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A. THE PREAMBLE The Court finds R.A.

9522 constitutional and is consistent wit


h thePhilippines national interest. Aside from being a vital
B. NATIONAL TERRITORY (ART 1) step in safeguarding
- ARCHIPELAGIC DOCTRINE thecountrys maritime zones, the law also allows an internati
onally-recognizeddelimitation of the breadth of the
CASE: Philippines maritime zones and
1. PROF. MERLIN M. MAGALLONA V. HON EDUARDO continentalshelf. The Court also finds that the conversion of i
ERMITA GR NO 187167 JULY 2011 nternal waters intoarchipelagic waters will not risk the
Philippines as affirmed in the Article 49 of the UNCLOS III, an
The conversion of internal waters into archipelagic waters will archipelagic State has sovereign power that extends to
not risk the Philippines because an archipelagic State has thewaters enclosed by the archipelagic baselines, regardless
sovereign power that extends to the waters enclosed by the of their depth ordistance from the coast. It is further stated
archipelagic baselines, regardless of their depth or distance that the regime of archipelagic sea-lanes passage will
from the coast. not affect the status of its archipelagic waters or the exercise
R.A. 9522 was enacted by the Congress in March 2009 of sovereignty over waters and air space, bed and subsoil
to comply with the terms of the United Nations Convention and the resources therein.
on the Law of the Sea (UNCLOS III),which the Philippines
ratified on February 27, 1984. Such compliance shortened
one baseline, optimized the location of some base points C. STATE IMMUNITY
around the Philippine - LEGAL BASIS (ART. XVI SEC 3)
archipelago and classified adjacent territories such as the Kal - SCOPE (DE LEON, VOL II P. 1157)
ayaan IslandGround (KIG) and the Scarborough Shoal as - WHEN IS A SUIT AGAINST A STATE?
regimes of islands whose islands generate their own - REASONS OR BASES OF THE DOCTRINE
applicable maritime zones. Petitioners, in their capacities as - WHEN SUITS ARE AGAINST THE STATE PERMISSIBLE
citizens, taxpayers or legislators assail the constitutionality - EXECUTION OF JUDGMENT AGAINST THE STATE
of R.A. 9522 with one of their arguments contending that the
law unconstitutionally converts internal waters into CASES:
archipelagic waters thus subjecting these waters to the right 1. PROFESSIONAL VIDEO V. TECHNICAL EDUCATION
of innocent and sea lanes passage under UNCLOS III, AND SKILLS DEVELOPMENT AUTHORITY GR NO 155504
including over flight. Petitioners have contended that these JUNE 2009
passage rights will violate the Constitution as it shall expose
Philippine internal waters to nuclear and maritime pollution
hazard. We resolve the petition filed by Professional Video, Inc.
(PROVI)[1] to annul and set aside the Decision [2] of the Court of
ISSUE:
Appeals (CA) in CA-G.R. SP No. 67599, and its subsequent
Whether or not R.A. 9522 is unconstitutional for converting
internal watersinto archipelagic waters Order denying PROVIs motion for reconsideration. [3] The
assailed CA decision nullified:
HELD:
Petition a. the Order[4] dated July 16, 2001 of the
DISMISSED. Regional Trial Court (RTC), Pasig City, in Civil
Case No. 68527, directing the TESDAs Pre-Qualification Bids Award Committee
attachment/garnishment of the properties of (PBAC) conducted two (2) public biddings on June 25,
respondent Technical Education and 1999 and July 22, 1999 for the printing and encoding of PVC
Skills Development Authority (TESDA) cards. A failure of bidding resulted in both instances since
amounting to Thirty Five Million Pesos only two (2) bidders PROVI and Sirex Phils. Corp. submitted
(P35,000,000.00); and proposals.

b. the RTCs August 24, 2001 Order[5] denying


respondent TESDAs motion to discharge/quash
writ of attachment. Due to the failed bidding, the PBAC recommended that
TESDA enter into a negotiated contract with PROVI.
On December 29, 1999, TESDA and PROVI signed and
executed their Contract Agreement Project: PVC ID Card
Issuance (the Contract Agreement) for the provision of goods
and services in the printing and encoding of PVC cards.
THE FACTUAL BACKGROUND [7]
Under this Contract Agreement, PROVI was to provide
TESDA with the system and equipment compliant with the
PROVI is an entity engaged in the sale of high specifications defined in the Technical Proposal. In return,
technology equipment, information technology products and TESDA would pay PROVI the amount of Thirty-Nine Million
broadcast devices, including the supply of plastic card Four Hundred and Seventy-Five Thousand Pesos
printing and security facilities. (P39,475,000) within fifteen (15) days after TESDAs
acceptance of the contracted goods and services.

TESDA is an instrumentality of the government


established under Republic Act (R.A.) No. 7796 (the TESDA On August 24, 2000, TESDA and PROVI executed an
Act of 1994) and attached to the Department of Labor and Addendum to the Contract Agreement Project: PVC ID Card
Employment (DOLE) to develop and establish a national Issuance (Addendum),[8] whose terms bound PROVI to deliver
system of skills standardization, testing, and certification in one hundred percent (100%) of the enumerated supplies to
the country.[6] To fulfill this mandate, it sought to issue TESDA consisting of five hundred thousand (500,000) pieces
security-printed certification and/or identification polyvinyl of security foil; five (5) pieces of security die with TESDA seal;
(PVC) cards to trainees who have passed the certification five hundred thousand (500,000) pieces of pre-printed and
process. customized identification cards; one hundred thousand
(100,000) pieces of scannable answer sheets; and five
hundred thousand (500,000) customized TESDA holographic
laminate. In addition, PROVI would install and maintain the Custom hologram Foil
following equipment: one (1) unit of Micropoise, two (2) units
of card printer, three (3) units of flatbed scanner, one (1) unit Total P 39,475,000.00
of OMR scanner, one (1) unit of Server, and seven (7) units of
personal computer.

PROVI further alleged that out of TESDAs liability


of P39,475,000.00, TESDA paid PROVI only P3,739,500.00,
TESDA in turn undertook to pay PROVI thirty percent leaving an outstanding balance of P35,735,500.00, as
(30%) of the total cost of the supplies within thirty (30) days evidenced by PROVIs Statement of Account. [9] Despite the
after receipt and acceptance of the contracted supplies, with two demand letters dated March 8 and April 27, 2001 that
the balance payable within thirty (30) days after the initial PROVI sent TESDA,[10] the outstanding balance remained
payment. unpaid.

According to PROVI, it delivered the following items to On July 11, 2001, PROVI filed with the RTC a complaint
TESDA on the dates indicated: for sum of money with damages against TESDA. PROVI
additionally prayed for the issuance of a writ of preliminary
attachment/garnishment against TESDA. The case was
docketed as Civil Case No. 68527. In an Order dated July 16,
Date Particulars Amount 2001, the RTC granted PROVIs prayer and issued a writ of
preliminary attachment against the properties of TESDA not
exempt from execution in the amount of P35,000,000.00.[11]

26 April 2000 48,500 pre-printed cards P 2,764,500.00

07 June 2000 330,000 pre-printed cards 18,810,000.00 TESDA responded on July 24, 2001 by filing a Motion to
Discharge/Quash the Writ of Attachment, arguing mainly that
07 August 2000 121,500 pre-printed cards 6,925,500.00 public funds cannot be the subject of garnishment. [12] The
RTC denied TESDAs motion, and subsequently ordered the
26 April 2000 100,000 scannable answer sheets 600,000.00 manager of the Land Bank of the Philippines to produce
TESDAs bank statement for the garnishment of the covered
06 June 2000 5 Micro-Poise customized die 375,000.00
amount.[13]

13 June 2000 35 boxes @ 15,000 imp/box 10,000,000.00


Faced with these rulings, TESDA filed a Petition 2001 and August 24, 2001. According to PROVI, the RTC
for Certiorari with the CA to question the RTC orders, correctly found that when TESDA entered into a purely
imputing grave abuse of discretion amounting to lack or commercial contract with PROVI, TESDA went to the level of
excess of jurisdiction on the trial court for issuing a writ of an ordinary private citizen and could no longer use the
preliminary attachment against TESDAs public funds. [14] defense of state immunity from suit. PROVI further contends
that it has alleged sufficient ultimate facts in the affidavit it
submitted to support its application for a writ of preliminary
attachment. Lastly, PROVI maintains that sufficient basis
The CA set aside the RTCs orders after finding that: (a) existed for the RTCs grant of the writ of preliminary
TESDAs funds are public in nature and, therefore, exempt attachment, since TESDA fraudulently misapplied or
from garnishment; and (b) TESDAs purchase of the PVC cards embezzled the money earmarked for the payment of the
was a necessary incident of its governmental function; contracted supplies and services, as evidenced by the
consequently, it ruled that there was no legal basis for the Certification as to Availability of Funds.
issuance of a writ of preliminary attachment/garnishment.
[15]
The CA subsequently denied PROVIs motion for
reconsideration;[16] hence, the present petition.
TESDA claims that it entered the Contract Agreement and
Addendum in the performance of its governmental function
to develop and establish a national system of skills
THE PETITION standardization, testing, and certification; in the performance
of this governmental function, TESDA is immune from suit.
Even assuming that it had impliedly consented to be sued by
entering into a contract with PROVI, TESDA posits that the
The petition submits to this Court the single issue of whether RTC still did not have the power to garnish or attach its funds
or not the writ of attachment against TESDA and its funds, to since these are public funds. Lastly, TESDA points out that
cover PROVIs claim against TESDA, is valid. The issue PROVI failed to comply with the elements for the valid
involves a pure question of law and requires us to determine issuance of a writ of preliminary attachment, as set forth in
whether the CA was correct in ruling that the RTC gravely Section 1, Rule 57 of the 1997 Rules of Civil Procedure.
abused its discretion in issuing a writ of attachment against
TESDA.

THE COURTS RULING

PROVI argues that the CA should have dismissed TESDAs


petition for certiorari as the RTC did not commit any grave
abuse of discretion when it issued the Orders dated July 16,
We find, as the CA did, that the RTCs questioned Among others, TESDA is empowered to: approve trade
order involved a gross misreading of the law and skills standards and trade tests as established and conducted
jurisprudence amounting to action in excess of its by private industries; establish and administer a system of
jurisdiction. Hence, we resolve to DENY PROVIs accreditation of both public and private institutions;
petition for lack of merit. establish, develop and support the institutions' trainors'
training and/or programs; exact reasonable fees and charges
for such tests and trainings conducted, and retain such
earnings for its own use, subject to guidelines promulgated
TESDA is by the Authority; and perform such other duties and
an instrumentality functions necessary to carry out the provisions of the Act,
consistent with the purposes of the creation of TESDA. [19]
of the government
undertaking
governmental
functions. Within TESDAs structure, as provided by R.A. No. 7769,
is a Skills Standards and Certification Office expressly tasked,
R.A. No. 7796 created the Technical Education and among others, to develop and establish a national system of
Skills Development Authority or TESDA under the declared skills standardization, testing and certification in the country;
policy of the State to provide relevant, accessible, high and to conduct research and development on various
quality and efficient technical education and skills occupational areas in order to recommend policies, rules and
development in support of the development of high quality regulations for effective and efficient skills standardization,
Filipino middle-level manpower responsive to and in testing and certification system in the country. [20] The law
accordance with Philippine development goals and priorities. likewise mandates that [T]here shall be national occupational
[17]
TESDA replaced and absorbed the National Manpower and skills standards to be established by TESDA-accredited
Youth Council, the Bureau of Technical and Vocational industry committees. The TESDA shall develop and
Education and the personnel and functions pertaining to implement a certification and accreditation program in which
technical-vocational education in the regional offices of the private groups and trade associations are accredited to
Department of Education, Culture and Sports and the conduct approved trade tests, and the local government
apprenticeship program of the Bureau of Local Employment units to promote such trade testing activities in their
of the DOLE.[18] Thus, TESDA is an unincorporated respective areas in accordance with the guidelines to be set
instrumentality of the government operating under its own by the TESDA. The Secretary of Labor and Employment shall
charter. determine the occupational trades for mandatory
certification. All certificates relating to the national trade
skills testing and certification system shall be issued by the
TESDA through its Secretariat.[21]
without its
consent.
All these measures are undertaken pursuant to the
constitutional command that [T]he State affirms labor as a
primary social economic force, and shall protect the rights of
workers and promote their welfare; [22] that [T]he State shall The rule that a state may not be sued without its
protect and promote the right of all citizens to quality consent is embodied in Section 3, Article XVI of the 1987
education at all levels, and shall take appropriate steps to Constitution and has been an established principle that
make such education accessible to all;[23] in order to afford antedates this Constitution.[27] It is as well a universally
protection to labor and promote full employment and recognized principle of international law that exempts a state
equality of employment opportunities for all.[24] and its organs from the jurisdiction of another state. [28] The
principle is based on the very essence of sovereignty, and on
the practical ground that there can be no legal right as
against the authority that makes the law on which the right
Under these terms, both constitutional and statutory, depends.[29] It also rests on reasons of public policy that
we do not believe that the role and status of TESDA can public service would be hindered, and the public endangered,
seriously be contested: it is an unincorporated if the sovereign authority could be subjected to law suits at
instrumentality of the government, directly attached to the the instance of every citizen and, consequently, controlled in
DOLE through the participation of the Secretary of Labor as the uses and dispositions of the means required for the
its Chairman, for the performance of governmental proper administration of the government.[30]
functions i.e., the handling of formal and non-formal
education and training, and skills development. As an
unincorporated instrumentality operating under a specific
charter, it is equipped with both express and implied powers, The proscribed suit that the state immunity principle
[25]
and all State immunities fully apply to it.[26] covers takes on various forms, namely: a suit against the
Republic by name; a suit against an unincorporated
government agency; a suit against a government agency
covered by a charter with respect to the agencys
performance of governmental functions; and a suit that on its
face is against a government officer, but where the ultimate
TESDA, as an liability will fall on the government. In the present case, the
agency of the writ of attachment was issued against a government agency
State, cannot covered by its own charter. As discussed above, TESDA
be sued performs governmental functions, and the issuance of
certifications is a task within its function of developing and
establishing a system of skills standardization, testing, and engages in commercial transactions not incidental to its
certification in the country. From the perspective of this governmental functions.
function, the core reason for the existence of state immunity
applies i.e., the public policy reason that the performance of
governmental function cannot be hindered or delayed by
suits, nor can these suits control the use and disposition of TESDAs response to this position is to point out that it is not
the means for the performance of governmental functions. engaged in business, and there is nothing in the records to
In Providence Washington Insurance Co. v. Republic of the show that its purchase of the PVC cards from PROVI is for a
Philippines,[31] we said: business purpose. While TESDA admits that it will charge the
trainees with a fee for the PVC cards, it claims that this fee is
[A] continued adherence to the doctrine of non- only to recover their costs and is not intended for profit.
suability is not to be deplored for as against the
inconvenience that may be caused private
parties, the loss of governmental efficiency and
the obstacle to the performance of its We agree with TESDA. As the appellate court found,
multifarious functions are far greater if such a the PVC cards purchased by TESDA from PROVI are meant to
fundamental principle were abandoned and the properly identify the trainees who passed TESDAs National
availability of judicial remedy were not thus Skills Certification Program the program that immediately
restricted. With the well known propensity on serves TESDAs mandated function of developing and
the part of our people to go to court, at the least establishing a national system of skills standardization,
provocation, the loss of time and energy testing, and certification in the country. [32] Aside from the
required to defend against law suits, in the express mention of this function in R.A. No. 7796, the details
absence of such a basic principle that of this function are provided under DOLE Administrative
constitutes such an effective obstacle, could Order No. 157, S. 1992, as supplemented by Department
very well be imagined. Order Nos. 3 thru 3-F, S. 1994 and Department Order No. 13,
S. 1994.[33]

PROVI argues that TESDA can be sued because it has


effectively waived its immunity when it entered into a Admittedly, the certification and classification of
contract with PROVI for a commercial purpose. According to trainees may be undertaken in ways other than the issuance
PROVI, since the purpose of its contract with TESDA is to of identification cards, as the RTC stated in its assailed Order.
[34]
provide identification PVC cards with security seal which How the mandated certification is to be done, however,
TESDA will thereafter sell to TESDA trainees, TESDA thereby lies within the discretion of TESDA as an incident of its
mandated function, and is a properly delegated authority
that this Court cannot inquire into, unless its exercise is Even assuming that TESDA entered into a proprietary
attended by grave abuse of discretion. contract with PROVI and thereby gave its implied consent to
be sued, TESDAs funds are still public in nature and, thus,
cannot be the valid subject of a writ of garnishment or
attachment. Under Section 33 of the TESDA Act, the TESDA
That TESDA sells the PVC cards to its trainees for a fee budget for the implementation of the Act shall be included in
does not characterize the transaction as industrial or the annual General Appropriation Act; hence, TESDA funds,
business; the sale, expressly authorized by the TESDA Act, being sourced from the Treasury, are moneys belonging to
[35]
cannot be considered separately from TESDAs general the government, or any of its departments, in the hands of
governmental functions, as they are undertaken in the public officials.[37] We specifically spoke of the limits in
discharge of these functions. Along this line of reasoning, we dealing with this fund inRepublic v. Villasor[38] when we said:
held in Mobil Philippines v. Customs Arrastre Services:[36]

This fundamental postulate underlying


Now, the fact that a non-corporate government the 1935 Constitution is now made explicit in
entity performs a function proprietary in nature the revised charter. It is therein expressly
does not necessarily result in its being suable. If provided, The State may not be sued without its
said non-governmental function is undertaken consent. A corollary, both dictated by logic and
as an incident to its governmental function, sound sense, from such a basic concept, is
there is no waiver thereby of the sovereign that public funds cannot be the object of
immunity from suit extended to such garnishment proceedings even if the
government entity. consent to be sued had been previously
granted and the state liability
adjudged. Thus in the recent case
of Commissioner of Public Highways vs. San
Diego, such a well-settled doctrine was restated
in the opinion of Justice Teehankee:
TESDAs funds The universal rule that where the
are public in State gives its consent to be sued
character, by private parties either by general
hence exempt or special law, it may limit
claimant's action 'only up to the
from
completion of proceedings anterior
attachment or to the stage of execution' and that
garnishment. the power of the Courts ends when
the judgment is rendered, since
government funds and properties
may not be seized under writs of
execution or garnishment to satisfy PROVI has not
such judgments, is based on shown that it
obvious considerations of public is entitled to
policy. Disbursements of public
funds must be covered by the the writ of
corresponding appropriation as attachment.
required by law. The functions
and public services rendered
by the State cannot be allowed Even without the benefit of any immunity from suit,
to be paralyzed or disrupted by the attachment of TESDA funds should not have been
the diversion of public funds granted, as PROVI failed to prove that TESDA fraudulently
from their legitimate and misapplied or converted funds allocated under the Certificate
specific objects, as as to Availability of Funds. Section 1, Rule 57 of the Rules of
appropriated by law. [Emphasis Court sets forth the grounds for issuance of a writ of
supplied.] preliminary attachment, as follows:

We reiterated this doctrine in Traders Royal Bank v.


Intermediate Appellate Court,[39] where we said:
SECTION 1. Grounds upon which attachment
The NMPCs implied consent to be sued may issue. A plaintiff or any proper party may,
notwithstanding, the trial court did not have the at the commencement of the action or at any
power to garnish NMPC deposits to answer for time thereafter, have the property of the
any eventual judgment against it. Being public adverse party attached as security for the
funds, the deposits are not within the satisfaction of any judgment that may be
reach of any garnishment or attachment recovered in the following cases:
proceedings. [Emphasis supplied.]

As pointed out by TESDA in its Memorandum, [40] the (a) In an action for recovery of a specified
garnished funds constitute TESDAs lifeblood in government amount of money or damages, other than moral
parlance, its MOOE[41] whose withholding via a writ of and exemplary, on a cause of action arising
attachment, even on a temporary basis, would paralyze from law, contract, quasi-contract, delict or
TESDAs functions and services. As well, these funds also quasi-delict against a party who is about to
depart from the Philippines with intent to
include TESDAs Personal Services funds from which salaries defraud his creditors;
of TESDA personnel are sourced. Again and for obvious
reasons, the release of these funds cannot be delayed.

(b) In an action for money or property


embezzled or fraudulently misapplied or
converted to his use by a public officer, or
an officer of a corporation, or an attorney, Jurisprudence teaches us that the rule on the issuance
factor, broker, agent or clerk, in the course of a writ of attachment must be construed strictly in favor of
of his employment as such, or by any other the defendant. Attachment, a harsh remedy, must be issued
person in a fiduciary capacity, or for a
willful violation of duty; only on concrete and specific grounds and not on general
averments merely quoting the words of the pertinent rules.
[42]
Thus, the applicants affidavit must contain statements
clearly showing that the ground relied upon for the
(c) In an action to recover the possession of attachment exists.
property unjustly or fraudulently taken, detained
or converted, when the property or any part
thereof, has been concealed, removed or
disposed of to prevent its being found or taken
by the applicant or an authorized person; Section 1(b), Rule 57 of the Rules of Court, that
PROVI relied upon, applies only where money or property has
been embezzled or converted by a public officer, an officer of
a corporation, or some other person who took advantage of
(d) In an action against a party who has his fiduciary position or who willfully violated his duty.
been guilty of fraud in contracting the
debt or incurring the obligation upon
which the action is brought, or in
concealing or disposing of the property for PROVI, in this case, never entrusted any money or
the taking, detention or conversion of property to TESDA. While the Contract Agreement is
which the action is brought; supported by a Certificate as to Availability of Funds
(Certificate) issued by the Chief of TESDAs Accounting
Division, this Certificate does not automatically confer
ownership over the funds to PROVI. Absent any actual
(e) In an action against a party who has disbursement, these funds form part of TESDAs public funds,
removed or disposed of his property, or is about and TESDAs failure to pay PROVI the amount stated in the
to do so, with intent to defraud his creditors; Certificate cannot be construed as an act of fraudulent
misapplication or embezzlement. In this regard, Section 86 of
Presidential Decree No. 1445 (The Accounting Code)
provides:
(f) In an action against a party who does not
Section 86. Certificate showing appropriation to
reside and is not found in the Philippines, or on
meet contract. Except in a case of a contract for
whom summons may be served by publication.
personal service, for supplies for current
[Emphasis supplied.]
consumption or to be carried in stock not
exceeding the estimated consumption for three
months, or banking transactions of government-
owned or controlled banks, no contract involving
the expenditure of public funds by any foundation of the writ, must contain particulars showing how
government agency shall be entered into or the imputed fraud was committed for the court to decide
authorized unless the proper accounting official whether or not to issue the writ. To reiterate, a writ of
or the agency concerned shall have certified to attachment can only be granted on concrete and specific
the officer entering into the obligation that grounds and not on general averments merely quoting the
funds have been duly appropriated for the words of the rules.[44]
purpose and that the amount necessary to
cover the proposed contract for the current
fiscal year is available for expenditure on The affidavit filed by PROVI through Elmer Ramiro, its
account thereof, subject to verification by the President and Chief Executive Officer, only contained a
auditor concerned. The certification signed by general allegation that TESDA had fraudulent misapplied or
the proper accounting official and the auditor converted the amount ofP10,975,000.00 that was allotted to
who verified it, shall be attached to and become it. Clearly, we cannot infer any finding of fraud from PROVIs
an integral part of the proposed contract, vague assertion, and the CA correctly ruled that the lower
and the sum so certified shall not court acted with grave abuse of discretion in granting the
thereafter be available for expenditure for writ of attachment despite want of any valid ground for its
any other purpose until the obligation of issuance.
the government agency concerned under
the contract is fully
extinguished. [Emphasis supplied.]

For all these reasons, we support the appellate courts


conclusion that no valid ground exists to support the grant of
By law, therefore, the amount stated in the Certification
should be intact and remains devoted to its purpose since its the writ of attachment against TESDA. The CAs annulment
original appropriation. PROVI can rebut the presumption that and setting aside of the Orders of the RTC were therefore
necessarily arises from the cited provision only by evidence fully in order.
to the contrary. No such evidence has been adduced.

