Political Case

7/28/2019 Political Case

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Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-32667 January 31, 1978

PHILIPPINE NATIONAL BANK, petitioner,vs.COURT OF INDUSTRIAL RELATIONS, GABRIEL V. MANANSALA and GILBERT P. LORENZO, in his official capacity asauthorized Deputy sheriff, respondents.

Conrado E. Medina for petitioner.

Gabriel V. Manansala in his own behalf.

Jose K. Manguiat, Jr. for respondent Court.

FERNANDO, J .:

The issue raised in this certiorariproceeding is whether or not an order of the now defunct respondent Court of Industrial Relationsdenying for lack of merit petitioner's motion to quash a notice of garnishment can be stigmatized as a grave abuse of discretion.What was sought to be garnished was the money of the People's Homesite and Housing Corporation deposited at petitioner'sbranch in Quezon City, to satisfy a decision of respondent Court which had become final and executory. 1 A writ of execution in favorof private respondent Gabriel V. Manansala had previously been issued. 2 He was the counsel of the prevailing party, the UnitedHomesite Employees and Laborers Association, in the aforementioned case. The validity of the order assailed is challenged on twogrounds: (1) that the appointment of respondent Gilbert P. Lorenzo as authorized deputy sheriff to serve the writ of execution wascontrary to law and (2) that the funds subject of the garnishment "may be public in character." 3 In thus denying the motion to quash,petitioner contended that there was on the part of respondent Court a failure to abide by authoritative doctrines amounting to agrave abuse of discretion. After a careful consideration of the matter, it is the conclusion of this Tribunal that while the authorizationof respondent Lorenzo to act as special deputy sheriff to serve the notice of garnishment may be open to objection, the more basicground that could have been relied upon not even categorically raised, petitioner limiting itself to the assertion that the funds"could be public" in character, thus giving rise to the applicability of the fundamental concept of non-suability is hardly persuasive.The People's Homesite and Housing Corporation had a juridical existence enabling it sue and be sued. 4 Whatever defect could be

attributed therefore to the order denying the motion to quash could not be characterized as a grave abuse of discretion. Moreover,with the lapse of time during which private respondent had been unable to execute a judgment in his favor, the equities are on hisside. Accordingly, this petition must be dismissed.

The order of August 26, 1970 of respondent Court denying the motion to quash, subject of this certiorari proceeding, reads asfollows: "The Philippine National Bank moves to quash the notice of garnishment served upon its branch in Quezon City by theauthorized deputy sheriff of this Court. It contends that the service of the notice by the authorized deputy sheriff of the courtcontravenes Section 11 of Commonwealth Act No. 105, as amended which reads:" 'All writs and processes issued by the Courtshall be served and executed free of charge by provincial or city sheriffs, or by any person authorized by this Court, in the samemanner as writs and processes of Courts of First Instance.' Following the law, the Bank argues that it is the Sheriff of Quezon City,and not the Clerk of this Court who is its Ex-Officio Sheriff, that has the authority to serve the notice of garnishment, and that theactual service by the latter officer of said notice is therefore not in order. The Court finds no merit in this argument. Republic Act No.4201 has, since June 19, 1965, already repealed Commonwealth Act No. 103, and under this law, it is now the Clerk of this Courtthat is at the same time the Ex-Officio Sheriff. As such Ex-Officio Sheriff, the Clerk of this Court has therefore the authority to issuewrits of execution and notices of garnishment in an area encompassing the whole of the country, including Quezon City, since hisarea of authority is coterminous with that of the Court itself, which is national in nature. ... At this stage, the Court notes from the

record that the appeal to the Supreme Court by individual employees of PHHC which questions the award of attorney's fees to Atty.Gabriel V.

Manansala, has already been dismissed and that the same became final and executory on August 9, 1970. There is no longer anyreason, therefore, for withholding action in this case. [Wherefore], the motion to quash filed by the Philippine National Bank is deniedfor lack of merit. The said Bank is therefore ordered to comply within five days from receipt with the 'notice of Garnishment' datedMay 6, 1970." 5 There was a motion for reconsideration filed by petitioner, but in a resolution dated September 22, 1970, it wasdenied. Hence, this certiorari petition.

As noted at the outset, the petition lacks merit.


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1. The plea for setting aside the notice of garnishment was promised on the funds of the People's homesite and HousingCorporation deposited with petitioner being "public in character." There was not even a categorical assertion to that effect. It is onlythe possibility of its being "public in character." The tone was thus irresolute,the approach difficult The premise that the funds couldbe spoken of as public in character may be accepted in the sense that the People's Homesite and Housing Corporation was agovernment-owned entity It does not follow though that they were exempt from garnishment. National Shipyard and SteelCorporation v. court of Industrial Relations 6is squarely in point. As was explicitly stated in the opinion of the then Justice, later ChiefJustice, Concepcion: "The allegation to the effect that the funds of the NASSCO are public funds of the government, and that, assuch, the same may not be garnished, attached or levied upon, is untenable for, as a government owned and controlled corporation.

the NASSCO has a personality of its own, distinct and separate from that of the Government. It has pursuant to Section 2 ofExecutive Order No. 356, dated October 23, 1950 ..., pursuant to which the NASSCO has been established 'all the powers of acorporation under the Corporation Law ...' Accordingly, it may sue and be sued and may be subjected to court processes just l ikeany other corporation (Section 13, Act No. 1459), as amended." 7 The similarities between the aforesaid case and the presentlitigation are patent. Petitioner was similarly a government-owned corporation. The principal respondent was the Court of IndustrialRelations. The prevailing parties were the employees of petitioner. There was likewise a writ of execution and thereafter notices ofgarnishment served on several banks. There was an objection to such a move and the ruling was adverse to the National Shipyardand Steel Corporation. Hence the filing of a petition forcertiorari. To repeat, the ruling was quite categorical Garnishment was theappropriate remedy for the prevailing party which could proceed against the funds of a corporate entity even if owned or controlledby the government. In a 1941 decision, Manila Hotel Employees Association v. Manila Hotel Company, 8 this Court, through JusticeOzaeta, held: "On the other hand, it is well settled that when the government enters into commercial business, it abandons itssovereign capacity and is to be treated like any other corporation. (Bank of the United States v. Planters' Bank,9 Wheat, 904, 6 L.ed.244). By engaging in a particular business thru the instrumentality of a corporation, the governmnent divests itself pro hac vice of itssovereign character, so as to render the corporation subject to the rules of law governing private corporations."

