EN BANC
[G.R. No. 85284. February 28, 1990.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. SANDIGANBAYAN, Third Division, SIMPLICIO A. PALANCA in his own behalf as a stockholder of Bacolod Real Estate Development Corporation (BREDCO), and other stockholders similarly situated, respondents.
Hilado, Hagad & Hilado for private respondents.
R E S O L U T I O N
PADILLA, J p:
This is a petition for CERTIORARI to annul and set aside the resolution of the Sandiganbayan (Third Division), dated 3 June 1988, granting the private respondents' motion to intervene in Civil Case No. 0025 and admitting their answer in intervention, as well as its resolution, dated 25 August 1988, denying the petitioner's motion for reconsideration; PROHIBITION to order the respondent court to cease and desist from proceeding with the intervention filed with it; and alternatively, MANDAMUS to compel the respondent court to dismiss the intervention case.
The antecedents are as follows:
On 29 July 1987, the Republic of the Philippines, as Plaintiff, through its governmental instrumentality the Presidential Commission on Good Government (PCGG) filed with the respondent Sandiganbayan a complaint against Ferdinand E. Marcos, et al. for reconveyance, reversion, accounting, restitution and damages, docketed therein as Civil Case No. 0025 (PCGG No. 26). 1
On or about 3 September 1987, before the said Civil Case No. 0025 could be set for hearing, private respondent Simplicio A. Palanca in his own behalf as a stockholder of Bacolod Real Estate Development Corporation (BREDCO) and other stockholders similarly situated, filed with the respondent Sandiganbayan a "Motion For Leave To Intervene" 2 attaching thereto their "Answer in Intervention." 3
In their motion, private respondents alleged that they be —
". . . allowed to intervene in the present action and to file the Answer in intervention hereto attached as Annex 'A', the said stockholders having a legal interest in the matter in litigation and in the disposition of the properties listed in Annex 'A' of the Complaint as 'BREDCO LOTS' and shares of stock in Bacolod Real Estate Development Corporation.
"In justification, it is further respectfully alleged that:
"1. Close examination of the Complaint, in particular par. 12 thereto under 'V. SPECIFIC AVERMENTS OF DEFENDANTS' ILLEGAL ACTS', makes no mention at all about BREDCO being the subject of any anomalous transaction engaged in by any of the defendants, in consequence of which the listed BREDCO lots could have been gotten illegally. It is to be observed, on the other hand, that the titles mentioned in aforesaid Annex of the complaint covering the lots in question are not registered in the names of any of the defendants but in the name of Bacolod Real Estate Development Corporation.
"2. Similarly, the shares of stock in Bacolod Real Estate Development Corporation appearing under PERSONAL PROPERTY on page two of Annex 'A' of the complaint are carried, not in the names of any of the defendants, but in the name of Marsteel Consolidated, Inc. and were acquired under the circumstances averred more in detail in the accompanying Answer in Intervention by reason of which said shares should not be involved in the present action.
"3. If intervention is allowed, intervenors are prepared to prove that if ever any of the defendants through Marsteel Consolidated, Inc. and Marsteel Corporation came to have any interest in Bacolod Real Estate Development Corporation, it was only by way of accommodation on the part of BREDCO stockholders who transferred their shareholdings aggregating 70% of the subscribed capital to enable Marsteel Consolidated to secure adequate financing for the reclamation and port development project." 4
The foregoing allegations were further expanded and elaborated in the private respondents' Answer in Intervention.
On 2 December 1987, petitioner filed its Reply 5 to Answer In Intervention, while private respondents filed a "Rejoinder to Reply With Motion To Release BREDCO Lots" 6 and also a "Motion To Calendar For Hearing" the motion to release BREDCO lots. 7
On 22 January 1988, respondent court promulgated a resolution 8 holding in abeyance action on the private respondents' "Rejoinder to Reply with Motion to Release BREDCO lots", and set the Motion for Leave to Intervene for hearing on 2 February 1988.
On 11 March 1988, respondent court issued an order 9 giving petitioner fifteen (l5) days from 11 March 1988 within which to file its opposition and or comment on the motion to intervene and giving the private respondents in turn ten (10) days within which to file their reply thereto.
On 23 March 1988, petitioner filed its Motion to Dismiss "Answer In Intervention," on the grounds that; (1) respondent court lacks jurisdiction and (2) intervenors have no legal interest in the matter in litigation, 10 which the private respondents opposed. 11
On 6 June 1988, respondent court promulgated a Resolution dated 3 June 1988 12 granting the private respondents' motion to intervene and admitting their Answer in Intervention.
Petitioner moved for reconsideration but this was denied by respondent court in its resolution of 25 August 1989. 13
Hence, the instant petition.
The petitioner, through the Solicitor General, contends that in issuing the questioned resolutions granting the Motion to Intervene and admitting the Answer-in-Intervention, respondent Sandiganbayan acted in contravention of a national or public policy embedded in Executive Order Nos. 1, 2, 4 and related issuances, or otherwise acted in a way not in accord with law or with the applicable decisions of this Court, because:
(a) Petitioner, being the sovereign state, cannot be sued without its consent, and the Intervention is, in legal effect, a suit or counter-suit against the sovereign state, the Republic of the Philippines;
(b) The cause of action of intervenors does not fall within the jurisdiction of the Sandiganbayan as expressly spelled out in P.D. No. 1606 and Executive Order No. 14;
(c) Intervenors have no legal interest in the matter in litigation, and the subject matter is not in custodia legis of respondent court; and
(d) Intervenors' claims, as contained in their Motion for Intervention and Answer-in-Intervention, are claims between and or among Ferdinand and Imelda Marcos and their cronies, i.e., "members of their immediate family close relatives, subordinates, and/or business associates, dummies, agents and nominees" and are cognizable not by respondent court but by the regular courts or other fora. Even if there would be multiple litigations, as among themselves, the legal effect remains, i.e., that there is only one case filed by the Republic against the named defendants in Civil Case No. 0025, grounded on causes of action entirely distinct from any cause of action which intervenors may have against Mr. Marcos and his cronies.
The petition is not impressed with merit.
The Rules of Court permit an aggrieved party, generally, to take a cause and apply for relief with the appellate courts by way of either of two distinct and dissimilar modes — through the broad process of appeal or the limited special civil action of certiorari. An appeal brings up for review errors of judgment committed by a court of competent jurisdiction over the subject of the suit or the persons of the parties or any such error committed by the court in the exercise of its jurisdiction amounting to nothing more than an error of judgment. On the other hand, the writ of certiorari issues for the correction of errors of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. The writ of certiorari cannot legally be used for any other purpose. In terms of its function, the writ of certiorari serves to keep a lower court within the bounds of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to excess of jurisdiction or to relieve parties from arbitrary acts of courts — acts which courts have no power or authority in law to perform. 14
Hence, the main issue to be resolved in the present case, which is principally a petition for certiorari to annul and set aside the questioned resolutions of respondent court is, whether or not the Sandiganbayan has jurisdiction over the action for intervention, or if it has, whether respondent court acted with grave abuse of discretion amounting to lack or excess of its jurisdiction in rendering the questioned resolutions.
In the present case, petitioner merely contends that the cause of action of intervenors does not fall within the jurisdiction of the Sandiganbayan as expressly spelled out in Presidential Decree No. 1606 and Executive Order No. 14; it does not claim that respondent court committed grave abuse of discretion amounting to lack or excess of its jurisdiction in rendering the questioned resolutions.
The jurisdiction of the Sandiganbayan has already been settled in Presidential Commission on Good Government vs. Hon. Emmanuel G. Pena, etc., et al. 15 where the Court held that —
". . . Under Section 2 of the President's Executive Order No. 14 issued on May 7, 1986, all cases of the Commission regarding 'the funds, Moneys, Assets, and Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, their Close Relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees' whether civil or criminal, are lodged within the 'exclusive and original jurisdiction of the Sandiganbayan' and all incidents arising from, incidental to, or related to, such cases necessarily fall likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court." (Emphasis supplied)
In reiterating the aforequoted ruling in six (6) subsequent cases 16 which were decided jointly, again, the Court held that —
". . . the exclusive jurisdiction conferred on the Sandiganbayan would evidently extend not only to the principal causes of action, i.e., the recovery of alleged ill-gotten wealth, but also to 'all incidents arising from, incidental to, or related to, such cases,' such as the dispute over the sale of the shares, the propriety of the issuance of ancillary writs or provisional remedies relative thereto, the sequestration thereof, which may not be made the subject of separate actions or proceedings in another forum."
Intervention is not an independent action, but is ancillary and supplemental to an existing litigation. 17 Hence, the private respondents' action for intervention in Civil Case No. 0025, not being an independent action, is merely incidental to, or related to, the said civil case. Since the respondent Sandiganbayan has the exclusive and original jurisdiction over Civil Case No. 0025, it has likewise original and exclusive jurisdiction over the private respondents' action for intervention therein.
Now, considering that respondent Sandiganbayan has jurisdiction not only over Civil Case No. 0025 but also over the private respondents' action for intervention, any error or irregularity that it may have committed in rendering its questioned resolutions, in the exercise of its jurisdiction, amounts to an error of judgment, which is not correctible in the present petition for certiorari but by appeal.
Accordingly, this case may be dismissed outright without the Court having to pass upon the other issues raised in the petition, However, considering that the litigation below is of great public interest and involves a matter of public policy, the Court has decided to review the other errors allegedly committed by respondent court in rendering its questioned resolutions.
In this jurisdiction, the law on "intervention" is found in the Rules of Court. 18 Thus, a person may, before or during a trial, be permitted by the court, in its discretion, to intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof. 19
The Court is not impressed with the contention of petitioner that the intervenors have no legal interest in the matter in litigation. In this connection, it would suffice to quote what the respondent court said in holding that the intervenors have a legal interest in the matter in litigation. Thus —
"Has Palanca shown a proper case for intervention by him and his co-stockholders who are similarly situated as he is?
A narration of the pertinent facts alleged by Palanca and the plaintiff indicates the answer.
In 1961, BREDCO was awarded by Bacolod City a contract to undertake the reclamation and port development of the city. As of 1975, a sizeable portion of land had already been reclaimed from the sea and corresponding torrens titles issued in BREDCO's name.
In that year, BREDCO engaged MARSTEEL as a contractor to complete the project with power to negotiate in its name or jointly and or severally with BREDCO for loans to finance the reclamation and port development, and to mortgage all reclaimed lots and other assets of the project as security. For its services, MARSTEEL shall receive 65% of the excess of all revenues over all disbursements. Accordingly, BREDCO conveyed to MARSTEEL 65% of each lot already reclaimed and that to be reclaimed.
In 1977, MARSTEEL assigned to MCI, which owned 100% of its capital stock, all its rights, interests, obligations, and undertakings in the project. To enable MCI to expand its base of negotiation for loans needed in the reclamation and port development, the BREDCO stockholders transferred to MCI their respective shares of stock amounting to 70% of the capital stock of BREDCO. In return, they 'shall be entitled to a share of 35% in excess of all revenues over all disbursements of the projects,' it being 'understood that payment of the corresponding share shall be due to BREDCO stockholders as owners of existing interests in the project, regardless of the fact that by implementation of this AGREEMENT, they ceased to be stockholders of BREDCO.'
In September 1986, the Presidential Commission on Good Government (PCGG) sequestered 'all assets, properties, records and documents' of MARSTEEL, MCI, and BREDCO'. In July 1987, the complaint at bar was filed and expanded in March 1988. The pleadings, original and expanded, allege that the defendants, acting singly or collectively, amassed ill-gotten wealth listed in Annex 'A' thereof, among which are the BREDCO lots and shares of stock, and pray that the ill-gotten wealth be reconveyed to the plaintiff, plus damages. Significantly, however, the bodies of the complaints do not mention anything about BREDCO, its project, lots, and stocks, nor about MCI.
Under these alleged facts, Palanca has established a proper case for intervention. Firstly, he and his co-stockholders have a legal interest in the matter in litigation, namely, their 70% of the capital stock of BREDCO, which they transferred to MCI by way of alleged accommodation, or its equivalent of 35% of the excess of all revenues over all disbursements, to which they are entitled 'as owners of existing interests in the project.' Section 2, Rule 12, Revised Rules of Court, provides that a person may be permitted 'to intervene in an action, if he has legal interest in the matter in litigation.'
