Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

Immunity from Suit

1. What is the exemption

2.

G.R. No. L-30671 November 28, 1973

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I,
THE PROVINCIAL SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF
OF THE CITY OF MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P. J.
KIENER CO., LTD., GAVINO UNCHUAN, AND INTERNATIONAL CONSTRUCTION
CORPORATION, respondents.

Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo for petitioner.

Andres T. Velarde and Marcelo B. Fernan for respondents.

FERNANDO, J.:

The Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of
an order issued by respondent Judge Guillermo P. Villasor, then of the Court of First Instance of
Cebu, Branch I,1 declaring a decision final and executory and of an alias writ of execution directed
against the funds of the Armed Forces of the Philippines subsequently issued in pursuance thereof,
the alleged ground being excess of jurisdiction, or at the very least, grave abuse of discretion. As
thus simply and tersely put, with the facts being undisputed and the principle of law that calls for
application indisputable, the outcome is predictable. The Republic of the Philippines is entitled to the
writs prayed for. Respondent Judge ought not to have acted thus. The order thus impugned and the
alias writ of execution must be nullified.

In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set
forth thus: "7. On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor
of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation,
and against the petitioner herein, confirming the arbitration award in the amount of P1,712,396.40,
subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable Guillermo P. Villasor,
issued an Order declaring the aforestated decision of July 3, 1961 final and executory, directing the
Sheriffs of Rizal Province, Quezon City [as well as] Manila to execute the said decision. 9. Pursuant
to the said Order dated June 24, 1969, the corresponding Alias Writ of Execution [was issued] dated
June 26, 1969, .... 10. On the strength of the afore-mentioned Alias Writ of Execution dated June 26,
1969, the Provincial Sheriff of Rizal (respondent herein) served notices of garnishment dated June
28, 1969 with several Banks, specially on the "monies due the Armed Forces of the Philippines in
the form of deposits sufficient to cover the amount mentioned in the said Writ of Execution"; the
Philippine Veterans Bank received the same notice of garnishment on June 30, 1969 .... 11. The
funds of the Armed Forces of the Philippines on deposit with the Banks, particularly, with the
Philippine Veterans Bank and the Philippine National Bank [or] their branches are public funds duly
appropriated and allocated for the payment of pensions of retirees, pay and allowances of military
and civilian personnel and for maintenance and operations of the Armed Forces of the Philippines,
as per Certification dated July 3, 1969 by the AFP Controller,..."2. The paragraph immediately
succeeding in such petition then alleged: "12. Respondent Judge, Honorable Guillermo P. Villasor,
acted in excess of jurisdiction [or] with grave abuse of discretion amounting to lack of jurisdiction in
granting the issuance of an alias writ of execution against the properties of the Armed Forces of the
Philippines, hence, the Alias Writ of Execution and notices of garnishment issued pursuant thereto
are null and void."3 In the answer filed by respondents, through counsel Andres T. Velarde and
Marcelo B. Fernan, the facts set forth were admitted with the only qualification being that the total
award was in the amount of P2,372,331.40.4

The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and
prohibition proceeding. What was done by respondent Judge is not in conformity with the dictates of
the Constitution. .

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that
the state as well as its government is immune from suit unless it gives its consent. It is readily
understandable why it must be so. In the classic formulation of Holmes: "A sovereign is exempt from
suit, not because of any formal conception or obsolete theory, but on the logical and practical ground
that there can be no legal right as against the authority that makes the law on which the right
depends."5 Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a
recent decision, Providence Washington Insurance Co. v. Republic of the Philippines,6 with its
affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as
against the inconvenience that may be caused private parties, the loss of governmental efficiency
and the obstacle to the performance of its multifarious functions are far greater if such a fundamental
principle were abandoned and the availability of judicial remedy were not thus restricted. With the
well known propensity on the part of our people to go to court, at the least provocation, the loss of
time and energy required to defend against law suits, in the absence of such a basic principle that
constitutes such an effective obstacle, could very well be imagined."7

This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised
charter. It is therein expressly provided: "The State may not be sued without its consent."8 A
corollary, both dictated by logic and sound sense from a basic concept is that public funds cannot be
the object of a garnishment proceeding even if the consent to be sued had been previously granted
and the state liability adjudged. Thus in the recent case of Commissioner of Public Highways v. San
Diego,9 such a well-settled doctrine was restated in the opinion of Justice Teehankee: "The universal
rule that where the State gives its consent to be sued by private parties either by general or special
law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of
execution' and that the power of the Courts ends when the judgment is rendered, since government
funds and properties may not be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy. Disbursements of public funds must
be covered by the corresponding appropriation as required by law. The functions and public services
rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects, as appropriated by law." 10 Such a principle applies
even to an attempted garnishment of a salary that had accrued in favor of an employee. Director of
Commerce and Industry v. Concepcion, 11 speaks to that effect. Justice Malcolm as ponente left no
doubt on that score. Thus: "A rule which has never been seriously questioned, is that money in the
hands of public officers, although it may be due government employees, is not liable to the creditors
of these employees in the process of garnishment. One reason is, that the State, by virtue of its
sovereignty, may not be sued in its own courts except by express authorization by the Legislature,
and to subject its officers to garnishment would be to permit indirectly what is prohibited directly.
Another reason is that moneys sought to be garnished, as long as they remain in the hands of the
disbursing officer of the Government, belong to the latter, although the defendant in garnishment
may be entitled to a specific portion thereof. And still another reason which covers both of the
foregoing is that every consideration of public policy forbids it." 12

In the light of the above, it is made abundantly clear why the Republic of the Philippines could
rightfully allege a legitimate grievance.

WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside both the
order of June 24, 1969 declaring executory the decision of July 3, 1961 as well as the alias writ of
execution issued thereunder. The preliminary injunction issued by this Court on July 12, 1969 is
hereby made permanent.

Zaldivar (Chairman), Antonio, Fernandez and Aquino, JJ., concur.

Barredo, J, took no part.

G.R. Nos. 109095-109107 February 23, 1995

State Immunity of the Respondent while employing Petitioners

ELDEPIO LASCO, RODOLFO ELISAN, URBANO BERADOR, FLORENTINO ESTOBIO,

MARCELINO MATURAN, FRAEN BALIBAG, CARMELITO GAJOL, DEMOSTHENES MANTO,
SATURNINO BACOL, SATURNINO LASCO, RAMON LOYOLA, JOSENIANO B. ESPINA, all
represented by MARIANO R. ESPINA, petitioner,
vs.
UNITED NATIONS REVOLVING FUND FOR NATURAL RESOURCES EXPLORATION
(UNRFNRE) represented by its operations manager, DR. KYRIACOS LOUCA, OSCAR N.
ABELLA, LEON G. GONZAGA, JR., MUSIB M. BUAT, Commissioners of National Labor
Relations Commission (NLRC), Fifth Division, Cagayan de Oro City and IRVING PETILLA,
Labor Arbiter of Butuan City, respondents.

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court to set aside the
Resolution dated January 25, 1993 of the National Labor Relations Commission (NLRC), Fifth
Division, Cagayan de Oro City.

We dismiss the petition.

I
Petitioners were dismissed from their employment with private respondent, the United Nations
Revolving Fund for Natural Resources Exploration (UNRFNRE), which is a special fund and
subsidiary organ of the United Nations. The UNRFNRE is involved in a joint project of the Philippine
Government and the United Nations for exploration work in Dinagat Island.

Petitioners are the complainants in NLRC Cases Nos. SRAB 10-03-00067-91 to 10-03-00078-91
and SRAB 10-07-00159-91 for illegal dismissal and damages.

