A condemnor should commit to use the property pursuant to the purpose stated in the petition for expropriation

Public use, as an eminent domain concept, has now acquired an expansive meaning to include any use that is of "usefulness, utility, or advantage, or what is productive of general benefit [of the public]." If the genuine public necessity—the very reason or condition as it were— allowing, at the first instance, the expropriation of a private land ceases or disappears, then there is no more cogent point for the government’s retention of the expropriated land. The same legal situation should hold if the government devotes the property to another public use very much different from the original or deviates from the declared purpose to benefit another private person. It has been said that the direct use by the state of its power to oblige landowners to renounce their productive possession to another citizen, who will use it predominantly for that citizen’s own private gain, is offensive to our laws.

A condemnor should commit to use the property pursuant to the purpose stated in the petition for expropriation, failing which it should file another petition for the new purpose. If not, then it behooves the condemnor to return the said property to its private owner, if the latter so desires. The government cannot plausibly keep the property it expropriated in any manner it pleases and, in the process, dishonor the judgment of expropriation. This is not in keeping with the idea of fair play[.]

SECOND DIVISION

G.R. No. 191945               March 11, 2015

NATIONAL CORPORATION, Petitioner,
vs.
SOCORRO T. POSADA, RENATO BUENO, ALICE BALIN, ADRIAN TABLIZO, TEOFILO TABLIZO, and LYDIA T. OLIVO, substituted by her heirs, ALFREDO M. OLIVO, ALICIA O. SALAZAR, ANITA O. ORDONO, ANGELITA O. LIM, AND ADELFA O. ESPINAS, Respondents.

When the taking of private property is no longer for a public purpose, the expropriation complaint should be disMissed by the trial court. The case will proceed only if the trial court's order of expropriation became final and executory and the expropriation causes prejudice to the property owner.

Expropriation proceedings for national infrastructure projects are governed by Rule 67 of the Rules of Court and Republic Act No. 8974.44

The power of eminent domain is an inherent competence of the state. It is essential to a sovereign. Thus, the Constitution does not explicitly define this power but subjects it to a limitation: that it be exercised only for public use and with payment of just compensation.45 Whether the use is public or whether the compensation is constitutionally just will be determined finally by the courts.

However, the manner of its exercise such as which government instrumentality can be delegated with the power to condemn, under what conditions, and how may be limited by law. Republic Act No. 8974 does these, but it should not be read as superseding the power of this court to promulgate rules of procedure. Thus, our existing rules should be read in conjunction with the law that limits and conditions the power of eminent domain.

Expropriation, the procedure by which the government takes possession of private property, is outlined primarily in Rule 67 of the Rules of Court. It undergoes two phases. The first phase determines the propriety of the action. The second phase determines the compensation to be paid to the landowner. Thus:

There are two (2) stages in every action for expropriation. The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint." An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter, as the Rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard.["]

The second phase of the eminent domain action is concerned with the determination by the Court of "the just compensation for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. Obviously, one or another of the parties may believe the order to be erroneous in its appreciation of the evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek a reversal of the order by taking an appeal therefrom.46 (Emphasis supplied, citations omitted)

The first phase of expropriation commences with the filing of the complaint. It ends with the order of the trial court to proceed with the expropriation and determination of just compensation. During the pendency of the complaint before the trial court, the state may already enter and possess the property subject to the guidelines in Rule 67 of the Rules of Court.

Rule 67 of the Rules of Court, however, is not the only set of rules that governs the first phase of expropriation. On November 7, 2000, Congress enacted Republic Act No. 8974 to govern the expropriation of private property for national government infrastructure projects. The law qualifies the manner by which the government may enter and take possession of the property to be expropriated.

Rule 67, Section 2 of the Rules of Court states:

Sec. 2. Entry of plaintiff upon depositing value with authorized government depositary. — Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary. (Emphasis supplied)

Section 4 of Republic Act No. 8974,on the other hand, mandates: Section 4. Guidelines for Expropriation Proceedings.- Whenever it is necessary to acquire real property for the right-of-way or location for any national government infrastructure project through expropriation, the appropriate implementing agency shall initiate the expropriation proceedings before the proper court under the following guidelines:

(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under Section 7 hereof;

. . . .

