Republic of the Philippines

Supreme Court
Manila

EN BANC


MANOLITO AGRA, EDMUNDO
P. AGUILAR, IMELDA I.
AMERICA, EVELYN R.
CONCEPCION, DIOSDADO A.
CORSIGA, PERCIVAL G.
CRISOSTOMO, CESAR E.
FAELDON, MA. REGINA C.
FILOTEO, ZARINA O.
HIPOLITO, JANICE F.
MABILOG, ROBERTO
MARTINEZ, JONATHAN
MENDROS, NORMAN
MIRASOL, EDRICK V. MOZO,
LORENZO A. PENOLIAR,
LOURDES QUINTERO,
GLORIA GUDELIA SAMBO,
DEMOSTHENES V. ERENO,
RHONEIL LIBUNAO, ILUGEN
P. MABANSAG, JOSEPHINE
MAGBOO, MADELEINE ANN B.
BAUTISTA, ULYSSES C. BIBON,
ANGELINA RAMOS, EDUARDO
M. SUMAYOD, DOMINGO
TAMAYO, HERACLEA M.
AFABLE, ANNA LISSA
CREENCIA, CHONA O. DELA
CRUZ, MERCY NANETTE C.
IBOY, JEAN A. LUPANGO,
MARIE DELA O. NA-OBRE,
PERLA LUZ OCAMPO,
ROUCHELLEJANE PAYURAN,
ABIGAIL E. PORMENTO,
G. R. No. 167807





Present:

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
*

LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.









THERESITA A. RIVERA,
MILAGROS ROBLES,
JOSEPHINE ROSILLO,
ARSENIA M. SACDALAN,
PRECILA TUBIO, IRENE H.
VIRAY, WILFREDO O. BUCSIT,
BONIFACIO DAVID, ROSARIO
P. DIZON, EXEQUIEL EVALE,
JR., RONALD M. MANALO,
HENRIETTA A. MARAMOT,
FELICISIMO U. PULA, JONAS
F. SALVADOR, ERNESTO
SILVANO, JR., ENRICO G.
VELGADO, FEDERICO
VILLAR, JR., ARNEL C. ABEN,
ABDULMALIK BACARAMAN,
VIRGINIA BORJA, ANTONIO
CARANDANG, JR., RINA RIEL
DOLINA, MANOLITO
FAJARDO, ARVIN B.
GARDUQUE, CAYETANO
JUAREZ, MA. SHERYL
LABONETE, HERCONIDA T.
LAZARO, MARITESS
MARTINEZ, AURELIO L.
MENDOZA, ARNEL M. NOGOT,
GERARDO G. POMOY, DENCIO
RAMOS, CORAZON TAGUDIN,
ANAFEL B. TIO, AGATONA S.
ZALATAR, MARGIE EULALIA
CALMA, RENEE D. MELLA,
ARLIQUIN AMERICA, DEANNA
B. AYSON, GERALDINE J.
CALICA, CHESTER
FERNANDEZ, LUISA I.
HERNANDEZ, CYNTHIA E.
LISONDRA, ALONA S.
LLVATA, CLAIRE P. QUETUA,
ROSEMARIE S. QUINTOS,
RUTH S. RAMIREZ, LINO








































VERMUDO, JR., ROLANDO R.
APOLONIO, CELIA I. ACCAD,
MA. ALMA AYOS, PAMELA
CASTILLO, ARNOLD DUPA,
LAURENCE FELICIANO,
LEANDRO P. LIBRANDO,
MARILOU B. LOPEZ, AMELITA
P. LUCERO, ESTERBELLE T.
SIBALA, JONA ANDAL,
ANDRES RATIO, MA.
THERESA Q. MALLANO,
DANILO P. LIGUA, JOY
ABOGADO, VIRGINIA C. STA.
ANA, ALBERNARD BAUTISTA,
JUBANE DE PEDRO, PAUL
DINDO C. DELA CRUZ, ALEJO
B. INCISO, SHERWIN
MAADA, JESUS T. OBIDOS,
JOEL B. ARELLANO,
ALFREDO CABRERA, MARY
LYNN E. GELLOR, JOHN
JOSEPH M. MAGTULOY,
MICHELLE MONTEMAYOR,
RHINA ANGUE, NORBERTO
BAYAGA, JR., JUSTINO
CALVEZ, EDWIN
CONCEPCION, ALAN JOSEPH
IBE, CESAR JACINTO,
JOSERITA MADRID, IRENE
MARTIN, GINA T. QUINDO,
RENATO SUBIJANO, NIELMA
E. VERZOSA, ALL NATIONAL
ELECTRIFICATION
ADMINISTRATION
EMPLOYEES, REPRESENTED
BY REGINA FILOTEO,
Petitioners,











































- versus -



COMMISSION ON AUDIT,
Respondent.

Promulgated:



December 6, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x






D E C I S I O N


LEONARDO-DE CASTRO, J .:


This is a special civil action via certiorari under Rule 65 in relation to Rule
64 of the 1997 Revised Rules of Civil Procedure from the Decision
[1]
of
the Commission on Audit (COA) No. 2003-134 dated October 9, 2003, which
denied the grant of rice allowance to employees of the National Electrification
Administration (NEA) who were hired after June 30, 1989 (petitioners) and
COAs Resolution
[2]
No. 2005-010 dated February 24, 2005, which likewise
denied petitioners Motion for Reconsideration.

On July 1, 1989, Republic Act No. 6758 (the Compensation and Position
Classification Act of 1989) took effect, Section 12 of which provides:

Sec. 12. Consolidation of Allowances and Compensation. All
allowances, except for representation and transportation allowances;
clothing and laundry allowances; subsistence allowance of marine
officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign service personnel stationed abroad;
and such other additional compensation not otherwise specified herein as
may be determined by the DBM, shall be deemed included in the
standardized salary rates herein prescribed. Such other additional
compensation, whether in cash or in kind, being received by
incumbents only as of July 1, 1989 not integrated into the
standardized salary rates shall continue to be authorized.

Existing additional compensation of any national government
official or employee paid from local funds of a local government unit
shall be absorbed into the basic salary of said official or employee and
shall be paid by the National Government. (Emphasis ours.)


Pursuant to its authority to implement Republic Act No. 6758 under Section
23 thereof, the Department of Budget and Management (DBM) on October 2, 1989
issuedCorporate Compensation Circular No. 10 (DBM-CCC No. 10), otherwise
known as the Implementing Rules and Regulations of R.A. No.
6758. Paragraph 5.5 of DBM-CCC No. 10 reads:

5.5 The following allowances/fringe benefits authorized to
GOCCs/GFIs pursuant to the aforementioned issuances are
not likewise to be integrated into the basic salary and allowed
to be continued only for incumbents of positions as of June 30,
1989 who are authorized and actually receiving said
allowances/benefits as of said date, at the same terms and
conditions prescribed in said issuances[:]

5.5.1 Rice Subsidy;
5.5.2 Sugar Subsidy;
5.5.3 Death Benefits other than those granted by the GSIS;
5.5.4 Medical/dental/optical allowances/benefits;
5.5.5 Childrens Allowance;
5.5.6 Special Duty Pay/Allowance;
5.5.7 Meal Subsidy;
5.5.8 Longevity Pay; and
5.5.9 Tellers Allowance. (Emphasis added.)


A group of NEA employees who were hired after October 31,
1989
[3]
claimed that they did not receive meal, rice, and childrens allowances.
Thus, on July 23, 1999, they filed a special civil action for mandamus against NEA
and its Board of Administrators before the Regional Trial Court (RTC), Branch 88,
Quezon City, docketed as SP. Civil Action No. Q-99-38275, alleging violation of
their right to the equal protection clause under the Constitution.

On December 15, 1999, the RTC rendered its Decision
[4]
in their favor,
disposing of the case in the following manner:

WHEREFORE, foregoing considered, the petition is hereby
GRANTED directing the respondent NEA, its Board of Administrators
to forthwith settle the claims of the petitioners and other employees
similarly situated and extend to them the benefits and allowances to
which they are entitled but which until now they have been deprived of
as enumerated under Section 5 of DBM CCC No. 10 and their inclusion
in the Provident Funds Membership, retroactive from the date of their
appointments up to the present or until their separation from the
service.
[5]



At the instance of the complainants, the Branch Clerk of Court of RTC
Branch 88, Quezon City, Lily D. Labarda, issued a CERTIFICATION
[6]
dated
January 24, 2000, which states:

This is to certify that the Decision dated December 16, 1999
[7]
of
the above-entitled case which reads the dispositive portion:

x x x x

is now final and executory.

This certification [is] issued upon the request of Ms. Blesilda B.
Aguilar for whatever legal purpose/s it may serve.
[8]



Afterwards, the Presiding Judge of RTC Branch 88, Quezon City issued
a Writ of Execution
[9]
in SP. Civil Action No. Q-99-38275 on February 22,
2000.
[10]
Thereafter, the RTC issued a Notice of Garnishment against the funds of
NEA with Development Bank of the Philippines (DBP) to the extent
of P16,581,429.00.
[11]


NEA questioned before the Court of Appeals the Orders of the lower court,
and the case was docketed as CA-G.R. SP No. 62919. On July 4, 2002, the Court
of Appeals rendered a Decision
[12]
declaring null and void the December 11, 2000
Resolution as well as the January 8, 2001 Order of the RTC, and ordering the
implementation of a writ of execution against the funds of NEA. Thus, NEA filed
a Petition for Review on Certiorari with this Court, docketed as G.R. No.
154200. Meanwhile, the RTC held in abeyance the execution of its December 15,
1999 Decision pending resolution of this Court of the review on certiorari
in National Electrification Administration v. Morales.
[13]


On July 24, 2007, this Court reversed and set aside the Court of Appeals
decision and described the subsequent events relating to the case in this manner
[14]
:

Meanwhile, in a letter dated June 28, 2000, former DBM
Secretary Benjamin E. Diokno informed NEA Administrator Conrado
M. Estrella III of the denial of the NEA request for a supplemental
budget on the ground that the claims under R.A. No. 6758 which the
RTC had ordered to be settled cannot be paid because Morales, et al. are
not incumbents of positions as of July 1, 1989 who are actually
receiving and enjoying such benefits.

Moreover, in an Indorsement dated March 23, 2000, the
Commission on Audit (COA) advised NEA against making further
payments in settlement of the claims of Morales, et al. Apparently, COA
had already passed upon claims similar to those of Morales, et al. in its
earlier Decision No. 95-074 dated January 25, 1995. Portions of the
Indorsement read as follows:

This Office concurs with the above view. The court may
have exceeded its jurisdiction when it entertained the petition for
the entitlement of the after-hired employees which had already
been passed upon by this Commission in COA Decision No. 95-
074 dated J anuary 25, 1995. There, it was held that: the adverse
action of this Commission sustaining the disallowance made by
the Auditor, NEA, on the payment of fringe benefits granted to
NEA employees hired from July 1, 1989 to October 31, 1989 is
hereby reconsidered. Accordingly, subject disallowance is lifted.

Thus, employees hired after the extended date of October 31,
1989, pursuant to the above COA decision cannot defy that
decision by filing a petition for mandamus in the lower
court. Presidential Decree No. 1445 and the 1987 Constitution
prescribe that the only mode for appeal from decisions of this
Commission is on certiorari to the Supreme Court in the
manner provided by law and the Rules of Court. Clearly, the
lower court had no jurisdiction when it entertained the subject
case of mandamus. And void decisions of the lower court can
never attain finality, much less be executed. Moreover, COA was
not made a party thereto, hence, it cannot be compelled to allow
the payment of claims on the basis of the questioned decision.

PREMISES CONSIDERED, the auditor of NEA should post-
audit the disbursement vouchers on the bases of this
Commission's decision particularly the above-cited COA Decision
No. 94-074 [sic] and existing rules and regulations, as if there is
no decision of the court in the subject special civil action for
mandamus. At the same time, management should be informed of
the intention of this Office to question the validity of the court
decision before the Supreme Court through the Office of the
Solicitor General.

Parenthetically, the records at hand do not indicate when
Morales, et al. were appointed. Even the December [15], 1999 RTC
Decision is vague for it merely states that they were appointed after June
30, 1989, which could mean that they were appointed either before the
cut-off date of October 31, 1989 or after. Thus, there is not enough basis
for this Court to determine that the foregoing COA Decision No. 95-074
adversely affects Morales, et al.. Moreover, the records do not show
whether COA actually questioned the December 16, 1999 RTC Decision
before this Court.
[15]



The Court ruled that respondents therein could not proceed against the
funds of NEA because the December [15], 1999 RTC Decision sought to be
satisfied is not a judgment for a specific sum of money susceptible of execution
by garnishment; it is a special judgment requiring petitioners to settle the
claims ofrespondents in accordance with existing regulations of the
COA.
[16]
The Court further held as follows:

In its plain text, the December [15], 1999 RTC Decision merely
directs petitioners to settle the claims of [respondents] and other
employees similarly situated. It does not require petitioners to pay a
certain sum of money to respondents. The judgment is only for the
performance of an act other than the payment of money, implementation
of which is governed by Section 11, Rule 39 of the Rules of Court,
which provides:

Section 11. Execution of special judgments. - When a judgment
requires the performance of any act other than those mentioned in the
two preceding sections, a certified copy of the judgment shall be
attached to the writ of execution and shall be served by the officer upon
the party against whom the same is rendered, or upon any other person
required thereby, or by law, to obey the same, and such party or person
may be punished for contempt if he disobeys such judgment.

x x x x

Garnishment is proper only when the judgment to be enforced
is one for payment of a sum of money.

The RTC exceeded the scope of its judgment when, in its
February 22, 2000 Writ of Execution, it directed petitioners to extend to
[respondents] the benefits and allowances to which they are entitled but
which until now they have been deprived of as enumerated under Sec. 5
of DBM CCC No. 10 and x x x to cause their inclusion in the Provident
Fund Membership. Worse, it countenanced the issuance of a notice of
garnishment against the funds of petitioners with DBP to the extent
of P16,581,429.00 even when no such amount was awarded in its
December 16, 1999 Decision.

However, in its subsequent Orders dated May 17, 2000 and
January 8, 2001, the RTC attempted to set matters right by directing the
parties to now await the outcome of the legal processes for the settlement
of respondents claims.

That is only right.

Without question, petitioner NEA is a GOCC -- a juridical
personality separate and distinct from the government, with
capacity to sue and be sued. As such GOCC, petitioner NEA cannot
evade execution; its funds may be garnished or levied upon in
satisfaction of a judgment rendered against it. However, before
execution may proceed against it, a claim for payment of the
judgment award must first be filed with the COA.

Under Commonwealth Act No. 327, as amended by Section 26 of
P.D. No. 1445, it is the COA which has primary jurisdiction
to examine, audit and settle all debts and claims of any sort due
from or owing the Government or any of its subdivisions, agencies
and instrumentalities, including government-owned or controlled
corporations and their subsidiaries. With respect to money claims
arising from the implementation of R.A. No. 6758, their allowance or
disallowance is for COA to decide, subject only to the remedy of
appeal by petition forcertiorari to this Court.

All told, the RTC acted prudently in halting implementation
of the writ of execution to allow the parties recourse to the processes
of the COA. It may be that the tenor of the March 23, 2000
Indorsement issued by COA already spells doom for respondents
claims; but it is not for this Court to preempt the action of the COA
on the post-audit to be conducted by it per its Indorsement dated
March 23, 2000.

In fine, it was grave error for the CA to reverse the RTC and
direct immediate implementation of the writ of execution through
garnishment of the funds of petitioners,

WHEREFORE, the petition is GRANTED. The July 4, 2002
Decision of the Court of Appeals is REVERSED and SET
ASIDE. The Resolution dated December 11, 2000 and Order dated
January 8, 2001 of the Regional Trial Court, Branch 88, Quezon City in
Special Civil Action No. Q-99-38275 are REINSTATED.
[17]



Meantime, the Civil Service Commission issued Resolution No.
001295 dated June 1, 2001
[18]
and interpreted Section 12 of Republic Act No. 6758
in this manner:

Material to the resolution of this instant request is Section 12 of
SSL x x x.

x x x x

The Commission, x x x is of the view that this provision of law
does not imply that such other additional compensation not integrated
into the salary rates shall not be received by employees appointed after
July 1, 1989. The word only before the phrase as of July 1, 1989
does not refer to incumbents but qualifies what additional compensation
can be continued together with the qualifying words not integrated into
the standardized rates shall continue to be authorized. The correct
interpretation therefore is that, additional compensation being
received by employees not integrated into the standardized rates as
of July 1, 1989 shall continue to be authorized and received/enjoyed
by said employees, whether or not said employee was appointed
prior to or after July 1, 1989.

A different interpretation will result in the creation of two classes
of employees, i.e., one class receiving less pay than another class for
substantially equal work. Said interpretation will violate Section 2 of the
SSL which provides, thus:

x x x x

Additionally, this interpretation will also violate the constitutional
precept that no person shall be denied the equal protection of
law (Section 1, Article III of the 1987 Constitution). Applying this
precept the Supreme Court declared that equal protection of the law is
against unde favor on an individual or class (Tiu vs. Court of Appeals,
GR No. 127410, January 20, 1999).
[19]



The Office of the Government Corporate Counsel (OGCC), in response to
the request of then NEA Administrator Manuel Luis S. Sanchez, issued on August
14, 2001 itsOpinion No. 157, s. 2001
[20]
declaring that the RTC decision, not
having been appealed, had become the law of the case which must now be
applied. The pertinent portion of such opinion reads:

HON. MANUEL LUIS S. SANCHEZ
Administrator
National Electrification Administration
NEA Road, Diliman, Quezon City

Re: Request for legal opinion on the propriety and
applicability to NEA employees hired after July 1,
1989 of OGCC Opinion NO. 086, s. 2001

x x x x

Pursuant to law, subject Decision became final and executory
fifteen (15) days after its rendition, there being no appeal or motion for
reconsideration filed in the interim, as certified to by Atty. Lily D.
Labarda, Branch 88, Quezon City, on January 24, 2000.

The foregoing considered, this Office therefore cannot opine
otherwise save to uphold the supremacy and finality of the aforequoted
Decision of the Court on the matter. Its judgment is now res judicata,
hence, the controlling legal rule, as far as Petitioners NEA employees are
concerned, is that they must be extended the benefits and allowances to
which they are entitled but which until now they have been deprived of
as enumerated under Section 5 of DBM CCC No. 101 x x x, retroactive
from the date of their appointments up to the present or until their
separation from the service. This is the law of the case which must now
be applied. At any rate, we have stated in OGCC Opinion No. 086, S.
2001 that even employees hired after July 1, 1989 may receive the
subject benefits provided there is determination by the DBM that the
same have not been actually integrated into their basic salaries.

Hence, your query is therefore answered in the affirmative.
[21]



Pursuant to the above opinion in its favor, the NEA Board of Administrators
issued Resolution No. 29 on August 9, 2001
[22]
approving the entitlement to rice,
medical, children, meal, and other related allowances to NEA employees hired
after October 31, 1989,
[23]
and the payment of these benefits, chargeable to its
Personnel Services Savings. This resolution was the outcome of the meeting of the
NEA Board of Administrators on the same date, and reads:

RESOLUTION NO. 29

x x x x

RESOLVED THEREFORE TO APPROVE, as it hereby
approves, the entitlement to rice, medical, children, meal and other
related allowances of NEA employees hired after October 31, 1989 and
payment of these benefits;

RESOLVED FURTHER TO CONFIRM, as it hereby confirms,
the initial appropriation and payment of One Million Six Hundred Forty
Six Thousand One Hundred Twenty Seven Pesos and Thirty Centavos
(P1,646,127.30) for this purpose chargeable against the Personnel
Services Savings.
[24]



Thus, NEA granted the questioned allowances to its employees who were
not receiving these benefits/allowances, including rice allowance amounting
to P1,865,811.84 covering the period January to August 2001.
[25]


However, the resident auditor of COA, Carmelita M. Agullana (Agullana),
did not allow the payment of rice allowance for the period January to August 2001
to NEA employees who were not incumbents as of June 30, 1989, under Notice of
Disallowance
[26]
No. 2001-004-101 dated September 6, 2001. Agullana indicated
the Facts and/or Reasons for Disallowance as follows:

Payment of Rice Allowance for the period January, 2001 to
August, 2001 to employees who were not incumbents as of June 30,
1989 not allowed pursuant to RA #6758 as implemented by Corporate
Compensation Circular No. 10 prescribing the Rules and Regulations for
the Implementation of the Revised Compensation and Position
Classification System for Government-Owned and/or Controlled
Corporations (GOCCs) and Financial Institutions (GFIs) specifically
Sections 5.4 and 5.5 thereof. x x x.
[27]



NEA, through then Acting Administrator Francisco G. Silva, and assisted by
counsel, appealed Agullanas disallowance to the COA on September 27,
2001,
[28]
arguing that the disallowance had no basis in law and in fact, and that the
subject disbursement was anchored on a court decision that had become final and
executory.

The COA denied the appeal from the disallowance in a Decision
[29]
dated
October 9, 2003 (Decision No. 2003-134). The COA stated that:

The Director of x x x Corporate Audit Office II recommended the
affirmance of the subject disallowance contending that Section 12 of
Republic Act (RA) No. 6758 (Salary Standardization Law) x x x remains
applicable on the matter since Department of Budget and Management-
Corporate Compensation Circular No. 10, s. 1989 (DBM-CCC No. 10)
was declared ineffective by the Supreme Court in the case of De Jesus, et
al. vs. COA, et al. (G.R. No. 109023, August 13, 1998) due to its non-
publication in the Official Gazette or in a newspaper of general
circulation. She pointed out that the alleged discriminatory effect and
violation of the policy to provide equal pay for substantially equal work
in the above-quoted provision have been sufficiently considered in
Philippine Ports Authority vs. COA, 214 SCRA 653 and later confirmed
in Philippine International Trading Corporation vs. COA, G.R. No.
132593, June 25, 1999, wherein the Supreme Court ruled that:

x x x we must mention that this Court has confirmed in
Philippine Ports Authority vs. Commission on Audit the
legislative intent to protect incumbents who are receiving salaries
and allowances over and above those authorized by RA 6758 to
continue to receive the same even after RA 6758 took effect. In
reserving the benefit to incumbents, the legislature has manifested
its intent to gradually phase out this privilege without upsetting
the policy of non-diminution of pay and consistent with the rule
that laws should only be applied prospectively in the spirit of fair
play.

She also conformed to the OGCC Opinion No. 52, s. 1999 dated
March 22, 1999, edifying the implication of the De Jesus Case which
enunciated thusly:

Notwithstanding the ruling in the De Jesus Case, the
applicable law is still Section 12 of R.A. No. 6758 which allows
additional compensation being received by incumbents as of July
1, 1989 not integrated into the standard rates to continue. The
recent nullification of DBM-CCC No. 10 applies favorably only
to those incumbent employees (hired prior to July 1, 1989) and
does not in any way change the position or situation of those
employees hired after the cut-off date. With the issuance of R.A.
6758, employees hired after July 1, 1989 must follow the revised
and unified compensation and position classification system in the
government, for which the DBM was directed to establish and
administer and which shall be applied for all government entities.

x x x x

The new hirees having accepted their employment, aware of such
a condition that they are not entitled to additional benefits and
allowances, they would be estopped from complaining.

Moreover, the Director noted that when the rice allowance to the
claimants was granted in the year 2001, the DBM had already published
CCC No. 10.

Anent the contention that the subject decision of the RTC has
become the law of the case which must be applied, she stressed that the
said doctrine is one of the policies only and will be disregarded when
compelling circumstances call for a redetermination of the point of law.
As cited in Blacks Law Dictionary, 6
th
Edition, 1990, the doctrine is
merely a rule of procedure and does not go to the power of the court, and
will not be adhered to where its application will result in unjust
decision.

x x x x

PREMISES CONSIDERED, the instant appeal is hereby
DENIED and the disallowance in the total amount of P1,865,811.84 is
accordingly affirmed.
[30]



NEA filed a Motion for Reconsideration of the said Decision, but this was
denied in COA Decision No. 2005-010
[31]
dated February 24, 2005, the pertinent
portions of which read:

After a careful re-evaluation, this Commission finds herein
motion devoid of merit, the issues raised therein being a mere reiteration
of the previous arguments of the movant in his appeal and which were
already considered and passed upon by this Commission in the assailed
decision.

WHEREFORE, there being no new and material evidence
adduced as would warrant a reversal or modification of the decision
herein sought to be reconsidered, the instant motion for reconsideration
has to be, as it is hereby, denied with finality.
[32]



Thus, petitioners came to this Court questioning the COAs decision and
resolution on the disallowance of their rice subsidy.

Petitioners claim that the COAs reliance on DBM-CCC No. 10 is totally
misplaced, alleging that this interpretation had been squarely debunked by the
Supreme Court in a number of cases, including Cruz v. Commission on
Audit.
[33]
Furthermore, petitioners claim that in a similar case involving Opinion
No. 086, s. 2001 of the OGCC, it wrote: [It] is our considered opinion that
employees of COA, whether appointed before or after July 1, 1989, are entitled to
the benefits enumerated under Section 5.5 of DBM-CCC No. 10 x x x.
[34]


We quote portions of Opinion No. 086, s. 2001 of the OGCC below:

Please be informed that our Office had previously rendered legal
opinions involving the same issue upon the request of some of our client
corporations similarly situated. In our Opinion No. 55, Series of 2000,
we stated:

At the outset we would like to clarify that the amount of
the standardized salary vis--vis the pre-SSL salary (plus
allowance) is not conclusively determinant of whether or not a
certain allowance is deemed integrated into the former. Section
12 of R.A. 6758 expressly provides:

x x x x

The law is thus clear. The general rule is that all
allowances are deemed included in the standardized rates set
forth in R.A. 6758. This is consistent with the primary intent of the
Act to eliminate wage inequities. The law, however, admits of
certain exceptions and as stated in the second sentence of the
aforecited provision, such other additional compensation in cash
or in kind not integrated into the standardized rates being
received by incumbents as of July 1, 1989 shall continue to be
authorized. It is our view, however, that a government agency, in
this case NDC, does not have discretion to determine what
allowances received by incumbent employees prior to SSL are
deemed included or integrated in the standardized rates. It is the
DBM which has the mandate and authority under the SSL to
determine what additional compensation shall be integrated and it
is precisely why it issued NCC No. 10.

The foregoing opinion is consistent with our Opinion No. 52,
Series of 1999, wherein we opined:

x x x Nonetheless, as Section 12 of RA 6758 expressly provides
that such additional compensation, whether in cash or in kind, being
received by incumbent employees as of July 1, 1989 not integrated to the
standardized salary rates as may be determined by the DBM shall
continue to be authorized, the question becomes a matter of fact, on
whether or not the aforementioned allowances have been integrated into
the salaries of employees.
[35]
(Emphases in the quoted text.)


Petitioners claim that the Civil Service Commission, the Office of the
Government Corporate Counsel and the highest court of the land, the Supreme
Court, chose not to distinguish the entitlement of benefits to those hired before and
after October 31, 1989 (or in this case, July [1], 1989), while the COA
sweepingly does so by just a wave of the hand.
[36]
To support this claim,
petitioners erroneously cite Javier v. Philippine Ports Authority, CA-G.R. No.
67937, March 12, 2002, as a decision by this Court, but said decision was rendered
by the Court of Appeals.

Petitioners argue that assuming that they are not entitled to the rice
allowance in question, they should not be required to refund the amounts received,
on grounds of fairness and equity. In connection with this, petitioners allege as
follows:

Prior to December 31, 2003, NEA consists of 720 employees more or
less who received the rice allowance. Upon [the] restructuring of NEA in
December 2003, all NEA employees were legally terminated. Out of 720
employees, only 320 employees are now left with to operate NEA. Most
of the (sic) them are rehired while minority of them are newly hired.
Thus, the refund of P1,865,811.84, shall be shouldered by those who
remained as NEA employees. Secondly, those who received the said rice
allowance accepted it in good faith believing that they are entitled to it as
a matter of law.
[37]



In its Comment
[38]
dated September 21, 2005, COAs lone argument is that
[t]he assailed COA decision is not tainted with grave abuse of discretion. The
disallowance of payment for the rice [subsidy] by the COA is in accord with the
law and the rules. COA maintains that the law on the matter, Section 12 of
Republic Act No. 6758, is clear, as its last sentence provides reservation of certain
allowances to incumbents. COA argues in this wise:

The Supreme Court in Philippine Ports Authority vs. Commission on
Audit confirmed the legislative intent to protect incumbents who are
receiving salaries and/or allowances over and above those authorized by
R.A. 6758 to continue to receive the same even after the law took
effect. In reserving the benefit to incumbents, the legislature has
manifested its intent to gradually phase out this privilege without
upsetting the policy of non-diminution of pay and consistent with the
rule that laws should only be applied prospectively in the spirit of
fairness and justice.

Thus, pursuant to its authority under Section 23 of R.A. No. 6758,
the DBM x x x issued on October 2, 1989, DBM-CCC No. 10. Section
5.5 of DBM-CCC No. 10 enumerated the various allowances/fringe
benefits authorized to GOCCs/GFIs which are not to be integrated into
the basic salary and allowed to be continued only for incumbents of
positions as of June 30, 1989 who are authorized and actually receiving
said allowances/benefits as of said date. Among these was the rice
subsidy/allowance.

Hence, in light of the effectivity of DBM-CCC No. 10 on March
16, 1999 following its reissuance (in its entirety on February 15, 1999)
and publication in the Official Gazette on March 1, 1999, the
disallowance by the COA of the rice allowance for the period beginning
January 2001 up to August 2001 is not tainted with grave abuse of
discretion but in accord with the law and the rules.
[39]



Petitioners, in their Reply,
[40]
anchor their petition on their allegation that the
RTC Decision had already become final and executory, could no longer be
disturbed, and must be respected by the parties. To support their claim, they
cite Arcenas v. Court of Appeals
[41]
wherein this Court held:

For, it is a fundamental rule that when a final judgment becomes
executory, it thereby becomes immutable and unalterable. The judgment
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. The
only recognized exceptions are the correction of clerical errors or the
making of so-called nunc pro tunc entries which cause no prejudice to
any party, and, of course, where the judgment is void. Any amendment
or alteration which substantially affects a final and executory judgment
is null and void for lack of jurisdiction, including the entire proceedings
held for that purpose.
[42]
(Emphasis ours.)


Petitioners likewise cite Panado v. Court of Appeals
[43]
wherein the Court
held that [i]t is axiomatic that final and executory judgments can no longer be
attacked by any of the parties or be modified, directly or indirectly, even by the
highest court of the land.
[44]
From the foregoing jurisprudence, petitioners
conclude that the acts of COA in disallowing the claims and ordering refund of
benefits already received clearly constitute grave abuse of discretion amounting to
lack of jurisdiction inasmuch as said acts frustrated the final and executory
decision of the trial court.

The pivotal issues as determined by the COA are:

1. Whether or not the immutability of final decision doctrine must
prevail over the exclusive jurisdiction of [the COA] to audit and
settle disbursements of funds; and

2. Whether or not the NEA employees hired after June 30, 1989 are
entitled to rice allowance.
[45]



The COA resolved these issues in this manner:

As to the first issue, the immutability rule applies only when the
decision is promulgated by a court possessed of jurisdiction to hear and
decide the case. Undoubtedly, the petition in the guise of a case for
mandamus is a money claim falling within the original and exclusive
jurisdiction of this Commission. Noting the propensity of the lower
courts in taking cognizance of cases filed by claimants in violation of
such primary jurisdiction, the Supreme Court issued Administrative
Circular 10-2000 dated October 23, 2000 enjoining judges of lower
courts to exercise caution in order to prevent possible circumvention of
the rules and procedures of the Commission on Audit and reiterating
the basic rule that: All money claims against the Government must be
filed with the Commission on Audit which shall 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.

Under the doctrine of primary jurisdiction, when an
administrative body is clothed with original and exclusive jurisdiction,
courts are utterly without power and authority to exercise concurrently
such jurisdiction. Accordingly, all the proceedings of the court in
violation of that doctrine and all orders and decisions reached thereby
are null and void. It will be noted in the cited Supreme Court Circular
that money claims are cognizable by the COA and its decision is
appealable only to the Supreme Court. The lower courts have nothing to
do with such genus of transactions.

Anent the issue of entitlement to rice allowance by employees
hired after June 30, 1989, this Commission is left with no option but to
affirm the disallowance in the face of the explicit provisions of DBM-
CCC No. 10. After its publication on March 9, 1999 in the Official
Gazette, rice allowance was allowed only for incumbents as of July 1,
1989. Obviously, there is no violation of the equal protection clause as
cited in the PITC case, supra, because whatever increments the
incumbents are enjoying over those of non-incumbents are transitory, for
the same law provides that such difference shall be deducted from the
salary increase the former should receive under Section 17. Thus, the
equalization or standardization of what the two categories of employees
will be receiving in terms of benefits is ensured.

PREMISES CONSIDERED, the instant appeal is hereby
DENIED and the disallowance in the total amount of P1,865,811.84 is
accordingly affirmed.
[46]



We agree with the findings of the COA.

In National Electrification Administration v. Morales, the order of
garnishment against the NEA funds to implement the RTC Decision was in issue,
and we said that the COA had exclusive jurisdiction to decide on the allowance
or disallowance of money claims arising from the implementation of Republic
Act No. 6758. We observed therein that

the RTC acted prudently in halting

implementation of the writ of execution to allow the parties recourse to the
processes of the COA.
[47]
In fact, we even stated there that it is not for this
Court to preempt the action of the COA on the post-audit to be conducted by it per
its Indorsement dated March 23, 2000.
[48]


We find that the COA had ruled in accordance with law and jurisprudence,
and we see no reason to reverse its decision.

Section 5.5 of DBM-CCC No. 10 is clear that rice subsidy is one of the
benefits that will be granted to employees of GOCCs
[49]
or GFIs
[50]
only if they are
incumbents as of July 1, 1989. We reproduce the first paragraph of Section 5.5
below:

5.5 The following allowances/fringe benefits authorized to
GOCCs/GFIs pursuant to the aforementioned issuances are
not likewise to be integrated into the basic salary and allowed
to be continued only for incumbents of positions as of June 30,
1989 who are authorized and actually receiving said
allowances/benefits as of said date, at the same terms and
conditions prescribed in said issuances[:]

5.5.1 Rice Subsidy; x x x.
[51]



We have defined an incumbent as a person who is in present possession of
an office; one who is legally authorized to discharge the duties of an
office.
[52]
There is no question that petitioners were not incumbents as of June 30,
1989. We have likewise characterized NEA as a GOCC in National Electrification
Administration v. Morales. Thus, Section 5.5 quoted above, issued pursuant to the
authority given to the DBM under Section 12 of Republic Act No. 6758, was
correctly applied by the COA.

We find our pronouncements in Philippine National Bank v. Palma
[53]
to be
applicable and conclusive on this issue now before us:

During these tough economic times, this Court understands, and
in fact sympathizes with, the plight of ordinary government employees.
Whenever legally possible, it has bent over backwards to protect labor
and favor it with additional economic advantages. In the present case,
however, the Salary Standardization Law clearly provides that the
claimed benefits shall continue to be granted only to employees who
were "incumbents" as of July 1, 1989. Hence, much to its regret, the
Court has no authority to reinvent or modify the law to extend those
benefits even to employees hired after that date.

x x x x

Stare Decisis

The doctrine stare decisis et non quieta movere (Stand by the
decisions and disturb not what is settled) is firmly entrenched in our
jurisprudence. Once this Court has laid down a principle of law as
applicable to a certain state of facts, it would adhere to that principle and
apply it to all future cases in which the facts are substantially the same as
in the earlier controversy.

The precise interpretation and application of the assailed
provisions of RA 6758, namely those in Section 12, have long been
established in Philippine Ports Authority v. COA. The essential
pronouncements in that case have further been fortified by Manila
International Airport Authority v. COA, Philippine International
Trading Corporation v. COA, and Social Security System v. COA.

This Court has consistently held in those cases that allowances
or fringe benefits, whether or not integrated into the standardized
salaries prescribed by RA 6758, should continueto be enjoyed by
employees who (1) were incumbents and (2) were receiving those
benefits as of July 1, 1989.

In Philippine Ports Authority v. COA, the x x x Court said that the
intention of the framers of that law was to phase out certain allowances
and privileges gradually, without upsetting the principle of non-
diminution of pay. The intention of Section 12 to
protect incumbents who were already receiving those allowances on July
1, 1989, when RA 6758 took effect was emphasized thus:

An incumbent is a person who is in present possession of an
office.

The consequential outcome, under sections 12 and 17, is that if
the incumbent resigns or is promoted to a higher position, his successor
is no longer entitled to his predecessors RATA privilege x x x or to the
transition allowance.

Finally, to explain what July 1, 1989 pertained to, we held in the
same case as follows:

x x x. The date July 1, 1989 becomes crucial only to determine
that as of said date, the officer was an incumbent and was receiving the
RATA, for purposes of entitling him to its continued grant. x x x.

In Philippine International Trading Corporation v. COA, this
Court confirmed the legislative intention in this wise:

x x x [T]here was no intention on the part of the legislature to
revoke existing benefits being enjoyed by incumbents of government
positions at the time of the passage of RA 6758 by virtue of Sections 12
and 17 thereof. x x x.

The Court stressed that in reserving the benefits to
incumbents alone, the legislatures intention was not only to
adhere to the policy of non-diminution of pay, but also to be
consistent with the prospective application of laws and the spirit of
fairness and justice.

x x x x

In consonance with stare decisis, there should be no more
misgivings about the proper application of Section 12. In the
present case, the payment of benefits to employees hired after July 1,
1989, was properly withheld, because the law clearly mandated that
those benefits should be reserved only to incumbents who were
already enjoying them before its enactment. Withholding them
from the others ensured that the compensation of the incumbents
would not be diminished in the course of the latters continued
employment with the government agency.
[54]
(Emphasis ours, citations
omitted.)


As petitioners were hired after June 30, 1989, the COA was correct in
disallowing the grant of the benefit to them, as they were clearly not entitled to
it. As quoted above, we have repeatedly held that under Section 12 of Republic
Act No. 6758, the only requirements for the continuous grant of allowances and
fringe benefits on top of the standardized salary rates for employees of GOCCs and
GFIs are as follows: (1) the employee must be an incumbent as of July 1, 1989;
and (2) the allowance or benefit was not consolidated in the standardized salary
rate as prescribed by Republic Act No. 6758.
[55]


We hereby reiterate our ruling in Philippine National Bank v. Palma as
regards Section 12 of Republic Act No. 6758, as follows:

In sum, we rule thus:

1. Under Section 12 of RA 6758, additional compensation already
being received by the employees of petitioner, but not integrated
into the standardized salary rates -- enumerated in Section 5.5 of
DBM-CC[C] No. 10, like "rice subsidy, sugar subsidy, death
benefits other than those granted by the GSIS," and so on -- shall
continue to be given.

2. However, the continuation of the grant shall be available only
to those "incumbents" already receiving it on July 1, 1989.

3. Thus, in PPA v. COA, this Court held that PPA employees
already receiving the RATA granted by LOI No. 97 should
continue to receive them, provided they were already
"incumbents" on or before July 1, 1989.

4. PITC v. COA held that in enacting RA 6758, Congress was
adhering to the policy of non-diminution of existing pay. Hence, if
a benefit was not yet existing when the law took effect on July 1,
1989, there was nothing to continue and no basis for applying the
policy.

5. Neither would Cruz v. COA be applicable. In those cases, the
COA arbitrarily set a specific date, October 31, 1989; RA 6758
had not made a distinction between those hired before and those
after that date. In the present case, the law itself set July 1, 1989,
as the date when employees should be "incumbents," because that
was when RA 6758 took effect. It was not an arbitrarily chosen
date; there was sufficient reason for setting it as the cutoff
point.
[56]



Notwithstanding our ruling above, however, we take up as another matter the
refund ordered by the COA on the rice subsidy that petitioners had already
received. As regards the refund, we rule in favor of petitioners and will not require
them to return the amounts anymore.

This is because, to begin with, the officials and administrators of NEA
themselves had believed that their employees were entitled to the allowances, and
this was covered by Resolution No. 29 of the NEA Board of Administrators. The
petitioners thus received in good faith the rice subsidy together with other
allowances provided in said Resolution. For reasons of equity and fairness,
therefore, and considering their long wait for this matter to be resolved with
finality, we will no longer require a refund from these public servants.

Our pronouncements on refund in De Jesus v. Commission on
Audit,
[57]
wherein we cited Blaquera v. Hon. Alcala,
[58]
are applicable:

Considering, however, that all the parties here acted in good
faith, we cannot countenance the refund of subject incentive benefits for
the year 1992, which amounts the petitioners have already received.
Indeed, no indicia of bad faith can be detected under the attendant facts
and circumstances. The officials and chiefs of offices concerned
disbursed such incentive benefits in the honest belief that the amounts
given were due to the recipients and the latter accepted the same with
gratitude, confident that they richly deserve such benefits.

This ruling in Blaquera applies to the instant case. Petitioners here
received the additional allowances and bonuses in good faith under the
honest belief that LWUA Board Resolution No. 313 authorized such
payment. At the time petitioners received the additional allowances and
bonuses, the Court had not yet decided Baybay Water
District. Petitioners had no knowledge that such payment was without
legal basis. Thus, being in good faith, petitioners need not refund the
allowances and bonuses they received but disallowed by the
COA.
[59]
(Emphasis supplied.)


As in the cases above quoted, we cannot countenance the refund of the rice
subsidies given to petitioners by NEA for the period January to August 2001 at this
late time, especially since they were given by the government agency to its
employees in good faith.

WHEREFORE, premises considered, the petition is hereby PARTIALLY
GRANTED. COA Decision No. 2003-134 dated October 9, 2003
and COA ResolutionNo. 2005-010 dated February 24, 2005 are
hereby AFFIRMED with the CLARIFICATION that the petitioners shall no
longer be required to refund the rice subsidies for the period January to August
2001, which they had received from NEA but were later disallowed by the COA.

