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G.R. No. L-13250 October 29, 1971

THE COLLECTOR OF INTERNAL REVENUE, petitioner,
vs.
ANTONIO CAMPOS RUEDA, respondent..
Assistant Solicitor General Jose P. Alejandro and Special Attorney Jose G. Azurin, (O.S.G.) for petitioner.
Ramirez and Ortigas for respondent.
FERNANDO, J.:
The basic issue posed by petitioner Collector of Internal Revenue in this appeal from a decision of the Court of Tax
Appeals as to whether or not the requisites of statehood, or at least so much thereof as may be necessary for the
acquisition of an international personality, must be satisfied for a "foreign country" to fall within the exemption of Section
122 of the National Internal Revenue Code 1 is now ripe for adjudication. The Court of Tax Appeals answered the question
in the negative, and thus reversed the action taken by petitioner Collector, who would hold respondent Antonio Campos
Rueda, as administrator of the estate of the late Estrella Soriano Vda. de Cerdeira, liable for the sum of P161,874.95 as
deficiency estate and inheritance taxes for the transfer of intangible personal properties in the Philippines, the deceased,
a Spanish national having been a resident of Tangier, Morocco from 1931 up to the time of her death in 1955. In an earlier
resolution promulgated May 30, 1962, this Court on the assumption that the need for resolving the principal question
would be obviated, referred the matter back to the Court of Tax Appeals to determine whether the alleged law of Tangier
did grant the reciprocal tax exemption required by the aforesaid Section 122. Then came an order from the Court of Tax
Appeals submitting copies of legislation of Tangier that would manifest that the element of reciprocity was not lacking. It
was not until July 29, 1969 that the case was deemed submitted for decision. When the petition for review was filed on
January 2, 1958, the basic issue raised was impressed with an element of novelty. Four days thereafter, however, on
January 6, 1958, it was held by this Court that the aforesaid provision does not require that the "foreign country" possess
an international personality to come within its terms. 2 Accordingly, we have to affirm.
The decision of the Court of Tax Appeals, now under review, sets forth the background facts as follows: "This is an appeal
interposed by petitioner Antonio Campos Rueda as administrator of the estate of the deceased Doa Maria de la Estrella
Soriano Vda. de Cerdeira, from the decision of the respondent Collector of Internal Revenue, assessing against and
demanding from the former the sum P161,874.95 as deficiency estate and inheritance taxes, including interest and
penalties, on the transfer of intangible personal properties situated in the Philippines and belonging to said Maria de la
Estrella Soriano Vda. de Cerdeira. Maria de la Estrella Soriano Vda. de Cerdeira (Maria Cerdeira for short) is a Spanish
national, by reason of her marriage to a Spanish citizen and was a resident of Tangier, Morocco from 1931 up to her
death on January 2, 1955. At the time of her demise she left, among others, intangible personal properties in the
Philippines." 3 Then came this portion: "On September 29, 1955, petitioner filed a provisional estate and inheritance tax
return on all the properties of the late Maria Cerdeira. On the same date, respondent, pending investigation, issued an
assessment for state and inheritance taxes in the respective amounts of P111,592.48 and P157,791.48, or a total of
P369,383.96 which tax liabilities were paid by petitioner ... . On November 17, 1955, an amended return was filed ...
wherein intangible personal properties with the value of P396,308.90 were claimed as exempted from taxes. On
November 23, 1955, respondent, pending investigation, issued another assessment for estate and inheritance taxes in
the amounts of P202,262.40 and P267,402.84, respectively, or a total of P469,665.24 ... . In a letter dated January 11,
1956, respondent denied the request for exemption on the ground that the law of Tangier is not reciprocal to Section 122
of the National Internal Revenue Code. Hence, respondent demanded the payment of the sums of P239,439.49
representing deficiency estate and inheritance taxes including ad valorem penalties, surcharges, interests and
compromise penalties ... . In a letter dated February 8, 1956, and received by respondent on the following day, petitioner
requested for the reconsideration of the decision denying the claim for tax exemption of the intangible personal properties
and the imposition of the 25% and 5% ad valorem penalties ... . However, respondent denied request, in his letter dated
May 5, 1956 ... and received by petitioner on May 21, 1956. Respondent premised the denial on the grounds that there
was no reciprocity [with Tangier, which was moreover] a mere principality, not a foreign country. Consequently,
respondent demanded the payment of the sums of P73,851.21 and P88,023.74 respectively, or a total of P161,874.95 as
deficiency estate and inheritance taxes including surcharges, interests and compromise penalties." 4
The matter was then elevated to the Court of Tax Appeals. As there was no dispute between the parties regarding the
values of the properties and the mathematical correctness of the deficiency assessments, the principal question as noted
dealt with the reciprocity aspect as well as the insisting by the Collector of Internal Revenue that Tangier was not a foreign
country within the meaning of Section 122. In ruling against the contention of the Collector of Internal Revenue, the
appealed decision states: "In fine, we believe, and so hold, that the expression "foreign country", used in the last proviso
of Section 122 of the National Internal Revenue Code, refers to a government of that foreign power which, although not
an international person in the sense of international law, does not impose transfer or death upon intangible person
properties of our citizens not residing therein, or whose law allows a similar exemption from such taxes. It is, therefore,
not necessary that Tangier should have been recognized by our Government order to entitle the petitioner to the
exemption benefits of the proviso of Section 122 of our Tax. Code." 5
Hence appeal to this court by petitioner. The respective briefs of the parties duly submitted, but as above indicated,
instead of ruling definitely on the question, this Court, on May 30, 1962, resolve to inquire further into the question of
reciprocity and sent back the case to the Court of Tax Appeals for the motion of evidence thereon. The dispositive portion
of such resolution reads as follows: "While section 122 of the Philippine Tax Code aforequoted speaks of 'intangible
personal property' in both subdivisions (a) and (b); the alleged laws of Tangier refer to 'bienes muebles situados en
Tanger', 'bienes muebles radicantes en Tanger', 'movables' and 'movable property'. In order that this Court may be able to

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determine whether the alleged laws of Tangier grant the reciprocal tax exemptions required by Section 122 of the Tax
Code, and without, for the time being, going into the merits of the issues raised by the petitioner-appellant, the case is
[remanded] to the Court of Tax Appeals for the reception of evidence or proof on whether or not the words `bienes
muebles', 'movables' and 'movable properties as used in the Tangier laws, include or embrace 'intangible person
property', as used in the Tax Code." 6 In line with the above resolution, the Court of Tax Appeals admitted evidence
submitted by the administrator petitioner Antonio Campos Rueda, consisting of exhibits of laws of Tangier to the effect
that "the transfers by reason of death of movable properties, corporeal or incorporeal, including furniture and personal
effects as well as of securities, bonds, shares, ..., were not subject, on that date and in said zone, to the payment of any
death tax, whatever might have been the nationality of the deceased or his heirs and legatees." It was further noted in an
order of such Court referring the matter back to us that such were duly admitted in evidence during the hearing of the
case on September 9, 1963. Respondent presented no evidence." 7
The controlling legal provision as noted is a proviso in Section 122 of the National Internal Revenue Code. It reads thus:
"That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at the time of
his death was a resident of a foreign country which at the time of his death did not impose a transfer tax or death tax of
any character in respect of intangible person property of the Philippines not residing in that foreign country, or (b) if the
laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from
transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the
Philippines not residing in that foreign country." 8 The only obstacle therefore to a definitive ruling is whether or not as
vigorously insisted upon by petitioner the acquisition of internal personality is a condition sine qua non to Tangier being
considered a "foreign country". Deference to the De Lara ruling, as was made clear in the opening paragraph of this
opinion, calls for an affirmance of the decision of the Court of Tax Appeals.
It does not admit of doubt that if a foreign country is to be identified with a state, it is required in line with Pound's
formulation that it be a politically organized sovereign community independent of outside control bound by penalties of
nationhood, legally supreme within its territory, acting through a government functioning under a regime of
law. 9 It is thus a sovereign person with the people composing it viewed as an organized corporate society under a
government with the legal competence to exact obedience to its commands. 10 It has been referred to as a body-politic
organized by common consent for mutual defense and mutual safety and to promote the general welfare. 11Correctly has
it been described by Esmein as "the juridical personification of the nation." 12 This is to view it in the light of its historical
development. The stress is on its being a nation, its people occupying a definite territory, politically organized, exercising
by means of its government its sovereign will over the individuals within it and maintaining its separate international
personality. Laski could speak of it then as a territorial society divided into government and subjects, claiming within its
allotted area a supremacy over all other institutions. 13 McIver similarly would point to the power entrusted to its
government to maintain within its territory the conditions of a legal order and to enter into international relations. 14 With
the latter requisite satisfied, international law do not exact independence as a condition of statehood. So Hyde did
opine. 15
Even on the assumption then that Tangier is bereft of international personality, petitioner has not successfully made out a
case. It bears repeating that four days after the filing of this petition on January 6, 1958 in Collector of Internal Revenue v.
De Lara, 16 it was specifically held by us: "Considering the State of California as a foreign country in relation to section
122 of our Tax Code we believe and hold, as did the Tax Court, that the Ancilliary Administrator is entitled the exemption
from the inheritance tax on the intangible personal property found in the Philippines." 17 There can be no doubt that
California as a state in the American Union was in the alleged requisite of international personality. Nonetheless, it was
held to be a foreign country within the meaning of Section 122 of the National Internal Revenue Code. 18
What is undeniable is that even prior to the De Lara ruling, this Court did commit itself to the doctrine that even a tiny
principality, that of Liechtenstein, hardly an international personality in the sense, did fall under this exempt category. So it
appears in an opinion of the Court by the then Acting Chief Justicem Bengson who thereafter assumed that position in a
permanent capacity, in Kiene v. Collector of Internal Revenue. 19 As was therein noted: 'The Board found from the
documents submitted to it proof of the laws of Liechtenstein that said country does not impose estate, inheritance
and gift taxes on intangible property of Filipino citizens not residing in that country. Wherefore, the Board declared that
pursuant to the exemption above established, no estate or inheritance taxes were collectible, Ludwig Kiene being a
resident of Liechtestein when he passed away." 20 Then came this definitive ruling: "The Collector hereafter named the
respondent cites decisions of the United States Supreme Court and of this Court, holding that intangible personal
property in the Philippines belonging to a non-resident foreigner, who died outside of this country is subject to the estate
tax, in disregard of the principle 'mobilia sequuntur personam'. Such property is admittedly taxable here. Without the
proviso above quoted, the shares of stock owned here by the Ludwig Kiene would be concededly subject to estate and
inheritance taxes. Nevertheless our Congress chose to make an exemption where conditions are such that demand
reciprocity as in this case. And the exemption must be honored." 21
WHEREFORE, the decision of the respondent Court of Tax Appeals of October 30, 1957 is affirmed. Without
pronouncement as to costs.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Villamor and Makasiar, JJ., concur.
Reyes, J.B.L., J., concurs in the result.
Teehankee and Barredo, JJ., took no part.
Footnotes
1 Commonwealth Act No. 466 as amended (1939).
2 Collector of Internal Revenue v. De Lara, 102 Phil. 813 (1958).

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3 Annex C, Petition, Decision of Court of Tax Appeals, p. 1.
4 Ibid, pp. 2-3.
5 Ibid, p. 9.
6 Resolution, pp. 4-5.
7 Order of November 19, 1963 p. 2.
8 Section 122 of the National Internal Revenue Code (1939) reads insofar as relevant: "For the purposes of this Title the
terms 'gross estate' and 'gift' include real estate and tangible personal property, or mixed, physically located in the
Philippines; franchise which must be exercised in the Philippines; shares, obligations, or bonds issued by any corporation
or sociedad anonima organized or constituted in the Philippines in accordance with its laws; shares, obligations, or bonds
issued by any foreign corporation eighty-five per centum of the business of which is located in the Philippines; shares,
obligations, or bonds issued by any foreign corporation if such shares, obligations, or bonds have acquired a business
situs in the Philippines; shares or rights in any partnership, business or industry established in the Philippines; or any
personal property, whether tangible or intangible, located in the Philippines; Provided, however, That in the case of a
resident, the transmission or transfer of any intangible personal property, regardless of its location, subject to the taxes
prescribed in this Title; And provided, further, that no tax shall be collected under this Title in respect of intangible
personal property (a) if the decedent at the time of his death was a resident of a foreign country which at the time of his
death did not impose a transfer tax or death tax of any character in respect of intangible personal property of citizens of
the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the decedent was a
resident at the time of his death allow a similar exemption from transfer taxes or death taxes of every character in respect
of intangible personal property owned by citizens of the Philippines not residing in that foreign country."
9 Cf. Pound: "The political organization of a society legally supreme within and independent of legal control from without."
II Jurisprudence, p. 346 (1959).
10 Cf. Willoughby, Fundamental Concepts of Public Law, p. 3 (1925).
11 Cf. 1 Cooley, Constitutional Limitations, p. 3 (1927).
12 Cf. Cohen, Recent Theories of Sovereignty, p. 15 (1937). Pitamic speaks of it as a juridical organization of human
beings. Treatise on the State, p. 17 (1933).
13 Laski, Grammar of Polities, p. 25 (1934).
14 Cf. McIver, The State, p. 22 (1926).
15 Hyde, International Law, 2nd ed., p. 22 (1945).
16 102 Phil. 813 (1958).
17 Ibid, p. 820.
18 In the subsequent case of Collector of Internal Revenue v. Fisher, L-11622, January 28, 1961, 1 SCRA 93, this Court
did find that the reciprocity found in the California statutes was partial not total, thus holding that Section 122 would not
apply, without however reversing the doctrine that an international personality is not a requisite. "
19 97 Phil. 352 (1955).
20 Ibid, p. 354.

BERNARDITA R. MACARIOLA, complainant,

vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.
MAKASIAR, J:
In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B. Asuncion of the
Court of First Instance of Leyte, now Associate Justice of the Court of Appeals, with "acts unbecoming a judge."
The factual setting of the case is stated in the report dated May 27, 1971 of then Associate Justice Cecilia Muoz Palma
of the Court of Appeals now retired Associate Justice of the Supreme Court, to whom this case was referred on October
28, 1968 for investigation, thus:
Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed by Sinforosa R. Bales, Luz R.
Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs, against Bernardita R.
Macariola, defendant, concerning the properties left by the deceased Francisco Reyes, the common father of the plaintiff
and defendant.
In her defenses to the complaint for partition, Mrs. Macariola alleged among other things that; a) plaintiff Sinforosa R.
Bales was not a daughter of the deceased Francisco Reyes; b) the only legal heirs of the deceased were defendant
Macariola, she being the only offspring of the first marriage of Francisco Reyes with Felisa Espiras, and the remaining
plaintiffs who were the children of the deceased by his second marriage with Irene Ondez; c) the properties left by the
deceased were all the conjugal properties of the latter and his first wife, Felisa Espiras, and no properties were acquired
by the deceased during his second marriage; d) if there was any partition to be made, those conjugal properties should
first be partitioned into two parts, and one part is to be adjudicated solely to defendant it being the share of the latter's
deceased mother, Felisa Espiras, and the other half which is the share of the deceased Francisco Reyes was to be
divided equally among his children by his two marriages.
On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case 3010, the dispositive portion of
which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a preponderance of evidence, finds and so holds,
and hereby renders judgment (1) Declaring the plaintiffs Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela
Reyes and Priscilla Reyes as the only children legitimated by the subsequent marriage of Francisco Reyes Diaz to Irene
Ondez; (2) Declaring the plaintiff Sinforosa R. Bales to have been an illegitimate child of Francisco Reyes Diaz; (3)
Declaring Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and 1/4 of Lot 1145 as belonging to the conjugal
partnership of the spouses Francisco Reyes Diaz and Felisa Espiras; (4) Declaring Lot No. 2304 and 1/4 of Lot No. 3416
as belonging to the spouses Francisco Reyes Diaz and Irene Ondez in common partnership; (5) Declaring that 1/2 of Lot
No. 1184 as belonging exclusively to the deceased Francisco Reyes Diaz; (6) Declaring the defendant Bernardita R.
Macariola, being the only legal and forced heir of her mother Felisa Espiras, as the exclusive owner of one-half of each of
Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506; and the remaining one-half (1/2) of each of said Lots Nos. 4474,
4475, 4892, 5265, 4803, 4581, 4506 and one-half (1/2) of one-fourth (1/4) of Lot No. 1154 as belonging to the estate of
Francisco Reyes Diaz; (7) Declaring Irene Ondez to be the exclusive owner of one-half (1/2) of Lot No. 2304 and one-half
(1/2) of one-fourth (1/4) of Lot No. 3416; the remaining one-half (1/2) of Lot 2304 and the remaining one-half (1/2) of onefourth (1/4) of Lot No. 3416 as belonging to the estate of Francisco Reyes Diaz; (8) Directing the division or partition of
the estate of Francisco Reyes Diaz in such a manner as to give or grant to Irene Ondez, as surviving widow of Francisco
Reyes Diaz, a hereditary share of. one-twelfth (1/12) of the whole estate of Francisco Reyes Diaz (Art. 996 in relation to
Art. 892, par 2, New Civil Code), and the remaining portion of the estate to be divided among the plaintiffs Sinforosa R.
Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, Priscilla Reyes and defendant Bernardita R.
Macariola, in such a way that the extent of the total share of plaintiff Sinforosa R. Bales in the hereditary estate shall not
exceed the equivalent of two-fifth (2/5) of the total share of any or each of the other plaintiffs and the defendant (Art. 983,
New Civil Code), each of the latter to receive equal shares from the hereditary estate, (Ramirez vs. Bautista, 14 Phil. 528;
Diancin vs. Bishop of Jaro, O.G. [3rd Ed.] p. 33); (9) Directing the parties, within thirty days after this judgment shall have
become final to submit to this court, for approval a project of partition of the hereditary estate in the proportion above
indicated, and in such manner as the parties may, by agreement, deemed convenient and equitable to them taking into
consideration the location, kind, quality, nature and value of the properties involved; (10) Directing the plaintiff Sinforosa
R. Bales and defendant Bernardita R. Macariola to pay the costs of this suit, in the proportion of one-third (1/3) by the first
named and two-thirds (2/3) by the second named; and (I 1) Dismissing all other claims of the parties [pp 27-29 of Exh. C].
The decision in civil case 3010 became final for lack of an appeal, and on October 16, 1963, a project of partition was
submitted to Judge Asuncion which is marked Exh. A. Notwithstanding the fact that the project of partition was not signed
by the parties themselves but only by the respective counsel of plaintiffs and defendant, Judge Asuncion approved it in
his Order dated October 23, 1963, which for convenience is quoted hereunder in full:
The parties, through their respective counsels, presented to this Court for approval the following project of partition:
COMES NOW, the plaintiffs and the defendant in the above-entitled case, to this Honorable Court respectfully submit the
following Project of Partition:
l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively to Bernardita Reyes Macariola;

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2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along the eastern part of the lot shall be awarded
likewise to Bernardita R. Macariola;
3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes Bales;
4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along the western part of the lot shall likewise be
awarded to Sinforosa Reyes-Bales;
5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes,
Adela Reyes and Priscilla Reyes in equal shares;
6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the portions awarded under item (2) and (4) above
shall be awarded to Luz Reyes Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal
shares, provided, however that the remaining portion of Lot No. 3416 shall belong exclusively to Priscilla Reyes.
WHEREFORE, it is respectfully prayed that the Project of Partition indicated above which is made in accordance with the
decision of the Honorable Court be approved.
Tacloban City, October 16, 1963.
(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City
(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City
While the Court thought it more desirable for all the parties to have signed this Project of Partition, nevertheless, upon
assurance of both counsels of the respective parties to this Court that the Project of Partition, as above- quoted, had
been made after a conference and agreement of the plaintiffs and the defendant approving the above Project of Partition,
and that both lawyers had represented to the Court that they are given full authority to sign by themselves the Project of
Partition, the Court, therefore, finding the above-quoted Project of Partition to be in accordance with law, hereby approves
the same. The parties, therefore, are directed to execute such papers, documents or instrument sufficient in form and
substance for the vesting of the rights, interests and participations which were adjudicated to the respective parties, as
outlined in the Project of Partition and the delivery of the respective properties adjudicated to each one in view of said
Project of Partition, and to perform such other acts as are legal and necessary to effectuate the said Project of Partition.
SO ORDERED.
Given in Tacloban City, this 23rd day of October, 1963.
(SGD) ELIAS B. ASUNCION Judge
EXH. B.
The above Order of October 23, 1963, was amended on November 11, 1963, only for the purpose of giving authority to
the Register of Deeds of the Province of Leyte to issue the corresponding transfer certificates of title to the respective
adjudicatees in conformity with the project of partition (see Exh. U).
One of the properties mentioned in the project of partition was Lot 1184 or rather one-half thereof with an area of 15,162.5
sq. meters. This lot, which according to the decision was the exclusive property of the deceased Francisco Reyes, was
adjudicated in said project of partition to the plaintiffs Luz, Anacorita Ruperto, Adela, and Priscilla all surnamed Reyes in
equal shares, and when the project of partition was approved by the trial court the adjudicatees caused Lot 1184 to be
subdivided into five lots denominated as Lot 1184-A to 1184-E inclusive (Exh. V).
Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge Asuncion's court (Exhs. F, F-1 and V-1), while
Lot 1184-E which had an area of 2,172.5556 sq. meters was sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2) who
was issued transfer certificate of title No. 2338 of the Register of Deeds of the city of Tacloban (Exh. 12).
On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E with an area of around 1,306 sq. meters
to Judge Asuncion and his wife, Victoria S. Asuncion (Exh. 11), which particular portion was declared by the latter for
taxation purposes (Exh. F).
On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their respective shares and interest in Lot 1184E to "The Traders Manufacturing and Fishing Industries Inc." (Exit 15 & 16). At the time of said sale the stockholders of
the corporation were Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime Arigpa Tan, Judge Asuncion, and the latter's
wife, Victoria S. Asuncion, with Judge Asuncion as the President and Mrs. Asuncion as the secretary (Exhs. E-4 to E-7).
The Articles of Incorporation of "The Traders Manufacturing and Fishing Industries, Inc." which we shall henceforth refer
to as "TRADERS" were registered with the Securities and Exchange Commission only on January 9, 1967 (Exh. E) [pp.
378-385, rec.].
Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968 alleging four
causes of action, to wit: [1] that respondent Judge Asuncion violated Article 1491, paragraph 5, of the New Civil Code in
acquiring by purchase a portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010
decided by him; [2] that he likewise violated Article 14, paragraphs I and 5 of the Code of Commerce, Section 3,
paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, Section 12, Rule XVIII of the
Civil Service Rules, and Canon 25 of the Canons of Judicial Ethics, by associating himself with the Traders Manufacturing
and Fishing Industries, Inc., as a stockholder and a ranking officer while he was a judge of the Court of First Instance of
Leyte; [3] that respondent was guilty of coddling an impostor and acted in disregard of judicial decorum by closely
fraternizing with a certain Dominador Arigpa Tan who openly and publicly advertised himself as a practising attorney when
in truth and in fact his name does not appear in the Rolls of Attorneys and is not a member of the Philippine Bar; and [4]
that there was a culpable defiance of the law and utter disregard for ethics by respondent Judge (pp. 1-7, rec.).
Respondent Judge Asuncion filed on September 24, 1968 his answer to which a reply was filed on October 16, 1968 by
herein complainant. In Our resolution of October 28, 1968, We referred this case to then Justice Cecilia Muoz Palma of
the Court of Appeals, for investigation, report and recommendation. After hearing, the said Investigating Justice submitted
her report dated May 27, 1971 recommending that respondent Judge should be reprimanded or warned in connection
with the first cause of action alleged in the complaint, and for the second cause of action, respondent should be warned in

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case of a finding that he is prohibited under the law to engage in business. On the third and fourth causes of action,
Justice Palma recommended that respondent Judge be exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477, rec.), complainant herein instituted an
action before the Court of First Instance of Leyte, entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et
al., defendants," which was docketed as Civil Case No. 4235, seeking the annulment of the project of partition made
pursuant to the decision in Civil Case No. 3010 and the two orders issued by respondent Judge approving the same, as
well as the partition of the estate and the subsequent conveyances with damages. It appears, however, that some
defendants were dropped from the civil case. For one, the case against Dr. Arcadio Galapon was dismissed because he
was no longer a real party in interest when Civil Case No. 4234 was filed, having already conveyed on March 6, 1965 a
portion of lot 1184-E to respondent Judge and on August 31, 1966 the remainder was sold to the Traders Manufacturing
and Fishing Industries, Inc. Similarly, the case against defendant Victoria Asuncion was dismissed on the ground that she
was no longer a real party in interest at the time the aforesaid Civil Case No. 4234 was filed as the portion of Lot 1184
acquired by her and respondent Judge from Dr. Arcadio Galapon was already sold on August 31, 1966 to the Traders
Manufacturing and Fishing industries, Inc. Likewise, the cases against defendants Serafin P. Ramento, Catalina Cabus,
Ben Barraza Go, Jesus Perez, Traders Manufacturing and Fishing Industries, Inc., Alfredo R. Celestial and Pilar P.
Celestial, Leopoldo Petilla and Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty. Zotico A. Tolete were
dismissed with the conformity of complainant herein, plaintiff therein, and her counsel.
On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of Leyte, who was directed and
authorized on June 2, 1969 by the then Secretary (now Minister) of Justice and now Minister of National Defense Juan
Ponce Enrile to hear and decide Civil Case No. 4234, rendered a decision, the dispositive portion of which reads as
follows:
A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION
(1) declaring that only Branch IV of the Court of First Instance of Leyte has jurisdiction to take cognizance of the issue of
the legality and validity of the Project of Partition [Exhibit "B"] and the two Orders [Exhibits "C" and "C- 3"] approving the
partition;
(2) dismissing the complaint against Judge Elias B. Asuncion;
(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge Elias B. Asuncion,
(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for moral damages;
(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for exemplary damages;
(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal damages; and
(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.
B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR HERSELF AND FOR THE HEIRS OF THE
DECEASED GERARDO VILLASIN
(1) Dismissing the complaint against the defendants Mariquita Villasin and the heirs of the deceased Gerardo Villasin;
(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of Gerardo Villasin the cost of the suit.
C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES, ET AL., WHO WERE PLAINTIFFS IN CIVIL
CASE NO. 3010
(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R. Herrer, Priscilla R. Solis, Luz R. Bakunawa,
Anacorita R. Eng and Ruperto O. Reyes.
D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO
(1) Dismissing the complaint against Bonifacio Ramo;
(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.
SO ORDERED [pp. 531-533, rec.]
It is further disclosed by the record that the aforesaid decision was elevated to the Court of Appeals upon perfection of the
appeal on February 22, 1971.
I
WE find that there is no merit in the contention of complainant Bernardita R. Macariola, under her first cause of action,
that respondent Judge Elias B. Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by
purchase a portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010. 'That Article
provides:
Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either in person or
through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees
connected with the administration of justice, the property and rights in litigation or levied upon an execution before the
court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of
any litigation in which they may take part by virtue of their profession [emphasis supplied].
The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the subject of
litigation to the persons disqualified therein. WE have already ruled that "... for the prohibition to operate, the sale or
assignment of the property must take place during the pendency of the litigation involving the property" (The Director of
Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario vda. de Laig vs. Court of Appeals, 86 SCRA 641, 646 [1978]).
In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the decision in Civil
Case No. 3010 which he rendered on June 8, 1963 was already final because none of the parties therein filed an appeal
within the reglementary period; hence, the lot in question was no longer subject of the litigation. Moreover, at the time of

