CABANAS VS PILAPIL (1974)

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. L-25843 July 25, 1974

MELCHORA CABANAS, plaintiff-appellee,
vs.
FRANCISCO PILAPIL, defendant-appellant.
Seno, Mendoza & Associates for plaintiff-appellee.
Emilio Benitez, Jr. for defendant-appellant.

FERNANDO, J.:p
The disputants in this appeal from a question of law from a lower court decision are the mother
and the uncle of a minor beneficiary of the proceeds of an insurance policy issued on the life of
her deceased father. The dispute centers as to who of them should be entitled to act as trustee
thereof. The lower court applying the appropriate Civil Code provisions decided in favor of the
mother, the plaintiff in this case. Defendant uncle appealed. As noted, the lower court acted the
way it did following the specific mandate of the law. In addition, it must have taken into
account the principle that in cases of this nature the welfare of the child is the paramount
consideration. It is not an unreasonable assumption that between a mother and an uncle, the
former is likely to lavish more care on and pay greater attention to her. This is all the more
likely considering that the child is with the mother. There are no circumstances then that did
militate against what conforms to the natural order of things, even if the language of the law
were not as clear. It is not to be lost sight of either that the judiciary pursuant to its role as an
agency of the State as parens patriae, with an even greater stress on family unity under the
present Constitution, did weigh in the balance the opposing claims and did come to the

conclusion that the welfare of the child called for the mother to be entrusted with such
responsibility. We have to affirm.
The appealed decision made clear: "There is no controversy as to the facts. " 1 The insured,
Florentino Pilapil had a child, Millian Pilapil, with a married woman, the plaintiff, Melchora
Cabanas. She was ten years old at the time the complaint was filed on October 10, 1964. The
defendant, Francisco Pilapil, is the brother of the deceased. The deceased insured himself and
instituted as beneficiary, his child, with his brother to act as trustee during her minority. Upon
his death, the proceeds were paid to him. Hence this complaint by the mother, with whom the
child is living, seeking the delivery of such sum. She filed the bond required by the Civil Code.
Defendant would justify his claim to the retention of the amount in question by invoking the
terms of the insurance policy. 2
After trial duly had, the lower court in a decision of May 10, 1965, rendered judgment ordering
the defendant to deliver the proceeds of the policy in question to plaintiff. Its main reliance was
on Articles 320 and 321 of the Civil Code. The former provides: "The father, or in his absence
the mother, is the legal administrator of the property pertaining to the child under parental
authority. If the property is worth more than two thousand pesos, the father or mother shall give
a bond subject to the approval of the Court of First Instance." 3 The latter states: "The property
which the unemancipated child has acquired or may acquire with his work or industry, or by any
lucrative title, belongs to the child in ownership, and in usufruct to the father or mother under
whom he is under parental authority and whose company he lives; ... 4
Conformity to such explicit codal norm is apparent in this portion of the appealed decision:
"The insurance proceeds belong to the beneficiary. The beneficiary is a minor under the custody
and parental authority of the plaintiff, her mother. The said minor lives with plaintiff or lives in
the company of the plaintiff. The said minor acquired this property by lucrative title. Said
property, therefore, belongs to the minor child in ownership, and in usufruct to the plaintiff, her
mother. Since under our law the usufructuary is entitled to possession, the plaintiff is entitled to
possession of the insurance proceeds. The trust, insofar as it is in conflict with the above quoted
provision of law, is pro tanto null and void. In order, however, to protect the rights of the minor,
Millian Pilapil, the plaintiff should file an additional bond in the guardianship proceedings, Sp.
Proc. No. 2418-R of this Court to raise her bond therein to the total amount of P5,000.00." 5
It is very clear, therefore, considering the above, that unless the applicability of the two cited
Civil Code provisions can be disputed, the decision must stand. There is no ambiguity in the
language employed. The words are rather clear. Their meaning is unequivocal. Time and time
again, this Court has left no doubt that where codal or statutory norms are cast in categorical
language, the task before it is not one of interpretation but of application. 6So it must be in this
case. So it was in the appealed decision.

1. It would take more than just two paragraphs as found in the brief for the defendantappellant 7 to blunt the force of legal commands that speak so plainly and so unqualifiedly. Even
if it were a question of policy, the conclusion will remain unaltered. What is paramount, as
mentioned at the outset, is the welfare of the child. It is in consonance with such primordial end
that Articles 320 and 321 have been worded. There is recognition in the law of the deep ties that
bind parent and child. In the event that there is less than full measure of concern for the
offspring, the protection is supplied by the bond required. With the added circumstance that the
child stays with the mother, not the uncle, without any evidence of lack of maternal care, the
decision arrived at can stand the test of the strictest scrutiny. It is further fortified by the
assumption, both logical and natural, that infidelity to the trust imposed by the deceased is
much less in the case of a mother than in the case of an uncle. Manresa, commenting on Article
159 of the Civil Code of Spain, the source of Article 320 of the Civil Code, was of that view:
Thus "El derecho y la obligacion de administrar el Patrimonio de los hijos es una consecuencia
natural y lgica de la patria potestad y de la presuncin de que nadie cuidar de los bienes de
acqullos con mas cario y solicitude que los padres. En nuestro Derecho antiguo puede decirse
que se hallaba reconocida de una manera indirecta aquelia doctrina, y asi se desprende de la
sentencia del Tribunal Supremeo de 30 de diciembre de 1864, que se refiere a la ley 24, tit. XIII
de la Partida 5. De la propia suerte aceptan en general dicho principio los Codigos extranjeros,
con las limitaciones y requisitos de que trataremos mis adelante." 8
2. The appealed decision is supported by another cogent consideration. It is buttressed by its
adherence to the concept that the judiciary, as an agency of the State acting as parens patriae, is
called upon whenever a pending suit of litigation affects one who is a minor to accord priority
to his best interest. It may happen, as it did occur here, that family relations may press their
respective claims. It would be more in consonance not only with the natural order of things but
the tradition of the country for a parent to be preferred. it could have been different if the
conflict were between father and mother. Such is not the case at all. It is a mother asserting
priority. Certainly the judiciary as the instrumentality of the State in its role of parens patriae,
cannot remain insensible to the validity of her plea. In a recent case, 9 there is this quotation
from an opinion of the United States Supreme Court: "This prerogative of parens patriae is
inherent in the supreme power of every State, whether that power is lodged in a royal person or
in the legislature, and has no affinity to those arbitrary powers which are sometimes exerted by
irresponsible monarchs to the great detriment of the people and the destruction of their
liberties." What is more, there is this constitutional provision vitalizing this concept. It reads:
"The State shall strengthen the family as a basic social institution." 10 If, as the Constitution so
wisely dictates, it is the family as a unit that has to be strengthened, it does not admit of doubt
that even if a stronger case were presented for the uncle, still deference to a constitutional
mandate would have led the lower court to decide as it did.

WHEREFORE, the decision of May 10, 1965 is affirmed. Costs against defendant-appellant.

DIGEST

MELCHORA CABANAS, plaintiff-appelleevs.FRANCISCO PILAPIL, defendantappellant

(58 SCRA 94, July 25, 1974)
Facts:
Florentino Pilapil, deceased, left an insurance having his child, Millian Pilapil, as the
beneficiaryand authorized his brother, Francisco Pilapil, to act as trustee during his daughters
minority. Thelower court decided to give the mother of the child, Melchora Cabanas, the right
to act as trusteeciting the appropriate provisions in the Civil Code and the consideration of the
childs welfare. Thedefendant appealed for the case. He claims the retention of the amount in
question by
invokingthe terms of the insurance policy. He is the rightful trustee of the insurance policy.
Issue:
Whether the mother should be entitled to act as a trustee of a minor beneficiary of the
proceedsof an insurance policy from the deceased.
Ruling:
With the provisions Articles 320 and 321 of the Civil Code as basis, the decision is affirmed
withcosts against the defendant-appellant, Francisco Pilapil. Article 320 states that the father,
or inhis absence the mother, is the legal administrator of the property pertaining to the child
under parental authority. If the property is worth more than two thousand pesos, the father
or mother shall give a bond subject to the approval of the Court of First Instance." And Article
321 statesthat "The property which the child has acquired or may acquire with his work or
industry, or byany lucrative title, belongs to the child in ownership, and in usufruct to the father
or mother under whom he is under parental authority and whose company he lives.With the
added condition that the child stays with the mother, not the uncle, without any evidenceof lack
of maternal care, the decision arrived at stand the test of the strictest scrutiny. Theappealed
decision is supported by another rational consideration. It is reinforced by its adherenceto the
concept that the judiciary, as an agency of the State acting as parens patriae, is calledupon
whenever a pending suit of litigation affects one who is a minor to accord priority to his
bestinterest This prerogative of parens patriae is inherent in the supreme power of every

State,whether that power is lodged in a royal person or in the legislature, and has no affinity to
thosearbitrary powers which are sometimes exerted by irresponsible monarchs to the great
detrimentof the people and the destruction of their liberties." There is a constitutional provision
vitalizingthis concept that "The State shall strengthen the family as a basic social institution." If,
as theConstitution so wisely dictates, it is the family as a unit that has to be strengthened, it does
notadmit of doubt that even if a stronger case were presented for the uncle, still deference to
aconstitutional mandate would have led the lower court to decide as it did.The trust, insofar as it
is in conflict with the above quoted provision of law, is pro tanto null andvoid. In order,
however, to protect the rights of the minor, Millian Pilapil, the plaintiff should file anadditional
bond in the guardianship proceedings, Sp. Proc. No. 2418-R of this Court to raise her bond
therein to the total amount of P5,000.00."

GONZALES VS MARCOS
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-31685 July 31, 1975

RAMON A. GONZALES, petitioner,
vs.
IMELDA R. MARCOS, as Chairman of the Cultural Center of the Philippines, Father
HORACIO DE LA COSTA, I. P. SOLIONGCO, ERNESTO RUFINO, ANTONIO
MADRIGAL, and ANDRES SORIANO, as Members thereof, respondents.
Ramon A. Gonzales in his own behalf.
Acting Solicitor General Hugo E. Gutierrez; Jr. and Assistant Solicitor General Reynato S.
Puno for respondent Imelda R. Marcos.
Siguion Reyna, Montecillo, Beto and Ongsiako for respondents.

FERNANDO, J.:

It was the novelty of the constitutional question raised, there being an imputation by petitioner
Ramon A. Gonzales of an impermissible encroachment by the President of the Philippines on
the legislative prerogative, that led this Tribunal to give due course to an appeal
by certiorari from an order of dismissal by the Court of First Instance of Manila. 1 More
specifically, the issue centered on the validity of the creation in Executive Order No. 30 of a
trust for the benefit of the Filipino people under the name and style of the Cultural Center of the
Philippines entrusted with the task to construct a national theatre, a national music hall, an arts
building and facilities, to awaken our people's consciousness in the nation's cultural heritage
and to encourage its assistance in the preservation, promotion, enhancement and development
thereof, with the Board of Trustees to be appointed by the President, the Center having as its
estate the real and personal property vested in it as well as donations received, financial
commitments that could thereafter be collected, and gifts that may be forthcoming in the
future. 2 It was likewise alleged that the Board of Trustees did accept donations from the private
sector and did secure from the Chemical Bank of New York a loan of $5 million guaranteed by
the National Investment & Development Corporation as well as $3.5 million received from
President Johnson of the United States in the concept of war damage funds, all intended for the
construction of the Cultural Center building estimated to cost P48 million. The Board of
Trustees has as its Chairman the First Lady, Imelda Romualdez Marcos, who is named as the
principal respondent. 3 In an order of dismissal by the then Judge, now Justice of the Court of
Appeals, Jose G. Bautista of a suit for prohibition filed in the Court of First Instance of Manila,
stress was laid on the funds administered by the Center as coming from donations and
contributions, with not a single centavo raised by taxation, and the absence of any pecuniary or
monetary interest of petitioner that could in any wise be prejudiced distinct from those of the
general public. Moreover, reference was made to the admission by petitioner of the desirability
of the objective of Executive Order No. 30, his objection arising from the alleged illegality of
its issuance. 4
There was a motion of respondents to file a motion to dismiss this appeal by certiorari, and it
was granted in a resolution of March 5, 1970. Such a pleading was submitted to this Court
twelve days later, where it was contended that Executive Order No. 30 represented the
legitimate exercise of executive power, there being no invasion of the legislative domain and
that it was supplementary to rather than a disregard of Republic Act No. 4165 creating the
National Commission on Culture. In this exhaustive motion to dismiss, the point was likewise
raised that petitioner did not have the requisite personality to contest as a taxpayer the validity
of the executive order in question, as the funds held by the Cultural Center came from donations
and contributions, not one centavo being raised by taxation. 5 Thereafter, a manifestation was
filed by the then Solicitor General, now Associate Justice, Felix Q. Antonio, adopting "the
Motion to Dismiss the Petition dated February 25, 1970, filed by respondents with this
Honorable Court." 6 There was an opposition to such motion to dismiss on the part of

petitioner. 7 That was the status of the case, there being no further pleadings filed except two
motions for extension of time to file answer submitted by the Solicitor General and granted by
this Court, when on July 22, 1975, there was a second motion to dismiss on the part of
respondents through the Acting Solicitor General Hugo E. Gutierrez Jr. and Assistant Solicitor
General Reynato S. Puno. It is therein set forth: "(1) As stated in the petition itself its
undeniable quintessence is [the allegation of] "an executive usurpation of legislative powers,
hence, respondents in enforcing the same, are acting without jurisdiction, hence, are restrainable
by prohibition." ... (2) On October 5, 1972, Presidential Decree No. 15 ... was promulgated
creating the Cultural Center of the Philippines, defining its objectives, powers and functions and
other purposes. Section 4, thereof was amended by Presidential Decree No. 179 ... enacted on
April 26, 1973. It is submitted that it is now moot and academic to discuss the constitutionality
of Executive Order No. 30 considering the promulgation of PD Nos. 15 and 179, done by the
President in the exercise of legislative powers under martial law. Executive Order No. 30 has
ceased to exist while PD Nos. 15 and 179 meet all the constitutional arguments raised in the
petition at bar." 8
It would thus appear that the petition cannot succeed. There is no justification for setting aside
the order of dismissal. Notwithstanding the exhaustive and scholarly pleadings submitted by
petitioner on his own behalf, the burden of persuasion to warrant a reversal of the action of the
lower court was not met. Both on procedural and substantive grounds, a case for prohibition
was not made out, notwithstanding the valiant efforts of petitioner. With this latest
manifestation, that Executive Order No. 30 had been superseded by Presidential Decree Nos. 15
and 179, the moot and academic character of this appeal by certiorari became rather obvious. To
repeat, the petition must fail.
1. It may not be amiss though to consider briefly both the procedural and substantive grounds
that led to the lower court's order of dismissal. It was therein pointed out as "one more valid
reason" why such an outcome was unavoidable that "the funds administered by the President of
the Philippines came from donations [and] contributions [not] by taxation." Accordingly, there
was that absence of the "requisite pecuniary or monetary interest." 9 The stand of the lower
court finds support in judicial precedents. 10 This is not to retreat from the liberal approach
followed inPascual v. Secretary of Public Works, 11 foreshadowed by People v. Vera, 12 where
the doctrine of standing was first fully discussed. It is only to make clear that petitioner, judged
by orthodox legal learning, has not satisfied the elemental requisite for a taxpayer's suit.
Moreover, even on the assumption that public funds raised by taxation were involved, it does
not necessarily follow that such kind of an action to assail the validity of a legislative or
executive act has to be passed upon. This Court, as held in the recent case of Tan v.
Macapagal, 13 "is not devoid of discretion as to whether or not it should be entertained." 14 The
lower court thus did not err in so viewing the situation.

