Mark Jhones A.

Licardo

June 30, 2013

Republic of the Philippines vs. Hon. Guillermo P. Villasor 54 SCRA 83 November 28, 1973

Facts: The decision that was rendered in favor of respondents P.J. Kiener Co., Ltd, Gavino Unchuan and International Construction Corporation was declared final and executory by Respondent Hon. Guillermo P. Villasor. Pursuant to the said declaration, the corresponding Alias Writ of Execution was issued. And for the strength of this writ, the provincial sheriff served notices of garnishment with several banks, specially on the 'monies due the Armed Forces of the Philippines in the form of deposits; the Philippines Veterans Bank received the same notice of garnishment. The funds of the AFP on deposit with the banks are public funds duly appropriated and allocated for the payment of pensions of retireees, pay and allowances of military and civillian personnel and for maintenance and operations of AFP. Petitioner filed a petition against Villasor for acting in excess jurisdiction amounting to lack of jurisdiction in granting the issuance of a Writ of Execution against the properties of AFP, hence the notices and garnishments are null and void. Issue: Whether or not the Writ of Execution issued by respondent Judge Villasor is valid. Ruling: No. 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 and its government is immune from suit unless it gives its consent. 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.

Republic vs. Feliciano 148 SCRA 424 March 12, 1987 Facts: Respondent Pablo Feliciano filed a complaint with the Court of First Instance against the Republic of the Philippines, represented by the Land Authority, for the recovery of ownership and possession of a parcel of land. The trial court rendered a decision declaring Lot No. 1 to be the private property of Feliciano and the rest of the property reverted to the public domain. The trial court reopened the case due to the filing of a motion to intervene and to set aside the decision of the trial court by 86 settlers, alleging that they had been in possession of the land for more than 20 years under claim of ownership. The trial court ordered the settlers to present their evidence but they did not appear at the day of presentation of evidence. Feliciano, on the other hand, presented additional evidence. Thereafter, the case was submitted for decision and the trial court ruled in favor of Feliciano. The settlers immediately filed a motion for reconsideration and then the case was reopened to allow them to present their evidence. Feliciano filed a petition for certiorari with the Appellate Court but it was denied. The settlers filed a motion to dismiss on the ground that the Republic of the Philippines cannot be sued without its consent and hence the action cannot prosper. The motion was opposed by Feliciano. Issue: Whether or not the state can be sued for recovery and possession of a parcel of land. Held: No. A suit against the state is not permitted, except upon a showing that the state has consented to be sued, either expressly or by implication through the use of statutory language too plain to be misinterpreted. The complaint involves land not owned by the state but private land belonging to Feliciano, hence the government is not being divested of any of its properties.

PHIL. NATIONAL BANK vs. JAVIER PABALAN G.R. No. L-33112 June 15, 1978 Issue: The petitioner is requesting for certiorari against the writ of execution authorized by the Hon Judge Pabalan regarding the transfer of funds amounting to P12,724.66 belonging to Philippine Virginia Tobacco Administration. Facts: Philippine National Bank invoked the doctrine of non-suability in behalf of PVTA. It is to be admitted that under the present Constitution, what was formerly implicit as a fundamental doctrine in constitutional law has been set forth in express terms: "The State may not be sued without its consent." In addition, the amount held by said bank is subject to garnishment. Ruling: The certiorari was dismissed without cost by the Supreme Court saying that the funds held by PNB is subject for garnishment, thus, the writ of execution be imposed immediately. The non-suability clause raised by PVTA being a government owned corporation was also denied citing previous decisions held by the Supreme Court specifically citing that of Manila Hotel Employees Association vs Manila Hotel Company and to quote '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.

Department of Agriculture vs. NLRC G.R. No. 104269, November 11, 1993 Facts: Petitioner Department of Agriculture (DA) 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, nonpayment 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 thesecurity agency. Thereafter, the City Sheriff levied on execution the motor vehicles of the DA. Issue: Whether or not the doctrine of non-suability of the State applies in the case Ruling: The basic postulate enshrined in the Constitution that the State may not be sued without its consent 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. It is based on the very essence of sovereignty. A sovereign is exempt from suit based 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. The rule is not really absolute for it does not say that the State may not be sued under any circumstances. The State may at times be sued. The States consent may be given expressly or impliedly. Express consent may be made through a general law or a special law. Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a counterclaim, or when it enters into a contract. 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. But not all contracts entered into by the government operate as a waiver of its nonsuability; 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. 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 intobusiness contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In the 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, be that as it may, the claims of the complainant security guards clearly constitute money claims. Act No. 3083 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 327, as amended by PD 1145, the money claim must first be brought to the Commission on Audit.

