FACTS:

Respondent spouses Vicente and Maria Cleofe Abecina are the registered owners of the subject five parcels of land located in Jose Panganiban, Camarines Norte. 

In 1993, the DOTC and Digitel entered into several Facilities Management Agreements (FMA) for Digitel to manage, operate, maintain, and develop the Regional Telecommunications Development Project (RTDP) under the National Telephone Program, Phase I, Tranche 1 (NTPI-1) facilities comprising local telephone exchange lines in various municipalities in Luzon. The FMAs were later converted into Financial Lease Agreements (FLA) in 1995.

Later on, the municipality of Jose Panganiban, Camarines Norte, donated a 1,200 sqm parcel of land to the DOTC for the implementation of the RDTP in the municipality. 

However, the municipality erroneously included portions of the respondent spouses Vicente and Maria Cleofe Abecina’s  property in the donation. Pursuant to the FLAs, Digitel constructed a telephone exchange on the property which encroached on the properties of the respondent spouses.

Upon discovery thereof, spouses Abecina required Digitel to vacate their properties and pay damages, but the latter refused, insisting that it was occupying the property of the DOTC pursuant to their FLA.

The respondent spouses thereafter sent a final demand letter to vacate the premises and to pay unpaid rent/damages in the amount of P1,200,000.00. Neither the DOTC nor Digitel complied with the demand.

The respondent spouses filed an accion publiciana complaint against the DOTC and Digitel for recovery of possession and damages. 

During the pre-trial conference, the DOTC admitted that the Abecinas were the rightful owners of the properties and invoked state immunity from suit.

On March 12, 2007, the respondent spouses and Digitel executed a Compromise Agreement and entered into a Contract of Lease. The RTC approved the Compromise Agreement.

On May 20, 2009, the RTC rendered its decision against the DOTC. It brushed aside the defense of state immunity and held that as the lawful owners of the properties, the respondent spouses enjoyed the right to use and to possess them – rights that were violated by the DOTC’s unauthorized entry, construction, and refusal to vacate. 

The RTC (1) ordered the Department – as a builder in bad faith -to forfeit the improvements and vacate the properties; and (2) awarded the spouses with P1,200,000.00 as actual damages, P200,000.00 as moral damages, and P200,000.00 as exemplary damages plus attorney’s fees and costs of suit.

On appeal, the CA affirmed the RTC’s decision but deleted the award of exemplary damages. 

Hence, the instant petition for review on certiorari.

ISSUE:

Whether or not he Department’s entry into and taking of possession of the respondents’ property amounted to an implied waiver of its governmental immunity from suit.

RULING:

We find no merit in the petition.

The State may not be sued without its consent. This fundamental doctrine stems from the principle that there can be no legal right against the authority which makes the law on which the right depends. This generally accepted principle of law has been explicitly expressed in both the 1973 and the present Constitutions.

But as the principle itself implies, the doctrine of state immunity is not absolute. The State may waive its cloak of immunity and the waiver may be made expressly or by implication.

The DOTC encroached on the respondents’ properties when it constructed the local telephone exchange in Daet, Camarines Norte. We have no doubt that when the DOTC constructed the encroaching structures and subsequently entered into the FLA with Digitel for their maintenance, it was carrying out a sovereign function. Therefore, we agree with the DOTC’s contention that these are acts jure imperii that fall within the cloak of state immunity.

However, as the respondents repeatedly pointed out, this Court has long established by jurisprudence that the doctrine of state immunity cannot serve as an instrument for perpetrating an injustice to a citizen.

The Constitution identifies the limitations to the awesome and near-limitless powers of the State. Chief among these limitations are the principles that no person shall be deprived of life, liberty, or property without due process of law and that private property shall not be taken for public use without just compensation. These limitations are enshrined in no less than the Bill of Rights that guarantees the citizen protection from abuse by the State.

Consequently, our laws require that the State’s power of eminent domain shall be exercised through expropriation proceedings in court. Whenever private property is taken for public use, it becomes the ministerial duty of the concerned office or agency to initiate expropriation proceedings. By necessary implication, the filing of a complaint for expropriation is a waiver of State immunity.

If the DOTC had correctly followed the regular procedure upon discovering that it had encroached on the respondents’ property, it would have initiated expropriation proceedings instead of insisting on its immunity from suit. 

We hold, therefore, that the Department’s entry into and taking of possession of the respondents’ property amounted to an implied waiver of its governmental immunity from suit.