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Loida Q. Shauf & Jacob Shauf, petitioners v. Hon. CA, Don E.

Detwiler & Anthony


Persi, respondents

Facts: Loida Shauf, a Filipino by origin and married to an American who is a member of
the US Air Force, was rejected for a position of Guidance Counselor in the Base
Education Office at Clark Air Base, for which she is eminently qualified.

By reason of her non-selection, she filed a complaint for damages and an equal
employment opportunity complaint against private respondents, Don Detwiler (civillian
personnel officer) and Anthony Persi (Education Director), for alleged discrimination by
reason of her nationality and sex.

Shauf was offered a temporary position as a temporary Assistant Education Adviser for
a 180-day period with the condition that if a vacancy occurs, she will be automatically
selected to fill the vacancy. But if no vacancy occurs after 180 days, she will be
released but will be selected to fill a future vacancy if shes available. Shauf accepted
the offer. During that time, Mrs. Mary Abalateos was about to vacate her position. But
Mrs. Abalateos appointment was extended thus, Shauf was never appointed to said
position. She claims that the Abalateos stay was extended indefinitely to deny her the
appointment as retaliation for the complaint that she filed against Persi. Persi denies
this allegation. He claims it was a joint decision of the management & it was in
accordance of with the applicable regulation.
Shauf filed for damages and other relief in different venues such as the Civil Service
Commission, Appeals Review Board, Philippine Regional Trial Court, etc.

RTC ruled in favor of Shauf ordering defendants to pay $39,662.49 as actual damages
+ 20% of such amount as attorneys fees + P100k as moral & exemplary damages.

Both parties appealed to the CA. Shauf prayed for the increase of the damages to be
collected from defendants. Defendants on the other hand, continued using the defense
that they are immune from suit for acts done/statements made by them in performance
of their official governmental functions pursuant to RP-US Military Bases Agreement of
1947. They claim that the Philippines does not have jurisdiction over the case because
it was under the exclusive jurisdiction of a US District Court. They likewise claim that
petitioner failed to exhaust all administrative remedies thus case should be dismissed.
CA reversed RTC decision. According to the CA, defendants are immune from suit.

Shauf claims that the respondents are being sued in their private capacity thus this is
not a suit against the US government which would require consent.

Respondents still maintain their immunity from suit. They further claim that the rule
allowing suits against public officers & employees for criminal & unauthorized acts is
applicable only in the Philippines & is not part of international law.

Hence this petition for review on certiorari.

Issue: WON private respondents are immune from suit being officers of the US Armed
Forces

Held: No they are not immune.

WHEREFORE, the challenged decision and resolution of respondent Court of Appeals


in CA-G.R. CV No. 17932 are hereby ANNULLED and SET ASIDE. Private
respondents are hereby ORDERED, jointly and severally, to pay petitioners the sum of
P100,000.00 as moral damages, P20,000.00 as and for attorney's fees, and the costs
of suit.

Ratio: 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

Director of the Bureau of Telecommunications vs. Aligaen 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 doctrine of state immunity
cannot be used as an instrument for perpetrating an injustice

In the case at bar, there is nothing in the record which suggests any arbitrary, irregular
or abusive conduct or motive on the part of the trial judge in ruling that private
respondents committed acts of discrimination for which they should be held personally
liable.

There is ample evidence to sustain plaintiffs' complaint that plaintiff Loida Q. Shauf was
refused appointment as Guidance Counselor by the defendants on account of her sex,
color and origin.

She received a Master of Arts Degree from the University of Santo Tomas, Manila, in
1971 and has completed 34 semester hours in psychology?guidance and 25 quarter
hours in human behavioral science. She has also completed all course work in human
behavior and counselling psychology for a doctoral degree. She is a civil service
eligible. More important, she had functioned as a Guidance Counselor at the Clark Air
Base at the GS-1710-9 level for approximately four years at the time she applied for the
same position in 1976.

In filling the vacant position of Guidance Counselor, defendant Persi did not even
consider the application of plaintiff Loida Q. Shauf, but referred the vacancy to CORRO
which appointed Edward B. Isakson who was not eligible to the position.

Article XIII, Section 3, of the 1987 Constitution provides that the State shall afford full
protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all. This is a carry-over from
Article II, Section 9, of the 1973 Constitution ensuring equal work opportunities
regardless of sex, race, or creed..
There is no doubt that private respondents Persi and Detwiler, in committing the acts
complained of have, in effect, violated the basic constitutional right of petitioner Loida Q.
Shauf to earn a living which is very much an integral aspect of the right to life. For this,
they should be held accountable

Respondents alleged that petitioner Loida Q. Shauf failed to avail herself of her remedy
under the United States federal legislation on equality of opportunity for civilian
employees, which is allegedly exclusive of any other remedy under American law, let
alone remedies before a foreign court and under a foreign law such as the Civil Code of
the Philippines.

SC: Petitioner Loida Q. Shauf is not limited to these remedies, but is entitled as a matter
of plain and simple justice to choose that remedy, not otherwise proscribed, which will
best advance and protect her interests. There is, thus, nothing to enjoin her from
seeking redress in Philippine courts which should not be ousted of jurisdiction on the
dubious and inconclusive representations of private respondents on that score.
USA and Bradford v. Hon. Luis R. Reyes and Montoya | [219 SCRA 192, March 1,
1993] | G.R. No. 79253

Facts: Private respondent [Montoya] is an American citizen was employed as an


identification (I.D.) checker at the U.S. Navy Exchange (NEX) at the Joint United States
Military Assistance Group (JUSMAG) headquarters in Quezon City. Petitioner [Bradford]
also worked at NEX JUSMAG as an activity manager. There was an incident on 22
January 1987 whereby Bradford had Montoyas person and belongings searched in
front of many curious onlookers. This caused Montoya to feel aggrieved and to file a suit
for damages.

Contentions:

Bradford claimed that she was immune from suit because:

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; and

2) Defendant, Maxine Bradford, as manager of the US Navy Exchange Branch at


JUSMAG, Quezon City, is immune from suit for act(s) done by her in the performance of
her official functions under the Philippines-United States Military Assistance Agreement
of 1947 and Military Bases Agreement of 1947, as amended.

Montoya argued that:

(a) Bradford, in ordering the search upon her person and belongings outside the NEX
JUSMAG store in the presence of onlookers, had committed an improper, unlawful and
highly discriminatory act against a Filipino employee and had exceeded the scope of
her authority; (b) having exceeded her authority, Bradford cannot rely on the sovereign
immunity of the public petitioner because her liability is personal; (c) Philippine courts
are vested with jurisdiction over the case because Bradford is a civilian employee who
had committed the challenged act outside the U.S. Military Bases; such act is not one of
those exempted from the jurisdiction of Philippine courts; and (d) Philippine courts can
inquire into the factual circumstances of the case to determine whether or not Bradford
had acted within or outside the scope of her authority.

The doctrine of state immunity is at the core of this controversy.

Doctrine of State Immunity:

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

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. 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. "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 or 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.

In the case of Baer, etc. vs. Tizon, etc., et al., it was ruled that:

There should be no misinterpretation of the scope of the decision reached by this Court.
Petitioner, as the Commander of the United States Naval Base in Olongapo, does not
possess diplomatic immunity. He may therefore be proceeded against in his personal
capacity, or when the action taken by him cannot be imputed to the government which
he represents.

Also, in Animos, et al. vs. Philippine Veterans Affairs Office, et al., we held that:
. . . it is equally well-settled that where a litigation may have adverse consequences on
the public treasury, whether in the disbursements of funds or loss of property, the public
official proceeded against not being liable in his personal capacity, then the doctrine of
non-suability may appropriately be invoked. It has no application, however, where the
suit against such a functionary had to be instituted because of his failure to comply with
the duty imposed by statute appropriating public funds for the benefit of plaintiff or
petitioner. . . . .

The aforecited authorities are clear on the matter. 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 donewith malice and in bad faith, or
beyond the scope of his authority or jurisdiction.

The agents and officials of the United States armed forces stationed in Clark Air Base
are no exception to this rule. [footnotes omitted]

In the present case, it appears that Bradford was sued for acts done beyond the scope
and beyond her place of official functions. Thus she may not avail of immunity.

She may not even avail of diplomatic immunity because Article 31 of the Vienna
Convention on Diplomatic Relations admits of exceptions. It reads:

1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving
State. He shall also enjoy immunity from its civil and administrative jurisdiction except in
the case of:

(c) an action relating to any professional or commercial activity exercised by the


diplomatic agent in the receiving State outside his official functions (Emphasis supplied).

Disposition: Petition was dismissed.

