Case Digest of L.L.

B 1 Block C in Legal research

UP Vs Ruben Ayson, August 17, 1989
Sometime in 1972, the UP Board of Regents approved the establishment of UPCBHS as an
integral part of the graduate program in education to serve, among others, as a laboratory and
demonstration school for prospective teachers. Provided, however, that UPCBHS must be self-
supporting and should not entail any subsidy from the budget of the UP.
In 1978, the Board of Regents provided for the establishment of a Division of Education in UP
College Baguio (UPCB) which shall be composed of a Department of Professional Education
and a High School Department. However, the Department of Professional Education was never
organized, although the High School Department has been in continuous operation.
In 1981, the Committee to Review Academic Program recommended the abolition of the
UPCBHS. In 1985, the Program Review Committee likewise asked the UPCB to look into the
viability of its secondary education program on account of limited financial resources plus the
fact that UPCBHS failed to serve as a laboratory school for teacher training program as UPCB
does not offer programs in Education. Subsequently, various discussions were held on the
proposed phase-out of the UPCBHS.
On January 30,1989, the UP Board of Regents approved the proposed phase-out of UPCBHS on
the grounds, inter alia, that only an insignificant number of UPCBHS graduates qualified for
admission and actually enrolled in UPCB and that UPCBHS is not serving as a laboratory or
demonstration school for prospective teachers much less a self-supporting unit. Subsequently,
petitioner Dean Patricio Lazaro issued a memorandum directing the UPCBHS Principal not to
accept new incoming high school freshmen for the school year 1989- 1990.
On May 25,1989, respondent UP College Baguio High School Foundation Inc., represented by
its president, filed a petition with the Regional Trial Court of Baguio, Br. VI, presided by
respondent Judge against herein petitioners, for Injunction with preliminary preventive and
mandatory injunction with prayer for the issuance of a temporary restraining order, docketed as
Civil Case No. 1748-R, alleging among others, that the decision of the UP Board of Regents to
phase out the UPCBHS is without legal basis and unconstitutional.
Thereafter, respondent Judge issued the assailed Orders restraining petitioners from
implementing the Board's decision to phase out UPCBHS and the memorandum of Dean Patricio
Lazaro. Petitioners' motion to dismiss Civil Case No. 1748-R was denied by respondent Judge.
Issue:
Whether it is within the Clause of Academic Freedom on the part of the School
Ruling:
The Supreme Court ruled that, It is beyond cavil that the UP, as an institution of higher learning,
enjoys academic freedom—the institutional kind.
In Garcia v. The Faculty Admission Committee, Loyola School of Theology (68 SCRA 277
[1975]), the Court had occasion to note the scope of academic freedom recognized by the
Constitution as follows:
(I)t is to be noted that the reference is to the 'institutions of higher learning' as the recipients of
this boon. It would follow then that the school or college itself is possessed of such a right. It
decides for itself its aims and objectives and how best to attain them. It is free from outside
coercion or interference save possibly when the overriding public welfare calls for some
restraint. It has a wide sphere of autonomy certainly extending to the choice of students. This
constitutional provision is not to be construed in a niggardly manner or in a grudging fashion.
That would be to frustrate its purpose, nullify its intent.
It is the business of a university to provide that atmosphere which is most conducive to
speculation, experiment and creation. It is an atmosphere in which there prevail the four essential
freedom of a university—to determine for itself on academic grounds who may teach, what may
be taught, how it shall be taught, and who may be admitted to study"' (Emphasis supplied; citing
Sinco, Philippine Political Law, 491, (1962) and the concurring opinion of Justice Frankfurter
in Sweezy v. New Hampshire (354 US 234 [1957]).
Rep. Act No. 6655, otherwise known as the "Free Public Secondary Education Act of 1988,"
includes in its coverage state colleges and universities (SCUs) offering secondary courses.
Respondents cointend that since a secondary course is being offered in UPCB, petitioners cannot
unilaterally withdraw therefrom, otherwise, the said Act would be nothing but a mere nullity for
all other SCUs. Besides, respondents contend, petitioners already recognized the applicability of
Rep. Act No. 6655 when they implemented the same at the UPCBHS for School Year 1988-89
and petitioners' assertion that UPCBHS was established only if it would be "self-supporting and
should not entail any subsidy from the budget of UP" is but a lame excuse.
At this juncture, it must be pointed out that UPCBHS was established subject to a number of
conditionalities, e.g., it must be self-supporting, it can serve as a feeder for the UP at Baguio, it
can serve as a laboratory and demonstration school for prospective teachers, failing in which the
University can order its abolition on academic grounds, specially where the purposes for which it
was established was not satisfied.
Specifically, the University of the Philippines was created under its Charter (Act No. 1870
[1908], as amended) to provide advanced tertiary education and not secondary education. Section
2 of said Act states that "the purpose of said University shall be to provide advanced instruction
in literature, philosophy, the sciences, and arts, and to give professional and technical training."
It is apparent that secondary education is not the mandated function of the University of the
Philippines; consequently, the latter can validly phase out and/or abolish the UPCBHS especially
so when the requirements for its continuance have not been met, Rep. Act No. 6655 to the
contrary notwithstanding. The findings of facts by the Board of Regents which led to its decision
to phase out the UPCBHS must be accorded respect, if not finality. Acts of an administrative
agency within their areas of competence must be casually overturned by the courts. It must be
emphasized that UPCBHS was established as a component of the tertiary level, i.e., the
teacher/training program. As it turned out however, the latter program was not viable in UPCB
thereby necessitating the phasing out of UPCBHS, the rationale being its reasons for existence
no longer exists. On this score, UPCBHS differs from the other UP high schools in Iloilo,
Diliman, Cebu and Los Bañ;os. The latter schools serve as laboratory schools for the College of
Education in said areas, whereas, in Baguio, there is no College of Education.
A careful perusal of Rep. Act No. 6655 could not lend respondents a helping hand either. Said
Act implements the policy of the State to provide free public secondary education (Sec. 4) and
vests the formulation of a secondary public education curriculum (Sec. 5), the nationalization of
public secondary schools (Sec. 7) and the implementation of the rules and regulations thereof
(Sec. 9) upon the Secretary of the Department of Education, Culture and Sports
(DECS).lâwphî1.ñèt Rep. Act No. 6655 complements Sec. 2 (2), Article XIV of the Constitution
which mandates that the State shall establish and maintain a system of free public secondary
education. However, this mandate is not directed to institutions of higher learning like UP but to
the government through the Department of Education, Culture and Sports (DECS). As an
institution of higher learning enjoying academic freedom, the UP cannot be compelled to provide
for secondary education. However, should UP operate a high school in the exercise of its
academic freedom, Rep. Act No. 6655 requires that the students enrolled therein "shall be free
from payment of tuition and other school fees.

