STATE IMMUNITY FROM SUIT

G.R. No. L-30671 November 28, 1973

REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. GUILLERMO P. VILLASOR, as Judge of the Court of
First Instance of Cebu, Branch I, THE PROVINCIAL
SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and
THE SHERIFF OF THE CITY OF MANILA, THE CLERK OF
COURT, Court of First Instance of Cebu, P. J. KIENER CO.,
LTD., GAVINO UNCHUAN, AND INTERNATIONAL
CONSTRUCTION CORPORATION, respondents.

Office of the Solicitor General Felix V. Makasiar and Solicitor

Bernardo P. Pardo for petitioner.
Andres T. Velarde and Marcelo B. Fernan for respondents.

FERNANDO, J.:
The Republic of the Philippines in this certiorari and prohibition
proceeding challenges the validity of an order issued by
respondent Judge Guillermo P. Villasor, then of the Court of
First Instance of Cebu, Branch I,1 declaring a decision final and
executory and of an alias writ of execution directed against the
funds of the Armed Forces of the Philippines subsequently
issued in pursuance thereof, the alleged ground being excess of
jurisdiction, or at the very least, grave abuse of discretion. As
thus simply and tersely put, with the facts being undisputed and
the principle of law that calls for application indisputable, the
outcome is predictable. The Republic of the Philippines is
entitled to the writs prayed for. Respondent Judge ought not to
have acted thus. The order thus impugned and the alias writ of
execution must be nullified.
In the petition filed by the Republic of the Philippines on July 7,
1969, a summary of facts was set forth thus: "7. On July 3,
1961, a decision was rendered in Special Proceedings No.
2156-R in favor of respondents P. J. Kiener Co., Ltd., Gavino
Unchuan, and International Construction Corporation, and
against the petitioner herein, confirming the arbitration award in
the amount of P1,712,396.40, subject of Special Proceedings.
8. On June 24, 1969, respondent Honorable Guillermo P.
Villasor, issued an Order declaring the aforestated decision of
July 3, 1961 final and executory, directing the Sheriffs of Rizal
Province, Quezon City [as well as] Manila to execute the said
decision. 9. Pursuant to the said Order dated June 24, 1969,
the corresponding Alias Writ of Execution [was issued] dated
June 26, 1969, .... 10. On the strength of the afore-mentioned
Alias Writ of Execution dated June 26, 1969, the Provincial
Sheriff of Rizal (respondent herein) served notices of
garnishment dated June 28, 1969 with several Banks, specially
on the "monies due the Armed Forces of the Philippines in the
form of deposits sufficient to cover the amount mentioned in the
said Writ of Execution"; the Philippine Veterans Bank received
the same notice of garnishment on June 30, 1969 .... 11. The
funds of the Armed Forces of the Philippines on deposit with the
Banks, particularly, with the Philippine Veterans Bank and the
Philippine National Bank [or] their branches are public funds
duly appropriated and allocated for the payment of pensions of
retirees, pay and allowances of military and civilian personnel
and for maintenance and operations of the Armed Forces of the
Philippines, as per Certification dated July 3, 1969 by the AFP
Controller,..."2. The paragraph immediately succeeding in such
petition then alleged: "12. Respondent Judge, Honorable
Guillermo P. Villasor, acted in excess of jurisdiction [or] with
grave abuse of discretion amounting to lack of jurisdiction in
granting the issuance of an alias writ of execution against the
properties of the Armed Forces of the Philippines, hence, the
Alias Writ of Execution and notices of garnishment issued
pursuant thereto are null and void."3 In the answer filed by
respondents, through counsel Andres T. Velarde and Marcelo
B. Fernan, the facts set forth were admitted with the only
qualification being that the total award was in the amount of
P2,372,331.40.4

The Republic of the Philippines, as mentioned at the outset, did

right in filing this certiorari and prohibition proceeding. What was
done by respondent Judge is not in conformity with the dictates
of the Constitution. .

It is a fundamental postulate of constitutionalism flowing from

the juristic concept of sovereignty that the state as well as its
government is immune from suit unless it gives its consent. It is
readily understandable why it must be so. In the classic
formulation of Holmes: "A sovereign is exempt from suit, not
because of any formal conception or obsolete theory, but on the
logical and practical ground that there can be no legal right as
against the authority that makes the law on which the right
depends."5 Sociological jurisprudence supplies an answer not
dissimilar. So it was indicated in a recent decision, Providence
Washington Insurance Co. v. Republic of the Philippines,6 with
its affirmation that "a continued adherence to the doctrine of
non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of
governmental efficiency and the obstacle to the performance of
its multifarious functions are far greater if such a fundamental
principle were abandoned and the availability of judicial remedy
were not thus restricted. With the well known propensity on the
part of our people to go to court, at the least provocation, the
loss of time and energy required to defend against law suits, in
the absence of such a basic principle that constitutes such an
effective obstacle, could very well be imagined."7

This fundamental postulate underlying the 1935 Constitution is

now made explicit in the revised charter. It is therein expressly
provided: "The State may not be sued without its consent."8 A
corollary, both dictated by logic and sound sense from a basic
concept is that public funds cannot be the object of a
garnishment proceeding even if the consent to be sued had
been previously granted and the state liability adjudged. Thus in
the recent case of Commissioner of Public Highways v. San
Diego,9 such a well-settled doctrine was restated in the opinion
of Justice Teehankee: "The universal rule that where the State
gives its consent to be sued by private parties either by general
or special law, it may limit claimant's action 'only up to the
completion of proceedings anterior to the stage of execution'
and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be
seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The functions
and public services rendered by the State cannot be allowed to
be paralyzed or disrupted by the diversion of public funds from
their legitimate and specific objects, as appropriated by
law." 10 Such a principle applies even to an attempted
garnishment of a salary that had accrued in favor of an
employee. Director of Commerce and Industry v.
Concepcion, 11 speaks to that effect. Justice Malcolm as
ponente left no doubt on that score. Thus: "A rule which has
never been seriously questioned, is that money in the hands of
public officers, although it may be due government employees,
is not liable to the creditors of these employees in the process
of garnishment. One reason is, that the State, by virtue of its
sovereignty, may not be sued in its own courts except by
express authorization by the Legislature, and to subject its
officers to garnishment would be to permit indirectly what is
prohibited directly. Another reason is that moneys sought to be
garnished, as long as they remain in the hands of the disbursing
officer of the Government, belong to the latter, although the
defendant in garnishment may be entitled to a specific portion
thereof. And still another reason which covers both of the
foregoing is that every consideration of public policy forbids it." 12

In the light of the above, it is made abundantly clear why the

Republic of the Philippines could rightfully allege a legitimate
grievance.

WHEREFORE, the writs of certiorari and prohibition are

granted, nullifying and setting aside both the order of June 24,
1969 declaring executory the decision of July 3, 1961 as well as
the alias writ of execution issued thereunder. The preliminary
injunction issued by this Court on July 12, 1969 is hereby made
permanent.
G.R. Nos. 109095-109107 February 23, 1995
ELDEPIO LASCO, RODOLFO ELISAN, URBANO BERADOR,
FLORENTINO ESTOBIO, MARCELINO MATURAN, FRAEN
BALIBAG, CARMELITO GAJOL, DEMOSTHENES MANTO,
SATURNINO BACOL, SATURNINO LASCO, RAMON
LOYOLA, JOSENIANO B. ESPINA, all represented by
MARIANO R. ESPINA, petitioner,
vs.
UNITED NATIONS REVOLVING FUND FOR NATURAL
RESOURCES EXPLORATION (UNRFNRE) represented by
its operations manager, DR. KYRIACOS LOUCA, OSCAR N.
ABELLA, LEON G. GONZAGA, JR., MUSIB M. BUAT,
Commissioners of National Labor Relations Commission
(NLRC), Fifth Division, Cagayan de Oro City and IRVING
PETILLA, Labor Arbiter of Butuan City, respondents.

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised

Rules of Court to set aside the Resolution dated January 25,
1993 of the National Labor Relations Commission (NLRC), Fifth
Division, Cagayan de Oro City.
We dismiss the petition.
I
Petitioners were dismissed from their employment with private
respondent, the United Nations Revolving Fund for Natural
Resources Exploration (UNRFNRE), which is a special fund
and subsidiary organ of the United Nations. The UNRFNRE is
involved in a joint project of the Philippine Government and the
United Nations for exploration work in Dinagat Island.

Petitioners are the complainants in NLRC Cases Nos. SRAB

10-03-00067-91 to 10-03-00078-91 and SRAB 10-07-00159-91
for illegal dismissal and damages.

In its Motion to Dismiss, private respondent alleged that

respondent Labor Arbiter had no jurisdiction over its personality
since it enjoyed diplomatic immunity pursuant to the 1946
Convention on the Privileges and Immunities of the United
Nations. In support thereof, private respondent attached a letter
from the Department of Foreign Affairs dated August 26, 1991,
which acknowledged its immunity from suit. The letter confirmed
that private respondent, being a special fund administered by
the United Nations, was covered by the 1946 Convention on the
Privileges and Immunities of the United Nations of which the
Philippine Government was an original signatory (Rollo, p. 21).
On November 25, 1991, respondent Labor Arbiter issued an
order dismissing the complaints on the ground that private
respondent was protected by diplomatic immunity. The
dismissal was based on the letter of the Foreign Office dated
September 10, 1991.

Petitioners' motion for reconsideration was denied. Thus, an

appeal was filed with the NLRC, which affirmed the dismissal of
the complaints in its Resolution dated January 25, 1993.

Petitioners filed the instant petition for certiorari without first

seeking a reconsideration of the NLRC resolution.
II
Article 223 of the Labor Code of the Philippines, as amended,
provides that decisions of the NLRC are final and executory.
Thus, they may only be questioned through certiorari as a
special civil action under Rule 65 of the Revised Rules of Court.

Ordinarily, certiorari as a special civil action will not lie unless a

motion for reconsideration is first filed before the respondent
tribunal, to allow it an opportunity to correct its assigned errors
(Liberty Insurance Corporation v. Court of Appeals, 222 SCRA
37 [1993]).
In the case at bench, petitioners' failure to file a motion for
reconsideration is fatal to the instant petition. Moreover, the
petition lacks any explanation for such omission, which may
merit its being considered as falling under the recognized
exceptions to the necessity of filing such motion.

Notwithstanding, we deem it wise to give due course to the

petition because of the implications of the issue in our
international relations.

Petitioners argued that the acts of mining exploration and

exploitation are outside the official functions of an international
agency protected by diplomatic immunity. Even assuming that
private respondent was entitled to diplomatic immunity,
petitioners insisted that private respondent waived it when it
engaged in exploration work and entered into a contract of
employment with petitioners.

Petitioners, likewise, invoked the constitutional mandate that the

State shall afford full protection to labor and promote full
employment and equality of employment opportunities for all
(1987 Constitution, Art. XIII, Sec. 3).
The Office of the Solicitor General is of the view that private
respondent is covered by the mantle of diplomatic immunity.
Private respondent is a specialized agency of the United
Nations. Under Article 105 of the Charter of the United Nations:

1. The Organization shall enjoy in the territory of its

Members such privileges and immunities as are
necessary for the fulfillment of its purposes.

2. Representatives of the Members of the United

Nations and officials of the Organization shall similarly
enjoy such privileges and immunities as are
necessary for the independent exercise of their
functions in connection with the organization.
Corollary to the cited article is the Convention on the Privileges
and Immunities of the Specialized Agencies of the United
Nations, to which the Philippines was a signatory (Vol. 1,
Philippine Treaty Series, p. 621). We quote Sections 4 and 5 of
Article III thereof:

Sec. 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 (Emphasis supplied).

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).
As a matter of state policy as expressed in the Constitution, the
Philippine Government adopts the generally accepted principles
of international law (1987 Constitution, Art. II, Sec. 2). Being a
member of the United Nations and a party to the Convention on
the Privileges and Immunities of the Specialized Agencies of
the United Nations, the Philippine Government adheres to the
doctrine of immunity granted to the United Nations and its
specialized agencies. Both treaties have the force and effect of
law.

In World Health Organization v. Aquino, 48 SCRA 242, (1972),

we had occasion to rule that:
It is a recognized principle of international law and
under our system of separation of powers
that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a
determination by the executive branch of the
government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive
branch of the government as in the case at bar, it is
then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal
law officer of the government, the Solicitor General or
other officer acting under his direction. Hence, in
adherence to the settled principle that courts may not
so exercise their jurisdiction by seizure and detention
of property, 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 (Emphasis
supplied).

We recognize the growth of international organizations

dedicated to specific universal endeavors, such as health,
agriculture, science and technology and environment. It is not
surprising that their existence has evolved into the concept of
international immunities. The reason behind the grant of
privileges and immunities to international organizations, its
officials and functionaries is to secure them legal and practical
independence in fulfilling their duties (Jenks, International
Immunities 17 [1961]).

Immunity is necessary to assure unimpeded performance of

their functions. The purpose 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"
(International Catholic Migration Commission v. Calleja, 190
SCRA 130 [1990]).

In the International Catholic Migration Commission case, we

held that there is no conflict between the constitutional duty of
the State to protect the rights of workers and to promote their
welfare, and the grant of immunity to international
organizations. Clauses on jurisdictional immunity are now
standard in the charters of the international organizations to
guarantee the smooth discharge of their functions.

The diplomatic immunity of private respondent was sufficiently

established by the letter of the Department of Foreign Affairs,
recognizing and confirming the immunity of UNRFNRE in
accordance with the 1946 Convention on Privileges and
Immunities of the United Nations where the Philippine
Government was a party. The issue whether an international
organization is entitled to diplomatic immunity is a "political
question" and such determination by the executive branch is
conclusive on the courts and quasi-judicial agencies (The Holy
See v. Hon. Eriberto U. Rosario, Jr., G.R. No. 101949, Dec. 1,
1994; International Catholic Migration Commission v.
Calleja, supra).

Our courts can only assume jurisdiction over private respondent

if it expressly waived its immunity, which is not so in the case at
bench (Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations, Art. III, Sec. 4).

Private respondent is not engaged in a commercial venture in

the Philippines. Its presence here is by virtue of a joint project
entered into by the Philippine Government and the United
Nations for mineral exploration in Dinagat Island. Its mission is
not to exploit our natural resources and gain pecuniarily thereby
but to help improve the quality of life of the people, including
that of petitioners.

This is not to say that petitioner have no recourse. Section 31 of

the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations states that "each
specialized agency shall make a 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."
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
G.R. No. 86773 February 14, 1992
SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-
AQUACULTURE DEPARTMENT (SEAFDEC-AQD), DR.
FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD,
ADMINISTRATIVE DIV.), BEN DELOS REYES (FINANCE
OFFICER), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
JUVENAL LAZAGA, respondents.

Ramon Encarnacion for petitioners.

Caesar T. Corpus for private respondent.

NOCON, J.:

This is a petition for certiorari to annul and set aside the July 26,
1988 decision of the National Labor Relations Commission
sustaining the labor arbiter, in holding herein petitioners
Southeast Asian Fisheries Development Center-Aquaculture
Department (SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas
and Ben de los Reyes liable to pay private respondent Juvenal
Lazaga the amount of P126,458.89 plus interest thereon
computed from May 16, 1986 until full payment thereof is made,
as separation pay and other post-employment benefits, and the
resolution denying the petitioners' motion for reconsideration of
said decision dated January 9, 1989.
The antecedent facts of the case are as follows:
SEAFDEC-AQD is a department of an international
organization, the Southeast Asian Fisheries Development
Center, organized through an agreement entered into in
Bangkok, Thailand on December 28, 1967 by the governments
of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the
Philippines with Japan as the sponsoring country (Article 1,
Agreement Establishing the SEAFDEC).
On April 20, 1975, private respondent Juvenal Lazaga was
employed as a Research Associate an a probationary basis by
the SEAFDEC-AQD and was appointed Senior External Affairs
Officer on January 5, 1983 with a monthly basic salary of
P8,000.00 and a monthly allowance of P4,000.00. Thereafter,
he was appointed to the position of Professional III and
designated as Head of External Affairs Office with the same pay
and benefits.
On May 8, 1986, petitioner Lacanilao in his capacity as Chief of
SEAFDEC-AQD sent a notice of termination to private
respondent informing him that due to the financial constraints
being experienced by the department, his services shall be
terminated at the close of office hours on May 15, 1986 and that
he is entitled to separation benefits equivalent to one (1) month
of his basic salary for every year of service plus other benefits
(Rollo, p. 153).

Upon petitioner SEAFDEC-AQD's failure to pay private

respondent his separation pay, the latter filed on March 18,
1987 a complaint against petitioners for non-payment of
separation benefits plus moral damages and attorney's fees
with the Arbitration Branch of the NLRC (Annex "C" of Petition
for Certiorari).
Petitioners in their answer with counterclaim alleged that the
NLRC has no jurisdiction over the case inasmuch as the
SEAFDEC-AQD is an international organization and that private
respondent must first secure clearances from the proper
departments for property or money accountability before any
claim for separation pay will be paid, and which clearances had
not yet been obtained by the private respondent.

A formal hearing was conducted whereby private respondent

alleged that the non-issuance of the clearances by the
petitioners was politically motivated and in bad faith. On the
other hand, petitioners alleged that private respondent has
property accountability and an outstanding obligation to
SEAFDEC-AQD in the amount of P27,532.11. Furthermore,
private respondent is not entitled to accrued sick leave benefits
amounting to P44,000.00 due to his failure to avail of the same
during his employment with the SEAFDEC-AQD (Annex
"D", Id.).
On January 12, 1988, the labor arbiter rendered a decision, the
dispositive portion of which reads:

WHEREFORE, premises considered, judgment is

hereby rendered ordering respondents:
1. To pay complainant P126,458.89, plus legal
interest thereon computed from May 16, 1986 until full
payment thereof is made, as separation pay and other
post-employment benefits;

2. To pay complainant actual damages in the amount

of P50,000, plus 10% attorney's fees.
All other claims are hereby dismissed.
SO ORDERED. (Rollo, p. 51, Annex "E")
On July 26, 1988, said decision was affirmed by the Fifth
Division of the NLRC except as to the award of P50,000.00 as
actual damages and attorney's fees for being baseless. (Annex
"A", p. 28, id.)

On September 3, 1988, petitioners filed a Motion for

Reconsideration (Annex "G", id.) which was denied on January
9, 1989. Thereafter, petitioners instituted this petition
for certiorari alleging that the NLRC has no jurisdiction to hear
and decide respondent Lazaga's complaint since SEAFDEC-
AQD is immune from suit owing to its international character
and the complaint is in effect a suit against the State which
cannot be maintained without its consent.
The petition is impressed with merit.
Petitioner Southeast Asian Fisheries Development Center-
Aquaculture Department (SEAFDEC-AQD) is an international
agency beyond the jurisdiction of public respondent NLRC.
It was established by the Governments of Burma, Kingdom of
Cambodia, Republic of Indonesia, Japan, Kingdom of Laos,
Malaysia. Republic of the Philippines, Republic of Singapore,
Kingdom of Thailand and Republic of Vietnam (Annex "H",
Petition).
The Republic of the Philippines became a signatory to the
Agreement establishing SEAFDEC on January 16,1968. Its
purpose is as follows:

The purpose of the Center is to contribute to the

promotion of the fisheries development in Southeast
Asia by mutual co-operation among the member
governments of the Center, hereinafter called the
"Members", and through collaboration with
 international organizations and governments external
to the Center. (Agreement Establishing the
SEAFDEC, Art. 1; Annex "H" Petition) (p.310, Rollo)

SEAFDEC-AQD was organized during the Sixth Council

Meeting of SEAFDEC on July 3-7, 1973 in Kuala Lumpur,
Malaysia as one of the principal departments of SEAFDEC
(Annex "I", id.) to be established in Iloilo for the promotion of
research in aquaculture. Paragraph 1, Article 6 of the
Agreement establishing SEAFDEC mandates:
1. The Council shall be the supreme organ of the
Center and all powers of the Center shall be vested in
the Council.
Being an intergovernmental organization, SEAFDEC including
its Departments (AQD), enjoys functional independence and
freedom from control of the state in whose territory its office is
located.
As Senator Jovito R. Salonga and Former Chief Justice Pedro
L. Yap stated in their book, Public International Law (p. 83,
1956 ed.):
Permanent international commissions and
administrative bodies have been created by the
agreement of a considerable number of States for a
variety of international purposes, economic or social
and mainly non-political. Among the notable instances
are the International Labor Organization, the
International Institute of Agriculture, the International
Danube Commission. In so far as they are
autonomous and beyond the control of any one State,
they have a distinct juridical personality independent
of the municipal law of the State where they are
 situated. As such, according to one leading authority
"they must be deemed to possess a species of
international personality of their own." (Salonga and
Yap, Public International Law, 83 [1956 ed.])

Pursuant to its being a signatory to the Agreement, the Republic

of the Philippines agreed to be represented by one Director in
the governing SEAFDEC Council (Agreement Establishing
SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.) and that its national
laws and regulations shall apply only insofar as its contribution
to SEAFDEC of "an agreed amount of money, movable and
immovable property and services necessary for the
establishment and operation of the Center" are concerned (Art.
11, ibid.). It expressly waived the application of the Philippine
laws on the disbursement of funds of petitioner SEAFDEC-AQD
(Section 2, P.D. No. 292).
The then Minister of Justice likewise opined that Philippine
Courts have no jurisdiction over SEAFDEC-AQD in Opinion No.
139, Series of 1984 —
4. One of the basic immunities of an international
organization is immunity from local
jurisdiction, i.e.,that it is immune from the legal writs
and processes issued by the tribunals of the country
where it is found. (See Jenks, Id., pp. 37-44) The
obvious reason for this is that the subjection of such
an organization to the authority of the local courts
would afford a convenient medium thru which the host
government may interfere in there operations or even
influence or control its policies and decisions of the
organization; besides, such subjection to local
jurisdiction would impair the capacity of such body to
discharge its responsibilities impartially on behalf of
 its member-states. In the case at bar, for instance, the
entertainment by the National Labor Relations
Commission of Mr. Madamba's reinstatement cases
would amount to interference by the Philippine
Government in the management decisions of the
SEARCA governing board; even worse, it could
compromise the desired impartiality of the
organization since it will have to suit its actuations to
the requirements of Philippine law, which may not
necessarily coincide with the interests of the other
member-states. It is precisely to forestall these
possibilities that in cases where the extent of the
immunity is specified in the enabling instruments of
international organizations, jurisdictional immunity
from the host country is invariably among the first
accorded. (SeeJenks, Id.; See also Bowett, The Law
of International Institutions, pp. 284-1285).

