MARCOS MENDOZA vs. FRANCISCO DE LEON FIRST DIVISION [G.R. No. 9596. February 11, 1916.

] MARCOS MENDOZA, plaintiff-appellee, vs. FRANCISCO DE LEON ET AL., defendants-appellants. Luis Morales for the appellants. Hugo Sansano for appellee. SYLLABUS 1. MUNICIPAL CORPORATIONS; GOVERNMENTAL POWERS AND CORPORATE POWERS; LIABILITY TO PRIVATE PERSONS. The Municipal Code confers both governmental and business or corporate powers upon municipal corporations. For the exercise of the former it is not liable to private persons. It's liability to them for the wrongful exercise of the latter is the same as that of a private corporation or individual. 2. ID.; ID.; ID.; OFFICERS AND AGENTS Officers and agents of municipal corporations charged with the performance of governmental duties which are their nature legislative, judicial, or quasi-judicial, are not liable for the consequences of their official act unless it

be shown that they act willfully and maliciously, with the express purpose of inflicting injury upon the plaintiff. 3. ID.; ID.; ID.; ID. Officers of municipalities charged with the administration of patrimonial property of a municipal corporation are liable for mismanagement of its affairs as are directors or managing officers of private corporations; not for mere mistakes of judgment, but only when their acts are so far opposed to the true interests of the municipality as to lead to the clear inference that no one thus acting could have been influenced by any honest desire to secure such interests, but that they must have acted with an intent to subserve some outside purpose regardless of the consequences to the municipality and in a manner inconsistent with its interest. 4. ID.; ID.; ID.; ID. The defendant councillors regularly leased an exclusive ferry privilege to the plaintiff for two years. After continuous user of a little more than one year, they forcibly evicted him on the pretext that he was not operating the ferry leased to him. Held: Under the evidence of record, that there is no manner of doubt that this pretext was absolutely without foundation and as there was therefore no occasion whatever for rescinding the contract, the defendant councillors are liable personally for the damages resulting to the lessee by their wrongful action.

DECISION

TRENT, J p:

This is an action for damages against the individual members of the municipal council of the municipality of Villasis, Pangasinan, for the revocation of the lease of an exclusive ferry privilege awarded to the plaintiff under the provisions of Act. No. 1634 of the Philippine Commission. After user of a little more than one year, the plaintiff was forcibly ejected under and in pursuance of a resolution adopted by the herein defendants, awarding a franchise for the same ferry to another person. Municipalities of the Philippine Islands organized under the Municipal Code have both governmental and corporate or business functions. Of the first class are the adoption of regulations against fire and disease, preservation of the public peace maintenance of municipal prisons, establishment of primary schools and post-offices, etc. Of the latter class are the establishment of municipal waterworks for the use of the inhabitants, the construction and maintenance of municipal slaughterhouses, markets, stables, bathing establishments, wharves, ferries, and fisheries. Act No. 1634 provides that the use of each fishery, fish-breeding ground, ferry, stable, market, slaughterhouse belonging to any municipality or township shall be let to the highest bidder annually or for such longer period not exceeding five years as may have been previously approved by the provincial board of the province in which the municipality or township is located. The twofold character of the powers of a municipality, under our Municipal Code (Act No. 82) is so apparent and its private or corporate powers so numerous and important that we find no difficulty in

reaching the conclusion that the general principles governing the liability of such entities to private individuals as enunciated in the United States are applicable to it. The distinction between governmental powers on the one hand, and corporate or proprietary or business powers on the other, as the latter class is variously described in the reported cases, has long been recognized in the United States and there is no dissent from the doctrine. In Wilcox vs. City of Rochester (190 N.Y., 137), it was said: "The broad general doctrine of the Maxmilian case (Maxmilian vs. Mayor, etc., New York, 62 N.Y., 160), which is certainly not now open to question in the courts of this State, is that 'two kinds of duties are imposed on municipal corporations, the one governmental and a branch of the general administration of the state, the other quasi private or corporate;' and 'that in the exercise of the latter duties the municipality is liable for the acts of its officers and agents, while in the former it is not.' (Cullen, J., in Lefrois vs Co. of Monroe, 162 N.Y., 563, 567.)" The Maxmilian case is quoted with approval in Bond vs. Royston (130 Ga., 646). In Co. Comm's of Anne Arundel Co. vs. Duckett (20 Md., 468, 476; 83 Am. Dec., 557), it was said: "With the regard to the liability of a public municipal corporation for the acts of its officers, the distinction is between an exercise

of those legislative powers which it holds for the public purposes, and as part of the government of the country, and those private franchises which belong to it, as a creation of the law; within the sphere of the former, it enjoys the exemption of the government, from responsibility for its own acts, and for the acts of those who are independent corporate officers, deriving their rights and duties from the sovereign power. But in regard to the latter, it is responsible for the acts of those who are in law its agents, though they may not be appointed by itself." This case is quoted with approval in Trammell vs. Russellville (34 Ark., 105; 36 Am. Rep., 1); and in McIlheney vs. Wilmington (127 N. C., 146; 50 L. R. A., 470). In Cummings vs. Lobsitz (42 Okla., 704; L. R. A., N. S., 1915 B, p. 415), it was said: "A distinction is made between the liability of a municipal corporation for the acts of its own officers in the exercise of powers which it possesses for the public purpose and which it holds as agent of the state, and those powers which embrace private or corporate duties and are exercised for the advantage of the municipality and its inhabitants. When the acts of its officers come within the powers which it has as agent of the state, it is exempt from liability for its own acts and the acts of its officers; if the acts of the officer or agent of the city are for the

special benefit of the corporation in its private or corporate interest, such officer is deemed the agent or servant of the city, but where the act is not in relation to a private or corporate interest of the municipality, but for the benefit of the public at large, such acts by the agents and servants are deemed to be acts by public or state officers, and for the public benefit." The distinction is also recognized by Dillon in his work on Municipal Corporations (5th ed.) sections 38 and 39. As is indicated in some of the above quoted cases, the municipality is not liable for the acts of its officers or agents in the performance in the performance of its governmental functions. Governmental affairs do not lose their governmental character by being delegated to the municipal government. Nor does the fact that such duties are performed by such officers of the municipality which, for convenience, the state allows the municipality to select, change their character. To preserve the peace, protect the morals and health of the community and so on is to administer government, whether it be done by the central government itself or is shifted to a local organization. And the state being immune for injuries suffered by private individuals in the administration of strictly governmental functions, like immunity is enjoyed by the municipality in the performance of the same duties, unless it is expressly made liable by statute. "The state cannot, without its consent expressed through legislation, be sued for injuries resulting from an act done in the exercise of its lawful governmental powers

and pertaining to the administration of government. . . . Municipal corporations are agents of the state in the exercise of certain governmental powers. The preservation of the health and peace of its inhabitants and fire protections afforded the property owner, are governmental functions." (Burke vs. City of South Omaha, 79 Neb., 793) In Nicholson vs. Detroit (129 Mich., 246; 56. L. R. A., 601), it was said: "It is the well-settled rule that the state is not liable to private persons who suffer injuries through negligence of its officers and the rule extends to townships and cities while in the performance of state functions, imposed upon them by the law. This subject is fully discussed in Detroit vs. Blackeby (21 Mich., 84; 4 Am. Rep., 450). It was there held that cities are governmental agencies, and that their 'officers are in no such sense municipal agents; that their negligence is the neglect of the municipality; nor will their misconduct be chargeable against them, unless the act complained of be either authorized or ratified.' And in a large number of cases it has been held that there is no such liability on the part of such governmental agency unless it has been imposed by statute, and in such case it is necessarily limited by the statute." In Claussen vs City of Luverne (103 Minn., 491; 15 L. R. A., N. S., 698), it was said:

"It is elementary that neither the state nor any of the subdivisions, like a municipality, through which it operates, is liable for torts committed by public officers, save in definitely excepted classes of cases. The exemption is based upon the sovereign character of the state and its agencies, and upon the absence of obligation, and not on the ground that by no means for remedy has been provided. 'The government,' said Mr. 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.' (U.S. vs Kirkpatrick, 9 Wheat., 720; 6 L. ed., 199; Beers vs. Arkansas, 20 How., 527; 15 L. ed., 991) This general exemption has been applied to municipal corporations in so far as the acts complained of were, in the language of the memorandum of the trial court, 'done in exercising powers for the public at large as a governing agency.' While so acting, the city cannot be held liable for misfeasance; and . . . the rule of respondeat superior has no application." Nor are officers or agents of the Government charged with the performance of governmental duties which are in their nature legislative, or quasi judicial, liable for the consequences of their official acts, unless it

be shown that they act willfully and maliciously, and with the express purpose of inflicting injury upon the plaintiff. If they exercise their honest judgment in the performance of their duties, their errors cannot be charged against them. (People vs. May, 251 Ill., 54; Salt Lake County vs. Clinton [Utah, 1911], 117 Pac., 1075; Comanche County vs. Burks (Tex. Civ. App., 19140, 166 S. W., 470; Monnier vs. Godbold, 1166 La., 165; 5 L. R. A., N. S., 463; Ray vs. Dodd, 132 Mo. App., 444; Johnson vs. Marsh, 82 N. J. L., 4; Gregory vs. Brooks, 37 Conn., 365; Lecourt vs. Gaster, 50 La. Ann., 521.) So it may be said that in so far as its governmental functions are concerned, a municipality is not liable at all, unless expressly made by statute; nor are its officers, so long as they perform their duties honestly and in good faith. The most common illustration of both phases of this rule is the action for false imprisonment so often brought against a municipality or a municipal officer. (Bartlett vs. City of Columbus, 101 Ga., 300; 44 L. R. A. 795; Peters vs. City of Lindsborg, 40 Kan., 654.) So, in Field vs. City of Des Moines (39 Iowa, 575), it was held that a municipality, acting under authority given it by the central government to destroy houses in the path of a conflagration, was not liable in damages in the absence of a statute expressly making it so. From what has already been said, it should be clear that a municipality is not exempt from liability for the negligent performance of its corporate or proprietary or business functions. In the administration of its patrimonial property, it is to be regarded as a private corporation or individual 153113-13 so far as its liability to third persons on contract or in tort is concerned. Its contracts, valid entered into, may be enforced and

damages may be collected from it for the torts of its officers or agents within the scope of their employment in precisely the same manner and to the same extent as those of private corporations or individuals. As to such matters the principles respondeat superior applies. It is for these purposes that the municipality is made liable to suits in the courts. "Municipal corporations are subject to be sued upon contracts and in tort. In a previous chapter we have considered at length the authority of such corporations to make contracts, the mode of exercising, and the effect of transcending the power. This leaves but little to add in this place respecting their liability in actions ex contractu. Upon an authorized contract that is, upon a contract within the scope of the charter or legislative powers of the corporation and duly made by the proper officers or agents they are liable in the same manner and to the same extent as private corporations or natural persons." (Dillon on Municipal Corporations, 5th ed., sec. 1610.) The same author says in section 1647: "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. To create such liability, it is fundamentally necessary that the act done which is injurious to others must be within the scope of the corporate powers as prescribed by charter or positive enactment (the extent of which powers all persons are bound, at their peril, to know); in other words, it must not be ultra vires in the sense that it is not within the power or authority of the corporation to act in reference to it under any circumstances. If the act complained of necessarily lies wholly outside of the general or special powers of the corporation as conferred in its charter or by statute, the corporation can in no event be liable to an action for damages, whether it directly commanded the performance of the act or whether it be done by its officers without its express command; for a corporation cannot of course, be impliedly liable to a greater extent than it could make itself by express corporate vote or action." It often happens that the same agent or agency has both a governmental and a corporate character. Such, for instance, are a municipal water system designed both for protection against fire (a governmental function) and to supply water to the inhabitants for profit (a corporate function) (Omaha Water Co., vs. Omaha, 12 L. R. A., N. S. 736; 77 C. C. A., 267; 147 Fed., 1; Judson vs. Borough of Winsted, 80 Conn., 384; 15 L. R. A., N. S., 91); a municipal light plant both for lighting the streets (a

governmental function) and for furnishing light to the inhabitants at a profit (a corporate function) (Fisher vs. New Bern, 140 N. C., 506; 111 Am. St. Rep., 857); an agent who is at the same time a police officer and a caretaker of a municipal toll bridge (Woodhull vs. Mayor, etc., of New York, 150 N. Y., 450). It is, also, sometimes the case that considerable difficulty is experienced in determining whether a particular municipal duty is governmental or corporate. But questions such as these do not arise in the case at bar. Here it is clear that the leasing of a municipal ferry to the highest bidder for a specified period of time is not a governmental but corporate function. Such a lease, when validly entered into, constitutes a contract with the lessee which the municipality is bound to respect. The matter is thus summed up by Dillon on Municipal Corporations (5th ed., sec. 1306): "Ordinances made by municipalities under charter or legislative authority, containing grants to water and light companies and other public service corporations of the right to use the street pipes, mains, etc., upon the condition of the performance of service by the grantee, are, after acceptance and performance by the grantee, contracts protected by the prohibition of the Federal Constitution against the enactment of any State Law impairing the obligation of contracts." Again, this author, adopting the language of the court in In re Fay (15 Pick. [Mass.], 243), says, in section 277:

"If a municipal corporation, seized of a ferry, lease the same, through the agency of the mayor and aldermen, with a covenant of quiet enjoyment, this covenant will not restrain the mayor and aldermen from exercising the powers vested in them by statute, to license another ferry over the same waters, if in their judgment (which cannot be reviewed by the courts) the public necessity and convenience require it. On such a covenant the city may be liable to the covenantees; but the powers vested in the city officers as trustees of the public cannot be thus abrogated. If, however, the city in its corporate capacity is the legal owner of an exclusive franchise, its grantees or lessees would hold it, notwithstanding any license to others, whether granted by the mayor and aldermen or any other tribunal." It seems clear, therefore, that under the provisions of the Municipal Code and Act No. 1634, above referred to, the plaintiff had a vested right to the exclusive operation of the ferry in question for the period of his lease. Were the municipality a party to this action, it would be patent that a judgment for damages against it for the rescission of the contract would be proper. This, be it said, is the usual method of exacting damages, either ex contractu or ex delicto arising from the exercise of corporate powers of municipalities. But the present action is against the members of the municipal council personally, and the question arise: Are they liable? In administering the patrimonial property of municipalities, the municipal council occupies, for most purposes, the

position of a board of directors of a private corporation. In disposing of the local public utilities, if the term may be used, such as the fishing and ferry rights, etc., they must exercise considerable judgment. It requires some considerable amount of business acumen to compel performance on the part of lessees of these privileges in accordance with the terms of their leases and in a manner in which will not cause the property to deteriorate. Questions must continually arise which are not expressly provided for in the contracts and which must be settled, if possible, in a manner that will preserve the just claims of the municipality. Indeed, it is not at all improbable that on occasion the councilors may have reason to believe that a particular contract has been rescinded by the other party or has never been legally entered into, in both of which cases, decisive steps must be taken to safeguard the interest of the municipality. Thus, in Municipality of Moncada vs. Cajuigan (21 Phil. Rep., 184), the lessee of a municipal fishery was evicted for failing to pay his quarterly rents. The municipal authorities rightly held that the contract was rescinded but forcibly evicted the lessee instead of resorting to the courts. Hence, in an action by the municipality against the lessee and his bondsmen to recover rent arrears, damages were allowed the lessee on his counterclaim for the loss caused by the forcible eviction. Nevertheless, we do not think the councilors could have been personally held liable for their error in resorting to forcible eviction of the lessee. Theirs was an error of judgment, and honest mistake on their part as to the rights of the municipality in the premises. We think the rule of personal liability should be with municipal councilors in such matters as it is with

the directors or managers of an ordinary private corporation. "Under the rule that directors are not liable for mistakes of judgment, it follows naturally that they are not liable for the mismanagement of the corporate affairs where such mismanagement is a mistake of judgment. The wisdom of this rule is not only approved by common experience but by law writers and all courts. A rule so rigid as to hold directors personally liable for honest mistakes in corporate management would deter all prudent business men from accepting such positions. The remedy of stockholders in all such cases is by a change in the directory. . . . The rule is that the courts will not interfere even in doubtful cases. But directors and managing directors may be liable for mismanagement to warrant the interposition of a court either as against the contemplated action of the directors, or a majority of the stockholders, or to give relief by way of damages after the action has been taken; a case must be made out which plainly shows that such action is so far opposed to the true interests of the corporation itself as to lead to the clear inference that no thus acting could have been influenced by any honest desire to secure such interests, but that he must have acted with an intent to subserve some outside purpose, regardless of the consequences to the corporation, and in a manner inconsistent with

its interests." (Thompson on Corporations, sec. 1298.) In the case at bar, there is not a scintilla of evidence that there was any justifiable reason for forcibly evicting the plaintiff from the ferry which he had leased. On the contrary, the defendant councilors attempted to justify their action on the ground that the ferry which he was operating was not the one leased to him; this in spite of the fact the vice-president had personally placed him in possession of it more than a year before, and the fact that he had operated this ferry for over a year, evidently with the knowledge of the defendants. The evidence is so clear that the ferry of which the plaintiff was dispossessed was the one which he had leased that no reasonable man would entertain any doubt whatever upon the question. Hence, we cannot say that in rescinding the contract with the plaintiff, thereby making the municipality liable to an action for damages for no valid reason at all, the defendant councilors were honestly acting for the interests of the municipality. We are, therefore, of the opinion that the defendants are liable jointly and severally for the damages sustained by the plaintiff from the rescission of his contract of lease of the ferry privilege in question. In reaching this conclusion, we have not failed to take into consideration the rule enunciated in Dennison vs. The Moro Province (R. G. No. 8173, March 28, 1914; not reported), nor the distinction made by the courts in the United States between the liability of a municipal corporation, made such by acceptance of a village or city charter, and the involuntary quasi corporations known as counties, towns,

schools districts, and especially the townships of New England. Upon the question of the amount of damages sustained, we accept the findings of the lower court. For the foregoing reasons, the judgment appealed from is affirmed, with costs. So ordered. Arellano, C. J., Torres, Johnson, and Araullo, JJ. concur. Moreland, J. concurs in the result.