Upon compliance with the guidelines abovementioned, the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project. (Emphasis supplied)

As stated in Gingoyon, Republic Act No. 8974 "provides for a procedure eminently more favorable to the property owner than Rule 67"47 since it requires the immediate payment of the zonal value and the value of the improvements on the land to the property owner before the trial court can allow the government to take possession. In contrast, Rule 67 only requires the government to deposit the assessed value of the property for it to enter and take possession.

In its Petition, the National Power Corporation argues that the amount of just compensation at ₱2,000.00 per square meter is excessive since the zonal valuation of the Bureau of Internal Revenue classifies the property as cocoland48pegged at 4.15 per square meter, and the commissioners merely "engaged in speculation and guess-work"49 when they arrived at the amount.50

The National Power Corporation argues that the Writ of Possession should not have been recalled because it already deposited ₱580,769.93, the provisional amount required by Republic Act No. 8974. It argues that the amount ordered by the trial court to be paid to respondents was the amount of just compensation, which should have been distinguished from the provisional amount required for the issuance of a Writ of Possession. The deposit of the provisional amount was sufficient to be granted a Writ of Possession and to take possession of the property.51

In their Comment, respondents argue that the Court of Appeals did not err in sustaining the amount of just compensation determined by the trial court since the value was based on location, costs of improvements, prevailing market values of the properties similarly located, and opinions of the residents in the area.52

Respondents also argue that the Court of Appeals correctly upheld the trial court’s recall of the Writ of Possession because there was no showing that any payment was made to respondents, as required by Gingoyon.53

The purpose for the taking of private property was for the construction of the National Power Corporation’s Substation Island Grid Project. According to the Implementing Rules and Regulations of Republic Act No. 8974, projects related to "power generation, transmission and distribution"54 are national infrastructure projects covered by the law. The National Power Corporation must first comply with the guidelines stated in Republic Act No. 8974 before it can take possession of respondents’ property.

The trial court allowed the National Power Corporation to take possession of the properties because of its deposit with Land Bank of the Philippines of the alleged provisional value. However, the trial court recalled the Writ of Possession because the National Power Corporation failed to deposit the additional amount.

ECOND DIVISION

G.R. No. 191945               March 11, 2015

NATIONAL CORPORATION, Petitioner,
vs.
SOCORRO T. POSADA, RENATO BUENO, ALICE BALIN, ADRIAN TABLIZO, TEOFILO TABLIZO, and LYDIA T. OLIVO, substituted by her heirs, ALFREDO M. OLIVO, ALICIA O. SALAZAR, ANITA O. ORDONO, ANGELITA O. LIM, AND ADELFA O. ESPINAS, Respondents.

power of eminent domain is lodged in the legislative branch of the government.

The power of eminent domain is lodged in the legislative branch of the government. It delegates the exercise thereof to local government units, other public entities and public utility corporations,⁹ subject only to Constitutional limitations. Local governments have no inherent power of eminent domain and may exercise it only when expressly authorized by statute.¹⁰ Section 19 of the Local Government Code of 1991 (Republic Act No. 7160) prescribes the delegation by Congress of the power of eminent domain to local government units and lays down the parameters for its exercise, thus:

"SEC. 19. Eminent Domain. – A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That, the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner and such offer was not accepted: Provided, further, That, the local government unit may immediately take possession of the property upon the filing of expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property."

Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the adequacy of the compensation, (b) the necessity of the taking, and (c) the public use character of the purpose of the taking.¹¹

SECOND DIVISION

G.R. No. 136349             January 23, 2006

LOURDES DE LA PAZ MASIKIP, Petitioner,
vs.
THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the Regional Trial Court of Pasig City, Branch 165 and THE COURT OF APPEALS, Respondents.

doctrine of primary jurisdiction

Firstly, petitioners claim that the Complaint filed by respondent before the Regional Trial Court was done without exhausting administrative remedies. Petitioners aver that respondent should have first filed a claim before the Commission on Audit (COA) before going to the courts. However, it has been established that the doctrine of exhaustion of administrative remedies and the doctrine of primary jurisdiction are not ironclad rules. In Republic of the Philippines v. Lacap, ^[9] this Court enumerated the numerous exceptions to these rules, namely: 
(a) where there is estoppel on the part of the party invoking the doctrine; 
(b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction;
(c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; 
(d) where the amount involved is relatively so small as to make the rule impractical and oppressive;
 (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; 
(f) where judicial intervention is urgent; 
(g) where the application of the doctrine may cause great and irreparable damage;
 (h) where the controverted acts violate due process; (i) where the issue of non-exhaustion of administrative remedies has been rendered moot; 
(j) where there is no other plain, speedy and adequate remedy;
(k) where strong public interest is involved; and
 (l) in quo warranto proceedings. 