Respondent Lazaga's invocation of estoppel with respect to the

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

A rule, that had been settled by unquestioned

acceptance and upheld in decisions so numerous to
cite is that the jurisdiction of a court over the subject
matter of the action is a matter of law and may not be
conferred by consent or agreement of the parties. The
lack of jurisdiction of a court may be raised at any
stage of the proceedings, even on appeal. This
 doctrine has been qualified by recent
pronouncements which it stemmed principally from
the ruling in the cited case of Sibonghanoy. It is to be
regretted, however, that the holding in said case had
been applied to situations which were obviously not
contemplated therein. The exceptional circumstances
involved in Sibonghanoy which justified the departure
from the accepted concept of non-waivability of
objection to jurisdiction has been ignored and, instead
a blanket doctrine had been repeatedly upheld that
rendered the supposed ruling in Sibonghanoy not as
the exception, but rather the general rule, virtually
overthrowing altogether the time-honored principle
that the issue of jurisdiction is not lost by waiver or by
estoppel. (Calimlim vs. Ramirez, G.R. No. L-34362,
118 SCRA 399; [1982])
Respondent NLRC'S citation of the ruling of this Court
in Lacanilao v. De Leon (147 SCRA 286 [1987]) to justify its
assumption of jurisdiction over SEAFDEC is misplaced. On the
contrary, the Court in said case explained why it took
cognizance of the case. Said the Court:
We would note, finally, that the present petition
relates to a controversy between two claimants to the
same position; this is not a controversy between the
SEAFDEC on the one hand, and an officer or
employee, or a person claiming to be an officer or
employee, of the SEAFDEC, on the other hand. There
is before us no question involving immunity from the
jurisdiction of the Court, there being no plea for such
immunity whether by or on behalf of SEAFDEC, or by
an official of SEAFDEC with the consent of SEAFDEC
(Id., at 300; emphasis supplied).
WHEREFORE, finding SEAFDEC-AQD to be an international
agency beyond the jurisdiction of the courts or local agency of the Philippine government, the
questioned decision and resolution of the NLRC dated July 26, 1988 and January 9, 1989, respectively,
are hereby REVERSED and SET ASIDE for having been rendered without jurisdiction. No costs.

SO ORDERED.

G.R. No. 106483 May 22, 1995

ERNESTO L. CALLADO, petitioner,

vs.
INTERNATIONAL RICE RESEARCH INSTITUTE, respondent.

ROMERO, J.:
Did the International Rice Research Institute (IRRI) waive its
immunity from suit in this dispute which arose from an
employer-employee relationship?
We rule in the negative and vote to dismiss the petition.

Ernesto Callado, petitioner, was employed as a driver at the

IRRI from April 11, 1983 to December 14, 1990. On February
11, 1990, while driving an IRRI vehicle on an official trip to the
Ninoy Aquino International Airport and back to the IRRI,
petitioner figured in an accident.

Petitioner was informed of the findings of a preliminary

investigation conducted by the IRRI's Human Resource
Development Department Manager in a Memorandum dated
March 5, 1990. 1 In view of the aforesaid findings, he was
charged with:
(1) Driving an institute vehicle while on official duty
under the influence of liquor;
 (2) Serious misconduct consisting of your failure to
report to your supervisors the failure of your vehicle to
start because of a problem with the car battery which,
you alleged, required you to overstay in Manila for
more than six (6) hours, whereas, had you reported
the matter to IRRI, Los Baños by telephone, your
problem could have been solved within one or two
hours;
(3) Gross and habitual neglect of your duties. 2
In a Memorandum dated March 9, 1990, petitioner submitted
his answer and defenses to the charges against him. 3After
evaluating petitioner's answer, explanations and other
evidence, IRRI issued a Notice of Termination to petitioner on
December 7, 1990. 4

Thereafter, petitioner filed a complaint on December 19, 1990

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

On January 2, 1991, private respondent IRRI, through counsel,

wrote the Labor Arbiter to inform him that the Institute enjoys
immunity from legal process by virtue of Article 3 of Presidential
Decree No. 1620, 5 and that it invokes such diplomatic immunity
and privileges as an international organization in the instant
case filed by petitioner, not having waived the same. 6

IRRI likewise wrote in the same tenor to the Regional Director

of the Department of Labor and Employment. 7

While admitting IRRI's defense of immunity, the Labor Arbiter,

nonetheless, cited an Order issued by the Institute on August
13, 1991 to the effect that "in all cases of termination,
respondent IRRI waives its immunity," 8 and, accordingly,
considered the defense of immunity no longer a legal obstacle
in resolving the case. The dispositive portion of the Labor
arbiter's decision dated October 31, 1991, reads:

WHEREFORE, premises considered, judgment is

hereby rendered ordering respondent to reinstate
complainant to his former position without loss or (sic)
seniority rights and privileges within five (5) days from
receipt hereof and to pay his full backwages from
March 7, 1990 to October 31, 1991, in the total
amount of P83,048.75 computed on the basis of his
last monthly salary. 9

The NLRC found merit in private respondent' s appeal and,

finding that IRRI did not waive its immunity, ordered the
aforesaid decision of the Labor Arbiter set aside and the
complaint dismissed. 10

Hence, this petition where it is contended that the immunity of

the IRRI as an international organization granted by Article 3 of
Presidential Decree No. 1620 may not be invoked in the case at
bench inasmuch as it waived the same by virtue of its
Memorandum on "Guidelines on the handling of dismissed
employees in relation to P.D. 1620." 11

It is also petitioner's position that a dismissal of his complaint

before the Labor Arbiter leaves him no other remedy through
which he can seek redress. He further states that since the
investigation of his case was not referred to the Council of IRRI
Employees and Management (CIEM), he was denied his
constitutional right to due process.
We find no merit in petitioner's arguments.
IRRI's immunity from suit is undisputed.
Presidential Decree No. 1620, Article 3 provides:
Art. 3. Immunity from Legal Process. The Institute
shall enjoy immunity from any penal, civil and
administrative proceedings, except insofar as that
immunity has been expressly waived by the Director-
General of the Institute or his authorized
representatives.

In the case of International Catholic Migration Commission v.

Hon. Calleja, et al. and Kapisanan ng Manggagawa at TAC sa
IRRI v. Secretary of Labor and Employment and IRRI, 12 the
Court upheld the constitutionality of the aforequoted law. After
the Court noted the letter of the Acting Secretary of Foreign
Affairs to the Secretary of Labor dated June 17, 1987, where
the immunity of IRRI from the jurisdiction of the Department of
Labor and Employment was sustained, the Court stated that
this opinion constituted "a categorical recognition by the
Executive Branch of the Government that . . . IRRI enjoy(s)
immunities accorded to international organizations, which
determination has been held to be a political question
conclusive upon the Courts in order not to embarass a political
department of Government. 13 We cited the Court's earlier
pronouncement in WHO v. Hon. Benjamin Aquino, et al., 14 to
wit:
It is a recognized principle of international law and
under our system of separation of powers that
diplomatic immunity is essentially a political question
and courts should refuse to look beyond a
determination by the executive branch of the
government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive
 branch of the government as in the case at bar, it is
then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal
law officer of the government . . . or other officer
acting under his direction. Hence, in adherence to the
settled principle that courts may not so exercise their
jurisdiction . . . as to embarass the executive arm of
the government in conducting foreign relations, it is
accepted doctrine that in such cases the judicial
department of (this) government follows the action of
the political branch and will not embarrass the latter
by assuming an antagonistic jurisdiction. 15

Further, we held that "(t)he 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 . . .
and IRRI is clearly necessitated by their international
character and respective purposes. The objective is to
avoid the danger of partiality and interference by the
host country in their internal workings. The exercise of
jurisdiction by the Department of Labor in these
instances would defeat the very purpose of immunity,
which is to shield the affairs of international
organizations, in accordance with international
practice, from political pressure or control by the host
country to the prejudice of member States of the
organization, and to ensure the unhampered the
performance of their functions. 16
The grant of immunity to IRRI is clear and unequivocal and an
express waiver by its Director-General is the only way by which
it may relinquish or abandon this immunity.
On the matter of waiving its immunity from suit, IRRI had, early
on, made its position clear. Through counsel, the Institute wrote
the Labor Arbiter categorically informing him that the Institute
will not waive its diplomatic immunity. In the second place,
petitioner's reliance on the Memorandum with "Guidelines in
handling cases of dismissal of employees in relation to P.D.
1620" dated July 26, 1983, is misplaced. The Memorandum
reads, in part:

Time and again the Institute has reiterated that it will

not use its immunity under P.D. 1620 for the purpose
of terminating the services of any of its employees.
Despite continuing efforts on the part of IRRI to live
up to this undertaking, there appears to be
apprehension in the minds of some IRRI employees.
To help allay these fears the following guidelines will
be followed hereafter by the Personnel/Legal Office
while handling cases of dismissed employees.
xxx xxx xxx
2. Notification/manifestation to MOLE or labor arbiter
If and when a dismissed employee files a complaint against the
Institute contesting the legality of dismissal, IRRI's answer to
the complaint will:

1. Indicate in the identification of IRRI that it is an

international organization operating under the laws of
the Philippines including P.D. 1620. and
2. Base the defense on the merits and facts of the case
as well as the legality of the cause or causes for
termination.
3) Waiving immunity under P.D. 1620
 If the plaintiff's attorney or the arbiter, asks if IRRI will
waive its immunity we may reply that the Institute will
be happy to do so, as it has in the past in the formal
manner required thereby reaffirming our commitment
to abide by the laws of the Philippines and our full
faith in the integrity and impartially of the legal
system. 17 (Emphasis in this paragraphs ours)
From the last paragraph of the foregoing quotation, it is clear
that in cases involving dismissed employees, the Institute may
waive its immunity, signifying that such waiver is discretionary
on its part.

We agree with private respondent IRRI that this memorandum

cannot, by any stretch of the imagination, be considered the
express waiver by the Director-General. Respondent
Commission has quoted IRRI's reply thus:

The 1983 . . . is an internal memo addressed to

Personnel and Legal Office and was issued for its
guidance in handling those cases where IRRI opts to
waive its immunity. It is not a declaration of waiver for
all cases. This is apparent from the use of the
permissive term "may" rather than the mandatory term
"shall" in the last paragraph of the memo. Certainly
the memo cannot be considered as the express
waiver by the Director General as contemplated by
P.D. 1620, especially since the memo was issued by
a former Director-General. At the very least, the
express declaration of the incumbent Director-general
supersedes the 1983 memo and should be accorded
greater respect. It would be equally important to point
out that the Personnel and Legal Office has been
non-existent since 1988 as a result of major
 reorganization of the IRRI. Cases of IRRI before
DOLE are handled by an external Legal Counsel as in
this particular
case. 18 (Emphasis supplied)

The memorandum, issued by the former Director-General to a

now-defunct division of the IRRI, was meant for internal
circulation and not as a pledge of waiver in all cases arising
from dismissal of employees. Moreover, the IRRI's letter to the
Labor Arbiter in the case at bench made in 1991 declaring that
it has no intention of waiving its immunity, at the very least,
supplants any pronouncement of alleged waiver issued in
previous cases.

Petitioner's allegation that he was denied due process is

unfounded and has no basis.

It is not denied that he was informed of the findings and charges

resulting from an investigation conducted of his case in
accordance with IRRI policies and procedures. He had a
chance to comment thereon in a Memorandum he submitted to
the Manager of the Human Resource and Development
Department. Therefore, he was given proper notice and
adequate opportunity to refute the charges and findings, hereby
fulfilling the basic requirements of due process.

Finally, on the issue of referral to the Council of IRRI

Employees and Management (CIEM), petitioner similarly fails to
persuade the Court.

The Court, in the Kapisanan ng mga Manggagawa at TAC sa

IRRI case, 19 held:

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. 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.

We have earlier concluded that petitioner was not denied due

process, and this, notwithstanding the non-referral to the
Council of IRRI Employees and Management. Private
respondent correctly pointed out that petitioner, having opted
not to seek the help of the CIEM Grievance Committee,
prepared his answer by his own self. 20 He cannot now fault the
Institute for not referring his case to the CIEM.
IN VIEW OF THE FOREGOING, the petition for certiorari is
DISMISSED. No costs.
SO ORDERED.
 TEST TO DETERMINE WHETHER THE SUIT IS
AGAINST THE STATE
Begosa vs. PVA

Gaudencio A. Begosa, plantiff-appellee, vs. Chairman, Philippine Veterans Administration; and Members of the
Board of Administrators, Philippine Veterans Administration, defendants-appellants.

Nature: Appeal from a decision of the CFI of Manila

Date: April 30, 1970

Ponente: Fernando, J.

Facts:

 Plaintiff sought the aid of the judiciary to obtain the benefits to which he believed he was entitled under the
Veterans’ Bill of Rights.
 He filed his claim for disability pension on March 4, 1955 but was erroneously disapproved on June 21, 1955
due to his dishonorable discharge from the army.
 The Board of Administrators of PVA finally approved his claim on September 2, 1964, entitling him with a
pension of P30 a month, to take effect on October 5 of that year.
 Believing that his pension should have taken effect back in 1955 when his claim was disapproved, and that he
is entitled to a higher pension of P50 (RA No. 1362 amending Section 9 of RA No. 65) as a permanently
incapacitated person, which was increased to P100 a month when RP 1362 was amended by RA No. 1920 on
June 22, 1957, Begosa filed a case against PVA in the Court of First Instance.
 CFI ruled in favor plaintiff.
 Defendants claim that the plaintiff has not exhausted all administrative remedies before resorting to court
action and that the plaintiff’s claim is in reality a suit against the Government which cannot be entertained by
this Court for lack of jurisdiction because the Government has not given its consent.

Issue: WON the SC can entertain the suit against PVA.

Held: Yes.

Ratio:
 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-suitability may appropriately be invoked.
 However, it has no application where the suit against such a functionary had to be instituted because of his
failure to comply with the duty imposed by statue appropriating public funds for the benefit of plaintiff.
 Also, where there is a stipulation of facts, the question before the lower court being solely one of law and on
the face of the decision, the actuation of appellants being patently illegal, the doctrine of exhaustion of
administrative remedies certainly does not come into play.
 Del Mar vs Philippine Veterans
Administration [G.R. L-27299] June
27, 1973
by Quolete
Facts:
del Mar, the petitioner, was was relieved with honorable discharge
with permanent total physical disability. Philippine Veterans
administration granted him pension but was soon discontinued
because he received the same pension under the United States
Veterans Administration.

Issue:
The PVA decided that:

(1) Petitioner is barred from receiving any pension from the Philippine
Veterans Administration.

“The PVA reiterated its contention that del Mar’s receipt of a similar
pension from the United States Government effectively barred him
from claiming and receiving from the Philippine Government the
monthly life pension granted him as well as the monthly allowances he
claimed for his five living unmarried minor children below eighteen
years of age.”
(2) The filing of the case is premature.

“the action of del Mar was premature because of his failure to

exhaust administrative remedies before invoking judicial
intervention”
(3) The case is a suit against the state.
“the court a quo was without jurisdiction to try the case as del Mar
demand partakes of a money claim against the PVA — a mere agency
of the Philippine Government — and, in effect, of a suit against the
Government which is not suitable without its consent.”
(4) It was discretionary on the part of PVA to discontinue pension.

Held:
(1) When a case is a suit against the state:

“As a general proposition, the rule — well-settled in this jurisdiction

— on the immunity of the Government from suit without its consent
holds true in all actions resulting in “adverse consequences on the
public treasury, whether in the disbursements of funds or loss of
property.”
(2) Suits against the state must be dismissed

(3) When a case is not a suit against the state:

“where a claimant institutes an action against a functionary who fails

to comply with his statutory duty to release the amount claimed from
the public funds already appropriated by statute for the benefit of the
said claimant.”
(4) The case is not premature. Administrative liability is not required.

“Suffice it to state that where a case as in the present controversy —

involves a question solely of a legal nature, there arises no need for
the litigant to resort to all administrative remedies available to him
before seeking judicial relief.”
(5) The act committed by the PVA, in suspending a provision of law,
is against the constitution.

“… the Constitution limits the authority of the President, in whom all

executive power resides, to take care that the laws be faithfully
executed. No lesser administrative executive office or agency then
can, contrary to the express language of the Constitution, assert for
itself a more extensive prerogative. Necessarily, it is bound to observe
the constitutional mandate. There must be strict compliance with the
legislative enactment. Its terms must be followed. The statute requires
adherence to, not departure from, its provisions. No deviation is
allowable.”
 VETERANS MANPOWER VSCOURT OF APPEALS

G.R. NO. 91359

FACTS: VMPSI (Veterans Manpower and Protective Services, Inc.) alleges that the provisions of RA 5487
(Private Security Agency Law) violate the provisions of the Constitution against monopolies, unfair
competition and combinations of restraint of trade and tend to favor and institutionalize the PADPAO
(Philippine Association of Detective and Protective Services, Inc.). Furthermore, VMPSI questions the
provision on requiring all private security agencies or company security forces to register as members of
any PADPAO chapter organized within the region. On May 12, 1986, a Memorandum of Agreement was
executed by PADPAO and the PC Chief, which fixed the minimum monthly contract rate per guard for 8
hours of security service per day at P2,255.00 within Metro Manila and P2,215.00 outside of Metro
Manila. PADPAO found VMPSI guilty of cut-throat competition when it charged Metropolitan
Waterworks and Sewerage System lower than the standard minimum rates provided in the MOA. As a
result, PADPAO refused to issue a clearance/certificate of membership to VMPSI. VMPSI filed a civil case
against the PC chief and PC-SUSIA (Philippine Constabulary Supervisory Unit for Security and
Investigation Agencies). PC Chief and PC-SUSIA filed a motion to dismiss on the grounds that the case is
against the State which had not given consent thereto.

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

HELD: Yes. A public official may sometimes be held liable in his personal or private capacity if he acts in
bad faith, or beyond the scope of his authority or jurisdiction, however, since the acts for which the PC
Chief and PC-SUSIA are being called to account in this case, were performed as part of their official
duties, without malice, gross negligence, or bad faith, no recovery may be had against them in their
private capacities. Furthermore, the Supreme Court agrees with the Court of Appeals that the
Memorandum of Agreement dated May 12, 1986 does not constitute an implied consent by the State to
be sued.

The consent of the State to be sued must emanate from statutory authority, hence, a legislative act, not
from a mere memorandum. Without such consent, the trial court did not acquired jurisdiction over the
public respondents.

Petition for review is denied and the judgment appealed from is affirmed in toto.
 SUIT AGAINST GOVERNMENT AGENCIES

PNB vs CIR
the test of suability is found in its charter

PNB VS CIR
G.R. No. L-32667 81 SCRA 214 January 31, 1978
PHILIPPINE NATIONAL BANK, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, GABRIEL V.
MANANSALA and GILBERT P. LORENZO, in his official capacity
as authorized Deputy sheriff, respondents.

Facts:
A writ of execution in favor of private respondent Gabriel V.
Manansala had previously been issued. He was the counsel of the
prevailing party, the United Homesite Employees and Laborers
Association. The validity of the order assailed is challenged on two
grounds: n
  That the appointment of respondent Gilbert P. Lorenzo as
authorized deputy sheriff to serve the writ of execution was
contrary to law and
 That the funds subject of the garnishment “may be public in
character.” In thus denying the motion to quash, petitioner
contended that there was on the part of respondent Court a failure
to abide by authoritative doctrines amounting to a grave abuse of
discretion.

The Philippine National Bank (PNB) moves to quash the notice of

garnishment is denied for the lack of merit. PNB is therefore ordered
to comply within five days from receipt with the ‘notice of
Garnishment’ dated May 6, 1970.”

The petitioner filed a motion for reconsideration, but it was denied.

Hence, this certiorari petition.

Issues:
Whether or not the order denying motion to quash a notice of
garnishment can be stigmatized as a grave abuse of discretion.

Discussions:
According to the doctrine of state immunity, under suits against
Government Agencies:
“An incorporated Agency has a charter of its own that invests it with a
separate judicial personality. If the agency is incorporated, the test of
suability is found in its charter.”
From the opinion being penned by the great Chief Justice Marshall.
As was pointed out by him: “It is, we think, a sound principle, that
when a government becomes a partner in any trading company, it
divests itself, so far as concerns the transactions of that company, of
its sovereign character, and takes that of a private citizen. Instead of
communicating to the company its privileges and its prerogatives, it
descends to a level with those with whom it associates itself, and takes
the character which belongs to its associates, and to the business
which is to be transacted.

Rulings:
No. Supreme Court ruled that there has not been a grave abuse of
discretion. The premise that the funds could be spoken of as public in
character may be accepted in the sense that the People’s Homesite and
Housing Corporation was a government-owned entity It does not
follow though that they were exempt from garnishment.

As stated in “National Shipyard and Steel Corporation v. Court of

Industrial Relations”, a government owned and controlled corporation
has a personality of its own, distinct and separate from that of the
Government. It may sue and be sued and may be subjected to court
processes just like any other corporation.
Justice Ozaeta held that it is well settled that when the government
enters into commercial business, it abandons its sovereign capacity
and is to be treated like any other corporation. By engaging in a
particular business thru the instrumentality of a corporation, the
governmnent divests itself pro hac vice of its sovereign character, so
as to render the corporation subject to the rules of law governing
private corporations.
SSS vs. CA

(120 SCRA 707)

FACTS:

Spouses David and Socorro Cruz, applied and granted a real estate loan by the SSS with
residential lot located at Pateros, Rizal as collateral. The spouses Cruz complied with their monthly
payments. When delayed were incurred in their monthly payments SSS filed a petition for foreclosure of
their real estate mortgage executed by the spouses Cruz on the ground that the spouses Cruz defaulted
in payment, Pursuant for these application for foreclosure notices were published on the second notice
the counsel for spouses Cruz sent a letter to SSS informing the latter that his clients are up to date in
their payment of the monthly amortization and the SSS should discontinued the publication of the
notices of foreclosure. This request remain unheaded, this spouses Cruz filed an action for damages
against SSS before RTC in Rizal. SSS invoking its immunity from suit being an agency of the government
performing government function. The trial court and court of appeal nevertheless awarded damages in
favor of spouses Cruz which was affirmed by court of appeal, Hence this petition.

ISSUE: Whether or not SSS is immune from suit.

HELD:

Negative.. The SSS has a distinct legal personality and it can be sued for damages. The SSS does
not enjoy immunity from suit by express statutory consent.

It has corporated power separate and distinct from the government. SSS own organic act
specifically provides that it can sue and be sued in court. These words “sue and be sued” embrace all
civil process incident to a legal action. So that even assuming that the SSS, as it claims, enjoys immunity
from suit as an entity performing governmental function, by virtue of the explicit provision of the
aforecited enabling law, the government must be deemed to have waived immunity in respect of the
SSS, although it does not thereby concede its liability that statutory law has given to the private citizen a
remedy for the enforcement and protection of his rights. The SSS thereby has been required to submit
to the jurisdiction of the court; subject to its right to interpose any lawful defense.
G.R. No. L-55273-83 December 19, 1981
GAUDENCIO RAYO, BIENVINIDO PASCUAL, TOMAS
MANUEL, MARIANO CRUZ, PEDRO BARTOLOME,
BERNARDINO CRUZ JOSE PALAD , LUCIO FAJARDO,
FRANCISCO RAYOS, ANGEL TORRES, NORBERTO
TORRES, RODELIO JOAQUIN, PEDRO AQUINO,
APOLINARIO BARTOLOME, MAMERTO BERNARDO,
CIRIACO CASTILLO, GREGORIO CRUZ, SIMEON
ESTRELLA, EPIFANIO MARCELO, HERMOGENES SAN
PEDRO, JUAN SANTOS, ELIZABETH ABAN, MARCELINA
BERNABE, BUENAVENTURA CRUZ, ANTONIO MENESES,
ROMAN SAN PEDRO, LOPEZ ESPINOSA, GODOFREDO
PUNZAL, JULIANA GARCIA, LEBERATO SARMIENTO,
INOCENCIO DE LEON, CARLOS CORREA, REYNALDO
CASIMIRO, ANTONIO GENER, GAUDENCIO CASTILLO,
MATIAS PEREZ, CRISPINIANO TORRES, CRESENCIO
CRUZ, PROTACIO BERNABE, MARIANO ANDRES,
CRISOSTOMO CRUZ, MARCOS EUSTAQUIO, PABLO
LEGASPI, VICENTE PASCUAL, ALEJANDRA SISON,
EUFRACIO TORRES, ROGELIO BARTOLOME, RODOLFO
BERNARDO, APOLONIO CASTILLO, MARCELINO
DALMACIO, EUTIQUIO LEGASPI, LORENZO LUCIANO and
GREGORIO PALAD, petitioners,
vs.
COURT OF FIRST INSTANCE OF BULACAN, BRANCH V,
STA. MARIA, and NATIONAL POWER
CORPORATION, respondents.