ROMERO, J p: Questioned in the instant petition for review on certiorari is the Decision of the then Intermediate Appellate Court 1 affirming the December 1, 1982 Order of the then Court of First Instance of Rizal, Branch XXII at Pasig 2 in Civil Case Nos. 46800 and 46801 which states in toto: Cdpr "It appearing that the construction of the road and creek in question was a project undertaken under the authority of the Minister of Public Works, the funding of which was the responsibility of the National Government and that the defendants impleaded herein are Edilberto Cadiente and Nestor Agustin and not the Republic of the Philippines which cannot be sued without its consent, this Court hereby resolves to dismiss these two (2) cases without pronouncement as to costs. SO ORDERED." Civil Case Nos. 46800 and 46801 were both filed on July 13, 1982 by petitioners who are co-owners under TCT No. 329945 of a parcel of land located in Barrio Wawa, Binangonan, Rizal with an area of nineteen thousand sixtyone (19,061) square meters. In Civil Case No. 46800, petitioners alleged in the petition for prohibition that in October 1981, without their knowledge or consent, Lorenzo Cadiente, a private contractor and the Provincial Engineer of Rizal constructed a road nine (9) meters wide and one hundred twenty-eight meters and seventy centimeters (128.70) long occupying a total area of one thousand one hundred sixty-five (1,165) square meters of their land. prcd

THIRD DIVISION [G.R. Nos. 71998-99. June 2, 1993.] EMILIANO R. DE LOS SANTOS, SPOUSES NORMA A. PADILLA and ISIDORO L. PADILLA and the HEIRS OF FRANCISCO DAYRIT, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, HON. JUDGE CICERO C. JURADO, NESTOR AGUSTIN and EDILBERTO CADIENTE, respondents. Isidoro L. Padilla for petitioners. Joaquin G. Mendoza for E. Cadiente.

DECISION

Petitioners added that aside from the road, the said respondents also constructed, without their knowledge and consent, an artificial creek twenty-three meters and twenty centimeters (23.20) wide and one hundred twenty-eight meters and sixty-nine centimeters long (128.69) occupying an area of two thousand nine hundred six (2,906) square meters of their property. Constructed in a zigzag manner, the creek meandered through their property. Alleging that if completed, the road and the creek would "serve no public profitable and practicable purpose but for respondents' personal profit, to the great damage and prejudice of the taxpayers and the petitioners," the same petitioners invoked their rights under Art. IV, Secs. 1 and 2, of the Bill of Rights of the 1973 Constitution and prayed for the issuance of a restraining order or a writ of preliminary injunction to stop the construction. They also prayed that after hearing on the merits, judgment be rendered: (1) declaring illegal the construction of the road and artificial creek which was made without their knowledge and consent, "without due process and without just compensation and in violation of the provision of statute law and of the Philippine Constitution;" (2) issuing a permanent prohibition; (3) ordering respondents to pay petitioners "jointly and collectively" P15,000.00 as attorney's fees and P600.00 for each appearance, and (4) ordering the respondents to pay the costs of the suit. 3 An action for damages, Civil Case No. 46801, on the other hand, was founded on Art. 32, paragraphs 6 and 7 of the Civil Code and the constitutional provisions on the right against deprivation of property without due process of law and without just compensation.

Thereafter, the two cases were consolidated. On November 11, 1982, the Solicitor General filed a motion to dismiss both cases on the following grounds: (a) with respect to Civil Case No. 46800, the pendency of Civil Case No. 46801 which involved the same parties and cause of action; (b) both cases were in reality suits against the state which could not be maintained without the State's consent; and (c) lack of cause of action. Consequently, the lower court issued the aforequoted Order of December 1, 1982. Their motion for the reconsideration of said Order having been denied, petitioners elevated (to) the cases to this Court through an "appeal by certiorari" which was docketed as G.R. No. 63610. The Second Division of this Court, however, referred the cases to the then Intermediate Appellate Court pursuant to Sec. 16 of the Interim Rules. 4 In due course, the appellate court rendered a Decision on May 22, 1985 which disposed of the cases thus: "Accordingly, the two actions cannot be maintained. They are in reality suits against the state which has not given its consent to be sued (Minister [sic] vs. CFI, 40 SCRA 464; Isberto vs. Raquiza, 67 SCRA 116; Begosa v. Chairman, PVA, 32 SCRA 466). Appellants' remedy lies elsewhere. Appellants assert that the taking of their property in the manner alleged in these two cases was without due process of law. This is not correct. The appealed order has not closed the door to appellants' right, if any, to just

compensation for the alleged area of their land which was expropriated. The court below dismissed the cases for lack of consent on the part of the state to be sued herein. We repeat, appellants' remedy for just compensation lies elsewhere. WHEREFORE, the order appealed from is in full accord with the evidence and the law and is hereby therefore affirmed in all its parts. Costs against appellants. SO ORDERED." 5 Consequently, petitioners elevated the cases to this Court through a petition for review on certiorari. The petition is anchored on the ruling of the Court in Amigable v. Cuenca 6 which states: ". . . where the government takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale," a suit may properly be maintained against the government. We hold for the petitioners. That the principle of state immunity from suit cannot be invoked to defeat petitioners' claim has long been settled. In Ministerio v. Court of First Instance of Cebu, 7 the Court held: ". . . The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. Had the government followed the procedure indicated

by the governing law at the time, a complaint would have been filed by it, and only upon payment of the compensation fixed by the judgment, or after tender to the party entitled to such payment of the amount fixed, may it 'have the right to enter in and upon the land so condemned' to appropriate the same to the public use defined in the judgment. If there were an observance of procedural regularity, petitioners would not be in the sad plaint they are now. It is unthinkable then that precisely because there was a failure to abide by what the law requires, the government would stand to benefit. It is just as important, if not more so, that there be fidelity to legal norms on the part of the 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." We find the facts of the Ministerio case on all fours with the instant cases insofar as the fact that the respondent government officials executed a shortcut in appropriating petitioners' property for public use is concerned. As in the Amigable case, no expropriation proceedings were initiated before construction of the projects began. In like manner, nowhere in his pleadings in the cases at bar does the

Solicitor General mention the fact that expropriation proceedings had in fact been undertaken before the road and artificial creek were constructed. Thus, quoting the answer of the defendants in Civil Case No. 46801, the Solicitor General summarized the facts which defendants considered as constituting justification for the construction as follows: "10. The construction of the road and creek in question on the property which at the time was said to be public property, was initiated, and construction effected, through the usual and ordinary course, as shown by the following: a. November 5, 1979 Engr. Data who was the incumbent District Engineer submitted (thru channels) plans, program of works and detailed estimates for approval of higher authorities, thru the initiation of Mayor Ynares and Assemblyman Gilberto Duavit; b. February 18, 1980 Regional Director Eduardo L. Lagunilla, MPW Region IV, EDSA, Quezon City endorsed said request to the Minister of Public Works; c. February 13, 1981 Assemblyman Gilberto Duavit sent a hand-written follow-up note regarding the project;

d. June 17, 1981 The undersigned defendant Nestor Agustin was designated Chief Civil Engineer of the Rizal Engineering District, Vice Engr. Cresencio Data who reached his compulsory retirement age; e. September 23, 1981 Funds in the amount of P588,000.00 was released for partial implementation of the project. The total amount requested was P1,200,000.00; f. October 19, 1981 The undersigned submitted a request to the MPWH Central Office seeking authority to effect implementation of the project; g. October 29, 1981 The Regional Director approved the plans and program of works for the project in the amount of P588,000.00; h. November 11, 1981 The Honorable Minister Jesus S. Hipolito granted the request to undertake the implementation of the project; i. November 25, 1981 Project implementation was started; j. March 3, 1982 Construction of rock bulkhead was completed;

k. November 23, 1981 P249,000.00 was released for improvement (deepening and diverting of flow) of Binangonan River which was a complimentary structure of Binangonan port system;

mayor of Binangonan, Rizal stated that said area is public property." 8 Public respondents' belief that the property involved is public, even if buttressed by statements of other public officials, is no reason for the unjust taking of petitioners' property. As TCT No. 329945 shows, the property was registered under the Torrens system in the names of "Emiliano R. de los Santos, married to Corazon Dayrit; and Norma Alabastro, married to Isidoro L. Padilla" as early as March 29, 1971. Had the public respondents, including the other officials involved in the construction, performed their functions by exercising even the ordinary diligence expected of them as public officials, they would not have failed to note that the property is a private one. A public infrastructure losses its laudability if, in the process of undertaking it, private rights are disregarded. In this connection, the Court said in Republic v. Sandiganbayan: 9 "It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private property has been taken in expropriation without just compensation being paid, the defense of immunity from suit cannot be set up by the State against an action for payment by the owner." Public respondents' assertion that the project had been completed on May 21, 1982 meets strong opposition from the petitioners who insist that the project "until now is not

l. April 19, 1982 Implementation was started. Contract for this project was approved by the Regional Director in favor of EDILBERTO CADIENTE CONSTRUCTION; m. May 21, 1982 Deepening slightly of the adjacent portion of the rock bulkhead was completed. 11. The construction of the structures was done in good faith; The construction of the roadway and deepening of the creek was designed to generate for the municipality of Binangonan, Rizal more benefits in the form of substantial revenue from fishing industry, parking area, market rentals, development site, and road system improvements. The area covered by said public improvements is part of the Laguna Lake area which is submerged in water even during dry season. The municipal

yet finished." 10 This factual issue needs determination which only the trial court can undertake. Thus, the need for a full blown trial on the merits. We do not subscribe to the appellate court's suggestion that the remedy of the petitioners "lies elsewhere." The filing of another case to determine just compensation is superfluous. The issue may be threshed out below for practical reasons in the event that it is shown later that it is no longer possible to prohibit the public respondents from continuing with the public work. As held in the Amigable case, damages may be awarded the petitioners in the form of legal interest on the price of the land to be reckoned from the time of the unlawful taking. WHEREFORE, the petition is hereby GRANTED and Civil Cases Nos. 46800 and 46801 shall be REMANDED to the lower court for trial on the merits after the Republic of the Philippines shall have been impleaded as defendant in both cases. SO ORDERED. Feliciano, Davide, Jr. and Melo, JJ ., concur. Bidin, J ., is on leave. Footnotes 1. Associate Justice Porfirio V. Sison, ponente, Associate Justices Abdulwahid A. Bidin and Marcelino R. Veloso, concurring. 2. Judge Gregorio G. Pineda, presiding.

3. Record of Civil Case No. 46800, pp. 4-5. 4. Rollo, p. 19. 5. Rollo, p. 22. 6. L-26400, February 29, 1972, 43 SCRA 360. 7. L-31635, August 31, 1971, 40 SCRA 464. 8. Comment of Public Respondents, pp. 3-5, quoting the Motion to Dismiss, pp. 4-5, which in turn lifted the answer in Civil Case No. 46801 of Nestor Agustin, represented by then Solicitor General Estelito P. Mendoza, Assistant Solicitor General Ruben E. Agpalo and Solicitor Gloria Fermo-Berin, pp. 3-4 (Rollo, pp. 42-44). 9. G.R. No. 90478, November 21, 1991, 204 SCRA 212, 231. 10. Petitioners, Reply to Comment, p. 2; Rollo, p. 56.

EN BANC [G.R. No. 90478. November 21, 1991.] REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner, vs. SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR. and DOMINADOR R. SANTIAGO, respondents. Dominador R. Santiago for and in his own behalf and as counsel for respondent Tantoco, Jr. SYLLABUS 1. REMEDIAL LAW; COURTS; RAISON D'ETRE. The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential function is accomplished by first, the ascertainment of all the material and relevant facts from the pleadings and from the evidence adduced by the parties, and second, after that determination of the facts has been completed, by the application of the law thereto to the end that the controversy may be settled authoritatively, definitely and finally. 2. ID.; ACTIONS; NATURE AND OBJECT OF LITIGATIONS. Seventy-one years ago, in Alonso v. Villamor, this Court described the nature and object of litigation and in the process laid down the standards by which judicial contests are to be conducted in this jurisdiction. It said: "A litigation is not a game of

technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is, rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done on the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts. There should be no vested right in technicalities. . . ." 3. ID.; ID.; PLEADINGS; ULTIMATE FACTS MUST BE CONTAINED THEREIN. Every pleading "shall contain in a methodical and logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the statement of mere evidentiary facts." 4. ID.; ID.; ID.; BILL OF PARTICULARS, RESORTED TO IF ULTIMATE FACTS ALLEGED ARE TOO GENERAL. Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or "not averred with sufficient definiteness or particularity to enable . . . (an adverse party) properly to prepare his responsive pleading or to prepare for trial," a bill of particulars seeking a "more definite statement" may be ordered by the court on motion of a party. The office of a bill of particulars is, however, limited to making more particular or definite the ultimate facts in a pleading. It is not its office to supply evidentiary matters. And the common perception is that said evidentiary details are made known to

the parties and the court only during the trial, when proof is adduced on the issues of fact arising from the pleadings. 5. ID.; ID.; PARTIES SHOULD DISCOVER OR INFORM THEMSELVES OF ALL THE FACTS RELEVANT TO THE ACTION; MADE POSSIBLE THROUGH THE DEPOSITION-DISCOVERY MECHANISM SET FORTH IN RULES 24 TO 29 OF THE RULES OF COURT. The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial. Indeed, it is the purpose and policy of the law that the parties before the trial if not indeed even before the pre-trial should discover or inform themselves of all the facts relevant to the action, not only those known to them individually, but also those known to their adversaries; in other words, the desideratum is that civil trials should not be carried on in the dark; and the Rules of Court make this ideal possible through the deposition-discovery mechanism set forth in Rules 24 to 29. The experience in other jurisdictions has been that ample discovery before trial, under proper regulation, accomplished one of the most necessary ends of modern procedure: it not only eliminates unessential issues from trials thereby shortening them considerably, but also requires parties to play the game with the cards on the table so that the possibility of fair settlement before trial is measurably increased." 6. ID.; ID.; MODES OF DISCOVERY; PURPOSE. The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts relative to those issues. The evident purpose is, to repeat, to enable

the parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the issues and facts before civil trials and thus prevent that said trials are carried on in the dark. 7. ID.; ID.; ID.; FIELD OF INQUIRY. To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad as when the interrogated party is called as a witness to testify orally at trial. The inquiry extends to all facts which are relevant, whether they be ultimate or evidentiary, excepting only those matters which are privileged. The objective is as much to give every party the fullest possible information of all the relevant facts before the trial as to obtain evidence for use upon said trial. The principle is reflected in Section 2, Rule 24 (governing depositions) of the Revised Rules of Court. 8. ID.; ID.; ID.; ACCORDED A BROAD AND LIBERAL TREATMENT AND AVAILABLE TO BOTH PARTIES. What is chiefly contemplated is the discovery of every bit of information which may be useful in the preparation for trial, such as the identity and location of persons having knowledge of relevant facts; those relevant facts themselves; and the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things. Hence, "the deposition-discovery rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of 'fishing expedition' serve to preclude a party from inquiring into the facts underlying his opponent's case. Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession. The deposition-discovery

procedure simply advances the stage at which the disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility of surprise." 9. ID.; ID.; ID.; ID.; MAY BE AVAILED OF WITHOUT LEAVE OF COURT AND GENERALLY WITHOUT COURT INTERVENTION. In line with this principle of according liberal treatment to the deposition-discovery mechanism, such modes of discovery as (a) depositions (whether by oral examination or written interrogatories) under Rule 24, (b) interrogatories to parties under Rule 25, and (c) requests for admissions under Rule 26, may be availed of without leave of court, and generally, without court intervention. 10. ID.; ID.; ID.; ID.; ID.; EXCEPTION. The Rules of Court explicitly provide that leave of court is not necessary to avail of said modes of discovery after an answer to the complaint has been served. It is only when an answer has not yet been filed (but after jurisdiction has been obtained over the defendant or property subject of the action) that prior leave of court is needed to avail of these modes of discovery, the reason being that at that time the issues are not yet joined and the disputed facts are not clear. On the other hand, leave of court is required as regards discovery by (a) production or inspection of documents or things in accordance with Rule 27, or (b) physical and mental examination of persons under Rule 28, which may be granted upon due application and a showing of due cause. 11. ID.; ID.; ID.; LIMITATIONS. Of course, there are limitations to discovery, even when permitted to be undertaken without leave and without judicial intervention.

