G.R. No.
L-41299 February 21, 1983 telegram was received by said counsel on July 23, 1968 (Exhibit
SOCIAL SECURITY SYSTEM, petitioner,
vs.
COURT OF APPEALS, DAVID B. CRUZ, SOCORRO
CONCIO CRUZ, and LORNA C. CRUZ, respondents.
The Solicitor General for petitioner.
Eribert D. Ignacio for respondents David Cruz, Socorro Concio
Cruz and Lorna Cruz.
MELENCIO-HERRERA, J.:
This Petition for Review on certiorari of the Decision of the Court
of Appeals 1 stems from the following facts, as narrated by the
Trial Court, adopted by the Court of Appeals, and quoted by both
petitioner 2 and private respondents 3:
Sometime in March, 1963 the spouses David B. Cruz and Socorro
Concio Cruz applied for and were granted a real estate loan by the
SSS with their residential lot located at Lozada Street, Sto.
Rosario, Pateros, Rizal covered by Transfer Certificate of Title
No. 2000 of the Register of Deeds of Rizal as collateral. Pursuant
to this real estate ban said spouses executed on March 26, 1963
the corresponding real estate mortgage originally in the amount of
P39,500.00 which was later increased to P48,000.00 covering the
aforementioned property as shown in their mortgage contract,
Exhibit A and 1. From the proceeds of the real estate loan the
mortgagors constructed their residential house on the mortgaged
property and were furnished by the SSS with a passbook to record
the monthly payments of their amortizations (Exhibits B and B-
1). The mortgagors, plaintiffs herein, complied with their monthly
payments although there were times when delays were incurred in
their monthly payments which were due every first five (5) days
of the month (Exhibits 3-A to 3-N). On July 9, 1968, defendant
SSS filed an application with the Provincial Sheriff of Rizal for
the foreclosure of the real estate mortgage executed by the
plaintiffs on the ground, among others:
That the conditions of the mortgage have been broken since
October, 1967 with the default on the part of the mortgagor to pay
in full the installments then due and payable on the principal debt
and the interest thereon, and, all of the monthly installments due
and payable thereafter up to the present date; …
That by the terms of the contract herein above referred to, the
indebtedness to the mortgagee as of June, 1968 amounts to Ten
Thousand Seven Hundred Two Pesos & 58/100 (P10,702.58),
Philippine Currency, excluding interests thereon, plus 20% of the
total amount of the indebtedness as attorney's fees, also secured
by the said mortgage. (Exhibit "C ")
Pursuant to this application for foreclosure, the notice of the
Sheriff's Sale of the mortgaged property was initially published in
the Sunday Chronicle in its issue of July 14, 1968 announcing the
sale at public auction of the said mortgaged property. After this
first publication of the notice, and before the second publication
of the notice, plaintiff herein thru counsel formally wrote
defendant SSS, a letter dated July 19, 1968 and received on the
same date by said entity demanding, among others, for said
defendant SSS to withdraw the foreclosure and discontinue the
publication of the notice of sale of their property claiming that
plaintiffs were up-to-date in the payment of their monthly
amortizations (Exhibits "E" and "E-1"). In answer to this letter
defendant SSS sent a telegram to Atty. Eriberto Ignacio
requesting him to come to their office for a conference. This
"G " and "G-1 "). To this telegraphic answer, Atty. Ignacio sent a
telegraphic reply suggesting instead that a representative of the
SSS be sent to him because his clients were the aggrieved parties
(Exhibit-. "G-2"). Nothing came out of the telegraphic
communications between the parties and the second and third
publications of the notice of foreclosure were published
successively in the Sunday Chronicle in its issues of July 21 and
28, 1968 (Exhibits "N-1 " and "O-1"). 4
On July 24, 1968, the Cruz spouses, together with their daughter
Lorna C. Cruz, instituted before the Court of First Instance of
Rizal an action for damages and attorney's fees against the Social
Security System (SSS) and the Provincial Sheriff of Rizal
alleging, among other things, that they had fully and religiously
paid their monthly amortizations and had not defaulted in any
payment.
In its Answer, with counterclaim, the SSS stressed its right to
foreclose the mortgage executed in its favor by private
respondents by virtue of the automatic acceleration clause
provided in the mortgage contract, even after private respondents
had paid their amortization installments. In its counterclaim, the
SSS prayed for actual and other damages, as well as attorney's
fees, for malicious and baseless statements made by private
respondents and published in the Manila Chronicle.
On September 23, 1968, the Trial Court enjoined the SSS from
holding the sale at public auction of private respondent's property
upon their posting of a P2,000.00 bond executed in favor of the
SSS.
The Trial Court rendered judgment on March 5, 1971, the
dispositive portion of which reads:
WHEREFORE, judgment is rendered against defendant SSS,
directing it to pay plaintiffs the following amounts:(a) P2,500.00
as actual damage;
(b) P35,000.00 as moral damage;
(c) P10,000.00 as exemplary or corrective damages; and
(d) P5,000.00 as attorney's fees.
Defendant SSS shall
further pay the costs. 5
In respect of the moral and temperate damages awarded, the Trial
Court stated:
With respect to moral and temperate damages, the Court holds
that the first publication of the notice was made in good faith but
committed by defendant SSS in gross negligence considering the
personnel at its command and the ease with which verifications of
the actual defaulting mortgagors may be made. On this initial
publication of the notice of foreclosure (Exhibits "M" and "M-
1"), the Court believes plaintiffs are entitled to the amount of
P5,000.00. The second publication of the notice of foreclosure is
another matter. There was already notice by plaintiffs to
defendant SSS that there was no reason for the foreclosure of
their mortgaged property as they were never in default. Instead of
taking any corrective measure to rectify its error, defendant SSS
adopted a position of righteousness and followed the same course
of action contending that no error has open committed. This act of
defendant indeed was deliberate, calculated to cow plaintiffs into
submission, and made obviously with malice. On this score, the
Court believes defendant SSS should pay and indemnify plaintiffs
jointly in the sum of P10,000.00. Lastly, on the third publication
of the notice of foreclosure, the Court finds this continued
publication an outright disregard for the reputation and standing
of plaintiffs. The publication having reached a bigger segment of
society and also done with malice and callous disregard for the
rights of its clients, defendant SSS should compensate plaintiffs
jointly in the sum of P20,000.00. All in all, plaintiffs are entitled
to P35,000.00 by way of moral damages. 6
On appeal, the Court of Appeals affirmed the lower Court
judgment in a Decision promulgated on March 14, 1975, but upon
SSS's Motion for Reconsideration, modified the judgment by the
elimination of the P5,000.00 moral damages awarded on account
of the initial publication of the foreclosure notice. To quote:
xxx xxx xxx
After a re-examination of the evidence, we
find that the negligence of the appellant is not
so gross as to warrant moral and temperate
damages. The amount of P5,000.00 should be
deducted from the total damages awarded to
the plaintiffs.
WHEREFORE, the decision promulgated on
March 14, 1975 is hereby maintained with the
sole modification that the amount of
P5,000.00 awarded on account of the initial
publication is eliminated so that the said
amount should be deducted from the total
damages awarded to the plaintiffs.
SO ORDERED. 7
In so far as exemplary and corrective damages are concerned, the
Court of Appeals had this to say.
The Court finds no extenuating circumstances
to mitigate the irresponsible action of
defendant SSS and for this reason, said
defendant should pay exemplary and
corrective damages in the sum of
P10,000.00 ...
Upon denial of its Motion for Reconsideration by respondent
Court, the SSS filed this Petition alleging —.
I. Respondent Court of Appeals erred in not
finding that under Condition No. 10 of the
Mortgage contract, which is a self-executing,
automatic acceleration clause, all
amortizations and obligations of the
mortgagors become ipso jure due and
demandable if they at any time fail to pay any
of the amortizations or interest when due;
II. Respondent Court of Appeals erred in
holding that a previous notice to the
mortgagor was necessary before the mortgage
could be foreclosed;
III. Respondent Court of Appeals erred in not
holding that, assuming that there was
negligence committed by subordinate
employees of the SSS in staking 'Socorro C.
Cruz' for 'Socorro J. Cruz' as the defaulting
borrower, the fault cannot be attributed to the
SSS, much less should the SSS be made liable
for their acts done without its knowledge and
authority;
IV. Respondent Court of Appeals erred in
holding that there is no extenuating
circumstance to mitigate the liability of
petitioner;
V. Respondent Court of Appeals erred in not
holding that petitioner is not liable for
damages not being a profit-oriented
governmental institution but one performing
governmental functions petitions. 8
For failure of the First Division to obtain concurrence of the five
remaining members (Justices Plana and Gutierrez, Jr. could take
no part), the case was referred to the Court en banc.
The pivotal issues raised are: (1) whether the Cruz spouses had, in
fact, violated their real estate mortgage contract with the SSS as
would have warranted the publications of the notices of
foreclosure; and (2) whether or not the SSS can be held liable for
damages.
The first issue revolves around the question of appreciation of the
evidence by the lower Court as concurred in by the Court of
Appeals. The appraisal should be left undisturbed following the
general rule that factual findings of the Court of Appeals are not
subject to review by this Court, the present case not being one of
the recognized exceptions to that rule. 9 Accordingly, we are
upholding the finding of the Court of Appeals that the SSS
application for foreclosure was not justified, particularly
considering that the real estate loan of P48,000.00 obtained by the
Cruzes in March, 1963, was payable in 15 years with a monthly
amortization of P425.18, and that as of July 14, 1968, the date of
the first notice of foreclosure and sale, the outstanding obligation
was still P38,875.06 and not P10,701.58, as published.
The appellant was not justified in applying for
the extrajudicial foreclosure of the mortgage
contract executed in its favor by the spouses,
David B. Cruz and Socorro Concio-Cruz,
Exh. 'A'. While it is true that the payments of
the monthly installments were previously not
regular, it is a fact that as of June 30, 1968 the
appellee, David B. Cruz and Socorro Concio-
Cruz were up-to-date and current in the
payment of their monthly installments.
Having accepted the prior late payments of
the monthly installments, the appellant could
no longer suddenly and without prior notice to
the mortgagors apply for the extra-judicial
foreclosure of the mortgage in July 1968. 10
A similar conclusion was reached by the trial Court.
Defendant's contention that there was clerical
error in the amount of the mortgage loan due
as of June, 1968 as per their application for
foreclosure of real estate mortgage is a naive
attempt to justify an untenable position. As a
matter of fact plaintiffs were able to establish
that the mortgagor who actually committed
the violation of her mortgage loan was a
certain 'Socorro J. Cruz' who was in arrears in
the amount of P10,702.58 at the time the
application for foreclosure of real estate
mortgage was filed Exhibits "BB" and "EE").
Defendant mortgagee must have committed
an error in picking the record of plaintiff
'Socorro C. Cruz' instead of the record of
'Socorro J. Cruz'. Defendant SSS, however,
denied having committed any error and insists
 that their motion for foreclosure covers the
real estate mortgage of spouses David E. Cruz
and Socorro C. Cruz. This Court is
nonetheless convinced that the foreclosure
proceedings should have been on the real
estate mortgage of 'Socorro J. Cruz' who was
in arrears as of June, 1968 in the amount of
P10,701.58, the exact amount mentioned in
the application for foreclosure of real estate
mortgage by defendant SSS. 11
We come now to the amendability of the SSS to judicial action
and legal responsibility for its acts. To our minds, there should be
no question on this score considering that the SSS is a juridical
entity with a personality of its own. 12 It has corporate powers
separate and distinct from the Government. 13 SSS' own organic
act specifically provides that it can sue and be sued in
Court. 14 These words "sue and be sued" embrace all civil
process incident to a legal action. 15 So that, even assuming that
the SSS, as it claims, enjoys immunity from suit as an entity
performing governmental functions, by virtue of the explicit
provision of the aforecited enabling law, the Government must be
deemed to have waived immunity in respect of the SSS, although
it does not thereby concede its liability. That statutoy law has
given to the private-citizen a remedy for the enforcement and
protection of his rights. The SSS thereby has been required to
submit to the jurisdiction of the Courts, subject to its right to
interpose any lawful defense. Whether the SSS performs
governmental or proprietary functions thus becomes unnecessary
to belabor. For by that waiver, a private citizen may bring a suit
against it for varied objectives, such as, in this case, to obtain
compensation in damages arising from contract 16 and even for
tort.
A recent case squarely in point anent the principle, involving the
National Power Corporation, is that of Rayo vs. Court of First
Instance of Bulacan, 110 SCRA 457 (1981), wherein this Court,
speaking through Mr. Justice Vicente Abad Santos, ruled:
It is not necessary to write an extended
dissertation on whether or not the NPC
performs a governmental function with
respect to the management and operation of
the Angat Dam. It is sufficient to say that the
government has organized a private
