G.R. No.

L-5731
June 22, 1954
HERBERT BROWNELL, JR., as Attorney General of the United States, petitioner-appellee,
vs.
SUN LIFE ASSURANCE COMPANY OF CANADA, respondent-appellant.
LABRADOR, J.:
This is a petition instituted in the Court of the First Instance of Manila under the provisions of the Philippine
Property Act of the United States against the Sun Life Assurance Company of Canada, to compel the latter to
comply with the demand of the former to pay him the sum of P310.10, which represents one-half of the proceeds of
an endowment policy (No. 757199) which matured on August 20, 1946, and which is payable to one Naogiro
Aihara, a Japanese national. Under the policy Aihara and his wife, Filomena Gayapan, were insured jointly for the
sum of P1,000, and upon its maturity the proceeds thereof were payable to said insured, share and share alike, or
P310.10 each. The defenses set up in the court of origin are: (1) that the immunities provided in section 5 (b) (2) of
the Trading With the Enemy Act of the United States are of doubtful application in the Philippines, and have never
been adopted by any law of the Philippines as applicable here or obligatory on the local courts; (2) that the
defendant is a trustee of the funds and is under a legal obligation to see it to that it is paid to the person or persons
entitled thereto, and unless the petitioner executes a suitable discharge and an adequate guarantee to indemnify and
keep it free and harmless from any further liability under the policy, it may not be compelled to make the payment
demanded. The Court of First Instance of Manila having approved and granted the petition, the respondent has
appealed to this Court, contending that the Court of origin erred in holding that the Trading With the Enemy Act of
the United States is binding upon the inhabitants of this country, notwithstanding the attainment of complete
independence on July 4, 1946, and in ordering the payment prayed for.
On July 3, 1946, the Congress of the United States passed Public Law 485-79th Congress, known as the Philippine
Property Act of 1946. Section 3 thereof provides that "The Trading with the Enemy Act of October 6, 1917 (40 Stat.
411), as amended, shall continue in force in the Philippines after July 4, 1946, ...." To implement the provisions of
the act, the President of the United States on July 3, 1946, promulgated Executive Order No. 9747, "continuing the
functions of the Alien Property Custodian and the Department of the Treasury in the Philippines." Prior to and
preparatory to the approval of said Philippine Property Act of 1946, an agreement was entered into between
President Manuel Roxas of the Commonwealth and U. S. Commissioner Paul V. McNutt whereby title to enemy
agricultural lands and other properties was to be conveyed by the United States to the Philippines in order to help the
rehabilitation of the latter, but that in order to avoid complex legal problems in relation to said enemy properties, the
Alien Property Custodian of the United States was to continue operations in the Philippines even after the latter's
independence, that he may settle all claims that may exist or arise against the above-mentioned enemy properties, in
accordance with the Trading With the Enemy Act of the United States. (Report of the Committee on Insural Affairs
No. 2296 and Senate Report No. 1578 from the Committee on Territories and Insular Affairs, to accompany S. 2345,
accompanying H. R. 6801, 79th Congress, 2nd Session.) This purpose of conveying enemy properties to the
Philippines after all claims against them shall have been settled is expressly embodied in the Philippine Property Act
of 1946.
SEC. 3. The Trading With the Enemy Act of October 6, 1917 (40 Stat. 411) is amended, shall continue in
force in the Philippines after July 4, 1946, and all powers and authority conferred upon the President of the
United States or the Alien Property Custodian by the terms of the said Trading With the Enemy Act, as
amended, with respect to the Philippines, shall continue thereafter to be exercised by the President of the
United States, or such officer or agency as he may designate: Provided, That all property vested in or
transferred to the President of the United States, the Alien Property Custodian, or any such officer or
agency as the President of the United States may designate under the Trading With the Enemy Act, as
amended, which was located in the Philippines at the time of such vesting, or the proceeds thereof, and
which shall remain after the satisfaction of any claim payable under the Trading With the Enemy Act, as
amended, and after the payment of such costs and expenses of administration as may be law be charged
against such property or proceeds, shall be transferred by the President of the United States to the Republic
of the Philippines: Provided further, That such property, or proceeds thereof, may be transferred by the
President of the United States to the Republic of the Philippines upon indemnification acceptable to the
President of the United States by the Republic of the Philippines for such claims, costs, and expenses of
administration as may by law be charged against such property or proceeds thereof before final
adjudication of such claims, costs and expenses of administration. Provided further, That the courts of first
instance of the Republic of the Philippines are hereby given jurisdiction to make and enter all such rules as
to notice or otherwise, and all such orders and decrees and to issue such process as may be necessary and
proper in the premises to enforce any orders, rules, and regulations issued by the President of the United
States, the Alien Property Custodian, or such officer or agency designated by the President of the United
States pursuant to the Trading With the Enemy Act, as amended, with such right of appeal therefrom as

may be provided by law: And provided further, That any suit authorized under the Trading With the Enemy
Act, as amended, with respect to property vested in or transferred to the President of the United States, the
Alien Property Custodian, or any officer or agency designated by the President of the United States
hereunder, which at the time of such vesting or transfer was located with the Philippines, shall after July 4,
1946, be brought in the appropriate court of first instance of the Republic of the Philippines, against the
officer or agency hereunder designated by the President of the United States with right of appeal therefrom
as may be provided by law. In any litigation authorized under this section, the officer or administrative
head of the agency designated hereunder may appear personally, or through attorneys appointed by him,
without regard to the requirements of law other than this section.
And when the proclamation of the independence of the Philippines by President Truman was made, said
independence was granted "in accordance with the subject to the reservations provided in the applicable statutes of
the Unites States." The enforcement of the Trading With the Enemy Act of the United States was contemplated to be
made applicable after independence, within the meaning of the reservations.
On the part of the Philippines, conformity to the enactment of the Philippine Property Act of 1946 of the United
States was announced by President Manuel Roxas in a joint statement signed by him and by Commissioner Mcnutt.
Ambassador Romulo also formally expressed the conformity of the Philippines Government to the approval of said
act to the American Senate prior to its approval. And after the grant of independence, the Congress of the
Philippines approved Republic Act No. 8, entitled.
AN ACT TO AUTHORIZE THE PRESIDENT OF THE PHLIPPINES TO ENTER INTO SUCH
CONTRACT OR UNDERTAKINGS AS MAY BE NECESSARY TO EFFECTUATE THE TRANSFER
TO THE REPUBLIC OF THE PHILIPPINES UNDER THE PHILIPPINES PROPERTY ACT OF
NINETEEN HUNDRED AND FORTY-SIX OF ANY PROPERTY OR PROPERTY RIGHTS OR THE
PROCEEDS THEREOF AUTHORIZED TO BE TRANSFERRED UNDER SAID ACT; PROVIDING
FOR THE ADMINISTRATION AND DISPOSITION OF SUCH PROPERTIES ONCE RECEIVED;
AND APPROPRIATING THE NECESSARY FUND THEREFOR.
The Congress of the Philippines also approved Republic Act No. 7, which established a Foreign Funds Control
Office. After the approval of the Philippine Property Act of 1946 of the United States, the Philippine Government
also formally expressed, through the Secretary of Foreign Affairs, conformity thereto. (See letters of Secretary dated
August 22, 1946, and June 3, 1947.) The Congress of the Philippines has also approved Republic Act No. 477,
which provides for the administration and disposition of properties which have been or may hereafter be transferred
to the Republic of the Philippines in accordance with the Philippines Property Act of 1946 of the United States.
It is evident, therefore, that the consent of the Philippine Government to the application of the Philippine Property
Act of 1946 to the Philippines after independence was given, not only by the Executive Department of the
Philippines Government, but also by the Congress, which enacted the laws that would implement or carry out the
benefits accruing from the operation of the United States law. The respondent-appellant, however, contends that the
operation of the law after independence could not have actually taken, or may not take place, because both Republic
Act No. 8 and Republic Act No. 477 do not contain any specific provision whereby the Philippine Property Act of
1946 or its provisions is made applicable to the Philippines. It is also contended that in the absence of such express
provision in any of the laws passed by the Philippine Congress, said Philippine Property Act of 1946 does not form
part of our laws and is not binding upon the courts and inhabitants of the country.
There is no question that a foreign law may have extraterritorial effect in a country other than the country of origin,
provided the latter, in which it is sought to be made operative, gives its consent thereto. This principle is supported
by the unquestioned authority.
The jurisdiction of the nation within its territory is necessarily exclusive and absolute. It is susceptible of no
limitation not imposed by itself. Any restriction upon it, deriving validity from an external source, would
imply a diminution of its sovereignty to the extent of the restriction, and an investment of that sovereignty
to the same extent in that power in which would impose such restriction. All exceptions, therefore, to the
full and complete power of a nation within its own territories, must be traced up to the consent of the nation
itself. They can flow from no other legitimate source. This consent may be either express or implied.
(Philippine Political Law by Sinco, pp. 27-28, citing Chief Justice Marshall's statement in the Exchange, 7
Cranch 116)
In the course of his dissenting opinion in the case of S. S. Lotus, decided by the Permanent Court of International
Justice, John Bassett Moore said:
1. It is an admitted principle of International Law that a nation possesses and exercises within its own
territory an absolute and exclusive jurisdiction, and that any exception to this right must be traced to the
consent of the nation, either express or implied (Schooner Exchange vs. McFadden [812], 7 Cranch 116,
136). The benefit of this principle equally enures to all independent and sovereign States, and is attended
with a corresponding responsibility for what takes place within the national territory. (Digest of
International Law, by Backworth, Vol. II, pp. 1-2)

The above principle is not denied by respondent-appellant. But its argument on this appeal is that while the acts
enacted by the Philippine Congress impliedly accept the benefits of the operation of the United States law
(Philippine Property Act of 1946), no provision in the said acts of the Philippine Congress makes said United States
law expressly applicable. In answer to this contention, it must be stated that the consent of a Senate to the operation
of a foreign law within its territory does not need to be express; it is enough that said consent be implied from its
conduct or from that of its authorized officers.
515. No rule of International Law exists which prescribe a necessary form of ratification. Ratification
can, therefore, be given tacitly as well as expressly. Tacit ratification takes place when a State begins the
execution of a treaty without expressly ratifying it. It is usual for ratification to take the form of a document
duly signed by the Heads of the States concerned and their Secretaries for Foreign Affairs. It is usual to
draft as many documents as there are parties to the Convention, and to exchange these documents between
the parties. Occasionally the whole of the treaty is recited verbatim in the ratifying documents, but
sometimes only the title, preamble, and date of the treaty, and the names of the signatory representatives
are cited. As ratification is only the confirmation of an already existing treaty, the essential requirements in
a ratifying document is merely that it should refer clearly and unmistakably to the treaty to be ratified. The
citation of title, preamble, date, and names of the representatives is, therefore quite sufficient to satisfy that
requirements. (Oppenheim, pp. 818-819; emphasis ours.)
International Law does not require that agreements between nations must be concluded in any particular
form or style. The law of nations is much more interested in the faithful performance of international
obligations than in prescribing procedural requirements. (Treaties and Executive Agreements, by Myers S.
McDougal and Asher Lands, Yale Law Journal, Vol. 54, pp. 318-319)
In the case at bar, our ratification of or concurrence to the agreement for the extension of the Philippine Property Act
of 1946 is clearly implied from the acts of the President of the Philippines and of the Secretary of Foreign Affairs, as
well as by the enactment of Republic Acts Nos. 7, 8, and 477.
We must emphasize the fact that the operation of the Philippine Property Act of 1946 in the Philippines is not
derived from the unilateral act of the United States Congress, which made it expressly applicable, or from the saving
provision contained in the proclamation of independence. It is well-settled in the United States that its laws have no
extraterritorial effect. The application of said law in the Philippines is based concurrently on said act (Philippine
Property Act of 1946) and on the tacit consent thereto and the conduct of the Philippine Government itself in
receiving the benefits of its provisions.
It is also claimed by the respondent-appellant that the trial court erred in ordering it to pay the petitioner the amount
demanded, without the execution by the petitioner of a deed of discharge and indemnity for its protection. The
Trading With the Enemy Act of the United States, the application of which was extended to the Philippines by
mutual agreement of the two Governments, contains an express provision to the effect that delivery of property or
interest therein made to or for the account of the United States in pursuance of the provision of the law, shall be
considered as a full acquittance and discharge for purposes of the obligation of the person making the delivery or
payment. (Section 5(b) (2), Trading With the Enemy Act.) This express provision of the United States law saves the
respondent-appellant from any further liability for the amount ordered to be paid to the petitioner, and fully protects
it from any further claim with respect thereto. The request of the respondent-appellant that a security be granted it
for the payment to be made under the law is, therefore, unnecessary, because the judgment rendered in this case is
sufficient to prove such acquittance and discharge.
The decision appealed from should be as it is hereby affirmed, with costs against the respondent-appellant.
Paras, C. J., Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo and Concepcion, JJ.,concur
G.R. No. L-26379
WILLIAM C. REAGAN, ETC., petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
Quasha, Asperilla, Blanco, Zafra and Tayag for petitioner.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete, Solicitor Lolita
O. Gal-lang and Special Attorney Gamaliel H. Mantolino for respondent.
FERNANDO, J.:
A question novel in character, the answer to which has far-reaching implications, is raised by petitioner William C.
Reagan, at one time a civilian employee of an American corporation providing technical assistance to the United
States Air Force in the Philippines. He would dispute the payment of the income tax assessed on him by respondent
Commissioner of Internal Revenue on an amount realized by him on a sale of his automobile to a member of the
United States Marine Corps, the transaction having taken place at the Clark Field Air Base at Pampanga. It is his
contention, seriously and earnestly expressed, that in legal contemplation the sale was made outside Philippine
territory and therefore beyond our jurisdictional power to tax.

Such a plea, far-fetched and implausible, on its face betraying no kinship with reality, he would justify by invoking,
mistakenly as will hereafter be more fully shown an observation to that effect in a 1951 opinion, [[1]] petitioner
ignoring that such utterance was made purely as a flourish of rhetoric and by way of emphasizing the decision
reached, that the trading firm as purchaser of army goods must respond for the sales taxes due from an importer, as
the American armed forces being exempt could not be taxed as such under the National Internal Revenue
Code.[[2]] Such an assumption, inspired by the commendable aim to render unavailing any attempt at tax evasion on
the part of such vendee, found expression anew in a 1962 decision, [[3]] coupled with the reminder however, to render
the truth unmistakable, that "the areas covered by the United States Military Bases are not foreign territories both in
the political and geographical sense."
As thus clarified, it is manifest that such a view amounts at most to a legal fiction and is moreover obiter. It certainly
cannot control the resolution of the specific question that confronts us. We declare our stand in an unequivocal
manner. The sale having taken place on what indisputably is Philippine territory, petitioner's liability for the income
tax due as a result thereof was unavoidable. As the Court of Tax Appeals reached a similar conclusion, we sustain its
decision now before us on appeal.
In the decision appealed from, the Court of Tax Appeals, after stating the nature of the case, started the recital of
facts thus: "It appears that petitioner, a citizen of the United States and an employee of Bendix Radio, Division of
Bendix Aviation Corporation, which provides technical assistance to the United States Air Force, was assigned at
Clark Air Base, Philippines, on or about July 7, 1959 ... . Nine (9) months thereafter and before his tour of duty
expired, petitioner imported on April 22, 1960 a tax-free 1960 Cadillac car with accessories valued at $6,443.83,
including freight, insurance and other charges." [[4]] Then came the following: "On July 11, 1960, more than two (2)
months after the 1960 Cadillac car was imported into the Philippines, petitioner requested the Base Commander,
Clark Air Base, for a permit to sell the car, which was granted provided that the sale was made to a member of the
United States Armed Forces or a citizen of the United States employed in the U.S. military bases in the Philippines.
On the same date, July 11, 1960, petitioner sold his car for $6,600.00 to a certain Willie Johnson, Jr. (Private first
class), United States Marine Corps, Sangley Point, Cavite, Philippines, as shown by a Bill of Sale . . . executed at
Clark Air Base. On the same date, Pfc. Willie (William) Johnson, Jr. sold the car to Fred Meneses for P32,000.00 as
evidenced by a deed of sale executed in Manila." [[5]]
As a result of the transaction thus made, respondent Commissioner of Internal Revenue, after deducting the landed
cost of the car as well as the personal exemption to which petitioner was entitled, fixed as his net taxable income
arising from such transaction the amount of P17,912.34, rendering him liable for income tax in the sum of
P2,979.00. After paying the sum, he sought a refund from respondent claiming that he was exempt, but pending
action on his request for refund, he filed the case with the Court of Tax Appeals seeking recovery of the sum of
P2,979.00 plus the legal rate of interest.
As noted in the appealed decision: "The only issue submitted for our resolution is whether or not the said income tax
of P2,979.00 was legally collected by respondent for petitioner." [[6]] After discussing the legal issues raised,
primarily the contention that the Clark Air Base "in legal contemplation, is a base outside the Philippines" the sale
therefore having taken place on "foreign soil", the Court of Tax Appeals found nothing objectionable in the
assessment and thereafter the payment of P2,979.00 as income tax and denied the refund on the same. Hence, this
appeal predicated on a legal theory we cannot accept. Petitioner cannot make out a case for reversal.
1. Resort to fundamentals is unavoidable to place things in their proper perspective, petitioner apparently feeling
justified in his refusal to defer to basic postulates of constitutional and international law, induced no doubt by the
weight he would accord to the observation made by this Court in the two opinions earlier referred to. To repeat,
scant comfort, if at all is to be derived from such an obiter dictum, one which is likewise far from reflecting the fact
as it is.
Nothing is better settled than that the Philippines being independent and sovereign, its authority may be exercised
over its entire domain. There is no portion thereof that is beyond its power. Within its limits, its decrees are
supreme, its commands paramount. Its laws govern therein, and everyone to whom it applies must submit to its
terms. That is the extent of its jurisdiction, both territorial and personal. Necessarily, likewise, it has to be exclusive.
If it were not thus, there is a diminution of its sovereignty.
It is to be admitted that any state may, by its consent, express or implied, submit to a restriction of its sovereign
rights. There may thus be a curtailment of what otherwise is a power plenary in character. That is the concept of
sovereignty as auto-limitation, which, in the succinct language of Jellinek, "is the property of a state-force due to
which it has the exclusive capacity of legal self-determination and self-restriction."[[7]]A state then, if it chooses to,
may refrain from the exercise of what otherwise is illimitable competence.
Its laws may as to some persons found within its territory no longer control. Nor does the matter end there. It is not
precluded from allowing another power to participate in the exercise of jurisdictional right over certain portions of
its territory. If it does so, it by no means follows that such areas become impressed with an alien character. They
retain their status as native soil. They are still subject to its authority. Its jurisdiction may be diminished, but it does