Lansang vs. Court of Appeals (Consti1)

Facts: Private respondent General Assembly of the Blind (GABI) were allegedly
awarded a verbal contract of lease in Rizal Park by the National Parks Development
Committee (NPDC). However, this verbal contract accommodation was unclear
because there was no document or instrument involved.
With the change of government, the new Chairman of NPDC, petitioner Amado J.
Lansang, sought to clean up Rizal Park and terminated the said verbal agreement with
GABI and demanded that they vacate the area.

The notice was signed by the president of GABI, private respondent Jose Iglesias,
allegedly to indicate his conformity to its contents but later on claimed that he was
deceived into signing the notice.

On the day of the supposed eviction, GABI filed an action for damages and injunction in
the RTC against the petitioner but it was dismissed, ruling that the complaint was
actually directed against the state which could not be sued without its consent.

On appeal, the Court of Appeals reversed the decision of the trial court and ruled that a
government official being sued in his official capacity is not enough to protest such
official from liability for acts done without or in excess of his authority.

Issues:

Whether or not private respondents' complaint against petitioner Lansang, as Chairman


of NPDC, is in effect a suit against the state which cannot be sued without its consent.

Whether or not petitioner Lansang abused his authority in ordering the ejectment of
private respondents from Rizal Park.

Held:

No, the complaint is not a suit against the state.

No, Lansang did not abuse his authority.

Ratio:

The doctrine of state immunity from suit applies to complaints filed against public
officials for acts done in the performance of their duties. The rule is that the suit must be
regarded as one against the state where satisfaction of the judgment against the public
official concerned will require the state itself to perform a positive act.

Lansang was sued not in his capacity as NPDC Chairman but in his personal capacity.
It is evident from the complaint that Lansang was sued allegedly for having personal
motives in ordering the ejectment of GABI from Rizal Park.

There was no evidence of abuse of authority.


MINUCHER vs. HON. COURT OF APPEALS and ARTHUR SCALZO (G.R. No.
142396 February 11, 2003)

Facts: Violation of the Dangerous Drugs Act of 1972, was filed against Minucher
following a buy-bust operation conducted by Philippine police narcotic agents
accompanied by Scalzo in the house of Minucher, an Iranian national, where heroin was
said to have been seized. Minucher was later acquitted by the court.

Minucher later on filed for damages due to trumped-up charges of drug trafficking made
by Arthur Scalzo.

Scalzo on his counterclaims that he had acted in the discharge of his official duties as
being merely an agent of the Drug Enforcement Administration of the United States
Department of Justice.

Scalzo subsequently filed a motion to dismiss the complaint on the ground that, being a
special agent of the United States Drug Enforcement Administration, he was entitled to
diplomatic immunity. He attached to his motion Diplomatic Note of the United States
Embassy addressed to DOJ of the Philippines and a Certification of Vice Consul Donna
Woodward, certifying that the note is a true and faithful copy of its original. Trial court
denied the motion to dismiss.

ISSUE: Whether or not Arthur Scalzo is indeed entitled to diplomatic immunity.


RULLING: YES. A foreign agent, operating within a territory, can be cloaked with
immunity from suit as long as it can be established that he is acting within the directives
of the sending state.

The consent or imprimatur of the Philippine government to the activities of the United
States Drug Enforcement Agency, however, can be gleaned from the undisputed facts
in the case.

The official exchanges of communication between agencies of the government of the


two countries

Certifications from officials of both the Philippine Department of Foreign Affairs and the
United States Embassy

Participation of members of the Philippine Narcotics Command in the buy-bust


operation conducted at the residence of Minucher at the behest of Scalzo

These may be inadequate to support the diplomatic status of the latter but they give
enough indication that the Philippine government has given its imprimatur, if not
consent, to the activities within Philippine territory of agent Scalzo of the United States
Drug Enforcement Agency.

The job description of Scalzo has tasked him to conduct surveillance on suspected drug
suppliers and, after having ascertained the target, to inform local law enforcers who
would then be expected to make the arrest.

In conducting surveillance activities on Minucher, later acting as the poseur-buyer


during the buy-bust operation, and then becoming a principal witness in the criminal
case against Minucher,

Scalzo hardly can be said to have acted beyond the scope of his official function or
duties.

WHO vs Aquino Case Digest

Diplomatic Immunity, Political Question, Suits against International Agencies

Facts: Dr. Leonce Verstuyft was assigned by WHO to its regional office in Manila as
Acting Assistant Director of Health Services. His personal effects, contained in twelve
(12) crates, were allowed free entry from duties and taxes. Constabulary Offshore
Action Center (COSAC) suspected that the crates contain large quantities of highly
dutiable goods beyond the official needs of Verstuyft. Upon application of the COSAC
officers, Judge Aquino issued a search warrant for the search and seizure of the
personal effects of Verstuyft.

Secretary of Foreign Affairs Carlos P. Romulo advised Judge Aquino that Dr. Verstuyft
is entitled to immunity from search in respect for his personal baggage as accorded to
members of diplomatic missions pursuant to the Host Agreement and requested that the
search warrant be suspended. The Solicitor General accordingly joined Verstuyft for the
quashal of the search warrant but respondent judge nevertheless summarily denied the
quashal. Verstuyft, thus, filed a petition for certiorari and prohibition with the SC. WHO
joined Verstuyft in asserting diplomatic immunity.

Issue: Whether or not personal effect of Verstuyft can be exempted from search and
seizure under the diplomatic immunity.

Held: Yes. The executive branch of the Phils has expressly recognized that Verstuyft is
entitled to diplomatic immunity, pursuant to the provisions of the Host Agreement. The
DFA formally advised respondent judge of the Philippine Government's official position.
The Solicitor General, as principal law officer of the gorvernment, likewise expressly
affirmed said petitioner's right to diplomatic immunity and asked for the quashal of the
search warrant.

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, the Solicitor General in this case, or other officer acting under his
discretion. Courts may not so exercise their jurisdiction by seizure and detention of
property, as to embarass the executive arm of the government in conducting foreign
relations.

The Court, therefore, holds the respondent judge acted without jurisdiction and with
grave abuse of discretion in not ordering the quashal of the search warrant issued by
him in disregard of the diplomatic immunity of petitioner Verstuyft. (World Health
Organization vs. Aquino, G.R. No. L-35131, November 29, 1972, 48 SCRA 243)

Lasco vs UNRFNRE

Facts: Petitioners were dismissed from their employment with privaterespondent, the
United Nations Revolving Fund for NaturalResourcesExploration (UNRFNRE), which is
a special fund and subsidiary organ of theUnited Nations.The UNRFNRE is involved in
a joint project of thePhilippineGovernment and the United Nations for exploration work
in Dinagat Island.Petitioners are thecomplainants for illegal dismissal and
damages.Private respondent alleged that respondent Labor Arbiter had no jurisdiction
over its personality since itenjoyed diplomatic immunity.

Issue:WON specialized agencies enjoy diplomatic immunity

Held:Petition is dismissed. This is not to say that petitioner have no recourse.Section 31


of the Convention on the Privileges and Immunitiesof the SpecializedAgencies of the
United Nations states that each specialized agency shall makea provision for
appropriate modes of settlement of (a) disputes arising out of contracts or other
disputes of private character to which thespecialized agencyisa party. Private
respondent is not engaged in a commercial venture in thePhilippines.Its presence is by
virtue of a joint project entered into by thePhilippine Government and theUnited Nations
for mineral exploration in DinagatIsland

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.

ISSUES:

1. Does the NLRC have jurisdiction over SEAFDEC-AQD?

2. Is SEAFDEC-AQD estopped for its failure to raise the issue of jurisdiction at the first
instance?

HELD:
1. 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. 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.

2. Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is


unavailing because estoppel does not apply to confer jurisdiction to a tribunal that has
none over a cause of action. Jurisdiction is conferred by law. Where there is none, no
agreement of the parties can provide one. Settled is the rule that the decision of a
tribunal not vested with appropriate jurisdiction is null and void.

ERNESTO CALLADO vs. INTERNATIONAL RICE RESEARCH INSTITUTE (IRRI)

Facts: Ernesto Callado, petitioner, was employed as a driver at the IRRI. One day while
driving an IRRI vehicle on an official trip to the NAIA and back to the IRRI, petitioner
figured in an accident.

Petitioner was informed of the findings of a preliminary investigation conducted by the


IRRI's Human Resource Development Department Manager. In view of the findings, he
was charged with:

(1) Driving an institute vehicle while on official duty under the influence of liquor;

(2) Serious misconduct consisting of failure to report to supervisors the failure of the
vehicle to start because of a problem with the car battery, and
(3) Gross and habitual neglect of duties.

Petitioner submitted his answer and defenses to the charges against him. However,
IRRI issued a Notice of Termination to petitioner.

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

IRRI 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, 5 and that it invokes such
diplomatic immunity 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 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.

In this petition petitioner contends 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."