corporation, put money in it and has snowed it
to sue and be sued in any court under its
charter. (R.A. No. 6395, Sec. 3[d]). As a
government owned and controlled
corporation, it has a personality of its own,
distinct and separate from that of the
Government. (See National Shipyards and
Steel Corp. vs. CIR, et al., L-17874, August
31, 1963, 8 SCRA 78 1). Moreover, the
charter provision that the NPC can 'sue and be
sued in any court' is without qualification on
the cause of action and accordingly it can
include a tort claim such as the one instituted
by the petitioners.
The proposition that the SSS is not profit-oriented was rejected in
the case of SSS Employees' Association vs. Hon. Soriano. 17 But
even conceding that the SSS is not, in the main, operated for
profit, it cannot be denied that, in so far as contractual loan
agreements with private parties are concerned, the SSS enters into
them for profit considering that the borrowers pay interest, which
is money paid for the use of money, plus other charges.
In so far as it is argued that to hold the SSS liable for damages
would be to deplete the benefit funds available for its covered
members, suffice it to say, that expenditures of the System are not
confined to the payment of social security benefits. For example,
the System also has to pay the salaries of its personnel. Moreover,
drawing a parallel with the NASSCO and the Virginia Tobacco
Administration, whose funds are in the nature of public funds, it
has been held that those funds may even be made the object of a
notice of garnishment. 18
What is of paramount importance in this controversy is that an
injustice is not perpetrated and that when damage is caused a
citizen, the latter should have a right of redress particularly when
it arises from a purely private and contractual relationship
between said individual and the System.
We find, however, that under the circumstances of the case, the
SSS cannot be held liable for the damages as awarded by the Trial
Court and the Appellate Tribunal.
As basis for the award of actual damages, the Trial Court relied
on the alleged expenses incurred by private respondents for the
wardrobe they were supposed to use during their trip abroad,
which was allegedly aborted because of the filing of the
foreclosure application by the SSS. We find the foregoing too
speculative. There could have been other reasons why the trip did
not materialize. Moreover, it appears that private respondents'
passports had already expired but that they made no effort to
secure new passports. 19 Nor did they secure the necessary visas
from the local consulates of foreign countries they intended to
visit for their trip abroad. 20
Nor can the SSS be held liable for moral and temperate damages.
As concluded by the Court of Appeals "the negligence of the
appellant is not so gross as to warrant moral and temperate
damages", 21 except that, said Court reduced those damages by
only P5,000.00 instead of eliminating them. Neither can we agree
with the findings of both the Trial Court and respondent Court
that the SSS had acted maliciously or in bad faith. The SSS was
of the belief that it was acting in the legitimate exercise of its
right under the mortgage contract in the face of irregular
payments made by private respondents, and placed reliance on the
automatic acceleration clause in the contract. The filing alone of
the foreclosure application should not be a ground for an award of
moral damages in the same way that a clearly unfounded civil
action is not among the grounds for moral damages. 22
With the ruling out of compensatory, moral and temperate
damages, the grant of exemplary or corrective damages should
also be set aside. 23 Moreover, no proof has been submitted that
the SSS had acted in a wanton, reckless and oppressive
manner. 24
However, as found by both the Trial and Appellate Courts, there
was clear negligence on the part of SSS when they mistook the
loan account of Socorro J. Cruz for that of private respondent
Socorro C. Cruz. Its attention was called to the error, but it
adamantly refused to acknowledge its mistake. The SSS can be
held liable for nominal damages. This type of damages is not for
the purpose of indemnifying private respondents for any loss
suffered by them but to vindicate or recognize their rights which
have been violated or invaded by petitioner SSS. 25
The circumstances of the case also justify the award of attorney's
fees, as granted by the Trial and Appellate Courts, particularly
considering that private respondents were compelled to litigate
for the prosecution of their interests. 26
WHEREFORE, the judgment sought to be reviewed is hereby
modified in that petitioner SSS shall pay private respondents:
P3,000.00 as nominal damages; and P5,000.00 as attorney's fees.
Costs against petitioner Social Security System.
SO ORDERED.
G.R. No. 85284 February 28, 1990
REPUBLIC OF THE PHILIPPINES, petitioner
vs.
SANDIGANBAYAN, Third Division, SIMPLICIO A.
PALANCA in his own behalf as a stockholder of Bacolod Real
Estate Development Corporation (BREDCO), and other
stockholders similarly situated, respondents.
Hilado, Hagad & Hilado for private respondents.
RESOLUTION
PADILLA, J.:
This is a petition for certiorari to annul and set aside the
resolution of the Sandiganbayan (Third Division), dated 3 June
1988, granting the private respondents' motion to intervene in
Civil Case No. 0025 and admitting their answer in intervention,
as well as its resolution, dated 25 August 1988, denying the
petitioner's motion for reconsideration; PROHIBITION to order
the respondent court to cease and desist from proceeding with the
intervention filed with it; and alternatively, mandamus to compel
the respondent court to dismiss the intervention case.
The antecedents are as follows:
On 29 July 1987, the Republic of the Philippines, as Plaintiff,
through its governmental instrumentality the Presidential
Commission on Good Government (PCGG) filed with the
respondent Sandiganbayan a complaint against Ferdinand E.
Marcos, et al. for reconveyance, reversion, accounting, restitution
and damages, docketed therein as Civil Case No. 0025 (PCGG
No. 26). 1
On or about 3 September 1987, before the said Civil Case No.
0025 could be set for hearing, private respondent Simplicio A.
Palanca in his own behalf as a stockholder of Bacolod Real Estate
Development Corporation (BREDCO) and other stockholders
similarly situated, filed with the respondent Sandiganbayan a
"Motion For Leave To Intervene" 2 attaching thereto their
"Answer in Intervention ." 3
In their motion, private respondents alleged that they be —
... allowed to intervene in the present action and to file the
Answer in intervention hereto attached as Annex 'A', the said
stockholders having a legal interest in the matter in litigation and
in the disposition of the properties listed in Annex 'A' of the
Complaint as BREDCO LOTS and shares of stock in Bacolod
Real Estate Development Corporation.
In justification, it is further respectfully alleged that.
1. Close examination of the Complaint, in
particular par. 12 thereto under 'V. SPECIFIC
AVERMENTS OF DEFENDANTS'
ILLEGAL ACTS', makes no mention at all
about BREDCO being the subject of any
anomalous transaction engaged in by any of
the defendants, in consequence of which the
listed BREDCO lots could have been gotten
illegally. It is to be observed, on the other
hand, that the titles mentioned in aforesaid
Annex of the complaint covering the lots in
question are not registered in the names of
any of the defendants but in the name of
Bacolod Real Estate Development
Corporation.
2. Similarly, the shares of stock in Bacolod
Real Estate Development Corporation
appealing under PERSONAL PROPERTY on
page two of Annex A of the complaint t are '
carried not in the names of any of the
defendants, but in the name of Marsteel
Consolidated Inc. and were acquired under the
circumstances averred more in detail in the
accompanying Answer in Intervention by
reason of which detail shares should not be
involved in the present action.
3. If intervention is allowed, intervenors are
prepared to prove that if ever any of the
defendants through Marsteel Consolidated,
Inc. and Marsteel Corporation came to have
any interest in Bacolod Real Estate
Development Corporation, it was only by way
of accommodation on the part of BREDCO
stockholders who transferred their
shareholdings aggregating 70% of the
subscribed capital to enable Marsteel
Consolidated to secure adequate financing for
the reclamation and port development
project . 4
The foregoing allegations were further expanded and elaborated
in the private respondents' Answer in Intervention.
On 2 December 1987, petitioner filed its Reply 5 to Answer In
Intervention, while private respondents filed a "Rejoinder to
Reply With Motion To Release BREDCO Lots 6 and also a
"Motion To Calendar For Hearing" the motion to release
BREDCO lots. 7
On 22 January 1988, respondent court promulgated a
resolution 8 holding in abeyance action on the private
respondents' "Rejoinder to Reply with Motion to Release
BREDCO lots", and set the Motion for Leave to Intervene for
hearing on 2 February 1988.
On 11 March 1988, respondent court issued an order 9 giving
petitioner fifteen (1 5) days from 11 March 1988 within which to
file its opposition and/or comment on the motion to intervene and
giving the private respondents in turn ten (10) days within which
to file their reply thereto.
On 23 March 1988, petitioner filed its Motion to Dismiss
"Answer In Intervention," on the grounds that; (1) respondent
court lacks jurisdiction and (2) intervenors have no legal interest
in the matter in litigation, 10 which the private respondents
opposed. 11
On 6 June 1988, respondent court promulgated a Resolution dated
3 June 1988 12 granting the private respondents' motion to
intervene and admitting their Answer in Intervention.
Petitioner moved for reconsideration but this was denied by
respondent court in its resolution of 25 August 1989. 13
Hence, the instant petition.
The petitioner, through the Solicitor General, contends that in
issuing the questioned resolutions granting the Motion to
Intervene and admitting the Answer-in-Intervention, respondent
Sandiganbayan acted in contravention of a national or public
policy embedded in Executive Order Nos. 1, 2, 4 and related
issuances, or otherwise acted in a way not in accord with law or
with the applicable decisions of this Court, because:
(a) Petitioner, being the sovereign state, cannot be sued without
its consent, and the Intervention is, in legal effect, a suit or
counter- suit against the sovereign state, the Republic of the
Philippines;
(b) The cause of action of intervenors does not fall within the
jurisdiction of the Sandiganbayan as expressly spelled out in P.D.
No. 1606 and Executive Order No. 14;
(c) Intervenors have no legal interest in the matter in litigation,
and the subject matter is not in custodia legis of respondent court;
and
(d) Intervenors' claims, as contained in their Motion for
Intervention and Answer-in-Intervention, are claims between
and/or among Ferdinand and Imelda Marcos and their cronies,
i.e., "members of their immediate family close relatives,
subordinates, and/or business associates, dummies, agents and
nominees" and are cognizable not by respondent court but by the
regular courts or other for a Even if there would be multiple
litigations, as among themselves, the legal effect remains, i.e.,
that there is only one case filed by the Republic against the named
defendants in Civil Case No. 0025, grounded on causes of action
entirely distinct from any cause of action which intervenors may
have against Mr. Marcos and his cronies.
The petition is not impressed with merit.
The Rules of Court permit an aggrieved party, generally, to take a
cause and apply for relief with the appellate courts by way of
either of two distinct and dissimilar modes through the broad
process of appeal or the limited special civil action of certiorari.
An appeal brings up for review errors of judgment committed by
a court of competent jurisdiction over the subject of the suit or the
persons of the parties or any such error committed by the court in
the exercise of its jurisdiction amounting to nothing more than an
error of judgment. On the other hand, the writ of certiorari issues
for the correction of errors of jurisdiction only or grave abuse of
discretion amounting to lack or excess of jurisdiction. The writ of
certiorari cannot legally be used for any other purpose. In terms
of its function, the writ of certiorari serves to keep a lower court
within the bounds of its jurisdiction or to prevent it from
committing such a grave abuse of discretion amounting to excess
of jurisdiction or to relieve parties from arbitrary acts of courts —
acts which courts have no power or authority in law to
perform. 14
Hence, the main issue to be resolved in the present case, which is
principally a petition for certiorari to annul and set aside the
questioned resolutions of respondent court is, whether or not the
Sandiganbayan has jurisdiction over the action for intervention,
or if it has, whether respondent court acted with grave abuse of
discretion amounting to lack or excess of its jurisdiction in
rendering the questioned resolutions.
In the present case, petitioner merely contends that the cause of
action of intervenors does not fall within the jurisdiction of the
Sandiganbayan as expressly spelled out in Presidential Decree
No. 1606 and Executive Order No. 14; it does not claim that
respondent court committed grave abuse of discretion amounting
to lack or excess of its jurisdiction in rendering the questioned
resolutions.
The jurisdiction of the Sandiganbayan has already been settled
in Presidential Commission on Good Government vs. Hon.
Emmanuel G. Penal, etc., et al. 15 where the Court held that —
... Under Section 2 of the President's
Executive Order No. 14 issued on May 7,
1986, all cases of the Commission regarding
'the funds, Moneys, Assets, and Properties
Illegally Acquired or I Misappropriated by
Former President Ferdinand Marcos, Mrs.
Imelda Romualdez Marcos, their Close
Relatives, Subordinates, Business Associates,
Dummies, Agents, or Nominees whether civil
or criminal, are lodged within the 'exclusive
and original jurisdiction of the
Sandiganbayan' and all incidents arising
from, incidental to, or related to, such cases
necessarily fall likewise under the