2. Nor was the lower court any more impressed by the contention that there was an
encroachment on the legislative prerogative discernible in the issuance of Executive Order No.
30. It first took note of the exchange of diplomatic notes between the Republic of the
Philippines and the United States as to the use of a special fund coming from the latter for a
Philippine cultural development project. Then, as set forth in the order of dismissal, it explained
why no constitutional objection could be validly interposed. Thus: "When the President,
therefore, acted by disposing of a matter of general concern (Section 63, Rev. Adm. Code) in
accord with the constitutional injunction to promote arts and letters (Section 4, Article XIV,
Constitution of the Philippines) and issued Executive Order No. 30, he simply carried out the
purpose of the trust in establishing the Cultural Center of the Philippines as the instrumentality
through which this agreement between the two governments would be realized. Needless to
state, the President alone cannot and need not personally handle the duties of a trustee for and in
behalf of the Filipino people in relation with this trust. He can do this by means of an executive
order by creating as he did, a group of persons, who would receive and administer the trust
estate, responsible to the President. As head of the State, as chief executive, as spokesman in
domestic and foreign affairs, in behalf of the estate as parens patriae, it cannot be successfully
questioned that the President has authority to implement for the benefit of the Filipino people
by creating the Cultural Center consisting of private citizens to administer the private
contributions and donations given not only by the United States government but also by private
persons." 15
There is impressive juridical support for the stand taken by the lower court. Justice Malcolm
in Government of the Philippine Islands v. Springer 16 took pains to emphasize: "Just as surely
as the duty of caring for governmental property is neither judicial nor legislative in character is
it as surely executive." 17 It Would be an unduly narrow or restrictive view of such a principle if
the public funds that accrued by way of donation from the United States and financial
contributions for the Cultural Center project could not be legally considered as "governmental
property." They may be acquired under the concept of dominium, the state as a persona in law
not being deprived of such an attribute, thereafter to be administered by virtue of its prerogative
of imperium. 18 What is a more appropriate agency for assuring that they be not wasted or
frittered away than the Executive, the department precisely entrusted with management
functions? It would thus appear that for the President to refrain from taking positive steps and
await the action of the then Congress could be tantamount to dereliction of duty. He had to act;
time was of the essence. Delay was far from conducive to public interest. It was as simple as
that. Certainly then, it could be only under the most strained construction of executive power to
conclude that in taking the step he took, he transgressed on terrain constitutionally reserved for
Congress.

This is not to preclude legislative action in the premises. While to the Presidency under the
1935 Constitution was entrusted the responsibility for administering public property, the then
Congress could provide guidelines for such a task. Relevant in this connection is the excerpt
from an opinion of Justice Jackson in Youngstown Sheet & Tube Co. v. Sawyer: 19 "When the
President acts in absence of either a congressional grant or denial of authority, he can only rely
upon his own independent powers, but there is a zone of twilight in which he and Congress may
have concurrent authority, or in which its distribution is uncertain. Therefore, congressional
inertia, indifference or quiescence may sometimes, at least as a practical matter, enable, if not
invite, measures on independent presidential responsibility. In this area, any actual test of power
is likely to depend on the imperative of events and contemporary imponderables rather than on
abstract theories of law." 20 To vary the phraseology, to recall Thomas Reed Powell, if Congress
would continue to keep its peace notwithstanding the action taken by the executive department,
it may be considered as silently vocal. In plainer language, it could be an instance of silence
meaning consent. The Executive Order assailed was issued on June 25, 1966. Congress until the
time of the filing of the petition on August 26, 1969 remained quiescent. Parenthetically, it may
be observed that petitioner waited until almost the day of inaugurating the Cultural Center on
September 11, 1969 before filing his petition in the lower court. However worthy of
commendation was his resolute determination to keep the Presidency within the bounds of its
competence, it cannot be denied that the remedy, if any, could be supplied by Congress
asserting itself in the premises. Instead, there was apparent conformity on its part to the way the
President saw fit to administer such governmental property.
3. The futility of this appeal by certiorari becomes even more apparent with the issuance of
Presidential Decree No. 15 on October 5, 1972. As contended by the Solicitor General, the
matter, as of that date, became moot and academic. Executive Order No. 30 was thus
superseded. The institution known as the Cultural Center is other than that assailed in this suit.
In that sense a coup de grace was administered to this proceeding. The labored attempt of
petitioner could thus be set at rest. This particular litigation is at an end. There is, too, relevance
in the observation that the aforesaid decree is part of the law of the land. So the Constitution
provides. 21
4. It only remains to be added that respondents as trustees lived up fully to the weighty
responsibility entrusted to them. The task imposed on them was performed with competence,
fidelity, and dedication. That was to be expected. From the inception of the Marcos
Administration, the First Lady has given unsparingly of herself in the encouragement and
support of literary, musical, and artistic endeavors and in the appreciation of our rich and
diverse cultural heritage. The rest of the then Board of Trustees, named as the other
respondents, were equally deserving of their being chosen for this worthy project. One of them,
the late I.P Soliongco, was in his lifetime one of the most gifted men of letters. Father Horacio

de la Costa is a historian and scholar of international repute. Respondents Ernesto Rufino,

Antonio Madrigal and Andres Soriano, all men of substance, have contributed in time and
money to civic efforts. It is not surprising then that the Cultural Center became a reality, the
massive and imposing structure constructed at a shorter period and at a lower cost than at first
thought possible. What is of even greater significance, with a portion thereof being accessible at
modest admission prices, musical and artistic performances of all kinds are within reach of the
lower-income groups. Only thus may meaning be imparted to the Constitutional provision that
arts and letters shall be under State patronage. 22 For equally important as the encouragement
and support for talented Filipinos with a creative spark is the diffusion of the opportunity for the
rest of their countrymen to savour the finer things in life. Who knows, if state efforts along
these lines are diligently pursued, that what was said by Justice Holmes about France could
apply to the Philippines. Thus: "We have not that respect for art that is one of the glories of
France." 23 In justice to petitioner Gonzales, it may be noted that he did not question the wisdom
or soundness of the goal of having a Cultural Center or the disbursement of the funds by
respondents. It is the absence of statutory authority that bothered him. The lower court did not
see things in the same light. It is easily understandable why, as the preceding discussion has
made clear, it cannot be said that such a conclusion suffered from legal infirmity. What is more,
with the issuance of Presidential Decree No. 15, the suit, to repeat, has assumed a moot and
academic character.
WHEREFORE, this appeal by certiorari to review the lower court's order of dismissal dated
December 4, 1969 is dismissed.
No costs.

DIGEST
GONZALES vs. MARCOS
65 SCRA 624
GR No. L-31685 July 31, 1975
"With the absence of any pecuniary or monetary interest owing from the public, a taxpayer may
not have the right to question the legality of an issuance creating a trust for the benefit of the
people but purely funded by charity."
FACTS: The petitioner questioned the validity of EO No. 30 creating the Cultural Center of the
Philippines, having as its estate the real and personal property vested in it as well as donations
received, financial commitments that could thereafter be collected, and gifts that may be
forthcoming in the future. It was likewise alleged that the Board of Trustees did accept

donations from the private sector and did secure from the Chemical Bank of New York a loan of
$5 million guaranteed by the National Investment & Development Corporation as well as $3.5
million received from President Johnson of the United States in the concept of war damage
funds, all intended for the construction of the Cultural Center building estimated to cost P48
million. The petition was denied by the trial court arguing that with not a single centavo raised
by taxation, and the absence of any pecuniary or monetary interest of petitioner that could in
any wise be prejudiced distinct from those of the general public.
ISSUE: Has a taxpayer the capacity to question the validity of the issuance in this case?
HELD: No. It was therein pointed out as "one more valid reason" why such an outcome was
unavoidable that "the funds administered by the President of the Philippines came from
donations [and] contributions [not] by taxation." Accordingly, there was that absence of the
"requisite pecuniary or monetary interest." The stand of the lower court finds support in judicial
precedents. This is not to retreat from the liberal approach followed in Pascual v. Secretary of
Public Works, foreshadowed by People v. Vera, where the doctrine of standing was first fully
discussed. It is only to make clear that petitioner, judged by orthodox legal learning, has not
satisfied the elemental requisite for a taxpayer's suit. Moreover, even on the assumption that
public funds raised by taxation were involved, it does not necessarily follow that such kind of
an action to assail the validity of a legislative or executive act has to be passed upon. This
Court, as held in the recent case of Tan v. Macapagal, "is not devoid of discretion as to whether
or not it should be entertained." The lower court thus did not err in so viewing the situation.

REPUBLIC VS FELICIANO
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 70853 March 12, 1987
REPUBLIC OF THE PHILIPPINES, petitioner-appellee,
vs.
PABLO FELICIANO and INTERMEDIATE APPELLATE COURT, respondentsappellants.

YAP, J.:

Petitioner seeks the review of the decision of the Intermediate Appellate Court dated April 30,
1985 reversing the order of the Court of First Instance of Camarines Sur, Branch VI, dated
August 21, 1980, which dismissed the complaint of respondent Pablo Feliciano for recovery of
ownership and possession of a parcel of land on the ground of non-suability of the State.
The background of the present controversy may be briefly summarized as follows:
On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First
Instance of Camarines Sur 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
(4) lots with an aggregate area of 1,364.4177 hectares, situated in the Barrio of Salvacion,
Municipality of Tinambac, Camarines Sur. Plaintiff alleged that he bought the property in
question from Victor Gardiola by virtue of a Contract of Sale dated May 31, 1952, followed by
a Deed of Absolute Sale on October 30, 1954; that Gardiola had acquired the property by
purchase from the heirs of Francisco Abrazado whose title to the said property was evidenced
by an informacion posesoria that upon plaintiff's purchase of the property, he took actual
possession of the same, introduced various improvements therein and caused it to be surveyed
in July 1952, which survey was approved by the Director of Lands on October 24, 1954; that on
November 1, 1954, President Ramon Magsaysay issued Proclamation No. 90 reserving for
settlement purposes, under the administration of the National Resettlement and Rehabilitation
Administration (NARRA), a tract of land situated in the Municipalities of Tinambac and
Siruma, Camarines Sur, after which the NARRA and its successor agency, the Land Authority,
started sub-dividing and distributing the land to the settlers; that the property in question, while
located within the reservation established under Proclamation No. 90, was the private property
of plaintiff and should therefore be excluded therefrom. Plaintiff prayed that he be declared the
rightful and true owner of the property in question consisting of 1,364.4177 hectares; that his
title of ownership based on informacion posesoria of his predecessor-in-interest be declared
legal valid and subsisting and that defendant be ordered to cancel and nullify all awards to the
settlers.
The defendant, represented by the Land Authority, filed an answer, raising by way of
affirmative defenses lack of sufficient cause of action and prescription.
On August 29, 1970, the trial court, through Judge Rafael S. Sison, rendered a decision
declaring Lot No. 1, with an area of 701.9064 hectares, to be the private property of the
plaintiff, "being covered by a possessory information title in the name of his predecessor-ininterest" and declaring said lot excluded from the NARRA settlement reservation. The court
declared the rest of the property claimed by plaintiff, i.e. Lots 2, 3 and 4, reverted to the public
domain.

