43 scra 360 G.R. No.

L-26400 February 29, 1972

VICTORIA AMIGABLE, plaintiff-appellant,

vs.
NICOLAS CUENCA, as Commissioner of Public Highways and REPUBLIC OF THE PHILIPPINES, defendants-appellees.

MAKALINTAL, J.:p

This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R-5977, dismissing the plaintiff's
complaint.

Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad Estate in Cebu City as shown by Transfer
Certificate of Title No. T-18060, which superseded Transfer Certificate of Title No. RT-3272 (T-3435) issued to her by the Register of
Deeds of Cebu on February 1, 1924. No annotation in favor of the government of any right or interest in the property appears at the
back of the certificate. Without prior expropriation or negotiated sale, the government used a portion of said lot, with an area of 6,167
square meters, for the construction of the Mango and Gorordo Avenues.

It appears that said avenues were already existing in 1921 although "they were in bad condition and very narrow, unlike the wide and
beautiful avenues that they are now," and "that the tracing of said roads was begun in 1924, and the formal construction in
1925." *

On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of her lot which had
been appropriated by the government. The claim was indorsed to the Auditor General, who disallowed it in his 9th Indorsement dated
December 9, 1958. A copy of said indorsement was transmitted to Amigable's counsel by the Office of the President on January 7,
1959.

On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended on April 17, 1959 upon motion of the
defendants, against the Republic of the Philippines and Nicolas Cuenca, in his capacity as Commissioner of Public Highways for the
recovery of ownership and possession of the 6,167 square meters of land traversed by the Mango and Gorordo Avenues. She also
sought the payment of compensatory damages in the sum of P50,000.00 for the illegal occupation of her land, moral damages in the
sum of P25,000.00, attorney's fees in the sum of P5,000.00 and the costs of the suit.

Within the reglementary period the defendants filed a joint answer denying the material allegations of the complaint and interposing the
following affirmative defenses, to wit: (1) that the action was premature, the claim not having been filed first with the Office of the
Auditor General; (2) that the right of action for the recovery of any amount which might be due the plaintiff, if any, had already
prescribed; (3) that the action being a suit against the Government, the claim for moral damages, attorney's fees and costs had no valid
basis since as to these items the Government had not given its consent to be sued; and (4) that inasmuch as it was the province of
Cebu that appropriated and used the area involved in the construction of Mango Avenue, plaintiff had no cause of action against the
defendants.

During the scheduled hearings nobody appeared for the defendants notwithstanding due notice, so the trial court proceeded to receive
the plaintiff's evidence ex parte. On July 29, 1959 said court rendered its decision holding that it had no jurisdiction over the plaintiff's
cause of action for the recovery of possession and ownership of the portion of her lot in question on the ground that the government
cannot be sued without its consent; that it had neither original nor appellate jurisdiction to hear, try and decide plaintiff's claim for
compensatory damages in the sum of P50,000.00, the same being a money claim against the government; and that the claim for moral
damages had long prescribed, nor did it have jurisdiction over said claim because the government had not given its consent to be sued.
Accordingly, the complaint was dismissed. Unable to secure a reconsideration, the plaintiff appealed to the Court of Appeals, which
subsequently certified the case to Us, there being no question of fact involved.

The issue here is whether or not the appellant may properly sue the government under the facts of the case.

In the case of Ministerio vs. Court of First Instance of Cebu, 1 involving a claim for payment of the value of a portion of land used for the
widening of the Gorordo Avenue in Cebu City, this Court, through Mr. Justice Enrique M. Fernando, held that where the government
takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale,
the aggrieved party may properly maintain a suit against the government without thereby violating the doctrine of governmental
immunity from suit without its consent. We there said: .

... . If the constitutional mandate that the owner be compensated for property taken for public use were to be
respected, as it should, then a suit of this character should not be summarily dismissed. The doctrine of
governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. Had the
government followed the procedure indicated by the governing law at the time, a complaint would have been filed by
it, and only upon payment of the compensation fixed by the judgment, or after tender to the party entitled to such
payment of the amount fixed, may it "have the right to enter in and upon the land so condemned, to appropriate the
same to the public use defined in the judgment." If there were an observance of procedural regularity, petitioners
would not be in the sad plaint they are now. It is unthinkable then that precisely because there was a failure to abide
by what the law requires, the government would stand to benefit. It is just as important, if not more so, that there be
fidelity to legal norms on the part of officialdom if the rule of law were to be maintained. It is not too much to say that
when the government takes any property for public use, which is conditioned upon the payment of just
compensation, to be judicially ascertained, it makes manifest that it submits to the jurisdiction of a court. There is no
thought then that the doctrine of immunity from suit could still be appropriately invoked.

Considering that no annotation in favor of the government appears at the back of her certificate of title and that she has not executed
any deed of conveyance of any portion of her lot to the government, the appellant remains the owner of the whole lot. As registered
owner, she could bring an action to recover possession of the portion of land in question at anytime because possession is one of the
attributes of ownership. However, since restoration of possession of said portion by the government is neither convenient nor feasible
at this time because it is now and has been used for road purposes, the only relief available is for the government to make due
compensation which it could and should have done years ago. To determine the due compensation for the land, the basis should be
the price or value thereof at the time of the taking. 2
As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price of the land from the time it was
taken up to the time that payment is made by the government. 3 In addition, the government should pay for attorney's fees, the amount
of which should be fixed by the trial court after hearing.

WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the court a quo for the determination of
compensation, including attorney's fees, to which the appellant is entitled as above indicated. No pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and Makasiar JJ., concur.
G.R. No. L-6060 September 30, 1954

FERNANDO A. FROILAN, plaintiff-appellee,

vs.
PAN ORIENTAL SHIPPING CO., defendant-appellant,
REPUBLIC OF THE PHILIPPINES, intervenor-appellee.

Quisumbing, Sycip, Quisumbing and Salazar, for appellant.

Ernesto Zaragoza for appellee.
Hilarion U. Jarencio for the intervenor.

PARAS, C.J.:

The factual antecedents of this case are sufficiently recited in the brief filed by the intervenor-appellee as follows:

1. On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a complaint against the defendant-appellant, Pan Oriental
Shipping Co., alleging that he purchased from the Shipping Commission the vessel FS-197 for P200,000, paying P50,000
down and agreeing to pay the balance in installments; that to secure the payment of the balance of the purchase price, he
executed a chattel mortgage of said vessel in favor of the Shipping Commission; that for various reason, among them the non-
payment of the installments, the Shipping Commission took possession of said vessel and considered the contract of sale
cancelled; that the Shipping Commission chartered and delivered said vessel to the defendant-appellant Pan Oriental
Shipping Co. subject to the approval of the President of the Philippines; that he appealed the action of the Shipping
Commission to the President of the Philippines and, in its meeting on August 25, 1950, the Cabinet restored him to all his
rights under his original contract with the Shipping Commission; that he had repeatedly demanded from the Pan Oriental
Shipping Co. the possession of the vessel in question but the latter refused to do so. He, therefore, prayed that, upon the
approval of the bond accompanying his complaint, a writ of replevin be issued for the seizure of said vessel with all its
equipment and appurtenances, and that after hearing, he be adjudged to have the rightful possession thereof (Rec. on App.
pp. 2-8).

2. On February 3, 1951, the lower court issued the writ of replevin prayed for by Froilan and by virtue thereof the Pan Oriental
Shipping Co. was divested of its possession of said vessel (Rec. on App. p. 47).

3. On March 1, 1951, Pan Oriental Shipping Co. filed its answer denying the right of Froilan to the possession of the said
vessel; it alleged that the action of the Cabinet on August 25, 1950, restoring Froilan to his rights under his original contract
with the Shipping Commission was null and void; that, in any event, Froilan had not complied with the conditions precedent
imposed by the Cabinet for the restoration of his rights to the vessel under the original contract; that it suffered damages in the
amount of P22,764.59 for wrongful replevin in the month of February, 1951, and the sum of P17,651.84 a month as damages
suffered for wrongful replevin from March 1, 1951; it alleged that it had incurred necessary and useful expenses on the vessel
amounting to P127,057.31 and claimed the right to retain said vessel until its useful and necessary expenses had been
reimbursed (Rec. on App. pp. 8-53).

4. On November 10, 1951, after the leave of the lower court had been obtained, the intervenor-appellee, Government of the
Republic of the Philippines, filed a complaint in intervention alleging that Froilan had failed to pay to the Shipping Commission
(which name was later changed to Shipping Administration) the balance due on the purchase price of the vessel in question,
the interest thereon, and its advances on insurance premium totalling P162,142.95, excluding the dry-docking expenses
incurred on said vessel by the Pan Oriental Shipping Co.; that intervenor was entitled to the possession of the said vessel
either under the terms of the original contract as supplemented by Froilan's letter dated January 28, 1949, or in order that it
may cause the extrajudicial sale thereof under the Chattel Mortgage Law. It, therefore, prayed that Froilan be ordered to
deliver the vessel in question to its authorized representative, the Board of Liquidators; that Froilan be declared to be without
any rights on said vessel and the amounts he paid thereon forfeited or alternately, that the said vessel be delivered to the
Board of Liquidators in order that the intervenor may have its chattel mortgage extrajudicially foreclosed in accordance with
the provisions of the Chattel Mortgage Law; and that pending the hearing on the merits, the said vessel be delivered to it (Rec.
on App. pp. 54-66).

5. On November 29, 1951, the Pan Oriental Shipping Co. filed an answer to the complaint in intervention alleging that the
Government of the Republic of the Philippines was obligated to deliver the vessel in question to it by virtue of a contract of
bare-boat charter with option to purchase executed on June 16, 1949, by the latter in favor of the former; it also alleged that it
had made necessary and useful expenses on the vessel and claimed the right of retention of the vessel. It, therefore, prayed
that, if the Republic of the Philippines succeeded in obtaining possession of the said vessel, to comply with its obligations of
delivering to it (Pan Oriental Shipping co.) or causing its delivery by recovering it from Froilan (Rec. on App. pp. 69-81).

6. On November 29, 1951, Froilan tendered to the Board of Liquidators, which was liquidating the affairs of the Shipping
Administration, a check in the amount of P162,576.96 in payment of his obligation to the Shipping Administration for the said
vessel as claimed in the complaint in intervention of the Government of the Republic of the Philippines. The Board of
Liquidators issued an official report therefor stating that it was a 'deposit pending the issuance of an order of the Court of First
Instance of Manila' (Rec. on App. pp. 92-93).

7. On December 7, 1951, the Government of the Republic of the Philippines brought the matter of said payment and the
circumstance surrounding it to the attention of the lower court "in order that they may be taken into account by this Honorable
Court in connection with the questions that are not pending before it for determination" (Rec. on App. pp. 82-86).

8. On February 3, 1952, the lower court held that the payment by Froilan of the amount of P162,576.96 on November 29,
1951, to the Board of Liquidators constituted a payment and a discharge of Froilan's obligation to the Government of the
Republic of the Philippines and ordered the dismissal of the latter's complaint in intervention. In the same order, the lower
court made it very clear that said order did not pre-judge the question involved between Froilan and the Oriental Shipping Co.
which was also pending determination in said court (Rec. on App. pp. 92-93). This order dismissing the complaint in
intervention, but reserving for future adjudication the controversy between Froilan and the Pan Oriental Shipping Co. has
already become final since neither the Government of the Republic of the Philippines nor the Pan Oriental Shipping Co. had
appealed therefrom.
 9. On May 10, 1952, the Government of the Republic of the Philippines filed a motion to dismiss the counterclaim of the Pan
Oriental Shipping Co. against it on the ground that the purpose of said counterclaim was to compel the Government of the
Republic of the Philippines to deliver the vessel to it (Pan Oriental Shipping Co.) in the event that the Government of the
Republic of the Philippines recovers the vessel in question from Froilan. In view, however, of the order of the lower court dated
February 3, holding that the payment made by Froilan to the Board of Liquidators constituted full payment of Froilan's
obligation to the Shipping Administration, which order had already become final, the claim of the Pan Oriental Shipping Co.
against the Republic of the Philippines was no longer feasible, said counterclaim was barred by prior judgment and stated no
cause of action. It was also alleged that movant was not subject to the jurisdiction of the court in connection with the
counterclaim. (Rec. on App. pp. 94-97). This motion was opposed by the Pan Oriental Shipping Co. in its written opposition
dated June 4, 1952 (Rec. on app. pp. 19-104).

10. In an order dated July 1, 1952, the lower court dismissed the counterclaim of the Pan Oriental Shipping Co. as prayed for
by the Republic of the Philippines (Rec. on App. pp. 104-106).

11. It if from this order of the lower court dismissing its counterclaim against the Government of the Republic of the Philippines
that Pan Oriental Shipping Co. has perfected the present appeal (Rec. on App. p. 107).

The order of the Court of First Instance of Manila, dismissing the counterclaim of the defendant Pan Oriental Shipping Co., from which
the latter has appealed, reads as follows:

This is a motion to dismiss the counterclaim interposed by the defendant in its answer to the complaint in intervention.

"The counterclaim states as follows:

"COUNTERCLAIM

"As counterclaim against the intervenor Republic of the Philippines, the defendant alleges:

"1. That the defendant reproduces herein all the pertinent allegations of the foregoing answer to the complaint in intervention

"2. That, as shown by the allegations of the foregoing answer to the complaint in intervention, the defendant Pan Oriental
Shipping Company is entitled to the possession of the vessel and the intervenor Republic of the Philippines is bound under
the contract of charter with option to purchase it entered into with the defendant to deliver that possession to the defendant —
whether it actually has the said possession or it does not have that possession from the plaintiff Fernando A. Froilan and
deliver the same to the defendant;

"3. That, notwithstanding demand, the intervenor Republic of the Philippines has not to date complied with its obligation of
delivering or causing the delivery of the vessel to the defendant Pan Oriental Shipping Company.1âwphïl.nêt

"RELIEF

"WHEREFORE, the defendant respectfully prays that judgment be rendered ordering the intervenor Republic of the
Philippines alternatively to deliver to the defendants the possession of the said vessel, or to comply with its obligation to the
defendant or causing the delivery to the latter of the said vessel by recovering the same from plaintiff, with costs.

"The defendant prays for such other remedy as the Court may deem just and equitable in the premises."

The ground of the motion to dismiss are (a) That the cause of action is barred by prior judgment; (b) That the counterclaim
states no cause of action; and (c) That this Honorable Court has no jurisdiction over the intervenor government of the
Republic of the Philippines in connection with the counterclaim of the defendant Pan Oriental Shipping Co.

The intervenor contends that the complaint in intervention having been dismissed and no appeal having been taken, the
dismissal of said complaint is tantamount to a judgment.

The complaint in intervention did not contain any claim whatsoever against the defendant Pan Oriental Shipping Co.; hence,
the counterclaim has no foundation.

The question as to whether the Court has jurisdiction over the intervenor with regard to the counterclaim, the Court is of the
opinion that it has no jurisdiction over said intervenor.

It appearing, therefore, that the grounds of the motion to dismiss are well taken, the counterclaim of the defendant is
dismissed, without pronouncement as to costs.

The defendant's appeal is predicated upon the following assignments of error:

I. The lower court erred in dismissing the counterclaim on the ground of prior judgment.

II. The lower court erred in dismissing the counterclaim on the ground that the counterclaim had no foundation because made
to a complaint in intervention that contained no claim against the defendant.

III. The lower court erred in dismissing the counterclaim on the ground of alleged lack of jurisdiction over the intervenor
Republic of the Philippines.

We agree with appellant's contention that its counterclaim is not barred by prior judgment (order of February 8, 1952, dismissing the
complaint in intervention), first, because said counterclaim was filed on November 29, 1951, before the issuance of the order invoked;
and, secondly, because in said order of February 8, the court dismissed the complaint in intervention, "without, of course, precluding
the determination of the right of the defendant in the instant case," and subject to the condition that the "release and cancellation of the
chattel mortgage does not, however, prejudge the question involved between the plaintiff and the defendant which is still the subject of
determination in this case." It is to be noted that the first condition referred to the right of the defendant, as distinguished from the
second condition that expressly specified the controversy between the plaintiff and the defendant. That the first condition reserved the
right of the defendant as against the intervenor, is clearly to be deduced from the fact that the order of February 8 mentioned the
circumstance that "the question of the expenses of drydocking incurred by the defendant has been included in its counterclaim against
the plaintiff," apparently as one of the grounds for granting the motion to dismiss the complaint in intervention.

The defendant's failure to appeal from the order of February 8 cannot, therefore, be held as barring the defendant from proceeding with
its counterclaim, since, as already stated, said order preserved its right as against the intervenor. Indeed, the maintenance of said right
is in consonance with Rule 30, section 2, of the Rules of Court providing that "if a counterclaim has been pleaded by a defendant prior
to the service upon him of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless
the counterclaim can remain pending for independent adjudication by the court."

The lower court also erred in holding that, as the intervenor had not made any claim against the defendant, the latter's counterclaim
had no foundation. The complaint in intervention sought to recover possession of the vessel in question from the plaintiff, and this claim
is logically adverse to the position assumed by the defendant that it has a better right to said possession than the plaintiff who alleges
in his complaint that he is entitled to recover the vessel from the defendant. At any rate a counterclaim should be judged by its own
allegations, and not by the averments of the adverse party. It should be recalled that the defendant's theory is that the plaintiff had
already lost his rights under the contract with the Shipping Administration and that, on the other hand, the defendant is relying on the
charter contract executed in its favor by the intervenor which is bound to protect the defendant in its possession of the vessel. In other
words, the counterclaim calls for specific performance on the part of the intervenor. As to whether this counterclaim is meritorious is
another question which is not now before us.

The other ground for dismissing the defendant's counterclaim is that the State is immune from suit. This is untenable, because by filing
its complaint in intervention the Government in effect waived its right of nonsuability.

The immunity of the state from suits does not deprive it of the right to sue private parties in its own courts. The state as plaintiff
may avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in an action against a
private party, the state surrenders its privileged position and comes down to the level of the defendant. The latter
automatically acquires, within certain limits, the right to set up whatever claims and other defenses he might have against the
state. The United States Supreme Court thus explains:

"No direct suit can be maintained against the United States. But when an action is brought by the United States to
recover money in the hands of a party who has a legal claim against them, it would be a very rigid principle to deny to
him the right of setting up such claim in a court of justice, and turn him around to an application to Congress." (Sinco,
Philippine Political Law, Tenth Ed., pp. 36-37, citing U. S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899.)