7
the sale on March 6, 1965, respondent's order dated October 23, 1963 and the amended order dated November 11,
1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963 decision, had long become
final for there was no appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs in Civil Case
No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs,
namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of the decision in Civil Case No. 3010. It
may be recalled that Lot 1184 or more specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes,
Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the same was
subdivided into five lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to
Dr. Galapon for which he was issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March 6, 1965 he
sold a portion of said lot to respondent Judge and his wife who declared the same for taxation purposes only. The
subsequent sale on August 31, 1966 by spouses Asuncion and spouses Galapon of their respective shares and interest
in said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc., in which respondent was the president and
his wife was the secretary, took place long after the finality of the decision in Civil Case No. 3010 and of the subsequent
two aforesaid orders therein approving the project of partition.
While it appears that complainant herein filed on or about November 9 or 11, 1968 an action before the Court of First
Instance of Leyte docketed as Civil Case No. 4234, seeking to annul the project of partition and the two orders approving
the same, as well as the partition of the estate and the subsequent conveyances, the same, however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr. Arcadio Galapon;
hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case No. 3010 and his two questioned
orders dated October 23, 1963 and November 11, 1963. Therefore, the property was no longer subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer alter, change or affect the
aforesaid facts that the questioned sale to respondent Judge, now Court of Appeals Justice, was effected and
consummated long after the finality of the aforesaid decision or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year after the finality
of the decision in Civil Case No. 3010 as well as the two orders approving the project of partition, and not during the
pendency of the litigation, there was no violation of paragraph 5, Article 1491 of the New Civil Code.
It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E to Dr. Arcadio Galapon by Priscilla
Reyes, Adela Reyes and Luz R. Bakunawa was only a mere scheme to conceal the illegal and unethical transfer of said
lot to respondent Judge as a consideration for the approval of the project of partition. In this connection, We agree with
the findings of the Investigating Justice thus:
And so we are now confronted with this all-important question whether or not the acquisition by respondent of a portion of
Lot 1184-E and the subsequent transfer of the whole lot to "TRADERS" of which respondent was the President and his
wife the Secretary, was intimately related to the Order of respondent approving the project of partition, Exh. A.
Respondent vehemently denies any interest or participation in the transactions between the Reyeses and the Galapons
concerning Lot 1184-E, and he insists that there is no evidence whatsoever to show that Dr. Galapon had acted, in the
purchase of Lot 1184-E, in mediation for him and his wife. (See p. 14 of Respondent's Memorandum).
xxx xxx xxx
On this point, I agree with respondent that there is no evidence in the record showing that Dr. Arcadio Galapon acted as a
mere "dummy" of respondent in acquiring Lot 1184-E from the Reyeses. Dr. Galapon appeared to this investigator as a
respectable citizen, credible and sincere, and I believe him when he testified that he bought Lot 1184-E in good faith and
for valuable consideration from the Reyeses without any intervention of, or previous understanding with Judge Asuncion
(pp. 391- 394, rec.).
On the contention of complainant herein that respondent Judge acted illegally in approving the project of partition
although it was not signed by the parties, We quote with approval the findings of the Investigating Justice, as follows:
1. I agree with complainant that respondent should have required the signature of the parties more particularly that of
Mrs. Macariola on the project of partition submitted to him for approval; however, whatever error was committed by
respondent in that respect was done in good faith as according to Judge Asuncion he was assured by Atty. Bonifacio
Ramo, the counsel of record of Mrs. Macariola, That he was authorized by his client to submit said project of partition,
(See Exh. B and tsn p. 24, January 20, 1969). While it is true that such written authority if there was any, was not
presented by respondent in evidence, nor did Atty. Ramo appear to corroborate the statement of respondent, his affidavit
being the only one that was presented as respondent's Exh. 10, certain actuations of Mrs. Macariola lead this investigator
to believe that she knew the contents of the project of partition, Exh. A, and that she gave her conformity thereto. I refer to
the following documents:
1) Exh. 9 Certified true copy of OCT No. 19520 covering Lot 1154 of the Tacloban Cadastral Survey in which the
deceased Francisco Reyes holds a "1/4 share" (Exh. 9-a). On tills certificate of title the Order dated November 11, 1963,
(Exh. U) approving the project of partition was duly entered and registered on November 26, 1963 (Exh. 9-D);
2) Exh. 7 Certified copy of a deed of absolute sale executed by Bernardita Reyes Macariola onOctober 22, 1963,
conveying to Dr. Hector Decena the one-fourth share of the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale
the vendee stated that she was the absolute owner of said one-fourth share, the same having been adjudicated to her as
her share in the estate of her father Francisco Reyes Diaz as per decision of the Court of First Instance of Leyte under
case No. 3010 (Exh. 7-A). The deed of sale was duly registered and annotated at the back of OCT 19520 on December
3, 1963 (see Exh. 9-e).
In connection with the abovementioned documents it is to be noted that in the project of partition dated October 16, 1963,
which was approved by respondent on October 23, 1963, followed by an amending Order on November 11, 1963, Lot

8
1154 or rather 1/4 thereof was adjudicated to Mrs. Macariola. It is this 1/4 share in Lot 1154 which complainant sold to Dr.
Decena on October 22, 1963, several days after the preparation of the project of partition.
Counsel for complainant stresses the view, however, that the latter sold her one-fourth share in Lot 1154 by virtue of the
decision in Civil Case 3010 and not because of the project of partition, Exh. A. Such contention is absurd because from
the decision, Exh. C, it is clear that one-half of one- fourth of Lot 1154 belonged to the estate of Francisco Reyes Diaz
while the other half of said one-fourth was the share of complainant's mother, Felisa Espiras; in other words, the decision
did not adjudicate the whole of the one-fourth of Lot 1154 to the herein complainant (see Exhs. C-3 & C-4). Complainant
became the owner of the entire one-fourth of Lot 1154 only by means of the project of partition, Exh. A. Therefore, if Mrs.
Macariola sold Lot 1154 on October 22, 1963, it was for no other reason than that she was wen aware of the distribution
of the properties of her deceased father as per Exhs. A and B. It is also significant at this point to state that Mrs. Macariola
admitted during the cross-examination that she went to Tacloban City in connection with the sale of Lot 1154 to Dr.
Decena (tsn p. 92, November 28, 1968) from which we can deduce that she could not have been kept ignorant of the
proceedings in civil case 3010 relative to the project of partition.
Complainant also assails the project of partition because according to her the properties adjudicated to her were
insignificant lots and the least valuable. Complainant, however, did not present any direct and positive evidence to prove
the alleged gross inequalities in the choice and distribution of the real properties when she could have easily done so by
presenting evidence on the area, location, kind, the assessed and market value of said properties. Without such evidence
there is nothing in the record to show that there were inequalities in the distribution of the properties of complainant's
father (pp. 386389, rec.).
Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil Code in acquiring
by purchase a portion of Lot 1184-E which was in litigation in his court, it was, however, improper for him to have acquired
the same. He should be reminded of Canon 3 of the Canons of Judicial Ethics which requires that: "A judge's official
conduct should be free from the appearance of impropriety, and his personal behavior, not only upon the bench and in the
performance of judicial duties, but also in his everyday life, should be beyond reproach." And as aptly observed by the
Investigating Justice: "... it was unwise and indiscreet on the part of respondent to have purchased or acquired a portion
of a piece of property that was or had been in litigation in his court and caused it to be transferred to a corporation of
which he and his wife were ranking officers at the time of such transfer. One who occupies an exalted position in the
judiciary has the duty and responsibility of maintaining the faith and trust of the citizenry in the courts of justice, so that
not only must he be truly honest and just, but his actuations must be such as not give cause for doubt and mistrust in the
uprightness of his administration of justice. In this particular case of respondent, he cannot deny that the transactions
over Lot 1184-E are damaging and render his actuations open to suspicion and distrust. Even if respondent honestly
believed that Lot 1184-E was no longer in litigation in his court and that he was purchasing it from a third person and not
from the parties to the litigation, he should nonetheless have refrained from buying it for himself and transferring it to a
corporation in which he and his wife were financially involved, to avoid possible suspicion that his acquisition was related
in one way or another to his official actuations in civil case 3010. The conduct of respondent gave cause for the litigants in
civil case 3010, the lawyers practising in his court, and the public in general to doubt the honesty and fairness of his
actuations and the integrity of our courts of justice" (pp. 395396, rec.).
II
With respect to the second cause of action, the complainant alleged that respondent Judge violated paragraphs 1 and 5,
Article 14 of the Code of Commerce when he associated himself with the Traders Manufacturing and Fishing Industries,
Inc. as a stockholder and a ranking officer, said corporation having been organized to engage in business. Said Article
provides that:
Article 14 The following cannot engage in commerce, either in person or by proxy, nor can they hold any office or have
any direct, administrative, or financial intervention in commercial or industrial companies within the limits of the districts,
provinces, or towns in which they discharge their duties:
1. Justices of the Supreme Court, judges and officials of the department of public prosecution in active service. This
provision shall not be applicable to mayors, municipal judges, and municipal prosecuting attorneys nor to those who by
chance are temporarily discharging the functions of judge or prosecuting attorney.
xxx xxx xxx
5. Those who by virtue of laws or special provisions may not engage in commerce in a determinate territory.
It is Our considered view that although the aforestated provision is incorporated in the Code of Commerce which is part of
the commercial laws of the Philippines, it, however, partakes of the nature of a political law as it regulates the relationship
between the government and certain public officers and employees, like justices and judges.
Political Law has been defined as that branch of public law which deals with the organization and operation of the
governmental organs of the State and define the relations of the state with the inhabitants of its territory (People vs.
Perfecto, 43 Phil. 887, 897 [1922]). It may be recalled that political law embraces constitutional law, law of public
corporations, administrative law including the law on public officers and elections. Specifically, Article 14 of the Code of
Commerce partakes more of the nature of an administrative law because it regulates the conduct of certain public officers
and employees with respect to engaging in business: hence, political in essence.
It is significant to note that the present Code of Commerce is the Spanish Code of Commerce of 1885, with some
modifications made by the "Commission de Codificacion de las Provincias de Ultramar," which was extended to the
Philippines by the Royal Decree of August 6, 1888, and took effect as law in this jurisdiction on December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of
the Philippines, Article 14 of this Code of Commerce must be deemed to have been abrogated because where there is

9
change of sovereignty, the political laws of the former sovereign, whether compatible or not with those of the new
sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new sovereign.
Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:
By well-settled public law, upon the cession of territory by one nation to another, either following a conquest or
otherwise, ... those laws which are political in their nature and pertain to the prerogatives of the former government
immediately cease upon the transfer of sovereignty. (Opinion, Atty. Gen., July 10, 1899).
While municipal laws of the newly acquired territory not in conflict with the, laws of the new sovereign continue in force
without the express assent or affirmative act of the conqueror, the political laws do not. (Halleck's Int. Law, chap. 34, par.
14). However, such political laws of the prior sovereignty as are not in conflict with the constitution or institutions of the
new sovereign, may be continued in force if the conqueror shall so declare by affirmative act of the commander-in-chief
during the war, or by Congress in time of peace. (Ely's Administrator vs. United States, 171 U.S. 220, 43 L. Ed. 142). In
the case of American and Ocean Ins. Cos. vs. 356 Bales of Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief Justice
Marshall said:
On such transfer (by cession) of territory, it has never been held that the relations of the inhabitants with each other
undergo any change. Their relations with their former sovereign are dissolved, and new relations are created between
them and the government which has acquired their territory. The same act which transfers their country, transfers the
allegiance of those who remain in it; and the law which may be denominated political, is necessarily changed, although
that which regulates the intercourse and general conduct of individuals, remains in force, until altered by the newlycreated power of the State.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It is a general principle of the public law
that on acquisition of territory the previous political relations of the ceded region are totally abrogated. "
There appears no enabling or affirmative act that continued the effectivity of the aforestated provision of the Code of
Commerce after the change of sovereignty from Spain to the United States and then to the Republic of the Philippines.
Consequently, Article 14 of the Code of Commerce has no legal and binding effect and cannot apply to the respondent,
then Judge of the Court of First Instance, now Associate Justice of the Court of Appeals.
It is also argued by complainant herein that respondent Judge violated paragraph H, Section 3 of Republic Act No. 3019,
otherwise known as the Anti-Graft and Corrupt Practices Act, which provides that:
Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by
existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with
which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any Iaw from
having any interest.
Respondent Judge cannot be held liable under the aforestated paragraph because there is no showing that respondent
participated or intervened in his official capacity in the business or transactions of the Traders Manufacturing and Fishing
Industries, Inc. In the case at bar, the business of the corporation in which respondent participated has obviously no
relation or connection with his judicial office. The business of said corporation is not that kind where respondent
intervenes or takes part in his capacity as Judge of the Court of First Instance. As was held in one case involving the
application of Article 216 of the Revised Penal Code which has a similar prohibition on public officers against directly or
indirectly becoming interested in any contract or business in which it is his official duty to intervene, "(I)t is not enough to
be a public official to be subject to this crime; it is necessary that by reason of his office, he has to intervene in said
contracts or transactions; and, hence, the official who intervenes in contracts or transactions which have no relation to his
office cannot commit this crime.' (People vs. Meneses, C.A. 40 O.G. 11th Supp. 134, cited by Justice Ramon C. Aquino;
Revised Penal Code, p. 1174, Vol. 11 [1976]).
It does not appear also from the records that the aforesaid corporation gained any undue advantage in its business
operations by reason of respondent's financial involvement in it, or that the corporation benefited in one way or another in
any case filed by or against it in court. It is undisputed that there was no case filed in the different branches of the Court of
First Instance of Leyte in which the corporation was either party plaintiff or defendant except Civil Case No. 4234 entitled
"Bernardita R. Macariola, plaintiff, versus Sinforosa O. Bales, et al.,"wherein the complainant herein sought to recover Lot
1184-E from the aforesaid corporation. It must be noted, however, that Civil Case No. 4234 was filed only on November 9
or 11, 1968 and decided on November 2, 1970 by CFI Judge Jose D. Nepomuceno when respondent Judge was no
longer connected with the corporation, having disposed of his interest therein on January 31, 1967.
Furthermore, respondent is not liable under the same paragraph because there is no provision in both the 1935 and 1973
Constitutions of the Philippines, nor is there an existing law expressly prohibiting members of the Judiciary from engaging
or having interest in any lawful business.
It may be pointed out that Republic Act No. 296, as amended, also known as the Judiciary Act of 1948, does not contain
any prohibition to that effect. As a matter of fact, under Section 77 of said law, municipal judges may engage in teaching
or other vocation not involving the practice of law after office hours but with the permission of the district judge concerned.
Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging in commerce is, as heretofore stated,
deemed abrogated automatically upon the transfer of sovereignty from Spain to America, because it is political in nature.
Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against the purchase by judges of a property
in litigation before the court within whose jurisdiction they perform their duties, cannot apply to respondent Judge because
the sale of the lot in question to him took place after the finality of his decision in Civil Case No. 3010 as well as his two
orders approving the project of partition; hence, the property was no longer subject of litigation.

10
In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant to the Civil Service Act of 1959
prohibits an officer or employee in the civil service from engaging in any private business, vocation, or profession or be
connected with any commercial, credit, agricultural or industrial undertaking without a written permission from the head of
department, the same, however, may not fall within the purview of paragraph h, Section 3 of the Anti-Graft and Corrupt
Practices Act because the last portion of said paragraph speaks of a prohibition by the Constitution or law on any public
officer from having any interest in any business and not by a mere administrative rule or regulation. Thus, a violation of
the aforesaid rule by any officer or employee in the civil service, that is, engaging in private business without a written
permission from the Department Head may not constitute graft and corrupt practice as defined by law.
On the contention of complainant that respondent Judge violated Section 12, Rule XVIII of the Civil Service Rules, We
hold that the Civil Service Act of 1959 (R.A. No. 2260) and the Civil Service Rules promulgated thereunder, particularly
Section 12 of Rule XVIII, do not apply to the members of the Judiciary. Under said Section 12: "No officer or employee
shall engage directly in any private business, vocation, or profession or be connected with any commercial, credit,
agricultural or industrial undertaking without a written permission from the Head of Department ..."
It must be emphasized at the outset that respondent, being a member of the Judiciary, is covered by Republic Act No.
296, as amended, otherwise known as the Judiciary Act of 1948 and by Section 7, Article X, 1973 Constitution.
Under Section 67 of said law, the power to remove or dismiss judges was then vested in the President of the Philippines,
not in the Commissioner of Civil Service, and only on two grounds, namely, serious misconduct and inefficiency, and upon
the recommendation of the Supreme Court, which alone is authorized, upon its own motion, or upon information of the
Secretary (now Minister) of Justice to conduct the corresponding investigation. Clearly, the aforesaid section defines the
grounds and prescribes the special procedure for the discipline of judges.
And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme Court can discipline judges of inferior
courts as well as other personnel of the Judiciary.
It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner may, for ... violation of the existing
Civil Service Law and rules or of reasonable office regulations, or in the interest of the service, remove any subordinate
officer or employee from the service, demote him in rank, suspend him for not more than one year without pay or fine him
in an amount not exceeding six months' salary." Thus, a violation of Section 12 of Rule XVIII is a ground for disciplinary
action against civil service officers and employees.
However, judges cannot be considered as subordinate civil service officers or employees subject to the disciplinary
authority of the Commissioner of Civil Service; for, certainly, the Commissioner is not the head of the Judicial Department
to which they belong. The Revised Administrative Code (Section 89) and the Civil Service Law itself state that the Chief
Justice is the department head of the Supreme Court (Sec. 20, R.A. No. 2260) [1959]); and under the 1973 Constitution,
the Judiciary is the only other or second branch of the government (Sec. 1, Art. X, 1973 Constitution). Besides, a violation
of Section 12, Rule XVIII cannot be considered as a ground for disciplinary action against judges because to recognize
the same as applicable to them, would be adding another ground for the discipline of judges and, as aforestated, Section
67 of the Judiciary Act recognizes only two grounds for their removal, namely, serious misconduct and inefficiency.
Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner of Civil Service who has original and
exclusive jurisdiction "(T)o decide, within one hundred twenty days, after submission to it, all administrative cases
against permanent officers and employees in the competitive service, and, except as provided by law, to have final
authority to pass upon their removal, separation, and suspension and upon all matters relating to the conduct, discipline,
and efficiency of such officers and employees; and prescribe standards, guidelines and regulations governing the
administration of discipline" (emphasis supplied). There is no question that a judge belong to the non-competitive or
unclassified service of the government as a Presidential appointee and is therefore not covered by the aforesaid
provision. WE have already ruled that "... in interpreting Section 16(i) of Republic Act No. 2260, we emphasized that only
permanent officers and employees who belong to the classified service come under the exclusive jurisdiction of the
Commissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-Angco vs. Castillo, 9 SCRA 619
[1963]).
Although the actuation of respondent Judge in engaging in private business by joining the Traders Manufacturing and
Fishing Industries, Inc. as a stockholder and a ranking officer, is not violative of the provissions of Article 14 of the Code of
Commerce and Section 3(h) of the Anti-Graft and Corrupt Practices Act as well as Section 12, Rule XVIII of the Civil
Service Rules promulgated pursuant to the Civil Service Act of 1959, the impropriety of the same is clearly
unquestionable because Canon 25 of the Canons of Judicial Ethics expressly declares that:
A judge should abstain from making personal investments in enterprises which are apt to be involved in litigation in his
court; and, after his accession to the bench, he should not retain such investments previously made, longer than a period
sufficient to enable him to dispose of them without serious loss. It is desirable that he should, so far as reasonably
possible, refrain from all relations which would normally tend to arouse the suspicion that such relations warp or bias his
judgment, or prevent his impartial attitude of mind in the administration of his judicial duties. ...
WE are not, however, unmindful of the fact that respondent Judge and his wife had withdrawn on January 31, 1967 from
the aforesaid corporation and sold their respective shares to third parties, and it appears also that the aforesaid
corporation did not in anyway benefit in any case filed by or against it in court as there was no case filed in the different
branches of the Court of First Instance of Leyte from the time of the drafting of the Articles of Incorporation of the
corporation on March 12, 1966, up to its incorporation on January 9, 1967, and the eventual withdrawal of respondent on
January 31, 1967 from said corporation. Such disposal or sale by respondent and his wife of their shares in the
corporation only 22 days after the incorporation of the corporation, indicates that respondent realized that early that their
interest in the corporation contravenes the aforesaid Canon 25. Respondent Judge and his wife therefore deserve the

11
commendation for their immediate withdrawal from the firm after its incorporation and before it became involved in any
court litigation
III
With respect to the third and fourth causes of action, complainant alleged that respondent was guilty of coddling an
impostor and acted in disregard of judicial decorum, and that there was culpable defiance of the law and utter disregard
for ethics. WE agree, however, with the recommendation of the Investigating Justice that respondent Judge be
exonerated because the aforesaid causes of action are groundless, and WE quote the pertinent portion of her report
which reads as follows:
The basis for complainant's third cause of action is the claim that respondent associated and closely fraternized with
Dominador Arigpa Tan who openly and publicly advertised himself as a practising attorney (see Exhs. I, I-1 and J) when in
truth and in fact said Dominador Arigpa Tan does not appear in the Roll of Attorneys and is not a member of the Philippine
Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was an "impostor" and claims that all the time he believed
that the latter was a bona fide member of the bar. I see no reason for disbelieving this assertion of respondent. It has
been shown by complainant that Dominador Arigpa Tan represented himself publicly as an attorney-at-law to the extent of
putting up a signboard with his name and the words "Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it was
but natural for respondent and any person for that matter to have accepted that statement on its face value. "Now with
respect to the allegation of complainant that respondent is guilty of fraternizing with Dominador Arigpa Tan to the extent of
permitting his wife to be a godmother of Mr. Tan's child at baptism (Exh. M & M-1), that fact even if true did not render
respondent guilty of violating any canon of judicial ethics as long as his friendly relations with Dominador A. Tan and
family did not influence his official actuations as a judge where said persons were concerned. There is no tangible
convincing proof that herein respondent gave any undue privileges in his court to Dominador Arigpa Tan or that the latter
benefitted in his practice of law from his personal relations with respondent, or that he used his influence, if he had any,
on the Judges of the other branches of the Court to favor said Dominador Tan.
Of course it is highly desirable for a member of the judiciary to refrain as much as possible from maintaining close friendly
relations with practising attorneys and litigants in his court so as to avoid suspicion 'that his social or business relations or
friendship constitute an element in determining his judicial course" (par. 30, Canons of Judicial Ethics), but if a Judge
does have social relations, that in itself would not constitute a ground for disciplinary action unless it be clearly shown that
his social relations be clouded his official actuations with bias and partiality in favor of his friends (pp. 403-405, rec.).
In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not violate any law in
acquiring by purchase a parcel of land which was in litigation in his court and in engaging in business by joining a private
corporation during his incumbency as judge of the Court of First Instance of Leyte, he should be reminded to be more
discreet in his private and business activities, because his conduct as a member of the Judiciary must not only be
characterized with propriety but must always be above suspicion.
WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS HEREBY REMINDED TO
BE MORE DISCREET IN HIS PRIVATE AND BUSINESS ACTIVITIES.
SO ORDERED.
Teehankee, Guerrero, De Castro, Melencio-Herrera, Plana, Vasquez, Relova and Gutierrez, JJ., concur.
Concepcion Jr., J., is on leave.
Fernando, C.J., Abad Santos and Esolin JJ., took no part.
Separate Opinions
Separate OpinionsAQUINO, J., concurring and dissenting:
I vote for respondent's unqualified exoneration.
BARREDO, J., concurring and dissenting:
I vote with Justice Aquino.
AQUINO, J., concurring and dissenting:
I vote for respondent's unqualified exoneration.
BARREDO, J., concurring and dissenting:
I vote with Justice Aquino.

