[No. L-5156.

Marzo 11, 1954] CARMEN FESTEJO, demandante y apelante, contra ISAAS FERNANDO, Director de Obras Pblicas, demandado y apelado. RCTICA FORENSE; ACCIN CONTRA UN FUNCIONARIO PBLICO POR DAOS Y PERJUICIOS.La accin contra el demandado como Director de Obras Pblicas encargado y responsable de la construccin de los sistemas de irrigacin en Filipinas, por alegadas extralimitaciones en el desempeo de sus funciones oficiales, es una dirigida personalmente contra el. "Ordinarily the officer or employee committing the tort is personally liable therefor, and may be sued as any other citizen and held answerable for whatever injury or damage results from his tortious act." (49 Am. Jur. 28.) En ese caso, no procede el sobreseimiento de la demanda por el fundamento de que la accin es una dirigida contra la Repblica de Filipinas. APELACIN contra una orden del Juzgado de Primera Instancia de Ilocos Sur. Campos, J. Los hechos aparecen relacionados en la decision del Tribunal. D. Eloy B. Bello en representacin de la apelante. El Procurador General Sr. Pompeyo Daz y el Procurador Sr. Antonio A. Torres en representacin del apelado. DIOKNO, M.: Carmen Festejo, duea de unos terrenos azucareros, de un total de unas 9 hectreas y media de superfice, demand a "Isaas Fernando Director, Bureau of Public Works, que como tal Director de Obras

Pblicas tiene a su cargo los sistemas y proyectos de irrigacin y es el funcionario responsable de la construccin de los sistemas de irrigacin en el pas," alegando que "The defendant, as Director of the Bureau of Public Works, without authority obtained first from the Court of First Instance of Ilocos Sur, without obtaining first a right of way, and without the consent and knowledge of the plaintiff, and against her express objection, unlawfully took possession of 'portions of the three parcels of land described above, and caused an irrigation canal to be constructed on the portion of the three parcels of land on or about the month of February 1951 the aggregate area being 24,179 square meters to the damage and prejudice of the plaintiif."R. on A., p. s. causando a ella variados daos y perjuicios. Pidi, en su consecuencia, sentencia condenando el demandado: "* * * to return or cause to be returned the possession of the portions of land unlawfully occupied and appropriated in the aggregate area of 24,179 square meters and to return the land to its former condition under the expenses of the defendant." * * * "In the remote event that the portions of land unlawfully occupied and appropriated can not be returned to the plaintiff, then to order the defendant to pay to the plaintiff the sum of P19,343.20 as value of the portions totalling an area of 24,179 square meters;"R. on A., p. 5. y adems a pagar P9,756.19 de daos y P5,000 de honorarios de abogado, con las costas R. on A., pp. 5-6.

El demandado, por medio del Procurador General, present mocin de sobreseimiento de la demanda por el fundamento de que el Juzgado no tiene jurisdiccin paradictar sentencia vlida contra l, toda vez que judicialmente la reclamacin es contra la Repblica de Filipinas, y esta no ha presentado su consentimiento a la demanda. El Juzgado inferior estim la mocin y sobresey la demanda sin perjuicio y sin costas. En apelacin, la demandante sostiene que fu un error considerar la demanda como una contra la Repblica y sobreseer en su virtud la demanda, La mocin contra "Isaas Fernando, Director de Obras Pblicas, encargado y responsable de la construccin de los sistemas de irrigacin en Filipinas" es una dirigida personalmente contra l, por actos que asumi ejecutar en su concepto oficial. La ley no le exime de responsabilidad por las extralimitaciones que cometa o haga cometer en el desempeo de sus funciones oficiales. Un caso semejante es el de Nelson vs. Bobcock (1933) 18 minn. 584, 24 NW 49, 90 ALR 1472. All el Comisionado de Carreteras, al mejorar un trozo de la carretera ocup o se apropi de terrenos contiguos al derecho de paso. El Tribunal Supremo del Estado declar que es personalmente responsable al dueo de los daos causados. Declar adems que la ratificacin de lo que hicieron sus subordinados era equivalente a una orden a los mismos. He aqu lo dijo el Tribunal. "We think the evidence and conceded facts permitted the jury in finding that in the trespass on plaintiff's land defendant committed acts outside the scope of his authority. When he went outside the