2. It is worth noting that the decision referred to, the Bank of the United States v. Planters' Bank, 10 was promulgated by the

American Supreme Court as early as 1824, the opinion being penned by the great Chief Justice Marshall. As was pointed out byhim: "It is, we think, a sound principle, that when a government becomes a partner in any trading company, it divests itself, so far asconcerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicatingto the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes thecharacter which belongs to its associates, and to the business which is to be transacted. Thus, many states of this Union who havean interest in banks, are not suable even in their own courts; yet they never exempt the corporation from being sued. The state ofGeorgia, by giving to the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as respectsthe transactions of the bank, and waives an the privileges of that character. As a member of a corporation, a government neverexercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management of the affairs of thecorporation, that are expressly given by the incorporating act." 11 The National Shipyard and Steel Corporation case, therefore,merely reaffirmed one of the oldest and soundest doctrines in this branch of the law.

3. The invocation ofRepublic v. Palacio, 12 as well as Commissioner of Public Highways v. San Diego, 13 did not help the cause ofpetitioner at all The decisions are not applicable. If properly understood they can easily be distinguished. As is clear in the opinion ofJustice J.B.L. Reyes in Republic v. Palacio, the Irrigation Service Unit which was sued was an office and agency under theDepartment of Public Works and Communications. The Republic of the Philippines, through the then Solicitor General, moved for

the dismissal of such complaint, alleging that it "has no juridical personality to sue and be sued."

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Such a motion to dismiss wasdenied. The case was tried and plaintiff Ildefonso Ortiz, included as private respondent in the Supreme Court proceeding, obtained afavorable money judgment. It became final and executory. Thereafter, it appeared that the Solicitor General was served with a copyof the writ of execution issued by the lower court followed by an order of garnishment 15 Again, there was an urgent motion to liftsuch order, but it was denied. A certiorariand prohibition proceeding was then filed with the Court of Appeals. The legality of theissuance of such execution and punishment was upheld, and the matter was elevated to this Tribunal The Republic was sustained.The infirmity of the decision reached by the Court of Appeals, according to the opinion, could be traced to the belief that there was awaiver of "governmental immunity and, by implication, consent to the suit." 16 There was no such waiver. Even if there were, it wasstressed by justice J.B.L. Reyes: "It is apparent that this decision of the Court of Appeals suffers from the erroneous assumption thatbecause the State has waived its immunity, its property and funds become liable to seizure under the legal process. Thisemphatically is not the law. (Merritt v. Insular Government, 34 Phil 311)." 17 To levy the execution of such funds, according to him,would thus "amount to a disbursement without any proper appropriation as required by law " 18 In Commissioner of Public Highwaysv. San Diego, the opening paragraph of Justice Teehankee was quite specific as to why there could be neither execution norgarnishment of the money of petitioner Bureau of Public Highways: "In this special civil action for certiorari and prohibition, the Courtdeclares null and void the two questioned orders of respondent Court levying upon funds of petitioner Bureau of Public Highways ondeposit with the Philippine National Bank, by virtue of the fundamental precept that government funds are not subject to execution orgarnishment." 19 The funds appertained to a governmental office, not to a government-owned or controlled corporation with a

separate juridical personality. In neither case therefore was there an entity with the capacity to sue and be sued, the funds of whichcould thereafter be held liable to execution and garnishment in the event of an adverse judgment.

4. Both the Palacio and the Commissioner of Public Highways decisions, insofar as they reiterate the doctrine that one of thecoronaries of the fundamental concept of non-suability is that governmental funds are immune from garnishment, refer to Merritt v.Insular Government, a 1916 decision 20 Since then such a principle has been followed with undeviating rigidity, the latest case inpoint being Republic v. Villasor, 21 promulgated in 1973. It is an entirely different matter if, according to Justice Sanchez in Ramos v.Court of Industrial Relations, 22 the office or entity is "possessed of a separate and distinct corporate existence." 23 Then it can sueand be sued. Thereafter, its funds may be levied upon or garnished. That is what happened in this case.


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5. With the crucial issue thus resolved in favor of the correctness of the order assailed, the other objection raised, namely thatrespondent Court acted erroneously in having a special sheriff serve to the writ of execution, hardly needs any extensive decision. Itis true that in the aforesaid Commissioner of Public Highways opinion, this Court held that there is no authorization in law for theappointment of special sheriffs for the service of writs of execution.24 In the order sought to be nullified, the then Judge Joaquin M.Salvador of respondent Court pointed out that under a later Act, 25 the Court of Industrial Relations Act was amended with theproviso that its Clerk of Court was the ex-oficio sheriff. The point raised in the petition that it should be the sheriff of Quezon City thatought to have served the writ of execution would thus clearly appear to be inconclusive. There is to be sure no thought of deviatingfrom the principle announced in the Commissioner of Public Highways case. That is as it ought to be. Even if, however, there is

sufficient justification for the infirmity attributed to respondent Court by virtue of such a ruling, still considering all the circumstancesof this case, it clearly does not call for the nullification of the order in question. What cannot be denied is that the writ of executionwas issued as far back as May 5, 1970 by the then Clerk of Court of respondent Tribunal as the authorized sheriff. It would be, tosay the least, unfair and unequitable if, on the assumption that such Clerk of Court lacked such competence, a new writ of executionhad to be issued by the proper official At any rate, what is important is that the judgment be executed. That is to achieve justiceaccording to law. It would be to carry technicality, therefore, to an absurd length if just because of such a mistake, assuming that itis, but undoubtedly one committed in good faith, further delay would get be imposed on private respondent by characterizing theorder sought to be nullified amounting to a grave abuse of discretion.

