*

G.R. No. 129406. March 6, 2006.

REPUBLIC OF THE PHILIPPINES represented b the PRESIDENTIAL COMMISSION ON GOOD

GOVERNMENT (PCGG), petitioner, . SANDIGANBAYAN (SECOND DIVISION) and ROBERTO
S. BENEDICTO, respondents.

Ce i a i; C ; Sa diga ba a ; Ce i a i ill i e l c ec e f j i dic i , e f

j dg e , h i g ha he e de ib al ffice e e ci i g j dicial a ij dicial f c i ha
ac ed i h i e ce f i hi j i dic i , i h g a e ab e f di c e i .—For sure, even if the
Sandiganbayan were wrong in its findings, which does not seem to be in this case, it is a well-settled rule of
jurisprudence that ce i a i will issue only to correct errors of jurisdiction, not errors of judgment. Corollarily,
errors of procedure or mistakes in the court’s findings and conclusions are beyond the corrective hand
of ce i a i. The extraordinary writ of ce i a i may be availed only upon a showing, in the minimum, that the
respondent tribunal or officer exercising judicial or quasi-judicial functions has acted without or in excess of its
or his jurisdiction, or with grave abuse of discretion.
G a e Ab e f Di c e i ; W d a d Ph a e ; G a e Ab e f Di c e i c e ca ici a d
hi ical e e ci e f j dg e a i e i ale e ce , a lack f j i dic i .—The term “grave abuse of
discretion” connotes capricious and whimsical exercise of judgment as is equivalent to excess, or a lack of
jurisdiction. The abuse must be so patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where the power is exer-

_______________

* SECOND DIVISION.

1 0

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Re blic . Sandiganba an (Sec nd Di i i n)

cised in an arbitrary and despotic manner by reason of passion or hostility.

C i i al La ; I i f S i ; Whe he S a e, h gh i d l a h i ed ffice , ake he
i i ia i e i a i agai a i a e a , i he eb de ce d he le el f a i a e i di id al a d h e
i elf ha e e c e clai defe e he la e a ha e agai i .—In a last-ditch attempt to escape
liability, petitioner Republic, through the PCGG, invokes state immunity from suit. As argued, the order for it to
pay the value of the delinquent shares would fix monetary liability on a government agency, thus necessitating
the appropriation of public funds to satisfy the judgment claim. But, as private respondent Benedicto correctly
countered, the PCGG fails to take stock of one of the exceptions to the state immunity principle, i.e., when the
government itself is the suitor, as in Ci il Ca e N . 0034. Where, as here, the State itself is no less the plaintiff
in the main case, immunity from suit cannot be effectively invoked. For, as jurisprudence teaches, when the
State, through its duly authorized officers, takes the initiative in a suit against a private party, it thereby
descends to the level of a private individual and thus opens itself to whatever counter-claims or defenses the
latter may have against it. Petitioner Republic’s act of filing its complaint in Ci il Ca e N . 0034 constitutes a
waiver of its immunity from suit. Being itself the plaintiff in that case, petitioner Republic cannot set up its
immunity against private respondent Benedicto’s prayers in the same case.
Sa e; Sa e; B e e i g i a C i e Ag ee e ih i ae e de Be edic , e i i e
Re blic he eb i ed i elf f i i i f i a d laced i elf i he a e le el f i ad e a .—By
entering into a Compromise Agreement with private respondent Benedicto, petitioner Republic thereby stripped
itself of its immunity from suit and placed itself in the same level of its adversary. When the State enters into
contract, through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant to
constitutional legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations
arise therefrom, the State may be sued even without its express consent, precisely because by entering into a
contract the sovereign descends to the level of the citizen. Its consent to be sued is implied from the very act of
entering into such contract, breach of which on its part gives the corresponding right to the other party to the
agreement.

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SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

D ad R. Sa ag for the administratri of the intestate estate of R. S. Benedicto.
Ba g , Pe e & Pac for PCIB.

