G.R. No.
L-26379      December 27, 1969 submit to a restriction of its sovereign rights. There may thus be a
WILLIAM C. REAGAN, ETC., petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
FERNANDO, J.:
A question novel in character, the answer to which has far-reaching
implications, is raised by petitioner William C. Reagan, at one time a
civilian employee of an American corporation providing technical assistance
to the United States Air Force in the Philippines. He would dispute the
payment of the income tax assessed on him by respondent Commissioner
of Internal Revenue on an amount realized by him on a sale of his
automobile to a member of the United States Marine Corps, the transaction
having taken place at the Clark Field Air Base at Pampanga. It is his
contention, seriously and earnestly expressed, that in legal contemplation
the sale was made outside Philippine territory and therefore beyond our
jurisdictional power to tax.
Such a plea, far-fetched and implausible, on its face betraying no kinship
with reality, he would justify by invoking, mistakenly as will hereafter be
more fully shown an observation to that effect in a 1951 opinion, 1
petitioner ignoring that such utterance was made purely as a flourish of
rhetoric and by way of emphasizing the decision reached, that the trading
firm as purchaser of army goods must respond for the sales taxes due
from an importer, as the American armed forces being exempt could not
be taxed as such under the National Internal Revenue Code.2 Such an
assumption, inspired by the commendable aim to render unavailing any
attempt at tax evasion on the part of such vendee, found expression anew
in a 1962 decision,3 coupled with the reminder however, to render the
truth unmistakable, that "the areas covered by the United States Military
Bases are not foreign territories both in the political and geographical
sense."
As thus clarified, it is manifest that such a view amounts at most to a legal
fiction and is moreover obiter. It certainly cannot control the resolution of
the specific question that confronts us. We declare our stand in an
unequivocal manner. The sale having taken place on what indisputably is
Philippine territory, petitioner's liability for the income tax due as a result
thereof was unavoidable. As the Court of Tax Appeals reached a similar
conclusion, we sustain its decision now before us on appeal.
In the decision appealed from, the Court of Tax Appeals, after stating the
nature of the case, started the recital of facts thus: "It appears that
petitioner, a citizen of the United States and an employee of Bendix Radio,
Division of Bendix Aviation Corporation, which provides technical
assistance to the United States Air Force, was assigned at Clark Air Base,
Philippines, on or about July 7, 1959 ... . Nine (9) months thereafter and
before his tour of duty expired, petitioner imported on April 22, 1960 a tax-
free 1960 Cadillac car with accessories valued at $6,443.83, including
freight, insurance and other charges."4 Then came the following: "On July
11, 1960, more than two (2) months after the 1960 Cadillac car was
imported into the Philippines, petitioner requested the Base Commander,
Clark Air Base, for a permit to sell the car, which was granted provided
that the sale was made to a member of the United States Armed Forces or
a citizen of the United States employed in the U.S. military bases in the
Philippines. On the same date, July 11, 1960, petitioner sold his car for
$6,600.00 to a certain Willie Johnson, Jr. (Private first class), United States
Marine Corps, Sangley Point, Cavite, Philippines, as shown by a Bill of
Sale . . . executed at Clark Air Base. On the same date, Pfc. Willie (William)
Johnson, Jr. sold the car to Fred Meneses for P32,000.00 as evidenced by
a deed of sale executed in Manila."5
As a result of the transaction thus made, respondent Commissioner of
Internal Revenue, after deducting the landed cost of the car as well as the
personal exemption to which petitioner was entitled, fixed as his net
taxable income arising from such transaction the amount of P17,912.34,
rendering him liable for income tax in the sum of P2,979.00. After paying
the sum, he sought a refund from respondent claiming that he was
exempt, but pending action on his request for refund, he filed the case
with the Court of Tax Appeals seeking recovery of the sum of P2,979.00
plus the legal rate of interest.
As noted in the appealed decision: "The only issue submitted for our
resolution is whether or not the said income tax of P2,979.00 was legally
collected by respondent for petitioner."6 After discussing the legal issues
raised, primarily the contention that the Clark Air Base "in legal
contemplation, is a base outside the Philippines" the sale therefore having
taken place on "foreign soil", the Court of Tax Appeals found nothing
objectionable in the assessment and thereafter the payment of P2,979.00
as income tax and denied the refund on the same. Hence, this appeal
predicated on a legal theory we cannot accept. Petitioner cannot make out
a case for reversal.
1. Resort to fundamentals is unavoidable to place things in their proper
perspective, petitioner apparently feeling justified in his refusal to defer to
basic postulates of constitutional and international law, induced no doubt
by the weight he would accord to the observation made by this Court in
the two opinions earlier referred to. To repeat, scant comfort, if at all is to
be derived from such an obiter dictum, one which is likewise far from
reflecting the fact as it is.
Nothing is better settled than that the Philippines being independent and
sovereign, its authority may be exercised over its entire domain. There is
no portion thereof that is beyond its power. Within its limits, its decrees
are supreme, its commands paramount. Its laws govern therein, and
everyone to whom it applies must submit to its terms. That is the extent of
its jurisdiction, both territorial and personal. Necessarily, likewise, it has to
be exclusive. If it were not thus, there is a diminution of its sovereignty.
It is to be admitted that any state may, by its consent, express or implied,
curtailment of what otherwise is a power plenary in character. That is the
concept of sovereignty as auto-limitation, which, in the succinct language
of Jellinek, "is the property of a state-force due to which it has the
exclusive capacity of legal self-determination and self-restriction." 7 A state
then, if it chooses to, may refrain from the exercise of what otherwise is
illimitable competence.
Its laws may as to some persons found within its territory no longer
control. Nor does the matter end there. It is not precluded from allowing
another power to participate in the exercise of jurisdictional right over
certain portions of its territory. If it does so, it by no means follows that
such areas become impressed with an alien character. They retain their
status as native soil. They are still subject to its authority. Its jurisdiction
may be diminished, but it does not disappear. So it is with the bases under
lease to the American armed forces by virtue of the military bases
agreement of 1947. They are not and cannot be foreign territory.
Decisions coming from petitioner's native land, penned by jurists of repute,
speak to that effect with impressive unanimity. We start with the citation
from Chief Justice Marshall, announced in the leading case of Schooner
Exchange v. M'Faddon, an 1812 decision: "The jurisdiction of the nation
within its own territory is necessarily exclusive and absolute. It is
susceptible of no limitation not imposed by itself. Any restriction upon it,
deriving validity from an external source, would imply a diminution of its
sovereignty to the extent of the restriction, and an investment of that
sovereignty to the same extent in that power which could impose such
restriction." After which came this paragraph: "All exceptions, therefore, to
the full and complete power of a nation within its own territories, must be
traced up to the consent of the nation itself. They can flow from no other
legitimate source."
Chief Justice Taney, in an 1857 decision, affirmed the fundamental
principle of everyone within the territorial domain of a state being subject
to its commands: "For undoubtedly every person who is found within the
limits of a government, whether the temporary purposes or as a resident,
is bound by its laws." It is no exaggeration then for Justice Brewer to
stress that the United States government "is one having jurisdiction over
every foot of soil within its territory, and acting directly upon each
[individual found therein]; . . ."
Not too long ago, there was a reiteration of such a view, this time from the
pen of Justice Van Devanter. Thus: "It now is settled in the United States
and recognized elsewhere that the territory subject to its jurisdiction
includes the land areas under its dominion and control the ports, harbors,
bays, and other in closed arms of the sea along its coast, and a marginal
belt of the sea extending from the coast line outward a marine league, or 3
geographic miles."11 He could cite moreover, in addition to many American
decisions, such eminent treatise-writers as Kent, Moore, Hyde, Wilson,
Westlake, Wheaton and Oppenheim.
As a matter of fact, the eminent commentator Hyde in his three-volume
work on International Law, as interpreted and applied by the United
States, made clear that not even the embassy premises of a foreign power
are to be considered outside the territorial domain of the host state. Thus:
"The ground occupied by an embassy is not in fact the territory of the
foreign State to which the premises belong through possession or
ownership. The lawfulness or unlawfulness of acts there committed is
determined by the territorial sovereign. If an attache commits an offense
within the precincts of an embassy, his immunity from prosecution is not
because he has not violated the local law, but rather for the reason that
the individual is exempt from prosecution. If a person not so exempt, or
whose immunity is waived, similarly commits a crime therein, the territorial
sovereign, if it secures custody of the offender, may subject him to
prosecution, even though its criminal code normally does not contemplate
the punishment of one who commits an offense outside of the national
domain. It is not believed, therefore, that an ambassador himself
possesses the right to exercise jurisdiction, contrary to the will of the State
of his sojourn, even within his embassy with respect to acts there
committed. Nor is there apparent at the present time any tendency on the
part of States to acquiesce in his exercise of it."12
2. In the light of the above, the first and crucial error imputed to the Court
of Tax Appeals to the effect that it should have held that the Clark Air
Force is foreign soil or territory for purposes of income tax legislation is
clearly without support in law. As thus correctly viewed, petitioner's hope
for the reversal of the decision completely fades away. There is nothing in
the Military Bases Agreement that lends support to such an assertion. It
has not become foreign soil or territory. This country's jurisdictional rights
therein, certainly not excluding the power to tax, have been preserved. As
to certain tax matters, an appropriate exemption was provided for.
Petitioner could not have been unaware that to maintain the contrary
would be to defy reality and would be an affront to the law. While his first
assigned error is thus worded, he would seek to impart plausibility to his
claim by the ostensible invocation of the exemption clause in the
Agreement by virtue of which a "national of the United States serving in or
employed in the Philippines in connection with the construction,
maintenance, operation or defense of the bases and residing in the
Philippines only by reason of such employment" is not to be taxed on his
income unless "derived from Philippine source or sources other than the
United States sources."13 The reliance, to repeat, is more apparent than
real for as noted at the outset of this opinion, petitioner places more faith
not on the language of the provision on exemption but on a sentiment
given expression in a 1951 opinion of this Court, which would be made to
yield such an unwarranted interpretation at war with the controlling
constitutional and international law principles. At any rate, even if such a
contention were more adequately pressed and insisted upon, it is on its
face devoid of merit as the source clearly was Philippine.
In Saura Import and Export Co. v. Meer,14 the case above referred to, this
Court affirmed a decision rendered about seven months previously, 15
holding liable as an importer, within the contemplation of the National
Internal Revenue Code provision, the trading firm that purchased army
goods from a United States government agency in the Philippines. It is
easily understandable why. If it were not thus, tax evasion would have
been facilitated. The United States forces that brought in such equipment
later disposed of as surplus, when no longer needed for military purposes,
was beyond the reach of our tax statutes.
Justice Tuason, who spoke for the Court, adhered to such a rationale,
quoting extensively from the earlier opinion. He could have stopped there.
He chose not to do so. The transaction having occurred in 1946, not so
long after the liberation of the Philippines, he proceeded to discuss the role
of the American military contingent in the Philippines as a belligerent
occupant. In the course of such a dissertion, drawing on his well-known
gift for rhetoric and cognizant that he was making an as if statement, he
did say: "While in army bases or installations within the Philippines those
goods were in contemplation of law on foreign soil."
It is thus evident that the first, and thereafter the controlling, decision as
to the liability for sales taxes as an importer by the purchaser, could have
been reached without any need for such expression as that given
utterance by Justice Tuason. Its value then as an authoritative doctrine
cannot be as much as petitioner would mistakenly attach to it. It was
clearly obiter not being necessary for the resolution of the issue before this
Court.16 It was an opinion "uttered by the way."17 It could not then be
controlling on the question before us now, the liability of the petitioner for
income tax which, as announced at the opening of this opinion, is squarely
raised for the first time.18
On this point, Chief Justice Marshall could again be listened to with profit.
Thus: "It is a maxim, not to be disregarded, that general expressions, in
every opinion, are to be taken in connection with the case in which those
expressions are used. If they go beyond the case, they may be respected,
but ought not to control the judgment in a subsequent suit when the very
point is presented for decision."19
Nor did the fact that such utterance of Justice Tuason was cited in Co Po
v. Collector of Internal Revenue,20 a 1962 decision relied upon by
petitioner, put a different complexion on the matter. Again, it was by way
of pure embellishment, there being no need to repeat it, to reach the
conclusion that it was the purchaser of army goods, this time from military
bases, that must respond for the advance sales taxes as importer. Again,
the purpose that animated the reiteration of such a view was clearly to
emphasize that through the employment of such a fiction, tax evasion is
precluded. What is more, how far divorced from the truth was such
statement was emphasized by Justice Barrera, who penned the Co Po
opinion, thus: "It is true that the areas covered by the United States
Military Bases are not foreign territories both in the political and
geographical sense."21
Justice Tuason moreover made explicit that rather than corresponding with
reality, what was said by him was in the way of a legal fiction. Note his
stress on "in contemplation of law." To lend further support to a conclusion
already announced, being at that a confirmation of what had been arrived
at in the earlier case, distinguished by its sound appreciation of the issue
then before this Court and to preclude any tax evasion, an observation
certainly not to be taken literally was thus given utterance.
This is not to say that it should have been ignored altogether afterwards.
