appears to be used as office building of the Office of the President.1
The facts:
Sometime in June 1999, Mendoza filed a suit with the RTC of Manila for
reconveyance and the corresponding declaration of nullity of a deed of sale and
title against the Republic, the Register of Deeds of Manila and one Atty. Fidel
Vivar. In her complaint, as later amended, docketed as Civil Case No. 99-94075
and eventually raffled to Branch 35 of the court, Mendoza essentially alleged
being the owner of the disputed Arlegui property which the Republic forcibly
dispossessed her of and over which the Register of Deeds of Manila issued TCT
No. 118911 in the name of the Republic.
Answering, the Republic set up, among other affirmative defenses, the State’s
immunity from suit.
The intervening legal tussles are not essential to this narration. What is material
is that in an Order of March 17, 2000, the RTC of Manila, Branch 35, dismissed
Mendoza’s complaint. The court would also deny, in another order dated May 12,
2000, Mendoza’s omnibus motion for reconsideration. On a petition for certiorari,
however, the Court of Appeals (CA), in CA-G.R. SP No. 60749, reversed the trial
court’s assailed orders and remanded the case to the court a quo for further
115
proceedings.2 On appeal, this Court, in G.R. No. 155231, sustained the CA’s
reversal action.3
From Branch 35 of the trial court whose then presiding judge inhibited himself
from hearing the remanded Civil Case No. 99-94075, the case was re-raffled to
Branch 37 thereof, presided by the respondent judge.
On May 5, 2003, Mendoza filed a Motion for Leave of Court to file a Third
Amended Complaint with a copy of the intended third amended complaint thereto
attached. In the May 16, 2003 setting to hear the motion, the RTC, in open court
and in the presence of the Republic’s counsel, admitted the third amended
complaint, ordered the Republic to file its answer thereto within five (5) days from
May 16, 2003 and set a date for pre-trial.
In her adverted third amended complaint for recovery and reconveyance of the
Arlegui property, Mendoza sought the declaration of nullity of a supposed deed
of sale dated July 15, 1975 which provided the instrumentation toward the
issuance of TCT No. 118911 in the name of the Republic. And aside from the
cancellation of TCT No. 118911, Mendoza also asked for the reinstatement of her
TCT No. 118527.4 In the same third amended complaint, Mendoza averred that,
since time immemorial, she and her predecessors-in-interest had been in
peaceful and adverse possession of the property as well as of the owner’s
duplicate copy of TCT No. 118527. Such possession, she added, continued "until
the first week of July 1975 when a group of armed men representing themselves
to be members of the Presidential Security Group [PSG] of the then President
Ferdinand E. Marcos, had forcibly entered [her] residence and ordered [her] to
turn over to them her … Copy of TCT No. 118525 … and compelled her and the
members of her household to vacate the same …; thus, out of fear for their lives,
[she] handed her Owner’s Duplicate Certificate Copy of TCT No. 118527 and had
left and/or vacated the subject property." Mendoza further alleged the following:
1. Per verification, TCT No. 118527 had already been cancelled by virtue of a
deed of sale in favor of the Republic allegedly executed by her and her deceased
husband on July 15, 1975 and acknowledged before Fidel Vivar which deed was
annotated at the back of TCT No. 118527 under PE: 2035/T-118911 dated July
28, 1975; and
2. That the aforementioned deed of sale is fictitious as she (Mendoza) and her
husband have not executed any deed of conveyance covering the disputed
property in favor of the Republic, let alone appearing before Fidel Vivar.
Inter alia, she prayed for the following:
4. Ordering the … Republic to pay plaintiff [Mendoza] a reasonable
compensation or rental for the use or occupancy of the subject property in the
sum of FIVE HUNDRED THOUSAND (P500,000.00) PESOS a month with a five
(5%) per cent yearly increase, plus interest thereon at the legal rate, beginning
July 1975 until it finally vacates the same;
5. Ordering the … Republic to pay plaintiff’s counsel a sum equivalent to
TWENTY FIVE (25%) PER CENT of the current value of the subject property
and/or whatever amount is recovered under the premises; Further, plaintiff prays
for such other relief, just and equitable under the premises.
On May 21, 2003, the Republic, represented by the OSG, filed a Motion for
Extension (With Motion for Cancellation of scheduled pre-trial). In it, the Republic
manifested its inability to simply adopt its previous answer and, accordingly,
asked that it be given a period of thirty (30) days from May 21, 2003 or until June
20, 2003 within which to submit an Answer.5 June 20, 2003 came and went, but
no answer was filed. On July 18, 2003 and again on August 19, 2003, the OSG
moved for a 30-day extension at each instance. The filing of the last two motions
for extension proved to be an idle gesture, however, since the trial court had
meanwhile issued an order6 dated July 7, 2003 declaring the petitioner Republic
as in default and allowing the private respondent to present her evidence ex-
parte.
The evidence for the private respondent, as plaintiff a quo, consisted of her
testimony denying having executed the alleged deed of sale dated July 15, 1975
which paved the way for the issuance of TCT No. 118911. According to her, said
deed is fictitious or inexistent, as evidenced by separate certifications, the first
(Exh. "E"), issued by the Register of Deeds for Manila and the second (Exh.
"F"), by the Office of Clerk of Court, RTC Manila. Exhibit "E"7 states that a copy
of the supposed conveying deed cannot, despite diligent efforts of records
personnel, be located, while Exhibit "F"8 states that Fidel Vivar was not a
commissioned notary public for and in the City of Manila for the year 1975. Three
other witnesses9 testified, albeit their testimonies revolved around the appraisal
and rental values of the Arlegui property.
Eventually, the trial court rendered a judgment by default10 for Mendoza and
against the Republic. To the trial court, the Republic had veritably confiscated
Mendoza’s property, and deprived her not only of the use thereof but also denied
her of the income she could have had otherwise realized during all the years she
was illegally dispossessed of the same.
Dated August 27, 2003, the trial court’s decision dispositively reads as follows:
WHEREFORE, judgment is hereby rendered:
1. Declaring the deed of sale dated July 15, 1975, annotated at the back of [TCT]
No. 118527 as PE:2035/T-118911, as non-existent and/or fictitious, and,
therefore, null and void from the beginning;
2. Declaring that [TCT] No. 118911 of the defendant Republic of the Philippines
has no basis, thereby making it null and void from the beginning;
3. Ordering the defendant Register of Deeds for the City of Manila to reinstate
plaintiff [Mendoza’s TCT] No. 118527;
4. Ordering the defendant Republic … to pay just compensation in the sum of
ONE HUNDRED FORTY THREE MILLION SIX HUNDRED THOUSAND
(P143,600,000.00) PESOS, plus interest at the legal rate, until the whole amount
is paid in full for the acquisition of the subject property;
5. Ordering the plaintiff, upon payment of the just compensation for the
acquisition of her property, to execute the necessary deed of conveyance in favor
of the defendant Republic …; and, on the other hand, directing the defendant
Register of Deeds, upon presentation of the said deed of conveyance, to cancel
plaintiff’s TCT No. 118527 and to issue, in lieu thereof, a new Transfer Certificate
of Title in favor of the defendant Republic;
116
6. Ordering the defendant Republic … to pay the plaintiff the sum of ONE
BILLION FOUR HUNDRED EIGHTY MILLION SIX HUNDRED TWENTY SEVEN
THOUSAND SIX HUNDRED EIGHTY EIGHT (P1,480,627,688.00) PESOS,
representing the reasonable rental for the use of the subject property, the interest
thereon at the legal rate, and the opportunity cost at the rate of three (3%) per
cent per annum, commencing July 1975 continuously up to July 30, 2003, plus
an additional interest at the legal rate, commencing from this date until the whole
amount is paid in full;
7. Ordering the defendant Republic … to pay the plaintiff attorney’s fee, in an
amount equivalent to FIFTEEN (15%) PER CENT of the amount due to the
plaintiff.
With pronouncement as to the costs of suit.
SO ORDERED. (Words in bracket and emphasis added.)
Subsequently, the Republic moved for, but was denied, a new trial per order of
the trial court of October 7, 2003.11 Denied also was its subsequent plea for
reconsideration.12 These twin denial orders were followed by several orders and
processes issued by the trial court on separate dates as hereunder indicated:
1. November 27, 2003 - - Certificate of Finality declaring the August 27, 2003
decision final and executory.13
2. December 17, 2003 - - Order denying the Notice of Appeal filed on November
27, 2003, the same having been filed beyond the reglementary period.14
3. December 19, 2003 - - Order15 granting the private respondent’s motion for
execution.
4. December 22, 2003 - - Writ of Execution.16
Hence, this petition for certiorari.
By Resolution17 of November 20, 2006, the case was set for oral arguments. On
January 22, 2007, when this case was called for the purpose, both parties
manifested their willingness to settle the case amicably, for which reason the
Court gave them up to February 28, 2007 to submit the compromise agreement
for approval. Following several approved extensions of the February 28, 2007
deadline, the OSG, on August 6, 2007, manifested that it is submitting the case
for resolution on the merits owing to the inability of the parties to agree on an
acceptable compromise.
In this recourse, the petitioner urges the Court to strike down as a nullity the trial
court’s order declaring it in default and the judgment by default that followed.
Sought to be nullified, too, also on the ground that they were issued in grave
abuse of discretion amounting to lack or in excess of jurisdiction, are the orders
and processes enumerated immediately above issued after the rendition of the
default judgment.
Petitioner lists five (5) overlapping grounds for allowing its petition. It starts off by
impugning the order of default and the judgment by default. To the petitioner, the
respondent judge committed serious jurisdictional error when he proceeded to
hear the case and eventually awarded the private respondent a staggering
amount without so much as giving the petitioner the opportunity to present its
defense.
Petitioner’s posture is simply without merit.
Deprivation of procedural due process is obviously the petitioner’s threshold
theme. Due process, in its procedural aspect, guarantees in the minimum the
opportunity to be heard.18 Grave abuse of discretion, however, cannot plausibly
be laid at the doorstep of the respondent judge on account of his having issued
the default order against the petitioner, then proceeding with the hearing and
eventually rendering a default judgment. For, what the respondent judge did hew
with what Section 3, Rule 9 of the Rules of Court prescribes and allows in the
event the defending party fails to seasonably file a responsive pleading. The
provision reads:
SEC. 3. Default; declaration of.- If the defending party fails to answer within the
time allowed therefor, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending
party in default. Thereupon, the court shall proceed to render judgment granting
the claimant such relief as his pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence ….19
While the ideal lies in avoiding orders of default,20 the policy of the law being to
have every litigated case tried on its full merits,21 the act of the respondent judge
in rendering the default judgment after an order of default was properly issued
cannot be struck down as a case of grave abuse of discretion.
The term "grave abuse of discretion," in its juridical sense, connotes capricious,
despotic, oppressive or whimsical exercise of judgment as is equivalent to lack of
jurisdiction.22 The abuse must be of such degree as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law, as where the
power is exercised in a capricious manner. The word "capricious," usually used
in tandem with "arbitrary," conveys the notion of willful and unreasoning action.23
Under the premises, the mere issuance by the trial court of the order of default
followed by a judgment by default can easily be sustained as correct and
doubtless within its jurisdiction. Surely, a disposition directing the Republic to pay
an enormous sum without the trial court hearing its side does not, without more,
vitiate, on due procedural ground, the validity of the default judgment. The
petitioner may have indeed been deprived of such hearing, but this does not
mean that its right to due process had been violated. For, consequent to being
declared in default, the defaulting defendant is deemed to have waived his right
to be heard or to take part in the trial. The handling solicitors simply squandered
the Republic’s opportunity to be heard. But more importantly, the law itself
imposes such deprivation of the right to participate as a form of penalty against
one unwilling without justification to join issue upon the allegations tendered by
the plaintiff.
And going to another point, the petitioner would ascribe jurisdictional error on the
respondent judge for denying its motion for new trial based on any or a mix of the
following factors, viz., (1) the failure to file an answer is attributable to the
negligence of the former handling solicitor; (2) the meritorious nature of the
petitioner’s defense; and (3) the value of the property involved.
The Court is not convinced. Even as the Court particularly notes what the trial
court had said on the matter of negligence: that all of the petitioner’s pleadings
below bear at least three signatures, that of the handling solicitor, the assistant
117
solicitor and the Solicitor General himself, and hence accountability should go up
all the way to the top of the totem pole of authority, the cited reasons advanced
by the petitioner for a new trial are not recognized under Section 1, Rule 37 of
the Rules of Court for such recourse.24 Withal, there is no cogent reason to
disturb the denial by the trial court of the motion for new trial and the denial of the
reiterative motion for reconsideration.
Then, too, the issuance by the trial court of the Order dated December 17,
200325 denying the petitioner’s notice of appeal after the court caused the
issuance on November 27, 2003 of a certificate of finality of its August 27, 2003
decision can hardly be described as arbitrary, as the petitioner would have this
Court believe. In this regard, the Court takes stock of the following key events
and material dates set forth in the assailed December 17, 2003 order, supra: (a)
The petitioner, thru the OSG, received on August 29, 2003 a copy of the RTC
decision in this case, hence had up to September 13, 2003, a Saturday, within
which to perfect an appeal; (b) On September 15, 2003, a Monday, the OSG filed
its motion for new trial, which the RTC denied, the OSG receiving a copy of the
order of denial on October 9, 2003; and (c) On October 24, 2003, the OSG
sought reconsideration of the order denying the motion for new trial. The motion
for reconsideration was denied per Order dated November 25, 2003, a copy of
which the OSG received on the same date.
Given the foregoing time perspective, what the trial court wrote in its
aforementioned impugned order of December 17, 2003 merits approval:
In the case at bar, it is clear that the motion for new trial filed on the fifteenth
(15th) day after the decision was received on August 29, 2003 was denied and
the moving party has only the remaining period from notice of notice of denial
within which to file a notice of appeal. xxx
Accordingly, when defendants [Republic et al.] filed their motion for new trial on
the last day of the fifteen day (15) prescribed for taking an appeal, which motion
was subsequently denied, they had one (1) day from receipt of a copy of the
order denying … new trial within which to perfect [an] appeal …. Since
defendants had received a copy of the order denying their motion for new trial on
09 October 2003, reckoned from that date, they only have one (1) day left within
which to file the notice of appeal. But instead of doing so, the defendants filed a
motion for reconsideration which was later declared by the Court as pro forma
motion in the Order dated 25 November 2003. The running of the prescriptive
period, therefore, can not be interrupted by a pro forma motion. Hence the filing
of the notice of appeal on 27 November 2007 came much too late for by then the
judgment had already become final and executory.26 (Words in bracket added;
Emphasis in the original.)
It cannot be over-emphasized at this stage that the special civil action of
certiorari is limited to resolving only errors of jurisdiction; it is not a remedy to
correct errors of judgment. Hence, the petitioner’s lament, partly covered by and
discussed under the first ground for allowing its petition, about the trial court
taking cognizance of the case notwithstanding private respondent’s claim or
action being barred by prescription and/or laches cannot be considered
favorably. For, let alone the fact that an action for the declaration of the
inexistence of a contract, as here, does not prescribe;27 that a void transfer of
property can be recovered by accion reivindicatoria;28 and that the legal fiction of
indefeasibility of a Torrens title cannot be used as a shield to perpetuate fraud,29
the trial court’s disinclination not to appreciate in favor of the Republic the
general principles of prescription or laches constitutes, at best, errors of
judgment not correctable by certiorari.
The evidence adduced below indeed adequately supports a conclusion that the
Office of the President, during the administration of then President Marcos,
wrested possession of the property in question and somehow secured a
certificate of title over it without a conveying deed having been executed to
legally justify the cancellation of the old title (TCT No. 118527) in the name of the
private respondent and the issuance of a new one (TCT No. 118911) in the name
of petitioner Republic. Accordingly, granting private respondent’s basic plea for
recovery of the Arlegui property, which was legally hers all along, and the
reinstatement of her cancelled certificate of title are legally correct as they are
morally right. While not exactly convenient because the Office of the President
presently uses it for mix residence and office purposes, restoring private
respondent to her possession of the Arlegui property is still legally and physically
feasible. For what is before us, after all, is a registered owner of a piece of land
who, during the early days of the martial law regime, lost possession thereof to
the Government which appropriated the same for some public use, but without
going through the legal process of expropriation, let alone paying such owner
just compensation.
The Court cannot, however, stop with just restoring the private respondent to her
possession and ownership of her property. The restoration ought to be
complemented by some form of monetary compensation for having been unjustly
deprived of the beneficial use thereof, but not, however, in the varying amounts
and level fixed in the assailed decision of the trial court and set to be executed
by the equally assailed writ of execution. The Court finds the monetary award set
forth therein to be erroneous. And the error relates to basic fundamentals of law
as to constitute grave abuse of discretion.
As may be noted, private respondent fixed the assessed value of her Arlegui
property at ₱2,388,990.00. And in the prayer portion of her third amended
complaint for recovery, she asked to be restored to the possession of her
property and that the petitioner be ordered to pay her, as reasonable
compensation or rental use or occupancy thereof, the sum of ₱500,000.00 a
month, or ₱6 Million a year, with a five percent (5%) yearly increase plus interest
at the legal rate beginning July 1975. From July 1975 when the PSG allegedly
took over the subject property to July 2003, a month before the trial court
rendered judgment, or a period of 28 years, private respondent’s total rental
claim would, per the OSG’s computation, only amount to ₱371,440,426.00. In its
assailed decision, however, the trial court ordered the petitioner to pay private
respondent the total amount of over ₱1.48 Billion or the mind-boggling amount of
₱1,480,627,688.00, to be exact, representing the reasonable rental for the
property, the interest rate thereon at the legal rate and the opportunity cost. This
figure is on top of the ₱143,600,000.00 which represents the acquisition cost of
118
the disputed property. All told, the trial court would have the Republic pay the
total amount of about ₱1.624 Billion, exclusive of interest, for the taking of a
property with a declared assessed value of ₱2,388,900.00. This is not to mention
the award of attorney’s fees in an amount equivalent to 15% of the amount due
the private respondent.
In doing so, the respondent judge brazenly went around the explicit command of
Rule 9, Section 3(d) of the Rules of Court30 which defines the extent of the relief
that may be awarded in a judgment by default, i.e., only so much as has been
alleged and proved. The court acts in excess of jurisdiction if it awards an
amount beyond the claim made in the complaint or beyond that proved by the
evidence.31 While a defaulted defendant may be said to be at the mercy of the
trial court, the Rules of Court and certainly the imperatives of fair play see to it
that any decision against him must be in accordance with law.32 In the abstract,
this means that the judgment must not be characterized by outrageous one-
sidedness, but by what is fair, just and equitable that always underlie the
enactment of a law.
Given the above perspective, the obvious question that comes to mind is the
level of compensation which – for the use and occupancy of the Arlegui property
- would be fair to both the petitioner and the private respondent and, at the same
time, be within acceptable legal bounds. The process of balancing the interests
of both parties is not an easy one. But surely, the Arlegui property cannot
possibly be assigned, even perhaps at the present real estate business
standards, a monthly rental value of at least ₱500,000.00 or ₱6,000,000.00 a
year, the amount private respondent particularly sought and attempted to prove.
This asking figure is clearly unconscionable, if not downright ridiculous, attendant
circumstances considered. To the Court, an award of ₱20,000.00 a month for the
use and occupancy of the Arlegui property, while perhaps a little bit arbitrary, is
reasonable and may be granted pro hac vice considering the following hard
realities which the Court takes stock of:
1. The property is relatively small in terms of actual area and had an assessed
value of only P2,388,900.00;
2. What the martial law regime took over was not exactly an area with a new and
imposing structure, if there was any; and
3. The Arlegui property had minimal rental value during the relatively long martial
law years, given the very restrictive entry and egress conditions prevailing at the
vicinity at that time and even after.
To be sure, the grant of monetary award is not without parallel. In Alfonso v.
Pasay City,33 a case where a registered owner also lost possession of a piece of
lot to a municipality which took it for a public purposes without instituting
expropriation proceedings or paying any compensation for the lot, the Court,
citing Herrera v. Auditor General,34 ordered payment of just compensation but in
the form of interest when a return of the property was no longer feasible.
The award of attorney’s fees equivalent to 15% of the amount due the private
respondent, as reduced herein, is affirmed.
The assessment of costs of suit against the petitioner is, however, nullified, costs
not being allowed against the Republic, unless otherwise provided by law.35
The assailed trial court’s issuance of the writ of execution36 against government
funds to satisfy its money judgment is also nullified. It is basic that government
funds and properties may not be seized under writs of execution or garnishment
to satisfy such judgments.37 Republic v. Palacio38 teaches that a judgment
against the State generally operates merely to liquidate and establish the
plaintiff’s claim in the absence of express provision; otherwise, they can not be
enforced by processes of law.
Albeit title to the Arlegui property remains in the name of the petitioner
Republic, it is actually the Office of the President which has beneficial
possession of and use over it since the 1975 takeover. Accordingly, and in
accord with the elementary sense of justice, it behooves that office to make the
appropriate budgetary arrangements towards paying private respondent what is
due her under the premises. This, to us, is the right thing to do. The imperatives
of fair dealing demand no less. And the Court would be remiss in the discharge
of its duties as dispenser of justice if it does not exhort the Office of the President
to comply with what, in law and equity, is its obligation. If the same office will
undertake to pay its obligation with reasonable dispatch or in a manner
acceptable to the private respondent, then simple justice, while perhaps delayed,
will have its day. Private respondent is in the twilight of her life, being now over
90 years of age.39 Any delay in the implementation of this disposition would be a
bitter cut.1âwphi1
WHEREFORE, the decision of the Regional Trial Court of Manila dated August
27, 2003 insofar as it nullified TCT No. 118911 of petitioner Republic of the
Philippines and ordered the Register of Deeds of Manila to reinstate private
respondent Tarcila L. Mendoza’s TCT No. 118527, or to issue her a new
certificate of title is AFFIRMED. Should it be necessary, the Register of Deeds of
Manila shall execute the necessary conveying deed to effect the reinstatement of
title or the issuance of a new title to her.
It is MODIFIED in the sense that for the use and occupancy of the Arlegui
property, petitioner Republic is ordered to pay private respondent the reasonable
amount of ₱20,000.00 a month beginning July 1975 until it vacates the same and
the possession thereof restored to the private respondent, plus an additional
interest of 6% per annum on the total amount due upon the finality of this
Decision until the same is fully paid. Petitioner is further ordered to pay private
respondent attorney's fees equivalent to 15% of the amount due her under the
premises.
Accordingly, a writ of certiorari is hereby ISSUED in the sense that:
1. The respondent court’s assailed decision of August 27, 2003 insofar as it
ordered the petitioner Republic of the Philippines to pay private respondent
Tarcila L. Mendoza the sum of One Billion Four Hundred Eighty Million Six
Hundred Twenty Seven Thousand Six Hundred Eighty Eight Pesos
(₱1,480,627,688.00) representing the purported rental use of the property in
question, the interest thereon and the opportunity cost at the rate of 3% per
annum plus the interest at the legal rate added thereon is nullified. The portion
assessing the petitioner Republic for costs of suit is also declared null and void.
119
2. The Order of the respondent court dated December 19, 2003 for the issuance
of a writ of execution and the Writ of Execution dated December 22, 2003
against government funds are hereby declared null and void. Accordingly, the
presiding judge of the respondent court, the private respondent, their agents and
persons acting for and in their behalves are permanently enjoined from enforcing
said writ of execution.
However, consistent with the basic tenets of justice, fairness and equity,
petitioner Republic, thru the Office of the President, is hereby strongly enjoined
to take the necessary steps, and, with reasonable dispatch, make the
appropriate budgetary arrangements to pay private respondent Tarcila L.
Mendoza or her assigns the amount adjudged due her under this disposition.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
G.R. Nos. 89898-99 October 1, 1990
MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN,
JR., as Judge RTC of Makati, Branch CXLII ADMIRAL FINANCE
CREDITORS CONSORTIUM, INC., and SHERIFF SILVINO R. PASTRANA,
respondents.
Defante & Elegado for petitioner.
Roberto B. Lugue for private respondent Admiral Finance Creditors' Consortium,
Inc.
RESOLUTION
CORTÉS, J.:
The present petition for review is an off-shoot of expropriation proceedings
initiated by petitioner Municipality of Makati against private respondent Admiral
Finance Creditors Consortium, Inc., Home Building System & Realty Corporation
and one Arceli P. Jo, involving a parcel of land and improvements thereon
located at Mayapis St., San Antonio Village, Makati and registered in the name of
Arceli P. Jo under TCT No. S-5499.
It appears that the action for eminent domain was filed on May 20, 1986,
docketed as Civil Case No. 13699. Attached to petitioner's complaint was a
certification that a bank account (Account No. S/A 265-537154-3) had been
opened with the PNB Buendia Branch under petitioner's name containing the
sum of P417,510.00, made pursuant to the provisions of Pres. Decree No. 42.
After due hearing where the parties presented their respective appraisal reports
regarding the value of the property, respondent RTC judge rendered a decision
on June 4, 1987, fixing the appraised value of the property at P5,291,666.00,
and ordering petitioner to pay this amount minus the advanced payment of
P338,160.00 which was earlier released to private respondent.
After this decision became final and executory, private respondent moved for the
issuance of a writ of execution. This motion was granted by respondent RTC
judge. After issuance of the writ of execution, a Notice of Garnishment dated
January 14, 1988 was served by respondent sheriff Silvino R. Pastrana upon the
manager of the PNB Buendia Branch. However, respondent sheriff was informed
that a "hold code" was placed on the account of petitioner. As a result of this,
private respondent filed a motion dated January 27, 1988 praying that an order
be issued directing the bank to deliver to respondent sheriff the amount
equivalent to the unpaid balance due under the RTC decision dated June 4,
1987.
Petitioner filed a motion to lift the garnishment, on the ground that the manner of
payment of the expropriation amount should be done in installments which the
respondent RTC judge failed to state in his decision. Private respondent filed its
opposition to the motion.
Pending resolution of the above motions, petitioner filed on July 20, 1988 a
"Manifestation" informing the court that private respondent was no longer the true
and lawful owner of the subject property because a new title over the property
had been registered in the name of Philippine Savings Bank, Inc. (PSB)
Respondent RTC judge issued an order requiring PSB to make available the
documents pertaining to its transactions over the subject property, and the PNB
Buendia Branch to reveal the amount in petitioner's account which was
garnished by respondent sheriff. In compliance with this order, PSB filed a
manifestation informing the court that it had consolidated its ownership over the
property as mortgagee/purchaser at an extrajudicial foreclosure sale held on
April 20, 1987. After several conferences, PSB and private respondent entered
into a compromise agreement whereby they agreed to divide between
themselves the compensation due from the expropriation proceedings.
Respondent trial judge subsequently issued an order dated September 8, 1988
which: (1) approved the compromise agreement; (2) ordered PNB Buendia
Branch to immediately release to PSB the sum of P4,953,506.45 which
corresponds to the balance of the appraised value of the subject property under
the RTC decision dated June 4, 1987, from the garnished account of petitioner;
and, (3) ordered PSB and private respondent to execute the necessary deed of
conveyance over the subject property in favor of petitioner. Petitioner's motion to
lift the garnishment was denied.
Petitioner filed a motion for reconsideration, which was duly opposed by private
respondent. On the other hand, for failure of the manager of the PNB Buendia
Branch to comply with the order dated September 8, 1988, private respondent
filed two succeeding motions to require the bank manager to show cause why he
should not be held in contempt of court. During the hearings conducted for the
above motions, the general manager of the PNB Buendia Branch, a Mr. Antonio
Bautista, informed the court that he was still waiting for proper authorization from
the PNB head office enabling him to make a disbursement for the amount so
ordered. For its part, petitioner contended that its funds at the PNB Buendia
Branch could neither be garnished nor levied upon execution, for to do so would
result in the disbursement of public funds without the proper appropriation
120
required under the law, citing the case of Republic of the Philippines v. Palacio
[G.R. No. L-20322, May 29, 1968, 23 SCRA 899].
Respondent trial judge issued an order dated December 21, 1988 denying
petitioner's motion for reconsideration on the ground that the doctrine enunciated
in Republic v. Palacio did not apply to the case because petitioner's PNB
Account No. S/A 265-537154-3 was an account specifically opened for the
expropriation proceedings of the subject property pursuant to Pres. Decree No.
42. Respondent RTC judge likewise declared Mr. Antonio Bautista guilty of
contempt of court for his inexcusable refusal to obey the order dated September
8, 1988, and thus ordered his arrest and detention until his compliance with the
said order.
Petitioner and the bank manager of PNB Buendia Branch then filed separate
petitions for certiorari with the Court of Appeals, which were eventually
consolidated. In a decision promulgated on June 28, 1989, the Court of Appeals
dismissed both petitions for lack of merit, sustained the jurisdiction of respondent
RTC judge over the funds contained in petitioner's PNB Account No.
265-537154-3, and affirmed his authority to levy on such funds.
Its motion for reconsideration having been denied by the Court of Appeals,
petitioner now files the present petition for review with prayer for preliminary
injunction.
On November 20, 1989, the Court resolved to issue a temporary restraining
order enjoining respondent RTC judge, respondent sheriff, and their
representatives, from enforcing and/or carrying out the RTC order dated
December 21, 1988 and the writ of garnishment issued pursuant thereto. Private
respondent then filed its comment to the petition, while petitioner filed its reply.