GARCIA, J.:

Before the Court is this petition

1
for ce a under
2
Rule 65 of the Rules of Court to nullif and set
aside the March 28, 1995 and March 13, 1997 Resolutions of the Sandiganba an, Second Division,
in C Ca e N . 0034, insofar as said resolutions ordered the Presidential Commission on Good
Government (PCGG) to pa private respondent Roberto S. Benedicto or his corporations the value of
227 shares of stock of the Negros Occidental Golf and Countr Club, Inc. (NOGCCI) at P150,000.00
per share, registered in the name of said private respondent or his corporations.
The facts:
C Ca e N . 0034 entitled Re b c f he Ph e , a ff, . R be S. Be ed c , e a .,
defe da , is a complaint for reconve ance, reversion, accounting, reconstitution and damages. The
case is one of several suits involving illgotten or une plained ealth that petitioner Republic, through
the PCGG, filed ith the Sandiganba an 3against private respondent Roberto S. Benedicto and others
pursuant to E ecutive Order (EO) No. 14, series of 1986.

1 P A J R M. E , A J M C -N (
C ) R M. L , ;R , . 14-27.
2 R , . 28-43.
3 I P . C C. A
- P F E. M ,

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122 C A A D
Re blic . Sandiganba an (Sec nd Di i i n)
4
Pursuant to its mandate under EO No. 1, series of 1986, the PCGG issued rits placing under
sequestration all business enterprises, entities and other properties, real and personal, o ned or
registered in the name of private respondent Benedicto, or of corporations in hich he appeared to
have controlling or majorit interest. Among the properties thus sequestered and taken over b
PCGG fiscal agents ere the 227 shares in NOGCCI o ned b private respondent Benedicto and
registered in his name or under the names of corporations he o ned or controlled.
Follo ing the sequestration process, PCGG representatives sat as members of the Board of
Directors of NOGCCI, hich passed, sometime in October 1986, a resolution effecting a corporate
polic change. The change consisted of assessing a m hl membe hi d e of P150.00 for each
NOGCCI share. Prior to this resolution, an investor purchasing more than one NOGCCI share as
e empt from pa ing monthl membership due for the second and subsequent shares that he/she
o ned.
Subsequentl , on March 29, 1987, the NOGCCI Board passed another resolution, this time
increasing the monthl membership due from P150.00 to P250.00 for each share.
 As sequestrator of the 227 shares of stock in question, PCGG did not pa the corresponding
monthl membership due thereon totaling P2,959,471.00. On account thereof, the 227 sequestered
shares ere declared delinquent to be disposed of in an auction sale.
Apprised of the above development and evidentl to prevent the projected auction sale of the same
shares, PCGG

, , , / , , .
4 C PCGG P
P M , , .

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filed a complaint for injunction ith the Regional Trial Court (RTC) of Bacolod Cit , thereat docketed
as Civil Case No. 5348. The complaint, ho ever, as dismissed, paving the a for the auction sale
for the delinquent 227 shares of stock. On August 5, 1989, an auction sale as conducted.
On November 3, 1990, petitioner Republic and private respondent Benedicto entered into
a C m5 mi e Ag eeme in C Ca e N . 0034. The agreement contained a general release
clause hereunder petitioner Republic agreed and bound itself to lift the sequestration on the 227
NOGCCI shares, among other Benedicto s properties, petitioner Republic ackno ledging that it as
ithin private respondent Benedicto s capacit6 to acquire the same shares out of his income from
business and the e ercise of his profession. Implied in this undertaking is the recognition b
petitioner Republic that the subject shares of stock could not have been illgotten.
In a decision dated October 2, 1992, the Sandiganba an approved the Compromise Agreement and
accordingl rendered judgment in accordance ith its terms.
In the process of implementing the Compromise Agreement, either of the parties ould, from time
to time, move for a ruling b the Sandiganba an on the proper manner of implementing or
interpreting a specific provision therein. On Februar 22, 1994, Benedicto filed in C Ca e N .
0034 a M f Re ea e f Se e a a d Re f Se e e ed Sha e /D de d
pra ing, e a a, that his NOGCCI shares of stock be specificall released from sequestration and
returned, delivered or paid to him as part of the parties Compromise Agreement in that case. In a
Resolution promulgated on December 6, 1994, the Sandiganba an

