Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 175888 February 11, 2009

SUZETTE NICOLAS y SOMBILON, Petitioner,

vs.
ALBERTO ROMULO, in his capacity as Secretary of Foreign Affairs; RAUL GONZALEZ, in his
capacity as Secretary of Justice; EDUARDO ERMITA, in his capacity as Executive Secretary;
RONALDO PUNO, in his capacity as Secretary of the Interior and Local Government;
SERGIO APOSTOL, in his capacity as Presidential Legal Counsel; and L/CPL. DANIEL
SMITH, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 176051 February 11, 2009

JOVITO R. SALONGA, WIGBERTO E. TAADA, JOSE DE LA RAMA, EMILIO C. CAPULONG, H.

HARRY L. ROQUE, JR., FLORIN HILBAY, and BENJAMIN POZON, Petitioners,
vs.
DANIEL SMITH, SECRETARY RAUL GONZALEZ, PRESIDENTIAL LEGAL COUNSEL SERGIO
APOSTOL, SECRETARY RONALDO PUNO, SECRETARY ALBERTO ROMULO, The Special 16th
Division of the COURT OF APPEALS, and all persons acting in their capacity, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 176222 February 11, 2009

BAGONG ALYANSANG MAKABAYAN (BAYAN), represented by Dr. Carol Araullo; GABRIELA,

represented by Emerenciana de Jesus; BAYAN MUNA, represented by Rep. Satur Ocampo;
GABRIELA WOMEN'S PARTY, represented by Rep. Liza Maza; KILUSANG MAYO UNO (KMU),
represented by Elmer Labog; KILUSANG MAGBUBUKID NG PILIPINAS (KMP), represented by
Willy Marbella; LEAGUE OF FILIPINO STUDENTS (LFS), represented by Vencer Crisostomo;
and THE PUBLIC INTEREST LAW CENTER, represented by Atty. Rachel Pastores, Petitioners,
vs.
PRESIDENT GLORIA MACAPAGAL-ARROYO, in her capacity as concurrent Defense Secretary,
EXECUTIVE SECRETARY EDUARDO ERMITA, FOREIGN AFFAIRS SECRETARY ALBERTO
ROMULO, JUSTICE SECRETARY RAUL GONZALEZ, AND INTERIOR AND LOCAL GOVERNMENT
SECRETARY RONALDO PUNO, Respondents.

DECISION

AZCUNA, J.:

FACTS:

PIL 1
 Respondent Lance Corporal (L/CPL) Daniel Smith is a member of the United States
Armed Forces. He was charged with the crime of rape committed against a Filipina,
petitioner herein, sometime on November 1, 2005, as follows:

The undersigned accused LCpl. Daniel Smith, Ssgt. Chad Brian Carpentier, Dominic
Duplantis, Keith Silkwood and Timoteo L. Soriano, Jr. of the crime of Rape under Article
266-A of the Revised Penal Code, as amended by Republic Act 8353, upon a complaint
under oath filed by Suzette S. Nicolas:

"That on or about the First (1st) day of November 2005, inside the Subic Bay
Freeport Zone, Olongapo City and within the jurisdiction of this Honorable Court, the
above-named accuseds (sic), being then members of the United States Marine Corps,
except Timoteo L. Soriano, Jr., conspiring, confederating together and mutually helping one
another, with lewd design and by means of force, threat and intimidation, with abuse of
superior strength and taking advantage of the intoxication of the victim, did then and
there willfully, unlawfully and feloniously sexually abuse and have sexual intercourse with
or carnal knowledge of one Suzette S. Nicolas, a 22-year old unmarried woman inside a
Starex Van with Plate No. WKF-162, owned by Starways Travel and Tours, with Office
address at 8900 P. Victor St., Guadalupe, Makati City, and driven by accused Timoteo L.
Soriano, Jr., against the will and consent of the said Suzette S. Nicolas, to her damage and
prejudice."

Pursuant to the Visiting Forces Agreement (VFA) between the Republic of the Philippines
and the United States, entered into on February 10, 1998, the United States, at its request,
was granted custody of defendant Smith pending the proceedings. The United States
Government faithfully complied with its undertaking to bring defendant Smith to the trial
court every time his presence was required.

On December 4, 2006, the RTC of Makati, following the end of the trial, rendered its
Decision, finding defendant Smith guilty others were Acquitted.

Pursuant to Article V, paragraph No. 10, of the Visiting Forces Agreement entered into by
the Philippines and the United States, accused L/CPL. DANIEL J. SMITH shall serve his
sentence in the facilities that shall, thereafter, be agreed upon by appropriate Philippine
and United States authorities. Pending agreement on such facilities, accused L/CPL.
DANIEL J. SMITH is hereby temporarily committed to the Makati City Jail.

As a result, the Makati court ordered Smith detained at the Makati jail until further orders.

On December 29, 2006, however, defendant Smith was taken out of the Makati jail by a
contingent of Philippine law enforcement agents, purportedly acting under orders of the
Department of the Interior and Local Government, and brought to a facility for detention
under the control of the United States government, provided for under new agreements
between the Philippines and the United States, referred to as the Romulo-Kenney
Agreement of December 19, 2006 which states:

The Government of the Republic of the Philippines and the Government of the United
States of America agree that, in accordance with the Visiting Forces Agreement signed

PIL 2
between our two nations, Lance Corporal Daniel J. Smith, United States Marine Corps, be
returned to U.S. military custody at the U.S. Embassy in Manila.

The Department of Foreign Affairs of the Republic of the Philippines and the Embassy of
the United States of America agree that, in accordance with the Visiting Forces Agreement
signed between the two nations, upon transfer of Lance Corporal Daniel J. Smith, United
States Marine Corps, from the Makati City Jail, he will be detained at the first floor, Rowe
(JUSMAG) Building, U.S. Embassy Compound in a room of approximately 10 x 12 square
feet. He will be guarded round the clock by U.S. military personnel. The Philippine police
and jail authorities, under the direct supervision of the Philippine Department of Interior
and Local Government (DILG) will have access to the place of detention to ensure the
United States is in compliance with the terms of the VFA.

The matter was brought before the Court of Appeals which decided on January 2, 2007
which was DISMISSED for being moot.

Hence, the present actions.

ISSUE:

1. W/N the VFA was unconstitutional?

2. W/N Philippines should have custody of defendant L/CPL Smith?
3. W/N the Rommulo Kennedy Agreement is valid?

HELD:

1. NO!

The provision of the Constitution is Art. XVIII, Sec. 25 which states:

Sec. 25. After the expiration in 1991 of the Agreement between the Philippines and the
United States of America concerning Military Bases, foreign military bases, troops, or
facilities shall not be allowed in the Philippines except under a treaty duly concurred in by
the Senate and, when the Congress so requires, ratified by a majority of the votes cast by
the people in a national referendum held for that purpose, and recognized as a treaty by
the other contracting State.

Applying the provision to the situation involved in these cases, the question is whether or
not the presence of US Armed Forces in Philippine territory pursuant to the VFA is allowed
"under a treaty duly concurred in by the Senate xxx and recognized as a treaty by the
other contracting State."

This Court finds that it is, for two reasons.

First, as held in Bayan v. Zamora,5 the VFA was duly concurred in by the Philippine
Senate and has been recognized as a treaty by the United States as attested and certified
by the duly authorized representative of the United States government.

PIL 3
The fact that the VFA was not submitted for advice and consent of the United States
Senate does not detract from its status as a binding international agreement or treaty
recognized by the said State. For this is a matter of internal United States law. Notice can
be taken of the internationally known practice by the United States of submitting to its
Senate for advice and consent agreements that are policymaking in nature, whereas those
that carry out or further implement these policymaking agreements are merely submitted
to Congress, under the provisions of the so-called CaseZablocki Act, within sixty days
from ratification.6

The second reason has to do with the relation between the VFA and the RP-US
Mutual Defense Treaty of August 30, 1951. This earlier agreement was signed and duly
ratified with the concurrence of both the Philippine Senate and the United States Senate.

Clearly, therefore, joint RP-US military exercises for the purpose of developing the
capability to resist an armed attack fall squarely under the provisions of the RP-US Mutual
Defense Treaty. The VFA, which is the instrument agreed upon to provide for the joint RP-
US military exercises, is simply an implementing agreement to the main RP-US Military
Defense Treaty.

Have agreed as follows:9

Accordingly, as an implementing agreement of the RP-US Mutual Defense Treaty, it was

not necessary to submit the VFA to the US Senate for advice and consent, but merely to
the US Congress under the CaseZablocki Act within 60 days of its ratification. It is for this
reason that the US has certified that it recognizes the VFA as a binding international
agreement, i.e., a treaty, and this substantially complies with the requirements of Art.
XVIII, Sec. 25 of our Constitution.10

The provision of Art. XVIII, Sec. 25 of the Constitution, is complied with by virtue of the fact
that the presence of the US Armed Forces through the VFA is a presence "allowed under"
the RP-US Mutual Defense Treaty. Since the RP-US Mutual Defense Treaty itself has been
ratified and concurred in by both the Philippine Senate and the US Senate, there is no
violation of the Constitutional provision resulting from such presence.

The VFA being a valid and binding agreement, the parties are required as a matter of
international law to abide by its terms and provisions.

2.

The VFA provides that in cases of offenses committed by the members of the US Armed
Forces in the Philippines, the following rules apply:

Article V

Criminal Jurisdiction

xxx

PIL 4
6. The custody of any United States personnel over whom the Philippines is to exercise
jurisdiction shall immediately reside with United States military authorities, if they so
request, from the commission of the offense until completion of all judicial proceedings.
United States military authorities shall, upon formal notification by the Philippine
authorities and without delay, make such personnel available to those authorities in time
for any investigative or judicial proceedings relating to the offense with which the person
has been charged. In extraordinary cases, the Philippine Government shall present its
position to the United States Government regarding custody, which the United States
Government shall take into full account. In the event Philippine judicial proceedings are
not completed within one year, the United States shall be relieved of any obligations under
this paragraph. The one year period will not include the time necessary to appeal. Also,
the one year period will not include any time during which scheduled trial procedures are
delayed because United States authorities, after timely notification by Philippine
authorities to arrange for the presence of the accused, fail to do so.

Petitioners contend that these undertakings violate another provision of the Constitution,
namely, that providing for the exclusive power of this Court to adopt rules of procedure for
all courts in the Philippines (Art. VIII, Sec. 5[5]). They argue that to allow the transfer of
custody of an accused to a foreign power is to provide for a different rule of procedure for
that accused, which also violates the equal protection clause of the Constitution (Art. III,
Sec. 1.).

Again, this Court finds no violation of the Constitution.

The equal protection clause is not violated, because there is a substantial basis for a
different treatment of a member of a foreign military armed forces allowed to enter our
territory and all other accused.11

The rule in international law is that a foreign armed forces allowed to enter ones territory
is immune from local jurisdiction, except to the extent agreed upon. The Status of Forces
Agreements involving foreign military units around the world vary in terms and conditions,
according to the situation of the parties involved, and reflect their bargaining power. But
the principle remains, i.e., the receiving State can exercise jurisdiction over the forces of
the sending State only to the extent agreed upon by the parties.12

As a result, the situation involved is not one in which the power of this Court to adopt rules
of procedure is curtailed or violated, but rather one in which, as is normally encountered
around the world, the laws (including rules of procedure) of one State do not extend or
apply except to the extent agreed upon to subjects of another State due to the
recognition of extraterritorial immunity given to such bodies as visiting foreign armed
forces.

Nothing in the Constitution prohibits such agreements recognizing immunity from

jurisdiction or some aspects of jurisdiction (such as custody), in relation to long-recognized
subjects of such immunity like Heads of State, diplomats and members of the armed
forces contingents of a foreign State allowed to enter another States territory. On the
contrary, the Constitution states that the Philippines adopts the generally accepted
principles of international law as part of the law of the land. (Art. II, Sec. 2).

PIL 5
Applying, however, the provisions of VFA, the Court finds that there is a different treatment
when it comes to detention as against custody. The moment the accused has to be
detained, e.g., after conviction, the rule that governs is the following provision of the VFA:

Article V

Criminal Jurisdiction

xxx

Sec. 10. The confinement or detention by Philippine authorities of United States personnel
shall be carried out in facilities agreed on by appropriate Philippines and United States
authorities. United States personnel serving sentences in the Philippines shall have the
right to visits and material assistance.

It is clear that the parties to the VFA recognized the difference between custody during the
trial and detention after conviction, because they provided for a specific arrangement to
cover detention. And this specific arrangement clearly states not only that the detention
shall be carried out in facilities agreed on by authorities of both parties, but also that the
detention shall be "by Philippine authorities." Therefore, the Romulo-Kenney Agreements
of December 19 and 22, 2006, which are agreements on the detention of the accused in
the United States Embassy, are not in accord with the VFA itself because such detention is
not "by Philippine authorities."

Respondents should therefore comply with the VFA and negotiate with representatives of
the United States towards an agreement on detention facilities under Philippine authorities
as mandated by Art. V, Sec. 10 of the VFA.

Next, the Court addresses the recent decision of the United States Supreme Court in
Medellin v. Texas ( 552 US ___ No. 06-984, March 25, 2008), which held that treaties
entered into by the United States are not automatically part of their domestic law unless
these treaties are self-executing or there is an implementing legislation to make them
enforceable.1avvphi1

On February 3, 2009, the Court issued a Resolution, thus:

"G.R. No. 175888 (Suzette Nicolas y Sombilon v. Alberto Romulo, et al.); G.R. No. 176051
(Jovito R. Salonga, et al. v. Daniel Smith, et al.); and G.R. No. 176222 (Bagong Alyansang
Makabayan [BAYAN], et al. v. President Gloria Macapagal-Arroyo, et al.).

The parties, including the Solicitor General, are required to submit within three (3) days a
Comment/Manifestation on the following points:

1. What is the implication on the RP-US Visiting Forces Agreement of the recent US
Supreme Court decision in Jose Ernesto Medellin v. Texas, dated March 25, 2008, to
the effect that treaty stipulations that are not self-executory can only be enforced
pursuant to legislation to carry them into effect; and that, while treaties may
comprise international commitments, they are not domestic law unless Congress

PIL 6
 has enacted implementing statutes or the treaty itself conveys an intention that it
be "self-executory" and is ratified on these terms?

2. Whether the VFA is enforceable in the US as domestic law, either because it is

self-executory or because there exists legislation to implement it.

3. Whether the RP-US Mutual Defense Treaty of August 30, 1951 was concurred in
by the US Senate and, if so, is there proof of the US Senate advice and consent
resolution? Peralta, J., no part."

After deliberation, the Court holds, on these points, as follows:

First, the VFA is a self-executing Agreement, as that term is defined in Medellin itself,
because the parties intend its provisions to be enforceable, precisely because the
Agreement is intended to carry out obligations and undertakings under the RP-US Mutual
Defense Treaty. As a matter of fact, the VFA has been implemented and executed, with the
US faithfully complying with its obligation to produce L/CPL Smith before the court during
the trial.

Secondly, the VFA is covered by implementing legislation, namely, the Case-Zablocki Act,
USC Sec. 112(b), inasmuch as it is the very purpose and intent of the US Congress that
executive agreements registered under this Act within 60 days from their ratification be
immediately implemented. The parties to these present cases do not question the fact
that the VFA has been registered under the Case-Zablocki Act.1avvphi1

In sum, therefore, the VFA differs from the Vienna Convention on Consular Relations and
the Avena decision of the International Court of Justice (ICJ), subject matter of the Medellin
decision. The Convention and the ICJ decision are not self-executing and are not
registrable under the Case-Zablocki Act, and thus lack legislative implementing authority.

Finally, the RP-US Mutual Defense Treaty was advised and consented to by the US Senate
on March 20, 1952, as reflected in the US Congressional Record, 82nd Congress, Second
Session, Vol. 98 Part 2, pp. 2594-2595.

The framers of the Constitution were aware that the application of international law in
domestic courts varies from country to country.

As Ward N. Ferdinandusse states in his Treatise, DIRECT APPLICATION OF INTERNATIONAL

CRIMINAL LAW IN NATIONAL COURTS, some countries require legislation whereas others do
not.

It was not the intention of the framers of the 1987 Constitution, in adopting Article XVIII,
Sec. 25, to require the other contracting State to convert their system to achieve
alignment and parity with ours. It was simply required that the treaty be recognized as a
treaty by the other contracting State. With that, it becomes for both parties a binding
international obligation and the enforcement of that obligation is left to the normal
recourse and processes under international law.

PIL 7
Furthermore, as held by the US Supreme Court in Weinberger v. Rossi,13 an executive
agreement is a "treaty" within the meaning of that word in international law and
constitutes enforceable domestic law vis--vis the United States. Thus, the US Supreme
Court in Weinberger enforced the provisions of the executive agreement granting
preferential employment to Filipinos in the US Bases here.

Accordingly, there are three types of treaties in the American system:

1. Art. II, Sec. 2 treaties These are advised and consented to by the US Senate in
accordance with Art. II, Sec. 2 of the US Constitution.

2. ExecutiveCongressional Agreements: These are joint agreements of the

President and Congress and need not be submitted to the Senate.

3. Sole Executive Agreements. These are agreements entered into by the

President. They are to be submitted to Congress within sixty (60) days of ratification
under the provisions of the Case-Zablocki Act, after which they are recognized by
the Congress and may be implemented.

As regards the implementation of the RP-US Mutual Defense Treaty, military aid or
assistance has been given under it and this can only be done through implementing
legislation. The VFA itself is another form of implementation of its provisions.

WHEREFORE, the petitions are PARTLY GRANTED, and the Court of Appeals Decision in CA-
G.R. SP No. 97212 dated January 2, 2007 is MODIFIED. The Visiting Forces Agreement
(VFA) between the Republic of the Philippines and the United States, entered into on
February 10, 1998, is UPHELD as constitutional, but the Romulo-Kenney Agreements of
December 19 and 22, 2006 are DECLARED not in accordance with the VFA, and
respondent Secretary of Foreign Affairs is hereby ordered to forthwith negotiate with the
United States representatives for the appropriate agreement on detention facilities under
Philippine authorities as provided in Art. V, Sec. 10 of the VFA, pending which the status
quo shall be maintained until further orders by this Court.

The Court of Appeals is hereby directed to resolve without delay the related matters
pending therein, namely, the petition for contempt and the appeal of L/CPL Daniel Smith
from the judgment of conviction.

No costs.

SO ORDERED.

ADOLFO S. AZCUNA
Associate Justice

PIL 8
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner

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

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION IN

LINE INDUSTRIES AND AGRICULTURE, petitioner,
vs
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH
INSTITUTE, INC.,respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.

Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.

Jimenez & Associates for IRRI.

PIL 9
Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J.:

Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by
the International Catholic Migration Commission (ICMC) and the International Rice Research Institute,
Inc. (IRRI) from the application of Philippine labor laws.

Facts and Issues

A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's
communist rule confronted the international community.

In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine
Government and the United Nations High Commissioner for Refugees whereby an operating center for
processing Indo-Chinese refugees for eventual resettlement to other countries was to be established in
Bataan (Annex "A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee processing
center in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a
non-profit agency involved in international humanitarian and voluntary work. It is duly registered with
the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category
II. As an international organization rendering voluntary and humanitarian services in the Philippines, its
activities are parallel to those of the International Committee for Migration (ICM) and the International
Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja,
Vol. 1].

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

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

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-
Arbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC's
request for recognition as a specialized agency was still pending with the Department of Foreign Affairs
(DEFORAF).

PIL 10
Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted
ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, as
evidenced by a Memorandum of Agreement between the Government and ICMC (Annex "E",
Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking
the immunity expressly granted but the same was denied by respondent BLR Director who, again,
ordered the immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration
were denied despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order
violated ICMC's diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction
assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the
certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the
Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive department with
the competence and authority to act on matters involving diplomatic immunity and privileges, and
tasked with the conduct of Philippine diplomatic and consular relations with foreign governments and
UN organizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal
of memoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to ICMC
extends to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the
Philippine Government giving it the status of a specialized agency, (infra); (2) the Convention on the
Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21
November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949
(the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and deposited
with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which
declares that the Philippines adopts the generally accepted principles of international law as part of the
law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the
DEFORAF determination that the BLR Order for a certification election among the ICMC employees is
violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy
and Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III,

PIL 11
Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid.
In addition, she contends that a certification election is not a litigation but a mere investigation of a non-
adversary, fact-finding character. It is not a suit against ICMC its property, funds or assets, but is the sole
concern of the workers themselves.