Petitioner not only reiterates the arguments adduced in its petition before the
Court of Appeals, but also alleges for the first time that it has actually two
accounts with the PNB Buendia Branch, to wit:
xxx xxx xxx
(1) Account No. S/A 265-537154-3 — exclusively for the expropriation of the
subject property, with an outstanding balance of P99,743.94.
(2) Account No. S/A 263-530850-7 — for statutory obligations and other
purposes of the municipal government, with a balance of P170,098,421.72, as of
July 12, 1989.
xxx xxx xxx
[Petition, pp. 6-7; Rollo, pp. 11-12.]
Because the petitioner has belatedly alleged only in this Court the existence of
two bank accounts, it may fairly be asked whether the second account was
opened only for the purpose of undermining the legal basis of the assailed orders
of respondent RTC judge and the decision of the Court of Appeals, and
strengthening its reliance on the doctrine that public funds are exempted from
garnishment or execution as enunciated in Republic v. Palacio [supra.] At any
rate, the Court will give petitioner the benefit of the doubt, and proceed to resolve
the principal issues presented based on the factual circumstances thus alleged
by petitioner.
Admitting that its PNB Account No. S/A 265-537154-3 was specifically opened
for expropriation proceedings it had initiated over the subject property, petitioner
poses no objection to the garnishment or the levy under execution of the funds
deposited therein amounting to P99,743.94. However, it is petitioner's main
contention that inasmuch as the assailed orders of respondent RTC judge
involved the net amount of P4,965,506.45, the funds garnished by respondent
sheriff in excess of P99,743.94, which are public funds earmarked for the
municipal government's other statutory obligations, are exempted from execution
without the proper appropriation required under the law.
There is merit in this contention. The funds deposited in the second PNB Account
No. S/A 263-530850-7 are public funds of the municipal government. In this
jurisdiction, well-settled is the rule that public funds are not subject to levy and
execution, unless otherwise provided for by statute [Republic v. Palacio, supra.;
The Commissioner of Public Highways v. San Diego, G.R. No. L-30098,
February 18, 1970, 31 SCRA 616]. More particularly, the properties of a
municipality, whether real or personal, which are necessary for public use cannot
be attached and sold at execution sale to satisfy a money judgment against the
municipality. Municipal revenues derived from taxes, licenses and market fees,
and which are intended primarily and exclusively for the purpose of financing the
governmental activities and functions of the municipality, are exempt from
execution [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52
(1926): The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950);
Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25,
1984, 130 SCRA 56]. The foregoing rule finds application in the case at bar.
Absent a showing that the municipal council of Makati has passed an ordinance
appropriating from its public funds an amount corresponding to the balance due
under the RTC decision dated June 4, 1987, less the sum of P99,743.94
deposited in Account No. S/A 265-537154-3, no levy under execution may be
validly effected on the public funds of petitioner deposited in Account No. S/A
263-530850-7.
Nevertheless, this is not to say that private respondent and PSB are left with no
legal recourse. Where a municipality fails or refuses, without justifiable reason, to
effect payment of a final money judgment rendered against it, the claimant may
avail of the remedy of mandamus in order to compel the enactment and approval
of the necessary appropriation ordinance, and the corresponding disbursement
of municipal funds therefor [See Viuda De Tan Toco v. The Municipal Council of
Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco v. Gonzales, 108
Phil. 247 (1960)].
In the case at bar, the validity of the RTC decision dated June 4, 1987 is not
disputed by petitioner. No appeal was taken therefrom. For three years now,
petitioner has enjoyed possession and use of the subject property
notwithstanding its inexcusable failure to comply with its legal obligation to pay
just compensation. Petitioner has benefited from its possession of the property
since the same has been the site of Makati West High School since the school
year 1986-1987. This Court will not condone petitioner's blatant refusal to settle
its legal obligation arising from expropriation proceedings it had in fact initiated. It
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cannot be over-emphasized that, within the context of the State's inherent power
of eminent domain,
. . . [j]ust compensation means not only the correct determination of the amount
to be paid to the owner of the land but also the payment of the land within a
reasonable time from its taking. Without prompt payment, compensation cannot
be considered "just" for the property owner is made to suffer the consequence of
being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his loss
[Cosculluela v. The Honorable Court of Appeals, G.R. No. 77765, August 15,
1988, 164 SCRA 393, 400. See also Provincial Government of Sorsogon v. Vda.
de Villaroya, G.R. No. 64037, August 27, 1987, 153 SCRA 291].
The State's power of eminent domain should be exercised within the bounds of
fair play and justice. In the case at bar, considering that valuable property has
been taken, the compensation to be paid fixed and the municipality is in full
possession and utilizing the property for public purpose, for three (3) years, the
Court finds that the municipality has had more than reasonable time to pay full
compensation.
WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati
to immediately pay Philippine Savings Bank, Inc. and private respondent the
amount of P4,953,506.45. Petitioner is hereby required to submit to this Court a
report of its compliance with the foregoing order within a non-extendible period of
SIXTY (60) DAYS from the date of receipt of this resolution.
The order of respondent RTC judge dated December 21, 1988, which was
rendered in Civil Case No. 13699, is SET ASIDE and the temporary restraining
order issued by the Court on November 20, 1989 is MADE PERMANENT.
SO ORDERED.
FIRST DIVISION
G.R. No. 171182 August 23, 2012
UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA, RAUL P. DE
GUZMAN, RUBEN P. ASPIRAS, EMMANUEL P. BELLO, WILFREDO P.
DAVID, CASIANO S. ABRIGO, and JOSEFINA R. LICUANAN, Petitioners,
vs.
HON. AGUSTIN S. DIZON, his capacity as Presiding Judge of the Regional
Trial Court of Quezon City, Branch 80, STERN BUILDERS, INC., and
SERVILLANO DELA CRUZ, Respondents.
DECISION
BERSAMIN, J.:
Trial judges should not immediately issue writs of execution or garnishment
against the Government or any of its subdivisions, agencies and instrumentalities
to enforce money judgments.1 They should bear in mind that the primary
jurisdiction to examine, audit and settle all claims of any sort due from the
Government or any of its subdivisions, agencies and instrumentalities pertains to
the Commission on Audit (COA) pursuant to Presidential Decree No. 1445
(Government Auditing Code of the Philippines).
The Case
On appeal by the University of the Philippines and its then incumbent officials
(collectively, the UP) is the decision promulgated on September 16, 2005,2
whereby the Court of Appeals (CA) upheld the order of the Regional Trial Court
(RTC), Branch 80, in Quezon City that directed the garnishment of public funds
amounting to ₱ 16,370,191.74 belonging to the UP to satisfy the writ of execution
issued to enforce the already final and executory judgment against the UP.
Antecedents
On August 30, 1990, the UP, through its then President Jose V. Abueva, entered
into a General Construction Agreement with respondent Stern Builders
Corporation (Stern Builders), represented by its President and General Manager
Servillano dela Cruz, for the construction of the extension building and the
renovation of the College of Arts and Sciences Building in the campus of the
University of the Philippines in Los Baños (UPLB).3
In the course of the implementation of the contract, Stern Builders submitted
three progress billings corresponding to the work accomplished, but the UP paid
only two of the billings. The third billing worth ₱ 273,729.47 was not paid due to
its disallowance by the Commission on Audit (COA). Despite the lifting of the
disallowance, the UP failed to pay the billing, prompting Stern Builders and dela
Cruz to sue the UP and its co-respondent officials to collect the unpaid billing and
to recover various damages. The suit, entitled Stern Builders Corporation and
Servillano R. Dela Cruz v. University of the Philippines Systems, Jose V. Abueva,
Raul P. de Guzman, Ruben P. Aspiras, Emmanuel P. Bello, Wilfredo P. David,
Casiano S. Abrigo, and Josefina R. Licuanan, was docketed as Civil Case No.
Q-93-14971 of the Regional Trial Court in Quezon City (RTC).4
After trial, on November 28, 2001, the RTC rendered its decision in favor of the
plaintiffs,5 viz:
Wherefore, in the light of the foregoing, judgment is hereby rendered in favor of
the plaintiff and against the defendants ordering the latter to pay plaintiff, jointly
and severally, the following, to wit:
1. ₱ 503,462.74 amount of the third billing, additional accomplished work and
retention money
2. ₱ 5,716,729.00 in actual damages
3. ₱ 10,000,000.00 in moral damages
4. ₱ 150,000.00 and ₱ 1,500.00 per appearance as attorney’s fees; and
5. Costs of suit.
SO ORDERED.
Following the RTC’s denial of its motion for reconsideration on May 7, 2002,6 the
UP filed a notice of appeal on June 3, 2002.7 Stern Builders and dela Cruz
opposed the notice of appeal on the ground of its filing being belated, and moved
for the execution of the decision. The UP countered that the notice of appeal was
filed within the reglementary period because the UP’s Office of Legal Affairs
(OLS) in Diliman, Quezon City received the order of denial only on May 31, 2002.
On September 26, 2002, the RTC denied due course to the notice of appeal for
having been filed out of time and granted the private respondents’ motion for
execution.8
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The RTC issued the writ of execution on October 4, 2002,9 and the sheriff of the
RTC served the writ of execution and notice of demand upon the UP, through its
counsel, on October 9, 2002.10 The UP filed an urgent motion to reconsider the
order dated September 26, 2002, to quash the writ of execution dated October 4,
2002, and to restrain the proceedings.11 However, the RTC denied the urgent
motion on April 1, 2003.12
On June 24, 2003, the UP assailed the denial of due course to its appeal through
a petition for certiorari in the Court of Appeals (CA), docketed as CA-G.R. No.
77395.13
On February 24, 2004, the CA dismissed the petition for certiorari upon finding
that the UP’s notice of appeal had been filed late,14 stating:
Records clearly show that petitioners received a copy of the Decision dated
November 28, 2001 and January 7, 2002, thus, they had until January 22, 2002
within which to file their appeal. On January 16, 2002 or after the lapse of nine
(9) days, petitioners through their counsel Atty. Nolasco filed a Motion for
Reconsideration of the aforesaid decision, hence, pursuant to the rules,
petitioners still had six (6) remaining days to file their appeal. As admitted by the
petitioners in their petition (Rollo, p. 25), Atty. Nolasco received a copy of the
Order denying their motion for reconsideration on May 17, 2002, thus, petitioners
still has until May 23, 2002 (the remaining six (6) days) within which to file their
appeal. Obviously, petitioners were not able to file their Notice of Appeal on May
23, 2002 as it was only filed on June 3, 2002.
In view of the said circumstances, We are of the belief and so holds that the
Notice of Appeal filed by the petitioners was really filed out of time, the same
having been filed seventeen (17) days late of the reglementary period. By reason
of which, the decision dated November 28, 2001 had already become final and
executory. "Settled is the rule that the perfection of an appeal in the manner and
within the period permitted by law is not only mandatory but jurisdictional, and
failure to perfect that appeal renders the challenged judgment final and
executory. This is not an empty procedural rule but is grounded on fundamental
considerations of public policy and sound practice." (Ram’s Studio and
Photographic Equipment, Inc. vs. Court of Appeals, 346 SCRA 691, 696).
Indeed, Atty. Nolasco received the order of denial of the Motion for
Reconsideration on May 17, 2002 but filed a Notice of Appeal only on June 3,
3003. As such, the decision of the lower court ipso facto became final when no
appeal was perfected after the lapse of the reglementary period. This procedural
caveat cannot be trifled with, not even by the High Court.15
The UP sought a reconsideration, but the CA denied the UP’s motion for
reconsideration on April 19, 2004.16
On May 11, 2004, the UP appealed to the Court by petition for review on
certiorari (G.R. No. 163501).
On June 23, 2004, the Court denied the petition for review.17 The UP moved for
the reconsideration of the denial of its petition for review on August 29, 2004,18
but the Court denied the motion on October 6, 2004.19 The denial became final
and executory on November 12, 2004.20
In the meanwhile that the UP was exhausting the available remedies to overturn
the denial of due course to the appeal and the issuance of the writ of execution,
Stern Builders and dela Cruz filed in the RTC their motions for execution despite
their previous motion having already been granted and despite the writ of
execution having already issued. On June 11, 2003, the RTC granted another
motion for execution filed on May 9, 2003 (although the RTC had already issued
the writ of execution on October 4, 2002).21
On June 23, 2003 and July 25, 2003, respectively, the sheriff served notices of
garnishment on the UP’s depository banks, namely: Land Bank of the Philippines
(Buendia Branch) and the Development Bank of the Philippines (DBP),
Commonwealth Branch.22 The UP assailed the garnishment through an urgent
motion to quash the notices of garnishment;23 and a motion to quash the writ of
execution dated May 9, 2003.24
On their part, Stern Builders and dela Cruz filed their ex parte motion for
issuance of a release order.25
On October 14, 2003, the RTC denied the UP’s urgent motion to quash, and
granted Stern Builders and dela Cruz’s ex parte motion for issuance of a release
order.26
The UP moved for the reconsideration of the order of October 14, 2003, but the
RTC denied the motion on November 7, 2003.27
On January 12, 2004, Stern Builders and dela Cruz again sought the release of
the garnished funds.28 Despite the UP’s opposition,29 the RTC granted the motion
to release the garnished funds on March 16, 2004.30 On April 20, 2004, however,
the RTC held in abeyance the enforcement of the writs of execution issued on
October 4, 2002 and June 3, 2003 and all the ensuing notices of garnishment,
citing Section 4, Rule 52, Rules of Court, which provided that the pendency of a
timely motion for reconsideration stayed the execution of the judgment.31
On December 21, 2004, the RTC, through respondent Judge Agustin S. Dizon,
authorized the release of the garnished funds of the UP,32 to wit:
WHEREFORE, premises considered, there being no more legal impediment for
the release of the garnished amount in satisfaction of the judgment award in the
instant case, let the amount garnished be immediately released by the
Development Bank of the Philippines, Commonwealth Branch, Quezon City in
favor of the plaintiff.
SO ORDERED.
The UP was served on January 3, 2005 with the order of December 21, 2004
directing DBP to release the garnished funds.33
On January 6, 2005, Stern Builders and dela Cruz moved to cite DBP in direct
contempt of court for its non-compliance with the order of release.34
Thereupon, on January 10, 2005, the UP brought a petition for certiorari in the
CA to challenge the jurisdiction of the RTC in issuing the order of December 21,
2004 (CA-G.R. CV No. 88125).35 Aside from raising the denial of due process,
the UP averred that the RTC committed grave abuse of discretion amounting to
lack or excess of jurisdiction in ruling that there was no longer any legal
impediment to the release of the garnished funds. The UP argued that
government funds and properties could not be seized by virtue of writs of
123
execution or garnishment, as held in Department of Agriculture v. National Labor
Relations Commission,36 and citing Section 84 of Presidential Decree No. 1445
to the effect that "revenue funds shall not be paid out of any public treasury or
depository except in pursuance of an appropriation law or other specific statutory
authority;" and that the order of garnishment clashed with the ruling in University
of the Philippines Board of Regents v. Ligot-Telan37 to the effect that the funds
belonging to the UP were public funds.
On January 19, 2005, the CA issued a temporary restraining order (TRO) upon
application by the UP.38
On March 22, 2005, Stern Builders and dela Cruz filed in the RTC their amended
motion for sheriff’s assistance to implement the release order dated December
21, 2004, stating that the 60-day period of the TRO of the CA had already
lapsed.39 The UP opposed the amended motion and countered that the
implementation of the release order be suspended.40
On May 3, 2005, the RTC granted the amended motion for sheriff’s assistance
and directed the sheriff to proceed to the DBP to receive the check in satisfaction
of the judgment.41
The UP sought the reconsideration of the order of May 3, 2005.42
On May 16, 2005, DBP filed a motion to consign the check representing the
judgment award and to dismiss the motion to cite its officials in contempt of court.
43
On May 23, 2005, the UP presented a motion to withhold the release of the
payment of the judgment award.44
On July 8, 2005, the RTC resolved all the pending matters,45 noting that the DBP
had already delivered to the sheriff Manager’s Check No. 811941 for ₱
16,370,191.74 representing the garnished funds payable to the order of Stern
Builders and dela Cruz as its compliance with the RTC’s order dated December
21, 2004.46 However, the RTC directed in the same order that Stern Builders and
dela Cruz should not encash the check or withdraw its amount pending the final
resolution of the UP’s petition for certiorari, to wit:47
To enable the money represented in the check in question (No. 00008119411) to
earn interest during the pendency of the defendant University of the Philippines
application for a writ of injunction with the Court of Appeals the same may now
be deposited by the plaintiff at the garnishee Bank (Development Bank of the
Philippines), the disposition of the amount represented therein being subject to
the final outcome of the case of the University of the Philippines et al., vs. Hon.
Agustin S. Dizon et al., (CA G.R. 88125) before the Court of Appeals.
Let it be stated herein that the plaintiff is not authorized to encash and withdraw
the amount represented in the check in question and enjoy the same in the
fashion of an owner during the pendency of the case between the parties before
the Court of Appeals which may or may not be resolved in plaintiff’s favor.
With the end in view of seeing to it that the check in question is deposited by the
plaintiff at the Development Bank of the Philippines (garnishee bank), Branch
Sheriff Herlan Velasco is directed to accompany and/or escort the plaintiff in
making the deposit of the check in question.
SO ORDERED.
On September 16, 2005, the CA promulgated its assailed decision dismissing the
UP’s petition for certiorari, ruling that the UP had been given ample opportunity
to contest the motion to direct the DBP to deposit the check in the name of Stern
Builders and dela Cruz; and that the garnished funds could be the proper subject
of garnishment because they had been already earmarked for the project, with
the UP holding the funds only in a fiduciary capacity,48 viz:
Petitioners next argue that the UP funds may not be seized for execution or
garnishment to satisfy the judgment award. Citing Department of Agriculture vs.
NLRC, University of the Philippines Board of Regents vs. Hon. Ligot-Telan,
petitioners contend that UP deposits at Land Bank and the Development Bank of
the Philippines, being government funds, may not be released absent an
appropriations bill from Congress.
The argument is specious. UP entered into a contract with private respondents
for the expansion and renovation of the Arts and Sciences Building of its campus
in Los Baños, Laguna. Decidedly, there was already an appropriations
earmarked for the said project. The said funds are retained by UP, in a fiduciary
capacity, pending completion of the construction project.
We agree with the trial Court [sic] observation on this score:
"4. Executive Order No. 109 (Directing all National Government Agencies to
Revert Certain Accounts Payable to the Cumulative Result of Operations of the
National Government and for Other Purposes) Section 9. Reversion of Accounts
Payable, provides that, all 1995 and prior years documented accounts payable
and all undocumented accounts regardless of the year they were incurred shall
be reverted to the Cumulative Result of Operations of the National Government
(CROU). This shall apply to accounts payable of all funds, except fiduciary funds,
as long as the purpose for which the funds were created have not been
accomplished and accounts payable under foreign assisted projects for the
duration of the said project. In this regard, the Department of Budget and
Management issued Joint-Circular No. 99-6 4.0 (4.3) Procedural Guidelines
which provides that all accounts payable that reverted to the CROU may be
considered for payment upon determination thru administrative process, of the
existence, validity and legality of the claim. Thus, the allegation of the defendants
that considering no appropriation for the payment of any amount awarded to
plaintiffs appellee the funds of defendant-appellants may not be seized pursuant
to a writ of execution issued by the regular court is misplaced. Surely when the
defendants and the plaintiff entered into the General Construction of Agreement
there is an amount already allocated by the latter for the said project which is no
longer subject of future appropriation."49
After the CA denied their motion for reconsideration on December 23, 2005, the
petitioners appealed by petition for review.
Matters Arising During the Pendency of the Petition
On January 30, 2006, Judge Dizon of the RTC (Branch 80) denied Stern Builders
and dela Cruz’s motion to withdraw the deposit, in consideration of the UP’s
intention to appeal to the CA,50 stating:
Since it appears that the defendants are intending to file a petition for review of
the Court of Appeals resolution in CA-G.R. No. 88125 within the reglementary
124
period of fifteen (15) days from receipt of resolution, the Court agrees with the
defendants stand that the granting of plaintiffs’ subject motion is premature.
Let it be stated that what the Court meant by its Order dated July 8, 2005 which
states in part that the "disposition of the amount represented therein being
subject to the final outcome of the case of the University of the Philippines, et.
al., vs. Hon. Agustin S. Dizon et al., (CA G.R. No. 88125 before the Court of
Appeals) is that the judgment or resolution of said court has to be final and
executory, for if the same will still be elevated to the Supreme Court, it will not
attain finality yet until the highest court has rendered its own final judgment or
resolution.51
However, on January 22, 2007, the UP filed an Urgent Application for A
Temporary Restraining Order and/or A Writ of Preliminary Injunction,52 averring
that on January 3, 2007, Judge Maria Theresa dela Torre-Yadao (who had
meanwhile replaced Judge Dizon upon the latter’s appointment to the CA) had
issued another order allowing Stern Builders and dela Cruz to withdraw the
deposit,53 to wit:
It bears stressing that defendants’ liability for the payment of the judgment
obligation has become indubitable due to the final and executory nature of the
Decision dated November 28, 2001. Insofar as the payment of the [sic] judgment
obligation is concerned, the Court believes that there is nothing more the
defendant can do to escape liability. It is observed that there is nothing more the
defendant can do to escape liability. It is observed that defendant U.P. System
had already exhausted all its legal remedies to overturn, set aside or modify the
decision (dated November 28, 2001( rendered against it. The way the Court sees
it, defendant U.P. System’s petition before the Supreme Court concerns only with
the manner by which said judgment award should be satisfied. It has nothing to
do with the legality or propriety thereof, although it prays for the deletion of [sic]
reduction of the award of moral damages.
It must be emphasized that this Court’s finding, i.e., that there was sufficient
appropriation earmarked for the project, was upheld by the Court of Appeals in its
decision dated September 16, 2005. Being a finding of fact, the Supreme Court
will, ordinarily, not disturb the same was said Court is not a trier of fact. Such
being the case, defendants’ arguments that there was no sufficient appropriation
for the payment of the judgment obligation must fail.
While it is true that the former Presiding Judge of this Court in its Order dated
January 30, 2006 had stated that:
Let it be stated that what the Court meant by its Order dated July 8, 2005 which
states in part that the "disposition of the amount represented therein being
subject to the final outcome of the case of the University of the Philippines, et.
al., vs. Hon. Agustin S. Dizon et al., (CA G.R. No. 88125 before the Court of
Appeals) is that the judgment or resolution of said court has to be final and
executory, for if the same will still be elevated to the Supreme Court, it will not
attain finality yet until the highest court has rendered its own final judgment or
resolution.
it should be noted that neither the Court of Appeals nor the Supreme Court
issued a preliminary injunction enjoining the release or withdrawal of the
garnished amount. In fact, in its present petition for review before the Supreme
Court, U.P. System has not prayed for the issuance of a writ of preliminary
injunction. Thus, the Court doubts whether such writ is forthcoming.
The Court honestly believes that if defendants’ petition assailing the Order of this
Court dated December 31, 2004 granting the motion for the release of the
garnished amount was meritorious, the Court of Appeals would have issued a
writ of injunction enjoining the same. Instead, said appellate court not only
refused to issue a wit of preliminary injunction prayed for by U.P. System but
denied the petition, as well.54
The UP contended that Judge Yadao thereby effectively reversed the January
30, 2006 order of Judge Dizon disallowing the withdrawal of the garnished
amount until after the decision in the case would have become final and
executory.
Although the Court issued a TRO on January 24, 2007 to enjoin Judge Yadao
and all persons acting pursuant to her authority from enforcing her order of
January 3, 2007,55 it appears that on January 16, 2007, or prior to the issuance
of the TRO, she had already directed the DBP to forthwith release the garnished
amount to Stern Builders and dela Cruz; 56 and that DBP had forthwith complied
with the order on January 17, 2007 upon the sheriff’s service of the order of
Judge Yadao.57
These intervening developments impelled the UP to file in this Court a
supplemental petition on January 26, 2007,58 alleging that the RTC (Judge
Yadao) gravely erred in ordering the immediate release of the garnished amount
despite the pendency of the petition for review in this Court.
The UP filed a second supplemental petition59 after the RTC (Judge Yadao)
denied the UP’s motion for the redeposit of the withdrawn amount on April 10,
2007,60 to wit:
This resolves defendant U.P. System’s Urgent Motion to Redeposit Judgment
Award praying that plaintiffs be directed to redeposit the judgment award to DBP
pursuant to the Temporary Restraining Order issued by the Supreme Court.
Plaintiffs opposed the motion and countered that the Temporary Restraining
Order issued by the Supreme Court has become moot and academic considering
that the act sought to be restrained by it has already been performed. They also
alleged that the redeposit of the judgment award was no longer feasible as they
have already spent the same.
It bears stressing, if only to set the record straight, that this Court did not – in its
Order dated January 3, 2007 (the implementation of which was restrained by the
Supreme Court in its Resolution dated January 24, 2002) – direct that that
garnished amount "be deposited with the garnishee bank (Development Bank of
the Philippines)". In the first place, there was no need to order DBP to make such
deposit, as the garnished amount was already deposited in the account of
plaintiffs with the DBP as early as May 13, 2005. What the Court granted in its
Order dated January 3, 2007 was plaintiff’s motion to allow the release of said
deposit. It must be recalled that the Court found plaintiff’s motion meritorious
and, at that time, there was no restraining order or preliminary injunction from
either the Court of Appeals or the Supreme Court which could have enjoined the
125
release of plaintiffs’ deposit. The Court also took into account the following
factors:
a) the Decision in this case had long been final and executory after it was
rendered on November 28, 2001;
b) the propriety of the dismissal of U.P. System’s appeal was upheld by the
Supreme Court;
c) a writ of execution had been issued;
d) defendant U.P. System’s deposit with DBP was garnished pursuant to a lawful
writ of execution issued by the Court; and
e) the garnished amount had already been turned over to the plaintiffs and
deposited in their account with DBP.
The garnished amount, as discussed in the Order dated January 16, 2007, was
already owned by the plaintiffs, having been delivered to them by the Deputy
Sheriff of this Court pursuant to par. (c), Section 9, Rule 39 of the 1997 Rules of
Civil Procedure. Moreover, the judgment obligation has already been fully
satisfied as per Report of the Deputy Sheriff.
Anent the Temporary Restraining Order issued by the Supreme Court, the same
has become functus oficio, having been issued after the garnished amount had
been released to the plaintiffs. The judgment debt was released to the plaintiffs
on January 17, 2007, while the Temporary Restraining Order issued by the
Supreme Court was received by this Court on February 2, 2007. At the time of
the issuance of the Restraining Order, the act sought to be restrained had
already been done, thereby rendering the said Order ineffectual.
After a careful and thorough study of the arguments advanced by the parties, the
Court is of the considered opinion that there is no legal basis to grant defendant
U.P. System’s motion to redeposit the judgment amount. Granting said motion is
not only contrary to law, but it will also render this Court’s final executory
judgment nugatory. Litigation must end and terminate sometime and somewhere,
and it is essential to an effective administration of justice that once a judgment
has become final the issue or cause involved therein should be laid to rest. This
doctrine of finality of judgment is grounded on fundamental considerations of
public policy and sound practice. In fact, nothing is more settled in law than that
once a judgment attains finality it thereby becomes immutable and unalterable. It
may no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by the court
rendering it or by the highest court of the land.
WHEREFORE, premises considered, finding defendant U.P. System’s Urgent
Motion to Redeposit Judgment Award devoid of merit, the same is hereby
DENIED.
SO ORDERED.
Issues
The UP now submits that:
I towards the Court due to the pendency of the UP’s petition for review; and that
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISMISSING THE
PETITION, ALLOWING IN EFFECT THE GARNISHMENT OF UP FUNDS,
WHEN IT RULED THAT FUNDS HAVE ALREADY BEEN EARMARKED FOR
THE CONSTRUCTION PROJECT; AND THUS, THERE IS NO NEED FOR
FURTHER APPROPRIATIONS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN ALLOWING
GARNISHMENT OF A STATE UNIVERSITY’S FUNDS IN VIOLATION OF
ARTICLE XIV, SECTION 5(5) OF THE CONSTITUTION.
III
IN THE ALTERNATIVE, THE UNIVERSITY INVOKES EQUITY AND THE
REVIEW POWERS OF THIS HONORABLE COURT TO MODIFY, IF NOT
TOTALLY DELETE THE AWARD OF ₱ 10 MILLION AS MORAL DAMAGES TO
RESPONDENTS.
IV
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE
IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER DATED 3
JANUARY 2007 ON THE GROUND OF EQUITY AND JUDICIAL COURTESY.
V
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE
IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER DATED
16 JANUARY 2007 ON THE GROUND THAT PETITIONER UNIVERSITY STILL
HAS A PENDING MOTION FOR RECONSIDERATION OF THE ORDER DATED
3 JANUARY 2007.
VI
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN NOT ORDERING THE
REDEPOSIT OF THE GARNISHED AMOUNT TO THE DBP IN VIOLATION OF
THE CLEAR LANGUAGE OF THE SUPREME COURT RESOLUTION DATED
24 JANUARY 2007.
The UP argues that the amount earmarked for the construction project had been
purposely set aside only for the aborted project and did not include incidental
matters like the awards of actual damages, moral damages and attorney’s fees.
