POLITICAL LAW CASE DIGESTS

A. Preliminary Considerations In RE: Joaquin T. Borromeo (21 February 1995) 241 SCRA 405 per curiam FACTS: BACKGROUND. "A Little learning is a dangerous thing, and he who act as his own lawyer has a fool for a client. o Joaquin Borromeo is not a lawyer but had read some law books and had superficial awareness of few substantive principles and procedural rules. With a couple of learning he had been prosecuting legal proceedings in various courts dogmatically pontificating errors supposedly committed by courts, including the Supreme Court. His illusions of being a lawyer has presumably given him competence to represent himself in original and review proceedings. With this, he circulated statements against judges, court employees, and lawyers, aside from the many cases he filed against bank employees. o Borromeo had loan transactions with three banks (Traders Royal Bank (TRB), United Coconut Planters Bank(UCPB) and Security Bank and Trust Co) with his property and property of his familiy and a third person as a collateral. However, Borromeo failed to pay his obligations to the said banks, and when demands were made for him to do so, he laid down his own terms for his satisfaction which were inconsistent with those agreed upon. o When the bank refused to agree with him, he brought suits left and right against the said banks, officers of the banks, lawyers representing the banks and public prosecutors. He sued as well judges of trial courts, justices of the court of appeals and Supreme Court who at one time or another, rendered judgement, resolutions or orders that were adverse to him. In aggregate , he had initiated an astounding number of no less than 50 original or review proceedings, civil, criminal and administrative.

ISSUE Whether or not Borromeo is guilty of constructive contempt for repetitious disrespect to court officials and their decisions? RULING Borromeo is found and declared guilty of constructive contempt. o There can scarcely be any doubt of Borromeo's guilt of contempt, for abuse of and interference with judicial rules and processes, gross disrespect to courts and judges and improper conduct directly impeding, obstructing and degrading the administration of justice. He stubbornly litigated issues already declared to be without merit, rendered adversely to him in many suits and proceedings, rulings which had become final and executory, obdurately and unreasonably insisting on the application of his own individual version of the rules, founded on nothing more than his personal (and quite erroneous) reading of the Constitution and the law; he insulted judges and court officers, including the attorneys appearing for his adversaries, needlessly overloaded the court dockets and sorely tried the patience of the judges and court employees who had to act on

his repetitious and largely unfounded complaints, pleadings and motions. On the contention that he "was exercising his rights of freedom of speech, of expression, and to petition the government for redress of grievances as guaranteed by the Constitution (Sec. 4, Art. III) and in accordance with the accountability of public officials.": The constitutional rights invoked by him afford no justification for repetitious litigation of the same causes and issues, for insulting lawyers, judges, court employees; and other persons, for abusing the processes and rules of the courts, wasting their time, and bringing them into disrepute and disrespect.

Conducto v. Monzon (2 July 1998) A.M. MTJ-98-1147 FACTS BACKGROUNDER. An administrative complaint filed by petitioner Conducto against respondent Judge Iluminado C. Monzon of Municipal Trial Court, San Pablo City with ignorance of law when he deliberately refused to suspend a barangay chairman who was charged with the crime of unlawful appointment under Article 244 of the Revised Penal Code. o In Aug 30, 1993, Jesus Conducto (complainant) filed a complaint against Barangay Chairman Benjamin Maghirang with violation of Section 394 of the Local Government Code and Article 244 of the Revised Penal Code for appointing his sister-in-law as barangay secretary in May 17, 1989. o Section 394 of the LGC prohibits a punong barangay from appointing a relative within the fourth civil degree of consanguinity or affinity as barangay secretary. o The City Prosecutor dismissed the complaint, stating that the appointment was made before the effectivity of the Local Government Code of 1991 [which allow such appointment?]. o In October, complainant Conducto obtained an opinion from DILG Director Opinion declaring that the appointment violated par(2), Section 95 of BP 337, the Local Government Code prior to the Local Government Code of 1991. o In Feb 1994, the Ombudsman recommended and approved the filing of an information for unlawful appointment (Article 244 of the Revised Penal Code) against Maghirang. o The City Prosecutor filed a criminal case against Maghirang together with a motion for his suspension pursuant to Sec. 13 of RA 3019 or the Anti Graft and Corrupt Practices Act (which provides that any incumbent public officer or official under criminal prosecution under Title 7, Book II of the RPC shall be suspended). o Judge Monzon denied the motion for suspension. The judge opined that that the suspension sought by the prosecution is premised upon the act charged allegedly committed during the previous term of the accused as Barangay Chairman, who was subsequently re-elected during the last Barangay Election of May 9, 1994. He opined that preventive suspension is applicable only if there is an administrative case filed against a local official who is at the same time criminally charged in Court [so, both administrative and criminal charges have to be present, according to Monzon?]. At present, the records of the Court show that there is no pending administrative case existing or filed against the accused. [PRESENT CASE. Was the case brought to the CA and later to the SC? What was CAs decision?]

ISSUE Whether or not the elective official will be free from criminal liability upon his reelection to office RULING No. Judge Monzon was fined for Php 5,000 The Supreme Court explicitly ruled that the reelection of public official extinguishes only the administrative and not criminal liability incurred by him in his previous term of office. Thus: the ruling therefore, that -when the people have elected a man to his office it must be assumed that they did this with knowledge of his life and character and that they disregarded or forgave his fault or misconduct if he had been guilty of any- refers only to administrative case and not to criminal case, because a crime according to

the supreme court is a public wrong more atrocious in character than mere misfeasance committed by a public officer in the discharge of his duty, and injurious not only to a person but also to the state as whole. Article 89 of the revised penal code enumerates the ground for extinction of the criminal liability and reelection to office of public official is not one of them. Only the President of the Philippines can grant the pardon of a criminal offense (Philippine constitution) [which section in what article?]

Republic v. Sandiganbayan (21 July 2003) G.R. No. 104768 Carpio, J. Complete Title REPUBLIC OF THE PHILIPPINES, Petitioner, vs. SANDIGANBAYAN, MAJOR GENERAL JOSEPHUS Q. RAMAS and ELIZABETH DIMAANO, Respondents. FACTS BACKGROUND. There are three major issues involved in the case and our main concern for our Consti 1 class is the third. At any rate, it may be good for everyone to know what the 3 issues are: 1. PCGGs Jurisdiction to Investigate Private Respondents; 2. Propriety of Dismissal of Case Before Completion of Presentation of Evidence; and 3. Legality of the Search and Seizure o Immediately upon her assumption to office following the successful EDSA Revolution, then President Corazon C. Aquino issued Executive Order No. 1 ("EO No. 1") creating the Presidential Commission on Good Government ("PCGG"). EO No. 1 primarily tasked the PCGG to recover all ill-gotten wealth of former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates. o PCGG created an AFP Anti-Graft Board ("AFP Board") tasked to investigate reports of unexplained wealth and corrupt practices by AFP personnel, whether in the active service or retired. o Based on its mandate, the AFP Board investigated various reports of alleged unexplained wealth of respondent Major General Josephus Q. Ramas ("Ramas"). On 27 July 1987, the AFP Board issued a Resolution on its findings and recommendation on the reported unexplained wealth of Ramas, to wit: house and lot located at 15-Yakan St., La Vista, Quezon City; house and lot located in Cebu City; The equipment/items and communication facilities which were found in the premises of Elizabeth Dimaano, money in the amount of P2,870,000.00 and $50,000 US Dollars o Where is the love story being asked by the prof? Elizabeth Dimaano is the mistress of respondent. That respondent usually goes and stays and sleeps in the alleged house of Elizabeth Dimaano in Barangay Tengga, Itaas, Batangas City and when he arrives, Elizabeth Dimaano embraces and kisses respondent. That on February 25, 1986, a person who rode in a car went to the residence of Elizabeth Dimaano with four (4) attache cases filled with money and owned by MGen Ramas. Sworn statement in the record disclosed also that Elizabeth Dimaano had no visible means of income and is supported by respondent for she was formerly a mere secretary. FIRST CASE [with the Sandiganbayan by PCGG]. It was recommended by the AFB Board that Maj. Gen. Josephus Q. Ramas (ret.) be prosecuted and tried for violation of RA 3019, as amended ("Anti-Graft and Corrupt Practices Act") and RA 1379, as amended ("The Act for the Forfeiture of Unlawfully Acquired Property.") o 1 August 1987, the PCGG filed a petition for forfeiture under Republic Act No. 1379 ("RA No. 1379") against Ramas. o Before Ramas could answer the petition, then Solicitor General Francisco I. Chavez filed an Amended Complaint naming the Republic of the Philippines ("petitioner"), represented by the PCGG, as plaintiff and Ramas as defendant. The Amended Complaint also impleaded Elizabeth Dimaano ("Dimaano") as co-defendant. o After several petitions by PCGG to delay the trial, Ramas and Dimaano filed their motions to dismiss based on Republic v. Migrino. The Court held in Migrino that the PCGG does not have

o o o

jurisdiction to investigate and prosecute military officers by reason of mere position held without a showing that they are "subordinates" of former President Marcos. 18 November 1991, Sandiganbayan dismissed the Amended Complaint, without pronouncement as to costs. The counterclaims are likewise dismissed for lack of merit, but the confiscated sum of money, communications equipment, jewelry and land titles are ordered returned to Elizabeth Dimaano. The records of the case were remanded and referred to the Ombudsman, who has primary jurisdiction over the forfeiture cases under R.A. No. 1379 and to the Commissioner of the Bureau of Internal Revenue for a determination of any tax liability of respondent Elizabeth Dimaano. 4 December 1991, petitioner filed its Motion for Reconsideration. In answer to the Motion for Reconsideration, private respondents filed a Joint Comment/Opposition to which petitioner filed its Reply on 10 January 1992. 25 March 1992, the Sandiganbayan rendered a Resolution denying the Motion for Reconsideration.

FINAL CASE [to the SC]. This is a petition for review on certiorari seeking to set aside the Resolutions of the Sandiganbayan.

