CONSTITUTIONAL LAW CASES: 1. Republic vs. Villasor, 54 SCRA 83 2. Department of Agriculture vs. NLRC, 227 SCRA 693 3.

Republic vs. Feliciano, 148 SCRA 424 4. Del Mar vs. Philippine Veterans Administration, 51 SCRA 340 5. PNB vs. CIR, 81 SCRA 314 6. Lansang vs. Court of Appeals, G.R. No. 102667, Febraury 23, 2000 7. Republic vs. Sandoval, 220 SCRA 124 8. Meritt vs. Government of the Philippines Islands, 34 Phil. 311 9. USA vs. Ruiz, 136 SCRA 487 10. Amigable vs. Cuenca, G.R. No. L-26400, February 29, 1972.

2 17 26 39 47 54 62 67 78 88

SECOND DIVISION [G.R. No. L-30671. November 28, 1973.] REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I, THE PROVINCIALSHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE CITY OF MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P.J. KIENER CO., LTD., GAVINO UNCHUAN, and INTERNATIONAL CONSTRUCTION CORPORATION, respondents. Solicitor General Felix V . Makasiar and Solicitor Bernardo P. Pardo for petitioner. Andres T . Velarde & Marcelo B. Fernan for respondents.

DECISION

FERNANDO, J p: The Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of an order issued by respondent Judge Guillermo P. Villasor, then of the Court of First Instance of Cebu, Branch I, 1 declaring a decision final and executory and of an alias writ of execution directed against the funds of the Armed Forces of the Philippines subsequently issued in pursuance thereof, the alleged ground being excess of jurisdiction, or at the very least, grave abuse of discretion. As thus simply and tersely put, with the facts being undisputed and the principle of law that calls for application indisputable, the outcome is predictable. The Republic of the Philippines is entitled to the writs prayed for. Respondent Judge ought not to have acted thus. The order thus impugned and the alias writ of execution must be nullified. In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set forth thus: "7. On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation, and against the petitioner herein, confirming the arbitration award in the amount
2

of P1,712,396.40, subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable Guillermo P.Villasor, issued an Order declaring the aforestated decision of July 3, 1961 final and executory, directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila to execute the said decision. 9. Pursuant to the said Order dated June 24, 1969, the corresponding Alias Writ of Execution [was issued] dated June 26, 1969, . . . 10. On the strength of the afore-mentioned Alias Writ of Execution dated June 26, 1969, the Provincial Sheriff of Rizal (respondent herein) served notices of garnishment dated June 28, 1969 with several Banks, specially on the `monies due the Armed Forces of the Philippines in the form of deposits, sufficient to cover the amount mentioned in the said Writ of Execution'; the Philippine Veterans Bank received the same notice of garnishment on June 30, 1969 . . . 11. The funds of the Armed Forces of the Philippines on deposit with the Banks, particularly, with the Philippine Veterans Bank and the Philippine National Bank [or] their branches are public funds duly appropriated and allocated for the payment of pensions of retirees, pay and allowances of military and civilian personnel and for maintenance and operations of the Armed Forces of the Philippines, as per Certification dated July 3, 1969 by the AFP Comptroller, . . ." 2 The paragraph immediately succeeding in such petition then alleged: "12. Respondent Judge, Honorable Guillermo P. Villasor, acted in excess of jurisdiction [or] with grave abuse of discretion amounting to lack of jurisdiction in granting the issuance of an alias writ of execution against the properties of the Armed Forces of the Philippines, hence, the Alias Writ of Execution and notices of garnishment issued pursuant thereto are null and void." 3 In the answer filed by respondents, through counsel Andres T. Velarde and Marcelo B. Fernan, the facts set forth were admitted with the only qualification being that the total award was in the amount of P2,372,331.40. 4 The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and prohibition proceeding. What was done by respondent Judge is not in conformity with the dictates of the Constitution. It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well as its government is immune from suit unless it gives its consent. It is readily understandable why it must be so. In the classic formulation of Holmes: "A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends." 5 Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a recent decision, Providence Washington Insurance Co. v. Republic of the Philippines, 6 with its affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience that may

be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence of such a basic principle that constitutes such an effective obstacle, could very well be imagined." 7 This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein expressly provided: "The State may not be sued without its consent." 8 A corollary, both dictated by logic and sound sense from such a basic concept is that public funds cannot be the object of a garnishment proceeding even if the consent to be sued had been previously granted and the state liability adjudged. Thus in the recent case of Commissioner of Public Highways v. San Diego, 9 such a well-settled doctrine was restated in the opinion of Justice Teehankee: "The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action `only up to the completion of proceedings anterior to the stage of execution' and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law." 10 Such a principle applies even to an attempted garnishment of a salary that had accrued in favor of an employee. Director of Commerce and Industry v. Concepcion, 11 speaks to that effect. Justice Malcolm as ponente left no doubt on that score. Thus: "A rule, which has never been seriously questioned, is that money in the hands of public officers, although it may be due government employees, is not liable to the creditors of these employees in the process of garnishment. One reason is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by express authorization by the Legislature, and to subject its officers to garnishment would be to permit indirectly what is prohibited directly. Another reason is that moneys sought to be garnished, as long as they remain in the hands of the disbursing officer of the Government, belong to the latter, although the defendant in garnishment may be entitled to a specific portion thereof. And still another reason which covers both of the foregoing is that every consideration of public policy forbids it." 12 In the light of the above, it is made abundantly clear why the Republic of the Philippines could rightfully allege a legitimate grievance.

WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside both the order of June 24, 1969 declaring executory the decision of July 3, 1961 as well as the alias writ of execution issued thereunder. The preliminary injunction issued by this Court on July 12, 1969 is hereby made permanent. Zaldivar, Antonio, Fernandez and Aquino, JJ ., concur. Barredo, J ., did not take part.

FIRST DIVISION [G.R. No. 132529. February 2, 2001.] SUSAN NICDAO CARIO, petitioner, vs. SUSAN YEE CARIO, respondent. Gancayco Balasbas & Associates for petitioner. Atty. Agapito P. Oquindo, Jr. for respondent. SYNOPSIS SPO4 Santiago S. Carino contracted two marriages. The first was with petitioner with whom he begot two (2) children, while the second, during the subsistence of the first, was with respondent with whom he had no issue. When he died in 1988 petitioner and respondent filed claims for monetary benefits and financial assistance from various government agencies. Petitioner collected P146,000 from MBAI, PCCUI, commutation, NAPOLCOM and Pag-Ibig, while respondent collected P21,000 from GSIS and SSS. Respondent, in an action for collection, sought to recover half the amount collected by petitioner. She claimed that she had no knowledge of the previous marriage with petitioner and presented evidence that the same was contracted without the necessary marriage license. Judgment was rendered by the trial court in favor of respondent which was affirmed on appeal by the Court of Appeals. Hence, this recourse. The absence of a marriage license, as a general rule, renders the marriage void ab initio. However, for purposes of remarriage, a prior judicial declaration of nullity of the previous marriage must be obtained. For other purposes no such judicial action is required. Otherwise, the second marriage would also be void. Article 148 of the Civil Code governs the property regime of bigamous marriages. Only the properties acquired by the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. While union of parties who are legally capacitated and not barred by any impediment to contract marriage is governed by co-ownership under Article 147 of the Civil Code. Thus, the P146,000 from MBAI, PCCUI, commutation, NAPOLCOM and Pag-Ibig earned by the deceased, in the absence of evidence that respondent contributed money, property or industry in the acquisition of these monetary benefits, is owned by the deceased alone and respondent has
6

no right whatsoever to claim the same. However, petitioner is entitled to one-half of the subject "death benefits" as her share in the property regime and the other half shall pass by to petitioner's children as the decedent's legal heirs. SYLLABUS 1.CIVIL LAW; FAMILY CODE; MARRIAGE; FINAL JUDGMENT DECLARING PREVIOUS MARRIAGE VOID, NECESSARY FOR PURPOSES OF SECOND MARRIAGE. Under Article 40 of the Family Code, the absolute nullity of a previous marriage may be invoked for purposes of remarriage on the basis solely of a final judgment declaring such previous marriage void. Meaning, where the absolute nullity of a previous marriage is sought to be invoked for purposes of contracting a second marriage, the sole basis acceptable in law, for said projected marriage to be free from legal infirmity, is a final judgment declaring the previous marriage void. However, for purposes other than remarriage, no judicial action is necessary to declare a marriage an absolute nullity. For other purposes, such as but not limited to the determination of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property regime, or a criminal case for that matter, the court may pass upon the validity of marriage even after the death of the parties thereto, and even in a suit not directly instituted to question the validity of said marriage, so long as it is essential to the determination of the case. In such instances, evidence must be adduced, testimonial or documentary, to prove the existence of grounds rendering such a previous marriage an absolute nullity. These need not be limited solely to an earlier final judgment of a court declaring such previous marriage void. 2.ID.; PERSONS AND FAMILY RELATIONS; MARRIAGE; LICENSE, REQUIRED; CASE AT BAR. Under the Civil Code, which was the law in force when the marriage of petitioner Susan Nicdao and the deceased was solemnized in 1969, a valid marriage license is a requisite of marriage, and the absence thereof, subject to certain exceptions, renders the marriage void ab initio. In the case at bar, there is no question that the marriage of petitioner and the deceased does not fall within the marriages exempt from the license requirement. A marriage license, therefore, was indispensable to the validity of their marriage. This notwithstanding, the records reveal that the marriage contract of petitioner and the deceased bears no marriage license number and, as certified by the Local Civil Registrar of San Juan, Metro Manila, their office has no record of such marriage license. It is beyond cavil, therefore, that the marriage between petitioner Susan Nicdao and the deceased, having been solemnized without the necessary marriage license, and not being one of the marriages exempt from the marriage license requirement, is undoubtedly void ab initio.

3.ID.; FAMILY CODE; FINAL JUDGMENT DECLARING PREVIOUS MARRIAGE VOID, NECESSARY FOR PURPOSES OF SECOND MARRIAGE; WITHOUT SUCH DECLARATION, SECOND MARRIAGE IS ALSO VOID. Accordingly, the declaration in the instant case of nullity of the previous marriage of the deceased and petitioner Susan Nicdao does not validate the second marriage of the deceased with respondent Susan Yee. The fact remains that their marriage was solemnized without first obtaining a judicial decree declaring the marriage of petitioner Susan Nicdao and the deceased void. Hence, the marriage of respondent Susan Yee and the deceased is, likewise, void ab initio. SCaITA 4.ID.; ID.; BIGAMOUS MARRIAGE; WAGES AND SALARIES EARNED BY EACH PARTY BELONG TO HIM OR HER EXCLUSIVELY. Under Article 148 of the Family Code, which refers to the property regime of bigamous marriages, adulterous relationships, relationships in a state of concubine, relationships where both man and woman are married to other persons, multiple alliances of the same married man, the properties acquired by the parties through their actual joint contribution shall belong to the co-ownership. Wages and salaries earned by each party belong to him or her exclusively. Then too, contributions in the form of care of the home, children and household, or spiritual or moral inspiration, are excluded in this regime. 5.ID.; ID.; ID.; ID.; CASE AT BAR. Considering that the marriage of respondent Susan Yee and the deceased is a bigamous marriage, having been solemnized during the subsistence of a previous marriage then presumed to be valid (between petitioner and the deceased), the application of Article 148 is therefore in order. The disputed P146,000.00 from MBAI [AFP Mutual Benefit Association, Inc.], NAPOLCOM, Commutation, Pag-ibig, and PCCUI, are clearly remunerations, incentives and benefits from governmental agencies earned by the deceased as a police officer. Unless respondent Susan Yee presents proof to the contrary, it could not be said that she contributed money, property or industry in the acquisition of these monetary benefits. Hence, they are not owned in common by respondent and the deceased, but belong to the deceased alone and respondent has no right whatsoever to claim the same. By intestate succession, the said "death benefits" of the deceased shall pass to his legal heirs. And, respondent, not being the legal wife of the deceased is not one of them. 6.ID.; ID.; VOID MARRIAGES OF PARTIES LEGALLY CAPACITATED AND NOT BARRED BY ANY IMPEDIMENT; PROPERTY RELATIONSHIP GOVERNED BY CO-OWNERSHIP; CASE AT BAR. As to the property regime of petitioner Susan Nicdao and the deceased, Article 147 of the Family Code governs. This article applies to unions of parties who are legally capacitated and not barred by any impediment to contract marriage, but whose marriage is nonetheless void for other reasons, like the absence of a marriage license. In contrast to Article 148, under the

foregoing article, wages and salaries earned by either party during the cohabitation shall be owned by the parties in equal shares and will be divided equally between them, even if only one party earned the wages and the other did not contribute thereto. Conformably, even if the disputed "death benefits" were earned by the deceased alone as a government employee, Article 147 creates a co-ownership in respect thereto, entitling the petitioner to share one-half thereof. As there is no allegation of bad faith in the present case, both parties of the first marriage are presumed to be in good faith. Thus, one-half of the subject "death benefits" under scrutiny shall go to the petitioner as her share in the property regime, and the other half pertaining to the deceased shall pass by, intestate succession, to his legal heirs, namely, his children with Susan Nicdao.

DECISION

YNARES-SANTIAGO, J p: The issue for resolution in the case at bar hinges on the validity of the two marriages contracted by the deceased SPO4 Santiago S. Cario, whose "death benefits" is now the subject of the controversy between the two Susans whom he married. Before this Court is a petition for review on certiorari seeking to set aside the decision 1 of the Court of Appeals in CA-G.R. CV No. 51263, which affirmed in toto the decision 2 of the Regional Trial Court of Quezon City, Branch 87, in Civil Case No. Q-93-18632. During the lifetime of the late SPO4 Santiago S. Cario, he contracted two marriages, the first was on June 20, 1969, with petitioner Susan Nicdao Cario (hereafter referred to as Susan Nicdao), with whom he had two offsprings, namely, Sahlee and Sandee Cario; and the second was on November 10, 1992, with respondent Susan Yee Cario (hereafter referred to as Susan Yee), with whom he had no children in their almost ten year cohabitation starting way back in 1982. In 1988, SPO4 Santiago S. Cario became ill and bedridden due to diabetes complicated by pulmonary tuberculosis. He passed away on November 23, 1992, under the care of Susan Yee, who spent for his medical and burial expenses. Both petitioner and respondent filed claims for monetary benefits and financial assistance pertaining to the deceased from various government agencies. Petitioner Susan Nicdao was able to collect a total of P146,000.00 from

"MBAI, PCCUI, Commutation, NAPOLCOM, [and] Pag-ibig," 3 while respondent Susan Yee received a total of P21,000.00 from "GSIS Life, Burial (GSIS) and burial (SSS)." 4

On December 14, 1993, respondent Susan Yee filed the instant case for collection of sum of money against petitioner Susan Nicdao praying, inter alia, that petitioner be ordered to return to her at least one-half of the one hundred forty-six thousand pesos (P146,000.00) collectively denominated as "death benefits" which she (petitioner) received from "MBAI, PCCUI, Commutation, NAPOLCOM, [and] Pag-ibig." Despite service of summons, petitioner failed to file her answer, prompting the trial court to declare her in default. Respondent Susan Yee admitted that her marriage to the deceased took place during the subsistence of, and without first obtaining a judicial declaration of nullity of, the marriage between petitioner and the deceased. She, however, claimed that she had no knowledge of the previous marriage and that she became aware of it only at the funeral of the deceased, where she met petitioner who introduced herself as the wife of the deceased. To bolster her action for collection of sum of money, respondent contended that the marriage of petitioner and the deceased is void ab initiobecause the same was solemnized without the required marriage license. In support thereof, respondent presented: 1) the marriage certificate of the deceased and the petitioner which bears no marriage license number; 5 and 2) a certification dated March 9, 1994, from the Local Civil Registrar of San Juan, Metro Manila, which reads This is to certify that this Office has no record of marriage license of the spouses SANTIAGO CARINO (sic) and SUSAN NICDAO, who are married in this municipality on June 20, 1969. Hence, we cannot issue as requested a true copy or transcription of Marriage License number from the records of this archives. This certification is issued upon the request of Mrs. Susan Yee Cario for whatever legal purpose it may serve.6 On August 28, 1995, the trial court ruled in favor of respondent, Susan Yee, holding as follows: WHEREFORE, the defendant is hereby ordered to pay the plaintiff the sum of P73,000.00, half of the amount which was paid to her in the form of death benefits arising from the death of SPO4 Santiago S. Cario, plus attorney 's fees in the amount of P5,000.00, and costs of suit.