"As indicated by (the) Rules . . ., limitations inevitably arise when it can be shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarrass, or oppress the person subject to the inquiry. And . . . further limitations come into existence when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege" In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired into are otherwise relevant and not privileged, and the inquiry is made in good faith and within the bounds of the law. 12. ID.; ID.; ID.; INTERROGATORIES; MAY BE AVAILED OF WITHOUT LEAVE OF COURT AFTER ANSWER HAD BEEN SERVED; LEAVE OF COURT NECESSARY BEFORE FILING OF ANSWER. It should initially be pointed out as regards the private respondents "Motion for Leave to File Interrogatories" dated February 1, 1988 that it was correct for them to seek leave to serve interrogatories, because discovery was being availed of before an answer had been served. In such a situation, i.e., "after jurisdiction has been obtained over any defendant or over property subject of the action" but before answer, Section 1 of Rule 24 (treating of depositions), in relation to Section 1 of Rule 25 (dealing with interrogatories to parties) explicitly requires "leave of court." But there was no need for the private respondents to seek such leave to serve their "Amended Interrogatories to Plaintiffs (dated August 2, 1989) after they had filed their answer to the PCGG's complaint, just as there was no need for the Sandiganbayan to act thereon.

13. ID.; ID.; ID.; ID.; IF A PARTY SERVED WITH INTERROGATORIES IS A JURIDICAL ENTITY, THE SAME MAY BE ANSWERED BY ANY COMPETENT OFFICER; RULE APPLIED BY ANALOGY TO THE PCGG. The petitioner's first contention that the interrogatories in question are defective because they (a) do not name the particular individuals to whom they are propounded, being addressed only to the PCGG, and (b) are "fundamentally the same matters . . . (private respondents) sought to be clarified through their aborted Motion . . . for Bill of Particulars" are untenable and quickly disposed of. The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states that if the party served with interrogatories is a juridical entity such as "a public or private corporation or a partnership or association," the same shall be "answered . . . by any officer thereof competent to testify in its behalf." There is absolutely no reason why this proposition should not be applied by analogy to the interrogatories served on the PCGG. That the interrogatories are addressed only to the PCGG, without naming any specific commissioner or officer thereof, is utterly of no consequence, and may not be invoked as a reason to refuse to answer. As the rule states, the interrogatories shall be answered "by any officer thereof competent to testify in its behalf."

complaint and denied for lack of merit is beside the point. Indeed, as already pointed out above, a bill of particulars may elicit only ultimate facts, not so-called evidentiary facts. The latter are without doubt proper subject of discovery. 15. ID.; ID.; ID.; INTERROGATORIES; GROUNDS FOR OBJECTION. Neither may it be validly argued that the amended interrogatories lack specificity. The merest glance at them disproves the argument. The interrogatories are made to relate to individual paragraphs of the PCGG's expanded complaint and inquire about details of the ultimate facts therein alleged. What the PCGG may properly do is to object to specific items of the interrogatories, on the ground of lack of relevancy, or privilege, or that the inquiries are being made in bad faith, or simply to embarass or oppress it. But until such an objection is presented and sustained, the obligation to answer subsists. 16. ID.; ID.; ID.; ID.; ID.; INQUIRY ON FACTUAL MATTERS, NOT A GROUND. That the interrogatories deal with factual matters which will be part of the PCGG's proof upon trial, is not ground for suppressing them either. As already pointed out, it is the precise purpose of discovery to ensure mutual knowledge of all the relevant facts on the part of all parties even before trial, this being deemed essential to proper litigation. This is why either party may compel the other to disgorge whatever facts he has in his possession; and the stage at which disclosure of evidence is made is advanced from the time of trial to the period preceding it.

14. ID.; ID.; ID.; SUBJECT OF DISCOVERY DIFFERENTIATED FROM SUBJECT OF BILL OF PARTICULARS. That the matters on which discovery is desired are the same matters subject of a prior motion for bill of particulars addressed to the PCGG's amended

17. ID.; EVIDENCE; A PARTY MAY MAKE HIS ADVERSARY HIS WITNESS; RULE APPLIED IN CASE AT BAR. Also unmeritorious is the objection that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention of Executive Order No. 14 and related issuances. In the first place, there is nothing at all wrong in a party's making his adversary his witness. This is expressly allowed by Section 6, Rule 132 of the Rules of Court. 18. ID.; ACTIONS; MODES OF DISCOVERY; INTERROGATORIES; PERMIT PARTIES TO ENGAGE ON A "FISHING EXPEDITION". The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart from the fact that the information sought is immaterial since they are evidently meant to establish a claim against PCGG officers who are not parties to the action. It suffices to point out that "fishing expeditions" are precisely permitted through the modes of discovery. 19. ID.; ID.; COUNTERCLAIM; A DEFENDANT WHO FILES A COUNTERCLAIM CAN IMPLEAD PERSONS STRANGERS TO THE ACTION. A defendant who files a counterclaim against the plaintiff is allowed by the Rules to implead persons (therefore strangers to the action) as additional defendants on said counterclaim. This may be done pursuant to Section 14, Rule 6 of the Rules. 20. REMEDIAL LAW; ACTIONS; MODES OF DISCOVERY; INTERROGATORIES; PCGG'S IMMUNITY FROM SUIT; NOT A GROUND TO REFUSE TO ANSWER THE INTERROGATORIES. The PCGG's assertion that it or its members are not amenable to any civil

action "for anything done or omitted in the discharge of the task contemplated by . . . (Executive) Order (No. 1)," is not a ground to refuse to answer the interrogatories. The disclosure of facts relevant to the action and which are not self-incriminatory or otherwise privileged is one thing; the matter of whether or not liability may arise from the facts disclosed in light of Executive Order No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the action. 21. ID.; ID.; ID.; ID.; ANSWER THERETO MAY BE UTILIZED AS FOUNDATION FOR A COUNTERCLAIM. The apprehension has been expressed that the answers to the interrogatories may be utilized as foundation for a counterclaim against the PCGG or its members and officers. They will be. The private respondents have made no secret that this is in fact their intention. Withal, the Court is unable to uphold the proposition that while the PCGG obviously feels itself at liberty to bring actions on the basis of its study and appreciation of the evidence in its possession, the parties sued should not be free to file counterclaims in the same actions against the PCGG or its officers for gross neglect or ignorance, if not down right bad faith or malice in the commencement or initiation of such judicial proceedings, or that in the actions that it may bring, the PCGG may opt not to be bound by rules applicable to the parties it has sued, e.g., the rules of discovery. 22. CONSTITUTIONAL LAW; STATE IMMUNITY FROM SUIT; MAY BE WAIVED BY FILING OF ACTIONS; THE PCGG CANNOT CLAIM A SUPERIOR STATUS TO THE STATE; IT MAY BE REQUIRED TO

TESTIFY OR PRODUCE EVIDENCE IN ANY JUDICIAL PROCEEDING IT HAS ITSELF INITIATED. The PCGG's postulation that none of its members may be "required to testify or produce evidence in any judicial . . . proceeding concerning matters within its official cognizance," has no application to a judicial proceeding it has itself initiated. As just suggested, the act of bringing suit must entail a waiver of the exemption from giving evidence; by bringing suit it brings itself within the operation and scope of all the rules governing civil actions, including the rights and duties under the rules of discovery. Otherwise, the absurd would have to be conceded, that while the parties it has impleaded as defendants may be required to "disgorge all the facts" within their knowledge and in their possession, it may not itself be subject to a like compulsion. The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its consent. But it is axiomatic that in filing an action, it divests itself of its sovereign character and sheds its immunity from suit, descending to the level of an ordinary litigant. The PCGG cannot claim a superior or preferred status to the State, even while assuming to represent or act for the State. 23. ID.; ID.; CONSENT TO BE SUED MAY BE GIVEN EXPRESSLY OR IMPLIEDLY; WAIVER APPLIES EVEN IF STATE IS PERFORMING GOVERNMENTAL FUNCTION. The suggestion that the State makes no implied waiver of immunity by filing suit except when in so doing it acts in, or in matters concerning, its proprietary or non-governmental capacity, is unacceptable; it attempts a distinction without support in principle or precedent. On the contrary "The consent of the State to be sued may be given expressly or impliedly. Express consent may be

manifested either through a general law or a special law. Implied consent is given when the State itself commences litigation or when it enters into a contract." "The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state as plaintiff may avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in an action against the private parties, the state surrenders its privileged position and comes down to the level of the defendant. The latter automatically acquires, within certain limits, the right to set up whatever claims and other defenses he might have against the state . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-37, citing U.S. vs. Ringgold, 8 Pet. 150, 8 L.ed. 899)'" It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private property has been taken in expropriation without just compensation being paid, the defense of immunity from suit cannot be set up by the State against an action for payment by the owner. 24. REMEDIAL LAW; ACTIONS; MODES OF DISCOVERY; PRODUCTION OR INSPECTION OF DOCUMENT; DISCLOSURE OF RELEVANT DOCUMENTS, MANDATORY; CASE AT BAR. The Court finally finds that, contrary to the petitioner's theory, there is good cause for the production and inspection of the documents subject of the motion dated August 3, 1989. Some of the documents are, according to the verification of the amended complaint, the basis of several of the material allegations of said complaint. Others, admittedly, are to be used in evidence by the plaintiff. It is matters such as these

into which inquiry is precisely allowed by the rules of discovery, to the end that the parties may adequately prepare for pre-trial and trial. The only other documents sought to be produced are needed in relation to the allegations of the counterclaim. Their relevance is indisputable; their disclosure may not be opposed. 25. ID.; ID.; ID.; PROCEDURE. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and operation of the modes of discovery earlier mentioned, there also appears to be a widely entertained idea that application of said modes is a complicated matter, unduly expensive and dilatory. Nothing could be farther from the truth. For example, as will already have been noted from the preceding discussion, all that is entailed to activate or put in motion the process of discovery by interrogatories to parties under Rule 25 of the Rules of Court, is simply the delivery directly to a party of a letter setting forth a list of questions with the request that they be answered individually. That is all. The service of such a communication on the party has the effect of imposing on him the obligation of answering the questions "separately and fully in writing under oath," and serving "a copy of the answers on the party submitting the interrogatories within fifteen (15) days after service of the interrogatories . . ." The sanctions for refusing to make discovery have already been mentioned. So, too, discovery under Rule 26 is begun by nothing more complex than the service on a party of a letter or other written communication containing a request that specific facts therein set forth and/or particular documents copies of which are thereto appended, be admitted in writing. That is all. Again, the receipt of such a communication by the party has the effect of imposing on him the obligation of serving the party

requesting admission with "a sworn statement either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters," failing in which "(e)ach of the matters of which admission is requested shall be deemed admitted." The taking of depositions in accordance with Rule 24 (either on oral examination or by written interrogatories) while somewhat less simple, is nonetheless by no means as complicated as seems to be the lamentably extensive notion.

DECISION

NARVASA, J p: Private respondents Bienvenido R. Tantoco, Jr. and Dominador R. Santiago together with Ferdinand E. Marcos, Imelda R. Marcos, Bienvenido R. Tantoco, Sr., Gliceria R. Tantoco, and Maria Lourdes Tantoco-Pineda are defendants in Civil Case No. 0008 of the Sandiganbayan. The case was commenced on July 21, 1987 by the Presidential Commission on Good Government (PCGG) in behalf of the Republic of the Philippines. The complaint which initiated the action was denominated one "for reconveyance, reversion, accounting, restitution and damages," and was avowedly filed pursuant to Executive Order No. 14 of President Corazon C. Aquino.

After having been served with summons, Tantoco, Jr. and Santiago, instead of filing their answer, jointly filed a "MOTION TO STRIKE OUT SOME PORTIONS OF THE COMPLAINT AND FOR BILL OF PARTICULARS OF OTHER PORTIONS" dated Nov. 3, 1987. 1 The PCGG filed an opposition thereto, 2 and the movants, a reply to the opposition. 3 By order dated January 29, 1988, the Sandiganbayan, in order to expedite proceedings and accommodate the defendants, gave the PCGG forty-five (45) days to expand its complaint to make more specific certain allegations. 4 Tantoco and Santiago then presented a "motion for leave to file interrogatories under Rule 25 of the Rules of Court" dated February 1, 1988, and "Interrogatories under Rule 25." 5 Basically, they sought an answer to the question: " Who were the Commissioners of the PCGG (aside from its Chairman, Hon. Ramon Diaz, who verified the complaint) who approved or authorized the inclusion of Messrs. Bienvenido R. Tantoco, Jr. and Dominador R. Santiago as defendants in the . . . case?" 6 The PCGG responded by filing a motion dated February 9, 1988 to strike out said motion and interrogatories as being impertinent, "queer," "weird," or "procedurally bizarre as the purpose thereof lacks merit as it is improper, impertinent and irrelevant under any guise." 7 On March 18, 1988, in compliance with the Order of January 29, 1988, the PCGG filed an Expanded Complaint. 8 As regards this expanded complaint, Tantoco and Santiago reiterated their motion for bill of particulars, through a Manifestation dated April 11, 1988. 9

Afterwards, by Resolution dated July 4, 1988, 10 the Sandiganbayan denied the motion to strike out, for bill of particulars, and for leave to file interrogatories, holding them to be without legal and factual basis. Also denied was the PCGG's motion to strike out impertinent pleading dated February 9, 1988. The Sandiganbayan declared inter alia the complaint to be "sufficiently definite and clear enough," there are adequate allegations . . . which clearly portray the supposed involvement and/or alleged participation of defendants-movants in the transactions described in detail in said Complaint," and "the other matters sought for particularization are evidentiary in nature which should be ventilated in the pre-trial or trial proper . . . ." It also opined that "(s)ervice of interrogatories before joinder of issue and without leave of court is premature . . . (absent) any special or extraordinary circumstances . . . which would justify . . . (the same)." llcd Tantoco and Santiago then filed an Answer with Compulsory Counterclaim under date of July 18, 1988. 11 In response, the PCGG presented a "Reply to Answer with Motion to Dismiss Compulsory Counterclaim." 12 The case was set for pre-trial on July 31, 1989. 13 On July 25, 1989, the PCGG submitted its PRE-TRIAL BRIEF. 14 The pre-trial was however reset to September 11, 1989, and all other parties were required to submit pre-trial briefs on or before that date. 15 On July 27, 1989 Tantoco and Santiago filed with the Sandiganbayan a pleading denominated "Interrogatories to Plaintiff," 16 and on August 2, 1989, an "Amended