G.R. No. 79156 June 22, 1989

ISIDRO, ZENAIDA, IRWIN, ZENDA and DORNET, all surnamed ANIMOS, petitioners,
vs.
PHILIPPINE VETERANS AFFAIRS OFFICE, its Administrator, JUAN L. GACAD and THE COURT OF
APPEALS,respondents.
Duran and Associates for petitioners.
SARMIENTO, J.:
The Court grants this petition assailing the decision of the Court of Appeals. *

12
The case originated from a suit for mandamus commenced by the petitioners against the respondent, the Philippine
Veterans Affairs Office, to compel payment by the said respondent of full pension benefits, retroactive to 1947, under
Republic Act No. 65 as amended. The Regional Trial Court ** dismissed the case on the ground of lack of jurisdiction. The
petitioners then appealed to the respondent, the Court of Appeals, which however rendered an affirmance.
The antecedent facts are stated by the Solicitor General. We quote:
Isidro Animos is a veteran of World War II, having been a member of the USAFFE and later of the guerilla forces during
the war.
On October 18, 1946, Republic Act No. 65 was approved, providing for a Bill of Rights for Officers and Enlisted Men of
the Philippine Army, Recognized and Deserving Guerilla Organizations, and Veterans of the Philippine Revolution.
Section 9 thereof provides:
SEC. 9. The persons mentioned in sections one and two hereof who are permanently incapacitated from work owing to
sickness, disease, or injuries sustained in line of duty, shall be given a life pension of fifty pesos a month unless they are
actually receiving a similar pension from other Government funds, and shall receive, in addition, the necessary
hospitalization and medical care.
Pursuant to the above provision, Animos filed with the Philippine Veterans Board (now Philippine Veterans Affairs Office,
or PVAO for short) a claim for disability pension benefit. Upon medical examination, Animos was found to have incurred
partial physical disability due to a gunshot wound, and was awarded 25% pension benefit effective November 18, 1947, in
the amount of P12.50 a month.
On June 21, 1957, Republic Act No. 1920 was approved amending Sec. 9 of Rep. Act No. 65, which increased the life
pension from P50.00 to P100.00, plus P10.00 a month for each unmarried minor child below 18 years of age.
Subsequently, on June 22, 1969, Rep. Act No. 5373 took effect which further amended said Sec. 9 and increased the
basic monthly pension from P100.00 to P200.00, plus P30.00 a month for the wife and P30.00 a month for each
unmarried child below 18 years.
It appears that on September 27, 1955, Animos filed an application for dependents' pension benefits. The application was
however disapproved on September 4, 1956, on the ground that Animos was not totally incapacitated.
Upon the required re-evaluation of his partial physical disability, Animos was re-rated to be 30% disabled on November
25, 1964 and was correspondingly granted a P30.00 monthly pension. Again, on August 4, 1970, Animos was re-rated to
be 50% disabled and was granted a P50.00 monthly pension. Reassessments made on April 22, 1975 and June 11, 1982
showed that Animos' partial disability remained unchanged at 50%.
Animos' numerous written requests to be granted the maximum pension benefit as well as dependents' pension benefits
were all disapproved. Thus, on November 23, 1982, Animos, his wife and children filed a petition for mandamus with the
then Court of First Instance of Albay against the PVAO to compel that office to increase his monthly pension, alleging that
since the rules on disability rating of the latter are contrary to law, Animos, who was granted a lifetime pension for his
disability should be paid the maximum pension benefits, including pension for his wife and minor children. 1
In dismissing the petition, the trial court held that "should petitioner's claim be upheld for the satisfaction of veteran's
benefits for the years up to the present, or a period of about 40 years, the defendant may not be in a position, legally and
budgetary wise, to comply with the court's award as sufficient treasury funds therefor could only be appropriated for that
purpose by the legislature," 2 and ruled that the petition was "in effect a money claim against the government" 3 over
which it did not have jurisdiction. In sustaining the trial court, the Court of Appeals added that mandamus does not lie to
interfere with discretion, and that the petitioner had failed to exhaust administrative remedies.
On the question of procedure, the controlling precedents are Begoso v. Chairman, Philippine Veterans
Administration 4 and Teoxon v. Members of the Board of Administrators, Philippine Veterans Administration, 5 in which we
held:
1. The fourth assignment of error assails what it considers to be the failing of the lower court in not holding that the
complaint in this case is in effect a suit against the State which has not given its consent thereto. We have recently had
occasion to reaffirm the force and primacy of the doctrine of non-suability. It does not admit of doubt, then, that if the suit
were in fact against the State, the lower court should have dismissed the complaint. Nor is it to be doubted that while
ostensibly an action may be against a public official, the defendant may in reality be the government. As a result, it is
equally well-settled that where a litigation may have adverse consequences on the public treasury, whether in the
disbursements of funds or loss of property, the public official proceeded against not being liable in his personal capacity,
then the doctrine of non-suability may appropriately be invoked. It has no application, however, where the suit against
such a functionary had to be instituted because of his failure to comply with the duty imposed by statute appropriating
public funds for the benefit of plaintiff or petitioner. Such is the present case.
The doctrine announced by us in Ruiz v. Cabahug finds relevance: "We hold that under the facts and circumstances
alleged in the amended complaint, which should be taken on its face value, the suit is not one against the Government, or
a claim against it, but one against the officials to compel them to act in accordance with the rights to be established by the
contending architects, or to prevent them from making payment and recognition until the contending architects have
established their respective rights and interests in the funds retained and in the credit for the work done." As a matter of
fact, in an earlier case where we sustained the power of a private citizen claiming title to and right of possession of a
certain property to sue an officer or agent of the government alleged to be illegally withholding the same, we likewise
expressed this caveat: "However, and this is important, where the judgment in such a case would result not only in the
recovery of possession of the property in favor of said citizen but also in a charge against or financial liability to the
Government, then the suit should be regarded as one against the government itself, and, consequently, it cannot prosper
or be validly entertained by the courts except with the consent of said Government.

13
2. Nor is the third assignment of error to the effect that the lower court did not require appellee to exhaust his
administrative remedies before coming to court any more persuasive. An excerpt from the leading case ofGonzales v.
Hechanova, the opinion being penned by the present Chief Justice, clearly demonstrates why appellants' argument in this
respect is unavailing: "Respondents assail petitioner's right to the reliefs prayed for because he 'has not exhausted all
administrative remedies available to him before coming to court. We have already held, however, that the principle
requiring the previous exhaustion of administrative remedies is not applicable 'where the question in dispute is purely a
legal one', or where the controverted act is patently illegal or was performed without jurisdiction or in excess of
jurisdiction, or where the respondent is a department secretary, whose acts as an alter-ego of the President bear the
implied or assumed approval of the latter, unless actually disapproved by him, or where there are circumstances
indicating the urgency of judicial intervention." The Gonzales doctrine, it is to be noted, summarized the views announced
in earlier cases. The list of subsequent cases reiterating such a doctrine is quite impressive. To be more specific, where
there is a stipulation of facts, as in this case, the question before the lower court being solely one of law and on the face
of the decision, the actuation of appellants being patently illegal, the doctrine of exhaustion of administrative remedies
certainly does not come into play. 6
Mandamus therefore lies, and failure to exhaust remedies is no defense against payment.
We come to the merits.
The denial of the petitioner's claim was predicated on the finding that his disabilities were, based on the respondent's
"Rules on Disability Ratings", partial rather than total, a condition that precludes payment of maximum pension benefits.
The petitioner submits that the very rating system adopted by the respondent veterans' office is null and void.
The applicable provision is Section 9 of Republic Act No. 65, as amended, as follows:
SEC. 9. The persons mentioned in sections one and two hereof who are permanently incapacitated from work owing to
sickness, disease, or injuries sustained in line of duty, shall be given a life pension of two hundred pesos a month,
and thirty pesos a month for his wife and each of his unmarried minor children below eighteen years of age, unless they
are actually receiving a similar pension from other Government funds, and shall receive, in addition, the necessary
hospitalization and medical care. 7
In Begoso, supra, as well as Teoxon, supra, this Court held that bare rules promulgated by the Philippine Veterans
Administration, now the Philippine Veterans' Affairs Office, cannot overrule the mandate of statute, on the fundamental
principle that "an administrative agency 'cannot amend an act of Congress.' " 8 In the case at bar, there is no gainsaying
the fact that the petitioner had been enjoying pension benefits, albeit partial, pursuant to the provisions of Section
9, supra, upon the premise that he was qualified thereto. Hence, the Government must pay him maximum pension
benefits. The fact that his injuries, based on the respondent's ratings, have been classified as "partial" cannot erase the
equal fact that he is "permanently incapacitated" under the law. Section 9 refers simply to "permanent incapacity" and
makes no distinctions as a condition sine qua non to compensability. It does not require such an incapacity to be total or
partial and neither does it authorize the PVAO to make a gradation of injuries. It is axiomatic that where the law does not
distinguish, let no one distinguish. The classifications or ratings formulated by the respondent body amount to an
amendment of the law at the administrative level, and to that extent, they are null and void.
The case of Board of administrators, PVA v. Agcaoili, 9 which the Solicitor General invokes does not apply. In that case,
we denied pension for the plain reason that the applicant was not permanently incapacitated. But we did not,
consequently, uphold, expressly or by implication, the PVAO's rules in said case, the applicant being disqualified in any
event. If we did, it was because their validity was not specifically challenged. Needless to state, we did not abandon
either Begoso or Teoxon therein.
It is pure conjecture to say that the petitioner "had no more service-connected disability to hang on and should not have
been denied continued disability pension were it not for the compassionate regard by respondents to the veterans of
World War II." 10 The fact of the matter is that the respondent had consistently paid the petitioner pension benefits for the
past forty years, meaning to say that he was (is) entitled thereto. It would be an act of injustice to deny him now what, by
strong constitutional presumptions, is due him.
Neither is it a matter of charity or compassion. The PVAO is vested with no discretion to deny payment where payment is
due and conversely, to pay when payment is not due.
"The State," declares the Constitution (1973), "shall establish, maintain, and ensure adequate social services in the field
of education, health, housing, employment, welfare, and social security to guarantee the enjoyment by the people of a
decent standard of living." 11 Under the present Constitution, the State's concern for war veterans finds an even more
emphatic expression:
SEC. 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that provides adequate social services, promote full employment,
a rising standard of living, and an improved quality of life for all . 12
xxx xxx xxx
SEC. 7. The State shall provide immediate and adequate care, benefits, and other forms of assistance to war veterans
and veterans of military campaigns, their surviving spouses and orphans. Funds shall be provided therefor and due
consideration shall be given them in the disposition of agricultural lands of the public domain and, in appropriate cases, in
the utilization of natural resources. 13
In the face of clear State policy, the burden is consequently on the Government to show that the applicant is not qualified
for pension. The applicant enjoys a presumed qualification upon a simple demonstration that he had fought in the war
and had suffered a permanent incapacity as a result thereof .
The records show that the petitioner suffered various injuries, in his ear arising from a bombing in Atimonan, Quezon
(where elements of the Japanese Imperial Army landed, after they had established a beachhead at Vigan, Ilocos Sur, two

14
days after the Pearl Harbor bombing which commenced World War II in the Pacific area), and other parts of his body due
to bullets and bayonets. 14 There is no showing that his wounds have since healed. Hence, they are "permanent" within
the intendment of the veterans' Bill of Rights. As we said, the fact that they are partial rather than total is of no moment.
"Permanent incapacity", under Republic Act No. 65, contemplates an injury or ailment sustained in battle, permanent or
incurable in character, and such that it impedes nominal work. But the statute does not require that the veteran be utterly
unable to work by reason of the injury or ailment, or otherwise, "totally disabled". To say that it does is to reduce the law
into a simple social security measure, similar to workmen's compensation, rather than an act of gratitude by the State to
the brave veterans of the last two wars in the country.
Further, to say that Republic Act No. 26 applies only to veterans totally disabled for work is to make the Act the veterans'
sole source of income (by virtue of the prohibition against multiple compensations under Sections 9 and 10). Certainly,
P230.00 a month 15 the amount of pension under the Act is hardly "compensation" for any common tao, let alone a
totally disabled citizen. This could not have been the intent of the legislature.
The clear implication is that the PVAO may not rate disabilities in the same manner they are evaluated under our laws on
employees' compensation. So long as a veteran's incapacity is permanent, the veteran is entitled to payment.
Alleged budgetary constraints or lack of appropriation are no obstacles to payment. In Espaol v. Chairman, Philippine
Veterans Administration, 16 we ordered "the restoration of [the petitioner's] monthly pension and her children's monthly
dependent's pension provided for by R.A. No. 65, as amended, the coverage of which Congress had already
appropriated funds [for]." 17 The instant case presents a similar situation. In asking for retroactive pension, what the
petitioner in reality seeks is the "restoration" of full pension benefits long denied him on account of the PVAO's improper
application of Republic Act No. 65, and the funds for which have been undoubtedly appropriated.
To the extent that this decision is incompatible with our decision in PVAO vs. Asterio Q. Tamayo, promulgated on July 29,
1988, G.R. No. 74322, the latter is therefore considered changed.
The war veterans loom as the forgotten heroes of this generation. This is the reality both unfortunate and tragic. What has
been lost on many is the fact that it was because of their bravery and sacrifice that we are a free people today.
They stand as shining mementos of our struggle for emancipation from the colonial yoke With crude boloes and primitive
spears but with abundant courage in their hearts they fought the white man's arsenal of rifles and cannons, overcame it,
and finished a revolution. They fought with no anticipation of a prize, reward, or medal, but in obedient and unquestioning
response to duty to country.
It was they who, four decades later, would lead the resistance against the Japanese invaders. Poorly trained, fed, and
equipped but encouraged by a firmness of will, they offered their lives and many forfeited theirs amid superior
firepower from the enemy. Like the revolutionaries, they were not conscripts but volunteers. And like them, they fought
without any expectation of laurels or citations but in order that liberty shall dawn upon the land.
The Court strongly stresses that Republic Act No. 65, the veterans' Bill of Rights, was not meant to compensate alone
veterans for the wounds of war. It is, above all, a gesture of gratitude on the part of the State and a tribute to their
gallantry and selfless love of country. Though valor cannot be measured in terms of money, money is the best we can
offer for the moment. And if we cannot do more, let us do no less. This case should not have indeed reached this Court
had not insensitivity gotten the better of Government functionaries.
WHEREFORE, the petition is GRANTED.
The respondent, the Philippine Veterans Affairs Office, is ORDERED to pay the petitioner, his spouse, and qualified
children, full pension benefits plus such other and further increments as may be provided for by law, effective November
18, 1947. No costs.
SO ORDERED.
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin, Cortes, Grio-Aquino, Medialdea and Regalado,
JJ., concur.
Separate Opinions
FERNAN, C.J., dissenting:
Without detracting from the great honor and gratitude our nation owes its war heroes and veterans I regret that I am
unable to concur with the opinion expressed by the majority relative to the power of the Philippine Veterans Affairs Office
PVAO to rate the disability or incapacity from work of war veterans seeking entitlement to the pension benefits provided
under Republic Act No. 65 and its amendments.
As conceded in my earlier ponencia in G.R. No. 74322 entitled "The Philippine Veterans Affairs Office vs. Asterio Q.
Tamayo", promulgated on July 29, 1988, R.A. No. 65 itself did not contain a disability rating schedule. However, it did
repose upon the Philippine Veterans Board, predecessor of the PVAO, rulemaking powers which by their tenor are
sufficiently broad and encompassing to include this authority to rate disabilities. Thus, from its enactment in 1946, or for
more than forty (40) years, the governmental agency specially created and charged with implementing the provisions of
R.A. No. 65 and its amendments, from the Philippine Veterans Board, the Philippine Veterans Administration to the
present PVAO had consistently done so in accordance with the assailed disability rating schedule. Although technically
not binding and controlling on the courts, the construction given by the agency or entity charged with the enforcement of a
statute should be given great weight and respect (In re Allen, 2 Phil. 630, 640), particularly so if such construction, as in
the case at bar, has been uniform and consistent, and has been observed and acted on for a long period of time (Molina
vs. Rafferty 38 Phil. 167; Madrigal vs. Rafferty 38 Phil. 414; Philippine Sugar Central vs. Collector of Customs, 51 Phil.
143).
Neither should we lose sight of the fact that the basic law, R.A. No. 65, has undergone a number of amendments, without
the legislature deeming it wise or proper to discontinue or proscribe this practice of the implementing agency of rating the

15
veterans' disabilities. This, to my mind, is a strong indication, nay, conclusive proof that the construction given by the
PVAO and its predecessors is in accord with the legislative intent, for a basic rule in statutory construction is that the
legislature is presumed to know the effect which statutes originally had, and by re-enactment to intend that they should
again have the same effect (In re McCullough Dick, 39 Phil. 41). There is implied legislative approval by the legislature's
failure to change a longstanding administrative construction (Asturias Sugar Central, Inc. vs. Commissioner of Customs,
29 SCRA 617).
It is regretable that the majority has missed the wisdom of the construction given by the veterans board to Section 9 of
R.A. No. 65, and the undeniable fact that it is through the veterans board's authority to rate disabilities that the spirit and
intent of the law are being given their most beneficial effects. Note that Section 9 of R.A. No. 65 uses the
phrase "permanently incapacitated from work" as the qualifying condition for the full pension benefits provided
thereunder. As stated in the case of Board of Administrators vs. Agcaoili, 58 SCRA 72, these words "have a restrictive
signification which cannot be conveniently disregarded." An amendment, R.A. No. 5753 * enacted on June 21, 1969,
employs the equally restrictive term "totally disabled". The literal import flowing from the interchangeable and
synonymous use of the phrases "permanently incapacitated from work" and "total disability", is that the legislature
intended to give the full amount of pension benefits provided under the law only to war veterans who are permanently and
totally unable to engage in any gainful occupation or employment by reason of the sickness, disease or injury sustained
in line of duty. The veterans board could have easily interpreted and applied the law in this wise, but did not. It is to its
great credit that giving due consideration to the spirit and intent of the law, rather than adhering to its letters, the veterans
board correctly construed the law as setting a maximum amount of pension benefits for the worst kind or condition of
incapacity from work (i.e., permanent), and leaving to the administering agency thru its ample rule-making powers the
task of providing for proportional benefits for corresponding varying degrees of incapacity or disability. Thus, it is thru the
now assailed rating power of the veterans board that less than permanently incapacited war veterans are enjoying the
benefits, albeit partial, of the law, which a literal reading thereof would seem to preclude.
In what it probably perceives as a most charitable and generous move, the majority lightly casts aside the construction
given and followed by the veterans board for more than 40 years. The majority likewise completely failed to make the very
crucial and significant distinction between "permanent incapacity" and "permanent incapacity from work", and in the
process, unwittingly gave rise to an absurd, if not inequitable situation, in that all war veterans are deemed entitled to the
same amount of pension benefits regardless of the nature and effect of the sickness, disease or injury sustained in line of
duty. Certaintly, the legislature could not have intended such patent inequality. It is safer and more logical to assume that
the law intended to give equal benefits to those similarly situated, a circumstance best attained through the adoption by
the veterans board of a standard classification of disability or incapacity.
Moreover, to entitle all war veterans to the full amount of pension benefits mentioned in the law regardless of the extent of
their disability would involve a staggering sum of money. While there is no gainsaying that the amount prescribed by law
is far from adequate, we must, however, realize that the Philippines is a relatively poor country. It wants to reward its war
heroes and veterans for their valor and gallantry but harsh economic reality deters it from adequately doing so. It does
what it can under the circumstances, without the Judiciary adding to its financial troubles and burden through what I firmly
believe to be an unwarranted interpretation of a law.
Feliciano, J., concur.
NARVASA, J., dissenting:
I dissent and vote to adhere to the ruling in G.R. No. 74322 (Phil. Veterans Affairs Office v. Tamayo, July 29, 1988.)
Separate Opinions
FERNAN, C.J., dissenting:
Without detracting from the great honor and gratitude our nation owes its war heroes and veterans I regret that I am
unable to concur with the opinion expressed by the majority relative to the power of the Philippine Veterans Affairs Office
PVAO to rate the disability or incapacity from work of war veterans seeking entitlement to the pension benefits provided
under Republic Act No. 65 and its amendments.
As conceded in my earlier ponencia in G.R. No. 74322 entitled "The Philippine Veterans Affairs Office vs. Asterio Q.
Tamayo", promulgated on July 29, 1988, R.A. No. 65 itself did not contain a disability rating schedule. However, it did
repose upon the Philippine Veterans Board, predecessor of the PVAO, rulemaking powers which by their tenor are
sufficiently broad and encompassing to include this authority to rate disabilities. Thus, from its enactment in 1946, or for
more than forty (40) years, the governmental agency specially created and charged with implementing the provisions of
R.A. No. 65 and its amendments, from the Philippine Veterans Board, the Philippine Veterans Administration to the
present PVAO had consistently done so in accordance with the assailed disability rating schedule. Although technically
not binding and controlling on the courts, the construction given by the agency or entity charged with the enforcement of a
statute should be given great weight and respect (In re Allen, 2 Phil. 630, 640), particularly so if such construction, as in
the case at bar, has been uniform and consistent, and has been observed and acted on for a long period of time (Molina
vs. Rafferty 38 Phil. 167; Madrigal vs. Rafferty 38 Phil. 414; Philippine Sugar Central vs. Collector of Customs, 51 Phil.
143).
Neither should we lose sight of the fact that the basic law, R.A. No. 65, has undergone a number of amendments, without
the legislature deeming it wise or proper to discontinue or proscribe this practice of the implementing agency of rating the
veterans' disabilities. This, to my mind, is a strong indication, nay, conclusive proof that the construction given by the
PVAO and its predecessors is in accord with the legislative intent, for a basic rule in statutory construction is that the
legislature is presumed to know the effect which statutes originally had, and by re-enactment to intend that they should

16
again have the same effect (In re McCullough Dick, 39 Phil. 41). There is implied legislative approval by the legislature's
failure to change a longstanding administrative construction (Asturias Sugar Central, Inc. vs. Commissioner of Customs,
29 SCRA 617).
It is regretable that the majority has missed the wisdom of the construction given by the veterans board to Section 9 of
R.A. No. 65, and the undeniable fact that it is through the veterans board's authority to rate disabilities that the spirit and
intent of the law are being given their most beneficial effects. Note that Section 9 of R.A. No. 65 uses the
phrase "permanently incapacitated from work" as the qualifying condition for the full pension benefits provided
thereunder. As stated in the case of Board of Administrators vs. Agcaoili, 58 SCRA 72, these words "have a restrictive
signification which cannot be conveniently disregarded." An amendment, R.A. No. 5753 * enacted on June 21, 1969,
employs the equally restrictive term "totally disabled". The literal import flowing from the interchangeable and
synonymous use of the phrases "permanently incapacitated from work" and "total disability", is that the legislature
intended to give the full amount of pension benefits provided under the law only to war veterans who are permanently and
totally unable to engage in any gainful occupation or employment by reason of the sickness, disease or injury sustained
in line of duty. The veterans board could have easily interpreted and applied the law in this wise, but did not. It is to its
great credit that giving due consideration to the spirit and intent of the law, rather than adhering to its letters, the veterans
board correctly construed the law as setting a maximum amount of pension benefits for the worst kind or condition of
incapacity from work (i.e., permanent), and leaving to the administering agency thru its ample rule-making powers the
task of providing for proportional benefits for corresponding varying degrees of incapacity or disability. Thus, it is thru the
now assailed rating power of the veterans board that less than permanently incapacited war veterans are enjoying the
benefits, albeit partial, of the law, which a literal reading thereof would seem to preclude.
In what it probably perceives as a most charitable and generous move, the majority lightly casts aside the construction
given and followed by the veterans board for more than 40 years. The majority likewise completely failed to make the very
crucial and significant distinction between "permanent incapacity" and "permanent incapacity from work", and in the
process, unwittingly gave rise to an absurd, if not inequitable situation, in that all war veterans are deemed entitled to the
same amount of pension benefits regardless of the nature and effect of the sickness, disease or injury sustained in line of
duty. Certaintly, the legislature could not have intended such patent inequality. It is safer and more logical to assume that
the law intended to give equal benefits to those similarly situated, a circumstance best attained through the adoption by
the veterans board of a standard classification of disability or incapacity.
Moreover, to entitle all war veterans to the full amount of pension benefits mentioned in the law regardless of the extent of
their disability would involve a staggering sum of money. While there is no gainsaying that the amount prescribed by law
is far from adequate, we must, however, realize that the Philippines is a relatively poor country. It wants to reward its war
heroes and veterans for their valor and gallantry but harsh economic reality deters it from adequately doing so. It does
what it can under the circumstances, without the Judiciary adding to its financial troubles and burden through what I firmly
believe to be an unwarranted interpretation of a law.
Feliciano, J., concur.
NARVASA, J., dissenting:
I dissent and vote to adhere to the ruling in G.R. No. 74322 (Phil. Veterans Affairs Office v. Tamayo, July 29, 1988.)
Footnotes
* CA-G.R. SP No. 10496, Eleventh Division: Francisco, Ricardo, J., Lombos de la Fuente, Lorna and Benipayo,
Alfredo, JJ., Concurring.
** Regional Trial Court, Fifth Judicial Region, Branch VII, Legaspi City; Hon. Domingo Reyes, Presiding Judge.
1 Rollo, 68-71.
2 Id., 18.
3 Id.
4 No L-25916, April 30, 1970, 32 SCRA 466.
5 No. L-25619, June 30, 1970, 33 SCRA 585.
6 Begoso v. Chairman, Philippine Veterans Administration, 471474. With respect to the defense of prescription, see
Espanol v. Chairman, Philippine Veterans Administration, No. L-44616, June 29, 1985, 137 SCRA 314.
7 II PPGS (Rev. Ed.) 468; emphasis in original.
8 Teoxon v. Members of the Board of Administrators, Philippine Veterans Administration, 589.
9 No. L-38129, July 23, 1974, 58 SCRA 72.
10 Rollo, Id., 32; emphasis supplied.
11 CONST. (1973), art. II, sec. 7.
12 CONST. (1987), art. II, sec. 9.
13 Supra, art. XVI, sec. 7.
14 Rollo, Id., 16.
15 P200.00 a month for the veteran and P30.00 a month for his spouse for each unmarried child.
16 Supra.
17 Supra, 320.
Fernan, C.J:
* RA. 5753 is entitled, "AN ACT FURTHER AMENDING REPUBLIC ACT NUMBER SIXTY FIVE, AS AMENDED, BY
INCREASING THE PENSION OF TOTALLY DISABLED VETERANS OF WORLD WAR II AND THEIR LIVING
DEPENDENTS."
G.R. No. L-44616 June 29, 1985