MOBIL PHILIPPINESEXPLORATION, INC. vs. CUSTOMS ARRASTRE SERVICE and BUREAU of CUSTOMS G.R. No. L-23139 December 17,1966 FACTS: Four cases of rotary drill parts wereshipped from abroad on S.S. "Leoville" consigned to Mobil Philippines Exploration, Inc., Manila. It was discharged to the custody of the Customs Arrastre Service, the unit of the Bureau of Customs then handling arrastreoperations therein. The Customs ArrastreService later delivered to the broker of the consignee three cases only. Petitioner filed suitin the Court of First Instance of Manila against the Customs Arrastre Service and the Bureauof Customs to recover the value of theundelivered case plus other damages. The respondents filed a motion to dismiss on the ground that not being persons under the law, they cannot be sued. ISSUE: Whether or not the defendants can invoke the state immunity. Ruling: YES. Now, the fact that a non-corporate government entity performs a function result in its being suable. If said nonproprietary in nature does not necessarily

governmental function is undertaken as an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity. The Bureau of Customs, to repeat, is part of the Department of Finance with no personality of its own apart from that of the national government. Its primary function is governmental, that of assessing and collecting lawful revenues from imported articles and allother tariff and customs duties, fees, charges, fines and penalties. To this function, arrastre service is a necessary incident.

NATIONAL AIRPORTS CORPORATION vs. JOSE TEODORO, SR G.R. No. L-5122 April 30, 1952 Facts: The National Airports Corporation was organized under Republic Act No. 224, which expressly made the provisions of the Corporation Law applicable to the said corporation. On November 10, 1950, the National Airports Corporation was abolished by Executive Order No. 365 and to take its place the Civil Aeronautics Administration was created. Before the abolition, the Philippine Airlines, Inc. paid to the National Airports Corporation P65,245 as fees for landing and parking on Bacolod Airport No. 2 for the period up to and including July 31, 1948. These fees are said to have been due and payable to the Capitol Subdivision, Inc. which owned the land used by the National Airports Corporation as airport, and the owner commenced an action in the Court of First Instance of Negros Occidental against the Philippine Airlines, Inc., in 1951 to recover the above amount. The Philippine Airlines, Inc. countered with a third-party complaint against the National Airports Corporation, which by that time had been dissolved, and served summons on the Civil Aeronautics Administration. The third party plaintiff alleged that it had paid to the National Airports Corporation the fees claimed by the Capitol Subdivision, Inc. "on the belief and assumption that the third party defendant was the lessee of the lands subject of the complaint and that the third party defendant and its predecessors in interest were the operators and maintainers of said Bacolod Airport No. 2 and, further, that the third party defendant would pay to the landowners, particularly the Capitol Subdivision, Inc., the reasonable rentals for the use of their lands." Issue: (1) Whether or not, the National Airports Corporation can be sued. (2) Whether or not, the Civil Aeronautics Administration can be sued. Ruling: (1) The National Airports Corporation cannot be sued for the fact that it has been abolished by Executive Order No. 365 and the said corporation is no longer operates and its transactions therein and other external affairs have been terminated. The Philippine Airline Inc.s suit will also be dismissed because they cannot sue the state without its consent even if the National Airports Corporation is a private entity, it is still under control of the government.

Suits against state agencies with relation to matters in which they have assumed to act in private or nongovernment 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 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 implication consents to suits against the corporation. (2) Yes. Under Section 7 of Executive Order No. 365 reads: All records, properties, equipment, assets, rights, choses in action, obligations, liabilities and contracts of the National Airport Corporation abolished under this Order, are hereby transferred to, vested in, and assumed by, the Civil Aeronautics Administration. All works, construction, and improvements made by the National Airports Corporation or any agency of the National Government in or upon government airfields, including all appropriations or the unreleased and unexpended balances thereof, shall likewise be transferred to the Civil Aeronautics Administration. These provisions confer upon the Civil Aeronautics Administration, in our opinion, the power to sue and be sued. The power to sue and be sued is implied from the power to transact private business. And if it has the power to sue and be sued on its behalf, the Civil Aeronautics Administration with greater reason should have the power to prosecute and defend suits for and against the National Airports Corporation, having acquired all the properties, funds and choses in action and assumed all the liabilities of the latter. To deny the National Airports Corporation's creditors access to the courts of justice against the Civil Aeronautics Administration is to say that the government could impair the obligation of its corporations by the simple expedient of converting them into unincorporated agencies. Wherefore, the petition is DENIED with costs against the Civil Aeronautics Administration.