ISSUE [Take note that there are three issues involved in the case as mentioned above but we are limiting ourselves to issue number 3] Did the respondent court err in holding articles and things such as sums of money, communications equipment, jewelry and land titles confiscated from Dimaano, and that these were illegally seized and therefore excluded as evidence? Can Ramas and Dimaano claim exclusionary right during that time when there was no enforceable Constitution in place? [NB: exclusionary rule is a rule of evidence that disallows the use of illegally obtained evidence in criminal trials]

RULING SC said that the correct issues are: (1) whether the revolutionary government was bound by the Bill of Rights of the 1973 Constitution during the interregnum, that is, after the actual and effective take-over of power by the revolutionary government following the cessation of resistance by loyalist forces up to 24 March 1986 (immediately before the adoption of the Provisional Constitution); and (2) whether the protection accorded to individuals under the International Covenant on Civil and Political Rights ("Covenant") and the Universal Declaration of Human Rights ("Declaration") remained in effect during the interregnum. SC held that the Bill of Rights under the 1973 Constitution was not operative during the interregnum. However, they ruled that the protection accorded to individuals under the Covenant and the Declaration remained in effect during the interregnum. Thus, to rule that the Bill of Rights of the 1973 Constitution remained in force during the interregnum, absent a constitutional provision excepting sequestration orders from such Bill of Rights, would clearly render all sequestration orders void during the interregnum. Nevertheless, even during the interregnum the Filipino people continued to enjoy, under the Covenant and the Declaration, almost the same rights found in the Bill of Rights of the 1973 Constitution. The revolutionary government, after installing itself as the de jure government, assumed responsibility for the States good faith compliance with the Covenant to which the Philippines is a signatory. Article 2(1) of the Covenant requires each signatory State "to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant." Under Article 17(1) of the Covenant, the revolutionary government had the duty to insure that "[n]o one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence."

 The Declaration, to which the Philippines is also a signatory, provides in its Article 17(2) that "[n]o one shall be arbitrarily deprived of his property." Although the signatories to the Declaration did not intend it as a legally binding document, being only a declaration, the Court has interpreted the Declaration as part of the generally accepted principles of international law and binding on the State. Thus, the revolutionary government was also obligated under international law to observe the rights of individuals under the Declaration. The revolutionary government did not repudiate the Covenant or the Declaration during the interregnum. During the interregnum when no constitution or Bill of Rights existed, directives and orders issued by government officers were valid so long as these officers did not exceed the authority granted them by the revolutionary government. The directives and orders should not have also violated the Covenant or the Declaration. In this case, the revolutionary government presumptively sanctioned the warrant since the revolutionary government did not repudiate it. The warrant, issued by a judge upon proper application, specified the items to be searched and seized. The warrant is thus valid with respect to the items specifically described in the warrant. Hence, both Ramas and Dimaano still had their exclusionary rights intact by virtue of both the Covenant and the Declaration. However, the Constabulary raiding team seized items not included in the warrant. As admitted by petitioners witnesses, the raiding team confiscated items not included in the warrant The seizure of these items was therefore void, and unless these items are contraband per se, and they are not, they must be returned to the person from whom the raiding seized them. However, we do not declare that such person is the lawful owner of these items, merely that the search and seizure warrant could not be used as basis to seize and withhold these items from the possessor. It was thus held that these items should be returned immediately to Dimaano. The petition for certiorari was DISMISSED. The questioned Resolutions of the Sandiganbayan dated 18 November 1991 and 25 March 1992 in Civil Case No. 0037, were remanded to the Ombudsman for appropriate action as the evidence may warrant, and referred to the Commissioner of the Bureau of Internal Revenue for a determination of any tax liability of respondent Elizabeth Dimaano.

Reagan v. Commissioner of Internal Revenue (27 December 1969) 30 SCRA 968 Fernando, J. FACTS BACKGROUND. William Reagan was a US citizen and employee of Bendix Radio, Division of Bendix Aviation Corporation which provides technical assistance to the US Air Force. He was assigned to Clark Air Base in Pampanga on July 7, 1959. He imported on April 22, 1960 a tax free 1960 Cadillac car with accessories worth $6,443.83. o On July 11, 1960, he was granted by the Base Commander to sell his car provided that it would be sold to a member of US Armed Forces. On the same date, the petitioner sold his car to Willie Johnson Jr. (US Marine Corps. in Cavite) in Clark Air Base. o Johnson, on the other hand, sold it to Fred Meneses for Php32,000 in Manila. The Commissioner of Internal Revenue rendered him liable for income tax (Php 2,912) he earned based from the sale. Reagan paid but sought for refund from the Commissioner after claiming tax exemption. FIRST STAGE. Even though the action for the refund was pending he filed a case with the Court of Tax Appeals. o As regards the ruling of the CTA, there was a contention if Clark Air Base is considered a foreign soil as it is an American base. The court has no answer in the contention. The CTA ruled that there is nothing objectionable in the tax assessment and denied the refund. FINAL STAGE. Reagan appealed the decision of the CTA to the SC.

ISSUE Whether or not the Philippines has jurisdiction over US Bases in the country for purposes of taxation RULING The ruling of the Court of Tax appeals was affirmed. The petitioner is liable for the income tax arising from sale of his automobile in Clark Field Air Base which is within the territorial jurisdiction of the country. The law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and top categorical to be misinterpreted. In claiming tax exemptions, the court is strictly against the person claiming it. He must prove first that he is covered by such exemption. The petitioners liability for the income tax due to him as a result of the sale was unavoidable since the sale took place in Philippine territory. Being independent and sovereign, the Philippines may exercise its authority over its entire domain. However, the state may restrict the use of its power expressly or impliedly. o This refers to concept of state sovereignty which is called "auto-limitation." It is defined by Jellinek as the "property of a state-force due to which it has the exclusive capacity of legal selfdetermination and self-restriction." It may refrain from its exercise of illimitable competence [its definition was not provided but based in the context it refers to the illimitable power of the state to control its territory unless it refrains or limits itself from exercising its authority.] o RE the Military Bases Agreement of 1947: though Philippines does not preclude itself from allowing another power to participate in its jurisdictional right over its territory, the areas covered have alien character but their status as native soil remains and still subject to its authority. Its jurisdiction may be diminished but it does not disappear. [Sovereignty refers to the power of the state over its local affairs within its territory and this territorial sovereignty of the state is also referred to here as jurisdiction.] o Taking from these statements, US bases in the Philippines are not and cannot be foreign territory.

There is nothing in the agreement that Clark Air Base is a foreign territory for purposes of income tax legislation. It clearly says that the country's jurisdictional rights including power to tax have been preserved. However, Reagan invoked the exemption clause in Act XII of the Military Bases Agreement which states that a "US national serving or employed in the Philippines in connection with the construction, maintenance, operation or defense of the bases and residing in the Philippines only by reason of employment is not to be taxed on his income unless he derived it from Philippine source or sources other than the US sources." This statement does not apply to income derived from the bases which are clearly derived from the Philippines [you mean that income generated from the US bases in the Philippines are considered Philippine income? Not actually, but the sources of income in US bases were from Philippine sources. According to the ruling of the court, the exemption clause in the Agreement does not apply to income derived in the bases which are clearly derived in the Philippines. For income tax purposes, the Clark Air Force Base is not outside Philippine territory.] The court cited decisions from US courts: o Chief Justice Marshall (Schooner Exchange v. M'Faddon, 1812): "The jurisdiction of the nation within its own territory is necessarily exclusive and absolute. It is susceptible of no limitation not imposed by itself. o Chief Justice Taney (1857): "For undoubtedly every person who is found within the limits of a government, whether temporary purposes or as a resident, is bound by its laws. o Justice Van Devanter: "the territory subject to its jurisdiction includes the land areas under its dominion and control the ports, harbors, bays, and other inclosed arms of the sea along its coast, and a marginal belt of the sea extending from the coast line outward a marine league, or 3 geographic miles." o Hyde (International Law): not even the embassy premises of a foreign power are to be considered outside territorial domain of the host state. The petitioner cited the 1951 decision of the court (Saura Import and Export, Co. v. Meer) where Justice Tuason said that "US state forces that brought in such equipment later disposed of as surplus, when no longer needed for military purposes, was beyond the reach of our tax statues." Justice Tuason also added, "while in army bases or installations within the Philippines those goods were in contemplation of law on foreign soil." This statement of Justice Tuason was clearly obiter and not being necessary for the resolution of the issue. It was only said by way of legal fiction. o However, Justice Barrera in the 1962 decision in Co Po v. Collector of Internal Revenue said that the "US Military Air Bases are not foreign territories both in the political and geographical sense" It is thus concluded that the claim of the petitioner that Clark Air Force Base is outside Philippine territory is without merit. Nevertheless, Justice Tuason, in the case of People v. Acierto, ruled that the Military Bases Agreement merely consents the US exercising jurisdiction on certain cases in matters of comity, courtesy, or expediency over bases as part of Philippine territory. It should not be construed as a limitation upon the rights of the Philippine government.

Bacani and Matoto v. Natl Coconut Corp., et al. (November 29, 1956) 100 PHIL 468 [pls put the name of the ponente here] FACTS BACKGROUND. Bacani and Matoto are court stenographers of Branch VI of the Court of First Instance of Manila. [can you add a story here that led to the case? Please include NACOCOs entry into the story] FIRST STAGE. In the pendency of case Civil Case No. 2293, Federico Alikpala, counsel for NACOCO requested said stenographers transcript of stenography taken by them. Leopldo Bacani was paid 564 and Mateo Matoto 150 for the transcript at 1 per page. o Upon inspecting the books of this corporation, the Auditor General disallowed the payment of these fees. o On January19, 1953 DOJ expressed an opinion that NACOCO being a government entity is exempted from the said fees thus, plaintiffs are required to reimburse said amounts. This shall be reimbursed through deducting it from the plaintiffs salary- 25 for Bacani and 10 for Matoto every payday SECOND STAGE. To prevent [the enforcement of the above?] deductions and securing judicial ruling that NACOCO is not a government entity, this Action was instituted in the Court of First Instance of Manila, under the purview of section 16, Rule 130 of the Rules of Court [please put what this rule says here]. While NACOCO countered with a defense that they are a government entity with the purview of section 2 of Revised Administrative Code of 1917. [is there an intermittent case at the CA?] [Is this case a petition for certiorari at the SC?]