ABAD SANTOS, J.:

The relevant antecedents of this case are narrated in the
petition and have not been controverted, namely:
3. At about midnight on October 26, 1978, during the
height of that infamous typhoon "KADING" the
respondent corporation, acting through its plant
superintendent, Benjamin Chavez, opened or caused
to be opened simultaneously all the three floodgates
of the Angat Dam. And as a direct and immediate
result of the sudden, precipitate and simultaneous
opening of said floodgates several towns in Bulacan
were inundated. Hardest-hit was Norzagaray. About a
hundred of its residents died or were reported to have
died and properties worth million of pesos destroyed
or washed away. This flood was unprecedented in
Norzagaray.

4. Petitioners, who were among the many unfortunate

victims of that man-caused flood, filed with the
respondent Court eleven complaints for damages
against the respondent corporation and the plant
superintendent of Angat Dam, Benjamin Chavez,
docketed as Civil Cases Nos. SM-950 951, 953, 958,
959, 964, 965, 966, 981, 982 and 983. These
complaints though separately filed have a
common/similar cause of action. ...

5. Respondent corporation filed separate answers to

each of these eleven complaints. Apart from
traversing the material averments in the complaints
and setting forth counterclaims for damages
respondent corporation invoked in each answer a
special and affirmative defense that "in the operation
of the Angat Dam," it is "performing a purely
governmental function", hence it "can not be sued
without the express consent of the State." ...
 6. On motion of the respondent corporation a
preliminary hearing was held on its affirmative
defense as though a motion to dismiss were filed.
Petitioners opposed the prayer for dismissal and
contended that respondent corporation is performing
not governmental but merely proprietary functions and
that under its own organic act, Section 3 (d) of
Republic Act No. 6395, it can sue and be sued in any
court. ...

7. On July 29, 1980 petitioners received a copy of the

questioned order of the respondent Court dated
December 21, 1979 dismissing all their complaints as
against the respondent corporation thereby leaving
the superintendent of the Angat Dam, Benjamin
Chavez, as the sole party-defendant. ...
8. On August 7, 1980 petitioners filed with the
respondent Court a motion for reconsideration of the
questioned order of dismissal. ...
9. The respondent Court denied petitioners' motion for
reconsideration in its order dated October 3, 1980. ...
Hence, the present petition for review on certiorari
under Republic Act No. 5440. (Rollo, pp. 3-6.)

The Order of dismissal dated December 12, 1979, reads as

follows:

Under consideration is a motion to dismiss embodied

as a special affirmative defense in the answer filed by
defendant NPC on the grounds that said defendant
performs a purely governmental function in the
operation of the Angat Dam and cannot therefore be
 sued for damages in the instant cases in connection
therewith.
Plaintiffs' opposition to said motion to discuss, relying
on Sec. 3 (d) of Republic Act 6396 which imposes on
the NPC the power and liability to sue and be sued in
any court, is not tenable since the same refer to such
matters only as are within the scope of the other
corporate powers of said defendant and not matters
of tort as in the instant cases. It being an agency
performing a purely governmental function in the
operation of the Angat Dam, said defendant was not
given any right to commit wrongs upon individuals. To
sue said defendant for tort may require the express
consent of the State.

WHEREFORE, the cases against defendant NPC are

hereby dismissed. (Rollo, p. 60.)

The Order dated October 3, 1980, denying the motion for

reconsideration filed by the plaintiffs is pro forma; the motion
was simply denied for lack of merit. (Rollo, p. 74.)
The petition to review the two orders of the public respondent
was filed on October 16, 1980, and on October 27, 1980, We
required the respondents to comment. It was only on April 13,
1981, after a number of extensions, that the Solicitor General
filed the required comment. (Rollo, pp. 107-114.)

On May 27, 1980, We required the parties to file simultaneous

memoranda within twenty (20) days from notice. (Rollo, p. 115.)
Petitioners filed their memorandum on July 22, 1981. (Rollo, pp.
118-125.) The Solicitor General filed a number of motions for
extension of time to file his memorandum. We granted the
seventh extension with a warning that there would be no further
extension. Despite the warning the Solicitor General moved for an eighth
extension which We denied on November 9, 1981. A motion for a ninth
extension was similarly denied on November 18, 1981. The decision in this
case is therefore, without the memorandum of the Solicitor General.

The parties are agreed that the Order dated December 21, 1979, raises the
following issues:

1. Whether respondent National Power Corporation performs a

governmental function with respect to the management and
operation of the Angat Dam; and

2. Whether the power of respondent National Power

Corporation to sue and be sued under its organic charter
includes the power to be sued for tort.
The petition is highly impressed with merit.

It is not necessary to write an extended dissertation on whether

or not the NPC performs a governmental function with respect
to the management and operation of the Angat Dam. It is
sufficient to say that the government has organized a private
corporation, put money in it and has allowed it to sue and be
sued in any court under its charter. (R.A. No. 6395, Sec. 3 (d).)
As a government owned and controlled corporation, it has a
personality of its own, distinct and separate from that of the
Government. (See National Shipyards and Steel Corp. vs. CIR,
et al., L-17874, August 31, 1963, 8 SCRA 781.) Moreover, the
charter provision that the NPC can "sue and be sued in any
court" is without qualification on the cause of action and
accordingly it can include a tort claim such as the one instituted
by the petitioners.
WHEREFORE, the petition is hereby granted; the Orders of the respondent court dated December 12,
1979 and October 3, 1980, are set aside; and said court is ordered to reinstate the complaints of the
petitioners. Costs against the NPC.

SO ORDERED.
Malong v. PNR
FRANCISCO MALONG and ROSALINA AQUINOMALONG,
petitioners v. PHILIPPINE NATIONAL RAILWAYS and COURT OF
FIRST INSTANCE OF PANGASINAN, Lingayen Branch 11,
respondents

En Banc

Doctrine: implied consent

Date: August 7, 1985

Ponente: Justice Aquino

Facts:
The Malong spouses alleged in their complaint that on October
30, 1977 their son, Jaime Aquino, a paying passenger, was killed
when he fell from a PNR train while it was between Tarlac and
Capas. The tragedy occurred because Jaime had to sit near the
door of a coach. The train was overloaded with passengers and
baggage in view of the proximity of All Saints Day.
The Malong spouses prayed that the PNR be ordered to pay
them damages totaling P136,370.
Upon the Solicitor General's motion, the trial court dismissed
the complaint. It ruled that it had no jurisdiction because the
PNR, being a government instrumentality, the action was a suit
against the State (Sec. 16, Art. XV of the Constitution).
The Malong spouses appealed to this Court pursuant to
Republic Act No. 5440
R.A. No. 5440 changed the mode of appeal from courts of first
instance (now Regional Trial Courts) to the Supreme Court in
cases involving only questions of law, or the constitutionality or
validity of any treaty, law, ordinance, etc. or the legality of any
tax, impost, assessment or toll, etc., or the jurisdiction of any
inferior court, from ordinary appeal — i.e., by notice of appeal,
record on appeal and appeal bond, under Rule 41— to appeal
by certiorari, under Rule 45
Issue/s:
WON PNR is immune from suit.

WON the State acted in a sovereign capacity or in a corporate capacity when it

organized the PNR for the purpose of engaging in transportation
WON the State acted differently when it organized the PNR as
successor of the Manila Railroad Company

Held: No, PNR is NOT immune. The State divested itself of its
sovereign capacity when it organized the PNR which is no
different from its predecessor, the Manila Railroad Company.
The PNR did not become immune from suit. It did not remove
itself from the operation of articles 1732 to 1766 of the Civil
Code on common carriers

WHEREFORE, the order of dismissal is reversed and set aside.

The case is remanded to the trial court for further proceedings.
Costs against the Philippine National Railways.
Ratio:
The correct rule is that "not all government entities, whether
corporate or non-corporate, are immune from suits. Immunity
from suit is determined by the character of the objects for
which the entity was organized." (Nat. Airports Corp. vs.
Teodoro and Phil. Airlines, Inc., 91 Phil. 203, 206; Santos vs, Santos, 92 Phil. 281, 285; Harry Lyons,
Inc. vs. USA, 104 Phil. 593.)

Suits against State agencies with respect to matters in which they have assumed to act in a private or non-
governmental capacity are not suits against the State
 that private
Like any private common carrier, the PNR is subject to the obligations of persons engaged in

enterprise. It is not performing any governmental function

The point is that when the government enters into a
commercial business it abandons its sovereign capacity and is
to be treated like any other private corporation (Bank of the
U.S. vs. Planters' Bank, 9 Wheat. 904, 6 L. ed. 244, cited in
Manila Hotel Employees Association vs. Manila Hotel Company,
et al., 73 Phil. 374, 388).
There is not one law for the sovereign and another for the
subject, but when the sovereign engages in business and the
conduct of business enterprises, and contracts with individuals,
whenever the contract in any form comes before the courts,
the rights and obligation of the contracting parties must be
adjusted upon the same principles as if both contracting parties
were private persons. Both stand upon equality before the law,
and the sovereign is merged in the dealer, contractor and suitor
(People vs. Stephens, 71 N.Y. 549).
Justice Abad Santos (Separate Opinion) : All corporations
organized by the government are its instrumentality by the very
reason of their creation. But that fact alone does not invest
them with immunity from suit.
G.R. Nos. 169823-24 September 11, 2013
HERMINIO T. DISINI, Petitioner,
vs.
THE HON. SANDIGANBAYAN, FIRST DIVISION, AND THE
PEOPLE OF THE PHILIPPINES, Respondents.
x-----------------------x
G.R. Nos. 174764-65

HERMINIO T. DISINI, Petitioner,

vs.
SANDIGANBAYAN, FIRST DIVISION, AND THE PEOPLE OF
THE PHILIPPINES, Respondents.
DECISION
BERSAMIN, J.:
The Sandiganbayan has exclusive original jurisdiction over the
criminal action involving petitioner notwithstanding that he is a
private individual considering that his criminal prosecution is
intimately related to the recovery of ill-gotten wealth of the
Marcoses, their immediate family, subordinates and close
associates.
The Case
Petitioner Herminio T. Disini assails via petition for certiorari
there solutions promulgated by the Sandiganbayan in Criminal
Case No. 28001and Criminal Case No. 28002, both entitled
People v. Herminio T. Disini, on January 17, 2005 (denying his
motion to quash the informations)1 and August 10, 2005
(denying his motion for reconsideration of the denial of his
motion to quash),2 alleging that the Sandiganbayan (First
Division) thereby committed grave abuse of discretion
amounting to lack or excess of jurisdiction.
Antecedents

The Office of the Ombudsman filed two informations dated June

30,2004 charging Disini in the Sandiganbayan with corruption of
public officials, penalized under Article 212 in relation to Article
210 of the Revised Penal Code (Criminal Case No. 28001), and
with a violation of Section 4(a) of Republic Act 3019 (R.A. No.
3019), also known as the Anti-Graft and Corrupt Practices Act
(Criminal Case No. 28002).
The accusatory portions of the informations read as follows:
Criminal Case No. 28001

That during the period from 1974 to February 1986, in Manila,

Philippines, and within the jurisdiction of this Honorable Court,
accused HERMINIO T. DISINI, conspiring together and
confederating with the then President of the Philippines
Ferdinand E. Marcos, did then and there, willfully, unlawfully
and feloniously offer, promise and give gifts and presents to
said Ferdinand E. Marcos, consisting of accused DISINI’s
ownership of two billion and five hundred (2.5 billion) shares of
stock in Vulcan Industrial and Mining Corporation and four
billion (4 billion)shares of stock in The Energy Corporation, with
both shares of stock having then a book value of ₱100.00 per
share of stock, and subcontracts, to Engineering and
Construction Company of Asia, owned and controlled by said
Ferdinand E. Marcos, on the mechanical and electrical
construction work on the Philippine Nuclear Power Plant
Project("Project") of the National Power Corporation at Morong,
Bataan, all for and in consideration of accused Disini seeking
and obtaining for Burns and Roe and Westinghouse Electrical
Corporation (Westinghouse), the contracts to do the
engineering and architectural design and to construct,
respectively, the Project, as in fact said Ferdinand E. Marcos,
taking undue advantage of his position and committing the
offense in relation to his office and in consideration of the
aforesaid gifts and presents, did award or cause to be awarded
to said Burns and Roe and Westinghouse, the contracts to do
the engineering and architectural design and to construct the
Project, respectively, which acts constitute the crime of
corruption of public officials.
CONTRARY TO LAW.3
Criminal Case No. 28002

That during the period 1974 to February 1986, in Manila,

Philippines, and within the jurisdiction of the Honorable Court,
accused HERMINIO T. DISINI, conspiring together and
confederating with the then President of the Philippines,
Ferdinand E. Marcos, being then the close personal friend and
golfing partner of said Ferdinand E. Marcos, and being further
the husband of Paciencia Escolin-Disini who was the first
cousin of then First Lady Imelda Romualdez-Marcos and family
physicianof the Marcos family, taking advantage of such close
personal relation, intimacy and free access, did then and there,
willfully, unlawfully and criminally, in connection with the
Philippine Nuclear Power Plant (PNPP)Project ("PROJECT") of
the National Power Corporation (NPC) at Morong, Bataan,
request and receive from Burns and Roe, a foreign consultant,
the total amount of One Million U.S. Dollars
($1,000,000.00),more or less, and also from Westinghouse
Electric Corporation(WESTINGHOUSE), the total amount of
Seventeen Million U.S. Dollars($17,000,000.00), more or less,
both of which entities were then having business, transaction,
and application with the Government of the Republic of the
Philippines, all for and in consideration of accused DISINI
securing and obtaining, as accused Disini did secure and
obtain, the contract for the said Burns and Roe and
Westinghouse to do the engineering and architectural design,
and construct, respectively, the said PROJECT, and
subsequently, request and receive subcontracts for Power
Contractors, Inc. owned by accused DISINI, and Engineering
and Construction Company of Asia (ECCO-Asia), owned and
controlled by said Ferdinand E. Marcos, which stated amounts
and subcontracts constituted kickbacks, commissions and gifts
as material or pecuniary advantages, for securing and
obtaining, as accused DISINI did secure and obtain, through the
direct intervention of said Ferdinand E. Marcos, for Burns and
Roe the engineering and architectural contract, and for
Westinghouse the construction contract, for the PROJECT.
CONTRARY TO LAW.4
On August 2, 2004, Disini filed a motion to quash,5 alleging that
the criminal actions had been extinguished by prescription, and
that the informations did not conform to the prescribed form.
The Prosecution opposed the motion to quash.6

On September 16, 2004, Disini voluntarily submitted himself for

arraignment to obtain the Sandiganbayan’s favorable action on
his motion for permission to travel abroad.7 He then entered a
plea of not guilty to both informations.

As stated, on January 17, 2005, the Sandiganbayan (First

Division) promulgated its first assailed resolution denying the
motion to quash.8
Disini moved for the reconsideration of the resolution dated
January 17, 2005,9 but the Sandiganbayan (First Division)
denied his motion on August 10, 2005 through the second
assailed resolution.10
Issues

Undaunted, Disini commenced this special civil action for

certiorari, alleging that:

A. THE RESPONDENT COURT HAS NO JURISDICTION

OVER THEOFFENSES CHARGED.

1. THE RESPONDENT COURT GRAVELY ERRED

WHEN ITRULED THAT SECTION 4, PARAGRAPHS
(A) AND (B) OFREPUBLIC ACT NO. 8249 DO NOT
APPLY SINCE THEINFORMATIONS WERE "FILED
PURSUANT TO E.O. NOS. 1,2, 14 AND 14-A".

2. THE RESPONDENT COURT GRAVELY ERRED

WHEN ITASSUMED JURISDICTION WITHOUT
HAVING MET THEREQUISITE UNDER SECTION 4
OF R.A. 8249 THAT THEACCUSED MUST BE A
PUBLIC OFFICER.
B. THE RESPONDENT COURT ACTED WITH SUCH
GRAVEABUSE OF DISCRETION WHEN IT
EFFECTIVELY IGNORED, DISREGARDED, AND
DENIED PETITIONER’SCONSTITUTIONAL AND
STATUTORY RIGHT TOPRESCRIPTION.
1. THE RESPONDENT COURT GRAVELY ERRED
INDETERMINING THE APPLICABLE
PRESCRIPTIVE PERIOD.
 2. THE RESPONDENT COURT GRAVELY ERRED
INDETERMINING THE COMMENCEMENT OF
THEPRESCRIPTIVE PERIOD.

3. THE RESPONDENT COURT GRAVELY ERRED

INDETERMINING THE POINT OF INTERRUPTION
OF THEPRESCRIPTIVE PERIOD.

C. BY MERELY ASSUMING THE PRESENCE OF

GLARINGLYABSENT ELEMENTS IN THE OFFENSES
CHARGED TOUPHOLD THE ‘SUFFICIENCY’ OF THE
INFORMATIONS INCRIMINAL CASE NOS. 28001 AND
28002, THE RESPONDENTCOURT DEMONSTRATED
ITS PREJUDGMENT OVER THE SUBJECT CASES AND
ACTED WITH GRAVE ABUSE OF ITSDISCRETION.
D. THE RESPONDENT COURT ACTED WITH GRAVE
ABUSE OFDISCRETION IN REFUSING TO QUASH THE
INFORMATIONSDESPITE THEIR UTTER FAILURE TO
COMPLY WITH THEPRESCRIBED FORM, THUS
EFFECTIVELY DENYING THEACCUSED HIS
CONSTITUTIONAL AND STATUTORY RIGHTTO BE
INFORMED OF THE NATURE AND CAUSE OF
THEACCUSATION AGAINST HIM.11
Ruling
The petition for certiorari has no merit.
1.Preliminary Considerations
To properly resolve this case, reference is made to the ruling of
the Court in G.R. No. 175730 entitled Herminio Disini v.
Sandiganbayan,12 which involved the civil action for
reconveyance, reversion, accounting, restitution, and damages
(Civil Case No. 0013 entitled Republic v. HerminioT. Disini, et
al.) filed by the Presidential Commission on Good
Government(PCGG) against Disini and others.13 The amended
complaint in Civil Case No. 0013 alleged that Disini had acted in
unlawful concert with his co-defendants in acquiring and
accumulating ill-gotten wealth through them is appropriation of
public funds, plunder of the nation’s wealth, extortion,
embezzlement, and other acts of corruption,14 as follows:

4. Defendant HERMINIO T. DISINI is a close associate of

defendant Ferdinand E. Marcos and the husband of the first
cousin of Defendant Imelda R. Marcos. By reason of this
relationship xxx defendant Herminio Disini obtained staggering
commissions from the Westinghouse in exchange for securing
the nuclear power plant contract from the Philippine
government.
xxxx

13. Defendants Herminio T. Disini and Rodolfo Jacob, by

themselves and/or in unlawful concert, active collaboration and
willing participation of defendants Ferdinand E. Marcos and
Imelda R. Marcos, and taking undue advantage of their
association and influence with the latter defendant spouses in
order to prevent disclosure and recovery of ill-gotten assets,
engaged in devices, schemes, and stratagems such as:
xxxx

(c) unlawfully utilizing the Herdis Group of Companies and Asia

Industries, Inc. as conduits through which defendants received,
kept, and/or invested improper payments such as
unconscionably large commissions from foreign corporations
like the Westinghouse Corporation; (d) secured special
concessions, privileges and/or benefits from defendants
Ferdinand E. Marcos and Imelda R. Marcos, such as a contract
awarded to Westinghouse Corporation which built an inoperable
nuclear facility in the country for a scandalously exorbitant
amount that included defendant’s staggering commissions –
defendant Rodolfo Jacob executed for HGI the contract for the
aforesaid nuclear plant;15
Through its letter dated April 8, 1991,16 the PCGG transmitted
the records of Criminal Case No. 28001 and Criminal Case No.
28002 to then Ombudsman Conrado M. Vasquez for
appropriate action, to wit:
In line with the decision of the Supreme Court in the case of
EduardoM. Cojuangco, Jr. versus the PCGG (G.R. Nos. 92319–
92320) dated October 2, 1990, we are hereby transmitting to
your Office for appropriate action the records of the attached
criminal case which we believe is similar to the said Cojuangco
case in certain aspects, such as: (i) some parts or elements are
also parts of the causes of action in the civil complaints[-]filed
with the Sandiganbayan; (ii) some properties or assets of the
respondents have been sequestered; (iii) some of the
respondents are also party defendants in the civil cases.

Although the authority of the PCGG has been upheld by the

Supreme Court, we are constrained to refer to you for proper
action the herein-attached case in view of the suspicion that the
PCGG cannot conduct an impartial investigation in cases
similar to that of the Cojuangco case. x x x
Ostensibly, the PCGG’s letter of transmittal was adverting to the
ruling in Cojuangco, Jr. v. Presidential Commission on Good
Government (Cojuangco, Jr.),17 viz:
x x x The PCGG and the Solicitor General finding a prima facie
basis filed a civil complaint against petitioner and intervenors
alleging substantially the same illegal or criminal acts subject of
the subsequent criminal complaints the Solicitor General filed
with the PCGG for preliminary investigation. x x x.

Moreover, when the PCGG issued the sequestration and freeze

orders against petitioner’s properties, it was on the basis of a
prima facie finding that the same were ill-gotten and/or were
acquired in relation to the illegal disposition of coconut levy
funds. Thus, the Court finds that the PCGG cannot possibly
conduct the preliminary investigation of said criminal complaints
with the "cold neutrality of an impartial judge," as it has
prejudged the matter. x x x18
xxxx
The Court finds that under the circumstances of the case, the
PCGG cannot inspire belief that it could be impartial in the
conduct of the preliminary investigation of the aforesaid
complaints against petitioner and intervenors. It cannot possibly
preside in the said preliminary investigation with an even hand.