Sandiganbayan's exclusive and original
jurisdiction, subject to review on certiorari
exclusively by the Supreme Court. (emphasis
supplied)
In reiterating the aforequoted ruling in six (6) subsequent
cases 16 which were decided jointly, again, the Court held that-
... the exclusive jurisdiction conferred on the
Sandiganbayan would evidently extend not
only to the principal causes of action, i.e., the
recovery of alleged ill-gotten wealth, but also
to 'all incidents arising from, incidental to, or
related to, such cases,' such as the dispute
over the sale of the shares, the propriety of the
issuance of ancillary writs or provisional
remedies relative thereto, the sequestration
thereof, which may not be made the subject of
separate actions or proceedings in another
forum.
Intervention is not an independent action, but is ancillary and
supplemental to an existing litigation. 17 Hence, the private
respondents' action for intervention in Civil Case No. 0025, not
being an independent action, is merely incidental to, or related to,
the said civil case. Since the respondent Sandiganbayan has the
exclusive and original jurisdiction over Civil Case No. 0025, it
has likewise original and exclusive jurisdiction over the private
respondents' action for intervention therein.
Now, considering that respondent Sandiganbayan has jurisdiction
not only over Civil Case No. 0025 but also over the private
respondents' action for intervention, any error or irregularity that
it may have committed in rendering its questioned resolutions, in
the exercise of its jurisdiction, amounts to an error of judgment,
which is not correctable in the present petition for certiorari but
by appeal.
Accordingly, this case may be dismissed outright without the
Court having to pass upon the other issues raised in the petition.
However, considering that the litigation below is of great public
interest and involves a matter of public policy, the Court has
decided to review the other errors allegedly committed by
respondent court in rendering its questioned resolutions.
In this jurisdiction, the law on "intervention" is found in the Rules
of Court. 18 Thus, a person may, before or during a trial, be
permitted by the court, in its discretion, to intervene in an action,
if he has legal interest in the matter in litigation, or in the success
of either of the parties or an interest against both, or when he is so
situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer
thereof. 19
The Court is not impressed with the contention of petitioner that
the intervenors have no legal interest in the matter in litigation. In
this connection, it would suffice to quote what the respondent
court said in holding that the intervenors have a legal interest in
the matter in litigation. Thus —
Has Palanca shown a proper case for intervention by him and his
co-stockholders who are similarly situated as he is?
A narration of the pertinent facts alleged by Palanca and the
plaintiff indicates the answer.
In 1961, BREDCO was awarded by Bacolod City a contract to
undertake the reclamation and port development of the city. As of
1975, a sizeable portion of land had already been reclaimed from
the sea and corresponding torrens titles issued in BREDCO's
name.
In that year, BREDCO engaged MARSTEEL as a contractor to
complete the project with power to negotiate in its name or jointly
and/or severally with BREDCO for loans to finance the
reclamation and port development, and to mortgage all reclaimed
lots and other assets of the project as security. For its services,
MARSTEEL shall receive 65% of the excess of all revenues over
all disbursements. Accordingly, BREDCO conveyed to
MARSTEEL 65% of each lot already reclaimed and that to be
reclaimed.
In 1977, MARSTEEL assigned to MCI, which owned 100% of its
capital stock, all its rights, interests, obligations, and undertakings
in the project. To enable MCI to expand its base of negotiation for
loans needed in the reclamation and port development the
BREDCO stockholders transferred to MCI their respective shares
of stock amounting to 70% of the capital stock of BREDCO. In
return, they 'shall be entitled to a share of 35% in excess of all
revenues over all disbursements of the projects,' it being
understood that payment of the corresponding share shall be due
to BREDCO stockholders as owners of existing interests in the
project, regardless of the fact that by implementation of this
AGREEMENT, they ceased to be stockholders of BREDCO.
In September 1986, the Presidential Commission on Good
Government (PCGG) sequestered all assets, properties, records
and documents' of MARSTEEL, MCI, and BREDCO'. In July
1987, the complaint at bar was filed and expanded in March
1988. The pleadings, original and expanded, allege that the
defendants, acting singly or collectively, amassed ill-gotten
wealth listed in Annex 'A' thereof, among which are the
BREDCO lots and shares of stock, and pray that the ill-gotten
wealth be reconveyed to the plaintiff, plus damages. Significantly,
however, the bodies of the complaints do not mention anything
about BREDCO, its project, lots, and stocks, nor about MCI.
Under these alleged facts, Palanca has established a proper case
for intervention. Firstly, he and his co-stockholders have a legal
interest in the matter in litigation, namely, their 70% of the capital
stock of BREDCO, which they transferred to MCI by way of
alleged accommodation, or its equivalent of 35% of the excess of
all revenues over all disbursements, to which they are entitled 'as
owners of existing interests in the project.' Section 2, Rule 12,
Revised Rules of Court, provides that a person may be permitted
'to intervene in an action, if he has legal interest in the matter in
litigation.'
As a general rule the right to intervene exists in favor of one who
claims to be the owner or to have some interest in the property
which is the subject of litigation, and this without particular
regard to the value of the property or the right claimed therein. A
third party may intervene in a sequestration suit involving title to
personal property, and have his claims to the possession of the
property vindicated therein So, in an action for possession of real
or personal property, an intervenor may be admitted on the
ground that he is an owner thereof, either to assist in the defense,
or to claim the property for himself, or to obtain some other relief
germane to the action.' (59 Am Jur 2d, Parties, Sec. 152, p. 585,
Secondly, the same Section 2, Rule 12, further provides that
intervention by a person may be permitted 'when he is so situated
as to be adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof.' On
this point, the Supreme Court observed:
We shall now speak of the case where the stranger desires to
intervene for the purpose of asserting a property right in the res,
or thing, which is the subject-matter of the ligitation, without
becoming a formal plaintiff or defendant, and without acquiring
the control over the course of a litigation, which is conceded to
the main actions (sic) therein. The mode of intervention to which
reference is now made is denominated in equity procedure the
intervention pro interesse suo and is somewhat analogous to the
trial of a right of property in an action of law, its purpose being to
enable a person whose property gets into the clutches of a court,
in a controversy between others, to go into court and to procure it
or its proceeds to be surrendered to him. It often happens that a
person who really owns property, or has a superior lien or other
interest in it, sees a litigation spring up between others who assert
rights in or concerning it. If the court takes possession of the res,
or otherwise gets jurisdiction over it in such a controversy, the
real owner is not compelled to stand Idly by and see the property
disposed of without asserting his rights. Though it be granted that
the litigation would not be technically binding on him, because of
his not being a party, yet it might well happen that complications
would ensue whereby his rights would be materially prejudiced.
For instance, the subject-matter of the litigation might consist of a
fund to he distributed, and the conditions might be such that if it
were turned over to the particular litigant who should appear to
have the better right in the original action, the person really
having a superior title might be left without redress. Accordingly
provision is made whereby persons who have not been joined as
parties in the original proceedings may intervene and assert a
right antagonistic or superior to that of one or both of the parties.
(Bosworth vs. Terminal etc. Assoc. of St. Louis, 174 U.S.
182,187, 43 L. ed., 941, 943). As regards the right to intervene in
this manner, it may be stated that if the party desiring to intervene
shows a legitimate and proper interest in the fund or property in
question, the motion to intervene should be granted, especially if
such interest cannot be otherwise properly protected. (Joaquin v.
Herrera, 37 Phil. 705, 722-724)
Here, the BREDCO lots and stocks were sequestered and are now
in custodia legis (Bernas, The Constitution of the Republic of the
Philippines, An Annotated Text, 1987 ed., p. 129, footnote 42).
From the facts averred by Palanca and the plaintiff, it is easy to
see that in the event We decide to order the reconveyance of those
assets to the plaintiff, Palanca and his co-stockholders in
BREDCO stand to be adversely affected.
And thirdly, the legal interest of Palanca and his co-stockholders
in the matter in litigation and the possibility of a judgment
ordering reconveyance in favor of the plaintiff, invest them with
legal interest in the success of the defendants, at least insofar as
the BREDCO lots and shares are concerned. Section 2, Rule 12,
also permits intervention by a person who has legal interest in the
success of either of the parties. 20
The petitioner's contention that the State cannot be sued without
its consent and that private respondents' action for intervention is,
in legal effect, a suit or counter-suit against the sovereign is also
untenable.
The Rules of Court 21 provide that the intervention shall be made
by complaint filed and served in regular form, and may be
answered as if it where an original complaint; but where the
intervenor unites with the defendant in resisting the claims of the
plaintiff, the intervention may be made in the form of an answer
to the complaint. In order words, a third person who makes
himself a party to an existing litigation, may either join the
plaintiff in claiming what is sought in the filing a complaint in
intervention, or by uniting with the defendant in resisting the
claims of the plaintiff, by filing an answer in intervention.
In Froilan v. Pan Oriental Shipping Co., 22 the plaintiff therein
Fernando A. Froilan filed a complaint against the defendant, Pan
Oriental Shipping Co. The Republic of the Philippines intervened
by filing a complaint in intervention. Thereafter, the defendant
filed its answer to the complaint in intervention, and set up a
counterclaim against the Republic of the Philippines. The trial
court dismissed the defendants counterclaim against the Republic
on the ground, among others, that the state is immune from suit.
On appeal, this Court held that the dismissal of the counterclaim
was untenable, because by filing its complaint in intervention the
Government in effect waived its right to non-suability.
In another case, Lim vs. Brownell, Jr. and Kagawa, 23 the
plaintiff Benito E. Lim, as administrator of the intestate estate of
Arsenia Enriquez, filed a complaint in the Court of First Instance
of Manila against the Alien Property Administrator (later
substituted by the Attorney General of the United States) for the
recovery of four (4) parcels of land (which were subsequently
transferred to the Republic of the Philippines) with a prayer for
the payment of back rentals. The Republic of the Philippines
intervened in the case. The defendant Attorney General of the
United States and the defendant- intervenor Republic of the
Philippines each filed an answer, alleging by way of affirmative
defense, among others, that the lower court had no jurisdiction
over the claim for rentals since the action in that regard
constituted a suit against the Republic to which it had not given
its consent. The trial court dismissed the complaint for lack of
jurisdiction. On appeal, this Court affirmed, with the following
reasons:
The claim for damages for the use of the property against the
intervenor defendant Republic of the Philippines to which it was
transferred, likewise, cannot be maintained because of the
immunity of the state from suit. The claim obviously constitutes a
charge against, or financial liability to, the Government and
consequently cannot be entertained by the courts except with the
consent of said government. (Syquia vs. Almeda Lopez, 84 Phil.
312; 47 Off. Gaz., 665; Compania General de Tabacos vs. Govt.
of the PI 45 Phil., 663). Plaintiff argues that by its intervention,
the Republic of the Philippines, in effect, waived its right of non-
suability, but it will be remembered that the Republic intervened
in the case merely to unite with the defendant Attorney General of
the United States in resisting plaintiffs claims, and for that reason
asked no affirmative relief against any party in the answer in
intervention. x x x. Clearly, this is not a case where the State
takes the initiative in an action against a private party by filing a
complaint in intervention, thereby surrendering its privileged
position and coming down to the level of the defendants what
happened in the case of Froilan vs. Pan Oriental Shipping Co., et
al.-95 Phil. 905 cited by the plaintiff but one where the State, as
one of the defendants merely resisted a claim against it precisely
on the ground, among others, of its privileged position which
exempts it from suit. (emphasis supplied).
In the present case, the private respondents intervened in Civil
Case No. 0025 merely to unite with the defendants therein in
resisting the claims of petitioner, as plaintiff, and for that reason
asked for no affirmative relief against any party in their answer
in intervention. In other words, this is not a case where the private
respondents take the initiative in an action against petitioner by
filing a complaint in intervention or a complaint. As observed by
respondent Sandiganbayan:
In intervening, Palanca and his co-
stockholders have for their purpose to exclude
the BREDCO lots and stocks or, at least, their
35% interest in the BREDCO project from
any possible judgment directing reconveyance
of the alleged ill-gotten wealth to the plaintiff.
They do not pray for damages against the
latter. In effect, they occupy a defensive
position as regards those shares of stock or
interest. The fact that they interjected
themselves into his litigation at their own
initiative does not alter the essential nature of
their intervention." 24
Private respondents' action for intervention in Civil Case No.
0025 is not, therefore, a suit or counter-suit against petitioner
Republic of the Philippines.
Having arrived at the above conclusions, the Court finds no need
to further discuss the petitioner's pretense that the private
respondents' claims are claims as between and/or among
Ferdinand and Imelda Marcos, et al., and that the same is not
cognizable by respondent Sandiganbayan but by the regular
courts. It suffices to state that, as already stated, in intervening in
Civil Case No. 0025, private respondents merely joined the
defendants therein in resisting the claims of petitioner, as
plaintiff, and that they asked no affirmative relief against any
party in their answer in intervention. They do not appear to have
any controversy with the defendants, Ferdinand and Imelda
Marcos, et al.
ACCORDINGLY, the petition in the present case is hereby
DISMISSED.
SO ORDERED.
G.R. No. L-55963 December 1, 1989
SPOUSES JOSE FONTANILLA AND VIRGINIA
FONTANILLA, petitioners,
vs.
HONORABLE INOCENCIO D. MALIAMAN and
NATIONAL IRRIGATION ADMINISTRATION, respondents.
G.R. No. L-61045 December 1, 1989
NATIONAL IRRIGATION ADMINISTRATION, appellant,
vs.
SPOUSES JOSE FONTANILLA and VIRGINIA
FONTANILLA, appellees.
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Felicisimo C. Villaflor for NIA.
PARAS, J.:
In G.R. No. L-55963, the petition for review on certiorari seeks
the affirmance of the decision dated March 20, 1980 of the then
Court of First Instance of Nueva Ecija, Branch VIII, at San Jose
City and its modification with respect to the denial of petitioner's
claim for moral and exemplary damages and attorneys fees.
In G.R. No. 61045, respondent National Irrigation Administration
seeks the reversal of the aforesaid decision of the lower court.
The original appeal of this case before the Court of Appeals was
certified to this Court and in the resolution of July 7, 1982, it was
docketed with the aforecited number. And in the resolution of
April 3, this case was consolidated with G.R. No. 55963.
It appears that on August 21, 1976 at about 6:30 P.M., a pickup
owned and operated by respondent National Irrigation
Administration, a government agency bearing Plate No. IN-651,
then driven officially by Hugo Garcia, an employee of said
agency as its regular driver, bumped a bicycle ridden by
Francisco Fontanilla, son of herein petitioners, and Restituto
Deligo, at Maasin, San Jose City along the Maharlika Highway.
As a result of the impact, Francisco Fontanilla and Restituto
Deligo were injured and brought to the San Jose City Emergency
Hospital for treatment. Fontanilla was later transferred to the
Cabanatuan Provincial Hospital where he died.
Garcia was then a regular driver of respondent National Irrigation
Administration who, at the time of the accident, was a licensed
professional driver and who qualified for employment as such
regular driver of respondent after having passed the written and
oral examinations on traffic rules and maintenance of vehicles
given by National Irrigation Administration authorities.
The within petition is thus an off-shot of the action (Civil Case
No. SJC-56) instituted by petitioners-spouses on April 17, 1978
against respondent NIA before the then Court of First Instance of
Nueva Ecija, Branch VIII at San Jose City, for damages in
connection with the death of their son resulting from the
aforestated accident.
After trial, the trial court rendered judgment on March 20, 1980
which directed respondent National Irrigation Administration to
pay damages (death benefits) and actual expenses to petitioners.
The dispositive portion of the decision reads thus:
. . . . . Judgment is here rendered ordering the
defendant National Irrigation Administration
to pay to the heirs of the deceased P12,000.00
for the death of Francisco Fontanilla;
P3,389.00 which the parents of the deceased
had spent for the hospitalization and burial of
the deceased Francisco Fontanilla; and to pay
the costs. (Brief for the petitioners spouses
Fontanilla, p. 4; Rollo, p. 132)
Respondent National Irrigation Administration filed on April 21,
1980, its motion for reconsideration of the aforesaid decision
which respondent trial court denied in its Order of June 13, 1980.
Respondent National Irrigation Administration thus appealed said
decision to the Court of Appeals (C.A.-G.R. No. 67237- R) where
it filed its brief for appellant in support of its position.
Instead of filing the required brief in the aforecited Court of
Appeals case, petitioners filed the instant petition with this Court.
The sole issue for the resolution of the Court is: Whether or not
the award of moral damages, exemplary damages and attorney's
fees is legally proper in a complaint for damages based on quasi-
delict which resulted in the death of the son of herein petitioners.
Petitioners allege:
1. The award of moral damages is specifically
allowable. under paragraph 3 of Article 2206
of the New Civil Code which provides that
the spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental
anguish by reason of the death of the
deceased. Should moral damages be granted,
the award should be made to each of
petitioners-spouses individually and in
varying amounts depending upon proof of
mental and depth of intensity of the same,
which should not be less than P50,000.00 for
each of them.
2. The decision of the trial court had made an
impression that respondent National Irrigation
Administration acted with gross negligence
because of the accident and the subsequent
failure of the National Irrigation
Administration personnel including the driver
to stop in order to give assistance to the,
victims. Thus, by reason of the gross
negligence of respondent, petitioners become
entitled to exemplary damages under Arts.
2231 and 2229 of the New Civil Code.
3. Petitioners are entitled to an award of
attorney's fees, the amount of which (20%)
had been sufficiently established in the
hearing of May 23, 1979.
4. This petition has been filed only for the
purpose of reviewing the findings of the lower
court upon which the disallowance of moral
damages, exemplary damages and attorney's
fees was based and not for the purpose of
disturbing the other findings of fact and
conclusions of law.
The Solicitor General, taking up the cudgels for public respondent
National Irrigation Administration, contends thus:
1. The filing of the instant petition is rot
proper in view of the appeal taken by
respondent National Irrigation Administration
to the Court of Appeals against the judgment
sought to be reviewed. The focal issue raised
in respondent's appeal to the Court of Appeals
involves the question as to whether or not the
driver of the vehicle that bumped the victims
was negligent in his operation of said vehicle.
It thus becomes necessary that before
petitioners' claim for moral and exemplary
damages could be resolved, there should first
be a finding of negligence on the part of
respondent's employee-driver. In this regard,
the Solicitor General alleges that the trial
court decision does not categorically contain
such finding.
2. The filing of the "Appearance and Urgent
Motion For Leave to File Plaintiff-Appellee's
Brief" dated December 28, 1981 by
petitioners in the appeal (CA-G.R. No. 67237-
R; and G. R. No.61045) of the respondent
National Irrigation Administration before the
Court of Appeals, is an explicit admission of
said petitioners that the herein petition, is not
proper. Inconsistent procedures are manifest
because while petitioners question the
findings of fact in the Court of Appeals, they
present only the questions of law before this
Court which posture confirms their admission
of the facts.
3. The fact that the parties failed to agree on
whether or not negligence caused the
vehicular accident involves a question of fact
which petitioners should have brought to the
Court of Appeals within the reglementary
period. Hence, the decision of the trial court
has become final as to the petitioners and for
this reason alone, the petition should be
dismissed.
4. Respondent Judge acted within his
jurisdiction, sound discretion and in
conformity with the law.
5. Respondents do not assail petitioners' claim
to moral and exemplary damages by reason of
the shock and subsequent illness they suffered
because of the death of their son. Respondent
National Irrigation Administration, however,
avers that it cannot be held liable for the
damages because it is an agency of the State
performing governmental functions and driver
Hugo Garcia was a regular driver of the
vehicle, not a special agent who was
performing a job or act foreign to his usual
duties. Hence, the liability for the tortious act
should. not be borne by respondent
government agency but by driver Garcia who
should answer for the consequences of his act.
6. Even as the trial court touched on the
failure or laxity of respondent National
Irrigation Administration in exercising due
diligence in the selection and supervision of
its employee, the matter of due diligence is
not an issue in this case since driver Garcia
was not its special agent but a regular driver
of the vehicle.
The sole legal question on whether or not petitioners may be
entitled to an award of moral and exemplary damages and
attorney's fees can very well be answered with the application of
Arts. 2176 and 2180 of theNew Civil Code.
Art. 2176 thus provides:
Whoever by act omission causes damage to
another, there being fault or negligence, is
obliged to pay for damage done. Such fault or
negligence, if there is no pre-existing
cotractual relation between the parties, is
called a quasi-delict and is governed by the
provisions of this Chapter
Paragraphs 5 and 6 of Art. 21 80 read as follows:
Employers shall be liable for the damages
caused by their employees and household
helpers acting within the scope of their
assigned tasks, even the though the former are
not engaged in any business or industry.
The State is responsible in like manner when
it acts through a special agent.; but not when
the damage has been caused by the official to
whom the task done properly pertains, in
which case what is provided in Art. 2176 shall
be applicable.
The liability of the State has two aspects. namely:
1. Its public or governmental aspects where it
is liable for the tortious acts of special agents
only.
2. Its private or business aspects (as when it
engages in private enterprises) where it
becomes liable as an ordinary employer. (p.
961, Civil Code of the Philippines; Annotated,
Paras; 1986 Ed. ).
In this jurisdiction, the State assumes a limited liability for the
damage caused by the tortious acts or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the State has
voluntarily assumed liability for acts done through special agents.
The State's agent, if a public official, must not only be specially
commissioned to do a particular task but that such task must be
foreign to said official's usual governmental functions. If the
State's agent is not a public official, and is commissioned to
perform non-governmental functions, then the State assumes the
role of an ordinary employer and will be held liable as such for its
agent's tort. Where the government commissions a private
individual for a special governmental task, it is acting through a
special agent within the meaning of the provision. (Torts and
Damages, Sangco, p. 347, 1984 Ed.)
Certain functions and activities, which can be performed only by
the government, are more or less generally agreed to be
"governmental" in character, and so the State is immune from tort
liability. On the other hand, a service which might as well be
provided by a private corporation, and particularly when it
collects revenues from it, the function is considered a
"proprietary" one, as to which there may be liability for the torts
of agents within the scope of their employment.
The National Irrigation Administration is an agency of the
government exercising proprietary functions, by express
provision of Rep. Act No. 3601. Section 1 of said Act provides:
Section 1. Name and domicile.-A body
corporate is hereby created which shall be
known as the National Irrigation
Administration, hereinafter called the NIA for
short, which shall be organized immediately
after the approval of this Act. It shall have its
principal seat of business in the City of
Manila and shall have representatives in all
provinces for the proper conduct of its
business.
Section 2 of said law spells out some of the NIA's proprietary
functions. Thus-
Sec. 2. Powers and objectives.-The NIA shall
have the following powers and objectives:
(a) x x x x x x x x x x x x x x x x x x
(b) x x x x x x x x x x x x x x x x x x
(c) To collect from the users of each irrigation
system constructed by it such fees as may be
necessary to finance the continuous operation
of the system and reimburse within a certain
period not less than twenty-five years cost of
construction thereof; and
(d) To do all such other tthings and to transact
all such business as are directly or indirectly
necessary, incidental or conducive to the
attainment of the above objectives.
Indubitably, the NIA is a government corporation with juridical
personality and not a mere agency of the government. Since it is a
corporate body performing non-governmental functions, it now
becomes liable for the damage caused by the accident resulting
from the tortious act of its driver-employee. In this particular
case, the NIA assumes the responsibility of an ordinary employer
and as such, it becomes answerable for damages.
This assumption of liability, however, is predicated upon the
existence of negligence on the part of respondent NIA. The
negligence referred to here is the negligence of supervision.
At this juncture, the matter of due diligence on the part of
respondent NIA becomes a crucial issue in determining its
liability since it has been established that respondent is a