SO ORDERED.
Republic of the Philippines
Supreme Court
Manila

EN BANC

CHINA NATIONAL MACHINERY &
EQUIPMENT CORP. (GROUP),
Petitioner,


versus


HON. CESAR D. SANTAMARIA, in his
official capacity as Presiding Judge of
Branch 145, Regional Trial Court of Makati
City, HERMINIO HARRY L. ROQUE, JR., JOEL
R. BUTUYAN, ROGER R. RAYEL, ROMEL R.
BAGARES, CHRISTOPHER FRANCISCO C.
BOLASTIG, LEAGUE OF URBAN POOR FOR
ACTION (LUPA), KILUSAN NG MARALITA SA
MEYCAUAYAN (KMM-LUPA CHAPTER),
DANILO M. CALDERON, VICENTE C. ALBAN,
MERLYN M. VAAL, LOLITA S. QUINONES,
RICARDO D. LANOZO, JR., CONCHITA G.
GOZO, MA. TERESA D. ZEPEDA, JOSEFINA
A. LANOZO, and SERGIO C. LEGASPI, JR.,
KALIPUNAN NG DAMAYANG MAHIHIRAP
(KADAMAY), EDY CLERIGO, RAMMIL
DINGAL, NELSON B. TERRADO, CARMEN
DEUNIDA, and EDUARDO LEGSON,
Respondents.
G.R. No. 185572


Present:

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.





x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N
SERENO, J.:
This is a Petition for Review on Certiorari with Prayer for the Issuance of a
Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing the
30 September 2008 Decision and 5 December 2008 Resolution of the Court of
Appeals (CA) in CAG.R. SP No. 103351.
[1]

On 14 September 2002, petitioner China National Machinery & Equipment
Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin, entered
into a Memorandum of Understanding with the North Luzon Railways
Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for the
conduct of a feasibility study on a possible railway line from Manila to San
Fernando, La Union (the Northrail Project).
[2]

On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the
Department of Finance of the Philippines (DOF) entered into a Memorandum of
Understanding (Aug 30 MOU), wherein China agreed to extend Preferential
Buyers Credit to the Philippine government to finance the Northrail
Project.
[3]
The Chinese government designated EXIM Bank as the lender, while the
Philippine government named the DOF as the borrower.
[4]
Under the Aug 30
MOU, EXIM Bank agreed to extend an amount not exceeding USD 400,000,000 in
favor of the DOF, payable in 20 years, with a 5-year grace period, and at the rate
of 3% per annum.
[5]

On 1 October 2003, the Chinese Ambassador to the Philippines, Wang
Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec.
Camacho) informing him of CNMEGs designation as the Prime Contractor for the
Northrail Project.
[6]

On 30 December 2003, Northrail and CNMEG executed a Contract
Agreement for the construction of Section I, Phase I of the North Luzon Railway
System from Caloocan to Malolos on a turnkey basis (the Contract
Agreement).
[7]
The contract price for the Northrail Project was pegged at USD
421,050,000.
[8]

On 26 February 2004, the Philippine government and EXIM Bank entered
into a counterpart financial agreement Buyer Credit Loan Agreement No. BLA
04055 (the Loan Agreement).
[9]
In the Loan Agreement, EXIM Bank agreed to
extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor of
the Philippine government in order to finance the construction of Phase I of the
Northrail Project.
[10]

On 13 February 2006, respondents filed a Complaint for Annulment of
Contract and Injunction with Urgent Motion for Summary Hearing to Determine
the Existence of Facts and Circumstances Justifying the Issuance of Writs of
Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG,
the Office of the Executive Secretary, the DOF, the Department of Budget and
Management, the National Economic Development Authority and
Northrail.
[11]
The case was docketed as Civil Case No. 06-203 before the Regional
Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC Br. 145).
In the Complaint, respondents alleged that the Contract Agreement and the Loan
Agreement were void for being contrary to (a) the Constitution; (b) Republic Act
No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement
Reform Act; (c) Presidential Decree No. 1445, otherwise known as the
Government Auditing Code; and (d) Executive Order No. 292, otherwise known as
the Administrative Code.
[12]

RTC Br. 145 issued an Order dated 17 March 2006 setting the case for
hearing on the issuance of injunctive reliefs.
[13]
On 29 March 2006, CNMEG filed
an Urgent Motion for Reconsideration of this Order.
[14]
Before RTC Br. 145 could
rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that
the trial court did not have jurisdiction over (a) its person, as it was an agent of
the Chinese government, making it immune from suit, and (b) the subject matter,
as the Northrail Project was a product of an executive agreement.
[15]

On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs
Motion to Dismiss and setting the case for summary hearing to determine
whether the injunctive reliefs prayed for should be issued.
[16]
CNMEG then filed a
Motion for Reconsideration,
[17]
which was denied by the trial court in an Order
dated 10 March 2008.
[18]
Thus, CNMEG filed before the CA a Petition for Certiorari
with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4
April 2008.
[19]

In the assailed Decision dated 30 September 2008, the appellate court
dismissed the Petition for Certiorari.
[20]
Subsequently, CNMEG filed a Motion for
Reconsideration,
[21]
which was denied by the CA in a Resolution dated 5
December 2008.
[22]
Thus, CNMEG filed the instant Petition for Review on
Certiorari dated 21 January 2009, raising the following issues:
[23]

Whether or not petitioner CNMEG is an agent of the sovereign
Peoples Republic of China.

Whether or not the Northrail contracts are products of an
executive agreement between two sovereign states.

Whether or not the certification from the Department of Foreign
Affairs is necessary under the foregoing circumstances.

Whether or not the act being undertaken by petitioner CNMEG is
an act jure imperii.

Whether or not the Court of Appeals failed to avoid a procedural
limbo in the lower court.


Whether or not the Northrail Project is subject to competitive
public bidding.

Whether or not the Court of Appeals ignored the ruling of this
Honorable Court in the Neri case.

CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br. 145
for lack of jurisdiction. It likewise requests this Court for the issuance of a TRO and,
later on, a writ of preliminary injunction to restrain public respondent from
proceeding with the disposition of Civil Case No. 06-203.
The crux of this case boils down to two main issues, namely:
1. Whether CNMEG is entitled to immunity, precluding it from being
sued before a local court.
2. Whether the Contract Agreement is an executive agreement, such
that it cannot be questioned by or before a local court.

First issue: Whether CNMEG is entitled to
immunity

This Court explained the doctrine of sovereign immunity in Holy See v.
Rosario,
[24]
to wit:
There are two conflicting concepts of sovereign immunity, each
widely held and firmly established. According to the classical or
absolute theory, a sovereign cannot, without its consent, be made a
respondent in the courts of another sovereign. According to the newer
or restrictive theory, the immunity of the sovereign is recognized only
with regard to public acts or acts jure imperii of a state, but not with
regard to private acts or acts jure gestionis. (Emphasis supplied;
citations omitted.)

xxx xxx xxx

The restrictive theory came about because of the entry of
sovereign states into purely commercial activities remotely connected
with the discharge of governmental functions. This is particularly true
with respect to the Communist states which took control of nationalized
business activities and international trading.


In JUSMAG v. National Labor Relations Commission,
[25]
this Court affirmed
the Philippines adherence to the restrictive theory as follows:
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract does
not, per se, mean that sovereign states may, at all times, be sued in local
courts. The complexity of relationships between sovereign states,
brought about by their increasing commercial activities, mothered a
more restrictive application of the doctrine.

xxx xxx xxx

As it stands now, the application of the doctrine of immunity
from suit has been restricted to sovereign or governmental
activities (jure imperii). The mantle of state immunity cannot be extended
to commercial, private and proprietary acts (jure gestionis).
[26]
(Emphasis
supplied.)

Since the Philippines adheres to the restrictive theory,

it is crucial to ascertain
the legal nature of the act involved whether the entity claiming immunity
performs governmental, as opposed to proprietary, functions. As held in United
States of America v. Ruiz
[27]

The restrictive application of State immunity is proper only when
the proceedings arise out of commercial transactions of the foreign
sovereign, its commercial activities or economic affairs. Stated
differently, a State may be said to have descended to the level of an
individual and can thus be deemed to have tacitly given its consent to
be sued only when it enters into business contracts. It does not apply
where the contract relates to the exercise of its sovereign functions.
[28]



A. CNMEG is engaged in a proprietary
activity.

A threshold question that must be answered is whether CNMEG performs
governmental or proprietary functions. A thorough examination of the basic facts
of the case would show that CNMEG is engaged in a proprietary activity.
The parties executed the Contract Agreement for the purpose of
constructing the Luzon Railways, viz:
[29]

WHEREAS the Employer (Northrail) desired to construct the
railways form Caloocan to Malolos, section I, Phase I of Philippine North
Luzon Railways Project (hereinafter referred to as THE PROJECT);

AND WHEREAS the Contractor has offered to provide the Project on
Turnkey basis, including design, manufacturing, supply, construction,
commissioning, and training of the Employers personnel;

AND WHEREAS the Loan Agreement of the Preferential Buyers
Credit between Export-Import Bank of China and Department of Finance of
Republic of the Philippines;

NOW, THEREFORE, the parties agree to sign this Contract for the
Implementation of the Project.

The above-cited portion of the Contract Agreement, however, does not on
its own reveal whether the construction of the Luzon railways was meant to be a
proprietary endeavor. In order to fully understand the intention behind and the
purpose of the entire undertaking, the Contract Agreement must not be read in
isolation. Instead, it must be construed in conjunction with three other
documents executed in relation to the Northrail Project, namely: (a) the
Memorandum of Understanding dated 14 September 2002 between Northrail
and CNMEG;
[30]
(b) the letter of Amb. Wang dated 1 October 2003 addressed to
Sec. Camacho;
[31]
and (c) the Loan Agreement.
[32]


1. Memorandum of Understanding dated
14 September 2002

The Memorandum of Understanding dated 14 September 2002 shows that
CNMEG sought the construction of the Luzon Railways as a proprietary venture.
The relevant parts thereof read:
WHEREAS, CNMEG has the financial capability, professional
competence and technical expertise to assess the state of the [Main
Line North (MLN)] and recommend implementation plans as well as
undertake its rehabilitation and/or modernization;

WHEREAS, CNMEG has expressed interest in the
rehabilitation and/or modernization of the MLN from Metro Manila
to San Fernando, La Union passing through the provinces of Bulacan,
Pampanga, Tarlac, Pangasinan and La Union (the Project);

WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs
proposal to undertake a Feasibility Study (the Study) at no cost to
NORTHRAIL CORP.;

WHEREAS, the NORTHRAIL CORP. also welcomes CNMEGs
interest in undertaking the Project with Suppliers Credit and
intends to employ CNMEG as the Contractor for the Project subject
to compliance with Philippine and Chinese laws, rules and
regulations for the selection of a contractor;

WHEREAS, the NORTHRAIL CORP. considers CNMEGs proposal
advantageous to the Government of the Republic of
the Philippines and has therefore agreed to assist CNMEG in the
conduct of the aforesaid Study;

xxx xxx xxx

II. APPROVAL PROCESS

2.1 As soon as possible after completion and presentation of the
Study in accordance with Paragraphs 1.3 and 1.4 above and in
compliance with necessary governmental laws, rules,
regulations and procedures required from both parties, the
parties shall commence the preparation and negotiation of the
terms and conditions of the Contract (the Contract) to be
entered into between them on the implementation of the
Project. The parties shall use their best endeavors to
formulate and finalize a Contract with a view to signing the
Contract within one hundred twenty (120) days from
CNMEGs presentation of the Study.
[33]
(Emphasis supplied)

Clearly, it was CNMEG that initiated the undertaking, and not the Chinese
government. The Feasibility Study was conducted not because of any diplomatic
gratuity from or exercise of sovereign functions by the Chinese government, but
was plainly a business strategy employed by CNMEG with a view to securing this
commercial enterprise.

2. Letter dated 1 October 2003
That CNMEG, and not the Chinese government, initiated the
Northrail Project was confirmed by Amb. Wang in his letter dated 1 October
2003, thus:
1. CNMEG has the proven competence and capability to
undertake the Project as evidenced by the ranking of 42 given by the
ENR among 225 global construction companies.

2. CNMEG already signed an MOU with the North Luzon
Railways Corporation last September 14, 2000 during the visit of
Chairman Li Peng. Such being the case, they have already established
an initial working relationship with your North Luzon Railways
Corporation. This would categorize CNMEG as the state corporation
within the Peoples Republic of China which initiated our
Governments involvement in the Project.

3. Among the various state corporations of the Peoples
Republic of China, only CNMEG has the advantage of being fully
familiar with the current requirements of the Northrail Project having
already accomplished a Feasibility Study which was used as inputs by
the North Luzon Railways Corporation in the approvals (sic) process
required by the Republic of the Philippines.
[34]
(Emphasis supplied.)

Thus, the desire of CNMEG to secure the Northrail Project was in the
ordinary or regular course of its business as a global construction company. The
implementation of the Northrail Project was intended to generate profit for
CNMEG, with the Contract Agreement placing a contract price of USD 421,050,000
for the venture.
[35]
The use of the term state corporation to refer to CNMEG was
only descriptive of its nature as a government-owned and/or -controlled
corporation, and its assignment as the Primary Contractor did not imply that it
was acting on behalf of China in the performance of the latters sovereign
functions. To imply otherwise would result in an absurd situation, in which all
Chinese corporations owned by the state would be automatically considered as
performing governmental activities, even if they are clearly engaged in
commercial or proprietary pursuits.


3. The Loan Agreement
CNMEG claims immunity on the ground that the Aug 30 MOU on the
financing of the Northrail Project was signed by the Philippine and Chinese
governments, and its assignment as the Primary Contractor meant that it was
bound to perform a governmental function on behalf of China. However, the Loan
Agreement, which originated from the same Aug 30 MOU, belies this
reasoning, viz:
Article 11. xxx (j) Commercial Activity The execution and delivery
of this Agreement by the Borrower constitute, and the Borrowers
performance of and compliance with its obligations under this
Agreement will constitute, private and commercial acts done and
performed for commercial purposes under the laws of the Republic of
the Philippines and neither the Borrower nor any of its assets is entitled
to any immunity or privilege (sovereign or otherwise) from suit,
execution or any other legal process with respect to its obligations
under this Agreement, as the case may be, in any
jurisdiction. Notwithstanding the foregoing, the Borrower does not
waive any immunity with respect of its assets which are (i) used by a
diplomatic or consular mission of the Borrower and (ii) assets of a
military character and under control of a military authority or defense
agency and (iii) located in the Philippines and dedicated to public or
governmental use (as distinguished from patrimonial assets or assets
dedicated to commercial use). (Emphasis supplied.)

(k) Proceedings to Enforce Agreement In any proceeding in the
Republic of the Philippines to enforce this Agreement, the choice of the
laws of the Peoples Republic of China as the governing law hereof will be
recognized and such law will be applied. The waiver of immunity by the
Borrower, the irrevocable submissions of the Borrower to the non-
exclusive jurisdiction of the courts of the Peoples Republic of China and
the appointment of the Borrowers Chinese Process Agent is legal, valid,
binding and enforceable and any judgment obtained in the Peoples
Republic of China will be if introduced, evidence for enforcement in any
proceedings against the Borrower and its assets in the Republic of the
Philippines provided that (a) the court rendering judgment had
jurisdiction over the subject matter of the action in accordance with its
jurisdictional rules, (b) the Republic had notice of the proceedings, (c) the
judgment of the court was not obtained through collusion or fraud, and
(d) such judgment was not based on a clear mistake of fact or law.
[36]


Further, the Loan Agreement likewise contains this express waiver of
immunity:
15.5 Waiver of Immunity The Borrower irrevocably and
unconditionally waives, any immunity to which it or its property may at
any time be or become entitled, whether characterized as sovereign
immunity or otherwise, from any suit, judgment, service of process upon
it or any agent, execution on judgment, set-off, attachment prior to
judgment, attachment in aid of execution to which it or its assets may be
entitled in any legal action or proceedings with respect to this Agreement
or any of the transactions contemplated hereby or hereunder.
Notwithstanding the foregoing, the Borrower does not waive any
immunity in respect of its assets which are (i) used by a diplomatic or
consular mission of the Borrower, (ii) assets of a military character and
under control of a military authority or defense agency and (iii) located in
the Philippines and dedicated to a public or governmental use (as
distinguished from patrimonial assets or assets dedicated to commercial
use).
[37]


Thus, despite petitioners claim that the EXIM Bank extended financial
assistance to Northrail because the bank was mandated by the Chinese
government, and not because of any motivation to do business in the
Philippines,
[38]
it is clear from the foregoing provisions that the Northrail Project
was a purely commercial transaction.
Admittedly, the Loan Agreement was entered into between EXIM Bank and
the Philippine government, while the Contract Agreement was between Northrail
and CNMEG. Although the Contract Agreement is silent on the classification of the
legal nature of the transaction, the foregoing provisions of the Loan Agreement,
which is an inextricable part of the entire undertaking, nonetheless reveal the
intention of the parties to the Northrail Project to classify the whole venture as
commercial or proprietary in character.
Thus, piecing together the content and tenor of the Contract Agreement,
the Memorandum of Understanding dated 14 September 2002, Amb. Wangs
letter dated 1 October 2003, and the Loan Agreement would reveal the desire of
CNMEG to construct the Luzon Railways in pursuit of a purely commercial activity
performed in the ordinary course of its business.

B. CNMEG failed to adduce evidence
that it is immune from suit under Chinese
law.

Even assuming arguendo that CNMEG performs governmental functions,
such claim does not automatically vest it with immunity. This view finds support
in Malong v. Philippine National Railways, in which this Court held that (i)mmunity
from suit is determined by the character of the objects for which the entity was
organized.
[39]

In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische
Zusammenarbeit (GTZ) v. CA
[40]
must be examined. In Deutsche
Gesellschaft, Germany and thePhilippines entered into a Technical Cooperation
Agreement, pursuant to which both signed an arrangement promoting the Social
Health InsuranceNetworking and Empowerment (SHINE) project. The two
governments named their respective implementing organizations: the Department
of Health (DOH) and the Philippine Health Insurance Corporation (PHIC) for
the Philippines, and GTZ for the implementation of Germanys contributions. In
ruling that GTZ was not immune from suit, this Court held:
The arguments raised by GTZ and the [Office of the Solicitor
General (OSG)] are rooted in several indisputable facts. The SHINE
project was implemented pursuant to the bilateral agreements between
the Philippine and German governments. GTZ was tasked, under the
1991 agreement, with the implementation of the contributions of the
German government. The activities performed by GTZ pertaining to
the SHINE project are governmental in nature, related as they are to
the promotion of health insurance in the Philippines. The fact that GTZ
entered into employment contracts with the private respondents did not
disqualify it from invoking immunity from suit, as held in cases such as
Holy See v. Rosario, Jr., which set forth what remains valid doctrine:

Certainly, the mere entering into a contract by a
foreign state with a private party cannot be the ultimate
test. Such an act can only be the start of the inquiry. The
logical question is whether the foreign state is engaged in
the activity in the regular course of business. If the foreign
state is not engaged regularly in a business or trade, the
particular act or transaction must then be tested by its
nature. If the act is in pursuit of a sovereign activity, or an
incident thereof, then it is an act jure imperii, especially
when it is not undertaken for gain or profit.

Beyond dispute is the tenability of the comment points (sic) raised
by GTZ and the OSG that GTZ was not performing proprietary
functions notwithstanding its entry into the particular employment
contracts. Yet there is an equally fundamental premise which GTZ and the
OSG fail to address, namely: Is GTZ, by conception, able to enjoy
the Federal Republics immunity from suit?

The principle of state immunity from suit, whether a local state or
a foreign state, is reflected in Section 9, Article XVI of the Constitution,
which states that the State may not be sued without its consent. Who
or what consists of the State? For one, the doctrine is available to
foreign States insofar as they are sought to be sued in the courts of the
local State, necessary as it is to avoid unduly vexing the peace of
nations.

If the instant suit had been brought directly against the Federal
Republic of Germany, there would be no doubt that it is a suit brought
against a State, and the only necessary inquiry is whether said State had
consented to be sued. However, the present suit was brought against
GTZ. It is necessary for us to understand what precisely are the
parameters of the legal personality of GTZ.
Counsel for GTZ characterizes GTZ as the implementing agency
of the Government of the Federal Republic of Germany, a depiction
similarly adopted by the OSG. Assuming that the characterization is
correct, it does not automatically invest GTZ with the ability to invoke
State immunity from suit. The distinction lies in whether the agency is
incorporated or unincorporated.

xxx xxx xxx

State immunity from suit may be waived by general or special
law. The special law can take the form of the original charter of the
incorporated government agency. Jurisprudence is replete with
examples of incorporated government agencies which were ruled not
entitled to invoke immunity from suit, owing to provisions in their
charters manifesting their consent to be sued.

xxx xxx xxx

It is useful to note that on the part of the Philippine government, it
had designated two entities, the Department of Health and the Philippine
Health Insurance Corporation (PHIC), as the implementing agencies in
behalf of the Philippines. The PHIC was established under Republic Act No.
7875, Section 16 (g) of which grants the corporation the power to sue
and be sued in court. Applying the previously cited jurisprudence, PHIC
would not enjoy immunity from suit even in the performance of its
functions connected with SHINE, however, (sic) governmental in nature as
(sic) they may be.

Is GTZ an incorporated agency of the German government?
There is some mystery surrounding that question. Neither GTZ nor
the OSG go beyond the claim that petitioner is the implementing
agency of the Government of the Federal Republic of
Germany. On the other hand, private respondents asserted before the
Labor Arbiter that GTZ was a private corporation engaged in the
implementation of development projects. The Labor Arbiter accepted
that claim in his Order denying the Motion to Dismiss, though he was
silent on that point in his Decision. Nevertheless, private respondents
argue in their Comment that the finding that GTZ was a private
corporation was never controverted, and is therefore deemed
admitted. In its Reply, GTZ controverts that finding, saying that it is a
matter of public knowledge that the status of petitioner GTZ is that of
the implementing agency, and not that of a private corporation.

In truth, private respondents were unable to adduce any evidence
to substantiate their claim that GTZ was a private corporation, and the
Labor Arbiter acted rashly in accepting such claim without explanation.
But neither has GTZ supplied any evidence defining its legal nature
beyond that of the bare descriptive implementing agency. There is
no doubt that the 1991 Agreement designated GTZ as the
implementing agency in behalf of the German government. Yet
the catch is that such term has no precise definition that is responsive
to our concerns. Inherently, an agent acts in behalf of a principal,
and the GTZ can be said to act in behalf of the German state. But
that is as far as implementing agency could take us. The term by
itself does not supply whether GTZ is incorporated or
unincorporated, whether it is owned by the German state or by
private interests, whether it has juridical personality independent of
the German government or none at all.

xxx xxx xxx

Again, we are uncertain of the corresponding legal
implications under German law surrounding a private company
owned by the Federal Republic of Germany. Yet taking the
description on face value, the apparent equivalent under Philippine
law is that of a corporation organized under the Corporation Code
but owned by the Philippine government, or a government-owned or
controlled corporation without original charter. And it bears notice
that Section 36 of the Corporate Code states that [e]very
corporation incorporated under this Code has the power and
capacity x x x to sue and be sued in its corporate name.

It is entirely possible that under German law, an entity such as
GTZ or particularly GTZ itself has not been vested or has been
specifically deprived the power and capacity to sue and/or be sued. Yet in
the proceedings below and before this Court, GTZ has failed to
establish that under German law, it has not consented to be sued
despite it being owned by the Federal Republic of Germany. We
adhere to the rule that in the absence of evidence to the contrary,
foreign laws on a particular subject are presumed to be the same as
those of the Philippines, and following the most intelligent
assumption we can gather, GTZ is akin to a governmental owned or
controlled corporation without original charter which, by virtue of
the Corporation Code, has expressly consented to be sued. At the
very least, like the Labor Arbiter and the Court of Appeals, this Court has
no basis in fact to conclude or presume that GTZ enjoys immunity from
suit.
[41]
(Emphasis supplied.)

Applying the foregoing ruling to the case at bar, it is readily apparent that
CNMEG cannot claim immunity from suit, even if it contends that it performs
governmental functions. Its designation as the Primary Contractor does not
automatically grant it immunity, just as the term implementing agency has no
precise definition for purposes of ascertaining whether GTZ was immune from suit.
Although CNMEG claims to be a government-owned corporation, it failed to
adduce evidence that it has not consented to be sued under Chinese law. Thus,
following this Courts ruling in Deutsche Gesellschaft, in the absence of evidence to
the contrary, CNMEG is to be presumed to be a government-owned and -controlled
corporation without an original charter. As a result, it has the capacity to sue and
be sued under Section 36 of the Corporation Code.

C. CNMEG failed to present a
certification from the Department of
Foreign Affairs.

In Holy See,
[42]
this Court reiterated the oft-cited doctrine that the
determination by the Executive that an entity is entitled to sovereign or diplomatic
immunity is a political question conclusive upon the courts, to wit:
In Public International Law, when a state or international agency
wishes to plead sovereign or diplomatic immunity in a foreign court,
it requests the Foreign Office of the state where it is sued to convey to
the court that said defendant is entitled to immunity.

xxx xxx xxx

In the Philippines, the practice is for the foreign government or
the international organization to first secure an executive
endorsement of its claim of sovereign or diplomatic immunity. But
how the Philippine Foreign Office conveys its endorsement to the courts
varies. In International Catholic Migration Commission v. Calleja, 190
SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter
directly to the Secretary of Labor and Employment, informing the latter
that the respondent-employer could not be sued because it enjoyed
diplomatic immunity. In World Health Organization v. Aquino, 48
SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a
telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S.
Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval
Base at Olongapo City, Zambales, a suggestion to respondent Judge.
The Solicitor General embodied the suggestion in a Manifestation and
Memorandum as amicus curiae.

In the case at bench, the Department of Foreign Affairs, through
the Office of Legal Affairs moved with this Court to be allowed to
intervene on the side of petitioner. The Court allowed the said
Department to file its memorandum in support of petitioners claim of
sovereign immunity.

In some cases, the defense of sovereign immunity was submitted
directly to the local courts by the respondents through their private
counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v.
Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of
America v. Guinto, 182 SCRA 644 [1990] and companion cases). In
cases where the foreign states bypass the Foreign Office, the courts can
inquire into the facts and make their own determination as to the nature
of the acts and transactions involved.
[43]
(Emphasis supplied.)

The question now is whether any agency of the Executive Branch can make a
determination of immunity from suit, which may be considered as conclusive upon
the courts. This Court, in Department of Foreign Affairs (DFA) v. National Labor
Relations Commission (NLRC),
[44]
emphasized the DFAs competence and authority to
provide such necessary determination, to wit:
The DFAs function includes, among its other mandates, the
determination of persons and institutions covered by diplomatic
immunities, a determination which, when challenge, (sic) entitles it to
seek relief from the court so as not to seriously impair the conduct of
the country's foreign relations. The DFA must be allowed to plead its
case whenever necessary or advisable to enable it to help keep the
credibility of the Philippine government before the international
community. When international agreements are concluded, the
parties thereto are deemed to have likewise accepted the
responsibility of seeing to it that their agreements are duly regarded.
In our country, this task falls principally of (sic) the DFA as being the
highest executive department with the competence and authority to
so act in this aspect of the international arena.
[45]
(Emphasis supplied.)

Further, the fact that this authority is exclusive to the DFA was also
emphasized in this Courts ruling in Deutsche Gesellschaft:
It is to be recalled that the Labor Arbiter, in both of his rulings,
noted that it was imperative for petitioners to secure from the Department
of Foreign Affairs a certification of respondents diplomatic status and
entitlement to diplomatic privileges including immunity from suits. The
requirement might not necessarily be imperative. However, had GTZ
obtained such certification from the DFA, it would have provided
factual basis for its claim of immunity that would, at the very least,
establish a disputable evidentiary presumption that the foreign party
is indeed immune which the opposing party will have to overcome
with its own factual evidence. We do not see why GTZ could not
have secured such certification or endorsement from the DFA for
purposes of this case. Certainly, it would have been highly prudential
for GTZ to obtain the same after the Labor Arbiter had denied the motion
to dismiss. Still, even at this juncture, we do not see any evidence that
the DFA, the office of the executive branch in charge of our
diplomatic relations, has indeed endorsed GTZs claim of
immunity. It may be possible that GTZ tried, but failed to secure such
certification, due to the same concerns that we have discussed herein.

Would the fact that the Solicitor General has endorsed
GTZs claim of States immunity from suit before this Court
sufficiently substitute for the DFA certification? Note that the rule
in public international law quoted in Holy See referred to
endorsement by the Foreign Office of the State where the suit is
filed, such foreign office in the Philippines being the Department of
Foreign Affairs. Nowhere in the Comment of the OSG is it
manifested that the DFA has endorsed GTZs claim, or that the
OSG had solicited the DFAs views on the issue. The arguments
raised by the OSG are virtually the same as the arguments raised by
GTZ without any indication of any special and distinct perspective
maintained by the Philippine government on the issue. The Comment
filed by the OSG does not inspire the same degree of confidence as a
certification from the DFA would have elicited.
[46]
(Emphasis
supplied.)

In the case at bar, CNMEG offers the Certification executed by the Economic
and Commercial Office of the Embassy of the Peoples Republic of China, stating
that the Northrail Project is in pursuit of a sovereign activity.
[47]
Surely, this is not
the kind of certification that can establish CNMEGs entitlement to immunity from
suit, as Holy Seeunequivocally refers to the determination of the Foreign Office of
the state where it is sued.
Further, CNMEG also claims that its immunity from suit has the executive
endorsement of both the OSG and the Office of the Government Corporate Counsel
(OGCC), which must be respected by the courts. However, as expressly enunciated
in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that
matter, does not inspire the same degree of confidence as a DFA certification. Even
with a DFA certification, however, it must be remembered that this Court is not
precluded from making an inquiry into the intrinsic correctness of such certification.

D. An agreement to submit any
dispute to arbitration may be construed as
an implicit waiver of immunity from suit.

In the United States, the Foreign Sovereign Immunities Act of 1976 provides
for a waiver by implication of state immunity. In the said law, the agreement to
submit disputes to arbitration in a foreign country is construed as an implicit waiver
of immunity from suit. Although there is no similar law in the Philippines, there is
reason to apply the legal reasoning behind the waiver in this case.
The Conditions of Contract,
[48]
which is an integral part of the Contract
Agreement,
[49]
states:
33. SETTLEMENT OF DISPUTES AND ARBITRATION

33.1. Amicable Settlement

Both parties shall attempt to amicably settle all disputes or
controversies arising from this Contract before the commencement of
arbitration.

33.2. Arbitration

All disputes or controversies arising from this Contract which
cannot be settled between the Employer and the Contractor shall be
submitted to arbitration in accordance with the UNCITRAL Arbitration
Rules at present in force and as may be amended by the rest of this
Clause. The appointing authority shall be Hong
Kong International Arbitration Center. The place of arbitration shall be in
Hong Kong at Hong Kong International Arbitration Center (HKIAC).

Under the above provisions, if any dispute arises between Northrail and
CNMEG, both parties are bound to submit the matter to the HKIAC for arbitration.
In case the HKIAC makes an arbitral award in favor of Northrail, its enforcement in
the Philippines would be subject to the Special Rules on Alternative Dispute
Resolution (Special Rules). Rule 13 thereof provides for the Recognition and
Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special
Rules, the party to arbitration wishing to have an arbitral award recognized and
enforced in the Philippines must petition the proper regional trial court (a) where
the assets to be attached or levied upon is located; (b) where the acts to be
enjoined are being performed; (c) in the principal place of business in the
Philippines of any of the parties; (d) if any of the parties is an individual, where any
of those individuals resides; or (e) in the National Capital Judicial Region.
From all the foregoing, it is clear that CNMEG has agreed that it will not be
afforded immunity from suit. Thus, the courts have the competence and
jurisdiction to ascertain the validity of the Contract Agreement.

Second issue: Whether the Contract
Agreement is an executive agreement

Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna
Convention) defines a treaty as follows:
[A]n international agreement concluded between States in written
form and governed by international law, whether embodied in a single
instrument or in two or more related instruments and whatever its
particular designation.

In Bayan Muna v. Romulo, this Court held that an executive agreement is
similar to a treaty, except that the former (a) does not require legislative
concurrence; (b) is usually less formal; and (c) deals with a narrower range of
subject matters.
[50]

Despite these differences, to be considered an executive agreement, the
following three requisites provided under the Vienna Convention must
nevertheless concur: (a) the agreement must be between states; (b) it must be
written; and (c) it must governed by international law. The first and the third
requisites do not obtain in the case at bar.

A. CNMEG is neither a government nor a
government agency.

The Contract Agreement was not concluded between
the Philippines and China, but between Northrail and CNMEG.
[51]
By the terms of
the Contract Agreement, Northrail is a government-owned or -controlled
corporation, while CNMEG is a corporation duly organized and created under the
laws of the Peoples Republic of China.
[52]
Thus, both Northrail and CNMEG entered
into the Contract Agreement as entities with personalities distinct and separate
from the Philippine and Chinese governments, respectively.
Neither can it be said that CNMEG acted as agent of the Chinese
government. As previously discussed, the fact that Amb. Wang, in his letter dated 1
October 2003,
[53]
described CNMEG as a state corporation and declared its
designation as the Primary Contractor in the Northrail Project did not mean it was
to perform sovereign functions on behalf of China. That label was only descriptive
of its nature as a state-owned corporation, and did not preclude it from engaging
in purely commercial or proprietary ventures.

B. The Contract Agreement is to be
governed by Philippine law.

Article 2 of the Conditions of Contract,
[54]
which under Article 1.1 of the
Contract Agreement is an integral part of the latter, states:
APPLICABLE LAW AND GOVERNING LANGUAGE

The contract shall in all respects be read and construed in
accordance with the laws of the Philippines.

The contract shall be written in English language. All
correspondence and other documents pertaining to the Contract which
are exchanged by the parties shall be written in English language.

Since the Contract Agreement explicitly provides that Philippine law shall be
applicable, the parties have effectively conceded that their rights and obligations
thereunder are not governed by international law.
It is therefore clear from the foregoing reasons that the Contract Agreement
does not partake of the nature of an executive agreement. It is merely an ordinary
commercial contract that can be questioned before the local courts.
WHEREFORE, the instant Petition is DENIED. Petitioner China National
Machinery & Equipment Corp. (Group) is not entitled to immunity from suit, and
the Contract Agreement is not an executive agreement. CNMEGs prayer for the
issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being moot
and academic. This case isREMANDED to the Regional Trial Court of Makati,
Branch 145, for further proceedings as regards the validity of the contracts subject
of Civil Case No. 06-203.
No pronouncement on costs of suit.
SO ORDERED.
G.R. No. 166508 - National Home Mortgage Finance Corporation v. Mario Abayari, et al.

THIRD DIVISION
[G.R. NO. 166508 : October 2, 2009]
NATIONAL HOME MORTGAGE FINANCE CORPORATION, Petitioner, v. MARIO
ABAYARI, MAY ALMINE, MA. VICTORIA ALPAJARO, FLORANTE AMORES,
ANGELINA ANCHETA, ANGELINE ODIEM-ARANETA, CECILIA PACIBLE, MIRIAM
BAJADO, EDUARDO BALAURO, EVANGELINA BALIAO, LUISA BANUA, RIZALINA
BENLAYO, MARJORIE BINAG, CRESENCIA BISNAR, CARMELITA BREBONERIA,
JOSELYN BUNYI, EMILIO CABAMONGAN, JR., PAZ DIVINA CABANERO, RAUL
CABANILLA, LEONILA WYNDA CADA, CELSTINA CASAO, ELIZABETH CASAS,
ARNULFO CATALAN, FRANCIS DE LA CHICA, JAIME CORTES, JAIME DE LA
CRUZ, JHONNY CUSTODIO, MA. BELINDA DAPULA, REMEDIOS DEBUQUE,
REBECCA DECARA, JOCELYN DIEGO, JAIME DUQUE, LUCIA ENRIQUEZ, MA.
LUCIA ESPEROS, HELEN EVANGELISTA, CELSO FERNANDEZ, EDILBERTO SAN
GABRIEL, REYNALDO SAN GABRIEL, EDMUNDO GARAIS, JENNILYN GOZADO,
EVELYN GUEVARRA, MA. MAGDALENA HIDONA, VICTORINO INDEFONSO, JR.,
GRACE CECILLE JAVIER, MARIETA JOSE, MA. CECILIA KAPAW-AN,
EVANGELINE LABAY, SENORA LUCUNSAY, MILAGROSO ALLAN LAMBAN,
VIOLETA DE LEON, CHARITO LONTAYAO, REMEDIOS LOYOLA, NORA
MALALUAN, ALBERTO MALIFICIADO, DENNIS MANZANO, MA. CONCEPCION
MARQUEZ, REYNALDO MASILANG, MAGDALENA MENDOZA, MELCHOR NANUD,
MILAGROS NEPOMUCENO, ROSEMARIE NEPOMUCENO, APOLO NISPEROS,
ANNALIZA NOBRERA, EVANGELINE NUESCA, YUMINA PABLO, GLORIA
PANGANIBAN, ROGELIO PAQUIZ, ROLANDO PAREDES, NORA PEDROSO, MARIA
HILNA DELA PEA VICTORIA, PEARADA, MELVIN PERALTA, DOROTHY PEREZ,
FREDERICK MICHAEL PORTACION, ROMMEL RABACA, RODERICK REALUBIT,
GWENDOLYN REMORIN, ANTONIO DE LOS REYES, NERISSA REYES, NENITA
ROBRIGADO, ALLAN ROMERO, MA. ROSARIO ROMULO, LUIS DEL ROSARIO,
CRISTINA ROSAS, DEXTER SALAZAR, MAGDALENA SALOMON, OLIVIA
SALOMON, ELENITA SANCHEZ, ANGELINA SANTELICES, ANABELLE SANTOS,
SHARLENE SANTOS, JAIME SINGH DELMASINGUN, EVELYN SO, MILAGROS
SOLMIRANO, CHRISTINE TALUSIK, CYRIL ROMUADO TEJA EFREN TESORERO,
PENNYLANE TIONGSON, CYPRIANO TOMINES, RONILO UMALI, MA. LOURSES
VALDUAZA, MA. ANTONIA VALENZUELA, EDWIN VANGUARDIA, CARLO VEGA,
ANNAMOR VELASCO, ESTEFANIA VILLANUEVA, CANDELARIA
YODICO, Respondents.
D E C I S I O N
DEL CASTILLO, J.:
In this Petition for Review
1
under Rule 45 of the Rules of Court, the National Home
Mortgage Finance Corporation assails the August 20, 2004 Decision
2
of the Court of
Appeals in CA-G.R. SP No. 82637, which dismissed its petition for certiorari from the
October 14, 2003
3
and December 15, 2003
4
Orders issued by the Regional Trial Court
(RTC) of Makati City, Branch 138.
5
The said Orders, in turn, respectively granted the
issuance of a writ of execution and denied petitioner's motion for reconsideration in
Civil Case No. 99-1209 - a case for mandamus .
The antecedents follow.
Petitioner, the National Home Mortgage Finance Corporation (NHMFC), is a
government-owned and controlled corporation created under the authority of
Presidential Decree No. 1267 for the primary purpose of developing and providing a
secondary market for home mortgages granted by public and/or private home-financing
institutions.
6
In its employ were respondents,
7
mostly rank-and-file employees, who all
profess as having been hired after June 30, 1989.
8

On July 1, 1989, Republic Act No. 6758, otherwise known as The Compensation and
Position Classification Act of 1989, was enacted and was subsequently approved on
August 21, 1989. Section 12 thereof directed that all allowances - namely
representation and transportation allowance, clothing and laundry allowance,
subsistence allowance, hazard pay and other allowances as may be determined by the
budget department - enjoyed by covered employees should be deemed included in the
standardized salary rates prescribed therein, and that the other additional
compensation being received by incumbents only as of July 1, 1989 not integrated into
the standardized salary rates should continue to be authorized. To implement the law,
the Department of Budget and Management (DBM) issued Corporate Compensation
Circular No. 10.
9
Section 5.5
10
thereof excluded certain allowances and benefits from
integration into the standardized basic salary but continued their grant to those who
were incumbents as of June 30, 1989 and who were actually receiving the benefits as of
said date. These are the allowances involved in this case.
Respondents filed a petition for mandamus with the RTC of Makati City, Branch 138
11
to
compel petitioner to pay them meal, rice, medical, dental, optical and children's
allowances, as well as longevity pay, which allegedly were already being enjoyed by
other NHMFC employees as early as July 1, 1989. In its April 27, 2001 Decision, the
trial court ruled favorably and ordered petitioner to pay respondents the allowances
prayed for, retroactive to the respective dates of appointment.
12
The dispositive portion
of the Decision reads:
WHEREFORE, judgment is hereby rendered in favor of the petitioners and respondent is
ordered to pay petitioners their meal allowance, rice allowance, medical allowance,
longevity pay and children's allowance retroactive to the dates of their respective
appointments up to the present or for the time that they were employed by the
respondent.
SO ORDERED.
13

In arriving at the conclusion that respondents were entitled to the prayed-for benefits,
the trial court explained, thus,
The use of the word "only" before the words July 1, 1989 in section 12 of Republic Act
No. 6758 appears to be the source of the dispute.
Section 12 is clear that other additional compensation being received by incumbents
only as of July 1, 1989 that are not integrated into the standardized salary rates shall
continue to be authorized. The law is prospective in effect and it does not say that such
additional compensation shall not continue to be authorized for employees appointed
after June 30, 1989. The use of the word "only" before the words "as of July 1, 1989"
qualifies the additional compensation which can be continued. The foregoing applies to
all employees whether permanent or casual.
DBM Circular No. 10, the Implementing Rules and Regulations particularly section 5.5
thereof use the word "only" for incumbents as of June 30, 1989 and by implication the
same shall not apply to employees appointed after June 30, 1989. This is in effect
another qualification limiting the grant of benefits to those who are incumbents as of
June 30, 1989, a condition not imposed by Section 12 of Republic Act No. 6758 for
which reason it has to be strike (sic) down.
14

Petitioner timely filed an appeal with the Court of Appeals.
15
In its November 21, 2001
Decision, the appellate court affirmed the trial court's ruling.
16
No appeal was taken
from the decision and upon its finality,
17
respondents moved for execution.
18

However, the motion for execution was withdrawn when on May 12, 2002, petitioner
and respondents executed a Compromise Agreement in which petitioner bound itself to
comply with the decision rendered in the case, except that the payment of the
allowances adjudicated in favor of respondents would be made in four installments
instead. It was, likewise stipulated therein that the parties waive all claims against each
other. The trial court did not take any positive action on the compromise except to note
the same since the parties did not intend to novate the April 27, 2001 Decision.
19
On
that basis, petitioner had started paying respondents the arrears in benefits.
Conflict arose when the DBM sent a letter
20
dated July 15, 2003 to NHMFC President
Angelico Salud disallowing the payment of certain allowances, including those awarded
by the trial court to respondents. A reading of the letter reveals that the disallowance
was made in accordance with the 2002 NHMFC Corporate Operating Budget previously
issued by the DBM.
To abide by the DBM's directive, petitioner then issued a memorandum stating that
effective August 2003, the grant of benefits to its covered employees, including those
awarded to respondents, would be curtailed pursuant to the DBM letter.
21
This
eventuality compelled respondents to file for the second time a motion for a writ of
execution of the trial court's April 27, 2001 decision.
22

In its October 14, 2003 Order,
23
the trial court found merit in respondents' motion;
hence, it directed the execution of the judgment. Petitioner moved for
reconsideration
24
but it was denied.
25
On February 16, 2004, the trial court issued a
Writ of Execution/Garnishment with a directive to the sheriff to tender to respondents
the amount of their collective claim equivalent to P4,806,530.00 to be satisfied out of
petitioners goods and chattels and if the same be not sufficient, out of its existing real
property.
26
Respondents then sought the garnishment of its funds under the custody of
the Land Bank of the Philippines.
27

Bent on preventing execution, petitioner filed a petition for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 82637.
28
In it, petitioner ascribed grave abuse of
discretion to the trial court in ordering the execution of the judgment. It pointed out
that the trial court disregarded the fact that the DBM's issuance amounted to a
supervening event, or an occurrence that changed the situation of the parties that
would make the continued payment of allowances to respondents impossible and illegal,
and disregarded the DBM's exclusive authority to allow or disallow the payment of the
benefits in question.
29
It likewise faulted the trial court in ordering the garnishment of
its funds despite the settled rule that government funds may not be garnished in the
absence of an appropriation made by law.
Republic of the Philippines
Supreme Court
Manila


FIRST DIVISION


REPUBLIC OF THE PHILIPPINES,
represented by the Department of
Public Works and Highways,
through the Hon. Secretary,
HERMOGENES EBDANE,
Petitioner,


- versus -


ALBERTO A. DOMINGO,
G.R. No. 175299

Present:

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

Promulgated:
Respondent.
September 14, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N


LEONARDO DE CASTRO, J.:

In this Petition for Review on Certiorari
[1]
under Rule 45 of the Rules of
Court, the Court is called upon to reverse and set aside the Decision
[2]
dated May
19, 2006 and the Resolution
[3]
dated October 25, 2006 of the Court of Appeals in
CA-G.R. SP No. 78813, as well as to declare null and void the Decision
[4]
dated
February 18, 2003 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch
18, in Civil Case No. 333-M-2002.

As culled from the records, the factual antecedents of the case are as
follows:

On April 26, 2002, herein respondent Alberto A. Domingo filed a Complaint
for Specific Performance with Damages
[5]
against the Department of Public Works
and Highways (DPWH), Region III, which was docketed as Civil Case No. 333-M-
2002 in the RTC of Malolos, Bulacan, Branch 18. Domingo averred that from April
to September 1992, he entered into seven contracts with the DPWH Region III for
the lease of his construction equipment to said government agency.
[6]
The lease
contracts were allegedly executed in order to implement the emergency projects
of the DPWH Region III, which aimed to control the flow of
lahar from Mt. Pinatubo in the adjacent towns in the provinces of Tarlac and
Pampanga. After the completion of the projects, Domingo claimed that the
unpaid rentals of the DPWH Region III amounted to P6,320,163.05. Despite
repeated demands, Domingo asserted that the DPWH Region III failed to pay its
obligations. Domingo was, thus, compelled to file the above case for the payment
of the P6,320,163.05 balance, plus P200,000.00 as moral and compensatory
damages, P100,000.00 as exemplary damages, and P200,000.00 as attorneys
fees.
[7]


Thereafter, summons was issued by the RTC. The Proof of Service
[8]
of the
Sheriff dated May 9, 2002 stated, thus:

PROOF OF SERVICE

The undersigned personally served the copy of the Summons together with the complaint issued in the above-
entitled case upon defendant The Department of Public Works and Highways, Region III, San Fernando Pampanga on May
6, 2002 through Nora Cortez, Clerk III of said office as shown by her signature and stamped mark received by said office
appearing on the original Summons.