ISSUE Whether or not NACOCO may be considered as included in the term Government of the Republic of the Philippines

RULING The NACOCO is a government-owned or controlled corporation, they are not a part of the Government and do not acquire that status for the simple reason that they do not come under the classification of municipal or public corporation and this court aptly said, The mere fact that the Government happens to be a majority stockholder does not make it a public corporation (Natl Coal Co v. Collector of Internal Revenue) While NACOCO was organized with the purpose and a function to which our government has chosen to exercise to promote the coconut industry, it was given a corporate power separate and distinct

from our government. They are governed by the Corporation Law. Their powers, duties and liabilities have t be determined in the light of that law and of their corporate charters. [can you explain what GOCCs are and their nature vis--vis their connection with the government? They are owned by the government but they are not governmental in nature? This is important in explaining the outcome of the case] Wherefore, the decision appealed from is affirmed, without pronouncement as to costs. [are you referring to the payments to the stenographers? What happened to them in the end? Made to reimburse or no? why?]

ACCFA vs. CUGCO (29 November 1969) GR L-21484 J. Makalintal FACTS BACKGROUND. The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government agency created under Republic Act No. 821, as amended. Its administrative machinery was reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land Reform Code (Republic Act No. 3844). o On 4 September 1961 a collective bargaining agreement (contract between an employer and a union to define conditions for work, benefit and dispute relations), which was to be effective for a period of 1 year from 1 July 1961, was entered into by and between the Unions and the Agricultural Credit and Cooperative Financing Administration (ACCFA). A few months thereafter, the Unions started protesting against alleged violations and non-implementation of said agreement. Finally, on 25 October 1962 the Unions declared a strike, which was ended when the strikers voluntarily returned to work on 26 November 1962. FIRST STAGE. On 30 October 1962 the Unions, together with its mother union, the Confederation of Unions in Government Corporations and Offices (CUGCO), filed a complaint with the Court of Industrial Relations against the ACCFA (Case 3450-ULP) for having allegedly committed acts of unfair labor practice, namely: o violation of the CBA in order to discourage the members of the Unions in the exercise of their right to self-organization o discrimination against said members in the matter of promotions o refusal to bargain. The ACCFA denied the charges and interposed as affirmative and special defenses lack of jurisdiction of the CIR over the case, illegality of the bargaining contract, expiration of said Contract and lack of approval by the office of the President of the fringe benefits provided for therein. Brushing aside the foregoing defenses, the CIR in its decision dated 25 March 1963 ordered the ACCFA: to cease and desist from committing further acts tending to discourage the members of complainant unions in the exercise of their right to self organization; to comply with and implement the provision of the collective bargaining contract executed on 4 September 1961, including the payment of P30.00 a month living allowance; to bargain in good faith and expeditiously with the herein complainants; SECOND STAGE. ACCFA moved to reconsider but was turned down in a resolution dated 25 April 1963 of the CIR en banc. Thereupon it brought the appeal by certiorari to the Supreme Court (GR L-21484). o During the pendency of the ACCFA's case, specifically on 8 August 1963, the President of the Philippines signed into law the Agricultural Land Reform Code (Republic Act 3844), which among other things required the reorganization of the administrative machinery of the Agricultural Credit and Cooperative Financing Administration (ACCFA) and changed its name to Agricultural Credit Administration (ACA). o On 17 March 1964 the Unions filed a petition for certification election with the Court of Industrial Relations (Case No. 1327-MC) praying that they be certified as the exclusive bargaining agents for the supervisors and rank-and-file employees, respectively, in the ACA. The trial Court in its order dated 30 March 1964 directed the Manager or Officer-in-Charge of the ACA to allow the posting of said order "for the information of all employees and workers thereof," and to answer the petition. o ACA denied that the Unions represented the majority of the supervisors and rank-and-file workers. It further alleged that the petition was premature, that the ACA was not the proper party to be notified

and to answer the petition, and that the employees and supervisors could not lawfully become members of the Unions, nor be represented by them. [is this another stage? They raised the matter to the NLRC?] However, in a joint manifestation of the Unions dated 7 May 1964, with the conformity of the ACA Administrator and of the Agrarian Counsel in his capacity as such and as counsel for the National Land Reform Council, it was agreed "that the union in this case represent the majority of the employees in their respective bargaining units" and that only the legal issues raised would be submitted for the resolution of the trial Court. o Finding the remaining grounds for ACA's opposition to the petition to be without merit, the trial Court in its order dated 21 May 1964 certified the Unions as the sole and exclusive bargaining representatives of the rank-and-file employees and supervisors, respectively, of ACA. Said order was affirmed by the CIR en banc in its resolution dated 24 August 1964. [Was there not case filed at the CA before the SC below?] FINAL STAGE. On 2 October 1964 the ACA filed in the Supreme Court a petition for certiorari with urgent motion to stay (court order suspending something from proceeding) the CIR order (GR L-23605). In a resolution dated 6 October 1964, the Supreme Court dismissed the petition for lack of adequate allegations," but the dismissal was later reconsidered when the ACA complied with the formal requirement stated in said resolution. As prayed for, the Court ordered the CIR to stay the execution of its order of 21 May 1964.

ISSUE Whether or not the ACA is engaged in governmental or proprietary functions RULINGS The ACA is a government office or agency engaged in governmental, not proprietary functions. These functions may not be strictly what President Wilson described as "constituent" (as distinguished from "ministrant"), such as those relating to the maintenance of peace and the prevention of crime, those regulating property and property rights, those relating to the administration of justice and the determination of political duties of citizens, and those relating to national defense and foreign relations. Under this traditional classification, such constituent functions are exercised by the State as attributes of sovereignty, and not merely to promote the welfare, progress and prosperity of the people these latter functions being ministrant, the exercise of which is optional on the part of the government. The growing complexities of modern society, however, have rendered this traditional classification of the functions of government quite unrealistic, not to say obsolete. The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally, and only "because it was better equipped to administer for the public welfare than is any private individual or group of individuals" continue to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the times. Here as almost everywhere else the tendency is undoubtedly towards a greater socialization of economic forces. Hereof course this development was envisioned, indeed adopted as a national policy, by the Constitution itself in its declaration of principle concerning the promotion of social justice. It was in furtherance of such policy that the Land Reform Code was enacted and the various agencies, the ACA among them, established to carry out its purposes. There can be no dispute as to the fact that the land reform program contemplated in the said Code is beyond the capabilities of any private enterprise to translate into reality. It is a purely governmental function, no less than, say, the establishment and maintenance of public schools and public hospitals. And when, aside from the governmental objectives of the ACA, geared as they are to the implementation of the land reform program of the State, the law itself declares that the ACA is a government office, with the formulation of policies, plans and programs vested no longer in a Board of Governors, as in the case of the ACCFA, but in the National Land Reform

Council, itself a government instrumentality; and that its personnel are subject to Civil Service laws and to rules of standardization with respect to positions and salaries, any vestige of doubt as to the governmental character of its functions disappears. In view of the foregoing premises, the Unions are not entitled to the certification election sought in the lower Court. Such certification is admittedly for purposes of bargaining in behalf of the employees with respect to terms and conditions of employment, including the right to strike as a coercive economic weapon, as in fact the said unions did strike in 1962 against the ACCFA (GR L-21824). This is contrary to Section 11 of Republic Act 875. With the reorganization of the ACCFA and its conversion into the ACA under the Land Reform Code and in view of the Court's ruling as to the governmental character of the functions of the ACA, the decision of the lower Court dated 25 March 1963, and the resolution en banc affirming it, in the unfair labor practice case filed by the ACCFA, which decision is the subject of the present review in GR No. L-21484, has become moot and academic, particularly insofar as the order to bargain collectively with the Unions is concerned. [In simple words, can you explain the difference between the constituent and ministrant functions of the State; and whether ACAs functions fall within either the c/m function; and why the SC used that to justify their resolution on this matter?]

C. State Immunity E. MERRITT v. GOVERNMENT OF THE PHILIPPINE ISLANDS (21 March 1916) 34 PHIL 311 [kindly put the name of the ponente here] FACTS BACKGROUND. Plaintiff (Merritt) was driving a motorcycle toward the western part of Padre Faura (Calle Padre Faura) with a speed of 10 to 12 miles an hour upon crossing Taft Avenue. When he was 10 feet from the southwest intersection, the General Hospital ambulance turned suddenly to the right side of Taft Ave. without sounding the horn. Such act violated the Motor Vehicle Act which prescribes that after passing the center, the vehicle should have turned south to reach the left side. This resulted to the ambulances collision with the plaintiff who was six feet from the southwest point. o The plaintiff sustained the severe injuries as diagnosed by Dr. Saleeby. He suffered depression in the left parietal region, wound in the same area and in the back of the head, and nose bleeding. He was also unconscious. His pulse was weak and irregular at the time of his operation (10:00pm). His right leg was also broken that the fracture extended to the outer skin. o o He had a weak mental condition and was also slightly deaf. [were these a consequence of the accident? The wording may mean that he had been like that even before] Because of this condition, the plaintiff could no longer perform his duties as a contractor efficiently that he had to dissolve the partnership he formed with the engineer. FIRST STAGE. Legislature passed Act no. 2457 effective Feb. 3, 1915, enabling the plaintiff to file suit against the government. The government cannot be sued by an individual without its consent. Act No. 2457, effective February 3, 1915, reads: 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. Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for damages resulting from a collision between his motorcycle and the ambulance of the General Hospital on March twenty-fifth, nineteen hundred and thirteen; Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of damages, if any, to which the claimant is entitled; and Whereas the Director of Public Works and the Attorney-General recommended that an Act be passed by the Legislature authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order that said questions may be decided: Now, therefore, By authority of the United States, be it enacted by the Philippine Legislature, that: SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the Government of the Philippine Islands in order to fix the responsibility for

the collision between his motorcycle and the ambulance of the General Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and the Attorney-General of the Philippine Islands is hereby authorized and directed to appear at the trial on the behalf of the Government of said Islands, to defendant said Government at the same. SEC. 2. This Act shall take effect on its passage.