WHEREFORE, premises considered, we hereby DENY the


Section 1 (d), Rule 57 of the Rules of
Court applies where a party is guilty of fraud in contracting a petition filed by petitioner Professional Video, Inc.,
debt or incurring an obligation, or in concealing or disposing and AFFIRM the Court of Appeals Decision dated July 23,
of the property for the taking, detention or conversion of 2002, and Resolution of September 27, 2002, in CA-G.R. SP
which the action is brought. In Wee v. Tankiansee,[43] we held No. 67599. Costs against the petitioner.
that for a writ of attachment to issue under this Rule, the
applicant must sufficiently show the factual circumstances of
the alleged fraud because fraudulent intent cannot be
inferred from the debtors mere non-payment of the debt or
failure to comply with his obligation. The affidavit, being the 2. DEUTSCHE GESELLSCHAFT V. HON. COURT OF
APPEALS GR NO 152318 APRIL 2009
On 7 September 1971, the governments of the Federal
Republic of Germany and the Republic of - one expert in health economy, insurance and health
the Philippines ratified an Agreement concerning Technical systems for up to 48 expert/months,
Co-operation (Agreement) in Bonn, capital of what was
then West Germany. The Agreement affirmed the countries - one expert in system development for up to 10
common interest in promoting the technical and economic expert/months
development of their States, and recogni[zed] the benefits to
be derived by both States from closer technical co-operation, - short-term experts to deal with special tasks for a
and allowed for the conclusion of arrangements concerning total of up to 18 expert/months,
individual projects of technical co-operation.[1] While the
Agreement provided for a limited term of effectivity of five - project assistants/guest students as required, who
(5) years, it nonetheless was stated that [t]he Agreement shall work on the project as part of their basic and further
shall be tacitly extended for successive periods of one year training and assume specific project tasks under the
unless either of the two Contracting Parties denounces it in separately financed junior staff promotion programme of the
writing three months prior to its expiry, and that even upon Deutsche Gesellschaft fr Technische Zusammenarbeit (GTZ);
the Agreements expiry, its provisions would continue to apply
to any projects agreed upon x x x until their completion.[2] (b) provide in situ

On 10 December 1999, the Philippine government, through - short-term experts to deal with diverse special tasks
then Foreign Affairs Secretary Domingo Siazon, and the for a total of up to 27 expert/months,
German government, agreed to an Arrangement in
furtherance of the 1971 Agreement. This Arrangement - five local experts in health economy, health insurance,
affirmed the common commitment of both governments to community health systems, information technology,
promote jointly a project called, Social Health information systems, training and community mobilization for
InsuranceNetworking and Empowerment (SHINE), which was a total of up to 240 expert/months,
designed to enable Philippine familiesespecially poor onesto
maintain their health and secure health care of sustainable - local and auxiliary personnel for a total of up to 120
quality.[3] It appears that SHINE had already been in months;
existence even prior to the effectivity of the Arrangement,
though the record does not indicate when exactly SHINE was (c) supply inputs, in particular
constituted. Nonetheless, the Arrangement stated the
various obligations of the Filipino and German governments. - two cross-country vehicles,
The relevant provisions of the Arrangement are reproduced
as follows: - ten computers with accessories,

3. The Government of the Federal Republic of - office furnishings and equipment


Germany shall make the following contributions to the
project. up to a total value of DM 310,000 (three hundred and ten
thousand Deutsche Mark);
It shall
(c) meet
(a) second
- the cost of accommodation for the seconded experts - make available the land and buildings required for
and their families in so far as this cost is not met by the the project;
seconded experts themselves,
(b) assume an increasing proportion of the running
- the cost of official travel by the experts referred to in and operating costs of the project;
sub-paragraph (a) above within and outside the Republic of (c) afford the seconded experts any assistance they
the Philippines, may require in carrying out the tasks assigned to them and
place at their disposal all necessary records and documents;
- the cost of seminars and courses, (d) guarantee that

- the cost of transport and insurance to the project site - the project is provided with an itemized budget of its
of inputs to be supplied pursuant to sub-paragraph (c) above, own in order to ensure smooth continuation of the project.
excluding the charges and storage fees referred to in
paragraph 4(d) below, - the necessary legal and administrative framework is
created for the project,
- a proportion of the operating and administrative costs;
- the project is coordinated in close cooperation with
xxx other national and international agencies relevant to
implementation,
4. The Government of the Republic of
the Philippines shall make the following contributions to the - the inputs supplied for the project on behalf of the
project: Government of the Federal Republic of Germany are
exempted from the cost of licenses, harbour dues, import and
It shall export duties and other public charges and fees, as well as
storage fees, or that any costs thereof are met, and that they
(a) provide the necessary Philippine experts for the are cleared by customs without delay. The aforementioned
project, in particular one project coordinator in the Philippine exemptions shall, at the request of the implementing
Health Insurance Corporation (Philhealth), at least three agencies also apply to inputs procured in the Republic of
further experts and a sufficient number of administrative and the Philippines,
auxiliary personnel, as well as health personnel in the pilot
provinces and in the other project partners, in particular one - the tasks of the seconded experts are taken over as
responsible expert for each pilot province and for each soon as possible by Philippine experts,
association representing the various target groups,
- examinations passed by Philippine nationals
- release suitably qualified experts from their duties pursuant to this Arrangement are recognized in accordance
for attendance at the envisaged basic and further training with their respective standards and that the persons
activities; it shall only nominate such candidates as have concerned are afforded such opportunities with regard to
given an undertaking to work on the project for at least five careers, appointments and advancement as are
years after completing their training and shall ensure that commensurate with their training.[4]
these Philippine experts receive appropriate remuneration,
- ensure that the project field offices have sufficient
expendables,
In the arraignment, both governments likewise named their Nicolay had veered away from its original purpose to
respective implementing organizations for SHINE. facilitate the development of social health insurance by
The Philippines designated the Department of Health (DOH) shoring up the national health insurance program and
and the Philippine Health Insurance Corporation (Philhealth) strengthening local initiatives, as Nicolay had refused to
with the implementation of SHINE. For their part, the German support local partners and new initiatives on the premise that
government charge[d] the Deustche Gesellschaft fr community and local government unit schemes were not
Technische Zusammenarbeit[[5]] (GTZ[[6]]) GmbH, Eschborn, sustainablea philosophy that supposedly betrayed Nicolays
with the implementation of its contributions.[7] lack of understanding of the purpose of the project. Private
respondents further alleged that as a result of Nicolays new
Private respondents were engaged as contract employees thrust, resources have been used inappropriately; that the
hired by GTZ to work for SHINE on various dates between new management style was not congruent with the original
December of 1998 to September of 1999. Bernadette goals of the project; that Nicolay herself suffered from
Carmela Magtaas was hired as an information systems cultural insensitivity that consequently failed to sustain
manager and project officer of SHINE;[8] Carolina Dionco as a healthy relations with SHINEs partners and staff.
Project Assistant of SHINE;[9] Christopher Ramos as a project
assistant and liason personnel of NHI related SHINE activities The letter ended with these ominous words:
by GTZ;[10] Melvin Dela Paz and Randy Tamayo as
programmers;[11] and Edgardo Ramilo as driver, messenger The issues that we [the private respondents] have stated
and multipurpose service man.[12] The employment here are very crucial to us in working for the project. We
contracts of all six private respondents all specified Dr. Rainer could no longer find any reason to stay with the project
Tollkotter, identified as an adviser of GTZ, as the employer. At unless ALL of these issues be addressed immediately and
the same time, all the contracts commonly provided that [i]t appropriately.[15]
is mutually agreed and understood that [Dr. Tollkotter, as
employer] is a seconded GTZ expert who is hiring the
Employee on behalf of GTZ and for a Philippine-German In response, Nicolay wrote each of the private respondents a
bilateral project named Social Health InsuranceNetworking letter dated 21 June 2000, all similarly worded except for
and Empowerment (SHINE) which will end at a given time. their respective addressees. She informed private
[13] respondents that the projects orientations and evolution were
decided in consensus with partner institutions, Philhealth and
In September of 1999, Anne Nicolay (Nicolay), a Belgian the DOH, and thus no longer subject to modifications. More
national, assumed the post of SHINE Project Manager. pertinently, she stated:
Disagreements eventually arose between Nicolay and private
respondents in matters such as proposed salary adjustments, You have firmly and unequivocally stated in the last
and the course Nicolay was taking in the implementation of paragraph of your 8th June 2000 letter that you and the five
SHINE different from her predecessors. The dispute other staff could no longer find any reason to stay with the
culminated in a letter[14] dated 8 June 2000, signed by the project unless ALL of these issues be addressed immediately
private respondents, addressed to Nicolay, and copies and appropriately. Under the foregoing premises and
furnished officials of the DOH, Philheath, and the director of circumstances, it is now imperative that I am to accept your
the Manila office of GTZ. The letter raised several issues resignation, which I expect to receive as soon as possible.
which private respondents claim had been brought up [16]
several times in the past, but have not been given
appropriate response. It was claimed that SHINE under
Taken aback, private respondents replied with a common reprising the arguments for dismissal it had earlier raised.
letter, clarifying that their earlier letter was not intended as a [20] No action was taken by the Labor Arbiter on this new
resignation letter, but one that merely intended to raise motion. Instead, on 15 October 2001, the Labor Arbiter
attention to what they perceived as vital issues. rendered a Decision[21] granting the complaint for illegal
[17] Negotiations ensued between private respondents and dismissal. The Decision concluded that respondents were
Nicolay, but for naught. Each of the private respondents dismissed without lawful cause, there being a total lack of
received a letter from Nicolay dated 11 July 2000, informing due process both substantive and procedural [sic].[22] GTZ
them of the pre-termination of their contracts of employment was faulted for failing to observe the notice requirements in
on the grounds of serious and gross insubordination, among the labor law. The Decision likewise proceeded from the
others, resulting to loss of confidence and trust.[18] premise that GTZ had treated the letter dated 8 June 2000 as
a resignation letter, and devoted some focus in debunking
On 21 August 2000, the private respondents filed a complaint this theory.
for illegal dismissal with the NLRC. Named as respondents
therein where GTZ, the Director of its Manila office Hans The Decision initially offered that it need not discuss the
Peter Paulenz, its Assistant Project Manager Christian Jahn, jurisdictional aspect considering that the same had already
and Nicolay. been lengthily discussed in the Order de[n]ying respondents
Motion to Dismiss.[23]Nonetheless, it proceeded to discuss
On 25 October 2005, GTZ, through counsel, filed a Motion to the jurisdictional aspect, in this wise:
Dismiss, on the ground that the Labor Arbiter had no
jurisdiction over the case, as its acts were undertaken in the
discharge of the governmental functions and sovereign acts
of the Government of the Federal Republic of Germany. This
was opposed by private respondents with the arguments
that GTZ had failed to secure a certification that it was
immune from suit from the Department of Foreign Affairs, Under pain of being repetitious, the undersigned Labor
and that it was GTZ and not the German government which Arbiter has jurisdiction to entertain the complaint on the
had implemented the SHINE Project and entered into the following grounds:
contracts of employment.
Firstly, under the employment contract entered into between
On 27 November 2000, the Labor Arbiter issued an complainants and respondents, specifically Section 10
Order[19] denying the Motion to Dismiss. The Order cited, thereof, it provides that contract partners agree that his
among others, that GTZ was a private corporation which contract shall be subject to the LAWS of the jurisdiction of the
entered into an employment contract; and that GTZ had locality in which the service is performed.
failed to secure from the DFA a certification as to its
diplomatic status. Secondly, respondent having entered into contract, they can
no longer invoke the sovereignty of the Federal Republic of
Germany.

Lastly, it is imperative to be immune from suit, respondents


On 7 February 2001, GTZ filed with the Labor Arbiter a should have secured from the Department of Foreign Affairs a
Reiterating Motion to Dismiss, again praying that the Motion certification of respondents diplomatic status and entitlement
to Dismiss be granted on the jurisdictional ground, and to diplomatic privileges including immunity from suits.
Having failed in this regard, respondents cannot escape NLRC and challenging the Labor Arbiters Decision directly
liability from the shelter of sovereign immunity.[sic][24] with the appellate
court byway of a Rule 65 petition. In dismissing the petition,
the
Notably, GTZ did not file a motion for reconsideration to the
Labor Arbiters Decision or elevate said decision for appeal to
the NLRC. Instead, GTZ opted to assail the decision by way of
a special civil action for certiorari filed with the Court of
Appeals.[25] On 10 December 2001, the Court of Appeals
promulgated a Resolution[26] dismissing GTZs petition,
finding that judicial recourse at this stage of the case is
uncalled for[,] [t]he appropriate remedy of the petitioners
[being] an appeal to the NLRC x x x.[27] A motion for
reconsideration to this Resolution proved fruitless for GTZ.
[28]

Thus, the present petition for review under Rule 45, assailing
the decision and resolutions of the Court of Appeals and of
the Labor Arbiter. GTZs arguments center on whether the
Court of Appeals could have entertained its petition for
certiorari despite its not having undertaken an appeal before
the NLRC; and whether the complaint for illegal dismissal
should have been dismissed for lack of jurisdiction on
account of GTZs insistence that it enjoys immunity from suit.
No special arguments are directed with respect to petitioners
Hans Peter Paulenz and Anne Nicolay, respectively the then
Director and the then Project Manager of GTZ in the
Philippines; so we have to presume that the arguments
raised in behalf of GTZs alleged immunity from suit extend to
them as well.

The Court required the Office of the Solicitor General (OSG)


to file a Comment on the petition. In its Comment dated 7
November 2005, the OSG took the side of GTZ, with the
prayer that the petition be granted on the ground that GTZ
was immune from suit, citing in particular its assigned
functions in implementing the SHINE programa joint
undertaking of the Philippine and German governments
which was neither proprietary nor commercial in nature.

The Court of Appeals had premised the dismissal of GTZs


petition on its procedural misstep in bypassing an appeal to
The arguments raised by GTZ and the OSG are rooted in
Court of Appeals relied on our ruling in Air Service several indisputable facts. The SHINE project was
Cooperative v. Court of Appeals.[29] The central issue in that implemented pursuant to the bilateral agreements between
case was whether a decision of a Labor Arbiter rendered the Philippine and German governments. GTZ was tasked,
without jurisdiction over the subject matter may be annulled under the 1991 agreement, with the implementation of the
in a petition before a Regional Trial Court. That case may be contributions of the German government. The activities
differentiated from the present case, since the Regional Trial performed by GTZ pertaining to the SHINE project are
Court does not have original or appellate jurisdiction to governmental in nature, related as they are to the promotion
review a decision rendered by a Labor Arbiter. In contrast, of health insurance in the Philippines. The fact that GTZ
there is no doubt, as affirmed by jurisprudence, that the entered into employment contracts with the private
Court of Appeals has jurisdiction to review, by way of its respondents did not disqualify it from invoking immunity from
original certiorari jurisdiction, decisions ruling on complaints suit, as held in cases such as Holy See v. Rosario, Jr.,
for illegal dismissal. [32] which set forth what remains valid doctrine:

Nonetheless, the Court of Appeals is correct in pronouncing


the general rule that the proper recourse from the decision of
the Labor Arbiter is to first appeal the same to the NLRC. Air
Services is in fact clearly detrimental to petitioners position
in one regard. The Court therein noted that on account of the
failure to correctly appeal the decision of the Labor Arbiter to
the NLRC, such judgment consequently became final and Certainly, the mere entering into a contract by a foreign state
executory.[30] GTZ goes as far as to request that the Court with a private party cannot be the ultimate test. Such an act
re-examine Air Services, a suggestion that is needlessly can only be the start of the inquiry. The logical question is
improvident under the circumstances. Air Services affirms whether the foreign state is engaged in the activity in the
doctrines grounded in sound procedural rules that have regular course of business. If the foreign state is not engaged
allowed for the considered and orderly disposition of labor regularly in a business or trade, the particular act or
cases. transaction must then be tested by its nature. If the act is in
pursuit of a sovereign activity, or an incident thereof, then it
is an act jure imperii, especially when it is not undertaken for
gain or profit.[33]

The OSG points out, citing Heirs of Mayor Nemencio Galvez v.


Court of Appeals,[31] that even when appeal is available, the Beyond dispute is the tenability of the comment points raised
Court has nonetheless allowed a writ of certiorari when the by GTZ and the OSG that GTZ was not performing proprietary
orders of the lower court were issued either in excess of or functions notwithstanding its entry into the particular
without jurisdiction. Indeed, the Court has ruled before that employment contracts. Yet there is an equally fundamental
the failure to employ available intermediate recourses, such premise which GTZ and the OSG fail to address, namely: Is
as a motion for reconsideration, is not a fatal infirmity if the GTZ, by conception, able to enjoy the Federal Republics
ruling assailed is a patent nullity. This approach suggested by immunity from suit?
the OSG allows the Court to inquire directly into what is the
main issuewhether GTZ enjoys immunity from suit.
The principle of state immunity from suit, whether a local
state or a foreign state, is reflected in Section 9, Article XVI of
the Constitution, which states that the State may not be sued
without its consent. Who or what consists of the State? For
one, the doctrine is available to foreign States insofar as they
are sought to be sued in the courts of the local State,
[34] necessary as it is to avoid unduly vexing the peace of
nations.
engaged in governmental functions and therefore should
enjoy the sovereign immunity from suit. Nevertheless, they
If the instant suit had been brought directly against the are subject to suit even in the performance of such functions
Federal Republic of Germany, there would be no doubt that it because their charter provides that they can sue and be
is a suit brought against a State, and the only necessary sued.[35]
inquiry is whether said State had consented to be sued.
However, the present suit was brought against GTZ. It is
necessary for us to understand what precisely are the State immunity from suit may be waived by general or
parameters of the legal personality of GTZ. special law.[36] The special law can take the form of the
original charter of the incorporated government agency.
Counsel for GTZ characterizes GTZ as the implementing Jurisprudence is replete with examples of incorporated
agency of the Government of the Federal Republic of government agencies which were ruled not
Germany, a depiction similarly adopted by the OSG. entitled to invoke immunity from suit, owing to provisions in
Assuming that characterization is correct, it does not their
automatically invest GTZ with the ability to invoke State charters manifesting their consent to be sued. These include
immunity from suit. The distinction lies in whether the the National Irrigation Administration,[37] the former Central
agency is incorporated or unincorporated. The following lucid Bank,[38] and the National Power Corporation.[39] In SSS v.
discussion from Justice Isagani Cruz is pertinent: Court of Appeals,[40]the Court through Justice Melencio-
Herrera explained that by virtue of an express provision in its
charter allowing it to sue and be sued, the Social Security
Where suit is filed not against the government itself or its System did not enjoy immunity from suit:
officials but against one of its entities, it must be ascertained
whether or not the State, as the principal that may ultimately We come now to the amendability of the SSS to judicial
be held liable, has given its consent to be sued. This action and legal responsibility for its acts. To our minds, there
ascertainment will depend in the first instance on whether should be no question on this score considering that the SSS
the government agency impleaded is incorporated or is a juridical entity with a personality of its own. It has
unincorporated. corporate powers separate and distinct from the
Government. SSS' own organic act specifically provides that
An incorporated agency has a charter of its own that invests it can sue and be sued in Court. These words "sue and be
it with a separate juridical personality, like the Social Security sued" embrace all civil process incident to a legal action. So
System, the University of the Philippines, and the City that, even assuming that the SSS, as it claims, enjoys
of Manila. By contrast, the unincorporated agency is so called immunity from suit as an entity performing governmental
because it has no separate juridical personality but is merged functions, by virtue of the explicit provision of the aforecited
in the general machinery of the government, like the enabling law, the Government must be deemed to have
Department of Justice, the Bureau of Mines and the waived immunity in respect of the SSS, although it does not
Government Printing Office. thereby concede its liability. That statutory law has given to
the private citizen a remedy for the enforcement and
If the agency is incorporated, the test of its suability is found protection of his rights. The SSS thereby has been required to
in its charter. The simple rule is that it is suable if its charter submit to the jurisdiction of the Courts, subject to its right to
says so, and this is true regardless of the functions it is interpose any lawful defense. Whether the SSS performs
performing. Municipal corporations, for example, like governmental or proprietary functions thus becomes
provinces and cities, are agencies of the State when they are unnecessary to belabor. For by that waiver, a private citizen
may bring a suit against it for varied objectives, such as, in projects.[42] The Labor Arbiter accepted that claim in his
this case, to obtain compensation in damages arising from Order denying the Motion to Dismiss,[43] though he was
contract, and even for tort. silent on that point in his Decision. Nevertheless, private
respondents argue in their Comment that the finding that
A recent case squarely in point anent the principle, involving GTZ was a private corporation was never controverted, and is
the National Power Corporation, is that of Rayo v. Court of therefore deemed admitted.[44] In its Reply, GTZ controverts
First Instance of Bulacan, 110 SCRA 457 (1981), wherein this that finding, saying that it is a matter of public knowledge
Court, speaking through Mr. Justice Vicente Abad Santos, that the status of petitioner GTZ is that of the implementing
ruled: agency, and not that of a private corporation.[45]

