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Digests From Republic v. Feliciano Upto SSS

v. CA
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Published by Jilliane Oria

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Republic v.
FelicianoFACTS:

Petitioner seeks
the review of the
decision of the
Intermediate
AppellateCourt
dated April 30,
1985 reversing the
order of the Court
of FirstInstance of
Camarines Sur,
Branch VI, dated

August 21, 1980,

whichdismissed the
complaint of
respondent Pablo
Feliciano for
recovery
of ownership and
possession of a
parcel of land on
the ground of nonsuability of the

State.On January
22, 1970, Feliciano
filed a complaint
with the then Court
of First Instance of
Camarines Sur
against the RP,
represented by the
Land Authority, for
the recovery of
ownership and

possession of a
parcel of land,
consisting of four
(4) lots with an
aggregate area of
1,364.4177hectare
s, situated in the
Barrio of Salvacion,
Municipality of
Tinambac,Camarin
es Sur. Feliciano

alleged that he
bought the
property in
questionfrom
Victor Gardiola by
virtue of a Contract
of Sale dated May
31, 1952,followed
by a Deed of
Absolute Sale on
October 30, 1954;

that Gardiolahad
acquired the
property by
purchase from the
heirs of
Francisco Abrazado
whose title to the
said property was
evidenced by an
informacion
posesoria

that upon his

purchase of the
property, he
took actual
possession of the
same, introduced
various
improvements
thereinand caused
it to be surveyed in
July 1952, which

survey was
approved bythe
Director of Lands
on October 24,
1954.On November
1, 1954, President
Ramon Magsaysay
issued
ProclamationNo.
90 reserving for
settlement

purposes, under
the administration
of theNational
Resettlement and
Rehabilitation
Administration
(NARRA), a tractof
land situated in the
Municipalities of
Tinambac and
Siruma,

CamarinesSur,
after which the
NARRA and its
successor agency,
the Land
Authority,started
sub-dividing and
distributing the
land to the
settlers; that
theproperty in

question, while
located within the
reservation
establishedunder
Proclamation No.
90, was the private
property of
Feliciano
andshould
therefore be
excluded

therefrom.
Feliciano prayed
that he bedeclared
the rightful and
true owner of the
property in
question
consistingof
1,364.4177
hectares; that his

title of ownership
based on
informacion posesor
ia

of his predecessorin-interest be
declared legal valid
andsubsisting and
that defendant be
ordered to cancel
and nullify all

awardsto the
settlers.
ISSUE:

WON the State can

be sued for
recovery and
possession of
aparcel of land
RULING:

NO
RATIONALE:

A suit against the

State, under
settled
jurisprudence is
not
permitted,except
upon a showing
that the State has
consented to be
sued,
eitherexpressly or

by implication
through the use of
statutory language
tooplain to be
misinterpreted. It
may be invoked by
the courts
sua sponte

atany stage of the

proceedings.Waiver
of immunity, being

a derogation of
sovereignty, will
not be
inferredlightly. but
must be construed
in
strictissimi juris

(of strictest
right).Moreover,
the Proclamation is
not a legislative

act. The consent of

theState to be
sued must
emanate from
statutory authority.
Waiver of
Stateimmunity can
only be made by
an act of the
legislative body.
Addtl:

Worthy of note is
the fact, as pointed
out by the Solicitor
General,that the
informacion
posesoria

registered in the
Office of the
Register of Deed of
Camarines Sur on
September 23,

1952 was a
"reconstituted"poss
essory information;
it was
"reconstituted from
the
duplicatepresented
to this office
(Register of Deeds)
by Dr. Pablo
Feliciano,"without

the submission of
proof that the
alleged duplicate
was authenticor
that the original
thereof was lost.
Reconstitution can
be validly
madeonly in case
of loss of the
original. These

circumstances
raise gravedoubts
as to the
authenticity and
validity of the
"informacion
posesoria"relied
upon by
respondent
Feliciano. Adding
to the dubiousness

of saiddocument is
the fact that
"possessory
information calls
for an area of
only100 hectares,"
whereas the land
claimed by
respondent
Felicianocomprises
1,364.4177

hectares, later
reduced to 7019064
hectares.Courts
should be wary in
accepting
"possessory
information
documents,as well
as other
purportedly old

Spanish titles, as
proof of
allegedownership
of lands.
Phil Agila Satellite
v. LichaucoFACTS:

On June 6, 1994, a
Memorandum of
Understanding1(M
OU) was
enteredinto by a

consortium of
private
telecommunication
s carriers and
theDepartment of
Transportation and
Communications
(DOTC), they
formeda
corporation and
adopted the

corporate name
Philippine Agila
Satellite,Inc.
(PASI). They
requested the then
DOTC Secretary
Amado
S.Lagdameo, Jr.
for official
government
confirmation of the

assignment
of Philippine orbital
slots 161E and
153E to PASI for
its AGILA satellites
bya letter dated
June 28,
1996.When it was
confirmed, PASI
undertook
preparations for

the
launching,operatio
n and management
of its satellites by,
among other
things,obtaining
loans, increasing
its capital,
conducting
negotiations with
itsbusiness

partners, and
making an initial
payment. When
they requestedthe
Land banks
confirmation of its
participation in a
club loan for
thegovernments
assignment to
PASI of orbital

slots 161E and

153E,
DOTCUndersecreta
ry Josefina T.
Lichauco sent a
letter to the
bank controverting
the said
assignment, clearly
stating that orbital
slot 153Ecan no

longer be assigned
to PASI. She
subsequently
issued a Notice
of Offer for several
orbital slots
including 153E in
December
1997.PASI,
claiming that the
offer was without

its knowledge and

that itsubsequently
came to learn that
another company
whose identity had
notbeen disclosed
had submitted a
bid and won the
award for orbital
slot153E, filed on
January 23, 1998 a

complaint7before
the Regional
TrialCourt (RTC) of
Mandaluyong City
against Lichauco
and the
"Unknown Awardee
," for injunction to
enjoin the award of
orbital slot 153E,
declareits nullity,

and for
damages.PASI filed
on February 23,
1998 a complaint
before the Office of
theOmbudsman
against Secretary
Josefina Trinidad
Lichauco. In his
affidavit-complaint,
de Guzman

charged Lichauco
with gross violation
of Section3(e) of
Republic Act No.
3019, otherwise
known as the AntiGraft andCorrupt
Practices Act, as
amended,
reading:(e)
Causing any undue

injury to any party,

including
theGovernment, or
giving any private
party any
unwarrantedbenefi
ts, advantage or
preference in the
discharge of
hisofficial,
administrative or

judicial functions
through
manifestpartiality,
evident bad faith
or gross
inexcusable
negligence.This
provision shall
apply to officers
and employees of
officersor

government
corporations
charged with the
grant of licensesor
permits or other
concessions.Becau
se a prejudicial
question was found
by the Evaluation
andPreliminary
Investigation

Bureau (EPIB), the

criminal suit was
dismissedand
reconsideration
was denied by
Order dated July
17, 1998.
Hence,PASI is in
petition for review
on certiorari,
arguing that the

Ombudsmanerred
in dismissing the
complaint.
ISSUE:

WON there exists a

prejudicial
question, and if in
the
affirmative,whethe
r or not the
dismissal of the

complaint on that
account is in order
RULING:

Yes, there exists a

prejudicial question
because if the
award tothe
undisclosed bidder
of the orbital lot
153E is, in the
civil case

declaredvalid for
being within
Lichaucos scope of
authority to thus
free her
fromliability for
damages, there
would be no
prohibited act to
speak of norwould
there be basis for

undue injury
claimed to have
been suffered
bypetitioner.No,
according to Yap v.
Paras, Section 6,
Rule 111 of the
Rules of
Courtdirects that
the proceedings
may only be

suspended, not
dismissed, andthat
it may be made
only upon petition,
and not at the
instance of
the judge alone or
the investigating
officer. It would
sanction
theextiguishment

of the criminal
liability, if there be
any, through
prescriptionunder
Article 89 vis a vis
Article 90 and 91
of the RPC.The
Order dismissing
OMB Case No. 098-0416 dated July
17, 1998against

Lichauco was set

aside. The
Ombudsman was
Ordered
toreinstate the
case for further
proceedings.
RATIONALE:

When a public
officer acts without
or in excess

of jurisdiction, any
injury caused by
him is his own
personal liability
andcannot be
imputed to the
State. (p.34,
Political Law,
Isagani Cruz)
SAYSON v.
SINGSONFACTS:

"In January 1967,

the Office of the
District Engineer
requisitionedvariou
s items of spare
parts for the repair
of a D-8 bulldozer
which wassigned
by the District
Engineer, Adventor
Fernandez, and

theRequisitioning
Officer (civil
engineer), Manuel
S. Lepatan. ... It
wasapproved by
the Secretary of
Public Works and
Communications,
Antonio V.
Raquiza. It is noted
in the approval of

the said requisition

that "This isan
exception to the
telegram dated
Feb. 21, 1967 of
the Secretary
of Public Works
and
Communications."
... So, a canvass or
public biddingwas

conducted on May
5, 1967 ... . The
committee on
award acceptedthe
bid of the Singkier
Motor Service for
the sum of
P43,530.00.
...Subsequently, it
was approved by
the Secretary of

Public Works
andCommunication
s; and on May 16,
1967 the Secretary
sent a letterorderto the
Singkier Motor
Service, Mandaue,
Cebu requesting it
toimmediately
deliver the items

listed therein for

the lot price
of P43,530.00. ...It
would appear that
a purchase order
signed by the
District Engineer,
theRequisitioning
Officer and the
Procurement
Officer, was

addressed to
theSingkier Motor
Service. ... In due
course the Voucher
No. 07806
reachedthe hands
of Highway Auditor
Sayson for preaudit. He then
madeinquiries
about the

reasonableness of
the price. ... Thus,
after findingfrom
the indorsements
of the Division
Engineer and the
Commissioner
of Public Highways
that the prices of
the various spare
parts are just

andreasonable and
that the requisition
was also approved
by no less than
theSecretary of
Public Works and
Communications
with the
verification of
V.M. Secarro a
representative of

the Bureau of
Supply
Coordination,Manil
a, he approved it
for payment in the
sum of
P34,824.00, with
theretention of
20% equivalent to
P8,706.00 to
submit the voucher

with thesupporting
papers to the
Supervising
Auditor, which he
did. ... Thevoucher
was paid on June
9, 1967 in the
amount of
P34,824.00
toSingson. On June
10,1967, Highway

Auditor Sayson
received a
telegramfrom
Supervising
Auditor Fornier
quoting a
telegraphic
message of
theGeneral
Auditing Office
which states: "In

view of excessive
prices chargefor
purchase of spare
parts and
equipment shown
by vouchers
alreadysubmitted
this Office direct all
highway auditors
refer General
Officepayment

similar nature for

appropriate
action." ... In the
interim

it wouldappear that
when the voucher
and the supporting
papers reached
theGAO, a canvass
was made of the
spare parts among

the suppliers
inManila,
particularly, the
USI (Phil.), which
is the exclusive
dealer of thespare
parts of the
caterpillar tractors
in the Philippines.
Said firm
thussubmitted its

quotations at
P2,529.64 only
which is
P40,000.00 less
thanthe price of
the Singkier. ... In
view of the
overpricing the
GAO took upthe
matter with the
Secretary of Public