B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989,
resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered
case pending with the Second Division, upon manifestation by the Solicitor General that both cases
involve similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller
Foundations signed a Memorandum of Understanding establishing the International Rice Research
Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free,
non-profit, non-stock organization designed to carry out the principal objective of conducting "basic
research on the rice plant, on all phases of rice production, management, distribution and utilization with
a view to attaining nutritive and economic advantage or benefit for the people of Asia and other major
rice-growing areas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private
corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620,
promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of
an international organization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor
organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan,
for short) in respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV,
Regional Office of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an
international organization and granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree
No. 1620 and dismissed the Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-
Arbiter's Order and authorized the calling of a certification election among the rank-and-file employees
of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra and Article XIII,
Section 3 of the 1987 Constitution, 1and held that "the immunities and privileges granted to IRRI do not
include exemption from coverage of our Labor Laws." Reconsideration sought by IRRI was denied.

PIL 12
On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order,
dismissed the Petition for Certification Election, and held that the grant of specialized agency status by
the Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRI
Said Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges
and immunities of an international organization is clear and explicit. It provides in
categorical terms that:

Art. 3 The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as immunity has been expressly waived by the Director-
General of the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons,
subpoena, orders, decisions or proceedings ordered by any court or administrative
or quasi-judicial agency are enforceable as against the Institute. In the case at bar there
was no such waiver made by the Director-General of the Institute. Indeed, the Institute, at
the very first opportunity already vehemently questioned the jurisdiction of this
Department by filing an ex-parte motion to dismiss the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by
respondent Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to comment on
the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "not
adopting as his own" the decision of the BLR Director in the ICMC Case as well as the Comment of the
Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be
excused from filing a comment "it appearing that in the earlier case of International Catholic Migration
Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General had sustained the
stand of Director Calleja on the very same issue now before it, which position has been superseded by
respondent Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor
General's prayer.

The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of
discretion in dismissing the Petition for Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges,
prerogatives and immunities of an international organization, invoked by the Secretary of Labor, is
unconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional right
to form trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI'S
appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of a
certification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the

PIL 13
Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final and
unappeable and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act.
No. 6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-
Arbiter to the Office of the Secretary of Labor and Employment instead of to the Director of the Bureau
of Labor Relations in cases involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides
that ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of
the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General
Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19
on 17 May 1949, explicitly provides:

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

Sec. 5. The premises of the specialized agencies shall be inviolable. The property and
assets of the specialized agencies, wherever located and by whomsoever held shall be
immune from search, requisition, confiscation, expropriation and any other form of
interference, whether by executive, administrative, judicial or legislative action.
(Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any
penal, civil and administrative proceedings, except insofar as that immunity has been
expressly waived by the Director-General of the Institute or his authorized
representatives.

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity
when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of
the Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification Election within
ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the
DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated
17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of
DOLE in this particular instance."

PIL 14
The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government
that ICMC and IRRI enjoy immunities accorded to international organizations, which determination has
been held to be a political question conclusive upon the Courts in order not to embarrass a political
department of Government.

It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government, and
where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government as in the case at bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law officer of the
government . . . or other officer acting under his direction. Hence, in adherence to the
settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the
executive arm of the government in conducting foreign relations, it is accepted doctrine
that in such cases the judicial department of (this) government follows the action of the
political branch and will not embarrass the latter by assuming an antagonistic
jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in order. The term
"international organization" is generally used to describe an organization set up by agreement between
two or more states. 4 Under contemporary international law, such organizations are endowed with some
degree of international legal personality 5 such that they are capable of exercising specific rights, duties
and powers. 6 They are organized mainly as a means for conducting general international business in
which the member states have an interest. 7 The United Nations, for instance, is an international
organization dedicated to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular fields. The term
appears in Articles 57 8 and 63 9 of the Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting
progress and international cooperation in economic, social, health, cultural, educational
and related matters, contemplates that these tasks will be mainly fulfilled not by organs of
the United Nations itself but by autonomous international organizations established by
inter-governmental agreements outside the United Nations. There are now many such
international agencies having functions in many different fields, e.g. in posts,
telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology,
atomic energy, finance, trade, education and culture, health and refugees. Some are
virtually world-wide in their membership, some are regional or otherwise limited in their
membership. The Charter provides that those agencies which have "wide international
responsibilities" are to be brought into relationship with the United Nations by
agreements entered into between them and the Economic and Social Council, are then to
be known as "specialized agencies." 10

The rapid growth of international organizations under contemporary international law has paved the way
for the development of the concept of international immunities.

PIL 15
 It is now usual for the constitutions of international organizations to contain provisions
conferring certain immunities on the organizations themselves, representatives of their
member states and persons acting on behalf of the organizations. A series of conventions,
agreements and protocols defining the immunities of various international organizations
in relation to their members generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities to international
organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international
institutions should have a status which protects them against control or interference by any one
government in the performance of functions for the effective discharge of which they are responsible to
democratically constituted international bodies in which all the nations concerned are represented; 2) no
country should derive any national financial advantage by levying fiscal charges on common
international funds; and 3) the international organization should, as a collectivity of States members, be
accorded the facilities for the conduct of its official business customarily extended to each other by its
individual member States. 12 The theory behind all three propositions is said to be essentially
institutional in character. "It is not concerned with the status, dignity or privileges of individuals, but
with the elements of functional independence necessary to free international institutions from national
control and to enable them to discharge their responsibilities impartially on behalf of all their
members. 13 The raison d'etre for these immunities is the assurance of unimpeded performance of their
functions by the agencies concerned.

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

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights,
which are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3
(supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor Code, 16 relied
on by the BLR Director and by Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of
the Convention on the Privileges and Immunities of the Specialized Agencies of the United
Nations 17 provides that "each specialized agency shall make provision for appropriate modes of
settlement of: (a) disputes arising out of contracts or other disputes of private character to which the
specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement
between ICMC the the Philippine Government, whenever there is any abuse of privilege by ICMC, the
Government is free to withdraw the privileges and immunities accorded. Thus:

Art. IV. Cooperation with Government Authorities. 1. The Commission shall

cooperate at all times with the appropriate authorities of the Government to ensure the
observance of Philippine laws, rules and regulations, facilitate the proper administration
of justice and prevent the occurrences of any abuse of the privileges and immunities

PIL 16
 granted its officials and alien employees in Article III of this Agreement to the
Commission.

2. In the event that the Government determines that there has been an abuse of the
privileges and immunities granted under this Agreement, consultations shall be held
between the Government and the Commission to determine whether any such abuse has
occurred and, if so, the Government shall withdraw the privileges and immunities granted
the Commission and its officials.

Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there
had been organized a forum for better management-employee relationship as evidenced by the formation
of the Council of IRRI Employees and Management (CIEM) wherein "both management and employees
were and still are represented for purposes of maintaining mutual and beneficial cooperation between
IRRI and its employees." The existence of this Union factually and tellingly belies the argument that
Pres. Decree No. 1620, which grants to IRRI the status, privileges and immunities of an international
organization, deprives its employees of the right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any particular case
they have expressly waived their immunity," it is inaccurate to state that a certification election is
beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification
election cannot be viewed as an independent or isolated process. It could tugger off a series of events in
the collective bargaining process together with related incidents and/or concerted activities, which could
inevitably involve ICMC in the "legal process," which includes "any penal, civil and administrative
proceedings." The eventuality of Court litigation is neither remote and from which international
organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on
jurisdictional immunity are said to be standard provisions in the constitutions of international
Organizations. "The immunity covers the organization concerned, its property and its assets. It is equally
applicable to proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein
TUPAS calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et
als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of
that dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary
employment), the Court is now estopped from passing upon the question of DOLE jurisdiction petition
over ICMC.

We find no merit to said submission. Not only did the facts of said controversy occur between 1983-
1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with
corresponding immunities, but also because ICMC in that case did not invoke its immunity and,
therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly
recognized as enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR
Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration filed
by IRRI Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides
for direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in certification election

PIL 17
cases either from the order or the results of the election itself, was already in effect, specifically since 21
March 1989. Hence, no grave abuse of discretion may be imputed to respondent Secretary of Labor in
his assumption of appellate jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of
that law provides:

Art. 259. Any party to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the
ground that the rules and regulations or parts thereof established by the Secretary of
Labor and Employment for the conduct of the election have been violated. Such appeal
shall be decided within 15 calendar days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two
departments of the executive branch of government have been rectified and the resultant embarrassment
to the Philippine Government in the eyes of the international community now, hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the
Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary Restraining
Order earlier issued is made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having been
committed by the Secretary of Labor and Employment in dismissing the Petition for Certification
Election.

No pronouncement as to costs.

SO ORDERED.

Padilla, Sarmiento and Regalado, JJ., concur.

Paras, J., is on leave.

PIL 18
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 79253 March 1, 1993

UNITED STATES OF AMERICA and MAXINE BRADFORD, petitioners,

vs.
HON. LUIS R. REYES, as Presiding Judge of Branch 22, Regional Trial Court of Cavite, and NELIA T.
MONTOYA, respondents.

Luna, Sison & Manas for petitioners.

Evelyn R. Dominguez for private respondent.

DAVIDE, JR., J.:

This is a petition for certiorari and prohibition under Rule 65 of the Rules of Court. Petitioners would
have Us annul and set aside, for having been issued with grave abuse of discretion amounting to lack of
jurisdiction, the Resolution of 17 July 1987 of Branch 22 of the Regional Trial Court (RTC) of Cavite in
Civil Case No. 224-87. The said resolution denied, for lack of merit, petitioners' motion to dismiss the
said case and granted the private respondent's motion for the issuance of a writ of preliminary
attachment. Likewise sought to be set aside is the writ of attachment subsequently issued by the RTC on
28 July 1987.

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

The readings disclose the following material operative facts:

Private respondent, hereinafter referred to as Montoya, is an American citizen who, at the time material
to this case, was employed as an identification (I.D.) checker at the U.S. Navy Exchange (NEX) at the
Joint United States Military Assistance Group (JUSMAG) headquarters in Quezon City. She is married
to one Edgardo H. Montoya, a Filipino-American serviceman employed by the U.S. Navy and stationed

PIL 19
in San Francisco, California. Petitioner Maxine Bradford, hereinafter referred to as Bradford, is likewise
an American citizen who was the activity exchange manager at the said JUSMAG Headquarters.

As a consequence of an incident which occurred on 22 January 1987 whereby her body and belongings
were searched after she had bought some items from the retail store of the NEX JUSMAG, where she
had purchasing privileges, and while she was already at the parking area, Montoya filed on
7 May 1987 a complaint 1 with the Regional Trial Court of her place of residence Cavite against
Bradford for damages due to the oppressive and discriminatory acts committed by the latter in excess of
her authority as store manager of the NEX JUSMAG. The complaint, docketed as Civil Case No. 224-87
and subsequently raffled off to Branch 22 at Imus, Cavite, alleges the following, material operative
facts:

xxx xxx xxx

3. That on January 22, 1987, after working as the duty ID checker from 7:45 to 11:45
a.m., plaintiff went shopping and left the store at l2:00 noon of that day;

4. That on the way to her car while already outside the store, Mrs. Yong Kennedy, also an
ID checker, upon the instruction of the store manager, Ms. Maxine Bradford, approached
plaintiff and informed her that she needed to search her bags;

5. That plaintiff went to defendant, who was then outside the store talking to some men,
to protest the search but she was informed by the defendant that the search is to be made
on all Jusmag employees that day;

6. That the search was thereafter made on the person, car and bags of the plaintiff by Mrs.
Yong Kennedy in the presence of the defendant and numerous curious onlookers;

7. That having found nothing irregular on her person and belongings, plaintiff was
allowed to leave the premises;

8. That feeling aggrieved, plaintiff checked the records and discovered that she was the
only one whose person and belonging was (sic) searched that day contrary to defendant's
allegation as set forth in par. 5 hereof and as evidenced by the memorandum dated
January 30, 1987 made by other Filipino Jusmag employees, a photocopy of which is
hereto attached as ANNEX "A" and made integral (sic) part hereof:

9. That moreover, a check with Navy Exchange Security Manager, R.L. Roynon on
January 27, 1987 was made and she was informed by Mr. Roynon that it is a matter of
policy that customers and employees of NEX Jusmag are not searched outside the store
unless there is a very strong evidence of a wrongdoing;

10. That plaintiff knows of no circumstances sufficient to trigger suspicion of a

wrongdoing on her part but on the other hand, is aware of the propensity of defendant to
lay suspicion on Filipinos for theft and/or shoplifting;

PIL 20
 11. That plaintiff formally protested the illegal search on February 14, 1987 in a letter
addressed to Mr. R.L. Roynon, a photocopy of which is hereto attached as ANNEX "B"
and made integral (sic) part hereof; but no action was undertaken by the said officer;

12. That the illegal search on the person and belongings of the plaintiff in front of many
people has subjected the plaintiff to speculations of theft, shoplifting and such other
wrongdoings and has exposed her to contempt and ridicule which was caused her undue
embarrassment and indignity;

13. That since the act could not have been motivated by other (sic) reason than racial
discrimination in our own land, the act constitute (sic) a blow to our national pride and
dignity which has caused the plaintiff a feeling of anger for which she suffers sleepless
nights and wounded feelings;

14. That considering the above, plaintiff is entitled to be compensated by way of moral
damages in the amount of P500,000.00;

15. That to serve as a deterrent to those inclined to follow the oppressive act of the
defendant, exemplary damages in the amount of P100,000.00 should also be awarded. 2

She then prayed for judgment ordering Bradford to pay her P500,000.00 as moral damages, P100,000.00
as exemplary damages and reasonable attorney's fees plus the costs of the suit. 3

Summons and a copy of the complaint were served on Bradford on 13 May 1987. In response thereto,
she filed two (2) motions for extension of time to file her Answer which were both granted by the trial
court. The first was filed through Atty. Miguel Famularcano, Jr., who asked for a 20-day extension from
28 May 1987. The second, filed through the law firm of Luna, Sison and Manas, sought a 15-day
extension from 17 June 1987. 4 Thus, Bradford had up to 1 July 1987 to file her Answer. Instead of doing
so, however, she, together with the government of the United States of America (hereinafter referred to
as the public petitioner), filed on 25 June 1987, also through the law firm of Luna, Sison and Manas, a
Motion to Dismiss 5 based on the following grounds:

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

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

JUSMAG, Quezon City, is immune from suit for act(s) done by her in the performance of
her official functions under the Philippines-United States Military Assistance Agreement
of 1947 and Military Bases Agreement of 1947, as amended. 6

In support of the motion, the petitioners claimed that JUSMAG, composed of an Army, Navy and Air
Group, had been established under the Philippine-United States Military Assistance Agreement entered
into on 21 March 1947 to implement the United States' program of rendering military assistance to the
Philippines. Its headquarters in Quezon City is considered a temporary installation under the provisions
of Article XXI of the Military Bases Agreement of 1947. Thereunder, "it is mutually agreed that the

PIL 21
United States shall have the rights, power and authority within the bases which are necessary for the
establishment, use and operation and defense thereof or appropriate for the control thereof." The 1979
amendment of the Military Bases Agreement made it clear that the United States shall have "the use of
certain facilities and areas within the bases and shall have effective command and control over such
facilities and over United States personnel, employees, equipment and material." JUSMAG maintains, at
its Quezon City headquarters, a Navy Exchange referred to as the NEX-JUSMAG. Checking of
purchases at the NEX is a routine procedure observed at base retail outlets to protect and safeguard
merchandise, cash and equipment pursuant to paragraphs 2 and 4(b) of NAVRESALEACT SUBIC
INST. 5500.1. 7Thus, Bradford's order to have purchases of all employees checked on 22 January 1987
was made in the exercise of her duties as Manager of the NEX-JUSMAG.

They further claimed that the Navy Exchange (NAVEX), an instrumentality of the U.S. Government, is
considered essential for the performance of governmental functions. Its mission is to provide a
convenient and reliable source, at the lowest practicable cost, of articles and services required for the
well-being of Navy personnel, and of funds to be used for the latter's welfare and recreation. Montoya's
complaint, relating as it does to the mission, functions and responsibilities of a unit of the United States
Navy, cannot then be allowed. To do so would constitute a violation of the military bases agreement.
Moreover, the rights, powers and authority granted by the Philippine government to the United States
within the U.S. installations would be illusory and academic unless the latter has effective command and
control over such facilities and over American personnel, employees, equipment and material. Such
rights, power and authority within the bases can only be exercised by the United States through the
officers and officials of its armed forces, such as Bradford. Baer vs. Tizon 8 and United States of
America vs.
Ruiz 9 were invoked to support these claims.

On 6 July 1987, Montoya filed a motion for preliminary attachment 10 on the ground that Bradford was
about to depart from the country and was in the process of removing and/or disposing of her properties
with intent to defraud her creditors. On 14 July 1987, Montoya filed her opposition to the motion to
dismiss 11 alleging therein that the grounds proffered in the latter are bereft of merit because (a)
Bradford, in ordering the search upon her person and belongings outside the NEX JUSMAG store in the
presence of onlookers, had committed an improper, unlawful and highly discriminatory act against a
Filipino employee and had exceeded the scope of her authority; (b) having exceeded her authority,
Bradford cannot rely on the sovereign immunity of the public petitioner because her liability is personal;
(c) Philippine courts are vested with jurisdiction over the case because Bradford is a civilian employee
who had committed the challenged act outside the U.S. Military Bases; such act is not one of those
exempted from the jurisdiction of Philippine courts; and (d) Philippine courts can inquire into the factual
circumstances of the case to determine whether or not Bradford had acted within or outside the scope of
her authority.

On 16 July 1987, public petitioner and Bradford filed a reply to Montoya's opposition and an opposition
to the motion for preliminary attachment. 12

On 17 July 1987, 13 the trial court 14 resolved both the motion to dismiss and the motion for preliminary
attachment in this wise:

PIL 22
 On the motion to dismiss, the grounds and arguments interposed for the dismissal of this
case are determined to be not indubitable. Hence, the motion is denied for lack of merit.

The motion for preliminary attachment is granted in the interest of justice, upon the
plaintiff's filing of a bond in the sum of P50,000.00.

Upon Montoya's filing of the required bond, the trial court issued on 28 July 1987 an Order 15 decreeing
the issuance of a writ of attachment and directing the sheriff to serve the writ immediately at the expense
of the private respondent. The writ of attachment was issued on that same date. 16

Instead of filing a motion to reconsider the last two (2) orders, or an answer insofar as Bradford is
concerned both the latter and the public petitioner filed on 6 August 1987 the instant petition to annul
and set aside the above Resolution of 17 July 1987 and the writ of attachment issued pursuant thereto.
As grounds therefor, they allege that:

10. The respondent judge committed a grave abuse of discretion amounting to lack of
jurisdiction in denying the motion to dismiss the complaint in Civil Case No. 224-87 "for
lack of merit." For the action was in effect a suit against the United States of America, a
foreign sovereign immune from suit without its consent for the cause of action pleaded in
the complaint, while its co-petitioner was immune from suit for act(s) done by her in the
performance of her official functions as manager of the US Navy Exchange Branch at the
Headquarters of JUSMAG, under the Philippines-United States Military Assistance
Agreement of 1947 and Military Bases Agreement of 1947, as amended. 17

On 5 August 1987, the trial court set Civil Case No. 224-87 for pre-trial and trial on 27 August 1987 at
9:30 a.m.18

On 12 August 1987, this Court resolved to require the respondents to comment on the petition. 19

On 19 August 1987, petitioners filed with the trial court a Motion

to Suspend Proceedings 20 which the latter denied in its Order of 21 August 1987. 21

In the meantime, however, for failure to file an answer, Bradford was declared in default in Civil Case
No. 224-87 and Montoya was allowed to present her evidence ex-parte. 22 She thus took the witness
stand and presented Mrs. Nam Thi Moore and Mrs. Miss Yu as her witnesses.

On 10 September 1987, the trial court rendered its decision 23 in Civil Case No. 224-87, the dispositive
portion of which reads:

Prescinding from the foregoing, it is hereby determined that the unreasonable search on
the plaintiff's person and bag caused (sic) done recklessly and oppressively by the
defendant, violated, impaired and undermined the plaintiff's liberty guaranteed by the
Constitution, entitling her to moral and exemplary damages against the defendant. The
search has unduly subjected the plaintiff to intense humiliation and indignities and had
consequently ridiculed and embarrassed publicly said plaintiff so gravely and
immeasurably.

PIL 23
 WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant
Maxine Bradford assessing the latter to pay unto the former the sums of P300,000.00 for
moral damages, P100,000.00 for exemplary damages and P50,000.00 for actual expenses
and attorney's fees.

No costs.