WHEREFORE, the original Summons respectfully returned to the Court DULY SERVED, for its record and
information.

Malolos, Bulacan, May 9, 2002.


Subsequently, on July 30, 2002, Domingo filed a Motion to Declare Defendant
in Default
[9]
in view of the failure of the DPWH Region III to file a responsive pleading
within the reglementary period as required under the Rules of Court. During the
hearing of the motion on August 8, 2002, the RTC directed the counsel of Domingo
to submit proof of service of said motion on the DPWH Region III. Thereafter, the
motion was deemed submitted for resolution.
[10]
Counsel for Domingo timely filed a
Manifestation,
[11]
showing compliance with the order of the trial court.

In an Order
[12]
dated September 2, 2002, the RTC declared the DPWH Region
III in default and thereafter set the date for the reception of Domingos
evidence ex parte.

After the ex parte presentation of Domingos evidence, the RTC rendered
judgment on February 18, 2003, finding that:

From the evidence presented by [Domingo], testimonial and documentary, it was convincingly proven that
[Domingo] is entitled to the relief prayed for.

In his seven causes of actions, [Domingo] has religiously undertaken what is incumbent upon him in the contracts
of lease signed by both [Domingo] and [the DPWH Region III]. As a matter of course, the [DPWH Region III] has the duty
to pay [Domingo] the amount equivalent to the services performed by [Domingo] which [in] this case now amount
to P6,320,163.05 excluding interest.

Considering that there was a long delay in the payment of the obligation on the part of the [DPWH Region III],
Article 2209 of the New Civil Code finds application as to imputation of legal interest at six (6%) percent per annum, in
the absence of stipulation of interest on the amount due.

With respect to the claim for attorneys fees, although as a general rule, attorneys fees cannot be rewarded
because of the policy that no premium should be placed on the right to litigate, this rule does not apply in the case at bar
in the face of the stubborn refusal of [the DPWH Region III] to respect the valid claim of [Domingo] x x x. Award of
attorneys fees in the amount of P30,000.00 appears proper. Moreover, as to [the] demand for moral and exemplary
damages, the same are hereby denied for lack of persuasive and sufficient evidence.
[13]



Thus, the RTC disposed:

Wherefore, premises considered, judgment is hereby rendered in favor of plaintiff Alberto Domingo and
against defendant DPWH Region III, ordering defendant to pay plaintiff:

1. the sum of Six Million Three Hundred Twenty Thousand One Hundred Sixty[-]Three and 05/100 Pesos
(P6,320,163.05) representing the principal obligation of the defendant plus interest at six percent (6%) per annum from
1993 until the obligation is fully paid;

2. to pay attorneys fees in the total amount of Thirty Thousand Pesos (P30,000.00) and

3. to pay the costs of suit.
[14]



On March 12, 2003, Domingo filed a Motion for Issuance of Writ of
Execution,
[15]
asserting that the DPWH Region III failed to file an appeal or a
motion for new trial and/or reconsideration despite its receipt of a copy of the
RTC decision on February 19, 2003. On March 20, 2003, the RTC granted the
aforesaid motion of Domingo.
[16]
A Writ of Execution
[17]
was then issued on
March 24, 2003, commanding the sheriff to enforce the RTC Decision dated
February 18, 2003.

On August 27, 2003, the Republic of the Philippines, represented by the
Office of the Solicitor General (OSG), filed with the Court of Appeals a Petition for
Annulment of Judgment with Prayer for the Issuance of a Temporary Restraining
Order and/or a Writ of Preliminary Injunction.
[18]
The petition was docketed as
CA-G.R. SP No. 78813. The Republic argued that it was not impleaded as an
indispensable party in Civil Case No. 333-M-2002. The seven contracts sued upon
in the trial court stated that they were entered into by the Regional Director,
Assistant Regional Director and/or Project Manager of the DPWH Region III for
and in behalf of the Republic of the Philippines, which purportedly was the real
party to the contract. Moreover, the Republic averred that, under the law, the
statutory representatives of the government for purposes of litigation are either
the Solicitor General or the Legal Service Branch of the Executive Department
concerned. Since no summons was issued to either of said representatives, the
trial court never acquired jurisdiction over the Republic. The absence of
indispensable parties allegedly rendered null and void the subsequent acts of the
trial court because of its lack of authority to act, not only as to the absent parties,
but even as to those present. The Republic prayed for the annulment of the RTC
Decision dated February 18, 2003 and the dismissal of the said case, without
prejudice to the original action being refiled in the proper court.

On May 19, 2006, the Court of Appeals promulgated its decision, dismissing
the Petition for Annulment of Judgment filed by the Republic. The appellate court
elaborated that:

The hair-splitting distinction being made by [the Republic] between the DPWH as a department under the
Republic, and the Regional Office of the DPWH fails to persuade Us. Instead, We uphold *Domingos+ position that the
regional office is an extension of the department itself and service of summons upon the former is service upon the
latter. x x x.

x x x x

x x x [A] regional office of the DPWH is part of the composition of the department itself and is therefore, not
an entity that is altogether separate from the department. This conclusion lends credence to *Domingos+ position that
service of summons upon the regional office is service upon the department itself because the former is essentially part
of the latter. Indeed, what militates heavily against [the Republics+ theory is the simple fact that the regional office is not
a different entity at all, but, as can be gleaned from the manner of its creation, a part of the department itself, so much
so that it does not even have a juridical personality of its own. x x x.

Anent the claim that the procedure for service of summons upon the Republic was not followed because service
should have been made on the OSG or the Legal Service Department of the DPWH, We are likewise not persuaded. A
perusal of the Revised Administrative Code of the Philippines suggests nothing of this import. x x x.

x x x x

Clearly, nothing [in the functions of the OSG] remotely suggests that service of summons upon the Republic should
be made exclusively on the OSG. What the [provisions] merely state is that the OSG will represent the government in all
proceedings involving it. It cannot be deduced nor implied from this, however, that summons should be served upon it
alone.

The same conclusion applies to the legal service branch of the DPWH, as there is also nothing in the law that
suggests that service of summons on the DPWH should be made upon it alone. x x x.

x x x x

Obviously, petitioners conclusion that the proper procedure for service of summons was not observed is a mere
conjecture because We find nothing in the provisions invoked by it that such indeed is the procedure sanctioned by
law. We are thus inclined to give more credence to [the Republics+ argument that it was the regional offices fault if it
failed to bring the subject case to the attention of the OSG for proper representation. To allow it to benefit from its own
omission in order to evade its just and valid obligation would be the height of injustice.

Finally, anent the argument that the Republic is estopped from questioning the jurisdiction of the trial court, We
rule in the negative. The existence of another case against the regional office of the DPWH where the OSG appeared is of
no moment as it concerns a totally different transaction. Thus, it would be erroneous for Us to rule on that basis alone,
that the OSG is already acknowledging the service of summons upon the regional office, especially considering the
categorical stand taken by the OSG on the matter in the case now before Us. Be that as it may, however, We still rule, as
We have discussed above, that *Domingos+ position is more impressed with merit.

WHEREFORE, in view of the foregoing, the instant Petition for Annulment of Judgment is hereby DISMISSED.
[19]



The Republic filed a Motion for Reconsideration
[20]
of the above decision,
but the Court of Appeals denied the same in the assailed Resolution dated
October 25, 2006.

Consequently, the Republic filed the instant petition before this Court. In a
Resolution
[21]
dated February 19, 2007, we denied the Republics petition for
failure to properly verify the petition and that the jurat in the verification and
certification against forum shopping did not contain any competent evidence of
the affiants identity. In addition, the Integrated Bar of the Philippines (IBP) dues
payment (under IBP O.R. No. 663485) of one of the counsels who signed the
petition was not updated. The Republic filed a Motion for Reconsideration
[22]
of
the above resolution.
[23]
On July 2, 2007, the Court resolved
[24]
to grant the
Republics motion, thereby reinstating its petition.

In assailing the judgment of the Court of Appeals, the Republic brings to
fore the following arguments:

I.

If in the act by which the Republic consents to be sued, no designation is made as to the officer to be served with
summons, then the process can only be served upon the Solicitor General.

[II.]

The State is not bound by the errors or mistakes of its agents.

III.

Respondent can recover on the government contracts sued upon in Civil Case No. [3]33-M-2002 only on a
quantum meruit basis.
[25]



In essence, the primary issue that must be resolved in the instant petition is
whether the Court of Appeals correctly dismissed the Petition for Annulment of
Judgment filed by the Republic.

Section 1, Rule 47
[26]
of the Rules of Court provides for the remedy of
annulment by the Court of Appeals of judgments or final orders and resolutions of
Regional Trial Courts for which the ordinary remedies of new trial, appeal,
petition for relief or other appropriate remedies are no longer available through
no fault of the petitioner.

Under the first paragraph of Section 2, Rule 47
[27]
of the Rules of Court, the
annulment may be based only on the grounds of extrinsic fraud and lack of
jurisdiction. As a ground for annulment of judgment, lack of jurisdiction refers to
either lack of jurisdiction over the person of the defending party or over the
subject matter of the claim.
[28]


In the petition at bar, the Republic argues that the RTC failed to acquire
jurisdiction over the former. The Republic reiterates that the service of summons
upon the DPWH Region III alone was insufficient. According to the Republic, the
applicable rule of procedure in this case is Section 13, Rule 14 of the Rules of
Court, which mandates that when the defendant is the Republic of the
Philippines, the service of summons may be effected on the Office of the Solicitor
General (OSG). The DPWH and its regional office are simply agents of the
Republic, which is the real party in interest in Civil Case No. 333-M-2002. The
Republic posits that, since it was not impleaded in the case below and the RTC did
not acquire jurisdiction over it, the proceedings in Civil Case No. 333-M-2002 are
null and void.

On the other hand, Domingo argues that the DPWH Region III is part of the
DPWH itself; hence, a suit against the regional office is a suit against the said
department and the Republic as well. Domingo stresses that the case he filed was
against the Republic, that is, against the DPWH Region III, and it was clear that the
summons and a copy of the complaint was duly served on the said regional
office. Likewise, Domingo submits that the Republic is estopped from raising the
issue of jurisdiction in the instant case given that he has filed two other civil
actions for specific performance and damages against the DPWH Region III and, in
the said cases, the OSG formally entered its appearance for and in behalf of the
Republic. Domingo alleges that the foregoing action of the OSG proved that it
recognized the validity of the service of summons upon the DPWH Region III and
the jurisdiction of the trial court over the said regional office.

The Court finds merit in the Republics petition.

Summons is a writ by which the defendant is notified of the action brought
against him. Service of such writ is the means by which the court acquires
jurisdiction over his person. Jurisdiction over the person of the defendant is
acquired through coercive process, generally by the service of summons issued by
the court, or through the defendant's voluntary appearance or submission to the
court.
[29]


Section 13, Rule 14 of the Rules of Court states that:

SEC. 13. Service upon public corporations. When the defendant is the Republic
of the Philippines, service may be effected on the Solicitor General; in case of a
province, city or municipality, or like public corporations, service may be effected on its
executive head, or on such other officer or officers as the law or the court may
direct. (Emphasis ours.)


Jurisprudence further instructs that when a suit is directed against an
unincorporated government agency, which, because it is unincorporated,
possesses no juridical personality of its own, the suit is against the agency's
principal, i.e., the State.
[30]
In the similar case of Heirs of Mamerto Manguiat v.
Court of Appeals,
[31]
where summons was served on the Bureau of
Telecommunications which was an agency attached to the Department of
Transportation and Communications, we held that:

Rule 14, Section 13 of the 1997 Rules of Procedure provides:

SEC. 13. Service upon public corporations. When the defendant is the Republic of
the Philippines, service may be effected on the Solicitor General; in case of a province, city or
municipality, or like public corporations, service may be effected on its executive head, or on such
other officer or officers as the law or the court may direct.

It is clear under the Rules that where the defendant is the Republic of the Philippines, service of summons
must be made on the Solicitor General. The BUTEL is an agency attached to the Department of Transportation and
Communications created under E.O. No. 546 on July 23, 1979, and is in charge of providing telecommunication facilities,
including telephone systems to government offices. It also provides its services to augment limited or inadequate existing
similar private communication facilities. It extends its services to areas where no communication facilities exist yet; and
assists the private sector engaged in telecommunication services by providing and maintaining backbone
telecommunication network. It is indisputably part of the Republic, and summons should have been served on the
Solicitor General.

We now turn to the question of whether summons was properly served according to the Rules of Court.
Petitioners rely solely on the sheriff's return to prove that summons was properly served. We quote its contents, viz:

THIS IS TO CERTIFY that on the 19th day of May 1999, the undersigned caused the
service of Summons and Complaint upon defendant J.A. Development Corporation at the address
indicated in the summons, the same having been received by a certain Jacqueline delos Santos, a
person employed thereat, of sufficient age and discretion to receive such process, who signed on
the lower portion of the Summons to acknowledge receipt thereof.

Likewise, copy of the Summons and Complaint was served upon defendant Bureau of
Telecommunications at the address indicated in the Summons, a copy of the same was received by
a certain Cholito Anitola, a person employed thereat, who signed on the lower portion of the
Summons to acknowledge receipt thereof.

It is incumbent upon the party alleging that summons was validly served to prove that all requirements were
met in the service thereof. We find that this burden was not discharged by the petitioners.The records show that the
sheriff served summons on an ordinary employee and not on the Solicitor General. Consequently, the trial court
acquired no jurisdiction over BUTEL, and all proceedings therein are null and void.
[32]
(Emphases supplied.)


In the instant case, the Complaint for Specific Performance with Damages
filed by Domingo specifically named as defendant the DPWH Region III. As
correctly argued by the Republic, the DPWH and its regional office are merely the
agents of the former (the Republic), which is the real party in interest in Civil Case
No. 333-M-2002. Thus, as mandated by Section 13, Rule 14 of the Rules of Court,
the summons in this case should have been served on the OSG.

Quite inexplicably, the Court of Appeals failed to apply, nay, to even
consider, the provisions of Section 13, Rule 14 of the Rules of Court in rendering
its assailed Decision. A perusal of the Decision dated May 19, 2006 shows that
the appellate court mainly dissertated regarding the functions and organizational
structures of the DPWH and the OSG, as provided for in the Revised
Administrative Code of 1987, in an attempt to demonstrate the relationship
between the DPWH and its regional offices, as well as to refute the claim that the
service of summons upon the Republic should be made exclusively upon the
OSG. Such an oversight on the part of the Court of Appeals is most unfortunate
given the relevance and materiality of Section 13, Rule 14 of the Rules of Court to
the instant case, in addition to the fact that the Republic itself quoted the
aforesaid provision in its petition before the appellate court.
[33]


The Court, nonetheless, subscribes to the ruling of the Court of Appeals
that the Republic is not estopped from raising the issue of jurisdiction in the case
at bar in view of the alleged entry of appearance of the OSG, in behalf of the
Republic, in the other civil cases supposedly filed by Domingo against the DPWH
Region III. As held by the appellate court, the other civil cases presumably
pertained to transactions involving Domingo and the DPWH Region III, which
were totally different from the contracts involved in the instant case. The fact
that the OSG entered its appearance in the other civil cases, notwithstanding that
the summons therein were only served upon the DPWH Region III, has no bearing
in the case now before us. All this indicates is that, despite the improper service
of summons in these other civil cases, there appeared to be notice to the OSG and
voluntary appearance on the latters part.

Here, there was no indication, and Domingo did not insist otherwise, that
the OSG had any notice of the filing of Civil Case No. 333-M-2002. Domingo
speculates that, in the subsequent civil actions against the DPWH Region III, the
latter most likely brought the said cases to the attention of the OSG. On the other
hand, Domingo opines that the DPWH Region III apparently neglected to inform
the OSG of the pendency of Civil Case No. 333-M-2002. Accordingly, Domingo
asserted that he should not be faulted therefor. The Court disagrees. Domingo
ought to bear in mind that it is the duty of the plaintiff to implead all the
necessary or indispensable parties for the complete determination of the
action.
[34]
It was, thus, incumbent upon him to name and implead the proper
defendant in this case, i.e., the Republic, and cause the service of summons to be
made upon the officer mandated by law, that is, the OSG. As Domingo failed to
discharge this burden, he cannot now be allowed to shift the blame on the DPWH
Region III or hold in estoppel the OSG.

In sum, the Court holds that the Republic was not validly served with
summons in Civil Case No. 333-M-2002. Hence, the RTC failed to acquire
jurisdiction over the person of the Republic. Consequently, the proceedings had
before the trial court and its Decision dated February 18, 2003 are hereby
declared void.

In accordance with Section 7, Rule 47
[35]
of the Rules of Court, a
judgment of annulment shall set aside the questioned judgment or final order or
resolution and render the same null and void, without prejudice to the original
action being refiled in the proper court.

In view of the above ruling of the Court declaring the nullity of the
proceedings in the RTC, the Court shall no longer pass upon the other issues
raised by the parties in the instant petition.

WHEREFORE, the petition is GRANTED. The Decision dated May 19, 2006
and the Resolution dated October 25, 2006 of the Court of Appeals in CA-G.R. SP
No. 78813 are REVERSED. The Decision dated February 18, 2003 of the Regional
Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002 is
herebyANNULLED and SET ASIDE, without prejudice to the filing of the original
action in the proper Regional Trial Court.

SO ORDERED.
Republic of the Philippines
Supreme Court
Manila


FIRST DIVISION


BANAHAW BROADCASTING
CORPORATION,
Petitioner,

- versus -

CAYETANO PACANA III, NOE U.
DACER, JOHNNY B. RACAZA,
G.R. No. 171673



Present:

CORONA, C.J.,
Chairperson,
VELASCO, JR.,
LEONARDO S. OREVILLO, ARACELI T.
LIBRE, GENOVEVO E. ROMITMAN,
PORFERIA M. VALMORES, MENELEO
G. LACTUAN, DIONISIO G. BANGGA,
FRANCISCO D. MANGA, NESTOR A.
AMPLAYO, LEILANI B. GASATAYA,
LORETA G. LACTUAN, RICARDO B.
PIDO, RESIGOLO M. NACUA and
ANACLETO C. REMEDIO,
Respondents.
LEONARDO-DE CASTRO,
PERALTA,
*
and
PEREZ, JJ.






Promulgated:


May 30, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N


LEONARDO-DE CASTRO, J.:


This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Civil Procedure assailing the Decision
[1]
dated April 15, 2005 of the Court of
Appeals in CA-G.R. SP No. 57847, and its Resolution
[2]
dated January 27, 2006
denying petitioners Motion for Reconsideration.

The factual and procedural antecedents of this case are as follows:

Respondents in the case at bar, Cayetano Pacana III, Noe U. Dacer, Johnny
B. Racaza, Leonardo S. Orevillo, Araceli T. Libre, Genovevo E. Romitman, Porferia
M. Valmores, Meneleo G. Lactuan, Dionisio G. Bangga, Francisco D. Manga,
Nestor A. Amplayo, Leilani B. Gasataya, Loreta G. Lactuan, Ricardo B. Pido,
Resigolo M. Nacua and Anacleto C. Remedio (collectively, the DXWG personnel),
are supervisory and rank and file employees of the DXWG-Iligan City radio station
which is owned by petitioner Banahaw Broadcasting Corporation (BBC), a
corporation managed by Intercontinental Broadcasting Corporation (IBC).

On August 29, 1995, the DXWG personnel filed with the Sub-regional
Arbitration Branch No. XI, Iligan City a complaint for illegal dismissal, unfair labor
practice, reimbursement of unpaid Collective Bargaining Agreement (CBA)
benefits, and attorneys fees against IBC and BBC.

On June 21, 1996, Labor Arbiter Abdullah L. Alug rendered his
Decision
[3]
awarding the DXWG personnel a total of P12,002,157.28 as unpaid CBA
benefits consisting of unpaid wages and increases, 13
th
month pay, longevity pay,
sick leave cash conversion, rice and sugar subsidy, retirement pay, loyalty reward
and separation pay.
[4]
The Labor Arbiter denied the other claims of the DXWG
personnel for Christmas bonus, educational assistance, medical check-up and
optical expenses. Both sets of parties appealed to the National Labor Relations
Commission (NLRC).

On May 15, 1997, a Motion to Dismiss, Release, Waiver and
Quitclaim,
[5]
was jointly filed by IBC and the DXWG personnel based on the latters
admission that IBC is not their employer as it does not own DXWG-Iligan City. On
April 21, 1997, the NLRC granted the Motion and dismissed the case with respect
to IBC.
[6]


BBC filed a Motion for Reconsideration alleging that (1) neither BBC nor its
duly authorized representatives or officers were served with summons and/or a
copy of the complaint when the case was pending before the Labor Arbiter or a
copy of the Decision therein; (2) since the liability of IBC and BBC is solidary, the
release and quitclaim issued by the DXWG personnel in favor of IBC totally
extinguished BBCs liability; (3) it was IBC that effected the termination of the
DXWG personnels employment; (4) the DXWG personnel are members of the IBC
union and are not employees of BBC; and (5) the sequestered properties of BBC
cannot be levied upon.

On December 12, 1997, the NLRC issued a Resolution vacating the Decision
of Labor Arbiter Alug and remanding the case to the arbitration branch of origin
on the ground that while the complaint was filed against both IBC and BBC, only
IBC was served with summons, ordered to submit a position paper, and furnished
a copy of the assailed decision.
[7]


On October 15, 1998, Labor Arbiter Nicodemus G. Palangan rendered a
Decision adjudging BBC to be liable for the same amount discussed in the vacated
Decision of Labor Arbiter Alug:


WHEREFORE, premises considered, judgment is hereby rendered
ordering the respondent Banahaw Broadcasting Corporation to pay complainants
the following:

1. Cayetano Pacana III P 1,730,535.75
2. Noe U. Dacer 886,776.43
3. Johnny B. Racaza 1,271,739.34
4. Leonardo S. Orevillo 1,097,752.70
5. Araceli T. Libre 543,467.22
6. Genovevo E. Romitman 716,455.72
7. Porferia M. Valmores 562,564.78
8. Meneleo G. Lactuan 678,995.91
9. Dionisio G. Bangga 580,873.78
10. Francisco D. Manga 29,286.65
11. Nestor A. Amplayo 583,798.51
12. Leilani B. Gasataya 42,669.75
13. Loreta G. Lactuan 757,252.52
14. Ricardo B. Pido 756,835.64
15. Resigolo M. Nacua 887,344.75
16. Anacleto C. Remedio 887,345.39
___________________________
GRAND TOTAL P 12,002,157.28

Respondent is likewise ordered to pay 10% of the total award as attorneys
fee.
[8]



Both BBC and respondents appealed to the NLRC anew. The appeal was
docketed as NLRC CA No. M-004419-98. In their appeal, the DXWG personnel
reasserted their claim for the remaining CBA benefits not awarded to them, and
alleged error in the reckoning date of the computation of the monetary
award. BBC, in its own Memorandum of Appeal, challenged the monetary award
itself, claiming that such benefits were only due to IBC, not BBC, employees.
[9]
In
the same Memorandum of Appeal, BBC incorporated a Motion for the
Recomputation of the Monetary Award (of the Labor Arbiter),
[10]
in order that the
appeal bond may be reduced.

On September 16, 1999, the NLRC issued an Order
[11]
denying the Motion
for the Recomputation of the Monetary Award. According to the NLRC, such
recomputation would result in the premature resolution of the issue raised on
appeal. The NLRC ordered BBC to post the required bond within 10 days from
receipt of said Order, with a warning that noncompliance will cause the dismissal
of the appeal for non-perfection.
[12]
Instead of complying with the Order to post
the required bond, BBC filed a Motion for Reconsideration,
[13]
alleging this time
that since it is wholly owned by the Republic of the Philippines, it need not post
an appeal bond.

On November 22, 1999, the NLRC rendered its Decision
[14]
in NLRC CA No.
M-004419-98. In said Decision, the NLRC denied the Motion for Reconsideration
of BBC on its September 16, 1999 Order and accordingly dismissed the appeal of
BBC for non-perfection. The NLRC likewise dismissed the appeal of the DXWG
personnel for lack of merit in the same Decision.


BBC filed a Motion for Reconsideration of the above Decision. On January
13, 2000, the NLRC issued a Resolution
[15]
denying the Motion.

BBC filed with the Court of Appeals a Petition for Certiorari under Rule 65 of
the Rules of Court assailing the above dispositions by the NLRC. The Petition was
docketed as CA-G.R. SP No. 57847.

On April 15, 2005, the Court of Appeals rendered the assailed Decision
denying BBCs Petition for Certiorari. The Court of Appeals held that BBC, though
owned by the government, is a corporation with a personality distinct from the
Republic or any of its agencies or instrumentalities, and therefore do not partake
in the latters exemption from the posting of appeal bonds. The dispositive
portion of the Decision states:

WHEREFORE, finding no grave abuse of discretion on the part of
public respondents, We DENY the petition. The challenged decision of
public respondent dated November 22, 1999, as well as its subsequent
resolution dated January 13, 2000, in NLRC Case No. M-004419-98 are
hereby AFFIRMED. The decision of the Labor Arbiter dated October 15,
1998 in RAB Case No. 12-09-00309-95 is hereby declared FINAL AND
EXECUTORY.
[16]



On January 27, 2006, the Court of Appeals rendered the assailed Resolution
denying the Motion for Reconsideration. Hence, this Petition for Review.

As stated above, both the NLRC and the Court of Appeals dealt with only
one issue whether BBC is exempt from posting an appeal bond. To recall, the
NLRC issued an Order denying BBCs Motion for the Recomputation of the
Monetary Award and ordered BBC to post the required bond within 10 days from
receipt of said Order, with a warning that noncompliance will cause the dismissal
of the appeal for non-perfection.
[17]
However, instead of heeding the warning,
BBC filed a Motion for Reconsideration, alleging that it need not post an appeal
bond since it is wholly owned by the Republic of the Philippines.

There is no dispute as regards the history of the ownership of BBC and
IBC. Both BBC and IBC, together with Radio Philippines Network (RPN-9), were
formerly owned by Roberto S. Benedicto (Benedicto). In the aftermath of the
1986 people power revolution, the three companies, collectively denominated as
Broadcast City, were sequestered and placed under the control and management
of the Board of Administrators (BOA).
[18]
The BOA was tasked to operate and
manage its business and affairs subject to the control and supervision of the
Presidential Commission on Good Government (PCGG).
[19]
In December 1986,
Benedicto and PCGG allegedly executed a Management Agreement whereby the
Boards of Directors of BBC, IBC and RPN-9 were agreed to be
reconstituted. Under the agreement, 2/3 of the membership of the Boards of
Directors will be PCGG nominees, and 1/3 will be Benedicto nominees. A
reorganized Board of Directors was thus elected for each of the three
corporations. The BOA, however, refused to relinquish its function, paving for the
filing by Benedicto of a Petition for Prohibition with this Court in 1989, which was
docketed as G.R. No. 87710.

In the meantime, it was in 1987 when the Republic, represented by the
PCGG, filed the case for recovery/reconveyance/reversion and damages against
Benedicto. Following our ruling in Bataan Shipyard & Engineering Co., Inc.
(BASECO) v. Presidential Commission on Good Government,
[20]
the institution of
this suit necessarily placed BBC, IBC and RPN-9 under custodia legis of the
Sandiganbayan.

On November 3, 1990, Benedicto and the Republic executed a Compromise
Agreement whereby Benedicto, in exchange for immunity from civil and criminal
actions, ceded to the government certain pieces of property listed in Annex A of
the agreement and assigned or transferred whatever rights he may have, if any,
to the government over all corporate assets listed in Annex B of the
agreement.
[21]
BBC is one of the properties listed in Annex B.
[22]
Annex A, on the
other hand, includes the following entry:

CESSION TO THE GOVERNMENT:

I. PHILIPPINE ASSETS:

x x x x

7. Inter-Continental Broadcasting Corporation (IBC), 100% of
total assets estimated at P450 million, consisting of 41,000
sq.mtrs. of land, more or less, located at Broadcast City
Quezon City, other land and buildings in various Provinces,
and operates the following TV stations:

a. TV 13 (Manila)
b. DY/TV 13 (Cebu)
c. DX/TV 13 (Davao)
d. DYOB/TV 12 (Iloilo)
e. DWLW/TV 13 (Laoag)
as well as the following Radio Stations
a. DZMZ-FM Manila
b. DYBQ Iloilo
c. DYOO Roxas
d. DYRG Kalibo
e. DWLW Laoag
f. DWGW Legaspi
g. DWDW Dagupan
h. DWNW Naga
i. DXWG
Iligan . . . . . . . . . . P352,455,286.00
[23]
(Emphasis
supplied.)


Then Senator Teofisto T. Guingona, Jr. filed a Petition for Certiorari and
Prohibition seeking to invalidate the Compromise Agreement, which was
docketed as G.R. No. 96087. The Petition was consolidated with G.R. No. 87710.

On March 31, 1992, this Court, in Benedicto v. Board of Administrators of
Television Stations RPN, BBC and IBC,
[24]
promulgated its Decision on the
consolidated petitions in G.R. No. 87710 and G.R. No. 96087. Holding that the
authority of the BOA had become functus oficio, we granted the Petition in G.R.
No. 87710, ordering the BOA to cease and desist from further exercising
management, operation and control of Broadcast City and is hereby directed to
surrender the management, operation and control of Broadcast City to the
reorganized Board of Directors of each of the Broadcast City television
stations.
[25]
We denied the Petition in G.R. No. 96087 for being premature, since
the approval of the Compromise Agreement was still pending in the
Sandiganbayan.
[26]


The Sandiganbayan subsequently approved the Compromise Agreement on
October 31, 1992, and the approval was affirmed by this Court on September 10,
1993 inRepublic v. Sandiganbayan.
[27]
Thus, both BBC and IBC were government-
owned and controlled during the time the DXWG personnel filed their original
complaint on August 29, 1995.

In the present Petition, BBC reiterates its argument that since it is now
wholly and solely owned by the government, the posting of the appeal bond was
unnecessary on account of the fact that it is presumed that the government is
always solvent.
[28]
Citing the 1975 case of Republic (Bureau of Forestry) v. Court of
Appeals,
[29]
BBC adds before us that it is not even necessary for BBC to raise its
exempt status as the NLRC should have taken cognizance of the same.
[30]


When the Court of Appeals affirmed the dismissal by the NLRC of BBCs
appeal for failure of the latter to post an appeal bond, it relied to the ruling of this
Court inRepublic v. Presiding Judge, Branch XV, Court of First Instance of
Rizal.
[31]
The appellate court, noting that BBCs primary purpose as stated in its
Articles of Incorporation is to engage in commercial radio and television
broadcasting, held that BBC did not meet the criteria enunciated in Republic v.
Presiding Judge for exemption from the appeal bond.
[32]


We pertinently held in Republic v. Presiding Judge:

The sole issue implicit in this petition is whether or not the RCA is
exempt from paying the legal fees and from posting an appeal bond.

We find merit in the petition.

To begin with, We have to determine whether the RCA is a
governmental agency of the Republic of the Philippines without a
separate, distinct and independent legal personality from the latter. We
maintain the affirmative. The legal character of the RCA as a
governmental agency had already been passed upon in the case
of Ramos vs. Court of Industrial Relations wherein this Court held:

Congress, by said Republic Act 3452 approved on
June 14, 1962, created RCA, in pursuance of its declared
policy, viz:

SECTION 1. It is hereby declared to be
the policy of the Government that in order to
stabilize the price of palay, rice and corn, it
shall engage in the 'purchase of these basic
foods directly from those tenants, farmers,
growers, producers and landowners in the
Philippines who wish to dispose of their
produce at a price that will afford them a fair
and just return for their labor and capital
investment and whenever circumstances
brought about by any cause, natural or
artificial, should so require, shall sell and
dispose of these commodities to the
consumers at areas of consumption at a price
that is within their reach.

RCA is, therefore, a government machinery to carry
out a declared government policy just noted, and not for
profit.

And more. By law, RCA depends for its continuous
operation on appropriations yearly set aside by the
General Appropriations Act. So says Section 14 of Republic
Act 3452:

SECTION 14. The sum of one hundred
million pesos is hereby appropriated, out of
any funds in the National Treasury not
otherwise appropriated, for the capitalization
of the Administration: Provided, That the
annual operational expenses of the
Administration shall not exceed three million
pesos of the said amount: Provided further,
That the budget of the Rice and Corn
Administration for the fiscal year nineteen
hundred and sixty-three to nineteen hundred
and sixty-four and the years thereafter shall
be included in the General appropriations
submitted to Congress.

RCA is not possessed of a separate and distinct
corporate existence. On the contrary, by the law of its
creation, it is an office directly under the Office of the
President of the Philippines.

Respondent, however, contends that the RCA has been created
to succeed to the corporate assets, liabilities, functions and powers of
the abolished National Rice & Corn Corporation which is a government-
owned and controlled corporation separate and distinct from the
Government of the Republic of the Philippines. He further contends
that the RCA, being a duly capitalized entity doing mercantile activity
engaged in the buying and selling of palay, rice, and corn cannot be the
same as the Republic of the Philippines; rather, it is an entity separate
and distinct from the Republic of the Philippines. These contentions are
patently erroneous.

x x x x

The mercantile activity of RCA in the buying and selling of palay,
rice, and corn is only incident to its primary governmental function
which is to carry out its declared policy of subsidizing and stabilizing the
price of palay, rice, and corn in order to make it well within the reach of
average consumers, an object obviously identified with the primary
function of government to serve the well-being of the people.

As a governmental agency under the Office of the President the
RCA is thus exempt from the payment of legal fees as well as the
posting of an appeal bond. Under the decisional laws which form part of
the legal system of the Philippines the Republic of the Philippines is
exempt from the requirement of filing an appeal bond on taking an
appeal from an adverse judgment, since there could be no doubt, as to
the solvency of the Government. This well-settled doctrine of the
Government's exemption from the requirement of posting an appeal
bond was first enunciated as early as March 7, 1916 inGovernment of
the Philippine Island vs. Judge of the Court of First Instance of Iloilo and
has since been so consistently enforced that it has become practically a
matter of public knowledge and certainly a matter of judicial notice on
the part of the courts of the land.
[33]



In the subsequent case of Badillo v. Tayag,
[34]
we further discussed that:

Created by virtue of PD No. 757, the NHA is a government-owned
and controlled corporation with an original charter. As a general rule,
however, such corporations -- with or without independent charters --
are required to pay legal fees under Section 21 of Rule 141 of the 1997
Rules of Civil Procedure:

SEC. 21. Government Exempt. - The Republic of the
Philippines, its agencies and instrumentalities, are exempt
from paying the legal fees provided in this rule. Local
governments and government-owned or controlled
corporations with or without independent charters are not
exempt from paying such fees.

On the other hand, the NHA contends that it is exempt from
paying all kinds of fees and charges, because it performs governmental
functions. It cites Public Estates Authority v. Yujuico, which holds that
the Public Estates Authority (PEA), a government-owned and controlled
corporation, is exempt from paying docket fees whenever it files a suit
in relation to its governmental functions.

We agree. x x x.
[35]



We can infer from the foregoing jurisprudential precedents that, as a
general rule, the government and all the attached agencies with no legal
personality distinct from the former are exempt from posting appeal bonds,
whereas government-owned and controlled corporations (GOCCs) are not
similarly exempted. This distinction is brought about by the very reason of the
appeal bond itself: to protect the presumptive judgment creditor against the
insolvency of the presumptive judgment debtor. When the State litigates, it is not
required to put up an appeal bond because it is presumed to be always
solvent.
[36]
This exemption, however, does not, as a general rule, apply to GOCCs
for the reason that the latter has a personality distinct from its
shareholders. Thus, while a GOCCs majority stockholder, the State, will always
be presumed solvent, the presumption does not necessarily extend to the GOCC
itself. However, when a GOCC becomes a government machinery to carry out a
declared government policy,
[37]
it becomes similarly situated as its majority
stockholder as there is the assurance that the government will necessarily fund its
primary functions. Thus, a GOCC that is sued in relation to its governmental
functions may be, under appropriate circumstances, exempted from the payment
of appeal fees.

In the case at bar, BBC was organized as a private corporation, sequestered
in the 1980s and the ownership of which was subsequently transferred to the
government in a compromise agreement. Further, it is stated in its Amended
Articles of Incorporation that BBC has the following primary function:

To engage in commercial radio and television broadcasting, and
for this purpose, to establish, operate and maintain such stations, both
terrestrial and satellite or interplanetary, as may be necessary for
broadcasting on a network wide or international basis.
[38]



It is therefore crystal clear that BBCs function is purely commercial or
proprietary and not governmental. As such, BBC cannot be deemed entitled to an
exemption from the posting of an appeal bond.

Consequently, the NLRC did not commit an error, and much less grave
abuse of discretion, in dismissing the appeal of BBC on account of non-perfection
of the same. In doing so, the NLRC was merely applying Article 223 of the Labor
Code, which provides:

ART. 223. Appeal. - Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:

(a) If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter;

(b) If the decision, order or award was secured through fraud or
coercion, including graft and corruption;

(c) If made purely on questions of law; and

(d) If serious errors in the findings of facts are raised which would
cause grave or irreparable damage or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Italization supplied.)




The posting of the appeal bond within the period provided by law is not
merely mandatory but jurisdictional. The failure on the part of BBC to perfect the
appeal thus had the effect of rendering the judgment final and executory.
[39]


Neither was there an interruption of the period to perfect the appeal when
BBC filed (1) its Motion for the Recomputation of the Monetary Award in order to
reduce the appeal bond, and (2) its Motion for Reconsideration of the denial of
the same. In Lamzon v. National Labor Relations Commission,
[40]
where the
petitioner argued that the NLRC gravely abused its discretion in dismissing her
appeal on the ground of non-perfection despite the fact that she filed a Motion
for Extension of Time to File an Appeal Bond, we held:

The pertinent provision of Rule VI, NLRC Rules of Procedure, as
amended, provides as follows:

x x x x

Section 6. Bond. - In case the decision of a Labor
Arbiter, POEA Administrator and Regional Director or his
duly authorized hearing officer involves a monetary award,
an appeal by the employer shall be perfected only upon
the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission or
the Supreme Court in an amount equivalent to the
monetary award, exclusive of moral and exemplary
damages and attorney's fees.

The employer as well as counsel shall submit a joint
declaration under oath attesting that the surety bond
posted is genuine and that it shall be in effect until final
disposition of the case.

The Commission may, in meritorious cases and
upon Motion of the Appellant, reduce the amount of the
bond. The filing, however, of the motion to reduce bond
shall not stop the running of the period to perfect appeal.

Section 7. No Extension of Period. - No motion or
request for extension of the period within which to perfect
an appeal shall be allowed."

As correctly observed by the NLRC, petitioner is presumptuous in
assuming that the 10-day period for perfecting an appeal, during which
she was to post her appeal bond, could be easily extended by the mere
filing of an appropriate motion for extension to file the bond and even
without the said motion being granted. It bears emphasizing that an
appeal is only a statutory privilege and it may only be exercised in the
manner provided by law. Nevertheless, in certain cases, we had
occasion to declare that while the rule treats the filing of a cash or
surety bond in the amount equivalent to the monetary award in the
judgment appealed from, as a jurisdictional requirement to perfect an
appeal, the bond requirement on appeals involving monetary awards is
sometimes given a liberal interpretation in line with the desired
objective of resolving controversies on the merits. However, we find no
cogent reason to apply this same liberal interpretation in this
case. Considering that the motion for extension to file appeal bond
remained unacted upon, petitioner, pursuant to the NLRC rules, should
have seasonably filed the appeal bond within the ten (10) day
reglementary period following receipt of the order, resolution or
decision of the NLRC to forestall the finality of such order, resolution or
decision. Besides, the rule mandates that no motion or request for
extension of the period within which to perfect an appeal shall be
allowed. The motion filed by petitioner in this case is tantamount to an
extension of the period for perfecting an appeal. As payment of the
appeal bond is an indispensable and jurisdictional requisite and not a
mere technicality of law or procedure, we find the challenged NLRC
Resolution of October 26, 1993 and Order dated January 11, 1994 in
accordance with law. The appeal filed by petitioner was not perfected
within the reglementary period because the appeal bond was filed out
of time. Consequently, the decision sought to be reconsidered became
final and executory. Unless there is a clear and patent grave abuse of
discretion amounting to lack or excess of jurisdiction, the NLRC's denial
of the appeal and the motion for reconsideration may not be
disturbed.
[41]
(Underscoring supplied.)


In the case at bar, BBC already took a risk when it filed its Motion for the
Recomputation of the Monetary Award without posting the bond itself. The
Motion for the Recomputation of the Monetary Award filed by BBC, like the
Motion for Extension to File the Appeal Bond in Lamzon, was itself tantamount to
a motion for extension to perfect the appeal, which is prohibited by the
rules. The NLRC already exhibited leniency when, instead of dismissing the appeal
outright, it merely ordered BBC to post the required bond within 10 days from
receipt of said Order, with a warning that noncompliance will cause the dismissal
of the appeal for non-perfection. When BBC further demonstrated its
unwillingness by completely ignoring this warning and by filing a Motion for
Reconsideration on an entirely new ground, the NLRC cannot be said to have
committed grave abuse of discretion by making good its warning to dismiss the
appeal. Therefore, the Court of Appeals committed no error when it upheld the
NLRCs dismissal of petitioners appeal.

WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The
Decision of the Court of Appeals dated April 15, 2005 in CA-G.R. SP No. 57847,
and its Resolution dated January 27, 2006 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.
FIRST DIVISION


LAND BANK OF THEPHILIPPINES, G.R. No. 182431
Petitioner,




- versus -





ESTHER ANSON RIVERA, ANTONIO G.
ANSON AND CESAR G. ANSON,
Respondents.
Present:

CORONA, C. J.,
Chairperson,
VELASCO, JR.,
LEONARDO-DE CASTRO,
PERALTA,* and
PEREZ, JJ.



Promulgated:

November 17, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x


D E C I S I O N


PEREZ, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure filed by Petitioner Land Bank of the Philippines (LBP) assailing the
Decision
[1]
of the Court of Appeals dated 9 October 2007 in CA G.R. SP No. 87463,
ordering the payment by LBP of just compensation and interest in favor of
respondents Esther Anson Rivera, Antonio G. Anson and Cesar G. Anson, and at
the same time directed LBP to pay the costs of suit. Likewise assailed is the
Resolution
[2]
of the Court of Appeals dated18 March 2008 denying the Motion for
Reconsideration of LBP.
[3]


The respondents are the co-owners of a parcel of agricultural land
embraced by Original Certificate of Title No. P-082, and later transferred in their
names under Transfer Certificate of Title No. T-95690 that was placed under the
coverage of Operation Land Transfer pursuant to Presidential Decree No. 27 in
1972. Only 18.8704 hectares of the total are of 20.5254 hectares were subject of
the coverage.

After the Department of Agrarian Reform (DAR) directed payment, LBP
approved the payment of P265,494.20, exclusive of the advance payments made
in the form of lease rental amounting to P75,415.88 but inclusive of 6% increment
of P191,876.99 pursuant to DAR Administrative Order No. 13, series of 1994.
[4]


On 1 December 1994, the respondents instituted Civil Case No. 94-03 for
determination and payment of just compensation before the Regional Trial Court
(RTC), Branch 3 of Legaspi City,
[5]
claiming that the landholding involved was
irrigated with two cropping seasons a year with an average gross production per
season of 100 cavans of 50 kilos/hectare, equivalent of 200 cavans/year/hectare;
and that the fair market value of the property was not less
that P130,000.00/hectare, or P2,668,302.00 for the entire landholding of 20.5254
hectares.

LBP filed its answer,
[6]
stating that rice and corn lands placed under the
coverage of Presidential Decree No. 27
[7]
were governed and valued in accordance
with the provisions of Executive Order No. 228
[8]
as implemented by DAR
Administrative Order No. 2, Series of 1987 and other statutes and administrative
issuances; that the administrative valuation of lands covered by Presidential
Decree No. 27 and Executive Order No. 228 rested solely in DAR and LBP was the
only financing arm; that the funds that LBP would use to pay compensation were
public funds to be disbursed only in accordance with existing laws and
regulations; that the supporting documents were not yet received by LBP; and
that the constitutionality of Presidential Decree No. 27 and Executive Order No.
228 was already settled.