In support of its argument, the UP cited Article 12.2 of the General Construction
Agreement, which stipulated that no deductions would be allowed for the
payment of claims, damages, losses and expenses, including attorney’s fees, in
case of any litigation arising out of the performance of the work. The UP insists
that the CA decision was inconsistent with the rulings in Commissioner of Public
Highways v. San Diego61 and Department of Agriculture v. NLRC62 to the effect
that government funds and properties could not be seized under writs of
execution or garnishment to satisfy judgment awards.
Furthermore, the UP contends that the CA contravened Section 5, Article XIV of
the Constitution by allowing the garnishment of UP funds, because the
garnishment resulted in a substantial reduction of the UP’s limited budget
allocated for the remuneration, job satisfaction and fulfillment of the best
available teachers; that Judge Yadao should have exhibited judicial courtesy
she should have also desisted from declaring that the TRO issued by this Court
had become functus officio.
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Lastly, the UP states that the awards of actual damages of ₱ 5,716,729.00 and
moral damages of ₱ 10 million should be reduced, if not entirely deleted, due to
its being unconscionable, inequitable and detrimental to public service.
In contrast, Stern Builders and dela Cruz aver that the petition for review was
fatally defective for its failure to mention the other cases upon the same issues
pending between the parties (i.e., CA-G.R. No. 77395 and G.R No. 163501); that
the UP was evidently resorting to forum shopping, and to delaying the
satisfaction of the final judgment by the filing of its petition for review; that the
ruling in Commissioner of Public Works v. San Diego had no application because
there was an appropriation for the project; that the UP retained the funds allotted
for the project only in a fiduciary capacity; that the contract price had been
meanwhile adjusted to ₱ 22,338,553.25, an amount already more than sufficient
to cover the judgment award; that the UP’s prayer to reduce or delete the award
of damages had no factual basis, because they had been gravely wronged, had
been deprived of their source of income, and had suffered untold miseries,
discomfort, humiliation and sleepless years; that dela Cruz had even been
constrained to sell his house, his equipment and the implements of his trade, and
together with his family had been forced to live miserably because of the
wrongful actuations of the UP; and that the RTC correctly declared the Court’s
TRO to be already functus officio by reason of the withdrawal of the garnished
amount from the DBP.
The decisive issues to be considered and passed upon are, therefore:
(a) whether the funds of the UP were the proper subject of garnishment in order
to satisfy the judgment award; and (b) whether the UP’s prayer for the deletion of
the awards of actual damages of ₱ 5,716,729.00, moral damages of ₱
10,000,000.00 and attorney’s fees of ₱ 150,000.00 plus ₱ 1,500.00 per
appearance could be granted despite the finality of the judgment of the RTC.
Ruling
The petition for review is meritorious.
I.
 Also, in Republic v. Villasor,81 where the issuance of an alias writ of execution
UP’s funds, being government funds,
 directed against the funds of the Armed Forces of the Philippines to satisfy a final
are not subject to garnishment
The UP was founded on June 18, 1908 through Act 1870 to provide advanced
instruction in literature, philosophy, the sciences, and arts, and to give
professional and technical training to deserving students.63 Despite its
establishment as a body corporate,64 the UP remains to be a "chartered
institution"65 performing a legitimate government function. It is an institution of
higher learning, not a corporation established for profit and declaring any
dividends.66 In enacting Republic Act No. 9500 (The University of the Philippines
Charter of 2008), Congress has declared the UP as the national university67
"dedicated to the search for truth and knowledge as well as the development of
future leaders."68
Irrefragably, the UP is a government instrumentality,69 performing the State’s
constitutional mandate of promoting quality and accessible education.70 As a
government instrumentality, the UP administers special funds sourced from the
fees and income enumerated under Act No. 1870 and Section 1 of Executive
Order No. 714,71 and from the yearly appropriations, to achieve the purposes laid
down by Section 2 of Act 1870, as expanded in Republic Act No. 9500.72 All the
funds going into the possession of the UP, including any interest accruing from
the deposit of such funds in any banking institution, constitute a "special trust
fund," the disbursement of which should always be aligned with the UP’s mission
and purpose,73 and should always be subject to auditing by the COA.74
Presidential Decree No. 1445 defines a "trust fund" as a fund that officially
comes in the possession of an agency of the government or of a public officer as
trustee, agent or administrator, or that is received for the fulfillment of some
obligation.75 A trust fund may be utilized only for the "specific purpose for which
the trust was created or the funds received."76
The funds of the UP are government funds that are public in character. They
include the income accruing from the use of real property ceded to the UP that
may be spent only for the attainment of its institutional objectives.77 Hence, the
funds subject of this action could not be validly made the subject of the RTC’s
writ of execution or garnishment. The adverse judgment rendered against the UP
in a suit to which it had impliedly consented was not immediately enforceable by
execution against the UP,78 because suability of the State did not necessarily
mean its liability.79
A marked distinction exists between suability of the State and its liability. As the
Court succinctly stated in Municipality of San Fernando, La Union v. Firme:80
A distinction should first be made between suability and liability. "Suability
depends on the consent of the state to be sued, liability on the applicable law
and the established facts. The circumstance that a state is suable does not
necessarily mean that it is liable; on the other hand, it can never be held liable if
it does not first consent to be sued. Liability is not conceded by the mere fact that
the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the
defendant is liable.
and executory judgment was nullified, the Court said:
xxx The universal rule that where the State gives its consent to be sued by
private parties either by general or special law, it may limit claimant’s action "only
up to the completion of proceedings anterior to the stage of execution" and that
the power of the Courts ends when the judgment is rendered, since government
funds and properties may not be seized under writs of execution or garnishment
to satisfy such judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the corresponding
appropriation as required by law. The functions and public services rendered by
the State cannot be allowed to be paralyzed or disrupted by the diversion of
public funds from their legitimate and specific objects, as appropriated by law.
The UP correctly submits here that the garnishment of its funds to satisfy the
judgment awards of actual and moral damages (including attorney’s fees) was
not validly made if there was no special appropriation by Congress to cover the
liability. It was, therefore, legally unwarranted for the CA to agree with the RTC’s
127
holding in the order issued on April 1, 2003 that no appropriation by Congress to
allocate and set aside the payment of the judgment awards was necessary
because "there (were) already an appropriations (sic) earmarked for the said
project."82 The CA and the RTC thereby unjustifiably ignored the legal restriction
imposed on the trust funds of the Government and its agencies and
instrumentalities to be used exclusively to fulfill the purposes for which the trusts
were created or for which the funds were received except upon express
authorization by Congress or by the head of a government agency in control of
the funds, and subject to pertinent budgetary laws, rules and regulations.83
Indeed, an appropriation by Congress was required before the judgment that
rendered the UP liable for moral and actual damages (including attorney’s fees)
would be satisfied considering that such monetary liabilities were not covered by
the "appropriations earmarked for the said project." The Constitution strictly
mandated that "(n)o money shall be paid out of the Treasury except in pursuance
of an appropriation made by law."84
II
 October 25, 2000, enjoining them "to observe utmost caution, prudence and
COA must adjudicate private respondents’ claim
 judiciousness in the issuance of writs of execution to satisfy money judgments
before execution should proceed
The execution of the monetary judgment against the UP was within the primary
jurisdiction of the COA. This was expressly provided in Section 26 of Presidential
Decree No. 1445, to wit:
Section 26. General jurisdiction. - The authority and powers of the Commission
shall extend to and comprehend all matters relating to auditing procedures,
systems and controls, the keeping of the general accounts of the Government,
the preservation of vouchers pertaining thereto for a period of ten years, the
examination and inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all persons respecting
funds or property received or held by them in an accountable capacity, as well as
the examination, audit, and settlement of all debts and claims of any sort due
from or owing to the Government or any of its subdivisions, agencies and
instrumentalities. The said jurisdiction extends to all government-owned or
controlled corporations, including their subsidiaries, and other self-governing
boards, commissions, or agencies of the Government, and as herein prescribed,
including non governmental entities subsidized by the government, those funded
by donations through the government, those required to pay levies or
government share, and those for which the government has put up a counterpart
fund or those partly funded by the government.
It was of no moment that a final and executory decision already validated the
claim against the UP. The settlement of the monetary claim was still subject to
the primary jurisdiction of the COA despite the final decision of the RTC having
already validated the claim.85 As such, Stern Builders and dela Cruz as the
claimants had no alternative except to first seek the approval of the COA of their
monetary claim.
On its part, the RTC should have exercised utmost caution, prudence and
judiciousness in dealing with the motions for execution against the UP and the
garnishment of the UP’s funds. The RTC had no authority to direct the immediate
withdrawal of any portion of the garnished funds from the depository banks of the
UP. By eschewing utmost caution, prudence and judiciousness in dealing with
the execution and garnishment, and by authorizing the withdrawal of the
garnished funds of the UP, the RTC acted beyond its jurisdiction, and all its
orders and issuances thereon were void and of no legal effect, specifically: (a)
the order Judge Yadao issued on January 3, 2007 allowing Stern Builders and
dela Cruz to withdraw the deposited garnished amount; (b) the order Judge
Yadao issued on January 16, 2007 directing DBP to forthwith release the garnish
amount to Stern Builders and dela Cruz; (c) the sheriff’s report of January 17,
2007 manifesting the full satisfaction of the writ of execution; and (d) the order of
April 10, 2007 deying the UP’s motion for the redeposit of the withdrawn amount.
Hence, such orders and issuances should be struck down without exception.
Nothing extenuated Judge Yadao’s successive violations of Presidential Decree
No. 1445. She was aware of Presidential Decree No. 1445, considering that the
Court circulated to all judges its Administrative Circular No. 10-2000,86 issued on
against government agencies and local government units" precisely in order to
prevent the circumvention of Presidential Decree No. 1445, as well as of the
rules and procedures of the COA, to wit:
In order to prevent possible circumvention of the rules and procedures of
the Commission on Audit, judges are hereby enjoined to observe utmost
caution, prudence and judiciousness in the issuance of writs of execution
to satisfy money judgments against government agencies and local
government units.
Judges should bear in mind that in Commissioner of Public Highways v. San
Diego (31 SCRA 617, 625 1970), this Court explicitly stated:
"The universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant’s action ‘only up to
the completion of proceedings anterior to the stage of execution’ and that the
power of the Court ends when the judgment is rendered, since government funds
and properties may not be seized under writs of execution or garnishment to
satisfy such judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the corresponding
appropriation as required by law. The functions and public services rendered by
the State cannot be allowed to be paralyzed or disrupted by the diversion of
public funds from their legitimate and specific objects, as appropriated by law.
Moreover, it is settled jurisprudence that upon determination of State
liability, the prosecution, enforcement or satisfaction thereof must still be
pursued in accordance with the rules and procedures laid down in P.D. No.
1445, otherwise known as the Government Auditing Code of the
Philippines (Department of Agriculture v. NLRC, 227 SCRA 693, 701-02 1993
citing Republic vs. Villasor, 54 SCRA 84 1973). All money claims against the
Government must first be filed with the Commission on Audit which must
act upon it within sixty days. Rejection of the claim will authorize the
128
claimant to elevate the matter to the Supreme Court on certiorari and in appeal, which the RTC declared on September 26, 2002. The CA upheld the
effect, sue the State thereby (P.D. 1445, Sections 49-50). declaration of finality on February 24, 2004, and the Court itself denied the UP’s
However, notwithstanding the rule that government properties are not subject to petition for review on that issue on May 11, 2004 (G.R. No. 163501). The denial
levy and execution unless otherwise provided for by statute (Republic v. Palacio, became final on November 12, 2004.
23 SCRA 899 1968; Commissioner of Public Highways v. San Diego, supra) or It is true that a decision that has attained finality becomes immutable and
municipal ordinance (Municipality of Makati v. Court of Appeals, 190 SCRA 206 unalterable, and cannot be modified in any respect,87 even if the modification is
1990), the Court has, in various instances, distinguished between government meant to correct erroneous conclusions of fact and law, and whether the
funds and properties for public use and those not held for public use. Thus, in modification is made by the court that rendered it or by this Court as the highest
Viuda de Tan Toco v. Municipal Council of Iloilo (49 Phil 52 1926, the Court ruled court of the land.88 Public policy dictates that once a judgment becomes final,
that "where property of a municipal or other public corporation is sought to be executory and unappealable, the prevailing party should not be deprived of the
subjected to execution to satisfy judgments recovered against such corporation, fruits of victory by some subterfuge devised by the losing party. Unjustified delay
the question as to whether such property is leviable or not is to be determined by in the enforcement of such judgment sets at naught the role and purpose of the
the usage and purposes for which it is held." The following can be culled from courts to resolve justiciable controversies with finality.89 Indeed, all litigations
Viuda de Tan Toco v. Municipal Council of Iloilo: must at some time end, even at the risk of occasional errors.
1. Properties held for public uses – and generally everything held for But the doctrine of immutability of a final judgment has not been absolute, and
governmental purposes – are not subject to levy and sale under execution has admitted several exceptions, among them: (a) the correction of clerical
against such corporation. The same rule applies to funds in the hands of a errors; (b) the so-called nunc pro tunc entries that cause no prejudice to any
public officer and taxes due to a municipal corporation. party; (c) void judgments; and (d) whenever circumstances transpire after the
2. Where a municipal corporation owns in its proprietary capacity, as finality of the decision that render its execution unjust and inequitable.90
distinguished from its public or government capacity, property not used or used Moreover, in Heirs of Maura So v. Obliosca,91 we stated that despite the absence
for a public purpose but for quasi-private purposes, it is the general rule that such of the preceding circumstances, the Court is not precluded from brushing aside
property may be seized and sold under execution against the corporation. procedural norms if only to serve the higher interests of justice and equity. Also,
3. Property held for public purposes is not subject to execution merely because it in Gumaru v. Quirino State College,92 the Court nullified the proceedings and the
is temporarily used for private purposes. If the public use is wholly abandoned, writ of execution issued by the RTC for the reason that respondent state college
such property becomes subject to execution. had not been represented in the litigation by the Office of the Solicitor General.
This Administrative Circular shall take effect immediately and the Court We rule that the UP’s plea for equity warrants the Court’s exercise of the
Administrator shall see to it that it is faithfully implemented. exceptional power to disregard the declaration of finality of the judgment of the
Although Judge Yadao pointed out that neither the CA nor the Court had issued RTC for being in clear violation of the UP’s right to due process.
as of then any writ of preliminary injunction to enjoin the release or withdrawal of Both the CA and the RTC found the filing on June 3, 2002 by the UP of the notice
the garnished amount, she did not need any writ of injunction from a superior of appeal to be tardy. They based their finding on the fact that only six days
court to compel her obedience to the law. The Court is disturbed that an remained of the UP’s reglementary 15-day period within which to file the notice of
experienced judge like her should look at public laws like Presidential Decree No. appeal because the UP had filed a motion for reconsideration on January 16,
1445 dismissively instead of loyally following and unquestioningly implementing 2002 vis-à-vis the RTC’s decision the UP received on January 7, 2002; and that
them. That she did so turned her court into an oppressive bastion of mindless because the denial of the motion for reconsideration had been served upon Atty.
tyranny instead of having it as a true haven for the seekers of justice like the UP. Felimon D. Nolasco of the UPLB Legal Office on May 17, 2002, the UP had only
III
 until May 23, 2002 within which to file the notice of appeal.
Period of appeal did not start without effective
 The UP counters that the service of the denial of the motion for reconsideration
service of decision upon counsel of record;
 upon Atty. Nolasco was defective considering that its counsel of record was not
Fresh-period rule announced in
 Atty. Nolasco of the UPLB Legal Office but the OLS in Diliman, Quezon City; and
Neypes v. Court of Appeals
 that the period of appeal should be reckoned from May 31, 2002, the date when
can be given retroactive application the OLS received the order. The UP submits that the filing of the notice of appeal
The UP next pleads that the Court gives due course to its petition for review in on June 3, 2002 was well within the reglementary period to appeal.
the name of equity in order to reverse or modify the adverse judgment against it We agree with the submission of the UP.
despite its finality. At stake in the UP’s plea for equity was the return of the Firstly, the service of the denial of the motion for reconsideration upon Atty.
amount of ₱ 16,370,191.74 illegally garnished from its trust funds. Obstructing Nolasco of the UPLB Legal Office was invalid and ineffectual because he was
the plea is the finality of the judgment based on the supposed tardiness of UP’s
129
admittedly not the counsel of record of the UP. The rule is that it is on the counsel
and not the client that the service should be made.93
That counsel was the OLS in Diliman, Quezon City, which was served with the
denial only on May 31, 2002. As such, the running of the remaining period of six
days resumed only on June 1, 2002,94 rendering the filing of the UP’s notice of
appeal on June 3, 2002 timely and well within the remaining days of the UP’s
period to appeal.
Verily, the service of the denial of the motion for reconsideration could only be
validly made upon the OLS in Diliman, and no other. The fact that Atty. Nolasco
was in the employ of the UP at the UPLB Legal Office did not render the service
upon him effective. It is settled that where a party has appeared by counsel,
service must be made upon such counsel.95 Service on the party or the party’s
employee is not effective because such notice is not notice in law.96 This is clear
enough from Section 2, second paragraph, of Rule 13, Rules of Court, which
explicitly states that: "If any party has appeared by counsel, service upon him
shall be made upon his counsel or one of them, unless service upon the party
himself is ordered by the court. Where one counsel appears for several parties,
he shall only be entitled to one copy of any paper served upon him by the
opposite side." As such, the period to appeal resumed only on June 1, 2002, the
date following the service on May 31, 2002 upon the OLS in Diliman of the copy
of the decision of the RTC, not from the date when the UP was notified.97
Accordingly, the declaration of finality of the judgment of the RTC, being devoid
of factual and legal bases, is set aside.
Secondly, even assuming that the service upon Atty. Nolasco was valid and
effective, such that the remaining period for the UP to take a timely appeal would
end by May 23, 2002, it would still not be correct to find that the judgment of the
RTC became final and immutable thereafter due to the notice of appeal being
filed too late on June 3, 2002.
In so declaring the judgment of the RTC as final against the UP, the CA and the
RTC applied the rule contained in the second paragraph of Section 3, Rule 41 of
the Rules of Court to the effect that the filing of a motion for reconsideration
interrupted the running of the period for filing the appeal; and that the period
resumed upon notice of the denial of the motion for reconsideration. For that
reason, the CA and the RTC might not be taken to task for strictly adhering to the
rule then prevailing.
However, equity calls for the retroactive application in the UP’s favor of the fresh-
period rule that the Court first announced in mid-September of 2005 through its
ruling in Neypes v. Court of Appeals,98 viz:
To standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh
period of 15 days within which to file the notice of appeal in the Regional Trial
Court, counted from receipt of the order dismissing a motion for a new trial or
motion for reconsideration.
The retroactive application of the fresh-period rule, a procedural law that aims "to
regiment or make the appeal period uniform, to be counted from receipt of the
order denying the motion for new trial, motion for reconsideration (whether full or
partial) or any final order or resolution,"99 is impervious to any serious challenge.
This is because there are no vested rights in rules of procedure.100 A law or
regulation is procedural when it prescribes rules and forms of procedure in order
that courts may be able to administer justice.101 It does not come within the legal
conception of a retroactive law, or is not subject of the general rule prohibiting
the retroactive operation of statues, but is given retroactive effect in actions
pending and undetermined at the time of its passage without violating any right
of a person who may feel that he is adversely affected.
We have further said that a procedural rule that is amended for the benefit of
litigants in furtherance of the administration of justice shall be retroactively
applied to likewise favor actions then pending, as equity delights in equality.102
We may even relax stringent procedural rules in order to serve substantial justice
and in the exercise of this Court’s equity jurisdiction.103 Equity jurisdiction aims to
do complete justice in cases where a court of law is unable to adapt its
judgments to the special circumstances of a case because of the inflexibility of its
statutory or legal jurisdiction.104
It is cogent to add in this regard that to deny the benefit of the fresh-period rule to
the UP would amount to injustice and absurdity – injustice, because the
judgment in question was issued on November 28, 2001 as compared to the
judgment in Neypes that was rendered in 1998; absurdity, because parties
receiving notices of judgment and final orders issued in the year 1998 would
enjoy the benefit of the fresh-period rule but the later rulings of the lower courts
like that herein would not.105
Consequently, even if the reckoning started from May 17, 2002, when Atty.
Nolasco received the denial, the UP’s filing on June 3, 2002 of the notice of
appeal was not tardy within the context of the fresh-period rule. For the UP, the
fresh period of 15-days counted from service of the denial of the motion for
reconsideration would end on June 1, 2002, which was a Saturday. Hence, the
UP had until the next working day, or June 3, 2002, a Monday, within which to
appeal, conformably with Section 1 of Rule 22, Rules of Court, which holds that:
"If the last day of the period, as thus computed, falls on a Saturday, a Sunday, or
a legal holiday in the place where the court sits, the time shall not run until the
next working day."
IV

Awards of monetary damages,

being devoid of factual and legal bases,

did not attain finality and should be deleted
Section 14 of Article VIII of the Constitution prescribes that express findings of
fact and of law should be made in the decision rendered by any court, to wit:
Section 14. No decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall
be refused due course or denied without stating the legal basis therefor.
Implementing the constitutional provision in civil actions is Section 1 of Rule 36,
Rules of Court, viz:
130
Section 1. Rendition of judgments and final orders. — A judgment or final order
determining the merits of the case shall be in writing personally and directly
prepared by the judge, stating clearly and distinctly the facts and the law on
which it is based, signed by him, and filed with the clerk of the court. (1a)
The Constitution and the Rules of Court apparently delineate two main essential
parts of a judgment, namely: the body and the decretal portion. Although the
latter is the controlling part,106 the importance of the former is not to be lightly
regarded because it is there where the court clearly and distinctly states its
findings of fact and of law on which the decision is based. To state it differently,
one without the other is ineffectual and useless. The omission of either inevitably
results in a judgment that violates the letter and the spirit of the Constitution and
the Rules of Court.
The term findings of fact that must be found in the body of the decision refers to
statements of fact, not to conclusions of law.107 Unlike in pleadings where
ultimate facts alone need to be stated, the Constitution and the Rules of Court
require not only that a decision should state the ultimate facts but also that it
should specify the supporting evidentiary facts, for they are what are called the
findings of fact.
The importance of the findings of fact and of law cannot be overstated. The
reason and purpose of the Constitution and the Rules of Court in that regard are
obviously to inform the parties why they win or lose, and what their rights and
obligations are. Only thereby is the demand of due process met as to the parties.
As Justice Isagani A. Cruz explained in Nicos Industrial Corporation v. Court of
Appeals:108
It is a requirement of due process that the parties to a litigation be informed of
how it was decided, with an explanation of the factual and legal reasons that led
to the conclusions of the court. The court cannot simply say that judgment is
rendered in favor of X and against Y and just leave it at that without any
justification whatsoever for its action. The losing party is entitled to know why he
lost, so he may appeal to a higher court, if permitted, should he believe that the
decision should be reversed. A decision that does not clearly and distinctly state
the facts and the law on which it is based leaves the parties in the dark as to how
it was reached and is especially prejudicial to the losing party, who is unable to
pinpoint the possible errors of the court for review by a higher tribunal.
Here, the decision of the RTC justified the grant of actual and moral damages,
and attorney’s fees in the following terse manner, viz:
xxx The Court is not unmindful that due to defendants’ unjustified refusal to pay
their outstanding obligation to plaintiff, the same suffered losses and incurred
expenses as he was forced to re-mortgage his house and lot located in Quezon
City to Metrobank (Exh. "CC") and BPI Bank just to pay its monetary obligations
in the form of interest and penalties incurred in the course of the construction of
the subject project.109
The statement that "due to defendants’ unjustified refusal to pay their outstanding
obligation to plaintiff, the same suffered losses and incurred expenses as he was
forced to re-mortgage his house and lot located in Quezon City to Metrobank
(Exh. "CC") and BPI Bank just to pay its monetary obligations in the form of
interest and penalties incurred in the course of the construction of the subject
project" was only a conclusion of fact and law that did not comply with the
constitutional and statutory prescription. The statement specified no detailed
expenses or losses constituting the ₱ 5,716,729.00 actual damages sustained by
Stern Builders in relation to the construction project or to other pecuniary
hardships. The omission of such expenses or losses directly indicated that Stern
Builders did not prove them at all, which then contravened Article 2199, Civil
Code, the statutory basis for the award of actual damages, which entitled a
person to an adequate compensation only for such pecuniary loss suffered by
him as he has duly proved. As such, the actual damages allowed by the RTC,
being bereft of factual support, were speculative and whimsical. Without the clear
and distinct findings of fact and law, the award amounted only to an ipse dixit on
the part of the RTC,110 and did not attain finality.
There was also no clear and distinct statement of the factual and legal support
for the award of moral damages in the substantial amount of ₱ 10,000,000.00.
The award was thus also speculative and whimsical. Like the actual damages,
the moral damages constituted another judicial ipse dixit, the inevitable
consequence of which was to render the award of moral damages incapable of
attaining finality. In addition, the grant of moral damages in that manner
contravened the law that permitted the recovery of moral damages as the means
to assuage "physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury."111 The contravention of the law was manifest considering that
Stern Builders, as an artificial person, was incapable of experiencing pain and
moral sufferings.112 Assuming that in granting the substantial amount of ₱
10,000,000.00 as moral damages, the RTC might have had in mind that dela
Cruz had himself suffered mental anguish and anxiety. If that was the case, then
the RTC obviously disregarded his separate and distinct personality from that of
Stern Builders.113 Moreover, his moral and emotional sufferings as the President
of Stern Builders were not the sufferings of Stern Builders. Lastly, the RTC
violated the basic principle that moral damages were not intended to enrich the
plaintiff at the expense of the defendant, but to restore the plaintiff to his status
quo ante as much as possible. Taken together, therefore, all these considerations
exposed the substantial amount of ₱ 10,000,000.00 allowed as moral damages
not only to be factually baseless and legally indefensible, but also to be
unconscionable, inequitable and unreasonable.
Like the actual and moral damages, the ₱ 150,000.00, plus ₱ 1,500.00 per
appearance, granted as attorney’s fees were factually unwarranted and devoid of
legal basis. The general rule is that a successful litigant cannot recover
attorney’s fees as part of the damages to be assessed against the losing party
because of the policy that no premium should be placed on the right to litigate.114
Prior to the effectivity of the present Civil Code, indeed, such fees could be
recovered only when there was a stipulation to that effect. It was only under the
present Civil Code that the right to collect attorney’s fees in the cases mentioned
in Article 2208115 of the Civil Code came to be recognized.116 Nonetheless, with
attorney’s fees being allowed in the concept of actual damages,117 their amounts
131
must be factually and legally justified in the body of the decision and not stated
for the first time in the decretal portion.118 Stating the amounts only in the
dispositive portion of the judgment is not enough;119 a rendition of the factual and
legal justifications for them must also be laid out in the body of the decision.120
That the attorney’s fees granted to the private respondents did not satisfy the
foregoing requirement suffices for the Court to undo them.121 The grant was
ineffectual for being contrary to law and public policy, it being clear that the
express findings of fact and law were intended to bring the case within the
exception and thereby justify the award of the attorney’s fees. Devoid of such
express findings, the award was a conclusion without a premise, its basis being
improperly left to speculation and conjecture.122
Nonetheless, the absence of findings of fact and of any statement of the law and
jurisprudence on which the awards of actual and moral damages, as well as of
attorney’s fees, were based was a fatal flaw that invalidated the decision of the
RTC only as to such awards. As the Court declared in Velarde v. Social Justice
Society,123 the failure to comply with the constitutional requirement for a clear and
distinct statement of the supporting facts and law "is a grave abuse of discretion
amounting to lack or excess of jurisdiction" and that "(d)ecisions or orders issued
in careless disregard of the constitutional mandate are a patent nullity and must
be struck down as void."124 The other item granted by the RTC (i.e., ₱
503,462.74) shall stand, subject to the action of the COA as stated herein.
WHEREFORE, the Court GRANTS the petition for review on certiorari;
REVERSES and SETS ASIDE the decision of the Court of Appeals under
review; ANNULS the orders for the garnishment of the funds of the University of
the Philippines and for the release of the garnished amount to Stern Builders
Corporation and Servillano dela Cruz; and DELETES from the decision of the
Regional Trial Court dated November 28, 2001 for being void only the awards of
actual damages of ₱ 5,716,729.00, moral damages of ₱ 10,000,000.00, and
attorney's fees of ₱ 150,000.00, plus ₱ 1,500.00 per appearance, in favor of
Stern Builders Corporation and Servillano dela Cruz.
The Court ORDERS Stem Builders Corporation and Servillano dela Cruz to
redeposit the amount of ₱ 16,370,191.74 within 10 days from receipt of this
decision.
Costs of suit to be paid by the private respondents.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
WE CONCUR:
FIRST DIVISION
G.R. No. 171953, October 21, 2015
NATIONAL HOUSING AUTHORITY, Petitioner, v. ERNESTO
ROXAS, Respondent.
DECISION
BERSAMIN, J.:
The National Housing Authority (NHA), a government-owned and -
controlled corporation created and existing under Presidential Decree
No. 757,1 may sue and be sued. However, no court should issue a writ
of execution upon any monetary judgment rendered against the NHA
unless such monetary judgment is first submitted to and passed upon
by the Commission on Audit (COA).