A motion to intervene and to set aside the decision of August 29, 1970 was filed by eighty-six
(86) settlers, together with the barrio council of Pag-asay, alleging among other things that
intervenors had been in possession of the land in question for more than twenty (20) years under
claim of ownership.
On January 25, 1971, the court a quo reconsidered its decision, reopened the case and directed
the intervenors to file their corresponding pleadings and present their evidence; all evidence
already presented were to remain but plaintiff, as well as the Republic of the Philippines, could
present additional evidence if they so desire. The plaintiff presented additional evidence on July
30, 1971, and the case was set for hearing for the reception of intervenors' evidence on August
30 and August 31, 1971.
On August 30, 1971, the date set for the presentation of the evidence for intervenors, the latter
did not appear but submitted a motion for postponement and resetting of the hearing on the next
day, August 31, 1971. The trial court denied the motion for postponement and allowed plaintiff
to offer his evidence "en ausencia," after which the case would be deemed submitted for
decision. On the following day, August 31, 1971, Judge Sison rendered a decision reiterating his
decision of August 29, 1970.
A motion for reconsideration was immediately filed by the intervenors. But before this motion
was acted upon, plaintiff filed a motion for execution, dated November 18, 1971. On December
10, 1971, the lower court, this time through Judge Miguel Navarro, issued an order denying the
motion for execution and setting aside the order denying intervenors' motion for postponement.
The case was reopened to allow intervenors to present their evidence. Unable to secure a
reconsideration of Judge Navarro's order, the plaintiff went to the Intermediate Appellate Court
on a petition for certiorari. Said petition was, however, denied by the Intermediate Appellate
Court, and petitioners brought the matter to this Court in G.R. No. 36163, which was denied on
May 3, 1973 Consequently, the case was remanded to the court a quo for further proceedings.
On August 31, 1970, intervenors filed a motion to dismiss, principally 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 the plaintiff.
On August 21, 1980, the trial court, through Judge Esteban Lising, issued the questioned order
dismissing the case for lack of jurisdiction. Respondent moved for reconsideration, while the
Solicitor General, on behalf of the Republic of the Philippines filed its opposition thereto,
maintaining that the dismissal was proper on the ground of non-suability of the State and also
on the ground that the existence and/or authenticity of the purported possessory information
title of the respondents' predecessor-in-interest had not been demonstrated and that at any rate,
the same is not evidence of title, or if it is, its efficacy has been lost by prescription and laches.

Upon denial of the motion for reconsideration, plaintiff again went to the Intermediate
Appellate Court on petition for certiorari. On April 30, 1985, the respondent appellate court
rendered its decision reversing the order of Judge Lising and remanding the case to the court a
quo for further proceedings. Hence this petition.
We find the petition meritorious. 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.1 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.
By its caption and its allegation and prayer, 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. 2 There is no such showing in the instant case. Worse, the
complaint itself fails to allege the existence of such consent. This is a fatal defect, 3 and on this
basis alone, the complaint should have been dismissed.
The failure of the petitioner to assert the defense of immunity from suit when the case was tried
before the court a quo, as alleged by private respondent, is not fatal. It is now settled that such
defense "may be invoked by the courts sua sponte at any stage of the proceedings." 4
Private respondent contends that the consent of petitioner may be read from the Proclamation
itself, when it established the reservation " subject to private rights, if any there be. " We do not
agree. No such consent can be drawn from the language of the Proclamation. The exclusion of
existing private rights from the reservation established by Proclamation No. 90 can not be
construed as a waiver of the immunity of the State from suit. Waiver of immunity, being a
derogation of sovereignty, will not be inferred lightly. but must be construed instrictissimi
juris. 5 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.
Neither is there merit in respondent's submission, which the respondent appellate court
sustained, on the basis of our decision in the Begosa case, 6 that the present action is not a suit
against the State within the rule of State immunity from suit, because plaintiff does not seek to
divest the Government of any of its lands or its funds. It is contended that the complaint
involves land not owned by the State, but private land belonging to the plaintiff, hence the

Government is not being divested of any of its properties. There is some sophistry involved in
this argument, since the character of the land sought to be recovered still remains to be
established, and the plaintiff's action is directed against the State precisely to compel the latter
to litigate the ownership and possession of the property. In other words, the plaintiff is out to
establish that he is the owner of the land in question based, incidentally, on an informacion
posesoria of dubious value, and he seeks to establish his claim of ownership by suing the
Republic of the Philippines in an action in personam.
The inscription in the property registry of an informacion posesoria under the Spanish
Mortgage Law was a means provided by the law then in force in the Philippines prior to the
transfer of sovereignty from Spain to the United States of America, to record a claimant's actual
possession of a piece of land, established through an ex parte proceeding conducted in
accordance with prescribed rules. 7 Such inscription merely furnishes, at best, prima
facie evidence of the fact that at the time the proceeding was held, the claimant was in
possession of the land under a claim of right as set forth in his application. 8 The possessory
information could ripen into a record of ownership after the lapse of 20 years (later reduced to
10 years), upon the fulfillment of the requisites prescribed in Article 393 of the Spanish
Mortgage Law.
There is no showing in the case at bar that the informacion posesoria held by the respondent
had been converted into a record of ownership. Such possessory information, therefore,
remained at best mere prima facie evidence of possession. Using this possessory information,
the respondent could have applied for judicial confirmation of imperfect title under the Public
Land Act, which is an action in rem. However, having failed to do so, it is rather late for him to
pursue this avenue at this time. Respondent must also contend, as the records disclose, with the
fact admitted by him and stated in the decision of the Court a quo that settlers have been
occupying and cultivating the land in question since even before the outbreak of the war, which
puts in grave doubt his own claim of possession.
Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion
posesoria registered in the Office of the Register of Deed of Camarines Sur on September 23,
1952 was a "reconstituted" possessory information; it was "reconstituted from the duplicate
presented to this office (Register of Deeds) by Dr. Pablo Feliciano," without the submission of
proof that the alleged duplicate was authentic or that the original thereof was lost.
Reconstitution can be validly made only in case of loss of the original. 10 These circumstances
raise grave doubts as to the authenticity and validity of the "informacion posesoria" relied upon
by respondent Feliciano. Adding to the dubiousness of said document is the fact that
"possessory information calls for an area of only 100 hectares," 11 whereas the land claimed by
respondent Feliciano comprises 1,364.4177 hectares, later reduced to 701-9064 hectares. Courts

should be wary in accepting "possessory information documents, as well as other purportedly

old Spanish titles, as proof of alleged ownership of lands.
WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed decision
of the Intermediate Appellate Court, dated April 30, 1985, and affirming the order of the court a
quo, dated August 21, 1980, dismissing the complaint filed by respondent Pablo Feliciano
against the Republic of the Philippines. No costs.
SO ORDERED.

DIGEST
Republic vs. Feliciano (Consti1)
Republic of the Philippines, petitioner-appellee, vs. Pablo Feliciano and Intermediate Appellate
Court, respondents-appellants.

March 12, 1987

Yap, J:

Facts:
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.
The trial court rendered a decision declaring Lot No. 1 to be the private property of
Feliciano and the rest of the property 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 and then the case was
reopened to allow them to present their evidence.
Feliciano filed a petition for certiorari 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:
Whether or not the state can be sued for recovery and possession of a parcel of land.
Held:
No
Ratio:
A suit against the state 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.
The complaint involves land not owned by the state but private land belonging to
Feliciano, hence the government is not being divested of any of its properties.
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.

REPUBLIC VS PURISIMA

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-36084 August 31, 1977
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HONORABLE AMANTE P. PURISIMA, the Presiding Judge of the court of first Instance
of Manila (Branch VII), and YELLOW BALL FREIGHT LINES, INC., respondents.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Santiago M. Kapunan,
Solicitor Oscar C. Fernandez and Special Attorney Renato P. Mabugat for petitioner.
Jose Q. Calingo for private respondent.

FERNANDO, Acting C.J.:

The jurisdictional issued raised by Solicitor General Estelito P. Mendoza on behalf of the
Republic of the Philippines in this certiorari and prohibition proceeding arose from the failure
of respondent Judge Amante P. Purisima of the Court of First Instance of Manila to apply the
well-known and of-reiterated doctrine of the non-suability of a State, including its offices and
agencies, from suit without its consent. it was so alleged in a motion to dismiss filed by

defendant Rice and Corn Administration in a pending civil suit in the sala of respondent Judge
for the collection of a money claim arising from an alleged breach of contract, the plaintiff
being private respondent Yellow Ball Freight Lines, Inc. 1 Such a motion to dismiss was filed on
September 7, 1972. At that time, the leading case of Mobil Philippines Exploration, Inc. v.
Customs Arrastre Service, 2 were Justice Bengzon stressed the lack of jurisdiction of a court to
pass on the merits of a claim against any office or entity acting as part of the machinery of the
national government unless consent be shown, had been applied in 53 other decisions. 3 There is
thus more than sufficient basis for an allegation of jurisdiction infirmity against the order of
respondent Judge denying the motion to dismiss dated October 4, 1972. 4 What is more, the
position of the Republic has been fortified with the explicit affirmation found in this provision
of the present Constitution: "The State may not be sued without its consent." 5
The merit of the petition for certiorari and prohibition is thus obvious.
1. There is pertinence to this excerpt from Switzerland General Insurance Co., Ltd. v. Republic
of the Philippines:6 "The doctrine of non-suability recognized in this jurisdiction even prior to
the effectivity of the [1935] Constitution is a logical corollary of the positivist concept of law
which, to para-phrase Holmes, negates the assertion of any legal right as against the state, in
itself the source of the law on which such a right may be predicated. Nor is this
all.lwphl@it Even if such a principle does give rise to problems, considering the vastly
expanded role of government enabling it to engage in business pursuits to promote the general
welfare, it is not obeisance to the analytical school of thought alone that calls for its continued
applicability. Why it must continue to be so, even if the matter be viewed sociologically, was set
forth inProvidence Washington Insurance Co. v. Republic thus: "Nonetheless, 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 the 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 It only remains to be
added that under the present Constitution which, as noted, expressly reaffirmed such a doctrine,
the following decisions had been rendered: Del mar v. The Philippine veterans
Administration; 8 Republic v. Villasor; 9 Sayson v. Singson; 10 and Director of the Bureau of
Printing v. Francisco. 11
2. Equally so, the next paragraph in the above opinion from the Switzerland General Insurance
Company decision is likewise relevant: "Nor is injustice thereby cause private parties. They
could still proceed to seek collection of their money claims by pursuing the statutory remedy of

having the Auditor General pass upon them subject to appeal to judicial tribunals for final
adjudication. We could thus correctly conclude as we did in the cited Provindence Washington
Insurance decision: "Thus the doctrine of non-suability of the government without its consent,
as it has operated in practice, hardly lends itself to the charge that it could be the fruitful parent
of injustice, considering the vast and ever-widening scope of state activities at present being
undertaken. Whatever difficulties for private claimants may still exist, is, from an objective
appraisal of all factors, minimal. In the balancing of interests, so unavoidable in the
determination of what principles must prevail if government is to satisfy the public weal, the
verdict must be, as it has been these so many years, for its continuing recognition as a
fundamental postulate of constitutional law." 12
3. Apparently respondent Judge was misled by the terms of the contract between the private
respondent, plaintiff in his sala, and defendant Rice and Corn Administration which, according
to him, anticipated the case of a breach of contract within the parties and the suits that may
thereafter arise. 13 The consent, to be effective though, must come from the State acting through
a duly enacted statute as pointed out by Justice Bengzon in Mobil. Thus, whatever counsel for
defendant Rice and Corn Administration agreed to had no binding force on the government.
That was clearly beyond the scope of his authority. At any rate, Justice Sanchez, in Ramos v.
Court of Industrial Relations, 14 was quite categorical as to its "not [being] possessed of a
separate and distinct corporate existence. On the contrary, by the law of its creation, it is an
office directly 'under the Office of the President of the Philippines." 15
WHEREFORE, the petitioner for certiorari is granted and the resolution of October 4, 1972
denying the motion to dismiss filed by the Rice and Corn Administration nullified and set aside
and the petitioner for prohibition is likewise granted restraining respondent Judge from acting
on civil Case No. 79082 pending in his sala except for the purpose of ordering its dismissal for
lack of jurisdiction. The temporary restraining order issued on February 8, 1973 by this Court is
made permanent terminating this case. Costs against Yellow Ball Freight Lines, Inc.

DIGEST

Case Digest, People vs. Purisima, No. L -47757-61, January 28, 1980
FACTS: Informations were filed to 26 individuals from Manila and Samar, individually and
separately, before the Courts of First Instance of Manila and Samar for illegal possession of
deadly weapon or violation of Presidential Decree No. 9 pursuant to Proclamation No. 1081

dated Sept 21 and 23, 1973. On the motion to quash by the accused, the three respondent
judges: Judge Purisima and Judge Macaren, both of CFI of Manila; and Judge Polo of CFI of
Samar, issued in the respective cases filed before them an order to quash or dismiss the
informations on a common ground Lack of essential elements to constitute an offense
penalized by PD No. 9. The respondent judges stated that to constitute the said offense, two
elements must be present; (1) possession of any bladed, blunt or pointed weapon outside of
residence as stated in par 3; (2) and intended to use it to commit or abet subversion, rebellion,
etc as stated in the preamble of the said PD. The People, as petitioners, thru the Solicitor
General, contended that the prohibited acts need not be related to subversive activities and
the intent of the accused are irrelevant since its is a statutory offense and punishing the
possession of such deadly weapon is not only to eradicatesubversive acts but also criminality in
general. The petitioners also argued that the preamble is not an essential part of an act and
cannot prevail over the text of the law itself.
ISSUE: Whether or not the petitioners arguments as to the intention and scope of PD No. 9 (3)
correct?
HELD: NO. The Supreme Court says that the intention of PD No. 9 (3) is to penalize the acts
which are those related to the desired result of Proc. No. 1081 and Gen. Orders Nos. 6 and 7
which are to suppress those who commit or abet lawlessness, rebellion, subversive acts and the
like. The preamble of PD No. 9 also clearly concurs to that, though the preamble is not a part of
the statute, it is the key to determine what is the intent and spirit of
the decree and determine what acts fall within the purview of a penal statute.

