G.R. No.
171182 August 23, 2012 2002, to quash the writ of execution dated October 4, 2002, and to
UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA, RAUL P. DE
GUZMAN, RUBEN P. ASPIRAS, EMMANUEL P. BELLO, WILFREDO P.
DAVID, CASIANO S. ABRIGO, and JOSEFINA R.
LICUANAN,Petitioners,
vs.
HON. AGUSTIN S. DIZON, his capacity as Presiding Judge of the
Regional Trial Court of Quezon City, Branch 80, STERN BUILDERS,
INC., and SERVILLANO DELA CRUZ, Respondents.
DECISION
BERSAMIN, J.:
Trial judges should not immediately issue writs of execution or
garnishment against the Government or any of its subdivisions,
agencies and instrumentalities to enforce money judgments.1 They
should bear in mind that the primary jurisdiction to examine, audit
and settle all claims of any sort due from the Government or any of
its subdivisions, agencies and instrumentalities pertains to the
Commission on Audit (COA) pursuant to Presidential Decree No.
1445 (Government Auditing Code of the Philippines).
The Case
On appeal by the University of the Philippines and its then
incumbent officials (collectively, the UP) is the decision promulgated
on September 16, 2005,2 whereby the Court of Appeals (CA) upheld
the order of the Regional Trial Court (RTC), Branch 80, in Quezon
City that directed the garnishment of public funds amounting to ₱
16,370,191.74 belonging to the UP to satisfy the writ of execution
issued to enforce the already final and executory judgment against
the UP.
Antecedents
On August 30, 1990, the UP, through its then President Jose V.
Abueva, entered into a General Construction Agreement with
respondent Stern Builders Corporation (Stern Builders), represented
by its President and General Manager Servillano dela Cruz, for the
construction of the extension building and the renovation of the
College of Arts and Sciences Building in the campus of the University
of the Philippines in Los Baños (UPLB).3
In the course of the implementation of the contract, Stern Builders
submitted three progress billings corresponding to the work
accomplished, but the UP paid only two of the billings. The third
billing worth ₱ 273,729.47 was not paid due to its disallowance by
the Commission on Audit (COA). Despite the lifting of the
disallowance, the UP failed to pay the billing, prompting Stern
Builders and dela Cruz to sue the UP and its co-respondent officials
to collect the unpaid billing and to recover various damages. The
suit, entitled Stern Builders Corporation and Servillano R. Dela Cruz v.
University of the Philippines Systems, Jose V. Abueva, Raul P. de
Guzman, Ruben P. Aspiras, Emmanuel P. Bello, Wilfredo P. David,
Casiano S. Abrigo, and Josefina R. Licuanan, was docketed as Civil
Case No. Q-93-14971 of the Regional Trial Court in Quezon City
(RTC).4
After trial, on November 28, 2001, the RTC rendered its decision in
favor of the plaintiffs,5 viz:
Wherefore, in the light of the foregoing, judgment is hereby
rendered in favor of the plaintiff and against the defendants
ordering the latter to pay plaintiff, jointly and severally, the
following, to wit:
1. ₱ 503,462.74 amount of the third billing, additional accomplished
work and retention money
2. ₱ 5,716,729.00 in actual damages
3. ₱ 10,000,000.00 in moral damages
4. ₱ 150,000.00 and ₱ 1,500.00 per appearance as attorney’s fees;
and
5. Costs of suit.
SO ORDERED.
Following the RTC’s denial of its motion for reconsideration on May
7, 2002,6 the UP filed a notice of appeal on June 3, 2002.7 Stern
Builders and dela Cruz opposed the notice of appeal on the ground
of its filing being belated, and moved for the execution of the
decision. The UP countered that the notice of appeal was filed
within the reglementary period because the UP’s Office of Legal
Affairs (OLS) in Diliman, Quezon City received the order of denial
only on May 31, 2002. On September 26, 2002, the RTC denied due
course to the notice of appeal for having been filed out of time and
granted the private respondents’ motion for execution.8
The RTC issued the writ of execution on October 4, 2002,9 and the
sheriff of the RTC served the writ of execution and notice of demand
upon the UP, through its counsel, on October 9, 2002.10 The UP filed
an urgent motion to reconsider the order dated September 26,
restrain the proceedings.11 However, the RTC denied the urgent
motion on April 1, 2003.12
On June 24, 2003, the UP assailed the denial of due course to its
appeal through a petition for certiorari in the Court of Appeals (CA),
docketed as CA-G.R. No. 77395.13
On February 24, 2004, the CA dismissed the petition
for certiorari upon finding that the UP’s notice of appeal had been
filed late,14 stating:
Records clearly show that petitioners received a copy of the Decision
dated November 28, 2001 and January 7, 2002, thus, they had until
January 22, 2002 within which to file their appeal. On January 16,
2002 or after the lapse of nine (9) days, petitioners through their
counsel Atty. Nolasco filed a Motion for Reconsideration of the
aforesaid decision, hence, pursuant to the rules, petitioners still had
six (6) remaining days to file their appeal. As admitted by the
petitioners in their petition (Rollo, p. 25), Atty. Nolasco received a
copy of the Order denying their motion for reconsideration on May
17, 2002, thus, petitioners still has until May 23, 2002 (the remaining
six (6) days) within which to file their appeal. Obviously, petitioners
were not able to file their Notice of Appeal on May 23, 2002 as it
was only filed on June 3, 2002.
In view of the said circumstances, We are of the belief and so holds
that the Notice of Appeal filed by the petitioners was really filed out
of time, the same having been filed seventeen (17) days late of the
reglementary period. By reason of which, the decision dated
November 28, 2001 had already become final and executory.
"Settled is the rule that the perfection of an appeal in the manner
and within the period permitted by law is not only mandatory but
jurisdictional, and failure to perfect that appeal renders the
challenged judgment final and executory. This is not an empty
procedural rule but is grounded on fundamental considerations of
public policy and sound practice." (Ram’s Studio and Photographic
Equipment, Inc. vs. Court of Appeals, 346 SCRA 691, 696). Indeed,
Atty. Nolasco received the order of denial of the Motion for
Reconsideration on May 17, 2002 but filed a Notice of Appeal only
on June 3, 3003. As such, the decision of the lower court ipso
facto became final when no appeal was perfected after the lapse of
the reglementary period. This procedural caveat cannot be trifled
with, not even by the High Court.15
The UP sought a reconsideration, but the CA denied the UP’s motion
for reconsideration on April 19, 2004.16
On May 11, 2004, the UP appealed to the Court by petition for
review on certiorari (G.R. No. 163501).
On June 23, 2004, the Court denied the petition for review.17 The UP
moved for the reconsideration of the denial of its petition for review
on August 29, 2004,18 but the Court denied the motion on October 6,
2004.19 The denial became final and executory on November 12,
2004.20
In the meanwhile that the UP was exhausting the available remedies
to overturn the denial of due course to the appeal and the issuance
of the writ of execution, Stern Builders and dela Cruz filed in the RTC
their motions for execution despite their previous motion having
already been granted and despite the writ of execution having
already issued. On June 11, 2003, the RTC granted another motion
for execution filed on May 9, 2003 (although the RTC had already
issued the writ of execution on October 4, 2002).21
On June 23, 2003 and July 25, 2003, respectively, the sheriff served
notices of garnishment on the UP’s depository banks, namely: Land
Bank of the Philippines (Buendia Branch) and the Development Bank
of the Philippines (DBP), Commonwealth Branch. 22 The UP assailed
the garnishment through an urgent motion to quash the notices of
garnishment;23 and a motion to quash the writ of execution dated
May 9, 2003.24
On their part, Stern Builders and dela Cruz filed their ex parte
motion for issuance of a release order.25
On October 14, 2003, the RTC denied the UP’s urgent motion to
quash, and granted Stern Builders and dela Cruz’s ex parte motion
for issuance of a release order.26
The UP moved for the reconsideration of the order of October 14,
2003, but the RTC denied the motion on November 7, 2003.27
On January 12, 2004, Stern Builders and dela Cruz again sought the
release of the garnished funds.28 Despite the UP’s opposition,29 the
RTC granted the motion to release the garnished funds on March 16,
2004.30 On April 20, 2004, however, the RTC held in abeyance the
enforcement of the writs of execution issued on October 4, 2002
and June 3, 2003 and all the ensuing notices of garnishment, citing
Section 4, Rule 52, Rules of Court, which provided that the pendency
of a timely motion for reconsideration stayed the execution of the
judgment.31
On December 21, 2004, the RTC, through respondent Judge Agustin
S. Dizon, authorized the release of the garnished funds of the
UP,32 to wit:
WHEREFORE, premises considered, there being no more legal
impediment for the release of the garnished amount in satisfaction
of the judgment award in the instant case, let the amount garnished
be immediately released by the Development Bank of the
Philippines, Commonwealth Branch, Quezon City in favor of the
plaintiff.
SO ORDERED.
The UP was served on January 3, 2005 with the order of December
21, 2004 directing DBP to release the garnished funds.33
On January 6, 2005, Stern Builders and dela Cruz moved to cite DBP
in direct contempt of court for its non-compliance with the order of
release.34
Thereupon, on January 10, 2005, the UP brought a petition
for certiorari in the CA to challenge the jurisdiction of the RTC in
issuing the order of December 21, 2004 (CA-G.R. CV No.
88125).35 Aside from raising the denial of due process, the UP
averred that the RTC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in ruling that there was
no longer any legal impediment to the release of the garnished
funds. The UP argued that government funds and properties could
not be seized by virtue of writs of execution or garnishment, as held
in Department of Agriculture v. National Labor Relations
Commission,36 and citing Section 84 of Presidential Decree No. 1445
to the effect that "revenue funds shall not be paid out of any public
treasury or depository except in pursuance of an appropriation law
or other specific statutory authority;" and that the order of
garnishment clashed with the ruling in University of the Philippines
Board of Regents v. Ligot-Telan37 to the effect that the funds
belonging to the UP were public funds.
On January 19, 2005, the CA issued a temporary restraining order
(TRO) upon application by the UP.38
On March 22, 2005, Stern Builders and dela Cruz filed in the RTC
their amended motion for sheriff’s assistance to implement the
release order dated December 21, 2004, stating that the 60-day
period of the TRO of the CA had already lapsed.39 The UP opposed
the amended motion and countered that the implementation of the
release order be suspended.40
On May 3, 2005, the RTC granted the amended motion for sheriff’s
assistance and directed the sheriff to proceed to the DBP to receive
the check in satisfaction of the judgment.41
The UP sought the reconsideration of the order of May 3, 2005.42
On May 16, 2005, DBP filed a motion to consign the check
representing the judgment award and to dismiss the motion to cite
its officials in contempt of court.43
On May 23, 2005, the UP presented a motion to withhold the
release of the payment of the judgment award.44
On July 8, 2005, the RTC resolved all the pending matters,45 noting
that the DBP had already delivered to the sheriff Manager’s Check
No. 811941 for ₱ 16,370,191.74 representing the garnished funds
payable to the order of Stern Builders and dela Cruz as its
compliance with the RTC’s order dated December 21,
2004.46 However, the RTC directed in the same order that Stern
Builders and dela Cruz should not encash the check or withdraw its
amount pending the final resolution of the UP’s petition for
certiorari, to wit:47
To enable the money represented in the check in question (No.
00008119411) to earn interest during the pendency of the
defendant University of the Philippines application for a writ of
injunction with the Court of Appeals the same may now be
deposited by the plaintiff at the garnishee Bank (Development Bank
of the Philippines), the disposition of the amount represented
therein being subject to the final outcome of the case of the
University of the Philippines et al., vs. Hon. Agustin S. Dizon et al.,
(CA G.R. 88125) before the Court of Appeals.
Let it be stated herein that the plaintiff is not authorized to encash
and withdraw the amount represented in the check in question and
enjoy the same in the fashion of an owner during the pendency of
the case between the parties before the Court of Appeals which may
or may not be resolved in plaintiff’s favor.
With the end in view of seeing to it that the check in question is
deposited by the plaintiff at the Development Bank of the
Philippines (garnishee bank), Branch Sheriff Herlan Velasco is
directed to accompany and/or escort the plaintiff in making the
deposit of the check in question.
SO ORDERED.
On September 16, 2005, the CA promulgated its assailed decision
dismissing the UP’s petition for certiorari, ruling that the UP had
been given ample opportunity to contest the motion to direct the
DBP to deposit the check in the name of Stern Builders and dela
Cruz; and that the garnished funds could be the proper subject of
garnishment because they had been already earmarked for the
project, with the UP holding the funds only in a fiduciary
capacity,48 viz:
Petitioners next argue that the UP funds may not be seized for
execution or garnishment to satisfy the judgment award. Citing
Department of Agriculture vs. NLRC, University of the Philippines
Board of Regents vs. Hon. Ligot-Telan, petitioners contend that UP
deposits at Land Bank and the Development Bank of the Philippines,
being government funds, may not be released absent an
appropriations bill from Congress.
The argument is specious. UP entered into a contract with private
respondents for the expansion and renovation of the Arts and
Sciences Building of its campus in Los Baños, Laguna. Decidedly,
there was already an appropriations earmarked for the said project.
The said funds are retained by UP, in a fiduciary capacity, pending
completion of the construction project.
We agree with the trial Court [sic] observation on this score:
"4. Executive Order No. 109 (Directing all National Government
Agencies to Revert Certain Accounts Payable to the Cumulative
Result of Operations of the National Government and for Other
Purposes) Section 9. Reversion of Accounts Payable, provides that,
all 1995 and prior years documented accounts payable and all
undocumented accounts regardless of the year they were incurred
shall be reverted to the Cumulative Result of Operations of the
National Government (CROU). This shall apply to accounts payable
of all funds, except fiduciary funds, as long as the purpose for which
the funds were created have not been accomplished and accounts
payable under foreign assisted projects for the duration of the said
project. In this regard, the Department of Budget and Management
issued Joint-Circular No. 99-6 4.0 (4.3) Procedural Guidelines which
provides that all accounts payable that reverted to the CROU may be
considered for payment upon determination thru administrative
process, of the existence, validity and legality of the claim. Thus, the
allegation of the defendants that considering no appropriation for
the payment of any amount awarded to plaintiffs appellee the funds
of defendant-appellants may not be seized pursuant to a writ of
execution issued by the regular court is misplaced. Surely when the
defendants and the plaintiff entered into the General Construction
of Agreement there is an amount already allocated by the latter for
the said project which is no longer subject of future
appropriation."49
After the CA denied their motion for reconsideration on December
23, 2005, the petitioners appealed by petition for review.
Matters Arising During the Pendency of the Petition
On January 30, 2006, Judge Dizon of the RTC (Branch 80) denied
Stern Builders and dela Cruz’s motion to withdraw the deposit, in
consideration of the UP’s intention to appeal to the CA,50 stating:
Since it appears that the defendants are intending to file a petition
for review of the Court of Appeals resolution in CA-G.R. No. 88125
within the reglementary period of fifteen (15) days from receipt of
resolution, the Court agrees with the defendants stand that the
granting of plaintiffs’ subject motion is premature.
Let it be stated that what the Court meant by its Order dated July 8,
2005 which states in part that the "disposition of the amount
represented therein being subject to the final outcome of the case
of the University of the Philippines, et. al., vs. Hon. Agustin S. Dizon
et al., (CA G.R. No. 88125 before the Court of Appeals) is that the
judgment or resolution of said court has to be final and executory,
for if the same will still be elevated to the Supreme Court, it will not
attain finality yet until the highest court has rendered its own final
judgment or resolution.51
However, on January 22, 2007, the UP filed an Urgent Application
for A Temporary Restraining Order and/or A Writ of Preliminary
Injunction,52 averring that on January 3, 2007, Judge Maria Theresa
dela Torre-Yadao (who had meanwhile replaced Judge Dizon upon
the latter’s appointment to the CA) had issued another order
allowing Stern Builders and dela Cruz to withdraw the deposit,53 to
wit:
It bears stressing that defendants’ liability for the payment of the
judgment obligation has become indubitable due to the final and
executory nature of the Decision dated November 28, 2001. Insofar
as the payment of the [sic] judgment obligation is concerned, the
Court believes that there is nothing more the defendant can do to
escape liability. It is observed that there is nothing more the
defendant can do to escape liability. It is observed that defendant
U.P. System had already exhausted all its legal remedies to overturn,
set aside or modify the decision (dated November 28, 2001(
rendered against it. The way the Court sees it, defendant U.P.
System’s petition before the Supreme Court concerns only with the
manner by which said judgment award should be satisfied. It has
nothing to do with the legality or propriety thereof, although it prays
for the deletion of [sic] reduction of the award of moral damages.
It must be emphasized that this Court’s finding, i.e., that there was
sufficient appropriation earmarked for the project, was upheld by
the Court of Appeals in its decision dated September 16, 2005. Being
a finding of fact, the Supreme Court will, ordinarily, not disturb the
same was said Court is not a trier of fact. Such being the case,
defendants’ arguments that there was no sufficient appropriation
for the payment of the judgment obligation must fail.
While it is true that the former Presiding Judge of this Court in its
Order dated January 30, 2006 had stated that:
Let it be stated that what the Court meant by its Order dated July 8,
2005 which states in part that the "disposition of the amount
represented therein being subject to the final outcome of the case
of the University of the Philippines, et. al., vs. Hon. Agustin S. Dizon
et al., (CA G.R. No. 88125 before the Court of Appeals) is that the
judgment or resolution of said court has to be final and executory,
for if the same will still be elevated to the Supreme Court, it will not
attain finality yet until the highest court has rendered its own final
judgment or resolution.
it should be noted that neither the Court of Appeals nor the
Supreme Court issued a preliminary injunction enjoining the release
or withdrawal of the garnished amount. In fact, in its present
petition for review before the Supreme Court, U.P. System has not
prayed for the issuance of a writ of preliminary injunction. Thus, the
Court doubts whether such writ is forthcoming.
The Court honestly believes that if defendants’ petition assailing the
Order of this Court dated December 31, 2004 granting the motion
for the release of the garnished amount was meritorious, the Court
of Appeals would have issued a writ of injunction enjoining the
same. Instead, said appellate court not only refused to issue a wit of
preliminary injunction prayed for by U.P. System but denied the
petition, as well.54
The UP contended that Judge Yadao thereby effectively reversed the
January 30, 2006 order of Judge Dizon disallowing the withdrawal of
the garnished amount until after the decision in the case would have
become final and executory.
Although the Court issued a TRO on January 24, 2007 to enjoin
Judge Yadao and all persons acting pursuant to her authority from
enforcing her order of January 3, 2007,55 it appears that on January
16, 2007, or prior to the issuance of the TRO, she had already
directed the DBP to forthwith release the garnished amount to Stern
Builders and dela Cruz; 56 and that DBP had forthwith complied with
the order on January 17, 2007 upon the sheriff’s service of the order
of Judge Yadao.57
These intervening developments impelled the UP to file in this Court
a supplemental petition on January 26, 2007,58alleging that the RTC
(Judge Yadao) gravely erred in ordering the immediate release of the
garnished amount despite the pendency of the petition for review in
this Court.
The UP filed a second supplemental petition59 after the RTC (Judge
Yadao) denied the UP’s motion for the redeposit of the withdrawn
amount on April 10, 2007,60 to wit:
This resolves defendant U.P. System’s Urgent Motion to Redeposit
Judgment Award praying that plaintiffs be directed to redeposit the
judgment award to DBP pursuant to the Temporary Restraining
Order issued by the Supreme Court. Plaintiffs opposed the motion
and countered that the Temporary Restraining Order issued by the
Supreme Court has become moot and academic considering that the
act sought to be restrained by it has already been performed. They
also alleged that the redeposit of the judgment award was no longer
feasible as they have already spent the same.
It bears stressing, if only to set the record straight, that this Court
did not – in its Order dated January 3, 2007 (the implementation of
which was restrained by the Supreme Court in its Resolution dated
January 24, 2002) – direct that that garnished amount "be deposited
with the garnishee bank (Development Bank of the Philippines)". In
the first place, there was no need to order DBP to make such
deposit, as the garnished amount was already deposited in the
account of plaintiffs with the DBP as early as May 13, 2005. What
the Court granted in its Order dated January 3, 2007 was plaintiff’s
motion to allow the release of said deposit. It must be recalled that
the Court found plaintiff’s motion meritorious and, at that time,
there was no restraining order or preliminary injunction from either
the Court of Appeals or the Supreme Court which could have
enjoined the release of plaintiffs’ deposit. The Court also took into
account the following factors:
a) the Decision in this case had long been final and executory after it
was rendered on November 28, 2001;
b) the propriety of the dismissal of U.P. System’s appeal was upheld
by the Supreme Court;
c) a writ of execution had been issued;
d) defendant U.P. System’s deposit with DBP was garnished
pursuant to a lawful writ of execution issued by the Court; and
e) the garnished amount had already been turned over to the
plaintiffs and deposited in their account with DBP.
The garnished amount, as discussed in the Order dated January 16,
2007, was already owned by the plaintiffs, having been delivered to
them by the Deputy Sheriff of this Court pursuant to par. (c), Section
9, Rule 39 of the 1997 Rules of Civil Procedure. Moreover, the
judgment obligation has already been fully satisfied as per Report of
the Deputy Sheriff.
Anent the Temporary Restraining Order issued by the Supreme
Court, the same has become functus oficio, having been issued after
the garnished amount had been released to the plaintiffs. The
judgment debt was released to the plaintiffs on January 17, 2007,
while the Temporary Restraining Order issued by the Supreme Court
was received by this Court on February 2, 2007. At the time of the
issuance of the Restraining Order, the act sought to be restrained
had already been done, thereby rendering the said Order
ineffectual.
After a careful and thorough study of the arguments advanced by
the parties, the Court is of the considered opinion that there is no
legal basis to grant defendant U.P. System’s motion to redeposit the
judgment amount. Granting said motion is not only contrary to law,
but it will also render this Court’s final executory judgment
nugatory. Litigation must end and terminate sometime and
somewhere, and it is essential to an effective administration of
justice that once a judgment has become final the issue or cause
involved therein should be laid to rest. This doctrine of finality of
judgment is grounded on fundamental considerations of public
policy and sound practice. In fact, nothing is more settled in law than
that once a judgment attains finality it thereby becomes immutable
and unalterable. It may no longer be modified in any respect, even if
the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or by
the highest court of the land.
WHEREFORE, premises considered, finding defendant U.P. System’s
Urgent Motion to Redeposit Judgment Award devoid of merit, the
same is hereby DENIED.
SO ORDERED.
Issues
The UP now submits that:
I
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISMISSING
THE PETITION, ALLOWING IN EFFECT THE GARNISHMENT OF UP
FUNDS, WHEN IT RULED THAT FUNDS HAVE ALREADY BEEN
EARMARKED FOR THE CONSTRUCTION PROJECT; AND THUS, THERE
IS NO NEED FOR FURTHER APPROPRIATIONS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN ALLOWING
GARNISHMENT OF A STATE UNIVERSITY’S FUNDS IN VIOLATION OF
ARTICLE XIV, SECTION 5(5) OF THE CONSTITUTION.
III
IN THE ALTERNATIVE, THE UNIVERSITY INVOKES EQUITY AND THE
REVIEW POWERS OF THIS HONORABLE COURT TO MODIFY, IF NOT
TOTALLY DELETE THE AWARD OF ₱ 10 MILLION AS MORAL
DAMAGES TO RESPONDENTS.
IV
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE
IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER
DATED 3 JANUARY 2007 ON THE GROUND OF EQUITY AND JUDICIAL
COURTESY.
V
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE
IMMEDIATE RELEASE OF THE JUDGMENT AWARD IN ITS ORDER
DATED 16 JANUARY 2007 ON THE GROUND THAT PETITIONER
UNIVERSITY STILL HAS A PENDING MOTION FOR RECONSIDERATION
OF THE ORDER DATED 3 JANUARY 2007.
VI
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN NOT ORDERING
THE REDEPOSIT OF THE GARNISHED AMOUNT TO THE DBP IN
VIOLATION OF THE CLEAR LANGUAGE OF THE SUPREME COURT
RESOLUTION DATED 24 JANUARY 2007.
The UP argues that the amount earmarked for the construction
project had been purposely set aside only for the aborted project
and did not include incidental matters like the awards of actual
damages, moral damages and attorney’s fees. In support of its
argument, the UP cited Article 12.2 of the General Construction
Agreement, which stipulated that no deductions would be allowed
for the payment of claims, damages, losses and expenses, including
attorney’s fees, in case of any litigation arising out of the
performance of the work. The UP insists that the CA decision was
inconsistent with the rulings in Commissioner of Public Highways v.
San Diego61 and Department of Agriculture v. NLRC62 to the effect
that government funds and properties could not be seized under
writs of execution or garnishment to satisfy judgment awards.
Furthermore, the UP contends that the CA contravened Section 5,
Article XIV of the Constitution by allowing the garnishment of UP
funds, because the garnishment resulted in a substantial reduction
of the UP’s limited budget allocated for the remuneration, job
satisfaction and fulfillment of the best available teachers; that Judge
Yadao should have exhibited judicial courtesy towards the Court due
to the pendency of the UP’s petition for review; and that she should
have also desisted from declaring that the TRO issued by this Court
had become functus officio.
Lastly, the UP states that the awards of actual damages of ₱
5,716,729.00 and moral damages of ₱ 10 million should be reduced,
if not entirely deleted, due to its being unconscionable, inequitable
and detrimental to public service.
In contrast, Stern Builders and dela Cruz aver that the petition for
review was fatally defective for its failure to mention the other cases
upon the same issues pending between the parties (i.e., CA-G.R. No.
77395 and G.R No. 163501); that the UP was evidently resorting to
forum shopping, and to delaying the satisfaction of the final
judgment by the filing of its petition for review; that the ruling in
Commissioner of Public Works v. San Diego had no application
because there was an appropriation for the project; that the UP
retained the funds allotted for the project only in a fiduciary
capacity; that the contract price had been meanwhile adjusted to ₱
22,338,553.25, an amount already more than sufficient to cover the
judgment award; that the UP’s prayer to reduce or delete the award
of damages had no factual basis, because they had been gravely
wronged, had been deprived of their source of income, and had
suffered untold miseries, discomfort, humiliation and sleepless
years; that dela Cruz had even been constrained to sell his house, his
equipment and the implements of his trade, and together with his
family had been forced to live miserably because of the wrongful
actuations of the UP; and that the RTC correctly declared the Court’s
TRO to be already functus officio by reason of the withdrawal of the
garnished amount from the DBP.
The decisive issues to be considered and passed upon are, therefore:
(a) whether the funds of the UP were the proper subject of
garnishment in order to satisfy the judgment award; and (b)
whether the UP’s prayer for the deletion of the awards of actual
damages of ₱ 5,716,729.00, moral damages of ₱ 10,000,000.00 and
attorney’s fees of ₱ 150,000.00 plus ₱ 1,500.00 per appearance
could be granted despite the finality of the judgment of the RTC.
Ruling
The petition for review is meritorious.
I.
UP’s funds, being government funds,
are not subject to garnishment
The UP was founded on June 18, 1908 through Act 1870 to provide
advanced instruction in literature, philosophy, the sciences, and arts,
and to give professional and technical training to deserving
students.63 Despite its establishment as a body corporate,64 the UP
remains to be a "chartered institution"65 performing a legitimate
government function. It is an institution of higher learning, not a
corporation established for profit and declaring any dividends.66 In
enacting Republic Act No. 9500 (The University of the Philippines
Charter of 2008), Congress has declared the UP as the national
university67 "dedicated to the search for truth and knowledge as well
as the development of future leaders."68
Irrefragably, the UP is a government instrumentality,69 performing
the State’s constitutional mandate of promoting quality and
accessible education.70 As a government instrumentality, the UP
administers special funds sourced from the fees and income
enumerated under Act No. 1870 and Section 1 of Executive Order
No. 714,71 and from the yearly appropriations, to achieve the
purposes laid down by Section 2 of Act 1870, as expanded in
Republic Act No. 9500.72 All the funds going into the possession of
the UP, including any interest accruing from the deposit of such
funds in any banking institution, constitute a "special trust fund," the
disbursement of which should always be aligned with the UP’s
mission and purpose,73 and should always be subject to auditing by
the COA.74
Presidential Decree No. 1445 defines a "trust fund" as a fund that
officially comes in the possession of an agency of the government or
of a public officer as trustee, agent or administrator, or that is
received for the fulfillment of some obligation.75 A trust fund may be
utilized only for the "specific purpose for which the trust was
created or the funds received."76
The funds of the UP are government funds that are public in
character. They include the income accruing from the use of real
property ceded to the UP that may be spent only for the attainment
of its institutional objectives.77 Hence, the funds subject of this
action could not be validly made the subject of the RTC’s writ of
execution or garnishment. The adverse judgment rendered against
the UP in a suit to which it had impliedly consented was not
immediately enforceable by execution against the UP,78 because
suability of the State did not necessarily mean its liability.79
A marked distinction exists between suability of the State and its
liability. As the Court succinctly stated in Municipality of San
Fernando, La Union v. Firme:80
A distinction should first be made between suability and liability.
"Suability depends on the consent of the state to be sued, liability on
the applicable law and the established facts. The circumstance that a
state is suable does not necessarily mean that it is liable; on the
other hand, it can never be held liable if it does not first consent to
be sued. Liability is not conceded by the mere fact that the state has
allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can,
that the defendant is liable.
Also, in Republic v. Villasor,81 where the issuance of an alias writ of
execution directed against the funds of the Armed Forces of the
Philippines to satisfy a final and executory judgment was nullified,
the Court said:
xxx The universal rule that where the State gives its consent to be
sued by private parties either by general or special law, it may limit
claimant’s action "only up to the completion of proceedings anterior
to the stage of execution" and that the power of the Courts ends
when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or
garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must
be covered by the corresponding appropriation as required by law.
The functions and public services rendered by the State cannot be
allowed to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects, as appropriated by law.
The UP correctly submits here that the garnishment of its funds to
satisfy the judgment awards of actual and moral damages (including
attorney’s fees) was not validly made if there was no special
appropriation by Congress to cover the liability. It was, therefore,
legally unwarranted for the CA to agree with the RTC’s holding in the
order issued on April 1, 2003 that no appropriation by Congress to
allocate and set aside the payment of the judgment awards was
necessary because "there (were) already an appropriations (sic)
earmarked for the said project."82 The CA and the RTC thereby
unjustifiably ignored the legal restriction imposed on the trust funds
of the Government and its agencies and instrumentalities to be used
exclusively to fulfill the purposes for which the trusts were created
or for which the funds were received except upon express
authorization by Congress or by the head of a government agency in
control of the funds, and subject to pertinent budgetary laws, rules
and regulations.83
Indeed, an appropriation by Congress was required before the
judgment that rendered the UP liable for moral and actual damages
(including attorney’s fees) would be satisfied considering that such
monetary liabilities were not covered by the "appropriations
earmarked for the said project." The Constitution strictly mandated
that "(n)o money shall be paid out of the Treasury except in
pursuance of an appropriation made by law."84
II
COA must adjudicate private respondents’ claim
before execution should proceed
The execution of the monetary judgment against the UP was within
the primary jurisdiction of the COA. This was expressly provided in
Section 26 of Presidential Decree No. 1445, to wit:
Section 26. General jurisdiction. - The authority and powers of the
Commission shall extend to and comprehend all matters relating to
auditing procedures, systems and controls, the keeping of the
general accounts of the Government, the preservation of vouchers
pertaining thereto for a period of ten years, the examination and
inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all
persons respecting funds or property received or held by them in an
accountable capacity, as well as the examination, audit, and
settlement of all debts and claims of any sort due from or owing to
the Government or any of its subdivisions, agencies and
instrumentalities. The said jurisdiction extends to all government-
owned or controlled corporations, including their subsidiaries, and
other self-governing boards, commissions, or agencies of the
Government, and as herein prescribed, including non governmental
entities subsidized by the government, those funded by donations
through the government, those required to pay levies or
government share, and those for which the government has put up
a counterpart fund or those partly funded by the government.
It was of no moment that a final and executory decision already
validated the claim against the UP. The settlement of the monetary
claim was still subject to the primary jurisdiction of the COA despite
the final decision of the RTC having already validated the claim.85 As
such, Stern Builders and dela Cruz as the claimants had no
alternative except to first seek the approval of the COA of their
monetary claim.
On its part, the RTC should have exercised utmost caution, prudence
and judiciousness in dealing with the motions for execution against
the UP and the garnishment of the UP’s funds. The RTC had no
authority to direct the immediate withdrawal of any portion of the
garnished funds from the depository banks of the UP. By eschewing
utmost caution, prudence and judiciousness in dealing with the
execution and garnishment, and by authorizing the withdrawal of
the garnished funds of the UP, the RTC acted beyond its jurisdiction,
and all its orders and issuances thereon were void and of no legal
effect, specifically: (a) the order Judge Yadao issued on January 3,
2007 allowing Stern Builders and dela Cruz to withdraw the
deposited garnished amount; (b) the order Judge Yadao issued on
January 16, 2007 directing DBP to forthwith release the garnish
amount to Stern Builders and dela Cruz; (c) the sheriff’s report of
January 17, 2007 manifesting the full satisfaction of the writ of
execution; and (d) the order of April 10, 2007 deying the UP’s
motion for the redeposit of the withdrawn amount. Hence, such
orders and issuances should be struck down without exception.
Nothing extenuated Judge Yadao’s successive violations of
Presidential Decree No. 1445. She was aware of Presidential Decree
No. 1445, considering that the Court circulated to all judges its
Administrative Circular No. 10-2000,86 issued on October 25, 2000,
enjoining them "to observe utmost caution, prudence and
judiciousness in the issuance of writs of execution to satisfy money
judgments against government agencies and local government
units" precisely in order to prevent the circumvention of Presidential
Decree No. 1445, as well as of the rules and procedures of the COA,
to wit:
In order to prevent possible circumvention of the rules and
procedures of the Commission on Audit, judges are hereby
enjoined to observe utmost caution, prudence and judiciousness in
the issuance of writs of execution to satisfy money judgments
against government agencies and local government units.
Judges should bear in mind that in Commissioner of Public Highways
v. San Diego (31 SCRA 617, 625 1970), this Court explicitly stated:
"The universal rule that where the State gives its consent to be sued
by private parties either by general or special law, it may limit
claimant’s action ‘only up to the completion of proceedings anterior
to the stage of execution’ and that the power of the Court ends
when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or
garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must
be covered by the corresponding appropriation as required by law.
The functions and public services rendered by the State cannot be
allowed to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects, as appropriated by law.
Moreover, it is settled jurisprudence that upon determination of
State liability, the prosecution, enforcement or satisfaction thereof
must still be pursued in accordance with the rules and procedures
laid down in P.D. No. 1445, otherwise known as the Government
Auditing Code of the Philippines (Department of Agriculture v.
NLRC, 227 SCRA 693, 701-02 1993 citing Republic vs. Villasor, 54
SCRA 84 1973). All money claims against the Government must
first be filed with the Commission on Audit which must act upon it
within sixty days. Rejection of the claim will authorize the claimant
to elevate the matter to the Supreme Court on certiorari and in
effect, sue the State thereby (P.D. 1445, Sections 49-50).
However, notwithstanding the rule that government properties are
not subject to levy and execution unless otherwise provided for by
statute (Republic v. Palacio, 23 SCRA 899 1968; Commissioner of
Public Highways v. San Diego, supra) or municipal ordinance
(Municipality of Makati v. Court of Appeals, 190 SCRA 206 1990), the
Court has, in various instances, distinguished between government
funds and properties for public use and those not held for public
use. Thus, in Viuda de Tan Toco v. Municipal Council of Iloilo (49 Phil
52 1926, the Court ruled that "where property of a municipal or
other public corporation is sought to be subjected to execution to
satisfy judgments recovered against such corporation, the question
as to whether such property is leviable or not is to be determined by
the usage and purposes for which it is held." The following can be
culled from Viuda de Tan Toco v. Municipal Council of Iloilo:
1. Properties held for public uses – and generally everything held
for governmental purposes – are not subject to levy and sale under
execution against such corporation. The same rule applies to funds
in the hands of a public officer and taxes due to a municipal
corporation.
2. Where a municipal corporation owns in its proprietary capacity, as
distinguished from its public or government capacity, property not
used or used for a public purpose but for quasi-private purposes, it is
the general rule that such property may be seized and sold under
execution against the corporation.
3. Property held for public purposes is not subject to execution
merely because it is temporarily used for private purposes. If the
public use is wholly abandoned, such property becomes subject to
execution.
This Administrative Circular shall take effect immediately and the
Court Administrator shall see to it that it is faithfully implemented.
Although Judge Yadao pointed out that neither the CA nor the Court
had issued as of then any writ of preliminary injunction to enjoin the
release or withdrawal of the garnished amount, she did not need
any writ of injunction from a superior court to compel her obedience
to the law. The Court is disturbed that an experienced judge like her
should look at public laws like Presidential Decree No. 1445
dismissively instead of loyally following and unquestioningly
implementing them. That she did so turned her court into an
oppressive bastion of mindless tyranny instead of having it as a true
haven for the seekers of justice like the UP.
III
Period of appeal did not start without effective
service of decision upon counsel of record;
Fresh-period rule announced in
Neypes v. Court of Appeals
can be given retroactive application
The UP next pleads that the Court gives due course to its petition for
review in the name of equity in order to reverse or modify the
adverse judgment against it despite its finality. At stake in the UP’s
plea for equity was the return of the amount of ₱ 16,370,191.74
illegally garnished from its trust funds. Obstructing the plea is the
finality of the judgment based on the supposed tardiness of UP’s
appeal, which the RTC declared on September 26, 2002. The CA
upheld the declaration of finality on February 24, 2004, and the
Court itself denied the UP’s petition for review on that issue on May
11, 2004 (G.R. No. 163501). The denial became final on November
12, 2004.
It is true that a decision that has attained finality becomes
immutable and unalterable, and cannot be modified in any
respect,87 even if the modification is meant to correct erroneous
conclusions of fact and law, and whether the modification is made
by the court that rendered it or by this Court as the highest court of
the land.88 Public policy dictates that once a judgment becomes
final, executory and unappealable, the prevailing party should not
be deprived of the fruits of victory by some subterfuge devised by
the losing party. Unjustified delay in the enforcement of such
judgment sets at naught the role and purpose of the courts to
resolve justiciable controversies with finality.89Indeed, all litigations
must at some time end, even at the risk of occasional errors.
But the doctrine of immutability of a final judgment has not been
absolute, and has admitted several exceptions, among them: (a) the
correction of clerical errors; (b) the so-called nunc pro tunc entries
that cause no prejudice to any party; (c) void judgments; and (d)
whenever circumstances transpire after the finality of the decision
that render its execution unjust and inequitable.90 Moreover, in
Heirs of Maura So v. Obliosca,91 we stated that despite the absence
of the preceding circumstances, the Court is not precluded from
brushing aside procedural norms if only to serve the higher interests
of justice and equity. Also, in Gumaru v. Quirino State College,92 the
Court nullified the proceedings and the writ of execution issued by
the RTC for the reason that respondent state college had not been
represented in the litigation by the Office of the Solicitor General.
We rule that the UP’s plea for equity warrants the Court’s exercise
of the exceptional power to disregard the declaration of finality of
the judgment of the RTC for being in clear violation of the UP’s right
to due process.
Both the CA and the RTC found the filing on June 3, 2002 by the UP
of the notice of appeal to be tardy. They based their finding on the
fact that only six days remained of the UP’s reglementary 15-day
period within which to file the notice of appeal because the UP had
filed a motion for reconsideration on January 16, 2002 vis-à-vis the
RTC’s decision the UP received on January 7, 2002; and that because
the denial of the motion for reconsideration had been served upon
Atty. Felimon D. Nolasco of the UPLB Legal Office on May 17, 2002,
the UP had only until May 23, 2002 within which to file the notice of
appeal.
The UP counters that the service of the denial of the motion for
reconsideration upon Atty. Nolasco was defective considering that
its counsel of record was not Atty. Nolasco of the UPLB Legal Office
but the OLS in Diliman, Quezon City; and that the period of appeal
should be reckoned from May 31, 2002, the date when the OLS
received the order. The UP submits that the filing of the notice of
appeal on June 3, 2002 was well within the reglementary period to
appeal.
We agree with the submission of the UP.
Firstly, the service of the denial of the motion for reconsideration
upon Atty. Nolasco of the UPLB Legal Office was invalid and
ineffectual because he was admittedly not the counsel of record of
the UP. The rule is that it is on the counsel and not the client that
the service should be made.93
That counsel was the OLS in Diliman, Quezon City, which was served
with the denial only on May 31, 2002. As such, the running of the
remaining period of six days resumed only on June 1,
2002,94 rendering the filing of the UP’s notice of appeal on June 3,
2002 timely and well within the remaining days of the UP’s period to
appeal.
Verily, the service of the denial of the motion for reconsideration
could only be validly made upon the OLS in Diliman, and no other.
The fact that Atty. Nolasco was in the employ of the UP at the UPLB
Legal Office did not render the service upon him effective. It is
settled that where a party has appeared by counsel, service must be
made upon such counsel.95 Service on the party or the party’s
employee is not effective because such notice is not notice in
law.96 This is clear enough from Section 2, second paragraph, of Rule
13, Rules of Court, which explicitly states that: "If any party has
appeared by counsel, service upon him shall be made upon his
counsel or one of them, unless service upon the party himself is
ordered by the court. Where one counsel appears for several
parties, he shall only be entitled to one copy of any paper served
upon him by the opposite side." As such, the period to appeal
resumed only on June 1, 2002, the date following the service on May
31, 2002 upon the OLS in Diliman of the copy of the decision of the
RTC, not from the date when the UP was notified.97
Accordingly, the declaration of finality of the judgment of the RTC,
being devoid of factual and legal bases, is set aside.
Secondly, even assuming that the service upon Atty. Nolasco was
valid and effective, such that the remaining period for the UP to take
a timely appeal would end by May 23, 2002, it would still not be
correct to find that the judgment of the RTC became final and
immutable thereafter due to the notice of appeal being filed too late
on June 3, 2002.
In so declaring the judgment of the RTC as final against the UP, the
CA and the RTC applied the rule contained in the second paragraph
of Section 3, Rule 41 of the Rules of Court to the effect that the filing
of a motion for reconsideration interrupted the running of the
period for filing the appeal; and that the period resumed upon
notice of the denial of the motion for reconsideration. For that
reason, the CA and the RTC might not be taken to task for strictly
adhering to the rule then prevailing.
However, equity calls for the retroactive application in the UP’s
favor of the fresh-period rule that the Court first announced in mid-
September of 2005 through its ruling in Neypes v. Court of
Appeals,98 viz:
To standardize the appeal periods provided in the Rules and to
afford litigants fair opportunity to appeal their cases, the Court
deems it practical to allow a fresh period of 15 days within which to
file the notice of appeal in the Regional Trial Court, counted from
receipt of the order dismissing a motion for a new trial or motion for
reconsideration.
The retroactive application of the fresh-period rule, a procedural law
that aims "to regiment or make the appeal period uniform, to be
counted from receipt of the order denying the motion for new trial,
motion for reconsideration (whether full or partial) or any final order
or resolution,"99 is impervious to any serious challenge. This is
because there are no vested rights in rules of procedure.100 A law or
regulation is procedural when it prescribes rules and forms of
procedure in order that courts may be able to administer
justice.101 It does not come within the legal conception of a
retroactive law, or is not subject of the general rule prohibiting the
retroactive operation of statues, but is given retroactive effect in
actions pending and undetermined at the time of its passage
without violating any right of a person who may feel that he is
adversely affected.