Works in a third
indorsement
of July 18, 1967.
... The Secretary
then circularized a
telegram holding
thedistrict engineer
responsible for
overpricing." What
is more, charges
formalversation

were filed against

the district
engineer and the
civil
engineerinvolved.
It was the failure
of the Highways
Auditor, one of the
petitionersbefore
us, that led to the
filing of the

mandamus suit
below, with
nowrespondent
Singson as sole
proprietor of
Singkier Motor
Service,
beingadjudged as
entitled to collect
the balance of
P8,706.00, the

contract inquestion
having been
upheld. Hence this
appeal by
certiorari

.
ISSUE:

WON the
mandamus suit of
the respondent
(Singson) involving

amoney claim
against the
government,
predicated on a
contract is valid
RULING:

No.
RATIONALE:

the claim is void

for the cause or
consideration is

contraryto law,
morals or public
policy, mandamus
is not the remedy
to enforcethe
collection of such
claim against the
State but a
ordinary action
forspecific
performance. the

suit disguised as
one for mandamus
to compelthe
Auditors to
approve the
vouchers for
payment, is a suit
against theState,
which cannot
prosper or be
entertained by the

Court except
withthe consent of
the State ... . In
other words, the
respondent should
havefiled his claim
with the General
Auditing Office,
under the
provisions of Com.
Act 327 which

prescribe the
conditions under
which money
claimagainst the
government may
befiled:"In all
cases involving the
settlement of
accounts or claims,
other thanthose of
accountable

officers, the
Auditor General
shall act and
decide thesame
within sixty days,
exclusive of
Sundays and
holidays, after
theirpresentation.
If said accounts or
claims need

reference to other
persons,office or
offices, or to a
party interested,
the period
aforesaid shall
becounted from
the time the last
comment
necessary to a

proper decision
isreceived by him."
Thereafter, the
procedure for
appeal is indicated:
"The party
aggrieved bythe
final decision of the
Auditor General in
the settlement of
an account orclaim

may, within thirty

days from receipt
of the decision,
take an appealin
writing: (a) To the
President of the
United States,
pending the final
andcomplete
withdrawal of her
sovereignty over

the Philippines, or
(b) To thePresident
of the Philippines,
or (c) To the
Supreme Court of
thePhilippines if
the appellant is a
private person or
entity."Once
consent is secured,
an action may be

filed. There is
nothing toprevent
the State,
however, in such
statutory grant, to
require that
certainadministrati
ve proceedings be
had and be
exhausted. Also,
the properforum in

the judicial
hierarchy can be
specified if
thereafter an
appealwould be
taken by the party
aggrieved. Here,
there was no ruling
of the Auditor
General. Even had
there been such,

the court to which

the mattershould
have been elevated
is this Tribunal; the
lower court could
notlegally act on
the matter.
Republic v.
PurisimaFacts:

A motion to
dismiss was filed

on September 7,
1972 by defendant
Riceand Corn
Administration in a
pending civil suit in
the sala of
respondentJudge
for the collection of
a money claim
arising from an
alleged breachof

contract, the
plaintiff being
private respondent
Yellow Ball
FreightLines, Inc.
At that time, the
leading case of
Mobil Philippines
Exploration,Inc. v.
Customs Arrastre
Service

,
where Justice
Bengzon stressed
the lack of
jurisdiction of a
court to pass on
the merits of a
claim against
anyoffice or entity
acting as part of

the machinery of
the national
governmentunless
consent be shown,
had been applied
in 53 other
decisions.Responde
nt Judge Amante
P. Purisima of the
Court of First
Instance of Manila

denied the motion

to dismiss dated
October 4, 1972.
Hence, thepetition
for certiorari and
prohibition.
Issue:

WON the
respondents
decision is valid
Ruling:

No.
Rationale:

The position of the

Republic has been
fortified with the
explicit
affirmationfound in
this provision of
the present
Constitution: "The
State may not

besued without its

consent.""The
doctrine of nonsuability
recognized in this
jurisdiction even
prior tothe
effectivity of the
[1935]
Constitution is a
logical corollary of

thepositivist
concept of law
which, to paraphrase Holmes,
negates
theassertion of any
legal right as
against the state,
in itself the source
of thelaw on which
such a right may

be predicated. Nor
is this all, even if
sucha principle
does give rise to
problems,
considering the
vastly
expandedrole of
government
enabling it to
engage in business

pursuits to
promotethe
general welfare, it
is not obeisance to
the analytical
school of
thoughtalone that
calls for its
continued
applicability. Nor is
injustice

therebycause
private parties.
They could still
proceed to seek
collection of
theirmoney claims
by pursuing the
statutory remedy
of having the
AuditorGeneral
pass upon them

subject to appeal
to judicial tribunals
for
finaladjudication.
We could thus
correctly conclude
as we did in the
citedProvidence
Washington
Insurance decision:
"Thus the doctrine

of non-suability of
the government
without its
consent, as it has
operated
inpractice, hardly
lends itself to the
charge that it could
be the
fruitfulparent of
injustice,

considering the
vast and everwidening scope of
stateactivities at
present being
undertaken.
Whatever
difficulties for
privateclaimants
may still exist, is,
from an objective

appraisal of all
factors,minimal. In
the balancing of
interests, so
unavoidable in
thedetermination
of what principles
must prevail if
government is to
satisfythe public
weal, the verdict

must be, as it has

been these so
many years,for its
continuing
recognition as a
fundamental
postulate of
constitutionallaw."
[
Switzerland General
Insurance Co., Ltd.

v. Republic of
the Philippines]

***The consent, to
be effective, must
come from the
State
actingthrough a
duly enacted
statute as pointed
out by Justice
Bengzon inMobil.

Thus, whatever
counsel for
defendant Rice and
Corn
Administrationagre
ed to had no
binding force on
the government.
E. Meritt v.
Government of the
Philippine
IslandsFacts:

This is an appeal
by both parties
from a judgment of
the Court of First
Instance of the city
of Manila in favor
of the plaintiff for
the sum
of P14,741,
together with the
costs of the

cause.The plaintiff,
riding on a
motorcycle, was
going toward the
western partof
Calle Padre Faura,
passing along the
west side thereof
at a speed of ten
to twelve miles an
hour, upon

crossing Taft
Avenue and when
he wasten feet
from the
southwestern
intersection of said
streets, the
GeneralHospital
ambulance, upon
reaching said
avenue, instead of

turningtoward the
south, after
passing the center
thereof, so that it
would be onthe left
side of said
avenue, as is
prescribed by the
ordinance and
theMotor Vehicle
Act, turned

suddenly and
unexpectedly and
long
beforereaching the
center of the
street, into the
right side of Taft
Avenue,without
having sounded
any whistle or
horn, by which

movement it
struck the plaintiff,
who was already
six feet from the
southwestern point
orfrom the post
place there.By
reason of the
resulting collision,
the plaintiff was so
severely

injuredthat,
according to Dr.
Saleeby, who
examined him on
the very same
daythat he was
taken to the
General Hospital,
he was suffering
from adepression
in the left parietal

region, a wound in
the same place and
inthe back part of
his head, while
blood issued from
his nose and he
wasentirely
unconscious. The
patient apparently
was slightly deaf,
had a

lightweakness in
his eyes and in his
mental condition.
The plaintiff's
mentaland physical
condition prior to
the accident was
excellent, and that
afterhaving
received the
injuries, his

physical condition
had undergone
anoticeable
depreciation, for
he had lost the
agility, energy, and
ability thathe had
constantly
displayed before
the accident as one
of the

bestconstructors of
wooden buildings
and he could not
now earn even a
half of the income
that he had
secured for his
work because he
had lost 50per cent
of his efficiency. As
a contractor, he

could no longer, as
he hadbefore done,
climb up ladders
and scaffoldings to
reach the highest
partsof the
building.The two
items which
constitute a part of
the P14,741 are
(a) P5,000,

theaward awarded
for permanent
injuries, and (b)
the P2,666, the
amountallowed for
the loss of wages
during the time the
plaintiff
wasincapacitated
from pursuing his
occupation.

Nothing was found

in therecord which
would justify
increasing the
amount of the first.
As to thesecond,
the record shows,
and the trial court
so found, that the
plaintiff'sservices
as a contractor

were worth P1,000

per month. The
court,however,
limited the time to
two months and
twenty-one days,
which theplaintiff
was actually
confined in the
hospital. In this the
Court thinksthere

was error, because

it was clearly
established that
the plaintiff
waswholly
incapacitated for a
period of six
months. The mere
fact that
heremained in the
hospital only two

months and
twenty-one days
while theremainder
of the six months
was spent in his
home, would not
prevent
recovery for the
whole time. The
Court, therefore,
find that the

amount
of damages
sustained by the
plaintiff, without
any fault on his
part,
isP18,075.The
petitioner vis--vis
Act No. 2457
effective February
3, 1915

wasauthorized to
bring suit against
the Government of
the Philippine
Islandsand
authorizing the
Attorney-General
to appear in said
suit.
Issue:

WON the scope of

the Act authorizes
the Court to hold
that
theGovernment is
legally liable for
the said amount
Ruling:

No
Rationale:

Plaintiff claims that

by the enactment
of this law
thelegislature
admitted liability
on the part of the
state for the acts
of itsofficers, and
that the suit now
stands just as it
would stand

betweenprivate
parties. It is
difficult to see how
the act does, or
was intended todo,
more than remove
the state's
immunity from
suit. It simply
givesauthority to
commence suit for

the purpose of
settling
plaintiff'scontrover
sies with the
estate. Nowhere in
the act is there a
whisper
orsuggestion that
the court or courts
in the disposition
of the suit

shalldepart from
well established
principles of law,
or that the amount
of damages is the
only question to be
settled. The act
opened the door
of the court to the
plaintiff. It did not
pass upon the

question of
liability, butleft the
suit just where it
would be in the
absence of the
state's
immunityfrom suit.
If the Legislature
had intended to
change the rule
that obtainedin this

state so long and

to declare liability
on the part of the
state, itwould not
have left so
important a matter
to mere inference,
but wouldhave
done so in express
terms. (Murdock
Grate Co. vs.