Issue: Did the (IRRI) waive its immunity from suit in this dispute which arose from an
employer-employee relationship?

Held: No.

P.D. 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.

The SC upholds the constitutionality of the aforequoted law. There is in this case "a
categorical recognition by the Executive Branch of the Government that IRRI enjoys
immunities accorded to international organizations, which determination has been held
to be a political question conclusive upon the Courts in order not to embarass a political
department of Government.
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.

The raison d'etre for these immunities is the assurance of unimpeded performance of
their functions by the agencies concerned.

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.

In cases involving dismissed employees, the Institute may waive its immunity, signifying
that such waiver is discretionary on its part.

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner vs. HON.


PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR
RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES
(TUPAS) WFTU respondents.

FACTS: ICMC an accredited refugee processing center in Morong Bataan, is a non-


profit agency involved in international humanitarian and voluntary work. It is duly
registered with the United Nations Economic and Social Council (ECOSOC) and enjoys
Consultative status II. It has the activities parallel to those of the International
Committee for Migrtion (ICM) and the International Committee of the Red Cross (ICRC).

On July 14, 1986, Trade Union of the Philippines and Allied Services (TUPAS) filed with
the then Ministry of Labor and Employment a Petition for Certification Election among
the rank and file members employed by the ICMC. The latter opposed the petition on
the ground that it enjoys diplomatic immunity.

On Februaury 5, 1987 Med Arbiter Anastacio L. Bactin sustained ICMC and dismissed
the petition of TUPAS for lack of jurisdiction.

On appeal, The Director of the Bureau of Labor Relations reversed the Med Arbiters
Decisionand ordered the immediate conduct of a certification election.

This present Petition for Certiorari with Preliminary Injunction assailing the BLR Order.

ISSUE: Whether or not the grant of diplomatic privileges and immunities to ICMC
extends to immunity from the application of Philippine labor laws.
HELD: The Petition is GRANTED, the order of the Bureau of Labor Relations for
Certification election is SET ASIDE, and the Temporary Restraining Order earlier issued
is made PERMANENT.

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 embarrass
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.

BASIS:

Article II of the Memorandum of Agreement between the Philippine Government and


ICMC provides that ICMC shall have a status similar to that of a specialized agency.

Article III, Section 4. The specialized agencies, their property and assets, wherever
located and by whomsoever held, shall enjoy immunity from every form of legal process
except in so far as in any particular case they have expressly waived their immunity. It
is, however, understood that no waiver of immunity shall extend to any measure of
execution.

REPUBLIC OF THE PHILIPPINES, petitioner-appellee, PABLO FELICIANO and


INTERMEDIATE APPELLATE COURT, respondents-appellants

Facts: The appeal was filed by 86 settlers of Barrio of Salvacion, representing the
Republic of the Philippines to dismiss the complaint filed by Feliciano, on the ground
that the Republic of the Philippines cannot be sued without its consent.

Prior to this appeal, respondent Pablo Feliciano filed a complaint with the Court of First
Instance against the Republic of the Philippines, represented by the Land Authority, for
the recovery of ownership and possession of a parcel of land consisting of four lots. The
trial court rendered a decision declaring Lot No. 1 to be the private property of Feliciano
and the rest of the property, Lots 2, 3 and 4, reverted to the public domain.
The trial court reopened the case due to the filing of a motion to intervene and to set
aside the decision of the trial court by 86 settlers, alleging that they had been in
possession of the land for more than 20 years under claim of ownership. The trial court
ordered the settlers to present their evidence but they did not appear at the day of
presentation of evidence. Feliciano, on the other hand, presented additional evidence.
Thereafter, the case was submitted for decision and the trial court ruled in favor of
Feliciano.

The settlers immediately filed a motion for reconsideration. The case was reopened to
allow them to present their evidence. But before this motion was acted upon, Feliciano
filed a motion for execution with the Appellate Court but it was denied.

The settlers filed a motion to dismiss on the ground that the Republic of the Philippines
cannot be sued without its consent and hence the action cannot prosper. The motion
was opposed by Feliciano.

Issue/s: Whether or not the state can be sued for recovery and possession of a parcel
of land.

Discussions:

A suit against the State, 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. It may be invoked
by the courts sua sponte at any stage of the proceedings.

Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly. but
must be construed in strictissimi juris (of strictest right). 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.

Ruling/s: No. 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. It is
an action directed against a specific party or parties, and any judgment therein binds
only such party or parties. The complaint filed by plaintiff, the private respondent herein,
is directed against the Republic of the Philippines, represented by the Land Authority, a
governmental agency created by Republic Act No. 3844.

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.

Department of Agriculture vs NLRC | Doctrine of non-suability

Facts: The case is regarding money claim against Department of Agriculture (DA) as
filed and requested by National Labor Relations Commission (NLRC).

Petitioner Department of Agriculture and Sultan Security Agency entered into a contract
for security services to be provided by the latter to the said governmental entity.
Pursuant to their arrangements, guards were deployed by Sultan Security Agency in the
various premises of the DA. Thereafter, several guards filed a complaint for
underpayment of wages, non-payment of 13th month pay, uniform allowances, night
shift differential pay, holiday pay, and overtime pay, as well as for damages against the
DA and the security agency.

The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the
security agency for the payment of money claims of the complainant security guards.
The DA and the security agency did not appeal the decision. Thus, the decision became
final and executory. The Labor Arbiter issued a writ of execution to enforce and execute
the judgment against the property of the DA and the security agency. Thereafter, the
City Sheriff levied on execution the motor vehicles of the DA.

The petitioner charges the NLRC with grave abuse of discretion for refusing to quash
the writ of execution. The petitioner faults the NLRC for assuming jurisdiction over a
money claim against the Department, which, it claims, falls under the exclusive
jurisdiction of the Commission on Audit. More importantly, the petitioner asserts, the
NLRC has disregarded the cardinal rule on the non-suability of the State.

The private respondents, on the other hand, argue that the petitioner has impliedly
waived its immunity from suit by concluding a service contract with Sultan Security
Agency.

Issues: Whether or not the doctrine of non-suability of the State applies in the case.

Discussions: Act No. 3083, aforecited, gives the consent of the State to be sued upon
any moneyed claim involving liability arising from contract, express or implied. However,
the money claim should first be brought to the Commission on Audit. Act 3083 stands
as the general law waiving the States immunity from suit, subject to its general
limitation expressed in Section 7 thereof that no execution shall issue upon any
judgment rendered by any Court against the Government of the (Philippines), and that
the conditions provided in Commonwealth Act 327 for filing money claims against the
Government must be strictly observed.

Rulings: No. The rule does not say that the State may not be sued under any
circumstances. The State may at times be sued. The general law waiving the immunity
of the state from suit is found in Act No. 3083, where the Philippine government
consents and submits to be sued upon any money claims involving liability arising from
contract, express or implied, which could serve as a basis of civil action between private
parties.

In this case, The DA has not pretended to have assumed a capacity apart from its being
a governmental entity when it entered into the questioned contract; nor that it could
have, in fact, performed any act proprietary in character. But the claims of the
complainant security guards clearly constitute money claims.

VICTORIA AMIGABLE vs. NICOLAS CUENCA G.R. No. L-26400 February 29, 1972

FACTS: Victoria Amigable is the is the registered owner of a lot which, without prior
expropriation proceedings or negotiated sale, was used by the government. Amigable's
counsel wrote the President of the Philippines requesting payment of the portion of her
lot which had been expropriated by the government.

Amigable later filed a case against Cuenca, the Commissioner of Public Highways, for
recovery of ownership and possession of the said lot. She also sought payment for
comlensatory damages, moral damages and attorney's fees.

The defendant said that the case was premature, barred by prescription, and the
government did not give its consent to be sued.

ISSUE: W/N the appellant may properly sue the government.

HELD: Where the government takes away property from a private landowner for public
use without going through the legal process of expropriation or negotiated sale, the
aggrieved party may properly maintain a suit against the government without violating
the doctrine of governmental immunity from suit.