In its Motion to Dismiss, private respondent alleged that respondent Labor Arbiter had no jurisdiction
over its personality since it enjoyed diplomatic immunity pursuant to the 1946 Convention on the
Privileges and Immunities of the United Nations. In support thereof, private respondent attached a
letter from the Department of Foreign Affairs dated August 26, 1991, which acknowledged its
immunity from suit. The letter confirmed that private respondent, being a special fund administered
by the United Nations, was covered by the 1946 Convention on the Privileges and Immunities of the
United Nations of which the Philippine Government was an original signatory (Rollo, p. 21).

On November 25, 1991, respondent Labor Arbiter issued an order dismissing the complaints on the
ground that private respondent was protected by diplomatic immunity. The dismissal was based on
the letter of the Foreign Office dated September 10, 1991.

Petitioners' motion for reconsideration was denied. Thus, an appeal was filed with the NLRC, which
affirmed the dismissal of the complaints in its Resolution dated January 25, 1993.

Petitioners filed the instant petition for certiorari without first seeking a reconsideration of the NLRC
resolution.

II

Article 223 of the Labor Code of the Philippines, as amended, provides that decisions of the NLRC
are final and executory. Thus, they may only be questioned through certiorari as a special civil action
under Rule 65 of the Revised Rules of Court.

Ordinarily, certiorari as a special civil action will not lie unless a motion for reconsideration is first
filed before the respondent tribunal, to allow it an opportunity to correct its assigned errors (Liberty
Insurance Corporation v. Court of Appeals, 222 SCRA 37 [1993]).

In the case at bench, petitioners' failure to file a motion for reconsideration is fatal to the instant
petition. Moreover, the petition lacks any explanation for such omission, which may merit its being
considered as falling under the recognized exceptions to the necessity of filing such motion.

Notwithstanding, we deem it wise to give due course to the petition because of the implications of
the issue in our international relations.

Petitioners argued that the acts of mining exploration and exploitation are outside the official
functions of an international agency protected by diplomatic immunity. Even assuming that private
respondent was entitled to diplomatic immunity, petitioners insisted that private respondent waived it
when it engaged in exploration work and entered into a contract of employment with petitioners.

Petitioners, likewise, invoked the constitutional mandate that the State shall afford full protection to
labor and promote full employment and equality of employment opportunities for all (1987
Constitution, Art. XIII, Sec. 3).
The Office of the Solicitor General is of the view that private respondent is covered by the mantle of
diplomatic immunity. Private respondent is a specialized agency of the United Nations. Under Article
105 of the Charter of the United Nations:

1. The Organization shall enjoy in the territory of its Members such privileges and
immunities as are necessary for the fulfillment of its purposes.

2. Representatives of the Members of the United Nations and officials of the

Organization shall similarly enjoy such privileges and immunities as are necessary
for the independent exercise of their functions in connection with the organization.

Corollary to the cited article is the Convention on the Privileges and Immunities of the Specialized
Agencies of the United Nations, to which the Philippines was a signatory (Vol. 1, Philippine Treaty
Series, p. 621). We quote Sections 4 and 5 of Article III thereof:

Sec. 4. The specialized agencies, their property and assets, wherever located and by
whomsoever held shall enjoy immunity from every form of legal process except
insofar as in any particular case they have expressly waived their immunity. It is,
however, understood that no waiver of immunity shall extend to any measure of
execution (Emphasis supplied).

Sec. 5. The premises of the specialized agencies shall be inviolable. The property
and assets of the specialized agencies, wherever located and by whomsoever held,
shall be immune from search, requisition, confiscation, expropriation and any other
form of interference, whether by executive, administrative, judicial or legislative
action (Emphasis supplied).

As a matter of state policy as expressed in the Constitution, the Philippine Government adopts the
generally accepted principles of international law (1987 Constitution, Art. II, Sec. 2). Being a member
of the United Nations and a party to the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations, the Philippine Government adheres to the doctrine of
immunity granted to the United Nations and its specialized agencies. Both treaties have the force
and effect of law.

In World Health Organization v. Aquino, 48 SCRA 242, (1972), we had occasion to rule that:

It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government,
and where the plea of diplomatic immunity is recognized and affirmed by the
executive branch of the government as in the case at bar, it is then the duty of the
courts to accept the claim of immunity upon appropriate suggestion by the principal
law officer of the government, the Solicitor General or other officer acting under his
direction. Hence, in adherence to the settled principle that courts may not so exercise
their jurisdiction by seizure and detention of property, as to embarrass the executive
arm of the government in conducting foreign relations, it is accepted doctrine that "in
such cases the judicial department of (this) government follows the action of the
political branch and will not embarrass the latter by assuming an antagonistic
jurisdiction (Emphasis supplied).

We recognize the growth of international organizations dedicated to specific universal endeavors,

such as health, agriculture, science and technology and environment. It is not surprising that their
existence has evolved into the concept of international immunities. The reason behind the grant of
privileges and immunities to international organizations, its officials and functionaries is to secure
them legal and practical independence in fulfilling their duties (Jenks, International Immunities 17
[1961]).

Immunity is necessary to assure unimpeded performance of their functions. The purpose is "to shield
the affairs of international organizations, in accordance with international practice, from political
pressure or control by the host country to the prejudice of member States of the organization, and to
ensure the unhampered performance of their functions" (International Catholic Migration
Commission v. Calleja, 190 SCRA 130 [1990]).

In the International Catholic Migration Commission case, we held that there is no conflict between
the constitutional duty of the State to protect the rights of workers and to promote their welfare, and
the grant of immunity to international organizations. Clauses on jurisdictional immunity are now
standard in the charters of the international organizations to guarantee the smooth discharge of their
functions.

The diplomatic immunity of private respondent was sufficiently established by the letter of the
Department of Foreign Affairs, recognizing and confirming the immunity of UNRFNRE in accordance
with the 1946 Convention on Privileges and Immunities of the United Nations where the Philippine
Government was a party. The issue whether an international organization is entitled to diplomatic
immunity is a "political question" and such determination by the executive branch is conclusive on
the courts and quasi-judicial agencies (The Holy See v. Hon. Eriberto U. Rosario, Jr., G.R. No.
101949, Dec. 1, 1994; International Catholic Migration Commission v. Calleja, supra).

Our courts can only assume jurisdiction over private respondent if it expressly waived its immunity,
which is not so in the case at bench (Convention on the Privileges and Immunities of the Specialized
Agencies of the United Nations, Art. III, Sec. 4).

Private respondent is not engaged in a commercial venture in the Philippines. Its presence here is
by virtue of a joint project entered into by the Philippine Government and the United Nations for
mineral exploration in Dinagat Island. Its mission is not to exploit our natural resources and gain
pecuniarily thereby but to help improve the quality of life of the people, including that of petitioners.

This is not to say that petitioner have no recourse. Section 31 of the Convention on the Privileges
and Immunities of the Specialized Agencies of the United Nations states that "each specialized
agency shall make a provision for appropriate modes of settlement of: (a) disputes arising out of
contracts or other disputes of private character to which the specialized agency is a party."

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

G.R. No. 86773 February 14, 1992

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT

(SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD, ADMINISTRATIVE
DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents.

Ramon Encarnacion for petitioners.

Caesar T. Corpus for private respondent.

NOCON, J.:

This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the National Labor
Relations Commission sustaining the labor arbiter, in holding herein petitioners Southeast Asian
Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil
Cuevas and Ben de los Reyes liable to pay private respondent Juvenal Lazaga the amount of
P126,458.89 plus interest thereon computed from May 16, 1986 until full payment thereof is made,
as separation pay and other post-employment benefits, and the resolution denying the petitioners'
motion for reconsideration of said decision dated January 9, 1989.

The antecedent facts of the case are as follows:

SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries

Development Center, organized through an agreement entered into in Bangkok, Thailand on
December 28, 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and
the Philippines with Japan as the sponsoring country (Article 1, Agreement Establishing the
SEAFDEC).

