Fontanilla v.

MaliamanREAD the qualifications of entities having immunity from suits per case

UNITED STATES OF AMERICA vs. HON. LUIS R. REYES

1) (This) action is in effect a suit against the United States of America, a foreign sovereign immune from
suit without its consent for the cause of action pleaded in the complaint

Nelia T. Montoya, an American citizen employed as an identification checker at the U.S. Navy Exchange
(NEX) at the Joint United States Military Assistance Group (JUSMAG) headquarters in Quezon City, filed a
complaint against Maxine Bradford, also an American citizen working as a manager at JUSMAG
Headquarter’s activity exchange, for damages due to the oppressive and discriminatory acts committed
by the latter in excess of her authority as store manager of the NEX JUSMAG. This was due to the
incident on January 22, 1987 when Bradford searched Montoya’s body and belongings while the latter
was already in the parking area after buying some items NEX JUSMAG’s retail store, where she had
purchasing privileges. To support the motion, the petitioners claimed that checking of purchases is a
routine procedure observed at base retail outlets to protect and safeguard merchandise, cash, and
equipment pursuant to paragraphs 2 and 4(b) of NAVRESALEACT SUBIC INST. 5500.1. 7. Therefore,
Bradford’s order to check all employee purchases was done in the exercise of her duties as Manager of
the NEX-JUSMAG.

the petitioners claimed that JUSMAG, composed of an Army, Navy and Air Group, had been established
under the Philippine-United States Military Assistance Agreement entered into on 21 March 1947 to
implement the United States' program of rendering military assistance to the Philippines. Its
headquarters in Quezon City is considered a temporary installation under the provisions of Article XXI of
the Military Bases Agreement of 1947. Thereunder, "it is mutually agreed that the United States shall
have the rights, power and authority within the bases which are necessary for the establishment, use
and operation and defense thereof or appropriate for the control thereof." The 1979 amendment of the
Military Bases Agreement made it clear that the United States shall have "the use of certain facilities and
areas within the bases and shall have effective command and control over such facilities and over United
States personnel, employees, equipment and material." JUSMAG maintains, at its Quezon City
headquarters, a Navy Exchange referred to as the NEX-JUSMAG. Checking of purchases at the NEX is a
routine procedure observed at base retail outlets to protect and safeguard merchandise, cash and
equipment pursuant to paragraphs 2 and 4(b) of NAVRESALEACT SUBIC INST. 5500.1.7 Thus, Bradford's
order to have purchases of all employees checked on January 1987 was made in the exercise of her
duties as Manager of the NEX-JUSMAG.

They further claimed that the Navy Exchange (NAVEX), an instrumentality of the U.S. Government, is
considered essential for the performance of governmental functions. Its mission is to provide a
convenient and reliable source, at the lowest practicable cost, of articles and services required for the
well-being of Navy personnel, and of funds to be used for the latter's welfare and recreation
Montoya's complaint, relating as it does to the mission, functions and responsibilities of a unit of the
United States Navy, cannot then be allowed. To do so would constitute a violation of the military bases
agreement. Moreover, the rights, powers and authority granted by the Philippine government to the
United States within the U.S. installations would be illusory and academic unless the latter has effective
command and control over such facilities and over American personnel, employees, equipment and
material. Such rights, power and authority within the bases can only be exercised by the United States
through the officers and officials of its armed forces, such as Bradford. Baer vs. Tizon8 and United
States of America vs. Ruiz9 were invoked to support these claims.

Issue: The kernel issue presented in this case is whether or not the trial court committed grave abuse
of discretion in denying the motion to dismiss based on the following grounds:

(a) the complaint in Civil Case No. 224-87 is in effect a suit against the public petitioner, a foreign
sovereign immune from suit which has not given consent to such suit and (b) Bradford is immune from
suit for acts done by her in the performance of her official functions as manager of the U.S. Navy
Exchange of JUSMAG pursuant to the Philippines-United States Military Assistance Agreement of 1947
and the Military Bases Agreement of 1947, as amended.

The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs. Court of Appeals,
40 thus:

I. The rule that a state may not be sued without its consent, now expressed in Article XVI Section 3, of
the 1987 Constitution, is one of the generally accepted principles of international law that we have
adopted as part of the law of our land under Article II, Section 2. This latter provision merely reiterates a
policy earlier embodied in the 1935 and 1973 Constitutions and also intended to manifest our resolve to
abide by the rules of the international community. 41

While the doctrine appears to prohibit only suits against the state without its consent, it is also
applicable to complaints filed against officials of the state for acts allegedly performed by them in the
discharge of their duties. The rule is that if the judgment against such officials will require the state
itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount
needed to pay the damages awarded against them, the suit must be regarded as against the state
itself although it has not been formally impleaded.

(how to determine whether a suit is a suit against a state)

It must be noted, however, that the rule is not so all-encompassing as to be applicable under all
circumstances.

It is a different matter where the public official is made to account in his capacity as such for acts
contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar in
Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al. 43 "Inasmuch as the State
authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not
acts of the State, and an action against the officials or officers by one whose rights have been invaded
or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of
immunity of the State from suit.

In the same tenor, it has been said that an action at law or suit in equity against a State officer or the
director of a State department on the ground that, while claiming to act for the State, he violates or
invades the personal and property rights of the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its consent." The rationale for this
ruling is that the doctrinaire of state immunity cannot be used as an instrument for perpetrating an
injustice.

They state that the doctrine of immunity from suit will not apply and may not be invoked where the
public official is being sued in his private and personal capacity as an ordinary citizen. The cloak of
protection afforded the officers and agents of the government is removed the moment they are sued
in their individual capacity. This situation usually arises where the public official acts without authority
or in excess of the powers vested in him. It is a well-settled principle of law that a public official may
be liable in his personal private capacity for whatever damage he may have caused by his act done

with malice and in bad faith, or beyond the scope of his authority or jurisdiction.

Since it is apparent from the complaint that Bradford was sued in her private or personal capacity for
acts allegedly done beyond the scope and even beyond her place of official functions, said complaint is
not then vulnerable to a motion to dismiss

WHEREFORE, the instant petition is DENIED for lack of merit. The Temporary Restraining Order of 7
December 1987 is hereby LIFTED. (PETITION TO DISMISS IS DENIED, NO ANSWER IS FILED THEREFORE
AUTHORITY TO CONDUCT THE ACT WAS NEVER PROVEN BY PETITIONERS AS IT WAS DEEMED
HYPOTHETICALLY ADMITTED) he acts complained of were committed by Bradford not only outside the
scope of her authority — or more specifically, in her private capacity — but also outside the territory
where she exercises such authority, that is, outside the NEX-JUSMAG — particularly, at the parking
area which has not been shown to form part of the facility of which she was the manager.

HOLY SEE VS. ROSARIO

Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is
represented in the Philippines by the Papal Nuncio; Private respondent, Starbright Sales Enterprises,
Inc., is a domestic corporation engaged in the real estate business.
This petition arose from a controversy over a parcel of land consisting of 6,000 square meters located
in the Municipality of Paranaque registered in the name of petitioner. Said lot was contiguous with
two other lots registered in the name of the Philippine Realty Corporation (PRC).

The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the
sellers. Later, Licup assigned his rights to the sale to private respondent.

In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as
to who of the parties has the responsibility of evicting and clearing the land of squatters. Complicating
the relations of the parties was the sale by petitioner of Lot 5-A to Tropicana Properties and
Development Corporation (Tropicana).

private respondent filed a complaint with the Regional Trial Court, Branch 61, Makati, Metro Manila
for annulment of the sale of the three parcels of land, and specific performance and damages against
petitioner, represented by the Papal Nuncio, and three other defendants: namely, Msgr. Domingo A.
Cirilos, Jr., the PRC and Tropicana

petitioner and Msgr. Cirilos separately moved to dismiss the complaint — petitioner for lack of
jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an improper party. An
opposition to the motion was filed by private respondent.

the trial court issued an order denying, among others, petitioner’s motion to dismiss after finding that
petitioner “shed off [its] sovereign immunity by entering into the business contract in question”
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of
sovereign immunity only on its own behalf and on behalf of its official representative, the Papal
Nuncio

petitioner and Msgr. Cirilos separately moved to dismiss the complaint — petitioner for lack of
jurisdiction based on sovereign immunity from suit

the trial court issued an order denying, among others, petitioner's motion to dismiss after finding that
petitioner "shed off [its] sovereign immunity by entering into the business contract in question"

arguments: The burden of the petition is that respondent trial court has no jurisdiction over petitioner,
being a foreign state enjoying sovereign immunity. On the other hand, private respondent insists that
the doctrine of non-suability is not anymore absolute and that petitioner has divested itself of such a
cloak when, of its own free will, it entered into a commercial transaction for the sale of a parcel of
land located in the Philippines.