'As a general rule the right to intervene exists in favor of one who claims to be the owner or to have some interest in the property which is the subject of litigation, and this without particular regard to the value of the property or the right claimed therein. A third party may intervene in a sequestration suit involving title to personal property, and have his claims to the possession of the property vindicated therein. So, in an action for possession of real or personal property, an intervenor may be admitted on the ground that he is an owner thereof, either to assist in the defense, or to claim the property for himself, or to obtain some other relief germane to the action.' (59 Am Jur 2d, Parties, Sec. 152, p. 585)
Secondly, the same Section 2, Rule 12, further provides that intervention by a person may be permitted 'when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof.' On this point, the Supreme Court observed:
'We shall now speak of the case where the stranger desires to intervene for the purpose of asserting a property right in the res, or thing, which is the subject matter of the litigation, without becoming a formal plaintiff or defendant, and without acquiring the control over the course of a litigation, which is conceded to the main actions (sic) therein. The mode of intervention to which reference is now made is denominated in equity procedure the intervention pro interesse suo and is somewhat analogous to the trial of a right of property in an action of law, its purpose being to enable a person whose property gets into the clutches of a court, in a controversy between others, to go into court and to procure it or its proceeds to be surrendered to him. It often happens that a person who really owns property, or has a superior lien or other interest in it, sees a litigation spring up between others who assert rights in or concerning it. If the court takes possession of the res, or otherwise gets jurisdiction over it in such a controversy, the real owner is not compelled to stand idly by and see the property disposed of without asserting his rights. Though it be granted that the litigation would not be technically binding on him, because of his not being a party, yet it might well happen that complications would ensue whereby his rights would be materially prejudiced. For instance, the subject-matter of the litigation might consist of a fund to be distributed, and the conditions might be such that if it were turned over to the particular litigant who should appear to have the better right in the original action, the person really having a superior title might be left without redress. Accordingly provision is made whereby persons who have not been joined as parties in the original proceedings may intervene and assert a right antagonistic or superior to that of one or both of the parties. (Bosworth vs. Terminal etc. Assoc. of St. Louis, 174 U.S. 182, 187, 43 L. ed., 941, 943). As regards the right to intervene in this manner, it may be stated that if the party desiring to intervene shows a legitimate and proper interest in the fund or property in question, the motion to intervene should be granted, especially if such interest cannot be otherwise properly protected.' (Joaquin v. Herrera, 37 Phil. 705, 722-724)
Here, the BREDCO lots and stocks were sequestered and are now in custodia legis (Bernas, The Constitution of the Republic of the Philippines, An Annotated Text, 1987 ed., p. 129, footnote 42). From the facts averred by Palanca and the plaintiff, it is easy to see that in the event We decide to order the reconveyance of those assets to the plaintiff, Palanca and his co-stockholders in BREDCO stand to be adversely affected.
And thirdly, the legal interest of Palanca and his co-stockholders in the matter in litigation and the possibility of a judgment ordering reconveyance in favor of the plaintiff, invest them with legal interest in the success of the defendants, at least insofar as the BREDCO lots and shares are concerned. Section 2, Rule 12, also permits intervention by a person who has legal interest in the success of either of the parties." 20
The petitioner's contention that the State cannot be sued without its consent and that private respondents' action for intervention is, in legal effect, a suit or counter suit against the sovereign is also untenable.
The Rules of Court 21 provide that the intervention shall be made by complaint filed and served in regular form, and may be answered as if it where an original complaint; but where the intervenor unites with the defendant in resisting the claims of the plaintiff, the intervention may be made in the form of an answer to the complaint. In other words, a third person who makes himself a party to an existing litigation, may either join the plaintiff in claiming what is sought in the complaint, by filing a complaint in intervention, or by uniting with the defendant in resisting the claims of the plaintiff, by filing an answer in intervention.
In Froilan v. Pan Oriental Shipping Co., 22 the plaintiff therein Fernando A. Froilan filed a complaint against the defendant, Pan Oriental Shipping Co. The Republic of the Philippines intervened by filing a complaint in intervention. Thereafter, the defendant filed its answer to the complaint in intervention, and set up a counterclaim against the Republic of the Philippines. The trial court dismissed the defendant's counterclaim against the Republic on the ground, among others, that the state is immune from suit. On appeal, this Court held that the dismissal of the counterclaim was untenable, because by filing its complaint in intervention the Government in effect waived its right to non-suability.
In another case, Lim vs. Brownell, Jr. and Kagawa, 23 the plaintiff Benito E. Lim, as administrator of the intestate estate of Arsenia Enriquez, filed a complaint in the Court of First Instance of Manila against the Alien Property Administrator (later substituted by the Attorney General of the United States) for the recovery of four (4) parcels of land (which were subsequently transferred to the Republic of the Philippines) with a prayer for the payment of back rentals. The Republic of the Philippines intervened in the case. The defendant Attorney General of the United States and the defendant-intervenor Republic of the Philippines each filed an answer, alleging by way of affirmative defense, among others, that the lower court had no jurisdiction over the claim for rentals since the action in that regard constituted a suit against the Republic to which it had not given its consent. The trial court dismissed the complaint for lack of jurisdiction. On appeal, this Court affirmed, with the following reasons:
"The claim for damages for the use of the property against the intervenor defendant Republic of the Philippines to which it was transferred, likewise, cannot be maintained because of the immunity of the state from suit. The claim obviously constitutes a charge against, or financial liability to, the Government and consequently cannot be entertained by the courts except with the consent of said government. (Syquia vs. Almeda Lopez, 84 Phil. 312; 47 Off. Gaz., 665; Compania General de Tabacos vs. Gov't. of the PI, 45 Phil., 663). Plaintiff argues that by its intervention, the Republic of the Philippines, in effect, waived its right of non-suability, but it will be remembered that the Republic intervened in the case merely to unite with the defendant Attorney General of the United States in resisting plaintiff's claims, and for that reason asked no affirmative relief against any party in the answer in intervention. . . . Clearly, this is not a case where the State takes the initiative in an action against a private party by filing a complaint in intervention, thereby surrendering its privileged position and coming down to the level of the defendant — as what happened in the case of Froilan vs. Pan Oriental Shipping Co., et al. — 95 Phil. 905 cited by the plaintiff — but one where the State, as one of the defendants merely resisted a claim against it precisely on the ground, among others, of its privileged position which exempts it from suit." (emphasis supplied)
In the present case, the private respondents intervened in Civil Case No. 0025 merely to unite with the defendants therein in resisting the claims of petitioner, as plaintiff, and for that reason asked for no affirmative relief against any party in their answer in intervention. In other words, this is not a case where the private respondents take the initiative in an action against petitioner by filing a complaint in intervention or a complaint. As observed by respondent Sandiganbayan: llcd
"In intervening, Palanca and his co-stockholders have for their purpose to exclude the BREDCO lots and stocks or, at least, their 35% interest in the BREDCO project from any possible judgment directing reconveyance of the alleged ill-gotten wealth to the plaintiff. They do not pray for damages against the latter. In effect, they occupy a defensive position as regards those shares of stock or interest. The fact that they interjected themselves into his litigation at their own initiative does not alter the essential nature of their intervention." 24
Private respondents' action for intervention in Civil Case No. 0025 is not, therefore, a suit or counter-suit against petitioner Republic of the Philippines.
Having arrived at the above conclusions, the Court finds no need to further discuss the petitioner's pretense that the private respondents' claims are claims as between and/or among Ferdinand and Imelda Marcos, et al., and that the same is not cognizable by respondent Sandiganbayan but by the regular courts. It suffices to state that, as already stated, in intervening in Civil Case No. 0025, private respondents merely joined the defendants therein in resisting the claims of petitioner, as plaintiff, and that they asked no affirmative relief against any party in their answer in intervention. They do not appear to have any controversy with the defendants, Ferdinand and Imelda Marcos, et al.
ACCORDINGLY, the petition in the present case is hereby DISMISSED.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.
Footnotes
1. Rollo, p. 81.
2. Rollo, p. 108.
3. Rollo, p. 111.
4. Rollo, pp. 108-109.
5. Rollo, p. 142.
6. Rollo, p. 146.
7. Rollo, p. 145.
8. Rollo, p. 150.
9. Rollo, p. 152.
10. Rollo, p. 153.
11. Rollo, p. 164.
12. Rollo, p. 61.
13. Rollo, p. 74.
14. Silverio vs. Hon. Court of Appeals, et al. G.R. No. L-39861, 17 March 1986, 141 SCRA 527 and cases therein cited.
15. G.R. No. 77663, 12 April 1988, 159 SCRA 556.
16. Soriano III vs. Yuzon, 164 SCRA 226.
17. Garcia vs. David, 67 Phil. 279, 282.
18. Rule 12, Rules of Court.
19. Section 2, Rule 12, Rules of Court.
20. Rollo, pp. 63-66.
21. Sec. 2(c), Rule 12, Rules of Court.
22. 95 Phil. 905.
23. 107 Phil. 344.
24. Rollo, p. 66.
EN BANC
[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 & Salazar, for appellant.
Ernesto Zaragoza, for appellee.
Hilarion U. Jarencio, for the intervenor.
D E C I S I O N
PARAS, C.J p:
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 reasons, among them the non-payment of the installments, the Shipping Commission tool 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 condition 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 is alleged that it has 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 excluding the dry-docking expenses incurred on said vessel by the session 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 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 its (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 bareboat 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 of the vessel and claimed the right of retention of the vessel. It, therefore, prayed that, if the Republic 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 circumstances 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 question that are now 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. had 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 order of the lower court dated February 3, 1952, holding that the payment made by Froilan's obligation to the Shipping Administration, which order had already become final, the counterclaim 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. App. pp. 104-106).
"11. It is 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. App. pp. 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 stated 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 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.
'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 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 stated no cause of action; (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 over the intervenor Republic of the Philippines.
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 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 judge 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 counter-claim calls for specific performance on the part of the intervenor. As to whether this counterclaim is meritorious is another question 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 the 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 defense 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 complainant 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.
EN BANC
[G.R. No. L-8587. March 24, 1960.]
BENITO E. LIM, as administrator of the Intestate Estate of Arsenia Enriquez, plaintiff and appellant, vs. HERBERT BROWNELL, JR., Attorney General of the United States, and ASAICHI KAGAWA, defendants and appellees, REPUBLIC OF THE PHILIPPINES, intervenor and appellee.
Angel S. Gamboa for appellant.
Townsend, Gilbert, Santos & Patajo for appellee.
Alfredo Catolico for intervenor.
D E C I S I O N
GUTIERREZ DAVID, J p:
This is an appeal from an order of the Court of First Instance of Manila, dismissing plaintiff's action for the recovery of real property of lack of jurisdiction over the subject matter.
The property in dispute consists of four parcels of land situated in Tondo, City of Manila, with a total area of 29,151 square meters. The lands were, after the last world war, found by the Alien Property Custodian of the United States to be registered in the name of Asaichi Kagawa, national of an enemy country, Japan, as evidenced by Transfer Certificates of Title Nos. 64904 to 65140, inclusive, for which reason the said Alien Property Custodian, on March 14, 1946, issued a vesting order on the authority of the Trading with the Enemy Act of the United States, as amended, vesting in himself the ownership over two of the said lots, Lots Nos. 1 and 2. On July 6, 1948, the Philippine Alien Property Administrator (successor of the Alien Property Custodian) under the authority of the same statute, issued a supplemental vesting order, vesting in himself title to the remaining Lots Nos. 3 and 4. On August 3, 1948, the Philippine Alien Property Administrator (acting on behalf of the President of the United States) and the President of the Philippines, executed two formal agreements, one referring to Lots 1 and 2 and the other to Lots 3 and 4, whereby the said Administrator transferred all the said four lots to the Republic of the Philippines upon the latter's undertaking fully to indemnify the United States for all claims in relation to the property transferred, which claims are payable by the United States of America or the Philippine Alien Property Administrator of the United States under the Trading with the Enemy Act, as amended, and for all such costs and expenses of administration as may by law be charged against the property or proceeds thereof hereby transferred." The transfer agreements were executed pursuant to section 3 of the Philippine Property Act of 1946 and Executive Order No. 9921, dated January 10, 1948, of the President of the United States.
On the theory that the lots in question still belonged to Arsenia Enriquez, the latter's son Benito E. Lim filed on November 15, 1948 a formal notice of claim to the property with the Philippine Alien Property Administrator. The notice was subsequently amended to permit Lim to prosecute the claim as administrator of the intestate estate of the deceased Arsenia Enriquez, thus, in effect, substituting the intestate estate as the claimant, it being alleged that the lots were once the property of Arsenia Enriquez; that they were mortgaged by her to the Mercantile Bank of China; that the mortgage having been foreclosed, the property was sold at public auction during the war to the Japanese Asaichi Kagawa, who, by means of threat and intimidation succeeded in preventing Arsenia Enriquez from exercising her right to redemption; and that Kagawa never acquired any valid title to the property because he was ineligible under the Constitution to acquire residential land in the Philippines by reason of alienage.
On March 7, 1950, the claim was disallowed by the Vested Property Claims Committee of the Philippine Alien Property Administrator, and copy of the decision disallowing the claim was received by claimant's counsel on the 15th of the month. The claimant, however, took no appeal to the Philippine Alien Property Administrator, so that pursuant to the rules of procedure governing claims before the Philippine Alien Property Administrator, the decision of the committee became final on April 15, 1950, that is, twenty days after receipt of the decision by claimant's counsel.
