Case Summary (G.R. No. 63796-97)
Key Dates and Documentary Milestones
MOU: 1994. PASI organized: 1996. Government confirmation letter (DOTC Secretary Lagdameo): 3 July 1996, confirming assignment of orbital slots 161°E and 153°E to PASI’s Agila satellites. PASI’s initial payments and commercial preparations followed. Notice of offer for orbital slot 153°E allegedly issued by respondent: December 1997. Complaint filed by PASI and De Guzman in RTC Mandaluyong: 23 January 1998. RTC issued temporary restraining order: 2 February 1998. Motion to dismiss filed by respondent: 27 February 1998. RTC denied motion to dismiss (Order dated 14 August 1998). Court of Appeals reversed the RTC (Decision dated 21 February 2000). Supreme Court decision under discussion: May 3, 2006. Applicable constitutional framework: 1987 Constitution (decision date post‑1990).
Parties’ Core Allegations and Causes of Action
PASI and De Guzman alleged that after securing government confirmation of orbital slot assignments, they proceeded with commercial preparations (loans, capital increase, payment to manufacturer). They charged respondent Lichauco with malicious acts that injured PASI’s business prospects and personal reputation of De Guzman, culminating in offering and awarding orbital slot 153°E to another party despite the prior assignment to PASI. The complaint asserted three causes of action: (1) injunction to enjoin respondent from acting in relation to orbital slot 153°E; (2) declaration of nullity of the alleged award of 153°E; and (3) damages for defamatory statements and other tortious acts, with specific monetary claims for actual, moral, exemplary damages and attorneys’ fees.
Relief Sought
For cause (1): permanent injunction against respondent’s exercise of authority over orbital slot 153°E. For cause (2): declaration nullifying the offer and award of 153°E. For cause (3): monetary compensation consisting of P10 million each as actual damages, P10 million (corporation) and P10 million (De Guzman) as moral damages, P5 million exemplary damages each, and P500,000 each for attorneys’ fees and litigation expenses.
RTC Proceedings and Ruling on Motion to Dismiss
The complaint was filed and the RTC granted a temporary restraining order. Respondent failed to timely answer and subsequently filed a Motion to Dismiss arguing (a) the suit was effectively a suit against the State (thus barred without consent), (b) failure to state a cause of action, and (c) non‑exhaustion of administrative remedies. The RTC denied the motion to dismiss (14 August 1998), finding that state immunity was a contentious issue better resolved at trial, that the complaint sufficiently alleged acts ultra vires, and that exceptions to the rule on exhaustion of administrative remedies applied because immediate injunctive relief was necessary to prevent irreparable injury.
Court of Appeals’ Reasoning and Reversal
The Court of Appeals granted respondent’s petition for certiorari and annulled the RTC order. The appellate court treated the suit as one against the State because the acts challenged (issuance of the Notice of Offer and related bidding procedures) were performed in the exercise of official duty as Undersecretary. It relied on the presumption of good faith in official acts and the general rule that officials acting within the scope of their authority are not personally liable. Citing authorities and general principles (including American jurisprudence and prior Philippine decisions), the Court concluded the complaint sought relief that implicated DOTC functions and would effectively require the State’s participation, thus falling within the doctrine of state immunity from suit.
Procedural Issue Raised on Review: Attachments in Rule 65 Petition
Petitioners argued that respondent failed to attach all relevant pleadings to her Rule 65 petition in the Court of Appeals, contrary to Section 1, Rule 65, and that the attachments were duplicate originals. Respondent countered that only certain specified documents were necessary. The Supreme Court acknowledged the significance of mandatory attachments in certiorari petitions but exercised discretion to overlook the absence of the complaint attachment. The Court recognized that, while strict compliance could warrant dismissal under Section 3, Rule 46, the higher interest of justice and the presence of weighty legal issues (state immunity, motion to dismiss requisites) justified taking cognizance of the petition despite the procedural lapse.
Legal Standard: State Immunity and Its Limits Under the 1987 Constitution
The Supreme Court applied the operative constitutional framework (1987 Constitution) affirming both the doctrine of state immunity from suit and its limitations. The Court reiterated that suits that would impose a charge or financial liability on the State—or otherwise require affirmative action or appropriation by the State to satisfy a judgment—are, in substance, suits against the State and cannot proceed without consent. Conversely, acts of public officers that are ultra vires, constituted by grave abuse of discretion or tortious/unconstitutional conduct, are not acts of the State; judicial review and civil actions against the official personally are permissible. The Constitution guarantees judicial review of government action; therefore, when an official is alleged to have acted with grave abuse of discretion, the proper party to be impleaded is the official who performed the act.