10

IT IS SO ORDERED. 7 On appeal by petitioner to the Court of Appeals, the latter affirmed in toto the decision of the trial court. Hence, the instant petition, contending that: I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE FINDINGS OF THE LOWER COURT THAT VDA. DE CONSUEGRA VS. GSIS IS APPLICABLE TO THE CASE AT BAR. II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPLYING EQUITY IN THE INSTANT CASE INSTEAD OF THE CLEAR AND UNEQUIVOCAL MANDATE OF THE FAMILY CODE. III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THE CASE OF VDA. DE CONSUEGRA VS GSIS TO HAVE BEEN MODIFIED, AMENDED AND EVEN ABANDONED BY THE ENACTMENT OF THE FAMILY CODE. 8 Under Article 40 of the Family Code, the absolute nullity of a previous marriage may be invoked for purposes of remarriage on the basis solely of a final judgment declaring such previous marriage void. Meaning, where the absolute nullity of a previous marriage is sought to be invoked for purposes of contracting a second marriage, the sole basis acceptable in law, for said projected marriage to be free from legal infirmity, is a final judgment declaring the previous marriage void. 9 However, for purposes other than remarriage, no judicial action is necessary to declare a marriage an absolute nullity. For other purposes, such as but not limited to the determination of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property regime, or a criminal case for that matter, the court may pass upon the validity of marriage even after the death of the parties thereto, and even in a suit not directly instituted to question the validity of said marriage, so long as it is essential to the determination of the case. 10 In such instances, evidence must be adduced, testimonial or documentary, to prove the existence of grounds rendering such a previous marriage an absolute nullity. These need not be limited solely to an earlier final judgment of a court declaring such previous marriage void. 11 aDCIHE

11

It is clear therefore that the Court is clothed with sufficient authority to pass upon the validity of the two marriages in this case, as the same is essential to the determination of who is rightfully entitled to the subject "death benefits" of the deceased. Under the Civil Code, which was the law in force when the marriage of petitioner Susan Nicdao and the deceased was solemnized in 1969, a valid marriage license is a requisite of marriage, 12 and the absence thereof, subject to certain exceptions, 13 renders the marriage void ab initio. 14 In the case at bar, there is no question that the marriage of petitioner and the deceased does not fall within the marriages exempt from the license requirement. A marriage license, therefore, was indispensable to the validity of their marriage. This notwithstanding, the records reveal that the marriage contract of petitioner and the deceased bears no marriage license number and, as certified by the Local Civil Registrar of San Juan, Metro Manila, their office has no record of such marriage license. In Republic v. Court of Appeals, 15 the Court held that such a certification is adequate to prove the non-issuance of a marriage license. Absent any circumstance of suspicion, as in the present case, the certification issued by the local civil registrar enjoys probative value, he being the officer charged under the law to keep a record of all data relative to the issuance of a marriage license. Such being the case, the presumed validity of the marriage of petitioner and the deceased has been sufficiently overcome. It then became the burden of petitioner to prove that their marriage is valid and that they secured the required marriage license. Although she was declared in default before the trial court, petitioner could have squarely met the issue and explained the absence of a marriage license in her pleadings before the Court of Appeals and this Court. But petitioner conveniently avoided the issue and chose to refrain from pursuing an argument that will put her case in jeopardy. Hence, the presumed validity of their marriage cannot stand. It is beyond cavil, therefore, that the marriage between petitioner Susan Nicdao and the deceased, having been solemnized without the necessary marriage license, and not being one of the marriages exempt from the marriage license requirement, is undoubtedly void ab initio. It does not follow from the foregoing disquisition, however, that since the marriage of petitioner and the deceased is declared void ab initio, the "death benefits" under scrutiny would now be awarded to respondent Susan Yee. To reiterate, under Article 40 of the Family Code, for purposes of remarriage, there must first be a prior judicial declaration of the nullity

12

of a previous marriage, though void, before a party can enter into a second marriage, otherwise, the second marriage would also be void. Accordingly, the declaration in the instant case of nullity of the previous marriage of the deceased and petitioner Susan Nicdao does not validate the second marriage of the deceased with respondent Susan Yee. The fact remains that their marriage was solemnized without first obtaining a judicial decree declaring the marriage of petitioner Susan Nicdao and the deceased void. Hence, the marriage of respondent Susan Yee and the deceased is, likewise, void ab initio. One of the effects of the declaration of nullity of marriage is the separation of the property of the spouses according to the applicable property regime. 16 Considering that the two marriages are void ab initio, the applicable property regime would not be absolute community or conjugal partnership of property, but rather, be governed by the provisions of Articles 147 and 148 of the Family Code on "Property Regime of Unions Without Marriage." Under Article 148 of the Family Code, which refers to the property regime of bigamous marriages, adulterous relationships, relationships in a state of concubine, relationships where both man and woman are married to other persons, multiple alliances of the same married man, 17 ". . . [O]nly the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions . . ." In this property regime, the properties acquired by the parties through their actual joint contribution shall belong to the co-ownership. Wages and salaries earned by each party belong to him or her exclusively. Then too, contributions in the form of care of the home, children and household, or spiritual or moral inspiration, are excluded in this regime. 18 Considering that the marriage of respondent Susan Yee and the deceased is a bigamous marriage, having been solemnized during the subsistence of a previous marriage then presumed to be valid (between petitioner and the deceased), the application of Article 148 is therefore in order. The disputed P146,000.00 from MBAI [AFP Mutual Benefit Association, Inc.], NAPOLCOM, Commutation, Pag-ibig, and PCCUI, are clearly renumerations, incentives and benefits from governmental agencies earned by the deceased as a police officer. Unless respondent Susan Yee presents proof to the contrary, it could not be said that she contributed money, property

13

or industry in the acquisition of these monetary benefits. Hence, they are not owned in common by respondent and the deceased, but belong to the deceased alone and respondent has no right whatsoever to claim the same. By intestate succession, the said "death benefits" of the deceased shall pass to his legal heirs. And, respondent, not being the legal wife of the deceased is not one of them.

As to the property regime of petitioner Susan Nicdao and the deceased, Article 147 of the Family Code governs. This article applies to unions of parties who are legally capacitated and not barred by any impediment to contract marriage, but whose marriage is nonetheless void for other reasons, like the absence of a marriage license. Article 147 of the Family Code reads ARTICLE 147.When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership. In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the former's efforts consisted in the care and maintenance of the family and of the household. xxx xxx xxx When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the respective surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation.

14

In contrast to Article 148, under the foregoing article, wages and salaries earned by either party during the cohabitation shall be owned by the parties in equal shares and will be divided equally between them, even if only one party earned the wages and the other did not contribute thereto. 19 Conformably, even if the disputed "death benefits" were earned by the deceased alone as a government employee, Article 147 creates a co-ownership in respect thereto, entitling the petitioner to share one-half thereof. As there is no allegation of bad faith in the present case, both parties of the first marriage are presumed to be in good faith. Thus, one-half of the subject "death benefits" under scrutiny shall go to the petitioner as her share in the property regime, and the other half pertaining to the deceased shall pass by, intestate succession, to his legal heirs, namely, his children with Susan Nicdao. In affirming the decision of the trial court, the Court of Appeals relied on the case of Vda. de Consuegra v. Government Service Insurance System, 20 where the Court awarded one-half of the retirement benefits of the deceased to the first wife and the other half, to the second wife, holding that: ". . . [S]ince the defendant's first marriage has not been dissolved or declared void the conjugal partnership established by that marriage has not ceased. Nor has the first wife lost or relinquished her status as putative heir of her husband under the new Civil Code, entitled to share in his estate upon his death should she survive him. Consequently, whether as conjugal partner in a still subsisting marriage or as such putative heir she has an interest in the husband's share in the property here in dispute . . ." And with respect to the right of the second wife, this Court observed that although the second marriage can be presumed to be void ab initio as it was celebrated while the first marriage was still subsisting, still there is need for judicial declaration of such nullity. And inasmuch as the conjugal partnership formed by the second marriage was dissolved before judicial declaration of its nullity, "[t]he only just and equitable solution in this case would be to recognize the right of the second wife to her share of one-half in the property acquired by her and her husband, and consider the other half as pertaining to the conjugal partnership of the first marriage." 21 It should be stressed, however, that the aforecited decision is premised on the rule which requires a prior and separate judicial declaration of nullity of marriage. This is the reason why in the said case, the Court determined the rights of the parties in accordance with their existing property regime.

15

In Domingo v. Court of Appeals, 22 however, the Court, construing Article 40 of the Family Code, clarified that a prior and separate declaration of nullity of a marriage is an all important condition precedent only for purposes of remarriage. That is, if a party who is previously married wishes to contract a second marriage, he or she has to obtain first a judicial decree declaring the first marriage void, before he or she could contract said second marriage, otherwise the second marriage would be void. The same rule applies even if the first marriage is patently void because the parties are not free to determine for themselves the validity or invalidity or their marriage. However, for purposes other than to remarry, like for filing a case for collection of sum of money anchored on a marriage claimed to be valid, no prior and separate judicial declaration of nullity is necessary. All that a party has to do is to present evidence, testimonial or documentary, that would prove that the marriage from which his or her rights flow is in fact valid. Thereupon, the court, if material to the determination of the issues before it, will rule on the status of the marriage involved and proceed to determine the rights of the parties in accordance with the applicable laws and jurisprudence. Thus, in Nial v. Bayadog, 23 the Court explained: [T]he court may pass upon the validity of marriage even in a suit not directly instituted to question the same so long as it is essential to the determination of the case. This is without prejudice to any issue that may arise in the case. When such need arises, a final judgment of declaration of nullity is necessary even if the purpose is other than to remarry. The clause "on the basis of a final judgment declaring such previous marriage void " in Article 40 of the Family Code connoted that such final judgment need not be obtained only for purpose of remarriage. WHEREFORE, the petition is GRANTED, and the decision of the Court of Appeals in CA-G.R. CV No. 51263 which affirmed the decision of the Regional Trial Court of Quezon City ordering petitioner to pay respondent the sum of P73,000.00 plus attorney's fees in the amount of P5,000.00, is REVERSED and SET ASIDE. The complaint in Civil Case No. Q-93-18632, is hereby DISMISSED. No pronouncement as to costs. SO ORDERED. Davide, Jr., C .J ., Kapunan and Pardo, JJ., concur. Puno, J., is on official leave.

16

THIRD DIVISION [G.R. No. 104269. November 11, 1993.] DEPARTMENT OF AGRICULTURE, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, ET AL., respondents. Roy Lago Salcedo for private respondents. SYLLABUS 1.CONSTITUTIONAL LAW; STATE IMMUNITY FROM SUIT; CONSTRUED. The basic postulate enshrined in the constitution that "(t)he State may not be sued without its consent," reflects nothing less than a recognition of the sovereign character of the State and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. It is based on the very essence of sovereignty. As has been aptly observed, by Justice Holmes, a sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends. True, the doctrine, not too infrequently, is derisively called "the royal prerogative of dishonesty" because it grants the state the prerogative to defeat any legitimate claim against it by simply invoking its non-suability. We have had occasion to explain in its defense, however, that a continued adherence to the doctrine of non-suability cannot be deplored, for the loss of governmental efficiency and the obstacle to the performance of its multifarious functions would be far greater in severity than the inconvenience that may be caused private parties, if such fundamental principle is to be abandoned and the availability of judicial remedy is not to be accordingly restricted. 2.ID.; ID.; EXCEPTION ON NON-SUABILITY OF THE STATE. The rule, in any case, is not really absolute for it does not say that the state may not be sued under any circumstance. On the contrary, as correctly phrased, the doctrine only conveys, "the state may not be sued without its consent"; its clear import then is that the State may at times be sued. The States' consent may be given either expressly or impliedly. Express consent may be made through a general law or a special law. In this jurisdiction, the general law waiving the immunity of the state from suit is found in Act No. 3083, where the Philippine government "consents and submits to be
17

sued upon any money claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties." Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a counterclaim or when it enters into a contract. In this situation, the government is deemed to have descended to the level of the other contracting party and to have divested itself of its sovereign immunity. 3.ID.; ID.; ID.; IMPLIED CONSENT THROUGH CONTRACTS; QUALIFICATION. Not all contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made between one which is executed in the exercise of its sovereign function and another which is done in its proprietary capacity. 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 contracts 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. (United States of America vs. Ruiz, 136 SCRA 487) 4.ID.; ID.; ID.; ID.; CASE AT BAR. In the instant case, the Department of Agriculture has not pretended to have assumed a capacity apart from its being a governmental entity when it entered into the contract on security services; nor that it could have, in fact, performed any act proprietary in character. But, be that as it may, the claims of private respondents, i.e., for underpayment of wages, holiday pay, overtime pay and similar other items, arising from the Contract for Security Services, clearly constitute money claims. Act No. 3083, aforecited, gives the consent of the State to be "sued upon any moneyed claim involving liability arising from contract, express or implied, . . ." 5.ID.; ID.; ID.; ID.; MONEY CLAIMS AGAINST THE STATE; PROVISIONS OF COMMONWEALTH ACT NO. 327 REQUIRING FILING OF CLAIMS WITH THE COMMISSION ON AUDIT NOT INCONSISTENT WITH THE LABOR CODE. Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No. 1445, the money claim should first be brought to the Commission on Audit. (Carabao, Inc. vs. Agricultural Productivity Commission) We fail to see any substantial conflict or inconsistency between the provisions of C.A. No. 327 and the Labor Code with respect to money claims against the State. The Labor Code, in

18

relation to Act No. 3083, provides the legal basis for the State liability but the prosecution, enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in C.A. No. 327, as amended by P.D. 1445. 6.ID.; ID.; CONSENT NOT SYNONYMOUS WITH LIABILITY; REQUISITE FOR LIABILITY TO ATTACH. When the State gives its consent to be sued, it does not thereby necessarily consent to an unrestrained execution against it. Tersely put, when the State waives its immunity, all it does, in effect, is to give the other party an opportunity to prove, if it can, that the State has a liability. In Republic vs. Villasor this Court, in nullifying the issuance of an alias writ of execution directed against the funds of the Armed Forces of the Philippines to satisfy a final and executory judgment, has explained, thus The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action "only up to the completion of proceedings anterior to the stage of execution" and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the correspondent appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law.

DECISION

VITUG, J p: For consideration are the incidents that flow from the familiar doctrine of non-suability of the state. llcd In this petition for certiorari, the Department of Agriculture seeks to nullify the Resolution, 1 dated 27 November 1991, of the National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City, denying the petition for injunction, prohibition and mandamus that prays to enjoin permanently the NLRC's Regional Arbitration Branch X and Cagayan de Oro City Sheriff from enforcing the decision 2 of 31 May 1991 of the Executive Labor Arbiter and from attaching and executing on petitioner's property. The Department of Agriculture (herein petitioner) and Sultan Security Agency entered into a contract 3 on 01 April 1989 for security services to be provided by the latter to the said
19

governmental entity. Save for the increase in the monthly rate of the guards, the same terms and conditions were also made to apply to another contract, dated 01 May 1990, between the same parties. Pursuant to their arrangements, guards were deployed by Sultan Agency in the various premises of the petitioner. On 13 September 1990, several guards of the Sultan Security Agency filed a complaint for underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift differential pay, holiday pay and overtime pay, as well as for damages, 4 before the Regional Arbitration Branch X of Cagayan de Oro City, docketed as NLRC Case No. 10-09-00455-90 (or 10-10-00519-90, its original docket number), against the Department of Agriculture and Sultan Security Agency. LLjur The Executive Labor Arbiter rendered a decision on 31 May 1991, finding herein petitioner jointly and severally liable with sultan Security Agency for the payment of the money claims, aggregating P266,483.91, of the complainant security guards. The petitioner and Sultan Security Agency did not appeal the decision of the Labor Arbiter. Thus, the decision became final and executory. cdrep On 18 July 1991, the Labor Arbiter issued a writ of execution, 5 commanding the City Sheriff to enforce and execute the judgment against the property of the two respondents. Forthwith, or on 19 July 1991, the City Sheriff levied on execution the motor vehicles of the petitioner, i.e., one (1) unit Toyota Hi-Ace, one (1) unit Toyota Mini Cruiser, and one (1) unit Toyota Crown. 6 These units were put under the custody of Zacharias Roa, the property custodian of the petitioner, pending their sale at public auction or the final settlement of the case, whichever would come first. A petition for injunction, prohibition and mandamus, with prayer for preliminary writ of injunction, was filed by the petitioner with the National Labor Relations Commission ("NLRC"), Cagayan de Oro, alleging, inter alia, that the writ issued was effected without the Labor Arbiter having duly acquired jurisdiction over the petitioner, and that, therefore, the decision of the Labor Arbiter was null and void and all actions pursuant thereto should be deemed equally invalid and of no legal effect. The petitioner also pointed out that the attachment or seizure of its property would hamper and jeopardize petitioner's governmental functions to the prejudice of the public good.