On November 13, 1950, the claimant Benito E. Lim, as administrator of the intestate estate of Arsenia Enriquez; filed a complaint in the Court of First Instance of Manila against the Philippine Alien Property Administrator (later substituted by the Attorney General of the United States) for the recovery of the property in question with back rents. The complaint was later amended to include Asaichi Kagawa as defendant. As amended, it alleged that the lands in question formerly belonged to Arsenia Enriquez and were mortgaged by her to the Mercantile Bank of China; that the mortgage having been foreclosed, she was sentenced to pay the mortgage debt within 3 months; that within those 3 months the bank commissioner, who had been appointed liquidator of said bank, assured her that she could pay her mortgage debt little by little in monthly installments, and pursuant to that arrangement the income derived from the mortgaged property were thereafter applied to her indebtedness, that such payment of the mortgage debt continued until a few months after the occupation of the City of Manila by the Japanese forces, when the Bank of Taiwan, having taken over the administration and control of all banks in the Philippines, including the Mercantile Bank of China, had the properties sold at public auction on October 26, 1942 by the sheriff of the city; that the properties were awarded to Asaichi Kagawa and the sale was subsequently confirmed by the court; that if Arsenia Enriquez failed to redeem the properties before the confirmation of the sale, it was because of the financial depression and also because she was prevented from doing so by Kagawa through threats and intimidation; that the auction sale was irregular and illegal because it was made without publication or notice and because though the land was subdivided into lots, the same was sold as a whole; that because of the irregularities mentioned, competitive bidding was prevented or stifled with the result that the lands, which could have been easily sold for P300,000 at then prevailing prices, were awarded to Kagawa whose bid was only P54,460.40, a price that was "grossly inadequate and shocking to the conscience;" that the titles to the lands having been subsequently transferred to Kagawa, the latter in June, 1943 illegally dispossessed Arsenia Enriquez and kept possession of the properties until the liberation of the City of Manila; that as Arsenia Enriquez was still the owner of the properties, the seizure thereof by the United States Attorney General's predecessors on the assumption that they belong to Kagawa, as well as their decision disallowing her claim, was contrary to law. Plaintiff, therefore, prayed that the sheriff's sale to Kagawa and the vesting of the properties in the Philippine Alien Property Administrator and the transfer thereof by the United States to the Republic of the Philippines be declared null and void; that Arsenia Enriquez be adjudged owner of the said properties and the Register of Deeds of Manila be ordered to issue the corresponding transfer certificates of title to her; and that the defendant Attorney General of the United States be required to pay rental from March 14, 1946, and the Government of the Philippines from August 3, 1948, at the rate of P30,000 per annum with legal interest.
The defendant Attorney General of the United States and the defendant-intervenor Republic of the Philippines each filed an answer, alleging by way of affirmative defenses (1) that the action with respect to Lots 1 and 2 had already prescribed, the same not having been brought within the period prescribed in section 33 of the Trading with the Enemy Act, as amended, and (2) that the lower court had no jurisdiction over the claim for rentals since the action in that regard constituted a suit against the United States to which it had not given its consent. The defendant Asaichi Kagawa was summoned by publication, but having failed to file an answer to the complaint, he was declared in default. Thereafter, a preliminary hearing on the affirmative defenses was held at the instance of the United States Attorney General pursuant to Section 5, Rule 8 of the Rules of Court. After said hearing, the court ordered the complaint dismissed on the ground - as stated in the dispositive part of the order - that the "court has no jurisdiction over the subject matter of this action, taking into consideration the provisions of Sec. 34 (must be 33) of the Trading with the Enemy Act, as the requirements needed by the above-mentioned Act have not been fulfilled by the herein plaintiff." From that order, plaintiff has taken the present appeal.
Judging from the context of the order complained of, it would appear that the dismissal of plaintiff's action was actually based upon the principle that a foreign state or its government cannot be sued without its consent. Considering, however, the law applicable, we do not think the order of dismissal can be sustained in its entirety. There is no denying that an action against the Alien Property Custodian, or the Attorney General of the United States as his successor, involving vested property under the Trading with the Enemy Act located in the Philippines, is in substance an action against the United States. The immunity of the state from suit, however, cannot be invoked where the action, as in the present case, is instituted by a person who is neither an enemy or ally of an enemy for the purpose of establishing his right, title or interest in vested property, and of recovering his ownership and possession. Congressional consent to such suit has expressly been given by the United States. (Sec. 3, Philippine Property Act of 1946; Philippine Alien Property Administration vs. Castelo, et al., 89 Phil., 568.)
The order of dismissal, however, with respect to plaintiff's claim for damages against the defendant Attorney General of the United States must be upheld. The relief available to a person claiming enemy property which has been vested by the Philippine Alien Property Custodian is limited to those expressly provided for in the Trading with the Enemy Act, which does not include a suit for damages for the use of such vested property. That action, as held by this Court in the Castelo case just cited, is not one of those authorized under the Act which may be instituted in the appropriate courts of the Philippines under the provisions of section 3 of the Philippine Property Act of 1946. Congressional consent to such suit has not been granted.
The claim for damages for the use of the property against the intervenor defendant Republic of the Philippines to which it was transferred, likewise, cannot be maintained because of the immunity of the state from suit. The claim obviously constitutes a charge against, or financial liability to, the Government and consequently cannot be entertained by the courts except with the consent of said government. (Syquia vs. Almeda Lopez, 84 Phil., 312; 47 Off. Gaz., 665; Compañia General de Tabacos vs. Gov't of PI, 45 Phil., 663.) Plaintiff argues that by its intervention, the Republic of the Philippines, in effect, waived its right of non-suability, but it will be remembered that the Republic intervened in the case merely to unite with the defendant Attorney General of the United States in resisting plaintiff's claims, and for that reason asked no affirmative relief against any party in the answer in intervention it filed. On the other hand, plaintiff in his original complaint made no claim against the Republic and only asked for damages against it for the use of the property when the complaint was amended. In its answer to the amended complaint, the Republic "reproduced and incorporated by reference" all the affirmative defenses contained in the answer of the defendant Attorney General, one of which, as already stated, is that the lower court had no jurisdiction over the claim for rentals because of lack of consent to be sued. Clearly, this is not a case where the state takes the initiative in an action against a private party by filing a complaint in intervention, thereby surrendering its privileged position and coming down to the level of the defendant - as what happened in the case of Froilan vs. Pan Oriental Shipping Co., et al. 95 Phil., 905 cited by plaintiff — but one where the state, as one of the defendants merely resisted a claim against it precisely on the ground, among others, of its privileged position which exempts it from suit.
With respect to the recovery or return of the properties vested, section 33 of the Trading with the Enemy Act, as amended, provides:
"Sec. 33. Return of property; notice; institution of suits, computation of time. — No return may be made pursuant to section 9 or 32 unless notice of claim has been filed: (a) in the case of any property or interest acquired by the United States prior to December 18, 1941, by August 9, 1948; or (b) in the case of any property or interest acquired by the United States on or after December 18, 1941, by April 30, 1949, or two years from the vesting of the property or interest in respect of which the claim is made, whichever is later. No suit pursuant to section 9 may be instituted after April 30, 1949, or after the expiration of two years from the date of the seizure by or vesting in the Alien Property Custodian, as the case may be, of the property or interest in respect of which relief is sought, whichever is later, but in computing such two years there shall be excluded any period during which there was pending a suit or claim for return pursuant to section 9 or 32(a) hereof." (USCA, Tit. 50, App., p. 216.)
From the above provisions, it is evident that a condition precedent to a suit for the return property vested under the Trading with the Enemy Act is that it should be filed not later than April 30, 1949, or within two years from the date of vesting, whichever is later, but in computing such two years, the period during which there was pending a suit or claim for the return of the said property pursuant to secs. 9 or 32(a) of the Act shall be excluded. That limitation, as held in a case, is jurisdictional. (See Cisatlantic Corporation, et al. vs. Brownell, Jr., Civil Case No. 8-221, U. S. District Court, Southern District, New York, affirmed by the United States Court of Appeals, 2nd Circuit, May 11, 1955 (Docket No. 23499), annexed as appendices "D" and "E" in appellees' brief.) Such being the case, it is evident that the court below erred in dismissing the complaint, at least insofar as lots 3 and 4 of the land in dispute are concerned. These lots were vested only on July 6, 1948 and consequently the two-year period within which to file the action for their recovery expired on July 7, 1950. But in computing that two-year period, the time during which plaintiff's claim with the Philippine Alien Property Administration was pending — from November 16, 1948 when the claim was filed to March 7, 1950 when it was disallowed — should be excluded. The complaint therefore filed on November 13, 1950 is well within the prescribed period. As a matter of fact, the Attorney General of the United States concedes that the dismissal of the complaint with respect to these lots was erroneous. Indeed, he states that he had never asked for the dismissal of the complaint with respect to them because the complaint insofar as those properties were concerned was filed within the period provided for in the law.
On the other hand, lots 1 and 2 were vested by the Alien Property Custodian on March 14, 1946. The two-year period, therefore, within which to file a suit for their return expired on March 14, 1948. As no suit or claim for the return of said properties pursuant to sections 9 or 32(a) of the Trading with the Enemy Act was filed by plaintiff within two years from the date of vesting, the "later" date and the last on which suit could be brought was April 30, 1949. The claim filed by plaintiff with the Philippine Alien Property Administration on November 15, 1948 obviously could not toll the two-year period that had already expired on March 14, 1948. And the complaint in the present case having been filed only on November 13, 1950, the same is already barred. (Pass vs. McGrath, 192 F. 2d 415; Kroll vs. McGrath, 91 F. Supp. 173.) The lower court, therefore, had no jurisdiction to entertain the action insofar as these lots are concerned. Plaintiff contends that section 33 of the Trading with the Enemy Act cannot prevail over section 40 of the Code of Civil Procedure, which provides that an action to recover real property prescribes after 10 years, on the theory that under international law questions relating to real property are governed by the law of the place where the property is located and that prescription, being remedial, is likewise governed by the laws of the forum. But the Trading with the Enemy Act, by consent of the Philippine Government, continued to be in force in the Philippines even after July 4, 1946 (Brownell, Jr., vs. Sun Life Assurance Co., of Canada, * 50 Off. Gaz., 4814; Brownell, Jr., vs. Bautista, 95 Phil., 853) and consequently, is as much part of the law of the land as section 40 of the Code of Civil Procedure. Contrary to plaintiff's claim, therefore, there is here no conflict of laws involved. It should be stated that in an action under the Trading with the Enemy Act for the recovery of property vested thereunder, the rights of the parties must necessarily be governed by the terms of that Act. Indeed, section 7 (c) thereof explicitly provides that the relief available to a claimant of vested property is limited to those expressly provided for by its terms.
Needless to say, the defense of limitation as contained in section 33 of the Trading with the Enemy Act, as amended, may be invoked not only by the defendant Attorney General of the United States but also by the intervenor Republic of the Philippines to which the lands in question were transferred. To sustain plaintiff's claim and preclude the Republic from putting up that defense would render nugatory the provisions of the Act. For in such case, a claimant who has failed to file his claim or suit within the period provided for in section 33 of the Act and consequently has forfeited whatever rights he may have therein, could easily circumvent the law. It would also mean that the transfer of vested property to the Republic would have the effect of permitting re-examination of the title to such vested property which has already become absolute in the name of the United States, the transferor, for failure of the claimant to assert his claim within the prescribed time. This absurdity, to say the least, cannot be countenanced.
In view of the foregoing, the order appealed from insofar as it dismisses the complaint with respect to Lots 1 and 2 and the claim for damages against the Attorney General of the United States and the Republic of the Philippines, is affirmed, but revoked insofar as it dismisses the complaint with respect to Lots 3 and 4, as to which the case is hereby remanded to the court below for further proceedings. Without costs.
Parás, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepción, Reyes, J. B. L., Endencia and Barrera, JJ., concur.
Footnotes
* 95 Phil. 228.
EN BANC
[G.R. No. L-49930. August 7, 1985.]
FRANCISCO MALONG and ROSALINA AQUINO-MALONG, petitioners, vs. PHILIPPINE NATIONAL RAILWAYS and COURT OF FIRST INSTANCE OF PANGASINAN, Lingayen Branch II, respondents.
D E C I S I O N
AQUINO, J p:
This case is about the immunity from suit of the Philippine National Railways. The Malong spouses alleged in their complaint that on October 30, 1977 their son, Jaime Aquino, a paying passenger, was killed when he fell from a PNR train while it was between Tarlac and Capas.
The tragedy occurred because Jaime had to sit near the door of a coach. The train was overloaded with passengers and baggage in view of the proximity of all Saints Day. The Malong spouses prayed that the PNR be ordered to pay them damages totalling P136,370.
Upon the Solicitor General's motion, the trial court dismissed the complaint. It ruled that it had no jurisdiction because the PNR, being a government instrumentality, the action was a suit against the State (Sec. 16, Art. XV of the Constitution). The Malong spouses appealed to this Court pursuant to Republic Act No. 5440.
The Manila Railroad Company, the PNR's predecessor, as a common carrier, was not immune from suit under Act No. 1510, its charter.
The PNR charter, Republic Act No. 4156, as amended by Republic Act No. 6366 and Presidential Decree No. 741, provides that the PNR is a government instrumentality under government ownership during its 50-year term, 1964 to 2014. It is under the Office of the President of the Philippines. Republic Act No. 6366 provides:
"SECTION 1-a. Statement of policy. — The Philippine National Railways, being a factor for socio-economic development and growth, shall be a part of the infrastructure program of the government and as such shall remain in and under government ownership during its corporate existence. The Philippine National Railways must be administered with the view of serving the interests of the public by providing them the maximum of service and, while aiming at its greatest utility by the public, the economy of operation must be ensured so that service can be rendered at the minimum passenger and freight prices possible."