WHEREFORE, the petition forcertiorariis dismissed. No costs.


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Manila

SECOND DIVISION

G.R. No. L-55273-83 December 19, 1981

GAUDENCIO RAYO, BIENVINIDO PASCUAL, TOMAS MANUEL, MARIANO CRUZ, PEDRO BARTOLOME, BERNARDINOCRUZ JOSE PALAD , LUCIO FAJARDO, FRANCISCO RAYOS, ANGEL TORRES, NORBERTO TORRES, RODELIO JOAQUIN,PEDRO AQUINO, APOLINARIO BARTOLOME, MAMERTO BERNARDO, CIRIACO CASTILLO, GREGORIO CRUZ, SIMEONESTRELLA, EPIFANIO MARCELO, HERMOGENES SAN PEDRO, JUAN SANTOS, ELIZABETH ABAN, MARCELINABERNABE, BUENAVENTURA CRUZ, ANTONIO MENESES, ROMAN SAN PEDRO, LOPEZ ESPINOSA, GODOFREDOPUNZAL, JULIANA GARCIA, LEBERATO SARMIENTO, INOCENCIO DE LEON, CARLOS CORREA, REYNALDO CASIMIRO,ANTONIO GENER, GAUDENCIO CASTILLO, MATIAS PEREZ, CRISPINIANO TORRES, CRESENCIO CRUZ, PROTACIOBERNABE, MARIANO ANDRES, CRISOSTOMO CRUZ, MARCOS EUSTAQUIO, PABLO LEGASPI, VICENTE PASCUAL,ALEJANDRA SISON, EUFRACIO TORRES, ROGELIO BARTOLOME, RODOLFO BERNARDO, APOLONIO CASTILLO,MARCELINO DALMACIO, EUTIQUIO LEGASPI, LORENZO LUCIANO and GREGORIO PALAD,petitioners,vs.COURT OF FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA, and NATIONAL POWERCORPORATION, respondents.

ABAD SANTOS, J .:

The relevant antecedents of this case are narrated in the petition and have not been controverted, namely:

3. At about midnight on October 26, 1978, during the height of that infamous typhoon "KADING" the respondentcorporation, acting through its plant superintendent, Benjamin Chavez, opened or caused to be openedsimultaneously all the three floodgates of the Angat Dam. And as a direct and immediate result of the sudden,precipitate and simultaneous opening of said floodgates several towns in Bulacan were inundated. Hardest-hitwas Norzagaray. About a hundred of its residents died or were reported to have died and properties worthmillion of pesos destroyed or washed away. This flood was unprecedented in Norzagaray.

4. Petitioners, who were among the many unfortunate victims of that man-caused flood, filed with therespondent Court eleven complaints for damages against the respondent corporation and the plant

superintendent of Angat Dam, Benjamin Chavez, docketed as Civil Cases Nos. SM-950 951, 953, 958, 959,964, 965, 966, 981, 982 and 983. These complaints though separately filed have a common/similar cause ofaction. ...

5. Respondent corporation filed separate answers to each of these eleven complaints. Apart from traversing thematerial averments in the complaints and setting forth counterclaims for damages respondent corporationinvoked in each answer a special and affirmative defense that "in the operation of the Angat Dam," it is"performing a purely governmental function", hence it "can not be sued without the express consent of theState." ...

6. On motion of the respondent corporation a preliminary hearing was held on its affirmative defense as thougha motion to dismiss were filed. Petitioners opposed the prayer for dismissal and contended that respondentcorporation is performing not governmental but merelyproprietary functions and that under its own organic act,Section 3 (d) of Republic Act No. 6395, it can sue and be sued in any court. ...

7. On July 29, 1980 petitioners received a copy of the questioned order of the respondent Court datedDecember 21, 1979 dismissing all their complaints as against the respondent corporation thereby leaving thesuperintendent of the Angat Dam, Benjamin Chavez, as the sole party-defendant. ...

8. On August 7, 1980 petitioners filed with the respondent Court a motion for reconsideration of the questionedorder of dismissal. ...

9. The respondent Court denied petitioners' motion for reconsideration in its order dated October 3, 1980. ...Hence, the present petition for review on certiorari under Republic Act No. 5440. (Rollo, pp. 3-6.)

The Order of dismissal dated December 12, 1979, reads as follows:


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Under consideration is a motion to dismiss embodied as a special affirmative defense in the answer filed bydefendant NPC on the grounds that said defendant performs a purely governmental function in the operation ofthe Angat Dam and cannot therefore be sued for damages in the instant cases in connection therewith.

Plaintiffs' opposition to said motion to discuss, relying on Sec. 3 (d) of Republic Act 6396 which imposes on theNPC the power and liability to sue and be sued in any court, is not tenable since the same refer to such mattersonly as are within the scope of the other corporate powers of said defendant and not matters of tort as in theinstant cases. It being an agency performing a purely governmental function in the operation of the Angat Dam,

said defendant was not given any right to commit wrongs upon individuals. To sue said defendant for tort mayrequire the express consent of the State.

WHEREFORE, the cases against defendant NPC are hereby dismissed. (Rollo, p. 60.)

The Order dated October 3, 1980, denying the motion for reconsideration filed by the plaintiffs ispro forma; the motion was simplydenied for lack of merit. (Rollo, p. 74.)

The petition to review the two orders of the public respondent was filed on October 16, 1980, and on October 27, 1980, We requiredthe respondents to comment. It was only on April 13, 1981, after a number of extensions, that the Solicitor General filed the requiredcomment. (Rollo, pp. 107-114.)

On May 27, 1980, We required the parties to file simultaneous memoranda within twenty (20) days from notice. (Rollo, p. 115.)Petitioners filed their memorandum on July 22, 1981. (Rollo, pp. 118-125.) The Solicitor General filed a number of motions for

extension of time to file his memorandum. We granted the seventh extension with a warning that there would be no furtherextension. Despite the warning the Solicitor General moved for an eighth extension which We denied on November 9, 1981. Amotion for a ninth extension was similarly denied on November 18, 1981. The decision in this case is therefore, without thememorandum of the Solicitor General.