On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate an a
probationary basis by the SEAFDEC-AQD and was appointed Senior External Affairs Officer on
January 5, 1983 with a monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00.
Thereafter, he was appointed to the position of Professional III and designated as Head of External
Affairs Office with the same pay and benefits.

On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of
termination to private respondent informing him that due to the financial constraints being
experienced by the department, his services shall be terminated at the close of office hours on May
15, 1986 and that he is entitled to separation benefits equivalent to one (1) month of his basic salary
for every year of service plus other benefits (Rollo, p. 153).

Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed
on March 18, 1987 a complaint against petitioners for non-payment of separation benefits plus moral
damages and attorney's fees with the Arbitration Branch of the NLRC (Annex "C" of Petition
for Certiorari).

Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case
inasmuch as the SEAFDEC-AQD is an international organization and that private respondent must
first secure clearances from the proper departments for property or money accountability before any
claim for separation pay will be paid, and which clearances had not yet been obtained by the private
respondent.
A formal hearing was conducted whereby private respondent alleged that the non-issuance of the
clearances by the petitioners was politically motivated and in bad faith. On the other hand,
petitioners alleged that private respondent has property accountability and an outstanding obligation
to SEAFDEC-AQD in the amount of P27,532.11. Furthermore, private respondent is not entitled to
accrued sick leave benefits amounting to P44,000.00 due to his failure to avail of the same during
his employment with the SEAFDEC-AQD (Annex "D", Id.).

On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering

respondents:

1. To pay complainant P126,458.89, plus legal interest thereon computed from May
16, 1986 until full payment thereof is made, as separation pay and other post-
employment benefits;

2. To pay complainant actual damages in the amount of P50,000, plus 10%

attorney's fees.

All other claims are hereby dismissed.

SO ORDERED. (Rollo, p. 51, Annex "E")

On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as to the
award of P50,000.00 as actual damages and attorney's fees for being baseless. (Annex "A", p.
28, id.)

On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.) which was
denied on January 9, 1989. Thereafter, petitioners instituted this petition for certiorari alleging that
the NLRC has no jurisdiction to hear and decide respondent Lazaga's complaint since SEAFDEC-
AQD is immune from suit owing to its international character and the complaint is in effect a suit
against the State which cannot be maintained without its consent.

The petition is impressed with merit.

Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-

AQD) is an international agency beyond the jurisdiction of public respondent NLRC.

It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia,

Japan, Kingdom of Laos, Malaysia. Republic of the Philippines, Republic of Singapore, Kingdom of
Thailand and Republic of Vietnam (Annex "H", Petition).

The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on
January 16,1968. Its purpose is as follows:

The purpose of the Center is to contribute to the promotion of the fisheries

development in Southeast Asia by mutual co-operation among the member
governments of the Center, hereinafter called the "Members", and through
collaboration with international organizations and governments external to the
Center. (Agreement Establishing the SEAFDEC, Art. 1; Annex "H" Petition)
(p.310, Rollo)
SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in
Kuala Lumpur, Malaysia as one of the principal departments of SEAFDEC (Annex "I", id.) to be
established in Iloilo for the promotion of research in aquaculture. Paragraph 1, Article 6 of the
Agreement establishing SEAFDEC mandates:

1. The Council shall be the supreme organ of the Center and all powers of the Center
shall be vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys

functional independence and freedom from control of the state in whose territory its office is located.

As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public
International Law (p. 83, 1956 ed.):

Permanent international commissions and administrative bodies have been created

by the agreement of a considerable number of States for a variety of international
purposes, economic or social and mainly non-political. Among the notable instances
are the International Labor Organization, the International Institute of Agriculture, the
International Danube Commission. In so far as they are autonomous and beyond the
control of any one State, they have a distinct juridical personality independent of the
municipal law of the State where they are situated. As such, according to one leading
authority "they must be deemed to possess a species of international personality of
their own." (Salonga and Yap, Public International Law, 83 [1956 ed.])

Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be
represented by one Director in the governing SEAFDEC Council (Agreement Establishing
SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.) and that its national laws and regulations shall apply only
insofar as its contribution to SEAFDEC of "an agreed amount of money, movable and immovable
property and services necessary for the establishment and operation of the Center" are concerned
(Art. 11, ibid.). It expressly waived the application of the Philippine laws on the disbursement of
funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).

The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over
SEAFDEC-AQD in Opinion No. 139, Series of 1984 —

4. One of the basic immunities of an international organization is immunity from local

jurisdiction, i.e.,that it is immune from the legal writs and processes issued by the
tribunals of the country where it is found. (See Jenks, Id., pp. 37-44) The obvious
reason for this is that the subjection of such an organization to the authority of the
local courts would afford a convenient medium thru which the host government may
interfere in there operations or even influence or control its policies and decisions of
the organization; besides, such subjection to local jurisdiction would impair the
capacity of such body to discharge its responsibilities impartially on behalf of its
member-states. In the case at bar, for instance, the entertainment by the National
Labor Relations Commission of Mr. Madamba's reinstatement cases would amount
to interference by the Philippine Government in the management decisions of the
SEARCA governing board; even worse, it could compromise the desired impartiality
of the organization since it will have to suit its actuations to the requirements of
Philippine law, which may not necessarily coincide with the interests of the other
member-states. It is precisely to forestall these possibilities that in cases where the
extent of the immunity is specified in the enabling instruments of international
organizations, jurisdictional immunity from the host country is invariably among the
 first accorded. (SeeJenks, Id.; See also Bowett, The Law of International Institutions,
pp. 284-1285).

Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing
because estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of
action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can
provide one. Settled is the rule that the decision of a tribunal not vested with appropriate jurisdiction
is null and void. Thus, in Calimlim vs. Ramirez, this Court held:

A rule, that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject matter of the action
is a matter of law and may not be conferred by consent or agreement of the parties.
The lack of jurisdiction of a court may be raised at any stage of the proceedings,
even on appeal. This doctrine has been qualified by recent pronouncements which it
stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be
regretted, however, that the holding in said case had been applied to situations which
were obviously not contemplated therein. The exceptional circumstances involved
in Sibonghanoy which justified the departure from the accepted concept of non-
waivability of objection to jurisdiction has been ignored and, instead a blanket
doctrine had been repeatedly upheld that rendered the supposed ruling
in Sibonghanoy not as the exception, but rather the general rule, virtually
overthrowing altogether the time-honored principle that the issue of jurisdiction is not
lost by waiver or by estoppel. (Calimlim vs. Ramirez, G.R. No. L-34362, 118 SCRA
399; [1982])

Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA 286
[1987]) to justify its assumption of jurisdiction over SEAFDEC is misplaced. On the contrary, the
Court in said case explained why it took cognizance of the case. Said the Court:

We would note, finally, that the present petition relates to a controversy between two
claimants to the same position; this is not a controversy between the SEAFDEC on
the one hand, and an officer or employee, or a person claiming to be an officer or
employee, of the SEAFDEC, on the other hand. There is before us no question
involving immunity from the jurisdiction of the Court, there being no plea for such
immunity whether by or on behalf of SEAFDEC, or by an official of SEAFDEC with
the consent of SEAFDEC (Id., at 300; emphasis supplied).

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the

courts or local agency of the Philippine government, the questioned decision and resolution of the
NLRC dated July 26, 1988 and January 9, 1989, respectively, are hereby REVERSED and SET
ASIDE for having been rendered without jurisdiction. No costs.

SO ORDERED.
G.R. No. 106483 May 22, 1995

ERNESTO L. CALLADO, petitioner,

vs.
INTERNATIONAL RICE RESEARCH INSTITUTE, respondent.