The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy
See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine
government since 1957 (Rollo, p. 87). This appears to be the universal practice in international
relations.
There are two conflicting concepts of sovereign immunity, each widely held and firmly established.
According to the classical or absolute theory, a sovereign cannot, without its consent, be made a
respondent in the courts of another sovereign. According to the newer or restrictive theory, the
immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state,
but not with regard to private acts or acts jure gestionis

summary of restrictive theory:

juri imperii - public acts of a sovereign state or acts in pursuit of a sovereign activity. Cannot be sued. It
is an act which is not commercial in nature or when a state is not engaged in a regular business or
trade. In such case the principle of immunity from suits applay

juri gestionis - private acts of a sovereign state. purpose of the act is for profit. It is an act considered
as a commercial act and not a government act. Effect: the state who enteres into such kinds of
contract impliesly divests its sovereign immunity from suits.

In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate
business, surely the said transaction can be categorized as an act jure gestionis. However, petitioner
has denied that the acquisition and subsequent disposal of Lot 5-A were made for profit but claimed
that it acquired said property for the site of its mission or the Apostolic Nunciature in the Philippines.
Private respondent failed to dispute said claim.

Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was
made not for commercial purpose, but for the use of petitioner to construct thereon the official place
of residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or personal,
in a receiving state, necessary for the creation and maintenance of its diplomatic mission, is
recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22).

The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a
governmental character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose
off the same because the squatters living thereon made it almost impossible for petitioner to use it for
the purpose of the donation. The fact that squatters have occupied and are still occupying the lot, and
that they stubbornly refuse to leave the premises, has been admitted by private respondent in its
complaint

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT (SEAFDEC-AQD)

vs. NLRC

FACTS: SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries

Development Center, organized through an agreement in 1967 by the governments of Malaysia,
Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country.
Juvenal Lazaga was employed as a Research Associate on a probationary basis by SEAFDEC-AQD.
Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to Lazaga informing him
that due to the financial constraints being experienced by the department, his services shall be
terminated. SEAFDEC-AQD's failure to pay Lazaga his separation pay forced him to file a case with the
NLRC. The Labor Arbiter and NLRC ruled in favor of Lazaga.

Thus SEAFDEC-AQD appealed, claiming that the NLRC has no jurisdiction over the case since it is immune
from suit owing to its international character and the complaint is in effect a suit against the State which
cannot be maintained without its consent.

Issue: whether the NLRC has jurisdiction over SEAFDEC?

Ruling: No. Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department

(SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent NLRC.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional
independence and freedom from control of the state in whose territory its office is located.

Permanent international commissions and administrative bodies have been created by the agreement of
a considerable number of States for a variety of international purposes, economic or social and mainly
non-political.

In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical
personality independent of the municipal law of the State where they are situated. As such, according to
one leading authority "they must be deemed to possess a species of international personality of their
own."

One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that
it is immune from the legal writs and processes issued by the tribunals of the country where it is found.
(See Jenks, Id., pp. 37-44) The obvious reason for this is that the subjection of such an organization to
the authority of the local courts would afford a convenient medium thru which the host government
may interfere in there operations or even influence or control its policies and decisions of the
organization; besides, such subjection to local jurisdiction would impair the capacity of such body to
discharge its responsibilities impartially on behalf of its member-states.
ERNESTO L. CALLADO, petitioner, vs. INTERNATIONAL RICE RESEARCH INSTITUTE

IRRI (International Institute)

Ernesto Callado, petitioner, was employed as a driver at the IRRI from April 11, 1983 to December 14,
1990. On February 11, 1990, while driving an IRRI vehicle on an official trip to the Ninoy Aquino
International Airport and back to the IRRI, petitioner figured in an accident.

IRRI issued a Notice of Termination to petitioner

petitioner filed a complaint on December 19, 1990 before the Labor Arbiter for illegal dismissal, illegal
suspension and indemnity pay with moral and exemplary damages and attorney's fees.

private respondent IRRI, through counsel, wrote the Labor Arbiter to inform him that the Institute enjoys
immunity from legal process by virtue of Article 3 of Presidential Decree No. 1620, and that it invokes
such diplomatic immunity (is there a need to invoke diplomatic immunity in order to enjoy such
privilege?) and privileges as an international organization in the instant case filed by petitioner, not
having waived the same.

While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an Order issued by the
Institute on August 13, 1991 to the effect that "in all cases of termination, respondent IRRI waives its
immunity," and, accordingly, considered the defense of immunity no longer a legal obstacle in resolving
the case.

The NLRC found merit in private respondent' s appeal and, finding that IRRI did not waive its immunity,
ordered the aforesaid decision of the Labor Arbiter set aside and the complaint dismissed.

Hence, this petition where it is contended that the immunity of the IRRI as an international organization
granted by Article 3 of Presidential Decree No. 1620 may not be invoked in the case at bench inasmuch
as it waived the same by virtue of its Memorandum on "Guidelines on the handling of dismissed
employees in relation to P.D. 1620.

the questioned provision: If the plaintiff's attorney or the arbiter, asks if IRRI will waive its immunity we
may reply that the Institute will be happy to do so, as it has in the past in the formal manner required
thereby reaffirming our commitment to abide by the laws of the Philippines and our full faith in the
integrity and impartially of the legal system.

Presidential Decree No. 1620, Article 3 provides:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and
administrative proceedings, except insofar as that immunity has been expressly waived by the Director-
General of the Institute or his authorized representatives.
It is a recognized principle of international law and under our system of separation of powers that
diplomatic immunity is essentially a political question and courts should refuse to look beyond a
determination by the executive branch of the government, and where the plea of diplomatic immunity is
recognized and affirmed by the executive branch of the government as in the case at bar, it is then the
duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law
officer of the government . . . or other officer acting under his direction. Hence, in adherence to the
settled principle that courts may not so exercise their jurisdiction . . . as to embarass the executive arm
of the government in conducting foreign relations, it is accepted doctrine that in such cases the judicial
department of (this) government follows the action of the political branch and will not embarrass the
latter by assuming an antagonistic jurisdiction.

The grant of immunity from local jurisdiction to . . . and IRRI is clearly necessitated by their international
character and respective purposes. The objective is to avoid the danger of partiality and interference by
the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in
these instances would defeat the very purpose of immunity, which is to shield the affairs of international
organizations, in accordance with international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and to ensure the unhampered the
performance of their functions.

The grant of immunity to IRRI is clear and unequivocal and an express waiver by its Director-General is
the only way by which it may relinquish or abandon this immunity.

On the matter of waiving its immunity from suit, IRRI had, early on, made its position clear. Through
counsel, the Institute wrote the Labor Arbiter categorically informing him that the Institute will not waive
its diplomatic immunity.

Also petitioners relience on the memorandum is misplaced as the word used in the memo is may and
not shall, indicating that the waiver is discretionary on the part of IRRI. especially since the memo was
issued by a former Director-General. At the very least, the express declaration of the incumbent Director-
general supersedes the 1983 memo and should be accorded greater respect.

To summarize, diplomatic immunity was expressedly invoked by IRRI. There was no waiver on its part as
the memo shows that in termination proceedings, IRRI may waive its diplomatic immunity, indicating
that such is merely discretionary on its part.

DFA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION

On 27 January 1993, private respondent Magnayi filed an illegal dismissal case against Asian
Development Bank. Two summonses were served, one sent directly to the ADB and the other through
the Department of Foreign Affairs. ADB and the DFA notified respondent Labor Arbiter that the ADB, as
well as its President and Officers, were covered by an immunity from legal process except for
borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement
Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44 of the
Agreement Between The Bank and The Government Of The Philippines Regarding The Bank's
Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its
diplomatic immunity from suit and, in time, rendered a decision in favor Magnayi. The ADB did not
appeal the decision. Instead, on 03 November 1993, the DFA referred the matter to the NLRC; in its
referral, the DFA sought a "formal vacation of the void judgment." When DFA failed to obtain a favorable
decision from the NLRC, it filed a petition for certiorari.