5 P . II ( ).
6 P ,R , . 6.
7 R , . 127-132, A 6 C .

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Re blic . Sandiganba an (Sec nd Di i i n)

granted Benedicto s aforementioned motion but placed the subject shares under the custod of its
Clerk of Court, thus:
“WHEREFORE, in the light of the foregoing, the said “Motion for Release From Sequestration and Return of
Sequestered Shares/ Dividends” is hereby GRANTED and it is directed that said shares/ dividends be
delivered/placed under the custody of the Clerk of Court, Sandiganbayan, Manila subject to this Court’s
disposition.”
On March 28, 1995, the Sandiganba an came out ith the herein fi a ailed Re l i , hich
clarified its aforementioned December 6, 1994 Resolution and directed the immediate implementation
thereof b requiring PCGG, among other things:
(b) T deli e  to the Clerk of Court the 227 sequestered shares of [NOGCCI] registered in the name of nominees
of ROBERTO S. BENEDICTO free from all liens and encumbrances, o in defa l he eof, o a hei al e
a P150,000.00 e ha ewhich can be deducted from [the Republic’s] cash share in the Compromise
Agreement. [Words in bracket added] (Emphasis Supplied).

O ing to PCGG s failure to compl ith the above directive, Benedicto filed in C Ca e N .
0034 a M f C a ce dated Jul 25, 1995, follo ed b an E Pa e M f Ea
Re dated Februar 12, 1996. Acting thereon, the Sandiganba an promulgated et another
Resolution on Februar 23, 1996, dispositivel reading:
“WHEREFORE, finding merit in the instant motion for early resolution and considering that, indeed, the PCGG
has not shown any justifiable ground as to why it has not complied with its obligation as set forth in the Order of
December 6, 1994 up to this date and which Order was issued pursuant to the Compromise Agreement and has
already become final and executory, accordingly, the Presidential Commission on Good Government is hereby
given a final

_______________

Rollo, pp. 14-27, Anne A of he Pe i ion.

Rollo, pp. 138-139, Anne 9 of Commen .

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Re blic . Sandiganba an (Sec nd Di i i n)

extension of fifteen (15) days from receipt hereof within which to comply with the Order of December 6, 1994
as stated hereinabove.”
10
On April 1, 1996, PCGG filed a Ma fe a h M f Rec de a , pra ing for the
setting aside of the Resolution of Februar 23, 1996. On April 11, 1996, private respondent Benedicto
filed a M E f ce J dg e 11 Le . Resolving these t o motions, the Sandiganba an, in
its ec d a ailed Re l i dated March 13, 1997, denied that portion of the
PCGG s Ma fe a h M f Rec de a concerning the subject 227 NOGCCI shares
and granted Benedicto s M E f ce J dg e Le .
Hence, the Republic s present recourse on the sole issue of hether or not the public respondent
Sandiganba an, Second Division, gravel abused its discretion in holding that the PCGG is at fault
for not pa ing the membership dues on the 227 sequestered NOGCCI shares of stock, a failing hich
eventuall led to the foreclosure sale thereof.
The petition lacks merit.
To begin ith, PCGG itself does not dispute its being12 considered as a receiver insofar as the
sequestered 227 NOGCCI shares of stock are concerned. PCGG also ackno ledges that as such
receiver, 13one of its functions is to pa outstanding debts pertaining to the sequestered entit or
propert , in this case the 227 NOGCCI shares in question. It contends, ho ever, that membership
dues o ing to a golf club cannot be considered as an outstanding debt for hich PCGG, as receiver,
must pa . It also claims to have e ercised due diligence to prevent the loss through delinquenc sale
of the subject NOGCCI shares, specificall inviting attention to the

10 R , . 44-46, A C P .
11 R , . 28-43, A B P .
12 P ,R , . 7.
13 Id., . 7-8, P , Ba aan Ship a d & Enginee ing Co. . P e iden ial Commi ion on Good Go e nmen , 150
CRA 181 (1987).