The Court holds that a just and fair administration of justice can
be promoted if the PCGG would be prohibited from conducting
the preliminary investigation of the complaints subject of this
petition and the petition for intervention and that the records of
the same should be forwarded to the Ombudsman, who as an
independent constitutional officer has primary jurisdiction over
cases of this nature, to conduct such preliminary investigation
and take appropriate action.19 (Bold emphasis supplied)

It appears that the resolutions of the Office of the Ombudsman,

following its conduct of the preliminary investigation on the
criminal complaints thus transmitted by the PCGG, were
reversed and set aside by the Court in Presidential Commission
on Good Government v. Desierto,20
with the Court requiring the Office of the Ombudsman to file the
informations that became the subject of Disini’s motion to quash
in Criminal Case No.28001 and Criminal Case No. 28002.
2.
Sandiganbayan has exclusive and
original jurisdiction over the offenses charged
Disini challenges the jurisdiction of the Sandiganbayan over the
offenses charged in Criminal Case No. 28001 and Criminal
Case No. 28002.He contends that: (1) the informations did not
allege that the charges were being filed pursuant to and in
connection with Executive Order (E.O.) Nos.1, 2, 14 and 14-A;
(2) the offenses charged were not of the nature contemplated
by E.O. Nos. 1, 2, 14 and 14-A because the allegations in the
informations neither pertained to the recovery of ill-gotten
wealth, nor involved sequestration cases; (3) the cases were
filed by the Office of the Ombudsman instead of by the PCGG;
and (4) being a private individual not charged as a co-principal,
accomplice or accessory of a public officer, he should be
prosecuted in the regular courts instead of in the
Sandiganbayan.

The Office of the Solicitor General (OSG) counters that the

Sandiganbayan has jurisdiction over the offenses charged
because Criminal Case No. 28001 and Criminal Case No.
28002 were filed within the purview of Section 4 (c) of R.A. No.
8249; and that both cases stemmed from the criminal
complaints initially filed by the PCGG pursuant to its mandate
under E.O. Nos. 1, 2, 14 and 14-A to investigate and file the
appropriate civil or criminal cases to recover ill-gotten wealth
not only of the Marcoses and their immediately family but also
of their relatives, subordinates and close associates.
We hold that the Sandiganbayan has jurisdiction over Criminal
Case No. 28001 and Criminal Case No. 28002.
Presidential Decree (P.D.) No. 1606 was the law that
established the Sandiganbayan and defined its jurisdiction. The
law was amended by R.A. No. 7975 and R.A. No. 8249. Under
Section 4 of R.A. No. 8249, the Sandiganbayan was vested with
original and exclusive jurisdiction over all cases involving:

a. Violations of Republic Act No. 3019, as amended,

otherwise known as the Anti-Graft and Corrupt Practices
Act, Republic Act No.1379, and Chapter II, Section 2, Title
VII, Book II of the Revised Penal Code, where one or more
of the accused are officials occupying the following
positions in the government whether in a permanent,
acting or interim capacity, at the time of the commission of
the offense:
xxxx
b. Other offenses or felonies whether simple or complexed
with other crimes committed by the public officials and
employees mentioned in subsection (a) of this section in
relation to their office.

c. Civil and criminal cases filed pursuant to and in

connection with Executive Order Nos. 1, 2, 14 and 14-A,
issued in 1986. (Bold emphasis supplied)

In cases where none of the accused are occupying positions

corresponding to salary grade ‘27’ or higher, as prescribed in
the said Republic Act No. 6758, or military or PNP officers
mentioned above, exclusive original jurisdiction thereof shall be
vested in the proper regional trial court, metropolitan trial court,
municipal trial court and municipal circuit trial court, as the case
may be, pursuant to their respective jurisdiction as provided in
Batas Pambansa Blg. 129, as amended.
xxxx
In case private individuals are charged as co-principals,
accomplices or accessories with the public officers or
employees, including those employed in government-owned or
controlled corporations, they shall be tried jointly with said
public officers and employees in the proper courts which shall
exercise exclusive jurisdiction over them. x x x x

It is underscored that it was the PCGG that had initially filed the
criminal complaints in the Sandiganbayan, with the Office of the
Ombudsman taking over the investigation of Disini only after the
Court issued in Cojuangco, Jr. the directive to the PCGG to
refer the criminal cases to the Office of the Ombudsman on the
ground that the PCGG would not be an impartial office following
its finding of a prima facie case being established against Disini
to sustain the institution of Civil Case No. 0013.

Also underscored is that the complaint in Civil Case No. 0013

and the informations in Criminal Case No. 28001 and Criminal
Case No. 28002involved the same transaction, specifically the
contracts awarded through the intervention of Disini and
President Marcos in favor of Burns & Roe to do the engineering
and architectural design, and Westinghouse to do the
construction of the Philippine Nuclear Power Plant Project
(PNPPP). Given their sameness in subject matter, to still
expressly aver in Criminal Case No.28001 and Criminal Case
No. 28002 that the charges involved the recovery of ill-gotten
wealth was no longer necessary.21 With Criminal Case
No.28001 and Criminal Case No. 28002 being intertwined with
Civil Case No.0013, the PCGG had the authority to institute the
criminal prosecutions against Disini pursuant to E.O. Nos. 1, 2,
14 and 14-A.
That Disini was a private individual did not remove the offenses
charged from the jurisdiction of the Sandiganbayan. Section 2
of E.O. No.1, which tasked the PCGG with assisting the
President in "the recovery of all ill-gotten wealth accumulated by
former President Ferdinand E. Marcos, his immediate family,
relatives, subordinates and close associates, whether located in
the Philippines or abroad, including the takeover or
sequestration of all business enterprises and entities owned or
controlled by them, during his administration, directly or through
nominees, by taking undue advantage of their public office
and/or using their powers, authority, influence, connections or
relationship," expressly granted the authority of the PCGG to
recover ill-gotten wealth covered President Marcos’ immediate
family, relatives, subordinates and close associates, without
distinction as to their private or public status.

Contrary to Disini’s argument, too, the qualifying clause found in

Section 4 of R.A. No. 824922

applied only to the cases listed in Subsection 4aand Subsection

4b of R.A. No. 8249, the full text of which follows:
xxxx

a. Violations of Republic Act No. 3019, as amended, otherwise

known as the Anti-Graft and Corrupt Practices Act, Republic Act
No.1379, and Chapter II, Section 2, Title VII, Book II of the
Revised Penal Code, where one or more of the accused are
officials occupying the following positions in the government
whether in a permanent, acting or interim capacity, at the time
of the commission of the offense:
(1) Officials of the executive branch occupying the
positions of regional director and higher, otherwise
classified as Grade ‘27’ and higher, of the Compensation
and Position Classification Act of 1989(Republic Act No.
6758), specifically including:

(a) Provincial governors, vice-governors, members of

the sangguniang panlalawigan and provincial
treasurers, assessors, engineers and other provincial
department heads;
(b) City mayors, vice-mayors, members of the
sangguniang panlungsod, city treasurers, assessors
engineers and other city department heads;
(c) Officials of the diplomatic service occupying the
position of consul and higher;
(d) Philippine army and air force colonels, naval
captains, and all officers of higher rank;

(e) Officers of the Philippine National Police while

occupying the position of provincial director and those
holding the rank of senior superintendent or higher;
(f) City and provincial prosecutors and their
assistants, and officials and prosecutors in the Office
of the Ombudsman and special prosecutor;

(g) Presidents, directors or trustees, or managers of

government-owned or -controlled corporations, state
universities or educational institutions or foundations;

(2) Members of Congress and officials thereof classified as

Grade‘27’ and up under the Compensation and Position
Classification Act of 1989;
 (3) Members of the judiciary without prejudice to the
provisions of the Constitution;
(4) Chairmen and members of Constitutional
Commissions, without prejudice to the provisions of the
Constitution; and

(5) All other national and local officials classified as Grade

‘27’and higher under the Compensation and Position
Classification Act of 1989. b. Other offenses or felonies
whether simple or complexed with other crimes committed
by the public officials and employees mentioned in
subsection a of this section in relation to their office. (bold
emphasis supplied)
xxxx

Unquestionably, public officials occupying positions classified

as Grade 27 or higher are mentioned only in Subsection 4a and
Subsection 4b,signifying the plain legislative intent of limiting
the qualifying clause to such public officials. To include within
the ambit of the qualifying clause the persons covered by
Subsection 4c would contravene the exclusive mandate of the
PCGG to bring the civil and criminal cases pursuant to and in
connection with E.O. Nos. 1, 2, 14 and 14-A. In view of this, the
Sandiganbayan properly took cognizance of Criminal Case No.
28001 and Criminal Case No. 28002 despite Disini’s being a
private individual, and despite the lack of any allegation of his
being the co-principal, accomplice or accessory of a public
official in the commission of the offenses charged.
3.

The offenses charged in the

informations have not yet prescribed
In resolving the issue of prescription, the following must be
considered, namely: (1) the period of prescription for the
offense charged;(2) the time when the period of prescription
starts to run; and (3) the time when the prescriptive period is
interrupted.23

The information in Criminal Case No. 28001 alleged that Disini

had offered, promised and given gifts and presents to
Ferdinand E. Marcos; that said gifts were in consideration of
Disini obtaining for Burns & Roe and Westinghouse Electrical
Corporation (Westinghouse) the contracts, respectively, to do
the engineering and architectural design of and to construct the
PNPPP; and that President Marcos did award or cause to be
awarded the respective contracts to Burns & Roe and
Westinghouse, which acts constituted the crime of corruption of
public officials.24
The crime of corruption of public officials charged in Criminal
Case No. 28001 is punished by Article 212 of the Revised
Penal Code with the" same penalties imposed upon the officer
corrupted."25 Under the second paragraph of Article 210 of the
Revised Penal Code (direct bribery),26 if the gift was accepted
by the officer in consideration of the execution of an act that
does not constitute a crime, and the officer executes the act, he
shall suffer the penalty of prision mayor in its medium and
minimum periods and a fine of not less than three times the
value of the gift. Conformably with Article 90 of the Revised
Penal Code,27 the period of prescription for this specie of
corruption of public officials charged against Disini is 15 years.

As for Criminal Case No. 28002, Disini was charged with a

violation of Section 4(a) of R.A. No. 3019. By express provision
of Section 11 of R.A. No. 3019, as amended by Batas
Pambansa Blg. 195, the offenses committed under R.A. No.
3019 shall prescribe in 15 years. Prior to the amendment, the
prescriptive period was only 10 years. It became settled in
People v. Pacificador,28 however, that the longer prescriptive
period of 15years would not apply to crimes committed prior to
the effectivity of Batas Pambansa Blg. 195, which was
approved on March 16, 1982, because the longer period could
not be given retroactive effect for not being favorable to the
accused. With the information alleging the period from 1974 to
February1986 as the time of the commission of the crime
charged, the applicable prescriptive period is 10 years in order
to accord with People v. Pacificador .

For crimes punishable by the Revised Penal Code, Article 91

thereof provides that prescription starts to run from the day on
which the crime is discovered by the offended party, the
authorities, or their agents. As to offenses punishable by R.A.
No. 3019, Section 2 of R.A. No. 332629 states:

Section 2. Prescription shall begin to run from the day of the

commission of the violation of the law, and if the same be not
known at the time, from the discovery thereof and the institution
of judicial proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are

instituted against the guilty person, and shall begin to run again
if the proceedings are dismissed for reasons not constituting
double jeopardy.
The ruling on the issue of prescription in Presidential Ad Hoc
Fact-Finding Committee on Behest Loans v. Desierto30 is also
enlightening, viz:
Generally, the prescriptive period shall commence to run on the
day the crime is committed. That an aggrieved person "entitled
to an action has no knowledge of his right to sue or of the facts
out of which his right arises," does not prevent the running of
the prescriptive period. An exception to this rule is the
"blameless ignorance" doctrine, incorporated in Section 2 of Act
No. 3326. Under this doctrine, "the statute of limitations runs
only upon discovery of the fact of the invasion of a right which
will support a cause of action. In other words, the courts would
decline to apply the statute of limitations where the plaintiff does
not know or has no reasonable means of knowing the existence
of a cause of action." It was in this accord that the Court
confronted the question on the running of the prescriptive period
in People v. Duque which became the cornerstone of our 1999
Decision in Presidential Ad Hoc Fact-Finding Committee on
Behest Loans v. Desierto (G.R. No. 130149), and the
subsequent cases which Ombudsman Desierto dismissed,
emphatically, on the ground of prescription too. Thus, we held in
a catena of cases, that if the violation of the special law was not
known at the time of its commission, the prescription begins to
run only from the discovery thereof, i.e., discovery of the
unlawful nature of the constitutive act or acts.
Corollary, it is safe to conclude that the prescriptive period for
the crime which is the subject herein, commenced from the date
of its discovery in 1992 after the Committee made an
exhaustive investigation. When the complaint was filed in 1997,
only five years have elapsed, and, hence, prescription has not
yet set in. The rationale for this was succinctly discussed in the
1999 Presidential Ad Hoc Fact-Finding Committee on Behest
Loans, that "it was well-high impossible for the State, the
aggrieved party, to have known these crimes committed prior to
the 1986EDSA Revolution, because of the alleged connivance
and conspiracy among involved public officials and the
beneficiaries of the loans." In yet another pronouncement, in the
2001 Presidential Ad Hoc Fact-Finding Committee on Behest
Loans v. Desierto (G.R. No. 130817), the Court held that during
the Marcos regime, no person would have dared to question the
legality of these transactions. (Citations omitted)31
Accordingly, we are not persuaded to hold here that the
prescriptive period began to run from 1974, the time when the
contracts for the PNPP Project were awarded to Burns & Roe
and Westinghouse. Although the criminal cases were the
offshoot of the sequestration case to recover ill-gotten wealth
instead of behest loans like in Presidential Ad Hoc Fact-Finding
Committee on Behest Loans v. Desierto, the connivance and
conspiracy among the public officials involved and the
beneficiaries of the favors illegally extended rendered it similarly
well-nigh impossible for the State, as the aggrieved party, to
have known of the commission of the crimes charged prior to
the EDSA Revolution in 1986. Notwithstanding the highly
publicized and widely-known nature of the PNPPP, the unlawful
acts or transactions in relation to it were discovered only
through the PCGG’s exhaustive investigation, resulting in the
establishment of a prima facie case sufficient for the PCGG to
institute Civil Case No. 0013 against Disini. Before the
discovery, the PNPPP contracts, which partook of a public
character, enjoyed the presumption of their execution having
been regularly done in the course of official functions.32

Considering further that during the Marcos regime, no person

would have dared to assail the legality of the transactions, it
would be unreasonable to expect that the discovery of the
unlawful transactions was possible prior to 1986.

We note, too, that the criminal complaints were filed and their
records transmitted by the PCGG to the Office of the
Ombudsman on April 8, 1991for the conduct the preliminary
investigation.33 In accordance with Article 91 of the
Revised Penal Code34 and the ruling in Panaguiton, Jr. v.
Department of Justice,35 the filing of the criminal complaints in
the Office of the Ombudsman effectively interrupted the running
of the period of prescription. According to Panaguiton:36

In Ingco v. Sandiganbayan and Sanrio Company Limited v. Lim,

which involved violations of the Anti-Graft and Corrupt Practices
Act(R.A. No. 3019) and the Intellectual Property Code (R.A. No.
8293),which are both special laws, the Court ruled that the
prescriptive period is interrupted by the institution of
proceedings for preliminary investigation against the accused.
In the more recent case of Securities and Exchange
Commission v. Interport Resources Corporation, the Court ruled
that the nature and purpose of the investigation conducted by
the Securities and Exchange Commission on violations of the
Revised Securities Act, another special law, is equivalent to the
preliminary investigation conducted by the DOJ in criminal
cases, and thus effectively interrupts the prescriptive period.

The following disquisition in the Interport Resources case is

instructive, thus:

While it may be observed that the term "judicial proceedings" in

Sec. 2 of Act No. 3326 appears before" investigation and
punishment" in the old law, with the subsequent change in set-
up whereby the investigation of the charge for purposes of
prosecution has become the exclusive function of the executive
branch, the term "proceedings" should now be understood
either executive or judicial in character: executive when it
involves the investigation phase and judicial when it refers to
the trial and judgment stage. With this clarification, any kind of
investigative proceeding instituted against the guilty person
which may ultimately lead to his prosecution should be sufficient
to toll prescription.
Indeed, to rule otherwise would deprive the injured party the
right to obtain vindication on account of delays that are not
under his control.

The prevailing rule is, therefore, that irrespective of whether the

offense charged is punishable by the Revised Penal Code or by
a special law, it is the filing of the complaint or information in the
office of the public prosecutor for purposes of the preliminary
investigation that interrupts the period of prescription.
Consequently, prescription did not yet set in because only five
years elapsed from 1986, the time of the discovery of the
offenses charged, up to April 1991, the time of the filing of the
criminal complaints in the Office of the Ombudsman.
The informations were sufficient in form and substance
It is axiomatic that a complaint or information must state every
single fact necessary to constitute the offense charged;
otherwise, a motion to dismiss or to quash on the ground that
the complaint or information charges no offense may be
properly sustained. The fundamental test in determining
whether a motion to quash may be sustained based on this
ground is whether the facts alleged, if hypothetically admitted,
will establish the essential elements of the offense as defined in
the law.37 Extrinsic matters or evidence aliunde are not
considered.38

The test does not require absolute certainty as to the presence

of the elements of the offense; otherwise, there would no longer
be any need for the Prosecution to proceed to trial.

The informations in Criminal Case No. 28001 (corruption of

public officials) and Criminal Case No. 28002 (violation of
Section 4(a) of RA No.3019) have sufficiently complied with the
requirements of Section 6, Rule110 of the Rules of Court, viz:
Section 6. Sufficiency of complaint or information. — A
complaint or information is sufficient if it states the name of the
accused; the designation of the offense given by the statute; the
acts or omissions complained of as constituting the offense; the
name of the offended party; the approximate date of the
commission of the offense; and the place where the offense
was committed.
When the offense is committed by more than one person, all of
them shall be included in the complaint or information.
The information in Criminal Case No. 28001 alleging corruption
of public officers specifically put forth that Disini, in the period
from 1974 to February 1986 in Manila, Philippines, conspiring
and confederating with then President Marcos, willfully,
unlawfully and feloniously offered, promised and gave gifts and
presents to President Marcos, who, by taking undue advantage
of his position as President, committed the offense in relation to
his office, and in consideration of the gifts and presents offered,
promised and given by Disini, President Marcos caused to be
awarded to Burns & Roe and Westinghouse the respective
contracts to do the engineering and architectural design of and
to construct the PNPPP. The felonious act consisted of causing
the contracts for the PNPPP to be awarded to Burns & Roe and
Westinghouse by reason of the gifts and promises offered by
Disini to President Marcos.

The elements of corruption of public officials under Article 212

of the Revised Penal Code are:

1. That the offender makes offers or promises, or gives

gifts or presents to a public officer; and
2. That the offers or promises are made or the gifts or
presents are given to a public officer under circumstances
 that will make the public officer liable for direct bribery or
indirect bribery.
The allegations in the information for corruption of public
officials, if hypothetically admitted, would establish the essential
elements of the crime. The information stated that: (1) Disini
made an offer and promise, and gave gifts to President Marcos,
a public officer; and (2) in consideration of the offers, promises
and gifts, President Marcos, in causing the award of the
contracts to Burns & Roe and Westinghouse by taking
advantage of his position and in committing said act in relation
to his office, was placed under circumstances that would make
him liable for direct bribery.39

The second element of corruption of public officers simply

required the public officer to be placed under circumstances,
not absolute certainty, that would make him liable for direct or
indirect bribery. Thus, even without alleging that President
Marcos received or accepted Disini’s offers, promises and gifts
– an essential element in direct bribery – the allegation that
President Marcos caused the award of the contracts to Burns &
Roe and Westinghouse sufficed to place him under
circumstances of being liable for direct bribery.
The sufficiency of the allegations in the information charging the
violation of Section 4(a) of R.A. No. 3019 is similarly upheld.
The elements of the offense under Section 4(a) of R.A. No.
3019 are:
1. That the offender has family or close personal relation
with a public official;
2. That he capitalizes or exploits or takes advantage of
such family or close personal relation by directly or
indirectly requesting or receiving any present, gift, material
 or pecuniary advantage from any person having some
business, transaction, application, request or contract with
the government;

3. That the public official with whom the offender has family
or close personal relation has to intervene in the business
transaction, application, request, or contract with the
government.

The allegations in the information charging the violation of

Section 4(a) of R.A. No. 3019, if hypothetically admitted, would
establish the elements of the offense, considering that: (1)
Disini, being the husband of Paciencia Escolin-Disini, the first
cousin of First Lady Imelda Romualdez-Marcos, and at the
same time the family physician of the Marcoses, had close
personal relations and intimacy with and free access to
President Marcos, a public official; (2) Disini, taking advantage
of such family and close personal relations, requested and
received $1,000,000.00 from Burns & Roe and $17,000,000.00
from Westinghouse, the entities then having business,
transaction, and application with the Government in connection
with the PNPPP; (3) President Marcos, the public officer with
whom Disini had family or close personal relations, intervened
to secure and obtain for Burns & Roe the engineering and
architectural contract, and for Westinghouse the construction of
the PNPPP.

WHEREFORE, the Court DISMISSES the petition for certiorari;

AFFIRMS the resolutions promulgated on January 17, 2005 and
August 10, 2005 by the Sandiganbayan (First Division) in
Criminal Case No. 28001 and Criminal Case No. 28002; and
DIRECTS petitioner to pay the costs of suit.
SO ORDERED.
 Department of Agriculture vs
NLRC
Doctrine of non-suability

DEPT OF AGRICULTURE VS NLRC

G.R. No. 104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.

Facts:

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

Petitioner Department of Agriculture and Sultan Security Agency entered into a contract for
security services to be provided by the latter to the said governmental entity. Pursuant to their
arrangements, guards were deployed by Sultan Security Agency in the various premises of the
DA. Thereafter, several guards filed a complaint for underpayment of wages, non-payment of
13th month pay, uniform allowances, night shift differential pay, holiday pay, and overtime pay,
as well as for damages against the DA and the security agency.
The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the
security agency for the payment of money claims of the complainant security guards. The DA
and the security agency did not appeal the decision. Thus, the decision became final and
executory. The Labor Arbiter issued a writ of execution to enforce and execute the judgment
against the property of the DA and the security agency. Thereafter, the City Sheriff levied on
execution the motor vehicles of the DA.

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

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

Issues:

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

Discussions:

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

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

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

G.R. No. 104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, et
al., respondents.
Roy Lago Salcedo for private respondents.

VITUG, J.:

For consideration are the incidents that flow from the familiar
doctrine of non-suability of the state.