Issues:

1. Whether or not ADB is immune from suit

2. Whether or not by entering into service contracts with different private companies, ADB has
descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of its
immunity from suit

3. Whether or not the DFA has the legal standing to file the present petition

Held:

1. Under the Charter and Headquarters Agreement, the ADB enjoys immunity from legal process of
every form, except in the specified cases of borrowing and guarantee operations, as well as the
purchase, sale and underwriting of securities. The Bank’s officers, on their part, enjoy immunity in
respect of all acts performed by them in their official capacity. The Charter and the Headquarters
Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily
assumed by the Philippine government which must be respected.

Being an international organization that has been extended a diplomatic status, the ADB is independent
of the municipal law. "One of the basic immunities of an international organization is immunity from
local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the
country where it is found. The obvious reason for this is that the subjection of such an organization to
the authority of the local courts would afford a convenient medium thru which the host government
may interfere in their operations or even influence or control its policies and decisions of the
organization; besides, such subjection to local jurisdiction would impair the capacity of such body to
discharge its responsibilities impartially on behalf of its member-states."

2. No. The ADB didn't descend to the level of an ordinary party to a commercial transaction, which
should have constituted a waiver of its immunity from suit, by entering into service contracts with
different private companies. “There are two conflicting concepts of sovereign immunity, each widely
held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its
consent, be made a respondent in the Courts of another sovereign. According to the newer or restrictive
theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of
a state, but not with regard to private act or acts jure gestionis.

“Certainly, the mere entering into a contract by a foreign state with a private party cannot be the
ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign
state is engaged in the activity in the regular course of business. If the foreign state is not engaged
regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially
when it is not undertaken for gain or profit.”

The service contracts referred to by private respondent have not been intended by the ADB for profit or
gain but are official acts over which a waiver of immunity would not attach.

3. How international organizations plead immunity from suit:

In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic
immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the
court that said defendant is entitled to immunity.

In the Philippines, the practice is for the foreign government or the international organization to first
secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the
Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic
Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter
directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer
could not be sued because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48
SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer vs.
Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval Base at Olongapo City,
Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a
manifestation and memorandum as amicus curiae.

In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with
this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to
file its memorandum in support of petitioner's claim of sovereign immunity.

In some cases, the defense of sovereign immunity was submitted directly to the local courts by the
respondents through their private counsels (Raquiza vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs.
Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America vs. Guinto, 182 SCRA 644
[1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can
in quire into the facts and make their own determination as to the nature of the acts and transactions
involved.
In summary: If an international organization wishes to plead dimplomatic immunity from suits in the
Philippines, it must first secure an executive endorsement from the Department of foreign affairs. After
which, the latter shall convey such endorsement to the courts.

In some instances, the international organization may bypass the first part and directly submit its
defense of diplomatic immunity with the courts. In such cases, the courts shall inquire into the facts and
make their own determination as to the nature of the acts and transactions involved whether it is a
public or private act.

In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with
this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to
file its memorandum in support of petitioner's claim of sovereign immunity.

Municipality of San Fernando vs. Firme (municipal corporation)

Facts: A passenger jeepney, a sand truck and a dump truck of the Municipality of San Fernando, La Union
collided. Due to the impact, several passengers of the jeepney including Laureano Baniña Sr. died. The
heirs of Baniña filed a complaint for damages against the owner and driver of the jeepney, who, in turn,
filed a Third Party Complaint against the Municipality and its dump truck driver, Alfredo Bislig.
Municipality filed its answer and raised the defense of non-suability of the State. After trial, the court
ruled in favor of the plaintiffs and ordered Municipality and Bislig to pay jointly and severally the heirs of
Baniña.

1. Are municipal corporations suable?

Yes (charter)

2. Is the Municipality liable for the torts committed by its employee who was then engaged in the
discharge of governmental functions?

Ruling:

the State may not be sued without its consent.

Consent takes the form of express or implied consent.

Express:

Express consent may be embodied in a general law or a special law. The standing consent of the State to
be sued in case of money claims involving liability arising from contracts is found in Act No. 3083. A
special law may be passed to enable a person to sue the government for an alleged quasi-delict

Implied:
Consent is implied when the government enters into business contracts, thereby descending to the level
of the other contracting party, and also when the State files a complaint, thus opening itself to a
counterclaim.

Rules to take note:

gen rule: Municipal corporations, for example, like provinces and cities, are agencies of the State when
they are engaged in governmental functions and therefore should enjoy the sovereign immunity from
suit.

xpn: Nevertheless, they are subject to suit even in the performance of such functions because their
charter provided that they can sue and be sued.

xpn to xpn: they are generally not liable for torts committed by them in the discharge of governmental
functions and can be held answerable only if it can be shown that they were acting in a proprietary
capacity. (RULING WHY SAN FERNANDO LA UNION CANNOT BE SUED)

In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way to the
Naguilian river to get a load of sand and gravel for the repair of San Fernando's municipal streets." (Rollo,
p. 29.)

In the absence of any evidence to the contrary, the regularity of the performance of official duty is
presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule that the
driver of the dump truck was performing duties or tasks pertaining to his office.

In summary: Which means that La union, a municipal corporation, cannot be sued because although it's
charter provides that it can sue and be sued, it cannot be sued in this case because the act committed
was a tortuous act. A municipal corporation can only be sued due to tort if it can be shown that it was
acting in its proprietary function. However, in this case, the driver was acting in its governmental
function as no evidence to the contrary was presented. In the absence of such evidence, the regularity of
the performance of official duty by the driver is presumed.

A distinction should first be made between suability and liability.

"Suability depends on the consent of the state to be sued, liability on the applicable law and the
established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on
the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded
by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable."

* The respondent judge did not commit grave abuse of discretion when in the exercise of its judgment it
arbitrarily failed to resolve the vital issue of non-suability of the State in the guise of the municipality.
However, said judge acted in excess of his jurisdiction when in his decision dated October 10, 1979 he
held the municipality liable for the quasi-delict committed by its regular employee.

(in other words, there was no grave abuse of discretion when the judge deffered judgment on the non-
suability of the state but there is excess of jurisdiction when the judge ruled on the issue of liability.)
Why?

A state can never be held liable if it did not consent to be sued.

Farolan vs. Court of Tax Appeals (government bureau)

On January 30, 1972, the vessel S/S "Pacific Hawk" arrived at the Port of Manila carrying, among others,
80 bales of screen net consigned to Bagong Buhay Trading (Bagong Buhay).

Said importation was declared through a customs broker which was classified under Tariff Heading No.
39.06-B of the Tariff and Customs Code at 35% ad valorem.

Acting on the strength of an information that the shipment consisted of "mosquito net" made of nylon,
the Office of the Collector of Customs ordered a re-examination of the shipment which revealed that the
shipment consisted of 80 bales of screen net, each bale containing 20 rolls or a total of 1,600 rolls.

The value of the shipment was re-appraised.

Furthermore, the Collector of Customs determined the subject shipment as made of synthetic
(polyethylene) woven fabric classifiable under Tariff Heading No. 51.04-B at 100% ad valorem.

Thus, Bagong Buhay Trading was assessed P272,600.00 as duties and taxes due on the shipment in
question.

Since the shipment was also misdeclared as to quantity and value, the Collector of Customs forfeited the
subject shipment in favor of the government which was also affirmed by the Commissioner of Customs.

However, the Court of Tax Appeals reversed the decision of the Commissioner.

On August 20, 1976, private respondent filed a petition asking for the release of the questioned goods.
Consequently, on July 26, 1986, private respondent posted a cash bond of P149,443.36 to secure the
release of 64 bales out of the 80 bales originally delivered on January 30, 1972. Sixteen bales remain
missing. Consequently, private respondent demands that the Bureau of Customs be ordered to pay for
damages for the 43,050 yards it actually lost.

Issue: whether or not the Collector of Customs may be held liable for the 43,050 yards actually lost by
private respondent.

