Co Kim Chan v Valdez Tan Keh

Facts of the case: Co Kim Chan had a pending civil case, initiated during the
Japanese occupation, with the Court of First Instance of Manila. After the
Liberation of the Manila and the American occupation, Judge Arsenio Dizon
refused to continue hearings on the case, saying that a proclamation issued by
General Douglas MacArthur had invalidated and nullified all judicial
proceedings and judgments of the courts of the Philippines and, without an
enabling law, lower courts have no jurisdiction to take cognizance of and
continue judicial proceedings pending in the courts of the defunct Republic of
the Philippines (the Philippine government under the Japanese).
The court resolved three issues:
1.
Whether or not judicial proceedings and decisions made during the
Japanese occupation were valid and remained valid even after the American
occupation;
2.
Whether or not the October 23, 1944 proclamation MacArthur issued in
which he declared that all laws, regulations and processes of any other
government in the Philippines than that of the said Commonwealth are
null and void and without legal effect in areas of the Philippines free of
enemy occupation and control invalidated all judgments and judicial acts
and proceedings of the courts;
3.
And whether or not if they were not invalidated by MacArthurs
proclamation, those courts could continue hearing the cases pending before
them.
Ratio: Political and international law recognizes that all acts and
proceedings of a de facto government are good and valid. The Philippine
Executive Commission and the Republic of the Philippines under the Japanese
occupation may be considered de facto governments, supported by the military
force and deriving their authority from the laws of war.
Municipal laws and private laws, however, usually remain in force unless
suspended or changed by the conqueror. Civil obedience is expected even
during war, for the existence of a state of insurrection and war did not
loosen the bonds of society, or do away with civil government or the
regular administration of the laws. And if they were not valid, then it would
not have been necessary for MacArthur to come out with a proclamation
abrogating them.
The second question, the court said, hinges on the interpretation of the phrase
processes of any other government and whether or not he intended it to
annul all other judgments and judicial proceedings of courts during the

Japanese military occupation.

IF, according to international law, non-political judgments and judicial
proceedings of de facto governments are valid and remain valid even after
the occupied territory has been liberated, then it could not have been
MacArthurs intention to refer to judicial processes, which would be in
violation of international law.
A well-known rule of statutory construction is: A statute ought never to be
construed to violate the law of nations if any other possible construction
remains.
Another is that where great inconvenience will result from a particular
construction, or great mischief done, such construction is to be avoided,
or the court ought to presume that such construction was not intended by
the makers of the law, unless required by clear and unequivocal words.
Annulling judgments of courts made during the Japanese occupation would
clog the dockets and violate international law, therefore what MacArthur said
should not be construed to mean that judicial proceedings are included in
the phrase processes of any other governments.
In the case of US vs Reiter, the court said that if such laws and institutions
are continued in use by the occupant, they become his and derive their force
from him. The laws and courts of the Philippines did not become, by being
continued as required by the law of nations, laws and courts of Japan.
It is a legal maxim that, excepting of a political nature, law once established
continues until changed by some competent legislative power. IT IS NOT
CHANGED MERELY BY CHANGE OF SOVEREIGNTY. Until, of course, the
new sovereign by legislative act creates a change.
Therefore, even assuming that Japan legally acquired sovereignty over the
Philippines, and the laws and courts of the Philippines had become courts of
Japan, as the said courts and laws creating and conferring jurisdiction upon
them have continued in force until now, it follows that the same courts may
continue exercising the same jurisdiction over cases pending therein before the
restoration of the Commonwealth Government, until abolished or the laws
creating and conferring jurisdiction upon them are repealed by the said
government.
DECISION: Writ of mandamus issued to the judge of the Court of First
Instance of Manila, ordering him to take cognizance of and continue to final
judgment the proceedings in civil case no. 3012.
Summary of ratio:
1.
International law says the acts of a de facto government are valid

and civil laws continue even during occupation unless repealed.