We have further said that a procedural rule that is amended for the
benefit of litigants in furtherance of the administration of justice
shall be retroactively applied to likewise favor actions then pending,
as equity delights in equality.102 We may even relax stringent
procedural rules in order to serve substantial justice and in the
exercise of this Court’s equity jurisdiction.103 Equity jurisdiction aims
to do complete justice in cases where a court of law is unable to
adapt its judgments to the special circumstances of a case because
of the inflexibility of its statutory or legal jurisdiction.104
It is cogent to add in this regard that to deny the benefit of the
fresh-period rule to the UP would amount to injustice and absurdity
– injustice, because the judgment in question was issued on
November 28, 2001 as compared to the judgment in Neypes that
was rendered in 1998; absurdity, because parties receiving notices
of judgment and final orders issued in the year 1998 would enjoy
the benefit of the fresh-period rule but the later rulings of the lower
courts like that herein would not.105
Consequently, even if the reckoning started from May 17, 2002,
when Atty. Nolasco received the denial, the UP’s filing on June 3,
2002 of the notice of appeal was not tardy within the context of the
fresh-period rule. For the UP, the fresh period of 15-days counted
from service of the denial of the motion for reconsideration would
end on June 1, 2002, which was a Saturday. Hence, the UP had until
the next working day, or June 3, 2002, a Monday, within which to
appeal, conformably with Section 1 of Rule 22, Rules of Court, which
holds that: "If the last day of the period, as thus computed, falls on a
Saturday, a Sunday, or a legal holiday in the place where the court
sits, the time shall not run until the next working day."
IV
Awards of monetary damages,
being devoid of factual and legal bases,
did not attain finality and should be deleted
Section 14 of Article VIII of the Constitution prescribes that express
findings of fact and of law should be made in the decision rendered
by any court, to wit:
Section 14. No decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on
which it is based.
No petition for review or motion for reconsideration of a decision of
the court shall be refused due course or denied without stating the
legal basis therefor.
Implementing the constitutional provision in civil actions is Section 1
of Rule 36, Rules of Court, viz:
Section 1. Rendition of judgments and final orders. — A judgment or
final order determining the merits of the case shall be in writing
personally and directly prepared by the judge, stating clearly and
distinctly the facts and the law on which it is based, signed by him,
and filed with the clerk of the court. (1a)
The Constitution and the Rules of Court apparently delineate two
main essential parts of a judgment, namely: the body and the
decretal portion. Although the latter is the controlling part,106 the
importance of the former is not to be lightly regarded because it is
there where the court clearly and distinctly states its findings of fact
and of law on which the decision is based. To state it differently, one
without the other is ineffectual and useless. The omission of either
inevitably results in a judgment that violates the letter and the spirit
of the Constitution and the Rules of Court.
The term findings of fact that must be found in the body of the
decision refers to statements of fact, not to conclusions of
law.107 Unlike in pleadings where ultimate facts alone need to be
stated, the Constitution and the Rules of Court require not only that
a decision should state the ultimate facts but also that it should
specify the supporting evidentiary facts, for they are what are called
the findings of fact.
The importance of the findings of fact and of law cannot be
overstated. The reason and purpose of the Constitution and the
Rules of Court in that regard are obviously to inform the parties why
they win or lose, and what their rights and obligations are. Only
thereby is the demand of due process met as to the parties. As
Justice Isagani A. Cruz explained in Nicos Industrial Corporation v.
Court of Appeals:108
It is a requirement of due process that the parties to a litigation be
informed of how it was decided, with an explanation of the factual
and legal reasons that led to the conclusions of the court. The court
cannot simply say that judgment is rendered in favor of X and
against Y and just leave it at that without any justification
whatsoever for its action. The losing party is entitled to know why
he lost, so he may appeal to a higher court, if permitted, should he
believe that the decision should be reversed. A decision that does
not clearly and distinctly state the facts and the law on which it is
based leaves the parties in the dark as to how it was reached and is
especially prejudicial to the losing party, who is unable to pinpoint
the possible errors of the court for review by a higher tribunal.
Here, the decision of the RTC justified the grant of actual and moral
damages, and attorney’s fees in the following terse manner, viz:
xxx The Court is not unmindful that due to defendants’ unjustified
refusal to pay their outstanding obligation to plaintiff, the same
suffered losses and incurred expenses as he was forced to re-
mortgage his house and lot located in Quezon City to Metrobank
(Exh. "CC") and BPI Bank just to pay its monetary obligations in the
form of interest and penalties incurred in the course of the
construction of the subject project.109
The statement that "due to defendants’ unjustified refusal to pay
their outstanding obligation to plaintiff, the same suffered losses
and incurred expenses as he was forced to re-mortgage his house
and lot located in Quezon City to Metrobank (Exh. "CC") and BPI
Bank just to pay its monetary obligations in the form of interest and
penalties incurred in the course of the construction of the subject
project" was only a conclusion of fact and law that did not comply
with the constitutional and statutory prescription. The statement
specified no detailed expenses or losses constituting the ₱
5,716,729.00 actual damages sustained by Stern Builders in relation
to the construction project or to other pecuniary hardships. The
omission of such expenses or losses directly indicated that Stern
Builders did not prove them at all, which then contravened Article
2199, Civil Code, the statutory basis for the award of actual
damages, which entitled a person to an adequate compensation
only for such pecuniary loss suffered by him as he has duly proved.
As such, the actual damages allowed by the RTC, being bereft of
factual support, were speculative and whimsical. Without the clear
and distinct findings of fact and law, the award amounted only to an
ipse dixit on the part of the RTC,110 and did not attain finality.
There was also no clear and distinct statement of the factual and
legal support for the award of moral damages in the substantial
amount of ₱ 10,000,000.00. The award was thus also speculative
and whimsical. Like the actual damages, the moral damages
constituted another judicial ipse dixit, the inevitable consequence of
which was to render the award of moral damages incapable of
attaining finality. In addition, the grant of moral damages in that
manner contravened the law that permitted the recovery of moral
damages as the means to assuage "physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury."111 The
contravention of the law was manifest considering that Stern
Builders, as an artificial person, was incapable of experiencing pain
and moral sufferings.112 Assuming that in granting the substantial
amount of ₱ 10,000,000.00 as moral damages, the RTC might have
had in mind that dela Cruz had himself suffered mental anguish and
anxiety. If that was the case, then the RTC obviously disregarded his
separate and distinct personality from that of Stern
Builders.113 Moreover, his moral and emotional sufferings as the
President of Stern Builders were not the sufferings of Stern Builders.
Lastly, the RTC violated the basic principle that moral damages were
not intended to enrich the plaintiff at the expense of the defendant,
but to restore the plaintiff to his status quo ante as much as
possible. Taken together, therefore, all these considerations
exposed the substantial amount of ₱ 10,000,000.00 allowed as
moral damages not only to be factually baseless and legally
indefensible, but also to be unconscionable, inequitable and
unreasonable.
Like the actual and moral damages, the ₱ 150,000.00, plus ₱
1,500.00 per appearance, granted as attorney’s fees were factually
unwarranted and devoid of legal basis. The general rule is that a
successful litigant cannot recover attorney’s fees as part of the
damages to be assessed against the losing party because of the
policy that no premium should be placed on the right to
litigate.114 Prior to the effectivity of the present Civil Code, indeed,
such fees could be recovered only when there was a stipulation to
that effect. It was only under the present Civil Code that the right to
collect attorney’s fees in the cases mentioned in Article 2208115 of
the Civil Code came to be recognized.116 Nonetheless, with
attorney’s fees being allowed in the concept of actual
damages,117 their amounts must be factually and legally justified in
the body of the decision and not stated for the first time in the
decretal portion.118 Stating the amounts only in the dispositive
portion of the judgment is not enough;119 a rendition of the factual
and legal justifications for them must also be laid out in the body of
the decision.120
That the attorney’s fees granted to the private respondents did not
satisfy the foregoing requirement suffices for the Court to undo
them.121 The grant was ineffectual for being contrary to law and
public policy, it being clear that the express findings of fact and law
were intended to bring the case within the exception and thereby
justify the award of the attorney’s fees. Devoid of such express
findings, the award was a conclusion without a premise, its basis
being improperly left to speculation and conjecture.122
Nonetheless, the absence of findings of fact and of any statement of
the law and jurisprudence on which the awards of actual and moral
damages, as well as of attorney’s fees, were based was a fatal flaw
that invalidated the decision of the RTC only as to such awards. As
the Court declared in Velarde v. Social Justice Society,123 the failure
to comply with the constitutional requirement for a clear and
distinct statement of the supporting facts and law "is a grave abuse
of discretion amounting to lack or excess of jurisdiction" and that
"(d)ecisions or orders issued in careless disregard of the
constitutional mandate are a patent nullity and must be struck down
as void."124 The other item granted by the RTC (i.e., ₱ 503,462.74)
shall stand, subject to the action of the COA as stated herein.
WHEREFORE, the Court GRANTS the petition for review on
certiorari; REVERSES and SETS ASIDE the decision of the Court of
Appeals under review; ANNULS the orders for the garnishment of
the funds of the University of the Philippines and for the release of
the garnished amount to Stern Builders Corporation and Servillano
dela Cruz; and DELETES from the decision of the Regional Trial Court
dated November 28, 2001 for being void only the awards of actual
damages of ₱ 5,716,729.00, moral damages of ₱ 10,000,000.00, and
attorney's fees of ₱ 150,000.00, plus ₱ 1,500.00 per appearance, in
favor of Stern Builders Corporation and Servillano dela Cruz.
The Court ORDERS Stem Builders Corporation and Servillano dela
Cruz to redeposit the amount of ₱ 16,370,191.74 within 10 days
from receipt of this decision.
Costs of suit to be paid by the private respondents.
SO ORDERED.
G.R. No. 85284 February 28, 1990
REPUBLIC OF THE PHILIPPINES, petitioner
vs.
SANDIGANBAYAN, Third Division, SIMPLICIO A. PALANCA in his
own behalf as a stockholder of Bacolod Real Estate Development
Corporation (BREDCO), and other stockholders similarly
situated, respondents.
Hilado, Hagad & Hilado for private respondents.
RESOLUTION
PADILLA, J.:
This is a petition for certiorari to annul and set aside the resolution
of the Sandiganbayan (Third Division), dated 3 June 1988, granting
the private respondents' motion to intervene in Civil Case No. 0025
and admitting their answer in intervention, as well as its resolution,
dated 25 August 1988, denying the petitioner's motion for
reconsideration; PROHIBITION to order the respondent court to
cease and desist from proceeding with the intervention filed with it;
and alternatively, mandamus to compel the respondent court to
dismiss the intervention case.
The antecedents are as follows:
On 29 July 1987, the Republic of the Philippines, as Plaintiff, through
its governmental instrumentality the Presidential Commission on
Good Government (PCGG) filed with the respondent Sandiganbayan
a complaint against Ferdinand E. Marcos, et al. for reconveyance,
reversion, accounting, restitution and damages, docketed therein as
Civil Case No. 0025 (PCGG No. 26). 1
On or about 3 September 1987, before the said Civil Case No. 0025
could be set for hearing, private respondent Simplicio A. Palanca in
his own behalf as a stockholder of Bacolod Real Estate Development
Corporation (BREDCO) and other stockholders similarly situated,
filed with the respondent Sandiganbayan a "Motion For Leave To
Intervene" 2 attaching thereto their "Answer in Intervention ." 3
In their motion, private respondents alleged that they be —
... allowed to intervene in the present action and to file the Answer
in intervention hereto attached as Annex 'A', the said stockholders
having a legal interest in the matter in litigation and in the
disposition of the properties listed in Annex 'A' of the Complaint as
BREDCO LOTS and shares of stock in Bacolod Real Estate
Development Corporation.
In justification, it is further respectfully alleged that.
1. Close examination of the Complaint, in particular par. 12 thereto
under 'V. SPECIFIC AVERMENTS OF DEFENDANTS' ILLEGAL ACTS',
makes no mention at all about BREDCO being the subject of any
anomalous transaction engaged in by any of the defendants, in
consequence of which the listed BREDCO lots could have been
gotten illegally. It is to be observed, on the other hand, that the
titles mentioned in aforesaid Annex of the complaint covering the
lots in question are not registered in the names of any of the
defendants but in the name of Bacolod Real Estate Development
Corporation.
2. Similarly, the shares of stock in Bacolod Real Estate Development
Corporation appealing under PERSONAL PROPERTY on page two of
Annex A of the complaint t are ' carried not in the names of any of
the defendants, but in the name of Marsteel Consolidated Inc. and
were acquired under the circumstances averred more in detail in the
accompanying Answer in Intervention by reason of which detail
shares should not be involved in the present action.
3. If intervention is allowed, intervenors are prepared to prove that
if ever any of the defendants through Marsteel Consolidated, Inc.
and Marsteel Corporation came to have any interest in Bacolod Real
Estate Development Corporation, it was only by way of
accommodation on the part of BREDCO stockholders who
transferred their shareholdings aggregating 70% of the subscribed
capital to enable Marsteel Consolidated to secure adequate
financing for the reclamation and port development project . 4
The foregoing allegations were further expanded and elaborated in
the private respondents' Answer in Intervention.
On 2 December 1987, petitioner filed its Reply 5 to Answer In
Intervention, while private respondents filed a "Rejoinder to Reply
With Motion To Release BREDCO Lots 6 and also a "Motion To
Calendar For Hearing" the motion to release BREDCO lots. 7
On 22 January 1988, respondent court promulgated a
resolution 8 holding in abeyance action on the private respondents'
"Rejoinder to Reply with Motion to Release BREDCO lots", and set
the Motion for Leave to Intervene for hearing on 2 February 1988.
On 11 March 1988, respondent court issued an order 9 giving
petitioner fifteen (1 5) days from 11 March 1988 within which to file
its opposition and/or comment on the motion to intervene and
giving the private respondents in turn ten (10) days within which to
file their reply thereto.
On 23 March 1988, petitioner filed its Motion to Dismiss "Answer In
Intervention," on the grounds that; (1) respondent court lacks
jurisdiction and (2) intervenors have no legal interest in the matter
in litigation, 10 which the private respondents opposed. 11
On 6 June 1988, respondent court promulgated a Resolution dated 3
June 1988 12 granting the private respondents' motion to intervene
and admitting their Answer in Intervention.
Petitioner moved for reconsideration but this was denied by
respondent court in its resolution of 25 August 1989.13
Hence, the instant petition.
The petitioner, through the Solicitor General, contends that in
issuing the questioned resolutions granting the Motion to Intervene
and admitting the Answer-in-Intervention, respondent
Sandiganbayan acted in contravention of a national or public policy
embedded in Executive Order Nos. 1, 2, 4 and related issuances, or
otherwise acted in a way not in accord with law or with the
applicable decisions of this Court, because:
(a) Petitioner, being the sovereign state, cannot be sued without its
consent, and the Intervention is, in legal effect, a suit or counter-
suit against the sovereign state, the Republic of the Philippines;
(b) The cause of action of intervenors does not fall within the
jurisdiction of the Sandiganbayan as expressly spelled out in P.D. No.
1606 and Executive Order No. 14;
(c) Intervenors have no legal interest in the matter in litigation, and
the subject matter is not in custodia legis of respondent court; and
(d) Intervenors' claims, as contained in their Motion for Intervention
and Answer-in-Intervention, are claims between and/or among
Ferdinand and Imelda Marcos and their cronies, i.e., "members of
their immediate family close relatives, subordinates, and/or
business associates, dummies, agents and nominees" and are
cognizable not by respondent court but by the regular courts or
other for a Even if there would be multiple litigations, as among
themselves, the legal effect remains, i.e., that there is only one case
filed by the Republic against the named defendants in Civil Case No.
0025, grounded on causes of action entirely distinct from any cause
of action which intervenors may have against Mr. Marcos and his
cronies.
The petition is not impressed with merit.
The Rules of Court permit an aggrieved party, generally, to take a
cause and apply for relief with the appellate courts by way of either
of two distinct and dissimilar modes through the broad process of
appeal or the limited special civil action of certiorari. An appeal
brings up for review errors of judgment committed by a court of
competent jurisdiction over the subject of the suit or the persons of
the parties or any such error committed by the court in the exercise
of its jurisdiction amounting to nothing more than an error of
judgment. On the other hand, the writ of certiorari issues for the
correction of errors of jurisdiction only or grave abuse of discretion
amounting to lack or excess of jurisdiction. The writ of certiorari
cannot legally be used for any other purpose. In terms of its
function, the writ of certiorari serves to keep a lower court within
the bounds of its jurisdiction or to prevent it from committing such a
grave abuse of discretion amounting to excess of jurisdiction or to
relieve parties from arbitrary acts of courts — acts which courts
have no power or authority in law to perform. 14
Hence, the main issue to be resolved in the present case, which is
principally a petition for certiorari to annul and set aside the
questioned resolutions of respondent court is, whether or not the
Sandiganbayan has jurisdiction over the action for intervention, or if
it has, whether respondent court acted with grave abuse of
discretion amounting to lack or excess of its jurisdiction in rendering
the questioned resolutions.
In the present case, petitioner merely contends that the cause of
action of intervenors does not fall within the jurisdiction of the
Sandiganbayan as expressly spelled out in Presidential Decree No.
1606 and Executive Order No. 14; it does not claim that respondent
court committed grave abuse of discretion amounting to lack or
excess of its jurisdiction in rendering the questioned resolutions.
The jurisdiction of the Sandiganbayan has already been settled
in Presidential Commission on Good Government vs. Hon. Emmanuel
G. Penal, etc., et al. 15 where the Court held that —
... Under Section 2 of the President's Executive Order No. 14 issued
on May 7, 1986, all cases of the Commission regarding 'the funds,
Moneys, Assets, and Properties Illegally Acquired or I
Misappropriated by Former President Ferdinand Marcos, Mrs.
Imelda Romualdez Marcos, their Close Relatives, Subordinates,
Business Associates, Dummies, Agents, or Nominees whether civil or
criminal, are lodged within the 'exclusive and original jurisdiction of
the Sandiganbayan' and all incidents arising from, incidental to, or
related to, such cases necessarily fall likewise under the
Sandiganbayan's exclusive and original jurisdiction, subject to review
on certiorari exclusively by the Supreme Court. (emphasis supplied)
In reiterating the aforequoted ruling in six (6) subsequent
cases 16 which were decided jointly, again, the Court held that-
... the exclusive jurisdiction conferred on the Sandiganbayan would
evidently extend not only to the principal causes of action, i.e., the
recovery of alleged ill-gotten wealth, but also to 'all incidents arising
from, incidental to, or related to, such cases,' such as the dispute
over the sale of the shares, the propriety of the issuance of ancillary
writs or provisional remedies relative thereto, the sequestration
thereof, which may not be made the subject of separate actions or
proceedings in another forum.
Intervention is not an independent action, but is ancillary and
supplemental to an existing litigation. 17 Hence, the private
respondents' action for intervention in Civil Case No. 0025, not being
an independent action, is merely incidental to, or related to, the said
civil case. Since the respondent Sandiganbayan has the exclusive and
original jurisdiction over Civil Case No. 0025, it has likewise original
and exclusive jurisdiction over the private respondents' action for
intervention therein.
Now, considering that respondent Sandiganbayan has jurisdiction
not only over Civil Case No. 0025 but also over the private
respondents' action for intervention, any error or irregularity that it
may have committed in rendering its questioned resolutions, in the
exercise of its jurisdiction, amounts to an error of judgment, which is
not correctable in the present petition for certiorari but by appeal.
Accordingly, this case may be dismissed outright without the Court
having to pass upon the other issues raised in the petition. However,
considering that the litigation below is of great public interest and
involves a matter of public policy, the Court has decided to review
the other errors allegedly committed by respondent court in
rendering its questioned resolutions.
In this jurisdiction, the law on "intervention" is found in the Rules of
Court. 18 Thus, a person may, before or during a trial, be permitted
by the court, in its discretion, to intervene in an action, if he has
legal interest in the matter in litigation, or in the success of either of
the parties or an interest against both, or when he is so situated as
to be adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof. 19
The Court is not impressed with the contention of petitioner that
the intervenors have no legal interest in the matter in litigation. In
this connection, it would suffice to quote what the respondent court
said in holding that the intervenors have a legal interest in the
matter in litigation. Thus —
Has Palanca shown a proper case for intervention by him and his co-
stockholders who are similarly situated as he is?
A narration of the pertinent facts alleged by Palanca and the plaintiff
indicates the answer.
In 1961, BREDCO was awarded by Bacolod City a contract to
undertake the reclamation and port development of the city. As of
1975, a sizeable portion of land had already been reclaimed from
the sea and corresponding torrens titles issued in BREDCO's name.
In that year, BREDCO engaged MARSTEEL as a contractor to
complete the project with power to negotiate in its name or jointly
and/or severally with BREDCO for loans to finance the reclamation
and port development, and to mortgage all reclaimed lots and other
assets of the project as security. For its services, MARSTEEL shall
receive 65% of the excess of all revenues over all disbursements.
Accordingly, BREDCO conveyed to MARSTEEL 65% of each lot
already reclaimed and that to be reclaimed.
In 1977, MARSTEEL assigned to MCI, which owned 100% of its
capital stock, all its rights, interests, obligations, and undertakings in
the project. To enable MCI to expand its base of negotiation for
loans needed in the reclamation and port development the BREDCO
stockholders transferred to MCI their respective shares of stock
amounting to 70% of the capital stock of BREDCO. In return, they
'shall be entitled to a share of 35% in excess of all revenues over all
disbursements of the projects,' it being understood that payment of
the corresponding share shall be due to BREDCO stockholders as
owners of existing interests in the project, regardless of the fact that
by implementation of this AGREEMENT, they ceased to be
stockholders of BREDCO.
In September 1986, the Presidential Commission on Good
Government (PCGG) sequestered all assets, properties, records and
documents' of MARSTEEL, MCI, and BREDCO'. In July 1987, the
complaint at bar was filed and expanded in March 1988. The
pleadings, original and expanded, allege that the defendants, acting
singly or collectively, amassed ill-gotten wealth listed in Annex 'A'
thereof, among which are the BREDCO lots and shares of stock, and
pray that the ill-gotten wealth be reconveyed to the plaintiff, plus
damages. Significantly, however, the bodies of the complaints do
not mention anything about BREDCO, its project, lots, and stocks,
nor about MCI.
Under these alleged facts, Palanca has established a proper case for
intervention. Firstly, he and his co-stockholders have a legal interest
in the matter in litigation, namely, their 70% of the capital stock of
BREDCO, which they transferred to MCI by way of alleged
accommodation, or its equivalent of 35% of the excess of all
revenues over all disbursements, to which they are entitled 'as
owners of existing interests in the project.' Section 2, Rule 12,
Revised Rules of Court, provides that a person may be permitted 'to
intervene in an action, if he has legal interest in the matter in
litigation.'
As a general rule the right to intervene exists in favor of one who
claims to be the owner or to have some interest in the property
which is the subject of litigation, and this without particular regard
to the value of the property or the right claimed therein. A third
party may intervene in a sequestration suit involving title to
personal property, and have his claims to the possession of the
property vindicated therein So, in an action for possession of real or
personal property, an intervenor may be admitted on the ground
that he is an owner thereof, either to assist in the defense, or to
claim the property for himself, or to obtain some other relief
germane to the action.' (59 Am Jur 2d, Parties, Sec. 152, p. 585,
Secondly, the same Section 2, Rule 12, further provides that
intervention by a person may be permitted 'when he is so situated
as to be adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof.' On this
point, the Supreme Court observed:
We shall now speak of the case where the stranger desires to
intervene for the purpose of asserting a property right in the res, or
thing, which is the subject-matter of the ligitation, without
becoming a formal plaintiff or defendant, and without acquiring the
control over the course of a litigation, which is conceded to the main
actions (sic) therein. The mode of intervention to which reference is
now made is denominated in equity procedure the intervention pro
interesse suo and is somewhat analogous to the trial of a right of
property in an action of law, its purpose being to enable a person
whose property gets into the clutches of a court, in a controversy
between others, to go into court and to procure it or its proceeds to
be surrendered to him. It often happens that a person who really
owns property, or has a superior lien or other interest in it, sees a
litigation spring up between others who assert rights in or
concerning it. If the court takes possession of the res, or otherwise
gets jurisdiction over it in such a controversy, the real owner is not
compelled to stand Idly by and see the property disposed of without
asserting his rights. Though it be granted that the litigation would
not be technically binding on him, because of his not being a party,
yet it might well happen that complications would ensue whereby
his rights would be materially prejudiced. For instance, the subject-
matter of the litigation might consist of a fund to he distributed, and
the conditions might be such that if it were turned over to the
particular litigant who should appear to have the better right in the
original action, the person really having a superior title might be left
without redress. Accordingly provision is made whereby persons
who have not been joined as parties in the original proceedings may
intervene and assert a right antagonistic or superior to that of one or
both of the parties. (Bosworth vs. Terminal etc. Assoc. of St. Louis,
174 U.S. 182,187, 43 L. ed., 941, 943). As regards the right to
intervene in this manner, it may be stated that if the party desiring
to intervene shows a legitimate and proper interest in the fund or
property in question, the motion to intervene should be granted,
especially if such interest cannot be otherwise properly protected.
(Joaquin v. Herrera, 37 Phil. 705, 722-724)
Here, the BREDCO lots and stocks were sequestered and are now in
custodia legis (Bernas, The Constitution of the Republic of the
Philippines, An Annotated Text, 1987 ed., p. 129, footnote 42). From
the facts averred by Palanca and the plaintiff, it is easy to see that in
the event We decide to order the reconveyance of those assets to
the plaintiff, Palanca and his co-stockholders in BREDCO stand to be intervention or a complaint. As observed by respondent
adversely affected. Sandiganbayan:
And thirdly, the legal interest of Palanca and his co-stockholders in In intervening, Palanca and his co-stockholders have for their
the matter in litigation and the possibility of a judgment ordering purpose to exclude the BREDCO lots and stocks or, at least, their
reconveyance in favor of the plaintiff, invest them with legal interest 35% interest in the BREDCO project from any possible judgment
in the success of the defendants, at least insofar as the BREDCO lots directing reconveyance of the alleged ill-gotten wealth to the
and shares are concerned. Section 2, Rule 12, also permits plaintiff. They do not pray for damages against the latter. In effect,
intervention by a person who has legal interest in the success of they occupy a defensive position as regards those shares of stock or
either of the parties. 20 interest. The fact that they interjected themselves into his litigation
The petitioner's contention that the State cannot be sued without its at their own initiative does not alter the essential nature of their
consent and that private respondents' action for intervention is, in intervention." 24
legal effect, a suit or counter-suit against the sovereign is also Private respondents' action for intervention in Civil Case No. 0025 is
untenable. not, therefore, a suit or counter-suit against petitioner Republic of
The Rules of Court 21 provide that the intervention shall be made by the Philippines.
complaint filed and served in regular form, and may be answered as Having arrived at the above conclusions, the Court finds no need to
if it where an original complaint; but where the intervenor unites further discuss the petitioner's pretense that the private
with the defendant in resisting the claims of the plaintiff, the respondents' claims are claims as between and/or among Ferdinand
intervention may be made in the form of an answer to the and Imelda Marcos, et al., and that the same is not cognizable by
complaint. In order words, a third person who makes himself a party respondent Sandiganbayan but by the regular courts. It suffices to
to an existing litigation, may either join the plaintiff in claiming what state that, as already stated, in intervening in Civil Case No. 0025,
is sought in the filing a complaint in intervention, or by uniting with private respondents merely joined the defendants therein in
the defendant in resisting the claims of the plaintiff, by filing an resisting the claims of petitioner, as plaintiff, and that they asked no
answer in intervention. affirmative relief against any party in their answer in intervention.
In Froilan v. Pan Oriental Shipping Co., 22 the plaintiff therein They do not appear to have any controversy with the defendants,
Fernando A. Froilan filed a complaint against the defendant, Pan Ferdinand and Imelda Marcos, et al.
Oriental Shipping Co. The Republic of the Philippines intervened by ACCORDINGLY, the petition in the present case is hereby DISMISSED.
filing a complaint in intervention. Thereafter, the defendant filed its SO ORDERED.
answer to the complaint in intervention, and set up a counterclaim Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras,
against the Republic of the Philippines. The trial court dismissed the Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Griño-Aquino,
defendants counterclaim against the Republic on the ground, among Medialdea and Regalado, JJ., concur.
others, that the state is immune from suit. On appeal, this Court
held that the dismissal of the counterclaim was untenable, because
by filing its complaint in intervention the Government in effect
waived its right to non-suability.
In another case, Lim vs. Brownell, Jr. and Kagawa, 23 the plaintiff
Benito E. Lim, as administrator of the intestate estate of Arsenia
Enriquez, filed a complaint in the Court of First Instance of Manila
against the Alien Property Administrator (later substituted by the
Attorney General of the United States) for the recovery of four (4)
parcels of land (which were subsequently transferred to the
Republic of the Philippines) with a prayer for the payment of back
rentals. The Republic of the Philippines intervened in the case. The
defendant Attorney General of the United States and the defendant-
intervenor Republic of the Philippines each filed an answer, alleging
by way of affirmative defense, among others, that the lower court
had no jurisdiction over the claim for rentals since the action in that
regard constituted a suit against the Republic to which it had not
given its consent. The trial court dismissed the complaint for lack of
jurisdiction. On appeal, this Court affirmed, with the following
reasons:
The claim for damages for the use of the property against the
intervenor defendant Republic of the Philippines to which it was
transferred, likewise, cannot be maintained because of the
immunity of the state from suit. The claim obviously constitutes a
charge against, or financial liability to, the Government and
consequently cannot be entertained by the courts except with the
consent of said government. (Syquia vs. Almeda Lopez, 84 Phil. 312;
47 Off. Gaz., 665; Compania General de Tabacos vs. Govt. of the PI
45 Phil., 663). Plaintiff argues that by its intervention, the Republic
of the Philippines, in effect, waived its right of non-suability, but it
will be remembered that the Republic intervened in the case merely
to unite with the defendant Attorney General of the United States in
resisting plaintiffs claims, and for that reason asked no affirmative
relief against any party in the answer in intervention. x x x. Clearly,
this is not a case where the State takes the initiative in an action
against a private party by filing a complaint in intervention, thereby
surrendering its privileged position and coming down to the level of
the defendants what happened in the case of Froilan vs. Pan Oriental
Shipping Co., et al.-95 Phil. 905 cited by the plaintiff but one where
the State, as one of the defendants merely resisted a claim against it
precisely on the ground, among others, of its privileged position
which exempts it from suit. (emphasis supplied).
In the present case, the private respondents intervened in Civil Case
No. 0025 merely to unite with the defendants therein in resisting the
claims of petitioner, as plaintiff, and for that reason asked for no
affirmative relief against any party in their answer in intervention. In
other words, this is not a case where the private respondents take
the initiative in an action against petitioner by filing a complaint in
G.R. No. L-48214 December 19, 1978
ILDEFONSO SANTIAGO, represented by his Attorney-in-Fact,
ALFREDO T. SANTIAGO, petitioner,
vs.
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES,
represented by the Director, Bureau of Plant Industry, and the
Regional Director, Region IX, Zamboanga City, respondent,
Ahmad D. Sahak for petitioner.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General
Octavio R. Ramirez and Solicitor Mariano M. Martinez for
respondents.
FERNANDO, J.:
The first impression yielded by a perusal of this petition
for certiorari is its inherent weakness considering the explicit
provision in the present Constitution prohibiting a suit against the
Republic without its consent. 1 Here petitioner Ildefonso
Santiago 2 filed on August 9, 1976 an action in the Court of First
Instance of Zamboanga City naming as defendant the government of
the Republic of the Philippines represented by the Director of the
Bureau of Plant Industry. 3 His plea was for the revocation of a deed
of donation executed by him and his spouse in January of
1971, 4 with the Bureau of Plant Industry as the donee. As alleged in
such complaint, such Bureau, contrary to the terms of the donation,
failed to "install lighting facilities and water system on the property
donated and to build an office building and parking [lot] thereon
which should have been constructed and ready for occupancy on or
before December 7, 1974. 5 That led him to conclude that under the
circumstances, he was exempt from compliance with such an explicit
constitutional command. The lower court, in the order challenged in
this petition, was of a different view. It sustained a motion to dismiss
on the part of the defendant Republic of the Philippines, now named
as one of the respondents, the other respondent being the Court of
First Instance of Zamboanga City, Branch II. It premised such an
order on the settled "rule that the state cannot be sued without its
consent. This is so, because the New Constitution of the Philippines
expressly provides that the state may not be sued without its
consent. 6 Solicitor General Estelito P. Mendoza, 7 in the com ment
on the petition filed with this Court, is for the affirmance of the
order of dismissal of respondent Court precisely to accord deference
to the above categorical constitutional mandate.
On its face, such a submission carries persuasion. Upon further
reflection, this Tribunal is impressed with the unique aspect of this
petition for certiorari, dealing as it does with a suit for the
revocation of a donation to the Republic, which allegedly fatted to
conform with what was agreed to by the donee. If an order of
dismissal would suffice, then the element of unfairness enters, the
facts alleged being hypothetically admitted. It is the considered
opinion of this Court then that to conform to the high dictates of
equity and justice, the presumption of consent could be indulged in
safely. That would serve to accord to petitioner as plaintiff, at the
very least, the right to be heard. certiorari lies.
1. This is not to deny the obstacle posed by the constitutional
provision. It is expressed in language plain and unmistakable: "The
State may not be sued without its consent. 8 The Republic cannot be
proceeded against unless it allows itself to be sued. Neither can a
department, bureau, agency, office, or instrumentality of the
government where the suit, according to the then Justice, now Chief
Justice, Castro in Del Mar v. Philippine Veterans
Administration, 9 may result "in adverse consequences to the public
treasury, whether in the disbursements of funds or loss of
property. 10 Such a doctrine was reiterated in the following
cases: Republic v. Villasor, 11 Sayson v. Singson, 12 Director of the
Bureau of Printing v. Francisco, 13 and Republic v. Purisima. 14
2. It is contended by counsel for petitioner that the above
constitutional provision would be given a retroactive application in
this case if the suit for the revocation of donation were dismissed.
That is not the case at all. In Republic v. Purisima, this Court made
clear that such a basic postulate is part and parcel of the system of
government implanted in the Philippines from the time of the
acquisition of sovereignty by the United States, and therefore, was
implicit in the 1935 Constitution even in the absence of any explicit
language to that effect. This it did in a citation from Switzerland
General Insurance Co., Ltd. v. Republic of the Philippines: 15 "The
doctrine of non-suability recognized in this jurisdiction even prior to
the effectivity of the [1935] Constitution is a logical corollary of the
positivist concept of law which, to paraphrase Holmes, negates the
assertion of any legal right as against the state, in itself the source of
the law on which such a right may be predicated. Nor is this all. Even
if such a principle does give rise to problems, considering the vastly
expanded role of government enabling it to engage in business
pursuits to promote the general welfare, it is not obeisance to the
analytical school of thought alone that calls for its continued
applicability. 16 That is the teaching of the leading case of Mobil
Philippines Exploration, Inc. v. Customs Arrastre Service,
17 promulgated in December of 1966. As a matter of fact, the
Switzerland General Insurance Co. decision was the thirty-seventh of
its kind after Mobil. Clearly, then, the contention that to dismiss the
suit would be to give the applicable constitutional provision a
retroactive effect is, to put it at its mildest, untenable.
3. Petitioner's counsel invoked Santos v. Santos, 18 a 1952 decision. A
more thorough analysis ought to have cautioned him against
reliance on such a case. It was therein clearly pointed out that the
government entity involved was originally the National Airports
Corporation. Thereafter, it "was abolished by Executive Order No.
365, series of 1950, and in its place and stead the Civil Aeronautics
Administration was created and took over all the assets and
assumed all the liabilities of the abolished corporation. The Civil
Aeronautics Administration, even if it is not a juridical entity, cannot
legally prevent a party or parties from enforcing their proprietary
rights under the cloak or shield of lack of juridical personality,
because to took over all the powers and assumed all the obligations
of the defunct corporation which had entered into the contract in
question." 19 Then came National Shipyard and Steel Corporation v.
Court of Industrial Relations, 20 a 1963 decision, where the then
Justice, later Chief Justice, Concepcion, as ponente, stated that a
government-owned and controlled corporation "has a personality of
its own distinct and separate from that of the government. ...
Accordingly, it may sue and be sued and may be subjected to court
processes just like any other corporation. (Section 13, Act 1459, as
amended). 21 In three recent decisions, Philippine National Bank v.
Court of Industrial Relations, 22 Philippine National Bank v.
Honorable Judge Pabalan, 23and Philippine National Railways v.
Union de Maquinistas, 24 this constitutional provision on non-
suability was unavailing in view of the suit being against a
government-owned or controlled corporation. That point apparently
escaped the attention of counsel for petitioner. Hence Santos v.
Santos is hardly controlling.
4. It is to be noted further that the trend against the interpretation
sought to be fastened in the broad language of Santos v. Santos is
quite discernible. Not long after, in Araneta v. Hon. M.
Gatmaitan, 25 decided in 1957, it was held that an action [against]
Government officials, is essentially one against the Government, ...
. 26 In the same year, this Court, in Angat River Irrigation System v.
Angat River Workers 27 Union, after referring to the "basic and
fundamental principle of the law that the Government cannot be
sued before courts of justice without its consent," pointed out that
"this privilege of non-suability of the Government" covers with the
mantle of its protection "an entity," in this case, the Angat River
Irrigation System. 28 Then, in 1960, came Lim v. Brownell,
Jr., 29 where there was a reaffirmation of the doctrine that a "claim
[constituting] a charge against, or financial liability to, the
Government cannot be entertained by the courts except with the
consent of said government. 30 Bureau of Printing v. Bureau of
Printing Employees Association 31 came a year later; it reiterated
such a doctrine. It was not surprising therefore that in 1966, Mobil
Philippines Exploration, Inc. was decided the way it was. The
remedy, where the liability is based on contract, according to this
Court, speaking through Justice J. P. Bengzon, is for plaintiff to file a
claim with the general office in accordance with the controlling
statute, Commonwealth Act No. 327. 32 To repeat, that doctrine has
been adhered to ever since. The latest case in point is Travelers
Indemnity Company v. Barber Steamship Lines, Inc. 33 Justice
Aquino's opinion concluded with this paragraph: "It is settled that
the Bureau of Customs, acting as part of the machinery of the
national government in the operation of the arrastre service, is
immune from suit under the doctrine of non-suability of the State.
The claimant's remedy to recover the loss or damage to the goods
under the custody of the customs arrastre service is to file a claim
with the Commission in Audit as contemplated in Act No. 3083 and
Commonwealth Act No. 327. 34 With the explicit provision found in
the present Constitution, the fundamental principle of non-suability
becomes even more exigent in its command.
5. The reliance on Santos v. Santos as a prop for this petition having
failed, it would ordinarily follow that this suit cannot prosper.
Nonetheless, as set forth at the outset, there is a novel aspect that
suffices to call for a contrary conclusion. It would be manifestly
unfair for the Republic, as donee, alleged to have violated the
conditions under which it received gratuitously certain property,
thereafter to put as a barrier the concept of non-suitability. That
would be a purely one-sided arrangement offensive to one's sense
of justice. Such conduct, whether proceeding from an individual or
governmental agency, is to be condemned. As a matter of fact, in
case it is the latter that is culpable, the affront to decency is even
more manifest. The government, to paraphrase Justice Brandeis,
should set the example. If it is susceptible to the charge of having
acted dishonorably, then it forfeits public trust-and rightly so.
6. Fortunately, the constitutional provision itself snows a waiver.
Where there is consent, a suit may be filed. Consent need not be
express. It can be implied. So it was more than implied in Ministerio
v. Court of First Instance of Cebu: 35 "The doctrine of governmental
immunity from suit cannot serve as an instrument for perpetrating
an injustice on a citizen. 36 The fact that this decision arose from a
suit against the Public Highways Commissioner and the Auditor
General for failure of the government to pay for land necessary to
widen a national highway, the defense of immunity without the
consent proving unavailing, is not material. The analogy is quite
obvious. Where the government ordinarily benefited by the taking
of the land, the failure to institute the necessary condemnation
proceedings should not be a bar to an ordinary action for the
collection of the just compensation due. Here, the alleged failure to
abide by the conditions under which a donation was given should
not prove an insuperable obstacle to a civil action, the consent
likewise being presumed. This conclusion is strengthened by the fact
that while a donation partakes of a contract, there is no money
claim, and therefore reliance on Commonwealth Act No. 327 would
be futile.
7. Our decision, it must be emphasized, goes no further than to rule
that a donor, with the Republic or any of its agency being the donee,
is entitled to go to court in case of an alleged breach of the
conditions of such donation. He has the right to be heard. Under the
circumstances, the fundamental postulate of non-suability cannot
stand in the way. It is made to accommodate itself to the demands
of procedural due process, which is the negation of arbitrariness and
inequity. The government, in the final analysis, is the beneficiary. It
thereby manifests its adherence to the highest ethical standards,
which can only be ignored at the risk of losing the confidence of the
people, the repository of the sovereign power. The judiciary under
this circumstance has the grave responsibility of living up to the
ideal of objectivity and impartiality, the very essence of the rule of
law. Only by displaying the neutrality expected of an arbiter, even if
it happens to be one of the departments of a litigant, can the
decision arrived at, whatever it may be, command respect and be
entitled to acceptance.
WHEREFORE, the writ of certiorari prayed for is granted and the
order of dismissal of October 20, 1977 is nullified, set aside and
declared to be without force and effect. The Court of First Instance
of Zamboanga City, Branch II, is hereby directed to proceed with this
case, observing the procedure set forth in the Rules of Court. No
costs.
Barredo, Antonio, Aquino, Concepcion, Jr. and Santos, JJ., concur.
G.R. No. 206484, June 29, 2016
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS
(DOTC), Petitioner, v. SPOUSES VICENTE ABECINA AND MARIA
CLEOFE ABECINA, Respondents.
DECISION
BRION, J.:
This petition for review on certiorari seeks to reverse and set aside
the March 20, 2013 decision of the Court of Appeals (CA) in CA-G.R.
CV No. 937951 affirming the decision of the Regional Trial Court
(RTC) of Daet, Camarines Norte, Branch 39, in Civil Case No.
7355.2 The RTC ordered the Department of Transportation and
Communications (DOTC) to vacate the respondents' properties and
to pay them actual and moral damages.
ANTECEDENTS
Respondent spouses Vicente and Maria Cleofe Abecina
(respondents/spouses Abecina) are the registered owners of five
parcels of land in Sitio Paltik, Barrio Sta. Rosa, Jose Panganiban,
Camarines Norte. The properties are covered by Transfer Certificates
of Title (TCT) Nos. T-25094, T-25095, T-25096, T-25097, and T-
25098.3chanrobleslaw
In February 1993, the DOTC awarded Digitel Telecommunications
Philippines, Inc. (Digitel) a contract for the management, operation,
maintenance, and development of a Regional Telecommunications
Development Project (RTDP) under the National Telephone
Program, Phase I, Tranche 1 (NTPI-1)4chanrobleslaw
The DOTC and Digitel subsequently entered into several Facilities
Management Agreements (FMA) for Digitel to manage, operate,
maintain, and develop the RTDP and NTPI-1 facilities comprising
local telephone exchange lines in various municipalities in Luzon.