Ruling: the Bureau of Customs cannot be held liable for actual damages that the private respondent
sustained with regard to its goods. Otherwise, to permit private respondent's claim to prosper would
violate the doctrine of sovereign immunity. Since it demands that the Commissioner of Customs be
ordered to pay for actual damages it sustained, for which ultimately liability will fall on the government,
it is obvious that this case has been converted technically into a suit against the state.

Note: how to determine whether a suit is a suit against a state? If the state is required to perform a
positive act as a consequence of the liability, like in this case where if the commissioner of customs is
ordered to pay actual damages, the ultimate liability to pay such damages will fall upon the state.

On this point, the political doctrine that "the state may not be sued without its consent," categorically
applies. As an unincorporated government agency without any separate juridical personality of its own,
the Bureau of Customs enjoys immunity from suit. Along with the Bureau of Internal Revenue, it is
invested with an inherent power of sovereignty, namely, taxation. As an agency, the Bureau of Customs
performs the governmental function of collecting revenues which is definitely not a proprietary
function. Thus, private respondent's claim for damages against the Commissioner of Customs must fail.

CITY OF ANGELES VS CA, TIMOG SILANGAN DEVELOPMENT CORPORATION (Public Officials - with bad
faith)

In a Deed of Donation , private respondent donated to the City of Angeles, 51 parcels of land situated
inBarrio Pampang, City of Angeles (50,676 sq m). The amended deed provides that: “ The
propertiesdonated shall be devoted and utilized solely for the site of the Angeles City Sports Center. Any
changeor modification in the basic design or concept of said Sports Center must have the prior written
consentof the DONOR. The properties donated are devoted and described as ‘open spaces’ of the
DONOR’ssubdivision, and to this effect, the DONEE, upon acceptance of this donation, releases the
DONORand/or assumes any and all obligations and liabilities appertaining to the properties donated.On
1988, petitioners started the construction of a drug rehabilitation center on a portion of the
donatedland. Upon learning thereof, private respondent protested such action for being violative of the
termsand conditions and also offered another site for the rehabilitation center. However,
petitionersrejected the alternative because the site was too isolated and had no electric and water
facilities. Privaterespondent filed a complaint for breach of the conditions imposed in the amended deed
of donationand seeking the revocation of the donation.Petitioners admitted the commencement of the
construction but alleged that the conditions imposed inthe amended deed were contrary to Municipal
Ordinance No. 1, Series of 1962, otherwise known as theSubdivision Ordinance of the Municipality of
Angeles.

Ruling why the construction of the drug rehabilitation center should be removed:

In the case at bar, one of the conditions imposed in the Amended Deed of Donation is that the donee
should build a sports complex on the donated land. Since P.D. 1216 clearly requires that the 3.5% to 9%
of the gross area alloted for parks and playgrounds is "non-buildable", then the obvious question arises
whether or not such condition was validly imposed and is binding on the donee. It is clear that the "non-
buildable" character applies only to the 3.5% to 9% area set by law. If there is any excess land over and
above the 3.5% to 9% required by the decree, which is also used or allocated for parks, playgrounds and
recreational purposes, it is obvious that such excess area is not covered by the non-buildability
restriction.

Since the donated land constitutes only a little more than 5% of the gross area of the subdivision, which
is less than the area required to be allocated for non-buildable open space, therefore there is no "excess
land" to speak of. This then means that the condition to build a sports complex on the donated land is
contrary to law and should be considered as not imposed.

Ruling on immunity:

Inasmuch as the construction and operation of the drug rehabilitation center has been established to
law, the said center should be removed or demolished. At this juncture, we hasten to add that this Court
is and has always been four-square behind the government's efforts to eradicate the drug scourge in this
country. But the end never justifies the means, and however laudable the purpose of the construction in
question, this Court cannot and will not countenance an outright and continuing violation of the laws of
the land, especially when committed by public officials.

In theory, the cost of such demolition, and the reimbursement of the public funds expended in the
construction thereof, should be borne by the officials of the City Angeles who ordered and directed
such construction. This Court has time and again ruled that public officials are not immune from
damages in their personal capacities arising from acts done in bad faith.

Otherwise stated, a public official may be liable in his personal capacity for whatever damage he may
have caused by his act done with malice and in bad faith or beyond the scope of his authority or
jurisdiction. 20 In the instant case, the public officials concerned deliberately violated the law and
persisted in their violations, going so far as attempting to deceive the courts by their pretended change
of purpose and usage for the enter, and "making a mockery of the judicial system". Indisputably, said
public officials acted beyond the scope of their authority and jurisdiction and with evident bad faith.

However, as noted by the trial court 2, the petitioners mayor and members of the Sangguniang
Panlungsod of Angeles City were sued only in their official capacities, hence, they could not be held
personally liable without first giving them their day in court. Prevailing jurisprudence holding that public
officials are personally liable for damages arising from illegal acts done in bad faith are premised on said
officials having been sued both in their official and personal capacities.

In summary: public officials may be sued in their personal capacity if they performed acts which was
done with malice or in bad faith, or when such act is beyond the scope of his authority. However, in
order for such public official to be personally liable for damages, he must be sued both in his official
capacity and personal capacity. If he is only sued in his official capacity, he cannot be held personally
liable without fist fiving him his day in court.
Veterans Manpower v. CA (Public Officials - no bad faith)

On May 12, 1986, a Memorandum of Agreement was executed by PADPAO and the PC Chief, which fixed
the minimum monthly contract rate per guard for eight (8) hours of security service per day at P2,255.00
within Metro Manila and P2,215.00 outside of Metro Manila

On June 29, 1987, Odin Security Agency (Odin) filed a complaint with PADPAO accusing VMPSI of cut-
throat competition by undercutting its contract rate for security services rendered to the Metropolitan
Waterworks and Sewerage System (MWSS), charging said customer lower than the standard minimum
rates provided in the Memorandum of Agreement

PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO Committee on Discipline
recommended the expulsion of VMPSI from PADPAO and the cancellation of its license to operate a
security agency. The PC-SUSIA made similar findings

VMPSI filed a Civil in the RTC-Makati against the PC Chief and PC-SUSIA. On the same date, the court
issued a restraining order enjoining the PC Chief and PC-SUSIA "from committing acts that would result
in the cancellation or non-renewal of VMPSI’s license"

The PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the Issuance of Writ of Preliminary
Injunction, and Motion to Quash the Temporary Restraining Order," on the grounds that the case is
against the State which had not given consent thereto

Whether or not VMPSI’s complaint against the PC Chief and PC-SUSIA is a suit against the State without
its consent.

Argument: The State may not be sued without its consent (Article XVI, Section 3, of the 1987
Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being instrumentalities of the
national government exercising a primarily governmental function of regulating the organization and
operation of private detective, watchmen, or security guard agencies, said official (the PC Chief) and
agency (PC-SUSIA) may not be sued without the Government’s consent, especially in this case because
VMPSI’s complaint seeks not only to compel the public respondents to act in a certain way, but worse,
because VMPSI seeks actual and compensatory damages in the sum of P1,000,000.00, exemplary
damages in the same amount, and P200,000.00 as attorney’s fees from said public respondents. Even if
its action prospers, the payment of its monetary claims may not be enforced because the State did not
consent to appropriate the necessary funds for that purpose.

"While the doctrine appears to prohibit only suits against the state without its consent, it is also
applicable to complaints filed against officials of the state for acts allegedly performed by them in the
discharge of their duties. The rule is that if the judgment against such officials will require the state itself
to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay
the damages awarded against them, the suit must be regarded as against the state itself although it has
not been formally impleaded."

A public official may sometimes be held liable in his personal or private capacity if he acts in bad faith, or
beyond the scope of his authority or jurisdiction (Shauf v. Court of Appeals, supra), however, since the
acts for which the PC Chief and PC-SUSIA are being called to account in this case, were performed by
them as part of their official duties, without malice, gross negligence, or bad faith, no recovery may be
had against them in their private capacities.

"The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief in relation to the
exercise of a function sovereign in nature. The correct test for the application of state immunity is not
the conclusion of a contract by the State but the legal nature of the act.