2.
MacArthur annulled proceedings of other governments, but this
cannot be applied on judicial proceedings because such a construction
would violate the law of nations.
3.
Since the laws remain valid, the court must continue hearing the case
pending before it.
***3 kinds of de facto government: one established through rebellion (govt
gets possession and control through force or the voice of the majority and
maintains itself against the will of the rightful government)
through occupation (established and maintained by military forces who
invade and occupy a territory of the enemy in the course of war; denoted as a
government of paramount force)
through insurrection (established as an independent government by the
inhabitants of a country who rise in insurrection against the parent state)
A de jure government is the legal, legitimate government of a state and is so
recognized by other states. In contrast, a de facto government is in actual
possession of authority and control of the state

Soriano Vs Laguardia
Ang Dating Daan host Eliseo S. Soriano uttered the following statements in his
TV program against Michael Sandoval (Iglesia ni Cristos minister and regular
host of the TV program Ang Tamang Daan):
Lehitimong anak ng demonyo[!] Sinungaling [!]
Gago ka talaga[,] Michael[!] [M]asahol ka pa sa putang babae[,] o di ba[?]

[]Yung putang babae[,] ang gumagana lang doon[,] []yung ibaba, dito kay
Michael[,] ang gumagana ang itaas, o di ba? O, masahol pa sa putang babae
[]yan. Sobra ang kasinungalingan ng mga demonyong ito.
As a result, The MTRCB initially slapped Sorianos Ang Dating Daan, which
was earlier given a G rating for general viewership, with a 20-day preventive
suspension after a preliminary conference. Later, in a decision, it found him
liable for his utterances, and was imposed a three-month suspension from his
TV program Ang Dating Daan. Soriano challenged the order of the MTRCB.
HELD:
The SC ruled that Sorianos statement can be treated as obscene, at least with
respect to the average child, and thus his utterances cannot be considered as
protected speech. Citing decisions from the US Supreme Court, the High Court
said that the analysis should be context based and found the utterances to be
obscene after considering the use of television broadcasting as a medium, the
time of the show, and the G rating of the show, which are all factors that
made the utterances susceptible to children viewers. The Court emphasized on
how the uttered words could be easily understood by a child literally rather
than in the context that they were used.
The SC also said that the suspension is not a prior restraint, but rather a
form of permissible administrative sanction or subsequent punishment. In
affirming the power of the MTRCB to issue an order of suspension, the majority
said that it is a sanction that the MTRCB may validly impose under its charter
without running afoul of the free speech clause. visit fellester.blogspot.com The
Court said that the suspension is not a prior restraint on the right of
petitioner to continue with the broadcast of Ang Dating Daan as a permit was
already issued to him by MTRCB, rather, it was a sanction for the indecent
contents of his utterances in a G rated TV program. (Soriano v. Laguardia;
GR No. 165636, April 29, 2009)
Dissenting Opinion:
Chief Justice Reynato S. Puno, in a separate dissenting opinion, said that a
single government action could be both a penalty and a prior restraint. The
Chief Magistrate pointed out that the three month suspension takes such form
because it also acts as a restraint to petitioners future speech and thus
deserves a higher scrutiny than the context based approach that the majority
applied. In voting to grant Sorianos petition, the Chief Justice said that in the
absence of proof and reason, he [Soriano] should not be penalized with a threemonth suspension that works as a prior restraint on his speech.