government agency performing proprietary functions and as such,
it assumes the posture of an ordinary employer which, under Par.
5 of Art. 2180, is responsible for the damages caused by its
employees provided that it has failed to observe or exercise due
diligence in the selection and supervision of the driver.
It will be noted from the assailed decision of the trial court that
"as a result of the impact, Francisco Fontanilla was thrown to a
distance 50 meters away from the point of impact while Restituto
Deligo was thrown a little bit further away. The impact took place
almost at the edge of the cemented portion of the road."
(Emphasis supplied,) [page 26, Rollo]
The lower court further declared that "a speeding vehicle coming
in contact with a person causes force and impact upon the vehicle
that anyone in the vehicle cannot fail to notice. As a matter of
fact, the impact was so strong as shown by the fact that
the vehicle suffered dents on the right side of the radiator guard,
the hood, the fender and a crack on the radiator as shown by the
investigation report (Exhibit "E"). (Emphasis supplied) [page 29,
Rollo]
It should be emphasized that the accident happened along the
Maharlika National Road within the city limits of San Jose City,
an urban area. Considering the fact that the victim was thrown 50
meters away from the point of impact, there is a strong indication
that driver Garcia was driving at a high speed. This is confirmed
by the fact that the pick-up suffered substantial and heavy damage
as above-described and the fact that the NIA group was then "in a
hurry to reach the campsite as early as possible", as shown by
their not stopping to find out what they bumped as would have
been their normal and initial reaction.
Evidently, there was negligence in the supervision of the driver
for the reason that they were travelling at a high speed within the
city limits and yet the supervisor of the group, Ely Salonga, failed
to caution and make the driver observe the proper and allowed
speed limit within the city. Under the situation, such negligence is
further aggravated by their desire to reach their destination
without even checking whether or not the vehicle suffered
damage from the object it bumped, thus showing imprudence and
reckelessness on the part of both the driver and the supervisor in
the group.
Significantly, this Court has ruled that even if the employer can
prove the diligence in the selection and supervision (the latter
aspect has not been established herein) of the employee, still if he
ratifies the wrongful acts, or take no step to avert further damage,
the employer would still be liable. (Maxion vs. Manila Railroad
Co., 44 Phil. 597).
Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-
26810, August 31, 1970, 34 SCRA 618), this Court held that a
driver should be especially watchful in anticipation of others who
may be using the highway, and his failure to keep a proper look
out for reasons and objects in the line to be traversed constitutes
negligence.
Considering the foregoing, respondent NIA is hereby directed to
pay herein petitioners-spouses the amounts of P12,000.00 for the
death of Francisco Fontanilla; P3,389.00 for hospitalization and
burial expenses of the aforenamed deceased; P30,000.00 as moral
damages; P8,000.00 as exemplary damages and attorney's fees of
20% of the total award.
SO ORDERED.
G.R. No. 74135 May 28, 1992
M. H. WYLIE and CAPT. JAMES WILLIAMS, petitioners,
vs.
AURORA I. RARANG and THE HONORABLE
INTERMEDIATE APPELLATE COURT, respondents.
GUTIERREZ, JR., J.:
The pivotal issue in this petition centers on the extent of the
"immunity from suit" of the officials of a United States Naval
Base inside Philippine territory.
In February, 1978, petitioner M. H. Wylie was the assistant
administrative officer while petitioner Capt. James Williams was
the commanding officer of the U. S. Naval Base in Subic Bay,
Olongapo City. Private respondent Aurora I. Rarang was an
employee in the office of the Provost Marshal assigned as
merchandise control guard.
M. H. Wylie, in his capacity as assistant administrative officer of
the U.S. Naval Station supervised the publication of the "Plan of
the Day" (POD) which was published daily by the US Naval Base
station. The POD featured important announcements, necessary
precautions, and general matters of interest to military personnel.
One of the regular features of the POD was the "action line
inquiry." On February 3, 1978, the POD published, under the
"NAVSTA ACTION LINE INQUIRY" the following:
Question: I have observed that Merchandise
Control inspector/inspectress are (sic)
consuming for their own benefit things they
have confiscated from Base Personnel. The
observation is even more aggravated by
consuming such confiscated items as
cigarettes and food stuffs PUBLICLY. This is
not to mention "Auring" who is in herself, a
disgrace to her division and to the Office of
the Provost Marshal. In lieu of this
observation, may I therefore, ask if the head
of the Merchandise Control Division is aware
of this malpractice?
Answer: Merchandise Control Guards and all
other personnel are prohibited from
appropriating confiscated items for their own
consumption or use. Two locked containers
are installed at the Main Gate area for deposit
of confiscated items and the OPM evidence
custodian controls access to these containers.
Merchandise Control Guards are permitted to
eat their meals at their worksite due to heavy
workload. Complaints regarding merchandise
control guards procedure or actions may be
made directly at the Office of the Provost
Marshal for immediate and necessary action.
Specific dates and time along with details of
suspected violations would be most
appreciated. Telephone 4-3430/4-3234 for
further information or to report noted or
suspected irregularities. Exhibits E & E-1.
(Rollo, pp. 11-12)
The private respondent was the only one who was named
"Auring" in the Office of the Provost Marshal. That the private
respondent was the same "Auring" referred to in the POD was
conclusively proven when on February 7, 1978, petitioner M. H.
Wylie wrote her a letter of apology for the "inadvertent"
publication. The private respondent then commenced an action
for damages in the Court of First Instance of Zambales (now
Regional Trial Court) against
M. H. Wylie, Capt. James Williams and the U. S. Naval Base. She
alleged that the article constituted false, injurious, and malicious
defamation and libel tending to impeach her honesty, virtue and
reputation exposing her to public hatred, contempt and ridicule;
and that the libel was published and circulated in the English
language and read by almost all the U. S. Naval Base personnel.
She prayed that she be awarded P300,000.00 as moral damages;
exemplary damages which the court may find proper; and
P50,000.00 as attorney's fees.
In response to the complaint, the defendants filed a motion to
dismiss anchored on three grounds:
1. Defendants M. H. Wylie and Capt. James
Williams acted in the performance of their
official functions as officers of the United
States Navy and are, therefore, immune from
suit;
2. The United States Naval Base is an
instrumentality of the US government which
cannot be sued without its consent; and
3. This Court has no jurisdiction over the
subject matter as well as the parties in this
case. (Record on Appeal, pp. 133-134)
The motion was, however, denied.
In their answer, the defendants reiterated the lack of jurisdiction
of the court over the case.
In its decision, the trial court ruled that the acts of defendants M.
H. Wylie and Cpt. James Williams were not official acts of the
government of the United States of America in the operation and
control of the Base but personal and tortious acts which are
exceptions to the general rule that a sovereign country cannot be
sued in the court of another country without its consent. In short,
the trial court ruled that the acts and omissions of the two US
officials were not imputable against the US government but were
done in the individual and personal capacities of the said officials.
The trial court dismissed the suit against the US Naval Base. The
dispositive portion of the decision reads as follows:
WHEREFORE, judgment is hereby rendered
in favor of the plaintiff and against the
defendants jointly and severally, as follows:
1) Ordering defendants M. H. Wylie and Capt.
James Williams to pay the plaintiff Aurora
Rarang the sum of one hundred thousand
(P100,000.00) pesos by way of moral and
exemplary damages;
2) Ordering defendants M. H. Wylie and Capt.
James Williams to pay the plaintiff the sum of
thirty thousand (P30,000.00) pesos by way of
attorney's fees and expenses of litigation; and
3) To pay the costs of this suit.
Counterclaims are dismissed.
Likewise, the suit against the U.S. Naval Base
is ordered dismissed. (Record on Appeal, p.
154)
On appeal, the petitioners reiterated their stance that they are
immune from suit since the subject publication was made in their
official capacities as officers of the U. S. Navy. They also
maintained that they did not intentionally and maliciously cause
the questioned publication.
The private respondent, not satisfied with the amount of damages
awarded to her, also appealed the trial court's decision.
Acting on these appeals, the Intermediate Appellate Court, now
Court of Appeals, modified the trial court's decision, to wit:
WHEREFORE, the judgment of the court
below is modified so that the defendants are
ordered to pay the plaintiff, jointly and
severally, the sum of P175,000.00 as moral
damages and the sum of P60,000.00 as
exemplary damages. The rest of the judgment
appealed from is hereby affirmed in toto.
Costs against the defendants-appellants.
(Rollo, p. 44)
The appellate court denied a motion for reconsideration filed by
the petitioners.
Hence, this petition.
In a resolution dated March 9, 1987, we gave due course to the
petition.
The petitioners persist that they made the questioned publication
in the performance of their official functions as administrative
assistant, in the case of M. H. Wylie, and commanding officer, in
the case of Capt. James Williams of the US Navy assigned to the
U. S. Naval Station, Subic Bay, Olongapo City and were,
therefore, immune from suit for their official actions.
In the case of United States of America v. Guinto (182 SCRA 644
[1990]), we discussed the principle of the state immunity from
suit as follows:
The rule that a state may not be sued without
its consent, now expressed in Article XVI,
Section 3, of the 1987 Constitution, is one of
the generally accepted principles of
international law that we have adopted as part
of the law of our land under Article II, Section
2.
xxx xxx xxx
Even without such affirmation, we would still
be bound by the generally accepted principles
of international law under the doctrine of
incorporation. Under this doctrine, as
accepted by the majority of states, such
principles are deemed incorporated in the law
of every civilized state as a condition and
consequence of its membership in the society
of nations. Upon its admission to such society,
the state is automatically obligated to comply
with these principles in its relations with other
states.
As applied to the local state, the doctrine of
state immunity is based on the justification
given by Justice Holmes that "there can be no
legal right against the authority which makes
the law on which the right depends."
(Kawanakoa v. Polybank, 205 U.S. 349)
There are other practical reasons for the
enforcement of the doctrine. In the case of the
foreign state sought to be impleaded in the
local jurisdiction, the added inhibition is
expressed in the maxim par in parem, non
habet imperium. All states are sovereign
equals and cannot assert jurisdiction over one
another. A contrary disposition would, in the
language of a celebrated case, "unduly vex the
peace of nations." (Da Haber v. Queen of
Portugal, 17 Q. B. 171)
While the doctrine appears to prohibit only
suits against the state without its consent, it is
also applicable to complaints filed against
officials of the state for acts allegedly
performed by them in the discharge of their
duties. The rule is that if the judgment against
such officials will require the state itself to
perform an affirmative act to satisfy the same,
such as the appropriation of the amount
needed to pay the damages awarded against
them, the suit must be regarded as against the
state itself although it has not been formally
impleaded. (Garcia v. Chief of Staff, 16 SCRA
120) In such a situation, the state may move
to dismiss the complaint on the ground that it
has been filed without its consent.
The doctrine is sometimes derisively called
"the royal prerogative of dishonesty" because
of the privilege it grants the state to defeat any
legitimate claim against it by simply invoking
its non-suability. That is hardly fair, at least in
democratic societies, for the state is not an
unfeeling tyrant unmoved by the valid claims
of its citizens. In fact, the doctrine is not
absolute and does not say the state may not be
sued under any circumstance. On the contrary,
the rule says that the state may not be sued
without its consent, which clearly imports that
it may be sued if it consents.
The consent of the state to be sued may be
manifested expressly or impliedly. Express
consent may be embodied in a general law or
a special law. Consent is implied when the
state enters into a contract it itself commences
litigation.
xxx xxx xxx
The above rules are subject to qualification.
Express consent is effected only by the will of
the legislature through the medium of a duly
enacted statute. (Republic v. Purisima, 78
SCRA 470) We have held that not all
contracts entered into by the government will
operate as a waiver of its non-suability;
distinction must be made between its
sovereign and proprietary acts. (United States
of America v. Ruiz, 136 SCRA 487) As for the
filing of a complaint by the government,
suability will result only where the
government is claiming affirmative relief
from the defendant. (Lim v. Brownell, 107
Phil. 345) (at pp. 652-655)
In the same case we had opportunity to discuss extensively the and of such general acceptance that we deem it unnecessary to
nature and extent of immunity from suit of United States cite authorities in support thereof."
personnel who are assigned and stationed in Philippine territory,
to wit: xxx xxx xxx