The parties are agreed that the Order dated December 21, 1979, raises the following issues:

1. Whether respondent National Power Corporation performs a governmental function with respect to the management andoperation of the Angat Dam; and

2. Whether the power of respondent National Power Corporation to sue and be sued under its organic charter includes the power tobe sued for tort.

The petition is highly impressed with merit.

It is not necessary to write an extended dissertation on whether or not the NPC performs a governmental function with respect to themanagement and operation of the Angat Dam. It is sufficient to say that the government has organized a private corporation, putmoney in it and has allowed it to sue and be sued in any court under its charter. (R.A. No. 6395, Sec. 3 (d).) As a governmentowned and controlled corporation, it has a personality of its own, distinct and separate from that of the Government. (See NationalShipyards and Steel Corp. vs. CIR, et al., L-17874, August 31, 1963, 8 SCRA 781.) Moreover, the charter provision that the NPCcan "sue and be sued in any court" is without qualification on the cause of action and accordingly it can include a tort claim such asthe one instituted by the petitioners.

WHEREFORE, the petition is hereby granted; the Orders of the respondent court dated December 12, 1979 and October 3, 1980,are set aside; and said court is ordered to reinstate the complaints of the petitioners. Costs against the NPC.

SO ORDERED.


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Manila

THIRD DIVISION

G.R. No. 70547 January 22, 1993

PHILIPPINE NATIONAL RAILWAYS and HONORIO CABARDO, petitioners,vs.INTERMEDIATE APPELLATE COURT, and BALIWAG TRANSIT, INC., respondents.

The Solicitor General for petitioner.

Leopoldo Sta. Maria for private respondents.

MELO, J. :

The imputation ofculpa on the part of herein petitioners as a result of the collision between its strain, bound for Manila from LaUnion, with a Baliwag transit bus at the railroad crossing on the road going to Hagonoy, Bulacan on August l0, 1974, is the subjectof the petition at bar directed against the judgment of affirmance rendered by respondent court, through the Fourth Civil CasesDivision (Sison, Bidin (P), Veloso, JJ.), vis-a-vis the decretal portion handed down by the court of origin in:

1. Ordering the defendants, jointly and severally to pay the plaintiff the amount of P179,511.52 as actualdamages.

2. Ordering the defendants jointly and severally to pay the plaintiff P436,642.03 as reimbursement for thedamages paid by the plaintiff to death, injury and damage claimants.

3. Ordering the defendants jointly and severally to pay exemplary damages in the amount of P50, 000.00 to theplaintiff.

4. Ordering the defendants jointly and severally to pay the plaintiff attorney's fees in the amount of P5, 000.00.

5. Ordering the defendants, jointly and severally to pay the plaintiff interest at the legal rate on the aboveamounts due the plaintiff from August 10, 1974 until fully paid.

6. Ordering the defendants to pay the cost of this suit.

7. Ordering the dismissal of the defendants' counterclaim for lack of factual and legal basis. (p. 101, Record onAppeal; p. 103. Rollo.)

Culled from the text of the assailed disposition are the facts of the case at bar which are hereunder adoptedverbatim:

The case arose from a collision of a passenger express train of defendant Philippine National Railways, (PNR)

coming from San Fernando, La Union and bound for Manila and a passenger bus of Baliwag Transit, Inc. whichwas on its way to Hagonoy, Bulacan, from Manila, but upon reaching the railroad crossing at Barrio Balungao,Calumpit, Bulacan at about 1:30 in the afternoon of August 10, 1974, got stalled and was hit by defendant'sexpress train causing damages to plaintiff's bus and its passengers, eighteen (18) of whom died and fifty-three(53) others suffered physical injuries. Plaintiff alleging that the proximate cause of the collision was thenegligence and imprudence of defendant PNR and its locomotive engineer, Honorio Cirbado, in operating itspassenger train in a busy intersection without any bars, semaphores, signal lights, flagman or switchman towarn the public of approaching train that would pass through the crossing, filed the instant action for Damagesagainst defendants. The defendants, in their Answer traversed the material allegation of the Complaint and asaffirmative defense alleged that the collision was caused by the negligence, imprudence and lack of foresight ofplaintiff's bus driver, Romeo Hughes.


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At the pre-trial conference held on June 23, 1976, the parties agreed on a partial stipulation of facts and issueswhich as amplified at the continuation of the pre-trial conference, on July 12, 1976, are as follows:

1 That plaintiff is a duly constituted corporation registered with the Securities and ExchangeCommission engaged in the business of transportation and operating public utility buses forthe public with lines covering Manila, Caloocan City, Quezon City, Malabon, Rizal, Bulacan,Pampanga and Nueva Ecija, and particularly from Manila to Hagonoy, Bulacan and returnin the month of August, l974 passing thru the town of Calumpit Bulacan, temporarily while

the bridge at Hagonoy, Bulacan was under construction;

2 That defendant Philippine National Railways is a purely government owned andcontrolled corporation duly registered and existing virtue of Presidential Decree No. 741,with capacity to sue and be sued, and is likewise engaged in transporting passengers andcargoes by trains and buses and that, it operates a train line between San Fernando, LaUnion and Manila particularly Passenger Express Train with Body No. 73, passing alongthe intersection of Barrio Balungao, Calumpit, Bulacan, in going to San Fernando, La Unionfrom Manila and return;

3. That on August 10, 1974, at about 1:20 o'clock in the afternoon, a Baliuag Transit Buswith Body No. 1066 and Plate No. XS-929 PUB-Bulacan '74 was driven by its authorizeddriver Romeo Hughes and PNR Train No. 73 was operated by Train Engineer HonorioCabardo alias Honorio Cirbado and at the railroad intersection at Barrio Balungao,Calumpit, Bulacan, said passenger train No. 73 hit and bumped the right mid portion of the

plaintiff's passenger bus No. 1066, while the rear portion of said bus was at the railroadtrack and its direction was towards Hagonoy, Bulacan at about 1:30 o'clock in theafternoon;