SECOND STAGE. Both parties appealed regarding judgement rendered by Court of First Instance of Manila City (which was in favor of the plaintiff with the sum of P14,471). o The plaintiff said the trial court erred: 1) "in limiting the general damages which the plaintiff suffered to P5,000, instead of P25,000 as claimed in the complaint," 2) "in limiting the time when plaintiff was entirely disabled to two months and twentyone days and fixing the damage accordingly in the sum of P2,666, instead of P6,000 as claimed by plaintiff in his complaint." o Meanwhile, the defendant said the trial court erred: 1) in finding that the collision between the plaintiff's motorcycle and the ambulance of the General Hospital was due to the negligence of the chauffeur 2) in holding that the Government of the Philippine Islands is liable for the damages sustained by the plaintiff as a result of the collision, even if it be true that the collision was due to the negligence of the chauffeur 3) in rendering judgment against the defendant for the sum of P14,741

ISSUES Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it also concede its liability to the plaintiff? The issue is whether the government is legally-liable for the damages resulting therefrom. Does the Act authorize us to hold that the Government is legally liable for that amount? If not, we must look elsewhere for such authority, if it exists. RULINGS The Court was in full accord with the trial court that the accident was due to the negligence of the chauffeur. o The Act was passed " in order that said questions may be decided."We have " decided"that the accident was due solely to the negligence of the chauffeur, who was at the time an employee of the defendant, and we have also fixed the amount of damages sustained by the plaintiff as a result of the collision. The Court also found that the trial court erred in calculating the amount to be paid for the plaintiffs loss of wages. There are two items questioned that constitute the P14,741 (the original total amount to be given to the plaintiff): o 1) P5,000 for permanent injuries. The Court found no justification to increase this amount.

2) P2,666 for the loss of wages during the time the plaintiff was incapacitated from pursuing his occupation. According to records, the plaintiffs services as contractor amounted to P1,000 per month. However, the trial court limited the actual time only to the time the plaintiff was confined which was 2 months and 21 days. The Court said it was clear that the plaintiff was incapacitated for 6 months, 2 of which was spent in the hospital and the remainder at his home. Thus, the amount of damages is P18,075.

It was also established that the government can only be made liable for the acts of its officers and employees when they act as special agents. The chauffeur of the ambulance was not a special agent. (See citation on Supreme Court of Spain below).

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

CITATION OF CASES & OTHER LAWS: As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out of either fort or contract, the rule is stated in 36 Cyc., 915, [what is this reference? a book? A manual?] thus: By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely gives a remedy to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense. Apfelbacher vs. State of Wisconsin: It (removing states immunity from suit) simply gives authority to commence suit for the purpose of settling plaintiff's controversies with the estate. Nowhere in the act is there a whisper or suggestion that the court or courts in the disposition of the suit shall depart from well-established principles of law, or that the amount of damages is the only question to be settled It did not pass upon the question of liability, but left the suit just where it would be in the absence of the state's immunity from suit. (Murdock Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N.E., 854; 8 L. R. A., 399.) Sipple vs. State (99 N. Y., 284): Chief Justice Ruger remarks: "It must be conceded that the state can be made liable for injuries arising from the negligence of its agents or servants, only by force of some positive statute assuming such liability. Paragraph 5 of article 1903 of the Civil Code reads:

The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by the official to whom properly it pertained to do the act performed, in which case the provisions of the preceding article shall be applicable. (Art. 1903 was cited in examining substantive laws touching the defendant's liability for the negligent acts of its officers, agents, and employees) Supreme Court of Spain in defining the scope of paragraph 5: 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 (Supreme Court of Spain, January 7, 1898; 83 Jur. Civ., 24.) That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault or negligence; and whereas in the first article thereof. No. 1902, where the general principle is laid down that where a person who by an act or omission causes damage to another through fault or negligence, shall be obliged to repair the damage so done, reference is made to acts or omissions of the persons who directly or indirectly cause the damage, the following articles refers to this persons and imposes an identical obligation upon those who maintain fixed relations of authority and superiority over the authors of the damage, because the law presumes that in consequence of such relations the evil caused by their own fault or negligence is imputable to them. This legal presumption gives way to proof, however, because, as held in the last paragraph of article 1903, responsibility for acts of third persons ceases when the persons mentioned in said article prove that they employed all the diligence of a good father of a family to avoid the damage, and among these persons, called upon to answer in a direct and not a subsidiary manner, are found, in addition to the mother or the father in a proper case, guardians and owners or directors of an establishment or enterprise, the state, but not always, except when it acts through the agency of a special agent, doubtless because and only in this case, the fault or negligence, which is the original basis of this kind of objections, must be presumed to lie with the state That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (and a special agent, in the sense in which these words are employed, is one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official) so that in representation of the state and being bound to act as an agent thereof, he executes the trust confided to him. This concept does not apply to any executive agent who is an employee of the acting administration and who on his own responsibility performs the functions which are inherent in and naturally pertain to his office and which are regulated by law and the regulations." (Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.)

United States of America vs. Hon. Ruiz [date of SC decision] 136 SCRA 487 FACTS BACKGROUNDER. The United States of America had a naval base in Subic, Zambales which was provided in the Military Bases Agreement between the Philippines and the United States. o Sometime in May 1972, the US opened the submission of bids for the following projects: o Repair offender system [what is this?] Repair typhoon damage to certain parts of the base

Eligio de Guzman & Co., Inc. submitted bids. Subsequent thereto, the company received two telegrams from the US requesting it to confirm its price proposals and the name of its bonding company. The company in turn complied with such request.

In June 1972, the company received a letter signed by William Collins (director, contracts Division, Naval Facilities engineering Command, Southwest Pacific, Dept. of the Navy of the US) that says that the company did not qualify to receive an award for the projects due to its previous unsatisfactory performance on a repair contract for the sea wall at the boat landings of the US Naval Station in Subic Bay.

o o

That the projects have been awarded to third parties [the present projects being bidded?] Company [Eligio de Guzmans?] then sued the USA and the members of the Engineering Command of the US Navy. Complaint is to order the said company to perform the works on the projects and the event that specific performance was no longer possible, to order the defendants to pay damages. [I do not understand what you mean: the company wants the US to hire them for this project?] The company also seek for the issuance of a writ of preliminary injunction to retrain [to train them again?] the defendants from entering into contracts with third parties.

The defendants entered their special appearance for the purpose only of questioning the jurisdiction of this court over the subject matter of the complaint and the persons of defendants, the subject matter of the complaint being acts and omissions of the individual defendants as agents of defendant United States of America, a foreign sovereign which has not given her consent to this suit or any other suit for the causes of action asserted in the complaint." Subsequently the defendants filed a motion to dismiss the complaint which included an opposition to the issuance of the writ of preliminary injunction. The company opposed the motion. The trial court denied the motion and issued the writ. The defendants moved twice to reconsider but to no avail.

Hence, this petition [to the SC for certiorari? Was there no case filed to the CA?] ISSUE Whether or not the United States can invoke State Immunity [for what?]

HELD YES. 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 and private, commercial and proprietary acts. The result is that state immunity now extends only to sovereign and governmental acts. 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. It does not apply where the contracts relates the exercise of its sovereign function. In this case, the projects are integral part of the naval base which is devoted to the defense of both US and the Philippines indisputably, a function of the government of highest order, they are not utilized for , nor dedicated to commercial or business purposes.

Republic of the Philippines [represented?] by the Presidential Commission on Good Government (PCGG) vs. Sandiganbayan (2nd Division) and Roberto S. Benedicto [please put date of the SC decision here] [please put SCRA entry here] [please put ponente here]

FACTS BACKGROUND/FIRST STAGE. PCGG issued writs placing under sequestration all business enterprises, entities and other propertiesreal and personalowned or registered in the name of private respondent Benedicto. o o o Among other things were his 227 shares in Negros Occidental Golf and Country Club (NOGCC) at P150, 000.00 /per. In Oct.1986, a corporate policy change was implemented assessing a monthly membership due at P150.00/share and in Mar 1987, it was changed to P250.00/share. PCGG did not pay the corresponding monthly membership fee which totaled to P2, 959,471.00. Due to these delinquent shares, an auction sale [by NOGCC?] was projected. SECOND STAGE. In 1990, Republic and Benedicto entered into a Compromise Agreement, where PCGG agreed to lift the sequestration of the said 227 shares, [do the succeeding words refer to the reason why the sequestration was lifted? Kindly rephrase them. The sentence is too long and is prone to being misunderstood] that it is within Benedictos capacity to acquire the same out of his income from business and exercise of profession, that subject shares could not have been ill- gotten and in 1992 it was approved by Sandiganbayan. THIRD STAGE. In February 1994, Benedicto filed a motion to release the shares and return to him or [?] payment of 227 shares at P150, 000.00/share by PCGG as part of the Compromise Agreement and it was granted by Sandiganbayan but to be placed under the custody of its Clerk of Court. o On 6 December 1994, Sandiganbayan directed PCGG to deliver the shares to the Clerk of Court but it failed to comply without showing any justifiable ground. Republic invokes state immunity from suit. [there is a jump from the last two sentences: explain why PCGG becomes Republic] ISSUE Whether or not Republics invocation of state immunity from suit is tenable.

RULING NO, PCGG cannot be benefited of state immunity. One of the exceptions to the state immunity principle is that the Government itself is the suitor, the state itself is the petitioner [explain the difference between state and government]. When the State, through its duly authorized officers, takes the initiative in a suit against a private party, it descends to the level of a private individual thereby waiving its right to immunity from suit. Also, by entering [into a] Compromise Agreement, the Republic stripped itself of the immunity. [This happens] when the State enters into a contract, through its officers or agents, in furtherance of a legitimate aim and

purpose and pursuant to constitutional legislative authority [I do not understand why the latter phrase was added. It appears like a sudden jump. Can you explain a bit more for the flow of ideas to come more smoothly?].

Mobil Philippines Exploration Inc. v. Customs Arrastre Service and Bureau of Customs (1966) 18 SCRA 1120 [please put name of the ponente here] FACTS BACKGROUND. Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville" sometime in November of 1962, consigned to Mobil Philippines Exploration, Inc., Manila. o The shipment arrived at the Port of Manila on April 10, 1963, and was discharged to the custody of the Customs Arrastre Service, the unit of the Bureau of Customs then handling arrastre operations therein. o The Customs Arrastre Service later delivered to the broker of the consignee three cases only of the shipment. FIRST STAGE. On April 4, 1964 Mobil Philippines Exploration, Inc., filed a suit at the Court of First Instance of Manila against the Customs Arrastre Service and the Bureau of Customs to recover the value of the undelivered case in the amount of P18,493.37 plus other damages. o The defendants filed a motion to dismiss the complaint on the ground that not being persons under the law, defendants cannot be sued. o After plaintiff opposed the motion, the court dismissed the complaint on the ground that neither the Customs Arrastre Service nor the Bureau of Customs is suable. SECOND STAGE. Plaintiff appealed to Us [to us or the US?] from the order of dismissal. [is this a case at the CA?] FINAL STAGE. [this is the case at bar at the SC, right?] Raised, therefore, in this appeal is the purely legal question of the defendants' suability under the facts stated. Appellant contends that not all government entities are immuned from suit; that defendant Bureau of Customs as operator of the arrastre service at the Port of Manila, is discharging proprietary functions and as such, can be sued by private individuals. Whether or not State Immunity applies to the Customs of Arrastre Service and Bureau of Customs.