In this petition for certiorari, the Department of Agriculture seeks

to nullify the Resolution, 1 dated 27 November 1991, of the
National Labor Relations Commission (NLRC), Fifth Division,
Cagayan de Oro City, denying the petition for injunction,
prohibition and mandamus that prays to enjoin permanently the
NLRC's Regional Arbitration Branch X and Cagayan de Oro
City Sheriff from enforcing the decision 2 of 31 May 1991 of the
Executive Labor Arbiter and from attaching and executing on
petitioner's property.
The Department of Agriculture (herein petitioner) and Sultan
Security Agency entered into a contract3 on 01 April 1989 for
security services to be provided by the latter to the said
governmental entity. Save for the increase in the monthly rate of
the guards, the same terms and conditions were also made to
apply to another contract, dated 01 May 1990, between the
same parties. Pursuant to their arrangements, guards were
deployed by Sultan Agency in the various premises of the
petitioner.
On 13 September 1990, several guards of the Sultan Security
Agency filed a complaint for underpayment of wages, non-
payment of 13th month pay, uniform allowances, night shift
differential pay, holiday pay and overtime pay, as well as for
damages,4 before the Regional Arbitration Branch X of Cagayan
de Oro City, docketed as NLRC Case No. 10-09-00455-90 (or
10-10-00519-90, its original docket number), against the
Department of Agriculture and Sultan Security Agency.
The Executive Labor Arbiter rendered a decision on 31 May
finding herein petitioner and jointly and severally liable with
Sultan Security Agency for the payment of money claims,
aggregating P266,483.91, of the complainant security guards.
The petitioner and Sultan Security Agency did not appeal the
decision of the Labor Arbiter. Thus, the decision became final
and executory.
On 18 July 1991, the Labor Arbiter issued a writ of
execution. 5 commanding the City Sheriff to enforce and execute
the judgment against the property of the two respondents.
Forthwith, or on 19 July 1991, the City Sheriff levied on
execution the motor vehicles of the petitioner, i.e. one (1) unit
Toyota Hi-Ace, one (1) unit Toyota Mini Cruiser, and one (1)
unit Toyota Crown.6 These units were put under the custody of
Zacharias Roa, the property custodian of the petitioner, pending
their sale at public auction or the final settlement of the case,
whichever would come first.
A petition for injunction, prohibition and mandamus, with prayer
for preliminary writ of injunction was filed by the petitioner with
the National Labor Relations Commission (NLRC), Cagayan de
Oro, alleging, inter alia, that the writ issued was effected without
the Labor Arbiter having duly acquired jurisdiction over the
petitioner, and that, therefore, the decision of the Labor Arbiter
was null and void and all actions pursuant thereto should be
deemed equally invalid and of no legal, effect. The petitioner
also pointed out that the attachment or seizure of its property
would hamper and jeopardize petitioner's governmental
functions to the prejudice of the public good.

On 27 November 1991, the NLRC promulgated its assailed

resolution; viz:

WHEREFORE, premises considered, the following

orders are issued:

1. The enforcement and execution of the judgments

against petitioner in NLRC RABX Cases Nos. 10-10-
00455-90; 10-10-0481-90 and 10-10-00519-90 are
temporarily suspended for a period of two (2) months,
more or less, but not extending beyond the last
quarter of calendar year 1991 to enable petitioner to
source and raise funds to satisfy the judgment awards
against it;

2. Meantime, petitioner is ordered and directed to

source for funds within the period above-stated and to
deposit the sums of money equivalent to the
aggregate amount. it has been adjudged to pay jointly
and severally with respondent Sultan Security Agency
with the Regional Arbitration Branch X, Cagayan de
Oro City within the same period for proper
dispositions;

3. In order to ensure compliance with this order,

petitioner is likewise directed to put up and post
sufficient surety and supersedeas bond equivalent to
at least to fifty (50%) percent of the total monetary
award issued by a reputable bonding company duly
accredited by the Supreme Court or by the Regional
Trial Court of Misamis Oriental to answer for the
satisfaction of the money claims in case of failure or
default on the part of petitioner to satisfy the money
claims;

4. The City Sheriff is ordered to immediately release

the properties of petitioner levied on execution within
ten (10) days from notice of the posting of sufficient
surety or supersedeas bond as specified above. In
the meanwhile, petitioner is assessed to pay the costs
and/or expenses incurred by the City Sheriff, if any, in
connection with the execution of the judgments in the
above-stated cases upon presentation of the
appropriate claims or vouchers and receipts by the
city Sheriff, subject to the conditions specified in the
NLRC Sheriff, subject to the conditions specified in
the NLRC Manual of Instructions for Sheriffs;

5. The right of any of the judgment debtors to claim

reimbursement against each other for any payments
made in connection with the satisfaction of the
judgments herein is hereby recognized pursuant to
the ruling in the Eagle Security case, (supra). In case
of dispute between the judgment debtors, the
 Executive Labor Arbiter of the Branch of origin may
upon proper petition by any of the parties conduct
arbitration proceedings for the purpose and thereby
render his decision after due notice and hearings;

7. Finally, the petition for injunction is Dismissed for

lack of basis. The writ of preliminary injunction
previously issued is Lifted and Set Aside and in lieu
thereof, a Temporary Stay of Execution is issued for a
period of two (2) months but not extending beyond the
last quarter of calendar year 1991, conditioned upon
the posting of a surety or supersedeas bond by
petitioner within ten (10) days from notice pursuant to
paragraph 3 of this disposition. The motion to admit
the complaint in intervention is Denied for lack of
merit while the motion to dismiss the petition filed by
Duty Sheriff is Noted
SO ORDERED.

In this petition for certiorari, the petitioner charges the NLRC

with grave abuse of discretion for refusing to quash the writ of
execution. The petitioner faults the NLRC for assuming
jurisdiction over a money claim against the Department, which,
it claims, falls under the exclusive jurisdiction of the
Commission on Audit. More importantly, the petitioner asserts,
the NLRC has disregarded the cardinal rule on the non-suability
of the State.
The private respondents, on the other hand, argue that the
petitioner has impliedly waived its immunity from suit by
concluding a service contract with Sultan Security Agency.
The basic postulate enshrined in the constitution that "(t)he
State may not be sued without its consent," 7 reflects nothing
less than a recognition of the sovereign character of the State
and an express affirmation of the unwritten rule effectively
insulating it from the jurisdiction of courts. 8 It is based on the
very essence of sovereignty. As has been aptly observed, by
Justice Holmes, a sovereign is exempt from suit, not because of
any formal conception or obsolete theory, but on the logical and
practical ground that there can be no legal right as against the
authority that makes the law on which the right depends. 9 True,
the doctrine, not too infrequently, is derisively called "the royal
prerogative of dishonesty" because it grants the state the
prerogative to defeat any legitimate claim against it by simply
invoking its non-suability. 10 We have had occasion, to explain in
its defense, however, that a continued adherence to the
doctrine of non-suability cannot be deplored, for the loss of
governmental efficiency and the obstacle to the performance of
its multifarious functions would be far greater in severity than
the inconvenience that may be caused private parties, if such
fundamental principle is to be abandoned and the availability of
judicial remedy is not to be accordingly restricted. 11
The rule, in any case, is not really absolute for it does not say
that the state may not be sued under any circumstances. On
the contrary, as correctly phrased, the doctrine only conveys,
"the state may not be sued without its consent;" its clear import
then is that the State may at times be sued. 12 The States'
consent may be given expressly or impliedly. Express consent
may be made through a general law13 or a special law. 14 In this
jurisdiction, the general law waiving the immunity of the state
from suit is found in Act No. 3083, where the Philippine
government "consents and submits to be sued upon any money
claims involving liability arising from contract, express or
implied, which could serve as a basis of civil action between
private parties." 15 Implied consent, on the other hand, is
conceded when the State itself commences litigation, thus
opening itself to a counterclaim16 or when it enters into a
contract. 17 In this situation, the government is deemed to have
descended to the level of the other contracting party and to
have divested itself of its sovereign immunity. This rule, relied
upon by the NLRC and the private respondents, is not,
however, without qualification. Not all contracts entered into by
the government operate as a waiver of its non-suability;
distinction must still be made between one which is executed in
the exercise of its sovereign function and another which is done
in its proprietary capacity. 18

In the Unites States of America vs. Ruiz, 19 where the

questioned transaction dealt with improvements on the wharves
in the naval installation at Subic Bay, we held:

The traditional rule of 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
act ( jure gestionisis). The result is that State
immunity now extends only to acts jure imperii. The
restrictive application of State immunity is now the
rule in the United States, the United Kingdom and
other states in Western Europe.
xxx xxx xxx
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 this be deemed to have actually
given its consent to be sued only when it enters into
business contracts. It does not apply where the
contracts 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 not dedicated to
commercial or business purposes.

In the instant case, the Department of Agriculture has not

pretended to have assumed a capacity apart from its being a
governmental entity when it entered into the questioned
contract; nor that it could have, in fact, performed any act
proprietary in character.
But, be that as it may, the claims of private respondents, i.e. for
underpayment of wages, holiday pay, overtime pay and similar
other items, arising from the Contract for Service, clearly
constitute money claims. Act No. 3083, aforecited, gives the
consent of the State to be "sued upon any moneyed claim
involving liability arising from contract, express or implied, . . .
Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as
amended by Presidential Decree ("P.D.") No. 1145, the money
claim first be brought to the Commission on Audit. Thus,
in Carabao, Inc., vs. Agricultural Productivity Commission, 20 we
ruled:

(C)laimants have to prosecute their money claims

against the Government under Commonwealth Act
 327, stating that Act 3083 stands now merely as the
general law waiving the State's immunity from suit,
subject to the general limitation expressed in Section
7 thereof that "no execution shall issue upon any
judgment rendered by any Court against the
Government of the (Philippines), and that the
conditions provided in Commonwealth Act 327 for
filing money claims against the Government must be
strictly observed."

We fail to see any substantial conflict or inconsistency between

the provisions of C.A. No. 327 and the Labor Code with respect
to money claims against the State. The Labor code, in relation
to Act No. 3083, provides the legal basis for the State liability
but the prosecution, enforcement or satisfaction thereof must
still be pursued in accordance with the rules and procedures
laid down in C.A. No. 327, as amended by P.D. 1445.

When the state gives its consent to be sued, it does thereby

necessarily consent to unrestrained execution against it. tersely
put, when the State waives its immunity, all it does, in effect, is
to give the other party an opportunity to prove, if it can, that the
State has a liability. 21 In Republic vs. Villasor 22 this Court, in
nullifying the issuance of an alias writ of execution directed
against the funds of the Armed Forces of the Philippines to
satisfy a final and executory judgment, has explained, thus —

The universal rule that where the State gives its

consent to be sued by private parties either by
general or special law, it may limit the claimant's
action "only up to the completion of proceedings
anterior to the stage of execution" and that the power
of the Courts ends when the judgment is rendered,
since government funds and properties may not be
 seized under writs or execution or garnishment to
satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of
public funds must be covered by the correspondent
appropriation as required by law. The functions and
public services rendered by the State cannot be
allowed to be paralyzed or disrupted by the diversion
of public funds from their legitimate and specific
objects, as appropriated by law.23

WHEREFORE, the petition is GRANTED. The resolution, dated

27 November 1991, is hereby REVERSED and SET ASIDE.
The writ of execution directed against the property of the
Department of Agriculture is nullified, and the public
respondents are hereby enjoined permanently from doing,
issuing and implementing any and all writs of execution issued
pursuant to the decision rendered by the Labor Arbiter against
said petitioner.
SO ORDERED.
 SUIT AGAINST PUBLIC OFFICERS
VETERANS MANPOWER VSCOURT OF APPEALS

G.R. NO. 91359

FACTS: VMPSI (Veterans Manpower and Protective Services, Inc.) alleges that the provisions of RA 5487
(Private Security Agency Law) violate the provisions of the Constitution against monopolies, unfair
competition and combinations of restraint of trade and tend to favor and institutionalize the PADPAO
(Philippine Association of Detective and Protective Services, Inc.). Furthermore, VMPSI questions the
provision on requiring all private security agencies or company security forces to register as members of
any PADPAO chapter organized within the region. On May 12, 1986, a Memorandum of Agreement was
executed by PADPAO and the PC Chief, which fixed the minimum monthly contract rate per guard for 8
hours of security service per day at P2,255.00 within Metro Manila and P2,215.00 outside of Metro
Manila. PADPAO found VMPSI guilty of cut-throat competition when it charged Metropolitan
Waterworks and Sewerage System lower than the standard minimum rates provided in the MOA. As a
result, PADPAO refused to issue a clearance/certificate of membership to VMPSI. VMPSI filed a civil case
against the PC chief and PC-SUSIA (Philippine Constabulary Supervisory Unit for Security and
Investigation Agencies). PC Chief and PC-SUSIA filed a motion to dismiss on the grounds that the case is
against the State which had not given consent thereto.

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

HELD: Yes. A public official may sometimes be held liable in his personal or private capacity if he acts in
bad faith, or beyond the scope of his authority or jurisdiction, however, since the acts for which the PC
Chief and PC-SUSIA are being called to account in this case, were performed as part of their official
duties, without malice, gross negligence, or bad faith, no recovery may be had against them in their
private capacities. Furthermore, the Supreme Court agrees with the Court of Appeals that the
Memorandum of Agreement dated May 12, 1986 does not constitute an implied consent by the State to
be sued.

The consent of the State to be sued must emanate from statutory authority, hence, a legislative act, not
from a mere memorandum. Without such consent, the trial court did not acquired jurisdiction over the
public respondents.

Petition for review is denied and the judgment appealed from is affirmed in toto.
G.R. No. 92432 February 23, 1995
T/SGT ALDORA LARKINS, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON.
IRINEO BERNARDO, DANIEL HERRERA, MARIETTA DE
GUZMAN, JOSELITO CATACUTAN, JOSEPH GALANG,
ROBERTO HERRERA, DELPIN PECSON, CARLOS
CORTEZ, JAIME CORTEZ, ARSENIO DIAZ, ROBERTO
SAGAD and MARCELO LOZANO, respondents.

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised

Rules of Court to set aside the Resolutions dated August 31,
1989 and February 5, 1990 of the National Labor Relations
Commission (NLRC) in NLRC Case No. RAB- III-08-0572-88.
We grant the petition.
I

Petitioner was a member of the United States Air Force (USAF)

assigned to oversee the dormitories of the Third Aircraft
Generation Squadron (3 AGS) at Clark Air Base, Pampanga.

On August 10, 1988, 3 AGS terminated the contract for the

maintenance and upkeep of the dormitories with the De
Guzman Custodial Services. The employees thereof, including
private respondents, were allowed to continue working for 3
AGS. It was left to the new contractor, the JAC Maintenance
Services owned by Joselito Cunanan, to decide whether it
would retain their services.
Joselito Cunanan, however, chose to bring in his own workers.
As a result, the workers of the De Guzman Custodial Services
were requested to surrender their base passes to Lt. Col.
Frankhauser or to petitioner.

On August 12, 1988, private respondents filed a complaint with

the Regional Arbitration Branch No. III of the NLRC, San
Fernando, Pampanga, against petitioner, Lt. Col. Frankhauser,
and Cunanan for illegal dismissal and underpayment of wages
(NLRC Case No. RAB-III-08-0572-88). On September 9, 1988,
private respondents amended their complaint and added therein
claims for emergency cost of living allowance, thirteenth-month
pay, service incentive leave pay and holiday premiums.

The Labor Arbiter, with the conformity of private respondents,

ordered Cunanan dropped as party respondent.
Petitioner and Lt. Col. Frankhauser failed to answer the
complaint and to appear at the hearings. They, likewise, failed
to submit their position paper, which the Labor Arbiter deemed
a waiver on their part to do so. The case was therefore
submitted for decision on the basis of private respondents'
position paper and supporting documents.

On November 21, 1988, the Labor Arbiter rendered a decision

granting all the claims of private respondents. He found both Lt.
Col. Frankhauser and petitioner "guilty of illegal dismissal" and
ordered them to reinstate private respondents with full back
wages, or if that is no longer possible, to pay private
respondents' separation pay (Rollo, p. 78).
Petitioner appealed to the NLRC claiming that the Labor Arbiter
never acquired jurisdiction over her person because no
summons or copies of the complaints, both original and
amended, were ever served on her. In her "Supplemental
Memorandum to Memorandum of Appeal," petitioner argued
that the attempts to serve her with notices of hearing were not
in accordance with the provisions of the R.P. — U.S. Military
Bases Agreement of 1947 (Rollo, pp. 35-37).

On August 31, 1989, NLRC issued a Resolution affirming the

decision of the Labor Arbiter, but declared that:
In the event this decision is executed and/or enforced,
and considering our finding that the real party
respondent is the United States Government through
its Armed Forces stationed at Clark Air Base, let such
execution be made subject to existing international
agreements diplomatic protocol (Rollo, p. 95).

Petitioner moved for reconsideration, which NLRC denied on

February 5, 1990 (Rollo, p. 101).
Petitioner then elevated the matter to us.
On July 11, 1990, the Office of the solicitor General filed a
Manifestation stating that it "cannot legally support the decision
of the Labor Arbiter" and therefore prayed that it be relieved
from the responsibility of filing the required Comment for the
public respondents (Rollo, pp. 117-118). In view of this
Manifestation, on July 18, 1990, we resolved to require NLRC to
file its own comment to the petition, which NLRC did on
November 29, 1990 (Rollo, pp. 120, 133-139).
II
It is petitioner's contention that the questioned resolutions are
null and void because respondent Labor Arbiter did not acquire
jurisdiction to entertain and decide the case. Petitioner alleges
that she never received nor was served, any summons or
copies of the original and amended complaints, and therefore
the Labor Arbiter had no jurisdiction over her person under
Article XIV of the R.P. — U.S. Military Bases Agreement.
We agree.

The "Agreement Between the Republic of the Philippines and

the United States of America Concerning Military Bases,"
otherwise known as the R.P. — U.S. Military Bases Agreement,
governed the rights, duties, authority, and the exercise thereof
by Philippine and American nationals inside the U.S. military
bases in the country.

Article XIV thereof, governing the procedure for service of

summons on persons inside U.S. military bases, provides that:
. . . [N]o process, civil or criminal, shall be served
within any base except with the permission of the
commanding officer of such base; but should the
commanding officer refuse to grant such permission
he shall forthwith take the necessary steps . . . . to
serve such process, as the case may be, and to
provide the attendance of the server of such process
before the appropriate court in the Philippines or
procure such server to make the necessary affidavit
or declaration to prove such service as the case may
require.
Summonses and other processes issued by Philippine courts
and administrative agencies for United States Armed Forces
personnel within any U.S. base in the Philippines could be
served therein only with the permission of the Base
Commander. If he withholds giving his permission, he should
instead designate another person to serve the process, and
obtain the server's affidavit for filing with the appropriate court.

Respondent Labor Arbiter did not follow said procedure. He

instead, addressed the summons to Lt. Col. Frankhauser and
not the Base Commander (Rollo, p. 11).

Respondents do not dispute petitioner's claim that no summons

was ever issued and served on her. They contend, however,
that they sent notices of the hearings to her (Rollo, pp. 12-13).

Notices of hearing are not summonses. The provisions and

prevailing jurisprudence in Civil Procedure may be applied by
analogy to NLRC proceedings (Revised Rules of the NLRC,
Rule I, Sec. 3). It is basic that the Labor Arbiter cannot acquire
jurisdiction over the person of the respondent without the latter
being served with summons (cf. Vda. de Macoy v. Court of
Appeals, 206 SCRA 244 [1992]; Filmerco Commercial Co., Inc.
v. Intermediate Appellate Court, 149 SCRA 193 [1987]). In the
absence of service of summons or a valid waiver thereof, the
hearings and judgment rendered by the Labor Arbiter are null
and void (cf. Vda. de Macoy v. Court of Appeals, supra.)

Petitioner, in the case at bench, appealed to the NLRC and

participated in the oral argument before the said body. This,
however, does not constitute a waiver of the lack of summons
and a voluntary submission of her person to the jurisdiction of
the Labor Arbiter. She may have raised in her pleadings
grounds other than lack of jurisdiction, but these grounds were
discussed in relation to and as a result of the issue of the lack of
jurisdiction. In effect, petitioner set forth only one issue and that
is the absence of jurisdiction over her person. If an appearance
before the NLRC is precisely to question the jurisdiction of the
said agency over the person of the defendant, then this
appearance is not equivalent to service of summons (De los
Santos v. Montera, 221 SCRA 15 [1993]).

Be that as it may, on the assumption that petitioner validly

waived service of summons on her, still the case could not
prosper. There is no allegation from the pleadings filed that Lt.
Col. Frankhauser and petitioner were being sued in their
personal capacities for tortious acts (United States of America
v. Guinto, 182 SCRA 644 [1990]). However, private
respondents named 3 AGS as one of the respondents in their
complaint (Rollo, p. 10).
It is worth noting that NLRC admitted that:
At the outset, let it be made clear that We are aware
as to who is the real party respondent in this case; it
is the Government of the United States of America
which is maintaining military facilities in the
Philippines, one of which is located inside Clark Air
Base. The 3 AGS where the appellees previously
worked as dormitory attendants is just one of the
various units of the United States Armed Forces
(USAF) inside the said military base. While individual
respondents, particularly Lt. Col. William Frankhauser
and T/Sgt. Aldora Larkins, are mere elements of the
USAF assigned to the 3 AGS. Thus, whatever
awards, monetary or otherwise, the appellees are
entitled to by virtue of this case are the primary
liabilities of their real employer, the United States
Government (Rollo, pp. 91-92).

Private respondents were dismissed from their employment by

Lt. Col. Frankhauser acting for and in behalf of the U.S.
Government. The employer of private respondents was not Lt.
Col. Frankhauser nor petitioner. The employer of private
respondents, as found by NLRC, was the U.S. Government which, by right
of sovereign power, operated and maintained the dormitories at Clark Air
Base for members of the USAF (United States of America v. Guinto, 182
SCRA 644 [1990]; United States of America v. Ruiz, 136 SCRA 487
[1985]).

Indeed, assuming that jurisdiction was acquired over the United States
Government and the monetary claims of private respondents proved,
such awards will have to be satisfied not by Lt. Col.
Frankhauser and petitioner in their personal capacities, but by
the United States government (Sanders v. Veridiano II, 162
SCRA 88 [1988]).

Under the "Agreement Between the Government of the

Republic of the Philippines and the Government of the United
States of America Relating to the Employment of Philippine
Nationals in the United States Military Bases in the Philippines"
otherwise known as the Base Labor Agreement of May 27,
1968, any dispute or disagreement between the United States
Armed Forces and Filipino employees should be settled under
grievance or labor relations procedures established therein (Art.
II) or by the arbitration process provided in the Romualdez-
Bosworth Memorandum of Agreement dated September 5,
1985. If no agreement was reached or if the grievance
procedure failed, the dispute was appealable by either party to
a Joint Labor Committee established in Article III of the Base
Labor Agreement.