4. That at the time of the collision there was a slight rainfall in the vicinity of the scene of theaccident and that there was at said intersection no bars, semaphores, and signal lights thatwould warn the public of the approaching train that was about to pass through theintersection and likewise there was no warning devices to passing trains showing that theywere about to pass an intersection in going to Manila from San Fernando, La Union andback;

5. That on account of said collision, the Baliuag Transit Bus with Body No. 1066 driven byRomeo Hughes was damaged and eighteen (18) of its passengers died and the rest whowere more than fifty three (53) passengers suffered physical injuries;

6. That after the investigation the Chief of Police of Calumpit, Bulacan, filed a criminal caseof Reckless Imprudence Causing Multiple Homicide with Multiple Physical Injuries andDamage to Property against Romeo Hughes y Parfan, driver of the Baliuag Transit busdocketed under Crim. Case No. 2392; while the train Engineer Honorio Cabardo aliasHonorio Cirbado was not included as an accused in said case, although his train No. 73was the one that hit and bumped the right rear portion of the said bus;

7. That immediately after the said accident Major Manuel A. Macam, Chief of the MunicipalPolice of Calumpit, Bulacan, together with some of his policemen conducted aninvestigation of the accident;

8. That at the railroad crossing in Calumpit, Bulacan where the accident took place there isno railroad crossing bar, however, during the pre-war days there was a railroad crossingbar at said intersection; that, however, there was only one sign of railroad crossing "Stop,Look and Listen" placed on a concrete slab and attached to a concrete post existing at theapproach of the railroad track from the Highway going towards Hagonoy, Bulacan and that

after the said railroad track there was a designated jeep parking area at the right side in thedirection from the Highway to Hagonoy Bulacan;

9. That the train No. 73 driven by Train Engineer Honorio Cabardo alias Honorio Cirbadostopped after passing the railroad crossing at a distance of about 50 meters from the saidintersection after the collision on August, 1974;

10. That the expected time of arrival of said Train No. 73 in Manila was 2:41 P.M. and itsdeparture time from San Fernando, La Union was 9:00 A.M. and its expected arrival atCalumpit, Bulacan was 1:41 P.M. with no stop at Calumpit, Bulacan.


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SIMPLIFICATION OF ISSUES

11. That the principal issue in the instant case is who between the driver Romeo Hughes ofBaliuag Transit, Incorporated and the train engineer Honorio Cabardo alias HonorioCirbado of the Philippine National Railways was negligent or whether or not both arenegligent; that likewise which of said companies was negligent at said railroad intersection;

12. That another additional issue is whether the Baliuag Transit Incorporated has exercisedthe diligence of a good father of the family in the selection and supervision of itsemployees. (pp.85-87, Record on Appeal). ( Annex A, Petition; pp. 79-82, Rollo)

In addition, respondent court deemed it necessary to reflect the salient findings of the case for damages as formulated by the trialcourt:

Posed for resolution are the following issues: Who between the driver Romeo Hughes of the Baliuag TransitIncorporated and Honorio Cabardo, train Engineer of the Philippine National Railways was negligent in theoperation of their respective vehicles, or whether or both were negligent? Could either of the companies BaliuagTransit Incorporated and the Philippine National Railways be held accountable for the collision because ofnegligence?

The defendants presented several statements or affidavits of alleged witnesses to the collision, specifically

Exhibits 2, 3, 4, 5, 6, 11, 13, 14, 15, 16, 17, 18 and 19; the Court is at a loss as to why the persons who gavethe said statements were not presented as witnesses during the trial of thecase, as aptly said, the statements are hearsay evidence (Azcueta v. Cabangbang, 45 O.G. 144); at mostthey be taken as proof only of the fact that statements of said persons were taken and that investigation wasconducted of the incident; the Court cannot consider the averments in said statements as testimonies orevidence of truth.

Defendants endeavored to show that the proximate and immediate cause of the collision was the negligence ofthe bus driver because the driver did not make a stop before ascending the railtrack; he did not heed thewarning or shoutings of bystanders and passengers and proceeded in traversing the railtrack at a fast speed;that the bus driver was in fact violating Section 42(d) of R.A. 4136, otherwise known as the Land Transportationand Traffic Code for failure to "stop, look, and listen" at the intersection, before crossing the railtrack; that it isincumbent upon him to take the necessary precautions at the intersection because the railroad track is in itself awarning; and the bus driver ignored such a warning and must assume the responsibility for the result of themotion taken by him (U.S. v. Mananquil, 42 Phil. 90)

Except the testimony of the train engineer Cabardo, there is no admissible evidence to show that indeed, thebus driver did not take the necessary precaution in traversing the track. Note that he first noticed the bus whenit was only 15 meters away from him; he could not have possibly noticed the position of the bus beforenegotiating the track.

On the other hand, it was shown by plaintiff that the bus driver Romeo Hughes took the necessary precautionsin traversing the track.

The bus driver had stopped before traversing the track and in fact asked the conductor to alight and made a"Look and Listen" before proceeding; the conductor had done just that and made a signal to proceed when hedid not see any oncoming train. (TSN, October 2l, 1976, p. 4); plaintiff's bus drivers and conductors are enjoinedto observe such a precautionary measure in seminars conducted by the company. (TSN, September 23, 1976.pp. 26-27).

The evidence disclosed that the train was running fast because by his own testimony, the train engineer had

testified that before reaching the station of Calumpit the terrain was downgrade and levelled only after passingthe Calumpit bridge (TSN, July 28, 1976, p. 14 ); the tendency of the train, coming from a high point is toaccelerate as the gravity will necessarily make it so, especially when it is pulling seven coaches loaded withgoods and passengers.

Moreover, upon impact, the bus loaded with passengers was dragged and thrown into a ditch several metersaway; the train had stopped only after the engine portion was about 190 meters away from the fallen bus;several passengers were injured and at least 20 died; such facts conclusively indicate that the train wasspeeding, because if it were moving at moderate speed, it would not run some 190 meters after impact andthrow the bus at quite a distance especially so when it is claimed that the train's emergency brakes wereapplied.