The FMAs were later converted into Financial Lease Agreements
(FLA) in 1995.
Later on, the municipality of Jose Panganiban, Camarines Norte,
donated a one thousand two hundred (1,200) square-meter parcel
of land to the DOTC for the implementation of the RDTP in the
municipality. However, the municipality erroneously included
portions of the respondents' property in the donation. Pursuant to
the FLAs, Digitel constructed a telephone exchange on the property
which encroached on the properties of the respondent
spouses.5chanrobleslaw
Sometime in the mid-1990s, the spouses Abecina discovered
Digitel's occupation over portions of their properties. They required
Digitel to vacate their properties and pay damages, but the latter
refused, insisting that it was occupying the property of the DOTC
pursuant to their FLA.
On April 29, 2003, the respondent spouses sent a final demand
letter to both the DOTC and Digitel to vacate the premises and to
pay unpaid rent/damages in the amount of one million two hundred
thousand pesos (P1,200,000.00). Neither the DOTC nor Digitel
complied with the demand.
On September 3, 2003, the respondent spouses filed an accion
publiciana complaint6 against the DOTC and Digitel for recovery of
possession and damages. The complaint was docketed as Civil Case
No. 7355.
In its answer, the DOTC claimed immunity from suit and ownership
over the subject properties.7Nevertheless, during the pre-trial
conference, the DOTC admitted that the Abecinas were the rightful
owners of the properties and opted to rely instead on state
immunity from suit.8chanrobleslaw
On March 12, 2007, the respondent spouses and Digitel executed a
Compromise Agreement and entered into a Contract of Lease. The
RTC rendered a partial decision and approved the Compromise
Agreement on March 22, 2007.9chanrobleslaw
On May 20, 2009, the RTC rendered its decision against the
DOTC.10 It brushed aside the defense of state immunity.
Citing Ministerio v. Court of First Instance11 and Amigable v.
Cuenca,12 it held that government immunity from suit could not be
used as an instrument to perpetuate an injustice on a
citizen.13chanrobleslaw
The RTC held that as the lawful owners of the properties, the
respondent spouses enjoyed the right to use and to possess them -
rights that were violated by the DOTC's unauthorized entry,
construction, and refusal to vacate. The RTC (1) ordered the
Department - as a builder in bad faith -to forfeit the improvements
and vacate the properties; and (2) awarded the spouses with
P1,200,000.00 as actual damages, P200,000.00 as moral damages,
and P200,000.00 as exemplary damages plus attorney's fees and
costs of suit.
The DOTC elevated the case to the CA arguing: (1) that the RTC
never acquired jurisdiction over it due to state immunity from suit;
(2) that the suit against it should have been dismissed after the
spouses Abecina and Digitel executed a compromise agreement; and
(3) that the RTC erred in awarding actual, moral, and exemplary
damages against it.14 The appeal was docketed as CA-G.R. CV No.
93795.
On March 20, 2013, the CA affirmed the RTC's decision but deleted
the award of exemplary damages. The CA upheld the RTC's
jurisdiction over cases for accion publiciana where the assessed
value exceeds P20,000.00.15 It likewise denied the DOTC's claim of
state immunity from suit, reasoning that the DOTC removed its cloak
of immunity after entering into a proprietary contract - the Financial
Lease Agreement with Digitel.16 It also adopted the RTC's position
that state immunity cannot be used to defeat a valid claim for
compensation arising from an unlawful taking without the proper
expropriation proceedings.17The CA affirmed the award of actual
and moral damages due to the DOTC's neglect to verify the
perimeter of the telephone exchange construction but found no
valid justification for the award of exemplary
damages.18chanrobleslaw
On April 16, 2013, the DOTC filed the present petition for review
on certiorari.
THE PARTIES' ARGUMENTS
The DOTC asserts that its Financial Lease Agreement with Digitel was
entered into in pursuit of its governmental functions to promote and
develop networks of communication systems.19 Therefore, it cannot
be interpreted as a waiver of state immunity.
The DOTC also maintains that while it was regrettable that the
construction of the telephone exchange erroneously encroached on
portions of the respondent's properties, the RTC erred in ordering
the return of the property.20 It argues that while the DOTC, in good
faith and in the performance of its mandate, took private property
without formal expropriation proceedings, the taking was
nevertheless an exercise of eminent domain.21chanrobleslaw
Citing the 2007 case of Heirs of Mateo Pidacan v. Air Transportation
Office (ATO),22 the Department prays that instead of allowing
recovery of the property, the case should be remanded to the RTC
for determination of just compensation.
On the other hand, the respondents counter that the state immunity
cannot be invoked to perpetrate an injustice against its
citizens.23 They also maintain that because the subject properties
are titled, the DOTC is a builder in bad faith who is deemed to have
lost the improvements it introduced.24 Finally, they differentiate
their case from Heirs of Mateo Pidacan v.
ATO because Pidacan originated from a complaint for payment of
the value of the property and rentals while their case originated
from a complaint for recovery of possession and
damages.25cralawredchanrobleslaw
OUR RULING
We find no merit in the petition.
The State may not be sued without its consent.26 This fundamental
doctrine stems from the principle that there can be no legal right
against the authority which makes the law on which the right
depends.27This generally accepted principle of law has been
explicitly expressed in both the 197328 and the present
Constitutions.
But as the principle itself implies, the doctrine of state immunity is
not absolute. The State may waive its cloak of immunity and the
waiver may be made expressly or by implication.
Over the years, the State's participation in economic and
commercial activities gradually expanded beyond its sovereign
function as regulator and governor. The evolution of the State's
activities and degree of participation in commerce demanded a
parallel evolution in the traditional rule of state immunity. Thus, it
became necessary to distinguish between the State's sovereign and
governmental acts (jure imperii) and its private, commercial, and
proprietary acts (jure gestionis). Presently, state immunity
restrictively extends only to acts jure imperii while acts jure
gestionis are considered as a waiver of immunity.29chanrobleslaw
The Philippines recognizes the vital role of information and
communication in nation building.30 As a consequence, we have
adopted a policy environment that aspires for the full development
of communications infrastructure to facilitate the flow of
information into, out of, and across the country.31To this end, the
DOTC has been mandated with the promotion, development, and
regulation of dependable and coordinated networks of
communication.32chanrobleslaw
The DOTC encroached on the respondents' properties when it
constructed the local telephone exchange in Daet, Camarines Norte.
The exchange was part of the RTDP pursuant to the National
Telephone Program. We have no doubt that when the DOTC
constructed the encroaching structures and subsequently entered
into the FLA with Digitel for their maintenance, it was carrying out a
sovereign function. Therefore, we agree with the DOTC's contention
that these are acts jure imperii that fall within the cloak of state
immunity.
However, as the respondents repeatedly pointed out, this Court has
long established in Ministerio v CFI,33Amigable v. Cuenca,34 the 2010
case Heirs of Pidacan v. ATO,35 and more recently in Vigilar v.
Aquino36 that the doctrine of state immunity cannot serve as an
instrument for perpetrating an injustice to a citizen.
The Constitution identifies the limitations to the awesome and near-
limitless powers of the State. Chief among these limitations are the
principles that no person shall be deprived of life, liberty, or
property without due process of law and that private property shall
not be taken for public use without just compensation.37 These
limitations are enshrined in no less than the Bill of Rights that
guarantees the citizen protection from abuse by the State.
efficient communication system.40chanrobleslaw
The exercise of eminent domain requires a genuine necessity to take
the property for public use and the consequent payment of just
compensation. The property is evidently being used for a public
purpose. However, we also note that the respondent spouses
willingly entered into a lease agreement with Digitel for the use of
the subject properties.
If in the future the factual circumstances should change and the
respondents refuse to continue the lease, then the DOTC may
initiate expropriation proceedings. But as matters now stand, the
respondents are clearly willing to lease the property. Therefore, we
find no genuine necessity for the DOTC to actually take the property
at this point.
Lastly, we find that the CA erred when it affirmed the RTC's decision
without deleting the forfeiture of the improvements made by the
DOTC through Digitel. Contrary to the RTC's findings, the DOTC was
not a builder in bad faith when the improvements were constructed.
The CA itself found that the Department's encroachment over the
respondents' properties was a result of a mistaken implementation
of the donation from the municipality of Jose
Panganiban.41chanrobleslaw
Good faith consists in the belief of the builder that the land he is
building on is his and [of] his ignorance of any defect or flaw in his
title.42 While the DOTC later realized its error and admitted its
encroachment over the respondents' property, there is no evidence
that it acted maliciously or in bad faith when the construction was
done.
Article 52743 of the Civil Code presumes good faith. Without proof
that the Department's mistake was made in bad faith, its
construction is presumed to have been made in good faith.
Therefore, the forfeiture of the improvements in favor of the
respondent spouses is unwarranted.
WHEREFORE, we hereby DENY the petition for lack of merit. The
May 20, 2009 decision of the Regional Trial Court in Civil Case No.
7355, as modified by the March 20, 2013 decision of the Court of
Appeals in CA-G.R. CV No. 93795, is AFFIRMED with
further MODIFICATION that the forfeiture of the improvements
made by the DOTC in favor of the respondents is DELETED. No costs.
SO ORDERED.chanRoblesvirtualLawlibrary

Consequently, our laws38 require that the State's power of eminent Carpio, (Chairperson), Mendoza, and Leonen, JJ., concur.
domain shall be exercised through expropriation proceedings in Del Castillo, J., on leave.
court. Whenever private property is taken for public use, it becomes
the ministerial duty of the concerned office or agency to initiate
expropriation proceedings. By necessary implication, the filing of a
complaint for expropriation is a waiver of State immunity.

If the DOTC had correctly followed the regular procedure upon

discovering that it had encroached on the respondents' property, it
would have initiated expropriation proceedings instead of insisting
on its immunity from suit. The petitioners would not have had to
resort to filing its complaint for reconveyance. As this Court said
in Ministerio:ChanRoblesVirtualawlibrary
It is unthinkable then that precisely because there was a failure to
abide by what the law requires, the government would stand to
benefit. It is just as important, if not more so, that there be fidelity
to legal norms on the part of officialdom if the rule of law were to be
maintained. It is not too much to say that when the government
takes any property for public use, which is conditioned upon the
payment of just compensation, to be judicially ascertained, it
makes manifest that it submits to the jurisdiction of a court. There
is no thought then that the doctrine of immunity from suit could still
be appropriately invoked.39 [Emphasis supplied]
We hold, therefore, that the Department's entry into and taking of
possession of the respondents' property amounted to an implied
waiver of its governmental immunity from suit.

We also find no merit in the DOTC's contention that the RTC should
not have ordered the reconveyance of the respondent spouses'
property because the property is being used for a vital governmental
function, that is, the operation and maintenance of a safe and
G.R. No. 206510 September 16, 2014
MOST REV. PEDRO D. ARIGO, Vicar Apostolic of Puerto Princesa
D.D.; MOST REV. DEOGRACIAS S. INIGUEZ, JR., Bishop-Emeritus of
Caloocan, FRANCES Q. QUIMPO, CLEMENTE G. BAUTISTA, JR.,
Kalikasan-PNE, MARIA CAROLINA P. ARAULLO, RENATO M. REYES,
JR., Bagong Alyansang Makabayan, HON. NERI JAVIER
COLMENARES, Bayan Muna Partylist, ROLAND G. SIMBULAN,
PH.D., Junk VF A Movement, TERESITA R. PEREZ, PH.D., HON.
RAYMOND V. PALATINO, Kabataan Party-list, PETER SJ. GONZALES,
Pamalakaya, GIOVANNI A. TAPANG, PH. D., Agham, ELMER C.
LABOG, Kilusang Mayo Uno, JOAN MAY E. SALVADOR, Gabriela,
JOSE ENRIQUE A. AFRICA, THERESA A. CONCEPCION, MARY JOAN
A. GUAN, NESTOR T. BAGUINON, PH.D., A. EDSEL F.
TUPAZ, Petitioners,
vs.
SCOTT H. SWIFT in his capacity as Commander of the US. 7th Fleet,
MARK A. RICE in his capacity as Commanding Officer of the USS
Guardian, PRESIDENT BENIGNO S. AQUINO III in his capacity as
Commander-in-Chief of the Armed Forces of the Philippines, HON.
ALBERT F. DEL ROSARIO, Secretary, pepartment of Foreign Affair.s,
HON. PAQUITO OCHOA, JR., Executiv~.:Secretary, Office of the
President, . HON. VOLTAIRE T. GAZMIN, Secretary, Department of
National Defense, HON. RAMON JESUS P. P AJE, Secretary,
Department of Environment and Natural Resoz!rces, VICE
ADMIRAL JOSE LUIS M. ALANO, Philippine Navy Flag Officer in
Command, Armed Forces of the Philippines, ADMIRAL RODOLFO D.
ISO RENA, Commandant, Philippine Coast Guard, COMMODORE
ENRICO EFREN EVANGELISTA, Philippine Coast Guard Palawan,
MAJOR GEN. VIRGILIO 0. DOMINGO, Commandant of Armed
Forces of the Philippines Command and LT. GEN. TERRY G.
ROBLING, US Marine Corps Forces. Pacific and Balikatan 2013
Exercise Co-Director, Respondents.
DECISION
VILLARAMA, JR, J.:
Before us is a petition for the issuance of a Writ of Kalikasan with
prayer for the issuance of a Temporary Environmental Protection
Order (TEPO) under Rule 7 of A.M. No. 09-6-8-SC, otherwise known
as the Rules of Procedure for Environmental Cases (Rules), involving
violations of environmental laws and regulations in relation to the
grounding of the US military ship USS Guardian over the Tubbataha
Reefs.
Factual Background
The name "Tubbataha" came from the Samal (seafaring people of
southern Philippines) language which means "long reef exposed at
low tide." Tubbataha is composed of two huge coral atolls - the
north atoll and the south atoll - and the Jessie Beazley Reef, a
smaller coral structure about 20 kilometers north of the atolls. The
reefs of Tubbataha and Jessie Beazley are considered part of
Cagayancillo, a remote island municipality of Palawan.1
In 1988, Tubbataha was declared a National Marine Park by virtue of
Proclamation No. 306 issued by President Corazon C. Aquino on
August 11, 1988. Located in the middle of Central Sulu Sea, 150
kilometers southeast of Puerto Princesa City, Tubbataha lies at the
heart of the Coral Triangle, the global center of marine biodiversity.
In 1993, Tubbataha was inscribed by the United Nations Educational
Scientific and Cultural Organization (UNESCO) as a World Heritage
Site. It was recognized as one of the Philippines' oldest ecosystems,
containing excellent examples of pristine reefs and a high diversity
of marine life. The 97,030-hectare protected marine park is also an
important habitat for internationally threatened and endangered
marine species. UNESCO cited Tubbataha's outstanding universal
value as an important and significant natural habitat for in situ
conservation of biological diversity; an example representing
significant on-going ecological and biological processes; and an area
of exceptional natural beauty and aesthetic importance.2
On April 6, 2010, Congress passed Republic Act (R.A.) No.
10067,3 otherwise known as the "Tubbataha Reefs Natural Park
(TRNP) Act of 2009" "to ensure the protection and conservation of
the globally significant economic, biological, sociocultural,
educational and scientific values of the Tubbataha Reefs into
perpetuity for the enjoyment of present and future generations."
Under the "no-take" policy, entry into the waters of TRNP is strictly
regulated and many human activities are prohibited and penalized
or fined, including fishing, gathering, destroying and disturbing the
resources within the TRNP. The law likewise created the Tubbataha
Protected Area Management Board (TPAMB) which shall be the sole
policy-making and permit-granting body of the TRNP.
The USS Guardian is an Avenger-class mine countermeasures ship of
the US Navy. In December 2012, the US Embassy in the Philippines
requested diplomatic clearance for the said vessel "to enter and exit
the territorial waters of the Philippines and to arrive at the port of
Subic Bay for the purpose of routine ship replenishment,
maintenance, and crew liberty."4 On January 6, 2013, the ship left
Sasebo, Japan for Subic Bay, arriving on January 13, 2013 after a
brief stop for fuel in Okinawa, Japan.1âwphi1
On January 15, 2013, the USS Guardian departed Subic Bay for its
next port of call in Makassar, Indonesia. On January 17, 2013 at 2:20
a.m. while transiting the Sulu Sea, the ship ran aground on the
northwest side of South Shoal of the Tubbataha Reefs, about 80
miles east-southeast of Palawan. No cine was injured in the incident,
and there have been no reports of leaking fuel or oil.
On January 20, 2013, U.S. 7th Fleet Commander, Vice Admiral Scott
Swift, expressed regret for the incident in a press
statement.5 Likewise, US Ambassador to the Philippines Harry K.
Thomas, Jr., in a meeting at the Department of Foreign Affairs (DFA)
on February 4, "reiterated his regrets over the grounding incident
and assured Foreign Affairs Secretazy Albert F. del Rosario that the
United States will provide appropriate compensation for damage to
the reef caused by the ship."6 By March 30, 2013, the US Navy-led
salvage team had finished removing the last piece of the grounded
ship from the coral reef.
On April 1 7, 2013, the above-named petitioners on their behalf and
in representation of their respective sector/organization and others,
including minors or generations yet unborn, filed the present
petition agairtst Scott H. Swift in his capacity as Commander of the
US 7th Fleet, Mark A. Rice in his capacity as Commanding Officer of
the USS Guardian and Lt. Gen. Terry G. Robling, US Marine Corps
Forces, Pacific and Balikatan 2013 Exercises Co-Director ("US
respondents"); President Benigno S. Aquino III in his capacity as
Commander-in-Chief of the Armed Forces of the Philippines (AFP),
DF A Secretary Albert F. Del Rosario, Executive Secretary Paquito
Ochoa, Jr., Secretary Voltaire T. Gazmin (Department of National
Defense), Secretary Jesus P. Paje (Department of Environment and
Natural Resources), Vice-Admiral Jose Luis M. Alano (Philippine Navy
Flag Officer in Command, AFP), Admiral Rodolfo D. Isorena
(Philippine Coast Guard Commandant), Commodore Enrico Efren
Evangelista (Philippine Coast Guard-Palawan), and Major General
Virgilio 0. Domingo (AFP Commandant), collectively the "Philippine
respondents."
The Petition
Petitioners claim that the grounding, salvaging and post-salvaging
operations of the USS Guardian cause and continue to cause
environmental damage of such magnitude as to affect the provinces
of Palawan, Antique, Aklan, Guimaras, Iloilo, Negros Occidental,
Negros Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-Tawi,
which events violate their constitutional rights to a balanced and
healthful ecology. They also seek a directive from this Court for the
institution of civil, administrative and criminal suits for acts
committed in violation of environmental laws and regulations in
connection with the grounding incident.
Specifically, petitioners cite the following violations committed by
US respondents under R.A. No. 10067: unauthorized entry (Section
19); non-payment of conservation fees (Section 21 ); obstruction of
law enforcement officer (Section 30); damages to the reef (Section
20); and destroying and disturbing resources (Section 26[g]).
Furthermore, petitioners assail certain provisions of the Visiting
Forces Agreement (VFA) which they want this Court to nullify for
being unconstitutional.
The numerous reliefs sought in this case are set forth in the final
prayer of the petition, to wit: WHEREFORE, in view of the foregoing,
Petitioners respectfully pray that the Honorable Court: 1.
Immediately issue upon the filing of this petition a Temporary
Environmental Protection Order (TEPO) and/or a Writ of Kalikasan,
which shall, in particular,
a. Order Respondents and any person acting on their behalf, to
cease and desist all operations over the Guardian grounding
incident;
b. Initially demarcating the metes and bounds of the damaged area
as well as an additional buffer zone;
c. Order Respondents to stop all port calls and war games under
'Balikatan' because of the absence of clear guidelines, duties, and
liability schemes for breaches of those duties, and require
Respondents to assume responsibility for prior and future
environmental damage in general, and environmental damage
under the Visiting Forces Agreement in particular.
d. Temporarily define and describe allowable activities of
ecotourism, diving, recreation, and limited commercial activities by
fisherfolk and indigenous communities near or around the TRNP but
away from the damaged site and an additional buffer zone;
2. After summary hearing, issue a Resolution extending the TEPO
until further orders of the Court;
3. After due proceedings, render a Decision which shall include,
without limitation:
a. Order Respondents Secretary of Foreign Affairs, following the
dispositive portion of Nicolas v. Romulo, "to forthwith negotiate
with the United States representatives for the appropriate
agreement on [environmental guidelines and environmental
accountability] under Philippine authorities as provided in Art. V[] of
the VFA ... "
b. Direct Respondents and appropriate agencies to commence
administrative, civil, and criminal proceedings against erring officers
and individuals to the full extent of the law, and to make such
proceedings public;
c. Declare that Philippine authorities may exercise primary and
exclusive criminal jurisdiction over erring U.S. personnel under the
circumstances of this case;
d. Require Respondents to pay just and reasonable compensation in
the settlement of all meritorious claims for damages caused to the
Tubbataha Reef on terms and conditions no less severe than those
applicable to other States, and damages for personal injury or death,
if such had been the case;
e. Direct Respondents to cooperate in providing for the attendance
of witnesses and in the collection and production of evidence,
including seizure and delivery of objects connected with the
offenses related to the grounding of the Guardian;
f. Require the authorities of the Philippines and the United States to
notify each other of the disposition of all cases, wherever heard,
related to the grounding of the Guardian;
g. Restrain Respondents from proceeding with any purported
restoration, repair, salvage or post salvage plan or plans, including
cleanup plans covering the damaged area of the Tubbataha Reef
absent a just settlement approved by the Honorable Court;
h. Require Respondents to engage in stakeholder and LOU
consultations in accordance with the Local Government Code and
R.A. 10067;
i. Require Respondent US officials and their representatives to place
a deposit to the TRNP Trust Fund defined under Section 17 of RA
10067 as a bona .fide gesture towards full reparations;
j. Direct Respondents to undertake measures to rehabilitate the
areas affected by the grounding of the Guardian in light of
Respondents' experience in the Port Royale grounding in 2009,
among other similar grounding incidents;
k. Require Respondents to regularly publish on a quarterly basis and
in the name of transparency and accountability such environmental
damage assessment, valuation, and valuation methods, in all stages
of negotiation;
l. Convene a multisectoral technical working group to provide
scientific and technical support to the TPAMB;
m. Order the Department of Foreign Affairs, Department of National
Defense, and the Department of Environment and Natural
Resources to review the Visiting Forces Agreement and the Mutual
Defense Treaty to consider whether their provisions allow for the
exercise of erga omnes rights to a balanced and healthful ecology
and for damages which follow from any violation of those rights;
n. Narrowly tailor the provisions of the Visiting Forces Agreement for
purposes of protecting the damaged areas of TRNP;
o. Declare the grant of immunity found in Article V ("Criminal
Jurisdiction") and Article VI of the Visiting Forces Agreement
unconstitutional for violating equal protection and/or for violating
the preemptory norm of nondiscrimination incorporated as part of
the law of the land under Section 2, Article II, of the Philippine
Constitution;
p. Allow for continuing discovery measures;
q. Supervise marine wildlife rehabilitation in the Tubbataha Reefs in
all other respects; and
4. Provide just and equitable environmental rehabilitation measures
and such other reliefs as are just and equitable under the
premises.7 (Underscoring supplied.)
Since only the Philippine respondents filed their comment 8 to the
petition, petitioners also filed a motion for early resolution and
motion to proceed ex parte against the US respondents.9
Respondents' Consolidated Comment
In their consolidated comment with opposition to the application for
a TEPO and ocular inspection and production orders, respondents
assert that: ( 1) the grounds relied upon for the issuance of a TEPO
or writ of Kalikasan have become fait accompli as the salvage
operations on the USS Guardian were already completed; (2) the
petition is defective in form and substance; (3) the petition
improperly raises issues involving the VFA between the Republic of
the Philippines and the United States of America; and ( 4) the
determination of the extent of responsibility of the US Government
as regards the damage to the Tubbataha Reefs rests exdusively with
the executive branch.
The Court's Ruling
As a preliminary matter, there is no dispute on the legal standing of
petitioners to file the present petition.
Locus standi is "a right of appearance in a court of justice on a given
question."10 Specifically, it is "a party's personal and substantial
interest in a case where he has sustained or will sustain direct injury
as a result" of the act being challenged, and "calls for more than just
a generalized grievance."11 However, the rule on standing is a
procedural matter which this Court has relaxed for non-traditional
plaintiffs like ordinary citizens, taxpayers and legislators when the
public interest so requires, such as when the subject matter of the
controversy is of transcendental importance, of overreaching
significance to society, or of paramount public interest.12
In the landmark case of Oposa v. Factoran, Jr.,13 we recognized the
"public right" of citizens to "a balanced and healthful ecology which,
for the first time in our constitutional history, is solemnly
incorporated in the fundamental law." We declared that the right to
a balanced and healthful ecology need not be written in the
Constitution for it is assumed, like other civil and polittcal rights
guaranteed in the Bill of Rights, to exist from the inception of
mankind and it is an issue of transcendental importance with
intergenerational implications.1âwphi1 Such right carries with it the
correlative duty to refrain from impairing the environment.14
On the novel element in the class suit filed by the petitioners minors
in Oposa, this Court ruled that not only do ordinary citizens have
legal standing to sue for the enforcement of environmental rights,
they can do so in representation of their own and future
generations. Thus:
Petitioners minors assert that they represent their generation as
well as generations yet unborn. We find no difficulty in ruling that
they can, for themselves, for others of their generation and for the
succeeding generations, file a class suit. Their personality to sue in
behalf of the succeeding generations can only be based on the
concept of intergenerational responsibility insofar as the right to a
balanced and healthful ecology is concerned. Such a right, as
hereinafter expounded, considers the "rhythm and harmony of
nature." Nature means the created world in its entirety. Such
rhythm and harmony indispensably include, inter alia, the judicious
disposition, utilization, management, renewal and conservation of
the country's forest, mineral, land, waters, fisheries, wildlife, off-
shore areas and other natural resources to the end that their
exploration, development and utilization be equitably accessible to
the present a:: well as future generations. Needless to say, every
generation has a responsibility to the next to preserve that rhythm
and harmony for the full 1:njoyment of a balanced and healthful
ecology. Put a little differently, the minors' assertion of their right to
a sound environment constitutes, at the same time, the
performance of their obligation to ensure the protection of that
right for the generations to come.15 (Emphasis supplied.)
The liberalization of standing first enunciated in Oposa, insofar as it
refers to minors and generations yet unborn, is now enshrined in the
Rules which allows the filing of a citizen suit in environmental cases.
The provision on citizen suits in the Rules "collapses the traditional
rule on personal and direct interest, on the principle that humans
are stewards of nature."16
Having settled the issue of locus standi, we shall address the more
fundamental question of whether this Court has jurisdiction over the
US respondents who did not submit any pleading or manifestation in
this case.
The immunity of the State from suit, known also as the doctrine of
sovereign immunity or non-suability of the State,17is expressly
provided in Article XVI of the 1987 Constitution which states:
Section 3. The State may not be sued without its consent.
In United States of America v. Judge Guinto,18 we discussed the
principle of state immunity from suit, as follows:
The rule that a state may not be sued without its consent, now ·
expressed in Article XVI, Section 3, of the 1987 Constitution, is one
of the generally accepted principles of international law that we
have adopted as part of the law of our land under Article II, Section
2. x x x.
Even without such affirmation, we would still be bound by the
generally accepted principles of international law under the doctrine
of incorporation. Under this doctrine, as accepted by the majority of
states, such principles are deemed incorporated in the law of every
civilized state as a condition and consequence of its membership in
the society of nations. Upon its admission to such society, the state
is automatically obligated to comply with these principles in its
relations with other states.
As applied to the local state, the doctrine of state immunity is based
on the justification given by Justice Holmes that ''there can be no
legal right against the authority which makes the law on which the
right depends." [Kawanakoa v. Polybank, 205 U.S. 349] There are
other practical reasons for the enforcement of the doctrine. In the
case of the foreign state sought to be impleaded in the local
jurisdiction, the added inhibition is expressed in the maxim par in
parem, non habet imperium. All states are sovereign equals and
cannot assert jurisdiction over one another. A contrary disposition
would, in the language of a celebrated case, "unduly vex the peace
of nations." [De Haber v. Queen of Portugal, 17 Q. B. 171]
While the doctrine appears to prohibit only suits against the state
without its consent, it is also applicable to complaints filed against
officials of the state for acts allegedly performed by them in the
discharge of their duties. The rule is that if the judgment against
such officials will require the state itself to perform an affirmative
act to satisfy the same,. such as the appropriation of the amount
needed to pay the damages awarded against them, the suit must be
regarded as against the state itself although it has not been formally
impleaded. [Garcia v. Chief of Staff, 16 SCRA 120] In such a situation,
the state may move to dismiss the comp.taint on the ground that it
has been filed without its consent.19 (Emphasis supplied.)
Under the American Constitution, the doctrine is expressed in the
Eleventh Amendment which reads:
The Judicial power of the United States shall not be construed to
extend to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State, or by
Citizens or Subjects of any Foreign State.
In the case of Minucher v. Court of Appeals,20 we further expounded
on the immunity of foreign states from the jurisdiction of local
courts, as follows:
The precept that a State cannot be sued in the courts of a foreign
state is a long-standing rule of customary international law then
closely identified with the personal immunity of a foreign sovereign
from suit and, with the emergence of democratic states, made to
attach not just to the person of the head of state, or his
representative, but also distinctly to the state itself in its sovereign
capacity. If the acts giving rise to a suit arc those of a foreign
government done by its foreign agent, although not necessarily a
diplomatic personage, but acting in his official capacity, the
complaint could be barred by the immunity of the foreign sovereign
from suit without its consent. Suing a representative of a state is
believed to be, in effect, suing the state itself. The proscription is not
accorded for the benefit of an individual but for the State, in whose
service he is, under the maxim -par in parem, non habet imperium -
that all states are soverr~ign equals and cannot assert jurisdiction
over one another. The implication, in broad terms, is that if the
judgment against an official would rec 1uire the state itself to
perform an affirmative act to satisfy the award, such as the
appropriation of the amount needed to pay the damages decreed
against him, the suit must be regarded as being against the state
itself, although it has not been formally impleaded.21 (Emphasis
supplied.)
In the same case we also mentioned that in the case of diplomatic
immunity, the privilege is not an immunity from the observance of
the law of the territorial sovereign or from ensuing legal liability; it
is, rather, an immunity from the exercise of territorial jurisdiction. 22
In United States of America v. Judge Guinto,23 one of the
consolidated cases therein involved a Filipino employed at Clark Air
Base who was arrested following a buy-bust operation conducted by
two officers of the US Air Force, and was eventually dismissed from
his employment when he was charged in court for violation of R.A.
No. 6425. In a complaint for damages filed by the said employee
against the military officers, the latter moved to dismiss the case on
the ground that the suit was against the US Government which had
not given its consent. The RTC denied the motion but on a petition
for certiorari and prohibition filed before this Court, we reversed the
RTC and dismissed the complaint. We held that petitioners US
military officers were acting in the exercise of their official functions
when they conducted the buy-bust operation against the
complainant and thereafter testified against him at his trial. It
follows that for discharging their duties as agents of the United
States, they cannot be directly impleaded for acts imputable to their
principal, which has not given its consent to be sued.
This traditional rule of State immunity which exempts a State from
being sued in the courts of another State without the former's
consent or waiver has evolved into a restrictive doctrine which
distinguishes sovereign and governmental acts (Jure imperil") from
private, commercial and proprietary acts (Jure gestionis). Under the
restrictive rule of State immunity, State immunity extends only to
acts Jure imperii. The restrictive application of State immunity is
proper only when the proceedings arise out of commercial
transactions of the foreign sovereign, its commercial activities or
economic affairs.24
In Shauf v. Court of Appeals,25 we discussed the limitations of the
State immunity principle, thus:
It is a different matter where the public official is made to account in
his capacity as such for acts contrary to law and injurious to the
rights of plaintiff. As was clearly set forth by JustiGe Zaldivar in
Director of the Bureau of Telecommunications, et al. vs. Aligaen,
etc., et al. : "Inasmuch as the State authorizes only legal acts by its
officers, unauthorized acts of government officials or officers are not
acts of the State, and an action against the officials or officers by one
whose rights have been invaded or violated by such acts, for the
protection of his rights, is not a suit against the State within the rule
of immunity of the State from suit. In the same tenor, it has been
said that an action at law or suit in equity against a State officer or
the director of a State department on the ground that, while
claiming to act for the State, he violates or invades the personal and
property rights of the plaintiff, under an unconstitutional act or
under an assumption of authority which he does not have, is not a
suit against the State within the constitutional provision that the
State may not be sued without its consent." The rationale for this
ruling is that the doctrine of state immunity cannot be used as an
instrument for perpetrating an injustice.
xxxx
The aforecited authorities are clear on the matter. They state that
the doctrine of immunity from suit will not apply and may not be
invoked where the public official is being sued in his private and
personal capacity as an ordinary citizen. The cloak of protection
afforded the officers and agents of the government is removed the
moment they are sued in their individual capacity. This situation
usually arises where the public official acts without authority or in
excess of the powers vested in him. It is a well-settled principle of
law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done
with malice and in bad faith, or beyond the scope of his authority or
jurisdiction.26 (Emphasis supplied.) In this case, the US respondents
were sued in their official capacity as commanding officers of the US
Navy who had control and supervision over the USS Guardian and its
crew. The alleged act or omission resulting in the unfortunate
grounding of the USS Guardian on the TRNP was committed while
they we:re performing official military duties. Considering that the
satisfaction of a judgment against said officials will require remedial
actions and appropriation of funds by the US government, the suit is
deemed to be one against the US itself. The principle of State
immunity therefore bars the exercise of jurisdiction by this Court
over the persons of respondents Swift, Rice and Robling.
During the deliberations, Senior Associate Justice Antonio T. Carpio
took the position that the conduct of the US in this case, when its
warship entered a restricted area in violation of R.A. No. 10067 and
caused damage to the TRNP reef system, brings the matter within
the ambit of Article 31 of the United Nations Convention on the Law
of the Sea (UNCLOS). He explained that while historically, warships
enjoy sovereign immunity from suit as extensions of their flag State,
Art. 31 of the UNCLOS creates an exception to this rule in cases
where they fail to comply with the rules and regulations of the
coastal State regarding passage through the latter's internal waters
and the territorial sea.
According to Justice Carpio, although the US to date has not ratified
the UNCLOS, as a matter of long-standing policy the US considers
itself bound by customary international rules on the "traditional
uses of the oceans" as codified in UNCLOS, as can be gleaned from
previous declarations by former Presidents Reagan and Clinton, and
the US judiciary in the case of United States v. Royal Caribbean
Cruise Lines, Ltd.27
The international law of the sea is generally defined as "a body of
treaty rules arid customary norms governing the uses of the sea, the
exploitation of its resources, and the exercise of jurisdiction over
maritime regimes. It is a branch of public international law,
regulating the relations of states with respect to the uses of the
oceans."28 The UNCLOS is a multilateral treaty which was opened for
signature on December 10, 1982 at Montego Bay, Jamaica. It was
ratified by the Philippines in 1984 but came into force on November
16, 1994 upon the submission of the 60th ratification.
The UNCLOS is a product of international negotiation that seeks to
balance State sovereignty (mare clausum) and the principle of
freedom of the high seas (mare liberum).29 The freedom to use the
world's marine waters is one of the oldest customary principles of
international law.30 The UNCLOS gives to the coastal State sovereign
rights in varying degrees over the different zones of the sea which
are: 1) internal waters, 2) territorial sea, 3) contiguous zone, 4)
exclusive economic zone, and 5) the high seas. It also gives coastal
States more or less jurisdiction over foreign vessels depending on
where the vessel is located.31
Insofar as the internal waters and territorial sea is concerned, the
Coastal State exercises sovereignty, subject to the UNCLOS and
other rules of international law. Such sovereignty extends to the air
space over the territorial sea as well as to its bed and subsoil.32
In the case of warships,33 as pointed out by Justice Carpio, they
continue to enjoy sovereign immunity subject to the following
exceptions:
Article 30
Non-compliance by warships with the laws and regulations of the
coastal State
If any warship does not comply with the laws and regulations of the
coastal State concerning passage through the territorial sea and
disregards any request for compliance therewith which is made to it,
the coastal State may require it to leave the territorial sea
immediately.
Article 31
Responsibility of the flag State for damage caused by a warship
or other government ship operated for non-commercial purposes
The flag State shall bear international responsibility for any loss or
damage to the coastal State resulting from the non-compliance by a
warship or other government ship operated for non-commercial
purposes with the laws and regulations of the coastal State
concerning passage through the territorial sea or with the provisions
of this Convention or other rules of international law.
Article 32
Immunities of warships and other government ships operated for
non-commercial purposes
With such exceptions as are contained in subsection A and in articles
30 and 31, nothing in this Convention affects the immunities of
warships and other government ships operated for non-commercial
purposes. (Emphasis supplied.) A foreign warship's unauthorized
entry into our internal waters with resulting damage to marine
resources is one situation in which the above provisions may apply.
But what if the offending warship is a non-party to the UNCLOS, as in
this case, the US?
An overwhelming majority - over 80% -- of nation states are now
members of UNCLOS, but despite this the US, the world's leading
maritime power, has not ratified it.
While the Reagan administration was instrumental in UNCLOS'
negotiation and drafting, the U.S. delegation ultimately voted
against and refrained from signing it due to concerns over deep
seabed mining technology transfer provisions contained in Part XI. In
a remarkable, multilateral effort to induce U.S. membership, the
bulk of UNCLOS member states cooperated over the succeeding
decade to revise the objection.able provisions. The revisions
satisfied the Clinton administration, which signed the revised Part XI
implementing agreement in 1994. In the fall of 1994, President
Clinton transmitted UNCLOS and the Part XI implementing
agreement to the Senate requesting its advice and consent. Despite
consistent support from President Clinton, each of his successors,
and an ideologically diverse array of stakeholders, the Senate has
since withheld the consent required for the President to
internationally bind the United States to UNCLOS.
While UNCLOS cleared the Senate Foreign Relations Committee
(SFRC) during the 108th and 110th Congresses, its progress
continues to be hamstrung by significant pockets of political
ambivalence over U.S. participation in international institutions.
Most recently, 111 th Congress SFRC Chairman Senator John Kerry
included "voting out" UNCLOS for full Senate consideration among
his highest priorities. This did not occur, and no Senate action has
been taken on UNCLOS by the 112th Congress.34
Justice Carpio invited our attention to the policy statement given by
President Reagan on March 10, 1983 that the US will "recognize the
rights of the other , states in the waters off their coasts, as reflected
in the convention [UNCLOS], so long as the rights and freedom of
the United States and others under international law are recognized
by such coastal states", and President Clinton's reiteration of the US
policy "to act in a manner consistent with its [UNCLOS] provisions
relating to traditional uses of the oceans and to encourage other
countries to do likewise." Since Article 31 relates to the "traditional
uses of the oceans," and "if under its policy, the US 'recognize[s] the
rights of the other states in the waters off their coasts,"' Justice
Carpio postulates that "there is more reason to expect it to
recognize the rights of other states in their internal waters, such as
the Sulu Sea in this case."
As to the non-ratification by the US, Justice Carpio emphasizes that
"the US' refusal to join the UN CLOS was centered on its
disagreement with UN CLOS' regime of deep seabed mining (Part XI)
which considers the oceans and deep seabed commonly owned by
mankind," pointing out that such "has nothing to do with its [the
US'] acceptance of customary international rules on navigation."
It may be mentioned that even the US Navy Judge Advocate
General's Corps publicly endorses the ratification of the UNCLOS, as
shown by the following statement posted on its official website:
The Convention is in the national interest of the United States
because it establishes stable maritime zones, including a maximum
outer limit for territorial seas; codifies innocent passage, transit
passage, and archipelagic sea lanes passage rights; works against
"jurisdictiomtl creep" by preventing coastal nations from expanding
their own maritime zones; and reaffirms sovereign immunity of
warships, auxiliaries anJ government aircraft.
xxxx
Economically, accession to the Convention would support our
national interests by enhancing the ability of the US to assert its
sovereign rights over the resources of one of the largest continental
shelves in the world. Further, it is the Law of the Sea Convention
that first established the concept of a maritime Exclusive Economic
Zone out to 200 nautical miles, and recognized the rights of coastal
states to conserve and manage the natural resources in this Zone.35
We fully concur with Justice Carpio's view that non-membership in
the UNCLOS does not mean that the US will disregard the rights of
the Philippines as a Coastal State over its internal waters and
territorial sea. We thus expect the US to bear "international
responsibility" under Art. 31 in connection with the USS Guardian
grounding which adversely affected the Tubbataha reefs. Indeed, it
is difficult to imagine that our long-time ally and trading partner,
which has been actively supporting the country's efforts to preserve
our vital marine resources, would shirk from its obligation to
compensate the damage caused by its warship while transiting our
internal waters. Much less can we comprehend a Government
exercising leadership in international affairs, unwilling to comply
with the UNCLOS directive for all nations to cooperate in the global
task to protect and preserve the marine environment as provided in
Article 197, viz:
Article 197
Cooperation on a global or regional basis
States shall cooperate on a global basis and, as appropriate, on a
regional basis, directly or through competent international
organizations, in formulating and elaborating international rules,
standards and recommended practices and procedures consistent
with this Convention, for the protection and preservation of the
marine environment, taking into account characteristic regional
features.
In fine, the relevance of UNCLOS provisions to the present
controversy is beyond dispute. Although the said treaty upholds the
immunity of warships from the jurisdiction of Coastal States while
navigating the.latter's territorial sea, the flag States shall be required
to leave the territorial '::;ea immediately if they flout the laws and
regulations of the Coastal State, and they will be liable for damages
caused by their warships or any other government vessel operated
for non-commercial purposes under Article 31.
Petitioners argue that there is a waiver of immunity from suit found
in the VFA. Likewise, they invoke federal statutes in the US under
which agencies of the US have statutorily waived their immunity to
any action. Even under the common law tort claims, petitioners
asseverate that the US respondents are liable for negligence,
trespass and nuisance.
We are not persuaded.
The VFA is an agreement which defines the treatment of United
States troops and personnel visiting the Philippines to promote
"common security interests" between the US and the Philippines in
the region. It provides for the guidelines to govern such visits of
military personnel, and further defines the rights of the United
States and the Philippine government in the matter of criminal
jurisdiction, movement of vessel and aircraft, importation and
exportation of equipment, materials and supplies.36 The invocation
of US federal tort laws and even common law is thus improper
considering that it is the VF A which governs disputes involving US
military ships and crew navigating Philippine waters in pursuance of
the objectives of the agreement.
As it is, the waiver of State immunity under the VF A pertains only to
criminal jurisdiction and not to special civil actions such as the
present petition for issuance of a writ of Kalikasan. In fact, it can be
inferred from Section 17, Rule 7 of the Rules that a criminal case
against a person charged with a violation of an environmental law is
to be filed separately:
SEC. 17. Institution of separate actions.-The filing of a petition for
the issuance of the writ of kalikasan shall not preclude the filing of
separate civil, criminal or administrative actions.