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Re blic . Sandiganba an (Sec nd Di i i n)

injunctive suit, .e., Civil Case No. 5348, it filed before the RTC of Bacolod Cit to enjoin the
foreclosure sale of the shares.
The filing of the injunction complaint adverted to, ithout more, cannot plausibl tilt the balance
in favor of PCGG. To the mind of the Court, such filing is a case of acting too little and too late. It
cannot be over-emphasi ed that it behooved the PCGG s fiscal agents to preserve, like a responsible
father of the famil , the value of the shares of stock under their administration. But far from acting
as such father, hat the fiscal agents did under the premises as to allo the element of delinquenc
to set in before acting b embarking on a tedious process of going to court after the auction sale had
been announced and scheduled.
The PCGG s posture that to the o ner of the sequestered shares rests the burden of pa ing the
membership dues is untenable. For one, it lost sight of the realit that such dues are basicall
obligations attached to the shares, hich, in the final anal sis, shall be made liable, thru delinquenc
sale in case of default in pa ment of the dues. For another, the PCGG as sequestrator-receiver of such
shares is, as stressed earlier, dut -bound to preserve the value of such shares. Needless to state,
adopting timel measures to obviate the loss of those shares forms part of such dut and due
diligence.
The Sandiganba an, to be sure, cannot plausibl be faulted for finding the PCGG liable for the loss
of the 227 NOGCCI shares. There can be no quibbling, as indeed the graft court so declared in its
assailed and related resolutions respecting the NOGCCI shares of stock, that PCGG s fiscal agents,
hile sitting in the NOGCCI Board of Directors agreed to the amendment of the rule pertaining to
membership dues. Hence, it is not amiss to state, as did the Sandiganba an, that the PCGG-
designated fiscal agents, no less, had a direct hand in the loss of the sequestered shares through
delinquenc and their eventual sale through public auction. While perhaps anti-climactic to so
mention it at this stage, the unfortunate
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loss of the shares ought not to have come to pass had those fiscal agents prudentl not agreed to the
passage of the NOGCCI board resolutions charging membership dues on shares ithout pla ing
representatives.
Given the circumstances leading to the auction sale of the subject NOGCCI shares, PCGG s lament
about public respondent Sandiganba an having erred or, orse still, having gravel abused its
discretion in its determination as to ho is at fault for the loss of the shares in question can hardl be
given cogenc .
For sure, even if the Sandiganba an ere rong in its findings, hich does not seem to be in this
case, it is a ell-settled rule of jurisprudence that ce a ill issue onl to correct errors of
jurisdiction, not errors of judgment. Corollaril , errors of procedure or mistakes
14
in the court s findings
and conclusions are be ond the corrective hand of ce a . The e traordinar rit
of ce a ma be availed onl upon a sho ing, in the minimum, that the respondent tribunal or
officer e ercising judicial or quasi-judicial functions
15
has acted ithout or in e cess of its or his
jurisdiction, or ith grave abuse of discretion.
The term grave abuse of discretion connotes 16
capricious and himsical e ercise of judgment as is
equivalent to e cess, or a lack of jurisdiction. The abuse must be so patent and gross as to amount to
an evasion of a positive dut or a virtual refusal to perform a dut enjoined b la , or to act at all in
contemplation of la as1 here the po er is e ercised in an arbitrar and despotic manner b reason
of passion or hostilit . Sadl , this is completel absent in the present case. For, at bottom, the
assailed resolutions of the Sandiganba an did
 14 Lee . People, 393 CRA 397 (2002).
15 Camacho . Co e i , J ., 387 CRA 628 (2002).
16 Li on Mill , Inc. . Galleon T ade , Inc., 163 CRA 489 (1988).
17 D e o . Co of Appeal , 373 CRA 11 (2002).

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Re blic . Sandiganba an (Sec nd Di i i n)

no more than to direct PCGG to compl ith its part of the bargain under the compromise agreement
it freel entered into ith private respondent Benedicto. Simpl put, the assailed resolutions of the
Sandiganba an have firm basis in fact and in la .
Lest it be overlooked, the issue of liabilit for the shares in question had, as both public and
private respondents asserted, long become final and e ecutor . Petitioner s narration of facts in its
present petition is even misleading as it convenientl fails to make reference to t o1 (2) resolutions
issued b 1 the Sandiganba an. We refer to that court s resolutions of December 6, 1994 and Februar
23, 1996 as ell as several intervening pleadings hich served as basis for the decisions reached 20
therein. As it 21ere, the present petition questions onl and focuses on the March 28, 1995 and
March 13, 1997 resolutions, hich merel reiterated and clarified the graft court s underl ing
resolution of December 6, 1994. And to place matters in the proper perspective, PCGG s failure to
compl ith the December 6, 1994 resolution prompted the issuance of the clarificator and/or
reiterator resolutions aforementioned.
In a last-ditch attempt
22
to escape liabilit , petitioner Republic, through the PCGG, invokes state
immunit from suit. As argued, the order for it to pa the value of the delinquent shares ould fi
monetar liabilit on a government
23
agenc , thus necessitating the appropriation of public funds to
satisf the judgment claim. But, as private respondent Benedicto correctl countered, the PCGG
fails to take stock of one of the e ceptions to the state immunit principle, .e., hen the government
itself is the suitor, as in C Ca e N . 0034.