Epicharis Garcia vs. The Faculty Admission CommitteeL-40779November 28,

1975Respondent: Fr. Lambino
Facts
:1. That in summer, 1975, Respondent admitted Petitioner for studies leading to an M.A.in
Theology;2. That on May 30, 1975, when Petitioner wanted to enroll for the same course for
thefirst semester, 1975-1976 respondent told her about the letter he had written her,informing her
of the faculty's decision to bar her from re-admission in their schoolreason in the letter:
Petitioner’s frequent questions and difficulties had the effect of slowing down the progress of the
class.3. Fr. Pedro Sevilla, the school's Director, that the compromises she was offering
wereunacceptable, their decision was final, and that it were better for her to seek for admission at
the UST Graduate School4. Petitioner then subsequently made inquiries in said school, as to the
possibilities for her pursuing her graduate studies for an for M.A. in Theology, and she was
informedthat she could enroll at the UST Ecclesiastical Faculties, but that she would have to
fulfiltheir requirements for Baccalaureate in Philosophy in order to have her degree later
inTheology — which would entail about four to five years more of studies — whereas inthe
Loyola School of Studies to which she is being unlawfully refused readmission, itwould entail
only about two years more.5. She prayed for a writ of mandamus for the purpose of allowing her
to enroll in thecurrent semester
Issue:
Whether or not the Faculty Admissions Committee had authority and discretion inallowing
petitioner to continue studying or not?
Held:
Yes. Being a particular educational institution (seminary). Petition dismissed for lack
of merit.Petitioner cannot compel the mandamus to admit her into further studies since
therespondent had no clear duty to admit the petitioner. That respondent Fr. Lambino andLoyola
School of Technology has the discretion whether to admit the petitioner or
not.Factors that were considered are academic standards, personality traits, character orientation
and nature of Loyola School of Theology as a seminary.