ISSUE

RULING Yes. The Rules of Court, in Section 1, Rule 3, provide: SECTION 1. Who may be parties.Only natural or juridical persons or entities authorized by law may be parties in a civil action. Accordingly, a defendant in a civil suit must be (1) a natural person; (2) a juridical person or (3) an entity authorized by law to be sued. Neither the Bureau of Customs nor (a fortiori) its function unit, the Customs Arrastre Service, is a person. They are merely parts of the machinery of Government. The Bureau of Customs is a bureau under the Department of Finance (Sec. 81, Revised Administrative Code); and as stated, the Customs Arrastre Service is a unit of the Bureau of Custom, set up under Customs Administrative Order No. 8-62 of November 9, 1962 (Annex "A" to Motion to Dismiss, pp. 13-15, Record an Appeal). It follows that the defendants herein cannot he sued under the first two above mentioned categories of natural or juridical persons. [please explain in simple words why the Customs AS and BOC are not considered persons] The fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result in its being suable. If [is] said [that] non-governmental function is undertaken as an

incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity. The Bureau of Customs, to repeat, is part of the Department of Finance (Sec. 81, Rev. Adm. Code), with no personality of its own apart from that of the national government. Its primary function is governmental, that of assessing and collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties (Sec. 602, R.A. 1937). To this function, arrastre service is a necessary incident. Customs authorities and officers must see to it that the declaration tallies with the merchandise actually landed. And this checking up requires that the landed merchandise be hauled from the ship's side to a suitable place in the customs premises to enable said customs officers to make it, that is, it requires arrastre operations. Clearly, therefore, although arrastre function may be deemed proprietary, it is a necessary incident of the primary and governmental function of the Bureau of Customs, so that engaging in the same does not necessarily render said Bureau liable to suit. For otherwise, it could not perform its governmental function without necessarily exposing itself to suit. Sovereign immunity, granted as to the end, should not be denied as to the necessary means to that end. Regardless of the merits of the claim against it, the State, for obvious reasons of public policy, cannot be sued without its consent. Plaintiff should have filed its present claim to the General Auditing Office, it being for money [is this the way it was written? It is not easy to understand] under the provisions of Commonwealth Act 327, which state the conditions under which money claims against the Government may be filed. It must be remembered that statutory provisions waiving State immunity from suit are strictly construed and that waiver of immunity, being in derogation of sovereignty, will not be lightly inferred. (49 Am. Jur., States, Territories and Dependencies, Sec. 96, p. 314; Petty vs. Tennessee-Missouri Bridge Com., 359 U.S. 275, 3 L. Ed. 804, 79 S. Ct. 785). From the provision authorizing the Bureau of Customs to lease arrastre operations to private parties, We see no authority to sue the said Bureau in the instances where it undertakes to conduct said operation itself. The Bureau of Customs, acting as part of the machinery of the national government in the operation of the arrastre service, pursuant to express legislative mandate and as a necessary incident of its prime governmental function, is immune from suit, there being no statute to the contrary.

DOH v. PPI (13 March 2007) G.R. No. 169304 CARPIO MORALES, J. Complete Case Title: THE DEPARTMENT OF HEALTH, SECRETARY MANUEL M. DAYRIT, USEC. MA. MARGARITA GALON and USEC. ANTONIO M. LOPEZ, Petitioners, vs. PHIL. PHARMAWEALTH, INC., Respondent. FACTS BACKGROUND. Phil. Pharmawealth, Inc. or PPI (respondent) is a domestic corporation engaged in the business of manufacturing and supplying pharmaceutical products to government hospitals in the Philippines. o December 22, 1998: then Secretary of Health Alberto G. Romualdez, Jr. issued Administrative Order (A.O.) No. 27 outlining the guidelines and procedures on the accreditation of government suppliers for pharmaceutical products. o In 2000, A.O. No. 27 was later amended by A.O. No. 10 providing for additional guidelines for accreditation of drug suppliers aimed at ensuring that only qualified bidders can transact business with DOH. It also specified that Only products accredited by the Committee shall be allowed to be procured by the DOH and all other entities under its jurisdiction. o May 9, 2000 and May 29, 2000 respondent submitted to petitioner DOH a request for the inclusion of additional items in its list of accredited drug products, including the antibiotic "Penicillin G Benzathine." o September 2000, DOH, through petitioner Antonio M. Lopez, issued an Invitation for Bids for the procurement of 1.2 million units vials of Penicillin G Benzathine. Despite the lack of response from DOH regarding respondents request for inclusion of additional items in its list of accredited products, respondent submitted its bid for the Penicillin G Benzathine contract. o October 11, 2000, only two companies participated, with PPI submitting the lower bid at P82.24 per unit, compared to Cathay/YSS Laboratories (YSS) bid of P95.00 per unit. In view, however, of the non- accreditation of PPIs Penicillin G Benzathine product, the contract was awarded to YSS. FIRST CASE [with the RTC of Pasig]. PPI filed a complain for injunction, mandamus and damages with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order with the Regional Trial Court of Pasig City praying, inter alia, that the trial court "nullify the award of the Penicillin G Benzathine contract to YSS Laboratories, Inc. and direct DOH, defendant Romualdez, defendant Galon and defendant Lopez to declare plaintiff Pharmawealth as the lowest complying responsible bidder for the Benzathine contract, and that they accordingly award the same to plaintiff company" and "adjudge defendants Romualdez, Galon and Lopez liable, jointly and severally to plaintiff, for [the therein specified damages]." o In their Comment, DOH Secretary Alberto Romualdez, Jr. (later succeeded by Secretary Manuel M. Dayrit), and individual petitioners Undersecretaries Margarita Galon and Antonio Lopez argued for the dismissal of the complaint for lack of merit in view of the express reservation made by petitioner DOH to accept or reject any or all bids without incurring liability to the bidders, they positing that government agencies have such full discretion. o Petitioners subsequently filed a Manifestation and Motion (motion to dismiss) praying for the outright dismissal of the complaint based on the doctrine of state immunity. Additionally, they alleged that respondents representative was not duly authorized by its board of directors to file the complaint.

PPI argued that the doctrine of state immunity is not applicable considering that individual petitioners are being sued both in their official and personal capacities, hence, they, not the state, would be liable for damages.

SECOND CASE [with the CA]. By Order of December 8, 2003, the trial court denied petitioners motion to dismiss. Their motion for reconsideration having been denied, petitioners filed a petition for certiorari with the Court ofAppeals, before which they maintained that the suit is against the state. o By the assailed Decision of May 12, 2005, the Court of Appeals affirmed the trial courts Order. And by Resolution of August 9, 2005, it denied petitioners motion for reconsideration. FINAL CASE [with the SC]. This instant petition for review which raises the sole issue of whether the Court of Appeals erred in upholding the denial of petitioners motion to dismiss. ISSUE Does the doctrine of state immunity (from suit) apply to the DOH and its officials in the case at bar?

RULING [AND EXPLANATIONS] No. SC affirmed the ruling of the CA. The suability of a government official depends on: o whether the official concerned was acting within his official or jurisdictional capacity (the Constitution itself assures the availability of judicial review in this case, i.e., SC can check whether the act was done within his official capacity; this is in Section 1, Article VIII of the Constitution); the official concerned who should be impleaded as the proper party (not the DOH, in this case); this ruling may apply in this case at the petitioners were accused of grave abuse of discretion in their official capacity. o whether the acts done in the performance of official functions will result in a charge or financial liability against the government. Why does the defense of immunity not apply in this case although DOH is an unincorporated agency of the government? o for the only causes of action directed against it are preliminary injunction and mandamus. Under Section 1, Rule 5823 of the Rules of Court, preliminary injunction may be directed against a party or a court, agency or a person. o Moreover, the defense of state immunity from suit does not apply in causes of action which do not seek to impose a charge or financial liability against the State. More on the doctrine of state immunity embodied in Section 3, Article XVI of the 1987 Constitution: o This is one of the generally accepted principles of international law, which we have adopted as part of the law of the land o While the doctrine of state immunity 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. o The suit is regarded as one against the state where satisfaction of the judgment against the officials will require the state itself to perform a positive act [say, through a legislative act], such as the appropriation of the amount necessary to pay the damages awarded against them. Important judicial precedents on state immunity [key ideas are underlined, although most of the text was quoted for your general comprehension of the entire matter]: o Shauf v. Court of Appeals: 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 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.

As a summary, applying these elaboration of the doctrine of state immunity in the case at bar: o Hence, the rule does not apply where the public official is charged in his official capacity for acts that are unauthorized or unlawful and injurious to the rights of others. Neither does it apply where the public official is clearly being sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a public position. o In the present case, suing individual petitioners in their personal capacities for damages in connection with their alleged act of "illegal[ly] abus[ing] their official positions to make sure that plaintiff Pharmawealth would not be awarded the Benzathine contract [which act was] done in bad faith and with full knowledge of the limits and breadth of their powers given by law" is permissible, in consonance with the foregoing principles. For an officer who exceeds the power conferred on him by law cannot hide behind the plea of sovereign immunity and must bear the liability personally. o But please take note of this last sentence of the ruling: These are matters of evidence which should be presented and proven at the trial.