17
MARIA U. ESPAOL, petitioner-appellee,
vs.
THE CHAIRMAN and MEMBERS OF THE BOARD OF ADMINISTRATORS, PHILIPPINE VETERANS
ADMINISTRATION, respondents-appellants.
MAKASIAR, J.:
This is a petition for review on certiorari to set aside and/or modify the decision dated January 14, 1975, in Civil Case No.
93382 of the Court of First Instance of Manila, ordering by way of mandamus the Chairman and Members of the Board of
Administrators, Philippine Veterans Administration to restore Maria U. Espaol's monthly pension.
Maria U. Espaol was the widow of the deceased veteran German Espaol, who died in the service during World War II,
She applied for monthly pension under R.A. No. 65 with the Philippine Veterans Administration (now Philippine Veterans
Affairs Office). Her application was approved and she received her monthly pension and her minor children their monthly
dependent's pension. But on November 1, 1951, the Philippine Veterans Administration (PVA), in pursuance of its
administrative policy, providing that those beneficiaries of veterans receiving pensions from the U.S. Veterans
Administration are no longer entitled to receive pension from the PVA, cancelled Maria U. Espaol's monthly pension and
that of her then minor children (p. 5, Appellant's Brief; p. 10, rec.).
On February 25, 1974, or after more than 22 years from the date when her monthly pension was cancelled, Maria U.
Espaol filed with the CFI of Manila a petition for mandamus against PVA for the restoration and continued payment of
her monthly pension including that of her dependents effective from the date of cancellation.
After PVA filed its answer, in which factual issues were admitted, judgment on the pleadings was rendered by the lower
court, on January 14, 1975, the dispositive portion of which reads:
WHEREFORE, finding merit in the petition, let mandamus issue, ordering the restoration of petitioner's monthly pension
plus whatever increase are allowed by law except that of petitioner's children who are now above 18 years of age (p. 10,
rec.).
The PVA appealed to the Court of Appeals, which elevated the appeal to this Court, as only errors or questions of law
were involved (pp. 4-5, CA decision; pp. 38-39, rec.).
WE find the appeal to be without merit.
I
The contention of appellant PVA that the action of appellee Maria U. Espaol to compel the restoration of her monthly
pension and that of her children, effective from the date of cancellation on November 1, 1951, has already prescribed,
inasmuch as the same was filed more than 10 years from the date of cancellation, is without merit.
Article 1144 of the New Civil Code provides that actions based on an obligation created by law shall be brought within 10
years from the time the right of action accrues. It is important to reckon the date, when the right of action accrues, as the
same is the beginning for counting the 10-year prescriptive period.
The right of action accrues when there exists a cause of action, which consists of 3 elements, namely: a) a right in favor
of the plaintiff by whatever means and under whatever law it arises or is created; b) an obligation on the part of defendant
to respect such right; and c) an act or omission on the part of such defendant violative of the right of the plaintiff (Cole vs.
Vda. de Gregorio, 116 SCRA 670 [1982]; Mathay vs. Consolidated Bank & Trust Co., 58 SCRA 559 [1974]; Vda. de
Enriquez vs. De la Cruz, 54 SCRA 1 [1973]). It is only when the last element occurs or takes place that it can be said in
law that a cause of action has arisen (Cole vs. Vda. de Gregorio, supra).
The appellee cannot be said to have a cause of action, in compelling appellant to continue paying her monthly pension on
November 1, 1951, because appellant's act of cancellation, being pursuant to an administrative policy, cannot be
considered a violation of appellee's right to receive her monthly pension.
It is elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to
interpret the law which they are entrusted to enforce, have the force of law, are entitled to great respect (Sierra Madre
Trust vs. Secretary of Agriculture and Natural Resources, 121 SCRA 384 [1983]; Asturias Sugar Central Inc. vs.
Commissioner of Customs, 29 SCRA 617 [1969]; Antique Sawmill Inc. vs. Zayco, et al., 17 SCRA 316 [1966]), and have
in their favor a presumption of legality. Thus, appellant's act of cancelling appellee's monthly pension being presumed
legal and valid, cannot be taken as a violation of appellee's right to receive her monthly pension under R.A. No. 65.
In the case of Del Mar vs. The Philippine Veterans Administration (51 SCRA 340 [1973]), this Court did not consider
prescription in favor of PVA, even though the action of Del Mar was filed on June 20, 1964 or more than 10 years from the
cancellation of his monthly pension in March, 1950; because the action of Del Mar was basically to declare the
questioned administrative policy invalid, which action does not prescribe.
It is only when this Court declared invalid the questioned administrative policy in the case of Del Mar vs. The Philippine
Veterans Administration, supra, promulgated on June 27, 1973, can the appellee be said to have a cause of action to
compel appellant to resume her monthly pension; because it is at that point in time, when the presumption of legality of
the questioned administrative policy had been rebutted and thus it can be said with certainty that appellant's act was in
violation of appellee's right to receive her monthly pension.
The 10-year prescriptive period, therefore, should be counted from June 27, 1973 when the case of Del Mar vs. The
Philippine Veterans Administration, supra, was promulgated, and not from November 1, 1951, the date of cancellation by
appellant of appellee's pension. The action of appellee, which was brought on February 25, 1974, is therefore well within
the 10-year prescriptive period.
II
Appellant's contention that appellee's action for mandamus cannot prosper because no prior exhaustion of administrative
remedy was made, as appellee had not made any prior demand on appellant, is without merit.

18
It is a rule that when a case involves solely legal questions, the litigant need not exhaust all administrative remedies
before judicial relief is sought (One Heart Sporting Club, Inc. vs. CA, 108 SCRA 416 [1981]; Bagatsing vs. Ramirez, 74
SCRA 306 [1976]; Del Mar vs. The Philippine Veterans Administration, supra; Mendoza vs. SSS, 44 SCRA 373 [1972]).
III
The contention of appellant that it cannot be ordered by mandamus to resume paying appellee's monthly pension
because in the case of Board of Administrators, Philippine Veterans Administration vs. Hon. Maria Agcaoili and Mauro
Abrera (58 SCRA 72 [1974]), it was held that disbursement of public funds must be covered by corresponding
appropriation, is likewise untenable.
WE find the Agcaoili case inapplicable to appellee's claim. Since the action for mandamus filed by claimant Mauro Abrera
in said case was to compel PVA to pay him the additional benefits provided for by R.A. No. 5753 (An Act further amending
R.A. 65, as amended, by increasing the Pension of totally disabled Veterans of WWII and their Living Dependents), this
Court rightly dismissed his action because Congress made no actual appropriations to cover all increased claims covered
by R.A. No. 5753. In the case at bar, appellee does not seek to recover increased benefits under R.A. No. 5753, but for
the restoration of her monthly pension and her children's monthly dependent's pension provided for by R.A. No. 65, as
amended, the coverage of which Congress had already appropriated funds therefor. Besides, R.A. No. 5753 covering
disabled veterans is alien to appellee's claim for benefits due to her as a surviving spouse of a deceased veteran. The
action by appellee for mandamus against appellant, thus, exists.
WHEREFORE, THE DECISION OF THE COURT OF FIRST INSTANCE DATED JANUARY 14, 1975 IS HEREBY
AMENDED, AND APPELLANT, CHAIRMAN AND MEMBERS OF THE BOARD, PHILIPPINE VETERANS
ADMINISTRATION (NOW PHILIPPINE VETERANS AFFAIRS OFFICE) IS HEREBY ORDERED TO:
1. PAY APPELLEE, MARIA U. ESPAOL, HER MONTHLY PENSION PLUS WHATEVER INCREMENTS THAT MAY BE
PROVIDED FOR BY LAW, EFFECTIVE NOVEMBER 1, 1951, AS LONG AS SHE QUALIFIES; AND
2. PAY APPELLEE'S QUALIFIED MINOR CHILDREN THEIR MONTHLY DEPENDENT'S PENSION PLUS WHATEVER
INCREMENTS THAT MAY BE PROVIDED FOR BY LAW, EFFECTIVE NOVEMBER 1, 1951.
COSTS AGAINST RESPONDENT-APPELLANT.
SO ORDERED.
Fernando, C.J., Aquino, Concepcion, Jr., Abad Santos, Escolin, De la Fuente and Alampay, JJ., concur.
Plana, J., concur in the result.
Melencio-Herrera, Relova and Gutierrez, Jr., JJ., took no part.
Cuevas, J., I reserved my vote.
Separate Opinions
TEEHANKEE, J., dissenting:
I dissent and vote to set aside the appealed decision on two grounds: (1) Petitioner's action prescribed upon the
expiration on November 1, 1961 of the ten-year prescriptive period counted from date of respondents' cancellation on
November 1, 1951 of her pension. This action was filed too late after over 22 years only on February 25, 1974; and (2) It
is now 1985 and no actual appropriation to cover back pensions granted by the decision for over 33 years could
possibly exist.
Separate Opinions
TEEHANKEE, J., dissenting:
I dissent and vote to set aside the appealed decision on two grounds: (1) Petitioner's action prescribed upon the
expiration on November 1, 1961 of the ten-year prescriptive period counted from date of respondents' cancellation on
November 1, 1951 of her pension. This action was filed too late after over 22 years only on February 25, 1974; and (2) It
is now 1985 and no actual appropriation to cover back pensions granted by the decision for over 33 years could
possibly exist.
G.R. No. L-27299 June 27, 1973
QUIRICO DEL MAR, petitioner and appellee,
vs.
THE PHILIPPINE VETERANS ADMINISTRATION, respondent and appellant.
Quirico del Mar in his own behalf.
Office of the Solicitor General Felix V. Makasiar, First Assistant Solicitor General Esmeraldo Umali and Solicitor Eulogio
Raquel Santos for respondent appellant.
CASTRO, J.:
On June 20, 1964, Quirico del Mar (hereinafter referred to del Mar) filed with the Court of First Instance of Cebu petition
for mandamus (civil case R-8465) against the Philippine Veterans Administration (hereinafter referred to the PVA to
compel the latter to continue paying him monthly life pension of P50 from the date of its cancellation in March 1950 to
June 20, 1957, and thereafter, or from June 22 1957 his monthly life pension, as increased by Republic Act 1920, 1 of
P100 and to pay to him as well the monthly living allowance of P10 for each of his unmarried minor children below
eighteen years of age, 2 pursuant to the said Republic Act 1920 which took effect on June 22, 1957. Del Mar also asked
for compensatory, moral and exemplary damages.
In his petition below, del Mar averred that he served during World War II as chief judge advocate of the Cebu Area
Command (a duly recognized guerrilla organization) with the rank of major; that he subsequently obtained an honorable

19
discharge from the service on October 20, 1946 on a certificate of permanent total physical disability; that upon proper
claim presented and after hearing and adjudication, the Philippine Veterans Board (the PVA's predecessor granted him a
monthly life pension of P50 effective January 28, 1947; that in March 1950, the said Board discontinued payment of his
monthly life pension on the ground that his receipt of a similar pension from the United States Government, through the
United States Veterans Administration, by reason of military service rendered in the United States Army in the Far East
during World War II, precluded him from receiving any further monthly life pension from the Philippine Government; that
he wrote the said Board twice demanding that it continue paying his monthly life pension, impugning the cancellation
thereof as illegal; and that his demands went unheeded.
The PVA reiterated its contention that del Mar's receipt of a similar pension from the United States Government effectively
barred him from claiming and receiving from the Philippine Government the monthly life pension granted him as well as
the monthly allowances he claimed for his five living unmarried minor children below eighteen years of age. The PVA also
asserted that it is discretionary on its part to grant or discontinue the pension sought by del Mar. In addition, it alleged that
the action of del Mar was premature because of his failure to exhaust administrative remedies before invoking judicial
intervention, and that the court a quo was without jurisdiction to try the case as del Mar demand partakes of a money
claim against the PVA a mere agency of the Philippine Government and, in effect, of a suit against the Government
which is not suitable without its consent. The PVA thus prayed for the dismissal of the petition.
After due trial, the court a quo rendered judgment upholding del Mar claims. In its decision dated February 27, 1965, the
court (1) ordered the PVA to pay to del Mar his monthly life pension corresponding to the period from April 1950 to May
1957 at the rate of P50 a month, adding up to P4,334.86, and his monthly life pension corresponding to the period from
June 22, 1957 to February 1965 at the amount of P100 a month totalling P9,200, and thereafter to continue to pay his
monthly life pension at the rate of P100. a month; (2) directed del Mar to file with the PVA the corresponding written
application for the payment to him of the monthly living allowance of P10 for each of his five living unmarried minor
children from June 22, 1957; and ordered the PVA to give due course to the written application as soon as del Mar shall
have filed the same with it, and once approved, to make the necessary payment of the accumulated unpaid living
allowances due to each of the said children from June 22, 1957 as well as the current ones until each one of them ceases
to be entitled to the same; and (3 directed the PVA in the event of unavailability of funds to pay the claims
aforementioned, to set aside funds from such as intended to pay the veterans' living pensions, or to cause the same to be
appropriated in its budget in order to comply with the judgment. For lack of basis, the court a quo omitted to pass
judgment on del Mar's claim for moral and exemplary damages.
Hence, the present appeal by the PVA.
The PVA alleges that the court a quo erred (1) in not holding itself without jurisdiction to try civil case R-8465; (2) in no
finding as premature the petition for mandamus filed by del Mar due to the failure of the latter to exhaust available
administrative remedies before seeking judicial intervention; (3) in declaring null and void section 6 of PVA Regulation No.
2 relied upon by it in discontinuing the monthly life pension of del Mar since March 1950; (4) in not finding it discretionary
on the part of the PVA to grant or discontinue the said suspension; (5) in ordering it to pay to del Mar the amounts stated
in the judgment; and (6) in ordering it to give due course to and approve the application which the said court directed del
Mar to file for the payment to the latter of the monthly living allowance for each of his living unmarried minor children
below eighteen years of age.
This appeal raises several questions which will be discussed in seriatim.
1. The PVA argues that the court a quo was without jurisdiction to try civil case R-8465 because it involves a money claim
against the said PVA a mere agency of the Government performing governmental functions with no juridical personality
of its own and, in reality, partakes of an action against the Philippine Government which is immune from suit without its
consent, citing this Court's observation in Republic of the Philippine vs. Ramolete and Del Mar, 3 to wit:
....a charge against the Government where the money involved is part of the public funds, is a suit against the
Government, and the happenstance that the action is directed against the PVA as an entity and not against the Republic
of the Philippines is of no moment. Perforce, the Republic of the Philippines, on matters of administration of all benefits
due to the veterans of revolutions and wars, and to their heirs and beneficiaries, acts and has to act through its agency
and instrumentality, the PVA. The suit should therefore be regarded as one against the Republic of the Philippines; the
PVA is therefore exempt from the filing of an appeal bond.
The PVA labors under a muddled and mistaken appreciation of the aforecited observation. This Court stated in precise
language the sole issue for resolution in that case, thus:
Is the PVA exempt from the filing of an appeal bond? To resolve this issue, we must initially determine whether the PVA is
an agency or instrumentality of the Republic of the Philippines, and, in the affirmative, whether it exercises governmental
functions.
Indeed, the decisive point in the aforementioned case related to the status of the PVA as an agency or instrumentality of
the Republic of the Philippines exercising governmental functions as to be entitled to exemption from the filing of the
appeal bond per section 16 of Rule 141 of the Rules of Court, not to the nature of the claim sought to be enforced by the
private respondent therein (del Mar) against the said PVA. Thus, in the said case, this Court made a lengthy disquisition
on the history, development and organization of the PVA to show conclusively that the same is an entity or agency of the
Republic of the Philippines performing governmental functions. True, this Court referred to the claim of the private
respondent therein as "a claim for a sum of money against the Government, which claim, if adjudged finally to be
meritorious, would render the Republic of the Philippines liable therefor," since the funds from which the claim was to be
satisfied were funds appropriated by Congress for the PVA; but this Court properly and advisedly omitted any study and
consideration of the question of suitability or non-suitability of the Government in connection therewith.

20
As a general proposition, the rule well-settled in this jurisdiction on the immunity of the Government from suit
without its consent holds true in all actions resulting in "adverse consequences on the public treasury, whether in the
disbursements of funds or loss of property." 4 Needless to state, in such actions, which, in effect, constitute suits against
the Government, the court has no option but to dismiss them. Nonetheless, the rule admits of an exception. It finds no
application where a claimant institutes an action against a functionary who fails to comply with his statutory duty to
release the amount claimed from the public funds already appropriated by statute for the benefit of the said claimant. 5 As
clearly discernible from the circumstances, the case at bar falls under the exception.
2. The second question posed by the PVA relates to del Mar alleged failure to exhaust administrative remedies before
resorting to court action. Suffice it to state that where a case as in the present controversy involves a question solely of
a legal nature, there arises no need for the litigant to resort to all administrative remedies available to him before seeking
judicial relief. 6
3. The validity of section 6 of Regulation No. 2 of the "Rules and Regulations on Veterans' Benefits" adopted by the PVA
constitutes the core of the present controversy. The said section 6 reads as follows:
SEC. 6. Effect of receipt of USVA pension benefit termination, reduction. An award of a similar disability
compensation from the US Veterans Administration shall be a ground for the cancellation of a disability pension granted
under the Regulation: Provided, however, That if and while the disability compensation awarded by the US Veterans
Administration is less than the pension granted hereunder, the difference in amount shall be assumed and paid by the
PVA: Provided, further, That upon proper application, the disability award previously cancelled may be restored upon the
termination of the US Veterans Administration award if the cause of such termination is due to negative military service
report of the pensioner certified by the US Department of the Army and not for any other valid cause: Provided, finally,
That the veteran is medically determined to be still suffering from the disability for which he was previously awarded a
pension. Payment of pension thus restored shall take effect or shall commence only from the date of approval of
restoration and when funds become available.
Pursuant to the foregoing, the PVA cancelled and discontinued the monthly life pension of del Mar reasoning that the
latter's receipt of a similar pension from the United States Government precluded his enjoying any like benefit from the
Philippine Government. The PVA avers that it adopted the aforequoted section 6 in order to carry out and implement
section 9 of Republic Act 65, as amended, 7 particularly its excepting clause. Said section 9 reads:
SEC. 9. The persons mentioned in sections one and two hereof who are permanently incapacitated from work owing to
sickness, disease or injuries sustained in line of duty, shall be given a life pension of one hundred pesos a month, and ten
pesos a month for each of his unmarried minor children below eighteen years of age, unless they are actually receiving a
similar pension from other Government funds, and shall receive, in addition, the necessary hospitalization and medical
care. 8
The PVA reads the phrase "from other Government funds" in the excepting clause of the aforecited provision as
necessarily including funds of the United States Government. And without question, the pension del Mar receives from
the United States Veterans Administration comes from the funds of the United States Government.
On the other hand, del Mar avers that section 6 of Regulation No. 2 illegally effects the suspension of the operation of
section 9 of Republic Act 65, as amended, and argues that under section 20 9 of Republic Act 65, as amended, the power
suspend the payment of the monthly life pension awarded to disabled veteran belongs exclusively to the President of the
Philippines, not to the PVA which, in the case at bar, illegally arrogated unto itself the said power. Furthermore, del Mar
states, the PVA "deliberately misinterprets" the phrase from other Government funds" in extending its scope to include
United States Government funds.
The principle recognizing the necessity of vesting administrative authorities with the power to promulgate rules and
regulations to implement a given statute and to effectual its policies, provided such rules and regulations conform to the
terms and standards prescribed by the statute as well purport to carry into effect its general policies, constitutes well
established doctrine in this jurisdiction. 10 In Teoxon v. Members of the Board of Administrators, Philippine Veterans
Administration, suprea, this Court fittingly stated: .
... the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be
faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the
Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate.
There must be strict compliance with the legislative enactment. Its terms must be followed. The statute requires
adherence to, not departure from, its provisions. No deviation is allowable.
Section 11 of Republic Act 2665 11 empowers the PVA to adopt rules and regulations, thus:
SEC. 11. Policies, rules and regulations. Subject to existing laws, the Administration shall have the power to
promulgate and issue rules and regulations as may be found necessary to govern its operations and to carry out that
aims and purposes of this Act and of all other laws to be administered by the Administration.
Pursuant to this rule making authority, the PVA allegedly' to implement section 9 of Republic Act 65, as amended
promulgated its "Rules and Regulations on Veterans' Benefits," section 6 of Regulation No. 2 of which cancels the
disability pension granted if the beneficiary receives a similar compensation from the United States Veterans
Administration. In effect, the PVA by adopting section 6 of Regulation No. 2, suspended the operation of section 9' of
Republic Act 65, as amended. This, Republic Act 65, as amended, forbids the PVA to do for it expressly authorizes only
the President of the Philippines to suspend the operation of any of its provisions "if and when the Congress of the United
States approves the pending GI Bill of Rights applicable to the Philippines the provisions of which are identical or similar
to the provisions of this Act." Clearly then, section 6 of Regulation No. 2 not only negates the very spirit behind section 9
of Republic Act 65, as amended, but also contravenes the express mandate of section 20 thereof.

21
The PVA's pretense that del Mar case falls under the clause of section 9 of Republic Act 65, as amended, which excepts
those who "are actually receiving a similar pension from other Government funds" from the coverage of said section 9
predicated upon its interpretation that the phrase other Government funds" includes funds of the United States
Government fails to persuade this Court as a valid argument to justify its cancellation of del Mar monthly life pens
Section 9 of Republic Act 65, as amended, in providing for the excepting clause, obviously intends to prevent the receipt
the same beneficiary of concurrent or multiple pensions benefits similar to each other in nature and basis, although
coursed through different departments or agencies, but paid out of the funds of the same Government. Any contrary
interpretation resulting in the derogation of the interests of the beneficiary who likewise receives a similar pension paid
out funds of other Governments, conflicts with the establish axiom ordaining the construction of pension laws of war
veterans in favor of those seeking their benefits.
The record of the case at bar being completely bereft of any indication to show the suspension by the President of the
Philippines pursuant to section 20 of Republic Act 65, amended of the operation of any of the provisions of the said
statute, this Court perforce must uphold del Mar claims.
4. The rest of the assigned errors relate to the allege undue interference by the court a quo with the purely discretionary
functions of the PVA in the matter of granting discontinuing the pension benefits.
The law concedes to administrative bodies like the PVA the authority to act on and decide claims and applications in
accordance with their judgment, in the exercise of their adjudicatory capacity. Because of their acquired expertise in
specific matters within the purview of their respective jurisdictions, the findings of these administrative bodies merit not
only great weight but also respect and finality. "There is limit, however, to such a deference paid to the actuations or such
bodies, Clearly, where there has been a failure to interpret and apply the statutory provisions in question, judicial power
should assert itself. Under the theory of separation of power it is to the judiciary, and to the judiciary alone, that the final
say on questions of law in appropriate cases coming before it is vested." 12
All told, no roadblock stands in the way of del Mar's demand for the continuance of his monthly life pension.
In view, however, of the further amendment by Congress of section 9 of Republic Act 65, as amended, through Republic
Act 5753 the provisions of which took effect on June 21, 1969 there arises the need to modify the judgment a quo in
order to make it conform to the said statute as it now stands. Republic Act 5753, in further amending section 9 of
Republic Act 65, as amended, grants every totally disabled veteran of World War II "a life pension of two hundred pesos a
month, and thirty pesos a month for his wife and each of his unmarried minor children below eighteen years of age."
ACCORDINGLY, this Court adjudges the appellee Quirico del Mar entitled to his life pension (1) at the rate of P50 a
month effective as of April 1950 to May 1957, per Republic Act 65; (2) at the rate of P100 a month effective as of June 22,
1957 to May 1969, per Republic Act 65 as amended by Republic Act 1920; and (3) at the rate of P200 a month effective
as of June 21, 1969, per Republic Act 65 as further amended by Republic Act 5753. This Court directs the appellant
Philippine Veterans Administration to compute and then to pay to the appellee del Mar his past and accumulated monthly
life pension at the aforementioned statutory rates.
Regarding the monthly living allowance the appellee del Mar asks for each of his five "living unmarried minor children
below eighteen years of age," it appearing that he has not filed any proper application therefor with the appellant PVA but
simply included them in his claim for the restoration of his discontinued monthly life pension, the appellee del Mar may, if
he so desires, comply with section 15 of Republic Act 65, as amended, which requires that "[A]ny person who desires to
take advantage of the rights and privileges provided for in this Act should file his application" with the Philippine Veterans
Administration, and the latter is hereby ordered to consider and pass upon the merits of such application, if filed,
particular reference to the entitlement qualifications of intended beneficiaries. No pronouncement as to costs.
Makalintal, Zaldivar, Fernando, Teehankee Barredo, and Esguerra, JJ., concur.
Antonio and Makasiar, JJ., took no part.
Footnotes
1 AN ACT AMENDING SECTION NINE OF REPUBLIC ACT NUMBERED SIXTY-FIVE BY INCREASING FROM FIFTY
TO ONE HUNDRED PESOS A MONTH THE LIFE PENSION OF PERMANENTLY INCAPACITATED PHILIPPINE
VETERANS.
2 Lydia (born on January 26, 1942), Quirico, Jr. (born on February 10,1945), Rolando (born on December 5, 1948),
Carmencita (born on July 25, 1950), and Lourdes (born on September 4, 1953).
3 L-94673, August 12, 1966, 16 SCRA 923.
4 Begosa vs. Chairman, Philippine Veterans Administration, 32 SCRA 466.
5 Begosa vs. Chairman, Philippine Veterans Administration, ibid., Teoxon vs. Members of the Board of Administrators,
Philippine Veterans Administration 13 SCRA 585.
6 Begosa vs. Chairman, Philippine Veterans Administration, ibid.; Teoxon vs. Members of the Board of Administrators,
Philippine Veterans Administration, ibid.
7 Amendments were introduced by Republic Act 1362, approved on June 18, 1955; Republic Act 1920, approved on June
22, 1957; and Republic Act 5753, approved on June 21, 1969.
8 Prior to its amendment by Republic Act 5753 (AN ACT FURTHER AMENDING REPUBLIC ACT NUMBERED SIXTY
FIVE, AS AMENDED, BY INCREASING THE PENSION OF TOTALLY DISABLED VETERANS OF WORLD WAR II AND
DEPENDENTS).
9 "SEC. 20. This Act shall take effect upon its approval: Provided, That the President of the Philippines is hereby
authorized to suspend the operation of any provision of this Act if and when the Congress of the United States approves
the pending GI Bill of Rights applicable to the Philippines the provisions of which are identical or similar to the provisions
of this Act."