not disappear. So it is with the bases under lease to the American armed forces by virtue of the military bases
agreement of 1947. They are not and cannot be foreign territory.
Decisions coming from petitioner's native land, penned by jurists of repute, speak to that effect with impressive
unanimity. We start with the citation from Chief Justice Marshall, announced in the leading case of Schooner
Exchange v. M'Faddon,[[8]] an 1812 decision: "The jurisdiction of the nation within its own territory is necessarily
exclusive and absolute. It is susceptible of no limitation not imposed by itself. Any restriction upon it, deriving
validity from an external source, would imply a diminution of its sovereignty to the extent of the restriction, and an
investment of that sovereignty to the same extent in that power which could impose such restriction." After which
came this paragraph: "All exceptions, therefore, to the full and complete power of a nation within its own territories,
must be traced up to the consent of the nation itself. They can flow from no other legitimate source."
Chief Justice Taney, in an 1857 decision,[[9]] affirmed the fundamental principle of everyone within the territorial
domain of a state being subject to its commands: "For undoubtedly every person who is found within the limits of a
government, whether the temporary purposes or as a resident, is bound by its laws." It is no exaggeration then for
Justice Brewer to stress that the United States government "is one having jurisdiction over every foot of soil within
its territory, and acting directly upon each [individual found therein]; . . ." [[10]]
Not too long ago, there was a reiteration of such a view, this time from the pen of Justice Van Devanter. Thus: "It
now is settled in the United States and recognized elsewhere that the territory subject to its jurisdiction includes the
land areas under its dominion and control the ports, harbors, bays, and other in closed arms of the sea along its coast,
and a marginal belt of the sea extending from the coast line outward a marine league, or 3 geographic
miles."[[11]] He could cite moreover, in addition to many American decisions, such eminent treatise-writers as Kent,
Moore, Hyde, Wilson, Westlake, Wheaton and Oppenheim.
As a matter of fact, the eminent commentator Hyde in his three-volume work on International Law, as interpreted
and applied by the United States, made clear that not even the embassy premises of a foreign power are to be
considered outside the territorial domain of the host state. Thus: "The ground occupied by an embassy is not in fact
the territory of the foreign State to which the premises belong through possession or ownership. The lawfulness or
unlawfulness of acts there committed is determined by the territorial sovereign. If an attache commits an offense
within the precincts of an embassy, his immunity from prosecution is not because he has not violated the local law,
but rather for the reason that the individual is exempt from prosecution. If a person not so exempt, or whose
immunity is waived, similarly commits a crime therein, the territorial sovereign, if it secures custody of the offender,
may subject him to prosecution, even though its criminal code normally does not contemplate the punishment of one
who commits an offense outside of the national domain. It is not believed, therefore, that an ambassador himself
possesses the right to exercise jurisdiction, contrary to the will of the State of his sojourn, even within his embassy
with respect to acts there committed. Nor is there apparent at the present time any tendency on the part of States to
acquiesce in his exercise of it."[[12]]
2. In the light of the above, the first and crucial error imputed to the Court of Tax Appeals to the effect that it should
have held that the Clark Air Force is foreign soil or territory for purposes of income tax legislation is clearly without
support in law. As thus correctly viewed, petitioner's hope for the reversal of the decision completely fades away.
There is nothing in the Military Bases Agreement that lends support to such an assertion. It has not become foreign
soil or territory. This country's jurisdictional rights therein, certainly not excluding the power to tax, have been
preserved. As to certain tax matters, an appropriate exemption was provided for.
Petitioner could not have been unaware that to maintain the contrary would be to defy reality and would be an
affront to the law. While his first assigned error is thus worded, he would seek to impart plausibility to his claim by
the ostensible invocation of the exemption clause in the Agreement by virtue of which a "national of the United
States serving in or employed in the Philippines in connection with the construction, maintenance, operation or
defense of the bases and residing in the Philippines only by reason of such employment" is not to be taxed on his
income unless "derived from Philippine source or sources other than the United States sources." [[13]] The reliance, to
repeat, is more apparent than real for as noted at the outset of this opinion, petitioner places more faith not on the
language of the provision on exemption but on a sentiment given expression in a 1951 opinion of this Court, which
would be made to yield such an unwarranted interpretation at war with the controlling constitutional and
international law principles. At any rate, even if such a contention were more adequately pressed and insisted upon,
it is on its face devoid of merit as the source clearly was Philippine.
In Saura Import and Export Co. v. Meer,[[14]] the case above referred to, this Court affirmed a decision rendered
about seven months previously,[[15]] holding liable as an importer, within the contemplation of the National Internal
Revenue Code provision, the trading firm that purchased army goods from a United States government agency in the
Philippines. It is easily understandable why. If it were not thus, tax evasion would have been facilitated. The United
States forces that brought in such equipment later disposed of as surplus, when no longer needed for military
purposes, was beyond the reach of our tax statutes.
Justice Tuason, who spoke for the Court, adhered to such a rationale, quoting extensively from the earlier opinion.
He could have stopped there. He chose not to do so. The transaction having occurred in 1946, not so long after the

liberation of the Philippines, he proceeded to discuss the role of the American military contingent in the Philippines
as a belligerent occupant. In the course of such a dissertion, drawing on his well-known gift for rhetoric and
cognizant that he was making an as if statement, he did say: "While in army bases or installations within the
Philippines those goods were in contemplation of law on foreign soil."
It is thus evident that the first, and thereafter the controlling, decision as to the liability for sales taxes as an importer
by the purchaser, could have been reached without any need for such expression as that given utterance by Justice
Tuason. Its value then as an authoritative doctrine cannot be as much as petitioner would mistakenly attach to it. It
was clearly obiter not being necessary for the resolution of the issue before this Court. [[16]] It was an opinion
"uttered by the way."[[17]] It could not then be controlling on the question before us now, the liability of the
petitioner for income tax which, as announced at the opening of this opinion, is squarely raised for the first
time.[[18]]
On this point, Chief Justice Marshall could again be listened to with profit. Thus: "It is a maxim, not to be
disregarded, that general expressions, in every opinion, are to be taken in connection with the case in which those
expressions are used. If they go beyond the case, they may be respected, but ought not to control the judgment in a
subsequent suit when the very point is presented for decision." [[19]]
Nor did the fact that such utterance of Justice Tuason was cited in Co Po v. Collector of Internal Revenue,[[20]] a
1962 decision relied upon by petitioner, put a different complexion on the matter. Again, it was by way of pure
embellishment, there being no need to repeat it, to reach the conclusion that it was the purchaser of army goods, this
time from military bases, that must respond for the advance sales taxes as importer. Again, the purpose that
animated the reiteration of such a view was clearly to emphasize that through the employment of such a fiction, tax
evasion is precluded. What is more, how far divorced from the truth was such statement was emphasized by Justice
Barrera, who penned the Co Po opinion, thus: "It is true that the areas covered by the United States Military Bases
are not foreign territories both in the political and geographical sense." [[21]]
Justice Tuason moreover made explicit that rather than corresponding with reality, what was said by him was in the
way of a legal fiction. Note his stress on "in contemplation of law." To lend further support to a conclusion already
announced, being at that a confirmation of what had been arrived at in the earlier case, distinguished by its sound
appreciation of the issue then before this Court and to preclude any tax evasion, an observation certainly not to be
taken literally was thus given utterance.
This is not to say that it should have been ignored altogether afterwards. It could be utilized again, as it undoubtedly
was, especially so for the purpose intended, namely to stigmatize as without support in law any attempt on the part
of a taxpayer to escape an obligation incumbent upon him. So it was quoted with that end in view in the Co Po case.
It certainly does not justify any effort to render futile the collection of a tax legally due, as here. That was farthest
from the thought of Justice Tuason.
What is more, the statement on its face is, to repeat, a legal fiction. This is not to discount the uses of a fictio juris in
the science of the law. It was Cardozo who pointed out its value as a device "to advance the ends of justice"
although at times it could be "clumsy" and even "offensive". [[22]] Certainly, then, while far from objectionable as
thus enunciated, this observation of Justice Tuason could be misused or misconstrued in a clumsy manner to reach
an offensive result. To repeat, properly used, a legal fiction could be relied upon by the law, as Frankfurter noted, in
the pursuit of legitimate ends. [[23]] Petitioner then would be well-advised to take to heart such counsel of care and
circumspection before invoking not a legal fiction that would avoid a mockery of the law by avoiding tax evasion
but what clearly is a misinterpretation thereof, leading to results that would have shocked its originator.
The conclusion is thus irresistible that the crucial error assigned, the only one that calls for discussion to the effect
that for income tax purposes the Clark Air Force Base is outside Philippine territory, is utterly without merit. So we
have said earlier.
3. To impute then to the statement of Justice Tuason the meaning that petitioner would fasten on it is, to paraphrase
Frankfurter, to be guilty of succumbing to the vice of literalness. To so conclude is, whether by design or
inadvertence, to misread it. It certainly is not susceptible of the mischievous consequences now sought to be
fastened on it by petitioner.
That it would be fraught with such peril to the enforcement of our tax statutes on the military bases under lease to
the American armed forces could not have been within the contemplation of Justice Tuason. To so attribute such a
bizarre consequence is to be guilty of a grave disservice to the memory of a great jurist. For his real and genuine
sentiment on the matter in consonance with the imperative mandate of controlling constitutional and international
law concepts was categorically set forth by him, not as an obiter but as the rationale of the decision, in People v.
Acierto[[24]] thus: "By the [Military Bases] Agreement, it should be noted, the Philippine Government merely
consents that the United States exercise jurisdiction in certain cases. The consent was given purely as a matter of
comity, courtesy, or expediency over the bases as part of the Philippine territory or divested itself completely of
jurisdiction over offenses committed therein."
Nor did he stop there. He did stress further the full extent of our territorial jurisdiction in words that do not admit of
doubt. Thus: "This provision is not and can not on principle or authority be construed as a limitation upon the rights

of the Philippine Government. If anything, it is an emphatic recognition and reaffirmation of Philippine sovereignty
over the bases and of the truth that all jurisdictional rights granted to the United States and not exercised by the latter
are reserved by the Philippines for itself." [[25]]
It is in the same spirit that we approach the specific question confronting us in this litigation. We hold, as announced
at the outset, that petitioner was liable for the income tax arising from a sale of his automobile in the Clark Field Air
Base, which clearly is and cannot otherwise be other than, within our territorial jurisdiction to tax.
4. With the mist thus lifted from the situation as it truly presents itself, there is nothing that stands in the way of an
affirmance of the Court of Tax Appeals decision. No useful purpose would be served by discussing the other
assigned errors, petitioner himself being fully aware that if the Clark Air Force Base is to be considered, as it ought
to be and as it is, Philippine soil or territory, his claim for exemption from the income tax due was distinguished
only by its futility.
There is further satisfaction in finding ourselves unable to indulge petitioner in his plea for reversal. We thus
manifest fealty to a pronouncement made time and time again that the law does not look with favor on tax
exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and
too categorical to be misinterpreted.[[26]] Petitioner had not done so. Petitioner cannot do so.
WHEREFORE, the decision of the Court of Tax Appeals of May 12, 1966 denying the refund of P2,979.00 as the
income tax paid by petitioner is affirmed. With costs against petitioner.
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of Foreign
Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON T.
GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING
COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT
PROPERTIES IN JAPAN,respondents.
Arturo M. Tolentino for petitioner in 92013.

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from
proceeding with the bidding for the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku
Tokyo, Japan scheduled on February 21, 1990. We granted the prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to compel the
respondents to fully disclose to the public the basis of their decision to push through with the sale of the Roppongi
property inspire of strong public opposition and to explain the proceedings which effectively prevent the
participation of Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13, 1990. After
G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were required to file a comment by
the Court's resolution dated February 22, 1990. The two petitions were consolidated on March 27, 1990 when the
memoranda of the parties in the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the respondents filed a motion for an extension of thirty
(30) days to file comment in G.R. No. 92047, followed by a second motion for an extension of another thirty (30)
days which we granted on May 8, 1990, a third motion for extension of time granted on May 24, 1990 and a fourth
motion for extension of time which we granted on June 5, 1990 but calling the attention of the respondents to the

length of time the petitions have been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked
for thirty (30) days to file a reply. We noted his motion and resolved to decide the two (2) cases.
I
The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government
under the Reparations Agreement entered into with Japan on May 9, 1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of approximately
2,489.96 square meters, and is at present the site of the Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square meters and
categorized as a commercial lot now being used as a warehouse and parking lot for the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a residential lot which is
now vacant.
The properties and the capital goods and services procured from the Japanese government for national development
projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering
during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be payable in twenty (20) years
in accordance with annual schedules of procurements to be fixed by the Philippine and Japanese governments
(Article 2, Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the national policy on
procurement and utilization of reparations and development loans. The procurements are divided into those for use
by the government sector and those for private parties in projects as the then National Economic Council shall
determine. Those intended for the private sector shall be made available by sale to Filipino citizens or to one
hundred (100%) percent Filipino-owned entities in national development projects.
The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed
under the heading "Government Sector", through Reparations Contract No. 300 dated June 27, 1958. The Roppongi
property consists of the land and building "for the Chancery of the Philippine Embassy" (Annex M-D to
Memorandum for Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the latter was
transferred to Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the failure of
our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J.
Valdez, to make the property the subject of a lease agreement with a Japanese firm - Kajima Corporation which
shall construct two (2) buildings in Roppongi and one (1) building in Nampeidai and renovate the present Philippine
Chancery in Nampeidai. The consideration of the construction would be the lease to the foreign corporation of one
(1) of the buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The other building in
Roppongi shall then be used as the Philippine Embassy Chancery. At the end of the lease period, all the three leased
buildings shall be occupied and used by the Philippine government. No change of ownership or title shall occur.
(See Annex "B" to Reply to Comment) The Philippine government retains the title all throughout the lease period
and thereafter. However, the government has not acted favorably on this proposal which is pending approval and
ratification between the parties. Instead, on August 11, 1986, President Aquino created a committee to study the
disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan through Administrative Order
No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of
separations' capital goods and services in the event of sale, lease or disposition. The four properties in Japan
including the Roppongi were specifically mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor,
its decision to sell the reparations properties starting with the Roppongi lot. The property has twice been set for
bidding at a minimum floor price of $225 million. The first bidding was a failure since only one bidder qualified.
The second one, after postponements, has not yet materialized. The last scheduled bidding on February 21, 1990 was