It could be utilized again, as it undoubtedly was, especially so for the
purpose intended, namely to stigmatize as without support in law any
attempt on the part of a taxpayer to escape an obligation incumbent upon
him. So it was quoted with that end in view in the Co Po case. It certainly
does not justify any effort to render futile the collection of a tax legally
due, as here. That was farthest from the thought of Justice Tuason.
What is more, the statement on its face is, to repeat, a legal fiction. This is
not to discount the uses of a fictio juris in the science of the law. It was
Cardozo who pointed out its value as a device "to advance the ends of
justice" although at times it could be "clumsy" and even "offensive".22
Certainly, then, while far from objectionable as thus enunciated, this
observation of Justice Tuason could be misused or misconstrued in a
clumsy manner to reach an offensive result. To repeat, properly used, a
legal fiction could be relied upon by the law, as Frankfurter noted, in the
pursuit of legitimate ends.23 Petitioner then would be well-advised to take
to heart such counsel of care and circumspection before invoking not a
legal fiction that would avoid a mockery of the law by avoiding tax evasion
but what clearly is a misinterpretation thereof, leading to results that
would have shocked its originator.
The conclusion is thus irresistible that the crucial error assigned, the only
one that calls for discussion to the effect that for income tax purposes the
Clark Air Force Base is outside Philippine territory, is utterly without merit.
So we have said earlier.
3. To impute then to the statement of Justice Tuason the meaning that
petitioner would fasten on it is, to paraphrase Frankfurter, to be guilty of
succumbing to the vice of literalness. To so conclude is, whether by design
or inadvertence, to misread it. It certainly is not susceptible of the
mischievous consequences now sought to be fastened on it by petitioner.
That it would be fraught with such peril to the enforcement of our tax
statutes on the military bases under lease to the American armed forces
could not have been within the contemplation of Justice Tuason. To so
attribute such a bizarre consequence is to be guilty of a grave disservice to
the memory of a great jurist. For his real and genuine sentiment on the
matter in consonance with the imperative mandate of controlling
constitutional and international law concepts was categorically set forth by
him, not as an obiter but as the rationale of the decision, in People v.
Acierto24 thus: "By the [Military Bases] Agreement, it should be noted, the
Philippine Government merely consents that the United States exercise
jurisdiction in certain cases. The consent was given purely as a matter of
comity, courtesy, or expediency over the bases as part of the Philippine
territory or divested itself completely of jurisdiction over offenses
committed therein."
Nor did he stop there. He did stress further the full extent of our territorial
jurisdiction in words that do not admit of doubt. Thus: "This provision is
not and can not on principle or authority be construed as a limitation upon
the rights of the Philippine Government. If anything, it is an emphatic
recognition and reaffirmation of Philippine sovereignty over the bases and
of the truth that all jurisdictional rights granted to the United States and
not exercised by the latter are reserved by the Philippines for itself."25
It is in the same spirit that we approach the specific question confronting
us in this litigation. We hold, as announced at the outset, that petitioner
was liable for the income tax arising from a sale of his automobile in the
Clark Field Air Base, which clearly is and cannot otherwise be other than,
within our territorial jurisdiction to tax.
4. With the mist thus lifted from the situation as it truly presents itself,
there is nothing that stands in the way of an affirmance of the Court of
Tax Appeals decision. No useful purpose would be served by discussing the
other assigned errors, petitioner himself being fully aware that if the Clark
Air Force Base is to be considered, as it ought to be and as it is, Philippine
soil or territory, his claim for exemption from the income tax due was
distinguished only by its futility.
There is further satisfaction in finding ourselves unable to indulge
petitioner in his plea for reversal. We thus manifest fealty to a
pronouncement made time and time again that the law does not look with
favor on tax exemptions and that he who would seek to be thus privileged
must justify it by words too plain to be mistaken and too categorical to be
misinterpreted.26 Petitioner had not done so. Petitioner cannot do so.
WHEREFORE, the decision of the Court of Tax Appeals of May 12, 1966
denying the refund of P2,979.00 as the income tax paid by petitioner is
affirmed. With costs against petitioner.
G.R. No. L-30671 November 28, 1973
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. GUILLERMO P. VILLASOR, as Judge of the Court of First
Instance of Cebu, Branch I, THE PROVINCIAL SHERIFF OF RIZAL,
THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE CITY
OF MANILA, THE CLERK OF COURT, Court of First Instance of
Cebu, P. J. KIENER CO., LTD., GAVINO UNCHUAN, AND
INTERNATIONAL CONSTRUCTION CORPORATION, respondents.
 FERNANDO, J.:
The Republic of the Philippines in this certiorari and prohibition proceeding
challenges the validity of an order issued by respondent Judge Guillermo P.
Villasor, then of the Court of First Instance of Cebu, Branch I, 1 declaring a
decision final and executory and of an alias writ of execution directed
against the funds of the Armed Forces of the Philippines subsequently
issued in pursuance thereof, the alleged ground being excess of
jurisdiction, or at the very least, grave abuse of discretion. As thus simply
and tersely put, with the facts being undisputed and the principle of law
that calls for application indisputable, the outcome is predictable. The
Republic of the Philippines is entitled to the writs prayed for. Respondent
Judge ought not to have acted thus. The order thus impugned and the
alias writ of execution must be nullified.
In the petition filed by the Republic of the Philippines on July 7, 1969, a
summary of facts was set forth thus: "7. On July 3, 1961, a decision was
rendered in Special Proceedings No. 2156-R in favor of respondents P. J.
Kiener Co., Ltd., Gavino Unchuan, and International Construction
Corporation, and against the petitioner herein, confirming the arbitration
award in the amount of P1,712,396.40, subject of Special Proceedings. 8.
On June 24, 1969, respondent Honorable Guillermo P. Villasor, issued an
Order declaring the aforestated decision of July 3, 1961 final and
executory, directing the Sheriffs of Rizal Province, Quezon City [as well as]
Manila to execute the said decision. 9. Pursuant to the said Order dated
June 24, 1969, the corresponding Alias Writ of Execution [was issued]
dated June 26, 1969, .... 10. On the strength of the afore-mentioned Alias
Writ of Execution dated June 26, 1969, the Provincial Sheriff of Rizal
(respondent herein) served notices of garnishment dated June 28, 1969
with several Banks, specially on the "monies due the Armed Forces of the
Philippines in the form of deposits sufficient to cover the amount
mentioned in the said Writ of Execution"; the Philippine Veterans Bank
received the same notice of garnishment on June 30, 1969 .... 11. The
funds of the Armed Forces of the Philippines on deposit with the Banks,
particularly, with the Philippine Veterans Bank and the Philippine National
Bank [or] their branches are public funds duly appropriated and allocated
for the payment of pensions of retirees, pay and allowances of military and
civilian personnel and for maintenance and operations of the Armed Forces
of the Philippines, as per Certification dated July 3, 1969 by the AFP
Controller,..." 2. The paragraph immediately succeeding in such petition
then alleged: "12. Respondent Judge, Honorable Guillermo P. Villasor,
acted in excess of jurisdiction [or] with grave abuse of discretion
amounting to lack of jurisdiction in granting the issuance of an alias writ of
execution against the properties of the Armed Forces of the Philippines,
hence, the Alias Writ of Execution and notices of garnishment issued
pursuant thereto are null and void." 3 In the answer filed by respondents,
through counsel Andres T. Velarde and Marcelo B. Fernan, the facts set
forth were admitted with the only qualification being that the total award
was in the amount of P2,372,331.40.
The Republic of the Philippines, as mentioned at the outset, did right in
filing this certiorari and prohibition proceeding. What was done by
respondent Judge is not in conformity with the dictates of the Constitution.
. National Resettlement and Rehabilitation Administration (NARRA), a tract
It is a fundamental postulate of constitutionalism flowing from the juristic
concept of sovereignty that the state as well as its government is immune
from suit unless it gives its consent. It is readily understandable why it
must be so. In the classic formulation of Holmes: "A sovereign is exempt
from suit, not because of any formal conception or obsolete theory, but on
the logical and practical ground that there can be no legal right as against
the authority that makes the law on which the right depends." 5
Sociological jurisprudence supplies an answer not dissimilar. So it was
indicated in a recent decision, Providence Washington Insurance Co. v.
Republic of the Philippines, 6 with its affirmation that "a continued
adherence to the doctrine of non-suability is not to be deplored for as
against the inconvenience that may be caused private parties, the loss of
governmental efficiency and the obstacle to the performance of its
multifarious functions are far greater if such a fundamental principle were
abandoned and the availability of judicial remedy were not thus restricted.
With the well known propensity on the part of our people to go to court, at
the least provocation, the loss of time and energy required to defend
against law suits, in the absence of such a basic principle that constitutes
such an effective obstacle, could very well be imagined." 7
This fundamental postulate underlying the 1935 Constitution is now made
explicit in the revised charter. It is therein expressly provided: "The State
may not be sued without its consent." 8 A corollary, both dictated by logic
and sound sense from a basic concept is that public funds cannot be the
object of a garnishment proceeding even if the consent to be sued had
been previously granted and the state liability adjudged. Thus in the recent
case of Commissioner of Public Highways v. San Diego, 9 such a well-
settled doctrine was restated in the opinion of Justice Teehankee: "The
universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant's action 'only
up to the completion of proceedings anterior to the stage of execution' and
that the power of the Courts ends when the judgment is rendered, since
government funds and properties may not be seized under writs of
execution or garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must be
covered by the corresponding appropriation as required by law. The
functions and public services rendered by the State cannot be allowed to
be paralyzed or disrupted by the diversion of public funds from their
legitimate and specific objects, as appropriated by law." 10 Such a principle
applies even to an attempted garnishment of a salary that had accrued in
favor of an employee. Director of Commerce and Industry v. Concepcion ,
11
speaks to that effect. Justice Malcolm as ponente left no doubt on that
score. Thus: "A rule which has never been seriously questioned, is that
money in the hands of public officers, although it may be due government
employees, is not liable to the creditors of these employees in the process
of garnishment. One reason is, that the State, by virtue of its sovereignty,
may not be sued in its own courts except by express authorization by the
Legislature, and to subject its officers to garnishment would be to permit
indirectly what is prohibited directly. Another reason is that moneys sought
to be garnished, as long as they remain in the hands of the disbursing
officer of the Government, belong to the latter, although the defendant in
garnishment may be entitled to a specific portion thereof. And still another
reason which covers both of the foregoing is that every consideration of
public policy forbids it." 12
In the light of the above, it is made abundantly clear why the Republic of
the Philippines could rightfully allege a legitimate grievance.
WHEREFORE, the writs of certiorari and prohibition are granted, nullifying
and setting aside both the order of June 24, 1969 declaring executory the
decision of July 3, 1961 as well as the alias writ of execution issued
thereunder. The preliminary injunction issued by this Court on July 12,
1969 is hereby made permanent.
G.R. No. 70853 March 12, 1987
REPUBLIC OF THE PHILIPPINES, petitioner-appellee,
vs.
PABLO FELICIANO and INTERMEDIATE APPELLATE COURT,
respondents-appellants.
 YAP, J.:
Petitioner seeks the review of the decision of the Intermediate Appellate
Court dated April 30, 1985 reversing the order of the Court of First
Instance of Camarines Sur, Branch VI, dated August 21, 1980, which
dismissed the complaint of respondent Pablo Feliciano for recovery of
ownership and possession of a parcel of land on the ground of non-
suability of the State.
The background of the present controversy may be briefly summarized as
follows:
On January 22, 1970, respondent Feliciano filed a complaint with the then
Court of First Instance of Camarines Sur against the Republic of the
Philippines, represented by the Land Authority, for the recovery of
ownership and possession of a parcel of land, consisting of four (4) lots
with an aggregate area of 1,364.4177 hectares, situated in the Barrio of
Salvacion, Municipality of Tinambac, Camarines Sur. Plaintiff alleged that
he bought the property in question from Victor Gardiola by virtue of a
Contract of Sale dated May 31, 1952, followed by a Deed of Absolute Sale
on October 30, 1954; that Gardiola had acquired the property by purchase
from the heirs of Francisco Abrazado whose title to the said property was
evidenced by an informacion posesoria that upon plaintiff's purchase of the
property, he took actual possession of the same, introduced various
improvements therein and caused it to be surveyed in July 1952, which
survey was approved by the Director of Lands on October 24, 1954; that
on November 1, 1954, President Ramon Magsaysay issued Proclamation
No. 90 reserving for settlement purposes, under the administration of the
of land situated in the Municipalities of Tinambac and Siruma, Camarines
Sur, after which the NARRA and its successor agency, the Land Authority,
started sub-dividing and distributing the land to the settlers; that the
property in question, while located within the reservation established under
Proclamation No. 90, was the private property of plaintiff and should
therefore be excluded therefrom. Plaintiff prayed that he be declared the
rightful and true owner of the property in question consisting of
1,364.4177 hectares; that his title of ownership based on informacion
posesoria of his predecessor-in-interest be declared legal valid and
subsisting and that defendant be ordered to cancel and nullify all awards
to the settlers.
The defendant, represented by the Land Authority, filed an answer, raising
by way of affirmative defenses lack of sufficient cause of action and
prescription.