Interrogatories to Plaintiff" 17 as well as a Motion for Production and Inspection of Documents. 1 8 The amended interrogatories chiefly sought factual details relative to specific averments of PCGG's amended complaint, through such questions, for instance, as "1. In connection with the allegations . . . in paragraph 1 . . ., what specific property or properties does the plaintiff claim it has the right to recover from defendants Tantoco, Jr. and Santiago for being 'ill-gotten'?" "3. In connection with the allegations . . . in paragraph 10 (a) . . ., what specific act or acts . . . were committed by defendants Tantoco, Jr. and Santiago in 'concert with' defendant Ferdinand Marcos and in furtherance or pursuit, of the alleged systematic plan of said defendant Marcos to accumulate ill-gotten wealth?" "5. In connection with . . . paragraph 13 . . ., what specific act or acts of the defendants Tantoco, Jr. and Santiago . . . were committed by said defendants as part, or in furtherance, of the alleged plan to conceal assets of defendants Ferdinand and Imelda Marcos?" "7. In connection with . . . paragraph 15 (c) . . . is it plaintiff's position or theory of the case that Tourist Duty Free Shops, Inc., including all the assets of said corporation, are beneficially owned by either or both

defendants Ferdinand and Imelda Marcos and that the defendants Tantoco, Jr. and Santiago, as well as, the other stockholders of record of the same corporation are mere 'dummies' of said defendants Ferdinand and/or Imelda R. Marcos?" On the other hand, the motion for production and inspection of documents prayed for examination and copying of 1) the "official records and other evidence" on the basis of which the verification of the Amended Complaint asserted that the allegations thereof are "true and correct; llcd "2) the documents listed in PCGG's Pre-Trial Brief as those "intended to be presented and xx marked as exhibits for the plaintiff;" and 3) "the minutes of the meeting of the PCGG which chronicles the discussion (if any) and the decision (of the Chairman and members) to file the complaint" in the case at bar. By Resolutions dated August 21, 1989 and August 25, 1989, the Sandiganbayan admitted the Amended Interrogatories and granted the motion for production and inspection of documents (production being scheduled on September 14 and 15, 1989), respectively. On September 1, 1989, the PCGG filed a Motion for Reconsideration of the Resolution of August 25, 1989 (allowing production and inspection of documents). It argued that

1) since the documents subject thereof would be marked as exhibits during the pre-trial on September 11, 1989 anyway, the order for "their production and inspection on September 14 and 15, are purposeless and unnecessary;" 2) movants already know of the existence and contents of the document which "are clearly described . . . (in) plaintiff's Pre-Trial Brief;" 3) the documents are "privileged in character" since they are intended to be used against the PCGG and/or its Commissioners in violation of Section 4, Executive Order No. 1, viz.: "(a) No civil action shall lie against the Commission or any member thereof for anything done or omitted in the discharge of the task contemplated by this Order. (b) No member or staff of the Commission shall be required to testify or produce evidence in any judicial, legislative, or administrative proceeding concerning matters within its official cognizance." It also filed on September 4, 1989 an opposition to the Amended Interrogatories, 19 which the Sandiganbayan treated as a motion for reconsideration of the Resolution of August 21, 1989 (admitting the Amended Interrogatories). The opposition alleged that 1) the interrogatories "are not specific and do not name the person to whom they are propounded . . .," or "who in the

PCGG, in particular, . . . (should) answer the interrogatories;" LibLex 2) the interrogatories delve into "factual matters which had already been decreed . . . as part of the proof of the Complaint upon trial . . .;" 3) the interrogatories "are frivolous" since they inquire about "matters of fact . . . which defendants . . . sought to . . . (extract) through their aborted Motion for Bill of Particulars;" 4) the interrogatories "are really in the nature of a deposition, which is prematurely filed and irregularly utilized . . . (since) the order of trial calls for plaintiff to first present its evidence." Tantoco and Santiago filed a reply and opposition on September 18, 1989. After hearing, the Sandiganbayan promulgated two (2) Resolutions on September 29, 1989, the first, denying reconsideration (of the Resolution allowing production of documents), and the second, reiterating by implication the permission to serve the amended interrogatories on the plaintiff (PCGG). 20 Hence, this petition for certiorari. The PCGG contends that said orders, both dated September 29, 1989, should be nullified because rendered with grave abuse of discretion amounting to excess of jurisdiction. More particularly, it claims

a) as regards the order allowing the amended interrogatories to the plaintiff PCGG: 1) that said interrogatories are not specific and do not name the particular individuals to whom they are propounded, being addressed only to the PCGG; 2) that the interrogatories deal with factual matters which the Sandiganbayan (in denying the movants' motion for bill of particulars) had already declared to be part of the PCGG's proof upon trial; and 3) that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention of Executive Order No. 14 and related issuances; and b) as regards the order granting the motion for production of documents: 1) that movants had not shown any good cause therefor; 2) that some documents sought to be produced and inspected had already been presented in Court and marked preliminarily as PCGG's exhibits, and the movants had viewed, scrutinized

and even offered objections thereto and made comments thereon; and

3) that the other documents sought to be produced are either (a) privileged in character or confidential in nature and their use is proscribed by the immunity provisions of Executive Order No. 1, or (b) non-existent, or mere products of the movants' suspicion and fear. This Court issued a temporary restraining order on October 27, 1989, directing the Sandiganbayan to desist from enforcing its questioned resolutions of September 29, 1989 in Civil Case No. 0008. 21 After the issues were delineated and argued at no little length by the parties, the Solicitor General withdrew "as counsel for plaintiff . . . with the reservation, however, conformably with Presidential Decree No. 478, the provisions of Executive Order No. 292, as well a the decisional law of 'Orbos v. Civil Service Commission, et al.,' (G.R. No. 92561, September 12, 1990) 22 to submit his comment/observation on incidents/matters pending with this . . Court if called for by circumstances in the interest of the Government or if he is so required by the Court." 23 This, the Court allowed by Resolution dated January 21, 1991. 24

Subsequently, PCGG Commissioner Maximo A. Maceren advised the Court that the cases from which the Solicitor General had withdrawn would henceforth be under his (Maceren's) charge "and/or any of the following private attorneys: Eliseo B. Alampay, Jr., Mario E. Ongkiko, Mario Jalandoni and such other attorneys as it may later authorize." 25 The facts not being in dispute, and it appearing that the parties have fully ventilated their respective positions, the Court now proceeds to decide the case. prLL Involved in the present proceedings are two of the modes of discovery provided in the Rules of Court: interrogatories to parties, 26 and production and inspection of document and things. 27 Now, it appears to the Court that among far too many lawyers (and not a few judges), there is, if not a regrettable unfamiliarity and even outright ignorance about the nature, purposes and operation of the modes of discovery, at least a strong yet unreasoned and unreasonable disinclination to resort to them which is a great pity for the intelligent and adequate use of the deposition-discovery mechanism, coupled with pre-trial procedure, could, as the experience of other jurisdictions convincingly demonstrates, effectively shorten the period of litigation and speed up adjudication. 28 Hence, a few words about these remedies is not at all inappropriate. The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential function is accomplished by first, the ascertainment of all the material and relevant facts from the pleadings and from the evidence adduced by the parties, and second, after that determination

of the facts has been completed, by the application of the law thereto to the end that the controversy may be settled authoritatively, definitely and finally. It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with assuring that all the facts are indeed presented to the Court; for obviously, to the extent that adjudication is made on the basis of incomplete facts, to that extent there is faultiness in the approximation of objective justice. It is thus the obligation of lawyers no less than of judges to see that this objective is attained; that is to say, that there be no suppression, obscuration, misrepresentation or distortion of the facts; and that no party be unaware of any fact material and relevant to the action, or surprised by any factual detail suddenly brought to his attention during the trial. 29 Seventy-one years ago, in Alonso v. Villamor, 30 this Court described the nature and object of litigation and in the process laid down the standards by which judicial contests are to be conducted in this jurisdiction. It said: "A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is, rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done on the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust.

Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts. There should be no vested right in technicalities. . . ." The message is plain. It is the duty of each contending party to lay before the court the facts in issue fully and fairly; i.e., to present to the court all the material and relevant facts known to him, suppressing or concealing nothing, nor preventing another party, by clever and adroit manipulation of the technical rules of pleading and evidence, from also presenting all the facts within his knowledge. Initially, that undertaking of laying the facts before the court is accomplished by the pleadings filed by the parties; but that, only in a very general way. Only "ultimate facts" are set forth in the pleadings; hence, only the barest outline of the factual basis of a party's claims or defenses is limned in his pleadings. The law says that every pleading "shall contain in a methodical and logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the statement of mere evidentiary facts." 31 Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or "not averred with sufficient definiteness or particularity to enable . . . (an adverse party) properly to prepare his responsive pleading or to prepare for trial," a bill of particulars seeking a "more definite statement" may be ordered by the court on motion of a party. The office of a bill of particulars is, however, limited to making more particular or definite the ultimate

facts in a pleading. It is not its office to supply evidentiary matters. And the common perception is that said evidentiary details are made known to the parties and the court only during the trial, when proof is adduced on the issues of fact arising from the pleadings. cdrep The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial. Indeed, it is the purpose and policy of the law that the parties before the trial if not indeed even before the pre-trial should discover or inform themselves of all the facts relevant to the action, not only those known to them individually, but also those known to their adversaries; in other words, the desideratum is that civil trials should not be carried on in the dark; and the Rules of Court make this ideal possible through the deposition-discovery mechanism set forth in Rules 24 to 29. The experience in other jurisdictions has been that ample discovery before trial, under proper regulation, accomplished one of the most necessary ends of modern procedure: it not only eliminates unessential issues from trials thereby shortening them considerably, but also requires parties to play the game with the cards on the table so that the possibility of fair settlement before trial is measurably increased. . . ." 32 As just intimated, the deposition-discovery procedure was designed to remedy the conceded inadequacy and cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact revelation theretofore performed primarily by the pleadings. The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial hearing under

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

What is chiefly contemplated is the discovery of every bit of information which may be useful in the preparation for trial, such as the identity and location of persons having knowledge of relevant facts; those relevant facts themselves; and the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things. Hence, "the deposition-discovery rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of 'fishing expedition' serve to preclude a party from inquiring into the facts underlying his opponent's case. Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has ill his possession. The deposition-discovery procedure simply advances the stage at which the disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility, of surprise. . . ." 35

In line with this principle of according liberal treatment to the deposition-discovery mechanism, such modes of discovery as (a) depositions (whether by oral examination or written interrogatories) under Rule 24, (b) interrogatories to parties under Rule 25, and (c) requests for admissions under Rule 26, may be availed of without leave of court, and generally, without court intervention. The Rules of Court explicitly provide that leave of court is not necessary to avail of said modes of discovery after an answer to the complaint has been served. 36 It is only when an answer has not yet been filed (but after jurisdiction has been obtained over the defendant or property subject of the action) that prior leave

of court is needed to avail of these modes of discovery, the reason being that at that time the issues are not yet joined and the disputed facts are not clear. 37 On the other hand, leave of court is required as regards discovery by (a) production or inspection of documents or things in accordance with Rule 27, or (b) physical and mental examination of persons under Rule 28, which may be granted upon due application and a showing of due cause. cdll To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law imposes serious sanctions on the party who refuses to makes discovery, such as dismissing the action or proceeding or part thereof, or rendering judgment by default against the disobedient party; contempt of court, or arrest of the party or agent of the party; payment of the amount of reasonable expenses incurred in obtaining a court order to compel discovery; taking the matters inquired into as established in accordance with the claim of the party seeking discovery; refusal to allow the disobedient party support or oppose designated claims or defenses; striking out pleadings or parts thereof; staying further proceedings. 38 Of course, there are limitations to discovery, even when permitted to be undertaken without leave and without judicial intervention. "As indicated by (the) Rules . . ., limitations inevitably arise when it can be shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarrass, or oppress the person subject to the inquiry. 39 And . . . further limitations come

into existence when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege." 40 In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired into are otherwise relevant and not privileged, and the inquiry is made in good faith and within the bounds of the law. It is in light of these broad principles underlying the deposition-discovery mechanism, in relation of course to the particular rules directly involved, that the issues in this case will now be resolved. The petitioner's objections to the interrogatories served on it in accordance with Rule 25 of the Rules of Court cannot be sustained. It should initially be pointed out as regards the private respondents "Motion for Leave to File Interrogatories" dated February 1, 1988 41 that it was correct for them to seek leave to serve interrogatories, because discovery was being availed of before an answer had been served. In such a situation, i.e., "after jurisdiction has been obtained over any defendant or over property subject of the action" but before answer, Section 1 of Rule 24 (treating of depositions), in relation to Section 1 of Rule 25 (dealing with interrogatories to parties) explicitly requires "leave of court." 42 But there was no need for the private respondents to seek such leave to serve their "Amended Interrogatories to Plaintiffs (dated August 2, 1989 43 ) after they had filed their answer to the PCGG's complaint, just as there was no need for the Sandiganbayan to act thereon.

1. The petitioner's first contention that the interrogatories in question are defective because they (a) do not name the particular individuals to whom they are propounded, being addressed only to the PCGG, and (b) are "fundamentally the same matters . . . (private respondents) sought to be clarified through their aborted Motion . . . for Bill of Particulars" are untenable and quickly disposed of. The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states that if the party served with interrogatories is a juridical entity such as "a public or private corporation or a partnership or association," the same shall be "answered . . . by any officer thereof competent to testify in its behalf." There is absolutely no reason why this proposition should not be applied by analogy to the interrogatories served on the PCGG. That the interrogatories are addressed only to the PCGG, without naming any specific commissioner or officer thereof, is utterly of no consequence, and may not be invoked as a reason to refuse to answer. As the rule states, the interrogatories shall be answered "by any officer thereof competent to testify in its behalf." That the matters on which discovery is desired are the same matters subject of a prior motion for bill of particulars addressed to the PCGG's amended complaint and denied for lack of merit is beside the point. Indeed, as already pointed out above, a bill of particulars may elicit only ultimate facts, not so-called evidentiary facts. The latter are without doubt proper subject of discovery. 44 Neither may it be validly argued that the amended interrogatories lack specificity. The merest glance at them

disproves the argument. The interrogatories are made to relate to individual paragraphs of the PCGG's expanded complaint and inquire about details of the ultimate facts therein alleged. What the PCGG may properly do is to object to specific items of the interrogatories, on the ground of lack of relevancy, or privilege, or that the inquiries are being made in bad faith, or simply to embarass or oppress it. 45 But until such an objection is presented and sustained, the obligation to answer subsists. 2. That the interrogatories deal with factual matters which will be part of the PCGG's proof upon trial, is not ground for suppressing them either. As already pointed out, it is the precise purpose of discovery to ensure mutual knowledge of all the relevant facts on the part of all parties even before trial, this being deemed essential to proper litigation. This is why either party may compel the other to disgorge whatever facts he has in his possession; and the stage at which disclosure of evidence is made is advanced from the time of trial to the period preceding it. LLjur 3. Also unmeritorious is the objection that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention of Executive Order No. 14 and related issuances. In the first place, there is nothing at all wrong in a party's making his adversary his witness. 46 This is expressly allowed by Section 6, Rule 132 of the Rules of Court, viz.: "SECTION 6. Direct examination of unwilling or hostile witnesses. A party may . . . call an adverse party or an officer, director, or managing agent of a public or

private corporation or of a partnership or association which is an adverse party, and interrogate him by leading questions and contradict and impeach him in all respects as if he had been called by the adverse party, and the witness thus called may be contradicted and impeached by or on behalf of the adverse party also, and may be cross-examined by the adverse party only upon the subject-matter of his examination in chief." The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart from the fact that the information sought is immaterial since they are evidently meant to establish a claim against PCGG officers who are not parties to the action It suffices to point out that "fishing expeditions" are precisely permitted through the modes of discovery. 47 Moreover, a defendant who files a counterclaim against the plaintiff is allowed by the Rules to implead persons (therefore strangers to the action) as additional defendants on said counterclaim. This may be done pursuant to Section 14, Rule 6 of the Rules, to wit: "SECTION 14. Bringing new parties. When the presence of parties other than those to the original action is required for the granting of complete relief in the determination of a counterclaim or cross claim, the court shall order them to be brought in as defendants, if jurisdiction over them can be obtained."