It is however, contended for the intervenor that, if there was at all any waiver, it was in favor of the plaintiff against whom the complaint
in intervention was directed. This contention is untenable. As already stated, the complaint in intervention was in a sense in derogation
of the defendant's claim over the possession of the vessel in question.

Wherefore, the appealed order is hereby reversed and set aside and the case remanded to the lower court for further proceedings. So
ordered, without costs.

Pablo, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Concepcion, and Reyes, J.B.L., JJ., concur.
136 scra 487 G.R. No. L-35645 May 22, 1985

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN & CO.,
INC., respondents.

Sycip, Salazar, Luna & Manalo & Feliciano Law for petitioners.

Albert, Vergara, Benares, Perias & Dominguez Law Office for respondents.

ABAD SANTOS, J.:

This is a petition to review, set aside certain orders and restrain the respondent judge from trying Civil Case No. 779M of the defunct
Court of First Instance of Rizal.

The factual background is as follows:

At times material to this case, the United States of America had a naval base in Subic, Zambales. The base was one of those provided
in the Military Bases Agreement between the Philippines and the United States.

Sometime in May, 1972, the United States invited the submission of bids for the following projects

1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines.

2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline revetment, NAVBASE Subic; and repair to
Leyte Wharf approach, NAVBASE Subic Bay, Philippines.

Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the company received from the
United States two telegrams requesting it to confirm its price proposals and for the name of its bonding company. The company
complied with the requests. [In its complaint, the company alleges that the United States had accepted its bids because "A request to
confirm a price proposal confirms the acceptance of a bid pursuant to defendant United States' bidding practices." (Rollo, p. 30.) The
truth of this allegation has not been tested because the case has not reached the trial stage.]

In June, 1972, the company received a letter which was signed by Wilham I. Collins, Director, Contracts Division, Naval Facilities
Engineering Command, Southwest Pacific, Department of the Navy of the United States, who is one of the petitioners herein. The letter
said that the company did not qualify to receive an award for the projects because of its previous unsatisfactory performance rating on
a repair contract for the sea wall at the boat landings of the U.S. Naval Station in Subic Bay. The letter further said that the projects had
been awarded to third parties. In the abovementioned Civil Case No. 779-M, the company sued the United States of America and
Messrs. James E. Galloway, William I. Collins and Robert Gohier all members of the Engineering Command of the U.S. Navy. The
complaint is to order the defendants to allow the plaintiff to perform the work on the projects and, in the event that specific performance
was no longer possible, to order the defendants to pay damages. The company also asked for the issuance of a writ of preliminary
injunction to restrain the defendants from entering into contracts with third parties for work on the projects.

The defendants entered their special appearance for the purpose only of questioning the jurisdiction of this court over the subject
matter of the complaint and the persons of defendants, the subject matter of the complaint being acts and omissions of the individual
defendants as agents of defendant United States of America, a foreign sovereign which has not given her consent to this suit or any
other suit for the causes of action asserted in the complaint." (Rollo, p. 50.)

Subsequently the defendants filed a motion to dismiss the complaint which included an opposition to the issuance of the writ of
preliminary injunction. The company opposed the motion. The trial court denied the motion and issued the writ. The defendants moved
twice to reconsider but to no avail. Hence the instant petition which seeks to restrain perpetually the proceedings in Civil Case No. 779-
M for lack of jurisdiction on the part of the trial court.

The petition is highly impressed with merit.

The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent or waiver. This
rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are
not petrified; they are constantly developing and evolving. And because the activities of states have multiplied, it has been necessary to
distinguish them-between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis).
The result is that State immunity now extends only to acts jure imperil The restrictive application of State immunity is now the rule in the
United States, the United Kingdom and other states in western Europe. (See Coquia and Defensor Santiago, Public International Law,
pp. 207-209 [1984].)

The respondent judge recognized the restrictive doctrine of State immunity when he said in his Order denying the defendants' (now
petitioners) motion: " A distinction should be made between a strictly governmental function of the sovereign state from its private,
proprietary or non- governmental acts (Rollo, p. 20.) However, the respondent judge also said: "It is the Court's considered opinion that
entering into a contract for the repair of wharves or shoreline is certainly not a governmental function altho it may partake of a public
nature or character. As aptly pointed out by plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594
(1958)], and which this Court quotes with approval, viz.:

It is however contended that when a sovereign state enters into a contract with a private person, the state can be
sued upon the theory that it has descended to the level of an individual from which it can be implied that it has given
its consent to be sued under the contract. ...

xxx xxx xxx

 We agree to the above contention, and considering that the United States government, through its agency at Subic
Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay
Area, a U.S. Naval Reservation, it is evident that it can bring an action before our courts for any contractual liability
that that political entity may assume under the contract. The trial court, therefore, has jurisdiction to entertain this
case ... (Rollo, pp. 20-21.)

The reliance placed on Lyons by the respondent judge is misplaced for the following reasons:

In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court of First Instance of Manila to collect
several sums of money on account of a contract between plaintiff and defendant. The defendant filed a motion to dismiss on the ground
that the court had no jurisdiction over defendant and over the subject matter of the action. The court granted the motion on the grounds
that: (a) it had no jurisdiction over the defendant who did not give its consent to the suit; and (b) plaintiff failed to exhaust the
administrative remedies provided in the contract. The order of dismissal was elevated to this Court for review.

In sustaining the action of the lower court, this Court said:

It appearing in the complaint that appellant has not complied with the procedure laid down in Article XXI of the
contract regarding the prosecution of its claim against the United States Government, or, stated differently, it has
failed to first exhaust its administrative remedies against said Government, the lower court acted properly in
dismissing this case.(At p. 598.)

It can thus be seen that the statement in respect of the waiver of State immunity from suit was purely gratuitous and,
therefore, obiter so that it has no value as an imperative authority.

The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign
sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an
individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not
apply where the contract relates to the exercise of its sovereign functions. In this case the projects are an integral part of the naval
base which is devoted to the defense of both the United States and the Philippines, indisputably a function of the government of the
highest order; they are not utilized for nor dedicated to commercial or business purposes.

That the correct test for the application of State immunity is not the conclusion of a contract by a State but the legal nature of the act is
shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased three apartment buildings to the United States of
America for the use of its military officials. The plaintiffs sued to recover possession of the premises on the ground that the term of the
leases had expired. They also asked for increased rentals until the apartments shall have been vacated.

The defendants who were armed forces officers of the United States moved to dismiss the suit for lack of jurisdiction in the part of the
court. The Municipal Court of Manila granted the motion to dismiss; sustained by the Court of First Instance, the plaintiffs went to this
Court for review on certiorari. In denying the petition, this Court said:

On the basis of the foregoing considerations we are of the belief and we hold that the real party defendant in interest
is the Government of the United States of America; that any judgment for back or Increased rentals or damages will
have to be paid not by defendants Moore and Tillman and their 64 co-defendants but by the said U.S. Government.
On the basis of the ruling in the case of Land vs. Dollar already cited, and on what we have already stated, the
present action must be considered as one against the U.S. Government. It is clear hat the courts of the Philippines
including the Municipal Court of Manila have no jurisdiction over the present case for unlawful detainer. The question
of lack of jurisdiction was raised and interposed at the very beginning of the action. The U.S. Government has not ,
given its consent to the filing of this suit which is essentially against her, though not in name. Moreover, this is not
only a case of a citizen filing a suit against his own Government without the latter's consent but it is of a citizen filing
an action against a foreign government without said government's consent, which renders more obvious the lack of
jurisdiction of the courts of his country. The principles of law behind this rule are so elementary and of such general
acceptance that we deem it unnecessary to cite authorities in support thereof. (At p. 323.)

In Syquia,the United States concluded contracts with private individuals but the contracts notwithstanding the States was not deemed
to have given or waived its consent to be sued for the reason that the contracts were for jure imperii and not for jure gestionis.

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and Civil Case No. is dismissed.
Costs against the private respondent.

Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, * Escolin, Relova, Gutierrez, Jr., De la Fuente, Cuevas and Alampay,
JJ., concur.

Fernando, C.J., took no part.

Separate Opinions

MAKASIAR, J., dissenting:

The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to
continue therein.

In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry
Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further
stated that inasmuch as ". . . the United States Government. through its agency at Subic Bay, entered into a contract with appellant for
stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an
action before our courts for any contractual liability that that political entity may assume under the contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of
wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign
immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of
entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at bar by the
unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bay should not be
allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-
suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for
violation of his rights committed by the agents of the foreign government professing to act in its name.

Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325:

Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is
inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's
jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals.

Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with
regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the
private citizens of another country, such foreign government cannot shield its non-performance or contravention of
the terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the
jurisdiction of the domestic courts is to give approval to the execution of unilateral contracts, graphically described in
Spanish as 'contratos leoninos', because one party gets the lion's share to the detriment of the other. To give validity
to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private
contract, including governments and the most powerful of them, are amenable to law, and that such contracts are
enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such
contracts if the same had been entered into only by private individuals.

Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our
sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from transacting business
and entering into contracts with United States authorities or facilities in the Philippines whether naval, air or ground forces-because the
difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of
contractual obligation committed by agents of the United States government, always, looms large, thereby hampering the growth of
Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies
with the various U.S. offices and agencies operating in the Philippines.

The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or
private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good
faith.

One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm
small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes
hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations,
subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small
nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private
respondent on the other, was honored more in the breach than in the compliance The opinion of the majority will certainly open the
floodgates of more violations of contractual obligations. American authorities or any foreign government in the Philippines for that
matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is
disastrous to the Philippines.

This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our
Republic.

The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen
(Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40
SCRA 464).

Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay,
should be held amenable to lawsuits in our country like any other juristic person.

The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military
Bases Agreement of March 14, 1947, which states that "in the exercise of the above-mentioned rights, powers and authority, the United
States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis supplied).

Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military
Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will assure equality of
treatment of all employees ... and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will be
mutually beneficial and will strengthen the democratic institutions cherished by both Governments, ... the United States Government
agrees to accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs
for civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).

Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid
amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S. Armed Forces shall be
required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations, " even though
paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity
under international law."
Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on
respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases
Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian component and their dependents, to
respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases
Agreement and, in particular, from any political activity in the Philippines. The United States shag take all measures within its authority
to insure that they adhere to them (Emphasis supplied).

The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social
improvement of areas surrounding the bases, which directs that "moreover, the United States Forces shall procure goods and services
in the Philippines to the maximum extent feasible" (Emphasis supplied).

Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions
or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of the principles of equality of
treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the Republic of the Philippines" (Emphasis
supplied)

The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President
Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty extends over the bases
and that Its base shall be under the command of a Philippine Base Commander, " which is supposed to underscore the joint
Communique of President Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality,
territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and
that "they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between
their two countries. "

The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and
American Base Commanders that "in the performance of their duties, the Philippine Base Commander and the American Base
Commander shall be guided by full respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military
operations on the other hand and that "they shall promote cooperation understanding and harmonious relations within the Base and
with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7,
1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied).

Separate Opinions

MAKASIAR, J., dissenting:

The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to
continue therein.

In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry
Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further
stated that inasmuch as ". . . the United States Government. through its agency at Subic Bay, entered into a contract with appellant for
stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an
action before our courts for any contractual liability that that political entity may assume under the contract."

When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of
wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign
immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of
entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at bar by the
unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bay should not be
allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-
suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for
violation of his rights committed by the agents of the foreign government professing to act in its name.

Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325:

Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is
inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's
jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals.

Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with
regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the
private citizens of another country, such foreign government cannot shield its non-performance or contravention of
the terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the
jurisdiction of the domestic courts is to give approval to the execution of unilateral contracts, graphically described in
Spanish as 'contratos leoninos', because one party gets the lion's share to the detriment of the other. To give validity
to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private
contract, including governments and the most powerful of them, are amenable to law, and that such contracts are
enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such
contracts if the same had been entered into only by private individuals.

Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our
sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from transacting business
and entering into contracts with United States authorities or facilities in the Philippines whether naval, air or ground forces-because the
difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of
contractual obligation committed by agents of the United States government, always, looms large, thereby hampering the growth of
Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies
with the various U.S. offices and agencies operating in the Philippines.

The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or
private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good
faith.

One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm
small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes
hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations,
subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small
nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private
respondent on the other, was honored more in the breach than in the compliance The opinion of the majority will certainly open the
floodgates of more violations of contractual obligations. American authorities or any foreign government in the Philippines for that
matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is
disastrous to the Philippines.

This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our
Republic.

The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen
(Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40
SCRA 464).

Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay,
should be held amenable to lawsuits in our country like any other juristic person.

The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military
Bases Agreement of March 14, 1947, which states that "in the exercise of the above-mentioned rights, powers and authority, the United
States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis supplied).

Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military
Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will assure equality of
treatment of all employees ... and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will be
mutually beneficial and will strengthen the democratic institutions cherished by both Governments, ... the United States Government
agrees to accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs
for civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).

Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid
amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S. Armed Forces shall be
required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations, " even though
paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity
under international law."

Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on
respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases
Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian component and their dependents, to
respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases
Agreement and, in particular, from any political activity in the Philippines. The United States shag take all measures within its authority
to insure that they adhere to them (Emphasis supplied).

The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social
improvement of areas surrounding the bases, which directs that "moreover, the United States Forces shall procure goods and services
in the Philippines to the maximum extent feasible" (Emphasis supplied).

Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions
or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of the principles of equality of
treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the Republic of the Philippines" (Emphasis
supplied)

The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President
Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty extends over the bases
and that Its base shall be under the command of a Philippine Base Commander, " which is supposed to underscore the joint
Communique of President Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality,
territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and
that "they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between
their two countries. "

The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and
American Base Commanders that "in the performance of their duties, the Philippine Base Commander and the American Base
Commander shall be guided by full respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military
operations on the other hand and that "they shall promote cooperation understanding and harmonious relations within the Base and
with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7,
1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied).
182 scra 645 G.R. No. 76607 February 26, 1990

UNITED STATES OF AMERICA, FREDERICK M. SMOUSE AND YVONNE REEVES, petitioners,

vs.
HON. ELIODORO B. GUINTO, Presiding Judge, Branch LVII, Regional Trial Court, Angeles City, ROBERTO T. VALENCIA,
EMERENCIANA C. TANGLAO, AND PABLO C. DEL PILAR, respondents.

G.R. No. 79470 February 26, 1990

UNITED STATES OF AMERICA, ANTHONY LAMACHIA, T/SGT. USAF, WILFREDO BELSA, PETER ORASCION AND ROSE
CARTALLA, petitioners,
vs.
HON. RODOLFO D. RODRIGO, as Presiding Judge of Branch 7, Regional Trial Court (BAGUIO CITY), La Trinidad, Benguet and
FABIAN GENOVE, respondents.

G.R. No. 80018 February 26, 1990

UNITED STATES OF AMERICA, TOMI J. KINGI, DARREL D. DYE and STEVEN F. BOSTICK, petitioners,
vs.
HON. JOSEFINA D. CEBALLOS, As Presiding Judge, Regional Trial Court, Branch 66, Capas, Tarlac, and LUIS
BAUTISTA, respondents.

G.R. No. 80258 February 26, 1990

UNITED STATES OF AMERICA, MAJOR GENERAL MICHAEL P. C. CARNS, AIC ERNEST E. RIVENBURGH, AIC ROBIN BLEVINS,
SGT. NOEL A. GONZALES, SGT. THOMAS MITCHELL, SGT. WAYNE L. BENJAMIN, ET AL., petitioners,
vs.
HON. CONCEPCION S. ALARCON VERGARA, as Presiding Judge, Branch 62 REGIONAL TRIAL COURT, Angeles City, and RICKY
SANCHEZ, FREDDIE SANCHEZ AKA FREDDIE RIVERA, EDWIN MARIANO, AKA JESSIE DOLORES SANGALANG, ET
AL., respondents.

Luna, Sison & Manas Law Office for petitioners.

CRUZ, J.:

These cases have been consolidated because they all involve the doctrine of state immunity. The United States of America was not
impleaded in the complaints below but has moved to dismiss on the ground that they are in effect suits against it to which it has not
consented. It is now contesting the denial of its motions by the respondent judges.

In G.R. No. 76607, the private respondents are suing several officers of the U.S. Air Force stationed in Clark Air Base in connection
with the bidding conducted by them for contracts for barber services in the said base.

On February 24, 1986, the Western Pacific Contracting Office, Okinawa Area Exchange, U.S. Air Force, solicited bids for such
contracts through its contracting officer, James F. Shaw. Among those who submitted their bids were private respondents Roberto T.
Valencia, Emerenciana C. Tanglao, and Pablo C. del Pilar. Valencia had been a concessionaire inside Clark for 34 years; del Pilar for
12 years; and Tanglao for 50 years.

The bidding was won by Ramon Dizon, over the objection of the private respondents, who claimed that he had made a bid for four
facilities, including the Civil Engineering Area, which was not included in the invitation to bid.

The private respondents complained to the Philippine Area Exchange (PHAX). The latter, through its representatives, petitioners
Yvonne Reeves and Frederic M. Smouse explained that the Civil Engineering concession had not been awarded to Dizon as a result of
the February 24, 1986 solicitation. Dizon was already operating this concession, then known as the NCO club concession, and the
expiration of the contract had been extended from June 30, 1986 to August 31, 1986. They further explained that the solicitation of the
CE barbershop would be available only by the end of June and the private respondents would be notified.

On June 30, 1986, the private respondents filed a complaint in the court below to compel PHAX and the individual petitioners to cancel
the award to defendant Dizon, to conduct a rebidding for the barbershop concessions and to allow the private respondents by a writ of
preliminary injunction to continue operating the concessions pending litigation. 1

Upon the filing of the complaint, the respondent court issued an ex parte order directing the individual petitioners to maintain the status
quo.

