JULIAN SALGADO, PLAINTIFF AND APPELLANT, VS. SIMEON RAMOS, AS DIRECTOR OF LANDS, DEFENDANT AND APPELLEE.

This is an appeal taken by the plaintiff
Julian Salgado from the judgment of the Court of First Instance of
Manila, the dispositive part of which reads as follows:

“Wherefore, upon this latter consideration,
the defendant is absolved from the complaint in this case, without
costs. So ordered.”

In support of his appeal, the appellant assigns as the only alleged error committed by the court a quo
in its said judgment its having held that the provisions of Act No.
3083, defining the conditions under which the Government of the
Philippine Islands may be sued, are applicable to the present case.

The
following pertinent facts, which are undisputed, are necessary for the
resolution of the legal question raised in this appeal, to wit:

On June 17, 1919, the plaintiff Julian Salgado applied for and
obtained a loan in the sum of P46,500 from the funds known as the “San
Lazaro Estate Funds”, created by Act No. 2360, as amended, payable
within the period of three years, with interest thereon at 7 per cent
per annum. Said loan was secured by real estate mortgage. The
corresponding deed was executed by Basilio Salgado, in his capacity as
attorney in fact of the plaintiff Julian Salgado, as mortgagor, and by
Cayetano Lukban, in his capacity as Director of Lands, in
representation of the Government of the Philippine Islands, as
mortgagee, and it was approved by the then Secretary of Agriculture and
Natural Resources, Honorable Galicano Apacible. Inasmuch as the
plaintiff’s debt had not been fully paid upon the expiration of the
period of three years stipulated for the payment thereof, he obtained
an extension of said period from June 27, 1922. Said extension was not
recorded in any instrument. Prom June 27, 1919, to June 27, 1922, the
plaintiff had been paying the stipulated interest at 7 per cent per
annum, but from June 27, 1922, to June 1, 1928, he paid without protest
interest at 9 per cent per annum, as required by the defendant Director
of Lands, by virtue of the authority conferred upon him by the then
Secretary of Agriculture and Natural Resources (Exhibit 13). On August
4, 1933, said plaintiff Julian Salgado claimed the refund of the sum of
P3,251.15, alleging that he had paid it in excess of the original rate
of interest of 7 per cent, pursuant to said requirement, in violation
of the original contract of loan, Exhibits A and B. As the defendant
Director of Lands had not acceded to the plaintiff’s claim, the latter
brought this action without first having presented his said claim to
the Insular Auditor.

As his first proposition, the appellant contends that the present
action does not constitute a moneyed claim against the Government of
the Philippine Islands, in accordance with Act No. 3083, on the ground
that said defendant, in charging interest at 9 per cent, when the
stipulated interest was only 7 per cent, acted without legal authority
and the money so collected by him does not belong to said Government.
Therefore the Government cannot be responsible for his said act.

As stated in the statement of facts, the charging of interest at 9
per cent was authorized by the then Secretary of Agriculture and
Natural Resources. Said increase was in accordance with the regulation
promulgated by said department head (Exhibit 13), pursuant to the
authority conferred upon him by section 79 (B) of Act No. 2711, as
amended by Act No. 2803, If the Director of Lands was authorized by the
corresponding department head to increase the rate of interest, the
fact that the increase thereof to 9 per cent had been made, whether in
violation or not of the contract of loan secured by mortgage, entered
into between the plaintiff and the defendant, would not exempt the
Government of the Philippine Islands from civil responsibility for the
acts of its agent, performed within the scope of his authority. If the
charging of 9 per cent interest were illegal, the Government of the
Philippine Islands to whose coffers the money so charged went, would be
the one to refund it. Consequently, while the claim is actually made
against the Director of Lands, it is juridically against the Government
of the Philippine Islands of which the Director of Lands is a mere
agent, in accordance with the provisions of article 1727 of the Civil
Code.

As his second proposition, the plaintiff contends that the recovery
of what has been improperly paid (cobro de lo indebido), provided for
in article 1895 of the Civil Code on which he bases his claim, is not
included within the terms of section 1 of said Act No. 3083, which
reads as follows:

“SECTION 1. Subject to the provisions of this Act,
the Government of the Philippine Islands hereby consents and submits to
be sued upon any moneyed claim involving lia. bility arising from
contract, express or implied, which could serve as a basis of civil
action between private parties.”

In the case of Leung Ben vs. O’Brien (38 Phil., 182), this court
has held that quasi-contracts, as a source of obligations, as well as
those emanating from law (art. 1089, Civil Code), partake of the
juridical nature of implied contracts. However, even if this were not
so, inasmuch as the interest alleged to have been excessively charged
by the Director of Lands has been turned over to the Insular Treasury,
it cannot be restored without the consent of the Insular Government.
Consequently, the Government is a party interested in the claim, and as
such it cannot be sued without first having complied with the condition
established in the above-cited Act No. 3083, that is, without first
having presented the claim to the Insular Auditor and the latter did
not decide the same within two months from the date of its
presentation. This condition has been ratified by the Constitution of
the Philippines in providing in its Article X, section 3, that when the
aggrieved party is a private person or entity, an appeal from the
decision of the Auditor-General may be taken directly ‘to a court of
record in the manner provided by law.

For the foregoing considerations, this court is of the opinion and
so holds: (1) That the Insular Government, as principal, is the really
interested party to an action brought to recover from the Director of
Lands interest allegedly charged in excess by said official in the
performance of his duties; and (2) that the presentation of the claim
to the Insular Auditor and the disapproval thereof are indispensable
requisites for the competent courts to acquire jurisdiction over the
Government of the Philippine Islands in actions involving moneyed
claims.

Wherefore, not finding any error in the appealed judgment, it is
affirmed in all its parts, with costs to the appellant. So ordered.

Avancena, C. J., Abad Santos, Imperial, Diaz, Laurel, and Concepcion, JJ., concur.