22
10 People vs. Exconde 101 Phil. 1125; Geukekoo vs. Araneta, 102 Phil. 706; Teoxon vs. Members of the Board of
Administrators, Philippine Veterans Administration, supra.
11 AN ACT TO CONSOLIDATE INTO ONE OFFICE TO BE KNOWN AS THE "PHILIPPINE VETERANS
ADMINISTRATION" THE BOARD ON PENSIONS FOR VETERANS CREATED BY COMMONWEALTH ACT SIX
HUNDRED AND FIVE, THE PHILIPPINE VETERANS BOARD CREATED BY REPUBLIC ACT NUMBERED SIXTY FIVE,
THE CLAIMS OFFICE CREATED BY VIRTUE OF REPUBLIC ACT NUMBERED ONE HUNDRED THIRTY-SIX, THE
VETERANS BACK PAY COMMISSION CREATED BY REPUBLIC ACT NUMBERED EIGHT HUNDRED NINETY-SEVEN
AND THE VETERANS NINE, AMENDING THEREBY THE LAWS CITED AND FOR OTHER PURPOSES.
12 Begosa vs. Chairman, Philippine Veterans Administration, supra.
G.R. No. L-60413 October 31, 1990
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. SOFRONIO G. SAYO, Judge, Br. I, C I, Nueva Vizcaya, HEIRS OF CASIANO SANDOVAL, HEIRS OF
LIBERATO BAYAUA, JOSE C. REYES, and PHILIPPINE CACAO AND FARM PRODUCTS, INC., respondents.
Celso D. Gangan respondent Heirs of Liberato Bayaua.
Acosta & Associates fox Phil. Cacao and Farm Products, Inc.
Jose Reyes & Associates for Heirs of Casiano Sandoval, et al.
NARVASA, J.:
Sought to be annulled and set aside in this special civil action of certiorari is the decision of respondent Judge Sofronio G.
Sayo rendered on March 5, 1981 in Land Registration Case No. N-109, LRC Record No. 20850, confirming, by virtue of a
compromise agreement, the title of the private respondents over a tract of land.
The spouses, Casiano Sandoval and Luz Marquez, filed an original application for registration of a tract of land identified
as Lot No. 7454 of the Cadastral Survey of Santiago, BL Cad. 211 (July 17, 1961) and having an area of 33,950 hectares.
The land was formerly part of the Municipality of Santiago, Province of Isabela, but had been transferred to Nueva
Vizcaya in virtue of Republic Act No. 236.
Oppositions were filed by the Government, through the Director of Lands and the Director of Forestry, and some others,
including the Heirs of Liberato Bayaua. 1 In due course, an order of general default was thereafter entered on December
11, 1961 against the whole world except the oppositors.
The case dragged on for about twenty (20) years until March 3, 1981 when a compromise agreement was entered into by
and among all the parties, assisted by their respective counsel, namely: the Heirs of Casiano Sandoval (who had since
died), the Bureau of Lands, the Bureau of Forest Development, the Heirs of Liberato Bayaua, and the Philippine Cacao
and Farm Products, Inc. Under the compromise agreement, the Heirs of Casiano Sandoval (as applicants) renounced
their claims and ceded
1) in favor of the Bureau of Lands, an area of 4,109 hectares;
2) in favor of the Bureau of Forest Development, 12,341 hectares;
3) in favor of the Heirs of Liberato Bayaua, 4,000 hectares; and
4) in favor of Philippine Cacao & Farm Products, Inc., 8,000 hectares.
The remaining area of 5,500 hectares was, under the compromise agreement, adjudicated to and acknowledged as
owned by the Heirs of Casiano Sandoval, but out of this area, 1,500 hectares were assigned by the Casiano Heirs to their
counsel, Jose C. Reyes, in payment of his attorney's fees. In consideration of the areas respectively allocated to them, all
the parties also mutually waived and renounced all their prior claims to and over Lot No. 7454 of the Santiago Cadastre.
In a decision rendered on March 5, 1981, the respondent Judge approved the compromise agreement and confirmed the
title and ownership of the parties in accordance with its terms.
The Solicitor General, in behalf of the Republic of the Philippines, has taken the present recourse in a bid to have that
decision of March 5, 1981 annulled as being patently void and rendered in excess of jurisdiction or with grave abuse of
discretion. The Solicitor General contends that
1) no evidence whatever was adduced by the parties in support of their petitions for registration;
2) neither the Director of Lands nor the Director of Forest Development had legal authority to enter into the compromise
agreement;
3) as counsel of the Republic, he should have been but was not given notice of the compromise agreement or otherwise
accorded an opportunity to take part therein;
4) that he was not even served with notice of the decision approving the compromise; it was the Sangguniang
Panlalawigan of Quirino Province that drew his attention to the "patently erroneous decision" and requested him to take
immediate remedial measures to bring about its annulment.
The respondents maintain, on the other hand, that the Solicitor General's arguments are premised on the proposition that
Lot 7454 is public land, but it is not. According to them, as pointed out in the application for registration, the private
character of the land is demonstrated by the following circumstances, to wit:
1) the possessory information title of the applicants and their predecessors-in-interest;
2) the fact that Lot 7454 was never claimed to be public land by the Director of Lands in the proper cadastral
proceedings;
3) the pre-war certification of the National Library dated August 16, 1932 to the effect that the (Estadistica de
Propiedades) of Isabela issued in 1896 and appearing in the Bureau of Archives, the property in question was registered

23
under the 'Spanish system of land registration as private property owned by Don Liberato Bayaua, applicants'
predecessors-in-interest;
4) the proceeding for registration, brought under Act 496 (the Torrens Act) presupposes that there is already a title to be
confirmed by the court, distinguishing it from proceedings under the Public Land Act where the presumption is always that
the land involved belongs to the State.
Under the Regalian Doctrine 2 all lands not otherwise appearing to be clearly within private ownership are presumed to
belong to the State. Hence it is that all applicants in land registration proceedings have the burden of overcoming the
presumption that the land thus sought to be registered forms part of the public domain. 3 Unless the applicant succeeds in
showing by clear and convincing evidence that the property involved was acquired by him or his ancestors either by
composition title from the Spanish Government or by possessory information title, or any other means for the proper
acquisition of public lands, the property must be held to be part of the public domain . 4 The applicant must present
competent and persuasive proof to substantiate his claim; he may not rely on general statements, or mere conclusions of
law other than factual evidence of possession and title. 5
In the proceeding at bar, it appears that the principal document relied upon and presented by the applicants for
registration, to prove the private character of the large tract of land subject of their application, was a photocopy of a
certification of the National Library dated August 16, 1932 (already above mentioned) to the effect that according to the
Government's (Estadistica de Propiedades) of Isabela issued in 1896, the property in question was registered under the
Spanish system of land registration as private property of Don Liberato Bayaua. But, as this Court has already had
occasion to rule, that Spanish document, the (Estadistica de Propiedades,) cannot be considered a title to property, it not
being one of the grants made during the Spanish regime, and obviously not constituting primary evidence of
ownership. 6 It is an inefficacious document on which to base any finding of the private character of the land in question.
And, of course, to argue that the initiation of an application for registration of land under the Torrens Act is proof that the
land is of private ownership, not pertaining to the public domain, is to beg the question. It is precisely the character of the
land as private which the applicant has the obligation of establishing. For there can be no doubt of the intendment of the
Land Registration Act, Act 496, that every applicant show a proper title for registration; indeed, even in the absence of
any adverse claim, the applicant is not assured of a favorable decree by the Land Registration Court, if he fails to
establish a proper title for official recognition.
It thus appears that the decision of the Registration Court a quo is based solely on the compromise agreement of the
parties. But that compromise agreement included private persons who had not adduced any competent evidence of their
ownership over the land subject of the registration proceeding. Portions of the land in controversy were assigned to
persons or entities who had presented nothing whatever to prove their ownership of any part of the land. What was done
was to consider the compromise agreement as proof of title of the parties taking part therein, a totally unacceptable
proposition. The result has been the adjudication of lands of no little extension to persons who had not submitted any
substantiation at all of their pretensions to ownership, founded on nothing but the agreement among themselves that they
had rights and interests over the land.
The assent of the Directors of Lands and Forest Development to the compromise agreement did not and could not supply
the absence of evidence of title required of the private respondents.
As to the informacion posesoria invoked by the private respondents, it should be pointed out that under the Spanish
Mortgage Law, it was considered a mode of acquiring title to public lands, subject to two (2) conditions: first, the
inscription thereof in the Registry of Property, and second, actual, public, adverse, and uninterrupted possession of the
land for twenty (20) years (later reduced to ten [10] years); but where, as here, proof of fulfillment of these conditions is
absent, the informacion posesoria cannot be considered as anything more thanprima facie evidence of possession. 7
Finally, it was error to disregard the Solicitor General in the execution of the compromise agreement and its submission to
the Court for approval. It is, after all, the Solicitor General, who is the principal counsel of the Government; this is the
reason for our holding that "Court orders and decisions sent to the fiscal, acting as agent of the Solicitor General in land
registration cases, are not binding until they are actually received by the Solicitor General." 8
It thus appears that the compromise agreement and the judgment approving it must be, as they are hereby, declared null
and void, and set aside. Considerations of fairness however indicate the remand of the case to the Registration Court so
that the private parties may be afforded an opportunity to establish by competent evidence their respective claims to the
property.
WHEREFORE, the decision of the respondent Judge complained of is ANNULLED and SET ASIDE. Land Registration
Case No. N-109 subject of the petition is REMANDED to the court of origin which shall conduct further appropriate
proceedings therein, receiving the evidence of the parties and thereafter rendering judgment as such evidence and the
law may warrant. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
Footnotes
1 See Municipality of Santiago, Isabela v. CA et al., 120 SCRA 734, infra, involving parties surnamed Bayaua, claimants
to Lots No. 49760A and No. 8000-A of the Santiago cadastre, Province of Isabela, which lots were declared to belong to
the Municipality of Santiago.
2 Embodied "in Section 1 of Article XIII of the Constitution of 1935 . . declaring that 'al agricultural, timber, and mineral
lands of the public dmain ... and other natural resources of the Philippines belong to the State..."(Pinero, Jr. v. Director of
Lands, 57 SCRA 386) (See Secs. 2 and 3, ART. XII, 1987 Constitution).
3 National Power Corporation v. C.A., 114 SCRA 318 [1982]; Armagui v. Director of Forestry, 126 SCRA 69 [1983].

24
4 Director of Lands v. Reyes, 68 SCRA 2177 [1971].
5 Republic v. C.A 167 SCRA 150 [1988).
6 Municipality of Santiago v. C.A. 120 SCRA 734, 743 [1983].
7 Republic v. Feliciano, 148 SCRA 424 [1987].
8 Republic v. C.A., 148 SCRA 480 [1987]; Republic v. C.A., 135 SCRA 157 [1985]; Republic v. Mendoza, 125 SCRA 539
[1983].
G.R. No. L-46930 June 10, 1988
DALE SANDERS, AND A.S. MOREAU, JR, petitioners,
vs.
HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of Zambales, Olongapo City,
ANTHONY M. ROSSI and RALPH L. WYERS, respondents.
CRUZ, J.:
The basic issue to be resolved in this case is whether or not the petitioners were performing their official duties when they
did the acts for which they have been sued for damages by the private respondents. Once this question is decided, the
other answers will fall into place and this petition need not detain us any longer than it already has.
Petitioner Sanders was, at the time the incident in question occurred, the special services director of the U.S. Naval
Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the commanding officer of the Subic Naval Base, which
includes the said station. 2 Private respondent Rossi is an American citizen with permanent residence in the
Philippines, 3 as so was private respondent Wyer, who died two years ago. 4 They were both employed as gameroom
attendants in the special services department of the NAVSTA, the former having been hired in 1971 and the latter in
1969. 5
On October 3, 1975, the private respondents were advised that their employment had been converted from permanent
full-time to permanent part-time, effective October 18, 1975. 6 Their reaction was to protest this conversion and to institute
grievance proceedings conformably to the pertinent rules and regulations of the U.S. Department of Defense. The result
was a recommendation from the hearing officer who conducted the proceedings for the reinstatement of the private
respondents to permanent full-time status plus backwages. The report on the hearing contained the observation that
"Special Services management practices an autocratic form of supervision." 7
In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), Sanders disagreed with the
hearing officer's report and asked for the rejection of the abovestated recommendation. The letter contained the
statements that: a ) "Mr. Rossi tends to alienate most co-workers and supervisors;" b) "Messrs. Rossi and Wyers have
proven, according to their immediate supervisors, to be difficult employees to supervise;" and c) "even though the
grievants were under oath not to discuss the case with anyone, (they) placed the records in public places where others
not involved in the case could hear."
On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the complaint) purportedly
corning from petitioner Moreau as the commanding general of the U.S. Naval Station in Subic Bay was sent to the Chief
of Naval Personnel explaining the change of the private respondent's employment status and requesting concurrence
therewith. The letter did not carry his signature but was signed by W.B. Moore, Jr. "by direction," presumably of Moreau.
On the basis of these antecedent facts, the private respondent filed in the Court of First Instance of Olongapo City a for
damages against the herein petitioners on November 8, 1976. 8 The plaintiffs claimed that the letters contained libelous
imputations that had exposed them to ridicule and caused them mental anguish and that the prejudgment of the
grievance proceedings was an invasion of their personal and proprietary rights.
The private respondents made it clear that the petitioners were being sued in their private or personal capacity. However,
in a motion to dismiss filed under a special appearance, the petitioners argued that the acts complained of were
performed by them in the discharge of their official duties and that, consequently, the court had no jurisdiction over them
under the doctrine of state immunity.
After extensive written arguments between the parties, the motion was denied in an order dated March 8, 1977, 9on the
main ground that the petitioners had not presented any evidence that their acts were official in nature and not personal
torts, moreover, the allegation in the complaint was that the defendants had acted maliciously and in bad faith. The same
order issued a writ of preliminary attachment, conditioned upon the filing of a P10,000.00 bond by the plaintiffs, against
the properties of petitioner Moreau, who allegedly was then about to leave the Philippines. Subsequently, to make matters
worse for the defendants, petitioner Moreau was declared in a default by the trial court in its order dated August 9, 1977.
The motion to lift the default order on the ground that Moreau's failure to appear at the pre-trial conference was the result
of some misunderstanding, and the motion for reconsideration of the denial of the motion to dismiss, which was filed by
the petitioner's new lawyers, were denied by the respondent court on September 7, 1977.
This petition for certiorari, prohibition and preliminary injunction was thereafter filed before this Court, on the contention
that the above-narrated acts of the respondent court are tainted with grave abuse of discretion amounting to lack of
jurisdiction.
We return now to the basic question of whether the petitioners were acting officially or only in their private capacities
when they did the acts for which the private respondents have sued them for damages.
It is stressed at the outset that the mere allegation that a government functionary is being sued in his personal capacity
will not automatically remove him from the protection of the law of public officers and, if appropriate, the doctrine of state
immunity. By the same token, the mere invocation of official character will not suffice to insulate him from suability and

25
liability for an act imputed to him as a personal tort committed without or in excess of his authority. These well-settled
principles are applicable not only to the officers of the local state but also where the person sued in its courts pertains to
the government of a foreign state, as in the present case.
The respondent judge, apparently finding that the complained acts were prima facie personal and tortious, decided to
proceed to trial to determine inter alia their precise character on the strength of the evidence to be submitted by the
parties. The petitioners have objected, arguing that no such evidence was needed to substantiate their claim of
jurisdictional immunity. Pending resolution of this question, we issued a temporary restraining order on September 26,
1977, that has since then suspended the proceedings in this case in the courta quo.
In past cases, this Court has held that where the character of the act complained of can be determined from the
pleadings exchanged between the parties before the trial, it is not necessary for the court to require them to belabor the
point at a trial still to be conducted. Such a proceeding would be superfluous, not to say unfair to the defendant who is
subjected to unnecessary and avoidable inconvenience.
Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the commanding general of the Olongapo
Naval Base should not have been denied because it had been sufficiently shown that the act for which he was being sued
was done in his official capacity on behalf of the American government. The United States had not given its consent to be
sued. It was the reverse situation in Syquia v. Almeda Lopez," where we sustained the order of the lower court granting a
where we motion to dismiss a complaint against certain officers of the U.S. armed forces also shown to be acting officially
in the name of the American government. The United States had also not waived its immunity from suit. Only three years
ago, in United States of America v. Ruiz, 12 we set aside the denial by the lower court of a motion to dismiss a complaint
for damages filed against the United States and several of its officials, it appearing that the act complained of was
governmental rather than proprietary, and certainly not personal. In these and several other cases 13 the Court found it
redundant to prolong the other case proceedings after it had become clear that the suit could not prosper because the
acts complained of were covered by the doctrine of state immunity.
It is abundantly clear in the present case that the acts for which the petitioners are being called to account were
performed by them in the discharge of their official duties. Sanders, as director of the special services department of
NAVSTA, undoubtedly had supervision over its personnel, including the private respondents, and had a hand in their
employment, work assignments, discipline, dismissal and other related matters. It is not disputed that the letter he had
written was in fact a reply to a request from his superior, the other petitioner, for more information regarding the case of
the private respondents. 14 Moreover, even in the absence of such request, he still was within his rights in reacting to the
hearing officer's criticismin effect a direct attack against him-that Special Services was practicing "an autocratic form
of supervision."
As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for concurrence with the
conversion of the private respondents' type of employment even before the grievance proceedings had even
commenced. Disregarding for the nonce the question of its timeliness, this act is clearly official in nature, performed by
Moreau as the immediate superior of Sanders and directly answerable to Naval Personnel in matters involving the special
services department of NAVSTA In fact, the letter dealt with the financial and budgetary problems of the department and
contained recommendations for their solution, including the re-designation of the private respondents. There was nothing
personal or private about it.
Given the official character of the above-described letters, we have to conclude that the petitioners were, legally
speaking, being sued as officers of the United States government. As they have acted on behalf of that government, and
within the scope of their authority, it is that government, and not the petitioners personally, that is responsible for their
acts. Assuming that the trial can proceed and it is proved that the claimants have a right to the payment of damages, such
award will have to be satisfied not by the petitioners in their personal capacities but by the United States government as
their principal. This will require that government to perform an affirmative act to satisfy the judgment, viz, the appropriation
of the necessary amount to cover the damages awarded, thus making the action a suit against that government without
its consent.
There should be no question by now that such complaint cannot prosper unless the government sought to be held
ultimately liable has given its consent to' be sued. So we have ruled not only in Baer but in many other decisions where
we upheld the doctrine of state immunity as applicable not only to our own government but also to foreign states sought
to be subjected to the jurisdiction of our courts. 15
The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right against the authority which
makes the law on which the right depends. 16 In the case of foreign states, the rule is derived from the principle of the
sovereign equality of states which wisely admonishes that par in parem non habet imperium and that a contrary attitude
would "unduly vex the peace of nations." 17 Our adherence to this precept is formally expressed in Article II, Section 2, of
our Constitution, where we reiterate from our previous charters that the Philippines "adopts the generally accepted
principles of international law as part of the law of the land.
All this is not to say that in no case may a public officer be sued as such without the previous consent of the state. To be
sure, there are a number of well-recognized exceptions. It is clear that a public officer may be sued as such to compel
him to do an act required by law, as where, say, a register of deeds refuses to record a deed of sale; 18or to restrain a
Cabinet member, for example, from enforcing a law claimed to be unconstitutional; 19 or to compel the national treasurer
to pay damages from an already appropriated assurance fund; 20 or the commissioner of internal revenue to refund tax
over-payments from a fund already available for the purpose; 21 or, in general, to secure a judgment that the officer
impleaded may satisfy by himself without the government itself having to do a positive act to assist him. We have also
held that where the government itself has violated its own laws, the aggrieved party may directly implead the government

26
even without first filing his claim with the Commission on Audit as normally required, as the doctrine of state immunity
"cannot be used as an instrument for perpetrating an injustice." 22
This case must also be distinguished from such decisions as Festejo v. Fernando, 23 where the Court held that a bureau
director could be sued for damages on a personal tort committed by him when he acted without or in excess of authority
in forcibly taking private property without paying just compensation therefor although he did convert it into a public
irrigation canal. It was not necessary to secure the previous consent of the state, nor could it be validly impleaded as a
party defendant, as it was not responsible for the defendant's unauthorized act.
The case at bar, to repeat, comes under the rule and not under any of the recognized exceptions. The government of the
United States has not given its consent to be sued for the official acts of the petitioners, who cannot satisfy any judgment
that may be rendered against them. As it is the American government itself that will have to perform the affirmative act of
appropriating the amount that may be adjudged for the private respondents, the complaint must be dismissed for lack of
jurisdiction.
The Court finds that, even under the law of public officers, the acts of the petitioners are protected by the presumption of
good faith, which has not been overturned by the private respondents. Even mistakes concededly committed by such
public officers are not actionable as long as it is not shown that they were motivated by malice or gross negligence
amounting to bad faith. 24 This, to, is well settled . 25 Furthermore, applying now our own penal laws, the letters come
under the concept of privileged communications and are not punishable, 26 let alone the fact that the resented remarks
are not defamatory by our standards. It seems the private respondents have overstated their case.
A final consideration is that since the questioned acts were done in the Olongapo Naval Base by the petitioners in the
performance of their official duties and the private respondents are themselves American citizens, it would seem only
proper for the courts of this country to refrain from taking cognizance of this matter and to treat it as coming under the
internal administration of the said base.
The petitioners' counsel have submitted a memorandum replete with citations of American cases, as if they were arguing
before a court of the United States. The Court is bemused by such attitude. While these decisions do have persuasive
effect upon us, they can at best be invoked only to support our own jurisprudence, which we have developed and
enriched on the basis of our own persuasions as a people, particularly since we became independent in 1946.
We appreciate the assistance foreign decisions offer us, and not only from the United States but also from Spain and
other countries from which we have derived some if not most of our own laws. But we should not place undue and
fawning reliance upon them and regard them as indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments We live in a different ambience and must decide our own
problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and
always with our own concept of law and justice.
The private respondents must, if they are still sominded, pursue their claim against the petitioners in accordance with the
laws of the United States, of which they are all citizens and under whose jurisdiction the alleged offenses were
committed. Even assuming that our own laws are applicable, the United States government has not decided to give its
consent to be sued in our courts, which therefore has not acquired the competence to act on the said claim,.
WHEREFORE, the petition is GRANTED. The challenged orders dated March 8,1977, August 9,1977, and September 7,
1977, are SET ASIDE. The respondent court is directed to DISMISS Civil Case No. 2077-O. Our Temporary restraining
order of September 26,1977, is made PERMANENT. No costs.
SO ORDERED.
Narvasa, Gancayco, Grino-Aquio and Medialdea, JJ., Concur.
Footnotes
1 Rollo, pp. 2, 26.
2 Ibid.
3 Id.
4 Id., p. 319.
5 Id., pp. 4, 27, 91.
6 Id., pp. 5, 91.
7 Id., p. 5, 28, 91.
8 Id., pp- 26-34.
9 Id., pp- 90-94.
10 57 SCRA 1.
11 84 Phil. 312.
12 136 SCRA 487.
13 Lim v. Brownell, et al., 107 Phil. 344; Parreo v. McGranery, 92 Phil. 791; Lim v. Nelson, 87 Phil. 328; Marvel Building
Corp. v. Philippine War Damage Commission, 85 Phil. 27.
14 Rollo, pp. 35-40.
15 Syquia v. Almeda Lopez, supra; Marvel Building Corp. v. Philippine War Damage Commission,supra; Lim v.
Nelson, supra; Philippine Alien Property Administration v. Castelo, 89 Phil. 568; Parreo v. McGranery, supra; Johnson v.
Turner, 94 Phil. 807-all cited in Baer case; United States of America v. Ruiz, supra.
16 Kawanakoa v. Polybank, 205 U.S. 349.
17 De Haber v. Queen of Portugal, 17 QB 171.
18 Krivenko v. Register of Deeds, 79 Phil. 461.
19 Javellana v. Executive Secretary, 50 SCRA 30: Ichong v. Hernandez, 101 Phil. 1155.

27
20 Treasurer of the Philippines v. Court of Appeals, G.R. No. L-42805, August 31, 1987.
21 National Development Company v. Commissioner of Internal Revenue, 151 SCRA 472.
22 Amigable v. Cuenca, 43 SCRA 360, reiterating Ministerio v. Court of First Instance of Cebu, 40 SCRA 464.
23 50 O.G. 1556.
24 Philippine Racing Club, Inc., et al. v. Bonifacio, et al., 109 Phil. 233.
25 Cabungcal, et al. v. Cordova, et al., 11 SCRA 584, cited in Mabutol v. Pascual, 124 SCRA 867; Mindanao Realty Corp.
v. Kintanar, 6 SCRA 814; U.S. v. Santos, 36 Phil. 853. 2'
26 Art. 354, par. 1, Revised Penal Code; see also U.S. v. Bustos, 37 Phil. 731; and Deano v. Godinez, 12 SCRA 843.
G.R. No. 70853 March 12, 1987
REPUBLIC OF THE PHILIPPINES, petitioner-appellee,
vs.
PABLO FELICIANO and INTERMEDIATE APPELLATE COURT, respondents-appellants.
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
oninformacion 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-in-interest" 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.