The Case
Being challenged on appeal by the NHA is the adverse decision
promulgated on February 20, 2006,2 whereby the Court of Appeals
(CA) dismissed the NHA's petition for certiorari brought to nullify the
orders issued in Special Civil Action No. 93-060-MN entitled Ernesto
Roxas v. National Housing Authority, et al. by the Regional Trial Court
(RTC), Branch 72, in Malabon City. The first order, dated May 3, 2002,
had granted the motion for the issuance of the writ of execution filed
by respondent Ernesto Roxas.3 The other order, dated January 6,
2003, had denied the NHA's motion for reconsideration.4 The NHA had
also thereby assailed the writ of execution consequently issued on
February 24, 2003.5 In its petition for certiorari, the NHA insisted that
the RTC had thereby committed grave abuse of discretion amounting
to lack or excess of jurisdiction.
Antecedents
The NHA is charged, among others, with the development of the
Dagat-dagatan Development Project (project) situated in Navotas,
Metro Manila.6 On December 4, 1985, Roxas applied for commercial
lots in the project, particularly Lot 9 and Lot 10 in Block 11, Area 3,
Phase III A/B, with an area of 176 square meters, for the use of his
business of buying and selling gravel, sand and cement products.7 The
NHA approved his application, and issued on December 6, 1985 the
order of payment respecting the lots. On December 27, 1985, the NHA
issued the notice of award for the lots in favor of Roxas,8 at
P1,500.00/square meter.9 On the basis of the order of payment and
the notice of award, Roxas made his downpayment of P79,200.00.10 A
relocation/reblocking survey resulted in the renumbering of Lot 9 to
Lot 5 and Lot 10 to Lot 6 (subject lots).11 He completed his payment
for the subject lots on December 20, 1991.
In the meanwhile, the NHA conducted a final subdivision project
survey, causing the increase in the area of the subject lots from 176 to
132
320 square meters. The NHA informed Roxas about the increase in the
area of the subject lots, and approved the award of the additional area
of 144 square meters to him at P3,500.00/square meter.12 Although
manifesting his interest in acquiring the additional area, he appealed
for the reduction of the price to Pl,500.00/square meter,13 pointing out
that Lot 5 and Lot 6 were a substitution unilaterally imposed by the
NHA that resulted in the increase of 144 square meters based on the
technical description, and that although he desired to purchase the
increased area, the purchase must be in accordance with the terms
and conditions contained in the order of payment and notice of award
issued to him. After the NHA rejected his appeal,14 he commenced in
the RTC this action for specific performance and damages, with prayer
for the issuance of a writ of preliminary injunction. He amended the
complaint15 to compel the NHA to comply with the terms and
conditions of the order of payment and the notice of award.
The NHA countered in its answer16 that Roxas' prayer to include in the
original contract the increase in lot measurement of 144 square
meters was contrary to its existing rules and regulation; that he could
not claim more than what had been originally awarded to him; and
that at the very least, his right in the additional area was limited only
to first refusal.
On July 15, 1994, after trial, the RTC rendered judgment against the
NHA,17 decreeing:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is hereby rendered in
favor of plaintiff Ernesto Roxas and against defendant NHA,
represented by its General Manager and its Dagat-dagatan
Development Project Manager, as follows:
1. Declaring plaintiff Ernesto Roxas the legal awardee of subject lots 5
and 6 in the full total area thereof of 320 sq. meters;
2. Ordering defendant NHA, thru its General Manager Robert P. Balao
and the project Manager for its Dagat-dagatan Development Project
Evelyn V. Ramos, or whoever shall be the incumbents of the positions
at the time of the enforcement hereof to execute the corresponding
Contract to Sell for the entire area of subject lots 5 and 6 totaling to
320 sq. meters at the cost of PI,500.00 per sq. meter under the same
terms and conditions as that provided for in the Order of Payment and
Notice of Award (Exhs. B and D), respectively, deducting whatever has
already been paid by plaintiff;
3. Ordering defendant NHA to pay plaintiff P30,000.00 by way of
reasonable Attorney's Fees.
The Writ of Preliminary Injunction issued in this case on January 31,
1994 is hereby made permanent.
Costs against defendant NHA.
SO ORDERED.cralawlawlibrary
The NHA appealed in due course, but the CA affirmed the judgment of
the RTC, prompting the NHA to seek to undo the adverse decision of
the CA through its petition for certiorari. On July 5, 2000, however, the
Court dismissed the petition for certiorari. It later denied the NHA's
motion for reconsideration.18
On July 27, 2001, Roxas filed his motion for the issuance of the writ of
execution,19 which the RTC granted on May 3, 2002.20 The NHA sought
reconsideration, but its motion was denied on January 6, 2003.
Accordingly, on February 24, 2003, the RTC issued the writ of
execution to enforce the final and executory decision of July 15,
1994.21
In order to prevent the execution, the NHA brought another petition
for certiorari in the CA, docketed as C.A.-G.R. SP No. 76468, imputing
to the RTC grave abuse of discretion amounting to lack or excess of
jurisdiction for ordering the execution of the judgment.
On February 20, 2006, the CA dismissed the NFIA's petition for
certiorari through the presently assailed decision because it found that
the RTC did not gravely abuse its discretion amounting to lack or
excess of jurisdiction in granting Roxas' motion for the issuance of the
writ of execution and in issuing the writ of execution.22 The CA
observed that the NHA was a government-owned and -controlled
corporation whose funds were not exempt from garnishment or
execution; and ruled that Roxas did not need to first file his claim in
the COA.
Issues
The NHA insists that the judgment of the RTC did not lie against it
because its submission to the litigation did not necessarily imply that
133
the Government had thereby given its consent to liability; and that the
money judgment awarded to Roxas could not be recovered by motion
for execution but should have been first filed in the COA.23
Roxas counters that the main relief under the final and executory
judgment of the RTC directed the NHA to execute the contract to sell
the subject lots at the rate of P1,500.00/square meter as provided for
in the order of payment and the notice of award. He claims that the
award of attorney's fees in his favor was only incidental to the main
relief of specific performance; and argues that the Government
abandons its sovereign capacity and is treated like any other
corporations whenever it enters into a commercial transaction.24
Ruling of the Court
The appeal is partly meritorious.
First of all, the mantle of the State's immunity from suit did not extend
to the NHA despite its being a government-owned and -controlled
corporation. Under Section 6(i) of Presidential Decree No. 757, which
was its charter, the NHA could sue and be sued. As such, the NHA was
not immune from the suit of Roxas.
And, secondly, for purposes of the implementation of the writ of
execution, it is necessary to distinguish between, on the one hand, the
main relief adjudicated in the judgment of July 15, 1994, which was
the decree of specific performance as to the right of Roxas to acquire
the subject lots at Pl,500.00/square meter as stated in the original
agreement between the parties, and, on the other, the secondary relief
for the attorney's fees of P30,000.00 to be paid by the NHA to Roxas.
Section 12 of Presidential Decree No. 757 has authorized the NHA to
"determine, establish and maintain the most feasible and effective
program for the management or disposition of specific housing or
resettlement projects undertaken by [it]", and "[u]nless otherwise
decided by the Board, completed housing or resettlement projects
shall be managed and administered by [it]." The execution of the
contract to sell by the NHA conformably with the main relief under the
judgment would be in the ordinary course of the management or
disposition of the Dagat-dagatan Development Project undertaken by
the NHA. In other words, the NHA possessed the legal competence
and authority to directly afford the main relief without Roxas needing
to first submit to the COA the contract to sell for review and approval.
To maintain otherwise is to unconstitutionally grant to the COA the
power of judicial review in respect of the decision of a court of law.
However, settling or paying off the secondary relief for the attorney's
fees of £30,000.00, being a monetary obligation of the NHA, would not
be in the usual course of the activities of the NHA under its charter.
That such relief was the consequence of the suit that granted the main
relief did not matter. Pursuant to Section 26 of Presidential Decree No.
1445, Roxas should first bring it to the COA prior to its enforcement
against the NHA.25 Indeed, Section 26 specifically vested in the COA
the power, authority and duty to examine, audit and settle "all debts
and claims of any sort" due from or owing to the Government, or any
of its subdivisions, agencies, or instrumentalities, including
government-owned and controlled corporations with original charters,
viz.:chanRoblesvirtualLawlibrary
Section 26. General jurisdiction. The authority and powers of the
Commission shall extend to and comprehend all matters relating to
auditing procedures, systems and controls, the keeping of the general
accounts of the Government, the preservation of vouchers pertaining
thereto for a period of ten years, the examination and inspection of
the books, records, and papers relating to those accounts; and the
audit and settlement of the accounts of all persons respecting
funds or property received or held by them in an accountable
capacity, as well as the examination, audit, and settlement of
all debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies and
instrumentalities. The said jurisdiction extends to all
government-owned or controlled corporations, including their
subsidiaries, and other self-governing boards, commissions, or
agencies of the Government, and as herein prescribed,
including nongovernmental entities subsidized by the
government, those funded by donations through the
government, those required to pay levies or government share,
and those for which the government has put up a counterpart
fund or those partly funded by the government, (bold
underscoring supplied for emphasis)
cralawlawlibrary
As the text of the legal provision plainly shows, the audit jurisdiction of
the COA extends to all government-owned or -controlled corporations,
134
their subsidiaries, and other self-governing boards, commissions, or
agencies of the Government, as well as to all non-governmental
entities subsidized by the Government, or funded by donations
through the Government, or required to pay levies or government
share, or for which the Government has put up a counterpart fund, or
those partly funded by the Government. There is no distinction as to
the class of claims. Ubi lex non distinguish nee nos distinguere
debemos.26 Indeed, a general term or phrase should not be reduced
into parts and one part distinguished from the other so as to justify its
exclusion from the operation of the law. In other words, there should
be no distinction in the application of a statute where none is
indicated. Corollary to this rule is the principle that where the law does
not make any exception, the courts may not exempt something
therefrom, unless there is compelling reason to the contrary.27
There is no question that the NHA could sue or be sued, and thus
could be held liable under the judgment rendered against it. But the
universal rule remains to be that the State, although it gives its
consent to be sued either by general or special law, may limit the
claimant's action only up to the completion of proceedings anterior to
the stage of execution. In other words, the power of the court ends
when the judgment is rendered because government funds and
property may not be seized pursuant to writs of execution or writs of
garnishment to satisfy such judgments. The functions and public
services of the State cannot be allowed to be paralyzed or disrupted
by the diversion of public fund from their legitimate and specific
objects, and as appropriated by law. The rule is based on obvious
considerations of public policy. Indeed, the disbursements of public
funds must be covered by the corresponding appropriation as required
by law.28
WHEREFORE, the Court PARTLY GRANTS the petition for review on
certiorari; and MODIFIES the writ of execution dated February 24,
2003 by enjoining the respondent to file his claim for attorney's fees
with the Commission on Audit pursuant to Presidential Decree No.
1445.
SO ORDERED.chanroblesvirtuallawlibrary
SECOND DIVISION
G.R. No. 174747, March 09, 2016
REPUBLIC OF THE PHILIPPINES REPRESENTED BY
PRIVATIZATION AND MANAGEMENT OFFICE, Petitioners, v.
NATIONAL LABOR RELATIONS COMMISSION (THIRD
DIVISION) AND NACUSIP/BISUDECO CHAPTER/GEORGE
EMATA, DOMINGO REBANCOS, NELSON BERINA, ROBERTO
TIRAO, AMADO VILLOTE, AND BIENVENIDO FELINA,
Respondents.
DECISION
LEONEN, J.:
Under Proclamation No. 50, Series of 1986,1 no employer-employee
relationship is created by the acquisition of Asset Privatization Trust
(now Privatization and Management Office) of government assets for
privatization. It is not obliged to pay for any money claims arising
from employer-employee relations except when it voluntarily holds
itself liable to pay. These money claims, however, must be filed within
the three-year period under Article 2912 of the Labor Code. Once
liability is determined, a separate money claim must be brought before
the Commission on Audit, unless the funds to be used have already
been previously appropriated and disbursed.
This resolves a Petition for Review on Certiorari3 assailing the Decision4
dated February 27, 2004 and Resolution5 dated September 19, 2006
of the Court of Appeals. The Decision and Resolution affirmed the
National Labor Relations Commission Resolutions dated May 10, 20026
and June 21, 20027 dismissing petitioner's appeal for failure to file the
appeal within the reglementary period.
Asset Privatization Trust was a government entity created under
Proclamation No. 50 dated December 8, 1986 for the purpose of
conserving, provisionally managing, and disposing of assets that have
been identified for privatization or disposition. NACUSIP/BISUDECO
Chapter is the exclusive bargaining agent for the rank-and-file
employees of Bicolandia Sugar Development Corporation, a
corporation engaged in milling and producing sugar.8 Since the 1980s,
Bicolandia Sugar Development Corporation had been incurring heavy
losses.9 It obtained loans from Philippine Sugar Corporation and
Philippine National Bank, secured by its assets and properties.10
Under Proclamation No. 50, as amended, Administrative Order No. 14
dated February 3, 1987, the Deed of Transfer dated February 27,
1987, and the Trust Agreement dated February 27, 1987,11 Philippine
National Bank ceded its rights and interests over Bicolandia Sugar
135
Development Corporation's loans to the government through Asset
Privatization Trust.12
On November 18, 1988, Bicolandia Sugar Development Corporation,
with the conformity of Asset Privatization Trust, entered into a
Supervision and Financing Agreement 13 with Philippine Sugar
Corporation for the latter to operate and manage the mill until August
31, 1992.14
Due to Bicolandia Sugar Development Corporation's continued failure
to pay its loan obligations, Asset Privatization Trust filed a Petition for
Extrajudicial Foreclosure of Bicolandia Sugar Development
Corporation's mortgaged properties on March 26, 1990. There being
no other qualified bidder, Asset Privatization Trust was issued a
certificate of sale upon payment of P1,725,063,044.00.15
On December 15, 1990, NACUSIP/BISUDECO Chapter and Bicolandia
Sugar Development Corporation entered into a Collective Bargaining
Agreement to be in effect until December 15, 1996.16 Asset
Privatization Trust and Philippine Sugar Corporation were also joined
as parties.17
Sometime in 1992, the Asset Privatization Trust, pursuant to its
mandate to dispose of government properties for privatization, decided
to sell the assets and properties of Bicolandia Sugar Development
Corporation. On September 1, 1992, it issued a Notice of Termination
to Bicolandia Sugar Development Corporation's employees, advising
them that their services would be terminated within 30 days.
NASUCIP/BISUDECO Chapter received the Notice under protest.18
After the employees' dismissal from service, Bicolandia Sugar
Development Corporation's assets and properties were sold to Bicol
Agro-Industrial Producers Cooperative, Incorporated-Peñafrancia
Sugar Mill.19
As a result, several members of the NACUSIP/BISUDECO Chapter20
filed a Complaint dated April 24, 1996 charging Asset Privatization
Trust, Bicolandia Sugar Development Corporation, Philippine Sugar
Corporation, and Bicol Agro-Industrial Producers Cooperative,
Incorporated-Peñafrancia Sugar Mill with unfair labor practice, union
busting, and claims for labor standard benefits.21
On January 14, 2000, the Labor Arbiter rendered the Decision22
dismissing the Complaint for lack of merit. The Labor Arbiter found
that there was no union busting when Asset Privatization Trust and
Philippine Sugar Corporation disposed of Bicolandia Sugar
Development Corporation's assets and properties since Asset
Privatization Trust was merely disposing of a non-performing asset of
government, pursuant to its mandate under Proclamation No. 50.23
However, the Labor Arbiter found that although Asset Privatization
Trust previously released funds for separation pay, 13th month pay,
and accrued vacation and sick leave credits for 1992, George Emata,
Bienvenido Felina, Domingo Rebancos, Jr., Nelson Berina, Armando
Villote, and Roberto Tirao (Emata, et al.) refused to receive their
checks24 "on account of their protested dismissal."25 Their refusal to
receive their checks was premised on their Complaint that Asset
Privatization Trust's sale of Bicolandia Sugar Development Corporation
violated their Collective Bargaining Agreement and was a method of
union busting.26
While the Labor Arbiter acknowledged that Emata, et al.'s entitlement
to these benefits had already prescribed under Article 29127 of the
Labor Code,28 he nevertheless ordered Asset Privatization Trust to pay
Emata, et al. their benefits since their co-complainants were able to
claim their checks.29
Pursuant to the Decision, Asset Privatization Trust deposited with the
National Labor Relations Commission a Cashier's Check in the amount
of P116,182.20, the equivalent of the monetary award in favor of
Emata, et al. On February 8, 2000, it filed a Notice of Partial Appeal,
together with a Memorandum of Partial Appeal, before the National
Labor Relations Commission.30
Under Executive Order No. 323 dated December 6, 2000, Asset
Privatization Trust was succeeded by Privatization and Management
Office.31
On May 10, 2002, the National Labor Relations Commission issued the
Resolution32 dismissing the Partial Appeal for failure to perfect the
appeal within the statutory period of appeal. Privatization and
Management Office moved for reconsideration, but its Motion was
denied in the National Labor Relations Commission's June 21, 2002
Resolution.33
136

Aggrieved, Privatization and Management Office filed before the Court
of Appeals a Petition for Certiorari34 arguing that its appeal should
have been decided on the merits in the interest of substantial justice.
On February 27, 2004, the Court of Appeals rendered its Decision35
denying the Petition. According to the Court of Appeals, Privatization
and Management Office failed to show that it falls under the
exemption for strict compliance with procedural rules. It ruled that the
grant of separation pay to Emata, et al. was anchored on the finding
that Privatization and Management Office had already granted the
same benefits to the other complainants in the labor case.36
Privatization and Management Office moved for reconsideration, but
the Motion was denied in the Resolution37 dated September 19, 2006.
Hence, this Petition38 was filed.
Privatization and Management Office argues that there should have
been a liberal application of the procedural rules since the dismissal of
its appeal would cause grave and irreparable damage to government.39
It alleges that the money claims of the employees had already
prescribed since their Complaint for illegal dismissal was filed beyond
the three-year prescriptive period under Article 29140 of the Labor
Code.41
Privatization and Management Office argues further that even
assuming that the action had not yet prescribed, it would still not be
liable to pay separation pay and other benefits since the closure of the
business was due to serious losses and financial reverses.42 It also
argues that the transfer of Bicolandia Sugar Development
Corporation's assets and properties to it, by virtue of a foreclosure
sale, did not create an employer-employee relationship with Bicolandia
Sugar Development Corporation's employees.43 Moreover, since
Privatization and Management Office is an instrumentality of
government, any money claim against it should first be brought before
the Commission on Audit in view of Commonwealth Act No. 327,44 as
amended by Presidential Decree No. 1445.45
On the other hand, Emata, et al. allege that the Petition did not raise
any new issue that had not already been addressed by the Labor
Arbiter, the National Labor Relations Commission, and the Court of
Appeals.46 They argue that the issues raised involve the exercise of
discretion by the Court of Appeals and the quasi-judicial agencies.
They further argue that the Petition does not specifically mention any
law relied upon by Privatization and Management Office to support its
arguments.47
In rebuttal, Privatization and Management Office insists that it was
able to point out laws and jurisprudence that the Court of Appeals and
the National Labor Relations Commission failed to take into
consideration when it dismissed the appeal on a technicality.48
For this Court's resolution are the following issues:
First, whether there was an employer-employee relationship between
petitioner Privatization and Management Office (then Asset
Privatization Trust) and private respondents NACUSIP/BISUDECO
Chapter employees, and thus, whether petitioner is liable to pay the
separation benefits of private respondents George Emata, Bienvenido
Felina, Domingo Rebancos, Jr., Nelson Berina, Armando Villote, and
Roberto Tirao;
Second, whether Bicolandia Sugar Development Corporation's closure
could be considered serious business losses that would exempt
petitioner from payment of separation benefits; and
Lastly, whether private respondents' claim for labor standard benefits
had already prescribed under Article 291 of the Labor Code.
I
Before proceeding to the substantive issues of the case, petitioner's
procedural misstep before the National Labor Relations Commission
must first be addressed.
It is settled that appeal is not a right but a mere statutory privilege. It
may only be exercised within the manner provided by law.49 In labor
cases, the perfection of an appeal is governed by the Labor Code.
Article 223 provides:
chanRoblesvirtualLawlibrary
Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter
are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such
137
decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:
....
Petitioner received a copy of the Labor Arbiter's Decision on January
26, 2000.50 It had 10 days, or until February 7, 2000,51 to file its
appeal. However, it filed its Memorandum of Appeal only on February
8, 2000.52 Petitioner did not explain the reason for its delay.
Petitioner's disregard of procedural rules resulted in the denial of its
appeal before the National Labor Relations Commission and its
subsequent Petition for Certiorari before the Court of Appeals. In its
Petition for Review before this Court, petitioner still did not explain its
delay in filing the Memorandum of Appeal. It merely insisted that its
case should have been resolved on the merits.
Procedural rules are designed to facilitate the orderly administration of
justice.53 In labor cases, however, procedural rules are not to be
applied "in a very rigid and technical sense"54 if its strict application
will frustrate, rather than promote, substantial justice.55
Liberality favors the laborer.56 However, this case is also brought
against a government entity. If the government entity is found liable,
its liability will necessarily entail the dispensation of public funds.
Thus, its basis for liability must be subjected to strict scrutiny.
Even assuming that we grant the plea of liberality, the Petition will still
be denied.
II
Initially, petitioner was not liable for the Union's claims for labor
standard benefits. Its acquisition of Bicolandia Sugar Development
Corporation's assets was not for the purpose of continuing its
business. It was to conserve the assets in order to prepare it for
privatization.
When Philippine National Bank ceded its rights and interests over
Bicolandia Sugar Development Corporation's loan to petitioner in
1987, it merely transferred its rights and interests over Bicolandia's
outstanding loan obligations. The transfer was not for the purpose of
continuing Bicolandia Sugar Development Corporation's business.
Thus, petitioner never became the substitute employer of Bicolandia
Sugar Development Corporation's employees. It would not have been
liable for any money claim arising from an employer-employee
relationship.
Section 24 of Proclamation No. 50 states:
chanRoblesvirtualLawlibrary
The transfer of any asset of government directly to the national
government as mandated herein shall be for the purpose of
disposition, liquidation and/or privatization only, any import in the
covering deed of assignment to the contrary notwithstanding. Such
transfer, therefore, shall not operate to revert such assets
automatically to the general fund or the national patrimony, and shall
not require specific enabling legislation to authorize their subsequent
disposition, but shall remain as duly appropriated public properties
earmarked for assignment, transfer or conveyance under the signature
of the Minister of Finance or his duly authorized representative, who is
hereby authorized for this purpose, to any disposition entity approved
by the Committee pursuant to the provisions of this Proclamation.
(Emphasis supplied)
This Court explained in Republic v. National Labor Relations
Commission, et al.57 that the Asset Privatization Trust is usually joined
as a party respondent due to its role as the conservator of assets of
the corporation undergoing privatization:
chanRoblesvirtualLawlibrary
A matter that must not be overlooked is the fact that the inclusion of
APT as a respondent in the monetary claims against [Pantranco North
Express, Inc.] is merely the consequence of its being a conservator of
assets, a role that APT normally plays in, or the relationship that
ordinarily it maintains with, corporations identified for and while under
privatization. The liability of APT under this particular arrangement,
nothing else having been shown, should be co-extensive with the
amount of assets taken over from the privatized firm.
58
ChanRoblesVirtualawlibrary
Pursuant to its mandate under Proclamation No. 50, petitioner
provisionally took possession of assets and properties only for the
purpose of privatization or disposition. Its interest over Bicolandia
Sugar Development Corporation was not the latter's continued
business operations.
138
The issue of petitioner's role in the money claims of Bicolandia Sugar
Development Corporation's employees was already settled in Barayoga
v. Asset Privatization Trust.59
In Barayoga, BISUDECO-PHILSUCOR Corfarm Workers Union alleged
that when Philippine Sugar Corporation took over Bicolandia Sugar
Development Corporation's operations in 1988, it retained the
Corporation's existing employees until the start of the season
sometime in May 1991. At the start of the 1991 season, Philippine
Sugar Corporation failed to recall some of the union's members back
to work. For this reason, it filed a Complaint on July 23, 1991 for
unfair labor practice, illegal dismissal, illegal deduction, and
underpayment of wages and other labor standard benefits against
Bicolandia Sugar Development Corporation, Asset Privatization Trust,
and Philippine Sugar Corporation. Of the three respondents, only Asset
Privatization Trust was held liable by the Labor Arbiter and the
National Labor Relations Commission for the union members' money
claims.
The Court of Appeals reversed the Labor Arbiter's and the National
Labor Relations Commission's rulings and held that Asset Privatization
Trust did not become the employer of Bicolandia Sugar Development
Corporation's employees. The terminated employees appealed to this
Court, arguing that their claims against Asset Privatization Trust were
recognized under the law.
This Court, however, denied their Petition and held that the Asset
Privatization Trust could not be held liable for any money claims
arising from an employer-employee relationship. Asset Privatization
Trust, being a mere transferee of Bicolandia Sugar Development
Corporation's assets for the purpose of conservation, never became
the union's employer. Hence, it could not be liable for their money
claims:
chanRoblesvirtualLawlibrary
The duties and liabilities of BISUDECO, including its monetary liabilities
to its employees, were not all automatically assumed by APT as
purchaser of the foreclosed properties at the auction sale. Any
assumption of liability must be specifically and categorically agreed
upon. In Sundowner Development Corp. v. Drilon, the Court ruled
that, unless expressly assumed, labor contracts like collective
bargaining agreements are not enforceable against the transferee of
an enterprise. Labor contracts are in personam and thus binding only
between the parties.
No succession of employment rights and obligations can be said to
have taken place between the two. Between the employees of
BISUDECO and APT, there is no privity of contract that would make
the latter a substitute employer that should be burdened with the
obligations of the corporation. To rule otherwise would result in unduly
imposing upon APT an unwarranted assumption of accounts not
contemplated in Proclamation No. 50 or in the Deed of Transfer
between the national government and PNB.60 (Emphasis supplied)
For petitioner to be liable for private respondents' money claims
arising from an employer-employee relationship, it must specifically
and categorically agree to be liable for these claims.
III
While petitioner per se is not liable for private respondents' money
claims arising from an employer-employee relationship, it voluntarily
obliged itself to pay Bicolandia Sugar Development Corporation's
terminated employees separation benefits in the event of the
Corporation's privatization.
In Barayoga, the aggrieved union members were those who were not
recalled back to work by Philippine Sugar Corporation during the start
of the season in May 1991. The union members in this case were
those who were recalled back to work in May 1991 but were eventually
served with a Notice of Termination on September 1, 1992.
The timeline of events in this case mirror that of Barayoga. In
Barayoga, Asset Privatization Trust's Board of Trustees issued the
Resolution dated September 23, 1992 authorizing the payment of
separation pay and other benefits to Bicolandia Sugar Development
Corporation's employees in the event of its privatization:
chanRoblesvirtualLawlibrary
In the present case, petitioner-unions members who were not recalled
to work by Philsucor in May 1991 seek to hold APT liable for their
monetary claims and allegedly illegal dismissal. Significantly, prior to
the actual sale of BISUDECO assets to BAPCI on October 30, 1992, the
APT board of trustees had approved a Resolution on September 23,
1992. The Resolution authorized the payment of separation benefits to
the employees of the corporation in the event of its privatization. Not
139
included in the Resolution, though, were petitioner-unions members
who had not been recalled to work in May 1991.61 (Emphasis supplied)
This Resolution was not made part of the records of this case.
However, it is not disputed that the union members here were
Bicolandia Sugar Development Corporation's employees at the time
the Corporation was sold to Bicol Agro-Industrial Producers
Cooperative, Incorporated-Peñafrancia Sugar Mill. The Labor Arbiter
also found that:
chanRoblesvirtualLawlibrary
With respect to complainants['] claim for labor standard benefits,
records show that they were paid separation pay including 13th month
pay for the year 1992 as well as conversion of their accrued vacation
and sick leave (pp. 698 to 763, rollo) except that some complainants
refused to collect their checks representing said benefits whereas the
payments due complainants Domulot, de Luna, Falcon, Aguilar,
Gomez, Ramos, Arao, de Jesus, Abonite, Bomanlag, and Parro were
released by APT to this Arbitration Branch (p. 764), rollo) in
compliance with the Alias Writ of Execution issued by then Executive
Labor Arbiter Vito C. Bose.62ChanRoblesVirtualawlibrary
Under Section 27 of Proclamation No. 50, the employer-employee
relationship is severed upon the sale or disposition of assets of a
company undergoing privatization. This, however, is without prejudice
to "benefits incident to their employment or attaching to termination
under applicable employment contracts, collective bargaining
agreements, and applicable legislation":
chanRoblesvirtualLawlibrary
SECTION 27. AUTOMATIC TERMINATION OF EMPLOYER-EMPLOYEE
RELATIONS. Upon the sale or other disposition of the ownership and/
or controlling interest of the government in a corporation held by the
Trust, or all or substantially all of the assets of such corporation, the
employer-employee relations between the government and the officers
and other personnel of such corporations shall terminate by operation
of law. None of such officers or employees shall retain any vested right
to future employment in the privatized or disposed corporation, and
the new owners or controlling interest holders thereof shall have full
and absolute discretion to retain or dismiss said officers and
employees and to hire the replacement or replacements of any one or
all of them as the pleasure and confidence of such owners or
controlling interest holders may dictate.