The charter also provides:
"SEC. 4. General powers. — The Philippine National Railways shall have the following general powers:
(a) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to the attainment of the purpose of the corporation; and
(b) Generally, to exercise all powers of a railroad corporation under the Corporation Law." (This refers to sections 81 to 102 of the Corporation Law on railroad corporations, not reproduced in the Corporation Code.)
Section 36 of the Corporation Code provides that every corporation has the power to sue and be sued in its corporate name. Section 13(2) of the Corporation Law provides that every corporation has the power to sue and be sued in any court.
"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" (Justice Holmes in Kawananakoa vs. Polyblank, 205 U.S. 353, 51 L. ed. 834).
"The public service would be hindered, and public safety endangered, if the supreme authority could be subjected to suit at the instance of every citizen and, consequently, controlled in the use and disposition of the means required for the proper administration of the Government" (The Siren vs. U.S., 7 Wall. 152, 19 L. ed. 129).
Did the State act in a sovereign capacity or in a corporate capacity when it organized the PNR for the purpose of engaging in transportation? Did it act differently when it organized the PNR as successor of the Manila Railroad Company?
We hold that in the instant case the State divested itself of its sovereign capacity when it organized the PNR which is no different from its predecessor, the Manila Railroad Company. The PNR did not become immune from suit. It did not remove itself from the operation of articles 1732 to 1766 of the Civil Code on common carriers.
The correct rule is that "not all government entities, whether corporate or noncorporate, are immune from suits. Immunity from suit is determined by the character of the objects for which the entity was organized. " (Nat. Airports Corp. vs. Teodoro and Phil. Airlines, Inc., 91 Phil. 203, 206; Santos vs. Santos, 92 Phil. 281, 285; Harry Lyons, Inc. vs. USA, 104 Phil. 593.)
"Suits against State agencies with respect to matters in which they have assumed to act in a private or nongovernmental capacity are not suits against the State" (81 C.J.S. 1319).
"Suits against State agencies with relation to matters in which they have assumed to act in a private or nongovernmental capacity, and various suits against certain corporations created by the State for public purposes, but to engage in matters partaking more of the nature of ordinary business rather than functions of a governmental or political character, are not regarded as suits against the State.
"The latter is true, although the State may own the stock or property of such a corporation, for by engaging in business operations through a corporation the State divests itself so far of its sovereign character, and by implicating consents to suits against the corporation." (81 C.J.S. 1319.)
The foregoing rule was applied to State Dock Commissions carrying on business relating to pilots, terminals and transportation (Standard Oil Co. of New Jersey vs. U.S., 27 Fed. 2nd 370) and to State Highway Commissions created to build public roads and given appropriations in advance to discharge obligations incurred in their behalf (Arkansas State Highway Commission vs. Dodge, 26 SW 2nd 879 and State Highway Commission of Missouri vs. Bates, 296 SW 418, cited in National Airports case).
The point is that when the government enters into a commercial business it abandons its sovereign capacity and is to be treated like any other private corporation (Bank of the U.S. vs. Planters' Bank, 9 Wheat. 904, 6 L. ed. 244, cited in Manila Hotel Employees Association vs. Manila Hotel Company, et al., 73 Phil. 374, 388). The Manila Hotel case also relied on the following rulings:
"By engaging in a particular business through the instrumentality of a corporation, the government divests itself pro hoc vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations."
"When the State acts in its proprietary capacity, it is amenable to all the rules of law which bind private individuals."
"There is not one law for the sovereign and another for the subject, but when the sovereign engages in business and the conduct of business enterprises, and contracts with individuals, whenever the contract in any form comes before the courts, the rights and obligation of the contracting parties must be adjusted upon the same principles as if both contracting parties were private persons. Both stand upon equality before the law, and the sovereign is merged in the dealer, contractor and suitor" (People vs. Stephens, 71 N.Y. 549).
It should be noted that in Philippine National Railways vs. Union de Maquinistas, etc., L-31948, July 25, 1978, 84 SCRA 223, it was held that the PNR funds could be garnished at the instance of a labor union.
It would be unjust if the heirs of the victim of an alleged negligence of the PNR employees could not sue the PNR for damages. Like any private common carrier, the PNR is subject to the obligations of persons engaged in that private enterprise. It is not performing any governmental function.
Thus, the National Development Company is not immune from suit. It does not exercise sovereign functions. It is an agency for the performance of purely corporate, proprietary or business functions (National Development Company vs. Tobias, 117 Phil. 703, 705 and cases cited therein; National Development Company vs. NDC Employees and Workers' Union, L-32387, August 19, 1975, 66 SCRA 181, 184).
Other government agencies not enjoying immunity from Suit are the Social Security System (Social Security System vs. Court of Appeals, L-41299, February 21, 1983, 120 SCRA 707) and the Philippine National Bank (Republic vs. Philippine National Bank, 121 Phil. 26).
WHEREFORE, the order of dismissal is reversed and set aside. The case is remanded to the trial court for further proceedings. Costs against the Philippine National Railways.
SO ORDERED.
Concepcion, Jr., Melencio-Herrera, Plana, Escolin, Relova, Gutierrez, Jr., De la Fuente, Cuevas and Alampay, JJ., concur.
Teehankee, J., concurs in the result.
EN BANC
[G.R. Nos. 55963 & 61045. February 27, 1991.]
SPOUSES JOSE FONTANILLA and VIRGINIA FONTANILLA, petitioners, vs. HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION ADMINISTRATION, respondents.
NATIONAL IRRIGATION ADMINISTRATION, petitioners, vs. SPOUSES JOSE FONTANILLA and VIRGINIA FONTANILLA, respondents.
R E S O L U T I O N
PARAS, J p:
In its Motion for Reconsideration 1 of the Court's Second Division decision in G.R. No. 55963 and G.R. No. 61045, the National Irrigation Administration (NIA, for brevity), through the Solicitor General, maintains that, on the strength of Presidential Decree No. 552 (which amended certain provisions of Republic Act 3601, the law creating the NIA) and the case of Angat River Irrigation System, et al. vs. Angat River Workers' Union, et al., 102 Phil. 790 "the NIA does not perform solely and primarily proprietary functions but is an agency of the government tasked with governmental functions, and is therefore not liable for the tortious act of its driver Hugo Garcia, who was not its special agent."
Although the majority opinion in the cited case of Angat System declares that the Angat System (like the NIA) exercised a governmental function because the nature of the powers and functions of said agency does not show that it was intended to "bring to the Government any special corporate benefit or pecuniary profit," there is a strong dissenting opinion penned by then Associate Justice and later Chief Justice Roberto Concepcion and concurred in by then Associate Justice J.B.L. Reyes which held the contrary view that the Angat River System is a government entity exercising proprietary functions. To buttress said stand, the former Chief Justice cited some authorities which will be useful in the proper resolution of this case.
Quoting from said dissenting opinion which cited McQuillin's The Law of Municipal Corporations, 3rd ed., Vol. 18, pp. 423-424:
"In undertaking to supply water at price, municipality is not performing governmental function but is engaged in trade, and is liable first as private company would be for any negligence in laying out of its pipes, in keeping them in repair, or in furnishing potable water through them. Harvard Furniture Co., Inc. vs. City of Cambridge, 320 Mass. 227, 68 N.E. (2d) 684."
"Municipality in contracting to provide water supply acts under its proprietary power and not under its legislative, public or governmental powers. Farmers' State Bank vs. Conrad, 100 Mont. 415, 47 P. (2d) 853."
In this connection, the opinion is that irrigation districts in the United States are basically identical to our irrigation systems under Act No. 2152. Because of such similarity, it is found appropriate to consider certain doctrines from American jurisprudence, which are as follows, to wit:
"An irrigation district is a public quasi corporation, organized, however, to conduct a business for the private benefit of the owners of land within its limits. They are members of the corporation, control its affairs, and alone are benefited by its operations. It is, in the administration of its business, the owner of its system in a proprietary rather than a public capacity, and must assume and bear the burdens of proprietary ownership." (Nampa vs. Nampa & M. Irrig. Dist. 19 Idaho, 779, 115 Pac. 979)
". . . the plaintiff sought damages for injuries to crops on his land during 1923, 1924, 1925, and 1926, caused by water seeping, percolating, and escaping from the defendant's canal. The defendant contended that irrigation districts were agencies of the state, and were, therefore, not liable for the negligent construction or operation of their canals or ditches. The court, after a careful review of the authorities defining an irrigation district, conceded that such a quasi public corporation possessed some governmental powers and exercised some governmental functions, but held that the construction and operation of its irrigation canals and ditches was a proprietary rather than a governmental function, and hence the district was responsible in damages for the negligent construction or operation of its canal system." (69 A.L.R., p. 1233)
It may not be amiss to state at this point that the functions of government have been classified into governmental or constituent and proprietary or ministrant. The former involves the exercise of sovereignty and considered as compulsory; the latter connotes merely the exercise of proprietary functions and thus considered as optional. The Solicitor General argues that the reasons presented by P.D. 552 for the existence of the NIA (the WHEREAS clauses of said decree) indubitably reveal that the responsibility vested in said agency concerns public welfare and public benefit, and is therefore an exercise of sovereignty. On the contrary, We agree with the former Chief Justice Concepcion in saying that the same purpose such as public benefit and public welfare may be found in the operation of certain enterprises (those engaged in the supply of electric power, or in supplying telegraphic, telephonic, and radio communication, or in the production and distribution of prime necessities, etc.) yet it is certain that the functions performed by such enterprises are basically proprietary in nature. Thus, as held in Holderbaum vs. Hidalgo County Water Improvement District (297 S.W. 865, aff'd in 11 S.W. [2d] 506) — cited in the dissenting opinion by Justice Concepcion:
". . . Primarily, a water improvement district is in no better position than a city is when exercising its purely local powers and duties. Its general purposes are not essentially public in their nature, but are only incidentally so; those purposes may be likened to those of a city which is operating a waterworks system, or an irrigation system. . . . A water improvement district can do nothing, it has and furnishes no facilities, for the administration of the sovereign government. Its officers have no power or authority to exercise any of the functions of the general government, or to enforce any of the laws of the state or any of its other subdivisions, or collect taxes other than those assessed by the district. They have no more power or authority than that of the officers of a private corporation organized for like purposes. As a practical matter, the primary objects and purposes of such district are of a purely local nature, for the district is created and operated for the sole benefit of its own members, and an analysis of those objects and purposes discloses that they directly benefit only the landowners who reside within and whose lands form a part of the district, to the exclusion of all other residents therein. It is true, of course, that the state and the general public are greatly benefited by the proper operation of the district, and to that extent its objects and accomplishments are public in their nature, but this characteristic is only incidental to the primary and chief object of the corporation, which is the irrigation of lands forming a part of the district. It is obvious, then, that the purposes and duties of such districts do not come within the definition of public rights, purposes, and duties which would entitle the district to the exemption raised by the common law as a protection to corporations having a purely public purpose and performing essentially public duties."
Of equal importance is the case of National Waterworks and Sewerage Authority (NAWASA) vs. NWSA Consolidated Unions, 11 SCRA 766, which propounds the thesis that "the NAWASA is not an agency performing governmental functions; rather it performs proprietary functions . . .." The functions of providing water supply and sewerage service are regarded as mere optional functions of government even though the service rendered caters to the community as a whole and the goal is for the general interest of society. The business of furnishing water supply and sewerage service, as held in the case of Metropolitan Water District vs. Court of Industrial Relations, et al., 91 Phil. 840, "may for all practical purposes be likened to an industry engaged in by coal companies, gas companies, power plants, ice plants, and the like." Withal, it has been enunciated that "although the State may regulate the service and rates of water plants owned and operated by municipalities, such property is not employed for governmental purposes and in the ownership and operation thereof the municipality acts in its proprietary capacity, free from legislative interference." (1 McQuillin, p. 683)
Like the NAWASA, the National Irrigation Administration was not created for purposes of local government. While it may be true that the NIA was essentially a service agency of the government aimed at promoting public interest and public welfare, such fact does not make the NIA essentially and purely a "government-function" corporation. NIA was created for the purpose of "constructing, improving, rehabilitating, and administering all national irrigation systems in the Philippines, including all communal and pump irrigation projects." Certainly, the state and the community as a whole are largely benefited by the services the agency renders, but these functions are only incidental to the principal aim of the agency, which is the irrigation of lands.
We must not lose sight of the fact that the NIA is a government agency invested with a corporate personality separate and distinct from the government, thus is governed by the Corporation Law. Section 1 of Republic Act No. 3601 provides:
"Section 1. Name and Domicile — A body corporate is hereby created which shall be known as the National Irrigation Administration. . . . which shall be organized immediately after the approval of this Act. It shall have its principal seat of business in the City of Manila and shall have representatives in all provinces, for the proper conduct of its business." (Emphasis supplied).