ATENEO DE MANILA UNIVERSITY vs. JUDGE CAPULONG

FACTS:

The Aquila Legis Fraternity of the Ateneo de Manila conducted hazing activities on February 8,9
and 10, 1991 which resulted to the death of one Leonardo Villa and the hospitalization of
Bienvenido Marquez. After due examination, the involved parties were suspended and thereafter
dismissed from the university upon order of the school’s president, Fr. Joaquin Bernas. These
students vere found to be guilty of violating Rule 3 of the Rules on Discipline.

The respondent, Judge Ignacio Capulong, then ordered the reinstatement of the students upon the
latters petition for certiorari, prohobition and mandamus.

ISSUE:

Whether the Ateneo Law School may dismiss their students for violation of its rules.

RULING:

The Court ruled that Ateneo has the competence and power to dismiss such students by validly
exercising its power of discipline on erring students. The evidence also pointed that due process
was given on the students and that the investigation followed the procedures set by the school.
According to the court, the “students do not deserve to claim such a venerable institution such as
Ateneo as their own a minute longer for they may forseeably case a malevolent influence on
students currently enrolled.”

The court futher mentioned the academic freedom imposed on part of the school which includes
the following the freedom to determine who may teach, what may be taught, how it shall be
taught, and who may be admitted to study.

Merritt Vs Government 34,Phil 311

The facts of the case took place in the 1910’s. E. Merritt was a constructor who was excellent at
his work. One day, while he was riding his motorcycle along Calle Padre Faura, he was bumped
by a government ambulance. The driver of the ambulance was proven to have been negligent.
Because of the incident, Merritt was hospitalized and he was severely injured beyond
rehabilitation so much so that he could never perform his job the way he used to and that he
cannot even earn at least half of what he used to earn.
In order for Merritt to recover damages, he sought to sue the government which later authorized
Merritt to sue the government by virtue of Act 2457 enacted by the legislature (An Act
authorizing E. Merritt to bring suit against the Government of the Philippine Islands and
authorizing the Attorney-General of said Islands to appear in said suit). The lower court then
determined the amount of damages and ordered the government to pay the same.
ISSUE: Whether or not the government is liable for the negligent act of the driver of the
ambulance.
HELD: No. By consenting to be sued a state simply waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or create any cause of action in his favor, or extend its
liability to any cause not previously recognized. It merely gives a remedy to enforce a
preexisting liability and submits itself to the jurisdiction of the court, subject to its right to
interpose any lawful defense. It follows therefrom that the state, by virtue of such provisions of
law, is not responsible for the damages suffered by private individuals in consequence of acts
performed by its employees in the discharge of the functions pertaining to their office, because
neither fault nor even negligence can be presumed on the part of the state in the organization of
branches of public service and in the appointment of its agents. The State can only be liable if it
acts through a special agent (and a special agent, in the sense in which these words are
employed, is one who receives a definite and fixed order or commission, foreign to the exercise
of the duties of his office if he is a special official) so that in representation of the state and being
bound to act as an agent thereof, he executes the trust confided to him.
In the case at bar, the ambulance driver was not a special agent nor was a government officer
acting as a special agent hence, there can be no liability from the government. “The Government
does not undertake to guarantee to any person the fidelity of the officers or agents whom it
employs, since that would involve it in all its operations in endless embarrassments, difficulties
and losses, which would be subversive of the public interest.”