In the present case, conditions (c) and (e) are present.

The government project contracted out to respondent was completed almost two decades ago. To delay the proceedings by remanding the case to the relevant government office or agency will definitely prejudice respondent. More importantly, the issues in the present case involve the validity and the enforceability of the "Contract of Agreement" entered into by the parties. These are questions purely of law and clearly beyond the expertise of the Commission on Audit or the DPWH. In Lacap, this Court said:

... It does not involve an examination of the probative value of the evidence presented by the parties. There is a question of law when the doubt or difference arises as to what the law is on a certain state of facts, and not as to the truth or the falsehood of alleged facts. Said question at best could be resolved only tentatively by the administrative authorities. The final decision on the matter rests not with them but with the courts of justice. Exhaustion of administrative remedies does not apply, because nothing of an administrative nature is to be or can be done. The issue does not require technical knowledge and experience but one that would involve the interpretation and application of law

xxx
Under these circumstances, respondent may not validly invoke the Royal Prerogative of Dishonesty and conveniently hide under the State's cloak of invincibility against suit, considering that this principle yields to certain settled exceptions. True enough, the rule, in any case, is not absolute for it does not say that the state may not be sued under any circumstance.

...                                 ...                                 ...

Although the Amigable and Ministerio cases generously tackled the issue of the State's immunity from suit vis a vis the payment of just compensation for expropriated property, this Court nonetheless finds the doctrine enunciated in the aforementioned cases applicable to the instant controversy, considering that the ends of justice would be subverted if we were to uphold, in this particular instance, the State's immunity from suit.

To be sure, this Court -- as the staunch guardian of the citizens' rights and welfare -- cannot sanction an injustice so patent on its face, and allow itself to be an instrument in the perpetration thereof. Justice and equity sternly demand that the State's cloak of invincibility against suit be shred in this particular instance, and that petitioners-contractors be duly compensated -- on the basis of quantum meruit -- for construction done on the public works housing project.

EN BANC

[ G.R. No. 180388, January 18, 2011 ]

GREGORIO R. VIGILAR, SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), DPWH UNDERSECRETARIES TEODORO E. ENCARNACION AND EDMUNDO E. ENCARNACION AND EDMUNDO V. MIR, DPWH ASSISTANT SECRETARY JOEL L. ALTEA, DPWH REGIONAL DIRECTOR VICENTE B. LOPEZ, DPWH DISTRICT ENGINEER ANGELITO M. TWAÑO, FELIX A. DESIERTO OF THE TECHNICAL WORKING GROUP VALIDATION AND AUDITING TEAM, AND LEONARDO ALVARO, ROMEO N. SUPAN, VICTORINO C. SANTOS OF THE DPWH PAMPANGA 2ND ENGINEERING DISTRICT, PETITIONERS, VS. ARNULFO D. AQUINO, RESPONDENT.

An unincorporated government agency without any separate juridical personality of its own enjoys immunity from suit because it is invested with an inherent power of sovereignty.

The basic postulate enshrined in the constitution that ‘(t)he State may not be sued without its consent,’ reflects nothing less than a recognition of the sovereign character of the State and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts.  It is based on the very essence of sovereignty.  x x x [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.  True, the doctrine, not too infrequently, is derisively called ‘the royal prerogative of dishonesty’ because it grants the state the prerogative to defeat any legitimate claim against it by simply invoking its non-suability.  We have had occasion to explain in its defense, however, that a continued adherence to the doctrine of non-suability cannot be deplored, for the loss of governmental efficiency and the obstacle to the performance of its multifarious functions would be far greater in severity than the inconvenience that may be caused private parties, if such fundamental principle is to be abandoned and the availability of judicial remedy is not to be accordingly restricted.