In any case, it is our considered view that a ruling on the application
or non-application of criminal jurisdiction provisions of the VF A to
US personnel who may be found responsible for the grounding of
the USS Guardian, would be premature and beyond the province of
a petition for a writ of Kalikasan. We also find it unnecessary at this
point to determine whether such waiver of State immunity is indeed
absolute. In the same vein, we cannot grant damages which have
resulted from the violation of environmental laws. The Rules allows
the recovery of damages, including the collection of administrative
fines under R.A. No. 10067, in a separate civil suit or that deemed
instituted with the criminal action charging the same violation of an
environmental law.37
Section 15, Rule 7 enumerates the reliefs which may be granted in a
petition for issuance of a writ of Kalikasan, to wit:
SEC. 15. Judgment.-Within sixty (60) days from the time the petition
is submitted for decision, the court shall render judgment granting
or denying the privilege of the writ of kalikasan.
The reliefs that may be granted under the writ are the following:
(a) Directing respondent to permanently cease and desist from
committing acts or neglecting the performance of a duty in violation
of environmental laws resulting in environmental destruction or
damage;
(b) Directing the respondent public official, govemment agency,
private person or entity to protect, preserve, rehabilitate or restore
the environment;
(c) Directing the respondent public official, government agency,
private person or entity to monitor strict compliance with the
decision and orders of the court;
(d) Directing the respondent public official, government agency, or
private person or entity to make periodic reports on the execution
of the final judgment; and
(e) Such other reliefs which relate to the right of the people to a
balanced and healthful ecology or to the protection, preservation,
rehabilitation or restoration of the environment, except the award
of damages to individual petitioners. (Emphasis supplied.)
We agree with respondents (Philippine officials) in asserting that this
petition has become moot in the sense that the salvage operation
sought to be enjoined or restrained had already been accomplished
when petitioners sought recourse from this Court. But insofar as the
directives to Philippine respondents to protect and rehabilitate the
coral reef stn icture and marine habitat adversely affected by the
grounding incident are concerned, petitioners are entitled to these
reliefs notwithstanding the completion of the removal of the USS
Guardian from the coral reef. However, we are mindful of the fact
that the US and Philippine governments both expressed readiness to
negotiate and discuss the matter of compensation for the damage
caused by the USS Guardian. The US Embassy has also declared it is
closely coordinating with local scientists and experts in assessing the
extent of the damage and appropriate methods of rehabilitation.
Exploring avenues for settlement of environmental cases is not
proscribed by the Rules. As can be gleaned from the following
provisions, mediation and settlement are available for the
consideration of the parties, and which dispute resolution methods
are encouraged by the court, to wit:
RULE3
xxxx
SEC. 3. Referral to mediation.-At the start of the pre-trial
conference, the court shall inquire from the parties if they have
settled the dispute; otherwise, the court shall immediately refer the
parties or their counsel, if authorized by their clients, to the
Philippine Mediation Center (PMC) unit for purposes of mediation. If
not available, the court shall refer the case to the clerk of court or
legal researcher for mediation.
Mediation must be conducted within a non-extendible period of
thirty (30) days from receipt of notice of referral to mediation.
The mediation report must be submitted within ten (10) days from
the expiration of the 30-day period.
SEC. 4. Preliminary conference.-If mediation fails, the court will
schedule the continuance of the pre-trial. Before the scheduled date
of continuance, the court may refer the case to the branch clerk of
court for a preliminary conference for the following purposes:
(a) To assist the parties in reaching a settlement;
xxxx
SEC. 5. Pre-trial conference; consent decree.-The judge shall put the
parties and their counsels under oath, and they shall remain under
oath in all pre-trial conferences.
The judge shall exert best efforts to persuade the parties to arrive at
a settlement of the dispute. The judge may issue a consent decree
approving the agreement between the parties in accordance with
law, morals, public order and public policy to protect the right of the
people to a balanced and healthful ecology.
xxxx
SEC. 10. Efforts to settle.- The court shall endeavor to make the
parties to agree to compromise or settle in accordance with law at
any stage of the proceedings before rendition of judgment.
(Underscoring supplied.)
The Court takes judicial notice of a similar incident in 2009 when a
guided-missile cruiser, the USS Port Royal, ran aground about half a
mile off the Honolulu Airport Reef Runway and remained stuck for
four days. After spending $6.5 million restoring the coral reef, the US
government was reported to have paid the State of Hawaii $8.5
million in settlement over coral reef damage caused by the
grounding.38
To underscore that the US government is prepared to pay
appropriate compensation for the damage caused by the USS
Guardian grounding, the US Embassy in the Philippines has
announced the formation of a US interdisciplinary scientific team
which will "initiate discussions with the Government of the
Philippines to review coral reef rehabilitation options in Tubbataha,
based on assessments by Philippine-based marine scientists." The US
team intends to "help assess damage and remediation options, in
coordination with the Tubbataha Management Office, appropriate
Philippine government entities, non-governmental organizations,
and scientific experts from Philippine universities."39
A rehabilitation or restoration program to be implemented at the
cost of the violator is also a major relief that may be obtained under
a judgment rendered in a citizens' suit under the Rules, viz:
RULES
SECTION 1. Reliefs in a citizen suit.-If warranted, the court may grant
to the plaintiff proper reliefs which shall include the protection,
preservation or rehabilitation of the environment and the payment
of attorney's fees, costs of suit and other litigation expenses. It may
also require the violator to submit a program of rehabilitation or
restoration of the environment, the costs of which shall be borne by
the violator, or to contribute to a special trust fund for that purpose
subject to the control of the court.1âwphi1
In the light of the foregoing, the Court defers to the Executive
Branch on the matter of compensation and rehabilitation measures
through diplomatic channels. Resolution of these issues impinges on
our relations with another State in the context of common security
interests under the VFA. It is settled that "[t]he conduct of the
foreign relations of our government is committed by the
Constitution to the executive and legislative-"the political" --
departments of the government, and the propriety of what may be
done in the exercise of this political power is not subject to judicial
inquiry or decision."40
On the other hand, we cannot grant the additional reliefs prayed for
in the petition to order a review of the VFA and to nullify certain
immunity provisions thereof.
As held in BAYAN (Bagong Alyansang Makabayan) v. Exec. Sec.
Zamora,41 the VFA was duly concurred in by the Philippine Senate
and has been recognized as a treaty by the United States as attested
and certified by the duly authorized representative of the United
States government. The VF A being a valid and binding agreement,
the parties are required as a matter of international law to abide by
its terms and provisions.42 The present petition under the Rules is
not the proper remedy to assail the constitutionality of its
provisions. WHEREFORE, the petition for the issuance of the
privilege of the Writ of Kalikasan is hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice
FACTS:
The USS Guardian is an Avenger-class mine
countermeasures ship of the US Navy. In December 2012, the US
Embassy in the Philippines requested diplomatic clearance for the
said vessel “to enter and exit the territorial waters of the Philippines
and to arrive at the port of Subic Bay for the purpose of routine ship
replenishment, maintenance, and crew liberty.” On January 6, 2013,
the ship left Sasebo, Japan for Subic Bay, arriving on January 13,
2013 after a brief stop for fuel in Okinawa, Japan.
On January 15, 2013, the USS Guardian departed Subic Bay
for its next port of call in Makassar, Indonesia. On January 17, 2013
at 2:20 a.m. while transiting the Sulu Sea, the ship ran aground on
the northwest side of South Shoal of the Tubbataha Reefs, about 80
miles east-southeast of Palawan. No one was injured in the incident,
and there have been no reports of leaking fuel or oil.
Petitioners claim that the grounding, salvaging and post-
salvaging operations of the USS Guardian cause and continue to
cause environmental damage of such magnitude as to affect the
provinces of Palawan, Antique, Aklan, Guimaras, Iloilo, Negros
Occidental, Negros Oriental, Zamboanga del Norte, Basilan, Sulu,
and Tawi-Tawi, which events violate their constitutional rights to a
balanced and healthful ecology.
ISSUES:
1. Whether or not petitioners have legal standing.
2. Whether or not US respondents may be held liable for
damages caused by USS Guardian.
3. Whether or not the waiver of immunity from suit under
VFA applies in this case.
HELD:
First issue: YES.
Petitioners have legal standing
Locus standi is “a right of appearance in a court of justice
on a given question.” Specifically, it is “a party’s personal and
substantial interest in a case where he has sustained or will sustain
direct injury as a result” of the act being challenged, and “calls for
more than just a generalized grievance.” However, the rule on
standing is a procedural matter which this Court has relaxed for non-
traditional plaintiffs like ordinary citizens, taxpayers and legislators
when the public interest so requires, such as when the subject
matter of the controversy is of transcendental importance, of
overreaching significance to society, or of paramount public interest.
In the landmark case of Oposa v. Factoran, Jr., we
recognized the “public right” of citizens to “a balanced and healthful
ecology which, for the first time in our constitutional history, is
solemnly incorporated in the fundamental law.” We declared that
the right to a balanced and healthful ecology need not be written in
the Constitution for it is assumed, like other civil and polittcal rights
guaranteed in the Bill of Rights, to exist from the inception of
mankind and it is an issue of transcendental importance with
intergenerational implications. Such right carries with it the
correlative duty to refrain from impairing the environment.
On the novel element in the class suit filed by the
petitioners minors in Oposa, this Court ruled that not only do
ordinary citizens have legal standing to sue for the enforcement
of environmental rights, they can do so in representation of their
own and future generations.
Second issue: YES.
The US respondents were sued in their official capacity as
commanding officers of the US Navy who had control and
supervision over the USS Guardian and its crew. The alleged act or
omission resulting in the unfortunate grounding of the USS Guardian
on the TRNP was committed while they were performing official
military duties. Considering that the satisfaction of a judgment
against said officials will require remedial actions and appropriation
of funds by the US government, the suit is deemed to be one against
the US itself. The principle of State immunity therefore bars the
exercise of jurisdiction by this Court over the persons of respondents
Swift, Rice and Robling.
During the deliberations, Senior Associate Justice Antonio
T. Carpio took the position that the conduct of the US in this case,
when its warship entered a restricted area in violation of R.A. No.
10067 and caused damage to the TRNP reef system, brings the
matter within the ambit of Article 31 of the United Nations
Convention on the Law of the Sea (UNCLOS). He explained that
while historically, warships enjoy sovereign immunity from suit as
extensions of their flag State, Art. 31 of the UNCLOS creates an
exception to this rule in cases where they fail to comply with the
rules and regulations of the coastal State regarding passage
through the latter’s internal waters and the territorial sea.
In the case of warships, as pointed out by Justice Carpio,
they continue to enjoy sovereign immunity subject to the following
exceptions:
Article 30: Non-compliance by warships with the laws and
regulations of the coastal State
If any warship does not comply with the laws and regulations of the
coastal State concerning passage through the territorial sea and
disregards any request for compliance therewith which is made to it,
the coastal State may require it to leave the territorial sea
immediately.
Article 31: Responsibility of the flag State for damage caused by a
warship or other government ship operated for non-commercial
purposes
The flag State shall bear international responsibility for any loss or
damage to the coastal State resulting from the non-compliance by a
warship or other government ship operated for non-commercial
purposes with the laws and regulations of the coastal State
concerning passage through the territorial sea or with the provisions
of this Convention or other rules of international law.
Article 32: Immunities of warships and other government ships
operated for non-commercial purposes
With such exceptions as are contained in subsection A and
in articles 30 and 31, nothing in this Convention affects the
immunities of warships and other government ships operated for
non-commercial purposes. A foreign warship’s unauthorized entry
into our internal waters with resulting damage to marine resources
is one situation in which the above provisions may apply.
But what if the offending warship is a non-party to the UNCLOS, as in
this case, the US?
According to Justice Carpio, although the US to date has not ratified
the UNCLOS, as a matter of long-standing policy the US considers
itself bound by customary international rules on the “traditional
uses of the oceans” as codified in UNCLOS.
Moreover, Justice Carpio emphasizes that “the US refusal to join the
UNCLOS was centered on its disagreement with UNCLOS” regime of
deep seabed mining (Part XI) which considers the oceans and deep
seabed commonly owned by mankind,” pointing out that such “has
nothing to do with its the US’ acceptance of customary international
rules on navigation.”
The Court also fully concurred with Justice Carpio’s view that non-
membership in the UNCLOS does not mean that the US will
disregard the rights of the Philippines as a Coastal State over
its internal waters and territorial sea. We thus expect the US to bear
“international responsibility” under Art. 31 in connection with the
USS Guardian grounding which adversely affected the Tubbataha
reefs. Indeed, it is difficult to imagine that our long-time ally and
trading partner, which has been actively supporting the country’s
efforts to preserve our vital marine resources, would shirk from its
obligation to compensate the damage caused by its warship while
transiting our internal waters. Much less can we comprehend a
Government exercising leadership in international affairs, unwilling
to comply with the UNCLOS directive for all nations to cooperate in
the global task to protect and preserve the marine environment as
provided in Article 197 of UNCLOS
Article 197: Cooperation on a global or regional basis
States shall cooperate on a global basis and, as appropriate, on a
regional basis, directly or through competent international
organizations, in formulating and elaborating international rules,
standards and recommended practices and procedures consistent
with this Convention, for the protection and preservation of the
marine environment, taking into account characteristic regional
features.
In fine, the relevance of UNCLOS provisions to the present
controversy is beyond dispute. Although the said treaty upholds
the immunity of warships from the jurisdiction of Coastal States
while navigating the latter’s territorial sea, the flag States shall be
required to leave the territorial sea immediately if they flout the
laws and regulations of the Coastal State, and they will be liable for
damages caused by their warships or any other government vessel
operated for non-commercial purposes under Article 31.
Third issue: NO.

The waiver of State immunity under the VF A pertains only

to criminal jurisdiction and not to special civil actions such as the
present petition for issuance of a writ of Kalikasan. In fact, it can be
inferred from Section 17, Rule 7 of the Rules that a criminal case
against a person charged with a violation of an environmental law is
to be filed separately.
The Court considered a view that a ruling on the application
or non-application of criminal jurisdiction provisions of the VFA to
US personnel who may be found responsible for the grounding of
the USS Guardian, would be premature and beyond the province of
a petition for a writ of Kalikasan.
The Court also found unnecessary at this point to
determine whether such waiver of State immunity is indeed
absolute. In the same vein, we cannot grant damages which have
resulted from the violation of environmental laws. The Rules allows
the recovery of damages, including the collection of administrative
fines under R.A. No. 10067, in a separate civil suit or that deemed
instituted with the criminal action charging the same violation of an
environmental law.
G.R. No. 142396 February 11, 2003
KHOSROW MINUCHER, petitioner,
vs.
HON. COURT OF APPEALS and ARTHUR SCALZO, respondents.
DECISION
VITUG, J.:
Sometime in May 1986, an Information for violation of Section 4 of
Republic Act No. 6425, otherwise also known as the "Dangerous
Drugs Act of 1972," was filed against petitioner Khosrow Minucher
and one Abbas Torabian with the Regional Trial Court, Branch 151,
of Pasig City. The criminal charge followed a "buy-bust operation"
conducted by the Philippine police narcotic agents in the house of
Minucher, an Iranian national, where a quantity of heroin, a
prohibited drug, was said to have been seized. The narcotic agents
were accompanied by private respondent Arthur Scalzo who would,
in due time, become one of the principal witnesses for the
prosecution. On 08 January 1988, Presiding Judge Eutropio Migrino
rendered a decision acquitting the two accused.
On 03 August 1988, Minucher filed Civil Case No. 88-45691 before
the Regional Trial Court (RTC), Branch 19, of Manila for damages on
account of what he claimed to have been trumped-up charges of
drug trafficking made by Arthur Scalzo. The Manila RTC detailed
what it had found to be the facts and circumstances surrounding the
case.
"The testimony of the plaintiff disclosed that he is an Iranian
national. He came to the Philippines to study in the University of the
Philippines in 1974. In 1976, under the regime of the Shah of Iran, he
was appointed Labor Attaché for the Iranian Embassies in Tokyo,
Japan and Manila, Philippines. When the Shah of Iran was deposed
by Ayatollah Khomeini, plaintiff became a refugee of the United
Nations and continued to stay in the Philippines. He headed the
Iranian National Resistance Movement in the Philippines.
"He came to know the defendant on May 13, 1986, when the latter
was brought to his house and introduced to him by a certain Jose
Iñigo, an informer of the Intelligence Unit of the military. Jose Iñigo,
on the other hand, was met by plaintiff at the office of Atty. Crisanto
Saruca, a lawyer for several Iranians whom plaintiff assisted as head
of the anti-Khomeini movement in the Philippines.
"During his first meeting with the defendant on May 13, 1986, upon
the introduction of Jose Iñigo, the defendant expressed his interest
in buying caviar. As a matter of fact, he bought two kilos of caviar
from plaintiff and paid P10,000.00 for it. Selling caviar, aside from
that of Persian carpets, pistachio nuts and other Iranian products
was his business after the Khomeini government cut his pension of
over $3,000.00 per month. During their introduction in that meeting,
the defendant gave the plaintiff his calling card, which showed that
he is working at the US Embassy in the Philippines, as a special agent
of the Drug Enforcement Administration, Department of Justice, of
the United States, and gave his address as US Embassy, Manila. At
the back of the card appears a telephone number in defendant’s
own handwriting, the number of which he can also be contacted.
"It was also during this first meeting that plaintiff expressed his
desire to obtain a US Visa for his wife and the wife of a countryman
named Abbas Torabian. The defendant told him that he [could] help
plaintiff for a fee of $2,000.00 per visa. Their conversation, however,
was more concentrated on politics, carpets and caviar. Thereafter,
the defendant promised to see plaintiff again.
"On May 19, 1986, the defendant called the plaintiff and invited the
latter for dinner at Mario's Restaurant at Makati. He wanted to buy
200 grams of caviar. Plaintiff brought the merchandize but for the
reason that the defendant was not yet there, he requested the
restaurant people to x x x place the same in the refrigerator.
Defendant, however, came and plaintiff gave him the caviar for
which he was paid. Then their conversation was again focused on
politics and business.
"On May 26, 1986, defendant visited plaintiff again at the latter's
residence for 18 years at Kapitolyo, Pasig. The defendant wanted to
buy a pair of carpets which plaintiff valued at $27,900.00. After
some haggling, they agreed at $24,000.00. For the reason that
defendant did not yet have the money, they agreed that defendant
would come back the next day. The following day, at 1:00 p.m., he
came back with his $24,000.00, which he gave to the plaintiff, and
the latter, in turn, gave him the pair of carpets.1awphi1.nét
"At about 3:00 in the afternoon of May 27, 1986, the defendant
came back again to plaintiff's house and directly proceeded to the
latter's bedroom, where the latter and his countryman, Abbas
Torabian, were playing chess. Plaintiff opened his safe in the
bedroom and obtained $2,000.00 from it, gave it to the defendant
for the latter's fee in obtaining a visa for plaintiff's wife. The
defendant told him that he would be leaving the Philippines very
soon and requested him to come out of the house for a while so that
he can introduce him to his cousin waiting in a cab. Without much
ado, and without putting on his shirt as he was only in his pajama
pants, he followed the defendant where he saw a parked cab
opposite the street. To his complete surprise, an American jumped
out of the cab with a drawn high-powered gun. He was in the
company of about 30 to 40 Filipino soldiers with 6 Americans, all
armed. He was handcuffed and after about 20 minutes in the street,
he was brought inside the house by the defendant. He was made to
sit down while in handcuffs while the defendant was inside his
bedroom. The defendant came out of the bedroom and out from
defendant's attaché case, he took something and placed it on the
table in front of the plaintiff. They also took plaintiff's wife who was
at that time at the boutique near his house and likewise arrested
Torabian, who was playing chess with him in the bedroom and both
were handcuffed together. Plaintiff was not told why he was being
handcuffed and why the privacy of his house, especially his bedroom
was invaded by defendant. He was not allowed to use the
telephone. In fact, his telephone was unplugged. He asked for any
warrant, but the defendant told him to `shut up.’ He was
nevertheless told that he would be able to call for his lawyer who
can defend him.
"The plaintiff took note of the fact that when the defendant invited
him to come out to meet his cousin, his safe was opened where he
kept the $24,000.00 the defendant paid for the carpets and another
$8,000.00 which he also placed in the safe together with a bracelet
worth $15,000.00 and a pair of earrings worth $10,000.00. He also
discovered missing upon his release his 8 pieces hand-made Persian
carpets, valued at $65,000.00, a painting he bought for P30,000.00
together with his TV and betamax sets. He claimed that when he
was handcuffed, the defendant took his keys from his wallet. There
was, therefore, nothing left in his house.
"That his arrest as a heroin trafficker x x x had been well publicized
throughout the world, in various newspapers, particularly in
Australia, America, Central Asia and in the Philippines. He was
identified in the papers as an international drug trafficker. x x x
In fact, the arrest of defendant and Torabian was likewise on
television, not only in the Philippines, but also in America and in
Germany. His friends in said places informed him that they saw him
on TV with said news.
"After the arrest made on plaintiff and Torabian, they were brought
to Camp Crame handcuffed together, where they were detained for
three days without food and water."1
During the trial, the law firm of Luna, Sison and Manas, filed a
special appearance for Scalzo and moved for extension of time to
file an answer pending a supposed advice from the United States
Department of State and Department of Justice on the defenses to
be raised. The trial court granted the motion. On 27 October 1988,
Scalzo filed another special appearance to quash the summons on
the ground that he, not being a resident of the Philippines and the
action being one in personam, was beyond the processes of the
court. The motion was denied by the court, in its order of 13
December 1988, holding that the filing by Scalzo of a motion for
extension of time to file an answer to the complaint was a voluntary
appearance equivalent to service of summons which could likewise
be construed a waiver of the requirement of formal notice. Scalzo
filed a motion for reconsideration of the court order, contending
that a motion for an extension of time to file an answer was not a
voluntary appearance equivalent to service of summons since it did
not seek an affirmative relief. Scalzo argued that in cases involving
the United States government, as well as its agencies and officials, a
motion for extension was peculiarly unavoidable due to the need (1)
for both the Department of State and the Department of Justice to
agree on the defenses to be raised and (2) to refer the case to a
Philippine lawyer who would be expected to first review the case.
The court a quo denied the motion for reconsideration in its order of
15 October 1989.
Scalzo filed a petition for review with the Court of Appeals, there
docketed CA-G.R. No. 17023, assailing the denial. In a decision,
dated 06 October 1989, the appellate court denied the petition and
affirmed the ruling of the trial court. Scalzo then elevated the
incident in a petition for review on certiorari, docketed G.R. No.
91173, to this Court. The petition, however, was denied for its
failure to comply with SC Circular No. 1-88; in any event, the Court
added, Scalzo had failed to show that the appellate court was in
error in its questioned judgment.
Meanwhile, at the court a quo, an order, dated 09 February 1990,
was issued (a) declaring Scalzo in default for his failure to file a
responsive pleading (answer) and (b) setting the case for the
reception of evidence. On 12 March 1990, Scalzo filed a motion to
set aside the order of default and to admit his answer to the
complaint. Granting the motion, the trial court set the case for pre-
trial. In his answer, Scalzo denied the material allegations of the
complaint and raised the affirmative defenses (a) of Minucher’s
failure to state a cause of action in his complaint and (b) that Scalzo
had acted in the discharge of his official duties as being merely an
agent of the Drug Enforcement Administration of the United States
Department of Justice. Scalzo interposed a counterclaim of
P100,000.00 to answer for attorneys' fees and expenses of litigation.
Then, on 14 June 1990, after almost two years since the institution
of the civil case, Scalzo filed a motion to dismiss the complaint on
the ground that, being a special agent of the United States Drug
Enforcement Administration, he was entitled to diplomatic
immunity. He attached to his motion Diplomatic Note No. 414 of the
United States Embassy, dated 29 May 1990, addressed to the
Department of Foreign Affairs of the Philippines and a Certification,
dated 11 June 1990, of Vice Consul Donna Woodward, certifying
that the note is a true and faithful copy of its original. In an order of
25 June 1990, the trial court denied the motion to dismiss.
On 27 July 1990, Scalzo filed a petition for certiorari with injunction
with this Court, docketed G.R. No. 94257 and entitled "Arthur W.
Scalzo, Jr., vs. Hon. Wenceslao Polo, et al.," asking that the
complaint in Civil Case No. 88-45691 be ordered dismissed. The case
was referred to the Court of Appeals, there docketed CA-G.R. SP No.
22505, per this Court’s resolution of 07 August 1990. On 31 October
1990, the Court of Appeals promulgated its decision sustaining the
diplomatic immunity of Scalzo and ordering the dismissal of the
complaint against him. Minucher filed a petition for review with this
Court, docketed G.R. No. 97765 and entitled "Khosrow Minucher vs.
the Honorable Court of Appeals, et. al." (cited in 214 SCRA 242),
appealing the judgment of the Court of Appeals. In a decision, dated
24 September 1992, penned by Justice (now Chief Justice) Hilario
Davide, Jr., this Court reversed the decision of the appellate court
and remanded the case to the lower court for trial. The remand was
ordered on the theses (a) that the Court of Appeals erred in granting
the motion to dismiss of Scalzo for lack of jurisdiction over his
person without even considering the issue of the authenticity of
Diplomatic Note No. 414 and (b) that the complaint contained
sufficient allegations to the effect that Scalzo committed the
imputed acts in his personal capacity and outside the scope of his
official duties and, absent any evidence to the contrary, the issue on
Scalzo’s diplomatic immunity could not be taken up.
The Manila RTC thus continued with its hearings on the case. On 17
November 1995, the trial court reached a decision; it adjudged:
"WHEREFORE, and in view of all the foregoing considerations,
judgment is hereby rendered for the plaintiff, who successfully
established his claim by sufficient evidence, against the defendant in
the manner following:
"`Adjudging defendant liable to plaintiff in actual and compensatory
damages of P520,000.00; moral damages in the sum of P10 million;
exemplary damages in the sum of P100,000.00; attorney's fees in
the sum of P200,000.00 plus costs.
`The Clerk of the Regional Trial Court, Manila, is ordered to take
note of the lien of the Court on this judgment to answer for the
unpaid docket fees considering that the plaintiff in this case
instituted this action as a pauper litigant.’"2
While the trial court gave credence to the claim of Scalzo and the
evidence presented by him that he was a diplomatic agent entitled
to immunity as such, it ruled that he, nevertheless, should be held
accountable for the acts complained of committed outside his
official duties. On appeal, the Court of Appeals reversed the decision
of the trial court and sustained the defense of Scalzo that he was
sufficiently clothed with diplomatic immunity during his term of duty
and thereby immune from the criminal and civil jurisdiction of the
"Receiving State" pursuant to the terms of the Vienna Convention.
Hence, this recourse by Minucher. The instant petition for review
raises a two-fold issue: (1) whether or not the doctrine of
conclusiveness of judgment, following the decision rendered by this
Court in G.R. No. 97765, should have precluded the Court of Appeals
from resolving the appeal to it in an entirely different manner, and
(2) whether or not Arthur Scalzo is indeed entitled to diplomatic
immunity.
The doctrine of conclusiveness of judgment, or its kindred rule of res
judicata, would require 1) the finality of the prior judgment, 2) a
valid jurisdiction over the subject matter and the parties on the part
of the court that renders it, 3) a judgment on the merits, and 4) an
identity of the parties, subject matter and causes of action.3 Even
while one of the issues submitted in G.R. No. 97765 - "whether or
not public respondent Court of Appeals erred in ruling that private
respondent Scalzo is a diplomat immune from civil suit conformably
with the Vienna Convention on Diplomatic Relations" - is also a
pivotal question raised in the instant petition, the ruling in G.R. No.
97765, however, has not resolved that point with finality. Indeed,
the Court there has made this observation -
"It may be mentioned in this regard that private respondent himself,
in his Pre-trial Brief filed on 13 June 1990, unequivocally states that
he would present documentary evidence consisting of DEA records
on his investigation and surveillance of plaintiff and on his position
and duties as DEA special agent in Manila. Having thus reserved his
right to present evidence in support of his position, which is the
basis for the alleged diplomatic immunity, the barren self-serving
claim in the belated motion to dismiss cannot be relied upon for a
reasonable, intelligent and fair resolution of the issue of diplomatic
immunity."4
Scalzo contends that the Vienna Convention on Diplomatic
Relations, to which the Philippines is a signatory, grants him
absolute immunity from suit, describing his functions as an agent of
the United States Drugs Enforcement Agency as "conducting
surveillance operations on suspected drug dealers in the Philippines
believed to be the source of prohibited drugs being shipped to the
U.S., (and) having ascertained the target, (he then) would inform the
Philippine narcotic agents (to) make the actual arrest." Scalzo has
submitted to the trial court a number of documents -
1. Exh. '2' - Diplomatic Note No. 414 dated 29 May 1990;
2. Exh. '1' - Certification of Vice Consul Donna K. Woodward dated
11 June 1990;
3. Exh. '5' - Diplomatic Note No. 757 dated 25 October 1991;
4. Exh. '6' - Diplomatic Note No. 791 dated 17 November 1992; and
5. Exh. '7' - Diplomatic Note No. 833 dated 21 October 1988.
6. Exh. '3' - 1st Indorsement of the Hon. Jorge R. Coquia, Legal
Adviser, Department of Foreign Affairs, dated 27 June 1990
forwarding Embassy Note No. 414 to the Clerk of Court of RTC
Manila, Branch 19 (the trial court);
7. Exh. '4' - Diplomatic Note No. 414, appended to the 1st
Indorsement (Exh. '3'); and
8. Exh. '8' - Letter dated 18 November 1992 from the Office of the
Protocol, Department of Foreign Affairs, through Asst. Sec.
Emmanuel Fernandez, addressed to the Chief Justice of this Court.5
The documents, according to Scalzo, would show that: (1) the United
States Embassy accordingly advised the Executive Department of the
Philippine Government that Scalzo was a member of the diplomatic
staff of the United States diplomatic mission from his arrival in the
Philippines on 14 October 1985 until his departure on 10 August
1988; (2) that the United States Government was firm from the very
beginning in asserting the diplomatic immunity of Scalzo with
respect to the case pursuant to the provisions of the Vienna
Convention on Diplomatic Relations; and (3) that the United States
Embassy repeatedly urged the Department of Foreign Affairs to take
appropriate action to inform the trial court of Scalzo’s diplomatic
immunity. The other documentary exhibits were presented to
indicate that: (1) the Philippine government itself, through its
Executive Department, recognizing and respecting the diplomatic
status of Scalzo, formally advised the "Judicial Department" of his
diplomatic status and his entitlement to all diplomatic privileges and
immunities under the Vienna Convention; and (2) the Department of
Foreign Affairs itself authenticated Diplomatic Note No. 414. Scalzo
additionally presented Exhibits "9" to "13" consisting of his reports
of investigation on the surveillance and subsequent arrest of
Minucher, the certification of the Drug Enforcement Administration
of the United States Department of Justice that Scalzo was a special
agent assigned to the Philippines at all times relevant to the
complaint, and the special power of attorney executed by him in
favor of his previous counsel6 to show (a) that the United States
Embassy, affirmed by its Vice Consul, acknowledged Scalzo to be a
member of the diplomatic staff of the United States diplomatic
mission from his arrival in the Philippines on 14 October 1985 until
his departure on 10 August 1988, (b) that, on May 1986, with the
cooperation of the Philippine law enforcement officials and in the
exercise of his functions as member of the mission, he investigated
Minucher for alleged trafficking in a prohibited drug, and (c) that the
Philippine Department of Foreign Affairs itself recognized that Scalzo
during his tour of duty in the Philippines (14 October 1985 up to 10
August 1988) was listed as being an Assistant Attaché of the United
States diplomatic mission and accredited with diplomatic status by
the Government of the Philippines. In his Exhibit 12, Scalzo
described the functions of the overseas office of the United States
Drugs Enforcement Agency, i.e., (1) to provide criminal investigative
expertise and assistance to foreign law enforcement agencies on
narcotic and drug control programs upon the request of the host
country, 2) to establish and maintain liaison with the host country
and counterpart foreign law enforcement officials, and 3) to conduct
complex criminal investigations involving international criminal
conspiracies which affect the interests of the United States.
The Vienna Convention on Diplomatic Relations was a codification of
centuries-old customary law and, by the time of its ratification on 18
April 1961, its rules of law had long become stable. Among the city
states of ancient Greece, among the peoples of the Mediterranean
before the establishment of the Roman Empire, and among the
states of India, the person of the herald in time of war and the
person of the diplomatic envoy in time of peace were universally
held sacrosanct.7 By the end of the 16th century, when the earliest
treatises on diplomatic law were published, the inviolability of
ambassadors was firmly established as a rule of customary
international law.8Traditionally, the exercise of diplomatic
intercourse among states was undertaken by the head of state
himself, as being the preeminent embodiment of the state he
represented, and the foreign secretary, the official usually entrusted
with the external affairs of the state. Where a state would wish to
have a more prominent diplomatic presence in the receiving state, it
would then send to the latter a diplomatic mission. Conformably
with the Vienna Convention, the functions of the diplomatic mission
involve, by and large, the representation of the interests of the
sending state and promoting friendly relations with the receiving
state.9
The Convention lists the classes of heads of diplomatic missions to
include (a) ambassadors or nuncios accredited to the heads of
state,10 (b) envoys,11 ministers or internuncios accredited to the
heads of states; and (c) charges d' affairs12 accredited to the
ministers of foreign affairs.13 Comprising the "staff of the
(diplomatic) mission" are the diplomatic staff, the administrative
staff and the technical and service staff. Only the heads of missions,
as well as members of the diplomatic staff, excluding the members
of the administrative, technical and service staff of the mission, are
accorded diplomatic rank. Even while the Vienna Convention on
Diplomatic Relations provides for immunity to the members of
diplomatic missions, it does so, nevertheless, with an understanding
that the same be restrictively applied. Only "diplomatic agents,"
under the terms of the Convention, are vested with blanket
diplomatic immunity from civil and criminal suits. The Convention
defines "diplomatic agents" as the heads of missions or members of
the diplomatic staff, thus impliedly withholding the same privileges
from all others. It might bear stressing that even consuls, who
represent their respective states in concerns of commerce and
navigation and perform certain administrative and notarial duties,
such as the issuance of passports and visas, authentication of
documents, and administration of oaths, do not ordinarily enjoy the
traditional diplomatic immunities and privileges accorded diplomats,
mainly for the reason that they are not charged with the duty of
representing their states in political matters. Indeed, the main
yardstick in ascertaining whether a person is a diplomat entitled to
immunity is the determination of whether or not he performs duties
of diplomatic nature.
Scalzo asserted, particularly in his Exhibits "9" to "13," that he was
an Assistant Attaché of the United States diplomatic mission and
was accredited as such by the Philippine Government. An attaché
belongs to a category of officers in the diplomatic establishment
who may be in charge of its cultural, press, administrative or
financial affairs. There could also be a class of attaches belonging to
certain ministries or departments of the government, other than the
foreign ministry or department, who are detailed by their respective
ministries or departments with the embassies such as the military,
naval, air, commercial, agricultural, labor, science, and customs
attaches, or the like. Attaches assist a chief of mission in his duties
and are administratively under him, but their main function is to
observe, analyze and interpret trends and developments in their
respective fields in the host country and submit reports to their own
ministries or departments in the home government.14 These officials
are not generally regarded as members of the diplomatic mission,
nor are they normally designated as having diplomatic rank.
In an attempt to prove his diplomatic status, Scalzo presented
Diplomatic Notes Nos. 414, 757 and 791, all issued post litem
motam, respectively, on 29 May 1990, 25 October 1991 and 17
November 1992. The presentation did nothing much to alleviate the
Court's initial reservations in G.R. No. 97765, viz:
"While the trial court denied the motion to dismiss, the public
respondent gravely abused its discretion in dismissing Civil Case No.
88-45691 on the basis of an erroneous assumption that simply
because of the diplomatic note, the private respondent is clothed
with diplomatic immunity, thereby divesting the trial court of
jurisdiction over his person.
"x x x x x x x x x
"And now, to the core issue - the alleged diplomatic immunity of the
private respondent. Setting aside for the moment the issue of
authenticity raised by the petitioner and the doubts that surround
such claim, in view of the fact that it took private respondent one (1)
year, eight (8) months and seventeen (17) days from the time his
counsel filed on 12 September 1988 a Special Appearance and
Motion asking for a first extension of time to file the Answer
because the Departments of State and Justice of the United States of
America were studying the case for the purpose of determining his
defenses, before he could secure the Diplomatic Note from the US
Embassy in Manila, and even granting for the sake of argument that
such note is authentic, the complaint for damages filed by petitioner
cannot be peremptorily dismissed.
"x x x x x x x x x
"There is of course the claim of private respondent that the acts
imputed to him were done in his official capacity. Nothing supports
this self-serving claim other than the so-called Diplomatic Note. x x
x. The public respondent then should have sustained the trial court's
denial of the motion to dismiss. Verily, it should have been the most
proper and appropriate recourse. It should not have been
overwhelmed by the self-serving Diplomatic Note whose belated
issuance is even suspect and whose authenticity has not yet been
proved. The undue haste with which respondent Court yielded to
the private respondent's claim is arbitrary."
A significant document would appear to be Exhibit No. 08, dated 08
November 1992, issued by the Office of Protocol of the Department
of Foreign Affairs and signed by Emmanuel C. Fernandez, Assistant
Secretary, certifying that "the records of the Department (would)
show that Mr. Arthur W. Scalzo, Jr., during his term of office in the
Philippines (from 14 October 1985 up to 10 August 1988) was listed
as an Assistant Attaché of the United States diplomatic mission and
was, therefore, accredited diplomatic status by the Government of
the Philippines." No certified true copy of such "records," the
supposed bases for the belated issuance, was presented in evidence.
Concededly, vesting a person with diplomatic immunity is a
prerogative of the executive branch of the government. In World
Health Organization vs. Aquino,15 the Court has recognized that, in
such matters, the hands of the courts are virtually tied. Amidst
apprehensions of indiscriminate and incautious grant of immunity,
designed to gain exemption from the jurisdiction of courts, it should
behoove the Philippine government, specifically its Department of
Foreign Affairs, to be most circumspect, that should particularly be
no less than compelling, in its post litem motam issuances. It might
be recalled that the privilege is not an immunity from the
observance of the law of the territorial sovereign or from ensuing
legal liability; it is, rather, an immunity from the exercise of
territorial jurisdiction.16 The government of the United States itself,
which Scalzo claims to be acting for, has formulated its standards for
recognition of a diplomatic agent. The State Department policy is to
only concede diplomatic status to a person who possesses an
acknowledged diplomatic title and "performs duties of diplomatic
nature."17 Supplementary criteria for accreditation are the
possession of a valid diplomatic passport or, from States which do
not issue such passports, a diplomatic note formally representing
the intention to assign the person to diplomatic duties, the holding
of a non-immigrant visa, being over twenty-one years of age, and
performing diplomatic functions on an essentially full-time
basis.18 Diplomatic missions are requested to provide the most
accurate and descriptive job title to that which currently applies to
the duties performed. The Office of the Protocol would then assign
each individual to the appropriate functional category.19
But while the diplomatic immunity of Scalzo might thus remain
contentious, it was sufficiently established that, indeed, he worked
for the United States Drug Enforcement Agency and was tasked to
conduct surveillance of suspected drug activities within the country
on the dates pertinent to this case. If it should be ascertained that
Arthur Scalzo was acting well within his assigned functions when he
committed the acts alleged in the complaint, the present
controversy could then be resolved under the related doctrine of
State Immunity from Suit.
The precept that a State cannot be sued in the courts of a foreign
state is a long-standing rule of customary international law then
closely identified with the personal immunity of a foreign sovereign
from suit20 and, with the emergence of democratic states, made to
attach not just to the person of the head of state, or his
representative, but also distinctly to the state itself in its sovereign
capacity.21 If the acts giving rise to a suit are those of a foreign
government done by its foreign agent, although not necessarily a
diplomatic personage, but acting in his official capacity, the
complaint could be barred by the immunity of the foreign sovereign
from suit without its consent. Suing a representative of a state is
believed to be, in effect, suing the state itself. The proscription is not
accorded for the benefit of an individual but for the State, in whose
service he is, under the maxim - par in parem, non habet imperium -
that all states are sovereign equals and cannot assert jurisdiction
over one another.22 The implication, in broad terms, is that if the
judgment against an official would require the state itself to perform
an affirmative act to satisfy the award, such as the appropriation of
the amount needed to pay the damages decreed against him, the
suit must be regarded as being against the state itself, although it
has not been formally impleaded.23
In United States of America vs. Guinto,24 involving officers of the
United States Air Force and special officers of the Air Force Office of
Special Investigators charged with the duty of preventing the
distribution, possession and use of prohibited drugs, this Court has
ruled -
"While the doctrine (of state immunity) appears to prohibit only
suits against the state without its consent, it is also applicable to
complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. x x x. It cannot
for a moment be imagined that they were acting in their private or
unofficial capacity when they apprehended and later testified
against the complainant. It follows that for discharging their duties
as agents of the United States, they cannot be directly impleaded for
acts imputable to their principal, which has not given its consent to
be sued. x x x As they have acted on behalf of the government, and
within the scope of their authority, it is that government, and not
the petitioners personally, [who were] responsible for their acts." 25
This immunity principle, however, has its limitations. Thus, Shauf vs.
Court of Appeals26 elaborates:
"It is a different matter where the public official is made to account
in his capacity as such for acts contrary to law and injurious to the
rights of the plaintiff. As was clearly set forth by Justice Zaldivar in
Director of the Bureau of Telecommunications, et al., vs. Aligaen, et
al. (33 SCRA 368): `Inasmuch as the State authorizes only legal acts
by its officers, unauthorized acts of government officials or officers
are not acts of the State, and an action against the officials or
officers by one whose rights have been invaded or violated by such
acts, for the protection of his rights, is not a suit against the State
within the rule of immunity of the State from suit. In the same tenor,
it has been said that an action at law or suit in equity against a State
officer or the director of a State department on the ground that,
while claiming to act for the State, he violates or invades the
personal and property rights of the plaintiff, under an
unconstitutional act or under an assumption of authority which he
does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its
consent. The rationale for this ruling is that the doctrine of state
immunity cannot be used as an instrument for perpetrating an
injustice.
"x x x x x x x x x
"(T)he doctrine of immunity from suit will not apply and may not be
invoked where the public official is being sued in his private and
personal capacity as an ordinary citizen. The cloak of protection
afforded the officers and agents of the government is removed the
moment they are sued in their individual capacity. This situation
usually arises where the public official acts without authority or in
excess of the powers vested in him. It is a well-settled principle of
law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done
with malice and in bad faith or beyond the scope of his authority
and jurisdiction."27
A foreign agent, operating within a territory, can be cloaked with
immunity from suit but only as long as it can be established that he
is acting within the directives of the sending state. The consent of
the host state is an indispensable requirement of basic courtesy
between the two sovereigns. Guinto and Shauf both involve officers
and personnel of the United States, stationed within Philippine
territory, under the RP-US Military Bases Agreement. While
evidence is wanting to show any similar agreement between the
governments of the Philippines and of the United States (for the
latter to send its agents and to conduct surveillance and related
activities of suspected drug dealers in the Philippines), the consent
or imprimatur of the Philippine government to the activities of the
United States Drug Enforcement Agency, however, can be gleaned
from the facts heretofore elsewhere mentioned. The official
exchanges of communication between agencies of the government
of the two countries, certifications from officials of both the
Philippine Department of Foreign Affairs and the United States
Embassy, as well as the participation of members of the Philippine
Narcotics Command in the "buy-bust operation" conducted at the
residence of Minucher at the behest of Scalzo, may be inadequate to
support the "diplomatic status" of the latter but they give enough
indication that the Philippine government has given its imprimatur,
if not consent, to the activities within Philippine territory of agent
Scalzo of the United States Drug Enforcement Agency. The job
description of Scalzo has tasked him to conduct surveillance on
suspected drug suppliers and, after having ascertained the target, to
inform local law enforcers who would then be expected to make the
arrest. In conducting surveillance activities on Minucher, later acting
as the poseur-buyer during the buy-bust operation, and then
becoming a principal witness in the criminal case against Minucher,
Scalzo hardly can be said to have acted beyond the scope of his
official function or duties.