In the case of the United States of America, the customary rule of It bears stressing at this point that the above
international law on state immunity is expressed with more observations do not confer on the United
specificity in the RP-US Bases Treaty. Article III thereof provides States of America a blanket immunity for all
as follows: acts done by it or its agents in the Philippines.
Neither may the other petitioners claim that
It is mutually agreed that the United States shall have the rights, they are also insulated from suit in this
power and authority within the bases which are necessary for the country merely because they have acted as
establishment, use, operation and defense thereof or appropriate agents of the United States in the discharge of
for the control thereof and all the rights, power and authority their official functions.
within the limits of the territorial waters and air space adjacent to,
or in the vicinity of, the bases which are necessary to provide There is no question that the United States of
access to them or appropriate for their control. America, like any other state, will be deemed
to have impliedly waived its non-suability if it
The petitioners also rely heavily on Baer v. Tizon, (57 SCRA 1) has entered into a contract in its proprietary or
along with several other decisions, to support their position that private capacity. It is only when the contract
they are not suable in the cases below, the United States not involves its sovereign or governmental
having waived its sovereign immunity from suit. It is emphasized capacity that no such waiver may be implied.
that in Baer, the Court held: This was our ruling in United States of
America v. Ruiz, (136 SCRA 487) where the
The invocation of the doctrine of immunity from suit of a foreign transaction in question dealt with the
state without its consent is appropriate. More specifically, insofar improvement of the wharves in the naval
as alien armed forces is concerned, the starting point is Raquiza installation at Subic Bay. As this was a clearly
v. Bradford, a 1945 decision. In dismissing a habeas governmental function, we held that the
corpus petition for the release of petitioners confined by contract did not operate to divest the United
American army authorities, Justice Hilado, speaking for the States of its sovereign immunity from suit. In
Court, cited Coleman v. Tennessee, where it was explicitly the words of Justice Vicente Abad Santos:
declared: "It is well settled that a foreign army, permitted to
march through a friendly country or to be stationed in it, by • The traditional rule of immunity excepts a
permission of its government or sovereign, is exempt from the State from being sued in the courts of another
civil and criminal jurisdiction of the place." Two years later, State without its consent or waiver. This rule
in Tubb and Tedrow v. Griess, this Court relied on the ruling is a necessary consequence of the principles
in Raquiza v. Bradford and cited in support thereof excerpts from of independence and equality of States.
the works of the following authoritative writers: Vattel, Wheaton, However, the rules of International Law are
Hall, Lawrence, Oppenheim, Westlake, Hyde, and McNair and not petrified; they are constantly developing
Lauterpacht. Accuracy demands the clarification that after the and evolving. And because the activities of
conclusion of the Philippine-American Military Bases states have multiplied, it has been necessary
Agreement, the treaty provisions should control on such matter, to distinguish them –– between sovereign and
the assumption being that there was a manifestation of the governmental acts (jure imperii) and private,
submission to jurisdiction on the part of the foreign power commercial and proprietary acts (jure
whenever appropriate. More to the point is Syquia v. Almeda gestionis). The result is that State immunity
Lopez, where plaintiffs as lessors sued the Commanding General now extends only to acts jure imperii. The
of the United States Army in the Philippines, seeking the restrictive application of State immunity is
restoration to them of the apartment buildings they owned leased now the rule in the United States, the United
to the United States armed forces station in the Manila area. A Kingdom and other states in Western Europe.
motion to dismiss on the ground of non-suability was filed and
upheld by respondent Judge. The matter was taken to this Court xxx xxx xxx
in a mandamus proceeding. It failed. It was the ruling that The restrictive application
respondent Judge acted correctly considering that the "action of State immunity is
must be considered as one against the U.S. Government." The proper only when the
opinion of Justice Montemayor continued: "It is clear that the proceedings arise out of
courts of the Philippines including the Municipal Court of Manila commercial transactions
have no jurisdiction over the present case for unlawful detainer. of the foreign sovereign,
The question of lack of jurisdiction was raised and interposed at its commercial activities
the very beginning of the action. The U.S. Government has not or economic affairs. Stated
given its consent to the filing of this suit which is essentially differently, a State may be
against her, though not in name. Moreover, this is not only a case said to have descended to
of a citizen filing a suit against his own Government without the the level of an individual
latter's consent but it is of a citizen filing an action against a and can thus be deemed to
foreign government without said government's consent, which have tacitly given its
renders more obvious the lack of jurisdiction of the courts of his consent to be sued only
country. The principles of law behind this rule are so elementary when it enters into
business contracts. It does
 not apply where the
contract relates to the
exercise of its sovereign
functions. In this case the
projects are an integral
part of the naval base
which is devoted to the
defense of both the United
States and the Philippines,
indisputably a function of
the government of the
highest order; they are not
utilized for nor dedicated
to commercial or business
purposes.
The other petitioners in the cases before us all
aver they have acted in the discharge of their
official functions as officers or agents of the
United States. However, this is a matter of
evidence. The charges against them may not
be summarily dismissed on their mere
assertion that their acts are imputable to the
United States of America, which has not given
its consent to be sued. In fact, the defendants
are sought to be held answerable for personal
torts in which the United States itself is not
involved. If found liable, they and they alone
must satisfy the judgment. (At pp. 655-658)
In the light of these precedents, we proceed to resolve the present
case.
The POD was published under the direction and authority of the
commanding officer, U.S. Naval Station Subic Bay. The
administrative assistant, among his other duties, is tasked to
prepare and distribute the POD. On February 3, 1978, when the
questioned article was published in the POD, petitioner Capt.
James Williams was the commanding officer while petitioner
M.H. Wylie was the administrative assistant of the US Naval
Station at Subic bay.
The NAVSTA ACTION LINE INQUIRY is a regular feature of
the POD. It is a telephone answering device in the office of the
Administrative Assistant. The Action Line is intended to provide
personnel access to the Commanding Officer on matters they feel
should be brought to his attention for correction or investigation.
The matter of inquiry may be phoned in or mailed to the POD.
(TSN, September 9, 1980, pp. 12-13, Jerry Poblon) According to
M. H. Wylie, the action line naming "Auring" was received about
three (3) weeks prior to its being published in the POD on
February 3, 1978. It was forwarded to Rarang's office of
employment, the Provost Marshal, for comment. The Provost
Marshal office's response ". . . included a short note stating that if
the article was published, to remove the name." (Exhibit 8-A, p.
5) The Provost Marshal's response was then forwarded to the
executive officer and to the commanding officer for approval. The
approval of the Commanding officer was forwarded to the office
of the Administrative Assistant for inclusion in the POD. A
certain Mrs. Dologmodin, a clerk typist in the office of the
Administrative Assistant prepared the smooth copy of the POD.
Finally, M. H. Wylie, the administrative assistant signed the
smooth copy of the POD but failed to notice the reference to
"Auring" in the action line inquiry. (Exh. 8-A, pp. 4-5, Questions
Nos. 14-15).
There is no question, therefore, that the two (2) petitioners
actively participated in screening the features and articles in the
POD as part of their official functions. Under the rule that U.S.
officials in the performance of their official functions are immune
from suit, then it should follow that the petitioners may not be
held liable for the questioned publication.
It is to be noted, however, that the petitioners were sued in their
personal capacities for their alleged tortious acts in publishing a
libelous article.
The question, therefore, arises –– are American naval officers
who commit a crime or tortious act while discharging official
functions still covered by the principle of state immunity from
suit? Pursuing the question further, does the grant of rights,
power, and authority to the United States under the RP-US Bases
Treaty cover immunity of its officers from crimes and torts? Our
answer is No.
Killing a person in cold blood while on patrol duty, running over
a child while driving with reckless imprudence on an official trip,
or slandering a person during office hours could not possibly be
covered by the immunity agreement. Our laws and, we presume,
those of the United States do not allow the commission of crimes
in the name of official duty.
The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991]
gives the law on immunity from suit of public officials:
The general rule is that public officials can be held personally
accountable for acts claimed to have been performed in
connection with official duties where they have acted ultra
vires or where there is showing of bad faith.
Moreover, the petitioner's argument that the immunity proviso
under Section 4(a) of Executive Order No. 1 also extends to him
is not well-taken. A mere invocation of the immunity clause does
not ipso facto result in the charges being automatically dropped.
In the case of Presidential Commission on Good Government
v. Peña (159 SCRA 556 [1988] then Chief Justice Claudio
Teehankee, added a clarification of the immunity accorded PCGG
officials under Section 4(a) of Executive Order No. 1 as follows:
With respect to the qualifications expressed by Mr. Justice
Feliciano in his separate opinion, I just wish to point out two
things: First, the main opinion does not claim absolute immunity
for the members of the Commission. The cited section of
Executive Order No. 1 provides the Commission's members
immunity from suit thus: "No civil action shall lie against the
Commission or any member thereof for anything done or omitted
in the discharge of the task contemplated by this order." No
absolute immunity like that sought by Mr. Marcos in his
Constitution for himself and his subordinates is herein
involved. It is understood that the immunity granted the members
of the Commission by virtue of the unimaginable magnitude of its
task to recover the plundered wealth and the State's exercise of
police power was immunity from liability for damages in the
official discharge of the task granted the members of the
Commission much in the same manner that judges are immune
from suit in the official discharge of the functions of their office.
. . . (at pp. 581-582
Immunity from suit cannot institutionalize irresponsibility and
non-accountability nor grant a privileged status not claimed by
any other official of the Republic. (id., at page 586)
Where the petitioner exceeds his authority as Solicitor General,
acts in bad faith, or, as contended by the private respondent,
"maliciously conspir(es) with the PCGG commissioners in
persecuting respondent Enrile by filing against him an evidently
baseless suit in derogation of the latter's constitutional rights and
liberties" (Rollo, p. 417), there can be no question that a
complaint for damages does not confer a license to persecute or
recklessly injure another. The actions governed by Articles 19, 20,
21, and 32 of the Civil Code on Human Relations may be taken
against public officers or private citizens alike. . . . (pp. 289-291)
We apply the same ruling to this case.
The subject article in the US Newsletter POD dated February 3,
1978 mentions a certain "Auring" as ". . a disgrace to her division
and to the Office of the Provost Marshal." The same article
explicitly implies that Auring was consuming and appropriating
for herself confiscated items like cigarettes and foodstuffs. There
is no question that the Auring alluded to in the Article was the
private respondent as she was the only Auring in the Office of the
Provost Marshal. Moreover, as a result of this article, the private
respondent was investigated by her supervisor. Before the article
came out, the private respondent had been the recipient of
commendations by her superiors for honesty in the performance
of her duties.
It may be argued that Captain James Williams as commanding
officer of the naval base is far removed in the chain of command
from the offensive publication and it would be asking too much to
hold him responsible for everything which goes wrong on the
base. This may be true as a general rule. In this particular case,
however, the records show that the offensive publication was sent
to the commanding officer for approval and he approved it. The
factual findings of the two courts below are based on the records.
The petitioners have shown no convincing reasons why our usual
respect for the findings of the trial court and the respondent court
should be withheld in this particular case and why their decisions
should be reversed.
Article 2176 of the Civil Code prescribes a civil liability for
damages caused by a person's act or omission constituting fault or
negligence, to wit:
Art. 2176. Whoever by act or omission,
causes damage to another, there being fault or
negligence is obliged to pay for the damage
done. Such fault or negligence, if there is no
pre-existing contractual relation between the
parties, is called a quasi-delict and is
governed by the provisions of this Chapter.
"Fault" or "negligence" in this Article covers not only acts "not
punishable by law" but also acts criminal in character, whether
intentional or voluntary or negligent." (Andamo v. Intermediate
Appellate Court, 191 SCRA 195 [1990]).
Moreover, Article 2219(7) of the Civil Code provides that moral
damages may be recovered in case of libel, slander or any other
form of defamation. In effect, the offended party in these cases is
given the right to receive from the guilty party moral damages for
injury to his feelings and reputation in addition to punitive or
exemplary damages. (Occena v. Icamina, 181 SCRA 328 [1990]).
In another case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72
[1963], we ruled that the allegation of forgery of documents could
be a defamation, which in the light of Article 2219(7) of the Civil
Code could by analogy be ground for payment of moral damages,
considering the wounded feelings and besmirched reputation of
the defendants.
Indeed the imputation of theft contained in the POD dated
February 3, 1978 is a defamation against the character and
reputation of the private respondent. Petitioner Wylie himself
admitted that the Office of the Provost Marshal explicitly
recommended the deletion of the name Auring if the article were
published. The petitioners, however, were negligent because
under their direction they issued the publication without deleting
the name "Auring." Such act or omission is ultra vires and cannot
be part of official duty. It was a tortious act which ridiculed the
private respondent. As a result of the petitioners' act, the private
respondent, according to the record, suffered besmirched
reputation, serious anxiety, wounded feelings and social
humiliation, specially so, since the article was baseless and false.
The petitioners, alone, in their personal capacities are liable for
the damages they caused the private respondent.
WHEREFORE, the petition is hereby DISMISSED. The
questioned decision and resolution of the then Intermediate
Appellate Court, now Court of Appeals, are AFFIRMED.
AIR TRANSPORTATIONG.R. No. 159402
OFFICE,
Petitioner, Present:
BRION, Acting
Chairperson,**
- versus - BERSAMIN,
ABAD,***
VILLARAMA, JR., and
SERENO, JJ.
SPOUSES DAVID* and
ELISEA RAMOS, Promulgated:
Respondents. February 23, 2011
x------------------------------------------------------------------------------
-----------x
RESOLUTION
BERSAMIN, J.:
The States immunity from suit does not extend to the petitioner
because it is an agency of the State engaged in an enterprise that
is far from being the States exclusive prerogative.
Under challenge is the decision promulgated on May 14, 2003,
[1] by which the Court of Appeals (CA) affirmed with
modification the decision rendered on February 21, 2001 by the
Regional Trial Court, Branch 61 (RTC), in Baguio City in favor
of the respondents.[2]
Antecedents
Spouses David and Elisea Ramos (respondents) discovered that a upon its finding that the assailed orders were not tainted with