restrained by his Court. Later, the rules on bidding were changed such that the $225 million floor price became
merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No. 92013 objects to
the alienation of the Roppongi property to anyone while the petitioner in G.R. No. 92047 adds as a principal
objection the alleged unjustified bias of the Philippine government in favor of selling the property to non-Filipino
citizens and entities. These petitions have been consolidated and are resolved at the same time for the objective is
the same - to stop the sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and
(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi
property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government to alienate the
Roppongi property assails the constitutionality of Executive Order No. 296 in making the property available for sale
to non-Filipino citizens and entities. He also questions the bidding procedures of the Committee on the Utilization or
Disposition of Philippine Government Properties in Japan for being discriminatory against Filipino citizens and
Filipino-owned entities by denying them the right to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were acquired as part of
the reparations from the Japanese government for diplomatic and consular use by the Philippine government. VicePresident Laurel states that the Roppongi property is classified as one of public dominion, and not of private
ownership under Article 420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes under "property intended for public service" in paragraph
2 of the above provision. He states that being one of public dominion, no ownership by any one can attach to it, not
even by the State. The Roppongi and related properties were acquired for "sites for chancery, diplomatic, and
consular quarters, buildings and other improvements" (Second Year Reparations Schedule). The petitioner states
that they continue to be intended for a necessary service. They are held by the State in anticipation of an opportune
use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to put it in
more simple terms, it cannot be alienated nor be the subject matter of contracts (Citing Municipality of Cavite v.
Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the moment, the petitioner avers that the
same remains property of public dominion so long as the government has not used it for other purposes nor adopted
any measure constituting a removal of its original purpose or use.
The respondents, for their part, refute the petitioner's contention by saying that the subject property is not governed
by our Civil Code but by the laws of Japan where the property is located. They rely upon the rule of lex situs which
is used in determining the applicable law regarding the acquisition, transfer and devolution of the title to a property.
They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used
the lex situs in explaining the inapplicability of Philippine law regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the Roppongi
property has ceased to become property of public dominion. It has become patrimonial property because it has not
been used for public service or for diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil
Code) and because the intention by the Executive Department and the Congress to convert it to private use has been
manifested by overt acts, such as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the
issuance of administrative orders for the possibility of alienating the four government properties in Japan; (3) the
issuance of Executive Order No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the Comprehensive
Agrarian Reform Law] on June 10, 1988 which contains a provision stating that funds may be taken from the sale of
Philippine properties in foreign countries; (5) the holding of the public bidding of the Roppongi property but which
failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding to a future date; thus an acknowledgment
by the Senate of the government's intention to remove the Roppongi property from the public service purpose; and

(7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which
sought to enjoin the second bidding of the Roppongi property scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of Executive Order
No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court dismissed on August 1, 1989. He now
avers that the executive order contravenes the constitutional mandate to conserve and develop the national
patrimony stated in the Preamble of the 1987 Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public domain to Filipino citizens.
(Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth Act 141).itc-asl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the national
economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade practices;
(4) The guarantee of the right of the people to information on all matters of public concern (Section 7, Article III,
Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino citizens of
capital goods received by the Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public disclosure of all transactions involving public interest (Section
28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive order is a
misapplication of public funds He states that since the details of the bidding for the Roppongi property were never
publicly disclosed until February 15, 1990 (or a few days before the scheduled bidding), the bidding guidelines are
available only in Tokyo, and the accomplishment of requirements and the selection of qualified bidders should be
done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance to comply with
Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225
million from which price capital gains tax under Japanese law of about 50 to 70% of the floor price would still be
deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the three related
properties were through reparations agreements, that these were assigned to the government sector and that the
Roppongi property itself was specifically designated under the Reparations Agreement to house the Philippine
Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of
the Reparations Agreement and the corresponding contract of procurement which bind both the Philippine
government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become
patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its
ownership is a special collective ownership for general use and enjoyment, an application to the satisfaction of
collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but the
citizens; it is intended for the common and public welfare and cannot be the object of appropration. (Taken from 3
Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p.
26).

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks shores roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth.
ART. 421. All other property of the State, which is not of the character stated in the preceding
article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property
belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed because the lot has been Idle for
some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically
convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use
(Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public
domain, not available for private appropriation or ownership until there is a formal declaration on the part of the
government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention.
We emphasize, however, that an abandonment of the intention to use the Roppongi property for public service and
to make it patrimonial property under Article 422 of the Civil Code must be definite Abandonment cannot be
inferred from the non-use alone specially if the non-use was attributable not to the government's own deliberate and
indubitable will but to a lack of financial support to repair and improve the property (See Heirs of Felino Santiago v.
Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's
original purpose. Even the failure by the government to repair the building in Roppongi is not abandonment since as
earlier stated, there simply was a shortage of government funds. The recent Administrative Orders authorizing a
study of the status and conditions of government properties in Japan were merely directives for investigation but did
not in any way signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text
expressly authorizing the sale of the four properties procured from Japan for the government sector. The executive
order does not declare that the properties lost their public character. It merely intends to make the
properties available to foreigners and not to Filipinos alone in case of a sale, lease or other disposition. It merely
eliminates the restriction under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and
one hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as amended, and of other laws to the contrary
notwithstanding, the above-mentioned properties can be made available for sale, lease or any other
manner of disposition to non-Filipino citizens or to entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the three other
properties were earlier converted into alienable real properties. As earlier stated, Rep. Act No. 1789 differentiates
the procurements for the government sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the
private sector properties can be sold to end-users who must be Filipinos or entities owned by Filipinos. It is this
nationality provision which was amended by Executive Order No. 296.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for its
implementation, the proceeds of the disposition of the properties of the Government in foreign countries, did not
withdraw the Roppongi property from being classified as one of public dominion when it mentions Philippine
properties abroad. Section 63 (c) refers to properties which are alienable and not to those reserved for public use or
service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the Roppongi property. It
merely enumerates possible sources of future funding to augment (as and when needed) the Agrarian Reform Fund
created under Executive Order No. 299. Obviously any property outside of the commerce of man cannot be tapped
as a source of funds.
The respondents try to get around the public dominion character of the Roppongi property by insisting that Japanese
law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the ones to insist that in the sale
of extremely valuable government property, Japanese law and not Philippine law should prevail. The Japanese law its coverage and effects, when enacted, and exceptions to its provision is not presented to the Court It is simply
asserted that the lex loci rei sitae or Japanese law should apply without stating what that law provides. It is a ed on
faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of law
situation arises only when: (1) There is a dispute over the title or ownership of an immovable, such that the capacity
to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the
interpretation and effect of a conveyance, are to be determined (See Salonga, Private International Law, 1981 ed.,
pp. 377-383); and (2) A foreign law on land ownership and its conveyance is asserted to conflict with a domestic
law on the same matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question that the property belongs to the
Philippines. The issue is the authority of the respondent officials to validly dispose of property belonging to the
State. And the validity of the procedures adopted to effect its sale. This is governed by Philippine Law. The rule
of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situsrule is
misplaced. The opinion does not tackle the alienability of the real properties procured through reparations nor the
existence in what body of the authority to sell them. In discussing who are capableof acquiring the lots, the
Secretary merely explains that it is the foreign law which should determinewho can acquire the properties so that
the constitutional limitation on acquisition of lands of the public domain to Filipino citizens and entities wholly
owned by Filipinos is inapplicable. We see no point in belaboring whether or not this opinion is correct. Why should
we discuss who can acquire the Roppongi lot when there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the investigating
committee to sell the Roppongi property was premature or, at the very least, conditioned on a valid change in the
public character of the Roppongi property. Moreover, the approval does not have the force and effect of law since
the President already lost her legislative powers. The Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there is
another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the Government is a party. In cases in
which the Government of the Republic of the Philippines is a party to any deed or other instrument
conveying the title to real estate or to any other property the value of which is in excess of one
hundred thousand pesos, the respective Department Secretary shall prepare the necessary papers
which, together with the proper recommendations, shall be submitted to the Congress of the

Philippines for approval by the same. Such deed, instrument, or contract shall be executed and
signed by the President of the Philippines on behalf of the Government of the Philippines unless
the Government of the Philippines unless the authority therefor be expressly vested by law in
another officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of 1987 (Executive Order No.
292).
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
President, unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or her own sole will. Any such
conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and legislative
concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the Roppongi property
does not withdraw the property from public domain much less authorize its sale. It is a mere resolution; it is not a
formal declaration abandoning the public character of the Roppongi property. In fact, the Senate Committee on
Foreign Relations is conducting hearings on Senate Resolution No. 734 which raises serious policy considerations
and calls for a fact-finding investigation of the circumstances behind the decision to sell the Philippine government
properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the constitutionality of
Executive Order No. 296. Contrary to respondents' assertion, we did not uphold the authority of the President to sell
the Roppongi property. The Court stated that the constitutionality of the executive order was not the real issue and
that resolving the constitutional question was "neither necessary nor finally determinative of the case." The Court
noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the disposition of the Roppongi
property." In emphasizing that "the decision of the Executive to dispose of the Roppongi property to finance the
CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge the
fact that the property became alienable nor did it indicate that the President was authorized to dispose of the
Roppongi property. The resolution should be read to mean that in case the Roppongi property is re-classified to be
patrimonial and alienable by authority of law, the proceeds of a sale may be used for national economic
development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 sale of the
Roppongi property. We are resolving the issues raised in these petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi property from public domain to
make it alienable and a need for legislative authority to allow the sale of the property, we see no compelling reason
to tackle the constitutional issues raised by petitioner Ojeda.
The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in
appropriate cases and their resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56
[1937]). The Court will not pass upon a constitutional question although properly presented by the record if the case
can be disposed of on some other ground such as the application of a statute or general law (Siler v. Louisville and
Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:

The Roppongi property is not just like any piece of property. It was given to the Filipino people in
reparation for the lives and blood of Filipinos who died and suffered during the Japanese military
occupation, for the suffering of widows and orphans who lost their loved ones and kindred, for the
homes and other properties lost by countless Filipinos during the war. The Tokyo properties are a
monument to the bravery and sacrifice of the Filipino people in the face of an invader; like the
monuments of Rizal, Quezon, and other Filipino heroes, we do not expect economic or financial
benefits from them. But who would think of selling these monuments? Filipino honor and national
dignity dictate that we keep our properties in Japan as memorials to the countless Filipinos who
died and suffered. Even if we should become paupers we should not think of selling them. For it
would be as if we sold the lives and blood and tears of our countrymen. (Rollo- G.R. No. 92013,
p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by the Japanese government in atonement for its
past belligerence for the valiant sacrifice of life and limb and for deaths, physical dislocation and
economic devastation the whole Filipino people endured in World War II.
It is for what it stands for, and for what it could never bring back to life, that its significance today
remains undimmed, inspire of the lapse of 45 years since the war ended, inspire of the passage of
32 years since the property passed on to the Philippine government.
Roppongi is a reminder that cannot should not be dissipated ... (Rollo-92047, p. 9)
It is indeed true that the Roppongi property is valuable not so much because of the inflated prices fetched by real
property in Tokyo but more so because of its symbolic value to all Filipinos veterans and civilians alike. Whether
or not the Roppongi and related properties will eventually be sold is a policy determination where both the President
and Congress must concur. Considering the properties' importance and value, the laws on conversion and disposition
of property of public dominion must be faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is issued
enjoining the respondents from proceeding with the sale of the Roppongi property in Tokyo, Japan. The February
20, 1990 Temporary Restraining Order is made PERMANENT.
SO ORDERED.
Melencio-Herrera, Paras, Bidin, Grio-Aquino and Regalado, JJ., concur.

Separate Opinions

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations
only for emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property.
When asked to do so at the hearing on these petitions, the Solicitor General was at best ambiguous, although I must
add in fairness that this was not his fault. The fact is that there is -no such authority. Legal expertise alone cannot
conjure that statutory permission out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither
does Rep. Act No. 6657, which simply allows the proceeds of the sale of our properties abroad to be used for the
comprehensive agrarian reform program. Senate Res. No. 55 was a mere request for the deferment of the scheduled
sale of tile Roppongi property, possibly to stop the transaction altogether; and ill any case it is not a law. The sale of
the said property may be authorized only by Congress through a duly enacted statute, and there is no such law.
Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public
official, from the lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in the
several cases where this Court has ruled against her, the President of the Philippines has submitted to this principle
with becoming grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could
help in further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines
policies. The President executes such policies. The policies determined by Congress are embodied in legislative
enactments that have to be approved by the President to become law. The President, of course, recommends to
Congress the approval of policies but, in the final analysis, it is Congress that is the policy - determining branch of
government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and
approved by the President, and presidential acts implementing such laws, are in accordance with the Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between
the Philippine and Japanese governments. Under such agreement, this property was acquired by the Philippine
government for a specific purpose, namely, to serve as the site of the Philippine Embassy in Tokyo, Japan.
Consequently, Roppongi is a property of public dominion and intended for public service, squarely falling within
that class of property under Art. 420 of the Civil Code, which provides:
Art. 420. The following things are property of public dominion :
(1) ...
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the property is first transformed into
private property of the state otherwise known as patrimonial property of the state. 1The transformation of public
dominion property to state patrimonial property involves, to my mind, a policy decision. It is a policy decision
because the treatment of the property varies according to its classification. Consequently, it is Congress which can
decide and declare the conversion of Roppongi from a public dominion property to a state patrimonial property.
Congress has made no such decision or declaration.
Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be
approved by Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of
the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the
name of any political subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality. (Emphasis supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any
congressional authority extended to the President to sell Roppongi thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise
without a prior congressional approval, first, converting Roppongi from a public dominion property to a state
patrimonial property, and, second, authorizing the President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order
earlier issued by this Court.