Besides, Section 2, subsection b of P.D. 552 provides that:
"(b) To charge and collect from the beneficiaries of the water from all irrigation systems constructed by or under its administration, such fees or administration charges as may be necessary to cover the cost of operation, maintenance and insurance, and to recover the cost of construction within a reasonable period of time to the extent consistent with government policy; to recover funds or portions thereof expended for the construction and/or rehabilitation of communal irrigation systems which funds shall accrue to a special fund for irrigation development under section 2 hereof;
Unpaid irrigation fees or administration charges shall be preferred liens first, upon the land benefited, and then on the crops raised thereon, which liens shall have preference over all other liens except for taxes on the land, and such preferred liens shall not be removed until all fees or administration charges are paid or the property is levied upon and sold by the National Irrigation Administration for the satisfaction thereof. . . ."
The same section also provides that NIA may sue and be sued in court. Thus,
"b) . . . Judicial actions for the collection of unpaid irrigation fees or charges, drainage fees or other charges which the National Irrigation Administration is authorized to impose and collect, shall henceforth be governed by the provisions of the Rules of Court of the Philippines for similar actions, the provisions of other laws to the contrary notwithstanding."
xxx xxx xxx
"(e) . . .
xxx xxx xxx
xxx xxx xxx
All actions for the recovery of compensation and damages against the National Irrigation Administration under paragraphs (1), (2), and (3) hereof, shall be filed with a competent court within five (5) years from the date of entry of the land or destruction of the improvements or crops, after which period, the right of possession and/or ownership of the National Irrigation Administration shall be considered vested and absolute. All other actions for the recovery of compensation and damages to private property and improvements occasioned by the construction, operation and maintenance of irrigation facilities and other hydraulic structures under the administration of the National Irrigation Administration, which have accrued ten (10) or more years prior to the approval of this decree are deemed to have prescribed and are barred forever."
It has its own assets and liabilities. It also has corporate powers to be exercised by a Board of Directors. To quote Section 2, subsection (f):
"(f) . . . and to transact such business, as are directly or indirectly necessary, incidental or conducive to the attainment of the above powers and objectives, including the power to establish and maintain subsidiaries, and in general, to exercise all the powers of a corporation under the Corporation Law, insofar as they are not inconsistent with the provisions of this Act." (Emphasis supplied).
On the basis of the foregoing considerations, We conclude that the National Irrigation Administration is a government agency with a juridical personality separate and distinct from the government. It is not a mere agency of the government but a corporate body performing proprietary functions. Therefore, it may be held liable for the damages caused by the negligent act of its driver who was not its special agent.
ACCORDINGLY, the Motion for Reconsideration dated January 26, 1990 is DENIED WITH FINALITY. The decision of this Court in G.R. No. 55963 and G.R. No. 61045 dated December 1, 1989 is hereby AFFIRMED.
Gancayco, Bidin, Sarmiento, Griño-Aquino, Medialdea and Regalado, JJ ., concur.
Fernan, C .J ., Melencio-Herrera and Gutierrez, Jr., JJ ., concur in the result.
Footnotes
1. This motion was referred to the court en banc per resolution dated May 9, 1990.
SECOND DIVISION
[G.R. No. L-48214. December 19, 1978.]
ILDEFONSO SANTIAGO, represented by his Attorney-in-Fact, ALFREDO T. SANTIAGO, petitioner, vs. THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, represented by the Director, Bureau of Plant Industry, and the Regional Director, Region IX, Zamboanga City, respondent.
Ahmad D. Sahak for petitioner.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Octavio R. Ramirez and Solicitor Mariano M. Martinez for respondents.
SYNOPSIS
Petitioner filed a suit against the respondent for the revocation of a deed of donation executed by him and his spouse in 1971 alleging that the donee, Bureau of Plant Industry, failed to abide by the conditions under which the donation was given. Respondent moved to have the case dismiss on the premise that the State cannot be sued without its consent. The lower court sustained the motion, hence, this present action.
The Supreme Court ruled that a donor, with the Republic of any of its agency being the donee, is entitled to go to court in case of an alleged breach of the conditions of such donation, as the doctrine of non-suability has to accommodate itself to the demands of procedural due process.
D E C I S I O N
FERNANDO, J p:
The first impression yielded by a perusal of this petition for certiorari is its inherent weakness considering the explicit provision in the present Constitution prohibiting a suit against the Republic without its consent. 1 Here, petitioner Ildefonso Santiago 2 filed on August 9, 1976 an action in the Court of First Instance of Zamboanga City naming as defendant the government of the Republic of the Philippines represented by the Director of the Bureau of Plant Industry. 3 His plea was for the revocation of a deed of donation executed by him and his spouse in January of 1971, 4 with the Bureau of Plant Industry as the donee. As alleged in such complaint, such Bureau, contrary to the terms of the donation, failed to "install lighting facilities and water system on the property donated and to build an office building and parking [lot] thereon which should have been constructed and ready for occupancy on or before December 7, 1974." 5 That led him to conclude that under the circumstances, he was exempt from compliance with such an explicit constitutional command. The lower court, in the order challenged in this petition, was of a different view. It sustained a motion to dismiss on the part of the defendant Republic of the Philippines, now named as one of the respondents, the other respondent being the Court of First Instance of Zamboanga City, Branch II. It premised such an order on the settled "rule that the state cannot be sued without its consent. This is so, because the New Constitution of the Philippines expressly provides that the state may not be sued without its consent." 6 Solicitor General Estelito P. Mendoza, 7 in the comment on the petition filed with this Court, is for the affirmance of the order of dismissal of respondent Court precisely to accord deference to the above categorical constitutional mandate.
On its face, such a submission carries persuasion. Upon further reflection, this Tribunal is impressed with the unique aspect of this petition for certiorari, dealing as it does with a suit for the revocation of a donation to the Republic, which allegedly failed to conform with what was agreed to by the donee. If an order of dismissal would suffice, then the element of unfairness enters, the facts alleged being hypothetically admitted. It is the considered opinion of this Court then that to conform to the high dictates of equity and justice, the presumption of consent could be indulged in safely. That would serve to accord to petitioner as plaintiff, at the very least, the right to be heard. Certiorari lies.
1. This is not to deny the obstacle posed by the constitutional provision. It is expressed in language plain and unmistakable: "The State may not be sued without its consent." 8 The Republic cannot be proceeded against unless it allows itself to be sued. Neither can a department, bureau, agency, office, or instrumentality of the government where the suit, according to the then Justice, now Chief Justice, Castro in Del Mar v. Philippine Veterans Administration, 9 may result "in adverse consequences to the public treasury, whether in the disbursements of funds or loss of property." 10 Such a doctrine was reiterated in the following cases: Republic v. Villasor, 11 Sayson v. Singson, 12 Director of the Bureau of Printing v. Francisco, 13 and Republic v. Purisima. 14
2. It is contended by counsel for petitioner that the above constitutional provision would be given a retroactive application in this case if the suit for the revocation of donation were dismissed. That is not the case at all. In Republic v. Purisima, this Court made clear that such a basic postulate is part and parcel of the system of government implanted in the Philippines from the time of the acquisition of sovereignty by the United States, and therefore, was implicit in the 1935 Constitution even in the absence of any explicit language to that effect. This it did in a citation from Switzerland General Insurance Co., Ltd. v. Republic of the Philippines: 15 "The doctrine of non-suability recognized in this jurisdiction even prior to the effectivity of the [1935] Constitution is a logical corollary of the positivist concept of law which, to paraphrase Holmes, negates the assertion of any legal right as against the state, in itself the source of the law on which such a right may be predicated. Nor is this all. Even if such a principle does give rise to problems, considering the vastly expanded role of government enabling it to engage in business pursuits to promote the general welfare, it is not obeisance to the analytical school of thought alone that calls for its continued applicability." 16 That is the teaching of the leading case of Mobil Philippines Exploration, Inc. v. Customs Arrastre Service, 17 promulgated in December of 1966. As a matter of fact, the Switzerland General Insurance Co. decision was the thirty-seventh of its kind after Mobil. Clearly, then, the contention that to dismiss the suit would be to give the applicable constitutional provision a retroactive effect is, to put it at its mildest, untenable.
3. Petitioner's counsel invoked Santos v. Santos, 18 a 1952 decision. A more thorough analysis ought to have cautioned him against reliance on such a case. It was therein clearly pointed out that the government entity involved was originally the National Airports Corporation. Thereafter, it "was abolished by Executive Order No. 365, series of 1950, and in its place and stead the Civil Aeronautics Administration was created and took over all the assets and assumed all the liabilities of the abolished corporation. The Civil Aeronautics Administration, even if it is not a juridical entity, cannot legally prevent a party or parties from enforcing their proprietary rights under the cloak or shield of lack of juridical personality, because to took over all the powers and assumed all the obligations of the defunct corporation which had entered into the contract in question." 19 Then came National Shipyard and Steel Corporation v. Court of Industrial Relations, 20 a 1963 decision, where the then Justice, later Chief Justice, Concepcion, as ponente, stated that a government-owned and controlled corporation "has a personality of its own distinct and separate from that of the government.. . . Accordingly, it may sue and be sued and may be subjected to court processes just like any other corporation. (Section 13, Act 1459, as amended)." 21 In three recent decisions, Philippine National Bank v. Court of Industrial Relations, 22 Philippine National Bank v. Honorable Judge Pabalan, 23 and Philippine National Railways v. Union de Maquinistas, 24 this constitutional provision on non-suability was unavailing in view of the suit being against a government-owned or controlled corporation. That point apparently escaped the attention of counsel for petitioner. Hence Santos v. Santos is hardly controlling.
4. It is to be noted further that the trend against the interpretation sought to be fastened in the broad language of Santos v. Santos is quite discernible. Not long after, in Araneta v. Hon. M. Gatmaitan, 25 decided in 1957, it was held that an "action [against] Government officials, is essentially one against the Government, . . .." 26 In the same year, this Court, in Angat River Irrigation System v. Angat River Workers Union, 27 after referring to the "basic and fundamental principle of the law that the Government cannot be sued before courts of justice without its consent," pointed out that "this privilege of non-suability of the Government" covers with the mantle of its protection "an entity," in this case, the Angat River Irrigation System. 28 Then, in 1960, came Lim v. Brownell, Jr., 29 where there was a reaffirmation of the doctrine that a "claim [constituting] a charge against, or financial liability to, the Government cannot be entertained by the courts except with the consent of said government." 30 Bureau of Printing v. Bureau of Printing Employees Association 31 came a year later; it reiterated such a doctrine. It was not surprising therefore that in 1966, Mobil Philippines Exploration, Inc. was decided the way it was. The remedy, where the liability is based on contract, according to this Court, speaking through Justice J. P. Bengzon, is for plaintiff to file a claim with the general office in accordance with the controlling statute, Commonwealth Act No. 327. 32 To repeat, that doctrine has been adhered to ever since. The latest case in point is Travelers Indemnity Company v. Barber Steamship Lines, Inc. 33 Justice Aquino's opinion concluded with this paragraph: "It is settled that the Bureau of Customs, acting as part of the machinery of the national government in the operation of the arrastre service, is immune from suit under the doctrine of non-suability of the State. The claimant's remedy to recover the loss or damage to the goods under the custody of the customs arrastre service is to file a claim with the Commission in Audit as contemplated in Act No. 3083 and Commonwealth Act No. 327." 34 With the explicit provision found in the present Constitution, the fundamental principle of non-suability becomes even more exigent in its command.
5. The reliance on Santos v. Santos as a prop for this petition having failed, it would ordinarily follow that this suit cannot prosper. Nonetheless, as set forth at the outset, there is a novel aspect that suffices to call for a contrary conclusion. It would be manifestly unfair for the Republic, as donee, alleged to have violated the conditions under which it received gratuitously certain property, thereafter to put as a barrier the concept of non-suitability. That would be a purely one-sided arrangement offensive to one's sense of justice. Such conduct, whether proceeding from an individual or governmental agency, is to be condemned. As a matter of fact, in case it is the latter that is culpable, the affront to decency is even more manifest. The government, to paraphrase Justice Brandeis, should set the example. If it is susceptible to the charge of having acted dishonorably, then it forfeits public trust — and rightly so.
6.
6. Fortunately, the constitutional provision itself allows a waiver. Where there is consent, a suit may be filed. Consent need not be express. It can be implied. So it was more than implied in Ministerio v. Court of First Instance of Cebu: 35 "The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen." 36 The fact that this decision arose from a suit against the Public Highways Commissioner and the Auditor General for failure of the government to pay for land necessary to widen a national highway, the defense of immunity without the consent proving unavailing, is not material. The analogy is quite obvious. Where the government ordinarily benefited by the taking of the land, the failure to institute the necessary condemnation proceedings should not be a bar to an ordinary action for the collection of the just compensation due. Here, the alleged failure to abide by the conditions under which a donation was given should not prove an insuperable obstacle to a civil action, the consent likewise being presumed. This conclusion is strengthened by the fact that while a donation partakes of a contract, there is no money claim, and therefore reliance on Commonwealth Act No. 327 would be futile.