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

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

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

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

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

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

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

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

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

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

affirmative defense the issuance of Proclamation No. 1358,

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

performance of governmental functions.

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

preliminary hearing of the affirmative defense. Issue

The only issue presented for resolution is whether the ATO could

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

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

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

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

The immunity of the State from suit, known also as the doctrine
of sovereign immunity or non-suability of the State, is expressly
provided in Article XVI of the 1987 Constitution, viz:
Section 3. The State may not be sued without
its consent.
The immunity from suit is based on the political truism that the
State, as a sovereign, can do no wrong. Moreover, as the eminent
Justice Holmes said in Kawananakoa v. Polyblank:[6]
The territory [of Hawaii], of course, could
waive its exemption (Smith v. Reeves,
178 US 436, 44 L ed 1140, 20 Sup. Ct. Rep.
919), and it took no objection to the
proceedings in the cases cited if it could have
done so. xxx But in the case at bar it did
object, and the question raised is whether the
plaintiffs were bound to yield. Some doubts
have been expressed as to the source of the
immunity of a sovereign power from suit
without its own permission, but the answer
has been public property since before the
days of Hobbes. Leviathan, chap. 26, 2. 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. Car on peut bien
recevoir loy d'autruy, mais il est impossible
par nature de se donner
loy. Bodin, Republique, 1, chap. 8, ed. 1629,
p. 132; Sir John Eliot, De Jure Maiestatis,
chap. 3. Nemo suo statuto ligatur
necessitative. Baldus, De Leg. et Const.
Digna Vox, 2. ed. 1496, fol. 51b, ed. 1539,
fol. 61.[7]
Practical considerations dictate the establishment of an immunity
from suit in favor of the State. Otherwise, and the State is suable
at the instance of every other individual, government service may
be severely obstructed and public safety endangered because of
the number of suits that the State has to defend against.
[8] Several justifications have been offered to support the
adoption of the doctrine in the Philippines, but that offered
in Providence Washington Insurance Co. v. Republic of the
Philippines[9] is the most acceptable explanation, according to
Father Bernas, a recognized commentator on Constitutional Law,
[10] to wit:
[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.
An unincorporated government agency without any separate
juridical personality of its own enjoys immunity from suit
because it is invested with an inherent power of
sovereignty. Accordingly, a claim for damages against the agency
cannot prosper; otherwise, the doctrine of sovereign immunity is
violated.[11] However, the need to distinguish between an
unincorporated government agency performing governmental
function and one performing proprietary functions has arisen. The
immunity has been upheld in favor of the former because its
function is governmental or incidental to such function; [12] it
has not been upheld in favor of the latter whose function was not
in pursuit of a necessary function of government but was
essentially a business.[13]
Should the doctrine of sovereignty immunity or non-suability of
the State be extended to the ATO?

In its challenged decision,[14] the CA answered in the negative,
holding:
On the first assignment of error, appellants seek to
impress upon Us that the subject contract of sale
partook of a governmental character. Apropos, the
lower court erred in applying the High Courts ruling
in National Airports Corporation vs. Teodoro (91 Phil.
203 [1952]), arguing that in Teodoro, the matter
involved the collection of landing and parking fees
which is a proprietary function, while the case at bar
involves the maintenance and operation of aircraft and
air navigational facilities and services which are
governmental functions.
We are not persuaded.
Contrary to appellants conclusions, it was not merely
the collection of landing and parking fees which was
declared as proprietary in nature by the High Court
in Teodoro, but management and maintenance of airport
operations as a whole, as well. Thus, in the much later
case of Civil Aeronautics Administration vs. Court of
Appeals (167 SCRA 28 [1988]), the Supreme Court,
reiterating the pronouncements laid down in Teodoro,
declared that the CAA (predecessor of ATO) is an
agency not immune from suit, it being engaged in
functions pertaining to a private entity. It went on to
explain in this wise:
The Civil Aeronautics Administration comes
under the category of a private
entity. Although not a body corporate it was
created, like the National Airports
Corporation, not to maintain a necessary
function of government, but to run what is
essentially a business, even if revenues be not
its prime objective but rather the promotion
of travel and the convenience of the travelling
public. It is engaged in an enterprise which,
far from being the exclusive prerogative of
state, may, more than the construction of
public roads, be undertaken by private
concerns. [National Airports Corp. v.
Teodoro, supra, p. 207.]
xxx
True, the law prevailing in 1952 when
the Teodoro case was promulgated was Exec.
Order 365 (Reorganizing the Civil
Aeronautics Administration and Abolishing
the National Airports Corporation). Republic
Act No. 776 (Civil Aeronautics Act of
the Philippines), subsequently enacted
on June 20, 1952, did not alter the character
of the CAAs objectives under Exec. Order
365. The pertinent provisions cited in
the Teodoro case, particularly Secs. 3 and 4 of
Exec. Order 365, which led the Court to
consider the CAA in the category of a private
entity were retained substantially in Republic
Act 776, Sec. 32(24) and (25). Said Act
provides:
Sec. 32. Powers and Duties of the
Administrator. Subject to the general control
and supervision of the Department Head, the
Administrator shall have among others, the
following powers and duties:
xx
(24) To administer, operate, manage, control,
maintain and develop the Manila
International Airport and all government-
owned aerodromes except those controlled or
operated by the Armed Forces of the
Philippines including such powers and duties
as: (a) to plan, design, construct, equip,
expand, improve, repair or alter aerodromes
or such structures, improvement or air
navigation facilities; (b) to enter into, make
and execute contracts of any kind with any
person, firm, or public or private corporation
or entity;
(25) To determine, fix, impose, collect and
receive landing fees, parking space fees,
royalties on sales or deliveries, direct or
indirect, to any aircraft for its use of aviation
gasoline, oil and lubricants, spare parts,
accessories and supplies, tools, other
royalties, fees or rentals for the use of any of
the property under its management and
control.
xxx
From the foregoing, it can be seen that the
CAA is tasked with private or non-
governmental functions which operate to
remove it from the purview of the rule on
State immunity from suit. For the correct rule
as set forth in the Teodoro case states:
xxx
Not all government entities, whether
corporate or non-corporate, are immune from
suits. Immunity from suits is determined by
the character of the objects for which the
entity was organized. The rule is thus stated
in Corpus Juris:
Suits against State agencies with
relation to matters in which they
have assumed to act in private or
non-governmental capacity, and
various suits against certain
corporations created by the state for
public purposes, but to engage in
matters partaking more of the
nature of ordinary business rather
than functions of a governmental or
political character, are not regarded
as suits against the state. The latter
is true, although the state may own
stock or property of such a
corporation for by engaging in
business operations through a
corporation, the state divests itself
so far of its sovereign character, and
by implication consents to suits
against the corporation. (59 C.J.,
313) [National Airports Corporation
v. Teodoro, supra, pp. 206-207;
Italics supplied.]
This doctrine has been reaffirmed in the
recent case of Malong v. Philippine National
Railways [G.R. No. L-49930, August 7, 1985,
138 SCRA 63], where it was held that the
Philippine National Railways, although
owned and operated by the government, was
not immune from suit as it does not exercise
sovereign but purely proprietary and business
functions. Accordingly, as the CAA was
created to undertake the management of
airport operations which primarily involve
proprietary functions, it cannot avail of the
immunity from suit accorded to government
agencies performing strictly governmental
functions.[15]
In our view, the CA thereby correctly appreciated the juridical
character of the ATO as an agency of the Government not
performing a purely governmental or sovereign function, but was
instead involved in the management and maintenance of
the Loakan Airport, an activity that was not the exclusive
prerogative of the State in its sovereign capacity. Hence, the ATO
had no claim to the States immunity from suit. We uphold the
CAs aforequoted holding.
We further observe the doctrine of sovereign immunity cannot be
successfully invoked to defeat a valid claim for compensation
arising from the taking without just compensation and without the
proper expropriation proceedings being first resorted to of the
plaintiffs property.[16] Thus, in De los Santos v. Intermediate
Appellate Court,[17] the trial courts dismissal based on the
doctrine of non-suability of the State of two cases (one of which
was for damages) filed by owners of property where a road 9
meters wide and 128.70 meters long occupying a total area of
1,165 square meters and an artificial creek 23.20 meters wide and
128.69 meters long occupying an area of 2,906 square meters had
been constructed by the provincial engineer of Rizal and a private
contractor without the owners knowledge and consent was
reversed and the cases remanded for trial on the merits. The
Supreme Court ruled that the doctrine of sovereign immunity was
not an instrument for perpetrating any injustice on a citizen. In
exercising the right of eminent domain, the Court explained, the
State exercised its jus imperii, as distinguished from its
proprietary rights, or jus gestionis; yet, even in that area, where
private property had been taken in expropriation without just
compensation being paid, the defense of immunity from suit
could not be set up by the State against an action for payment by
the owners.
Lastly, the issue of whether or not the ATO could be sued without
the States consent has been rendered moot by the passage of
Republic Act No. 9497, otherwise known as the Civil Aviation
Authority Act of 2008.
R.A. No. 9497 abolished the ATO, to wit:
Section 4. Creation of the Authority. There is
hereby created an independent regulatory
body with quasi-judicial and quasi-legislative
powers and possessing corporate attributes to
be known as the Civil Aviation Authority of
the Philippines (CAAP), herein after referred
to as the Authority attached to the Department
of Transportation and Communications
(DOTC) for the purpose of policy
coordination. For this purpose, the existing
Air transportation Office created under
the provisions of Republic Act No. 776, as
amended is hereby abolished.
xxx
Under its Transitory Provisions, R.A. No. 9497 established in
place of the ATO the Civil Aviation Authority of the Philippines
(CAAP), which thereby assumed all of the ATOs powers, duties WHEREFORE, the Court denies the petition for review