The PCGG's assertion that it or its members are not amenable to any civil action "for anything done or omitted in the discharge of the task contemplated by . . . (Executive) Order (No. 1)," is not a ground to refuse to answer the interrogatories. The disclosure of facts relevant to the action and which are not self-incriminatory or otherwise privileged is one thing; the matter of whether or not liability may arise from the facts disclosed in light of Executive Order No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the action. The apprehension has been expressed that the answers to the interrogatories may be utilized as foundation for a counterclaim against the PCGG or its members and officers. They will be. The private respondents have made no secret that this is in fact their intention. Withal, the Court is unable to uphold the proposition that while the PCGG obviously feels itself at liberty to bring actions on the basis of its study and appreciation of the evidence in its possession, the parties sued should not be free to file counterclaims in the same actions against the PCGG or its officers for gross neglect or ignorance, if not down right bad faith or malice in the commencement or initiation of such judicial proceedings, or that in the actions that it may bring, the PCGG may opt not to be bound by rules applicable to the parties it has sued, e.g., the rules of discovery.

So, too, the PCGG's postulation that none of its members may be "required to testify or produce evidence in any judicial . . . proceeding concerning matters within its official cognizance," has no application to a judicial proceeding it

has itself initiated. As just suggested, the act of bringing suit must entail a waiver of the exemption from giving evidence; by bringing suit it brings itself within the operation and scope of all the rules governing civil actions, including the rights and duties under the rules of discovery. Otherwise, the absurd would have to be conceded, that while the parties it has impleaded as defendants may be required to "disgorge all the facts" within their knowledge and in their possession, it may not itself be subject to a like compulsion. The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its consent. But it is axiomatic that in filing an action, it divests itself of its sovereign character and sheds its immunity from suit, descending to the level of an ordinary litigant. The PCGG cannot claim a superior or preferred status to the State, even while assuming to represent or act for the State. 48 The suggestion 49 that the State makes no implied waiver of immunity by filing suit except when in so doing it acts in, or in matters concerning, its proprietary or non-governmental capacity, is unacceptable; it attempts a distinction without support in principle or precedent. On the contrary "The consent of the State to be sued may be given expressly or impliedly. Express consent may be manifested either through a general law or a special law. Implied consent is given when the State itself commences litigation or when it enters into a contract." 50 "The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state as plaintiff may

avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in an action against the private parties, the state surrenders its privileged position and comes down to the level of the defendant. The latter automatically acquires, within certain limits, the right to set up whatever claims and other defenses he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-37, citing U.S. vs. Ringgold, 8 Pet. 150, 8 L.ed. 899)'" 51 It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private property has been taken in expropriation without just compensation being paid, the defense of immunity from suit cannot be set up by the State against an action for payment by the owner. 52 The Court also finds itself unable to sustain the PCGG's other principal contention, of the nullity of the Sandiganbayan's Order for the production and inspection of specified documents and things allegedly in its possession. The Court gives short shrift to the argument that some documents sought to be produced and inspected had already been presented in Court and marked preliminarily as PCGG's exhibits, the movants having in fact viewed, scrutinized and even offered objections thereto and made comments thereon. Obviously, there is nothing secret or confidential about these documents. No serious objection

can therefore be presented to the desire of the private respondents to have copies of those documents in order to study them some more or otherwise use them during the trial for any purpose allowed by law. The PCGG says that some of the documents are nonexistent. This it can allege in response to the corresponding question in the interrogatories, and it will incur no sanction for doing so unless it is subsequently established that the denial is false. cdphil The claim that use of the documents is prescribed by Executive Order No. 1 has already been dealt with. The PCGG is however at liberty to allege and prove that said documents fall within some other privilege, constitutional or statutory. The Court finally finds that, contrary to the petitioner's theory, there is good cause for the production and inspection of the documents subject of the motion dated August 3, 1989. 53 Some of the documents are, according to the verification of the amended complaint, the basis of several of the material allegations of said complaint. Others, admittedly, are to be used in evidence by the plaintiff. It is matters such as these into which inquiry is precisely allowed by the rules of discovery, to the end that the parties may adequately prepare for pre-trial and trial. The only other documents sought to be produced are needed in relation to the allegations of the counterclaim. Their relevance is indisputable; their disclosure may not be opposed. One last word. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and operation of the modes of discovery earlier mentioned, 54 there also appears to be a

widely entertained idea that application of said modes is a complicated matter, unduly expensive and dilatory. Nothing could be farther from the truth. For example, as will already have been noted from the preceding discussion, all that is entailed to activate or put in motion the process of discovery by interrogatories to parties under Rule 25 of the Rules of Court, is simply the delivery directly to a party of a letter setting forth a list of questions with the request that they be answered individually. 55 That is all. The service of such a communication on the party has the effect of imposing on him the obligation of answering the questions "separately and fully in writing under oath," and serving "a copy of the answers on the party submitting the interrogatories within fifteen (15) days after service of the interrogatories . . ." 56 The sanctions for refusing to make discovery have already been mentioned. 57 So, too, discovery under rule 26 is begun by nothing more complex than the service on a party of a letter or other written communication containing a request that specific facts therein set forth and/or particular documents copies of which are thereto appended, be admitted in writing. 58 That is all. Again, the receipt of such a communication by the party has the effect of imposing on him the obligation of serving the party requesting admission with "a sworn statement either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters," failing in which "(e)ach of the matters of which admission is requested shall be deemed admitted." 59 The taking of depositions in accordance with Rule 24 (either on oral examination or by written interrogatories) while somewhat less simple, is nonetheless by no means as complicated as seems to be the lamentably extensive notion.

WHEREFORE, The petition is DENIED, without pronouncement as to costs. The temporary restraining order issued on October 27, 1989 is hereby LIFTED AND SET ASIDE. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur. Romero, J., took no part. Separate Opinions CRUZ, J ., concurring: I am delighted to concur with Mr. Justice Andres R. Narvasa in his scholarly ponencia which, besides reaching a conclusion sustained by the applicable law and jurisprudence, makes for reading both pleasurable and instructive. One function of the Court not generally appreciated is to educate the reader on the intricacies and even the mystique of the law. The opinion performs this function with impressive expertise and makes the modes of discovery less esoteric or inaccessible to many members of the bar. Melencio-Herrera, J., concurs. Footnotes 1. Petition, Annex D.

2. Id., Annex E. 3. Id., Annex F. 4. Rollo, p. 7. 5. Id., pp. 7, 145. 6. Id., p. 7. 7. Petition, Annex G. 8. Rollo, pp. 56-87. 9. Petition, Annex H. 10. Id., Annex I. 11. Id., Annex J. 12. Id., Annex K. 13. Rollo, p. 9. 14. Petition, Annex L. 15. Id., Annex M. 16. Rollo, p. 9. 17. Petition, Annex N. 18. Id., Annex O. 19. Petition, Annex R; Rollo, p. 220.

20. Id., Annexes A and B; Rollo, p. 11. 21. Rollo, pp. 244, 245, 245-A. 22. 189 SCRA 459. 23. Id., p. 317. The Solicitor General also withdrew his appearance in other cases involving the PCGG, to wit: G. R. Nos. 74302 (Tourist Duty-Free Shops, Inc. v. PCGG); 86949 (Placido L. Mapa v. Hon. Sandiganbayan, et al.); 86926 (Cesar E. A. Virata v. Hon. Sandiganbayan, et al.); 89425 (Republic, etc., et al. v. Sandiganbayan . . . et al.); 90478 (Republic v. Hon. Sandiganbayan, etc. et al.); 93694 (Philippine Coconut Producers Federation, etc., et al. v. PCGG, et al.). 24. Id., p. 320. 25. Id., pp. 328 et seq. 26. Governed by Rule 25. 27. Governed by Rule 27. 28. Moran (Comments on the Rules of Court, 1979 ed., Vol. 2, pp. 5-6), for instance, points out citing the recommendations of the committee of the American Judicature Society that drafted the Model Rule of Civil Procedure that 'The English and Canadian experience has been of more value than any other single procedural device, in bringing parties to a settlement who otherwise would have fought their way through to trial."

N.B. Actions could very well be ended by summary judgments (Rule 34) on the basis of the results of discovery. 29. Surprises, it has been observed, are most dangerous weapons" in a "judicial duel" (Moran, Comments on the Rules of Court, 1963, ed., Vol. 2, p. 6). 30. 16 Phil. 315, 322 (July 26, 1910); emphasis supplied. 31. Section 1, Rule 8, Rules of Court. 32. Moran, Comments on the Rules of Court, 1979 ed., Vol. 2, pp. 5-6; see footnote 28, supra. 33. SEE Hickman v. Taylor, et al., U.S. Sup. Ct. Rpts., 91 Law Ed., 451, 455, cited in Feria, Civil Procedure, 1969 ed., p. 435; 35A CJS Sec. 527, pp. 785-786; 23 Am Jur. 2d, See, 156, p. 493.

34. Sec. 5, Rule 25 ("Interrogatories to Parties") also allows inquiry as "to any matters that can be inquired into under section 2 of Rule 24 . . ." 35. Feria, op. cit., p. 436, citing Hickman v. Taylor, et al., supra; SEE 23 Am Jur 2d., Sec. 150, pp. 484-487. 36. Sec. 1, Rule 24; Sec. 1, Rule 25; Sec. 1, Rule 26. 37. SEE Everett v. Asia Banking Corp., 49 Phil. 512. 38. Rule 29.

39. SEE Secs. 16 and 18, Rule 24. 40. Hickman v. Taylor, et al., supra, cited in Feria, op. cit., p. 436. 41. SEE footnote 5, supra. 42. Cf. Uy Chao v. de la Rama Steamship Co., Inc., 6 SCRA 69. 43. SEE footnote 17, supra. 44. SEE discussion at page 8, and footnote 30 and related text. 45. Cf . Lopez, etc., et al. v. Maceren, etc., et al. 95 Phil. 754 Cojuangco v. Caluag, 97 Phil. 982 (unrep.); Villalon v. Ysip, 98 Phil. 997; Caguiat v. Torres, 30 SCRA 109-110; Jacinto v. Amparo, 93 Phil. 693. 46. SEE Cason v. San Pedro, 9 SCRA 925, where such objections as that the interrogatories transferred the onus probandi from plaintiffs to defendants, or the latter were being made to prove the former's case, or that anyway, the facts may be proven by plaintiffs through their own evidence, were overruled. 47. SEE Tan Chico v. Concepcion, 43 Phil. 141 (1922). 48. It should be pointed out that the rulings in PCGG v. Pea, 159 SCRA 556 (1988) and PCGG v. Nepomuceno, etc., et al., G.R. No. 78750, April 20, 1990 are not inconsistent with that in this proceeding, the facts and basic issues therein

involved being quite distinct from those in the case at bar. Unlike the present case, where the PCGG instituted a civil action against Tantoco, et al. in the Sandiganbayan neither Pea nor Nepomuceno involved any suit filed by the PCGG, the acts therein challenged being simply its extrajudicial orders of sequestration; and in both said cases, the Regional Trial Courts issued write of preliminary injunction prohibiting enforcement and implementation of the sequestration orders. This Court nullified those injunctive writs on the ground that the PCGG, as an agency possessed of primary administrative jurisdiction (particularly concerning sequestration) and exercising quasijudicial functions, was co-equal to a Regional Trial Court which therefore had no jurisdiction to review or otherwise restrain or interfere with its acts, that power being exclusively lodged in the Sandiganbayan, subject only to review by this Court. In Nepomuceno, it was additionally ruled that there was prima facie basis for the challenged order of sequestration; that the take-over of the property in question by the PCGG fiscal agents was necessitated as much by the resistance and defiance of the holders thereof to the PCGG's authority as by the desire of the PCGG to preserve said property; and that since the power to seize property to conserve it pending the institution of suit for its recovery was sanctioned by the Freedom Constitution and the 1987 Constitution, the PCGG must be deemed immune from any suit which would render that authority inutile or ineffectual.

49. Of the Solicitor General in his Reply to Answer, etc.: Rollo, pp. 168-169. 50. Mr. Justice Isagani A. Cruz, Philippine Political Law, 1991 ed., p.33. SEC. 5, Act No. 3083 (eff., March 16, 1923) provides that, "When the Government of the Philippine Islands is plaintiff in an action instituted in any court of original jurisdiction, the defendant shall have the right to assert therein, by way of set off or counterclaim in a similar action between private parties." 51. Froilan vs. Pan Oriented Shipping Co., 95 Phil. 905, 912. 52. Ministerio vs. City of Cebu, 40 SCRA 464, cited with approval in Santiago vs. Republic, 87 SCRA 294. 53. Petition, Annex O, pp. 206-208. 54. At page 6, last paragraph, supra. 55. Sec. 1, Rule 25, Rules of Court. 56. Sec. 2, Rule 25. 57. SEE footnote 38 and related text. 58. Sec. 1, Rule 26. 59. Sec. 2, Rule 25; see also footnote 38 and related text, supra. EN BANC [G.R. No. L-20322. May 29, 1968.] REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. PERFECTO R. PALACIO, as Judge of the Court of First Instance of Camarines Sur, MACARIO M. OFILADA, as Ex-officio Sheriff of Manila and ILDEFONSO ORTIZ, respondents. Solicitor General for petitioner. Luis Contreras for respondents. SYLLABUS 1. POLITICAL LAW; STATE; STATE IMMUNITY FROM SUIT: WAIVER OF IMMUNITY DOES NOT NECESSARILY SUBJECT ITS PROPERTY AND FUNDS TO SEIZURE. The mere waiver of the State of its immunity does not render its property and funds liable to seizure under legal process. Judgments against a State, where it has consented to be sued, operate merely to liquidate and establish the plaintiff's claim but they cannot be enforced by processes of law; it is up to the legislature to provide for their payment in such manner as it sees fit.

2. ID.; ID.; ID.; STATE LIABLE ONLY FOR TORTS CAUSED BY SPECIAL AGENTS. The initial complaint against the Irrigation Service Unit was that it induced the Handong Irrigation Associations, Inc., to invade and occupy the land of respondent Ortiz. This liability thus arose from tort and not from contract and it is a well-entrenched rule embodied in art. 2180 of the Civil Code that the State is liable only for torts caused by its special agents specifically commissioned to carry out acts complained of outside of such agent's regular duties. In the absence of proof that the tortious inducement was authorized, neither the State nor its funds are liable therefor.

principal place of business in Libmanan, Camarines Sur, and the Irrigation Service Unit, an office or agency under the Department of Public Works and Communications, to recover possession, with damages, of 958-square meter-lot located in Handong, San Juan, Libmanan, Camarines Sur, which the Irrigation Association allegedly entered and occupied, at the instance of its co-defendant. For failure to appear and answer the complaint, therein defendant Irrigation Service Unit was declared in default. On June 3, 1960, the Republic of the Philippines, through the Solicitor General, moved for the dismissal of the complaint, claiming that defendant Irrigation Service Unit has no juridical personality to sue and be sued. By order of June 11, 1960, this motion was denied, on the ground that the said defendant although a mere agency of the Republic of the Philippines, is engaged in the private business of selling irrigation pumps and construction materials on installment plan. The Solicitor General's motion for reconsideration of the aforesaid order was also denied on July 19, 1960. No appeal appears to have been taken. On January 29, 1962, the Solicitor General was served with copy of the writ of execution issued by the court against the defendants in the above-mentioned civil case; and, on February 16, 1962, an order of garnishment was served by the Sheriff of Manila against the deposits and/or pump irrigation trust fund in the account of the Irrigation Service Unit at the Philippine National Bank, Manila, to cover the sum of P14,874.40. 1 On March 8, 1962, the Solicitor General, on behalf of the Republic of the Philippines, filed with the lower court an

DECISION

REYES, J.B.L., J p: This is a petition for review of the decision of the Court of Appeals (in CA-G.R. No. 30915), dismissing the original action for certiorari and prohibition filed with said Court by herein petitioner Republic of the Philippines, to restrain the enforcement of a writ of execution (issued by the Court of First Instance of Camarines Sur in its Civil Case No. 4886) on the trust fund in the account of the Irrigation Service Unit with the Philippine National Bank. There is no controversy as to the following facts: On April 2, 1960, Ildefonso Ortiz instituted in the Court of First Instance of Camarines Sur Civil Case No. 4886, against the Handong Irrigation Association, Inc., a corporation with

urgent motion to lift the order of garnishment, for the reason that the funds subject matter thereof are public funds and exempt from attachment or execution. Upon denial of this motion, as well as of the motion for reconsideration of said denial, the Solicitor General commenced the present certiorari and prohibition proceeding in the Court of Appeals. In its decision of August 21, 1962, the appellate court sustained the propriety of the disputed garnishment-order, and dismissed the Government's petition, on the basis of the finding by the trial court that the Irrigation Service Unit, "formerly an office under the Department of Agriculture and Natural Resources created by virtue of a 'Memorandum of Agreement on the Irrigation Pump Program of the Philippines' signed by the Chairman of the PHILCUSA (now NEC), Chief of the MSA Mission (now AID) and the Secretary of Agriculture and Natural Resources, and presently under the Department of Public Works and Communications to which it was transferred", is engaged in a private business of purchase and sale of irrigation pumps and systems. Consequently, according to the Court of Appeals and following the ruling in the case of National Airports Corporation vs. Teodoro et al., L-5122, April 30, 1952 (91 Phil. 203), by thus engaging in private business, the Government, through the Irrigation Service Unit, had actually consented to the suit. Hence, the present petition for review filed by the Republic of the Philippines. The issue presented by this case is whether or not the pump irrigation trust fund, deposited with the Philippine National Bank in the account of the Irrigation Service Unit, may be garnished to satisfy a money-judgment against the latter.