On August 29, 1970, the trial court, through Judge Rafael S. Sison,
rendered a decision declaring Lot No. 1, with an area of 701.9064
hectares, to be the private property of the plaintiff, "being covered by a
possessory information title in the name of his predecessor-in-interest" and
declaring said lot excluded from the NARRA settlement reservation. The
court declared the rest of the property claimed by plaintiff, i.e. Lots 2, 3
and 4, reverted to the public domain.
A motion to intervene and to set aside the decision of August 29, 1970 was
filed by eighty-six (86) settlers, together with the barrio council of Pag-
asay, alleging among other things that intervenors had been in possession
of the land in question for more than twenty (20) years under claim of
ownership.
On January 25, 1971, the court a quo reconsidered its decision, reopened
the case and directed the intervenors to file their corresponding pleadings
and present their evidence; all evidence already presented were to remain
but plaintiff, as well as the Republic of the Philippines, could present
additional evidence if they so desire. The plaintiff presented additional
evidence on July 30, 1971, and the case was set for hearing for the
reception of intervenors' evidence on August 30 and August 31, 1971.
On August 30, 1971, the date set for the presentation of the evidence for
intervenors, the latter did not appear but submitted a motion for
postponement and resetting of the hearing on the next day, August 31,
1971. The trial court denied the motion for postponement and allowed
plaintiff to offer his evidence "en ausencia," after which the case would be
deemed submitted for decision. On the following day, August 31, 1971,
Judge Sison rendered a decision reiterating his decision of August 29,
1970.
A motion for reconsideration was immediately filed by the intervenors. But
before this motion was acted upon, plaintiff filed a motion for execution,
dated November 18, 1971. On December 10, 1971, the lower court, this
time through Judge Miguel Navarro, issued an order denying the motion
for execution and setting aside the order denying intervenors' motion for
postponement. The case was reopened to allow intervenors to present
their evidence. Unable to secure a reconsideration of Judge Navarro's
order, the plaintiff went to the Intermediate Appellate Court on a petition
for certiorari. Said petition was, however, denied by the Intermediate
Appellate Court, and petitioners brought the matter to this Court in G.R.
No. 36163, which was denied on May 3, 1973 Consequently, the case was
remanded to the court a quo for further proceedings.
On August 31, 1970, intervenors filed a motion to dismiss, principally on
the ground that the Republic of the Philippines cannot be sued without its
consent and hence the action cannot prosper. The motion was opposed by
the plaintiff.
On August 21, 1980, the trial court, through Judge Esteban Lising, issued
the questioned order dismissing the case for lack of jurisdiction.
Respondent moved for reconsideration, while the Solicitor General, on
behalf of the Republic of the Philippines filed its opposition thereto,
maintaining that the dismissal was proper on the ground of non-suability of
the State and also on the ground that the existence and/or authenticity of
the purported possessory information title of the respondents'
predecessor-in-interest had not been demonstrated and that at any rate,
the same is not evidence of title, or if it is, its efficacy has been lost by
prescription and laches.
Upon denial of the motion for reconsideration, plaintiff again went to the
Intermediate Appellate Court on petition for certiorari. On April 30, 1985,
the respondent appellate court rendered its decision reversing the order of
Judge Lising and remanding the case to the court a quo for further
proceedings. Hence this petition.
We find the petition meritorious. The doctrine of non-suability of the State
has proper application in this case. The plaintiff has impleaded the
Republic of the Philippines as defendant in an action for recovery of
ownership and possession of a parcel of land, bringing the State to court
just like any private person who is claimed to be usurping a piece of
property. A suit for the recovery of property is not an action in rem, but an
action in personam. 1 It is an action directed against a specific party or
parties, and any judgment therein binds only such party or parties. The
complaint filed by plaintiff, the private respondent herein, is directed
against the Republic of the Philippines, represented by the Land Authority,
a governmental agency created by Republic Act No. 3844.
By its caption and its allegation and prayer, the complaint is clearly a suit
against the State, which under settled jurisprudence is not permitted,
except upon a showing that the State has consented to be sued, either
expressly or by implication through the use of statutory language too plain
to be misinterpreted. 2 There is no such showing in the instant case.
Worse, the complaint itself fails to allege the existence of such consent.
This is a fatal defect, 3 and on this basis alone, the complaint should have
been dismissed.
The failure of the petitioner to assert the defense of immunity from suit
when the case was tried before the court a quo, as alleged by private
respondent, is not fatal. It is now settled that such defense "may be
invoked by the courts sua sponte at any stage of the proceedings." 4
Private respondent contends that the consent of petitioner may be read
from the Proclamation itself, when it established the reservation " subject
to private rights, if any there be. " We do not agree. No such consent can
be drawn from the language of the Proclamation. The exclusion of existing
private rights from the reservation established by Proclamation No. 90 can
not be construed as a waiver of the immunity of the State from suit.
Waiver of immunity, being a derogation of sovereignty, will not be inferred
lightly. but must be construed in strictissimi juris. 5 Moreover, the
Proclamation is not a legislative act. The consent of the State to be sued
must emanate from statutory authority. Waiver of State immunity can only
be made by an act of the legislative body.
Neither is there merit in respondent's submission, which the respondent
appellate court sustained, on the basis of our decision in the Begosa case,
6
that the present action is not a suit against the State within the rule of
State immunity from suit, because plaintiff does not seek to divest the
Government of any of its lands or its funds. It is contended that the
complaint involves land not owned by the State, but private land belonging
to the plaintiff, hence the Government is not being divested of any of its
properties. There is some sophistry involved in this argument, since the
character of the land sought to be recovered still remains to be
established, and the plaintiff's action is directed against the State precisely
to compel the latter to litigate the ownership and possession of the
property. In other words, the plaintiff is out to establish that he is the
owner of the land in question based, incidentally, on an informacion
posesoria of dubious value, and he seeks to establish his claim of
ownership by suing the Republic of the Philippines in an action in
personam.
The inscription in the property registry of an informacion posesoria under
the Spanish Mortgage Law was a means provided by the law then in force
in the Philippines prior to the transfer of sovereignty from Spain to the
United States of America, to record a claimant's actual possession of a
piece of land, established through an ex parte proceeding conducted in
accordance with prescribed rules. 7 Such inscription merely furnishes, at
best, prima facie evidence of the fact that at the time the proceeding was
held, the claimant was in possession of the land under a claim of right as
set forth in his application. 8 The possessory information could ripen into a
record of ownership after the lapse of 20 years (later reduced to 10 years),
upon the fulfillment of the requisites prescribed in Article 393 of the
Spanish Mortgage Law.
There is no showing in the case at bar that the informacion posesoria held
by the respondent had been converted into a record of ownership. Such
possessory information, therefore, remained at best mere prima facie
evidence of possession. Using this possessory information, the respondent
could have applied for judicial confirmation of imperfect title under the
Public Land Act, which is an action in rem. However, having failed to do so,
it is rather late for him to pursue this avenue at this time. Respondent
must also contend, as the records disclose, with the fact admitted by him
and stated in the decision of the Court a quo that settlers have been
occupying and cultivating the land in question since even before the
outbreak of the war, which puts in grave doubt his own claim of
possession.
Worthy of note is the fact, as pointed out by the Solicitor General, that the
informacion posesoria registered in the Office of the Register of Deed of
Camarines Sur on September 23, 1952 was a "reconstituted" possessory
information; it was "reconstituted from the duplicate presented to this
office (Register of Deeds) by Dr. Pablo Feliciano," without the submission
of proof that the alleged duplicate was authentic or that the original
thereof was lost. Reconstitution can be validly made only in case of loss of
the original. 10 These circumstances raise grave doubts as to the
authenticity and validity of the "informacion posesoria" relied upon by
respondent Feliciano. Adding to the dubiousness of said document is the
fact that "possessory information calls for an area of only 100 hectares,"
11 whereas the land claimed by respondent Feliciano comprises
1,364.4177 hectares, later reduced to 701-9064 hectares. Courts should be
wary in accepting "possessory information documents, as well as other
purportedly old Spanish titles, as proof of alleged ownership of lands.
WHEREFORE, judgment is hereby rendered reversing and setting aside the
appealed decision of the Intermediate Appellate Court, dated April 30,
1985, and affirming the order of the court a quo, dated August 21, 1980,
dismissing the complaint filed by respondent Pablo Feliciano against the
Republic of the Philippines. No costs.
SO ORDERED.
G.R. No. L-27299 June 27, 1973
QUIRICO DEL MAR, petitioner and appellee,
vs.
THE PHILIPPINE VETERANS ADMINISTRATION, respondent and
appellant.
CASTRO, J.:
On June 20, 1964, Quirico del Mar (hereinafter referred to del Mar) filed
with the Court of First Instance of Cebu petition for mandamus (civil case
R-8465) against the Philippine Veterans Administration (hereinafter
referred to the PVA to compel the latter to continue paying him monthly
life pension of P50 from the date of its cancellation in March 1950 to June
20, 1957, and thereafter, or from June 22 1957 his monthly life pension,
as increased by Republic Act 1920, 1 of P100 and to pay to him as well the
monthly living allowance of P10 for each of his unmarried minor children
below eighteen years of age, 2 pursuant to the said Republic Act 1920
which took effect on June 22, 1957. Del Mar also asked for compensatory,
moral and exemplary damages.
In his petition below, del Mar averred that he served during World War II
as chief judge advocate of the Cebu Area Command (a duly recognized
guerrilla organization) with the rank of major; that he subsequently
obtained an honorable discharge from the service on October 20, 1946 on
a certificate of permanent total physical disability; that upon proper claim
presented and after hearing and adjudication, the Philippine Veterans
Board (the PVA's predecessor granted him a monthly life pension of P50
effective January 28, 1947; that in March 1950, the said Board
discontinued payment of his monthly life pension on the ground that his
receipt of a similar pension from the United States Government, through
the United States Veterans Administration, by reason of military service
rendered in the United States Army in the Far East during World War II,
precluded him from receiving any further monthly life pension from the
Philippine Government; that he wrote the said Board twice demanding that
it continue paying his monthly life pension, impugning the cancellation
thereof as illegal; and that his demands went unheeded.
The PVA reiterated its contention that del Mar's receipt of a similar pension
from the United States Government effectively barred him from claiming
and receiving from the Philippine Government the monthly life pension
granted him as well as the monthly allowances he claimed for his five living
unmarried minor children below eighteen years of age. The PVA also
asserted that it is discretionary on its part to grant or discontinue the
pension sought by del Mar. In addition, it alleged that the action of del Mar
was premature because of his failure to exhaust administrative remedies
before invoking judicial intervention, and that the court a quo was without
jurisdiction to try the case as del Mar demand partakes of a money claim
against the PVA — a mere agency of the Philippine Government — and, in
effect, of a suit against the Government which is not suitable without its
consent. The PVA thus prayed for the dismissal of the petition.
After due trial, the court a quo rendered judgment upholding del Mar
claims. In its decision dated February 27, 1965, the court (1) ordered the
PVA to pay to del Mar his monthly life pension corresponding to the period
from April 1950 to May 1957 at the rate of P50 a month, adding up to
P4,334.86, and his monthly life pension corresponding to the period from
June 22, 1957 to February 1965 at the amount of P100 a month totalling
P9,200, and thereafter to continue to pay his monthly life pension at the
rate of P100. a month; (2) directed del Mar to file with the PVA the
corresponding written application for the payment to him of the monthly
living allowance of P10 for each of his five living unmarried minor children
from June 22, 1957; and ordered the PVA to give due course to the written
application as soon as del Mar shall have filed the same with it, and once
approved, to make the necessary payment of the accumulated unpaid
living allowances due to each of the said children from June 22, 1957 as
well as the current ones until each one of them ceases to be entitled to the
same; and (3 directed the PVA in the event of unavailability of funds to
pay the claims aforementioned, to set aside funds from such as intended
to pay the veterans' living pensions, or to cause the same to be
appropriated in its budget in order to comply with the judgment. For lack
of basis, the court a quo omitted to pass judgment on del Mar's claim for
moral and exemplary damages.
Hence, the present appeal by the PVA.
The PVA alleges that the court a quo erred (1) in not holding itself without
jurisdiction to try civil case R-8465; (2) in no finding as premature the
petition for mandamus filed by del Mar due to the failure of the latter to
exhaust available administrative remedies before seeking judicial
intervention; (3) in declaring null and void section 6 of PVA Regulation No.
2 relied upon by it in discontinuing the monthly life pension of del Mar
since March 1950; (4) in not finding it discretionary on the part of the PVA
to grant or discontinue the said suspension; (5) in ordering it to pay to del
Mar the amounts stated in the judgment; and (6) in ordering it to give due
course to and approve the application which the said court directed del
Mar to file for the payment to the latter of the monthly living allowance for
each of his living unmarried minor children below eighteen years of age.
This appeal raises several questions which will be discussed in seriatim.
1. The PVA argues that the court a quo was without jurisdiction to try civil
case R-8465 because it involves a money claim against the said PVA — a
mere agency of the Government performing governmental functions with
no juridical personality of its own — and, in reality, partakes of an action
against the Philippine Government which is immune from suit without its
consent, citing this Court's observation in Republic of the Philippine vs.