On 6 October 2004, the RTC rendered its decision, holding:

ACCORDINGLY, the just compensation of the land partly covered by TCT No. T-
95690 is fixed at Php1,297,710.63. Land Bank of the Philippines is hereby ordered to
pay Esther Anson, Cesar Anson and Antonio Anson the aforesaid value of the land, plus
interest of 12% per annum or Php194.36 per day effective October 7, 2004, until the
value is fully paid, in cash or in bond or in any other mode of payment at the option of
the landowners in accordance with Sec. 18, RA 6657.
[9]



LBP filed a Motion for Reconsideration
[10]
which the RTC denied in its Order
dated 29 October 2004.
[11]


LBP next filed a petition for Review to the Court of Appeals docketed as CA
G.R. SP No. 87463. The Court of Appeals rendered a decision dated 9 October
2007, thefallo of which reads:
[12]


WHEREFORE, the DECISION DATED OCTOBER 6, 2004 is MODIFIED, ordering
petitioner LAND BANK OF THE PHILIPPINES to pay to the respondents just compensation
(inclusive of interests as of October 6, 2004) in the amount of P823,957.23, plus interest
of 12% per annum on the amount of P515,777.57, or P61,893.30 per annum, beginning
October 7, 2004 until the just compensation is fully paid in accordance with this
decision.


In arriving at its computation, the Court of Appeals explained:

In computing the just compensation of the property, pursuant to Executive
Order No. 228, Sec. 2 thereof, the formula is

LV = AGP x 2.5 x GSP x A

(LV is Land Valuation; AGP is Average Gross Production; GSP is Government Support
Price and A is the Area of the Land)

WHERE: AGP = 99.36 cavans per hectare
GSP = Php 35.00 per cavan
A = 18.8704 hectares

COMPUTATION:

LV = (99.36 x2.5 x 35.00) 18.8704
LV = 8,694 x 18.8704
LV = Php 164,059.26

With increment of 6% interest per annum compounded annually beginning
October 21, 1972 until October 21, 1994 and immediately after said date with 12%
interest per annum until the value is fully paid in accordance with extant jurisprudence,
computed as follows:

To be compounded annually at 6% per annum from October 21, 1972 up
to October 24, 1994. The formula is

CA = P(1+R)n

(CA is Compounded Amount; P is Principal; R is Rate; and n is the number of years)

WHERE: P = Php 164,059.26
R = 6% per annum
N = 22 years

COMPUTATION:

CA = 164,059.26 x (1+06) 22
CA = 164,059.26 x (1.06) 22
CA = 164,059.26 x 3.60353741
CA = Php 591,193.68

Plus simple interest of 12% per annum from October 22, 1994 up to October 21,
2003, the formula of which is:

I = P x R x T

(I is the Interest; P is the Principal; R is the Rate and T is the time)

WHERE: P = Php591,193.68
R = 12% per annum
T = 9 years

COMPUTATION:

I = 591,193.68 x 12 x 9
I = 70,943.24 x 9
I = Php638,489.18

(Plus interest of 12% per annum from October 22, 2003 up to October 6,
2004 or a period of 350 days)

COMPUTATION:

I = (591,193.68 x .12) x 350
350
I = 194.3605 x 350
I = Php68,027.77

Total Interest Php 706,516.95


RECAPITULATION:

Compounded Amount Php 591,193.68
Total Interest 706,516.95

TOTAL AMOUNT Php 1,297,710.63




The Court of Appeals pointed out that:

Pursuant to AO 13, considering that the landholding involved herein was
tenanted prior to October 21, 1972, the rate of 6% per annum is imposed, compounded
annually from October 21, 1972until October 21, 1994, the date of the effectivity of AO
13. Beyond October 21, 1994, only the simple rate of 6% per annum interest is
imposable until October 6, 2004 (the date of the rendition of the decision of the RTC) on
the total value (that is, P164,059.26 plus the compounded increments up to October 21,
1994) but minus the lease rentals of P75,415.88. Only the simple rate of 6% is
applicable up to then because the obligation to pay was not founded on a written
agreement that stipulated a different rate of interest. From October 7, 2004 until the
full payment, the simple interest rate is raised to 12% per annum. The reason is that the
amount thus determined had by then acquired the character of a forbearance in
money.
[13]


LBP disagreed with the imposition of 12% interest and its liability to pay the
costs of suit. It filed a Motion for Reconsideration which was denied in the Court
of Appeals Resolution dated 18 March 2008.

The Court of Appeals held:

We DENY the petitioners motion for partial reconsideration for the following
reasons, to wit:

1. Anent the first ground, the decision of October 9, 2007 has explained in
detail why the obligation of the petitioner should be charged 12% interest. Considering
that the motion fails to persuasively show that a modification of the decision thereon
would be justified, we reject such ground for lack of merit.

2. Regarding costs of suit, they are allowed to the prevailing party as a matter
of course, unless there be special reasons for the court to decree otherwise (Sec. 1, Rule
43, Rules of Court). In appeals, the Court has the power to render judgment for costs as
justice may require (Sec. 2, Rule 142, Rules of Court).

In view of the foregoing, the award of costs to the respondents was warranted
under the circumstances.
[14]




Before this Court, LBP raises the same issues for resolution:

I. Is it valid or lawful to award 12% rate of interest per annum in favor of
respondents notwithstanding the 6% rate of interest per annum compounded annually
prescribed under DAR A.O. No. 13, series of 1994, DAR A.O. No. 02, series of 2004, and
DAR A.O. No. 06, series of 2008, xxx from November 1994 up to the time of actual
payment?

II. Is it valid or lawful to adjudge petitioner LBP, which is performing a
governmental function, liable for costs of suit?
[15]



At the outset, the Court notes that the parcels of land subject matter of this
case were acquired under Presidential Decree No. 27, but the complaint for just
compensation was filed in the RTC on 1 December 1994 after Republic Act No.
6657 already took into effect.
[16]
Thus, our pronouncement in LBP v.
Soriano
[17]
finds application. We quote:

x x x [I]f just compensation is not settled prior to the passage of Republic Act No. 6657,
it should be computed in accordance with the said law, although the property was
acquired under Presidential Decree No. 27. The fixing of just compensation should
therefore be based on the parameters set out in Republic Act No. 6657, with
Presidential Decree No. 27 and Executive Order No. 228 having only suppletory effect.

In the instant case, while the subject lands were acquired under Presidential
Decree No. 27, the complaint for just compensation was only lodged before the court
on 23 November 2000 or long after the passage of Republic Act No. 6657 in
1998. Therefore, Section 17 of Republic Act No. 6657 should be the principal basis of
the computation for just compensation. As a matter of fact, the factors enumerated
therein had already been translated into a basic formula by the DAR pursuant to its rule-
making power under Section 49 of Republic Act No. 6657. The formula outlines in DAR
Administrative Order No. 5, series of 1998 should be applied in computing just
compensation, thus:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration


In the case before Us, the just compensation was computed based on
Executive Order No. 228, which computation the parties do not contest.
Consequently, we reiterate our rule in LBP v. Soriano that while we uphold the
amount derived from the old formula, since the application of the new formula is
a matter of law and thus, should be made applicable, the parties are not
precluded from asking for any additional amount as may be warranted by the
new formula.
[18]


That settled, we now proceed to resolve the issue of the propriety of the
imposition of 12% interest on just compensation awarded to the
respondents. The Court of Appeals imposed interest of 12% per annum on the
amount of P515,777.57 beginning 7 October 2004, until full payment.

We agree with the Court of Appeals.

In Republic v. Court of Appeals,
[19]
we affirmed the award of 12% interest on
just compensation due to the landowner. The court decreed:

The constitutional limitation of just compensation is considered to be the sum
equivalent to the market value of the property, broadly described to be the price fixed
by the seller in open market in the usual and ordinary course of legal action and
competition or the fair value of the property as between one who receives, and one
who desires to sell, if fixed at the time of the actual taking by the government. Thus, if
property is taken for public use before compensation is deposited with the court
having jurisdiction over the case, the final compensation must include interest on its
just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine, between the taking
of the property and the actual payment, legal interests accrue in order to place the
owner in a position as good as (but not better than) the position he was in before the
taking occurred.

The Bulacan trial court, in its 1979 decision, was correct in imposing interest on
the zonal value of the property to be computed from the time petitioner instituted
condemnation proceedings and took the property in September 1969. This allowance
of interest on the amount found to be the value of the property as of the time of the
taking computed, being an effective forbearance, at 12% per annum should help
eliminate the issue of the constant fluctuation and inflation of the value of the currency
over time.
[20]



We similarly upheld Republics 12% per annum interest rate on the unpaid
expropriation compensation in the following cases: Reyes v. National Housing
Authority,
[21]
Land Bank of the Philippines v. Wycoco,
[22]
Republic v. Court of
Appeals,
[23]
Land Bank of the Philippines v. Imperial,
[24]
Philippine Ports Authority v.
Rosales-Bondoc,
[25]
Nepomuceno v. City of Surigao,
[26]
and Curata v. Philippine
Ports Authority.
[27]


Conformably with the foregoing resolution, this Court rules that a 12%
interest per annum on just compensation, due to the respondents, from the
finality of this decision until its satisfaction, is proper.
[28]


We now proceed to the issue of whether or not the Court of Appeals
correctly adjudged LBP liable to pay the cost of suit.

According to LBP, it performs a governmental function when it disburses
the Agrarian Reform Fund to satisfy awards of just compensation. Hence, it
cannot be made to pay costs in eminent domain proceedings.

LBP cites Sps. Badillo v. Hon. Tayag,
[29]
to further bolster its claim that it is
exempt from the payment of costs of suit. The Court in that case made the
following pronouncement:

On the other hand, the NHA contends that it is exempt from paying all kinds of
fees and charges, because it performs governmental functions. It cites Public Estates
Authority v. Yujuico, which holds that the Public Estates Authority (PEA), a government-
owned and controlled corporation, is exempt from paying docket fees whenever it files
a suit in relation to its governmental functions.

We agree. People's Homesite and Housing Corporation v. Court of Industrial
Relations declares that the provision of mass housing is a governmental function:

Coming now to the case at bar, We note that since 1941 when the National
Housing Commission (predecessor of PHHC, which is now known as the National
Housing Authority [NHA] was created, the Philippine government has pursued a mass
housing and resettlement program to meet the needs of Filipinos for decent housing.
The agency tasked with implementing such governmental program was the PHHC.

These can be gleaned from the provisions of Commonwealth Act 648, the
charter of said agency.

We rule that the PHHC is a governmental institution performing governmental
functions.

This is not the first time We are ruling on the proper characterization of housing
as an activity of the government. In the 1985 case of National Housing Corporation v.
Juco and the NLRC (No. L-64313, January 17, 1985, 134 SCRA 172), We ruled that
housing is a governmental function.

While it has not always been easy to distinguish governmental from proprietary
functions, the Court's declaration in the Decision quoted above is not without basis.
Indeed, the characterization of governmental functions has veered away from the
traditional constituent-ministrant classification that has become unrealistic, if not
obsolete. Justice Isagani A. Cruz avers: "[I]t is now obligatory upon the State itself to
promote social justice, to provide adequate social services to promote a rising standard
of living, to afford protection to labor to formulate and implement urban and agrarian
reform programs, and to adopt other measures intended to ensure the dignity, welfare
and security of its citizens.....These functions, while traditionally regarded as merely
ministrant and optional, have been made compulsory by the Constitution."
[30]



We agree with the LBP. The relevant provision of the Rules of Court states:

Rule 142
Costs

Section 1. Costs ordinarily follow results of suit. Unless otherwise provided in
these rules, costs shall be allowed to the prevailing party as a matter of course but the
court shall have power, for special reasons adjudge that either party shall pay the costs
of an action, or that the same be divided, as may be equitable. No costs shall be
allowed against the Republic of the Philippinesunless otherwise provided by law.

In Heirs of Vidad v. Land Bank of the Philippines,
[31]
this Court extensively
discussed the role of LBP in the implementation of the agrarian reform program.

LBP is an agency created primarily to provide financial support in all phases of
agrarian reform pursuant to Section 74 of Republic Act (RA) No. 3844 and Section 64
of RA No. 6657. It is vested with the primary responsibility and authority in the
valuation and compensation of covered landholdings to carry out the full
implementation of the Agrarian Reform Program. It may agree with the DAR and the
land owner as to the amount of just compensation to be paid to the latter and may also
disagree with them and bring the matter to court for judicial determination.

x x x x

To the contrary, the Court had already recognized in Sharp International
Marketing v. Court of Appeals that the LBP plays a significant role under the CARL and in
the implementation of the CARP, thus:

As may be gleaned very clearly from EO 229, the LBP is an essential part of the
government sector with regard to the payment of compensation to the landowner. It is,
after all, the instrumentality that is charged with the disbursement of public funds for
purposes of agrarian reform. It is therefore part, an indispensable cog, in the
governmental machinery that fixes and determines the amount compensable to the
landowner. Were LBP to be excluded from that intricate, if not sensitive, function of
establishing the compensable amount, there would be no amount "to be established by
the government" as required in Sec. 6, EO 229. This is precisely why the law requires the
[Deed of Absolute Sale (DAS)], even if already approved and signed by the DAR
Secretary, to be transmitted still to the LBP for its review, evaluation and approval.

It needs no exceptional intelligence to understand the implications of this
transmittal. It simply means that if LBP agrees on the amount stated in the DAS, after its
review and evaluation, it becomes its duty to sign the deed. But not until then. For, it is
only in that event that the amount to be compensated shall have been "established"
according to law. Inversely, if the LBP, after review and evaluation, refuses to sign, it is
because as a party to the contract it does not give its consent thereto. This necessarily
implies the exercise of judgment on the part of LBP, which is not supposed to be a
mere rubber stamp in the exercise. Obviously, were it not so, LBP could not have been
made a distinct member of [Presidential Agrarian Reform Council (PARC)], the super
body responsible for the successful implementation of the CARP. Neither would it have
been given the power to review and evaluate the DAS already signed by the DAR
Secretary. If the function of the LBP in this regard is merely to sign the DAS without the
concomitant power of review and evaluation, its duty to "review/evaluate" mandated in
Adm. Order No. 5 would have been a mere surplus age, meaningless, and a useless
ceremony.

x x x x

Even more explicit is R.A. 6657 with respect to the indispensable role of LBP in
the determination of the amount to be compensated to the landowner. Under Sec. 18
thereof, "the LBP shall compensate the landowner in such amount as may be agreed
upon by the landowner and the DAR and LBP, in accordance with the criteria provided
in Secs. 16 and 17, and other pertinent provisions hereof, or as may be finally
determined by the court, as the just compensation for the land."

x x x x

It must be observed that once an expropriation proceeding for the acquisition of
private agricultural lands is commenced by the DAR, the indispensable role of Land
Bank begins.

x x x x

It is evident from the afore-quoted jurisprudence that the role of LBP in the
CARP is more than just the ministerial duty of keeping and disbursing the Agrarian
Reform Funds. As the Court had previously declared, the LBP is primarily responsible for
the valuation and determination of compensation for all private lands. It has the
discretion to approve or reject the land valuation and just compensation for a private
agricultural land placed under the CARP. In case the LBP disagrees with the valuation of
land and determination of just compensation by a party, the DAR, or even the courts,
the LBP not only has the right, but the duty, to challenge the same, by appeal to the
Court of Appeals or to this Court, if appropriate.
[32]



It is clear from the above discussions that since LBP is performing a
governmental function in agrarian reform proceeding, it is exempt from the
payment of costs of suit as provided under Rule 142, Section 1 of the Rules of
Court.

WHEREFORE, premises considered, the petition is GRANTED. The decision
of the Court of Appeals in CA G.R. SP No. 87463 dated 9 October 2007
is AFFIRMEDwith the MODIFICATION that LBP is hereby held exempted from the
payment of costs of suit. In all other respects, the Decision of the Court of
Appeals is AFFIRMED. No costs.

SO ORDERED.
FIRST DIVISION


GOVERNMENT SERVICE
INSURANCE SYSTEM (GSIS),
Petitioner,


- versus -


GROUP MANAGEMENT
CORPORATION (GMC) AND LAPU-
LAPU DEVELOPMENT & HOUSING
CORPORATION (LLDHC),
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - x
GROUP MANAGEMENT
G.R. No. 167000














G.R. No. 169971

Present:
CORPORATION (GMC),
Petitioner,


- versus -


LAPU-LAPU DEVELOPMENT &
HOUSING CORPORATION
(LLDHC) and GOVERNMENT
SERVICE INSURANCE SYSTEM
(GSIS),
Respondents.

CORONA, C.J.,
Chairperson,
VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

Promulgated:

June 8, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x








D E C I S I O N


LEONARDO-DE CASTRO, J.:

At bar are two consolidated Petitions for Review on Certiorari concerning
78 parcels of land located in Barrio Marigondon, Lapu-Lapu City. The parties in
both cases have been in litigation over these lots for the last two decades in what
seems to be an endless exercise of filing repetitious suits before the Court of
Appeals and even this Court, questioning the various decisions and
resolutions issued by the two separate trial courts involved. With this decision, it
is intended that all legal disputes among the parties concerned, particularly over
all the issues involved in these cases, will finally come to an end

In the Petition in G.R. No. 167000, the Government Service Insurance
System (GSIS) seeks to reverse and set aside the November 25, 2004
Decision
[1]
and January 20, 2005 Resolution
[2]
of the Twentieth Division of the
Court of Appeals in CA-G.R. SP No. 85096 and to annul and set aside the March
11, 2004
[3]
and May 7, 2004
[4]
Orders of the Regional Trial Court (RTC) of Lapu-
Lapu City (Lapu-Lapu RTC) in Civil Case No. 2203-L.

In the Petition in G.R. No. 169971, Group Management Corporation (GMC)
seeks to reverse and set aside the September 23, 2005 Decision
[5]
in CA-G.R. SP
No. 84382 wherein the Special Nineteenth Division of the Court of Appeals
annulled and set aside the March 11, 2004 Order of the Lapu-Lapu RTC in Civil
Case No. 2203-L.

Both these cases stem from the same undisputed factual antecedents as
follows:

Lapu-Lapu Development & Housing Corporation
[6]
(LLDHC) was the
registered owner of seventy-eight (78) lots (subject lots), situated in Barrio
Marigondon, Lapu-LapuCity.

On February 4, 1974, LLDHC and the GSIS entered into a Project and Loan
Agreement for the development of the subject lots. GSIS agreed to extend a
Twenty-Five Million Peso-loan (P25,000,000.00) to LLDHC, and in return, LLDHC
will develop, subdivide, and sell its lots to GSIS members. To secure the payment
of the loan, LLDHC executed a real estate mortgage over the subject lots in favor
of GSIS.

For LLDHCs failure to fulfill its obligations, GSIS foreclosed the
mortgage. As the lone bidder in the public auction sale, GSIS acquired the subject
lots, and eventually was able to consolidate its ownership over the subject lots
with the corresponding transfer certificates of title (TCTs) issued in its name.

On November 19, 1979, GMC offered to purchase on installments the
subject lots from GSIS for a total price of One Million One Hundred Thousand
Pesos (P1,100,000.00), with the aggregate area specified as 423,177 square
meters. GSIS accepted the offer and on February 26, 1980, executed a Deed of
Conditional Sale over the subject lots. However, when GMC discovered that the
total area of the subject lots was only 298,504 square meters, it wrote GSIS and
proposed to proportionately reduce the purchase price to conform to the actual
total area of the subject lots. GSIS approved this proposal and an Amendment to
the Deed of Conditional Sale was executed to reflect the final sales agreement
between GSIS and GMC.

On April 23, 1980, LLDHC filed a complaint for Annulment of Foreclosure
with Writ of Mandatory Injunction against GSIS before the RTC of Manila (Manila
RTC). This became Civil Case No. R-82-3429
[7]
and was assigned to Branch 38.

On November 3, 1989, GMC filed its own complaint against GSIS for Specific
Performance with Damages before the Lapu-Lapu RTC. The complaint was
docketed asCivil Case No. 2203-L and it sought to compel GSIS to execute a Final
Deed of Sale over the subject lots since the purchase price had already been fully
paid by GMC. GSIS, in defense, submitted to the court a Commission on Audit
(COA) Memorandum dated April 3, 1989, purportedly disallowing in audit the sale
of the subject lots for apparent inherent irregularities, the sale price to GMC
being lower than GSISs purchase price at the public auction. LLDHC, having been
allowed to intervene, filed a Motion to Dismiss GMCs complaint. When this
motion was denied, LLDHC filed its Answer-in-Intervention and participated in the
ensuing proceedings as an intervenor.

GMC, on February 1, 1992, filed its own Motion to Intervene with a
Complaint-in-Intervention in Civil Case No. R-82-3429. This was dismissed on
February 17, 1992 and finally denied on March 23, 1992 by the Manila RTC on the
ground that GMC can protect its interest in another proceeding.
[8]


On February 24, 1992, after a full-blown trial, the Lapu-Lapu RTC rendered
its Decision
[9]
in Civil Case No. 2203-L, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering defendant
to:

1. Execute the final deed of absolute sale and deliver the
seventy-eight (78) certificates of title covering said seventy-eight (78)
parcels of land to the [Group Management Corporation (GMC)];

2. Pay *GMC+ actual damages, plus attorneys fees and
expenses of litigation, in the amount of P285,638.88 and P100,000.00
exemplary damages;

3. [D]ismissing in toto intervenors complaint-in-intervention
for lack of evidence of legal standing and legal interest in the suit, as
well as failure to substantiate any cause of action against either [GMC]
or [GSIS].
[10]



In deciding in favor of GMC, the Lapu-Lapu RTC held that there existed a
valid and binding sales contract between GSIS and GMC, which GSIS could not
continue to ignore without any justifiable reason especially since GMC had
already fully complied with its obligations.
[11]


The Lapu-Lapu RTC found GSISs invocation of COAs alleged disapproval of
the sale belated and self-serving. The Lapu-Lapu RTC said that COA, in
disapproving GSISs sale of the subject lots to GMC, violated its own circular which
excludes the disposal by a government owned and/or controlled corporation of
its acquired assets (e.g.,foreclosed assets or collaterals acquired in the regular
course of business).
[12]
The Lapu-Lapu RTC also held that COA may not intrude
into GSISs charter-granted power to dispose of its acquired assets within five
years from acquisition by preventing/aborting the sale in question by refusing to
pass it in audit.
[13]
Moreover, the Lapu-Lapu RTC held that the GSIS-proferred
COA Memorandum was inadmissible in evidence not only because as a mere
photocopy it failed to measure up to the best evidence rule under the Revised
Rules of Court, but also because no one from COA, not even the auditor who
supposedly prepared it, was ever presented to testify to the veracity of its
contents or its due execution.
[14]


In dismissing LLDHCs complaint-in-intervention, the Lapu-Lapu RTC held
that LLDHC failed to prove its legal personality as a party-intervenor and all it was
able to establish was a suggestion of right for *GSIS+ to renege *on+ the sale for
reasons peculiar to [GSIS] but not transmissible nor subject to invocation by
*LLDHC+.
[15]


LLDHC and GSIS filed their separate Notices of Appeal but these were
dismissed by the Lapu-Lapu RTC on December 6, 1993.
[16]


On May 10, 1994, the Manila RTC rendered a Decision
[17]
in Civil Case No. R-
82-3429. The Manila RTC held that GSIS was unable to prove the alleged
violations committed by LLDHC to warrant the foreclosure of the mortgage over
the subject lots. Thus, the Manila RTC annulled the foreclosure made by GSIS and
ordered LLDHC to pay GSIS the balance of its loan with interest, to wit:

WHEREFORE, judgment is hereby rendered:

1. ANNULLING the foreclosure by the defendant GSIS of the
mortgage over the seventy-eight (78) parcels of land here involved:

2. CANCELLING the consolidated certificates of [title] issued in
the name of GSIS and directing the Register of Deeds of Lapu-Lapu City
to issue new certificates of [title] over those seventy-eight (78) parcels
of land in the name of the plaintiff, in exactly the same condition as
they were before the foreclosure;

3. ORDERING the plaintiff to pay the GSIS the amount
of P9,200,000.00 with interest thereon at the rate of twelve (12%)
percent per annum commencing from October 12, 1989 until fully paid;
and

4. ORDERING defendant GSIS to execute a properly registrable
release of discharge of mortgage over the parcels of land here involved
after full payment of such amount by the plaintiff.

All claims and counterclaims by the parties as against each other
are hereby dismissed.

No pronouncement as to costs.
[18]



Armed with the Manila RTC decision, LLDHC, on July 27, 1994, filed before
the Court of Appeals a Petition for Annulment of Judgment of the Lapu-Lapu RTC
Decision in Civil Case No. 2203-L.
[19]
LLDHC alleged that the Manila RTC decision
nullified the sale of the subject lots to GMC and consequently, the Lapu-Lapu RTC
decision was also nullified.

This petition, docketed as CA-G.R. SP No. 34696, was dismissed by the Court
of Appeals on December 29, 1994.
[20]
The Court of Appeals, in finding that the
grounds LLDHC relied on were without merit, said:

In fine, there being no showing from the allegations of the
petition that the respondent court is without jurisdiction over the
subject matter and of the parties in Civil Case No. 2309 [2203-L],
petitioner has no cause of action for the annulment of judgment. The
complaint must allege ultimate facts for the annulment of the decision
(Avendana v. Bautista, 142 SCRA 41). We find none in this case.
[21]



No appeal having been taken by LLDHC, the decision of the Court of
Appeals in CA-G.R. SP No. 34696 became final and executory on January 28, 1995,
as stated in the Entry of Final Judgment dated August 18, 1995.
[22]


On February 2, 1995, LLDHC filed before this Court a Petition
for Certiorari
[23]
docketed as G.R. No. 118633. LLDHC, in seeking to annul the
February 24, 1992 Decision of the Lapu-Lapu RTC, again alleged that the Manila
RTC Decision nullified the Lapu-Lapu RTC Decision.

Finding the petition a mere reproduction of the Petition for Annulment
filed before the Court of Appeals in CA-G.R. SP No. 34696, this Court, in a
Resolution
[24]
dated September 6, 1996, dismissed the petition in this wise:

In a last ditch attempt to annul the February 24, 1992 Decision of
the respondent court, this petition was brought before us on February
2, 1995.

Dismissal of this petition is inevitable.

The instant petition which is captioned, For: Certiorari With
Preliminary Injunction, is actually another Petition for Annulment of
Judgment of the February 24, 1992 Decision of the respondent Regional
Trial Court of Lapu-lapu City, Branch 27 in Civil Case No. 2203-L. A close
perusal of this petition as well as the Petition for Annulment of
Judgment brought by the petitioner before the Court of Appeals in CA-
G.R. SP No. 34696 reveals that the instant petition is a mere
reproduction of the petition/complaint filed before the appellate
tribunal for annulment of judgment. Paragraphs two (2) to eighteen
(18) of this petition were copied verbatim from the Petition for
Annulment of Judgment earlier filed in the court a quo, except for the
designation of the parties thereto, i.e., plaintiff was changed to
petitioner, defendant to respondent. In fact, even the prayer in this
petition is the same prayer in the Petition for Annulment of Judgment
dismissed by the Court of Appeals, x x x.

x x x x

Under Section 9(2) of Batas Pambansa Blg. 129, otherwise
known as The Judiciary Reorganization Act of 1980, it is the Court of
Appeals (then the Intermediate Appellate Court), and not this Court,
which has jurisdiction to annul judgments of Regional Trial Courts, viz:

SEC. 9. Jurisdiction -- The Intermediate Appellate
Court shall exercise:

x x x x

(2) Exclusive original jurisdiction over actions for
annulment of judgments of Regional Trial Courts; and

x x x x

Thus, this Court apparently has no jurisdiction to entertain a
petition which is evidently another petition to annul the February 24,
1992 Decision of the respondent Branch 27, Regional Trial Court of
Lapu-lapu City, it appearing that jurisdiction thereto properly pertains
to the Court of Appeals. Such a petition was brought before the
appellate court, but due to petitioners failure to nullify Judge Risos
Decision in said forum, LLDHC, apparently at a loss as to what legal
remedy to take, brought the instant petition under the guise of a
petition for certiorari under Rule 65 seeking once again to annul the
judgment of Branch 27.

Instead of filing this petition for certiorari under Rule 65, which is
essentially another Petition to Annul Judgment, petitioner LLDHC
should have filed a timely Petition for Review under Rule 45 of the
Revised Rules of Court of the decision of the Court of Appeals, dated
December 29, 1994, dismissing the Petition for Annulment of Judgment
filed by the petitioner LLDHC before the court a quo. But, this is all
academic now. The appellate courts decision had become final and
executory on January 28, 1995.
[25]



Despite such pronouncements, this Court, nevertheless, passed upon the
merits of LLDHCs Petition for Certiorari in G.R. No. 118633. This Court said that
the petition, which was truly for annulment of judgment,
[26]
cannot prosper
because the two grounds on which a judgment may be annulled were not present
in the case.
[27]
Going further, this Court held that even if the petition were to be
given due course as a petition for certiorari under Rule 65 of the Revised Rules of
Court, it would still be dismissible for not being brought within a reasonable
period of time as it took LLDHC almost three years from the time it received the
February 24, 1992 decision until the time it brought this action.
[28]


LLDHCs motion for reconsideration was denied with finality
[29]
on
November 18, 1996, and on February 18, 1997, an Entry of Judgment
[30]
was
made certifying that the September 6, 1996 Resolution of this Court in G.R. No.
118633 had become final and executory on December 23, 1996.

Consequently, on November 28, 1996, the Lapu-Lapu RTC issued an
Order
[31]
directing the execution of the judgment in Civil Case No. 2203-L. A
corresponding Writ of Execution
[32]
was issued on December 17, 1996. The
Motions to Stay Execution filed by LLDHC and GSIS were denied by the Lapu-Lapu
RTC on February 19, 1997.
[33]


Meanwhile, on December 27, 1996, the Court of Appeals rendered a
Decision
[34]
in the separate appeals taken by GSIS and LLDHC from the May 10,
1994 Manila RTC Decision in Civil Case No. R-82-3429. This case, docketed as CA-
G.R. CV No. 49117, affirmed the Manila RTC decision with modification insofar as
awarding LLDHC attorneys fees and litigation expenses.

On March 3, 1997, GSIS came to this Court on a Petition for Review of the
Court of Appeals decision in CA-G.R. CV No. 49117. This was docketed as G.R.
No. 127732 and was dismissed on April 14, 1997
[35]
due to late filing, the due date
being January 31, 1997. This dismissal became final and executory on May 30,
1997.
[36]


On March 8, 1997, LLDHC filed a Petition for Certiorari with preliminary
injunction before the Court of Appeals, praying that GMC and the Lapu-Lapu RTC
be ordered to cease and desist from proceeding with the execution of its Decision
in Civil Case No. 2203-L, on the theory that the Manila RTC decision was a
supervening event which made it mandatory for the Lapu-Lapu RTC to stop the
execution of its decision. This case was docketed as CA-G.R. SP No. 44052. On
July 16, 1997, the Court of Appeals issued an Order temporarily restraining the
Lapu-Lapu RTC and GMC from executing the February 24, 1992 decision in Civil
Case No. 2203-L so as not to render the resolution of the case moot and
academic.
[37]


On July 21, 1997, because of GSISs continued refusal to implement the
December 17, 1996 Writ of Execution, the Lapu-Lapu RTC, upon GMCs motion,
issued an Order
[38]
redirecting its instructions to the Register of Deeds of Lapu-
Lapu City, to wit:

WHEREFORE, the defendant GSIS having refused to implement
the Order of this Court dated December 17, 1996 the Court in
accordance with Rule 39, Sec. 10-a of the 1997 Rules of Procedure,
hereby directs the Register of Deeds of Lapu-lapu City to cancel the
Transfer Certificate of Titles of the properties involved in this case and
to issue new ones in the name of the plaintiff and to deliver the same to
the latter within ten (10) days after this Order shall have become
final.
[39]



While the TRO issued by the Court of Appeals in CA-G.R. SP No. 44052 was
in effect, the Manila RTC, on August 1, 1997, issued a Writ of Execution
[40]
of its
judgment in Civil Case No. R-82-3429. On August 7, 1997, the
Sheriff implemented the Writ and ordered the Register of Deeds of Lapu-Lapu City
to cancel the consolidated certificates of title issued in the name of GSIS and to
issue new ones in favor of LLDHC. In conformity with the TRO, the Lapu-Lapu RTC
on August 19, 1997, ordered
[41]
the suspension of its July 21, 1997 Order. With no
similar restraining order against the execution of the Manila RTC Decision, a Writ
of Possession was issued on August 21, 1997 to cause GSIS and all persons
claiming rights under it to vacate the properties in question and to place LLDHC in
peaceful possession thereof.
[42]


On October 23, 1997, the Lapu-Lapu RTC, being aware of the events that
have taken place while the TRO was in effect, issued an Order
[43]
reiterating its
previous Orders of November 28, 1996, December 17, 1996, and July 21,
1997. The Lapu-Lapu RTC held that since the restraining order issued by the Court
of Appeals in CA-G.R. SP No. 44052 had already lapsed by operation of law, and
the February 24, 1992 Decision in Civil Case No. 2203-L had not only become final
and executory but had been affirmed and upheld by both the Court of Appeals
and this Court, the inescapable mandate was to give due course to the efficacy of
its decision. The Lapu-Lapu RTC thus directed the Register of Deeds of Lapu-Lapu
City to effect the transfer of the titles to the subject lots in favor of GMC and
declared any and all acts done by the Register of Deeds of Lapu-Lapu City null
and void starting with the surreptitious issuance of the new certificates of title in
the name of *LLDHC+, contrary to its decision and orders.
[44]


On November 13, 1997, LLDHC filed before the Court of Appeals another
Petition for Certiorari with preliminary injunction and motion to consolidate
with CA-G.R. SP No. 44052. This case was docketed as CA-G.R. SP No. 45946, but
was dismissed
[45]
on November 20, 1997 for LLDHCs failure to comply with
Section 1, Rule 65 of the 1997 Rules of Civil Procedure which requires the petition
to be accompanied by, among others, copies of all pleadings and documents
relevant and pertinent thereto.
[46]


The petition in CA-G.R. SP No. 44052 would likewise be dismissed
[47]
by the
Court of Appeals on January 9, 1998, but this time, on the merits, to wit:

The validity of the decision of the respondent judge in Civil Case
No. 2303-L has thus been brought both before this Court and to the
Supreme Court by the petitioner. In both instances the respondent
judge has been upheld. The instant petition is petitioners latest
attempt to resist the implementation or execution of that decision
using as a shield a decision of a Regional Trial Court in the National
Capital Region. We are not prepared to allow it. The applicable rule
and jurisprudence are clear. The prevailing party is entitled as a matter
of right to a writ of execution, and the issuance thereof is a ministerial
duty compellable by mandamus. We do not believe that there exists in
this instance a supervening event which would justify a deviation from
this rule.
[48]


Prior to this, however, on November 28, 1997, the Lapu-Lapu RTC, acting
on GMCs Omnibus Motion, made the following orders: for LLDHC to show cause
why it should not be declared in contempt; for a writ of preliminary prohibitory
injunction to be issued to restrain all persons acting on LLDHCs orders from
carrying out such orders in defiance of its final and executory judgment; and for a
writ of preliminary mandatory injunction to be issued to direct the ouster of
LLDHC. The Lapu-Lapu RTC also declared the Register of Deeds of Lapu-Lapu City
in contempt and directed the Office of the City Sheriff to implement the above
orders and to immediately detain and confine the Register of Deeds of Lapu-Lapu
City at the City Jail if he continues to refuse to transfer the titles of the subject lots
after ten days from receipt of this order.
[49]


On December 22, 1997, the Lapu-Lapu RTC denied
[50]
the motion for
reconsideration filed by the Register of Deeds of Lapu-Lapu City. In separate
motions, LLDHC, and again the Register of Deeds of Lapu-Lapu City, sought the
reconsideration of the November 28, 1997 and December 22, 1997 Orders. On
May 27, 1998, the Lapu-Lapu RTC, acting under a new judge,
[51]
granted both
motions and accordingly set aside the November 28, 1997 and December 22,
1997 Orders.
[52]


With the denial
[53]
of its motion for reconsideration on August 4, 1998, GMC
came to this Court on a Petition for Certiorari, Prohibition and Mandamus,
seeking to set aside the May 27, 1998 Order of the Lapu-Lapu RTC in Civil Case No.
2203-L. The Petition was referred to the Court of Appeals, which under Batas
Pambansa Blg. 129, exercises original jurisdiction to issue such writs.
[54]
This was
docketed as CA-G.R. SP No. 50650.

On April 30, 1999, the Court of Appeals rendered its Decision
[55]
in CA-G.R.
SP No. 50650, the dispositive portion of which reads:

WHEREFORE, the petition being partly meritorious, the Court
hereby resolves as follows:

(1) To AFFIRM the Orders of May 28, 1998 and August 4,
1998 in Civil Case No. 2203-L insofar as they set aside the order holding
respondent Register of Deeds guilty of indirect contempt of court and
to NULLIFY said orders in so far as they set aside the directives
contained in paragraphs (a) and (b) and (c) of the order dated
November 28, 1997.

(2) To DECLARE without FORCE and EFFECT insofar as
petitioner Group Management Corporation is concerned the decision in
Civil Case No. R-82-3429 as well as the orders and writs issued for its
execution and enforcement: and

(3) To ENJOIN respondent Lapu-Lapu Development and
Housing Corporation, along with its agents and representatives and/or
persons/public officials/employees acting in its interest, specifically
respondent Regional Trial Court of Manila Branch 38, and respondent
Register of Deeds of Lapu-Lapu City, from obstructing, interfering with
or in any manner delaying the implementation/execution/ enforcement
by the Lapu-Lapu City RTC of its order and writ of execution in Civil Case
No. 2203-L.

For lack of sufficient basis the charge of contempt of court
against respondent Lapu-Lapu Development and Housing Corporation
and the public respondents is hereby DISMISSED.
[56]



With the denial of LLDHCs motion for reconsideration on December 29,
1999,
[57]
LLDHC, on January 26, 2000, filed before this Court a Petition for Review
onCertiorari assailing the April 30, 1999 decision of the Court of Appeals in CA-
G.R. SP No. 50650. This petition was docketed as G.R. No. 141407.

This Court dismissed LLDHCs petition and upheld the decision of the Court
of Appeals in CA-G.R. SP No. 50650 in its decision dated September 9,
2002.
[58]
LLDHCs Motion for Reconsideration and Second Motion for
Reconsideration were also denied on November 13, 2002
[59]
and February 3,
2003,
[60]
respectively.

The September 9, 2002 decision of this Court in G.R. No. 141407 became
final on March 10, 2003.
[61]


On March 11, 2004, the Lapu-Lapu RTC, acting on GMCs Motion for
Execution, issued an Order
[62]
the dispositive portion of which reads:

WHEREFORE, in light of the foregoing considerations, plaintiff
Group Management Corporations motion is GRANTED, while
defendant GSIS motion to stay the issuance of a writ of execution is
denied for lack of merit. Consequently, the Sheriff of this Court is
directed to proceed with the immediate implementation of this Courts
decision dated February 24, 1992, by enforcing completely this Courts
Order of Execution dated November 28, 1996, the writ of execution
dated December 17, 1996, the Order dated July 21, 1997, the Order
dated October 23 1997, the Order dated November 28, 1997 and the
Order dated December 22, 1997.
[63]



On May 7, 2004, the Lapu-Lapu RTC denied
[64]
the motions for
reconsideration filed by LLDHC and GSIS.

On May 27, 2004, LLDHC filed before the Court of Appeals a Petition
for Certiorari, Prohibition and Mandamus
[65]
against the Lapu-Lapu RTC for having
issued the Orders of March 11, 2004 and May 7, 2004 (assailed Orders). This
petition docketed as CA-G.R. SP No. 84382, sought the annulment of the assailed
Orders and for the Court of Appeals to command the Lapu-Lapu RTC to desist
from further proceeding in Civil Case No. 2203-L, to dismiss GMCs Motion for
Execution, and for the issuance of a Temporary Restraining Order (TRO)/Writ of
Preliminary Injunction against the Lapu-Lapu RTC and GMC.

On July 6, 2004, GSIS filed its own Petition for Certiorari and Prohibition with
Preliminary Injunction and Temporary Restraining Order
[66]
before the Court of
Appeals to annul the assailed Orders of the Lapu-Lapu RTC, to prohibit the judge
therein and the Register of Deeds of Lapu-Lapu City from implementing such
assailed Orders, and for the issuance of a TRO and writ of preliminary injunction
to maintain the status quo while the case is under litigation. This petition was
docketed as CA-G.R. SP No. 85096.

The Court of Appeals initially dismissed outright LLDHCs petition for failure
to attach the Required Secretarys Certificate/Board Resolution authorizing
petitioner to initiate the petition,
[67]
but in a Resolution
[68]
dated August 2, 2004,
after having found the explanation for the mistake satisfactory, the Court of
Appeals, on equitable consideration and for the purpose of preserving the status
quo during the pendency of the appeal,
[69]
issued a TRO against the Lapu-Lapu
RTC from enforcing its jurisdiction and judgment/order in Civil Case No. 2203-L
until further orders. In its August 30, 2004 Resolution,
[70]
the Court of Appeals,
without resolving the case on its merits, also issued a Writ of Preliminary
Injunction, commanding the Lapu-Lapu RTC to cease and desist from
implementing the assailed Orders in Civil Case No. 2203-L, until further orders.

On November 25, 2004, the Twentieth Division of the Court of Appeals
promulgated its decision in CA-G.R. SP No. 85096. It dismissed GSISs petition and
affirmed the assailed Orders of March 11, 2004 and May 7, 2004. The Court of
Appeals found no merit in GSISs petition since the judgment in Civil Case No.
2203-L, which was decided way back on February 24, 1992, had long become final
and executory, which meant that the Lapu-Lapu RTC had no legal obstacle to
cause said judgment to be executed and enforced. The Court of Appeals quoted
in full, portions of this Courts Decision in G.R. No. 141407 to underscore the fact
that no less than the Supreme Court had declared that the decision in Civil Case
No. 2203-L was valid and binding and had become final and executory a long time
ago and had not been in any way nullified by the decision rendered by the Manila
RTC on May 10, 1994 in Civil Case No. R-82-3429. On January 20, 2005, the Court
of Appeals upheld its decision and denied GSISs Motion for Reconsideration.
[71]


However, on September 23, 2005, the Special Nineteenth Division of the
Court of Appeals came out with its own decision in CA-G.R. SP No. 84382. It
granted LLDHCs petition, contrary to the Court of Appeals decision in CA-G.R. SP
No. 85096, and annulled and set aside the March 11, 2004 Order of the Lapu-Lapu
RTC in this wise:

WHEREFORE, finding merit in the instant Petition for Certiorari,
Prohibition and Mandamus, the same is hereby GRANTED, and the
assailed Order, dated March 11, 2004, of the Regional Trial Court,
7
th
Judicial Region, Branch 27, Lapulapu City, in Civil Case No. 2203-L
is ANNULLED AND SET ASIDE.

Accordingly, respondent Judge Benedicto Cobarde is
hereby ORDERED:

a) to DESIST from further proceeding in Civil Case No. 2203-L;
and

b) to DISMISS GMCs Motion for Execution in the
abovementioned case;

Meanwhile, the Writ of Preliminary Injunction earlier issued is
hereby declared PERMANENT. No pronouncement as to costs.
[72]



GSIS
[73]
and GMC
[74]
are now before this Court, with their separate Petitions
for Review on Certiorari, assailing the decisions of the Court of Appeals in CA-G.R.
SP No. 85096 and CA-G.R. SP No. 84382, respectively.

G.R. No. 167000

In G.R. No. 167000, GSIS is assailing the Orders issued by the Lapu-Lapu RTC
on March 11, 2004 and May 7, 2004 for being legally unenforceable on GSIS
because the titles of the 78 lots in Marigondon, Lapu-Lapu City were already in
LLDHCs name, due to the final and executory judgment rendered by the Manila
RTC in Civil Case No. R-82-3429. GSIS contends that it is legally and physically
impossible for it to comply with the assailed Orders as the subject matter to be
delivered or performed have already been taken away from
[75]
GSIS. GSIS
asserts that the circumstances which have arisen, from the judgment of the
Manila RTC to the cancellation of GSISs titles, are supervening events which
should be considered as an exception to the doctrine of finality of judgments
because they render the execution of the final and executory judgment of the
Lapu-Lapu RTC in Civil Case No. 2203-L unjust and inequitable. GSIS further claims
that it should not be made to pay damages of any kind because its funds and
properties are exempt from execution, garnishment, and other legal processes
under Section 39 of Republic Act No. 8291.