Republic Vs Feliciano
Facts:
The appeal was filed by 86 settlers of Barrio of Salvacion, representing the
Republic of the Philippines to dismiss the complaint filed by Feliciano, on the
ground that the Republic of the Philippines cannot be sued without its
consent.
Prior to this appeal, respondent Pablo Feliciano filed a complaint with the
Court of First Instance against the Republic of the Philippines, represented by
the Land Authority, for the recovery of ownership and possession of a parcel of
land consisting of four lots. The trial court rendered a decision declaring Lot
No. 1 to be the private property of Feliciano and the rest of the property, Lots 2,
3 and 4, reverted to the public domain.
The trial court reopened the case due to the filing of a motion to intervene and
to set aside the decision of the trial court by 86 settlers, alleging that they had
been in possession of the land for more than 20 years under claim of
ownership. The trial court ordered the settlers to present their evidence but
they did not appear at the day of presentation of evidence. Feliciano, on the
other hand, presented additional evidence. Thereafter, the case was
submitted for decision and the trial court ruled in favor of Feliciano.
The settlers immediately filed a motion for reconsideration. The case was
reopened to allow them to present their evidence. But before this motion was
acted upon, Feliciano filed a motion for execution with the Appellate Court but
it was denied.
The settlers filed a motion to dismiss on the ground that the Republic of the
Philippines cannot be sued without its consent and hence the action cannot
prosper. The motion was opposed by Feliciano.
Issue/s:
Whether or not the state can be sued for recovery and possession of a
parcel of land.
Discussions:
A suit against the State, under settled jurisprudence is not permitted, except
upon a showing that the State has consented to be sued, either expressly or by
implication through the use of statutory language too plain to be
misinterpreted. It may be invoked by the courts sua sponte at any stage of the
proceedings.
Waiver of immunity, being a derogation of sovereignty, will not be inferred
lightly. but must be construed in strictissimi juris (of strictest right).
Moreover, the Proclamation is not a legislative act. The consent of the State to
be sued must emanate from statutory authority. Waiver of State immunity can

only be made by an act of the legislative body.

Ruling/s:
No. The doctrine of non-suability of the State has proper application in
this case. The plaintiff has impleaded the Republic of the Philippines as
defendant in an action for recovery of ownership and possession of a parcel of
land, bringing the State to court just like any private person who is claimed to
be usurping a piece of property. A suit for the recovery of property is not an
action in rem, but an action in personam. It is an action directed against a
specific party or parties, and any judgment therein binds only such party or
parties. The complaint filed by plaintiff, the private respondent herein, is
directed against the Republic of the Philippines, represented by the Land
Authority, a governmental agency created by Republic Act No. 3844.
The complaint is clearly a suit against the State, which under settled
jurisprudence is not permitted, except upon a showing that the State has
consented to be sued, either expressly or by implication through the use of
statutory language too plain to be misinterpreted. There is no such showing in
the instant case. Worse, the complaint itself fails to allege the existence of such
consent.

Merrit Vs Government of the Philippine Islands

FACTS: E. Merrit was riding a motorcycle along Padre Faura Street when he
was bumped by the ambulance of the General Hospital. Merrit sustained
severe injuries rendering him unable to return to work. The legislature later
enacted Act 2457 authorizing Merritt to file a suit 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 he is entitled. After trial, the lower court held that the
collision was due to the negligence of the driver of the ambulance. It then
determined the amount of damages and ordered the government to pay the
same.
ISSUES:

1. Did the Government, in enacting the Act 2457, simply waive its immunity
from suit or did it also concede its liability to the plaintiff?
2. Is the Government liable for the negligent act of the driver of the ambulance?
HELD:
1. 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.
2. Under the Civil Code, the state is liable 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. A special agent 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. This concept does not apply to any
executive agent who is an employee of the acting administration and who on his
own responsibility performs the functions which are inherent in and naturally
pertain to his office and which are regulated by law and the regulations. The
driver of the ambulance of the General Hospital was not a special agent; thus
the Government is not liable. (Merritt vs Government of the Philippine Islands,
G.R. No. L-11154, March 21 1916, 34 Phil. 311)
NOTE:
The State is responsible in like manner when it acts through a special
agent; but not when the damage has been caused by the official to whom
the task done properly pertains. (Art. 2180 par. 6, Civil Code)
The state is not responsible for the damages suffered by private individuals
in consequence of acts performed by its employees in the discharge of the
functions pertaining to their office, because neither fault nor even negligence
can be presumed on the part of the state in the organization of branches of
public service and in the appointment of its agents. (Merritt vs. Government of
the Philippine Islands)
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. The
government does not undertake to guarantee to any person the fidelity of the
officers or agents whom it employs since that would involve it in all its
operations in endless embarrassments, difficulties and losses, which would be
subversive of the public interest. (Merritt vs. Government of the Philippine