Ramolete and Del Mar, 3 to wit:
....a charge against the Government where the money
involved is part of the public funds, is a suit against
the Government, and the happenstance that the
action is directed against the PVA as an entity and not
against the Republic of the Philippines is of no
moment. Perforce, the Republic of the Philippines, on
matters of administration of all benefits due to the
veterans of revolutions and wars, and to their heirs
and beneficiaries, acts and has to act through its
agency and instrumentality, the PVA. The suit should
therefore be regarded as one against the Republic of
the Philippines; the PVA is therefore exempt from the
filing of an appeal bond.
The PVA labors under a muddled and mistaken appreciation of the
aforecited observation. This Court stated in precise language the sole issue
for resolution in that case, thus:
Is the PVA exempt from the filing of an appeal bond?
To resolve this issue, we must initially determine
whether the PVA is an agency or instrumentality of the
Republic of the Philippines, and, in the affirmative,
whether it exercises governmental functions.
Indeed, the decisive point in the aforementioned case
related to the status of the PVA as an agency or
instrumentality of the Republic of the Philippines
exercising governmental functions as to be entitled to
exemption from the filing of the appeal bond per
section 16 of Rule 141 of the Rules of Court, not to
the nature of the claim sought to be enforced by the
private respondent therein (del Mar) against the said
PVA. Thus, in the said case, this Court made a lengthy
disquisition on the history, development and
organization of the PVA to show conclusively that the
same is an entity or agency of the Republic of the
Philippines performing governmental functions. True,
this Court referred to the claim of the private
respondent therein as "a claim for a sum of money
against the Government, which claim, if adjudged
finally to be meritorious, would render the Republic of
the Philippines liable therefor," since the funds from
which the claim was to be satisfied were funds
appropriated by Congress for the PVA; but this Court
properly and advisedly omitted any study and
consideration of the question of suitability or non-
suitability of the Government in connection therewith.
As a general proposition, the rule — well-settled in this jurisdiction — on
the immunity of the Government from suit without its consent holds true in
all actions resulting in "adverse consequences on the public treasury,
whether in the disbursements of funds or loss of property." 4 Needless to
state, in such actions, which, in effect, constitute suits against the
Government, the court has no option but to dismiss them. Nonetheless,
the rule admits of an exception. It finds no application where a claimant
institutes an action against a functionary who fails to comply with his
statutory duty to release the amount claimed from the public funds already
appropriated by statute for the benefit of the said claimant. 5 As clearly
discernible from the circumstances, the case at bar falls under the
exception.
2. The second question posed by the PVA relates to del Mar alleged failure
to exhaust administrative remedies before resorting to court action. Suffice
it to state that where a case as in the present controversy — involves a
question solely of a legal nature, there arises no need for the litigant to
resort to all administrative remedies available to him before seeking
judicial relief.
3. The validity of section 6 of Regulation No. 2 of the "Rules and
Regulations on Veterans' Benefits" adopted by the PVA constitutes the core
of the present controversy. The said section 6 reads as follows:
SEC. 6. Effect of receipt of USVA pension benefit —
termination, reduction. — An award of a similar
disability compensation from the US Veterans
Administration shall be a ground for the cancellation of
a disability pension granted under the Regulation:
Provided, however, That if and while the disability
compensation awarded by the US Veterans
Administration is less than the pension granted
hereunder, the difference in amount shall be assumed
and paid by the PVA: Provided, further, That upon
proper application, the disability award previously
cancelled may be restored upon the termination of the
US Veterans Administration award if the cause of such
termination is due to negative military service report of
the pensioner certified by the US Department of the
Army and not for any other valid cause: Provided,
finally, That the veteran is medically determined to be
still suffering from the disability for which he was
previously awarded a pension. Payment of pension
thus restored shall take effect or shall commence only
from the date of approval of restoration and when
funds become available.
Pursuant to the foregoing, the PVA cancelled and discontinued the monthly
life pension of del Mar reasoning that the latter's receipt of a similar
pension from the United States Government precluded his enjoying any
like benefit from the Philippine Government. The PVA avers that it adopted
the aforequoted section 6 in order to carry out and implement section 9 of
Republic Act 65, as amended, 7 particularly its excepting clause. Said
section 9 reads:
SEC. 9. The persons mentioned in sections one and
two hereof who are permanently incapacitated from
work owing to sickness, disease or injuries sustained
in line of duty, shall be given a life pension of one
hundred pesos a month, and ten pesos a month for
each of his unmarried minor children below eighteen
years of age, unless they are actually receiving a
similar pension from other Government funds, and
shall receive, in addition, the necessary hospitalization
and medical care. 8
The PVA reads the phrase "from other Government funds" in the excepting
clause of the aforecited provision as necessarily including funds of the
United States Government. And without question, the pension del Mar
receives from the United States Veterans Administration comes from the
funds of the United States Government.
On the other hand, del Mar avers that section 6 of Regulation No. 2
illegally effects the suspension of the operation of section 9 of Republic Act
65, as amended, and argues that under section 20 9 of Republic Act 65, as
amended, the power suspend the payment of the monthly life pension
awarded to disabled veteran belongs exclusively to the President of the
Philippines, not to the PVA which, in the case at bar, illegally arrogated
unto itself the said power. Furthermore, del Mar states, the PVA
"deliberately misinterprets" the phrase from other Government funds" in
extending its scope to include United States Government funds.
The principle recognizing the necessity of vesting administrative authorities
with the power to promulgate rules and regulations to implement a given
statute and to effectual its policies, provided such rules and regulations
conform to the terms and standards prescribed by the statute as well
purport to carry into effect its general policies, constitutes well established
doctrine in this jurisdiction. 10 In Teoxon v. Members of the Board of
Administrators, Philippine Veterans Administration, suprea, this Court
fittingly stated: .
... the Constitution limits the authority of the
President, in whom all executive power resides, to
take care that the laws be faithfully executed. No
lesser administrative executive office or agency then
can, contrary to the express language of the
Constitution, assert for itself a more extensive
prerogative. Necessarily, it is bound to observe the
constitutional mandate. There must be strict
compliance with the legislative enactment. Its terms
must be followed. The statute requires adherence to,
not departure from, its provisions. No deviation is
allowable.
Section 11 of Republic Act 2665 11 empowers the PVA to adopt rules and
regulations, thus:
SEC. 11. Policies, rules and regulations. — Subject to
existing laws, the Administration shall have the power
to promulgate and issue rules and regulations as may
be found necessary to govern its operations and to
carry out that aims and purposes of this Act and of all
other laws to be administered by the Administration.
Pursuant to this rule making authority, the PVA —
allegedly' to implement section 9 of Republic Act 65,
as amended promulgated its "Rules and Regulations
on Veterans' Benefits," section 6 of Regulation No. 2
of which cancels the disability pension granted if the
beneficiary receives a similar compensation from the
United States Veterans Administration. In effect, the
PVA by adopting section 6 of Regulation No. 2,
suspended the operation of section 9' of Republic Act
65, as amended. This, Republic Act 65, as amended,
forbids the PVA to do for it expressly authorizes only
the President of the Philippines to suspend the
operation of any of its provisions "if and when the
Congress of the United States approves the pending
GI Bill of Rights applicable to the Philippines the
provisions of which are identical or similar to the
provisions of this Act." Clearly then, section 6 of
Regulation No. 2 not only negates the very spirit
behind section 9 of Republic Act 65, as amended, but
also contravenes the express mandate of section 20
thereof.
The PVA's pretense that del Mar case falls under the clause of section 9 of
Republic Act 65, as amended, which excepts those who "are actually
receiving a similar pension from other Government funds" from the
coverage of said section 9 — predicated upon its interpretation that the
phrase other Government funds" includes funds of the United States
Government — fails to persuade this Court as a valid argument to justify
its cancellation of del Mar monthly life pens Section 9 of Republic Act 65,
as amended, in providing for the excepting clause, obviously intends to
prevent the receipt the same beneficiary of concurrent or multiple pensions
benefits similar to each other in nature and basis, although coursed
through different departments or agencies, but paid out of the funds of the
same Government. Any contrary interpretation resulting in the derogation
of the interests of the beneficiary who likewise receives a similar pension
paid out funds of other Governments, conflicts with the establish axiom
ordaining the construction of pension laws of war veterans in favor of
those seeking their benefits.
The record of the case at bar being completely bereft of any indication to
show the suspension by the President of the Philippines — pursuant to
section 20 of Republic Act 65, amended — of the operation of any of the
provisions of the said statute, this Court perforce must uphold del Mar
claims.
4. The rest of the assigned errors relate to the allege undue interference
by the court a quo with the purely discretionary functions of the PVA in the
matter of granting discontinuing the pension benefits.
The law concedes to administrative bodies — like the PVA — the authority
to act on and decide claims and applications in accordance with their
judgment, in the exercise of their adjudicatory capacity. Because of their
acquired expertise in specific matters within the purview of their respective
jurisdictions, the findings of these administrative bodies merit not only
great weight but also respect and finality. "There is limit, however, to such
a deference paid to the actuations or such bodies, Clearly, where there has
been a failure to interpret and apply the statutory provisions in question,
judicial power should assert itself. Under the theory of separation of power
it is to the judiciary, and to the judiciary alone, that the final say on
questions of law in appropriate cases coming before it is vested." 12
All told, no roadblock stands in the way of del Mar's demand for the
continuance of his monthly life pension.
In view, however, of the further amendment by Congress of section 9 of
Republic Act 65, as amended, through Republic Act 5753 — the provisions
of which took effect on June 21, 1969 — there arises the need to modify
the judgment a quo in order to make it conform to the said statute as it
now stands. Republic Act 5753, in further amending section 9 of Republic
Act 65, as amended, grants every totally disabled veteran of World War II
"a life pension of two hundred pesos a month, and thirty pesos a month
for his wife and each of his unmarried minor children below eighteen years
of age."
ACCORDINGLY, this Court adjudges the appellee Quirico del Mar entitled to
his life pension (1) at the rate of P50 a month effective as of April 1950 to
May 1957, per Republic Act 65; (2) at the rate of P100 a month effective
as of June 22, 1957 to May 1969, per Republic Act 65 as amended by
Republic Act 1920; and (3) at the rate of P200 a month effective as of
June 21, 1969, per Republic Act 65 as further amended by Republic Act
5753. This Court directs the appellant Philippine Veterans Administration to
compute and then to pay to the appellee del Mar his past and accumulated
monthly life pension at the aforementioned statutory rates.
Regarding the monthly living allowance the appellee del Mar asks for each
of his five "living unmarried minor children below eighteen years of age," it
appearing that he has not filed any proper application therefor with the
appellant PVA but simply included them in his claim for the restoration of
his discontinued monthly life pension, the appellee del Mar may, if he so
desires, comply with section 15 of Republic Act 65, as amended, which
requires that "[A]ny person who desires to take advantage of the rights
and privileges provided for in this Act should file his application" with the
Philippine Veterans Administration, and the latter is hereby ordered to
consider and pass upon the merits of such application, if filed, particular
reference to the entitlement qualifications of intended beneficiaries. No
pronouncement as to costs.
G.R. No. L-32667 January 31, 1978
PHILIPPINE NATIONAL BANK, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, GABRIEL V. MANANSALA
and GILBERT P. LORENZO, in his official capacity as authorized
Deputy sheriff, respondents.
FERNANDO, J.:
The issue raised in this certiorari proceeding is whether or not an order of
the now defunct respondent Court of Industrial Relations denying for lack
of merit petitioner's motion to quash a notice of garnishment can be
stigmatized as a grave abuse of discretion. What was sought to be
garnished was the money of the People's Homesite and Housing
Corporation deposited at petitioner's branch in Quezon City, to satisfy a
decision of respondent Court which had become final and executory. 1 A
writ of execution in favor of private respondent Gabriel V. Manansala had
previously been issued. 2 He was the counsel of the prevailing party, the
United Homesite Employees and Laborers Association, in the
aforementioned case. The validity of the order assailed is challenged on
two grounds: (1) that the appointment of respondent Gilbert P. Lorenzo as
authorized deputy sheriff to serve the writ of execution was contrary to law
and (2) that the funds subject of the garnishment "may be public in
character." 3 In thus denying the motion to quash, petitioner contended
that there was on the part of respondent Court a failure to abide by
authoritative doctrines amounting to a grave abuse of discretion. After a
careful consideration of the matter, it is the conclusion of this Tribunal that
while the authorization of respondent Lorenzo to act as special deputy
sheriff to serve the notice of garnishment may be open to objection, the
more basic ground that could have been relied upon — not even
categorically raised, petitioner limiting itself to the assertion that the funds
"could be public" in character, thus giving rise to the applicability of the
fundamental concept of non-suability — is hardly persuasive. The People's
Homesite and Housing Corporation had a juridical existence enabling it sue
and be sued. 4 Whatever defect could be attributed therefore to the order
denying the motion to quash could not be characterized as a grave abuse
of discretion. Moreover, with the lapse of time during which private
respondent had been unable to execute a judgment in his favor, the
equities are on his side. Accordingly, this petition must be dismissed.