"It is not necessary to write an extended dissertation on In truth, private respondents were unable to adduce any
whether or not the NPC performs a governmental function evidence to substantiate their claim that GTZ was a private
with respect to the management and operation of the Angat corporation, and the Labor Arbiter acted rashly in accepting
Dam. It is sufficient to say that the government has such claim without explanation. But neither has GTZ supplied
organized a private corporation, put money in it and has any evidence defining its legal nature beyond that of the
allowed it to sue and be sued in any court under its charter. bare descriptive implementing agency. There is no doubt that
(R.A. No. 6395, Sec. 3[d]). As a government, owned and the 1991 Agreement designated GTZ as the implementing
controlled corporation, it has a personality of its own, distinct agency in behalf of the German government. Yet the catch is
and separate from that of the Government. Moreover, the that such term has no precise definition that is responsive to
charter provision that the NPC can 'sue and be sued in any our concerns. Inherently, an agent acts in behalf of a
court' is without qualification on the cause of action and principal, and the GTZ can be said to act in behalf of the
accordingly it can include a tort claim such as the one German state. But that is as far as implementing agency
instituted by the petitioners."[41] could take us. The term by itself does not supply whether
GTZ is incorporated or unincorporated, whether it is owned
It is useful to note that on the part of the Philippine by the German state or by private interests, whether it has
government, it had designated two entities, the Department juridical personality independent of the German government
of Health and the Philippine Health Insurance Corporation or none at all.
(PHIC), as the implementing agencies in behalf of
the Philippines. The PHIC was established under Republic Act GTZ itself provides a more helpful clue, inadvertently,
No. 7875, Section 16(g) of which grants the corporation the through its own official Internet website.[46] In the Corporate
power to sue and be sued in court. Applying the previously Profile section of the English language version of its site, GTZ
cited jurisprudence, PHIC would not enjoy immunity from suit describes itself as follows:
even in the performance of its functions connected with
SHINE, however, governmental in nature as they may be. As an international cooperation enterprise for sustainable
development with worldwide operations, the federally owned
Is GTZ an incorporated agency of the German government? Deutsche Gesellschaft fr Technische Zusammenarbeit (GTZ)
There is some mystery surrounding that question. Neither GmbH supports the German Government in achieving its
GTZ nor the OSG go beyond the claim that petitioner is the development-policy objectives. It provides viable, forward-
implementing agency of the Government of the Federal looking solutions for political, economic, ecological and social
Republic of Germany. On the other hand, private respondents development in a globalised world. Working under difficult
asserted before the Labor Arbiter that GTZ was a private conditions, GTZ promotes complex reforms and change
corporation engaged in the implementation of development
processes. Its corporate objective is to improve peoples living x x x Going by the principle of sustainable development, the
conditions on a sustainable basis. German Technical Cooperation (Deutsche Gesellschaft fr
Technische Zusammenarbeit GmbH, GTZ) takes on non-profit
GTZ is a federal enterprise based in Eschborn near Frankfurt projects in international technical cooperation. The GTZ is a
am Main. It was founded in 1975 as a company under private private company owned by the Federal Republic of Germany.
law. The German Federal Ministry for Economic Cooperation [49]
and Development (BMZ) is its major client. The company also
operates on behalf of other German ministries, the
governments of other countries and international clients, Again, we are uncertain of the corresponding legal
such as the European Commission, the United Nations and implications under German law surrounding a private
the World Bank, as well as on behalf of private enterprises. company owned by the Federal Republic of Germany. Yet
GTZ works on a public-benefit basis. All surpluses generated taking the description on face value, the apparent equivalent
are channeled [sic] back into its own international under Philippine law is that of a corporation organized under
cooperation projects for sustainable development.[47] the Corporation Code but owned by the Philippine
government, or a government-owned or controlled
corporation without original charter. And it bears notice that
GTZs own website elicits that petitioner is federally owned, a Section 36 of the Corporate Code states that [e]very
federal enterprise, and founded in 1975 as a company under corporation incorporated under this Code has the power and
private law. GTZ clearly has a very meaningful relationship capacity x x x to sue and be sued in its corporate name.[50]
with the Federal Republic of Germany, which apparently owns
it. At the same time, it appears that GTZ was actually It is entirely possible that under German law, an entity such
organized not through a legislative public charter, but under as GTZ or particularly GTZ itself has not been vested or has
private law, in the same way that Philippine corporations can been specifically deprived the power and capacity to sue
be organized under the Corporation Code even if fully owned and/or be sued. Yet in the proceedings below and before this
by the Philippine government. Court, GTZ has failed to establish that under German law, it
has not consented to be sued despite it being owned by the
This self-description of GTZ in its own official website gives Federal Republic of Germany. We
further cause for pause in adopting petitioners argument that adhere to the rulethat in the absence of evidence to the
GTZ is entitled to immunity from suit because it is an contrary,
implementing agency. The above-quoted statement does not foreign laws on a particular subject are presumed to be the
dispute the characterization of GTZ as an implementing same as those of the Philippines,[51] and following the most
agency of the Federal Republic of Germany, yet it bolsters intelligent assumption we can gather, GTZ is akin to a
the notion that as a company organized under private law, it governmental owned or controlled corporation without
has a legal personality independent of that of the Federal original charter which, by virtue of the Corporation Code, has
Republic of Germany. expressly consented to be sued. At the very least, like the
Labor Arbiter and the Court of Appeals, this Court has no
The Federal Republic of Germany, in its own official website, basis in fact to conclude or presume that GTZ enjoys
[48] also makes reference to GTZ and describes it in this immunity from suit.
manner:
This absence of basis in fact leads to another important
point, alluded to by the Labor Arbiter in his rulings. Our ruling
in Holy See v. Del Rosario[52] provided a template on how a
foreign entity desiring to invoke State immunity from suit Judge. The Solicitor General embodied the "suggestion" in a
could duly prove such immunity before our local courts. The Manifestation and Memorandum as amicus curiae.[53]
principles enunciated in that case were derived from public
international law. We stated then:
It is to be recalled that the Labor Arbiter, in both of his
In Public International Law, when a state or international rulings, noted that it was imperative for petitioners to secure
agency wishes to plead sovereign or diplomatic immunity in from the Department of Foreign Affairs a certification of
a foreign court, it requests the Foreign Office of the state respondents diplomatic status and entitlement to diplomatic
where it is sued to convey to the court that said defendant is privileges including immunity from suits.[54] The
entitled to immunity. requirement might not necessarily be imperative. However,
had GTZ obtained such certification from the DFA, it would
In the United States, the procedure followed is the process of have provided factual basis for its claim of immunity that
"suggestion," where the foreign state or the international would, at the very least, establish a disputable evidentiary
organization sued in an American court requests the presumption that the foreign party is indeed immune which
Secretary of State to make a determination as to whether it is the opposing party will have to overcome with its own factual
entitled to immunity. If the Secretary of State finds that the evidence. We do not see why GTZ could not have secured
defendant is immune from suit, he, in turn, asks the Attorney such certification or endorsement from the DFA for purposes
General to submit to the court a "suggestion" that the of this case. Certainly, it would have been highly prudential
defendant is entitled to immunity. InEngland, a similar for GTZ to obtain the same after the Labor Arbiter had denied
procedure is followed, only the Foreign Office issues a the motion to dismiss. Still, even at this juncture, we do not
certification to that effect instead of submitting a see any evidence that the DFA, the office of the executive
"suggestion" (O'Connell, I International Law 130 [1965]; Note: branch in charge of our diplomatic relations, has indeed
Immunity from Suit of Foreign Sovereign Instrumentalities endorsed GTZs claim of immunity. It may be possible that
and Obligations, 50 Yale Law Journal 1088 [1941]). GTZ tried, but failed to secure such certification, due to the
same concerns that we have discussed herein.
In the Philippines, the practice is for the foreign government
or the international organization to first secure an executive Would the fact that the Solicitor General has endorsed GTZs
endorsement of its claim of sovereign or diplomatic claim of States immunity from suit before this Court
immunity. But how the Philippine Foreign Office conveys its sufficiently substitute for the DFA certification? Note that the
endorsement to the courts varies. In International Catholic rule in public international law quoted in Holy See referred to
Migration Commission v. Calleja, 190 SCRA 130 (1990), the endorsement by the Foreign Office of the State where the
Secretary of Foreign Affairs just sent a letter directly to the suit is filed, such foreign office in the Philippines being the
Secretary of Labor and Employment, informing the latter that Department of Foreign Affairs. Nowhere in the Comment of
the respondent-employer could not be sued because it the OSG is it manifested that the DFA has endorsed GTZs
enjoyed diplomatic immunity. In World Health Organization v. claim, or that the OSG had solicited the DFAs views on the
Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs issue. The arguments raised by the OSG are virtually the
sent the trial court a telegram to that effect. In Baer v. Tizon, same as the arguments raised by GTZ without any indication
57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of of any special and distinct perspective maintained by the
Foreign Affairs to request the Solicitor General to make, in Philippine government on the issue. The Comment filed by
behalf of the Commander of the United States Naval Base at the OSG does not inspire the same degree of confidence as a
Olongapo City, Zambales, a "suggestion" to respondent certification from the DFA would have elicited.
Holy See made reference to Baer v. Tizon,[55] and that in the susceptible to review, respecting as we do the finality of the
said case, the United States Embassy asked the Secretary of Labor Arbiters Decision.
Foreign Affairs to request the Solicitor General to make a
suggestion to the trial court, accomplished by way of a A final note. This decision should not be seen as deviation
Manifestation and Memorandum, that the petitioner therein from the more common methodology employed in
enjoyed immunity as the Commander of the Subic Bay Naval ascertaining whether a party enjoys State immunity from
Base. Such circumstance is actually not narrated in the text suit, one which focuses on the particular functions exercised
of Baer itself and was likely supplied in Holy See because its by the party and determines whether these are proprietary or
author, Justice Camilio Quiason, had appeared as the Solicitor sovereign in nature. The nature of the acts performed by the
in behalf of the OSG in Baer. Nonetheless, as narrated in Holy entity invoking immunity remains the most important
See, it was the Secretary of Foreign Affairs which directed the barometer for testing whether the privilege of State
OSG to intervene in behalf of the United States government immunity from suit should apply. At the same time, our
in the Baer case, and such fact is manifest enough of the Constitution stipulates that a State immunity from suit is
endorsement by the Foreign Office. We do not find a similar conditional on its withholding of consent; hence, the laws and
circumstance that bears here. circumstances pertaining to the creation and legal
personality of an instrumentality or agency invoking
The Court is thus holds and so rules that GTZ consistently immunity remain relevant. Consent to be sued, as exhibited
has been unable to establish with satisfaction that it enjoys in this decision, is often conferred by the very same statute
the immunity from suit generally enjoyed by its parent or general law creating the instrumentality or agency.
country, the Federal Republic of Germany. Consequently,
both the Labor Arbiter and the Court of Appeals acted within WHEREFORE, the petition is DENIED. No pronouncement as
proper bounds when they refused to acknowledge that GTZ is to costs.
so immune by dismissing the complaint against it. Our
finding has additional ramifications on the failure of GTZ to
properly appeal the Labor Arbiters decision to the NLRC. As 3. LOCKHEED DETECTIVE AND WATCHMAN AGENCY
pointed out by the OSG, the direct recourse to the Court of INC. V. UNIVERSITY OF THE PHILIPPINES GR NO.
Appeals while bypassing the NLRC could have been 185918 APRIL 2012
sanctioned had the Labor Arbiters decision been a patent Before us is a petition for review on certiorari under Rule 45
nullity. Since the Labor Arbiter acted properly in deciding the of the 1997 Rules of Civil Procedure, as amended, assailing
complaint, notwithstanding GTZs claim of immunity, we the August 20, 2008 Amended Decision[1] and December 23,
cannot see how the decision could have translated into a 2008 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP
patent nullity. No. 91281.

As a result, there was no basis for petitioners in foregoing the The antecedent facts of the case are as follows:
appeal to the NLRC by filing directly with the Court of Appeals Petitioner Lockheed Detective and Watchman Agency, Inc.
the petition for certiorari. It then follows that the Court of (Lockheed) entered into a contract for security services with
Appeals acted correctly in dismissing the petition on that respondent University of the Philippines (UP).
ground. As a further consequence, since petitioners failed to In 1998, several security guards assigned to UP filed
perfect an appeal from the Labor Arbiters Decision, the same separate complaints against Lockheed and UP for payment of
has long become final and executory. All other questions underpaid wages, 25% overtime pay, premium pay for rest
related to this case, such as whether or not private days and special holidays, holiday pay, service incentive
respondents were illegally dismissed, are no longer leave pay, night shift differentials, 13th month pay, refund of
cash bond, refund of deductions for the Mutual Benefits Aids Third party respondent University of the Philippines is hereby
System (MBAS), unpaid wages from December 16-31, 1998, declared to be liable to Third Party Complainant and cross
and attorneys fees. claimant Lockheed Detective and Watchman Agency for the
On February 16, 2000, the Labor Arbiter rendered a decision unpaid legislated salary increases of the latters security
as follows: guards for the years 1996 to 1998, in the total amount of
P13,066,794.14, out of which amount the amounts due
WHEREFORE, premises considered, respondents Lockheed complainants here shall be paid.
Detective and Watchman Agency, Inc. and UP as job The other claims are hereby DISMISSED for lack of merit
contractor and principal, respectively, are hereby declared to (night shift differential and 13th month pay) or for having
be solidarily liable to complainants for the following claims of been paid in the course of this proceedings (salaries
the latter which are found meritorious. for December 15-31, 1997 in the amount of P40,140.44).
The claims of Erlindo Collado, Rogelio Banjao and Amor
Underpaid wages/salaries, premium pay for work on rest day Banjao are hereby DISMISSED as amicably settled for and in
and special holiday, holiday pay, 5 days service incentive consideration of the amounts of P12,315.72, P12,271.77 and
leave pay, 13th month pay for 1998, refund of cash bond P12,819.33, respectively.
(deducted at P50.00 per month from January to May 1996, SO ORDERED.[3]
P100.00 per month from June 1996 and P200.00 from Both Lockheed and UP appealed the Labor Arbiters
November 1997), refund of deduction for Mutual Benefits decision. By Decision[4] dated April 12, 2002, the NLRC
Aids System at the rate of P50.00 a month, and attorneys modified the Labor Arbiters decision. The NLRC held:
fees; in the total amount of P1,184,763.12 broken down as WHEREFORE, the decision appealed from is hereby modified
follows per attached computation of the Computation and as follows:
[E]xamination Unit of this Commission, which computation 1. Complainants claims for premium pay for work on rest
forms part of this Decision: day and special holiday, and 5 days service incentive leave
1. JOSE SABALAS P77,983.62 pay, are hereby dismissed for lack of basis.
2. TIRSO DOMASIAN 76,262.70 2. The respondent University of the Philippines is still
3. JUAN TAPEL 80,546.03 solidarily liable with Lockheed in the payment of the rest of
4. DINDO MURING 80,546.03 the claims covering the period of their service contract.
5. ALEXANDER ALLORDE 80,471.78 The Financial Analyst is hereby ordered to recompute the
6. WILFREDO ESCOBAR 80,160.63 awards of the complainants in accordance with the foregoing
7. FERDINAND VELASQUEZ 78,595.53 modifications.
8. ANTHONY GONZALES 76,869.97 SO ORDERED.[5]
9. SAMUEL ESCARIO 80,509.78
10. PEDRO FAILORINA 80,350.87 The complaining security guards and UP filed their respective
11. MATEO TANELA 70,590.58 motions for reconsideration. On August 14, 2002, however,
12. JOB SABALAS 59,362.40 the NLRC denied said motions.
13. ANDRES DACANAYAN 77,403.73 As the parties did not appeal the NLRC decision, the same
14. EDDIE OLIVAR 77,403.73 became final and executory on October 26, 2002.[6] A writ of
P1,077,057.38 execution was then issued but later quashed by the Labor
plus 10% attorneys fees 107,705.74 Arbiter on November 23, 2003 on motion of UP due to
GRAND TOTAL AWARD P1,184,763.12 disputes regarding the amount of the award. Later, however,
said order quashing the writ was reversed by the NLRC by
Resolution[7] dated June 8, 2004, disposing as follows:
WHEREFORE, premises considered, we grant this instant account cannot be disbursed except pursuant to an
appeal. The Order dated 23 November 2003 is hereby appropriation required by law. The Labor Arbiter, however,
reversed and set aside. The Labor Arbiter is directed to issue dismissed the urgent motion for lack of merit on August 30,
a Writ of Execution for the satisfaction of the judgment award 2005.[13]
in favor of Third-Party complainants. On September 2, 2005, the amount of P12,062,398.71 was
SO ORDERED.[8] withdrawn by the sheriff from UPs PNB account.[14]
On September 12, 2005, UP filed a petition for certiorari
UP moved to reconsider the NLRC resolution. On December before the CA based on the following grounds:
28, 2004, the NLRC upheld its resolution but with I.
modification that the satisfaction of the judgment award in The concept of solidary liability by an indirect employer
favor of Lockheed will be only against the funds of UP which notwithstanding, respondent NLRC gravely abused its
are not identified as public funds. discretion in a manner amounting to lack or excess of
The NLRC order and resolution having become final, jurisdiction by misusing such concept to justify the
Lockheed filed a motion for the issuance of an alias writ of garnishment by the executing Sheriff of public/government
execution. The same was granted on May 23, 2005.[9] funds belonging to UP.
On July 25, 2005, a Notice of Garnishment[10] was issued to
Philippine National Bank (PNB) UP Diliman Branch for the II.
satisfaction of the award of P12,142,522.69 (inclusive of Respondents NLRC and Arbiter LORA acted without
execution fee). jurisdiction or gravely abused their discretion in a manner
In a letter[11] dated August 9, 2005, PNB informed UP that it amounting to lack or excess of jurisdiction when, by means of
has received an order of release dated August 8, 2005 issued an Alias Writ of Execution against petitioner UP, they
by the Labor Arbiter directing PNB UP Diliman Branch to authorized respondent Sheriff to garnish UPs public funds.
release to the NLRC Cashier, through the assigned NLRC Similarly, respondent LORA gravely abused her discretion
Sheriff Max L. Lago, the judgment award/amount when she resolved petitioners Motion to Quash Notice of
of P12,142,522.69. PNB likewise reminded UP that the bank Garnishment addressed to, and intended for, the NLRC, and
only has 10 working days from receipt of the order to deliver when she unilaterally and arbitrarily disregarded an official
the garnished funds and unless it receives a notice from UP Certification that the funds garnished are public/government
or the NLRC before the expiry of the 10-day period regarding funds, and thereby allowed respondent Sheriff to withdraw
the issuance of a court order or writ of injunction discharging the same from PNB.
or enjoining the implementation and execution of the Notice
of Garnishment and Writ of Execution, the bank shall be III.
constrained to cause the release of the garnished funds in Respondents gravely abused their discretion in a manner
favor of the NLRC. amounting to lack or excess of jurisdiction when they,
On August 16, 2005, UP filed an Urgent Motion to Quash despite prior knowledge, effected the execution that caused
Garnishment.[12] UP contended that the funds being paralyzation and dislocation to petitioners governmental
subjected to garnishment at PNB are government/public functions.[15]
funds. As certified by the University Accountant, the subject On March 12, 2008, the CA rendered a
funds are covered by Savings Account No. 275-529999-8, decision[16] dismissing UPs petition for
under the name of UP System Trust Receipts, earmarked for certiorari. Citing Republic v. COCOFED,[17] which defines
Student Guaranty Deposit, Scholarship Fund, Student Fund, public funds as moneys belonging to the State or to any
Publications, Research Grants, and Miscellaneous Trust political subdivisions of the State, more specifically taxes,
Account. UP argued that as public funds, the subject PNB customs, duties and moneys raised by operation of law for
the support of the government or the discharge of its Executive Order No. 714 entitled Fiscal Control and
obligations, the appellate court ruled that the funds sought to Management of the Funds of UP recognizes that as an
be garnished do not seem to fall within the stated definition. institution of higher learning, UP has always granted full
On reconsideration, however, the CA issued the assailed management and control of its affairs including its financial
Amended Decision. It held that without departing from its affairs.[21] Therefore, it cannot shield itself from its private
findings that the funds covered in the savings account sought contractual liabilities by simply invoking the public character
to be garnished do not fall within the classification of public of its funds. Lockheed also cites several cases wherein it was
funds, it reconsiders the dismissal of the petition in light of ruled that funds of public corporations which can sue and be
the ruling in the case of National Electrification sued were not exempt from garnishment.
Administration v. Morales[18] which mandates that all money Lockheed likewise argues that the rulings in
claims against the government must first be filed with the the NEA and MIAA cases are inapplicable. It contends that UP
Commission on Audit (COA). is not similarly situated with NEA because the jurisdiction of
Lockheed moved to reconsider the amended decision but the COA over the accounts of UP is only on a post-audit basis. As
same was denied in the assailed CA Resolution to the MIAA case, the liability of MIAA pertains to the real
dated December 23, 2008. The CA cited Manila International estate taxes imposed by the City of Paranaque while the
Airport Authority v. Court of Appeals[19] which held that UP obligation of UP in this case involves a private contractual
ranks with MIAA, a government instrumentality exercising obligation. Lockheed also argues that the declaration
corporate powers but not organized as a stock or non-stock in MIAA specifically citing UP was mere obiter dictum.
corporation. While said corporations are government
instrumentalities, they are loosely called government Lockheed moreover submits that UP cannot invoke state
corporate entities but not government-owned and controlled immunity to justify and perpetrate an injustice. UP itself
corporations in the strict sense. admitted its liability and thus it should not be allowed to
renege on its contractual obligations. Lockheed contends that
Hence this petition by Lockheed raising the following this might create a ruinous precedent that would likely affect
arguments: the relationship between the public and private sectors.
1. RESPONDENT UP IS A GOVERNMENT ENTITY WITH A Lastly, Lockheed contends that UP cannot anymore seek the
SEPARATE AND DISTINCT PERSONALITY FROM THE NATIONAL quashal of the writ of execution and notice of garnishment as
GOVERNMENT AND HAS ITS OWN CHARTER GRANTING IT THE they are already fait accompli.
RIGHT TO SUE AND BE SUED. IT THEREFORE CANNOT AVAIL For its part, UP contends that it did not invoke the doctrine of
OF THE IMMUNITY FROM SUIT OF THE GOVERNMENT. NOT state immunity from suit in the proceedings a quo and in
HAVING IMMUNITY FROM SUIT, RESPONDENT UP CAN BE fact, it did not object to being sued before the labor
HELD LIABLE AND EXECUTION CAN THUS ENSUE. department. It maintains, however, that suability does not
2. MOREOVER, IF THE COURT LENDS IT ASSENT TO THE necessarily mean liability. UP argues that the CA correctly
INVOCATION OF THE DOCTRINE OF STATE IMMUNITY, THIS applied the NEA ruling when it held that all money claims
WILL RESULT [IN] GRAVE INJUSTICE. must be filed with the COA.
3. FURTHERMORE, THE PROTESTATIONS OF THE
RESPONDENT ARE TOO LATE IN THE DAY, AS THE EXECUTION As to alleged injustice that may result for invocation of state
PROCEEDINGS HAVE ALREADY BEEN TERMINATED.[20] immunity from suit, UP reiterates that it consented to be
sued and even participated in the proceedings
Lockheed contends that UP has its own separate and distinct below. Lockheed cannot now claim that invocation of state
juridical entity from the national government and has its own immunity, which UP did not invoke in the first place, can
charter. Thus, it can be sued and be held liable. Moreover, result in injustice.
We cannot subscribe to Lockheeds argument that NEA is not
On the fait accompli argument, UP argues that Lockheed similarly situated with UP because the COAs jurisdiction over
cannot wash its hands from liability for the consummated the latter is only on post-audit basis. A reading of the
garnishment and execution of UPs trust fund in the amount pertinent Commonwealth Act provision clearly shows that it
of P12,062,398.71. UP cites that damage was done to UP and does not make any distinction as to which of the government
the beneficiaries of the fund when said funds, which were subdivisions, agencies and instrumentalities, including
earmarked for specific educational purposes, were government-owned or controlled corporations and their
misapplied, for instance, to answer for the execution fee subsidiaries whose debts should be filed before the COA.
ofP120,123.98 unilaterally stipulated by the
sheriff. Lockheed, being the party which procured the illegal As to the fait accompli argument of Lockheed, contrary to its
garnishment, should be held primarily liable. The mere fact claim that there is nothing that can be done since the funds
that the CA set aside the writ of garnishment confirms the of UP had already been garnished, since the garnishment was
liability of Lockheed to reimburse and indemnify in erroneously carried out and did not go through the proper
accordance with law. procedure (the filing of a claim with the COA), UP is entitled
to reimbursement of the garnished funds plus interest of 6%
The petition has no merit. per annum, to be computed from the time of judicial demand
to be reckoned from the time UP filed a petition for certiorari
We agree with UP that there was no point for Lockheed in before the CA which occurred right after the withdrawal of
discussing the doctrine of state immunity from suit as this the garnished funds from PNB.
was never an issue in this case. Clearly, UP consented to be WHEREFORE, the petition for review on certiorari
sued when it participated in the proceedings below. What UP is DENIED for lack of merit. Petitioner Lockheed Detective
questions is the hasty garnishment of its funds in its PNB and Watchman Agency, Inc. is ordered
account. to REIMBURSE respondent University of the Philippines the
This Court finds that the CA correctly applied amount of P12,062,398.71 plus interest of 6% per annum, to
the NEA case. Like NEA, UP is a juridical personality separate be computed from September 12, 2005 up to the finality of
and distinct from the government and has the capacity to this Decision, and 12% interest on the entire amount from
sue and be sued. Thus, also like NEA, it cannot evade date of finality of this Decision until fully paid.
execution, and its funds may be subject to garnishment or
levy. However, before execution may be had, a claim for
payment of the judgment award must first be filed with the
COA.Under Commonwealth Act No. 327,[22] as amended by 4. AIR TRANSPORTATION OFFICE V. SPS. DAVID AND
Section 26 of P.D. No. 1445,[23] it is the COA which has ELISEA RAMOS GR NO. 159402 FEBRURARY 2011
primary jurisdiction to examine, audit and settle all debts and
claims of any sort due from or owing the Government or any The States immunity from suit does not extend to the
of its subdivisions, agencies and instrumentalities, including petitioner because it is an agency of the State engaged in an
government-owned or controlled corporations and their enterprise that is far from being the States exclusive
subsidiaries. With respect to money claims arising from the prerogative.
implementation of Republic Act No. 6758,[24] their allowance
or disallowance is for COA to decide, subject only to the Under challenge is the decision promulgated on May 14,
remedy of appeal by petition for certiorari to this Court.[25] 2003,[1] by which the Court of Appeals (CA) affirmed with
modification the decision rendered on February 21, 2001 by
the Regional Trial Court, Branch 61 (RTC), in Baguio City in
favor of the respondents.[2] WHEREFORE, the judgment is rendered ORDERING the
Antecedents defendant Air Transportation Office to pay the plaintiffs
DAVID and ELISEA RAMOS the following: (1) The amount
Spouses David and Elisea Ramos (respondents) discovered of P778,150.00 being the value of the parcel of land
that a portion of their land registered under Transfer appropriated by the defendant ATO as embodied in the Deed
Certificate of Title No. T-58894 of the Baguio City land of Sale, plus an annual interest of 12% from August 11, 1995,
records with an area of 985 square meters, more or less, was the date of the Deed of Sale until fully paid; (2) The amount
being used as part of the runway and running shoulder of of P150,000.00 by way of moral damages and P150,000.00
the Loakan Airport being operated by petitioner Air as exemplary damages; (3) the amount of P50,000.00 by way
Transportation Office (ATO). On August 11, 1995, the of attorneys fees plus P15,000.00 representing the 10, more
respondents agreed after negotiations to convey the affected or less, court appearances of plaintiffs counsel; (4) The costs
portion by deed of sale to the ATO in consideration of the of this suit.
amount of P778,150.00. However, the ATO failed to pay
despite repeated verbal and written demands. SO ORDERED.