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

revenues, viz: of Appeals.

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

All powers, duties and rights vested by law
and exercised by the
ATO is hereby transferred to the Authority.
All assets, real and personal properties,
funds and revenues owned by or vested in
the different offices of the ATO are
transferred to the Authority. All contracts,
records and documents relating to the
operations of the abolished agency and its
offices and branches are likewise transferred
to the Authority. Any real property owned
by the national government or
government-owned corporation or
authority which is being used and
utilized as office or facility by the ATO shall
be transferred and titled in favor of the
Authority.
Section 23 of R.A. No. 9497 enumerates the corporate powers
vested in the CAAP, including the power to sue and be sued, to
enter into contracts of every class, kind and description,
to construct, acquire, own, hold, operate, maintain, administer and
lease personal and real properties, and to settle, under such terms
and conditions most advantageous to it, any claim by or against it.
[18]
With the CAAP having legally succeeded the ATO pursuant to
R.A. No. 9497, the obligations that the ATO had incurred by
virtue of the deed of sale with the Ramos spouses might now be
enforced against the CAAP.
MUNICIPALITY OF SAN MIGUEL, BULACAN, petitioner,
vs.
HONORABLE OSCAR C. FERNANDEZ, in his capacity as
the Presiding Judge, Branch IV, Baliuag, Bulacan, The
PROVINCIAL SHERIFF of Bulacan, MARGARITA D. VDA.
DE IMPERIO, ADORACION IMPERIO, RODOLFO
IMPERIO, CONRADO IMPERIO, ERNESTO IMPERIO,
ALFREDO IMPERIO, CARLOS IMPERIO, JR., JUAN
IMPERIO and SPOUSES MARCELO PINEDA and
LUCILA PONGCO, respondents.
Pascual C. Liatchko for petitioner.
The Solicitor General and Marcelo Pineda for respondents.
RELOVA, J.:
In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio,
et al. vs. Municipal Government of San Miguel, Bulacan, et al.",
the then Court of First Instance of Bulacan, on April 28, 1978,
rendered judgment holding herein petitioner municipality liable to
private respondents, as follows:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs and against the defendant
Municipal Government of San Miguel Bulacan, represented by
Mayor Mar Marcelo G. Aure and its Municipal Treasurer:
1. ordering the partial revocation of the Deed of Donation
signed by the deceased Carlos Imperio in favor of the
Municipality of San Miguel Bulacan, dated October 27,
1947 insofar as Lots Nos. 1, 2, 3, 4 and 5, Block 11 of
Subdivision Plan Psd-20831 are concerned, with an
aggregate total area of 4,646 square meters, which lots
are among those covered and described under TCT No.
T-1831 of the Register of Deeds of Bulacan in the name
of the Municipal Government of San Miguel Bulacan,
2. 2. ordering the defendant to execute the corresponding
Deed of Reconveyance over the aforementioned five
lots in favor of the plaintiffs in the proportion of the
undivided one-half (½) share in the name of plaintiffs
Margarita D. Vda. de Imperio, Adoracion, Rodolfo,
Conrado, Ernesto, Alfredo, Carlos, Jr. and Juan, all
surnamed Imperio, and the remaining undivided one-
half (½) share in favor of plaintiffs uses Marcelo E.
Pineda and Lucila Pongco;
3. 3. ordering the defendant municipality to pay to the
plaintiffs in the proportion mentioned in the
 immediately preceding paragraph the sum of
P64,440.00 corresponding to the rentals it has collected
from the occupants for their use and occupation of the
premises from 1970 up to and including 1975, plus
interest thereon at the legal rate from January 1970 until
fully paid;
4. 4. ordering the restoration of ownership and possession
over the five lots in question in favor of the plaintiffs in
the same proportion aforementioned;
5. 5. ordering the defendant to pay the plaintiffs the sum
of P3,000.00 for attomey's fees; and to pay the cost of
suit.
The counterclaim of the defendant is hereby
ordered dismissed for lack of evidence
presented to substantiate the same.
SO ORDERED. (pp. 11-12, Rollo)
The foregoing judgment became final when herein petitioner's
appeal was dismissed due to its failure to file the record on appeal
on time. The dismissal was affirmed by the then Court of Appeals
in CA-G.R. No. SP-12118 and by this Court in G.R. No. 59938.
Thereafter, herein private respondents moved for issuance of a
writ of execution for the satisfaction of the judgment. Respondent
judge, on July 27, 1982, issued an order, to wit:
Considering that an entry of judgment had
already been made on June 14, 1982 in G. R.
No. L-59938 and;
Considering further that there is no opposition
to plaintiffs' motion for execution dated July
23, 1983;
Let a writ of execution be so issued, as prayed
for in the aforestated motion. (p. 10, Rollo)
Petitioner, on July 30, 1982, filed a Motion to Quash the writ of
execution on the ground that the municipality's property or funds
are all public funds exempt from execution. The said motion to
quash was, however, denied by the respondent judge in an order
dated August 23, 1982 and the alias writ of execution stands in
full force and effect.
On September 13, 1982, respondent judge issued an order which
in part, states:
It is clear and evident from the foregoing that
defendant has more than enough funds to
meet its judgment obligation. Municipal
Treasurer Miguel C, Roura of San Miguel,
Bulacan and Provincial Treasurer of Bulacan
Agustin O. Talavera are therefor hereby
ordered to comply with the money judgment
rendered by Judge Agustin C. Bagasao against
said municipality. In like manner, the
municipal authorities of San Miguel, Bulacan
are likewise ordered to desist from plaintiffs'
legal possession of the property already
returned to plaintiffs by virtue of the alias writ
of execution.
Finally, defendants are hereby given an
inextendible period of ten (10) days from
receipt of a copy of this order by the Office of
the Provincial Fiscal of Bulacan within which
to submit their written compliance, (p. 24,
Rollo)
When the treasurers (provincial and municipal) failed to comply
with the order of September 13, 1982, respondent judge issued an
order for their arrest and that they will be release only upon
compliance thereof.
Hence, the present petition on the issue whether the funds of the
Municipality of San Miguel, Bulacan, in the hands of the
provincial and municipal treasurers of Bulacan and San Miguel,
respectively, are public funds which are exempt from execution
for the satisfaction of the money judgment in Civil Case No. 604-
B.
Well settled is the rule that public funds are not subject to levy
and execution. The reason for this was explained in the case of
Municipality of Paoay vs. Manaois, 86 Phil. 629 "that they are
held in trust for the people, intended and used for the
accomplishment of the purposes for which municipal
corporations are created, and that to subject said properties and
public funds to execution would materially impede, even defeat
and in some instances destroy said purpose." And, in Tantoco vs.
Municipal Council of Iloilo, 49 Phil. 52, it was held that "it is the
settled doctrine of the law that not only the public property but
also the taxes and public revenues of such corporations Cannot be
seized under execution against them, either in the treasury or
when in transit to it. Judgments rendered for taxes, and the
proceeds of such judgments in the hands of officers of the law, are
not subject to execution unless so declared by statute." Thus, it is
clear that all the funds of petitioner municipality in the possession
of the Municipal Treasurer of San Miguel, as well as those in the
possession of the Provincial Treasurer of Bulacan, are also public
funds and as such they are exempt from execution.
Besides, Presidential Decree No. 477, known as "The Decree on
Local Fiscal Administration", Section 2 (a), provides:
SEC. 2. Fundamental Principles. — Local
government financial affairs, transactions, and
operations shall be governed by the
fundamental principles set forth hereunder:
(a) No money shall be paid out of the treasury
except in pursuance of a lawful appropriation
or other specific statutory authority.
xxx xxx xxx
Otherwise stated, there must be a corresponding appropriation in
the form of an ordinance duly passed by the Sangguniang Bayan
before any money of the municipality may be paid out. In the
case at bar, it has not been shown that the Sangguniang Bayan has
passed an ordinance to this effect.
Furthermore, Section 15, Rule 39 of the New Rules of Court,
outlines the procedure for the enforcement of money judgment:
(a) By levying on all the property of the
debtor, whether real or personal, not otherwise
exempt from execution, or only on such part
of the property as is sufficient to satisfy the
judgment and accruing cost, if he has more
than sufficient property for the purpose;
(b) By selling the property levied upon;
(c) By paying the judgment-creditor so much
of the proceeds as will satisfy the judgment
and accruing costs; and
 (d) By delivering to the judgment-debtor the
excess, if any, unless otherwise, directed by
judgment or order of the court.
The foregoing has not been followed in the case at bar.
ACCORDINGLY, the petition is granted and the order of
respondent judge, dated July 27, 1982, granting issuance of a writ
of execution; the alias writ of execution, dated July 27, 1982; and
the order of respondent judge, dated September 13, 1982,
directing the Provincial Treasurer of Bulacan and the Municipal
Treasurer of San Miguel, Bulacan to comply with the money
judgments, are SET ASIDE; and respondents are hereby enjoined
from implementing the writ of execution.
SO ORDERED.