7. Our decision, it must be emphasized, goes no further than to rule that a donor, with the Republic or any of its agency being the donee, is entitled to go to court in case of an alleged breach of the conditions of such donation. He has the right to be heard. Under the circumstances, the fundamental postulate of non-suability cannot stand in the way. It is made to accommodate itself to the demands of procedural due process, which is the negation of arbitrariness and inequity. The government, in the final analysis, is the beneficiary. It thereby manifests its adherence to the highest ethical standards, which can only be ignored at the risk of losing the confidence of the people, the repository of the sovereign power. The judiciary under this circumstance has the grave responsibility of living up to the ideal of objectivity and impartiality, the very essence of the rule of law. Only by displaying the neutrality expected of an arbiter, even if it happens to be one of the departments of a litigant, can the decision arrived at, whatever it may be, command respect and be entitled to acceptance.
WHEREFORE, the writ of certiorari prayed for is granted and the order of dismissal of October 20, 1977 is nullified, set aside and declared to be without force and effect. The Court of First Instance of Zamboanga City, Branch II, is hereby directed to proceed with this case, observing the procedure set forth in the Rules of Court. No costs.
Barredo, Antonio, Aquino, Concepcion Jr., and Santos, JJ., concur.
Footnotes
1. According to Article XV, Section 16 of the Constitution: "The State may not be sued without its consent."
2. He is represented by his attorney-in-fact, Alfredo T. Santiago.
3. Ildefonso Santiago v. Republic of the Philippines, Civil Case No. 249 of the Court of First Instance of Zamboanga City, Branch II. .
4. The exact date is January 20, 1971.
5. Record on Appeal attached in the Petition for Certiorari, Their Amended Complaint, par. 3, 40.
6. Order of October 20, 1977 by respondent Court, through District Judge Alberto V. Señeris, 1-2. This Order was included in the petition without counsel for petitioner taking the trouble of identifying it as one of the annexes.
7. He was assisted by Assistant Solicitor General Octavio B. Ramirez and Solicitor Mariano M. Martinez.
8. Article XV Section 16 of the Constitution. .
9. L-27299, June 27, 1973, 51 SCRA 340.
10. Ibid, 345-346. The quotation is from Begosa v. Chairman, Philippine Veterans Administration, L-25916, April 30, 1970, 32 SCRA 466.
11. L-30671, April 30, 1970, 32 SCRA 466.
12. L-30044, December 19, 1973, 54 SCRA 282.
13. L-31337, December 20, 1973, 54 SCRA 324.
14. L-36084, August 31, 1977, 78 SCRA 470.
15. L-27389, March 30, 1970, 32 SCRA 227.
16. Ibid, 228-229.
17. L-23139, December 17, 1966, 18 SCRA 1120.
18. 92 Phil. 281.
19. Ibid, 285.
20. 118 Phil. 782.
21. Ibid, 788.
22. L-32667, January 31, 1978, 81 SCRA 314.
23. L-33112, June 15, 1978.
24. L-31948, July 25, 1978.
25. 101 Phil. 328.
26. Ibid, 340.
27. 102 Phil. 789.
28. Ibid, 801.
29. 107 Phil. 344 (1960).
30. Ibid, 351.
31. 110 Phil. 952 (1961).
32. Cf. 18 Phil. 1120, 1127.
33. L-27019, May 6, 1977, 7 SCRA 10.
34. Ibid, 12.
35. L-31635, August 31, 1971, 40 SCRA 464.
36. Ibid, 470.
FIRST DIVISION
[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.
Quirico del Mar, Domingo Antigua, Antonio Paulin and N. Capangpangan for plaintiff and appellant.
Assistant Solicitor General Guillermo Torres and Solicitor Dominador L. Quiroz for defendants and appellees.
D E C I S I O N
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.
FIRST DIVISION
[G.R. No. L-29993. October 23, 1978.]
LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON TULAGAN, all Members of the Municipal Council of Malasiqui in 1959, Malasiqui, Pangasinan, petitioners, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE HONORABLE COURT OF APPEALS, respondents.
[G.R. No. L-30183. October 23, 1978.]
MUNICIPALITY OF MALASIQUI, petitioner, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and the Honorable COURT OF APPEALS, respondents.
Julian M. Armas, Assistant Provincial Fiscal for petitioners.
Isidoro L. Padilla for respondents.
SYNOPSIS
Pursuant to Section 2282 of the Revised Administrative Code, the Municipal Council of Malasiqui, Pangasinan, resolved to celebrate the town fiesta and created a "Town Fiesta Executive Committee" to undertake, manage and supervise the festivities. The Executive Committee created a sub-committee on "Entertainment and Stage", which constructed two stages, one for the "zarzuela" and another for "cancionan." During the program people went up the "zarzuela" stage and before the play was over the stage collapsed, pinning underneath one of the performers, resulting in his death.
The heirs of the deceased sued the municipality and the councilors for damages. The municipality invoked inter alia the principal defense that the holding of a town fiesta was an exercise of its governmental function from which no liability can arise to answer for the negligence of any of its agents. The councilors maintained that they merely acted as agents of the municipality in carrying out the municipal ordinance.
The trial court dismissed the complaint of a finding that the petitioners exercised due diligence and care of a good father of a family in selecting a competent man to construct the stage and if it collapsed it was due to forces beyond the control of the committee on entertainment and stage.
The Court of Appeals reversed the decision stating that petitioners were guilty of negligence when they failed to take the necessary measures to prevent the mounting of onlookers on the stage resulting in the collapse thereof.
The Supreme Court held that the holding of a town fiesta though not for profit is a proprietary function for which a municipality is liable for damages to third persons ex contractu or ex delicto; that under the principle of respondeat superior the principal is liable for the negligence of its agents acting within the scope of their assigned tasks; and that the municipal councilors have a personally distinct and separate from the municipality, hence, as a rule they are not co-responsible in an action for damages for tort or negligence unless they acted in bad faith or have directly participated in the commission of the wrongful act.
Appealed decision affirmed with modification.
D E C I S I O N
MUÑOZ PALMA, J p:
These Petitions for review present the issue of whether or not the celebration of a town fiesta authorized by a municipal council under Sec. 2282 of the Municipal Law as embodied in the Revised Administrative Code is a governmental or a corporate or proprietary function of the municipality.
A resolution of that issue will lead to another, viz: the civil liability for damages of the Municipality of Malasiqui, and the members of the Municipal Council of Malasiqui, province of Pangasinan, for a death which occurred during the celebration of the town fiesta on January 22, 1959, and which was attributed to the negligence of the municipality and its council members.
The following facts are not in dispute:
On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 whereby "it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959." Resolution No. 182 was also passed creating the "1959 Malasiqui Town Fiesta Executive Committee" which in turn organized a subcommittee on entertainment and stage, with Jose Macaraeg as Chairman. The council appropriated the amount of P100.00 for the construction of 2 stages, one for the "zarzuela" and another for the "cancionan". Jose Macaraeg supervised the construction of the stage and as constructed the stage for the "zarzuela" was "5-1/2 meters by 8 meters in size, had a wooden floor high at the rear and was supported by 24 bamboo posts — 4 in a row in front, 4 in the rear and 5 on each side — with bamboo braces." 1
The "zarzuela" entitled "Midas Extravanganza" was donated by an association of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The troupe arrived in the evening of January 22 for the performance and one of the members of the group was Vicente Fontanilla. The program started at about 10:15 o'clock that evening with some speeches, and many persons went up the stage. The "zarzuela" then began but before the dramatic part of the play was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilla was taken to the San Carlos General Hospital where he died in the afternoon of the following day.
The heirs of Vicente Fontanilla filed a complaint with the Court of First Instance of Manila on September 11, 1959 to recover damages. Named party-defendants were the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the individual members of the Municipal Council in 1959.
Answering the complaint defendant municipality invoked inter alia the principal defense that as a legally and duly organized public corporation it performs sovereign functions and the holding of a town fiesta was an exercise of its governmental functions from which no liability can arise to answer for the negligence of any of its agents.
The defendant councilors in turn maintained that they merely acted as agents of the municipality in carrying out the municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not one for profit; furthermore. they had exercised due care and diligence in implementing the municipal ordinance. 2
After trial, the Presiding Judge, Hon. Gregorio T. Lantin, narrowed the issue to whether or not the defendants exercised due diligence in the construction of the stage. From his findings he arrived at the conclusion that the Executive Committee appointed by the municipal council had exercised due diligence and care like a good father of the family in selecting a competent man to construct a stage strong enough for the occasion and that if it collapsed that was due to forces beyond the control of the committee on entertainment, consequently, the defendants were not liable for damages for the death of Vicente Fontanilla. The complaint was accordingly dismissed in a decision dated July 10, 1962. 3
The Fontanillas appealed to the Court of Appeals. In a decision promulgated on October 31, 1968, the Court of Appeals through its Fourth Division composed at the time of Justices Salvador V. Esguerra, Nicasio A. Yatco and Eulogio S. Serrano reversed the trial court's decision and ordered all the defendants-appellees to pay jointly and severally the heirs of Vicente Fontanilla the sums of P12,000.00 by way of moral and actual damages: P1,200.00 as attorney's fees; and the costs. 4
The case is now before Us on various assignments of errors all of which center on the proposition stated at the opening sentence of this Opinion and which We repeat:
Is the celebration of a town fiesta an undertaking in the exercise of a municipality's governmental or public function or is it of a private or proprietary character?
1. Under Philippine laws municipalities are political bodies corporate and as such as endowed with the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law, and in their proper corporate name, they may, inter alia, sue and be sued, and contract and be contracted with. 5
The powers of a municipality are twofold in character — public, governmental, or political on the one hand, and corporate, private, or proprietary on the other. Governmental powers are those exercised by the corporation in administering the powers of the state and promoting the public welfare and they include the legislative, judicial, public, and political, Municipal powers on the other hand are exercised for the special benefit and advantage of the community and include those which are ministerial, private and corporate. 6
As to when a certain activity is governmental and when proprietary or private, that is generally a difficult matter to determine. The evolution of the municipal law in American Jurisprudence, for instance, has shown that none of the tests which have evolved and are stated in textbooks have set down a conclusive principle or rule, so that each case will have to be determined on the basis of attending circumstances.
In McQuillin on Municipal Corporations, the rule is stated thus: "A municipal corporation proper has . . . a public character as regards the state at large insofar as it is its agent in government, and private (so-cases) insofar as it is to promote local necessities and conveniences for its own community." 7
Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme Court of Indiana in 1916, thus:
"Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental. Their officers and agents in such capacity, though elected or appointed by them, are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private, proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or individual capacity, and not for the state or sovereign power." (112 N.E., 994-995)
In the early Philippine case of Mendoza v. de Leon, 1916, the Supreme Court, through Justice Grant T. Trent, relying mainly on American Jurisprudence classified certain activities of the municipality as governmental, e.g.: regulations against fire, disease, preservation of public peace, maintenance of municipal prisons, establishment of schools, post-offices, etc. while the following are corporate or proprietary in character, viz: municipal waterwork, slaughterhouses, markets, stables, bathing establishments, wharves, ferries, and fisheries. 8 Maintenance of parks, golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of a proprietary character. 9
2. This distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons.
If the injury is caused in the course of the performance of a governmental function or duty no recovery, as a rule, can be had from the municipality unless there is an existing statute on the matter, 10 nor from its officers, so long as they performed their duties honestly and in good faith or that they did not act wantonly and maliciously. 11 In Palafox, et al. v. Province of Ilocos Norte, et al., 1958, a truck driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox in the course of his work at the construction of a road. The Supreme Court in affirming the trial court's dismissal of the complaint for damages held that the province could not be made liable because its employee was in the performance of a governmental function — the construction and maintenance of roads — and however tragic and deplorable it may be, the death of Palafox imposed on the province no duty to pay monetary consideration. 12
With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third persons ex contractu 13 or ex delicto. 14
"Municipal corporations are subject to be sued upon contracts and in tort. . . .
xxx xxx xxx
"The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or line of his employment, by which another, who is free from contributory fault, is injured. Municipal corporations under the conditions herein stated, fall within the operation of this rule of law, and are liable, accordingly, to civil actions for damages when the requisite elements of liability coexist . . ." (Dillon on Municipal Corporations, 5th ed. Secs, 1610, 1647, cited in Mendoza v. de Leon, supra, 514)
3. Coming to the case before Us, and applying the general tests given above, We hold that the holding of the town fiesta in 1959 by the municipality of Malasiqui Pangasinan, was an exercise of a private or proprietary function of the municipality.
Section 2282 of the Chapter on Municipal Law of the Revised Administrative Code provides:
"Section 2282. Celebration of fiesta. — A fiesta may be held in each municipality not oftener than once a year upon a date fixed by the municipal council. A fiesta shall not be held upon any other date than that lawfully fixed therefor, except when, for weighty reasons, such as typhoons, inundations, earthquakes, epidemics, or other public calamities, the fiesta cannot be held in the date fixed, in which case it may be held at a later date in the same year, by resolution of the council."
This provision simply gives authority to the municipality to accelebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed, was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for the town, nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service.
As stated earlier, there can be no hard and fast rule for purposes of determining the true nature of an undertaking or function of a municipality; the surrounding circumstances of a particular case are to be considered and will be decisive. The basic element, however beneficial to the public the undertaking may be, is that it is governmental in essence, otherwise, the function becomes private or proprietary in character. Easily, no governmental or public policy of the state is involved in the celebration of a town fiesta. 15
4. It follows that under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilla if that was attributable to the negligence of the municipality's officers, employees, or agents.
"Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. . . ."
"Art. 2180. Civil Code: The obligation imposed by article 2176 is demandable not only for one's own acts or omission, but also for those of persons for whom one is responsible . . ."
On this point, the Court of Appeals found and held that there was negligence.
The trial court gave credence to the testimony of Angel Novado, a witness of the defendants (now petitioners), that a member of the "extravaganza troupe" removed two principal braces located on the front portion of the stage and used them to hang the screen or "telon", and that when many people went up the stage the latter collapsed. This testimony was not believed however by respondent appellate court, and rightly so. According to said defendants, those two braces were "mother" or "principal" braces located semi-diagonally from the front ends of the stage to the front posts of the ticket booth located at the rear of the stage and were fastened with a bamboo twine. 16 That being the case, it becomes incredible that any person in his right mind would remove those principal braces and leave the front portion of the stage practically unsupported. Moreover, if that did happen, there was indeed negligence as there was lack of supervision over the use of the stage to prevent such an occurrence.
At any rate, the guitarist who was pointed to by Novado as the person who removed the two bamboo braces denied having done so. The Court of Appeals said. "Amor by himself alone could not have removed the two braces which must be about ten meters long and fastened them on top of the stage for the curtain. The stage was only five and a half meters wide Surely, it would be impractical and unwieldy to use a ten meter bamboo pole, much more two poles, for the stage curtain." 17
The appellate court also found that the stage was not strong enough considering that only P100.00 was appropriate for the construction of two stages and while the floor of the "zarzuela" stage was of wooden planks, the posts and braces used were of bamboo material. We likewise observe that although the stage was described by the petitioners as being supported by "24" posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on each side. Where were the rest?
The Court of Appeals thus concluded:
"The court a quo itself attributed the collapse of the stage to the great number of onlookers who mounted the stage. The municipality and/or its agents had the necessary means within its command to prevent such an occurrence. Having failed to take the necessary steps to maintain the safety of the stage for the use of the participants in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing nonparticipants or spectators from mounting and accumulating on the stage which was not constructed to meet the additional weight, the defendants-appellees were negligent and are liable for the death of Vicente Fontanilla." (pp. 30-31, rollo, L-29993)
The findings of the respondent appellate court that the facts as presented to it establish negligence as a matter of law and that the Municipality failed to exercise the due diligence of a good father of the family, will not disturbed by Us in the absence of a clear showing of an abuse of discretion or a gross misapprehension of facts. 18
Liability rests on negligence which is "the want of such care as a person of ordinary prudence would exercise under the circumstances of the case." 19
Thus, private respondents argue that the "Midas Extravaganza" which was to be performed during the town fiesta was a "donation" offered by an association of Malasiqui employees of the Manila Railroad Co. in Caloocan, and that when the Municipality of Malasiqui accepted the donation of services and constructed precisely a "zarzuela stage" for the purpose, the participants in the stage show had the right to expect that the Municipality through its "Committee on entertainment and stage" would build or put up a stage or platform strong enough to sustain the weight or burden of the performance and take the necessary measures to insure the personal safety of the participants. 20 We agree.
Quite relevant to that argument is the American case of Sanders v. City of Long Beach, 1942, which was an action against the city for injuries sustained from a fall when plaintiff was descending the steps of the city auditorium. The city was conducting a "Know your City Week" and one of the features was the showing of a motion picture in the city auditorium to which the general public was invited and plaintiff Sanders was one of those who attended. In sustaining the award for damages in favor of plaintiff, the District Court of Appeal, Second district, California, held inter alia that the "Know your City Week" was a "proprietary activity" and not a "governmental one" of the city, that defendant owed to plaintiff, an "invitee", the duty of exercising ordinary care for her safety, and plaintiff was entitled to assume that she would not be exposed to a danger (which in this case consisted of lack of sufficient illumination of the premises) that would come to her through a violation of defendant's duty. 21
We can say that the deceased Vicente Fontanilla was similarly situated as Sanders. The Municipality of Malasiqui resolved to celebrate the town fiesta in January of 1959; it created a committee in charge of the entertainment and stage; an association of Malasiqui residents responded to the call for the festivities and volunteered to present a stage show; Vicente Fontanilla was one of the participants who like Sanders had the right to expect that he would be exposed to danger on that occasion.
Lastly, petitioner or appellant Municipality cannot evade responsibility and/or liability under the claim that it was Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed Macaraeg as chairman of the sub-committee on entertainment and in charge of the construction of the "zarzuela" stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its agent acting within his assigned tasks. 22
". . . when it is sought to render a municipal corporation liable for the act of servants or agents, a cardinal inquiry is, whether they are the servants or agents of the corporation. If the corporation appoints or elects them, can control them in the discharge of their duties, can continue or remove them, can hold them responsible for the manner in which they discharge their trust, and if those duties relate to the exercise of corporate powers, and are for the peculiar benefit of the corporation in its local or special interest, they may justly be regarded as its agents or servants, and the maxim of respondent superior applies." . . . (Dillon on Municipal Corporations, 5th Ed., Vol. IV, p. 2879)
5. The remaining question to be resolved centers on the liability of the municipal councilors who enacted the ordinance and created the fiesta committee.
The Court of Appeals held the councilors jointly and solidarily liable with the municipality for damages under Article 27 of the Civil Code which provides that "any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter." 23
In their Petition for review the municipal councilors allege that the Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function and that there was negligence on their part for not maintaining and supervising the safe use of the stage, in applying Article 27 of the Civil Code against them, and in not holding Jose Macaraeg liable for the collapse of the stage and the consequent death of Vicente Fontanilla. 24
We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against them, for this particular article covers a case of non-feasance or non-performance by a public officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying out an official duty.
If We are led to set aside the decision of the Court of Appeals insofar as these petitioners are concerned, it is because of plain error committed by respondent court which however is not invoked in petitioners' brief.
In Miguel v. The Court of Appeals, et al., the Court, through Justice, now Chief Justice, Fred Ruiz Castro, held that the Supreme Court is vested with ample authority to review matters not assigned as errors in an appeal if it finds that their consideration and resolution are indispensable or necessary in arriving at a just decision in a given case, and that this is authorized under Sec. 7, Rule 51 of the Rules of Court. 25 We believe that this pronouncement can well be applied in the instant case. Cdpr
The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. It is an elementary principle that a corporation has a personality, separate and distinct from its officers, directors, or persons composing it 26 and the latter are not as a rule co-responsible in an action for damages for tort or negligence (culpa aquiliana) committed by the corporation's employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part. 27
xxx xxx xxx
"The ordinary doctrine is that a Director, merely by reason of his office, is not personally liable for the torts of his corporation; he must be shown to have personally voted for or otherwise participated in them." . . . (Fletcher Cyclopedia Corporations, Vol. 3A, Chapt. 11, p. 207)
"Officers of a corporation 'are not held liable for the negligence of the corporation merely because of their official relation to it, but because of some wrongful or negligent act by such officer amounting to a breach of duty which resulted in an injury . . . To make an officer of a corporation liable for the negligence of the corporation there must have been upon his part such a breach of duty as contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the wrongful act." . . . (pp. 207-208, ibid.)
xxx xxx xxx
"Directors who merely employ one to give n fireworks exhibition on the corporate grounds are not personally liable for the negligent acts of the exhibitor." (p. 211, ibid.)
On these principles We absolve the municipal councilors from any liability for the death of Vicente Fontanilla. The records do not show that said petitioners directly participated in the defective construction of the "zarzuela" stage or that they personally permitted spectators to go up the platform.
6. One last point We have to resolve is on the award of attorney's fees by respondent court. Petitioner-municipality assails the award.
Under paragraph 11, Art. 2208 of the Civil Code attorney's fees and expenses of litigation may be granted when the court deems it just and equitable. In this case of Vicente Fontanilla, although respondent appellate court failed to state the grounds for awarding attorney's fees, the records show however that attempts were made by plaintiffs, now private respondents, to secure an extrajudicial compensation from the municipality; that the latter gave promises and assurances of assistance but failed to comply; and it was only eight months after the incident that the bereaved family of Vicente Fontanilla was compelled to seek relief from the courts to ventilate what was believed to be a just cause. 28
We hold, therefore, that there is no error committed in the grant of attorney's fees which after all is a matter of judicial discretion. The amount of P1,200.00 is fair and reasonable.
PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of Appeals insofar as the Municipality of Malasiqui is concerned (L-30183), and We absolve the municipal councilors from liability and SET ASIDE the judgment against them (L-29993).
Without pronouncement as to costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.
Footnotes
1. pp. 3-4 of Petitioner's brief
2. pp. 35-37, rollo L-29993.
3. pp. 42-44, ibid.
4. pp. 21-31, ibid.
5. Sec. 2125, Art. 1, Municipal Law as embodied in the Revised Administrative Code.
6. Mendoza v. de Leon, 33 Phil. 508; 56 Am Jur 2d 254, sec. 199; Martin on the Revised Administrative Code, 1963 ed,, pp. 482-483, citing Cooley's Municipal Corporation, pp. 136-137.
7. 2nd Ed. Vol. 1, Sec. 126, p. 381, cited in Dept. of Treasury v. City of Evansville, Sup. Ct. of Indiana, 60 N.E 2nd 952, 954.
8. supra, p. 509.
9. Dept. of Treasury v. City of Evansville. supra, p. 956.
10. For instance, Art. 2189, Civil Code provides —
"Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision."
11. Mendoza v. de Leon, supra, p. 513. In Palma v. Graciano, the City of Cebu, et al., 99 Phil. 72, the Court held that although the prosecution of crimes is a governmental function and as a rule the province and City of Cebu are not civilly liable by reason thereof, nonetheless when a public official goes beyond the scope of his duty, particularly when acting tortiously, he is not entitled to protection on account of his office but is liable for his acts like any private individual.
12. L-10659, January 31, 1958, Unrep., 102 Phil. 1186.
13. Municipality of Paoay, Ilocos Norte v. Manaois, et al., 86 Phil. 629; Municipality of Moncada v. Cajuigan, et al., 21 Phil. 184.
14. Mendoza v. de Leon, supra, p. 513.
15. We came across an interesting case which shows that surrounding circumstances plus the political, social, and cultural backgrounds may have a decisive bearing on this question. The case of Pope v. City of New Haven, et al., was an action to recover damages for personal injuries caused during a Fourth of July fireworks display resulting in the death of a bystander alleged to have been caused by defendants' negligence. The defendants demurred to the complaint invoking the defense that the city was engaged in the performance of a public governmental duty from which it received no pecuniary benefit and for negligence in the performance of which no statutory liability is imposed. This demurrer was sustained by the Superior Court of New Haven Country. Plaintiff sought to amend his complaint to allege that the celebration was for the corporate advantage of the city. This was denied. In affirming the order, the Supreme Court of Errors of Connecticut held inter alia:
"Municipal corporations are exempt from liability for the negligent performance of purely public governmental duties, unless made liable by statute . . .
"A municipal corporation, which under permissive authority of its charter or of statute, conducted a public Fourth of July celebration, including a display of fireworks, and sent up a bomb intended to explode in the air, but which failed to explode until it reached the ground, and then killed a spectator was engaged in the performance of a governmental duty." (99 A.R. 51)
This decision was concurred in by three Judges while two dissented.
At any rate the rationale of the Majority Opinion is evident from this excerpt:
"July 4th, or, when that date falls upon Sunday, July 5th, is made a public holiday, called Independence Day, by our statutes. All or nearly all of the other states have similar statutes. While there is no United States statute making a similar provision, the different departments of the government recognize, and have recognized since the government was established, July 4th as a national holiday. Throughout the country it has been recognized and celebrated as such. These celebrations, calculated to entertain and instruct the people generally and to arouse and stimulate patriotic sentiments and love of country, frequently take the form of literary exercises consisting of patriotic speeches and the reading of the Constitution, accompanied by a musical program including patriotic airs, sometimes preceded by the firing of cannon and followed by fireworks. That such celebrations are of advantage to the general public and their promotion a proper subject of legislation can hardly be questioned . . ." (ibid., p. 52)
16. See page 8 of Court of Appeals decision, p. 28 rollo L-29993.
17. p. 29, ibid.
18. De Gala-Sison v. Manalo, 8 SCRA 595; Ramos v. Pepsi-Cola Bottling Co, 19 SCRA 289; Tan v. Court of Appeals, et al., 20 SCRA 54; Chan v. Court of Appeals, et al., 33 SCRA 737, among others.
19. 19 Cal. Jur., p. 543; Corliss v. Manila Railroad Co., 27 SCRA 674.
20. Respondents' brief, p. 70, rollo L-29993.
21. 129 P. 2d 511, 514.
22. See page 8 of this Decision for quotation from Dillon on Municipal Corporations.
23. p. 31, rollo L-29993
24. pp. 1-3, petitioners' brief
25. 29 SCRA 760
26. Banque General Belge, et al. v. Walter Bull & Co., Inc. and Walter Bull, 47 Off. Gaz., No. 1, 140
27. See Mindanao Motor Line, Inc. et al. v. Court of Industrial Relations, et al., 6 SCRA 710
28. pp. 34, 72-73, rollo L-29993.