28
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, 3and 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 parteproceeding
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

29
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.
Narvasa, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.
Melencio-Herrera, J., is on leave.
Footnotes
1 Ang Lam v. Rosenosa 86 Phil. 447.
2 Providence Washington Insurance Co. v. Republic of the Philippines, 29 SCRA 598, 601.
3 Insurance Company of North America v. Republic of the Philippines, 20 SCRA 627.
4 Insurance Company of North America v. Osaka Shosen Kaisha 27 SCRA 780.
5 Mobil Philippines Exploration, nn. v. Customs Arrastre Service, 18 SCRA 1120; Insurance Company of North America v.
Warner, 21 SCRA 766.
6 Begosa v. Philippine Veterans Administration 32 SCRA 466.
7 Alfonso v. Commanding General 7 Phil. 600, 615.
8 Bishop of Segovia v. Mun. of Bantay, 28 Phil. 347, 351.
9 Querol and Flores v. Querol, 48 Phil. 90, 98-99.
10 Republic of the Philippines vs. Court of Appeals, 94 SCRA 865.
11 Government of the Philippines v. Heirs of Abella, 49 Phil. 374, 379.
G.R. No. L-30044 December 19, 1973
LORENZO SAYSON, as Highway Auditor, Bureau of Public Highways, Cebu First Engineering District; CORNELIO
FORNIER, as Regional Supervising Auditor, Eastern Visayas Region; ASTERIO, BUQUERON, ADVENTOR
FERNANDEZ, MANUEL S. LEPATAN, RAMON QUIRANTE, and TEODULFO REGIS, petitioners,
vs.
FELIPE SINGSON, as sole owner and proprietor of Singkier Motor Service, respondent.
Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo for petitioners.
Teodoro Almase and Casiano U. Laput for respondent.
FERNANDO, J.:
The real party in interest before this Court in this certiorari proceeding to review a decision of the Court of First Instance
of Cebu is the Republic of the Philippines, although the petitioners are the public officials who were named as
respondents 1 in a mandamus suit below. Such is the contention of the then Solicitor General, now Associate Justice,
Felix V. Makasiar, 2 for as he did point out, what is involved is a money claim against the government, predicated on a
contract. The basic doctrine of non-suability of the government without its consent is thus decisive of the controversy.
There is a governing statute that is controlling. 3 Respondent Felipe Singson, the claimant, for reasons known to him, did
not choose to abide by its terms. That was a fatal misstep. The lower court, however, did not see it that way. We cannot
affirm its decision.
As found by the lower court, the facts are the following: "In January, 1967, the Office of the District Engineer requisitioned
various items of spare parts for the repair of a D-8 bulldozer, ... . The requisition (RIV No. 67/0331) was signed by the
District Engineer, Adventor Fernandez, and the Requisitioning Officer (civil engineer), Manuel S. Lepatan. ... It was
approved by the Secretary of Public Works and Communications, Antonio V. Raquiza. It is noted in the approval of the
said requisition that "This is an exception to the telegram dated Feb. 21, 1967 of the Secretary of Public Works and
Communications." ... So, a canvass or public bidding was conducted on May 5, 1967 ... . The committee on award
accepted the bid of the Singkier Motor Service [owned by respondent Felipe Singson] for the sum of P43,530.00. ...
Subsequently, it was approved by the Secretary of Public Works and Communications; and on May 16, 1967 the
Secretary sent a letter-order to the Singkier Motor Service, Mandaue, Cebu requesting it to immediately deliver the items
listed therein for the lot price of P43,530.00. ... It would appear that a purchase order signed by the District Engineer, the
Requisitioning Officer and the Procurement Officer, was addressed to the Singkier Motor Service. ... In due course the
Voucher No. 07806 reached the hands of Highway Auditor Sayson for pre-audit. He then made inquiries about the
reasonableness of the price. ... Thus, after finding from the indorsements of the Division Engineer and the Commissioner
of Public Highways that the prices of the various spare parts are just and reasonable and that the requisition was also
approved by no less than the Secretary of Public Works and Communications with the verification of V.M. Secarro a
representative of the Bureau of Supply Coordination, Manila, he approved it for payment in the sum of P34,824.00, with
the retention of 20% equivalent to P8,706.00. ... His reason for withholding the 20% equivalent to P8,706.00 was to
submit the voucher with the supporting papers to the Supervising Auditor, which he did. ... The voucher ... was paid on
June 9, 1967 in the amount of P34,824.00 to the petitioner [respondent Singson]. On June 10,1967, Highway Auditor
Sayson received a telegram from Supervising Auditor Fornier quoting a telegraphic message of the General Auditing
Office which states: "In view of excessive prices charge for purchase of spare parts and equipment shown by vouchers
already submitted this Office direct all highway auditors refer General Office payment similar nature for appropriate
action." ... In the interim it would appear that when the voucher and the supporting papers reached the GAO, a canvass
was made of the spare parts among the suppliers in Manila, particularly, the USI (Phil.), which is the exclusive dealer of

30
the spare parts of the caterpillar tractors in the Philippines. Said firm thus submitted its quotations at P2,529.64 only
which is P40,000.00 less than the price of the Singkier. ... In view of the overpricing the GAO took up the matter with the
Secretary of Public Works in a third indorsement of July 18, 1967. ... The Secretary then circularized a telegram holding
the district engineer responsible for overpricing." 4 What is more, charges for malversation were filed against the district
engineer and the civil engineer involved. It was the failure of the Highways Auditor, one of the petitioners before us, that
led to the filing of the mandamus suit below, with now respondent Singson as sole proprietor of Singkier Motor Service,
being adjudged as entitled to collect the balance of P8,706.00, the contract in question having been upheld. Hence this
appeal by certiorari.
1. To state the facts is to make clear the solidity of the stand taken by the Republic. The lower court was unmindful of the
fundamental doctrine of non-suability. So it was stressed in the petition of the then Solicitor General Makasiar. Thus: "It is
apparent that respondent Singson's cause of action is a money claim against the government, for the payment of the
alleged balance of the cost of spare parts supplied by him to the Bureau of Public Highways. Assuming momentarily the
validity of such claim, although as will be shown hereunder, the claim is void for the cause or consideration is contrary to
law, morals or public policy, mandamus is not the remedy to enforce the collection of such claim against the State but a
ordinary action for specific performance ... . Actually, the suit disguised as one for mandamus to compel the Auditors to
approve the vouchers for payment, is a suit against the State, which cannot prosper or be entertained by the Court except
with the consent of the State ... . In other words, the respondent should have filed his claim with the General Auditing
Office, under the provisions of Com. Act 327 ... which prescribe the conditions under which money claim against the
government may be
filed ...." 5 Commonwealth Act No. 327 is quite explicit. It is therein provided: "In all cases involving the settlement of
accounts or claims, other than those of accountable officers, the Auditor General shall act and decide the same within
sixty days, exclusive of Sundays and holidays, after their presentation. If said accounts or claims need reference to other
persons, office or offices, or to a party interested, the period aforesaid shall be counted from the time the last comment
necessary to a proper decision is received by
him." 6 Thereafter, the procedure for appeal is indicated: "The party aggrieved by the final decision of the Auditor General
in the settlement of an account or claim may, within thirty days from receipt of the decision, take an appeal in writing: (a)
To the President of the United States, pending the final and complete withdrawal of her sovereignty over the Philippines,
or (b) To the President of the Philippines, or (c) To the Supreme Court of the Philippines if the appellant is a private
person or entity." 7
2. With the facts undisputed and the statute far from indefinite or ambiguous, the appealed decision defies explanation. It
would be to disregard a basic corollary of the cardinal postulate of non-suability. It is true that once consent is secured, an
action may be filed. There is nothing to prevent the State, however, in such statutory grant, to require that certain
administrative proceedings be had and be exhausted. Also, the proper forum in the judicial hierarchy can be specified if
thereafter an appeal would be taken by the party aggrieved. Here, there was no ruling of the Auditor General. Even had
there been such, the court to which the matter should have been elevated is this Tribunal; the lower court could not
legally act on the matter. What transpired was anything but that. It is quite obvious then that it does not have the imprint of
validity.
WHEREFORE, the decision of the Court of First Instance of Cebu of September 4, 1968 is reversed and set aside, and
the suit for mandamus filed against petitioners, respondents below, is dismissed. With costs against respondent Felipe
Singson.
Zaldivar (Chairman), Barredo, Antonio, Fernandez and Aquino, JJ., concur.
Footnotes
1 This petition was filed by Lorenzo Sayson, Highways Auditor; Cornelio Fornier, Regional Supervising Auditor; Adventor
Fernandez, District Engineer; Manuel S. Lepatan, Mechanical Engineer; Ramon Quirante, Property Custodian; Teodulfo
Regis, Chief Accountant; and Asterio Buqueron, Cashier, of the Cebu First Engineering District of Cebu City. Solicitor
Bernardo P. Pardo.
2 He was assisted by Solicitor Bernardo P. Pardo.
3 Com. Act No. 327 (1938).
4 Petition for Review, 2-4.
5 Ibid, 4-5. The Solicitor General cited the following cases: City of Manila v. Posadas, 48 Phil. 309 (1925); Jacinto v.
Director of Lands, 49 Phil. 853 (1926); Syquia v. Almeda Lopez, 84 Phil. 312 (1949); Aprueba v. Ganzon, L-20867, Sept.
3, 1966, 18 SCRA 8; Namaroo v. Cloribel, L-27260, April 29, 1968, 23 SCRA 398.
6 Commonwealth Act No. 327, Section 1 (1938).
7 Ibid, Section 2.
G.R. No. L-35645 May 22, 1985
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT
GOHIER,petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN & CO.,
INC., respondents.
Sycip, Salazar, Luna & Manalo & Feliciano Law for petitioners.
Albert, Vergara, Benares, Perias & Dominguez Law Office for respondents.
ABAD SANTOS, J.:

31
This is a petition to review, set aside certain orders and restrain the respondent judge from trying Civil Case No. 779M of
the defunct Court of First Instance of Rizal.
The factual background is as follows:
At times material to this case, the United States of America had a naval base in Subic, Zambales. The base was one of
those provided in the Military Bases Agreement between the Philippines and the United States.
Sometime in May, 1972, the United States invited the submission of bids for the following projects
1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines.
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline revetment, NAVBASE Subic; and
repair to Leyte Wharf approach, NAVBASE Subic Bay, Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the company received
from the United States two telegrams requesting it to confirm its price proposals and for the name of its bonding company.
The company complied with the requests. [In its complaint, the company alleges that the United States had accepted its
bids because "A request to confirm a price proposal confirms the acceptance of a bid pursuant to defendant United
States' bidding practices." (Rollo, p. 30.) The truth of this allegation has not been tested because the case has not
reached the trial stage.]
In June, 1972, the company received a letter which was signed by Wilham I. Collins, Director, Contracts Division, Naval
Facilities Engineering Command, Southwest Pacific, Department of the Navy of the United States, who is one of the
petitioners herein. The letter said that the company did not qualify to receive an award for the projects because of its
previous unsatisfactory performance rating on a repair contract for the sea wall at the boat landings of the U.S. Naval
Station in Subic Bay. The letter further said that the projects had been awarded to third parties. In the abovementioned
Civil Case No. 779-M, the company sued the United States of America and Messrs. James E. Galloway, William I. Collins
and Robert Gohier all members of the Engineering Command of the U.S. Navy. The complaint is to order the defendants
to allow the plaintiff to perform the work on the projects and, in the event that specific performance was no longer
possible, to order the defendants to pay damages. The company also asked for the issuance of a writ of preliminary
injunction to restrain the defendants from entering into contracts with third parties for work on the projects.
The defendants entered their special appearance for the purpose only of questioning the jurisdiction of this court over the
subject matter of the complaint and the persons of defendants, the subject matter of the complaint being acts and
omissions of the individual defendants as agents of defendant United States of America, a foreign sovereign which has
not given her consent to this suit or any other suit for the causes of action asserted in the complaint." (Rollo, p. 50.)
Subsequently the defendants filed a motion to dismiss the complaint which included an opposition to the issuance of the
writ of preliminary injunction. The company opposed the motion. The trial court denied the motion and issued the writ. The
defendants moved twice to reconsider but to no avail. Hence the instant petition which seeks to restrain perpetually the
proceedings in Civil Case No. 779-M for lack of jurisdiction on the part of the trial court.
The petition is highly impressed with merit.
The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent
or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the
rules of International Law are not petrified; they are constantly developing and evolving. And because the activities of
states have multiplied, it has been necessary to distinguish them-between sovereign and governmental acts (jure imperii)
and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts
jure imperil The restrictive application of State immunity is now the rule in the United States, the United Kingdom and
other states in western Europe. (See Coquia and Defensor Santiago, Public International Law, pp. 207-209 [1984].)
The respondent judge recognized the restrictive doctrine of State immunity when he said in his Order denying the
defendants' (now petitioners) motion: " A distinction should be made between a strictly governmental function of the
sovereign state from its private, proprietary or non- governmental acts (Rollo, p. 20.) However, the respondent judge also
said: "It is the Court's considered opinion that entering into a contract for the repair of wharves or shoreline is certainly not
a governmental function altho it may partake of a public nature or character. As aptly pointed out by plaintiff's counsel in
his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594 (1958)], and which this Court quotes with approval, viz.:
It is however contended that when a sovereign state enters into a contract with a private person, the state can be sued
upon the theory that it has descended to the level of an individual from which it can be implied that it has given its consent
to be sued under the contract. ...
xxx xxx xxx
We agree to the above contention, and considering that the United States government, through its agency at Subic Bay,
entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay Area, a U.S.
Naval Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political
entity may assume under the contract. The trial court, therefore, has jurisdiction to entertain this case ... (Rollo, pp. 2021.)
The reliance placed on Lyons by the respondent judge is misplaced for the following reasons:
In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court of First Instance of Manila
to collect several sums of money on account of a contract between plaintiff and defendant. The defendant filed a motion
to dismiss on the ground that the court had no jurisdiction over defendant and over the subject matter of the action. The
court granted the motion on the grounds that: (a) it had no jurisdiction over the defendant who did not give its consent to
the suit; and (b) plaintiff failed to exhaust the administrative remedies provided in the contract. The order of dismissal was
elevated to this Court for review.
In sustaining the action of the lower court, this Court said:

32
It appearing in the complaint that appellant has not complied with the procedure laid down in Article XXI of the contract
regarding the prosecution of its claim against the United States Government, or, stated differently, it has failed to first
exhaust its administrative remedies against said Government, the lower court acted properly in dismissing this case.(At p.
598.)
It can thus be seen that the statement in respect of the waiver of State immunity from suit was purely gratuitous and,
therefore, obiter so that it has no value as an imperative authority.
The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of
the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have
descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it
enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In
this case the projects are an integral part of the naval base which is devoted to the defense of both the United States and
the Philippines, indisputably a function of the government of the highest order; they are not utilized for nor dedicated to
commercial or business purposes.
That the correct test for the application of State immunity is not the conclusion of a contract by a State but the legal
nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased three apartment
buildings to the United States of America for the use of its military officials. The plaintiffs sued to recover possession of
the premises on the ground that the term of the leases had expired. They also asked for increased rentals until the
apartments shall have been vacated.
The defendants who were armed forces officers of the United States moved to dismiss the suit for lack of jurisdiction in
the part of the court. The Municipal Court of Manila granted the motion to dismiss; sustained by the Court of First
Instance, the plaintiffs went to this Court for review on certiorari. In denying the petition, this Court said:
On the basis of the foregoing considerations we are of the belief and we hold that the real party defendant in interest is
the Government of the United States of America; that any judgment for back or Increased rentals or damages will have to
be paid not by defendants Moore and Tillman and their 64 co-defendants but by the said U.S. Government. On the basis
of the ruling in the case of Land vs. Dollar already cited, and on what we have already stated, the present action must be
considered as one against the U.S. Government. It is clear hat the courts of the Philippines including the Municipal Court
of Manila have no jurisdiction over the present case for unlawful detainer. The question of lack of jurisdiction was raised
and interposed at the very beginning of the action. The U.S. Government has not , given its consent to the filing of this
suit which is essentially against her, though not in name. Moreover, this is not only a case of a citizen filing a suit against
his own Government without the latter's consent but it is of a citizen filing an action against a foreign government without
said government's consent, which renders more obvious the lack of jurisdiction of the courts of his country. The principles
of law behind this rule are so elementary and of such general acceptance that we deem it unnecessary to cite authorities
in support thereof. (At p. 323.)
In Syquia,the United States concluded contracts with private individuals but the contracts notwithstanding the States was
not deemed to have given or waived its consent to be sued for the reason that the contracts were forjure imperii and not
for jure gestionis.
WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and Civil Case No. is
dismissed. Costs against the private respondent.
Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, * Escolin, Relova, Gutierrez, Jr., De la Fuente, Cuevas
and Alampay, JJ., concur.
Fernando, C.J., took no part.
Separate Opinions
MAKASIAR, J., dissenting:
The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be
allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff
(Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay
area, this Court further stated that inasmuch as ". . . the United States Government. through its agency at Subic Bay,
entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S.
Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political
entity may assume under the contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for
the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the
mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued,
therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).
Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at
bar by the unilateral cancellation of the award for the project by the United States government, through its agency at
Subic Bay should not be allowed to take undue advantage of a party who may have legitimate claims against it by
seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case,
helpless and without redress in his own country for violation of his rights committed by the agents of the foreign
government professing to act in its name.
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325:

33
Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is
inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's
jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals.
Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with
regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the
private citizens of another country, such foreign government cannot shield its non-performance or contravention of the
terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the jurisdiction of the
domestic courts is to give approval to the execution of unilateral contracts, graphically described in Spanish as 'contratos
leoninos', because one party gets the lion's share to the detriment of the other. To give validity to such contract is to
sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including
governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the
help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been
entered into only by private individuals.
Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon
our sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from
transacting business and entering into contracts with United States authorities or facilities in the Philippines whether
naval, air or ground forces-because the difficulty, if not impossibility, of enforcing a validly executed contract and of
seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of the United States
government, always, looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in
our own country by United States contractors of contracts for services or supplies with the various U.S. offices and
agencies operating in the Philippines.
The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties
are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the
contract will be complied with in good faith.
One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always
overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and
sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose
upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when
U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke
principles of international law for their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein
private respondent on the other, was honored more in the breach than in the compliance The opinion of the majority will
certainly open the floodgates of more violations of contractual obligations. American authorities or any foreign
government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective
cover under the majority opinion. The result is disastrous to the Philippines.
This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political
ascendancy in our Republic.
The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice
on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at
Subic Bay, should be held amenable to lawsuits in our country like any other juristic person.
The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RPUS Military Bases Agreement of March 14, 1947, which states that "in the exercise of the above-mentioned rights, powers
and authority, the United States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis
supplied).
Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US
Military Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will
assure equality of treatment of all employees ... and continuing favorable employer-employee relations ..." and
"(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both
Governments, ... the United States Government agrees to accord preferential employment of Filipino citizens in the
Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino
citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).
Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the
aforesaid amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S.
Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor
laws and regulations, " even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by
either of the two Governments of such immunity under international law."
Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with
No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US
Military Bases Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian
component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity
inconsistent with the spirit of the Military Bases Agreement and, in particular, from any political activity in the Philippines.
The United States shag take all measures within its authority to insure that they adhere to them (Emphasis supplied).

34
The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and
social improvement of areas surrounding the bases, which directs that "moreover, the United States Forces shall procure
goods and services in the Philippines to the maximum extent feasible" (Emphasis supplied).
Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on
possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of
the principles of equality of treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the
Republic of the Philippines" (Emphasis supplied)
The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and VicePresident Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty
extends over the bases and that Its base shall be under the command of a Philippine Base Commander, " which is
supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under
which "they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental
principles which both countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each
nation shall characterize their friendship as well as the alliance between their two countries. "
The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the
Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base Commander and
the American Base Commander shall be guided by full respect for Philippine sovereignty on the one hand and the
assurance of unhampered U.S. military operations on the other hand and that "they shall promote cooperation
understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof" (par.
2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy
and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied).
Separate Opinions
MAKASIAR, J., dissenting:
The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be
allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff
(Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay
area, this Court further stated that inasmuch as ". . . the United States Government. through its agency at Subic Bay,
entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S.
Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political
entity may assume under the contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for
the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the
mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued,
therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).
Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at
bar by the unilateral cancellation of the award for the project by the United States government, through its agency at
Subic Bay should not be allowed to take undue advantage of a party who may have legitimate claims against it by
seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case,
helpless and without redress in his own country for violation of his rights committed by the agents of the foreign
government professing to act in its name.
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325:
Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is
inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's
jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals.
Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with
regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the
private citizens of another country, such foreign government cannot shield its non-performance or contravention of the
terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the jurisdiction of the
domestic courts is to give approval to the execution of unilateral contracts, graphically described in Spanish as 'contratos
leoninos', because one party gets the lion's share to the detriment of the other. To give validity to such contract is to
sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including
governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the
help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been
entered into only by private individuals.
Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon
our sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from
transacting business and entering into contracts with United States authorities or facilities in the Philippines whether
naval, air or ground forces-because the difficulty, if not impossibility, of enforcing a validly executed contract and of
seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of the United States
government, always, looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in
our own country by United States contractors of contracts for services or supplies with the various U.S. offices and
agencies operating in the Philippines.

35
The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties
are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the
contract will be complied with in good faith.
One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always
overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and
sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose
upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when
U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke
principles of international law for their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein
private respondent on the other, was honored more in the breach than in the compliance The opinion of the majority will
certainly open the floodgates of more violations of contractual obligations. American authorities or any foreign
government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective
cover under the majority opinion. The result is disastrous to the Philippines.
This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political
ascendancy in our Republic.
The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice
on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L31635, August 31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at
Subic Bay, should be held amenable to lawsuits in our country like any other juristic person.
The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RPUS Military Bases Agreement of March 14, 1947, which states that "in the exercise of the above-mentioned rights, powers
and authority, the United States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis
supplied).
Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US
Military Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will
assure equality of treatment of all employees ... and continuing favorable employer-employee relations ..." and
"(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both
Governments, ... the United States Government agrees to accord preferential employment of Filipino citizens in the
Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino
citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).
Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the
aforesaid amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S.
Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor
laws and regulations, " even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by
either of the two Governments of such immunity under international law."
Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with
No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US
Military Bases Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian
component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity
inconsistent with the spirit of the Military Bases Agreement and, in particular, from any political activity in the Philippines.
The United States shag take all measures within its authority to insure that they adhere to them (Emphasis supplied).
The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and
social improvement of areas surrounding the bases, which directs that "moreover, the United States Forces shall procure
goods and services in the Philippines to the maximum extent feasible" (Emphasis supplied).
Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on
possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of
the principles of equality of treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the
Republic of the Philippines" (Emphasis supplied)
The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and VicePresident Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty
extends over the bases and that Its base shall be under the command of a Philippine Base Commander, " which is
supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under
which "they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental
principles which both countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each
nation shall characterize their friendship as well as the alliance between their two countries. "
The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the
Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base Commander and
the American Base Commander shall be guided by full respect for Philippine sovereignty on the one hand and the
assurance of unhampered U.S. military operations on the other hand and that "they shall promote cooperation
understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof" (par.
2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy
and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied).
Footnotes

36
* He signed before he left.
G.R. No. L-55347 October 4, 1985
PHILIPPINE NATIONAL RAILWAYS, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ROSARIO TUPANG, respondents.
Arturo Samaniego for private respondent.
ESCOLIN, J.:
Invoking the principle of state immunity from suit, the Philippine National Railways, PNR for short, instituted this petition
for review on certiorari to set aside the decision of the respondent Appellate Court which held petitioner PNR liable for
damages for the death of Winifredo Tupang, a paying passenger who fell off a train operated by the petitioner.
The pertinent facts are summarized by the respondent court as follows:
The facts show that on September 10, 1972, at about 9:00 o'clock in the evening, Winifredo Tupang, husband of plaintiff
Rosario Tupang, boarded 'Train No. 516 of appellant at Libmanan, Camarines Sur, as a paying passenger bound for
Manila. Due to some mechanical defect, the train stopped at Sipocot, Camarines Sur, for repairs, taking some two hours
before the train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon, Winifredo
Tupang fell off the train resulting in his death.The train did not stop despite the alarm raised by the other passengers that
somebody fell from the train. Instead, the train conductor Perfecto Abrazado, called the station agent at Candelaria,
Quezon, and requested for verification of the information. Police authorities of Lucena City were dispatched to the Iyam
Bridge where they found the lifeless body of Winifredo Tupang.
As shown by the autopsy report, Winifredo Tupang died of cardio-respiratory failure due to massive cerebral hemorrhage
due to traumatic injury [Exhibits B and C, Folder of Exhibits],Tupang was later buried in the public cemetery of Lucena
City by the local police authorities. [Rollo, pp. 91-92]
Upon complaint filed by the deceased's widow, Rosario Tupang, the then Court of First Instance of Rizal, after trial, held
the petitioner PNR liable for damages for breach of contract of carriage and ordered "to pay the plaintiff the sum of
P12,000,00 for the death of Winifredo Tupang, plus P20,000.00 for loss of his earning capacity and the further sum of
P10,000.00 as moral damages, and P2,000.00 as attorney's fees, and costs. 1
On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not exercise the utmost diligence
required by law of a common carrier. It further increased the amount adjudicated by the trial court by ordering PNR to pay
the plaintiff an additional sum of P5,000.00 as exemplary damages.
Moving for reconsideration of the above decision, the PNR raised for the first time, as a defense, the doctrine of state
immunity from suit. It alleged that it is a mere agency of the Philippine government without distinct or separate personality
of its own, and that its funds are governmental in character and, therefore, not subject to garnishment or execution. The
motion was denied; the respondent court ruled that the ground advanced could not be raised for the first time on appeal.
Hence, this petition for review.
The petition is devoid of merit. The PNR was created under Rep. Act 4156, as amended. Section 4 of the said Act
provides:
The Philippine national Railways shall have the following powers:
a. To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to
the attainment of the purpose of the corporation; and
b. Generally, to exercise all powers of a corporation under the Corporation Law.
Under the foregoing section, the PNR has all the powers, the characteristics and attributes of a corporation under the
Corporation Law. There can be no question then that the PNR may sue and be sued and may be subjected to court
processes just like any other corporation. 2
The petitioner's contention that the funds of the PNR are not subject to garnishment or execution hardly raises a question
of first impression. In Philippine National Railways v. Union de Maquinistas, et al., 3 then Justice Fernando, later Chief
Justice, said. "The main issue posed in this certiorari proceeding, whether or not the funds of the Philippine National
Railways, could be garnished or levied upon on execution was resolved in two recent decisions, the Philippine National
Bank v. Court of Industrial Relations [81 SCRA 314] and Philippine National Bank v. Hon. Judge Pabalan [83 SCRA 595].
This Court in both cases answered the question in the affirmative. There was no legal bar to garnishment or execution.
The argument based on non-suability of a state allegedly because the funds are governmental in character was
unavailing.So it must be again."
In support of the above conclusion, Justice Fernando cited the Court's holding in Philippine National Bank v. Court of
Industrial Relations, to wit: "The premise that the funds could be spoken of as public in character may be accepted in the
sense that the People's Homesite and Housing Corporation was a government-owned entity. It does not follow though
that they were exempt from garnishment. National Shipyard and Steel Corporation v. Court of Industrial Relations is
squarely in point. As was explicitly stated in the opinion of then Justice, later Chief Justice, Concepcion: "The allegation to
the effect that the funds of the NASSCO are public funds of the government, and that, as such, the same may not be
garnished, attached or levied upon, is untenable for, as a government- owned and controlled corporation, the NASSCO
has a personality of its own, distinct and separate from that of the Government. It has-pursuant to Section 2 of Executive
Order No. 356, dated October 23, 1950 * * *, pursuant to which the NASSCO has been established- 'all the powers of a
corporation under the Corporation Law * * *. 4
As far back as 1941, this Court in the case of Manila Hotel Employees Association v. Manila Hotel Co., 5 laid down the
rule that "when the government enters into commercial business, it abandons its sovereign capacity and is to be treated
like any other corporation. [Bank of the U.S. v. Planters' Bank, 9 Waitch 904, 6 L. ed. 244]. By engaging in a particular

37
business through the instrumentality of a corporation the government divests itself pro hac vice of its sovereign character,
so as to render the corporation subject to the rules of law governing private corporations. 6Of Similar import is the
pronouncement in Prisco v. CIR,' that "when the government engages in business, it abdicates part of its sovereign
prerogatives and descends to the level of a citizen, ... . " In fine, the petitioner PNR cannot legally set up the doctrine of
non-suability as a bar to the plaintiff's suit for damages.
The appellate court found, the petitioner does not deny, that the train boarded by the deceased Winifredo Tupang was so
over-crowded that he and many other passengers had no choice but to sit on the open platforms between the coaches of
the train. It is likewise undisputed that the train did not even slow down when it approached the Iyam Bridge which was
under repair at the time, Neither did the train stop, despite the alarm raised by other passengers that a person had fallen
off the train at lyam Bridge. 7
The petitioner has the obligation to transport its passengers to their destinations and to observe extraordinary diligence in
doing so. Death or any injury suffered by any of its passengers gives rise to the presumption that it was negligent in the
performance of its obligation under the contract of carriage. Thus, as correctly ruled by the respondent court, the
petitioner failed to overthrow such presumption of negligence with clear and convincing evidence.
But while petitioner failed to exercise extraordinary diligence as required by law, 8 it appears that the deceased was
chargeable with contributory negligence. Since he opted to sit on the open platform between the coaches of the train, he
should have held tightly and tenaciously on the upright metal bar found at the side of said platform to avoid falling off from
the speeding train. Such contributory negligence, while not exempting the PNR from liability, nevertheless justified the
deletion of the amount adjudicated as moral damages. By the same token, the award of exemplary damages must be set
aside. Exemplary damages may be allowed only in cases where the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. 9 There being no evidence of fraud, malice or bad faith on the part of petitioner, the
grant of exemplary damages should be discarded.
WHEREFORE, the decision of the respondent appellate court is hereby modified by eliminating therefrom the amounts of
P10,000.00 and P5,000.00 adjudicated as moral and exemplary damages, respectively. No costs.
SO ORDERED.
Concepcion, Jr., Cuevas, and Alampay, JJ., concur.
Separate Opinions
AQUINO, J., concurring:
The case of Malong vs. PNR, L-49930, Aug. 7, 1985 (en banc) hold that the PNR is not immune from suit and is liable as
a common carrier for the negligent acts of its employeees. It is expressly liable for moral damages for the death of a
passanger under arts. 1764 and 2206 of the Civil Code.
ABAD SANTOS, J., concurring:
I concur with the admonition that government owned and/or controlled corporations should desist from invoking the
baseless immunity from suit.