RP VS SANDIGAN BAYAN

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 85284 February 28, 1990
REPUBLIC OF THE PHILIPPINES, petitioner
vs.
SANDIGANBAYAN, Third Division, SIMPLICIO A. PALANCA in his own behalf as a

stockholder of Bacolod Real Estate Development Corporation (BREDCO), and other

stockholders similarly situated, respondents.
Hilado, Hagad & Hilado for private respondents.
R E S O LUTIO N

PADILLA, J.:
This is a petition for certiorari to annul and set aside the resolution of the Sandiganbayan (Third
Division), dated 3 June 1988, granting the private respondents' motion to intervene in Civil
Case No. 0025 and admitting their answer in intervention, as well as its resolution, dated 25
August 1988, denying the petitioner's motion for reconsideration; PROHIBITION to order the
respondent court to cease and desist from proceeding with the intervention filed with it; and
alternatively, mandamus to compel the respondent court to dismiss the intervention case.
The antecedents are as follows:
On 29 July 1987, the Republic of the Philippines, as Plaintiff, through its governmental
instrumentality the Presidential Commission on Good Government (PCGG) filed with the
respondent Sandiganbayan a complaint against Ferdinand E. Marcos, et al. for reconveyance,
reversion, accounting, restitution and damages, docketed therein as Civil Case No. 0025 (PCGG
No. 26). 1
On or about 3 September 1987, before the said Civil Case No. 0025 could be set for hearing,
private respondent Simplicio A. Palanca in his own behalf as a stockholder of Bacolod Real
Estate Development Corporation (BREDCO) and other stockholders similarly situated, filed
with the respondent Sandiganbayan a "Motion For Leave To Intervene" 2 attaching thereto their
"Answer in Intervention ." 3
In their motion, private respondents alleged that they be
... allowed to intervene in the present action and to file the Answer in intervention
hereto attached as Annex 'A', the said stockholders having a legal interest in the
matter in litigation and in the disposition of the properties listed in Annex 'A' of the
Complaint as BREDCO LOTS and shares of stock in Bacolod Real Estate
Development Corporation.
In justification, it is further respectfully alleged that.

1. Close examination of the Complaint, in particular par. 12 thereto under 'V.

SPECIFIC AVERMENTS OF DEFENDANTS' ILLEGAL ACTS', makes no
mention at all about BREDCO being the subject of any anomalous transaction
engaged in by any of the defendants, in consequence of which the listed BREDCO
lots could have been gotten illegally. It is to be observed, on the other hand, that
the titles mentioned in aforesaid Annex of the complaint covering the lots in
question are not registered in the names of any of the defendants but in the name of
Bacolod Real Estate Development Corporation.
2. Similarly, the shares of stock in Bacolod Real Estate Development Corporation
appealing under PERSONAL PROPERTY on page two of Annex A of the
complaint t are ' carried not in the names of any of the defendants, but in the name
of Marsteel Consolidated Inc. and were acquired under the circumstances averred
more in detail in the accompanying Answer in Intervention by reason of which
detail shares should not be involved in the present action.
3. If intervention is allowed, intervenors are prepared to prove that if ever any of
the defendants through Marsteel Consolidated, Inc. and Marsteel Corporation came
to have any interest in Bacolod Real Estate Development Corporation, it was only
by way of accommodation on the part of BREDCO stockholders who transferred
their shareholdings aggregating 70% of the subscribed capital to enable Marsteel
Consolidated to secure adequate financing for the reclamation and port
development project . 4
The foregoing allegations were further expanded and elaborated in the private respondents'
Answer in Intervention.
On 2 December 1987, petitioner filed its Reply 5 to Answer In Intervention, while private
respondents filed a "Rejoinder to Reply With Motion To Release BREDCO Lots 6 and also a
"Motion To Calendar For Hearing" the motion to release BREDCO lots. 7
On 22 January 1988, respondent court promulgated a resolution 8 holding in abeyance action on
the private respondents' "Rejoinder to Reply with Motion to Release BREDCO lots", and set the
Motion for Leave to Intervene for hearing on 2 February 1988.
On 11 March 1988, respondent court issued an order 9 giving petitioner fifteen (1 5) days from
11 March 1988 within which to file its opposition and/or comment on the motion to intervene
and giving the private respondents in turn ten (10) days within which to file their reply thereto.

On 23 March 1988, petitioner filed its Motion to Dismiss "Answer In Intervention," on the
grounds that; (1) respondent court lacks jurisdiction and (2) intervenors have no legal interest in
the matter in litigation, 10 which the private respondents opposed. 11
On 6 June 1988, respondent court promulgated a Resolution dated 3 June 1988 12 granting the
private respondents' motion to intervene and admitting their Answer in Intervention.
Petitioner moved for reconsideration but this was denied by respondent court in its resolution of
25 August 1989.13
Hence, the instant petition.
The petitioner, through the Solicitor General, contends that in issuing the questioned resolutions
granting the Motion to Intervene and admitting the Answer-in-Intervention, respondent
Sandiganbayan acted in contravention of a national or public policy embedded in Executive
Order Nos. 1, 2, 4 and related issuances, or otherwise acted in a way not in accord with law or
with the applicable decisions of this Court, because:
(a) Petitioner, being the sovereign state, cannot be sued without its consent, and the Intervention
is, in legal effect, a suit or counter- suit against the sovereign state, the Republic of the
Philippines;
(b) The cause of action of intervenors does not fall within the jurisdiction of the Sandiganbayan
as expressly spelled out in P.D. No. 1606 and Executive Order No. 14;
(c) Intervenors have no legal interest in the matter in litigation, and the subject matter is not in
custodia legis of respondent court; and
(d) Intervenors' claims, as contained in their Motion for Intervention and Answer-inIntervention, are claims between and/or among Ferdinand and Imelda Marcos and their cronies,
i.e., "members of their immediate family close relatives, subordinates, and/or business
associates, dummies, agents and nominees" and are cognizable not by respondent court but by
the regular courts or other for a Even if there would be multiple litigations, as among
themselves, the legal effect remains, i.e., that there is only one case filed by the Republic
against the named defendants in Civil Case No. 0025, grounded on causes of action entirely
distinct from any cause of action which intervenors may have against Mr. Marcos and his
cronies.
The petition is not impressed with merit.

The Rules of Court permit an aggrieved party, generally, to take a cause and apply for relief
with the appellate courts by way of either of two distinct and dissimilar modes through the
broad process of appeal or the limited special civil action of certiorari. An appeal brings up for
review errors of judgment committed by a court of competent jurisdiction over the subject of
the suit or the persons of the parties or any such error committed by the court in the exercise of
its jurisdiction amounting to nothing more than an error of judgment. On the other hand, the
writ of certiorari issues for the correction of errors of jurisdiction only or grave abuse of
discretion amounting to lack or excess of jurisdiction. The writ of certiorari cannot legally be
used for any other purpose. In terms of its function, the writ of certiorari serves to keep a lower
court within the bounds of its jurisdiction or to prevent it from committing such a grave abuse
of discretion amounting to excess of jurisdiction or to relieve parties from arbitrary acts of
courts acts which courts have no power or authority in law to perform. 14
Hence, the main issue to be resolved in the present case, which is principally a petition for
certiorari to annul and set aside the questioned resolutions of respondent court is, whether or not
the Sandiganbayan has jurisdiction over the action for intervention, or if it has, whether
respondent court acted with grave abuse of discretion amounting to lack or excess of its
jurisdiction in rendering the questioned resolutions.
In the present case, petitioner merely contends that the cause of action of intervenors does not
fall within the jurisdiction of the Sandiganbayan as expressly spelled out in Presidential Decree
No. 1606 and Executive Order No. 14; it does not claim that respondent court committed grave
abuse of discretion amounting to lack or excess of its jurisdiction in rendering the questioned
resolutions.
The jurisdiction of the Sandiganbayan has already been settled in Presidential Commission on
Good Government vs. Hon. Emmanuel G. Penal, etc., et al. 15 where the Court held that
... Under Section 2 of the President's Executive Order No. 14 issued on May 7,
1986, all cases of the Commission regarding 'the funds, Moneys, Assets, and
Properties Illegally Acquired or I Misappropriated by Former President Ferdinand
Marcos, Mrs. Imelda Romualdez Marcos, their Close Relatives, Subordinates,
Business Associates, Dummies, Agents, or Nominees whether civil or criminal, are
lodged within the 'exclusive and original jurisdiction of the Sandiganbayan' and all
incidents arising from, incidental to, or related to, such cases necessarily fall
likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to
review on certiorari exclusively by the Supreme Court. (emphasis supplied)
In reiterating the aforequoted ruling in six (6) subsequent cases 16 which were decided jointly,
again, the Court held that-

... the exclusive jurisdiction conferred on the Sandiganbayan would evidently

extend not only to the principal causes of action, i.e., the recovery of alleged illgotten wealth, but also to 'all incidents arising from, incidental to, or related to,
such cases,' such as the dispute over the sale of the shares, the propriety of the
issuance of ancillary writs or provisional remedies relative thereto, the
sequestration thereof, which may not be made the subject of separate actions or
proceedings in another forum.
Intervention is not an independent action, but is ancillary and supplemental to an existing
litigation. 17 Hence, the private respondents' action for intervention in Civil Case No. 0025, not
being an independent action, is merely incidental to, or related to, the said civil case. Since the
respondent Sandiganbayan has the exclusive and original jurisdiction over Civil Case No. 0025,
it has likewise original and exclusive jurisdiction over the private respondents' action for
intervention therein.
Now, considering that respondent Sandiganbayan has jurisdiction not only over Civil Case No.
0025 but also over the private respondents' action for intervention, any error or irregularity that
it may have committed in rendering its questioned resolutions, in the exercise of its jurisdiction,
amounts to an error of judgment, which is not correctable in the present petition for certiorari
but by appeal.
Accordingly, this case may be dismissed outright without the Court having to pass upon the
other issues raised in the petition. However, considering that the litigation below is of great
public interest and involves a matter of public policy, the Court has decided to review the other
errors allegedly committed by respondent court in rendering its questioned resolutions.
In this jurisdiction, the law on "intervention" is found in the Rules of Court. 18 Thus, a person
may, before or during a trial, be permitted by the court, in its discretion, to intervene in an
action, if he has legal interest in the matter in litigation, or in the success of either of the parties
or an interest against both, or when he is so situated as to be adversely affected by a distribution
or other disposition of property in the custody of the court or of an officer thereof. 19
The Court is not impressed with the contention of petitioner that the intervenors have no legal
interest in the matter in litigation. In this connection, it would suffice to quote what the
respondent court said in holding that the intervenors have a legal interest in the matter in
litigation. Thus
Has Palanca shown a proper case for intervention by him and his co-stockholders
who are similarly situated as he is?

A narration of the pertinent facts alleged by Palanca and the plaintiff indicates the
answer.
In 1961, BREDCO was awarded by Bacolod City a contract to
undertake the reclamation and port development of the city. As of
1975, a sizeable portion of land had already been reclaimed from the
sea and corresponding torrens titles issued in BREDCO's name.
In that year, BREDCO engaged MARSTEEL as a contractor to
complete the project with power to negotiate in its name or jointly
and/or severally with BREDCO for loans to finance the reclamation
and port development, and to mortgage all reclaimed lots and other
assets of the project as security. For its services, MARSTEEL shall
receive 65% of the excess of all revenues over all disbursements.
Accordingly, BREDCO conveyed to MARSTEEL 65% of each lot
already reclaimed and that to be reclaimed.
In 1977, MARSTEEL assigned to MCI, which owned 100% of its
capital stock, all its rights, interests, obligations, and undertakings in
the project. To enable MCI to expand its base of negotiation for loans
needed in the reclamation and port development the BREDCO
stockholders transferred to MCI their respective shares of stock
amounting to 70% of the capital stock of BREDCO. In return, they
'shall be entitled to a share of 35% in excess of all revenues over all
disbursements of the projects,' it being understood that payment of the
corresponding share shall be due to BREDCO stockholders as owners
of existing interests in the project, regardless of the fact that by
implementation of this AGREEMENT, they ceased to be stockholders
of BREDCO.
In September 1986, the Presidential Commission on Good
Government (PCGG) sequestered all assets, properties, records and
documents' of MARSTEEL, MCI, and BREDCO'. In July 1987, the
complaint at bar was filed and expanded in March 1988. The
pleadings, original and expanded, allege that the defendants, acting
singly or collectively, amassed ill-gotten wealth listed in Annex 'A'
thereof, among which are the BREDCO lots and shares of stock, and
pray that the ill-gotten wealth be reconveyed to the plaintiff, plus
damages. Significantly, however, the bodies of the complaints do not

mention anything about BREDCO, its project, lots, and stocks, nor
about MCI.
Under these alleged facts, Palanca has established a proper case for intervention.
Firstly, he and his co-stockholders have a legal interest in the matter in litigation,
namely, their 70% of the capital stock of BREDCO, which they transferred to MCI
by way of alleged accommodation, or its equivalent of 35% of the excess of all
revenues over all disbursements, to which they are entitled 'as owners of existing
interests in the project.' Section 2, Rule 12, Revised Rules of Court, provides that a
person may be permitted 'to intervene in an action, if he has legal interest in the
matter in litigation.'
As a general rule the right to intervene exists in favor of one who
claims to be the owner or to have some interest in the property which
is the subject of litigation, and this without particular regard to the
value of the property or the right claimed therein. A third party may
intervene in a sequestration suit involving title to personal property,
and have his claims to the possession of the property vindicated
therein So, in an action for possession of real or personal property, an
intervenor may be admitted on the ground that he is an owner thereof,
either to assist in the defense, or to claim the property for himself, or
to obtain some other relief germane to the action.' (59 Am Jur 2d,
Parties, Sec. 152, p. 585,
Secondly, the same Section 2, Rule 12, further provides that intervention by a
person may be permitted 'when he is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of the court or of an
officer thereof.' On this point, the Supreme Court observed:
We shall now speak of the case where the stranger desires to intervene
for the purpose of asserting a property right in the res, or thing, which
is the subject-matter of the ligitation, without becoming a formal
plaintiff or defendant, and without acquiring the control over the
course of a litigation, which is conceded to the main actions (sic)
therein. The mode of intervention to which reference is now made is
denominated in equity procedure the intervention pro interesse suo
and is somewhat analogous to the trial of a right of property in an
action of law, its purpose being to enable a person whose property
gets into the clutches of a court, in a controversy between others, to go
into court and to procure it or its proceeds to be surrendered to him. It

often happens that a person who really owns property, or has a

superior lien or other interest in it, sees a litigation spring up between
others who assert rights in or concerning it. If the court takes
possession of the res, or otherwise gets jurisdiction over it in such a
controversy, the real owner is not compelled to stand Idly by and see
the property disposed of without asserting his rights. Though it be
granted that the litigation would not be technically binding on him,
because of his not being a party, yet it might well happen that
complications would ensue whereby his rights would be materially
prejudiced. For instance, the subject-matter of the litigation might
consist of a fund to he distributed, and the conditions might be such
that if it were turned over to the particular litigant who should appear
to have the better right in the original action, the person really having
a superior title might be left without redress. Accordingly provision is
made whereby persons who have not been joined as parties in the
original proceedings may intervene and assert a right antagonistic or
superior to that of one or both of the parties. (Bosworth vs. Terminal
etc. Assoc. of St. Louis, 174 U.S. 182,187, 43 L. ed., 941, 943). As
regards the right to intervene in this manner, it may be stated that if
the party desiring to intervene shows a legitimate and proper interest
in the fund or property in question, the motion to intervene should be
granted, especially if such interest cannot be otherwise properly
protected. (Joaquin v. Herrera, 37 Phil. 705, 722-724)
Here, the BREDCO lots and stocks were sequestered and are now in custodia legis
(Bernas, The Constitution of the Republic of the Philippines, An Annotated Text,
1987 ed., p. 129, footnote 42). From the facts averred by Palanca and the plaintiff,
it is easy to see that in the event We decide to order the reconveyance of those
assets to the plaintiff, Palanca and his co-stockholders in BREDCO stand to be
adversely affected.
And thirdly, the legal interest of Palanca and his co-stockholders in the matter in
litigation and the possibility of a judgment ordering reconveyance in favor of the
plaintiff, invest them with legal interest in the success of the defendants, at least
insofar as the BREDCO lots and shares are concerned. Section 2, Rule 12, also
permits intervention by a person who has legal interest in the success of either of
the parties. 20