Commonwealth,15
2 Mass., 28; 24
N.E., 854; 8 L. R.
A., 399.)Paragraph
5 of article 1903 of
the Civil Code
reads:The state is
liable in this sense
when it acts
through a
specialagent, but

not when the

damage should
have been caused
bythe official to
whom properly it
pertained to do the
actperformed, in
which case the
provisions of the
preceding
articleshall be

applicable.It
follows therefrom
that the state, by
virtue of such
provisions of law,
isnot responsible
for the damages
suffered by private
individuals
inconsequence of
acts performed by

its employees in
the discharge of
thefunctions
pertaining to their
office, because
neither fault nor
evennegligence
can be presumed
on the part of the
state in the
organizationof

branches of public
service and in the
appointment of its
agents; on
thecontrary, we
must presuppose
all foresight
humanly possible
on its part inorder
that each branch of
service serves the

general weal and

that of private
persons interested
in its operation.
Between these
latter and thestate,
therefore, no
relations of a
private nature
governed by the
civil lawcan arise

except in a case
where the state
acts as a judicial
personcapable of
acquiring rights
and contracting
obligations.
(Supreme Court
of Spain, January
7, 1898; 83 Jur.
Civ., 24.) According

to paragraph 5 of
article 1903 of the
Civil Code and
theprinciple 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
itcontracts 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
oromissions
imputable to a
public official
charged with some
administrativeor
technical office

who can be held to

the proper
responsibility in
themanner laid
down by the law of
civil responsibility.
Consequently, the
trialcourt in not so
deciding and in
sentencing the said
entity to the

paymentof
damages, caused
by an official of the
second class
referred to, has
byerroneous
interpretation
infringed the
provisions of
articles 1902 and
1903of the Civil

Code. (Supreme
Court of Spain,
July 30, 1911; 122
Jur. Civ.,146.)
PNB v. CIRFacts:

Petitioners motion
to quash a notice
of garnishment
was denied for
lack of merit. What
was sought to be

garnished was the

money of the
People'sHomesite
and Housing
Corporation
deposited at
petitioner's branch
inQuezon City, to
satisfy a decision
of respondent
Court which had

becomefinal and
executory. A writ
of execution in
favor of private
respondentGabriel
V. Manansala had
previously been
issued. He was the
counsel of the
prevailing party,
the United

Homesite
Employees and
Laborers Associatio
n. The validity of
the order assailed
is challenged on
twogrounds: (1)
that the
appointment of
respondent Gilbert
P. Lorenzo

asauthorized
deputy sheriff to
serve the writ of
execution was
contrary tolaw and
(2) that the funds
subject of the
garnishment "may
be public
incharacter."The
order of August 26,

1970 of
respondent Court
denying the motion
toquash, subject of
this certiorari
proceeding, reads
as follows:
"ThePhilippine
National Bank
moves to quash
the notice of

garnishment
servedupon its
branch in Quezon
City by the
authorized deputy
sheriff of thisCourt.
It contends that
the service of the
notice by the
authorized
deputysheriff of

the court
contravenes
Section 11 of
Commonwealth Act
No.105, as
amended which
reads:" 'All writs
and processes
issued by theCourt
shall be served and
executed free of

charge by
provincial or
citysheriffs, or by
any person
authorized by this
Court, in the same
manneras writs
and processes of
Courts of First
Instance.'
Following the law,

theBank argues
that it is the Sheriff
of Quezon City,
and not the Clerk
of thisCourt who is
its Ex-Officio
Sheriff, that has
the authority to
serve thenotice of
garnishment, and
that the actual

service by the
latter officer of said
notice is therefore
not in order. The
Court finds no
merit in
thisargument.
Republic Act No.
4201 has, since
June 19, 1965,
alreadyrepealed

Commonwealth Act
No. 103, and under
this law, it is now
theClerk of this
Court that is at the
same time the ExOfficio Sheriff. As
suchEx-Officio
Sheriff, the Clerk
of this Court has
therefore the

authority toissue
writs of execution
and notices of
garnishment in an
areaencompassing
the whole of the
country, including
Quezon City, since
hisarea of
authority is
coterminous with

that of the Court

itself, which
isnational in
nature. ... At this
stage, the Court
notes from the
record thatthe
appeal to the
Supreme Court by
individual
employees of PHHC

whichquestions the
award of attorney's
fees to Atty. Gabriel
V. Manansala,
hasalready been
dismissed and that
the same became
final and executory
on August 9, 1970.
There is no longer
any reason,

therefore, for
withholdingaction
in this case.
[Wherefore], the
motion to quash
filed by
thePhilippine
National Bank is
denied for lack of
merit. The said
Bank istherefore

ordered to comply
within five days
from receipt with
the 'noticeof
Garnishment'
dated May 6,
1970."
5

There was a
motion
forreconsideration
filed by petitioner,

but in a resolution
dated
September22,
1970, it was
denied. Hence, this
certiorari petition.
Issue:

WON the funds

mentioned may be
garnished
Ruling:

No
Rationale:
National Shipyard
and Steel
Corporation v. court
of Industrial
Relations
6

issquarely in point.
As was explicitly
stated in the

opinion of the
thenJustice, later
Chief Justice,
Concepcion: "The
allegation to the
effect thatthe
funds of the
NASSCO are public
funds of the
government, and
that, assuch, the

same may not be

garnished,
attached or levied
upon, isuntenable
for, as a
government owned
and controlled
corporation.
theNASSCO has a
personality of its
own, distinct and

separate from that

of the
Government. It
has pursuant to
Section 2 of
Executive Order
No. 356,dated
October 23, 1950
..., pursuant to
which the NASSCO
has

beenestablished
'all the powers of a
corporation under
the Corporation
Law...' Accordingly,
it may sue and be
sued and may be
subjected to
courtprocesses just
like any other
corporation

(Section 13, Act

No. 1459),
asamended."In a
1941 decision,
Manila Hotel
Employees
Association v.
Manila
Hotel Company

,
8

this Court, through

Justice Ozaeta,
held: "On the other
hand,it is well
settled that when
the government
enters into
commercialbusines
s, it abandons its
sovereign capacity
and is to be

treated like
anyother
corporation. (Bank
of the United
States v. Planters'
Bank,
9

Wheat,904, 6 L.ed.
244). By engaging
in a particular
business thru
theinstrumentality

of a corporation,
the governmnent
divests itself pro
hacvice of its
sovereign
character, so as to
render the
corporation subject
tothe rules of law
governing private
corporations."Both

the Palacio and the

Commissioner of
Public Highways
decisions,insofar as
they reiterate the
doctrine that one
of the coronaries of
thefundamental
concept of nonsuability is that
governmental

funds areimmune
from garnishment.
It is an entirely
different matter if,
accordingto Justice
Sanchez in Ramos
v. Court of
Industrial Relations

, the office orentity

is "possessed of a
separate and

distinct corporate
existence." Thenit
can sue and be
sued. Thereafter,
its funds may be
levied upon
orgarnished.
SSS v. CAFacts:

Sometime in
March, 1963 the
spouses David B.

Cruz and Socorro

ConcioCruz applied
for and were
granted a real
estate loan by the
SSS with
theirresidential lot
located at Rizal
covered by TCT
No. 2000 of the
Register of Deeds

of Rizal as
collateral. Pursuant
to this real estate
ban said
spousesexecuted
on March 26, 1963
the corresponding
real estate
mortgageoriginally
in the amount of
P39,500.00 which

was later increased

toP48,000.00
covering the
aforementioned
property as shown
in theirmortgage
contract. The
plaintiffs complied
with their monthly
paymentsalthough
there were times

when delays were

incurred in their
monthlypayments
which were due
every first five (5)
days of the month.
On July9, 1968,
defendant SSS
filed an application
with the Provincial
Sheriff of Rizal for

the foreclosure of
the real estate
mortgage executed
by theplaintiffs on
the ground that
the conditions of
the mortgage have
beenbroken since
October, 1967 with
the default on the
part of the

mortgagorto pay in
full the
installments then
due and payable
on the principal
debtand the
interest thereon,
and, all of the
monthly
installments due
andpayable

thereafter up to
the present date.
Pursuant to this
application for
foreclosure, the
notice of the
Sheriff's Saleof the
mortgaged
property was
initially published
in the Sunday

Chroniclein its
issue of July 14,
1968 announcing
the sale at public
auction of thesaid
mortgaged
property. After this
first publication of
the notice,
andbefore the
second publication

of the notice,
plaintiff herein thru
counselformally
wrote defendant
SSS, a letter dated
July 19, 1968 and
receivedon the
same date by said
entity demanding,
among others, for
SSS towithdraw

the foreclosure and

discontinue the
publication of the
notice of sale of
their property
claiming that
plaintiffs were upto-date in
thepayment of
their monthly
amortizations.

Nothing came out

of thetelegraphic
communications
between the
parties and the
second and
thirdpublications of
the notice of
foreclosure were
published
successively in

theSunday
Chronicle in its
issues of July 21
and 28, 1968.On
July 24, 1968, the
Cruz spouses,
together with their
daughter Lorna
C.Cruz, instituted
before the Court of
First Instance of

Rizal an action
fordamages and
attorney's fees
against the Social
Security System
(SSS) andthe
Provincial Sheriff of
Rizal alleging, that
they had fully and
religiouslypaid
their monthly

amortizations and
had not defaulted
in any
payment.Trial
Court rendered
judgment in favor
of the plaintiffs[(a)
P2,500.00 asactual
damage;(b)
P35,000.00 as
moral damage;(c)

P10,000.00
asexemplary or
corrective
damages; and(d)
P5,000.00 as
attorney's
fees].The Court of
Appeals affirmed
the lower Courts
judgment but
modified itby

deducting P5000 to
total damages.
SSS then filed a
petition for
reviewon certiorari
alleging:I.
Respondent Court
of Appeals erred in
not finding that
under ConditionNo.
10 of the Mortgage

contract, which is a
self-executing,
automaticaccelerati
on clause, all
amortizations and
obligations of the
mortgagorsbecome
ipso jure

due and
demandable if they
at any time fail to

pay anyof the

amortizations or
interest when
due;II. Respondent
Court of Appeals
erred in holding
that a previous
notice tothe
mortgagor was
necessary before
the mortgage could

be foreclosed;III.
Respondent Court
of Appeals erred in
not holding that,
assuming thatthere
was negligence
committed by
subordinate
employees of the
SSS instaking
'Socorro C. Cruz'

for 'Socorro J.
Cruz' as the
defaulting
borrower,the fault
cannot be
attributed to the
SSS, much less
should the SSS
bemade liable for
their acts done
without its

knowledge and
authority;
IV. Respondent
Court of Appeals
erred in holding that
there is
no extenuating
circumstance to
mitigate the liability
of petitioner; V.
Respondent Court of
Appeals erred in not

holding that
petitioner is
not liable for
damages not being
a profit-oriented
governmental
institution but one
performing
governmental
functions petitions.
Issue:

WON SSS can be

held liable for
damages
Ruling:

Yes
Rationale:

The amendability
of the SSS to
judicial action and
legalresponsibility
for its acts have

come to the courts,

there should be
noquestion
considering that
the SSS is a
juridical entity with
a personality of its
own. It has
corporate powers
separate and
distinct from

theGovernment.
SSS' own organic
act specifically
provides that it can
sue andbe sued in
Court. These words
"sue and be sued"
embrace all
civilprocess
incident to a legal
action. So that,

even assuming
that the SSS, asit
claims, enjoys
immunity from suit
as an entity
performing
governmentalfuncti
ons, by virtue of
the explicit
provision of the
aforecited enabling

law,the
Government must
be deemed to have
waived immunity
in respect of the
SSS, although it
does not thereby
concede its
liability. That
statutorylaw has
given to the

private-citizen a
remedy for the
enforcement
andprotection of
his rights. The SSS
thereby has been
required to submit
tothe jurisdiction of
the Courts, subject
to its right to
interpose any

lawfuldefense.
Whether the SSS
performs
governmental or
proprietary
functionsthus
becomes
unnecessary to
belabor. For by that
waiver, a private
citizenmay bring a

suit against it for

varied objectives,
such as, in this
case, toobtain
compensation in
damages arising
from contract and
even for tort. As a
government owned
and controlled
corporation, it has

a personality of its
own, distinct and
separate from that
of the
Government.
(NationalShipyards
and Steel Corp. vs.
CIR, et al., L17874, August 31,
1963).Moreover,
the charter

provision that the

NPC can 'sue and
be sued in
anycourt' is
without
qualification on the
cause of action and
accordingly it
caninclude a tort
claim such as the
one instituted by

the
petitioners.What is
of paramount
importance in this
controversy is that
an injustice isnot
perpetrated and
that when damage
is caused a citizen,
the lattershould
have a right of

redress particularly
when it arises from
a purelyprivate and
contractual
relationship
between said
individual and
theSystem.Under
the circumstances
of the case, the
SSS cannot be held

liable for
thedamages as
awarded by the
Trial Court and the
Appellate Tribunal
nor canthe SSS be
held liable for
moral and
temperate
damages. The
filing aloneof the

foreclosure
application should
not be a ground for
an award of moral
damages in the
same way that a
clearly unfounded
civil action isnot
among the grounds
for moral
damages. With the

ruling out
of compensatory,
moral and
temperate
damages, the
grant of exemplary
orcorrective
damages should
also be set
aside.However, as
found by both the

Trial and Appellate

Courts, there was
clearnegligence on
the part of SSS
when they mistook
the loan account
of Socorro J. Cruz
for that of private
respondent
Socorro C. Cruz.
Itsattention was

called to the error,

but it adamantly
refused to
acknowledgeits
mistake. The SSS
can be held liable
for nominal
damages. This
type of damages is
not for the purpose
of indemnifying

private
respondents forany
loss suffered by
them but to
vindicate or
recognize their
rights whichhave
been violated or
invaded by
petitioner SSS.

BENITO E. LIM, as
administrator of
the Intestate Estate
ofArsenia
Enriquez,

plaintiffappellant,vs.
HERBERT
BROWNELL, JR.,
Attorney General
of the
UnitedStates, and

ASAICHI KAGAWA,
defendantsappellee,
REPUBLICOF THE
PHILIPPINES,
intervenorappellee.
FACTS:

The property in
dispute consists of
four parcels of land
situated in

Tondo,City of
Manila. The lands
were, after the last
world war, found
by the
AlienProperty
Custodian of the
United States to be
registered in the
name of Asaichi
Kagawa, national

of an enemy
country, Japan.
Alien
PropertyCustodian,
issued a vesting
order on the
authority of the
Trading with
theEnemy Act of
the United States,
as amended,

vesting in himself
theownership over
two of the said
lots, Lots Nos. 1
and 2.On July, 6,
1948 The
Philippine Alien
Property
Administrator
(successor of the
Alien Property

Custodian) under
the authority of the
same
statute,issued a
supplemental
vesting order,
vesting in himself
title to
theremaining Lots
Nos. 3 and 4.The
Philippine Alien

Property
Administrator
(acting on behalf of
thePresident of the
United States) and
the President of
the
Philippines,execute
d two formal
agreements, one
referring to Lots 1

and 2 and theother

to Lots 3 and 4,
whereby the said
Administrator
transferred all
thesaid four lots to
the Republic of the
Philippines .The
transfer
agreementswere
executed.On the

theory that the lots

in question still
belonged to
Arsenia
Enriquez,the
latter's son Benito
E. Lim filed a
formal notice of
claim to the
propertywith the
Philippine Alien

Property
Administrator. The
notice
wassubsequently
amended to permit
Lim to prosecute
the claim
asadministrator of
the intestate estate
of the deceased
Arsenia

Enriquez,thus, in
effect, substituting
the intestate estate
as the claimant, it
beingalleged that
the lots were once
the property of
Arsenia Enriquez.
Theclaim was
disallowed by the
Vested Property

Claims Committee
of thePhilippine
Alien Property
Administrator.The
claimant Benito E.
Lim filed a
complaint in the
Court of First
Instanceof Manila
against the
Philippine Alien

Property
Administrator
(latersubstituted
by the Attorney
General of the
United States) for
the recoveryof the
property in
question with back
rents. The
complaint was

lateramended to
include Asaichi
Kagawa as
defendant. As
amended, it
allegedthat the
lands in question
formerly belonged
to Arsenia
Enriquez. Hestated
some reasons in

his allegations to
prove that Arsenia
is the ownerof the
property.Plaintiff,
therefore, prayed
that the sheriff's
sale to Kagawa and
thevesting of the
properties in the
Philippine Alien
Property

Administrator
andthe transfer
thereof by the
United States to
the Republic of the
Philippinesbe
declared null and
void; that Arsenia
Enriquez be
adjudged owner
of the said

properties and the

Register of Deeds
of Manila be
ordered toissue the
corresponding
transfer certificates
of title to her.The
court ordered the
complaint
dismissed on the
ground as

stated inthe
dispositive part of
the order that
the "court has no
jurisdiction overthe
subject matter of
this
action,ISSUE:Whet
her or not Lim has
the right to sue or
claim for damages

against
theRepublic and
Attorney General
of the United
States.RULING:The
immunity of the
state from suit,
however, cannot
be invoked
wherethe action,
as in the present

case, is instituted
by a person who is
neitheran enemy
or ally of an enemy
for the purpose of
establishing his
right,

title or interest in
vested property,
and of recovering
his ownership
andpossession.
Congressional
consent to such
suit has expressly
been givenby the
United States.
(Sec. 3, Philippine

Property Act of
1946;
Philippine Alien
Property
Administration vs.
Castelo, et al., 89
Phil., 568.)The
order of dismissal,
however, with
respect to
plaintiff's claim

fordamages
against the
defendant Attorney
General of the
United Statesmust
be upheld. The
relief available to a
person claiming
enemy
propertywhich has
been vested by the

Philippines Alien
Property Custodian
islimited to those
expressly provided
for in the Trading
with the Enemy
Act,which does not
include a suit for
damages for the
use of such
vestedproperty.

That action, as
held by this Court
in the Castelo case
just cited,is not
one of those
authorized under
the Act which may
be instituted inthe
appropriate courts
of the Philippines
under the

provisions of
section 3of the
Philippine Property
Act of 1946.
Congressional
consent to such
suithas not been
granted.The claim
for damages for
the use of the
property against

the
intervenordefendan
t Republic of the
Philippines to
which is was
transferred,likewis
e, cannot be
maintained
because of the
immunity of the
state fromsuit. The

claim obviously
constitutes a
charge against, or
financial liabilityto,
the Government
and consequently
cannot be
entertained by the
courtsexcept with
the consent of said
government.Repub

lic intervened in
the case merely to
unite with the
defendant Attorney
General of the
United States in
resisting plaintiff's
claims, and forthat
reason asked no
affirmative relief
against any party

in the answer
inintervention it
filed. On the other
hand, plaintiff in
his original
complaintmade no
claim against the
Republic and only
asked for damages
against itfor the
use of the property

when the
complaint was
amended.In view
of the foregoing,
the order appealed
from insofar as it
dismissesthe
complaint with
respect to Lots 1
and 2 and the
claim for

damagesagainst
the Attorney
General of the
United States and
the Republic of
thePhilippines, is
affirmed,
FRANCISCO
MALONG and
ROSALINA
AQUINOMALONG

petitioners,vs.

PHILIPPINE
NATIONAL
RAILWAYS and
COURT OF
FIRSTINSTANCE
OF PANGASINAN,
Lingayen Branch
11,

respondentsFACTS:
The Malong
spouses alleged in
their complaint

that on October
30, 1977their son,
Jaime Aquino, a
paying passenger,
was killed when he
fell froma PNR
train while it was
between Tarlac
and Capas. The
tragedy
occurredbecause

Jaime had to sit

near the door of a
coach. The train
wasoverloaded
with passengers
and baggage in
view of the
proximity of
AllSaints Day. The
Malong spouses
prayed that the

PNR be ordered to
paythem
damages.Upon the
Solicitor General's
motion, the trial
court dismissed
thecomplaint. It
ruled that it had no
jurisdiction
because the PNR,
being a

government
instrumentality

, the action was a

suit against the
State. TheMalong
spouses appealed
to the Court
.ISSUE:Whether or
not the PNR is
cannot be sue or
sued because its

agovernmental
instrument?RULIN
G:The Manila
Railroad Company,
the PNR's
predecessor, as a
commoncarrier,
was not immune
from suit.The PNR
is a
governmentinstru

mentality under
government
ownership during
its 50-year
term.The
Corporation Code
provides that every
corporation has the
power tosue and
be sued in its
corporate name.

The Corporation
Law provides
thatevery
corporation has the
power to sue and
be sued in any
court.We hold that
in the instant case
the State divested
itself of its
sovereigncapacity

when it organized
the PNR which is
no different from
itspredecessor, the
Manila Railroad
Company. The PNR
did not
becomeimmune
from suit. It did
not remove itself
from the operation

of articles1732 to
1766 of the Civil
Code on common
carriers.But the
correct rule is that
"not all
government
entities,
whethercorporate
or non-corporate,
are immune from

suits. Immunity
from suit
isdetermined by
the character of
the objects for
which the entity
wasorganized."Suit
s against State
agencies with
respect to matters
in which they

haveassumed to
act in a private or
non-governmental
capacity are not
suitsagainst the
State.It would be
unjust if the heirs
of the victim of an
alleged negligence
of the PNR
employees could

not sue the PNR for

damages. Like any
privatecommon
carrier, the PNR is
subject to the
obligations of
persons engagedin
that private
enterprise. It is not
performing any
governmental

function.WHEREFO
RE, the order of
dismissal is
reversed and set
aside. The case
isremanded to the
trial court for
further
proceedings. Costs
against

thePhilippine
National Railways.
SPOUSES JOSE
FONTANILLA and
VIRGINIA
FONTANILLA,

petitioners,vs.
HONORABLE
INOCENCIO D.
MALIAMAN and
NATIONALIRRIGA

TION
ADMINISTRATION,

respondentsFACTS:
It appears that on
August 21, 1976 at
about 6:30 P.M., a
pickup ownedand
operated by
respondent
National Irrigation
Administration,

agovernment
agency bearing
Plate No. IN-651,
then driven
officially byHugo
Garcia, an
employee of said
agency as its
regular driver,
bumped abicycle
ridden by Francisco