Separate Opinions
AQUINO, J., concurring:
The case of Malong vs. PNR, L-49930, Aug. 7, 1985 (en banc) hold that the PNR is not immune from suit and is liable as
a common carrier for the negligent acts of its employeees. It is expressly liable for moral damages for the death of a
passanger under arts. 1764 and 2206 of the Civil Code.
ABAD SANTOS, J., concurring:
I concur with the admonition that government owned and/or controlled corporations should desist from invoking the
baseless immunity from suit.
Footnotes
1 Record on Appeal, pp. 16-17.
2 Sec. 13, Act 1459, as amended.
3 84 SCRA 223.
4 84 SCRA 223.
5 73 Phil, 374.
6 102 Phil. 515.
7 p. 93, Rollo.
8 Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5,
6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755, and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all the circumstances.
9 Article 2232, Civil Code.

38
G.R. No. 90478 November 21, 1991
REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner,
vs.
SANDIGANBAYAN, BIENVENIDO R. TANTOCO, JR. and DOMINADOR R. SANTIAGO, respondents.
Dominador R. Santiago for and in his own behalf and as counsel for respondent Tantoco, Jr.
NARVASA, J.:p
Private respondents Bienvenido R. Tantoco, Jr. and Dominador R. Santiago together with Ferdinand E. Marcos, Imelda
R. Marcos, Bienvenido R. Tantoco, Sr., Gliceria R. Tantoco, and Maria Lourdes Tantoco-Pineda-are defendants in Civil
Case No. 0008 of the Sandiganbayan. The case was commenced on July 21, 1987 by the Presidential Commission on
Good Government (PCGG) in behalf of the Republic of the Philippines. The complaint which initiated the action was
denominated one "for reconveyance, reversion, accounting, restitution and damages," and was avowedly filed pursuant
to Executive Order No. 14 of President Corazon C. Aquino.
After having been served with summons, Tantoco, Jr. and Santiago, instead of filing their answer, jointly filed a "MOTION
TO STRIKE OUT SOME PORTIONS OF THE COMPLAINT AND FOR BILL OF PARTICULARS OF OTHER PORTIONS"
dated Nov. 3, 1987. 1 The PCGG filed an opposition thereto, 2 and the movants, a reply to the opposition. 3 By order
dated January 29, 1988, the Sandiganbayan, in order to expedite proceedings and accommodate the defendants, gave
the PCGG forty-five (45) days to expand its complaint to make more specific certain allegations. 4
Tantoco and Santiago then presented a "motion for leave to file interrogatories under Rule 25 of the Rules of Court" dated
February 1, 1988, and "Interrogatories under Rule 25." 5 Basically, they sought an answer to the question: "Who were the
Commissioners of the PCGG (aside from its Chairman, Hon. Ramon Diaz, who verified the complaint) who approved or
authorized the inclusion of Messrs. Bienvenido R. Tantoco, Jr. and Dominador R. Santiago as defendants in
the . . case?" 6 The PCGG responded by filing a motion dated February 9, 1988 to strike out said motion and
interrogatories as being impertinent, "queer," "weird," or "procedurally bizarre as the purpose thereof lacks merit as it is
improper, impertinent and irrelevant under any
guise." 7
On March 18, 1988, in compliance with the Order of January 29, 1988, the PCGG filed an Expanded Complaint. 8As this
expanded complaint, Tantoco and Santiago reiterated their motion for bill of particulars, through a Manifestation dated
April 11, 1988. 9
Afterwards, by Resolution dated July 4, 1988, 10 the Sandiganbayan denied the motion to strike out, for bill of particulars,
and for leave to file interrogatories, holding them to be without legal and factual basis. Also denied was the PCGG's
motion to strike out impertinent pleading dated February 9, 1988. The Sandiganbayan declared inter alia the complaint to
be "sufficiently definite and clear enough," there are adequate allegations . . which clearly portray the supposed
involvement and/or alleged participation of defendants-movants in the transactions described in detail in said Complaint,"
and "the other matters sought for particularization are evidentiary in nature which should be ventilated in the pre-trial or
trial proper . ." It also opined that "(s)ervice of interrogatories before joinder of issue and without leave of court is
premature . . (absent) any special or extraordinary circumstances . . which would justify . . (the same)."
Tantoco and Santiago then filed an Answer with Compulsory Counterclaim under date of July 18, 1988. 11 In response,
the PCGG presented a "Reply to Answer with Motion to Dismiss Compulsory Counterclaim " 12
The case was set for pre-trial on July 31, 1989. 13 On July 25, 1989, the PCGG submitted its PRE-TRIAL. 14 The pretrial was however reset to September 11, 1989, and all other parties were required to submit pre-trial briefs on or before
that date. 15
On July 27, 1989 Tantoco and Santiago filed with the Sandiganbayan a pleading denominated "Interrogatories to
Plaintiff," 16 and on August 2, 1989, an "Amended Interrogatories to Plaintiff"' 17 as well as a Motion for Production and
Inspection of Documents. 18
The amended interrogatories chiefly sought factual details relative to specific averments of PCGG's amended complaint,
through such questions, for instance, as
1. In connection with the allegations . . in paragraph 1 . ., what specific property or properties does the plaintiff claim it
has the right to recover from defendants Tantoco, Jr. and Santiago for being ill-gotten?
3. In connection with the allegations . . in paragraph 10 (a) . . what specific act or acts . . were committed by defendants
Tantoco, Jr. and Santiago in "concert with" defendant Ferdinand Marcos and in furtherance or pursuit, of the alleged
systematic plan of said defendant Marcos to accumulate ill-gotten wealth?"
5. In connection with . . paragraph 13 . ., what specific act or acts of the defendants Tantoco, Jr. and Santiago . . were
committed by said defendants as part, or in furtherance, of the alleged plan to conceal assets of defendants Ferdinand
and Imelda Marcos?
7. In connection with . . paragraph 15(c) . . is it plaintiff's position or theory of the case that Tourist Duty Free Shops, Inc.,
including all the assets of said corporation, are beneficially owned by either or both defendants Ferdinand and Imelda
Marcos and that the defendants Tantoco, Jr. and Santiago, as well as, the other stockholders of record of the same
corporation are mere "dummies" of said defendants Ferdinand and /or Imelda R. Marcos?
On the other hand, the motion for production and inspection of documents prayed for examination and copying of
1) the "official records and other evidence" on the basis of which the verification of the Amended Complaint asserted that
the allegations thereof are "true and correct;"
2) the documents listed in PCGG's Pre-Trial Brief as those "intended to be presented and . . marked as exhibits for the
plaintiff;" and

39
3) "the minutes of the meeting of the PCGG which chronicles the discussion (if any) and the decision (of the Chairman
and members) to file the complaint" in the case at bar.
By Resolutions dated August 21, 1989 and August 25, 1989, the Sandiganbayan admitted the Amended Interrogatories
and granted the motion for production and inspection of documents (production being scheduled on September 14 and
15, 1989), respectively.
On September 1, 1989, the PCGG filed a Motion for Reconsideration of the Resolution of August 25, 1989 (allowing
production and inspection of documents). It argued that
1) since the documents subject thereof would be marked as exhibits during the pre-trial on September 11, 1989 anyway,
the order for "their production and inspection on September 14 and 15, are purposeless and unnecessary;"
2) movants already know of the existence and contents of the document which "are clearly described . . (in) plaintiff's PreTrial Brief;"
3) the documents are "privileged in character" since they are intended to be used against the PCGG and/or its
Commissioners in violation of Section 4, Executive Order No. 1, viz.:
(a) No civil action shall lie against the Commission or any member thereof for anything done or omitted in the discharge
of the task contemplated by this Order.
(b) No member or staff of the Commission shall be required to testify or produce evidence in any judicial, legislative, or
administrative proceeding concerning matters within its official cognizance.
It also filed on September 4, 1989 an opposition to the Amended Interrogatories, 19 which the Sandiganbayan treated as
a motion for reconsideration of the Resolution of August 21, 1989 (admitting the Amended Interrogatories). The
opposition alleged that
1) the interrogatories "are not specific and do not name the person to whom they are propounded . .," or "who in the
PCGG, in particular, . . (should) answer the interrogatories;"
2) the interrogatories delve into "factual matters which had already been decreed . . as part of the proof of the Complaint
upon trial . .;"
3) the interrogatories "are frivolous" since they inquire about "matters of fact . . which defendants . . sought to . . (extract)
through their aborted Motion for Bill of Particulars;"
4) the interrogatories "are really in the nature of a deposition, which is prematurely filed and irregularly utilized . . (since)
the order of trial calls for plaintiff to first present its evidence."
Tantoco and Santiago filed a reply and opposition on September 18, 1989.
After hearing, the Sandiganbayan promulgated two (2) Resolutions on September 29, 1989, the first, denying
reconsideration (of the Resolution allowing production of documents), and the second, reiterating by implication the
permission to serve the amended interrogatories on the plaintiff (PCGG). 20
Hence, this petition for certiorari.
The PCGG contends that said orders, both dated September 29, 1989, should be nullified because rendered with grave
abuse of discretion amounting to excess of jurisdiction. More particularly, it claims
a) as regards the order allowing the amended interrogatories to the plaintiff PCGG:
1) that said interrogatories are not specific and do not name the particular individuals to whom they are propounded,
being addressed only to the PCGG;
2) that the interrogatories deal with factual matters which the Sandiganbayan (in denying the movants' motion for bill of
particulars) had already declared to be part of the PCGG's proof upon trial; and
3) that the interrogatories would make PCGG Commissioners and officers witnesses, in contravention of Executive Order
No. 14 and related issuances; and
b) as regards the order granting the motion for production of documents:
1) that movants had not shown any good cause therefor;
2) that some documents sought to be produced and inspected had already been presented in Court and marked
preliminarily as PCGG's exhibits, and the movants had viewed, scrutinized and even offered objections thereto and made
comments thereon; and
3) that the other documents sought to be produced are either
(a) privileged in character or confidential in nature and their use is proscribed by the immunity provisions of Executive
Order No. 1, or
(b) non-existent, or mere products of the movants' suspicion and fear.
This Court issued a temporary restraining order on October 27, 1989, directing the Sandiganbayan to desist from
enforcing its questioned resolutions of September 29, 1989 in Civil Case No. 0008. 21
After the issues were delineated and argued at no little length by the parties, the Solicitor General withdrew "as counsel
for plaintiff . . with the reservation, however, conformably with Presidential Decree No. 478, the provisions of Executive
Order No. 292, as well as the decisional law of 'Orbos v. Civil Service Commission, et al.,' (G.R. No. 92561, September
12, 1990) 22 to submit his comment/observation on incidents/matters pending with this . . Court if called for by
circumstances in the interest of the Government or if he is so required by the Court." 23 This, the Court allowed by
Resolution dated January 21, 1991. 24
Subsequently, PCGG Commissioner Maximo A. Maceren advised the Court that the cases from which the Solicitor
General had withdrawn would henceforth be under his (Maceren's) charge "and/or any of the following private attorneys:
Eliseo B. Alampay, Jr., Mario E. Ongkiko, Mario Jalandoni and such other attorneys as it may later authorize." 25
The facts not being in dispute, and it appearing that the parties have fully ventilated their respective positions, the Court
now proceeds to decide the case.

40
Involved in the present proceedings are two of the modes of discovery provided in the Rules of Court: interrogatories to
parties , 26 and production and inspection of documents and things. 27 Now, it appears to the Court that among far too
many lawyers (and not a few judges), there is, if not a regrettable unfamiliarity and even outright ignorance about the
nature, purposes and operation of the modes of discovery, at least a strong yet unreasoned and unreasonable
disinclination to resort to them which is a great pity for the intelligent and adequate use of the deposition-discovery
mechanism, coupled with pre-trial procedure, could, as the experience of other jurisdictions convincingly demonstrates,
effectively shorten the period of litigation and speed up adjudication. 28 Hence, a few words about these remedies is not
at all inappropriate.
The resolution of controversies is, as everyone knows, the raison d'etre of courts. This essential function is accomplished
by first, the ascertainment of all the material and relevant facts from the pleadings and from the evidence adduced by the
parties, and second, after that determination of the facts has been completed, by the application of the law thereto to the
end that the controversy may be settled authoritatively, definitely and finally.
It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with assuring that all the facts
are indeed presented to the Court; for obviously, to the extent that adjudication is made on the basis of incomplete facts,
to that extent there is faultiness in the approximation of objective justice. It is thus the obligation of lawyers no less than of
judges to see that this objective is attained; that is to say, that there no suppression, obscuration, misrepresentation or
distortion of the facts; and that no party be unaware of any fact material a relevant to the action, or surprised by any
factual detail suddenly brought to his attention during the trial. 29
Seventy-one years ago, in Alonso v. Villamor, 30 this Court described the nature and object of litigation and in the
process laid down the standards by which judicial contests are to be conducted in this jurisdiction. It said:
A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement
and position, entraps and destroys the other. It is, rather a contest in which each contending party fully and fairly lays
before the court the facts in issue and then brushing aside as wholly trivial and indecisive all imperfections of form and
technicalities of procedure, asks that justice be done on the merits. Lawsuits, unlike duels, are not to be won by a rapier's
thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy,
deserves scant consideration from courts. There should be no vested right in technicalities. . . .
The message is plain. It is the duty of each contending party to lay before the court the facts in issue-fully and fairly; i.e.,
to present to the court all the material and relevant facts known to him, suppressing or concealing nothing, nor preventing
another party, by clever and adroit manipulation of the technical rules of pleading and evidence, from also presenting all
the facts within his knowledge.
Initially, that undertaking of laying the facts before the court is accomplished by the pleadings filed by the parties; but that,
only in a very general way. Only "ultimate facts" are set forth in the pleadings; hence, only the barest outline of the facfual
basis of a party's claims or defenses is limned in his pleadings. The law says that every pleading "shall contain in a
methodical and logical form, a plain, concise and direct statement of the ultimate factson which the party pleading relies
for his claim or defense, as the case may be, omitting the statement of mere evidentiary facts." 31
Parenthetically, if this requirement is not observed, i.e., the ultimate facts are alleged too generally or "not averred with
sufficient definiteness or particularity to enable . . (an adverse party) properly to prepare his responsive pleading or to
prepare for trial," a bill of particulars seeking a "more definite statement" may be ordered by the court on motion of a
party. The office of a bill of particulars is, however, limited to making more particular or definite the ultimate facts in a
pleading It is not its office to supply evidentiary matters. And the common perception is that said evidentiary details are
made known to the parties and the court only during the trial, when proof is adduced on the issues of fact arising from the
pleadings.
The truth is that "evidentiary matters" may be inquired into and learned by the parties before the trial. Indeed, it is the
purpose and policy of the law that the parties before the trial if not indeed even before the pre-trial should discover
or inform themselves of all the facts relevant to the action, not only those known to them individually, but also those
known to adversaries; in other words, the desideratum is that civil trials should not be carried on in the dark; and the
Rules of Court make this ideal possible through the deposition-discovery mechanism set forth in Rules 24 to 29. The
experience in other jurisdictions has been that ample discovery before trial, under proper regulation, accomplished one of
the most necessary of modern procedure: it not only eliminates unessential issue from trials thereby shortening them
considerably, but also requires parties to play the game with the cards on the table so that the possibility of fair settlement
before trial is measurably increased. . ." 32
As just intimated, the deposition-discovery procedure was designed to remedy the conceded inadequacy and
cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact revelation theretofore performed
primarily by the pleadings.
The various modes or instruments of discovery are meant to serve (1) as a device, along with the pre-trial hearing under
Rule 20, to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts relative
to those issues. The evident purpose is, to repeat, to enable parties, consistent with recognized privileges, to obtain the
fullest possible knowledge of the issues and facts before trials and thus prevent that said trials are carried on in the
dark. 33
To this end, the field of inquiry that may be covered by depositions or interrogatories is as broad as when the interrogated
party is called as a witness to testify orally at trial. The inquiry extends to all facts which are relevant, whether they be
ultimate or evidentiary, excepting only those matters which are privileged. The objective is as much to give every party the
fullest possible information of all the relevant facts before the trial as to obtain evidence for use upon said trial. The
principle is reflected in Section 2, Rule 24 (governing depositions) 34 which generally allows the examination of a
deponent

41
1) "regarding any matter, not privileged, which is relevant to the subject of the pending action, whether relating to the
claim or defense of any other party;"
2) as well as:
(a) "the existence, description, nature, custody, condition and location of any books, documents, or other tangible things"
and
(b) "the identity and location of persons having knowledge of relevant facts."
What is chiefly contemplated is the discovery of every bit of information which may be useful in the preparation for trial,
such as the identity and location of persons having knowledge of relevant facts; those relevant facts themselves; and the
existence, description, nature, custody, condition, and location of any books, documents, or other tangible things. Hence,
"the deposition-discovery rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of
"fishing expedition" serve to preclude a party from inquiring into the facts underlying his opponent's case. Mutual
knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may
compel the other to disgorge whatever facts he has in his possession. The deposition-discovery procedure simply
advances the stage at which the disclosure can be compelled from the time of trial to the period preceding it, thus
reducing the possibility, of surprise, . . . 35
In line with this principle of according liberal treatment to the deposition-discovery mechanism, such modes of discovery
as (a) depositions (whether by oral examination or written interrogatories) under Rule 24, (b) interrogatories to parties
under Rule 25, and (c) requests for admissions under Rule 26, may be availed of without leave of court, and generally,
without court intervention. The Rules of Court explicitly provide that leave of court is not necessary to avail of said modes
of discovery after an answer to the complaint has been served. 36 It is only when an answer has not yet been filed (but
after jurisdiction has been obtained over the defendant or property subject of the action) that prior leave of court is
needed to avail of these modes of discovery, the reason being that at that time the issues are not yet joined and the
disputed facts are not clear. 37
On the other hand, leave of court is required as regards discovery by (a) production or inspection of documents or things
in accordance with Rule 27, or (b) physical and mental examination of persons under Rule 28, which may be granted
upon due application and a showing of due cause.
To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law imposes serious
sanctions on the party who refuses to make discovery, such as dismissing the action or proceeding or part thereof, or
rendering judgment by default against the disobedient party; contempt of court, or arrest of the party or agent of the party;
payment of the amount of reasonable expenses incurred in obtaining a court order to compel discovery; taking the
matters inquired into as established in accordance with the claim of the party seeking discovery; refusal to allow the
disobedient party support or oppose designated claims or defenses; striking out pleadings or parts thereof; staying further
proceedings. 38
Of course, there are limitations to discovery, even when permitted to be undertaken without leave and without judicial
intervention. "As indicated by (the) Rules . . ., limitations inevitably arise when it can be shown that the examination is
being conducted in bad faith or in such a manner as to annoy, embarass, or oppress the person subject to the
inquiry. 39 And . . . further limitations come into existence when the inquiry touches upon the irrelevant or encroaches
upon the recognized domains of privilege." 40
In fine, the liberty of a party to make discovery is well nigh unrestricted if the matters inquired into are otherwise relevant
and not privileged, and the inquiry is made in good faith and within the bounds of the law.
It is in light of these broad principles underlying the deposition-discovery mechanism, in relation of course to the particular
rules directly involved, that the issues in this case will now be resolved.
The petitioner's objections to the interrogatories served on it in accordance with Rule 25 of the Rules of Court cannot be
sustained.
It should initially be pointed out as regards the private respondents "Motion for Leave to File Interrogatories" dated
February 1, 1988 41 that it was correct for them to seek leave to serve interrogatories, because discovery was being
availed of before an answer had been served. In such a situation, i.e., "after jurisdiction has been obtained over any
defendant or over property subject of the action" but before answer, Section 1 of Rule 24 (treating of depositions), in
relation to Section 1 of Rule 25 (dealing with interrogatories to parties) explicitly requires "leave of court." 42 But there
was no need for the private respondents to seek such leave to serve their "Amended Interrogatories to Plaintiff" (dated
August 2, 1989 43) after they had filed their answer to the PCGG's complaint, just as there was no need for the
Sandiganbayan to act thereon.
1. The petitioner's first contention that the interrogatories in question are defective because they (a) do not name the
particular individuals to whom they are propounded, being addressed only to the PCGG, and (b) are "fundamentally the
same matters . . (private respondents) sought to be clarified through their aborted Motion . . for Bill of Particulars" are
untenable and quickly disposed of.
The first part of petitioner's submission is adequately confuted by Section 1, Rule 25 which states that if the party served
with interrogatories is a juridical entity such as "a public or private corporation or a partnership or association," the same
shall be "answered . . by any officer thereof competent to testify in its behalf." There is absolutely no reason why this
proposition should not be applied by analogy to the interrogatories served on the PCGG. That the interrogatories are
addressed only to the PCGG, without naming any specific commissioner o officer thereof, is utterly of no consequence,
and may not be invoked as a reason to refuse to answer. As the rule states, the interrogatories shall be answered "by any
officer thereof competent to testify in its behalf."
That the matters on which discovery is desired are the same matters subject of a prior motion for bill of particulars
addressed to the PCGG's amended complaint and denied for lack of merit is beside the point. Indeed, as already

42
pointed out above, a bill of particulars may elicit only ultimate facts, not so-called evidentiary facts. The latter are without
doubt proper subject of discovery. 44
Neither may it be validly argued that the amended interrogatories lack specificity. The merest glance at them disproves
the argument. The interrogatories are made to relate to individual paragraphs of the PCGG's expanded complaint and
inquire about details of the ultimate facts therein alleged. What the PCGG may properly do is to object to specific items of
the interrogatories, on the ground of lack of relevancy, or privilege, or that the inquiries are being made in bad faith, or
simply to embarass or oppress it. 45 But until such an objection is presented and sustained, the obligation to answer
subsists.
2. That the interrogatories deal with factual matters which will be part of the PCGG's proof upon trial, is not ground for
suppressing them either. As already pointed out, it is the precise purpose of discovery to ensure mutual knowledge of all
the relevant facts on the part of all parties even before trial, this being deemed essential to proper litigation. This is why
either party may compel the other to disgorge whatever facts he has in his possession; and the stage at which disclosure
of evidence is made is advanced from the time of trial to the period preceding it.
3. Also unmeritorious is the objection that the interrogatories would make PCGG Commissioners and officers witnesses,
in contravention of Executive Order No. 14 and related issuances. In the first place, there is nothing at all wrong in a
party's making his adversary his witness .46 This is expressly allowed by Section 6, Rule 132 of the Rules of Court, viz.:
Sec. 6. Direct examination of unwilling or hostile witnesses. A party may . . . call an adverse party or an officer, director,
or managing agent of a public or private corporation or of a partnership or association which is an adverse party, and
interrogate him by leading questions and contradict and impeach him in all respects as if he had been called by the
adverse party, and the witness thus called may be contradicted and impeached by or on behalf of the adverse party also,
and may be cross-examined by the adverse party only upon the subject-matter of his examination in chief.
The PCGG insinuates that the private respondents are engaged on a "fishing expedition," apart from the fact that the
information sought is immaterial since they are evidently meant to establish a claim against PCGG officers who are not
parties to the action. It suffices to point out that "fishing expeditions" are precisely permitted through the modes of
discovery. 47 Moreover, a defendant who files a counterclaim against the plaintiff is allowed by the Rules to implead
persons (therefore strangers to the action) as additional defendants on said counterclaim. This may be done pursuant to
Section 14, Rule 6 of the Rules, to wit:
Sec. 14. Bringing new parties. When the presence of parties other than those to the original action is required for the
granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order them to be brought
in as defendants, if jurisdiction over them can be obtained."
The PCGG's assertion that it or its members are not amenable to any civil action "for anything done or omitted in the
discharge of the task contemplated by . . (Executive) Order (No. 1)," is not a ground to refuse to answer the
interrogatories. The disclosure of facto relevant to the action and which are not self-incriminatory or otherwise privileged
is one thing; the matter of whether or not liability may arise from the facts disclosed in light of Executive Order
No. 1, is another. No doubt, the latter proposition may properly be set up by way of defense in the action.
The apprehension has been expressed that the answers to the interrogatories may be utilized as foundation for a
counterclaim against the PCGG or its members and officers. They will be. The private respondents have made no secret
that this is in fact their intention. Withal, the Court is unable to uphold the proposition that while the PCGG obviously feels
itself at liberty to bring actions on the basis of its study and appreciation of the evidence in its possession, the parties
sued should not be free to file counterclaims in the same actions against the PCGG or its officers for gross neglect or
ignorance, if not downright bad faith or malice in the commencement or initiation of such judicial proceedings, or that in
the actions that it may bring, the PCGG may opt not to be bound by rule applicable to the parties it has sued, e.g., the
rules of discovery.
So, too, the PCGG's postulation that none of its members may be "required to testify or produce evidence in any
judicial . . proceeding concerning matters within its official cognizance," has no application to a judicial proceeding it has
itself initiated. As just suggested, the act of bringing suit must entail a waiver of the exemption from giving evidence; by
bringing suit it brings itself within the operation and scope of all the rules governing civil actions, including the rights and
duties under the rules of discovery. Otherwise, the absurd would have to be conceded, that while the parties it has
impleaded as defendants may be required to "disgorge all the facts" within their knowledge and in their possession, it
may not itself be subject to a like compulsion.
The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its consent. But it is
axiomatic that in filing an action, it divests itself of its sovereign character and sheds its immunity from suit, descending to
the level of an ordinary litigant. The PCGG cannot claim a superior or preferred status to the State, even while assuming
to represent or act for the State. 48
The suggestion 49 that the State makes no implied waiver of immunity by filing suit except when in so doing it acts in, or
in matters concerning, its proprietary or non-governmental capacity, is unacceptable; it attempts a distinction without
support in principle or precedent. On the contrary
The consent of the State to be sued may be given expressly or impliedly. Express consent may be manifested either
through a general law or a special law. Implied consent is given when the State itself commences litigation or when it
enters into a contract. 50
The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state as
plaintiff may avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in an
action against the private parties, the state surrenders its privileged position and comes down to the level of the
defendant. The latter automatically acquires, within certain limits, the right to set up whatever claims and other defenses