The petitioner's contention that the State cannot be sued without its consent and that private
respondents' action for intervention is, in legal effect, a suit or counter-suit against the sovereign
is also untenable.
The Rules of Court 21 provide that the intervention shall be made by complaint filed and served
in regular form, and may be answered as if it where an original complaint; but where the
intervenor unites with the defendant in resisting the claims of the plaintiff, the intervention may
be made in the form of an answer to the complaint. In order words, a third person who makes
himself a party to an existing litigation, may either join the plaintiff in claiming what is sought
in the filing a complaint in intervention, or by uniting with the defendant in resisting the claims
of the plaintiff, by filing an answer in intervention.
In Froilan v. Pan Oriental Shipping Co., 22 the plaintiff therein Fernando A. Froilan filed a
complaint against the defendant, Pan Oriental Shipping Co. The Republic of the Philippines
intervened by filing a complaint in intervention. Thereafter, the defendant filed its answer to the
complaint in intervention, and set up a counterclaim against the Republic of the Philippines.
The trial court dismissed the defendants counterclaim against the Republic on the ground,
among others, that the state is immune from suit. On appeal, this Court held that the dismissal
of the counterclaim was untenable, because by filing its complaint in intervention the
Government in effect waived its right to non-suability.
In another case, Lim vs. Brownell, Jr. and Kagawa, 23 the plaintiff Benito E. Lim, as
administrator of the intestate estate of Arsenia Enriquez, filed a complaint in the Court of First
Instance of Manila against the Alien Property Administrator (later substituted by the Attorney
General of the United States) for the recovery of four (4) parcels of land (which were
subsequently transferred to the Republic of the Philippines) with a prayer for the payment of
back rentals. The Republic of the Philippines intervened in the case. The defendant Attorney
General of the United States and the defendant- intervenor Republic of the Philippines each
filed an answer, alleging by way of affirmative defense, among others, that the lower court had
no jurisdiction over the claim for rentals since the action in that regard constituted a suit against
the Republic to which it had not given its consent. The trial court dismissed the complaint for
lack of jurisdiction. On appeal, this Court affirmed, with the following reasons:
The claim for damages for the use of the property against the intervenor defendant
Republic of the Philippines to which it was transferred, likewise, cannot be
maintained because of the immunity of the state from suit. The claim obviously
constitutes a charge against, or financial liability to, the Government and
consequently cannot be entertained by the courts except with the consent of said
government. (Syquia vs. Almeda Lopez, 84 Phil. 312; 47 Off. Gaz., 665; Compania
General de Tabacos vs. Govt. of the PI 45 Phil., 663). Plaintiff argues that by its

intervention, the Republic of the Philippines, in effect, waived its right of nonsuability, but it will be remembered that the Republic intervened in the case merely
to unite with the defendant Attorney General of the United States in resisting
plaintiffs claims, and for that reason asked no affirmative relief against any party
in the answer in intervention. x x x. Clearly, this is not a case where the State takes
the initiative in an action against a private party by filing a complaint in
intervention, thereby surrendering its privileged position and coming down to the
level of the defendants what happened in the case of Froilan vs. Pan Oriental
Shipping Co., et al.-95 Phil. 905 cited by the plaintiff but one where the State, as
one of the defendants merely resisted a claim against it precisely on the ground,
among others, of its privileged position which exempts it from suit. (emphasis
supplied).
In the present case, the private respondents intervened in Civil Case No. 0025 merely to unite
with the defendants therein in resisting the claims of petitioner, as plaintiff, and for that reason
asked for no affirmative relief against any party in their answer in intervention. In other words,
this is not a case where the private respondents take the initiative in an action against petitioner
by filing a complaint in intervention or a complaint. As observed by respondent Sandiganbayan:
In intervening, Palanca and his co-stockholders have for their purpose to exclude
the BREDCO lots and stocks or, at least, their 35% interest in the BREDCO
project from any possible judgment directing reconveyance of the alleged ill-gotten
wealth to the plaintiff. They do not pray for damages against the latter. In effect,
they occupy a defensive position as regards those shares of stock or interest. The
fact that they interjected themselves into his litigation at their own initiative does
not alter the essential nature of their intervention." 24
Private respondents' action for intervention in Civil Case No. 0025 is not, therefore, a suit or
counter-suit against petitioner Republic of the Philippines.
Having arrived at the above conclusions, the Court finds no need to further discuss the
petitioner's pretense that the private respondents' claims are claims as between and/or among
Ferdinand and Imelda Marcos, et al., and that the same is not cognizable by respondent
Sandiganbayan but by the regular courts. It suffices to state that, as already stated, in
intervening in Civil Case No. 0025, private respondents merely joined the defendants therein in
resisting the claims of petitioner, as plaintiff, and that they asked no affirmative relief against
any party in their answer in intervention. They do not appear to have any controversy with the
defendants, Ferdinand and Imelda Marcos, et al.
ACCORDINGLY, the petition in the present case is hereby DISMISSED.

FONTANILLA VS MALIAMAN
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-55963 December 1, 1989
SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA, petitioners,
vs.
HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION
ADMINISTRATION, respondents.
G.R. No. L-61045 December 1, 1989
NATIONAL IRRIGATION ADMINISTRATION, appellant,
vs.
SPOUSES JOSE FONTANILLA and VIRGINIA FONTANILLA, appellees.
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Felicisimo C. Villaflor for NIA.

PARAS, J.:
In G.R. No. L-55963, the petition for review on certiorari seeks the affirmance of the decision
dated March 20, 1980 of the then Court of First Instance of Nueva Ecija, Branch VIII, at San
Jose City and its modification with respect to the denial of petitioner's claim for moral and
exemplary damages and attorneys fees.
In G.R. No. 61045, respondent National Irrigation Administration seeks the reversal of the
aforesaid decision of the lower court. The original appeal of this case before the Court of
Appeals was certified to this Court and in the resolution of July 7, 1982, it was docketed with
the aforecited number. And in the resolution of April 3, this case was consolidated with G.R.
No. 55963.

It appears that on August 21, 1976 at about 6:30 P.M., a pickup owned and operated by
respondent National Irrigation Administration, a government agency bearing Plate No. IN-651,
then driven officially by Hugo Garcia, an employee of said agency as its regular driver, bumped
a bicycle ridden by Francisco Fontanilla, son of herein petitioners, and Restituto Deligo, at
Maasin, San Jose City along the Maharlika Highway. As a result of the impact, Francisco
Fontanilla and Restituto Deligo were injured and brought to the San Jose City Emergency
Hospital for treatment. Fontanilla was later transferred to the Cabanatuan Provincial Hospital
where he died.
Garcia was then a regular driver of respondent National Irrigation Administration who, at the
time of the accident, was a licensed professional driver and who qualified for employment as
such regular driver of respondent after having passed the written and oral examinations on
traffic rules and maintenance of vehicles given by National Irrigation Administration
authorities.
The within petition is thus an off-shot of the action (Civil Case No. SJC-56) instituted by
petitioners-spouses on April 17, 1978 against respondent NIA before the then Court of First
Instance of Nueva Ecija, Branch VIII at San Jose City, for damages in connection with the death
of their son resulting from the aforestated accident.
After trial, the trial court rendered judgment on March 20, 1980 which directed respondent
National Irrigation Administration to pay damages (death benefits) and actual expenses to
petitioners. The dispositive portion of the decision reads thus:
. . . . . Judgment is here rendered ordering the defendant National Irrigation
Administration to pay to the heirs of the deceased P12,000.00 for the death of
Francisco Fontanilla; P3,389.00 which the parents of the deceased had spent for
the hospitalization and burial of the deceased Francisco Fontanilla; and to pay the
costs. (Brief for the petitioners spouses Fontanilla, p. 4; Rollo, p. 132)
Respondent National Irrigation Administration filed on April 21, 1980, its motion for
reconsideration of the aforesaid decision which respondent trial court denied in its Order of
June 13, 1980. Respondent National Irrigation Administration thus appealed said decision to the
Court of Appeals (C.A.-G.R. No. 67237- R) where it filed its brief for appellant in support of its
position.
Instead of filing the required brief in the aforecited Court of Appeals case, petitioners filed the
instant petition with this Court.

The sole issue for the resolution of the Court is: Whether or not the award of moral damages,
exemplary damages and attorney's fees is legally proper in a complaint for damages based on
quasi-delict which resulted in the death of the son of herein petitioners.
Petitioners allege:
1. The award of moral damages is specifically allowable. under paragraph 3 of
Article 2206 of the New Civil Code which provides that the spouse, legitimate and
illegitimate descendants and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased. Should moral
damages be granted, the award should be made to each of petitionersspouses individually and in varying amounts depending upon proof of mental and
depth of intensity of the same, which should not be less than P50,000.00 for each
of them.
2. The decision of the trial court had made an impression that respondent National
Irrigation Administration acted with gross negligence because of the accident and
the subsequent failure of the National Irrigation Administration personnel
including the driver to stop in order to give assistance to the, victims. Thus, by
reason of the gross negligence of respondent, petitioners become entitled to
exemplary damages under Arts. 2231 and 2229 of the New Civil Code.
3. Petitioners are entitled to an award of attorney's fees, the amount of which
(20%) had been sufficiently established in the hearing of May 23, 1979.
4. This petition has been filed only for the purpose of reviewing the findings of the
lower court upon which the disallowance of moral damages, exemplary damages
and attorney's fees was based and not for the purpose of disturbing the other
findings of fact and conclusions of law.
The Solicitor General, taking up the cudgels for public respondent National Irrigation
Administration, contends thus:
1. The filing of the instant petition is rot proper in view of the appeal taken by
respondent National Irrigation Administration to the Court of Appeals against the
judgment sought to be reviewed. The focal issue raised in respondent's appeal to
the Court of Appeals involves the question as to whether or not the driver of the
vehicle that bumped the victims was negligent in his operation of said vehicle. It
thus becomes necessary that before petitioners' claim for moral and exemplary
damages could be resolved, there should first be a finding of negligence on the part

of respondent's employee-driver. In this regard, the Solicitor General alleges that

the trial court decision does not categorically contain such finding.
2. The filing of the "Appearance and Urgent Motion For Leave to File PlaintiffAppellee's Brief" dated December 28, 1981 by petitioners in the appeal (CA-G.R.
No. 67237-R; and G. R. No.61045) of the respondent National Irrigation
Administration before the Court of Appeals, is an explicit admission of said
petitioners that the herein petition, is not proper. Inconsistent procedures are
manifest because while petitioners question the findings of fact in the Court of
Appeals, they present only the questions of law before this Court which posture
confirms their admission of the facts.
3. The fact that the parties failed to agree on whether or not negligence caused the
vehicular accident involves a question of fact which petitioners should have
brought to the Court of Appeals within the reglementary period. Hence, the
decision of the trial court has become final as to the petitioners and for this reason
alone, the petition should be dismissed.
4. Respondent Judge acted within his jurisdiction, sound discretion and in
conformity with the law.
5. Respondents do not assail petitioners' claim to moral and exemplary damages by
reason of the shock and subsequent illness they suffered because of the death of
their son. Respondent National Irrigation Administration, however, avers that it
cannot be held liable for the damages because it is an agency of the State
performing governmental functions and driver Hugo Garcia was a regular driver of
the vehicle, not a special agent who was performing a job or act foreign to his
usual duties. Hence, the liability for the tortious act should. not be borne by
respondent government agency but by driver Garcia who should answer for the
consequences of his act.
6. Even as the trial court touched on the failure or laxity of respondent National
Irrigation Administration in exercising due diligence in the selection and
supervision of its employee, the matter of due diligence is not an issue in this case
since driver Garcia was not its special agent but a regular driver of the vehicle.
The sole legal question on whether or not petitioners may be entitled to an award of moral and
exemplary damages and attorney's fees can very well be answered with the application of Arts.
2176 and 2180 of theNew Civil Code.