boundaries of the right of way upon plaintifTs land and damaged it or destroyed its former condition and usefulness, he must be held to have designedly departed from the duties imposed on him by law. There can be no claim that he thus invaded plaintiff's land southeasterly of the right of way innocently. Surveys clearly marked the limits of the land appropriated for the right of way of this trunk highway before construction began. * * *. " 'Ratification may be equivalent to command, and cooperation may be inferred from acquiescence where there is power to restrain.' It is unnecessary to consider other cases cited, * * *, for as before suggested, the jury could find or infer that, in so far as there was actual trespass by appropriation of plaintiff's land as a dumping place for the rock to be removed from the additional appropriated right of way, defendant planned, approved, and ratified what was done by his subordinates."Nelson vs. Bobcock, 90 A. L. R., 1472, 1476, 1477. La doctrina sobre la responsabilidad civil de los funcionarios en casos parecidos se resume como sigue: "Ordinarily the officer or employee committing the tort is personally liable therefor, and may be sued as any other citizen and held answerable for whatever injury or damage results from his tortious act."49 Am. Jur. 289. * * * If an officer, even while acting under color of his office, exceeds the power conferred on him by law, he cannot shelter himself under the plea that he is a public agent."43 Am. Jur. 86. "It is a general rule that an officer-executive, administrative quasijudicial, ministerial, or otherwise who acts outside the scope of his

jurisdiction and without authorization of law may thereby render himself amenable to personal liability in a civil suit. If he exceeds the power conferred on him by law, he cannot shelter himself by the plea that he is a public agent acting under color of his office, and not personally. In the eye of the law, his acts then are wholly without authority."48 Am. Jur. 89-90. El artculo 32 del Cdigo Civil dice, a su vez: "ART. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: * * * * * * *

Veanse tambin Lung vs. Aldanese, 45 Phil., 784; Syquia vs. Almeda, No. L-1648, Agosto 17, 1947; Marquez vs. Nelson, No. L-2412, Septiembre 1950. Se revoca la orden apelada y se ordena la continuacin de la tramitacin de la demanda conforme proveen los reglamentos. Sin especial pronunciamiento en cuanto a las costas. As se ordena. Padilla, Reyes, Jugo, Bautista Angelo y Labrador, MM., estn conformes. CONCEPCION, J., dissenting: To my mind, the allegations of the complaint lead to no other conclusion than that appellee Isaias Fernando is a party in this case, not in his personal capacity, but as an officer of the Government. According to said pleading the defendant is "Isaias Fernando, Director, Bureau of Public Works." Moreover, in paragraphs 4 and 5 of the complaint, it is alleged: "4. That the defendant as Director of the Bureau of Public Works is in charge of irrigation projects and systems, and the official responsible for the construction of irrigation system in the Philippines; 5. That the defendant, as Director of the Bureau of Public Works, without authority obtained first from the Court of First Instance of Ilocos Sur, without obtaining first a right of way, and without the consent and knowledge of the plaintiff, and against her express objection, unlawfully took possession of portions of the three parcels of land described above, and caused an irrigation canal to be constructed on the portion of the three parcels of land on or about

"(6) The right against deprivation of property without due process of law; * * * * * * *

"In any of the cases referred to in this article, whether or not the defendant's acts or omission constitutes a criminal ofFense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted), and may be proved by a preponderance of evidence. "The indemnity shall include moral damages. Exemplary damages may also be adjudicated."