Nothing in this section, however, be construed to deprive said officers
and employees of their vested entitlements in accrued or due
compensation and other benefits incident to their employment or
attaching to termination under applicable employment contracts,
collective bargaining agreements, and applicable legislation.
(Emphasis supplied)
When petitioner's Board of Trustees issued the Resolution dated
September 23, 1992, it acknowledged its contractual obligation to be
liable for benefits arising from an employer-employee relationship
even though, as a mere conservator of assets, it was not supposed to
be liable. Under Article III, Section 12(6) of Proclamation No. 50,63
Asset Privatization Trust had the power to release claims or settle
liabilities, as in this case. When it issued its Resolution dated
September 23, 1992, petitioner voluntarily bound itself to be liable for
separation benefits to Bicolandia Sugar Development Corporation's
terminated employees.
IV
Petitioner proposes that even if it is found liable for separation
benefits, it cannot be made to pay since Bicolandia Sugar
Development Corporation's closure was due to serious business losses.
An employer may terminate employment to prevent business losses.
Article 29864 of the Labor Code allows the termination of employees
provided that the employer pays the affected employees separation
pay of one month or at least one-half month for every month of pay,
whichever is higher. The provision states:
chanRoblesvirtualLawlibrary
Art. 298. Closure of establishment and reduction of personnel.
The employer may also terminate the employment of any employee
due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation
of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a
written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof.
In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at
least one (1) month pay for every year of service, whichever is higher.
In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall
140
be equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year.
The employer is exempted from having to pay separation pay if the
closure was due to serious business losses.65 A business suffers from
serious business losses when it has operated at a loss for such a
period of time that its financial standing is unlikely to improve in the
future.66
Bicolandia Sugar Development Corporation incurred heavy loans from
Philippine National Bank in the 1980s to cover its losses. The
Corporation's losses were substantial. When Philippine National Bank
transferred its interests over the Corporation's loans to petitioner, it
effectively transferred all of the Corporation's assets. Petitioner
eventually sold these assets and properties to a private company,
pursuant to its mandate to dispose of government's non-performing
assets.
Bicolandia Sugar Development Corporation's financial standing when
petitioner took over as its conservator clearly showed that it was
suffering from serious business losses and would have been exempted
from paying its terminated employees their separation pay. This
exemption, however, only applies to employers. It does not apply to
petitioner.
Even assuming that petitioner became NACUSIP/BISUDECO's
substitute employer, the exemption would still not apply if the
employer voluntarily assumes the obligation to pay terminated
employees, regardless of the employer's financial situation. In Benson
Industries Employees Union-ALU-TUCP v. Benson Industries, Inc.:67
To reiterate, an employer which closes shop due to serious business
losses is exempt from paying separation benefits under Article 297 of
the Labor Code for the reason that the said provision explicitly
requires the same only when the closure is not due to serious business
losses; conversely, the obligation is maintained when the employer's
closure is not due to serious business losses. For a similar exemption
to obtain against a contract, such as a CBA, the tenor of the parties'
agreement ought to be similar to the law's tenor. When the parties,
however, agree to deviate therefrom, and unqualifiedly covenant the
payment of separation benefits irrespective of the employer's financial
position, then the obligatory force of that contract prevails and its
terms should be carried out to its full effect.68(Emphasis supplied)
Petitioner's Board of Trustees issued the Resolution dated September
23, 1992 authorizing the payment of separation benefits to Bicolandia
Sugar Development Corporation's terminated employees in the event
of the Corporation's privatization. It voluntarily bound itself to pay
separation benefits regardless of the Corporation's financial standing.
It cannot now claim that it was exempted from paying such benefits
due to serious business losses.
V
Private respondents' claim to their separation benefits has not yet
prescribed under Article 291 of the Labor Code.69 Article 291 provides:
chanRoblesvirtualLawlibrary
Art. 291. Money claims. All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall be
filed within three (3) years from the time the cause of action accrued;
otherwise they shall be forever barred[.]
In Arriola v. National Labor Relations Commission,70 we have
distinguished a money claim arising from an employer-employee
relationship and a money claim as reparation for illegal acts done by
an employer in violation of the Labor Code. The prescriptive period for
the former is three (3) years under Article 291 of the Labor Code while
the prescriptive period of the latter is four (4) years under Article
114671 of the Civil Code. We also reiterated that the three-year
prescriptive period under Article 290 of the Labor Code refers to
"illegal acts penalized under the Labor Code, including committing any
of the prohibited activities during strikes and lockouts, unfair labor
practices, and illegal recruitment activities."72 Article 290 provides:
chanRoblesvirtualLawlibrary
Art. 290. Offenses. Offenses penalized under this Code and the rules
and regulations pursuant thereto shall prescribe in three (3) years.
All unfair labor practice arising from Book V shall be filed within one
(1) year from accrual of such unfair labor practice; otherwise, they
shall be forever barred.
Private respondents filed their Complaint for unfair labor practices,
union busting, and labor standard benefits on April 24, 1996,73 or
three (3) years, seven (7) months and 24 days after their termination
on September 30, 1992. Their Complaint essentially alleged that their
termination was illegal because it was made prior to Bicolandia Sugar
Development Corporation's sale to Bicol Agro-Industrial Producers
Cooperative, Incorporated-Peñafrancia Sugar Mill.74 They also alleged
141
that the sale was illegal since it was made for the purpose of removing
NACUSIP/BISUDECO Chapter as the sugar mill's Union.75
Under the prescriptive periods stated in the Labor Code and Arriola,
private respondents' cause of action and any subsequent money claim
for illegal termination has not yet prescribed. Their Complaint dated
April 24, 1996 before the Labor Arbiter was filed within the
prescriptive period.
The claim for separation pay, 13th month pay, and accrued vacation
and sick leaves are incidental to employer-employee relations. Under
Article 291 of the Labor Code, these claims prescribe within three (3)
years from the accrual of the cause of action:
chanRoblesvirtualLawlibrary
Art. 291. Money Claims. All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall be
filed within three (3) years from the time the cause of action accrued;
otherwise they shall be barred forever.
This Court has stated that "in the computation of the three-year
prescriptive period, a determination must be made as to the period
when the act constituting a violation of the workers' right to the
benefits being claimed was committed."76 In Barayoga, the September
23, 1992 Resolution "authorized the payment of separation benefits to
the employees of the corporation in the event of its privatization."77
The payment of these benefits, however, to private respondents was
mandated by the Labor Arbiter in his Decision dated January 14,
2000.78 It was only then that private respondents' right to these
benefits was determined. Since the case was appealed to the National
Labor Relations Commission, the prescriptive period to claim these
benefits began to run only after the Commission's Decision had
become final and executory. The refusal to pay these benefits after the
Commission's Decision had become final and executory would be "the
act constituting a violation of the worker's right to the benefits being
claimed."79
Under Rule VII, Section 1480 of the New Rules of Procedure of the
National Labor Relations Commission,81 decisions of the Commission
become final and executory 10 days after the receipt of the notice of
decision, order, or resolution. The three-year prescriptive period,
therefore, begins from private respondents' receipt of the National
Labor Relations Commission Resolution dated June 21, 2002 denying
petitioner's Motion for Reconsideration.
Since the Complaint, which included the claim for labor benefits, was
filed on April 24, 1996, private respondents' claims did not prescribe.
Further, the Labor Arbiter did not err in ordering the release of
separation benefits to private respondents despite their initial refusal
to receive them. The Constitution guarantees workers full protection of
their rights, including that of "economic security and parity."82 Article
II, Section 18 and Article XIII, Section 3 state:
chanRoblesvirtualLawlibrary
Article II
State Policies
SECTION 18. The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their welfare.
Article XIII
Labor
SECTION 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work, and
a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by
law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.
Under these provisions, workers should be granted all rights, including
monetary benefits, enjoyed by other workers who are similarly
142
situated. Thus, the separation benefits granted to Bicolandia Sugar
Development Corporation's terminated employees as of September 30,
1992 must be enjoyed by all, including private respondents.
This case is unique, however, in that though private respondents'
separation benefits were already released by petitioner, they refused
to collect their checks "on account of their protested dismissal."83 Their
refusal to receive their checks was premised on their Complaint that
petitioner's sale of Bicolandia Sugar Development Corporation violated
their Collective Bargaining Agreement and was a method of union
busting. It was not because of negligence or malice. It was because of
their honest belief that their rights as laborers were violated and the
grant of separation benefits would not be enough compensation for it.
While private respondents' allegations have not been properly
substantiated, it would be unjust to deprive them of their rightful claim
to their separation benefits.
Moreover, private respondents' co-complainants84 were able to collect
their checks for their separation benefits during the pendency of the
Complaint85 without having to go through the Commission on Audit.
Under Section 26 of the State Auditing Code, the Commission on Audit
has jurisdiction over the settlement of debts and claims "of any sort"
against government:
chanRoblesvirtualLawlibrary
Section 26. General jurisdiction. The authority and powers of the
Commission shall extend to and comprehend all matters relating to
auditing procedures, systems and controls, the keeping of the general
accounts of the Government, the preservation of vouchers pertaining
thereto for a period of ten years, the examination and inspection of
the books, records, and papers relating to those accounts; and the
audit and settlement of the accounts of all persons respecting funds or
property received or held by them in an accountable capacity, as well
as the examination, audit, and settlement of all debts and claims of
any sort due from or owing to the Government or any of its
subdivisions, agencies and instrumentalities. The said jurisdiction
extends to all government-owned or controlled corporations, including
their subsidiaries, and other selfgoverning [sic] boards, commissions,
or agencies of the Government, and as herein prescribed, including
non-governmental entities subsidized by the government, those
funded by donation through the government, those required to pay
levies or government share, and those for which the government has
put up a counterpart fund or those partly funded by the government.
(Emphasis supplied)
The purpose of requiring a separate process with the Commission on
Audit for money claims against government is under the principle that
public funds may only be released upon proper appropriation and
disbursement:
chanRoblesvirtualLawlibrary
Section 4. Fundamental principles. Financial transactions and
operations of any government agency shall be governed by the
fundamental principles set forth hereunder, to wit:
(1) No money shall be paid out of any public treasury or depository
except in pursuance of an appropriation law or other specific statutory
authority.
(2) Government funds or property shall be spent or used solely for
public purposes.
(3) Trust funds shall be available and may be spent only for the
specific purpose for which the trust was created or the funds received.
(4) Fiscal responsibility shall, to the greatest extent, be shared by all
those exercising authority over the financial affairs, transactions, and
operations of the government agency.
(5) Disbursements or disposition of government funds or property
shall invariably bear the approval of the proper officials.
(6) Claims against government funds shall be supported with complete
documentation.
(7) All laws and regulations applicable to financial transactions shall be
faithfully adhered to.
(8) Generally accepted principles and practices of accounting as well
as of sound management and fiscal administration shall be observed,
provided that they do not contravene existing laws and regulations.
Money claims against government include money judgments by
courts, which must be brought before the Commission on Audit before
it can be satisfied. Supreme Court Administrative Circular No.
10-200086 states the rationale for requiring claimants to file their
money judgments before the Commission on Audit:
143
chanRoblesvirtualLawlibrary
Republic of the Philippines
Supreme Court
Manila
ADMINISTRATIVE CIRCULAR NO. 10-2000
TO : All Judges of Lower Courts
SUBJECT : Exercise of Utmost Caution, Prudence and Judiciousness in
the Issuance of Writs of Execution to Satisfy Money Judgments Against
Government Agencies and Local Government Units
In order to prevent possible circumvention of the rules and procedures
of the Commission on Audit, judges are hereby enjoined to observe
utmost caution, prudence and judiciousness in the issuance of writs of
execution to satisfy money judgments against government agencies
and local government units.
Judges should bear in mind that in Commissioner of Public Highways
v. San Diego (31 SCRA 617, 625 [1970]), this Court explicitly stated:
The universal rule that where the State gives its consent to be sued by
private parties either by general or special law, it may limit claimant's
action 'only up to the completion of proceedings anterior to the stage
of execution' and that the power of the Courts ends when the
judgment is rendered, since government funds and properties may not
be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the corresponding
appropriation as required by law. The functions and public services
rendered by the State cannot be allowed to be paralyzed or disrupted
by the diversion of public funds from their legitimate and specific
objects, as appropriated by law.
Moreover, it is settled jurisprudence that upon determination of State
liability, the prosecution, enforcement or satisfaction thereof must still
be pursued in accordance with the rules and procedures laid down in
P.D. No. 1445, otherwise known as the Government Auditing Code of
the Philippines (Department of Agriculture v. NLRC, 227 SCRA 693,
701-02 [1993] citing Republic vs. Villasor, 54 SCRA 84 [1973]). All
money claims against the Government must first be filed with the
Commission on Audit which must act upon it within sixty days.
Rejection of the claim will authorize the claimant to elevate the matter
to the Supreme Court on certiorari and in effect sue the State thereby
(P.D. 1445, Sections 49-50). . . . (Emphasis supplied)
Thus, in National Electrification Administration v. Morales,87 while
entitlement to claims for rice allowance, meal allowance, medical/
dental/optical allowance, children's allowance, and longevity pay under
Republic Act No. 6758 may be adjudicated by the trial court, a
separate action must be filed before the Commission on Audit for the
satisfaction of the judgment award.
Similarly, in Lockheed Detective and Watchman Agency v. University
of the Philippines,88 this Court reimbursed to the University of the
Philippines its funds that were garnished upon orders of the National
Labor Relations Commission for the satisfaction of a judgment award.
The reimbursement was on the ground that the money claim must first
be filed before the Commission on Audit.
The situation in this case, however, is different from these previous
cases. Petitioner's Board of Trustees already issued the Resolution on
September 23, 1992 for the release of funds to pay separation
benefits to terminated employees of Bicolandia Sugar Development
Corporation.89 Private respondents' checks were released by petitioner
to the Arbitration Branch of the Labor Arbiter in 1992.90 Under these
circumstances, it is presumed that the funds to be used for private
respondents' separation benefits have already been appropriated and
disbursed. This would account for why private respondents' co-
complainants were able to claim their checks without need of filing a
separate claim before the Commission on Audit.
In this instance, private respondents' separation benefits may be
released to them without filing a separate money claim before the
Commission on Audit. It would be unjust and a violation of private
respondents' right to equal protection if they were not allowed to
claim, under the same conditions as their fellow workers, what is
rightfully due to them.chanrobleslaw
WHEREFORE, the Petition is DENIED.
SO ORDERED.cralawlawlibrary
Carpio, (Chairperson), Del Castillo, and Mendoza, JJ., concur.
Brion, J., on leavechanroblesvirtuallawlibrary
144
Manila
THIRD DIVISION
G.R. No. 77765 August 15, 1988
SEBASTIAN COSCULLUELA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and the REPUBLIC OF THE
PHILIPPINES, represented by NATIONAL IRRIGATION ADMINISTRATION,
respondents.
Pio G. Villoso for petitioner.
GUTIERREZ, JR., J.:
This is a petition for review on certiorari which seeks to set aside the decision of
the Court of Appeals nullifying the orders of the trial court on the ground that said
orders in effect, sought the enforcement of a writ of execution against
government funds. The petitioner contends that to set aside the writ of execution
would be an abridgment of his right to just compensation and due process of law.
The public respondents on the other hand, state that government funds cannot
be disbursed without proper appropriation and that a writ of execution cannot
legally issue against the State.
On March 8, 1976, the Republic of the Philippines filed a complaint with the
Court of First Instance of Iloilo to expropriate two parcels of land in the
municipality of Barotac, Iloilo owned by petitioner Sebastian Cosculluela and one
Mita Lumampao, for the construction of the canal network of the Barotac
Irrigation Project.
On April 4, 1976, the trial court rendered a decision granting the expropriation
and ordered the public respondent to pay the following amounts:
1. To Mita Lumampao, the sum of P20,000 minus P4,001.82 which she had
already withdrawn plus P3,000 attorney's fees; and
2. Sebastian Cosculluela, the sum of P200,000.00 which is the reasonable
estimate of his actual and consequential loss by reason of the taking of his 3
hectares of land, destruction of the sugarcane therein and the reduce in the yield
of his sugarcane farm due to water lagging and seepage; plus attorney's fees of
P10,000 and litigation expenses of P5,000.00. (p. 36, Rollo)
On appeal, the Court of Appeals modified the trial court's decision in that the
attorney's fees and litigation expenses were reduced from P10,000.00 and
P5,000.00 to P5,000.00 and P2,500.00 respectively. The decision became final
and executory on September 21, 1985.
On May 7, 1986, on motion of the petitioner, the trial court ordered the issuance
of a writ of execution to implement the judgment of the appellate court.
On August 11, 1986, the respondent Republic filed a motion to set aside the
order of May 7, 1986 as well as the writ of execution issued pursuant thereto,
contending that the funds of the National Irrigation Authority (NIA) are
government funds and therefore, cannot be disbursed without a government
appropriation.
On October 6, 1986, the lower court issued an order modifying its order of May 7,
1986, directing instead that the respondenit Republic deposit with the Philippine
National Bank (PNB) in the name of the petitioner, the amount adjudged in favor
of the latter.
The respondent filed a petition with the Court of Appeals to annul the orders of
May 7 and October 6, 1986.
On November 25, 1986, the appellate court rendered the questioned decision
setting aside the aforementioned orders of the trial court on the ground that
public or government funds are not subject to levy and execution.
In this instant petition, the petitioner assails the decision of the appellate court as
being violative of his right to just compensation and due process of law. He
maintains that these constitutional guarantees transcend all administrative and
procedural laws and jurisprudence for as between these said laws and the
constitutional rights of private citizens, the latter must prevail.
As admitted by the respondent Republic, the NIA took possession of the
expropriated property in 1975 and for around ten (10) years already, it has been
servicing the farmers on both sides of the Barotac Viejo Irrigation Project in Iloilo
Province and has been collecting fees therefor by way of taxes at the expense of
the petitioner. On the other hand, the petitioner, who is already more than eighty
(80) years old and sickly, is undergoing frequent hospitalization, and is made to
suffer further by the unconscionable delay in the payment of just compensation
based on a final and executory judgment.
The respondent Republic, on the other hand, argues that while it has no intention
of keeping the land and dishonoring the judgment, the manner by which the
same will have to be satisfied must not be inconsistent with prevailing
jurisprudence, and that is, that public funds such as those of the respondent NIA
cannot be disbursed without the proper appropriation.
We rule for the petitioner.
One of the basic principles enshrined in our Constitution is that no person shall
be deprived of his private property without due process of law; and in
expropriation cases, an essential element of due process is that there must be
just compensation whenever private property is taken for public use. Thus, in the
case of Province of Pangasinan v. CFI Judge of Pangasinan, Branch VIII (80
SCRA 117, 120-121), this Court speaking through then Chief Justice Fernando
ruled:
There is full and ample recognition of the power of eminent domain by Justice
Street in a leading case of Visayan Refining Co. v. Camus (4C) Phil. 550 [1919])
decided prior to the Commonwealth, the matter being governed by the Philippine
Autonomy Act of 1916, otherwise known as the Jones Law. It was characterized
as "inseparable from sovereignty being essential to the existence of the State
and inherent in government even in its most primitive forms." (Ibid, 558)
Nonetheless, he was careful to point out: "In other words, the provisions now
generally found in the modern laws of constitutions of civilized countries to the
effect that private property shall not be taken for public use without just
compensation have their origin in the recognition of a necessity for restraining
the sovereign and protecting the individual. (Ibid, 559) Moreover, he did
emphasize: "Nevertheless it should be noted that the whole problem of
expropriation is resolvable in its ultimate analysis into a constitutional question of
145
due process of law. ... Even were there no organic or constitutional provision in
force requiring compensation to be paid, the seizure of one's property without
payment, even though intended for a public use, would undoubtedly be held to
be a taking without due process of law and a denial of the equal protection of the
laws. That aspect of the matter was stressed in the recent case of J. M. Tuason
and Co., Inc. v. Land Tenure Administration. (31 SCRA 413) Conformably to such
a fundamental principle then, in accordance with a constitutional mandate, this
Court has never hesitated to assure that there be just compensation. If it were
otherwise, the element of arbitrariness certainly would enter. It is bad enough
that an owner of a property, in the event of the exercise of this sovereign
prerogative, has no choice but to yield to such a taking. It is infinitely worse if
thereafter, he is denied all these years the payment to which he is entitled. This
is one of the instances where law and morals speak to the same effect. (Cf.
Province of Tayabas v. Perez, 66 Phil. 467 [1938] and other related cases).
The property of the petitioner was taken by the government in 1975. The
following year, respondent NIA made the required deposit of P2,097.30 with the
Philippine National Bank and within the same year, the Barotac Viejo Irrigation
Project was finished. Since then, for more than a period of ten (10) years, the
project has been of service to the farmers nearby in the province of Iloilo. It is,
thus, inconceivable how this project could have been started without the
necessary appropriation for just compensation. Needless to state, no
government instrumentality, agency, or subdivision has any business initiating
expropriation proceedings unless it has adequate funds, supported by proper
appropriation acts, to pay for the property to be seized from the owner. Not only
was the government able to make an initial deposit of P2,097.30 but the project
was finished in only a year's time. We agree with the petitioner that before the
respondent NIA undertook the construction of the Barotac Viejo Irrigation Project,
the same was duly authorized, with the corresponding funds appropriated for the
payment of expropriated land and to pay for equipment, salaries of personnel,
and other expenses incidental to the project. The NIA officials responsible for the
project have to do plenty of explaining as to where they misdirected the funds
intended for the expropriated property.
The present case must be distinguished from earlier cases where payment for
property expropriated by the National Government may not be realized upon
execution. As a rule, the legislature must first appropriate the additional amount
to pay the award. (See Commissioner of Public Highways v. San Diego, 31
SCRA 616 and Visayan Refining Co. v. Camus & Paredes, 40 Phil. 550).
In the present case, the Barotac Viejo Project was a package project of
government. Money was allocated for an entire project. Before bulldozers and
ditch diggers tore up the place and before millions of pesos were put into the
development of the project, the basic responsibility of paying the owners for
property seized from them should have been met.
Another distinction lies in the fact that the NIA collects fees for the use of the
irrigation system constructed on the petitioner's land. It does not have to await an
express act of Congress to locate funds for this specific purpose. The rule in
earlier precedents that the functions and public services rendered by the state
cannot be allowed to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects (Commissioner of Public Highways v.
San Diego, supra, at p. 625) is not applicable here. There is no showing of any
public service to be disrupted if the fees collected from the farmers of Iloilo for
the use of irrigation water from the disrupted property were utilized to pay for that
property.
We must emphasize that nowhere in any expropriation case has there been a
deviation from the rule that the Government must pay for expropriated property.
In the Commissioner of Public Highways case, the Court stressed that it is
incumbent upon the legislature to appropriate the necessary amount because it
cannot keep the land and dishonor the judgment.
This case illustrates the expanded meaning of "public use" in the eminent
domain clause. (Constitution, Article III, Section 9.) The petitioner's land was not
taken for the construction of a road, bridge, school, public buildings, or other
traditional objects of expropriation. When the National Housing Authority
expropriates raw land to convert into housing projects for rent or sale to private
persons or the NIA expropriates land to construct irrigation systems and sells
water rights to farmers, it would be the height of abuse and ignominy for the
agencies to start earning from those properties while ignoring final judgments
ordering the payment of just compensation to the former owners.
Just compensation means not only the correct determination of the amount to be
paid to the owner of the land but also the payment of the land within a
reasonable time from its taking. Without prompt payment, compensation cannot
be considered "just" for the property owner is made to suffer the consequence of
being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his loss. Thus,
in the case of Provincial Government of Sorsogon v. Rosa E. Vda. de Villaroyo
(153 SCRA 291), we ruled:
The petitioners have been waiting for more than thirty years to be paid for their
land which was taken for use as a public high school. As a matter of fair
procedure, it is the duty of the Government whenever it takes property from
private persons against their will to supply all required documentation and
facilitate payment of just compensation. The imposition of unreasonable
requirements and vexatious delays before effecting payment is not only galling
and arbitrary but a rich source of discontent with government. There should be
some kind of swift and effective recourse against unfeeling and uncaring acts of
middle or lower level bureaucrats.
Under ordinary circumstances, immediate return to the owners of the unpaid
property is the obvious remedy. ln cases where land is taken for public use,
public interest, however, must, be considered. The children of Gubat, Sorsogon
have been using the disputed land as their high school athletic grounds for thirty
years. (Emphasis supplied)
In the present case, the irrigation project was completed and has been in
operation since 1976. The project is benefitting the farmers specifically and the
community in general. Obviously, the petitioner's land cannot be returned to him.
However, it is high time that the petitioner be paid what was due him eleven
146
years ago. It is arbitrary and capricious for a government agency to initiate
expropriation proceedings, seize a person's property, allow the judgment of the
court to become final and executory and then refuse to pay on the ground that
there are no appropriations for the property earlier taken and profitably used. We
condemn in the strongest possible terms the cavalier attitude of government
officials who adopt such a despotic and irresponsible stance.
WHEREFORE, the petition is hereby GRANTED. The decision and order of the
respondent appellate court dated November 25, 1987 and February 16, 1987
respectively are ANNULLED and SET ASIDE. The Regional Trial Court of Iloilo
City is ordered to immediately execute the final judgment in Civil Case No. 10530
and effect payment of P200,000.00 as just compensation deducting therefrom
the partial payment already deposited by the respondent at the institution of the
action below with legal interest from September 21, 1985, plus P5,000.00
attorney's fees and P2,500.00 litigation expenses.
SO ORDERED
G.R. No. 101949 December 1, 1994
THE HOLY SEE, petitioner,
vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional
Trial Court of Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES,
INC., respondents.
Padilla Law Office for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to
reverse and set aside the Orders dated June 20, 1991 and September 19, 1991
of the Regional Trial Court, Branch 61, Makati, Metro Manila in Civil Case No.
90-183.
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the
complaint in Civil Case No. 90-183, while the Order dated September 19, 1991
denied the motion for reconsideration of the June 20,1991 Order.
Petitioner is the Holy See who exercises sovereignty over the Vatican City in
Rome, Italy, and is represented in the Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation
engaged in the real estate business.
This petition arose from a controversy over a parcel of land consisting of 6,000
square meters (Lot 5-A, Transfer Certificate of Title No. 390440) located in the
Municipality of Parañaque, Metro Manila and registered in the name of petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer
Certificates of Title Nos. 271108 and 265388 respectively and registered in the
name of the Philippine Realty Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr.,
acting as agent to the sellers. Later, Licup assigned his rights to the sale to
private respondent.
In view of the refusal of the squatters to vacate the lots sold to private
respondent, a dispute arose as to who of the parties has the responsibility of
evicting and clearing the land of squatters. Complicating the relations of the
parties was the sale by petitioner of Lot 5-A to Tropicana Properties and
Development Corporation (Tropicana).
I
On January 23, 1990, private respondent filed a complaint with the Regional Trial
Court, Branch 61, Makati, Metro Manila for annulment of the sale of the three
parcels of land, and specific performance and damages against petitioner,
represented by the Papal Nuncio, and three other defendants: namely, Msgr.
Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil Case No.
90-183).
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of
petitioner and the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at
the price of P1,240.00 per square meters; (2) the agreement to sell was made on
the condition that earnest money of P100,000.00 be paid by Licup to the sellers,
and that the sellers clear the said lots of squatters who were then occupying the
same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in the same month,
Licup assigned his rights over the property to private respondent and informed
the sellers of the said assignment; (5) thereafter, private respondent demanded
from Msgr. Cirilos that the sellers fulfill their undertaking and clear the property of
squatters; however, Msgr. Cirilos informed private respondent of the squatters'
refusal to vacate the lots, proposing instead either that private respondent
undertake the eviction or that the earnest money be returned to the latter; (6)
private respondent counterproposed that if it would undertake the eviction of the
squatters, the purchase price of the lots should be reduced from P1,240.00 to
P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of
P100,000.00 and wrote private respondent giving it seven days from receipt of
the letter to pay the original purchase price in cash; (8) private respondent sent
the earnest money back to the sellers, but later discovered that on March 30,
1989, petitioner and the PRC, without notice to private respondent, sold the lots
to Tropicana, as evidenced by two separate Deeds of Sale, one over Lot 5-A,
and another over Lots 5-B and 5-D; and that the sellers' transfer certificate of title
over the lots were cancelled, transferred and registered in the name of
Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it and
thus enriched itself at the expense of private respondent; (10) private respondent
demanded the rescission of the sale to Tropicana and the reconveyance of the
lots, to no avail; and (11) private respondent is willing and able to comply with the
terms of the contract to sell and has actually made plans to develop the lots into
a townhouse project, but in view of the sellers' breach, it lost profits of not less
than P30,000.000.00.
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale
between petitioner and the PRC on the one hand, and Tropicana on the other;
(2) the reconveyance of the lots in question; (3) specific performance of the
agreement to sell between it and the owners of the lots; and (4) damages.
147
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the
complaint — petitioner for lack of jurisdiction based on sovereign immunity from
suit, and Msgr. Cirilos for being an improper party. An opposition to the motion
was filed by private respondent.