The doctrine of immunity from suit cannot serve as an instrument for perpetrating an
injustice to a citizen. The only relief available is for the government to make due
compensation which it could and should have done years ago. To determine just
compensation of the land, the basis should be the price or value at the time of the
taking.
EPG Construction Co. vs. Vigilar (Consti1)

Topic: Sovereignty - Suits not against the State - Justice and Equity

Facts: In 1983, the Ministry of Human Settlement (MHS), through the BLISS
Development Corporation, intiated a housing project on a government property along
the east bank of Manggahan Floodway in Pasig

The MHS entered into a Memorandum of Agreement (MOA) with Ministry of Public
Works and Highways (MPWH) where the latter undertook to develop the housing site
and construct thereon 145 housing units

By virtue of the MOA, MPWH forged individual contracts with petitioners EPG, Ciper,
Septa, Phil. Plumbing, Home Construction, World Builders, Glass World, Performance
Builders, and De Leon Araneta Construction for the construction of the housing units

Under the contracts, the scope of construction and funding covered only around "2/3 of
each housing unit"

Petitioners agreed to undertake and perform "additional constructions" for the


completion of the housing units despite the fact that there was only a verbal promise,
and not a written contract, by the MPWH Undersecretary Aber Canlas that additional
funds will be available and forthcoming

Unpaid balance for the additional constructions amounted to P5,918,315.63

Upon a demand letter from the petitioners, on November 14, 1988, DPWH Asst.
Secretary Madamba opined that payment of petitioners' money claims should be based
on quantum meruit (what one has earned) and should be forwarded to the Commission
on Audit (COA)

In a Letter of the Undersecretary of Budget and Management dated December 20,


1994, the amount of P5,819,316.00 was then released for the payment of the
petitioners' money claims under Advise of Allotment No. A4-1303-04-41-303

In an indorsement dated December 27, 1995, the COA referred anew the money claims
to the DPWH

In a letter dated August 26, 1996, respondent Secretary Gregorio Vigilar denied the
subject money claims

Petitioners filed before the RTC of QC, Branch 226 a Petition for Mandamus to order
the respondent to pay petitioners their money claims plus damages and attorney's fees.

Lower court denied the petition on February 18, 1997


Issue: Whether or not the implied, verbal contracts between the petitioners and then
Undersecretary Canlas should be upheld

Whether or not the State is immune from suit

Holding:

Yes.

No.

Ratio: While the court agrees with the respondent that the implied contracts are void, in
view of violation of applicable laws, auditing rules, and lack of legal requirements, it still
finds merit in the instant petition

The illegality of the implied contracts proceeds from an express declaration or


prohibition by law, not from any intrinsic illegality

"in the interest of substantial justice," petitioners-contractors' right to be compensated is


upheld, applying the principle of quantum meruit

Even the DPWH Asst. Sec. for Legal Affairs recommends their compensation; even the
DPWH Auditor did not object to the payment of the money claims

2. The respondent may not conveniently hide under the State's cloak of invincibility
against suit, considering that this principle yields to certain settled exceptions.

The State's immunity cannot serve as an instrument perpetrating injustice

Petition granted. RTC decision reversed and set aside.

Ildefonso Santiago vs Republic of the Philippines| 87 SCRA 294 Political Law


Constitutional Law Immunity of the State from Suit; When is it Deemed Waived

Facts: In January 1971, Ildefonso Santiago gratuitously donated a parcel of land to the
Bureau of Plant Industry. The terms of the donation are; that the Bureau should
construct a building on the said lot and that the building should be finished by December
7, 1974, that the Bureau should install lighting facilities on the said lot. However, come
1976 there were still no improvements on the lot. This prompted Santiago to file a case
pleading for the revocation of such contract of donation. The trial court dismissed the
petition claiming that it is a suit against the government and should not prosper without
the consent of the government.

ISSUE: Whether or not the state has not waived its immunity from suit.
HELD: No. The government has waived its immunity and such waiver is implied by
virtue of the terms provided in the deed of donation. The government is a beneficiary of
the terms of the donation. But the government through the Bureau of Plant Industry has
breached the terms of the deed by not complying with such, therefore, the donor
Santiago has the right to have his day in court and be heard. Further, to not allow the
donor to be heard would be unethical and contrary to equity which the government so
advances. Case should prosper.

Merritt vs Government of the Philippine Islands | 34 Phil 311 Civil Law Torts and
Damages Liability of the State for acts of special agents

Political Law Non-Suability of the State Waiver of Non-Suability is Not Admission of


Liability

The facts of the case took place in the 1910s. E. Merritt was a constructor who was
excellent at his work. One day, while he was riding his motorcycle along Calle Padre
Faura, he was bumped by a government ambulance. The driver of the ambulance was
proven to have been negligent. Because of the incident, Merritt was hospitalized and he
was severely injured beyond rehabilitation so much so that he could never perform his
job the way he used to and that he cannot even earn at least half of what he used to
earn.

In order for Merritt to recover damages, he sought to sue the government which later
authorized Merritt to sue the government by virtue of Act 2457 enacted by the
legislature (An Act authorizing E. Merritt to bring suit against the Government of the
Philippine Islands and authorizing the Attorney-General of said Islands to appear in said
suit). The lower court then determined the amount of damages and ordered the
government to pay the same.

ISSUE: Whether or not the government is liable for the negligent act of the driver of the
ambulance.

HELD: No. 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. It follows therefrom that the state, by
virtue of such provisions of law, is not responsible for the damages suffered by private
individuals in consequence of acts performed by its employees in the discharge of the
functions pertaining to their office, because neither fault nor even negligence can be
presumed on the part of the state in the organization of branches of public service and
in the appointment of its agents. The State can only be liable if 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.

In the case at bar, the ambulance driver was not a special agent nor was a government
officer acting as a special agent hence, there can be no liability from the government.
The Government does not undertake to guarantee to any person the fidelity of the
officers or agents whom it employs, since that would involve it in all its operations in
endless embarrassments, difficulties and losses, which would be subversive of the
public interest.
FROILAN VS PAN ORIENTAL SHIPPING

Facts: Plaintiff, Fernando Froilan filed a complaint against the defendant-appellant, Pan
Oriental Shipping Co., alleging that he purchased from the Shipping Commission the
vessel for P200,000, paying P50,000 down and agreeing to pay the balance in
instalments. 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. For various
reasons, among them the non-payment of the installments, the Shipping Commission
tool possession of said vessel and considered the contract of sale cancelled. 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.
Plaintiff appealed the action of the Shipping Commission to the President of the
Philippines and, in its meeting the Cabinet restored him to all his rights under his
original contract with the Shipping Commission. Plaintiff had repeatedly demanded from
the Pan Oriental Shipping Co. the possession of the vessel in question but the latter
refused to do so.

Plaintiff, 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 . 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.

Pan Oriental protested to this restoration of Plaintiff s rights under the contract of sale,
for the reason that when the vessel was delivered to it, the Shipping Administration had
authority to dispose of said authority to the property, Plaintiff having already
relinquished whatever rights he may have thereon. Plaintiff paid the required cash of
P10,000.00 and as Pan Oriental refused to surrender possession of the vessel, he filed
an action to recover possession thereof and have him declared the rightful owner of
said property. The Republic of the Philippines was allowed to intervene in said civil case
praying for the possession of the in order that the chattel mortgage constituted thereon
may be foreclosed.

Issues: Whether or not the Court has jurisdiction over the intervenor with regard to the
counterclaim.

Discussions: When the government enters into a contract, for the State is then deem to
have divested itself of the mantle of sovereign immunity and descended to the level of
the ordinary individual. Having done so, it becomes subject to judicial action and
processes.

Rulings: Yes. The Supreme Court held that the government impliedly allowed itself to be
sued when it filed a complaint in intervention for the purpose of asserting claim for
affirmative relief against the plaintiff to the recovery of the vessel. 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.

USA vs Ruiz | Doctrine of Immunity from Suit

Facts: This is a petition to review, set aside certain orders and restrain perpetually the
proceedings done by Hon. Ruiz for lack of jurisdiction on the part of the trial court.

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 a couple of repair projects. Eligio de Guzman land Co., Inc. responded to the
invitation and submitted bids. Subsequent thereto, the company received from the US
two telegrams requesting it to confirm its price proposals and for the name of its
bonding company. The company construed this as an acceptance of its offer so they
complied with the requests. The company received a letter which was signed by William
I. Collins of Department of the Navy of the United States, also one of the petitioners
herein informing that the company did not qualify to receive an award for the projects
because of its previous unsatisfactory performance rating in repairs, and that the
projects were awarded to third parties. For this reason, a suit for specific performance
was filed by him against the US.

Issues: Whether or not the US naval base in bidding for said contracts exercise
governmental functions to be able to invoke state immunity.

Discussions: The traditional role of the state immunity exempts a state from being sued
in the courts of another state without its consent or waiver. This rule is necessary
consequence of the principle of independence and equality of states. However, the
rules of international law are not petrified; they are continually 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.

Rulings: Yes. The Supreme Court held that 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.
The restrictive application of state immunity is proper only when the proceedings arise
out of commercial transactions of the foreign sovereign. Its commercial activities of
economic affairs. A state may be 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.