the month of February 1951 the aggregate area being 24,179 square meters to the damage and prejudice of the plaintiff." (Italics supplied.) The emphasis thus placed upon the allegation that the acts complained of were performed by said defendant "as Director of the Bureau of Public Works," clearly shows that the designation of his office was included in the title of the case to indicate that he was being sued in his official capacity. This conclusion is bolstered up by the fact that, among other things, plaintiff prays, in the complaint, for a judgment "Ordering the defendant to return or caused to be returned the possession of the portions of land unlawfully occupied and appropriated in the aggregate area of 24,179 square meters and to return the land to its former condition under the expense of the defendant." (Paragraph a, of the complaint). We take judicial notice of the fact that the irrigation projects and system referred to in the complaintof which the defendant, Isaias Fernando, according to the same pleading, is "in charge" and for which he is "responsible" as Director of the Bureau of Public Worksare established and operated with public funds, which pursuant to the Constitution, must be appropriated by law. Irrespective of the manner in which the construction may have been undertaken by the Bureau of Public Works, the system or canal is, therefore, a property of the Government. Consequently, in praying that possession of the portions of land occupied by the irrigation canal involved in the present case be returned to plaintiff herein, and that said land be restored to its former condition, plaintiff seeks

to divest the Government of its possession of said irrigation canal, and, what is worse, to cause said property of the Government to be removed or destroyed. As held in Syquia vs. Lopez * (47 Off. Gaz., 665), the Government is, accordingly, "the real party in interest as defendant" in the case at bar. In other words, the same partakes of the nature of a suit against the state and may not be maintained without its consent. Hence I am constrained to dissent. Bengzon, J., concurs. Se revoca la orden opelada y se ordena la continuacin de la tramitacin de la demanda conforme proveen los reglamentos. [Festejo vs. Fernando, 94 Phil. 504(1954)] G.R. No. 101949. December 1, 1994.* THE HOLY SEE, petitioner, vs. THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents. Remedial Law; Motion to Dismiss; Appeal; An order denying a motion to dismiss is not reviewable by the appellate courts except when it is clear in the records that the trial court has no alternative but to dismiss the complaint.A preliminary matter to be threshed out is the procedural issue of whether the petition for certiorari under Rule 65 of the Revised Rules of Court can be availed of to question the order denying petitioners motion to dismiss. The general rule is that an order denying a motion to dismiss is not reviewable by the appellate courts, the remedy of the movant being to file his answer and to proceed with the hearing before the trial

court. But the general rule admits of exceptions, and one of these is when it is very clear in the records that the trial court has no alternative but to dismiss the complaint (Philippine National Bank v. Florendo, 206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]). In such a case, it would be a sheer waste of time and energy to require the parties to undergo the rigors of a trial. Public International Law; Diplomatic Immunity; Non-suability; Courts and Practices; A state or international agency requests the Foreign Office of the state where it is sued to convey to the court that it is entitled to immunity.In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. Same; Same; Same; In the Philippines, the practice is for the government sovereign or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity.In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court

a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a suggestion to respondent Judge. The Solicitor General embodied the suggestion in a Manifestation and Memorandum as amicus curiae. Same; Same; Same.In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioners claim of sovereign immunity. Same; Same; Same; Statehood; In 1929, through the Lateran Treaty, Italy recognized the exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City.In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City. It also recognized the right of the Holy See to receive foreign diplomats, to send its own diplomats to foreign countries, and to enter into treaties according to International Law (Garcia, Questions and Problems In International Law, Public and Private 81 [1948]). Same; Same; Same; Same; The Lateran Treaty established the statehood of the Vatican City.The Lateran Treaty established the statehood of the Vatican City for the purpose of assuring to the Holy See absolute and visible independence and of guaranteeing to it indisputable sovereignty also in the field of international relations (OConnell, I International Law 311 *1965+).

Same; Same; Same; Same; Despite its size and object, the Vatican City has an independent government of its own, with the Pope, who is also head of the Roman Catholic Church, as the Holy See or Head of State, in conformity with its traditions, and the demands of its mission in the world.The Vatican City fits into none of the established categories of states, and the attribution to it of sovereignty must be made in a sense different from that in which it is applied to other states (Fenwick, International Law 124-125 [1948]; Cruz, International Law 37 [1991]). In a community of national states, the Vatican City represents an entity organized not for political but for ecclesiastical purposes and international objects. Despite its size and object, the Vatican City has an independent government of its own, with the Pope, who is also head of the Roman Catholic Church, as the Holy See or Head of State, in conformity with its traditions, and the demands of its mission in the world. Indeed, the world-wide interests and activities of the Vatican City are such as to make it in a sense an international state (Fenwick, supra. 125; Kelsen, Principles of International Law 160 [1956]). Same; Same; Same; Same; Same; It is the Holy See that is the international person.Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and not in the name of the Vatican City, one can conclude that in the Popes own view, it is the Holy See that is the international person. Same; Same; Same; The Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government since 1957.The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had