On June 20, 1991, the trial court issued an order denying, among others,
petitioner's motion to dismiss after finding that petitioner "shed off [its] sovereign
immunity by entering into the business contract in question" (Rollo, pp. 20-21).
On July 12, 1991, petitioner moved for reconsideration of the order. On August
30, 1991, petitioner filed a "Motion for a Hearing for the Sole Purpose of
Establishing Factual Allegation for claim of Immunity as a Jurisdictional
Defense." So as to facilitate the determination of its defense of sovereign
immunity, petitioner prayed that a hearing be conducted to allow it to establish
certain facts upon which the said defense is based. Private respondent opposed
this motion as well as the motion for reconsideration.
On October 1, 1991, the trial court issued an order deferring the resolution on the
motion for reconsideration until after trial on the merits and directing petitioner to
file its answer (Rollo, p. 22).
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the
privilege of sovereign immunity only on its own behalf and on behalf of its official
representative, the Papal Nuncio.
On December 9, 1991, a Motion for Intervention was filed before us by the
Department of Foreign Affairs, claiming that it has a legal interest in the outcome
of the case as regards the diplomatic immunity of petitioner, and that it "adopts
by reference, the allegations contained in the petition of the Holy See insofar as
they refer to arguments relative to its claim of sovereign immunity from
suit" (Rollo, p. 87).
Private respondent opposed the intervention of the Department of Foreign
Affairs. In compliance with the resolution of this Court, both parties and the
Department of Foreign Affairs submitted their respective memoranda.
II
A preliminary matter to be threshed out is the procedural issue of whether the
petition for certiorari under Rule 65 of the Revised Rules of Court can be availed
of to question the order denying petitioner's motion to dismiss. The general rule
is that an order denying a motion to dismiss is not reviewable by the appellate
courts, the remedy of the movant being to file his answer and to proceed with the
hearing before the trial court. But the general rule admits of exceptions, and one
of these is when it is very clear in the records that the trial court has no
alternative but to dismiss the complaint (Philippine National Bank v. Florendo,
206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114
[1992]. In such a case, it would be a sheer waste of time and energy to require
the parties to undergo the rigors of a trial.
The other procedural question raised by private respondent is the personality or
legal interest of the Department of Foreign Affairs to intervene in the case in
behalf of the Holy See (Rollo, pp. 186-190).
In Public International Law, when a state or international agency wishes to plead
sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office
of the state where it is sued to convey to the court that said defendant is entitled
to immunity.
In the United States, the procedure followed is the process of "suggestion,"
where the foreign state or the international organization sued in an American
court requests the Secretary of State to make a determination as to whether it is
entitled to immunity. If the Secretary of State finds that the defendant is immune
from suit, he, in turn, asks the Attorney General to submit to the court a
"suggestion" that the defendant is entitled to immunity. In England, a similar
procedure is followed, only the Foreign Office issues a certification to that effect
instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965];
Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations,
50 Yale Law Journal 1088 [1941]).
In the Philippines, the practice is for the foreign government or the international
organization to first secure an executive endorsement of its claim of sovereign or
diplomatic immunity. But how the Philippine Foreign Office conveys its
endorsement to the courts varies. In International Catholic Migration Commission
v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a
letter directly to the Secretary of Labor and Employment, informing the latter that
the respondent-employer could not be sued because it enjoyed diplomatic
immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the
Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v.
Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign
Affairs to request the Solicitor General to make, in behalf of the Commander of
the United States Naval Base at Olongapo City, Zambales, a "suggestion" to
respondent Judge. The Solicitor General embodied the "suggestion" in a
Manifestation and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of
Legal Affairs moved with this Court to be allowed to intervene on the side of
petitioner. The Court allowed the said Department to file its memorandum in
support of petitioner's claim of sovereign immunity.
In some cases, the defense of sovereign immunity was submitted directly to the
local courts by the respondents through their private counsels (Raquiza v.
Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil.
262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and
companion cases). In cases where the foreign states bypass the Foreign Office,
the courts can inquire into the facts and make their own determination as to the
nature of the acts and transactions involved.
III
The burden of the petition is that respondent trial court has no jurisdiction over
petitioner, being a foreign state enjoying sovereign immunity. On the other hand,
private respondent insists that the doctrine of non-suability is not anymore
absolute and that petitioner has divested itself of such a cloak when, of its own
free will, it entered into a commercial transaction for the sale of a parcel of land
located in the Philippines.
A. The Holy See
148
Before we determine the issue of petitioner's non-suability, a brief look into its
status as a sovereign state is in order.
Before the annexation of the Papal States by Italy in 1870, the Pope was the
monarch and he, as the Holy See, was considered a subject of International Law.
With the loss of the Papal States and the limitation of the territory under the Holy
See to an area of 108.7 acres, the position of the Holy See in International Law
became controversial (Salonga and Yap, Public International Law 36-37 [1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy
recognized the exclusive dominion and sovereign jurisdiction of the Holy See
over the Vatican City. It also recognized the right of the Holy See to receive
foreign diplomats, to send its own diplomats to foreign countries, and to enter
into treaties according to International Law (Garcia, Questions and Problems In
International Law, Public and Private 81 [1948]).
The Lateran Treaty established the statehood of the Vatican City "for the purpose
of assuring to the Holy See absolute and visible independence and of
guaranteeing to it indisputable sovereignty also in the field of international
relations" (O'Connell, I International Law 311 [1965]).
In view of the wordings of the Lateran Treaty, it is difficult to determine whether
the statehood is vested in the Holy See or in the Vatican City. Some writers even
suggested that the treaty created two international persons — the Holy See and
Vatican City (Salonga and Yap, supra, 37).
The Vatican City fits into none of the established categories of states, and the
attribution to it of "sovereignty" must be made in a sense different from that in
which it is applied to other states (Fenwick, International Law 124-125 [1948];
Cruz, International Law 37 [1991]). In a community of national states, the Vatican
City represents an entity organized not for political but for ecclesiastical purposes
and international objects. Despite its size and object, the Vatican City has an
independent government of its own, with the Pope, who is also head of the
Roman Catholic Church, as the Holy See or Head of State, in conformity with its
traditions, and the demands of its mission in the world. Indeed, the world-wide
interests and activities of the Vatican City are such as to make it in a sense an
"international state" (Fenwick, supra., 125; Kelsen, Principles of International
Law 160 [1956]).
One authority wrote that the recognition of the Vatican City as a state has
significant implication — that it is possible for any entity pursuing objects
essentially different from those pursued by states to be invested with
international personality (Kunz, The Status of the Holy See in International Law,
46 The American Journal of International Law 308 [1952]).
Inasmuch as the Pope prefers to conduct foreign relations and enter into
transactions as the Holy See and not in the name of the Vatican City, one can
conclude that in the Pope's own view, it is the Holy See that is the international
person.
The Republic of the Philippines has accorded the Holy See the status of a
foreign sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has
had diplomatic representations with the Philippine government since 1957 (Rollo,
p. 87). This appears to be the universal practice in international relations.
B. Sovereign Immunity
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted
the generally accepted principles of International Law. Even without this
affirmation, such principles of International Law are deemed incorporated as part
of the law of the land as a condition and consequence of our admission in the
society of nations (United States of America v. Guinto, 182 SCRA 644 [1990]).
There are two conflicting concepts of sovereign immunity, each widely held and
firmly established. According to the classical or absolute theory, a sovereign
cannot, without its consent, be made a respondent in the courts of another
sovereign. According to the newer or restrictive theory, the immunity of the
sovereign is recognized only with regard to public acts or acts jure imperii of a
state, but not with regard to private acts or acts jure gestionis

(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-
Santiago, Public International Law 194 [1984]).
Some states passed legislation to serve as guidelines for the executive or judicial
determination when an act may be considered as jure gestionis. The United
States passed the Foreign Sovereign Immunities Act of 1976, which defines a
commercial activity as "either a regular course of commercial conduct or a
particular commercial transaction or act." Furthermore, the law declared that the
"commercial character of the activity shall be determined by reference to the
nature of the course of conduct or particular transaction or act, rather than by
reference to its purpose." The Canadian Parliament enacted in 1982 an Act to
Provide For State Immunity in Canadian Courts. The Act defines a "commercial
activity" as any particular transaction, act or conduct or any regular course of
conduct that by reason of its nature, is of a "commercial character."
The restrictive theory, which is intended to be a solution to the host of problems
involving the issue of sovereign immunity, has created problems of its own. Legal
treatises and the decisions in countries which follow the restrictive theory have
difficulty in characterizing whether a contract of a sovereign state with a private
party is an act jure gestionis or an act jure imperii.
The restrictive theory came about because of the entry of sovereign states into
purely commercial activities remotely connected with the discharge of
governmental functions. This is particularly true with respect to the Communist
states which took control of nationalized business activities and international
trading.
This Court has considered the following transactions by a foreign state with
private parties as acts jure imperii: (1) the lease by a foreign government of
apartment buildings for use of its military officers (Syquia v. Lopez, 84 Phil. 312
[1949]; (2) the conduct of public bidding for the repair of a wharf at a United
States Naval Station (United States of America v. Ruiz, supra.); and (3) the
change of employment status of base employees (Sanders v. Veridiano, 162
SCRA 88 [1988]).
On the other hand, this Court has considered the following transactions by a
foreign state with private parties as acts jure gestionis: (1) the hiring of a cook in
the recreation center, consisting of three restaurants, a cafeteria, a bakery, a
store, and a coffee and pastry shop at the John Hay Air Station in Baguio City, to
149
cater to American servicemen and the general public (United States of America v.
Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber
shops in Clark Air Base in Angeles City (United States of America v. Guinto, 182
SCRA 644 [1990]). The operation of the restaurants and other facilities open to
the general public is undoubtedly for profit as a commercial and not a
governmental activity. By entering into the employment contract with the cook in
the discharge of its proprietary function, the United States government impliedly
divested itself of its sovereign immunity from suit.
In the absence of legislation defining what activities and transactions shall be
considered "commercial" and as constituting acts jure gestionis, we have to
come out with our own guidelines, tentative they may be.
Certainly, the mere entering into a contract by a foreign state with a private party
cannot be the ultimate test. Such an act can only be the start of the inquiry. The
logical question is whether the foreign state is engaged in the activity in the
regular course of business. If the foreign state is not engaged regularly in a
business or trade, the particular act or transaction must then be tested by its
nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it
is an act jure imperii, especially when it is not undertaken for gain or profit.
As held in United States of America v. Guinto, (supra):
There is no question that the United States of America, like any other state, will
be deemed to have impliedly waived its non-suability if it has entered into a
contract in its proprietary or private capacity. It is only when the contract involves
its sovereign or governmental capacity that no such waiver may be implied.
In the case at bench, if petitioner has bought and sold lands in the ordinary
course of a real estate business, surely the said transaction can be categorized
as an act jure gestionis. However, petitioner has denied that the acquisition and
subsequent disposal of Lot 5-A were made for profit but claimed that it acquired
said property for the site of its mission or the Apostolic Nunciature in the
Philippines. Private respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila.
The donation was made not for commercial purpose, but for the use of petitioner
to construct thereon the official place of residence of the Papal Nuncio. The right
of a foreign sovereign to acquire property, real or personal, in a receiving state,
necessary for the creation and maintenance of its diplomatic mission, is
recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22).
This treaty was concurred in by the Philippine Senate and entered into force in
the Philippines on November 15, 1965.
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from
the civil and administrative jurisdiction of the receiving state over any real action
relating to private immovable property situated in the territory of the receiving
state which the envoy holds on behalf of the sending state for the purposes of
the mission. If this immunity is provided for a diplomatic envoy, with all the more
reason should immunity be recognized as regards the sovereign itself, which in
this case is the Holy See.
The decision to transfer the property and the subsequent disposal thereof are
likewise clothed with a governmental character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the
squatters living thereon made it almost impossible for petitioner to use it for the
purpose of the donation. The fact that squatters have occupied and are still
occupying the lot, and that they stubbornly refuse to leave the premises, has
been admitted by private respondent in its complaint (Rollo, pp. 26, 27).
The issue of petitioner's non-suability can be determined by the trial court without
going to trial in the light of the pleadings, particularly the admission of private
respondent. Besides, the privilege of sovereign immunity in this case was
sufficiently established by the Memorandum and Certification of the Department
of Foreign Affairs. As the department tasked with the conduct of the Philippines'
foreign relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the
Department of Foreign Affairs has formally intervened in this case and officially
certified that the Embassy of the Holy See is a duly accredited diplomatic mission
to the Republic of the Philippines exempt from local jurisdiction and entitled to all
the rights, privileges and immunities of a diplomatic mission or embassy in this
country (Rollo, pp. 156-157). The determination of the executive arm of
government that a state or instrumentality is entitled to sovereign or diplomatic
immunity is a political question that is conclusive upon the courts (International
Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the
plea of immunity is recognized and affirmed by the executive branch, it is the
duty of the courts to accept this claim so as not to embarrass the executive arm
of the government in conducting the country's foreign relations (World Health
Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic
Migration Commission and in World Health Organization, we abide by the
certification of the Department of Foreign Affairs.
Ordinarily, the procedure would be to remand the case and order the trial court to
conduct a hearing to establish the facts alleged by petitioner in its motion. In view
of said certification, such procedure would however be pointless and unduly
circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No.
109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its
grievances. Under both Public International Law and Transnational Law, a
person who feels aggrieved by the acts of a foreign sovereign can ask his own
government to espouse his cause through diplomatic channels.
Private respondent can ask the Philippine government, through the Foreign
Office, to espouse its claims against the Holy See. Its first task is to persuade the
Philippine government to take up with the Holy See the validity of its claims. Of
course, the Foreign Office shall first make a determination of the impact of its
espousal on the relations between the Philippine government and the Holy See
(Young, Remedies of Private Claimants Against Foreign States, Selected
Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]).
Once the Philippine government decides to espouse the claim, the latter ceases
to be a private cause.
According to the Permanent Court of International Justice, the forerunner of the
International Court of Justice:
150
By taking up the case of one of its subjects and by reporting to diplomatic action
or international judicial proceedings on his behalf, a State is in reality asserting
its own rights — its right to ensure, in the person of its subjects, respect for the
rules of international law (The Mavrommatis Palestine Concessions, 1 Hudson,
World Court Reports 293, 302 [1924]).
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil
Case No. 90-183 against petitioner is DISMISSED.
SO ORDERED.
# gave his address as US Embassy, Manila. At the back of the card appears a
FIRST DIVISION
G.R. No. 142396 February 11, 2003
KHOSROW MINUCHER, petitioner,
vs.
HON. COURT OF APPEALS and ARTHUR SCALZO, respondents.
DECISION
VITUG, J.:
Sometime in May 1986, an Information for violation of Section 4 of Republic Act
No. 6425, otherwise also known as the "Dangerous Drugs Act of 1972," was filed
against petitioner Khosrow Minucher and one Abbas Torabian with the Regional
Trial Court, Branch 151, of Pasig City. The criminal charge followed a "buy-bust
operation" conducted by the Philippine police narcotic agents in the house of
Minucher, an Iranian national, where a quantity of heroin, a prohibited drug, was
said to have been seized. The narcotic agents were accompanied by private
respondent Arthur Scalzo who would, in due time, become one of the principal
witnesses for the prosecution. On 08 January 1988, Presiding Judge Eutropio
Migrino rendered a decision acquitting the two accused.
On 03 August 1988, Minucher filed Civil Case No. 88-45691 before the Regional
Trial Court (RTC), Branch 19, of Manila for damages on account of what he
claimed to have been trumped-up charges of drug trafficking made by Arthur
Scalzo. The Manila RTC detailed what it had found to be the facts and
circumstances surrounding the case.
"The testimony of the plaintiff disclosed that he is an Iranian national. He came to
the Philippines to study in the University of the Philippines in 1974. In 1976,
under the regime of the Shah of Iran, he was appointed Labor Attaché for the
Iranian Embassies in Tokyo, Japan and Manila, Philippines. When the Shah of
Iran was deposed by Ayatollah Khomeini, plaintiff became a refugee of the
United Nations and continued to stay in the Philippines. He headed the Iranian
National Resistance Movement in the Philippines.
"He came to know the defendant on May 13, 1986, when the latter was brought
to his house and introduced to him by a certain Jose Iñigo, an informer of the
Intelligence Unit of the military. Jose Iñigo, on the other hand, was met by plaintiff
at the office of Atty. Crisanto Saruca, a lawyer for several Iranians whom plaintiff
assisted as head of the anti-Khomeini movement in the Philippines.
"During his first meeting with the defendant on May 13, 1986, upon the
introduction of Jose Iñigo, the defendant expressed his interest in buying caviar.
As a matter of fact, he bought two kilos of caviar from plaintiff and paid
P10,000.00 for it. Selling caviar, aside from that of Persian carpets, pistachio
nuts and other Iranian products was his business after the Khomeini government
cut his pension of over $3,000.00 per month. During their introduction in that
meeting, the defendant gave the plaintiff his calling card, which showed that he is
working at the US Embassy in the Philippines, as a special agent of the Drug
Enforcement Administration, Department of Justice, of the United States, and
telephone number in defendant’s own handwriting, the number of which he can
also be contacted.
"It was also during this first meeting that plaintiff expressed his desire to obtain a
US Visa for his wife and the wife of a countryman named Abbas Torabian. The
defendant told him that he [could] help plaintiff for a fee of $2,000.00 per visa.
Their conversation, however, was more concentrated on politics, carpets and
caviar. Thereafter, the defendant promised to see plaintiff again.
"On May 19, 1986, the defendant called the plaintiff and invited the latter for
dinner at Mario's Restaurant at Makati. He wanted to buy 200 grams of caviar.
Plaintiff brought the merchandize but for the reason that the defendant was not
yet there, he requested the restaurant people to x x x place the same in the
refrigerator. Defendant, however, came and plaintiff gave him the caviar for which
he was paid. Then their conversation was again focused on politics and
business.
"On May 26, 1986, defendant visited plaintiff again at the latter's residence for 18
years at Kapitolyo, Pasig. The defendant wanted to buy a pair of carpets which
plaintiff valued at $27,900.00. After some haggling, they agreed at $24,000.00.
For the reason that defendant did not yet have the money, they agreed that
defendant would come back the next day. The following day, at 1:00 p.m., he
came back with his $24,000.00, which he gave to the plaintiff, and the latter, in
turn, gave him the pair of carpets.1awphi1.nét
"At about 3:00 in the afternoon of May 27, 1986, the defendant came back again
to plaintiff's house and directly proceeded to the latter's bedroom, where the
latter and his countryman, Abbas Torabian, were playing chess. Plaintiff opened
151
his safe in the bedroom and obtained $2,000.00 from it, gave it to the defendant
for the latter's fee in obtaining a visa for plaintiff's wife. The defendant told him
that he would be leaving the Philippines very soon and requested him to come
out of the house for a while so that he can introduce him to his cousin waiting in
a cab. Without much ado, and without putting on his shirt as he was only in his
pajama pants, he followed the defendant where he saw a parked cab opposite
the street. To his complete surprise, an American jumped out of the cab with a
drawn high-powered gun. He was in the company of about 30 to 40 Filipino
soldiers with 6 Americans, all armed. He was handcuffed and after about 20
minutes in the street, he was brought inside the house by the defendant. He was
made to sit down while in handcuffs while the defendant was inside his bedroom.
The defendant came out of the bedroom and out from defendant's attaché case,
he took something and placed it on the table in front of the plaintiff. They also
took plaintiff's wife who was at that time at the boutique near his house and
likewise arrested Torabian, who was playing chess with him in the bedroom and
both were handcuffed together. Plaintiff was not told why he was being
handcuffed and why the privacy of his house, especially his bedroom was
invaded by defendant. He was not allowed to use the telephone. In fact, his
telephone was unplugged. He asked for any warrant, but the defendant told him
to `shut up.’ He was nevertheless told that he would be able to call for his lawyer
who can defend him.
"The plaintiff took note of the fact that when the defendant invited him to come
out to meet his cousin, his safe was opened where he kept the $24,000.00 the
defendant paid for the carpets and another $8,000.00 which he also placed in
the safe together with a bracelet worth $15,000.00 and a pair of earrings worth
$10,000.00. He also discovered missing upon his release his 8 pieces hand-
made Persian carpets, valued at $65,000.00, a painting he bought for
P30,000.00 together with his TV and betamax sets. He claimed that when he
was handcuffed, the defendant took his keys from his wallet. There was,
therefore, nothing left in his house.
"That his arrest as a heroin trafficker x x x had been well publicized throughout
the world, in various newspapers, particularly in Australia, America, Central Asia
and in the Philippines. He was identified in the papers as an international drug
trafficker. x x x
In fact, the arrest of defendant and Torabian was likewise on television, not only
in the Philippines, but also in America and in Germany. His friends in said places
informed him that they saw him on TV with said news.
"After the arrest made on plaintiff and Torabian, they were brought to Camp
Crame handcuffed together, where they were detained for three days without
food and water."1
During the trial, the law firm of Luna, Sison and Manas, filed a special
appearance for Scalzo and moved for extension of time to file an answer
pending a supposed advice from the United States Department of State and
Department of Justice on the defenses to be raised. The trial court granted the
motion. On 27 October 1988, Scalzo filed another special appearance to quash
the summons on the ground that he, not being a resident of the Philippines and
the action being one in personam, was beyond the processes of the court. The
motion was denied by the court, in its order of 13 December 1988, holding that
the filing by Scalzo of a motion for extension of time to file an answer to the
complaint was a voluntary appearance equivalent to service of summons which
could likewise be construed a waiver of the requirement of formal notice. Scalzo
filed a motion for reconsideration of the court order, contending that a motion for
an extension of time to file an answer was not a voluntary appearance equivalent
to service of summons since it did not seek an affirmative relief. Scalzo argued
that in cases involving the United States government, as well as its agencies and
officials, a motion for extension was peculiarly unavoidable due to the need (1)
for both the Department of State and the Department of Justice to agree on the
defenses to be raised and (2) to refer the case to a Philippine lawyer who would
be expected to first review the case. The court a quo denied the motion for
reconsideration in its order of 15 October 1989.
Scalzo filed a petition for review with the Court of Appeals, there docketed CA-
G.R. No. 17023, assailing the denial. In a decision, dated 06 October 1989, the
appellate court denied the petition and affirmed the ruling of the trial court.
Scalzo then elevated the incident in a petition for review on certiorari, docketed
G.R. No. 91173, to this Court. The petition, however, was denied for its failure to
comply with SC Circular No. 1-88; in any event, the Court added, Scalzo had
failed to show that the appellate court was in error in its questioned judgment.
Meanwhile, at the court a quo, an order, dated 09 February 1990, was issued (a)
declaring Scalzo in default for his failure to file a responsive pleading (answer)
and (b) setting the case for the reception of evidence. On 12 March 1990, Scalzo
filed a motion to set aside the order of default and to admit his answer to the
complaint. Granting the motion, the trial court set the case for pre-trial. In his
answer, Scalzo denied the material allegations of the complaint and raised the
affirmative defenses (a) of Minucher’s failure to state a cause of action in his
complaint and (b) that Scalzo had acted in the discharge of his official duties as
being merely an agent of the Drug Enforcement Administration of the United
States Department of Justice. Scalzo interposed a counterclaim of P100,000.00
to answer for attorneys' fees and expenses of litigation.
Then, on 14 June 1990, after almost two years since the institution of the civil
case, Scalzo filed a motion to dismiss the complaint on the ground that, being a
special agent of the United States Drug Enforcement Administration, he was
entitled to diplomatic immunity. He attached to his motion Diplomatic Note No.
414 of the United States Embassy, dated 29 May 1990, addressed to the
Department of Foreign Affairs of the Philippines and a Certification, dated 11
June 1990, of Vice Consul Donna Woodward, certifying that the note is a true
and faithful copy of its original. In an order of 25 June 1990, the trial court denied
the motion to dismiss.
On 27 July 1990, Scalzo filed a petition for certiorari with injunction with this
Court, docketed G.R. No. 94257 and entitled "Arthur W. Scalzo, Jr., vs. Hon.
Wenceslao Polo, et al.," asking that the complaint in Civil Case No. 88-45691 be
ordered dismissed. The case was referred to the Court of Appeals, there
docketed CA-G.R. SP No. 22505, per this Court’s resolution of 07 August 1990.
152
On 31 October 1990, the Court of Appeals promulgated its decision sustaining
the diplomatic immunity of Scalzo and ordering the dismissal of the complaint
against him. Minucher filed a petition for review with this Court, docketed G.R.
No. 97765 and entitled "Khosrow Minucher vs. the Honorable Court of Appeals,
et. al." (cited in 214 SCRA 242), appealing the judgment of the Court of Appeals.
In a decision, dated 24 September 1992, penned by Justice (now Chief Justice)
Hilario Davide, Jr., this Court reversed the decision of the appellate court and
remanded the case to the lower court for trial. The remand was ordered on the
theses (a) that the Court of Appeals erred in granting the motion to dismiss of
Scalzo for lack of jurisdiction over his person without even considering the issue
of the authenticity of Diplomatic Note No. 414 and (b) that the complaint
contained sufficient allegations to the effect that Scalzo committed the imputed
acts in his personal capacity and outside the scope of his official duties and,
absent any evidence to the contrary, the issue on Scalzo’s diplomatic immunity
could not be taken up.
The Manila RTC thus continued with its hearings on the case. On 17 November
1995, the trial court reached a decision; it adjudged:
"WHEREFORE, and in view of all the foregoing considerations, judgment is
hereby rendered for the plaintiff, who successfully established his claim by
sufficient evidence, against the defendant in the manner following:
"`Adjudging defendant liable to plaintiff in actual and compensatory damages of
P520,000.00; moral damages in the sum of P10 million; exemplary damages in
the sum of P100,000.00; attorney's fees in the sum of P200,000.00 plus costs.
`The Clerk of the Regional Trial Court, Manila, is ordered to take note of the lien
of the Court on this judgment to answer for the unpaid docket fees considering
that the plaintiff in this case instituted this action as a pauper litigant.’"2
While the trial court gave credence to the claim of Scalzo and the evidence
presented by him that he was a diplomatic agent entitled to immunity as such, it
ruled that he, nevertheless, should be held accountable for the acts complained
of committed outside his official duties. On appeal, the Court of Appeals reversed
the decision of the trial court and sustained the defense of Scalzo that he was
sufficiently clothed with diplomatic immunity during his term of duty and thereby
immune from the criminal and civil jurisdiction of the "Receiving State" pursuant
to the terms of the Vienna Convention.
Hence, this recourse by Minucher. The instant petition for review raises a two-
fold issue: (1) whether or not the doctrine of conclusiveness of judgment,
following the decision rendered by this Court in G.R. No. 97765, should have
precluded the Court of Appeals from resolving the appeal to it in an entirely
different manner, and (2) whether or not Arthur Scalzo is indeed entitled to
diplomatic immunity.