ANGEL MINISTERIO and ASUNCION SADAYA vs. THE COURT OF FIRST

INSTANCE OF CEBU

G.R. No. L-31635 August 31, 1971

FERNANDO, J.:
FACTS:
Petitioners as plaintiffs in a complaint filed with the Court of First Instance of Cebu, dated April
13, 1966, sought the payment of just compensation for a registered lot, containing an area of
1045 square meters, alleging that in 1927 the National Government through its authorized
representatives took physical and material possession of it and used it for the widening of the
Gorordo Avenue, a national road, Cebu City, without paying just compensation and without any
agreement, either written or verbal. There was an allegation of repeated demands for the payment
of its price or return of its possession, but defendants Public Highway Commissioner and the
Auditor General refused to restore its possession. It was further alleged that on August 25, 1965,
the appraisal committee of the City of Cebu approved Resolution No. 90, appraising the
reasonable and just price of Lot No. 647-B at P50.00 per square meter or a total price of
P52,250.00. Thereafter, the complaint was amended on June 30, 1966 in the sense that the
remedy prayed for was in the alternative, either the restoration of possession or the payment of
the just compensation.
In the answer filed by defendants, now respondents, through the then Solicitor General, now
Associate Justice, Antonio P. Barredo, the principal defense relied upon was that the suit in
reality was one against the government and therefore should be dismissed, no consent having
been shown. Then on July 11, 1969, the parties submitted a stipulation of facts to this effect:
"That the plaintiffs are the registered owners of Lot 647-B of the Banilad estate described in the
Survey plan RS-600 GLRO Record No. 5988 and more particularly described in Transfer
Certificate of Title No. RT-5963 containing an area of 1,045 square meters; That the National
Government in 1927 took possession of Lot 647-B Banilad estate, and used the same for the
widening of Gorordo Avenue; That the Appraisal Committee of Cebu City approved Resolution
No. 90, Series of 1965 fixing the price of Lot No. 647-B at P50.00 per square meter; That Lot
No. 647-B is still in the possession of the National Government the same being utilized as part of
the Gorordo Avenue, Cebu City, and that the National Government has not as yet paid the value
of the land which is being utilized for public use."
The lower court dismissed the complaint on January 30, 1969 stating that the case is undoubtedly
against the National Government and there is now showing that the Government has not
consented to be sued in this case. The petitioners appealed by certiorari to review the decision
and contended that they are entitled for just compensation under the Art III, Sec. 1 (2) of the
Constitution.
ISSUE:
Whether or not, the decision of the CFI of Cebu to dismiss the complaint by reason Government
immunity from suit correct?
HELD:
NO. The doctrine of governmental immunity from suit cannot be an instrument for perpetrating
an injustice on a citizen. If there were an observance of procedural regularity, petitioners would
not be in sad plaint they are now. It is unthinkable then that precisely there was a failure on what
the law requires and the petitioners has the right to demand from the Government what is due to
them. The Supreme Court decided that the lower court’s decision of dismissing the complaint is
reversed and the case remanded to the lower court for proceedings in accordance with law.
G.R. No. L-29993 October 23, 1978
LAUDENCIO TORIO … vs. ROSALINA, ANGELINA … and THE HONORABLE
COURT OF APPEALS

Facts:

On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan resolved to manage the
1959 Malasiqui town fiesta celebration through Resolution 159. It also passed Resolution No.
182 creating the "1959 Malasiqui 'Town Fiesta Executive Committee" which in turn organized a
sub-committee on entertainment and stage, with Jose Macaraeg as Chairman. The council
appropriated the amount of P100.00 for the construction of 2 stages, one for the "zarzuela" and
another for the cancionan. Jose Macaraeg supervised the construction of the stage. The stage for
the "zarzuela" was "5-½ meters by 8 meters in size, had a wooden floor high at the rear and was
supported by 24 bamboo posts 4 in a row in front, 4 in the rear and 5 on each side with bamboo
braces."

The "zarzuela" was donated by an association of Malasiqui employees of the Manila Railroad
Company in Caloocan, Rizal. The "zarzuela" then began, but before the dramatic part of the play
was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was
pinned underneath. Fontanilia was taken to tile San Carlos General Hospital where he died in the
afternoon of the following day.
The heirs of Vicente Fontanilia filed a complaint with the Court of First Instance of Manila to
recover damages.

