People v Perfecto_Traders Royal Bank v IAC

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People v. Perfecto

G.R. No. L-18463, October 4, 1922

"The important question is here squarely presented of whether article 256 of the SpanishPenal Code, punishing "Any person who, by . . . writing, shall defame, abuse, or insultany Minister of the Crown or other person in authority . . .," is still in force."

public law: It is a general principle of the public law that on acquisition of territory theprevious political relations of the ceded region are totally abrogated -- "political" beingused to denominate the laws regulating the relations sustained by the inhabitants to the

sovereign.

FACTS:

This is a case relating to the loss of some documents which constituted the records of testimonygiven by witnesses in the Senate investigation of oil companies. The newspaper La Nacion,

edited by Mr. Gregorio Perfecto, published an article about it to the effect that "the author or

authors of the robbery of the records from the iron safe of the Senate have, perhaps, but followedthe example of certain Senators who secured their election through fraud and robbery."

Consequently, the Attorney-General, through a resolution adopted by the Philippine Senate, filed

an information alleging that the editorial constituted a violation of article 256 of the Penal Code.

The defendant Gregorio Perfecto was found guilty in the municipal court and again in the Court

of First Instance of Manila.

ISSUES:

Whether or not article 256 of the Spanish Penal Code was abrogated with the changefrom Spanish to American sovereignty

Whether or not Perfecto is guilty of libel

RULING:

It is a general principle of the public law that on acquisition of territory the previous politicalrelations of the ceded region are totally abrogated -- "political" being used to denominate the

laws regulating the relations sustained by the inhabitants to the sovereign.

On American occupation of the Philippines, by instructions of the President to the Military

Commander, and by proclamation of the latter, the municipal laws of the conquered territory

affecting private rights of person and property and providing for the punishment of crime (e.g.
http://scire-licet.blogspot.com/2008/05/people-v-perfecto.htmlhttp://scire-licet.blogspot.com/2008/05/people-v-perfecto.html


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the Spanish Penal Code) were nominally continued in force in so far as they were compatible

with the new order of things.

Article 256 was enacted by the Government of Spain to protect Spanish officials who were the

representatives of the King. But with the change of sovereignty, a new government, and a new

theory of government, was set up in the Philippines. No longer is there a Minister of the Crownor a person in authority of such exalted position that the citizen must speak of him only withbated breath. Said article is contrary to the genius and fundamental principles of the American

character and system of government. It was crowded out by implication as soon as the United

States established its authority in the Philippine Islands.

"From an entirely different point of view, it must be noted that this article punishes contempts

against executive officials, although its terms are broad enough to cover the entire official class.

Punishment for contempt of non-judicial officers has no place in a government based uponAmerican principles. Our official class is not, as in monarchies, an agent of some authority

greater than the people but it is an agent and servant of the people themselves. These officials are

only entitled to respect and obedience when they are acting within the scope of their authorityand jurisdiction. The American system of government is calculated to enforce respect and

obedience where such respect and obedience is due, but never does it place around the individual

who happens to occupy an official position by mandate of the people any official halo, which

calls for drastic punishment for contemptuous remarks."

DECISION:

To summarize, the result is, that all the members of the court are of the opinion, although for

different reasons, that the judgment should be reversed and the defendant and appellant

acquitted, with costs de officio. So ordered.


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THIRD DIVISION

[G.R. No. 68514 : December 17, 1990.]

192 SCRA 305

TRADERS ROYAL BANK, Peti tioner, vs. HON. INTERMEDIATE APPELLATECOURT and HON. GREGORIO S. CENDAA, in his capacity as DIRECTOR OF THE

NATIONAL MEDIA PRODUCTION CENTER (NMPC), Respondents.

FERNAN, J.:

FACTS:

In this petition for review on Certiorari, the Traders Royal Bank (Traders) seeks tonullify the decision of the then Intermediate Appellate Court ordering the dismissal of the

collection case against the National Media Production Center (NMPC) and theProduction Specialists, Inc. (PSI

On April 9, 1981, Traders, a banking institution operating under Philippine laws, enteredinto a loan agreement with the NMPC represented by Director Gregorio S. Cendaa, and

the PSI, represented by its president, Romeo G. Jalosjos.

Under the loan agreement, Traders approved a credit accommodation in the amount ofP2, 520,000 in favor of NMPC and PSI through a domestic stand-by letter of credit toguarantee payment of the coverage or broadcast rights for the 1981 season of the

Philippine Basketball Association. Among the conditions imposed were that NMPC and

PSI would deposit with Traders all collections obtained from the sponsoring companies

and that during the term of said letter of credit they would maintain in their current

account with the a balance of at least P500,000 or 20% of the face value of the letter ofcredit.

As of July 27, 1981, the PBA had actually drawn against said letter of credit the totalamount of P340,000. Traders filed in the Court of First Instance of Rizal at Pasay City acomplaint against NMPC and PSI to collect the whole amount of P2,520,000. Alleging

therein that the defendants were selling or disposing of substantial portions of their assets.