This issue in turn calls for a determination of the nature of said trust fund, i.e., whether it is a fund belonging to the national Government (which was not a party to Civil Case No. 4886), as maintained by herein petitioner, or purely the proceeds of a private venture by the government, as claimed by the respondents. For a better understanding of the nature, function and operation of the Irrigation Service Unit (ISU) which is necessary for the proper resolution of the issue herein involved, it is worthwhile to recall that this office was originally created under the Department of Agriculture and Natural Resources by virtue of a Memorandum Agreement between the governments of the Philippines and the United States, dated August 13, 1952. It was later transferred to the Department of Public Works and Communications as an office directly under the Office of the Secretary, "to prosecute to completion the rehabilitation of pump systems transferred from the former Irrigation Pump Administration of the Department of Agriculture and Natural Resources, 2 including the settlement of the obligations of said administration." The budgetary requirements to carry out the objectives of the project were to be financed by withdrawals from the Counterpart Fund-Special Account (Memorandum Agreement of June, 1954.) This Counterpart Fund-Special Account referred to above was established in the Central Bank by the Government of the Philippines and made up of deposits in pesos commensurate with the indicated dollar cost to the Government of the United States of economic and technical assistance made available to the Philippines, pursuant to the Bilateral Agreement between the Philippines and the United

States of April 27, 1951; of deposits accruing to it (Philippine government) from the sale of commodities or services supplied under the Agreement or otherwise accruing to it as a result of the import of such commodities or service; and of any advance deposits which the Philippine government may make in the Special Account (Sec. 1, paragraphs 2[a],[b],and [c], Annex to Memo. Agreement of April 27, 1951). Later, on the basis of a supplemental agreement (No. 2, Counterpart Project No. 409 Pump Irrigation), the Pump Irrigation Trust Fund was established in the Philippine National Bank, to which all authorized releases to the ISU 3 from the Counterpart Fund Special Account, to finance the peso-cost of the Irrigation Pump Project, were transferred. This is the fund on which the disputed writ of execution for money judgment rendered against the ISU, is being enforced. A reading of the records and documents submitted to the Court of Appeals will readily show that the sales of irrigation pumps to farmers by ISU are governed by the terms of the Supplemental Agreement No. 2 to Counterpart Project No. 409 (signed by representatives of the Philippine and U.S. governments) hereunder copied in full: "C Disposition of Proceeds from Payments under Contracts of Sale. "1. Under the Guiding Principles of the Irrigation Pump Project, pumps are sold to farmers' associations under conditional sales contracts. Periodic payments to ISU by each association are required. The total payment required under the contract is stated in the

contract and is equal to the sum of (a) the landed cost of equipment at the installation site, (b) the cost of installation and construction including survey and design, (c) the cost of fuel and oil financed for the first crop season, if any, (d) ten per cent of the total of (a) and (b) to cover the costs of administration, technical assistance furnished by the ISU, inspection and collection, and (e) the compensating use tax to the Philippine Government. Interest is also payable under each contract at the rate of six percent per annum on any unpaid balance of the total amount of the contract. "2. All principal and interest payments received by the ISU from farmers' associations shall be deposited immediately in the Trust Fund. The separate account established by the project agreement for Counterpart Project 409, entitled 'Irrigation Pump Sales Proceeds Account' is hereby abolished and any deposits therein will be immediately transferred to the Trust Fund. "3. Whenever the total value of all deposits made to the Trust Fund from contract principal and interest payments exceeds the value of total releases made to the Trust Fund from the Counterpart Fund- Special Account, these excess deposits shall be transferred from the Trust Fund to the Counter fund-Special Account. Such transfers shall be considered as

'proceeds of sale' and 'advance deposits' as provided in Annex Section 1, (b) and (c) of the Bilateral Agreement between the Republic of the Philippines and the United States of America."

that the ISU, by engaging in the private business of purchasing and selling irrigation pumps on installment basis, has waived its governmental immunity and, by implication, consented to the suit. It is apparent that this decision of the Court of Appeals suffers from the erroneous assumption that because the State has waived its immunity, its property and funds become liable to seizure under legal process. This emphatically is not the law (Merritt vs. Insular Government, 34 Phil. 311). "Even though the rule as to immunity of a state from suit is relaxed, the power of the courts ends when the judgment is rendered. Although the liability of the state has been judicially ascertained, the state is at liberty to determine for itself whether to pay the judgment or not, and execution can not issue on a judgment against the state. Such statutes do not authorize a seizure of state property to satisfy judgments recovered, and only convey an implication that the legislature will recognize such judgment as final and make provision for the satisfaction thereof." (49 Am. Jur., sec. 104, pp. 312-320.) "Judgment against a state, in cases where it has consented to be sued, generally operate merely to liquidate and establish plaintiff's claim in the absence of express provision; otherwise they can not be enforced by processes of law; and it is for the legislature to provide for their payment in such manner as it

It was also provided therein that the payments by the farmers' associations on conditional sales agreements specified in paragraph C- 2 above, will be considered in the preparation, and shall form part, of the ISU annual budget, which will finance the costs of supply and equipment purchases, the installation and construction of pump units, and the operating expenses of ISU for which appropriated funds are not available. (Par. B 1). It is clear from the foregoing that the ISU is not only an office in the Government of the Republic of the Philippines, created to promote a specific economic policy of said government, but also that its activity (of selling irrigation pumps to farmers on installment basis) is not intended to earn profit or financial gain to its operator. The mere fact that interests are being collected on the balance of the unpaid cost of the purchased pumps does not convert this economic project of the government into a corporate activity. As previously pointed out, the installment payments and interests receivable from the farmers are to be used to replenish the counterpart funds utilized in furtherance of the operation of the project. Although evidently acknowledging the nature of the Pump Irrigation Trust Fund as a public fund, the Court of Appeals nevertheless sustained the garnishment order, on the ground

sees fit." (59 C.J. sec. 501, p. 331; 81 C.J.S., sec. 232, p. 1343.) It needs no stressing that to allow the levying under execution of the ISU funds would amount to diverting them from the purposes originally contemplated by the P.I. U.S. Bilateral Agreement, and would amount to a disbursement without any proper appropriation as required by law. A second infirmity of the decision under appeal originates from its ignoring the fact that the initial complaint against the Irrigation Service Unit was that it had induced the Handong Irrigation Association, Inc., to invade and occupy the land of the plaintiff Ildefonso Ortiz. The ISU liability thus arose from tort and not from contract; and it is a wellentrenched rule in this jurisdiction, embodied in Article 2180 of the Civil Code of the Philippines, that the State is liable only for torts caused by its special agents, specifically commissioned to carry out the acts complained of outside of such agent's regular duties (Merritt vs. Insular Government, supra; Rosete vs. Auditor General, 81 Phil. 453). There being no proof that the making of the tortious inducement was authorized, neither the State nor its funds can be made liable therefor. WHEREFORE, the decision of the Court of Appeals under review is reversed and set aside, and the order of garnishment issued by the Sheriff of Manila on the Pump Irrigation Trust Fund in the account of the Irrigation Service Unit, with the Philippine National Bank, is hereby declared null and void. The writ of preliminary injunction heretofore issued is made permanent. No costs.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Angeles, JJ., concur. Fernando, J., is on official leave. Footnotes 1. A previous order of garnishment served on the Philippine National Bank, Naga branch was returned unsatisfied, the trust fund in the account of defendant having been transferred to the Philippine National Bank, Manila office. 2. The primary purpose of this (irrigation pump) project is to extend irrigation facilities through the installation of irrigation pumps to provide water to communities of small farmers whose fields depend solely upon the natural rainfall for water supply during the rainy season of the year and are left uncultivated during the dry season. (Memo. Agreement of October 2, 1953). 3. Irrigation Service Unit.

FIRST DIVISION [G.R. No. L-53064. September 25, 1980.] FELIX LANUZO, plaintiff-appellee, vs. SY BON PING and SALVADOR MENDOZA, defendantappellants.

The defendants moved to dismiss on the ground that another action, Criminal Case No. 4250 for Damage to Property through Reckless Imprudence, was pending in the Municipal Court of Nabua, Camarines Sur, between the same parties for the same cause. Plaintiff opposed the dismissal stressing that he had made an express reservation in the criminal case to institute a civil action for damages separate and distinct from the criminal suit. The lower Court denied the Motion to Dismiss for lack of merit. On August 13, 1970, the trial Court rendered a default judgment in plaintiff's favor, the dispositive portion of which reads: "WHEREFORE, judgment is hereby rendered (a) ordering the defendants to pay jointly and severally the amount of P13,000.00 as damages, resulting to the loss of the store including the merchandise for sale therein, the residential house of mixed materials, furnitures, clothing and households fixtures; (b) ordering the said defendants to pay jointly and severally P300.00 monthly from July 24, 1969 which represents plaintiff's monthly income from his store until the who amount of P13,000.00 is fully paid; and (c) for attorney's fees an amount equivalent to 20% of the total amount claimed by the plaintiff, plus the costs of this suit." Defendants' "Motion for Reconsideration and/or New Trial and To Set Aside Order of Default" was denied.

DECISION

MELENCIO-HERRERA, J p: Appeal certified to Us by the Court of Appeals 1 as it involves pure legal questions. On November 25, 1969, a Complaint for damages was instituted in the Court of First Instance of Camarines Sur (Civil Case No. 6847) by plaintiff Felix Lanuzo against Sy Bon Ping, the owner and operator of a freight truck bearing Plate No. T-57266, and his driver, Salvador Mendoza. As alleged therein, at about five o clock in the afternoon of July 24, 1969, while Salvador Mendoza was driving the truck along the national highway in the Barrio of San Ramon, Nabua, Camarines Sur, and because of his reckless negligence, he rammed into the residential house and store of plaintiff. As a result, the house and store were completely razed to the ground causing damage to plaintiff in the total amount of P13,000.00. Plaintiff averred that by reason thereof he became destitute as he lost his means of livelihood from the store which used to give him a monthly income of P300.00.

Upon elevation by the defendants of the case to the Court Appeals (CA-G.R. No. 48399-R) they urged that the civil action was prematurely instituted in view of Rule 111, section 3, providing in part that "after the criminal action has been commenced the civil action cannot be instituted until final judgment has been rendered in the criminal action." Additionally, they contended that even assuming their liability, the lower Court nevertheless committed an error in holding them jointly and severally liable. On February 20, 1980, the Court of Appeals certified the case to this instance on pure questions of law. We start from the fundamental premise, clearly enunciated as early as the case of Barredo vs. Garcia, et al., 2 that: "A distinction exists between the civil liability arising from a crime and the responsibility for cuasi-delitos or culpa-extra-contractual. The same negligent act causing damages may produce civil liability arising from a crime under article 100 of the Revised Penal Code, or create an action for cuasi-delito or culpa extra-contractual under articles 1902-1910 of the Civil Code. Plaintiffs were free to choose which remedy to enforce." Plaintiff's reservation before the Municipal Court in the criminal case of his right to institute a civil action separately is quoted hereunder in full: "UNDERSIGNED offended party in the above entitled case before this Honorable Court respectfully alleges:

"1. That this action which was commenced by the Chief of Police included in the complaint the claim of the undersigned for civil liability; "2. That the undersigned is reserving his right to institute the civil action for damages, docketed as Civil Case No. 6847 of the Court of First Instance of Camarines Sur, against accused herein and his employer; "WHEREFORE, it is respectfully prayed that reservation be made of record therein and that the civil aspect of the above-entitled case be not included herein. xxx xxx xxx" 3 The terms of plaintiff's reservation clearly and unmistakably make out a case for quasi-delict. This is also evident from the recitals in plaintiff's Complaint averring the employeremployee relationship between the appellants, alleging that damages to the house and store were caused by the fact that Salvador Mendoza had driven the truck "recklessly, with gross negligence and imprudence, without observance of traffic rules and regulations and without regard to the safety of persons and property", and praying that appellants be held jointly and solidarily liable for damages. These are, basically, what should be alleged in actions based on quasidelict. 4 As it is quite apparent that plaintiff had predicated his present claim for damages on quasi-delict, he is not barred from proceeding with this independent civil suit. The institution of a criminal action cannot have the effect of

interrupting the civil action based on quasi-delict. 5 And the separate civil action for quasi-delict may proceed independently and regardless of the result of the criminal case, 6 except that a plaintiff cannot recover damages twice for the same act or commission of the defendant. 7 The civil action referred to in Sections 3(a) and (b) of Rule 111 of the Rules of Court, which should be suspended after the institution of the criminal action, is that arising from delict, and not the civil action based on quasi-delict or culpa aquiliana. We come now to the subject of liability of the appellants herein. For his own negligence in recklessly driving the truck owned and operated by his employer, the driver, Salvador Mendoza, is primarily liable under Article 2176 of the Civil Code. On the other hand, the liability of his employer, Sy Bon Ping, is also primary and direct under Article 2180 of the same Code, which explicitly provides: LibLex "Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry." For failure of the appellant Sy Bon Ping to rebut the legal presumption of his negligence in the selection and supervision of this employee, 8 he is likewise responsible for the damages caused by the negligent act of his employee (driver) Salvador Mendoza, and his liability is primary and solidary.

". . . What needs only to be alleged under the aforequoted provision (Article 2180, Civil Code) is that the employee (driver) has, by his negligence (quasi-delict) caused damage to make the employer, likewise, responsible for the tortious act of the employee, and his liability is, as earlier observed, primary and solidary" 9 But although the employer is solidarily liable with the employee for damages, the employer may demand reimbursement from his employee (driver) for whatever amount the employer will have to pay the offended party to satisfy the latter's claim. 10 WHEREFORE, the appealed decision is hereby affirmed. Costs against defendants-appellants. SO ORDERED. Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.

Footnotes 1. Resolution dated February 20, 1980 of the Eighth Division of the Court of Appeals, composed of JJ. Mariano A. Zosa (ponente) Samuel F. Reyes and Jorge R. Coquia. 2. 73 Phil. 607 (1942).