diplomatic representations with the Philippine government since 1957 (Rollo, p. 87). This appears to be the universal practice in international relations. Same; Same; Same; The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations.Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not for commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in the Philippines on November 15, 1965. Same; Same; Same; Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation.The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by private respondent in its complaint (Rollo, pp. 26, 27).

Same; Same; Same; The issue of Petitioners non-suability can be determined by the trial court without going to trial in the light of the pleadings, particularly the admission of the private respondent.The issue of petitioners non-suability can be determined by the trial court without going to trial in the light of the pleadings, particularly the admission of private respondent. Besides, the privilege of sovereign immunity in this case was sufficiently established by the Memorandum and Certification of the Department of Foreign Affairs. As the department tasked with the conduct of the Philippines foreign relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has formally intervened in this case and officially certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156157). The determination of the executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the courts (International Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so as not to embarrass the executive arm of the government in conducting the countrys foreign relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration Commission and in World Health Organization, we abide by the certification of the Department of Foreign Affairs. Same; Same; Same; Under both Public International Law and Transnational Law, a person who feels aggrieved by the acts of a

foreign sovereign can ask his own government to espouse his cause through diplomatic channels.Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign sovereign can ask his own government to espouse his cause through diplomatic channels. Same; Same; Same; Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the Holy See.Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of its espousal on the relations between the Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the Philippine government decides to espouse the claim, the latter ceases to be a private cause. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court. Padilla Law Office for petitioner. Siguion Reyna, Montecillo & Ongsiako for private respondent. QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court, Branch 61, Makati, Metro Manila in Civil Case No. 90-183. The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil Case No. 90-183, while the Order dated September 19, 1991 denied the motion for reconsideration of the June 20, 1991 Order. Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is represented in the Philippines by the Papal Nuncio. Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate business. This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot 5-A, Transfer Certificate of Title No. 390440) located in the Municipality of Paraaque, Metro Manila and registered in the name of petitioner. Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of Title Nos. 271108 and 265388 respectively and registered in the name of the Philippine Realty Corporation (PRC). The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent of the sellers. Later, Licup assigned his rights to the sale to private respondent.

In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to who of the parties has the responsibility of evicting and clearing the land of squatters. Complicating the relations of the parties was the sale by petitioner of Lot 5-A to Tropicana Properties and Development Corporation (Tropicana). I On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch 61, Makati, Metro Manila for annulment of the sale of the three parcels of land, and specific performance and damages against petitioner, represented by the Papal Nuncio, and three other defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and Tropicana (Civil Case No. 90-183). The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square meter; (2) the agreement to sell was made on the condition that earnest money of P100,000.00 be paid by Licup to the sellers, and that the sellers clear the said lots of squatters who were then occupying the same; (3) Licup paid the earnest money to Msgr. Cirilos; (4) in the same month, Licup assigned his rights over the property to private respondent and informed the sellers of the said assignment; (5) thereafter, private respondent demanded from Msgr. Cirilos that the sellers fulfill their undertaking and clear the property of squatters; however, Msgr. Cirilos informed private respondent of the squatters refusal to vacate the lots, proposing instead either that private respondent undertake the eviction or that the earnest money be returned to the latter; (6) private respondent

counterproposed that if it would undertake the eviction of the squatters, the purchase price of the lots should be reduced from P1,240.00 to P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of P100,000.00 and wrote private respondent giving it seven days from receipt of the letter to pay the original purchase price in cash; (8) private respondent sent the earnest money back to the sellers, but later discovered that on March 30, 1989, petitioner and the PRC, without notice to private respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers transfer certificate of title over the lots were cancelled, transferred and registered in the name of Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it and thus enriched itself at the expense of private respondent; (10) private respondent demanded the rescission of the sale to Tropicana and the reconveyance of the lots, to no avail; and (11) private respondent is willing and able to comply with the terms of the contract to sell and has actually made plans to develop the lots into a townhouse project, but in view of the sellers breach, it lost profits of not less than P30,000,000.00. Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and the PRC on the one hand, and Tropicana on the other; (2) the reconveyance of the lots in question; (3) specific performance of the agreement to sell between it and the owners of the lots; and (4) damages. On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaintpetitioner for lack of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an