On July 22, 1986, the petitioners filed a motion to dismiss and opposition to the petition for preliminary injunction on the ground that the
action was in effect a suit against the United States of America, which had not waived its non-suability. The individual defendants, as
official employees of the U.S. Air Force, were also immune from suit.

On the same date, July 22, 1986, the trial court denied the application for a writ of preliminary injunction.

On October 10, 1988, the trial court denied the petitioners' motion to dismiss, holding in part as follows:

From the pleadings thus far presented to this Court by the parties, the Court's attention is called by the relationship
between the plaintiffs as well as the defendants, including the US Government, in that prior to the bidding or
solicitation in question, there was a binding contract between the plaintiffs as well as the defendants, including the
US Government. By virtue of said contract of concession it is the Court's understanding that neither the US
Government nor the herein principal defendants would become the employer/s of the plaintiffs but that the latter are
 the employers themselves of the barbers, etc. with the employer, the plaintiffs herein, remitting the stipulated
percentage of commissions to the Philippine Area Exchange. The same circumstance would become in effect when
the Philippine Area Exchange opened for bidding or solicitation the questioned barber shop concessions. To this
extent, therefore, indeed a commercial transaction has been entered, and for purposes of the said solicitation, would
necessarily be entered between the plaintiffs as well as the defendants.

The Court, further, is of the view that Article XVIII of the RP-US Bases Agreement does not cover such kind of
services falling under the concessionaireship, such as a barber shop concession. 2

On December 11, 1986, following the filing of the herein petition for certiorari and prohibition with preliminary injunction, we issued a
temporary restraining order against further proceedings in the court below. 3

In G.R. No. 79470, Fabian Genove filed a complaint for damages against petitioners Anthony Lamachia, Wilfredo Belsa, Rose Cartalla
and Peter Orascion for his dismissal as cook in the U.S. Air Force Recreation Center at the John Hay Air Station in Baguio City. It had
been ascertained after investigation, from the testimony of Belsa Cartalla and Orascion, that Genove had poured urine into the soup
stock used in cooking the vegetables served to the club customers. Lamachia, as club manager, suspended him and thereafter
referred the case to a board of arbitrators conformably to the collective bargaining agreement between the Center and its employees.
The board unanimously found him guilty and recommended his dismissal. This was effected on March 5, 1986, by Col. David C.
Kimball, Commander of the 3rd Combat Support Group, PACAF Clark Air Force Base. Genove's reaction was to file Ms complaint in
the Regional Trial Court of Baguio City against the individual petitioners. 4

On March 13, 1987, the defendants, joined by the United States of America, moved to dismiss the complaint, alleging that Lamachia,
as an officer of the U.S. Air Force stationed at John Hay Air Station, was immune from suit for the acts done by him in his official
capacity. They argued that the suit was in effect against the United States, which had not given its consent to be sued.

This motion was denied by the respondent judge on June 4, 1987, in an order which read in part:

It is the understanding of the Court, based on the allegations of the complaint — which have been hypothetically
admitted by defendants upon the filing of their motion to dismiss — that although defendants acted initially in their
official capacities, their going beyond what their functions called for brought them out of the protective mantle of
whatever immunities they may have had in the beginning. Thus, the allegation that the acts complained of were
illegal, done. with extreme bad faith and with pre-conceived sinister plan to harass and finally dismiss the plaintiff,
gains significance. 5

The petitioners then came to this Court seeking certiorari and prohibition with preliminary injunction.

In G.R. No. 80018, Luis Bautista, who was employed as a barracks boy in Camp O' Donnell, an extension of Clark Air Base, was
arrested following a buy-bust operation conducted by the individual petitioners herein, namely, Tomi J. King, Darrel D. Dye and
Stephen F. Bostick, officers of the U.S. Air Force and special agents of the Air Force Office of Special Investigators (AFOSI). On the
basis of the sworn statements made by them, an information for violation of R.A. 6425, otherwise known as the Dangerous Drugs Act,
was filed against Bautista in the Regional Trial Court of Tarlac. The above-named officers testified against him at his trial. As a result of
the filing of the charge, Bautista was dismissed from his employment. He then filed a complaint for damages against the individual
petitioners herein claiming that it was because of their acts that he was removed. 6

During the period for filing of the answer, Mariano Y. Navarro a special counsel assigned to the International Law Division, Office of the
Staff Judge Advocate of Clark Air Base, entered a special appearance for the defendants and moved for an extension within which to
file an "answer and/or other pleadings." His reason was that the Attorney General of the United States had not yet designated counsel
to represent the defendants, who were being sued for their official acts. Within the extended period, the defendants, without the
assistance of counsel or authority from the U.S. Department of Justice, filed their answer. They alleged therein as affirmative defenses
that they had only done their duty in the enforcement of the laws of the Philippines inside the American bases pursuant to the RP-US
Military Bases Agreement.

On May 7, 1987, the law firm of Luna, Sison and Manas, having been retained to represent the defendants, filed with leave of court a
motion to withdraw the answer and dismiss the complaint. The ground invoked was that the defendants were acting in their official
capacity when they did the acts complained of and that the complaint against them was in effect a suit against the United States
without its consent.

The motion was denied by the respondent judge in his order dated September 11, 1987, which held that the claimed immunity under
the Military Bases Agreement covered only criminal and not civil cases. Moreover, the defendants had come under the jurisdiction of
the court when they submitted their answer. 7

Following the filing of the herein petition for certiorari and prohibition with preliminary injunction, we issued on October 14, 1987, a
temporary restraining order. 8

In G.R. No. 80258, a complaint for damages was filed by the private respondents against the herein petitioners (except the United
States of America), for injuries allegedly sustained by the plaintiffs as a result of the acts of the defendants. 9 There is a conflict of
factual allegations here. According to the plaintiffs, the defendants beat them up, handcuffed them and unleashed dogs on them which
bit them in several parts of their bodies and caused extensive injuries to them. The defendants deny this and claim the plaintiffs were
arrested for theft and were bitten by the dogs because they were struggling and resisting arrest, The defendants stress that the dogs
were called off and the plaintiffs were immediately taken to the medical center for treatment of their wounds.

In a motion to dismiss the complaint, the United States of America and the individually named defendants argued that the suit was in
effect a suit against the United States, which had not given its consent to be sued. The defendants were also immune from suit under
the RP-US Bases Treaty for acts done by them in the performance of their official functions.

The motion to dismiss was denied by the trial court in its order dated August 10, 1987, reading in part as follows:
 The defendants certainly cannot correctly argue that they are immune from suit. The allegations, of the complaint
which is sought to be dismissed, had to be hypothetically admitted and whatever ground the defendants may have,
had to be ventilated during the trial of the case on the merits. The complaint alleged criminal acts against the
individually-named defendants and from the nature of said acts it could not be said that they are Acts of State, for
which immunity should be invoked. If the Filipinos themselves are duty bound to respect, obey and submit
themselves to the laws of the country, with more reason, the members of the United States Armed Forces who are
being treated as guests of this country should respect, obey and submit themselves to its laws. 10

and so was the motion for reconsideration. The defendants submitted their answer as required but subsequently filed their petition
11
for certiorari and prohibition with preliminary injunction with this Court. We issued a temporary restraining order on October 27, 1987.

II

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. This
latter provision merely reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended to manifest our
resolve to abide by the rules of the international community.

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." 12 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." 13

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. 14 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 or it itself commences litigation.

The general law waiving the immunity of the state from suit is found in Act No. 3083, under which the Philippine government "consents
and submits to be sued upon any moneyed claim involving liability arising from contract, express or implied, which could serve as a
basis of civil action between private parties." In Merritt v. Government of the Philippine Islands, 15 a special law was passed to enable a
person to sue the government for an alleged tort. When the government enters into a contract, it is deemed to have descended to the
level of the other contracting party and divested of its sovereign immunity from suit with its implied consent. 16 Waiver is also implied
when the government files a complaint, thus opening itself to a counterclaim. 17

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. 18 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. 19 As for the filing of a complaint by the government, suability will
result only where the government is claiming affirmative relief from the defendant. 20

In the case of the United States of America, the customary rule of international law on state immunity is expressed with more specificity
in the RP-US Bases Treaty. Article III thereof provides as follows:

It is mutually agreed that the United States shall have the rights, power and authority within the bases which are
necessary for the establishment, use, operation and defense thereof or appropriate for the control thereof and all the
rights, power and authority within the limits of the territorial waters and air space adjacent to, or in the vicinity of, the
bases which are necessary to provide access to them or appropriate for their control.

The petitioners also rely heavily on Baer v. Tizon, 21 along with several other decisions, to support their position that they are not suable
in the cases below, the United States not having waived its sovereign immunity from suit. It is emphasized that in Baer, the Court held:

The invocation of the doctrine of immunity from suit of a foreign state without its consent is appropriate. More
specifically, insofar as alien armed forces is concerned, the starting point is Raquiza v. Bradford, a 1945 decision. In
dismissing a habeas corpus petition for the release of petitioners confined by American army authorities, Justice
Hilado speaking for the Court, cited Coleman v. Tennessee, where it was explicitly declared: 'It is well settled that a
foreign army, permitted to march through a friendly country or to be stationed in it, by permission of its government or
sovereign, is exempt from the civil and criminal jurisdiction of the place.' Two years later, in Tubb and Tedrow v.
Griess, this Court relied on the ruling in Raquiza v. Bradford and cited in support thereof excerpts from the works of
the following authoritative writers: Vattel, Wheaton, Hall, Lawrence, Oppenheim, Westlake, Hyde, and McNair and
Lauterpacht. Accuracy demands the clarification that after the conclusion of the Philippine-American Military Bases
Agreement, the treaty provisions should control on such matter, the assumption being that there was a manifestation
of the submission to jurisdiction on the part of the foreign power whenever appropriate. More to the point is Syquia v.
 Almeda Lopez, where plaintiffs as lessors sued the Commanding General of the United States Army in the
Philippines, seeking the restoration to them of the apartment buildings they owned leased to the United States armed
forces stationed in the Manila area. A motion to dismiss on the ground of non-suability was filed and upheld by
respondent Judge. The matter was taken to this Court in a mandamus proceeding. It failed. It was the ruling that
respondent Judge acted correctly considering that the 4 action must be considered as one against the U.S.
Government. The opinion of Justice Montemayor continued: 'It is clear that the courts of the Philippines including the
Municipal Court of Manila have no jurisdiction over the present case for unlawful detainer. The question of lack of
jurisdiction was raised and interposed at the very beginning of the action. The U.S. Government has not given its
consent to the filing of this suit which is essentially against her, though not in name. Moreover, this is not only a case
of a citizen filing a suit against his own Government without the latter's consent but it is of a citizen firing an action
against a foreign government without said government's consent, which renders more obvious the lack of jurisdiction
of the courts of his country. The principles of law behind this rule are so elementary and of such general acceptance
that we deem it unnecessary to cite authorities in support thereof then came Marvel Building Corporation v.
Philippine War Damage Commission, where respondent, a United States Agency established to compensate
damages suffered by the Philippines during World War II was held as falling within the above doctrine as the suit
against it would eventually be a charge against or financial liability of the United States Government because ... , the
Commission has no funds of its own for the purpose of paying money judgments.' The Syquia ruling was again
explicitly relied upon in Marquez Lim v. Nelson, involving a complaint for the recovery of a motor launch, plus
damages, the special defense interposed being 'that the vessel belonged to the United States Government, that the
defendants merely acted as agents of said Government, and that the United States Government is therefore the real
party in interest.' So it was in Philippine Alien Property Administration v. Castelo, where it was held that a suit against
Alien Property Custodian and the Attorney General of the United States involving vested property under the Trading
with the Enemy Act is in substance a suit against the United States. To the same effect is Parreno v. McGranery, as
the following excerpt from the opinion of justice Tuazon clearly shows: 'It is a widely accepted principle of
international law, which is made a part of the law of the land (Article II, Section 3 of the Constitution), that a foreign
state may not be brought to suit before the courts of another state or its own courts without its consent.' Finally, there
is Johnson v. Turner, an appeal by the defendant, then Commanding General, Philippine Command (Air Force, with
office at Clark Field) from a decision ordering the return to plaintiff of the confiscated military payment certificates
known as scrip money. In reversing the lower court decision, this Tribunal, through Justice Montemayor, relied
on Syquia v. Almeda Lopez, explaining why it could not be sustained.

It bears stressing at this point that the above observations do not confer on the United States of America a blanket immunity for all acts
done by it or its agents in the Philippines. Neither may the other petitioners claim that they are also insulated from suit in this country
merely because they have acted as agents of the United States in the discharge of their official functions.

There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if
it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental
capacity that no such waiver may be implied. This was our ruling in United States of America v. Ruiz, 22 where the transaction in
question dealt with the improvement of the wharves in the naval installation at Subic Bay. As this was a clearly governmental function,
we held that the contract did not operate to divest the United States of its sovereign immunity from suit. In the words of Justice Vicente
Abad Santos:

The traditional rule of immunity exempts a State from being sued in the courts of another State without its consent or
waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the
rules of International Law are not petrified; they are constantly developing and evolving. And because the activities of
states have multiplied, it has been necessary to distinguish them — between sovereign and governmental acts (jure
imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends
only to acts jure imperii The restrictive application of State immunity is now the rule in the United States, the United
kingdom and other states in Western Europe.

xxx xxx xxx

The restrictive application of State immunity is proper only when the proceedings arise out of commercial
transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be
said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be
sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its
sovereign functions. In this case the projects are an integral part of the naval base which is devoted to the defense of
both the United States and the Philippines, indisputably a function of the government of the highest order; they are
not utilized for nor dedicated to commercial or business purposes.

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.

In Festejo v. Fernando, 23 a bureau director, acting without any authority whatsoever, appropriated private land and converted it into
public irrigation ditches. Sued for the value of the lots invalidly taken by him, he moved to dismiss the complaint on the ground that the
suit was in effect against the Philippine government, which had not given its consent to be sued. This Court sustained the denial of the
motion and held that the doctrine of state immunity was not applicable. The director was being sued in his private capacity for a
personal tort.

With these considerations in mind, we now proceed to resolve the cases at hand.

III

It is clear from a study of the records of G.R. No. 80018 that the individually-named petitioners therein were acting in the exercise of
their official functions when they conducted the buy-bust operation against the complainant and thereafter testified against him at his
trial. The said petitioners were in fact connected with the Air Force Office of Special Investigators and were charged precisely with the
function of preventing the distribution, possession and use of prohibited drugs and prosecuting those guilty of such acts. It cannot for a
moment be imagined that they were acting in their private or unofficial capacity when they apprehended and later testified against the
complainant. It follows that for discharging their duties as agents of the United States, they cannot be directly impleaded for acts
imputable to their principal, which has not given its consent to be sued. As we observed in Sanders v. Veridiano: 24

Given the official character of the above-described letters, we have to conclude that the petitioners were, legally
speaking, being sued as officers of the United States government. As they have acted on behalf of that government,
and within the scope of their authority, it is that government, and not the petitioners personally, that is responsible for
their acts.

The private respondent invokes Article 2180 of the Civil Code which holds the government liable if it acts through a special agent. The
argument, it would seem, is premised on the ground that since the officers are designated "special agents," the United States
government should be liable for their torts.

There seems to be a failure to distinguish between suability and liability and a misconception that the two terms are synonymous.
Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that
a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to
be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable.

The said article establishes a rule of liability, not suability. The government may be held liable under this rule only if it first allows itself
to be sued through any of the accepted forms of consent.

Moreover, the agent performing his regular functions is not a special agent even if he is so denominated, as in the case at bar. No less
important, the said provision appears to regulate only the relations of the local state with its inhabitants and, hence, applies only to the
Philippine government and not to foreign governments impleaded in our courts.

We reject the conclusion of the trial court that the answer filed by the special counsel of the Office of the Sheriff Judge Advocate of
Clark Air Base was a submission by the United States government to its jurisdiction. As we noted in Republic v. Purisima, 25 express
waiver of immunity cannot be made by a mere counsel of the government but must be effected through a duly-enacted statute. Neither
does such answer come under the implied forms of consent as earlier discussed.

But even as we are certain that the individual petitioners in G.R. No. 80018 were acting in the discharge of their official functions, we
hesitate to make the same conclusion in G.R. No. 80258. The contradictory factual allegations in this case deserve in our view a closer
study of what actually happened to the plaintiffs. The record is too meager to indicate if the defendants were really discharging their
official duties or had actually exceeded their authority when the incident in question occurred. Lacking this information, this Court
cannot directly decide this case. The needed inquiry must first be made by the lower court so it may assess and resolve the conflicting
claims of the parties on the basis of the evidence that has yet to be presented at the trial. Only after it shall have determined in what
capacity the petitioners were acting at the time of the incident in question will this Court determine, if still necessary, if the doctrine of
state immunity is applicable.

In G.R. No. 79470, private respondent Genove was employed as a cook in the Main Club located at the U.S. Air Force Recreation
Center, also known as the Open Mess Complex, at John Hay Air Station. As manager of this complex, petitioner Lamachia is
responsible for eleven diversified activities generating an annual income of $2 million. Under his executive management are three
service restaurants, a cafeteria, a bakery, a Class VI store, a coffee and pantry shop, a main cashier cage, an administrative office, and
a decentralized warehouse which maintains a stock level of $200,000.00 per month in resale items. He supervises 167 employees, one
of whom was Genove, with whom the United States government has concluded a collective bargaining agreement.

From these circumstances, the Court can assume that the restaurant services offered at the John Hay Air Station partake of the nature
of a business enterprise undertaken by the United States government in its proprietary capacity. Such services are not extended to the
American servicemen for free as a perquisite of membership in the Armed Forces of the United States. Neither does it appear that they
are exclusively offered to these servicemen; on the contrary, it is well known that they are available to the general public as well,
including the tourists in Baguio City, many of whom make it a point to visit John Hay for this reason. All persons availing themselves of
this facility pay for the privilege like all other customers as in ordinary restaurants. Although the prices are concededly reasonable and
relatively low, such services are undoubtedly operated for profit, as a commercial and not a governmental activity.