On 27 November 1991, the NLRC promulgated its assailed resolution; viz:

20

"WHEREFORE, premises considered, the following orders are issued: 1.The enforcement and execution of the judgments against petitioner in NLRC RABX Cases Nos. 10-10-00455-90; 10-10-0481-90 and 10-10-00519-90 are temporarily suspended for a period of two (2) months, more or less, but not extending beyond the last quarter of calendar year 1991 to enable petitioner to source and raise funds to satisfy the judgment awards against it; 2.Meantime, petitioner is ordered and directed to source for funds within the period above-stated and to deposit the sums of money equivalent to the aggregate amount it has been adjudged to pay jointly and severally with respondent Sultan Security Agency with the Regional Arbitration Branch X, Cagayan de Oro City within the same period for proper disposition; 3.In order to ensure compliance with this order, petitioner is likewise directed to put up and post sufficientsurety and supersedeas bond equivalent to at least to fifty (50%) percent of the total monetary award issued by a reputable bonding company duly accredited by the Supreme Court or by the Regional Trial court of Misamis Oriental to answer for the satisfaction of the money claims in case of failure or default on the part of petitioner to satisfy the money claims; 4.The City Sheriff is ordered to immediately release the properties of petitioner levied on execution within ten (10) days from notice of the posting of sufficient surety or supersedeas bond as specified above. In the meanwhile, petitioner is assessed to pay the costs and/or expenses incurred by the City Sheriff, if any, in connection with the execution of the judgments in the above-stated cases upon presentation of the appropriate claims or vouchers and receipts by the city Sheriff, subject to the conditions specified in the NLRC Sheriff, subject to the conditions specified in the NLRC Manual of Instructions for Sheriffs; 5.The right of any of the judgment debtors to claim reimbursement against each other for any payments made in connection with the satisfaction of the judgments herein is hereby recognized pursuant to the ruling in the Eagle Security case, (supra). In case of dispute between the judgment debtors, the Executive Labor Arbiter of the Branch of origin may upon proper petition by any of the parties conduct arbitration proceedings for the purpose and thereby render his decision after due notice and hearings;

21

6.Finally, the petition for injunction is Dismissed for lack of basis. The writ of preliminary injunction previously issued in Lifted and Set Aside and in lieu thereof, a Temporary Stay of Execution is issued for a period of two (2) months but not extending beyond the last quarter of calendar year 1991, conditioned upon the posting of a surety or supersedeas bond by petitioner with in ten (10) days from notice pursuant to paragraph 3 of this disposition. The motion to admit the complaint in intervention is Denied for lack of merit while the motion to dismiss the petition filed by Duty Sheriff in Noted. LLpr SO ORDERED." In this petition for certiorari, the petitioner charges the NLRC with grave abuse of discretion for refusing to quash the writ of execution. The petitioner faults the NLRC for assuming jurisdiction over a money claim against the Department, which, it claims, falls under the exclusive jurisdiction of the Commission on Audit. More importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on the non-suability of the State. The private respondents, on the other hand, argue that the petitioner has impliedly waived its immunity from suit by concluding a service contract with Sultan Security Agency. The basic postulate enshrined in the constitution that "(t)he State may not be sued without its consent," 7 reflects nothing less than a recognition of the sovereign character of the State and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. 8 It is based on the very essence of sovereignty. As has been aptly observed, by Justice Holmes, a sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends. 9 True, the doctrine, not too infrequently, is derisively called "the royal prerogative of dishonesty" because it grants the state the prerogative to defeat any legitimate claim against it by simply invoking its nonsuability. 10 We have had occasion to explain in its defense, however, that a continued adherence to the doctrine of non-suability cannot be deplored, for the loss of governmental efficiency and the obstacle to the performance of its multifarious functions would be far greater in severity than the inconvenience that may be caused private parties, if such fundamental principle is to be abandoned and the availability of judicial remedy is not to be accordingly restricted. 11 The rule, in any case, is not really absolute for it does not say that the state may not be sued under any circumstance. On the contrary, as correctly phrased, the doctrine only conveys, "the
22

state may not be sued without its consent;" its clear import then is that the State may at times be sued. 12 The States' consent may be given either expressly or impliedly. Express consent may be made through a general law 13 or a special law. 14 In this jurisdiction, the general law waiving the immunity of the state from suit is found in Act No. 3083, where the Philippine government "consents and submits to be sued upon any money claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties." 15 Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a counterclaim 16 or when it enters into a contract. 17 In this situation, the government is deemed to have descended to the level of the other contracting party and to have divested itself of its sovereign immunity. This rule, relied upon by the NLRC and the private respondents, is not, however, without qualification. Not all contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made between one which is executed in the exercise of its sovereign functions and another which is done in its proprietary capacity. 18 In United States of America vs. Ruiz, 19 where the questioned transaction dealt with the improvements on the wharves in the naval installation at Subic Bay, we held: "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 contracts relates to the exercise of its sovereign

23

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." In the instant case, the Department of Agriculture has not pretended to have assumed a capacity apart from its being a governmental entity when it entered into the questioned contract; nor that it could have, in fact, performed any act proprietary in character. But, be that as it may, the claims of private respondents, i.e., for underpayment of wages, holiday pay, overtime pay and similar other items, arising from the Contract for Security Services, clearly constitute money claims. Act No. 3083, aforecited, gives the consent of the State to be "sued upon any moneyed claim involving liability arising from contract, express or implied, . . ." Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No. 1445, the money claim should first be brought to the Commission on Audit. Thus, in Carabao, Inc., vs. Agricultural Productivity Commission, 20 we ruled: "(C)laimants have to prosecute their money claims against the Government under Commonwealth Act 327, stating that Act 3083 stands now merely as the general law waiving the State's immunity from suit, subject to its general limitation expressed in Section 7 thereof that 'no execution shall issue upon any judgment rendered by any Court against the Government of the (Philippines), and that the conditions provided in Commonwealth Act 327 for filing money claims against the Government must be strictly observed.' " We fail to see any substantial conflict or inconsistency between the provisions of C.A. No. 327 and the Labor Code with respect to money claims against the State. The Labor Code, in relation to Act No. 3083, provides the legal basis for the State liability but the prosecution, enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in C.A. No. 327, as amended by P.D. 1445.

When the State gives its consent to be sued, it does not thereby necessarily consent to an unrestrained execution against it. Tersely put, when the State waives its immunity, all it does, in effect, is to give the other party an opportunity to prove, if it can, that the State has a liability. 21 In Republic vs. Villasor 22 this Court, in nullifying the issuance of analias writ of

24

execution directed against the funds of the Armed Forces of the Philippines to satisfy a final and executory judgment, has explained, thus The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action "only up to the completion of proceedings anterior to the stage of execution" and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the correspondent appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law. 23 WHEREFORE, the petition is GRANTED. The resolution, dated 27 November 1991, is hereby REVERSED and SET ASIDE. The writ of execution directed against the property of the Department of Agriculture is nullified, and the public respondents are hereby enjoined permanently from doing, issuing and implementing any and all writs of execution issued pursuant to the decision rendered by the Labor Arbiter against said petitioner. SO ORDERED. Feliciano, Bidin, Romero and Melo, JJ ., concur.

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FIRST DIVISION [G.R. No. 140091. August 10, 2006.] FELICIANO G. MANANSAN, petitioner, vs. REPUBLIC OF THE PHILIPPINES and PHILIPPINE NATIONAL BANK, respondents.

DECISION

CALLEJO, SR., J p: This is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals (CA) in CAG.R. CV No. 52063 affirming with modification the decision of the Regional Trial Court (RTC) of Manila in Civil Case No. 123003, granting the complaint of the Republic of the Philippines, through the Department of Education, Culture and Sports (DECS) (now DepEd), for the expropriation of the property of Agus Development Corporation (ADC, for brevity) and Feliciano G. Manansan. On April 17, 1979, the Republic, in behalf of the DECS, filed a complaint in the RTC of Manila for the expropriation of two parcels of land with improvements thereon located at Geronimo Street, Sampaloc, Manila: one consisted of 2,905.6 square meters owned by ADC and covered by Transfer Certificate of Title (TCT) No. 104374; and the other 584.5 square meters owned by Manansan and covered by TCT No. 132892. The property was to be used for the construction of the Trinidad Tecson Elementary School. Plaintiff averred that the amount of just compensation was P884,830.00. Plaintiff amended its complaint to implead the Philippine National Bank (PNB) in whose favor ADC had mortgaged the property as well as the occupants of the property. Plaintiff averred that the just compensation for the property was P904,830.00. On October 15, 1980, plaintiff filed a motion for the issuance of a writ of possession on its allegation that, based on the certification of the City Treasurer of Manila issued on December 13, 1979, the amount of P90,483.00 representing 10% of the assessed value of the property

26

had already been deposited with the PNB. Manansan did not object to the motion. On January 16, 1981, the RTC issued a writ of possession in favor of plaintiff. Plaintiff took possession of the property, caused the demolition of some of the improvements, and had the elementary school constructed thereon. On June 23, 1987, ADC filed a motion for the appointment of three (3) commissioners to fix the just compensation and require plaintiff to deposit 10% thereof. Plaintiff opposed the motion, insisting that it had already deposited the same (or P90,483.00) on December 3, 1979 with the PNB branch. In its comment on September 28, 1987, the PNB alleged that it had no knowledge that the amount had been deposited in the names of ADC and Manansan. When ordered to show proof of the deposit, plaintiff submitted a PNB deposit slip amounting to P90,483.00 in favor of the City Treasurer, and not in favor of defendants as owners of the property. DaAETS Defendants filed a motion to be restored to the possession of the subject properties. On September 13, 1990, the RTC denied the motion on the ground that restoration was no longer feasible. 2 Meanwhile, the court fixed provisionally the value of the property at P904,830.00 and required plaintiff to deposit the whole amount. On September 26, 1994, the court appointed the following three (3) commissioners to determine the just compensation of the properties expropriated: (1) City Assessor Reynaldo Jaylo; (2) City Auditor Reynaldo Ventura; and (3) Asian Appraisal Company, Inc. (AACI), thru its representative. However, on October 28, 1994, the court replaced City Auditor Reynaldo Ventura with the City Treasurer of Manila. On March 11, 1995, the City Assessor and City Treasurer of Manila submitted a Joint Appraisal Report of the expropriated properties and fixed the valuation of both land and buildings at P15,893,111.00. The valuation was based on the 1995 BIR Zonal Value, broken down as follows: Land Appraisal: Lot 6 Blk. RP 37 Psd 47-Area597.30 sq. m. Lot 7 Blk. RP 37 Psd 47-Area600.60 sq. m. Lot 8 Blk. RP 37 Psd 47-Area584.50 sq. m.

27

Lot 12 Blk. RP 37 Psd 47-Area1,122.90 sq. m. Lot 13 Blk. RP 37 Psd 47-Area584.80 sq. m. Total3,490.10 sq. m. 1995 BIR Zonal ValueP4,400.00/sq. m. Land Areax 3,490.10 sq. m. P15,356,440.00 Building Appraisal: Building 1P270,010.00 Building 2144,014.00 Building 329,445.00 Building 439,690.00 Building 519,012.00 Perimeter Wall Fence34,500.00 P536,671.00Market value for Building & Fence Total Market Value of Land, Building and FenceP15,893,111.00

28

On the other hand, the AACI submitted two separate reports on the fair market values of the subject properties, as ofApril 15, 1995, using the market data approach, to wit: 1)Lots 6, 7, 12 & 13 (owned by Agus) 2,905.60 sq. m. P14,000.00/sq.m. x 2,905.60 sq. m. = P40,678,000.00 2)Lot 8 (owned by Feliciano Manansan) 584.50 sq. m. P14,000.00/sq.m. x 584.50 sq. m. = P8,183,000.00 (Emphasis supplied) 3 The appraisal of AACI was based on the extent, character and utility of the property sales and holding prices of similar land, and the highest and best use of the property as of April 15, 1995. 4 In fine, under the report of the City Treasurer and City Assessor, the value of the subject properties was fixed at P3,490.50 per square meter, while AACI fixed the value of the land at P14,000.00 per square meter. On January 17, 1996, the trial court rendered judgment in favor of plaintiff. 5 The court fixed the fair market value of the property of defendants at P2,200.00 per square meter, or one-half of the 1995 BIR Zonal Value submitted by the City Treasurer and City Assessor. The fallo of the decision reads: WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendants, as follows: a)the lands (described as Lots 6, 7, 12 and 13 of Bk. RP 37) with an area of 2,905.6 sq. m. owned by defendant Agus Development Corporation and covered by TCT No. 104374 as well as the land (described as Lot 8 of Bk. RP 37) with an area of 584.5 sq. m. owned by defendant FelicianoManansan and covered by TCT No. 132892 with the improvements erected thereon, located at Geronimo St., Sampaloc, Manila and declared expropriated to be used as a public school, the Trinidad Tecson Elementary School; DHIaTS

29

b)the fair market value of the lands of the defendants is fixed at P2,200.00/sq. meter; c)the fair market values of the buildings or fence erected on the lands of Agus Development Corporation and Feliciano Manansan are P250,163.00 and P18,172.50, respectively; d)the Republic must pay the following defendants, to wit: 1)Agus Development Corporation, the sum of P6,642,483.00, and from which amount, the indebtedness incurred by Agus Development Corporation from the Phil. National Bank should first be liquidated and satisfied before the remaining balance thereof shall be delivered/paid to defendant Agus Development Corporation; 2)Feliciano Manansan, the sum of P1,304,072.50; With costs against the plaintiff. SO ORDERED. 6 The trial court declared that the joint assessment of the City Treasurer and City Assessor recommended that defendants be paid P15,893,111.00 as just compensation for the properties. However, the joint assessment was based on the BIR Zonal Value of the property as of 1995 instead of 1979 when the complaint was filed. Moreover, instead of directing the commissioners to revise their valuation reports and base the just compensation of the property on their market value as of 1979, the court merely resolved to cut in half the BIR Zonal Value of P4,400.00 to P2,200.00 per square meter, and declare that the fair market value of Manansan's lot was P1,285,900.00, or a total of P1,304,072.50 including the value of the improvements thereon. The RTC declared that it was not bound by the report of the commissioners, which was merely advisory in character. However, no attorney's fees were awarded to defendants. 7 Manansan and ADC thereafter appealed the decision to the CA. In his brief as appellant, Manansan alleged the following:

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A.THE LOWER COURT ERRED IN SETTING THE JUST COMPENSATION OF DEFENDANT'S PROPERTIES AT P7,946,555.55 WHICH IS HALF THE VALUE SET BY THE CITY TREASURER AND ASSESSOR. B.THE LOWER COURT ERRED IN NOT CONSIDERING THE VALUATION REPORT OF THE PRIVATE APPRAISAL COMPANY, ASIAN APPRAISAL COMPANY, INC., AS THE MORE CREDIBLE BASIS TO DETERMINE THE FAIR MARKET VALUE OF DEFENDANTS' PROPERTIES BY WAY OF JUST COMPENSATION. C.THE LOWER COURT ERRED IN NOT AWARDING ATTORNEY'S FEES AS PART OF JUST COMPENSATION. 8 On the issue of just compensation, Manansan alleged that the amount of P7,946,555.55 was not the fair and full equivalent for the loss sustained by him which is the measure of the indemnity. He pointed out that there was a blatant admission that the supposed 1979 valuations were taken or arrived at through the 1995 market values as submitted by the City Treasurer and City Assessor. Thus, he insisted, the halved amount of P7,946,555.55 is not the "fair and full equivalent for the loss sustained which is the measure of the indemnity." 9 Manansan asserted that the trial court should have adopted the appraisal of AACI which determined the fair market value of his property at P8,183,000.00. After all, the market data approach was used, and the court based its valuation on the sales and listings of comparable property registered within the immediate vicinity. He emphasized that the records of recent sales and offerings of similar land were analyzed, and comparison made for such factors as size, characteristics of the property, location, quality and prospective use. He averred that the valuation of the City Treasurer and City Assessor, which the lower court considered in arriving at the median sum of P7,946,555.55, should not have been given the weight it was accorded in the assailed decision, as it is certainly and evidentially inferior to that of the determination made by the AACI. Manansan maintained that this fact can be deduced from the rejection of the mode of determining just compensation based on the valuation of the assessor, made by no less than the Supreme Court inExport Processing Zone Authority v. Dulay. 10

On the issue of attorney's fees, Manansan averred that conformably with the ruling of this Court in Capitol Subdivision, Inc. v. Province of Negros Occidental, 11 he is entitled to attorney's fees. Thus, he prayed that the decision of the RTC be affirmed with modification, to wit:

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WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court that the Decision appealed from be modified and plaintiff-appellee ordered to pay defendant-appellant Feliciano Manansan the following: 1.P4,091,500.00 (median of the appraisal of Asian Appraisal Company for lot 8: 584.50 sq. m. x P14,000/sq. m.); cCDAHE 2.Reasonable attorney's fees equivalent to 10% of the amount involved; 3.Legal interest on the sum awarded (P4,091,500.00) as just compensation computed from 1979 up to the date of finality of judgment; 4.The costs of suit. 12 On the other hand, the Republic, through the Office of the Solicitor General, averred that what should apply is the ruling of this Court in Export Processing Zone Authority v. Dulay. 13 The valuation report of AACI recommending P40,678,000.00 for Manansan's land only is too much to be deemed credible by the trial court. It was stressed that it took possession of the property only on January 23, 1981; hence, its fair market value should be based as of that year, and not in 1995 when the commissioners submitted their report. On October 28, 1998, the CA rendered judgment affirming with modification the decision of the RTC. The fallo of the decision reads: WHEREFORE, the judgment herein appealed from is hereby AFFIRMED, with the MODIFICATION that the plaintiff-appellee is hereby ordered to pay the defendants-appellants legal interest (6% per annum) on the amounts of P6,642,483.00 and P1,304,072.50 due them, from January 16, 1981 until the said amounts are fully paid. No pronouncement as to costs. SO ORDERED. 14 In affirming the just compensation fixed by the trial court, the appellate court declared that the City Treasurer and City Assessor submitted a second report on September 11, 1995 recommending a value of only P1,065,283.22 for the land and P536,671.00 for the building plus accumulated legal interest in the amount of P1,633,993.30, or in the total amount of P3,235,947.52. It ratiocinated that the appraisals of AACI were also based on estimates of
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market values as of April 15, 1995, not as of 1979 or 1981. Moreover, such estimates were based not really on sales of similar properties in the vicinity, but on offers to sell found in newspaper advertisements. 15 Both parties filed motions for reconsideration, which the appellate court denied on September 15, 1999. 16 In the instant petition for review on certiorari, Manansan (now petitioner) raises the following issues: 1.WHETHER OR NOT EVIDENCE NOT FORMALLY OFFERED NOR FORMALLY ADMITTED MAY BE CONSIDERED BY THE COURT OF APPEALS IN DETERMINING THE DATE WHEN JUST COMPENSATION SHOULD BE BASED; 2.WHETHER OR NOT THE JUST COMPENSATION FOR A PROPERTY MAY BE BASED ONLY ON THE TRIAL COURT'S EXERCISE OF MERE HALVING A 1993 BIR ZONAL VALUATION AS THE BASIS OF JUST COMPENSATION AS APPROXIMATE VALUATION IN 1979, DATE OF USURPATION; 3.WHETHER OR NOT ATTORNEY'S FEES IS ALLOWED IN EXPROPRIATION PROCEEDINGS IN THE LIGHT OF THE CIRCUMSTANCES OF THIS CASE. 17 On the first issue, petitioner avers that the public respondent failed to prove that it deposited 10% of the assessed value of the property on December 13, 1979. He points out that it failed to formally offer in evidence the certificate issued by the City Treasurer of Manila that the P90,483.00 had been deposited as directed by the RTC. Considering that it was not admitted in evidence by the trial court, such certification cannot be considered as proof that the said amount had been deposited by public respondent. HCETDS On the second issue, petitioner insists that the halving of the valuation of the City Treasurer and City Assessor of P15,893,111.00 made by the trial and appellate courts is not based on competent evidence; it was merely based on the trial court's belief that one-half of the amount or P7,946,555.55 appears adequate to be paid to petitioner and ADC. Petitioner maintains that the trial court's formulation of the fair market value of the property must be based on competent evidence and not on speculations or surmises. To bolster his claim, petitioner cited the ruling of the Court inManila Railway Company v. Fabie. 18 On the last issue, petitioner posits that he was constrained to engage the services of counsel for the case, which has been pending for more than 20 years. The granting of his plea for

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attorney's fees does not even compensate his expenses in litigating this case. Petitioner prays that judgment be rendered in his favor ordering the public respondent to pay him the sum of P2,571,800.00 (584.50 sq.m. x P4,400.00 per square meter based on Bureau of Internal Revenue Zonal Valuation as of 1995) plus legal interest (at 6% per annum) from January 16, 1981 until fully paid; reasonable attorney's fees equivalent to 10% of the total award; and cost of suit. 19 By way of comment, public respondent avers that it had deposited P90,483.00 representing 10% of the just compensation as alleged in the complaint pursuant to Presidential Decree (P.D.) No. 1533, and that on January 16, 1981, the trial court issued an order for the issuance of a writ of possession and that a writ of possession was issued on January 23, 1981. On the strength of said writ, respondent took possession of the property, caused the demolition of the improvements on the property, and had a school building constructed thereon. It insists that under Section 2 of P.D. No. 1533, it is not required that the deposit be in the name and for the account of the owners of the property to be expropriated; the certification of the City Treasurer of Manila is not the only evidence to prove the 10% deposit; and the order of the trial court for the issuance of a writ of possession presupposes that the alleged 10% deposit had been complied with. Public respondent also points out that petitioner never questioned the 10% deposit it made with the PNB, or requested the City Treasurer to comply with P.D. No. 1533, or attempted to withdraw the deposit; it was all along, the ADC which questioned the deposit for allegedly being defective. Thus, the trial court did not err in basing the valuation of the property as of 1981, the time public respondent took possession of the property, and in reducing in half the valuation report submitted by the City Treasurer and Assessor, considering further that P7,946,555.55 is the amount nearest to the original value of P904,830.00. It insists that the amount of P1,334,580.00 arrived at by the trial court and affirmed by the CA is reasonable. Petitioner counters that while a writ of possession was issued by the trial court on January 23, 1981, it cannot thereby be concluded that the required 10% deposit had been complied with by public respondent. It insists that the alleged PNB Check No. 330334 representing the supposed 10% deposit had not been offered and admitted in evidence which is required under Section 2, Rule 67 of the Rules of Court, which reads: SEC. 2.Entry of plaintiff upon depositing value with authorized government depositary. Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or

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enter upon the possession of the real property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary. If personal property is involved, its value shall be provisionally ascertained and the amount to be deposited shall be promptly fixed by the court. TIADCc After such deposit is made, the court shall order the sheriff or other proper officer to forthwith place the plaintiff in possession of the property involved and promptly submit a report thereof to the court with service of copies to the parties. Petitioner claims that public respondent's reliance on the ruling of this Court in B.H. Berkenkotter & Co. v. Court of Appeals 20 is misplaced. To sustain public respondent's contention that the just compensation may be determined as of the filing of the complaint for expropriation is to condone the usurpation by the government of private property by the simple expedient of filing a complaint even if the latter is not prepared to allocate the requisite funds therefor. The petition is partially granted. On the first issue, we agree with the submission of public respondent that petitioner never raised the inadmissibility and lack of probative weight of the certification of the City Treasurer (on the ground that it was never offered in evidence) in the trial court; neither was the issue of public respondent's failure to offer said certification in evidence to prove that the P90,483.00 was deposited with the PNB raised in the appellate court. The issue was raised for the first time only in this Court, and the well-entrenched rule is that a party is proscribed from raising in this Court an issue which was never raised in the trial court. 21 Moreover, there is no dispute that public respondent deposited P90,483.00 with the PNB on December 19, 1979, except that the deposit was in the name of the City Treasurer and not in the names of petitioner and ADC as owners of the expropriated property. There was a hearing on public respondent's motion for the issuance of a writ of possession during which the matter of the regularity and validity of the deposit must have been discussed by the parties. The RTC

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found the motion in order and granted the same in its Order dated January 10, 1981, which in fine is a confirmation that the requisite deposit was in order. This enabled public respondent to construct the elementary school on the expropriated property.

It must be stressed that petitioner never assailed the order of the trial court in the CA and in this Court; he never bothered to file any motion for the remittance of his share of the 10% deposit in the court a quo, neither did he file a motion for the reconsideration of the trial court's January 10, 1981 Order. While ADC sought the repossession of the property on account of public respondent's alleged failure to deposit the just compensation of the property as provisionally fixed by the trial court, petitioner failed to do so. On the second issue, we agree with petitioner's contention that the trial court erred in reducing in half the assessment of the City Treasurer and City Assessor (P15,893,111.00) based on the BIR Zonal Value as of 1995, and consequently fixing the fair market value of the subject property at P7,946,555.55. There is no evidence on record that the fair market value of the property, as of 1979 when public respondent filed its complaint for expropriation in the RTC, was P7,946,555.55. The trial court merely indulged in speculations and surmises when it declared that the fair market value of the property in 1979 was P7,946,555.55. The rule is that the value of the property must be determined either as of the date of the taking of the property or the filing of the complaint, whichever comes first. 22 In this case, the complaint was filed on April 17, 1979, and the trial court issued the writ of possession on January 10, 1981. The City Treasurer, City Assessor and the AACI based their assessment reports as of 1995 and not as of 1979 or a difference of 16 years. Indeed, the fair market value of the property in 1979 cannot be fixed by the mere expedient of cutting in half the assessment made by the City Treasurer and City Assessor or AACI for that matter as of 1997. Such a process is arbitrary and a grave abuse of the trial court's discretion. It bears stressing that just compensation means a fair and full equivalent for the loss sustained. All the facts as to the condition of the property and its surroundings, its improvements and capabilities should be considered. 23 We agree with the contention of the Office of the Solicitor General that the trial court was not bound by the assessment report of the commissioners and that it had the discretion to reject the same and substitute its own judgment on its value as gathered from the record. The court may accept the report/recommendation of the commissioners in toto and base its judgment

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thereon. 24 However, the decision of the court must be based on all established rules, upon correct legal principles and competent evidence. The court is proscribed from basing its judgment on speculations or surmises.25 While tax values can serve as guide, the same cannot be absolute substitutes for just compensation. 26 Just compensation is the just and complete equivalent of the loss that the owner of the thing expropriated has to suffer by reason of the expropriation. The court should thus insist that the owner of private property should be compensated only for what he actually loses; it is not intended that the compensation shall extend beyond the loss or injury. 27 Since the commissioners failed to base their assessment of the property as of 1979 and relied solely on data as of 1995 instead of 1979, it behooved the trial court to direct them to revise their assessment, or to discharge them and appoint new ones, or to require the parties to adduce competent evidence to prove the fair market value of the property as of 1979. The trial court failed to do so. Worse, the CA condoned the lapse of the trial court. Considering all the foregoing, the Court has no other recourse but to remand the case to the trial court. DCScaT On the last issue, the Court affirms the following ratiocination of the CA: We cannot say the same about the appellants' claims for attorney's fees. There appears to be no basis for the same. Attorney's fees are not automatically awarded in every action for expropriation. The case of National Power Corp. v. Court of Appeals, supra, relied upon by appellant Agus Development Corporation, does not even award attorney's fees. It only refers to the case of Amigable v. Cuenca where the Supreme Court held that the government should pay attorney's fees which should be fixed by the trial court after hearing. But the facts in that case are different from the case at bench. In that case, the government simply occupied the plaintiff-appellant's property without benefit of expropriation. 28 IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 52063 is AFFIRMED WITH MODIFICATION. The trial court is ORDERED to RECONSTITUTE the commissioners or designate a panel of new commissioners who will assess the fair market value of the petitioner's property as of 1979, and to render judgment on the just compensation for the property in due course. No costs. SO ORDERED.

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Panganiban, C.J., Ynares-Santiago, Austria-Martinez and Chico-Nazario, JJ., concur.

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FIRST DIVISION [G.R. No. L-27299. June 27, 1973.] QUIRICO DEL MAR, petitioner, vs. THE PHILIPPINE VETERANS ADMINISTRATION , respondent-appellant. Quirico del Mar in his own behalf. Solicitor General Felix V . Makasiar, First Assistant Solicitor General Esmeraldo Umali and Solicitor Eulogio Raquel Santosfor respondent-appellant.

DECISION

CASTRO, J p: On June 20, 1964, Quirico del Mar (hereinafter referred to as del Mar) filed with the Court of First Instance of Cebu a petition for mandamus (civil case R-8465) against the Philippine Veterans Administration (hereinafter referred to as the PVA), to compel the latter to continue paying him his monthly life pension of P50 from the date of its cancellation in March 1950 to June 20, 1957, and thereafter, or from June 22, 1957, his monthly life pension, as increased by Republic Act 1920, 1 of P100, and to pay to him as well the monthly living allowance of P10 for each of his unmarried minor children below eighteen years of age, 2 pursuant to the said Republic Act 1920 which took effect on June 22, 1957. DelMar also asked for compensatory, moral and exemplary damages. In his petition below, del Mar averred that he served during World War II as chief judge advocate of the Cebu Area Command (a duly recognized guerrilla organization) with the rank of major; that he subsequently obtained an honorable discharge from the service on October 20, 1946 on a certificate of permanent total physical disability; that upon proper claim presented and after hearing and adjudication, the Philippine Veterans Board (the PVA's predecessor) granted him a monthly life pension of P50 effective January 28, 1947; that in March 1950, the said Board discontinued payment of his monthly life pension on the ground
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that his receipt of a similar pension from the United States Government, through the United States Veterans Administration, by reason of military service rendered in the United States Army in the Far East during World War II, precluded him from receiving any further monthly life pension from the Philippine Government; that he wrote the said Board twice, demanding that it continue paying his monthly life pension, impugning the cancellation thereof as illegal; and that his demands went unheeded. The PVA reiterated its contention that del Mar's receipt of a similar pension from the United States Government effectively barred him from claiming and receiving from the Philippine Government the monthly life pension granted him as well as the monthly allowances he claimed for his five living unmarried minor children below eighteen years of age. The PVA also asserted that it is discretionary on its part to grant or discontinue the pension sought by del Mar. In addition, it alleged that the action of del Mar was premature because of his failure to exhaust administrative remedies before invoking judicial intervention, and that the court a quo was without jurisdiction to try the case as del Mar'sdemand partakes of a money claim against the PVA a mere agency of the Philippine Government and, in effect, of a suit against the Government which is not suable without its consent. The PVA thus prayed for the dismissal of the petition. After due trial, the court a quo rendered judgment upholding del Mar's claims. In its decision dated February 27, 1965, the court (1) ordered the PVA to pay to del Mar his monthly life pension corresponding to the period from April 1950 to May 1957 at the rate of P50 a month, adding up to P4,334.86, and his monthly life pension corresponding to the period from June 22, 1957 to February 1965 at the rate of P100 a month totalling P9,200, and thereafter to continue to pay his monthly life pension at the rate of P100 a month; (2) directed del Mar to file with the PVA the corresponding written application for the payment to him of the monthly living allowance of P10 for each of his five living unmarried minor children from June 22, 1957; and ordered the PVA to give due course to the written application as soon as del Mar shall have filed the same with it, and once approved, to make the necessary payment of the accumulated unpaid living allowances due to each of the said children from June 22, 1957 as well as the current ones until each one of them ceases to be entitled to the same; and (3) directed the PVA, in the event of unavailability of funds to pay the claims aforementioned, to set aside funds from such as are intended to pay the veterans' living pensions, or to cause the same to be appropriated in its budget in order to comply with the judgment. For lack of basis, the court a quo omitted to pass judgment on del Mar's claim for moral and exemplary damages.