improper party. An opposition to the motion was filed by private respondent. On June 20, 1991, the trial court issued an order denying, among others, petitioners motion to dismiss after finding that petitioner shed off *its+ sovereign immunity by entering into the business contract in question (Rollo, pp. 20-21). On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991, petitioner filed a Motion for a Hearing for the Sole Purpose of Establishing Factual Allegation for Claim of Immunity as a Jurisdictional Defense. So as to facilitate the determination of its defense of sovereign immunity, petitioner prayed that a hearing be conducted to allow it to establish certain facts upon which the said defense is based. Private respondent opposed this motion as well as the motion for reconsideration. On October 1, 1991, the trial court issued an order deferring the resolution on the motion for reconsideration until after trial on the merits and directing petitioner to file its answer (Rollo, p.22). Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of sovereign immunity only on its own behalf and on behalf of its official representative, the Papal Nuncio. On December 9, 1991, a Motion for Intervention was filed before us by the Department of Foreign Affairs, claiming that it has a legal interest in the outcome of the case as regards the diplomatic immunity of petitioner, and that it adopts by reference, the allegations contained in the petition of the Holy See insofar as they

refer to arguments relative to its claim of sovereign immunity from suit (Rollo, p. 87). Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance with the resolution of this Court, both parties and the Department of Foreign Affairs submitted their respective memoranda. II A preliminary matter to be threshed out is the procedural issue of whether the petition for certiorari under Rule 65 of the Revised Rules of Court can be availed of to question the order denying petitioners motion to dismiss. The general rule is that an order denying a motion to dismiss is not reviewable by the appellate courts, the remedy of the movant being to file his answer and to proceed with the hearing before the trial court. But the general rule admits of exceptions, and one of these is when it is very clear in the records that the trial court has no alternative but to dismiss the complaint (Philippine National Bank v. Florendo, 206 SCRA 582 [1992]; Zagada v. Civil Service Commission, 216 SCRA 114 [1992]). In such a case, it would be a sheer waste of time and energy to require the parties to undergo the rigors of a trial. The other procedural question raised by private respondent is the personality or legal interest of the Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp. 186-190). In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity.

In the United States, the procedure followed is the process of suggestion, where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a suggestion that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a suggestion (OConnell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]). In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a suggestion to respondent Judge. The Solicitor General embodied the suggestion in a Manifestation and Memorandum as amicus curiae.

In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioners claim of sovereign immunity. In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved. III The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a foreign state enjoying sovereign immunity. On the other hand, private respondent insists that the doctrine of non-suability is not anymore absolute and that petitioner has divested itself of such a cloak when, of its own free will, it entered into a commercial transaction for the sale of a parcel of land located in the Philippines. A. The Holy See Before we determine the issue of petitioners non-suability, a brief look into its status as a sovereign state is in order. Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as the Holy See, was considered a subject

of International Law. With the loss of the Papal States and the limitation of the territory under the Holy See to an area of 108.7 acres, the position of the Holy See in International Law became controversial (Salonga and Yap, Public International Law 36-37 [1992]). In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City. It also recognized the right of the Holy See to receive foreign diplomats, to send its own diplomats to foreign countries, and to enter into treaties according to International Law (Garcia, Questions and Problems In International Law, Public and Private 81 [1948]). The Lateran Treaty established the statehood of the Vatican City for the purpose of assuring to the Holy See absolute and visible independence and of guaranteeing to it indisputable sovereignty also in the field of international relations (OConnell, I International Law 311 [1965]). In view of the wordings of the Lateran Treaty, it is difficult to determine whether the statehood is vested in the Holy See or in the Vatican City. Some writers even suggested that the treaty created two international personsthe Holy See and Vatican City (Salonga and Yap, supra. 37) The Vatican City fits into none of the established categories of states, and the attribution to it of sovereignty must be made in a sense different from that in which it is applied to other states (Fenwick, International Law 124-125 [1948]; Cruz, International Law 37 [1991]). In a community of national states, the Vatican City