All told, this Court is constrained to rule that respondent Arthur
Scalzo, an agent of the United States Drug Enforcement Agency
allowed by the Philippine government to conduct activities in the
country to help contain the problem on the drug traffic, is entitled to
the defense of state immunity from suit.
WHEREFORE, on the foregoing premises, the petition is DENIED. No
costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ.,
concur
Facts
Violation of the “Dangerous Drugs Act of 1972,” was filed against
Minucher following a “buy-bust operation” conducted by Philippine
police narcotic agents accompanied by Scalzo in the house of
Minucher, an Iranian national, where heroin was said to have been
seized. Minucher was later acquitted by the court.
Minucher later on filed for damages due to trumped-up charges of
drug trafficking made by Arthur Scalzo.
Scalzo on his counterclaims that he had acted in the discharge of his
official duties as being merely an agent of the Drug Enforcement
Administration of the United States Department of Justice.
Scalzo subsequently filed a motion to dismiss the complaint on the
ground that, being a special agent of the United States Drug
Enforcement Administration, he was entitled to diplomatic
immunity. He attached to his motion Diplomatic Note of the United
States Embassy addressed to DOJ of the Philippines and a
Certification of Vice Consul Donna Woodward, certifying that the
note is a true and faithful copy of its original. Trial court denied the
motion to dismiss.
ISSUE
Whether or not Arthur Scalzo is indeed entitled to diplomatic
immunity.
RULLING
YES.
A foreign agent, operating within a territory, can be cloaked with
immunity from suit as long as it can be established that he is acting
within the directives of the sending state.
The consent or imprimatur of the Philippine government to the
activities of the United States Drug Enforcement Agency, however,
can be gleaned from the undisputed facts in the case.
 The official exchanges of communication between
agencies of the government of the two countries
 Certifications from officials of both the Philippine
Department of Foreign Affairs and the United States
Embassy
  Participation of members of the Philippine Narcotics
Command in the “buy-bust operation” conducted at the
residence of Minucher at the behest of Scalzo
These may be inadequate to support the “diplomatic status” of the
latter but they give enough indication that the Philippine
government has given its imprimatur, if not consent, to the activities
within Philippine territory of agent Scalzo of the United States Drug
Enforcement Agency.
The job description of Scalzo has tasked him to conduct surveillance
on suspected drug suppliers and, after having ascertained the target,
to inform local law enforcers who would then be expected to make
the arrest.
In conducting surveillance activities on Minucher, later acting as the
poseur-buyer during the buy-bust operation, and then becoming a
principal witness in the criminal case against Minucher,
Scalzo hardly can be said to have acted beyond the scope of his
official function or duties.
G.R. No. 154705 June 26, 2003
THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR
SOERATMIN, and MINISTER COUNSELLOR AZHARI
KASIM, Petitioners,
vs.
JAMES VINZON, doing business under the name and style of
VINZON TRADE AND SERVICES, Respondent.
DECISION
AZCUNA, J:
This is a petition for review on certiorari to set aside the Decision of
the Court of Appeals dated May 30, 2002 and its Resolution dated
August 16, 2002, in CA-G.R. SP No. 66894 entitled "The Republic of
Indonesia, His Excellency Ambassador Soeratmin and Minister
Counselor Azhari Kasim v. Hon. Cesar Santamaria, Presiding Judge,
RTC Branch 145, Makati City, and James Vinzon, doing business
under the name and style of Vinzon Trade and Services."
Petitioner, Republic of Indonesia, represented by its Counsellor, Siti
Partinah, entered into a Maintenance Agreement in August 1995
with respondent James Vinzon, sole proprietor of Vinzon Trade and
Services. The Maintenance Agreement stated that respondent shall,
for a consideration, maintain specified equipment at the Embassy
Main Building, Embassy Annex Building and the Wisma Duta, the
official residence of petitioner Ambassador Soeratmin. The
equipment covered by the Maintenance Agreement are air
conditioning units, generator sets, electrical facilities, water heaters,
and water motor pumps. It is likewise stated therein that the
agreement shall be effective for a period of four years and will
renew itself automatically unless cancelled by either party by giving
thirty days prior written notice from the date of expiry.1
Petitioners claim that sometime prior to the date of expiration of
the said agreement, or before August 1999, they informed
respondent that the renewal of the agreement shall be at the
discretion of the incoming Chief of Administration, Minister
Counsellor Azhari Kasim, who was expected to arrive in February
2000. When Minister Counsellor Kasim assumed the position of
Chief of Administration in March 2000, he allegedly found
respondent’s work and services unsatisfactory and not in
compliance with the standards set in the Maintenance Agreement.
Hence, the Indonesian Embassy terminated the agreement in a
letter dated August 31, 2000.2 Petitioners claim, moreover, that they
had earlier verbally informed respondent of their decision to
terminate the agreement.
On the other hand, respondent claims that the aforesaid
termination was arbitrary and unlawful. Respondent cites various
circumstances which purportedly negated petitioners’ alleged
dissatisfaction over respondent’s services: (a) in July 2000, Minister
Counsellor Kasim still requested respondent to assign to the
embassy an additional full-time worker to assist one of his other
workers; (b) in August 2000, Minister Counsellor Kasim asked
respondent to donate a prize, which the latter did, on the occasion
of the Indonesian Independence Day golf tournament; and (c) in a
letter dated August 22, 2000, petitioner Ambassador Soeratmin
thanked respondent for sponsoring a prize and expressed his hope
that the cordial relations happily existing between them will
continue to prosper and be strengthened in the coming years.
Hence, on December 15, 2000, respondent filed a complaint3 against
petitioners docketed as Civil Case No. 18203 in the Regional Trial
Court (RTC) of Makati, Branch 145. On February 20, 2001,
petitioners filed a Motion to Dismiss, alleging that the Republic of
Indonesia, as a foreign sovereign State, has sovereign immunity from
suit and cannot be sued as a party-defendant in the Philippines. The
said motion further alleged that Ambassador Soeratmin and
Minister Counsellor Kasim are diplomatic agents as defined under
the Vienna Convention on Diplomatic Relations and therefore enjoy
diplomatic immunity.4 In turn, respondent filed on March 20, 2001,
an Opposition to the said motion alleging that the Republic of
Indonesia has expressly waived its immunity from suit. He based this
claim upon the following provision in the Maintenance Agreement:
"Any legal action arising out of this Maintenance Agreement shall be
settled according to the laws of the Philippines and by the proper
court of Makati City, Philippines."
Respondent’s Opposition likewise alleged that Ambassador
Soeratmin and Minister Counsellor Kasim can be sued and held
liable in their private capacities for tortious acts done with malice
and bad faith.5
On May 17, 2001, the trial court denied herein petitioners’ Motion
to Dismiss. It likewise denied the Motion for Reconsideration
subsequently filed.
The trial court’s denial of the Motion to Dismiss was brought up to
the Court of Appeals by herein petitioners in a petition for certiorari
and prohibition. Said petition, docketed as CA-G.R. SP No. 66894,
alleged that the trial court gravely abused its discretion in ruling that
the Republic of Indonesia gave its consent to be sued and voluntarily
submitted itself to the laws and jurisdiction of Philippine courts and
that petitioners Ambassador Soeratmin and Minister Counsellor
Kasim waived their immunity from suit.
On May 30, 2002, the Court of Appeals rendered its assailed decision
denying the petition for lack of merit.6 On August 16, 2002, it denied
herein petitioners’ motion for reconsideration.7
Hence, this petition.
In the case at bar, petitioners raise the sole issue of whether or not
the Court of Appeals erred in sustaining the trial court’s decision
that petitioners have waived their immunity from suit by using as its
basis the abovementioned provision in the Maintenance Agreement.
The petition is impressed with merit.
International law is founded largely upon the principles of
reciprocity, comity, independence, and equality of States which
were adopted as part of the law of our land under Article II, Section
2 of the 1987 Constitution.8 The rule that a State may not be sued
without its consent is a necessary consequence of the principles of
independence and equality of States.9 As enunciated in Sanders v.
Veridiano II,10 the practical justification for the doctrine of sovereign
immunity is that there can be no legal right against the authority
that makes the law on which the right depends. In the case of
foreign States, the rule is derived from the principle of the sovereign
equality of States, as expressed in the maxim par in parem non
habet imperium. All states are sovereign equals and cannot assert
jurisdiction over one another.11 A contrary attitude would "unduly
vex the peace of nations."12
The rules of International Law, however, are neither unyielding nor
impervious to change. The increasing need of sovereign States to
enter into purely commercial activities remotely connected with the
discharge of their governmental functions brought about a new
concept of sovereign immunity. This concept, the restrictive theory,
holds that the immunity of the sovereign is recognized only with
regard to public acts or acts jure imperii, but not with regard to
private acts or acts jure gestionis.13
In United States v. Ruiz,14 for instance, we held that the conduct of
public bidding for the repair of a wharf at a United States Naval
Station is an act jure imperii. On the other hand, we considered as an
act jure gestionis the hiring of a cook in the recreation center
catering to American servicemen and the general public at the John
Hay Air Station in Baguio City,15 as well as the bidding for the
operation of barber shops in Clark Air Base in Angeles City.16
Apropos the present case, the mere entering into a contract by a
foreign State with a private party cannot be construed as the
ultimate test of whether or not it is an act jure imperii or jure
gestionis. Such act is only the start of the inquiry. Is the foreign State
engaged in the regular conduct of a business? If the foreign State is
not engaged regularly in a business or commercial activity, and in
this case it has not been shown to be so engaged, the particular act
or transaction must then be tested by its nature. If the act is in
pursuit of a sovereign activity, or an incident thereof, then it is an
act jure imperii.17
Hence, the existence alone of a paragraph in a contract stating that
any legal action arising out of the agreement shall be settled
according to the laws of the Philippines and by a specified court of
the Philippines is not necessarily a waiver of sovereign immunity
from suit. The aforesaid provision contains language not necessarily
inconsistent with sovereign immunity. On the other hand, such
provision may also be meant to apply where the sovereign party
elects to sue in the local courts, or otherwise waives its immunity by
any subsequent act. The applicability of Philippine laws must be
deemed to include Philippine laws in its totality, including the
principle recognizing sovereign immunity. Hence, the proper court
may have no proper action, by way of settling the case, except to
dismiss it.
Submission by a foreign state to local jurisdiction must be clear and
unequivocal. It must be given explicitly or by necessary implication.
We find no such waiver in this case.
Respondent concedes that the establishment of a diplomatic
mission is a sovereign function.1âwphi1 On the other hand, he
argues that the actual physical maintenance of the premises of the
diplomatic mission, such as the upkeep of its furnishings and
equipment, is no longer a sovereign function of the State.18
We disagree. There is no dispute that the establishment of a
diplomatic mission is an act jure imperii. A sovereign State does not
merely establish a diplomatic mission and leave it at that; the
establishment of a diplomatic mission encompasses its maintenance
and upkeep. Hence, the State may enter into contracts with private
entities to maintain the premises, furnishings and equipment of the
embassy and the living quarters of its agents and officials. It is
therefore clear that petitioner Republic of Indonesia was acting in
pursuit of a sovereign activity when it entered into a contract with
respondent for the upkeep or maintenance of the air conditioning
units, generator sets, electrical facilities, water heaters, and water
motor pumps of the Indonesian Embassy and the official residence
of the Indonesian ambassador.
The Solicitor General, in his Comment, submits the view that, "the
Maintenance Agreement was entered into by the Republic of
Indonesia in the discharge of its governmental functions. In such a
case, it cannot be deemed to have waived its immunity from suit."
As to the paragraph in the agreement relied upon by respondent,
the Solicitor General states that it "was not a waiver of their
immunity from suit but a mere stipulation that in the event they do
waive their immunity, Philippine laws shall govern the resolution of
any legal action arising out of the agreement and the proper court in
Makati City shall be the agreed venue thereof.19
On the matter of whether or not petitioners Ambassador Soeratmin
and Minister Counsellor Kasim may be sued herein in their private
capacities, Article 31 of the Vienna Convention on Diplomatic
Relations provides:
xxx
1. A diplomatic agent shall enjoy immunity from the criminal
jurisidiction of the receiving State. He shall also enjoy immunity from
its civil and administrative jurisdiction, except in the case of:
(a) a real action relating to private immovable property situated in
the territory of the receiving State, unless he holds it on behalf of
the sending State for the purposes of the mission;
(b) an action relating to succession in which the diplomatic agent is
involved as executor, administrator, heir or legatee as a private
person and not on behalf of the sending State;
(c) an action relating to any professional or commercial activity
exercised by the diplomatic agent in the receiving State outside his
official functions.
xxx
The act of petitioners Ambassador Soeratmin and Minister
Counsellor Kasim in terminating the Maintenance Agreement is not
covered by the exceptions provided in the abovementioned
provision.
The Solicitor General believes that said act may fall under
subparagraph (c) thereof,20 but said provision clearly applies only to
a situation where the diplomatic agent engages in any professional
or commercial activity outside official functions, which is not the
case herein.
WHEREFORE, the petition is hereby GRANTED. The decision and
resolution of the Court of Appeals in CA G.R. SP No. 66894 are
REVERSED and SET ASIDE and the complaint in Civil Case No. 18203
against petitioners is DISMISSED.
No costs.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Quisumbing,
Ynares-Santiago, Sandoval-Gutierrez, Carpio, Corona, Carpio-
Morales, and Callejo, Sr., JJ., concur.
Austria-Martinez, J., on leave
Facts:
This is a petition for review of the decision made by Court of Appeals
in ruling that the Republic of Indonesia gave its consent to be sued
and voluntarily submitted itself to the laws and jurisdiction of
Philippine courts and that petitioners Ambassador Soeratmin and
Minister Counsellor Kasim waived their immunity from suit.
Petitioner, Republic of Indonesia, represented by its Counsellor, Siti
Partinah, entered into a Maintenance Agreement with respondent
James Vinzon, sole proprietor of Vinzon Trade and Services. The
equipment covered by the Maintenance Agreement are air
conditioning units and was to take effect in a period of four years.
When Indonesian Minister Counsellor Kasim assumed the position of
Chief of Administration, he allegedly found respondent’s work and
services unsatisfactory and not in compliance with the standards set
in the Maintenance Agreement. Hence, the Indonesian Embassy
terminated the agreement.
The respondent claims that the aforesaid termination was arbitrary
and unlawful. Hence, he filed a complaint against the petitioners
which opposed by invoking immunity from suit.
Issues:
1. Whether or not the Republic of Indonesia can invoke the
doctrine of sovereign immunity from suit.
2. Whether or not petitioners Ambassador Soeratmin and
Minister Counsellor Kasim may be sued herein in their
private capacities.
Discussions:
The rule that a State may not be sued without its consent is a
necessary consequence of the principles of independence and
equality of States. The practical justification for the doctrine of
sovereign immunity is that there can be no legal right against the
authority that makes the law on which the right depends. In the case
of foreign States, the rule is derived from the principle of the
sovereign equality of States, as expressed in the maxim par in parem
non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another.] A contrary attitude would
“unduly vex the peace of nations”.
The rules of International Law, however, are not unbending or
immune to change. The increasing need of sovereign States to enter
into purely commercial activities remotely connected with the
discharge of their governmental functions brought about a new
concept of sovereign immunity. This concept, the restrictive theory,
holds that the immunity of the sovereign is recognized only with
regard to public acts or acts jure imperii (public acts of the
government of a state), but not with regard to private acts or
acts jure gestionis (the commercial activities of a state.)
Rulings:
1. The Supreme Court ruled that the republic of Indonesia
cannot be deemed to have waived its immunity to suit.
The mere entering into a contract by a foreign state with a
private party cannot be construed as the ultimate test of
whether or not it is an act juri imperii or juri gestionis. Such
act is only the start of the inquiry. There is no dispute that
the establishment of a diplomatic mission is an act juri
imperii. The state may enter into contracts with private
entities to maintain the premises, furnishings and
equipment of the embassy. The Republic of Indonesia is
acting in pursuit of a sovereign activity when it entered
into a contract with the respondent. The maintenance
agreement was entered into by the Republic of Indonesia
in the discharge of its governmental functions. It cannot be
deemed to have waived its immunity from suit.
2. Article 31 of the Vienna Convention on Diplomatic
Relations provides that a diplomatic agent shall enjoy
immunity from the criminal jurisidiction of the receiving
State. He shall also enjoy immunity from its civil and
administrative jurisdiction, except in the case of:
o a real action relating to private immovable
property situated in the territory of the receiving
State, unless he holds it on behalf of the sending
State for the purposes of the mission;
o an action relating to succession in which the
diplomatic agent is involved as executor,
administrator, heir or legatee as a private person
and not on behalf of the sending State;
o an action relating to any professional or
commercial activity exercised by the diplomatic
agent in the receiving State outside his official
functions.
The Solicitor General believes that said act may fall under
subparagraph (c) thereof, but said provision clearly applies only to a
situation where the diplomatic agent engages in any professional or
commercial activity outside official functions, which is not the case
herein.
G.R. No. 178551 October 11, 2010
ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY
OF PUBLIC HEALTH-KUWAITPetitioners,
vs.
MA. JOSEFA ECHIN, Respondent.
DECISION
CARPIO MORALES, J.:
Josefina Echin (respondent) was hired by petitioner ATCI Overseas
Corporation in behalf of its principal-co-petitioner, the Ministry of
Public Health of Kuwait (the Ministry), for the position of medical
technologist under a two-year contract, denominated as a
Memorandum of Agreement (MOA), with a monthly salary of
US$1,200.00.
Under the MOA,1 all newly-hired employees undergo a probationary
period of one (1) year and are covered by Kuwait’s Civil Service
Board Employment Contract No. 2.
Respondent was deployed on February 17, 2000 but was terminated
from employment on February 11, 2001, she not having allegedly
passed the probationary period.
As the Ministry denied respondent’s request for reconsideration,
she returned to the Philippines on March 17, 2001, shouldering her
own air fare.
On July 27, 2001, respondent filed with the National Labor Relations
Commission (NLRC) a complaint2 for illegal dismissal against
petitioner ATCI as the local recruitment agency, represented by
petitioner, Amalia Ikdal (Ikdal), and the Ministry, as the foreign
principal.
By Decision3 of November 29, 2002, the Labor Arbiter, finding that
petitioners neither showed that there was just cause to warrant
respondent’s dismissal nor that she failed to qualify as a regular
employee, held that respondent was illegally dismissed and
accordingly ordered petitioners to pay her US$3,600.00,
representing her salary for the three months unexpired portion of
her contract.
On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor
Arbiter’s decision by Resolution4 of January 26, 2004. Petitioners’
motion for reconsideration having been denied by Resolution5 of
April 22, 2004, they appealed to the Court of Appeals, contending
that their principal, the Ministry, being a foreign government
agency, is immune from suit and, as such, the immunity extended to
them; and that respondent was validly dismissed for her failure to
meet the performance rating within the one-year period as required
under Kuwait’s Civil Service Laws. Petitioners further contended that
Ikdal should not be liable as an officer of petitioner ATCI.
By Decision6 of March 30, 2007, the appellate court affirmed the
NLRC Resolution.
In brushing aside petitioners’ contention that they only acted as
agent of the Ministry and that they cannot be held jointly and
solidarily liable with it, the appellate court noted that under the law,
a private employment agency shall assume all responsibilities for the
implementation of the contract of employment of an overseas
worker, hence, it can be sued jointly and severally with the foreign
principal for any violation of the recruitment agreement or contract
of employment.
As to Ikdal’s liability, the appellate court held that under Sec. 10 of
Republic Act No. 8042, the "Migrant and Overseas Filipinos’ Act of
1995," corporate officers, directors and partners of a recruitment
agency may themselves be jointly and solidarily liable with the
recruitment agency for money claims and damages awarded to
overseas workers.
Petitioners’ motion for reconsideration having been denied by the
appellate court by Resolution7 of June 27, 2007, the present petition
for review on certiorari was filed.
Petitioners maintain that they should not be held liable because
respondent’s employment contract specifically stipulates that her
employment shall be governed by the Civil Service Law and
Regulations of Kuwait. They thus conclude that it was patent error
for the labor tribunals and the appellate court to apply the Labor
Code provisions governing probationary employment in deciding the
present case.
Further, petitioners argue that even the Philippine Overseas
Employment Act (POEA) Rules relative to master employment
contracts (Part III, Sec. 2 of the POEA Rules and Regulations) accord
respect to the "customs, practices, company policies and labor laws
and legislation of the host country."
Finally, petitioners posit that assuming arguendo that Philippine
labor laws are applicable, given that the foreign principal is a
government agency which is immune from suit, as in fact it did not
sign any document agreeing to be held jointly and solidarily liable,
petitioner ATCI cannot likewise be held liable, more so since the
Ministry’s liability had not been judicially determined as jurisdiction
was not acquired over it.
The petition fails.
Petitioner ATCI, as a private recruitment agency, cannot evade
responsibility for the money claims of Overseas Filipino workers
(OFWs) which it deploys abroad by the mere expediency of claiming
that its foreign principal is a government agency clothed with
immunity from suit, or that such foreign principal’s liability must first
be established before it, as agent, can be held jointly and solidarily
liable.
In providing for the joint and solidary liability of private recruitment
agencies with their foreign principals, Republic Act No. 8042
precisely affords the OFWs with a recourse and assures them of
immediate and sufficient payment of what is due them. Skippers
United Pacific v. Maguad8 explains:
. . . [T]he obligations covenanted in the recruitment agreement
entered into by and between the local agent and its foreign
principal are not coterminous with the term of such agreement so
that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees
under the agreement do not at all end, but the same extends up to
and until the expiration of the employment contracts of the
employees recruited and employed pursuant to the said recruitment
agreement. Otherwise, this will render nugatory the very purpose
for which the law governing the employment of workers for
foreign jobs abroad was enacted. (emphasis supplied)
The imposition of joint and solidary liability is in line with the policy
of the state to protect and alleviate the plight of the working
class.9 Verily, to allow petitioners to simply invoke the immunity
from suit of its foreign principal or to wait for the judicial
determination of the foreign principal’s liability before petitioner
can be held liable renders the law on joint and solidary liability
inutile.
As to petitioners’ contentions that Philippine labor laws on
probationary employment are not applicable since it was expressly
provided in respondent’s employment contract, which she
voluntarily entered into, that the terms of her engagement shall be
governed by prevailing Kuwaiti Civil Service Laws and Regulations as
in fact POEA Rules accord respect to such rules, customs and
practices of the host country, the same was not substantiated.
Indeed, a contract freely entered into is considered the law between
the parties who can establish stipulations, clauses, terms and
conditions as they may deem convenient, including the laws which
they wish to govern their respective obligations, as long as they are
not contrary to law, morals, good customs, public order or public
policy.
It is hornbook principle, however, that the party invoking the
application of a foreign law has the burden of proving the law, under
the doctrine of processual presumption which, in this case,
petitioners failed to discharge. The Court’s ruling in EDI-Staffbuilders
Int’l., v. NLRC10 illuminates:
In the present case, the employment contract signed by Gran
specifically states that Saudi Labor Laws will govern matters not
provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the parties
(lex loci intentiones) to apply to the contract, Saudi Labor Laws
should govern all matters relating to the termination of the
employment of Gran.
In international law, the party who wants to have a foreign law
applied to a dispute or case has the burden of proving the foreign
law. The foreign law is treated as a question of fact to be properly
pleaded and proved as the judge or labor arbiter cannot take judicial
notice of a foreign law. He is presumed to know only domestic or
forum law.
Unfortunately for petitioner, it did not prove the pertinent Saudi
laws on the matter; thus, the International Law doctrine
of presumed-identity approach or processual presumption comes
into play. Where a foreign law is not pleaded or, even if pleaded, is
not proved, the presumption is that foreign law is the same as ours.
Thus, we apply Philippine labor laws in determining the issues
presented before us. (emphasis and underscoring supplied)
The Philippines does not take judicial notice of foreign laws, hence,
they must not only be alleged; they must be proven. To prove a
foreign law, the party invoking it must present a copy thereof and
comply with Sections 24 and 25 of Rule 132 of the Revised Rules of
Court which reads:
SEC. 24. Proof of official record. — The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any
purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record,
or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. If the
office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation,
consul general, consul, vice consul, or consular agent or by any
officer in the foreign service of the Philippines stationed in the
foreign country in which the record is kept, and authenticated by the
seal of his office. (emphasis supplied)
SEC. 25. What attestation of copy must state. — Whenever a copy of
a document or record is attested for the purpose of the evidence,
the attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may be.
The attestation must be under the official seal of the attesting
officer, if there be any, or if he be the clerk of a court having a seal,
under the seal of such court.
To prove the Kuwaiti law, petitioners submitted the following: MOA
between respondent and the Ministry, as represented by ATCI,
which provides that the employee is subject to a probationary
period of one (1) year and that the host country’s Civil Service Laws
and Regulations apply; a translated copy11 (Arabic to English) of the
termination letter to respondent stating that she did not pass the
probation terms, without specifying the grounds therefor, and a
translated copy of the certificate of termination,12 both of which
documents were certified by Mr. Mustapha Alawi, Head of the
Department of Foreign Affairs-Office of Consular Affairs Inslamic
Certification and Translation Unit; and respondent’s letter13 of
reconsideration to the Ministry, wherein she noted that in her first
eight (8) months of employment, she was given a rating of
"Excellent" albeit it changed due to changes in her shift of work
schedule.
These documents, whether taken singly or as a whole, do not
sufficiently prove that respondent was validly terminated as a
probationary employee under Kuwaiti civil service laws. Instead of
submitting a copy of the pertinent Kuwaiti labor laws duly
authenticated and translated by Embassy officials thereat, as
required under the Rules, what petitioners submitted were mere
certifications attesting only to the correctness of the translations
of the MOA and the termination letter which does not prove at all
that Kuwaiti civil service laws differ from Philippine laws and that
under such Kuwaiti laws, respondent was validly terminated. Thus
the subject certifications read:
xxxx
This is to certify that the herein attached translation/s from Arabic
to English/Tagalog and or vice versa was/were presented to this
Office for review and certification and the same was/were found to
be in order. This Office, however, assumes no responsibility as to
the contents of the document/s.
This certification is being issued upon request of the interested party
for whatever legal purpose it may serve. (emphasis
supplied)1avvphi1
Respecting Ikdal’s joint and solidary liability as a corporate officer,
the same is in order too following the express provision of R.A. 8042
on money claims, viz:
SEC. 10. Money Claims.—Notwithstanding any provision of law to
the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction
to hear and decide, within ninety (90) calendar days after the filing
of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual moral,
exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall be a
condition precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided by law, shall
be answerable for all money claims or damages that may be
awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as
the case may be, shall themselves be jointly and solidarily liable with
the corporation or partnership for the aforesaid claims and damages.
(emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
FACTS:
Josefina Echin was hired by petitioner ATCI Overseas Corporation in behalf of
its principal-co-petitioner, the Ministry of Public Health of Kuwait, for the
position of medical technologist under a two-year contract, denominated as
a MOA.
Under the MOA, all newly-hired employees undergo a probationary period of
one year.
Respondent was deployed on February 17, 2000 but was terminated from
employment on February 11, 2001, she not having allegedly passed the
probationary period.
Respondent filed with the NLRC a complaint for illegal dismissal against ATCI
as the local recruitment agency, represented by Amalia Ikdal, and the
Ministry, as the foreign principal.
The Labor Arbiter held that respondent was illegally dismissed and
accordingly ordered petitioners to pay her US$3,600.00, representing her
salary for the three months unexpired portion of her contract.
The NLRC affirmed the Labor Arbiter’s decision.
Petitioners appealed to the CA, contending that their principal, the Ministry,
being a foreign government agency, is immune from suit and, as such, the
immunity extended to them; and that respondent was validly dismissed for
her failure to meet the performance rating within the one-year period as
required under Kuwaits Civil Service Laws.
The CA affirmed the NLRC Resolution
ISSUE:
Whether or not petitioner is liable for the illegal dismissal of respondent.
RULING:
Petitioner ATCI, as a private recruitment agency, cannot evade responsibility
for the money claims of OFWs which it deploys abroad by the mere
expediency of claiming that its foreign principal is a government agency
clothed with immunity from suit, or that such foreign principals liability must
first be established before it, as agent, can be held jointly and solidarily
liable.
The imposition of joint and solidary liability is in line with the policy of the
state to protect and alleviate the plight of the working class. Verily, to allow
petitioners to simply invoke the immunity from suit of its foreign principal or
to wait for the judicial determination of the foreign principals liability before
petitioner can be held liable renders the law on joint and solidary liability
inutile.
As to petitioners contentions that Philippine labor laws on probationary
employment are not applicable since it was expressly provided in
respondents employment contract, which she voluntarily entered into, that
the terms of her engagement shall be governed by prevailing Kuwaiti Civil
Service Laws and Regulations as in fact POEA Rules accord respect to such
rules, customs and practices of the host country, the same was not
substantiated.
It is hornbook principle, however, that the party invoking the application of a
foreign law has the burden of proving the law, under the doctrine
of processual presumption which, in this case, petitioners failed to discharge.
The Philippines does not take judicial notice of foreign laws, hence, they
must not only be alleged; they must be proven. To prove a foreign law, the
party invoking it must present a copy thereof and comply with the Rules of
Court.
These documents submitted by petitioners do not sufficiently prove that
respondent was validly terminated as a probationary employee under
Kuwaiti civil service laws.
Respecting Ikdal’s joint and solidary liability as a corporate officer, the same
is in order too following the express provision of R.A. 8042:
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several.
This provision shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.
The petition is DENIED
November 21, 2017
G.R. No. 156208
NPC DRIVERS AND MECHANICS ASSOCIATION (NPC DAMA),
represented by its President ROGER S. SAN JUAN, SR., NPC
EMPLOYEES & WORKERS UNION (NEWU)- NORTHERN LUZON,
REGIONAL CENTER, represented by its Regional President JIMMY
D. SALMAN, in their own individual capacities and in behalf of the
members of the associations and all affected officers and
employees of National Power Corporation (NPC), ZOL D. MEDINA,
NARCISO M. MAGANTE, VICENTE B. CIRIO, JR., NECITAS B.
CAMAMA, in their individual capacities as employees of National
Power Corporation, Petitioners
vs.
THE NATIONAL POWER CORPORATION (NPC), NATIONAL POWER
BOARD OF DIRECTORS (NPB), JOSE ISIDRO N. CAMACHO as
Chairman of the National Power Board of . Directors (NPB),
ROLANDO S. QUILALA, as President-Officer-in-Charge/CEO of
National Power Corporation and Member of National Power
Board, and VINCENT S. PEREZ, JR., EMILIA T. BONCODIN, MARIUS
P. CORPUS, RUBEN S. REINOSO, JR., GREGORY L. DOMINGO and
NIEVES L. OSORIO, Respondents
RESOLUTION
LEONARDO-DE CASTRO, J.:
For resolution are the following motions filed subsequent to the
entry in the Book of Entries of the Judgment of the Court's decision
in the above-entitled case: (a) the National Power Corporation
(NPC)'s Manifestation and Motion dated August 22, 2014; (b) Power
Sector Assets and Liabilities Management Corporation (PSALM)' s
Omnibus Motion dated August 22, 2015; (c) the petitioners' Motion
to Expunge dated September 1, 2014; and (d) Meralco's Special
Appearance with Urgent Motion for Clarification dated September 4,
2014.
Antecedent Facts
The Electric Power Industry Reform Act (EPIRA)1 was enacted to
ordain reforms in the electric power industry, including the
privatization of the assets and liabilities of the NPC. Pursuant to this
objective, the said law created the National Power Board (NPB)
consisting of nine (9) heads of agencies as members, to wit: (a)
Secretary of Finance, (b) Secretary of Energy, (c) Secretary of Budget
and Management, (d) Secretary of Agriculture, (e) Director-General
of the National Economic and Development Authority, (f) Secretary
of Environment and Natural Resources, (g) Secretary of the Interior
and Local Government, (h) Secretary of the Department of Trade
and Industry, and (i) President of the NPC.2
In line with NPC's privatization, the EPIRA also called for the NPC's
restructuring. In this regard, the NPB passed NPB Resolution Nos.
2002- 124 and 2002-125 directing the termination from service of all
NPC employees effective January 31, 2003. The restructuring plan
covered even "Early-leavers" or those who: (a) did not intend to be
rehired by NPC based on the new organizational structure, or (b)
were no longer employed by NPC after June 26, 2001, the date of
the EPIRA's effectivity, for any reason other than voluntary
resignation.3
The Main Decision
In Our Decision4 dated September 26, 2006, we ruled that the
abovementioned resolutions were void and without effect. These
were not passed by a majority of NPB's members, as only three out
of nine members voted. The other four signatories to the resolutions
were not members of the Board. They were merely representatives
of those actually named under the EPIRA to sit as members of the
NPB. Thus, their votes did not count.
Clarifiying the Main Decision
Subsequently, We clarified the effect of Our Decision in our
Resolution dated September 17, 2008 to wit:
1. The Court's Decision does not preclude the NPB from passing
another resolution, in accord with law and jurisprudence, approving
a new separation program from its employees.
2. The termination of the petitioners' employment on January 31,
2003 was illegal.
3. Due to the illegal dismissal, as a general rule, the petitioners are
entitled to reinstatement. However, reinstatement has become
impossible because NPC was still able to proceed with its
reorganization prior to the promulgation of the Decision dated
September 26, 2006.
4. Thus, the petitioners are entitled to the following:
a. Separation pay in lieu of reinstatement, based on a validly
approved separation program of the NPC; and
b. Back wages together with wage adjustments and all other
benefits which they would have received had it not been for the
illegal dismissal, computed from January 31, 2003 until actual
reinstatement or payment of separation pay.
5. However, any amount of separation benefits already received by
the petitioners under NPB Resolution Nos. 2002-124 and 2002-125
shall be deducted from their total entitlement.
We also approved a 10% charging lien in favor of the petitioners'
counsels, Attys. Aldon and Orocio, in accordance with the Labor
Code which limits attorney's fees in illegal dismissal cases (in the
private sector) to 10% of the recovered amount.
Finally, We deferred the computation of the actual amounts due the
petitioners and the enforcement of payment thereof by execution to
the proper forum, as this Court is not a trier of facts. We held that
this Court is not equipped to receive evidence and determine the
truth of the factual allegations of the parties on this matter.
NPB Ratifies NPB Resolution Nos. 2002-124 and 2002-125
In the meantime, on September 14, 2007, the NPB issued Resolution
No. 2007-55, which adopted, confirmed, and approved the
principles and guidelines enunciated in NPB Resolution Nos. 2002-
124 and 2002-125.
Entry of Judgment
Our Decision dated September 26, 2006 became final and
executory on October 10, 2008. The entry of judgmentthereof was
made on October 27, 2008. Thus, in Our Resolution dated
December 10, 2008, we granted the petitioners' motion for
execution. We directed the Chairman and Members of the NPB and
the President of NPC (NPB/NPC) to prepare a verified list of the
names of all NPC employees terminated/separated as a result of
NPB Resolution Nos. 2002-124 and 2002-125, and the amounts due
to each of them, including 12% legal interest. We also directed the
Office of the Clerk of Court and ex-officio Sheriff of the Regional Trial
Court (RTC) of Quezon City to: a) issue a writ of execution based on
the list submitted by the NPC, and b) undertake all necessary actions
to execute the herein decision and resolution.
The petitioners sought to cite the NPB/NPC for contempt for its
alleged failure to comply with the Court's directive. They also
insisted for the garnishment and/or levy of NPC's assets, including
those of PSALM, for the satisfaction of the judgment.
The NPC countered that there were actually only 16 NPC personnel
terminated on January 31, 2003. Also, the issuance of NPB
Resolution No. 2007-55 cured the infirm NPB Resolution Nos. 2002-
124 and 2002-125. Thus, the termination on January 31, 2003 was
valid and legal.
Extent of Illegal Dismissal and
PSALM's Liability
In our Resolution dated December 2, 2009, We held that Our
previous rulings contemplated the illegal dismissal of all NPC
employees pursuant to NPB Resolution Nos. 2002-124 and 2002-
125, not just 16. Based on NPC Circular No. 2003-09, the
terminations were implemented in four (4) tranches, viz.: (a) Top
executives - effective January 31, 2003; (b) Early-leavers - effective
January 15, 2003; (c) Those no longer employed in the NPC after
June 26, 2001 - effective on the date of actual separation; and (d) All
other personnel - effective February 28, 2003.
We ruled further that the issuance of NPB Resolution No. 2007-55
on September 14, 2007 only means that the services of all NPC
employees have been legally terminated on this date. Thus, the
petitioners' entitlement (i.e., separation pay in lieu of reinstatement
plus back wages less benefits already received) shall be reckoned
from the above-mentioned dates (instead of just January 31, 2003)
up to September 14, 2007.
Lastly, We held that PSALM's assets may be subject of the execution
of this case.1awp++i1 We explained that under the EPIRA, PSALM
shall assume all of NPC's existing generation assets, liabilities, IPP
contracts, real estate, and other disposable assets. It would be
unfair and unjust if PSALM gets nearly all of NPC's assets but will not
pay for liabilities incurred by NPC during the privatization stage.
Further, there was a transfer of interest over these assets by
operation of law. These properties may be used to satisfy the
judgment.5
Our Jurisdiction, Legal Interest, and
NPB Resolution No. 2007-55's Non-
Retroactivity
In our Resolution dated June 30, 2014, we emphasized that by virtue
of Section 78 of the EPIRA, We have jurisdiction to rule on the issue
of the illegal termination of NPC employees. Also, since Our Decision
dated September 26, 2006 and Resolution dated September 17,
2008 have already become final and executory, NPC is barred by the
principles of estoppel and finality of judgments from raising
arguments aimed at modifying Our final rulings.
Further, we held that Our Resolution dated September 17, 2008 did
not grant additional reliefs. It merely clarified the Decision dated
September 26, 2006.
On the other hand, we also ruled that Our Resolution dated
December 10, 2008 did not exceed the terms of the Resolution
dated September 17, 2008 (inasmuch as it also awarded interest).
Legal interest on the judgment debt shall be computed as follows:
1. 12% from October 10, 2008 (finality of the Decision dated
September 26, 2006) until June 30, 2013; and
2. 6% from July 1, 2013 (effectivity of Central Bank Circular No. 799)
onwards.
As for NPB Resolution No. 2007-55, We pointed out that it did not
affect our final rulings as the said resolution shall be
applied prospectively (September 14, 2007 onwards).
We continued to explain PSALM's liability in this case. Pursuant to
Sections 47, 49, 50, and 55 of the EPIRA, PSALM assumed NPC's
liabilities existing at the time of the EPIRA's effectivity, including the
separation benefits due to the petitioners.
Finally, We found the NPC and Office of the Solicitor General (OSG)
guilty of indirect contempt due to their noncompliance with our
final orders. The parties were ordered to pay a fine of ₱30,000.00
each.
Implementation and Execution of
the Court's Main Decision and
Resolutions
Pursuant to Our Resolution dated June 30, 2014, the RTC Clerk of
Court and Ex-Officio Sheriff issued a Demand for Immediate
Payment dated July 28, 2014 and served the same upon the NPC and
PSALM. The demand amounted to ₱62,051,646,567.13 broken down
as follows:
Judgment amount,6 inclusive of 10%
₱60,244,316,841.88
charging lien
Lawful fees and costs of execution 1,807,329 ,725.25
Total amount demanded ₱62,051,646,567.13
A few days later, in a letter dated July 31, 2014, the R TC Clerk of
Court and Ex-Officio Sheriff asked the Court to clarify the effects of
our Resolution dated June 30, 2014, specifically whether the
judgment may already be executed. In response, some of the
petitioners, as represented by Attys. Aldon and Orocio, also wrote a
letter dated August 5, 2014 to request the Court to immediately act
on this matter.
Before the Court could act on the above-mentioned
correspondences, the RTC Clerk of Court and ex-officio Sheriff issued
Notices of Garnishment addressed to the Manila Electric Company
(Meralco), and National Transmission Commission (Transco)7 with
respect to all credits in or under their possession or control owing or
payable to NPC and/or PSALM, including but not limited to bank
deposits and financial interests, goods, effects, stocks, interest in
stock and shares, and any other personal properties. Another Notice
of Garnishment was also served upon Land Bank of the Philippines
(Landbank) in relation to NPC and PSALM's bank accounts. 8
In separate letters, PSALM, through its president and chief executive
officer Emmanuel R. Ledesma, Jr., advised Meralco and Transco to
"exercise restraint and refrain from improvidently releasing funds"
owing to PSALM to satisfy the Notices of Garnishment served upon
them.
NPC Employees List Requirement
and Suspension of Execution
In Our Resolution dated September 9, 2014, the Court directed the
parties to submit their separate lists of NPC employees as of January
31, 2002, showing the following data:
i. The full name;
ii. Date of hire;
iii. Last date of uninterrupted service after date of hire;
iv. Position, and salary as of last date of service; and
v. If termination or separation pay has been received at any time
from NPC, the amount of termination or separation pay received
and date of receipt.
Further, We directed the RTC Clerk of Court and Ex-Officio Sheriff:
(a) to defer the implementation of the Main Decision and the
Resolutions dated September 17, 2008, December 2, 2009, and June
30, 2014 while We consider the submissions now before Us and until
further notice; and (b) lift the Notice of Garnishment dated August
14, 2014.
Subsequently, in Our Resolution dated October 20, 2014, we
modified the terms of Our Resolution dated September 9, 2014 and
required a more detailed list as follows:
a. Employee's full name;
b. Date of hire;
c. Position as of date of hire;
d. Date of actual termination under NPB Resolution Nos. 2002-124
and 2002-125;
e. Position as of date of actual termination under NPB Resolution
Nos. 2002-124 and 2002-125;
f. Salary as of last date of actual termination;
g. Separation pay that the employee is entitled to under the
approved separation pay program;
h. Date of receipt of separation pay;
1. Amount of separation pay received;
j. Wage adjustments and other benefits that the employee is entitled
to from the date of actual termination until September 14, 2007;
k. Wage adjustments and other benefits that the employee has
received from the date of actual termination until September 14,
2007;
l. Date of re-hire by the NPC, the PSALM, or the TRANSCO, if any;
m. Position as of date of re-hire by the NPC, the PSALM, or the
TRANSCO, if any;
n. Salary as of date of re-hire by the NPC, the PSALM, or the
TRANSCO, if any;
o. Subsequent position/s in the NPC, the PSALM, or the TRANSCO as
a result of personnel actions after the date of re-hire;
p. Date of release of appointment papers in the subsequent
position/s;
q. Salary in the subsequent position/s;
r. Date of actual termination in the NPC, the PSALM, or the
TRANSCO, if any;
s. Separation pay that the employee is entitled to under the
approved separation pay program;
t. Amount of separation pay received;
u. Date of receipt of separation pay.9
The NPC and PSALM submitted their compliance to our Resolution
dated October 20, 2014.