Unquestionably therefore, no jurisdiction was ever acquired by

the Labor Arbiter over the case and the person of petitioner and
the judgment rendered is null and void (Filmerco Commercial
Co. v. Intermediate Appellate Court, supra.; Sy v. Navarro, 81
SCRA 458 [1978]).
WHEREFORE, the petition for certiorari is GRANTED.
Shauf v. CA (consti1)
Shauf v. CA
Loida Q. Shauf & Jacob Shauf, petitioners v. Hon. CA, Don E. Detwiler & Anthony Persi, respondents

Second Division
Doctrine: official v. personal capacity
Keywords: void for overbreadth
Date: November 27, 1990
Ponente: Justice Regalado

Facts:
 Loida Shauf, a Filipino by origin and married to an American who is a member of the US Air
Force, was rejected for a position of Guidance Counselor in the Base Education Office at Clark Air Base,
for which she is eminently qualified.
 By reason of her non-selection, she filed a complaint for damages and an equal employment
opportunity complaint against private respondents, Don Detwiler (civillian personnel officer) and Anthony
Persi (Education Director), for alleged discrimination by reason of her nationality and sex.
 Shauf was offered a temporary position as a temporary Assistant Education Adviser for a 180-day
period with the condition that if a vacancy occurs, she will be automatically selected to fill the vacancy.
But if no vacancy occurs after 180 days, she will be released but will be selected to fill a future vacancy if
she’s available. Shauf accepted the offer. During that time, Mrs. Mary Abalateo’s was about to vacate her
position. But Mrs. Abalateo’s appointment was extended thus, Shauf was never appointed to said
position. She claims that the Abalateo’s 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 attorney’s fees + P100k as moral & exemplary damages.
 Both parties appealed to the CA. Shauf prayed for the increase of the damages to be collected
from defendants. Defendants on the other hand, continued using the defense that they are immune from
suit for acts done/statements made by them in performance of their official governmental functions
pursuant to RP-US Military Bases Agreement of 1947. They claim that the Philippines does not have
jurisdiction over the case because it was under the exclusive jurisdiction of a US District Court. They
likewise claim that petitioner failed to exhaust all administrative remedies thus case should be dismissed.
CA reversed RTC decision. According to the CA, defendants are immune from suit.
 Shauf claims that the respondents are being sued in their private capacity thus this is not a suit
against the US government which would require consent.
 Respondents still maintain their immunity from suit. They further claim that the rule allowing suits
against public officers & employees for criminal & unauthorized acts is applicable only in the Philippines &
is not part of international law.
 Hence this petition for review on certiorari.

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

Held:
No they are not immune.
WHEREFORE, the challenged decision and resolution of respondent Court of Appeals in CA-G.R. CV
No. 17932 are hereby ANNULLED and SET ASIDE. Private respondents are hereby ORDERED, jointly
and severally, to pay petitioners the sum of P100,000.00 as moral damages, P20,000.00 as and for
attorney's fees, and the costs of suit.

Ratio:
 They state that the doctrine of immunity from suit will not apply and may not be invoked where the
public official is being sued in his private and personal capacity as an ordinary citizen. The cloak of
protection afforded the officers and agents of the government is removed the moment they are sued in
their individual capacity. This situation usually arises where the public official acts without authority or in
excess of the powers vested in him.
 It is a well-settled principle of law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done with malice and in bad faith, or
beyond the scope of his authority or jurisdiction
 Director of the Bureau of Telecommunications vs. Aligaen Inasmuch as the State authorizes
only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the
State, and an action against the officials or officers by one whose rights have been invaded or violated by
such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the
State from suit. In the same tenor, it has been said that an action at law or suit in equity against a State
officer or the director of a State department on the ground that, while claiming to act for the State, he
violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under
an assumption of authority which he does not have, is not a suit against the State within the constitutional
provision that the State may not be sued without its consent."The rationale for this ruling is that the
doctrine of state immunity cannot be used as an instrument for perpetrating an injustice

 In the case at bar, there is nothing in the record which suggests any arbitrary, irregular or abusive
conduct or motive on the part of the trial judge in ruling that private respondents committed acts of
discrimination for which they should be held personally liable.
 There is ample evidence to sustain plaintiffs' complaint that plaintiff Loida Q. Shauf was
refused appointment as Guidance Counselor by the defendants on account of her sex, color and origin.
 She received a Master of Arts Degree from the University of Santo Tomas, Manila, in
1971 and has completed 34 semester hours in psychology?guidance and 25 quarter hours in human
behavioral science. She has also completed all course work in human behavior and counselling
psychology for a doctoral degree. She is a civil service eligible. More important, she had functioned as a
Guidance Counselor at the Clark Air Base at the GS-1710-9 level for approximately four years at the time
she applied for the same position in 1976.
 In filling the vacant position of Guidance Counselor, defendant Persi did not even
consider the application of plaintiff Loida Q. Shauf, but referred the vacancy to CORRO which appointed
Edward B. Isakson who was not eligible to the position.

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

 Respondents alleged that petitioner Loida Q. Shauf failed to avail herself of her remedy under the
United States federal legislation on equality of opportunity for civilian employees, which is allegedly
exclusive of any other remedy under American law, let alone remedies before a foreign court and under a
foreign law such as the Civil Code of the Philippines.
 SC: Petitioner Loida Q. Shauf is not limited to these remedies, but is entitled as a matter of plain
and simple justice to choose that remedy, not otherwise proscribed, which will best advance and protect
her interests. There is, thus, nothing to enjoin her from seeking redress in Philippine courts which should
not be ousted of jurisdiction on the dubious and inconclusive representations of private respondents on
that score.
Republic vs. Sandoval 220 SCRA 124
Sunday, January 25, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: Farmer-rallyists marched to Malacanang calling for a genuine land

reform program. There was a marchers-police confrontation which resulted in
the death of 12 rallyists and scores were wounded. As a result, then Pres.
Aquino issued AO 11 creating the Citizens Mendiola Commission for the purpose
of conducting an investigation. The most significant recommendation of the
Commission was for the heirs of the deceased and wounded victims to
be compensated by the government. Based on such recommendation, the
victims of Mendiola massacre filed an action for damages against
the Republic and the military/police officers involved in the incident.

Issues:
(1) Whether or not there is a valid waiver of immunity
(2) Whether or not the State is liable for damages

Held: The Court held that there was no valid waiver of immunity as
claimed by the petitioners. The recommendation made by the Commission to indemnify
the heirs of the deceased and the victims does not in any way mean that liability attaches to
the State. AO 11 merely states the purpose of the creation of the Commission and,
therefore, whatever is the finding of the Commission only serves as the basis for a cause of
action in the event any party decides to litigate the same. Thus, the recommendation of the
Commission does not in any way bind the State.

The State cannot be made liable because the military/police officers who
allegedly were responsible for the death and injuries suffered by the marchers
acted beyond the scope of their authority. It is a settled rule that the State as a
person can commit no wrong. The military and police officers who were
responsible for the atrocities can be held personally liable for damages as they
exceeded their authority, hence, the actscannot be considered official.
 CONSENT TO BE SUED
A. EXPRESS CONSENT
G.R. No. 104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, et
al., respondents.

Roy Lago Salcedo for private respondents.

VITUG, J.:

For consideration are the incidents that flow from the familiar
doctrine of non-suability of the state.

In this petition for certiorari, the Department of Agriculture seeks

to nullify the Resolution, 1 dated 27 November 1991, of the
National Labor Relations Commission (NLRC), Fifth Division,
Cagayan de Oro City, denying the petition for injunction,
prohibition and mandamus that prays to enjoin permanently the
NLRC's Regional Arbitration Branch X and Cagayan de Oro
City Sheriff from enforcing the decision 2 of 31 May 1991 of the
Executive Labor Arbiter and from attaching and executing on
petitioner's property.
The Department of Agriculture (herein petitioner) and Sultan
Security Agency entered into a contract3 on 01 April 1989 for
security services to be provided by the latter to the said
governmental entity. Save for the increase in the monthly rate of
the guards, the same terms and conditions were also made to
apply to another contract, dated 01 May 1990, between the
same parties. Pursuant to their arrangements, guards were
deployed by Sultan Agency in the various premises of the
petitioner.

On 13 September 1990, several guards of the Sultan Security

Agency filed a complaint for underpayment of wages, non-
payment of 13th month pay, uniform allowances, night shift
differential pay, holiday pay and overtime pay, as well as for
damages,4 before the Regional Arbitration Branch X of Cagayan
de Oro City, docketed as NLRC Case No. 10-09-00455-90 (or
10-10-00519-90, its original docket number), against the
Department of Agriculture and Sultan Security Agency.

The Executive Labor Arbiter rendered a decision on 31 May

finding herein petitioner and jointly and severally liable with
Sultan Security Agency for the payment of money claims,
aggregating P266,483.91, of the complainant security guards.
The petitioner and Sultan Security Agency did not appeal the
decision of the Labor Arbiter. Thus, the decision became final
and executory.
On 18 July 1991, the Labor Arbiter issued a writ of
execution. 5 commanding the City Sheriff to enforce and execute
the judgment against the property of the two respondents.
Forthwith, or on 19 July 1991, the City Sheriff levied on
execution the motor vehicles of the petitioner, i.e. one (1) unit
Toyota Hi-Ace, one (1) unit Toyota Mini Cruiser, and one (1)
unit Toyota Crown.6 These units were put under the custody of
Zacharias Roa, the property custodian of the petitioner, pending
their sale at public auction or the final settlement of the case,
whichever would come first.

A petition for injunction, prohibition and mandamus, with prayer

for preliminary writ of injunction was filed by the petitioner with
the National Labor Relations Commission (NLRC), Cagayan de
Oro, alleging, inter alia, that the writ issued was effected without
the Labor Arbiter having duly acquired jurisdiction over the
petitioner, and that, therefore, the decision of the Labor Arbiter
was null and void and all actions pursuant thereto should be
deemed equally invalid and of no legal, effect. The petitioner
also pointed out that the attachment or seizure of its property
would hamper and jeopardize petitioner's governmental
functions to the prejudice of the public good.

On 27 November 1991, the NLRC promulgated its assailed

resolution; viz:
WHEREFORE, premises considered, the following
orders are issued:
1. The enforcement and execution of the judgments
against petitioner in NLRC RABX Cases Nos. 10-10-
00455-90; 10-10-0481-90 and 10-10-00519-90 are
temporarily suspended for a period of two (2) months,
more or less, but not extending beyond the last
quarter of calendar year 1991 to enable petitioner to
source and raise funds to satisfy the judgment awards
against it;
2. Meantime, petitioner is ordered and directed to
source for funds within the period above-stated and to
deposit the sums of money equivalent to the
aggregate amount. it has been adjudged to pay jointly
and severally with respondent Sultan Security Agency
with the Regional Arbitration Branch X, Cagayan de
Oro City within the same period for proper
dispositions;
3. In order to ensure compliance with this order,
petitioner is likewise directed to put up and post
sufficient surety and supersedeas bond equivalent to
at least to fifty (50%) percent of the total monetary
award issued by a reputable bonding company duly
accredited by the Supreme Court or by the Regional
Trial Court of Misamis Oriental to answer for the
satisfaction of the money claims in case of failure or
default on the part of petitioner to satisfy the money
claims;

4. The City Sheriff is ordered to immediately release

the properties of petitioner levied on execution within
ten (10) days from notice of the posting of sufficient
surety or supersedeas bond as specified above. In
the meanwhile, petitioner is assessed to pay the costs
and/or expenses incurred by the City Sheriff, if any, in
connection with the execution of the judgments in the
above-stated cases upon presentation of the
appropriate claims or vouchers and receipts by the
city Sheriff, subject to the conditions specified in the
NLRC Sheriff, subject to the conditions specified in
the NLRC Manual of Instructions for Sheriffs;
5. The right of any of the judgment debtors to claim
reimbursement against each other for any payments
made in connection with the satisfaction of the
judgments herein is hereby recognized pursuant to
the ruling in the Eagle Security case, (supra). In case
of dispute between the judgment debtors, the
Executive Labor Arbiter of the Branch of origin may
upon proper petition by any of the parties conduct
arbitration proceedings for the purpose and thereby
render his decision after due notice and hearings;
 7. Finally, the petition for injunction is Dismissed for
lack of basis. The writ of preliminary injunction
previously issued is Lifted and Set Aside and in lieu
thereof, a Temporary Stay of Execution is issued for a
period of two (2) months but not extending beyond the
last quarter of calendar year 1991, conditioned upon
the posting of a surety or supersedeas bond by
petitioner within ten (10) days from notice pursuant to
paragraph 3 of this disposition. The motion to admit
the complaint in intervention is Denied for lack of
merit while the motion to dismiss the petition filed by
Duty Sheriff is Noted
SO ORDERED.

In this petition for certiorari, the petitioner charges the NLRC

with grave abuse of discretion for refusing to quash the writ of
execution. The petitioner faults the NLRC for assuming
jurisdiction over a money claim against the Department, which,
it claims, falls under the exclusive jurisdiction of the
Commission on Audit. More importantly, the petitioner asserts,
the NLRC has disregarded the cardinal rule on the non-suability
of the State.
The private respondents, on the other hand, argue that the
petitioner has impliedly waived its immunity from suit by
concluding a service contract with Sultan Security Agency.
The basic postulate enshrined in the constitution that "(t)he
State may not be sued without its consent," 7 reflects nothing
less than a recognition of the sovereign character of the State
and an express affirmation of the unwritten rule effectively
insulating it from the jurisdiction of courts. 8 It is based on the
very essence of sovereignty. As has been aptly observed, by
Justice Holmes, a sovereign is exempt from suit, not because of
any formal conception or obsolete theory, but on the logical and
practical ground that there can be no legal right as against the
authority that makes the law on which the right depends. 9 True,
the doctrine, not too infrequently, is derisively called "the royal
prerogative of dishonesty" because it grants the state the
prerogative to defeat any legitimate claim against it by simply
invoking its non-suability. 10 We have had occasion, to explain in
its defense, however, that a continued adherence to the
doctrine of non-suability cannot be deplored, for the loss of
governmental efficiency and the obstacle to the performance of
its multifarious functions would be far greater in severity than
the inconvenience that may be caused private parties, if such
fundamental principle is to be abandoned and the availability of
judicial remedy is not to be accordingly restricted. 11
The rule, in any case, is not really absolute for it does not say
that the state may not be sued under any circumstances. On
the contrary, as correctly phrased, the doctrine only conveys,
"the state may not be sued without its consent;" its clear import
then is that the State may at times be sued. 12 The States'
consent may be given expressly or impliedly. Express consent
may be made through a general law13 or a special law. 14 In this
jurisdiction, the general law waiving the immunity of the state
from suit is found in Act No. 3083, where the Philippine
government "consents and submits to be sued upon any money
claims involving liability arising from contract, express or
implied, which could serve as a basis of civil action between
private parties." 15 Implied consent, on the other hand, is
conceded when the State itself commences litigation, thus
opening itself to a counterclaim16 or when it enters into a
contract. 17 In this situation, the government is deemed to have
descended to the level of the other contracting party and to
have divested itself of its sovereign immunity. This rule, relied
upon by the NLRC and the private respondents, is not,
however, without qualification. Not all contracts entered into by
the government operate as a waiver of its non-suability;
distinction must still be made between one which is executed in
the exercise of its sovereign function and another which is done
in its proprietary capacity. 18

In the Unites States of America vs. Ruiz, 19 where the

questioned transaction dealt with improvements on the wharves
in the naval installation at Subic Bay, we held:

The traditional rule of 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
act ( jure gestionisis). The result is that State
immunity now extends only to acts jure imperii. The
restrictive application of State immunity is now the
rule in the United States, the United Kingdom and
other states in Western Europe.
xxx xxx xxx
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 this be deemed to have actually
given its consent to be sued only when it enters into
 business contracts. It does not apply where the
contracts 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 not dedicated to
commercial or business purposes.

In the instant case, the Department of Agriculture has not

pretended to have assumed a capacity apart from its being a
governmental entity when it entered into the questioned
contract; nor that it could have, in fact, performed any act
proprietary in character.

But, be that as it may, the claims of private respondents, i.e. for

underpayment of wages, holiday pay, overtime pay and similar
other items, arising from the Contract for Service, clearly
constitute money claims. Act No. 3083, aforecited, gives the
consent of the State to be "sued upon any moneyed claim
involving liability arising from contract, express or implied, . . .
Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as
amended by Presidential Decree ("P.D.") No. 1145, the money
claim first be brought to the Commission on Audit. Thus,
in Carabao, Inc., vs. Agricultural Productivity Commission, 20 we
ruled:

(C)laimants have to prosecute their money claims

against the Government under Commonwealth Act
327, stating that Act 3083 stands now merely as the
general law waiving the State's immunity from suit,
subject to the general limitation expressed in Section
7 thereof that "no execution shall issue upon any
judgment rendered by any Court against the
 Government of the (Philippines), and that the
conditions provided in Commonwealth Act 327 for
filing money claims against the Government must be
strictly observed."

We fail to see any substantial conflict or inconsistency between

the provisions of C.A. No. 327 and the Labor Code with respect
to money claims against the State. The Labor code, in relation
to Act No. 3083, provides the legal basis for the State liability
but the prosecution, enforcement or satisfaction thereof must
still be pursued in accordance with the rules and procedures
laid down in C.A. No. 327, as amended by P.D. 1445.

When the state gives its consent to be sued, it does thereby

necessarily consent to unrestrained execution against it. tersely
put, when the State waives its immunity, all it does, in effect, is
to give the other party an opportunity to prove, if it can, that the
State has a liability. 21 In Republic vs. Villasor 22 this Court, in
nullifying the issuance of an alias writ of execution directed
against the funds of the Armed Forces of the Philippines to
satisfy a final and executory judgment, has explained, thus —

The universal rule that where the State gives its

consent to be sued by private parties either by
general or special law, it may limit the claimant's
action "only up to the completion of proceedings
anterior to the stage of execution" and that the power
of the Courts ends when the judgment is rendered,
since government funds and properties may not be
seized under writs or execution or garnishment to
satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of
public funds must be covered by the correspondent
appropriation as required by law. The functions and
 public services rendered by the State cannot be
allowed to be paralyzed or disrupted by the diversion
of public funds from their legitimate and specific
objects, as appropriated by law.23

WHEREFORE, the petition is GRANTED. The resolution, dated

27 November 1991, is hereby REVERSED and SET ASIDE.
The writ of execution directed against the property of the
Department of Agriculture is nullified, and the public
respondents are hereby enjoined permanently from doing,
issuing and implementing any and all writs of execution issued
pursuant to the decision rendered by the Labor Arbiter against
said petitioner.
SO ORDERED.
Merritt vs Government of the Philippine Islands

FACTS: Merrit was riding a motorcycle along Padre

Faura Street when he was bumped by the ambulance of
the General Hospital. Merrit sustained severe injuries
rendering him unable to return to work. The legislature
later enacted Act 2457 authorizing Merritt to file a suit
against the Government in order to fix the responsibility
for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the
amount of the damages, if any, to which he is entitled.
After trial, the lower court held that the collision was due
to the negligence of the driver of the ambulance. It then
determined the amount of damages and ordered the
government to pay the same.

ISSUES:

1. Did the Government, in enacting the Act 2457, simply

waive its immunity from suit or did it also concede its
liability to the plaintiff?
2. Is the Government liable for the negligent act of the
driver of the ambulance?

HELD:

1. By consenting to be sued a state simply waives its

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

2. Under the Civil Code, the state is liable when it acts

through a special agent, but not when the damage
should have been caused by the official to whom
properly it pertained to do the act performed. A special
agent is one who receives a definite and fixed order or
commission, foreign to the exercise of the duties of his
office if he is a special official. This concept does not
apply to any executive agent who is an employee of the
acting administration and who on his own responsibility
performs the functions which are inherent in and
naturally pertain to his office and which are regulated by
law and the regulations. The driver of the ambulance of
the General Hospital was not a special agent; thus the
Government is not liable. (Merritt vs Government of the
Philippine Islands, G.R. No. L-11154, March 21 1916, 34
Phil. 311)

NOTE:

■ The State is responsible in like manner when it acts

through a special agent; but not when the damage has
been caused by the official to whom the task done
properly pertains. (Art. 2180 par. 6, Civil Code)

■ The state is not responsible for the damages suffered

by private individuals in consequence of acts performed
by its employees in the discharge of the functions
pertaining to their office, because neither fault nor even
negligence can be presumed on the part of the state in
the organization of branches of public service and in the
appointment of its agents. (Merritt vs. Government of the
Philippine Islands)

■ The State is not liable for the torts committed by its

officers or agents whom it employs, except when
expressly made so by legislative enactment. The
government does not undertake to guarantee to any
person the fidelity of the officers or agents whom it
employs since that would involve it in all its operations in
endless embarrassments, difficulties and losses, which
would be subversive of the public interest. (Merritt vs.
Government of the Philippine Islands)
G.R. No. L-36084 August 31, 1977
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HONORABLE AMANTE P. PURISIMA, the Presiding Judge
of the court of first Instance of Manila (Branch VII), and
YELLOW BALL FREIGHT LINES, INC., respondents.

Solicitor General Estelito P. Mendoza, Assistant Solicitor

General Santiago M. Kapunan, Solicitor Oscar C. Fernandez
and Special Attorney Renato P. Mabugat for petitioner.
Jose Q. Calingo for private respondent.

FERNANDO, Acting C.J.:

The jurisdictional issued raised by Solicitor General Estelito P.

Mendoza on behalf of the Republic of the Philippines in this
certiorari and prohibition proceeding arose from the failure of
respondent Judge Amante P. Purisima of the Court of First
Instance of Manila to apply the well-known and of-reiterated
doctrine of the non-suability of a State, including its offices and
agencies, from suit without its consent. it was so alleged in a
motion to dismiss filed by defendant Rice and Corn
Administration in a pending civil suit in the sala of respondent
Judge for the collection of a money claim arising from an
alleged breach of contract, the plaintiff being private respondent
Yellow Ball Freight Lines, Inc. 1 Such a motion to dismiss was filed on September 7,
1972. At that time, the leading case of Mobil Philippines Exploration, Inc. v. Customs Arrastre
2
Service, were Justice Bengzon stressed the lack of jurisdiction of a court to pass on the merits of a
claim against any office or entity acting as part of the machinery of the national government unless
3
consent be shown, had been applied in 53 other decisions. There is thus more than sufficient basis for
an allegation of jurisdiction infirmity against the order of respondent Judge denying the motion to dismiss
 4
dated October 4, 1972. What is more, the position of the Republic has been fortified with the explicit
affirmation found in this provision of the present Constitution: "The State may not be sued without its
5
consent."

The merit of the petition for certiorari and prohibition is thus obvious.

1. There is pertinence to this excerpt from Switzerland General

Insurance Co., Ltd. v. Republic of the Philippines: 6"The doctrine of non-
suability recognized in this jurisdiction even prior to the effectivity of the [1935] Constitution is a logical
corollary of the positivist concept of law which, to para-phrase Holmes, negates the assertion of any legal
right as against the state, in itself the source of the law on which such a right may be predicated. Nor is
this all. Even if such a principle does give rise to problems, considering the vastly expanded role of
lw phl@itç

government enabling it to engage in business pursuits to promote the general welfare, it is not obeisance
to the analytical school of thought alone that calls for its continued applicability. Why it must continue to
be so, even if the matter be viewed sociologically, was set forth in Providence Washington Insurance Co.
v. Republic thus: "Nonetheless, a continued adherence to the doctrine of non-suability is not to be
deplored for as against the inconvenience that may be caused private parties, the loss of governmental
efficiency and the obstacle to the performance of its multifarious functions are far greater if such a
fundamental principle were abandoned and the availability of judicial remedy were not thus restricted.
With the well-known propensity on the part of our people to go the court, at the least provocation, the loss
of time and energy required to defend against law suits, in the absence of such a basic principle that
7
constitutes such an effective obstacle, could very well be imagined." It only remains to be added that
under the present Constitution which, as noted, expressly reaffirmed such a doctrine, the following
8
decisions had been rendered: Del mar v. The Philippine veterans Administration; Republic v.
9 10 11
Villasor; Sayson v. Singson; and Director of the Bureau of Printing v. Francisco.