The municipality claims that as a legally and duly organized public corporation it performs
sovereign functions and the holding of a town fiesta was an exercise of its governmental
functions from which no liability can arise to answer for the negligence of any of its agents.
Moreover, the councilors in turn maintained that they merely acted as agents of the municipality
in carrying out the municipal ordinance providing for the management of the town fiesta
celebration and as such they are likewise not liable for damages as the undertaking was not one
for profit; furthermore, they had exercised due care and diligence in implementing the municipal
ordinance.

The RTC, in its judgement, found that the Executive Committee appointed by the municipal
council had exercised the due diligence and care required of a good father of the family in
selecting a competent man to construct a stage strong enough for the occasion which
unfortunately collapsed due to forces beyond committee’s control. Thus, dismissing the
complaint.

The Fontanilla’s appealed to the CA, which in turn reversed the lower court’s decision. The CA
ordered all the defendants to pay jointly and severally the heirs of Vicente Fontanilla P12,000.00
by way of moral and actual damages: P1200.00 its attorney's fees; and the costs.

Issue/s:
Whether the celebration of a town fiesta is an undertaking in the exercise of a municipality's
governmental or public function or is it or a private or proprietary character?
Whether the municipality can be held liable?
What is the liability of the city councilors who passed the resolution?

Held:

The celebration of a town fiesta is of a private or proprietary character.

The powers of a municipality are twofold in character public, governmental or political on the
one hand, and corporate, private, or proprietary on the other. Governmental powers are those
exercised by the corporation in administering the powers of the state and promoting the public
welfare and they include the legislative, judicial public, and political Municipal powers on the
other hand are exercised for the special benefit and advantage of the community and include
those which are ministerial private and corporate.
Section 2282 of the Revised Administrative Code. Celebration of fiesta. — fiesta may be held in
each municipality not oftener than once a year upon a date fixed by the municipal council A
fiesta s not be held upon any other date than that lawfully fixed therefor, except when, for
weighty reasons, such as typhoons, foundations, earthquakes, epidemics, or other public ties, the
fiesta cannot be hold in the date fixed in which case it may be held at a later date in the same
year, by resolution of the council.
Section 2282 simply gives authority to the municipality to celebrate a yearly fiesta but it does not
impose upon it a duty to observe one. Holding a fiesta is in essence an act for the special benefit
of the community and not for the general welfare of the public performed in pursuance of a
policy of the state. The basic element, however beneficial to the public the undertaking may be,
is that it is governmental in essence, otherwise. the function becomes private or proprietary in
character. Easily, no governmental or public policy of the state is involved in the celebration of a
town fiesta. Therefore, the holding of the town fiesta in 1959 by the municipality of Malsiqui
Pangasinan was an exercise of a private or proprietary function of the municipality.

The municipality can be held liable.

If the injury is caused in the course of the performance of a governmental function or duty no
recovery can be held from the municipality unless there is an existing statute on the matter, nor
from its officers, so long as they performed their duties honestly and in good faith or that they
did not act wantonly and maliciously. With respect to proprietary functions, the settled rule is
that a municipal corporation can be held liable to third persons ex contract or ex delicto.

Under the doctrine of respondent superior, the superior or employer must answer civilly for the
negligence or want of skill of its agent or servant in the course or fine of his employment, by
which another, who is free from contributory fault, is injured.

Therefore, the municipality is to be held liable for damages for the death of Vicente Fontanilia if
that was attributable to the negligence of the municipality's officers, employees, or agents.
Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. . .

Art. 2180, Civil Code: The obligation imposed by article 2176 is demandable not only for one's
own acts or omission, but also for those of persons for whom one is responsible. . .