Traders prayed for the issuance of a writ of preliminary attachment. 4 The lower courtissued the writ prayed for 5 after Traders filed a bond of P2,520,000.: nad

Pursuant to said writ, the deputy sheriff of Rizal collected an aggregate amount ofP1,046,816.75 from the PSI. Jalosjos, thereafter requested Traders through a letter that

said amount be considered as partial payment of defendants' principal obligation, interest

and attorney's fees. Traders acceded to the request and through a manifestation, prayedthe court to issue an order in the tenor of Jalosjos' request. 6 Said prayer was granted by

the lower court. 7

NMPC, through the Office of the Solicitor General, filed a motion to dismiss the case onthe ground of lack of jurisdiction as the NMPC, being an entity under the Office of thePresident performing governmental functions, cannot be sued without its consent.

On September 21, 1982, the lower court denied the motion to dismiss.


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NMPC reiterated its contention that it was immune from suit and alleged that the claimshould have been filed with the Commission on Audit.

It filed a cross-claim against PSI alleging that it merely acted as a guarantor of PSI in theloan agreement.

Pre-trial of the case was set. The deputy sheriff collected from the sponsoring companies in the amount ofP1,391,699.57 and another P420,189.27 from NMPC's account with Traders for a total of

P1,811,888.84. 11

Before the trial, NMPC, through private counsel, filed another motion to dismissreiterating the stand of the Office of the Solicitor General on NMPC's immunity from

suit. 12 Traders opposed the motion asserting that the lower court has jurisdiction over

the subject or nature of the case and that the complaint states facts sufficient to constitute

a cause of action. 13 The NMPC, through private counsel, filed a reply to the opposition.

The lower court issued an order stating that denying the motion to dismiss should berespected.

NMPC filed before the Intermediate Appellate Court a petition forCertiorari, prohibitionand mandamus alleging that the lower court gravely abused its discretion in denying themotion to dismiss and in failing to dissolve the writ of attachment on the grounds thatgovernment property cannot be attached, removed, concealed or disposed of and that the

attachment bond of Traders was not renewed.

The appellate court granted the petition in its decision of July 17, 1984. It found that asan instrumentality of the government under the supervision of the Office of the President,NMPC, which had not been duly incorporated so as to assume a separate juridical

personality of its own, may not be sued without its consent. It ruled that NMPC's act of

entering into a contract did not mean that it voluntarily waived its immunity from suit

"inasmuch as NMPC truly has no personality of its own."

Traders contends herein that although NMPC is a government instrumentality and hence,it may not be sued without its consent. It also asserts that NMPC's petition forCertiorari,prohibition and mandamus in the appellate court was improper.

SC held that the NMPC properly filed the petition for Certiorari, prohibition andmandamus in the Intermediate Appellate Court because it needed an adequate and

expeditious relief from the garnishment of government funds.

ISSUE

Whether or not NMPC is immune from suit

RULING

The doctrine of state immunity from suits is constitutionally recognized and is germaneto the concept of sovereignty. As such, the doctrine may be waived by general or speciallaw. Immunity from suit may also be waived by an implied consent to be sued as when,

through its officers and agents, the state enters into a contract in furtherance of a

legitimate aim and purpose. By doing so, the state descends to the level of the citizen and

its consent to be sued is implied from the very act of entering into such contract.

A problem usually arises when a government entity, though unincorporated and thereforenot possessed of a distinct juridical personality, enters into a contract which, by its nature,

is proprietary in character. If the transaction, contract or operation undertaken by the


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government entity is a necessary incident of its prime governmental function, saidentity is immune from suit.

With this jurisprudential background in mind, the Court thoroughly examined the recordsof this case to determine whether by entering into the aforesaid contract with Traders, theNMPC, through its Director, waived immunity from suit

While it is true that even statutory provisions expressly waiving state immunity from suitare construed in strictissimi juris, and therefore, extreme caution should be exercised indetermining the existence of an implied consent of the state, when the state itself, throughthe acts of a duly authorized official of an agency, exceeds its authority, the doctrine may

not be invoked as a shield in the same manner that it cannot serve as an instrument for

perpetrating an injustice.

The NMPC's implied consent to be sued notwithstanding, the trial court did not have thepower to garnish NMPC deposits to answer for any eventual judgment against it. Being

public funds, the deposits are not within the reach of any garnishment or attachment

proceedings.

DECISION

The proceedings below should continue to determine the liabilities of PSI and NMPC.Should the court still find that NMPC is liable notwithstanding the PBA's availment ofonly P340,000 of the P2,520,000 value of the letter of credit and PSI's partial payment of

the principal obligation, interest and attorney's fees in the amount of P1,046,816.75, then

after judgment, the procedure outlined in Secs. 91-93 of Presidential Decree No. 1445regarding claims against the government shall be observed.

WHEREFORE, the decision of the then Intermediate Appellate Court insofar as itconsiders the NMPC as immune from suit is hereby reversed and set aside. The writ of

attachment issued by the lower court in Civil Case No. 9303-P against the NMPCdeposits with Traders Royal Bank is immediately lifted and said court is directed to

proceed with dispatch in resolving Civil Case No. 9303-P.SO ORDERED.

People v Perfecto_Traders Royal Bank v IAC

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