EN BANC
[G.R. No. 101949. December 1, 1994.]
THE HOLY SEE, petitioner, vs. THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents.
D E C I S I O N
QUIASON, J p:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court, Branch 61, Makati, Metro Manila in Civil Case No. 90-183.
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil Case No. 90- 183, while the Order dated September 19, 1991 denied the motion for reconsideration of the June 20, 1991 Order.
Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is represented in the Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate business.
This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot 5-A, Transfer Certificate of Title No. 390440) located in the Municipality of Parañaque, Metro Manila and registered in the name of petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of Title Nos. 271108 and 265388 respectively and registered in the name of the Philippine Realty Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the sellers. Later, Licup assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as who of the parties has the responsibility of evicting and clearing the land of squatters. Complicating the relations of the parties was the sale by petitioner of Lot 5-A to Tropicana Properties and Development Corporation (Tropicana).
I
On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch 61, Makati, Metro Manila for annulment of the sale of the three parcels of land, and specific performance and damages against petitioner, represented by the Papal Nuncio, and three other defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil Case No. 90-183).
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square meters; (2) the agreement to sell was made on the condition that earnest money of P100,000.00 be paid by Licup to the sellers, and that the sellers clear the said lots of squatters who were then occupying the same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in the same month, Licup assigned his rights over the property to private respondent and informed the sellers of the said assignment; (5) thereafter, private respondent demanded from Msgr. Cirilos that the sellers fulfill their undertaking and clear the property of squatters; however, Msgr. Cirilos informed private respondent of the squatters' refusal to vacate the lots, proposing instead either that private respondent undertake the eviction or that the earnest money be returned to the latter; (6) private respondent counterproposed that if it would undertake the eviction of the squatters, the purchase price of the lots should be reduced from P1,240.00 to P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of P100,000.00 and wrote private respondent giving it seven days from receipt of the letter to pay the original purchase price in cash; (8) private respondent sent the earnest money back to the sellers, but later discovered that on March 30, 1989, petitioner and the PRC, without notice to private respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers' transfer certificate of title over the lots were cancelled, transferred and registered in the name of Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it and thus enriched itself at the expense of private respondent; (10) private respondent demanded the rescission of the sale to Tropicana and the reconveyance of the lots, to no avail; and (11) private respondent is willing and able to comply with the terms of the contract to sell and has actually made plans to develop the lots into a townhouse project, but in view of the sellers' breach, it lost profits of not less than P30,000.000.00.
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and the PRC on the one hand, and Tropicana on the other; (2) the reconveyance of the lots in question; (3) specific performance of the agreement to sell between it and the owners of the lots; and (4) damages.
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint — petitioner for lack of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an improper party. An opposition to the motion was filed by private respondent.
On June 20, 1991, the trial court issued an order denying, among others, petitioner's motion to dismiss after finding that petitioner "shed off [its] sovereign immunity by entering into the business contract in question" (Rollo, pp. 20-21).
On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991, petitioner filed a "Motion for a Hearing for the Sole Purpose of Establishing Factual Allegation for claim of Immunity as a Jurisdictional Defense." So as to facilitate the determination of its defense of sovereign immunity, petitioner prayed that a hearing be conducted to allow it to establish certain facts upon which the said defense is based. Private respondent opposed this motion as well as the motion for reconsideration.
On October 1, 1991, the trial court issued an order deferring the resolution on the motion for reconsideration until after trial on the merits and directing petitioner to file its answer (Rollo, p. 22).
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of sovereign immunity only on its own behalf and on behalf of its official representative, the Papal Nuncio.
On December 9, 1991, a Motion for Intervention was filed before us by the Department of Foreign Affairs, claiming that it has a legal interest in the outcome of the case as regards the diplomatic immunity of petitioner, and that it "adopts by reference, the allegations contained in the petition of the Holy See insofar as they refer to arguments relative to its claim of sovereign immunity from suit" (Rollo, p. 87).
Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance with the resolution of this Court, both parties and the Department of Foreign Affairs submitted their respective memoranda.
II
A preliminary matter to be threshed out is the procedural issue of whether the petition for certiorari under Rule 65 of the Revised Rules of Court can be availed of to question the order denying petitioner's motion to dismiss. The general rule is that an order denying a motion to dismiss is not reviewable by the appellate courts, the remedy of the movant being to file his answer and to proceed with the hearing before the trial court. But the general rule admits of exceptions, and one of these is when it is very clear in the records that the trial court has no alternative but to dismiss the complaint (Philippine National Bank v. Florendo, 206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]. In such a case, it would be a sheer waste of time and energy to require the parties to undergo the rigors of a trial.
The other procedural question raised by private respondent is the personality or legal interest of the Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp. 186-190).
In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity.
In the United States, the procedure followed is the process of "suggestion," where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a "suggestion" that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).
In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity.
In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved.
III
The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a foreign state enjoying sovereign immunity. On the other hand, private respondent insists that the doctrine of non-suability is not anymore absolute and that petitioner has divested itself of such a cloak when, of its own free will, it entered into a commercial transaction for the sale of a parcel of land located in the Philippines.
A. The Holy See
Before we determine the issue of petitioner's non-suability, a brief look into its status as a sovereign state is in order.
Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as the Holy See, was considered a subject of International Law. With the loss of the Papal States and the limitation of the territory under the Holy See to an area of 108.7 acres, the position of the Holy See in International Law became controversial (Salonga and Yap, Public International Law 36-37 [1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City. It also recognized the right of the Holy See to receive foreign diplomats, to send its own diplomats to foreign countries, and to enter into treaties according to International Law (Garcia, Questions and Problems In International Law, Public and Private 81 [1948]).
The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to the Holy See absolute and visible independence and of guaranteeing to it indisputable sovereignty also in the field of international relations" (O'Connell, I International Law 311 [1965]).
In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood is vested in the Holy See or in the Vatican City. Some writers even suggested that the treaty created two international persons — the Holy See and Vatican City (Salonga and Yap, supra., 37).
The Vatican City fits into none of the established categories of states, and the attribution to it of "sovereignty" must be made in a sense different from that in which it is applied to other states (Fenwick, International Law 124-125 [1948]; Cruz, International Law 37 [1991]). In a community of national states, the Vatican City represents an entity organized not for political but for ecclesiastical purposes and international objects. Despite its size and object, the Vatican City has an independent government of its own, with the Pope, who is also head of the Roman Catholic Church, as the Holy See or Head of State, in conformity with its traditions, and the demands of its mission in the world. Indeed, the world-wide interests and activities of the Vatican City are such as to make it in a sense an "international state" (Fenwick, supra., 125; Kelsen, Principles of International Law 160 [1956]).
One authority wrote that the recognition of the Vatican City as a state has significant implication — that it is possible for any entity pursuing objects essentially different from those pursued by states to be invested with international personality (Kunz, The Status of the Holy See in International Law, 46 The American Journal of International Law 308 [1952]).
Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and not in the name of the Vatican City, one can conclude that in the Pope's own view, it is the Holy See that is the international person.
The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government since 1957 (Rollo, p. 87). This appears to be the universal practice in international relations.
B. Sovereign Immunity
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted principles of International Law. Even without this affirmation, such principles of International Law are deemed incorporated as part of the law of the land as a condition and consequence of our admission in the society of nations (United States of America v. Guinto, 182 SCRA 644 [1990]).
There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis (United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International Law 194 [1984]).
Some states passed legislation to serve as guidelines for the executive or judicial determination when an act may be considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act of 1976, which defines a commercial activity as "either a regular course of commercial conduct or a particular commercial transaction or act." Furthermore, the law declared that the "commercial character of the activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose." The Canadian Parliament enacted in 1982 an Act to Provide For State Immunity In Canadian Courts. The Act defines a "commercial activity" as any particular transaction, act or conduct or any regular course of conduct that by reason of its nature, is of a "commercial character."
The restrictive theory, which is intended to be a solution to the host of problems involving the issue of sovereign immunity, has created problems of its own. Legal treatises and the decisions in countries which follow the restrictive theory have difficulty in characterizing whether a contract of a sovereign state with a private party is an act jure gestionis or an act jure imperii.
The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely connected with the discharge of governmental functions. This is particularly true with respect to the Communist states which took control of nationalized business activities and international trading.
This Court has considered the following transactions by a foreign state with private parties as acts jure imperii: (1) the lease by a foreign government of apartment buildings for use of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of public bidding for the repair of a wharf at a United States Naval Station (United States of America v. Ruiz, supra.); and (3) the change of employment status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]).
On the other hand, this Court has considered the following transactions by a foreign state with private parties as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting of three restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to American servicemen and the general public (United States of America v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]). The operation of the restaurants and other facilities open to the general public is undoubtedly for profit as a commercial and not a governmental activity. By entering into the employment contract with the cook in the discharge of its proprietary function, the United States government impliedly divested itself of its sovereign immunity from suit.
In the absence of legislation defining what activities and transactions shall be considered "commercial" and as constituting acts jure gestionis, we have to come out with our own guidelines, tentative they may be.
Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit.
As held in United States of America v. Guinto, (supra):
"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."
In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate business, surely the said transaction can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and subsequent disposal of Lot 5-A were made for profit but claimed that it acquired said property for the site of its mission or the Apostolic Nunciature in the Philippines. Private respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not for commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in the Philippines on November 15, 1965.
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and administrative jurisdiction of the receiving state over any real action relating to private immovable property situated in the territory of the receiving state which the envoy holds on behalf of the sending state for the purposes of the mission. If this immunity is provided for a diplomatic envoy, with all the more reason should immunity be recognized as regards the sovereign itself, which in this case is the Holy See.
The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by private respondent in its complaint (Rollo, pp. 26, 27).
The issue of petitioner's non-suability can be determined by the trial court without going to trial in the light of the pleadings, particularly the admission of private respondent. Besides, the privilege of sovereign immunity in this case was sufficiently established by the Memorandum and Certification of the Department of Foreign Affairs. As the department tasked with the conduct of the Philippines' foreign relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has formally intervened in this case and officially certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156-157). The determination of the executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the courts (International Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so as not to embarrass the executive arm of the government in conducting the country's foreign relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration Commission and in World Health Organization, we abide by the certification of the Department of Foreign Affairs.
Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing to establish the facts alleged by petitioner in its motion. In view of said certification, such procedure would however be pointless and unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign sovereign can ask his own government to espouse his cause through diplomatic channels.
Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of its espousal on the relations between the Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the Philippine government decides to espouse the claim, the latter ceases to be a private cause.
According to the Permanent Court of International Justice, the forerunner of the International Court of Justice:
"By taking up the case of one of its subjects and by reporting to diplomatic action or international judicial proceedings on his behalf, a State is in reality asserting its own rights — its right to ensure, in the person of its subjects, respect for the rules of international law (The Mavrommatis Palestine Concessions, 1 Hudson, World Court Reports 293, 302 [1924]).
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90-183 against petitioner is DISMISSED.
SO ORDERED.
Narvasa, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan and Mendoza, JJ., concur.
Padilla, J., took no part.
Feliciano, J., is on leave.
EN BANC
[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 Office for petitioners.
Albert, Vergara, Benares, Perlas & Dominguez Law Office for respondents.
D E C I S I O N
ABAD SANTOS, J p:
This is a petition to review, set aside certain orders and restrain the respondent judge from trying Civil Case No. 779-M 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 fender 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 William 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 imperii. 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 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 on 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 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 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 United 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. 779-M is dismissed. Costs against the private respondent.
SO ORDERED.
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.
EN BANC
[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.
D E C I S I O N
CRUZ, J p:
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 barbering 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 officials/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 m 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 his 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 for certiorari and prohibition with preliminary injunction with this Court. We issued a temporary restraining order on October 27, 1987. 11
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 `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 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.' 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 persons. 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.
Footnotes
1. Civil Case No. 4772.
2. Annex "B", pp. 36-38.
3. Rollo, p. 88.
4. Civil Case No. 829-R(298).
5. Annex "A", Rollo, p. 38.
6. Civil Case No. 115-C-87.
7. Annex "A," Rollo, p. 33.
8. Rollo, p. 69.
9. Civil Case No. 4996.
10. Annex "A," Rollo, p. 58.
11. Rollo, p. 181.
12. Kawanakoa v. Polybank, 205 U.S. 349.
13. De Haber v. Queen of Portugal, 17 Q.B. 171.
14. Garcia v. Chief of Staff, 16 SCRA 120.
15. 34 Phil. 311.
16. Santos v. Santos, 92 Phil. 281; Lyons v. United States of America, 104 Phil. 593.
17. Froilan v. Pan Oriental Shipping Co., G.R. No. 6060, September 30, 1950.
18. Republic v. Purisima, 78 SCRA 470.
19. United States of America v. Ruiz, 136 SCRA 487.
20. Lim v. Brownell, 107 Phil. 345.
21. 57 SCRA 1.
22. 136 SCRA 487.
23. 50 O.G. 1556.
24. 162 SCRA 88.
25. Supra.
Thursday, January 8, 2009
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