ROMERO, J.:

Did the International Rice Research Institute (IRRI) waive its immunity from suit in this dispute which
arose from an employer-employee relationship?

We rule in the negative and vote to dismiss the petition.

Ernesto Callado, petitioner, was employed as a driver at the IRRI from April 11, 1983 to December
14, 1990. On February 11, 1990, while driving an IRRI vehicle on an official trip to the Ninoy Aquino
International Airport and back to the IRRI, petitioner figured in an accident.

Petitioner was informed of the findings of a preliminary investigation conducted by the IRRI's Human
Resource Development Department Manager in a Memorandum dated March 5, 1990. 1 In view of
the aforesaid findings, he was charged with:

(1) Driving an institute vehicle while on official duty under the influence of liquor;

(2) Serious misconduct consisting of your failure to report to your supervisors the
failure of your vehicle to start because of a problem with the car battery which, you
alleged, required you to overstay in Manila for more than six (6) hours, whereas, had
you reported the matter to IRRI, Los Baños by telephone, your problem could have
been solved within one or two hours;

(3) Gross and habitual neglect of your duties. 2

In a Memorandum dated March 9, 1990, petitioner submitted his answer and defenses to the
charges against him. 3After evaluating petitioner's answer, explanations and other evidence, IRRI
issued a Notice of Termination to petitioner on December 7, 1990. 4

Thereafter, petitioner filed a complaint on December 19, 1990 before the Labor Arbiter for illegal
dismissal, illegal suspension and indemnity pay with moral and exemplary damages and attorney's
fees.

On January 2, 1991, private respondent IRRI, through counsel, wrote the Labor Arbiter to inform him
that the Institute enjoys immunity from legal process by virtue of Article 3 of Presidential Decree No.
1620, 5 and that it invokes such diplomatic immunity and privileges as an international organization in
the instant case filed by petitioner, not having waived the same. 6

IRRI likewise wrote in the same tenor to the Regional Director of the Department of Labor and
Employment. 7

While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an Order issued by
the Institute on August 13, 1991 to the effect that "in all cases of termination, respondent IRRI
waives its immunity," 8 and, accordingly, considered the defense of immunity no longer a legal
obstacle in resolving the case. The dispositive portion of the Labor arbiter's decision dated October
31, 1991, reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering

respondent to reinstate complainant to his former position without loss or (sic)
seniority rights and privileges within five (5) days from receipt hereof and to pay his
full backwages from March 7, 1990 to October 31, 1991, in the total amount of
P83,048.75 computed on the basis of his last monthly salary. 9

The NLRC found merit in private respondent' s appeal and, finding that IRRI did not waive its
immunity, ordered the aforesaid decision of the Labor Arbiter set aside and the complaint
dismissed. 10

Hence, this petition where it is contended that the immunity of the IRRI as an international
organization granted by Article 3 of Presidential Decree No. 1620 may not be invoked in the case at
bench inasmuch as it waived the same by virtue of its Memorandum on "Guidelines on the handling
of dismissed employees in relation to P.D. 1620." 11

It is also petitioner's position that a dismissal of his complaint before the Labor Arbiter leaves him no
other remedy through which he can seek redress. He further states that since the investigation of his
case was not referred to the Council of IRRI Employees and Management (CIEM), he was denied
his constitutional right to due process.

We find no merit in petitioner's arguments.

IRRI's immunity from suit is undisputed.

Presidential Decree No. 1620, Article 3 provides:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any
penal, civil and administrative proceedings, except insofar as that immunity has been
expressly waived by the Director-General of the Institute or his authorized
representatives.

In the case of International Catholic Migration Commission v. Hon. Calleja, et al. and Kapisanan ng
Manggagawa at TAC sa IRRI v. Secretary of Labor and Employment and IRRI, 12 the Court upheld
the constitutionality of the aforequoted law. After the Court noted the letter of the Acting Secretary of
Foreign Affairs to the Secretary of Labor dated June 17, 1987, where the immunity of IRRI from the
jurisdiction of the Department of Labor and Employment was sustained, the Court stated that this
opinion constituted "a categorical recognition by the Executive Branch of the Government that . . .
IRRI enjoy(s) immunities accorded to international organizations, which determination has been held
to be a political question conclusive upon the Courts in order not to embarass a political department
of Government. 13 We cited the Court's earlier pronouncement in WHO v. Hon. Benjamin Aquino, et
al., 14 to wit:

It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government,
and where the plea of diplomatic immunity is recognized and affirmed by the
executive branch of the government as in the case at bar, it is then the duty of the
courts to accept the claim of immunity upon appropriate suggestion by the principal
 law officer of the government . . . or other officer acting under his direction. Hence, in
adherence to the settled principle that courts may not so exercise their jurisdiction . .
. as to embarass the executive arm of the government in conducting foreign
relations, it is accepted doctrine that in such cases the judicial department of (this)
government follows the action of the political branch and will not embarrass the latter
by assuming an antagonistic jurisdiction. 15

Further, we held that "(t)he raison d'etre for these immunities is the assurance of unimpeded
performance of their functions by the agencies concerned.

The grant of immunity from local jurisdiction to . . . and IRRI is clearly necessitated by
their international character and respective purposes. The objective is to avoid the
danger of partiality and interference by the host country in their internal workings.
The exercise of jurisdiction by the Department of Labor in these instances would
defeat the very purpose of immunity, which is to shield the affairs of international
organizations, in accordance with international practice, from political pressure or
control by the host country to the prejudice of member States of the organization,
and to ensure the unhampered the performance of their functions. 16

The grant of immunity to IRRI is clear and unequivocal and an express waiver by its Director-
General is the only way by which it may relinquish or abandon this immunity.

On the matter of waiving its immunity from suit, IRRI had, early on, made its position clear. Through
counsel, the Institute wrote the Labor Arbiter categorically informing him that the Institute will not
waive its diplomatic immunity. In the second place, petitioner's reliance on the Memorandum with
"Guidelines in handling cases of dismissal of employees in relation to P.D. 1620" dated July 26,
1983, is misplaced. The Memorandum reads, in part:

Time and again the Institute has reiterated that it will not use its immunity under P.D.
1620 for the purpose of terminating the services of any of its employees. Despite
continuing efforts on the part of IRRI to live up to this undertaking, there appears to
be apprehension in the minds of some IRRI employees. To help allay these fears the
following guidelines will be followed hereafter by the Personnel/Legal Office while
handling cases of dismissed employees.

xxx xxx xxx

2. Notification/manifestation to MOLE or labor arbiter

If and when a dismissed employee files a complaint against the Institute contesting the legality of
dismissal, IRRI's answer to the complaint will:

1. Indicate in the identification of IRRI that it is an international organization operating

under the laws of the Philippines including P.D. 1620. and
2. Base the defense on the merits and facts of the case as well as the legality of the
cause or causes for termination.

3) Waiving immunity under P.D. 1620

If the plaintiff's attorney or the arbiter, asks if IRRI will waive its immunity
we may reply that the Institute will be happy to do so, as it has in the past in the
 formal manner required thereby reaffirming our commitment to abide by the laws of
the Philippines and our full faith in the integrity and impartially of the legal
system. 17 (Emphasis in this paragraphs ours)

From the last paragraph of the foregoing quotation, it is clear that in cases involving dismissed
employees, the Institute may waive its immunity, signifying that such waiver is discretionary on its
part.