Thus, on April 29, 1998, the respondents filed an action for In due course, the ATO appealed to the CA, which affirmed
collection against the ATO and some of its officials in the RTC the RTCs decision on May 14, 2003,[5] viz:
(docketed as Civil Case No. 4017-R and entitled Spouses
David and Elisea Ramos v. Air Transportation Office, Capt. IN VIEW OF ALL THE FOREGOING, the appealed decision is
Panfilo Villaruel, Gen. Carlos Tanega, and Mr. Cesar de Jesus). hereby AFFIRMED, with MODIFICATION that the awarded cost
therein is deleted, while that of moral and exemplary
In their answer, the ATO and its co-defendants invoked as an damages is reduced to P30,000.00 each, and attorneys fees
affirmative defense the issuance of Proclamation No. 1358, is lowered to P10,000.00.
whereby President Marcos had reserved certain parcels of No cost.
land that included the respondents affected portion for use of SO ORDERED.
the Loakan Airport. They asserted that the RTC had no
jurisdiction to entertain the action without the States consent Hence, this appeal by petition for review on certiorari.
considering that the deed of sale had been entered into in
the performance of governmental functions. Issue
On November 10, 1998, the RTC denied the ATOs motion for
a preliminary hearing of the affirmative defense. The only issue presented for resolution is whether the ATO
could be sued without the States consent.
After the RTC likewise denied the ATOs motion for
reconsideration on December 10, 1998, the ATO commenced
a special civil action for certiorari in the CA to assail the RTCs Ruling
orders. The CA dismissed the petition for certiorari, however,
upon its finding that the assailed orders were not tainted with The petition for review has no merit.
grave abuse of discretion.[3]
The immunity of the State from suit, known also as the
Subsequently, February 21, 2001, the RTC rendered its doctrine of sovereign immunity or non-suability of the State,
decision on the merits,[4] disposing:
is expressly provided in Article XVI of the 1987 [A] continued adherence to the doctrine of non-suability is
Constitution, viz: not to be deplored for as against the inconvenience that may
be caused private parties, the loss of governmental efficiency
Section 3. The State may not be sued without its consent. and the obstacle to the performance of its multifarious
functions are far greater if such a fundamental principle were
The immunity from suit is based on the political truism that abandoned and the availability of judicial remedy were not
the State, as a sovereign, can do no wrong. Moreover, as the thus restricted. With the well-known propensity on the part of
eminent Justice Holmes said in Kawananakoa v. Polyblank:[6] our people to go to court, at the least provocation, the loss of
time and energy required to defend against law suits, in the
The territory [of Hawaii], of course, could waive its exemption absence of such a basic principle that constitutes such an
(Smith v. Reeves, 178 US 436, 44 L ed 1140, 20 Sup. Ct. Rep. effective obstacle, could very well be imagined.
919), and it took no objection to the proceedings in the cases
cited if it could have done so. xxx But in the case at bar it did An unincorporated government agency without any separate
object, and the question raised is whether the plaintiffs were juridical personality of its own enjoys immunity from suit
bound to yield. Some doubts have been expressed as to the because it is invested with an inherent power of
source of the immunity of a sovereign power from suit sovereignty. Accordingly, a claim for damages against the
without its own permission, but the answer has been public agency cannot prosper; otherwise, the doctrine of sovereign
property since before the days of Hobbes. Leviathan, chap. immunity is violated.[11] However, the need to distinguish
26, 2. A sovereign is exempt from suit, not because of any between an unincorporated government agency performing
formal conception or obsolete theory, but on the logical and governmental function and one performing proprietary
practical ground that there can be no legal right as against functions has arisen. The immunity has been upheld in favor
the authority that makes the law on which the right of the former because its function is governmental or
depends. Car on peut bien recevoir loy d'autruy, mais il est incidental to such function;[12] it has not been upheld in
impossible par nature de se donner loy. Bodin, Republique, 1, favor of the latter whose function was not in pursuit of a
chap. 8, ed. 1629, p. 132; Sir John Eliot, De Jure Maiestatis, necessary function of government but was essentially a
chap. 3. Nemo suo statuto ligatur necessitative. Baldus, De business.[13]
Leg. et Const. Digna Vox, 2. ed. 1496, fol. 51b, ed. 1539, fol.
61.[7] Should the doctrine of sovereignty immunity or non-suability
of the State be extended to the ATO?
Practical considerations dictate the establishment of an
immunity from suit in favor of the State. Otherwise, and the In its challenged decision,[14] the CA answered in the
State is suable at the instance of every other individual, negative, holding:
government service may be severely obstructed and public
safety endangered because of the number of suits that the On the first assignment of error, appellants seek to impress
State has to defend against.[8] Several justifications have upon Us that the subject contract of sale partook of a
been offered to support the adoption of the doctrine in governmental character. Apropos, the lower court erred in
thePhilippines, but that offered in Providence Washington applying the High Courts ruling in National Airports
Insurance Co. v. Republic of the Philippines[9] is the most Corporation vs. Teodoro (91 Phil. 203 [1952]), arguing that
acceptable explanation, according to Father Bernas, a in Teodoro, the matter involved the collection of landing and
recognized commentator on Constitutional Law,[10] to wit: parking fees which is a proprietary function, while the case at
bar involves the maintenance and operation of aircraft and
air navigational facilities and services which are of a private entity were retained substantially in Republic Act
governmental functions. 776, Sec. 32(24) and (25). Said Act provides:

We are not persuaded. Sec. 32. Powers and Duties of the Administrator. Subject to
the general control and supervision of the Department Head,
Contrary to appellants conclusions, it was not merely the the Administrator shall have among others, the following
collection of landing and parking fees which was declared as powers and duties:
proprietary in nature by the High Court in Teodoro, but
management and maintenance of airport operations as a xxx
whole, as well. Thus, in the much later case of Civil (24) To administer, operate, manage, control, maintain and
Aeronautics Administration vs. Court of Appeals (167 SCRA develop the Manila International Airport and all government-
28 [1988]), the Supreme Court, reiterating the owned aerodromes except those controlled or operated by
pronouncements laid down in Teodoro, declared that the CAA the Armed Forces of the Philippines including such powers
(predecessor of ATO) is an agency not immune from suit, it and duties as: (a) to plan, design, construct, equip, expand,
being engaged in functions pertaining to a private entity. It improve, repair or alter aerodromes or such structures,
went on to explain in this wise: improvement or air navigation facilities; (b) to enter into,
make and execute contracts of any kind with any person,
xxx firm, or public or private corporation or entity;

The Civil Aeronautics Administration comes under the (25) To determine, fix, impose, collect and receive landing
category of a private entity. Although not a body corporate it fees, parking space fees, royalties on sales or deliveries,
was created, like the National Airports Corporation, not to direct or indirect, to any aircraft for its use of aviation
maintain a necessary function of government, but to run gasoline, oil and lubricants, spare parts, accessories and
what is essentially a business, even if revenues be not its supplies, tools, other royalties, fees or rentals for the use of
prime objective but rather the promotion of travel and the any of the property under its management and control.
convenience of the travelling public. It is engaged in an
enterprise which, far from being the exclusive prerogative of xxx
state, may, more than the construction of public roads, be
undertaken by private concerns. [National Airports Corp. v. From the foregoing, it can be seen that the CAA is tasked
Teodoro, supra, p. 207.] with private or non-governmental functions which operate to
remove it from the purview of the rule on State immunity
xxx from suit. For the correct rule as set forth in the Teodoro case
states:
True, the law prevailing in 1952 when the Teodoro case was
promulgated was Exec. Order 365 (Reorganizing the Civil xxx
Aeronautics Administration and Abolishing the National
Airports Corporation). Republic Act No. 776 (Civil Aeronautics Not all government entities, whether corporate or non-
Act of the Philippines), subsequently enacted on June 20, corporate, are immune from suits. Immunity from suits is
1952, did not alter the character of the CAAs objectives determined by the character of the objects for which the
under Exec. Order 365. The pertinent provisions cited in entity was organized. The rule is thus stated in Corpus Juris:
the Teodorocase, particularly Secs. 3 and 4 of Exec. Order
365, which led the Court to consider the CAA in the category
Suits against State agencies with relation to matters in which suability of the State of two cases (one of which was for
they have assumed to act in private or non-governmental damages) filed by owners of property where a road 9 meters
capacity, and various suits against certain corporations wide and 128.70 meters long occupying a total area of 1,165
created by the state for public purposes, but to engage in square meters and an artificial creek 23.20 meters wide and
matters partaking more of the nature of ordinary business 128.69 meters long occupying an area of 2,906 square
rather than functions of a governmental or political meters had been constructed by the provincial engineer of
character, are not regarded as suits against the state. The Rizal and a private contractor without the owners knowledge
latter is true, although the state may own stock or property and consent was reversed and the cases remanded for trial
of such a corporation for by engaging in business operations on the merits. The Supreme Court ruled that the doctrine of
through a corporation, the state divests itself so far of its sovereign immunity was not an instrument for perpetrating
sovereign character, and by implication consents to suits any injustice on a citizen. In exercising the right of eminent
against the corporation. (59 C.J., 313) [National Airports domain, the Court explained, the State exercised its jus
Corporation v. Teodoro, supra, pp. 206-207; Italics supplied.] imperii, as distinguished from its proprietary rights, or jus
gestionis; yet, even in that area, where private property had
This doctrine has been reaffirmed in the recent case been taken in expropriation without just compensation being
of Malong v. Philippine National Railways [G.R. No. L-49930, paid, the defense of immunity from suit could not be set up
August 7, 1985, 138 SCRA 63], where it was held that the by the State against an action for payment by the owners.
Philippine National Railways, although owned and operated
by the government, was not immune from suit as it does not Lastly, the issue of whether or not the ATO could be sued
exercise sovereign but purely proprietary and business without the States consent has been rendered moot by the
functions. Accordingly, as the CAA was created to undertake passage of Republic Act No. 9497, otherwise known as
the management of airport operations which primarily the Civil Aviation Authority Act of 2008.
involve proprietary functions, it cannot avail of the immunity
from suit accorded to government agencies performing R.A. No. 9497 abolished the ATO, to wit:
strictly governmental functions.[15]
Section 4. Creation of the Authority. There is hereby created
In our view, the CA thereby correctly appreciated the juridical an independent regulatory body with quasi-judicial and quasi-
character of the ATO as an agency of the Government not legislative powers and possessing corporate attributes to be
performing a purely governmental or sovereign function, but known as the Civil Aviation Authority of the Philippines
was instead involved in the management and maintenance of (CAAP), herein after referred to as the Authority attached to
the Loakan Airport, an activity that was not the exclusive the Department of Transportation and Communications
prerogative of the State in its sovereign capacity. Hence, the (DOTC) for the purpose of policy coordination. For this
ATO had no claim to the States immunity from suit. We purpose, the existing Air transportation Office created under
uphold the CAs aforequoted holding. the provisions of Republic Act No. 776, as amended is hereby
abolished.
We further observe the doctrine of sovereign immunity xxx
cannot be successfully invoked to defeat a valid claim for
compensation arising from the taking without just Under its Transitory Provisions, R.A. No. 9497 established in
compensation and without the proper expropriation place of the ATO the Civil Aviation Authority of the Philippines
proceedings being first resorted to of the plaintiffs property. (CAAP), which thereby assumed all of the ATOs powers,
[16] Thus, in De los Santos v. Intermediate Appellate Court, duties and rights, assets, real and personal properties, funds,
[17] the trial courts dismissal based on the doctrine of non- and revenues, viz:
5. GREGORIO R. VIGILAR, SEC. OF DPWH, ET AL. V.
CHAPTER XII ARNULFO AQUINO GR NO. 180388 JANUARY 2011
TRANSITORTY PROVISIONS Before the Court is a Petition for Review on Certiorari1 under
Section 85. Abolition of the Air Transportation Office. The Air Rule 45 of the Rules of Court, assailing the Decision2 of the
Transportation Office (ATO) created under Republic Act No. Court of Appeals in C.A.-G.R. CV No. 82268, dated 25
776, a sectoral office of the Department of Transportation September 2006.
and Communications (DOTC), is hereby abolished. The antecedent facts are as follows:
On 19 June 1992, petitioner Angelito M. Twao, then Officer-
All powers, duties and rights vested by law and exercised by in-Charge (OIC)-District Engineer of the Department of Public
the ATO is hereby transferred to the Authority. Works and Highways (DPWH) 2nd Engineering District of
Pampanga sent an Invitation to Bid to respondent Arnulfo D.
Aquino, the owner of A.D. Aquino Construction and Supplies.
All assets, real and personal properties, funds and revenues The bidding was for the construction of a dike by bulldozing a
owned by or vested in the different offices of the ATO are part of the Porac River at Barangay Ascomo-Pulungmasle,
transferred to the Authority. All contracts, records and Guagua, Pampanga.
documents relating to the operations of the abolished
agency and its offices and branches are likewise transferred Subsequently, on 7 July 1992, the project was awarded to
to the Authority. Any real property owned by the national respondent, and a "Contract of Agreement" was thereafter
government or government-owned corporation or executed between him and concerned petitioners for the
authority which is being used and utilized as office or amount of PhP1,873,790.69, to cover the project cost.
facility by the ATO shall be transferred and titled in favor of By 9 July 1992, the project was duly completed by
the Authority. respondent, who was then issued a Certificate of Project
Section 23 of R.A. No. 9497 enumerates the corporate Completion dated 16 July 1992. The certificate was signed by
powers vested in the CAAP, including the power to sue and Romeo M. Yumul, the Project Engineer; as well as petitioner
be sued, to enter into contracts of every class, kind and Romeo N. Supan, Chief of the Construction Section, and by
description, to construct,acquire, own, hold, operate, petitioner Twao.
maintain, administer and lease personal and real properties, Respondent Aquino, however, claimed that PhP1,262,696.20
and to settle, under such terms and conditions most was still due him, but petitioners refused to pay the amount.
advantageous to it, any claim by or against it.[18] He thus filed a Complaint3 for the collection of sum of money
with damages before the Regional Trial Court of Guagua,
With the CAAP having legally succeeded the ATO pursuant to Pampanga. The complaint was docketed as Civil Case No.
R.A. No. 9497, the obligations that the ATO had incurred by 3137.
virtue of the deed of sale with the Ramos spouses might now Petitioners, for their part, set up the defense4 that the
be enforced against the CAAP. Complaint was a suit against the state; that respondent failed
to exhaust administrative remedies; and that the "Contract of
WHEREFORE, the Court denies the petition for review Agreement" covering the project was void for violating
on certiorari, and affirms the decision promulgated by the Presidential Decree No. 1445, absent the proper
Court of Appeals. appropriation and the Certificate of Availability of Funds.5

No pronouncement on costs of suit. On 28 November 2003, the lower court ruled in favor of
respondent, to wit:
WHEREFORE, premises considered, defendant Department of 2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT
Public Works and Highways is hereby ordered to pay the DISMISSING THE COMPLAINT FOR FAILURE OF RESPONDENT
plaintiff Arnulfo D. Aquino the following: TO EXHAUST ALL ADMINISTRATIVE REMEDIES.
1. PhP1,873,790.69, Philippine Currency, representing actual 3. WHETHER OR NOT THE COURT OF APPEALS ERRED IN
amount for the completion of the project done by the ORDERING THE COA TO ALLOW PAYMENT TO RESPONDENT
plaintiff; ON A QUANTUM MERUIT BASIS DESPITE THE LATTERS
2. PhP50,000.00 as attorneys fee and FAILURE TO COMPLY WITH THE REQUIREMENTS OF
3. Cost of this suit. PRESIDENTIAL DECREE NO. 1445.
SO ORDERED. 6
After a judicious review of the case, the Court finds the
It is to be noted that respondent was only asking for Petition to be without merit.
PhP1,262,696.20; the award in paragraph 1 above, however, Firstly, petitioners claim that the Complaint filed by
conforms to the entire contract amount. respondent before the Regional Trial Court was done without
On appeal, the Court of Appeals reversed and set aside the exhausting administrative remedies. Petitioners aver that
Decision of the lower court and disposed as follows: respondent should have first filed a claim before the
WHEREFORE, premises considered, the appeal is GRANTED. Commission on Audit (COA) before going to the courts.
The "CONTRACT AGREEMENT" entered into between the However, it has been established that the doctrine of
plaintiff-appellees construction company, which he exhaustion of administrative remedies and the doctrine of
represented, and the government, through the Department primary jurisdiction are not ironclad rules. In Republic of the
of Public Works and Highway (DPWH) Pampanga 2nd Philippines v. Lacap,9 this Court enumerated the numerous
Engineering District, is declared null and void ab initio. exceptions to these rules, namely: (a) where there is estoppel
The assailed decision of the court a quo is hereby REVERSED on the part of the party invoking the doctrine; (b) where the
AND SET ASIDE. challenged administrative act is patently illegal, amounting
In line with the pronouncement in Department of Health vs. to lack of jurisdiction; (c) where there is unreasonable delay
C.V. Canchela & Associates, Architects,7 the Commission on or official inaction that will irretrievably prejudice the
Audit (COA) is hereby ordered to determine and ascertain complainant; (d) where the amount involved is relatively so
with dispatch, on a quantum meruit basis, the total obligation small as to make the rule impractical and oppressive; (e)
due to the plaintiff-appellee for his undertaking in where the question involved is purely legal and will ultimately
implementing the subject contract of public works, and to have to be decided by the courts of justice; (f) where judicial
allow payment thereof, subject to COA Rules and Regulations, intervention is urgent; (g) where the application of the
upon the completion of the said determination. doctrine may cause great and irreparable damage; (h) where
No pronouncement as to costs. the controverted acts violate due process; (i) where the issue
SO ORDERED.8 of non-exhaustion of administrative remedies has been
rendered moot; (j) where there is no other plain, speedy and
Dissatisfied with the Decision of the Court of Appeals, adequate remedy; (k) where strong public interest is
petitioners are now before this Court, seeking a reversal of involved; and (l) in quo warranto proceedings. In the present
the appellate courts Decision and a dismissal of the case, conditions (c) and (e) are present.
Complaint in Civil Case No. G-3137. The Petition raises the
following issues: The government project contracted out to respondent was
1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN completed almost two decades ago. To delay the proceedings
HOLDING THAT THE DOCTRINE OF NON-SUABILITY OF THE by remanding the case to the relevant government office or
STATE HAS NO APPLICATION IN THIS CASE. agency will definitely prejudice respondent. More
importantly, the issues in the present case involve the 1992. For almost two decades, the public and the
validity and the enforceability of the "Contract of Agreement" government benefitted from the work done by respondent.
entered into by the parties. These are questions purely of law Thus, the Court of Appeals was correct in applying Eslao to
and clearly beyond the expertise of the Commission on Audit the present case. In Eslao, this Court stated:
or the DPWH. In Lacap, this Court said: ...the Court finds that the contractor should be duly
... It does not involve an examination of the probative value compensated for services rendered, which were for the
of the evidence presented by the parties. There is a question benefit of the general public. To deny the payment to the
of law when the doubt or difference arises as to what the law contractor of the two buildings which are almost fully
is on a certain state of facts, and not as to the truth or the completed and presently occupied by the university would be
falsehood of alleged facts. Said question at best could be to allow the government to unjustly enrich itself at the
resolved only tentatively by the administrative authorities. expense of another. Justice and equity demand compensation
The final decision on the matter rests not with them but with on the basis of quantum meruit. (Emphasis supplied.)
the courts of justice. Exhaustion of administrative remedies Neither can petitioners escape the obligation to compensate
does not apply, because nothing of an administrative nature respondent for services rendered and work done by invoking
is to be or can be done. The issue does not require technical the states immunity from suit. This Court has long
knowledge and experience but one that would involve the established in Ministerio v. CFI of Cebu,16 and recently
interpretation and application of law. (Emphasis supplied.) reiterated in Heirs of Pidacan v. ATO,17 that the doctrine of
Secondly, in ordering the payment of the obligation due governmental immunity from suit cannot serve as an
respondent on a quantum meruit basis, the Court of Appeals instrument for perpetrating an injustice to a citizen. As this
correctly relied on Royal Trust Corporation v. COA,10 Eslao v. Court enunciated in EPG Construction:181avvphi1
COA,11 Melchor v. COA,12 EPG Construction Company v. To our mind, it would be the apex of injustice and highly
Vigilar,13 and Department of Health v. C.V. Canchela & inequitable to defeat respondents right to be duly
Associates, Architects.14 All these cases involved compensated for actual work performed and services
government projects undertaken in violation of the relevant rendered, where both the government and the public have
laws, rules and regulations covering public bidding, budget for years received and accepted benefits from the project
appropriations, and release of funds for the projects. and reaped the fruits of respondents honest toil and labor.
Consistently in these cases, this Court has held that the xxx xxx xxx
contracts were void for failing to meet the requirements Under these circumstances, respondent may not validly
mandated by law; public interest and equity, however, invoke the Royal Prerogative of Dishonesty and conveniently
dictate that the contractor should be compensated for hide under the State's cloak of invincibility against suit,
services rendered and work done. considering that this principle yields to certain settled
Specifically, C.V. Canchela & Associates is similar to the case exceptions. True enough, the rule, in any case, is not
at bar, in that the contracts involved in both cases failed to absolute for it does not say that the state may not be sued
comply with the relevant provisions of Presidential Decree under any circumstance.
No. 1445 and the Revised Administrative Code of 1987.
Nevertheless, "(t)he illegality of the subject Agreements xxx xxx xxx
proceeds, it bears emphasis, from an express declaration or Although the Amigable and Ministerio cases generously
prohibition by law, not from any intrinsic illegality. As such, tackled the issue of the State's immunity from suit vis a vis
the Agreements are not illegal per se, and the party claiming the payment of just compensation for expropriated property,
thereunder may recover what had been paid or delivered."15 this Court nonetheless finds the doctrine enunciated in the
The government project involved in this case, the aforementioned cases applicable to the instant
construction of a dike, was completed way back on 9 July controversy, considering that the ends of justice would be
subverted if we were to uphold, in this particular instance, complaint for damages[1] against Shell before the Regional
the State's immunity from suit. Trial Court (RTC), Branch 41, Pinamalayan, Oriental
To be sure, this Court as the staunch guardian of the Mindoro. Jalos, et al claimed that they were all subsistence
citizens' rights and welfare cannot sanction an injustice so fishermen from the coastal barangay of Bansud, Oriental
patent on its face, and allow itself to be an instrument in the Mindoro whose livelihood was adversely affected by the
perpetration thereof. Justice and equity sternly demand that construction and operation of Shells natural gas pipeline.
the State's cloak of invincibility against suit be shred in this
particular instance, and that petitioners-contractors be duly Jalos, et al claimed that their fish catch became few after the
compensated on the basis of quantum meruit for construction of the pipeline. As a result, their average net
construction done on the public works housing income per month fell from a high of P4,848.00 to
project. (Emphasis supplied.) only P573.00. They said that the pipeline greatly affected
WHEREFORE, in view of the foregoing, the Petition biogenically hard-structured communities such as coral reefs
is DENIED for lack of merit. The assailed Decision of the Court and led [to] stress to the marine life in the Mindoro Sea. They
of Appeals in CA-G.R. No. 82268 dated 25 September 2006 now have to stay longer and farther out at sea to catch fish,
is AFFIRMED. as the pipelines operation has driven the fish population out
SO ORDERED. of coastal waters.[2]