Philippine National Bank vs. Commissioner of Internal Revenue 81 SCRA 314

Facts: Petitioners motion to quash a notice of garnishment was denied for lack of merit. What was sought to be garnished was the money of the People's Homesite and Housing Corporation deposited at petitioner's branch in Quezon City, to satisfy a decision of respondent Court which had become final and executor. 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 theorder assailed is challenged on two grounds: (1) that the appointment of respondent Gilbert P. Lorenzo as authorized deputy sheriff to serve the writ of execution was contrary to law and (2) that the funds subject of the garnishment "may be public in character." The order of August 26, 1970 of respondent Court denying the motion to quash, subject of this certiorari proceeding, reads as follows: "The Philippine National Bank moves to quash the notice of garnishment served upon its branch in Quezon City by the authorized deputy sheriff of this Court. It contends that the service of the notice by the authorized deputy sheriff of the court contravenes Section11 of Commonwealth Act No. 105, as amended which reads:" 'All writs and processes issued by the Court shall be served and executed free of charge by provincial or city sheriffs, or by any person authorized by this Court, in the same manner as writs and processes of Courts of First Instance.' Following the law, the Bank argues that it is the Sheriff of Quezon City, and not the Clerk of this Court who is its Ex-Officio Sheriff, that has the authority to serve the notice of garnishment, and that the actual service by the latter officer of said notice is therefore not in order. The Court finds no merit in this argument. Republic Act No. 4201 has, since June 19, 1965, already repealed Commonwealth Act No. 103, and under this law, it is now the Clerk of this Court that is at the same time the Ex-Officio Sheriff. As such Ex-Officio Sheriff, the Clerk of this Court has therefore the authority to issue writs of execution and notices of garnishment in an area encompassing the whole of the country, including Quezon City, since his area of authority is coterminous with that of the Court itself, which is national in nature. At this stage, the Court notes from the record that the appeal to the Supreme Court by individual employees of PHHC which questions the award of attorney's fees to Atty. Gabriel V. Manansala, has already been dismissed and that the same became final and

executory on August 9, 1970. There is no longer any reason, therefore, for withholding action in this case. Wherefore, the motion to quash filed by the Philippine National Bank is denied for lack of merit. The said Bank is therefore ordered to comply within five days from receipt with the 'notice of Garnishment' dated May 6, 1970." There was a motion for reconsideration filed by petitioner, but in a resolution dated September 22, 1970, it was denied. Hence, this certiorari petition. Issue: Whether or not the funds mentioned may be garnished. Ruling: No. National Shipyard and Steel Corporation v. court of Industrial Relations is squarely in point. As was explicitly stated in the opinion of the then Justice, later Chief Justice, Concepcion: "The allegation to the effect that the funds of the NASSCO are public funds of the government, and that, as such, the same may not be garnished, attached or levied upon, is untenable for, as a government owned and controlled corporation. The NASSCO has a personality of its own, distinct and separate from that of the Government. It has pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950, pursuant to which the NASSCO has been established 'all the powers of a corporation under the Corporation Law. By engaging in a particular business thru 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. "Both the Palacio and the Commissioner of Public Highways decisions, insofar as they reiterate the doctrine that one of the coronaries of the fundamental concept of non-suability is that governmental funds are immune from garnishment. It is an entirely different matter if, according to Justice Sanchez in Ramos v. Court of Industrial Relations, the office or entity is "possessed of a separate and distinct corporate existence." Then it can sue and be sued. Thereafter, its funds may be levied upon or garnished.

Municipality of San Fernando v. Judge Firme (1991) G.R. No. L-52179 Facts: On 16-Dec 1965 at 7am, a three-vehicle collision occurred involving a dump truck of the Municipality of San Fernando La Union, a gravel and sand truck, and a passenger jeepney. At the time of the accident, the dump truck of the municipality driven by its regular employee, A. Bislig, was on its way to Naguilian River to get a load of sand and gravel for the repair of the municipalitys streets. Laureano Baina Sr, a passenger of the jeepney, died as a result of the injuries he sustained in the collision. Ban ias relatives instituted a complaint for damages against the driver and owner of the passenger jeepney and the dump truck. In their answer, the municipality raised four (4) grounds for dismissal: lack of cause of action, the non-suability of the State w/o its consent, prescription and negligence of the jeepney driver. Judge Firme set a hearing on the sole ground of lack of jurisdiction but deferred resolution on the other grounds until trial. The municipality filed a motion for reconsideration against the order of the judge but denied. Soon after, the case was deemed submitted due to both parties failure to file their respective memoranda. The case was dismissed against the Jeepney owner and its driver but the court held the Municipality and its driver liable for actual damages, moral damages and Atty.s fees. Issues: (1) (2) Whether or not the municipality can be sued. If in the affirmative, WON it can be held liable for torts committed by its regular

employee who was then engaged in the discharge of governmental powers. Ruling: (1) Yes. Municipality can sue and be sued.