LLDHC, in its Compliance,
[76]
believes that it was impleaded in this case as a
mere nominal party since it filed its own Petition for Certiorari before the Court of
Appeals, which was granted in CA-G.R. SP No. 84382. LLDHC essentially agrees
with GSIS that the implementation of the assailed Orders have become legally
impossible due to the fully implemented Writ of Execution issued by the Manila
RTC in Civil Case No. R-82-3429. LLDHC alleges that because of this supervening
event, GSIS cannot be compelled to execute a final deed of sale in GMCs favor,
and LLDHC cannot be divested of its titles, ownership and possession of the
subject properties.
[77]


GMC in its comment
[78]
argues that GSIS has no legal standing to institute
this petition because it has no more interest in the subject lots, since it is no
longer in possession and the titles thereto have already been registered in
LLDHCs name. GMC claims that the decision of the Special Nineteenth Division of
the Court of Appeals is barred by res judicata, and that LLDHC is guilty of forum
shopping for filing several petitions before the Court of Appeals and this Court
with the same issues and arguments. GMC also asserts that the judgment in Civil
Case No. R-82-3429 is enforceable only between GSIS and LLDHC as GMC was not
a party to the case, and that the Manila RTC cannot overrule the Lapu-Lapu RTC,
they being co-equal courts.

G.R. No. 169971


In G.R. No. 169971, GMC is praying that the decision of the Special
Nineteenth Division of the Court of Appeals in CA-G.R. SP No. 84382 be reversed
and set aside. GMC is claiming that the Court of Appeals, in rendering the said
decision, committed a palpable legal error by overruling several final decisions
rendered by the Lapu-Lapu RTC, the Court of Appeals, and this Court.
[79]
GMC
claims that the Lapu-Lapu RTCs duty to continue with the implementation of its
orders is purely ministerial as the judgment has not only become final and
executory, but has been affirmed by both the Court of Appeals and the Supreme
Court in several equally final and executory decisions.
[80]
GMC, repeating its
arguments in G.R. No. 167000, maintains that the petition is barred by res
judicata, that there is forum shopping, and that the Manila RTC decision is not
binding on GMC.

LLDHC in its comment
[81]
insists that there is a supervening event which
rendered it necessary to stay the execution of the judgment of the Lapu-Lapu
RTC. LLDHC also asserts that, as correctly found by the Court of Appeals in CA-
G.R. SP No. 84382, the Lapu-Lapu RTC decision in Civil Case No. 2203-L was not
affirmed with finality by the Court of Appeals and the Supreme Court as the
decision was not reviewed on the merits.

SUMMARY OF THE ISSUES

The present case is peculiar in the sense that it involves two conflicting final
and executory decisions of two different trial courts. Moreover, one of the RTC
decisions had been fully executed and implemented. To complicate things
further, the parties have previously filed several petitions, which have reached
not only the Court of Appeals but also this Court. Upon consolidation of the two
petitions, this Court has narrowed down the issues to the following:

1. Whether or not the decision of the Manila RTC in Civil Case No. R-82-
3429 constitutes a supervening event, which should be admitted as an
exception to the doctrine of finality of judgments.

2. Whether or not the September 23, 2005 Decision of the Special
Nineteenth Division of the Court of Appeals in CA-G.R. SP No. 84382 and
GSISs Petition in G.R. No. 167000 are barred by res judicata.

3. Whether or not there is a legal and physical impossibility for GSIS to
comply with the March 11, 2004 and May 7, 2004 Orders of the Lapu-
Lapu RTC in Civil Case No. 2203-L.

4. Whether or not LLDHC and GSIS are guilty of forum shopping.

DISCUSSION

First Issue:
Supervening Event


It is well-settled that once a judgment attains finality, it becomes
immutable and unalterable. It may not be changed, altered or modified in any
way even if the modification were for the purpose of correcting an erroneous
conclusion of fact or law. This is referred to as the doctrine of finality of
judgments, and this doctrine applies even to the highest court of the
land.
[82]
This Court explained its rationale in this wise:

The doctrine of finality of judgment is grounded on fundamental
considerations of public policy and sound practice, and that, at the risk
of occasional errors, the judgments or orders of courts must become
final at some definite time fixed by law; otherwise, there would be no
end to litigations, thus setting to naught the main role of courts of
justice which is to assist in the enforcement of the rule of law and the
maintenance of peace and order by settling justiciable controversies
with finality.
[83]



This Court has, on several occasions, ruled that the doctrine of finality of
judgments admits of certain exceptions, namely: the correction of clerical
errors, the so-callednunc pro tunc entries which cause no prejudice to any party,
void judgments, and whenever circumstances transpire after the finality of the
decision which render its execution unjust and inequitable.
[84]


Both GSIS and LLDHC claim that the execution of the decision and orders in
Civil Case No. 2203-L should be stayed because of the occurrence of supervening
events which render the execution of the judgment impossible, unfair, unjust
and inequitable.
[85]
However, in order for an event to be considered a
supervening event to justify the alteration or modification of a final judgment, the
event must have transpired after the judgment has become final and
executory, to wit:

Supervening events refer to facts which transpire after judgment has
become final and executory or to new circumstances which developed
after the judgment has acquired finality, including matters which the
parties were not aware of prior to or during the trial as they were not
yet in existence at that time.
[86]



The Lapu-Lapu RTC Decision in Civil Case No. 2203-L was promulgated
on February 24, 1992, while the Manila RTC Decision in Civil Case No. R-82-3429
was promulgated on May 10, 1994. As early as December 6, 1993, both GSISs
and LLDHCs appeals of the Lapu-Lapu RTC Decision were dismissed by the said
RTC.
[87]
Only GSIS moved to reconsider this dismissal, which was denied on July 6,
1994.
[88]
Strictly speaking, the Lapu Lapu RTC Decision should have attained
finality at that stage; however, LLDHC filed with the Court of Appeals its Petition
for Annulment of Judgment (CA-G.R. SP No. 34696) on July 27, 1994 and it used
therein the Manila RTC Decision as its main ground for annulment of the Lapu-
Lapu RTC decision.

The Court of Appeals nonetheless dismissed LLDHCs Petition for
Annulment of Judgment, in CA-G.R. SP No. 34696,
[89]
and that became final and
executory on January 28, 1995,
[90]
after LLDHC interposed no appeal. The entry of
judgment in this case was issued on August 18, 1995.
[91]
Moreover, the similar
petition of LLDHC before this Court in G.R. No. 118633 was decided on September
6, 1996 and became final and executory on December 23, 1996. Therefore, the
ruling by the Manila RTC is evidently not a supervening event. It was already in
existence even before the decision in Civil Case No. 2203-L attained finality.

Just as LLDHC and GSIS, as the losing parties, had the right to file their
respective appeals within the prescribed period, GMC, as the winning party in
Civil Case No. 2203-L, equally had the correlative right to benefit from the finality
of the resolution of its case,
[92]
to wit:

A final judgment vests in the prevailing party a right recognized
and protected by law under the due process clause of the Constitution.
A final judgment is a vested interest which it is right and equitable that
the government should recognize and protect, and of which the
individual could not be deprived arbitrarily without
injustice.
[93]
(Citations omitted.)


Since the Manila RTC decision does not constitute a supervening event,
there is therefore neither reason nor justification to alter, modify or annul the
Lapu-Lapu RTC Decision and Orders, which have long become final and
executory. Thus, in the present case, GMC must not be deprived of its right to
enjoy the fruits of a final verdict.

It is settled in jurisprudence that to stay execution of a final judgment, a
supervening event must create a substantial change in the rights or relations of
the parties which would render execution of a final judgment unjust, impossible
or inequitable making it imperative to stay immediate execution in the interest of
justice.
[94]


However, what would be unjust and inequitable is for the Court to accord
preference to the Manila RTC Decision on this occasion when in the past, the
Court of Appeals and this Court have repeatedly, consistently, and with finality
rejected LLDHCs moves to use the Manila RTC Decision as a ground to annul,
and/or to bar the execution of, the Lapu Lapu RTC Decision. To be sure, in the
Decision dated September 9, 2002 in G.R. No. 141407, penned by former Chief
Justice Artemio V. Panganiban, the Court already passed upon the lack of effect of
the Manila RTC Decision on the finality of the Lapu Lapu RTC decision in this wise:

The records of the case clearly show that the Lapulapu Decision has
become final and executory and is thus valid and binding upon the
parties. Obviously, petitioner [LLDHC] is again trying another backdoor
attempt to annul the final and executory Decision of the Lapulapu
RTC.
First, it was petitioner that filed on March 11, 1992 a Notice of
Appeal contesting the Lapulapu RTC Judgment in Civil Case No. 2203-L
rendered on February 24, 1992. The Notice was however rejected by
the said RTC for being frivolous and dilatory. Since petitioner had done
nothing thereafter, the Decision clearly became final and executory.

However, upon receipt of the Manila RTC Decision, petitioner
found a new tool to evade the already final Lapulapu Decision by
seeking the annulment of the latter in a Petition with the
CA. However, the appellate court dismissed the action, because
petitioner had been unable to prove any of the grounds for annulment;
namely lack of jurisdiction or extrinsic fraud. Because no appeal had
been taken by petitioner, the ruling of the CA also became final and
executory.

Second, the Supreme Court likewise recognized the finality of
the CA Decision when it threw out LLDHCs Petition for Certiorari in GR
No. 118633. This Court ruled thus:

Instead of filing this petition for certiorari under
Rule 65, which is essentially another Petition to Annul
Judgment, petitioner LLDHC should have filed a timely
Petition for Review under Rule 45 of the Revised Rules of
Court of the decision of the Court of Appeals, dated
December 29, 1994, dismissing the Petition for Annulment
of Judgment filed by the petitioner LLDHC before the court
a quo. But this is all academic now. The appellate courts
decision had become final and executory on January 28,
1995.

Jurisprudence mandates that when a decision becomes final and
executory, it becomes valid and binding upon the parties and their
successors in interest. Such decision or order can no longer be
disturbed or reopened no matter how erroneous it may have been.
Petitioners failure to file an appeal within the reglementary period
renders the judgment final and executory. The perfection of an appeal
in the manner and within the period prescribed by law is mandatory.
Failure to conform to the rules regarding appeal will render the
judgment final and executory and, hence, unappealable. Therefore,
since the Lapulapu Decision has become final and executory, its
execution has become mandatory and ministerial on the part of the
judge.

The CA correctly ruled that the Lapulapu Judgment is binding
upon petitioner [LLDHC] which, by its own motion, participated as an
intervenor. In fact, the latter filed an Answer in Intervention and
thereafter actively took part in the trial. Thus, having had an
opportunity to be heard and to seek a reconsideration of the action or
ruling it complained of, it cannot claim that it was denied due process of
law. What the law prohibits is the absolute absence of the opportunity
to be heard. Jurisprudence teaches that a party cannot feign denial of
due process if it has been afforded the opportunity to present its side.

Petitioner likewise claims that Private Respondent GMC cannot
escape the adverse effects of the final and executory judgment of the
Manila RTC.

Again, we do not agree. A trial court has no power to stop an act
that has been authorized by another trial court of equal rank. As
correctly stated by the CA, the Decision rendered by theManila RTC --
while final and executory -- cannot bind herein private respondent
[GMC], which was not a party to the case before the said RTC. A
personal judgment is binding only upon the parties, their agents,
representatives and successors in interest.

Third, petitioner grievously errs in insisting that the judgment of
the Manila RTC nullified that of the Lapulapu RTC. As already adverted
to earlier, courts of coequal and coordinate jurisdiction may not
interfere with or pass upon each others orders or processes, since
they have the same power and jurisdiction. Except in extreme
situations authorized by law, they are proscribed from doing
so.
[95]
(Emphases supplied.)


It likewise does not escape the attention of this Court that the only reason
the Manila RTC Decision was implemented ahead of the Lapu Lapu RTC Decision
was that LLDHC successfully secured a TRO from the Court of Appeals through its
petition for certiorari docketed as CA-G.R. SP No. 44052, which was eventually
dismissed by the appellate court. The Court of Appeals ruled that the Manila RTC
Decision did not constitute a supervening event that would forestall the execution
of the Lapu Lapu RTC Decision. This decision of the Court of Appeals likewise
became final and executory in 1998.

It bears repeating that the issue of whether or not the Manila RTC Decision
could nullify or render unenforceable the Lapu Lapu RTC Decision has been
litigated many times over in different fora. It would be the height of inequity if
the Court were to now reverse the Court of Appeals and its own final and
executory rulings and allow GSIS to prevent the execution of the Lapu Lapu RTC
Decision on the same legal grounds previously discredited by the courts.

Second Issue:
Res J udicata


GMC asserts that the September 23, 2005 Decision of the Special
Nineteenth Division of the Court of Appeals in CA-G.R. SP No. 84382 and the
petition herein by GSIS in G.R. No. 167000 are barred by res judicata as the issues
involved had been fully resolved not only by the lower courts but by this Court as
well. GSIS and LLDHC both insist that res judicata does not apply as this Court
has not yet rendered a decision involving the same or any similar
petition.
[96]
The petitions by LLDHC before the Court of Appeals and GSIS before
this Court both prayed for the annulment of the March 11, 2004 and May 7, 2004
Orders of the Lapu-Lapu RTC in Civil Case No. 2203-L. These assailed Orders were
both issued to resolve the parties motions and to have the February 24, 1992
judgment implemented and executed.

In Republic of the Philippines (Civil Aeronautics Administration) v.
Yu,

[97] this Court expounded on the concept of res judicata and explained it in
this wise:

Res judicata literally means a matter adjudged; a thing judicially
acted upon or decided; a thing or matter settled by judgment.

Res
judicata lays the rule that an existing final judgment or decree rendered
on the merits, and without fraud or collusion, by a court of competent
jurisdiction, upon any matter within its jurisdiction, is conclusive of the
rights of the parties or their privies, in all other actions or suits in the
same or any other judicial tribunal of concurrent jurisdiction on the
points and matters in issue in the first suit.
[98]



In Villanueva v. Court of Appeals,
[99]
we enumerated the elements of res
judicata as follows:

a) The former judgment or order must be final;

b) It must be a judgment or order on the merits, that is, it was
rendered after a consideration of the evidence or stipulations
submitted by the parties at the trial of the case;

c) It must have been rendered by a court having jurisdiction over the
subject matter and the parties; and

d) There must be, between the first and second actions, identity of
parties, of subject matter and of cause of action. This requisite is
satisfied if the two (2) actions are substantially between the same
parties.
[100]



All three parties herein are in agreement with the facts that led to the
petitions in this case. However, not all of them agree that the matters involved in
this case have already been judicially settled. While GMC contends that GSISs
petition is barred by res judicata, both GSIS and LLDHC assert that this Court has
not yet decided any similar petition, thus disputing the claim of res judicata.

Res judicata has two concepts: (1) "bar by prior judgment" as enunciated in
Rule 39, Section 47(b) of the 1997 Rules of Civil Procedure; and (2)
"conclusiveness of judgment" in Rule 39, Section 47(c), which reads as follows:

(b) In other cases, the judgment or final order is, with respect to
the matter directly adjudged or as to any other matter that could have
been raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under the
same title and in the same capacity; and

(c) In any other litigation between the same parties or their
successors in interest, that only is deemed to have been adjudged in a
former judgment or final order which appears upon its face to have been
so adjudged, or which was actually and necessarily included therein or
necessary thereto.


In explaining the two concepts of res judicata, this Court held that:

There is "bar by prior judgment" when, as between the first case
where the judgment was rendered, and the second case that is sought to
be barred, there is identity of parties, subject matter, and causes of
action. But where there is identity of parties and subject matter in the
first and second cases, but no identity of causes of action, the first
judgment is conclusive only as to those matters actually and directly
controverted and determined and not as to matters merely involved
therein. This is "conclusiveness of judgment." Under the doctrine of
conclusiveness of judgment, facts and issues actually and directly
resolved in a former suit cannot again be raised in any future case
between the same parties, even if the latter suit may involve a different
claim or cause of action. The identity of causes of action is not required
but merely identity of issues.
[101]



In Pealosa v. Tuason,
[102]
we laid down the test in determining whether or
not the causes of action in the first and second cases are identical:

Would the same evidence support and establish both the present
and former cause of action? If so, the former recovery is a bar; if
otherwise, it does not stand in the way of the former action.
[103]



Res judicata clearly exists in G.R. No. 167000 and in CA-G.R. SP No.
84382 because both GSISs and LLDHCs actions put in issue the validity of the
Lapu-Lapu RTC Decision and were based on the assumption that it has either been
modified, altered or nullified by the Manila RTC Decision.

In CA-G.R. SP No. 84382, LLDHC sought to annul the assailed Orders of
the Lapu-Lapu RTC and to order the judge therein to desist from further
proceeding in Civil Case No. 2203-L. LLDHC sought for the same reliefs in its
Petition for Annulment of Judgment in CA-G.R. SP No. 34696 and G.R. No.
118633, in its Petition for Certiorari in CA-G.R. SP No. 44052, and in its Petition
for Review on Certiorari in G.R. No. 141407, all of which have been decided with
finality.

In G.R. No. 167000, GSIS is praying for the reversal of the November 25,
2004 Decision and January 20, 2005 Resolution in CA-G.R. SP No. 85096,
wherein the Court of Appeals affirmed the assailed Orders. The validity of these
assailed Orders hinges on the validity of the Lapu-Lapu RTC Decision, which
issue had already been decided with finality by both the Court of Appeals and this
Court.

Notwithstanding the difference in the forms of actions GSIS and LLDHC filed,
the doctrine of res judicata still applies considering that the parties were litigating
the same thing, i.e., the 78 lots in Marigondon, Lapu-Lapu City, and more
importantly, the same contentions and evidence were used in all causes of
action. As this Court held in Mendiola v. Court of Appeals
[104]
:

The test of identity of causes of action lies not in the form of an action
but on whether the same evidence would support and establish the
former and the present causes of action. The difference of actions in
the aforesaid cases is of no moment. x x x.
[105]



The doctrine of res judicata makes a final judgment on the merits rendered
by a court of competent jurisdiction conclusive as to the rights of the parties and
their privies and amounts to an absolute bar to subsequent actions involving the
same claim, demand, or cause of action.
[106]
Even a finding of conclusiveness of
judgment operates as estoppel with respect to matters in issue or points
controverted, on the determination of which the finding or judgment was
anchored.
[107]


Evidently, this Court could dispose of this case simply upon the application
of the principle of res judicata. It is clear that GSISs petition in G.R. No. 167000
and LLDHCs petition in CA-G.R. SP No. 84382 should have never reached those
stages for having been barred by a final and executory judgment on their
claims. However, considering the nature of the case before us, this Court is
compelled to make a final determination of the issues in the interest of
substantial justice and to end the wasteful use of our courts time and resources.

Third Issue:
GSISs Compliance with the
Lapu-Lapu RTC J udgment and Orders


GSIS asserts that the assailed Orders cannot be enforced upon it given the
physical and legal impossibility for it to comply as the titles over the subject
properties were transferred to LLDHC under the Manila RTC writ of execution.

A closer perusal of the March 11, 2004 and May 7, 2004 Orders shows that
GSISs argument holds no water. The May 7, 2004 Order denied GSISs and
LLDHCs motions for reconsideration of the March 11, 2004 Order. The March
11, 2004 Order resolved GMCs urgent manifestation and motion to proceed with
the implementation of the February 24, 1992 final and executory decision and
GSISs and LLDHCs opposition thereto, as well as GSISs motion to stay the
issuance of a writ of execution against it. The dispositive portion of the Order
reads:

WHEREFORE, in the light of the foregoing considerations,
plaintiff Group Management Corporations motion is GRANTED, while
defendant GSIS motion to stay the issuance of a writ of execution is
denied for lack of merit. Consequently, the Sheriff of this Court is
directed to proceed with the immediate implementation of this
Courts decision dated February 24, 1992, by enforcing completely
this Courts Order of Execution dated November 28, 1996, the writ of
execution dated December 17, 1996, the Order dated July 21, 1997, the
Order dated October 23, 1997, the Order dated November 28, 1997 and
the Order dated December 22, 1997.
[108]
(Emphasis ours.)


While the previous orders and writs of execution issued by the Lapu-Lapu
RTC required the GSIS to execute the final deed of sale and to deliver the subject
properties, the Lapu-Lapu RTC, in its subsequent Orders, modified this by
directing its order to the Register of Deeds of Lapu-Lapu City. In its July 21, 1997
Order,
[109]
the Lapu-Lapu RTC, seeing GSISs obstinate refusal to implement the
courts previous orders, directed the Register of Deeds of Lapu-Lapu City to cancel
the Transfer Certificates of Title of the subject properties and to issue new ones in
the name of GMC, and to deliver the same to GMC. Moreover, in its October 23,
1997 Order, the Lapu-Lapu RTC, noting the implemented judgment of the Manila
RTC, declared the issuance of new titles to LLDHC null and void for being
contrary to the courts February 24, 1992 decision and directed the Register of
Deeds to effect the transfer of the titles to GMC.

Considering that the assailed Orders merely directed the Lapu-Lapu RTCs
Sheriff to proceed with the implementation of the courts previous orders, that is,
to make sure that the Register of Deeds of Lapu-Lapu City complied with the
orders, GSIS had nothing to comply with insofar as the titles to, and possession of,
the subject properties were concerned, the Orders being clearly directed towards
the Sheriff of the Lapu-Lapu RTC and the Register of Deeds of Lapu-Lapu
City. Hence, GSISs argument of legal and physical impossibility of compliance
with the assailed Orders is baseless.

GSIS also argues that it cannot be the subject [of any] execution including
[the] payment of any damage and other monetary judgments because all GSIS
funds and properties are absolutely and expressly exempt from execution and other
legal processes under Section 39 of Republic Act No. 8291.
[110]


Section 39 of Republic Act No. 8291 provides:

SECTION 39. Exemption from Tax, Legal Process and Lien. It is
hereby declared to be the policy of the State that the actuarial solvency
of the funds of the GSIS shall be preserved and maintained at all times
and that contribution rates necessary to sustain the benefits under this
Act shall be kept as low as possible in order not to burden the members
of the GSIS and their employers. Taxes imposed on the GSIS tend to
impair the actuarial solvency of its funds and increase the contribution
rate necessary to sustain the benefits of this Act. Accordingly,
notwithstanding any laws to the contrary, the GSIS, its assets, revenues
including all accruals thereto, and benefits paid, shall be exempt from
all taxes, assessments, fees, charges or duties of all kinds. These
exemptions shall continue unless expressly and specifically revoked and
any assessment against the GSIS as of the approval of this Act are
hereby considered paid. Consequently, all laws, ordinances, regulations,
issuances, opinions or jurisprudence contrary to or in derogation of this
provision are hereby deemed repealed, superseded and rendered
ineffective and without legal force and effect.

x x x x

The funds and/or the properties referred to herein as well as the
benefits, sums or monies corresponding to the benefits under this Act
shall be exempt from attachment, garnishment, execution, levy or other
processes issued by the courts, quasi judicial agencies or administrative
bodies including Commission on Audit (COA) disallowances and from
all financial obligations of the members, including his pecuniary
accountability arising from or caused or occasioned by his exercise or
performance of his official functions or duties, or incurred relative to or
in connection with his position or work except when his monetary
liability, contractual or otherwise, is in favor of the GSIS.


This Court, in Rubia v. Government Service Insurance System,
[111]
held that
the exemption of GSIS is not absolute and does not encompass all of its funds, to
wit:

In so far as Section 39 of the GSIS charter exempts the GSIS from
execution, suffice it to say that such exemption is not absolute and does
not encompass all the GSIS funds. By way of illustration and as may be
gleaned from the Implementing Rules and Regulation of the GSIS Act of
1997, one exemption refers to social security benefits and other benefits
of GSIS members under Republic Act No. 8291 in connection with
financial obligations of the members to other parties. The pertinent GSIS
Rule provides:

Rule XV. Funds of the GSIS

Section 15.7 Exemption of Benefits of Members
from Tax, Attachment, Execution, Levy or other Legal
Processes. The social security benefits and other benefits
of GSIS members under R.A. 8291 shall be exempt from
tax, attachment, garnishment, execution, levy or other
processes issued by the courts, quasi-judicial agencies or
administrative bodies in connection with all financial
obligations of the member, including his pecuniary
accountability arising from or caused or occasioned by his
exercise or performance of his official functions or duties
or incurred in connection with his position or work, as well
as COA disallowances. Monetary liability in favor of the
GSIS, however, may be deducted from the benefits of the
member. [Emphasis supplied]

The processual exemption of the GSIS funds and properties under
Section 39 of the GSIS Charter, in our view, should be read consistently
with its avowed principal purpose: to maintain actuarial solvency of the
GSIS in the protection of assets which are to be used to finance the
retirement, disability and life insurance benefits of its members. Clearly,
the exemption should be limited to the purposes and objects covered.
Any interpretation that would give it an expansive construction to
exempt all GSIS assets from legal processes absolutely would be
unwarranted.

Furthermore, the declared policy of the State in Section 39 of the
GSIS Charter granting GSIS an exemption from tax, lien, attachment,
levy, execution, and other legal processes should be read together with
the grant of power to the GSIS to invest its "excess funds" under Section
36 of the same Act. Under Section 36, the GSIS is granted the ancillary
power to invest in business and other ventures for the benefit of the
employees, by using its excess funds for investment purposes. In the
exercise of such function and power, the GSIS is allowed to assume a
character similar to a private corporation. Thus, it may sue and be sued,
as also, explicitly granted by its charter. Needless to say, where proper,
under Section 36, the GSIS may be held liable for the contracts it has
entered into in the course of its business investments. For GSIS cannot
claim a special immunity from liability in regard to its business ventures
under said Section. Nor can it deny contracting parties, in our view, the
right of redress and the enforcement of a claim, particularly as it arises
from a purely contractual relationship, of a private character between an
individual and the GSIS.
[112]



This ruling has been reiterated in the more recent case of Government
Service Insurance System v. Regional Trial Court of Pasig City, Branch
71,
[113]
wherein GSIS, which was also the petitioner in that case, asked to reverse
this Courts findings in Rubia and grant GSIS absolute immunity. This Court
rejected that plea and held that GSIS should not be allowed to hide behind such
immunity especially since its obligation arose from its own wrongful action in a
business transaction.

In this case, the monetary judgments against GSIS arose from its failure to
comply with its private and contractual obligation to GMC. As such, GSIS cannot
claim immunity from the enforcement of the final and executory judgment against
it.
[114]


Fourth I ssue:
Forum Shopping


On the issue of forum shopping, this Court already found LLDHC guilty of
forum shopping and was adjudged to pay treble costs way back in 2002 in G.R.
No. 141407
[115]
:

There is forum shopping whenever, as a result of an adverse
opinion in one forum, a party seeks a favorable opinion (other than by
appeal or certiorari) from another. In Gatmaytan v. CA, the petitioner
therein repeatedly availed itself of several judicial remedies in different
courts, simultaneously or successively. All those remedies were
substantially founded on the same transactions and the same essential
facts and circumstances; and all raised substantially the same issues
either pending in, or already resolved adversely by, some other
court. This Court held that therein petitioner was trying to increase his
chances of obtaining a favorable decision by filing multiple suits in
several courts. Hence, he was found guilty of forum shopping.

In the present case, after the Lapulapu RTC had rendered its
Decision in favor of private respondent, petitioner filed several petitions
before this Court and the CA essentially seeking the annulment
thereof. True, petitioner had filed its Complaint in the Manila RTC
before private respondent filed its own suit in the Lapulapu
RTC. Records, however, show that private respondent learned of
the Manilacase only when petitioner filed its Motion for Intervention in
the Lapulapu RTC. When GMC filed its own Motion to Intervene in the
Manila RTC, it was promptly rebuffed by the judge therein. On the
other hand, petitioner was able to present its side and to participate
fully in the proceedings before the Lapulapu RTC.

On July 27, 1994, almost two years after the dismissal of its
appeal by the Lapulapu RTC, petitioner filed in the CA a suit for the
annulment of that RTC judgment. On December 29, 1994, this suit was
rejected by the CA in a Decision which became final and executory on
January 28, 1995, after no appeal was taken by petitioner. However,
this action did not stop petitioner. On February 2, 1995, it filed with
this Court another Petition deceptively cloaked as certiorari, but which
in reality sought the annulment of the Lapulapu Decision. This Court
dismissed the Petition on September 6, 1996. Petitioners Motion for
Reconsideration was denied with finality on November 18, 1996.

On November 28, 1996, Judge Risos of the Lapulapu RTC directed
the execution of the judgment in the case filed before it. The Motion to
Stay Execution filed by petitioner was denied on February 19,
1997. Undaunted, it filed in this Court another Petition for Certiorari,
Prohibition and Mandamus. On September 21, 1998, we referred the
Petition to the CA for appropriate action. This new Petition again
essentially sought to annul the final and executory Decision rendered by
the Lapulapu RTC. Needless to say, the new suit was unsuccessful. Still,
this rejection did not stop petitioner. It brought before this Court the
present Petition for Review on Certiorari alleging the same facts and
circumstances and raising the same issues already decided by this Court
in G.R. No. 118633.

First Philippine International Bank v. CA stresses that what is truly
important to consider in determining whether forum shopping exists is
the vexation caused the courts and the parties-litigants by one who asks
different courts and/or administrative agencies to rule on the same or
related facts and causes and/or to grant the same or substantially the
same relief, in the process creating the possibility of conflicting rulings
and decisions.

Petitioner in the present case sued twice before the CA and
thrice before this Court, alleging substantially the same facts and
circumstances, raising essentially the same issues, and praying for
almost identical reliefs for the annulment of the Decision rendered by
the Lapulapu RTC. This insidious practice of repeatedly bringing
essentially the same action -- albeit disguised in various nomenclatures
-- before different courts at different times is forum shopping no
less. Because of petitioners actions, the execution of the Lapulapu
Decision has been needlessly delayed and several courts vexed.
[116]



There is forum shopping when two or more actions or proceedings, other
than appeal or certiorari, involving the same parties for the same cause of action,
are instituted either simultaneously or successively to obtain a more favorable
decision.
[117]
This Court, in Spouses De la Cruz v. Joaquin,
[118]
explained why forum
shopping is disapproved of:

Forum shopping trifles with the courts, abuses their processes,
degrades the administration of justice, and congests court
dockets. Willful and deliberate violation of the rule against it is a ground
for the summary dismissal of the case; it may also constitute direct
contempt of court.
[119]



It is undeniable that both LLDHC and GSIS are guilty of forum shopping,
for having gone through several actions and proceedings from the lowest court to
this Court in the hopes that they will obtain a decision favorable to them. In all
those actions, only one issue was in contention: the ownership of the subject
lots. In the process, the parties degraded the administration of justice, congested
our court dockets, and abused our judicial system. Moreover, the simultaneous and
successive actions filed below have resulted in conflicting decisions rendered by
not only the trial courts but also by different divisions of the Court of Appeals.

The very purpose of the rule against forum shopping was to stamp out the
abominable practice of trifling with the administration of justice.
[120]
It is evident
from the history of this case that not only were the parties and the courts vexed, but
more importantly, justice was delayed. As this Court held in the earlier case of
LLDHC against GMC: [The] insidious practice of repeatedly bringing essentially
the same action albeit disguised in various nomenclatures before different
courts at different times is forum shopping no less.
[121]


Conclusion

Nonetheless, like we said, substantial justice requires the resolution of this
controversy on its merits. It is the duty of this Court to put an end to this long-
delayed litigation and render a decision, which will bind all parties with finality.

Although it is settled that the Lapu-Lapu RTC Decision was not in any way
nullified by the Manila RTC Decision, it is this Courts duty to resolve the legal
implications of having two conflicting, final, and executory decisions in
existence. In Collantes v. Court of Appeals,
[122]
this Court, faced with the similar
issue of having two conflicting, final and executory decisions before it, offered
three options to solve the dilemma: the first is for the parties to assert their claims
anew, the second is to determine which judgment came first, and the third is to
determine which of the judgments had been rendered by a court of last resort.
[123]


In Collantes, this Court applied the first option and resolved the conflicting
issues anew. However, resorting to the first solution in the case at bar would
entail disregarding not only the final and executory decisions of the Lapu-Lapu
RTC and the Manila RTC, but also the final and executory decisions of the Court of
Appeals and this Court. Moreover, it would negate two decades worth of
litigating. Thus, we find it more equitable and practicable to apply the second and
third options consequently maintaining the finality of one of the conflicting
judgments. The primary criterion under the second option is the time when the
decision was rendered and became final and executory, such that earlier
decisions should prevail over the current ones since final and executory decisions
vest rights in the winning party. In the third solution, the main criterion is the
determination of which court or tribunal rendered the decision. Decisions of this
Court should be accorded more respect than those made by the lower courts.
[124]


Applying these criteria to the case at bar, the February 24, 1992 Decision of
the Lapu-Lapu RTC in Civil Case No. 2203-L was not only promulgated first; it also
attained finality on January 28, 1995, before the Manila RTCs May 10, 1994
Decision in Civil Case No. R-82-3429 became final on May 30, 1997. It is especially
noteworthy that months after the Lapu-Lapu RTC issued its writ of execution on
December 17, 1996, the Manila RTC issued its own writ of execution on August 1,
1997. To recall, the Manila RTC writ was only satisfied first because the Court of
Appeals in CA-G.R. SP No. 44052 deemed it appropriate to issue a temporary
restraining order against the execution of the Lapu-Lapu RTC Decision, pending
the case before it. Hence, the fact that the Manila RTC Decision was implemented
and executed first does not negate the fact that the Lapu-Lapu RTC Decision was
not only rendered earlier, but had also attained finality earlier. Furthermore,
while both judgments reached the Court of Appeals, only Civil Case No. 2203-L
was passed upon on the merits by this Court. In G.R. No. 141407, this Court
resolved LLDHCs petition for review on certiorari seeking to annul the Court of
Appeals Decision in CA-G.R. SP No. 50650. This Court, in dismissing the petition,
upheld the validity of the Lapu-Lapu RTC Decision and declared that the Manila
RTC Decision cannot bind GMC. That decision became final and executory way
back on March 10, 2003.

While this Court cannot blame the parties for exhausting all available
remedies to obtain a favorable judgment, the issues involved in this case should
have been resolved upon the finality of this Courts decision in G.R. No.
141407. As pronounced by this Court in Villanueva v. Court of Appeals
[125]
:

The interest of the judicial system in preventing relitigation of the
same dispute recognizes that judicial resources are finite and the
number of cases that can be heard by the court is limited. Every
dispute that is reheard means that another will be delayed. In modern
times when court dockets are filled to overflowing, this concern is of
critical importance. x x x.
[126]



In summary, this Court finds the execution of the Lapu-Lapu RTC Decision
in Civil Case No. 2203-L to be in order. We affirm the assailed Orders of March
11, 2004 and May 7, 2004, which reiterate, among others, the October 23, 1997
Order issued by the Lapu-Lapu RTC, directing the Register of Deeds of Lapu-Lapu
City to cancel the certificates of title of LLDHC and to issue new ones in GMCs
name. Whatever rights are due LLDHC from GSIS as a result of the final
judgment of the Manila RTC in Civil Case No. R-82-3429, which we have
previously held to be binding between GSIS and LLDHC, may be threshed out in
an appropriate proceeding. Such proceeding shall not further delay the execution
of the Lapu-Lapu RTC Decision.

WHEREFORE, in view of the foregoing, the petition in G.R. No.
167000 is DENIED and the Decision dated November 25, 2004 and Resolution
dated January 20, 2005 of the Twentieth Division of the Court of Appeals
are AFFIRMED. The petition in G.R. No. 169971 is GRANTED and the Decision
dated September 23, 2005of the Special Nineteenth Division of the Court of
Appeals is hereby REVERSED AND SET ASIDE.

SO ORDERED.

FIRST DIVISION

LOCKHEED DETECTIVE AND
WATCHMAN AGENCY, INC.,
Petitioner,
G.R. No. 185918

Present:



- versus -

LEONARDO-DE CASTRO,
Acting
Chairperson,
PERALTA,


BERSAMIN,
VILLARAMA, JR., and
REYES,
**
JJ

UNIVERSITY OF THEPHILIPPINES,
Respondent.
Promulgated:

April 18, 2012
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended, assailing the August 20, 2008 Amended
Decision
[1]
and December 23, 2008 Resolution
[2]
of the Court of Appeals (CA) in
CA-G.R. SP No. 91281.
The antecedent facts of the case are as follows:
Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed)
entered into a contract for security services with respondent University of the
Philippines (UP).
In 1998, several security guards assigned to UP filed separate complaints
against Lockheed and UP for payment of underpaid wages, 25% overtime pay,
premium pay for rest days and special holidays, holiday pay, service incentive
leave pay, night shift differentials, 13
th
month pay, refund of cash bond, refund of
deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from
December 16-31, 1998, and attorneys fees.
On February 16, 2000, the Labor Arbiter rendered a decision as follows:
WHEREFORE, premises considered, respondents Lockheed Detective and
Watchman Agency, Inc. and UP as job contractor and principal, respectively, are hereby
declared to be solidarily liable to complainants for the following claims of the latter
which are found meritorious.
Underpaid wages/salaries, premium pay for work on rest day and special holiday,
holiday pay, 5 days service incentive leave pay, 13
th
month pay for 1998, refund of cash
bond (deducted at P50.00 per month from January to May 1996, P100.00 per month
from June 1996 and P200.00 from November 1997), refund of deduction for Mutual
Benefits Aids System at the rate of P50.00 a month, and attorneys fees; in the total
amount of P1,184,763.12 broken down as follows per attached computation of the
Computation and [E]xamination Unit of this Commission, which computation forms part
of this Decision:
1. JOSE SABALAS P77,983.62
2. TIRSO DOMASIAN 76,262.70
3. JUAN TAPEL 80,546.03
4. DINDO MURING 80,546.03
5. ALEXANDER ALLORDE 80,471.78
6. WILFREDO ESCOBAR 80,160.63
7. FERDINAND VELASQUEZ 78,595.53
8. ANTHONY GONZALES 76,869.97
9. SAMUEL ESCARIO 80,509.78
10. PEDRO FAILORINA 80,350.87
11. MATEO TANELA 70,590.58
12. JOB SABALAS 59,362.40
13. ANDRES DACANAYAN 77,403.73
14. EDDIE OLIVAR 77,403.73
P1,077,057.38
plus 10% attorneys fees 107,705.74
GRAND TOTAL AWARD P1,184,763.12
Third party respondent University of the Philippines is hereby declared to be
liable to Third Party Complainant and cross claimant Lockheed Detective and Watchman
Agency for the unpaid legislated salary increases of the latters security guards for the
years 1996 to 1998, in the total amount of P13,066,794.14, out of which amount the
amounts due complainants here shall be paid.
The other claims are hereby DISMISSED for lack of merit (night shift differential
and 13
th
month pay) or for having been paid in the course of this proceedings (salaries
for December 15-31, 1997in the amount of P40,140.44).
The claims of Erlindo Collado, Rogelio Banjao and Amor Banjao are hereby
DISMISSED as amicably settled for and in consideration of the amounts of P12,315.72,
P12,271.77 and P12,819.33, respectively.
SO ORDERED.
[3]

Both Lockheed and UP appealed the Labor Arbiters decision. By
Decision
[4]
dated April 12, 2002, the NLRC modified the Labor Arbiters
decision. The NLRC held:
WHEREFORE, the decision appealed from is hereby modified as follows:
1. Complainants claims for premium pay for work on rest day and special
holiday, and 5 days service incentive leave pay, are hereby dismissed for
lack of basis.
2. The respondent University of the Philippines is still solidarily liable with
Lockheed in the payment of the rest of the claims covering the period of
their service contract.
The Financial Analyst is hereby ordered to recompute the awards of the
complainants in accordance with the foregoing modifications.
SO ORDERED.
[5]

The complaining security guards and UP filed their respective motions for
reconsideration. On August 14, 2002, however, the NLRC denied said motions.
As the parties did not appeal the NLRC decision, the same became final and
executory on October 26, 2002.
[6]
A writ of execution was then issued but later
quashed by the Labor Arbiter on November 23, 2003 on motion of UP due to
disputes regarding the amount of the award. Later, however, said order
quashing the writ was reversed by the NLRC by Resolution
[7]
dated June 8, 2004,
disposing as follows:
WHEREFORE, premises considered, we grant this instant appeal. The Order
dated 23 November 2003 is hereby reversed and set aside. The Labor Arbiter is directed
to issue a Writ of Execution for the satisfaction of the judgment award in favor of Third-
Party complainants.
SO ORDERED.
[8]

UP moved to reconsider the NLRC resolution. On December 28, 2004, the
NLRC upheld its resolution but with modification that the satisfaction of the
judgment award in favor of Lockheed will be only against the funds of UP which
are not identified as public funds.
The NLRC order and resolution having become final, Lockheed filed a motion
for the issuance of an alias writ of execution. The same was granted on May 23,
2005.
[9]

On July 25, 2005, a Notice of Garnishment
[10]
was issued to Philippine
National Bank (PNB) UP Diliman Branch for the satisfaction of the award
of P12,142,522.69 (inclusive of execution fee).
In a letter
[11]
dated August 9, 2005, PNB informed UP that it has received an
order of release dated August 8, 2005 issued by the Labor Arbiter directing PNB
UP Diliman Branch to release to the NLRC Cashier, through the assigned NLRC
Sheriff Max L. Lago, the judgment award/amount of P12,142,522.69. PNB
likewise reminded UP that the bank only has 10 working days from receipt of the
order to deliver the garnished funds and unless it receives a notice from UP or the
NLRC before the expiry of the 10-day period regarding the issuance of a court
order or writ of injunction discharging or enjoining the implementation and
execution of the Notice of Garnishment and Writ of Execution, the bank shall be
constrained to cause the release of the garnished funds in favor of the NLRC.
On August 16, 2005, UP filed an Urgent Motion to Quash
Garnishment.
[12]
UP contended that the funds being subjected to garnishment at
PNB are government/public funds. As certified by the University Accountant, the
subject funds are covered by Savings Account No. 275-529999-8, under the name
of UP System Trust Receipts, earmarked for Student Guaranty Deposit,
Scholarship Fund, Student Fund, Publications, Research Grants, and Miscellaneous
Trust Account. UP argued that as public funds, the subject PNB account cannot
be disbursed except pursuant to an appropriation required by law. The Labor
Arbiter, however, dismissed the urgent motion for lack of merit on August 30,
2005.
[13]

On September 2, 2005, the amount of P12,062,398.71 was withdrawn by
the sheriff from UPs PNB account.
[14]

On September 12, 2005, UP filed a petition for certiorari before the CA
based on the following grounds:
I.
The concept of solidary liability by an indirect employer notwithstanding,
respondent NLRC gravely abused its discretion in a manner amounting to lack or excess
of jurisdiction by misusing such concept to justify the garnishment by the executing
Sheriff of public/government funds belonging to UP.
II.
Respondents NLRC and Arbiter LORA acted without jurisdiction or gravely
abused their discretion in a manner amounting to lack or excess of jurisdiction when, by
means of an Alias Writ of Execution against petitioner UP, they authorized respondent
Sheriff to garnish UPs public funds. Similarly, respondent LORA gravely abused her
discretion when she resolved petitioners Motion to Quash Notice of Garnishment
addressed to, and intended for, the NLRC, and when she unilaterally and arbitrarily
disregarded an official Certification that the funds garnished are public/government
funds, and thereby allowed respondent Sheriff to withdraw the same from PNB.
III.
Respondents gravely abused their discretion in a manner amounting to lack or
excess of jurisdiction when they, despite prior knowledge, effected the execution that
caused paralyzation and dislocation to petitioners governmental functions.
[15]