Instead of filing an answer, Shell moved for dismissal of the


complaint. It alleged that the trial court had no jurisdiction
6. SHELL PHILIPPINES EXPLORATION V. FREN JALOS, ET over the action, as it is a pollution case under Republic Act
AL. GR NO 179918 SEPTEMBER 2010 (R.A.) 3931, as amended by Presidential Decree (P.D.) 984 or
This case is about a question of jurisdiction over an action the Pollution Control Law. Under these statutes, the Pollution
against a petroleum contractor, whose pipeline operation has Adjudication Board (PAB) has primary jurisdiction over
allegedly driven the fish away from coastal areas, inflicting pollution cases and actions for related damages.[3]
loss of earnings among fishermen.
Shell also claimed that it could not be sued pursuant to the
The Facts and the Case doctrine of state immunity without the States consent. Shell
said that under Service Contract 38, it served merely as an
On December 11, 1990 petitioner Shell Philippines agent of the Philippine government in the development of the
Exploration B.V. (Shell) and the Republic of Malampaya gas reserves.
the Philippines entered into Service Contract 38 for the
exploration and extraction of petroleum in Moreover, said Shell, the complaint failed to state a cause of
northwesternPalawan. Two years later, Shell discovered action since it did not specify any actionable wrong or
natural gas in the Camago-Malampaya area and pursued its particular act or omission on Shells part that could have
development of the well under the Malampaya Natural Gas caused the alleged injury to Jalos, et al. The complaint
Project. This entailed the construction and installation of a likewise failed to comply with requirements of a valid class
pipeline from Shells production platform to its gas processing suit, verification and certification against forum shopping,
plant in Batangas. The pipeline spanned 504 kilometers and and the requisites for a suit brought by pauper litigants.[4]
crossed the Oriental Mindoro Sea.
On March 24, 2004 the RTC dismissed the complaint. It ruled
On May 19, 2003, respondents Efren Jalos, Joven Campang, that the action was actually pollution-related, although
Arnaldo Mijares, and 75 other individuals (Jalos, et al) filed a denominated as one for damages. The complaint should thus
be brought first before the PAB, the government agency 1. Whether or not the complaint is a pollution case that falls
vested with jurisdiction over pollution-related cases.[5] within the primary jurisdiction of the PAB;
Jalos, et al assailed the RTCs order through a petition
for certiorari[6] before the Court of Appeals (CA). In due 2. Whether or not the complaint sufficiently alleges a cause
course, the latter court reversed such order and upheld the of action against Shell; and
jurisdiction of the RTC over the action. It said that Shell was
not being sued for committing pollution, but for constructing 3. Whether or not the suit is actually against the State and is
and operating a natural gas pipeline that caused fish decline barred under the doctrine of state immunity.
and considerable reduction in the fishermens income. The
claim for damages was thus based on a quasi-delict over The Courts Rulings
which the regular courts have jurisdiction.
The CA also rejected Shells assertion that the suit was First. Although the complaint of Jalos, et al does not use the
actually against the State. It observed that the government word pollution in describing the cause of the alleged fish
was not even impleaded as party defendant. It gave short decline in the Mindoro Sea, it is unmistakable based on their
shrift to Shells insistence that, under the service contract, the allegations that Shells pipeline produced some kind of poison
government was solidarily liable with Shell for damages or emission that drove the fish away from the coastal
caused to third persons. Besides, the State should be areas. While the complaint did not specifically attribute to
deemed to have given its consent to be sued when it entered Shell any specific act of pollution, it alleged that the pipeline
into the contract with Shell. greatly affected biogenically hard-structured communities
such as coral reefs and led [to] stress to the marine life in
The CA also held that the complaint sufficiently alleged an the Mindoro Sea.[10] This constitutes pollution as defined by
actionable wrong. Jalos, et al invoked their right to fish the law.
sea and earn a living, which Shell had the correlative
obligation to respect. Failure to observe such obligation Section 2(a) of P.D. 984 defines pollution as any alteration of
resulted in a violation of the fishermens rights and thus gave the physical, chemical and biological properties of any
rise to a cause of action for damages.[7] water x x x as will or is likely to create or render such water x
x x harmful, detrimental or injurious to public health, safety
Finally, the CA held that Jalos, et al substantially complied or welfare or which will adversely affect their utilization for
with the technical requirements for filing the action. But since domestic, commercial, industrial, agricultural, recreational or
they failed to prove the requisites of a class suit, only those other legitimate purposes.
who have verified the complaint should be deemed party
plaintiffs.[8] It is clear from this definition that the stress to marine life
claimed by Jalos, et al is caused by some kind of pollution
Shell moved for reconsideration of the CAs decision but the emanating from Shells natural gas pipeline. The pipeline,
same was denied.[9] Hence, it filed this petition for review they said, greatly affected or altered the natural habitat of
under Rule 45. fish and affected the coastal waters natural function as
fishing grounds. Inevitably, in resolving Jalos, et als claim for
The Issues Presented damages, the proper tribunal must determine whether or not
the operation of the pipeline adversely altered the coastal
The case presents the following issues: waters properties and negatively affected its life sustaining
function. The power and expertise needed to determine such
issue lies with the PAB.
contain some scientific explanation regarding how the
Executive Order 192 (1987) transferred to the PAB the construction and operation of the pipeline disturbed the
powers and functions of the National Pollution and Control waters and drove away the fish from their usual habitat as
Commission provided in R.A. 3931, as amended by P.D. 984. the fishermen claimed. But lack of particulars is not a ground
[11] These empowered the PAB to [d]etermine the location, for dismissing the complaint.
magnitude, extent, severity, causes and effects of water
pollution.[12] Among its functions is to [s]erve as arbitrator A cause of action is the wrongful act or omission committed
for the determination of reparation, or restitution of the by the defendant in violation of the primary rights of the
damages and losses resulting from pollution. In this regard, plaintiff.[20] Its elements consist of: (1) a right existing in
the PAB has the power to conduct hearings,[13] impose favor of the plaintiff, (2) a duty on the part of the defendant
penalties for violation of P.D. 984,[14] and issue writs of to respect the plaintiffs right, and (3) an act or omission of
execution to enforce its orders and decisions.[15] The PABs the defendant in violation of such right.[21] To sustain a
final decisions may be reviewed by the CA under Rule 43 of motion to dismiss for lack of cause of action, however, the
the Rules of Court.[16] complaint must show that the claim for relief does not exist
and not only that the claim was defectively stated or is
Jalos, et al had, therefore, an administrative recourse before ambiguous, indefinite or uncertain.[22]
filing their complaint with the regular courts.[17] The laws Here, all the elements of a cause of action are present. First,
creating the PAB and vesting it with powers are wise. The Jalos, et al undoubtedly had the right to the preferential use
definition of the term pollution itself connotes the need for of marine and fishing resources which is guaranteed by no
specialized knowledge and skills, technical and scientific, in less than the Constitution.[23]Second, Shell had the
determining the presence, the cause, and the effects of correlative duty to refrain from acts or omissions that could
pollution. These knowledge and skills are not within the impair Jalos, et als use and enjoyment of the bounties of the
competence of ordinary courts.[18] Consequently, resort seas. Lastly, Shells construction and operation of the
must first be made to the PAB, which is the agency pipeline, which is an act of physical intrusion into the marine
possessed of expertise in determining pollution-related environment, is said to have disrupted and impaired the
matters. natural habitat of fish and resulted in considerable reduction
of fish catch and income for Jalos, et al.
To this extent, the failure of Jalos, et al to allege in their Thus, the construction and operation of the pipeline may, in
complaint that they had first taken resort to PAB before going itself, be a wrongful act that could be the basis of Jalos, et als
to court means that they failed to state a cause of action that cause of action. The rules do not require that the complaint
the RTC could act on.This warranted the dismissal of their establish in detail the causal link between the construction
action.[19] and operation of the pipeline, on the one hand, and the fish
decline and loss of income, on the other hand, it being
Second. Still, Shell points out that the complaint also states sufficient that the complaint states the ultimate facts on
no cause of action because it failed to specify any actionable which it bases its claim for relief. The test for determining the
wrong or particular act or omission on Shells part. The Court sufficiency of a cause of action rests on whether the
cannot agree. complaint alleges facts which, if true, would justify the relief
demanded.[24] In this case, a valid judgment for damages
As mentioned above, the complaint said that the natural gas can be made in favor of Jalos, et al, if the construction and
pipelines construction and operation greatly affected the operation of the pipeline indeed caused fish decline and
marine environment, drove away the fish, and resulted in eventually led to the fishermens loss of income, as alleged in
reduced income for Jalos, et al. True, the complaint did not the complaint.
recognized that Shell could be sued in relation to the
Third. Shell claims that it cannot be sued without the States project. This is evident in the stipulations agreed upon by the
consent under the doctrine of state immunity from suit. But, parties under Service Contract 38.
to begin with, Shell is not an agent of the Republic of
the Philippines. It is but a service contractor for the Article II, paragraph 8, Annex B of Service Contract
exploration and development of one of the countrys natural 38[32] states that legal expenses, including judgments
gas reserves. While the Republic appointed Shell as the obtained against the Parties or any of them on account of the
exclusive party to conduct petroleum operations in the Petroleum Operations, can be recovered by Shell as part of
Camago-Malampayo area under the States full control and operating expenses to be deducted from gross
supervision,[25] it does not follow that Shell has become the proceeds. Article II, paragraph 9B of the same document
States agent within the meaning of the law. allows a similar recovery for [a]ll actual expenditures incurred
An agent is a person who binds himself to render some and paid by CONTRACTOR [Shell] in settlement of any and all
service or to do something in representation or on behalf of losses, claims, damages, judgments, and any other expenses
another, with the consent or authority of the latter.[26] The not covered by insurance, including legal services. This
essence of an agency is the agents ability to represent his signifies that the State itself acknowledged the suability of
principal and bring about business relations between the Shell. Since payment of claims and damages pursuant to a
latter and third persons.[27] An agents ultimate undertaking judgment against Shell can be deducted from gross
is to execute juridical acts that would create, modify or proceeds, the State will not be required to perform any
extinguish relations between his principal and third persons. additional affirmative act to satisfy such a judgment.
[28] It is this power to affect the principals contractual
relations with third persons that differentiates the agent from In sum, while the complaint in this case sufficiently alleges a
a service contractor. cause of action, the same must be filed with the PAB, which
is the government agency tasked to adjudicate pollution-
Shells main undertaking under Service Contract 38 is to related cases. Shell is not an agent of the State and may thus
[p]erform all petroleum operations and provide all necessary be sued before that body for any damages caused by its
technology and finance as well as other connected operations. The parties may appeal the PABs decision to the
services[29] to the Philippine government. As defined under CA. But pending prior determination by the PAB, courts
the contract, petroleum operation means the searching for cannot take cognizance of the complaint.
and obtaining Petroleum within the Philippines, including the
transportation, storage, handling and sale of petroleum WHEREFORE, the Court GRANTS the petition
whether for export or domestic consumption.[30] Shells and REVERSES the decision of the Court of Appeals in CA-
primary obligation under the contract is not to represent the G.R. CV 82404 dated November 20, 2006. Respondent Efren
Philippine government for the purpose of transacting Jalos, et als complaint for damages against Shell Philippines
business with third persons. Rather, its contractual Exploration B.V. in Civil Case P-1818-03 of the Regional Trial
commitment is to develop and manage petroleum operations Court, Branch 41, Pinamalayan, Oriental Mindoro is
on behalf of the State. ordered DISMISSED without prejudice to its refiling with the
Pollution Adjudication Board or PAB.
Consequently, Shell is not an agent of the Philippine
government, but a provider of services, technology and SO ORDERED.
financing[31] for the Malampaya Natural Gas Project. It is not
immune from suit and may be sued for claims even without
the States consent. Notably, the Philippine government itself
D. PRINCIPLES AND POLICIES 2. GOVERNMENT OF THE PHILIPPINE ISLAND V. MONTE
I. PRINCIPLES (ART II, SEC 1-6) DE PIEDAD 35 SCRA 738
1.1 MANIFESTATIONS OF A REPUBLICAN STATE
1.2 CONSTITUENT AND MINISTRANT FUNCTIONS Facts:
OF THE GOVERNMENT 1. Spain paid $400,000 into the treasury of the Philippine
1.3 DE JURE AND DE FACTO GOVERNMENT Islands for the relief of those damaged by an earthquake.
1.4 DOCTRINE OF INCORPORATION 2. Upon the petition of Monte de Piedad, an institution under
the control of the church, the Philippine Government directed
CASES: its treasurer to give $80,000 of the relief fund in Four (4)4
1. ROMUALDEZ-YAP V. VSV 225 SCRA 285 installments. As a result, various petitions were
FACTS: filed, including the heirs of those entitled to the allotments.
Petitoner Conchita Romualdez-Yap started working with the All prayed for the State to bring suit against Monte de Piedad,
Philippine National Bank (PNB) on September 20, 1972 and and for it to pay with interest.
after several promotions, was appointed in 1983 as a Senior 3. The Defendant appealed since all its funds have been
Vice President assigned to the Fund Transfer Department. The exhausted already on various jewelry loans.
case at bar is a special civil action for certiorari assailing Res.
No. 92-201 of the respondent which upheld the petitioners Issue: Whether the government is the proper authority to the
separation from PNB in light of EO 80 or the Revised Charter cause of action
of PNB. Petitioner contends that there is an existence of bad
faith in its reorganization and that there is an erroneous YES.
application of the one year prescriptive period for quo
warranto proceedings in her case. The Philippine government, as a trustee towards the funds
could maintain the action since there has been no change of
ISSUE: sovereignty. The state, as a sovereign, is the parens
Is the reorganization of PNB, a government-owned or patriae of the people. These principles are based upon public
controlled corporation performing ministrant functions, valid? policy. The Philippine Government is not a mere nominal
party because it was exercising its sovereign functions or
HELD: powers and was merely seeking to carry out a trust
Ministrant functions are those undertaken by way of developed upon it when the Philippine Islands was ceded to
advancing the general interests of society and are merely the United States. Finally, if said loan was for ecclesiastical
optional. Commercial or universal banking is, ideally, not a pious work, then Spain would not exercise its civil capacities.
governmental but a private sector endeavour, an optional - See more at:
function of the government. There are functions of the http://lawsandfound.blogspot.com/2012/11/government-v-
government which it may exercise to promote merely the monte-de-piedad-digest.html#sthash.4lDzlqBS.dpuf
welfare, progress, and prosperity of the people. Thus,
reorganization of such corporations like PNB are valid so long
as they are done in good faith as prescribed in the Dario v. 3. CABANAS V. PILAPIL 58 SCRA 94
Mison doctrine. Accordingly, the reorganization of PNB is Facts: Deceased Florentino Pilapil, the husband of Melchora
found to be done in good faith by the Court. Cabanas and the father of Millian Pilapil, left an insurance
having his child as the beneficiary and authorized his brother,
Francisco Pilapil, to act as trustee during his daughters
minority. The lower court decided to give the mother of the priority to his best interest This prerogative of parens patriae
child the right to act as trustee while her child is a minor is inherent in the supreme power of every State, whether
citing the appropriate provisions in the Civil Code. The that power is lodged in a royal person or in the legislature,
welfare of the child is the paramount consideration here, and and has no affinity to those arbitrary powers which are
the mother resides with the child so she is the rightful sometimes exerted by irresponsible monarchs to the great
trustee. The judiciary pursuant to its role as an agency of the detriment of the people and the destruction of their
State parens patriae, called for the mother to take liberties." What is more, there is this constitutional provision
responsibility. The defendant appealed for the case. He vitalizing this concept. It reads: "The State shall strengthen
claims the retention of the amount in question by invoking the family as a basic social institution." 10 If, as the
the terms of the insurance policy. He is the rightful trustee of Constitution so wisely dictates, it is the family as a unit that
the insurance policy. has to be strengthened, it does not admit of doubt that even
if a stronger case were presented for the uncle, still
deference to a constitutional mandate would have led the
Issue: Whether the mother or the uncle should be entitled to lower court to decide as it did.
act as a trustee of a minor beneficiary of the proceeds of an
insurance policy from her deceased father? Whether the trial
court erred in its decision to give the right to the mother? The trust, insofar as it is in conflict with the above quoted
provision of law, is pro tanto null and void. In order, however,
to protect the rights of the minor, Millian Pilapil, the plaintiff
Ruling: The decision is affirmed with costs against the should file an additional bond in the guardianship
defendant-appellant. The provisions of Article 320 and 321 of proceedings, Sp. Proc. No. 2418-R of this Court to raise her
the Civil Code became the basis of the decision. The former bond therein to the total amount of P5,000.00." 5
provides that the father, or in his absence the mother, is the
legal administrator of the property pertaining to the child FACTS:
under parental authority. If the property is worth more than Florentino Pilapil, the insured, had a child, Millian Pilapil, with
two thousand pesos, the father or mother shall give a bond a married woman, Melchora Cabanas. The complaint was
subject to the approval of the Court of First Instance." The filed on October 10, 1964. The defendant Francisco Pilapil,
latter provides that "The property which the unemancipated the brother of the deceased is the one designated by the
child has acquired or may acquire with his work or industry, latter to act as his daughters trustee during her minority.
or by any lucrative title, belongs to the child in ownership, Thus, upon Florentinos death, the proceeds were paid to his
and in usufruct to the father or mother under whom he is brother hence the complaint of the mother whom the child
under parental authority and whose company he lives; ... lives with. Petitioner contends that she should be entitled to
act as the trustee of the insurance policy of her child.
With the added circumstance that the child stays with the
mother, not the uncle, without any evidence of lack of ISSUE:
maternal care, the decision arrived at can stand the test of Does the State have the authority to interfere with the terms
the strictest scrutiny. The appealed decision is supported by of the insurance policy by virtue of parens patriae?
another cogent consideration. It is buttressed by its
adherence to the concept that the judiciary, as an agency of HELD:
the State acting as parens patriae, is called upon whenever a The appealed decision adheres to the concept that the
pending suit of litigation affects one who is a minor to accord judiciary, as an agent of the State, acts as parens patriae. As
such, the judiciary cannot remain insensible to the validity of Named as respondents are the Health Secretary,
the petitioners plea. The State shall strengthen the family Undersecretaries, and Assistant Secretaries of the
as a basic social institution. The Constitution, moreover, Department of Health (DOH). For purposes of herein petition,
dictates that it is the family as a unit that has to be the DOH is deemed impleaded as a co-respondent since
strengthened. As such, the decision of the lower courts, respondents issued the questioned RIRR in their capacity as
entitling the mother as the trustee, is affirmed. officials of said executive agency.1Executive Order No. 51
Florentino Pilapil insured himself and he indicated in (Milk Code) was issued by President Corazon Aquino on
his insurance plan that his child will be his beneficiary. He October 28, 1986 by virtue of the legislative powers granted
also indicated that if upon his death the child is still a minor; to the president under the Freedom Constitution. One of the
the proceeds of his benefits shall be administered by his preambular clauses of the Milk Code states that the law
brother, Francisco Pilapil. The child was only ten years of age seeks to give effect to Article 112 of the International Code of
when Florentino died and so Francisco then took charge of Marketing of Breastmilk Substitutes (ICMBS), a code adopted
Florentinos insurance proceeds for the benefit of the child. by the World Health Assembly (WHA) in 1981. From 1982 to
On the other hand, the mother of the child Melchora Cabanas 2006, the WHA adopted several Resolutions to the effect that
filed a complaint seeking the delivery of breastfeeding should be supported, promoted and protected,
the insurance proceeds in favor and for her to be declared as hence, it should be ensured that nutrition and health claims
the childs trustee. Francisco asserted the terms of are not permitted for breastmilk substitutes.In 1990, the
the insurance policy and that as a private contract its terms Philippines ratified the International Convention on the Rights
and obligations must be binding only to the parties and of the Child. Article 24 of said instrument provides that State
intended beneficiaries. Parties should take appropriate measures to diminish infant
and child mortality, and ensure that all segments of society,
ISSUE: Whether or not the state may interfere by virtue of specially parents and children, are informed of the
parens patriae to the terms of theinsurance policy. advantages of breastfeeding. On May 15, 2006, the DOH
issued herein assailed RIRR which was to take effect on July
HELD: Yes. The Constitution provides for the strengthening of 7, 2006.
the family as the basic social unit, and that whenever any
member thereof such as in the case at bar would be
prejudiced and his interest be affected then the judiciary if a Issue: . Whether Administrative Order or the Revised
litigation has been filed should resolve that case according to Implementing Rules and Regulations (RIRR) issued by the
the best interest of that person. The uncle here should not be Department of Health (DOH) is not constitutional;
the trustee, it should be the mother as she was the
immediate relative of the minor child and it is assumed that
the mother shall show more care towards the child than the Held: YES
uncle will. The application of parens patriae here is in
consonance with this countrys tradition of favoring conflicts under Article 23, recommendations of the WHA do not come
in favor of the family hence preference to the parent into force for members,in the same way that conventions or
(mother) is observed. agreements under Article 19 and regulations under Article 21
come into force. Article 23 of the WHO Constitution reads:
Article 23. The Health Assembly shall have authority to make
4. PHARMACEUTICAL AND HEALTH ASSOCIATION V. recommendations to Members with respect to any matter
HEALTH SECRETARY GR NO 173034 OCTOBER 2007 within the competence of the Organization
for an international rule to be considered as customary law, it
must be established that such rule is being followed by states RTC: estimated the proper amount of filing fees was
because they consider it obligatory to comply with such rules approximately P472 and dismissing the case without
prejudice
Under the 1987 Constitution, international law can become Petition for Certiorari under Rule 65
part of the sphere of domestic law either
ISSUE: W/N the enforcement of a foreign judgment is
By transformation or incorporation. The transformation incapable of pecuniary estimation
method requires that an international law be transformed
into a domestic law through a constitutional mechanism such HELD: NO. (But belongs to "other actions not involving
as local legislation. The incorporation method applies when, property") petition is GRANTED.
by mere constitutional declaration, international law is
deemed to have the force of domestic law. There is an evident distinction between a foreign judgment in
an action in rem and one in personam. For an action in rem,
Consequently, legislation is necessary to transform the the foreign judgment is deemed conclusive upon the title to
provisions of the WHA Resolutions into domestic law. The the thing, while in an action in personam, the foreign
provisions of the WHA Resolutions cannot be considered as judgment is presumptive, and not conclusive, of a right as
part of the law of the land that can be implemented by between the parties and their successors in interest by a
executive agencies without the need of a law enacted by the subsequent title
legislature However, in both cases, the foreign judgment is susceptible
to impeachment in our local courts on the grounds of want of
jurisdiction or notice to the party, collusion, fraud, or clear
5. MIJARES V. RANADA GR NO. 139325 APRIL 2005 mistake of law or fact. Thus, the party aggrieved by the
FACTS: foreign judgment is entitled to defend against the
enforcement of such decision in the local forum. It is
May 9 1991: a complaint was filed by ten Filipino citizens essential that there should be an opportunity to challenge
representing a class of 10,000 members who each alleged the foreign judgment, in order for the court in this jurisdiction
having suffered human rights abuses such as arbitrary to properly determine its efficacy even if such judgment has
detention, torture and rape in the hands of police or military conclusive effect as in the case of in rem actions, if only for
forces during the Marcos regime with the United States the purpose of allowing the losing party an opportunity to
District Court (US District Court), District of Hawaii, against challenge the foreign judgment. Consequently, the party
the Estate of former Philippine President Ferdinand E. Marcos attacking a foreign judgment has the burden of overcoming
(Marcos Estate) the presumption of its validity. Absent perhaps a statutory
US District Court and Affirmed by US CA: awarded them grant of jurisdiction to a quasi-judicial body, the claim for
$1,964,005,859.90 enforcement of judgment must be brought before the regular
Petitioners filed Complaint with Makati RTC for the courts.
enforcement of the Final Judgment There are distinctions, nuanced but discernible, between the
Marcos Estate filed a motion to dismiss, raising, among cause of action arising from the enforcement of a foreign
others, the non-payment of the correct filing fees paying only judgment, and that arising from the facts or allegations that
P410 occasioned the foreign judgment. They may pertain to the
Petitioners claimed that an action for the enforcement of a same set of facts, but there is an essential difference in the
foreign judgment is not capable of pecuniary estimation right-duty correlatives that are sought to be vindicated.
Extensive litigation is thus conducted on the facts, and from
there the right to and amount of damages are assessed. On The complaint to enforce the US District Court judgment is
the other hand, in an action to enforce a foreign judgment, one capable of pecuniary estimation. But at the same time, it
the matter left for proof is the foreign judgment itself, and is also an action based on judgment against an estate, thus
not the facts from which it prescinds. placing it beyond the ambit of Section 7(a) of Rule 141. It is
As stated in Section 48, Rule 39, the actionable issues are covered by Section 7(b)(3), involving as it does, "other
generally restricted to a review of jurisdiction of the foreign actions not involving property." The petitioners thus paid the
court, the service of personal notice, collusion, fraud, or correct amount of filing fees, and it was a grave abuse of
mistake of fact or law. The limitations on review is in discretion for respondent judge to have applied instead a
consonance with a strong and pervasive policy in all legal clearly inapplicable rule and dismissed the complaint.
systems to limit repetitive litigation on claims and issues.
Otherwise known as the policy of preclusion, it seeks to
protect party expectations resulting from previous litigation,
to safeguard against the harassment of defendants, to insure II. STATE POLICIES (ART II, SEC. 7-28)
that the task of courts not be increased by never-ending 2.1 SOCIAL JUSTICE
litigation of the same disputes, and in a larger sense to 2.2 LAISSEZ FAIRE
promote what Lord Coke in the Ferrer's Case of 1599 stated
to be the goal of all law: "rest and quietness." If every CASES:
judgment of a foreign court were reviewable on themerits, 1. OPOSA V. FACTORAN GR NO 1010183 JULY 1993
the plaintiff would be forced back on his/her original cause of Fact:
action, rendering immaterial the previously concluded a cause of action to "prevent the misappropriation or
litigation. impairment" of Philippine rainforests and "arrest the
Marcos Estate cites Singsong v. Isabela Sawmill and unabated hemorrhage of the country's vital life support
Raymundo v. Court of Appeals: systems and continued rape of Mother Earth."
In determining whether an action is one the subject matter of
which is not capable of pecuniary estimation this Court has The complaint2 was instituted as a taxpayers' class suit 3
adopted the criterion of first ascertaining the nature of and alleges that the plaintiffs "are all citizens of the Republic
the principal action or remedy sought. If it is primarily for of the Philippines, taxpayers, and entitled to the full benefit,
the recovery of a sum of money, the claim is considered use and enjoyment of the natural resource treasure that is
capable of pecuniary estimation, and whether jurisdiction is the country's virgin tropical forests." The same was filed for
in the municipal courts or in the courts of first instance would themselves and others who are equally concerned about the
depend on the amount of the claim. However, where the preservation of said resource but are "so numerous that it is
basic issue is something other than the right to recover a impracticable to bring them all before the Court." The minors
sum of money, where the money claim is purely incidental to, further asseverate that they "represent their generation as
or a consequence of, the principal relief sought, this Court well as generations yet unborn." 4Consequently, it is prayed
has considered such actions as cases where the subject of for that judgment be rendered:
the litigation may not be estimated in terms of money, and
are cognizable exclusively by courts of first instance (now
Regional Trial Courts). 1] Cancel all existing timber license agreements in the
An examination of Section 19(6), B.P. 129 reveals that the country;
instant complaint for enforcement of a foreign judgment, 2] Cease and desist from receiving, accepting, processing,
even if capable of pecuniary estimation, would fall under the renewing or approving new timber license agreements.
jurisdiction of the Regional Trial Courts
deforestation have resulted in a host of environmental
tragedies. One of these is the reduction of the earths
Plaintiffs further assert that the adverse and detrimental capacity to process carbon dioxide, otherwise known as the
consequences of continued and deforestation are so capable greenhouse effect.
of unquestionable demonstration that the same may be
submitted as a matter of judicial notice. Continued issuance by the defendant of TLAs to cut and
deforest the remaining forest stands will work great damage
and irreparable injury to the plaintiffs. Appellants have
Issue: Whether or not petitioners have a cause of action? exhausted all administrative remedies with the defendants
office regarding the plea to cancel the said TLAs. The
defendant, however, fails and refuses to cancel existing TLAs.
HELD: YES
ISSUES:
Whether or not the petitioners have legal standing on the
petitioners have a cause of action. The case at bar is of said case
common interest to all Filipinos. The right to a balanced and Admitting that all facts presented are true, whether or not
healthy ecology carries with it the correlative duty to refrain the court can render a valid judgement in accordance to the
from impairing the environment. The said right implies the prayer of the complaints
judicious management of the countrys forests. This right is Whether or not the TLAs may be revoked despite the
also the mandate of the government through DENR. A denial respondents standing that these cancellation of these TLAs
or violation of that right by the other who has the correlative are against the non-impairment clause of the Constitution
duty or obligation to respect or protect the same gives rise to
a cause of action. All licenses may thus be revoked or HELD:
rescinded by executive action. The petitioners have locus standi (legal standing) on the case
as a taxpayers (class) suit. The subject matter of complaint
is of common and general interest to all the citizens of the
The right to a balanced and healthful ecology carries with it Philippines. The court found difficulty in ruling that the
the correlative duty to refrain from impairing the appellants can, for themselves, and for others file a class
environment suit.
The petitioners, all minors duly represented and joined by The right of the petitioners to a balanced and healthful
their respective parents, filed a petition to cancel all existing ecology has been clearly stated. A denial or violation of that
timber license agreements (TLAs) in the country and to cease right by the other who has the correlative duty or obligation
and desist from receiving, accepting, processing, renewing or to respect or protect the same gives rise to a cause of
approving new timber license agreements. This case is filed action. The granting of the TLAs, as the petitioners claim to
not only on the appellants right as taxpayers, but they are be done with grave abuse of discretion, violated their right to
also suing in behalf of succeeding generations based on the a balanced and healthful ecology hence, the full protection
concept of intergenerational responsibility in so far as the thereof requires that no TLAs should be renewed or
right to a balanced and healthful ecology is concerned. granted. The appellants have also submitted a document
with the sub-header CAUSE OF ACTION which is adequate
Together with the Philippine Ecological Network, Inc. (PENI), enough to show, prima facie, the violation of their rights. On
the petitioners presented scientific evidence that this basis, these actions must therefore be granted, wholly or
partially.
Despite the Constitutions non-impairment clause, TLAs are therefor was granted and that the enrollment list for the
not contracts, rather licenses; thus, the said clause cannot be summer term be submitted immediately.
invoked. Even if these are protected by the said clause,
these can be revoked if the public interest so required as Sometime in 1986 the DECS received a complaint from
stated in Section 20 of the Forestry Reform Code (P.D. No. Felixberto B. Galvez, president of petitioner's Faculty
705). Furthermore, Section 16 of Article II of the 1987 Association, NAFLU-KMU, concerning the issuance of summer
Constitution explicitly provides that: The State shall protect permit to petitioner and of its holding of classes for courses
the right of the people to a balanced and healthful ecology in not recognized by the Government. Galvez requested that
accord with the rhythm and harmony of nature. The right to the matter be looked into as well as the possible revocation
a balanced and healthful ecology carries with it the of petitioner's authority due to persistent violation of the
correlative duty to refrain from impairing the government. orders of the DECS.
The said right is also clear as the DENRs duty under its
mandate and by virtue of its powers and functions under In response, the DECS through Director Boquiren
Executive Order No. 192 and the Administrative Code of 1987 recommended that petitioner's summer permit be revoked
to protect and advance the said right. and that the school be closed effective SY 1986-1987 on the
ground that: (a) petitioner did not have a renewal
permit/recognition for SY 1986-1987; (b) several
2. PHILIPPINE MERCHANT MARINE SCHOOL INC. V. communications were sent to petitioner's head telling him
COURT OF APPEALS 244 SCRA 770 not to operate without permit and to explain within seventy-
PHILIPPINE MERCHANT MARINE SCHOOL, INC. (PMMSI), was two (72) hours from receipt of Director Boquiren's letter
established in Manila in 1950 to train and produce competent dated 9 July 1986 why no drastic action should be taken
marine officers. It offers a two-year course in Marine against it but said communication was never answered; and,
Engineering (A.M.E.) and a four-year course in Marine (c) petitioner did not correct the deficiencies indicated in the
Transportation (B.S.M.T.). In 1978 it established a branch in renewal permit for 1985-1986.
Talon, Las Pias, Metro Manila. But we are here concerned
only with the main school in Manila. Accordingly, in a 3rd Indorsement dated 23 September 1986
the DECS through then Minister Lourdes R. Quisumbing
For several times prior to 1985 respondent Department of approved the following courses of action for petitioner: (a)
Education, Culture and Sports (DECS) disapproved the students in the two courses who were graduating for SY
petitioner's requests for renewal permit/recognition. 1986-1987 would be allowed to graduate even without
However, on 11 March 1986 the DECS issued petitioner a permit for said courses as a special case provided that they
renewal permit for SY 1985-1986. Later, petitioner applied for completed the requirements for graduation and subject to
a summer permit for 1986 which the DECS favorably prior issuance of Special Order; and, (b) the remaining
indorsed to the Minister of Education in consideration of the students should be allowed to transfer to other authorized
graduating students for summer. Thereafter the application schools.
was returned to Director Modesta Boquiren of the DECS for
evaluation and decision pursuant to the authority delegated In a letter dated 30 September 1986 Director Boquiren,
to the Regions under Department Order No. 22, series of informed petitioner of the aforementioned courses of action
1975. Director Boquiren issued petitioner the summer permit and directed immediate implementation thereof.
for 1986 based on the previously stated humanitarian reason
but subject to the condition that petitioner should not enroll
students for the first semester of SY 1986-1987 until a permit
On 9 April 1987 the DECS Inter-Agency Technical Committee addressed to DECS Director Nilo Rosas, it set forth the
(IATCOM) recommended renewal of permits for the maritime following recommendations:
courses offered by petitioner provided that a development
plan for the improvement of its buildings classrooms, 1. The PMMS administration may be given a last
laboratory rooms, library offices and other rooms be chance to put up at least 60% of the minimum
formulated and implemented before the start of school year standard equipment for a period of about two
1987-1988. months (January-March 1989).