The rule, in any case, is not really absolute for it does not say that the state may not be sued under any circumstance.  On the contrary, as correctly phrased, the doctrine only conveys, ‘the state may not be sued without its consent;’ its clear import then is that the State may at times be sued.  The State’s consent may be given either expressly or impliedly.  Express consent may be made through a general law or a special law.  x x x Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a counterclaim or when it enters into a contract.  In this situation, the government is deemed to have descended to the level of the other contracting party and to have divested itself of its sovereign immunity.  This rule, x x x is not, however, without qualification.  Not all contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made between one which is executed in the exercise of its sovereign function and another which is done in its proprietary capacity.^[33]

As a general rule, a state may not be sued.  However, if it consents, either expressly or impliedly, then it may be the subject of a suit.^[34]  There is express consent when a law, either special or general, so provides.  On the other hand, there is implied consent when the state “enters into a contract or it itself commences litigation.”^[35]  However, it must be clarified that when a state enters into a contract, it does not automatically mean that it has waived its non-suability.^[36]  The State “will be deemed to have impliedly waived its non-suability [only] if it has entered into a contract in its proprietary or private capacity.  [However,] when the contract involves its sovereign or governmental capacity[,] x x x no such waiver may be implied.”^[37]  “Statutory provisions waiving [s]tate immunity are construed in strictissimi juris.  For, waiver of immunity is in derogation of sovereignty.”^[38]

The DOH can validly invoke state immunity.  

a) DOH is an unincorporated agency which
performs sovereign or governmental functions.

In this case, the DOH, being an “unincorporated agency of the government”^[39] can validly invoke the defense of immunity from suit because it has not consented, either expressly or impliedly, to be sued.  Significantly, the DOH is an unincorporated agency which performs functions of governmental character.

The ruling in Air Transportation Office v. Ramos^[40] is relevant, viz:

An unincorporated government agency without any separate juridical personality of its own enjoys immunity from suit because it is invested with an inherent power of sovereignty.  Accordingly, a claim for damages against the agency cannot prosper; otherwise, the doctrine of sovereign immunity is violated.  However, the need to distinguish between an unincorporated government agency performing governmental function and one performing proprietary functions has arisen.  The immunity has been upheld in favor of the former because its function is governmental or incidental to such function; it has not been upheld in favor of the latter whose function was not in pursuit of a necessary function of government but was essentially a business.^[41]

b) The Complaint seeks to hold the DOH
solidarily and jointly liable with the
other defendants for damages which
constitutes a charge or financial liability
against the state.

Moreover, it is settled that if a Complaint seeks to “impose a charge or financial liability against the state,”^[42] the defense of non-suability may be properly invoked.  In this case, PPI specifically prayed, in its Complaint and Amended and Supplemental Complaint, for the DOH, together with Secretaries Romualdez and Dayrit as well as Undersecretary Galon, to be held jointly and severally liable for moral damages, exemplary damages, attorney’s fees and costs of suit.^[43]  Undoubtedly, in the event that PPI succeeds in its suit, the government or the state through the DOH would become vulnerable to an imposition or financial charge in the form of damages.  This would require an appropriation from the national treasury which is precisely the situation which the doctrine of state immunity aims to protect the state from.

The mantle of non-suability extends to complaints
filed against public officials for acts done in the
performance of their official functions.

As regards the other petitioners, to wit, Secretaries Romualdez and Dayrit, and Undersecretary Galon, it must be stressed that the doctrine of state immunity extends its protective mantle also to complaints filed against state officials for acts done in the discharge and performance of their duties.^[44] “The suability of a government official depends on whether the official concerned was acting within his official or jurisdictional capacity, and whether the acts done in the performance of official functions will result in a charge or financial liability against the government.”^[45] Otherwise stated, “public officials can be held personally accountable for acts claimed to have been performed in connection with official duties where they have acted ultra vires or where there is showing of bad faith.”^[46] Moreover, “[t]he rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state x x x.  In such a situation, the state may move to dismiss the [C]omplaint on the ground that it has been filed without its consent.” ^[47]

It is beyond doubt that the acts imputed against Secretaries Romualdez and Dayrit, as well as Undersecretary Galon, were done while in the performance and discharge of their official functions or in their official capacities, and not in their personal or individual capacities. Secretaries Romualdez and Dayrit were being charged with the issuance of the assailed orders. On the other hand, Undersecretary Galon was being charged with implementing the assailed issuances.  By no stretch of imagination could the same be categorized as ultra vires simply because the said acts are well within the scope of their authority.  Section 4 of RA 3720 specifically provides that the BFAD is an office under the Office of the Health Secretary.  Also, the Health Secretary is authorized to issue rules and regulations as may be necessary to effectively enforce the provisions of RA 3720.^[48]  As regards Undersecretary Galon, she is authorized by law to supervise the offices under the DOH’s authority,^[49] such as the BFAD.  Moreover, there was also no showing of bad faith on their part.  The assailed issuances were not directed only against PPI.  The suspension of PPI’s accreditation only came about after it failed to submit its comment as directed by Undersecretary Galon.  It is also beyond dispute that if found wanting, a financial charge will be imposed upon them which will require an appropriation from the state of the needed amount.  Thus, based on the foregoing considerations, the Complaint against them should likewise be dismissed for being a suit against the state which absolutely did not give its consent to be sued.