The SC agrees with the CA’s judgement that there was negligence. The CA found that the stage
was not strong enough considering that only P100.00 was appropriated for the construction of
two stages. The floor of the "zarzuela" stage was of wooden planks, the Post and braces used
were of bamboo material being supported by "24" posts, but nevertheless there were only 4 in
front, 4 at the rear, and 5 on each side. Where were the rest? The collapse of the stage was due to
the great number of onlookers who mounted the stage. The municipality and/or its agents had the
necessary means within its command to prevent such an occurrence. Having failed to take the
necessary steps to maintain the safety of the stage, the defendant were negligent and are liable
for the death of Fontanilla.

Liability rests on negligence which is "the want of such care as a person of ordinary prudence
would exercise under the circumstances of the case."

Lastly, the Municipality cannot evade liability under the fact that it was Jose Macaraeg who
constructed the stage. The municipality acting through its municipal council appointed Macaraeg
as chairman of the sub-committee on entertainment and in charge of the construction of the
"zarzuela" stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of
respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its
agent acting within his assigned tasks.

The municipal councilors who passed the resolution is not liable.

While Article 27 of the Civil Code covers a case of nonfeasance or non-performance by a public
officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying
out an official duty. Hence the municipal councilors are absolved from any liability for the death
of Vicente Fontanilla. The records do not show that said petitioners directly participated in the
defective construction of the "zarzuela" stage or that they personally permitted spectators to go
up the platform.
THE MUNICIPALITY OF HAGONOY, BULACAN vs. JUDGE SIMEON P. DUMDUM,
JR.
G.R. No. 168289 March 22, 2010

FACTS: A complaint was filed by Lim Chao against the Municipality of Hagonoy, Bulacan for
collection of sum of money and damages. The complaint alleged that a contract was entered into
by Lim Chao and the Municipality for the delivery of motor vehicles, which supposedly were
needed to carry out certain developmental undertakings in the municipality. Lim Chao then
delivered to the Municipality of Hagonoy 21 motor vehicles amounting to P5,820,000.00.
However, despite having made several deliveries, the Municipality allegedly did not heed Lim
Chao’s claim for payment. Thus, she filed a complaint for full payment of the said amount, with
interest and damages and prayed for the issuance of a writ of preliminary attachment against the
Municipality. The trial court issued the Writ of Preliminary Attachment directing the sheriff "to
attach the estate, real and personal properties" of the Municipality. The Municipality filed a
Motion to Dismiss on the ground that the claim on which the action had been brought was
unenforceable under the statute of frauds, pointing out that there was no written contract or
document that would evince the supposed agreement they entered into with respondent. It also
filed a Motion to Dissolve and/or Discharge the Writ of Preliminary Attachment already issued,
invoking, among others, immunity of the state from suit. The Municipality argued that as a
municipal corporation, it is immune from suit, and that its properties are by law exempt from
execution and garnishment. Lim Chao on her part, counters that, the Municipality’s claim of
immunity from suit is negated by the Local Government Code, which vests municipal
corporations with the power to sue and be sued.
The Court of Appeals affirmed the trial court’s order.

ISSUE: W/N the issuance of the Writ of Preliminary Attachment against the Municipality of
Hagonoy is valid.

HELD: No. The universal rule is that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant’s action "only up to the completion
of proceedings anterior to the stage of execution" and that the power of the Courts ends when the
judgment is rendered. Since government funds and properties may not be seized under writs of
execution or garnishment to satisfy such judgments, is based on obvious considerations of public
policy. Disbursements of public funds must be covered by the corresponding appropriations as
required by law. The functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects.
DEPARTMENT OF HEALTH VS. CANCHELA AND ASSOCIATES
G.R. Nos. 151373-74 November 17, 2005