The consequence of this finding is that the petitioners cannot invoke the doctrine of state immunity to justify the dismissal of the
damage suit against them by Genove. Such defense will not prosper even if it be established that they were acting as agents of the
United States when they investigated and later dismissed Genove. For that matter, not even the United States government itself can
claim such immunity. The reason is that by entering into the employment contract with Genove in the discharge of its proprietary
functions, it impliedly divested itself of its sovereign immunity from suit.

But these considerations notwithstanding, we hold that the complaint against the petitioners in the court below must still be dismissed.
While suable, the petitioners are nevertheless not liable. It is obvious that the claim for damages cannot be allowed on the strength of
the evidence before us, which we have carefully examined.

The dismissal of the private respondent was decided upon only after a thorough investigation where it was established beyond doubt
that he had polluted the soup stock with urine. The investigation, in fact, did not stop there. Despite the definitive finding of Genove's
guilt, the case was still referred to the board of arbitrators provided for in the collective bargaining agreement. This board unanimously
affirmed the findings of the investigators and recommended Genove's dismissal. There was nothing arbitrary about the proceedings.
The petitioners acted quite properly in terminating the private respondent's employment for his unbelievably nauseating act. It is
surprising that he should still have the temerity to file his complaint for damages after committing his utterly disgusting offense.

Concerning G.R. No. 76607, we also find that the barbershops subject of the concessions granted by the United States government
are commercial enterprises operated by private person's. They are not agencies of the United States Armed Forces nor are their
facilities demandable as a matter of right by the American servicemen. These establishments provide for the grooming needs of their
customers and offer not only the basic haircut and shave (as required in most military organizations) but such other amenities as
shampoo, massage, manicure and other similar indulgences. And all for a fee. Interestingly, one of the concessionaires, private
respondent Valencia, was even sent abroad to improve his tonsorial business, presumably for the benefit of his customers. No less
significantly, if not more so, all the barbershop concessionaires are under the terms of their contracts, required to remit to the United
States government fixed commissions in consideration of the exclusive concessions granted to them in their respective areas.

This being the case, the petitioners cannot plead any immunity from the complaint filed by the private respondents in the court below.
The contracts in question being decidedly commercial, the conclusion reached in the United States of America v. Ruiz case cannot be
applied here.

The Court would have directly resolved the claims against the defendants as we have done in G.R. No. 79470, except for the paucity of
the record in the case at hand. The evidence of the alleged irregularity in the grant of the barbershop concessions is not before us. This
means that, as in G.R. No. 80258, the respondent court will have to receive that evidence first, so it can later determine on the basis
thereof if the plaintiffs are entitled to the relief they seek. Accordingly, this case must also be remanded to the court below for further
proceedings.

IV

There are a number of other cases now pending before us which also involve the question of the immunity of the United States from
the jurisdiction of the Philippines. This is cause for regret, indeed, as they mar the traditional friendship between two countries long
allied in the cause of democracy. It is hoped that the so-called "irritants" in their relations will be resolved in a spirit of mutual
accommodation and respect, without the inconvenience and asperity of litigation and always with justice to both parties.

WHEREFORE, after considering all the above premises, the Court hereby renders judgment as follows:

1. In G.R. No. 76607, the petition is DISMISSED and the respondent judge is directed to proceed with the hearing
and decision of Civil Case No. 4772. The temporary restraining order dated December 11, 1986, is LIFTED.

2. In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829-R(298) is DISMISSED.

3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C-87 is DISMISSED. The temporary
restraining order dated October 14, 1987, is made permanent.

4. In G.R. No. 80258, the petition is DISMISSED and the respondent court is directed to proceed with the hearing
and decision of Civil Case No. 4996. The temporary restraining order dated October 27, 1987, is LIFTED.

All without any pronouncement as to costs.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino,
Medialdea and Regalado, JJ., concur.
204 scra 212 G.R. No. 90478 November 21, 1991

REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner,

vs.
SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR. and DOMINADOR R. SANTIAGO, respondents.

Dominador R. Santiago for and in his own behalf and as counsel for respondent Tantoco, Jr.

NARVASA, J.:p

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

After having been served with summons, Tantoco, Jr. and Santiago, instead of filing their answer, jointly filed a "MOTION TO STRIKE
OUT SOME PORTIONS OF THE COMPLAINT AND FOR BILL OF PARTICULARS OF OTHER PORTIONS" dated Nov. 3,
1987. 1 The PCGG filed an opposition thereto, 2 and the movants, a reply to the opposition. 3 By order dated January 29, 1988, the
Sandiganbayan, in order to expedite proceedings and accommodate the defendants, gave the PCGG forty-five (45) days to expand its
complaint to make more specific certain allegations. 4

Tantoco and Santiago then presented a "motion for leave to file interrogatories under Rule 25 of the Rules of Court" dated February 1,
1988, and "Interrogatories under Rule 25." 5 Basically, they sought an answer to the question: "Who were the Commissioners of the
PCGG (aside from its Chairman, Hon. Ramon Diaz, who verified the complaint) who approved or authorized the inclusion of Messrs.
Bienvenido R. Tantoco, Jr. and Dominador R. Santiago as defendants in the . . case?" 6 The PCGG responded by filing a motion dated
February 9, 1988 to strike out said motion and interrogatories as being impertinent, "queer," "weird," or "procedurally bizarre as the
purpose thereof lacks merit as it is improper, impertinent and irrelevant under any
guise." 7

On March 18, 1988, in compliance with the Order of January 29, 1988, the PCGG filed an Expanded Complaint. 8 As this expanded
complaint, Tantoco and Santiago reiterated their motion for bill of particulars, through a Manifestation dated April 11, 1988. 9

Afterwards, by Resolution dated July 4, 1988, 10 the Sandiganbayan denied the motion to strike out, for bill of particulars, and for leave
to file interrogatories, holding them to be without legal and factual basis. Also denied was the PCGG's motion to strike out impertinent
pleading dated February 9, 1988. The Sandiganbayan declared inter alia the complaint to be "sufficiently definite and clear enough,"
there are adequate allegations . . which clearly portray the supposed involvement and/or alleged participation of defendants-movants in
the transactions described in detail in said Complaint," and "the other matters sought for particularization are evidentiary in nature
which should be ventilated in the pre-trial or trial proper . ." It also opined that "(s)ervice of interrogatories before joinder of issue and
without leave of court is premature . . (absent) any special or extraordinary circumstances . . which would justify . . (the same)."

Tantoco and Santiago then filed an Answer with Compulsory Counterclaim under date of July 18, 1988. 11 In response, the PCGG
presented a "Reply to Answer with Motion to Dismiss Compulsory Counterclaim " 12

The case was set for pre-trial on July 31, 1989. 13 On July 25, 1989, the PCGG submitted its PRE-TRIAL. 14 The pre-trial was
however reset to September 11, 1989, and all other parties were required to submit pre-trial briefs on or before that date. 15

On July 27, 1989 Tantoco and Santiago filed with the Sandiganbayan a pleading denominated "Interrogatories to Plaintiff," 16 and on
August 2, 1989, an "Amended Interrogatories to Plaintiff"' 17 as well as a Motion for Production and Inspection of Documents. 18

The amended interrogatories chiefly sought factual details relative to specific averments of PCGG's amended complaint, through such
questions, for instance, as—

1. In connection with the allegations . . in paragraph 1 . ., what specific property or properties does the plaintiff claim
it has the right to recover from defendants Tantoco, Jr. and Santiago for being ill-gotten?

3. In connection with the allegations . . in paragraph 10 (a) . . what specific act or acts . . were committed by
defendants Tantoco, Jr. and Santiago in "concert with" defendant Ferdinand Marcos and in furtherance or pursuit, of
the alleged systematic plan of said defendant Marcos to accumulate ill-gotten wealth?"

5. In connection with . . paragraph 13 . ., what specific act or acts of the defendants Tantoco, Jr. and Santiago .
. were committed by said defendants as part, or in furtherance, of the alleged plan to conceal assets of defendants
Ferdinand and Imelda Marcos?

7. In connection with . . paragraph 15(c) . . is it plaintiff's position or theory of the case that Tourist Duty Free Shops,
Inc., including all the assets of said corporation, are beneficially owned by either or both defendants Ferdinand and
Imelda Marcos and that the defendants Tantoco, Jr. and Santiago, as well as, the other stockholders of record of the
same corporation are mere "dummies" of said defendants Ferdinand and /or Imelda R. Marcos?

On the other hand, the motion for production and inspection of documents prayed for examination and copying of—

1) the "official records and other evidence" on the basis of which the verification of the Amended Complaint asserted
that the allegations thereof are "true and correct;"

2) the documents listed in PCGG's Pre-Trial Brief as those "intended to be presented and . . marked as exhibits for
the plaintiff;" and
 3) "the minutes of the meeting of the PCGG which chronicles the discussion (if any) and the decision (of the
Chairman and members) to file the complaint" in the case at bar.

By Resolutions dated August 21, 1989 and August 25, 1989, the Sandiganbayan admitted the Amended Interrogatories and granted
the motion for production and inspection of documents (production being scheduled on September 14 and 15, 1989), respectively.

On September 1, 1989, the PCGG filed a Motion for Reconsideration of the Resolution of August 25, 1989 (allowing production and
inspection of documents). It argued that

1) since the documents subject thereof would be marked as exhibits during the pre-trial on September 11, 1989 anyway, the order for
"their production and inspection on September 14 and 15, are purposeless and unnecessary;"

2) movants already know of the existence and contents of the document which "are clearly described . . (in) plaintiff's Pre-Trial Brief;"

3) the documents are "privileged in character" since they are intended to be used against the PCGG and/or its Commissioners in
violation of Section 4, Executive Order No. 1, viz.:

(a) No civil action shall lie against the Commission or any member thereof for anything done or omitted in the
discharge of the task contemplated by this Order.

(b) No member or staff of the Commission shall be required to testify or produce evidence in any judicial, legislative,
or administrative proceeding concerning matters within its official cognizance.

It also filed on September 4, 1989 an opposition to the Amended Interrogatories, 19 which the Sandiganbayan treated as a motion for
reconsideration of the Resolution of August 21, 1989 (admitting the Amended Interrogatories). The opposition alleged that —

1) the interrogatories "are not specific and do not name the person to whom they are propounded . .," or "who in the PCGG, in
particular, . . (should) answer the interrogatories;"

2) the interrogatories delve into "factual matters which had already been decreed . . as part of the proof of the Complaint upon trial . .;"

3) the interrogatories "are frivolous" since they inquire about "matters of fact . . which defendants . . sought to . . (extract) through their
aborted Motion for Bill of Particulars;"

4) the interrogatories "are really in the nature of a deposition, which is prematurely filed and irregularly utilized . . (since) the order of
trial calls for plaintiff to first present its evidence."

Tantoco and Santiago filed a reply and opposition on September 18, 1989.

After hearing, the Sandiganbayan promulgated two (2) Resolutions on September 29, 1989, the first, denying reconsideration (of the
Resolution allowing production of documents), and the second, reiterating by implication the permission to serve the amended
interrogatories on the plaintiff (PCGG). 20

Hence, this petition for certiorari.

The PCGG contends that said orders, both dated September 29, 1989, should be nullified because rendered with grave abuse of
discretion amounting to excess of jurisdiction. More particularly, it claims —

a) as regards the order allowing the amended interrogatories to the plaintiff PCGG:

1) that said interrogatories are not specific and do not name the particular individuals to whom they are propounded,
being addressed only to the PCGG;

2) that the interrogatories deal with factual matters which the Sandiganbayan (in denying the movants' motion for bill
of particulars) had already declared to be part of the PCGG's proof upon trial; and

3) that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention of Executive
Order No. 14 and related issuances; and

b) as regards the order granting the motion for production of documents:

1) that movants had not shown any good cause therefor;

2) that some documents sought to be produced and inspected had already been presented in Court and marked
preliminarily as PCGG's exhibits, and the movants had viewed, scrutinized and even offered objections thereto and
made comments thereon; and

3) that the other documents sought to be produced are either —

(a) privileged in character or confidential in nature and their use is proscribed by

the immunity provisions of Executive Order No. 1, or

(b) non-existent, or mere products of the movants' suspicion and fear.

This Court issued a temporary restraining order on October 27, 1989, directing the Sandiganbayan to desist from enforcing its
questioned resolutions of September 29, 1989 in Civil Case No. 0008. 21

After the issues were delineated and argued at no little length by the parties, the Solicitor General withdrew "as counsel for plaintiff . .
with the reservation, however, conformably with Presidential Decree No. 478, the provisions of Executive Order No. 292, as well as the
decisional law of 'Orbos v. Civil Service Commission, et al.,' (G.R. No. 92561, September 12, 1990) 22 to submit his
comment/observation on incidents/matters pending with this . . Court if called for by circumstances in the interest of the Government or
if he is so required by the Court." 23 This, the Court allowed by Resolution dated January 21, 1991. 24

Subsequently, PCGG Commissioner Maximo A. Maceren advised the Court that the cases from which the Solicitor General had
withdrawn would henceforth be under his (Maceren's) charge "and/or any of the following private attorneys: Eliseo B. Alampay, Jr.,
Mario E. Ongkiko, Mario Jalandoni and such other attorneys as it may later authorize." 25

The facts not being in dispute, and it appearing that the parties have fully ventilated their respective positions, the Court now proceeds
to decide the case.

Involved in the present proceedings are two of the modes of discovery provided in the Rules of Court: interrogatories to parties , 26 and
production and inspection of documents and things. 27 Now, it appears to the Court that among far too many lawyers (and not a few
judges), there is, if not a regrettable unfamiliarity and even outright ignorance about the nature, purposes and operation of the modes of
discovery, at least a strong yet unreasoned and unreasonable disinclination to resort to them — which is a great pity for the intelligent
and adequate use of the deposition-discovery mechanism, coupled with pre-trial procedure, could, as the experience of other
jurisdictions convincingly demonstrates, effectively shorten the period of litigation and speed up adjudication. 28 Hence, a few words
about these remedies is not at all inappropriate.

The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential function is accomplished by first, the
ascertainment of all the material and relevant facts from the pleadings and from the evidence adduced by the parties, and second, after
that determination of the facts has been completed, by the application of the law thereto to the end that the controversy may be settled
authoritatively, definitely and finally.

It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with assuring that all the facts are indeed
presented to the Court; for obviously, to the extent that adjudication is made on the basis of incomplete facts, to that extent there is
faultiness in the approximation of objective justice. It is thus the obligation of lawyers no less than of judges to see that this objective is
attained; that is to say, that there no suppression, obscuration, misrepresentation or distortion of the facts; and that no party be
unaware of any fact material a relevant to the action, or surprised by any factual detail suddenly brought to his attention during the
trial. 29

Seventy-one years ago, in Alonso v. Villamor, 30 this Court described the nature and object of litigation and in the process laid down
the standards by which judicial contests are to be conducted in this jurisdiction. It said:

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of
movement and position, entraps and destroys the other. It is, rather a contest in which each contending party fully
and fairly lays before the court the facts in issue and then brushing aside as wholly trivial and indecisive all
imperfections of form and technicalities of procedure, asks that justice be done on the merits. Lawsuits, unlike duels,
are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes
its great hindrance and chief enemy, deserves scant consideration from courts. There should be no vested right in
technicalities. . . .

The message is plain. It is the duty of each contending party to lay before the court the facts in issue-fully and fairly; i.e., to present to
the court all the material and relevant facts known to him, suppressing or concealing nothing, nor preventing another party, by clever
and adroit manipulation of the technical rules of pleading and evidence, from also presenting all the facts within his knowledge.

Initially, that undertaking of laying the facts before the court is accomplished by the pleadings filed by the parties; but that, only in a very
general way. Only "ultimate facts" are set forth in the pleadings; hence, only the barest outline of the facfual basis of a party's claims or
defenses is limned in his pleadings. The law says that every pleading "shall contain in a methodical and logical form, a plain, concise
and direct statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the
statement of mere evidentiary facts." 31

Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or "not averred with sufficient
definiteness or particularity to enable . . (an adverse party) properly to prepare his responsive pleading or to prepare for trial," a bill of
particulars seeking a "more definite statement" may be ordered by the court on motion of a party. The office of a bill of particulars is,
however, limited to making more particular or definite the ultimate facts in a pleading It is not its office to supply evidentiary matters.
And the common perception is that said evidentiary details are made known to the parties and the court only during the trial, when
proof is adduced on the issues of fact arising from the pleadings.

The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial. Indeed, it is the purpose and
policy of the law that the parties — before the trial if not indeed even before the pre-trial — should discover or inform themselves of all
the facts relevant to the action, not only those known to them individually, but also those known to adversaries; in other words,
the desideratum is that civil trials should not be carried on in the dark; and the Rules of Court make this ideal possible through the
deposition-discovery mechanism set forth in Rules 24 to 29. The experience in other jurisdictions has been that ample discovery before
trial, under proper regulation, accomplished one of the most necessary of modern procedure: it not only eliminates unessential issue
from trials thereby shortening them considerably, but also requires parties to play the game with the cards on the table so that the
possibility of fair settlement before trial is measurably increased. . ." 32

As just intimated, the deposition-discovery procedure was designed to remedy the conceded inadequacy and cumbersomeness of the
pre-trial functions of notice-giving, issue-formulation and fact revelation theretofore performed primarily by the pleadings.

The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial hearing under Rule 20, to
narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts relative to those issues. The
evident purpose is, to repeat, to enable parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the
issues and facts before trials and thus prevent that said trials are carried on in the dark. 33

To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad as when the interrogated party is
called as a witness to testify orally at trial. The inquiry extends to all facts which are relevant, whether they be ultimate or evidentiary,
excepting only those matters which are privileged. The objective is as much to give every party the fullest possible information of all the
relevant facts before the trial as to obtain evidence for use upon said trial. The principle is reflected in Section 2, Rule 24 (governing
depositions) 34 which generally allows the examination of a deponent —

1) "regarding any matter, not privileged, which is relevant to the subject of the pending action, whether relating to the
claim or defense of any other party;"

2) as well as:

(a) "the existence, description, nature, custody, condition and location of any books, documents, or other tangible
things" and

(b) "the identity and location of persons having knowledge of relevant facts."