Islands)
KHOSROW MINUCHER, petitioner, vs. HON. COURT OF APPEALS and
ARTHUR SCALZO, respondents
FACTS:
Khosrow Minucher, an Iranian national and a Labor Attach for the Iranian
Embassies in Tokyo, Japan and Manila came to the country to study in 1974
and continued to stay as head of the Iranian National Resistance Movement.
n May 1986, Minucher was charged with an Information for violation of
Republic Act No. 6425, Dangerous Drugs Act of 1972. The criminal charge
followed a buy-bust operation conducted by the Philippine police narcotic
agents in his house where a quantity of heroin was said to have been seized.
The narcotic agents were accompanied by private respondent Arthur Scalzo
who became one of the principal witnesses for the prosecution.
In August 1988, Minucher filed Civil Case before the Regional Trial Court (RTC)
for damages on the trumped-up charges of drug trafficking made by Arthur
Scalzo.
ISSUE:
WON private respondent Arthur Scalzo can be sued provided his alleged
diplomatic immunity conformably with the Vienna Convention on Diplomatic
Relations
RULING:
The SC DENIED the petition.
Conformably with the Vienna Convention, the functions of the diplomatic
mission involve, the representation of the interests of the sending state and
promoting friendly relations with the receiving state. Only diplomatic agents,
are vested with blanket diplomatic immunity from civil and criminal suits.
Indeed, the main yardstick in ascertaining whether a person is a diplomat
entitled to immunity is the determination of whether or not he performs duties
of diplomatic nature. Being an Attache, Scalzos main function is to observe,
analyze and interpret trends and developments in their respective fields in the
host country and submit reports to their own ministries or departments in the
home government. He is not generally regarded as a member of the diplomatic
mission. On the basis of an erroneous assumption that simply because of the
diplomatic note, divesting the trial court of jurisdiction over his person, his
diplomatic immunity is contentious.
Under the related doctrine of State Immunity from Suit, the precept that a
State cannot be sued in the courts of a foreign state is a long-standing rule of
customary international law. If the acts giving rise to a suit are those of a

foreign government done by its foreign agent, although not necessarily a

diplomatic personage, but acting in his official capacity, the complaint could be
barred by the immunity of the foreign sovereign from suit without its consent.
Suing a representative of a state is believed to be, in effect, suing the state
itself. The proscription is not accorded for the benefit of an individual but for
the State, in whose service he is, under the maxim par in parem, non habet
imperium that all states are sovereign equals and cannot assert
jurisdiction over one another. The implication is that if the judgment against
an official would require the state itself to perform an affirmative act to satisfy
the award, such as the appropriation of the amount needed to pay the damages
decreed against him, the suit must be regarded as being against the state itself,
although it has not been formally impleaded
A foreign agent, operating within a territory, can be cloaked with immunity
from suit but only as long as it can be established that he is acting within the
directives of the sending state. The consent of the host state is an
indispensable requirement of basic courtesy between the two sovereigns.
The buy-bust operation and other such acts are indication that the Philippine
government has given its imprimatur, if not consent, to the activities within
Philippine territory of agent Scalzo of the United States Drug Enforcement
Agency. In conducting surveillance activities on Minucher, later acting as the
poseur-buyer during the buy-bust operation, and then becoming a principal
witness in the criminal case against Minucher, Scalzo hardly can be said to
have acted beyond the scope of his official function or duties.
About these ads
Vigilar v. Aquino
January 18, 2011
Sereno, J.
PETITIONERS
Gregorio R. Vigilar (DPWH Sec.), DPWH Undersecretaries Teodoro Encarnacion and Edmundo Mir, DPWH
Assistant Sec. Joel Altea, DPWH Regional Director Vicente Lopez, DPWH District Engineer Angelito Twao, Felix
Desierto of the Technical Working Group Validation and Auditing Team, DPWH Pampanga 2nd Engineering District
Members Leonardo Alvaro, Romeo Supan and Victorino Santos
RESPONDENTS
Arnulfo D. Aquino
NATURE
Petition for a review on certiorari of a decision of the Court of Appeals
BRIEF
Respondent finished the construction of a dike completed almost two decades ago but DPWH refused to pay.
FACTS
Angelito M. Twao, petitioner, then the OIC District Engr. of DPWH 2nd Engineering District of
Pampanga sent an Invitation to bid to respondent Arnulfo D. Aquino (owner of A.D. Aquino Construction
and supplies). The bidding was for the construction of a dike by bull-dozing a part of the Porac River at
Brgy. Ascomo-Pulungmasle, Guagua, Pampanga.