The order of August 26, 1970 of respondent Court denying the motion to
quash, subject of this certiorari proceeding, reads as follows: "The
Philippine National Bank moves to quash the notice of garnishment served
upon its branch in Quezon City by the authorized deputy sheriff of this
Court. It contends that the service of the notice by the authorized deputy
sheriff of the court contravenes Section 11 of Commonwealth Act No. 105,
as amended which reads:" 'All writs and processes issued by the Court
shall be served and executed free of charge by provincial or city sheriffs, or
by any person authorized by this Court, in the same manner as writs and
processes of Courts of First Instance.' Following the law, the Bank argues
that it is the Sheriff of Quezon City, and not the Clerk of this Court who is
its Ex-Officio Sheriff, that has the authority to serve the notice of
garnishment, and that the actual service by the latter officer of said notice
is therefore not in order. The Court finds no merit in this argument.
Republic Act No. 4201 has, since June 19, 1965, already repealed
Commonwealth Act No. 103, and under this law, it is now the Clerk of this
Court that is at the same time the Ex-Officio Sheriff. As such Ex-Officio
Sheriff, the Clerk of this Court has therefore the authority to issue writs of
execution and notices of garnishment in an area encompassing the whole
of the country, including Quezon City, since his area of authority is
coterminous with that of the Court itself, which is national in nature. ... At
this stage, the Court notes from the record that the appeal to the Supreme
Court by individual employees of PHHC which questions the award of
attorney's fees to Atty. Gabriel V.
Manansala, has already been dismissed and that the same became final
and executory on August 9, 1970. There is no longer any reason,
therefore, for withholding action in this case. [Wherefore], the motion to
quash filed by the Philippine National Bank is denied for lack of merit. The
said Bank is therefore ordered to comply within five days from receipt with
the 'notice of Garnishment' dated May 6, 1970." 5 There was a motion for
reconsideration filed by petitioner, but in a resolution dated September 22,
1970, it was denied. Hence, this certiorari petition.
As noted at the outset, the petition lacks merit.
1. The plea for setting aside the notice of garnishment was promised on
the funds of the People's homesite and Housing Corporation deposited
with petitioner being "public in character." There was not even a
categorical assertion to that effect. It is only the possibility of its being
"public in character." The tone was thus irresolute,the approach difficult
The premise that the funds could be spoken of as public in character may
be accepted in the sense that the People's Homesite and Housing
Corporation was a government-owned entity It does not follow though that
they were exempt from garnishment. National Shipyard and Steel
Corporation v. court of Industrial Relations 6 is squarely in point. As was
explicitly stated in the opinion of the then Justice, later Chief Justice,
Concepcion: "The allegation to the effect that the funds of the NASSCO are
public funds of the government, and that, as such, the same may not be
garnished, attached or levied upon, is untenable for, as a government
owned and controlled corporation. the NASSCO has a personality of its
own, distinct and separate from that of the Government. It has pursuant to
Section 2 of Executive Order No. 356, dated October 23, 1950 ..., pursuant
to which the NASSCO has been established — 'all the powers of a
corporation under the Corporation Law ...' Accordingly, it may sue and be
sued and may be subjected to court processes just like any other
corporation (Section 13, Act No. 1459), as amended." 7 The similarities
between the aforesaid case and the present litigation are patent. Petitioner
was similarly a government-owned corporation. The principal respondent
was the Court of Industrial Relations. The prevailing parties were the
employees of petitioner. There was likewise a writ of execution and
thereafter notices of garnishment served on several banks. There was an
objection to such a move and the ruling was adverse to the National
Shipyard and Steel Corporation. Hence the filing of a petition for certiorari.
To repeat, the ruling was quite categorical Garnishment was the
appropriate remedy for the prevailing party which could proceed against
the funds of a corporate entity even if owned or controlled by the
government. In a 1941 decision, Manila Hotel Employees Association v.
Manila Hotel Company, 8 this Court, through Justice Ozaeta, held: "On the
other hand, it is well settled that when the government enters into
commercial business, it abandons its sovereign capacity and is to be
treated like any other corporation. (Bank of the United States v. Planters'
Bank, 9 Wheat, 904, 6 L.ed. 244). By engaging in a particular business thru
the instrumentality of a corporation, the governmnent divests itself pro hac
vice of its sovereign character, so as to render the corporation subject to
the rules of law governing private corporations."
2. It is worth noting that the decision referred to, the Bank of the United
States v. Planters' Bank, 10 was promulgated by the American Supreme
Court as early as 1824, the opinion being penned by the great Chief
Justice Marshall. As was pointed out by him: "It is, we think, a sound
principle, that when a government becomes a partner in any trading
company, it divests itself, so far as concerns the transactions of that
company, of its sovereign character, and takes that of a private citizen.
Instead of communicating to the company its privileges and its
prerogatives, it descends to a level with those with whom it associates
itself, and takes the character which belongs to its associates, and to the
business which is to be transacted. Thus, many states of this Union who
have an interest in banks, are not suable even in their own courts; yet they
never exempt the corporation from being sued. The state of Georgia, by
giving to the bank the capacity to sue and be sued, voluntarily strips itself
of its sovereign character, so far as respects the transactions of the bank,
and waives an the privileges of that character. As a member of a
corporation, a government never exercises its sovereignty. It acts merely
as a corporator, and exercises no other power in the management of the
affairs of the corporation, that are expressly given by the incorporating
act." 11 The National Shipyard and Steel Corporation case, therefore,
merely reaffirmed one of the oldest and soundest doctrines in this branch
of the law.
3. The invocation of Republic v. Palacio, 12 as well as Commissioner of
Public Highways v. San Diego, 13 did not help the cause of petitioner at all
The decisions are not applicable. If properly understood they can easily be
distinguished. As is clear in the opinion of Justice J.B.L. Reyes in Republic
v. Palacio, the Irrigation Service Unit which was sued was an office and
agency under the Department of Public Works and Communications. The
Republic of the Philippines, through the then Solicitor General, moved for
the dismissal of such complaint, alleging that it "has no juridical personality
to sue and be sued." 14 Such a motion to dismiss was denied. The case
was tried and plaintiff Ildefonso Ortiz, included as private respondent in
the Supreme Court proceeding, obtained a favorable money judgment. It
became final and executory. Thereafter, it appeared that the Solicitor
General was served with a copy of the writ of execution issued by the
lower court followed by an order of garnishment 15 Again, there was an
urgent motion to lift such order, but it was denied. A certiorari and
prohibition proceeding was then filed with the Court of Appeals. The
legality of the issuance of such execution and punishment was upheld, and
the matter was elevated to this Tribunal The Republic was sustained. The
infirmity of the decision reached by the Court of Appeals, according to the
opinion, could be traced to the belief that there was a waiver of
"governmental immunity and, by implication, consent to the suit." 16 There
was no such waiver. Even if there were, it was stressed by justice J.B.L.
Reyes: "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 the legal
process. This emphatically is not the law. (Merritt v. Insular Government,
34 Phil 311)." 17 To levy the execution of such funds, according to him,
would thus "amount to a disbursement without any proper appropriation
as required by law " 18 In Commissioner of Public Highways v. San Diego,
the opening paragraph of Justice Teehankee was quite specific as to why
there could be neither execution nor garnishment of the money of
petitioner Bureau of Public Highways: "In this special civil action for
certiorari and prohibition, the Court declares null and void the two
questioned orders of respondent Court levying upon funds of petitioner
Bureau of Public Highways on deposit with the Philippine National Bank, by
virtue of the fundamental precept that government funds are not subject
to execution or garnishment." 19 The funds appertained to a governmental
office, not to a government-owned or controlled corporation with a
separate juridical personality. In neither case therefore was there an entity
with the capacity to sue and be sued, the funds of which could thereafter
be held liable to execution and garnishment in the event of an adverse
judgment.
4. Both the Palacio and the Commissioner of Public Highways decisions,
insofar as they reiterate the doctrine that one of the coronaries of the
fundamental concept of non-suability is that governmental funds are
immune from garnishment, refer to Merritt v. Insular Government, a 1916
decision 20 Since then such a principle has been followed with undeviating
rigidity, the latest case in point being Republic v. Villasor, 21 promulgated
in 1973. It is an entirely different matter if, according to Justice Sanchez in
Ramos v. Court of Industrial Relations, 22 the office or entity is "possessed
of a separate and distinct corporate existence." 23 Then it can sue and be
sued. Thereafter, its funds may be levied upon or garnished. That is what
happened in this case.
5. With the crucial issue thus resolved in favor of the correctness of the
order assailed, the other objection raised, namely that respondent Court
acted erroneously in having a special sheriff serve to the writ of execution,
hardly needs any extensive decision. It is true that in the aforesaid
Commissioner of Public Highways opinion, this Court held that there is no
authorization in law for the appointment of special sheriffs for the service
of writs of execution. 24 In the order sought to be nullified, the then Judge
Joaquin M. Salvador of respondent Court pointed out that under a later
Act, 25 the Court of Industrial Relations Act was amended with the proviso
that its Clerk of Court was the ex-oficio sheriff. The point raised in the
petition that it should be the sheriff of Quezon City that ought to have
served the writ of execution would thus clearly appear to be inconclusive.
There is to be sure no thought of deviating from the principle announced
in the Commissioner of Public Highways case. That is as it ought to be.
Even if, however, there is sufficient justification for the infirmity attributed
to respondent Court by virtue of such a ruling, still considering all the
circumstances of this case, it clearly does not call for the nullification of the
order in question. What cannot be denied is that the writ of execution was
issued as far back as May 5, 1970 by the then Clerk of Court of respondent
Tribunal as the authorized sheriff. It would be, to say the least, unfair and
unequitable if, on the assumption that such Clerk of Court lacked such
competence, a new writ of execution had to be issued by the proper
official At any rate, what is important is that the judgment be executed.
That is to achieve justice according to law. It would be to carry
technicality, therefore, to an absurd length if just because of such a
mistake, assuming that it is, but undoubtedly one committed in good faith,
further delay would get be imposed on private respondent by
characterizing the order sought to be nullified amounting to a grave abuse
of discretion.
WHEREFORE, the petition for certiorari is dismissed. No costs.
G.R. No. 115634 April 27, 2000
FELIPE CALUB and RICARDO VALENCIA, DEPARTMENT of
ENVIRONMENT and NATURAL RESOURCES (DENR), CATBALOGAN,
SAMAR, petitioners,
vs.
COURT OF APPEALS, MANUELA T. BABALCON, and CONSTANCIO
ABUGANDA, respondents.
QUISUMBING, J.:
For review is the decision 1 dated May 27, 1994, of the Court of Appeals in
CA-G.R. SP No. 29191, denying the petition filed by herein petitioners for
certiorari, prohibition and mandamus, in order to annul the Order dated
May 27, 1992, by the Regional Trial Court of Catbalogan, Samar. Said
Order had denied petitioners' (a) Motion to Dismiss the replevin case filed
by herein private respondents, as well as (b) petitioners Motion for
Reconsideration of the Order of said trial court dated April 24, 1992,
granting an application for a Writ of replevin. 2
The pertinent facts of the case, borne by the records, are as follows:
On January 28, 1992, the Forest Protection and Law Enforcement Team of
the Community Environment and Natural Resources Office (CENRO) of the
DENR apprehended two (2) motor vehicles, described as follows:
1. Motor Vehicle with Plate No. HAK-733
loaded with one thousand and twenty six
(1,026) board feet of illegally sourced
lumber valued at P8,544.75, being driven by
one Pio Gabon and owned by [a certain]
Jose Vargas.
2. Motor Vehicle with Plate No. FCN-143
loaded with one thousand two hundred
twenty four and ninety seven (1,224.97)
board feet of illegally-sourced lumber valued
at P9,187.27, being driven by one
Constancio Abuganda and owned by [a
certain] Manuela Babalcon. . . . 3
Constancio Abuganda and Pio Gabon, the drivers of the vehicles, failed to
present proper documents and/or licenses. Thus, the apprehending team
seized and impounded the vehicles and its load of lumber at the DENR-
PENR (Department of Environment and Natural Resources-Provincial
Environment and Natural Resources) Office in Catbalogan. 4 Seizure
receipts were issued but the drivers refused to accept the receipts. 5 Felipe
Calub, Provincial Environment and Natural Resources Officer, then filed
before the Provincial Prosecutor's Office in Samar, a criminal complaint
against Abuganda, in Criminal Case No. 3795, for violation of Section 68
[78], Presidential Decree 705 as amended by Executive Order 277,
otherwise known as the Revised Forestry Code. 6
On January 31, 1992, the impounded vehicles were forcibly taken by
Gabon and Abuganda from the custody of the DENR, prompting DENR
Officer Calub this time to file a criminal complaint for grave coercion
against Gabon and Abuganda. The complaint was, however, dismissed by
the Public Prosecutor. 7
On February 11, 1992, one of the two vehicles, with plate number FCN
143, was again apprehended by a composite team of DENR-CENR in
Catbalogan and Philippine Army elements of the 802nd Infantry Brigade at
Barangay Buray, Paranas, Samar. It was again loaded with forest products
with an equivalent volume of 1,005.47 board feet, valued at P10,054.70.