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

In line with this principle of according liberal treatment to the deposition-discovery mechanism, such modes of discovery as (a)
depositions (whether by oral examination or written interrogatories) under Rule 24, (b) interrogatories to parties under Rule 25, and (c)
requests for admissions under Rule 26, may be availed of without leave of court, and generally, without court intervention. The Rules of
Court explicitly provide that leave of court is not necessary to avail of said modes of discovery after an answer to the complaint has
been served. 36 It is only when an answer has not yet been filed (but after jurisdiction has been obtained over the defendant or
property subject of the action) that prior leave of court is needed to avail of these modes of discovery, the reason being that at that time
the issues are not yet joined and the disputed facts are not clear. 37

On the other hand, leave of court is required as regards discovery by (a) production or inspection of documents or things in accordance
with Rule 27, or (b) physical and mental examination of persons under Rule 28, which may be granted upon due application and a
showing of due cause.

To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law imposes serious sanctions on
the party who refuses to make discovery, such as dismissing the action or proceeding or part thereof, or rendering judgment by default
against the disobedient party; contempt of court, or arrest of the party or agent of the party; payment of the amount of reasonable
expenses incurred in obtaining a court order to compel discovery; taking the matters inquired into as established in accordance with the
claim of the party seeking discovery; refusal to allow the disobedient party support or oppose designated claims or defenses; striking
out pleadings or parts thereof; staying further proceedings. 38

Of course, there are limitations to discovery, even when permitted to be undertaken without leave and without judicial intervention. "As
indicated by (the) Rules . . ., limitations inevitably arise when it can be shown that the examination is being conducted in bad faith or in
such a manner as to annoy, embarass, or oppress the person subject to the inquiry. 39 And . . . further limitations come into existence
when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege." 40

In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired into are otherwise relevant and not
privileged, and the inquiry is made in good faith and within the bounds of the law.

It is in light of these broad principles underlying the deposition-discovery mechanism, in relation of course to the particular rules directly
involved, that the issues in this case will now be resolved.

The petitioner's objections to the interrogatories served on it in accordance with Rule 25 of the Rules of Court cannot be sustained.

It should initially be pointed out — as regards the private respondents "Motion for Leave to File Interrogatories" dated February 1,
1988 41 — that it was correct for them to seek leave to serve interrogatories, because discovery was being availed of before an answer
had been served. In such a situation, i.e., "after jurisdiction has been obtained over any defendant or over property subject of the
action" but before answer, Section 1 of Rule 24 (treating of depositions), in relation to Section 1 of Rule 25 (dealing with interrogatories
to parties) explicitly requires "leave of court." 42 But there was no need for the private respondents to seek such leave to serve their
"Amended Interrogatories to Plaintiff" (dated August 2, 1989 43) after they had filed their answer to the PCGG's complaint, just as there
was no need for the Sandiganbayan to act thereon.

1. The petitioner's first contention — that the interrogatories in question are defective because they (a) do not name the particular
individuals to whom they are propounded, being addressed only to the PCGG, and (b) are "fundamentally the same matters . . (private
respondents) sought to be clarified through their aborted Motion . . for Bill of Particulars" — are untenable and quickly disposed of.

The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states that if the party served with
interrogatories is a juridical entity such as "a public or private corporation or a partnership or association," the same shall be "answered
. . by any officer thereof competent to testify in its behalf." There is absolutely no reason why this proposition should not be applied by
analogy to the interrogatories served on the PCGG. That the interrogatories are addressed only to the PCGG, without naming any
specific commissioner o officer thereof, is utterly of no consequence, and may not be invoked as a reason to refuse to answer. As the
rule states, the interrogatories shall be answered "by any officer thereof competent to testify in its behalf."

That the matters on which discovery is desired are the same matters subject of a prior motion for bill of particulars addressed to the
PCGG's amended complaint — and denied for lack of merit — is beside the point. Indeed, as already pointed out above, a bill of
particulars may elicit only ultimate facts, not so-called evidentiary facts. The latter are without doubt proper subject of discovery. 44

Neither may it be validly argued that the amended interrogatories lack specificity. The merest glance at them disproves the argument.
The interrogatories are made to relate to individual paragraphs of the PCGG's expanded complaint and inquire about details of the
ultimate facts therein alleged. What the PCGG may properly do is to object to specific items of the interrogatories, on the ground of lack
of relevancy, or privilege, or that the inquiries are being made in bad faith, or simply to embarass or oppress it. 45 But until such an
objection is presented and sustained, the obligation to answer subsists.

2. That the interrogatories deal with factual matters which will be part of the PCGG's proof upon trial, is not ground for suppressing
them either. As already pointed out, it is the precise purpose of discovery to ensure mutual knowledge of all the relevant facts on the
part of all parties even before trial, this being deemed essential to proper litigation. This is why either party may compel the other to
disgorge whatever facts he has in his possession; and the stage at which disclosure of evidence is made is advanced from the time of
trial to the period preceding it.

3. Also unmeritorious is the objection that the interrogatories would make PCGG Commissioners and officers witnesses, in
contravention of Executive Order No. 14 and related issuances. In the first place, there is nothing at all wrong in a party's making his
adversary his witness .46 This is expressly allowed by Section 6, Rule 132 of the Rules of Court, viz.:

Sec. 6. Direct examination of unwilling or hostile witnesses. — A party may . . . call an adverse party or an officer,
director, or managing agent of a public or private corporation or of a partnership or association which is an adverse
party, and interrogate him by leading questions and contradict and impeach him in all respects as if he had been
called by the adverse party, and the witness thus called may be contradicted and impeached by or on behalf of the
adverse party also, and may be cross-examined by the adverse party only upon the subject-matter of his
examination in chief.

The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart from the fact that the information
sought is immaterial since they are evidently meant to establish a claim against PCGG officers who are not parties to the action. It
suffices to point out that "fishing expeditions" are precisely permitted through the modes of discovery. 47 Moreover, a defendant who
files a counterclaim against the plaintiff is allowed by the Rules to implead persons (therefore strangers to the action) as additional
defendants on said counterclaim. This may be done pursuant to Section 14, Rule 6 of the Rules, to wit:

Sec. 14. Bringing new parties. — When the presence of parties other than those to the original action is required for
the granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order them to be
brought in as defendants, if jurisdiction over them can be obtained."

The PCGG's assertion that it or its members are not amenable to any civil action "for anything done or omitted in the discharge of the
task contemplated by . . (Executive) Order (No. 1)," is not a ground to refuse to answer the interrogatories. The disclosure of facto
relevant to the action and which are not self-incriminatory or otherwise privileged is one thing; the matter of whether or not liability may
arise from the facts disclosed in light of Executive Order
No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the action.

The apprehension has been expressed that the answers to the interrogatories may be utilized as foundation for a counterclaim against
the PCGG or its members and officers. They will be. The private respondents have made no secret that this is in fact their intention.
Withal, the Court is unable to uphold the proposition that while the PCGG obviously feels itself at liberty to bring actions on the basis of
its study and appreciation of the evidence in its possession, the parties sued should not be free to file counterclaims in the same
actions against the PCGG or its officers for gross neglect or ignorance, if not downright bad faith or malice in the commencement or
initiation of such judicial proceedings, or that in the actions that it may bring, the PCGG may opt not to be bound by rule applicable to
the parties it has sued, e.g., the rules of discovery.

So, too, the PCGG's postulation that none of its members may be "required to testify or produce evidence in any judicial . . proceeding
concerning matters within its official cognizance," has no application to a judicial proceeding it has itself initiated. As just suggested, the
act of bringing suit must entail a waiver of the exemption from giving evidence; by bringing suit it brings itself within the operation and
scope of all the rules governing civil actions, including the rights and duties under the rules of discovery. Otherwise, the absurd would
have to be conceded, that while the parties it has impleaded as defendants may be required to "disgorge all the facts" within their
knowledge and in their possession, it may not itself be subject to a like compulsion.

The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its consent. But it is axiomatic that in
filing an action, it divests itself of its sovereign character and sheds its immunity from suit, descending to the level of an ordinary litigant.
The PCGG cannot claim a superior or preferred status to the State, even while assuming to represent or act for the State. 48

The suggestion 49 that the State makes no implied waiver of immunity by filing suit except when in so doing it acts in, or in matters
concerning, its proprietary or non-governmental capacity, is unacceptable; it attempts a distinction without support in principle or
precedent. On the contrary —

The consent of the State to be sued may be given expressly or impliedly. Express consent may be manifested either
through a general law or a special law. Implied consent is given when the State itself commences litigation or when it
enters into a contract. 50

The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state
as plaintiff may avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in
an action against the private parties, the state surrenders its privileged position and comes down to the level of the
defendant. The latter automatically acquires, within certain limits, the right to set up whatever claims and other
 defenses he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-37, citing U.S. vs.
Ringgold, 8 Pet. 150, 8 L. ed. 899)" 51

It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as distinguished from its
proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private property has been taken in expropriation
without just compensation being paid, the defense of immunity from suit cannot be set up by the State against an action for payment by
the owner. 52

The Court also finds itself unable to sustain the PCGG's other principal contention, of the nullity of the Sandiganbayan's Order for the
production and inspection of specified documents and things allegedly in its possession.

The Court gives short shrift to the argument that some documents sought to be produced and inspected had already been presented in
Court and marked preliminarily as PCGG's exhibits, the movants having in fact viewed, scrutinized and even offered objections thereto
and made comments thereon. Obviously, there is nothing secret or confidential about these documents. No serious objection can
therefore be presented to the desire of the private respondents to have copies of those documents in order to study them some more
or otherwise use them during the trial for any purpose allowed by law.

The PCGG says that some of the documents are non-existent. This it can allege in response to the corresponding question in the
interrogatories, and it will incur no sanction for doing so unless it is subsequently established that the denial is false.

The claim that use of the documents is proscribed by Executive Order No. 1 has already been dealt with. The PCGG is however at
liberty to allege and prove that said documents fall within some other privilege, constitutional or statutory.

The Court finally finds that, contrary to the petitioner's theory, there is good cause for the production and inspection of the documents
subject of the motion dated August 3, 1989. 53 Some of the documents are, according to the verification of the amended complaint, the
basis of several of the material allegations of said complaint. Others, admittedly, are to be used in evidence by the plaintiff. It is matters
such as these into which inquiry is precisely allowed by the rules of discovery, to the end that the parties may adequately prepare for
pre-trial and trial. The only other documents sought to be produced are needed in relation to the allegations of the counterclaim. Their
relevance is indisputable; their disclosure may not be opposed.

One last word. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and operation of the modes of discovery
earlier
mentioned, 54 there also appears to be a widely entertained idea that application of said modes is a complicated matter, unduly
expensive and dilatory. Nothing could be farther from the truth. For example, as will already have been noted from the preceding
discussion, all that is entailed to activate or put in motion the process of discovery by interrogatories to parties under Rule 25 of the
Rules of Court, is simply the delivery directly to a party of a letter setting forth a list of least questions with the request that they be
answered individually. 55 That is all. The service of such a communication on the party has the effect of imposing on him the obligation
of answering the questions "separately and fully in writing underoath," and serving "a copy of the answers on the party submitting the
interrogatories within fifteen (15) days after service of the interrogatories . . ." 56 The sanctions for refusing to make discovery have
already been mentioned. 57 So, too, discovery under Rule 26 is begun by nothing more complex than the service on a party of a letter
or other written communication containing a request that specific facts therein set forth and/or particular documents copies of which are
thereto appended, be admitted in writing. 58 That is all. Again, the receipt of such a communication by the party has the effect of
imposing on him the obligation of serving the party requesting admission with "a sworn statement either denying specifically the matters
of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters,"
failing in which "(e)ach of the matters of which admission is requested shall be deemed admitted." 59 The taking of depositions in
accordance with Rule 24 (either on oral examination or by written interrogatories) while somewhat less simple, is nonetheless by no
means as complicated as seems to be the lamentably extensive notion.

WHEREFORE, the petition is DENIED, without pronouncement as to costs. The temporary restraining order issued on October 27,
1989 is hereby LIFTED AND SET ASIDE.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

Melencio-Herrera, J., I also join Justice Cruz's concurrence.

Romero, J., took no part.

Separate Opinions

CRUZ, J., concurring:

I am delighted to concurr with Mr. Justice Andres R. Narvasa in his scholarly ponencia which, besides reaching a conclusion sustained
by the applicable law and jurisprudence, makes for reading both pleasurable and instructive. One function of the court not generally
appreciated is to educate the reader on the intricacies and even the mustique of the law. The opinion performs this function with
impressive expertise and makes the modes of discovery less esoteric or inaccessible to many members of the bar.

# Separate Opinions

CRUZ, J., concurring:

I am delighted to concurr with Mr. Justice Andres R. Narvasa in his scholarly ponencia which, besides reaching a conclusion sustained
by the applicable law and jurisprudence, makes for coding both pleasurable and instructive. One function of the court not generally
appreciated is to educate the reader on the intricacies and even the mustique of the law. The opinion performs this function with
impressive expertise and makes the modes of discovery less esoteric or inaccessible to many members of the bar.
54 scra 84 G.R. No. L-30671 November 28, 1973 REPUBLIC OF THE PHILIPPINES, petitioner,vs.HON. GUILLERMO P. VILLASOR,.

Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo for petitioner.

Andres T. Velarde and Marcelo B. Fernan for respondents. FERNANDO, J.:

The Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of an order issued by respondent
Judge Guillermo P. Villasor, then of the Court of First Instance of Cebu, Branch I, 1 declaring a decision final and executory and of an
alias writ of execution directed against the funds of the Armed Forces of the Philippines subsequently issued in pursuance thereof, the
alleged ground being excess of jurisdiction, or at the very least, grave abuse of discretion. As thus simply and tersely put, with the facts
being undisputed and the principle of law that calls for application indisputable, the outcome is predictable. The Republic of the
Philippines is entitled to the writs prayed for. Respondent Judge ought not to have acted thus. The order thus impugned and the alias
writ of execution must be nullified.

In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set forth thus: "7. On July 3, 1961, a
decision was rendered in Special Proceedings No. 2156-R in favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and
International Construction Corporation, and against the petitioner herein, confirming the arbitration award in the amount of
P1,712,396.40, subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable Guillermo P. Villasor, issued an Order
declaring the aforestated decision of July 3, 1961 final and executory, directing the Sheriffs of Rizal Province, Quezon City [as well as]
Manila to execute the said decision. 9. Pursuant to the said Order dated June 24, 1969, the corresponding Alias Writ of Execution [was
issued] dated June 26, 1969, .... 10. On the strength of the afore-mentioned Alias Writ of Execution dated June 26, 1969, the Provincial
Sheriff of Rizal (respondent herein) served notices of garnishment dated June 28, 1969 with several Banks, specially on the "monies
due the Armed Forces of the Philippines in the form of deposits sufficient to cover the amount mentioned in the said Writ of Execution";
the Philippine Veterans Bank received the same notice of garnishment on June 30, 1969 .... 11. The funds of the Armed Forces of the
Philippines on deposit with the Banks, particularly, with the Philippine Veterans Bank and the Philippine National Bank [or] their
branches are public funds duly appropriated and allocated for the payment of pensions of retirees, pay and allowances of military and
civilian personnel and for maintenance and operations of the Armed Forces of the Philippines, as per Certification dated July 3, 1969
by the AFP Controller,..." 2. The paragraph immediately succeeding in such petition then alleged: "12. Respondent Judge, Honorable
Guillermo P. Villasor, acted in excess of jurisdiction [or] with grave abuse of discretion amounting to lack of jurisdiction in granting the
issuance of an alias writ of execution against the properties of the Armed Forces of the Philippines, hence, the Alias Writ of Execution
and notices of garnishment issued pursuant thereto are null and void." 3 In the answer filed by respondents, through counsel Andres T.
Velarde and Marcelo B. Fernan, the facts set forth were admitted with the only qualification being that the total award was in the
amount of P2,372,331.40. 4

The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and prohibition proceeding. What was done
by respondent Judge is not in conformity with the dictates of the Constitution. .

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well as its government
is immune from suit unless it gives its consent. It is readily understandable why it must be so. In the classic formulation of Holmes: "A
sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that
there can be no legal right as against the authority that makes the law on which the right depends." 5 Sociological jurisprudence
supplies an answer not dissimilar. So it was indicated in a recent decision, Providence Washington Insurance Co. v. Republic of the
Philippines, 6 with its affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its
multifarious functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were not
thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and
energy required to defend against law suits, in the absence of such a basic principle that constitutes such an effective obstacle, could
very well be imagined." 7

This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein expressly provided:
"The State may not be sued without its consent." 8 A corollary, both dictated by logic and sound sense from a basic concept is that
public funds cannot be the object of a garnishment proceeding even if the consent to be sued had been previously granted and the
state liability adjudged. Thus in the recent case of Commissioner of Public Highways v. San Diego, 9 such a well-settled doctrine was
restated in the opinion of Justice Teehankee: "The universal rule that where the State gives its consent to be sued by private parties
either by general or special law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of
execution' and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be
seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public
services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and
specific objects, as appropriated by law." 10 Such a principle applies even to an attempted garnishment of a salary that had accrued in
favor of an employee. Director of Commerce and Industry v. Concepcion, 11 speaks to that effect. Justice Malcolm as ponente left no
doubt on that score. Thus: "A rule which has never been seriously questioned, is that money in the hands of public officers, although it
may be due government employees, is not liable to the creditors of these employees in the process of garnishment. One reason is, that
the State, by virtue of its sovereignty, may not be sued in its own courts except by express authorization by the Legislature, and to
subject its officers to garnishment would be to permit indirectly what is prohibited directly. Another reason is that moneys sought to be
garnished, as long as they remain in the hands of the disbursing officer of the Government, belong to the latter, although the defendant
in garnishment may be entitled to a specific portion thereof. And still another reason which covers both of the foregoing is that every
consideration of public policy forbids it." 12

In the light of the above, it is made abundantly clear why the Republic of the Philippines could rightfully allege a legitimate grievance.

WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside both the order of June 24, 1969 declaring
executory the decision of July 3, 1961 as well as the alias writ of execution issued thereunder. The preliminary injunction issued by this
Court on July 12, 1969 is hereby made permanent.

Zaldivar (Chairman), Antonio, Fernandez and Aquino, JJ., concur.

Barredo, J, took no part.