Fontanilla, son of
herein petitioners,
andRestituto
Deligo, at Maasin,
San Jose City along
the Maharlika
Highway. As a
result of the
impact, Francisco
Fontanilla and
Restituto Deligo

wereinjured and
brought to the San
Jose City
Emergency
Hospital
fortreatment.
Fontanilla was later
transferred to the
Cabanatuan
ProvincialHospital
where he

died.Garcia was
then a regular
driver of
respondent
National
Irrigation Administr
ation who, at the
time of the
accident, was a
licensedprofessiona
l driver and who

qualified for
employment as
such regulardriver
of respondent after
having passed the
written and
oralexaminations
on traffic rules and
maintenance of
vehicles given
byNational

Irrigation
Administration
authorities.The
within petition is
thus an off-shot of
the action (Civil
Case No. SJC56)instituted by
petitioners-spouses
on April 17, 1978
against respondent

NIAbefore the then

Court of First
Instance of Nueva
Ecija, Branch VIII
at SanJose City,
for damages in
connection with
the death of their
son resultingfrom
the aforestated
accident. After

trial, the trial court

rendered judgment
on March 20, 1980
whichdirected
respondent
National Irrigation
Administration to
pay
damages(death
benefits) and
actual expenses to

petitioners. The
dispositiveportion
of the decision
reads thus:. . . . .
Judgment is here
rendered ordering
the defendant
NationalIrrigation
Administration to
pay to the heirs of
the deceased

P12,000.00for the
death of Francisco
Fontanilla;
P3,389.00 which
the parents of
thedeceased had
spent for the
hospitalization and
burial of the
deceasedFrancisco
Fontanilla; and to

pay the costs.

(Brief for the
petitionersspouses
Fontanilla, p. 4;
Rollo, p.
132)Respondent
National Irrigation
Administration filed
on April 21, 1980,
itsmotion for
reconsideration of

the aforesaid
decision which
respondent
trialcourt denied in
its Order of June
13, 1980.
Respondent
National
Irrigation Administr
ation thus
appealed said

decision to the
Court of Appeals
(C.A.-G.R. No.
67237- R) where it
filed its brief for
appellant in
support of
itsposition.Instead
of filing the
required brief in
the aforecited

Court of Appeals
case,petitioners
filed the instant
petition with this
Court.ISSUE:Whet
her or not
petitioners may be
entitled to an
award of moral
andexemplary
damages and

attorney's
fees?RULING:The
liability of the
State has two
aspects. namely:1.
Its public or
governmental
aspects where it is
liable for the
tortiousacts of
special agents

only.2. Its private

or business aspects
(as when it
engages in
privateenterprises)
where it becomes
liable as an
ordinary employer.
(p. 961,Civil Code
of the Philippines;
Annotated, Paras;

1986 Ed.

).In this
jurisdiction, the
State assumes a
limited liability for
the damagecaused
by the tortious acts
or conduct of its
special
agent.Under the
aforequoted

paragrah 6 of Art.
2180, the State
has
voluntarilyassumed
liability for acts
done through
special agents. The
State's agent,if a
public official, must
not only be
specially

commissioned to
do aparticular task
but that such task
must be foreign to
said official's
usualgovernmental
functions. If the
State's agent is not
a public official,
and
iscommissioned to

perform nongovernmental
functions, then the
Stateassumes the
role of an ordinary
employer and will
be held liable as
suchfor its agent's
tort. Where the
government
commissions a

privateindividual
for a special
governmental task,
it is acting through
a specialagent
within the meaning
of the
provision.Certain
functions and
activities, which
can be performed

only by
thegovernment,
are more or less
generally agreed to
be "governmental"
incharacter, and so
the State is
immune from tort
liability. On the
otherhand, a
service which

might as well be
provided by a
private
corporation,and
particularly when it
collects revenues
from it, the
function is

considered a
"proprietary" one,
as to which there
may be liability for
thetorts of agents
within the scope of
their

employment.The
National Irrigation
Administration is
an agency of the
governmentexercis
ing proprietary
functions,Indubitab
ly, the NIA is a
government
corporation with
juridical

personalityand not
a mere agency of
the government.
Since it is a
corporate
bodyperforming
non-governmental
functions, it now
becomes liable for
thedamage caused
by the accident

resulting from the

tortious act of
itsdriver-employee.
In this particular
case, the NIA
assumes
theresponsibility of
an ordinary
employer and as
such, it becomes
answerablefor

damages.This
assumption of
liability, however,
is predicated upon
the existence
of negligence on
the part of
respondent NIA.
The negligence
referred tohere is
the negligence of

supervision. At this
juncture, the
matter of due
diligence on the
part of
respondentNIA
becomes a crucial
issue in
determining its
liability since it has
beenestablished

that respondent is
a government
agency
performingpropriet
ary functions and
as such, it
assumes the
posture of an
ordinaryemployer
which, under Par. 5
of Art. 2180, is

responsible for the

damagescaused by
its employees
provided that it
has failed to
observe or
exercisedue
diligence in the
selection and
supervision of the
driver.Considering

the foregoing,
respondent NIA is
hereby directed to
payherein
petitioners-spouses
the amounts of
P12,000.00 for the
death of Francisco
Fontanilla;
P3,389.00 for
hospitalization and

burial expenses
of the aforenamed
deceased;
P30,000.00 as
moral damages;
P8,000.00
asexemplary
damages and
attorney's fees of
20% of the total
award.

Santiago vs
Republic

Facts:January 1971
plaintiff Ildefonso
Santiago executed
a deed of
donationto the
Bureau of Plant
Industry with
terms of the
donation, to

"installlighting
facilities and water
system on the
property donated
and to buildan
office building and
parking [lot]
thereon which
should have
beenconstructed
and ready for

occupancy on or
before December
7, 1974. August 9,
1976 Plaintiff
Santiago filed a
petition with the
Court of
firstinstance of
Zamboanga for
revocation of the
property donated

becausethe donee
failed to comply
with the terms and
conditions
aforementioned.Re
spondents asked
for the dismissal of
the case in lieu
with the
principlethat the
state may not be

sued without its

consent. The court
decided infavor of
the accused and
dismissed the
case.Issue:Whethe
r or not state can
claim immunity if it
violated
theconditions of a
donation.Ruling:No

, the state cannot

claim immunity if it
violated the
conditionsof a
donation.Rationale
:The doctrine of
governmental
immunity from suit
cannot serve as
aninstrument for
perpetrating an

injustice on a
citizen. Here, the
allegedfailure to
abide by the
conditions under
which a donation
was givenshould
not prove an
insuperable
obstacle to a civil
action, the

consentlikewise
being
presumed.Our
decision, it must
be emphasized,
goes no further
than to rule that
adonor, with the
Republic or any of
its agency being
the donee, is

entitledto go to
court in case of an
alleged breach of
the conditions of
suchdonation. He
has the right to be
heard. Under the
circumstances,
thefundamental
postulate of nonsuability cannot

stand in the way.

It ismade to
accommodate itself
to the demands of
procedural due
process,which is
the negation of
arbitrariness and
inequity. The
government, inthe
final analysis, is

the beneficiary. It
thereby manifests
its adherence tothe
highest ethical
standards, which
can only be
ignored at the risk
of losing the
confidence of the
people, the
repository of the

sovereignpower.De
cision of lower
court is reversed
and set aside.
Amigable vs
Cuenca

Facts: Victoria
Amigable, the
appellant herein, is
the registered
owner of Lot

No.639 of the
Banilad Estate in
Cebu City. No
annotation in favor
of thegovernment
of any right or
interest in the
property appears
at the back of the
certificate. Without
prior expropriation

or negotiated sale,
thegovernment
used a portion of
said lot for the
construction of the
Mangoand Gorordo
Avenues.said
avenues were
already existing in
1921 although
"they were in

badcondition and
very narrow, unlike
the wide and
beautiful avenues
thatthey are now,"
and "that the
tracing of said
roads was begun in
1924, andthe
formal construction
in 1925."March 27,

1958 Amigable's
counsel wrote the
President of the
Philippines,requesti
ng payment of the
portion of her lot
which had been
appropriatedby the
government. The
claim was indorsed
to the Auditor

General,
whodisallowed it in
his 9th
Indorsement dated
December 9, 1958.
A copy of said
indorsement was
transmitted to
Amigable's counsel
by the Office of the
President on

January 7,
1959.Petitioner
filed a complaint
against the
Republic of the
Philippines
andNicolas Cuenca,
in his capacity as
Commissioner of
Public Highways.
Thelower court

decided in favor of
the defendant and
further stated that
Itdid not have
jurisdiction over
said claim because
the government
had notgiven its
consent to be
sued.Issue:Whethe
r or not the state is

immune from the

suit
charged.Ruling:No,
the state is not
immune with
regards to the suit
charged.Rationale:
Ministerio vs. Court
of First Instance of
Cebu

where the
government takes
away property
from a private
landownerfor
public use without
going through the
legal process of
expropriation
ornegotiated sale,
the aggrieved

party may properly

maintain a suit
againstthe
government
without thereby
violating the
doctrine of
governmentalimmu
nity from suit
without its
consent.Considerin

g that no
annotation in favor
of the government
appears at theback
of her certificate of
title and that she
has not executed
any deed
of conveyance of
any portion of her
lot to the

government, the
appellantremains
the owner of the
whole lot. As
registered owner,
she could bringan
action to recover
possession of the
portion of land in
question atanytime
because

possession is one
of the attributes of
ownership.Howeve
r, since restoration
of possession of
said portion by
thegovernment is
neither convenient
nor feasible at this
time because it
isnow and has

been used for road

purposes, the only
relief available is
forthe government
to make due
compensation
which it could and
shouldhave done
years ago. To
determine the due
compensation for

the land,the basis

should be the price
or value thereof at
the time of the
taking.Judgement
is set reversed and
set aside.
Torio vs Fontanilla

Facts:Municipality
of Malasiqui passed
resolution number

159 to manage
the1959 town
fiesta. Jose
macaraeg was
appointed as
chairman of
thecommittee
concerning the
entertainment and
construction of
stage for thesaid

event. The
committee
constructed two
stages for the
event, one forthe
sarzuela and the
other for
cancionan, bamboo
were used for
theconstruction of
both.The

"zarzuela" entitled
"Midas
Extravaganza" was
donated by
anassociation of
Malasiqui
employees of the
Manila Railroad
Company
inCaloocan, Rizal.
The troupe for the

performance and
one of the
membersof the
group was Vicente
Fontanilla. The
program started at
about 10:15o'clock
that evening with
some speeches,
and many persons
went up thestage.