SO ORDERED. 24

Bradford received a copy of the decision on 21 September 1987. On that same date, she and the public
petitioner filed with this Court a Petition for Restraining Order 25 which sought to have the trial court's
decision vacated and to prevent the execution of the same; it was also prayed that the trial court be
enjoined from continuing with Civil Case No. 224-87. We noted this pleading in the Resolution of 23
September 1987. 26

In the meantime, since no motion for reconsideration or appeal had been interposed by Bradford
challenging the 10 September 1987 Decision which she had received on 21 September 1987, respondent
Judge issued on 14 October 1987 an order directing that an entry of final judgment be made. A copy
thereof was received by Bradford on 21 October, 1987. 27

Also on 14 October 1987, Montoya filed her Comment with Opposition to the Petition for Restraining
Order. 28Respondent Judge had earlier filed his own Comment to the petition on 14 September 1987. 29

On 27 October 1987, Montoya filed before the trial court a motion for the execution of the Decision of
10 September 1987 which petitioners opposed on the ground that although this Court had not yet issued
in this case a temporary restraining order, it had nevertheless resolved to require the respondents to
comment on the petition. It was further averred that execution thereof would cause Bradford grave
injury; moreover, enforcement of a writ of execution may lead to regrettable incidents and unnecessarily
complicate the situation in view of the public petitioner's position on the issue of the immunity of its
employees. In its Resolution of 11 November 1987, the trial court directed the issuance of a writ of
execution. 30

Consequently, the petitioners filed on 4 December 1987, a Manifestation and Motion reciting the
foregoing incidents obtaining before the trial court and praying that their petition for a restraining order
be resolved. 31

On 7 December 1987, this Court issued a Temporary Restraining Order "ENJOINING the respondents
and the Provincial Sheriff of Pasig, Metro Manila, from enforcing the Decision dated September 10,
1987, and the Writs of Attachment and Execution issued in Civil Case No. 224-87." 32

On 28 November 1988, after the private respondent filed a Rejoinder to the Consolidated Reply to the
Comments filed by the petitioners, this Court gave due course to the petition and required the parties to
submit their respective memoranda-Petitioners filed their Memorandum on 8 February 1989 33 while
private respondent filed her Memorandum on 14 November 1990. 34

PIL 24
The kernel issue presented in this case is whether or not the trial court committed grave abuse of
discretion in denying the motion to dismiss based on the following grounds: (a) the complaint in Civil
Case No. 224-87 is in effect a suit against the public petitioner, a foreign sovereign immune from suit
which has not given consent to such suit and (b) Bradford is immune from suit for acts done by her in
the performance of her official functions as manager of the U.S. Navy Exchange of JUSMAG pursuant
to the Philippines-United States Military Assistance Agreement of 1947 and the Military Bases
Agreement of 1947, as amended.

Aside from maintaining the affirmative view, the public petitioner and Bradford even go further by
asserting that even if the latter's act were ultra vires she would still be immune from suit for the rule that
public officers or employees may be sued in their personal capacity for ultra vires and tortious acts is
"domestic law" and not applicable in International Law. It is claimed that the application of the
immunity doctrine does not turn upon the lawlessness of the act or omission attributable to the foreign
national for if this were the case, the concept of immunity would be meaningless as inquiry into the
lawlessness or illegality of the act or omission would first have to be made before considering the
question of immunity; in other words, immunity will lie only if such act or omission is found to be
lawful.

On the other hand, Montoya submits that Bradford is not covered by the protective mantle of the
doctrine of sovereign immunity from suit as the latter is a mere civilian employee of JUSMAG
performing non-governmental and proprietary functions. And even assuming arguendo that Bradford is
performing governmental functions, she would still remain outside the coverage of the doctrine of state
immunity since the act complained of is ultra viresor outside the scope of her authority. What is being
questioned is not the fact of search alone, but also the manner in which the same was conducted as well
as the fact of discrimination against Filipino employees. Bradford's authority to order a search, it is
asserted, should have been exercised with restraint and should have been in accordance with the
guidelines and procedures laid down by the cited "NAVRESALEACT, Subic Inst." Moreover, ultra vires
acts of a public officer or employee, especially tortious and criminal acts, are his private acts and may
not be considered as acts of the State. Such officer or employee alone is answerable for any liability
arising therefrom and may thus be proceeded against in his personal capacity.

Montoya further argues that both the acts and person of Bradford are not exempt from the Philippine
courts' jurisdiction because (a) the search was conducted in a parking lot at Scout Borromeo, Quezon
City, outside the JUSMAG store and, therefore, outside the territorial control of the U.S. Military Bases
in the Philippines; (b) Bradford does not possess diplomatic immunity under Article 16(b) of the 1953
Military Assistance Agreement creating the JUSMAG which provides that only the Chief of the Military
Advisory Group and not more than six (6) other senior members thereof designated by him will be
accorded diplomatic immunity; 35 and (c) the acts complained of do not fall under those offenses where
the U.S. has been given the right to exercise its jurisdiction (per Article 13 of the 1947 Military Bases
Agreement, as amended by the, Mendez-Blair Notes of 10 August 1965). 36

Finally, Montoya maintains that at the very least, Philippine courts may inquire into the factual
circumstances of the case to determine whether petitioner Bradford is immune from suit or exempt from
Philippine jurisdiction. To rule otherwise would render the Philippine courts powerless as they may be
easily divested of their jurisdiction upon the mere invocation of this principle of immunity from suit.

PIL 25
A careful review of the records of this case and a judicious scrutiny of the arguments of both parties
yield nothing but the weakness of the petitioners' stand. While this can be easily demonstrated, We shall
first consider some procedural matters.

Despite the fact that public petitioner was not impleaded as a defendant in Civil Case No. 224-87, it
nevertheless joined Bradford in the motion to dismiss on the theory that the suit was in effect against
it without, however, first having obtained leave of court to intervene therein. This was a procedural
lapse, if not a downright improper legal tack. Since it was not impleaded as an original party, the public
petitioner could, on its own volition, join in the case only by intervening therein; such intervention, the
grant of which is discretionary upon the court, 37 may be allowed only upon a prior motion for leave with
notice to all the parties in the action. Of course, Montoya could have also impleaded the public
petitioner as an additional defendant by amending the complaint if she so believed that the latter is an
indispensible or necessary party.

Since the trial court entertained the motion to dismiss and the subsequent pleadings filed by the public
petitioner and Bradford, it may be deemed to have allowed the public petitioner to intervene. Corollarily,
because of its voluntary appearance, the public petitioner must be deemed to have submitted itself to the
jurisdiction of the trial court.

Moreover, the said motion does not specify any of the grounds for a motion to dismiss enumerated in
Section 1, Rule 16 of the Rules of Court. It merely recites state immunity on the part of the public
petitioner and immunity on the part of Bradford for the reason that the act imputed to her was done in
the performance of her official functions. The upshot of this contention is actually lack of cause of
action a specific ground for dismissal under the aforesaid Rule because assuming arguendo that
Montoya's rights had been violated by the public petitioner and Bradford, resulting in damage or injury
to the former, both would not be liable therefor, and no action may be maintained thereon, because of the
principle of state immunity.

The test of the sufficiency of the facts to constitute a cause of action is whether or not, admitting the
facts alleged in the complaint, the court could render a valid judgment upon the same, in accordance
with the prayer in the complaint. 38

A motion to dismiss on the ground of failure to state a cause of action hypothetically admits the truth of
the allegations in the complaint.

In deciding a motion to dismiss, a court may grant, deny, allow amendments to the pleadings or defer the
hearing and determination of the same if the ground alleged does not appear to be indubitable. 39 In the
instant case, while the trial court concluded that "the grounds and arguments interposed for the
dismissal" are not "indubitable," it denied the motion for lack of merit. What the trial court should have
done was to defer there solution on the motion instead of denying it for lack of merit.

In any event, whatever may or should have been done, the public petitioner and Bradford were not
expected to accept the verdict, making their recourse to this Court via the instant petition inevitable.
Thus, whether the trial court should have deferred resolution on or denied outright the motion to dismiss
for lack of merit is no longer pertinent or relevant.

PIL 26
The complaint in Civil Case No. 224-87 is for damages arising from what Montoya describes as an
"illegal search" on her "person and belongings" conducted outside the JUSMAG premises in front of
many people and upon the orders of Bradford, who has the propensity for laying suspicion on Filipinos
for theft or shoplifting. It is averred that the said search was directed only against Montoya.

Howsoever viewed, it is beyond doubt that Montoya's cause of action is premised on the theory that the
acts complained of were committed by Bradford not only outside the scope of her authority or more
specifically, in her private capacity but also outside the territory where she exercises such authority,
that is, outside the NEX-JUSMAG particularly, at the parking area which has not been shown to form
part of the facility of which she was the manager. By their motion to dismiss, public petitioner and
Bradford are deemed to have hypothetically admitted the truth of the allegation in the complaint which
support this theory.

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

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

While the doctrine appears to prohibit only suits against the state without its consent, it is
also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment against
such officials will require the state itself to perform an affirmative act to satisfy the same,
such as the appropriation of the amount needed to pay the damages awarded against
them, the suit must be regarded as against the state itself although it has not been
formally impleaded. 42 It must be noted, however, that the rule is not so all-encompassing
as to be applicable under all circumstances.

It is a different matter where the public official is made to account in his capacity as such
for acts contrary to law and injurious to the rights of plaintiff. As was clearly set forth by
Justice Zaldivar in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc.,
et al. 43 "Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts
of government officials or officers are not acts of the State, and an action against the
officials or officers by one whose rights have been invaded or violated by such acts, for
the protection of his rights, is not a suit against the State within the rule of immunity of
the State from suit. In the same tenor, it has been said that an action at law or suit in
equity against a State officer or the director of a State department on the ground that,
while claiming to act or the State, he violates or invades the personal and property rights
of the plaintiff, under an unconstitutional act or under an assumption of authority which
he does not have, is not a suit against the State within
the constitutional provision that the State may not be sued without its consent." 44 The

PIL 27
 rationale for this ruling is that the doctrinaire of state immunity cannot be used as an
instrument for perpetrating an injustice. 45

In the case of Baer, etc. vs. Tizon, etc., et al., 46 it was ruled that:

There should be no misinterpretation of the scope of the decision reached

by this Court. Petitioner, as the Commander of the United States Naval
Base in Olongapo, does not possess diplomatic immunity. He may
therefore be proceeded against in his personal capacity, or when the action
taken by him cannot be imputed to the government which he represents.

Also, in Animos, et al. vs. Philippine Veterans Affairs Office, et al., 47 we held that:

. . . it is equally well-settled that where a litigation may have adverse

consequences on the public treasury, whether in the disbursements of
funds or loss of property, the public official proceeded against not being
liable in his personal capacity, then the doctrine of non-suability may
appropriately be invoked. It has no application, however, where the suit
against such a functionary had to be instituted because of his failure to
comply with the duty imposed by statute appropriating public funds for
the benefit of plaintiff or petitioner. . . . .

The aforecited authorities are clear on the matter. They state that the doctrine of immunity
from suit will not apply and may not be invoked where the public official is being sued in
his private and personal capacity as an ordinary citizen. The cloak of protection afforded
the officers and agents of the government is removed the moment they are sued in their
individual capacity. This situation usually arises where the public official acts without
authority or in excess of the powers vested in him. It is a well-settled principle of law that
a public official may be liable in his personal private capacity for whatever damage he
may have caused by his act done
with malice and in bad faith, or beyond the scope of his authority or jurisdiction. 48

The agents and officials of the United States armed forces stationed in Clark Air Base are
no exception to this rule. In the case of United States of America, et al. vs. Guinto, etc., et
al., ante, 49 we declared:

It bears stressing at this point that the above observations do not confer on
the United States of America Blanket immunity for all acts done by it or
its agents in the Philippines. Neither may the other petitioners claim that
they are also insulated from suit in this country merely because they have
acted as agents of the United States in the discharge of their official
functions.

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

PIL 28
a consequence of the hypothetical admission of the truth of the allegations therein, the case falls within
the exception to the doctrine of state immunity.

In the recent cases of Williams vs. Rarang 50 and Minucher vs. Court of Appeals, 51 this Court reiterated
this exception. In the former, this Court observed:

There is no question, therefore, that the two (2) petitioners actively participated in
screening the features and articles in the POD as part of their official functions. Under the
rule that U.S. officials in the performance of their official functions are immune from
suit, then it should follow that petitioners may not be held liable for the questioned
publication.

It is to be noted, however, that the petitioners were sued in their personal capacities for
their alleged tortious acts in publishing a libelous article.

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

In the latter, even on the claim of diplomatic immunity which Bradford does not in fact pretend to
have in the instant case as she is not among those granted diplomatic immunity under Article 16(b) of
the 1953 Military Assistance Agreement creating the JUSMAG 52 this Court ruled:

Even Article 31 of the Vienna Convention on Diplomatic Relations admits of exceptions.

It reads:

1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction

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

xxx xxx xxx

(c) an action relating to any professional or commercial

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

There can be no doubt that on the basis of the allegations in the complaint, Montoya has a sufficient and
viable cause of action. Bradford's purported non-suability on the ground of state immunity is then a
defense which may be pleaded in the answer and proven at the trial.

Since Bradford did not file her Answer within the reglementary period, the trial court correctly declared
her in default upon motion of the private respondent. The judgment then rendered against her on 10
September 1987 after the ex parte reception of the evidence for the private respondent and before this
Court issued the Temporary Restraining Order on 7 December 1987 cannot be impugned. The filing of

PIL 29
the instant petition and the knowledge thereof by the trial court did not prevent the latter from
proceeding with Civil Case No.
224-87. "It is elementary that the mere pendency of a special civil action for certiorari, commenced in
relation to a case pending before a lower Court, does not interrupt the course of the latter when there is
no writ of injunction restraining it." 53

WHEREFORE, the instant petition is DENIED for lack of merit. The Temporary Restraining Order of 7
December 1987 is hereby LIFTED.

Costs against petitioner Bradford.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Romero, Nocon, Bellosillo,
Melo and Campos, Jr., JJ., concur.

Quiason, J., took no part.

Gutierrez, Jr., J., is on leave.

USA and Bradford v. Hon. Luis R. Reyes and Montoya

[219 SCRA 192, March 1, 1993]
G.R. No. 79253

Facts:

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

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

Contentions:
Bradford claimed that she was immune from suit because:
1) (This) action is in effect a suit against the United States of America, a foreign sovereign
immune from suit without its consent for the cause of action pleaded in the complaint; and

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

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

PIL 30
Montoya argued that:
(a) Bradford, in ordering the search upon her person and belongings outside the NEX
JUSMAG store in the presence of onlookers, had committed an improper, unlawful and
highly discriminatory act against a Filipino employee and had exceeded the scope of her
authority; (b) having exceeded her authority, Bradford cannot rely on the sovereign
immunity of the public petitioner because her liability is personal; (c) Philippine courts are
vested with jurisdiction over the case because Bradford is a civilian employee who had
committed the challenged act outside the U.S. Military Bases; such act is not one of those
exempted from the jurisdiction of Philippine courts; and (d) Philippine courts can inquire
into the factual circumstances of the case to determine whether or not Bradford had acted
within or outside the scope of her authority.

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

Doctrine of State Immunity:

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

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

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

It is a different matter where the public official is made to account in his capacity as such
for acts contrary to law and injurious to the rights of plaintiff. As was clearly set forth by
Justice Zaldivar in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et
al. "Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of
government officials or officers are not acts of the State, and an action against the officials
or officers by one whose rights have been invaded or violated by such acts, for the
protection of his rights, is not a suit against the State within the rule of immunity of the
State from suit. In the same tenor, it has been said that an action at law or suit in equity
against a State officer or the director of a State department on the ground that, while
claiming to act or the State, he violates or invades the personal and property rights of the
plaintiff, under an unconstitutional act or under an assumption of authority which he does
not have, is not a suit against the State within the constitutional provision that the State
may not be sued without its consent." The rationale for this ruling is that the doctrinaire of
state immunity cannot be used as an instrument for perpetrating an injustice.

PIL 31
In the case of Baer, etc. vs. Tizon, etc., et al., it was ruled that:

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

Also, in Animos, et al. vs. Philippine Veterans Affairs Office, et al., we held that:

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

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

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

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

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

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

xxx xxx xxx

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

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

Disposition:
Petition was dismissed.

PIL 32
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 90314 November 27, 1990

LOIDA Q. SHAUF and JACOB SHAUF, Petitioners,

vs.
HON. COURT OF APPEALS, DON E. DETWILER and ANTHONY PERSI, Respondents.

REGALADO, J.:

In this petition for review on certiorari, petitioners would have us reverse and set aside the decision
rendered by respondent Court of Appeals on August 22, 1989, in CA-G.R. CV No. 17932, entitled
"Loida Shauf and Jacob Shauf, Plaintiffs-Appellants, versus Don Detwiler and Anthony Persi,
Defendants-Appellants,"1 dismissing petitioners complaint for damages filed before the Regional Trial
Court, Branch LVI, Angeles City, in Civil Case No. 2783 thereof, and its subsequent resolution denying
petitioners motion for the reconsideration of its aforesaid decision.

As found by respondent court,2 Clark Air Base is one of the bases established and maintained by the
United States by authority of the agreement between the Philippines and the United States concerning
military bases which entered into force on March 26, 1947.

The Third Combat Support Group, a unit of Clark Air Base, maintains a Central Civilian Personnel
Office (CCPO) charged with the responsibility for civilian personnel management and administration. It
is through its civilian personnel officer that the base commander is responsible for direction and
administration of civilian personnel program, including advising management and operating officials on
civilian personnel matters. Acting for the commander, the civilian personnel officer is the administrative
official in charge of the activities of the CCPO, and the commander relies on him to carry out all aspects
of the civilian personnel program. The CCPO personnel program encompasses placement and staffing,
position management and classification.

The Third Combat Support Group also maintains an Education Branch, Personnel Division, which
provides an education program for military personnel, U.S. civilian employees, and adult dependents,
assigned or attached to Clark Air Base. Its head, the education director, is responsible directly to the base
director of personnel for administering the education services program for Clark Air Base. In this
capacity, and within broad agency policies, is delegated to him the full responsibility and authority for
the technical, administrative and management functions of the program. As part of his duties, the

PIL 33
education director provides complete academic and vocational guidance for military dependents,
including counseling, testing and test interpretation. During the time material to the complaint, private
respondent Don Detwiler was civilian personnel officer, while private respondent Anthony Persi was
education director.3

Petitioner Loida Q. Shauf, a Filipino by origin and married to an American who is a member of the
United States Air Force, applied for the vacant position of Guidance Counselor, GS17109, in the Base
Education Office at Clark Air Base, for which she is eminently qualified. As found by the trial court, she
received a Master of Arts degree from the University of Sto. Tomas, Manila, in 1971 and has completed
34 semester hours in psychology-guidance and 25 quarter hours in human behavioral science; she has
also completed all course work in human behavior and counseling psychology for a doctoral degree; she
is a civil service eligible; and, more importantly, she had functioned as a Guidance Counselor at the
Clark Air Base at the GS 1710-9 level for approximately four years at the time she applied for the same
position in 1976.4

By reason of her non-selection to the position, petitioner Loida Q. Shauf filed an equal employment
opportunity complaint against private respondents, for alleged discrimination against the former by
reason of her nationality and sex. The controversy was investigated by one Rudolph Duncan, an appeals
and grievance examiner assigned to the Office of Civilian Personnel Operations, Appellate Division, San
Antonio, Texas, U.S.A. and what follows are taken from his findings embodied in a report duly
submitted by him to the Equal Opportunity Officer on February 22, 1977.5

On or about October 1976, the position of Guidance Counselor, GS 1710-9, became vacant in the Base
Education Office, Clark Air Base. A standard Form 52 was submitted to the Civilian Personnel Office to
fill said position. The Civilian Personnel Division took immediate steps to fill the position by
advertisement in the Clark Air Base Daily Bulletin #205 dated October 21, 1976. As a result of the
advertisement, one application was received by the Civilian Personnel Office and two applications were
retrieved from the applicants supply file in the Civilian Personnel Office. These applications were that of
Mrs. Jean Hollenshead, an employee of the DOD Schools at Clark Air Base, Mrs. Lydia B. Gaillard, an
unemployed dependent, and Mrs. Loida Q. Shauf. All three applications were reviewed and their
experiences were considered qualifying for the advertised position.