Torio v. Fontanilla (23 October 1978) G.R. No. L-29993 Complete Title LAUDENCIO TORIO, ET. AL. vs. ROSALINA, ANGELINA, LEONARDO,EDUARDO, ARTEMIO, ANGELITA,ANITA, ERNESTO, NORMA,VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE HONORABLE COURT OF APPEALS FACTS BACKGROUND: On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 whereby "it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959." Resolution No. 182 was also passed creating the "1959 Malasiqui 'Town Fiesta Executive Committee" which in turn organized a sub-committee on entertainment and stage. Jose Macaraeg supervised the construction of 2 stages, one for the "zarzuela" and the other for cancionan. The "zarzuela" began but before the dramatic part of the play was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilia was taken to San Carlos General Hospital where he died in the afternoon of the following day. o [where does Torio come in the picture?] FIRST CASE: Heirs of Fontanilla filed a complaint with the First Instance of Manila to recover damages against the Municipality of Malasiqui, the Municipality Council, and all individual members of the Municipality Council. o DEFENSE OF THE MUNICIPALITY: They are duly and organized public corporation who performs sovereign functions. Holding town fiesta was an exercise of governmental functions from which no liability can arise to answer for the negligence of any of its agents. o DEFENSE OF THE COUNCILORS: They merely acted as agents of the municipality in carrying out the municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not one for profit; furthermore, they had exercised due care and diligence in implementing the municipal ordinance. o RTC RULING: Executive Committee appointed by the municipal council had exercised due diligence. The defendants were not liable for damages for the death of Vicente Fontanilla. SECOND CASE: Fontanilla appealed to CA. CA reversed RTCs decision and ordered all the defendantappellees to pay jointly and severally the heirs of Fontanilla. FINAL CASE. Petition for review of the decision of the Court of Appeals.

ISSUES 1. Whether or not the municipality was exercising its governmental functions in holding the celebration of the town fiesta, therefore immuned from suit. 2. Whether or not Councilors be held liable for the death of Fontanilla RULING 1. NO. We hold that the holding of the town fiesta in 1959 by the municipality of Malsiqui Pangasinan was an exercise of a private or proprietary function of the municipality. Under Philippine laws municipalities are political bodies that are corporate in nature and as such are endowed with

the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law, and in their proper corporate name, they may inter alia sue and be sued, and contract and be contracted with. Powers of Municipality are twofold in character: 1. Governmental those exercised by the corporation in administering the powers of the state and promoting the public welfare. 2. Corporate, Private, Proprietary - exercised for the special benefit and advantage of the community and include those which are ministerial private and corporate. Distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service. It follows that under the doctrine of respondent superior (Respondeat superior (Latin: "let the master answer is a legal doctrine which states that, in many circumstances, an employer is responsible for the actions of employees performed within the course of their employment.) petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilia if that was attributable to the negligence of the municipality's officers, employees, or agents. The Court of Appeals found and held that there was negligence. 2. NO. We absolve the municipal councilors from any liability for the death of Vicente Fontanilla. The records do not show that said petitioners directly participated in the defective construction of the "zarzuela" stage or that they personally permitted spectators to go up the platform. A corporation has a personality, separate and distinct from its officers, directors, or persons composing it and the latter are not as a rule co-responsible in an action for damages for tort or negligence culpa aquilla (A quasidelict or culpa aquiliana is a separate legal institution under the Civil Code, with a substantivity all its own, and individuality that is entirely apart and independent from a delict or crime.) committed by the corporation's employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part. The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. Officers of a corporation 'are not held liable for the negligence of the corporation merely because of their official relation to it, but because of some wrongful or negligent act by such officer amounting to a breach of duty which resulted in an injury ... To make an officer of a corporation liable for the negligence of the corporation there must have been upon his part such a breach of duty as contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the wrongful act. ... (pp. 207-208, Ibid.)

Municipality of San Fernando, La Union vs. Hon. Judge Romeo N. Firme [April 8, 1991] G.R. No. L-52179 [190 SCRA 206] FACTS BACKGROUND. At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario Nieveras, a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino Velasquez, and a dump truck of the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Several passengers of the jeepney including Laureano Bania Sr. died and four others suffered from physical injuries. FIRST STAGE. On December 11, 1966, the private respondents instituted a complaint for damages against the Nieveras and Balagot, which was docketed Civil Case No. 2183 in the Court of First Instance of La Union, Branch I, San Fernando, La Union. However, the aforesaid defendants filed a Third Party Complaint against the petitioner and the driver of the dump truck of petitioner. SECOND STAGE. Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent judge and was subsequently docketed as Civil Case No. 107-Bg. By virtue of a trial court order dated May 7, 1975, the private respondents amended the complaint wherein the petitioner and its regular employee, Alfredo Bislig were impleaded for the first time as defendants. Petitioner filed its answer and raised affirmative defenses particularly as the non-suability of the State. o The petitioner also told that respondent trial court committed grave abuse of discretion when it deferred and failed to resolve the defense of non-suability of the State amounting to lack of jurisdiction in a motion to dismiss. The respondent judge deferred the resolution of the defense of non-suability of the State amounting to lack of jurisdiction until trial.

ISSUE Whether or not the Municipality of San Fernando, La Union was liable for the torts committed by its employee, who was acting in behalf of the municipality? (This case had only one issue and that is the issue of suability. The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the Constitution, to wit: "the State may not be sued without its consent." This issue of TORTS and suability of the state dominated in the case.)

RULING No. The Court of Appeals held that the municipality cannot be held liable for the torts committed by its regular employee, who was then engaged in the discharge of governmental functions. The Court ruled that the driver of the dump truck was performing duties or tasks pertaining to his office. As emphasized in the case of Torio vs. Fontanilla, the distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. It has already been remarked that municipal corporations are suable because their charters grant them the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by them in the discharge of governmental functions and can be held answerable only if it can be shown that they were acting in a proprietary capacity. In permitting such entities to be sued, the State merely gives the claimant the right to show that the defendant was not acting in its governmental capacity when the injury was committed or that the case comes under the exceptions recognized by law. In the case at bar, the driver of the dump truck of the municipality insisted that "he was on his way to the Naguilian River to get a load of sand and gravel for the repair of San Fernando's municipal streets."

The Court stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte, the District Engineer, and the Provincial Treasurer that "the construction or maintenance of roads in which the truck and the driver worked at the time of the accident were admittedly governmental activities." In the case at bar, the respondent judge deferred the resolution of the defense of non-suability of the state amounting to lack of jurisdiction until trial. The Court was also convinced that the respondent judge's dereliction in failing to resolve the issue of non-suability did not amount to grave abuse of discretion. But said judge exceeded his jurisdiction when it ruled on the issue of liability. The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the Constitution, to wit: "the State may not be sued without its consent." The general rule is that the State may not be sued except when it gives consent to be sued. Consent takes the form of express or implied consent. Express consent may be embodied in a general law or a special law. A special law may be passed to enable a person to sue the government for an alleged quasi-delict, as in Merritt v. Government of the Philippine Islands. Consent is implied when the government enters into business contracts, thereby descending to the level of the other contracting party, and also when the State files a complaint, thus opening itself to a counterclaim.

Municipality of Makati v. Court of Appeals (1 October 1990) 190 SCRA 207 Cortes, J FACTS BACKGROUND. [There is no story behind this. See the actual case. ] FIRST STAGE. The Philippine State exercised its power of eminent domain (the power of the state to rightfully take away lands of private owners for public use and justly compensate them) on the property of Arceli P. Jo. o The value of the land was duly appraised by RTC and it was concluded that the land had an appraised value of Php 5,291,666.00 and the petitioners were obliged to pay the remaining balance, having been able to pay Php 338,160.00 [by the municipality of Makati]. They are the only indebted party in the case. o The petitioner for 3 years had been refusing to pay the rightful amount to the respondent. Petitioners contended that the second bank account it has in PNB is an account that has been opened for public funds and it is a well-settled rule that public funds are not subject to levy and execution. SECOND & THIRD STAGES. The petitioner claims that the CA erred in dismissing the petition for review of the decision rendered by the RTC ordering the payment of the appraised value of the property. Hence, the present petition for review.

ISSUE Whether or not the Municipality of Makati erred in not paying the private respondents. Can Makati rightfully claim that they cannot use the money in their second bank account as they are immuned from liability from suits? [This is a case regarding EMINENT DOMAIN, the power of the state to rightfully take a property of a private individual. It is related to state immunity because the Municipality of Makati said that their second bank account cannot be subject to writ of execution and levy]

RULING Makati has the legal obligation to pay the private petitioners a just compensation. The states power of eminent domain should be exercised within the bounds of fair play and justice. They said that their second bank account cannot be subject for levy and execution because these are public funds. It is a well-settled rule that public funds cannot be levied or be issued writ of execution. There was no argument that makati said that they were immuned from suabilit. What was contended by Makati is their second bank account that is not subject to levy and writ of execution, which means that they cannot be forced to pay or release the appraised value using the second bank account because it is public funds, that is, not intended for expropriation purposes.

Lockheed Detective and Watchman Agency, Inc. vs. University of the Philippines (18 April 2012) G.R. No. 185918 Villarama, Jr., J FACTS BACKGROUND. Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a contract for security services with respondent University of the Philippines (UP). FIRST STAGE. In 1998, several security guards assigned to UP filed separate complaints before the NLRC against Lockheed and UP for payment of underpaid wages. o On February 16, 2000, the Labor Arbiter of the National Labor Relations Commission (NLRC) rendered the following decision: Lockheed (petitioner) and UP (respondent) are solidarily liable to complaints for the claims of the complainants which were found meritorious. UP is herby declared to be liable to Third Party Complaint and cross claimant Lockheed for the unpaid legislated salary increases of the security guards for the years 1996 to 1998, in the total amount of P13,066,794.14. Complainants (security guards) shall be paid. Both Lockheed and UP appealed the Labor Arbiters decision. The NLRC modified the Labor Arbiters decision. The NLRC held: 1. Complainants claims for premium pay for work on rest day and special holiday, and 5 days service incentive leave pay, are hereby dismissed for lack of basis. The respondent University of the Philippines is still solidarily liable with Lockheed in the payment of the rest of the claims covering the period of their service contract. The Financial Analyst is hereby ordered to recompute the awards of the complainants in accordance with the foregoing modifications. o The NLRC order and resolution having become final, Lockheed filed a motion for the issuance of an alias writ of execution. The same was granted on May 23, 2005 o On July 25, 2005, a Notice of Garnishment (see definition below) was issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award of P12,142,522.69 (inclusive of execution fee). o On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP said that the funds that are being subjected to garnishment are public funds. The Labor Arbiter, however, dismissed the urgent motion for lack of merit.. On September 2, 2005, the amount of P12,062,398.71 was withdrawn by the sheriff from UPs PNB account. SECOND STAGE. The case was brought to the CA. On September 12, 2005, UP filed a petition for certiorari before the CA but was dismissed.