3. pp. 14-15, Record on Appeal. 4. Poblete vs. Fabros, et al., 93 SCRA 200, 204 (1979). 5. Capuno vs. Pepsi-Cola Bottling Co., 13 SCRA 658 (1965). 6. Article 31, New Civil Code; Chan vs. Yatco, 103 Phil. 1126 (1958). 7. Art. 2177, Civil Code. 8. last paragraph, Article 2180 of the Civil Code. 9. Poblete vs. Fabros, supra citing Bachrach Motor Co., vs. Gamboa, 101 Phil. 1219 (1957); Malipol vs. Tan, 65 SCRA 202; Barredo vs. Garcia and Almario, 73 Phil. 607; Viluan vs. Court of peals, et al., 16 SCRA 742; Anuran, et al vs. Buo, et al., 17 SCRA 224. 10. Article 2181, Civil Code; Malipol, etc. vs. Tan, et al., 55 SCRA 204-205 (1974). ZALDIVAR, J p:

SECOND DIVISION [G.R. No. L-27730. January 21, 1974.] PRIMA MALIPOL, in her own behalf and as guardian ad litem of her minor children, LYDIA MALIJAN, JOSEFINA MALIJAN, TEODORA MALIJAN, and SEBASTIAN MALIJAN, plaintiffsappellees, vs. LILY LIM TAN and ERNESTO LABSAN, defendantsappellants. Edgardo Moncada for plaintiffs-appellees. Achacoso, Ocampo & Simbulan for defendants-appellants.

DECISION

Appeal on questions of law from the decision dated July 1, 1966, a judgment by default, and from the order dated October 10, 1966, of the Court of First Instance of Batangas in its Civil Case No. 1732 which denied defendantsappellants' motion to lift the order of default and for a new trial and which considered the judgment by default as standing with full force and effect. In the evening of February 6, 1965, at about 8:35 o'clock, Pantaleon Malijan, who was walking with his companion

Leonardo Amante on the shoulder of the road in Barrio San Felix, Sto. Tomas, Batangas, was hit by a gasoline tanker and was thrown to the ground. While he was sprawling on the ground Malijan was run over by the tanker's right wheel that got detached from its axle. Malijan's companion, with the aid of the barrio captain, brought Malijan to the San Pablo City Hospital where he died that same night, the cause of death being "possible traumatic cerebral hemorrhage due to vehicular accident." The gasoline tanker with Plate No. T-52573, series of 1964, driven at the time of the accident by herein appellant Ernesto Labsan, was being used in connection with the gasoline business of the owner, the herein appellant Lily Lim Tan. Representations and demands for payment of damages having been ignored by appellants, appellees filed on May 18, 1966 a complaint in the Court of First Instance of Batangas, praying that appellants be condemned to pay, jointly and severally, the damages as specified in said complaint. The appellees are the mother and the minor brothers and sisters of the deceased Pantaleon Malijan. Appellants were duly served with summons on May 19, 1966, but they failed to file their answer within the reglementary period. Upon appellees' motion of June 8, 1966, the trial court, in an order dated June 10, 1966, declared the appellants in default, and appellees were permitted to present their evidence in the absence of the appellants. The trial court rendered a decision, dated July 1, 1966, the dispositive portion of which reads as follows: "WHEREFORE, finding the averments in the complaint as supported by the evidence to be

reasonable and justified, judgment is hereby rendered in favor of the plaintiffs and against the defendants. The defendant driver. Ernesto Labsan, is ordered (1) to pay the sum of P2,100.00 to the plaintiffs for expenses for hospitalization, medical treatment, vigil and burial of Pantaleon Malijan; (2) to pay to the plaintiffs the sum of P6,000.00 for the death of said victim; (3) to pay to the plaintiffs the sum of P20,000.00 for the loss of earnings of said deceased for a period of five years; (4) to pay to the plaintiffs the sum of P5,000.00 moral damages; (6) to pay to the plaintiffs the sum of P2,000.00 for attorney's fees and P500.00 for incidental and litigation expenses; and (6) to pay the costs of the suit. Should Ernesto Labsan not be able to pay the foregoing damages, they shall be paid for by defendant Lily Lim Tan, who by law, being the owner and operator of the gasoline tanker that featured in the accident, is subsidiarily liable." Copy of the decision was received by the appellees on August 23, 1966. A motion for execution was filed on August 26, 1966 by appellees but the trial court held its resolution in abeyance until September 22, 1966 when the judgment would become final. On September 21, 1966 appellants filed a verified motion to lift the order of default and for a new trial, alleging that they

were deprived of their day in court when the order of default was issued and a decision rendered thereafter; that they had good and valid defenses, namely: (a) that the accident which gave rise to the case was due to force majeure; (b) that appellant Ernesto Labsan was without fault in the accident that gave rise to the case; and (c) that appellant Lily Lim Tan had exercised the due diligence required of a good father of a family to prevent damage. Finding said motion to be without merit, the trial court denied the same on October 10, 1966. Hence, this appeal wherein appellants made assignment of errors, as follows: (a) The trial court erred in finding that appellants took the complaint for granted by reason of the fact that appellants referred to their lawyer the complaint for answer only after the lapse of eleven (11) days from receipt thereof; (b) The trial court erred in not holding that the mistake committed by the late Atty. Daniel Chavez in giving the wrong date of receipt by appellants of the summons and the complaint to Atty. Romulo R. de Castro on June 10, 1966 due to the abnormal mental condition of the late Atty. Daniel Chavez on June 10, 1966 which thereafter resulted in the commission of suicide by the latter on June 17, 1966, constitutes the mistake and accident in law which warrant the relief from default and the granting of the new trial;

(c) The trial court erred in not holding that the fact that appellants, through Atty. Romulo R. de Castro, filed on June 10, 1966 a motion for extension of time to file answer, and thereafter actually did file their answer to the complaint on June 20, 1966 wherein they alleged good, valid and meritorious defenses against the claim of plaintiffs in the complaint, should warrant favorable consideration of appellants' motion to lift order of default and for new trial; and (d) The trial court erred in not granting appellants' motion to lift order of default and for new trial. 1. In support of their first assignment of error, counsel for appellants contends that the finding of the trial court, that the appellants took the complaint for granted when they referred the complaint to their lawyer only on the eleventh day after receipt thereof, was unwarranted, because appellants had 15 days from receipt of the summons and complaint to answer and their lawyer, the late Atty. Daniel Chavez, after the complaint was referred to him on the eleventh day, had still four days to file the answer, which he could very well do inasmuch as he was well acquainted with the facts because he was the lawyer of appellant Ernesto Labsan in Criminal Case No. 2200 of the Court of First Instance of Batangas for homicide thru reckless imprudence which case arose from the very accident subject of appellees' complaint; that appellant Lily Lim Tan, furthermore, had instructed her employee, Eleuterio Dizon, to handcarry the summons and to deliver it to nobody except to Atty. Chavez; that Atty.

Chavez, in a long distance telephone conversation with appellant Lily Lim Tan, assured the latter that he would attend to the complaint. We do not find merit in the contention of counsel for appellants. It is within the sound discretion of the court to set aside an order of default and to permit a defendant to file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has expired, but it is not error, or an abuse of discretion, on the part of the court to refuse to set aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the answer. In motions for reconsideration of an order of default, the moving party has the burden of showing such diligence as would justify his being excused from not filing the answer within the reglementary period as provided by the Rules of Court, otherwise these guidelines for an orderly and expeditious procedure would be rendered meaningless. 1 Unless it is shown clearly that a party has justifiable reason for the delay the court will not ordinarily exercise its discretion in his favor. 2 In the instant case, We agree with the trial court, that appellants have not shown that they exercised such diligence as an ordinary prudent person would exercise, to have the answer filed within the reglementary period. Appellant Lily Lim Tan admitted in her affidavit 3 that she received the summons and copy of the complaint on May 19, 1966, and that having read the complaint she found out that she was being sued, together with her driver, for damages in connection with the accident of February 6, 1965 at Sto. Tomas, Batangas. The damages asked in the complaint

amounts to P36,600.00. The summons required them to answer the complaint within 15 days from receipt thereof, and warned them that should they fail to answer within said period the plaintiffs would take judgment against-them for the relief demanded in the complaint. The damages demanded was not a negligible sum, and appellant Lily Lim Tan, who is a business woman, should have considered the matter a serious one. Ordinary prudence would dictate that she should concern herself about the matter, that she should refer said complaint with the least possible delay to her lawyer. But, for reasons she did not explain, she referred the complaint to her lawyer only after the lapse of ten (10) days from receipt thereof, i.e., on May 30, 1966. She should have considered that four days might not be sufficient time for her lawyer to prepare and file the answer. Appellants, however, contend that their lawyer, Atty. Chavez, could very well prepare the answer within the remaining four days of the reglementary period, for he was conversant with the facts of the case. Be that as it may, the fact was that Atty. Chavez failed to file the answer. Because Atty. Chavez assured her, in their long distance telephone conversation that he would take care of the complaint, appellant Lily Lim Tan took for granted that the answer would be filed on time. Said appellant should have checked before the expiration of the period for filing the answer whether the complaint was really taken care of, or not. But this, appellant Lily Lim Tan failed to do, and this is another instance showing her lack of concern over the complaint. There was, therefore, no showing of due diligence on the part of appellants which would excuse their failure to file their answer on time. There is no showing either that the other appellant, Ernesto Labsan, had taken any step to have

an answer filed in his behalf evidently he was relying on his employer.

2. In support of the second assignment of error, appellants contend that the facts show that on June 10, 1966, Atty. Chavez, who was then acting strangely, endorsed the summons and complaint to Atty. Romulo R. de Castro; that upon inquiry by Atty. de Castro from Atty. Chavez the latter informed him that the summons was served on appellants on May 30, 1966; that appellant Lily Lim Tan, who was assured by Atty. Chavez in their long distance telephone conversation that the complaint would be attended to, could not, by the exercise of ordinary diligence, have foreseen, and avoided, the circumstance that at the time she referred the summons to Atty. Chavez, the latter was already in an abnormal condition which later resulted in his committing suicide on June 17, 1966; that it was Atty. Chavez's abnormal condition and his having given to Atty. de Castro the wrong date of the receipt of the summons by the appellees that caused the delay in the filing of the answer; that said circumstances constituted mistake and accident which entitled appellants to relief from default and a grant of new trial. Appellants' contention that the delay in filing the answer was due to mistake and accident is untenable. The mistake, according to appellants, consisted in Atty. Chavez' having told Atty. de Castro on June 10, 1966 that appellants received the summons and complaint on May 30, 1966. Even if Atty. Chavez had told Atty. de Castro the correct date, that is, that appellants received the summons on

May 19, 1966, the answer could not have been filed on time by Atty. de Castro, because the reglementary period for filing the answer expired on June 3, 1966, and it was already June 10, 1966, when the complaint was endorsed by Atty. Chavez to Atty. de Castro. The accident, according to appellants' counsel, consisted in Atty. Chavez's being in an abnormal condition at the time the complaint was given to him on May 30, 1966. This claim of appellants is not supported by the record. The record does not show that Atty. Chavez was suffering from an abnormal mind on May 30, 1966. His actuations on May 30 were those that could be expected of a normal person. Atty. Chavez asked the employee of appellant Lily Lim Tan about the date when his employer received the summons and complaint, and because the employee could not give him the desired information Atty. Chavez placed a long distance telephone call to appellant Lily Lim Tan to ask about said date. This action of Atty. Chavez showed that he was very much aware that the reglementary period within which the answer should be filed was to be computed from the date of the receipt of the summons and the complaint. It also showed that Atty. Chavez knew the easiest and the most practical means to get the information that he needed that was by a long distance telephone call to his client, Lily Lim Tan. These actuations of Atty. Chavez showed that he knew the importance of the matter at hand, and he was exercising the ordinary and reasonable care over the interests of his client. These specific actions of Atty. Chavez indicated that as of May 30, 1966 he had a sound mind.

It is claimed by appellants that on June 10, 1966 Atty. Chavez endorsed the complaint to Atty. de Castro, and told the latter that the summons and complaint were received by the appellants on May 30, 1966. It is further claimed by appellants that this information given by Atty. Chavez that the summons and complaint were received by the appellants on May 30, 1966 was the mistake that caused the delay of the filing of the answer. But it should be noted that on June 10, 1966 when Atty. Chavez endorsed the complaint to Atty. de Castro and informed the latter that the summons and complaint were received by the appellants on May 30, 1966, the period within which the answer should be filed had already expired the expiry date being June 3, 1966. There is no showing that between May 30, when Atty. Chavez received the summons and complaint from the employee of Lily Lim Tan, and June 3, 1973 Atty. Chavez was incapacitated to file the answer. And so it is clear that before the case was endorsed to Atty. de Castro, the appellants were already in default. The failure to file the answer on time may well be attributed to the mistake or negligence of Atty. Chavez. The appellants are bound by the mistakes, and may suffer by the negligence, of their lawyer. In fact, on June 8, 1966, or two days before Atty. Chavez endorsed the case to Atty. de Castro, the appellees had filed a motion in court to declare the defendants (now the appellants) in default. The moves taken by Atty. de Castro in filing a motion for extension of time to file an answer on June 10, 1966, and in finally filing an answer on June 20, 1966 were already late. The fact that Atty. Chavez committed suicide on June 17, 1966 does not necessarily prove that he was abnormal, incompetent or insane on May 50, 1966. Although there is a

judicial declaration that a sane man would not commit suicide, cognizance is nevertheless taken of the fact that circumstances at some given time may impel a person to commit suicide. 4 The probative value of suicide in determining the sanity of a person is dependent on the factual situation in each case. Such matters as the reasons for the act of self-destruction, the circumstances indicating the person's state of mind at the time, and other pertinent facts must be considered. The appellants had not indicated to the trial court any circumstance from which the trial court could form an opinion of the mental condition of Atty. Chavez before he committed suicide. The trial court, therefore, did not err when it did not favorably consider the claim of the appellant that their failure to file their answer to the complaint was due to accident or mistake, as contemplated in Section 3 of Rule 18 of the Rules of Court. 3. In support of the third assignment of error, appellants argue that acting on the wrong information given by Atty. Chavez, Atty. Romulo de Castro filed on June 10, 1966 a motion for an extension of 20 days within which to file an answer and that he did file the answer with good, valid and meritorious defenses on June 20, 1966; that on June 27, 1966 when appellees were allowed to present their evidence ex-parte, the motion for extension of time and the answer already formed part of the records of the case; that inasmuch as the late filing of the answer was due to accident and mistake, and appellants had good, valid, and meritorious defenses, the motion to lift the order of default and for new trial should have been favorably considered by the court. 5 Let it be noted that the lower court rendered its decision on July 1, 1966, and the appellees received notice of said

decision on August 23, 1966. The decision would have become final on September 22, 1966. On September 21, 1966 the appellants filed their motion to lift the order of default and for new trial. The motion of the appellants therefore, was in the nature of a motion for a new trial based on fraud, accident, mistake or excusable negligence under paragraph (a) of Section 1 of Rule 37 of the Rules of Court. Under Section 2 of said Rule 37 the moving party must show that he has a meritorious defense. The facts constituting the movant's good and substantial defense, which he may prove if the petition were granted, must be shown in the affidavit which should accompany the motion for a new trial. 6 In the instant case, the motion to lift the order of default and for new trial as well as the affidavit of merits accompanying the motion did not contain clear statements of the facts constituting a good and valid defense which the appellants might prove if they were given a chance to introduce evidence. The allegations in the motion that defendants have good and valid defenses, namely: that the accident which gave rise to the case was force majeure; that defendant Ernesto Labsan is absolutely without fault in the accident that gave rise to the case; and that defendant Lily Lim Tan has exercised due diligence required of a good father of a family to prevent damage, 7 are mere conclusions which did not provide the court with any basis for determining the nature and merit of the probable defense. An affidavit of merit should state facts, and not mere opinion or conclusions of law. Hence the trial court correctly denied the motion to set aside order of default and for new trial.