USA v. GUINTO

FACTS: The cases have been consolidated because they all involve the doctrine of
state immunity. In GR No. 76607, private respondents re suing several officers of the
US Air Force in connection with the bidding for barbering services in Clark Air Base. In
GR No. 80018, Luis Bautista was arrested following a buy-bust operation for violation of
the Dangerous Drugs Act. Bautista then filed a complaint for damages claiming that
because of the acts of the respondents, he lost his job. In GR No. 79470, Fabian
Genove filed a complaint for damages against petitioner for his dismissal as cook in the
US Air Force. In GR No. 80258, complaint for damage was filed by the respondents
against petitioners for injuries allegedly sustained by plaintiffs. All cases invoke the
doctrine of state immunity as ground to dismiss the same.

ISSUE:

Are the petitioners immune from suit?

HELD: It is clear that the petitioners in GR No. 80018 were acting in the exercise of their
official functions. They cannot be directly impleaded for the US government has not
given its consent to be sued. In GR No. 79470, petitioners are not immune for
restaurants are commercial enterprises, however, claim of damages by Genove cannot
be allowed on the strength of the evidence presented. Barber shops are also
commercial enterprises operated by private persons, thus, petitioners in GR No. 76607
cannot plead any immunity from the complaint filed. In GR No. 80258, the respondent
court will have to receive the evidence of the alleged irregularity in the grant of the
barbershop concessions before it can be known in what capacity the petitioners were
acting at the time of the incident.

Republic of Indonesia vs Vinzon | doctrine of sovereign immunity

Facts: This is a petition for review of the decision made by Court of Appeals in ruling
that the Republic of Indonesia gave its consent to be sued and voluntarily submitted
itself to the laws and jurisdiction of Philippine courts and that petitioners Ambassador
Soeratmin and Minister Counsellor Kasim waived their immunity from suit.
Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered
into a Maintenance Agreement with respondent James Vinzon, sole proprietor of Vinzon
Trade and Services. The equipment covered by the Maintenance Agreement are air
conditioning units and was to take effect in a period of four years.

When Indonesian Minister Counsellor Kasim assumed the position of Chief of


Administration, he allegedly found respondents work and services unsatisfactory and
not in compliance with the standards set in the Maintenance Agreement. Hence, the
Indonesian Embassy terminated the agreement.

The respondent claims that the aforesaid termination was arbitrary and unlawful. Hence,
he filed a complaint against the petitioners which opposed by invoking immunity from
suit.

Issues:

Whether or not the Republic of Indonesia can invoke the doctrine of sovereign immunity
from suit.

Whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may
be sued herein in their private capacities.

Discussions:

The rule that a State may not be sued without its consent is a necessary consequence
of the principles of independence and equality of States. The practical justification for
the doctrine of sovereign immunity is that there can be no legal right against the
authority that makes the law on which the right depends. In the case of foreign States,
the rule is derived from the principle of the sovereign equality of States, as expressed in
the maxim par in parem non habet imperium. All states are sovereign equals and
cannot assert jurisdiction over one another.] A contrary attitude would unduly vex the
peace of nations.

The rules of International Law, however, are not unbending or immune to change. The
increasing need of sovereign States to enter into purely commercial activities remotely
connected with the discharge of their governmental functions brought about a new
concept of sovereign immunity. This concept, the restrictive theory, holds that the
immunity of the sovereign is recognized only with regard to public acts or acts jure
imperii (public acts of the government of a state), but not with regard to private acts or
acts jure gestionis (the commercial activities of a state.)

Rulings: The Supreme Court ruled that the republic of Indonesia cannot be deemed to
have waived its immunity to suit. The mere entering into a contract by a foreign state
with a private party cannot be construed as the ultimate test of whether or not it is an act
juri imperii or juri gestionis. Such act is only the start of the inquiry. There is no dispute
that the establishment of a diplomatic mission is an act juri imperii. The state may enter
into contracts with private entities to maintain the premises, furnishings and equipment
of the embassy. The Republic of Indonesia is acting in pursuit of a sovereign activity
when it entered into a contract with the respondent. The maintenance agreement was
entered into by the Republic of Indonesia in the discharge of its governmental functions.
It cannot be deemed to have waived its immunity from suit.

Article 31 of the Vienna Convention on Diplomatic Relations provides that a diplomatic


agent shall enjoy immunity from the criminal jurisidiction of the receiving State. He shall
also enjoy immunity from its civil and administrative jurisdiction, except in the case of:

a real action relating to private immovable property situated in the territory of the
receiving State, unless he holds it on behalf of the sending State for the purposes of the
mission;

an action relating to succession in which the diplomatic agent is involved as executor,


administrator, heir or legatee as a private person and not on behalf of the sending State;

an action relating to any professional or commercial activity exercised by the diplomatic


agent in the receiving State outside his official functions.

The Solicitor General believes that said act may fall under subparagraph (c) thereof, but
said provision clearly applies only to a situation where the diplomatic agent engages in
any professional or commercial activity outside official functions, which is not the case
herein.

REPUBLIC VS. VILLASOR, ET AL.

Facts: On July 7, 1969, a decision was rendered in Special Proceedings No. 2156-R in
favor of respondents P.J. Kiener Co., Ltd., Gavino Unchuan, and International
Construction Corporation and against petitioner confirming the arbitration award in
theamount of P1,712,396.40.The award is for the satisfaction of a judgment against
thePhlippine Government.On June 24, 1969, respondent Honorable Guillermo Villasor
issued an Orderdeclaring the decision final and executory. Villasor directed the Sheriffs
of RizalProvince, Quezon City as well as Manilato execute said decision.The Provincial
Sheriffof Rizal served Notices of Garnishment with several Banks,specially on
PhilippineVeterans Bank and PNB.The funds of the Armed Forces of the Philippines on
deposit with PhilippineVeterans Bank andPNB are public funds duly appropriated and
allocated for thepayment of pensions of retirees, pay andallowances of military and
civilian personneland for maintenance and operations of the AFP.Petitioner, on
certiorari, filed prohibition proceedings against respondent JudgeVillasor for acting in
excess of jurisdiction with grave abuse of discretion amounting tolack of jurisdiction in
grantingthe issuance of a Writ of Execution against the propertiesof the AFP, hence the
notices and garnishment arenull and void.

Issue: Is the Writ of Execution issued by Judge Villasor valid?

Held: What was done by respondent Judge is not in conformity with the dictates of the
Constitution.It is a fundamental postulate of constitutionalism flowing from the
juristicconcept of sovereignty that the stateas well as its government is immune from
suitunless it gives its consent.A sovereign is exempt from suit,not because of any
formalconception or obsolete theory, but on the logical and practical ground that
therecan beno legal right as against the authority that makes the law on which the right
depends.The State may not be sued without its consent. A corollary, both dictated by
logicand soundsense from a basic concept is that public funds cannot be the object of
agarnishment proceeding even if theconsent to be sued had been previously granted
andthe state liability adjudged.The universal rule that wherethe State gives its consent
tobe sued by private parties either by general or special law, it may limitclaimants
actiononly 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 the 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.

PNB vs Pabalan | Implied Consent

Facts: The case was filed by petitioner requesting for certiorari against the writ of
execution authorized by the Hon Judge Pabalan regarding the transfer of funds
amounting to P12,724.66 belonging to Philippine Virginia Tobacco Administration
(PVTA).

Philippine National Bank (PNB) of La Union filed an administrative complaint against


Judge Pabalan for grave abuse of discretion, alleging that the latter failed to recognize
that the questioned funds are of public character and therefore may not be garnished,
attached or levied upon. The PNB La Union Branch invoked the doctrine of non-
suability, putting a bar on the notice of garnishment.

Issues: Whether or not Philippine National Bank can be sued.


Whether or not the notice of garnishment of funds of Philippine Virginia Tobacco
deposited with the petitioner bank is valid.

Discussions:

The consent of the state to be sued may be given expressly or impliedly. In this case,
Consent to be sued was given impliedly when the State enters into a commercial
contract. When the State enters into a contract, the State is deemed to have divested
itself of the mantle of sovereign immunity and descended to the level of the ordinary
individual. Hence, Funds of public corporations could properly be made the object of a
notice of garnishment.

Rulings: PVTA is also a public corporation with the same attributes, a similar outcome is
attributed. The government has entered with them into a commercial business hence it
has abandoned its sovereign capacity and has stepped down to the level of a
corporation. Therefore, it is subject to rules governing ordinary corporations and in
effect can be sued. Therefore, the petition of PNB La Union is denied.

The Supreme Court ruled that the funds held by PNB is subject for garnishment. Funds
of public corporations which can sue and be sued are not exempt from garnishment.
Thus, the writ of execution be imposed immediately.

NATIONAL HOUSING AUTHORITY v. HEIRS OF ISIDRO GUIVELONDO

FACTS: On February 23, 1999, petitioner National Housing Authority filed with the
Regional Trial Court of Cebu City, Branch 11, an Amended Complaint for eminent
domain against Associacion Benevola de Cebu, Engracia Urot and the Heirs of Isidro
Guivelondo for the purpose of the public use of Socialized housing.