On reconsideration, however, the CA issued the assailed Amended Decision. It still held findings that the funds covered in the savings account sought to be garnished do not fall within the classification of public funds, it reconsiders the dismissal of the petition in light of the ruling in the case of National Electrification Administration v. Morales which mandates that all money claims against the government must first be filed with the Commission on Audit (COA). The CA set aside the writ of garnishment

Lockheed moved to reconsider the amended decision but the same was denied in the assailed CA Resolution dated December 23, 2008. The CA cited Manila International Airport Authority v. Court of Appeals which held that UP ranks with MIAA, a government instrumentality exercising corporate powers but not organized as a stock or non-stock corporation. While said corporations are government instrumentalities, they are loosely called government corporate entities but not government-owned and controlled corporations in the strict sense.

FINAL STAGE. The case is a petition by Lockheed for review on certiorari assailing the Resolution of the Court of Appeals. In light of the aforementioned, Lockheed filed a petition before the Supreme Court with the following arguments:

Lockheed contends that UP has its own separate and distinct juridical entity from the national government and has its own charter. Thus, it can be sued and be held liable. o Lockheed likewise argues that the rulings in the NEA and MIAA cases are inapplicable in the case. Lockheed moreover submits that UP cannot invoke state immunity to justify and perpetrate an injustice. Lockheed contends that UP cannot anymore seek the quashal of the writ of execution and notice of garnishment as they are already fait accompli.

The Arguments of the University of the Philippines in Defense of the Contentions of Lockheed o UP contends that it did not invoke the doctrine of state immunity from suit in the proceedings a quo and in fact, it did not object to being sued before the labor department. It maintains, however, that suability does not necessarily mean liability [this is a smart statement!]. UP argues that the CA correctly applied the NEA ruling when it held that all money claims must be filed with the COA. UP is not invoking the state immunity from suit and reiterates that it consented to be sued and even participated in the proceedings. Lockheed cannot now claim that invocation of state of immunity would result in injustice as UP in the first place did not invoke such. With regard to the fait accompli argument of Lockheed, UP argues that Lockheed cannot wash its hands from liability for the consummated garnishment and execution of UPs trust fund in the amount of P12,062,398.71. Lockheed, being the party which procured the illegal garnishment, should be held primarily liable. The mere fact that the CA set aside the writ of garnishment confirms the liability of Lockheed to reimburse and indemnify in accordance with law.

The Decision of the Supreme Court: 1. The Court Agreed with UP that the doctrine of state of immunity was never an issue in this case. Clearly, UP consented to be sued when it participated in the proceedings below. What UP questions is the hasty garnishment of its funds in its PNB account. 2. This Court finds that the CA correctly applied the NEA case. 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.

3. As to the fait accompli argument of Lockheed, contrary to the claim of Lockheed that there is nothing that can be done since the funds of UP had already been garnished. But 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.

Definitions: Garnishment - A legal procedure by which a creditor can collect what a debtor owes by reaching the debtor's property when it is in the hands of someone other than the debtor. Garnishment is a drastic measure for collecting a debt (Legal Dictionary) Motion to quash - to annul or set aside. In law, a motion to quash asks the judge for an order setting aside or nullifying an action, such as "quashing" service of a summons when the wrong person was served (Legal Dictionary) Fait Accompli - A thing that has already happened or been decided.

Cosculluela v. Court of Appeals [please put the date of the SC decision here] 164 SCRA 393 Guitierez, Jr., J. FACTS BACKGROUND/FIRST STAGE. On March 8, 1976 the Republic filed a complaint with the Court of First Instance in Iloilo to expropriate two parcels of land owned by petitioner Sebastian Cosculluela and one Mita Lumampao, for the construction of the canal network of the Barotac Irrigation Project. SECOND STAGE. On September 21, 1985 the court of appeals decision became final and executory, ordering the, Republic, to pay a sum of P200,000 to the petitioner, for it is the reasonable amount of his property, plus attorneys fees of P5, 000 and P2,500 for litigation expenses, modifying the trial courts decision. [THIRD STAGE?] On May 7, 1986, on motion of the petitioner, Cusculluela, the trial court ordered the issuance of a writ of execution to implement the judgment of the appellate court. [FOURTH STAGE?] But on August 11, 1986, the respondent Republic filed a motion to set aside the order of May 7, 1986 as well as the writ of execution issued pursuant thereto, contending that the funds of the National Irrigation Authority (NIA) are government funds and therefore, cannot be disbursed without a government appropriation. o On October 6, 1986, the lower court issued an order modifying its order of May 7, 1986, directing instead that the respondent Republic deposit with the Philippine National Bank (PNB) in the name of the petitioner, the amount adjudged in favor of the latter. [FIFTH STAGE?] The respondent filed a petition with the Court of Appeals to annul the orders of May 7 and October 6, 1986. And on November 25, 1986, the appellate court rendered the questioned decision setting aside the aforementioned orders of the trial court on the ground that public or government funds are not subject to levy and execution. FINAL STAGE. The petitioner assails the decision of the appellate court as being violative of his right to just compensation and due process of law. He maintains that these constitutional guarantees transcend all administrative and procedural laws and jurisprudence for as between these said laws and the constitutional rights of private citizens, the latter must prevail. o The respondent Republic argues that it has no intention of keeping the land and dishonoring the judgment, but public funds such as those of the respondent National Irrigation Authority (NIA) cannot be disbursed without the proper appropriation.

ISSUE Whether or not the petitioners right to just compensation and due process of law are violated WON that there is a need for the Congress to locate funds before disbursement.

RULING The court ruled in favor of the petitioner. One of the basic principles enshrined in our Constitution is that no person shall be deprived of his private property without due process of law; and in expropriation cases, an essential element of due process is that there must be just compensation whenever private property is taken for public use and as in the case Commissioner of Public Highways case, the Court stressed that it is incumbent upon the legislature to appropriate the necessary amount because it cannot keep the land and dishonor the judgment.

Needless to state, no government instrumentality, agency, or subdivision has any business initiating expropriation proceedings unless it has adequate funds, supported by proper appropriation acts, to pay for the property to be seized from the owner. When the National Housing Authority expropriates raw land to convert into housing projects for rent or sale to private persons or the NIA expropriates land to construct irrigation systems and sells water rights to farmers, it would be the height of abuse and ignominy for the agencies to start earning from those properties while ignoring final judgments ordering the payment of just compensation to the former owners.

With the second issue, the case must be distinguished from earlier cases where payment for property expropriated by the National Government may not be realized upon execution. As a rule, the legislature must first appropriate the additional amount to pay the award. It is a fact that the NIA collects fees for the use of the irrigation system constructed on the petitioner's land. It means that, does not have to await an express act of Congress to locate funds for this specific purpose. The rule in earlier precedents that 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 (Commissioner of Public Highways v. San Diego, supra, at p. 625) is not applicable here. There is no showing of any public service to be disrupted if the fees collected from the farmers of Iloilo for the use of irrigation water from the disrupted property were utilized to pay for that property. The petitioner's land was not taken for the construction of a road, bridge, school, public buildings, or other traditional objects of expropriation.

China National Machinery & Equipment Corporation v. HON. CESAR D. SANTAMARIA, in his official capacity as Presiding Judge of Branch 145, Regional Trial Court of Makati City (7 February 2012) 665 SCRA 189 FACTS BACKGROUND. On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin, entered into a Memorandum of Understanding with the North Luzon Railways Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line from Manila to San Fernando, La Union (the Northrail Project). o On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein China agreed to extend Preferential Buyers Credit to the Philippine government to finance the Northrail Project. The Chinese government designated EXIM Bank as the lender, while the Philippine government named the DOF as the borrower. Under the Aug 30 MOU, EXIM Bank agreed to extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in 20 years, with a 5-year grace period, and at the rate of 3% per annum. o On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho) informing him of CNMEGs designation as the Prime Contractor for the Northrail Project. o On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of the North Luzon Railway System from Caloocan to Malolos on a turnkey basis (the Contract Agreement). The contract price for the Northrail Project was pegged at USD 421,050,000. o On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart financial agreement Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement). In the Loan Agreement, EXIM Bank agreed to extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor of the Philippine government in order to finance the construction of Phase I of the Northrail Project. FIRST STAGE. On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with Urgent Motion for Summary Hearing to Determine the Existence of Facts and Circumstances Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG, the Office of the Executive Secretary, the DOF, the Department of Budget and Management, the National Economic Development Authority and Northrail, because CNMEG asked the government for additional payment citing inflation and foreign-exchange issues. The case was docketed as Civil Case No. 06-203 before the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC Br. 145). In the Complaint, respondents alleged that the Contract Agreement and the Loan Agreement were void for being contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as the Government Auditing Code; and (d) Executive Order No. 292, otherwise known as the Administrative Code. o RTC Br. 145 issued an Order dated 17 March 2006 setting the case for hearing on the issuance of injunctive reliefs. o On 29 March 2006, CNMEG filed an Urgent Motion for Reconsideration of this Order. o Before RTC Br. 145 could rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that the trial court did not have jurisdiction over (a) its person, as it was an agent of the

Chinese government, making it immune from suit, and (b) the subject matter, as the Northrail Project was a product of an executive agreement. On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion to Dismiss and setting the case for summary hearing to determine whether the injunctive reliefs prayed for should be issued. CNMEG then filed a Motion for Reconsideration, which was denied by the trial court in an Order dated 10 March 2008.

SECOND STAGE. Thus, CNMEG filed before the CA a Petition for Certiorari with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008. o On 30 September 2008, the appellate court dismissed the Petition for Certiorari. Subsequently, CNMEG filed a Motion for Reconsideration, which was denied by the CA in a Resolution dated 5 December 2008. FINAL STAGE. This is a Petition for Review on Certiorari with Prayer for the Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing the 30 September 2008 Decision and 5 December 2008 Resolution of the Court of Appeals (CA) in CAG.R. SP No. 103351.