We agree with private respondent IRRI that this memorandum cannot, by any stretch of the
imagination, be considered the express waiver by the Director-General. Respondent Commission
has quoted IRRI's reply thus:

The 1983 . . . is an internal memo addressed to Personnel and Legal Office and was
issued for its guidance in handling those cases where IRRI opts to waive its
immunity. It is not a declaration of waiver for all cases. This is apparent from the use
of the permissive term "may" rather than the mandatory term "shall" in the last
paragraph of the memo. Certainly the memo cannot be considered as the express
waiver by the Director General as contemplated by P.D. 1620, especially since the
memo was issued by a former Director-General. At the very least, the express
declaration of the incumbent Director-general supersedes the 1983 memo and
should be accorded greater respect. It would be equally important to point out that
the Personnel and Legal Office has been non-existent since 1988 as a result of
major reorganization of the IRRI. Cases of IRRI before DOLE are handled by an
external Legal Counsel as in this particular
case. 18 (Emphasis supplied)

The memorandum, issued by the former Director-General to a now-defunct division of the IRRI, was
meant for internal circulation and not as a pledge of waiver in all cases arising from dismissal of
employees. Moreover, the IRRI's letter to the Labor Arbiter in the case at bench made in 1991
declaring that it has no intention of waiving its immunity, at the very least, supplants any
pronouncement of alleged waiver issued in previous cases.

Petitioner's allegation that he was denied due process is unfounded and has no basis.

It is not denied that he was informed of the findings and charges resulting from an investigation
conducted of his case in accordance with IRRI policies and procedures. He had a chance to
comment thereon in a Memorandum he submitted to the Manager of the Human Resource and
Development Department. Therefore, he was given proper notice and adequate opportunity to refute
the charges and findings, hereby fulfilling the basic requirements of due process.

Finally, on the issue of referral to the Council of IRRI Employees and Management (CIEM),
petitioner similarly fails to persuade the Court.

The Court, in the Kapisanan ng mga Manggagawa at TAC sa IRRI case, 19 held:

Neither are the employees of IRRI without remedy in case of dispute with
management as, in fact, there had been organized a forum for better management-
employee relationship as evidenced by the formation of the Council of IRRI
Employees and Management (CIEM) wherein "both management and employees
were and still are represented for purposes of maintaining mutual and beneficial
cooperation between IRRI and its employees." The existence of this Union factually
and tellingly belies the argument that Pres. Decree No. Decree No. 1620, which
 grants to IRRI the status, privileges and immunities of an international organization,
deprives its employees of the right to self-organization.

We have earlier concluded that petitioner was not denied due process, and this, notwithstanding the
non-referral to the Council of IRRI Employees and Management. Private respondent correctly
pointed out that petitioner, having opted not to seek the help of the CIEM Grievance Committee,
prepared his answer by his own self. 20 He cannot now fault the Institute for not referring his case to
the CIEM.

IN VIEW OF THE FOREGOING, the petition for certiorari is DISMISSED. No costs.