On November 11, 1976, the application of Loida Q. Shauf was referred to Mr. Anthony Persi, with the
applications of Mrs. Jean Hollenshead and Mrs. Lydia Gaillard, to be considered for the position of
Guidance Counselor, GS 1710-9, Mr. Persi, after review of the applications, stated that upon screening
the applications he concluded that two applicants had what he considered minimum qualifications for
the position. The two applicants were Mrs. Hollenshead and Mrs. Gaillard. In the case of Loida Q.
Shauf, Mr. Persi felt that her application was quite complete except for a reply to an inquiry form
attached to the application. This inquiry form stated that the National Personnel Records Center, St.
Louis, Missouri, was unable to find an official personnel folder for Loida Q. Shauf. Mr. Persi said that as
a result of the National Personnel Records Center, GSA, not being able to find any records on Loida Q.
Shauf, this raised some questions in his mind as to the validity of her work experience. As a result of his
reservations on Loida Q. Shaufs work experience and his conclusions that the two other applications
listed minimum qualifications, Mr. Persi decided to solicit additional names for consideration.

PIL 34
Subsequently in his correspondence dated November 12, 1976, Mr. Persi returned the three applications
to the Civilian Personnel Office without a selection decision. Mr. Persi also requested in his
correspondence that the Civilian Personnel Office initiate immediate inquiry to the Central Oversea
Rotation and Recruiting Office (CORRO) for the submission of a list of highly qualified candidates. He
further stated in his correspondence that the three applicants who had indicated an interest would be
considered with the CORRO input for selection.

As a result of Mr. Persis request, an AF Form 1188 "Oversea Civilian Personnel Request" was
submitted to CORRO on November 12, 1976. This request in fact asked for one Guidance Counselor,
GS 1710-9. The form listed the fact that local candidates are available. However, instead of getting a list
of candidates for consideration, Mr. Persi was informed by CORRO, through the Civilian Personnel
Office in their December 15, 1976 message that a Mr. Edward B. Isakson from Loring AFB, Maine, was
selected for the position. Mr. Persi stated, when informed of CORROs selection, that he had heard of
Mr. Isakson and, from what he had heard, Mr. Isakson was highly qualified for the position; therefore, he
wished to have the selection stand. This statement was denied by Mr. Persi. Mr. Isakson was placed on
the rolls at Clark Air Base on January 24, 1977.6

Said examiner, however, also stated in his findings that, by reason of petitioner Loida Q. Shaufs
credentials which he recited therein, she is and was at the time of the vacancy, 7 highly qualified for the
position of Guidance Counselor, GS 1710-9. In connection with said complaint, a Notice of Proposed
Disposition of Discrimination Complaint, dated May 16, 1977,8 was served upon petitioner Loida Q.
Shauf stating that because the individual selected did not meet the criteria of the qualification
requirements, it was recommended "that an overhire GS 1710-9 Assistant Education Advisor position be
established for a 180 day period. x x x. The position should be advertised for local procurement on a best
qualified basis with the stipulation that if a vacancy occurs in a permanent GS 1710-9 position the
selectee would automatically be selected to fill the vacancy. If a position is not vacated in the 180 day
period the temporary overhire would be released but would be selected to fill a future vacancy if the
selectee is available."

During that time, private respondents already knew that a permanent GS 1710-9 position would shortly
be vacant, that is, the position of Mrs. Mary Abalateo whose appointment was to expire on August 6,
1977 and this was exactly what private respondent Detwiler had in mind when he denied on June 27,
1977 Mrs. Abalateos request for extension of March 31, 1977. However, private respondents deny that
Col. Charles J. Corey represented to petitioner Loida Q. Shauf that she would be appointed to the
overhire position and to a permanent GS 1710-9 position as soon as it became vacant, which allegedly
prompted the latter to accept the proposed disposition.

Contrary to her expectations, petitioner Loida Q. Shauf was never appointed to the position occupied by
Mrs. Abalateo whose appointment was extended indefinitely by private respondent Detwiler.9

Feeling aggrieved by what she considered a shabby treatment accorded her, petitioner Loida Q. Shauf
wrote the U.S. Civil Service Commission questioning the qualifications of Edward Isakson. Thereafter,
said commission sent a communication addressed to private respondent Detwiler, 10 finding Edward
Isakson not qualified to the position of Guidance Counselor, GS 1710-9, and requesting that action be
taken to remove him from the position and that efforts be made to place him in a position for which he

PIL 35
qualifies. Petitioner Loida Q. Shauf avers that said recommendation was ignored by private respondent
Detwiler and that Isakson continued to occupy said position of guidance counselor.

Petitioner Loida Q. Shauf likewise wrote the Base Commander of Clark Air Base requesting a hearing
on her complaint for discrimination. Consequently, a hearing was held on March 29, 1978 before the
U.S. Department of Air Force in Clark Air Base.11

Before the Department of Air Force could render a decision, petitioner Loida Q. Shauf filed a complaint
for damages, dated April 27, 1978, against private respondents Don Detwiler and Anthony Persi before
the Regional Trial Court, Branch LVI at Angeles City, docketed as Civil Case No. 2783, for the alleged
discriminatory acts of herein private respondents in maliciously denying her application for the GS
1710-9 position.

Private respondents, as defendants in Civil Case No. 2783, filed a motion to dismiss on the ground that
as officers of the United States Armed Forces performing official functions in accordance with the
powers vested in them under the Philippine-American Military Bases Agreement, they are immune from
suit. The motion to dismiss was denied by the trial court. A motion for reconsideration was likewise
denied.

Consequently, private respondents filed an Answer reiterating the issue of jurisdiction and alleging, inter
alia, that defendant Persis request to Central Oversea Rotation and Recruiting Office (CORRO) was not
for appointment of a person to the position of Guidance Counselor, GS 1710-9, but for referrals whom
defendant Persi would consider together with local candidates for the position; that the extension of the
employment of Mrs. Abalato was in accordance with applicable regulation and was not related to
plaintiff Loida Q. Shaufs discrimination complaint; that the decision was a joint decision of
management and CCPO reached at a meeting on June 29, 1977 and based on a letter of the deputy
director of civilian personnel, Headquarters Pacific Air Forces, dated June 15, 1977; and that the ruling
was made known to and amplified by the director and the deputy director of civilian personnel in letters
to petitioner Loida Q. Shauf dated August 30, 1977 and September 19, 1977.

The parties submitted a Partial Stipulation of Facts in the court a quo providing, in part, as follows:

a) In October 1976, the position of guidance counselor, GS-1710-9, at Clark Air Base was
vacant;

b) Plaintiff Loida Q, Shauf, a qualified dependent locally available, was among those who
applied for said vacant position of guidance counselor, GS-1710-9;

c) Plaintiff Loida Q. Shauf at the time she filed her aforesaid application was qualified for the
position of guidance counselor, GS-1710-9;

d) Civilian Personnel Office accomplished and forwarded to CORRO an AF Form 1188 covering
the position of guidance counselor, GS-1710-9, applied for by plaintiff Loida Q. Shauf;

e) U.S. Department of Defense Instructions (DODI) No. 1400.23 under Policy and Procedures
provides that-

PIL 36
"Where qualified dependents of military or civilian personnel of the Department of Defense are locally
available for appointment to positions in foreign areas which are designated for U.S. citizen occupancy
and for which recruitment outside the current work force is appropriate, appointment to the position will
be limited to such dependents unless precluded by treaties or other agreements which provide for
preferential treatment for local nationals."

And Air Force Regulation 40-301 dated 12 May 1976 in par. 2 c (1) thereof provides that-

"c. Selection or Referral of Eligible Applicants From the 50 States:

(1)CORRO makes selection, except as provided in (3) below, for oversea positions of Grades
GS-11 and below (and wage grade equivalents) for which it has received an AF Form 1188, and
for higher grade positions if requested by the oversea activity." 12

Likewise, a Supplement to Partial Stipulation of Facts was filed by the parties on October 6, 1978,
which reads:

1. Under date of 30 September 1978, plaintiff Loida Q. Shauf through her counsel, Quasha Asperilla
Ancheta Valmonte Pea & Marcos, lodged an appeal before the Civil Service Commission, Appeals
Review Board, from the decision of the Secretary of the Air Force dated 1 September 1978 affirming the
EEO Complaints Examiners Findings and Recommended Decision in the Discrimination Complaint of
Mrs. Loida Q. Shauf, No. SF 071380181 dated 3 July 1978, x x x;

2. The aforesaid appeal has not been decided up to now by the Civil Service Commission, Appeals
Review Board; and

3. Plaintiff Loida Q. Shauf has not instituted any action before any federal district court of the United
States impugning the validity of the decision of the Secretary of the Air Force dated 1 September 1978
affirming the EEO Complaints Examiners Findings and Recommended Decision in the Discrimination
Complaint of Mrs. Loida Q. Shauf, No. SF 071380181 dated 3 July 1978.13

Thereafter, on March 8, 1988, the trial court rendered judgment in favor of herein petitioner Loida Q.
Shauf, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering the defendants jointly and severally to pay the
plaintiffs:

1) The amount $39,662.49 as actual damages or its equivalent in Philippine pesos in October
1976 as reported by the Central Bank of the Philippines or any authorized agency of the
Government;

2) The amount of P100,000.00 as moral and exemplary damages;

3) Twenty (20%) percent of $39,662.49 or its equivalent in Philippine Pesos in October 1976 as
reported by the Central Bank of the Philippines or any authorized agency of the Government, as
attorneys gees, and;

PIL 37
 4) Cost(s) of suit.

SO ORDERED.14

Both parties appealed from the aforecited decision to respondent Court of Appeals.

In their appeal, plaintiffs-appellants (herein petitioners) raised the following assignment of errors:

1. Lower court gravely erred in holding that the actual and exemplary damages and attorneys
fees may be paid in Philippine Pesos based on the exchange rate prevailing during October 1976
as determined by the Central Bank;

2. Lower court gravely erred in limiting the amount of moral and exemplary damages
recoverable by plaintiff to P100,000.0015

On the other hand, defendants-appellants (private respondents herein) argued that:

1. The trial court erred in not dismissing the complaint on the ground that defendants-appellants,
as officers/officials of the United States Armed Forces, are immune from suit for acts done or
statements made by them in the performance of their official governmental functions in
accordance with the powers possessed by them under the Philippine-American Military Bases
Agreement of 1947, as amended;

2. The trial court erred in not dismissing the complaint for a) non-exhaustion of administrative
remedies; and b) lack of jurisdiction of the trial court over the subject matter of the case in view
of the exclusive jurisdiction of an appropriate U.S. District Court over an appeal from an agency
decision on a complaint of discrimination under the U.S. Federal Law on Equality of opportunity
for civilian employees;

3. The trial court erred in holding that plaintiff-appellant Loida Q. Shauf was refused
appointment as guidance counselor by the defendants-appellants on account of her six (female),
color (brown), and national origin (Filipino by birth) and that the trial court erred in awarding
damages to plaintiffs-appellants.16

As stated at the outset, respondent Court of Appeals reversed the decision of the trial court, dismissed
herein petitionerscomplaint and denied their motion for reconsideration. Hence this petition, on the
basis of he following grounds:

The respondent Honorable Court of Appeals has decided a question of substance not in accord with law
and/or with applicable decisions of this Honorable Court. Respondent court committed grave error in
dismissing plaintiffs-appellants complaint and-

(a) in holding that private respondents are immune from suit for discriminatory acts performed
without or in excess of, their authority as officers of the U.S. Armed Forces;

PIL 38
 (b) for applying the doctrine of state immunity from suit when it is clear that the suit is not
against the U.S. Government or its Armed Forces; and

(c) for failing to recognize the fact that the instant action is a pure and simple case for damages
based on the discriminatory and malicious acts committed by private respondents in their
individual capacity who by force of circumstance and accident are officers of the U.S. Armed
Forces, against petitioner Loida Shauf solely on account of the latters sex (female), color
(brown), and national origin (Filipino).17

Petitioners aver that private respondents are being sued in their private capacity for discriminatory acts
performed beyond their authority, hence the instant action is not a suit against the United States
Government which would require its consent.

Private respondents, on the other hand, claim that in filing the case, petitioners sought a judicial review
by a Philippine court of the official actuations of respondents as officials of a military unit of the U.S.
Air Force stationed at Clark Air Base. The acts complained of were done by respondents while
administering the civil service laws of the United States. The acts sued upon being a governmental
activity of respondents, the complaint is barred by the immunity of the United States, as a foreign
sovereign, from suit without its consent and by the immunity of the officials of the United States armed
forces for acts committed in the performance of their official functions pursuant to the grant to the
United States armed forces of rights, power and authority within the bases under the Military Bases
Agreement. It is further contended that the rule allowing suits against public officers and employees for
unauthorized acts, torts and criminal acts is a rule of domestic law, not of international law. It applies to
cases involving the relations between private suitors and their government or state, not the relations
between one government and another from which springs the doctrine of immunity of a foreign
sovereign.

I. The rule that a state may not be sued without its consent, now expressed in Article XVI, Section 3, of
the 1987 Constitution, is one of the generally accepted principles of international law that we have
adopted as part of the law of our land under Article II, Section 2. This latter provision merely reiterates a
policy earlier embodied in the 1935 and 1973 Constitutions and also intended to manifest our resolve to
abide by the rules of the international community.18

While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable
to complaints filed against officials of the state for acts allegedly performed by them in the discharge of
their duties. The rule is that if the judgment against such officials will require the state itself to perform
an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the
damages awarded against them, the suit must be regarded as against the state itself although it has been
formally impleaded.19 It must be noted, however, that the rule is not also all-encompassing as to be
applicable under all circumstances.

It is a different matter where the public official is made to account in his capacity as such for acts
contrary to law and injurious to the rights of plaintiff. As we clearly set forth by Justice Zaldivar
in Director of the Bureau of Telecommunications, et al. Vs. Aligaen, etc., et al.:20 "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

PIL 39
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." 21 The
rationale for this ruling is that the doctrine of state immunity cannot be used as an instrument for
perpetrating an injustice.22

In the case of Baer, etc. vs. Tizon, etc., et al.,23 it was ruled that:

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

Also, in animos, et al. Vs. Philippine Veterans Affairs Office, et al.,24 we held that:

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

The aforecited authorities are clear on the matter. They state that the doctrine of immunity from suit will
not apply and may not be invoked where the public official is being sued in his private and personal
capacity as an ordinary citizen. The cloak of protection afforded the officers and agents of the
government is removed the moment they are sued in their individual capacity. This situation usually
arises where the public official acts without authority or in excess of the powers vested in him. It is a
well-settled principle of law that a public official may be liable in his personal private capacity for
whatever damage he may have caused by his act done with malice and in bad faith, or beyond the scope
of his authority or jurisdiction.25

The agents and officials of the United States armed forces stationed in Clark Air Base are no exception
to this rule. In the case of United States of America, et al. Vs. Guinto, etc., et al., ante,26 we declared:

It bears stressing at this point that the above observation do not confer on the United States of America
blanket immunity for all acts done by it or its agents in the Philippines. Neither may the other petitioners
claim that they are also insulated from suit in this country merely because they have acted as agents of
the United States in the discharge of their official functions.

II. The court below, in finding that private respondents are guilty of discriminating against petitioner
Loida Q. Shauf on account of her sex, color and origin, categorically emphasized that:

PIL 40
There is ample evidence to sustain plaintiffs complaint that plaintiff Loida Q. Shauf was refused
appointment as Guidance Counselor by the defendants on account of her sex, color and origin.

She is a female, brown in color and a Filipino by origin, although married to an American who is a
member of the United States Air Force. She is qualified for the vacant position of Guidance Counselor in
the office of the education director at Clark Air Base. She received a Master of Arts Degree from the
University of Santo Tomas, Manila, in 1971 and has completed 34 semester hours in psychology-
guidance and 25 quarter hours in human behavioral science. She has also completed all course work in
human behavior and counseling psychology for a doctoral degree. She is a civil service eligible. More
important, she had functioned as a Guidance Counselor at the Clark Air Base at the GS-1710-9 level for
approximately four years at the time she applied for the same position in 1976.

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

In defending his act, defendant Persi gave as his excuse that there was a question in his mind regarding
validity of plaintiff Loida Q. Shaufs work experience because of lack of record. But his assertion is
belied by the fact that plaintiff Loida Q. Shauf had previously been employed as Guidance Counselor at
the Clark Air Base in 1971 and this would have come out if defendant Persi had taken the trouble of
interviewing her. Nor can defendant free himself from any blame for the non-appointment of plaintiff
Loida Q. Shauf by claiming that it was CORRO that appointed Edward B. Isakson. This would not have
happened if defendant Persi adhered to the regulation that limits the appointment to the position of
Guidance Counselor, GS-1710-9 to qualified dependents of military personnel of the Department of
Defense who are locally available like the plaintiff Loida Q. Shauf. He should not have referred the
matter to CORRO. Furthermore, defendant Persi should have protested the appointment of Edward B.
Isakson who was ineligible for the position. He, however, remained silent because he was satisfied with
the appointment.

Likewise, the acts of the defendant Detwiler in rejecting the appointment of plaintiff Loida Q. Shauf
were undoubtedly discriminatory.

Plaintiff Loida Q. Shauf twice applied for the position of Guidance Counselor sometime in 1975 and in
October 1978. Although she was qualified for the postision, her appointment was rejected ny the
defendant Detwiler. The two who were appointed, a certain Petrucci and Edward B. Isakson, were
ordered removed by the U.S. Civil Service Commission. Instead of replacing Petrucci with the plaintiff
Loida Q. Shauf, the defendant Detwiler had the position vacated by Petrucci abolished. And in the case
of Edward Isakson, the defendant Detwiler ignored the order of the U.S. Civil Service Commission to
have him removed according to the testimony of plaintiff Loida Q. Shauf.

In connection with her complaint against the defendants, plaintiff Loida Q. Shauf was presented a Notice
of Proposed Disposition of her Discrimination Complaint by Col. Charles J. Corey, Vice Commander,
Third Combat Support Group, Clark Air Base, which would entitle her to a temporary appointment as
Guidance Counselor with the implied assurance that she would be appointed in a permanent capacity in
the event of a vacancy.

PIL 41
At the time of the issuance of said Notice, defendants knew that there would be a vacancy in a
permanent position as Guidance Counselor occupied by Mrs. Mary Abalateo and it was understood
between Col. Corey and plaintiff Loida Q. Shauf that this position would be reserved for her. Knowing
this arrangement, defendant Detwiler rejected the request for extension of services of Mrs. Mary
Abalateo. However, after plaintiff Loida Q. Shauf consented to the terms of the Notice of Proposed
Disposition of her Discrimination Complaint, defendant Detwiler extended the services of Mrs. Mary
Abalateo indefinitely. This act barred plaintiff Loida Q. Shauf from applying for the position of Mrs.
Mary Abalateo.

To rebut the evidence of the plaintiffs, defendant cited the findings and conclusions of Mr. Rudolph
Duncan, who was appointed to investigate plaintiff Loida Q. Shaufs complaint for discrimination and
Col. Charles J. Corey, Vice Commander, Third Combat Support Group that defendants were not guilty
of Discrimination.

It is pointed out, however, that Mr. Rudolph Duncan found plaintiff loida Q. Shauf to be highly qualified
for the position of Guidance Counselor at the GS-1710-9 level and that management should have hired a
local applicant. While Col. Corey characterized the act of defendant Persi as sloppy and recommend that
he be reprimanded. In any event their findings and conclusions are not binding with this Court.

To blunt the accusation of discrimination against them, defendants maintained that the extension of the
appointment of Mrs. Mary Abalateo was a joint decision of management and Central Civilian Personnel
Office, Clark Air Base. Nonetheless, having earlier rejected by himself the request for extension of the
services of Mrs. Mary Abalateo, defendant Detwiler should not have concurred to such an extension as
the reversal of his stand gave added substance to the charge of discrimination against him.

To further disprove the charge that the defendants discriminated against plaintiff Loida Q. Shauf for her
non-appointment as Guidance Counselor on account of her being a Filipino and a female, counsel for the
defendants cited the following: (1) that Mrs. Mary Abalateo whose appointment was extended by the
defendant Detwiler is likewise a female and a Filipino by origin; (2) that there are Filipinos employed in
the office of the defendant Persi; and (3) that there were two other women who applied in 1976 with the
plaintiff Loida Q. Shauf for the position of Guidance Counselor.

The contention of the defendants based on the allegations enumerated in Nos. 1 and 2 of the preceding
paragraph is without merit as there is no evidence to show that Mrs. Mary Abalateo and the Filipinos in
the office of the defendant Persi were appointed by the defendants. Moreover, faced with a choice
between plaintiff Loida Q. Shauf or Mrs. Mary Abalateo, it was to be expected that defendant Detwiler
chose to retain Mrs. Mary Abalateo as Guidance Counselor in retaliation for the complaint of
discrimination filed against him by plaintiff Loida Q. Shauf. Finally, as to the contention based on the
allegation in No. 3 of the preceding paragraph that there were two other women applicants in 1976 with
plaintiff Loida Q. Shauf, the record reveals that they had minimum qualifications unlike plaintiff Loida
Q. Shauf who was highly qualified.27

Elementary is the rule that the conclusions and findings of fact of the trial court are entitled to great
weight on appeal and should not be disturbed unless for strong and cogent reasons.28 Absent any
substancial proof, therefore, that the trial courts decision was grounded entirely on speculations,
surmises or conjectures, the same must be accorded full consideration and respect. This should be so

PIL 42
because the trial court is, after all, in a much better position to observe and correctly appreciate the
respective parties evidence as they were presented.29

In the case at bar, there is nothing in the record which suggests any arbitrary, irregular or abusive
conduct or motive on the part of the trial judge in ruling that private respondents committed acts of
discrimination for which they should be held personally liable. His conclusion on the matter is
sufficiently borne out by the evidence on record. We are thus constrained to uphold his findings of fact.