181 scra 536 G.R. No. L-33777 January 30, 1990

PACIFIC PRODUCTS, INC., petitioner,

vs.
VICENTE S. ONG, respondent.

Bito, Misa & Lozada for petitioner.

Vicente S. Ong for respondent.

MEDIALDEA, J.:

This is an appeal by certiorari from the decision of the Court of Appeals (p. 45, Rollo) in CA-G.R. No. 34038-R entitled "Vicente S. Ong,
Plaintiff-Appellant, versus Macario Ofilada, in his capacity as Sheriff of Manila, The Pacific Products, Inc. and the First Quezon City
Insurance Co., Inc., Defendants-Appellees," which reversed the decision (pp. 32-37, Record on Appeal, p. 26 Rollo) of the Court of
First Instance of Manila in Civil Case No. 53124.

The antecedent facts are as follows:

On February 15, 1963, Vicente Ong filed an action for damages against Macario Ofilada in his capacity as Sheriff of Manila, the Pacific
Products, Inc., and the First Quezon City Insurance, with the Court of First Instance of Manila (Branch XIX) and docketed as Civil Case
No. 53124. The complaint prayed for damages as a result of defendants' refusal to favorably consider his third party claim filed with the
Sheriff of Manila in connection with Civil Case No. 50120, also of the Regional Trial Court of Manila (Branch XVI). On July 2,1963, the
parties submitted a partial stipulation of facts, quoted herein as follows:

PARTIAL STIPULATION OF FACTS

COME NOW parties plaintiff and defendants, by their respective counsel, and to this Honorable Court respectfully
submit the following stipulation of facts:

1. That on April l2,1962, defendant Pacific Products, Inc. filed Civil Case No. 50120 entitled 'Pacific Products, Inc. vs
H.D. Labrador', doing business under the name and style of 'BML Trading and Supply,' with the Court of First
Instance of Manila (Branch XIV) for recovery of P9,111.70, plus interest, costs and attorney's fees;

2. That upon motion, the said Branch XIV of this Honorable Court issued an order directing the Sheriff of Manila or
any of his deputies to attach, 'the estate, real or personal, of the said defendant H. D. Labrador, etc.;'

3. That pursuant to the said order the Sheriff of Manila, through Deputy Sheriff Santiago Geronilla in a notice of
garnishment dated October 17, 1962 garnished P 9,111.70 of the amount of P 10,500.00 payable to the BML Trading
and Supply, the name and style under which the defendant H.D. Labrador in said Civil Case No. 50120 is doing
business, by the Bureau of Telecommunications, thereby stopping the payment of the said P10,500.00;

4. That on December 21, 1962, this Honorable Court (Branch XVI) rendered its decision in Civil Case No. 50120, the
dispositive portion of which reads as follows:

WHEREFORE, defendant H.D. Labrador is sentenced to pay plaintiff the sum of P 9,111.70 with interest thereon at
6% per annum from April 12, 1962 when the complaint was filed and until the decision in this case is fully complied
with plus attorney's fees which the Court fixes in the sum of P500.00 plus costs.'

5. That after the above decision became final, a writ of execution was issued, and the sheriff of Manila, through
Deputy Sheriff Santiago Geronilla, further garnished P l,181.65 of the P10,500.00 mentioned in Par. 3 hereof;

6. That plaintiff in this case, as stated in paragraph 2 of the complaint entered into and executed an AGREEMENT
with the BML Trading and Supply on October 6, 1962 (Annex 'A' of the Complaint), but defendant Pacific Products,
Inc. first came to know of the same thru counsel on November 8, 1962 and defendant Sheriff of Manila on November
9, 1962, when plaintiff filed a petition to Lift Attachment in Civil Case No. 50120 of the Court of First Instance of
Manila, Branch XVI; the Bureau of Telecommunications was notified of the Agreement Annex 'A,' on or about
November 15, 1962;

7. That Official Receipt No. 2174 and Official Invoice No. 6491, photostatic copies of which are attached to the
complaint as Annexes 'B' and 'C,' respectively, were issued on October 8, 1962 when plaintiff paid the sum of
P9,300.00 to the L & S Chemical Supply of Malabon, Rizal as purchase price of 15,000 pounds of Bluestone copper
sulfate pursuant to the AGREEMENT (Annex 'A' of the complaint);

8. That, as stated in paragraph 4 of the complaint the 15,000 pounds of Bluestone copper sulfate mentioned in the
Agreement were duly received on October 8, 1962 by the Bureau of Telecommunications as evidenced by Invoice
No. 125, photostatic copy of which was attached to the complaint as Annex 'D;'

9. That pursuant to the AGREEMENT (Annex 'A' of the complaint), the BML Trading and Supply executed on
October 19, 1962 a Waiver and Assignment of Rights over its share of 40% in the net profit in favor of the plaintiff,
photostatic copy of which was attached to the complaint as Annex 'E', but defendant Pacific Products, Inc. first came
to know of the same on November 16,1962 when it was served a copy of the plaintiff's Third Party Claim to which a
copy of said Waiver and Assignment of Rights was attached, and defendant Sheriff of Manila first came to know of
the same when plaintiff filed his said Third Party Claim with the Office of the Sheriff of Manila on November 19, 1962;
 the Bureau of Telecommunications was notified of the Waiver and Assignment of Rights on or about November 15,
1962;

10. That plaintiff filed his Third Party Claim on November l9, 1962 with the Office of the Sheriff of Manila and the
defendant Pacific Products, Inc. filed on November 29, 1962 in Civil Case No. 50120 a Motion to Strike Out Third
Party Claim which was denied for lack of merit in an order of this Court, Branch XVI, dated December 21, 1962;

11. That plaintiff received from the Office of the, Sheriff of Manila a notice dated January 22, 1963, simple copy of
which is attached hereto as Annex 'A,' that defendant Pacific Products, Inc. filed Indemnity Bond No. 3879 of the
defendant First Quezon City Insurance Co., and another notice dated April 30, 1963, a simple copy of which is
attached hereto as Annex 'B', that defendant Pacific Products, Inc. posted an additional bond of P1,181.55, both to
answer for the Third Party Claim;

12. That thereafter, on February 15, 1963 plaintiff filed the instant action;

13. That after being advised by the Sheriff of Manila in a letter dated April 30, 1963, Annex "B," hereof. to secure an
injunction inhibiting him from releasing the money in question in the amount of Pl0,293.35, plaintiff is convinced that
defendant Sheriff of Manila is not unjustified and persistent in refusing to satisfy the Third Party Claim of plaintiff;

14. That the letter of the Bureau of Telecommunications addressed to the Chief Deputy Sheriff of Manila, dated
November 5, 1962 and signed by its Acting Director A. Soriano, was in reply to the notice of garnishment dated
October 17, 1962, simple copy of which is attached hereto as Annex "C;"

15. That the parties herein admit their respective capacity to sue and be sued.

WHEREFORE, the parties hereto respectfully submit the foregoing stipulation of facts as part of the evidence in this
case without prejudice to the presentation of evidence as to matters not covered by this Stipulations of facts.

Manila, June 26, 1963.

MANUEL P. CALANOS & ASSOCIATES

By:

(Sgd.) JERRY P. REBUTOC

(T) JERRY P. REBUTOC

Counsel for the Plaintiff 404 Regina Building Escolta, Manila

ROSS, SELPH & CARRASCOSO

By:

(Sgd.) FELINO S. MEGINO

(T) FELINO S. MEGINO

Attorneys for the Defendant Pacific Products, Inc. 405 FNCB Building Manila

(Sgd.) FERNANDO P. AGDAMAG

FERNANDO P. AGDAMAG

Assistant Fiscal Counsel for the Defendant Sheriff of Manila

(Record on Appeal, pp. 26-32)

As aforequoted, Pacific Products, Inc. (Pacific, for brevity) filed an action for sum of money against Hilarion D. Labrador (hereinafter
referred to as H.D. Labrador), "doing business under the name and style of BML Trading and Supply," with the Court of First Instance
of Manila (Br. XVI) and docketed as Civil Case No. 50102. Upon Motion of Pacific, an order was issued directing the Sheriff of Manila
to attach the properties of the defendant.

Meanwhile, BML Trading and Supply (BML Trading, for brevity) won in a bid to supply the Bureau of Telecommunications (Bureau, for
brevity) with 15,000 pounds of bluestone copper sulfate worth P10,500.00. H.D. Labrador, as agent of BML Trading delivered the
compound. Before the Bureau could release the payment to BML Trading, the Sheriff of Manila garnished P9,111.70 of P10,500.00 on
October 17,1962.

Unknown to Pacific, BML Trading, through its attorney in-fact, H.D. Labrador assigned its tights over the P10,500.00 to herein
respondent, Vicente S. Ong on October 19,1962 (pp. 14-17, Record on Appeal; p. 26, Rollo). It appears that it was Vicente Ong who
advanced the necessary funds to purchase the copper sulfate and the parties agreed that the profits will be shared by BML Trading
and Vicente Ong on a 40-60 percent basis. It was also their agreement that BML Trading will waive its share in the net profits which
may be realized from the transaction should it fail to secure the release of the payment from the Bureau of Telecommunications within
seven (7) days from the delivery of the compound (pp. 9-13, Record on Appeal). Pacific learned about the assignment only when a
copy of the third party claim filed by Vicente Ong with the Office of the Sheriff of Manila was served on them on November 19,1962.

On November 29,1962, Pacific filed a motion to strike out the third party claim of Vicente Ong, but the same was denied for lack of
merit.

H.D. Labrador was declared in default and was ordered to pay Pacific the sum of P 9,111.70 in a decision which was rendered by the
trial court on December 21, 1962, the dispositive portion of which reads:

WHEREFORE, defendant H.D. Labrador is sentenced to pay plaintiff the sum of P9,111.70 with interest thereon at
6% per annum from April 12, 1962 when the complaint was filed and until the decision in this case is fully complied
with plus attorney's fees which the Court fixes in the sum of P500,000 plus cost. (P. 13, Rollo)

The corresponding writ of execution was issued and the Sheriff of Manila further garnished Pl,181.65 of the P10,500.00 in the
possession of the Bureau.

Ong's third party claim was frustrated when Pacific filed an Indemnity Bond with the Office of the Sheriff. Thus, the action for damages
against the Sheriff, Pacific Products and First Quezon City Insurance filed by Ong on February 14, 1963 to vindicate his claim on the
amount garnished.

On February 21, 1964, judgment was rendered by the trial court, as follows:

WHEREFORE, judgment is hereby rendered, dismissing the complaint, without special pronouncement as to costs.
(p. 37, Record on Appeal)

Ong filed a notice of appeal on March 20, 1964 (p. 38, Record on Appeal; p. 26, Rollo) which was approved on April 25, 1964 (p. 41,
Record on Appeal; supra).

On May 7, 1971, the Court of Appeals reversed the decision of the trial court. The dispositive portion of the decision reads:

WHEREFORE, the decision appealed from is reversed and judgment is hereby rendered ordering the defendants,
the Pacific Products, Inc., and the First Quezon City Insurance Co., Inc., to pay jointly and severally, the plaintiff-
appellant the sum of ten thousand two hundred ninety three pesos and thirty-five centavos (P10,293.35), with legal
interest from November 19, 1962, the date of the filing of the third party claim and the costs.

SO ORDERED. (p. 24, Rollo)

Pacific filed a Motion for Reconsideration which was denied on July 2, 1971 (p. 25, Rollo). Hence, the instant appeal by certiorari filed
by Pacific on July 17, 1971.

Petitioner assails the decision of the Court of Appeals when it held that the garnishment of the amount of P10,500.00 payable to BML
Trading and Supply while it was still in the possession of the Bureau of Telecommunications was illegal and therefore, null and void. It
is also petitioner's contention that the cases of Director of Commerce and Industry v. Concepcion, 43 Phil. 384 and Avendano et al. vs.
Alikpala, et al., G.R. No. L-21189, November 28, 1964, wherein this Court declared null and void the garnishment of the salaries of
government employees, relied upon by the appellate court are not applicable because no garnishment of salaries of government official
or employee is involved in this case.

There is no merit in this petition.

It is noted that the notice of garnishment served upon the Bureau of Telecommunications was made pursuant to an order of attachment
issued by the trial court in the case for sum of money against H.D. Labrador. At the time of such service, the amount against which the
notice was issued was still in the possession and control of the Bureau. The same situation obtains in the two cases relied upon by the
appellate court. While it is true that in the case at bar no salaries of public officials or employees are involved, the reasons for the ruling
in the two cited cases are clear. It was held, thus:

... By the process of garnishment, the plaintiff virtually sues the garnishee for a debt due to the defendant. The debtor
stranger becomes a forced intervenor. The Director of the Bureau of Commerce and Industry, an officer of the
Government of the Philippine Islands, when served with the writ of attachment, thus became a party to the action.
(Tayabas Land Co. vs. Sharruf (1921), 41 Phil. 382).

A rule, which has never been seriously questioned, is that money in the hands of public officers, although it may be
due government employees, is not liable to the creditors of these employees in the process of garnishment. One
reason is, that the State, by virtue of its sovereignty may not be sued in its own courts except by express
authorization by the Legislature, and to Subject its officers to garnishment would be to permit indirectly what is
prohibited directly. Another reason is that moneys sought to be garnished, as long as it remains in the hands of the
disbursing officer of the Government, belong latter, although the defendant in garnishment may be entitled to a
specific portion thereof. And still another reason which covers both of the foregoing is that every consideration of
public policy forbids it. (Director of Commerce and Industry v. Concepcion. 43 Phil. 386; Italics ours)

Against the first reason above-cited, petitioner contends that immunity from suit was waived when the Bureau of Telecommunications
entered into a business transaction with BML Trading since in this jurisdiction, it is now "a well established doctrine that when the
Government engages in business, it abdicates part of its sovereign prerogatives and ascends to the level of a citizen" (Price
Stabilization Corporation v. Court of Industrial Relations, G.R. L-9797 and L-9834. November 29. 1957).

This contention is not correct. Suability would follow only if the contract entered into by the government is in the exercise of a
proprietary as distinguished from a governmental function (see U.S.A vs. Ruiz, L-35645, May 22, 1985). The Bureau of
Telecommunications is a service bureau and is not engaged in business. There is also nothing in the records of this case from which it
could be concluded that in the purchase of the 15,000 pounds of bluestone copper sulfate, the Bureau was engaging in business.

Likewise, petitioner contends that in this case, where the Bureau is authorized to enter into a contract, the government "may sue and
be sued and may be subjected to court processes just like any other person," as was held in the case of National Shipyards and Steel
Corporation (NASSCO) vs. CIR, et al., G.R. L-17874, August 31, 1963, 8 SCRA 781.

There is no merit in this contention. NASSCO is a government owned and controlled corporation, with a personality of its own, separate
and distinct from that of the government. It has, pursuant to Section 2 of Executive Order No. 356 dated October 23, 1950 (46 Official
Gazette, 4677), which established the NASSCO all the powers of a corporation under the Corporation Code. Accordingly, it may sue
and be sued and may be subjected to court processes just like any other corporation ..." (supra). On the other hand, the Bureau of
Telecommunications is a government agency created under Section 78 of Executive Order No. 94, Series of 1947. It has no charter
and no distinct personality of its own. Being a government agency, the doctrine of State immunity from suit applies.

For the foregoing reasons, We affirm the ruling of the appellate court that the writ of garnishment issued against the P10,500.00
payable to BML Trading while still in the possession of the Bureau of Telecommunications is illegal and therefore, null and void. In view
of the assignment and waiver by BML Trading of the said amount in favor of Vicente Ong, the latter became the rightful owner thereof.

Finally, petitioner claims that the Court of Appeals erred in ruling that the money due to BML Trading and Supply in the hands of the
Bureau cannot be made to answer for a personal judgment against H.D. Labrador in Civil Case No. 50120. According to petitioner,
Vicente Ong admitted in the stipulation of facts that H.D. Labrador was "doing business under the name and style of BML Trading and
Supply" and that H.D. Labrador and BML Trading are one. A judgment rendered against H.D. Labrador can therefore be satisfied from
the funds the Bureau holds in favor of BML Trading.

We do not agree. There is nothing in the records from which it may be concluded that in the transactions involved in Civil Case 50120,
H.D. Labrador acted as an agent of BML Trading. On the contrary, the judgment therein was rendered only against H.D. Labrador.
Presumably, it was a personal judgment against him. On the other hand, the P10,500.00 in the hands of the Bureau was payable to
BML Trading and Supply owned by Benedicta Labrador and represented in the transaction by H.D. Labrador, There is also no
evidence on record to support a conclusion that H.D. Labrador held himself out as the owner of BML Trading in his transactions with
the Bureau. In the stipulation of facts, Vicente Ong never admitted that H.D. Labrador was doing business under the name and style of
BML Trading. What was admitted by Ong was the fact that Civil Case No. 50120 was entitled "Pacific Products, Inc. vs. H.D. Labrador,
doing business under the name and style of BML Trading and Supply."

ACCORDINGLY, the petition is DISMISSED. The decision of the Court of Appeals appealed from is AFFIRMED.

No costs.

SO ORDERED.
83 scra 597 G.R. No. L-33112 June 15, 1978

PHILIPPINE NATIONAL BANK, petitioner,

vs.
HON. JUDGE JAVIER PABALAN, Judge of the Court of First Instance, Branch III, La Union, AGOO TOBACCO PLANTERS
ASSOCIATION, INC., PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, and PANFILO P. JIMENEZ, Deputy Sheriff, La
Union, respondents.

Conrado E. Medina, Edgardo M. Magtalas & Walfrido Climaco for petitioner.

Felimon A. Aspirin fit respondent Agoo 'Tobacco Planters Association, Inc.

Virgilio C. Abejo for respondent Phil. Virginia Tobacco Administration.