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Hence, the present appeal by the PVA. The PVA alleges that the court a quo erred (1) in not holding itself without jurisdiction to try civil case R-8465; (2) in not finding as premature the petition for mandamus filed by del Mar due to the failure of the latter to exhaust available administrative remedies before seeking judicial intervention; (3) in declaring null and void section 6 of PVA Regulation No. 2 relied upon by it in discontinuing the monthly life pension of del Mar since March 1950; (4) in not finding it discretionary on the part of the PVA to grant or discontinue the said pension; (5) in ordering it to pay to del Mar the amounts stated in the judgment; and (6) in ordering it to give due course to and approve the application which the said court directed del Mar to file for the payment to the latter of the monthly living allowance for each of his living unmarried minor children below eighteen years of age. This appeal raises several questions which will be discussed in seriatim. 1.The PVA argues that the court a quo was without jurisdiction to try civil case R-8465 because it involves a money claim against the said PVA a mere agency of the Government performing governmental functions with no juridical personality of its own and, in reality, partakes of an action against the Philippine Government which is immune from suit without its consent, citing this Court's observation in Republic of the Philippines vs. Ramolete and Del Mar, 3 to wit: ". . . a charge against the Government where the money involved is part of the public funds, is a suit against the Government, and the happenstance that the action is directed against the PVA as an entity and not against the Republic of the Philippines is of no moment. Perforce, the Republic of the Philippines, on matters ofadministration of all benefits due to the veterans of revolutions and wars, and to their heirs and beneficiaries, acts and has to act through its agency and instrumentality, the PVA. The suit should therefore be regarded as one against the Republic of the Philippines; the PVA is therefore exempt from the filing of an appeal bond." The PVA labors under a muddled and mistaken appreciation of the aforecited observation. This Court stated in precise language the sole issue for resolution in that case, thus: "Is the PVA exempt from the filing of an appeal bond? To resolve this issue, we must initially determine whether the PVA is an agency or instrumentality of the

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Republic of the Philippines, and, in the affirmative, whether it exercises governmental functions." Indeed, the decisive point in the aforementioned case related to the status of the PVA as an agency or instrumentality of the Republic of the Philippines exercising governmental functions as to be entitled to exemption from the filing of the appeal bond per section 16 of Rule 141 of the Rules of Court, not to the nature of the claim sought to be enforced by the private respondent therein (del Mar) against the said PVA. Thus, in the said case, this Court made a lengthy disquisition on the history, development and organization of the PVA to show conclusively that the same is an entity or agency of the Republic of the Philippines performing governmental functions. True, this Court referred to the claim of the private respondent therein as "a claim for a sum of money against the Government, which claim, if adjudged finally to be meritorious, would render the Republic of the Philippines liable therefor," since the funds from which the claim was to be satisfied were funds appropriated by Congress for the PVA; but this Court properly and advisedly omitted any study and consideration of the question of suability or non-suability of the Government in connection therewith. As a general proposition, the rule well-settled in this jurisdiction on the immunity of the Government from suit without its consent holds true in all actions resulting in "adverse consequences on the public treasury, whether in the disbursements of funds or loss of property." 4 Needless to state, in such actions, which, in effect, constitute suits against the Government, the court has no option but to dismiss them Nonetheless, the rule admits of an exception It finds no application where a claimant institutes an action against a functionary who fails to comply with his statutory duty to release the amount claimed from the public funds already appropriated by statute for the benefit of the said claimant. 5 As clearly discernible from the circumstances, the case at bar falls under the exception. 2.The second question posed by the PVA relates to del Mar's alleged failure to exhaust administrative remedies before resorting to court action. Suffice it to state that where a case as in the present controversy involves a question solely of a legal nature, there arises no need for the litigant to resort to all administrative remedies available to him before seeking judicial relief. 6 3.The validity of section 6 of Regulation No. 2 of the "Rules and Regulations on Veterans' Benefits" adopted by the PVA constitutes the core of the present controversy. The said section 6 reads as follows:

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"SEC. 6.Effect of receipt of USVA pension benefit termination, reduction. An award of a similar disability compensation from the US Veterans Administration shall be a ground for the cancellation of a disability pension granted under this Regulation: Provided, however, That if and while the disability compensation awarded by the US Veterans Administration is less than the pension granted hereunder, the difference in amount shall be assumed and paid by the PVA: Provided, further, That upon proper application, the disability award previously cancelled may be restored upon the termination of the US VeteransAdministration award if the cause of such termination is due to negative military service report of the pensioner certified by the US Department of the Army and not for any other valid cause: Provided, finally, That the veteran is medically determined to be still suffering from the disability for which he was previously awarded a pension. Payment of pension thus restored shall take effect or shall commence only from the date of approval of restoration and when funds become available."

Pursuant to the foregoing, the PVA cancelled and discontinued the monthly life pension of del Mar, reasoning that the latter's receipt of a similar pension from the United States Government precluded his enjoying any like benefit from thePhilippine Government. The PVA avers that it adopted the aforequoted section 6 in order to carry out and implement section 9 of Republic Act 65, as amended, 7 particularly its excepting clause. Said section 9 reads: "SEC. 9.The persons mentioned in sections one and two hereof who are permanently incapacitated from work owing to sickness, disease or injuries sustained in line of duty, shall be given a life pension of one hundred pesos a month, and ten pesos a month for each of his unmarried minor children below eighteen years of age, unless they are actually receiving a similar pension from other Government funds, and shall receive, in addition, the necessary hospitalization and medical care." 8 The PVA reads the phrase "from other Government funds" in the excepting clause of the aforecited provision as necessarily including funds of the United States Government. And without question, the pension del Mar receives from the United States Veterans Administration comes from the funds of the United States Government.

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On the other hand, del Mar avers that section 6 of Regulation No. 2 illegally effects the suspension of the operation of section 9 of Republic Act 65, as amended, and argues that under section 20 9 of Republic Act 65, as amended, the power to suspend the payment of the monthly life pension awarded to a disabled veteran belongs exclusively to the President of the Philippines, not to the PVA which, in the case at bar, illegally arrogated unto itself the said power. Furthermore, del Mar states, the PVA "deliberately misinterprets" the phrase "from other Government funds" in extending its scope to include United States Government funds. The principle recognizing the necessity of vesting administrative authorities with the power to promulgate rules and regulations to implement a given statute and to effectuate its policies, provided such rules and regulations conform to the terms and standards prescribed by the statute as well as purport to carry into effect its general policies, constitutes a well-established doctrine in this jurisdiction. 10 In Teoxon vs. Members of the Board of Administrators, PhilippineVeterans Administration, suprea, this Court fittingly stated: ". . . the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative, Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. Its terms must be followed. The statute requires adherence to, not departure from, its provisions. No deviation is allowable." Section 11 of Republic Ace 2665 11 empowers the PVA to adopt rules and regulations, thus: "SEC. 11.Policies, rules and regulations. Subject to existing laws, the Administration shall have the power to promulgate and issue rules and regulations as may be found necessary to govern its operations and to carry out the aims and purposes of this Act and of all other laws to be administered by the Administration." Pursuant to this rule making authority, the PVA allegedly to implement section 9 of Republic Act 65, as amended promulgated its "Rules and Regulations on Veterans' Benefits," section 6 of Regulation No. 2 of which cancels the disability pension granted if the beneficiary receives a similar compensation from the United States VeteransAdministration. In effect, the PVA, by adopting section 6 of Regulation No. 2, suspended the operation of section 9 of Republic Act 65, as amended. This, Republic Act 65,
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as amended, forbids the PVA to do for it expressly authorizes only the President of the Philippines to suspend the operation of any of its provisions "if and when the Congress of the United States approves the pending GI Bill of Rights applicable to the Philippines the provisions of which are identical or similar to the provisions of this Act." Clearly then, section 6 of Regulation No. 2 not only negates the very spirit behind section 9 of Republic Act 65, as amended, but also contravenes the express mandate of section 20 thereof. The PVA's pretense that del Mar's case falls under the clause of section 9 of Republic Act 65, as amended, which excepts those who "are actually receiving a similar pension from other Government funds" from the coverage of said section 9 predicated upon its interpretation that the phrase "other Government funds" includes funds of the United States Government fails to persuade this Court as a valid argument to justify its cancellation of del Mar's monthly life pension. Section 9 of Republic Act 65, as amended, in providing for the excepting clause, obviously intends to prevent the receipt by the same beneficiary of concurrent or multiple pensions or benefits similar to each other in nature and basis, although coursed through different departments or agencies, but paid out of the funds of the same Government. Any contrary interpretation resulting in the derogation of the interests of the beneficiary who likewise receives a similar pension paid out of funds of other Governments, conflicts with the established axiom ordaining the construction of pension laws of war veterans in favor of those seeking their benefits. The record of the case at oar being completely bereft of any indication to show the suspension by the President of the Philippines pursuant to section 20 of Republic Act 65, as amended of the operation of any of the provisions of the said statute, this Court perforce must uphold del Mar's claims. 4.The rest of the assigned errors relate to the alleged undue interference by the court a quo with the purely discretionary functions of the PVA in the matter of granting or discontinuing the pension benefits. The law concedes to administrative bodies like the PVA the authority to act on and decide claims and applications in accordance with their judgment, in the exercise of their adjudicatory capacity. Because of their acquired expertise in specific matters within the purview of their respective jurisdictions, the findings of these administrative bodies merit not only great weight but also respect and finality. "There is a limit, however, to such a deference paid to the actuations of such bodies. Clearly, where there has been a failure to interpret and apply the statutory provisions in question, judicial power should assert itself. Under the theory

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of separation of powers, it is to the judiciary, and to the judiciary alone, that the final say on questions of law in appropriate cases coming before it is vested." 12 All told, no roadblock stands in the way of del Mar's demand for the continuance of his monthly life pension. In view, however, of the further amendment by Congress of section 9 of Republic Act 65, as amended, through Republic Act 5753 the provisions of which took effect on June 21, 1969 there arises the need to modify the judgment a quoin order to make it conform to the said statute as it now stands. Republic Act 5753, in further amending section 9 of Republic Act 65, as amended, grants every totally disabled veteran of World War II "a life pension of two hundred pesos a month, and thirty pesos a month for his wife and each of his unmarried minor children below eighteen years of age." ACCORDINGLY, this Court adjudges the appellee Quirico del Mar entitled to his life pension (1) at the rate of P50 a month effective as of April 1950 to May 1957, per Republic Act 65; (2) at the rate of P100 a month effective as of June 22, 1957 to May 1969, per Republic Act 65 as amended by Republic Act 1920; and (3) at the rate of P200 a month effective as of June 21, 1969, per Republic Act 65 as further amended by Republic Act 5753. This Court directs the appellant Philippine Veterans Administration to compute and then to pay to the appellee del Mar his past and accumulated monthly life pension at the aforementioned statutory rates. Regarding the monthly living allowance the appellee del Mar asks for each of his five "living unmarried minor children below eighteen years of age," it appearing that he has not filed any proper application therefor with the appellant PVA but simply included them in his claim for the restoration of his discontinued monthly life pension, the appellee del Mar, may, if he so desires, comply with section 15 of Republic Act 65, as amended, which requires that "[A]ny person who desires to take advantage of the rights and privileges provided for in this Act should file his application" with thePhilippine Veterans Administration, and the latter is hereby ordered to consider and pass upon the merits of such application, if filed, with particular reference to the entitlement qualifications of the intended beneficiaries. No pronouncement as to costs. Makalintal, Actg. C.J., Zaldivar, Fernando, Teehankee, Barredo and Esguerra, JJ., concur. Antonio and Makasiar, JJ., did not take part.

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SECOND DIVISION [G.R. No. L-32667. January 31, 1978.] PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, GABRIEL V. MANANSALA and GILBERT P. LORENZO, in his official capacity as authorized Deputy Sheriff,respondents. Conrado E. Medina for petitioner. Gabriel V. Manansala in his own behalf. Jose K. Manguiat, Jr. for respondent Court. SYNOPSIS Pursuant to a writ of execution issued by the now defunct Court of Industrial Relations in favor of private respondent and against the People's Homesite and Housing Corporation, respondent clerk of court, in his capacity as special deputy sheriff, served a notice to garnish the funds of the People's Homesite and Housing Corporation which were deposited with petitioner bank. Petitioner moved to quash the notice of garnishment but respondent Court denied the motion. Claiming that respondent Court's denial amounted to grave abuse of discretion because the appointment of the clerk of court as authorized deputy sheriff was contrary to law and the funds subject of the garnishment "could be public in character", petitioner instituted instant certiorari proceeding. The Supreme Court held that respondent clerk of court is the legally authorized deputy sheriff to serve the Court of Industrial Relations' writ of execution as provided for in Republic Act No. 4201 which amended the Court of Industrial Relations Act; and that funds of the People's Homesite and Housing Corporation may be the object of garnishment because although the said corporation is a government-owned and controlled corporation, it has a personality separate and distinct from the government which subjects it to the rules of law governing private corporations.

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SYLLABUS 1.GOVERNMENT CORPORATIONS; GARNISHMENT; PEOPLE'S HOMESITE AND HOUSING CORPORATION FUNDS NOT EXCEMPT THEREFROM. The premise that the funds of the People's Homesite and Housing Corporation could be spoken of as public in character may be accepted in the sense that the said corporation is a government-owned entity. However, it does not follow that they are exempt from garnishment because the People's Homesite and Housing Corporation, as a government-owned and controlled corporation, has a personality distinct and separate from that of the government. Accordingly, it may sue and be sued and may be subjected to court processes like any other corporation. 2.ID.; INDEMNITY FROM SUIT, GOVERNMENT-OWNED CORPORATIONS NOT IMMUNE FROM SUIT. By engaging in a particular business through the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations. 3.GOVERNMENT; IMMUNITY FROM SUITS; WAIVER THEREOF DOES NOT SUBJECT ITS PROPERTIES AND FUNDS TO EXECUTION OR GARNISHMENT. Waiver by the State of its right of immunity from suits does not automatically subject its properties and funds to execution or garnishment because such would amount to a disbursement without any proper appropriation as required by law. 4.CERTIORARI; JUDGMENTS; AUTHORITY OF INDUSTRIAL COURT'S CLERK OF COURT AS SPECIAL DEPUTY SHERIFF TO ISSUE NOTICE OF GARNISHMENT. The Industrial Court's order sustaining the authority of its Clerk of Court as special deputy sheriff to serve notice of garnishment cannot be stigmatized as a grave abuse of discretion. Under Republic Act 4201, the Clerk of Court of the now defunct Court of Industrial Relations was the ex-oficio sheriff. It is true that there is no authorization in law for the appointment of special sheriffs for the service of writs of execution. But even if there is a sufficient justification for the infirmity attributed to the order of the court, it would be inequitable to issue a new execution by the proper official considering the lapse of time during which the judgment creditor had been unable to execute the judgment in his favor. What is important is that the judgment be executed. It would be carry technicality to an absurd length if just because of such a mistake, assuming that it is, but undoubtedly committed in good faith, further delay would still be imposed on the judgment creditor by characterized the order sought to be nullified as amounting to a grave abuse of discretion.

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DECISION

FERNANDO, J p: The issue raised in this certiorari proceeding is whether or not an order of the now defunct respondent Court of Industrial Relations denying for lack of merit petitioner's motion to quash a notice of garnishment can be stigmatized as a grave abuse of discretion. What was sought to be garnished was the money of the People's Homesite and Housing Corporation deposited at petitioner's branch in Quezon City, to satisfy a decision of respondent Court which had become final and executory. 1 A writ of execution in favor of private respondent Gabriel V. Manansala had previously been issued.2 He was the counsel of the prevailing party, the United Homesite Employees and Laborers Association, in the aforementioned case. The validity of the order assailed is challenged on two, grounds: (1) that the appointment of respondent Gilbert P. Lorenzo as authorized deputy sheriff to serve the writ of execution was contrary to law and (2) that the funds subject of the garnishment "may be public in character." 3 In thus denying the motion to quash, petitioner contended that there was on the part of respondent Court a failure to abide by authoritative doctrines amounting to a grave abuse of discretion. After a careful consideration of the matter, it is the conclusion of this Tribunal that while the authorization of respondent Lorenzo to act as special deputy sheriff to serve the notice of garnishment may be open to objection, the more basic ground that could have been relied upon not even categorically raised, petitioner limiting itself to the assertion that the funds "could be public" in character, thus giving rise to the applicability of fundamental concept of non-suability is hardly persuasive. The People's Homesite and Housing Corporation had a juridical existence enabling it sue and be sued. 4 Whatever defect could be attributed therefore to the order denying the motion to quash could not be characterized as a grave abuse of discretion. Moreover, with the lapse of time during which private respondent had been unable to execute a judgment in his favor, the equities are on his side. Accordingly, this petition must be dismissed. The order of August 26, 1970 of respondent Court denying the motion to quash, subject of this certiorari proceeding, reads as follows: "The Philippine National Bank moves to quash the notice of garnishment served upon its branch in Quezon City by the authorized deputy sheriff of this Court. It contends that the service of the notice by the authorized deputy sheriff of the court contravenes Section 11 Commonwealth Act No. 105, as amended which reads: 'All writs and processes issued by the Court shall be served and executed free of charge by provincial or city sheriffs, or by any person authorized by this Court, in the same manner as writs and

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processes of Courts of First Instance.' Following the law, the Bank argues that it is the Sheriff of Quezon City, and not the Clerk of this Court who is its Ex-Officio Sheriff, that has the authority to serve the notice of garnishment, and that the actual service by the latter officer of said notice is therefore not in order. The Court finds no merit in this argument. Republic Act No. 4201 has, since June 19, 1965, already repealed Commonwealth Act No. 103, and under this law, it is now the Clerk of this Court that is at the same time the Ex-Officio Sheriff. As such ExOfficio Sheriff, the Clerk of this Court has therefore the authority to issue writs of execution and notices of garnishment in an area encompassing the whole of the country, including Quezon City, since his area of authority is coterminous with that of the Court itself, which is national in nature. . .. At this stage, the Court notes from the record that the appeal to the Supreme Court by individual employees of PHHC which questions the award of attorney's fees to Atty. Gabriel V. Manansala, has already been dismissed and that the same became final and executory on August 9, 1970. There is no longer any reason, therefore, for withholding action in this case. [Wherefore], the motion to quash filed by the Philippine National Bank is denied for lack of merit. The said Bank is therefore ordered to comply within five days from receipt with the 'notice of Garnishment' dated May 6, 1970." 5 There was a motion for reconsideration filed by petitioner, but in a resolution dated September 22, 1970, it was denied. Hence, this certiorari petition. prLL As noted at the outset, the petition lacks merit. 1.The plea for setting aside the notice of garnishment was premised on the funds of the People's Homesite and Housing Corporation deposited with petitioner being "public in character." There was not even a categorical assertion to that effect. It is only the possibility of its being "public in character." The tone was thus irresolute, the approach diffident. The premise that the funds could be spoken of as public in character may be accepted in the sense that the People's Homesite and Housing Corporation was a government-owned entity. It does not follow though that they were exempt from garnishment. National Shipyard and Steel Corporation v. Court of Industrial Relations 6 is squarely in point. As was explicitly stated in the opinion of the then Justice, later Chief Justice, Concepcion: "The allegation to the effect that the funds of the NASSCO are public funds of the government, and that, as such, the same may not be garnished, attached or levied upon, is untenable for, as a government owned and controlled corporation, the NASSCO has a personality of its own, distinct and separate from that of the Government. It has pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 . . . , pursuant to which the NASSCO has been established - 'all the powers of a corporation under the Corporation Law . . . . ' Accordingly, it may sue and be sue and may be subjected to court processes just like any other corporation (Section 13, Act No. 1459, as