The "zarzuela"
then began but
before the
dramatic part of
the playwas
reached, the stage
collapsed and
Vicente Fontanilla
who was at therear
of the stage was
pinned

underneath.
Fontanilia was
taken to tile
SanCarlos General
Hospital where he
died in the
afternoon of the
followingday.Heirs
of the deceased
filed a complaint
against the

municipality
of malasiqui,
municipal council
and all the
members thereof.
Answering
thecomplaint
defendant
municipality
invoked inter alia
the principal

defensethat as a
legally and duly
organized public
corporation it
performssovereign
functions and the
holding of a town
fiesta was an
exercise of
itsgovernmental
functions from

which no liability
can arise to answer
for thenegligence
of any of its
agents.Trial court
ruled that the
defendants
exercised diligence
of a good fatherof
a family and
therefore they are

not liable for

damages as
theundertaking
was not for profit.
Appellate court
reversed the trial
court'sdecision and
ordered all the
defendantsappellees to pay
jointly andseverally

the heirs of Vicente

Fontanill.Issue:Wh
ether or not the
municipality and its
councilors are
liable fordamages
for the death of
Fontanilla.Ruling:

The municipality is
liable for the death
of Fontanilla,
howeverthe
councilors acted as
mere agents of the
municipality thus
are
notliable.Rationale:
We hold that of the
town fiesta in 1959

by the municipality
of Malsiqui
Pangasinan was an
exercise of a
private or
proprietary
functionof the
municipality. It
follows that under
the doctrine of
respondentsuperior

, petitionermunicipality is to
be held liable for
damages for
thedeath of Vicente
Fontaniliaif that
was attributable to
the negligence of
themunicipality's
officers,
employees, or

agents. The rule

of law is a general
one, that the
superior or
employermust
answer civilly for
the negligence or
want of skill of its
agent orservant in
the course or fine
of his employment,

by which another,
who isfree from
contributory fault,
is injured.
Municipal
corporations under
theconditions
herein stated, fall
within the
operation of this
rule of law, andare

liable, accordingly,
to civil actions for
damages when the
requisiteelements
of liability co-exist.
Art. 2176, Civil
Code: Whoever by
act or omission
causes damage
toanother, there
being fault or

negligence, is
obliged to pay for
the damagedone. .
. Art. 2180, Civil
Code: The
obligation imposed
by article 2176
isdemandable not
only for one's own
acts or omission,
but also for those

of persons for
whom one is
responsible. .
.When it is sought
to render a
municipal
corporation liable
forthe act of
servants or agents,
a cardinal inquiry
is, whether they

are theservants or
agents of the
corporation. If the
corporation
appoints or
electsthem, can
control them in the
discharge of their
duties, can
continue orremove
the can hold them

responsible for the

manner in which
theydischarge their
trust, and if those
duties relate to the
exercise
of corporate
powers, and are
for the benefit of
the corporation in
its local orspecial

interest, they may

justly be regarded
as its agents or
servants,and the
maxim of
respondent
superior applies."
The Holy See vs
Hon. Rosario Jr.

Facts:Parcel of
Land was donated

by the archdiocese
of Manila to
theHoly See for the
Construction of a
residence of the
Pope located in
theMunicipality of
Paraaque, Metro
Manila and
registered in the
name of petitioner.

The said parcel of

land was adjacent
to the parcel of
landsregistered to
the Philippine
Realty Corporation
(PRC). April 17,
1988 - Msgr.
Cirilos, Jr., on
behalf of petitioner
and the PRC,agreed

to sell to Ramon
Licup Lots 5-A, 5-B
and 5-D at the
price of P1,240.00
per square meters
with the condition
that earnest
money
of P100,000.00 be
paid by Licup to
the sellers, and

that the sellers

clear thesaid lots
of squatters who
were then
occupying the
same.Licup paid
the earnest money
to Msgr. Cirilo and
assigned hisrights
over the property
to Star Bright

Sales Enterprises,
inc and
informedthe sellers
of the said
assignment.
Thereafter, private
respondentdemand
ed from Msgr.
Cirilos that the
sellers fulfill their
undertaking

andclear the
property of
squatters; however,
Msgr. Cirilos
informed
privaterespondent
of the squatters'
refusal to vacate
the lots, proposing
insteadeither that
private respondent

undertake the
eviction or that the
earnestmoney be
returned to the
latter.Private
respondent counter
proposed that if it
would
undertakethe
eviction of the
squatters, the

purchase price of
the lots should
bereduced from
P1,240.00 to
P1,150.00 per
square meter.
Msgr.
Cirilosreturned the
earnest money of
P100,000.00 and
wrote private

respondentgiving it
seven days from
receipt of the letter
to pay the original
purchaseprice in
cash.Private
respondent sent
the earnest money
back to the
sellers,but later
discovered that on

March 30, 1989,

petitioner and the
PRC,without notice
to private
respondent, sold
the lots to
Tropicana.Tropican
a induced
petitioner and the
PRC to sell the lots
to itand thus

enriched itself at
the expense of
private
respondent.
Privaterespondent
demanded the
rescission of the
sale to Tropicana
and
thereconveyance of
the lots, to no

avail; and private

respondent is
willingand able to
comply with the
terms of the
contract to sell and
has actuallymade
plans to develop
the lots into a
townhouse project,
but in view of the

sellers' breach, it
lost profits of not
less than
P30,000.000.00.Pe
titioner filed a
motion to dismiss
and asserts its
sovereignimmunity
from suit but the
trial court issued
an order denying,

amongothers,
petitioner's motion
to dismiss after
finding that
petitioner "shed
off [its] sovereign
immunity by
entering into the
business contract
inquestion"Issue:W
hether or not

petitioner is correct
in claiming
sovereignimmunity
being a foreign
state and on behalf
of the Papal
Nuncio.Ruling: Yes,
petitioner has
sovereign
immunity from
suit.Rationale: As

expressed in
Section 2 of Article
II of the 1987
Constitution,we
have adopted the
generally accepted
principles of
International
Law.Even without
this affirmation,
such principles of

International Law
aredeemed
incorporated as
part of the law of
the land as a
condition
andconsequence of
our admission in
the society of
nationsThere are
two conflicting

concepts of
sovereign
immunity, each
widelyheld and
firmly established.
According to the
classical or
absolute theory,a
sovereign cannot,
without its
consent, be made

a respondent in
thecourts of
another sovereign.
According to the
newer or restrictive
theory,the
immunity of the
sovereign is
recognized only
with regard to
publicacts or acts

jure imperii

of a state, but not

with regard to
private acts oracts
jure gestionis
This Court has
considered the
following
transactions by
aforeign state with
private parties as
acts

jure imperii

(1) the lease by a

foreign
government of
apartment
buildings for use
of its military
officers (Syquia v.
Lopez, 84 Phil. 312
[1949](2) the

conduct of public
bidding for the
repair of a wharf at
a UnitedStates
Naval Station
(United States of
America v. Ruiz,
supra

.); (3) thechange

of employment
status of base

employees
(Sanders v.
Veridiano,162
SCRA 88 [1988]).
This Court has
considered the
following
transactions by
aforeign state with
private parties as
acts
jure gestionis

(1) the hiring of a

cook in the
recreation center,
consisting of
threerestaurants, a
cafeteria, a bakery,
a store, and a
coffee and pastry
shop atthe John
Hay Air Station in

Baguio City, to
cater to American
servicemenand the
general public
(United States of
America v.
Rodrigo, 182
SCRA644
[1990])(2) the
bidding for the
operation of barber

shops in Clark Air

Base in Angeles
City (United States
of America v.
Guinto, 182 SCRA
644 [1990]).

The operation of the

restaurants and
other facilities open
to the general public

is undoubtedly for
profit as a
commercial and
not a governmental
activity. By entering
into the
employment contrac
t with the cook in
the discharge of its
proprietary function,
the United States
government

impliedly divested
itself of its
sovereign immunity
from suit.

Certainly, the mere

entering into a
contract by a
foreign state with
aprivate party
cannot be the
ultimate test. Such

an act can only be

thestart of the
inquiry. The logical
question is
whether the
foreign state
isengaged in the
activity in the
regular course of
business. If the
foreignstate is not

engaged regularly
in a business or
trade, the
particular act
ortransaction must
then be tested by
its nature. If the
act is in pursuit of
asovereign activity,
or an incident

thereof, then it is
an act
jure imperii

,especially when it
is not undertaken
for gain or
profit.The land in
question was
acquired by
petitioner as a
donation fromthe

Archdiocese of
Manila. The
donation was made
not for
commercialpurpose
, but for the use of
petitioner to
construct thereon
the officialplace of
residence of the
Papal Nuncio. The

right of a foreign
sovereign
toacquire property,
real or personal, in
a receiving state,
necessary for
thecreation and
maintenance of its
diplomatic mission,
is recognized in
the1961 Vienna

Convention on
Diplomatic
Relations (Arts.
20-22). This
treatywas
concurred in by the
Philippine Senate
and entered into
force in
thePhilippines on
November 15,

1965.The decision
to transfer the
property and the
subsequent
disposalthereof are
likewise clothed
with a
governmental
character.
Petitioner didnot
sell the land for

profit or gain. It
merely wanted to
dispose off
thesame because
the squatters living
thereon made it
almost impossible
forpetitioner to use
it for the purpose
of the donation.
The fact

thatsquatters have
occupied and are
still occupying the
lot, and that
theystubbornly
refuse to leave the
premises, has been
admitted by
privaterespondent
in its
complaintPetition is

granted and
decision of the
lower court is set
aside. ThePetitioner
has sovereign
immunity.
U.S.A vs Ruiz

Facts:Sometime in
May, 1972, the
United States
invited the

submission of
bidsfor the
following projects1.
Repair offender
system, Alava
Wharf at the U.S.
Naval Station
SubicBay,
Philippines.

2. Repair typhoon
damage to NAS
Cubi shoreline;
repair typhoon
damageto

shoreline
revetment,
NAVBASE Subic;
and repair to Leyte
Wharf approach,
NAVBASE Subic
Bay,
Philippines.Eligio
de Guzman & Co.,
Inc. responded to
the invitation and

submittedbids.
Subsequent
thereto, the
company received
from the United
Statestwo
telegrams
requesting it to
confirm its price
proposals and for
thename of its

bonding company.
The company
complied with the
requests.The
company received
a letter which was
signed by Wilham
I. Collins,Director,
Contracts Division,
Naval Facilities
Engineering

Command,Southwe
st Pacific,
Department of the
Navy of the United
States, who isone
of the petitioners
stating that the
company did not
qualify to
receivean award
for the projects

because of its
previous
unsatisfactoryperfo
rmance rating on a
repair contract for
the sea wall at the
boatlandings of the
U.S. Naval Station
in Subic Bay. The
letter further said
thatthe projects

had been awarded

to third partiesThe
said company filed
a suit against
United States of
America
andMessrs. James
E. Galloway,
William I. Collins
and Robert Gohier
allmembers of the

Engineering
Command of the
U.S. Navy to order
thelatter to allow
the company to
perform the work
on the projects
and, inthe event
that specific
performance was
no longer possible,

to order
thedefendants to
pay damages. The
company also
asked for the
issuance of a writ
of preliminary
injunction to
restrain the
defendants from
enteringinto

contracts with third

parties for work on
the projects.Herein
petitioner raised
the question of
jurisdiction for the
subject matterof
the complaint
being acts and
omissions of the
individual

defendants
asagents of
defendant United
States of America,
a foreign sovereign
whichhas not given
her consent to this
suit or any other
suit for the causes
of action asserted
in the complaint.