We must, however, point out a flaw in the decision of the lower court. It is stated in the decision appealed from that the driver, Ernesto Labsan, was primarily liable for the payment of damages adjudged therein, and the appellant Lily Lim Tan, being the owner and operator of the gasoline tanker that figured in the accident, is subsidiarily liable, that is, liable only in case Ernesto Labsan was not able to pay. This is not correct. The action in the instant case was brought not to demand civil liability arising from a crime. The complaint makes no mention of a crime having been committed, much less of the driver Ernesto Labsan having been convicted of a crime. But there is an allegation in the complaint that Ernesto Labsan was the authorized driver of the truck that figured in the accident, which truck was operated by appellant Lily Lim Tan in connection with her gasoline business. The prayer in the complaint, furthermore, sought to hold appellants jointly and solidarily liable for damages. The instant action, therefore, was based, as the complaint shows, on quasi delict. Under Article 2180 of the Civil Code, which treats of quasi delicts, the liability of the owners and managers of an establishment or enterprise for damages caused by their employees is primary and direct, not subsidiary. 9 The employer, however, can demand from his employee reimbursement of the amount which he paid under his liability. 10 The employer, appellant Lily Lim Tan, must be held primarily and directly, not subsidiarily, liable for damages awarded in the decision of the lower court. This is, of course, without prejudice to the right of appellant Lily Lim Tan to demand from her co-appellant Ernesto Labsan reimbursement of the damages that she would have to pay to appellees.

WHEREFORE, the decision of the Court of First Instance of Batangas, dated July 1, 1966, as modified in accordance with the observations We made in the preceding paragraph, and the order, dated October 10, 1966, denying appellants' motion for the lifting of the order of default and for new trial, in Civil Case No. 1732, are affirmed. Costs against defendants-appellees. It is so ordered. Fernando, Barredo, Antonio and Aquino, JJ ., concur. Separate Opinions FERNANDEZ, J ., concurring and dissenting: I agree with the dispositive part of the decision and the correctness of its premise that the liability of appellant Lily Lim Tan is primary and direct, and that her motion to set aside the order of default and the decision rendered thereafter as a result of an ex parte hearing is in the nature of a motion for new trial which must be denied for insufficiency of the affidavit of merit accompanying said motion. Lawyers preparing an affidavit of merit should be reminded that it must contain facts which if believed by the court would support a valid defense, because a motion for new trial should not be granted if it would be a mere exercise in futility in so far as the attainment of justice is concerned. However, I am not ready to join the majority in its pronouncements in connection with the negligence involved

in this case. The provisions of the Rules of Court should be interpreted liberally to afford every litigant his day in court. Under this principle, I consider the negligence of appellant Lily Lim Tan and her first lawyer Atty. Daniel Chavez to be excusable. Said appellant had a right to rely upon Atty. Chavez when she indorsed her case to him that he would be able to prepare and file the answer for her during the remaining four days of the fifteen-day period which commenced on May 19, 1966, or otherwise file a motion to extend the time to file the same. After all, it is a simple case for damages due to reckless imprudence of appellant's driver, resulting in the death of the victim. Considering that Atty. Chavez committed suicide on June 17, 1966, his troubled mind which probably led to his tragic end should be a sufficient explanation of his negligence in misinforming Atty. Romulo R. de Castro, the lawyer to whom he indorsed the case of Lily Lim Tan on June 10, 1966 that Lily Lim Tan received the summons on May 30, 1966, and not on May 19, 1966. I am not ready to attribute to Atty. Romulo R. de Castro any negligence. He had a right to rely on the information given him by Atty. Chavez that summons was received for the filing of the answer only on May 30, 1966. Atty. Castro, to gain enough time, filed on the same day the case was indorsed to him by Atty. Chavez a motion for extension of time within which to file the answer which was actually filed on June 20, 1966. All these, notwithstanding, this is a time as good as any to impress upon litigants and lawyers alike the necessity of stamping or writing on any pleading, process, order or

decision in any court case the time and date of its receipt, and the affixing thereon of the initials of the person receiving the same. For, human memory once in a while for some and very often for others, fails in the correct remembrance of dates and events. If this had been done by Lily Lim Tan and Atty. Chavez in this case with respect to the summons, the late filing of the answer which resulted in default and a decision rendered after an ex-parte hearing, could have been avoided. Footnotes 1. Quirante, et al. vs. Verano, et al., L-30207, February 27, 1971, 37 SCRA 801, 804. 2. Asian Surety & Insurance Company, Inc. vs. Ong Ting, et al., L-22079, May 27, 1966. 17 SCRA 292, 296. 3. Record on Appeal, pages 32-34. 4. 41 Am. Jur. 2d. p. 680. 5. The alleged motion for extension of time to file answer and the alleged answer that was filed on June 20, 1966 do not appear in the printed Record on Appeal which forms part of the record of this case before this Court. 6. Rosario vs. Alonzo, L-17330, June 29, 1963, 8 SCRA 397,398, 399. 7. Record on Appeal, page 25.

8. Price Stabilization Corporation vs. Judge of the Court of First Instance of Manila, et al. 97 Phil. 153, 156. 9. Barredo v. Garcia, 73 Phil. 607, 620-621. 10. Article 2181, Civil Code.

EN BANC [G.R. Nos. L-21477-81. April 29, 1966.] FRANCISCA VILUAN, petitioner, vs. THE COURT OF APPEALS, PATRICIO HUFANA AND GREGORIO HUFANA, respondents. Jose A. Solomon for petitioner. Lourdes M. Garcia for respondents SYLLABUS 1. PLEADING AND PRACTICE; AMENDMENT OF COMPLAINT TO ASSERT CLAIM AGAINST THIRDPARTY DEFENDANT. While Section 5 of Rule 12 of the Old Rules of Court has been held to preclude a judgment in favor of a plaintiff and against a third-party defendant where the plaintiff has not amended his complains to assert a certain claim against a third- party defendant, (See e.g., Thompson vs. Granston, Brown vs. Granston, 2 F.R.D. 270

[1942] yet, as held in subsequent decisions, this rule applied only to cases where the third-party defendant is brought in on an allegation of liability to the defendants. The rule does not apply where a third-party defendant is impleaded on the ground of direct liability to the plaintiff, in which case no amendment of the plaintiff's complaint is necessary. (Atlantic Coast Line R. Co. vs. United States Fidelity & Guaranty Co., 52 F. Supp. 177 [1943]; Lommer vs. Scranton-Spring Brook Water Service Co., 4 F.R.D. 104 [1944.] 2. ID.; ID.; WHEN AMENDMENT OF COMPLAINT TO ASSERT LIABILITY A MATTER OF FORM. Where the liability of the third-party defendant was already asserted in the third-party complaint, the amendment of the complaint to assert such liability would merely be a matter of form, to insist on which would not be in keeping with the liberal spirit of the Rules of Court. (I Moran, Comments on the Rules of Court, 205 [1957].) 3. COMMON CARRIERS; LIABILITY FOR INJURY TO PASSENGERS WHERE DRIVERS OF BOTH VEHICLES ARE NEGLIGENT. In case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages. (Gutierrez vs. Gutierrez, 56 Phil., 177.)

REGALA, J p: Seven persons were killed and thirteen others were injured in Bangar, La Union, on February 16, 1958, when a passenger bus on which they were riding caught fire after hitting a post and crashing against a tree. The bus, owned by petitioner and driven by Hermenegildo Aquino, came from San Fernando, La Union and was on its way to Candon, Ilocos Sur. It appears that, as the bus neared the gate of the Gabaldon school building in the municipality of Bangar, another passenger bus owned by Patricio Hufana and driven by Gregorio Hufana tried to overtake it but that instead of giving way, Aquino increased the speed of his bus and raced with the overtaking bus. Aquino lost control of his bus as a result of which it hit a post, crashed against a tree and then burst into flames. Among those who perished were Timoteo Mapanao, Francisca Lacsamana , Narcisa Mendoza and Gregorio Sibayan, whose heirs sued petitioner and the latter's driver, Hermenegildo Aquino, for damages for breach of contract of carriage. Carolina Sabado, one of those injured, also sued petitioner and the driver for damages. The complaints were filed in the Court of First Instance of La Union. In their answer, petitioner and her driver blamed respondent Gregorio Hufana for the accident. With leave of court, they filed third party complaints against Hufana and the latter's employer, Patricio Hufana. After trial, the court found that the accident was due to the concurrent negligence of the drivers of the two buses and

DECISION

held both, together with their respective employers, jointly and severally liable for damages. The dispositive portion of its decision reads: "IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered, declaring the plaintiffs entitled to damages to be paid jointly and severally by the defendants and thirdparty defendants as follows: (1) For plaintiff Juliana C. Vda. de Mapanao for the death of her son Timotheo Mapanao, the sum of P5,000.00 for actual damages, P1,000.00 as moral damages and P250.00 as attorney's fees; (2) For plaintiff Leon Lacsamana for the death of his daughter Francisca Lacsamana, the sum of P4,000.00 as actual damages, P1,000.00 as moral damages and P250.00 as attorney's fees; (3) For plaintiff Juan Mendoza and Magdalena Mendoza for the death of their mother Narcisa Mendoza, the sum of P4,000.00 as actual damages, P1,000.00 for moral damages and P250.00 as attorney's fees. (4) For plaintiffs Agustina Sabado, Quintin Sibayan, Julita Sibayan,

Primitivo Sibayan and Avelina Sibayan, the sum of P4,000.00 for actual damages, P1,500.00 for moral damages and P250.00 as attorney's fees. (5) For the injured passenger Carolina Sabado, P649.00 for actual damages, P1,500.00 for moral damages and P250.00 for attorney's fees. All such amounts awarded as damages shall bear interest at the legal rate of six per cent (6) per annum from the date of this decision until the same shall have been duly paid in full. Defendants and third-party defendants are further ordered to pay proportionate costs." Both petitioner and her driver and the respondents herein appealed to the Court of Appeals. While affirming the finding that the accident was due to the concurrent negligence of the drivers of both the Viluan and the Hufana buses, the Court of Appeals differed with the trial court in the assessment of liabilities of the parties. In its view only petitioner Francisca Viluan, as operator of the bus, is liable for breach of contract of carriage. The driver, Hermenegildo Aquino cannot be made jointly and severally liable with petitioner because he is merely the latter's employee and is in no way a party to the contract of carriage. The court added, however "Hermenegildo Aquino is not entirely free from liability. He may be

held liable, criminally and civilly, under the Revised Penal Code (Articles 100 and 103), but not in a civil suit for damages predicated upon a breach of contract, such as this one (Aguas, et al. vs. Vargas, et al., CA G.R. No. 27161-R, January 22, 1963). furthermore, the common carrier, Francisca Viluan, could recover from Aquino any damages that she might have suffered by reason of the latter's negligence." Neither may respondents Patricio Hufana and Gregorio Hufana be held liable in the opinion of the appellate court because the plaintiffs did not amend complaints in the main action so as to assert a claim against respondents as third party defendants. The appellate court likewise disallowed the award of moral damages for P1,000.00 to Carolina Sabado, there being no showing that the common carrier was guilty of fraud or bad faith in the performance of her obligation. Accordingly, it rendered judgment as follows: "IN VIEW OF ALL THE FOREGOING, we hereby find defendant-appellant Francisca Viluan solely liable to the plaintiffs-appellees for the damages and attorney's fees awarded to them by the court below and further declare null and void the lower court's award of moral damages in the amount of P1,000.00 in favor of plaintiff

Carolina Sabado. Thus modified, the judgment appealed from is affirmed in all other respects, with costs in this instance against defendant-appellant Francisca Viluan." From this judgment petitioner brought this appeal. In brief, her position is that since the proximate cause of the accident was found to be the concurrent negligence of the drivers of the two buses, then she and respondents Patricio and Gregorio Hufana should have been held equally liable to the plaintiffs in the damage suits. The fact that the respondents were not sued as principal defendants but were brought into the cases as third party defendants should not preclude a finding of their liability. We agree with petitioner's contention. To begin with, the Court of Appeal's ruling is based on section 5 of Rule 12 of the former Rules of Court,1 which was adopted from Rule 14-A of the Federal Rules of Civil Procedure. While the latter provision has indeed been helpful to preclude a judgment in favor of a plaintiff and against a third party defendant where the plaintiff has not amended his complaint to assert a claim against a third party defendant,2 yet, as held in subsequent decisions, this rule applies only to cases where the third party defendant is brought in on an allegation of liability to the defendants. The rule does not apply where a third party defendant is impleaded on the ground of direct liability to the plaintiffs, in which case no amendment of the plaintiff's complaint is necessary.3 As explained in the Atlantic Coast Line R. Co. vs. U.S. Fidelity and Guaranty Co., 52 F. Supp. 177 (1943):

"From the sources of Rule 14 and the decisions herein cited, it is clear that this rule, like the admiralty rule, 'covers two distinct subjects, the addition of parties defendant to the main cause of action, and the bringing in of a third party for a defendant's remedy over.'. . . "If the third party complaint alleged facts showing a third party's direct liability to plaintiff on the claim set out in plaintiff's petition, then third party "shall" make his defenses as provided in Rule 12 and his counterclaims against plaintiff as provided in Rule 13. In the case of alleged direct liability, no amendment is necessary or required. The subject-matter of the claim is contained in plaintiff's complaint, the ground of third party's liability on that claim is alleged in third party complaint, and third party's defense to his alleged liability on the claim is set up in his answer to plaintiff's complaint. At that point and without amendment, the plaintiff and third party are at issue as to their rights respecting the claim. "The provision in the rule that, "The third-party defendant may assert any defense which the third-party plaintiff may assert to the plaintiff's claim,' applies to the other subject,

namely, the alleged liability of third party defendant. The next sentence in the rule, "The third-party defendant is bound by the adjudication of the third- party plaintiff's liability to the plaintiff, as well as of his own to the plaintiff or to the third-party plaintiff,' applies to both subjects. If third party is brought in as liable only to defendant and judgment is rendered adjudicating plaintiff's right to recover against defendant and defendant's right to recover against third party, he is bound by both adjudications. That part of the sentence refers to the second subject. If third party is brought in as liable to plaintiff, then third party is bound by the adjudication as between him and plaintiff. That refers to the first subject. If third party is brought in as liable to plaintiff and also over to defendant, then third party is bound by both adjudications. The next sentence in the rule, `The plaintiff may amend his pleadings to assert against the third-party defendant any claim which the plaintiff might have asserted against the thirdparty defendant had he been joined originally as a defendant,' refers to the second subject, that is, to bringing in third party as liable to defendant only, and does not apply to the alleged liability of third party directly to plaintiff."

In this case the third party complaints filed by petitioner and her driver charged respondents with direct liability to the plaintiffs. It was contended that the accident was due "to the fault, negligence, carelessness and imprudence of the third party defendant Gregorio Hufana" and, in petitioner's motion for leave to file a third party complaint, it was stated that "Patricio Hufana and Gregorio Hufana were not made parties to this action, although the defendants are entitled to indemnify and/or subrogation against them in respect of plaintiff's claim." It should make no difference therefore whether the respondents were brought in as principal defendants or as third-party defendants. As Moran points out, since the liability of the third-party defendant is already asserted in the third-party complaint, the amendment of the complaint to assert such liability is merely a matter of form, to insist on which would not be in keeping with the liberal spirit of the Rules of Court.4 Nor should it make any difference that the liability of petitioner springs from contract while that of respondents arises from quasi-delict. As early as 1931, we already ruled in Gutierrez vs. Gutierrez, 56 Phil., 177,5 that in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages. Some members of the Court, though are of the view that under the circumstances they are liable on quasi-delict.

Wherefore, the decision appealed from is hereby modified in the sense that petitioner as well as respondents Patricio Hufana and Gregorio Hufana are jointly and severally liable for the damages awarded by the trial court. The disallowance of moral damages in the amount of P1,000.00 is correct and should be affirmed. No costs. Bengzon, C.J., Bautista, Angelo, Concepcion, Dizon, Makalintal, Zaldivar and Sanchez, JJ., concur. Reyes, J.B.L. and Barrera, JJ., took no part. Footnotes 1. This provision, which is not reproduced in the new Rules of Court, is as follows:

Complaint amendment. The plaintiff may amend his pleadings to assert against the third-party defendant any claim which the plaintiff might have asserted against the third-party defendant had he been joined originally as a defendant.

2. See e.g., Thompson vs. Cranston, Brown vs. Cranston, 2 F.R.D. 270 (1942) 3. Atlantic Coast Line R. Co. vs. United States Fidelity & Guaranty Co., 52 F. Supp. 177 (1943); Lommer vs. Scranton-Spring Brook Water Service Co., 4 F.R.D. 104 (1944).

4. 1 Moran, Comments on the Rules of Court, 205 (1957). 5. See also Paulan vs. Sarabia, G.R. No. L-10542, July 31, 1958.