Art. 2176 thus provides:

Whoever by act omission causes damage to another, there being fault or
negligence, is obliged to pay for damage done. Such fault or negligence, if there is
no pre-existing cotractual relation between the parties, is called a quasi-delict and
is governed by the provisions of this Chapter
Paragraphs 5 and 6 of Art. 21 80 read as follows:
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even the though
the former are not engaged in any business or industry.
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, in which case what is provided in Art. 2176 shall be applicable.
The liability of the State has two aspects. namely:
1. Its public or governmental aspects where it is liable for the tortious acts of
special agents only.
2. Its private or business aspects (as when it engages in private enterprises) where
it becomes liable as an ordinary employer. (p. 961, Civil Code of the Philippines;
Annotated, Paras; 1986 Ed. ).
In this jurisdiction, the State assumes a limited liability for the damage caused by the tortious
acts or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed liability for
acts done through special agents. The State's agent, if a public official, must not only be
specially commissioned to do a particular task but that such task must be foreign to said
official's usual governmental functions. If the State's agent is not a public official, and is
commissioned to perform non-governmental functions, then the State assumes the role of an
ordinary employer and will be held liable as such for its agent's tort. Where the government
commissions a private individual for a special governmental task, it is acting through a special
agent within the meaning of the provision. (Torts and Damages, Sangco, p. 347, 1984 Ed.)
Certain functions and activities, which can be performed only by the government, are more or
less generally agreed to be "governmental" in character, and so the State is immune from tort
liability. On the other hand, a service which might as well be provided by a private corporation,

and particularly when it collects revenues from it, the function is considered a "proprietary"
one, as to which there may be liability for the torts of agents within the scope of their
employment.
The National Irrigation Administration is an agency of the government exercising proprietary
functions, by express provision of Rep. Act No. 3601. Section 1 of said Act provides:
Section 1. Name and domicile.-A body corporate is hereby created which shall be
known as the National Irrigation Administration, hereinafter called the NIA for
short, which shall be organized immediately after the approval of this Act. It shall
have its principal seat of business in the City of Manila and shall have
representatives in all provinces for the proper conduct of its business.
Section 2 of said law spells out some of the NIA's proprietary functions. ThusSec. 2. Powers and objectives.-The NIA shall have the following powers and
objectives:
(a) x x x x x x x x x x x x x x x x x x
(b) x x x x x x x x x x x x x x x x x x
(c) To collect from the users of each irrigation system constructed by it such fees as
may be necessary to finance the continuous operation of the system and reimburse
within a certain period not less than twenty-five years cost of construction thereof;
and
(d) To do all such other tthings and to transact all such business as are directly or
indirectly necessary, incidental or conducive to the attainment of the above
objectives.
Indubitably, the NIA is a government corporation with juridical personality and not a mere
agency of the government. Since it is a corporate body performing non-governmental functions,
it now becomes liable for the damage caused by the accident resulting from the tortious act of
its driver-employee. In this particular case, the NIA assumes the responsibility of an ordinary
employer and as such, it becomes answerable for damages.
This assumption of liability, however, is predicated upon the existence of negligence on the part
of respondent NIA. The negligence referred to here is the negligence of supervision.

At this juncture, the matter of due diligence on the part of respondent NIA becomes a crucial
issue in determining its liability since it has been established that respondent is a government
agency performing proprietary functions and as such, it assumes the posture of an ordinary
employer which, under Par. 5 of Art. 2180, is responsible for the damages caused by its
employees provided that it has failed to observe or exercise due diligence in the selection and
supervision of the driver.
It will be noted from the assailed decision of the trial court that "as a result of the impact,
Francisco Fontanilla wasthrown to a distance 50 meters away from the point of impact while
Restituto Deligo was thrown a little bit further away. The impact took place almost at the edge
of the cemented portion of the road." (Emphasis supplied,) [page 26, Rollo]
The lower court further declared that "a speeding vehicle coming in contact with a person
causes force and impact upon the vehicle that anyone in the vehicle cannot fail to notice. As a
matter of fact, the impact was so strong as shown by the fact that the vehicle suffered dents on
the right side of the radiator guard, the hood, the fender and a crack on the radiator as shown
by the investigation report (Exhibit "E"). (Emphasis supplied) [page 29, Rollo]
It should be emphasized that the accident happened along the Maharlika National Road within
the city limits of San Jose City, an urban area. Considering the fact that the victim was thrown
50 meters away from the point of impact, there is a strong indication that driver Garcia was
driving at a high speed. This is confirmed by the fact that the pick-up suffered substantial and
heavy damage as above-described and the fact that the NIA group was then "in a hurry to reach
the campsite as early as possible", as shown by their not stopping to find out what they bumped
as would have been their normal and initial reaction.
Evidently, there was negligence in the supervision of the driver for the reason that they were
travelling at a high speed within the city limits and yet the supervisor of the group, Ely Salonga,
failed to caution and make the driver observe the proper and allowed speed limit within the city.
Under the situation, such negligence is further aggravated by their desire to reach their
destination without even checking whether or not the vehicle suffered damage from the object it
bumped, thus showing imprudence and reckelessness on the part of both the driver and the
supervisor in the group.
Significantly, this Court has ruled that even if the employer can prove the diligence in the
selection and supervision (the latter aspect has not been established herein) of the employee,
still if he ratifies the wrongful acts, or take no step to avert further damage, the employer would
still be liable. (Maxion vs. Manila Railroad Co., 44 Phil. 597).

Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-26810, August 31, 1970, 34
SCRA 618), this Court held that a driver should be especially watchful in anticipation of others
who may be using the highway, and his failure to keep a proper look out for reasons and objects
in the line to be traversed constitutes negligence.
Considering the foregoing, respondent NIA is hereby directed to pay herein petitioners-spouses
the amounts of P12,000.00 for the death of Francisco Fontanilla; P3,389.00 for hospitalization
and burial expenses of the aforenamed deceased; P30,000.00 as moral damages; P8,000.00 as
exemplary damages and attorney's fees of 20% of the total award.
SO ORDERED.

DIGEST

FONTANILLA V. MALIAMAN
G.R. No. L-55963, February 27, 1991

Petitioners: Spouses Jose Fontanilla and Virginia Fontanilla

Respondents: Hon. Inocencio D. Maliaman and National Irrigation Administration (NIA)
FACTS
On December 1, 1989, the Court rendered a decision declaring National Irrigation
Administration (NIA), a government agency performing proprietary functions. Like an
ordinary employer, NIA was held liable for the injuries, resulting in death, of Francisco
Fontanilla, son of petitioner spouses Jose and Virginia Fontanilla, caused by the fault and/or
negligence of NIAs driver employee Hugo Garcia; and NIA was ordered to pay the petitioners
the amounts of P 12,000 for the death of the victim; P3,389 for hospitalization and burial
expenses; P30,000 as moral damages; P8,000 as exemplary damages, and attorneys fees of
20% of the total award.
The National Irrigation Administration (NIA) maintains, however, that it does not perform
solely and primarily proprietary functions, but is an agency of the government tasked with
governmental functions, and is therefore not liable for the tortuous act of its driver Garcia, who
was not its special agent. For this, they have filed a motion for reconsideration on January 26,
1990.

NIA believes this bases this on:

PD 552 amended some provisions
of RA 3601 (the law which created the NIA)
The case of Angat River Irrigation
System v. Angat River Workers Union
Angat Case: Although the majority opinion declares that the Angat System, like the NIA,
exercised a governmental function because the nature of its powers and functions does not show
that it was intended to bring to the Government any special corporate benefit or pecuniary
profit, a strong dissenting opinion held that Angat River system is a government entity
exercising proprietary functions.
The Angat dissenting opinion:
Alegre protested the announced termination of his employment. He argued that although his
contract did stipulate that the same would terminate on July 17, 1976, since his services were
necessary and desirable in the usual business of his employer, and his employment had lasted
for five years, he had acquired the status of regular employee and could not be removed except
for valid cause.
The employment contract of 1971 was executed when the Labor Code of the Philippines had
not yet been promulgated, which came into effect some 3 years after the perfection of the
contract.
ISSUE
Whether or not NIA is a government agency with a juridical personality separate and distinct
from the government, thereby opening it up to the possibility that it may be held liable for the
damages caused by its driver, who was not its special agent
HELD: YES
Reasoning the functions of government have been classified into governmental or constituent
and proprietary or ministrant. The former involves the exercise of sovereignty and considered as
compulsory; the latter connotes merely the exercise of proprietary functions and thus considered
as optional.
The National Irrigation Administration was not created for purposes of local government.
While it may be true that the NIA was essentially a service agency of the government aimed at
promoting public interest and public welfare, such fact does not make the NIA essentially and

purely a "government-function" corporation. NIA was created for the purpose of "constructing,
improving, rehabilitating, and administering all national irrigation systems in the Philippines,
including all communal and pump irrigation projects." Certainly, the state and the community as
a whole are largely benefited by the services the agency renders, but these functions are only
incidental to the principal aim of the agency, which is the irrigation of lands.
NIA is a government agency invested with a corporate personality separate and distinct from the
government, thus is governed by the Corporation Law. Section 1 of Republic Act No. 3601
provides:
Sec. 1. Name and Domicile A body corporate is hereby created which shall be known as the
National Irrigation Administration. . . . which shall be organized immediately after the approval
of this Act. It shall have its principal seat of business in the City of Manila and shall have
representatives in all provinces, for the proper conduct of its business. (Emphasis for emphasis).

Besides, Section 2, subsection b of P.D. 552 provides that:

(b) To charge and collect from the beneficiaries of the water from all irrigation systems
constructed by or under its administration, such fees or administration charges as may be
necessary to cover the cost of operation, maintenance and insurance, and to recover the cost of
construction within a reasonable period of time to the extent consistent with government policy;
to recover funds or portions thereof expended for the construction and/or rehabilitation of
communal irrigation systems which funds shall accrue to a special fund for irrigation
development under section 2 hereof;
Unpaid irrigation fees or administration charges shall be preferred liens first, upon the land
benefited, and then on the crops raised thereon, which liens shall have preference over all other
liens except for taxes on the land, and such preferred liens shall not be removed until all fees or
administration charges are paid or the property is levied upon and sold by the National
Irrigation Administration for the satisfaction thereof. . . .
The same section also provides that NIA may sue and be sued in court.
It has its own assets and liabilities. It also has corporate powers to be exercised by a Board of
Directors. Section 2, subsection (f): . . . and to transact such business, as are directly or
indirectly necessary, incidental or conducive to the attainment of the above powers and
objectives, including the power to establish and maintain subsidiaries, and in general, to
exercise all the powers of a corporation under the Corporation Law, insofar as they are not
inconsistent with the provisions of this Act.

DISPOSITION: The court concluded that the National Irrigation Administration is a

government agency with a juridical personality separate and distinct from the government. It is
not a mere agency of the government but a corporate body performing proprietary functions.
Therefore, it may be held liable for the damages caused by the negligent act of its driver who
was not its special agent.
ACCORDINGLY, the Motion for Reconsideration dated January 26, 1990 is DENIED WITH
FINALITY. The decision of this Court in G.R. No. 55963 and G.R. No. 61045 dated December
1, 1989 is hereby AFFIRMED.

DISSENTING: PADILLA: to say that NIA has opened itself to suit is one thing; to say that it is
liable for damages arising from tort committed by its employees, is still another thing.
The state or a government agency performing governmental functions may be held liable for
tort committed by its employees only when it acts through a special agent.

DFA VS NLFC

[G.R. No. 113191. September 18, 1996]

DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES V. DE CASTRO and
JOSE C. MAGNAYI, respondents.
DECISION
VITUG, J.:
The questions raised in the petition for certiorari are a few coincidental matters relative to the
diplomatic immunity extended to the Asian Development Bank ("ADB").
On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for his
alleged illegal dismissal by ADB and the latter's violation of the "labor-only" contracting
law. Two summonses were served, one sent directly to the ADB and the other through the
Department of Foreign Affairs ("DFA"), both with a copy of the complaint. Forthwith, the ADB
and the DFA notified respondent Labor Arbiter that the ADB, as well as its President and
Officers, were covered by an immunity from legal process except for borrowings, guaranties or
the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the
Asian Development Bank (the "Charter") in relation to Section 5 and Section 44 of

the Agreement Between The Bank And The Government Of The Philippines Regarding The
Bank's Headquarters (the "Headquarters Agreement").
The Labor Arbiter took cognizance of the complaint on the impression that the ADB had
waived its diplomatic immunity from suit. In time, the Labor Arbiter rendered his decision,
dated31 August 1993, that concluded:
"WHEREFORE, above premises considered, judgment is hereby rendered declaring the
complainant as a regular employee of respondent ADB, and the termination of his services as
illegal. Accordingly, respondent Bank is hereby ordered:
"1. To immediately reinstate the complainant to his former position effective September 16,
1993;
"2. To pay complainant full backwages from December 1, 1992 to September 15, 1993 in the
amount of P42,750.00 (P4,500.00 x 9 months);
"3. And to pay complainants other benefits and without loss of seniority rights and other
privileges and benefits due a regular employee of Asian Development Bank from the time he
was terminated on December 31, 1992;
"4. To pay 10% attorney's fees of the total entitlements."[1]
The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred the
matter to the National Labor Relations Commission ("NLRC"); in its referral, the DFA sought a
"formal vacation of the void judgment." Replying to the letter, the NLRC Chairman, wrote:
"The undersigned submits that the request for the 'investigation' of Labor Arbiter Nieves de
Castro, by the National Labor Relations Commission, has been erroneously premised on Art.
218(c) of the Labor Code, as cited in the letter of Secretary Padilla, considering that the
provision deals with 'a question, matter or controversy within its (the Commission) jurisdiction'
obviously referring to a labor dispute within the ambit of Art. 217 (on jurisdiction of Labor
Arbiters and the Commission over labor cases).
"The procedure, in the adjudication of labor cases, including raising of defenses, is prescribed
by law. The defense of immunity could have been raised before the Labor Arbiter by a special
appearance which, naturally, may not be considered as a waiver of the very defense being
raised. Any decision thereafter is subject to legal remedies, including appeals to the appropriate
division of the Commission and/or a petition for certiorari with the Supreme Court, under Rule
65 of the Rules of Court. Except where an appeal is seasonably and properly made, neither the
Commission nor the undersigned may review, or even question, the propriety of any decision by
a Labor Arbiter. Incidentally, the Commission sits en banc (all fifteen Commissioners) only to
promulgate rules of procedure or to formulate policies (Art. 213, Labor Code).