Generally, the State may not be sued without its consent (Art. XVI Sec. 3). When the state does waive its sovereign immunity, whether express or implied, it is only giving the plaintiff the chance to prove that the defendant is liable. Express consent may be embodied in a general law or a special law. Consent is implied when the government enters into business contracts, thereby descending to the level of the other contracting party, and also when the State files a complaint, thus opening itself to a counterclaim. Municipal corporations are suable because their charters grant them the competence to sue and be sued (express consent).

(2)

No. The municipality cannot be held liable for the torts committed by its regular

employee, who was then engaged in the discharge of governmental functions. Municipal corporations exist in a dual capacity: Governmental and Proprietary. In its governmental function, they exercise the right springing from sovereignty and enjoy the sovereign immunity from suit. In its proprietary function, it exercises a private, proprietary or corporate right, arising from its existence as legal persons and not as public agencies. The test of liability of the municipality depends on whether or not the municipality, was performing governmental or proprietary functions. It has already been remarked that municipal corporations are suable because their charters grant them the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by them in the discharge of governmental functions and can only be held answerable only if it can be shown that they were acting in proprietary capacity. In permitting such entities to be sued, the State merely gives the claimant the right to show that the defendant was not acting in governmental capacity when the injury was committed or that the case comes under the exceptions recognized by law. Failing this, the claimant cannot recover. In the absence of any evidence to the contrary, the regularity of the performance of official duty is presumed. Hence, We rule that the driver of the dump truck was performing duties or tasks pertaining to his office. Decision of the respondent court modified. Petitioner municipality absolved of any liability in favor of private respondents.

MERITT vs. Government of the Philippine Islands 34 Phil 311 FACTS: It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a motorcycle, when an ambulance of the General Hospital struck the plaintiff in an intersection. By reason of the resulting collusion, the plaintiff was so severely injured that, according to Dr. Saleeby, he was suffering from a depression in the left parietal region, a wound 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 had suffered material injury. Upon recovery the doctor noticed that the plaintiffs 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 damages that the plaintiff got from the collision disabled him to do this work as a contractor and forced him to give up contracts he recently had. As the negligence which cause 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. The Philippine Legislature made an Act (Act No. 2457) that authorizes the plaintiff to bring suit against the GPI and authorizing the Attorney- General to appear in said suit. ISSUE: Whether or not the Government is legally-liable for the damages incurred by the plaintiff. RULING: No, the Government is not legally-liable for the damages incurred by the plaintiff. It being quiet clear that Act. No. 2457 does not operate to extend the Governments liability to any cause not previously recognized. That according to paragraph 5 of Article 1903 of the Civil Code and the principle laid down in a decision, among others, of the May 18, 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. It is, therefore, evidence that the State (GPI) 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, be legislative enactment and by appropriating sufficient funds therefore, we are not called upon to determine. This matter rests solely with the Legislature and not with the courts.

United States of America vs. Guinto 182 SCRA 644 FACTS: These cases are consolidated because they all involve the doctrine of state immunity. 1) US VS GUINTO (GR No. 76607) The private respondents are suing several officers of the US Air Force in Clark Air Base in connection with the bidding conducted by them for contracts for barber services in the said base which was won by a certain Dizon. The respondents wanted to cancel the award to the bid winner because they claimed that Dizon had included in his bid an area not included in the invitation to bid, and subsequently, to conduct a rebidding. 2) US VS RODRIGO (GR No 79470) Genove, employed as a cook in the Main Club at John Hay Station, was dismissed after it had been ascertained in an investigation that he poured urine in the soup stock. Genove filed a complaint for damages against the club manager who was also an officer of USAF. 3) US VS CEBALLOS (GR No 80018) -bust operation conducted by petitioners who were USAF officers and special agents of the