The NPC submitted a list of 9,272 employees, including details
required by our Resolution dated October 20, 2014, through their
Compliance Ad Cautelam dated March 16, 2015. However, it made
the following reservations:
1. Its submission should not prejudice the reliefs prayed for in NPC's
Manifestation and Motion dated August 22, 2014.
2. The figures in the submission are necessarily indeterminate
because they are subject to the final outcome of disallowance
proceedings under the Commission on Audit and a pending case
before the RTC (Case No. R-QZN-15-01290 CV) based on their lack of
appropriation cover.
On the other hand, PSALM' s submission was partially based on the
information it received from NPC, the custodian of personnel
records, which considered 47 former NPC employees. PSALM points
out that it is unable to provide complete information.
It argues that assuming that it is liable, the affected NPC employees
have already been paid separation benefits pursuant to Rule 33 of
the EPIRA Implementing Rules.
Motions Pending Resolution
The motions that remain pending before Us (after the Resolution
dated June 30, 2014) are as follows: (a) the NPC's Manifestation and
Motion dated August 22, 2014; (b) PSALM's Omnibus Motion dated
August 22, 2015; (c) the petitioners' Motion to Expunge dated
September 1, 2014; and (d) Meralco's Special Appearance with
Urgent Motion for Clarification dated September 4, 2014.
The NPC's Manifestation and
Motion dated August 22, 2014
The NPC argues as follows:
1. The subject matter of the case has a huge financial impact, which
must be decided en banc.
PSALM echoes this view.10 It further claims that two divisions of the
Court have given conflicting decisions-while one has ruled that
PSALM is an indispensable party, the other considered them as a
necessary party. Thus, in PSALM's view, to remedy the seeming
conflict between the two rulings, the present case must be referred
to the Court en banc.
In Our Resolution dated September 9, 2014, we deferred the
resolution of this matter pending full consideration of other
remaining motions submitted by the parties.
2. The Supreme Court has no jurisdiction over illegal dismissal cases
of NPC employees. Jurisdiction is vested with the Civil Service
Commission (CSC).
3. Department secretaries may vote through representatives.
4. In the absence of an actual computation of the amounts due to
the petitioners, the RTC Clerk of Court and Ex-Officio sheriff of
Quezon City cannot garnish NPC's properties. The Court's delegation
of authority must first be raffled to an RTC judge for proper
determination pursuant to the Court's Resolution dated June 30,
2014.
PSALM's Omnibus Motion dated
August 22, 201511
PSALM maintains that it should be absolved from any liability in this
case due to the following reasons:
1. PSALM shall only be liable for obligations/liabilities that were
exclusively listed under the EPIRA, to wit: (1) NPC liabilities
transferred to PSALM, (2) transfers from the national government,
(3) new loans, and (4) NPC stranded contract costs.12 Thus, despite
the privatization of NPC's assets, NPC remained as separate and
distinct from PSALM. It is capable of fulfilling its own obligations that
were not assumed by PSALM.
2. The obligation to pay separation benefits was not among the
liabilities assumed by PSALM because it arose only after the EPIRA
took effect.13
a. Under Section 49 of the EPIRA, PSALM shall be liable only for
NPC's selected outstanding obligations. The obligation to pay
separation benefits in the present case was not an outstanding
obligation assumed by PSALM because, at the time of the EPIRA's
passage, the obligation did not yet exist nor did it arise from any
loan, bond issuance, security and other instrument indebtedness.14
b. The obligation to pay the separation benefits in the present case
only arose after the EPIRA took effect. Only NPC liabilities existing
during the effectivity of the EPIRA were transferred to PSALM. Such
transfer could not have included even NPC liabilities incurred after
the EPIRA took effect.
3. NPC remains to be solely liable for the payment of separation
benefits in this case.
a. Separation benefits as a result of the privatization of NPC are
governed by Section 63 of the EPIRA and Rule 33 of its Implementing
Rules.
b. Under Section 4, Rule 33 of the Implementing Rules, funds
necessary to cover the payment of separation pay shall be provided
by either the GSIS or from the corporate funds of the NEA or the
NPC, as the case may be. The Buyer or Concessionaire or the
successor company shall not be liable for the payment thereof.
c. There is no basis to hold PSALM liable. The IRR clearly mandates
that the payment of separation pay in favor of displaced NPC
employees shall be out of NPC's own corporate funds.
4. If PSALM is at all liable, its liability is limited to the separation pay
of NPC employees terminated pursuant to a valid separation plan.
PSALM cannot be held liable for separation pay arising from a
separation/restructuring plan that was tainted with irregularities
and bad faith. If the law had intended PSALM to assume even the
obligation to pay separation pay, the same would have been clear
and categorical.15
However, in PSALM's Supplement to the Compliance dated October
27, 2014,16 it argues that the separation program was effected
through valid board actions. The laws applicable to government
corporations like NPC recognize the validity of designating alternates
to sit as members of the governing boards.
Further, based on the Congressional deliberations leading to the
EPIRA's enactment, the legislature intended to limit NPC liabilities to
be transferred and assumed by PSALM only to NPC debts arising
from direct contractual obligations with banking and multilateral
financial institutions.17
5. Its right to due process was violated when it was declared as a
mere necessary party to the case.
6. In keeping with PSALM's right to due process, the Notices of
Garnishment issued to it by the Regional Trial Court, Quezon City,
Clerk of Court should be quashed for being fatally defective.
7. Prior approval by the Commission on Audit (COA) must first be
obtained before any money judgment can be enforced against
PSALM.
On the other hand, the petitioners counter that while government
funds are generally not subject to execution, this rule admits of
exceptions.18 Relying on National Housing Authority v. Heirs of Isidro
Guivelondo,19 they argue that funds belonging to a public
corporation or a government-owned or controlled corporation like
PSALM, which is clothed with its own personality, separate, and
distinct from that of the government are not exempt .from
garnishment.20
Petitioners' Motion to Expunge
dated September 1, 2014
The petitioners argue that the NPC's Manifestation and Motion
dated August 22, 2014 and PSALM's Omnibus Motion dated August
22, 2015 violate the prohibition against the filing of a second motion
for reconsideration. In their view, the arguments raised in these
motions are mere rehashes of issues already resolved and disposed
of by the Court. Thus, the petitioners request that these motions be
denied and excluded from the records of the case altogether.
Meralco's Special Appearance with
Urgent Motion for Clarification
dated September 4, 2014
Meralco filed its Special Appearance before the Court in view of: (a)
the Notice of Garnishment dated August 14, 2014 served by the RTC
Clerk of Court and Ex-Officio Sheriff garnishing all credits owing to
PSALM but in and under Meralco's possession and control; and (b)
PSALM's letter of even date cautioning Meralco to exercise restraint
and refrain from releasing funds due to PSALM but still in its
(Meralco) possession.
Meralco manifests to the Court the following:
1. In response to the Notice of Garnishment, it filed a Compliance
and Manifestation dated August 19, 2014. Meralco informed the
RTC Clerk of Court and Ex-Officio Sheriff that it is ready and willing to
comply with the RTC's directives and processes. However, there are
serious repercussions that may arise due to the garnishment of
PSALM's credits (i.e.,suspension and/or nonpayment/-fulfillment of
reciprocal obligations between PSALM and Meralco, possible breach
of contract on Meralco's part, etc.). Thus, the parties must first
clarify these matters with and seek guidance from the Court.
2. Meralco also asserts that its regular remittances to PSALM may be
any one of three types, to wit: (a) universal charges for: 1) NPC's
stranded contract costs, 2) missionary electrification, and 3)
environmental charges; (b) line rental costs for energy purchases of
Sunpower Philippines Manufacturing Limited (Sunpower); and
(c) deferred accounting adjustments - generation rate adjustment
mechanism (DAA-GRAM).
It discusses each type of remittance as follows:
a. Universal charges are collected by Meralco and remitted to
PSALM by virtue of several Energy Regulatory Commission (ERC)
rulings.21 In accordance with the EPIRA, upon remittance, PSALM will
then place the amounts received in a Special Trust Fund (STF), which
shall be disbursed for purposes specified in Section 34 of the
EPIRA22 and in favor of identified beneficiaries. Meralco claims that
the judgment obligation in the present case has not been included in
the previous filings of the NPC/PSALM for the recovery of any
component of universal charge.
b. Line rental cost is an amount billed by the Philippine Electricity
Market Corporation (PMC) to buyers of electricity covered by
bilateral contracts to account for the cost of energy lost in the
process of delivering contracted energy volumes from a generator's
plant to the buyers. Sunpower is one of the said buyers of electricity.
There is a special arrangement with regard to the line rental cost
attributable to Sunpower where, instead of billing Sunpower
directly, PMC bills PSALM, which in turn bills Meralco. Meralco then
has the duty to collect the amount from Sunpower. Upon collection,
Meralco shall remit the amount to PSALM, which will ultimately be
remitted to PMC. Thus, while the amounts of line rental cost will be
initially remitted to PSALM, the latter does not own the same nor
will it accrue in its favor.
c. DAA-GRAM is a means approved by the ERC allowing the NPC to
recover the difference between the allowable fuel and purchased
power costs and the amounts recovered under the basic generation
charge for the period from January 2007 to April 2010. Meralco shall
collect the DAA-GRAM from the end users and remit the same in
favor of the NPC. Stated differently, it is a pass-through charge.
Meralco points out that since the Notice of Garnishment covers all
credits owing to PSALMINPC, it is thus being required to withhold all
the above-mentioned remittances. However, the law sets aside
these collections for specific purposes. There is also an established
process before Meralco can collect these amounts from its
customers.23
Finally, Meralco avers that it is not in a position to determine the
validity of the Notice of Garnishment or whether the amounts in its
possession and owing to PSALM are proper subjects of the
garnishment. It is not even a party to the present case. Thus,
Meralco has come before the Court to clarify: (a) whether the
amounts in its possession pertaining to universal charges, line rental
cost, and DAA-GRAM may be garnished in satisfaction of the
judgment obligation in the present case, and (b) whether separation
benefits may be recovered as part of the universal charge.
In its comment to Meralco's Special Appearance,24 PSALM maintains
that separation benefits are not recoverable from collections of
universal charges. Section 34 of the EPIRA clearly enumerates the
purposes by which the proceeds from these charges may be
disbursed. The judgment obligation in the present case not being
one of these purposes, the garnishment of the universal charges in
the custody of the Meralco and payable to PSALM violates the
EPIRA.
PSALM adds that amounts pertaining to universal charges, line
rental cost, and DAA-GRAM are not NPC assets. These are exactions
authorized by law for a specific purpose and, thus, cannot be
garnished.
On the other hand, the petitioners aver that the amounts pertaining
to the universal charge may be garnished.
Issues
Based on the parties' submissions, the issues now before Us are as
follows:
1. May PSALM be held directly liable for the judgment debt?
2. Can the RTC Clerk of Court and Ex-Officio Sheriff immediately and
directly proceed with the garnishment or levy of NPC assets?
3. What is the formula to compute the petitioners' entitlement?
The Court's Ruling
At the onset, We emphasize that most of the matters raised by
respondents NPC and PSALM in their respective submissions have
already been ruled upon by the Court and have since attained
finality, i.e., (a) NPB Resolution Nos. 2002-124 and 2002-125 are void
and without legal effect; (b) As a result, the petitioners were illegally
dismissed; (c) As illegally dismissed employees, they are entitled to
separation pay in lieu of reinstatement, back wages, and other wage
adjustments, but after deduction of the separation pay they already
received under the restructuring plan; and (d) Counsels for the
petitioners are entitled to a 10% charging lien.
Thus, this resolution shall address only the new matters raised in the
above-mentioned pending motions.
First, We affirm Our Resolution dated June 30, 2014 that PSALM is
directly liable for the judgment obligation. While the general rule is
that the NPC, as the employer guilty of illegal dismissal, shall be
liable for the petitioners' entitlement, PSALM assumed this
obligation. PSALM's assumption is clear based on the following
reasons: (a) the subject liability was already existing at the time of
the EPIRA's effectivity and was transferred from NPC to PSALM by
virtue of Section 49 of the law; (b) the subject liability is a
"Transferred Obligation" as defined under the Deed of Transfer; and
(c) under the EPIRA, PSALM is duty-bound to settle this liability.
Second, while PSALM is directly liable for the payment of the
petitioners' entitlement, We direct the petitioners to follow the
proper procedure to enforce a judgment award against the
government. We have consistently ruled that the back payment of
any compensation to public officers and employees cannot be done
through a writ of execution.25 The COA has exclusive jurisdiction to
settle "all debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies, and
instrumentalities."26 The proper procedure to enforce a judgment
award against the government is to file a separate action before the
COA for its satisfaction.27
Third, as a matter of prudence, We also propose guidelines that shall
aid the COA in determining, re-computing, and validating the
amount due to the petitioners.
The petitioners' entitlement shall be computed based on the
following general formula: Separation pay in lieu of reinstatement
plus back wages plus other wage adjustments minus separation pay
already received under the plan.28
On the other hand, the attorney's charging lien shall be 10% of the
petitioners' entitlement, after deducting the separation pay already
received by the petitioners under the restructuring plan.
Lastly, aside from the petitioners' entitlement, illegally dismissed
employees are entitled to interest at the legal rate.29The payment of
legal interest is a "natural consequence of a final
judgment."30 Interest on the judgment award shall be computed as
follows: (1) 12% per annum from October 8, 2008,31 until June 30,
2013; and (2) 6% per annum from July 1, 2013 onwards.
Issues Already Resolved with
Finality
Before proceeding to the above-mentioned issues, We observe that
the NPC and PSALM have, up to this point, repeatedly and
continuously defended the validity of NPB Resolution Nos. 2002-124
and 2002-125, as well as the resulting separation of NPC employees.
To recall, Our Main Decision dated September 26, 2006 and
Resolution dated September 17, 2008 have already been entered in
the Book of Entries of Judgment.32 Thus, as we ruled in Our
Resolution dated June 30, 2014, it is clear that these rulings have
become final and executory.
For emphasis, the matters resolved by the Court in these rulings are
as follows:
ILLEGAL DISMISSAL
1. NPB Resolution Nos. 2002-124 and 2002-125 are void and without
legal effect (Main Decision).
2. The logical and necessary consequences (Resolution dated
September 17, 2008) of these invalid resolutions are as follows:
a. The terminations pursuant to these resolutions were illegal
dismissals.
i. This contemplates the illegal dismissal of all NPC employees, not
just 16 employees, who were dismissed on different dates pursuant
to the NPC restructuring (Resolutions dated December 2, 2009 and
June 30, 2014).
b. Reinstatement has become impossible.
c. Those illegally dismissed are entitled to: separation pay in lieu of
reinstatement plus back wages lessbenefits already received under
the approved separation program (Petitioners' entitlement).
3. The issuance of NPB Resolution No. 2007-55 on September 14,
2007 only means that the services of all NPC employees have
been legally terminated on this date (Resolution dated December 2,
2009). It shall be applied prospectively (Resolution dated June 30,
2014).
CHARGING LIEN
4. Attys. Aldon and Orocio are entitled to a 10% charging
lien (Resolution dated September 17, 2008).
The basic rule is that a judgment that has lapsed into finality is
immutable and unalterable.33 Thus, the matters that have already
been resolved in the Main Decision and Resolution dated September
17, 2008 should no longer be disturbed.
The respondents' persistence to overturn an unfavorable but final
judgment is exactly what the rule on immutability of judgments
seeks to address. A losing party cannot endlessly evade an obligation
by filing appeal after appeal. Nor can a winning party continuously
demand for more than what has been adjudged in his favor by
asking the court to repeatedly reconsider his/her claims. There must
be an end to litigation. Controversies cannot drag on indefinitely
because fundamental considerations of public policy and sound
practice demand that the rights and obligations of every litigant
must not hang in suspense for an indefinite period of time.34
The NPC and OSG's mistaken belief that they could repeatedly raise
the same defenses in the hopes of securing a judgment in their favor
has even led the Court to find them guilty of indirect contempt after
they refused to comply with Our Resolution dated December 8,
2008.
The Court En Banc properly resolved
to accept the case
Both respondents request that the present case be resolved by the
Court en bane. While the NPC grounds its request on the subject
matter's sizeable financial impact, PSALM claims that there are
conflicting rulings that may only be resolved by the Court sitting en
banc.
We agree with the NPC.
Verily, the Court has already struck down similar requests made
previously by the NPC.35 However, the following must be
considered:
1. Based on the list submitted by the NPC36 pursuant to Our
Resolution dated October 20, 2014, a total of 9,272 former NPC
employees stand to benefit from the judgment award.
2. The NPC has estimated that these employees may be entitled
to separation pay amounting to at
least ₱7,311,084,851.79. However, this amount still does not
include:
a. Back wages and other wage adjustments, and
b. Legal interest on the judgment debt, which started to accrue as
early as October 10, 2008-the date when the Main Decision became
final-and has continued to run to this day, almost a decade after.
From these, it is clear that the present case's subject matter will
have a huge financial impact on the NPC and/or PSALM, both of
which play major parts in the country's electric power industry.
Thus, a decision that may greatly affect the operations of these
entities may, in turn, also affect the rendition of their services to the
general public.
Cases of this nature are cognizable by the Court en bane, as
provided in Rule 2, Section 3(k) of Our Internal Rules, viz.:
SEC. 3. Court en bane matters and cases. -The Court en bane shall
act on the following matters and cases:
xxxx
(k) Division cases where the subject matter has a huge financial
impact on businesses or affects the welfare of a community[.]
Matters Pending Court's Resolution
I. PSALM is directly liable for
the judgment obligation
In Our Resolution dated June 30, 2014, we held that the separation
benefits in the present case were NPC's "existing liability" at the
time of the EPIRA's enactment and, thus, the same was transferred
to PSALM. We explained:
The separation of NPC employees affected by its reorganization and
privatization was a foregone conclusion. In recognition of this, the
EPIRA gave the assurance that these employees shall receive the
separation pay and other benefits due them under existing laws,
rules or regulations or be able to avail of the privileges under a
separation plan which shall be one and one-half month salary for
every year of service in the government. The employees' separation
being an unavoidable consequence of the mandated restructuring
and privatization of the NPC, the liability to pay for their separation
benefits should be deemed existing as of the EPIRA's effectivity, and
were thus transferred to PSALM pursuant to Section 49 of the law.37
In its Omnibus Motion dated August 22, 2015,38 PSALM denies this
liability by arguing as follows: (a) The liability to pay the separation
benefits only arose after the effectivity of the EPIRA, (b) It was not
among the obligations exclusively listed under the EPIRA for which
PSALM shall be liable; and (c) NPC remains to be solely liable.
We disagree with PSALM.
The Court already held that herein petitioners are entitled to
separation pay in lieu of reinstatement, plus back wages and other
wage adjustments, less separation pay already received by virtue of
the restructuring plan because they were illegally dismissed. Thus, to
clarify, the liability is not limited just to separation pay but to the full
entitlement of an illegally terminated employee, as We will further
qualify below.
A. The General Rule
The settled rule is that an employer who terminates the
employment of its employees without lawful cause or due process
of law is liable for illegal dismissal.39
When the EPIRA mandated the NPC's privatization, it directed the
sale, disposition, change and transfer of ownership and control of
NPC's assets and IPP contracts40 for the purpose of pooling funds to
liquidate NPC's liabilities. This transaction is akin to an asset sale-
type corporate acquisition in the law of mergers and acquisitions
where one entity-the seller-sells all or substantially all of its assets to
another-the buyer.41
In SME Bank, Inc. v. De Guzman,42 we held that the rule in asset sales
is that the employees may be separated from their employment, but
the seller is liable for the payment of separation pay; on the other
hand, the buyer in good faith is not required to retain the affected
employees in its service, nor is it liable for the payment of their
claims.
This is consistent with Our ruling in Sundowner Development
Corporation v. Drilon,43 that unless expressly assumed, labor
contracts such as employment contracts and collective bargaining
agreements are not enforceable against a buyer of an enterprise,
labor contracts being in personam, thus binding only between the
seller-employer and its employees.
Following these rules, the NPC, as employer, is liable for the illegal
dismissal and, in effect, the payment of the petitioners' entitlement.
B. The Exceptions
There are however recognized exceptions to the general rule, where
the employer's liability for the separation of its employees is
nonetheless devolved upon the transferee of the employer's assets.
1. The transferee acknowledges the
contractual obligation to be liable
for separation pay
In Republic v. National Labor Relations Commission,44 the
government acquired Bicolandia Sugar Development Corporation
(Bisudeco)'s assets and identified the same for privatization.
Pursuant to the privatization, the assets were transferred to the
Asset Privatization Trust (APT) for conservation, provisional
management, and disposal. We recognized that, as a mere
transferee/conservator of Bisudeco's assets, the APT did not
substitute Bisudeco as employer. The transfer was not for the
purpose of continuing the latter's business. However, We found that
the APT issued a resolution authorizing the payment of the Bisudeco
employees' separation benefits. Thus, through the resolution, the
APT acknowledged its contractual obligation to be liable for benefits
arising from an employer-employee relationship even though, as a
mere conservator of assets, it was not supposed to be liable.
2. The transferee assumes the
obligation through a transfer
document
On the other hand, in Bank of the Philippine Islands v. BPI Employees
Union-Davao Chapter-Federation of Unions in BPI
Unibank,45 pursuant to a corporate merger, the assets and liabilities
of Far East Bank & Trust Company, the absorbed corporation, were
transferred to the Bank of the Philippine Islands (BPI), the surviving
entity. We recognized that employment is a personal consensual
contract. Thus, in mergers, the absorbed corporation's employment
contractsare not automatically absorbed by the surviving entity.
However, the liability for separation and other benefits due to the
absorbed corporation's former employees can be transferred to the
surviving entity if the latter clearly assumed the obligation pursuant
to the articles of merger.
C. The Present Case Falls
Within the Exceptions
We reiterate Our finding in Our Resolution dated June 30, 2014 that,
upon the NPC's privatization, PSALM assumed all of its liabilities,
including the separation benefits due to the petitioners.
That PSALM assumed the NPC’s liability to pay these separation
benefits is clear based on the following reasons: (1) The liability was
already existing at the time of the EPIRA's effectivity and was
transferred from NPC to PSALM by virtue of Section 49 of the law;
(2) It is a "Transferred Obligation" as defined under the Deed of
Transfer; and (3) Under the EPIRA, PSALM is duty-bound to settle
the subject liability.
1. The subject liability was existing
at the time of the EPIRA's
effectivity and was transferred
from NPC to PSALM by virtue of
Section 49 of the law
The EPIRA provides:
SECTION 49. Creation of Power Sector Assets and Liabilities
Management Corporation. - There is hereby created a government-
owned and -controlled corporation to be known as the "Power
Sector Assets and Liabilities Management Corporation," hereinafter
referred to as the "PSALM Corp.," which shall take ownership of
all existing NPC generation assets, liabilities, IPP contracts, real
estate and all other disposable assets. All outstanding obligations of
the NPC arising from loans, issuances of bonds, securities and other
instruments of indebtedness shall be transferred to and assumed by
the PSALM Corp. within one hundred eighty (180) days from the
approval of this Act. (Emphasis supplied.
In Our Resolution dated June 30, 2014, the Court explained that the
term "existing" in Section 49 qualified "liabilities" to mean that only
those liabilities existing at the time of the EPIRA's effectivity were
subject of the transfer.
Verily, the liability (to pay separation benefits) here arose due to the
petitioners' illegal dismissal. However, the separation from
employment per se took place only pursuant to the EPIRA's mandate
on NPC's privatization and restructuring, except that its
implementation through NPB Resolution Nos. 2002-124 and 2002-
125 was later on invalidated.
Stated differently, since the EPIRA mandated the NPC's privatization
and subsequent restructuring, the law, when it took effect on June
26, 2001, had already contemplated the termination of all NPC
employees as a logical effect of its mandate. To be sure, the liability
to pay the full entitlement arising from the employees' separation is
deemed to have existed upon the EPIRA's effectivity.
Thus, PSALM assumed the liability to pay the petitioners' full
entitlement in the present case because: (a) Section 49 of the EPIRA
mandated the transfer of all existing NPC liabilities to PSALM, and
(b) Such liability was already existing at the time of the EPIRA's
effectivity.
2. The subject liability is a
"Transferred Obligation" as
defined under the Deed of
Transfer
Under the EPIRA, following are valid claims against PSALM:
SECTION 56. Claims Against the PSALM Corp. - The following shall
constitute the claims against the PSALM Corp.:
(a) NPC liabilities transferred to the PSALM Corp.;
(b) Transfers from the National Government;
(c) New Loans; and
(d) NPC stranded contract costs. (Emphasis supplied.)
In the Deed of Transfer46 executed between them, the NPC and
PSALM laid out the scope of the term "liabilities transferred" by
differentiating their responsibilities over "Transferred Obligations"
and "Contingent Liabilities."
On the one hand, PSALM assumed all of NPC's Transferred
Obligations, which included all other liabilities and obligations of the
NPC: (a) mandated by the EPIRA to be transferred to PSALM, and (b)
which have been validated, fixed and finally determined to be legally
binding on NPC by the proper authorities.47
In contrast, NPC agreed to be solely responsible for its Contingent
Liabilities or those as of the transfer date have not yet
been validated, fixed, and finally determined to be legally binding on
NPC.48
Based on these provisions, it appears that the parties delineated
their responsibility over NPC liabilities that arose as a result of a final
determination of a proper authority, such that if such final
determination has not yet been made as of the transfer date it is a
Contingent Liability. Otherwise, it is a Transferred Obligation for
which PSALM assumes responsibility.
Thus, the liability to pay the petitioners' separation benefits satisfies
the conditions giving rise to a Transferred Obligation.
Our Rulings finally determined that
the liability is legally binding and
enforceable against the NPC
A plain reading49 of the provisions in the Deed of Transfer will reveal
that a final judgment rendered by a court with competent
jurisdiction holding the NPC liable for an obligation falls within the
meaning of a liability "validated, fixed, and finally determined to be
legally binding on NPC."
To emphasize, We adjudged that the NPC's liability for the
petitioners' illegal dismissal and, consequently, the payment of their
full entitlement was the logical and necessary effect of the
nullification of NPB Resolution Nos. 2002-124 and 2002-125. Our
ruling lapsed into finality on October 10, 2008.50 Clearly, Our Ruling
constitutes a final determinationthat the liability is legally binding
and enforceable against the NPC.
Our final determination of the
liability was made as of the transfer
date
If there had already been a final determination of the NPC's liability,
the next question is: Was the final determination made as of the
transfer date?
We answer in the affirmative.
According to the Deed of Transfer, the "transfer date" is "the date
on which all of the conditions precedent are either fulfilled or are
waived."51 While it would appear that the parties have executed
such a waiver,52 there is no indication in Our records of the exact
date of execution, other than NPB Resolution No. 2009-40,53 which
refers to October 1, 2008 as the date of "transfer of assets and
liabilities" of the NPC to PSALM.
However, upon further examination,54 both the NPC55 and
PSALM56 disclosed in their respective COA-audited financial
statements that the actual transfer date was on December 31, 2008.
The "transfer of assets and liabilities" that took place on October 1,
2008 was merely the transfer of "asset-debt accounts" from the
NPC's books of account to PSALM's.57
To be clear, the liability was finally determined by the Court on
October 10, 2008, the date of Our Ruling's finality, or before
December 31, 2008, the actual transfer date recognized by the
parties. Thus, the liability should be considered as a Transferred
Obligation, the responsibility for which was passed on to PSALM
pursuant to the terms of the Deed of Transfer.
3. Under the EPIRA, PSALM is
duty-bound to settle the subject
liability.
PSALM was created under the EPIRA for the principal purpose of
privatizing the NPC's generation assets, real estate and other
disposable assets, and IPP contracts with the ultimate objective of
liquidating all NPC financial obligations and stranded contract
costs.58 It is empowered to take possession of, administer, and
conserve, and subsequently sell or dispose the assets transferred to
it pursuant to its established purpose.59
In 2012, PSALM disclosed60 that the joint boards of directors of the
NPC and PSALM authorized utilization of the privatization proceeds
to pay the NPC's principal and other financial obligations. The
proceeds from privatization shall include not only the proceeds from
sale and disposition of NPC's generation and other disposable assets
but also the proceeds from NPC's net profits.61
Without a doubt, PSALM is statutorily mandated not only to
privatize NPC's generation assets, but also to manage the proceeds
obtained from privatization including its net profits and use these
proceeds to settle all of NPC's financial obligations, without
exception.
This blanket responsibility is evident from PSALM's role even in the
settlement of the NPC's Contingent Liabilities. Under the Deed of
Transfer, while the NPC shall retain sole responsibility of a
Contingent Liability, PSALM shall nonetheless provide for a
mechanism to allow the NPC to satisfy the claim through, for
example, a reserve fund or a provision under the Operation and
Maintenance Agreement or any other agreement to be entered into
by the parties.62Thus, whether or not the NPC has been finally
determined to be liable for the claim, PSALM must see to it that the
same is settled.
All told, PSALM expressly undertook all NPC Transferred Obligations
under Section 3.01 of the Deed of Transfer, which, as previously
discussed, includes the liability to pay the petitioners' entitlement.
Thus, it is now bound to ensure that it is settled.
Even if We rule that the liability was not a Transferred Obligation nor
was it ever voluntarily assumed under the Deed of Transfer, it is still
clear that the law itself mandated PSALM to satisfy the same.
PSALM's obligation is provided in: (a) Section 49 of the EPIRA, where
it was directed to take ownership of all existing NPC liabilities; and
(b) Section 50 of the EPIRA, where it was mandated to
liquidate all NPC financial obligations.
Clearly, PSALM cannot now turn its back on an obligation that is
both contractual and statutory. Although the liability was initially
imposed upon the NPC as the petitioners' employer, the
responsibility for its satisfaction now rests with PSALM.
This ruling is not affected by Section 4, Rule 3363 of the EPIRA IRR,
which provides that the "funds necessary to cover the separation
pay" of all NPC employees displaced as a result of the restructuring
plan "shall be provided either by the Government Service Insurance
System (GSIS) or from the NPC's corporate funds."
As it now stands, after privatization, We find that the NPC's
corporate funds are largely within PSALM's control.
Prior to the EPIRA, the NPC performed and derived corporate funds
from three main functions: generation, transmission, and missionary
electrification. Upon privatization, the NPC divested its generation
and transmission assetsbut continued operations as to its missionary
electrification function, viz.:
SECTION 70. Missionary Electrification. - Notwithstanding the
divestment and/or privatization of NPC assets, IPP contacts and
spun-off corporations, NPC shall remain as a National Government-
owned and -controlled corporation to perform the missionary
electrification function through the Small Power Utilities Group
(SPUG) and shall be responsible for providing power generation and
its associated power delivery systems in areas that are not
connected to the transmission system. The missionary electrification
function shall be funded from the revenues from sales in missionary
areas and from the universal charge to be collected from all
electricity end-users as determined by the ERC.64 (Emphases
supplied.)
The generation function having been devolved to PSALM, all net
profits from its operations also accrued in their favor after the date
of transfer.65
On the other hand, the revenues from missionary
electrification function retained by the NPC are collected from end-
users via the universal charge. However, all collections of the
universal charge shall be remitted monthly to PSALM. In turn,
PSALM, acting as administrator, shall create a Special Trust Fund,
which shall be disbursed only for the purposes specified by the
EPIRA in an open and transparent manner.66
PSALM's control over the NPC's corporate funds is consistent with its
principal purpose of privatizing the NPC's generation assets and
ultimate objective of liquidating all NPC financial obligations and
stranded contract costs. Thus, this control makes it clear that PSALM
is now directly responsible for the settlement of the liability due to
the petitioners.
II. The RTC cannot directly
proceed with the execution
before a separate money
claim is filed with and
approved by the COA
While PSALM is directly liable for the payment of the petitioners'
entitlement, the proper procedure to enforce a judgment award
against the government is to file a separate action before the COA
for its satisfaction.67
We have consistently ruled that the back payment of any
compensation to public officers and employees cannot be done
through a writ of execution.68 The COA has exclusive jurisdiction to
settle "all debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies, and
instrumentalities."69 The proper procedure to enforce a judgment
award against the government is to file a separate action before
the COA for its satisfaction.70
A. Parties' compliance to Our
Resolution dated October 20, 2014
In the present case, We have noted the parties' respective
compliance to Our Resolution dated October 20, 2014, directing
them to submit a complete list of NPC employees affected by the
NPC restructuring, as well as their respective computations of the
petitioners' entitlement.
In particular, the NPC, through their Compliance Ad Cautelam dated
March 16, 2017,71 listed 9,272 employees and provided its own
computation of the amounts each employee is supposedly entitled
to and other details as required by the Court (NPC List and
Computation).72
For their part,73 PSALM points out that it could only provide a list
of 46 former NPC employees subsequently employed by PSALM since
it does not have on record the total number of NPC employees prior
to the restructuring.
On the other hand, the petitioners fully adopted the NPC List and
Computation.74
B. The Court's Ruling vis-a-vis
the COA's Jurisdiction
The NPC List and Computation is by no means final and binding
either on the Court or the COA, regardless of the petitioners'
acceptance and admission of the same. It is still subject to the COA's
validation and audit procedures.
To enforce the satisfaction of the judgment award, the amount of
which has been provisionally computed in the NPC List and
Computation, the petitioners must now go before the COA and file a
separate money claim against the NPC and PSALM. Whether the
claim shall be allowed or disallowed is for the COA to decide, subject
only to the remedy of appeal by petition for certiorari to this
Court.75
In other words, while the Court has determined that PSALM, a
government owned and controlled corporation, is liable to the
petitioners, it is for the COA to ascertain the exact amount of its
liability in accordance with its audit rules and procedures, after a
separate money claim for the satisfaction of the judgment award is
properly filed.
III. Guidelines on the
computation of the
petitioners' entitlement
Inasmuch as the final judgment award will be re-computed and
validated by the COA upon the filing of a separate money claim, We
deem it proper and prudent to lay out guidelines precisely
governing the petitioners ' entitlement-alogical and necessary effect
of the invalidation of NPB Resolution Nos. 2002-124 and 2002-125
and their illegal dismissal.
To dispel any notion that the Court, with these guidelines, is
preempting the COA's jurisdiction, We clarify that these rules govern
only the general formula by which the judgment award shall be
computed.
Verily, jurisprudence is replete with general principles on the
computation of separation pay in lieu of reinstatement, back wages,
and other money claims filed by illegally dismissed employees.
However, these guidelines are tailor-fitted to the extraordinary
circumstances surrounding ~he facts of the present case and in
accordance with Our previous rulings, the EPIRA and its IRR, and
other applicable laws.
These guidelines shall aid the COA in determining, re-computing,
and validating the amount due to the petitioners.
In this regard, PSALM raises points for the Court's consideration, viz.:
1. There were two reorganizations undertaken in NPC - 2003 and
2013.
2. The approval of NPB Resolution No. 2007-55 on September 14,
2007 meant that the services of all NPC employees have been legally
terminated on this date.
3. There were NPC officials and employees that were rehired by the
government and immediately reported for work the day after their
termination from NPC as a consequence of the 2003 reorganization
x x x. The effect of such continued employment with the NPC or with
other government agencies x x x should be considered.
4. The number of NPC employees might have included contractual
employees or those having a fixed-term of employment.
5. A separation package was given to NPC employees that operated
the generation assets upon these assets' privatization.
6. There were NPC employees who were rehired in 2003 but
subsequently tendered their resignation prior to the issuance of NPB
Resolution No. 2007-55.76
At the onset, We emphasize that the petitioners went before the
Court and assailed the validity of NPB Resolution Nos. 2002-124 and
2002-125, which directed the termination of all NPC employees
effective January 31, 2003 (2003 Reorganization). Thus, the Court's
ruling invalidating these resolutions could only affect the
restructuring plan implemented in 2003. The implementation of any
other restructuring plan, like the one in 2013, as PSALM points out,
cannot affect the computation of the judgment award in the present
case. It is not a matter presented for the Court's resolution.
Summary of Petitioners' Entitlement
Again, the petitioners' entitlement consists of the following: (a)
separation pay in lieu of reinstatement; (b) backwages; (c) wage
adjustments; minus any separation pay already received under the
restructuring plan.
A. Separation pay in lieu of
reinstatement
The established rule is that an illegally dismissed civil service
employee shall be entitled to reinstatement plus backwages.77 This
rule is echoed in Section 9 of Republic Act No. 6656,78 which relates
specifically to illegal dismissals due to a government agency
restructuring plan found to be invalid.
However, when an entirely new set-up takes the place of the entity's
previous corporate structure, the abolition of positions and offices
cannot be avoided, thus, making reinstatement impossible.79 In
which case, separation pay shall be awarded in lieu of
reinstatement.80 The award of separation pay in illegal dismissal
cases is an accepted deviation from the general rule of ordering
reinstatement because the law cannot exact compliance with what
is impossible.81
Under the law, the separation pay in lieu of reinstatement due to
each petitioner shall be either the: (1) Separation pay under the
EPIRA and the NPC restructuring plan; or (2) Separation gratuity
under Republic Act No. 6656, depending on their qualifications.
1. Separation pay under the EPIRA
and the NPC restructuring plan
Republic Act No. 6656, the general law governing corporate
reorganizations in the civil service, provides that the separation pay
due to entitled civil service employees separated pursuant to a
reorganization plan shall be the appropriate separation pay and
retirement and other benefits under existing laws, which in this case
is the EPIRA mandating the NPC restructuring plan.
A person is qualified to receive separation benefits under the NPC's
restructuring plan if the following requirements concur: (a) he/she is
an official or employee whose employment was severed pursuant to
the privatization of the NPC;82(b) he/she has rendered at least one
year of service as of June 26, 2001 ;83 (c) he/she must not have
qualified or opted to retire under existing laws;84 and (d) if a casual
or contractual employee, he/she must have had his/her
appointment approved or attested to by the csc.85
If qualified, the employee shall receive separation pay under the NPC
restructuring plan, which is equal to one and one-half months'
salary for every year of service in the government.86 To clarify, the
formula to compute the amount of separation pay has three
components, viz.: (a) base amount, consisting of the monthly salary;
(b) multiplier of one and one-half months or 1.5; and (c) length of
service.
As for the first component, the EPIRA IRR clearly defines "salary" as
the basic pay including the 13th month pay received by an employee
pursuant to his appointment but excluding per diems, bonuses,
overtime pay, honoraria, allowances and any other emoluments
received in addition to the basic pay under existing laws.87 In other
words, the "base amount" must consist of basic pay or
salary and 13th month pay exclusively.
2. Separation gratuity under
Republic Act No. 6656
If the person does not meet all the above-mentioned
requirements (i.e., he/she is a contractual employee whose
appointment was not approved by the CSC, etc.) but was separated
pursuant to the restructuring, he/she is not qualifiedto receive the
separation pay under the NPC's restructuring plan but is nonetheless
entitled to a separation gratuityprovided in Republic Act No. 6656 in
the amount equivalent to one month basic salary for every year of
service.88
Reckoning period
Both the separation pay under the NPC restructuring plan
and separation gratuity under Republic Act No. 6656 entitle the
employee to benefits based on the number of years of service
rendered. While there is no question that length of service shall be
counted from the first year of employment of each petitioner, We
now clarify when this period must end.
Again, separation pay is awarded in this case because the petitioners
could no longer be reinstated due to the abolition of their former
positions and overall restructuring of the NPC. Thus, for purposes of
computing separation pay in lieu of reinstatement, the length of
service shall be computed until the time reinstatement was
rendered impossible.89
In the present case, the petitioners' reinstatement became
impossible when their illegal dismissal was subsequently validated
by the issuance of NPB Resolution No. 2007-55 on September 14,
2007,90 as correctly pointed out by PSALM.
Thus, for purposes of computing the petitioners' separation pay,
their years of service shall be counted from their first year of
employment until September 14, 2007, unless in the meanwhile,
they would have reached the compulsory retirement age of sixty-
five years.
B. Back wages
We have consistently ruled that an illegally dismissed government
employee is entitled to back wages from the time of his illegal
dismissal until his reinstatement because he is considered as not
having left his office.91 Following Galang v. Land Bank of the
Philippines,92 back wages shall be computed based on the most
recent salary rate upon termination.
Reckoning period
1. Start date
The rationale in awarding back wages is to recompense the illegally
dismissed employee for the entire period of time that he/she was
wrongfully prevented from performing the duties of his/her position
and from enjoying its benefits because, in the eyes of the law,
he/she never truly left office.93 Thus, as a rule, it is reckoned from
the time of illegal termination. Verily, NPB Resolution Nos. 2002-124
and 2002-125 directed the termination from service of all NPC
employees effective January 31, 2003. However, the NPC
subsequently issued NPC Circular No. 2003-09 setting forth four
different dates of effectivity, viz.:
Effective date of
Group
termination
a) Top executives January 31, 2003
b) Early-leavers94 January 15, 2003
c) Those no longer employed after June Date of actual
26, 200195 separation
d) All other NPC personnel February 28, 2003
Thus, back wages shall be counted from each group's respective
effective date of termination, as the case may be.
2. End date
As a rule, back wages shall be computed until actual reinstatement.
However, since reinstatement is no longer possible in this case, it
must be computed from the petitioners' effective dates of
termination until September 14, 2007 or the petitioners' date of
retirement, in case petitioners retired after the effective date of
termination but before September 14, 2007.96
To be clear, the computation of separation pay is based on the
length of the employee's service; and the computation of back
wages is based on the actual period when the employee was
unlawfully prevented from working.97 While these two awards are
reckoned from different dates, both are computed in the present
case until September 14, 2007 or the date of retirement, whichever
is earlier. The period of overlap is proper because the period where
back wages are awarded must be included in the computation of
separation pay.98
Effect of employment in the civil
service immediately succeeding
termination
In the recent case of Campol v. Balao-As,99 the Court explained at
length the rationale supporting the award of full back wages in favor
of an illegally dismissed civil service employee, without deducting
any income that he may have earned in case he is employed anew in
another government position during the pendency of the action.
In Campo, the Sangguniang Bayan (SB) of Boliney, Abra passed a
resolution in 2004 terminating Julius B. Campol as SB Secretary. In
2005, while his illegal termination case was still pending, Campol
obtained another job as an administrative aide in the Public
Attorney's Office. The Court ruled that Campol's PAO earnings
should not be deducted from the award of full backwages,
explaining as follows:
This entitlement to full backwages also means that there is no need
to deduct Campol's earnings from his employment with PAO from
the award. The right to receive full backwages means exactly this -
that it corresponds to Campol's salary at the time of his dismissal
until his reinstatement. Any income he may have obtained during
the litigation of the case shall not be deducted from this amount.
This is consistent with our ruling that an employee illegally dismissed
has the right to live and to find employment elsewhere during the
pendency of the case. At the same time, an employer who illegally
dismisses an employee has the obligation to pay him or her what he
or she should have received had the illegal act not be done. It is an
employer's price or penalty for illegally dismissing an
employee.100 (Emphases supplied.)
The Court further explained that this is also the prevailing doctrine
in the award of back wages in the private sector, as previously held
in Bustamante v. National Labor Relations
Commission101 and Equitable Banking Corporation v. Sadac.102
However, We revisit Our ruling in Campol. We agree with Hon.