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Further, the train was an express train; its departure was 9:00 A.M. at San Fernando, La Union and expected inManila at 2:41 P.M.; the collision occurred at 1:30 P.M. or 4 1/2 hours after it left La Union; surely, the traincould have not negotiated such a distance in so short a time if it were not running at fast speed.

It may be argued that a railroad is not subject to the same restrictions to the speed of its train as a motorists(Mckelvey v. Delaware L. and W.R. Co. 253 App. D.V. 109, 300 NYS 1263 ); but it does not follow that a trainwill be permitted to run fast under all conditions at any rate of speed it may choose. It must regulate its speedwith proper regard for the safety of human life and property (Johnson v. Southern Pacific Company (Cal. App.

288 p. 81), considering the surrounding circumstances particularly the nature of the locality (Atchinson, T. andSFR Co. v. Nicks (Arts) 165 p. 2d 167).

Cabardo's route included the passage over the said intersection; he could have noticed that it is a very busyintersection because the crossroad leads to the Calumpit Poblacion as well as to the neighboring town ofHagonoy; there was a parking lot by the side of the track whereat passengers board jeepneys for theneighboring barrios and towns; stalls abound in the vicinity and bystanders congregate nearby. A prudent trainoperator must, under the circumstances, slacken his speed almost for the protection of motorists andpedestrians, not only when a collision is inevitable but even if no hindrance is apparent on the way;

Moreover, there was an intermittent rain at the time of the collision (see stipulation of facts and photographs);the condition of the weather was such that even if for this reason alone, the train engineer should have foreseenthat danger of collision lurked because of poor visibility of slippery road; he should have taken extra precautionby considerably slackening its speed. This he failed to do even if the nature of his job required him to observecare exercised by a prudent man.

Contributory negligence may not be ascribed to the bus driver; it was evident that he had taken the necessaryprecautions before passing over the railway track; if the bus was hit, it was for reasons beyond the control of thebus driver because he had no place to go; there were vehicles to his left which prevented him in swervingtowards that direction; his bus stalled in view of the obstructions in his front where a sand and gravel truckstopped because of a jeep maneuvering into a garage up front. All the wheels at the bus have already passedthe rail portion of the track and only the rear portion of the bus' body occupied or covered the railtrack. This wasevident because the part of the bus hit by the train was the rear since the bus fell on a nearby ditch. Otherwise,if the bus was really hit in mid-body, the bus could have been halved into two because of the force of theimpact.

The stipulation of facts between the parties show that there was no crossing bar at the railroad intersection atCalumpit, Bulacan at the time of collision (par. 8, Stipulation of Facts); the plaintiff contended and thedefendants did not deny, that there were no signal lights, semaphores, flagman or switchman thereat; theabsence of such devices, the plaintiff argues constitute negligence on the part of the Philippine NationalRailways.

A railroad is not required to have a gate (crossing bar) or a flagman, or to maintain signals at every intersection;only at such places reasonably necessary; what is considered reasonably necessary will depend on the amountof travel upon the road, the frequency with which trains pass over it and the view which could be obtained oftrains as they approach the crossing, and other conditions (Pari v. Los Angeles, Ry. Corporation (Cal A2d) 128p2d 563; Swdyk v. Indiana Harbor Belt R. Co. 148 F. 2d 795, and others).

As has been amply discussed, the crossroad at the intersection at Calumpit is one which is a busythoroughfare; it leads to the Poblacion at Calumpit and other barrios as well as the town of Hagonoy; the vicinityis utilized as a parking and waiting area for passengers of jeepneys that ply between the barrios, clearly, theflow of vehicular traffic thereat is huge. It can be said also that, since there is no other railtrack going Northexcept that one passing at Calumpit, trains pass over it frequently;

A portion of the intersection is being used as a parking area with stalls and other obstructions present making itdifficult, if not impossible, to see approaching trains (see photographs).

The failure of the Philippine National Railways to put a cross bar, or signal light, flagman or switchman, orsemaphores is evidence of negligence and disregard of the safety of the public, even if there is no law orordinance requiring it, because public safety demands that said devices or equipments be installed, in the lightof aforesaid jurisprudence. In the opinion of this Court the X sign or the presence of "STOP, LOOK, LISTEN"warnings would not be sufficient protection of the motoring public as well as the pedestrians, in the saidintersection;

The parties likewise have stipulated that during the pre-war days, there was a railroad crossing bar at the saidintersection (Par-8, Stipulation of Facts). It appears that it was a self imposed requirement which has beenabandoned. In a case it was held that where the use of a flagman was self imposed, the abandonment thereof


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may constitute negligence. (Fleming v. Missouri and A. Ry. Co. 198 ARDC 290, 128 S.W. 2d 286 and others;cited in Sec. 1082 SCRWARTZ, Vol. 2). Similarly, the abandonment by the PNR of the use of the crossing barat the intersection at Calumpit constitutes negligence, as its installation has become imperative, because of theprevailing circumstances in the place.

A railroad company has been adjudged guilty of negligence and civilly liable for damages when it failed to installsemaphores, or where it does not see to it that its flagman or switchman comply with their duties faithfully, tomotorist injured by a crossing train as long as he had crossed without negligence on his part (Lilius vs. MRR, 39

Phil. 758). (Decision, pages 94-100, R A.; pp. 83-89,Rollo).