1 N #7, p a.
1 N #9, p a.
20 N #1, p a.
21 N #2, p a.
22 R ,R , . 160; M ,R , . 260-261.
23 Id., Ga cia . Chief of S aff, 16 CRA 120 (1966).

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Re blic . Sandiganba an (Sec nd Di i i n)

Where, as here, the24State itself is no less the plaintiff in the main case, immunit from suit cannot be
effectivel invoked. For, as jurisprudence teaches, hen the State, through its dul authori ed
officers, takes the initiative in a suit against a private part , it thereb descends to the level of a
private individual
25
and thus opens itself to hatever counterclaims or defenses the latter ma have
against it. Petitioner Republic s act of filing its complaint in C Ca e N . 0034 constitutes a aiver
of its immunit from suit. Being itself the plaintiff in that case, petitioner Republic cannot set up its
immunit against private respondent Benedicto s pra ers in the same case.
In fact, b entering into a Compromise Agreement ith private respondent Benedicto, petitioner
Republic thereb stripped itself of its immunit from suit and placed itself in the same level of its
adversar . When the State enters into contract, through its officers or agents, in furtherance of a
legitimate aim and purpose and pursuant to constitutional legislative authorit , hereb mutual or
reciprocal benefits accrue and rights and obligations arise therefrom, the State ma be sued even
ithout its e press consent, precisel because b entering into a contract the sovereign descends to
the level26of the citi en. Its consent to be sued is implied from the ver act of entering into such
contract, breach of hich on its part gives the corresponding right to the other part to the
agreement.
Finall , it is a to stress that the Compromise Agreement in C Ca e N . 0034 envisaged
the immediate recover of alleged ill-gotten ealth ithout further litigation b the government, and
bu ing peace on the part of the aging

24 R ,R , . 169-170.
25 F oilan . Pan O ien al Shipping Co., 95 P . 905, 912 (1954).
26 San o . San o , 92 P . 281, 284 (1952).

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130 C A A D
Re blic . Sandiganba an (Sec nd Di i i n)
2
Benedicto. Sadl , that stated objective has come to naught as not onl had the litigation
2
continued
to ensue, but, orse, private respondent Benedicto passed a a on Ma 15, 2000, ith the trial
of C Ca e N . 0034 still in
2
s ing, so much so that the late Benedicto had to be substituted b the
administratri of his estate.
WHEREFORE, the instant petition is hereb DISMISSED.
SO ORDERED.

P (Cha e ), Sa d a -G e e and C a, JJ., concur.

A c a, J., In the result.

Pe d ed.

N e . Generall , no suit ma be maintained against the State because there can be no legal
right against the authorit hich makes the la on hich the right depends, e cept hen it gives
consent hether e press or implied. (Re b c . V a , 54 SCRA 83 [1973])
Fifth class municipalit ma ors fall under the original and e clusive jurisdiction of the
Sandiganba an. (La . Sa d ga ba a , 320 SCRA 233 [1999])
To invoke the Court s po er of judicial revie under Rule 65 of the Rules of Court, it must first be
sho n that respondent tribunal, board or officer e ercising judicial or quasijudicial functions has
indeed acted ithout or in e cess of its or his jurisdiction, and that there is no appeal, or an plain,
speed and adequate remed in the ordinar course of la . (Ca ach . C e , J ., 387 SCRA
628[2002])

o0o

27 M 28, 1995 R ;R , . 20.

2 N ,R , . 210-212.
2 R , . 228.