2. Equally so, the next paragraph in the above opinion from the Switzerland General Insurance Company
decision is likewise relevant: "Nor is injustice thereby cause private parties. They could still proceed to
seek collection of their money claims by pursuing the statutory remedy of having the Auditor General
pass upon them subject to appeal to judicial tribunals for final adjudication. We could thus correctly
conclude as we did in the cited Provindence Washington Insurance decision: "Thus the doctrine of non-
suability of the government without its consent, as it has operated in practice, hardly lends itself to the
charge that it could be the fruitful parent of injustice, considering the vast and ever-widening scope of
state activities at present being undertaken. Whatever difficulties for private claimants may still exist, is,
from an objective appraisal of all factors, minimal. In the balancing of interests, so unavoidable in the
determination of what principles must prevail if government is to satisfy the public weal, the verdict must
be, as it has been these so many years, for its continuing recognition as a fundamental postulate of
12
constitutional law."

3. Apparently respondent Judge was misled by the terms of the contract between the private respondent,
plaintiff in his sala, and defendant Rice and Corn Administration which, according to him, anticipated the
13
case of a breach of contract within the parties and the suits that may thereafter arise. The consent, to
be effective though, must come from the State acting through a duly enacted statute as pointed out by
Justice Bengzon in Mobil. Thus, whatever counsel for defendant Rice and Corn Administration agreed to
had no binding force on the government. That was clearly beyond the scope of his authority. At any
14
rate, Justice Sanchez, in Ramos v. Court of Industrial Relations, was quite categorical as to its "not
[being] possessed of a separate and distinct corporate existence. On the contrary, by the law of its
15
creation, it is an office directly 'under the Office of the President of the Philippines."
WHEREFORE, the petitioner for certiorari is granted and the resolution of October 4, 1972 denying the
motion to dismiss filed by the Rice and Corn Administration nullified and set aside and the petitioner for
prohibition is likewise granted restraining respondent Judge from acting on civil Case No. 79082 pending
in his sala except for the purpose of ordering its dismissal for lack of jurisdiction. The temporary
restraining order issued on February 8, 1973 by this Court is made permanent terminating this case.
Costs against Yellow Ball Freight Lines, Inc.

Antonio, Aquino, Concepcion, Jr. and Santos, JJ., concur.

Barredo, J., took no part.
 B. IMPLIED CONSENT

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.:

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 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 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 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 for jure 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.
G.R. No. L-49930 August 7, 1985
FRANCISCO MALONG and ROSALINA
AQUINOMALONG petitioners,
vs.
PHILIPPINE NATIONAL RAILWAYS and COURT OF FIRST
INSTANCE OF PANGASINAN, Lingayen Branch
11, respondents.

AQUINO, J.:

This case is about the immunity from suit of the Philippine

National Railways. The Malong spouses alleged in their
complaint that on October 30, 1977 their son, Jaime Aquino, a
paying passenger, was killed when he fell from a PNR train
while it was between Tarlac and Capas.

The tragedy occurred because Jaime had to sit near the door of
a coach. The train was overloaded with passengers and
baggage in view of the proximity of All Saints Day. The Malong
spouses prayed that the PNR be ordered to pay them damages
totalling P136,370.
Upon the Solicitor General's motion, the trial court dismissed
the complaint. It ruled that it had no jurisdiction because the
PNR, being a government instrumentality, the action was a suit
against the State (Sec. 16, Art. XV of the Constitution). The
Malong spouses appealed to this Court pursuant to Republic
Act No. 5440.
The Manila Railroad Company, the PNR's predecessor, as a
common carrier, was not immune from suit under Act No. 1510,
its charter.
The PNR charter, Republic Act No. 4156, as amended by
Republic Act No. 6366 and Presidential Decree No. 741,
provides that the PNR is a government instrumentality under
government ownership during its 50-year term, 1964 to 2014. It
is under the Office of the President of the Philippines. Republic
Act No. 6366 provides:
SECTION 1-a. Statement of policy. The Philippine
National Railways, being a factor for socio-economic
development and growth, shall be a part of the
infrastructure program of the government and as such
shall remain in and under government ownership
during its corporate existence. The Philippine National
Railways must be administered with the view of
serving the interests of the public by providing them
the maximum of service and, while aiming at its
greatest utility by the public, the economy of operation
must be ensured so that service can be rendered at
the minimum passenger and freight prices possible.
The charter also provides:

SEC. 4. General powers. The Philippine National

Railways shall have the following general powers:

(a) To do all such other things and to transact all such

business directly or indirectly necessary, incidental or
conducive to the attainment of the purpose of the
corporation; and

(b) Generally, to exercise all powers of a railroad

corporation under the Corporation Law. (This refers to
sections 81 to 102 of the Corporation Law on railroad
corporations, not reproduced in the Corporation
Code.)
Section 36 of the Corporation Code provides that every
corporation has the power to sue and be sued in its corporate
name. Section 13(2) of the Corporation Law provides that every
corporation has the power to sue and be sued in any court.

A sovereign is exempt from suit, not because of any

formal conception or obsolete theory, but on the
logical and practical ground that there can be no legal
right as against the authority that makes the law on
which the right depends (Justice Holmes in
Kawananakoa vs. Polyblank 205 U.S. 353, 51 L. ed.
834).

The public service would be hindered, and public

safety endangered, if the supreme authority could be
subjected to suit at the instance of every citizen and,
consequently, controlled in the use and disposition of
the means required for the proper administration of
the Government (The Siren vs. U.S., 7 Wall. 152, 19
L. ed. 129).
Did the State act in a sovereign capacity or in a corporate
capacity when it organized the PNR for the purpose of engaging
in transportation? Did it act differently when it organized the
PNR as successor of the Manila Railroad Company?

We hold that in the instant case the State divested itself of its
sovereign capacity when it organized the PNR which is no
different from its predecessor, the Manila Railroad Company.
The PNR did not become immune from suit. It did not remove
itself from the operation of articles 1732 to 1766 of the Civil
Code on common carriers.
The correct rule is that "not all government entities, whether
corporate or non-corporate, are immune from suits. Immunity
from suit is determined by the character of the objects for which
the entity was organized." (Nat. Airports Corp. vs. Teodoro and
Phil. Airlines, Inc., 91 Phil. 203, 206; Santos vs, Santos, 92 Phil.
281, 285; Harry Lyons, Inc. vs. USA, 104 Phil. 593.)

Suits against State agencies with respect to matters in which

they have assumed to act in a private or non-governmental
capacity are not suits against the State (81 C.J.S. 1319).

Suits against State agencies with relation to matters

in which they have assumed to act in a private or non-
governmental capacity, and various suits against
certain corporations created by the State for public
purposes, but to engage in matters partaking more of
the nature of ordinary business rather than functions
of a governmental or political character, are not
regarded as suits against the State.

The latter is true, although the State may own the

stock or property of such a corporation, for by
engaging in business operations through a
corporation the State divests itself so far of its
sovereign character, and by implicating consents to
suits against the corporation. (81 C.J. S. 1319.)

The foregoing rule was applied to State Dock Commissions

carrying on business relating to pilots, terminals and
transportation (Standard Oil Co. of New Jersey vs. U.S., 27
Fed. 2nd 370) and to State Highway Commissions created to
build public roads and given appropriations in advance to
discharge obligations incurred in their behalf (Arkansas State
Highway Commission vs. Dodge, 26 SW 2nd 879 and State
Highway Commission of Missouri vs. Bates, 296 SW 418, cited
in National Airports case).
The point is that when the government enters into a commercial
business it abandons its sovereign capacity and is to be treated
like any other private corporation (Bank of the U.S. vs. Planters'
Bank, 9 Wheat. 904, 6 L. ed. 244, cited in Manila Hotel
Employees Association vs. Manila Hotel Company, et al., 73
Phil. 374, 388). The Manila Hotel case also relied on the
following rulings:
By engaging in a particular business through the
instrumentality of a corporation, the government
divests itself pro hac vice of its sovereign character,
so as to render the corporation subject to the rules of
law governing private corporations.

When the State acts in its proprietary capacity, it is

amenable to all the rules of law which bind private
individuals.

There is not one law for the sovereign and another for
the subject, but when the sovereign engages in
business and the conduct of business enterprises,
and contracts with individuals, whenever the contract
in any form comes before the courts, the rights and
obligation of the contracting parties must be adjusted
upon the same principles as if both contracting parties
were private persons. Both stand upon equality before
the law, and the sovereign is merged in the dealer,
contractor and suitor (People vs. Stephens, 71 N.Y.
549).

It should be noted that in Philippine National Railways vs. Union

de Maquinistas, etc., L-31948, July 25, 1978, 84 SCRA 223, it
was held that the PNR funds could be garnished at the instance
of a labor union.
It would be unjust if the heirs of the victim of an alleged
negligence of the PNR employees could not sue the PNR for
damages. Like any private common carrier, the PNR is subject
to the obligations of persons engaged in that private enterprise.
It is not performing any governmental function.

Thus, the National Development Company is not immune from

suit. It does not exercise sovereign functions. It is an agency for
the performance of purely corporate, proprietary or business
functions (National Development Company vs. Tobias, 117 Phil.
703, 705 and cases cited therein; National Development
Company vs. NDC Employees and Workers' Union, L-32387,
August 19,1975,66 SCRA 181,184).

Other government agencies not enjoying immunity from suit are

the Social Security System (Social Security System vs. Court of
Appeals, L-41299, February 21, 1983, 120 SCRA 707) and the
Philippine National Bank (Republic vs. Philippine National Bank,
121 Phil. 26).

WHEREFORE, the order of dismissal is reversed and set aside.

The case is remanded to the trial court for further proceedings.
Costs against the Philippine National Railways.
SO ORDERED.
 THE DEPARTMENT OF HEALTH et al. v. PHIL.
PHARMAWEALTH, INC. 518 SCRA 240 (2007)
Defense of state immunity does not apply where the
public official is charged in his official capacity
for acts that are unauthorized or unlawful and injurious
to the rights of others neither does it apply where the
public official is clearly being sued not in
his official capacity but in his personal capacity, although
the acts complained of may have been committed while
he occupied a public position. Secretary of Health
Alberto G. Romualdez, Jr. issued an Administrative
Order providing for additional guidelines for
accreditation of drug suppliers aimed at ensuring that
only qualified bidders can transact business with
petitioner Department of Health (DOH). Respondent
Phil. Pharmawealth, Inc. (Pharmawealth) submitted to
DOH a request for the inclusion of additional items in its
list of accredited drug products, including
the antibiotic ―Penicillin G Benzathine. Petitioner DOH
issued an Invitation for Bids for the procurement of 1.2
million units vials of Penicillin G Benzathine. Despite the
lack of response from DOH regarding Pharmawealth‘s
request for inclusion of additional items in its list
of accredited products, the latter submittedits bid for the
Penicillin G Benzathine contract and gave the lowest bid
thereof. . In view, however, of the non- accreditation of
respondent‘s Penicillin G Benzathine product, the
contract was awarded to Cathay/YSS Laboratories‘
(YSS). Respondent Pharmawealth filed a complaint for
injunction, mandamus and damages with prayer for the
issuance of a writ of preliminary injunction and/or
temporary restraining order with the Regional Trial
praying, inter alia, that the trial court ―nullify the award
of the Penicillin G Benzathine contract to YSS
Laboratories, Inc. and direct petitioners DOH et al. to
declare Pharmawealth as the lowest complying
responsible bidder for the Benzathine contract, and that
they accordingly award the same to plaintiff company‖
and ―adjudge defendants Romualdez, Galon and Lopez
liable, jointly and severally to plaintiff. Petitioners DOH
et al. subsequently filed a motion to dismiss praying for
the dismissal of the complaint based on the doctrine of
state immunity. The trial court, however, denied the
motion to dismiss. The Court of Appeals (CA) denied
DOH‘s petition for review which affirmed the order
issued Regional Trial Court of Pasig City denying
petitioners‘ motion to dismiss the case.
ISSUE:
Whether or not the charge against the public officers
acting in their officialcapacity will prosper.
HELD:
The suability of a government official depends on
whether the official concerned was acting within
his official or jurisdictional capacity, and whether
the actsdone in the performance of official functions will
result in a charge or financial liability against the
government. In its complaint, DOH sufficiently imputes
grave abuse of discretion against petitioners in
their official capacity. Since judicial review of acts alleged
to have been tainted with grave abuse of discretion is
guaranteed by the Constitution, it necessarily follows
that it is the official concerned who should be impleaded
as defendant or respondent in an appropriate suit. As
regards petitioner DOH, the defense of immunity from
suit will not avail despite its being an unincorporated
agency of the government, for the only causes of action
directed against it are preliminary injunction and
mandamus. Under Section 1, Rule 58 of the Rules of
Court, preliminary injunction may be directed against a
party or a court, agency or a person. Moreover, the
defense of state immunity from suit does not apply in
causes of action which do not seek to impose a charge or
financial liability against the State.
Hence, the rule does not apply where the public official is
charged in his officialcapacity for acts that are
unauthorized or unlawful and injurious to the rights of
others. Neither does it apply where the public official is clearly being sued
not in his official capacity but in his personal capacity, although
the acts complained of may have been committed while he occupied a
public position. In the present case, suing individual petitioners in their
personal capacities for damages in connection with their alleged act of
―illegally abusing their official positions to make sure that plaintiff
Pharmawealth would not be awarded the Benzathine contract [which act
was] done in bad faith and with full knowledge of the limits
and breadth of their powers given by law is permissible,
in consonance with the foregoing principles. For an
officer who exceeds the power conferred on him by law
cannot hide behind the plea of sovereign immunity and
must bear the liability personally.
 SCOPE OF CONSENT

G.R. Nos. 89898-99 October 1, 1990

MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR
P. DE GUZMAN, JR., as Judge RTC of Makati, Branch CXLII
ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and
SHERIFF SILVINO R. PASTRANA, respondents.

Defante & Elegado for petitioner.

Roberto B. Lugue for private respondent Admiral Finance
Creditors' Consortium, Inc.
RESOLUTION

CORTÉS, J.:
The present petition for review is an off-shoot of expropriation proceedings initiated by petitioner Municipality of Makati against private
respondent Admiral Finance Creditors Consortium, Inc., Home Building System & Realty Corporation and one Arceli P. Jo, involving a parcel
of land and improvements thereon located at Mayapis St., San Antonio Village, Makati and registered in the name of Arceli P. Jo under TCT
No. S-5499.

It appears that the action for eminent domain was filed on May
20, 1986, docketed as Civil Case No. 13699. Attached to
petitioner's complaint was a certification that a bank account
(Account No. S/A 265-537154-3) had been opened with the
PNB Buendia Branch under petitioner's name containing the
sum of P417,510.00, made pursuant to the provisions of Pres.
Decree No. 42. After due hearing where the parties presented
their respective appraisal reports regarding the value of the
property, respondent RTC judge rendered a decision on June 4,
1987, fixing the appraised value of the property at
P5,291,666.00, and ordering petitioner to pay this amount
minus the advanced payment of P338,160.00 which was earlier
released to private respondent.
After this decision became final and executory, private
respondent moved for the issuance of a writ of execution. This
motion was granted by respondent RTC judge. After issuance
of the writ of execution, a Notice of Garnishment dated January
14, 1988 was served by respondent sheriff Silvino R. Pastrana
upon the manager of the PNB Buendia Branch. However,
respondent sheriff was informed that a "hold code" was placed
on the account of petitioner. As a result of this, private
respondent filed a motion dated January 27, 1988 praying that
an order be issued directing the bank to deliver to respondent
sheriff the amount equivalent to the unpaid balance due under
the RTC decision dated June 4, 1987.
Petitioner filed a motion to lift the garnishment, on the ground
that the manner of payment of the expropriation amount should
be done in installments which the respondent RTC judge failed
to state in his decision. Private respondent filed its opposition to
the motion.

Pending resolution of the above motions, petitioner filed on July

20, 1988 a "Manifestation" informing the court that private
respondent was no longer the true and lawful owner of the
subject property because a new title over the property had been
registered in the name of Philippine Savings Bank, Inc. (PSB)
Respondent RTC judge issued an order requiring PSB to make
available the documents pertaining to its transactions over the
subject property, and the PNB Buendia Branch to reveal the
amount in petitioner's account which was garnished by
respondent sheriff. In compliance with this order, PSB filed a
manifestation informing the court that it had consolidated its
ownership over the property as mortgagee/purchaser at an
extrajudicial foreclosure sale held on April 20, 1987. After
several conferences, PSB and private respondent entered into
a compromise agreement whereby they agreed to divide
between themselves the compensation due from the
expropriation proceedings.

Respondent trial judge subsequently issued an order dated

September 8, 1988 which: (1) approved the compromise
agreement; (2) ordered PNB Buendia Branch to immediately
release to PSB the sum of P4,953,506.45 which corresponds to
the balance of the appraised value of the subject property under
the RTC decision dated June 4, 1987, from the garnished
account of petitioner; and, (3) ordered PSB and private
respondent to execute the necessary deed of conveyance over
the subject property in favor of petitioner. Petitioner's motion to
lift the garnishment was denied.
Petitioner filed a motion for reconsideration, which was duly
opposed by private respondent. On the other hand, for failure of
the manager of the PNB Buendia Branch to comply with the
order dated September 8, 1988, private respondent filed two
succeeding motions to require the bank manager to show cause
why he should not be held in contempt of court. During the
hearings conducted for the above motions, the general
manager of the PNB Buendia Branch, a Mr. Antonio Bautista,
informed the court that he was still waiting for proper
authorization from the PNB head office enabling him to make a
disbursement for the amount so ordered. For its part, petitioner
contended that its funds at the PNB Buendia Branch could
neither be garnished nor levied upon execution, for to do so
would result in the disbursement of public funds without the
proper appropriation required under the law, citing the case
of Republic of the Philippines v. Palacio [G.R. No. L-20322, May
29, 1968, 23 SCRA 899].

Respondent trial judge issued an order dated December 21,

1988 denying petitioner's motion for reconsideration on the
ground that the doctrine enunciated in Republic v. Palacio did
not apply to the case because petitioner's PNB Account No. S/A
265-537154-3 was an account specifically opened for the
expropriation proceedings of the subject property pursuant to
Pres. Decree No. 42. Respondent RTC judge likewise declared
Mr. Antonio Bautista guilty of contempt of court for his
inexcusable refusal to obey the order dated September 8, 1988,
and thus ordered his arrest and detention until his compliance
with the said order.
Petitioner and the bank manager of PNB Buendia Branch then
filed separate petitions for certiorari with the Court of Appeals,
which were eventually consolidated. In a decision promulgated
on June 28, 1989, the Court of Appeals dismissed both petitions
for lack of merit, sustained the jurisdiction of respondent RTC
judge over the funds contained in petitioner's PNB Account No.
265-537154-3, and affirmed his authority to levy on such funds.
Its motion for reconsideration having been denied by the Court
of Appeals, petitioner now files the present petition for review
with prayer for preliminary injunction.
On November 20, 1989, the Court resolved to issue a
temporary restraining order enjoining respondent RTC judge,
respondent sheriff, and their representatives, from enforcing
and/or carrying out the RTC order dated December 21, 1988
and the writ of garnishment issued pursuant thereto. Private
respondent then filed its comment to the petition, while
petitioner filed its reply.
Petitioner not only reiterates the arguments adduced in its
petition before the Court of Appeals, but also alleges for the first
time that it has actually two accounts with the PNB Buendia
Branch, to wit:
xxx xxx xxx

(1) Account No. S/A 265-537154-3 — exclusively for

the expropriation of the subject property, with an
outstanding balance of P99,743.94.

(2) Account No. S/A 263-530850-7 — for statutory

obligations and other purposes of the municipal
government, with a balance of P170,098,421.72, as of
July 12, 1989.
xxx xxx xxx
[Petition, pp. 6-7; Rollo, pp. 11-12.]
Because the petitioner has belatedly alleged only in this Court
the existence of two bank accounts, it may fairly be asked
whether the second account was opened only for the purpose
of undermining the legal basis of the assailed orders of
respondent RTC judge and the decision of the Court of
Appeals, and strengthening its reliance on the doctrine that
public funds are exempted from garnishment or execution as
enunciated in Republic v. Palacio [supra.] At any rate, the Court
will give petitioner the benefit of the doubt, and proceed to
resolve the principal issues presented based on the factual
circumstances thus alleged by petitioner.
Admitting that its PNB Account No. S/A 265-537154-3 was
specifically opened for expropriation proceedings it had initiated
over the subject property, petitioner poses no objection to the
garnishment or the levy under execution of the funds deposited
therein amounting to P99,743.94. However, it is petitioner's
main contention that inasmuch as the assailed orders of
respondent RTC judge involved the net amount of
P4,965,506.45, the funds garnished by respondent sheriff in
excess of P99,743.94, which are public funds earmarked for the
municipal government's other statutory obligations, are
exempted from execution without the proper appropriation
required under the law.

There is merit in this contention. The funds deposited in the

second PNB Account No. S/A 263-530850-7 are public funds of
the municipal government. In this jurisdiction, well-settled is the
rule that public funds are not subject to levy and execution,
unless otherwise provided for by statute [Republic v.
Palacio, supra.; The Commissioner of Public Highways v. San
Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616].
More particularly, the properties of a municipality, whether real
or personal, which are necessary for public use cannot be
attached and sold at execution sale to satisfy a money
judgment against the municipality. Municipal revenues derived
from taxes, licenses and market fees, and which are intended
primarily and exclusively for the purpose of financing the
governmental activities and functions of the municipality, are
exempt from execution [See Viuda De Tan Toco v. The
Municipal Council of Iloilo, 49 Phil. 52 (1926): The Municipality
of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950);
Municipality of San Miguel, Bulacan v. Fernandez, G.R. No.
61744, June 25, 1984, 130 SCRA 56]. The foregoing rule finds
application in the case at bar. Absent a showing that the
municipal council of Makati has passed an ordinance
appropriating from its public funds an amount corresponding to
the balance due under the RTC decision dated June 4, 1987,
less the sum of P99,743.94 deposited in Account No. S/A 265-
537154-3, no levy under execution may be validly effected on
the public funds of petitioner deposited in Account No. S/A 263-
530850-7.
Nevertheless, this is not to say that private respondent and PSB
are left with no legal recourse. Where a municipality fails or
refuses, without justifiable reason, to effect payment of a final
money judgment rendered against it, the claimant may avail of
the remedy of mandamus in order to compel the enactment and
approval of the necessary appropriation ordinance, and the
corresponding disbursement of municipal funds therefor
[See Viuda De Tan Toco v. The Municipal Council of
Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco
v. Gonzales, 108 Phil. 247 (1960)].

In the case at bar, the validity of the RTC decision dated June
4, 1987 is not disputed by petitioner. No appeal was taken
therefrom. For three years now, petitioner has enjoyed
possession and use of the subject property notwithstanding its
inexcusable failure to comply with its legal obligation to pay just
compensation. Petitioner has benefited from its possession of
the property since the same has been the site of Makati West
High School since the school year 1986-1987. This Court will
not condone petitioner's blatant refusal to settle its legal
obligation arising from expropriation proceedings it had in fact
initiated. It cannot be over-emphasized that, within the context
of the State's inherent power of eminent domain,
. . . [j]ust compensation means not only the correct
determination of the amount to be paid to the owner
of the land but also the payment of the land within a
 reasonable time from its taking. Without prompt
payment, compensation cannot be considered "just"
for the property owner is made to suffer the
consequence of being immediately deprived of his
land while being made to wait for a decade or more
before actually receiving the amount necessary to
cope with his loss [Cosculluela v. The Honorable
Court of Appeals, G.R. No. 77765, August 15, 1988,
164 SCRA 393, 400. See also Provincial Government
of Sorsogon v. Vda. de Villaroya, G.R. No. 64037,
August 27, 1987, 153 SCRA 291].