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amended." 7 The similarities between the aforesaid case and the present litigation are patent. Petitioner was similarly a government-owned corporation. The principal respondent was the Court of Industrial Relations. The prevailing parties were the employee of petitioner. There was likewise a writ of execution and thereafter notices of garnishment served on several banks. There was an objection to such a move and the ruling was adverse to the National Shipyard and Steel Corporation. Hence the filing of a petition for certiorari. To repeat, the ruling was quite categorical. Garnishment was the appropriate remedy for the prevailing party which could proceed against the funds of a corporate entity even if owned or controlled by the government. In a 1941 decision, Manila Hotel Employees Association v. Manila Hotel Company, 8 this Court, through Justice Ozaeta, held: "On the other hand, it is well settled that when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation. (Bank of the United States v. Planters' Bank, 9 Wheat, 904, 6 L.ed. 244). By engaging in a particular business thru the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations." 9

2.It is worth noting that the decision referred to, the Bank of the United States v. Planters' Bank, 10 was promulgated by the American Supreme Court as early as 1824, the opinion being penned by the great Chief Justice Marshall. As pointed out by him: "It is, we think, a sound principle when a government becomes a partner in any trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates, and to the business which is to be transacted. Thus, many states of this Union who have an interest in banks, are not suable even in their own courts; yet they never exempt the corporation from being sued. The state of Georgia, by giving to the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as respects the transactions of the bank, and waives all the privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management the affairs of the corporation, that are expressly given by the incorporating act." 11 The National Shipyard and Steel Corporation case, therefore, merely reaffirmed one of the oldest and soundest doctrines in this branch of the law.

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3.The invocation of Republic v. Palacio, 12 as well as Commissioner of Public Highways v. San Diego, 13 did not help the cause of petitioner at all. The decisions are not applicable is properly understood they can easily be distinguished. As is clear in the opinion of Justice J.B.L. Reyes in Republic v. Palacio, the Irrigation Service Unit which was sued was an office and agency under the Department of Public Works al Communications. The Republic of the Philippines, through the then Solicitor General, moved for the dismissal of such complaint, alleging that it "has no juridical personality to sue and be sued." 14 Such a motion to dismiss was denied. The case was tried and plaintiff Ildefonso Ortiz, included as private respondent in the Supreme Court proceeding, obtained a favorable money judgment. It became final and executory. Thereafter, it appeared that the Solicitor General was served with a copy of the writ of execution issued by the lower court followed by an order of garnishment. 15 Again, there was an urgent motion lift such order, but it was denied. A certiorari and prohibition proceeding was then filed with the Court of Appeals. The legality of the issuance of such execution and garnishment was upheld, and the matter was elevated to this Tribunal. The Republic was sustained. The infirmity of the decision reached by the Court of Appeals, according to the opinion, could be traced to the belief that there was a waiver of "government immunity and, by implication, consent to the suit." 16 There was no such waiver. Even if there were, it was stressed by Justice J.B.L. Reyes: "It is apparent that this decision of the Court of Appeals suffers from the erroneous assumption that because the State has waived its immunity, its property and funds become liable to seizure under the legal process. This emphatically is not the law. (Merritt v. Insular Government, 34 Phil. 311)."17 To levy the execution of such funds, according to him, would thus "amount to a disbursement without any proper appropriation as required by law." 18 In Commissioner of Public Highways v. San Diego, the opening paragraph of Justice Teehankee was quite specific as to why there could be neither execution nor garnishment of the money of petitioner Bureau of Public Highways: "In this special civil action for certiorari and prohibition, the Court declares null and void the two questioned orders of respondent Court levying upon funds of petitioner Bureau of Public Highways on deposit with the Philippine National Bank, by virtue of the fundamental precept that government funds are not subject to execution or garnishment." 19 The funds appertained to a governmental office, not to a government owned or controlled corporation with a separate juridical personality. In neither case therefore was there an entity with the capacity to sue and be sued, the funds of which could thereafter be held liable to execution and garnishment in the event of an adverse judgment. 4.Both the Palacio and the Commissioner of Public Highways decisions, insofar as they reiterate the doctrine that one of the corollaries of the fundamental concept of non-suability is that governmental funds are immune from garnishment, refer to Merritt v. Insular

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Government, decision. 20 Since then such a principle has been followed with undeviating rigidity, the latest case in point being Republic v. Villasor, 21 promulgated in 1973. It is an entirely different matter if, according to Justice Sanchez in Ramos v. Court of Industrial Relations, 22 the office or entity is "possessed of a separate and distinct corporate existence." 23 Then it can sue and be sued. Thereafter, its funds may be levied upon or garnished. That is what happened in this case. 5.With the crucial issue thus resolved in favor of the correctness of the order assailed, the other objection raised, namely that respondent Court acted erroneously in having a special sheriff serve to the writ of execution, hardly needs any extensive discussion. It is true that in the aforesaid Commissions of Public Highways opinion, this Court held that there is no authorization in law for the appointment of special sheriffs for the service of writs of execution. 24 In the order sought to be nullified, the then Judge Joaquin M. Salvador of respondent Court pointed out that under a later Act,25 the Court of Industrial Relations Act was amended with the proviso that its Clerk of Court was the ex-oficio sheriff. The point raised in the petition that it should be the sheriff of Quezon City that ought to have served the writ of execution would thus clearly appear to be inconclusive. There is to be sure no thought of deviating from the principle announced in the Commissioner of Public Highways case. That is as it ought to be. Even if, however, there is sufficient justification for the infirmity attributed to respondent Court by virtue of such a ruling, still consider all the circumstances of this case, it clearly does not call for the nullification of the order in question. What cannot be denied that the writ of execution was issued as far back as May 5, 1970 by the then Clerk of Court of respondent Tribunal as the authorized sheriff. It would be, to say the least, unfair and unequitable if, on the assumption that such Clerk of Court lacked such competence, a new writ of execution had to be issued by the proper official. At any rate, what is important is that the judgment be executed. That is to achieve justice according to law. It would be to carry technicality, therefore, to an absurd length if just because of such a mistake, assuming that it is, but undoubtedly one committed in good faith, further delay would still be imposed on private respondent by characterizing the order sought to be nullified amounting to a grave abuse of discretion. WHEREFORE, the petition for certiorari is dismissed. No costs. Barredo, Antonio and Concepcion, Jr., JJ., concur. Santos, J., is on leave. Aquino, J., concurs in the result.
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SECOND DIVISION [G.R. No. 102667. February 23, 2000.] AMADO J. LANSANG, petitioner, vs. COURT OF APPEALS, GENERAL ASSEMBLY OF THE BLIND, INC., and JOSE IGLESIAS, respondents. The Solicitor General for petitioner. Marlin F. Velasco for private respondents. SYNOPSIS In 1970, the General Assembly of the Blind, Inc. (GABI) started operating several kiosks in Rizal Park under a verbal contract of lease with the National Parks Development Committee (NPDC), a government initiated civic body engaged in the development of national parks. The contract was terminated in 1988 by the new chairman of NPDC, herein petitioner, by serving written notice to respondent Iglesias, President of GABI, with a demand to vacate the premises. GABI filed an action for damages and injunction with the trial court alleging that petitioner acted beyond the scope of his authority when he showed malice and bad faith in ordering GABI's ejectment from Rizal Park. Perusal of the complaint disclosed that petitioner, as Chairman of NPDC, acted under the spirit of revenge, ill-will, evil motive and personal resentment in serving the notice of termination to Iglesias who is totally blind and who was deceived into signing the notice. The complaint failed to categorically state that he is being sued in that capacity. The trial court rendered judgment dismissing the complaint. It ruled that the complaint was a suit against the State which could not be sued without its consent. It further ruled that GABI, a mere concessionaire, cannot claim damages for termination of contract. The decision was, however, reversed by the Court of Appeals ruling that the mere allegation that a government official is being sued in his official capacity is not enough to protect him from liability for acts done without or in excess of his authority. It found petitioner liable for moral and exemplary damages and for attorneys fees. Hence, this petition. The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in the performance of their duties and does cover unlawful acts or where he is being
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sued in his personal capacity, although the acts complained of may have been committed while he occupied a public position. Rizal Park is beyond the commerce of man and can not be the subject of a lease contract. HEacDA A party allowed by accommodation to occupy spaces in the park may be asked at anytime to vacate the premises. With regard to damages, moral damages cannot be sustained in the absence of evidence to support a claim of moral injury. Exemplary damages cannot be awarded in the absence of an award of moral damages. Also, attorney's fees cannot be recovered in the absence of stipulation between the parties. SYLLABUS 1.POLITICAL LAW; STATE IMMUNITY FROM SUIT DOCTRINE; APPLIES TO COMPLAINTS FILED AGAINST PUBLIC OFFICIALS FOR ACTS DONE IN PERFORMANCE OF THEIR DUTIES. The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in the performance of their duties. The rule is that the suit must be regarded as one against the state where satisfaction of the judgment against the public official concerned will require the state itself to perform a positive act, such as appropriation of the amount necessary to pay the damages awarded to the plaintiff. 2.ID.; ID.; DOES NOT APPLY TO UNLAWFUL ACTS OF PUBLIC OFFICIALS. The rule does not apply where the public official is charged in his official capacity for acts that are unlawful and injurious to the rights of others. Public officials are not exempt, in their personal capacity, from liability arising from acts committed in bad faith. 3.ID.; ID.; ID.; DOES NOT APPLY WHERE PUBLIC OFFICIAL IS SUED IN HIS PERSONAL CAPACITY. Neither does it apply where the public official is clearly being sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a public position. 4.ID.; ID.; ID.; CASE AT BAR. We are convinced that petitioner is being sued not in his capacity as NPDC chairman but in his personal capacity. The complaint filed by private respondents in the RTC merely identified petitioner as chairman of the NPDC, but did not

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categorically state that he is being sued in that capacity. Also, it is evident from paragraph 4 of said complaint that petitioner was sued allegedly for having personal motives in ordering the ejectment of GABI from Rizal Park. 5.ID.; ID.; ID.; PETITIONER AS CHAIRMAN OF NPDC, AGENCY TASKED TO ADMINISTER RIZAL PARK, MAY VALIDLY DISCONTINUE ACCOMMODATION TO, AND EJECT, PARTIES OCCUPYING AN OFFICE THEREAT. Rizal Park is beyond the commerce of man and, thus, could not be the subject of a lease contract. Admittedly, there was no written contract. That private respondents were allowed to occupy office and kiosk spaces in the park was only a matter of accommodation by the previous administrator. This being so, also admittedly, petitioner may validly discontinue the accommodation extended to private respondents, who may be ejected from the park when necessary. Private respondents cannot and does not claim a vested right to continue to occupy Rizal Park. 6.CIVIL LAW; DAMAGES; MORAL DAMAGES; PROOF OF MORAL INJURY, REQUIRED FOR AWARD THEREOF. We find no evidence on record to support Iglesias' claim that he suffered moral injury as a result of GABI's ejectment from Rizal Park. Absent any satisfactory proof upon which the Court may base the amount of damages suffered, the award of moral damages cannot be sustained. 7.ID.; ID.; EXEMPLARY DAMAGES; AWARD THEREOF NOT PROPER IN ABSENCE OF MORAL, TEMPERATE, LIQUIDATED OR COMPENSATORY DAMAGES. Neither can we sustain the award of exemplary damages, which may only be awarded in addition to moral, temperate, liquidated, or compensatory damages. 8.ID.; ID.; ATTORNEY'S FEES; DISALLOWED IN ABSENCE OF STIPULATIONS BY PARTIES; EXCEPTION NOT PRESENT IN CASE AT BAR. We also disallow the award for attorney's fees, which can only be recovered per stipulation of the parties, which is absent in this case. There is no showing that any of the exceptions justifying the award of attorney's fees absent a stipulation is present in this case.

DECISION

QUISUMBING, J p:

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Before us is a petition to review the decision of the Court of Appeals in C.A. G.R. CV No. 27244, which set aside the ruling of the Regional Trial Court, Manila, Branch 8, in Civil Case No. 8843887, and ordered petitioner Amado J. Lansangto pay private respondent Jose Iglesias P50,000.00 in moral damages, P10,000.00 in exemplary damages and P5,000.00 in attorney's fees. Like public streets, public parks are beyond the commerce of man. However, private respondents were allegedly awarded a "verbal contract of lease" in 1970 by the National Parks Development Committee (NPDC), a government initiated civic body engaged in the development of national parks, including Rizal Park, 1 but actually administered by high profile civic leaders and journalists. Whoever in NPDC gave such "verbal" accommodation to private respondents was unclear, for indeed no document or instrument appears on record to show the grantor of the verbal license to private respondents to occupy a portion of the government park dedicated to the national hero's memory. Private respondents were allegedly given office and library space as well as kiosks area selling food and drinks. One such kiosk was located along T.M. Kalaw St., in front of the Army and Navy Club. Private respondent General Assembly of the Blind, Inc. (GABI) was to remit to NPDC, 40 percent of the profits derived from operating the kiosks, 2 without again anything shown in the record who received the share of the profits or how they were used or spent. With the change of government after the EDSA Revolution, the new Chairman of the NPDC, herein petitioner, sought to clean up Rizal Park. In a written notice dated February 23, 1988 and received by private respondents on February 29, 1988, petitioner terminated the so-called verbal agreement with GABI and demanded that the latter vacate the premises and the kiosks it ran privately within the public park. 3 In another notice dated March 5, 1988, respondents were given until March 8, 1988 to vacate. 4 The latter notice was signed by private respondent Iglesias, GABI president, allegedly to indicate his conformity to its contents. However, Iglesias, who is totally blind, claims that he was deceived into signing the notice. He was allegedly told by Ricardo Villanueva, then chief warden of Rizal Park, that he was merely acknowledging receipt of the notice. Although blind, Iglesias as president was knowledgeable enough to run GABI as well as its business. On the day of the supposed eviction, GABI filed an action for damages and injunction in the Regional Trial Court against petitioner, Villanueva, and "all persons acting on their behalf." 5 The trial court issued a temporary restraining order on the same day. 6

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The TRO expired on March 28, 1988. The following day, GABI was finally evicted by NPDC. GABI's action for damages and injunction was subsequently dismissed by the RTC, ruling that the complaint was actually directed against the State which could not be sued without its consent. Moreover, the trial court ruled that GABI could not claim damages under the alleged oral lease agreement since GABI was a mere accommodation concessionaire. As such, it could only recover damages upon proof of the profits it could realize from the concession. The trial court noted that no such proof was presented. On appeal, the Court of Appeals reversed the decision of the trial court. The Court of Appeals ruled that the mere allegation that a government official is being sued in his official capacity is not enough to protect such official from liability for acts done without or in excess of his authority. 7 Granting that petitioner had the authority to evict GABI from Rizal Park, "the abusive and capricious manner in which that authority was exercised amounted to a legal wrong for which he must now be held liable for damages" 8 according to the Court of Appeals.

The Court of Appeals noted that, as the trial court observed, the eviction of GABI came at the heels of two significant incidents. First, after private respondent Iglesias extended monetary support to striking workers of the NPDC, and second, after Iglesias sent the Tanodbayan, a letter on November 26, 1987, denouncing alleged graft and corruption in the NPDC. 9 These, according to the Court of Appeals, should not have been taken against GABI, which had been occupying Rizal Park for nearly 20 years. GABI was evicted purportedly for violating its verbal agreement with NPDC. 10However, the Court of Appeals pointed out that NPDC failed to present proof of such violation. 11 The Court of Appeals found petitioner liable for damages under Articles 19, 21, and 24 of the Civil Code. 12 The Court of Appeals absolved from liability all other persons impleaded in GABI's complaint since it appeared that they were merely acting under the orders of petitioner. The new officers of NPDC, additionally impleaded by GABI, were likewise absolved from liability, absent any showing that they participated in the acts complained of. Petitioner was ordered to pay private respondent Iglesias moral and exemplary damages and attorney's fees.