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of
public dominion, and hence, has become patrimonial property of the State. I understand that the parties are agreed
that it was property intended for "public service" within the contemplation of paragraph (2), of Article 430, of the
Civil Code, and accordingly, land of State dominion, and beyond human commerce. The lone issue is, in the light of
supervening developments, that is non-user thereof by the National Government (for diplomatic purposes) for the
last thirteen years; the issuance of Executive Order No. 296 making it available for sale to any interested buyer; the
promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making available for the
program's financing, State assets sold; the approval by the President of the recommendation of the investigating
committee formed to study the property's utilization; and the issuance of Resolution No. 55 of the Philippine Senate
requesting for the deferment of its disposition it, "Roppongi", is still property of the public dominion, and if it is not,
how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have
debated early. In a 1906 decision, 1 it was held that property of the public dominion, a public plaza in this instance,
becomes patrimonial upon use thereof for purposes other than a plaza. In a later case, 2this ruling was reiterated.
Likewise, it has been held that land, originally private property, has become of public dominion upon its donation to
the town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the character of the
property, and any change occurring therein, depends on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the Government, through the
executive department or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for
public use or for special industries, [it] continue[s] to be part of the public [dominion], not available for private
expropriation or ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case) alone
may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public
domain to make it alienable and a land for legislative authority to allow the sale of the property" 7 the majority lays
stress to the fact that: (1) An affirmative act executive or legislative is necessary to reclassify property of the
public dominion, and (2) a legislative decree is required to make it alienable. It also clears the uncertainties brought
about by earlier interpretations that the nature of property-whether public or patrimonial is predicated on the manner
it is actually used, or not used, and in the same breath, repudiates the Government's position that the continuous nonuse of "Roppongi", among other arguments, for "diplomatic purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is
presumed to be State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the

same continue to be lands of the public dominion unless and until reclassified by the Executive Branch of the
Government; 9 and (3) All natural resources, under the Constitution, and subject to exceptional cases, belong to the
State. 10
I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku
Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be characterized as property of public
dominion, within the meaning of Article 420 (2) of the Civil Code:
[Property] which belong[s] to the State, without being for public use, and are intended for some
public service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple
threefold classification found in Article 420 of the Civil Code ("property for public use property "intended for some
public service" and property intended "for the development of the national wealth") all property owned by the
Republic of the Philippines whether found within the territorial boundaries of the Republic or located within the
territory of another sovereign State, is notself-evident. The first item of the classification property intended
for public use can scarcely be properly applied to property belonging to the Republic but found within the
territory of another State. The third item of the classification property intended for the development of the national
wealth is illustrated, in Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again,
mineral lands owned by a sovereign State are rarely, if ever, found within the territorial base of another sovereign
State. The task of examining in detail the applicability of the classification set out in Article 420 of our Civil Code to
property that the Philippines happens to own outside its own boundaries must, however, be left to academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this
Court. The issues before us relate essentially to authority to sell the Roppongi property so far as Philippine law is
concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into
patrimonial property or property of the private domain of the State; and (b) assuming an affirmative answer to (a),
whether or not there is legal authority to dispose of the Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some public service, into
property of the private domain of the Republic, it should be noted that the Civil Code does not address the question
of who has authority to effect such conversion. Neither does the Civil Code set out or refer to any procedure for
such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed
out in his concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that
if the land in question formed part of the public domain, the trial court should have declared the same no longer
necessary for public use or public purposes and which would, therefore, have become disposable and available for
private ownership. Mr. Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer
washed by the waters of the sea and is not necessary for purposes of public utility, or for the
establishment of special industries, or for coast-guard service, the government shall declare it to be
the property of the owners of the estates adjacent thereto and as an increment thereof. We believe
that only the executive and possibly the legislative departments have the authority and the power

to make the declaration that any land so gained by the sea, is not necessary for purposes of public
utility, or for the establishment of special industries, or for coast-guard service. If no such
declaration has been made by said departments, the lot in question forms part of the public
domain. (Natividad v. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y
Monteverde v. Director of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to
determine whether any public land are to be used for the purposes specified in Article 4 of the Law
of Waters. Consequently, until a formal declaration on the part of the Government, through the
executive department or the Legislature, to the effect that the land in question is no longer needed
for coast-guard service, for public use or for special industries, they continue to be part of the
public domain not available for private appropriation or ownership.(108 Phil. at 338-339;
emphasis supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the
State of public dominion into patrimonial property of the State. No particular formula or procedure of conversion is
specified either in statute law or in case law. Article 422 of the Civil Code simply states that: "Property of public
dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property
of the State". I respectfully submit, therefore, that the only requirement which is legitimately imposable is that the
intent to convert must be reasonably clear from a consideration of the acts or acts of the Executive Department or of
the Legislative Department which are said to have effected such conversion.
The same legal situation exists in respect of conversion of property of public dominion belonging to municipal
corporations, i.e., local governmental units, into patrimonial property of such entities. InCebu Oxygen Acetylene v.
Bercilles (66 SCRA 481 [1975]), the City Council of Cebu by resolution declared a certain portion of an existing
street as an abandoned road, "the same not being included in the city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through public
bidding. Although there was no formal and explicit declaration of conversion of property for public use into
patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street subject of petitioner's application for registration of title
was withdrawn from public use, it follows that such withdrawn portion becomes patrimonial
property which can be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public dominion, when no
longer intended for public use of for public service, shall form part of the patrimonial property of
the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal
terms, states that "Property thus withdrawn from public servitude may be used or conveyed for
any purpose for which other real property belonging to the City may be lawfully used or
conveyed."
Accordingly, the withdrawal of the property in question from public use and its subsequent sale to
the petitioner is valid. Hence, the petitioner has a registrable title over the lot in question. (66
SCRA at 484-; emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal
corporations simple non-use or the actual dedication of public property to some use other than "public use" or some
"public service", was sufficient legally to convert such property into patrimonial property (Municipality of Oas v.
Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of
Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect
of property of the State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has
been carried over verbatim into our Civil Code by Article 422 thereof, wrote:
La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de
dominio publico dejan de serlo. Si la Administracion o la autoridad competente legislative realizan
qun acto en virtud del cual cesa el destino o uso publico de los bienes de que se trata naturalmente
la dificultad queda desde el primer momento resuelta. Hay un punto de partida cierto para iniciar
las relaciones juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion
expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino publico de los
bienes; ahora bien, en este caso, y para los efectos juridicos que resultan de entrar la cosa en el
comercio de los hombres,' se entedera que se ha verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por
nuestra parte creemos que tal debe ser la soluciion. El destino de las cosas no depende tanto de una
declaracion expresa como del uso publico de las mismas, y cuanda el uso publico cese con
respecto de determinados bienes, cesa tambien su situacion en el dominio publico. Si una fortaleza
en ruina se abandona y no se repara, si un trozo de la via publica se abandona tambien por
constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes
especiales mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p.
128 [7a ed.; 1952) (Emphasis supplied)
The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or
definitely, to convert the Roppongi property into patrimonial property of the Republic. Assuming that to be the
case, it is respectfully submitted that cumulative effect of the executive acts here involved was to convert property
originally intended for and devoted to public service into patrimonial property of the State, that is, property
susceptible of disposition to and appropration by private persons. These executive acts, in their totality if not each
individual act, make crystal clear the intent of the Executive Department to effect such conversion. These executive
acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the
disposition/utilization of the Government's property in Japan, The Committee was composed of officials of the
Executive Department: the Executive Secretary; the Philippine Ambassador to Japan; and representatives of the
Department of Foreign Affairs and the Asset Privatization Trust. On 19 September 1988, the Committee
recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through public bidding.
On 4 October 1988, the President approved the recommendation of the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign
Affairs of the Republic's intention to dispose of the property in Roppongi. The Japanese Government through its
Ministry of Foreign Affairs replied that it interposed no objection to such disposition by the Republic. Subsequently,
the President and the Committee informed the leaders of the House of Representatives and of the Senate of the
Philippines of the proposed disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority
opinion is right in saying that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property,
it is here submitted with respect that Executive Order No. 296 is more than sufficient to indicate an intention to
convert the property previously devoted to public service into patrimonial property that is capable of being sold or
otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming
(but only arguendo) that non-use does not, by itself, automatically convert the property into patrimonial property. I
respectfully urge that prolonged non-use, conjoined with the other factors here listed, was legally effective to
convert the lot in Roppongi into patrimonial property of the State. Actually, as already pointed out, case law
involving property of municipal corporations is to the effect that simple non-use or the actual dedication of public
property to some use other than public use or public service, was sufficient to convert such property into patrimonial
property of the local governmental entity concerned. Also as pointed out above, Manresa reached the same

conclusion in respect of conversion of property of the public domain of the State into property of the private domain
of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use
was attributable not to the Government's own deliberate and indubitable will but to lack of financial support to repair
and improve the property" (Majority Opinion, p. 13). With respect, it may be stressed that there is no abandonment
involved here, certainly no abandonment of property or of property rights. What is involved is the charge of the
classification of the property from property of the public domain into property of the private domain of the State.
Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds were necessary to
maintain the property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of the crystalizing intent to change the character of the
property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in
Roppongi. The circumstance that this bidding was not successful certainly does not argue against an intent to
convert the property involved into property that is disposable by bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on
the part of the Executive Department (with the knowledge of the Legislative Department) to convert the property
involved into patrimonial property that is susceptible of being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of
whether or not there exists legal authority for the sale or disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is a party. In cases in which
the Government of the Republic of the Philippines is a party to any deed or other
instrument conveying the title to real estate or to any other property the value of which is in excess
of one hundred thousand pesos, the respective Department Secretary shall prepare the necessary
papers which, together with the proper recommendations, shall besubmitted to the Congress of the
Philippines for approval by the same. Such deed, instrument, or contract shall be executed and
signed by the President of the Philippines on behalf of the Government of the Philippines unless
the authority therefor be expressly vested by law in another officer. (Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the
Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
President, unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of
Congress when the price of the real property being disposed of is in excess of One Hundred Thousand Pesos
(P100,000.00) under the Revised Administrative Code of 1917, has been deleted from Section 48 of the 1987
Administrative Code. What Section 48 of the present Administrative Code refers to isauthorization by law for the
conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance of real property of

the Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition of real property of the
private domain of the Government, has been granted by Congress both in the form of (a) a general, standing
authorization for disposition of patrimonial property of the Government; and (b) specific legislation authorizing the
disposition of particular pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act
No. 3038, entitled "An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of
the Private Domain of the Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9
March 1922. The full text of this statute is as follows:
Be it enacted by the Senate and House of Representatives of the Philippines in Legislature
assembled and by the authority of the same:
SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the
Environment and Natural Resources) is hereby authorized to sell or lease land of the private
domain of the Government of the Philippine Islands, or any part thereof, to such persons,
corporations or associations as are, under the provisions of Act Numbered Twenty-eight hundred
and seventy-four, (now Commonwealth Act No. 141, as amended) known as the Public Land Act,
entitled to apply for the purchase or lease or agricultural public land.
SECTION 2. The sale of the land referred to in the preceding section shall, if such land is
agricultural, be made in the manner and subject to the limitations prescribed in chapters five and
six, respectively, of said Public Land Act, and if it be classified differently, in conformity with the
provisions of chapter nine of said Act: Provided, however, That the land necessary for the public
service shall be exempt from the provisions of this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be
noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act
(Commonwealth Act No. 141, as amended) and that both statutes refer to: "any tract of land of the public domain
which being neither timber nor mineral land, is intended to be used for residential purposes or for commercial or
industrial purposes other than agricultural" (Emphasis supplied).itc-asl In other words, the statute covers the sale
or lease or residential, commercial or industrial land of the private domain of the State.
Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December
1954, the then Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6
and 7-7 which were entitled, respectively: "Supplementary Regulations Governing the Sale of the Lands of the
Private Domain of the Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands
of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been
repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by
certain earlier statutes. The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the
disposition of the friar lands, purchased by the Government from the Roman Catholic Church, to bona fide settlers
and occupants thereof or to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands
were held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914,
authorized the sale of the San Lazaro Estatelocated in the City of Manila, which had also been purchased by the
Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including

therein all lands and buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by private
persons, and which were also acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the
President to dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953,
which authorized the
President to sell an Identified parcel of land of the private domain of the National Government to the National Press
Club of the Philippines, and to other recognized national associations of professionals with academic standing, for
the nominal price of P1.00. It appears relevant to note that Republic Act No. 905 was not an outright disposition in
perpetuity of the property involved- it provided for reversion of the property to the National Government in case the
National Press Club stopped using it for its headquarters. What Republic Act No. 905 authorized was really
a donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of
the Roppongi property which, in my view, has been converted into patrimonial property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the
Philippines but also to patrimonial property found outside the Philippines, may appear strange or unusual. I
respectfully submit that such position is not any more unusual or strange than the assumption that Article 420 of the
Civil Code applies not only to property of the Republic located within Philippine territory but also to property found
outside the boundaries of the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the
President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of
control exercised by the President over department heads (Article VII, Section 17,1987 Constitution), the President
herself may carry out the function or duty that is specifically lodged in the Secretary of the Department of
Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the President
retains the power to approve or disapprove the exercise of that function or duty when done by the Secretary of
Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of
existence of legal power or authority. They have nothing to do with much debated questions of wisdom or propriety
or relative desirability either of the proposed disposition itself or of the proposed utilization of the anticipated
proceeds of the property involved. These latter types of considerations He within the sphere of responsibility of the
political departments of government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations
only for emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property.
When asked to do so at the hearing on these petitions, the Solicitor General was at best ambiguous, although I must
add in fairness that this was not his fault. The fact is that there is -no such authority. Legal expertise alone cannot
conjure that statutory permission out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither
does Rep. Act No. 6657, which simply allows the proceeds of the sale of our properties abroad to be used for the
comprehensive agrarian reform program. Senate Res. No. 55 was a mere request for the deferment of the scheduled
sale of tile Roppongi property, possibly to stop the transaction altogether; and ill any case it is not a law. The sale of
the said property may be authorized only by Congress through a duly enacted statute, and there is no such law.
Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public
official, from the lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in the
several cases where this Court has ruled against her, the President of the Philippines has submitted to this principle
with becoming grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could
help in further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines
policies. The President executes such policies. The policies determined by Congress are embodied in legislative
enactments that have to be approved by the President to become law. The President, of course, recommends to
Congress the approval of policies but, in the final analysis, it is Congress that is the policy - determining branch of
government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and
approved by the President, and presidential acts implementing such laws, are in accordance with the Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between
the Philippine and Japanese governments. Under such agreement, this property was acquired by the Philippine
government for a specific purpose, namely, to serve as the site of the Philippine Embassy in Tokyo, Japan.
Consequently, Roppongi is a property of public dominion and intended for public service, squarely falling within
that class of property under Art. 420 of the Civil Code, which provides:
Art. 420. The following things are property of public dominion :
(1) ...
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the property is first transformed into
private property of the state otherwise known as patrimonial property of the state. 1The transformation of public
dominion property to state patrimonial property involves, to my mind, a policy decision. It is a policy decision
because the treatment of the property varies according to its classification. Consequently, it is Congress which can
decide and declare the conversion of Roppongi from a public dominion property to a state patrimonial property.
Congress has made no such decision or declaration.
Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be
approved by Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of
the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the
name of any political subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality. (Emphasis supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any
congressional authority extended to the President to sell Roppongi thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise
without a prior congressional approval, first, converting Roppongi from a public dominion property to a state
patrimonial property, and, second, authorizing the President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order
earlier issued by this Court.

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of
public dominion, and hence, has become patrimonial property of the State. I understand that the parties are agreed
that it was property intended for "public service" within the contemplation of paragraph (2), of Article 430, of the
Civil Code, and accordingly, land of State dominion, and beyond human commerce. The lone issue is, in the light of
supervening developments, that is non-user thereof by the National Government (for diplomatic purposes) for the
last thirteen years; the issuance of Executive Order No. 296 making it available for sale to any interested buyer; the
promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making available for the
program's financing, State assets sold; the approval by the President of the recommendation of the investigating
committee formed to study the property's utilization; and the issuance of Resolution No. 55 of the Philippine Senate
requesting for the deferment of its disposition it, "Roppongi", is still property of the public dominion, and if it is not,
how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have
debated early. In a 1906 decision, 1 it was held that property of the public dominion, a public plaza in this instance,
becomes patrimonial upon use thereof for purposes other than a plaza. In a later case, 2this ruling was reiterated.
Likewise, it has been held that land, originally private property, has become of public dominion upon its donation to
the town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the character of the
property, and any change occurring therein, depends on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the Government, through the
executive department or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for
public use or for special industries, [it] continue[s] to be part of the public [dominion], not available for private
expropriation or ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case) alone
may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public
domain to make it alienable and a land for legislative authority to allow the sale of the property" 7 the majority lays
stress to the fact that: (1) An affirmative act executive or legislative is necessary to reclassify property of the
public dominion, and (2) a legislative decree is required to make it alienable. It also clears the uncertainties brought
about by earlier interpretations that the nature of property-whether public or patrimonial is predicated on the manner
it is actually used, or not used, and in the same breath, repudiates the Government's position that the continuous nonuse of "Roppongi", among other arguments, for "diplomatic purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is
presumed to be State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the

same continue to be lands of the public dominion unless and until reclassified by the Executive Branch of the
Government; 9 and (3) All natural resources, under the Constitution, and subject to exceptional cases, belong to the
State. 10
I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku
Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be characterized as property of public
dominion, within the meaning of Article 420 (2) of the Civil Code:
[Property] which belong[s] to the State, without being for public use, and are intended for some
public service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple
threefold classification found in Article 420 of the Civil Code ("property for public use property "intended for some
public service" and property intended "for the development of the national wealth") all property owned by the
Republic of the Philippines whether found within the territorial boundaries of the Republic or located within the
territory of another sovereign State, is notself-evident. The first item of the classification property intended
for public use can scarcely be properly applied to property belonging to the Republic but found within the
territory of another State. The third item of the classification property intended for the development of the national
wealth is illustrated, in Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again,
mineral lands owned by a sovereign State are rarely, if ever, found within the territorial base of another sovereign
State. The task of examining in detail the applicability of the classification set out in Article 420 of our Civil Code to
property that the Philippines happens to own outside its own boundaries must, however, be left to academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this
Court. The issues before us relate essentially to authority to sell the Roppongi property so far as Philippine law is
concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into
patrimonial property or property of the private domain of the State; and (b) assuming an affirmative answer to (a),
whether or not there is legal authority to dispose of the Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some public service, into
property of the private domain of the Republic, it should be noted that the Civil Code does not address the question
of who has authority to effect such conversion. Neither does the Civil Code set out or refer to any procedure for
such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed
out in his concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that
if the land in question formed part of the public domain, the trial court should have declared the same no longer
necessary for public use or public purposes and which would, therefore, have become disposable and available for
private ownership. Mr. Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer
washed by the waters of the sea and is not necessary for purposes of public utility, or for the
establishment of special industries, or for coast-guard service, the government shall declare it to be
the property of the owners of the estates adjacent thereto and as an increment thereof. We believe
that only the executive and possibly the legislative departments have the authority and the power