On March 12, 2008, the CA rendered a decision
[16]
dismissing UPs petition
for certiorari. Citing Republic v. COCOFED,
[17]
which defines public funds as
moneys belonging to the State or to any political subdivisions of the State, more
specifically taxes, customs, duties and moneys raised by operation of law for the
support of the government or the discharge of its obligations, the appellate court
ruled that the funds sought to be garnished do not seem to fall within the stated
definition.
On reconsideration, however, the CA issued the assailed Amended
Decision. It held that without departing from its findings that the funds covered
in the savings account sought to be garnished do not fall within the classification
of public funds, it reconsiders the dismissal of the petition in light of the ruling in
the case of National Electrification Administration v. Morales
[18]
which mandates
that all money claims against the government must first be filed with the
Commission on Audit (COA).
Lockheed moved to reconsider the amended decision but the same was
denied in the assailed CA Resolution dated December 23, 2008. The CA
cited Manila International Airport Authority v. Court of Appeals
[19]
which held that
UP ranks with MIAA, a government instrumentality exercising corporate powers
but not organized as a stock or non-stock corporation. While said corporations are
government instrumentalities, they are loosely called government corporate
entities but not government-owned and controlled corporations in the strict
sense.
Hence this petition by Lockheed raising the following arguments:
1. RESPONDENT UP IS A GOVERNMENT ENTITY WITH A SEPARATE AND DISTINCT
PERSONALITY FROM THE NATIONAL GOVERNMENT AND HAS ITS OWN CHARTER
GRANTING IT THE RIGHT TO SUE AND BE SUED. IT THEREFORE CANNOT AVAIL OF
THE IMMUNITY FROM SUIT OF THE GOVERNMENT. NOT HAVING IMMUNITY FROM
SUIT, RESPONDENT UP CAN BE HELD LIABLE AND EXECUTION CAN THUS ENSUE.
2. MOREOVER, IF THE COURT LENDS IT ASSENT TO THE INVOCATION OF THE
DOCTRINE OF STATE IMMUNITY, THIS WILL RESULT [IN] GRAVE INJUSTICE.
3. FURTHERMORE, THE PROTESTATIONS OF THE RESPONDENT ARE TOO LATE IN THE
DAY, AS THE EXECUTION PROCEEDINGS HAVE ALREADY BEEN TERMINATED.
[20]

Lockheed contends that UP has its own separate and distinct juridical entity
from the national government and has its own charter. Thus, it can be sued and
be held liable. Moreover, Executive Order No. 714 entitled Fiscal Control and
Management of the Funds of UP recognizes that as an institution of higher
learning, UP has always granted full management and control of its affairs
including its financial affairs.
[21]
Therefore, it cannot shield itself from its private
contractual liabilities by simply invoking the public character of its
funds. Lockheed also cites several cases wherein it was ruled that funds of public
corporations which can sue and be sued were not exempt from garnishment.
Lockheed likewise argues that the rulings in the NEA and MIAA cases are
inapplicable. It contends that UP is not similarly situated with NEA because the
jurisdiction of COA over the accounts of UP is only on a post-audit basis. As to
the MIAA case, the liability of MIAA pertains to the real estate taxes imposed by
the City of Paranaque while the obligation of UP in this case involves a private
contractual obligation. Lockheed also argues that the declaration
in MIAA specifically citing UP was mere obiter dictum.
Lockheed moreover submits that UP cannot invoke state immunity to
justify and perpetrate an injustice. UP itself admitted its liability and thus it
should not be allowed to renege on its contractual obligations. Lockheed
contends that this might create a ruinous precedent that would likely affect the
relationship between the public and private sectors.
Lastly, Lockheed contends that UP cannot anymore seek the quashal of the
writ of execution and notice of garnishment as they are already fait accompli.
For its part, UP contends that it did not invoke the doctrine of state immunity
from suit in the proceedings a quo and in fact, it did not object to being sued before
the labor department. It maintains, however, that suability does not necessarily
mean liability. UP argues that the CA correctly applied the NEA ruling when it held
that all money claims must be filed with the COA.
As to alleged injustice that may result for invocation of state immunity from
suit, UP reiterates that it consented to be sued and even participated in the
proceedings below. Lockheed cannot now claim that invocation of state
immunity, which UP did not invoke in the first place, can result in injustice.
On the fait accompli argument, UP argues that Lockheed cannot wash its
hands from liability for the consummated garnishment and execution of UPs
trust fund in the amount of P12,062,398.71. UP cites that damage was done to
UP and the beneficiaries of the fund when said funds, which were earmarked for
specific educational purposes, were misapplied, for instance, to answer for the
execution fee of P120,123.98 unilaterally stipulated by the sheriff. Lockheed,
being the party which procured the illegal garnishment, should be held primarily
liable. The mere fact that the CA set aside the writ of garnishment confirms the
liability of Lockheed to reimburse and indemnify in accordance with law.
The petition has no merit.
We agree with UP that there was no point for Lockheed in discussing the
doctrine of state immunity from suit as this was never an issue in this
case. Clearly, UP consented to be sued when it participated in the proceedings
below. What UP questions is the hasty garnishment of its funds in its PNB
account.
This Court finds that the CA correctly applied the NEA case. Like NEA, UP is
a juridical personality separate and distinct from the government and has the
capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and
its funds may be subject to garnishment or levy. However, before execution may
be had, a claim for payment of the judgment award must first be filed with the
COA. Under Commonwealth Act No. 327,
[22]
as amended by Section 26 of P.D. No.
1445,
[23]
it is the COA which has primary jurisdiction to examine, audit and settle
all debts and claims of any sort due from or owing the Government or any of its
subdivisions, agencies and instrumentalities, including government-owned or
controlled corporations and their subsidiaries. With respect to money claims
arising from the implementation of Republic Act No. 6758,
[24]
their allowance or
disallowance is for COA to decide, subject only to the remedy of appeal by
petition for certiorari to this Court.
[25]

We cannot subscribe to Lockheeds argument that NEA is not similarly
situated with UP because the COAs jurisdiction over the latter is only on post-
audit basis. A reading of the pertinent Commonwealth Act provision clearly
shows that it does not make any distinction as to which of the government
subdivisions, agencies and instrumentalities, including government-owned or
controlled corporations and their subsidiaries whose debts should be filed before
the COA.
As to the fait accompli argument of Lockheed, contrary to its claim that
there is nothing that can be done since the funds of UP had already been
garnished, since the garnishment was erroneously carried out and did not go
through the proper procedure (the filing of a claim with the COA), UP is entitled to
reimbursement of the garnished funds plus interest of 6% per annum, to be
computed from the time of judicial demand to be reckoned from the time UP filed
a petition for certiorari before the CA which occurred right after the withdrawal of
the garnished funds from PNB.
WHEREFORE, the petition for review on certiorari is DENIED for lack of
merit. Petitioner Lockheed Detective and Watchman Agency, Inc. is ordered
toREIMBURSE respondent University of the Philippines the amount
of P12,062,398.71 plus interest of 6% per annum, to be computed from
September 12, 2005 up to the finality of this Decision, and 12% interest on the
entire amount from date of finality of this Decision until fully paid.
No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 171182 August 23, 2012
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.
D E C I S I O N
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 P16,370,191.74 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 Baos (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 P 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. P 503,462.74 amount of the third billing, additional
accomplished work and retention money
2. P 5,716,729.00 in actual damages
3. P 10,000,000.00 in moral damages
4. P 150,000.00 and P 1,500.00 per appearance as attorneys
fees; and
5. Costs of suit.
SO ORDERED.
Following the RTCs 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
UPs 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, 2002, to quash the writ of execution
dated October 4, 2002, and to 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 UPs 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."
(Rams 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 UPs 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 UPs 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 UPs urgent motion to quash, and
granted Stern Builders and dela Cruzs 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 UPs 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-Telan
37
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 sheriffs 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 sheriffs 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 Managers Check No. 811941
for P 16,370,191.74 representing the garnished funds payable to the order of
Stern Builders and dela Cruz as its compliance with the RTCs 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 UPs 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
plaintiffs 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 UPs 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 Baos, 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 Cruzs motion to withdraw the deposit, in consideration of
the UPs 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 latters
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. Systems
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 Courts 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 sheriffs
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,
58
alleging 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 petition
59
after the RTC (Judge Yadao)
denied the UPs motion for the redeposit of the withdrawn amount on April 10,
2007,
60
to wit:
This resolves defendant U.P. Systems 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 plaintiffs motion to allow the
release of said deposit. It must be recalled that the Court found plaintiffs
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. Systems appeal was
upheld by the Supreme Court;
c) a writ of execution had been issued;
d) defendant U.P. Systems 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. Systems motion to redeposit the judgment amount. Granting
said motion is not only contrary to law, but it will also render this Courts 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. Systems 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 UNIVERSITYS 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 P 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
attorneys 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 attorneys 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 Diego
61
and
Department of Agriculture v. NLRC
62
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 UPs 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 UPs 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 P 5,716,729.00
and moral damages of P 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 P 22,338,553.25, an amount
already more than sufficient to cover the judgment award; that the UPs 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 Courts 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 UPs prayer for the
deletion of the awards of actual damages of P 5,716,729.00, moral damages
of P 10,000,000.00 and attorneys fees of P 150,000.00 plus P 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.
UPs 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
university
67
"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 States
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 UPs 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 RTCs
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 claimants 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 attorneys 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
RTCs 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 attorneys
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 UPs 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 sheriffs report of January 17, 2007 manifesting the full
satisfaction of the writ of execution; and (d) the order of April 10, 2007 deying
the UPs motion for the redeposit of the withdrawn amount. Hence, such
orders and issuances should be struck down without exception.
Nothing extenuated Judge Yadaos 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 claimants 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 UPs plea for equity was the return of the
amount of P 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
UPs 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
UPs 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.
89
Indeed, 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 UPs plea for equity warrants the Courts exercise of the
exceptional power to disregard the declaration of finality of the judgment of the
RTC for being in clear violation of the UPs 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 UPs 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--vis the RTCs 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 UPs
notice of appeal on June 3, 2002 timely and well within the remaining days of
the UPs 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 partys 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 UPs 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 Courts 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 UPs 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 attorneys 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 P 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 P 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 P 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 P 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 P 150,000.00, plus P 1,500.00 per
appearance, granted as attorneys fees were factually unwarranted and
devoid of legal basis. The general rule is that a successful litigant cannot
recover attorneys 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 attorneys fees in the
cases mentioned in Article 2208
115
of the Civil Code came to be
recognized.
116
Nonetheless, with attorneys 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 attorneys 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 attorneys 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 attorneys 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., P 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 P 5,716,729.00, moral damages
of P 10,000,000.00, and attorney's fees of P150,000.00, plus P 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 P16,370,191.74 within 10 days from receipt of this
decision.
Costs of suit to be paid by the private respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-31635 August 31, 1971
ANGEL MINISTERIO and ASUNCION SADAYA, petitioners,
vs.
THE COURT OF FIRST INSTANCE OF CEBU, Fourth Branch, Presided by
the Honorable, Judge JOSE C. BORROMEO, THE PUBLIC HIGHWAY
COMMISSIONER, and THE AUDITOR GENERAL, respondents.
Eriberto Seno for petitioners.
Office of the Solicitor General Felix Q. Antonio, Acting First Assistant Solicitor
General Antonio A. Torres and Solicitor Norberto P. Eduardo for respondents.

FERNANDO, J .:
What is before this Court for determination in this appeal by certiorari to
review a decision of the Court of First Instance of Cebu is the question of
whether or not plaintiffs, now petitioners, seeking the just compensation to
which they are entitled under the Constitution for the expropriation of their
property necessary for the widening of a street, no condemnation proceeding
having been filed, could sue defendants Public Highway Commissioner and
the Auditor General, in their capacity as public officials without thereby
violating the principle of government immunity from suit without its consent.
The lower court, relying on what it considered to be authoritative precedents,
held that they could not and dismissed the suit. The matter was then elevated
to us. After a careful consideration and with a view to avoiding the grave
inconvenience, not to say possible injustice contrary to the constitutional
mandate, that would be the result if no such suit were permitted, this Court
arrives at a different conclusion, and sustains the right of the plaintiff to file a
suit of this character. Accordingly, we reverse.
Petitioners as plaintiffs in a complaint filed with the Court of First Instance of
Cebu, dated April 13, 1966, sought the payment of just compensation for a
registered lot, containing an area of 1045 square meters, alleging that in 1927
the National Government through its authorized representatives took physical
and material possession of it and used it for the widening of the Gorordo
Avenue, a national road, Cebu City, without paying just compensation and
without any agreement, either written or verbal. There was an allegation of
repeated demands for the payment of its price or return of its possession, but
defendants Public Highway Commissioner and the Auditor General refused to
restore its possession. It was further alleged that on August 25, 1965, the
appraisal committee of the City of Cebu approved Resolution No. 90,
appraising the reasonable and just price of Lot No. 647-B at P50.00 per
square meter or a total price of P52,250.00. Thereafter, the complaint was
amended on June 30, 1966 in the sense that the remedy prayed for was in the
alternative, either the restoration of possession or the payment of the just
compensation.
In the answer filed by defendants, now respondents, through the then Solicitor
General, now Associate Justice, Antonio P. Barredo, the principal defense
relied upon was that the suit in reality was one against the government and
therefore should be dismissed, no consent having been shown. Then on July
11, 1969, the parties submitted a stipulation of facts to this effect: "That the
plaintiffs are the registered owners of Lot 647-B of the Banilad estate
described in the Survey plan RS-600 GLRO Record No. 5988 and more
particularly described in Transfer Certificate of Title No. RT-5963 containing
an area of 1,045 square meters; That the National Government in 1927 took
possession of Lot 647-B Banilad estate, and used the same for the widening
of Gorordo Avenue; That the Appraisal Committee of Cebu City approved
Resolution No. 90, Series of 1965 fixing the price of Lot No. 647-B at P50.00
per square meter; That Lot No. 647-B is still in the possession of the National
Government the same being utilized as part of the Gorordo Avenue, Cebu
City, and that the National Government has not as yet paid the value of the
land which is being utilized for public use."
1

The lower court decision now under review was promulgated on January 30,
1969. As is evident from the excerpt to be cited, the plea that the suit was
against the government without its consent having been manifested met with
a favorable response. Thus: "It is uncontroverted that the land in question is
used by the National Government for road purposes. No evidence was
presented whether or not there was an agreement or contract between the
government and the original owner and whether payment was paid or not to
the original owner of the land. It may be presumed that when the land was
taken by the government the payment of its value was made thereafter and no
satisfactory explanation was given why this case was filed only in 1966. But
granting that no compensation was given to the owner of the land, the case is
undoubtedly against the National Government and there is no showing that
the government has consented to be sued in this case. It may be contended
that the present case is brought against the Public Highway Commissioner
and the Auditor General and not against the National Government.
Considering that the herein defendants are sued in their official capacity the
action is one against the National Government who should have been made a
party in this case, but, as stated before, with its consent."
2

Then came this petition for certiorari to review the above decision. The
principal error assigned would impugn the holding that the case being against
the national government which was sued without its consent should be
dismissed, as it was in fact dismissed. As was indicated in the opening
paragraph of this opinion, this assignment of error is justified. The decision of
the lower court cannot stand. We shall proceed to explain why.
1. The government is immune from suit without its consent.
3
Nor is it indispensable
that it be the party proceeded against. If it appears that the action, would in fact hold it liable, the doctrine
calls for application. It follows then that even if the defendants named were public officials, such a
principle could still be an effective bar. This is clearly so where a litigation would result in a financial
responsibility for the government, whether in the disbursements of funds or loss of property. Under such
circumstances, the liability of the official sued is not personal. The party that could be adversely affected
is government. Hence the defense of non-suability may be interposed.
4

So it has been categorically set forth in Syquia v. Almeda Lopez:
5
"However, and
this is important, where the judgment in such a case would result not only in the recovery of possession of
the property in favor of said citizen but also in a charge against or financial liability to the Government,
then the suit should be regarded as one against the government itself, and, consequently, it cannot
prosper or be validly entertained by the courts except with the consent of said Government."
6

2. 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 Justice Zaldivar in Director of the Bureau of
Telecommunications v. Aligean:
7
"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."
8

3. It would follow then that the prayer in the amended complaint of petitioners
being in the alternative, the lower court, instead of dismissing the same, could
have passed upon the claim of plaintiffs there, now petitioners, for the
recovery of the possession of the disputed lot, since no proceeding for
eminent domain, as required by the then Code of Civil Procedure, was
instituted.
9
However, as noted in Alfonso v. Pasay City,
10
this Court speaking through Justice
Montemayor, restoration would be "neither convenient nor feasible because it is now and has been used
for road purposes."
11
The only relief, in the opinion of this Court, would be for the government "to make
due compensation, ..."
12
It was made clear in such decision that compensation should have been made
"as far back as the date of the taking." Does it result, therefore, that petitioners would be absolutely
remediless since recovery of possession is in effect barred by the above decision? If the constitutional
mandate that the owner be compensated for property taken for public use
13
were to be respected, as it
should, then a suit of this character should not be summarily dismissed. The doctrine of governmental
immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. Had the
government followed the procedure indicated by the governing law at the time, a complaint would have
been filed by it, and only upon payment of the compensation fixed by the judgment, or after tender to the
party entitled to such payment of the amount fixed, may it "have the right to enter in and upon the land so
condemned" to appropriate the same to the public use defined in the judgment."
14
If there were an
observance of procedural regularity, petitioners would not be in the sad plaint they are now. 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.
15

Accordingly, the lower court decision is reversed so that the court may
proceed with the complaint and determine the compensation to which
petitioners are entitled, taking into account the ruling in the above Alfonso
case: "As to the value of the property, although the plaintiff claims the present
market value thereof, the rule is that to determine due compensation for lands
appropriated by the Government, the basis should be the price or value at the
time that it was taken from the owner and appropriated by the Government."
16