Calub duly filed a criminal complaint against Constancio Abuganda, a
certain Abegonia, and several John Does, in Criminal Case No. 3625, for
violation of Section 68 [78], Presidential Decree 705 as amended by
Executive Order 277, otherwise known as the Revised Forestry Code. 8
In Criminal Cases Nos. 3795 and 3625, however, Abegonia and Abuganda
were acquitted on the ground of reasonable doubt. But note the trial court
ordered that a copy of the decision be furnished the Secretary of Justice,
in order that the necessary criminal action may be filed against Noe
Pagarao and all other persons responsible for violation of the Revised
Forestry Code. For it appeared that it was Pagarao who chartered the
subject vehicle and ordered that cut timber be loaded on it. 9
Subsequently, herein private respondents Manuela Babalcon, the vehicle
owner, and Constancio Abuganda, the driver, filed a complaint for the
recovery of possession of the two (2) impounded vehicles with an
application for replevin against herein petitioners before the RTC of
Catbalogan. The trial court granted the application for replevin and issued
the corresponding writ in an Order dated April 24, 1992. 10 Petitioners filed
a motion to dismiss which was denied by the trial court. 11
Thus, on June 15, 1992, petitioners filed with the Supreme Court the
present Petition for Certiorari, Prohibition and Mandamus with application
for Preliminary Injunction and/or a Temporary Restraining Order. The
Court issued a TRO, enjoining respondent RTC judge from conducting
further proceedings in the civil case for replevin; and enjoining private
respondents from taking or attempting to take the motor vehicles and
forest products seized from the custody of the petitioners. The Court
further instructed the petitioners to see to it that the motor vehicles and
other forest products seized are kept in a secured place and protected
from deterioration, said property being in custodia legis and subject to the
direct order of the Supreme Court. 12 In a Resolution issued on September
28, 1992, the Court referred said petition to respondent appellate court for
appropriate disposition. 13
On May 27, 1994, the Court of Appeals denied said petition for lack of
merit. It ruled that the mere seizure of a motor vehicle pursuant to the
authority granted by Section 68 [78] of P.D. No. 705 as amended by E.O.
No. 277 does not automatically place said conveyance in custodia legis.
According to the appellate court, such authority of the Department Head of
the DENR or his duly authorized representative to order the confiscation
and disposition of illegally obtained forest products and the conveyance
used for that purpose is not absolute and unqualified. It is subject to
pertinent laws, regulations, or policies on that matter, added the appellate
court. The DENR Administrative Order No. 59, series of 1990, is one such
regulation, the appellate court said. For it prescribes the guidelines in the
confiscation, forfeiture and disposition of conveyances used in the
commission of offenses penalized under Section 68 [78] of P.D. No. 705 as
amended by E.O. No. 277. 14
Additionally, respondent Court of Appeals noted that the petitioners failed
to observe the procedure outlined in DENR Administrative Order No. 59,
series of 1990. They were unable to submit a report of the seizure to the
DENR Secretary, to give a written notice to the owner of the vehicle, and
to render a report of their findings and recommendations to the Secretary.
Moreover, petitioners' failure to comply with the procedure laid down by
DENR Administrative Order No. 59, series of 1990, was confirmed by the
admission of petitioners' counsel that no confiscation order has been
issued prior to the seizure of the vehicle and the filing of the replevin suit.
Therefore, in failing to follow such procedure, according to the appellate
court, the subject vehicles could not be considered in custodia legis. 15
Respondent Court of Appeals also found no merit in petitioners' claim that
private respondents' complaint for replevin is a suit against the State.
Accordingly, petitioners could not shield themselves under the principle of
state immunity as the property sought to be recovered in the instant suit
had not yet been lawfully adjudged forfeited in favor of the government.
Moreover, according to respondent appellate court, there could be no
pecuniary liability nor loss of property that could ensue against the
government. It reasoned that a suit against a public officer who acted
illegally or beyond the scope of his authority could not be considered a suit
against the State; and that a public officer might be sued for illegally
seizing or withholding the possession of the property of another. 16
Respondent court brushed aside other grounds raised by petitioners based
on the claim that the subject vehicles were validly seized and held in
custody because they were contradicted by its own findings. 17 Their
petition was found without merit. 18
Now, before us, the petitioners assign the following errors: 19
(1) THE COURT OF APPEALS ERRED IN
HOLDING THAT MERE SEIZURE OF A
CONVEYANCE PURSUANT TO SECTION 68-A
[78-A] OF P.D. NO. 705 AS AMENDED BY
EXECUTIVE ORDER 277 DOES NOT PLACE
SAID CONVEYANCE IN CUSTODIA LEGIS;
(2) THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT THE OPERATIVE ACT
GIVING RISE FOR THE SUBJECT
CONVEYANCE TO BE IN CUSTODIA LEGIS
IS ITS LAWFUL SEIZURE BY THE DENR
PURSUANT TO SECTION 68-A [78-A] OF
P.D. NO. 705, AS AMENDED BY E.O. NO.
277; AND
(3) THE COURT OF APPEALS ERRED IN
HOLDING THAT THE COMPLAINT FOR
REPLEVIN AGAINST THE PETITIONERS IS
NOT A SUIT AGAINST THE STATE.
In brief, the pertinent issues for our consideration are:
(1) Whether or not the DENR-seized motor vehicle, with plate number FCN
143, is in custodia legis.
(2) Whether or not the complaint for the recovery of possession of
impounded vehicles, with an application for replevin, is a suit against the
State.
We will now resolve both issues.
The Revised Forestry Code authorizes the DENR to seize all conveyances
used in the commission of an offense in violation of Section 78. Section 78
states:
Sec. 78. Cutting, Gathering, and/or
Collecting Timber, or Other Forest Products
without License. — Any person who shall
cut, gather, collect, remove timber or other
forest products from any forestland, or
timber from alienable or disposable public
land, or from private land, without any
authority, or possess timber or other forest
products without the legal documents as
required under existing forest laws and
regulations, shall be punished with the
penalties imposed under Articles 309 and
310 of the Revised Penal Code. . .
The Court shall further order the
confiscation in favor of the government of
the timber or any forest products cut,
gathered, collected, removed, or possessed,
as well as the machinery, equipment,
implements and tools illegally used in the
area where the timber or forest products are
found.
This provision makes mere possession of timber or other forest products
without the accompanying legal documents unlawful and punishable with
the penalties imposed for the crime of theft, as prescribed in Articles 309-
310 of the Revised Penal Code. In the present case, the subject vehicles
were loaded with forest products at the time of the seizure. But admittedly
no permit evidencing authority to possess and transport said load of forest
products was duly presented. These products, in turn, were deemed
illegally sourced. Thus there was a prima facie violation of Section 68 [78]
of the Revised Forestry Code, although as found by the trial court, the
persons responsible for said violation were not the ones charged by the
public prosecutor.
The corresponding authority of the DENR to seize all conveyances used in
the commission of an offense in violation of Section 78 of the Revised
Forestry Code is pursuant to Sections 78-A and 89 of the same Code. They
read as follows:
Sec. 78-A. Administrative Authority of the
Department Head or His Duly Authorized
Representative to Order Confiscation. — In
all cases of violation of this Code or other
forest laws, rules and regulations, the
Department Head or his duly authorized
representative, may order the confiscation
of any forest products illegally cut, gathered,
removed, or possessed or abandoned, and
all conveyances used either by land, water
or air in the commission of the offense and
to dispose of the same in accordance with
pertinent laws, regulations or policies on the
matter.
Sec. 89. Arrest; Institution of criminal
actions. — A forest officer or employee of
the Bureau [Department] or any personnel
of the Philippine Constabulary/Philippine
National Police shall arrest even without
warrant any person who has committed or is
committing in his presence any of the
offenses defined in this Chapter. He shall
also seize and confiscate, in favor of the
Government, the tools and equipment used
in committing the offense. . . [Emphasis
supplied.]
Note that DENR Administrative Order No. 59, series of 1990, implements
Sections 78-A and 89 of the Forestry Code, as follows:
Sec. 2. Conveyances Subject to Confiscation
and Forfeiture. — All conveyances used in
the transport of any forest product obtained
or gathered illegally whether or not covered
with transport documents, found spurious or
irregular in accordance with Sec. 68-A [78-
A] of P.D. No. 705, shall be confiscated in
favor of the government or disposed of in
accordance with pertinent laws, regulations
or policies on the matter.
Sec. 4. Who are Authorized to Seize
Conveyance. — The Secretary or his duly
authorized representative such as the forest
officers and/or natural resources officers, or
deputized officers of the DENR are
authorized to seize said conveyances subject
to policies and guidelines pertinent thereto.
Deputized military personnel and officials of
other agencies apprehending illegal logs and
other forest products and their conveyances
shall notify the nearest DENR field offices,
and turn oversaid forest products and
conveyances for proper action and
disposition. In case where the apprehension
is made by DENR field officer, the
conveyance shall be deposited with the
nearest CENRO/PENRO/RED Office as the
case may be, for safekeeping wherever it is
most convenient and secured. [Emphasis
supplied.]
Upon apprehension of the illegally-cut timber while
being transported without pertinent documents that
could evidence title to or right to possession of said
timber, a warrantless seizure of the involved vehicles
and their load was allowed under Section 78 and 89 of
the Revised Forestry Code.
Note further that petitioners' failure to observe the procedure outlined in
DENR Administrative Order No. 59, series of 1990 was justifiably
explained. Petitioners did not submit a report of the seizure to the
Secretary nor give a written notice to the owner of the vehicle because on
the 3rd day following the seizure, Gabon and Abuganda, drivers of the
seized vehicles, forcibly took the impounded vehicles from the custody of
the DENR. Then again, when one of the motor vehicles was apprehended
and impounded for the second time, the petitioners, again were not able to
report the seizure to the DENR Secretary nor give a written notice to the
owner of the vehicle because private respondents immediately went to
court and applied for a writ of replevin. The seizure of the vehicles and
their load was done upon their apprehension for a violation of the Revised
Forestry Code. It would be absurd to require a confiscation order or notice
and hearing before said seizure could be effected under the circumstances.
Since there was a violation of the Revised Forestry Code and the seizure
was in accordance with law, in our view the subject vehicles were validly
deemed in custodia legis. It could not be subject to an action for replevin.
For it is property lawfully taken by virtue of legal process and considered in
the custody of the law, and not otherwise. 20
In Mamanteo, et. al. v. Deputy Sheriff Magumun, A.M. No. P-98-1264,
promulgated on July 28, 1999, the case involves property to be seized by a
Deputy Sheriff in a replevin suit. But said property were already
impounded by the DENR due to violation of forestry laws and, in fact,
already forfeited in favor of the government by order of the DENR. We said
that such property was deemed in custodia legis. The sheriff could not
insist on seizing the property already subject of a prior warrant of seizure.
The appropriate action should be for the sheriff to inform the trial court of
the situation by way of partial Sheriff's Return, and wait for the judge's
instructions on the proper procedure to be observed.
Note that property that is validly deposited in custodia legis cannot be the
subject of a replevin suit. In Mamanteo v. Deputy Sheriff Magumun, we
elucidated further:
. . . the writ of replevin has been repeatedly
used by unscrupulous plaintiffs to retrieve
their chattel earlier taken for violation of the
Tariff and Customs Code, tax assessment,
attachment or execution. Officers of the
court, from the presiding judge to the
sheriff, are implored to be vigilant in their
 execution of the law otherwise, as in this
case, valid seizure and forfeiture
proceedings could easily be undermined by
the simple devise of a writ of replevin. . . 21
On the second issue, is the complaint for the recovery of possession of the
two impounded vehicles, with an application for replevin, a suit against the
State?
Well established is the doctrine that the State may not be sued without its
consent. 22 And a suit against a public officer for his official acts is, in
effect, a suit against the State if its purpose is to hold the State ultimately
liable. 23 However, the protection afforded to public officers by this
doctrine generally applies only to activities within the scope of their
authority in good faith and without willfulness, malice or corruption. 24 In
the present case, the acts for which the petitioners are being called to
account were performed by them in the discharge of their official duties.
The acts in question are clearly official in nature. 25 In implementing and
enforcing Sections 78-A and 89 of the Forestry Code through the seizure
carried out, petitioners were performing their duties and functions as
officers of the DENR, and did so within the limits of their authority. There
was no malice nor bad faith on their part. Hence, a suit against the
petitioners who represent the DENR is a suit against the State. It cannot
prosper without the State's consent.
Given the circumstances in this case, we need not pursue the Office of the
Solicitor General's line for the defense of petitioners concerning exhaustion
of administrative remedies. We ought only to recall that exhaustion must
be raised at the earliest time possible, even before filing the answer to the
complaint or pleading asserting a claim, by a motion to dismiss. 26 If not
invoked at the proper time, this ground for dismissal could be deemed
waived and the court could take cognizance of the case and try it. 27
ACCORDINGLY, the Petition is GRANTED, and the assailed Decision of the
Court of Appeals in CA-G.R. SP No. 29191 is SET ASIDE. Consequently, the
Order issued by the Regional Trial Court of Catbalogan, dated May 27,
1992, and the Writ of replevin issued in the Order dated April 24, 1992, are
ANNULLED. The Sheriff of the Regional Trial Court of Catbalogan, Branch
29, is directed to take possession of the subject motor vehicle, with plate
number FCN 143, for delivery to the custody of and appropriate disposition
by petitioners. Let a copy of this decision be provided the Honorable
Secretary of Justice for his appropriate action, against any and all persons
responsible for the abovecited violation of the Revised Forestry Code.