(Note: the difference between a public official who committed an act with bad faith and a public official
who committed an act not in bad faith or outside his authority or jurisdiction is that, the former may be
sued in his personal capacity while the latter cannot be sued in his personal capacity. In the latter, a suit
brought against such public official is regarded as a suit against the state because the act done was
performed in the discharge of their official functions, and in such case, such suit cannot prevail because
of the immunity of the state from suits without its consent.)

A State may be said to have descended to the level of an individual and can thus be deemed to have
tacitly given its consent to be sued only when it enters into a business contract. It does not apply where
the contract relates to the exercise of its functions.’

"In the instant case, the Memorandum of Agreement entered into by the PC Chief and PADPAO was
intended to professionalize the industry and to standardize the salaries of security guards as well as the
current rates of security services, clearly, a governmental function. The execution of the said agreement
is incidental to the purpose of R.A. 5487, as amended, which is to regulate the organization and
operation of private detective, watchmen or security guard agencies. (Emphasis ours.)" (pp. 258-259,
Rollo.)

Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be lightly inferred,
but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA 424). The consent of the State to
be sued must emanate from statutory authority, hence, from a legislative act, not from a mere
memorandum. Without such consent, the trial court did not acquire jurisdiction over the public
respondents.

Wylie vs. Rarang

Petitioner M. H. Wylie was the assistant administrative officer while petitioner Capt. James Williams
was the commanding officer of the U. S. Naval Base in Subic Bay, Olongapo City.

Private respondent Aurora I. Rarang was an employee in the office of the Provost Marshal assigned as
merchandise control guard.

M. H. Wylie, in his capacity as assistant administrative officer of the U.S. Naval Station supervised the
publication of the "Plan of the Day" (POD) which was published daily by the US Naval Base station.

The POD featured important announcements, necessary precautions, and general matters of interest
to military personnel.

One of the regular features of the POD was the "action line inquiry."

On February 3, 1978, the POD made a publication, under the "NAVSTA ACTION LINE INQUIRY" which
mentioned a certain person named “Auring” who is described as a disgrace to her division and to the
Office of the Provost Marshal.

The private respondent was the only one who was named "Auring" in the Office of the Provost
Marshal and was subsequently proven that it was her being referred to when petitioner M. H. Wylie
wrote her a letter of apology for the "inadvertent" publication.

The private respondent the filed an action for damages alleging that the article constituted false,
injurious, and malicious defamation and libel tending to impeach her honesty, virtue and reputation
exposing her to public hatred, contempt and ridicule; and that the libel was published and circulated
in the English language and read by almost all the U. S. Naval Base personnel.

The defendants however contended by filing a motion to dismiss based on the grounds that the
defendants M. H. Wylie and Capt. James Williams acted in the performance of their official functions
as officers of the United States Navy and are, therefore, immune from suit; and the United States
Naval Base is an instrumentality of the US government which cannot be sued without its consent.

Ruling:

The POD was published under the direction and authority of the commanding officer, U.S. Naval Station
Subic Bay. The administrative assistant, among his other duties, is tasked to prepare and distribute the
POD. On February 3, 1978, when the questioned article was published in the POD, petitioner Capt. James
Williams was the commanding officer while petitioner M.H. Wylie was the administrative assistant of the
US Naval Station at Subic bay.

There is no question, therefore, that the two (2) petitioners actively participated in screening the
features and articles in the POD as part of their official functions. Under the rule that U.S. officials in the
performance of their official functions are immune from suit, then it should follow that the petitioners
may not be held liable for the questioned publication.
It is to be noted, however, that the petitioners were sued in their personal capacities for their alleged
tortious acts in publishing a libelous article.

The question, therefore, arises –– are American naval officers who commit a crime or tortious act while
discharging official functions still covered by the principle of state immunity from suit? Pursuing the
question further, does the grant of rights, power, and authority to the United States under the RP-US
Bases Treaty cover immunity of its officers from crimes and torts? Our answer is No.

The general rule is that public officials can be held personally accountable for acts claimed to have
been performed in connection with official duties where they have acted ultra vires or where there is
showing of bad faith.

In Sumarry: Public officials can also be held personally liable even if there acts were made in the
discharge of their official duties if such acts are ultra vires or there is showing bad faith

The subject article in the US Newsletter POD dated February 3, 1978 mentions a certain "Auring" as ". . a
disgrace to her division and to the Office of the Provost Marshal." The same article explicitly implies that
Auring was consuming and appropriating for herself confiscated items like cigarettes and foodstuffs.
There is no question that the Auring alluded to in the Article was the private respondent as she was the
only Auring in the Office of the Provost Marshal. Moreover, as a result of this article, the private
respondent was investigated by her supervisor. Before the article came out, the private respondent had
been the recipient of commendations by her superiors for honesty in the performance of her duties.

the records show that the offensive publication was sent to the commanding officer for approval and he
approved it. The factual findings of the two courts below are based on the records. The petitioners have
shown no convincing reasons why our usual respect for the findings of the trial court and the respondent
court should be withheld in this particular case and why their decisions should be reversed.

The petitioners, alone, in their personal capacities are liable for the damages they caused the private
respondent.

Concepts:

Why should the state be immune from suits under such case and justified by justice holmes

- "there can be no legal right against the authority who makes the law on which the right depends"

With regards to immunity of foreign states who are to be impleaded in local jurisdictions, the
justification is - maxim par in parem, non habet imperium or in english, All states are sovereign equals
and cannot exercise jurisdiction over one another.

While the doctrine appears to prohibit only suits against the state without its consent, it is also
applicable to complaints filed against officials of the state for acts allegedly performed by them in the
discharge of their duties. The rule is that if the judgment against such officials will require the state itself
to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay
the damages awarded against them, the suit must be regarded as against the state itself although it has
not been formally impleaded. (Garcia v. Chief of Staff, 16 SCRA 120) In such a situation, the state may
move to dismiss the complaint on the ground that it has been filed without its consent.

The doctrine is sometimes derisively called "the royal prerogative of dishonesty" because of the privilege
it grants the state to defeat any legitimate claim against it by simply invoking its non-suability. That is
hardly fair, at least in democratic societies, for the state is not an unfeeling tyrant unmoved by the valid
claims of its citizens. In fact, the doctrine is not absolute and does not say the state may not be sued
under any circumstance. On the contrary, the rule says that the state may not be sued without its
consent, which clearly imports that it may be sued if it consents.

Republic v. Feliciano

Respondent Feliciano filed a complaint with the then Court of First Instance of Camarines Sur against the
Republic of the Philippines, represented by the Land Authority, for the recovery of ownership and
possession of a parcel of land. The claim of ownership by Feliciano was derived from deed of sale of the
property traced from informacion posesoria. However, the said property was subject of Proclamation
No. 90 by President Magsaysay for resettlement purposes.The Proclamation contained the reservation
clause” subject to private rights, if any there be. “Feliciano asserts that the subject property must be
excluded from the coverage of the resettlement project. The trial court dismissed the case on the ground
of non-suability of the State.

The doctrine of non-suability of the State has proper application in this case. The plaintiff has impleaded
the Republic of the Philippines as defendant in an action for recovery of ownership and possession of a
parcel of land, bringing the State to court just like any private person who is claimed to be usurping a
piece of property. A suit for the recovery of property is not an action in rem, but an action in personam.

By its caption and its allegation and prayer, the complaint is clearly a suit against the State, which under
settled jurisprudence is not permitted, except upon a showing that the State has consented to be sued,
either expressly or by implication through the use of statutory language too plain to be misinterpreted.

There is no such showing in the instant case. Worse, the complaint itself fails to allege the existence of
such consent. This is a fatal defect, and on this basis alone, the complaint should have been dismissed.

failure of the petitioner to assert the defense of immunity from suit when the case was tried before the
court a quo, as alleged by private respondent, is not fatal. It is now settled that such defense "may be
invoked by the courts sua sponte at any stage of the proceedings."
Private respondent contends that the consent of petitioner may be read from the Proclamation itself,
when it established the reservation " subject to private rights, if any there be. " We do not agree. No
such consent can be drawn from the language of the Proclamation. The exclusion of existing private
rights from the reservation established by Proclamation No. 90 can not be construed as a waiver of the
immunity of the State from suit. Waiver of immunity, being a derogation of sovereignty, will not be
inferred lightly. but must be construed in strictissimi juris. Moreover, the Proclamation is not a legislative
act. The consent of the State to be sued must emanate from statutory authority. Waiver of State
immunity can only be made by an act of the legislative body.