ISSUE/S: Whether CNMEG is entitled to immunity, precluding it from being sued before a local court. Whether the Contract Agreement is an executive agreement, such that it cannot be questioned by or before a local court. RULINGS 1ST ISSUE: This Court explained the doctrine of sovereign immunity in Holy See v. Rosario, to wit: There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis. In JUSMAG v. National Labor Relations Commission, this Court affirmed the Philippines adherence to the restrictive theory as follows: As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign or governmental activities (jure imperii). The mantle of state immunity cannot be extended to commercial, private and proprietary acts (jure gestionis). Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the act involved whether the entity claiming immunity performs governmental, as opposed to proprietary, functions. As held in United States of America v. Ruiz The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions.

A.CNMEG is engaged in a proprietary activity.

1. Memorandum of Understanding dated 14 September 2002 The Memorandum of Understanding dated 14 September 2002 shows that CNMEG sought the construction of the Luzon Railways as a proprietary venture. The relevant parts thereof read: WHEREAS, CNMEG has expressed interest in the rehabilitation and/or modernization of the MLN from Metro Manila to San Fernando, La Union passing through the provinces of Bulacan, Pampanga, Tarlac, Pangasinan and La Union (the Project); WHEREAS, the NORTHRAIL CORP. also welcomes CNMEGs interest in undertaking the Project with Suppliers Credit and intends to employ CNMEG as the Contractor for the Project subject to compliance with Philippine and Chinese laws, rules and regulations for the selection of a contractor;

Clearly, it was CNMEG that initiated the undertaking, and not the Chinese government. The Feasibility Study was conducted not because of any diplomatic gratuity from or exercise of sovereign functions by the Chinese government, but was plainly a business strategy employed by CNMEG with a view to securing this commercial enterprise. 2. Letter dated 1 October 2003 That CNMEG, and not the Chinese government, initiated the Northrail Project was confirmed by Amb. Wang in his letter dated 1 October 2003, thus: 2. CNMEG already signed an MOU with the North Luzon Railways Corporation last September 14, 2000 during the visit of Chairman Li Peng. Such being the case, they have already established an initial working relationship with your North Luzon Railways Corporation. This would categorize CNMEG as the state corporation within the Peoples Republic of China which initiated our Governments involvement in the Project. Thus, the desire of CNMEG to secure the Northrail Project was in the ordinary or regular course of its business as a global construction company. The implementation of the Northrail Project was intended to generate profit for CNMEG, with the Contract Agreement placing a contract price of USD 421,050,000 for the venture. The use of the term state corporation to refer to CNMEG was only descriptive of its nature as a government-owned and/or -controlled corporation, and its assignment as the Primary Contractor did not imply that it was acting on behalf of China in the performance of the latters sovereign functions. To imply otherwise would result in an absurd situation, in which all Chinese corporations owned by the state would be automatically considered as performing governmental activities, even if they are clearly engaged in commercial or proprietary pursuits. 3. The Loan Agreement CNMEG claims immunity on the ground that the Aug 30 MOU on the financing of the Northrail Project was signed by the Philippine and Chinese governments, and its assignment as the Primary Contractor meant that it was bound to perform a governmental function on behalf of China. However, the Loan Agreement, which originated from the same Aug 30 MOU, belies this reasoning, viz: Article 11. (j) Commercial Activity The execution and delivery of this Agreement by the Borrower constitute, and the Borrowers performance of and compliance with its obligations under this Agreement will constitute, private and commercial acts done and performed for commercial purposes under the laws of the Republic of the Philippines and neither the Borrower nor any of its assets is entitled to any immunity or privilege (sovereign or otherwise) from suit, execution or any other legal process with

respect to its obligations under this Agreement, as the case may be, in any jurisdiction. Notwithstanding the foregoing, the Borrower does not waive any immunity with respect of its assets which are (i) used by a diplomatic or consular mission of the Borrower and (ii) assets of a military character and under control of a military authority or defense agency and (iii) located in the Philippines and dedicated to public or governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use). Further, the Loan Agreement likewise contains this express waiver of immunity: 15.5 Waiver of Immunity The Borrower irrevocably and unconditionally waives, any immunity to which it or its property may at any time be or become entitled, whether characterized as sovereign immunity or otherwise, from any suit, judgment, service of process upon it or any agent, execution on judgment, set-off, attachment prior to judgment, attachment in aid of execution to which it or its assets may be entitled in any legal action or proceedings with respect to this Agreement or any of the transactions contemplated hereby or hereunder. Notwithstanding the foregoing, the Borrower does not waive any immunity in respect of its assets which are (i) used by a diplomatic or consular mission of the Borrower, (ii) assets of a military character and under control of a military authority or defense agency and (iii) located in the Philippines and dedicated to a public or governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use).[37] Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government, while the Contract Agreement was between Northrail and CNMEG. Although the Contract Agreement is silent on the classification of the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an inextricable part of the entire undertaking, nonetheless reveal the intention of the parties to the Northrail Project to classify the whole venture as commercial or proprietary in character. Thus, piecing together the content and tenor of the Contract Agreement, the Memorandum of Understanding dated 14 September 2002, Amb. Wangs letter dated 1 October 2003, and the Loan Agreement would reveal the desire of CNMEG to construct the Luzon Railways in pursuit of a purely commercial activity performed in the ordinary course of its business. B. CNMEG failed to adduce evidence that it is immune from suit under Chinese law. Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it with immunity. In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische Zusammenarbeit (GTZ) v. CA must be examined. In Deutsche Gesellschaft, Germany and the Philippines entered into a Technical Cooperation Agreement, pursuant to which both signed an arrangement promoting the Social Health InsuranceNetworking and Empowerment (SHINE) project. The two governments named their respective implementing organizations: (DOH) and PHIC and GTZ for the implementation of Germanys contributions. In ruling that GTZ was not immune from suit, this Court held: It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has not been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the proceedings below and before this Court, GTZ has failed to establish that under German law, it has not consented to be sued despite it being owned by the Federal Republic of Germany. We adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are presumed to be the same as those of the Philippines, and following the most intelligent assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without original charter which, by virtue of the

Corporation Code, has expressly consented to be sued. At the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume that GTZ enjoys immunity from suit. Applying the foregoing ruling to the case at bar, it is readily apparent that CNMEG cannot claim immunity from suit, even if it contends that it performs governmental functions. Its designation as the Primary Contractor does not automatically grant it immunity, just as the term implementing agency has no precise definition for purposes of ascertaining whether GTZ was immune from suit. Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it has not consented to be sued under Chinese law. Thus, following this Courts ruling in Deutsche Gesellschaft, in the absence of evidence to the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an original charter. As a result, it has the capacity to sue and be sued under Section 36 of the Corporation Code. C. CNMEG failed to present a certification from the Department of Foreign Affairs. In Holy See, this Court reiterated the oft-cited doctrine that the determination by the Executive that an entity is entitled to sovereign or diplomatic immunity is a political question conclusive upon the courts, to wit: In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. The question now is whether any agency of the Executive Branch can make a determination of immunity from suit, which may be considered as conclusive upon the courts. This Court, in Department of Foreign Affairs (DFA) v. National Labor Relations Commission (NLRC), emphasized the DFAs competence and authority to provide such necessary determination, to wit: The DFAs function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenge, (sic) entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally of (sic) the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena. Further, CNMEG also claims that its immunity from suit has the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC), which must be respected by the courts. However, as expressly enunciated in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that matter, does not inspire the same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of such certification. D. An agreement to submit any dispute to arbitration may be construed as an implicit waiver of immunity from suit. The Conditions of Contract, which is an integral part of the Contract Agreement, states: 33. SETTLEMENT OF DISPUTES AND ARBITRATION

33.2. Arbitration All disputes or controversies arising from this Contract which cannot be settled between the Employer and the Contractor shall be submitted to arbitration in accordance with the UNCITRAL Arbitration Rules at present in force and as may be amended by the rest of this Clause. The appointing authority shall be Hong Kong International Arbitration Center. The place of arbitration shall be in Hong Kong at Hong Kong International Arbitration Center (HKIAC). From all the foregoing, it is clear that CNMEG has agreed that it will not be afforded immunity from suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of the Contract Agreement. 2nd ISSUE: o In Bayan Muna v. Romulo, this Court held that an executive agreement is similar to a treaty, except that the former (a) does not require legislative concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters. Despite these differences, to be considered an executive agreement, the following three requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement must be between states; (b) it must be written; and (c) it must governed by international law. The first and the third requisites do not obtain in the case at bar. A. CNMEG is neither a government nor a government agency. The Contract Agreement was not concluded between the Philippines and China, but between Northrail and CNMEG. By the terms of the Contract Agreement, Northrail is a government-owned or -controlled corporation, while CNMEG is a corporation duly organized and created under the laws of the Peoples Republic of China. Thus, both Northrail and CNMEG entered into the Contract Agreement as entities with personalities distinct and separate from the Philippine and Chinese governments, respectively. B. The Contract Agreement is to be governed by Philippine law. Article 2 of the Conditions of Contract, which under Article 1.1 of the Contract Agreement is an integral part of the latter, states: APPLICABLE LAW AND GOVERNING LANGUAGE The contract shall in all respects be read and construed in accordance with the laws of the Philippines. Since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively conceded that their rights and obligations there under are not governed by international law. It is therefore clear from the foregoing reasons that the Contract Agreement does not partake of the nature of an executive agreement. It is merely an ordinary commercial contract that can be questioned before the local courts. WHEREFORE, the instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp. (Group) is not entitled to immunity from suit, and the Contract Agreement is not an executive agreement. CNMEGs prayer for the issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being moot and academic. This case is REMANDED to the Regional Trial Court of

Makati, Branch 145, for further proceedings as regards the validity of the contracts subject of Civil Case No. 06-203. No pronouncement on costs of suit. SO ORDERED. Some terms to understand o Certiorari. A writ that a superior appellate court issues in its discretion to an inferior court, ordering it to produce a certified record of a particular case it has tried, in order to determine whether any irregularities or errors occurred that justify review of the case. An extraordinary prerogative writ granted in cases that otherwise would not be entitled to review. o Preliminary Injunction. A preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or acts. o Mandatory Injunction. An order granted at any stage of an action or proceeding prior to the judgment or final order, requiring the performance of a particular act or acts.