On November 12, 1999, the Heirs of Isidro Guivelondo filed a Manifestation stating that
they were waiving their objections to NHAs power to expropriate their properties. Thus
an order of execution has been granted and the court already appointed commissioners
to determine the amount for just compensation

On April 17, 2000, the Commissioners submitted their report wherein they
recommended that the just compensation of the subject properties be fixed at
P11,200.00 per square meter wherein a partial judgment has been rendered.

After the report on the just compensation has completed, both parties filed an MR on
the amount for the just compensation stating that it has no adequate basis and support.
Both MR was denied by the court.
While the judgment has been rendered in the RTC and an entry of judgment and the
motion for execution has been issued, NHA filed a petition for certiorari to the Court of
Appeals. The CA denied the petition on the ground that the Partial Judgment and
Omnibus Order became final and executory when petitioner failed to appeal the same.

Wherefore, the Petitioner NHA filed an appeal to the Supreme Court.

ISSUE

1) WHETHER OR NOT THE STATE CAN BE COMPELLED AND COERCED BY


THE COURTS TO EXERCISE OR CONTINUE WITH THE EXERCISE OF ITS
INHERENT POWER OF EMINENT DOMAIN;

2) WHETHER OR NOT WRITS OF EXECUTION AND GARNISHMENT MAY BE


ISSUED AGAINST THE STATE IN AN EXPROPRIATION WHEREIN THE EXERCISE
OF THE POWER OF EMINENT DOMAIN WILL NOT SERVE PUBLIC USE OR
PURPOSE

3) WHETHER OR NOT JUDGMENT HAS BECOME FINAL AND EXECUTORY AND


IF ESTOPPEL OR LACHES APPLIES TO GOVERNMENT;

HELD:

The petition was denied and the judgment rendered by the lower court was affirmed.

RATIO:

On the first issue, the court held that, yes the state can be compelled and
coerced by the court to continue exercise its inherent power of eminent domain, since
the NHA does not exercise its right to appeal in the expropriation proceedings before
the court has rendered the case final and executory. In the early case of City of Manila
v. Ruymann and Metropolitan Water District v. De Los Angeles, an expropriation
proceeding was explained.

Expropriation proceedings consists of two stages: first, condemnation of the


property after it is determined that its acquisition will be for a public purpose or public
use and, second, the determination of just compensation to be paid for the taking of
private property to be made by the court with the assistance of not more than three
commissioners.

The first is concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its exercise in the context of
the facts involved in the suit. It ends with an order, if not of dismissal of the action, of
condemnation declaring that the plaintiff has a lawful right to take the property sought to
be condemned, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the filing of the
complaint. An order of dismissal, if this be ordained, would be a final one, of course,
since it finally disposes of the action and leaves nothing more to be done by the Court
on the merits. So, too, would an order of condemnation be a final one, for thereafter, as
the Rules expressly state, in the proceedings before the Trial Court, no objection to the
exercise of the right of condemnation (or the propriety thereof) shall be filed or heard.

The second phase of the eminent domain action is concerned with the
determination by the Court of the just compensation for the property sought to be
taken. This is done by the Court with the assistance of not more than three (3)
commissioners. The order fixing the just compensation on the basis of the evidence
before, and findings of, the commissioners would be final, too. It would finally dispose
of the second stage of the suit, and leave nothing more to be done by the Court
regarding the issue. Obviously, one or another of the parties may believe the order to
be erroneous in its appreciation of the evidence or findings of fact or otherwise.
Obviously, too, such a dissatisfied party may seek a reversal of the order by taking an
appeal there from.

On the second issue, the court held that a socialized housing is always for the
public used and that the public purpose of the socialized housing project is not in any
way diminished by the amount of just compensation that the court has fixed.

On the third issue, the court ruled that in this case the doctrine of state immunity
cannot be applied to the NHA, although it is public in character, it is only public in
character since it is government-owned, having a juridical personality separate and
distinct from the government, the funds of such government-owned and controlled
corporations and non-corporate agency, although considered public in character, are
not exempt from garnishment.

Notes:

Important Discussion in the case:

When does the Doctrine of State Immunity not applied in the government agencies?

1. The universal rule that where the State gives its consent to be sued by private parties
either by general or special law

2. If the funds belong to a public corporation or a government-owned or controlled


corporation which is clothed with a personality of its own, separate and distinct from that
of the government, then its funds are not exempt from garnishment. This is so because
when the government enters into commercial business, it abandons its sovereign
capacity and is to be treated like any other corporation.
GARNISMENT AS DEFINED BY BLACK LAW DICTIONARY:

Garnishment

- A judicial proceeding in which a creditor (or a potential creditor) asks the court to
order a third party who is indebted to or is bailee for the debtor to turn over to the
creditor any of the debtors property (such as wages or bank accounts) held by that third
party.

- A person can initiate a garnishment action as means of either prejudgment seizure


or post judgment collection.

- In short, it only means whether the Heirs of Guivelendo can file a case to NHA to
compel the latter to give to them the amount of the just compensation as rendered by
the court.
Case Digest: Lockheed v. UP

FACTS: Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered
into a contract for security services with respondent University of the Philippines (UP).
In 1998, several security guards assigned to UP filed separate complaints against
Lockheed and UP for payment of underpaid wages, 25% overtime pay, premium pay for
rest days and special holidays, holiday pay, service incentive leave pay, night shift
differentials, 13th month pay, refund of cash bond, refund of deductions for the Mutual
Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and
attorneys fees.

The LA held Lockheed and UP as solidarily liable to complainants. As the parties did not
appeal the NLRC decision, the same became final and executory. A writ of execution
was then issued but later quashed by the Labor Arbiter upon motion of UP due to
disputes regarding the amount of the award. Later, however, said order quashing the
writ was reversed by the NLRC.

The NLRC order and resolution having become final, Lockheed filed a motion for the
issuance of an alias writ of execution which was subsequently granted. A Notice of
Garnishment was issued to Philippine National Bank (PNB) UP Diliman Branch for the
satisfaction of the award.

UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being
subjected to garnishment at PNB are government/public funds. The Labor Arbiter,
however, dismissed the urgent motion for lack of merit. UP filed a petition for certiorari
before the CA. The CA held that although the subject funds do not constitute public
funds, in light of the ruling in the case of National Electrification Administration v.
Morales mandates that all money claims against the government must first be filed with
the Commission on Audit (COA). Hence, petitioner filed this petition before the SC.

ISSUE: Whether or not the garnishment is against the funds of UP is valid.

HELD: No.

Political Law Doctrine: It is the COA which has primary jurisdiction to examine, audit and
settle "all debts and claims of any sort" due from or owing the Government or any of its
subdivisions, agencies and instrumentalities, including government-owned or controlled
corporations and their subsidiaries.

This Court finds that the CA correctly applied theNEAcase. Like NEA, UP is a juridical
personality separate and distinct from the government and has the capacity to sue and
be sued. Thus, also like NEA, it cannot evade execution, and its funds may be subject
to garnishment or levy. However, before execution may be had, a claim for payment of
the judgment award must first be filed with the COA.

Under Commonwealth Act No. 327, as amended by Section 26 of P.D. No. 1445, it is
the COA which has primary jurisdiction to examine, audit and settle "all debts and
claims of any sort" due from or owing the Government or any of its subdivisions,
agencies and instrumentalities, including government-owned or controlled corporations
and their subsidiaries. With respect to money claims arising from the implementation of
Republic Act No. 6758,their allowance or disallowance is for COA to decide, subject
only to the remedy of appeal by petition for certiorari to this Court.

A reading of the pertinent Commonwealth Act provision clearly shows that it does not
make any distinction as to which of the government subdivisions, agencies and
instrumentalities, including government-owned or controlled corporations and their
subsidiaries whose debts should be filed before the COA.

As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing
that can be done since the funds of UP had already been garnished, since the
garnishment was erroneously carried out and did not go through the proper procedure
(the filing of a claim with the COA), UP is entitled to reimbursement of the garnished
funds plus interest of 6% per annum, to be computed from the time of judicial demand
to be reckoned from the time UP filed a petition for certiorari before the CA which
occurred right after the withdrawal of the garnished funds from PNB.

DENIED.

UP v. Dizon (G.R. No. 171182; August 23, 2012)

FACTS: University of the Philippines (UP) entered into a General Construction


Agreement with respondent Stern Builders Corporation (Stern Builders) for the
construction and renovation of the buildings in the campus of the UP in Los Bas. UP
was able to pay its first and second billing. However, the third billing worth P273,729.47
was not paid due to its disallowance by the Commission on Audit (COA). Thus, Stern
Builders sued the UP to collect the unpaid balance.