Justice Antonio T. Carpio's opinion that the award of full back wages
in favor of an illegally dismissed civil service employee who was
subsequently employed in another government agency certainly
violates the constitutional prohibitions against double office-
holding103 and double compensation in the civil service.104
Section 7, Article IX-B of the Constitution provides:
Section 7. No elective official shall be eligible for appointment or
designation in any capacity to any public office or position during his
tenure.
Unless otherwise allowed by law or by the primary functions of his
position, no appointive official shall hold any other office or
employment in the Government or any subdivision, agency or
instrumentality thereof, including government-owned or controlled
corporations or their subsidiaries.
On the other hand, Section 8, Article IX-B of the Constitution
provides:
SECTION 8. No elective or appointive public officer or employee shall
receive additional, double, or indirect compensation, unless
specifically authorized by law, nor accept without the consent of the
Congress, any present, emolument, office, or title of any kind from
any foreign government.
Pensions or gratuities shall not be considered as additional, double,
or indirect compensation.
Thus, We rule that petitioners who were subsequently: (a) rehired
by the NPC, (b) absorbed by PSALM or Transco, or (c) transferred or
employed by other government agencies, are not entitled to back
wages.
Moreover, to award full back wages even to those who remained
employed as a direct result of the 2003 reorganization amounts to
unjust enrichment and damage to the government.
In the present case, the EPIRA and its IRR established policies
governing the subsequent placement of all NPC employees affected
by the restructuring, viz.: (a) giving the NPC board of directors the
sole prerogative to hire the separated employees as new employees
and to assign them to new positions with the corresponding amount they shall receive must be reduced by any separation pay
compensation in accordance with its restructuring program; and (b) each of them has already received under the separation plan.
entitling qualified displaced or separated personnel to preference in Interest and Attorney's Lien
the hiring of the manpower requirements of PSALM and Transco.105 A. Attorney's lien
Pursuant to these policies and as pointed out by PSALM, there were In Our Resolution dated September 17, 2008, we approved a
NPC employees who were: (a) rehired by NPC or (b) absorbed by charging lien in favor of Attys. Aldon and Orocio. Their lien shall
PSALM or Transco as a direct result of the 2003 reorganization be 10% of the petitioners' entitlement, after deducting the
(Rehired or Absorbed NPC Personnel). These personnel immediately separation pay already received by the petitioners under the
reported for work the day after their termination from NPC. True restructuring plan.
enough, a perusal of NPC's list of employees submitted in B. Legal interest
compliance to Our Resolution dated October 20, 2014 reveals that a Aside from the petitioners' above-mentioned entitlement, the
majority of the listed personnel were either rehired by NPC or amount due shall earn interest at the legal rate.108 The payment of
absorbed by PSALM or Transco on March 1, 2003 or within March legal interest is a "natural consequence of a final judgment."109
2003. As We held in Eastern Shipping Lines, Inc. v. Court of
These circumstances lend peculiarity to the present case, setting it Appeals,110 interest at the legal rate of 12%, per annum shall accrue
apart from Campol, Bustamante, and Equitable Banking from the finality of judgment until the judgment award is fully
Corporation. The novelty of this case's factual backdrop is even more settled. However, pursuant to Nacar v. Galleray
evident in the following: Frames,111 beginning July 1, 2013, the legal rate of 6°/o per
First, it is important to note that there was no break or gap in the annum shall apply by virtue of Central Bank Circular No. 799.
rehired or absorbed NPC personnel's government service. They To be sure, the judgment award in this case upon which interest
continuously had employment and a means to receive regular and shall accrue is the petitioners' entitlement after deducting the
periodic compensation. Thus, they were not deprived of the right to separation pay already received by the petitioners under the
live nor prevented from earning a living to support their daily restructuring plan and the 10% charging. lien. The exclusion of the
expenses and financial obligations. Moreover, they were not forced charging lien from the amount of judgment award to be used as a
to seek employment elsewhere, because they were able to capitalize basis in accruing legal interest is only proper considering that in Bach
on the statutory preference given to them in filling up the v. Ongkiko Ka/aw Manhit & Acorda Law Offices,112 the Court
manpower requirements in PSALM or Transco. Obviously, the evil categorically held that legal interest must not be imposed on
sought to be avoided in the above-cited jurisprudence does not exist attorney's fees.
insofar as the rehired or absorbed NPC personnel are concerned. Following these principles, interest on the judgment award shall be
Second, verily, the Court nullified NPB Resolution Nos. 2002-124 and computed as follows: (1) 12% per annum fromOctober 8,
2002-125, and consequently held that the herein petitioners were 2008,113 until June 30, 2013; and (2) 6% per annum/ram July 1, 2013
illegally dismissed. However, in the meantime, NPC proceeded to onwards.
implement these resolutions. As a result, some of the petitioners WHEREFORE, the Court resolves to:
were re-employed by NPC or hired by PSALM or Transco. In other 1. GRANT PSALM's prayer to lift and quash the Demand for
words, while they may have been illegally dismissed, it cannot be Immediate Payment and the Notices of Garnishment issued against
denied that the rehired or absorbed NPC personnel nonetheless it and the NPC;
benefitted from the now-defunct NPB resolutions when they 2. DENY the petitioners' request to immediately execute the
continued to be employed in the government and receive judgment award; and
compensation for their service. 3. DIRECT the petitioners to file a claim against the government
To allow them: (a) to enjoy, without reimbursement, the employee before the Commission on Audit, pursuant to its rules, which shall
benefits they earned as rehired or absorbed NPC employees after be resolved in accordance with the guidelines herein set forth.
termination from NPC until September 14, 2007 or the date of SO ORDERED.
retirement, whichever is earlier and simultaneously, and (b) to
benefit from the award of full back wages covering the same period
is tantamount to permitting these personnel to occupy multiple
positions in the civil service (i.e., their original position in the
NPC andtheir new position in the NPC, PSALM, or Transco after the
reorganization) and to receive benefits separately for each of those
positions.
It is clear that sustaining the effects of these NPB resolutions prior to
nullification is incompatible with upholding the prevailing doctrine
on the award of full back wages as a result of illegal separation after
the same NPB resolutions were invalidated.
On the other hand, petitioners who were neither rehired by the NPC
or absorbed by PSALM or Transco pursuant to the 2003
reorganization and subsequently employed in the private sector
shall be entitled to full back wages
(applying Bustamante and Equitable Banking Corporation).
C. Wage Adjustments and Other
Benefits
In addition, We have also ruled that back wages should
include other monetary benefits attached to the employee's salary
following the principle that an illegally dismissed government
employee who is later reinstated is entitled to all the rights and
privileges that accrue to him/her by virtue of the office he/she
held.106
D. Separation pay already
received under the
restructuring plan
Recall that the Court did not issue a temporary restraining order or a
preliminary injunction to enjoin the implementation of NPB
Resolution Nos. 2002-124 and 2002-125. In effect, the NPC
proceeded with the implementation of the restructuring plan, the
termination of the petitioners' employment,107 and consequently
the payment of the personnel's separation pay under the plan.
Thus, while the petitioners are entitled to separation pay in lieu of
reinstatement, back wages, and other wage adjustments, the
G.R. No. 177597 July 16, 2008
BAI SANDRA S. A. SEMA, Petitioner,
vs.
COMMISSION ON ELECTIONS and DIDAGEN P.
DILANGALEN, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178628
PERFECTO F. MARQUEZ, Petitioner,
vs.
COMMISSION ON ELECTIONS, Respondent.
DECISION
CARPIO, J.:
The Case
These consolidated petitions1 seek to annul Resolution No. 7902,
dated 10 May 2007, of the Commission on Elections (COMELEC)
treating Cotabato City as part of the legislative district of the
Province of Shariff Kabunsuan.2
The Facts
The Ordinance appended to the 1987 Constitution apportioned two
legislative districts for the Province of Maguindanao. The first
legislative district consists of Cotabato City and eight
municipalities.3 Maguindanao forms part of the Autonomous Region
in Muslim Mindanao (ARMM), created under its Organic Act,
Republic Act No. 6734 (RA 6734), as amended by Republic Act No.
9054 (RA 9054).4 Although under the Ordinance, Cotabato City
forms part of Maguindanao’s first legislative district, it is not part of
the ARMM but of Region XII, having voted against its inclusion in the
ARMM in the plebiscite held in November 1989.
On 28 August 2006, the ARMM’s legislature, the ARMM Regional
Assembly, exercising its power to create provinces under Section 19,
Article VI of RA 9054,5 enacted Muslim Mindanao Autonomy Act No.
201 (MMA Act 201) creating the Province of Shariff Kabunsuan
composed of the eight municipalities in the first district of
Maguindanao. MMA Act 201 provides:
Section 1. The Municipalities of Barira, Buldon, Datu Odin Sinsuat,
Kabuntalan, Matanog, Parang, Sultan Kudarat, Sultan Mastura, and
Upi are hereby separated from the Province of Maguindanao and
constituted into a distinct and independent province, which is
hereby created, to be known as the Province of Shariff Kabunsuan.
xxxx
Sec. 5. The corporate existence of this province shall commence
upon the appointment by the Regional Governor or election of the
governor and majority of the regular members of the Sangguniang
Panlalawigan.
The incumbent elective provincial officials of the Province of
Maguindanao shall continue to serve their unexpired terms in the
province that they will choose or where they are residents:
Provided, that where an elective position in both provinces becomes
vacant as a consequence of the creation of the Province of Shariff
Kabunsuan, all incumbent elective provincial officials shall have
preference for appointment to a higher elective vacant position and
for the time being be appointed by the Regional Governor, and shall
hold office until their successors shall have been elected and
qualified in the next local elections; Provided, further, that they shall
continue to receive the salaries they are receiving at the time of the
approval of this Act until the new readjustment of salaries in
accordance with law. Provided, furthermore, that there shall be no
diminution in the number of the members of the Sangguniang
Panlalawigan of the mother province.
Except as may be provided by national law, the existing legislative
district, which includes Cotabato as a part thereof, shall remain.
Later, three new municipalities6 were carved out of the original nine
municipalities constituting Shariff Kabunsuan, bringing its total
number of municipalities to 11. Thus, what was left of Maguindanao
were the municipalities constituting its second legislative district.
Cotabato City, although part of Maguindanao’s first legislative
district, is not part of the Province of Maguindanao.
The voters of Maguindanao ratified Shariff Kabunsuan’s creation in a
plebiscite held on 29 October 2006.
On 6 February 2007, the Sangguniang Panlungsod of Cotabato City
passed Resolution No. 3999 requesting the COMELEC to "clarify the
status of Cotabato City in view of the conversion of the First District
of Maguindanao into a regular province" under MMA Act 201.
In answer to Cotabato City’s query, the COMELEC issued Resolution
No. 07-0407 on 6 March 2007 "maintaining the status quo with
Cotabato City as part of Shariff Kabunsuan in the First Legislative
District of Maguindanao." Resolution No. 07-0407, which adopted
the recommendation of the COMELEC’s Law Department under a
Memorandum dated 27 February 2007,7 provides in pertinent parts:
Considering the foregoing, the Commission RESOLVED, as it hereby
resolves, to adopt the recommendation of the Law Department
that pending the enactment of the appropriate law by Congress, to
maintain the status quo with Cotabato City as part of Shariff
Kabunsuan in the First Legislative District of Maguindanao.
(Emphasis supplied)
However, in preparation for the 14 May 2007 elections, the
COMELEC promulgated on 29 March 2007 Resolution No. 7845
stating that Maguindanao’s first legislative district is composed only
of Cotabato City because of the enactment of MMA Act 201.8
On 10 May 2007, the COMELEC issued Resolution No. 7902, subject
of these petitions, amending Resolution No. 07-0407 by renaming
the legislative district in question as "Shariff Kabunsuan Province
with Cotabato City (formerly First District of Maguindanao with
Cotabato City)."91avvphi1
In G.R. No. 177597, Sema, who was a candidate in the 14 May 2007
elections for Representative of "Shariff Kabunsuan with Cotabato
City," prayed for the nullification of COMELEC Resolution No. 7902
and the exclusion from canvassing of the votes cast in Cotabato City
for that office. Sema contended that Shariff Kabunsuan is entitled to
one representative in Congress under Section 5 (3), Article VI of the
Constitution10 and Section 3 of the Ordinance appended to the
Constitution.11 Thus, Sema asserted that the COMELEC acted
without or in excess of its jurisdiction in issuing Resolution No. 7902
which maintained the status quo in Maguindanao’s first legislative
district despite the COMELEC’s earlier directive in Resolution No.
7845 designating Cotabato City as the lone component of
Maguindanao’s reapportioned first legislative district.12 Sema
further claimed that in issuing Resolution No. 7902, the COMELEC
usurped Congress’ power to create or reapportion legislative
districts.
In its Comment, the COMELEC, through the Office of the Solicitor
General (OSG), chose not to reach the merits of the case and merely
contended that (1) Sema wrongly availed of the writ of certiorari to
nullify COMELEC Resolution No. 7902 because the COMELEC issued
the same in the exercise of its administrative, not quasi-judicial,
power and (2) Sema’s prayer for the writ of prohibition in G.R. No.
177597 became moot with the proclamation of respondent Didagen
P. Dilangalen (respondent Dilangalen) on 1 June 2007 as
representative of the legislative district of Shariff Kabunsuan
Province with Cotabato City.
In his Comment, respondent Dilangalen countered that Sema is
estopped from questioning COMELEC Resolution No. 7902 because
in her certificate of candidacy filed on 29 March 2007, Sema
indicated that she was seeking election as representative of "Shariff
Kabunsuan including Cotabato City." Respondent Dilangalen added
that COMELEC Resolution No. 7902 is constitutional because it did
not apportion a legislative district for Shariff Kabunsuan or
reapportion the legislative districts in Maguindanao but merely
renamed Maguindanao’s first legislative district. Respondent
Dilangalen further claimed that the COMELEC could not reapportion
Maguindanao’s first legislative district to make Cotabato City its sole
component unit as the power to reapportion legislative districts lies
exclusively with Congress, not to mention that Cotabato City does
not meet the minimum population requirement under Section 5 (3),
Article VI of the Constitution for the creation of a legislative district
within a city.13
Sema filed a Consolidated Reply controverting the matters raised in
respondents’ Comments and reiterating her claim that the COMELEC
acted ultra vires in issuing Resolution No. 7902.
In the Resolution of 4 September 2007, the Court required the
parties in G.R. No. 177597 to comment on the issue of whether a
province created by the ARMM Regional Assembly under Section 19,
Article VI of RA 9054 is entitled to one representative in the House
of Representatives without need of a national law creating a
legislative district for such new province. The parties submitted their
compliance as follows:
(1) Sema answered the issue in the affirmative on the following
grounds: (a) the Court in Felwa v. Salas14stated that "when a
province is created by statute, the corresponding representative
district comes into existence neither by authority of that statute —
which cannot provide otherwise — nor by apportionment, but by
operation of the Constitution, without a reapportionment"; (b)
Section 462 of Republic Act No. 7160 (RA 7160) "affirms" the
apportionment of a legislative district incident to the creation of a
province; and (c) Section 5 (3), Article VI of the Constitution and
Section 3 of the Ordinance appended to the Constitution mandate
the apportionment of a legislative district in newly created
provinces.
(2) The COMELEC, again represented by the OSG, apparently
abandoned its earlier stance on the propriety of issuing Resolution
Nos. 07-0407 and 7902 and joined causes with Sema, contending
that Section 5 (3), Article VI of the Constitution is "self-executing."
Thus, every new province created by the ARMM Regional Assembly
is ipso facto entitled to one representative in the House of
Representatives even in the absence of a national law; and
(3) Respondent Dilangalen answered the issue in the negative on the
following grounds: (a) the "province" contemplated in Section 5 (3),
Article VI of the Constitution is one that is created by an act of
Congress taking into account the provisions in RA 7160 on the
creation of provinces; (b) Section 3, Article IV of RA 9054 withheld
from the ARMM Regional Assembly the power to enact measures
relating to national elections, which encompasses the
apportionment of legislative districts for members of the House of
Representatives; (c) recognizing a legislative district in every
province the ARMM Regional Assembly creates will lead to the
disproportionate representation of the ARMM in the House of
Representatives as the Regional Assembly can create provinces
without regard to the requirements in Section 461 of RA 7160; and
(d) Cotabato City, which has a population of less than 250,000, is not
entitled to a representative in the House of Representatives.
On 27 November 2007, the Court heard the parties in G.R. No.
177597 in oral arguments on the following issues: (1) whether
Section 19, Article VI of RA 9054, delegating to the ARMM Regional
Assembly the power to create provinces, is constitutional; and (2) if
in the affirmative, whether a province created under Section 19,
Article VI of RA 9054 is entitled to one representative in the House
of Representatives without need of a national law creating a
legislative district for such new province.15
In compliance with the Resolution dated 27 November 2007, the
parties in G.R. No. 177597 filed their respective Memoranda on the
issues raised in the oral arguments.16 On the question of the
constitutionality of Section 19, Article VI of RA 9054, the parties in
G.R. No. 177597 adopted the following positions:
(1) Sema contended that Section 19, Article VI of RA 9054 is
constitutional (a) as a valid delegation by Congress to the ARMM of
the power to create provinces under Section 20 (9), Article X of the
Constitution granting to the autonomous regions, through their
organic acts, legislative powers over "other matters as may be
authorized by law for the promotion of the general welfare of the
people of the region" and (b) as an amendment to Section 6 of RA
7160.17 However, Sema concedes that, if taken literally, the grant in
Section 19, Article VI of RA 9054 to the ARMM Regional Assembly of
the power to "prescribe standards lower than those mandated" in
RA 7160 in the creation of provinces contravenes Section 10, Article
X of the Constitution.18 Thus, Sema proposed that Section 19
"should be construed as prohibiting the Regional Assembly from
prescribing standards x x x that do not comply with the minimum
criteria" under RA 7160.19
(2) Respondent Dilangalen contended that Section 19, Article VI of
RA 9054 is unconstitutional on the following grounds: (a) the power
to create provinces was not among those granted to the
autonomous regions under Section 20, Article X of the Constitution
and (b) the grant under Section 19, Article VI of RA 9054 to the
ARMM Regional Assembly of the power to prescribe standards
lower than those mandated in Section 461 of RA 7160 on the
creation of provinces contravenes Section 10, Article X of the
Constitution and the Equal Protection Clause; and
(3) The COMELEC, through the OSG, joined causes with respondent
Dilangalen (thus effectively abandoning the position the COMELEC
adopted in its Compliance with the Resolution of 4 September 2007)
and contended that Section 19, Article VI of RA 9054 is
unconstitutional because (a) it contravenes Section 10 and Section
6,20 Article X of the Constitution and (b) the power to create
provinces was withheld from the autonomous regions under Section
20, Article X of the Constitution.
On the question of whether a province created under Section 19,
Article VI of RA 9054 is entitled to one representative in the House
of Representatives without need of a national law creating a
legislative district for such new province, Sema and respondent
Dilangalen reiterated in their Memoranda the positions they
adopted in their Compliance with the Resolution of 4 September
2007. The COMELEC deemed it unnecessary to submit its position on
this issue considering its stance that Section 19, Article VI of RA 9054
is unconstitutional.
The pendency of the petition in G.R. No. 178628 was disclosed
during the oral arguments on 27 November 2007. Thus, in the
Resolution of 19 February 2008, the Court ordered G.R. No. 178628
consolidated with G.R. No. 177597. The petition in G.R. No. 178628
echoed Sema's contention that the COMELEC acted ultra vires in
issuing Resolution No. 7902 depriving the voters of Cotabato City of
a representative in the House of Representatives. In its Comment to
the petition in G.R. No. 178628, the COMELEC, through the OSG,
maintained the validity of COMELEC Resolution No. 7902 as a
temporary measure pending the enactment by Congress of the
"appropriate law."
The Issues
The petitions raise the following issues:
I. In G.R. No. 177597:
(A) Preliminarily –
(1) whether the writs of Certiorari, Prohibition, and Mandamus are
proper to test the constitutionality of COMELEC Resolution No.
7902; and
(2) whether the proclamation of respondent Dilangalen as
representative of Shariff Kabunsuan Province with Cotabato City
mooted the petition in G.R. No. 177597.
(B) On the merits –
(1) whether Section 19, Article VI of RA 9054, delegating to the
ARMM Regional Assembly the power to create provinces, cities,
municipalities and barangays, is constitutional; and
(2) if in the affirmative, whether a province created by the ARMM
Regional Assembly under MMA Act 201 pursuant to Section 19,
Article VI of RA 9054 is entitled to one representative in the House
of Representatives without need of a national law creating a
legislative district for such province.
II. In G.R No. 177597 and G.R No. 178628, whether COMELEC
Resolution No. 7902 is valid for maintaining the status quo in the
first legislative district of Maguindanao (as "Shariff Kabunsuan
Province with Cotabato City [formerly First District of Maguindanao
with Cotabato City]"), despite the creation of the Province of Shariff
Kabunsuan out of such district (excluding Cotabato City).
The Ruling of the Court
The petitions have no merit. We rule that (1) Section 19, Article VI of
RA 9054 is unconstitutional insofar as it grants to the ARMM
Regional Assembly the power to create provinces and cities; (2)
MMA Act 201 creating the Province of Shariff Kabunsuan is void; and
(3) COMELEC Resolution No. 7902 is valid.
On the Preliminary Matters
The Writ of Prohibition is Appropriate
to Test the Constitutionality of
Election Laws, Rules and Regulations
The purpose of the writ of Certiorari is to correct grave abuse of
discretion by "any tribunal, board, or officer exercising judicial or
quasi-judicial functions."21 On the other hand, the writ of Mandamus
will issue to compel a tribunal, corporation, board, officer, or person
to perform an act "which the law specifically enjoins as a
duty."22 True, the COMELEC did not issue Resolution No. 7902 in the
exercise of its judicial or quasi-judicial functions.23 Nor is there a law
which specifically enjoins the COMELEC to exclude from canvassing
the votes cast in Cotabato City for representative of "Shariff
Kabunsuan Province with Cotabato City." These, however, do not
justify the outright dismissal of the petition in G.R. No. 177597
because Sema also prayed for the issuance of the writ of Prohibition
and we have long recognized this writ as proper for testing the
constitutionality of election laws, rules, and regulations.24
Respondent Dilangalen’s Proclamation
Does Not Moot the Petition
There is also no merit in the claim that respondent Dilangalen’s
proclamation as winner in the 14 May 2007 elections for
representative of "Shariff Kabunsuan Province with Cotabato City"
mooted this petition. This case does not concern respondent
Dilangalen’s election. Rather, it involves an inquiry into the validity
of COMELEC Resolution No. 7902, as well as the constitutionality of
MMA Act 201 and Section 19, Article VI of RA 9054. Admittedly, the
outcome of this petition, one way or another, determines whether
the votes cast in Cotabato City for representative of the district of
"Shariff Kabunsuan Province with Cotabato City" will be included in
the canvassing of ballots. However, this incidental consequence is no
reason for us not to proceed with the resolution of the novel issues
raised here. The Court’s ruling in these petitions affects not only the
recently concluded elections but also all the other succeeding
elections for the office in question, as well as the power of the
ARMM Regional Assembly to create in the future additional
provinces.
On the Main Issues
Whether the ARMM Regional Assembly
Can Create the Province of Shariff Kabunsuan
The creation of local government units is governed by Section 10,
Article X of the Constitution, which provides:
Sec. 10. No province, city, municipality, or barangay may be created,
divided, merged, abolished or its boundary substantially altered
except in accordance with the criteria established in the local
government code and subject to approval by a majority of the votes
cast in a plebiscite in the political units directly affected.
Thus, the creation of any of the four local government units –
province, city, municipality or barangay – must comply with three
conditions. First, the creation of a local government unit must follow
the criteria fixed in the Local Government Code. Second, such
creation must not conflict with any provision of the Constitution.
Third, there must be a plebiscite in the political units affected.
There is neither an express prohibition nor an express grant of
authority in the Constitution for Congress to delegate to regional or
local legislative bodies the power to create local government units.
However, under its plenary legislative powers, Congress can
delegate to local legislative bodies the power to create local
government units, subject to reasonable standards and provided no
conflict arises with any provision of the Constitution. In fact,
Congress has delegated to provincial boards, and city and municipal
councils, the power to create barangays within their
jurisdiction,25 subject to compliance with the criteria established in
the Local Government Code, and the plebiscite requirement in
Section 10, Article X of the Constitution. However, under the Local
Government Code, "only x x x an Act of Congress" can create
provinces, cities or municipalities.261avvphi1
Under Section 19, Article VI of RA 9054, Congress delegated to the
ARMM Regional Assembly the power to create provinces, cities,
municipalities and barangays within the ARMM. Congress made the
delegation under its plenary legislative powers because the power
to create local government units is not one of the express legislative
powers granted by the Constitution to regional legislative
bodies.27 In the present case, the question arises whether the
delegation to the ARMM Regional Assembly of the power to create
provinces, cities, municipalities and barangays conflicts with any
provision of the Constitution.
There is no provision in the Constitution that conflicts with the
delegation to regional legislative bodies of the power to create
municipalities and barangays, provided Section 10, Article X of the
Constitution is followed. However, the creation of provinces and
cities is another matter. Section 5 (3), Article VI of the Constitution
provides, "Each city with a population of at least two hundred fifty
thousand, or each province, shall have at least one representative"
in the House of Representatives. Similarly, Section 3 of the
Ordinance appended to the Constitution provides, "Any province
that may hereafter be created, or any city whose population may
hereafter increase to more than two hundred fifty thousand shall be
entitled in the immediately following election to at least one
Member x x x."
Clearly, a province cannot be created without a legislative district
because it will violate Section 5 (3), Article VI of the Constitution as
well as Section 3 of the Ordinance appended to the Constitution. For
the same reason, a city with a population of 250,000 or more cannot
also be created without a legislative district. Thus, the power to
create a province, or a city with a population of 250,000 or more,
requires also the power to create a legislative district. Even the
creation of a city with a population of less than 250,000 involves the
power to create a legislative district because once the city’s
population reaches 250,000, the city automatically becomes entitled
to one representative under Section 5 (3), Article VI of the
Constitution and Section 3 of the Ordinance appended to the
Constitution. Thus, the power to create a province or city inherently
involves the power to create a legislative district.
For Congress to delegate validly the power to create a province or
city, it must also validly delegate at the same time the power to
create a legislative district. The threshold issue then is, can Congress
validly delegate to the ARMM Regional Assembly the power to
create legislative districts for the House of Representatives? The
answer is in the negative.
Legislative Districts are Created or Reapportioned
Only by an Act of Congress
Under the present Constitution, as well as in past28 Constitutions,
the power to increase the allowable membership in the House of
Representatives, and to reapportion legislative districts, is vested
exclusively in Congress. Section 5, Article VI of the Constitution
provides:
SECTION 5. (1) The House of Representatives shall be composed of
not more than two hundred and fifty members, unless otherwise
fixed by law, who shall be elected from legislative districts
apportioned among the provinces, cities, and the Metropolitan
Manila area in accordance with the number of their respective
inhabitants, and on the basis of a uniform and progressive ratio, and
those who, as provided by law, shall be elected through a party-list
system of registered national, regional, and sectoral parties or
organizations.
xxxx
(3) Each legislative district shall comprise, as far as practicable,
contiguous, compact, and adjacent territory. Each city with a
population of at least two hundred fifty thousand, or each province,
shall have at least one representative.
(4) Within three years following the return of every census, the
Congress shall make a reapportionment of legislative districts based
on the standards provided in this section. (Emphasis supplied)
Section 5 (1), Article VI of the Constitution vests in Congress the
power to increase, through a law, the allowable membership in the
House of Representatives. Section 5 (4) empowers Congress to
reapportion legislative districts. The power to reapportion legislative
districts necessarily includes the power to create legislative districts
out of existing ones. Congress exercises these powers through a law
that Congress itself enacts, and not through a law that regional or
local legislative bodies enact. The allowable membership of the
House of Representatives can be increased, and new legislative
districts of Congress can be created, only through a national law
passed by Congress. In Montejo v. COMELEC,29 we held that the
"power of redistricting x x x is traditionally regarded as part of the
power (of Congress) to make laws," and thus is vested exclusively in
Congress.
This textual commitment to Congress of the exclusive power to
create or reapportion legislative districts is logical. Congress is a
national legislature and any increase in its allowable membership or
in its incumbent membership through the creation of legislative
districts must be embodied in a national law. Only Congress can
enact such a law. It would be anomalous for regional or local
legislative bodies to create or reapportion legislative districts for a
national legislature like Congress. An inferior legislative body,
created by a superior legislative body, cannot change the
membership of the superior legislative body.
The creation of the ARMM, and the grant of legislative powers to its
Regional Assembly under its organic act, did not divest Congress of
its exclusive authority to create legislative districts. This is clear from
the Constitution and the ARMM Organic Act, as amended. Thus,
Section 20, Article X of the Constitution provides:
SECTION 20. Within its territorial jurisdiction and subject to the
provisions of this Constitution and national laws, the organic act of
autonomous regions shall provide for legislative powers over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family, and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social, and tourism development;
(7) Educational policies;
(8) Preservation and development of the cultural heritage; and
(9) Such other matters as may be authorized by law for the
promotion of the general welfare of the people of the region.
Nothing in Section 20, Article X of the Constitution authorizes
autonomous regions, expressly or impliedly, to create or
reapportion legislative districts for Congress.
On the other hand, Section 3, Article IV of RA 9054 amending the
ARMM Organic Act, provides, "The Regional Assembly may exercise
legislative power x x x except on the following matters: x x
x (k) National elections. x x x." Since the ARMM Regional Assembly
has no legislative power to enact laws relating to national elections,
it cannot create a legislative district whose representative is elected
in national elections. Whenever Congress enacts a law creating a
legislative district, the first representative is always elected in the
"next national elections" from the effectivity of the law.30
Indeed, the office of a legislative district representative to Congress
is a national office, and its occupant, a Member of the House of
Representatives, is a national official.31 It would be incongruous for
a regional legislative body like the ARMM Regional Assembly to
create a national office when its legislative powers extend only to its
regional territory. The office of a district representative is
maintained by national funds and the salary of its occupant is paid
out of national funds. It is a self-evident inherent limitation on the
legislative powers of every local or regional legislative body that it
can only create local or regional offices, respectively, and it can
never create a national office.
To allow the ARMM Regional Assembly to create a national office is
to allow its legislative powers to operate outside the ARMM’s
territorial jurisdiction. This violates Section 20, Article X of the
Constitution which expressly limits the coverage of the Regional
Assembly’s legislative powers "[w]ithin its territorial jurisdiction x x
x."
The ARMM Regional Assembly itself, in creating Shariff Kabunsuan,
recognized the exclusive nature of Congress’ power to create or
reapportion legislative districts by abstaining from creating a
legislative district for Shariff Kabunsuan. Section 5 of MMA Act 201
provides that:
Except as may be provided by national law, the existing legislative
district, which includes Cotabato City as a part thereof, shall remain.
(Emphasis supplied)
However, a province cannot legally be created without a legislative
district because the Constitution mandates that "each province shall
have at least one representative." Thus, the creation of the Province
of Shariff Kabunsuan without a legislative district is unconstitutional.
Sema, petitioner in G.R. No. 177597, contends that Section 5 (3),
Article VI of the Constitution, which provides:
Each legislative district shall comprise, as far as practicable,
contiguous, compact, and adjacent territory. Each city with a
population of at least two hundred fifty thousand, or each province,
shall have at least one representative. (Emphasis supplied)
and Section 3 of the Ordinance appended to the Constitution, which
states:
Any province that may hereafter be created, or any city whose
population may hereafter increase to more than two hundred fifty
thousand shall be entitled in the immediately following election to
at least one Member or such number of Members as it may be
entitled to on the basis of the number of its inhabitants and
according to the standards set forth in paragraph (3), Section 5 of
Article VI of the Constitution. The number of Members apportioned
to the province out of which such new province was created or
where the city, whose population has so increased, is geographically
located shall be correspondingly adjusted by the Commission on
Elections but such adjustment shall not be made within one hundred
and twenty days before the election. (Emphasis supplied)
serve as bases for the conclusion that the Province of Shariff
Kabunsuan, created on 29 October 2006, is automatically entitled to
one member in the House of Representatives in the 14 May 2007
elections. As further support for her stance, petitioner invokes the
statement in Felwa that "when a province is created by statute, the
corresponding representative district comes into existence neither
by authority of that statute — which cannot provide otherwise —
nor by apportionment, but by operation of the Constitution, without
a reapportionment."
The contention has no merit.
First. The issue in Felwa, among others, was whether Republic Act
No. 4695 (RA 4695), creating the provinces of Benguet, Mountain
Province, Ifugao, and Kalinga-Apayao and providing for
congressional representation in the old and new provinces, was
unconstitutional for "creati[ng] congressional districts without the
apportionment provided in the Constitution." The Court answered in
the negative, thus:
The Constitution ordains:
"The House of Representatives shall be composed of not more than
one hundred and twenty Members who shall be apportioned among
the several provinces as nearly as may be according to the number
of their respective inhabitants, but each province shall have at least
one Member. The Congress shall by law make an apportionment
within three years after the return of every enumeration, and not
otherwise. Until such apportionment shall have been made, the
House of Representatives shall have the same number of Members
as that fixed by law for the National Assembly, who shall be elected
by the qualified electors from the present Assembly districts. Each
representative district shall comprise as far as practicable,
contiguous and compact territory."
Pursuant to this Section, a representative district may come into
existence: (a) indirectly, through the creation of a province — for
"each province shall have at least one member" in the House of
Representatives; or (b) by direct creation of several representative
districts within a province. The requirements concerning the
apportionment of representative districts and the territory thereof
refer only to the second method of creation of representative
districts, and do not apply to those incidental to the creation of
provinces, under the first method. This is deducible, not only from
the general tenor of the provision above quoted, but, also, from the
fact that the apportionment therein alluded to refers to that which
is made by an Act of Congress. Indeed, when a province is created by
statute, the corresponding representative district, comes into
existence neither by authority of that statute — which cannot
provide otherwise — nor by apportionment, but by operation of the
Constitution, without a reapportionment.
There is no constitutional limitation as to the time when, territory
of, or other conditions under which a province may be created,
except, perhaps, if the consequence thereof were to exceed the
maximum of 120 representative districts prescribed in the
Constitution, which is not the effect of the legislation under
consideration. As a matter of fact, provinces have been created or
subdivided into other provinces, with the consequent creation of
additional representative districts, without complying with the
aforementioned requirements.32 (Emphasis supplied)
Thus, the Court sustained the constitutionality of RA 4695 because
(1) it validly created legislative districts "indirectly" through a special
law enacted by Congress creating a province and (2) the creation of
the legislative districts will not result in breaching the maximum
number of legislative districts provided under the 1935
Constitution. Felwa does not apply to the present case because
in Felwa the new provinces were created by a national law enacted
by Congress itself. Here, the new province was created merely by
a regional law enacted by the ARMM Regional Assembly.
What Felwa teaches is that the creation of a legislative district by
Congress does not emanate alone from Congress’ power to
reapportion legislative districts, but also from Congress’ power to
create provinces which cannot be created without a legislative
district. Thus, when a province is created, a legislative district is
created by operation of the Constitution because the Constitution
provides that "each province shall have at least one representative"
in the House of Representatives. This does not detract from the
constitutional principle that the power to create legislative districts
belongs exclusively to Congress. It merely prevents any other
legislative body, except Congress, from creating provinces because
for a legislative body to create a province such legislative body must
have the power to create legislative districts. In short, only an act of
Congress can trigger the creation of a legislative district by operation
of the Constitution. Thus, only Congress has the power to create, or
trigger the creation of, a legislative district.
Moreover, if as Sema claims MMA Act 201 apportioned a legislative
district to Shariff Kabunsuan upon its creation, this will leave
Cotabato City as the lone component of the first legislative district of
Maguindanao. However, Cotabato City cannot constitute a
legislative district by itself because as of the census taken in 2000, it
had a population of only 163,849. To constitute Cotabato City alone
as the surviving first legislative district of Maguindanao will violate
Section 5 (3), Article VI of the Constitution which requires that
"[E]ach city with a population of at least two hundred fifty thousand
x x x, shall have at least one representative."
Second. Sema’s theory also undermines the composition and
independence of the House of Representatives. Under Section
19,33 Article VI of RA 9054, the ARMM Regional Assembly can create
provinces and cities within the ARMM with or without regard to the
criteria fixed in Section 461 of RA 7160, namely: minimum annual
income of ₱20,000,000, and minimum contiguous territory of 2,000
square kilometers or minimum population of 250,000.34The
following scenarios thus become distinct possibilities:
(1) An inferior legislative body like the ARMM Regional Assembly can
create 100 or more provinces and thus increase the membership of
a superior legislative body, the House of Representatives, beyond
the maximum limit of 250 fixed in the Constitution (unless a national
law provides otherwise);
(2) The proportional representation in the House of Representatives
based on one representative for at least every 250,000 residents will
be negated because the ARMM Regional Assembly need not comply
with the requirement in Section 461(a)(ii) of RA 7160 that every
province created must have a population of at least 250,000; and
(3) Representatives from the ARMM provinces can become the municipalities and barangays that does not comply with the criteria
majority in the House of Representatives through the ARMM established in Section 461 of RA 7160, as mandated in Section 10,
Regional Assembly’s continuous creation of provinces or cities Article X of the Constitution, because the creation of such
within the ARMM. municipalities and barangays does not involve the creation of
The following exchange during the oral arguments of the petition in legislative districts. We leave the resolution of this issue to an
G.R. No. 177597 highlights the absurdity of Sema’s position that the appropriate case.
ARMM Regional Assembly can create provinces: In summary, we rule that Section 19, Article VI of RA 9054, insofar as
Justice Carpio: it grants to the ARMM Regional Assembly the power to create
So, you mean to say [a] Local Government can create legislative provinces and cities, is void for being contrary to Section 5 of Article
district[s] and pack Congress with their own representatives [?] VI and Section 20 of Article X of the Constitution, as well as Section 3
Atty. Vistan II:35 of the Ordinance appended to the Constitution. Only Congress can
Yes, Your Honor, because the Constitution allows that. create provinces and cities because the creation of provinces and
Justice Carpio: cities necessarily includes the creation of legislative districts, a
So, [the] Regional Assembly of [the] ARMM can create and create x x power only Congress can exercise under Section 5, Article VI of the
x provinces x x x and, therefore, they can have thirty-five (35) new Constitution and Section 3 of the Ordinance appended to the
representatives in the House of Representatives without Congress Constitution. The ARMM Regional Assembly cannot create a
agreeing to it, is that what you are saying? That can be done, under province without a legislative district because the Constitution
your theory[?] mandates that every province shall have a legislative district.
Atty. Vistan II: Moreover, the ARMM Regional Assembly cannot enact a law
Yes, Your Honor, under the correct factual circumstances. creating a national office like the office of a district representative of
Justice Carpio: Congress because the legislative powers of the ARMM Regional
Under your theory, the ARMM legislature can create thirty-five (35) Assembly operate only within its territorial jurisdiction as provided
new provinces, there may be x x x [only] one hundred thousand in Section 20, Article X of the Constitution. Thus, we rule that MMA
(100,000) [population], x x x, and they will each have one Act 201, enacted by the ARMM Regional Assembly and creating the
representative x x x to Congress without any national law, is that Province of Shariff Kabunsuan, is void.
what you are saying? Resolution No. 7902 Complies with the Constitution
Atty. Vistan II: Consequently, we hold that COMELEC Resolution No. 7902,
Without law passed by Congress, yes, Your Honor, that is what we preserving the geographic and legislative district of the First District
are saying. of Maguindanao with Cotabato City, is valid as it merely complies
xxxx with Section 5 of Article VI and Section 20 of Article X of the
Justice Carpio: Constitution, as well as Section 1 of the Ordinance appended to the
So, they can also create one thousand (1000) new provinces, sen[d] Constitution.
one thousand (1000) representatives to the House of WHEREFORE, we declare Section 19, Article VI of Republic Act No.
Representatives without a national law[,] that is legally possible, 9054 UNCONSTITUTIONAL insofar as it grants to the Regional
correct? Assembly of the Autonomous Region in Muslim Mindanao the
Atty. Vistan II: power to create provinces and cities. Thus, we declare VOID Muslim
Yes, Your Honor.36 (Emphasis supplied) Mindanao Autonomy Act No. 201 creating the Province of Shariff
Neither the framers of the 1987 Constitution in adopting the Kabunsuan. Consequently, we rule that COMELEC Resolution No.
provisions in Article X on regional autonomy,37 nor Congress in 7902 is VALID.
enacting RA 9054, envisioned or intended these disastrous Let a copy of this ruling be served on the President of the Senate and
consequences that certainly would wreck the tri-branch system of the Speaker of the House of Representatives.
government under our Constitution. Clearly, the power to create or SO ORDERED.
reapportion legislative districts cannot be delegated by Congress but ANTONIO T. CARPIO
must be exercised by Congress itself. Even the ARMM Regional Associate Justice
Assembly recognizes this.
The Constitution empowered Congress to create or reapportion
legislative districts, not the regional assemblies. Section 3 of the
Ordinance to the Constitution which states, "[A]ny province that
may hereafter be created x x x shall be entitled in the immediately
following election to at least one Member," refers to a province
created by Congress itself through a national law. The reason is that
the creation of a province increases the actual membership of the
House of Representatives, an increase that only Congress can
decide. Incidentally, in the present 14th Congress, there are
21938 district representatives out of the maximum 250 seats in the
House of Representatives. Since party-list members shall constitute
20 percent of total membership of the House, there should at least
be 50 party-list seats available in every election in case 50 party-list
candidates are proclaimed winners. This leaves only 200 seats for
district representatives, much less than the 219 incumbent district
representatives. Thus, there is a need now for Congress to increase
by law the allowable membership of the House, even before
Congress can create new provinces.
It is axiomatic that organic acts of autonomous regions cannot
prevail over the Constitution. Section 20, Article X of the
Constitution expressly provides that the legislative powers of
regional assemblies are limited "[w]ithin its territorial jurisdiction
and subject to the provisions of the Constitution and national
laws, x x x." The Preamble of the ARMM Organic Act (RA 9054) itself
states that the ARMM Government is established "within the
framework of the Constitution." This follows Section 15, Article X of
the Constitution which mandates that the ARMM "shall be created x
x x within the framework of this Constitution and the national
sovereignty as well as territorial integrity of the Republic of the
Philippines."
The present case involves the creation of a local government unit
that necessarily involves also the creation of a legislative district. The
Court will not pass upon the constitutionality of the creation of
G.R. No. 161107 March 12, 2013
HON. MA. LOURDES C. FERNANDO, in her capacity as City Mayor of
Marikina City, JOSEPHINE C. EVANGELIST A, in her capacity as
Chief, Permit Division, Office of the City Engineer, and ALFONSO
ESPIRITU, in his capacity as City Engineer of Marikina
City, Petitioners,
vs.
ST. SCHOLASTICA'S COLLEGE and ST. SCHOLASTICA'S ACADEMY-
MARIKINA, INC., Respondents.
DECISION
MENDOZA, J.:
Before this Court is a petition for review on certiorari under Rule 45
of the Rules of Court, which seeks to set aside the December 1, 2003
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 75691.