The doctrine of conclusiveness of judgment, or its kindred rule of res judicata,
would require 1) the finality of the prior judgment, 2) a valid jurisdiction over the
subject matter and the parties on the part of the court that renders it, 3) a
judgment on the merits, and 4) an identity of the parties, subject matter and
causes of action.3 Even while one of the issues submitted in G.R. No. 97765 -
"whether or not public respondent Court of Appeals erred in ruling that private
respondent Scalzo is a diplomat immune from civil suit conformably with the
Vienna Convention on Diplomatic Relations" - is also a pivotal question raised in
the instant petition, the ruling in G.R. No. 97765, however, has not resolved that
point with finality. Indeed, the Court there has made this observation -
"It may be mentioned in this regard that private respondent himself, in his Pre-
trial Brief filed on 13 June 1990, unequivocally states that he would present
documentary evidence consisting of DEA records on his investigation and
surveillance of plaintiff and on his position and duties as DEA special agent in
Manila. Having thus reserved his right to present evidence in support of his
position, which is the basis for the alleged diplomatic immunity, the barren self-
serving claim in the belated motion to dismiss cannot be relied upon for a
reasonable, intelligent and fair resolution of the issue of diplomatic immunity."4
Scalzo contends that the Vienna Convention on Diplomatic Relations, to which
the Philippines is a signatory, grants him absolute immunity from suit, describing
his functions as an agent of the United States Drugs Enforcement Agency as
"conducting surveillance operations on suspected drug dealers in the Philippines
believed to be the source of prohibited drugs being shipped to the U.S., (and)
having ascertained the target, (he then) would inform the Philippine narcotic
agents (to) make the actual arrest." Scalzo has submitted to the trial court a
number of documents -
1. Exh. '2' - Diplomatic Note No. 414 dated 29 May 1990;
2. Exh. '1' - Certification of Vice Consul Donna K. Woodward dated 11 June
1990;
3. Exh. '5' - Diplomatic Note No. 757 dated 25 October 1991;
4. Exh. '6' - Diplomatic Note No. 791 dated 17 November 1992; and
5. Exh. '7' - Diplomatic Note No. 833 dated 21 October 1988.
6. Exh. '3' - 1st Indorsement of the Hon. Jorge R. Coquia, Legal Adviser,
Department of Foreign Affairs, dated 27 June 1990 forwarding Embassy Note
No. 414 to the Clerk of Court of RTC Manila, Branch 19 (the trial court);
7. Exh. '4' - Diplomatic Note No. 414, appended to the 1st Indorsement (Exh. '3');
and
8. Exh. '8' - Letter dated 18 November 1992 from the Office of the Protocol,
Department of Foreign Affairs, through Asst. Sec. Emmanuel Fernandez,
addressed to the Chief Justice of this Court.5
The documents, according to Scalzo, would show that: (1) the United States
Embassy accordingly advised the Executive Department of the Philippine
Government that Scalzo was a member of the diplomatic staff of the United
States diplomatic mission from his arrival in the Philippines on 14 October 1985
until his departure on 10 August 1988; (2) that the United States Government
was firm from the very beginning in asserting the diplomatic immunity of Scalzo
with respect to the case pursuant to the provisions of the Vienna Convention on
Diplomatic Relations; and (3) that the United States Embassy repeatedly urged
the Department of Foreign Affairs to take appropriate action to inform the trial
court of Scalzo’s diplomatic immunity. The other documentary exhibits were
presented to indicate that: (1) the Philippine government itself, through its
Executive Department, recognizing and respecting the diplomatic status of
153
Scalzo, formally advised the "Judicial Department" of his diplomatic status and
his entitlement to all diplomatic privileges and immunities under the Vienna
Convention; and (2) the Department of Foreign Affairs itself authenticated
Diplomatic Note No. 414. Scalzo additionally presented Exhibits "9" to "13"
consisting of his reports of investigation on the surveillance and subsequent
arrest of Minucher, the certification of the Drug Enforcement Administration of the
United States Department of Justice that Scalzo was a special agent assigned to
the Philippines at all times relevant to the complaint, and the special power of
attorney executed by him in favor of his previous counsel6 to show (a) that the
United States Embassy, affirmed by its Vice Consul, acknowledged Scalzo to be
a member of the diplomatic staff of the United States diplomatic mission from his
arrival in the Philippines on 14 October 1985 until his departure on 10 August
1988, (b) that, on May 1986, with the cooperation of the Philippine law
enforcement officials and in the exercise of his functions as member of the
mission, he investigated Minucher for alleged trafficking in a prohibited drug, and
(c) that the Philippine Department of Foreign Affairs itself recognized that Scalzo
during his tour of duty in the Philippines (14 October 1985 up to 10 August 1988)
was listed as being an Assistant Attaché of the United States diplomatic mission
and accredited with diplomatic status by the Government of the Philippines. In
his Exhibit 12, Scalzo described the functions of the overseas office of the United
States Drugs Enforcement Agency, i.e., (1) to provide criminal investigative
expertise and assistance to foreign law enforcement agencies on narcotic and
drug control programs upon the request of the host country, 2) to establish and
maintain liaison with the host country and counterpart foreign law enforcement
officials, and 3) to conduct complex criminal investigations involving international
criminal conspiracies which affect the interests of the United States.
The Vienna Convention on Diplomatic Relations was a codification of centuries-
old customary law and, by the time of its ratification on 18 April 1961, its rules of
law had long become stable. Among the city states of ancient Greece, among
the peoples of the Mediterranean before the establishment of the Roman
Empire, and among the states of India, the person of the herald in time of war
and the person of the diplomatic envoy in time of peace were universally held
sacrosanct.7 By the end of the 16th century, when the earliest treatises on
diplomatic law were published, the inviolability of ambassadors was firmly
established as a rule of customary international law.8 Traditionally, the exercise of
diplomatic intercourse among states was undertaken by the head of state
himself, as being the preeminent embodiment of the state he represented, and
the foreign secretary, the official usually entrusted with the external affairs of the
state. Where a state would wish to have a more prominent diplomatic presence
in the receiving state, it would then send to the latter a diplomatic mission.
Conformably with the Vienna Convention, the functions of the diplomatic mission
involve, by and large, the representation of the interests of the sending state and
promoting friendly relations with the receiving state.9
The Convention lists the classes of heads of diplomatic missions to include (a)
ambassadors or nuncios accredited to the heads of state,10 (b) envoys,11
ministers or internuncios accredited to the heads of states; and (c) charges d'
affairs12 accredited to the ministers of foreign affairs.13 Comprising the "staff of
the (diplomatic) mission" are the diplomatic staff, the administrative staff and the
technical and service staff. Only the heads of missions, as well as members of
the diplomatic staff, excluding the members of the administrative, technical and
service staff of the mission, are accorded diplomatic rank. Even while the Vienna
Convention on Diplomatic Relations provides for immunity to the members of
diplomatic missions, it does so, nevertheless, with an understanding that the
same be restrictively applied. Only "diplomatic agents," under the terms of the
Convention, are vested with blanket diplomatic immunity from civil and criminal
suits. The Convention defines "diplomatic agents" as the heads of missions or
members of the diplomatic staff, thus impliedly withholding the same privileges
from all others. It might bear stressing that even consuls, who represent their
respective states in concerns of commerce and navigation and perform certain
administrative and notarial duties, such as the issuance of passports and visas,
authentication of documents, and administration of oaths, do not ordinarily enjoy
the traditional diplomatic immunities and privileges accorded diplomats, mainly
for the reason that they are not charged with the duty of representing their states
in political matters. Indeed, the main yardstick in ascertaining whether a person
is a diplomat entitled to immunity is the determination of whether or not he
performs duties of diplomatic nature.
Scalzo asserted, particularly in his Exhibits "9" to "13," that he was an Assistant
Attaché of the United States diplomatic mission and was accredited as such by
the Philippine Government. An attaché belongs to a category of officers in the
diplomatic establishment who may be in charge of its cultural, press,
administrative or financial affairs. There could also be a class of attaches
belonging to certain ministries or departments of the government, other than the
foreign ministry or department, who are detailed by their respective ministries or
departments with the embassies such as the military, naval, air, commercial,
agricultural, labor, science, and customs attaches, or the like. Attaches assist a
chief of mission in his duties and are administratively under him, but their main
function is to observe, analyze and interpret trends and developments in their
respective fields in the host country and submit reports to their own ministries or
departments in the home government.14 These officials are not generally
regarded as members of the diplomatic mission, nor are they normally
designated as having diplomatic rank.
In an attempt to prove his diplomatic status, Scalzo presented Diplomatic Notes
Nos. 414, 757 and 791, all issued post litem motam, respectively, on 29 May
1990, 25 October 1991 and 17 November 1992. The presentation did nothing
much to alleviate the Court's initial reservations in G.R. No. 97765, viz:
"While the trial court denied the motion to dismiss, the public respondent gravely
abused its discretion in dismissing Civil Case No. 88-45691 on the basis of an
erroneous assumption that simply because of the diplomatic note, the private
respondent is clothed with diplomatic immunity, thereby divesting the trial court of
jurisdiction over his person.
"x x x x x x x x x
154
"And now, to the core issue - the alleged diplomatic immunity of the private
respondent. Setting aside for the moment the issue of authenticity raised by the
petitioner and the doubts that surround such claim, in view of the fact that it took
private respondent one (1) year, eight (8) months and seventeen (17) days from
the time his counsel filed on 12 September 1988 a Special Appearance and
Motion asking for a first extension of time to file the Answer because the
Departments of State and Justice of the United States of America were studying
the case for the purpose of determining his defenses, before he could secure the
Diplomatic Note from the US Embassy in Manila, and even granting for the sake
of argument that such note is authentic, the complaint for damages filed by
petitioner cannot be peremptorily dismissed.
"x x x x x x x x x
"There is of course the claim of private respondent that the acts imputed to him
were done in his official capacity. Nothing supports this self-serving claim other
than the so-called Diplomatic Note. x x x. The public respondent then should
have sustained the trial court's denial of the motion to dismiss. Verily, it should
have been the most proper and appropriate recourse. It should not have been
overwhelmed by the self-serving Diplomatic Note whose belated issuance is
even suspect and whose authenticity has not yet been proved. The undue haste
with which respondent Court yielded to the private respondent's claim is
arbitrary."
A significant document would appear to be Exhibit No. 08, dated 08 November
1992, issued by the Office of Protocol of the Department of Foreign Affairs and
signed by Emmanuel C. Fernandez, Assistant Secretary, certifying that "the
records of the Department (would) show that Mr. Arthur W. Scalzo, Jr., during his
term of office in the Philippines (from 14 October 1985 up to 10 August 1988)
was listed as an Assistant Attaché of the United States diplomatic mission and
was, therefore, accredited diplomatic status by the Government of the
Philippines." No certified true copy of such "records," the supposed bases for the
belated issuance, was presented in evidence.
Concededly, vesting a person with diplomatic immunity is a prerogative of the
executive branch of the government. In World Health Organization vs. Aquino,15
the Court has recognized that, in such matters, the hands of the courts are
virtually tied. Amidst apprehensions of indiscriminate and incautious grant of
immunity, designed to gain exemption from the jurisdiction of courts, it should
behoove the Philippine government, specifically its Department of Foreign
Affairs, to be most circumspect, that should particularly be no less than
compelling, in its post litem motam issuances. It might be recalled that the
privilege is not an immunity from the observance of the law of the territorial
sovereign or from ensuing legal liability; it is, rather, an immunity from the
exercise of territorial jurisdiction.16 The government of the United States itself,
which Scalzo claims to be acting for, has formulated its standards for recognition
of a diplomatic agent. The State Department policy is to only concede diplomatic
status to a person who possesses an acknowledged diplomatic title and
"performs duties of diplomatic nature."17 Supplementary criteria for accreditation
are the possession of a valid diplomatic passport or, from States which do not
issue such passports, a diplomatic note formally representing the intention to
assign the person to diplomatic duties, the holding of a non-immigrant visa, being
over twenty-one years of age, and performing diplomatic functions on an
essentially full-time basis.18 Diplomatic missions are requested to provide the
most accurate and descriptive job title to that which currently applies to the duties
performed. The Office of the Protocol would then assign each individual to the
appropriate functional category.19
But while the diplomatic immunity of Scalzo might thus remain contentious, it was
sufficiently established that, indeed, he worked for the United States Drug
Enforcement Agency and was tasked to conduct surveillance of suspected drug
activities within the country on the dates pertinent to this case. If it should be
ascertained that Arthur Scalzo was acting well within his assigned functions
when he committed the acts alleged in the complaint, the present controversy
could then be resolved under the related doctrine of State Immunity from Suit.
The precept that a State cannot be sued in the courts of a foreign state is a
long-standing rule of customary international law then closely identified with the
personal immunity of a foreign sovereign from suit20 and, with the emergence of
democratic states, made to attach not just to the person of the head of state, or
his representative, but also distinctly to the state itself in its sovereign capacity.21
If the acts giving rise to a suit are those of a foreign government done by its
foreign agent, although not necessarily a diplomatic personage, but acting in his
official capacity, the complaint could be barred by the immunity of the foreign
sovereign from suit without its consent. Suing a representative of a state is
believed to be, in effect, suing the state itself. The proscription is not accorded for
the benefit of an individual but for the State, in whose service he is, under the
maxim - par in parem, non habet imperium - that all states are sovereign equals
and cannot assert jurisdiction over one another.22 The implication, in broad terms,
is that if the judgment against an official would require the state itself to perform
an affirmative act to satisfy the award, such as the appropriation of the amount
needed to pay the damages decreed against him, the suit must be regarded as
being against the state itself, although it has not been formally impleaded.23
In United States of America vs. Guinto,24 involving officers of the United States
Air Force and special officers of the Air Force Office of Special Investigators
charged with the duty of preventing the distribution, possession and use of
prohibited drugs, this Court has ruled -
"While the doctrine (of state immunity) appears to prohibit only suits against the
state without its consent, it is also applicable to complaints filed against officials
of the state for acts allegedly performed by them in the discharge of their duties.
x x x. It cannot for a moment be imagined that they were acting in their private or
unofficial capacity when they apprehended and later testified against the
complainant. It follows that for discharging their duties as agents of the United
States, they cannot be directly impleaded for acts imputable to their principal,
which has not given its consent to be sued. x x x As they have acted on behalf of
the government, and within the scope of their authority, it is that government, and
not the petitioners personally, [who were] responsible for their acts."25
155
This immunity principle, however, has its limitations. Thus, Shauf vs. Court of
Appeals26 elaborates:
"It is a different matter where the public official is made to account in his capacity
as such for acts contrary to law and injurious to the rights of the plaintiff. As was
clearly set forth by Justice Zaldivar in Director of the Bureau of
Telecommunications, et al., vs. Aligaen, et al. (33 SCRA 368): `Inasmuch as the
State authorizes only legal acts by its officers, unauthorized acts of government
officials or officers are not acts of the State, and an action against the officials or
officers by one whose rights have been invaded or violated by such acts, for the
protection of his rights, is not a suit against the State within the rule of immunity
of the State from suit. In the same tenor, it has been said that an action at law or
suit in equity against a State officer or the director of a State department on the
ground that, while claiming to act for the State, he violates or invades the
personal and property rights of the plaintiff, under an unconstitutional act or
under an assumption of authority which he does not have, is not a suit against
the State within the constitutional provision that the State may not be sued
without its consent. The rationale for this ruling is that the doctrine of state
immunity cannot be used as an instrument for perpetrating an injustice.
"x x x x x x x x x
"(T)he doctrine of immunity from suit will not apply and may not be invoked
where the public official is being sued in his private and personal capacity as an
ordinary citizen. The cloak of protection afforded the officers and agents of the
government is removed the moment they are sued in their individual capacity.
This situation usually arises where the public official acts without authority or in
excess of the powers vested in him. It is a well-settled principle of law that a
public official may be liable in his personal private capacity for whatever damage
he may have caused by his act done with malice and in bad faith or beyond the
scope of his authority and jurisdiction."27
A foreign agent, operating within a territory, can be cloaked with immunity from
suit but only as long as it can be established that he is acting within the directives
of the sending state. The consent of the host state is an indispensable
requirement of basic courtesy between the two sovereigns. Guinto and Shauf
both involve officers and personnel of the United States, stationed within
Philippine territory, under the RP-US Military Bases Agreement. While evidence
is wanting to show any similar agreement between the governments of the
Philippines and of the United States (for the latter to send its agents and to
conduct surveillance and related activities of suspected drug dealers in the
Philippines), the consent or imprimatur of the Philippine government to the
activities of the United States Drug Enforcement Agency, however, can be
gleaned from the facts heretofore elsewhere mentioned. The official exchanges
of communication between agencies of the government of the two countries,
certifications from officials of both the Philippine Department of Foreign Affairs
and the United States Embassy, as well as the participation of members of the
Philippine Narcotics Command in the "buy-bust operation" conducted at the
residence of Minucher at the behest of Scalzo, may be inadequate to support the
"diplomatic status" of the latter but they give enough indication that the Philippine
government has given its imprimatur, if not consent, to the activities within
Philippine territory of agent Scalzo of the United States Drug Enforcement
Agency. The job description of Scalzo has tasked him to conduct surveillance on
suspected drug suppliers and, after having ascertained the target, to inform local
law enforcers who would then be expected to make the arrest. In conducting
surveillance activities on Minucher, later acting as the poseur-buyer during the
buy-bust operation, and then becoming a principal witness in the criminal case
against Minucher, Scalzo hardly can be said to have acted beyond the scope of
his official function or duties.
All told, this Court is constrained to rule that respondent Arthur Scalzo, an agent
of the United States Drug Enforcement Agency allowed by the Philippine
government to conduct activities in the country to help contain the problem on
the drug traffic, is entitled to the defense of state immunity from suit.
WHEREFORE, on the foregoing premises, the petition is DENIED. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur
EN BANC
G.R. No. 206510 September 16, 2014
MOST REV. PEDRO D. ARIGO, Vicar Apostolic of Puerto Princesa D.D.;
MOST REV. DEOGRACIAS S. INIGUEZ, JR., Bishop-Emeritus of Caloocan,
FRANCES Q. QUIMPO, CLEMENTE G. BAUTISTA, JR., Kalikasan-PNE,
MARIA CAROLINA P. ARAULLO, RENATO M. REYES, JR., Bagong
Alyansang Makabayan, HON. NERI JAVIER COLMENARES, Bayan Muna
Partylist, ROLAND G. SIMBULAN, PH.D., Junk VF A Movement, TERESITA
R. PEREZ, PH.D., HON. RAYMOND V. PALATINO, Kabataan Party-list,
PETER SJ. GONZALES, Pamalakaya, GIOVANNI A. TAPANG, PH. D.,
Agham, ELMER C. LABOG, Kilusang Mayo Uno, JOAN MAY E. SALVADOR,
Gabriela, JOSE ENRIQUE A. AFRICA, THERESA A. CONCEPCION, MARY
JOAN A. GUAN, NESTOR T. BAGUINON, PH.D., A. EDSEL F. TUPAZ,
Petitioners,
vs.
SCOTT H. SWIFT in his capacity as Commander of the US. 7th Fleet, MARK
A. RICE in his capacity as Commanding Officer of the USS Guardian,
PRESIDENT BENIGNO S. AQUINO III in his capacity as Commander-in-
Chief of the Armed Forces of the Philippines, HON. ALBERT F. DEL
ROSARIO, Secretary, pepartment of Foreign Affair.s, HON. PAQUITO
OCHOA, JR., Executiv~.:Secretary, Office of the President, . HON.
VOLTAIRE T. GAZMIN, Secretary, Department of National Defense, HON.
RAMON JESUS P. P AJE, Secretary, Department of Environment and
Natural Resoz!rces, VICE ADMIRAL JOSE LUIS M. ALANO, Philippine Navy
Flag Officer in Command, Armed Forces of the Philippines, ADMIRAL
RODOLFO D. ISO RENA, Commandant, Philippine Coast Guard,
COMMODORE ENRICO EFREN EVANGELISTA, Philippine Coast Guard
Palawan, MAJOR GEN. VIRGILIO 0. DOMINGO, Commandant of Armed
Forces of the Philippines Command and LT. GEN. TERRY G. ROBLING, US
156
Marine Corps Forces. Pacific and Balikatan 2013 Exercise Co-Director,
Respondents.
DECISION
VILLARAMA, JR, J.:
Before us is a petition for the issuance of a Writ of Kalikasan with prayer for the
issuance of a Temporary Environmental Protection Order (TEPO) under Rule 7
of A.M. No. 09-6-8-SC, otherwise known as the Rules of Procedure for
Environmental Cases (Rules), involving violations of environmental laws and
regulations in relation to the grounding of the US military ship USS Guardian
over the Tubbataha Reefs.
Factual Background
The name "Tubbataha" came from the Samal (seafaring people of southern
Philippines) language which means "long reef exposed at low tide." Tubbataha is
composed of two huge coral atolls - the north atoll and the south atoll - and the
Jessie Beazley Reef, a smaller coral structure about 20 kilometers north of the
atolls. The reefs of Tubbataha and Jessie Beazley are considered part of
Cagayancillo, a remote island municipality of Palawan.1
In 1988, Tubbataha was declared a National Marine Park by virtue of
Proclamation No. 306 issued by President Corazon C. Aquino on August 11,
1988. Located in the middle of Central Sulu Sea, 150 kilometers southeast of
Puerto Princesa City, Tubbataha lies at the heart of the Coral Triangle, the global
center of marine biodiversity.
In 1993, Tubbataha was inscribed by the United Nations Educational Scientific
and Cultural Organization (UNESCO) as a World Heritage Site. It was
recognized as one of the Philippines' oldest ecosystems, containing excellent
examples of pristine reefs and a high diversity of marine life. The 97,030-hectare
protected marine park is also an important habitat for internationally threatened
and endangered marine species. UNESCO cited Tubbataha's outstanding
universal value as an important and significant natural habitat for in situ
conservation of biological diversity; an example representing significant on-going
ecological and biological processes; and an area of exceptional natural beauty
and aesthetic importance.2
On April 6, 2010, Congress passed Republic Act (R.A.) No. 10067,3 otherwise
known as the "Tubbataha Reefs Natural Park (TRNP) Act of 2009" "to ensure the
protection and conservation of the globally significant economic, biological,
sociocultural, educational and scientific values of the Tubbataha Reefs into
perpetuity for the enjoyment of present and future generations." Under the "no-
take" policy, entry into the waters of TRNP is strictly regulated and many human
activities are prohibited and penalized or fined, including fishing, gathering,
destroying and disturbing the resources within the TRNP. The law likewise
created the Tubbataha Protected Area Management Board (TPAMB) which shall
be the sole policy-making and permit-granting body of the TRNP.
The USS Guardian is an Avenger-class mine countermeasures ship of the US
Navy. In December 2012, the US Embassy in the Philippines requested
diplomatic clearance for the said vessel "to enter and exit the territorial waters of
the Philippines and to arrive at the port of Subic Bay for the purpose of routine
ship replenishment, maintenance, and crew liberty."4 On January 6, 2013, the
ship left Sasebo, Japan for Subic Bay, arriving on January 13, 2013 after a brief
stop for fuel in Okinawa, Japan.1âwphi1
On January 15, 2013, the USS Guardian departed Subic Bay for its next port of
call in Makassar, Indonesia. On January 17, 2013 at 2:20 a.m. while transiting
the Sulu Sea, the ship ran aground on the northwest side of South Shoal of the
Tubbataha Reefs, about 80 miles east-southeast of Palawan. No cine was
injured in the incident, and there have been no reports of leaking fuel or oil.
On January 20, 2013, U.S. 7th Fleet Commander, Vice Admiral Scott Swift,
expressed regret for the incident in a press statement.5 Likewise, US
Ambassador to the Philippines Harry K. Thomas, Jr., in a meeting at the
Department of Foreign Affairs (DFA) on February 4, "reiterated his regrets over
the grounding incident and assured Foreign Affairs Secretazy Albert F. del
Rosario that the United States will provide appropriate compensation for damage
to the reef caused by the ship."6 By March 30, 2013, the US Navy-led salvage
team had finished removing the last piece of the grounded ship from the coral
reef.
On April 1 7, 2013, the above-named petitioners on their behalf and in
representation of their respective sector/organization and others, including
minors or generations yet unborn, filed the present petition agairtst Scott H. Swift
in his capacity as Commander of the US 7th Fleet, Mark A. Rice in his capacity
as Commanding Officer of the USS Guardian and Lt. Gen. Terry G. Robling, US
Marine Corps Forces, Pacific and Balikatan 2013 Exercises Co-Director ("US
respondents"); President Benigno S. Aquino III in his capacity as Commander-in-
Chief of the Armed Forces of the Philippines (AFP), DF A Secretary Albert F. Del
Rosario, Executive Secretary Paquito Ochoa, Jr., Secretary Voltaire T. Gazmin
(Department of National Defense), Secretary Jesus P. Paje (Department of
Environment and Natural Resources), Vice-Admiral Jose Luis M. Alano
(Philippine Navy Flag Officer in Command, AFP), Admiral Rodolfo D. Isorena
(Philippine Coast Guard Commandant), Commodore Enrico Efren Evangelista
(Philippine Coast Guard-Palawan), and Major General Virgilio 0. Domingo (AFP
Commandant), collectively the "Philippine respondents."
The Petition
Petitioners claim that the grounding, salvaging and post-salvaging operations of
the USS Guardian cause and continue to cause environmental damage of such
magnitude as to affect the provinces of Palawan, Antique, Aklan, Guimaras,
Iloilo, Negros Occidental, Negros Oriental, Zamboanga del Norte, Basilan, Sulu,
and Tawi-Tawi, which events violate their constitutional rights to a balanced and
healthful ecology. They also seek a directive from this Court for the institution of
civil, administrative and criminal suits for acts committed in violation of
environmental laws and regulations in connection with the grounding incident.
Specifically, petitioners cite the following violations committed by US respondents
under R.A. No. 10067: unauthorized entry (Section 19); non-payment of
conservation fees (Section 21 ); obstruction of law enforcement officer (Section
30); damages to the reef (Section 20); and destroying and disturbing resources
(Section 26[g]). Furthermore, petitioners assail certain provisions of the Visiting
157
Forces Agreement (VFA) which they want this Court to nullify for being
unconstitutional.
The numerous reliefs sought in this case are set forth in the final prayer of the
petition, to wit: WHEREFORE, in view of the foregoing, Petitioners respectfully
pray that the Honorable Court: 1. Immediately issue upon the filing of this petition
a Temporary Environmental Protection Order (TEPO) and/or a Writ of Kalikasan,
which shall, in particular,
a. Order Respondents and any person acting on their behalf, to cease and desist
all operations over the Guardian grounding incident;
b. Initially demarcating the metes and bounds of the damaged area as well as an
additional buffer zone;
c. Order Respondents to stop all port calls and war games under 'Balikatan'
because of the absence of clear guidelines, duties, and liability schemes for
breaches of those duties, and require Respondents to assume responsibility for
prior and future environmental damage in general, and environmental damage
under the Visiting Forces Agreement in particular.
d. Temporarily define and describe allowable activities of ecotourism, diving,
recreation, and limited commercial activities by fisherfolk and indigenous
communities near or around the TRNP but away from the damaged site and an
additional buffer zone;
2. After summary hearing, issue a Resolution extending the TEPO until further
orders of the Court;
3. After due proceedings, render a Decision which shall include, without
limitation:
a. Order Respondents Secretary of Foreign Affairs, following the dispositive
portion of Nicolas v. Romulo, "to forthwith negotiate with the United States
representatives for the appropriate agreement on [environmental guidelines and
environmental accountability] under Philippine authorities as provided in Art. V[]
of the VFA ... "
b. Direct Respondents and appropriate agencies to commence administrative,
civil, and criminal proceedings against erring officers and individuals to the full
extent of the law, and to make such proceedings public;
c. Declare that Philippine authorities may exercise primary and exclusive criminal
jurisdiction over erring U.S. personnel under the circumstances of this case;
d. Require Respondents to pay just and reasonable compensation in the
settlement of all meritorious claims for damages caused to the Tubbataha Reef
on terms and conditions no less severe than those applicable to other States,
and damages for personal injury or death, if such had been the case;
e. Direct Respondents to cooperate in providing for the attendance of witnesses
and in the collection and production of evidence, including seizure and delivery
of objects connected with the offenses related to the grounding of the Guardian;
f. Require the authorities of the Philippines and the United States to notify each
other of the disposition of all cases, wherever heard, related to the grounding of
the Guardian;
g. Restrain Respondents from proceeding with any purported restoration, repair,
salvage or post salvage plan or plans, including cleanup plans covering the
damaged area of the Tubbataha Reef absent a just settlement approved by the
Honorable Court;
h. Require Respondents to engage in stakeholder and LOU consultations in
accordance with the Local Government Code and R.A. 10067;
i. Require Respondent US officials and their representatives to place a deposit to
the TRNP Trust Fund defined under Section 17 of RA 10067 as a bona .fide
gesture towards full reparations;
j. Direct Respondents to undertake measures to rehabilitate the areas affected
by the grounding of the Guardian in light of Respondents' experience in the Port
Royale grounding in 2009, among other similar grounding incidents;
k. Require Respondents to regularly publish on a quarterly basis and in the name
of transparency and accountability such environmental damage assessment,
valuation, and valuation methods, in all stages of negotiation;
l. Convene a multisectoral technical working group to provide scientific and
technical support to the TPAMB;
m. Order the Department of Foreign Affairs, Department of National Defense,
and the Department of Environment and Natural Resources to review the Visiting
Forces Agreement and the Mutual Defense Treaty to consider whether their
provisions allow for the exercise of erga omnes rights to a balanced and healthful
ecology and for damages which follow from any violation of those rights;
n. Narrowly tailor the provisions of the Visiting Forces Agreement for purposes of
protecting the damaged areas of TRNP;
o. Declare the grant of immunity found in Article V ("Criminal Jurisdiction") and
Article VI of the Visiting Forces Agreement unconstitutional for violating equal
protection and/or for violating the preemptory norm of nondiscrimination
incorporated as part of the law of the land under Section 2, Article II, of the
Philippine Constitution;
p. Allow for continuing discovery measures;
q. Supervise marine wildlife rehabilitation in the Tubbataha Reefs in all other
respects; and
4. Provide just and equitable environmental rehabilitation measures and such
other reliefs as are just and equitable under the premises.7 (Underscoring
supplied.)
Since only the Philippine respondents filed their comment8 to the petition,
petitioners also filed a motion for early resolution and motion to proceed ex parte
against the US respondents.9
Respondents' Consolidated Comment
In their consolidated comment with opposition to the application for a TEPO and
ocular inspection and production orders, respondents assert that: ( 1) the
grounds relied upon for the issuance of a TEPO or writ of Kalikasan have
become fait accompli as the salvage operations on the USS Guardian were
already completed; (2) the petition is defective in form and substance; (3) the
petition improperly raises issues involving the VFA between the Republic of the
Philippines and the United States of America; and ( 4) the determination of the
extent of responsibility of the US Government as regards the damage to the
Tubbataha Reefs rests exdusively with the executive branch.
158
The Court's Ruling
As a preliminary matter, there is no dispute on the legal standing of petitioners to
file the present petition.