to make the declaration that any land so gained by the sea, is not necessary for purposes of public
utility, or for the establishment of special industries, or for coast-guard service. If no such
declaration has been made by said departments, the lot in question forms part of the public
domain. (Natividad v. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y
Monteverde v. Director of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to
determine whether any public land are to be used for the purposes specified in Article 4 of the Law
of Waters. Consequently, until a formal declaration on the part of the Government, through the
executive department or the Legislature, to the effect that the land in question is no longer needed
for coast-guard service, for public use or for special industries, they continue to be part of the
public domain not available for private appropriation or ownership.(108 Phil. at 338-339;
emphasis supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the
State of public dominion into patrimonial property of the State. No particular formula or procedure of conversion is
specified either in statute law or in case law. Article 422 of the Civil Code simply states that: "Property of public
dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property
of the State". I respectfully submit, therefore, that the only requirement which is legitimately imposable is that the
intent to convert must be reasonably clear from a consideration of the acts or acts of the Executive Department or of
the Legislative Department which are said to have effected such conversion.
The same legal situation exists in respect of conversion of property of public dominion belonging to municipal
corporations, i.e., local governmental units, into patrimonial property of such entities. InCebu Oxygen Acetylene v.
Bercilles (66 SCRA 481 [1975]), the City Council of Cebu by resolution declared a certain portion of an existing
street as an abandoned road, "the same not being included in the city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through public
bidding. Although there was no formal and explicit declaration of conversion of property for public use into
patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street subject of petitioner's application for registration of title
was withdrawn from public use, it follows that such withdrawn portion becomes patrimonial
property which can be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public dominion, when no
longer intended for public use of for public service, shall form part of the patrimonial property of
the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal
terms, states that "Property thus withdrawn from public servitude may be used or conveyed for
any purpose for which other real property belonging to the City may be lawfully used or
conveyed."
Accordingly, the withdrawal of the property in question from public use and its subsequent sale to
the petitioner is valid. Hence, the petitioner has a registrable title over the lot in question. (66
SCRA at 484-; emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal
corporations simple non-use or the actual dedication of public property to some use other than "public use" or some
"public service", was sufficient legally to convert such property into patrimonial property (Municipality of Oas v.
Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of
Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect
of property of the State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has
been carried over verbatim into our Civil Code by Article 422 thereof, wrote:
La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de
dominio publico dejan de serlo. Si la Administracion o la autoridad competente legislative realizan
qun acto en virtud del cual cesa el destino o uso publico de los bienes de que se trata naturalmente
la dificultad queda desde el primer momento resuelta. Hay un punto de partida cierto para iniciar
las relaciones juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion
expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino publico de los
bienes; ahora bien, en este caso, y para los efectos juridicos que resultan de entrar la cosa en el
comercio de los hombres,' se entedera que se ha verificado la conversion de los bienes
patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por
nuestra parte creemos que tal debe ser la soluciion. El destino de las cosas no depende tanto de una
declaracion expresa como del uso publico de las mismas, y cuanda el uso publico cese con
respecto de determinados bienes, cesa tambien su situacion en el dominio publico. Si una fortaleza
en ruina se abandona y no se repara, si un trozo de la via publica se abandona tambien por
constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes
especiales mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p.
128 [7a ed.; 1952) (Emphasis supplied)
The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or
definitely, to convert the Roppongi property into patrimonial property of the Republic. Assuming that to be the
case, it is respectfully submitted that cumulative effect of the executive acts here involved was to convert property
originally intended for and devoted to public service into patrimonial property of the State, that is, property
susceptible of disposition to and appropration by private persons. These executive acts, in their totality if not each
individual act, make crystal clear the intent of the Executive Department to effect such conversion. These executive
acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the
disposition/utilization of the Government's property in Japan, The Committee was composed of officials of the
Executive Department: the Executive Secretary; the Philippine Ambassador to Japan; and representatives of the
Department of Foreign Affairs and the Asset Privatization Trust. On 19 September 1988, the Committee
recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through public bidding.
On 4 October 1988, the President approved the recommendation of the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign
Affairs of the Republic's intention to dispose of the property in Roppongi. The Japanese Government through its
Ministry of Foreign Affairs replied that it interposed no objection to such disposition by the Republic. Subsequently,
the President and the Committee informed the leaders of the House of Representatives and of the Senate of the
Philippines of the proposed disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority
opinion is right in saying that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property,
it is here submitted with respect that Executive Order No. 296 is more than sufficient to indicate an intention to
convert the property previously devoted to public service into patrimonial property that is capable of being sold or
otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming
(but only arguendo) that non-use does not, by itself, automatically convert the property into patrimonial property. I
respectfully urge that prolonged non-use, conjoined with the other factors here listed, was legally effective to
convert the lot in Roppongi into patrimonial property of the State. Actually, as already pointed out, case law
involving property of municipal corporations is to the effect that simple non-use or the actual dedication of public
property to some use other than public use or public service, was sufficient to convert such property into patrimonial
property of the local governmental entity concerned. Also as pointed out above, Manresa reached the same

conclusion in respect of conversion of property of the public domain of the State into property of the private domain
of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use
was attributable not to the Government's own deliberate and indubitable will but to lack of financial support to repair
and improve the property" (Majority Opinion, p. 13). With respect, it may be stressed that there is no abandonment
involved here, certainly no abandonment of property or of property rights. What is involved is the charge of the
classification of the property from property of the public domain into property of the private domain of the State.
Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds were necessary to
maintain the property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of the crystalizing intent to change the character of the
property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in
Roppongi. The circumstance that this bidding was not successful certainly does not argue against an intent to
convert the property involved into property that is disposable by bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on
the part of the Executive Department (with the knowledge of the Legislative Department) to convert the property
involved into patrimonial property that is susceptible of being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of
whether or not there exists legal authority for the sale or disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is a party. In cases in which
the Government of the Republic of the Philippines is a party to any deed or other
instrument conveying the title to real estate or to any other property the value of which is in excess
of one hundred thousand pesos, the respective Department Secretary shall prepare the necessary
papers which, together with the proper recommendations, shall besubmitted to the Congress of the
Philippines for approval by the same. Such deed, instrument, or contract shall be executed and
signed by the President of the Philippines on behalf of the Government of the Philippines unless
the authority therefor be expressly vested by law in another officer. (Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the
Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
President, unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of
Congress when the price of the real property being disposed of is in excess of One Hundred Thousand Pesos
(P100,000.00) under the Revised Administrative Code of 1917, has been deleted from Section 48 of the 1987
Administrative Code. What Section 48 of the present Administrative Code refers to isauthorization by law for the
conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance of real property of

the Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition of real property of the
private domain of the Government, has been granted by Congress both in the form of (a) a general, standing
authorization for disposition of patrimonial property of the Government; and (b) specific legislation authorizing the
disposition of particular pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act
No. 3038, entitled "An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of
the Private Domain of the Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9
March 1922. The full text of this statute is as follows:
Be it enacted by the Senate and House of Representatives of the Philippines in Legislature
assembled and by the authority of the same:
SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the
Environment and Natural Resources) is hereby authorized to sell or lease land of the private
domain of the Government of the Philippine Islands, or any part thereof, to such persons,
corporations or associations as are, under the provisions of Act Numbered Twenty-eight hundred
and seventy-four, (now Commonwealth Act No. 141, as amended) known as the Public Land Act,
entitled to apply for the purchase or lease or agricultural public land.
SECTION 2. The sale of the land referred to in the preceding section shall, if such land is
agricultural, be made in the manner and subject to the limitations prescribed in chapters five and
six, respectively, of said Public Land Act, and if it be classified differently, in conformity with the
provisions of chapter nine of said Act: Provided, however, That the land necessary for the public
service shall be exempt from the provisions of this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be
noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act
(Commonwealth Act No. 141, as amended) and that both statutes refer to: "any tract of land of the public domain
which being neither timber nor mineral land, is intended to be used for residential purposes or for commercial or
industrial purposes other than agricultural" (Emphasis supplied). In other words, the statute covers the sale or lease
or residential, commercial or industrial land of the private domain of the State.
Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December
1954, the then Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6
and 7-7 which were entitled, respectively: "Supplementary Regulations Governing the Sale of the Lands of the
Private Domain of the Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands
of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been
repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by
certain earlier statutes. The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the
disposition of the friar lands, purchased by the Government from the Roman Catholic Church, to bona fide settlers
and occupants thereof or to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands
were held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914,
authorized the sale of the San Lazaro Estatelocated in the City of Manila, which had also been purchased by the
Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including

therein all lands and buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by private
persons, and which were also acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the
President to dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953,
which authorized the
President to sell an Identified parcel of land of the private domain of the National Government to the National Press
Club of the Philippines, and to other recognized national associations of professionals with academic standing, for
the nominal price of P1.00. It appears relevant to note that Republic Act No. 905 was not an outright disposition in
perpetuity of the property involved- it provided for reversion of the property to the National Government in case the
National Press Club stopped using it for its headquarters. What Republic Act No. 905 authorized was really
a donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of
the Roppongi property which, in my view, has been converted into patrimonial property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the
Philippines but also to patrimonial property found outside the Philippines, may appear strange or unusual. I
respectfully submit that such position is not any more unusual or strange than the assumption that Article 420 of the
Civil Code applies not only to property of the Republic located within Philippine territory but also to property found
outside the boundaries of the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the
President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of
control exercised by the President over department heads (Article VII, Section 17,1987 Constitution), the President
herself may carry out the function or duty that is specifically lodged in the Secretary of the Department of
Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the President
retains the power to approve or disapprove the exercise of that function or duty when done by the Secretary of
Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of
existence of legal power or authority. They have nothing to do with much debated questions of wisdom or propriety
or relative desirability either of the proposed disposition itself or of the proposed utilization of the anticipated
proceeds of the property involved. These latter types of considerations He within the sphere of responsibility of the
political departments of government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.
Footnotes

G.R. No. L-41518 June 30, 1976

GUERRERO'S TRANSPORT SERVICES, INC., petitioner,
vs.
BLAYLOCK TRANSPORTATION SERVICES EMPLOYEES ASSOCIATION-KILUSAN (BTEAKILUSAN), LABOR ARBITER FRANCISCO M. DE LOS REYES and JOSE CRUZ, respondents.

ANTONIO, J.:
Certiorari and prohibition with preliminary injunction to annul the Orders of the National Labor Relations
Commission, of March 26, June 20 and September 25, 1975, as well as the Writ of Execution of September 26,
1975, issued in NLRC Case No. 214, and to restrain respondent Deputy Sheriff of Manila from implementing said
writ.
On June 1, 1972, the United states Naval Base authorities at Subic, Zambales, conducted a public bidding for a fiveyear contract for the right to operate and/or manage the transportation services inside the naval base. This bidding
was won by Santiago Guerrero, owner- operator of Guerrero's Transport Services, Inc., herein petitioner, over
Concepcion F. Blaylock, the then incumbent concessionaire doing business under the name of "Blaylock Transport
Services", whose 395 employees are members of respondent union BTEA-KILUSAN. When petitioner, after the
commencement of its operation on January 1, 1973, refused to employ the members of the respondent union, the
latter. On January, 12, 1975, filed a complaint 1 with the National Labor Relations Commission 2 docketed as NLRC
Case No. 214, against Guerrero's Transport Services, Inc. and Santiago Guerrero, to compel them to employ its
members pursuant to Article 1, Section 2 of the RP-US Base Agreement dated May 27, 1968. 3 This case was
dismissed by the National Labor Relations Commission on March 13, 1973, upon petitioner's motion to dismiss on
jurisdictional
grounds,
there
being
no
employer-employee
relationship
between
the
parties. 4
Respondent union then appealed said Order on March 26,1973 to the Secretary of the Department of Labor, who,
instead of deciding the appeal, remanded the case for review to the NLRC which, subsequently, summoned both
parties to a series of conferences. Thereafter, or on October .11, 1973, the NLRC issue a Resolution 5 ordering
petitioner, among others, "to absorb all the complainants who filed their applications on or before the deadline" set
by petitioner "on 15 November 1972 except those who may have derogatory records with the U.S. Naval Authorities
in Subic, Zambales" and directing the Officer-in-charge of the provincial office of the Department of Labor in
Olongapo City to "oversee the preparation of the list of those qualified for absorption in accordance with this
resolution."
Petitioner appealed to Secretary of Labor Blas F. Ople who, in turn, rendered a Decision on December 27, 1973,
affirming said Resolution. 6 On January 22, 1974, Santiago A. Guerrero) appealed the decision to the President of
the Philippines, 7 but on July 9, 1974, the President, through Assistant Executive Secretary Ronaldo B. Zamora,
returned the case to the Secretary of Labor for appropriate action on the appeal, it appearing, that the same does not
involve national interest. 8
In the meantime, the Provincial Director of the Labor Office in Zambales furnished, on August 2, 1974, petitioner 9a
list of forty-six (46) members of respondent union BTEA-KILUSAN and former drivers of the Blaylock Transport
Service, 10who are within the coverage of the decision of the Secretary of Labor, and requesting petitioner to report
its action on the matter directly to the Chairman, NLRC, Manila. Subsequently, Santiago A. Guerrero received a
letter dated September 24, 1974 11 from Col. Levi L. Basilla, PC (GSC) Camp Olivas, San Fernando, Pampanga,
requesting compliance with the Order dated July 19, 1974 of the NLRC in NLRC Case No. 214. In his reply letter
dated October 4, 1974, Guerrero informed Col. Basilia that he had substantially complied with the decision of the
Secretary of Labor affirming the NLRC Resolution of October 31, 1974 in NLRC Case No. 214, and that any

apparent non-compliance therewith was attributable to the individual complainants who failed to submit themselves
for processing and examination as requested by the authorities of the U.S. Naval Base in Subic, Zambales,
preparatory to their absorption by petitioner.
On January 18, 1975, Acting Executive Secretary Roberto V. Reyes, pursuant to Section 10 of Presidential Decree
No. 21, directed the Chief of Constabulary to arrest the executive officers of petitioner. 12 On February 20, 1975,
petitioner informed Secretary Reyes that it has substantially complied with the NLRC Resolution of October 31,
1975 as out of those listed by the Regional Labor Director, only a few passed the examination given and some of
those who passed failed to comply with the final requirements of the U.S. Naval Base Authority; that only those who
passed and complied with the requirements of the U.S. Naval Base Authority were extended appointments as early
as December 16, 1974, but none of them, for evident lack of interest, has reported for work. 13 In his 1st
endorsement dated March 26, 1975, Secretary Zamora required the Secretary of Labor to verify petitioner's
allegations. 14 On the same date, respondent Labor Arbiter Francisco M. de los Reyes, upon a motion for execution
filed by respondent union, issued an Order stating that "upon the finality thereof and by way of implementing any
writ of execution that might be issued in this case, further hearings shall be held to determine the members of
respondent union who are entitled to reinstatement in accordance with the basic guidelines finally determined in this
case." 15
On June 20, 1975, respondent Labor Arbiter De los Reyes ordered the reinstatement of 129 individuals "to their
former or substantially equivalent positions without loss of seniority and other rights and privileges". 16
On July 16,1975, respondent BTEA-KILUSAN filed a Motion for Issuance of Writ of Execution with respondent
Labor Arbiter, 17 but this was objected to by petitioner contending that the Labor Arbiter has no jurisdiction over
NLRC Case No. 214 and, therefore, his proceedings and orders resulting therefrom are null and void. 18
On September 1, 1975, the Provincial Director of the Zambales Labor Office, pursuant to the directive of the
Secretary of Labor, 19 and the NLRC Resolution dated October 21, 1975 20 submitted a detailed information to the
Assistant Secretary of the Department of Labor on petitioner's compliance, "to enable the Department of Labor to
formally close" NLRC Case No. 214. 21
On September 25, 1975, respondent Labor Arbiter, acting on the motion for execution filed by respondent union
BTEA-KILUSAN, and finding that both the Orders, dated March 26 and June 20, 1975, have not been appealed
pursuant to Article 223 of the Labor Code, declared said Orders final and executory and directed petitioner
Guerrero's Transport Services, Inc. to reinstate the 129 complainants and to pay them the amount of P4,290.00 each,
or a total of P592,110.00 as back wages covering the period from August 22, 1974 to September 20, 1975. 22
On September 26, 1975, respondent Labor Arbiter issued a writ directing the respondent Deputy Sheriff of Manila
levy on the moneys and/or properties of petitioner, 23 and on the same date respondent Sheriff immediately serve
said writ on petitioner who was given a period of five (5) days within which to comply therewith.
It was on this factual environment that petitioner instituted the present petition for certiorari and prohibition with
preliminary injunction on October 6, 1975. Petitioner asserts that the afore-mentioned Orders were issued by
respondent Labor Arbiter without jurisdiction.
As prayed for, this Court, on October 6, 1975, issued a temporary restraining order and required the respondents to
file an answer within ten (10) days from notice.
On October 11, 1975, respondent Labor Arbiter De los Reyes and Sheriff Jose Cruz filed their Comment by way of
answer to the petition, explaining the legal justifications of their action on the premises.
Upon motion filed on October 11, 1975 by respondent union BTEA-KILUSAN for reconsideration and to lift the
temporary restraining order of October 6, 1975, this Court, on October 15, 1975, lifted said restraining order and set
the case for hearing on Monday, October 20, 1975 at 3:00 p.m.
At the hearing of this case on October 20, 1975, a Compromise Agreement was arrived at by the parties wherein
they agreed to submit to the Office of t he Secretary of Labor the determination of members of the respondent union
BTEA-KILUSAN who shall be reinstated or absorbed by the herein petitioner in the transportation service inside the