MERITT vs. Government of the Philippine Islands

It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a motorcycle,
when an ambulance of the General Hospital struck the plaintiff in an intersection. By reason of the
resulting collusion, the plaintiff was so severely injured that, according to Dr. Saleeby, he was suffering
from a depression in the left parietal region, a wound in the same place and in the back part of his head,
while blood issued from his nose and he was entirely unconscious. The marks revealed that he had one
or more fractures of the skull and that the grey matter and brain had suffered material injury.

Upon recovery the doctor noticed that the plaintiff’s leg showed a contraction of an inch and a half and a
curvature that made his leg very weak and painful at the point of the fracture. Examination of his head
revealed a notable readjustment of the functions of the brain and nerves. The damages that the plaintiff
got from the collision disabled him to do this work as a contractor and forced him to give up contracts he
recently had.

As the negligence which cause the collision is a tort committed by an agent or employee of the
Government, the inquiry at once arises whether the Government is legally-liable for the damages
resulting therefrom. The Philippine Legislature made an Act (Act No. 2457) that authorizes the plaintiff to
bring suit against the GPI and authorizing the Attorney- General to appear in said suit.

ISSUE:

Whether or not the Government is legally-liable for the damages incurred by the plaintiff.

The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility
for the collision between his motorcycle and the ambulance of the General Hospital and to determine
the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, .

As to the scope of legislative enactments permitting individuals to sue the state where the cause of
action arises out of either fort or contract, the rule is stated in 36 Cyc., 915, thus:

By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its
liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause not
previously recognized. It merely gives a remedy to enforce a preexisting liability and submits itself to the
jurisdiction of the court, subject to its right to interpose any lawful defense.

Act No. 2457 does not operate to extend the Government's liability to any cause not previously
recognized

the responsibility of the state is limited by article 1903 to the case wherein it acts through a special
agent (and a special agent, in the sense in which these words are employed, is one who receives a
definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special
official) so that in representation of the state and being bound to act as an agent thereof, he executes
the trust confided to him. This concept does not apply to any executive agent who is an employee of the
acting administration and who on his own responsibility performs the functions which are inherent in
and naturally pertain to his office and which are regulated by law and the regulations." (Supreme Court
of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.)

That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a decision,
among others, of the 18th of May, 1904, in a damage case, the responsibility of the state is limited to
that which it contracts through a special agent, duly empowered by a definite order or commission to
perform some act or charged with some definite purpose which gives rise to the claim, and not where
the claim is based on acts or omissions imputable to a public official charged with some administrative or
technical office who can be held to the proper responsibility in the manner laid down by the law of civil
responsibility. Consequently, the trial court in not so deciding and in sentencing the said entity to the
payment of damages, caused by an official of the second class referred to, has by erroneous
interpretation infringed the provisions of articles 1902 and 1903 of the Civil Code. (Supreme Court of
Spain, July 30, 1911; 122 Jur. Civ., 146.)

It is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable,
according to the above quoted decisions of the Supreme Court of Spain, for the acts of its agents,
officers and employees when they act as special agents within the meaning of paragraph 5 of article
1903, supra, and that the chauffeur of the ambulance of the General Hospital was not such an agent.

For the foregoing reasons, the judgment appealed from must be reversed, without costs in this instance.
Whether the Government intends to make itself legally liable for the amount of damages above set
forth, which the plaintiff has sustained by reason of the negligent acts of one of its employees, by
legislative enactment and by appropriating sufficient funds therefor, we are not called upon to
determine. This matter rests solely with the Legislature and not with the courts.
Froilan v. Pan Oriental Shipping

Fernando A. Froilan, filed a complaint against the defendant-appellant, Pan Oriental Shipping Co.,
alleging that he purchased from the Shipping Commission the vessel FS-197 for P200,000, paying
P50,000 down and agreeing to pay the balance in installments; that to secure the payment of the
balance of the purchase price, he executed a chattel mortgage of said vessel in favor of the Shipping
Commission; that for various reason, among them the non-payment of the installments, the Shipping
Commission took possession of said vessel and considered the contract of sale cancelled; that the
Shipping Commission chartered and delivered said vessel to the defendant-appellant Pan Oriental
Shipping Co. subject to the approval of the President of the Philippines;

that he appealed the action of the Shipping Commission to the President of the Philippines and, in its
meeting on August 25, 1950, the Cabinet restored him to all his rights under his original

He, therefore, prayed that, upon the approval of the bond accompanying his complaint, a writ of
replevin be issued for the seizure of said vessel with all its equipment and appurtenances, and that after
hearing, he be adjudged to have the rightful possession thereof

On February 3, 1951, the lower court issued the writ of replevin prayed for by Froilan and by virtue
thereof the Pan Oriental Shipping Co. was divested of its possession of said vessel

On November 10, 1951, after the leave of the lower court had been obtained, the intervenor-appellee,
Government of the Republic of the Philippines, filed a complaint in intervention alleging that Froilan had
failed to pay to the Shipping Commission (which name was later changed to Shipping Administration) the
balance due on the purchase price of the vessel in question

It, therefore, prayed that Froilan be ordered to deliver the vessel in question to its authorized
representative, the Board of Liquidators

The Pan Oriental Shipping Co. filed an answer to the complaint in intervention alleging that the
Government of the Republic of the Philippines was obligated to deliver the vessel in question to it by
virtue of a contract of bare-boat charter

On November 29, 1951, Froilan tendered to the Board of Liquidators, which was liquidating the affairs of
the Shipping Administration, a check in the amount of P162,576.96 in payment of his obligation

On February 3, 1952, the lower court held that the payment by Froilan of the amount of P162,576.96 on
November 29, 1951, to the Board of Liquidators constituted a payment and a discharge of Froilan's
obligation to the Government of the Republic of the Philippines and ordered the dismissal of the latter's
complaint in intervention.

the Government of the Republic of the Philippines filed a motion to dismiss the counterclaim of the Pan
Oriental Shipping Co. against it on the ground that the purpose of said counterclaim was to compel the
Government of the Republic of the Philippines to deliver the vessel to it (Pan Oriental Shipping Co.) in
the event that the Government of the Republic of the Philippines recovers the vessel in question from
Froilan. In view, however, of the order of the lower court dated February 3, holding that the payment
made by Froilan to the Board of Liquidators constituted full payment of Froilan's obligation to the
Shipping Administration, which order had already become final, the claim of the Pan Oriental Shipping
Co. against the Republic of the Philippines was no longer feasible, said counterclaim was barred by prior
judgment and stated no cause of action. It was also alleged that movant was not subject to the
jurisdiction of the court in connection with the counterclaim.

CFI dismissed counterclaim

Ruling: The other ground for dismissing the defendant's counterclaim is that the State is immune from
suit. This is untenable, because by filing its complaint in intervention the Government in effect waived its
right of nonsuability.

The immunity of the state from suits does not deprive it of the right to sue private parties in its own
courts. The state as plaintiff may avail itself of the different forms of actions open to private litigants. In
short, by taking the initiative in an action against a private party, the state surrenders its privileged
position and comes down to the level of the defendant. The latter automatically acquires, within certain
limits, the right to set up whatever claims and other defenses he might have against the state. The
United States Supreme Court thus explains:

"No direct suit can be maintained against the United States. But when an action is brought by the United
States to recover money in the hands of a party who has a legal claim against them, it would be a very
rigid principle to deny to him the right of setting up such claim in a court of justice, and turn him around
to an application to Congress." (Sinco, Philippine Political Law, Tenth Ed., pp. 36-37, citing U. S. vs.
Ringgold, 8 Pet. 150, 8 L. ed. 899.)

It is however, contended for the intervenor that, if there was at all any waiver, it was in favor of the
plaintiff against whom the complaint in intervention was directed. This contention is untenable. As
already stated, the complaint in intervention was in a sense in derogation of the defendant's claim over
the possession of the vessel in question.

Wherefore, the appealed order is hereby reversed and set aside and the case remanded to the lower
court for further proceedings. So ordered, without costs.