43
he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-37, citing U.S. vs. Ringgold, 8 Pet.
150, 8 L. ed. 899)" 51
It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as distinguished
from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private property has been
taken in expropriation without just compensation being paid, the defense of immunity from suit cannot be set up by the
State against an action for payment by the owner. 52
The Court also finds itself unable to sustain the PCGG's other principal contention, of the nullity of the Sandiganbayan's
Order for the production and inspection of specified documents and things allegedly in its possession.
The Court gives short shrift to the argument that some documents sought to be produced and inspected had already
been presented in Court and marked preliminarily as PCGG's exhibits, the movants having in fact viewed, scrutinized and
even offered objections thereto and made comments thereon. Obviously, there is nothing secret or confidential about
these documents. No serious objection can therefore be presented to the desire of the private respondents to have
copies of those documents in order to study them some more or otherwise use them during the trial for any purpose
allowed by law.
The PCGG says that some of the documents are non-existent. This it can allege in response to the corresponding
question in the interrogatories, and it will incur no sanction for doing so unless it is subsequently established that the
denial is false.
The claim that use of the documents is proscribed by Executive Order No. 1 has already been dealt with. The PCGG is
however at liberty to allege and prove that said documents fall within some other privilege, constitutional or statutory.
The Court finally finds that, contrary to the petitioner's theory, there is good cause for the production and inspection of the
documents subject of the motion dated August 3, 1989. 53 Some of the documents are, according to the verification of
the amended complaint, the basis of several of the material allegations of said complaint. Others, admittedly, are to be
used in evidence by the plaintiff. It is matters such as these into which inquiry is precisely allowed by the rules of
discovery, to the end that the parties may adequately prepare for pre-trial and trial. The only other documents sought to
be produced are needed in relation to the allegations of the counterclaim. Their relevance is indisputable; their disclosure
may not be opposed.
One last word. Due no doubt to the deplorable unfamiliarity respecting the nature, purposes and operation of the modes
of discovery earlier
mentioned, 54 there also appears to be a widely entertained idea that application of said modes is a complicated matter,
unduly expensive and dilatory. Nothing could be farther from the truth. For example, as will already have been noted from
the preceding discussion, all that is entailed to activate or put in motion the process of discovery by interrogatories to
parties under Rule 25 of the Rules of Court, is simply the delivery directly to a party of a letter setting forth a list of least
questions with the request that they be answered individually. 55 That is all. The service of such a communication on the
party has the effect of imposing on him the obligation of answering the questions "separately and fully in writing
underoath," and serving "a copy of the answers on the party submitting the interrogatories within fifteen (15) days after
service of the interrogatories . . ." 56 The sanctions for refusing to make discovery have already been mentioned. 57 So,
too, discovery under Rule 26 is begun by nothing more complex than the service on a party of a letter or other written
communication containing a request that specific facts therein set forth and/or particular documents copies of which are
thereto appended, be admitted in writing. 58That is all. Again, the receipt of such a communication by the party has the
effect of imposing on him the obligation of serving the party requesting admission with "a sworn statement either denying
specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully
either admit or deny those matters," failing in which "(e)ach of the matters of which admission is requested shall be
deemed admitted." 59 The taking of depositions in accordance with Rule 24 (either on oral examination or by written
interrogatories) while somewhat less simple, is nonetheless by no means as complicated as seems to be the lamentably
extensive notion.
WHEREFORE, the petition is DENIED, without pronouncement as to costs. The temporary restraining order issued on
October 27, 1989 is hereby LIFTED AND SET ASIDE.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ.,
concur.
Melencio-Herrera, J., I also join Justice Cruz's concurrence.
Romero, J., took no part.

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

44
CRUZ, J., concurring:
I am delighted to concurr with Mr. Justice Andres R. Narvasa in his scholarly ponencia which, besides reaching a
conclusion sustained by the applicable law and jurisprudence, makes for coding both pleasurable and instructive. One
function of the court not generally appreciated is to educate the reader on the intricacies and even the mustique of the
law. The opinion performs this function with impressive expertise and makes the modes of discovery less esoteric or
inaccessible to many members of the bar.
# Footnotes
1 Petition, Annex D.
2 Id., Annex E.
3 Id., Annex F.
4 Rollo, p. 7.
5 Id., pp. 7, 145.
6 Id., p. 7.
7 Petition, Annex G.
8 Rollo, pp. 56-87.
9 Petition, Annex H.
10 Id., Annex I.
11 Id., Annex J.
12 Id., Annex K.
13 Rollo, p. 9.
14 Petition, Annex L
15 Id., Annex M.
16 Rollo, p. 9.
17 Petition, Annex N.
18 Id., Annex O.
19 Petition, Annex R; Rollo, p. 220.
20 Id., Annexes A and B; Rollo, p. 11.
21 Rollo, pp. 244, 245, 245-A.
22 189 SCRA 459.
23 Id., p. 317. The Solicitor General also withdrew his appearance in other cases involving the PCGG, to wit: G.R. Nos.
74302 (Tourist Sandiganbayan, et al.); 86926 (Cesar E.A Virata v. Hon. Sandiganbayan, et al.); 89425 (Republic, etc., et
al. v. Sandiganbayan . . et al.); 90478 (Republic v. Hon. Sandiganbayan, etc. et al.); 93694 (Philippine Coconut Producers
Federation, etc., et al. v. PCGG, et al.).
24 Id., p. 320.
25 Id., pp. 328 et seq.
26 Governed by Rule 25.
27 Governed by Rule 27.
28 Moran (Comments on the Rules of Court, 1979 ed., Vol. 2, pp. 5-6), for instance, points out-citingthe
recommendations of the committee of the American Judicature Society that drafted the Model Rules of Civil Procedure
that "The English and Canadian experience has been of more value than any other single procedural device, in bringing
parties to a settlement who otherwise would have fought their way through to trial.
N.B. Actions could very well be ended by summary judgments (Rule 34) on the basis of the results of discovery.
29 Surprises, it has been observed, are "most dangerous weapons" in a "judicial duel" (Moran, Comments on the Rules
of Court, 1963, ed., Vol. 2, p. 6).
30 16 Phil. 315, 322 (July 26, 1910); emphasis supplied.
31 Section 1, Rule 8, Rules of Court.
32 Moran, Comments on the Rules of Court, 1979 ed., Vol. 2, pp. 5-6; see footnote 28, supra.
33 SEE Hickman v. Taylor, et al., U.S. Sup. Ct. Rpts., 91 Law Ed., 51, 455, cited in Feria, Civil Procedure, p. 1969 ed., p.
435; 35A CJS Sec. 527, pp. 785-786; 23 Am Jur. 2d, See, 156, p. 493.
34 Sec. 5, Rule 25 ("Interrogatories to Parties") also allows inquiry as "to any matters that can be inquired into under
section 2 of Rule 24 . ."
35 Feria, op. cit., p. 436, citing Hickman v. Taylor, et al., supra; SEE 23 Am Jur 2d., Sec. 150, pp. 484-487.
36 Sec. 1, Rule 24; Sec. 1, Rule 25; Sec. 1, Rule 26.
37 SEE Everett v. Asia Banking Corp., 49 Phil. 512.
38 Rule 29.
39 SEE Secs. 16 and 18, Rule 24.
40 Hickman v. Taylor, et al., supra, cited in Feria, op. cit., p. 436.
41 SEE footnote 5, supra.
42 Cf. Uy Chao v. de la Rama Steamship Co., Inc., 6 SCRA 69.
43 SEE footnote 17, supra.
44 SEE discussion at page 8, and footnote 30 and related text, supra.
45 Cf. Lopez, etc., et al. v. Maceren, etc., et al. 95 Phil. 754; Cojuangco v. Caluag, 97 Phil. 982 (unrep.); Villalon v. Ysip,
98 Phil. 997; Caguiat v. Torres, 30 SCRA 109-110; Jacinto v. Amparo, 93 Phil. 693.

45
46 SEE Cason v. San Pedro, 9 SCRA 925, where such objections as that the interrogatories transferred the onus
probandi from plaintiffs to defendants, or the latter were being made to prove the former's case, or that anyway, the facts
may be proven by plaintiffs through their own evidence, were overruled.
47 SEE Tan Chico v. Concepcion, 43 Phil. 141 (1922).
48 It should be pointed out that the rulings in PCGG v. Pea 159 SCRA 556 (1988) and PCGG v. Nepomuceno, etc., et
al., G.R. No. 78750, April 20, 1990 are not inconsistent with that in this proceeding, the facts and basic issues therein
involved being quite distinct from those in the case at bar. Unlike the present case, where the PCGG instituted a civil
action against Tantoco, et al. in the Sandiganbayan neither Pea nor Nepomuceno involved any suit filed by the PCGG,
the acts therein challenged being simply its extrajudicial orders of sequestration; and in both said cases, the Regional
Trial Courts issued writs of preliminary injunction prohibiting enforcement and implementation of the sequestration orders.
This Court nullified those injunctive writs on the ground that the PCGG, as an agency possessed of primary
administrative jurisdiction (particularly concerning sequestration) and exercising quasi-judicial functions, was co-equal to
a Regional Trial Court which therefore had no jurisdiction to review or otherwise restrain or interfere with its acts, that
power being exclusively lodged in the Sandiganbayan, subject only to review by this Court. In Nepomuceno, it was
additionally ruled that there was prima facie basis for the challenged order of sequestration; that the take-over of the
property in question by the PCGG fiscal agents was necessitated as much by the resistance and defiance of the holders
thereof to the PCGG's authority as by the desire of the PCGG to preserve said property; and that since the power to seize
property to conserve it pending the institution of suit for its recovery was sanctioned by the Freedom Constitution and the
1987 Constitution, the PCGG must be deemed immune from any suit which would render that authority inutile or
ineffectual.
49 Of the Solicitor General in his Reply to Answer, etc.: Rollo, pp 168-169.
50 Mr. Justice Isagani A. Cruz, Philippine Political Law, 1991 ed., p. 33.
SEC. 5, Act No. 3083 (eff., March 16, 1923) provides that,
"When the Government of the Philippine Islands is plaintiff in an action instituted in any court of original jurisdiction,
defendant shall have the right to assert therein, by way of set-off or counterclaim in a similar action between private
parties."
51 Froilan vs. Pan Oriental Shipping Co., 95 Phil. 905, 912.
52 Ministerio vs. City of Cebu, 40 SCRA 464, cited with approval in Santiago vs. Republic, 87 SCRA 294.
53 Petition, Annex O, pp. 206-208.
54 At page 6, last paragraph, supra.
55 Sec. 1, Rule 25, Rules of Court.
56 Sec. 2, Rule 25.
57 SEE footnote 38 and related text.
58 Sec. 1, Rule 26.
59 Sec. 2, Rule 25; see also footnote 38 and related text, supra.
G.R. No. L-36706 March 31, 1980
COMMISSIONER OF PUBLIC HlGHWAYS, petitioner,
vs.
HON. FRANCISCO P. BURGOS, in his capacity as Judge of the Court of First Instance of Cebu City, Branch 11,
and Victoria Amigable, respondents.
Quirico del Mar & Domingo Antiquera for respondent.
Office of the Solicitor General for petitioner.
DE CASTRO, J.:
Victoria Amigable is the owner of parcel of land situated in Cebu City with an area of 6,167 square meters. Sometime in
1924, the Government took this land for road-right-of-way purpose. The land had since become streets known as Mango
Avenue and Gorordo Avenue in Cebu City.
On February 6, 1959, Victoria Amigable filed in the Court of First Instance of Cebu a complaint, which was later amended
on April 17, 1959 to recover ownership and possession of the land, and for damages in the sum of P50,000.00 for the
alleged illegal occupation of the land by the Government, moral damages in the sum of P25,000.00, and attorney's fees in
the sum of P5,000.00, plus costs of suit. The complaint was docketed as Civil Case No. R-5977 of the Court of First
Instance of Cebu, entitled "Victoria Amigable vs. Nicolas Cuenca, in his capacity as Commissioner of Public Highway and
Republic of the Philippines. 1
In its answer, 2 the Republic alleged, among others, that the land was either donated or sold by its owners to the province
of Cebu to enhance its value, and that in any case, the right of the owner, if any, to recover the value of said property was
already barred by estoppel and the statute of limitations, defendants also invoking the non-suability of the Government.
In a decision rendered on July 29, 1959 by Judge Amador E. Gomez, the plaintiff's complaint was dismissed on the
grounds relied upon by the defendants therein. 3 The plaintiff appealed the decision to the Supreme Court where it was
reversed, and the case was remanded to the court of origin for the determination of the compensation to be paid the
plaintiff-appellant as owner of the land, including attorney's fees. 4 The Supreme Court decision also directed that to
determine just compensation for the land, the basis should be the price or value thereof at the time of the taking. 5
In the hearing held pursuant to the decision of the Supreme Court, the Government proved the value of the property at
the time of the taking thereof in 1924 with certified copies, issued by the Bureau of Records Management, of deeds of
conveyance executed in 1924 or thereabouts, of several parcels of land in the Banilad Friar Lands in which the property

46
in question is located, showing the price to be at P2.37 per square meter. For her part, Victoria Amigable presented
newspaper clippings of the Manila Times showing the value of the peso to the dollar obtaining about the middle of 1972,
which was P6.775 to a dollar.
Upon consideration of the evidence presented by both parties, the court which is now the public respondent in the instant
petition, rendered judgment on January 9, 1973 directing the Republic of the Philippines to pay Victoria Amigable the sum
of P49,459.34 as the value of the property taken, plus P145,410.44 representing interest at 6% on the principal amount of
P49,459.34 from the year 1924 up to the date of the decision, plus attorney's fees of 10% of the total amount due to
Victoria Amigable, or a grand total of P214,356.75. 6
The aforesaid decision of the respondent court is now the subject of the present petition for review by certiorari, filed by
the Solicitor General as counsel of the petitioner, Republic of the Philippines, against the landowner, Victoria Amigable, as
private respondent. The petition was given due course after respondents had filed their comment thereto, as required.
The Solicitor General, as counsel of petitioner, was then required to file petitioner's brief and to serve copies thereof to the
adverse parties. 7 Petitioner's brief was duly filed on January 29, 1974, 8to which respondents filed only a
"comment." 9 instead of a brief, and the case was then considered submitted for decision. 10
1. The issue of whether or not the provision of Article 1250 of the New Civil Code is applicable in determining the amount
of compensation to be paid to respondent Victoria Amigable for the property taken is raised because the respondent court
applied said Article by considering the value of the peso to the dollar at the time of hearing, in determining due
compensation to be paid for the property taken. The Solicitor General contends that in so doing, the respondent court
violated the order of this Court, in its decision in G.R. No. L-26400, February 29, 1972, to make as basis of the
determination of just compensation the price or value of the land at the time of the taking.
It is to be noted that respondent judge did consider the value of the property at the time of the taking, which as proven by
the petitioner was P2.37 per square meter in 1924. However, applying Article 1250 of the New Civil Code, and
considering that the value of the peso to the dollar during the hearing in 1972 was P6.775 to a dollar, as proven by the
evidence of the private respondent Victoria Amigable the Court fixed the value of the property at the deflated value of the
peso in relation, to the dollar, and came up with the sum of P49,459.34 as the just compensation to be paid by the
Government. To this action of the respondent judge, the Solicitor General has taken exception.
Article 1250 of the New Civil Code seems to be the only provision in our statutes which provides for payment of an
obligation in an amount different from what has been agreed upon by the parties because of the supervention of extraordinary inflation or deflation. Thus, the Article provides:
ART. 1250. In case extra-ordinary inflation or deflation of the currency stipulated should supervene, the value of the
currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to
the contrary.
It is clear that the foregoing provision applies only to cases where a contract or agreement is involved. It does not apply
where the obligation to pay arises from law, independent of contract. The taking of private property by the Government in
the exercise of its power of eminent domain does not give rise to a contractual obligation. We have expressed this view in
the case of Velasco vs. Manila Electric Co., et al., L-19390, December 29, 1971. 11
Moreover, the law as quoted, clearly provides that the value of the currency at the time of the establishment of the
obligation shall be the basis of payment which, in cases of expropriation, would be the value of the peso at the time of the
taking of the property when the obligation of the Government to pay arises. 12 It is only when there is an "agreement to the
contrary" that the extraordinary inflation will make the value of the currency at the time of payment, not at the time of the
establishment of the obligation, the basis for payment. In other words, an agreement is needed for the effects of an
extraordinary inflation to be taken into account to alter the value of the currency at the time of the establishment of the
obligation which, as a rule, is always the determinative element, to be varied by agreement that would find reason only in
the supervention of extraordinary inflation or deflation.
We hold, therefore, that under the law, in the absence of any agreement to the contrary, even assuming that there has
been an extraordinary inflation within the meaning of Article 1250 of the New Civil Code, a fact We decline to declare
categorically, the value of the peso at the time of the establishment of the obligation, which in the instant case is when the
property was taken possession of by the Government, must be considered for the purpose of determining just
compensation. Obviously, there can be no "agreement to the contrary" to speak of because the obligation of the
Government sought to be enforced in the present action does not originate from contract, but from law which, generally is
not subject to the will of the parties. And there being no other legal provision cited which would justify a departure from
the rule that just compensation is determined on the basis of the value of the property at the time of the taking thereof in
expropriation by the Government, the value of the property as it is when the Government took possession of the land in
question, not the increased value resulting from the passage of time which invariably brings unearned increment to
landed properties, represents the true value to be paid as just compensation for the property taken. 13
In the present case, the unusually long delay of private respondent in bringing the present action-period of almost 25
years which a stricter application of the law on estoppel and the statute of limitations and prescription may have divested
her of the rights she seeks on this action over the property in question, is an added circumstance militating against
payment to her of an amount bigger-may three-fold more than the value of the property as should have been paid at the
time of the taking. For conformably to the rule that one should take good care of his own concern, private respondent
should have commenced proper action soon after she had been deprived of her right of ownership and possession over
the land, a deprivation she knew was permanent in character, for the land was intended for, and had become, avenues in
the City of Cebu. A penalty is always visited upon one for his inaction, neglect or laches in the assertion of his rights
allegedly withheld from him, or otherwise transgressed upon by another.

47
From what has been said, the correct amount of compensation due private respondent for the taking of her land for a
public purpose would be not P49,459.34, as fixed by the respondent court, but only P14,615.79 at P2.37 per square
meter, the actual value of the land of 6,167 square meters when it was taken in 1924. The interest in the sum of
P145,410.44 at the rate of 6% from 1924 up to the time respondent court rendered its decision, as was awarded by the
said court should accordingly be reduced.
In Our decision in G.R. No. L-26400, February 29, 1972, 14 We have said that Victoria Amigable is entitled to the legal
interest on the price of the land from the time of the taking. This holding is however contested by the Solicitor General,
citing the case of Raymunda S. Digsan vs. Auditor General, et al., 15 alleged to have a similar factual environment and
involving the same issues, where this Court declared that the interest at the legal rate in favor of the landowner accrued
not from the taking of the property in 1924 but from April 20, 1961 when the claim for compensation was filed with the
Auditor General. Whether the ruling in the case cited is still the prevailing doctrine, what was said in the decision of this
Court in the abovecited case involving the same on the instant matter, has become the "law of the case", no motion for its
reconsideration having been filed by the Solicitor General before the decision became final. Accordingly, the interest to be
paid private respondent, Victoria Amigable, shall commence from 1924, when the taking of the property took place,
computed on the basis of P14,615.79, the value of the land when taken in said year 1924.
2. On the amount of attorney's fees to be paid private respondent, about which the Solicitor General has next taken issue
with the respondent court because the latter fixed the same at P19,486.97, while in her complaint, respondent Amigable
had asked for only P5,000.00, the amount as awarded by the respondent court, would be too exhorbitant based as it is,
on the inflated value of the land. An attorney's fees of P5,000.00, which is the amount asked for by private respondent
herself in her complaint, would be reasonable.
WHEREFORE, the judgment appealed from is hereby reversed as to the basis in the determination of the price of the
land taken as just compensation for its expropriation, which should be the value of the land at the time of the taking, in
1924. Accordingly, the same is hereby fixed at P14,615.79 at P2.37 per square meter, with interest thereon at 6% per
annum, from the taking of the property in 1924, to be also paid by Government to private respondent, Victoria Amigable,
until the amount due is fully paid, plus attorney's fees of P5,000.00.
SO ORDERED.
Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.
Separate Opinions
TEEHANKEE, Acting C.J., concuring:
I concur in the result, with the observation that the statements in the main opinion re the applicability or non-applicability
of Article 1250 of the Civil Code should be taken as obiter dicta, since said article may not be invoked nor applied without
a proper declaration of extraordinary inflation or deflation of currency by the competent authorities. The Court has thus set
aside respondent judge's raising of the amount of compensation for the land taken from P14,615.79 (at P2.37 per square
meter) as properly determined to be its value at the time of its taking in 1924 to P49,459.34 purportedly because of the
deflated value of the peso in relation to the dollar. The ratio decidendi of the Court's judgment is that respondent is
entitled to the value of the land at the time of its taking in 1924 with interest thereon at the legal rate of six (6%) percent
per annum (which for a period of 56 years since 1924 to the present amount to a total of 336% interest on the principal
due) and reasonable attorney's fees of P5,000.00 in consonance with the earlier decision of the Court in Victoria
Amigable vs. Cuenca, 43 SCRA 360 (February 29, 1972) which is the law of the case. The judgment at bar is merely an
implementation of the said earlier decision which remanded the case to the Court a quo for determination of the
compensation to be paid by the government, including attorney's fees, with legal interest on the determined price or value
of the land at the time of its taking in 1924 "from the time it was taken up to the time that payment s made by the
government."
Separate Opinions
TEEHANKEE, Acting C.J., concuring:
I concur in the result, with the observation that the statements in the main opinion re the applicability or non-applicability
of Article 1250 of the Civil Code should be taken as obiter dicta, since said article may not be invoked nor applied without
a proper declaration of extraordinary inflation or deflation of currency by the competent authorities. The Court has thus set
aside respondent judge's raising of the amount of compensation for the land taken from P14,615.79 (at P2.37 per square
meter) as properly determined to be its value at the time of its taking in 1924 to P49,459.34 purportedly because of the
deflated value of the peso in relation to the dollar. The ratio decidendi of the Court's judgment is that respondent is
entitled to the value of the land at the time of its taking in 1924 with interest thereon at the legal rate of six (6%) percent
per annum (which for a period of 56 years since 1924 to the present amount to a total of 336% interest on the principal
due) and reasonable attorney's fees of P5,000.00 in consonance with the earlier decision of the Court in Victoria
Amigable vs. Cuenca, 43 SCRA 360 (February 29, 1972) which is the law of the case. The judgment at bar is merely an
implementation of the said earlier decision which remanded the case to the Court a quo for determination of the
compensation to be paid by the government, including attorney's fees, with legal interest on the determined price or value
of the land at the time of its taking in 1924 "from the time it was taken up to the time that payment s made by the
government."
Footnotes

48
1 Annex A to Petition, pp. 22-24, Rollo.
2 Annex B to Petition. pp. 25-26, Rollo.
3 Annex C to Petition. pp. 27-33, Rollo
4 Victoria Amigable vs. Cuenca, et al., 43 SCRA 360.
5 Annex E to Petition, pp 35-38, Rollo.
6 Annex F to Petition, pp. 39-42, Rollo.
7 Page 82, Rollo.
8 Page 102, Rollo.
9 Page 115, Rollo.
10 Page 121, Rollo.
11 42 SCRA 556.
12 Republic vs. Philippine National Bank, 1 SCRA 957; J.M. Tuason vs. Land Tenure Administration, 31 SCRA 413.
13 Republic vs. Philippine National Bank, supra; J.M. Tuason vs Land Tenure Administration, supra.
14 43 SCRA 360.
15 G.R. No. L-21593. April 29, 1966, 16 SCRA 762.