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Hence, this petition, in which petitioner raises the following issues: I.WHETHER OR NOT RESPONDENT COURT ERRED IN NOT HOLDING THAT PRIVATE RESPONDENTS' COMPLAINT AGAINST PETITIONER, AS CHAIRMAN OF NPDC, AND HIS CO-DEFENDANTS IN CIVIL CASE NO. 8843887, IS IN EFFECT A SUIT AGAINST THE STATE WHICH CANNOT BE SUED WITHOUT ITS CONSENT. II.WHETHER OR NOT RESPONDENT COURT ERRED IN NOT HOLDING THAT PETITIONER'S ACT OF TERMINATING RESPONDENT GABI'S CONCESSION IS VALID AND DONE IN THE LAWFUL PERFORMANCE OF OFFICIAL DUTY. 13 Petitioner insists that the complaint filed against him is in reality a complaint against the State, which could not prosper without the latter's consent. He anchors his argument on the fact that NPDC is a government agency, and that when he ordered the eviction of GABI, he was acting in his capacity as chairman of NPDC. Petitioner avers that the mere allegation that he was being sued in his personal capacity did not remove the case from the coverage of the law of public officers and the doctrine of state immunity. Petitioner points out that Iglesias signed the notice of eviction to indicate his conformity thereto. He contends that as evidence of private respondents' bad faith, they sued petitioner instead of complying with their undertaking to vacate their library and kiosk at Rizal Park. Petitioner adds that during the actual eviction, no untoward incident occurred. GABI's properties were properly inventoried and stored. According to petitioner, the Court of Appeals' observation that the eviction was prompted by Iglesias' support for striking NPDC workers and the letter-complaint sent to the Tanodbayan is merely conjectural. Finally, petitioner avers that the move to evict GABI and award the spaces it occupied to another group was an executive policy decision within the discretion of NPDC. GABI's possession of the kiosks as concessionaire was by mere tolerance of NPDC and, thus, such possession may be withdrawn at any time, with or without cause. On the other hand, private respondents aver that petitioner acted beyond the scope of his authority when he showed malice and bad faith in ordering GABI's ejectment from Rizal Park. Quoting from the decision of the Court of Appeals, private respondents argue that petitioner is

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liable for damages for performing acts "to injure an individual rather than to discharge a public duty." 14 While private respondents recognize the authority of petitioner to terminate the agreement with GABI "if [the contract] is prejudicial to the interest of the NPDC,'' 15 they maintain that petitioner's personal interest, and not that of the NPDC, was the root cause of GABI's ejectment. The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in the performance of their duties. The rule is that the suit must be regarded as one against the state where satisfaction of the judgment against the public official concerned will require the state itself to perform a positive act, such as appropriation of the amount necessary to pay the damages awarded to the plaintiff. 16 The rule does not apply where the public official is charged in his official capacity for acts that are unlawful and injurious to the rights of others. 17 Public officials are not exempt, in their personal capacity, from liability arising from acts committed in bad faith. 18 Neither does it apply where the public official is clearly being sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a public position. We are convinced that petitioner is being sued not in his capacity as NPDC chairman but in his personal capacity. The complaint filed by private respondents in the RTC merely identified petitioner as chairman of the NPDC, but did not categorically state that he is being sued in that capacity. 19 Also, it is evident from paragraph 4 of said complaint that petitioner was sued allegedly for having personal motives in ordering the ejectment of GABI from Rizal Park. "4. Defendant AMADO J. LANSANG, JR., the Chairman of the National Parks Development Committee, acting under the spirit of revenge, ill-will, evil motive and personal resentment against plaintiff JOSE IGLESIAS, served on the plaintiff corporation a letter, dated February 23, 1988 terminating plaintiff's lease agreement with a demand for the plaintiff corporation to vacate its office premises. . ." 20 (Emphasis supplied.) The parties do not dispute that it was petitioner who ordered the ejectment of GABI from their office and kiosk at Rizal Park. There is also no dispute that petitioner, as chairman of the NPDC which was the agency tasked to administer Rizal Park, had the authority to terminate

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the agreement with GABI 21 and order the organization's ejectment. The question now is whether or not petitioner abused his authority in ordering the ejectment of private respondents. We find, however, no evidence of such abuse of authority on record. As earlier stated, Rizal Park is beyond the commerce of man and, thus, could not be the subject of a lease contract. Admittedly, there was no written contract. That private respondents were allowed to occupy office and kiosk spaces in the park was only a matter of accommodation by the previous administrator. This being so, also admittedly, petitioner may validly discontinue the accommodation extended to private respondents, who may be ejected from the park when necessary. Private respondents cannot and does not claim a vested right to continue to occupy Rizal Park. The Court of Appeals awarded private respondent Iglesias moral and exemplary damages and attorney's fees. However, we find no evidence on record to support Iglesias' claim that he suffered moral injury as a result of GABI's ejectment from Rizal Park. Absent any satisfactory proof upon which the Court may base the amount of damages suffered, the award of moral damages cannot be sustained. 22 Neither can we sustain the award of exemplary damages, which may only be awarded in addition to moral, temperate, liquidated, or compensatory damages. 23 We also disallow the award for attorney's fees, which can only be recovered per stipulation of the parties, which is absent in this case. There is no showing that any of the exceptions justifying the award of attorney's fees absent a stipulation is present in this case. 24 WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 27244 is hereby SET ASIDE, and the DISMISSAL of the complaint for damages by the trial court for want of merit is AFFIRMED. No costs. SO ORDERED. Bellosillo, Mendoza and De Leon, Jr., JJ., concur. Buena, J., is on official leave.

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FIRST DIVISION [G.R. No. 60413. October 31, 1990.] REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. SOFRONIO G. SAYO, Judge, Br. I, CFI, Nueva Vizcaya, HEIRS OF CASIANO SANDOVAL, HEIRS OF LIBERATO BAYAUA, JOSE C. REYES, and PHILIPPINE CACAO AND FARM PRODUCTS INC., respondents. Celso D. Gangan respondent Heirs of Liberato Bayaua. Acosta & Associates for Phil. Cacao and Farm Products, Inc. Jose Reyes & Associates for Heirs of Casiano Sandoval, et al.

DECISION

NARVASA, J p: Sought to be annulled and set aside in this special civil action of certiorari is the decision of respondent Judge Sofronio G. Sayo rendered on March 5, 1981 in Land Registration Case No. N-109, LRC Record No. 20850, confirming, by virtue of a compromise agreement, the title of the private respondents over a tract of land. LLjur The spouses, Casiano Sandoval and Luz Marquez, filed an original application for registration of a tract of land identified as Lot No. 7454 of the Cadastral Survey of Santiago, BL Cad. 211 (July 17, 1961) and having an area of 33,950 hectares. The land was formerly part of the Municipality of Santiago, Province of Isabela, but had been transferred to Nueva Vizcaya in virtue of Republic Act No. 236. Oppositions were filed by the Government, through the Director of Lands and the Director of Forestry, and some others, including the Heirs of Liberato Bayaua. 1 In due course, an order of

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general default was thereafter entered on December 11, 1961 against the whole world except the oppositors. The case dragged on for about twenty (20) years until March 3, 1981 when a compromise agreement was entered into by and among all the parties, assisted by their respective counsel, namely: the Heirs of Casiano Sandoval (who had since died), the Bureau of Lands, the Bureau of Forest Development, the Heirs of Liberato Bayaua, and the Philippine Cacao and Farm Products, Inc. Under the compromise agreement, the Heirs of Casiano Sandoval (as applicants) renounced their claims and ceded 1)in favor of the Bureau of Lands, an area of 4,109 hectares; 2)in favor of the Bureau of Forest Development, 12,341 hectares; 3)in favor of the Heirs of Liberato Bayaua, 4,000 hectares; and 4)in favor of Philippine Cacao & Farm Products, Inc., 8,000 hectares. The remaining area of 5,500 hectares was, under the compromise agreement, adjudicated to and acknowledged as owned by the Heirs of Casiano Sandoval, but out of this area, 1,500 hectares were assigned by the Casiano Heirs to their counsel, Jose C. Reyes, in payment of his attorney's fees. In consideration of the areas respectively allocated to them, all the parties also mutually waived and renounced all their prior claims to and over Lot No. 7454 of the Santiago Cadastre. In a decision rendered on March 5, 1981, the respondent Judge approved the compromise agreement and confirmed the title and ownership of the parties in accordance with its terms. The Solicitor General, in behalf of the Republic of the Philippines, has taken the present recourse in a bid to have that decision of March 5, 1981 annulled as being patently void and rendered in excess of jurisdiction or with grave abuse of discretion. The Solicitor General contends that 1)no evidence whatever was adduced by the parties in support of their petitions for registration; 2)neither the Director of Lands nor the Director of Forest Development had legal authority to enter into the compromise agreement;

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3)as counsel of the Republic, he should have been but was not given notice of the compromise agreement or otherwise accorded an opportunity to take part therein; 4)that he was not even served with notice of the decision approving the compromise; it was the Sangguniang Panlalawigan of Quirino Province that drew his attention to the "patently erroneous decision" and requested him to take immediate remedial measures to bring about its annulment. The respondents maintain, on the other hand, that the Solicitor General's arguments are premised on the proposition that Lot 7454 is public land, but it is not. According to them, as pointed out in the application for registration, the private character of the land is demonstrated by the following circumstances, to wit: 1)the possessory information title of the applicants and their predecessors-in-interest; 2)the fact that Lot 7454 was never claimed to be public land by the Director of Lands in the proper cadastral proceedings; 3)the pre-war certification of the National Library dated August 16, 1932 to the effect that the Estadistica de Propiedades of Isabela issued in 1896 and appearing in the Bureau of Archives, the property in question was registered under the 'Spanish system of land registration as private property owned by Don Liberato Bayaua, applicants' predecessors-ininterest; 4)the proceeding for registration, brought under Act 496 (the Torrens Act) presupposes that there is already a title to be confirmed by the court, distinguishing it from proceedings under the Public Land Act where the presumption is always that the land involved belongs to the State. Under the Regalian Doctrine, 2 all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. Hence it is that all applicants in land registration proceedings have the burden of overcoming the presumption that the land thus sought to be registered forms part of the public domain. 3 Unless the applicant succeeds in showing by clear and convincing evidence that the property involved was acquired by him or his ancestors either by composition title from the Spanish Government or by possessory information title, or any other means for the proper acquisition of public lands, the property must be held to be part of the public domain. 4 The applicant must present competent and

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persuasive proof to substantiate his claim; he may not rely on general statements, or mere conclusions of law other than factual evidence of possession and title. 5 In the proceeding at bar, it appears that the principal document relied upon and presented by the applicants for registration, to prove the private character of the large tract of land subject of their application, was a photocopy of a certification of the National Library dated August 16, 1932 (already above mentioned) to the effect that according to the Government's Estadistica de Propiedades of Isabela issued in 1896, the property in question was registered under the Spanish system of land registration as private property of Don Liberato Bayaua. But, as this Court has already had occasion to rule, that Spanish document, the Estadistica de Propiedades, cannot be considered a title to property, it not being one of the grants made during the Spanish regime, and obviously not constituting primary evidence of ownership. 6It is an inefficacious document on which to base any finding of the private character of the land in question. And, of course, to argue that the initiation of an application for registration of land under the Torrens Act is proof that the land is of private ownership, not pertaining to the public domain, is to beg the question. It is precisely the character of the land as private which the applicant has the obligation of establishing. For there can be no doubt of the intendment of the Land Registration Act, Act 496, that every applicant show a proper title for registration; indeed, even in the absence of any adverse claim, the applicant is not assured of a favorable decree by the Land Registration Court, if he fails to establish a proper title for official recognition. It thus appears that the decision of the Registration Court a quo is based solely on the compromise agreement of the parties. But that compromise agreement included private persons who had not adduced any competent evidence of their ownership over the land subject of the registration proceeding. Portions of the land in controversy were assigned to persons or entities who had presented nothing whatever to prove their ownership of any part of the land. What was done was to consider the compromise agreement as proof of title of the parties taking part therein, a totally unacceptable proposition. The result has been the adjudication of lands of no little extension to persons who had not submitted any substantiation at all of their pretensions to ownership, founded on nothing but the agreement among themselves that they had rights and interests over the land. cdll The assent of the Directors of Lands and Forest Development to the compromise agreement did not and could not supply the absence of evidence of title required of the private respondents.

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As to the informacion posesoria invoked by the private respondents, it should be pointed out that under the Spanish Mortgage Law, it was considered a mode of acquiring title to public lands, subject to two (2) conditions: first, the inscription thereof in the Registry of Property, and second, actual, public, adverse, and uninterrupted possession of the land for twenty (20) years (later reduced to ten [10] years); but where, as here, proof of fulfillment of these conditions is absent, the informacion posesoria cannot be considered as anything more than prima facie evidence of possession. 7 Finally, it was error to disregard the Solicitor General in the execution of the compromise agreement and its submission to the Court for approval. It is, after all, the Solicitor General, who is the principal counsel of the Government; this is the reason for our holding that "Court orders and decisions sent to the fiscal, acting as agent of the Solicitor General in land registration cases, are not binding until they are actually received by the Solicitor General." 8 It thus appears that the compromise agreement and the judgment approving it must be, as they are hereby, declared null and void, and set aside. Considerations of fairness however indicate the remand of the case to the Registration Court so that the private parties may be afforded an opportunity to establish by competent evidence their respective claims to the property. Cdpr

WHEREFORE, the decision of the respondent Judge complained of is ANNULLED and SET ASIDE. Land Registration Case No. N-109 subject of the petition is REMANDED to the court of origin which shall conduct further appropriate proceedings therein, receiving the evidence of the parties and thereafter rendering judgment as such evidence and the law may warrant. No pronouncement as to costs. SO ORDERED. Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

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FIRST DIVISION [G.R. No. 11154. March 21, 1916.] E. MERRITT, plaintiff-appellant, vs. GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant. Crossfield & O'Brien for plaintiff. Attorney-General Avancea for defendant. SYLLABUS 1.DAMAGES; MEASURE OF. Where the evidence shows that the plaintiff was wholly incapacitated for six months it is an error to restrict the damages to a shorter period during which he was confined in the hospital. 2.SPECIAL STATUTES; CONSENT OF THE STATE TO BE SUED; CONSTRUCTION. The Government of the Philippine Islands having been "modeled after the federal and state governments of the United States' the decisions of the high courts of that country may be used in determining the scope and purpose of a special statute. 3.ID.; ID.; ID. The state not being liable to suit except by its express consent, an act abrogating that immunity will be strictly construed. 4.ID.; ID.; ID. An act permitting a suit against the state gives rise to no liability not previously existing unless it is clearly expressed in the act. 5.GOVERNMENT OF THE PHILIPPINE ISLANDS; LIABILITY FOR THE NEGLIGENT ACTS OF ITS OFFICERS, AGENTS, AND EMPLOYEES. The Government of the Philippine Islands in only liable for the negligent acts of its officers, agents, and employees when they are acting as special agents within the meaning of paragraph 5 of article 1903 of the Civil code, and a chauffeur of the General Hospital is not such a special agent.

DECISION

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TRENT, J p: This is an appeal by both partied from a judgment of the Court of First Instance of the city of Manila in favor of the plaintiff for the sum of P14,741, together with the costs of the cause. Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general damages which the plaintiff suffered to P5,000, instead of P25,000 as claimed in the complaint," and (2) "in limiting the time when plaintiff was entirely disabled to two months and twenty-one days and fixing the damage accordingly in the sum of P2,666, instead of P6,000 as claimed by plaintiff in his complaint." The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in finding that the collision between the plaintiff's motorcycle and the ambulance of the General Hospital was due to the negligence of the chauffeur; (b) in holding that the Government of the Philippine Islands is liable for the damages sustained by the plaintiff as a result of the collision, even if it be true that collision was due to the negligence of the chauffeur; and (c) in rendering judgment against the defendant for the sum of P14,741. The trial court's findings of fact, which are fully supported by the record, are as follows: "It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a motorcycle, was going toward the western part of Calle Padre Faura, passing along the west side thereof at a speed of ten to twelve miles and hour, upon crossing Taft Avenue and when he was ten feet from the southwestern intersection of said streets, the General Hospital ambulance, upon reaching said avenue, instead of turning toward the south, after passing the center thereof, so that it would be on the left side of said avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned suddenly and unexpectedly and long before reaching the center of the street, into the right side of Taft Avenue, without having sounded any whistle or horn, by which movement it struck the plaintiff, who was already six feet from the southwestern point or from the post placed there. "By reason of the resulting collision, the plaintiff was so severely injured that, according to Dr. Saleeby, who examined him on the very same day that he was taken to the General Hospital, he was suffering from a depression in the left parietal region, a wound in the same place and in beck part of his head, while blood issued from his nose and he was entirely unconscious.