Analysis of First and Second Causes of Action (Injunction and Nullity)
The Court distinguished the nature of the first two causes, which sought nullification of the Notice of Offer and the alleged award. These remedies seek to set aside state action rather than impose monetary liability on the government. Because those prayers were limited to revocation and nullification, they did not automatically translate into a suit against the State requiring its consent. The Court emphasized that judicial review is available to nullify state action allegedly tainted with grave abuse of discretion, and that impleading the official who performed the act is proper. The Court also noted exceptions to the exhaustion doctrine applied by the RTC as justifying immediate judicial relief, given the potential for irreparable injury upon bidding and award of the orbital slot. Thus, the RTC’s denial of the motion to dismiss with respect to the first two causes of action was sustained.
Analysis of Third Cause of Action (Damages) and the
...continue readingCase Syllabus (G.R. No. 63796-97)
Court and Citation
- Supreme Court of the Philippines, Third Division.
- G.R. No. 142362.
- Reported at 522 Phil. 565.
- Decision promulgated May 03, 2006.
- Decision penned by Justice Tinga; concurrence by Justices Quisumbing (Chairman), Carpio, Carpio Morales, and Velasco, Jr.
Parties
- Petitioners/Complainants: Philippine Agila Satellite Inc. (PASI), a duly organized corporation; and Michael C. U. De Guzman, President and Chief Executive Officer of PASI.
- Respondent: Josefina Trinidad-Lichauco (hereafter “Lichauco”), identified in the complaint as Acting Secretary and formerly Undersecretary for Communications of the Department of Transportation and Communication (DOTC).
- Other defendant named in the complaint: “Unknown Awardee” allegedly the recipient of orbital slot 153°E.
Factual Background — Formation, MOU and Orbital Slots
- In 1994, a consortium of private telecommunications carriers entered into a Memorandum of Understanding (MOU) with the DOTC, through then-Secretary Jesus Garcia, concerning the planned launch of a Philippine-owned satellite. The consortium later organized as PASI (organized in 1996).
- Under the MOU:
- The satellite launch was intended as a private-sector endeavor and the satellite to be owned by the Filipino-owned consortium/PASI.
- The consortium would grant the Philippine government one (1) transponder free of charge for exclusive non-commercial use and a right of first refusal to another transponder if available.
- The DOTC (on behalf of the Philippine government) was tasked to secure from the International Telecommunication Union (ITU) the required orbital slot(s) and frequency assignment(s) for the Philippine satellite.
- Government and PASI coordinated with the ITU to secure two (2) orbital slots: 161°E and 153°E.
- On 28 June 1996, PASI wrote then-DOTC Secretary Amado S. Lagdameo, Jr., seeking official Philippine government confirmation that orbital slots 161°E and 153°E were assigned to PASI (for the Agila satellites).
- Secretary Lagdameo replied on 3 July 1996 confirming "the Philippine Government's assignment of Philippine orbital slots 161E and 153E to [PASI] for its [Agila] satellites."
- PASI proceeded with preparations for launch, operation and management of its satellites, including securing loans, increasing capital, negotiating with business partners, and making an initial payment of US$3.5 Million to a French satellite manufacturer.
- The assignment of 161°E was subsequently affirmed and formally effected through a Transponder Agreement dated 16 June 1997.
Allegations Against Lichauco and the Timing of the Dispute
- Petitioners aver that Lichauco, while Undersecretary for Communications, engaged in acts aimed at maligning Michael de Guzman’s reputation and sabotaging PASI’s business.
- Specific conduct alleged to have culminated in December 1997:
- Lichauco purportedly offered orbital slot 153°E for bidding in December 1997 despite prior DOTC assignment to PASI.
- PASI later claimed the slot was awarded to an entity unknown to it (the “Unknown Awardee”).
- The complaint against Lichauco and the Unknown Awardee was filed on 23 January 1998.
Causes of Action and Principal Allegations in the Complaint
- The complaint asserted three (3) causes of action: (1) injunction; (2) declaration of nullity of award; and (3) damages.