Despite lack of permit, petitioner continued to enroll students 2. The DECS with TPME will conduct a re-
and offer courses in Marine Engineering and Marine inspection sometime the first week of April to
Transportation for SY 1987-1988. This prompted the DECS monitor the progress of the requirements.
through Director Hernando Dizon to write petitioner on 4
August 1988 directing it not to operate without permit and 3. No new and old students will be allowed to
inviting its attention to the provisions of the Private School enroll during summer of 1989 and the
Law 1 as reiterated in the Education Act of 1982 2 which subsequent semesters pending issuance of a
prohibits operation of unauthorized schools/courses. permit.

On 28 October 1988 petitioner sent a letter to Director Dizon 4. Therefore, issuance of a school permit for
applying for permit/recognition to conduct classes for the two 1987-1988 to 1988-89 shall be held in abeyance
(2) maritime courses retroactive from summer of 1987 up to pending compliance of at least 60% of the
SY 1988-1989 and informing him of its transfer to the 5th requirements.
Floor of the Republic Supermarket Building, corner Rizal
Avenue and Soler St., Sta. Cruz, Manila. 5. DECS higher authorities shall decide whether
the graduating students for the second
On the basis of the favorable report of a supervisor of the semester 1988-89 will be allowed to graduate
Bureau of Higher Education who visited the premises of and a retroactive school permit for the school
petitioner on 14 November 1988, a director of said Bureau years 1987-88, 1988-89 can be granted. 3
recommended renewal of petitioner's permit. However, in a
DECS-PAMI survey conducted by the DECS technical staff in As recommended, the TPME Secretariat conducted a
1988, petitioner scored only 32 points out of a possible 1,026 reinspection of petitioner's premises, then submitted a report
points for requirements in Nautical Engineering, and only 207 dated 18 April 1989 with the following new recommendations
points out of 905 points in Marine Engineering, way below
the DECS requirements.
1. Gradual phasing out of the BSMT Nautical
Subsequent inspection of petitioner's premises by the Bureau Studies and Associate in Marine Engineering
of Higher Education-DECS Technical Panel for Maritime programs. Under this scheme, no new enrollees
Education (TPME) affirmed the findings of the DECS-PAMI should be accepted anymore for the 1st year
survey. It found petitioner deficient in terms of the minimum BSMT Nautical Studies and AME starting 1st
requirements as provided in DECS Order No. III, series of semester of school year 1989-90.
1987, which refers to the policies and standards for Maritime
Education Plan. In a memorandum dated 19 January 1989
2. If the school can come up with the DECS In a letter dated 27 April 1989 Director Rosas informed
minimum standard within the phasing out petitioner of the TPME report and recommendations and
period, suspension order may be lifted. invited it for a conference on 2 May 1989 before any major
decision and action would be made.
3. If the school fails to meet the DECS minimum
standard at the end of the phasing out period, On 2 May 1989, the TPME Secretariat submitted another
closure order will be issued. memorandum on its reinspection of petitioner's premises
made on 28 April 1989. Based on its findings that no
4. No special permit for the BSMT Nautical substantial improvement in terms of minimum requirements,
Studies and AME courses should be granted as a equipment and training facilities since the January 1989
special case. However, during the phasing out inspection was made, it reiterated the recommendations it
period students may be allowed to graduate submitted to the DECS Bureau of Higher Education. For this
under PMMS, Talon, Las Pias, reason, in the letter dated 25 May 1989 Director Rosas
notified petitioner about the aforementioned report and the
based on these considerations DECS' decision that:

1. PMMS, Manila, has inadequate training 1. The BSMT Nautical Studies and Associate in
facilities and equipment for BSMT Nautical Marine Engineering courses be gradually phased
Studies and AME programs. out. Such being the case, the school shall no
longer be allowed to accept 1st year students
2. The school has not acquired its own school and new enrollees starting 1st semester of
site and building. The present school campus is school year 1989-90.
not conducive for training and is found to be
very limited in space so that there is difficulty 2. The second year and third year students may
for school development and expansion. be allowed to remain until they graduate.
However, the school may opt to transfer these
3. On 23 September 1986, the Secretary of students to PMMS, Talon, Las Pias,
Education, Culture and Sports already issued a
cease to operate order to the school head of due to the following considerations:
PMMS. The said indorsement letter also provided
humanitarian decision (reason?) which granted 1. The school's training equipment and
permit to PMMS as a special case, just to allow instructional facilities are very far below the
BSMT and AME students to graduate and the standards set by DECS.
remaining students were advised to transfer to
authorized/recognized schools. 2. The school site and building are not owned by
the school but only leased with contract of
4. Labor dispute occurred in 1987. The conflict renewal to be made annually.
between the employees and employer is a
manifestation of mismanagement of school. 4 3. The present location of the school does not
warrant for expansion, development and
improvement.
4. The present location of the school is not Pursuant to petitioner's request, another inspection of the
conducive for learning, it being located on the Manila premises was conducted by the TPME-Secretariat on 8
5th floor of a supermarket in the downtown August 1989. However, petitioner only obtained a general
section of the city. rating of 31.17% for Nautical Studies and 28.53% for Marine
Engineering. Consequently, the inspection team reiterated its
5. A cease to operate order was issued by previous recommendation to gradually phase out the
Secretary Lourdes R. Quisumbing sometime in maritime programs of petitioner's Manila campus effective SY
1986, which order was violated by the 1990-1991 and that no new freshman students be accepted
school. 5 beginning SY 1990-1991.

In a letter dated 11 July 1989 the DECS through Secretary Accordingly, in a letter dated 25 September 1989 the DECS
Quisumbing informed petitioner that it had received reports through Secretary Quisumbing ordered petitioner to
that petitioner enrolled freshmen for its maritime programs discontinue its Maritime program in the Manila campus
which were ordered phased out effective SY 1989-1990 per effective school year 1990-1991 and suggested that efforts
letter of Director Rosas dated 25 May 1989; called be made towards the development of PMMS, Las Pias, which
petitioner's attention to the provision of Sec. 1, Rule 1, Part V, has a great potential of being a good Maritime School. 6 The
of the Implementing Rules of the Education Act of 1982 which phase-out order was reiterated in subsequent letters dated
makes it punishable and subject to penalties the operation of 19 February 1990 and 9 May 1990 of Director Rosas and then
a school through the conduct or offering of Educational DECS Secretary Isidro D. Cario, respectively.
Programs or Courses of Studies/Training, without prior
government authorization and/or in violation of any of the Subsequently, petitioner moved to reconsider the phase-out
terms and conditions of said permit or recognition; directed order in its letter of 21 May 1990, which request was denied
that in accordance with the phase-out order, petitioner's by the DECS through Undersecretary Benjamin Tayabas in his
Manila campus is allowed to operate only the 2nd, 3rd and letter of 1 June 1990. The letter reads
4th years of the authorized maritime programs which shall be
gradually phased out; and, required petitioner to comment With reference to your request to rescind an
on the reported unauthorized enrollment. order to phase-out the maritime courses at
PMMS, Manila, please be informed that this
In its letter to the DECS dated 26 July 1989, petitioner moved Department sees no reason for such action as
for reconsideration stating that the finding that it had not the conditions obtaining in the school when the
complied with the minimum requirements was due to the phase-out order was issued haven't shown any
following: that as early as 21 June 1989 it filed a letter significant improvement inspite of the fact that
requesting reconsideration of the letter dated 25 May 1989 of the PMMS had been given reasonable period to
Director Rosas; that since there was no reply it believed that comply with the minimum standard
the 25 May 1989 order was reconsidered sub-silencio and requirements prescribed by the Department of
that petitioner was allowed to enroll 1st year students for SY Education, Culture and Sports.
1989-1990; and, that it had undertaken improvements in all
of its facilities in compliance with DECS requirements. In this Maritime Education courses are highly
regard, it requested another inspection of its premises. specialized and require adequate training
facilities and equipment in order to ensure
quality. However, the series of visits made by
the staff of the BHE, NCR, and members of the (TPME) re-affirmed the findings of
Technical Panel on Maritime Education revealed the DECS-PAMI Survey. Very few
the following findings: equipment were found for the
Maritime courses. You concurred
(a) On April 9, 1987 the Inter- with these findings in a dialogue
Agency Technical Committee with the Director of the Bureau of
(IATCOM) recommended the Higher Education Secretariat. You
renewal of permits of the maritime appealed for another chance and
courses, provided, that a requested for re-inspection before
development plan for the the opening of SY 1989-1990.
improvement of the buildings,
classrooms, laboratory rooms, (d) As per agreement, on April 28,
library offices and other rooms 1989 another re-inspection was
shall be formulated and made and it showed that the
implemented before the start of SY school did not show any substantial
1987-1988. improvement.

(b) In 1988, the DECS-PAMI survey Then on May 25, 1989, Secretary
conducted by technical persons, Lourdes Quisumbing issued the
revealed that PMMS, then located phase-out order of our maritime
at the 5th floor of the Republic programs in Manila campus.
Supermarket, obtained a general
score of 32 out of 1,026 points for However, the Department again
requirements in the Nautical course allowed PMMS, Manila, to operate
and 207 out of 905 points for the the maritime courses for SY 1989-
Marina Engineering course. It is 1990 despite the above phase-out
needless to say that these findings order.
are way below the DECS
requirements. Above all, the school (e) Another evaluation of your
site was described as not school was conducted by technical
conducive for offering maritime people on August 8, 1989, as
program due to its limited area. requested. The findings revealed
Furthermore, the lease on the that your school obtained a general
premises is not a long term lease rating of 31.17% for Nautical
(2 years), a condition which would Studies and 28.53% for Marine
deter the school from fully Engineering.
developing the school site.
The PMMS has been provided with the Policies
(c) In January of 1989, the findings and Standards for Maritime Education and, as
of the Secretariat for the Technical revealed by the foregoing facts, the series of
Panel for Maritime Education inspection and evaluation were (sic) done by
technical persons who have expertise in the In view of the report which was confirmed by the
field of maritime education. Therefore, the evaluation team from the National Capital
requests relative to these are not valid. Region DECS Regional Office, that Philippine
Merchant Marine School (PMMS), Manila, has
It is therefore with regrets that this Department been accepting freshman students of the
cannot rescind its order to phase-out the maritime programs despite the phase-out order
Maritime courses at PMMS, Manila and the which was issued last September 28, (sic) 1989
school is admonished not to accept incoming by former Secretary Lourdes R. Quisumbing and
first year students starting school year 1990- further reiterated by the undersigned, dated
1991. So that by school year 1992-1993, the May 9, 1990, the Department, hereby orders
maritime courses at the Manila campus would Closure of your maritime programs of your
be fully phased-out. . . . 7 school effective second semester school year
1991-1992, otherwise this Department shall be
It is suggested that PMMS concentrate its constrained to institute the appropriate
development plans in the Las Pias Campus administrative, civil and criminal proceedings
which has a great potential of being a good against you and the other responsible officers of
maritime school. your school pursuant to Section 68, Batas
Pambansa Blg. 232. . . .
Not satisfied therewith, petitioner appealed the matter to
respondent Office of the President. The transfer of the affected students shall be
facilitated by the National Capital Region in
During the pendency of the appeal the DECS thru Secretary accordance with our Memorandum dated August
Cario issued a Closure Order dated 27 August 1991 16, 1991, xerox copy of which is hereto attached
for your information.

8
For your guidance and strict compliance.

In a Letter dated 24 August 1992 petitioner sought


reconsideration of the 27 August 1991 Closure Order and at
the same time requested that special orders be issued to its
graduates for SY 1991-1992. In letters filed with the Office of
the President dated 2 and 3 October 1992 petitioner alleged
compliance with DECS requirements. The letters were
referred to the DECS for consideration.

On 10 November 1992 the Office of the President through


respondent Executive Secretary Edelmiro Amante rendered a
Resolution dismissing petitioner's appeal. 9 It found no
plausible reason to disturb the action of the DECS Secretary
in the light of the conspicuous fact that petitioner had
repeatedly failed to comply with the phase-out order since
1986. Moreover, the grounds advanced by petitioner have PMMSI's refusal to comply with the phase-out
already been passed upon by the DECS. order on the ground that the same is not yet
final and executory is untenable. While said
Petitioner moved for reconsideration praying that the case be phase-out may not be final and executory, there
remanded to the DECS for another ocular inspection and was no reason for PMMSI to offer maritime
evaluation of its alleged improved facilities. Petitioner courses without the requisite prior authority of
anchored its motion on the proposition that since it had made the DECS. PMMSI possessed no valid permit
substantial improvements on school equipment and facilities prior to the issuance of the phase-out. There
there existed no valid ground to deny them a permit to offer was no authority to speak of.10
maritime courses. After another circumspect review of the
case, the Office of the President found no cogent reason to Thus the motion was denied in the Resolution dated 12
set aside its previous resolution. It opined that January 1993 through respondent Assistant Executive
Secretary Renato Corona. 11
Mere alleged efforts to improve the facilities and
equipments (sic) which were long due since Petitioner assailed both resolutions of the Office of the
1986, do not warrant the reversal of our President before respondent Court of Appeals by way
previous resolution. It bears stressing as the ofcertiorari. It alleged that the resolutions failed to meet the
records may show, that the phase-out order of constitutional requirement of due process because the basis
DECS was based not only on PMMSI's failure to for affirming the DECS phase-out and closure orders was not
provide adequate equipment and facilities but sufficiently disclosed. Furthermore, its letters dated 2 and 3
also on PMMSI's failure to comply with the October 1992 which presented incontrovertible proof that it
standard requirements prescribed for a school had introduced substantial improvements on its facilities for
site. the past two and a half years while its appeal was pending
were not taken into account, thereby gravely abusing its
xxx xxx xxx discretion.