SECOND DIVISION

[ G.R. No. 182358, February 20, 2013 ]

THE SECRETARY OF HEALTH, AND MA. MARGARITA M. GALON, PETITIONERS, VS. PHIL PHARMAWEALTH, INC., RESPONDENT.

abandonment of the doctrine of condonation took effect on April 12, 2016

[ G.R. No. 232325, April 10, 2019 ]

DOMINGO CREBELLO, PETITIONER, V. OFFICE OF THE OMBUDSMAN AND TIMOTEO T. CAPOQUIAN, JR., RESPONDENTS.

The abandonment of the doctrine of condonation took effect on April 12, 2016, when the Supreme Court denied with finality the OMB's motion for reconsideration in Morales v. Court of Appeals.^[1] However, the application by the OMB of the doctrine of condonation prior to its abandonment without the respondent elective public official invoking the same as a defense was whimsical, and amounted to grave abuse of discretion. Condonation, being a matter of defense, must be specifically invoked by the respondent elective public official.xxxThe petitioner submits that the doctrine of condonation had been abandoned on November 10, 2015 through the ruling in Morales v. Court of Appeals;^[14] hence, the decision of the OMB dated March 31, 2016 absolving respondent Capoquian, Jr. because of condonation was unjustified inasmuch as the doctrine of condonation had then been abandoned.

In contrast, the OMB insists that the ruling in Morales v. Court of Appeals on the abandonment of the doctrine of condonation became final only on April 12, 2016 because that was the date on which the Supreme Court had acted upon and denied with finality its motion for clarification/motion for partial reconsideration in Morales v. Court of Appeals; and that it issued its Office Circular No. 17 declaring that it would no longer apply the defense of condonation starting on April 12, 2016 except for open and pending administrative cases.

We sustain the insistence of the OMB. The ruling promulgated in Morales v. Court of Appeals on the abandonment of the doctrine ofcondonation had, indeed, become final only on April 12, 2016, and thus the abandonment should be reckoned from April 12, 2016. Under the circumstances, the decision of the OMB dated March 31, 2016 absolving respondent Capoquian, Jr. by reason of the application of the doctrine of condonation might have been justified.

However, the petitioner has assailed the application of the doctrine of condonation precisely because respondent Capoquian, Jr. had not invoked the doctrine of condonation as a defense. This omission on his part appears to be confirmed by the records, which indicated that he did not submit or file his counter-affidavit and verified position paper despite being required to do so. Worse, the omission to submit or file, according to the petitioner, amounted to his waiver of his right to controvert the charge of nepotism brought against him.

In this regard, we have to agree with the petitioner.

In Morales v. Court of Appeals, the Ombudsman took the strong position that condonation was a matter of defense that should be raised and passed upon during the administrative disciplinary proceedings, to wit:

The Ombudsman also maintained that a reliance on the condonation doctrine is a matter of defense, which should have been raised by Binay, Jr. before it during the administrative proceedings, and that, at any rate, there is no condonation because Binay, Jr. committed acts subject of the OMB Complaint after his re-election in 2013.^[15]
x x x x
The Ombudsman contends that it was inappropriate for the CA to have considered the condonation doctrine since it was a matter of defense which should have been raised and passed upon by her office during the administrative disciplinary proceedings.^[16]

The aforestated position taken by the OMB in Morales v. Court of Appeals should be upheld. Condonation is an affirmative fact that must be raised by the respondent in the administrative proceedings to enable the OMB to fully consider and pass upon the matter. That did not happen in the case of respondent Capoquian, Jr., whose failure to file or submit his counter-affidavit and verified position paper despite notice rendered indubitable that he had not at all raised before the OMB the doctrine of condonation or any other matter as a defense. Clearly, the OMB acted whimsically in absolving respondent Capoquian, Jr. by virtue of condonation.