Tests to Determine is Suit is against the State

143 Phil. 391

GAUDENCIO A. BEGOSA v. CHAIRMAN of Philippine Veterans Academy

Apr 30, 1970

FERNANDO, J.:
Plaintiff Gaudencio A. Begosa, now appellee, sought the aid of the judiciary to obtain the benefits to
which he believed he was entitled under the Veterans' Bill of Rights.[1] To such a move, there was an
insistent objection, both vigorous and persistent, on the part of defendants, the chairman and the
members of the Philippine Veterans Administration, now appellants. The lower court, then presided by
the then Judge, now Justice of the Court of Appeals, the Honorable Edilberto Soriano, found for plaintiffs,
after a careful and meticulous study of the applicable statutory provisions. Not being satisfied with such a
judgment, defendants appealed, relying once more on the principal grounds raised below that plaintiff
should have exhausted his administrative remedies before coming to court and that he was in fact suing
the State without its consent having been obtained. As neither defense is sufficiently meritorious, we
affirm the lower court decision.
As noted in such decision, appellee's complaint was predicated on his having been "an enlisted man in
good standing of the Philippine Commonwealth Army, inducted in the service of the USAFFE" and having
taken "active participation in the battle of Bataan" as well as the "liberation drive against the enemy"
thereafter having become "permanently incapacitated from work due to injuries he sustained in line of
duty * * *.[2] It was likewise asserted in his complaint that after having submitted all the supporting papers
relative to his complaint, there was a disapproval on the part of defendants on the ground of his having
been dishonorably discharged, although such an event did not take place until almost five years after the
end of the war on November 7, 1950 and while he was in the service of a different organization that such
a penalty was imposed on him.[3]
Then came the allegation that there was an approval on his claim on September 2, 1964 but effective
only as of October 5 of that year, and for amounts much less than that to which he was entitled under the
law. [4] The relief sought was the payment, as of the date to which he believed his right to pension should
have been respected, of the sums, which he felt were legally due and owing to him.
The then Judge Soriano noted that there was an admission of certain allegations to the complaint with
others being denied, and that the following affirmative and special defenses were interposed:
"Defendants' answer admits certain allegations of said complaint, while denying others; sets up the
following affirmative and special defenses: (1) payment of disability pension under Republic Act No. 65,
as amended, by the Philippine Veterans Administration commences from the date the proper
application therefor is approved; (2) plaintiff has not exhausted all administrative remedies before
resorting to court action, hence the present action is premature; (3) inasmuch as the instant action
pertains to money claim against the Government, it must first be presented before the Auditor General as
provided by existing law on the matter (C. A. 327); and (4) plaintiff's claim is in reality a suit against the
Government which cannot be entertained by this Court for lack of jurisdiction because the Government
has not given its consent, * * *."[5] The case was then submitted on an agreed statement of facts and the
respective memoranda of the parties.
In the decision now on appeal, the question of when appellee is entitled to his pension as well as how
much it would amount to were fully discussed by the lower court. Thus, as to the former: "From the facts
just set out, it will be noted that plaintiff filed his said claim for disability pension as far back as March 4,
1955; that it was erroneously disapproved on June 21, 1955, because his dishonorable discharge from
the Army was not a good or proper ground for the said disapproval, and that on reconsideration asked for
by him on November 1, 1957, which he continued to follow up, the Board of Administrators, Philippine
Veterans Administration, composed of herein defendants, which took over the duties of the Philippine
Veterans Board, finally approved his claim on September 2, 1964, at the rate of P30.00 a month." [6] After
stating that in fairness and good conscience the said claims could be made effective as of June 21, 1955,
when it was erroneously disapproved by appellants, and not on September 2, 1964 when it was approved
on reconsideration, as appellee should not for obvious reason be made to suffer for the error of another,
the then Judge Soriano observed further: "Had it not been for the said error, it appears that there was no
good ground to deny the said claim, so the latter was valid and meritorious even as of the date of its filing
on March 4, 1955, hence to make the same effective only as of the date of its approval on September 2,
1964 - according to defendant's stand - would be greatly unfair and prejudicial to plaintiff. This is
especially true in the light of the well-known intent of the legislature in passing these pension laws of war
veterans, and the no less well-known spirit in which they should be construed or interpreted by the courts
in favor of their beneficiaries."[7]
On the question of how much plaintiff should receive according to law, the appealed decision contains the
following: "The next question for resolution refers to the monthly rate or amount to which plaintiff is
entitled by way of pension. According to plaintiff, he should be given a disability pension of P50.00 a
month from June 21, 1955 (the effective date of his claim as above found by this Court) until June 21,
1957, and P100.00 a month for life from June 22, 1957 (when Section 9 of Republic Act No. 65, as
amended by Republic Act No. 1362, was further amended by Republic Act No. 1920). This contention, is
well taken because the very letter of the Philippine Veterans Administration to plaintiff (Annex F of the
[Agreed Statement of Facts]) contains the following 'Note: Re-rating is not required, permanent disability.'
By 'Permanent disability', as this Court understands it, is meant that plaintiff is permanently incapacitated
from work. Under Section 9 of Republic Act No. 65, as amended by Republic Act No. 1362, which was
the law in force when plaintiff's claim for pension should have been approved on June 21, 1955, he was
entitled to a pension of P50.00 a month as such permanently incapacitated person, which monthly rate or
amount was increased to P100. 00 a month when the said Section 9 was further amended by Republic
Act No. 1920 on June 22, 1957. [8] Why the action of appellants in the form of resolution could not prevail
as against the law was made clear by the decision in this wise: "For one thing, the said resolution may not
change or amend the meaning of the term 'permanent disability' as used by Congress itself in enacting
the said Section 9 of Republic Act No. 65, as amended. For another, as of June 21, 1955 and as of June
21, 1957, plaintiff was already entitled to the said pension of P50.00 and P100.00 a month respectively,
and his said right cannot be adversely affected by a resolution which was allegedly adopted only in
1963."[9] Necessarily, there was in the decision likewise a recognition of the monthly allowance for each
of appellee's unmarried minor, children below 18 years of age at the time he was entitled to the pension
to which under the statute he could validly lay claim.
After rejecting as untenable the defenses that there was no exhaustion of administrative remedies, that
the action is in the nature of money claim which should first be presented before the Auditor General, and
that said action is in reality a suit against the Government without the latter's consent, the decision
concludes with the following: "[Wherefore], judgment is; hereby rendered in accordance with the prayer of
plaintiff's amended complaint, to wit, that defendants make plaintiff's pension effective June 21, 1955 at
the rate of P50.00 a month up to June 21, 1957 at the rate of P100.00 a month, plus P10. 00 a month
each for his four unmarried minor children below 18 years old from June 22, 1957 up to September 1,
1964; and the difference of P70. 00 a month, plus P10.00 for his one unmarried minor child below 18
years old from September 2, 1954, and thereafter, with costs against said defendants." [10]
Appellants elevated the matter to us. The careful and painstaking way in which the controlling statutory
provisions were considered and applied by the then Judge Soriano must have impelled them to place
their faith in the alleged failure to respect the doctrines of non-suability and exhaustion of administrative
remedies to obtain a reversal. The appealed decision, however, as will now be shown, is not subject to
such a reproach. The appeal then, as noted at the outset, is not to be attended with success.
1. The fourth assignment of error assails what it considers to be the failing of the lower court in not
holding that the complaint in this case is in effect a suit against the State which has not given its consent
thereto. We have recently had occasion to reaffirm the force and primacy of the doctrine of non-
suability. [11] It does not admit of doubt, then, that if the suit were in fact against the State, the lower court
should have dismissed the complaint. Nor is it to be doubted that while ostensibly an action may be
against a public official, the defendant may in reality be the government. As a result, it is equally well-
settled that where a litigation may have adverse consequences on the public treasury, whether in the
disbursements of funds or loss of property, the public official proceeded against not being liable in his
personal capacity, then the doctrine of non-suability may appropriately be invoked. It has no application,
however, where the suit against such a functionary had to be instituted because of his failure to comply
with the duty imposed by statute appropriating public funds for the benefit of plaintiff or petitioner. Such is
the present case.
The doctrine announced by us in Ruiz v. Cabahug[12] finds relevance: "We hold that under the facts and
circumstances alleged in the amended complaint, which should be taken on its face value, the suit is not
one against the Government, or a claim against it, but one against the officials to compel them to act in
accordance with the rights to be established by the contending architects, or to prevent them from making
payment and recognition until the contending architects have established their respective rights and
interests, in the funds retained and in the credit for the work done."[13] As a matter of fact, in an earlier
case where we sustained the power of a private citizen claiming title to and right of possession of a
certain property to sue an officer or agent of the government alleged to be illegally withholding the same,
we likewise expressed this caveat: "However, and this is important, where the judgment in such a case
would result not only in the recovery of possession of the property in favor of said citizen but also in a
charge against or financial liability to the Government, then the suit should be regarded as one against
the government itself, and, consequently, it cannot prosper or be validly entertained by the courts except
with the consent of said Government."[14]
2. Nor is the third assignment of error to the effect that the lower court did not require appellee to
exhaust his administrative remedies before coming to court any more persuasive. An excerpt from the
leading case of Gonzales v. Hechnova,[15] the opinion being penned by the present Chief Justice, clearly
demonstrates why appellants' argument in this respect is unavailing: "Respondents assail petitioner's
right to the reliefs prayed for because he 'has not exhausted all administrative remedies available to him
before coming to court. We have already held, however, that the principle requiring the previous
exhaustion of administrative remedies is not applicable 'where the question in dispute is purely a legal
one', or where the controverted act is 'patently illegal' or was performed without jurisdiction or in excess of
jurisdiction, or where the respondent is a department secretary, whose acts as an alter ego of the
President bear the implied or assumed approval of the latter, unless actually disapproved by him, or
where there are circumstances indicating the urgency of judicial intervention."[16] The Gonzales doctrine, it
is to be noted, summarized the views announced in earlier cases.[17] The list of subsequent cases
reiterating such a doctrine is quite impressive.[18] To be more specific, where there is a stipulation of facts,
as in this case, the question before the lower court being solely one of law and on the face of the
decision, the actuation of appellants being' patently illegal, the doctrine of exhaustion of administrative
remedies certainly does not come into play.
3. The other errors assigned, namely the alleged failure of the lower court to comply with the law in-
fixing the amounts to which appellee is entitled instead of following the rules and regulations on veterans'
benefits promulgated by appellants and the alleged interference with, the purely discretionary matter of a
coordinate administrative agency, the Philippine Veterans Administration, can easily be disposed of. It is
to be admitted that appellants as chairman and members of the Philippine Veterans Administration,
formerly the Philippine Veterans Board, are officials of an administrative body. [19] Nor may exception be
taken to the general principle that as much as possible the courts should view with the utmost sympathy
the exercise of power of administrative tribunals whether in its rule-making or adjudicatory capacity. It
has often been announced, and rightly so, that as much as possible the findings of these regulatory
agencies which are expected to acquire expertise by their jurisdiction being confined to specific matters,
deserve to be accorded respect and finality. There is a limit, however, to such a deference paid to the
actuations of such bodies. Clearly, where there has been a failure to interpret and apply the statutory
provisions in question, judicial power should assert itself. Under the theory of separation of powers, it is
to the judiciary, and to the judiciary alone, that the final say on questions of law in appropriate cases
coming before it is vested.
When the then Judge Soriano, therefore, as he was called upon to do, saw to it that there was strict
compliance with the amounts of pension required by the law to be granted plaintiff and disregarded the
regulation promulgated under the rule-making power of appellants, the effect of which would
make appellee suffer the consequences of an error committed by them, it cannot be truly said that his
decision may be assailed as being offensive to authoritative doctrines. On the contrary, it can stand the
test of the utmost scrutiny. Precisely because the commands of the law were duly carried out, it cannot be
set aside.
WHEREFORE, the decision of the then Judge Edilberto Soriano of the Court of First Instance of Manila
promulgated on January 22, 1966, is affirmed. Without pronouncement as to costs.
Concepcion, Reyes, JBL, Dizon, Makalintal, Zaldivar, Ruiz Castro, and Villamor, JJ., concur.
Teehankee, J., in the result.
Barredo, J., on leave.

G.R. No. L-27299 June 27, 1973

QUIRICO DEL MAR, petitioner and appellee,

vs.
THE PHILIPPINE VETERANS ADMINISTRATION, respondent and appellant.

Quirico del Mar in his own behalf.

Office of the Solicitor General Felix V. Makasiar, First Assistant Solicitor General Esmeraldo Umali
and Solicitor Eulogio Raquel Santos for respondent appellant.