naval base, which determination shall be considered final. This Court approved this agreement and enjoined "all the
parties to strictly observe the terms thereof." This agreement is deemed to have superseded the Resolution of the
National Labor Relations Commission of October 31, 1973, as affirmed by the Secretary of Labor on December 27,
1973.
Pursuant to this agreement which was embodied in the Resolution of this Court of October 24, 1975, Secretary of
Labor Blas F. Ople issued an Order dated November 13, 1975, the pertinent portion of which reads as follows:
The issue submitted for resolution hinges on the credibility of the alleged applications.
Considering that the employees are economically dependent on their jobs, they have all the
reasons and zealousness to pursue their jobs within the legitimate framework of our laws. The
applicant are no strangers to the pains and difficulties of unemployment. Because of these factors
we cannot ignore the affidavits of proof presented by the employees concerned as against the
declaration of the herein respondent. Firmly entrenched is the rule in this jurisdiction that doubts
arising from labor disputes must be construed and interpreted in favor of the workers.
RESPONSIVE TO THE FOREGOING, the National Labor Relations Commission through
Arbiter Francisco delos Reyes is hereby directed to implement the absorption of the 175 members
of the Blaylock Transport Employees Association (BTEA-KILUSAN) into the Guerrero Transport
Services, subject to the following terms and conditions:
1) that they were bona fide employees of the Blaybock Transportation Service at the time its
concession expired:
2) that the appellants shall pass final screening and approval by the appropriate authorities of the
U.S. Base concerned.
The applicants to be processed for absorption shall be those in the list of 46 submitted by OIC
Liberator (Carino on 2 August 1974, and the list of 129 determined by Arbiter de los Reyes as
embodied in the Writ of Execution issued on 25 September 1975.
The Regional Director of Regional Office No. II, San Fernando, Pampanga, shall make available
to the parties the facilities of that Office in the implementation of the aforesaid absorption
process. 24
On November 24, 1975, in compliance with the aforesaid directive of the Secretary of Labor, Labor Arbiter
Francisco M. delos Reyes conducted a hearing to receive evidence as to who were the bona fide employees of the
former concessionaire at the "time of its concession expire". Thereafter, Labor Arbiter De los Reyes issued an Order,
dated November 25, 1975, listing in Annex "A" thereof, 174 employees who were bona fide employees of the
private respondent, and transmitting a copy of said Order to the Base Commander, U.S. Naval Base, Olongapo City,
with the request for the immediate screening and approval of their applications in accordance with applicable rules
of said command. The pertinent portion of said Order reads as follows:
As far as this Labor Arbiter is concerned, his only participation in this case refers to that portion of
the Secretary of Labor's Order directing him to implement "* * * the absorption of the 175
members of the Blaylock Transport Employees Association (BTEA-KILUSAN) into the Guerrero
Transport Services," subject to certain terms and conditions. Hence, any question of "prematurity"
as espoused by respondent's counsel may not he entertained by this Labor Arbiter.
Going now to the applicants who should be entitled to absorption, the Honorable Secretary of
Labor specified that the same should be composed of the 46 submitted by OIC Liberator Carino
on 2 August 1974 and the 129 applicants determined by this Labor Arbiter. Of the latter, only 128
will be named. A perusal of said list show that the name "Renato Carriaga" has been doubly listed.
For convenience, these two listings have now been consolidated and alphabetically arranged and
as an integral part of this Order has been made as Annex "A" (pp 1 to 6).

For purposes of implementation, the initial step to be undertaken is for the submission of the name
of the applicants to the U.S. Navy authorities concerned, which means the U. S. Naval Base at
Olongapo City for the screening and approval by the appropriate authorities.
Regarding the determination of whether the applicants are bona fide employees of the Blaylock
Transportation Service at the time its concession expired, the parties appear to be in agreement
that the records of this case will eventually show whether the applicants are such employees.
Further, we feel that such employment will likewise appear in the records of the U. S. Naval Base
at Olongapo City since persons connected with the Base like the applicants, have to undergo
processing by naval authority.
WHEREFORE, in view of the foregoing considerations, copies of this Order together with Annex
"A" hereof are hereby transmitted to the Base Commander, U. S. Naval Base , Olongapo City with
the request for the immediate screening and approval of said applicants, in accordance with
applicable rules of that command. 25
Pursuant to Section 6 of Article I of the Philippine-U S. Labor Agreement of May 27, 1968, the United States
Armed Forces undertook, consistent with military requirements, "to provide security for employment, and, in the
event certain services are contracted out, the United States Armed Forces shall require the contractor or
concessionerto give priority consideration to affected employees for employment. (Emphasis supplied.)
A treaty has two (2) aspects as an international agreement between states, and as municipal law for the people of
each state to observe. As part of the municipal law, the aforesaid provision of the treaty enters into and forms part of
the contract between petitioner and the U.S. Naval Base authorities. In view of said stipulation, the new contractor
is, therefore, bound to give "priority" to the employment of the qualified employees of the previous contractor. It is
obviously in recognition of such obligation that petitioner entered into the afore-mentioned Compromise Agreement.
As above indicated, under the Compromise Agreement as embodied in the Resolution of this Court dated October
24, 1975, the parties agreed to submit to the Secretary of Labor the determination as to who of the members of the
respondent union BTEA-KILUSAN shall be absorbed or employed by the herein petitioner Guerrero's Transport
Services, Inc., and that such determination shall be considered as final. In connection therewith, the Secretary of
Labor issued an Order dated November 13, 1975, directing the National Labor Relations Commission, through
Labor Arbiter Francisco de los Reyes, to implement the absorption of the 175 members 26into the Guerrero's
Transport Services, subject to the following conditions, viz.: (a) that they were bona fide employees of the Blaylock
Transport Service at the time its concession expired; and (b) that they should pass final screening and approval by
the appropriate authorities of the U.S. Naval Base concerned. According to private respondent, however,
Commander Vertplaetse of the U.S. Navy Exchange declined to implement the order of the Labor Arbiter, as it is
the petitioner who should request for the screening and approval of the applicants.
Considering that the afore-mentioned Compromise-Agreement of the parties, as approved by this Court, is more
than a mere contract and has the force and effect of any other judgment, it is, therefore, conclusive upon the [parties
and their privies. 27 For it is settled that a compromise has, upon the parties, the effect and authority of res
judicata and is enforceable by execution upon approval by the court. 28 Since the resolution of the NLRC of October
31, 1973 required the absorption of the applicants subject to the conditions therein contained, and there being no
showing that such conditions were complied with, the Labor Arbiter exceeded his authority in awarding back wages
to the 129 complainants.
ACCORDINGLY, judgment is hereby rendered ordering petitioner to employ members of respondent labor union
BTEA-KILUSAN referred to in the Order of the Secretary of Labor dated November 13, 1975 who satisfy the
criteria enunciated viz.: (a) those who were bona fide employees of the Blaylock Transport Services at the time its
concession expired; and (b) those who pass the final screening and approval by the appropriate authorities of the
U.S. Naval Base. For this purpose, petitioner is hereby ordered to submit to and secure from the appropriate
authorities of the U.S. naval Base at Subic, Zambales the requisite screening and approval, the names of the aforementioned members of respondent union.
The Order dated September 25, 1975 of respondent Labor Arbiter Francisco M. de los Reyes, awarding back wages
to the 129 complainants in the total amount of P592,110.00, is hereby set aside. No pronouncement as to costs.

Barredo, Aquino and Martin, JJ., concur.

U.S. Supreme Court

Northern Pacific R. Co. v. Babcock, 154 U.S. 190 (1894)
Northern Pacific R. Co. v. Babcock
No. 328
Submitted March 28, 1894
Decided May 28, 1894
154 U.S. 190
Syllabus
In an action by the representatives of a railroad employee against the company to recover damages for the death of
the employs caused by an accident while in its employ, which is tried in a different state from that in which the
contract of employment was made and in which the accident took place, the right to recover and the limit of the
amount of the judgment are governed by the lex loci, and not by the lex fori.
A railroad company is bound to furnish sound machinery for the use of its employee, and if one of them is killed in
an accident caused by a defective snow-plough, the right of his representative to recover damages therefor is not
affected by the fact that, some two weeks before he was sent out with the defective machinery, he had discovered
the defect, and had notified the master mechanic of it, and the latter had undertaken to have it repaired.
Some alleged errors in the charge of the court below are examined and held to have no merit.
The plaintiff below, who was the administrator of the estate of Hugh M. Munro, sued in the District Court of the
fourth Judicial District of Minnesota to recover $25,000 damages for the killing of Munro on the 10th day of
January, 1888 at or near a station known as Gray Cliff, on the Northern Pacific Railway, in the Territory of
Montana. The complaint contained the following allegations:
Page 154 U. S. 191

"That on the said 10th day of January, 1888, the said Hugh M. Munro, now deceased, was in the employ of the said
defendant corporation within the Territory of Montana in the capacity of locomotive engineer, for hire and reward
by the said defendant paid, and that the duty of running a locomotive engine upon said defendant's line of railway
within said territory was by said defendant assigned to said Hugh M. Munro on the said 10th day of January, 1888,
and the defendant directed and ordered the said Hugh M. Munro to run a certain locomotive engine, the property of
said defendant, known as engine 'No. 161,' over and upon its said railway in said territory; that prior to and at the
time the said orders were so presented to said Munro, there had been, and then was, a severe snowstorm in progress,
and defendant's line of railway over and upon which said Munro was so ordered to run said engine was covered with
drifting snow theretofore accumulated thereon, and then fast accumulating, notwithstanding which the said
defendant corporation did willfully, improperly, negligently, and carelessly refuse and neglect to send a snow plow
ahead of said engine No. 161 to clear the snow and ice from said defendant's said track, which had accumulated and
was accumulating thereon by reason of said storm, so as to render the passage of said engine No. 161 safe and
proper."
"That there was attached to the forward part of said engine No. 161 a certain attachment known as a 'pilot plow,' an
appliance constructed thereon for the purpose of clearing the railway of snow and ice accumulated thereon and
render safe the passage of the engine to which said plow was attached over and upon said railway of defendant."
"That on the said 10th day of January, 1888, the said defendant corporation knowingly, willfully, negligently, and
carelessly allowed to be and remain upon said engine No. 161, attached thereto as aforesaid, a certain pilot plow the
iron braces, bolts, and rods of which were broken, imperfect, and insufficient, by reason of which condition the said
plow was loose and insufficiently secured to the pilot of said engine, allowing the said pilot to raise up and ride over
obstructing
Page 154 U. S. 192
snow and ice instead of cutting through the same, as was the intention of its construction, rendering the running of
said engine upon said railway dangerous, and that the said defendant well knew of the broken, defective, and
dangerous condition of said engine No. 161 at the time the said Hugh M. Munro was so ordered to run the same
upon and over said railway, notwithstanding which the said defendant corporation did negligently and carelessly
furnish to said Hugh M. Munro said engine, with the said broken and imperfect pilot plow attached thereto, to run
over and upon its said line of railway."
"That while said Hugh M. Munro was running said engine in performance of his duty as such engineer and pursuant
to the orders of said defendant corporation, and before daylight on said 10th day of January, 1888, near Gray Cliff,
in said Territory of Montana, the said engine struck an accumulation of snow and ice which said defendant had
carelessly and negligently allowed to accumulate upon its said railway track, and the pilot plow of said engine, by
reason of its broken, loose, and imperfect condition aforesaid, did ride upon said accumulation of snow and ice,

thereby derailing said engine and throwing the same from said railway track, whereby the said Hugh M. Munro was
instantly killed."
"* * * *"
"That the law of the Territory of Montana governing actions for recovery of damages for causing death was on the
10th day of January, 1888, and now is, sections 13 and 14 of title 2 of said chapter 1 of the first division of Code of
Civil Procedure of the Territory of Montana, which said sections of said law of said territory are in the words and
figures following, viz.:"
"SEC. 13. A father, or, in case of his death or desertion of his family, the mother, may maintain an action for the
injury or death of a child, or a guardian for the injury or death of his ward."
"SEC. 14. Where the death of a person not being a minor is caused by the wrongful act or neglect of another, his
heirs or personal representatives may maintain an action for
Page 154 U. S. 193
damages against the person causing the death, or if such person be employed by another person who is responsible
for his action, then also against such other person. In every action under this and the preceding section, such
damages may be given as under all the circumstances of the case may be just."
The case was removed to the Circuit Court of the United States for the District of Minnesota, where an answer was
filed by the defendant denying the averments of the complaint and alleging that the death of Munro was caused
solely by his negligence and carelessness, and not by the negligence of the defendant or any of its servants or
employees.
There was a verdict and judgment below in favor of the plaintiff for $10,000. To review that judgment, this writ of
error is sued out. The errors assigned are as follows:
"First. The court erred in charging the jury as follows:"
" Did it fail to discharge any duty which the law imposed upon it for the safety of its employee, the plaintiff's
intestate? If it did, and if such negligence was the cause of the death of the engineer, Munro, then the plaintiff is
entitled to recover."
"Second. The court erred further in charging the jury as follows:"
" The charge in this complaint is that this death was caused by the derailment of the engine, which took place
because the plow was out of repair as described, or at least that the defendant had not used reasonable care in
clearing its track, and that when the engineer, in that condition, arrived at this cut, two miles from Gray Cliff, the

snow had accumulated to such an extent that the engine was thereby derailed, and that it was this negligence which
caused the death."
"Third. The court erred further in charging the jury as follows:"
"Many states have different laws. The law in this state until recently was that only $5,000 could be given in a case of
death. It has lately been increased to $10,000."
"Fourth. The court erred further in charging the jury as follows:"
"If you believe from all the evidence in the case that the plaintiff is entitled to recovery, then it is for you to
determine what compensation you will give for the death of the plaintiff's intestate. The law of Montana limits it to
such an amount as you think would be proper under all circumstances
Page 154 U. S. 194
of the case, and that is the law which will govern in this case."
"Fifth. The court erred further in refusing to give to the jury the following request tendered by defendant's counsel:
'You, the jury, are instructed to find a verdict for the defendant.'"
"Sixth. The court erred further in refusing to give to the jury the following request, tendered by defendant's counsel:
'The laws of Minnesota limit the amount of damages to be recovered in this case to five thousand dollars.'"
"Seventh. The court erred further in refusing to give to the jury the following request, tendered by defendant's
counsel:"
" The court instructs the jury that unless they find that it was customary for defendant company to send a snow plow
in advance of the trains running east from Livingston during storms of this character, and that unless, further, the
accident occurred by reason of the negligent and careless failure of the defendant to send such snow plow in
advance, they will find for the defendant."
"Eighth. The court erred further in refusing to give to the jury the following request, tendered by defendant's
counsel:"
" The court instructs the jury that unless they find that the defendant carelessly and negligently furnished to the
deceased engineer a plow attached to his engine the iron bolts and rods of which were broken, imperfect, and
insufficient, and that by reason of which condition the said plow was loose and insufficiently secured to the pilot of
said engine, and that when the said engine struck the snow at the cut, as testified to, the pilot plow of said engine, by
reason of its said broken, loose, and imperfect condition, did ride upon the accumulated snow and ice at said cut, and
that thereby the said engine was thrown from the track, the jury will find for the defendant. "