WHEREFORE, the lower court decision of January 30, 1969 dismissing the
complaint is reversed and the case remanded to the lower court for
proceedings in accordance with law.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14078 March 7, 1919
RUBI, ET AL. (manguianes), plaintiffs,
vs.
THE PROVINCIAL BOARD OF MINDORO, defendant.
D. R. Williams & Filemon Sotto for plaintiff.
Office of the Solicitor-General Paredes for defendant.
MALCOLM, J .:
In one of the cases which denote a landmark in American Constitutional
History (Worcester vs. Georgia [1832], 6 Pet., 515), Chief Justice Marshall,
the first luminary of American jurisprudence, began his opinion (relating to the
status of an Indian) with words which, with a slight change in phraseology, can
be made to introduce the present opinion This cause, in every point of view
in which it can be placed, is of the deepest interest. The legislative power of
state, the controlling power of the constitution and laws, the rights if they have
any, the political existence of a people, the personal liberty of a citizen, are all
involved in the subject now to be considered.
To imitate still further the opinion of the Chief Justice, we adopt his outline and
proceed first, to introduce the facts and the issues, next to give a history of the
so called "non-Christians," next to compare the status of the "non-Christians"
with that of the American Indians, and, lastly, to resolve the constitutional
questions presented.
I. INTRODUCTION.
This is an application for habeas corpus in favor of Rubi and other
Manguianes of the Province of Mindoro. It is alleged that the Maguianes are
being illegally deprived of their liberty by the provincial officials of that
province. Rubi and his companions are said to be held on the reservation
established at Tigbao, Mindoro, against their will, and one Dabalos is said to
be held under the custody of the provincial sheriff in the prison at Calapan for
having run away form the reservation.
The return of the Solicitor-General alleges:
1. That on February 1, 1917, the provincial board of Mindoro adopted
resolution No. 25 which is as follows:
The provincial governor, Hon. Juan Morente, Jr., presented the
following resolution:
"Whereas several attempts and schemes have been made for the
advancement of the non-Christian people of Mindoro, which were
all a failure,
"Whereas it has been found out and proved that unless some
other measure is taken for the Mangyan work of this province, no
successful result will be obtained toward educating these people.
"Whereas it is deemed necessary to obliged them to live in one
place in order to make a permanent settlement,
"Whereas the provincial governor of any province in which non-
Christian inhabitants are found is authorized, when such a course
is deemed necessary in the interest of law and order, to direct
such inhabitants to take up their habitation on sites on unoccupied
public lands to be selected by him and approved by the provincial
board.
"Whereas the provincial governor is of the opinion that the sitio of
Tigbao on Lake Naujan is a place most convenient for the
Mangyanes to live on, Now, therefore be it
"Resolved, that under section 2077 of the Administrative Code, 800
hectares of public land in the sitio of Tigbao on Naujan Lake be selected
as a site for the permanent settlement of Mangyanes in Mindoro subject
to the approval of the Honorable Secretary of the Interior, and
"Resolved further, That Mangyans may only solicit homesteads on this
reservation providing that said homestead applications are previously
recommended by the provincial governor."
2. That said resolution No. 25 (series 1917) of the provincial board of
Mindoro was approved by the Secretary of the Interior of February 21,
1917.
3. That on December 4, 1917, the provincial governor of Mindoro issued
executive order No. 2 which says:
"Whereas the provincial board, by Resolution No. 25, current
series, has selected a site in the sitio of Tigbao on Naujan Lake
for the permanent settlement of Mangyanes in Mindoro.
"Whereas said resolution has been duly approve by the
Honorable, the Secretary of the Interior, on February 21, 1917.
"Now, therefore, I, Juan Morente, jr., provincial governor of
Mindoro, pursuant to the provisions of section 2145 of the revised
Administrative Code, do hereby direct that all the Mangyans in the
townships of Naujan and Pola and the Mangyans east of the Baco
River including those in the districts of Dulangan and Rubi's place
in Calapan, to take up their habitation on the site of Tigbao,
Naujan Lake, not later than December 31, 1917.
"Any Mangyan who shall refuse to comply with this order shall
upon conviction be imprisoned not exceed in sixty days, in
accordance with section 2759 of the revised Administrative Code."
4. That the resolution of the provincial board of Mindoro copied in
paragraph 1 and the executive order of the governor of the same
province copied in paragraph 3, were necessary measures for the
protection of the Mangyanes of Mindoro as well as the protection of
public forests in which they roam, and to introduce civilized customs
among them.
5. That Rubi and those living in his rancheria have not fixed their
dwelling within the reservation of Tigbao and are liable to be punished in
accordance with section 2759 of Act No. 2711.
6. That the undersigned has not information that Doroteo Dabalos is
being detained by the sheriff of Mindoro but if he is so detained it must
be by virtue of the provisions of articles Nos. 2145 and 2759 of Act No.
2711.
It thus appears that the provincial governor of Mindoro and the provincial
board thereof directed the Manguianes in question to take up their habitation
in Tigbao, a site on the shore of Lake Naujan, selected by the provincial
governor and approved by the provincial board. The action was taken in
accordance with section 2145 of the Administrative Code of 1917, and was
duly approved by the Secretary of the Interior as required by said action.
Petitioners, however, challenge the validity of this section of the Administrative
Code. This, therefore, becomes the paramount question which the court is
called upon the decide.
Section 2145 of the Administrative Code of 1917 reads as follows:
SEC. 2145. Establishment of non-Christina upon sites selected by
provincial governor. With the prior approval of the Department Head,
the provincial governor of any province in which non-Christian
inhabitants are found is authorized, when such a course is deemed
necessary in the interest of law and order, to direct such inhabitants to
take up their habitation on sites on unoccupied public lands to be
selected by him an approved by the provincial board.
In connection with the above-quoted provisions, there should be noted section
2759 of the same Code, which read as follows:
SEC. 2759. Refusal of a non-Christian to take up appointed habitation.
Any non-Christian who shall refuse to comply with the directions
lawfully given by a provincial governor, pursuant to section two
thousand one hundred and forty-five of this Code, to take up habitation
upon a site designated by said governor shall upon conviction be
imprisonment for a period not exceeding sixty days.
The substance of what is now found in said section 2145 is not new to
Philippine law. The genealogical tree of this section, if we may be permitted to
use such terminology, would read: Section 2077, Administrative Code of
1916; section 62, Act No. 1397; section 2 of various special provincial laws,
notably of Act No. 547, specifically relating to the Manguianes; section 69, Act
No. 387.
Section 2145 and its antecedent laws make use of the term "non-Christians."
This word, as will later be disclosed, is also found in varying forms in other
laws of the Philippine Islands. In order to put the phrase in its proper category,
and in order to understand the policy of the Government of the Philippine
Islands with reference to the uncivilized elements of the Islands, it is well first
of all to set down a skeleton history of the attitude assumed by the authorities
towards these "non-Christians," with particular regard for the legislation on the
subject.
II. HISTORY.
A. BEFORE ACQUISITION OF THE PHILIPPINE BY THE UNITED STATES.
The most important of the laws of the Indies having reference to the subject at
hand are compiled in Book VI, Title III, in the following language.
LAW I.
The Emperor Charles and the Prince, the governor, at Cigales, on
March 21, 1551. Philip II at Toledo, on February 19, 1560. In the forest
of Segovia on September 13, 1565. In the Escorial on November 10,
1568. Ordinance 149 of the poblaciones of 1573. In San Lorenzo, on
May 20, 1578,
THAT THE "INDIOS" BE REDUCED INTO "POBLACIONES"
COMMUNITIES).
In order that the indios may be instructed in the Sacred Catholic Faith
and the evangelical law, and in order that they may forget the blunders
of their ancient rites and ceremonies to the end that they may live in
harmony and in a civilized manner, it has always been endeavored, with
great care and special attention, to use all the means most convenient
to the attainment of these purposes. To carry out this work with
success, our Council of the Indies and other religious persons met at
various times; the prelates of new Spain assembled by order of
Emperor Charles V of glorious memory in the year one thousand five
hundred and forty-six all of which meetings were actuated with a
desire to serve God an our Kingdom. At these meetings it was resolved
that indios be made to live in communities, and not to live in places
divided and separated from one another by sierras and mountains,
wherein they are deprived of all spiritual and temporal benefits and
wherein they cannot profit from the aid of our ministers and from that
which gives rise to those human necessities which men are obliged to
give one another. Having realized that convenience of this resolution,
our kings, our predecessors, by different orders, have entrusted and
ordered the viceroys, presidents, and governors to execute with great
care and moderation the concentration of the indios intoreducciones;
and to deal with their doctrine with such forbearance and gentleness,
without causing inconveniences, so that those who would not presently
settle and who would see the good treatment and the protection of
those already in settlements would, of their own accord, present
themselves, and it is ordained that they be not required to pay taxes
more than what is ordered. Because the above has been executed in
the greater part of our Indies, we hereby order and decree that the
same be complied with in all the remaining parts of the Indies, and
the encomederos shall entreat compliance thereof in the manner and
form prescribed by the laws of this title.
xxx xxx xxx
LAW VIII.
Philip II at the Pardo, on December 1, 1573. Philip III at Madrid, October
10, 1618.
THE "REDUCCTIONES" BE MADE IN ACCORDANCE WITH THE
CONDITIONS OF THIS LAW.
The places wherein the pueblos and reducciones shall be formed
should have the facilities of waters. lands, and mountains, ingress and
egress, husbandry and passageway of one league long, wherein
the indios can have their live stock that they may not be mixed with
those of the Spaniards.
LAW IX.
Philip II at Toledo, on February 19, 1956.
THAT THE "INDIOS" IN "REDUCCIONES" BE NOT DEPRIVED OF THE
LANDS PREVIOUSLY HELD BY THEM.
With more good-will and promptness, the indios shall be concentrated
in reducciones. Provided they shall not be deprived of the lands and
granaries which they may have in the places left by them. We hereby
order that no change shall be made in this respect, and that they be
allowed to retain the lands held by them previously so that they may
cultivate them and profit therefrom.
xxx xxx xxx
LAW XIII.
THE SAME AS ABOVE.
THAT THE "REDUCCIONES" BE NOT REMOVED WITHOUT ORDER OF
THE KING, VICEROY, OR COURT.
No governor, or magistrate, or alcalde mayor, or any other court, has
the right to alter or to remove thepueblos or the reducciones once
constituted and founded, without our express order or that of the
viceroy, president, or the royal district court, provided, however, that
the encomenderos, priests, or indios request such a change or consent
to it by offering or giving information to that en. And, because these
claims are often made for private interests and not for those of
the indios, we hereby order that this law be always complied with,
otherwise the change will be considered fraudulently obtained. The
penalty of one thousand pesos shall be imposed upon the judge
or encomendero who should violate this law.
LAW XV.
Philip III at Madrid, on October 10, 1618.
THAT THERE BE MAYORS AND ALDERMEN IN THE "REDUCTIONES,"
WHO SHALL BE "INDIOS."
We order that in each town and reduccion there be a mayor, who should
be an indio of the same reduccion; if there be more than eighty houses,
there should be two mayors and two aldermen, also indios; and, even if
the town be a big one, there should, nevertheless, be more than two
mayors and four aldermen, If there be less than eighty indios but not
less than forty, there should be not more than one mayor and one
alderman, who should annually elect nine others, in the presence of the
priests , as is the practice in town inhabited by Spaniards and indios.
LAW XXI.
Philip II, in Madrid, On May 2, 1563, and on November 25, 1578. At
Tomar, on May 8, 1581. At Madrid, on January 10, 1589. Philip III, at
Todesillas, on July 12, 1600. Philip IV, at Madrid, on October 1 and
December 17, 1646. For this law and the one following, see Law I, Tit.
4, Book 7.
THAT IN THE TOWNS OF THE "INDIOS," THERE SHALL LIVE NO
SPANIARDS, NEGROES, "MESTIZOS," AND MULATTOES.
We hereby prohibit and forbid Spaniards, negroes, mulattores,
or mestizos to live to live in the reduccionesand towns and towns of
the indios, because it has been found that some Spaniards who deal,
trade, live, and associate with the indios are men of troublesome nature,
of dirty ways of living; robbers, gamblers, and vicious and useless men;
and, to avoid the wrongs done them, the indios would leave their towns
and provinces; and the negroes, mestizos, and mulattoes, besides
maltreating them and utilizing their services, contaminate them with their
bad customs, idleness, and also some of their blunders and vices which
may corrupt and pervert the goal which we desire to reach with regard
to their salvation, increase, and tranquillity. We hereby order the
imposition of grave penalties upon the commission of the acts above-
mentioned which should not be tolerated in the towns, and that the
viceroys, presidents, governors, and courts take great care in executing
the law within their powers and avail themselves of the cooperation of
the ministers who are truly honest. As regards the mestizos and Indian
and Chinese half-breeds (zambaigos), who are children of indias and
born among them, and who are to inherit their houses andhaciendas,
they all not be affected by this law, it appearing to be a harsh thing to
separate them from their parents. (Law of the Indies, vol. 2, pp. 228,
229, 230, 231.)
A clear exposition of the purposes of the Spanish government, in its efforts to
improve the condition of the less advanced inhabitants of the Islands by
concentrating them in "reducciones," is found in the Decree of the Governor-
General of the Philippine Islands of January 14, 1881, reading as follows:
It is a legal principle as well as a national right that every inhabitant of a
territory recognized as an integral part of a nation should respect and
obey the laws in force therein; while, on other hand, it is the duty to
conscience and to humanity for all governments to civilize those
backward races that might exist in the nation, and which living in the
obscurity of ignorance, lack of all the nations which enable them to
grasp the moral and material advantages that may be acquired in those
towns under the protection and vigilance afforded them by the same
laws.
It is equally highly depressive to our national honor to tolerate any
longer the separation and isolation of the non-Christian races from the
social life of the civilized and Christian towns; to allow any longer the
commission of depredations, precisely in the Island of Luzon wherein is
located the seat of the representative of the Government of the,
metropolis.
It is but just to admit the fact that all the governments have occupied
themselves with this most important question, and that much has been
heretofore accomplished with the help and self-denial of the missionary
fathers who have even sacrificed their lives to the end that those
degenerate races might be brought to the principles of Christianity, but
the means and the preaching employed to allure them have been
insufficient to complete the work undertaken. Neither have the
punishments imposed been sufficient in certain cases and in those
which have not been guarded against, thus giving and customs of
isolation.
As it is impossible to consent to the continuation of such a lamentable
state of things, taking into account the prestige which the country
demands and the inevitable duty which every government has in
enforcing respect and obedience to the national laws on the part of all
who reside within the territory under its control, I have proceeded in the
premises by giving the most careful study of this serious question which
involves important interests for civilization, from the moral and material
as well as the political standpoints. After hearing the illustrious opinions
of all the local authorities, ecclesiastics, and missionaries of the
provinces of Northern Luzon, and also after finding the unanimous
conformity of the meeting held with the Archbishop of Manila, the
Bishops of Jaro and Cebu, and the provincial prelates of the orders of
the Dominicans, Agustinians, Recoletos, Franciscans, and Jesuits as
also of the meeting of the Council of Authorities, held for the object so
indicated, I have arrived at an intimate conviction of the inevitable
necessity of proceeding in a practical manner for the submission of the
said pagan and isolated races, as well as of the manner and the only
form of accomplishing such a task.
For the reasons above stated and for the purpose of carrying out these
objects, I hereby promulgate the following:
DECREE.
1. All the indian inhabitants (indios) of the Islands of Luzon are, from this
date, to be governed by the common law, save those exceptions
prescribed in this decree which are bases upon the differences of
instructions, of the customs, and of the necessities of the different
pagan races which occupy a part of its territory.
2. The diverse rules which should be promulgated for each of these
races which may be divided into three classes; one, which comprises
those which live isolated and roaming about without forming a town nor
a home; another, made up of those subdued pagans who have not as
yet entered completely the social life; and the third, of those mountain
and rebellious pagans shall be published in their respective dialects,
and the officials, priests, and missionaries of the provinces wherein they
are found are hereby entrusted in the work of having these races learn
these rules. These rules shall have executive character, beginning with
the first day of next April, and, as to their compliance, they must be
observed in the manner prescribed below.
3. The provincial authorities in conjunction with the priests shall
proceed, from now on, with all the means which their zeal may suggest
to them, to the taking of the census of the inhabitants of the towns or
settlement already subdued, and shall adopt the necessary regulations
for the appointment of local authorities, if there be none as yet; for the
construction of courts and schools, and for the opening or fixing up of
means of communication, endeavoring, as regards the administrative
organization of the said towns or settlements, that this be finished
before the first day of next July, so that at the beginning of the fiscal
year they shall have the same rights and obligations which affect the
remaining towns of the archipelago, with the only exception that in the
first two years they shall not be obliged to render personal services
other than those previously indicated.
4. So long as these subdued towns or settlements are located infertile
lands appropriate for cultivation, the inhabitants thereof shall not be
obliged to move their dwelling-houses; and only in case of absolute
necessity shall a new residence be fixed for them, choosing for this
purpose the place most convenient for them and which prejudices the
least their interest; and, in either of these cases, an effort must be made
to establish their homes with the reach of the sound of the bell.
5. For the protection and defense of these new towns, there shall be
established an armed force composed precisely of native Christian, the
organization and service of which shall be determined in a regulations
based upon that of the abolished Tercios de Policia (division of
the Guardia Civil).
6. The authorities shall see to it that the inhabitants of the new towns
understand all the rights and duties affecting them and the liberty which
they have as to where and now they shall till their lands and sell the
products thereof, with the only exception of the tobacco which shall be
bought by the Hacienda at the same price and conditions allowed other
producers, and with the prohibition against these new towns as well as
the others from engaging in commerce of any other transaction with the
rebellious indios, the violation of which shall be punished with
deportation.
7. In order to properly carry out this express prohibition, the limits of the
territory of the rebellious indiosshall be fixed; and whoever should go
beyond the said limits shall be detained and assigned governmentally
wherever convenient.
8. For the purpose of assisting in the conversion of the pagans into the
fraternity of the Catholic Church, all by this fact along be exempt for
eight years from rendering personal labor.
9. The authorities shall offer in the name of the State to the races not
subdued (aetas and mountains igorrots the following advantages in
returns for their voluntary submission: to live in towns; unity among their
families; concession of good lands and the right to cultivate them in the
manner they wish and in the way them deem most productive; support
during a year, and clothes upon effecting submission; respect for their
habits and customs in so far as the same are not opposed to natural
law; freedom to decide of their own accord as to whether they want to
be Christians or not; the establishment of missions and families of
recognized honesty who shall teach, direct, protect, and give them
security and trust them; the purchase or facility of the sale of their
harvests; the exemption from contributions and tributes for ten years
and from thequintas (a kind of tax) for twenty years; and lastly, that
those who are governed by the local authorities as the ones who elect
such officials under the direct charge of the authorities of the province or
district.
10. The races indicated in the preceding article, who voluntarily admit
the advantages offered, shall, in return, have the obligation of
constituting their new towns, of constructing their town hall, schools, and
country roads which place them in communication with one another and
with the Christians; provided, the location of these towns be distant from
their actual residences, when the latter do not have the good conditions
of location and cultivations, and provided further the putting of families
in a place so selected by them be authorized in the towns already
constituted.
11. The armed force shall proceed to the prosecution and punishment of
the tribes, that, disregarding the peace, protection, and advantages
offered them, continue in their rebellious attitude on the first of next
April, committing from now on the crimes and vexations against the
Christian towns; and for the this purposes, the Captain General's Office
shall proceed with the organization of the divisions of the Army which, in
conjunction with the rural guards (cuadrilleros), shall have to enter the
territory of such tribes. On the expiration of the term, they shall destroy
their dwelling-houses, labors, and implements, and confiscate their
products and cattle. Such a punishment shall necessarily be repeated
twice a year, and for this purpose the military headquarters shall
immediately order a detachment of the military staff to study the zones
where such operations shall take place and everything conducive to the
successful accomplishment of the same.
12. The chiefs of provinces, priests, and missioners, local authorities,
and other subordinates to my authorities, local authorities, and other
subordinates to may authority, civil as well as military authorities, shall
give the most effective aid and cooperation to the said forces in all that
is within the attributes and the scope of the authority of each.
13. With respect to the reduccion of the pagan races found in some of
the provinces in the southern part of the Archipelago, which I intend to
visit, the preceding provisions shall conveniently be applied to them.
14. There shall be created, under my presidency as Governor-General,
Vice-Royal Patron, a council or permanent commission which shall
attend to and decide all the questions relative to the application of the
foregoing regulations that may be brought to it for consultations by the
chiefs of provinces and priests and missionaries.
15. The secondary provisions which may be necessary, as a
complement to the foregoing, in brining about due compliance with this
decree, shall be promulgated by the respective official centers within
their respective jurisdictions. (Gaceta de Manila, No. 15) (Diccionario de
la Administracion, vol. 7, pp. 128-134.)
B. AFTER ACQUISITON OF THE PHILIPPINES BY THE UNITED STATES.
Ever since the acquisition of the Philippine Islands by the United States, the
question as to the best method for dealing with the primitive inhabitants has
been a perplexing one.
1. Organic law.
The first order of an organic character after the inauguration of the American
Government in the Philippines was President McKinley's Instructions to the
Commission of April 7, 1900, later expressly approved and ratified by section
1 of the Philippine Bill, the Act of Congress of July 1, 1902. Portions of these
instructions have remained undisturbed by subsequent congressional
legislation. One paragraph of particular interest should here be quoted,
namely:
In dealing with the uncivilized tribes of the Islands, the Commission
should adopt the same course followed by Congress in permitting the
tribes of our North American Indians to maintain their tribal organization
and government and under which many of these tribes are now living in
peace and contentment, surrounded by civilization to which they are
unable or unwilling to conform. Such tribal governments should,
however, be subjected to wise and firm regulation; and, without undue
or petty interference, constant and active effort should be exercised to
prevent barbarous practices and introduce civilized customs.
Next comes the Philippine Bill, the Act of Congress of July 1, 1902, in the
nature of an Organic Act for the Philippines. The purpose of section 7 of the
Philippine Bill was to provide for a legislative body and, with this end in view,
to name the prerequisites for the organization of the Philippine Assembly. The
Philippine Legislature, composed of the Philippine Commission and the
Philippine Assembly, was to have jurisdiction over the Christian portion of the
Islands. The Philippine Commission was to retain exclusive jurisdiction of that
part of said Islands inhabited by Moros or other non-Christian tribes.
The latest Act of Congress, nearest to a Constitution for the Philippines, is the
Act of Congress of August 29, 1916, commonly known as the Jones Law. This
transferred the exclusive legislative jurisdiction and authority theretofore
exercised by the Philippine Commission, to the Philippine Legislature (sec.
12). It divided the Philippine Islands into twelve senatorial districts, the twelfth
district to be composed of the Mountain Province, Baguio, Nueva Vizcaya,
and the Department of Mindanao and Sulu. The Governor-General of the
Philippine Islands was authorized to appoint senators and representatives for
the territory which, at the time of the passage of the Jones Law, was not
represented in the Philippine Assembly, that is, for the twelfth district (sec.
16). The law establish a bureau to be known as the "Bureau of non-Christian
Tribes" which shall have general supervision over the public affairs of the
inhabitants which are represented in the Legislature by appointed senators
and representatives( sec. 22).
Philippine organic law may, therefore, be said to recognized a dividing line
between the territory not inhabited by Moros or other non-Christian tribes, and
the territory which Moros or other non-Christian tribes, and the territory which
is inhabited by Moros or other non-Christian tribes.
2. Statute law.
Local governments in the Philippines have been provided for by various acts
of the Philippine Commission and Legislature. The most notable are Acts Nos.
48 and 49 concerning the Province of Benguet and the Igorots; Act NO. 82,
the Municipal Code; ;Act no. 83, the Provincial Government Act; Act No. 183,
the Character of the city of Manila; Act No. 7887, providing for the
organization and government of the Moro Province; Act No. 1396, the Special
Provincial Government Act; Act No. 1397, the Township Government Act; Act
No. 1667, relating to the organization of settlements; Act No. 1963, the Baguio
charger; and Act No. 2408, the Organic Act of the Department of Mindanao
and Sulu. The major portion of these laws have been carried forward into the
Administrative Codes of 1916 an d1917.
Of more particular interest are certain special laws concerning the government
of the primitive peoples. Beginning with Act No. 387, sections 68-71, enacted
on April 9, 1902, by the United States Philippine Commission, having
reference to the Province of Nueva Vizcaya, Acts Nos. 4111, 422, 445, 500,
547, 548, 549, 550, 579, 753, 855, 1113, 1145, 4568, 1306 were enacted for
the provinces of Abra, Antique, Bataan, Ilocos Norte, Ilocos Sur, Isabela.
Lepanto-Bontoc, Mindoro, Misamis, Nueva Vizcaya, Pangasinan, Paragua
(Palawan), Tarlac, Tayabas, and Zambales. As an example of these laws,
because referring to the Manguianes, we insert Act No. 547:
No. 547. AN ACT PROVIDING FOR THE ESTABLISHMENT
OF LOCAL CIVIL GOVERNMENTS FOR THE MANGUIANES IN
THE PROVINCE OF MINDORO.
By authority of the United States, be it enacted by the Philippine
Commission, that:
SECTION 1. Whereas the Manguianes of the Provinces of Mindoro
have not progressed sufficiently in civilization to make it practicable to
bring them under any form of municipal government, the provincial
governor is authorized, subject to the approval of the Secretary of the
Interior, in dealing with these Manguianes to appoint officers from
among them, to fix their designations and badges of office, and to
prescribe their powers and duties: Provided, That the powers and duties
thus prescribed shall not be in excess of those conferred upon township
officers by Act Numbered Three hundred and eighty-seven entitled "An
Act providing for the establishment of local civil Governments in the
townships and settlements of Nueva Vizcaya."
SEC. 2. Subject to the approval of the Secretary of the Interior, the
provincial governor is further authorized, when he deems such a course
necessary in the interest of law and order, to direct such Manguianes to
take up their habitation on sites on unoccupied public lands to be
selected by him and approved by the provincial board. Manguianes who
refuse to comply with such directions shall upon conviction be
imprisonment for a period not exceeding sixty days.
SEC. 3. The constant aim of the governor shall be to aid the
Manguianes of his province to acquire the knowledge and experience
necessary for successful local popular government, and his supervision
and control over them shall be exercised to this end, an to the end that
law and order and individual freedom shall be maintained.
SEC. 4. When in the opinion of the provincial board of Mindoro any
settlement of Manguianes has advanced sufficiently to make such a
course practicable, it may be organized under the provisions of sections
one to sixty-seven, inclusive, of Act Numbered three hundred and
eighty-seven, as a township, and the geographical limits of such
township shall be fixed by the provincial board.
SEC. 5. The public good requiring the speedy enactment of this bill, the
passage of the same is hereby expedited in accordance with section
two of 'An Act prescribing the order of procedure by the Commission in
the enactment of laws,' passed September twenty-sixth, nineteen
hundred.
SEC. 6. This Act shall take effect on its passage.
Enacted, December 4, 1902.
All of these special laws, with the exception of Act No. 1306, were repealed by
Act No. 1396 and 1397. The last named Act incorporated and embodied the
provisions in general language. In turn, Act No. 1397 was repealed by the
Administrative Code of 1916. The two Administrative Codes retained the
provisions in questions.
These different laws, if they of the non-Christian inhabitants of the Philippines
and a settled and consistent practice with reference to the methods to be
followed for their advancement.
C. TERMINOLOGY.
The terms made use of by these laws, organic and statutory, are found in
varying forms.
"Uncivilized tribes" is the denomination in President McKinley's instruction to
the Commission.
The most commonly accepted usage has sanctioned the term "non-Christian
tribes." These words are to be found in section 7 of the Philippine Bill and in
section 22 of the Jones Law. They are also to be found in Act No. 253 of the
Philippines Commission, establishing a Bureau of non-Christian Tribes and in
Act No. 2674 of the Philippine Legislature, carried forward into sections 701-
705 of the Administrative Code of 1917, reestablishing this Bureau. Among
other laws which contain the phrase, there can be mentioned Acts Nos. 127,
128, 387, 547, 548, 549, 550, 1397, 1639, and 2551.
"Non-Christian people," "non-Christian inhabitants," and "non-Christian
Filipinos" have been the favorite nomenclature, in lieu of the unpopular word
"tribes," since the coming into being of a Filipinized legislature. These terms
can be found in sections 2076, 2077, 2390, 2394, Administrative Code of
1916; sections 701-705, 2145, 2422, 2426, Administrative Code of 1917; and
in Acts Nos. 2404, 2435, 2444, 2674 of the Philippine Legislatures, as well as
in Act No. 1667 of the Philippine Commission.
The Administrative Code specifically provides that the term "non-Christian"
shall include Mohammedans and pagans. (Sec. 2576, Administrative Code of
1917; sec. 2561, Administrative Code of 1916, taken from Act No. 2408, sec.
3.)
D. MEANING OF TERM "NON-CHRISTIAN."
If we were to follow the literal meaning of the word "non-Christian," it would of
course result in giving to it a religious signification. Obviously, Christian would
be those who profess the Christian religion, and non-Christians, would be
those who do not profess the Christian religion. In partial corroboration of this
view, there could also be cited section 2576 of the last Administrative Code
and certain well-known authorities, as Zuiga, "Estadismo de las Islas
Filipinas," Professor Ferdinand Blumentritt, "Philippine Tribes and
Languages," and Dr. N. M. Saleeby, "The Origin of Malayan Filipinos." (See
Blair & Robertson, "The Philippine Islands," 1493-1898, vol. III, p. 300, note;
Craig-Benitez, "Philippine Progress prior to 1898," vol. I. p. 107.)
Not content with the apparent definition of the word, we shall investigate
further to ascertain what is its true meaning.
In one sense, the word can have a geographical signification. This is plainly to
be seen by the provisions of many laws. Thus, according to the Philippine Bill,
the authority of the Philippine Assembly was recognized in the "territory" of the
Islands not inhabited by Moros or other non-Christian tribes. Again, the Jones
Law confers similar recognition in the authorization of the twelfth senatorial
district for the "territory not now represented in the Philippine Assembly." The
Philippines Legislature has, time and again, adopted acts making certain other
acts applicable to that "part" of the Philippine Islands inhabited by Moros or
other non-Christian tribes.
Section 2145, is found in article XII of the Provincial Law of the Administrative
Code. The first section of this article, preceding section 2145, makes the
provisions of the article applicable only in specially organized provinces. The
specially organized provinces are the Mountain Province, Nueva Vizcaya,
Mindoro, Batanes, and Palawan. These are the provinces to which the
Philippine Legislature has never seen fit to give all the powers of local self-
government. They do not, however, exactly coincide with the portion of the
Philippines which is not granted popular representation. Nevertheless, it is still
a geographical description.
It is well-known that within the specially organized provinces, there live
persons some of who are Christians and some of whom are not Christians. In
fact, the law specifically recognizes this. ( Sec. 2422, Administrative Code of
1917, etc.)
If the religious conception is not satisfactory, so against the geographical
conception is likewise inadquate. The reason it that the motive of the law
relates not to a particular people, because of their religion, or to a particular
province because of its location, but the whole intent of the law is predicated n
the civilization or lack of civilization of the inhabitants.
At most, "non-Christian" is an awkward and unsatisfactory word. Apologetic
words usually introduce the term. "The so-called non-Christian" is a favorite
expression. The Secretary of the Interior who for so many years had these
people under his jurisdiction, recognizing the difficulty of selecting an exact
designation, speaks of the "backward Philippine peoples, commonly known as
the 'non-Christian tribes."' (See Hearings before the Committee on the
Philippines, United States Senate, Sixty-third Congress, third session on H.R.
18459, An Act to declare the purpose of the People of the United States as to
the future political status of the Philippine Islands and to provide a more
autonomous government for the Islands, pp. 346, 351; letter of the Secretary
of the Interior of June 30, 1906, circulated by the Executive Secretary.)
The idea that the term "non-Christian" is intended to relate to degree of
civilization, is substantiated by reference to legislative, judicial, and executive
authority.
The legislative intent is borne out by Acts Nos. 48, 253, 387, 1667, and 2674,
and sections 701 et seq, and sections 2422 et seq, of the Administrative Code
of 1917. For instance, Act No. 253 charged the Bureau of non-Christian tribes
to conduct "systematic investigations with reference to non-Christian tribes . . .
with special view to determining the most practicable means for bringing about
their advancement in civilization and material property prosperity."
As authority of a judicial nature is the decision of the Supreme Court in the
case of United States vs. Tubban [Kalinga] ([1915], 29, Phil., 434). The
question here arose as to the effect of a tribal marriage in connection with
article 423 of the Penal code concerning the husband who surprises his wife
in the act of adultery. In discussing the point, the court makes use of the
following language:
. . . we are not advised of any provision of law which recognizes as legal
a tribal marriage of so-called non-Christians or members of uncivilized
tribes, celebrated within that province without compliance with the
requisites prescribed by General Orders no. 68. . . . We hold also that
the fact that the accused is shown to be a member of an uncivilized
tribe, of a low order of intelligence, uncultured and uneducated, should
be taken into consideration as a second marked extenuating
circumstance.
Of much more moment is the uniform construction of execution officials who
have been called upon to interpret and enforce the law. The official who, as a
member of the Philippine Commission, drafted much of the legislation relating
to the so-called Christians and who had these people under his authority, was
the former Secretary of the Interior. Under date of June 30, 1906, this official
addressed a letter to all governor of provinces, organized under the Special
Provincial Government Act, a letter which later received recognition by the
Governor-General and was circulated by the Executive Secretary, reading as
follows:
Sir: Within the past few months, the question has arisen as to whether
people who were originally non-Christian but have recently been
baptized or who are children of persons who have been recently
baptized are, for the purposes of Act 1396 and 1397, to be considered
Christian or non-Christians.
It has been extremely difficult, in framing legislation for the tribes in
these islands which are not advanced far in civilization, to hit upon any
suitable designation which will fit all cases. The number of individual
tribes is so great that it is almost out of the question to enumerate all of
them in an Act. It was finally decided to adopt the designation 'non-
Christians' as the one most satisfactory, but the real purpose of the
Commission was not so much to legislate for people having any
particular religious belief as for those lacking sufficient advancement so
that they could, to their own advantage, be brought under the Provincial
Government Act and the Municipal Code.
The mere act of baptism does not, of course, in itself change the degree
of civilization to which the person baptized has attained at the time the
act of baptism is performed. For practical purposes, therefore, you will
give the member of so-called "wild tribes" of your province the benefit of
the doubt even though they may recently have embraced Christianity.
The determining factor in deciding whether they are to be allowed to
remain under the jurisdiction of regularly organized municipalities or
what form of government shall be afforded to them should be the
degree of civilization to which they have attained and you are requested
to govern yourself accordingly.
I have discussed this matter with the Honorable, the Governor-General,
who concurs in the opinion above expressed and who will have the
necessary instructions given to the governors of the provinces
organized under the Provincial Government Act. (Internal Revenue
Manual, p. 214.)
The present Secretary of the Interior, in a memorandum furnished a member
of this court, has the following to say on the subject:
As far as names are concerned the classification is indeed unfortunate,
but while no other better classification has as yet been made the
present classification should be allowed to stand . . . I believe the term
carries the same meaning as the expressed in the letter of the Secretary
of the Interior (of June 30, 1906, herein quoted). It is indicative of the
degree of civilization rather than of religious denomination, for the hold
that it is indicative of religious denomination will make the law invalid as
against that Constitutional guaranty of religious freedom.
Another official who was concerned with the status of the non-Christians, was
the Collector of Internal Revenue. The question arose for ruling relatives to
the cedula taxation of the Manobos and the Aetas. Thereupon, the view of the
Secretary of the Interior was requested on the point, who, by return
indorsement, agreed with the interpretation of the Collector of Internal
Revenue. This Construction of the Collector of Internal Revenue can be found
in circular letter No. 188 of the Bureau of Internal Revenue, dated June 11,
1907, reading as follows (Internal Revenue Manual, p. 214):
The internal revenue law exempts "members of non-Christian tribes"
from the payment of cedula taxes. The Collector of Internal Revenue
has interpreted this provision of law to mean not that persons who
profess some form of Christian worship are alone subject to the cedula
tax, and that all other person are exempt; he has interpreted it to mean
that all persons preserving tribal relations with the so-called non-
Christian tribes are exempt from the cedula tax, and that all others,
including Jews, Mohammedans, Confucians, Buddists, etc., are subject
to said tax so long as they live in cities or towns, or in the country in a
civilized condition. In other words, it is not so much a matter of a man's
form of religious worship or profession that decides whether or not he is
subject to the cedula tax; it is more dependent on whether he is living in
a civilized manner or is associated with the mountain tribes, either as a
member thereof or as a recruit. So far, this question has not come up as
to whether a Christian, maintaining his religious belief, but throwing his
lot and living with a non-Christian tribe, would or would not be subject to
the cedula tax. On one occasion a prominent Hebrew of Manila claimed
to this office that he was exempt from the cedula tax, inasmuch as he
was not a Christian. This Office, however, continued to collect cedula
taxes from all the Jews, East Indians, Arabs, Chinamen, etc., residing in
Manila. Quite a large proportion of the cedula taxes paid in this city are
paid by men belonging to the nationalities mentioned. Chinamen, Arabs
and other s are quite widely scattered throughout the Islands, and a
condition similar to that which exist in Manila also exists in most of the
large provincial towns. Cedula taxes are therefore being collected by
this Office in all parts of these Islands on the broad ground that civilized
people are subject to such taxes, and non-civilized people preserving
their tribal relations are not subject thereto.
(Sgd.) JNO. S. HORD,
Collector of Internal Revenue.
On September 17, 1910, the Collector of Internal Revenue addressed circular
letter No. 327, approved by the Secretary of Finance and Justice, to all
provincial treasurers. This letter in part reads:
In view of the many questions that have been raised by provincial
treasurers regarding cedula taxes due from members of non-Christian
tribes when they come in from the hills for the purposes of settling down
and becoming members of the body politic of the Philippine Islands, the
following clarification of the laws governing such questions and digest of
rulings thereunder is hereby published for the information of all
concerned:
Non-Christian inhabitants of the Philippine Islands are so classed, not
by reason of the fact that they do not profess Christianity, but because
of their uncivilized mode of life and low state of development. All
inhabitants of the Philippine Islands classed as members of non-
Christian tribes may be divided into three classes in so far as the cedula
tax law is concerned . . .
Whenever any member of an non-Christian tribe leaves his wild and
uncivilized mode of life, severs whatever tribal relations he may have
had and attaches himself civilized community, belonging a member of
the body politic, he thereby makes himself subject to precisely the same
law that governs the other members of that community and from and
after the date when he so attaches himself to the community the same
cedula and other taxes are due from him as from other members
thereof. If he comes in after the expiration of the delinquency period the
same rule should apply to him as to persons arriving from foreign
countries or reaching the age of eighteen subsequent to the expiration
of such period, and a regular class A, D, F, or H cedula, as the case
may be, should be furnished him without penalty and without requiring
him to pay the tax for former years.
In conclusion, it should be borne in mind that the prime factors in
determining whether or not a man is subject to the regular cedula tax is
not the circumstance that he does or does not profess Christianity, nor
even his maintenance of or failure to maintain tribal relations with some
of the well known wild tribes, but his mode of life, degree of
advancement in civilization and connection or lack of connection with
some civilized community. For this reason so called "Remontados" and
"Montescos" will be classed by this office as members of non-Christian
tribes in so far as the application of the Internal Revenue Law is
concerned, since, even though they belong to no well recognized tribe,
their mode of life, degree of advancement and so forth are practically
the same as those of the Igorrots and members of other recognized
non-Christina tribes.
Very respectfully,
(Sgd.) ELLIS CROMWELL,
Collector of Internal Revenue,
Approved:
(Sgd.) GREGORIO ARANETA,
Secretary of Finance and Justice.
The two circular above quoted have since been repealed by Bureau of
Internal Revenue Regulations No. 1, promulgated by Venancio Concepcion,
Acting Collector of Internal Revenue, and approved on April 16, 1915, by
Honorable Victorino Mapa, Secretary of Finance and Justice. Section 30 of
the regulations is practically a transcript of Circular Letter No. 327.
The subject has come before the Attorney-General for consideration. The
Chief of Constabulary request the opinion of the Attorney-General as to the
status of a non-Christian who has been baptized by a minister of the Gospel.
The precise questions were these: "Does he remain non-Christian or is he
entitled to the privileges of a Christian? By purchasing intoxicating liquors,
does he commit an infraction of the law and does the person selling same lay
himself liable under the provision of Act No. 1639?" The opinion of Attorney-
General Avancea, after quoting the same authorities hereinbefore set out,
concludes:
In conformity with the above quoted constructions, it is probable that is
probable that the person in question remains a non-Christian, so that, in
purchasing intoxicating liquors both he and the person selling the same
make themselves liable to prosecution under the provisions of Act No.
1639. At least, I advise you that these should be the constructions place
upon the law until a court shall hold otherwise.
Solicitor-General Paredes in his brief in this case says:
With respect to the meaning which the phrase non-Christian inhabitants
has in the provisions of the Administrative code which we are studying,
we submit that said phrase does not have its natural meaning which
would include all non-Christian inhabitants of the Islands, whether
Filipino or strangers, civilized or uncivilized, but simply refers to those
uncivilized members of the non-Christian tribes of the Philippines who,
living without home or fixed residence, roam in the mountains, beyond
the reach of law and order . . .
The Philippine Commission in denominating in its laws that portion of
the inhabitants of the Philippines which live in tribes as non-Christian
tribes, as distinguished from the common Filipinos which carry on a
social and civilized life, did not intended to establish a distinction based
on the religious beliefs of the individual, but, without dwelling on the
difficulties which later would be occasioned by the phrase, adopted the
expression which the Spanish legislation employed to designate the
uncivilized portion of the inhabitants of the Philippines.
The phrase 'non-Christian inhabitants' used in the provisions of articles
2077 and 2741 of Act No. 2657 (articles 2145 and 2759) should be
understood as equivalent to members of uncivilized tribes of the
Philippines, not only because this is the evident intention of the law, but
because to give it its lateral meaning would make the law null and
unconstitutional as making distinctions base the religion of the
individual.
The Official Census of 1903, in the portion written by no less an authority than
De. David P. Barrows, then "Chief of the Bureau of non-Christian Tribes,"
divides the population in the Christian or Civilized Tribes, and non-Christian or
Wild Tribes. (Census of the Philippine Islands [1903], vol. 1, pp. 411 et seq).
The present Director of the Census, Hon. Ignacio Villamor, writes that the
classification likely to be used in the Census now being taken is: "Filipinos and
Primitive Filipinos." In a Pronouncing Gazetteer and Geographical Dictionary
of the Philippine Islands, prepared in the Bureau of Insular Affairs, War
Department, a sub-division under the title non-Christian tribes is, "Physical
and Political Characteristics of the non-Christian Tribes," which sufficiently
shows that the terms refers to culture and not to religion.
In resume, therefore, the Legislature and the Judiciary, inferentially, and
different executive officials, specifically, join in the proposition that the term
"non-Christian" refers, not to religious belief, but, in a way , to geographical
area, and, more directly, to natives of the Philippine Islands of a law grade of
civilization, usually living in tribal relationship apart from settled communities.
E. THE MANGUIANES.
The so-called non-Christians are in various state approaching civilization. The
Philippine Census of 1903 divided them into four classes. Of the third class,
are the Manguianes (or Mangyans) of Mindoro.
Of the derivation of the name "Manguian" Dr. T. H. Pardo de Tavera in
his Etimilogia de los nombres de Rozas de Filipinas, says:
In Tagalog, Bicol, and Visaya, Manguian signifies "savage,"
"mountainer," "pagan," "negro." It may be that the use of this word is
applicable to a great number of Filipinos, but nevertheless it has been
applied only to certain inhabitants of Mindoro. Even in primitive times
without doubt this name was given to those of that island who bear it to-
day, but its employed in three Filipino languages shows that the
radical ngian had in all these languages a sense to-day forgotten. In
Pampango this ending still exists and signifies "ancient," from which we
can deduce that the name was applied to men considered to be the
ancient inhabitants, and that these men were pushed back into the
interior by the modern invaders, in whose language they were called the
"ancients."
The Manguianes are very low in culture. They have considerable Negrito
blood and have not advanced beyond the Negritos in civilization. They are a
peaceful, timid, primitive, semi-nomadic people. They number approximately
15,000. The manguianes have shown no desire for community life, and, as
indicated in the preamble to Act No. 547, have not progressed sufficiently in
civilization to make it practicable to bring them under any form of municipal
government. (See Census of the Philippine (Islands [1903], vol. I, pp. 22, 23,
460.)
III. COMPARATIVE THE AMERICAN INDIANS.
Reference was made in the Presidents' instructions to the Commission to the
policy adopted by the United States for the Indian Tribes. The methods
followed by the Government of the Philippines Islands in its dealings with the
so-called non-Christian people is said, on argument, to be practically identical
with that followed by the United States Government in its dealings with the
Indian tribes. Valuable lessons, it is insisted, can be derived by an
investigation of the American-Indian policy.
From the beginning of the United States, and even before, the Indians have
been treated as "in a state of pupilage." The recognized relation between the
Government of the United States and the Indians may be described as that of
guardian and ward. It is for the Congress to determine when and how the
guardianship shall be terminated. The Indians are always subject to the
plenary authority of the United States.
Chief Justice Marshall in his opinion in Worcester vs. Georgia, hereinbefore
mentioned, tells how the Congress passed an Act in 1819 "for promoting
those humane designs of civilizing the neighboring Indians." After quoting the
Act, the opinion goes on "This act avowedly contemplates the preservation
of the Indian nations as an object sought by the United States, and proposes
to effect this object by civilizing and converting them from hunters into
agriculturists."
A leading case which discusses the status of the Indians is that of the United
States vs. Kagama ([1886], 118 U.S., 375). Reference is herein made to the
clause of the United States Constitution which gives Congress "power to
regulate commerce with foreign nations, and among the several States, and
with the Indian tribes." The court then proceeds to indicate a brief history of
the position of the Indians in the United States (a more extended account of
which can be found in Marshall's opinion in Worcester vs. Georgia, supra), as
follows:
The relation of the Indian tribes living within the borders of the United
States, both before and since the Revolution, to the people of the United
States, has always been an anomalous one and of a complex character.
Following the policy of the European Governments in the discovery of
American towards the Indians who were found here, the colonies before
the Revolution and the States and the United States since, have
recognized in the Indians a possessory right to the soil over which they
roamed and hunted and established occasional villages. But they
asserted an ultimate title in the land itself, by which the Indian tribes
were forbidden to sell or transfer it to other nations or peoples without
the consent of this paramount authority. When a tribe wished to dispose
of its lands, or any part of it, or the State or the United States wished to
purchase it, a treaty with the tribe was the only mode in which this could
be done. The United States recognized no right in private persons, or in
other nations, to make such a purchase by treaty or otherwise. With the
Indians themselves these relation are equally difficult to define. They
were, and always have been, regarded as having a semi-independent
position when they preserved their tribal relations; not as States, not as
nation not a possessed of the fall attributes of sovereignty, but as a
separate people, with the power of regulating their internal and social
relations, and thus far not brought under the laws of the Union or of the
State within whose limits they resided.
The opinion then continues:
It seems to us that this (effect of the law) is within the competency of
Congress. These Indian tribes are the wards of the nation. The are
communities dependent on the United States. dependent largely for
their daily food. Dependent for their political rights. They owe no
allegiance to the States, and receive from the no protection. Because of
the local ill feeling, the people of the States where they are found are
often their deadliest enemies. From their very weakness and
helplessness, so largely due to the course of dealing of the Federal
Government with them and the treaties in which it has been promised,
there arise the duty of protection, and with it the power. This has always
been recognized by the Executive and by Congress, and by this court,
whenever the question has arisen . . . The power of the General
Government over these remnants of race once powerful, now weak and
diminished in numbers, is necessary to their protection, as well as to the
safety of those among whom they dwell. it must exist in that
government, because it never has existed anywhere else, because the
theater of its exercise is within the geographical limits of the United
States, because it has never been denied, and because it alone can
enforce its laws on all the tribes.
In the later case of United States vs. Sandoval ([1913], 231 U.S., 28) the
question to be considered was whether the status of the Pueblo Indians and
their lands was such that Congress could prohibit the introduction of
intoxicating liquor into those lands notwithstanding the admission of New
Mexico to statehood. The court looked to the reports of the different
superintendent charged with guarding their interests and founds that these
Indians are dependent upon the fostering care and protection of the
government "like reservation Indians in general." Continuing, the court said
"that during the Spanish dominion, the Indians of the pueblos were treated as
wards requiring special protection, where subjected to restraints and official
supervisions in the alienation of their property." And finally, we not the
following: "Not only does the Constitution expressly authorize Congress to
regulate commerce with the Indians tribes, but long-continued legislative and
executive usage and an unbroken current of judicial decisions have attributed
to the United States as a superior and civilized nation the power and the duty
of exercising a fostering care and protection over all dependent Indian
communities within its borders, whether within its original territory or territory
subsequently acquired, and whether within or without the limits of a state."
With reference to laws affecting the Indians, it has been held that it is not
within the power of the courts to overrule the judgment of Congress. For very
good reason, the subject has always been deemed political in nature, not
subject to the jurisdiction of the judicial department of the government. (Matter
of Heff [1905], 197 U.S., 488; U.S.vs. Celestine [1909], 215 U.S., 278;
U.S. vs. Sandoval, supra; Worcester vs. Georgia, supra; U.S. vs. Rogers
[1846], 4 How., 567; the Cherokee Tobacco [1871], 11 Wall, 616;
Roff vs. Burney [1897], 168 U.S., 218; Thomasvs. Gay [1898], 169 U.S.., 264;
Lone Wolf vs. Hitchcock[1903], 187 U.S., 553; Wallace vs. Adams [1907], 204
U.S., 415; Conley vs. Bollinger [1910], 216 U.S., 84; Tiger vs. Western Invest.
Co. [1911], 221 U.S., 286; U.S. vs. Lane [1913], 232 U.S.., 598;
Cyr vs. Walker (1911], 29 Okla, 281; 35 L.R.A. [N. S.], 795.) Whenever,
therefore, the United States sets apart any public land as an Indian
reservation, it has full authority to pass such laws and authorize such
measures as may be necessary to give to the Indians thereon full protection in
their persons and property. (U.S. vs. Thomas [1894], 151 U.S., 577.)
All this borne out by long-continued legislative and executive usage, and an
unbroken line of judicial decisions.
The only case which is even remotely in point and which, if followed literally,
might result in the issuance of habeas corpus, is that of United
States vs. Crook ([1879], Fed. Cas. No. 14891). This was a hearing upon
return to a writ of habeas corpus issued against Brigadier General George
Crook at the relation of Standing Bear and other Indians, formerly belonging to
the Ponca Tribe of Indians. The petition alleged in substance that the relators
are Indians who have formerly belonged to the Ponca tribe of Indians, now
located in the Indian Territory; that they had some time previously withdrawn
from the tribe, and completely severed their tribal relations therewith, and had
adopted the general habits of the whites, and were then endeavoring to
maintain themselves by their own exertions, and without aid or assistance
from the general government; that whilst they were thus engaged, and without
being guilty of violating any of the laws of the United States, they were
arrested and restrained of their liberty by order of the respondent, George
Crook. The substance of the return to the writ was that the relators are
individual members of, and connected with, the Ponca tribe of Indians; that
they had fled or escaped form a reservation situated some place within the
limits of the Indian Territory had departed therefrom without permission
from the Government; and, at the request of the Secretary of the Interior, the
General of the Army had issued an order which required the respondent to
arrest and return the relators to their tribe in the Indian Territory, and that,
pursuant to the said order, he had caused the relators to be arrested on the
Omaha Indian Territory.
The first question was whether an Indian can test the validity of an illegal
imprisonment by habeas corpus. The second question, of much greater
importance, related to the right of the Government to arrest and hold the
relators for a time, for the purpose of being returned to the Indian Territory
from which it was alleged the Indian escaped. In discussing this question, the
court reviewed the policy the Government had adopted in its dealing with the
friendly tribe of Poncase. Then, continuing, the court said: "Laws passed for
the government of the Indian country, and for the purpose of regulating trade
and intercourse with the Indian tribes, confer upon certain officers of the
Government almost unlimited power over the persons who go upon the
reservations without lawful authority . . . Whether such an extensive
discretionary power is wisely vested in the commissioner of Indian affairs or
not , need not be questioned. It is enough to know that the power rightfully
exists, and, where existing, the exercise of the power must be upheld." The
decision concluded as follows:
The reasoning advanced in support of my views, leads me to conclude:
1. that an Indian is a 'person' within the meaning of the laws of the
United States, and has, therefore, the right to sue out a writ of habeas
corpus in a federal court, or before a federal judge, in all cases where
he may be confined or in custody under color of authority of the United
States or where he is restrained of liberty in violation of the constitution
or laws of the United States.
2. That General George Crook, the respondent, being commander of
the military department of the Platte, has the custody of the relators,
under color of authority of the United States, and in violation of the laws
therefore.
3. That n rightful authority exists for removing by force any of the
relators to the Indian Territory, as the respondent has been directed to
do.
4. that the Indians possess the inherent right of expatriation, as well as
the more fortunate white race, and have the inalienable right to "life,
liberty, and the pursuit of happiness," so long as they obey the laws and
do not trespass on forbidden ground. And,
5. Being restrained of liberty under color of authority of the United
States, and in violation of the laws thereof, the relators must be
discharged from custody, and it is so ordered.
As far as the first point is concerned, the decision just quoted could be used
as authority to determine that Rubi, the Manguian petitioner, a Filipino, and a
citizen of the Philippine Islands, is a "person" within the meaning of
theHabeas Corpus Act, and as such, entitled to sue out a writ in the Philippine
courts. (See also In re Race Horse [1895], 70 Fed., 598.) We so decide.
As to the second point the facts in the Standing Bear case an the Rubi case
are not exactly identical. But even admitting similarity of facts, yet it is known
to all that Indian reservations do exist in the United States, that Indians have
been taken from different parts of the country and placed on these
reservation, without any previous consultation as to their own wishes, and
that, when once so located, they have been made to remain on the
reservation for their own good and for the general good of the country. If any
lesson can be drawn form the Indian policy of the United States, it is that the
determination of this policy is for the legislative and executive branches of the
government and that when once so decided upon, the courts should not
interfere to upset a carefully planned governmental system. Perhaps, just as
may forceful reasons exists for the segregation as existed for the segregation
of the different Indian tribes in the United States.
IV. CONSTITUTIONAL QUESTIONS.
A. DELEGATION OF LEGISLATIVE POWER.
The first constitutional objection which confronts us is that the Legislature
could not delegate this power to provincial authorities. In so attempting, it is
contended, the Philippine Legislature has abdicated its authority and avoided
its full responsibility.
That the maxim of Constitutional Law forbidding the delegation of legislative
power should be zealously protected, we agree. An understanding of the rule
will, however, disclose that it has not bee violated in his instance.
The rule has nowhere been better stated than in the early Ohio case decided
by Judge Ranney, and since followed in a multitude of case, namely: "The
true distinction therefore is between the delegation of power to make the law,
which necessarily involves a discretion as to what it shall be, and conferring
an authority or discretion as to its execution, to be exercised under and in
pursuance of the law. The first cannot be done; to the later no valid objection
can be made." (Cincinnati, W. & Z. R. Co. vs. Comm'rs. Clinton County
[1852], 1 Ohio S.t, 88.) Discretion, as held by Chief Justice Marshall in
Wayman vs. Southard ([1825], 10 Wheat., 1) may be committed by the
Legislature to an executive department or official. The Legislature may make
decisions of executive departments of subordinate official thereof, to whom t
has committed the execution of certain acts, final on questions of fact.
(U.S. vs. Kinkead [1918], 248 Fed., 141.) The growing tendency in the
decision is to give prominence to the "necessity" of the case.
Is not all this exactly what the Legislature has attempted to accomplish by the
enactment of section 21454 of the Administrative Code? Has not the
Legislature merely conferred upon the provincial governor, with the approval
of the provincial board and the Department Head, discretionary authority as to
the execution of the law? Is not this "necessary"?
The case of West vs. Hitchock, ([1906], 205 U.S., 80) was a petition for
mandamus to require the Secretary of the Interior to approve the selection
and taking of one hundred and sixty acres by the relator out of the lands
ceded to the United States by the Wichita and affiliated bands of Indians.
Section 463 of the United States Revised Statutes provided: "The
Commissioner of Indian Affairs shall, under the direction of the Secretary of
the Interior, and agreeably to such regulations as the President may
prescribe, have the management of all Indian affairs, and of all matters arising
out to the Indian relations." Justice Holmes said: "We should hesitate a good
deal, especially in view of the long established practice of the Department,
before saying that this language was not broad enough to warrant a regulation
obviously made for the welfare of the rather helpless people concerned. The
power of Congress is not doubted. The Indians have been treated as wards of
the nation. Some such supervision was necessary, and has been exercised.
In the absence of special provisions naturally it would be exercised by the
Indian Department." (See also as corroborative authority, it any is needed,
Union Bridge Co. vs. U.S. [1907], 204 U.S.., 364, reviewing the previous
decisions of the United States Supreme Court: U.S. vs. Lane [1914], 232 U.S.,
598.)
There is another aspect of the question, which once accepted, is decisive. An
exception to the general rule. sanctioned by immemorial practice, permits the
central legislative body to delegate legislative powers to local authorities. The
Philippine Legislature has here conferred authority upon the Province of
Mindoro, to be exercised by the provincial governor and the provincial board.
Who but the provincial governor and the provincial board, as the official
representatives of the province, are better qualified to judge "when such as
course is deemed necessary in the interest of law and order?" As officials
charged with the administration of the province and the protection of its
inhabitants, who but they are better fitted to select sites which have the
conditions most favorable for improving the people who have the misfortune of
being in a backward state?
Section 2145 of the Administrative Code of 1917 is not an unlawful delegation
of legislative power by the Philippine Legislature to provincial official and a
department head.
B. RELIGIOUS DISCRIMINATION
The attorney de officio, for petitioners, in a truly remarkable brief, submitted on
behalf of his unknown clients, says that "The statute is perfectly clear and
unambiguous. In limpid English, and in words as plain and unequivocal as
language can express, it provides for the segregation of 'non-Christians' and
none other." The inevitable result, them, is that the law "constitutes an attempt
by the Legislature to discriminate between individuals because of their
religious beliefs, and is, consequently, unconstitutional."
Counsel's premise once being conceded, his arguments is answerable the
Legislature must be understood to mean what it has plainly expressed; judicial
construction is then excluded; religious equality is demanded by the Organic
Law; the statute has violated this constitutional guaranty, and Q. E. D. is
invalid. But, as hereinbefore stated, we do not feel free to discard the long
continued meaning given to a common expression, especially as classification
of inhabitants according to religious belief leads the court to what it should
avoid, the nullification of legislative action. We hold that the term "non-
Christian" refers to natives of the Philippines Islands of a low grade of
civilization, and that section 2145 of the Administrative Code of 1917, does
not discriminate between individuals an account of religious differences.
C. LIBERTY; DUE PROCESS OF LAW; EQUAL PROTECTION OF THE
LAWS.
The third constitutional argument is grounded on those portions of the
President's instructions of to the Commission, the Philippine Bill, and the
Jones Law, providing "That no law shall be enacted in said Islands which shall
deprive any person of life, liberty, or property without due process of law, or
deny to any person therein the equal protection of the laws." This
constitutional limitation is derived from the Fourteenth Amendment to the
United States Constitution and these provisions, it has been said "are
universal in their application, to all persons within the territorial jurisdiction,
without regard to any differences of race, of color, or of nationality." (Yick
Wo vs.Hopkins [1886], 118 U.S., 356.) The protection afforded the individual
is then as much for the non-Christian as for the Christian.
The conception of civil liberty has been variously expressed thus:
Every man may claim the fullest liberty to exercise his faculties,
compatible with the possession of like liberty by every other. (Spencer,
Social Statistics, p. 94.)
Liberty is the creature of law, essentially different from that authorized
licentiousness that trespasses on right. That authorized licentiousness
that trespasses on right. It is a legal and a refined idea, the offspring of
high civilization, which the savage never understood, and never can
understand. Liberty exists in proportion to wholesome restraint; the
more restraint on others to keep off from us, the more liberty we have . .
. that man is free who is protected from injury. (II Webster's Works, p.
393.)
Liberty consists in the ability to do what one caught to desire and in not
being forced to do what one ought not do desire. (Montesque, spirit of
the Laws.)
Even liberty itself, the greatest of all rights, is no unrestricted license to
ac according to one's own will. It is only freedom from restraint under
conditions essential to the equal enjoyment of the same right by others.
(Field, J., in Crowley vs. Christensen [1890], 137 U.S., 86.)
Liberty does not import "an absolute right in each person to be, at all
times and in all circumstances, wholly freed from restraint. There are
manifold restraints to which every person is necessarily subject for the
common good. On any other basis, organized society could not exist
with safety to its members. Society based on the rule that each one is a
law unto himself would soon be confronted with disorder and anarchy.
Real liberty for all could not exist under the operation of a principle
which recognizes the right of each individual person to use his own,
whether in respect of his person or his property, regardless of the injury
that may be done to others . . . There is, of course, a sphere with which
the individual may asserts the supremacy of his own will, and rightfully
dispute the authority of any human government especially of any free
government existing under a written Constitution to interfere with the
exercise of that will. But it is equally true that in very well-ordered
society charged with the duty of conserving the safety of its members,
the rights of the individual in respect of his liberty may at times, under
the pressure of great dangers, be subjected to such restraint to be
enforced by reasonable regulations, as the safety of the general public
may demand." (Harlan, J., In Jacobson vs. Massachusetts [1905] 197
U.S., 11.)
Liberty is freedom to do right and never wrong; it is ever guided by
reason and the upright and honorable conscience of the individual.
(Apolinario Mabini.)
Civil Liberty may be said to mean that measure of freedom which may be
enjoyed in a civilized community, consistently with the peaceful enjoyment of
like freedom in others. The right to Liberty guaranteed by the Constitution
includes the right to exist and the right to be free from arbitrary personal
restraint or servitude. The term cannot be dwarfed into mere freedom from
physical restraint of the person of the citizen, but is deemed to embrace the
right of man to enjoy the faculties with which he has been endowed by this
Creator, subject only to such restraints as are necessary for the common
welfare. As enunciated in a long array of authorities including epoch-making
decisions of the United States Supreme Court, Liberty includes the right of the
citizens to be free to use his faculties in all lawful ways; to live an work where
he will; to earn his livelihood by an lawful calling; to pursue any avocations, an
for that purpose. to enter into all contracts which may be proper, necessary,
and essential to his carrying out these purposes to a successful conclusion.
The chief elements of the guaranty are the right to contract, the right to
choose one's employment, the right to labor, and the right of locomotion.
In general, it may be said that Liberty means the opportunity to do those
things which are ordinarily done by free men. (There can be noted
Cummings vs. Missouri [1866], 4 Wall, 277; Wilkinson vs. Leland [1829], 2
Pet., 627; Williams vs. Fears [1900], 179 U.S., 274; Allgeyer vs. Louisiana
[1896], 165, U.S., 578; State vs. Kreutzberg [1902], 114 Wis., 530. See 6
R.C.L., 258, 261.)
One thought which runs through all these different conceptions of Liberty is
plainly apparent. It is this: "Liberty" as understood in democracies, is not
license; it is "Liberty regulated by law." Implied in the term is restraint by law
for the good of the individual and for the greater good of the peace and order
of society and the general well-being. No man can do exactly as he pleases.
Every man must renounce unbridled license. The right of the individual is
necessarily subject to reasonable restraint by general law for the common
good. Whenever and wherever the natural rights of citizen would, if exercises
without restraint, deprive other citizens of rights which are also and equally
natural, such assumed rights must yield to the regulation of law. The Liberty of
the citizens may be restrained in the interest of the public health, or of the
public order and safety, or otherwise within the proper scope of the police
power. (See Hall vs. Geiger-Jones [1916], 242 U.S., 539; Hardie-Tynes
Manufacturing Co. vs.Cruz [1914], 189 Al., 66.)
None of the rights of the citizen can be taken away except by due process of
law. Daniel Webster, in the course of the argument in the Dartmouth College
Case before the United States Supreme Court, since a classic in forensic
literature, said that the meaning of "due process of law" is, that "every citizen
shall hold his life, liberty, property, an immunities under the protection of the
general rules which govern society." To constitute "due process of law," as
has been often held, a judicial proceeding is not always necessary. In some
instances, even a hearing and notice are not requisite a rule which is
especially true where much must be left to the discretion of the administrative
officers in applying a law to particular cases. (See McGehee, Due Process of
Law, p. 371.) Neither is due process a stationary and blind sentinel of liberty.
"Any legal proceeding enforced by public authority, whether sanctioned by
age and customs, or newly devised in the discretion of the legislative power,
in furtherance of the public good, which regards and preserves these
principles of liberty and justice, must be held to be due process of law."
(Hurtado vs. California [1883], 110, U.S., 516.) "Due process of law" means
simply . . . "first, that there shall be a law prescribed in harmony with the
general powers of the legislative department of the Government; second, that
this law shall be reasonable in its operation; third, that it shall be enforced
according to the regular methods of procedure prescribed; and fourth, that it
shall be applicable alike to all the citizens of the state or to all of a class."
(U.S. vs. Ling Su Fan [1908], 10 Phil., 104, affirmed on appeal to the United
States Supreme Court. 1) "What is due process of law depends on
circumstances. It varies with the subject-matter and necessities of the
situation." (Moyer vs. Peablody [1909], 212 U. S., 82.)
The pledge that no person shall be denied the equal protection of the laws is
not infringed by a statute which is applicable to all of a class. The
classification must have a reasonable basis and cannot be purely arbitrary in
nature.
We break off with the foregoing statement, leaving the logical deductions to be
made later on.
D. SLAVERY AND INVOLUNTARY SERVITUDE.
The fourth constitutional contention of petitioner relates to the Thirteen
Amendment to the United States Constitution particularly as found in those
portions of Philippine Organic Law providing "That slavery shall not exist in
said Islands; nor shall involuntary servitude exist except as a punishment for
crime whereof the party shall have been duly convicted." It is quite possible
that the Thirteenth Amendment, since reaching to "any place subject to" the
"jurisdiction" of the United States, has force in the Philippine. However this
may be, the Philippine Legislature has, by adoption, with necessary
modifications, of sections 268 to 271 inclusive of the United States Criminal
Code, prescribed the punishment for these crimes. Slavery and involuntary
servitude, together wit their corollary, peonage, all denote "a condition of
enforced, compulsory service of one to another." (Hodges vs. U.S. [1906], 203
U.S., 1.) The term of broadest scope is possibly involuntary servitude. It has
been applied to any servitude in fact involuntary, no matter under what form
such servitude may have been disguised. (Bailey vs. Alabama [1910], 219
U.S., 219.)
So much for an analysis of those constitutional provisions on which petitioners
rely for their freedom. Next must come a description of the police power under
which the State must act if section 2145 is to be held valid.
E. THE POLICE POWER.
Not attempting to phrase a definition of police power, all that it is necessary to
note at this moment is the farreaching scope of the power, that it has become
almost possible to limit its weep, and that among its purposes is the power to
prescribe regulations to promote the health, peace, morals, education, and
good order of the people, and to legislate so as to increase the industries of
the State, develop its resources and add to is wealth and prosperity. (See
Barbier vs. Connolly [1884], 113 U.S., 27.) What we are not interested in is
the right of the government to restrain liberty by the exercise of the police
power.
"The police power of the State," one court has said, . . . "is a power
coextensive with self-protection, and is not inaptly termed the 'law of
overruling necessity.' It may be said to be that inherent and plenary power in
the State which enables it to prohibit all things hurtful to the comfort, safety
and welfare of society." (Lake View vs. Rose Hill Cemetery Co. [1873], 70 Ill.,
191.) Carried onward by the current of legislation, the judiciary rarely attempt
to dam the on rushing power of legislative discretion, provided the purposes of
the law do not go beyond the great principles that mean security for the public
welfare or do not arbitrarily interfere with the right of the individual.
The Government of the Philippine Islands has both on reason and authority
the right to exercise the sovereign police power in the promotion of the
general welfare and the public interest. "There can be not doubt that the
exercise of the police power of the Philippine Government belongs to the
Legislature and that this power is limited only by the Acts of Congress and
those fundamental principles which lie at the foundation of all republican forms
of government." (Churchill and Tait vs. Rafferty [1915], 32 Phil., 580;
U.S. vs. Pompeya [1915], 31 Phil., 245.)
With the foregoing approximation of the applicable basic principles before us,
before finally deciding whether any constitutional provision has indeed been
violated by section 2145 of the Administrative Code, we should endeavor to
ascertain the intention of the Legislature in enacting this section. If legally
possible, such legislative intention should be effectuated.
F. LEGISLATIVE INTENT.
The preamble of the resolution of the provincial board of Mindoro which set
apart the Tigbao reservation, it will be remembered, assigned as reasons fort
the action, the following: (1) The failure of former attempts for the
advancement of the non-Christian people of the province; and (2) the only
successfully method for educating the Manguianes was to oblige them to live
in a permanent settlement. The Solicitor-General adds the following; (3) The
protection of the Manguianes; (4) the protection of the public forests in which
they roam; (5) the necessity of introducing civilized customs among the
Manguianes.
The present Secretary of the Interior says of the Tigbao reservation and of the
motives for its selection, the following:
To inform himself of the conditions of those Manguianes who were
taken together to Tigbao, the Secretary of the Interior on June 10 to 13,
1918, made a trip to the place. There he found that the site selected is a
good one; that creditable progress has been made in the clearing of
forests, construction of buildings, etc., that there appears to be
encouraging reaction by the boys to the work of the school the
requirements of which they appear to meet with enthusiastic interest
after the first weeks which are necessarily a somewhat trying period for
children wholly unaccustomed to orderly behaviour and habit of life. He
also gathered the impression that the results obtained during the period
of less than one year since the beginning of the institution definitely
justify its continuance and development.
Of course, there were many who were protesting against that
segregation. Such was naturally to be expected. But the Secretary of
the Interior, upon his return to Manila, made the following statement to
the press:
"It is not deemed wise to abandon the present policy over those
who prefer to live a nomadic life and evade the influence of
civilization. The Government will follow its policy to organize them
into political communities and to educate their children with the
object of making them useful citizens of this country. To permit
them to live a wayfaring life will ultimately result in a burden to the
state and on account of their ignorance, they will commit crimes
and make depredation, or if not they will be subject to involuntary
servitude by those who may want to abuse them."
The Secretary of the Interior, who is the official charged with the supervision
of all the non-Christian people, has adopted as the polaris of his
administration "the advancement of the non-Christian elements of our
population to equality and unification with the highly civilized Christian
inhabitants." This is carried on by the adoption of the following measures:
(a) Pursuance of the closer settlement policy whereby people of
seminomadic race are induced to leave their wild habitat and settle in
organized communities.
(b) The extension of the public school system and the system of public
health throughout the regions inhabited by the non-Christian people.
(c) The extention of public works throughout the Mohammedan regions
to facilitate their development and the extention of government control.
(d) Construction of roads and trials between one place and another
among non-Christians, to promote social and commercial intercourse
and maintain amicable relations among them and with the Christian
people.
(e) Pursuance of the development of natural economic resources,
especially agriculture.
( f ) The encouragement of immigration into, and of the investment of
private capital in, the fertile regions of Mindanao and Sulu.
The Secretary adds:
To attain the end desired, work of a civilizing influence have been
continued among the non-Christian people. These people are being
taught and guided to improve their living conditions in order that they
may fully appreciate the benefits of civilization. Those of them who are
still given to nomadic habits are being persuaded to abandon their wild
habitat and settle in organized settlements. They are being made to
understand that it is the purpose of the Government to organize them
politically into fixed and per manent communities, thus bringing them
under the control of the Government, to aid them to live and work,
protect them from involuntary servitude and abuse, educate their
children, and show them the advantages of leading a civilized life with
their civilized brothers. In short, they are being impressed with the
purposes and objectives of the Government of leading them to
economic, social, and political equality, and unification with the more
highly civilized inhabitants of the country. (See Report of the
Department for 1917.)
The fundamental objective of governmental policy is to establish friendly
relations with the so-called non-Christians, and to promote their educational,
agricultural, industrial, and economic development and advancement in
civilization. (Note Acts Nos. 2208, 2404, 2444.) Act No. 2674 in reestablishing
the Bureau of non-Christian Tribes, defines the aim of the Government
towards the non-Christian people in the following unequivocal terms:
It shall be the duty of the Bureau of non-Christian Tribes to continue the
work for advancement and liberty in favor of the region inhabited by
non-Christian Filipinos and foster by all adequate means and in a
systematical, rapid, and complete manner the moral, material,
economic, social, and political development of those regions, always
having in view the aim of rendering permanent the mutual intelligence
between, and complete fusion of, all the Christian and non-Christian
elements populating the provinces of the Archipelago. (Sec. 3.)
May the Manguianes not be considered, as are the Indians in the United
States, proper wards of the Filipino people? By the fostering care of a wise
Government, may not these unfortunates advance in the "habits and arts of
civilization?" Would it be advisable for the courts to intrude upon a plan,
carefully formulated, and apparently working out for the ultimate good of these
people?
In so far as the Manguianes themselves are concerned, the purpose of the
Government is evident. Here, we have on the Island of Mindoro, the
Manguianes, leading a nomadic life, making depredations on their more
fortunate neighbors, uneducated in the ways of civilization, and doing nothing
for the advancement of the Philippine Islands. What the Government wished
to do by bringing than into a reservation was to gather together the children
for educational purposes, and to improve the health and morals was in fine,
to begin the process of civilization. this method was termed in Spanish times,
"bringing under the bells." The same idea adapted to the existing situation,
has been followed with reference to the Manguianes and other peoples of the
same class, because it required, if they are to be improved, that they be
gathered together. On these few reservations there live under restraint in
some cases, and in other instances voluntarily, a few thousands of the
uncivilized people. Segregation really constitutes protection for the
manguianes.
Theoretically, one may assert that all men are created free and equal.
Practically, we know that the axiom is not precisely accurate. The
Manguianes, for instance, are not free, as civilized men are free, and they are
not the equals of their more fortunate brothers. True, indeed, they are citizens,
with many but not all the rights which citizenship implies. And true, indeed,
they are Filipinos. But just as surely, the Manguianes are citizens of a low
degree of intelligence, and Filipinos who are a drag upon the progress of the
State.
In so far as the relation of the Manguianes to the State is concerned, the
purposes of the Legislature in enacting the law, and of the executive branch in
enforcing it, are again plain. Settlers in Mindoro must have their crops and
persons protected from predatory men, or they will leave the country. It is no
argument to say that such crimes are punished by the Penal Code, because
these penalties are imposed after commission of the offense and not before. If
immigrants are to be encouraged to develop the resources of the great
Islands of Mindoro, and its, as yet, unproductive regions, the Government
must be in a position to guarantee peace and order.
Waste lands do not produce wealth. Waste people do not advance the interest
of the State. Illiteracy and thriftlessness are not conducive to homogeneity.
The State to protect itself from destruction must prod on the laggard and the
sluggard. The great law of overwhelming necessity is all convincing.
To quote again from the instructive memorandum of the Secretary of the
Interior:
Living a nomadic and a wayfaring life and evading the influence of
civilization, they (the manguianes) are engaged in the works of
destruction burning and destroying the forests and making illegal
caigins thereon. Not bringing any benefit to the State but instead
injuring and damaging its interests, what will ultimately become of these
people with the sort of liberty they wish to preserve and for which they
are now fighting in court? They will ultimately become a heavy burden to
the State and on account of their ignorance they will commit crimes and
make depredations, or if not they will be subjected to involuntary
servitude by those who may want to abuse them.
There is no doubt in my mind that this people a right conception of
liberty and does not practice liberty in a rightful way. They understand
liberty as the right to do anything they will going from one place to
another in the mountains, burning and destroying forests and making
illegal caigins thereon.
Not knowing what true liberty is and not practising the same rightfully,
how can they allege that they are being deprived thereof without due
process of law?
xxx xxx xxx
But does the Constitutional guaranty that 'no person shall be deprived of
his liberty without due process of law' apply to a class of persons who
do not have a correct idea of what liberty is and do not practise liberty in
a rightful way?
To say that it does will mean to sanction and defend an erroneous idea
of such class of persons as to what liberty is. It will mean, in the case at
bar, that the Government should not adopt any measures looking to the
welfare and advancement of the class of persons in question. It will
mean that this people should be let along in the mountains and in a
permanent state of savagery without even the remotest hope of coming
to understand liberty in its true and noble sense.
In dealing with the backward population, like the Manguianes, the
Government has been placed in the alternative of either letting them
alone or guiding them in the path of civilization. The latter measure was
adopted as the one more in accord with humanity and with national
conscience.
xxx xxx xxx
The national legislation on the subject of non-Christian people has
tended more and more towards the education and civilization of such
people and fitting them to be citizens. The progress of those people
under the tutelage of the Government is indeed encouraging and the
signs of the times point to a day which is not far distant when they will
become useful citizens. In the light of what has already been
accomplished which has been winning the gratitude of most of the
backward people, shall we give up the noble work simply because a
certain element, believing that their personal interests would be injured
by such a measure has come forward and challenged the authority of
the Government to lead this people in the pat of civilization? Shall we,
after expending sweat, treasure, and even blood only to redeem this
people from the claws of ignorance and superstition, now willingly retire
because there has been erroneously invoked in their favor that
Constitutional guaranty that no person shall be deprived of his liberty
without due process of law? To allow them to successfully invoke that
Constitutional guaranty at this time will leave the Government without
recourse to pursue the works of civilizing them and making them useful
citizens. They will thus left in a permanent state of savagery and
become a vulnerable point to attack by those who doubt, nay challenge,
the ability of the nation to deal with our backward brothers.
The manguianes in question have been directed to live together at
Tigbao. There they are being taught and guided to improve their living
conditions. They are being made to understand that they object of the
government is to organize them politically into fixed and permanent
communities. They are being aided to live and work. Their children are
being educated in a school especially established for them. In short,
everything is being done from them in order that their advancement in
civilization and material prosperity may be assured. Certainly their living
together in Tigbao does not make them slaves or put them in a
condition compelled to do services for another. They do not work for
anybody but for themselves. There is, therefore, no involuntary
servitude.
But they are compelled to live there and prohibited from emigrating to
some other places under penalty of imprisonment. Attention in this
connection is invited to the fact that this people, living a nomadic and
wayfaring life, do not have permanent individual property. They move
from one place to another as the conditions of living warrants, and the
entire space where they are roving about is the property of the nation,
the greater part being lands of public domain. Wandering from one
place to another on the public lands, why can not the government adopt
a measure to concentrate them in a certain fixed place on the public
lands, instead of permitting them to roam all over the entire territory?
This measure is necessary both in the interest of the public as owner of
the lands about which they are roving and for the proper
accomplishment of the purposes and objectives of the government. For
as people accustomed to nomadic habit, they will always long to return
to the mountains and follow a wayfaring life, and unless a penalty is
provinced for, you can not make them live together and the noble
intention of the Government of organizing them politically will come to
naught.
G. APPLICATION AND CONCLUSION.
Our exhaustive study should have left us in a position to answer specific
objections and to reach a general conclusion.
In the first place, it is argued that the citizen has the right, generally speaking,
to go where he pleases. Could be not, however, be kept away from certain
localities ? To furnish an example from the Indian legislation. The early Act of
Congress of 1802 (2 U.S. Stat. at L., p. 141) Indian reservation. Those
citizens certainly did not possess absolute freedom of locomotion. Again the
same law provided for the apprehension of marauding Indians. Without any
doubt, this law and other similar were accepted and followed time and again
without question.
It is said that, if we hold this section to be constitutional, we leave this weak
and defenseless people confined as in a prison at the mercy of unscrupulous
official. What, it is asked, would be the remedy of any oppressed Manguian?
The answer would naturally be that the official into whose hands are given the
enforcement of the law would have little or not motive to oppress these
people; on the contrary, the presumption would all be that they would
endeavor to carry out the purposes of the law intelligently and patriotically. If,
indeed, they did ill-treat any person thus confined, there always exists the
power of removal in the hands of superior officers, and the courts are always
open for a redress of grievances. When, however, only the validity of the law
is generally challenged and no particular case of oppression is called to the
attention of the courts, it would seems that the Judiciary should not
unnecessarily hamper the Government in the accomplishment of its laudable
purpose.
The question is above all one of sociology. How far, consistently with freedom,
may the right and liberties of the individual members of society be
subordinated to the will of the Government? It is a question which has
assailed the very existence of government from the beginning of time. Now
purely an ethical or philosophical subject, nor now to be decided by force, it
has been transferred to the peaceful forum of the Judiciary. In resolving such
an issue, the Judiciary must realize that the very existence of government
renders imperatives a power to restrain the individual to some extent,
dependent, of course, on the necessities of the class attempted to be
benefited. As to the particular degree to which the Legislature and the
Executive can go in interfering with the rights of the citizen, this is, and for a
along time to come will be, impossible for the courts to determine.
The doctrines of laissez faire and of unrestricted freedom of the individual, as
axioms of economics and political theory, are of the past. The modern period
has shown as widespread belief in the amplest possible demonstration of
governmental activity. The courts unfortunately have sometimes seemed to
trial after the other two branches of the government in this progressive march.
Considered, therefore, purely as an exercise of the police power, the courts
cannot fairly say that the Legislature has exceeded its rightful authority. it is,
indeed, an unusual exercise of that power. But a great malady requires an
equally drastic remedy.
Further, one cannot hold that the liberty of the citizen is unduly interfered
without when the degree of civilization of the Manguianes is considered. They
are restrained for their own good and the general good of the Philippines. Nor
can one say that due process of law has not been followed. To go back to our
definition of due process of law and equal protection of the law, there exists a
law ; the law seems to be reasonable; it is enforced according to the regular
methods of procedure prescribed; and it applies alike to all of a class.
As a point which has been left for the end of this decision and which, in case
of doubt, would lead to the determination that section 2145 is valid. it the
attitude which the courts should assume towards the settled policy of the
Government. In a late decision with which we are in full accord,
Gambles vs. Vanderbilt University (200 Southwestern Reporter, 510) the
Chief Justice of the Supreme Court of Tennessee writes:
We can seen objection to the application of public policy as a ratio decidendi.
Every really new question that comes before the courts is, in the last analysis,
determined on that theory, when not determined by differentiation of the
principle of a prior case or line of cases, or by the aid of analogies furnished
by such prior case. In balancing conflicting solutions, that one is perceived to
tip the scales which the court believes will best promote the public welfare in
its probable operation as a general rule or principle. But public policy is not a
thing inflexible. No court is wise enough to forecast its influence in all possible
contingencies. Distinctions must be made from time to time as sound reason
and a true sense of justice may dictate."
Our attempt at giving a brief history of the Philippines with reference to the so-
called non-Christians has been in vain, if we fail to realize that a consistent
governmental policy has been effective in the Philippines from early days to
the present. The idea to unify the people of the Philippines so that they may
approach the highest conception of nationality. If all are to be equal before the
law, all must be approximately equal in intelligence. If the Philippines is to be
a rich and powerful country, Mindoro must be populated, and its fertile regions
must be developed. The public policy of the Government of the Philippine
Islands is shaped with a view to benefit the Filipino people as a whole. The
Manguianes, in order to fulfill this governmental policy, must be confined for a
time, as we have said, for their own good and the good of the country.
Most cautiously should the power of this court to overrule the judgment of the
Philippine Legislature, a coordinate branch, be exercised. The whole tendency
of the best considered case is toward non-interference on the part of the
courts whenever political ideas are the moving consideration. Justice Holmes,
in one of the aphorisms for which he is justly famous, said that "constitutional
law, like other mortal contrivances, has to take some chances."
(Blinn vs. Nelson [1911], 222 U.S., 1.) If in the final decision of the many grave
questions which this case presents, the courts must take "a chance," it should
be with a view to upholding the law, with a view to the effectuation of the
general governmental policy, and with a view to the court's performing its duty
in no narrow and bigoted sense, but with that broad conception which will
make the courts as progressive and effective a force as are the other
departments of the Government.
We are of the opinion that action pursuant to section 2145 of the
Administrative Code does not deprive a person of his liberty without due
process of law and does not deny to him the equal protection of the laws, and
that confinement in reservations in accordance with said section does not
constitute slavery and involuntary servitude. We are further of the opinion that
section 2145 of the Administrative Code is a legitimate exertion of the police
power, somewhat analogous to the Indian policy of the United States. Section
2145 of the Administrative Code of 1917 is constitutional.
Petitioners are not unlawfully imprisoned or restrained of their liberty. Habeas
corpus can, therefore, not issue. This is the true ruling of the court. Costs shall
be taxes against petitioners. So ordered.
Arellano, C.J., Torres and Avancea, JJ., concur.