"On the other hand, while the undersigned exercises 'administrative supervision over the
Commission and its regional branches and all its personnel, including the Executive Labor
Arbiters and Labor Arbiters' (penultimate paragraph, Art. 213, Labor Code), he does not have
the competence to investigate or review any decision of a Labor Arbiter. However, on the purely
administrative aspect of the decision-making process, he may cause that an investigation be
made of any misconduct, malfeasance or misfeasance, upon complaint properly made.
"If the Department of Foreign Affairs feels that the action of Labor Arbiter Nieves de Castro
constitutes misconduct, malfeasance or misfeasance, it is suggested that an appropriate
complaint be lodged with the Office of the Ombudsman.
"Thank you for your kind attention."[2]
Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's resolution of 31
January 1994, respondents were required to comment. Petitioner was later constrained to make
an application for a restraining order and/or writ of preliminary injunction following the
issuance, on 16 March 1994, by the Labor Arbiter of a writ of execution. In a resolution,
dated 07 April 1994, the Court issued the temporary restraining order prayed for.
The Office of the Solicitor General (OSG), in its comment of 26 May 1994, initially assailed the
claim of immunity by the ADB. Subsequently, however, it submitted a Manifestation (dated 20
June 1994) stating, among other things, that "after a thorough review of the case and the
records," it became convinced that ADB, indeed, was correct in invoking its immunity from suit
under the Charter and the Headquarters Agreement.
The Court is of the same view.
Article 50(1) of the Charter provides:
The Bank shall enjoy immunity from every form of legal process, except in cases arising out of
or in connection with the exercise of its powers to borrow money, to guarantee obligations, or to
buy and sell or underwrite the sale of securities.[3]
Under Article 55 thereof All Governors, Directors, alternates, officers and employees of the Bank, including experts
performing missions for the Bank:
(1) shall be immune from legal process with respect of acts performed by them in their official
capacity, except when the Bank waives the immunity.[4]
Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:

"The Bank shall enjoy immunity from every form of legal process, except in cases arising out
of, or in connection with, the exercise of its powers to borrow money, to guarantee obligations,
or to buy and sell or underwrite the sale of securities.[5]
And, with respect to certain officials of the bank, Section 44 of the agreement states:
Governors, other representatives of Members, Directors, the President, Vice-President and
executive officers as may be agreed upon between the Government and the Bank shall enjoy,
during their stay in the Republic of the Philippines in connection with their official duties with
the Bank:
xxxxxxxxx
(b) Immunity from legal process of every kind in respect of words spoken or written and all acts
done by them in their official capacity.[6]
The above stipulations of both the Charter and Headquarters Agreement should be able, nay
well enough, to establish that, except in the specified cases of borrowing and guarantee
operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys
immunity from legal process of every form. The Banks officers, on their part, enjoy immunity
in respect of all acts performed by them in their official capacity. The Charter and the
Headquarters Agreement granting these immunities and privileges are treaty covenants and
commitments voluntarily assumed by the Philippine government which must be respected.
In World Health Organization vs. Aquino,[7] we have declared:
It is a recognized principle of international law and under our system of separation of powers
that diplomatic immunity is essentially a political question and courts should refuse to look
beyond a determination by the executive branch of the government, and where the plea of
diplomatic immunity is recognized and affirmed by the executive branch of the government x x
x it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion
by the principal law officer of the government, x x x or other officer acting under his
direction. Hence, in adherence to the settled principle that courts may not so exercise their
jurisdiction x x x as to embarrass the executive arm of the government in conducting foreign
relations, it is accepted doctrine that `in such cases the judicial department of government
follows the action of the political branch and will not embarrass the latter by assuming an
antagonistic jurisdiction.'"[8]
To the same effect is the decision in International Catholic Migration Commission vs. Calleja,
[9]
which has similarly deemed the Memoranda of the Legal Adviser of the Department of
Foreign Affairs to be "a categorical recognition by the Executive Branch of Government that
ICMC x x x enjoy(s) immunities accorded to international organizations" and which
determination must be held "conclusive upon the Courts in order not to embarrass a political

department of Government. In the instant case, the filing of the petition by the DFA, in behalf of
ADB, is itself an affirmance of the government's own recognition of ADB's immunity.
Being an international organization that has been extended a diplomatic status, the ADB is
independent of the municipal law.[10] In Southeast Asian Fisheries Development Center vs.
Acosta,[11] the Court has cited with approval the opinion[12] of the then Minister of Justice; thus "One of the basic immunities of an international organization is immunity from local
jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of
the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that the
subjection of such an organization to the authority of the local courts would afford a convenient
medium thru which the host government may interfere in their operations or even influence or
control its policies and decisions of the organization; besides, such subjection to local
jurisdiction would impair the capacity of such body to discharge its responsibilities impartially
on behalf of its member-states."[13]
Contrary to private respondent's assertion, the claim of immunity is not here being raised for the
first time; it has been invoked before the forum of origin through communications sent by
petitioner and the ADB to the Labor Arbiter, as well as before the NLRC following the rendition
of the questioned judgment by the Labor Arbiter, but evidently to no avail.
In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has
advised the NLRC:
"Respectfully returned to the Honorable Domingo B. Mabazza, Labor Arbitration Associate,
National Labor Relations Commission, National Capital Judicial Region, Arbitration Branch,
Associated bank Bldg., T.M. Kalaw St., Ermita, Manila, the attached Notice of Hearing
addressed to the Asian Development Bank, in connection with the aforestated case, for the
reason stated in the Department's 1st Indorsement dated 23 March 1993, copy attached, which is
self-explanatory.
"In view of the fact that the Asian Development Bank (ADB) invokes its immunity which is
sustained by the Department of Foreign Affairs, a continuous hearing of this case erodes the
credibility of the Philippine government before the international community, let alone the
negative implication of such a suit on the official relationship of the Philippine government with
the ADB.
"For the Secretary of Foreign Affairs
(Sgd.)
"SIME D. HIDALGO
Assistant Secretary"[14]

The Office of the President, likewise, has issued on 18 May 1993 a letter to the Secretary of
Labor, viz:
"Dear Secretary Confesor,
"I am writing to draw your attention to a case filed by a certain Jose C. Magnayi against the
Asian Development Bank and its President, Kimimasa Tarumizu, before the National Labor
Relations Commission, National Capital Region Arbitration Board (NLRC NCR Case No. 0001690-93).
"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de Castro, addressed a
Notice of Resolution/Order to the Bank which brought it to the attention of the Department of
Foreign Affairs on the ground that the service of such notice was in violation of the RP-ADB
Headquarters Agreement which provided, inter-alia, for the immunity of the Bank, its President
and officers from every form of legal process, except only, in cases of borrowings, guarantees
or the sale of securities.
"The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V. de Castro of this
fact by letter dated March 22, copied to you.
"Despite this, the labor arbiter in question persisted to send summons, the latest dated May 4,
herewith attached, regarding the Magnayi case.
"The Supreme Court has long settled the matter of diplomatic immunities. In WHO vs. Aquino,
SCRA 48, it ruled that courts should respect diplomatic immunities of foreign officials
recognized by the Philippine government. Such decision by the Supreme Court forms part of
the law of the land.
"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that ignorance of the law is
a ground for dismissal.
"Very truly yours,
(Sgd.)
JOSE B. ALEJANDRINO
Chairman, PCC-ADB"[15]
Private respondent argues that, by entering into service contracts with different private
companies, ADB has descended to the level of an ordinary party to a commercial transaction
giving rise to a waiver of its immunity from suit. In the case of Holy See vs. Hon. Rosario, Jr.,
[16]
the Court has held:
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 act or acts jure gestionis.
xxxxxxxxx
Certainly, the mere entering into a contract by a foreign state with a private party cannot be the
ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the
foreign state is engaged in the activity in the regular course of business. If the foreign state is
not engaged regularly in a business or trade, the particular act or transaction must then be tested
by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an
act jure imperii, especially when it is not undertaken for gain or profit.[17]
The service contracts referred to by private respondent have not been intended by the ADB for
profit or gain but are official acts over which a waiver of immunity would not attach.
With regard to the issue of whether or not the DFA has the legal standing to file the present
petition, and whether or not petitioner has regarded the basic rule that certiorari can be availed
of only when there is no appeal nor plain, speedy and adequate remedy in the ordinary course of
law, we hold both in the affirmative.
The DFA's function includes, among its other mandates, the determination of persons and
institutions covered by diplomatic immunities, a determination which, when challenged, entitles
it to seek relief from the court so as not to seriously impair the conduct of the country's foreign
relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable
it to help keep the credibility of the Philippine government before the international
community. When international agreements are concluded, the parties thereto are deemed to
have likewise accepted the responsibility of seeing to it that their agreements are duly
regarded. In our country, this task falls principally on the DFA as being the highest executive
department with the competence and authority to so act in this aspect of the international arena.
[18]
In Holy See vs. Hon. Rosario, Jr.,[19] this Court has explained the matter in good detail; viz:
"In Public International Law, when a state or international agency wishes to plead sovereign or
diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is
sued to convey to the court that said defendant is entitled to immunity.
"In the United States, the procedure followed is the process of 'suggestion,' where the foreign
state or the international organization sued in an American court requests the Secretary of State
to make a determination as to whether it is entitled to immunity. If the Secretary of State finds
that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the
court a 'suggestion' that the defendant is entitled to immunity. In England, a similar procedure is
followed, only the Foreign Office issues a certification to that effect instead of submitting a

'suggestion' (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign
Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).
"In the Philippines, the practice is for the foreign government or the international organization
to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But
how the Philippine Foreign Office conveys its endorsement to the courts varies. In International
Catholic Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign
Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter
that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In
World Health Organization vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs
sent the trial court a telegram to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S.
Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make,
in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a
'suggestion' to respondent Judge. The Solicitor General embodied the 'suggestion' in a
manifestation and memorandum as amicus curiae.
"In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs
moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed
the said Department to file its memorandum in support of petitioner's claim of sovereign
immunity.
"In some cases, the defense of sovereign immunity was submitted directly to the local courts by
the respondents through their private counsels (Raquiza vs. Bradford, 75 Phil. 50 [1945];
Miquiabas vs. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America vs.
Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass
the Foreign Office, the courts can inquire into the facts and make their own determination as to
the nature of the acts and transactions involved."[20]
Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special
circumstances, so allowed and entertained such a petition when (a) the questioned order or
decision is issued in excess of or without jurisdiction,[21] or (b) where the order or decision is a
patent nullity,[22] which, verily, are the circumstances that can be said to obtain in the present
case. When an adjudicator is devoid of jurisdiction on a matter before him, his action that
assumes otherwise would be a clear nullity.
WHEREFORE, the petition for certiorari is GRANTED, and the decision of the Labor
Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID. The temporary
restraining order issued by this Court on 07 April 1994 is hereby made permanent. No costs.
SO ORDERED.

HOLY SEE VS ROSARIO

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 101949 December 1, 1994

THE HOLY SEE, petitioner,
vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial
Court of Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES,
INC., respondents.
Padilla Law Office for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set
aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court,
Branch 61, Makati, Metro Manila in Civil Case No. 90-183.
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil
Case No. 90-183, while the Order dated September 19, 1991 denied the motion for
reconsideration of the June 20,1991 Order.
Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is
represented in the Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the
real estate business.

This petition arose from a controversy over a parcel of land consisting of 6,000 square meters
(Lot 5-A, Transfer Certificate of Title No. 390440) located in the Municipality of Paraaque,
Metro Manila and registered in the name of petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of
Title Nos. 271108 and 265388 respectively and registered in the name of the Philippine Realty
Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent
to the sellers. Later, Licup assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute
arose as to who of the parties has the responsibility of evicting and clearing the land of
squatters. Complicating the relations of the parties was the sale by petitioner of Lot 5-A to
Tropicana Properties and Development Corporation (Tropicana).
I
On January 23, 1990, private respondent filed a complaint with the Regional Trial Court,
Branch 61, Makati, Metro Manila for annulment of the sale of the three parcels of land, and
specific performance and damages against petitioner, represented by the Papal Nuncio, and
three other defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil
Case No.
90-183).
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and
the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per
square meters; (2) the agreement to sell was made on the condition that earnest money of
P100,000.00 be paid by Licup to the sellers, and that the sellers clear the said lots of squatters
who were then occupying the same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in
the same month, Licup assigned his rights over the property to private respondent and informed
the sellers of the said assignment; (5) thereafter, private respondent demanded from Msgr.
Cirilos that the sellers fulfill their undertaking and clear the property of squatters; however,
Msgr. Cirilos informed private respondent of the squatters' refusal to vacate the lots, proposing
instead either that private respondent undertake the eviction or that the earnest money be
returned to the latter; (6) private respondent counterproposed that if it would undertake the
eviction of the squatters, the purchase price of the lots should be reduced from P1,240.00 to
P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of P100,000.00 and
wrote private respondent giving it seven days from receipt of the letter to pay the original
purchase price in cash; (8) private respondent sent the earnest money back to the sellers, but

later discovered that on March 30, 1989, petitioner and the PRC, without notice to private
respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of Sale, one over
Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers' transfer certificate of title over
the lots were cancelled, transferred and registered in the name of Tropicana; (9) Tropicana
induced petitioner and the PRC to sell the lots to it and thus enriched itself at the expense of
private respondent; (10) private respondent demanded the rescission of the sale to Tropicana
and the reconveyance of the lots, to no avail; and (11) private respondent is willing and able to
comply with the terms of the contract to sell and has actually made plans to develop the lots into
a townhouse project, but in view of the sellers' breach, it lost profits of not less than
P30,000.000.00.
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner
and the PRC on the one hand, and Tropicana on the other; (2) the reconveyance of the lots in
question; (3) specific performance of the agreement to sell between it and the owners of the
lots; and (4) damages.
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint
petitioner for lack of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for
being an improper party. An opposition to the motion was filed by private respondent.
On June 20, 1991, the trial court issued an order denying, among others, petitioner's motion to
dismiss after finding that petitioner "shed off [its] sovereign immunity by entering into the
business contract in question" (Rollo, pp. 20-21).
On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991,
petitioner filed a "Motion for a Hearing for the Sole Purpose of Establishing Factual Allegation
for claim of Immunity as a Jurisdictional Defense." So as to facilitate the determination of its
defense of sovereign immunity, petitioner prayed that a hearing be conducted to allow it to
establish certain facts upon which the said defense is based. Private respondent opposed this
motion as well as the motion for reconsideration.
On October 1, 1991, the trial court issued an order deferring the resolution on the motion for
reconsideration until after trial on the merits and directing petitioner to file its answer (Rollo, p.
22).
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of
sovereign immunity only on its own behalf and on behalf of its official representative, the Papal
Nuncio.