On November 28, 2001, the RTC rendered its decision ordering UP to pay Stern
Builders. Then on January 16, 2002, the UP filed its motion for reconsideration. The
RTC denied the motion. The denial of the said motion was served upon Atty. Felimon
Nolasco (Atty.Nolasco) of the UPLB Legal Office on May 17, 2002. Notably, Atty.
Nolasco was not the counsel of record of the UP but the OLS inDiliman, Quezon City.

Thereafter, the UP filed a notice of appeal on June 3, 2002. However, the RTC denied
due course to the notice of appeal for having been filed out of time. On October 4, 2002,
upon motion of Stern Builders, the RTC issued the writ of execution.

On appeal, both the CA and the High Court denied UPs petition. The denial became
final and executory. Hence, Stern Builders filed in the RTC its motion for execution
despite their previous motion having already been granted and despite the writ of
execution having already issued. On June 11, 2003, the RTC granted another motion
for execution filed on May 9, 2003 (although the RTC had already issued the writ of
execution on October 4, 2002). Consequently, the sheriff served notices of garnishment
to the UPs depositary banks and the RTC ordered the release of the funds.

Aggrieved, UP elevated the matter to the CA. The CA sustained the RTC. Hence, this
petition.

ISSUES:

I. Was UP's funds validly garnished?

II. Has the UP's appeal dated June 3, 2002 been filed out of time?

HELD: UP's funds, being government funds, are not subject to garnishment.
(Garnishment of public funds; suability vs. liability of the State)

Despite its establishment as a body corporate, the UP remains to be a "chartered


institution" performing a legitimate government function. Irrefragably, the UP is a
government instrumentality, performing the States constitutional mandate of promoting
quality and accessible education. As a government instrumentality, the UP administers
special funds sourced from the fees and income enumerated under Act No. 1870 and
Section 1 of Executive Order No. 714, and from the yearly appropriations, to achieve
the purposes laid down by Section 2 of Act 1870, as expanded in Republic Act No.
9500. All the funds going into the possession of the UP, including any interest accruing
from the deposit of such funds in any banking institution, constitute a "special trust
fund," the disbursement of which should always be aligned with the UPs mission and
purpose, and should always be subject to auditing by the COA. The funds of the UP are
government funds that are public in character. They include the income accruing from
the use of real property ceded to the UP that may be spent only for the attainment of its
institutional objectives.

A marked distinction exists between suability of the State and its liability. As the Court
succinctly stated in Municipality of San Fernando, La Union v. Firme: 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 Constitution strictly mandated that "no money shall be paid out of the Treasury
except in pursuance of an appropriation made by law." The execution of the monetary
judgment against the UP was within the primary jurisdiction of the COA. It was of no
moment that a final and executory decision already validated the claim against the UP.

HELD: The period of appeal did not start without effective service of decision upon
counsel of record. (The doctrine of immutability of a final judgment; service of
judgments; fresh-period rule; computation of time)

At stake in the UPs plea for equity was the return of the amount of P16,370,191.74
illegally garnished from its trust funds. Obstructing the plea is the finality of the judgment
based on the supposed tardiness of UPs appeal, which the RTC declared on
September 26, 2002. It is true that a decision that has attained finality becomes
immutable and unalterable, and cannot be modified in any respect, even if the
modification is meant to correct erroneous conclusions of fact and law, and whether the
modification is made by the court that rendered it or by this Court as the highest court of
the land. But the doctrine of immutability of a final judgment has not been absolute, and
has admitted several exceptions, among them: (a) the correction of clerical errors; (b)
the so-called nunc pro tunc entries that cause no prejudice to any party; (c) void
judgments; and (d) whenever circumstances transpire after the finality of the decision
that render its execution unjust and inequitable. We rule that the UPs plea for equity
warrants the Courts exercise of the exceptional power to disregard the declaration of
finality of the judgment of the RTC for being in clear violation of the UPs right to due
process.

Firstly, the service of the denial of the motion for reconsideration upon Atty. Nolasco of
the UPLB Legal Office was invalid and ineffectual because he was admittedly not the
counsel of record of the UP. Verily, the service of the denial of the motion for
reconsideration could only be validly made upon the OLS in Diliman, and no other. It is
settled that where a party has appeared by counsel, service must be made upon such
counsel. This is clear enough from Section 2, second paragraph, of Rule 13, Rules of
Court, which explicitly states that: "If any party has appeared by counsel, service upon
him shall be made upon his counsel or one of them, unless service upon the party
himself is ordered by the court. Where one counsel appears for several parties, he shall
only be entitled to one copy of any paper served upon him by the opposite side."

Secondly, even assuming that the service upon Atty. Nolasco was valid and effective,
such that the remaining period for the UP to take a timely appeal would end by May 23,
2002, it would still not be correct to find that the judgment of the RTC became final and
immutable thereafter due to the notice of appeal being filed too late on June 3, 2002. In
so declaring the judgment of the RTC as final against the UP, the CA and the RTC
applied the rule contained in the second paragraph of Section 3, Rule 41 of the Rules of
Court to the effect that the filing of a motion for reconsideration interrupted the running
of the period for filing the appeal; and that the period resumed upon notice of the denial
of the motion for reconsideration. For that reason, the CA and the RTC might not be
taken to task for strictly adhering to the rule then prevailing.

However, equity calls for the retroactive application in the UPs favor of the fresh-period
rule that the Court first announced in mid-September of 2005 through its ruling in
Neypes v. Court of Appeals, viz: "to standardize the appeal periods provided in the
Rules and to afford litigants fair opportunity to appeal their cases, the Court deems it
practical to allow a fresh period of 15 days within which to file the notice of appeal in the
Regional Trial Court, counted from receipt of the order dismissing a motion for a new
trial or motion for reconsideration." The retroactive application of the fresh-period rule, a
procedural law that aims "to regiment or make the appeal period uniform, to be counted
from receipt of the order denying the motion for new trial, motion for reconsideration
(whether full or partial) or any final order or resolution," is impervious to any serious
challenge. This is because there are no vested rights in rules of procedure.

Consequently, even if the reckoning started from May 17, 2002, when Atty. Nolasco
received the denial, the UPs filing on June 3, 2002 of the notice of appeal was not tardy
within the context of the fresh-period rule. For the UP, the fresh period of 15-days
counted from service of the denial of the motion for reconsideration would end on June
1, 2002, which was a Saturday. Hence, the UP had until the next working day, or June
3, 2002, a Monday, within which to appeal, conformably with Section 1 of Rule 22,
Rules of Court, which holds that: "If the last day of the period, as thus computed, falls on
a Saturday, a Sunday, or a legal holiday in the place where the court sits, the time shall
not run until the next working day.

GRANTED

City of Caloocan vs. Allarde

Facts: Sometime in 1972, Marcial Samson, City Mayor of Caloocan City, through
Ordinance 1749, abolished the position of Assistant City Administrator and 17 other
positions from the plantilla of the local government of Caloocan. Then Assistant City
Administrator Delfina Hernandez Santiago and the 17 affected employees of the City
Government assailed the legality of the abolition before the then Court of First Instance
(CFI) of Caloocan City, Branch 33. In 1973, the CFI declared the abolition illegal and
ordered the reinstatement of all the dismissed employees and the payment of their back
salaries and other emoluments. The City Government of Caloocan appealed to the
Court of Appeals. Santiago and her co-parties moved for the dismissal of the appeal for
being dilatory and frivolous but the appellate court denied their motion. Thus, they
elevated the case on certiorari before the Supreme Court (GR L-39288-89, Heirs of
Abelardo Palomique, et al. vs. Marcial Samson, et al.) In the Supreme Court's
Resolution dated 31 January 1985, it held that the appellate court "erred in not
dismissing the appeal," and "that the appeal of the City Government of Caloocan was
frivolous and dilatory." In due time, the resolution lapsed into finality and entry of
judgment was made on 27 February 1985.

In 1986, the City Government of Caloocan paid Santiago P75,083.37 in partial payment
of her backwages, thereby leaving a balance of P530,761.91. Her co-parties were paid
in full. In 1987, the City of Caloocan appropriated funds for her unpaid back salaries.
This was included in Supplemental Budget 3 for the fiscal year 1987. Surprisingly,
however, the City later refused to release the money to Santiago. Santiago exerted
effort for the execution of the remainder of the money judgment but she met stiff
opposition from the City Government of Caloocan. On 12 February 1991, Judge Mauro
T. Allarde, RTC of Caloocan City, Branch 123, issued a writ of execution for the
payment of the remainder of Santiagos back salaries and other emoluments. For the
second time, the City Government of Caloocan went up to the Court of Appeals and
filed a petition for certiorari, prohibition and injunction to stop the trial court from
enforcing the writ of execution. The CA dismissed the petition and affirmed the order of
issuance of the writ of execution. One of the issues raised and resolved therein was the
extent to which back salaries and emoluments were due to respondent Santiago. The
appellate court held that she was entitled to her salaries from October, 1983 to
December, 1986. For the second time, the City Government of Caloocan appealed to
the Supreme Court (GR 98366, City Government of Caloocan vs. Court of Appeals, et
al.) The petition was dismissed, through its Resolution of 16 May 1991, for having been
filed late and for failure to show any reversible error on the part of the Court of Appeals.
The resolution subsequently attained finality and the corresponding entry of judgment
was made on 29 July 1991.