Republic vs. Villasor

The decision that was rendered in favor of respondents P.J. Kiener Co., Ltd, Gavino Unchuan and
International Construction Corporation was declared final and executory by Respondent Hon.
Guillermo P. Villasor.

Pursuant to the said declaration, the corresponding Alias Writ of Execution was issued. And for the
strength of this writ, the provincial sheriff served notices of garnishment with several banks, specially
on the 'monies due the Armed Forces of the Philippines in the form of deposits; the Philippines
Veterans Bank received the same notice of garnishment.

The funds of the AFP on deposit with the banks are public funds duly appropriated and allocated for
the payment of pensions of retireees, pay and allowances of military and civillian personnel and for
maintenance and operations of AFP.

Petitioner filed a petition against Villasor for acting in excess jurisdiction amounting to lack of
jurisdiction in granting the issuance of a Writ of Execution against the properties of AFP, hence the
notices and garnishments are null and void.

Issue:

Whether or not the Writ of Execution issued by respondent Judge Villasor is valid.

reasons for state immunity:

1. It is readily understandable why it must be so. In the classic formulation of Holmes: "A sovereign is
exempt from suit, not because of any formal conception or obsolete theory, but on the logical and
practical ground that there can be no legal right as against the authority that makes the law on which
the right depends."

2. "a continued adherence to the doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle
to the performance of its multifarious functions are far greater if such a fundamental principle were
abandoned and the availability of judicial remedy were not thus restricted. With the well known
propensity on the part of our people to go to court, at the least provocation, the loss of time and
energy required to defend against law suits, in the absence of such a basic principle that constitutes
such an effective obstacle, could very well be imagined."

a basic concept is that public funds cannot be the object of a garnishment proceeding even if the
consent to be sued had been previously granted and the state liability adjudged.

The universal rule that where the State gives its consent to be sued by private parties either by general
or special law, it may limit claimant's action 'only up to the completion of proceedings anterior to the
stage of execution' and that the power of the Courts ends when the judgment is rendered, since
government funds and properties may not be seized under writs of execution or garnishment to satisfy
such judgments, is based on obvious considerations of public policy.

Disbursements of public funds must be covered by the corresponding appropriation as required by

law. The functions and public services rendered by the State cannot be allowed to be paralyzed or
disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated
by law." Such a principle applies even to an attempted garnishment of a salary that had accrued in
favor of an employee. Director of Commerce and Industry v. Concepcion, speaks to that effect. Justice
Malcolm as ponente left no doubt on that score. Thus: "A rule which has never been seriously
questioned, is that money in the hands of public officers, although it may be due government
employees, is not liable to the creditors of these employees in the process of garnishment. One reason
is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by express
authorization by the Legislature, and to subject its officers to garnishment would be to permit
indirectly what is prohibited directly.

MUNICIPALITY OF SAN MIGUEL v. OSCAR C. FERNANDEZ

In Civil Case entitled "Margarita D. Vda. de Imperio, et al. vs. Municipal Government of San Miguel,
Bulacan, et al.", the then Court of First Instance of Bulacan rendered judgment holding herein petitioner
municipality liable to private respondents. One of the order states that the petitioner should pay the the
private respondents the loss of income from rentals on subject lots and attorney's fees. A writ of
execution was issued

Issue: Whether the municipality's property or funds are all public funds exempt from execution for the
satisfaction of the money judgment

Ruling: public funds are not subject to levy and execution.

The reason for this was explained in the case of Municipality of Paoay vs. Manaois, 86 Phil. 629 "that
they are held in trust for the people, intended and used for the accomplishment of the purposes for
which municipal corporations are created, and that to subject said properties and public funds to
execution would materially impede, even defeat and in some instances destroy said purpose."

"it is the settled doctrine of the law that not only the public property but also the taxes and public
revenues of such corporations Cannot be seized under execution against them, either in the treasury or
when in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of
officers of the law, are not subject to execution unless so declared by statute." Thus, it is clear that all the
funds of petitioner municipality in the possession of the Municipal Treasurer of San Miguel, as well as
those in the possession of the Provincial Treasurer of Bulacan, are also public funds and as such they are
exempt from execution.

No money shall be paid out of the treasury except in pursuance of a lawful appropriation or other
specific statutory authority.

Otherwise stated, there must be a corresponding appropriation in the form of an ordinance duly passed
by the Sangguniang Bayan before any money of the municipality may be paid out. In the case at bar, it
has not been shown that the Sangguniang Bayan has passed an ordinance to this effect.

Municipality of Makati vs. CA

For its part, petitioner contended that its funds at the PNB Buendia Branch could neither be garnished
nor levied upon execution, for to do so would result in the disbursement of public funds without the
proper appropriation required under the law.

Respondent trial judge: the doctrine enunciated did not apply to the case because petitioner's PNB
Account was an account specifically opened for the expropriation proceedings of the subject property
pursuant to Pres. Decree No. 42

Issue: are the funds of the municipality of makati exempt from garnishment and levy upon execution.

Ruling: Yes

The funds deposited in the second PNB Account No. S/A 263-530850-7 are public funds of the municipal
government. well-settled is the rule that public funds are not subject to levy and execution, unless
otherwise provided for by statute . More particularly, the properties of a municipality, whether real or
personal, which are necessary for public use cannot be attached and sold at execution sale to satisfy a
money judgment against the municipality. Municipal revenues derived from taxes, licenses and market
fees, and which are intended primarily and exclusively for the purpose of financing the governmental
activities and functions of the municipality, are exempt from execution.

The foregoing rule finds application in the case at bar. Absent a showing that the municipal council of
Makati has passed an ordinance appropriating from its public funds an amount corresponding to the
balance due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in
Account No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of
petitioner deposited in Account No. S/A 263-530850-7.

Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. Where a
municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment
rendered against it, the claimant may avail of the remedy of mandamus in order to compel the
enactment and approval of the necessary appropriation ordinance, and the corresponding disbursement
of municipal funds therefor

Here however, the court still ordered the petitioner to pay the private respondent despite the lack of a
municipal ordinance appropriating from its public funds the amount. This is because in the exercise of
eminent domain, [j]ust compensation means not only the correct determination of the amount to be
paid to the owner of the land but also the payment of the land within a reasonable time from its taking.
 the case at bar, considering that valuable property has been taken, the compensation to be paid fixed
and the municipality is in full possession and utilizing the property for public purpose, for three (3) years,
the Court finds that the municipality has had more than reasonable time to pay full compensation.

WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to immediately pay
Philippine Savings Bank, Inc. and private respondent

Ministerio vs. CFI of Cebu

Petitioners as plaintiffs in a complaint filed with the Court of First Instance of Cebu, sought the payment
of just compensation for a registered lot, alleging that in 1927 the National Government through its
authorized representatives took physical and material possession of it and used it for the widening of the
Gorordo Avenue, a national road, Cebu City, without payiIt was further alleged that the appraisal
committee of the City of Cebu approved Resolution No. 90, appraising the reasonable and just price of
Lot No. 647-B at P50.00 per square meter or a total price of P52,250.00.

Thereafter, the complaint was amended on June 30, 1966 in the sense that the remedy prayed for was in
the alternative, either the restoration of possession or the payment of the just compensation.

Respondents alleges that, granting that no compensation was given to the owner of the land, the case is
undoubtedly against the National Government and there is no showing that the government has
consented to be sued in this case. It may be contended that the present case is brought against the
Public Highway Commissioner and the Auditor General and not against the National Government.

Issue: Whether or not plaintiffs can sue defendants Public Highway Commissioner and the Auditor
General, in their capacity as public officials without thereby violating the principle of government
immunity from suit without its consent.

Ruling: The government is immune from suit without its consent. Nor is it indispensable that it be the
party proceeded against. If it appears that the action, would in fact hold it liable, the doctrine calls for
application. It follows then that even if the defendants named were public officials, such a principle
could still be an effective bar. This is clearly so where a litigation would result in a financial responsibility
for the government, whether in the disbursements of funds or loss of property. Under such
circumstances, the liability of the official sued is not personal. The party that could be adversely affected
is government. Hence the defense of non-suability may be interposed.