On July 7, 1992, the project was awarded to respondent, and a "Contract Agreement" has been executed
between him and petitioners for the amount of Php 1,873,790.69 to cover the project cost. On July 9, 1992,
the project was completed, and respondent was issued a Certificate of Project Completion on July 16
(signed by Yumul, Supan and Twao).
Respondent Aquino, however claimed that Php 1,262,696.20 was still due to him, but petitioners refused to
pay. He thus filed a complaint for the collection of sum of money with damages before the RTC of Guagua.
Petitioners has the following contentions: that the Complaint was a suit against the State; that respondent
failed to exhaust administrative remedies; and that the Contract of Agreement was void for violating PD
1445 (Government Auditing Code)- absent the proper appropriation and the Certificate of Availability of
Funds.
On November 28,2003, lower court ruled in favor of the respondent. The lower court ordered DPWH to
play Aquino the amount for the completion of the project (Php 1,873,790.69- Take note Aquino said 1.2 M
na lng kulang), Php 50,000 attorney's fees and cost of the suit.
On appeal, CA reversed and set aside the decision. It said that Contract Agreement is declared null and void
ab initio. CA ordered COA to determine the total obligation due to Aquino on a quantum meruit basis.
[[quantum meruit definition fr. net= When a person employs another to do work for him, without any
agreement as to his compensation, the law implies a promise from, the employer to the workman that he
will pay him for his services, as much as he may deserve or merit]]
Dissatisfied with the Decision the Court of Appeals, petitioners are seeking for the reversal of the appellate
court's decision and dismissal of the Complain in civil case
ISSUES x RULING
1 WON the CA erred in not dismissing the complaint for failure of respondent to exhaust all
administrative remedies
NO. Doctrine of exhaustion of administrative remedies and doctrine of primary jurisdiction are not ironclad rules.
There are numerous exceptions, and the pertinent ones in this case are 1.) Where there is unreasonable delay or
official inaction that will irretrievably prejudice the complainant; 2.) Where the question involved is purely legal and
will ultimately have to be decided by courts of justice. Also, the issues of the present case involve the validity and
enforceability of the Contract of Agreement entered into by the parties which are questions of law and clearly
beyond the expertise of COA.
The Final Decision on the matter rests not with them but with the courts of justice. Exhaustion of Administrative
remedies does not apply, because nothing of an administrative nature is to be or can be done. The issue does not
require technical knowledge and experience but one that would involve the interpretation and application of law.
2 WON the CA erred in ordering the COA to allow payment to respondent on a quantum meruit basis
despite the latters failure to comply with the requirements of PD 1445
NO. The Court has held that contracts which involved government projects undertaken in violation ofn the relevant
laws, rules etc. covering public bidding , budge appropriations and release of funds were VOID for failing to meet
the requirements mandated by law. However, THE CONTRACTOR SHOULD BE COMPENSATED FOR
SERVICES RENDERED AND WORK DONE.
The government project was completed almost two decades ago, and the public has benefitted from the work done
by the respondent. The contractor should be duly compensated. Not doing so would unjustly enrich the government.
Justice and equity demand compensation on the basis of quantum meruit.
3 WON the CA erred in holding that the doctrine of non-suability of the State has no application in this
case
NO. The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating injustice to a
citizen. This rule is not absolute anyway.
DISPOSITIVE
Petition is denied for lack of merit. The assailed decision of the CA dated Sept. 25, 2006 is affirmed. Panalo ung
contractor.