On motion of Santiago, Judge Mauro T. Allarde ordered the issuance of an alias writ of
execution on 3 March 1992. The City Government of Caloocan moved to reconsider the
order, insisting in the main that Santiago was not entitled to backwages from 1983 to
1986. The lower court denied the motion and forthwith issued the alias writ of execution.
Unfazed, the City Government of Caloocan filed a motion to quash the writ, maintaining
that the money judgment sought to be enforced should not have included salaries and
allowances for the years 1983-1986. The trial court likewise denied the motion. On 27
July 1992, Sheriff Alberto A. Castillo levied and sold at public auction one of the motor
vehicles of the City Government of Caloocan (SBH-165) for P100,000. The proceeds of
the sale were turned over to Santiago in partial satisfaction of her claim, thereby leaving
a balance of P439,377.14, inclusive of interest. The City of Caloocan and Norma M.
Abracia filed a motion questioning the validity of the auction sale of the vehicle with
plate SBH-165, and a supplemental motion maintaining that the properties of the
municipality were exempt from execution. In his Order dated 1 October 1992, Judge
Allarde denied both motions and directed the sheriff to levy and schedule at public
auction three more vehicles of the City of Caloocan. All the vehicles, including that
previously sold in the auction sale, were owned by the City and assigned for the use of
Norma Abracia, Division Superintendent of Caloocan City, and other officials of the
Division of City Schools.

Meanwhile, the City Government of Caloocan sought clarification from the Civil Service
Commission (CSC) on whether Santiago was considered to have rendered services
from 1983-1986 as to be entitled to backwages for that period. In its Resolution 91-
1124, the CSC ruled in the negative. On 22 November 1991, Santiago challenged the
CSC resolution before the Supreme Court (GR 102625, Santiago vs. Sto. Tomas, et al.)
On 8 July 1993, the Supreme Court initially dismissed the petition for lack of merit;
however, it reconsidered the dismissal of the petition in its Resolution dated 1 August
1995, this time ruling in favor of Santiago, holding that CSC Resolution 91-1124 could
not set aside what had been judicially decided with finality.

On 5 October 1992, the City Council of Caloocan passed Ordinance 0134, Series of
1992, which included the amount of P439,377.14 claimed by respondent Santiago as
back salaries, plus interest. Pursuant to the subject ordinance, Judge Allarde issued an
order dated 10 November 1992, decreeing that the City Treasurer (of Caloocan),
Norberto Azarcon be ordered to deliver to the Court within 5 days from receipt, (a)
managers check covering the amount of P439,378.00 representing the back salaries of
Delfina H. Santiago in accordance with Ordinance 0134 S. 1992 and pursuant to the
final and executory decision in these cases. Then Caloocan Mayor Macario A. Asistio,
Jr., however, refused to sign the check intended as payment for Santiagos claims. This,
despite the fact that he was one of the signatories of the ordinance authorizing such
payment. On 29 April 1993, Judge Allarde issued another order directing the Acting City
Mayor of Caloocan, Reynaldo O. Malonzo, to sign the check which had been pending
before the Office of the Mayor since 11 December 1992. Acting City Mayor Malonzo
informed the trial court that "he could not comply with the order since the subject check
was not formally turned over to him by the City Mayor" who went on official leave of
absence on 15 April 1993, and that "he doubted whether he had authority to sign the
same." Thus, in an order dated 7 May 1993, Judge Allarde ordered Sheriff Alberto A.
Castillo to immediately garnish the funds of the City Government of Caloocan
corresponding to the claim of Santiago. On the same day, Sheriff Alberto A. Castillo
served a copy of the Notice of Garnishment on the Philippine National Bank (PNB),
Sangandaan Branch, Caloocan City. When PNB immediately notified the City of
Caloocan of the Notice of Garnishment, the City Treasurer sent a letter-advice informing
PNB that the order of garnishment was "illegal," with a warning that it would hold PNB
liable for any damages which may be caused by the withholding of the funds of the city.
PNB opted to comply with the order of Judge Allarde and released to the Sheriff a
managers check amounting to P439,378. After 21 long years, the claim of Santiago
was finally settled in full.

On 4 June 1993, however, while the present petition was pending, the City Government
of Caloocan filed yet another motion with the Supreme Court, a Motion to Declare in
Contempt of Court; to Set Aside the Garnishment and Administrative Complaint against
Judge Allarde, Santiago and PNB. Subsequently, the City Government of Caloocan filed
a Supplemental Petition formally impleading PNB as a party-respondent in this case.
The petition for certiorari is directed this time against the validity of the garnishment of
the funds of the City of Caloocan, as well as the validity of the levy and sale of the motor
vehicles belonging to the City of Caloocan.

Issue: Whether the funds of City of Caloocan, in PNB, may be garnished (i.e. exempt
from execution), to satisfy Santiagos claim.

Held: Garnishment is considered a specie of attachment by means of which the plaintiff


seeks to subject to his claim property of the defendant in the hands of a third person, or
money owed by such third person or garnishee to the defendant. The rule is and has
always been that all government funds deposited in the PNB or any other official
depositary of the Philippine Government by any of its agencies or instrumentalities,
whether by general or special deposit, remain government funds and may not be
subject to garnishment or levy, in the absence of a corresponding appropriation as
required by law. Even though the rule as to immunity of a state from suit is relaxed, the
power of the courts ends when the judgment is rendered. Although the liability of the
state has been judicially ascertained, the state is at liberty to determine for itself whether
to pay the judgment or not, and execution cannot issue on a judgment against the state.
Such statutes do not authorize a seizure of state property to satisfy judgments
recovered, and only convey an implication that the legislature will recognize such
judgment as final and make provision for the satisfaction thereof. The rule is based on
obvious considerations of public policy. 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. However, the
rule is not absolute and admits of a well-defined exception, that is, when there is a
corresponding appropriation as required by law. Otherwise stated, the rule on the
immunity of public funds from seizure or garnishment does not apply where the funds
sought to be levied under execution are already allocated by law specifically for the
satisfaction of the money judgment against the government. In such a case, the
monetary judgment may be legally enforced by judicial processes. Herein, the City
Council of Caloocan already approved and passed Ordinance 0134, Series of 1992,
allocating the amount of P439,377.14 for Santiagos back salaries plus interest. This
case, thus, fell squarely within the exception. For all intents and purposes, Ordinance
0134, Series of 1992, was the "corresponding appropriation as required by law." The
sum indicated in the ordinance for Santiago were deemed automatically segregated
from the other budgetary allocations of the City of Caloocan and earmarked solely for
the Citys monetary obligation to her. The judgment of the trial court could then be
validly enforced against such funds.

Municipality of Makati vs. Court of Appeals

Facts: Petitioner Municipality of Makati expropriated a portion of land owned by private


respondents, Admiral Finance Creditors Consortium, Inc. After proceedings, the RTC of
Makati determined the cost of the said land which the petitioner must pay to the private
respondents amounting to P5,291,666.00 minus the advanced payment of
P338,160.00. It issued the corresponding writ of execution accompanied with a writ of
garnishment of funds of the petitioner which was deposited in PNB. However, such
order was opposed by petitioner through a motion for reconsideration, contending that
its funds at the PNB 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, citing the case of Republic of the Philippines v. Palacio.The
RTC dismissed such motion, which was appealed to the Court of Appeals; the latter
affirmed said dismissal and petitioner now filed this petition for review.

Issue: Whether or not funds of the Municipality of Makati are exempt from garnishment
and levy upon execution.

Held: It is petitioner's main contention that the orders of respondent RTC judge involved
the net amount of P4,965,506.45, wherein the funds garnished by respondent sheriff
are in excess of P99,743.94, which are public fund and thereby are exempted from
execution without the proper appropriation required under the law. There is merit in this
contention. In this jurisdiction, well-settled is the rule that public funds are not subject to
levy and execution, unless otherwise provided for by statute. 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. Absent a showing that the municipal council of
Makati has passed an ordinance appropriating the said amount from its public funds
deposited in their PNB account, no levy under execution may be validly effected.
However, this court orders petitioner to pay for the said land which has been in their use
already. This Court will not condone petitioner's blatant refusal to settle its legal
obligation arising from expropriation of land they are already enjoying. The State's
power of eminent domain should be exercised within the bounds of fair play and justice.