On the aspect of whether the Philippine National Railways enjoys immunity from suit, respondent court initially noted that anexculpation of this nature that was raised for the first time on appeal may no longer be entertained in view of the proscription underSection 2, Rule 9 of the Revised Rules of Court, apart from the fact that the lawyer of petitioner agreed to stipulate inter alia that therailroad company had capacity to sue and be sued. This being so, respondent court continued, PNR was perforce estopped fromdisavowing the prejudicial repercussion of an admission in judicio. Even as the laws governing the creation and rehabilitation of thePNR were entirely mute on its power to sue and be sued, respondent court nonetheless opined that such prerogative was impliedfrom the general power to transact business pertinent or indispensable to the attainment of the goals of the railroad company underSection 4 of Republic Act No. 4156 as amended by Republic Act No. 6366:

Sec. 4 General Powers The Philippine National Railways shall have the following general powers:

(a) To do all such other things and to transact all such business directly or indirectly necessary, incidental orconducive to the attainment of the purpose of the corporation; and

(b) Generally, to exercise all powers of a railroad corporation under the Corporation law.

in conjunction with Section 2(b) of Presidential Decree No. 741:

(b) To own or operate railroad transways, bus lines, trucklines, subways, and other kinds of land transportation,vessels, and pipelines, for the purpose of transporting for consideration, passengers, mail and property betweenany points in the Philippines;

Thus, respondent court utilized the doctrine of implied powers announced in National Airports Corporation vs. Teodoro, Sr. andPhilippine Airlines, Inc. (91 Phil. 203 [1952]), to the effect that the power to sue and be sued is implicit from the faculty to transactprivate business. At any rate, respondent court characterized the railroad company as a private entity created not to discharge agovernmental function but, among other things, to operate a transport service which is essentially a business concern, and thusbarred from invoking immunity from suit.

In brushing aside petitioners' asseveration that the bus driver outraced the train at the crossing, respondent court observed that thebus was hit by the train at its rear portion then protruding over the tracks as the bus could not move because another truck at itsfront was equally immobile due to a jeep maneuvering into a nearby parking area. Under these tight conditions, respondent courtblamed the train engineer who admitted to have seen the maneuvering jeep at a distance (TSN, July 28, 1976, page 18) and hadthe last clear chance to apply the brakes, knowing fully well that the vehicles following the jeep could not move away from the pathof the train. Apart from these considerations, it was perceived below that the train was running fast during the entire trip since thetrain stopped 190 meters from the point of impact and arrived at Calumpit, Bulacan earlier than its expected time of arrival thereat.

Moreover, respondent court agreed with the conclusion reached by the trial court that the absence of a crossing bar, signal light,flagman or switchman to warn the public of an approaching train constitutes negligence per the pronouncement of this Court in Liliusvs. Manila Railroad Company(59 Phil 758 [1934]).

Concerning the exercise of diligence normally expected of an employer in the selection and supervision of its employees,respondent court expressed the view that PNR was remiss on this score since it allowed Honorio Cabardo, who finished only

primary education and became an engineer only through sheer experience, to operate the locomotive, not to mention the fact thatsuch plea in avoidance was not asserted in the answer and was thus belatedly raised on appeal.

Petitioner moved to reconsider, but respondent court was far from persuaded. Hence, the petition before Us which, in essence,incorporates similar disputations anent PNR's immunity from suit and the attempt to toss the burden of negligence from the trainengineer to the bus driver of herein private respondent.

The bone of contention for exculpation is premised on the familiar maxim in political law that the State, by virtue of its sovereignnature and as reaffirmed by constitutional precept, is insulated from suits without its consent (Article 16, Section 3, 1987Constitution). However, equally conceded is the legal proposition that the acquiescence of the State to be sued can be manifestedexpressly through a general or special law, or indicated implicitly, as when the State commences litigation for the purpose of


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asserting an affirmative relief or when it enters into a contract (Cruz,Philippine Political Law, 1991 edition, page 33; Sinco, PhilippinePolitical Law, Eleventh Edition, 1962, page 34). When the State participates in a covenant, it is deemed to have descended from itssuperior position to the level of an ordinary citizen and thus virtually opens itself to judicial process. Of course, We realize that thisCourt qualified this form of consent only to those contracts concluded in a proprietary capacity and therefore immunity will attach forthose contracts entered into in a governmental capacity, following the ruling in the 1985 case ofUnited States of America vs.Ruiz(136 SCRA 487 [1985]; cited by Cruz, supra at pages 36-37). But the restrictive interpretation laid down therein is of nopractical worth nor can it give rise to herein petitioner PNR's exoneration since the case ofMalong vs. Philippine NationalRailways (138 SCRA 63, [1985]); 3 Padilla, 1987 Constitution with Comments and Cases, 1991 edition, page 644), decided three

months afterRuizwas promulgated, was categorical enough to specify that the Philippine National Railways "is not performing anygovernmental function" (supra, at page 68).

In Malong, Justice Aquino, speaking for the Court en banc, declared:

The Manila Railroad Company, the PNR's predecessor, as a common carrier, was not immune from suit underAct No. 1510, its charter.

The PNR Charter, Republic Act No. 4156, as amended by Republic Act No. 6366 and Presidential Decree No.741, provides that the PNR is a government instrumentality under government ownership during its 50-yearterm, 1964 to 2014. It is under the Office of the President of the Philippines. Republic Act No. 6366 provides:

Sec. 1-a. Statement of policy. The Philippine National Railways, being a factor for socio-economic development and growth, shall be a part of the infrastructure program of thegovernment and as such shall remain in and under government ownership during its

corporate existence. The Philippine National Railways must be administered with the viewof serving the interests of the public by providing them the maximum of service and, whileaiming at its greatest utility by the public, the economy of operation must be ensured sothat service can be rendered at the minimum passenger and freight prices possible.

The charter also provides:

Sec. 4. General powers. The Philippine National Railways shall have the followinggeneral powers:

(a) To do all such other things and to transact all such business directly or indirectlynecessary, incidental or conducive to the attainment of the purpose of the corporation; and

(b) Generally, to exercise all powers of a railroad corporation under the Corporation Law.

(This refers to Sections 81 to 102 of the Corporation Law on railroad corporations, notreproduced in the Corporation Code.)

Section 36 of the Corporation Code provides that every corporation has the power to sue and be sued in its corporate name.Section 13(2) of the Corporation Law provides that every corporation has the power to sue and be sued in any court.

A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical andpractical ground that there can be no legal right as against the authority that makes the law on which the rightdepends (Justice Holmes in Kawananakoa vs. Polyblank, 205 U.S. 353, 51 L. 3d 834).