Air Force Office. A trial ensued where petitioners testified against respondent Bautista. As a result of the charge, Bautista was dismissed from his employment. He then filed for damages against petitioners claiming that because of he was removed from his job. 4) US VS ALARCON VERGARA (GR No 80258) Complaint for damages was filed by private respondents against individual petitioners for injuries allegedly sustained by handcuffing and unleashing dogs on them by the latter. The individual petitioners, US military officers, deny this stressing that the private respondents were arrested for theft but resisted arrest, thus incurring the injuries. In all these cases, the individual petitioners claimed they were just exercising their official functions. The USA was not impleaded in the complaints but has moved to dismiss on the ground that they are in effect suits against it to which it has not consented. These cases have been consolidated because they all involve the doctrine of state immunity. ISSUE: Whether the defendants were also immune from suit under the RP-US Bases Treaty for acts done by them in the performance of their official duties. RULING: The rule that a State may not be sued without its consent is one of the generally accepted principles of international law that were have adopted as part of the law of our land. Even without such affirmation, we would still be bound by the generally accepted principles of international law under the doctrine of incorporation. Under this doctrine, as accepted by the majority of the states, such principles are deemed incorporated in the law of every civilized state as a condition and consequence of its membership in the society of nations. All states are sovereign equals and cannot assert jurisdiction over one another. While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the states for acts allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, the suit must be regarded as against the state although it has not been formally impleaded.

When the government enters into a contract, it is deemed to have descended to the level of the other contracting party and divested of its sovereign immunity from suit with its implied consent. In the case o US, the customary law of international law on state immunity is expressed with more specificity in the RP-US Bases Treaty. There is no question that the US, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its proprietory or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied. It is clear from a study of the records of GR No. 80018 that the petitioners therein were acting in the exercise of their official functions when they conducted the buy-bust operations against the complainant and thereafter testified against him at his trial. It follows that for discharging their duties as agents of the US, they cannot be directly impleaded for acts imputable to their principal, which has not given its consent to be sued. As for GR No. 80018, the record is too meager to indicate what really happened. The needed inquiry first be made by the lower court so it may assess and resolve the conflicting claims of the parties on the basis of evidence that has yet to be presented at the trial. There are a number of other cases now pending before us which also involve the question of the immunity of the United States from the jurisdiction of the Philippines. This is cause for regret, indeed, as they mar the traditional friendship between two countries long allied in the cause of democracy. It is hoped that the so-called "irritants" in their relations will be resolved in a spirit of mutual accommodation and respect, without the inconvenience and asperity of litigation and always with justice to both parties. WHEREFORE, after considering all the above premises, the Court hereby renders judgment as follows: 1. In G.R. No. 76607, the petition is DISMISSED and the respondent judge is directed to proceed with the hearing and decision of Civil Case No. 4772. The temporary restraining order dated December 11, 1986, is LIFTED. 2. In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829-R(298) is DISMISSED.

3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C-87 is DISMISSED. The temporary restraining order dated October 14, 1987, is made permanent. 4. In G.R. No. 80258, the petition is DISMISSED and the respondent court is directed to proceed with the hearing and decision of Civil Case No. 4996. The temporary restraining order dated October 27, 1987, is LIFTED.

Republic of Indonesia vs. James Vizon G.R. No. 54705, June 26, 2003 FACTS: Petitioner, Republic of Indonesia entered into a Maintenance Agreement in August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade and Services. The Maintenance Agreement stated that respondent shall, for a consideration, maintain specified equipment at the Embassy Main Building, Embassy Annex Building and the Wisma Duta, the official residence of petitioner Ambassador Soeratmin. The equipments covered by the Maintenance Agreement are air conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps. It is likewise stated therein that the agreement shall be effective for a period of four years and will renew itself automatically unless cancelled by either party by giving thirty days prior written notice from the date of expiry. Petitioners claim that sometime prior to the date of expiration of the said agreement, or before August 1999, they informed respondent that the renewal of the agreement shall be at the discretion of the incoming Chief of Administration, Minister Counsellor Azhari Kasim, who was expected to arrive in February 2000. When Minister Counsellor Kasim assumed the position of Chief of Administration in March 2000, he allegedly found respondents work and services unsatisfactory and not in compliance with the standards set in the Maintenance Agreement. Hence, the Indonesian Embassy terminated the agreement in a letter dated August 31, 2000. Petitioners claim, moreover, that they had earlier verbally informed respondent of their decision to terminate the agreement. On the other hand, respondent claims that the aforesaid termination was arbitrary and unlawful. Respondent filed a complaint against petitioners (RTC) of Makati, petitioners filed a Motion to Dismiss, alleging that the Republic of Indonesia, as a foreign sovereign State, has sovereign immunity from suit and cannot be sued as a party-defendant in the Philippines. The said motion further alleged that Ambassador Soeratmin and Minister