Respondent Court of Appeals, in its questioned decision, states that private respondents did, in fact,
discriminate against petitioner Loida Q. Shauf. However, it deemed such acts insufficient to prevent an
application of the doctrine of state immunity, contrary to the findings made by the trial court. It reasons
out that "the parties invoked are all American citizens (although plaintiff is a Filipina by origin) and the
appointment of personnel inside the base is clearly a sovereign act of the United States. This is an
internal affair in which we cannot interfere without having to touch some delicate constitutional
issues."30 In other words, it believes that the alleged discriminatory acts are not so grave in character as
would justify the award of damages.

In view of the apparent discrepancy between the findings of fact of respondent Court of Appeals and the
trial court, we are tasked to review the evidence in order to arrive at the correct findings based on the
record. A consideration of the evidence presented supports our view that the court a quo was correct in
holding herein private respondents personally liable and in ordering the indemnification of petitioner
Loida Q. Shauf. The records are clear that even prior to the filing of the complaint in this case, there
were various reports and communications issued on the matter which, while they make no categorical
statement of the private respondents liability, nevertheless admit of facts from which the intent of
private respondents to discriminate against Loida Q. Shauf is easily discernible. Witness the following
pertinent excerpts from the documents extant in the folder of Plaintiffs Exhibits:

1. Notice of Proposed Disposition of Discrimination Complaint, dated May 16, 1977 (Exhibit "G").

B. Mr. Anthony Persi was totally inept in the recruitment practices employed in attempting on fill the GS
1710-9 Assistant Education applicable DOD regulations. In addition, he failed to conduct an interview
of qualified personnel in the local environment and when the qualifications of the complainant (sic)
were questioned by Mr. Persi he did not request a review by the CCPO nor request an interview with the
complainant (sic). Mr. Persi failed to follow Department of Defense Instructions Number 1400.23, under
Policy and Procedures which states-"Where qualified dependents of military or civilian personnel of the
Department of Defense are locally available for appointment to positions in foreign areas which are
designated for US citizen occupancy and for which recruitment outside the current work force is
appropriate, appointment to the positions will be limited to such dependents unless precluded by treaties
or other agreements which provide for preferential treatment for local nationals." Attachment to Air
Force Supplement to FFM 213.2106 (b) (6) lists the positions of Guidance Counsellor, GS 1710-9, as
positions to be filled by locally available dependents. An added point is the lack of qualifications of the
individual selected for the GS 1710-9 positions as outlined under X-118 Civil Service Handbook. x x
x31

PIL 43
2. Letter of the Director of the U.S. Civil Service Commission, San Francisco Region, dated October 27,
1977, addressed to Mr. Don Detwiler, concerning Mr. Edward B. Isakson whose file was reviewed by
the Commission (Exhibit "K").

The position of Guidance Counsellor is one for which the Commission has established a mandatory
education requirement that may not be waived. An individual may not be assigned to such a position
without meeting the minimum qualification requirements. The requirements, as given in Handbook X-
118, are completion of all academic requirements for a bachelors degree from an accredited college or
university and successful completion of a teacher education program under an "approved program" or
successful completion of required kinds of courses.

On review of his record, we find that Mr. Isakson has a bachelors degree but he does not show
completion of a teacher education program. To qualify for Guidance Counselor on the basis of
coursework and semester hour credit, he would need to have 24 semester hours in Education and 12
semester hours in a combination of Psychology and Guidance subjects directly related to education. We
do not find that he meets these requirements.

xxx

We can appreciate the fact that Mr. Isakson may be working toward meeting the Guidance Counselor
requirements. Nonetheless, he does not appear to meet them at this time. We must, therefore, request that
action be taken to remove him from the position and that efforts be made to place him in a position for
which he qualifies.32

3. Letter of the Staff Judge Advocate of the Department of the Airforce addressed to Mr. Detwiler, dated
January 25, 1977 (Exhibit "L").

1. The attached memo from Captain John Vento of this office is forwarded for your review and
any action you deem appropriate. I concur with his conclusion that there is no evidence of sex or
ethnic bias in this matter. I also concur, however, that there were certain irregularities in the
handling of this selection.

xxx

3. Considering the above, it is most unfortunate that the filing of this latest Guidance Counselor
vacancy was not handled wholly in accordance with prescribed policies and regulations. This is
not to suggest that Mrs. Shauf should necessarily have been hired. But, she and other qualified
candidates should have been given the consideration to which they were entitled. (At no time
now or in the past have Mrs. Shaufs qualifications ever been questioned.) Had that happened
and management chose to select some qualified candidate other than Mrs. Shauf, there would be
no basis for her complaint.

4. It is my understanding that Mrs. Shauf has filed a formal EEO complaint. While I am
convinced that there was no discrimination in this case, my experience with EEO complaints
teaches me that, if Civil Service Commission finds that nonselection resulted from any kind of

PIL 44
 management malpractice, it is prone to brand it as a "discriminatory practice." This usually
results in a remedial order which can often be distasteful to management. x x x.33

The initial burden is on the plaintiff to establish a prima facie case or discrimination. Once the
discriminatory act is proven, the burden shifts to the defendant to articulate some legitimate,
undiscriminatory reason for the plaintiffs rejection. 34 Any such justification is wanting in the case at
bar, despite the prima facie case for petitioner Loida Q. Shauf. Private respondents defense is based
purely on outright denials which are insufficient to discharge theonus probandi imposed upon them.
They equally rely on the assertion that they are immune from suit by reason of their official functions.
As correctly pointed out by petitioners in their Memorandum, the mere invocation by private
respondents of the official character of their duties cannot shield them from liability especially when the
same were clearly done beyond the scope of their authority, again citing the Guinto, case, supra:

The other petitioners in the case before us all aver they have acted in the discharge of their official
functions as officers or agents of the United States. However, this is a matter of evidence. The charges
against them may not be summarily dismissed on their mere assertion that their acts are imputable to the
United States of America, which has not given its consent to be sued. In fact, the defendants are sought
to be held answerable for personal torts in which the United States itself is not involved. If found liable,
they and they alone must satisfy the judgment.

III. Article XIII, Section 3, of the 1987 Constitution provides that the State shall afford full protection to
labor, local and overseas, organized and unorganized, and promote full employment and equality of
employment opportunities for all. This is a carry-over from Article II, Section 9, of the 1973
Constitution ensuring equal work opportunities regardless of sex, race, or creed.

Under the Constitution of the United States, the assurance of equality in employment and work
opportunities regardless of sex, race, or creed is also given by the equal protection clause of the Bill of
Rights. The 14th Amendment, in declaring that no state shall deprive a person of his life, liberty, or
property without due process of law or deny to any person within its jurisdiction the equal protection of
the laws, undoubtedly intended not only that there should be no arbitrary spoliation of property, but that
equal protection and security should be given to all under like circumstances in the enjoyment of their
personal and civil rights, and that all persons should be equally entitled to pursue their happiness ands
acquire and enjoy property. It extends its protection to all persons without regard to race, color, or class.
It means equality of opportunity to all in like circumstances.35

The words "life, liberty, and property" as used in constitutions are representative terms and are intended
to cover every right to which a member of the body politic in entitled under the law. These terms include
the right of self-defense, freedom of speech, religious and political freedom, exemption from arbitrary
arrests, the right to freely buy and sell as others may, the right to labor, to contract, to terminate
contracts, to acquire property, and the right to all our liberties, personal, civil and political-in short, all
that makes life worth living.36

There is no doubt that private respondents Persi and Detwiler, in committing the acts complained of
have, in effect, violated the basic constitutional right of petitioner Loida Q. Shauf to earn a living which
is very much an integral aspect of the right to life. For this, they should be held accountable.

PIL 45
While we recognize petitioner Loida Q. Shaufs entitlement to an award of moral damages, we however
find no justification for the award of actual or compensatory damages, based on her supposedly
unearned income from March, 1975 up to April, 1978 in the total amount of $39,662.49, as erroneously
granted by the trial court.

Evidence that the plaintiff could have bettered her position had it not been for the defendants wrongful
act cannot serve as basis for an award of damages, because it is highly speculative. 37 Petitioner Loida
Q. Shaufs claim is merely premised on the possibility that had she been employed, she would have
earned said amount. But, the undeniable fact remains that she was never so employed. Petitioner never
acquired any vested right to the salaries pertaining to the position of GS 1710-9 to which she was never
appointed. Damages which are merely possible are speculative.38 In determining actual damages, the
court cannot rely on speculation, conjecture or guesswork. Without the actual proof of loss, the award of
actual damages is erroneous.39 Consequently, the award of actual damages made by the trial court
should be deleted. Attorneys fees, however, may be granted and we believe that an award thereof in the
sum of P20,000.00 is reasonable under the circumstances.1wphi1

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

In a letter of the Department of the Air Force in Washington, D.C., dated September 1, 1978 and
addressed to petitioner Loida Q. Shauf,40 the appeal rights of the latter from the Air Force decision
were enumerated as follows:

-You may appeal to the Civil Service Commission within 15 calendar days of receipt of the
decision. Your appeal should be addressed to the Civil Service Commission, Appeals Review
Board, 1990 E Street, N.Q., Washington, D.C. 20415. The appeal and any representation in
support thereof must be submitted in duplicate.

-In lieu of an appeal to the Commission you may file a civil action in an appropriate U.S. District
Court within 30 days of receipt of the decision.

-If you elect to appeal to the Commissions Appeals Review Board, you may file a civil action in
a U.S. District Court within 30 days of receipt of the Commissions final decision.

-A civil action may also be filed anytime after 180 days of the date of initial appeal to the
Commission, if a final decision has not been rendered.

As earlier noted, in a Supplement to Partial Stipulation of Facts filed by the parties on October 6, 1978,
it was manifested to the trial court that an appeal was lodged by counsel for petitioners on September 30,
1978 before the Civil Service Commission. Appeals Review Board from the decision of the Secretary of
the Air Force in the discrimination case filed by petitioner Loida Q. Shauf, No. SF 071380181. Said
appeal has not been decided up to now.

PIL 46
Furthermore, it is basic that remedial statutes are to be construed liberally. The term "may," as used in
adjective rules, is only permissive and not mandatory, and we see no reason why the so-called rules on
the above procedural options communicated to said petitioner should depart from this fundamental .
petitioner Loida Q. Shauf is not limited to these remedies, but is entitled as a matter of plain and simple
justice to choose that remedy, not otherwise proscribed, which will best advance and protect her
interests. There is, thus, nothing to enjoin her from seeking redress in Philippine courts which should not
be ousted of jurisdiction on the dubious and inconclusive representations of private respondents on that
score.

WHEREFORE, the challenged decision and resolution of respondent Court of Appeals in CA-G.R. CV
No. 17932 are hereby ANNULLED and SET ASIDE. Private respondents are hereby ORDERED,
jointly and severally, to pay petitioners the sum of P100,000.00 as moral damages, P20,000.00 as and for
attorneys fees, and the costs of suit.

SO ORDERED.

Melencio-Herrera (Chairman), Paras, Padilla and Sarmiento, jj., concur.

Decision and resolution annulled and set aside.

PIL 47
SHAUF vs. COURT OF APPEALS

Petition for certiorari to review the decision of CA

FACTS:

1990: Petitioner, Loida Shauf, a Filipino by origin and married to an American who is a member of the
US Air Force, was rejected for a position of Guidance Counselor in the Base Education Office at Clark
Air Base. She boasts of related working experience and being a qualified dependent locally available.

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

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

Shauf filed for damages and other relief in different venues such as the Civil Service Commission,
Appeals Review Board, Philippine Regional Trial Court, etc.

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

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

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

PIL 48
 Respondents still maintain their immunity from suit. They further claim that the rule allowing suits
against public officers & employees for criminal & unauthorized acts is applicable only in the
Philippines & is not part of international law.

ISSUE:

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

HELD:

Respondents ordered, jointly and severally, to pay petitioners the sum of P100K as moral damages,
P20K for attys fees.

RATIO:

No, the respondents cannot rely on the US blanket of diplomatic immunity for all its acts or the acts of
its agents in the Phils. Private respondents are personally liable in indemnifying petitioner Shauf.

While the doctrine of immunity is also applicable to complaints filed against state officials, it only
contemplates acts done in their official capacity. This does not cover acts contrary to law & injurious to
the rights of the plaintiff. When an official acts in a manner that invades or violates the personal &
property rights of another, the aggrieved party may sue the official & such suit will not be a suit against
the state. (Director of the Bureau of Telecommunications vs. Aligaen) The doctrine of immunity from
suit will not apply where the public official is being sued in his private & personal capacity as an
ordinary citizen.

The discrimination is very evident. Shauf was not considered for the position even if she was previously
employed as a Guidance Counselor at the Clark Airbase. She was not granted an interview. The person
appointed was not even qualified for that position and that person kept the position despite orders from
the US Civil Service Commission for his removal. Extension of Abalateos services is another proof.
She was not appointed even if US officials found her highly qualified for the position (letters from the
Director of the US Civil Service Commission, Staff Judge Advocate of the Department of Air Force).
Shauf has proven that discrimination did occur whereas respondents merely denied allegations.

The US Constitution assures everyone of equality in employment & work opportunities regardless of
sex, race, or creed. The Philippine Constitution has a similar provision. Persi & Detwiler violated
Shaufs constitutional right to earn a living, an integral aspect of her right to life. Thus, they should be
accountable. Though Shauf is entitled to damages, she should not be paid for the supposedly unearned
income had she been hired as a Guidance Counselor. She never acquired rights over that amount because
she was never appointed.

Shauf followed the proper procedure in seeking relief for the defendants discriminatory acts. The
Department of Air Force in Washington told her that one of her appeal rights would be to file a civil
action if a final decision has not been rendered after 180 days from the dated of the initial appeal to the
Commission. The appeal was lodged on Sept. 30, 1978 and it has not been decided up to the time SC has

PIL 49
decided. Shauf is entitled to choose the remedy, not otherwise prohibited, which will best advance &
protect her interests.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-35645 May 22, 1985

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and

ROBERT GOHIER,petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE
GUZMAN & CO., INC., respondents.

Sycip, Salazar, Luna & Manalo & Feliciano Law for petitioners.

Albert, Vergara, Benares, Perias & Dominguez Law Office for respondents.

ABAD SANTOS, J.:

PIL 50
This is a petition to review, set aside certain orders and restrain the respondent judge from trying Civil
Case No. 779M of the defunct Court of First Instance of Rizal.

The factual background is as follows:

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

Sometime in May, 1972, the United States invited the submission of bids for the following projects

1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines.

2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline revetment,
NAVBASE Subic; and repair to Leyte Wharf approach, NAVBASE Subic Bay, Philippines.

Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the
company received from the United States two telegrams requesting it to confirm its price proposals and
for the name of its bonding company. The company complied with the requests. [In its complaint, the
company alleges that the United States had accepted its bids because "A request to confirm a price
proposal confirms the acceptance of a bid pursuant to defendant United States' bidding practices."
(Rollo, p. 30.) The truth of this allegation has not been tested because the case has not reached the trial
stage.]

In June, 1972, the company received a letter which was signed by Wilham I. Collins, Director, Contracts
Division, Naval Facilities Engineering Command, Southwest Pacific, Department of the Navy of the
United States, who is one of the petitioners herein. The letter said that the company did not qualify to
receive an award for the projects because of its previous unsatisfactory performance rating on a repair
contract for the sea wall at the boat landings of the U.S. Naval Station in Subic Bay. The letter further
said that the projects had been awarded to third parties. In the abovementioned Civil Case No. 779-M,
the company sued the United States of America and Messrs. James E. Galloway, William I. Collins and
Robert Gohier all members of the Engineering Command of the U.S. Navy. The complaint is to order
the defendants to allow the plaintiff to perform the work on the projects and, in the event that specific
performance was no longer possible, to order the defendants to pay damages. The company also asked
for the issuance of a writ of preliminary injunction to restrain the defendants from entering into contracts
with third parties for work on the projects.

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." (Rollo, p. 50.)

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 the

PIL 51
instant petition which seeks to restrain perpetually the proceedings in Civil Case No. 779-M for lack of
jurisdiction on the part of the trial court.

The petition is highly impressed with merit.

The traditional rule of State immunity exempts a State from being sued in the courts of another State
without its consent or waiver. This rule is a necessary consequence of the principles of independence and
equality of States. However, the rules of International Law are not petrified; they are constantly
developing and evolving. And because the activities of states have multiplied, it has been necessary to
distinguish them-between sovereign and governmental acts (jure imperii) and private, commercial and
proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperil
The restrictive application of State immunity is now the rule in the United States, the United Kingdom
and other states in western Europe. (See Coquia and Defensor Santiago, Public International Law, pp.
207-209 [1984].)

The respondent judge recognized the restrictive doctrine of State immunity when he said in his Order
denying the defendants' (now petitioners) motion: " A distinction should be made between a strictly
governmental function of the sovereign state from its private, proprietary or non- governmental acts
(Rollo, p. 20.) However, the respondent judge also said: "It is the Court's considered opinion that
entering into a contract for the repair of wharves or shoreline is certainly not a governmental function
altho it may partake of a public nature or character. As aptly pointed out by plaintiff's counsel in his
reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594 (1958)], and which this Court quotes
with approval, viz.:

It is however contended that when a sovereign state enters into a contract with a private
person, the state can be sued upon the theory that it has descended to the level of an
individual from which it can be implied that it has given its consent to be sued under the
contract. ...

xxx xxx xxx

We agree to the above contention, and considering that the United States government,
through its agency at Subic Bay, entered into a contract with appellant for stevedoring
and miscellaneous labor services within the Subic Bay Area, a U.S. Naval Reservation, it
is evident that it can bring an action before our courts for any contractual liability that
that political entity may assume under the contract. The trial court, therefore, has
jurisdiction to entertain this case ... (Rollo, pp. 20-21.)

The reliance placed on Lyons by the respondent judge is misplaced for the following reasons:

In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court of First
Instance of Manila to collect several sums of money on account of a contract between plaintiff and
defendant. The defendant filed a motion to dismiss on the ground that the court had no jurisdiction over
defendant and over the subject matter of the action. The court granted the motion on the grounds that: (a)
it had no jurisdiction over the defendant who did not give its consent to the suit; and (b) plaintiff failed

PIL 52
to exhaust the administrative remedies provided in the contract. The order of dismissal was elevated to
this Court for review.

In sustaining the action of the lower court, this Court said:

It appearing in the complaint that appellant has not complied with the procedure laid
down in Article XXI of the contract regarding the prosecution of its claim against the
United States Government, or, stated differently, it has failed to first exhaust its
administrative remedies against said Government, the lower court acted properly in
dismissing this case.(At p. 598.)

It can thus be seen that the statement in respect of the waiver of State immunity from suit was purely
gratuitous and, therefore, obiter so that it has no value as an imperative authority.

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

That the correct test for the application of State immunity is not the conclusion of a contract by a State
but the legal nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the
plaintiffs leased three apartment buildings to the United States of America for the use of its military
officials. The plaintiffs sued to recover possession of the premises on the ground that the term of the
leases had expired. They also asked for increased rentals until the apartments shall have been vacated.

The defendants who were armed forces officers of the United States moved to dismiss the suit for lack
of jurisdiction in the part of the court. The Municipal Court of Manila granted the motion to dismiss;
sustained by the Court of First Instance, the plaintiffs went to this Court for review on certiorari. In
denying the petition, this Court said:

On the basis of the foregoing considerations we are of the belief and we hold that the real
party defendant in interest is the Government of the United States of America; that any
judgment for back or Increased rentals or damages will have to be paid not by defendants
Moore and Tillman and their 64 co-defendants but by the said U.S. Government. On the
basis of the ruling in the case of Land vs. Dollar already cited, and on what we have
already stated, the present action must be considered as one against the U.S. Government.
It is clear hat the courts of the Philippines including the Municipal Court of Manila have
no jurisdiction over the present case for unlawful detainer. The question of lack of
jurisdiction was raised and interposed at the very beginning of the action. The U.S.
Government has not , given its consent to the filing of this suit which is essentially
against her, though not in name. Moreover, this is not only a case of a citizen filing a suit
against his own Government without the latter's consent but it is of a citizen filing an

PIL 53
 action against a foreign government without said government's consent, which renders
more obvious the lack of jurisdiction of the courts of his country. The principles of law
behind this rule are so elementary and of such general acceptance that we deem it
unnecessary to cite authorities in support thereof. (At p. 323.)