The public service would be hindered, and public safety endangered, if the supreme authority could besubjected to suit at the instance of every citizen and, consequently, controlled in the use and disposition of themeans required for the proper administration of the Government (The Siren vs. U.S., 7 Wall. 152, 19 L. ed.129). (at pp.65-66).

To the pivotal issue of whether the State acted in a sovereign capacity when it organized the PNR for the purpose of engaging intransportation, Malongcontinued to hold that:

. . . in the instant case the State divested itself of its sovereign capacity when it organized the PNR which is nodifferent from its predecessor, the Manila Railroad Company. The PNR did not become immune from suit. It didnot remove itself from the operation of Articles 1732 to 1766 of the Civil Code on common carriers.

The correct rule is that "not all government entities, whether corporate or noncorporate, are immune from suits.Immunity from suit is determined by the character of the objects for which the entity was organized." (Nat.


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Airports Corp. vs. Teodoro and Phil. Airlines, Inc., 91 Phil. 203, 206; Santos vs. Santos, 92 Phil. 281, 285; HarryLyons, Inc. vs. USA, 104 Phil. 593).

Suits against State agencies with respect to matters in which they have assumed to act in a private ornongovernmental capacity are not suits against the State (81 C.J.S. 1319).

Suits against State agencies with relation to matters in which they have assumed to act in a

private or nongovernmental capacity, and various suits against certain corporations createdby the State for public purposes, but to engage in matters partaking more of the nature ofordinary business rather than functions of a governmental or political character, are notregarded as suits against the State.

The latter is true, although the State may own the stock or property of such a corporation,for by engaging in business operations through a corporation the State divests itself so farof its sovereign character, and by implicating consents to suits against the corporation. (81C.J.S. 1319).

The foregoing rule was applied to State Dock Commissions carrying on business relating to pilots, terminalsand transportation (Standard Oil Co. of New Jersey vs. U.S., 27 Fed. 2nd 370) and to State HighwaysCommissions created to build public roads and given appropriations in advance to discharge obligationsincurred in their behalf (Arkansas State Highway Commission vs. Dodge, 26 SW 2nd 879 and State HighwayCommission of Missouri vs. Bates, 296 SW 418, cited in National Airports case).

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

By engaging in a particular business through the instrumentality of a corporation, thegovernment divests itselfpro hac vice of its sovereign character, so as to render thecorporation 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 whichbind private individuals.

There is not one law for the sovereign and another for the subject, but when the sovereignengages in business and the conduct of business enterprises, and contracts with

individuals, whenever the contract in any form comes before the courts, the rights andobligation of the contracting parties must be adjusted upon the same principles as if bothcontracting parties were private persons. Both stand upon equality before the law, and thesovereign 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 thePNR for damages. Like any private common carrier, the PNR is subject to the obligations of persons engagedin 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. Itis 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. NDCEmployees and Workers' Union, L-32387, August 19, 1975, 66 SCRA 18l, 184).

Other government agencies not enjoying immunity from suit are the Social Security System (Social SecuritySystem vs. Court of Appeals,L-41299, February 21, 1983, 120 SCRA 707) and the Philippine National Bank (Republic vs. Philippine NationalBank, 121 Phil. 26). (at pp. 66-68).

We come now to the question of whether respondent court properly agreed with the trial court in imputing negligence on the part ofthe train engineer and his employer.


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It was demonstrated beyond cavil in the course of the pre-trial hearings held for the purpose of stipulating on crucial facts that thebus was hit on the rear portion thereof after it crossed the railroad tracks. Then, too the train engineer was frank enough to say thathe saw the jeep maneuvering into a parking area near the crossing which caused the obstruction in the flow of traffic such that thegravel and sand truck including the bus of herein private respondent were not able to move forward or to take the opposite lane dueto other vehicles. The unmindful demeanor of the train engineer in surging forward despite the obstruction before him is definitelyanathema to the conduct of a prudent person placed under the same set of perceived danger. Indeed:

When it is apparent, or when in the exercise of reasonable diligence commensurate with the surroundings it

should be apparent, to the company that a person on its track or to get on its track is unaware of his danger orcannot get out of the way, it becomes the duty of the company to use such precautions, by warnings, applyingbrakes, or otherwise, as may be reasonably necessary to avoid injury to him. (65Am. Jur., Second Edition. p.649).

Likewise, it was established that the weather condition was characterized with intermittent rain which should have prompted the trainengineer to exercise extra precaution. Also, the train reached Calumpit, Bulacan ahead of scheduled arrival thereat, indicating thatthe train was travelling more than the normal speed of 30 kilometers per hour. If the train were really running at 30 kilometers perhour when it was approaching the intersection, it would probably not have travelled 190 meters more from the place of the accident(page 10, Brief for Petitioners). All of these factors, taken collectively, engendered the concrete and yes, correct conclusion that thetrain engineer was negligent who, moreover, despite the last opportunity within his hands vis-a-vis the weather condition includingthe presence of people near the intersection, could have obviated the impending collision had he slackened his speed and appliedthe brakes (Picart vs. Smith, 37 Phil. 809 [1918]).Withal, these considerations were addressed to the trial judge who, unlikeappellate magistrates, was in a better position to assign weight on factual questions. Having resolved the question of negligencebetween the train engineer and the bus driver after collating the mass of evidence, the conclusion reached thereafter thuscommands great respect especially so in this case where respondent court gave its nod of approval to the findings of the court of

origin (Co vs. Court of Appeals, 193 SCRA 198; 206 [1991]);Amigo vs. Teves, 50 O.G. 5799; Regalado, Remedial LawCompendium, Fifth edition, page 353).

What exacerbates against petitioners' contention is the authority in this jurisdiction to the effect that the failure of a railroad companyto install a semaphore or at the very least, to post a flagman or watchman to warn the public of the passing train amounts tonegligence (Lilius vs. Manila Railroad Company, 59 Phil. 758 [1934]).

WHEREFORE, the petition is hereby DISMISSED and the decision of respondent court AFFIRMED.

SO ORDERED.

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