represents an entity organized not for political but for ecclesiastical purposes and international objects. Despite its size and object, the Vatican City has an independent government of its own, with the Pope, who is also head of the Roman Catholic Church, as the Holy See or Head of State, in conformity with its traditions, and the demands of its mission in the world. Indeed, the world-wide interests and activities of the Vatican City are such as to make it in a sense an international state (Fenwick, supra. 125; Kelsen, Principles of International Law 160 [1956]). One authority wrote that the recognition of the Vatican City as a state has significant implicationthat it is possible for any entity pursuing objects essentially different from those pursued by states to be invested with international personality (Kunz, The Status of the Holy See in International Law, 46 The American Journal of International Law 308 [1952]). Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and not in the name of the Vatican City, one can conclude that in the Popes own view, it is the Holy See that is the international person. The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representa-tions with the Philippine government since 1957 (Rollo, p. 87). This appears to be the universal practice in international relations. B. Sovereign Immunity As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted principles of International

Law. Even without this affirmation, such principles of International Law are deemed incorporated as part of the law of the land as a condition and consequence of our admission in the society of nations (United States of America v. Guinto, 182 SCRA 644 [1990]). There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis (United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International Law 194 [1984]). Some states passed legislation to serve as guidelines for the executive or judicial determination when an act may be considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act of 1976, which defines a commercial activity as either a regular course of commercial conduct or a particular commercial transaction or act. Furthermore, the law declared that the commercial character of the activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose. The Canadian Parliament enacted in 1982 an Act to Provide For State Immunity in Canadian Courts. The Act defines a commercial activity as any particular transaction, act or conduct or any regular course of conduct that by reason of its nature, is of a commercial character.

The restrictive theory, which is intended to be a solution to the host of problems involving the issue of sovereign immunity, has created problems of its own. Legal treatises and the decisions in countries which follow the restrictive theory have difficulty in characterizing whether a contract of a sovereign state with a private party is an act jure gestionis or an act jure imperii. The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely connected with the discharge of governmental functions. This is particularly true with respect to the Communist states which took control of nationalized business activities and international trading. This Court has considered the following transactions by a foreign state with private parties as acts jure imperii: (1) the lease by a foreign government of apartment buildings for use of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of public bidding for the repair of a wharf at a United States Naval Station (United States of America v. Ruiz, supra); and (3) the change of employment status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]). On the other hand, this Court has considered the following transactions by a foreign state with private parties as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting of three restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to American servicemen and the general public (United States of America v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]). The

operation of the restaurants and other facilities open to the general public is undoubtedly for profit as a commercial and not a governmental activity. By entering into the employment contract with the cook in the discharge of its proprietary function, the United States government impliedly divested itself of its sovereign immunity from suit. In the absence of legislation defining what activities and transactions shall be considered commercial and as constituting acts jure gestionis, we have to come out with our own guidelines, tentative they may be.

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit. As held in United States of America v. Guinto, (supra): There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its nonsuability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied.

In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate business, surely the said transaction can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and subsequent disposal of Lot 5-A were made for profit but claimed that it acquired said property for the site of its mission or the Apostolic Nunciature in the Philippines. Private respondent failed to dispute said claim. Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not for commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in the Philippines on November 15, 1965. In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and administrative jurisdiction of the receiving state over any real action relating to private immovable property situated in the territory of the receiving state which the envoy holds on behalf of the sending state for the purposes of the mission. If this immunity is provided for a diplomatic envoy, with all the more reason should immunity be recognized as regards the sovereign itself, which in this case is the Holy See. The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to

dispose off the same because the squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by private respondent in its complaint (Rollo, pp. 26, 27). The issue of petitioners non-suability can be determined by the trial court without going to trial in the light of the pleadings, particularly the admission of private respondent. Besides, the privilege of sovereign immunity in this case was sufficiently established by the Memorandum and Certification of the Department of Foreign Affairs. As the department tasked with the conduct of the Philippines foreign relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has formally intervened in this case and officially certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156-157). The determination of the executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the courts (International Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so as not to embarrass the executive arm of the government in conducting the countrys foreign relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration Commission and in