Counsellor Kasim are diplomatic agents as defined under the Vienna Convention on Diplomatic Relations and therefore enjoy diplomatic immunity. In turn, respondent filed on March 20, 2001, an Opposition to the said motion alleging that the Republic of Indonesia has expressly waived its immunity from suit. He based this claim upon the following provision in the Maintenance Agreement. ISSUE: Whether or not the Republic of Indonesia can be sued. RULING: The Supreme Court on the matter ruled that the republic of Indonesia cannot be deemed to have waived its immunity to suit. The existence alone of a paragraph in a contract stating that any legal action arising out of the agreement shall be settled according to the laws of the Philippines and by a specified court of the Philippines is not necessarily a waiver of sovereign immunity from suit. The aforesaid provision contains language not necessarily inconsistent with sovereign immunity. On the other hand, such provision may also be meant to apply where the sovereign party elects to sue in the local courts, or otherwise waives its immunity by any subsequent act. The applicability of Philippine laws must be deemed to include Philippine laws in its totality, including the principle recognizing sovereign immunity. Hence, the proper court may have no proper action, by way of settling the case, except to dismiss it. The Court stated that the upkeep of its furnishings and equipment is still part sovereign function of the State. A sovereign State does not merely establish a diplomatic mission and leave it at that; the establishment of a diplomatic mission encompasses its maintenance and upkeep. Hence, the State may enter into contracts with private entities to maintain the premises, furnishings and equipment of the embassy and the living quarters of its agents and officials. It is therefore clear that petitioner Republic of Indonesia was acting in pursuit of a sovereign activity when it entered into a contract with respondent for the upkeep or maintenance of the air conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps of the Indonesian Embassy and the official residence of the Indonesian ambassador. The Supreme Court grants the petition and reversed the decision of the Court of Appeals. The 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. It is, therefore, evidence that the State (GPI) 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, be legislative enactment and by appropriating sufficient funds therefore, we are not called upon to determine. This matter rests solely with the Legislature and not with the courts.

UNITED STATES OF AMERICA vs. HON. V. M. RUIZ

G.R. No. L-35645 136 SCRA 487 May 22, 1985

Facts: 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. US invited the submission of bids for Repair offender system and Repair typhoon damages. Eligio de Guzman & Co., Inc. responded to the invitation, submitted bids and complied with the requests based on the letters received from the US. In June 1972, a letter was received by the Eligio De Guzman & Co indicating 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 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. Issue: Whether or not the US naval base in bidding for said contracts exercise governmental functions to be able to invoke state immunity Held: 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. 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 (sovereign & governmental acts) 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. 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.

Froilan vs Pan Oriental Shipping GR No. L-6060 Sept. 30, 1950 FACTS: On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a complaint against the defendant-appellant, Pan Oriental Shipping Co., alleging that he purchased from the Shipping Commission the vessel FS-197 for P200,000, paying P50,000 down and agreeing to pay the balance in installments; that to secure the payment of the balance of the purchase price, he executed a chattel mortgage of said vessel in favor of the Shipping Commission; That for various reasons, among them the non-payment of the installments, the Shipping Commission tool possession of said vessel and considered the contract of sale cancelled; That the Shipping Commission chartered and delivered said vessel to the defendantappellant Pan Oriental Shipping Co. subject to the approval of the President of the Philippines; that he appealed the action of the Shipping Commission to the President of the Philippines and, in its meeting on August 25, 1950, the Cabinet restored him to all his rights under his original contract with the Shipping Commission; That he had repeatedly demanded from the Pan Oriental Shipping Co. the possession of the vessel in question but the latter refused to do so. He, therefore, prayed that, upon the approval of the bond accompanying his complaint, a writ of replevin be issued for the seizure of said vessel with all its equipment and appurtenances, and that after hearing, he be adjudged to have the rightful possession thereof On February 3, 1951, the lower court issued the writ of replevin prayed for by Froilan and by virtue thereof the Pan Oriental Shipping Co. was divested of its possession of said vessel. On March 1, 1951, Pan Oriental Shipping Co. filed its answer denying the right of Froilan to the possession of the said vessel; it alleged that the action of the Cabinet on August 25, 1950, restoring Froilan to his rights under his original contract with the Shipping Commission was null and void;