Costs against private respondents. SO ORDERED.
G.R. No. L-11154            March 21, 1916
E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.
TRENT, J.:
This is an appeal by both parties from a judgment of the Court of First
Instance of the city of Manila in favor of the plaintiff for the sum of
P14,741, together with the costs of the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in limiting the
general damages which the plaintiff suffered to P5,000, instead of P25,000
as claimed in the complaint," and (2) "in limiting the time when plaintiff
was entirely disabled to two months and twenty-one days and fixing the
damage accordingly in the sum of P2,666, instead of P6,000 as claimed by
plaintiff in his complaint."
The Attorney-General on behalf of the defendant urges that the trial court
erred: (a) in finding that the collision between the plaintiff's motorcycle
and the ambulance of the General Hospital was due to the negligence of
the chauffeur; (b) in holding that the Government of the Philippine Islands
is liable for the damages sustained by the plaintiff as a result of the
collision, even if it be true that the collision was due to the negligence of
the chauffeur; and (c) in rendering judgment against the defendant for the
sum of P14,741.
The trial court's findings of fact, which are fully supported by the record,
are as follows:
It is a fact not disputed by counsel for the defendant that when
the plaintiff, riding on a motorcycle, was going toward the
western part of Calle Padre Faura, passing along the west side
thereof at a speed of ten to twelve miles an hour, upon crossing
Taft Avenue and when he was ten feet from the southwestern
intersection of said streets, the General Hospital ambulance,
upon reaching said avenue, instead of turning toward the south,
after passing the center thereof, so that it would be on the left
side of said avenue, as is prescribed by the ordinance and the
Motor Vehicle Act, turned suddenly and unexpectedly and long
before reaching the center of the street, into the right side of
Taft Avenue, without having sounded any whistle or horn, by
which movement it struck the plaintiff, who was already six feet
from the southwestern point or from the post place there.
By reason of the resulting collision, the plaintiff was so severely
injured that, according to Dr. Saleeby, who examined him on the
very same day that he was taken to the General Hospital, he
was suffering from a depression in the left parietal region, a
would in the same place and in the back part of his head, while
blood issued from his nose and he was entirely unconscious.
The marks revealed that he had one or more fractures of the
skull and that the grey matter and brain was had suffered
material injury. At ten o'clock of the night in question, which was
the time set for performing the operation, his pulse was so weak
and so irregular that, in his opinion, there was little hope that he
would live. His right leg was broken in such a way that the
fracture extended to the outer skin in such manner that it might
be regarded as double and the would be exposed to infection,
for which reason it was of the most serious nature.
At another examination six days before the day of the trial, Dr.
Saleeby noticed that the plaintiff's leg showed a contraction of
an inch and a half and a curvature that made his leg very weak
and painful at the point of the fracture. Examination of his head
revealed a notable readjustment of the functions of the brain
and nerves. The patient apparently was slightly deaf, had a light
weakness in his eyes and in his mental condition. This latter
weakness was always noticed when the plaintiff had to do any
difficult mental labor, especially when he attempted to use his
money for mathematical calculations.
According to the various merchants who testified as witnesses,
the plaintiff's mental and physical condition prior to the accident
was excellent, and that after having received the injuries that
have been discussed, his physical condition had undergone a
noticeable depreciation, for he had lost the agility, energy, and
ability that he had constantly displayed before the accident as
one of the best constructors of wooden buildings and he could
not now earn even a half of the income that he had secured for
his work because he had lost 50 per cent of his efficiency. As a
contractor, he could no longer, as he had before done, climb up
ladders and scaffoldings to reach the highest parts of the
building.
As a consequence of the loss the plaintiff suffered in the
efficiency of his work as a contractor, he had to dissolved the
partnership he had formed with the engineer. Wilson, because
he was incapacitated from making mathematical calculations on
account of the condition of his leg and of his mental faculties,
and he had to give up a contract he had for the construction of
the Uy Chaco building."
We may say at the outset that we are in full accord with the trial court to
the effect that the collision between the plaintiff's motorcycle and the
ambulance of the General Hospital was due solely to the negligence of the
chauffeur.
The two items which constitute a part of the P14,741 and which are drawn
in question by the plaintiff are (a) P5,000, the award awarded for
permanent injuries, and (b) the P2,666, the amount allowed for the loss of
wages during the time the plaintiff was incapacitated from pursuing his
occupation. We find nothing in the record which would justify us in
increasing the amount of the first. As to the second, the record shows, and
the trial court so found, that the plaintiff's services as a contractor were
worth P1,000 per month. The court, however, limited the time to two
months and twenty-one days, which the plaintiff was actually confined in
the hospital. In this we think there was error, because it was clearly
established that the plaintiff was wholly incapacitated for a period of six
months. The mere fact that he remained in the hospital only two months
and twenty-one days while the remainder of the six months was spent in
his home, would not prevent recovery for the whole time. We, therefore,
find that the amount of damages sustained by the plaintiff, without any
fault on his part, is P18,075.
As the negligence which caused the collision is a tort committed by an
agent or employee of the Government, the inquiry at once arises whether
the Government is legally-liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
An Act authorizing E. Merritt to bring suit against the
Government of the Philippine Islands and authorizing the
Attorney-General of said Islands to appear in said suit.
Whereas a claim has been filed against the Government of the
Philippine Islands by Mr. E. Merritt, of Manila, for damages
resulting from a collision between his motorcycle and the
ambulance of the General Hospital on March twenty-fifth,
nineteen hundred and thirteen;
Whereas it is not known who is responsible for the accident nor
is it possible to determine the amount of damages, if any, to
which the claimant is entitled; and
Whereas the Director of Public Works and the Attorney-General
recommended that an Act be passed by the Legislature
authorizing Mr. E. Merritt to bring suit in the courts against the
Government, in order that said questions may be decided: Now,
therefore,
By authority of the United States, be it enacted by the Philippine
Legislature, that:
SECTION 1. E. Merritt is hereby authorized to bring suit in the
Court of First Instance of the city of Manila against the
Government of the Philippine Islands in order to fix the
responsibility for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the
amount of the damages, if any, to which Mr. E. Merritt is entitled
on account of said collision, and the Attorney-General of the
Philippine Islands is hereby authorized and directed to appear at
the trial on the behalf of the Government of said Islands, to
defendant said Government at the same.
SEC. 2. This Act shall take effect on its passage.
Enacted, February 3, 1915.
Did the defendant, in enacting the above quoted Act, simply waive its
immunity from suit or did it also concede its liability to the plaintiff? If only
the former, then it cannot be held that the Act created any new cause of
action in favor of the plaintiff or extended the defendant's liability to any
case not previously recognized.
All admit that the Insular Government (the defendant) cannot be sued by
an individual without its consent. It is also admitted that the instant case is
one against the Government. As the consent of the Government to be sued
by the plaintiff was entirely voluntary on its part, it is our duty to look
carefully into the terms of the consent, and render judgment accordingly.
The plaintiff was authorized to bring this action against the Government "in
order to fix the responsibility for the collision between his motorcycle and
the ambulance of the General Hospital and to determine the amount of the
damages, if any, to which Mr. E. Merritt is entitled on account of said
collision, . . . ." These were the two questions submitted to the court for
determination. The Act was passed "in order that said questions may be
decided." We have "decided" that the accident was due solely to the
negligence of the chauffeur, who was at the time an employee of the
defendant, and we have also fixed the amount of damages sustained by
the plaintiff as a result of the collision. Does the Act authorize us to hold
that the Government is legally liable for that amount? If not, we must look
elsewhere for such authority, if it exists.
The Government of the Philippine Islands having been "modeled after the
Federal and State Governments in the United States," we may look to the
decisions of the high courts of that country for aid in determining the
purpose and scope of Act No. 2457.
In the United States the rule that the state is not liable for the torts
committed by its officers or agents whom it employs, except when
expressly made so by legislative enactment, is well settled. "The
Government," says Justice Story, "does not undertake to guarantee to any
person the fidelity of the officers or agents whom it employs, since that
would involve it in all its operations in endless embarrassments, difficulties
and losses, which would be subversive of the public interest." (Claussen vs.
City of Luverne, 103 Minn., 491, citing U. S. vs. Kirkpatrick, 9 Wheat, 720;
6 L. Ed., 199; and Beers vs. States, 20 How., 527; 15 L. Ed., 991.)
In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to
recover damages from the state for personal injuries received on account
of the negligence of the state officers at the state fair, a state institution
created by the legislature for the purpose of improving agricultural and
kindred industries; to disseminate information calculated to educate and
benefit the industrial classes; and to advance by such means the material
interests of the state, being objects similar to those sought by the public
school system. In passing upon the question of the state's liability for the
negligent acts of its officers or agents, the court said:
No claim arises against any government is favor of an individual,
by reason of the misfeasance, laches, or unauthorized exercise
of powers by its officers or agents. (Citing Gibbons vs. U. S., 8
Wall., 269; Clodfelter vs. State, 86 N. C., 51, 53; 41 Am. Rep.,
440; Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158;
Green vs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27
Am. St. Rep., 203; Story on Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals to sue the
state where the cause of action arises out of either fort or contract, the
rule is stated in 36 Cyc., 915, thus:
By consenting to be sued a state simply waives its immunity
from suit. It does not thereby concede its liability to plaintiff, or
create any cause of action in his favor, or extend its liability to
any cause not previously recognized. It merely gives a remedy to
enforce a preexisting liability and submits itself to the jurisdiction
of the court, subject to its right to interpose any lawful defense.
In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April
16, 1915, the Act of 1913, which authorized the bringing of this suit, read:
SECTION 1. Authority is hereby given to George Apfelbacher, of
the town of Summit, Waukesha County, Wisconsin, to bring suit
in such court or courts and in such form or forms as he may be
advised for the purpose of settling and determining all
controversies which he may now have with the State of
Wisconsin, or its duly authorized officers and agents, relative to
the mill property of said George Apfelbacher, the fish hatchery of
the State of Wisconsin on the Bark River, and the mill property
of Evan Humphrey at the lower end of Nagawicka Lake, and
relative to the use of the waters of said Bark River and
Nagawicka Lake, all in the county of Waukesha, Wisconsin.
In determining the scope of this act, the court said:
Plaintiff claims that by the enactment of this law the legislature
admitted liability on the part of the state for the acts of its
officers, and that the suit now stands just as it would stand
between private parties. It is difficult to see how the act does, or
was intended to do, more than remove the state's immunity
from suit. It simply gives authority to commence suit for the
purpose of settling plaintiff's controversies with the estate.
Nowhere in the act is there a whisper or suggestion that the
court or courts in the disposition of the suit shall depart from
well established principles of law, or that the amount of
damages is the only question to be settled. The act opened the
door of the court to the plaintiff. It did not pass upon the
question of liability, but left the suit just where it would be in the
absence of the state's immunity from suit. If the Legislature had
intended to change the rule that obtained in this state so long
and to declare liability on the part of the state, it would not have
left so important a matter to mere inference, but would have
done so in express terms. (Murdock Grate Co. vs.
Commonwealth, 152 Mass., 28; 24 N.E., 854; 8 L. R. A., 399.)
In Denning vs. State (123 Cal., 316), the provisions of the Act of 1893,
relied upon and considered, are as follows:
All persons who have, or shall hereafter have, claims on contract
or for negligence against the state not allowed by the state
board of examiners, are hereby authorized, on the terms and
conditions herein contained, to bring suit thereon against the
state in any of the courts of this state of competent jurisdiction,
and prosecute the same to final judgment. The rules of practice
in civil cases shall apply to such suits, except as herein otherwise
provided.
And the court said:
This statute has been considered by this court in at least two
cases, arising under different facts, and in both it was held that
said statute did not create any liability or cause of action against
the state where none existed before, but merely gave an
additional remedy to enforce such liability as would have existed
if the statute had not been enacted. (Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Melvin vs. State, 121 Cal., 16.)
A statute of Massachusetts enacted in 1887 gave to the superior court
"jurisdiction of all claims against the commonwealth, whether at law or in
equity," with an exception not necessary to be here mentioned. In
construing this statute the court, in Murdock Grate Co. vs. Commonwealth
(152 Mass., 28), said:
The statute we are discussing disclose no intention to create
against the state a new and heretofore unrecognized class of
liabilities, but only an intention to provide a judicial tribunal
where well recognized existing liabilities can be adjudicated.
In Sipple vs. State (99 N. Y., 284), where the board of the canal claims
had, by the terms of the statute of New York, jurisdiction of claims for
damages for injuries in the management of the canals such as the plaintiff
had sustained, Chief Justice Ruger remarks: "It must be conceded that the
state can be made liable for injuries arising from the negligence of its
agents or servants, only by force of some positive statute assuming such
liability."