FACTS: The DOH entered into three owner –consultant agreements with the private respondents
covering infrastructure projects for the Baguio General Hospital and Medical Center (BGHMC),
the Batangas Regional Hospital and the Corazon L. Montelibano Memorial regional Hospital in
Bacolod City.
The agreements for the three (3) projects are almost identical. This requires the private
respondents to prepare: detailed architectural and engineering design plans; technical
specifications and detailed estimates of cost of construction of the hospital, including the
preparation of bid documents and requirements; and construction supervision until completion of
hand-over and issuance of final certificate.
While the Agreements were witnessed by the respective Chief Accountants of the
hospitals and were duly approved by the Department of Health, the former did not issue
corresponding certificates of availability of funds to cover the professional or consultancy fees.
The DOH through is authorized representative, wrote separate letters to the respective
chiefs of hospitals confirming the acceptance of private respondents’ complete Contract or Bid
Documents for each project and RECOMMENDED THE PAYMENT OF 7.5% OF THE
PROJECT ALLOCATION TO PRIVATE RESPONDENTS AS CONSULTANCY FEES.
During the construction of the projects, various deficiencies in the performance of the
agreed scope of private respondents’ work were allegedly discovered which were not
communicated to the private respondents. Due to such alleged deficiencies, petitioner withheld
payment of the consultancy fees due to private respondent. Neither did petitioner return the
documents, plans, specifications and estimates submitted by private respondents.
Considering the refusal of the DOH to pay said fees despite repeated demands, the
private respondents submitted the dispute to the Construction Industry Arbitration Commission
(CIAC).
After the presentation of evidence by both parties, the Arbitrator issued his decision dated
March 30, 1999 sentencing the DOH to pay the private respondents to pay P3,492,713.00 for
services performed and completed for and accepted by DOH. The said amount shall earn interest
at 6% per annum from the date of the award until the decision becomes final. Thereafter, the
principal and the interest accrued as of such time shall earn interest at 12% per annum.
The DOH filed a Petition for Review under Rule 43 before the Court of Appeals but was
dismissed for being filed out of time. As such, on motion of the private respondents, the
Arbitrator issued a Writ of Execution.
ISSUE: Whether or not the CIAC has jurisdiction to entertain the suit considering that the
Agreements, being to promote the health and well-being of the citizens, is in furtherance of the
state’s sovereign and governmental power and therefore, IMMUNE FROM SUIT.

HELD: In their Memorandum before the Supreme Court, the DOH, for the first time, raised the
nullity of the three (3) agreements from the very beginning for failure to include therein a
certification of availability of funds which is required under existing laws, particularly the
Auditing Code of the Philippines, PD 1445. As such, the fees of the private respondents shall
not be based on the project fund allocation but on the basis of reasonable value or on the
principle of quantum meruit.
While the agreement is indeed void ab initio for violation of existing laws, the DOH is
liable to pay the private respondents their consultancy services based on quantum meruit to be
determined by the Commission on Audit.
The invocation of immunity from suit is without merit. This is so because the government
has already received and accepted the benefits rendered. To refuse payment as a result of the
state’s immunity from suit would be to allow the government to unjustly enrich itself at the
expense of another. (Citing Eslao vs. COA, 195 SCRA 730)
In light of the foregoing discussions, addressing the question of jurisdiction and other
collateral issues raised in the petition is rendered unnecessary.

GAUDENCIO RAYO vs. COURT OF FIRST INSTANCE OF BULACAN

G.R. No. L-55273-83 December 19, 1981
ABAD SANTOS, J.:
FACTS:

On October 26, 1978, at the height of the infamous typhoon "Kading", the respondent opened
simultaneously all the three floodgates of the Angat Dam which resulted in a sudden, precipitate
and simultaneous opening of said floodgates several towns in Bulacan were inundated. Hardest-
hit was Norzagary where about hundred of its residents died or were reported to have died. The
petitioners who were among the many unfortunate victims of that man-made flood filed for
damages against the respondent corporation.
Petitioners opposed the prayer of the respondents forn dismissal of the case and contended that
the respondent corporation is merely performing a propriety functions and that under its own
organic act, it can sue and be sued in court.

ISSUE:

Whether the respondent performs governmental functions with respect to the management and
operation of the Angat Dam.

Whether the power of the respondent to sue and be sued under its organic charter includes the
power to be sued for tort.

HELD:
Yes. 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
allowed it to sue and be sued in any court under its charter.

Yes. As a government owned and controlled corporation, it has a personality of its own, distinct
and separate from that of the government. Moreover, the charter provision that it can sue and be
sued in any court.