The Facts
Respondents St. Scholastica’s College (SSC) and St. Scholastica’s
Academy-Marikina, Inc. (SSA-Marikina) are educational institutions
organized under the laws of the Republic of the Philippines, with
principal offices and business addresses at Leon Guinto Street,
Malate, Manila, and at West Drive, Marikina Heights, Marikina City,
respectively.2
Respondent SSC is the owner of four (4) parcels of land measuring a
total of 56,306.80 square meters, located in Marikina Heights and
covered by Transfer Certificate Title (TCT) No. 91537. Located within
the property are SSA-Marikina, the residence of the sisters of the
Benedictine Order, the formation house of the novices, and the
retirement house for the elderly sisters. The property is enclosed by
a tall concrete perimeter fence built some thirty (30) years ago.
Abutting the fence along the West Drive are buildings, facilities, and
other improvements.3
The petitioners are the officials of the City Government of Marikina.
On September 30, 1994, the Sangguniang Panlungsod of Marikina
City enacted Ordinance No. 192,4 entitled "Regulating the
Construction of Fences and Walls in the Municipality of Marikina." In
1995 and 1998, Ordinance Nos. 2175 and 2006 were enacted to
amend Sections 7 and 5, respectively. Ordinance No. 192, as
amended, is reproduced hereunder, as follows:
ORDINANCE No. 192
Series of 1994
ORDINANCE REGULATING THE CONSTRUCTION OF FENCES AND
WALLS IN THE MUNICIPALITY OF MARIKINA
WHEREAS, under Section 447.2 of Republic Act No. 7160 otherwise
known as the Local Government Code of 1991 empowers the
Sangguniang Bayan as the local legislative body of the municipality
to "x x x Prescribe reasonable limits and restraints on the use of
property within the jurisdiction of the municipality, x x x";
WHEREAS the effort of the municipality to accelerate its economic
and physical development, coupled with urbanization and
modernization, makes imperative the adoption of an ordinance
which shall embody up-to-date and modern technical design in the
construction of fences of residential, commercial and industrial
buildings;
WHEREAS, Presidential Decree No. 1096, otherwise known as the
National Building Code of the Philippines, does not adequately
provide technical guidelines for the construction of fences, in terms
of design, construction, and criteria;
WHEREAS, the adoption of such technical standards shall provide
more efficient and effective enforcement of laws on public safety
and security;
WHEREAS, it has occurred in not just a few occasions that high
fences or walls did not actually discourage but, in fact, even
protected burglars, robbers, and other lawless elements from the
view of outsiders once they have gained ingress into these walls,
hence, fences not necessarily providing security, but becomes itself
a "security problem";
WHEREAS, to discourage, suppress or prevent the concealment of
prohibited or unlawful acts earlier enumerated, and as guardian of
the people of Marikina, the municipal government seeks to enact
and implement rules and ordinances to protect and promote the
health, safety and morals of its constituents;
WHEREAS, consistent too, with the "Clean and Green Program" of
the government, lowering of fences and walls shall encourage
people to plant more trees and ornamental plants in their yards, and
when visible, such trees and ornamental plants are expected to
create an aura of a clean, green and beautiful environment for
Marikeños;
WHEREAS, high fences are unsightly that, in the past, people planted
on sidewalks to "beautify" the façade of their residences but,
however, become hazards and obstructions to pedestrians;
WHEREAS, high and solid walls as fences are considered "un-
neighborly" preventing community members to easily communicate
and socialize and deemed to create "boxed-in" mentality among the
populace;
WHEREAS, to gather as wide-range of opinions and comments on
this proposal, and as a requirement of the Local Government Code
of 1991 (R.A. 7160), the Sangguniang Bayan of Marikina invited
presidents or officers of homeowners associations, and commercial
and industrial establishments in Marikina to two public hearings
held on July 28, 1994 and August 25, 1994;
WHEREAS, the rationale and mechanics of the proposed ordinance
were fully presented to the attendees and no vehement objection
was presented to the municipal government;
NOW, THEREFORE, BE IT ORDAINED BY THE SANGGUINANG BAYAN
OF MARIKINA IN SESSION DULY ASSEMBLED:
Section 1. Coverage: This Ordinance regulates the construction of all
fences, walls and gates on lots classified or used for residential,
commercial, industrial, or special purposes.
Section 2. Definition of Terms:
a. Front Yard – refers to the area of the lot fronting a street, alley or
public thoroughfare.
b. Back Yard – the part of the lot at the rear of the structure
constructed therein.
c. Open fence – type of fence which allows a view of "thru-see" of
the inner yard and the improvements therein. (Examples: wrought
iron, wooden lattice, cyclone wire)
d. Front gate – refers to the gate which serves as a passage of
persons or vehicles fronting a street, alley, or public thoroughfare.
Section 3. The standard height of fences or walls allowed under this
ordinance are as follows:
(1) Fences on the front yard – shall be no more than one (1) meter in
height. Fences in excess of one (1) meter shall be of an open fence
type, at least eighty percent (80%) see-thru; and
(2) Fences on the side and back yard – shall be in accordance with
the provisions of P.D. 1096 otherwise known as the National
Building Code.
Section 4. No fence of any kind shall be allowed in areas specifically
reserved or classified as parks.
Section 5. In no case shall walls and fences be built within the five (5)
meter parking area allowance located between the front monument
line and the building line of commercial and industrial
establishments and educational and religious institutions.7
Section 6. Exemption.
(1) The Ordinance does not cover perimeter walls of residential
subdivisions.
(2) When public safety or public welfare requires, the Sangguniang
Bayan may allow the construction and/or maintenance of walls
higher than as prescribed herein and shall issue a special permit or
exemption.
Section 7. Transitory Provision. Real property owners whose existing
fences and walls do not conform to the specifications herein are
allowed adequate period of time from the passage of this Ordinance
within which to conform, as follows:
(1) Residential houses – eight (8) years
(2) Commercial establishments – five (5) years
(3) Industrial establishments – three (3) years
(4) Educational institutions – five (5) years8 (public and privately
owned)
Section 8. Penalty. Walls found not conforming to the provisions of
this Ordinance shall be demolished by the municipal government at
the expense of the owner of the lot or structure.
Section 9. The Municipal Engineering Office is tasked to strictly
implement this ordinance, including the issuance of the necessary
implementing guidelines, issuance of building and fencing permits,
and demolition of non-conforming walls at the lapse of the grace
period herein provided.
Section 10. Repealing Clause. All existing Ordinances and
Resolutions, Rules and Regulations inconsistent with the foregoing
provisions are hereby repealed, amended or modified.
Section 11. Separability Clause. If for any reason or reasons, local
executive orders, rules and regulations or parts thereof in conflict
with this Ordinance are hereby repealed and/or modified
accordingly.
Section 12. Effectivity. This ordinance takes effect after publication.
APPROVED: September 30, 1994
(Emphases supplied)
On April 2, 2000, the City Government of Marikina sent a letter to
the respondents ordering them to demolish and replace the fence of
their Marikina property to make it 80% see-thru, and, at the same
time, to move it back about six (6) meters to provide parking space
for vehicles to park.9 On April 26, 2000, the respondents requested
for an extension of time to comply with the directive.10 In response,
the petitioners, through then City Mayor Bayani F. Fernando,
insisted on the enforcement of the subject ordinance.
Not in conformity, the respondents filed a petition for prohibition
with an application for a writ of preliminary injunction and
temporary restraining order before the Regional Trial Court,
Marikina, Branch 273 (RTC), docketed as SCA Case No. 2000-381-
MK.11
The respondents argued that the petitioners were acting in excess of
jurisdiction in enforcing Ordinance No. 192, asserting that such
contravenes Section 1, Article III of the 1987 Constitution. That
demolishing their fence and constructing it six (6) meters back would
result in the loss of at least 1,808.34 square meters, worth about
₱9,041,700.00, along West Drive, and at least 1,954.02 square
meters, worth roughly ₱9,770,100.00, along East Drive. It would also
result in the destruction of the garbage house, covered walk, electric
house, storage house, comfort rooms, guards’ room, guards’ post,
waiting area for visitors, waiting area for students, Blessed Virgin
Shrine, P.E. area, and the multi-purpose hall, resulting in the
permanent loss of their beneficial use. The respondents, thus,
asserted that the implementation of the ordinance on their property
would be tantamount to an appropriation of property without due
process of law; and that the petitioners could only appropriate a
portion of their property through eminent domain. They also
pointed out that the goal of the provisions to deter lawless elements
and criminality did not exist as the solid concrete walls of the school
had served as sufficient protection for many years.12
The petitioners, on the other hand, countered that the ordinance
was a valid exercise of police power, by virtue of which, they could
restrain property rights for the protection of public safety, health,
morals, or the promotion of public convenience and general
prosperity.13
On June 30, 2000, the RTC issued a writ of preliminary injunction,
enjoining the petitioners from implementing the demolition of the
fence at SSC’s Marikina property.14
Ruling of the RTC
On the merits, the RTC rendered a Decision,15 dated October 2,
2002, granting the petition and ordering the issuance of a writ of
prohibition commanding the petitioners to permanently desist from
enforcing or implementing Ordinance No. 192 on the respondents’
property.
The RTC agreed with the respondents that the order of the
petitioners to demolish the fence at the SSC property in Marikina
and to move it back six (6) meters would amount to an
appropriation of property which could only be done through the
exercise of eminent domain. It held that the petitioners could not
take the respondents’ property under the guise of police power to
evade the payment of just compensation.
It did not give weight to the petitioners’ contention that the parking
space was for the benefit of the students and patrons of SSA-
Marikina, considering that the respondents were already providing
for sufficient parking in compliance with the standards under Rule
XIX of the National Building Code.
It further found that the 80% see-thru fence requirement could run
counter to the respondents’ right to privacy, considering that the
property also served as a residence of the Benedictine sisters, who
were entitled to some sense of privacy in their affairs. It also found
that the respondents were able to prove that the danger to security
had no basis in their case. Moreover, it held that the purpose of
beautification could not be used to justify the exercise of police
power.
It also observed that Section 7 of Ordinance No. 192, as amended,
provided for retroactive application. It held, however, that such
retroactive effect should not impair the respondents’ vested
substantive rights over the perimeter walls, the six-meter strips of
land along the walls, and the building, structures, facilities, and
improvements, which would be destroyed by the demolition of the
walls and the seizure of the strips of land.
The RTC also found untenable the petitioners’ argument that
Ordinance No. 192 was a remedial or curative statute intended to
correct the defects of buildings and structures, which were brought
about by the absence or insufficiency of laws. It ruled that the
assailed ordinance was neither remedial nor curative in nature,
considering that at the time the respondents’ perimeter wall was
built, the same was valid and legal, and the ordinance did not refer
to any previous legislation that it sought to correct.
The RTC noted that the petitioners could still take action to
expropriate the subject property through eminent domain.
The RTC, thus, disposed:
WHEREFORE, the petition is GRANTED. The writ of prohibition is
hereby issued commanding the respondents to permanently desist
from enforcing or implementing Ordinance No. 192, Series of 1994,
as amended, on petitioners’ property in question located at
Marikina Heights, Marikina, Metro Manila.
No pronouncement as to costs.
SO ORDERED.16
Ruling of the CA
In its December 1, 2003 Decision, the CA dismissed the petitioners’
appeal and affirmed the RTC decision.
The CA reasoned out that the objectives stated in Ordinance No. 192
did not justify the exercise of police power, as it did not only seek to
regulate, but also involved the taking of the respondents’ property
without due process of law. The respondents were bound to lose an
unquantifiable sense of security, the beneficial use of their
structures, and a total of 3,762.36 square meters of property. It,
thus, ruled that the assailed ordinance could not be upheld as valid
as it clearly invaded the personal and property rights of the
respondents and "[f]or being unreasonable, and undue restraint of
trade."17
It noted that although the petitioners complied with procedural due
process in enacting Ordinance No. 192, they failed to comply with
substantive due process. Hence, the failure of the respondents to
attend the public hearings in order to raise objections did not
amount to a waiver of their right to question the validity of the
ordinance.
The CA also shot down the argument that the five-meter setback
provision for parking was a legal easement, the use and ownership
of which would remain with, and inure to, the benefit of the
respondents for whom the easement was primarily intended. It
found that the real intent of the setback provision was to make the
parking space free for use by the public, considering that such would
cease to be for the exclusive use of the school and its students as it
would be situated outside school premises and beyond the school
administration’s control.
In affirming the RTC ruling that the ordinance was not a curative
statute, the CA found that the petitioner failed to point out any
irregularity or invalidity in the provisions of the National Building
Code that required correction or cure. It noted that any correction in
the Code should be properly undertaken by the Congress and not by
the City Council of Marikina through an ordinance.
The CA, thus, disposed:
WHEREFORE, all foregoing premises considered, the instant appeal
is DENIED.1âwphi1 The October 2, 2002 Decision and the January
13, 2003 Order of the Regional Trial Court (RTC) of Marikina City,
Branch 273, granting petitioners-appellees’ petition for Prohibition
in SCA Case No. 2000-381-MK are hereby AFFIRMED.
SO ORDERED.18
Aggrieved by the decision of the CA, the petitioners are now before
this Court presenting the following
ASSIGNMENT OF ERRORS
1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED
IN DECLARING THAT CITY ORDINANCE NO. 192, SERIES OF 1994 IS
NOT A VALID EXERCISE OF POLICE POWER;
2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED
IN RULING THAT THE AFOREMENTIONED ORDINANCE IS AN
EXERCISE OF THE CITY OF THE POWER OF EMINENT DOMAIN;
3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED
IN DECLARING THAT THE CITY VIOLATED THE DUE PROCESS CLAUSE
IN IMPLEMENTING ORDINANCE NO. 192, SERIES OF 1994; AND
4. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED
IN RULING THAT THE ABOVE-MENTIONED ORDINANCE CANNOT BE
GIVEN RETROACTIVE APPLICATION.19
In this case, the petitioners admit that Section 5 of the assailed
ordinance, pertaining to the five-meter setback requirement is, as
held by the lower courts, invalid.20 Nonetheless, the petitioners
argue that such invalidity was subsequently cured by Zoning
Ordinance No. 303, series of 2000. They also contend that Section 3,
relating to the 80% see-thru fence requirement, must be complied
with, as it remains to be valid.
Ruling of the Court
The ultimate question before the Court is whether Sections 3.1 and
5 of Ordinance No. 192 are valid exercises of police power by the
City Government of Marikina.
"Police power is the plenary power vested in the legislature to make
statutes and ordinances to promote the health, morals, peace,
education, good order or safety and general welfare of the
people."21 The State, through the legislature, has delegated the
exercise of police power to local government units, as agencies of
the State. This delegation of police power is embodied in Section
1622 of the Local Government Code of 1991 (R.A. No. 7160), known
as the General Welfare Clause,23 which has two branches. "The first,
known as the general legislative power, authorizes the municipal
council to enact ordinances and make regulations not repugnant to
law, as may be necessary to carry into effect and discharge the
powers and duties conferred upon the municipal council by law. The
second, known as the police power proper, authorizes the
municipality to enact ordinances as may be necessary and proper for
the health and safety, prosperity, morals, peace, good order,
comfort, and convenience of the municipality and its inhabitants,
and for the protection of their property."24
White Light Corporation v. City of Manila,25 discusses the test of a
valid ordinance:
The test of a valid ordinance is well established. A long line of
decisions including City of Manila has held that for an ordinance to
be valid, it must not only be within the corporate powers of the local
government unit to enact and pass according to the procedure
prescribed by law, it must also conform to the following substantive
requirements: (1) must not contravene the
Constitution or any statute; (2) must not be unfair or oppressive; (3)
must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy;
and (6) must not be unreasonable.26
Ordinance No. 192 was passed by the City Council of Marikina in the
apparent exercise of its police power. To successfully invoke the
exercise of police power as the rationale for the enactment of an
ordinance and to free it from the imputation of constitutional
infirmity, two tests have been used by the Court – the rational
relationship test and the strict scrutiny test:
We ourselves have often applied the rational basis test mainly in
analysis of equal protection challenges. Using the rational basis
examination, laws or ordinances are upheld if they rationally further
a legitimate governmental interest. Under intermediate review,
governmental interest is extensively examined and the availability of
less restrictive measures is considered. Applying strict scrutiny, the
focus is on the presence of compelling, rather than substantial,
governmental interest and on the absence of less restrictive means
for achieving that interest.27
Even without going to a discussion of the strict scrutiny test,
Ordinance No. 192, series of 1994 must be struck down for not
being reasonably necessary to accomplish the City’s purpose. More
importantly, it is oppressive of private rights.
Under the rational relationship test, an ordinance must pass the
following requisites as discussed in Social Justice Society (SJS) v.
Atienza, Jr.:28
As with the State, local governments may be considered as having
properly exercised their police power only if the following requisites
are met: (1) the interests of the public generally, as distinguished
from those of a particular class, require its exercise and (2) the
means employed are reasonably necessary for the accomplishment
of the purpose and not unduly oppressive upon individuals. In short,
there must be a concurrence of a lawful subject and lawful
method.29
Lacking a concurrence of these two requisites, the police power
measure shall be struck down as an arbitrary intrusion into private
rights and a violation of the due process clause.30
Section 3.1 and 5 of the assailed ordinance are pertinent to the issue
at hand, to wit:
Section 3. The standard height of fences of walls allowed under this
ordinance are as follows:
(1) Fences on the front yard – shall be no more than one (1) meter in
height. Fences in excess of one (1) meter shall be an open fence
type, at least eighty percent (80%) see-thru;
xxx xxx xxx
Section 5. In no case shall walls and fences be built within the five (5)
meter parking area allowance located between the front monument
line and the building line of commercial and industrial
establishments and educational and religious institutions.
The respondents, thus, sought to prohibit the petitioners from
requiring them to (1) demolish their existing concrete wall, (2) build
a fence (in excess of one meter) which must be 80% see-thru, and
(3) build the said fence six meters back in order to provide a parking
area.
Setback Requirement
The Court first turns its attention to Section 5 which requires the
five-meter setback of the fence to provide for a parking area. The
petitioners initially argued that the ownership of the parking area to
be created would remain with the respondents as it would primarily
be for the use of its students and faculty, and that its use by the
public on non-school days would only be incidental. In their Reply,
however, the petitioners admitted that Section 5 was, in fact, invalid
for being repugnant to the Constitution.31
The Court agrees with the latter position.
The Court joins the CA in finding that the real intent of the setback
requirement was to make the parking space free for use by the
public, considering that it would no longer be for the exclusive use
of the respondents as it would also be available for use by the
general public. Section 9 of Article III of the 1987 Constitution, a
provision on eminent domain, provides that private property shall
not be taken for public use without just compensation.
The petitioners cannot justify the setback by arguing that the
ownership of the property will continue to remain with the
respondents. It is a settled rule that neither the acquisition of title
nor the total destruction of value is essential to taking. In fact, it is
usually in cases where the title remains with the private owner that
inquiry should be made to determine whether the impairment of a
property is merely regulated or amounts to a compensable
taking.32 The Court is of the view that the implementation of the
setback requirement would be tantamount to a taking of a total of
3,762.36 square meters of the respondents’ private property for
public use without just compensation, in contravention to the
Constitution.
Anent the objectives of prevention of concealment of unlawful acts
and "un-neighborliness," it is obvious that providing for a parking
area has no logical connection to, and is not reasonably necessary
for, the accomplishment of these goals.
Regarding the beautification purpose of the setback requirement, it
has long been settled that the State may not, under the guise of
police power, permanently divest owners of the beneficial use of
their property solely to preserve or enhance the aesthetic
appearance of the community.33 The Court, thus, finds Section 5 to
be unreasonable and oppressive as it will substantially divest the
respondents of the beneficial use of their property solely for
aesthetic purposes. Accordingly, Section 5 of Ordinance No. 192 is
invalid.
The petitioners, however, argue that the invalidity of Section 5 was
properly cured by Zoning Ordinance No. 303,34Series of 2000, which
classified the respondents’ property to be within an institutional
zone, under which a five-meter setback has been required.
The petitioners are mistaken. Ordinance No. 303, Series of 2000, has
no bearing to the case at hand.
The Court notes with displeasure that this argument was only raised
for the first time on appeal in this Court in the petitioners’ Reply.
Considering that Ordinance No. 303 was enacted on December 20,
2000, the petitioners could very well have raised it in their defense
before the RTC in 2002. The settled rule in this jurisdiction is that a
party cannot change the legal theory of this case under which the
controversy was heard and decided in the trial court. It should be
the same theory under which the review on appeal is conducted.
Points of law, theories, issues, and arguments not adequately
brought to the attention of the lower court will not be ordinarily
considered by a reviewing court, inasmuch as they cannot be raised
for the first time on appeal. This will be offensive to the basic rules
of fair play, justice, and due process.35
Furthermore, the two ordinances have completely different
purposes and subjects. Ordinance No. 192 aims to regulate the
construction of fences, while Ordinance No. 303 is a zoning
ordinance which classifies the city into specific land uses. In fact, the
five-meter setback required by Ordinance No. 303 does not even
appear to be for the purpose of providing a parking area.
By no stretch of the imagination, therefore, can Ordinance No. 303,
"cure" Section 5 of Ordinance No. 192.
In any case, the clear subject of the petition for prohibition filed by
the respondents is Ordinance No. 192 and, as such, the precise issue
to be determined is whether the petitioners can be prohibited from
enforcing the said ordinance, and no other, against the respondents.
80% See-Thru Fence Requirement namely, its failure to provide for adequate guidelines for the
The petitioners argue that while Section 5 of Ordinance No. 192 may construction of fences. They ultimately seek to remedy an
be invalid, Section 3.1 limiting the height of fences to one meter and insufficiency in the law. In aiming to cure this insufficiency, the
requiring fences in excess of one meter to be at least 80% see-thru, petitioners attempt to add lacking provisions to the National
should remain valid and enforceable against the respondents. Building Code. This is not what is contemplated by curative statutes,
The Court cannot accommodate the petitioner. which intend to correct irregularities or invalidity in the law. The
For Section 3.1 to pass the rational relationship test, the petitioners petitioners fail to point out any irregular or invalid provision. As
must show the reasonable relation between the purpose of the such, the assailed ordinance cannot qualify as curative and
police power measure and the means employed for its retroactive in nature.
accomplishment, for even under the guise of protecting the public At any rate, there appears to be no insufficiency in the National
interest, personal rights and those pertaining to private property will Building Code with respect to parking provisions in relation to the
not be permitted to be arbitrarily invaded.36 issue of the respondents. Paragraph 1.16.1, Rule XIX of the Rules
The principal purpose of Section 3.1 is "to discourage, suppress or and Regulations of the said code requires an educational institution
prevent the concealment of prohibited or unlawful acts." The to provide one parking slot for every ten classrooms. As found by
ultimate goal of this objective is clearly the prevention of crime to the lower courts, the respondents provide a total of 76 parking slots
ensure public safety and security. The means employed by the for their 80 classrooms and, thus, had more than sufficiently
petitioners, however, is not reasonably necessary for the complied with the law.
accomplishment of this purpose and is unduly oppressive to private Ordinance No. 192, as amended, is, therefore, not a curative statute
rights. The petitioners have not adequately shown, and it does not which may be applied retroactively.
appear obvious to this Court, that an 80% see-thru fence would Separability
provide better protection and a higher level of security, or serve as a Sections 3.1 and 5 of Ordinance No. 192, as amended, are, thus,
more satisfactory criminal deterrent, than a tall solid concrete wall. invalid and cannot be enforced against the respondents.
It may even be argued that such exposed premises could entice and Nonetheless, "the general rule is that where part of a statute is void
tempt would-be criminals to the property, and that a see-thru fence as repugnant to the Constitution, while another part is valid, the
would be easier to bypass and breach. It also appears that the valid portion, if susceptible to being separated from the invalid, may
respondents’ concrete wall has served as more than sufficient stand and be enforced."42 Thus, the other sections of the assailed
protection over the last 40 years. ` ordinance remain valid and enforceable.
As to the beautification purpose of the assailed ordinance, as Conclusion
previously discussed, the State may not, under the guise of police Considering the invalidity of Sections 3.1 and 5, it is clear that the
power, infringe on private rights solely for the sake of the aesthetic petitioners were acting in excess of their jurisdiction in enforcing
appearance of the community. Similarly, the Court cannot perceive Ordinance No. 192 against the respondents. The CA was correct in
how a see-thru fence will foster "neighborliness" between members affirming the decision of the RTC in issuing the writ of prohibition.
of a community. The petitioners must permanently desist from enforcing Sections 3.1
Compelling the respondents to construct their fence in accordance and 5 of the assailed ordinance on the respondents' property in
with the assailed ordinance is, thus, a clear encroachment on their Marikina City.
right to property, which necessarily includes their right to decide WHEREFORE, the petition is DENIED. The October 2, 2002 Decision
how best to protect their property. of the Regional Trial Court in SCA Case No. 2000-381-MK is
It also appears that requiring the exposure of their property via a AFFIRMED but MODIFIED to read as follows:
see-thru fence is violative of their right to privacy, considering that WHEREFORE, the petition is GRANTED. The writ of prohibition is
the residence of the Benedictine nuns is also located within the hereby issued commanding the respondents to permanently desist
property. The right to privacy has long been considered a from enforcing or implementing Sections 3.1 and 5 of Ordinance No.
fundamental right guaranteed by the Constitution that must be 192, Series of 1994, as amended, on the petitioners' property in
protected from intrusion or constraint. The right to privacy is question located in Marikina Heights, Marikina, Metro Manila.
essentially the right to be let alone,37 as governmental powers No pronouncement as to costs.
should stop short of certain intrusions into the personal life of its SO ORDERED.
citizens.38 It is inherent in the concept of liberty, enshrined in the Bill
of Rights (Article III) in Sections 1, 2, 3(1), 6, 8, and 17, Article III of
the 1987 Constitution.39
The enforcement of Section 3.1 would, therefore, result in an undue
interference with the respondents’ rights to property and privacy.
Section 3.1 of Ordinance No. 192 is, thus, also invalid and cannot be
enforced against the respondents.
No Retroactivity
Ordinance No. 217 amended Section 7 of Ordinance No. 192 by
including the regulation of educational institutions which was
unintentionally omitted, and giving said educational institutions five
(5) years from the passage of Ordinance No. 192 (and not Ordinance
No. 217) to conform to its provisions.40 The petitioners argued that
the amendment could be retroactively applied because the assailed
ordinance is a curative statute which is retroactive in nature.
Considering that Sections 3.1 and 5 of Ordinance No. 192 cannot be
enforced against the respondents, it is no longer necessary to rule
on the issue of retroactivity. The Court shall, nevertheless, pass upon
the issue for the sake of clarity.
"Curative statutes are enacted to cure defects in a prior law or to
validate legal proceedings which would otherwise be void for want
of conformity with certain legal requirements. They are intended to
supply defects, abridge superfluities and curb certain evils. They are
intended to enable persons to carry into effect that which they have
designed or intended, but has failed of expected legal consequence
by reason of some statutory disability or irregularity in their own
action. They make valid that which, before the enactment of the
statute was invalid. Their purpose is to give validity to acts done that
would have been invalid under existing laws, as if existing laws have
been complied with. Curative statutes, therefore, by their very
essence, are retroactive."41
The petitioners argue that Ordinance No. 192 is a curative statute as
it aims to correct or cure a defect in the National Building Code,

Belgica, et al. vs. Executive Secretary, et al., G.R. Nos. 208566,
208493 & 209251, November 19, 2013
FACTS
HISTORY of CONGRESSIONAL PORK BARREL
 The term “pork barrel”, a political parlance of American-
English origin, refers to an appropriation of government
spending meant for localized projects and secured solely
or primarily to bring money to a representative’s district.
 The earliest form of the pork barrel system is found in
Section 3 of Act 3044, otherwise known as the Public
Works Act of 1922. Under this provision, release of funds
and realignment of unexpended portions of an item or
appropriation were subject to the approval of a joint
committee elected by the Senate and the House of
Representatives.
 In 1950, members of Congress, by virtue of being
representatives of the people, also became involved in
project identification.
 The pork barrel system was temporarily discontinued
when martial law was declared.
 It reappeared in 1982 through an item in the General
Appropriations Act (“GAA”) called “Support for Local
Development Projects” (“SLDP”). SLDP started the giving of
lump-sum allocations to individual legislators. The SLDP
also began to cover not only public works project or “hard
projects” but also covered “soft projects” such as those
which would fall under education, health and livelihood.
 After the EDSA People Power Revolution and the
restoration of democracy, the pork barrel was revived
through the “Mindanao Development Fund” and the
“Visayas Development Fund”.
 In 1990, the pork barrel was renamed “Countrywide
Development Fund” (“CDF”). The CDF was meant to cover
small local infrastructure and other priority community
projects.
 CDF Funds were, with the approval of the President,
released directly to implementing agencies subject to the
submission of the required list of projects and activities.
Senators and congressmen could identify any kind of
project from “hard projects” such as roads, buildings and
bridges to “soft projects” such as textbooks, medicines,
and scholarships.
 In 1993, the CDF was further modified such that the
release of funds was to be made upon the submission of
the list of projects and activities identified by individual
legislators. This was also the first time when the Vice-
President was given an allocation.
 The CDF contained the same provisions from 1994-1996
except that the Department of Budget and Management
was required to submit reports to the Senate Committee
on Finance and the House Committee on Appropriations
regarding the releases made from the funds.
 Congressional insertions (“CIs”) were another form of
congressional pork barrel aside from the CDF. Examples of
the CIs include the DepEd School Building Fund, the
Congressional Initiative Allocations, and the Public Works
Fund, among others.
 The allocations for the School Building Fund were made
upon prior consultation with the representative of the
legislative district concerned and the legislators had the
power to direct how, where and when these
appropriations were to be spent.
 In 1999, the CDF was removed from the GAA and replaced
by three separate forms of CIs: (i) Food Security Program
Fund, (ii) Lingap Para sa Mahihirap Fund, and (iii)
Rural/Urban Development Infrastructure Program Fund.
All three contained a provision requiring prior consultation
with members of Congress for the release of funds.
 In 2000, the Priority Development Assistance Fund
(“PDAF”) appeared in the GAA. PDAF required prior
consultation with the representative of the district before
the release of funds. PDAF also allowed realignment of
funds to any expense category except personal services
and other personnel benefits.
 In 2005, the PDAF introduced the program menu concept
which is essentially a list of general programs and
implementing agencies from which a particular PDAF
project may be subsequently chosen by the identifying
authority. This was retained in the GAAs from 2006-2010.
 It was during the Arroyo administration when the formal
participation of non-governmental organizations in the
implementation of PDAF projects was introduced.
 The PDAF articles from 2002-2010 were silent with respect
to specific amounts for individual legislators.
 In 2011, the PDAF Article in the GAA contained an express
statement on lump-sum amounts allocated for individual
legislators and the Vice-President. It also contained a
provision on realignment of funds but with the
qualification that it may be allowed only once.
 The 2013 PDAF Article allowed LGUs to be identified as
implementing agencies. Legislators were also allowed to
identify programs/projects outside of his legislative
district. Realignment of funds and release of funds were
required to be favorably endorsed by the House
Committee on Appropriations and the Senate Committee
on Finance, as the case may be.
MALAMPAYA FUNDS AND PRESIDENTIAL SOCIAL FUND
 The use of the term pork barrel was expanded to include
certain funds of the President such as the Malampaya
Fund and the Presidential Social Fund (“PSF”).
 The Malampaya Fund was created as a special fund under
Section 8 of Presidential Decree (“PD”) No. 910 issued by
President Ferdinand Marcos on March 22, 1976.
 The PSF was created under Section 12, Title IV of PD No.
1869, or the Charter of the Philippine Amusement and
Gaming Corporation (“PAGCOR”), as amended by PD No.
1993. The PSF is managed and administered by the
Presidential Management Staff and is sourced from the
share of the government in the aggregate gross earnings
of PAGCOR.
PORK BARREL MISUSE
 In 1996, Marikina City Representative Romeo Candozo
revealed that huge sums of money regularly went into the
pockets of legislators in the form of kickbacks.
 In 2004, several concerned citizens sought the nullification
of the PDAF but the Supreme Court dismissed the petition
for lack of evidentiary basis regarding illegal misuse of
PDAF in the form of kickbacks.
 In July 2013, the National Bureau of Investigation probed
the allegation that a syndicate defrauded the government
of P10 billion using funds from the pork barrel of
lawmakers and various government agencies for scores of
ghost projects.
 In August 2013, the Commission on Audit released the
results of a three-year audit investigation detailing the
irregularities in the release of the PDAF from 2007 to 2009.
 Whistle-blowers also alleged that at least P900 million
from the Malampaya Funds had gone into a dummy NGO.
ISSUE/S
PROCEDURAL ISSUES
 Whether or not (a) the issues raised in the consolidated
petitions involve an actual and justiciable controversy, (b)
the issues raised are matters of policy not subject to
judicial review, (c) petitioners have legal standing to sue,
(d) previous decisions of the Court bar the re-litigation of
the constitutionality of the Pork Barrel system.
SUBSTANTIVE ISSUES
 Whether or not the 2013 PDAF Article and all other
Congressional Pork Barrel laws are unconstitutional for
violating the constitutional provisions on (a) separation of
powers, (b) non-delegability of legislative power, (c)
checks and balances, (d) accountability, (e) political
dynasties, (f) local autonomy.
RULING
PROCEDURAL ISSUES
(a) There is an actual and justiciable controversy
 There exists an actual and justiciable controversy in the
cases. The requirement of contrariety of legal rights is
satisfied by the antagonistic positions of the parties
regarding the constitutionality of the pork barrel system.
  The case is ripe for adjudication since the challenged funds
and the laws allowing for their utilization are currently
existing and operational and thereby posing an immediate
or threatened injury to petitioners.
 The case is not moot as the proposed reforms on the PDAF
and the abolition thereof does not actually terminate the
controversy on the matter. The President does not have
constitutional authority to nullify or annul the legal
existence of the PDAF.
 The “moot and academic principle” cannot stop the Court
from deciding the case considering that: (a) petitioners
allege grave violation of the constitution, (b) the
constitutionality of the pork barrel system presents a
situation of exceptional character and is a matter of
paramount public interest, (c) there is a practical need for
a definitive ruling on the system’s constitutionality to
guide the bench, the bar and the public, and (d) the
preparation and passage of the national budget is an
annual occurrence.
(b) Political Question Doctrine is Inapplicable
 The intrinsic constitutionality of the “Pork Barrel System”
is not an issue dependent upon the wisdom of the political
branches of the government but rather a legal one which
the Constitution itself has commanded the Court to act
upon.
 The 1987 Constitution expanded the concept of judicial
power such that the Supreme Court has the power to
determine whether there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality on the part of
the government.
(c) Petitioners have legal standing to sue
 Petitioners have legal standing by virtue of being taxpayers
and citizens of the Philippines.
 As taxpayers, they are bound to suffer from the
unconstitutional usage of public funds.
 As citizens, the issues they have raised are matters of
transcendental importance, of overreaching significance to
society, or of paramount public interest.
(d) The Petition is not barred by previous cases
 The present case is not barred by the ruling in Philconsa
vs. Enriquez because the Philconsa case was a limited
response to a separation of powers problem, specifically
on the propriety of conferring post-enactment
identification authority to Members of Congress.
 On the contrary, the present cases involve a more holistic
examination of (a) the inter-relation between the CDF and
the PDAF Articles with each other, and (b) the inter-
relation of post-enactment measures contained within a
particular CDF or PDAF article, including not only those
related to the area of project identification but also to the
areas of fund release and realignment.
 Moreover, the Philconsa case was riddled with inherent
constitutional inconsistencies considering that the
authority to identify projects is an aspect of appropriation
and the power of appropriation is a form of legislative
power thereby lodged in Congress. This power cannot be
exercised by individual members of Congress and the
authority to appropriate cannot be exercised after the
GAA has already been passed.
 The case of Lawyers Against Monopoly and Poverty vs.
Secretary of Budget and Management does not also bar
judgment on the present case because it was dismissed on
a procedural technicality and hence no controlling
doctrine was rendered.
SUBSTANTIVE ISSUES ON CONGRESSIONAL PORK BARREL
(a) The separation of powers between the Executive and the
Legislative Departments has been violated.
 The post-enactment measures including project
identification, fund release, and fund realignment are not
related to functions of congressional oversight and, hence,
allow legislators to intervene and/or assume duties that
properly belong to the sphere of budget execution, which
belongs to the executive department.
 Legislators have been, in one form or another, authorized
to participate in the various operational aspects of
budgeting, including ―the evaluation of work and financial
plans for individual activities and the ― regulation and
release of funds in violation of the separation of powers
principle.
 Any provision of law that empowers Congress or any of its
members to play any role in the implementation or
enforcement of the law violates the principle of separation
of powers and is thus unconstitutional.
 That the said authority to identify projects is treated as
merely recommendatory in nature does not alter its
unconstitutional tenor since the prohibition covers any
role in the implementation or enforcement of the law.
 Respondents also failed to prove that the role of the
legislators is only recommendatory in nature. They even
admitted that the identification of the legislator
constitutes a mandatory requirement before the PDAF can
be tapped as a funding source.
(b)The principle of non-delegability of legislative powers has been
violated
 The 2013 PDAF Article, insofar as it confers post-
enactment identification authority to individual legislators,
violates the principle of non-delegability since said
legislators are effectively allowed to individually exercise
the power of appropriation, which – as settled in Philconsa
– is lodged in Congress.
 That the power to appropriate must be exercised only
through legislation is clear from Section 29(1), Article VI of
the 1987 Constitution which states that: ― No money shall
be paid out of the Treasury except in pursuance of an
appropriation made by law.
 The legislators are individually exercising the power of
appropriation because each of them determines (a) how
much of their PDAF fund would go to and (b) a specific
project or beneficiary that they themselves also
determine.
(c) Checks and balances
 Under the 2013 PDAF Article, the amount of P24.79 Billion
only appears as a collective allocation limit since the said
amount would be further divided among individual
legislators who would then receive personal lump-sum
allocations and could, after the GAA is passed, effectively
appropriate PDAF funds based on their own discretion.
 This kind of lump-sum/post-enactment legislative
identification budgeting system fosters the creation of a
―budget within a budget which subverts the prescribed
procedure of presentment and consequently impairs the
President‘s power of item veto.
 It forces the President to decide between (a) accepting the
entire PDAF allocation without knowing the specific
projects of the legislators, which may or may not be
consistent with his national agenda and (b) rejecting the
whole PDAF to the detriment of all other legislators with
legitimate projects.
 In fact, even without its post-enactment legislative
identification feature, the 2013 PDAF Article would remain
constitutionally flawed since it would then operate as a
prohibited form of lump-sum appropriation. This is
because the appropriation law leaves the actual amounts
and purposes of the appropriation for further
determination and, therefore, does not readily indicate a
discernible item which may be subject to the President‘s
power of item veto.
(d) The Congressional Pork Barrel partially prevents accountability as
Congress is incapable of checking itself or its members.
 The fact that individual legislators are given post-
enactment roles in the implementation of the budget
makes it difficult for them to become disinterested
observers when scrutinizing, investigating or monitoring
the implementation of the appropriation law.
 The conduct of oversight would be tainted as said
legislators, who are vested with post-enactment authority,
would, in effect, be checking on activities in which they
themselves participate.
 The concept of post-enactment authorization violates
Section 14, Article VI of the 1987 Constitution, which
prohibits members of Congress to intervene in any matter
 before any office of the Government, because it renders (b) Section 8 of PD No. 910 and Section 12 of PD No. 1869
them susceptible to taking undue advantage of their own constitutes undue delegation of legislation powers.
office.  The phrase “and for such other purposes as may be
 The Court, however, cannot completely agree that the hereafter directed by the President” under Section 8 of PD
same post-enactment authority and/or the individual 910 constitutes an undue delegation of legislative power
legislator‘s control of his PDAF per se would allow him to insofar as it does not lay down a sufficient standard to
perpetuate himself in office. adequately determine the limits of the President‘s
 The use of his PDAF for re-election purposes is a matter authority with respect to the purpose for which the
which must be analyzed based on particular facts and on a Malampaya Funds may be used.
case-to-case basis.  This phrase gives the President wide latitude to use the
(e) The constitutional provision regarding political dynasties is not Malampaya Funds for any other purpose he may direct
self-executing. and, in effect, allows him to unilaterally appropriate public
 Section 26, Article II of the 1987 Constitution, which funds beyond the purview of the law.
provides that the state shall prohibit political dynasties as  This notwithstanding, it must be underscored that the rest
may be defined by law, is not a self-executing provision. of Section 8, insofar as it allows for the use of the
 Since there appears to be no standing law which Malampaya Funds ―to finance energy resource
crystallizes the policy on political dynasties for development and exploitation programs and projects of
enforcement, the Court must defer from ruling on this the government, remains legally effective and subsisting.
issue.  Section 12 of PD No. 1869 constitutes an undue delegation
(f) The Congressional Pork Barrel violates constitutional principles on of legislative powers because it lies independently
local autonomy unfettered by any sufficient standard of the delegating
 The Congressional Pork Barrel goes against the law.
constitutional principles on local autonomy since it allows  The law does not supply a definition of “priority
district representatives, who are national officers, to infrastructure development projects” and hence, leaves
substitute their judgments in utilizing public funds for local the President without any guideline to construe the same.
development.  The delimitation of a project as one of “infrastructure” is
 The gauge of PDAF and CDF allocation/division is based too broad of a classification since the said term could
solely on the fact of office, without taking into account the pertain to any kind of facility.
specific interests and peculiarities of the district the
legislator represents.
 The allocation/division limits are clearly not based on
genuine parameters of equality, wherein economic or
geographic indicators have been taken into consideration.
 This concept of legislator control underlying the CDF and
PDAF conflicts with the functions of the various Local
Development Councils (“LDCs”) which are already legally
mandated to―assist the corresponding sanggunian in
setting the direction of economic and social development,
and coordinating development efforts within its territorial
jurisdiction.
 Considering that LDCs are instrumentalities whose
functions are essentially geared towards managing local
affairs, their programs, policies and resolutions should not
be overridden nor duplicated by individual legislators, who
are national officers that have no law-making authority
except only when acting as a body.
SUBSTANTIVE ISSUES ON PRESIDENTIAL PORK BARREL
(a) Section 8 of PD No. 910 and Section 12 of PD No. 1869 are valid
appropriation laws.
 For an appropriation law to be valid under Section 29 (1),
Article VI of the 1987 Constitution, which provides that
“No money shall be paid out of the Treasury except in
pursuance of an appropriation made by law”, it is enough
that (a) the provision of law sets apart a determinate or
determinable amount of money and (b) allocates the same
for a particular public purpose.
 Section 8 of PD 910 is a valid appropriation law because it
set apart a determinable amount: a Special Fund
comprised of ― all fees, revenues, and receipts of the
[Energy Development] Board from any and all sources.
 It also specified a public purpose: energy resource
development and exploitation programs and projects of
the government and for such other purposes as may be
hereafter directed by the President.
 Section 12 of PD No. 1869 is also a valid appropriation law
because it set apart a determinable amount: [a]fter
deducting five (5%) percent as Franchise Tax, the Fifty
(50%) percent share of the Government in the aggregate
gross earnings of [PAGCOR], or 60%[,] if the aggregate
gross earnings be less than P150,000,000.00.
 It also specified a public purpose: priority infrastructure
development projects and x x x the restoration of
damaged or destroyed facilities due to calamities, as may
be directed and authorized by the Office of the President
of the Philippines.