CASTRO, J.:

On June 20, 1964, Quirico del Mar (hereinafter referred to del Mar) filed with the Court of First
Instance of Cebu petition for mandamus (civil case R-8465) against the Philippine Veterans
Administration (hereinafter referred to the PVA to compel the latter to continue paying him monthly
life pension of P50 from the date of its cancellation in March 1950 to June 20, 1957, and thereafter,
or from June 22 1957 his monthly life pension, as increased by Republic Act 1920,1 of P100 and to
pay to him as well the monthly living allowance of P10 for each of his unmarried minor children
below eighteen years of age,2 pursuant to the said Republic Act 1920 which took effect on June 22,
1957. Del Mar also asked for compensatory, moral and exemplary damages.
In his petition below, del Mar averred that he served during World War II as chief judge advocate of
the Cebu Area Command (a duly recognized guerrilla organization) with the rank of major; that he
subsequently obtained an honorable discharge from the service on October 20, 1946 on a certificate
of permanent total physical disability; that upon proper claim presented and after hearing and
adjudication, the Philippine Veterans Board (the PVA's predecessor granted him a monthly life
pension of P50 effective January 28, 1947; that in March 1950, the said Board discontinued payment
of his monthly life pension on the ground that his receipt of a similar pension from the United States
Government, through the United States Veterans Administration, by reason of military service
rendered in the United States Army in the Far East during World War II, precluded him from
receiving any further monthly life pension from the Philippine Government; that he wrote the said
Board twice demanding that it continue paying his monthly life pension, impugning the cancellation
thereof as illegal; and that his demands went unheeded.

The PVA reiterated its contention that del Mar's receipt of a similar pension from the United States
Government effectively barred him from claiming and receiving from the Philippine Government the
monthly life pension granted him as well as the monthly allowances he claimed for his five living
unmarried minor children below eighteen years of age. The PVA also asserted that it is discretionary
on its part to grant or discontinue the pension sought by del Mar. In addition, it alleged that the action
of del Mar was premature because of his failure to exhaust administrative remedies before invoking
judicial intervention, and that the court a quo was without jurisdiction to try the case as del Mar
demand partakes of a money claim against the PVA — a mere agency of the Philippine Government
— and, in effect, of a suit against the Government which is not suitable without its consent. The PVA
thus prayed for the dismissal of the petition.

After due trial, the court a quo rendered judgment upholding del Mar claims. In its decision dated
February 27, 1965, the court (1) ordered the PVA to pay to del Mar his monthly life pension
corresponding to the period from April 1950 to May 1957 at the rate of P50 a month, adding up to
P4,334.86, and his monthly life pension corresponding to the period from June 22, 1957 to February
1965 at the amount of P100 a month totalling P9,200, and thereafter to continue to pay his monthly
life pension at the rate of P100. a month; (2) directed del Mar to file with the PVA the corresponding
written application for the payment to him of the monthly living allowance of P10 for each of his five
living unmarried minor children from June 22, 1957; and ordered the PVA to give due course to the
written application as soon as del Mar shall have filed the same with it, and once approved, to make
the necessary payment of the accumulated unpaid living allowances due to each of the said children
from June 22, 1957 as well as the current ones until each one of them ceases to be entitled to the
same; and (3 directed the PVA in the event of unavailability of funds to pay the claims
aforementioned, to set aside funds from such as intended to pay the veterans' living pensions, or to
cause the same to be appropriated in its budget in order to comply with the judgment. For lack of
basis, the court a quo omitted to pass judgment on del Mar's claim for moral and exemplary
damages.

Hence, the present appeal by the PVA.

The PVA alleges that the court a quo erred (1) in not holding itself without jurisdiction to try civil case
R-8465; (2) in no finding as premature the petition for mandamus filed by del Mar due to the failure
of the latter to exhaust available administrative remedies before seeking judicial intervention; (3) in
declaring null and void section 6 of PVA Regulation No. 2 relied upon by it in discontinuing the
monthly life pension of del Mar since March 1950; (4) in not finding it discretionary on the part of the
PVA to grant or discontinue the said suspension; (5) in ordering it to pay to del Mar the amounts
stated in the judgment; and (6) in ordering it to give due course to and approve the application which
the said court directed del Mar to file for the payment to the latter of the monthly living allowance for
each of his living unmarried minor children below eighteen years of age.
This appeal raises several questions which will be discussed in seriatim.

1. The PVA argues that the court a quo was without jurisdiction to try civil case R-8465 because it
involves a money claim against the said PVA — a mere agency of the Government performing
governmental functions with no juridical personality of its own — and, in reality, partakes of an action
against the Philippine Government which is immune from suit without its consent, citing this Court's
observation in Republic of the Philippine vs. Ramolete and Del Mar,3to wit:

....a charge against the Government where the money involved is part of the public
funds, is a suit against the Government, and the happenstance that the action is
directed against the PVA as an entity and not against the Republic of the Philippines
is of no moment. Perforce, the Republic of the Philippines, on matters of
administration of all benefits due to the veterans of revolutions and wars, and to their
heirs and beneficiaries, acts and has to act through its agency and instrumentality,
the PVA. The suit should therefore be regarded as one against the Republic of the
Philippines; the PVA is therefore exempt from the filing of an appeal bond.

The PVA labors under a muddled and mistaken appreciation of the aforecited observation. This
Court stated in precise language the sole issue for resolution in that case, thus:

Is the PVA exempt from the filing of an appeal bond? To resolve this issue, we must
initially determine whether the PVA is an agency or instrumentality of the Republic of
the Philippines, and, in the affirmative, whether it exercises governmental functions.

Indeed, the decisive point in the aforementioned case related to the status of the
PVA as an agency or instrumentality of the Republic of the Philippines exercising
governmental functions as to be entitled to exemption from the filing of the appeal
bond per section 16 of Rule 141 of the Rules of Court, not to the nature of the claim
sought to be enforced by the private respondent therein (del Mar) against the said
PVA. Thus, in the said case, this Court made a lengthy disquisition on the history,
development and organization of the PVA to show conclusively that the same is an
entity or agency of the Republic of the Philippines performing governmental
functions. True, this Court referred to the claim of the private respondent therein as
"a claim for a sum of money against the Government, which claim, if adjudged finally
to be meritorious, would render the Republic of the Philippines liable therefor," since
the funds from which the claim was to be satisfied were funds appropriated by
Congress for the PVA; but this Court properly and advisedly omitted any study and
consideration of the question of suitability or non-suitability of the Government in
connection therewith.

As a general proposition, the rule — well-settled in this jurisdiction — on the immunity of the
Government from suit without its consent holds true in all actions resulting in "adverse
consequences on the public treasury, whether in the disbursements of funds or loss of
property."4 Needless to state, in such actions, which, in effect, constitute suits against the
Government, the court has no option but to dismiss them. Nonetheless, the rule admits of an
exception. It finds no application where a claimant institutes an action against a functionary who fails
to comply with his statutory duty to release the amount claimed from the public funds already
appropriated by statute for the benefit of the said claimant.5 As clearly discernible from the
circumstances, the case at bar falls under the exception.

2. The second question posed by the PVA relates to del Mar alleged failure to exhaust administrative
remedies before resorting to court action. Suffice it to state that where a case as in the present
controversy — involves a question solely of a legal nature, there arises no need for the litigant to
resort to all administrative remedies available to him before seeking judicial relief.6

3. The validity of section 6 of Regulation No. 2 of the "Rules and Regulations on Veterans' Benefits"
adopted by the PVA constitutes the core of the present controversy. The said section 6 reads as
follows:

SEC. 6. Effect of receipt of USVA pension benefit — termination, reduction. — An

award of a similar disability compensation from the US Veterans Administration shall
be a ground for the cancellation of a disability pension granted under the
Regulation: Provided, however, That if and while the disability compensation
awarded by the US Veterans Administration is less than the pension granted
hereunder, the difference in amount shall be assumed and paid by the
PVA: Provided, further, That upon proper application, the disability award previously
cancelled may be restored upon the termination of the US Veterans Administration
award if the cause of such termination is due to negative military service report of the
pensioner certified by the US Department of the Army and not for any other valid
cause: Provided, finally, That the veteran is medically determined to be still suffering
from the disability for which he was previously awarded a pension. Payment of
pension thus restored shall take effect or shall commence only from the date of
approval of restoration and when funds become available.