In Syquia,the United States concluded contracts with private individuals but the contracts
notwithstanding the States was not deemed to have given or waived its consent to be sued for the reason
that the contracts were forjure imperii and not for jure gestionis.

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and
Civil Case No. is dismissed. Costs against the private respondent.

Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, * Escolin, Relova, Gutierrez, Jr., De la
Fuente, Cuevas and Alampay, JJ., concur.

Fernando, C.J., took no part.

Separate Opinions

MAKASIAR, J., dissenting:

The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now
RTC) of Rizal be allowed to continue therein.

In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into
between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and
labor services within the Subic Bay area, this Court further stated that inasmuch as ". . . the United
States Government. through its agency at Subic Bay, entered into a contract with appellant for
stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is
evident that it can bring an action before our courts for any contractual liability that that political entity
may assume under the contract."

When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a
private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have
entered into a contract and thus waived the mantle of sovereign immunity from suit and descended to the
level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a
contract (Santos vs. Santos, 92 Phil. 281, 284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation
in the case at bar by the unilateral cancellation of the award for the project by the United States
government, through its agency at Subic Bay should not be allowed to take undue advantage of a party
who may have legitimate claims against it by seeking refuge behind the shield of non-suability. A
contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his
own country for violation of his rights committed by the agents of the foreign government professing to
act in its name.

PIL 54
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84
Phil. 312, 325:

Although, generally, foreign governments are beyond the jurisdiction of domestic courts
of justice, such rule is inapplicable to cases in which the foreign government enters into
private contracts with the citizens of the court's jurisdiction. A contrary view would
simply run against all principles of decency and violative of all tenets of morals.

Moral principles and principles of justice are as valid and applicable as well with regard
to private individuals as with regard to governments either domestic or foreign. Once a
foreign government enters into a private contract with the private citizens of another
country, such foreign government cannot shield its non-performance or contravention of
the terms of the contract under the cloak of non-jurisdiction. To place such foreign
government beyond the jurisdiction of the domestic courts is to give approval to the
execution of unilateral contracts, graphically described in Spanish as 'contratos leoninos',
because one party gets the lion's share to the detriment of the other. To give validity to
such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that
all parties in a private contract, including governments and the most powerful of them,
are amenable to law, and that such contracts are enforceable through the help of the
courts of justice with jurisdiction to take cognizance of any violation of such contracts if
the same had been entered into only by private individuals.

Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction
impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly
discourage Filipino or domestic contractors from transacting business and entering into contracts with
United States authorities or facilities in the Philippines whether naval, air or ground forces-because the
difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in
our own courts for breaches of contractual obligation committed by agents of the United States
government, always, looms large, thereby hampering the growth of Filipino enterprises and creating a
virtual monopoly in our own country by United States contractors of contracts for services or supplies
with the various U.S. offices and agencies operating in the Philippines.

The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized.
Whether the parties are nations or private individuals, it is to be reasonably assumed and expected that
the undertakings in the contract will be complied with in good faith.

One glaring fact of modern day civilization is that a big and powerful nation, like the United States of
America, can always overwhelm small and weak nations. The declaration in the United Nations Charter
that its member states are equal and sovereign, becomes hollow and meaningless because big nations
wielding economic and military superiority impose upon and dictate to small nations, subverting their
sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the
interest of small nations, the American governmental agencies or its citizens invoke principles of
international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one
hand, and herein private respondent on the other, was honored more in the breach than in the compliance

PIL 55
The opinion of the majority will certainly open the floodgates of more violations of contractual
obligations. American authorities or any foreign government in the Philippines for that matter, dealing
with the citizens of this country, can conveniently seek protective cover under the majority opinion. The
result is disastrous to the Philippines.

This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and
foreign political ascendancy in our Republic.

The doctrine of government immunity from suit cannot and should not serve as an instrument for
perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360;
Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464).

Under the doctrine of implied waiver of its non-suability, the United States government, through its
naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic
person.

The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III
of the original RP-US Military Bases Agreement of March 14, 1947, which states that "in the exercise of
the above-mentioned rights, powers and authority, the United States agrees that the powers granted to it
will not be used unreasonably. . ." (Emphasis supplied).

Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the
aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and maintain sound
employment practices which will assure equality of treatment of all employees ... and continuing
favorable employer-employee relations ..." and "(B)elieving that an agreement will be mutually
beneficial and will strengthen the democratic institutions cherished by both Governments, ... the United
States Government agrees to accord preferential employment of Filipino citizens in the Bases, thus (1)
the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino
citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968).

Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of
Article IV of the aforesaid amendment of May 2 7, 1968 which directs that " contractors and
concessionaires performing work for the U.S. Armed Forces shall be required by their contract or
concession agreements to comply with all applicable Philippine labor laws and regulations, " even
though paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by either of
the two Governments of such immunity under international law."

Reliance by petitioners on the non-suability of the United States Government before the local courts,
actually clashes with No. III on respect for Philippine law of the Memorandum of Agreement signed on
January 7, 1979, also amending RP-US Military Bases Agreement, which stresses that "it is the duty of
members of the United States Forces, the civilian component and their dependents, to respect the laws of
the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the
Military Bases Agreement and, in particular, from any political activity in the Philippines. The United
States shag take all measures within its authority to insure that they adhere to them (Emphasis supplied).

PIL 56
The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the
economic and social improvement of areas surrounding the bases, which directs that "moreover, the
United States Forces shall procure goods and services in the Philippines to the maximum extent
feasible" (Emphasis supplied).

Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the
discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall
be conducted on the basis of the principles of equality of treatment, the right to organize, and bargain
collectively, and respect for the sovereignty of the Republic of the Philippines" (Emphasis supplied)

The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President
Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the United States re-
affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command
of a Philippine Base Commander, " which is supposed to underscore the joint Communique of President
Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality,
territorial integrity and political independence of all States are fundamental principles which both
countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each nation
shall characterize their friendship as well as the alliance between their two countries. "

The majority opinion negates the statement on the delineation of the powers, duties and responsibilities
of both the Philippine and American Base Commanders that "in the performance of their duties, the
Philippine Base Commander and the American Base Commander shall be guided by full respect for
Philippine sovereignty on the one hand and the assurance of unhampered U.S. military operations on the
other hand and that "they shall promote cooperation understanding and harmonious relations within the
Base and with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered
by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy and Minister of
Foreign Affairs Carlos P. Romulo, Emphasis supplied).

Footnotes

* He signed before he left.

PIL 57
USA v. RUIZ

GR No. L-35645; May 22, 1985

FACTS:

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

ISSUE:

1) Do the petitioners exercise governmental or proprietary functions?

2) Does the Court have jurisdiction over the case?

HELD:

The rule of State immunity exempts a State from being sued in the courts of another state
without its consent or waiver. This is a necessary consequence of the principles of
independence and equality of states. However, state immunity now extends only to
governmental acts of the state. The restrictive application of State immunity is proper only
when the proceedings arise out of commercial transactions of the foreign sovereign. In this
case, the projects are integral part of the naval base which is devoted to the defense of
the USA and Philippines which is, indisputably, a function of the government. As such, by
virtue of state immunity, the courts of the Philippines have no jurisdiction over the case for
the US government has not given consent to the filing of this suit.

PIL 58
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 108813 December 15, 1994

JUSMAG PHILIPPINES, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION (Second Division) and FLORENCIO
SACRAMENTO, Union President, JPFCEA, respondents.

Juan, Luces, Luna and Associates for petitioner.

Galutera & Aguilar Law Offices for private respondent.

PUNO, J.:

The immunity from suit of the Joint United States Military Assistance Group to the Republic of the
Philippines (JUSMAG-Philippines) is the pivotal issue in the case at bench.

JUSMAG assails the January 29, 1993 Resolution of the NATIONAL LABOR RELATIONS
COMMISSION (public respondent), in NLRC NCR CASE NO. 00-03-02092-92, reversing the July 30,
1991 Order of the Labor Arbiter, and ordering the latter to assume jurisdiction over the complaint for
illegal dismissal filed by FLORENCIO SACRAMENTO (private respondent) against petitioner.

First, the undisputed facts.

Private respondent was one of the seventy-four (74) security assistance support personnel (SASP)
working at JUSMAG-Philippines. 1 He had been with JUSMAG from December 18, 1969, until his
dismissal on April 27, 1992. When dismissed, he held the position of Illustrator 2 and was the incumbent
President of JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES ASSOCIATION (JPFCEA),
a labor organization duly registered with the Department of Labor and Employment. His services were
terminated allegedly due to the abolition of his position. 2 He was also advised that he was under
administrative leave until April 27, 1992, although the same was not charged against his leave.

PIL 59
On March 31, 1992, private respondent filed a complaint with the Department of Labor and
Employment on the ground that he was illegally suspended and dismissed from service by
JUSMAG. 3 He asked for his reinstatement.

JUSMAG then filed a Motion to Dismiss invoking its immunity from suit as an agency of the United
States. It further alleged lack of employer-employee relationship and that it has no juridical personality
to sue and be sued.4

In an Order dated July 30, 1991, Labor Arbiter Daniel C. Cueto dismissed the subject complaint " for
want of jurisdiction." 5 Private respondent appealed 6 to the National Labor Relations Commission
(public respondent), assailing the ruling that petitioner is immune from suit for alleged violation of our
labor laws. JUSMAG filed its Opposition, 7 reiterating its immunity from suit for its non-contractual,
governmental and/or public acts.

In a Resolution, dated January 29, 1993, the NLRC 8 reversed the ruling of the Labor Arbiter as it held
that petitioner had lost its right not to be sued. The resolution was predicated on two grounds: (1) the
principle of estoppel that JUSMAG failed to refute the existence of employer-employee relationship
under the "control test"; and (2) JUSMAG has waived its right to immunity from suit when it hired the
services of private respondent on December 18, 1969.

The NLRC relied on the case of Harry Lyons vs. United States of America, 9 where the "United States
Government (was considered to have) waived its immunity from suit by entering into (a) contract of
stevedoring services, and thus, it submitted itself to the jurisdiction of the local courts."

Accordingly, the case was remanded to the labor arbiter for reception of evidence as to the issue on
illegal dismissal.

Hence, this petition, JUSMAG contends:

THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION

A. IN REVERSING THE DECISION OF THE LABOR ARBITER AND

IN NOT AFFIRMING THE DISMISSAL OF THE COMPLAINT IT
BEING A SUIT AGAINST THE UNITED STATES OF AMERICA
WHICH HAD NOT GIVEN ITS CONSENT TO BE SUED; AND

B. IN FINDING WAIVER BY JUSMAG OF IMMUNITY FROM SUIT;

II

THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION

PIL 60
 A. WHEN IT FOUND AN EMPLOYER-EMPLOYEE RELATIONSHIP
BETWEEN JUSMAG AND PRIVATE RESPONDENT; AND

B. WHEN IT CONSIDERED JUSMAG ESTOPPED FROM DENYING

THAT PRIVATE RESPONDENT IS ITS EMPLOYEE FOR FAILURE
TO PRESENT PROOF TO THE CONTRARY.

We find the petition impressed with merit.

It is meet to discuss the historical background of the JUSMAG to determine its immunity from suit.

JUSMAG was created pursuant to the Military Assistance Agreement 10 dated March 21, 1947, between
the Government of the Republic of the Philippines and the Government of the United States of America.
As agreed upon, JUSMAG shall consist of Air, Naval and Army group, and its primary task was to
advise and assist the Philippines, on air force, army and naval matters. 11

Article 14 of the 1947 Agreement provides, inter alia, that "the cost of all services required by the
Group, including compensation of locally employed interpreters, clerks, laborers, and other personnel,
except personal servants, shall be borne by the Republic of the Philippines."

This set-up was to change in 1991. In Note No 22, addressed to the Department of Foreign Affairs
(DFA) of the Philippines, dated January 23, 1991, the United States Government, thru its Embassy,
manifested its preparedness "to provide funds to cover the salaries of security assistance support
personnel" and security guards, the rent of JUSMAG occupied buildings and housing, and the cost of
utilities. 12 This offer was accepted by our Government, thru the DFA, in Note No. 911725, dated April
18, 1991. 13

Consequently, a Memorandum of Agreement 14 was forged between the Armed Forces of the Philippines
and JUSMAG-Philippines, thru General Lisandro C. Abadia and U.S. Brigadier General Robert G.
Sausser. The Agreement delineated the terms of the assistance-in-kind of JUSMAG for 1991, the
relevant parts of which read:

a. The term salaries as used in this agreement include those for the security guards
currently contracted between JUSMAG and A' Prime Security Services Inc., and
the Security Assistance Support Personnel (SASP). . . . .

b. The term Security Assistance Support Personnel (SASP) does not include active duty
uniformed members of the Armed Forces of the Philippines performing duty at
JUSMAG.

c. It is understood that SASP are employees of the Armed Forces of the

Philippines (AFP). Therefore, the AFP agrees to appoint, for service with JUSMAG, no
more than 74 personnel to designated positions with JUSMAG.

d. SASP are under the total operational control of the Chief, JUSMAG-Philippines. The
term "Operational Control" includes, but is not limited to, all personnel administrative

PIL 61
 actions, such as: hiring recommendations; firing recommendations; position
classification; discipline; nomination and approval of incentive awards; and payroll
computation. Personnel administration will be guided by Annex E of JUSMAG-
Philippines Memo 10-2. For the period of time that there is an exceptional funding
agreement between the government of the Philippines and the United States Government
(USG), JUSMAG will pay the total payroll costs for the SASP employees. Payroll costs
include only regular salary; approved overtime, costs of living allowance; medical
insurance; regular contributions to the Philippine Social Security System, PAG-IBIG
Fund and Personnel Economic Relief Allowance (PERA); and the thirteenth-month
bonus. Payroll costs do not include gifts or other bonus payments in addition to those
previously defined above. Entitlements not considered payroll costs under this agreement
will be funded and paid by the AFP.

e. All SASP employed as of July 1, 1990 will continue their service with JUSMAG at
their current rate of pay and benefits up to 30 June 1991, with an annual renewal of
employment thereafter subject to renewal of their appointment with the AFP (employees
and rates of pay are indicated at Enclosure 3). No promotion or transfer internal to
JUSMAG of the listed personnel will result in the reduction of their pay and benefits.

f. All SASP will, after proper classification, be paid salaries and benefits at established
AFP civilian rates. Rules for computation of pay and allowances will be made available
to the Comptroller, JUSMAG, by the Comptroller, GHQ, AFP. Additionally, any legally
mandated changes in salary levels or methods of computation shall be transmitted within
48 hours of receipt by Comptroller, GHQ to Comptroller, JUSMAG.

g. The AFP agrees not to terminate SASP without 60 days prior written notice to Chief,
JUSMAG-Philippines. Any termination of these personnel thought to be necessary
because of budgetary restrictions or manpower ceiling will be subject to consultations
between AFP and JUSMAG to ensure that JUSMAG's mission of dedicated support to the
AFP will not be degraded or harmed in any way.

h. The AFP agrees to assume the severance pay/retirement pay liability for all appointed
SASP. (Enclosure 3 lists the severance pay liability date for current SASP). Any
termination of services, other than voluntary resignations or termination for cause, will
result in immediate payments of AFP of all termination pay to the entitled employee.
Vouchers for severance/retirement pay and accrued bonuses and annual leave will be
presented to the Comptroller, GHQ, AFP, not later than 14 calendar days prior to required
date of payment.

i. All SASP listed in Enclosure 3 will continue to participate in the Philippine Social
Security System.

A year later, or in 1992, the United States Embassy sent another note of similar import to the
Department of Foreign Affairs (No. 227, dated April 8, 1992), extending the funding agreement for the
salaries of SASP and security guards until December 31, 1992.

PIL 62
From the foregoing, it is apparent that when JUSMAG took the services of private respondent, it was
performing a governmental function on behalf of the United States pursuant to the Military Assistance
Agreement dated March 21, 1947. Hence, we agree with petitioner that the suit is, in effect, one against
the United States Government, albeit it was not impleaded in the complaint. Considering that the United
States has not waived or consented to the suit, the complaint against JUSMAG cannot not prosper.

In this jurisdiction, we recognize and adopt the generally accepted principles of international law as part
of the law of the land. 15 Immunity of State from suit is one of these universally recognized principles. In
international law, "immunity" is commonly understood as an exemption of the state and its organs from
the judicial jurisdiction of another state. 16 This is anchored on the principle of the sovereign equality of
states under which one state cannot assert jurisdiction over another in violation of the maxim par in
parem non habet imperium (an equal has no power over an equal).17

Under the traditional rule of State immunity, a state cannot be sued in the courts of another State,
without its consent or waiver. However, in Santos, et al., vs. Santos, et al., 18 we recognized an exception
to the doctrine of immunity from suit by a state, thus:

. . . . Nevertheless, if, where and when the state or its government enters into a contract,
through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant
to constitutional legislative authority, whereby mutual or reciprocal benefits accrue and
rights and obligations arise therefrom, and if the law granting the authority to enter into
such contract does not provide for or name the officer against whom action may be
brought in the event of a breach thereof, the state itself may be sued, even without its
consent, because by entering into a contract, the sovereign state has descended to the
level of the citizen and its consent to be sued is implied from the very act of entering into
such contract. . . . . (emphasis ours)

It was in this light that the state immunity issue in Harry Lyons, Inc., vs. United States of America 19 was
decided.

In the case of Harry Lyons, Inc., the petitioner entered into a contract with the United States Government
for stevedoring services at the U.S. Naval Base, Subic Bay, Philippines. It then sought to collect from
the US government sums of money arising from the contract. One of the issues posed in the case was
whether or not the defunct Court of First Instance had jurisdiction over the defendant United States, a
sovereign state which cannot be sued without its consent. This Court upheld the contention of Harry
Lyons, Inc., that "when a sovereign state enters into a contract with a private person, the state can be
sued upon the theory that it has descended to the level of an individual from which it can be implied that
it has given its consent to be sued under the contract."

The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that
the existence of a contract does not, per se, mean that sovereign states may, at all times, be sued in local
courts. The complexity of relationships between sovereign states, brought about by their increasing
commercial activities, mothered a more restrictive application of the doctrine. 20 Thus, in United States
of America vs. Ruiz, 21 we clarified that our pronouncement in Harry Lyons, supra, with respect to the
waiver of State immunity, was obiter and "has no value as an imperative authority."

PIL 63
As it stands now, the application of the doctrine of immunity from suit has
been restricted to sovereign orgovernmental activities ( jure imperii). 22 The mantle of state
immunity cannot be extended to commercial, private and proprietary acts ( jure gestionis). As aptly
stated by this Court (En banc) in US vs. Ruiz, supra:

The restrictive application of State immunity is proper 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 thus can be deemed to have tacitly given its consent to be used only when
it enters into business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. (emphasis ours)

We held further, that the application of the doctrine of state immunity depends on the legal nature of the
act. Ergo, since a governmental function was involved the transaction dealt with the improvement of
the wharves in the naval installation at Subic Bay it was held that the United States was not deemed
to have waived its immunity from suit.

Then came the case of United States vs. Hon. Rodrigo, et al. 23 In said case, Genove was employed as a
cook in the Main Club located at U.S. Air Force Recreation Center, John Hay Air Station. He was
dismissed from service after he was found to have polluted the stock of soup with urine. Genove
countered with a complaint for damages. Apparently, the restaurant services offered at the John Hay Air
Station partake of the nature of a business enterprise undertaken by the United States government in
its proprietary capacity. The Court then noted that the restaurant is well known and available to the
general public, thus, the services are operated for profit, as a commercial and not a governmental
activity. Speaking through Associate Justice Isagani Cruz, the Court (En Banc) said:

The consequence of this finding is that the petitioners cannot invoke the doctrine of state
immunity to justify the dismissal of the damage suit against them by Genove. Such
defense will not prosper even if it be established that they were acting as agents of the
United States when they investigated and later dismissed Genove. For the matter, not
even the United States government itself can claim such immunity. The reason is that by
entering into the employment contract with Genove in the discharge of its proprietary
functions, it impliedly divested itself of its sovereign immunity from suit. (emphasis ours)

Conversely, if the contract was entered into in the discharge of its governmental functions, the sovereign
state cannot be deemed to have waived its immunity from suit. 24 Such is the case at bench. Prescinding
from this premise, we need not determine whether JUSMAG controls the employment conditions of the
private respondent.