The "limitation on the power of judicial review to actual cases and controversies” carries the assurance that "the courts will not intrude into areas committed to the other branches of government.”[138] Essentially, the foregoing limitation is a restatement of the political question doctrine which, under the classic formulation of Baker v. Carr,[139] applies when there is found, among others, "a textually demonstrable constitutional commitment of the issue to a coordinate political department,” "a lack of judicially discoverable and manageable standards for resolving it” or "the impossibility of deciding without an initial policy determination of a kind clearly for non-judicial discretion.” Cast against this light, respondents submit that the "[t]he political branches are in the best position not only to perform budget-related reforms but also to do them in response to the specific demands of their constituents” and, as such, "urge [the Court] not to impose a solution at this stage.”[140]

I. Procedural Issues.

Whether or not (a) the issues raised in the consolidated petitions involve an actual and justiciable controversy; (b) the issues raised in the consolidated petitions are matters of policy not subject to judicial review; (c) petitioners have legal standing to sue; and (d) the Court‘s Decision dated August 19, 1994 in G.R. Nos. 113105, 113174, 113766, and 113888, entitled "Philippine Constitution Association v. Enriquez”^[114] (Philconsa) and Decision dated April 24, 2012 in G.R. No. 164987, entitled "Lawyers Against Monopoly and Poverty v. Secretary of Budget and Management”^[115] (LAMP) bar the re- litigation of the issue of constitutionality of the "Pork Barrel System” under the principles of res judicata and stare decisis.

II. Substantive Issues on the “Congressional Pork Barrel.”

Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar thereto are unconstitutional considering that they violate the principles of/constitutional provisions on (a) separation of powers; (b) non-delegability of legislative power; (c) checks and balances; (d) accountability; (e) political dynasties; and (f) local autonomy.

III. Substantive Issues on the “Presidential Pork Barrel.”

Whether or not the phrases (a) "and for such other purposes as may be hereafter directed by the President” under Section 8 of PD 910,^[116] relating to the Malampaya Funds, and (b) "to finance the priority infrastructure development projects and to finance the restoration of damaged or destroyed facilities due to calamities, as may be directed and authorized by the Office of the President of the Philippines” under Section 12 of PD 1869, as amended by PD 1993, relating to the Presidential Social Fund, are unconstitutional insofar as they constitute undue delegations of legislative power.

xxx
The Court renders this Decision to rectify an error which has persisted in the chronicles of our history. In the final analysis, the Court must strike down the Pork Barrel System as unconstitutional in view of the inherent defects in the rules within which it operates. To recount, insofar as it has allowed legislators to wield, in varying gradations, non-oversight, post- enactment authority in vital areas of budget execution, the system has violated the principle of separation of powers; insofar as it has conferred unto legislators the power of appropriation by giving them personal, discretionary funds from which they are able to fund specific projects which they themselves determine, it has similarly violated the principle of non- delegability of legislative power; insofar as it has created a system of budgeting wherein items are not textualized into the appropriations bill, it has flouted the prescribed procedure of presentment and, in the process, denied the President the power to veto items; insofar as it has diluted the effectiveness of congressional oversight by giving legislators a stake in the affairs of budget execution, an aspect of governance which they may be called to monitor and scrutinize, the system has equally impaired public accountability; insofar as it has authorized legislators, who are national officers, to intervene in affairs of purely local nature, despite the existence of capable local institutions, it has likewise subverted genuine local autonomy; and again, insofar as it has conferred to the President the power to appropriate funds intended by law for energy-related purposes only to other purposes he may deem fit as well as other public funds under the broad classification of "priority infrastructure development projects,” it has once more transgressed the principle of non-delegability.

For as long as this nation adheres to the rule of law, any of the multifarious unconstitutional methods and mechanisms the Court has herein pointed out should never again be adopted in any system of governance, by any name or form, by any semblance or similarity, by any influence or effect. Disconcerting as it is to think that a system so constitutionally unsound has monumentally endured, the Court urges the people and its co- stewards in government to look forward with the optimism of change and the awareness of the past. At a time of great civic unrest and vociferous public debate, the Court fervently hopes that its Decision today, while it may not purge all the wrongs of society nor bring back what has been lost, guides this nation to the path forged by the Constitution so that no one may heretofore detract from its cause nor stray from its course. After all, this is the Court‘s bounden duty and no other‘s.