Exception:
"Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government
officials or officers are not acts of the State, and an action against the officials or officers by one whose
rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the
State within the rule of immunity of the State from suit.

this Court speaking through Justice Montemayor, restoration would be "neither convenient nor feasible
because it is now and has been used for road purposes."The only relief, in the opinion of this Court,
would be for the government "to make due compensation. The doctrine of governmental immunity from
suit cannot serve as an instrument for perpetrating an injustice on a citizen.

Had the government followed the procedure indicated by the governing law at the time, a complaint
would have been filed by it, and only upon payment of the compensation fixed by the judgment, or after
tender to the party entitled to such payment of the amount fixed, may it "have the right to enter in and
upon the land so condemned" to appropriate the same to the public use defined in the judgment.

It is not too much to say that when the government takes any property for public use, which is
conditioned upon the payment of just compensation, to be judicially ascertained, it makes manifest that
it submits to the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit
could still be appropriately invoked.

PEDRO ARIGO vs. SCOTT H. SWIFT

While transiting the Sulu Sea, the USS Guardian, a US Navy ship, ran aground on the South Shoal of
Tubbataha Reefs, a restricted and marine protected area. The US Government provided compensation
for the damaged caused and undertook salvage operations to remove the grounded ship from the coral
reef.

Petition: issuance of a Writ of Kalikasan with prayer for the issuance of a Temporary Environmental
Protection Order (TEPO) under Rule 7 of A.M. No. 09-6-8-SC, otherwise known as the Rules of Procedure
for Environmental Cases (Rules), involving violations of environmental laws and regulations in relation to
the grounding of the US military ship USS Guardian over the Tubbataha Reefs

Petitioners claim that the grounding, salvaging and post-salvaging operations of the USS Guardian cause
and continue to cause environmental damage of such magnitude as to affect the provinces of Palawan,
Antique, Aklan, Guimaras, Iloilo, Negros Occidental, Negros Oriental, Zamboanga del Norte, Basilan, Sulu,
and Tawi-Tawi, which events violate their constitutional rights to a balanced and healthful ecology. They
also seek a directive from this Court for the institution of civil, administrative and criminal suits for acts
committed in violation of environmental laws and regulations in connection with the grounding incident.

Ruling:
Even without such affirmation, we would still be bound by the generally accepted principles of
international law under the doctrine of incorporation. Under this doctrine, as accepted by the majority
of states, such principles are deemed incorporated in the law of every civilized state as a condition and
consequence of its membership in the society of nations. Upon its admission to such society, the state is
automatically obligated to comply with these principles in its relations with other states.

There are other practical reasons for the enforcement of the doctrine. In the case of the foreign state
sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in
parem, non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one
another. A contrary disposition would, in the language of a celebrated case, "unduly vex the peace of
nations."

If the acts giving rise to a suit arc those of a foreign government done by its foreign agent, although not
necessarily a diplomatic personage, but acting in his official capacity, the complaint could be barred by
the immunity of the foreign sovereign from suit without its consent. Suing a representative of a state is
believed to be, in effect, suing the state itself. The proscription is not accorded for the benefit of an
individual but for the State, in whose service he is, under the maxim -par in parem, non habet imperium
-that all states are soverr~ign equals and cannot assert jurisdiction over one another.

In the same case we also mentioned that in the case of diplomatic immunity, the privilege is not an
immunity from the observance of the law of the territorial sovereign or from ensuing legal liability; it is,
rather, an immunity from the exercise of territorial jurisdiction

This traditional rule of State immunity which exempts a State from being sued in the courts of another
State without the former's consent or waiver has evolved into a restrictive doctrine which distinguishes
sovereign and governmental acts (Jure imperil") from private, commercial and proprietary acts (Jure
gestionis). Under the restrictive rule of State immunity, State immunity extends only to acts Jure imperii.
The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs

They state that the doctrine of immunity from suit will not apply and may not be invoked where the
public official is being sued in his private and personal capacity as an ordinary citizen. This situation
usually arises where the public official acts without authority or in excess of the powers vested in him. It
is a well-settled principle of law that a public official may be liable in his personal private capacity for
whatever damage he may have caused by his act done with malice and in bad faith, or beyond the scope
of his authority or jurisdiction.

In this case, the US respondents were sued in their official capacity as commanding officers of the US
Navy who had control and supervision over the USS Guardian and its crew. The alleged act or omission
resulting in the unfortunate grounding of the USS Guardian on the TRNP was committed while they
we:re performing official military duties. Considering that the satisfaction of a judgment against said
officials will require remedial actions and appropriation of funds by the US government, the suit is
deemed to be one against the US itself. The principle of State immunity therefore bars the exercise of
jurisdiction by this Court over the persons of respondents Swift, Rice and Robling.
USA v. RUIZ

the United States of America had a naval base in Subic, Zambales. The base was one of those provided in
the Military Bases Agreement between the Philippines and the United States.

Sometime in May 1972, the United States invited the submission of bids for certain naval projects. Eligio
de Guzman & Co. Inc. responded to the invitation and submitted bids. Subsequently, the company
received two telegrams requesting it to confirm its price. In June 1972, the company received a letter
which said that the company did not qualify to receive an award for the projects. The company then
sued the United States of America and individual petitioners demanding that the company perform the
work on the projects, or for the petitioners to pay damages and to issue a writ of preliminary injunction
to restrain the petitioners from entering into contracts with third parties concerning the project.

Issue: whether the court has jurisdiction

Ruling: No.

The traditional rule of State immunity exempts a State from being sued in the courts of another State
without its consent or waiver. This rule is a necessary consequence of the principles of independence
and equality of States. However, the rules of International Law are not petrified; they are constantly
developing and evolving. And because the activities of states have multiplied, it has been necessary to
distinguish them-between sovereign and governmental acts (jure imperii) and private, commercial and
proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperil
The restrictive application of State immunity is now the rule in the United States, the United Kingdom
and other states in western Europe.

The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated
differently, a State may be said to have descended to the level of an individual and can thus be deemed
to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply
where the contract relates to the exercise of its sovereign functions. In this case the projects are an
integral part of the naval base which is devoted to the defense of both the United States and the
Philippines, indisputably a function of the government of the highest order; they are not utilized for nor
dedicated to commercial or business purposes.

Buisan vs. COA

the DPWH undertook the construction of the Liguasan Cut-off hannel (Project) in Tunggol, Pagalungan,
Maguindanao, to minimize the perennial problem of flooding in the area. In April 2001, the DPWH
received various claims from land owners for damages allegedly caused to their properties, crops and
improvements by the premature opening of the Project.
The claims were forwarded to the RD of the DPWH R.O. No. XII to be returned to the claimants, as such
are considered to be under the jurisdiction of the COA

the petitioners, represented by Mayor Bai Annie C. Montawal (Montawal), filed a petition with the COA,6
praying that the DPWH be ordered to pay the petitioners the sum of ₱122,051,850.00 as compensation
for their damaged crops, properties and improvements.

Ruling:

The fundamental law of the land provides that the State cannot be sued without its consent. 17 It is a
fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the
State, as well as its government, is immune from suit unless it gives its consent. The rule, in any case, is
not absolute for it does not say that the State may not be sued under any circumstances. The doctrine
only conveys that "the state may not be sued without its consent;" its clear import then is that the State
may at times be sued. 18 Suits filed against government agencies may either be against incorporated or
unincorporated agencies. In case of incorporated agencies, its suability depends upon whether its own
organic act specifically provides that it can sue and be sued in Court. 19

As the State's engineering and construction arm, the DPWH exercises governmental functions that
effectively insulate it from any suit, much less from any monetary liability. The construction of the
Project which was for the purpose of minimizing the perennial problem of flood in the area of Tunggol,
Montawal, Maguindanao, is well within the powers and functions of the DPWH as mandated by the
Administrative Code of 1997.

Hence, the Doctrine of Non-Suability clothes the DPWH from being held responsible for alleged damages
it performed in consonance with its mandated duty. Nowhere does it appear in the petition that the
State has given its consent, expressly or impliedly, to be sued before the courts. The failure to allege the
existence of the State's consent to be sued in the complaint is a fatal defect, and on this basis alone,
should cause the dismissal of the complaint. 20

Note: incorporated government agency

they generally conduct propriety business operations and have charters which grant them a separate
juridical personality.

Unincorporated government agencies on the other hand are government agencies performing sovereign
or governmental functions.