FERNANDO, Acting C.J.:

The reliance of petitioner Philippine National Bank in this certiorari and prohibition proceeding against respondent Judge Javier
Pabalan who issued a writ of execution, 1 followed thereafter by a notice of garnishment of the funds of respondent Philippine Virginia
Tobacco Administration, 2 deposited with it, is on the fundamental constitutional law doctrine of non-suability of a state, it being alleged
that such funds are public in character. This is not the first time petitioner raised that issue. It did so before in Philippine National Bank
v. Court of industrial Relations, 3 decided only last January. It did not meet with success, this Court ruling in accordance with the two
previous cases of National Shipyard and Steel Corporation 4 and Manila Hotel Employees Association v. Manila Hotel Company, 5 that
funds of public corporations which can sue and be sued were not exempt from garnishment. As respondent Philippine Virginia Tobacco
Administration is likewise a public corporation possessed of the same attributes, 6 a similar outcome is indicated. This petition must be
dismissed.

It is undisputed that the judgment against respondent Philippine Virginia Tobacco Administration had reached the stage of finality. A
writ of execution was, therefore, in order. It was accordingly issued on December 17, 1970. 7There was a notice of garnishment for the
full amount mentioned in such writ of execution in the sum of P12,724,66. 8 In view of the objection, however, by petitioner Philippine
National Bank on the above ground, coupled with an inquiry as to whether or not respondent Philippine Virginia Tobacco Administration
had funds deposited with petitioner's La Union branch, it was not until January 25, 1971 that the order sought to be set aside in this
certiorari proceeding was issued by respondent Judge.9 Its dispositive portion reads as follows: Conformably with the foregoing, it is
now ordered, in accordance with law, that sufficient funds of the Philippine Virginia Tobacco Administration now deposited with the
Philippine National Bank, La Union Branch, shall be garnished and delivered to the plaintiff immediately to satisfy the Writ of Execution
for one-half of the amount awarded in the decision of November 16, 1970." 10 Hence this certiorari and prohibition proceeding.

As noted at the outset, petitioner Philippine National Bank would invoke the doctrine of non-suability. It is to be admitted that under the
present Constitution, what was formerly implicit as a fundamental doctrine in constitutional law has been set forth in express terms:
"The State may not be sued without its consent." 11 If the funds appertained to one of the regular departments or offices in the
government, then, certainly, such a provision would be a bar to garnishment. Such is not the case here. Garnishment would lie. Only
last January, as noted in the opening paragraph of this decision, this Court, in a case brought by the same petitioner precisely invoking
such a doctrine, left no doubt that the funds of public corporations could properly be made the object of a notice of garnishment.
Accordingly, this petition must fail.

1. The alleged grave abuse of discretion, the basis of this certiorari proceeding, was sought to be justified on the failure of respondent
Judge to set aside the notice of garnishment of funds belonging to respondent Philippine Virginia Tobacco Administration. This excerpt
from the aforecited decision of Philippine National Bank v. Court of Industrial Relations makes manifest why such an argument is far
from persuasive. "The premise that the funds could be spoken as public character may be accepted in the sense that the People
Homesite and Housing Corporation was a government-owned entity. It does not follow though that they were exempt. from
garnishment. National Shipyard and Steel Corporation v. Court of Industrial Relations is squarely in point. As was explicitly stated in the
opinion of the then Justice, later Chief Justice, Concepcion: "The allegation to the effect that the funds of the NASSCO are public funds
of the government, and that, as such, the same may not be garnished, attached or levied upon, is untenable for, as a government
owned and controlled corporation, the NASSCO has a personality of its own. distinct and separate from that of the Government. It has
— pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 ... , pursuant to which The NASSCO has been
established — all the powers of a corporation under the Corporation Law ... ." Accordingly, it may be sue and be sued and may be
subjected to court processes just like any other corporation (Section 13, Act No. 1459, as amended.)" ... To repeat, the ruling was the
appropriate remedy for the prevailing party which could proceed against the funds of a corporate entity even if owned or controlled by
the government." 12

2. The National Shipyard and Steel Corporation decision was not the first of its kind. The ruling therein could be inferred from the
judgment announced in Manila Hotel Employees Association v. Manila Hotel Company, decided as far back as 1941. 13 In the language
of its ponente Justice Ozaeta "On the other hand, it is well-settled that when the government enters into commercial business, it
abandons its sovereign capacity and is to be treated like any other corporation. (Bank of the United States v. Planters' Bank, 9 Wheat.
904, 6 L.ed. 244). By engaging in a particular business thru the instrumentality of a corporation, the government divests itself pro hac
vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations." 14 It is worth
mentioning that Justice Ozaeta could find support for such a pronouncement from the leading American Supreme Court case of
united States v. Planters' Bank, 15with the opinion coming from the illustrious Chief Justice Marshall. It was handed down more than
one hundred fifty years ago, 1824 to be exact. It is apparent, therefore, that petitioner Bank could it legally set forth as a bar or
impediment to a notice of garnishment the doctrine of non-suability.

WHEREFORE, this petition for certiorari and prohibition is dismissed. No costs.

Barredo, Antonio, Aquino, and Santos, JJ., concur.

Concepcion, Jr., J., is on leave.

130 scra 56 G.R. No. L-61744 June 25, 1984

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. 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. 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. ordering the restoration of ownership and possession over the five lots in question in favor of the plaintiffs in the
same proportion aforementioned;

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.

Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr., and De la Fuente, JJ,. concur.
34 phil. 311 G.R. No. L-11154 March 21, 1916

E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.

Crossfield and O'Brien for plaintiff.

Attorney-General Avanceña for defendant..

TRENT, J.:

This is an appeal by both parties from a judgment of the Court of First Instance of the city of Manila in favor of the plaintiff for the sum
of P14,741, together with the costs of the cause.

Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general damages which the plaintiff suffered to P5,000, instead
of P25,000 as claimed in the complaint," and (2) "in limiting the time when plaintiff was entirely disabled to two months and twenty-one
days and fixing the damage accordingly in the sum of P2,666, instead of P6,000 as claimed by plaintiff in his complaint."

The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in finding that the collision between the plaintiff's
motorcycle and the ambulance of the General Hospital was due to the negligence of the chauffeur; (b) in holding that the Government
of the Philippine Islands is liable for the damages sustained by the plaintiff as a result of the collision, even if it be true that the collision
was due to the negligence of the chauffeur; and (c) in rendering judgment against the defendant for the sum of P14,741.

The trial court's findings of fact, which are fully supported by the record, are as follows:

It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a motorcycle, was going toward the
western part of Calle Padre Faura, passing along the west side thereof at a speed of ten to twelve miles an hour, upon
crossing Taft Avenue and when he was ten feet from the southwestern intersection of said streets, the General Hospital
ambulance, upon reaching said avenue, instead of turning toward the south, after passing the center thereof, so that it would
be on the left side of said avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned suddenly and
unexpectedly and long before reaching the center of the street, into the right side of Taft Avenue, without having sounded any
whistle or horn, by which movement it struck the plaintiff, who was already six feet from the southwestern point or from the
post place there.

By reason of the resulting collision, the plaintiff was so severely injured that, according to Dr. Saleeby, who examined him on
the very same day that he was taken to the General Hospital, he was suffering from a depression in the left parietal region, a
would in the same place and in the back part of his head, while blood issued from his nose and he was entirely unconscious.

The marks revealed that he had one or more fractures of the skull and that the grey matter and brain was had suffered
material injury. At ten o'clock of the night in question, which was the time set for performing the operation, his pulse was so
weak and so irregular that, in his opinion, there was little hope that he would live. His right leg was broken in such a way that
the fracture extended to the outer skin in such manner that it might be regarded as double and the would be exposed to
infection, for which reason it was of the most serious nature.

At another examination six days before the day of the trial, Dr. Saleeby noticed that the plaintiff's leg showed a contraction of
an inch and a half and a curvature that made his leg very weak and painful at the point of the fracture. Examination of his
head revealed a notable readjustment of the functions of the brain and nerves. The patient apparently was slightly deaf, had a
light weakness in his eyes and in his mental condition. This latter weakness was always noticed when the plaintiff had to do
any difficult mental labor, especially when he attempted to use his money for mathematical calculations.

According to the various merchants who testified as witnesses, the plaintiff's mental and physical condition prior to the
accident was excellent, and that after having received the injuries that have been discussed, his physical condition had
undergone a noticeable depreciation, for he had lost the agility, energy, and ability that he had constantly displayed before the
accident as one of the best constructors of wooden buildings and he could not now earn even a half of the income that he had
secured for his work because he had lost 50 per cent of his efficiency. As a contractor, he could no longer, as he had before
done, climb up ladders and scaffoldings to reach the highest parts of the building.

As a consequence of the loss the plaintiff suffered in the efficiency of his work as a contractor, he had to dissolved the
partnership he had formed with the engineer. Wilson, because he was incapacitated from making mathematical calculations
on account of the condition of his leg and of his mental faculties, and he had to give up a contract he had for the construction
of the Uy Chaco building."

We may say at the outset that we are in full accord with the trial court to the effect that the collision between the plaintiff's motorcycle
and the ambulance of the General Hospital was due solely to the negligence of the chauffeur.

The two items which constitute a part of the P14,741 and which are drawn in question by the plaintiff are (a) P5,000, the award
awarded for permanent injuries, and (b) the P2,666, the amount allowed for the loss of wages during the time the plaintiff was
incapacitated from pursuing his occupation. We find nothing in the record which would justify us in increasing the amount of the first. As
to the second, the record shows, and the trial court so found, that the plaintiff's services as a contractor were worth P1,000 per month.
The court, however, limited the time to two months and twenty-one days, which the plaintiff was actually confined in the hospital. In this
we think there was error, because it was clearly established that the plaintiff was wholly incapacitated for a period of six months. The
mere fact that he remained in the hospital only two months and twenty-one days while the remainder of the six months was spent in his
home, would not prevent recovery for the whole time. We, therefore, find that the amount of damages sustained by the plaintiff, without
any fault on his part, is P18,075.

As the negligence which caused the collision is a tort committed by an agent or employee of the Government, the inquiry at once arises
whether the Government is legally-liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:

An Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and authorizing the Attorney-
General of said Islands to appear in said suit.

Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for damages
resulting from a collision between his motorcycle and the ambulance of the General Hospital on March twenty-fifth, nineteen
hundred and thirteen;

Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of damages, if any, to
which the claimant is entitled; and

Whereas the Director of Public Works and the Attorney-General recommended that an Act be passed by the Legislature
authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order that said questions may be decided: Now,
therefore,

By authority of the United States, be it enacted by the Philippine Legislature, that:

SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the
Government of the Philippine Islands in order to fix the responsibility for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on
account of said collision, and the Attorney-General of the Philippine Islands is hereby authorized and directed to appear at the
trial on the behalf of the Government of said Islands, to defendant said Government at the same.

SEC. 2. This Act shall take effect on its passage.

Enacted, February 3, 1915.

Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it also concede its liability to the
plaintiff? If only the former, then it cannot be held that the Act created any new cause of action in favor of the plaintiff or extended the
defendant's liability to any case not previously recognized.

All admit that the Insular Government (the defendant) cannot be sued by an individual without its consent. It is also admitted that the
instant case is one against the Government. As the consent of the Government to be sued by the plaintiff was entirely voluntary on its
part, it is our duty to look carefully into the terms of the consent, and render judgment accordingly.

The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility for the collision between his
motorcycle and the ambulance of the General Hospital and to determine the amount of the damages, if any, to which Mr. E. Merritt is
entitled on account of said collision, . . . ." These were the two questions submitted to the court for determination. The Act was passed
"in order that said questions may be decided." We have "decided" that the accident was due solely to the negligence of the chauffeur,
who was at the time an employee of the defendant, and we have also fixed the amount of damages sustained by the plaintiff as a result
of the collision. Does the Act authorize us to hold that the Government is legally liable for that amount? If not, we must look elsewhere
for such authority, if it exists.

The Government of the Philippine Islands having been "modeled after the Federal and State Governments in the United States," we
may look to the decisions of the high courts of that country for aid in determining the purpose and scope of Act No. 2457.

In the United States the rule that the state is not liable for the torts committed by its officers or agents whom it employs, except when
expressly made so by legislative enactment, is well settled. "The Government," says Justice Story, "does not undertake to guarantee to
any person the fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest." (Claussen vs. City of Luverne, 103 Minn.,
491, citing U. S. vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers vs. States, 20 How., 527; 15 L. Ed., 991.)

In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to recover damages from the state for personal injuries received on
account of the negligence of the state officers at the state fair, a state institution created by the legislature for the purpose of improving
agricultural and kindred industries; to disseminate information calculated to educate and benefit the industrial classes; and to advance
by such means the material interests of the state, being objects similar to those sought by the public school system. In passing upon
the question of the state's liability for the negligent acts of its officers or agents, the court said:

No claim arises against any government is favor of an individual, by reason of the misfeasance, laches, or unauthorized
exercise of powers by its officers or agents. (Citing Gibbons vs. U. S., 8 Wall., 269; Clodfelter vs. State, 86 N. C., 51, 53; 41
Am. Rep., 440; Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158; Green vs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal.,
321; 27 Am. St. Rep., 203; Story on Agency, sec. 319.)

As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out of either fort or
contract, the rule is stated in 36 Cyc., 915, thus:

By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or
create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely gives a remedy
to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful
defense.

In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the Act of 1913, which authorized the bringing of
this suit, read:
 SECTION 1. Authority is hereby given to George Apfelbacher, of the town of Summit, Waukesha County, Wisconsin, to bring
suit in such court or courts and in such form or forms as he may be advised for the purpose of settling and determining all
controversies which he may now have with the State of Wisconsin, or its duly authorized officers and agents, relative to the
mill property of said George Apfelbacher, the fish hatchery of the State of Wisconsin on the Bark River, and the mill property
of Evan Humphrey at the lower end of Nagawicka Lake, and relative to the use of the waters of said Bark River and
Nagawicka Lake, all in the county of Waukesha, Wisconsin.

In determining the scope of this act, the court said:

Plaintiff claims that by the enactment of this law the legislature admitted liability on the part of the state for the acts of its
officers, and that the suit now stands just as it would stand between private parties. It is difficult to see how the act does, or
was intended to do, more than remove the state's immunity from suit. It simply gives authority to commence suit for the
purpose of settling plaintiff's controversies with the estate. Nowhere in the act is there a whisper or suggestion that the court or
courts in the disposition of the suit shall depart from well established principles of law, or that the amount of damages is the
only question to be settled. The act opened the door of the court to the plaintiff. It did not pass upon the question of liability,
but left the suit just where it would be in the absence of the state's immunity from suit. If the Legislature had intended to
change the rule that obtained in this state so long and to declare liability on the part of the state, it would not have left so
important a matter to mere inference, but would have done so in express terms. (Murdock Grate Co. vs. Commonwealth, 152
Mass., 28; 24 N.E., 854; 8 L. R. A., 399.)

In Denning vs. State (123 Cal., 316), the provisions of the Act of 1893, relied upon and considered, are as follows:

All persons who have, or shall hereafter have, claims on contract or for negligence against the state not allowed by the state
board of examiners, are hereby authorized, on the terms and conditions herein contained, to bring suit thereon against the
state in any of the courts of this state of competent jurisdiction, and prosecute the same to final judgment. The rules of
practice in civil cases shall apply to such suits, except as herein otherwise provided.

And the court said:

This statute has been considered by this court in at least two cases, arising under different facts, and in both it was held that
said statute did not create any liability or cause of action against the state where none existed before, but merely gave an
additional remedy to enforce such liability as would have existed if the statute had not been enacted. (Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Melvin vs. State, 121 Cal., 16.)

A statute of Massachusetts enacted in 1887 gave to the superior court "jurisdiction of all claims against the commonwealth, whether at
law or in equity," with an exception not necessary to be here mentioned. In construing this statute the court, in Murdock Grate Co. vs.
Commonwealth (152 Mass., 28), said:

The statute we are discussing disclose no intention to create against the state a new and heretofore unrecognized class of
liabilities, but only an intention to provide a judicial tribunal where well recognized existing liabilities can be adjudicated.

In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by the terms of the statute of New York, jurisdiction of
claims for damages for injuries in the management of the canals such as the plaintiff had sustained, Chief Justice Ruger remarks: "It
must be conceded that the state can be made liable for injuries arising from the negligence of its agents or servants, only by force of
some positive statute assuming such liability."

It being quite clear that Act No. 2457 does not operate to extend the Government's liability to any cause not previously recognized, we
will now examine the substantive law touching the defendant's liability for the negligent acts of its officers, agents, and employees.
Paragraph 5 of article 1903 of the Civil Code reads:

The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by
the official to whom properly it pertained to do the act performed, in which case the provisions of the preceding article shall be
applicable.

The supreme court of Spain in defining the scope of this paragraph said:

That the obligation to indemnify for damages which a third person causes to another by his fault or negligence is based, as is
evidenced by the same Law 3, Title 15, Partida 7, on that the person obligated, by his own fault or negligence, takes part in
the act or omission of the third party who caused the damage. It follows therefrom that the state, by virtue of such provisions
of law, is not responsible for the damages suffered by private individuals in consequence of acts performed by its employees
in the discharge of the functions pertaining to their office, because neither fault nor even negligence can be presumed on the
part of the state in the organization of branches of public service and in the appointment of its agents; on the contrary, we
must presuppose all foresight humanly possible on its part in order that each branch of service serves the general weal an
that of private persons interested in its operation. Between these latter and the state, therefore, no relations of a private nature
governed by the civil law can arise except in a case where the state acts as a judicial person capable of acquiring rights and
contracting obligations. (Supreme Court of Spain, January 7, 1898; 83 Jur. Civ., 24.)

That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault or negligence; and whereas
in the first article thereof. No. 1902, where the general principle is laid down that where a person who by an act or omission
causes damage to another through fault or negligence, shall be obliged to repair the damage so done, reference is made to
acts or omissions of the persons who directly or indirectly cause the damage, the following articles refers to this persons and
imposes an identical obligation upon those who maintain fixed relations of authority and superiority over the authors of the
damage, because the law presumes that in consequence of such relations the evil caused by their own fault or negligence is
imputable to them. This legal presumption gives way to proof, however, because, as held in the last paragraph of article 1903,
responsibility for acts of third persons ceases when the persons mentioned in said article prove that they employed all the
diligence of a good father of a family to avoid the damage, and among these persons, called upon to answer in a direct and
not a subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians and owners or directors
of an establishment or enterprise, the state, but not always, except when it acts through the agency of a special agent,
 doubtless because and only in this case, the fault or negligence, which is the original basis of this kind of objections, must be
presumed to lie with the state.