Pursuant to the foregoing, the PVA cancelled and discontinued the monthly life pension of del Mar
reasoning that the latter's receipt of a similar pension from the United States Government precluded
his enjoying any like benefit from the Philippine Government. The PVA avers that it adopted the
aforequoted section 6 in order to carry out and implement section 9 of Republic Act 65, as
amended,7 particularly its excepting clause. Said section 9 reads:

SEC. 9. The persons mentioned in sections one and two hereof who are permanently
incapacitated from work owing to sickness, disease or injuries sustained in line of
duty, shall be given a life pension of one hundred pesos a month, and ten pesos a
month for each of his unmarried minor children below eighteen years of age, unless
they are actually receiving a similar pension from other Government funds, and shall
receive, in addition, the necessary hospitalization and medical care.8

The PVA reads the phrase "from other Government funds" in the excepting clause of the aforecited
provision as necessarily including funds of the United States Government. And without question, the
pension del Mar receives from the United States Veterans Administration comes from the funds of
the United States Government.

On the other hand, del Mar avers that section 6 of Regulation No. 2 illegally effects the suspension
of the operation of section 9 of Republic Act 65, as amended, and argues that under section 209 of
Republic Act 65, as amended, the power suspend the payment of the monthly life pension awarded
to disabled veteran belongs exclusively to the President of the Philippines, not to the PVA which, in
the case at bar, illegally arrogated unto itself the said power. Furthermore, del Mar states, the PVA
"deliberately misinterprets" the phrase from other Government funds" in extending its scope to
include United States Government funds.

The principle recognizing the necessity of vesting administrative authorities with the power to
promulgate rules and regulations to implement a given statute and to effectual its policies, provided
such rules and regulations conform to the terms and standards prescribed by the statute as well
purport to carry into effect its general policies, constitutes well established doctrine in this
jurisdiction. 10 In Teoxon v. Members of the Board of Administrators, Philippine Veterans
Administration, suprea, this Court fittingly stated: .

... the Constitution limits the authority of the President, in whom all executive power
resides, to take care that the laws be faithfully executed. No lesser administrative
executive office or agency then can, contrary to the express language of the
Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to
observe the constitutional mandate. There must be strict compliance with the
legislative enactment. Its terms must be followed. The statute requires adherence to,
not departure from, its provisions. No deviation is allowable.

Section 11 of Republic Act 2665 11 empowers the PVA to adopt rules and regulations, thus:

SEC. 11. Policies, rules and regulations. — Subject to existing laws, the
Administration shall have the power to promulgate and issue rules and regulations as
may be found necessary to govern its operations and to carry out that aims and
purposes of this Act and of all other laws to be administered by the Administration.

Pursuant to this rule making authority, the PVA — allegedly' to implement section 9
of Republic Act 65, as amended promulgated its "Rules and Regulations on
Veterans' Benefits," section 6 of Regulation No. 2 of which cancels the disability
pension granted if the beneficiary receives a similar compensation from the United
States Veterans Administration. In effect, the PVA by adopting section 6 of
Regulation No. 2, suspended the operation of section 9' of Republic Act 65, as
amended. This, Republic Act 65, as amended, forbids the PVA to do for it expressly
authorizes only the President of the Philippines to suspend the operation of any of its
provisions "if and when the Congress of the United States approves the pending GI
Bill of Rights applicable to the Philippines the provisions of which are identical or
similar to the provisions of this Act." Clearly then, section 6 of Regulation No. 2 not
only negates the very spirit behind section 9 of Republic Act 65, as amended, but
also contravenes the express mandate of section 20 thereof.

The PVA's pretense that del Mar case falls under the clause of section 9 of Republic Act 65, as
amended, which excepts those who "are actually receiving a similar pension from other Government
funds" from the coverage of said section 9 — predicated upon its interpretation that the phrase other
Government funds" includes funds of the United States Government — fails to persuade this Court
as a valid argument to justify its cancellation of del Mar monthly life pens Section 9 of Republic Act
65, as amended, in providing for the excepting clause, obviously intends to prevent the receipt the
same beneficiary of concurrent or multiple pensions benefits similar to each other in nature and
basis, although coursed through different departments or agencies, but paid out of the funds of the
same Government. Any contrary interpretation resulting in the derogation of the interests of the
beneficiary who likewise receives a similar pension paid out funds of other Governments, conflicts
with the establish axiom ordaining the construction of pension laws of war veterans in favor of those
seeking their benefits.

The record of the case at bar being completely bereft of any indication to show the suspension by
the President of the Philippines — pursuant to section 20 of Republic Act 65, amended — of the
operation of any of the provisions of the said statute, this Court perforce must uphold del Mar claims.

4. The rest of the assigned errors relate to the allege undue interference by the court a quo with the
purely discretionary functions of the PVA in the matter of granting discontinuing the pension benefits.
The law concedes to administrative bodies — like the PVA — the authority to act on and decide
claims and applications in accordance with their judgment, in the exercise of their adjudicatory
capacity. Because of their acquired expertise in specific matters within the purview of their
respective jurisdictions, the findings of these administrative bodies merit not only great weight but
also respect and finality. "There is limit, however, to such a deference paid to the actuations or such
bodies, Clearly, where there has been a failure to interpret and apply the statutory provisions in
question, judicial power should assert itself. Under the theory of separation of power it is to the
judiciary, and to the judiciary alone, that the final say on questions of law in appropriate cases
coming before it is vested." 12

All told, no roadblock stands in the way of del Mar's demand for the continuance of his monthly life
pension.

In view, however, of the further amendment by Congress of section 9 of Republic Act 65, as
amended, through Republic Act 5753 — the provisions of which took effect on June 21, 1969 —
there arises the need to modify the judgment a quo in order to make it conform to the said statute as
it now stands. Republic Act 5753, in further amending section 9 of Republic Act 65, as amended,
grants every totally disabled veteran of World War II "a life pension of two hundred pesos a month,
and thirty pesos a month for his wife and each of his unmarried minor children below eighteen years
of age."

ACCORDINGLY, this Court adjudges the appellee Quirico del Mar entitled to his life pension (1) at
the rate of P50 a month effective as of April 1950 to May 1957, per Republic Act 65; (2) at the rate of
P100 a month effective as of June 22, 1957 to May 1969, per Republic Act 65 as amended by
Republic Act 1920; and (3) at the rate of P200 a month effective as of June 21, 1969, per Republic
Act 65 as further amended by Republic Act 5753. This Court directs the appellant Philippine
Veterans Administration to compute and then to pay to the appellee del Mar his past and
accumulated monthly life pension at the aforementioned statutory rates.

Regarding the monthly living allowance the appellee del Mar asks for each of his five "living
unmarried minor children below eighteen years of age," it appearing that he has not filed any proper
application therefor with the appellant PVA but simply included them in his claim for the restoration
of his discontinued monthly life pension, the appellee del Mar may, if he so desires, comply with
section 15 of Republic Act 65, as amended, which requires that "[A]ny person who desires to take
advantage of the rights and privileges provided for in this Act should file his application" with the
Philippine Veterans Administration, and the latter is hereby ordered to consider and pass upon the
merits of such application, if filed, particular reference to the entitlement qualifications of intended
beneficiaries. No pronouncement as to costs.