We also hold that there appears to be no basis for public respondent to rule that JUSMAG is stopped
from denying the existence of employer-employee relationship with private respondent. On the contrary,
in its Opposition before the public respondent, JUSMAG consistently contended that the (74) SASP,
including private respondent, working in JUSMAG, are employees of the Armed Forces of the
Philippines. This can be gleaned from: (1) the Military Assistance Agreement, supra, (2) the exchange of
notes between our Government, thru Department of Foreign Affairs, and the United States, thru the US

PIL 64
Embassy to the Philippines, and (3) the Agreement on May 21, 1991, supra between the Armed Forces
of the Philippines and JUSMAG.

We symphatize with the plight of private respondent who had served JUSMAG for more than twenty
(20) years. Considering his length of service with JUSMAG, he deserves a more compassionate
treatment. Unfortunately, JUSMAG is beyond the jurisdiction of this Court. Nonetheless, the Executive
branch, through the Department of Foreign Affairs and the Armed Forces of the Philippines, can take the
cudgel for private respondent and the other SASP working for JUSMAG, pursuant to the aforestated
Military Assistance Agreement.

IN VIEW OF THE FOREGOING, the petition for certiorari is GRANTED. Accordingly, the impugned
Resolution dated January 29, 1993 of the National Labor Relations Commission is REVERSED and
SET ASIDE. No costs.

SO ORDERED.

Narvasa, C.J., Regalado and Mendoza, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 154705 June 26, 2003

THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and

MINISTER COUNSELLOR AZHARI KASIM, Petitioners,
vs.
JAMES VINZON, doing business under the name and style of VINZON TRADE AND
SERVICES,Respondent.

DECISION

AZCUNA, J:

This is a petition for review on certiorari to set aside the Decision of the Court of Appeals dated May 30,
2002 and its Resolution dated August 16, 2002, in CA-G.R. SP No. 66894 entitled "The Republic of
Indonesia, His Excellency Ambassador Soeratmin and Minister Counselor Azhari Kasim v. Hon. Cesar
Santamaria, Presiding Judge, RTC Branch 145, Makati City, and James Vinzon, doing business under
the name and style of Vinzon Trade and Services."

PIL 65
Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a
Maintenance Agreement in August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade
and Services. The Maintenance Agreement stated that respondent shall, for a consideration, maintain
specified equipment at the Embassy Main Building, Embassy Annex Building and the Wisma Duta, the
official residence of petitioner Ambassador Soeratmin. The equipment covered by the Maintenance
Agreement are air conditioning units, generator sets, electrical facilities, water heaters, and water motor
pumps. It is likewise stated therein that the agreement shall be effective for a period of four years and
will renew itself automatically unless cancelled by either party by giving thirty days prior written notice
from the date of expiry.1

Petitioners claim that sometime prior to the date of expiration of the said agreement, or before August
1999, they informed respondent that the renewal of the agreement shall be at the discretion of the
incoming Chief of Administration, Minister Counsellor Azhari Kasim, who was expected to arrive in
February 2000. When Minister Counsellor Kasim assumed the position of Chief of Administration in
March 2000, he allegedly found respondents work and services unsatisfactory and not in compliance
with the standards set in the Maintenance Agreement. Hence, the Indonesian Embassy terminated the
agreement in a letter dated August 31, 2000.2 Petitioners claim, moreover, that they had earlier verbally
informed respondent of their decision to terminate the agreement.

On the other hand, respondent claims that the aforesaid termination was arbitrary and unlawful.
Respondent cites various circumstances which purportedly negated petitioners alleged dissatisfaction
over respondents services: (a) in July 2000, Minister Counsellor Kasim still requested respondent to
assign to the embassy an additional full-time worker to assist one of his other workers; (b) in August
2000, Minister Counsellor Kasim asked respondent to donate a prize, which the latter did, on the
occasion of the Indonesian Independence Day golf tournament; and (c) in a letter dated August 22, 2000,
petitioner Ambassador Soeratmin thanked respondent for sponsoring a prize and expressed his hope that
the cordial relations happily existing between them will continue to prosper and be strengthened in the
coming years.

Hence, on December 15, 2000, respondent filed a complaint 3 against petitioners docketed as Civil Case
No. 18203 in the Regional Trial Court (RTC) of Makati, Branch 145. On February 20, 2001, petitioners
filed a Motion to Dismiss, alleging that the Republic of Indonesia, as a foreign sovereign State, has
sovereign immunity from suit and cannot be sued as a party-defendant in the Philippines. The said
motion further alleged that Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic agents
as defined under the Vienna Convention on Diplomatic Relations and therefore enjoy diplomatic
immunity.4 In turn, respondent filed on March 20, 2001, an Opposition to the said motion alleging that
the Republic of Indonesia has expressly waived its immunity from suit. He based this claim upon the
following provision in the Maintenance Agreement:

"Any legal action arising out of this Maintenance Agreement shall be settled according to the laws of the
Philippines and by the proper court of Makati City, Philippines."

Respondents Opposition likewise alleged that Ambassador Soeratmin and Minister Counsellor Kasim
can be sued and held liable in their private capacities for tortious acts done with malice and bad faith.5

PIL 66
On May 17, 2001, the trial court denied herein petitioners Motion to Dismiss. It likewise denied the
Motion for Reconsideration subsequently filed.

The trial courts denial of the Motion to Dismiss was brought up to the Court of Appeals by herein
petitioners in a petition for certiorari and prohibition. Said petition, docketed as CA-G.R. SP No. 66894,
alleged that the trial court gravely abused its discretion in ruling that the Republic of Indonesia gave its
consent to be sued and voluntarily submitted itself to the laws and jurisdiction of Philippine courts and
that petitioners Ambassador Soeratmin and Minister Counsellor Kasim waived their immunity from suit.

On May 30, 2002, the Court of Appeals rendered its assailed decision denying the petition for lack of
merit.6 On August 16, 2002, it denied herein petitioners motion for reconsideration.7

Hence, this petition.

In the case at bar, petitioners raise the sole issue of whether or not the Court of Appeals erred in
sustaining the trial courts decision that petitioners have waived their immunity from suit by using as its
basis the abovementioned provision in the Maintenance Agreement.

The petition is impressed with merit.

International law is founded largely upon the principles of reciprocity, comity, independence, and
equality of States which were adopted as part of the law of our land under Article II, Section 2 of the
1987 Constitution.8 The rule that a State may not be sued without its consent is a necessary consequence
of the principles of independence and equality of States.9 As enunciated in Sanders v. Veridiano II,10 the
practical justification for the doctrine of sovereign immunity is that there can be no legal right against
the authority that makes the law on which the right depends. In the case of foreign States, the rule is
derived from the principle of the sovereign equality of States, as expressed in the maxim par in parem
non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another.11 A
contrary attitude would "unduly vex the peace of nations."12

The rules of International Law, however, are neither unyielding nor impervious to change. The
increasing need of sovereign States to enter into purely commercial activities remotely connected with
the discharge of their governmental functions brought about a new concept of sovereign immunity. This
concept, the restrictive theory, holds that the immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii, but not with regard to private acts or acts jure gestionis.13

In United States v. Ruiz,14 for instance, we held that the conduct of public bidding for the repair of a
wharf at a United States Naval Station is an act jure imperii. On the other hand, we considered as an
act jure gestionis the hiring of a cook in the recreation center catering to American servicemen and the
general public at the John Hay Air Station in Baguio City, 15 as well as the bidding for the operation of
barber shops in Clark Air Base in Angeles City.16

Apropos the present case, the mere entering into a contract by a foreign State with a private party cannot
be construed as the ultimate test of whether or not it is an act jure imperii or jure gestionis. Such act is
only the start of the inquiry. Is the foreign State engaged in the regular conduct of a business? If the
foreign State is not engaged regularly in a business or commercial activity, and in this case it has not

PIL 67
been shown to be so engaged, the particular act or transaction must then be tested by its nature. If the act
is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii.17

Hence, the existence alone of a paragraph in a contract stating that any legal action arising out of the
agreement shall be settled according to the laws of the Philippines and by a specified court of the
Philippines is not necessarily a waiver of sovereign immunity from suit. The aforesaid provision
contains language not necessarily inconsistent with sovereign immunity. On the other hand, such
provision may also be meant to apply where the sovereign party elects to sue in the local courts, or
otherwise waives its immunity by any subsequent act. The applicability of Philippine laws must be
deemed to include Philippine laws in its totality, including the principle recognizing sovereign immunity.
Hence, the proper court may have no proper action, by way of settling the case, except to dismiss it.

Submission by a foreign state to local jurisdiction must be clear and unequivocal. It must be given
explicitly or by necessary implication. We find no such waiver in this case.

Respondent concedes that the establishment of a diplomatic mission is a sovereign function.1wphi1 On

the other hand, he argues that the actual physical maintenance of the premises of the diplomatic mission,
such as the upkeep of its furnishings and equipment, is no longer a sovereign function of the State.18

We disagree. There is no dispute that the establishment of a diplomatic mission is an act jure imperii. A
sovereign State does not merely establish a diplomatic mission and leave it at that; the establishment of a
diplomatic mission encompasses its maintenance and upkeep. Hence, the State may enter into contracts
with private entities to maintain the premises, furnishings and equipment of the embassy and the living
quarters of its agents and officials. It is therefore clear that petitioner Republic of Indonesia was acting
in pursuit of a sovereign activity when it entered into a contract with respondent for the upkeep or
maintenance of the air conditioning units, generator sets, electrical facilities, water heaters, and water
motor pumps of the Indonesian Embassy and the official residence of the Indonesian ambassador.

The Solicitor General, in his Comment, submits the view that, "the Maintenance Agreement was entered
into by the Republic of Indonesia in the discharge of its governmental functions. In such a case, it cannot
be deemed to have waived its immunity from suit." As to the paragraph in the agreement relied upon by
respondent, the Solicitor General states that it "was not a waiver of their immunity from suit but a mere
stipulation that in the event they do waive their immunity, Philippine laws shall govern the resolution of
any legal action arising out of the agreement and the proper court in Makati City shall be the agreed
venue thereof.19

On the matter of whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may
be sued herein in their private capacities, Article 31 of the Vienna Convention on Diplomatic Relations
provides:

xxx

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

PIL 68
 (a) a real action relating to private immovable property situated in the territory of the receiving
State, unless he holds it on behalf of the sending State for the purposes of the mission;

(b) an action relating to succession in which the diplomatic agent is involved as executor,
administrator, heir or legatee as a private person and not on behalf of the sending State;

(c) an action relating to any professional or commercial activity exercised by the diplomatic
agent in the receiving State outside his official functions.

xxx

The act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim in terminating the
Maintenance Agreement is not covered by the exceptions provided in the abovementioned provision.

The Solicitor General believes that said act may fall under subparagraph (c) thereof, 20 but said provision
clearly applies only to a situation where the diplomatic agent engages in any professional or commercial
activity outside official functions, which is not the case herein.

WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals
in CA G.R. SP No. 66894 are REVERSED and SET ASIDE and the complaint in Civil Case No. 18203
against petitioners is DISMISSED.

No costs.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-
Gutierrez, Carpio, Corona, Carpio-Morales, and Callejo, Sr., JJ., concur.
Austria-Martinez, J., on leave.

PIL 69
REPUBLIC OF INDONESIA vs. JAMES VINZON [G.R. No. 154705. June 26, 2003]
Immunity from suit

FACTS:

Petitioner Vinzon entered into a Maintenance Agreement with respondent. The

maintenance agreement includes the following specific equipments: air conditioning units,
generator sets, electrical facilities, water heaters and water motor pumps. The agreement
shall be effective for 4 years.

The new Minister Counsellor allegedly found respondent's work and services unsatisfactory
and not in compliance with the standards set in the Agreement. The respondent
terminated the agreement with the respondent. The latter claim that it was unlawful and
arbitrary. Respondent filed a Motion to Dismiss alleging that the Republic of Indonesia, as a
foreign state, has sovereign immunity from suit and cannot be sued as party-defendant in
the Philippines.

ISSUE:

W/N the CA erred in sustaining the trial court's decision that petitioners have waived their
immunity from suit by using as its basis the provision in the Maintenance Agreement.

HELD:

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

PIL 70
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 142396 February 11, 2003

KHOSROW MINUCHER, petitioner,

vs.
HON. COURT OF APPEALS and ARTHUR SCALZO, respondents.

DECISION

VITUG, J.:

Sometime in May 1986, an Information for violation of Section 4 of Republic Act No. 6425, otherwise
also known as the "Dangerous Drugs Act of 1972," was filed against petitioner Khosrow Minucher and
one Abbas Torabian with the Regional Trial Court, Branch 151, of Pasig City. The criminal charge
followed a "buy-bust operation" conducted by the Philippine police narcotic agents in the house of
Minucher, an Iranian national, where a quantity of heroin, a prohibited drug, was said to have been
seized. The narcotic agents were accompanied by private respondent Arthur Scalzo who would, in due
time, become one of the principal witnesses for the prosecution. On 08 January 1988, Presiding Judge
Eutropio Migrino rendered a decision acquitting the two accused.

PIL 71
On 03 August 1988, Minucher filed Civil Case No. 88-45691 before the Regional Trial Court (RTC),
Branch 19, of Manila for damages on account of what he claimed to have been trumped-up charges of
drug trafficking made by Arthur Scalzo. The Manila RTC detailed what it had found to be the facts and
circumstances surrounding the case.

"The testimony of the plaintiff disclosed that he is an Iranian national. He came to the Philippines to
study in the University of the Philippines in 1974. In 1976, under the regime of the Shah of Iran, he was
appointed Labor Attach for the Iranian Embassies in Tokyo, Japan and Manila, Philippines. When the
Shah of Iran was deposed by Ayatollah Khomeini, plaintiff became a refugee of the United Nations and
continued to stay in the Philippines. He headed the Iranian National Resistance Movement in the
Philippines.

"He came to know the defendant on May 13, 1986, when the latter was brought to his house and
introduced to him by a certain Jose Iigo, an informer of the Intelligence Unit of the military. Jose Iigo,
on the other hand, was met by plaintiff at the office of Atty. Crisanto Saruca, a lawyer for several
Iranians whom plaintiff assisted as head of the anti-Khomeini movement in the Philippines.

"During his first meeting with the defendant on May 13, 1986, upon the introduction of Jose Iigo, the
defendant expressed his interest in buying caviar. As a matter of fact, he bought two kilos of caviar from
plaintiff and paid P10,000.00 for it. Selling caviar, aside from that of Persian carpets, pistachio nuts and
other Iranian products was his business after the Khomeini government cut his pension of over
$3,000.00 per month. During their introduction in that meeting, the defendant gave the plaintiff his
calling card, which showed that he is working at the US Embassy in the Philippines, as a special agent
of the Drug Enforcement Administration, Department of Justice, of the United States, and gave his
address as US Embassy, Manila. At the back of the card appears a telephone number in defendants own
handwriting, the number of which he can also be contacted.

"It was also during this first meeting that plaintiff expressed his desire to obtain a US Visa for his wife
and the wife of a countryman named Abbas Torabian. The defendant told him that he [could] help
plaintiff for a fee of $2,000.00 per visa. Their conversation, however, was more concentrated on politics,
carpets and caviar. Thereafter, the defendant promised to see plaintiff again.

"On May 19, 1986, the defendant called the plaintiff and invited the latter for dinner at Mario's
Restaurant at Makati. He wanted to buy 200 grams of caviar. Plaintiff brought the merchandize but for
the reason that the defendant was not yet there, he requested the restaurant people to x x x place the
same in the refrigerator. Defendant, however, came and plaintiff gave him the caviar for which he was
paid. Then their conversation was again focused on politics and business.

"On May 26, 1986, defendant visited plaintiff again at the latter's residence for 18 years at Kapitolyo,
Pasig. The defendant wanted to buy a pair of carpets which plaintiff valued at $27,900.00. After some
haggling, they agreed at $24,000.00. For the reason that defendant did not yet have the money, they
agreed that defendant would come back the next day. The following day, at 1:00 p.m., he came back
with his $24,000.00, which he gave to the plaintiff, and the latter, in turn, gave him the pair of
carpets.1awphi1.nt

PIL 72
"At about 3:00 in the afternoon of May 27, 1986, the defendant came back again to plaintiff's house and
directly proceeded to the latter's bedroom, where the latter and his countryman, Abbas Torabian, were
playing chess. Plaintiff opened his safe in the bedroom and obtained $2,000.00 from it, gave it to the
defendant for the latter's fee in obtaining a visa for plaintiff's wife. The defendant told him that he would
be leaving the Philippines very soon and requested him to come out of the house for a while so that he
can introduce him to his cousin waiting in a cab. Without much ado, and without putting on his shirt as
he was only in his pajama pants, he followed the defendant where he saw a parked cab opposite the
street. To his complete surprise, an American jumped out of the cab with a drawn high-powered gun. He
was in the company of about 30 to 40 Filipino soldiers with 6 Americans, all armed. He was handcuffed
and after about 20 minutes in the street, he was brought inside the house by the defendant. He was made
to sit down while in handcuffs while the defendant was inside his bedroom. The defendant came out of
the bedroom and out from defendant's attach case, he took something and placed it on the table in front
of the plaintiff. They also took plaintiff's wife who was at that time at the boutique near his house and
likewise arrested Torabian, who was playing chess with him in the bedroom and both were handcuffed
together. Plaintiff was not told why he was being handcuffed and why the privacy of his house,
especially his bedroom was invaded by defendant. He was not allowed to use the telephone. In fact, his
telephone was unplugged. He asked for any warrant, but the defendant told him to `shut up. He was
nevertheless told that he would be able to call for his lawyer who can defend him.

"The plaintiff took note of the fact that when the defendant invited him to come out to meet his cousin,
his safe was opened where he kept the $24,000.00 the defendant paid for the carpets and another
$8,000.00 which he also placed in the safe together with a bracelet worth $15,000.00 and a pair of
earrings worth $10,000.00. He also discovered missing upon his release his 8 pieces hand-made Persian
carpets, valued at $65,000.00, a painting he bought for P30,000.00 together with his TV and betamax
sets. He claimed that when he was handcuffed, the defendant took his keys from his wallet. There was,
therefore, nothing left in his house.

"That his arrest as a heroin trafficker x x x had been well publicized throughout the world, in various
newspapers, particularly in Australia, America, Central Asia and in the Philippines. He was identified in
the papers as an international drug trafficker. x x x

In fact, the arrest of defendant and Torabian was likewise on television, not only in the Philippines, but
also in America and in Germany. His friends in said places informed him that they saw him on TV with
said news.

"After the arrest made on plaintiff and Torabian, they were brought to Camp Crame handcuffed together,
where they were detained for three days without food and water."1

During the trial, the law firm of Luna, Sison and Manas, filed a special appearance for Scalzo and
moved for extension of time to file an answer pending a supposed advice from the United States
Department of State and Department of Justice on the defenses to be raised. The trial court granted the
motion. On 27 October 1988, Scalzo filed another special appearance to quash the summons on the
ground that he, not being a resident of the Philippines and the action being one in personam, was beyond
the processes of the court. The motion was denied by the court, in its order of 13 December 1988,
holding that the filing by Scalzo of a motion for extension of time to file an answer to the complaint was
a voluntary appearance equivalent to service of summons which could likewise be construed a waiver of

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the requirement of formal notice. Scalzo filed a motion for reconsideration of the court order, contending
that a motion for an extension of time to file an answer was not a voluntary appearance equivalent to
service of summons since it did not seek an affirmative relief. Scalzo argued that in cases involving the
United States government, as well as its agencies and officials, a motion for extension was peculiarly
unavoidable due to the need (1) for both the Department of State and the Department of Justice to agree
on the defenses to be raised and (2) to refer the case to a Philippine lawyer who would be expected to
first review the case. The court a quo denied the motion for reconsideration in its order of 15 October
1989.

Scalzo filed a petition for review with the Court of Appeals, there docketed CA-G.R. No. 17023,
assailing the denial. In a decision, dated 06 October 1989, the appellate court denied the petition and
affirmed the ruling of the trial court. Scalzo then elevated the incident in a petition for review on
certiorari, docketed G.R. No. 91173, to this Court. The petition, however, was denied for its failure to
comply with SC Circular No. 1-88; in any event, the Court added, Scalzo had failed to show that the
appellate court was in error in its questioned judgment.