Page 154 U. S. 196

Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is
provided for general informational purposes only, and may not reflect current legal developments, verdicts or
settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information
contained on this site or information linked to from this site. Please check official sources.
Davis v. Mills, 194 U.S. 451 (1904)
Davis v. Mills
No. 235
Argued April 19, 1904
Decided May 16, 1904
194 U.S. 451
Syllabus
Section 554 of the Montana Code of Civil Procedure, limiting actions to enforce a special statutory director's
liability to three years, applies to liabilities incurred before its passage under a different statute and goes with them
as a qualification when they are sued upon in other states.
If such a statute of limitations allows over a year in which to sue upon an existing cause of action, it is sufficient. A
statute of limitations may bar an existing right as well as the remedy.
This case came here on a certificate of which the following is the material portion:
"The plaintiff is a citizen of Montana, and the owner by assignment of three causes of action (for goods sold and on
a promissory note) against the Obelisk Mining & Concentrating Company, a Montana corporation. The indebtedness
of the company upon these causes of action accrued July 31, 1892, July 1, 1892, and December 12, 1892,
respectively. The defendants are and always have been citizens and residents of Connecticut, and at all the times
mentioned in the complaint were trustees of the said Obelisk Mining Company. The statutes of Montana provide
that, within twenty days from the first day of September, every such company shall annually file a specified report,
and if it"
"shall fail to do so, all the trustees of the company shall be jointly and severally liable
Page 194 U. S. 452

for all of the debts of the company then existing, and for all that shall be contracted before such report shall be
made."
Section 460 of chapter 25 of the fifth division, Compiled Statutes of Montana, which was in force when the cause of
action arose. Reenacted as section 451 of the Civil Code of Montana, which went into effect July 1, 1895.
"The Obelisk Company failed to file certain of the required reports, and the causes of action sued upon here, against
the defendants as trustees, to recover debts of the company, accrued September 22, 1893, or prior thereto. This
action was brought to enforce the joint and several liability of the defendants under the statute on July 30, 1897."
"When the cause of action accrued, the Compiled Statutes of Montana contained these sections:"
" SEC. 45. 1. In an action for a penalty or forfeiture, when the action is given to an individual, or to an individual
and the territory, except where the statute imposing it prescribes a different limitation; 2, an action against a sheriff
or other officer for the escape of a prisoner arrested or imprisoned on civil process shall be commenced within one
year."
" SEC. 50. If, when the cause of action shall accrue against a person, he is out of the territory, the action may be
commenced within the time herein limited, after his return to the territory, and if, after the cause of action shall have
accrued, he depart from this territory, the time of his absence shall not be a part of the time limited for the
commencement of the action."
"Both of those sections were repealed by the Code of Civil Procedure, section 3482, which went into effect July 1,
1895. On the last-named date, the Civil Code of Montana went into effect, containing section 451, above cited. The
Code of Civil Procedure contains a separate title, numbered II and containing four chapters (sections 470 to 559),
which deals exhaustively with 'the time of commencing actions.' It contains these sections:"
" SEC. 515. Within two years: "
Page 194 U. S. 453
" 1. An action upon a statute for a penalty or forfeiture, when the action is given to an individual, or to an individual
and the state, except when the statute imposing and the state, except when the statute imposing it prescribes a
different limitation"
" SEC. 541. If, when the cause of action accrues against a person, he is out of the state, the action may be
commenced within the term herein limited after his return to the state, and if, after the cause of action accrues, he
departs from the state, the time of his absence is not part of the time limited for the commencement of the action."
" SEC. 554. This title does not affect actions against directors or stockholders of a corporation, to recover a penalty
or forfeiture imposed, or to enforce a liability created by law, but such actions must be brought within three years

after the discovery by the aggrieved party of the facts upon which the penalty of forfeiture attached or the liability
created (sic)."
"Upon the facts above set forth, the question of law concerning which this Court desires the instruction of the
Supreme Court, for its proper decision, is:"
" May a defendant, in an action of the kind specified in section 554 of the Code of Civil Procedure of Montana, avail
of the limitation therein prescribed, when the action is brought against him in the court of another state?"
Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is
provided for general informational purposes only, and may not reflect current legal developments, verdicts or
settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information
contained on this site or information linked to from this site. Please check official sources.

G.R. No. L-2363

GREGORIO ARANETA, INC., FRANCISCO JAVIER DE PITARQUE Y ELIO, ISABEL MARIA DE
YNCHAUSTI DE PITARQUE Y DE YNCHAUSTI, petitioners,
vs.
SOTERO RODAS, Judge of First Instance of Manila, COMPANIA GENERAL DE TABACOS DE
FILIPINAS and CENTRAL AZUCARERA DE TARLAC, respondents.
Araneta and Araneta and Jesus G. Barrera for petitioners.
FERIA, J.:

This is a motion for reconsideration of the resolution of this Court dismissing the special civil action
of certiorari and mandamus filed by the petitioners against the respondents, which asked that order of the
respondent judge denying the petitioner's motion to compel the other respondents to answer certain interrogatories
submitted by the former to the latter be set aside, and that the respondent be ordered to issue an order compelling the
respondent corporation to answer said interrogatories.
According to section 1, Rule 67, certiorari lies when the respondent court or judge has acted without or in excess of
its or his jurisdiction, or with grave abuse of discretion. There is no doubt or question that the respondent judge or
court had and did not exceed the court's jurisdiction, but it is alleged that said judge has acted with grave abuse of
discretion in denying the petition of the petitioners.
It is obvious that discretion is the power exercised by courts to determine questions arising in the trial of a cause to
which no rule of law is applicable, but which from their nature and circumstances of the case, are controlled by the
personal judgment of the court, or the judgment of the court uncontrolled by fixed rules of law (See Bouvier's Law
Dictionary, Third Division, Vol. I, p. 884). When the law does not provide a rule or norm for the court to follow in
deciding a question submitted to it, but leaves it to the court to determine it in one way or another at his discretion,
the judge is not absolutely free to act at his pleasure or will or arbitrarily. He must decide the question, not in
accordance with law for there is none, but in conformity with justice, reason and equity, in view of the
circumstances of the case. Otherwise the court or judge would abuse his discretion. (See Hodges vs. Barrios and
Redfern, L-1904, 1 promulgated April 16, 1948, 45 Off. Gaz. [Supp. to No. 9], 372, concurred in by the dissenter
from the resolution sought to be reconsidered in the present case.)
Therefore, the question to be determined in the present case is whether or not there is a rule of law which controls or
guides the respondent judge in deciding whether an interrogatory should be allowed or not.

It is well settled, and admitted in paragraphs 11 and 14 of the petition for the certiorari, that the scope of discovery
by means of written interrogatories under Rule 20 literally copied from Rule 33 of the Federal Rules of Civil
Procedure, like the scope of discovery by the deposition, is governed by section 2, Rule 18 of the Rules of Court,
which was taken from Rule 26, of said Federal Rules of which was taken from Rule 26 of said Federal Rules of
Civil Procedure promulgated by the Supreme Court of the United States. Under the provisions of said section 2,
Rule 18 "the deponent may be examined regarding any matter involved in the pending action, whether relating to the
claim or defense of the examining party, or to the claim or defense of the examining party, or to the claim or defense
of any other party". (Dixon vs. Philfer, D. C. S.C. 1939, 30 F. Supp., 627; Coca Cola Co. vs. Dixi Cola Laboratories,
D. C. Mass. 1939, 29 F. Supp. 423; Lanova Corporation vs. National Supply Co., D. C. Pac., 1939, 29 F. Supp., 119;
Aner vs. Hershey Cremexy Co., D. C. Pac., 1939, 29 F. Supp., 119; Aner vs. Hershey Cremexy Co. D. C. Va. 1940,
1 F. R. D., 286.)
Since the scope of depositions and written interrogatories is limited to matters which are not privileged and relevant
to the subject matter involved in a pending action, and the determination of whether or not an interrogatory is

privileged or material is not left to the discretion of the court or judge, for there is a law applicable which serves as
norm or guide for the court or judge to follow, the respondent judge could not commit a grave abuse of discretion
which it did not have in deciding whether or not the interrogatories in question are immaterial to the subject matter
involved in the pending action, and therefore they can not be allowed. If the respondent judge has acted contrary to
law in deciding that the written interrogatories propounded by the petitioners to the other respondents are
immaterial, he would have committed an error of law which this court can not correct in the present case; but not a
grave abuse of discretion.

In our resolution of July 27, 1948, we dismissed the partition for certiorari and mandamuson the ground that appeal
at the proper time is the proper remedy; and relying on the dissenting opinion of one member of this Court, that
"appeal cannot be the proper remedy for petitioners' complaint," all the arguments in the petitioners' motion for
reconsideration tend to show that appeal is not the speedy and adequate remedy, because it would entail unnecessary
delay and waste of time.
The resolution, in sitting that appeal at the proper time is the proper remedy, did not mean to say that certiorari may
lie, that is, that respondent judge has acted without or in excess of his jurisdiction, or with grave abuse of discretion,
but there is appeal or appeal is the proper remedy. The order complained of is interlocutory and hence not forthwith
appealable; it may only be assigned as erroneous if appeal is taken from the final judgment. The scope of the
subjects which a person interrogated is called to testify orally in actual trial (Landry vs. O'hara Vessels, supra); and
in the same way that neither appeal nor certiorari lies against a ruling of the court which reject an immaterial
question during the trial, so no such remedies may be resorted to against a court's order that does not allow a written
interrogatory which is not material.
What the resolution means to say, and we now expressly so hold is that certiorari does not lie at all for the reasons
above stated, and the proper remedy is to rise the question of admissibility of such interrogatories on appeal from the
final judgment of the respondent court or judge. It is obvious that the question whether certiorari or appeal is the
proper and adequate remedy may only come up when the court has acted without or in excess of jurisdiction and the
act complained of is appealable.
In view of all the foregoing, motion for reconsideration is denied. So ordered.

Moran, C. J., Paras, Pablo, Briones, and Tuason, JJ., concur.

G.R. No. L-5897

April 23, 1954

KING MAU WU, plaintiff-appellee,

vs.
FRANCISCO SYCIP, defendant-appellant.
PADILLA, J.:
This is an action to collect P59,082.92, together with lawful interests from 14 October 1947, the date of the written
demand for payment, and costs. The claim arises out of a shipment of 1,000 tons of coconut oil emulsion sold by the
plaintiff, as agent of the defendant, to Jas. Maxwell Fassett, who in turn assigned it to Fortrade Corporation. Under
an agency agreement set forth in a letter dated 7 November 1946 in New York addressed to the defendant and
accepted by the latter on the 22nd day of the same month, the plaintiff was made the exclusive agent of the
defendant in the sale of coconut oil and its derivatives outside the Philippines and was to be paid 2 1/2 per cent on
the total actual sale price of sales obtained through his efforts in addition thereto 50 per cent of the difference
between the authorized sale price and the actual sale price.
After the trial where the depositions of the plaintiff and of Jas. Maxwell Fassett and several letters in connection
therewith were introduced and the testimony of the defendant was heard, the Court rendered judgment as prayed for
in the complaint. A motion for reconsideration was denied. A motion for a new trial was filed, supported by the
defendant's affidavit, based on newly discovered evidence which consists of a duplicate original of a letter dated 16
October 1946 covering the sale of 1,000 tons of coconut oil soap emulsion signed by Jas. Maxwell Fassett assigned
by the latter to the defendant; the letter of credit No. 20122 of the Chemical Bank & Trust Company in favor of Jas.
Maxwell Fassett assigned by the latter to the defendant; and a letter dated 16 December 1946 by the Fortrade
Corporation to Jas. Maxwell Fassett accepted it on 24 December 1946, all of which documents, according to the
defendant, could not be produced at the trial, despite the use of reasonable diligence, and if produced they would
alter the result of the controversy. The motion for new trial was denied. The defendant is appealing from said
judgment.
Both parties agreed that the only transaction or sale made by the plaintiff, as agent of the defendant, was that of
1,000 metric tons of coconut oil emulsion f.o.b. in Manila, Philippines, to Jas. Maxwell Fassett, in whose favor letter
of credit No. 20112 of the Chemical Bank & Trust Company for a sum not to exceed $400,000 was established and
who assigned to Fortrade Corporation his fight to the 1,000 metric tons of coconut oil emulsion and in the defendant
the letter of credit referred to for a sum not to exceed $400,000.
The plaintiff claims that for that sale he is entitled under the agency contract dated 7 November 1946 and accepted
by the defendant on 22 November of the same year to a commission of 2 1/2 per cent on the total actual sale price of
1,000 tons of coconut oil emulsion, part of which has been paid by the defendant, there being only a balance of

$3,794.94 for commission due and unpaid on the last shipment of 379.494 tons and 50 per cent of the difference
between the authorized sale price of $350 per ton and the actual selling price of $400 per ton, which amounts to
$25,000 due and unpaid, and $746.52 for interest from 14 October 1947, the date of the written demand.
The defendant, on the other hand, contends that the transaction for the sale of 1,000 metric tons of coconut oil
emulsion was not covered by the agency contract of 22 November 1946 because it was agreed upon on 16 October
1946; that it was an independent and separate transaction for which the plaintiff has been duly compensated. The
contention is not borne out by the evidence. The plaintiff and his witness depose that there were several drafts of
documents or letter prepared by Jas. Maxwell Fassett preparatory or leading to the execution of the agency
agreement of 7 November 1946, which was accepted by the defendant on 22 November 1946, and that the letter, on
which the defendant bases his contention that the transaction on the 1,000 metric tons of coconut oil emulsion was
not covered by the agency agreement, was one of those letters. That is believable. The letter upon which defendant
relies for his defense does not stipulate on the commission to be paid to the plaintiff as agent, and yet if he paid the
plaintiff a 2 1/2 per cent commission on the first three coconut oil emulsion shipments, there is no reason why he
should not pay him the same commission on the last shipment amounting to $3,794.94. There can be no doubt that
the sale of 1,000 metric tons of coconut oil emulsion was not a separate and independent contract from that of the
agency agreement on 7 November and accepted on 22 November 1946 by the defendant, because in a letter dated 2
January 1947 addressed to the plaintiff, referring to the transaction of 1,000 metric tons of coconut oil emulsion, the
defendant says
. . . I am doing everything possible to fulfill these 1,000 tons of emulsion, and until such time that we
completed this order I do not feel it very sensible on my part to accept any more orders. I want to prove to
Fortrade, yourself and other people that we deliver our goods. Regarding your commission, it is understood
to be 2 1/2 per cent of all prices quoted by me plus 50-50 on over price. (Schedule B.)
In another letter dated 16 January 1957 to the plaintiff, speaking of the same transaction, the defendant says
As per our understanding when I was in the States the overprice is subject to any increase in the cost of
production. I am not trying to make things difficult for you and I shall give you your 2 1/2 per cent
commission plus our overprice provided you can give me substantial order in order for me to amortize my
loss on this first deal. Unless such could be arranged I shall remit to you for the present your commission
upon collection from the bank. (Schedule C.)
In a telegram sent by the defendant to the plaintiff the former says
. . . Your money pending stop understand you authorized some local attorneys and my relatives to intervene
your behalf. (Schedule D.)
The defendant's claim that the agreement for the sale of the 1,000 metric tons of coconut oil emulsion was agreed
upon in a document, referring to the letter of 16 October 1946, is again disproved by his letter dated 2 December
1946 to Fortrade Corporation where he says:
The purpose of this letter is to confirm in final form the oral agreement which we have heretofore reached,
as between ourselves, during the course of various conversations between us and our respective
representatives upon the subject matter of this letter.
It is understood that I am to sell to you, and you are to purchase from me, 1,000 tons of coconut oil soap
emulsion at a price of $400. per metric ton, i.e. 2,204.6 pounds, F.O.B. shipboard, Manila, P.I. (Exhibit S,
Special. Emphasis supplied.)
The contention that as the contract was executed in New York, the Court of First Instance of Manila has no
jurisdiction over this case, is without merit, because a non-resident may sue a resident in the courts of this
country1 where the defendant may be summoned and his property leviable upon execution in the case of a favorable,
final and executory judgment. It is a personal action for the collection of a sum of money which the Courts of First
Instance have jurisdiction to try and decide. There is no conflict of laws involved in the case, because it is only a
question of enforcing an obligation created by or arising from contract; and unless the enforcement of the contract
be against public policy of the forum, it must be enforced.