That although in some cases the state might by virtue of the general principle set forth in article 1902 respond for all the
damage that is occasioned to private parties by orders or resolutions which by fault or negligence are made by branches of
the central administration acting in the name and representation of the state itself and as an external expression of its
sovereignty in the exercise of its executive powers, yet said article is not applicable in the case of damages said to have been
occasioned to the petitioners by an executive official, acting in the exercise of his powers, in proceedings to enforce the
collections of certain property taxes owing by the owner of the property which they hold in sublease.

That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (and a special
agent, in the sense in which these words are employed, is one who receives a definite and fixed order or commission, foreign
to the exercise of the duties of his office if he is a special official) so that in representation of the state and being bound to act
as an agent thereof, he executes the trust confided to him. This concept does not apply to any executive agent who is an
employee of the acting administration and who on his own responsibility performs the functions which are inherent in and
naturally pertain to his office and which are regulated by law and the regulations." (Supreme Court of Spain, May 18, 1904; 98
Jur. Civ., 389, 390.)

That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a decision, among others, of the
18th of May, 1904, in a damage case, the responsibility of the state is limited to that which it contracts through a special agent,
duly empowered by a definite order or commission to perform some act or charged with some definite purpose which gives
rise to the claim, and not where the claim is based on acts or omissions imputable to a public official charged with some
administrative or technical office who can be held to the proper responsibility in the manner laid down by the law of civil
responsibility. Consequently, the trial court in not so deciding and in sentencing the said entity to the payment of damages,
caused by an official of the second class referred to, has by erroneous interpretation infringed the provisions of articles 1902
and 1903 of the Civil Code. (Supreme Court of Spain, July 30, 1911; 122 Jur. Civ., 146.)

It is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable, according to the above quoted
decisions of the Supreme Court of Spain, for the acts of its agents, officers and employees when they act as special agents within the
meaning of paragraph 5 of article 1903, supra, and that the chauffeur of the ambulance of the General Hospital was not such an agent.

For the foregoing reasons, the judgment appealed from must be reversed, without costs in this instance. Whether the Government
intends to make itself legally liable for the amount of damages above set forth, which the plaintiff has sustained by reason of the
negligent acts of one of its employees, by legislative enactment and by appropriating sufficient funds therefor, we are not called upon to
determine. This matter rests solely with the Legislature and not with the courts.

Arellano, C. J., Torres, Johnson, and Moreland, JJ., concur.

34 phil. 311 G.R. No. L-11154 March 21, 1916

E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.

Crossfield and O'Brien for plaintiff.

Attorney-General Avanceña for defendant..

TRENT, J.:

This is an appeal by both parties from a judgment of the Court of First Instance of the city of Manila in favor of the plaintiff for the sum
of P14,741, together with the costs of the cause.

Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general damages which the plaintiff suffered to P5,000, instead
of P25,000 as claimed in the complaint," and (2) "in limiting the time when plaintiff was entirely disabled to two months and twenty-one
days and fixing the damage accordingly in the sum of P2,666, instead of P6,000 as claimed by plaintiff in his complaint."

The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in finding that the collision between the plaintiff's
motorcycle and the ambulance of the General Hospital was due to the negligence of the chauffeur; (b) in holding that the Government
of the Philippine Islands is liable for the damages sustained by the plaintiff as a result of the collision, even if it be true that the collision
was due to the negligence of the chauffeur; and (c) in rendering judgment against the defendant for the sum of P14,741.

The trial court's findings of fact, which are fully supported by the record, are as follows:

It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a motorcycle, was going toward the
western part of Calle Padre Faura, passing along the west side thereof at a speed of ten to twelve miles an hour, upon
crossing Taft Avenue and when he was ten feet from the southwestern intersection of said streets, the General Hospital
ambulance, upon reaching said avenue, instead of turning toward the south, after passing the center thereof, so that it would
be on the left side of said avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned suddenly and
unexpectedly and long before reaching the center of the street, into the right side of Taft Avenue, without having sounded any
whistle or horn, by which movement it struck the plaintiff, who was already six feet from the southwestern point or from the
post place there.

By reason of the resulting collision, the plaintiff was so severely injured that, according to Dr. Saleeby, who examined him on
the very same day that he was taken to the General Hospital, he was suffering from a depression in the left parietal region, a
would in the same place and in the back part of his head, while blood issued from his nose and he was entirely unconscious.

The marks revealed that he had one or more fractures of the skull and that the grey matter and brain was had suffered
material injury. At ten o'clock of the night in question, which was the time set for performing the operation, his pulse was so
weak and so irregular that, in his opinion, there was little hope that he would live. His right leg was broken in such a way that
the fracture extended to the outer skin in such manner that it might be regarded as double and the would be exposed to
infection, for which reason it was of the most serious nature.

At another examination six days before the day of the trial, Dr. Saleeby noticed that the plaintiff's leg showed a contraction of
an inch and a half and a curvature that made his leg very weak and painful at the point of the fracture. Examination of his
head revealed a notable readjustment of the functions of the brain and nerves. The patient apparently was slightly deaf, had a
light weakness in his eyes and in his mental condition. This latter weakness was always noticed when the plaintiff had to do
any difficult mental labor, especially when he attempted to use his money for mathematical calculations.

According to the various merchants who testified as witnesses, the plaintiff's mental and physical condition prior to the
accident was excellent, and that after having received the injuries that have been discussed, his physical condition had
undergone a noticeable depreciation, for he had lost the agility, energy, and ability that he had constantly displayed before the
accident as one of the best constructors of wooden buildings and he could not now earn even a half of the income that he had
secured for his work because he had lost 50 per cent of his efficiency. As a contractor, he could no longer, as he had before
done, climb up ladders and scaffoldings to reach the highest parts of the building.

As a consequence of the loss the plaintiff suffered in the efficiency of his work as a contractor, he had to dissolved the
partnership he had formed with the engineer. Wilson, because he was incapacitated from making mathematical calculations
on account of the condition of his leg and of his mental faculties, and he had to give up a contract he had for the construction
of the Uy Chaco building."

We may say at the outset that we are in full accord with the trial court to the effect that the collision between the plaintiff's motorcycle
and the ambulance of the General Hospital was due solely to the negligence of the chauffeur.

The two items which constitute a part of the P14,741 and which are drawn in question by the plaintiff are (a) P5,000, the award
awarded for permanent injuries, and (b) the P2,666, the amount allowed for the loss of wages during the time the plaintiff was
incapacitated from pursuing his occupation. We find nothing in the record which would justify us in increasing the amount of the first. As
to the second, the record shows, and the trial court so found, that the plaintiff's services as a contractor were worth P1,000 per month.
The court, however, limited the time to two months and twenty-one days, which the plaintiff was actually confined in the hospital. In this
we think there was error, because it was clearly established that the plaintiff was wholly incapacitated for a period of six months. The
mere fact that he remained in the hospital only two months and twenty-one days while the remainder of the six months was spent in his
home, would not prevent recovery for the whole time. We, therefore, find that the amount of damages sustained by the plaintiff, without
any fault on his part, is P18,075.

As the negligence which caused the collision is a tort committed by an agent or employee of the Government, the inquiry at once arises
whether the Government is legally-liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:

An Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and authorizing the Attorney-
General of said Islands to appear in said suit.

Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for damages
resulting from a collision between his motorcycle and the ambulance of the General Hospital on March twenty-fifth, nineteen
hundred and thirteen;

Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of damages, if any, to
which the claimant is entitled; and

Whereas the Director of Public Works and the Attorney-General recommended that an Act be passed by the Legislature
authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order that said questions may be decided: Now,
therefore,

By authority of the United States, be it enacted by the Philippine Legislature, that:

SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the
Government of the Philippine Islands in order to fix the responsibility for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on
account of said collision, and the Attorney-General of the Philippine Islands is hereby authorized and directed to appear at the
trial on the behalf of the Government of said Islands, to defendant said Government at the same.

SEC. 2. This Act shall take effect on its passage.

Enacted, February 3, 1915.

Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it also concede its liability to the
plaintiff? If only the former, then it cannot be held that the Act created any new cause of action in favor of the plaintiff or extended the
defendant's liability to any case not previously recognized.

All admit that the Insular Government (the defendant) cannot be sued by an individual without its consent. It is also admitted that the
instant case is one against the Government. As the consent of the Government to be sued by the plaintiff was entirely voluntary on its
part, it is our duty to look carefully into the terms of the consent, and render judgment accordingly.

The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility for the collision between his
motorcycle and the ambulance of the General Hospital and to determine the amount of the damages, if any, to which Mr. E. Merritt is
entitled on account of said collision, . . . ." These were the two questions submitted to the court for determination. The Act was passed
"in order that said questions may be decided." We have "decided" that the accident was due solely to the negligence of the chauffeur,
who was at the time an employee of the defendant, and we have also fixed the amount of damages sustained by the plaintiff as a result
of the collision. Does the Act authorize us to hold that the Government is legally liable for that amount? If not, we must look elsewhere
for such authority, if it exists.

The Government of the Philippine Islands having been "modeled after the Federal and State Governments in the United States," we
may look to the decisions of the high courts of that country for aid in determining the purpose and scope of Act No. 2457.

In the United States the rule that the state is not liable for the torts committed by its officers or agents whom it employs, except when
expressly made so by legislative enactment, is well settled. "The Government," says Justice Story, "does not undertake to guarantee to
any person the fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest." (Claussen vs. City of Luverne, 103 Minn.,
491, citing U. S. vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers vs. States, 20 How., 527; 15 L. Ed., 991.)

In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought to recover damages from the state for personal injuries received on
account of the negligence of the state officers at the state fair, a state institution created by the legislature for the purpose of improving
agricultural and kindred industries; to disseminate information calculated to educate and benefit the industrial classes; and to advance
by such means the material interests of the state, being objects similar to those sought by the public school system. In passing upon
the question of the state's liability for the negligent acts of its officers or agents, the court said:

No claim arises against any government is favor of an individual, by reason of the misfeasance, laches, or unauthorized
exercise of powers by its officers or agents. (Citing Gibbons vs. U. S., 8 Wall., 269; Clodfelter vs. State, 86 N. C., 51, 53; 41
Am. Rep., 440; Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158; Green vs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal.,
321; 27 Am. St. Rep., 203; Story on Agency, sec. 319.)

As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out of either fort or
contract, the rule is stated in 36 Cyc., 915, thus:

By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or
create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely gives a remedy
to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful
defense.

In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the Act of 1913, which authorized the bringing of
this suit, read:
 SECTION 1. Authority is hereby given to George Apfelbacher, of the town of Summit, Waukesha County, Wisconsin, to bring
suit in such court or courts and in such form or forms as he may be advised for the purpose of settling and determining all
controversies which he may now have with the State of Wisconsin, or its duly authorized officers and agents, relative to the
mill property of said George Apfelbacher, the fish hatchery of the State of Wisconsin on the Bark River, and the mill property
of Evan Humphrey at the lower end of Nagawicka Lake, and relative to the use of the waters of said Bark River and
Nagawicka Lake, all in the county of Waukesha, Wisconsin.

In determining the scope of this act, the court said:

Plaintiff claims that by the enactment of this law the legislature admitted liability on the part of the state for the acts of its
officers, and that the suit now stands just as it would stand between private parties. It is difficult to see how the act does, or
was intended to do, more than remove the state's immunity from suit. It simply gives authority to commence suit for the
purpose of settling plaintiff's controversies with the estate. Nowhere in the act is there a whisper or suggestion that the court or
courts in the disposition of the suit shall depart from well established principles of law, or that the amount of damages is the
only question to be settled. The act opened the door of the court to the plaintiff. It did not pass upon the question of liability,
but left the suit just where it would be in the absence of the state's immunity from suit. If the Legislature had intended to
change the rule that obtained in this state so long and to declare liability on the part of the state, it would not have left so
important a matter to mere inference, but would have done so in express terms. (Murdock Grate Co. vs. Commonwealth, 152
Mass., 28; 24 N.E., 854; 8 L. R. A., 399.)

In Denning vs. State (123 Cal., 316), the provisions of the Act of 1893, relied upon and considered, are as follows:

All persons who have, or shall hereafter have, claims on contract or for negligence against the state not allowed by the state
board of examiners, are hereby authorized, on the terms and conditions herein contained, to bring suit thereon against the
state in any of the courts of this state of competent jurisdiction, and prosecute the same to final judgment. The rules of
practice in civil cases shall apply to such suits, except as herein otherwise provided.

And the court said:

This statute has been considered by this court in at least two cases, arising under different facts, and in both it was held that
said statute did not create any liability or cause of action against the state where none existed before, but merely gave an
additional remedy to enforce such liability as would have existed if the statute had not been enacted. (Chapman vs. State, 104
Cal., 690; 43 Am. St. Rep., 158; Melvin vs. State, 121 Cal., 16.)

A statute of Massachusetts enacted in 1887 gave to the superior court "jurisdiction of all claims against the commonwealth, whether at
law or in equity," with an exception not necessary to be here mentioned. In construing this statute the court, in Murdock Grate Co. vs.
Commonwealth (152 Mass., 28), said:

The statute we are discussing disclose no intention to create against the state a new and heretofore unrecognized class of
liabilities, but only an intention to provide a judicial tribunal where well recognized existing liabilities can be adjudicated.

In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by the terms of the statute of New York, jurisdiction of
claims for damages for injuries in the management of the canals such as the plaintiff had sustained, Chief Justice Ruger remarks: "It
must be conceded that the state can be made liable for injuries arising from the negligence of its agents or servants, only by force of
some positive statute assuming such liability."

It being quite clear that Act No. 2457 does not operate to extend the Government's liability to any cause not previously recognized, we
will now examine the substantive law touching the defendant's liability for the negligent acts of its officers, agents, and employees.
Paragraph 5 of article 1903 of the Civil Code reads:

The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by
the official to whom properly it pertained to do the act performed, in which case the provisions of the preceding article shall be
applicable.

The supreme court of Spain in defining the scope of this paragraph said:

That the obligation to indemnify for damages which a third person causes to another by his fault or negligence is based, as is
evidenced by the same Law 3, Title 15, Partida 7, on that the person obligated, by his own fault or negligence, takes part in
the act or omission of the third party who caused the damage. It follows therefrom that the state, by virtue of such provisions
of law, is not responsible for the damages suffered by private individuals in consequence of acts performed by its employees
in the discharge of the functions pertaining to their office, because neither fault nor even negligence can be presumed on the
part of the state in the organization of branches of public service and in the appointment of its agents; on the contrary, we
must presuppose all foresight humanly possible on its part in order that each branch of service serves the general weal an
that of private persons interested in its operation. Between these latter and the state, therefore, no relations of a private nature
governed by the civil law can arise except in a case where the state acts as a judicial person capable of acquiring rights and
contracting obligations. (Supreme Court of Spain, January 7, 1898; 83 Jur. Civ., 24.)

That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault or negligence; and whereas
in the first article thereof. No. 1902, where the general principle is laid down that where a person who by an act or omission
causes damage to another through fault or negligence, shall be obliged to repair the damage so done, reference is made to
acts or omissions of the persons who directly or indirectly cause the damage, the following articles refers to this persons and
imposes an identical obligation upon those who maintain fixed relations of authority and superiority over the authors of the
damage, because the law presumes that in consequence of such relations the evil caused by their own fault or negligence is
imputable to them. This legal presumption gives way to proof, however, because, as held in the last paragraph of article 1903,
responsibility for acts of third persons ceases when the persons mentioned in said article prove that they employed all the
diligence of a good father of a family to avoid the damage, and among these persons, called upon to answer in a direct and
not a subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians and owners or directors
of an establishment or enterprise, the state, but not always, except when it acts through the agency of a special agent,
 doubtless because and only in this case, the fault or negligence, which is the original basis of this kind of objections, mus t be
presumed to lie with the state.

That although in some cases the state might by virtue of the general principle set forth in article 1902 respond for all the
damage that is occasioned to private parties by orders or resolutions which by fault or negligence are made by branches of
the central administration acting in the name and representation of the state itself and as an external expression of its
sovereignty in the exercise of its executive powers, yet said article is not applicable in the case of damages said to have been
occasioned to the petitioners by an executive official, acting in the exercise of his powers, in proceedings to enforce the
collections of certain property taxes owing by the owner of the property which they hold in sublease.

That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (and a special
agent, in the sense in which these words are employed, is one who receives a definite and fixed order or commission, foreign
to the exercise of the duties of his office if he is a special official) so that in representation of the state and being bound to act
as an agent thereof, he executes the trust confided to him. This concept does not apply to any executive agent who is an
employee of the acting administration and who on his own responsibility performs the functions which are inherent in and
naturally pertain to his office and which are regulated by law and the regulations." (Supreme Court of Spain, May 18, 1904; 98
Jur. Civ., 389, 390.)

That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a decision, among others, of the
18th of May, 1904, in a damage case, the responsibility of the state is limited to that which it contracts through a special agent,
duly empowered by a definite order or commission to perform some act or charged with some definite purpose which gives
rise to the claim, and not where the claim is based on acts or omissions imputable to a public official charged with some
administrative or technical office who can be held to the proper responsibility in the manner laid down by the law of civil
responsibility. Consequently, the trial court in not so deciding and in sentencing the said entity to the payment of damages,
caused by an official of the second class referred to, has by erroneous interpretation infringed the provisions of articles 1902
and 1903 of the Civil Code. (Supreme Court of Spain, July 30, 1911; 122 Jur. Civ., 146.)

It is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable, according to the above quoted
decisions of the Supreme Court of Spain, for the acts of its agents, officers and employees when they act as special agents within the
meaning of paragraph 5 of article 1903, supra, and that the chauffeur of the ambulance of the General Hospital was not such an agent.

For the foregoing reasons, the judgment appealed from must be reversed, without costs in this instance. Whether the Government
intends to make itself legally liable for the amount of damages above set forth, which the plaintiff has sustained by reason of the
negligent acts of one of its employees, by legislative enactment and by appropriating sufficient funds therefor, we are not called upon to
determine. This matter rests solely with the Legislature and not with the courts.

Arellano, C. J., Torres, Johnson, and Moreland, JJ., concur.