It being quite clear that Act No. 2457 does not operate to extend the
Government's liability to any cause not previously recognized, we will now
examine the substantive law touching the defendant's liability for the
negligent acts of its officers, agents, and employees. Paragraph 5 of article
1903 of the Civil Code reads:
The state is liable in this sense when it acts through a special
agent, but not when the damage should have been caused by
the official to whom properly it pertained to do the act
performed, in which case the provisions of the preceding article
shall be applicable.
The supreme court of Spain in defining the scope of this paragraph said:
That the obligation to indemnify for damages which a third
person causes to another by his fault or negligence is based, as
is evidenced by the same Law 3, Title 15, Partida 7, on that the
person obligated, by his own fault or negligence, takes part in
the act or omission of the third party who caused the damage. It
follows therefrom that the state, by virtue of such provisions of
law, is not responsible for the damages suffered by private
individuals in consequence of acts performed by its employees in
the discharge of the functions pertaining to their office, because
neither fault nor even negligence can be presumed on the part
of the state in the organization of branches of public service and
in the appointment of its agents; on the contrary, we must
presuppose all foresight humanly possible on its part in order
that each branch of service serves the general weal an that of
private persons interested in its operation. Between these latter
and the state, therefore, no relations of a private nature
governed by the civil law can arise except in a case where the
state acts as a judicial person capable of acquiring rights and
contracting obligations. (Supreme Court of Spain, January 7,
1898; 83 Jur. Civ., 24.)
That the Civil Code in chapter 2, title 16, book 4, regulates the
obligations which arise out of fault or negligence; and whereas
in the first article thereof. No. 1902, where the general principle
is laid down that where a person who by an act or omission
causes damage to another through fault or negligence, shall be
obliged to repair the damage so done, reference is made to acts
or omissions of the persons who directly or indirectly cause the
damage, the following articles refers to this persons and imposes
an identical obligation upon those who maintain fixed relations
of authority and superiority over the authors of the damage,
because the law presumes that in consequence of such relations
the evil caused by their own fault or negligence is imputable to
them. This legal presumption gives way to proof, however,
because, as held in the last paragraph of article 1903,
responsibility for acts of third persons ceases when the persons
mentioned in said article prove that they employed all the
diligence of a good father of a family to avoid the damage, and
among these persons, called upon to answer in a direct and not
a subsidiary manner, are found, in addition to the mother or the
father in a proper case, guardians and owners or directors of an
establishment or enterprise, the state, but not always, except
when it acts through the agency of a special agent, doubtless
because and only in this case, the fault or negligence, which is
the original basis of this kind of objections, must be presumed to
lie with the state.
That although in some cases the state might by virtue of the
general principle set forth in article 1902 respond for all the
damage that is occasioned to private parties by orders or
resolutions which by fault or negligence are made by branches
of the central administration acting in the name and
 representation of the state itself and as an external expression
of its sovereignty in the exercise of its executive powers, yet said
article is not applicable in the case of damages said to have been
occasioned to the petitioners by an executive official, acting in
the exercise of his powers, in proceedings to enforce the
collections of certain property taxes owing by the owner of the
property which they hold in sublease.
That the responsibility of the state is limited by article 1903 to
the case wherein it acts through a special agent (and a special
agent, in the sense in which these words are employed, is one
who receives a definite and fixed order or commission, foreign to
the exercise of the duties of his office if he is a special official) so
that in representation of the state and being bound to act as an
agent thereof, he executes the trust confided to him. This
concept does not apply to any executive agent who is an
employee of the acting administration and who on his own
responsibility performs the functions which are inherent in and
naturally pertain to his office and which are regulated by law and
the regulations." (Supreme Court of Spain, May 18, 1904; 98
Jur. Civ., 389, 390.)
That according to paragraph 5 of article 1903 of the Civil Code
and the principle laid down in a decision, among others, of the
18th of May, 1904, in a damage case, the responsibility of the
state is limited to that which it contracts through a special agent,
duly empowered by a definite order or commission to perform
some act or charged with some definite purpose which gives rise
to the claim, and not where the claim is based on acts or
omissions imputable to a public official charged with some
administrative or technical office who can be held to the proper
responsibility in the manner laid down by the law of civil
responsibility. Consequently, the trial court in not so deciding
and in sentencing the said entity to the payment of damages,
caused by an official of the second class referred to, has by
erroneous interpretation infringed the provisions of articles 1902
and 1903 of the Civil Code. (Supreme Court of Spain, July 30,
1911; 122 Jur. Civ., 146.)
It is, therefore, evidence that the State (the Government of the Philippine
Islands) is only liable, according to the above quoted decisions of the
Supreme Court of Spain, for the acts of its agents, officers and employees
when they act as special agents within the meaning of paragraph 5 of
article 1903, supra, and that the chauffeur of the ambulance of the
General Hospital was not such an agent.
For the foregoing reasons, the judgment appealed from must be reversed,
without costs in this instance. Whether the Government intends to make
itself legally liable for the amount of damages above set forth, which the
plaintiff has sustained by reason of the negligent acts of one of its
employees, by legislative enactment and by appropriating sufficient funds
therefor, we are not called upon to determine. This matter rests solely with
the Legislature and not with the courts.
G.R. No. L-35645 May 22, 1985
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY,
WILLIAM I. COLLINS and ROBERT GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First
Instance of Rizal and ELIGIO DE GUZMAN & CO., INC., respondents.
ABAD SANTOS, J.:
This is a petition to review, set aside certain orders and restrain the
respondent judge from trying Civil Case No. 779M of the defunct Court of
First Instance of Rizal.
The factual background is as follows:
At times material to this case, the United States of America had a naval
base in Subic, Zambales. The base was one of those provided in the
Military Bases Agreement between the Philippines and the United States.
Sometime in May, 1972, the United States invited the submission of bids
for the following projects
1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic
Bay, Philippines.
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage
to shoreline revetment, NAVBASE Subic; and repair to Leyte Wharf
approach, NAVBASE Subic Bay, Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted
bids. Subsequent thereto, the company received from the United States
two telegrams requesting it to confirm its price proposals and for the name
of its bonding company. The company complied with the requests. [In its
complaint, the company alleges that the United States had accepted its
bids because "A request to confirm a price proposal confirms the
acceptance of a bid pursuant to defendant United States' bidding
practices." (Rollo, p. 30.) The truth of this allegation has not been tested
because the case has not reached the trial stage.]
In June, 1972, the company received a letter which was signed by Wilham
I. Collins, Director, Contracts Division, Naval Facilities Engineering
Command, Southwest Pacific, Department of the Navy of the United
States, who is one of the petitioners herein. The letter said that the
company did not qualify to receive an award for the projects because of its
previous unsatisfactory performance rating on a repair contract for the sea
wall at the boat landings of the U.S. Naval Station in Subic Bay. The letter
further said that the projects had been awarded to third parties. In the
abovementioned Civil Case No. 779-M, the company sued the United
States of America and Messrs. James E. Galloway, William I. Collins and
Robert Gohier all members of the Engineering Command of the U.S. Navy.
The complaint is to order the defendants to allow the plaintiff to perform
the work on the projects and, in the event that specific performance was
no longer possible, to order the defendants to pay damages. The company
also asked for the issuance of a writ of preliminary injunction to restrain
the defendants from entering into contracts with third parties for work on
the projects.
The defendants entered their special appearance for the purpose only of
questioning the jurisdiction of this court over the subject matter of the
complaint and the persons of defendants, the subject matter of the
complaint being acts and omissions of the individual defendants as agents
of defendant United States of America, a foreign sovereign which has not
given her consent to this suit or any other suit for the causes of action
asserted in the complaint." (Rollo, p. 50.)
Subsequently the defendants filed a motion to dismiss the complaint which
included an opposition to the issuance of the writ of preliminary injunction.
The company opposed the motion. The trial court denied the motion and
issued the writ. The defendants moved twice to reconsider but to no avail.
Hence the instant petition which seeks to restrain perpetually the
proceedings in Civil Case No. 779-M for lack of jurisdiction on the part of
the trial court.
The petition is highly impressed with merit.
The traditional rule of State immunity exempts a State from being sued in
the courts of another State without its consent or waiver. This rule is a
necessary consequence of the principles of independence and equality of
States. However, the rules of International Law are not petrified; they are
constantly developing and evolving. And because the activities of states
have multiplied, it has been necessary to distinguish them-between
sovereign and governmental acts (jure imperii) and private, commercial
and proprietary acts (jure gestionis). The result is that State immunity now
extends only to acts jure imperil The restrictive application of State
immunity is now the rule in the United States, the United Kingdom and
other states in western Europe. (See Coquia and Defensor Santiago, Public
International Law, pp. 207-209 [1984].)
The respondent judge recognized the restrictive doctrine of State immunity
when he said in his Order denying the defendants' (now petitioners)
motion: " A distinction should be made between a strictly governmental
function of the sovereign state from its private, proprietary or non-
governmental acts (Rollo, p. 20.) However, the respondent judge also said:
"It is the Court's considered opinion that entering into a contract for the
repair of wharves or shoreline is certainly not a governmental function
altho it may partake of a public nature or character. As aptly pointed out
by plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc.,
[104 Phil. 594 (1958)], and which this Court quotes with approval, viz.:
It is however contended that when a sovereign state
enters into a contract with a private person, the state
can be sued upon the theory that it has descended to
the level of an individual from which it can be implied
that it has given its consent to be sued under the
contract. ...
We agree to the above contention, and considering
that the United States government, through its agency
at Subic Bay, entered into a contract with appellant for
stevedoring and miscellaneous labor services within
the Subic Bay Area, a U.S. Naval Reservation, it is
evident that it can bring an action before our courts
for any contractual liability that that political entity
may assume under the contract. The trial court,
therefore, has jurisdiction to entertain this case ...
(Rollo, pp. 20-21.)
The reliance placed on Lyons by the respondent judge is misplaced for the
following reasons:
In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff
brought suit in the Court of First Instance of Manila to collect several sums
of money on account of a contract between plaintiff and defendant. The
defendant filed a motion to dismiss on the ground that the court had no
jurisdiction over defendant and over the subject matter of the action. The
court granted the motion on the grounds that: (a) it had no jurisdiction
over the defendant who did not give its consent to the suit; and (b)
plaintiff failed to exhaust the administrative remedies provided in the
contract. The order of dismissal was elevated to this Court for review.
In sustaining the action of the lower court, this Court said:
It appearing in the complaint that appellant has not
complied with the procedure laid down in Article XXI
of the contract regarding the prosecution of its claim
against the United States Government, or, stated
differently, it has failed to first exhaust its
administrative remedies against said Government, the
lower court acted properly in dismissing this case.(At
p. 598.)
It can thus be seen that the statement in respect of the waiver of State
immunity from suit was purely gratuitous and, therefore, obiter so that it
has no value as an imperative authority.
The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign,
its commercial activities or economic affairs. Stated differently, a State may
be said to have descended to the level of an individual and can thus be
deemed to have tacitly given its consent to be sued only when it enters
into business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. In this case the projects are an integral
part of the naval base which is devoted to the defense of both the United
States and the Philippines, indisputably a function of the government of
the highest order; they are not utilized for nor dedicated to commercial or
business purposes.
That the correct test for the application of State immunity is not the
conclusion of a contract by a State but the legal nature of the act is shown
in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased
three apartment buildings to the United States of America for the use of its
military officials. The plaintiffs sued to recover possession of the premises
on the ground that the term of the leases had expired. They also asked for
increased rentals until the apartments shall have been vacated.
The defendants who were armed forces officers of the United States
moved to dismiss the suit for lack of jurisdiction in the part of the court.
The Municipal Court of Manila granted the motion to dismiss; sustained by
the Court of First Instance, the plaintiffs went to this Court for review on
certiorari. In denying the petition, this Court said:
On the basis of the foregoing considerations we are of
the belief and we hold that the real party defendant in
interest is the Government of the United States of
America; that any judgment for back or Increased
rentals or damages will have to be paid not by
defendants Moore and Tillman and their 64 co-
defendants but by the said U.S. Government. On the
basis of the ruling in the case of Land vs. Dollar
already cited, and on what we have already stated,
the present action must be considered as one against
the U.S. Government. It is clear hat the courts of the
Philippines including the Municipal Court of Manila
have no jurisdiction over the present case for unlawful
detainer. The question of lack of jurisdiction was
raised and interposed at the very beginning of the
action. The U.S. Government has not , given its
consent to the filing of this suit which is essentially
against her, though not in name. Moreover, this is not
only a case of a citizen filing a suit against his own
Government without the latter's consent but it is of a
citizen filing an action against a foreign government
without said government's consent, which renders
more obvious the lack of jurisdiction of the courts of
his country. The principles of law behind this rule are
so elementary and of such general acceptance that we
deem it unnecessary to cite authorities in support
thereof. (At p. 323.)
In Syquia,the United States concluded contracts with private individuals
but the contracts notwithstanding the States was not deemed to have
given or waived its consent to be sued for the reason that the contracts
were for jure imperii and not for jure gestionis.
WHEREFORE, the petition is granted; the questioned orders of the
respondent judge are set aside and Civil Case No. is dismissed. Costs
against the private respondent.