On December 9, 1991, a Motion for Intervention was filed before us by the Department of
Foreign Affairs, claiming that it has a legal interest in the outcome of the case as regards the
diplomatic immunity of petitioner, and that it "adopts by reference, the allegations contained in
the petition of the Holy See insofar as they refer to arguments relative to its claim of sovereign
immunity from suit" (Rollo, p. 87).
Private respondent opposed the intervention of the Department of Foreign Affairs. In
compliance with the resolution of this Court, both parties and the Department of Foreign Affairs
submitted their respective memoranda.
II
A preliminary matter to be threshed out is the procedural issue of whether the petition
for certiorari under Rule 65 of the Revised Rules of Court can be availed of to question the
order denying petitioner's motion to dismiss. The general rule is that an order denying a motion
to dismiss is not reviewable by the appellate courts, the remedy of the movant being to file his
answer and to proceed with the hearing before the trial court. But the general rule admits of
exceptions, and one of these is when it is very clear in the records that the trial court has no
alternative but to dismiss the complaint (Philippine National Bank v. Florendo, 206 SCRA 582
[1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]. In such a case, it would be
a sheer waste of time and energy to require the parties to undergo the rigors of a trial.
The other procedural question raised by private respondent is the personality or legal interest of
the Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp.
186-190).
In Public International Law, when a state or international agency wishes to plead sovereign or
diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is
sued to convey to the court that said defendant is entitled to immunity.
In the United States, the procedure followed is the process of "suggestion," where the foreign
state or the international organization sued in an American court requests the Secretary of State
to make a determination as to whether it is entitled to immunity. If the Secretary of State finds
that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the
court a "suggestion" that the defendant is entitled to immunity. In England, a similar procedure
is followed, only the Foreign Office issues a certification to that effect instead of submitting a
"suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign
Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).

In the Philippines, the practice is for the foreign government or the international organization to
first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But
how the Philippine Foreign Office conveys its endorsement to the courts varies.
In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the
Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and
Employment, informing the latter that the respondent-employer could not be sued because it
enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972),
the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57
SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the
Solicitor General to make, in behalf of the Commander of the United States Naval Base at
Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied
the "suggestion" in a Manifestation and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs
moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed
the said Department to file its memorandum in support of petitioner's claim of sovereign
immunity.
In some cases, the defense of sovereign immunity was submitted directly to the local courts by
the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945];
Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v.
Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass
the Foreign Office, the courts can inquire into the facts and make their own determination as to
the nature of the acts and transactions involved.
III
The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being
a foreign state enjoying sovereign immunity. On the other hand, private respondent insists that
the doctrine of non-suability is not anymore absolute and that petitioner has divested itself of
such a cloak when, of its own free will, it entered into a commercial transaction for the sale of a
parcel of land located in the Philippines.
A. The Holy See
Before we determine the issue of petitioner's non-suability, a brief look into its status as a
sovereign state is in order.
Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as
the Holy See, was considered a subject of International Law. With the loss of the Papal States

and the limitation of the territory under the Holy See to an area of 108.7 acres, the position of
the Holy See in International Law became controversial (Salonga and Yap, Public International
Law 36-37 [1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the
exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City. It also
recognized the right of the Holy See to receive foreign diplomats, to send its own diplomats to
foreign countries, and to enter into treaties according to International Law (Garcia, Questions
and Problems In International Law, Public and Private 81 [1948]).
The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to
the Holy See absolute and visible independence and of guaranteeing to it indisputable
sovereignty also in the field of international relations" (O'Connell, I International Law 311
[1965]).
In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood
is vested in the Holy See or in the Vatican City. Some writers even suggested that the treaty
created two international persons the Holy See and Vatican City (Salonga and Yap, supra,
37).
The Vatican City fits into none of the established categories of states, and the attribution to it of
"sovereignty" must be made in a sense different from that in which it is applied to other states
(Fenwick, International Law 124-125 [1948]; Cruz, International Law 37 [1991]). In a
community of national states, the Vatican City represents an entity organized not for political
but for ecclesiastical purposes and international objects. Despite its size and object, the Vatican
City has an independent government of its own, with the Pope, who is also head of the Roman
Catholic Church, as the Holy See or Head of State, in conformity with its traditions, and the
demands of its mission in the world. Indeed, the world-wide interests and activities of the
Vatican City are such as to make it in a sense an "international state" (Fenwick, supra., 125;
Kelsen, Principles of International Law 160 [1956]).
One authority wrote that the recognition of the Vatican City as a state has significant implication
that it is possible for any entity pursuing objects essentially different from those pursued by
states to be invested with international personality (Kunz, The Status of the Holy See in
International Law, 46 The American Journal of International Law 308 [1952]).
Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the
Holy See and not in the name of the Vatican City, one can conclude that in the Pope's own view,
it is the Holy See that is the international person.

The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign.
The Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations
with the Philippine government since 1957 (Rollo, p. 87). This appears to be the universal
practice in international relations.
B. Sovereign Immunity
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally
accepted principles of International Law. Even without this affirmation, such principles of
International Law are deemed incorporated as part of the law of the land as a condition and
consequence of our admission in the society of nations (United States of America v. Guinto, 182
SCRA 644 [1990]).
There are two conflicting concepts of sovereign immunity, each widely held and firmly
established. According to the classical or absolute theory, a sovereign cannot, without its
consent, be made a respondent in the courts of another sovereign. According to the newer or
restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or
acts jure imperii of a state, but not with regard to private acts or acts jure gestionis
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago,
Public International Law 194 [1984]).
Some states passed legislation to serve as guidelines for the executive or judicial determination
when an act may be considered as jure gestionis. The United States passed the Foreign
Sovereign Immunities Act of 1976, which defines a commercial activity as "either a regular
course of commercial conduct or a particular commercial transaction or act." Furthermore, the
law declared that the "commercial character of the activity shall be determined by reference to
the nature of the course of conduct or particular transaction or act, rather than by reference to its
purpose." The Canadian Parliament enacted in 1982 an Act to Provide For State Immunity in
Canadian Courts. The Act defines a "commercial activity" as any particular transaction, act or
conduct or any regular course of conduct that by reason of its nature, is of a "commercial
character."
The restrictive theory, which is intended to be a solution to the host of problems involving the
issue of sovereign immunity, has created problems of its own. Legal treatises and the decisions
in countries which follow the restrictive theory have difficulty in characterizing whether a
contract of a sovereign state with a private party is an act jure gestionis or an act jure imperii.
The restrictive theory came about because of the entry of sovereign states into purely
commercial activities remotely connected with the discharge of governmental functions. This is

particularly true with respect to the Communist states which took control of nationalized
business activities and international trading.
This Court has considered the following transactions by a foreign state with private parties as
acts jure imperii: (1) the lease by a foreign government of apartment buildings for use of its
military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of public bidding for the
repair of a wharf at a United States Naval Station (United States of America v. Ruiz, supra.);
and (3) the change of employment status of base employees (Sanders v. Veridiano, 162 SCRA
88 [1988]).
On the other hand, this Court has considered the following transactions by a foreign state with
private parties as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting
of three restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay
Air Station in Baguio City, to cater to American servicemen and the general public (United
States of America v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of
barber shops in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA
644 [1990]). The operation of the restaurants and other facilities open to the general public is
undoubtedly for profit as a commercial and not a governmental activity. By entering into the
employment contract with the cook in the discharge of its proprietary function, the United
States government impliedly divested itself of its sovereign immunity from suit.
In the absence of legislation defining what activities and transactions shall be considered
"commercial" and as constituting acts jure gestionis, we have to come out with our own
guidelines, tentative they may be.
Certainly, the mere entering into a contract by a foreign state with a private party cannot be the
ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the
foreign state is engaged in the activity in the regular course of business. If the foreign state is
not engaged regularly in a business or trade, the particular act or transaction must then be tested
by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an
act jure imperii, especially when it is not undertaken for gain or profit.
As held in United States of America v. Guinto, (supra):
There is no question that the United States of America, like any other state, will be
deemed to have impliedly waived its non-suability if it has entered into a contract
in its proprietary or private capacity. It is only when the contract involves its
sovereign or governmental capacity that no such waiver may be implied.

In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real
estate business, surely the said transaction can be categorized as an act jure gestionis. However,
petitioner has denied that the acquisition and subsequent disposal of Lot 5-A were made for
profit but claimed that it acquired said property for the site of its mission or the Apostolic
Nunciature in the Philippines. Private respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation
was made not for commercial purpose, but for the use of petitioner to construct thereon the
official place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire
property, real or personal, in a receiving state, necessary for the creation and maintenance of its
diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations
(Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in
the Philippines on November 15, 1965.
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and
administrative jurisdiction of the receiving state over any real action relating to private
immovable property situated in the territory of the receiving state which the envoy holds on
behalf of the sending state for the purposes of the mission. If this immunity is provided for a
diplomatic envoy, with all the more reason should immunity be recognized as regards the
sovereign itself, which in this case is the Holy See.
The decision to transfer the property and the subsequent disposal thereof are likewise clothed
with a governmental character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the squatters living
thereon made it almost impossible for petitioner to use it for the purpose of the donation. The
fact that squatters have occupied and are still occupying the lot, and that they stubbornly refuse
to leave the premises, has been admitted by private respondent in its complaint (Rollo, pp. 26,
27).
The issue of petitioner's non-suability can be determined by the trial court without going to trial
in the light of the pleadings, particularly the admission of private respondent. Besides, the
privilege of sovereign immunity in this case was sufficiently established by the Memorandum
and Certification of the Department of Foreign Affairs. As the department tasked with the
conduct of the Philippines' foreign relations (Administrative Code of 1987, Book IV, Title I,
Sec. 3), the Department of Foreign Affairs has formally intervened in this case and officially
certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the
Republic of the Philippines exempt from local jurisdiction and entitled to all the rights,
privileges and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156157). The determination of the executive arm of government that a state or instrumentality is
entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the

courts (International Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where
the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the
courts to accept this claim so as not to embarrass the executive arm of the government in
conducting the country's foreign relations (World Health Organization v. Aquino, 48 SCRA 242
[1972]). As in International Catholic Migration Commission and in World Health Organization,
we abide by the certification of the Department of Foreign Affairs.
Ordinarily, the procedure would be to remand the case and order the trial court to conduct a
hearing to establish the facts alleged by petitioner in its motion. In view of said certification,
such procedure would however be pointless and unduly circuitous (Ortigas & Co. Ltd.
Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its grievances. Under
both Public International Law and Transnational Law, a person who feels aggrieved by the acts
of a foreign sovereign can ask his own government to espouse his cause through diplomatic
channels.
Private respondent can ask the Philippine government, through the Foreign Office, to espouse
its claims against the Holy See. Its first task is to persuade the Philippine government to take up
with the Holy See the validity of its claims. Of course, the Foreign Office shall first make a
determination of the impact of its espousal on the relations between the Philippine government
and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected
Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the
Philippine government decides to espouse the claim, the latter ceases to be a private cause.
According to the Permanent Court of International Justice, the forerunner of the International
Court of Justice:
By taking up the case of one of its subjects and by reporting to diplomatic action or
international judicial proceedings on his behalf, a State is in reality asserting its
own rights its right to ensure, in the person of its subjects, respect for the rules
of international law (The Mavrommatis Palestine Concessions, 1 Hudson, World
Court Reports 293, 302 [1924]).
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No.
90-183 against petitioner is DISMISSED.
SO ORDERED.

DIGEST

Case Digest: The Holy See vs. Rosario, Jr.

G.R. No. 101949

01 December 1994

FACTS:

This petition arose from a controversy over a parcel of land consisting of 6,000 square meters
located in the Municipality of Paranaque. Said lot was contiguous with two other lots. These
lots were sold to Ramon Licup. In view of the refusal of the squatters to vacate the lots sold, a
dispute arose as to who of the parties has the responsibility of evicting and clearing the land of
squatters. Complicating the relations of the parties was the sale by petitioner of the lot of
concern to Tropicana.

ISSUE:

Whether the Holy See is immune from suit insofar as its business relations regarding selling a
lot to a private entity

RULING:

As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally
accepted principles of International Law. Even without this affirmation, such principles of
International Law are deemed incorporated as part of the law of the land as a condition and
consequence of our admission in the society of nations. In the present case, if petitioner has
bought and sold lands in the ordinary course of real estate business, surely the said transaction
can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition

and subsequent disposal of the lot were made for profit but claimed that it acquired said
property for the site of its mission or the Apostolic Nunciature in the Philippines.

The Holy See is immune from suit for the act of selling the lot of concern is non-proprietary in
nature. The lot was acquired by petitioner as a donation from the Archdiocese of Manila. The
donation was made not for commercial purpose, but for the use of petitioner to construct
thereon the official place of residence of the Papal Nuncio. The decision to transfer the
property and the subsequent disposal thereof are likewise clothed with a governmental
character. Petitioner did not sell the lot for profit or gain. It merely wanted to dispose of the
same because the squatters living thereon made it almost impossible for petitioner to use it for
the purpose of the donation.