CHINANATIONALMACHINAERYVS.HON.STAMARIA
FACTS: On 14 September 2002, petitioner China National Machinery & Equipment Corp. entered
into a Memorandum of Understanding with the North Luzon Railways Corporation for the conduct
of a feasibility study on a possible railway line from Manila to San Fernando, La Union. On 30
August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the
Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein China
agreed to extend Preferential Buyers Credit to the Philippine government to finance the Northrail
Project. The Chinese government designated EXIM Bank as the lender, while the Philippine
government named the DOF as the borrower. On 30 December 2003, Northrail and CNMEG
executed a Contract Agreement for the construction of Section I, Phase I of the North Luzon
Railway System from Caloocan to Malolos on a turnkey basis (the Contract Agreement). On 13
February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with
Urgent Motion for Summary Hearing to Determine the Existence of Facts and Circumstances
Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO
against CNMEG. In the Complaint, respondents alleged that the Contract Agreement and the
Loan Agreement were void for being contrary to (a) the Constitution; (b) Republic Act No. 9184
(R.A. No. 9184), otherwise known as the Government Procurement Reform Act; (c) Presidential
Decree No. 1445, otherwise known as the Government Auditing Code; and (d) Executive Order
No. 292, otherwise known as the Administrative Code. Before RTC Br. 145 could rule thereon,
CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that the trial court did not have
jurisdiction over (a) its person, as it was an agent of the Chinese government, making it immune
from suit, and (b) the subject matter, as the Northrail Project was a product of an executive
agreement. On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion
to Dismiss and setting the case for summary hearing to determinae whether the injunctive reliefs
prayed for should be issued. Hence, this Petition for Review on Certiorari with Prayer for the
Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing the 30
September 2008 Decision and 5 December 2008 Resolution of the Court of Appeals.
ISSUE: Whether CNMEG is entitled to immunity, precluding it from being sued before a local
court.
HELD: No. There are two conflicting concepts of sovereign immunity, each widely held and firmly
established. According to the classical or absolute theory, a sovereign cannot, without its
consent, be made a respondent in the courts of another sovereign. According to the newer
or restrictive theory, the immunity of the sovereign is recognized only with regard to public
acts or acts jure imperii of a state, but not with regard to private acts or acts jure
gestionis. The view evolved that the existence of a contract does not, per se, mean that
sovereign states may, at all times, be sued in local courts. As it stands now, the application of the
doctrine of immunity from suit has been restricted to sovereign or governmental activities ( jure
imperii). The mantle of state immunity cannot be extended to commercial, private and proprietary
acts (jure gestionis). The parties executed the Contract Agreement for the purpose of constructing
the Luzon Railways. it was CNMEG that initiated the undertaking, and not the Chinese
government. The Feasibility Study was conducted not because of any diplomatic gratuity from or
exercise of sovereign functions by the Chinese government, but was plainly a business strategy
employed by CNMEG with a view to securing this commercial enterprise.Thus, the desire of
CNMEG to secure the Northrail Project was in the ordinary or regular course of its business as a
global construction company. The implementation of the Northrail Project was intended to