- First cause (injunction):
- Sought to enjoin award of orbital slot 153°E on the basis of prior DOTC assignment to PASI.
- Second cause (declaration of nullity):
- Sought declaration that the award to the Unknown Awardee was null and void, alleging Lichauco acted beyond her authority.
- Third cause (damages) — tortious and reputational acts alleged against Lichauco include:
- (a) On 4 December 1996, at a PASI Board meeting, Lichauco allegedly made disparaging and defamatory comments against Michael de Guzman, prompting internal efforts to remove him.
- (b) On 5 December 1996, Lichauco allegedly wrote Jesli Lapuz denying DOTC had assigned both orbital slots to PASI, asserting only 161°E was assigned and 153°E was not; she also allegedly branded as false PASI’s claim that "Agila" was a registered corporate name—petition attaches a copy as Annex E.
- (c) In October 1997, Lichauco allegedly made defamatory remarks against petitioners at a telecommunications forum in Makati City before public officials and business executives.
- (d) She allegedly told petitioners she had asked President Fidel V. Ramos to sue Michael de Guzman and threatened to prevent PASI’s use of the name "Agila."
- (e) She allegedly asserted PASI would never pay its contractors.
- (f) In December 1997 she allegedly offered orbital slot 153°E to interested applicants without notice to PASI in violation of DOTC’s earlier assignment; a copy of the notice of offer is attached as Annex F.
- Petitioners averred they learned of these acts after 153°E was offered and allegedly awarded to the Unknown Awardee.
Reliefs and Damages Sought
- Prayer for relief after trial included:
- (a) On first cause: make permanent the preliminary injunction.
- (b) On second cause: declare offer and award of orbital slot 153°E to Unknown Awardee null and void.
- (c) On third cause (damages): order Lichauco to pay:
- P10,000,000 each to the plaintiffs as actual damages;
- P10,000,000 to plaintiff corporation as moral damages;
- P10,000,000 to plaintiff De Guzman as moral damages;
- P5,000,000 each to plaintiffs as exemplary damages;
- P500,000 each to plaintiffs as attorney’s fees and litigation expenses.
Trial Court Proceedings (RTC, Mandaluyong City, Branch 214)
- Complaint filed in the Regional Trial Court (RTC) of Mandaluyong City; raffled to Branch 214.
- On 2 February 1998 the RTC issued a temporary restraining order against Lichauco.
- Lichauco received summons and complaint on 28 January 1998.
- Lichauco failed to file an answer within the reglementary period; eight (8) days after the lapse she filed a Manifestation and Motion asking for a new five (5)-day period, until 25 February 1998, to file a responsive pleading.
- Instead she filed a Motion to Admit with an attached Motion to Dismiss on 27 February 1998.
- Grounds in the Motion to Dismiss included:
- The suit is a suit against the State (State immunity) and the State cannot be sued without consent.
- The complaint failed to state a cause of action.
- Petitioners failed to exhaust administrative remedies, e.g., to seek recourse with the Office of the President.
- On 14 August 1998, the RTC (Judge Edwin D. Sorongon) denied the Motion to Dismiss.
- RTC characterized state immunity defense as a contentious issue unsuitable for resolution on mere pleadings and better determined after full litigation.
- RTC found allegations sufficiently presented an ultra vires act by Lichauco and that she was being sued in her personal capacity.
- RTC applied exceptions to non-exhaustion of administrative remedies where failure to exhaust would cause great and irreparable damage or would not provide a plain, speedy and adequate remedy, and found urgent injunctive relief appropriate given the bidding and award of 153°E.
Court of Appeals Petition and Decision
- Lichauco filed a Petition for Certiorari under Rule 65 before the Court of Appeals, assailing the RTC’s denial of her Motion to Dismiss.
- The Court of Appeals (Decision dated 21 February 2000) nullified the RTC order and sustained dismissal on the ground that the complaint constituted a suit against the State.
- Key elements of the Court of Appeals’ reasoning:
- Lichauco’s issuance of the Notice of Offer was in the exercise of an official duty and thus an official act.
- Cited the enumerated powers and duties of an Undersecretary (SEC. 10) — advising and assisting the Secretary, overseeing operational activities, coordinating programs and projects, being responsible for economical, efficient and effective administration — to conclude the Notice of Offer was within her official functions.
- Concluded the Noti