EN BANC

[ G.R. No. 208566, November 19, 2013 ]

GRECO ANTONIOUS BEDA B. BELGICA, JOSE M. VILLEGAS, JR., JOSE L. GONZALEZ, REUBEN M. ABANTE, AND QUINTIN PAREDES SAN DIEGO, PETITIONERS, VS. HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR., SECRETARY OF BUDGET AND MANAGEMENT FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA V. DE LEON, SENATE OF THE PHILIPPINES, REPRESENTED BY FRANKLIN M. DRILON IN HIS CAPACITY AS SENATE PRESIDENT, AND HOUSE OF REPRESENTATIVES, REPRESENTED BY FELICIANO S. BELMONTE, JR. IN HIS CAPACITY AS SPEAKER OF THE HOUSE, RESPONDENTS. 

general rule is that a void law or administrative act cannot be the source of legal rights or duties., exception to this is the doctrine of operative fact

The general rule is that a void law or administrative act cannot be the source of legal rights or duties. Article 7 of the Civil Code enunciates this general rule, as well as its exception: "Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary. When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution."

The doctrine of operative fact is an exception to the general rule, such that a judicial declaration of invalidity may not necessarily obliterate all the effects and consequences of a void act prior to such declaration.² In Serrano de Agbayani v. Philippine National Bank,³ the application of the doctrine of operative fact was discussed as follows:

The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once judicially declared results in its being to all intents and purposes a mere scrap of paper. As the new Civil Code puts it: "When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution." It is understandable why it should be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination of unconstitutionality, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official." This language has been quoted with approval in a resolution in Araneta v. Hill and the decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (Boldfacing and italicization supplied)

Clearly, for the operative fact doctrine to apply, there must be a "legislative or executive measure," meaning a law or executive issuance, that is invalidated by the court. From the passage of such law or promulgation of such executive issuance until its invalidation by the court, the effects of the law or executive issuance, when relied upon by the public in good faith, may have to be recognized as valid. In the present case, however, there is no such law or executive issuance that has been invalidated by the Court except BIR Ruling No. DA-489-03.

To justify the application of the doctrine of operative fact as an exemption, San Roque asserts that "the BIR and the CTA in actual practice did not observe and did not require refund seekers to comply with the120+30 day periods."⁴This is glaring error because an administrative practice is neither a law nor an executive issuance. Moreover, in the present case, there is even no such administrative practice by the BIR as claimed by San Roque.

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EN BANC

G.R. No. 187485               October 8, 2013

COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs.SAN ROQUE POWER CORPORATION, Respondent.

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

"By engaging in a particular business through the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations." "When the State acts in its proprietary capacity, it is amenable to all the rules of law which bind private individuals".

The point is that when the government enters into a commercial business it abandons its sovereign capacity and is to be treated like any other private corporation (Bank of the U. S. vs. Planters' Bank, 9 Wheat. 904, 6 L. ed. 244, cited in Manila Hotel Employees Association vs. Manila Hotel Company; et al., 73 Phil. 374, 388). The Manila Hotel case also relied on the following rulings:

"By engaging in a particular business through the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations."

"When the State acts in its proprietary capacity, it is amenable to all the rules of law which bind private individuals".

"There is not one law for the sovereign and another for the subject, but when the sovereign engages in business and the conduct of business enterprises, and contracts with individuals, whenever the contract in any form comes before the courts, the rights and obligation of the contracting parties must be adjusted upon the same principles as if both contracting parties were private persons. Both stand upon equality before the law, and the sovereign is merged in the dealer, contractor and suitor" (People vs. Stephens, 71 N. Y. 549).

It should be noted that in Philippine National Railways vs. Union de Maquinistas, etc., L-31948, July 25, 1978, 84 SCRA 223, it was held that the PNR funds could be garnished at the instance of a labor union.

It would be unjust if the heirs of the victim of an alleged negligence of the PNR employees could not sue the PNR for damages. Like any private common carriers the PNR is subject to the obligations of persons engaged in that private enterprise. It is not performing any governmental function.

Thus, the National Development Company is not immune from suit. It does not exercise sovereign func­tions. It is an agency for the performance of purely corporate, proprietary or business functions (National Development Company vs. Tobias, 117 Phil. 703, 705 and cases cited therein; National Development Company vs. NDC Employees and Workers' Union, L-32387, August 19, 1975, 66 SCRA 181, 184).

Other government agencies not enjoying immunity from suit are the Social Security System (Social Security System vs. Court of Appeals, L-41299, February 21, 1983, 120 SCRA 707) and the Philippine National Bank (Republic vs. Philippine National Bank, 121 Phil. 26).

IMMUNITY OF SEAFDEC from Suit

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.

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.

SO ORDERED.