generate profit for CNMEG, with the Contract Agreement placing a contract price of USD
421,050,000 for the venture. The use of the term "state corporation" to refer to CNMEG was only
descriptive of its nature as a government-owned and/or -controlled corporation, and its
assignment as the Primary Contractor did not imply that it was acting on behalf of China in the
performance of the latters sovereign functions. To imply otherwise would result in an absurd
situation, in which all Chinese corporations owned by the state would be automatically considered
as performing governmental activities, even if they are clearly engaged in commercial or
proprietary pursuits. It is clear that CNMEG has agreed that it will not be afforded immunity from
suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of the Contract
Agreement.
NationalHomeMortgateFinanceCorporationVS.ABAYARI
FACTS: Under Rule 45 of the Rules of Court, the National Home Mortgage Finance
Corporation assails the August 20, 2004 Decision of the Court of Appeals, which dismissed
its petition for certiorari from the October 14, 2003 and December 15, 2003 Orders issued
by the Regional Trial Court (RTC) of Makati City, Branch 138. The said Orders, in turn,
respectively granted the issuance of a writ of execution and denied petitioners motion for
reconsideration. Petitioner, the National Home Mortgage Finance Corporation (NHMFC), is a
government-owned and controlled corporation created under the authority of Presidential
Decree No. 1267 for the primary purpose of developing and providing a secondary market
for home mortgages granted by public and/or private home-financing institutions. In its
employ were respondents, mostly rank-and-file employees, who all profess as having been
hired after June 30, 1989. On July 1, 1989, Republic Act No. 6758, otherwise known as The
Compensation and Position Classification Act of 1989, was enacted and was subsequently
approved on August 21, 1989. Section 12 thereof directed that all allowances namely
representation and transportation allowance, clothing and laundry allowance, subsistence
allowance, hazard pay and other allowances as may be determined by the budget
department enjoyed by covered employees should be deemed included in the standardized
salary rates prescribed therein, and that the other additional compensation being received
by incumbents only as of July 1, 1989 not integrated into the standardized salary rates
should continue to be authorized. Respondents filed a petition for mandamus with the RTC of
Makati City, Branch 138 to compel petitioner to pay them meal, rice, medical, dental, optical
and children allowances, as well as longevity pay, which allegedly were already being
enjoyed by other NHMFC employees as early as July 1, 1989. Conflict arose when the DBM
sent a letter[20] dated July 15, 2003 to NHMFC President Angelico Salud disallowing the
payment of certain allowances, including those awarded by the trial court to respondents. A
reading of the letter reveals that the disallowance was made in accordance with the 2002
NHMFC Corporate Operating Budget previously issued by the DBM. To abide by the DBMs
directive, petitioner then issued a memorandum stating that effective August 2003, the
grant
of
benefits
to
its
covered employees, including those
awarded to respondents, would be curtailed pursuant to the DBM letter.[21] This eventuality
compelled respondents to file for the second time a motion for a writ of execution of the trial
courts April 27, 2001 decision. In its October 14, 2003 Order,[23] the trial court found merit
in respondents motion; hence, it directed the execution of the judgment.
ISSUE: Whether or not NHMC is immune from suit.
HELD: On this score, not only did the trial court exceed the scope of its judgment when it
awarded the benefits claimed by respondents. It also committed a blatant error when it
issued the February 16, 2004 Order directing the garnishment of petitioners funds with the
Land Bank of the Philippines equivalent to P4,806,530.00, even though the said amount was
not specified in the decision it sought to implement. Be that as it may, assuming for the sake

of argument that execution by garnishment could proceed in this case against the funds of
petitioner, it must bear stress that the latter is a government-owned or controlled
corporation with a charter of its own. Its juridical personality is separate and distinct from
the government and it can sue and be sued in its name.[41] As such, while indeed it cannot
evade the effects of the execution of an adverse judgment and may not ordinarily place its
funds beyond an order of garnishment issued in ordinary cases,[42] it is imperative in order
for execution to ensue that a claim for the payment of the judgment award be first filed with
the Commission on Audit (COA).[43]
Under Commonwealth Act No. 327,[44] as amended by P.D. No. 1445,[45] the COA, as one of
the three independent constitutional commissions, is specifically vested with the power,
authority and duty to examine, audit and settle all accounts pertaining to the revenue and
receipts of, and expenditures or uses of funds and property owned or held in trust by the
government, or any of its subdivisions, agencies or instrumentalities, including governmentowned and controlled corporations. To ensure the effective discharge of its functions, it is
vested with ample powers, subject to constitutional limitations, to define the scope of its
audit and examination and establish the techniques and methods required therefor, to
promulgate accounting and auditing rules and regulations, including those for the prevention
and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable
expenditures or uses of government funds and properties.
Clearly, the matter of allowing or disallowing a money claim against petitioner is within the
primary power of the COA to decide. This no doubt includes money claims arising from the
implementation of R.A. No. 6758.[50] Respondents claim against petitioner, although it has
already been validated by the trial courts final decision, likewise belongs to that class of
claims; hence, it must first be filed with the COA before execution could proceed.