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"The marks revealed that he had one or more fractures of the skull and that the grey matter and brain mass had suffered material injury. At ten o'clock of the night in question, which was the time set for performing the operation, his pulse was so weak and so irregular that, in his opinion, there was little hope that he would live. His right leg was broken in such a way that the fracture extended to the outer skin in such manner that it might be regarded as double and the wound would be expose to infection, for which reason it was of the most serious nature. "At another examination six days before the day of the trial, Dr. Saleeby notice that the plaintiff's leg showed a contraction of an inch and a half and a curvature that made his leg very weak and painful at the point of the fracture. Examination of his head revealed a notable re-adjustment of the functions of the brain and nerves. The patient apparently was slightly deaf, had a slight weakness in his eyes and in his mental condition. This latter weakness was always noticed when the plaintiff had to do any difficult mental labor, especially when he attempted to use his memory for mathematical calculations. "According to the various merchants who testified as witnesses, the plaintiff's mental and physical condition prior to the accident was excellent, and that after having received the injuries that have been discussed, his physical condition had undergone a noticeable depreciation, for he had lost the agility, energy, and ability that he had constantly displayed before the accident as one of the best constructors of wooden buildings and he could not now earn even a half of the income that he had secured for his work because he had lost 50 per cent of his efficiency. As a contractor, he could no longer, as he had before done, climb up ladders and scaffoldings to reach the highest parts of the building. "As a consequence of the loss the plaintiff suffered in the efficiency of his work as a contractor, he had to dissolve the partnership he had formed with the engineer, Wilson, because he was incapacitated from making mathematical calculations on account of the condition of his leg and of his mental faculties, and he had to give up a contract he had for the construction of the Uy Chaco building." We may say at the outset that we are in full accord with the trial court to the effect that the collision between the plaintiff's motorcycle and the ambulance of the General Hospital was due solely to the negligence of the chauffeur.

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The two items which constitute a part of the P14,741 and which are drawn in question by the plaintiff are (a) P5,000, the amount awarded for permanent injuries, and (b) the P2,666, the amount allowed for the loss of wages during the time the plaintiff was incapacitated from pursuing his occupation. We fund nothing in the record which would justify us in increasing the amount of the first. as to the second, the record shows, and the trial court so found, that the plaintiff's services as a contractor were worth P1,000 per month. The court, however, limited the time to two months and twenty-one days, which the plaintiff was actually confined in the hospital. In this we think there was error, because it was clearly established that the plaintiff was wholly incapacitated for a period of sex months. The mere fact that he remained in the hospital only two months and twenty-one days while the remainder of the six months was spent in his home, would not prevent recovery for the whole time. We, therefore, find that the amount of damages sustained by the plaintiff, without any fault on his part, is P18,075. As the negligence which caused the collision is a tort committed by an agent or employee of the Government, the inquiry at once arises whether the Government is legally liable for the damages resulting therefrom. Act No. 2457, effective February 3, 1915, reads: "An act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and authorizing the Attorney-General of said Islands to appear in said suit. "Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for damages resulting from a collision between his motorcycle and the ambulance of the General Hospital on March twenty-fifth, nineteen hundred and thirteen; "Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of damages, if any , to which the claimant is entitled; and "Whereas the Director of Public Works and the Attorney-General recommend that an act be passed by the Legislature authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order that said questions may be decided: Now, therefore, "By authority of the United States, be it enacted by the Philippine Legislature, that:

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"SECTION 1. E.Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the Government of the Philippine Islands in order to fix the responsibility for the collision between his motorcycle and the ambulance of the General Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and the attorney-General of thePhilippine Islands is hereby authorized and directed to appear at the trial on the behalf of the Government of said Islands, to defend said Government at the same. "SEC. 2.This Act shall take effect on its passage. "Enacted, February 3, 1915." Did the defendant, in enacting the above quoted act, simply waive its immunity from suit or did it also concede its liability to the plaintiff? If only the former, then it cannot be held that the Act created any new cause of action in favor of the plaintiff or extended the defendant's liability to any case not previously recognized. All admit that the Insular Government (the defendant) cannot be sued by an individual without its consent. It is also admitted that the instant case is one against the Government. As the consent of the Government to be sued by the plaintiff was entirely voluntary on its part, it is our duty to look carefully into the terms of the consent, and render judgment accordingly. The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility for the collision between his motorcycle and the ambulance of the General Hospital and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, . . . ." These were the two questions submitted to the court for determination. The Act was passed "in order that said questions may be decided." We have "decided" that the accident was due solely to the negligence of the chauffeur, who was at the time an employee of the defendant, and we have also fixed the amount of damages sustained by the plaintiff as a result of the collision. Does the Act authorize us to hold that the Government is legally liable for that amount? If not, we must look elsewhere for such authority, if it exists. The Government of the Philippine Islands having been "modeled after the Federal and state Governments in the United States," we may look to the decisions of the high courts of that country for aid in determining the purpose and scope of Act No. 2457.

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In the United States the rule that the state is not liable for the torts committed by its officers or agents whom it employs, except when expressly made so by legislative enactment, is well settled. "The Government," says Justice Story, "does not undertake to guarantee to any person the fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless embarrassments, difficulties and losses, which would be subversive of the public interest." (Claussen vs. City of Luverne, 103 Minn., 491, citing U.S. vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers vs. State, 20 How., 527; 15 L. Ed., 991.) In the case of Melvin vs. State ( 121 Cal., 16), the plaintiff sought to recover damages from the state for personal injuries received on account of the negligence of the state officers at the state fair, a state institution created by the legislature for the purpose of improving agricultural and kindred industries; to disseminate information calculated to educate and benefit the industrial classes; and to advance to educate and benefit the industrial classes; and to advance by such means the material interests of the state, being objects similar to those sought by the public school system. In passing upon the question of the state's liability for the negligent acts of its officers or agents, the court said: "No claim arises against any government in favor of an individual, by reason of the misfeasance, laces, or unauthorized exercise of powers by its officers or agents." (Citing Gibbons vs. U.S., 8 Wall., 269; Clodfeltervs. State, 86 N.C., 51, 53; 41 Am. Rep., 440; Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158; Greenvs. State, 73 Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27 Am. St. Rep., 203; Story on Agency, sec. 319.) As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out of either tort or contract, the rule is stated in 36 Cyc., 915, thus: "By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely gives a remedy to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense." In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the Act of 1913, which authorized the bringing of this suit, read: "SECTION 1.Authority is hereby given to George Apfelbacher, of the town of Summit, Waukesha County, Wisconsin, to bring suit in such court or courts and in such form or forms as he may be advised for the purpose of settling and

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determining all controversies which he may now have with the State of Wisconsin, or its duly authorizes officers and agents, relative to the mill property of said George Apfelbacher, the fish hatchery of the State Wisconsin on the Bark River, and the mill property of Evan Humphrey at the lower end of Nagawicka Lake, and relative to the use of the waters of said Bark River and Nagawicka Lake, all in the county of Waukesha, Wisconsin." In determining the scope of this act, the court said; "Plaintiff claims that by the enactment of this law the legislature admitted liability on the part of the state for the acts of its officers, and that the suit now stands just as it would stand between private parties. It is difficult to see how the act does, or was intended to do, more than remove the state's immunity from suit. It simply gives authority commence suit for the purpose of settling plaintiff's controversies with the state. Nowhere in the act is there a whisper or suggestion that the court or courts in the disposition of the suit shall depart from well established principles of law, or that the amount of damages is the only question to be settled. The act opened the door of the court to the plaintiff. It did not pass upon the question of liability, but left the suit just where it would be in the absence of the state's immunity from suit. If the Legislature had intended to change the rule that obtained in this state so long and to declare liability on the part of the state, it would not have left so important a matter to mere inference but would have done so in express terms. (Murdoc Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N. E., 854; 8 L. R.A., 399)" In Denning vs. state (123 Cal., 316), the provisions of the Act of 1893, relied upon and considered, are as follows: "All persons who have, or shall hereafter have claims on contract or for negligence against the state not allowed by the state board of examiners, are hereby authorized, on the terms and conditions herein contained, to bring suit thereon against the state in any of the courts of this state of competent jurisdiction, and prosecute the same to final judgment. The rules of practice in civil cases shall apply to such suits, except as herein otherwise provided." And the court said: "This statute has been considered by this court in at least two cases, arising under different facts, and in both it was held that said statute did not create any liability or cause of action against the state where none existed before, but merely gave an additional remedy to enforce such liability as would

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have existed if the statute had not been enacted. (Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158; Melvin vs. State, 121 Cal., 16.)" A statute of Massachusetts enacted in 1887 gave to the superior court "jurisdiction of all claims against the commonwealth, whether at law or in equity," with an exception not necessary to be here mentioned. In construing this statute the court, in Murdock Grate Co. vs. Commonwealth (152 Mass., 28), said: "The statute we are discussing discloses no intention to create against the state a new and heretofore unrecognized class of liabilities, but only an intention to provide a judicial tribunal where well recognized existing liabilities can be adjudicated." In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by the terms of the statute of New York, jurisdiction of claims for damages for injuries in the management of the canals such as the plaintiff had sustained, Chief Justice Ruger remarks; "It must be conceded that the state can be made liable for injuries arising from the negligence of its agents or servants, only by force of some positive statute assuming such liability." It being quite clear that Act No. 2457 does not operate to extend the Government's liability to any cause not previously recognized, we will now examine the substantive law touching the defendant's liability for the negligent acts of its officers, agents, and employees. Paragraph 5 of article 1903 of the civil Code reads: "The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by the official to whom properly it pertained to do the act performed, in which case the provisions of the preceding article shall be applicable." The supreme court of Spain in defining the scope of this paragraph said: "That the obligation to indemnify for damages which a third person causes another by his fault or negligence is based, as is evidenced by the same Law 3, Title 15, Partida 7, on that the person obligated, by his own fault or negligence, takes part in the act or omission of the third party who caused the damage. It follows therefrom that the state by virtue of such provision of law, is not responsible for the damages suffered by private individuals in consequence of acts performed by its employees in the discharge of the functions pertaining to their office, because neither fault nor even negligence can be presumed on the part of the state in the organization of branches of the public service and in

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the appointment of its agents; on the contrary, we must presuppose all foresight humanly possible on its part in order that each branch of service serves the general weal and that of private persons interested in its operation. Between these latter and the state therefore, no relations of a private nature governed by the civil law can arise except in a case where the state acts as a judicial person capable of acquiring rights and contracting obligations." (Supreme Court of Spain, January 7, 1898; 83 Jur. Civ., 24.) "That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault or negligence; and whereas in the first articles thereof, No. 1902, where the general principle is laid down that where a person who by an act or omission causes damage to another through fault or negligence, shall be obliged to repair the damage so done, reference is made to acts or omissions of the persons who directly or indirectly cause the damage, the following article refers to third persons and imposes an identical obligation upon those who maintain fixed relations of authority and superiority over the authors of the damage, because the law presumes that in consequence of such relations the evil caused by their own fault or negligence is imputable to them. This legal presumption gives way to proof, however, because, as held in the last paragraph of article 1903, responsibility for acts of third persons ceases when the persons mentioned in said article prove that they employed all the diligence of a good father of a family to avoid the damage, and among these persons, called up[on to answer in a direct and not a subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians and owners or director of an establishment or enterprise, the state, but not always, except when it acts through the agency of a special agent, doubtless because and only in this case, the fault or negligence, which is the original basis of this kind of objections, must be presumed to lie with the state. "That although in some cases the state might by virtue of the general principle set forth in article 1902 respond for all the damage that is occasioned to private parties by orders or resolutions which by fault or negligence are made by branches of the central administration acting in the name and representation of the state itself and as an external expression of its sovereignty in the exercise of its executive powers, yet said article is not applicable in the case of damages said to have been occasioned to the petitioners by an executive official, acting in

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the exercise of his powers, in proceedings to enforce the collections of certain property taxes owing by the owner of the property which they hold in sublease. "That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (and a special agent, in the sense in which these words are employed, is one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official) so that in representation of the state and being bound to act as an agent thereof he executed the trust confided to him. this concept does not apply to any executive agent who is an employee of the active administration and who in his own responsibility performs the functions which are inherent in and naturally pertain to his office and which are regulated by law and the regulations." (Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.) "That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a decision, among others, of the 18th of May, 1904, in a damage case, the responsibility of the state is limited to that which it contracts through a special agent, duly empowered by a definite order or commission to perform some act or charged with some definite purpose which gives rise to the claim, and not where the claim is based on acts or omissions imputable to a public official charge with some administrative or technical office who can be held to the proper responsibility in the manner laid down by the law of civil responsibility. Consequently, the trial court in not so deciding and in sentencing the said entity to the payment of damages, caused by an official of the second class referred to, has by erroneous interpretation infringed the provisions of articles 1902 and 1903 of the Civil Code." (Supreme Court of Spain, July 30, 1911; 122 Jur. Civ., 146) It is, therefore, evident that the State (the Government of the Philippine Islands) is only liable, according to the above quoted decisions of the Supreme Court of Spain, for the acts of its agents, officers and employees when they act as special agents within the meaning of paragraph 5 of article 1903, supra, and that the chauffeur of the ambulance of the General Hospital was not such an agent. For the foregoing reasons, the judgment appealed from must be reversed, without costs in this instance. Whether the Government intends to make itself legally liable for the amount of damages above set forth, which the plaintiff has sustained by reason of the negligent acts of one of its employees, by legislative enactment and by appropriating sufficient funds therefor, we are not called upon to determine. This matter rests solely with the Legislature and not with the courts.

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

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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.

DECISION

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.

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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. LLpr 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 defendantUnited 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
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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. LexLib 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, theUnited Kingdom and other states in western Europe. (See Coquia and Defensor-Santiago, Public International Law, pp. 207-209 [1984].) 2006cdtai 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

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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. cdrep 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 Statesand 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

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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.) LLphil

In Syquia, the United States concluded contracts with private individuals but the contracts notwithstanding the UnitedStates 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.

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Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, Escolin, Relova Gutierrez, Jr., De la Fuente, Cuevas andAlampay, JJ., concur. Fernando, C.J., took no part. Separate Opinions MAKASIAR, J., dissents: The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to continue therein. In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch as ". . . the United States Government, through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that political entity may assume under the contract." When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284). Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at bar by the unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bay should not be allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for violation of his rights committed by the agents of the foreign government professing to act in its name. cdll Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325:

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"Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals. "Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the private citizens of another country, such foreign government cannot shield its non-performance or contravention of the terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the jurisdiction of the domestic courts is to give approval to the execution of unilateral contracts, graphically described in Spanish as 'contratos leoninos,' because one party gets the lion's share to the detriment of the other. To give validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been entered into only by private individuals." Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from transacting business and entering into contracts with United States authorities or facilities in the Philippines whether naval, air or ground forces because the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of theUnited States government, always looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies with the various U.S. offices and agencies operating in the Philippines. The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good faith.

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One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit. In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private respondent on the other, was honored more in the breach than in the compliance. The opinion of the majority will certainly open the floodgates of more violations of contractual obligations. American authorities or any foreign government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is disastrous to the Philippines. LibLex This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our Republic. The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464). Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic person. The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that "in the exercise of the above-mentioned rights, powers and authority, the United States agrees that the powers granted to it will not be used unreasonably. . . ." (italics supplied). Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will assure equality of treatment of all employees . . . and continuing favorable employer-employee relations . . ." and "(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both Governments, . . . the United States Government agrees to accord

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preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968). Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 27, 1968 which directs that "contractors and concessionaires performing work for the U.S. Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations," even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity under international law." Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases Agreement and, in particular, from any political activity in the Philippines. The United States shall take all measures within its authority to insure that they adhere to them" (italics supplied). cdll The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social improvement of areas surrounding the bases, which directs that "moreover, the United States Forces shall procure goods and services in the Philippines to the maximum extent feasible" (italics supplied). Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of the principles of equality of treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the Republic of the Philippines" (italics supplied).

The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base Commander," which is supposed to

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underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between their two countries." The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base Commander and the American Base Commander shall be guided by full respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military operations on the other hand;" and that "they shall promote cooperation, understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, italics supplied).

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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. SYLLABUS 1.POLITICAL LAW; EMINENT DOMAIN; PROJECT USED BY GOVERNMENT FOR ROAD PURPOSES; RIGHTS OR REGISTERED OWNER TO DUE COMPENSATION ANYTIME. 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 has been and is now being 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. 2.ID.; ID.; ID.; ID.; RIGHT TO DAMAGES. The owner of the land is entitled to damages 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. In addition, the government should pay for attorney's fees, the amount of which should be fixed by the trial court after hearing.

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3.ID.; ID.; BASIS FOR DUE COMPENSATION. To determine the due compensation for the land appropriated by the Government, the basis should be the price or value thereof at the time of the taking.

DECISION

MAKALINTAL, J p: This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R5977, 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.

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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

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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.

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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.

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