Apart from these, PMMSI's adamant refusal to Respondent Court of Appeals brushed aside the allegations of
comply with the orders of the DECS to phase out petitioner since
its unauthorized courses is sufficient ground to
uphold the order appealed from. Since 1986, [T]he Office of the President, in the resolution
PMMSI has been applying for a permit to offer dated November 10, 1992, appears to have
maritime courses but has been invariably restated the report of the respondent DECS,
denied for failure to comply with the minimum meaning, that it adopted as its own the DECS'
requirements prescribed by DECS. report, but that is not a violation of the
Notwithstanding these denials, PMMSI continues Constitution and the Rules of Court, in line
to offer maritime courses and to admit freshmen with Alba Patio De Makati vs. Alba Patio De
students in clear violation of Section 1, Rule 1, Makati Employees Association, 128 SCRA 253,
of the Education Act of 1982 . . . . 264- 265 . . . Petitioner's latest attempt at
improving its facilities does not warrant a
xxx xxx xxx reversal of the phase-out order. For, in spite of
the claim that it spent on improvements, the
basic problem remained as it still occupies the Before proceeding to resolve the merits of this case, we shall
fifth floor of the William Liao building, which is state briefly the concept regarding establishment of schools.
not conducive to learning and has a limited area The educational operation of schools is subject to prior
for expansion and development. 12 authorization of the government and is effected by
recognition. In the case of government-operated schools,
On 22 July 1993 the petition was dismissed. 13 On 26 whether local, regional or national, recognition of educational
November 1993 the motion for reconsideration was denied. 14 programs and/or operations is deemed granted
simultaneously with establishment. In all other cases the
Petitioner imputes error on respondent court: (1) in not rules and regulations governing recognition are prescribed
setting aside the questioned resolutions and orders of public and enforced by the DECS, defining therein who are qualified
respondents which were rendered without due process of law to apply, providing for a permit system, stating the
since (a) petitioner was not afforded the right to fully present conditions for the grant of recognition and for its cancellation
its case and submit evidence in support thereof; (b) public and withdrawal, and providing for related matters. 15 The
respondents did not consider the evidence presented by requirement on prior government authorization is pursuant to
petitioner; (c) public respondents' decisions have no the State policy that educational programs and/or operations
substantial evidence to support them; (d) public respondents' shall be of good quality and therefore shall at least satisfy
decisions did not disclose the bases therefor; and, (2) in minimum standards with respect to curricula, teaching staff,
implementing the closure orders which had not become final physical plant and facilities and of administrative or
and executory. management viability. 16

Petitioner asseverates that the DECS denied its right to a Set against the records of the case, the assertion of
hearing on the supposed deficiencies which allegedly petitioner that it was deprived of its right to a hearing and
justified denial of its request for issuance of a renewal permit. any opportunity whatsoever to correct the alleged
Likewise, the DECS denied petitioner the opportunity to deficiencies readily collapses. The earlier narration of facts
correct such deficiencies. The Office of the President totally clearly demonstrates that before the DECS issued the phase-
ignored supervening events properly brought to its attention out and closure orders, petitioner was duly notified, warned
in the letters of petitioner dated 2 and 3 October 1992. It and given several opportunities to correct its deficiencies and
issued resolutions strictly on the basis of the DECS' to comply with pertinent orders and regulations.
representations which do not amount to substantial
evidence. The 10 November 1992 Resolution failed to Petitioner has gone all the way up to the Office of the
sufficiently disclose the basis for affirmation of the DECS' President to seek a reversal of the phase-out and closure
phase-out and closure orders. The 12 January 1993 orders. There is thus no reason to complain of lack of
Resolution still refused to take into consideration petitioner's opportunity to explain its side as well as to comply with the
compliance with the DECS' requirements. Petitioner did not alleged deficiencies. 17 We agree with the observation of the
violate the Education Act of 1992 because it was authorized Office of the Solicitor General that
to operate by virtue of the provisional authorities issued by
the DECS. The DECS orders were not final and executory As long as the parties were given opportunity to
because petitioner challenged them and appropriately be heard before judgment was rendered, the
availed itself of the remedies available to it under the law. demands of due process were sufficiently met
(Lindo v. COMELEC, 194 SCRA 25). It should also
be noted that petitioner herein repeatedly
sought reconsideration of the various orders of nor more than ten thousand pesos (P10,000.00)
respondent DECS and its motions were duly or imprisonment for a maximum period of two
considered by respondent DECS to the extent of (2) years, or both, in the discretion of the court.
allowing and granting its request for re-
inspection of its premises. In connection If the act is committed by a school corporation,
therewith, it has been ruled that the opportunity the school head together with the person or
to be heard is the essence of procedural due persons responsible for the offense or violation
process and that any defect is cured by the shall be equally liable.
filing of a motion for reconsideration (Medenilla
v. Civil Service Commission, 194 SCRA 278). 18 Sec. 69. Administrative Sanction. The Minister
(Secretary) of Education, Culture and Sports
Furthermore, the Office of the President properly ignored (in may prescribe and impose such administrative
the sense that it did not find worthy of consideration) the sanction as he may deem reasonable and
alleged supervening events, i.e., substantial improvements appropriate in the implementing rules and
on school equipment and facilities during the pendency of regulations promulgated pursuant to this Act for
the case before said Office because the improvements should any of the following causes . . . . 5. Unauthorized
have been undertaken starting 1986. Moreover, the phase- operation of a school, or course, or any
out and closure orders were based not only on petitioner's component thereof . . . .
deficiencies as a maritime institute but also on its continued
operation without the requisite authorization from the DECS The corresponding rules implementing Secs. 68 and 69 read
and acceptance of freshman students in blatant violation of
the latter's orders and/or persistent warnings not to do so.
Verily, there are sufficient grounds to uphold the phase-out Sec. 1. Punishable Acts and Penalties. The
and closure orders of the DECS which were issued operation of a school, through the conduct or
conformably with Sec. 28 of the Education Act of 1982 which offering of educational programs or courses of
provides: studies/training without prior government
authorization in the form of permit or
Sec. 28. . . . . Punishable Violation. . . . recognition as provided for in Rule III, PART III of
Operation of schools and educational programs these Rules, and/or in violation of any of the
without authorization, and/or operation thereof terms and conditions of the said permit or
in violation of the terms of recognition, are recognition, have been declared punishable
hereby declared punishable violations subject to violations of the Act, subject to the penalties
the penalties provided in this Act. provided therein.

Secs. 68 and 69 of the same Act provide the Any person, therefore, upon conviction for an
penalties: act constituting any of the foregoing punishable
violations, shall be punished with a fine of not
Sec. 68. Penalty Clause. Any person upon less than Two Thousand Pesos (P2,000.00) nor
conviction for an act in violation of Section 28, more than Ten Thousand Pesos (P10,000.00), or
Chapter 3, Title III, shall be punished with a fine imprisonment for a maximum period of two (2)
of not less than two thousand pesos (P2,000.00) years, or both, in the discretion of the
Court: Provided, however, that when the act is disturb the action of the Secretary of Education,
committed by a school corporation, the school Culture and Sports, more so in light of the
head together with the person or persons conspicuous fact that PMMS has repeatedly
responsible for the violation or offense shall be failed to comply with the phase out order since
deemed equally liable. 1986. What is more, the grounds advanced by
PMMS have already been passed upon, and
Sec. 2. Administrative Sanction. Without separately resolved by the office a quo. 20
prejudice to the interest of students, teachers
and employees, and independently of the Petitioner's persistent refusal to comply with the phase-out
penalty imposed in Sec. 1 under this Rule, the orders on the ground that the same were not yet final and
Minister may withdraw, suspend, revoke or executory is untenable. As correctly held by the Office of the
cancel a school's authority to operate as an President
educational institution or to conduct educational
programs or courses of studies/training, for any . . . . While said phase-out (orders) may not be
of the following causes, viz: . . . . e. final and executory, there was no reason for
Unauthorized operation of a school, or program PMMSI to offer maritime courses without, the
or course of studies or component thereof, or requisite prior authority of the DECS. PMMSI
any violation of the prescribed rules governing possessed no valid permit prior to the issuance
advertisements or announcements of of the phase-out. There was no authority to
educational institutions. speak of. 21

Substantial evidence has been defined to be such relevant By reason of the special knowledge and expertise of
evidence as a reasonable mind might accept as adequate to administrative departments over matters falling under their
support a conclusion. 19 A perusal of the questioned jurisdiction, they are in a better position to pass judgment
resolutions of the Office of the President reveals that they are thereon and their findings of fact in that regard are generally
based on the records of the case which constitute substantial accorded respect, if not finality, by the courts. In the case at
evidence, proving distinctly not only petitioner's consistent bench, it is not the function of this Court nor any other court
failure to meet the DECS' minimum standards for maritime for that matter
institutes and correct its deficiencies but also its continued
operation and offering of maritime courses despite the lack . . . to review the decisions and orders of the
of permit. Secretary on the issue of whether or not an
educational institution meets the norms and
Contrary to the claim of petitioner, the 10 November 1992 standards required for permission to operate
Resolution of the Office of the President sufficiently disclosed and to continue operating as such. On this
the basis for its affirmance of the DECS' phase-out and question, no Court has the power or prerogative
closure orders: to substitute its opinion for that of the Secretary.
Indeed, it is obviously not expected that any
After a careful study, we are constrained to Court would have the competence to do so.
resolve that there exists no sufficient
justification to modify, alter or reverse the The only authority reposed in the Courts on the
appealed order. We find no plausible reason to matter is the determination of whether or not
the Secretary of Education, Culture and Sports WHEREFORE , the petition is DENIED. The questioned
has acted within the scope of powers granted Decision of the Court of Appeals dated 22 July 1993, as well
him by law and the Constitution. As long as it as its Resolution of 26 November 1993, is AFFIRMED.
appears that he has done so, any decision
rendered by him should not and will not be Costs against petitioner.
subject to review and reversal by any court.

Of course, if it should be made to appear to the E. SEPARATION FO POWERS


Court that those powers were in a case
exercised so whimsically, capriciously, F. CHECKS AND BALANCES
oppressively, despotically or arbitrarily as to call
for peremptory correction or stated CASES:
otherwise, that the Secretary had acted with 1. GRECO BELGICA ET AL., V. EXECUTIVE SECRETARY
grave abuse of discretion, or had unlawfully GR NO. 208566 NOVEMBER 2013
neglected the performance of an act which the NATURE:
law specifically enjoins as a duty, or excluded These are consolidated petitions taken under Rule 65 of the
another from the use or enjoyment of a right or Rules of Court, all of which assail the constitutionality of the
office to which such other is entitled it Pork Barrel System.
becomes the Court's duty to rectify such action
through the extraordinary remedies of certiorari, FACTS:
prohibition, or mandamus, whichever may The NBI Investigation was spawned by sworn affidavits of six
properly apply. Yet even in these extreme (6) whistle-blowers who declared that JLN Corporation (Janet
instances, where a Court finds that there has Lim Napoles) had swindled billions of pesos from the public
been abuse of powers by the Secretary and coffers for "ghost projects" using dummy NGOs. Thus,
consequently nullifies and/or forbids such an Criminal complaints were filed before the Office of the
abuse of power, or commands whatever is Ombudsman, charging five (5) lawmakers for Plunder, and
needful to keep its exercise within bounds, the three (3) other lawmakers for Malversation, Direct Bribery,
Court, absent any compelling reason to do and Violation of the Anti-Graft and Corrupt Practices Act. Also
otherwise, should still leave to the Secretary the recommended to be charged in the complaints are some of
ultimate determination of the issue of the the lawmakers chiefs -of-staff or representatives, the heads
satisfaction of fulfillment by an educational and other officials of three (3) implementing agencies, and
institution of the standards set down for its the several presidents of the NGOs set up by Napoles.
legitimate operation, as to which it should not Whistle-blowers alleged that" at least P900 Million from
ordinarily substitute its own judgment for that of royalties in the operation of the Malampaya gas project off
said office. 22 Palawan province intended for agrarian reform beneficiaries
has gone into a dummy NGO. Several petitions were lodged
There being no grave abuse of discretion committed by before the Court similarly seeking that the "Pork Barrel
respondents representing the Office of the President in System" be declared unconstitutional
issuing the Resolutions of 10 November 1992 and 12 January
1993, respondent Court of Appeals did not err in sustaining G.R. No. 208493 SJS filed a Petition for Prohibition seeking
the resolutions in question. that the "Pork Barrel System" be declared unconstitutional,
and a writ of prohibition be issued permanently
G.R. No. 208566 - Belgica, et al filed an Urgent Petition For implementation of laws. Any action or step beyond that will
Certiorari and Prohibition With Prayer For The Immediate undermine the separation of powers guaranteed by the
Issuance of Temporary Restraining Order and/or Writ of constitution.
Preliminary Injunction seeking that the annual "Pork Barrel
System," presently embodied in the provisions of the GAA of Thus, the court declares the 2013 pdaf article as well as all
2013 which provided for the 2013 PDAF, and the Executives other provisions of law which similarly allow legislators to
lump-sum, discretionary funds, such as the Malampaya Funds wield any form of post-enactment authority in the
and the Presidential Social Fund, be declared unconstitutional implementation or enforcement of the budget, unrelated to
and null and void for being acts constituting grave abuse of congressional oversight, as violative of the separation of
discretion. Also, they pray that the Court issue a TRO against powers principle and thus unconstitutional.
respondents

UDK-14951 A Petition filed seeking that the PDAF be 2. Yes. Sec 8 of PD 910- the phrase and for such other
declared unconstitutional, and a cease and desist order be purposes as may be hereafter directed by the President
issued restraining President Benigno Simeon S. Aquino III constitutes an undue delegation of legislative power insofar
(President Aquino) and Secretary Abad from releasing such as it does not lay down a sufficient standard to adequately
funds to Members of Congress determine the limits of the Presidents authority with respect
to the purpose for which the Malampaya Funds may be used.
ISSUES: It gives the President wide latitude to use the Malampaya
1. Whether or not the 2013 PDAF Article and all other Funds for any other purpose he may direct and, in effect,
Congressional Pork Barrel Laws similar thereto are allows him to unilaterally appropriate public funds beyond
unconstitutional considering that they violate the principles the purview of the law.
of/constitutional provisions on (a) separation of powers; (b)
non-delegability of legislative power; (c) checks and Section 12 of PD 1869, as amended by PD 1993- the phrases:
balances; (d) accountability; (e) political dynasties; and (f)
local autonomy. (b) "to finance the priority infrastructure development
2. Whether or not the phrases (under Section 8 of PD projects was declared constitutional. IT INDICATED PURPOSE
910,116 relating to the Malampaya Funds, and under Section ADEQUATELY CURTAILS THE AUTHORITY OF THE PRESIDENT
12 of PD 1869, as amended by PD 1993, relating to the TO SPEND THE PRESIDENTIAL SOCIAL FUND ONLY FOR
Presidential Social Fund, are unconstitutional insofar as they RESTORATION PURPOSES WHICH ARISE FROM CALAMITIES.
constitute undue delegations of legislative power.
(b) and to finance the restoration of damaged or destroyed
HELD: facilities due to calamities, as may be directed and
1. Yes, the PDAF article is unconstitutional. The post- authorized by the Office of the President of the Philippines
enactment measures which govern the areas of project was declared unconstitutional.IT GIVES THE PRESIDENT
identification, fund release and fund realignment are not CARTE BLANCHE AUTHORITY TO USE THE SAME FUND FOR
related to functions of congressional oversight and, hence, ANY INFRASTRUCTURE PROJECT HE MAY SO DETERMINE AS A
allow legislators to intervene and/or assume duties that PRIORITY. VERILY, THE LAW DOES NOT SUPPLY A
properly belong to the sphere of budget execution. This DEFINITION OF PRIORITY INFRASTRUCTURE DEVELOPMENT
violates the principle of separation of powers. Congressrole PROJECTS AND HENCE, LEAVES THE PRESIDENT WITHOUT
must be confined to mere oversight that must be confined to: ANY GUIDELINE TO CONSTRUE THE SAME.
(1) scrutiny and (2) investigation and monitoring of the
4. Did Respondent Fernan act with grave abuse of
2. SEN. MIRIAM SANTIAGO V. SEN. TEOFISTO discretion in recognizing Respondent Guingona as the
GUINGONA, JR. GR NO 134577 NOVEMBER 1998 minority leader?
Facts: On July 31, 1998, Senators Miriam Defensor Santiago
and Francisco S. Tatad instituted an original petition for quo
warranto under Rule 66, Section 5, Rules of Court, seeking Held: WHEREFORE, for the above reasons, the petition is
the ouster of Senator Teofisto T. Guingona Jr. as minority hereby DISMISSED. SO ORDERED.
leader of the Senate and the declaration of Senator Tatad as
the rightful minority leader.
Ratio: On grounds of respect for the basic concept of
The following were likewise elected: Senator Ople as separation of powers, courts may not intervene in the
president pro tempore, and Sen. Franklin M. Drilon as internal affairs of the legislature; it is not within the province
majority leader. He explained that those who had voted for of courts to direct Congress how to do its work.
Senator Fernan comprised the "majority," while only those
who had voted for him, the losing nominee, belonged to the Where no specific, operable norms and standards are
"minority." shown to exist, then the legislature must be given a real and
effective opportunity to fashion and promulgate as well as to
During the discussion on who should constitute the implement them, before the courts may intervene. Being
Senate "minority," Sen. Juan M. Flavier manifested that the merely matters of procedure, their observance are of no
senators belonging to the Lakas-NUCD-UMDP Party concern to the courts, for said rules may be waived or
numbering seven (7) and, thus, also a minority had chosen disregarded by the legislative body at will, upon the
Senator Guingona as the minority leader. concurrence of a majority.

The following session day, the debate on the question This Court has no authority to interfere and unilaterally
continued, with Senators Santiago and Tatad delivering intrude into that exclusive realm, without running afoul of
privilege speeches. On the third session day, the Senate met constitutional principles that it is bound to protect and uphold
in caucus, but still failed to resolve the issue. the very duty that justifies the Court's being.
Constitutional respect and a becoming regard for the
The following day, Senators Santiago and Tatad filed sovereign acts of a coequal branch prevents this Court from
before this Court the subject petition for quo warranto, prying into the internal workings of the Senate.
alleging in the main that Senator Guingona had been
usurping, unlawfully holding and exercising the position of
Senate minority leader, a position that, according to them, In view of the Courts jurisdiction
rightfully belonged to Senator Tatad. Petitioners principally invoke Avelino v. Cuenco in arguing
that this Court has jurisdiction to settle the issue of who is
Issue: From the parties' pleadings, the Court formulated the the lawful Senate minority leader. They submit that the
following issues for resolution: definitions of "majority" and "minority" involve an
1. Does the Court have jurisdiction over the petition? interpretation of the Constitution.
2. Was there an actual violation of the Constitution?
3. Was Respondent Guingona usurping, unlawfully Upon a motion for reconsideration, however, the Court
holding and exercising the position of Senate minority ultimately assumed jurisdiction (1) "in the light of subsequent
leader? events which justify its intervention;" and (2) because
the resolution of the issue hinged on the interpretation of the
constitutional provision on the presence of a quorum to hold Majority may also refer to "the group, party, or faction
a session and therein elect a Senate President. with the larger number of votes," not necessarily more than
one half. This is sometimes referred to as plurality. In
The Court rules that the validity of the selection of contrast, minority is "a group, party, or faction with a smaller
members of the Senate Electoral Tribunal by the senators number of votes or adherents than the majority." Between
was not a political question. The choice of these members did two unequal parts or numbers comprising a whole or totality,
not depend on the Senate's "full discretionary authority," but the greater number would obviously be the majority, while
was subject to mandatory constitutional limitations. Thus, the the lesser would be the minority.
Court held that not only was it clearly within its jurisdiction to
pass upon the validity of the selection proceedings, but it In a government with a multi-party system such as in the
was also its duty to consider and determine the issue. Philippines (as pointed out by petitioners themselves), there
could be several minority parties, one of which has to be
"Judicial power includes the duty of the court of justice to identified by the Comelec as the "dominant minority party"
settle actual controversies involving rights which are legally for purposes of the general elections. In the prevailing
demandable and enforceable, and to determine whether or composition of the present Senate, members either belong to
not there has been a grave abuse of discretion amounting to different political parties or are independent. No
lack or excess of jurisdiction on the part of any branch or constitutional or statutory provision prescribes which of the
instrumentality of the Government." - 1987 Constitution. many minority groups or the independents or a combination
Well-settled is the doctrine, however, that jurisdiction over thereof has the right to select the minority leader.
the subject matter of a case is determined by the allegations
of the complaint or petition, regardless of whether the While the Constitution is explicit on the manner of
plaintiff or petitioner is entitled to the reliefasserted. In light electing a Senate President and a House Speaker, it is,
of the aforesaid allegations of petitioners, it is clear that this however, dead silent on the manner of selecting the other
Court has jurisdiction over the petition. It is well within the officers in both chambers of Congress. All that the Charter
power and jurisdiction of the Court to inquire whether indeed says is that "each House shall choose such other officers as it
the Senate or its officials committed a violation of the may deem necessary." In this regard, the Constitution vests
Constitution or gravely abuse their discretion in exercise of in each house of Congress the power "to determine the rules
their functions and prerogatives. of its proceedings."