They also filed a

motion to dismiss
thecase.The lower
court denied the
motion and issued
the writ prayed by
edigiode Guzman &
Co.,
inc.Issue:Whether
or not the
defendant-

appellant U.S.A
has immunityfrom
suit.Ruling: Yes,
the U.S.A has
immunity from suit
in the said
case.Rationale:The
traditional rule of
State immunity
exempts a State
frombeing sued in

the courts of
another State
without its consent
or waiver.This rule
is a necessary
consequence of the
principles of
independenceand
equality of States.
However, the rules
of International

Law are
notpetrified; they
are constantly
developing and
evolving. And
because
theactivities of
states have
multiplied, it has
been necessary to
distinguishthem-

between sovereign
and governmental
acts (
jure imperii

) andprivate,
commercial and
proprietary acts (
jure
gestionis

). The result isthat

State immunity
now extends only
to acts jure imperil
The
restrictiveapplicatio
n of State
immunity is now
the rule in the
United States,
theUnited Kingdom

and other states in

western
Europe.The
restrictive
application of State
immunity is proper
only when
theproceedings
arise out of
commercial
transactions of the

foreign
sovereign,its
commercial
activities or
economic affairs.
Stated differently,
a Statemay be said
to have descended
to the level of an
individual and can
thusbe deemed to

have tacitly given

its consent to be
sued only when
itenters into
business contracts.
It does not apply
where the
contractrelates to
the exercise of its
sovereign
functions. In this

case the
projectsare 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
thegovernment of

the highest order;

they are not
utilized for nor
dedicatedto
commercial or
business
purposes.That the
correct test for the
application of State
immunity is not
theconclusion of a

contract by a State
but the legal
nature of the
actJudgment of
lower court is
reversed and set
aside.
U.S.A vs Guinto

Facts:Several cases
have been
consolidated

because they all

involve thedoctrine
of state immunity.
The United States
of America was
notimpleaded in
the complaints
below but has
moved to dismiss
on theground that
they are in effect

suits against it to
which it has
notconsented. It is
now contesting the
denial of its
motions by
therespondent
judges.In G.R. No.
76607, the private
respondents are
suing several

officers of the U.S.

Air Force stationed
in Clark Air Base in
connection with
thebidding
conducted by them
for contracts for
barber services in
the saidbase.In
G.R. No. 79470,
Fabian Genove

filed a complaint
for damages
againstpetitioners
Anthony Lamachia,
Wilfredo Belsa,
Rose Cartalla and
PeterOrascion for
his dismissal as
cook in the U.S. Air
Force Recreation
Centerat the John

Hay Air Station in

Baguio City. It had
been ascertained
afterinvestigation,
from the testimony
of Belsa Cartalla
and Orascion,
thatGenove had
poured urine into
the soup stock
used in cooking

thevegetables
served to the club
customers.
Lamachia, as club
manager,suspende
d him and
thereafter referred
the case to a board
of
arbitratorsconform
ably to the

collective
bargaining
agreement
between the
Centerand its
employees. The
board unanimously
found him guilty
andrecommended
his dismissal. This
was effected on

March 5, 1986, by
Col.David C.
Kimball,
Commander of the
3rd Combat
Support Group,
PACAFClark Air
Force Base.
Genove's reaction
was to file Ms
complaint in

theRegional Trial
Court of Baguio
City against the
individual
petitioners.In G.R.
No. 80018, Luis
Bautista, who was
employed as a
barracks boy
inCamp O' Donnell,
an extension of

Clark Air Base, was

arrested following
abuy-bust
operation
conducted by the
individual
petitioners herein,
namely,Tomi J.
King, Darrel D. Dye
and Stephen F.
Bostick, officers of

the U.S. AirForce

and special agents
of the Air Force
Office of Special
Investigators(AFOS
I). On the basis of
the sworn
statements made
by them,
aninformation for
violation of R.A.

6425, otherwise
known as the
DangerousDrugs
Act, was filed
against Bautista in
the Regional Trial
Court of Tarlac.The
above-named
officers testified
against him at his
trial. As a result

of the filing of the

charge, Bautista
was dismissed
from his
employment.
Hethen filed a
complaint for
damages against
the individual
petitionersherein
claiming that it

was because of
their acts that he
was removed.In
G.R. No. 80258, a
complaint for
damages was filed
by the
privaterespondents
against the herein
petitioners (except
the United States

of America), for
injuries allegedly
sustained by the
plaintiffs as a
result of theacts of
the defendants.
9

There is a conflict
of factual
allegations
here. According to
the plaintiffs, the

defendants beat
them up,
handcuffed
themand
unleashed dogs on
them which bit
them in several
parts of theirbodies
and caused
extensive injuries
to them. The

defendants deny
thisand claim the
plaintiffs were
arrested for theft
and were bitten by
thedogs because
they were
struggling and
resisting arrest,
The
defendantsstress

that the dogs were

called off and the
plaintiffs were
immediatelytaken
to the medical
center for
treatment of their
wounds.Issue:Whe
ther or not the
doctrine of state
immunity is

applicable onthe
said
cases.Ruling:The
answer depends on
each and every
case
involved.Rationale:
As applied to the
local state, the
doctrine of state
immunity isbased

on the justification
given by Justice
Holmes that "there
can be nolegal
right against the
authority which
makes the law on
which the
rightdepends."
12

There are other

practical reasons

for the
enforcement of
thedoctrine. In the
case of the foreign
state sought to be
impleaded in
thelocal
jurisdiction, the
added inhibition is
expressed in the
maxim

par in parem, non

habet imperium.

All states are

sovereign equals
and cannotassert
jurisdiction over
one another. A
contrary
disposition would,
in thelanguage of a
celebrated case,

"unduly vex the

peace of nations."
13

While the doctrine

appears to prohibit
only suits against
the state withoutits
consent, it is also
applicable to
complaints filed
against officials of
thestate for acts

allegedly
performed by them
in the discharge of
theirduties. The
rule is that if the
judgment against
such officials will
requirethe state
itself to perform an
affirmative act to
satisfy the same,

such asthe
appropriation of
the amount needed
to pay the
damages
awardedagainst
them, the suit
must be regarded
as against the
state
itself although it

has not been

formally
impleaded.
14

In such a situation,
thestate may move
to dismiss the
complaint on the
ground that it has
beenfiled without
its consent.The
doctrine is

sometimes
derisively called
"the royal
prerogative
of dishonesty"
because of the
privilege it grants
the state to defeat
anylegitimate claim
against it by simply
invoking its non-

suability. That
ishardly fair, at
least in democratic
societies, for the
state is not
anunfeeling tyrant
unmoved by the
valid claims of its
citizens. In fact,
thedoctrine is not
absolute and does

not say the state

may not be
suedunder any
circumstance. On
the contrary, the
rule says that the
state maynot be
sued without its
consent, which
clearly imports that
it may be suedif it

consents.The
general law
waiving the
immunity of the
state from suit is
found in Act No.
3083, under which
the Philippine
government
"consents
andsubmits to be

sued upon any

moneyed claim
involving liability
arisingfrom
contract, express
or implied, which
could serve as a
basis of civilaction
between private
parties.When the
government enters

into a contract, it is
deemed to
havedescended to
the level of the
other contracting
party and divested
of its
sovereign
immunity from suit

with its implied

consent.
16

Waiver is
alsoimplied when
the government
files a complaint,
thus opening itself
to
acounterclaim.Ther
e is no question
that the United

States of America,
like any otherstate,
will be deemed to
have impliedly
waived its nonsuability if it
hasentered into a
contract in its
proprietary or
private capacity. It
is onlywhen the

contract involves
its sovereign or
governmental
capacity that
nosuch waiver may
be implied.The
other petitioners in
the cases before us
all aver they have
acted inthe
discharge of their

official functions as
officers or agents
of the
UnitedStates.
However, this is a
matter of evidence.
The charges
against themmay
not be summarily
dismissed on their
mere assertion

that their actsare

imputable to the
United States of
America, which has
not given
itsconsent to be
sued. In fact, the
defendants are
sought to be
heldanswerable for
personal torts in

which the United

States itself is
notinvolved. If
found liable, they
and they alone
must satisfy the
judgment.WHEREF
ORE, after
considering all the
above premises,
the Court

herebyrenders
judgment as
follows:1. In G.R.
No. 76607, the
petition is
DISMISSED and
the
respondent judge
is directed to
proceed with the
hearing and

decision of Civil
CaseNo. 4772. The
temporary
restraining order
dated December
11, 1986,
isLIFTED.2. In G.R.
No. 79470, the
petition is
GRANTED and Civil
Case No. 829-

R(298) is
DISMISSED.3. In
G.R. No. 80018,
the petition is
GRANTED and Civil
Case No. 115-C-87
is DISMISSED. The
temporary
restraining order
dated October
14,1987, is made

permanent.4. In
G.R. No. 80258,
the petition is
DISMISSED and
the respondent
courtis directed to
proceed with the
hearing and
decision of Civil
Case No.4996. The
temporary

restraining order
dated October 27,
1987, is LIFTED.
Minucher Vs C.A

Facts:Khosrow
Minucher is an
Iranian national.
He came to
thePhilippines to
study in the
University of the

Philippines in 1974.
In 1976,under the
regime of the Shah
of Iran, he was
appointed Labor
Attach forthe
Iranian Embassies
in Tokyo, Japan
and Manila,
Philippines. When
theShah of Iran

was deposed by
Ayatollah
Khomeini, plaintiff
became arefugee
of the United
Nations and
continued to stay
in the Philippines.
Heheaded the
Iranian National
Resistance

Movement in the
Philippines.May 13,
1986 Minucher
came to know
Arthur Scalzo
private
defendantwhich
expressed his
interest in buying
caviar. Selling
caviar, aside

fromthat of Persian
carpets, pistachio
nuts and other
Iranian products
was thebusiness of
Minucher after
Khoemeni
government cut his
pensions.Upon
knowing that
defendant was

working in the US
embassy in
thePhilippines as
special agent of
Drug Enforcement
Administrationexpr
essed his desire to
obtain a US Visa
for his wife and the
wife of
acountryman. The

defendant told him

that he [could]
help plaintiff for
afee of $2,000.00
per visa.May 26,
1986 - defendant
visited plaintiff
again at the
latter's
residencefor 18
years at Kapitolyo,

Pasig.May 27,
1986 defendant
visited petitioner
for the payment
for the visa. A
while later the
defendant was with
a few Americans
and
arrestedpetitioner
for drug

trafficking.The
petitioners arrest
as heroin trafficker
was well publicized
throughoutthe
world, in various
newspapers,
particularly in
Australia,
America,CentralAsi
a and in the