That, in any event, Froilan had not complied with the condition precedent imposed by the Cabinet for the restoration of his rights to the vessel under the original contract; that it suffered damages in the amount of P22, 764.59 for wrongful replevin in the month of February, 1951, and the sum of P17,651.84 a month as damages suffered for wrongful replevin from March 1, 1951; it is alleged that it has incurred necessary and useful expenses on the vessel amounting to P127,057.31 and claimed the right to retain said vessel until its useful and necessary expenses had been reimbursed(Rec. on App. pp. 8-53).On November 10, 1951, after the leave of the lower court had been obtained, the intervenor-appellee, Government of the Republic of the Philippines, filed a complaint in intervention alleging that Froilan had failed to pay to the Shipping Commission (which name was later changed to Shipping Administration) the balance due on the purchase price of the vessel in question, the interest excluding the dry-docking expenses incurred on said vessel by the session of the said vessel either under the terms of the original contract as supplemented by Froilan's letter dated January 28, 1949, or in order that it may cause the extrajudicial sale thereof under the Chattel Mortgage Law. It, therefore, prayed that Froilan be declared to be without any rights on said vessel and the amounts he paid thereon forfeited or alternately that the said vessel be delivered to the Board of Liquidators in order that the intervenor may have its chattel mortgage extra judicially foreclosed in accordance with the provisions of the Chattel Mortgage Law; and that pending the hearing on the merits, the said vessel be delivered to its owner On November 29, 1951, the Pan Oriental Shipping Co. filed an answer to the complaint in intervention alleging that the Government of the Republic of the Philippines was obligated to deliver the vessel in question to it by virtue of a contract of bareboat charter with option to purchase executed on June 16, 1949, by the latter in favor of the former; it also alleged that it had made necessary and useful expenses of the vessel and claimed the right of retention of the vessel. It, therefore, prayed that, if the Republic vessel, to comply with its obligations of delivering to it(Pan Oriental Shipping Co.) or causing its delivery by recovering it from Froilan on November 29, 1951, Froilan tendered to the Board of Liquidators, which was liquidating the affairs of the Shipping Administration, a check in the amount of P162,576.96 in payment of his obligation to the Shipping Administration for the said vessel as claimed in the complaint in intervention of the Government of the Republic of the Philippines. The Board of Liquidators issued an official report there for stating that it was a 'deposit pending the issuance of an order of the Court of First Instance of Manila

on December 7, 1951, the Government of the Republic of the Philippines brought the matter of said payment and the circumstances surrounding it to the attention of the lower court' in order that they may be taken into account by this Honorable Court in connection with question that are now pending before it for determination 'On February 3, 1952, the lower court held that the payment by Froilan of the amount of P162,576.96 on November 29, 1951, to the Board of Liquidators constituted a payment and discharge of Froilan's obligation to the Government of the Republic of the Philippines and ordered the dismissal of the latter's complaint in intervention. In the same order, the lower court made it very clear that said order did not pre-judge the question involved between Froilan and the Oriental Shipping Co. which was also pending determination in said court. This order dismissing the complaint in intervention, but reserving for future adjudication the controversy between Froilan and the Pan Oriental Shipping Co. had already become final since neither the Government of the Republic of the Philippines nor the Pan Oriental Shipping Co. had appealed therefrom. On May 10, 1952, the Government of the Republic of the Philippines filed a motion to dismiss the counterclaim of the Pan Oriental Shipping Co. against it on the ground that the purpose of said counterclaim was to compel the Government of the Republic of the Philippines to deliver the vessel to it (Pan Oriental Shipping Co.) in the event that the Government of the Republic of the Philippines recovers the vessel in question from Froilan. In view, however, of the order of the order of the lower court dated February 3, 1952, holding that the payment made by Froilan's obligation to the Shipping Administration, which order had already become final, the counter claim of the Pan Oriental Shipping Co. against the Republic of the Philippines was no longer feasible, said counterclaim was barred by prior judgment and stated no cause of action. It was also alleged that movant was not subject to the jurisdiction of the court in connection with the counterclaim. This motion was opposed by the Pan Oriental Shipping Co. in its written opposition dated June 4,1952 . ISSUE: Whether or not the RP of the Philippines is immune from suit. HELD: NO. By filing its complaint in intervention the Government in effect waived its right of non-suability."The immunity of the state from the suits does not deprive it of the right to sue private parties in its own courts. The state as plaintiff may avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in an

action against a private party, the state surrenders its privileged position and comes down to the level of the defendant. The latter automatically acquires, within certain limits, the right to set up whatever claims and other defense he might have against the state. The United States Supreme Court thus explains: No direct suit can be maintained against the United States. But when an action is brought by the United States to recover money in the hands of a party who has a legal claim against them, it would be a very rigid principle to deny to him the right of setting up such claim in a court of justice, and turn him around to an application to Congress.' .It is however, contended for the intervenor that, if there was at all any waiver, it was in favor of the plaintiff against whom the complainant in intervention was directed. This contention is untenable. As already stated, the complaint in intervention was in a sense in derogation of the defendant's claim over the possession of the vessel in question.