In view of constitutional violation Pursuant thereto, the Senate formulated and adopted a
set of rules to govern its internal affairs. However, the Rules
In effect, while the Constitution mandates that the of the Senate do not provide for the positions of majority and
President of the Senate must be elected by a number minority leaders. Neither is there an open clause providing
constituting more than one half of all the members thereof, it specifically for such offices and prescribing the manner of
does not provide that the members who will not vote for him creating them or of choosing the holders thereof. At any rate,
shall ipso facto constitute the "minority", who could thereby such offices, by tradition and long practice, are actually
elect the minority leader. Verily, no law or regulation states extant.
that the defeated candidate shall automatically become
the minority leader. In view of usurpation

Definition of minority and majority Usurpation generally refers to unauthorized arbitrary


assumption and exercise of power by one without color of manner by reason of passion or hostility." Where no provision
title or who is not entitled by law thereto. A quo warranto of the Constitution, the laws or even the rules of the Senate
proceeding is the proper legal remedy to determine the right has been clearly shown to have been violated, disregarded or
or title to the contested public office and to oust the holder overlooked, grave abuse of discretion cannot be imputed to
from its enjoyment. The action may be brought by the Senate officials for acts done within their competence and
solicitor general or a public prosecutor or any person authority.
claiming to be entitled to the public office or position usurped
or unlawfully held or exercise by another.
3. THE SANGUNIANG BARANGAY OF BARANGAY DON
In order for a quo warranto proceeding to be successful, MARIANO MARCOS, MUNICIPALITY OF BAYOMBONG
the person suing must show that he or she has a clear right PROVINCE OF NUEVA VIZCAYA V. PUNONG BARANGAY
to the contested office or to use or exercise the functions of SEVERINO MARTINEZ GR NO 170626 MARCH 2008
the office allegedly usurped or unlawfully held by the DECISION
respondent. In this case, petitioners present not sufficient
proof of a clear and indubitable franchise to the office of the
Senate minority leader. Furthermore, no grave abuse of CHICO-NAZARIO, J.:
discretion has been shown to characterize any of his specific
acts as minority leader. This is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, assailing the Orders dated 20 October
In view of Fernans recognition of Guingona 2005[1] and 30 November 2005[2] of the Regional Trial Court
(trial court), Branch 27, ofBayombong, Nueva Vizcaya, in
"By grave abuse of discretion is meant such capricious or Special Civil Action No. 6727. In its assailed Orders, the trial
whimsical exercise of judgment as is equivalent to lack of court ruled that
jurisdiction. The abuse of discretion must be patent and gross the Sangguniang Bayan of Bayombong, Neuva Vizcaya (Sang
as to amount to an evasion of positive duty or a virtual guniang Bayan), exceeded its jurisdiction when it imposed
refusal to perform a duty enjoined by law, or to act at all in upon respondent Severino Martinez the administrative
contemplation of law as where the power is exercised in an penalty of removal from office.
arbitrary and despotic manner by reason of passion and
hostility." Petitioner Sangguniang Barangay is the legislative body
of Barangay Don Mariano
By unanimous resolution of the members of this party that Marcos, Bayombong, Nueva Vizcaya, a local government unit
he be the minority leader, he was recognized as such by the created, organized and existing as such under pertinent laws
Senate President. Such formal recognition by Respondent of the Republic of the Philippines. Respondent Martinez is the
Fernan came only after at least two Senate sessions and a incumbent Punong Barangay of the said local government
caucus, wherein both sides were liberally allowed to unit.[3]
articulate their standpoints.
On 5 November 2004, Martinez was administratively charged
with Dishonesty and Graft and Corruption by petitioner
through the filing of a verified complaint before
Under these circumstances, we believe that the Senate the Sangguniang Bayan as the disciplining authority over
President cannot be accused of "capricious or whimsical elective barangay officials pursuant to Section 61[4] of Rep.
exercise of judgment" or of "an arbitrary and despotic Act No. 7160, otherwise known as the Local Government
Code. Petitioner filed with the Sangguniang Bayan an proceedings, Martinez was placed under preventive
Amended Administrative Complaint against Martinez on 6 suspension for 60 days or until 8 August 2005.[7]
December 2004 for Dishonesty, Misconduct in Office and
Violation of the Anti-Graft and Corrupt Practices Act. On 28 July 2005, the Sangguniang Bayan rendered its
[5] Petitioner alleged that Martinezcommitted the following Decision which imposed upon Martinez the penalty of
acts: removal from office.[8]

1. Failure to submit and fully remit to the Barangay Treasurer The Decision dated 28 July 2005 was conveyed to the
the income of their solid waste management project since Municipal Mayor
2001 particularly the sale of fertilizer derived from of Bayombong, Nueva Ecija, Severino Bagasao, for its
composting. implementation. On 3 August
2005, Municial Mayor Bagasao issued a Memorandum,
2. Failure to submit/remit to the barangay treasurer the sale wherein he stated that the Sanggunaing Bayan is not
of recyclable materials taken from garbage collection. empowered to order Martinezs removal from
service. However, the Decision remains valid until reversed
3. Using the garbage truck for other purposes like hauling and must be executed by him. For the meantime, he ordered
sand and gravel for private persons without monetary benefit the indefinite suspension of Martinez since the period of
to the barangay because no income from this source appears appeal had not yet lapsed.[9] The dispositive portion of the
in the year end report even if payments were collected x x x. said Memorandum states that:[10]

4. Using/spending barangay funds for repair, gasoline, The FOREGOING considered come AUGUST 8, 2005,
lubricants, wheels and other spare parts of the garbage truck respondent SEVERINO D. MARTINEZ is hereby directed NOT
instead of using the money or income of said truck from the to ASSUME and DISCHARGE the functions of the Office of
garbage fees collected as income from its Sold Waste the Punong Barangay of BarangayDon Mariano
Management Project. x x x. Marcos, Bayombong, Nueva Vizcaya and for complainant
JOSE CENEN SANTOS to CONTINUE assuming and discharging
5. Unliquidated traveling expenses for Seminar/Lakbay-Aral in the functions of the said office in ACTING CAPACITY pursuant
2003 because although a cash advance was made by the to the provisions of Sections 67 and 68 of Republic Act No.
respondent for the said purpose, he, however, did not attend 7160.
said seminar because on the dates when he was supposed to
be on seminar they saw him in the barangay. x x x.
On 26 August 2005, Martinez filed a Special Civil Action
6. That several attempts to discuss said problem during for Certiorari with a prayer for Temporary Restraining Order
sessions were all in vain because respondent declined to and Preliminary Injunction before the trial court against
discuss it and would adjourn the session.x x x.[6] petitioner, the SangguniangBayan and
Mayor Bagasao questioning the validity of the Decision
dated 28 July 2005 of the Sangguniang Bayan. This case was
Upon his failure to file an Answer to the Amended docketed as Special Civil Action No. 6727, which was initially
Administrative Complaint dated 6 December heard by Branch 28, but later raffled to Branch 27 of the trial
2004, Martinez was declared by the Sangguniang Bayan as in court.[11]
default. Pending the administrative
On 20 October 2005, the trial court issued an Order declaring An elective local official may be removed from office on the
the Decision of the Sangguniang Bayan and the grounds enumerated above by order of the proper court.
Memorandum of Mayor Bagasao void. It maintained that the (Emphasis provided.)
proper courts, and not the petitioner, are empowered to
remove an elective local official from office, in accordance
with Section 60 of the Local Government Code. Thus, the During the deliberations of the Senate on the Local
Order of the Sangguniang Bayan removing Martinez from Government Code,[16] the legislative intent to confine to the
service is void. As a consequence, Mayor Bagasao cannot courts, i.e., regional trial courts, the Sandiganbayan and the
prevent Martinez from assuming his office on the basis of a appellate courts, jurisdiction over cases involving the
void order. The trial court further ruled that Martinez properly removal of elective local officials was evident:
availed himself of the remedy of Special Civil Action, where
the order assailed was a patent nullity.[12] Senator Pimentel. This has been reserved, Mr. President,
including the issue of whether or not the Department
On 10 November 2005, petitioner filed a Motion for Secretary or the Office of the President can suspend or
Reconsideration[13] of the trial courts Order dated 10 remove an elective official.
October 2005. The trial court denied the said motion in
another Order dated 30 November 2005.[14] Senator Saguisag. For as long as that is open for some later
disposition, may I just add the following thought: It seems to
Hence, the present petition was filed. me that instead of identifying only the proper regional trial
Although Martinezs term as Punong Baranggay expired upon court or the Sandiganbayan, and since we know that in the
the holding of the 29 October 2007 case of a regional trial court, particularly, a case may be
Synchronized Barangay and Sangguniang Kabataan elections appealed or may be the subject of an injunction, in the
and, thus, rendering this petition moot and academic, the framing of this later on, I would like to suggest that we
Court will nevertheless settle a legal question that is capable consider replacing the phrase PROPER REGIONAL TRIAL
of repetition yet evading review.[15] COURT OR THE SANDIGANBAYAN simply by
COURTS. Kasi po, maaaring sabihin nila na mali iyong regiona
The pivotal issue in this case is whether or not l trial court o ang Sandiganbayan.
the Sangguniang Bayan may remove Martinez, an elective
local official, from office. The pertinent legal provisions and Senator Pimentel. OR THE PROPER COURT.
cases decided by this Court firmly establish that
the Sanggunaing Bayan is not empowered to do so. Senator Saguisag. OR THE PROPER COURT.

Section 60 of the Local Government Code conferred upon the Senator Pimentel. Thank you. We are willing to accept that
courts the power to remove elective local officials from office: now, Mr. President.

Section 60. Grounds for Disciplinary Actions.An elective local Senator Saguisag. It is to be incorporated in the phraseology
official may be disciplined, suspended, or removed from that we will craft to capture the other ideas that have been
office on any of the following grounds: elevated. (Emphasis provided.)

x x x x.
In Salalima v. Guingona, Jr.,[17] the Court en
banc categorically ruled that the Office of the President is
without any power to remove elected officials, since the
power is exclusively vested in the proper courts as expressly It is beyond cavil, therefore, that the power to remove erring
provided for in the last paragraph of Section 60 of the Local elective local officials from service is lodged exclusively with
Government Code. It further invalidated Article 125, Rule XIX the courts. Hence, Article 124 (sic 125)[20] (b), Rule XIX, of
of the Rules and Regulations Implementing the Local the Rules and Regulations Implementing the Local
Government Code of 1991, which provided that: Government Code, insofar as it vests power on the
disciplining authority to remove from office erring elective
Article 125. Grounds for Disciplinary Actions. x x x. local officials, is void for being repugnant to the last
paragraph of Section 60 of the Local Government Code of
x x x x. 1991. The law on suspension or removal of elective public
officials must be strictly construed and applied, and the
(b) An elective local official may be removed from office on authority in whom such power of suspension or removal is
the grounds enumerated in paragraph (a) of this Article by vested must exercise it with utmost good faith, for what is
order of the proper court or the disciplining authority involved is not just an ordinary public official but one chosen
whichever first acquires jurisdiction to the exclusion of the by the people through the exercise of their constitutional
other. right of suffrage. Their will must not be put to naught by the
caprice or partisanship of the disciplining authority. Where
the disciplining authority is given only the power to suspend
The Court nullified the aforequoted rule since the Oversight and not the power to remove, it should not be permitted to
Committee that prepared the Rules and Regulations of the manipulate the law by usurping the power to remove.
Local Government Code exceeded its authority when it (Emphasis supplied.)
granted to the disciplining authority the power to remove
elective officials, a power which the law itself granted only to
the proper courts. Thus, it is clear that under the law, The rule which confers to the proper courts the power to
the Sangguniang Bayan is not vested with the power to remove an elective local official from office is intended as a
remove Martinez. check against any capriciousness or partisan activity by the
disciplining authority. Vesting the local legislative body with
Petitioner contends that administrative cases involving the power to decide whether or not a local chief executive
elective barangay officials may be filed with, heard and may be removed from office, and only relegating to the
decided by courts a mandatory duty to implement the decision, would
the Sangguniang Panlungsod or Sangguniang Bayan concern still not free the resolution of the case from the
ed, which can, thereafter, impose a penalty of removal from capriciousness or partisanship of the disciplining
office. It further claims that the courts are merely tasked with authority. Thus, the petitioners interpretation would defeat
issuing the order of removal, after the clear intent of the law.
the Sangguniang Panlungsod or Sangguniang Bayan finds
that a penalty of removal is warranted.[18] Moreover, such an arrangement clearly demotes the courts
to nothing more than an implementing arm of
The aforementioned position put forward by the petitioner the Sangguniang Panlungsod, or Sangguniang Bayan. This
would run counter to the rationale for making the removal of would be an unmistakable breach of the doctrine on
elective officials an exclusive judicial separation of powers, thus placing the courts under the
prerogative. In Pablico v. Villapando,[19]the court declared orders of the legislative bodies of local governments. The
that: courts would be stripped of their power of review, and their
discretion in imposing the extreme penalty of removal from the doctrine of separation of powers. This allegation runs
office is thus left to be exercised by political factions which contrary to the 1987 Constitution itself, as well as
stand to benefit from the removal from office of the local jurisprudence.
elective official concerned, the very evil which Congress
sought to avoid when it enacted Section 60 of the Local The 1987 Constitution is explicit in defining the scope of
Government Code. judicial power. It establishes the authority of the courts to
determine in an appropriate action the validity of acts of the
Congress clearly meant that the removal of an elective local political departments. It speaks of judicial prerogative in
official be done only after a trial before the appropriate court, terms of duty.[21] Paragraph 2, Section 1, Article VIII of the
where court rules of procedure and evidence can ensure 1987 Constitution, provides that:
impartiality and fairness and protect against political
maneuverings. Elevating the removal of an elective local Judicial power includes the duty of the courts of justice to
official from office from an administrative case to a court settle actual controversies involving rights which are legally
case may be justified by the fact that such removal not only demandable and enforceable, and to determine whether or
punishes the official concerned but also, in effect, deprives not there has been a grave abuse of discretion amounting to
the electorate of the services of the official for whom they lack or excess of jurisdiction on the part of any branch or
voted. instrumentality of the Government. (Emphasis provided.)

As the law stands, Section 61 of the Local Government Code


provides for the procedure for the filing of an administrative The doctrine of separation of powers is not absolute in its
case against an erring elective barangay official before application; rather, it should be applied in accordance with
the Sangguniang Panlungsodor Sangguniang Bayan. However the principle of checks and balances. The removal from office
, the Sangguniang Panlungsod or Sangguniang Bayan cannot of elective officials must not be tainted with partisan politics
order the removal of an erring elective barangay official from and used to defeat the will of the voting public. Congress
office, as the courts are exclusively vested with this power itself saw it fit to vest that power in a more impartial tribunal,
under Section 60 of the Local Government Code. Thus, if the the court. Furthermore, the local government units are not
acts allegedly committed by the barangay official are of a deprived of the right to discipline local elective officials;
grave nature and, if found guilty, would merit the penalty of rather, they are prevented from imposing the extreme
removal from office, the case should be filed with the penalty of dismissal.
regional trial court. Once the court assumes jurisdiction, it
retains jurisdiction over the case even if it would be Petitioner questions the Decision dated 20 October 2005 of
subsequently apparent during the trial that a penalty less the trial court for allowing the petition filed before it as an
than removal from office is appropriate. On the other hand, exception to the doctrine of exhaustion of administrative
the most extreme penalty that remedies. If, indeed, theSangguniang Bayan had no power to
the Sangguniang Panlungsod or Sangguniang Bayan may remove Martinez from office, then Martinez should have
impose on the erring elective barangay official is suspension; sought recourse from the Sangguniang Panlalawigan. This
if it deems that the removal of the official from service is Court upholds the ruling of the trial court.
warranted, then it can resolve that the proper charges be
filed in court. The doctrine of exhaustion of administrative remedies calls
for resort first to the appropriate administrative authorities in
Petitioner alleged that an interpretation which gives the the resolution of a controversy falling under their jurisdiction
judiciary the power to remove local elective officials violates before the same may be elevated to the courts of justice for
review. Non-observance of the doctrine results in lack of a judicial relief can be sought.The reason behind providing an
cause of action, which is one of the grounds allowed by the exception to the rule on exhaustion of administrative
Rules of Court for the dismissal of the complaint.[22] remedies is that issues of law cannot be resolved with finality
by the administrative officer. Appeal to the administrative
The doctrine of exhaustion of administrative remedies, which officer would only be an exercise in futility. A legal question is
is based on sound public policy and practical consideration, is properly addressed to a regular court of justice rather than to
not inflexible. There are instances when it may be dispensed an administrative body.[26]
with and judicial action may be validly resorted to
immediately. Among these exceptions are: 1) where there In the present case, Martinez raised before the trial court the
is estoppel on the part of the party invoking the doctrine; sole issue of whether the Sangguniang Bayan has jurisdiction
2) where the challenged administrative act is patently illegal, over a case involving the removal of a local elective official
amounting to lack of jurisdiction; 3) where there is from office.[27] InMartinezs petition before the trial court,
unreasonable delay or official inaction that will irretrievably only a legal question was raised, one that will ultimately be
prejudice the complainant; 4) where the amount involved is resolved by the courts. Hence, appeal to the administrative
relatively small as to make the rule impractical and officer concerned would only be circuitous and, therefore,
oppressive; 5) where the question raised is purely legal and should no longer be required before judicial relief can be
will ultimately have to be decided by the courts of justice; 6) sought.
where judicial intervention is urgent; 7) where its application
may cause great and irreparable damage; 8) where IN VIEW OF THE FOREGOING, the instant Petition
the controverted acts violate due process; 9) when the issue is DENIED and the assailed Decision of the Bayombong RTC in
of non-exhaustion of administrative remedies has been Special Civil Action No. 6727 is AFFIRMED.
rendered moot; 10) where there is no other plain, speedy and
adequate remedy; 11) when strong public interest is
involved; and 13) in quo warranto proceedings.[23] 4. IN RE: IN THE MATTER OF CLARIFICATION OF
EXEMPTION FROM PAYMENT OF ALL COURT AND
As a general rule, no recourse to courts can be had until all SHERIFFS FEES OF COOPERATIVES DULY REGISTERED
administrative remedies have been exhausted. However, this IN ACCORDANCE WITH RA 9520 AM NO. 12-2-03-0
rule is not applicable where the challenged administrative act MARCH 2012
is patently illegal, amounting to lack of jurisdiction and where In a Petition[1] dated 24 October 2011, Perpetual Help
the question or questions involved are essentially judicial. Community Cooperative (PHCCI), through counsel, requests
for the issuance of a court order to clarify and implement the
In this case, it is apparent that the Sangguniang Bayan acted exemption of cooperatives from the payment of court and
beyond its jurisdiction when it issued the assailed Order sheriffs fees pursuant to Republic Act No. 6938, as amended
dated 28 July 2005 removing Martinez from office. Such act by Republic Act No. 9520, otherwise known as the Philippine
was patently illegal and, therefore, Martinez was no longer Cooperative Act of 2008.
required to avail himself of an administrative appeal in order
to annul the said Order of the Sangguniang Bayan.[24] Thus, PHCCI contends that as a cooperative it enjoys the exemption
his direct recourse to regular courts of justice was justified. provided for under Section 6, Article 61 of Republic Act No.
9520, which states:
In addition, this Court in Castro v. Gloria[25] declared that
where the case involves only legal questions, the litigant (6) Cooperatives shall be exempt from the payment of all
need not exhaust all administrative remedies before such court and sheriffs fees payable to the Philippine Government
for and in connection with all actions brought under this Before this Court is the issue on whether cooperatives are
Code, or where such actions is brought by the Authority exempt from the payment of court and sheriffs fees. The fees
before the court, to enforce the payment of obligations referred to are those provided for under Rule 141 (Legal
contracted in favor of the cooperative. Fees) of the Rules of Court.

It claims that this was a reiteration of Section 62, paragraph The term all court fees under Section 6, Article 61 of Republic
6 of Republic Act No. 6938, An Act to Ordain a Cooperative Act No. 9520 refers to the totality of legal fees imposed
Code of the Philippines,[2] and was made basis for the Courts under Rule 141 of the Rules of Court as an incident of
Resolution in A.M. No. 03-4-01-0, as well as of Office of the instituting an action in court.[4]These fees include filing or
Court Administrator (OCA) Circular No. 44-2007.[3] docket fees, appeal fees, fees for issuance of provisional
It avers that despite the exemptions granted by the aforesaid remedies, mediation fees, sheriffs fees, stenographers fees
laws and issuances, PHCCI had been continuously assessed and commissioners fees.[5]
and required to pay legal and other fees whenever it files
cases in court. With regard to the term sheriffs fees, this Court, in an
extended minute Resolution dated 1 September 2009, held
PHCCI reports that it filed with the Office of the Executive that the exemptions granted to cooperatives under Section 2,
Judge of the Municipal Trial Court in Cities (MTCC), paragraph 6 of Republic Act No. 6938; Section 6, Article 61 of
Dumaguete City, Negros Oriental, a Motion to implement the Republic Act No. 9520; and OCA Circular No. 44-2007 clearly
exemption of cooperatives from the payment of court and do not cover the amount required to defray the actual travel
sheriffs fees in cases filed before the courts in his jurisdiction, expenses of the sheriff, process server or other court-
but the Executive Judge ruled that the matter is of national authorized person in the service of summons, subpoena and
concern and should be brought to the attention of the other court processes issued relative to the trial of the case,
Supreme Court for it to come up with a straight policy and [6] which are neither considered as court and sheriffs fees
uniform system of collection. In the meantime, the MTCC has nor are amounts payable to the Philippine Government.[7]
continued the assessment of filing fees against cooperatives.
In fine, the 1 September 2009 Resolution exempted the
Records reveal that on 21 September 2011, Executive Judge cooperatives from court fees but not from sheriffs
Antonio Estoconing (Executive Judge Estoconing), MTCC, fees/expenses.
Dumaguete City, Negros Oriental, issued an Order treating
the motion filed by PHCCI as a mere consulta considering On 11 February 2010, however, the Supreme Court En
that no main action was filed in his court. Executive Judge Banc issued a Resolution in A.M. No. 08-2-01-0,[8] which
Estoconing submits that he had second thoughts in denied the petition of the Government Service Insurance
considering the exemption in view of the guidelines laid down System (GSIS) for recognition of its exemption from payment
in the Rules. He reported that many cases filed by PHCCI are of legal fees imposed under Section 22 of Rule 141 of the
small claims cases and under Section 8 of the Rule on Small Rules of Court. In the GSIS case, the Court citing Echegaray v.
Claims, the plaintiff is required to pay docket fees and other Secretary of Justice,[9] stressed that the 1987 Constitution
related costs unless he is allowed to litigate the case as an molded an even stronger and more independent judiciary;
indigent. took away the power of Congress to repeal, alter, or
supplement rules concerning pleading, practice and
Hence, this Petition. procedure; and held that the power to promulgate these
Rules is no longer shared by the Court with Congress, more
so, with the Executive,[10] thus:
and the SAJF. Undoubtedly, such situation is constitutionally
Since the payment of legal fees is a vital component of the infirm for it impairs the Courts guaranteed fiscal autonomy
rules promulgated by this Court concerning pleading, and erodes its independence.[17]
practice and procedure, it cannot be validly annulled, In a decision dated 26 February 2010 in Baguio Market
changed or modified by Congress. As one of the safeguards Vendors Multi-Purpose Cooperative (BAMARVEMPCO) v.
of this Courts institutional independence, the power to Cabato-Cortes,[18] this Court reiterated its ruling in
promulgate rules of pleading, practice and procedure is now the GSIS case when it denied the petition of the cooperative
the Courts exclusive domain. That power is no longer shared to be exempted from the payment of legal fees under Section
by this Court with Congress, much less with the Executive. 7(c) of Rule 141 of the Rules of Court relative to fees in
[11] petitions for extra-judicial foreclosure.
On 10 March 2010, relying again on the GSIS ruling, the
xxxx Court En Banc issued a resolution clarifying that the National
Power Corporation is not exempt from the payment of legal
The separation of powers among the three co-equal branches fees.[19]
of our government has erected an impregnable wall that
keeps the power to promulgate rules of pleading, practice With the foregoing categorical pronouncements of the
and procedure within the sole province of this Court.The Supreme Court, it is evident that the exemption of
other branches trespass upon this prerogative if they enact cooperatives from payment of court and sheriffs fees no
laws or issue orders that effectively repeal, alter or modify longer stands. Cooperatives can no longer invoke Republic
any of the procedural rules promulgated by this Act No. 6938, as amended by Republic Act No. 9520, as basis
Court. Viewed from this perspective, the claim of a legislative for exemption from the payment of legal fees.
grant of exemption from the payment of legal fees under
Section 39 of R.A. 8291 necessarily fails. WHEREFORE, in the light of the foregoing premises, the
petition of PHCCI requesting for this Court to issue an order
Congress could not have carved out an exemption for the clarifying and implementing the exemption of cooperatives
GSIS from the payment of legal fees without transgressing from the payment of court and sheriffs fees is
another equally important institutional safeguard of the hereby DENIED.
Courts independence - fiscal autonomy.[12] Fiscal autonomy
recognizes the power and authority of the Court to levy, The Office of the Court Administrator is DIRECTED to issue a
assess and collect fees,[13] including legal fees. Moreover, circular clarifying that cooperatives are not exempt from the
legal fees under Rule 141 have two basic components, the payment of the legal fees provided for under Rule 141 of the
Judiciary Development Fund (JDF) and the Special Allowance Rules of Court.
for the Judiciary Fund (SAJF).[14] The laws which established
the JDF and SAJF[15] expressly declare the identical purpose
of these funds to guarantee the independence of the
Judiciary as mandated by the Constitution and public policy. 5. ABAKADA GURO PARTY LIST V. HON. CESAR
[16] Legal fees therefore do not only constitute a vital source PURISIMA GR NO 166715 AUGUST 2008
of the Courts financial resources but also comprise an
essential element of the Courts fiscal independence. Any
exemption from the payment of legal fees granted by
Congress to government-owned or controlled corporations
and local government units will necessarily reduce the JDF

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