REPUBLICVS.DOMINGO
FACTS:Domingo averred that from April to September 1992, he entered into seven
contracts with the DPWH Region III for the lease of his construction equipment to
said government agency. After the completion of the projects, Domingo claimed
that the unpaid rentals of the DPWH Region III amounted to P6,320,163.05. Despite
repeated demands, Domingo asserted that the DPWH Region III failed to pay its
obligations. In an Order dated September 2, 2002, the RTC declared the DPWH
Region III in default and thereafter set the date for the reception of Domingos
evidence ex parte. On March 12, 2003, Domingo filed a Motion for Issuance of Writ
of Execution, asserting that the DPWH Region III failed to file an appeal or a motion
for new trial and/or reconsideration despite its receipt of a copy of the RTC decision
on February 19, 2003. On March 20, 2003, the RTC granted the aforesaid motion of
Domingo. A Writ of Execution was then issued on March 24, 2003, commanding the
sheriff to enforce the RTC Decision dated February 18, 2003.In the petition at bar,
the Republic argues that the RTC failed to acquire jurisdiction over the former. The
Republic reiterates that the service of summons upon the DPWH Region III alone
was insufficient. According to the Republic, the applicable rule of procedure in this
case is Section 13, Rule 14 of the Rules of Court, which mandates that when the
defendant is the Republic of the Philippines, the service of summons may be
effected on the Office of the Solicitor General (OSG). The DPWH and its regional
office are simply agents of the Republic, which is the real party in interest in Civil
Case No. 333-M-2002. The Republic posits that, since it was not impleaded in the
case below and the RTC did not acquire jurisdiction over it, the proceedings in Civil
Case No. 333-M-2002 are null and void. On the other hand, Domingo argues that the

DPWH Region III is part of the DPWH itself; hence, a suit against the regional office
is a suit against the said department and the Republic as well. Domingo stresses
that the case he filed was against the Republic, that is, against the DPWH Region III,
and it was clear that the summons and a copy of the complaint was duly served on
the said regional office. Likewise, Domingo submits that the Republic is estopped
from raising the issue of jurisdiction in the instant case given that he has filed two
other civil actions for specific performance and damages against the DPWH Region
III and, in the said cases, the OSG formally entered its appearance for and in behalf
of the Republic. Domingo alleges that the foregoing action of the OSG proved that it
recognized the validity of the service of summons upon the DPWH Region III and the
jurisdiction of the trial court over the said regional office.
ISSUE: Whether or not the trial court acquired jurisdiction over the person of the
Republic
HELD: The Court finds merit in the Republics petition.
Summons is a writ by which the defendant is notified of the action brought against
him. Service of such writ is the means by which the court acquires jurisdiction over
his person.
Jurisdiction over the person of the defendant is acquired through coercive process,
generally by the service of summons issued by the court, or through the
defendant's voluntary appearance or submission to the court. Jurisprudence further
instructs that when a suit is directed against an unincorporated government
agency, which, because it is unincorporated, possesses no juridical personality of its
own, the suit is against the agency's principal, i.e., the State.
In the instant case, the Complaint for Specific Performance with Damages filed by
Domingo specifically named as defendant the DPWH Region III. As correctly argued
by the Republic, the DPWH and its regional office are merely the agents of the
former (the Republic), which is the real party in interest in Civil Case No. 333-M2002. Thus, as mandated by Section 13, Rule 14 of the Rules of Court, the summons
in this case should have been served on the OSG. In sum, the Court holds that the
Republic was not validly served with summons in Civil Case No. 333-M-2002. Hence,
the RTC failed to acquire jurisdiction over the person of the Republic. Consequently,
the proceedings had before the trial court and its Decision dated February 18, 2003
are hereby declared void. In accordance with Section 7, Rule 47 of the Rules of
Court, a judgment of annulment shall set aside the questioned judgment or final
order or resolution and render the same null and void, without prejudice to the
original action being refiled in the proper court.