The State's power of eminent domain should be exercised

within the bounds of fair play and justice. In the case at bar,
considering that valuable property has been taken, the
compensation to be paid fixed and the municipality is in full
possession and utilizing the property for public purpose, for
three (3) years, the Court finds that the municipality has had
more than reasonable time to pay full compensation.
WHEREFORE, the Court Resolved to ORDER petitioner
Municipality of Makati to immediately pay Philippine Savings
Bank, Inc. and private respondent the amount of
P4,953,506.45. Petitioner is hereby required to submit to this
Court a report of its compliance with the foregoing order within a
non-extendible period of SIXTY (60) DAYS from the date of
receipt of this resolution.

The order of respondent RTC judge dated December 21, 1988,

which was rendered in Civil Case No. 13699, is SET ASIDE and
the temporary restraining order issued by the Court on
November 20, 1989 is MADE PERMANENT.
SO ORDERED.
NIA vs IAC; G.R. No. 73919; 18 Sep 1992; 214 SCRA 35
Claudine | 24 August 2017 | 0 Comments

FACTS:
Petitioner constructed an irrigation canal which passed through the private
respondent’s landholdings. The canal has two outlets which provide said
landholdings with water and at the same time drains excess water.

ISSUE(S):
Whether or not NIA is immune from suit.

HELD:
NO. NIA is not immune from suit. Section 2, sub-paragraph (f) of P.D. 552
grants the NIA the power to exercise all the powers of a corporation under
the Corporation Law insofar as they are not inconsistent with the provisions
of P.D. 552. Paragraph 5 of said law also provide that petitioner may sue
and be sued in courts for all kinds of actions, whether contractual or quasi-
contractual i the recovery of compensation and damages caused by the
petitioner.

Sharethis:

G.R. No. L-11154 March 21, 1916

E. MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-
appellant.

Crossfield and O'Brien for plaintiff.

Attorney-General Avanceña for defendant..
TRENT, J.:

This is an appeal by both parties from a judgment of the Court

of First Instance of the city of Manila in favor of the plaintiff for
the sum of P14,741, together with the costs of the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in
limiting the general damages which the plaintiff suffered to
P5,000, instead of P25,000 as claimed in the complaint," and
(2) "in limiting the time when plaintiff was entirely disabled to
two months and twenty-one days and fixing the damage
accordingly in the sum of P2,666, instead of P6,000 as claimed
by plaintiff in his complaint."
The Attorney-General on behalf of the defendant urges that the
trial court erred: (a) in finding that the collision between the
plaintiff's motorcycle and the ambulance of the General Hospital
was due to the negligence of the chauffeur; (b) in holding that
the Government of the Philippine Islands is liable for the
damages sustained by the plaintiff as a result of the collision,
even if it be true that the collision was due to the negligence of
the chauffeur; and (c) in rendering judgment against the
defendant for the sum of P14,741.

The trial court's findings of fact, which are fully supported by the
record, are as follows:
It is a fact not disputed by counsel for the defendant that
when the plaintiff, riding on a motorcycle, was going toward
the western part of Calle Padre Faura, passing along the
west side thereof at a speed of ten to twelve miles an hour,
upon crossing Taft Avenue and when he was ten feet from
the southwestern intersection of said streets, the General
Hospital ambulance, upon reaching said avenue, instead
of turning toward the south, after passing the center
thereof, so that it would be on the left side of said avenue,
as is prescribed by the ordinance and the Motor Vehicle
Act, turned suddenly and unexpectedly and long before
reaching the center of the street, into the right side of Taft
Avenue, without having sounded any whistle or horn, by
which movement it struck the plaintiff, who was already six
feet from the southwestern point or from the post place
there.

By reason of the resulting collision, the plaintiff was so

severely injured that, according to Dr. Saleeby, who
examined him on the very same day that he was taken to
the General Hospital, he was suffering from a depression
in the left parietal region, a would in the same place and in
the back part of his head, while blood issued from his nose
and he was entirely unconscious.
The marks revealed that he had one or more fractures of
the skull and that the grey matter and brain was had
suffered material injury. At ten o'clock of the night in
question, which was the time set for performing the
operation, his pulse was so weak and so irregular that, in
his opinion, there was little hope that he would live. His
right leg was broken in such a way that the fracture
extended to the outer skin in such manner that it might be
regarded as double and the would be exposed to infection,
for which reason it was of the most serious nature.

At another examination six days before the day of the trial,

Dr. Saleeby noticed that the plaintiff's leg showed a
contraction of an inch and a half and a curvature that made
his leg very weak and painful at the point of the fracture.
Examination of his head revealed a notable readjustment
of the functions of the brain and nerves. The patient
apparently was slightly deaf, had a light weakness in his
eyes and in his mental condition. This latter weakness was
always noticed when the plaintiff had to do any difficult
mental labor, especially when he attempted to use his
money for mathematical calculations.
 According to the various merchants who testified as
witnesses, the plaintiff's mental and physical condition prior
to the accident was excellent, and that after having
received the injuries that have been discussed, his
physical condition had undergone a noticeable
depreciation, for he had lost the agility, energy, and ability
that he had constantly displayed before the accident as
one of the best constructors of wooden buildings and he
could not now earn even a half of the income that he had
secured for his work because he had lost 50 per cent of his
efficiency. As a contractor, he could no longer, as he had
before done, climb up ladders and scaffoldings to reach
the highest parts of the building.

As a consequence of the loss the plaintiff suffered in the

efficiency of his work as a contractor, he had to dissolved
the partnership he had formed with the engineer. Wilson,
because he was incapacitated from making mathematical
calculations on account of the condition of his leg and of
his mental faculties, and he had to give up a contract he
had for the construction of the Uy Chaco building."
We may say at the outset that we are in full accord with the trial
court to the effect that the collision between the plaintiff's
motorcycle and the ambulance of the General Hospital was due
solely to the negligence of the chauffeur.

The two items which constitute a part of the P14,741 and which
are drawn in question by the plaintiff are (a) P5,000, the award
awarded for permanent injuries, and (b) the P2,666, the amount
allowed for the loss of wages during the time the plaintiff was
incapacitated from pursuing his occupation. We find nothing in
the record which would justify us in increasing the amount of the
first. As to the second, the record shows, and the trial court so
found, that the plaintiff's services as a contractor were worth
P1,000 per month. The court, however, limited the time to two
months and twenty-one days, which the plaintiff was actually
confined in the hospital. In this we think there was error,
because it was clearly established that the plaintiff was wholly
incapacitated for a period of six months. The mere fact that he
remained in the hospital only two months and twenty-one days
while the remainder of the six months was spent in his home,
would not prevent recovery for the whole time. We, therefore,
find that the amount of damages sustained by the plaintiff,
without any fault on his part, is P18,075.

As the negligence which caused the collision is a tort committed

by an agent or employee of the Government, the inquiry at once
arises whether the Government is legally-liable for the damages
resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:

An Act authorizing E. Merritt to bring suit against the

Government of the Philippine Islands and authorizing the
Attorney-General of said Islands to appear in said suit.
Whereas a claim has been filed against the Government of
the Philippine Islands by Mr. E. Merritt, of Manila, for
damages resulting from a collision between his motorcycle
and the ambulance of the General Hospital on March
twenty-fifth, nineteen hundred and thirteen;

Whereas it is not known who is responsible for the

accident nor is it possible to determine the amount of
damages, if any, to which the claimant is entitled; and

Whereas the Director of Public Works and the Attorney-

General recommended that an Act be passed by the
 Legislature authorizing Mr. E. Merritt to bring suit in the
courts against the Government, in order that said
questions may be decided: Now, therefore,

By authority of the United States, be it enacted by the

Philippine Legislature, that:
SECTION 1. E. Merritt is hereby authorized to bring suit in
the Court of First Instance of the city of Manila against the
Government of the Philippine Islands in order to fix the
responsibility for the collision between his motorcycle and
the ambulance of the General Hospital, and to determine
the amount of the damages, if any, to which Mr. E. Merritt
is entitled on account of said collision, and the Attorney-
General of the Philippine Islands is hereby authorized and
directed to appear at the trial on the behalf of the
Government of said Islands, to defendant said Government
at the same.
SEC. 2. This Act shall take effect on its passage.
Enacted, February 3, 1915.
Did the defendant, in enacting the above quoted Act, simply
waive its immunity from suit or did it also concede its liability to
the plaintiff? If only the former, then it cannot be held that the
Act created any new cause of action in favor of the plaintiff or
extended the defendant's liability to any case not previously
recognized.

All admit that the Insular Government (the defendant) cannot be

sued by an individual without its consent. It is also admitted that
the instant case is one against the Government. As the consent
of the Government to be sued by the plaintiff was entirely
voluntary on its part, it is our duty to look carefully into the terms
of the consent, and render judgment accordingly.
The plaintiff was authorized to bring this action against the
Government "in order to fix the responsibility for the collision
between his motorcycle and the ambulance of the General
Hospital and to determine the amount of the damages, if any, to
which Mr. E. Merritt is entitled on account of said collision, . . . ."
These were the two questions submitted to the court for
determination. The Act was passed "in order that said questions
may be decided." We have "decided" that the accident was due
solely to the negligence of the chauffeur, who was at the time
an employee of the defendant, and we have also fixed the
amount of damages sustained by the plaintiff as a result of the
collision. Does the Act authorize us to hold that the Government
is legally liable for that amount? If not, we must look elsewhere
for such authority, if it exists.

The Government of the Philippine Islands having been

"modeled after the Federal and State Governments in the
United States," we may look to the decisions of the high courts
of that country for aid in determining the purpose and scope of
Act No. 2457.
In the United States the rule that the state is not liable for the
torts committed by its officers or agents whom it employs,
except when expressly made so by legislative enactment, is
well settled. "The Government," says Justice Story, "does not
undertake to guarantee to any person the fidelity of the officers
or agents whom it employs, since that would involve it in all its
operations in endless embarrassments, difficulties and losses,
which would be subversive of the public interest." (Claussen vs.
City of Luverne, 103 Minn., 491, citing U. S. vs. Kirkpatrick, 9
Wheat, 720; 6 L. Ed., 199; and Beers vs. States, 20 How., 527;
15 L. Ed., 991.)
In the case of Melvin vs. State (121 Cal., 16), the plaintiff sought
to recover damages from the state for personal injuries received
on account of the negligence of the state officers at the state
fair, a state institution created by the legislature for the purpose
of improving agricultural and kindred industries; to disseminate
information calculated to educate and benefit the industrial
classes; and to advance by such means the material interests
of the state, being objects similar to those sought by the public
school system. In passing upon the question of the state's
liability for the negligent acts of its officers or agents, the court
said:

No claim arises against any government is favor of an

individual, by reason of the misfeasance, laches, or
unauthorized exercise of powers by its officers or agents.
(Citing Gibbons vs. U. S., 8 Wall., 269; Clodfelter vs. State,
86 N. C., 51, 53; 41 Am. Rep., 440; Chapman vs. State,
104 Cal., 690; 43 Am. St. Rep., 158; Green vs. State, 73
Cal., 29; Bourn vs. Hart, 93 Cal., 321; 27 Am. St. Rep.,
203; Story on Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals
to sue the state where the cause of action arises out of either
fort or contract, the rule is stated in 36 Cyc., 915, thus:
By consenting to be sued a state simply waives its
immunity from suit. It does not thereby concede its liability
to plaintiff, or create any cause of action in his favor, or
extend its liability to any cause not previously recognized.
It merely gives a remedy to enforce a preexisting liability
and submits itself to the jurisdiction of the court, subject to
its right to interpose any lawful defense.
In Apfelbacher vs. State (152 N. W., 144, advanced sheets),
decided April 16, 1915, the Act of 1913, which authorized the
bringing of this suit, read:

SECTION 1. Authority is hereby given to George

Apfelbacher, of the town of Summit, Waukesha County,
Wisconsin, to bring suit in such court or courts and in such
form or forms as he may be advised for the purpose of
settling and determining all controversies which he may
now have with the State of Wisconsin, or its duly
authorized officers and agents, relative to the mill property
of said George Apfelbacher, the fish hatchery of the State
of Wisconsin on the Bark River, and the mill property of
Evan Humphrey at the lower end of Nagawicka Lake, and
relative to the use of the waters of said Bark River and
Nagawicka Lake, all in the county of Waukesha,
Wisconsin.
In determining the scope of this act, the court said:

Plaintiff claims that by the enactment of this law the

legislature admitted liability on the part of the state for the
acts of its officers, and that the suit now stands just as it
would stand between private parties. It is difficult to see
how the act does, or was intended to do, more than
remove the state's immunity from suit. It simply gives
authority to commence suit for the purpose of settling
plaintiff's controversies with the estate. Nowhere in the act
is there a whisper or suggestion that the court or courts in
the disposition of the suit shall depart from well established
principles of law, or that the amount of damages is the only
question to be settled. The act opened the door of the
court to the plaintiff. It did not pass upon the question of
liability, but left the suit just where it would be in the
 absence of the state's immunity from suit. If the Legislature
had intended to change the rule that obtained in this state
so long and to declare liability on the part of the state, it
would not have left so important a matter to mere
inference, but would have done so in express terms.
(Murdock Grate Co. vs. Commonwealth, 152 Mass., 28; 24
N.E., 854; 8 L. R. A., 399.)
In Denning vs. State (123 Cal., 316), the provisions of the Act of
1893, relied upon and considered, are as follows:
All persons who have, or shall hereafter have, claims on
contract or for negligence against the state not allowed by
the state board of examiners, are hereby authorized, on
the terms and conditions herein contained, to bring suit
thereon against the state in any of the courts of this state
of competent jurisdiction, and prosecute the same to final
judgment. The rules of practice in civil cases shall apply to
such suits, except as herein otherwise provided.
And the court said:

This statute has been considered by this court in at least

two cases, arising under different facts, and in both it was
held that said statute did not create any liability or cause of
action against the state where none existed before, but
merely gave an additional remedy to enforce such liability
as would have existed if the statute had not been enacted.
(Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158;
Melvin vs. State, 121 Cal., 16.)

A statute of Massachusetts enacted in 1887 gave to the

superior court "jurisdiction of all claims against the
commonwealth, whether at law or in equity," with an exception
not necessary to be here mentioned. In construing this statute
the court, in Murdock Grate Co. vs. Commonwealth (152 Mass.,
28), said:
The statute we are discussing disclose no intention to
create against the state a new and heretofore
unrecognized class of liabilities, but only an intention to
provide a judicial tribunal where well recognized existing
liabilities can be adjudicated.

In Sipple vs. State (99 N. Y., 284), where the board of the canal
claims had, by the terms of the statute of New York, jurisdiction
of claims for damages for injuries in the management of the
canals such as the plaintiff had sustained, Chief Justice Ruger
remarks: "It must be conceded that the state can be made liable
for injuries arising from the negligence of its agents or servants,
only by force of some positive statute assuming such liability."

It being quite clear that Act No. 2457 does not operate to extend
the Government's liability to any cause not previously
recognized, we will now examine the substantive law touching
the defendant's liability for the negligent acts of its officers,
agents, and employees. Paragraph 5 of article 1903 of the Civil
Code reads:
The state is liable in this sense when it acts through a
special agent, but not when the damage should have been
caused by the official to whom properly it pertained to do
the act performed, in which case the provisions of the
preceding article shall be applicable.

The supreme court of Spain in defining the scope of this

paragraph said:

That the obligation to indemnify for damages which a third

person causes to another by his fault or negligence is
based, as is evidenced by the same Law 3, Title 15,
Partida 7, on that the person obligated, by his own fault or
negligence, takes part in the act or omission of the third
party who caused the damage. It follows therefrom that the
state, by virtue of such provisions of law, is not responsible
for the damages suffered by private individuals in
consequence of acts performed by its employees in the
discharge of the functions pertaining to their office,
because neither fault nor even negligence can be
presumed on the part of the state in the organization of
branches of public service and in the appointment of its
agents; on the contrary, we must presuppose all foresight
humanly possible on its part in order that each branch of
service serves the general weal an that of private persons
interested in its operation. Between these latter and the
state, therefore, no relations of a private nature governed
by the civil law can arise except in a case where the state
acts as a judicial person capable of acquiring rights and
contracting obligations. (Supreme Court of Spain, January
7, 1898; 83 Jur. Civ., 24.)

That the Civil Code in chapter 2, title 16, book 4, regulates

the obligations which arise out of fault or negligence; and
whereas in the first article thereof. No. 1902, where the
general principle is laid down that where a person who by
an act or omission causes damage to another through fault
or negligence, shall be obliged to repair the damage so
done, reference is made to acts or omissions of the
persons who directly or indirectly cause the damage, the
following articles refers to this persons and imposes an
identical obligation upon those who maintain fixed relations
of authority and superiority over the authors of the
damage, because the law presumes that in consequence
of such relations the evil caused by their own fault or
negligence is imputable to them. This legal presumption
gives way to proof, however, because, as held in the last
paragraph of article 1903, responsibility for acts of third
persons ceases when the persons mentioned in said
article prove that they employed all the diligence of a good
father of a family to avoid the damage, and among these
persons, called upon to answer in a direct and not a
subsidiary manner, are found, in addition to the mother or
the father in a proper case, guardians and owners or
directors of an establishment or enterprise, the state, but
not always, except when it acts through the agency of a
special agent, doubtless because and only in this case, the
fault or negligence, which is the original basis of this kind
of objections, must be presumed to lie with the state.
That although in some cases the state might by virtue of
the general principle set forth in article 1902 respond for all
the damage that is occasioned to private parties by orders
or resolutions which by fault or negligence are made by
branches of the central administration acting in the name
and representation of the state itself and as an external
expression of its sovereignty in the exercise of its
executive powers, yet said article is not applicable in the
case of damages said to have been occasioned to the
petitioners by an executive official, acting in the exercise of
his powers, in proceedings to enforce the collections of
certain property taxes owing by the owner of the property
which they hold in sublease.
That the responsibility of the state is limited by article 1903
to the case wherein it acts through a special agent(and a
special agent, in the sense in which these words are
employed, is one who receives a definite and fixed order or
commission, foreign to the exercise of the duties of his
 office if he is a special official) so that in representation of
the state and being bound to act as an agent thereof, he
executes the trust confided to him. This concept does not
apply to any executive agent who is an employee of the
acting administration and who on his own responsibility
performs the functions which are inherent in and naturally
pertain to his office and which are regulated by law and the
regulations." (Supreme Court of Spain, May 18, 1904; 98
Jur. Civ., 389, 390.)

That according to paragraph 5 of article 1903 of the Civil

Code and the principle laid down in a decision, among
others, of the 18th of May, 1904, in a damage case, the
responsibility of the state is limited to that which it contracts
through a special agent, duly empowered by a definite
order or commission to perform some act or charged with
some definite purpose which gives rise to the claim, and
not where the claim is based on acts or omissions
imputable to a public official charged with some
administrative or technical office who can be held to the
proper responsibility in the manner laid down by the law of
civil responsibility. Consequently, the trial court in not so
deciding and in sentencing the said entity to the payment
of damages, caused by an official of the second class
referred to, has by erroneous interpretation infringed the
provisions of articles 1902 and 1903 of the Civil Code.
(Supreme Court of Spain, July 30, 1911; 122 Jur. Civ.,
146.)
It is, therefore, evidence that the State (the Government of the
Philippine Islands) is only liable, according to the above quoted
decisions of the Supreme Court of Spain, for the acts of its
agents, officers and employees when they act as special agents
within the meaning of paragraph 5 of article 1903, supra, and
that the chauffeur of the ambulance of the General Hospital was
not such an agent.
For the foregoing reasons, the judgment appealed from must be
reversed, without costs in this instance. Whether the
Government intends to make itself legally liable for the amount
of damages above set forth, which the plaintiff has sustained by
reason of the negligent acts of one of its employees, by
legislative enactment and by appropriating sufficient funds
therefor, we are not called upon to determine. This matter rests
solely with the Legislature and not with the courts.
MERRITT VS. GOVERNMENT OF THE PHILIPPINE ISLANDS

FACTS:

Plaintiff was involved in an accident concerning

him and a General Hospital ambulance resulting
in him being incapacitated. He sustained severe
injuries rendering him unable to return to work.
Act No. 2457 was enacted in his favor which
reads: "An act authorizing E. Merritt to bring suit
against the Government of the Philippine Islands
and authorizing the Attorney-General of said
Islands to appear in said suit.

"Whereas a claim has been filed against the

Government of the Philippine Islands by Mr. E.
Merritt, of Manila, for damages resulting from a
collision between his motorcycle and the
ambulance of the General Hospital on March
twenty-fifth, nineteen hundred and thirteen;
"Whereas it is not known who is responsible for
the accident nor is it possible to determine the
amount of damages, if any , to which the
claimant is entitled; and

"Whereas the Director of Public Works and the

Attorney-General recommend that an act be
passed by the Legislature authorizing Mr. E.
Merritt to bring suit in the courts against the
Government, in order that said questions may be
decided: Now, therefore,

"By authority of the United States, be it enacted

by the Philippine Legislature, that:

"SECTION 1. E. Merritt is hereby authorized to

bring suit in the Court of First Instance of the city
of Manila against the Government of the
Philippine Islands in order to fix the responsibility
for the collision between his motorcycle and the
ambulance of the General Hospital, and to
determine the amount of the damages, if any, to
which Mr. E. Merritt is entitled on account of
said collision, and the attorney-General of the
Philippine Islands is hereby authorized and
directed to appear at the trial on the behalf of
the Government of said Islands, to defend said
Government at the same.

"SEC. 2. This Act shall take effect on its passage.

"Enacted, February 3, 1915."

ISSUE:

Whether or not the State is immune from suit.

HELD:
The accident was due to the negligence of the
ambulance’s chauffeur. As the negligence was
committed by an agent or employee of the
government involving tort, the inquiry arises
whether the government is legally liable for
damages. The State is not liable for the torts
committed by its officers or agents whom it
employs, except when expressly made so by
legislative enactment. The government does not
undertake to guarantee to any person the fidelity
of the officers or agents whom it employs since
that would involve it in all its operations in
endless embarrassments, difficulties and losses,
which would be subversive of the public interest.
By consenting to be sued, a state simply waives
its immunity from suit. It does not thereby
concede its liability or create any cause of action
in his favor, or extend his liability to any cause
not previously recognized. It merely gives a
remedy to enforce a pre existing liability and
submits itself to the jurisdiction of the court,
subject to its right to interpose any lawful
defense. The State is not responsible for the
damages suffered by private individuals in
consequence of acts performed by its employees
in the discharge of the functions pertaining to
their office, because neither fault nor
negligence can be presumed on the part of the
state in the organization of branches in the public
service and in the appointment of its agents. The
responsibility of the State is limited to that which
it contracts through a special agent, duly
empowered by a definite order or commission to
perform some act or charged with some definite
purpose which gives rise to the claim.