Separate Opinions
CARSON, J ., concurring:
I fully concur in the reasoning and the conclusions of Justice Malcolm as set
forth in the prevailing, opinion.
The words "non-Christian' have a clear, definite and well settled signification
when used in the Philippine statute-book as a descriptive adjective, applied to
"tribes," "people," or "inhabitants," dwelling in more or less remote districts
and provinces throughout the Islands.
Justice Malcolm, as I think, correctly finds that these words, as used in this
connection in our statute-book, denote the 'low grace of civilization" of the
individuals included in the class to which they are applied. To this I would add
that the tests for the determination of the fact that an individual or tribes is, or
is not of the "non-Christian" are, and throughout the period of American
occupation always have been, "the mode of life, the degree of advancement in
civilization, and connection or lack of connection with some civilized
community." (Cf. letter of Collector of Internal Revenue dated September 17,
1910, and set out in the principal opinion.)
The legislative and administrative history of the Philippine Islands clearly
discloses that the standard of civilization to which a specific tribe must be
found to have advanced, to justify its removal from the class embraces with
the descriptive term "non-Christian," as that term is used in the Philippine
statute-book, is that degree of civilization which results in a mode of life within
the tribe, such that it is feasible and practicable to extend to, and enforce upon
its membership the general laws and regulations, administrative, legislative,
and judicial, which control the conduct of the admitted civilized inhabitants of
the Islands; a made of life, furthermore, which does not find expression in
tribal customs or practices which tend to brutalize or debauch the members of
the tribe indulging in such customs or practices, or to expose to loss or peril
the lives or property of those who may be brought in contact with members of
the tribe.
So the standard of civilization to which any given number or group of
inhabitants of particular province in these Islands, or any individual member of
such a group, must be found to have advanced, in order to remove such
group or individual from the class embraced within the statutory description of
"non-Christian," is that degree of civilization which would naturally and
normally result in the withdrawal by such persons of permanent allegiance or
adherence to a "non-Christian" tribe, had they at any time adhered to or
maintained allegiance to such a tribe; and which would qualify them whether
they reside within or beyond the habitat of a "non-Christian" tribe, not only to
maintain a mode of life independent of a apart from that maintain by such
tribe, but a mode of life as would not be inimical to the lives or property or
general welfare of the civilized inhabitants of the Islands with whom they are
brought in contact.
The contention that, in this particular case, and without challenging the validity
of the statute, the writ should issue because of the failure to give these
petitioners, as well as the rest of the fifteen thousand Manguianes affected by
the reconcentration order, an opportunity to be heard before any attempt was
made to enforce it, begs the question and is, of course, tantamount to a
contention that there is no authority in law for the issuance of such an order.
If the fifteen thousand manguianes affected by the order complained of had
attained that degree of civilization which would have made it practicable to
serve notice upon, and give an opportunity for a real hearing, to all the
members of the tribe affected by the order, it may well be doubted whether the
provincial board and the Secretary of the Interior would have been justified in
its enforcement By what proceeding known to the law, or to be specially
adopted in a particular case, could the offices of any province provide for a
genuine hearing upon a proposal to issue a reconcentration order upon a
head-hunting tribe in the north of the Island of Luzon; or upon one of the
nomadic tribes whose habitat is in the mountain fastnesses of Mindanao, and
whose individual members have no fixed or known place of residence, or
upon the fifteen thousand Manguianes roaming in the wilds of Mindoro.
Of course, friendly headmen or chief might and, as a rule, should be
consulted, after the practice in the United States when tribes or groups of
American Indians have been placed upon reservations; but since non-
Christian head men and chiefs in the Philippines have no lawful authority to
bind their acts or their consent, the objection based on lack of a hearing,
would have the same force whether the issuance of a reconcentration order
was or was not preceded by a pow-wow of this kind.
The truth of the mater is that the power to provide for the issuance of such
orders rests upon analogous principles to those upon which the liberty and
freedom or action of children and persons of unsound minds is restrained,
without consulting their wishes, but for their own good and the general
welfare. The power rests upon necessity, that "great master of all things," and
is properly exercised only where certain individuals or groups of individual are
found to be of such a low grade of civilization that their own wishes cannot be
permitted to determine their mode of life or place of residence.
The status of the non-Christian inhabitants of these Islands, and the special
and necessarily paternal attitude assume toward them by the Insular
Government is well illustrated by the following provisions found in the
Administrative Code of 1917:
SEC. 705. Special duties and purposes of Bureau (of non-Christian
tribes). It shall be the duty of the Bureau of non-Christian tribes to
continue the work for advancement and liberty in favor of the regions
inhabited by non-Christian Filipinos and to foster by all adequate means
and in a systematic, rapid, and completely manner the moral, material,
economic, social and political development of those regions, always
having in view the aim of rendering permanent the mutual intelligence
between and complete fusion of all the Christian and non-Christian
elements populating the provinces of the Archipelago.
SEC. 2116. Township and settlement fund. There shall be
maintained in the provincial treasuries of the respective specially
organized provinces a special fund to be known as the township and
settlement fund, which shall be available, exclusively, for expenditures
for the benefit of the townships and settlements of the province, and
non-Christian inhabitants of the province, upon approval of the
Secretary of the Interior.
As I understand it, the case at bar does not raise any real question as to the
jurisdiction of the courts of these Islands in habeas corpus proceedings, to
review the action of the administrative authorities in the enforcement of
reconcentration orders issued, under authority of section 2145 of the
Administrative Code, against a petitioner challenging the alleged fact that he
is a "non-Christian" as that term is used in the statute. I, therefore, express no
opinion on that question at this time.


JOHNSON, J ., dissenting:
I dissent. The petitioners were deprived of their liberty without a hearing. That
fact is not denied. I cannot give my consent to any act which deprives the
humblest citizen of his just liberty without a hearing, whether he be a Christian
or non-Christian. All persons in the Philippine Islands are entitled to a hearing,
at least, before they are deprived of their liberty.


MOIR, J ., dissenting:
I dissent.
I realize that a dissenting opinion carries little weight, but may sense of justice
will not permit me to let this decision go on record without expressing may
strong dissent from the opinion of Justice Malcolm, concurred in by a majority
of the court. I shall not attempt to analyze the opinion or to go into the
question in detail. I shall simply state, as briefly as may be, the legal and
human side of the case as it presents itself to my mind.
The facts are that one Rubi and various other Manguianes in the Province of
Mindoro were ordered by the Provincial governor of Mindoro to remove their
residence from their native habitat and to establish themselves on a
reservation at Tigbao in the Province of Mindoro and to remain there, or be
punished by imprisonment if they escaped. This reservation, as appears from
the resolution of the provincial board, extends over an area of 800 hectares of
land, which is approximately 2,000 acres, on which about three hundred
manguianes are confined. One of the Manguianes, Dabalos, escaped from
the reservation and was taken in hand by the provincial sheriff and placed in
prision at Calapan, solely because he escaped from the reservation. The
Manguianes used out a writ of habeas corpus in this court, alleging that they
are deprived of their liberty in violation of law.
The Solicitor-General of the Philippine Islands makes return to the writ copied
in the majority opinion which states that the provincial governor of Mindoro
with the prior approval of his act by the Department Secretary ordered the
placing of the petitioners and others on a reservation.
The manguianes, it is stated on page 694 of the majority opinion, "are very
low in culture. They have considerable Negrito blood and have not advanced
beyond the Negritos in civilization. They are peaceful, timid, primitive,
seminomadic people. They number approximately 15,000 (?). The
manguianes have shown no desire for community life, and, as indicated in the
preamble to Act No. 547, have no progressed sufficiently in civilization to
make it practicable to bring them under any for of municipal government."
It may be well to add that the last P.I. Census (1903) shows that the Island of
Mindoro (not including smaller islands which together make the Province of
Mindoro) has an area of 3,851 square miles and a populations of 28, 361 of
which 7, 369 are wild or uncivilized tribes (Manguianes). This appears to be
the total Mangyan population of the province. The total population was less
than seven to the mile (Vol. 2, P.I. Census, pp. 30 and 407).
The Island is fertile, heavily wooded and well watered.
It has no savage population, but it is sparsely settled by Christian Filipinos
along the coast and by Manguianes.
The Manguianes roamed its mountains and valleys, fishing and hunting at will
long before Magallanes [Magellan] anchored his boats in the water of Cebu.
They have made little or no progress in the ways of civilization. "They are a
peaceful, timid, primitive, seminomadic people," whom the Government of the
Philippines Islands would bring under the beneficient influence of civilization
and progress.
The law provides for it in section 2145 of the Administrative Code, and for
those who like Dadalos do not take kindly to the ways provided for civilizing
them section 2759 provides the punishment.
The attorney for the petitioners has raised various constitutional questions, but
only the fundamental one will be considered by me. It is that the sections of
the Administrative Code, 2145 and 2759, quoted in the majority opinion, are in
violation of the first paragraph of section 3 of the Act of Congress of August
29, 1916, which reads as follows:
That no law shall be enacted in said Islands which shall deprive any
person of life, liberty or property without due process of law, or deny to
any person therein the equal protection of the laws.
It is not necessary to argue that a Mangyan is one of the persons protected by
that provision.
The Attorney-General argues that the treatment provided for the Manguianes
is similar to that accorded the Indians in the United States, and reference is
made all through the court's decision to the decisions of the United States
Supreme Court with reference to the Indians. It is not considered necessary to
go into these cases for the simple reason that all the Indians nations in the
United States were considered as separate nations and all acts taken in
regard to them were the result of separate treaties made by the United States
Government with the Indian nations, and, incompliance with these treaties,
reservations were set apart for them on which they lived and were protected
form intrusion and molestation by white men. Some these reservations were
larger than the Islands of Luzon, and they were not measured in hectares but
in thousands of square miles.
The Manguianes are not a separate state. They have no treaty with the
Government of the Philippine Islands by which they have agreed to live within
a certain district where they are accorded exclusive rights. They are citizens of
the Philippine Islands. Legally they are Filipinos. They are entitled to all the
rights and privileges of any other citizen of this country. And when the
provincial governor of the Province of Mindoro attempted to take them from
their native habitat and to hold them on the little reservation of about 800
hectares, he deprived them of their rights and their liberty without due process
of law, and they were denied the equal protection of the law.
The majority opinion says "they are restrained for their own good and the
general good of the Philippines."
They are to be made to accept the civilization of the more advanced Filipinos
whether they want it or not. They are backward and deficient in culture and
must be moved from their homes, however humble they may be and "bought
under the bells" and made to stay on a reservation.
Are these petitioners charged with any crime? There is no mention in the
return of the Solicitor-General of the Philippine Islands of any crime having
been committed by these "peacefully, timid, primitive, semi-nomadic people."
A memorandum of the Secretary of the Interior of the Philippine Islands is
copied in extenso in the majority opinion, and from it I gather the nature of
their offense which is that
Living a nomadic and wayfaring life and evading the influence of
civilization, they (the manguianes) are engaged in the works of
destruction burning and destroying the forests and making
illegal caiginsthereon. No bringing any benefit to the State but, instead,
injuring and damaging its interests, what will ultimately become of those
people with the sort of liberty they wish to preserve and for which they
are not fighting in court? They will ultimately become a heavy burden to
the State and, on account of their ignorance, they will commit crimes
and make depredations, or if not they will be subjected to involuntary
servitude by those who may want to abuse them.
There is no doubt in my mind that this people has not a right conception
of liberty and does not practice liberty in a rightful way. They understand
liberty as the right to do anything they will going from one place to
another in the mountains, burning and destroying forests and making
illegal caigins thereon.
Not knowing what true liberty is and not practising the same rightfully,
how can they are being deprived thereof without due process of law?
xxx xxx xxx
But does the constitutional guaranty that "no person shall be deprived of
his liberty without due process of law" apply to a class of persons who
do not have a correct idea of what liberty is and do not practise liberty in
a rightful way?
To say that it does will mean to sanction and defend an erroneous idea
of such class of persons as to what liberty is. It will mean, in the case at
bar, that the Government should not adopt any measures looking to the
welfare and advancement of the class of persons in question. It will
mean that this people be let alone in the mountains and in a permanent
state of savagery without even the remotest hope of coming to
understand liberty in its true and noble sense.
In dealing with the backward population, like the Manguianes, the
Government has been placed in the alternative of either letting them
alone or guiding them in the path of civilization. The latter measure was
adopted as the one more in accord with humanity and with national
conscience.
xxx xxx xxx
The national legislation on the subject of non-Christian people has
tended more and more towards the education and civilization of such
people and fitting them to be citizens.
There appear to be two intimations or charges in this memorandum; one is
that the Manguianes destroy the forest by making a caigin. What is a
"caigin?" Simply this. These people move their camp or place of abode
frequently and when they do move to a new place, it is necessary to clear the
land in order to plant corn and camotes (sweet potatoes) and they cut down
the smaller trees and burn these around the larger ones, killing them, so that
they can plant their crops. The fires never spread in the tropical undergrowth
of an island like Mindoro, but the trees within the caigin are killed and crops
are planted and harvested. This land may be abandoned later on due to
superstition, to a lack of game in the neighborhood, to poor crops from
exhausted fertility, or to a natural desire to move on.
Granting that the Manguianes do make caigins or clear lands in spots and
then abandon them for the more fertile lands, which every man knows to be
just over the hills, we cannot see that they are committing such a great abuse
as to justify incarcerating them on a small tract of land for incarceration it is
and nothing less.
The second intimation or charge is that "they will become a heavy burden to
the state and on account of their ignorance they will commit crimes and make
depredations, or if not they will be subjected to involuntary servitude by those
who want to abuse them." They have never been a burden to the state and
never will be. They have not committed crimes and, when they do, let the law
punish them." The authorities are anticipating too much from these "peaceful,
timid, primitive, semi-nomadic people." Their history does not demonstrate
that we must expect them to commit crimes and jail them to prevent the
possibility. But the Secretary says "they will be subjected to involuntary
servitude by those want to abuse them." Are they more liable to be subjected
to involuntary servitude when left free to roam their native hills and gain a
livelihood as they have been accustomed to for hundreds of years, than they
will be if closely confined on a narrow reservation from which they may not
escape without facing a term in jail? Is not more likely that they will be glad to
exchange their "freedom" on a small reservation for the great boon of binding
themselves and their children to the more fortunate Christian Filipinos who will
feed them and clothe them in return of their services.?
It think it not only probable but almost a certainty that they will be all be
subjected to involuntary personal servitude if their freedom is limited as it has
been. How will they live? There may be persons who are willing to lend them
money with which to buy food on the promise that they will work for them. And
if they accept the loan and do not work for the lender we have another law on
the statute books, Act No. 2098, into whose noose they run their necks, and
they may be fined not more than two hundred pesos or imprisonment for not
exceeding six months or both, and when the sentence expires they must
again go into debt or starve, and if they do not work will again go to jail, and
this maybe repeated till they are too old to work and are cast adrift.
The manguianes have committed no offenses and are charged with none. It
does not appear they were ever consulted about their reconcentration. It does
not appear that they had any hearing or were allowed to make any defense. It
seems they were gathered here and there whenever found by the authorities
of the law and forcibly placed upon the reservation, because they are "non-
Christian," and because the provincial governor ordered it. Let it be clear there
is no discrimination because of religion. The term "non-Christian" means one
who is not a Christian Filipino, but it also means any of the so-called "wild" or
backward tribes of the Philippines. These non-Christian tribes are Moros,
Igorrotes, Bukidnons, Ifugaos, Manguianes and various others, about one
millions souls all together. Some of them, like the Moros, Tinguianes and
Ifugaos, have made great progress in civilization. The have beautiful fields
reclaimed by hard labor they have herds of cattle and horses and some few
of them are well educated. Some of the non-Christians, like the Aetas and the
Negritos, are very low in the scale of civilization, but they are one and all "non-
Christians," as the term is used and understood in law and in fact.
All of them, according to the court's opinion under the present law, may be
taken from their homes and herded on a reservation at the instance of the
provincial governor, with the prior approval of the department head. To state
such a monstrous proposition is to show the wickedness and illegality of the
section of the law under which these people are restrained of their liberty. But
it is argued that there is no probability of the department head ever giving his
approval to such a crime, but the fact that he can do it and has done it in the
present case in what makes the law unconstitutional. The arbitrary and
unrestricted power to do harm should be the measure by which a law's legality
is tested and not the probability of doing harm.
It has been said that this is a government of laws and not of men; that
there is no arbitrary body of individuals; that the constitutional principles
upon which our government and its institutions rest do not leave room
for the play and action of purely personal and arbitrary power, but that
all in authority are guided and limited by these provisions which the
people have, the through the organic law, declared shall be the
measure and scope of all control exercised over them. In particular the
fourteenth amendment, and especially the equal protection clause,
thereof, forbids that the individual shall be subjected to any arbitrary
exercise of the powers of government; it was intended to prohibit, and
does prohibit, any arbitrary deprivation of life or liberty, or arbitrary
spoliation of property.
As we have seen, a statute which makes a purely arbitrary or
unreasonable classification, or which singles out any particular
individuals or class as the subject of hostile and discriminating
legislation, is clearly unconstitutional as being opposed to the fourteenth
amendment and especially to the equal protection clause thereof. This
is a plain case, and requires no further discussion. (Vol. 4, Encyclopedia
of U.S. Supreme Court Reports, p. 366.)
When we consider the nature and the theory of our institutions of
government, the principles upon which they are supposed to rest, and
review the history of their development, we are constrained to conclude
that they do not mean to leave room for the play and action of purely
personal and arbitrary power. Sovereignty itself is, of course, not subject
to law, for its is the author and source of law; but in our system, while
sovereign powers are delegated to the agencies of government,
sovereignty itself remains with the people, by whom and for whom all
government exists and acts. And the law is the definition and limitation
of power. It is, indeed, quite true, that there must always be lodged
somewhere, and in some person or body, the authority of final decision;
and, in many cases of mere administration the responsibility is purely
political, no appeal lying except to the ultimate tribunal of the public
judgment, exercised either in the pressure of opinion or by means of the
suffrage. But the fundamental rights to life, liberty, and the pursuit of
happiness, considered as individual possessions, are secured by those
maxims of constitutional law which are the monuments showing the
victorious progress of the race in securing to men the blessings of
civilization under the reign of just and equal laws, so that, in the famous
language of Massachusetts Bill of Rights, the Government of
Commonwealth "may be a government of law and not of men." For the
very idea that one man may be compelled to hold his life, or the means
of living, or any material right essential to the enjoyment of life, at the
mere will of another, seems to be intolerable in any country where
freedom prevails, as being the essence of slavery itself. (Yick
Wo vs. Hopkins, 118 U.S., 374.)
It is said that the present law is an old Act being substance Act No. 547 of the
Philippine Commission. But it has never been brought before this court for
determination of its constitutionality. No matter how beneficient the motives of
the lawmakers if the lawmakers if the law tends to deprive any man of life,
liberty, or property without due process law, it is void.
In may opinion the acts complained of which were taken in conformity with
section 2145 of the Administrative Code not only deprive these Manguianes of
their liberty, without due process of law, but will in all probability deprive them
of their life, without due process of law. History teaches that to take a semi-
nomadic tribe from their native fastnesses and to transfer them to the narrow
confines of a reservation is to invite disease an suffering and death. From my
long experience in the Islands, I should say that it would be a crime of title
less magnitude to take the Ifugaos from their mountain homes where they
have reclaimed a wilderness and made it a land of beauty and fruitfulness and
to transfer them to the more fertile, unoccupied, malaria infested valleys which
they look down upon from their fields than it would be to order their
decapitation en masse.
There can be no denial that the Ifugaos are "non-Christians," or "wild tribes"
and are in exactly the same category as the Manguianes. If the Manguianes
may be so taken from their native habitat and reconcentrated on a reservation
in effect an open air jail then so may the Ifugaos, so may the
Tinguianes, who have made more progress than the Ifugaos, and so may the
Moros.
There are "non-Christian" in nearly every province in the Philippine Islands. All
of the thirty-nine governors upon the prior approval of the head of the
department, have the power under this law to take the non-Christian
inhabitants of their different provinces form their homes and put them on a
reservation for "their own good and the general good of the Philippines," and
the court will grant them no relief. These unfortunate citizens of the Philippine
Islands would hold their liberty, and their lives, may be, subject to the
unregulated discretion of the provincial governor.
And who would be safe?
After the reservation is once established might not a provincial governor
decide that some political enemy was a non-Christian, and that he would be
safer on the reservation. No matter what his education and culture, he could
have no trial, he could make no defense, the judge of the court might be in a
distant province and not within reach, and the provincial governor's fiat is final.
The case of the United States vs. Crook (Federal Cases 14891), cited in the
majority opinion, should be quoted at length. District Judge Dundy said:
During the fifteen years in which I have been engaged in administering
the laws of my country, I have never been called upon to hear or decide
a case that appealed so strongly to my sympathy as the one now under
consideration. On the one side, we have a few of the remnants of a
once numerous and powerful, but now weak, insignificant, unlettered,
and generally despised race; and the other, we have the representative
of one of the most powerful, most enlightened, and most christianized
nations of modern times. On the one side, we have the representatives
of this wasted race coming into this national tribunal of ours, asking for
justice and liberty to enable them to adopt our boasted civilization, and
to pursue the arts of peace, which have made us great and happy as a
nation; on the other side, we have this magnificent, if not magnanimous,
government, resisting this application with the determination of sending
these people back to the country which is to them less desirable
perpetual imprisonment in their own native land. But I think it is
creditable to the heart and mind of the brave and distinguished officer
who is made respondent herein to say that he has no sort of sympathy
in the business in which he is forced by his position to bear a part so
conspicuous; and, so far as I am individually concerned, I think it not
improper to say that, if the strongest possible sympathy could give the
relators title to freedom, they would have been restored to liberty the
moment the arguments in their behalf were closed. no examination or
further thought would then have been necessary or expedient. But in a
country where liberty is regulated by law, something more satisfactory
and enduring than mere sympathy must furnish and constitute the rule
and basis of judicial action. It follows that this case must be examined
and decided on principles of law, and that unless the relators are
entitled to their discharge under the constitution or laws of the United
States, or some treaty, they must be remanded to the custody of the
officer who caused their arrest, to be returned to the Indian Territory
which they left without the consent of the government.
On the 8th of April, 1879, the relators Standing Bear and twenty-five
others, during the session of the court held at that time of Lincoln,
presented their petition, duly verified, praying for the allowance of a writ
ofhabeas corpus and their final discharged from custody thereunder.
The petition alleges, in substance, that the relators are Indians who
have formerly belonged to the Ponca tribe of Indians now located in the
Indian Territory; that they had some time previously withdrawn from the
tribe, and completely severed their tribal relations therewith, and had
adopted the general habits of the whites, and were then endeavoring to
maintain themselves by their own exertions, and without aid or
assistance from the general government; that whilst they were thus
engaged, and without being guilty of violating any of the laws of the
United States, they were arrested and restrained of their liberty by order
of the respondent, George Crook.
The writ was issued and served on the respondent on the 8th day of
April, and, the distance between the place where the writ was made
returnable and the place where the relators were confined being more
than twenty miles, ten days were alloted in which to make return.
On the 18th of April the writ was returned, and the authority for the
arrest and detention is therein shown. The substance of the return to the
writ, and the additional statement since filed, is that the relators are
individual members of, and connected with, the Ponca Tribe of Indians;
that they had fled or escaped from a reservation situated in some place
within the limits of the indian Territory had departed therefrom without
permission from the government; and, at the request of the secretary of
the interior, the general of the army had issued an order which required
the respondent to arrest and return the relators to their tribe in the
Indian Territory, and that, pursuant to the said order, he had caused the
relators to be arrested on the Omaha Indian reservation, and that they
were in his custody for the purpose of being returned to the Indian
Territory.
It is claimed upon the one side, and denied upon the other, that the
relators had withdrawn and severed, for all time, their connection with
the tribe to which they belonged; and upon this point alone was there
any testimony produced by either party hereto. The other matter stated
in the petition and the return to the writ are conceded to be true; so that
the questions to be determined are purely questions of law.
On the 8th of Mar, 1859, a treaty was made by the United States with
the Ponca tribe of Indians, by which a certain tract of country, north of
the Niobrara river and west of the Missouri, was set apart for the
permanent home of the aid Indians, in which the government agreed to
protect them during their good behaviour. But just when or how, or why,
or under what circumstances, the Indians left their reservation in Dakota
and went to the Indian Territory does not appear.
xxx xxx xxx
A question of much greater importance remains for consideration,
which, when determined, will be decisive of this whole controversy. This
relates to the right of the government to arrest and hold the relators for a
time, for the purpose of being returned to a point in the Indian Territory
from which it is alleged the Indians escaped. I am not vain enough to
think that I can do full justice to a question like the one under
consideration. But, as the mater furnishes so much valuable material for
discussion, and so much food for reflection, I shall try to present it as
viewed from my own standpoint, without reference to consequences or
criticisms, which, though not specially invited, will be sure to follow.
xxx xxx xxx
On the 15th day of August, 1876, congress passed the general Indian
appropriation bill, and in it we find a provision authorizing the secretary
of the interior to use $25,000 for the removal of the Poncas to the Indian
Territory, and providing them a home therein, with consent of the tribe.
(19 Sta., 192.)
xxx xxx xxx
The Poncas lived upon their reservation in southern Dakota, and
cultivated a portion of the same, until two or three years ago, when they
removed therefrom, but whether by force or otherwise does not appear.
At all event, we find a portion of them, including the relators, located at
some point in the Indian Territory. There, the testimony seems to show,
is where the trouble commenced. Standing Bear, the principal witness,
states that out of five hundred and eighty-one Indians who went from
the reservation in Dakota to the Indian Territory, one hundred and fifty-
eight died within a year or so, and a great proportion of the others were
sick and disabled, caused, in a great measure, no doubt, from change
of climate; and to save himself and the survivors of his wasted family,
and the feeble remnant of his little band of followers, he determined to
leave the Indian Territory and return to his old home, where, to use his
own language, "he might live and die in peace, and be buried with his
fathers." He also stated that he informed the agent of their final purpose
to leave, never to return, and that he and his followers had finally, fully,
and forever severed his and their connection with the Ponca tribe of
Indians, and had resolved to disband as a tribe, or band of Indians, and
to cut loose from the government, go to work, become self-sustaining,
and adopt the habits and customs of a higher civilization. To accomplish
what would seem to be a desirable and laudable purpose, all who were
able to do so went to work to earn a living. The Omaha Indians, who
speak the same language, and with whom many of the Poncas have
long continued to intermarry, gave them employment and ground to
cultivate, so as to make them self-sustaining. And it was when at the
Omaha reservation, and when thus employed, that they were arrested
by order of the government, for the purpose of being taken back to the
Indian Territory. They claim to be unable to see the justice, or reason, or
wisdom, or necessity, of removing them by force from their own native
plains and blood relations to a far-off country, in which they can see little
but new-made graves opening for their reception. The land from which
they fled in fear has no attractions for them. The love of home and
native land was strong enough in the minds of these people to induce
them to brave every peril to return and live and die where they had been
reared. The bones of the dead son of Standing Bear were not to repose
in the land they hoped to be leaving forever, but were carefully
preserved and protected and formed a part of what was to them
melancholy procession homeward. Such instances of parental
affections, and such love home and native land, may be heathen in
origin, but it seems to that they are not unlike Christian in principle.
And the court declared that the Indians were illegally held by authority of the
United States and in violation of their right to life, liberty, and the pursuit of
happiness, and ordered their release from custody.
This case is very similarly to the case of Standing Bear and others.
I think this Court should declare that section 2145 and 2759 of the
Administrative Code of 1917 are unconstitutional, null and void, and that the
petitioners are illegally restrained of their liberty, and that they have been
denied the equal protection of the law, and order the respondents immediately
to liberate all of the petitioners.
Agustin v Edu (1979) 88 SCRA 195
Facts:
Leovillo Agustin, the owner of a Beetle, challenged the constitutionality of
Letter of Instruction 229 and its implementing order No. 1 issued by LTO
Commissioner Romeo Edu. His car already had warning lights and did not
want to use this.
The letter was promulgation for the requirement of an early warning device
installed on a vehicle to reduce accidents between moving vehicles and
parked cars.
The LTO was the issuer of the device at the rate of not more than 15% of the
acquisition cost.
The triangular reflector plates were set when the car parked on any street or
highway for 30 minutes. It was mandatory.
Petitioner: 1. LOI violated the provisions and delegation of police power, equal
protection, and due process/
2. It was oppressive because the make manufacturers and car dealers
millionaires at the expense f car owners at 56-72 pesos per set.
Hence the petition.
The OSG denied the allegations in par X and XI of the petition with regard to
the unconstitutionality and undue delegation of police power to such acts.
The Philippines was also a member of the 1968 Vienna convention of UN on
road signs as a regulation. To the petitioner, this was still an unlawful
delegation of police power.

Issue:
Is the LOI constitutional? If it is, is it a valid delegation of police power?

Held: Yes on both. Petition dismissed.

Ratio:
Police power, according to the case of Edu v Ericta, which cited J. Taney, is
nothing more or less than the power of government inherent in every
sovereignty.
The case also says that police power is state authority to enact legislation that
may interfere with personal liberty or property to promote the general welfare.
Primicias v Fulgoso- It is the power to describe regulations to promote the
health, morals, peace, education, good order, and general welfare of the
people.
J. Carazo- government limitations to protect constitutional rights did not also
intend to enable a citizen to obstruct unreasonable the enactment of
measures calculated to insure communal peace.
There was no factual foundation on petitioner to refute validity.
Ermita Malate Hotel-The presumption of constitutionality must prevail in the
absence of factual record in over throwing the statute.
Brandeis- constitutionality must prevail in the absence of some factual
foundation in overthrowing the statute.
Even if the car had blinking lights, he must still buy reflectors. His claims that
the statute was oppressive was fantastic because the reflectors were not
expensive.
SC- blinking lights may lead to confusion whether the nature and purpose of
the driver is concerned.
Unlike the triangular reflectors, whose nature is evident because its installed
when parked for 30 minutes and placed from 400 meters from the car allowing
drivers to see clearly.
There was no constitutional basis for petitioner because the law doesnt
violate any constitutional provision.
LOI 229 doesnt force motor vehicle owners to purchase the reflector from the
LTO. It only prescribes rge requirement from any source.
The objective is public safety.
The Vienna convention on road rights and PD 207 both recommended
enforcement for installation of ewds. Bother possess relevance in applying
rules with the decvlaration of principles in the Constitution.
On the unlawful delegation of legislative power, the petitioners have no settled
legal doctrines.