Philippines. He was
identified in the
papers as
aninternational
drug trafficker. The
arrest of defendant
was likewise
ontelevision, not
only in the
Philippines, but
also in America

and in
Germany.His
friends in said
places informed
him that they saw
him on TV with
saidnews.Minucher
filed a case in the
RTC for damages
on account of what
heclaimed to have

been trumped-up
charges of drug
trafficking made
by Arthur Scalzo.
Scalzo filed a
motion to set aside
the order of default
andto admit his
answer to the
complaint.
Granting the

motion, the trial

courtset the case
for pre-trial. Scalzo
filed a motion to
dismiss the
complaint onthe
ground that, being
a special agent of
the United States
DrugEnforcement
Administration, he

was entitled to
diplomatic
immunity.
RTCdenied the
motion.Scalzo filed
a petition for
certiorari with
injunction in this
court(SC) butwas
referred to the C.A.
asking that the

complaint by
minucher
bedismissed. C.A.
sustained
diplomatic
immunity of Scalzo
and ordering
thedismissal of the
complaint against
him. S.C reversed
the decision of

C.A.and ordered
the continuance of
the trial and
ordered the trial
court todecide on
the case.RTC ruled
he should still be
liable for the
damages although
he is anagent
entitled to

immunity for it is
committed outside
his official
duties.C.A.
reversed the
decision of the trial
court and
sustained the
defense of Scalzo
that he was
sufficiently clothed

with diplomatic
immunity during
histerm of duty
and thereby
immune from the
criminal and civil
jurisdictionof the
"Receiving State"
pursuant to the
terms of the
Vienna

Convention.Issue:
Whether or not
whether or not
Arthur Scalzo is
indeed entitledto
diplomatic
immunity.Ruling: Y
es, Scalzo is
entitled to
diplomatic
immunity.Rationale

: Vesting a person
with diplomatic
immunity is a
prerogative of
theexecutive
branch of the
government. The
Court has
recognized that,
insuch matters, the
hands of the courts

are virtually tied.

The
StateDepartment
policy is to only
concede diplomatic
status to a person
whopossesses an
acknowledged
diplomatic title and
"performs duties

of diplomatic
natureThe
precept that a
State cannot be
sued in the courts
of aforeign state

is a long-standing
rule of customary
international law
thenclosely
identified with the
personal immunity

of a foreign
sovereign
fromsuit20and,
with the
emergence of
democratic states,
made to attach
not just to the
person of the head
of state, or his
representative, but

alsodistinctly to the
state itself in its
sovereign
capacity.If the acts
giving rise to a suit
are those of a
foreign
government done
byits foreign agent,
although not
necessarily a

diplomatic
personage,
butacting in his
official capacity,
the complaint
could be barred by
theimmunity of the
foreign sovereign
from suit without
its consent. Suing
arepresentative of

a state is believed
to be, in effect,
suing the state
itself.under the
maxim - par in
parem, non habet
imperium - that all
states
aresovereign
equals and cannot
assert jurisdiction

over one
another.22Theimpli
cation, in broad
terms, is that if the
judgment against
an officialwould
require the state
itself to perform an
affirmative act to
satisfy theaward,
such as the

appropriation of
the amount needed
to pay thedamages
decreed against
him, the suit must
be regarded as
being againstthe
state itself,
although it has not
been formally
impleadedWhile

the doctrine (of

state immunity)
appears to prohibit
only suitsagainst
the state without
its consent, it is
also applicable to
complaintsfiled
against officials of
the state for acts
allegedly

performed by them
inthe discharge of
their duties. The
doctrine of
immunity from suit
will notapply and
may not be
invoked where the
public official is
being sued inhis
private and

personal capacity
as an ordinary
citizen. The cloak
of protection
afforded the
officers and agents
of the government
is removedthe
moment they are
sued in their
individual

capacity.This
situation usually
arises where the
public official acts
without authorityor
in excess of the
powers vested in
him. It is a wellsettled principle
of law that a public
official may be

liable in his
personal private
capacity
forwhatever
damage he may
have caused by his
act done with
malice and inbad
faith or beyond the
scope of his
authority and

jurisdiction. A
foreign agent,
operating within a
territory, can be
cloaked
withimmunity from
suit but only as
long as it can be
established that he
isacting within the
directives of the

sending state.The
official exchanges
of communication
between agencies
of thegovernment
of the two
countries,
certifications from
officials of both
thePhilippine
Department of

Foreign Affairs and

the United States
Embassy,as well as
the participation of
members of the
Philippine
NarcoticsCommand
in the "buy-bust
operation"
conducted at the
residence

of Minucher at the
behest of Scalzo,
may be inadequate
to support
the"diplomatic
status" of the latter
but they give
enough indication
that thePhilippine
government has
given its

imprimatur

, if not consent, to
theactivities within
Philippine territory
of agent Scalzo of
the United
StatesDrug
Enforcement
Agency.The job
description of
Scalzo has tasked

him to conduct
surveillance
onsuspected drug
suppliers and, after
having ascertained
the target,
toinform local law
enforcers who
would then be
expected to make
thearrest. In

conducting
surveillance
activities on
Minucher, later
acting asthe
poseur-buyer
during the buybust operation,
and then becoming
aprincipal witness
in the criminal case

against Minucher,
Scalzo hardly
canbe said to have
acted beyond the
scope of his official
function or
duties.Decision of
C.A. is affirmed.
Defendant has
immunity.

Republic of
Indonesia vs Vinson

Facts:Petitioner,
Republic of
Indonesia,
represented by its
Counsellor,
SitiPartinah,
entered into a
Maintenance
Agreement in

August 1995
withrespondent
James Vinzon, sole
proprietor of
VinzonTrade and
Services.

The Maintenance
Agreement stated
that respondent
shall, for
aconsideration,
maintain specified
equipment at the
Embassy
MainBuilding,
Embassy Annex
Building and the

Wisma Duta, the

officialresidence of
petitioner
Ambassador
Soeratmin. The
equipment
coveredby the
Maintenance
Agreement are air
conditioning units,
generator

sets,electrical
facilities, water
heaters, and water
motor pumps. It is
likewisestated
therein that the
agreement shall be
effective for a
period of fouryears
and will renew
itself automatically

unless cancelled by
either partyby
giving thirty days
prior written notice
from the date of
expiry.Petitioners
informed
respondents that
the renewal of the
agreement shallbe
at the discretion of

the incoming Chief

of Administration,
MinisterCounsellor
Azhari Kasim, who
was expected to
arrive in February
2000.When
Minister Counsellor
Kasimassumed the
position of Chief
of Administration

in March 2000, he
allegedly found
respondents work
andservices
unsatisfactory and
not in compliance
with the standards
set inthe
Maintenance
Agreement. Hence,
the Indonesian

Embassy
terminatedthe
agreement in a
letter dated August
31,
2000.Respondents
claim that the
termination was
arbitrary and
unlawful.
Hencerespondent

filed a complaint.
Petitonerbeing the
accused at that
time fileda motion
to dismiss the case
on the ground that
the Republic
of Indonesia, as a
foreign sovereign
State, has
sovereign

immunity from
suitand cannot be
sued as a partydefendant in the
Philippines. The
saidmotion further
alleged that
Ambassador
Soeratmin and
MinisterCounsellor
Kasim are

diplomatic agents
as defined under
the
ViennaConvention
on Diplomatic
Relations and
therefore enjoy
diplomaticimmunity
In turn,
respondent filed on
March 20, 2001,

an Opposition to
the saidmotion
alleging that the
Republic of
Indonesia has
expressly waived
itsimmunity from
suit. He based this
claim upon the
following provision
inthe Maintenance

Agreement: Any
legal action arising
out of this
Maintenance
Agreement shall
besettled according
to the laws of the
Philippines and by
the proper court
of Makati City,
Philippines. Respo

ndents opposition
likewise alleged
that Ambassador
Soeratmin
andMinister
Counsellor Kasim
can be sued and
held liable in their
privatecapacities
for tortious acts
done with malice

and bad faith.Trial

court denied the
motion to dismiss.
C.A. affirmed the
trial
courtsdecision.Issu
e:Whether or a
stipulation in a
Maintenance
Agreement can
waivethe states

immunity from
suit.Ruling:No, the
stipulation in an
agreement cannot
be a waiver
of immunity from
suit.Rationale: Apr
opos the present
case, the mere
entering into a
contract by a

foreignState with a
private party
cannot be
construed as the
ultimate test
of whether or not it
is an act
jure imperii

or
jure gestionis

. Such act is
onlythe start of the
inquiry. Is the
foreign State
engaged in the
regularconduct of a
business? If the
foreign State is not
engaged regularly
in abusiness or
commercial

activity, and in this

case it has not
been shown tobe
so engaged, the
particular act or
transaction must
then be tested
byits nature. If the
act is in pursuit of
a sovereign
activity, or an

incidentthereof,
then it is an act
jure imperii

.Hence, the
existence alone of
a paragraph in a
contract stating
that anylegal
action arising out
of the agreement
shall be settled

according to
thelaws of the
Philippines and by
a specified court of
the Philippines is
notnecessarily a
waiver of sovereign
immunity from
suit.Submission by
a foreign state to
local jurisdiction

must be clear
andunequivocal. It
must be given
explicitly or by
necessary
implication. Wefind
no such waiver in
this case.There is
no dispute that the
establishment of a

diplomatic mission
is anact
jure imperii

. A sovereign State
does not merely
establish a
diplomaticmission
and leave it at
that; the
establishment of a
diplomatic

missionencompass
es its maintenance
and upkeep.
Hence, the State
may enterinto
contracts with
private entities to
maintain the
premises,
furnishingsand
equipment of the

embassy and the

living quarters of
its agents
andofficials.It is
therefore clear that
petitioner Republic
of Indonesia was
acting inpursuit of
a sovereign activity
when it entered
into a contract

withrespondent for
the upkeep or
maintenance of the
air conditioning
units,generator
sets, electrical
facilities, water
heaters, and water
motor pumpsof the
Indonesian
Embassy and the

official residence of
the
Indonesianambass
ador. Article 31 of
the Vienna
Convention on
Diplomatic
Relations
provides:x x x1. A
diplomatic agent
shall enjoy

immunity from the

criminal
jurisidictionof the
receiving State. He
shall also enjoy
immunity from its
civil
andadministrative
jurisdiction, except
in the case of:(a) a
real action relating

to private
immovable
property situated
in theterritory of
the receiving
State, unless he
holds it on behalf
of the
sendingState for
the purposes of the
mission;(b) an

action relating to
succession in which
the diplomatic
agent isinvolved as
executor,
administrator, heir
or legatee as a
private personand
not on behalf of
the sending
State;(c) an action

relating to any
professional or
commercial activity
exercisedby the
diplomatic agent in
the receiving State
outside his
officialfunctions.Th
e Solicitor General
believes that said
act may fall under

subparagraph(c)
thereof, but said
provision clearly
applies only to a
situation where
thediplomatic
agent engages in
any professional
or commercial
activityoutside
official functions,

which is not the

case
herein.Petition is
granted. Decision
of lower court is
reversed and set
aside.
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