Amigable vs Cuenca Case Digest G.R. No. L-26400 February 29, 1972 FACTS: Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of Cebu City as shown by Transfer Certificate of Title. No annotation in favor of the government of any right or interest in the property appears at the back of the certificate. Without prior expropriation or negotiated sale, the government used a portion of said lot for the construction of the Mango and Gorordo Avenues. It appears that said avenues were already existing in 1921 although "they were in bad condition and very narrow, unlike the wide and beautiful avenues that they are now," and "that the tracing of said roads was begun in 1924, and the formal construction in 1925." On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of her lot which had been appropriated by the government. The claim was indorsed to the Auditor General, who disallowed it in his 9th Endorsement dated December 9, 1958. Within the reglementary period the defendants filed a joint answer denying the material allegations of the complaint and interposing the following affirmative defenses, to wit: (1) That the action was premature, the claim not having been filed first with the Office of the Auditor General; (2) That the right of action for the recovery of any amount which might be due the plaintiff, if any, had already prescribed;

(3) That the action being a suit against the Government, the claim for moral damages, attorney's fees and costs had no valid basis since as to these items the Government had not given its consent to be sued; and (4) That inasmuch as it was the province of Cebu that appropriated and used the area involved in the construction of Mango Avenue, plaintiff had no cause of action against the defendants. ISSUE: Whether or not the appellant may properly sue the government under the facts of the case? RULING: Where the government takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the government without thereby violating the doctrine of governmental immunity from suit without its consent. Considering that no annotation in favor of the government appears at the back of her certificate of title and that she has not executed any deed of conveyance of any portion of her lot to the government, the appellant remains the owner of the whole lot. As registered owner, she could bring an action to recover possession of the portion of land in question at anytime because possession is one of the attributes of ownership. However, since restoration of possession of said portion by the government is neither convenient nor feasible at this time because it is now and has been used for road purposes, the only relief available is for the government to make due compensation which it could and should have done years ago. To determine the due compensation for the land, the basis should be the price or value thereof at the time of the taking. As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price of the land from the time it was taken up to the time that payment is made by the government. In addition, the government should pay for attorney's fees, the amount of which should be fixed by the trial court after hearing.

Basco v. PAGCOR GRN 91649, 14 May 1991 FACTS: On July 11, 1983, PAGCOR was created under Presidential Decree 1869, pursuant to the policy of the government, to regulate and centralize through an appropriate institution all games of chance authorized by existing franchise or permitted by law. This was subsequently proven to be beneficial not just to the government but also to the society in general. It is a reliable source of much needed revenue for the cashstrapped Government.

Petitioners filed an instant petition seeking to annul the PAGCOR because it is allegedly contrary ISSUES: Whether Presidential Decree 1869 is unconstitutional because: 1.) it is contrary to morals, public policy and public order; 2.) it constitutes a waiver of the right of the City of Manila to improve taxes and legal fees; and that the exemption clause in PD 1869 is violative of constitutional principle of Local Autonomy; 3.) it violates the equal protection clause of the Constitution in that it legalizes gambling thru PAGCOR while most other forms are outlawed together with prostitution, drug trafficking and other vices; and 4.) it is contrary to the avowed trend of the Cory Government, away from monopolistic and HELD: 1.) Gambling, in all its forms, is generally prohibited, unless allowed by law. But the prohibition of gambling does not mean that the government can not regulate it in the crony economy and toward free enterprise and privatization. to morals, public policy and public order, among others.

exercise of its police power, wherein the state has the authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare. 2.) The City of Manila, being a mere Municipal Corporation has no inherent right to impose taxes. Its charter was created by Congress, therefore subject to its control. Also, local governments have no power to tax instrumentalities of the National Government. 3.) Equal protection clause of the Constitution does not preclude classification of individuals who may be accorded different treatment under the law, provided it is not unreasonable or arbitrary. The clause does not prohibit the legislature from establishing classes of individuals or objects upon which different rules shall operate. 4.) The Judiciary does not settle policy issues which are within the domain of the political branches of government and the people themselves as the repository of all state power.

Every law has in its favor the presumption of constitutionality, thus, to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution. In this case, the grounds raised by petitioners have failed to overcome the presumption. Therefore, it is hereby dismissed for lack of merit.