The plaintiff is entitled to collect P7,589.88 for commission and P50,000 for one-half of the overprice, or a total of
P57,589.88, lawful interests thereon from the date of the filing of the complaint, and costs in both instances.
As thus modified the judgment appealed from is affirmed, with costs against the appellant.
Paras, C.J., Pablo, Bengzon, Montemayor, Reyes, Jugo, Bautista Angelo, and Concepcion, JJ., concur.

G.R. No. 72494 August 11, 1989

HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,
vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE
COURT, respondents.
Quiason, Makalintal, Barot & Torres for petitioner.
Alejandro, Aranzaso & Associates for private respondents.

MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of
Appeals) dated August 2, 1985, which reversed the order of the Regional Trial Court dated February 28,1985
denying the Motion to Dismiss filed by private respondents Jack Robert Sherman and Deodato Reloj.
A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner Hongkong and Shanghai
Banking Corporation (hereinafter referred to as petitioner BANK) against private respondents Jack Robert Sherman
and Deodato Reloj, docketed as Civil Case No. Q-42850 before the Regional Trial Court of Quezon City, Branch
84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as COMPANY), a
company incorporated in Singapore applied with, and was granted by, the Singapore branch of petitioner BANK an
overdraft facility in the maximum amount of Singapore dollars 200,000.00 (which amount was subsequently
increased to Singapore dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly,
on amounts due under said overdraft facility; as a security for the repayment by the COMPANY of sums advanced
by petitioner BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and a
certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and
Several Guarantee (p. 53, Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay,
jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated
overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of Singapore.
We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising
under this guarantee. ... (p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation from
private respondents, conformably with the provisions of the Joint and Several Guarantee. Inasmuch as the private
respondents still failed to pay, petitioner BANK filed the above-mentioned complaint.

On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo) which was opposed by
petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order dated February 28, 1985
(pp, 64-65, Rollo), which read as follows:
In a Motion to Dismiss filed on December 14, 1984, the defendants seek the dismissal of the
complaint on two grounds, namely:
1. That the court has no jurisdiction over the subject matter of the complaint; and
2. That the court has no jurisdiction over the persons of the defendants.
In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the motion. "On
the first ground, defendants claim that by virtue of the provision in the Guarantee (the actionable
document) which reads
This guarantee and all rights, obligations and liabilities arising hereunder shall
be construed and determined under and may be enforced in accordance with the
laws of the Republic of Singapore. We hereby agree that the courts in Singapore
shall have jurisdiction over all disputes arising under this guarantee,
the Court has no jurisdiction over the subject matter of the case. The Court finds and concludes
otherwise. There is nothing in the Guarantee which says that the courts of Singapore shall have
jurisdiction to the exclusion of the courts of other countries or nations. Also, it has long been
established in law and jurisprudence that jurisdiction of courts is fixed by law; it cannot be
conferred by the will, submission or consent of the parties.
On the second ground, it is asserted that defendant Robert' , Sherman is not a citizen nor a resident
of the Philippines. This argument holds no water. Jurisdiction over the persons of defendants is
acquired by service of summons and copy of the complaint on them. There has been a valid
service of summons on both defendants and in fact the same is admitted when said defendants
filed a 'Motion for Extension of Time to File Responsive Pleading on December 5, 1984.
WHEREFORE, the Motion to Dismiss is hereby DENIED.
SO ORDERED.
A motion for reconsideration of the said order was filed by private respondents which was, however, denied (p.
66,Rollo).
Private respondents then filed before the respondent Intermediate Appellate Court (now Court of Appeals) a petition
for prohibition with preliminary injunction and/or prayer for a restraining order (pp. 39-48, Rollo). On August 2,
1985, the respondent Court rendered a decision (p. 37, Rollo), the dispositive portion of which reads:
WHEREFORE, the petition for prohibition with preliminary injuction is hereby GRANTED. The
respondent Court is enjoined from taking further cognizance of the case and to dismiss the same
for filing with the proper court of Singapore which is the proper forum. No costs.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition.
The main issue is whether or not Philippine courts have jurisdiction over the suit.
The controversy stems from the interpretation of a provision in the Joint and Several Guarantee, to wit:

(14) This guarantee and all rights, obligations and liabilites arising hereunder shall be construed
and determined under and may be enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes
arising under this guarantee. ... (p. 53-A, Rollo)
In rendering the decision in favor of private respondents, the Court of Appeals made, the following observations (pp.
35-36, Rollo):
There are significant aspects of the case to which our attention is invited. The loan was obtained
by Eastern Book Service PTE, Ltd., a company incorporated in Singapore. The loan was granted
by theSingapore Branch of Hongkong and Shanghai Banking Corporation. The Joint and Several
Guarantee was also concluded in Singapore. The loan was in Singaporean dollars and the
repayment thereof also in the same currency. The transaction, to say the least, took place in
Singporean setting in which the law of that country is the measure by which that relationship of
the parties will be governed.
xxx xxx xxx
Contrary to the position taken by respondents, the guarantee agreement compliance that any
litigation will be before the courts of Singapore and that the rights and obligations of the parties
shall be construed and determined in accordance with the laws of the Republic of Singapore. A
closer examination of paragraph 14 of the Guarantee Agreement upon which the motion to dismiss
is based, employs in clear and unmistakeable (sic) terms the word 'shall' which under statutory
construction is mandatory.
Thus it was ruled that:
... the word 'shall' is imperative, operating to impose a duty which may be enforced (Dizon vs.
Encarnacion, 9 SCRA 714).lwph1.t
There is nothing more imperative and restrictive than what the agreement categorically commands
that 'all rights, obligations, and liabilities arising hereunder shall be construed and determined
under and may be enforced in accordance with the laws of the Republic of Singapore.'
While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several Guarantee
contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that "[t]his guarantee
and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore
shall have jurisdiction over all disputes arising under this guarantee" be liberally construed. One basic principle
underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some
reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam. To be
reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair
play and substantial justice (J. Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-out by petitioner
BANK at the outset, the instant case presents a very odd situation. In the ordinary habits of life, anyone would be
disinclined to litigate before a foreign tribunal, with more reason as a defendant. However, in this case, private
respondents are Philippine residents (a fact which was not disputed by them) who would rather face a complaint
against them before a foreign court and in the process incur considerable expenses, not to mention inconvenience,
than to have a Philippine court try and resolve the case. Private respondents' stance is hardly comprehensible, unless
their ultimate intent is to evade, or at least delay, the payment of a just obligation.
The defense of private respondents that the complaint should have been filed in Singapore is based merely on
technicality. They did not even claim, much less prove, that the filing of the action here will cause them any
unnecessary trouble, damage, or expense. On the other hand, there is no showing that petitioner BANK filed the
action here just to harass private respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187, it was ruled:

... An accurate reading, however, of the stipulation, 'The parties agree to sue and be sued in the
Courts of Manila,' does not preclude the filing of suits in the residence of plaintiff or defendant.
The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or
restrictive words which would indicate that Manila and Manila alone is the venue are totally
absent therefrom. We cannot read into that clause that plaintiff and defendant bound themselves to
file suits with respect to the last two transactions in question only or exclusively in Manila. For,
that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed
to add the courts of Manila as tribunals to which they may resort. They did not waive their right to
pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non
praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al., G.R. No. 57250,
October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case of litigation, jurisdiction shall be vested in
the Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a
stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or
defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of qualifying or restrictive
words in the agreement which would indicate that the place named is the only venue agreed upon
by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of Singapore, to
the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to divest Philippine courts of
jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over
persons and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction
over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units
stationed in or marching through State territory with the permission of the latter's authorities. This authority, which
finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is
competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over
all kinds of cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-38).lwph1.t
As regards the issue on improper venue, petitioner BANK avers that the objection to improper venue has been
waived. However, We agree with the ruling of the respondent Court that:
While in the main, the motion to dismiss fails to categorically use with exactitude the words
'improper venue' it can be perceived from the general thrust and context of the motion that what is
meant is improper venue, The use of the word 'jurisdiction' was merely an attempt to copy-cat the
same word employed in the guarantee agreement but conveys the concept of venue. Brushing
aside all technicalities, it would appear that jurisdiction was used loosely as to be synonymous
with venue. It is in this spirit that this Court must view the motion to dismiss. ... (p. 35, Rollo).
At any rate, this issue is now of no moment because We hold that venue here was properly laid for the same reasons
discussed above.
The respondent Court likewise ruled that (pp. 36-37, Rollo):
... In a conflict problem, a court will simply refuse to entertain the case if it is not authorized by
law to exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain the case
by applying the principle of forum non conveniens. ...
However, whether a suit should be entertained or dismissed on the basis of the principle of forum non
conveniensdepends largely upon the facts of the particular case and is addressed to the sound discretion of the trial
court (J. Salonga, Private International Law, 1981, p. 49).lwph1.t Thus, the respondent Court should not have
relied on such principle.

Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion and that
consequently, it cannot be permitted to take a stand contrary to the stipulations of the contract, substantial bases
exist for petitioner Bank's choice of forum, as discussed earlier.
Lastly, private respondents allege that neither the petitioner based at Hongkong nor its Philippine branch is involved
in the transaction sued upon. This is a vain attempt on their part to further thwart the proceedings below inasmuch as
well-known is the rule that a defendant cannot plead any defense that has not been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the Regional
Trial Court is REINSTATED, with costs against private respondents. This decision is immediately executory.
SO ORDERED.

[G.R. No. 128845. June 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON. LEONARDO A.
QUISUMBING in his capacity as the Secretary of Labor and Employment; HON. CRESENCIANO B.
TRAJANO in his capacity as the Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in
his capacity as the Superintendent of International School-Manila; and INTERNATIONAL SCHOOL,
INC., respondents.
DECISION
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent School, mostly
Filipinos, cry discrimination. We agree. That the local-hires are paid more than their colleagues in other schools is,
of course, beside the point. The point is that employees should be given equal pay for work of equal value. That is a
principle long honored in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the
principle we uphold today.
Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a
domestic educational institution established primarily for dependents of foreign diplomatic personnel and other
temporary residents.[1] To enable the School to continue carrying out its educational program and improve its
standard of instruction, Section 2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected by it either locally or abroad, from
Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have been or will be enacted for the
protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into
two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member
should be classified as a foreign-hire or a local hire:
a.....What is one's domicile?
b.....Where is one's home economy?

c.....To which country does one owe economic allegiance?

d.....Was the individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines? [2]
Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire;
otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local-hires. These include housing, transportation,
shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent
(25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages"
foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from his home country, leave his family
and friends, and take the risk of deviating from a promising career path-all for the purpose of
pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is
faced with economic realities: decent abode for oneself and/or for one's family, effective means of
transportation, allowance for the education of one's children, adequate insurance against illness
and death, and of course the primary benefit of a basic salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the same economic reality
after his term: that he will eventually and inevitably return to his home country where he will have
to confront the uncertainty of obtaining suitable employment after a long period in a foreign land.
The compensation scheme is simply the School's adaptive measure to remain competitive on an
international level in terms of attracting competent professionals in the field of international
education.[3]
When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International
School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty
members"[4] of the School, contested the difference in salary rates between foreign and local-hires. This issue, as
well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually
caused a deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and Mediation
Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume
jurisdiction over the dispute. On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an
Order resolving the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A.
Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997.
Petitioner now seeks relief in this Court.
Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that
the grant of higher salaries to foreign-hires constitutes racial discrimination.
The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, with
nationalities other than Filipino, who have been hired locally and classified as local hires. [5]The Acting Secretary of
Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires:
The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there
are foreigners who have been hired locally and who are paid equally as Filipino local hires. [6]
The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates:
The principle "equal pay for equal work" does not find application in the present case. The
international character of the School requires the hiring of foreign personnel to deal with different
nationalities and different cultures, among the student population.

We also take cognizance of the existence of a system of salaries and benefits accorded to foreign
hired personnel which system is universally recognized. We agree that certain amenities have to
be provided to these people in order to entice them to render their services in the Philippines and
in the process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other
benefits would also require parity in other terms and conditions of employment which include the
employment contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and
professional compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only in accordance
with Appendix C hereof provided that the Superintendent of the School has the
discretion to recruit and hire expatriate teachers from abroad, under terms and
conditions that are consistent with accepted international practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas Recruited Staff
(OSRS) salary schedule. The 25% differential is reflective of the agreed value of
system displacement and contracted status of the OSRS as differentiated from
the tenured status of Locally Recruited Staff (LRS).
To our mind, these provisions demonstrate the parties' recognition of the difference in the status of
two types of employees, hence, the difference in their salaries.
The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an
established principle of constitutional law that the guarantee of equal protection of the laws is not
violated by legislation or private covenants based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply to all members of the same class.
Verily, there is a substantial distinction between foreign hires and local hires, the former enjoying
only a limited tenure, having no amenities of their own in the Philippines and have to be given a
good compensation package in order to attract them to join the teaching faculty of the School.[7]
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the
policy against these evils. The Constitution[8] in the Article on Social Justice and Human Rights exhorts Congress to
"give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity,
reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every
person, "in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due,
and observe honesty and good faith."
International law, which springs from general principles of law, [9] likewise proscribes discrimination. General
principles of law include principles of equity,[10] i.e., the general principles of fairness and justice, based on the test
of what is reasonable.[11] The Universal Declaration of Human Rights,[12] the International Covenant on Economic,
Social, and Cultural Rights,[13] the International Convention on the Elimination of All Forms of Racial
Discrimination,[14] the Convention against Discrimination in Education,[15] the Convention (No. 111) Concerning
Discrimination in Respect of Employment and Occupation[16] - all embody the general principle against
discrimination, the very antithesis of fairness and justice. The Philippines, through its Constitution, has incorporated
this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and
discrimination by the employer are all the more reprehensible.

The Constitution[17] specifically provides that labor is entitled to "humane conditions of work." These conditions are
not restricted to the physical workplace - the factory, the office or the field - but include as well the manner by
which employers treat their employees.
The Constitution[18] also directs the State to promote "equality of employment opportunities for all." Similarly, the
Labor Code[19] provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It
would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to
promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and
conditions of employment.[20]
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example,
prohibits and penalizes[21] the payment of lesser compensation to a female employee as against a male employee for
work of equal value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to
wages in order to encourage or discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just
and favourable conditions of work, which ensure, in particular:
a.....Remuneration which provides all workers, as a minimum, with:
i.....Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of
work not inferior to those enjoyed by men, with equal pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay
for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. [22] This rule applies to the School, its "international character"
notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreignhires.[23] The Court finds this argument a little cavalier. If an employer accords employees the same position and
rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human
experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated
against that employee; it is for the employer to explain why the employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform
25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities,
which they perform under similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in
salary rates without violating the principle of equal work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services performed."
Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for
the rendering of services." In Songco v. National Labor Relations Commission,[24] we said that:
"salary" means a recompense or consideration made to a person for his pains or industry in another
man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of
the Roman soldier, it carries with it the fundamental idea of compensation for services
rendered. (Emphasis supplied.)

While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to
the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the
same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their welfare,"[25] "to afford labor
full protection."[26] The State, therefore, has the right and duty to regulate the relations between labor and
capital.[27] These relations are not merely contractual but are so impressed with public interest that labor contracts,
collective bargaining agreements included, must yield to the common good. [28] Should such contracts contain
stipulations that are contrary to public policy, courts will not hesitate to strike down these stipulations.
In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the
salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between
the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to
foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court.
We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires.
A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the entire body
of employees, consistent with equity to the employer indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law." [29] The factors in determining the
appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of
the employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of
employment status.[30] The basic test of an asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of their collective bargaining
rights.[31]
It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for
purposes of collective bargaining. The collective bargaining history in the School also shows that these groups were
always treated separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreignhires perform similar functions under the same working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and
home leave travel allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of the
former from the latter. To include foreign-hires in a bargaining unit with local-hires would not assure either group
the exercise of their respective collective bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART. The Orders
of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are hereby REVERSED and
SET ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than
local-hires.
SO ORDERED.