Locus standi is "a right of appearance in a court of justice on a given question."10
Specifically, it is "a party's personal and substantial interest in a case where he
has sustained or will sustain direct injury as a result" of the act being challenged,
and "calls for more than just a generalized grievance."11 However, the rule on
standing is a procedural matter which this Court has relaxed for non-traditional
plaintiffs like ordinary citizens, taxpayers and legislators when the public interest
so requires, such as when the subject matter of the controversy is of
transcendental importance, of overreaching significance to society, or of
paramount public interest.12
In the landmark case of Oposa v. Factoran, Jr.,13 we recognized the "public right"
of citizens to "a balanced and healthful ecology which, for the first time in our
constitutional history, is solemnly incorporated in the fundamental law." We
declared that the right to a balanced and healthful ecology need not be written in
the Constitution for it is assumed, like other civil and polittcal rights guaranteed in
the Bill of Rights, to exist from the inception of mankind and it is an issue of
transcendental importance with intergenerational implications.1âwphi1 Such right
carries with it the correlative duty to refrain from impairing the environment.14
On the novel element in the class suit filed by the petitioners minors in Oposa,
this Court ruled that not only do ordinary citizens have legal standing to sue for
the enforcement of environmental rights, they can do so in representation of their
own and future generations. Thus:
Petitioners minors assert that they represent their generation as well as
generations yet unborn. We find no difficulty in ruling that they can, for
themselves, for others of their generation and for the succeeding generations,
file a class suit. Their personality to sue in behalf of the succeeding generations
can only be based on the concept of intergenerational responsibility insofar as
the right to a balanced and healthful ecology is concerned. Such a right, as
hereinafter expounded, considers the "rhythm and harmony of nature." Nature
means the created world in its entirety. Such rhythm and harmony indispensably
include, inter alia, the judicious disposition, utilization, management, renewal and
conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-
shore areas and other natural resources to the end that their exploration,
development and utilization be equitably accessible to the present a:: well as
future generations. Needless to say, every generation has a responsibility to the
next to preserve that rhythm and harmony for the full 1:njoyment of a balanced
and healthful ecology. Put a little differently, the minors' assertion of their right to
a sound environment constitutes, at the same time, the performance of their
obligation to ensure the protection of that right for the generations to come.15
(Emphasis supplied.)
The liberalization of standing first enunciated in Oposa, insofar as it refers to
minors and generations yet unborn, is now enshrined in the Rules which allows
the filing of a citizen suit in environmental cases. The provision on citizen suits in
the Rules "collapses the traditional rule on personal and direct interest, on the
principle that humans are stewards of nature."16
Having settled the issue of locus standi, we shall address the more fundamental
question of whether this Court has jurisdiction over the US respondents who did
not submit any pleading or manifestation in this case.
The immunity of the State from suit, known also as the doctrine of sovereign
immunity or non-suability of the State,17 is expressly provided in Article XVI of the
1987 Constitution which states:
Section 3. The State may not be sued without its consent.
In United States of America v. Judge Guinto,18 we discussed the principle of state
immunity from suit, as follows:
The rule that a state may not be sued without its consent, now · expressed in
Article XVI, Section 3, of the 1987 Constitution, is one of the generally accepted
principles of international law that we have adopted as part of the law of our land
under Article II, Section 2. x x x.
Even without such affirmation, we would still be bound by the generally accepted
principles of international law under the doctrine of incorporation. Under this
doctrine, as accepted by the majority of states, such principles are deemed
incorporated in the law of every civilized state as a condition and consequence of
its membership in the society of nations. Upon its admission to such society, the
state is automatically obligated to comply with these principles in its relations with
other states.
As applied to the local state, the doctrine of state immunity is based on the
justification given by Justice Holmes that ''there can be no legal right against the
authority which makes the law on which the right depends." [Kawanakoa v.
Polybank, 205 U.S. 349] There are other practical reasons for the enforcement of
the doctrine. In the case of the foreign state sought to be impleaded in the local
jurisdiction, the added inhibition is expressed in the maxim par in parem, non
habet imperium. All states are sovereign equals and cannot assert jurisdiction
over one another. A contrary disposition would, in the language of a celebrated
case, "unduly vex the peace of nations." [De Haber v. Queen of Portugal, 17 Q.
B. 171]
While the doctrine appears to prohibit only suits against the state without its
consent, it is also applicable to complaints filed against officials of the state for
acts allegedly performed by them in the discharge of their duties. The rule is that
if the judgment against such officials will require the state itself to perform an
affirmative act to satisfy the same,. such as the appropriation of the amount
needed to pay the damages awarded against them, the suit must be regarded as
against the state itself although it has not been formally impleaded. [Garcia v.
Chief of Staff, 16 SCRA 120] In such a situation, the state may move to dismiss
the comp.taint on the ground that it has been filed without its consent.19
(Emphasis supplied.)
Under the American Constitution, the doctrine is expressed in the Eleventh
Amendment which reads:
159
The Judicial power of the United States shall not be construed to extend to any
suit in law or equity, commenced or prosecuted against one of the United States
by Citizens of another State, or by Citizens or Subjects of any Foreign State.
In the case of Minucher v. Court of Appeals,20 we further expounded on the
immunity of foreign states from the jurisdiction of local courts, as follows:
The precept that a State cannot be sued in the courts of a foreign state is a long-
standing rule of customary international law then closely identified with the
personal immunity of a foreign sovereign from suit and, with the emergence of
democratic states, made to attach not just to the person of the head of state, or
his representative, but also distinctly to the state itself in its sovereign capacity. If
the acts giving rise to a suit arc those of a foreign government done by its foreign
agent, although not necessarily a diplomatic personage, but acting in his official
capacity, the complaint could be barred by the immunity of the foreign sovereign
from suit without its consent. Suing a representative of a state is believed to be,
in effect, suing the state itself. The proscription is not accorded for the benefit of
an individual but for the State, in whose service he is, under the maxim -par in
parem, non habet imperium -that all states are soverr~ign equals and cannot
assert jurisdiction over one another. The implication, in broad terms, is that if the
judgment against an official would rec 1uire the state itself to perform an
affirmative act to satisfy the award, such as the appropriation of the amount
needed to pay the damages decreed against him, the suit must be regarded as
being against the state itself, although it has not been formally impleaded.21
(Emphasis supplied.)
In the same case we also mentioned that in the case of diplomatic immunity, the
privilege is not an immunity from the observance of the law of the territorial
sovereign or from ensuing legal liability; it is, rather, an immunity from the
exercise of territorial jurisdiction.22
In United States of America v. Judge Guinto,23 one of the consolidated cases
therein involved a Filipino employed at Clark Air Base who was arrested following
a buy-bust operation conducted by two officers of the US Air Force, and was
eventually dismissed from his employment when he was charged in court for
violation of R.A. No. 6425. In a complaint for damages filed by the said employee
against the military officers, the latter moved to dismiss the case on the ground
that the suit was against the US Government which had not given its consent.
The RTC denied the motion but on a petition for certiorari and prohibition filed
before this Court, we reversed the RTC and dismissed the complaint. We held
that petitioners US military officers were acting in the exercise of their official
functions when they conducted the buy-bust operation against the complainant
and thereafter testified against him at his trial. It follows that for discharging their
duties as agents of the United States, they cannot be directly impleaded for acts
imputable to their principal, which has not given its consent to be sued.
This traditional rule of State immunity which exempts a State from being sued in
the courts of another State without the former's consent or waiver has evolved
into a restrictive doctrine which distinguishes sovereign and governmental acts
(Jure imperil") from private, commercial and proprietary acts (Jure gestionis).
Under the restrictive rule of State immunity, State immunity extends only to acts
Jure imperii. The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign, its
commercial activities or economic affairs.24
In Shauf v. Court of Appeals,25 we discussed the limitations of the State immunity
principle, thus:
It is a different matter where the public official is made to account in his capacity
as such for acts contrary to law and injurious to the rights of plaintiff. As was
clearly set forth by JustiGe Zaldivar in Director of the Bureau of
Telecommunications, et al. vs. Aligaen, etc., et al. : "Inasmuch as the State
authorizes only legal acts by its officers, unauthorized acts of government
officials or officers are not acts of the State, and an action against the officials or
officers by one whose rights have been invaded or violated by such acts, for the
protection of his rights, is not a suit against the State within the rule of immunity
of the State from suit. In the same tenor, it has been said that an action at law or
suit in equity against a State officer or the director of a State department on the
ground that, while claiming to act for the State, he violates or invades the
personal and property rights of the plaintiff, under an unconstitutional act or
under an assumption of authority which he does not have, is not a suit against
the State within the constitutional provision that the State may not be sued
without its consent." The rationale for this ruling is that the doctrine of state
immunity cannot be used as an instrument for perpetrating an injustice.
xxxx
The aforecited authorities are clear on the matter. They state that the doctrine of
immunity from suit will not apply and may not be invoked where the public official
is being sued in his private and personal capacity as an ordinary citizen. The
cloak of protection afforded the officers and agents of the government is
removed the moment they are sued in their individual capacity. This situation
usually arises where the public official acts without authority or in excess of the
powers vested in him. It is a well-settled principle of law that a public official may
be liable in his personal private capacity for whatever damage he may have
caused by his act done with malice and in bad faith, or beyond the scope of his
authority or jurisdiction.26 (Emphasis supplied.) In this case, the US respondents
were sued in their official capacity as commanding officers of the US Navy who
had control and supervision over the USS Guardian and its crew. The alleged act
or omission resulting in the unfortunate grounding of the USS Guardian on the
TRNP was committed while they we:re performing official military duties.
Considering that the satisfaction of a judgment against said officials will require
remedial actions and appropriation of funds by the US government, the suit is
deemed to be one against the US itself. The principle of State immunity therefore
bars the exercise of jurisdiction by this Court over the persons of respondents
Swift, Rice and Robling.
During the deliberations, Senior Associate Justice Antonio T. Carpio took the
position that the conduct of the US in this case, when its warship entered a
restricted area in violation of R.A. No. 10067 and caused damage to the TRNP
reef system, brings the matter within the ambit of Article 31 of the United Nations
Convention on the Law of the Sea (UNCLOS). He explained that while
160
historically, warships enjoy sovereign immunity from suit as extensions of their
flag State, Art. 31 of the UNCLOS creates an exception to this rule in cases
where they fail to comply with the rules and regulations of the coastal State
regarding passage through the latter's internal waters and the territorial sea.
According to Justice Carpio, although the US to date has not ratified the
UNCLOS, as a matter of long-standing policy the US considers itself bound by
customary international rules on the "traditional uses of the oceans" as codified
in UNCLOS, as can be gleaned from previous declarations by former Presidents
Reagan and Clinton, and the US judiciary in the case of United States v. Royal
Caribbean Cruise Lines, Ltd.27
The international law of the sea is generally defined as "a body of treaty rules
arid customary norms governing the uses of the sea, the exploitation of its
resources, and the exercise of jurisdiction over maritime regimes. It is a branch
of public international law, regulating the relations of states with respect to the
uses of the oceans."28 The UNCLOS is a multilateral treaty which was opened for
signature on December 10, 1982 at Montego Bay, Jamaica. It was ratified by the
Philippines in 1984 but came into force on November 16, 1994 upon the
submission of the 60th ratification.
The UNCLOS is a product of international negotiation that seeks to balance
State sovereignty (mare clausum) and the principle of freedom of the high seas
(mare liberum).29 The freedom to use the world's marine waters is one of the
oldest customary principles of international law.30 The UNCLOS gives to the
coastal State sovereign rights in varying degrees over the different zones of the
sea which are: 1) internal waters, 2) territorial sea, 3) contiguous zone, 4)
exclusive economic zone, and 5) the high seas. It also gives coastal States more
or less jurisdiction over foreign vessels depending on where the vessel is
located.31
Insofar as the internal waters and territorial sea is concerned, the Coastal State
exercises sovereignty, subject to the UNCLOS and other rules of international
law. Such sovereignty extends to the air space over the territorial sea as well as
to its bed and subsoil.32
In the case of warships,33 as pointed out by Justice Carpio, they continue to
enjoy sovereign immunity subject to the following exceptions:
Article 30
Non-compliance by warships with the laws and regulations of the coastal State
If any warship does not comply with the laws and regulations of the coastal State
concerning passage through the territorial sea and disregards any request for
compliance therewith which is made to it, the coastal State may require it to
leave the territorial sea immediately.
Article 31
Responsibility of the flag State for damage caused by a warship
or other government ship operated for non-commercial purposes
The flag State shall bear international responsibility for any loss or damage to the
coastal State resulting from the non-compliance by a warship or other
government ship operated for non-commercial purposes with the laws and
regulations of the coastal State concerning passage through the territorial sea or
with the provisions of this Convention or other rules of international law.
Article 32
Immunities of warships and other government ships operated for non-commercial
purposes
With such exceptions as are contained in subsection A and in articles 30 and 31,
nothing in this Convention affects the immunities of warships and other
government ships operated for non-commercial purposes. (Emphasis supplied.)
A foreign warship's unauthorized entry into our internal waters with resulting
damage to marine resources is one situation in which the above provisions may
apply. But what if the offending warship is a non-party to the UNCLOS, as in this
case, the US?
An overwhelming majority - over 80% -- of nation states are now members of
UNCLOS, but despite this the US, the world's leading maritime power, has not
ratified it.
While the Reagan administration was instrumental in UNCLOS' negotiation and
drafting, the U.S. delegation ultimately voted against and refrained from signing it
due to concerns over deep seabed mining technology transfer provisions
contained in Part XI. In a remarkable, multilateral effort to induce U.S.
membership, the bulk of UNCLOS member states cooperated over the
succeeding decade to revise the objection.able provisions. The revisions
satisfied the Clinton administration, which signed the revised Part XI
implementing agreement in 1994. In the fall of 1994, President Clinton
transmitted UNCLOS and the Part XI implementing agreement to the Senate
requesting its advice and consent. Despite consistent support from President
Clinton, each of his successors, and an ideologically diverse array of
stakeholders, the Senate has since withheld the consent required for the
President to internationally bind the United States to UNCLOS.
While UNCLOS cleared the Senate Foreign Relations Committee (SFRC) during
the 108th and 110th Congresses, its progress continues to be hamstrung by
significant pockets of political ambivalence over U.S. participation in international
institutions. Most recently, 111 th Congress SFRC Chairman Senator John Kerry
included "voting out" UNCLOS for full Senate consideration among his highest
priorities. This did not occur, and no Senate action has been taken on UNCLOS
by the 112th Congress.34
Justice Carpio invited our attention to the policy statement given by President
Reagan on March 10, 1983 that the US will "recognize the rights of the other ,
states in the waters off their coasts, as reflected in the convention [UNCLOS], so
long as the rights and freedom of the United States and others under
international law are recognized by such coastal states", and President Clinton's
reiteration of the US policy "to act in a manner consistent with its [UNCLOS]
provisions relating to traditional uses of the oceans and to encourage other
countries to do likewise." Since Article 31 relates to the "traditional uses of the
oceans," and "if under its policy, the US 'recognize[s] the rights of the other
states in the waters off their coasts,"' Justice Carpio postulates that "there is
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more reason to expect it to recognize the rights of other states in their internal
waters, such as the Sulu Sea in this case."
As to the non-ratification by the US, Justice Carpio emphasizes that "the US'
refusal to join the UN CLOS was centered on its disagreement with UN CLOS'
regime of deep seabed mining (Part XI) which considers the oceans and deep
seabed commonly owned by mankind," pointing out that such "has nothing to do
with its [the US'] acceptance of customary international rules on navigation."
It may be mentioned that even the US Navy Judge Advocate General's Corps
publicly endorses the ratification of the UNCLOS, as shown by the following
statement posted on its official website:
The Convention is in the national interest of the United States because it
establishes stable maritime zones, including a maximum outer limit for territorial
seas; codifies innocent passage, transit passage, and archipelagic sea lanes
passage rights; works against "jurisdictiomtl creep" by preventing coastal nations
from expanding their own maritime zones; and reaffirms sovereign immunity of
warships, auxiliaries anJ government aircraft.
xxxx
Economically, accession to the Convention would support our national interests
by enhancing the ability of the US to assert its sovereign rights over the
resources of one of the largest continental shelves in the world. Further, it is the
Law of the Sea Convention that first established the concept of a maritime
Exclusive Economic Zone out to 200 nautical miles, and recognized the rights of
coastal states to conserve and manage the natural resources in this Zone.35
We fully concur with Justice Carpio's view that non-membership in the UNCLOS
does not mean that the US will disregard the rights of the Philippines as a
Coastal State over its internal waters and territorial sea. We thus expect the US
to bear "international responsibility" under Art. 31 in connection with the USS
Guardian grounding which adversely affected the Tubbataha reefs. Indeed, it is
difficult to imagine that our long-time ally and trading partner, which has been
actively supporting the country's efforts to preserve our vital marine resources,
would shirk from its obligation to compensate the damage caused by its warship
while transiting our internal waters. Much less can we comprehend a
Government exercising leadership in international affairs, unwilling to comply
with the UNCLOS directive for all nations to cooperate in the global task to
protect and preserve the marine environment as provided in Article 197, viz:
Article 197
Cooperation on a global or regional basis
States shall cooperate on a global basis and, as appropriate, on a regional basis,
directly or through competent international organizations, in formulating and
elaborating international rules, standards and recommended practices and
procedures consistent with this Convention, for the protection and preservation of
the marine environment, taking into account characteristic regional features.
In fine, the relevance of UNCLOS provisions to the present controversy is
beyond dispute. Although the said treaty upholds the immunity of warships from
the jurisdiction of Coastal States while navigating the.latter's territorial sea, the
flag States shall be required to leave the territorial '::;ea immediately if they flout
the laws and regulations of the Coastal State, and they will be liable for damages
caused by their warships or any other government vessel operated for non-
commercial purposes under Article 31.
Petitioners argue that there is a waiver of immunity from suit found in the VFA.
Likewise, they invoke federal statutes in the US under which agencies of the US
have statutorily waived their immunity to any action. Even under the common law
tort claims, petitioners asseverate that the US respondents are liable for
negligence, trespass and nuisance.
We are not persuaded.
The VFA is an agreement which defines the treatment of United States troops
and personnel visiting the Philippines to promote "common security interests"
between the US and the Philippines in the region. It provides for the guidelines to
govern such visits of military personnel, and further defines the rights of the
United States and the Philippine government in the matter of criminal jurisdiction,
movement of vessel and aircraft, importation and exportation of equipment,
materials and supplies.36 The invocation of US federal tort laws and even
common law is thus improper considering that it is the VF A which governs
disputes involving US military ships and crew navigating Philippine waters in
pursuance of the objectives of the agreement.
As it is, the waiver of State immunity under the VF A pertains only to criminal
jurisdiction and not to special civil actions such as the present petition for
issuance of a writ of Kalikasan. In fact, it can be inferred from Section 17, Rule 7
of the Rules that a criminal case against a person charged with a violation of an
environmental law is to be filed separately:
SEC. 17. Institution of separate actions.-The filing of a petition for the issuance of
the writ of kalikasan shall not preclude the filing of separate civil, criminal or
administrative actions.
In any case, it is our considered view that a ruling on the application or non-
application of criminal jurisdiction provisions of the VF A to US personnel who
may be found responsible for the grounding of the USS Guardian, would be
premature and beyond the province of a petition for a writ of Kalikasan. We also
find it unnecessary at this point to determine whether such waiver of State
immunity is indeed absolute. In the same vein, we cannot grant damages which
have resulted from the violation of environmental laws. The Rules allows the
recovery of damages, including the collection of administrative fines under R.A.
No. 10067, in a separate civil suit or that deemed instituted with the criminal
action charging the same violation of an environmental law.37
Section 15, Rule 7 enumerates the reliefs which may be granted in a petition for
issuance of a writ of Kalikasan, to wit:
SEC. 15. Judgment.-Within sixty (60) days from the time the petition is submitted
for decision, the court shall render judgment granting or denying the privilege of
the writ of kalikasan.
The reliefs that may be granted under the writ are the following:
(a) Directing respondent to permanently cease and desist from committing acts
or neglecting the performance of a duty in violation of environmental laws
resulting in environmental destruction or damage;
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(b) Directing the respondent public official, govemment agency, private person or
entity to protect, preserve, rehabilitate or restore the environment;
(c) Directing the respondent public official, government agency, private person or
entity to monitor strict compliance with the decision and orders of the court;
(d) Directing the respondent public official, government agency, or private person
or entity to make periodic reports on the execution of the final judgment; and
(e) Such other reliefs which relate to the right of the people to a balanced and
healthful ecology or to the protection, preservation, rehabilitation or restoration of
the environment, except the award of damages to individual petitioners.
(Emphasis supplied.)
We agree with respondents (Philippine officials) in asserting that this petition has
become moot in the sense that the salvage operation sought to be enjoined or
restrained had already been accomplished when petitioners sought recourse
from this Court. But insofar as the directives to Philippine respondents to protect
and rehabilitate the coral reef stn icture and marine habitat adversely affected by
the grounding incident are concerned, petitioners are entitled to these reliefs
notwithstanding the completion of the removal of the USS Guardian from the
coral reef. However, we are mindful of the fact that the US and Philippine
governments both expressed readiness to negotiate and discuss the matter of
compensation for the damage caused by the USS Guardian. The US Embassy
has also declared it is closely coordinating with local scientists and experts in
assessing the extent of the damage and appropriate methods of rehabilitation.
Exploring avenues for settlement of environmental cases is not proscribed by the
Rules. As can be gleaned from the following provisions, mediation and
settlement are available for the consideration of the parties, and which dispute
resolution methods are encouraged by the court, to wit:
RULE3
xxxx
SEC. 3. Referral to mediation.-At the start of the pre-trial conference, the court
shall inquire from the parties if they have settled the dispute; otherwise, the court
shall immediately refer the parties or their counsel, if authorized by their clients,
to the Philippine Mediation Center (PMC) unit for purposes of mediation. If not
available, the court shall refer the case to the clerk of court or legal researcher
for mediation.
Mediation must be conducted within a non-extendible period of thirty (30) days
from receipt of notice of referral to mediation.
The mediation report must be submitted within ten (10) days from the expiration
of the 30-day period.
SEC. 4. Preliminary conference.-If mediation fails, the court will schedule the
continuance of the pre-trial. Before the scheduled date of continuance, the court
may refer the case to the branch clerk of court for a preliminary conference for
the following purposes:
(a) To assist the parties in reaching a settlement;
xxxx
SEC. 5. Pre-trial conference; consent decree.-The judge shall put the parties and
their counsels under oath, and they shall remain under oath in all pre-trial
conferences.
The judge shall exert best efforts to persuade the parties to arrive at a settlement
of the dispute. The judge may issue a consent decree approving the agreement
between the parties in accordance with law, morals, public order and public
policy to protect the right of the people to a balanced and healthful ecology.
xxxx
SEC. 10. Efforts to settle.- The court shall endeavor to make the parties to agree
to compromise or settle in accordance with law at any stage of the proceedings
before rendition of judgment. (Underscoring supplied.)
The Court takes judicial notice of a similar incident in 2009 when a guided-
missile cruiser, the USS Port Royal, ran aground about half a mile off the
Honolulu Airport Reef Runway and remained stuck for four days. After spending
$6.5 million restoring the coral reef, the US government was reported to have
paid the State of Hawaii $8.5 million in settlement over coral reef damage caused
by the grounding.38
To underscore that the US government is prepared to pay appropriate
compensation for the damage caused by the USS Guardian grounding, the US
Embassy in the Philippines has announced the formation of a US
interdisciplinary scientific team which will "initiate discussions with the
Government of the Philippines to review coral reef rehabilitation options in
Tubbataha, based on assessments by Philippine-based marine scientists." The
US team intends to "help assess damage and remediation options, in
coordination with the Tubbataha Management Office, appropriate Philippine
government entities, non-governmental organizations, and scientific experts from
Philippine universities."39
A rehabilitation or restoration program to be implemented at the cost of the
violator is also a major relief that may be obtained under a judgment rendered in
a citizens' suit under the Rules, viz:
RULES
SECTION 1. Reliefs in a citizen suit.-If warranted, the court may grant to the
plaintiff proper reliefs which shall include the protection, preservation or
rehabilitation of the environment and the payment of attorney's fees, costs of suit
and other litigation expenses. It may also require the violator to submit a program
of rehabilitation or restoration of the environment, the costs of which shall be
borne by the violator, or to contribute to a special trust fund for that purpose
subject to the control of the court.1âwphi1
In the light of the foregoing, the Court defers to the Executive Branch on the
matter of compensation and rehabilitation measures through diplomatic
channels. Resolution of these issues impinges on our relations with another
State in the context of common security interests under the VFA. It is settled that
"[t]he conduct of the foreign relations of our government is committed by the
Constitution to the executive and legislative-"the political" --departments of the
government, and the propriety of what may be done in the exercise of this
political power is not subject to judicial inquiry or decision."40
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On the other hand, we cannot grant the additional reliefs prayed for in the
petition to order a review of the VFA and to nullify certain immunity provisions
thereof.
As held in BAYAN (Bagong Alyansang Makabayan) v. Exec. Sec. Zamora,41 the
VFA was duly concurred in by the Philippine Senate and has been recognized as
a treaty by the United States as attested and certified by the duly authorized
representative of the United States government. The VF A being a valid and
binding agreement, the parties are required as a matter of international law to
abide by its terms and provisions.42 The present petition under the Rules is not
the proper remedy to assail the constitutionality of its provisions. WHEREFORE,
the petition for the issuance of the privilege of the Writ of Kalikasan is hereby
DENIED.
No pronouncement as to costs.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice
WE CONCUR:
G.R. No. 125865 January 28, 2000
JEFFREY LIANG (HUEFENG), petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.
YNARES-SANTIAGO, J.:
Petitioner is an economist working with the Asian Development Bank (ADB).
Sometime in 1994, for allegedly uttering defamatory words against fellow ADB
worker Joyce Cabal, he was charged before the Metropolitan Trial Court (MeTC)
of Mandaluyong City with two counts of grave oral defamation docketed as
Criminal Cases Nos. 53170 and 53171. Petitioner was arrested by virtue of a
warrant issued by the MeTC. After fixing petitioner's bail at P2,400.00 per
criminal charge, the MeTC released him to the custody of the Security Officer of
ADB. The next day, the MeTC judge received an "office of protocol" from the
Department of Foreign Affairs (DFA) stating that petitioner is covered by
immunity from legal process under Section 45 of the Agreement between the
ADB and the Philippine Government regarding the Headquarters of the ADB
(hereinafter Agreement) in the country. Based on the said protocol
communication that petitioner is immune from suit, the MeTC judge without
notice to the prosecution dismissed the two criminal cases. The latter filed a
motion for reconsideration which was opposed by the DFA. When its motion was
denied, the prosecution filed a petition for certiorari and mandamus with the
Regional Trial Court (RTC) of Pasig City which set aside the MeTC rulings and
ordered the latter court to enforce the warrant of arrest it earlier issued. After the
motion for reconsideration was denied, petitioner elevated the case to this Court
via a petition for review arguing that he is covered by immunity under the
Agreement and that no preliminary investigation was held before the criminal
cases were filed in court.1âwphi1.nêt
The petition is not impressed with merit.
First, courts cannot blindly adhere and take on its face the communication from
the DFA that petitioner is covered by any immunity. The DFA's determination that
a certain person is covered by immunity is only preliminary which has no binding
effect in courts. In receiving ex-parte the DFA's advice and in motu propio
dismissing the two criminal cases without notice to the prosecution, the latter's
right to due process was violated. It should be noted that due process is a right
of the accused as much as it is of the prosecution. The needed inquiry in what
capacity petitioner was acting at the time of the alleged utterances requires for its
resolution evidentiary basis that has yet to be presented at the proper time.1 At
any rate, it has been ruled that the mere invocation of the immunity clause does
not ipso facto result in the dropping of the charges.2
Second, under Section 45 of the Agreement which provides:
Officers and staff of the Bank including for the purpose of this Article experts and
consultants performing missions for the Bank shall enjoy the following privileges
and immunities:
a.) immunity from legal process with respect to acts performed by them in their
official capacity except when the Bank waives the immunity.
the immunity mentioned therein is not absolute, but subject to the exception that
the acts was done in "official capacity." It is therefore necessary to determine if
petitioner's case falls within the ambit of Section 45(a). Thus, the prosecution
should have been given the chance to rebut the DFA protocol and it must be
accorded the opportunity to present its controverting evidence, should it so
desire.
Third, slandering a person could not possibly be covered by the immunity
agreement because our laws do not allow the commission of a crime, such as
defamation, in the name of official duty.3 The imputation of theft is ultra vires and
cannot be part of official functions. It is well-settled principle of law that a public
official may be liable in his personal private capacity for whatever damage he
may have caused by his act done with malice or in bad faith or beyond the scope
of his authority or jurisdiction.4 It appears that even the government's chief legal
counsel, the Solicitor General, does not support the stand taken by petitioner and
that of the DFA.
Fourth, under the Vienna Convention on Diplomatic Relations, a diplomatic
agent, assuming petitioner is such, enjoys immunity from criminal jurisdiction of
the receiving state except in the case of an action relating to any professional or
commercial activity exercised by the diplomatic agent in the receiving state
outside his official functions.5 As already mentioned above, the commission of a
crime is not part of official duty.
Finally, on the contention that there was no preliminary investigation conducted,
suffice it to say that preliminary investigation is not a matter of right in cases
cognizable by the MeTC such as the one at bar.6 Being purely a statutory right,
preliminary investigation may be invoked only when specifically granted by law.7
The rule on the criminal procedure is clear that no preliminary investigation is
required in cases falling within the jurisdiction of the MeTC.8 Besides the absence
of preliminary investigation does not affect the court's jurisdiction nor does it
impair the validity of the information or otherwise render it defective.9
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WHEREFORE, the petition is DENIED.
SO ORDERED.1âwphi1.nêt
Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.

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