Meanwhile, at the court a quo, an order, dated 09 February 1990, was issued (a) declaring Scalzo in
default for his failure to file a responsive pleading (answer) and (b) setting the case for the reception of
evidence. On 12 March 1990, Scalzo filed a motion to set aside the order of default and to admit his
answer to the complaint. Granting the motion, the trial court set the case for pre-trial. In his answer,
Scalzo denied the material allegations of the complaint and raised the affirmative defenses (a) of
Minuchers failure to state a cause of action in his complaint and (b) that Scalzo had acted in the
discharge of his official duties as being merely an agent of the Drug Enforcement Administration of the
United States Department of Justice. Scalzo interposed a counterclaim of P100,000.00 to answer for
attorneys' fees and expenses of litigation.

Then, on 14 June 1990, after almost two years since the institution of the civil case, Scalzo filed a
motion to dismiss the complaint on the ground that, being a special agent of the United States Drug
Enforcement Administration, he was entitled to diplomatic immunity. He attached to his motion
Diplomatic Note No. 414 of the United States Embassy, dated 29 May 1990, addressed to the
Department of Foreign Affairs of the Philippines and a Certification, dated 11 June 1990, of Vice Consul
Donna Woodward, certifying that the note is a true and faithful copy of its original. In an order of 25
June 1990, the trial court denied the motion to dismiss.

On 27 July 1990, Scalzo filed a petition for certiorari with injunction with this Court, docketed G.R. No.
94257 and entitled "Arthur W. Scalzo, Jr., vs. Hon. Wenceslao Polo, et al.," asking that the complaint in
Civil Case No. 88-45691 be ordered dismissed. The case was referred to the Court of Appeals, there
docketed CA-G.R. SP No. 22505, per this Courts resolution of 07 August 1990. On 31 October 1990,
the Court of Appeals promulgated its decision sustaining the diplomatic immunity of Scalzo and
ordering the dismissal of the complaint against him. Minucher filed a petition for review with this Court,
docketed G.R. No. 97765 and entitled "Khosrow Minucher vs. the Honorable Court of Appeals, et. al."
(cited in 214 SCRA 242), appealing the judgment of the Court of Appeals. In a decision, dated 24
September 1992, penned by Justice (now Chief Justice) Hilario Davide, Jr., this Court reversed the
decision of the appellate court and remanded the case to the lower court for trial. The remand was
ordered on the theses (a) that the Court of Appeals erred in granting the motion to dismiss of Scalzo for
lack of jurisdiction over his person without even considering the issue of the authenticity of Diplomatic

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Note No. 414 and (b) that the complaint contained sufficient allegations to the effect that Scalzo
committed the imputed acts in his personal capacity and outside the scope of his official duties and,
absent any evidence to the contrary, the issue on Scalzos diplomatic immunity could not be taken up.

The Manila RTC thus continued with its hearings on the case. On 17 November 1995, the trial court
reached a decision; it adjudged:

"WHEREFORE, and in view of all the foregoing considerations, judgment is hereby rendered for the
plaintiff, who successfully established his claim by sufficient evidence, against the defendant in the
manner following:

"`Adjudging defendant liable to plaintiff in actual and compensatory damages of P520,000.00; moral
damages in the sum of P10 million; exemplary damages in the sum of P100,000.00; attorney's fees in the
sum of P200,000.00 plus costs.

`The Clerk of the Regional Trial Court, Manila, is ordered to take note of the lien of the Court on this
judgment to answer for the unpaid docket fees considering that the plaintiff in this case instituted this
action as a pauper litigant."2

While the trial court gave credence to the claim of Scalzo and the evidence presented by him that he was
a diplomatic agent entitled to immunity as such, it ruled that he, nevertheless, should be held
accountable for the acts complained of committed outside his official duties. On appeal, the Court of
Appeals reversed the decision of the trial court and sustained the defense of Scalzo that he was
sufficiently clothed with diplomatic immunity during his term of duty and thereby immune from the
criminal and civil jurisdiction of the "Receiving State" pursuant to the terms of the Vienna Convention.

Hence, this recourse by Minucher. The instant petition for review raises a two-fold issue: (1) whether or
not the doctrine of conclusiveness of judgment, following the decision rendered by this Court in G.R.
No. 97765, should have precluded the Court of Appeals from resolving the appeal to it in an entirely
different manner, and (2) whether or not Arthur Scalzo is indeed entitled to diplomatic immunity.

The doctrine of conclusiveness of judgment, or its kindred rule of res judicata, would require 1) the
finality of the prior judgment, 2) a valid jurisdiction over the subject matter and the parties on the part of
the court that renders it, 3) a judgment on the merits, and 4) an identity of the parties, subject matter and
causes of action.3 Even while one of the issues submitted in G.R. No. 97765 - "whether or not public
respondent Court of Appeals erred in ruling that private respondent Scalzo is a diplomat immune from
civil suit conformably with the Vienna Convention on Diplomatic Relations" - is also a pivotal question
raised in the instant petition, the ruling in G.R. No. 97765, however, has not resolved that point with
finality. Indeed, the Court there has made this observation -

"It may be mentioned in this regard that private respondent himself, in his Pre-trial Brief filed on 13
June 1990, unequivocally states that he would present documentary evidence consisting of DEA records
on his investigation and surveillance of plaintiff and on his position and duties as DEA special agent in
Manila. Having thus reserved his right to present evidence in support of his position, which is the basis
for the alleged diplomatic immunity, the barren self-serving claim in the belated motion to dismiss

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cannot be relied upon for a reasonable, intelligent and fair resolution of the issue of diplomatic
immunity."4

Scalzo contends that the Vienna Convention on Diplomatic Relations, to which the Philippines is a
signatory, grants him absolute immunity from suit, describing his functions as an agent of the United
States Drugs Enforcement Agency as "conducting surveillance operations on suspected drug dealers in
the Philippines believed to be the source of prohibited drugs being shipped to the U.S., (and) having
ascertained the target, (he then) would inform the Philippine narcotic agents (to) make the actual arrest."
Scalzo has submitted to the trial court a number of documents -

1. Exh. '2' - Diplomatic Note No. 414 dated 29 May 1990;

2. Exh. '1' - Certification of Vice Consul Donna K. Woodward dated 11 June 1990;

3. Exh. '5' - Diplomatic Note No. 757 dated 25 October 1991;

4. Exh. '6' - Diplomatic Note No. 791 dated 17 November 1992; and

5. Exh. '7' - Diplomatic Note No. 833 dated 21 October 1988.

6. Exh. '3' - 1st Indorsement of the Hon. Jorge R. Coquia, Legal Adviser, Department of Foreign
Affairs, dated 27 June 1990 forwarding Embassy Note No. 414 to the Clerk of Court of RTC
Manila, Branch 19 (the trial court);

7. Exh. '4' - Diplomatic Note No. 414, appended to the 1st Indorsement (Exh. '3'); and

8. Exh. '8' - Letter dated 18 November 1992 from the Office of the Protocol, Department of
Foreign Affairs, through Asst. Sec. Emmanuel Fernandez, addressed to the Chief Justice of this
Court.5

The documents, according to Scalzo, would show that: (1) the United States Embassy accordingly
advised the Executive Department of the Philippine Government that Scalzo was a member of the
diplomatic staff of the United States diplomatic mission from his arrival in the Philippines on 14
October 1985 until his departure on 10 August 1988; (2) that the United States Government was firm
from the very beginning in asserting the diplomatic immunity of Scalzo with respect to the case pursuant
to the provisions of the Vienna Convention on Diplomatic Relations; and (3) that the United States
Embassy repeatedly urged the Department of Foreign Affairs to take appropriate action to inform the
trial court of Scalzos diplomatic immunity. The other documentary exhibits were presented to indicate
that: (1) the Philippine government itself, through its Executive Department, recognizing and respecting
the diplomatic status of Scalzo, formally advised the "Judicial Department" of his diplomatic status and
his entitlement to all diplomatic privileges and immunities under the Vienna Convention; and (2) the
Department of Foreign Affairs itself authenticated Diplomatic Note No. 414. Scalzo additionally
presented Exhibits "9" to "13" consisting of his reports of investigation on the surveillance and
subsequent arrest of Minucher, the certification of the Drug Enforcement Administration of the United
States Department of Justice that Scalzo was a special agent assigned to the Philippines at all times
relevant to the complaint, and the special power of attorney executed by him in favor of his previous

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counsel6 to show (a) that the United States Embassy, affirmed by its Vice Consul, acknowledged Scalzo
to be a member of the diplomatic staff of the United States diplomatic mission from his arrival in the
Philippines on 14 October 1985 until his departure on 10 August 1988, (b) that, on May 1986, with the
cooperation of the Philippine law enforcement officials and in the exercise of his functions as member of
the mission, he investigated Minucher for alleged trafficking in a prohibited drug, and (c) that the
Philippine Department of Foreign Affairs itself recognized that Scalzo during his tour of duty in the
Philippines (14 October 1985 up to 10 August 1988) was listed as being an Assistant Attach of the
United States diplomatic mission and accredited with diplomatic status by the Government of the
Philippines. In his Exhibit 12, Scalzo described the functions of the overseas office of the United States
Drugs Enforcement Agency, i.e., (1) to provide criminal investigative expertise and assistance to foreign
law enforcement agencies on narcotic and drug control programs upon the request of the host country, 2)
to establish and maintain liaison with the host country and counterpart foreign law enforcement officials,
and 3) to conduct complex criminal investigations involving international criminal conspiracies which
affect the interests of the United States.

The Vienna Convention on Diplomatic Relations was a codification of centuries-old customary law and,
by the time of its ratification on 18 April 1961, its rules of law had long become stable. Among the city
states of ancient Greece, among the peoples of the Mediterranean before the establishment of the Roman
Empire, and among the states of India, the person of the herald in time of war and the person of the
diplomatic envoy in time of peace were universally held sacrosanct.7 By the end of the 16th century,
when the earliest treatises on diplomatic law were published, the inviolability of ambassadors was firmly
established as a rule of customary international law.8Traditionally, the exercise of diplomatic intercourse
among states was undertaken by the head of state himself, as being the preeminent embodiment of the
state he represented, and the foreign secretary, the official usually entrusted with the external affairs of
the state. Where a state would wish to have a more prominent diplomatic presence in the receiving state,
it would then send to the latter a diplomatic mission. Conformably with the Vienna Convention, the
functions of the diplomatic mission involve, by and large, the representation of the interests of the
sending state and promoting friendly relations with the receiving state.9

The Convention lists the classes of heads of diplomatic missions to include (a) ambassadors or nuncios
accredited to the heads of state,10 (b) envoys,11 ministers or internuncios accredited to the heads of
states; and (c) charges d' affairs12 accredited to the ministers of foreign affairs.13 Comprising the "staff
of the (diplomatic) mission" are the diplomatic staff, the administrative staff and the technical and
service staff. Only the heads of missions, as well as members of the diplomatic staff, excluding the
members of the administrative, technical and service staff of the mission, are accorded diplomatic rank.
Even while the Vienna Convention on Diplomatic Relations provides for immunity to the members of
diplomatic missions, it does so, nevertheless, with an understanding that the same be restrictively
applied. Only "diplomatic agents," under the terms of the Convention, are vested with blanket
diplomatic immunity from civil and criminal suits. The Convention defines "diplomatic agents" as the
heads of missions or members of the diplomatic staff, thus impliedly withholding the same privileges
from all others. It might bear stressing that even consuls, who represent their respective states in
concerns of commerce and navigation and perform certain administrative and notarial duties, such as the
issuance of passports and visas, authentication of documents, and administration of oaths, do not
ordinarily enjoy the traditional diplomatic immunities and privileges accorded diplomats, mainly for the
reason that they are not charged with the duty of representing their states in political matters. Indeed, the

PIL 77
main yardstick in ascertaining whether a person is a diplomat entitled to immunity is the determination
of whether or not he performs duties of diplomatic nature.

Scalzo asserted, particularly in his Exhibits "9" to "13," that he was an Assistant Attach of the United
States diplomatic mission and was accredited as such by the Philippine Government. An attach belongs
to a category of officers in the diplomatic establishment who may be in charge of its cultural, press,
administrative or financial affairs. There could also be a class of attaches belonging to certain ministries
or departments of the government, other than the foreign ministry or department, who are detailed by
their respective ministries or departments with the embassies such as the military, naval, air, commercial,
agricultural, labor, science, and customs attaches, or the like. Attaches assist a chief of mission in his
duties and are administratively under him, but their main function is to observe, analyze and interpret
trends and developments in their respective fields in the host country and submit reports to their own
ministries or departments in the home government.14 These officials are not generally regarded as
members of the diplomatic mission, nor are they normally designated as having diplomatic rank.

In an attempt to prove his diplomatic status, Scalzo presented Diplomatic Notes Nos. 414, 757 and 791,
all issued post litem motam, respectively, on 29 May 1990, 25 October 1991 and 17 November 1992.
The presentation did nothing much to alleviate the Court's initial reservations in G.R. No. 97765, viz:

"While the trial court denied the motion to dismiss, the public respondent gravely abused its discretion
in dismissing Civil Case No. 88-45691 on the basis of an erroneous assumption that simply because of
the diplomatic note, the private respondent is clothed with diplomatic immunity, thereby divesting the
trial court of jurisdiction over his person.

"x x x x x x x x x

"And now, to the core issue - the alleged diplomatic immunity of the private respondent. Setting aside
for the moment the issue of authenticity raised by the petitioner and the doubts that surround such claim,
in view of the fact that it took private respondent one (1) year, eight (8) months and seventeen (17) days
from the time his counsel filed on 12 September 1988 a Special Appearance and Motion asking for a
first extension of time to file the Answer because the Departments of State and Justice of the United
States of America were studying the case for the purpose of determining his defenses, before he could
secure the Diplomatic Note from the US Embassy in Manila, and even granting for the sake of argument
that such note is authentic, the complaint for damages filed by petitioner cannot be peremptorily
dismissed.

"x x x x x x x x x

"There is of course the claim of private respondent that the acts imputed to him were done in his official
capacity. Nothing supports this self-serving claim other than the so-called Diplomatic Note. x x x. The
public respondent then should have sustained the trial court's denial of the motion to dismiss. Verily, it
should have been the most proper and appropriate recourse. It should not have been overwhelmed by the
self-serving Diplomatic Note whose belated issuance is even suspect and whose authenticity has not yet
been proved. The undue haste with which respondent Court yielded to the private respondent's claim is
arbitrary."

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A significant document would appear to be Exhibit No. 08, dated 08 November 1992, issued by the
Office of Protocol of the Department of Foreign Affairs and signed by Emmanuel C. Fernandez,
Assistant Secretary, certifying that "the records of the Department (would) show that Mr. Arthur W.
Scalzo, Jr., during his term of office in the Philippines (from 14 October 1985 up to 10 August 1988)
was listed as an Assistant Attach of the United States diplomatic mission and was, therefore, accredited
diplomatic status by the Government of the Philippines." No certified true copy of such "records," the
supposed bases for the belated issuance, was presented in evidence.

Concededly, vesting a person with diplomatic immunity is a prerogative of the executive branch of the
government. In World Health Organization vs. Aquino,15 the Court has recognized that, in such matters,
the hands of the courts are virtually tied. Amidst apprehensions of indiscriminate and incautious grant of
immunity, designed to gain exemption from the jurisdiction of courts, it should behoove the Philippine
government, specifically its Department of Foreign Affairs, to be most circumspect, that should
particularly be no less than compelling, in its post litem motam issuances. It might be recalled that the
privilege is not an immunity from the observance of the law of the territorial sovereign or from ensuing
legal liability; it is, rather, an immunity from the exercise of territorial jurisdiction.16 The government of
the United States itself, which Scalzo claims to be acting for, has formulated its standards for
recognition of a diplomatic agent. The State Department policy is to only concede diplomatic status to a
person who possesses an acknowledged diplomatic title and "performs duties of diplomatic
nature."17 Supplementary criteria for accreditation are the possession of a valid diplomatic passport or,
from States which do not issue such passports, a diplomatic note formally representing the intention to
assign the person to diplomatic duties, the holding of a non-immigrant visa, being over twenty-one years
of age, and performing diplomatic functions on an essentially full-time basis.18 Diplomatic missions are
requested to provide the most accurate and descriptive job title to that which currently applies to the
duties performed. The Office of the Protocol would then assign each individual to the appropriate
functional category.19

But while the diplomatic immunity of Scalzo might thus remain contentious, it was sufficiently
established that, indeed, he worked for the United States Drug Enforcement Agency and was tasked to
conduct surveillance of suspected drug activities within the country on the dates pertinent to this case. If
it should be ascertained that Arthur Scalzo was acting well within his assigned functions when he
committed the acts alleged in the complaint, the present controversy could then be resolved under the
related doctrine of State Immunity from Suit.

The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of
customary international law then closely identified with the personal immunity of a foreign sovereign
from suit20 and, with the emergence of democratic states, made to attach not just to the person of the
head of state, or his representative, but also distinctly to the state itself in its sovereign capacity.21 If the
acts giving rise to a suit are those of a foreign government done by its foreign agent, although not
necessarily a diplomatic personage, but acting in his official capacity, the complaint could be barred by
the immunity of the foreign sovereign from suit without its consent. Suing a representative of a state is
believed to be, in effect, suing the state itself. The proscription is not accorded for the benefit of an
individual but for the State, in whose service he is, under the maxim - par in parem, non habet imperium
- that all states are sovereign equals and cannot assert jurisdiction over one another.22 The implication,
in broad terms, is that if the judgment against an official would require the state itself to perform an
affirmative act to satisfy the award, such as the appropriation of the amount needed to pay the damages

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decreed against him, the suit must be regarded as being against the state itself, although it has not been
formally impleaded.23

In United States of America vs. Guinto,24 involving officers of the United States Air Force and special
officers of the Air Force Office of Special Investigators charged with the duty of preventing the
distribution, possession and use of prohibited drugs, this Court has ruled -

"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. x x x. It cannot for a moment be imagined that they were acting
in their private or unofficial capacity when they apprehended and later testified against the complainant.
It follows that for discharging their duties as agents of the United States, they cannot be directly
impleaded for acts imputable to their principal, which has not given its consent to be sued. x x x As they
have acted on behalf of the government, and within the scope of their authority, it is that government,
and not the petitioners personally, [who were] responsible for their acts."25

This immunity principle, however, has its limitations. Thus, Shauf vs. Court of Appeals26 elaborates:

"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 the plaintiff. As was clearly set forth by Justice Zaldivar in
Director of the Bureau of Telecommunications, et al., vs. Aligaen, et al. (33 SCRA 368): `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.

"x x x x x x x x x

"(T)he doctrine of immunity from suit will not apply and may not be invoked where the public official is
being sued in his private and personal capacity as an ordinary citizen. The cloak of protection afforded
the officers and agents of the government is removed the moment they are sued in their individual
capacity. This situation usually arises where the public official acts without authority or in excess of the
powers vested in him. It is a well-settled principle of law that a public official may be liable in his
personal private capacity for whatever damage he may have caused by his act done with malice and in
bad faith or beyond the scope of his authority and jurisdiction."27

A foreign agent, operating within a territory, can be cloaked with immunity from suit but only as long as
it can be established that he is acting within the directives of the sending state. The consent of the host
state is an indispensable requirement of basic courtesy between the two sovereigns. Guinto and Shauf
both involve officers and personnel of the United States, stationed within Philippine territory, under the

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RP-US Military Bases Agreement. While evidence is wanting to show any similar agreement between
the governments of the Philippines and of the United States (for the latter to send its agents and to
conduct surveillance and related activities of suspected drug dealers in the Philippines), the consent
or imprimatur of the Philippine government to the activities of the United States Drug Enforcement
Agency, however, can be gleaned from the facts heretofore elsewhere mentioned. The official exchanges
of communication between agencies of the government of the two countries, certifications from officials
of both the Philippine Department of Foreign Affairs and the United States Embassy, as well as the
participation of members of the Philippine Narcotics Command in the "buy-bust operation" conducted at
the residence of Minucher at the behest of Scalzo, may be inadequate to support the "diplomatic status"
of the latter but they give enough indication that the Philippine government has given its imprimatur, if
not consent, to the activities within Philippine territory of agent Scalzo of the United States Drug
Enforcement Agency. The job description of Scalzo has tasked him to conduct surveillance on suspected
drug suppliers and, after having ascertained the target, to inform local law enforcers who would then be
expected to make the arrest. In conducting surveillance activities on Minucher, later acting as the
poseur-buyer during the buy-bust operation, and then becoming a principal witness in the criminal case
against Minucher, Scalzo hardly can be said to have acted beyond the scope of his official function or
duties.

All told, this Court is constrained to rule that respondent Arthur Scalzo, an agent of the United States
Drug Enforcement Agency allowed by the Philippine government to conduct activities in the country to
help contain the problem on the drug traffic, is entitled to the defense of state immunity from suit.

WHEREFORE, on the foregoing premises, the petition is DENIED. No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur

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