World Health Organization, we abide by the certification of the Depart-ment of Foreign Affairs. Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing to establish the facts alleged by petitioner in its motion. In view of said certification, such procedure would however be pointless and unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994). IV Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign sovereign can ask his own government to espouse his cause through diplomatic channels. Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of its espousal on the relations between the Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the Philippine government decides to espouse the claim, the latter ceases to be a private cause. According to the Permanent Court of International Justice, the forerunner of the International Court of Justice:

By taking up the case of one of its subjects and by resorting to diplomatic action or international judicial proceedings on his behalf, a State is in reality asserting its own rightsits right to ensure, in the person of its subjects, respect for the rules of international law (The Mavrommatis Palestine Concessions, 1 Hudson, World Court Reports 293, 302 [1924]). WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90-183 against petitioner is DISMISSED. SO ORDERED. Narvasa (C.J.), Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan and Mendoza, JJ., concur. Feliciano, J., On leave. Padilla, J., No part; related to petitioners counsel. Petition granted, complaint dismissed. Note.Doctrine of rebus sic stantibus does not operate automatically. There is a necessity for a formal act of rejection, usually made by the Head of State, with a statement of the reasons why compliance with the treaty is no longer required. (Santos III vs. Northwest Orient Airlines, 210 SCRA 256 [1992]) o0o [Holy See, The vs. Rosario, Jr., 238 SCRA 524(1994)]\

[No. 11154. March 21, 1916,]

E. MERRITT, plaintiff and appellant, vs. GOVERNMENT OF THE PHILIPPINE ISLANDS, def endant and appellant. 1. DAMAGES; MEASURE OF.Where the evidence shows that the plaintiff was wholly incapacitated for six months it is an error to restrict the damages to a shorter period during which he was confined in the hospital. 2. SPECIAL STATUTES; CONSENT OF THE STATE TO BE SUED; CONSTRUCTION.The Government of the Philippine Islands having been "modeled after the federal and state governments of the United States" the decisions of the high courts of that country may be used in determining the scope and purpose of a special statute. 3. ID.; ID.; ID.The state not being liable to suit except by its express consent, an Act abrogating that immunity will be strictly construed. 4. ID.; ID. ; ID.An act permitting a suit against the state gives rise to no liability not previously existing unless it is clearly expressed in the act. 5. GOVERNMENT OF THE PHILIPPINE ISLANDS; LlABILITY FOR THE NEGLIGENT ACTS OF ITS OFFICERS, AGENTS, AND EMPLOYEES.The Government of the Philippine Islands its only liable for the negligent acts of its officers, agents, and employees when they are acting as special agents within. the meaning of paragraph 5 of article 1903 of the Civil Code, and a chauffeur of the General Hospital is not such a special agent. APPEAL from a judgment of the Court of First Instance of Manila. Del Rosario, J.

The facts are stated in the opinion of the court. Crossfield & O'Brien for plaintiff. Attorney-General Avancea 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 t 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 placed 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 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 mass 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 wound 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 slight 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 memory 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 dissolve 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 amount 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 plaintiffs 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 AttorneyGeneral 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 AttorneyGeneral 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." 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. State, 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 in 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 tort 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 f orm 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 plaintiffs controversies with the state. Nowhere in the act is there a whisper or suggestion that the court or courts in the disposition of the suit shall depart f rom 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 discloses 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 perf ormed 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 the 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 and 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 article refers to third 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 f amily 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 active 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 Panlilio vs. Provincial Board of Pampanga. 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, theref ore, evident 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. Arellano, C. J., Torres, Johnson, and Moreland, JJ., concur, Judgment reversed.

ILDEFONSO SANTIAGO, represented by his Attorney-in-Fact, ALFREDO T. SANTIAGO, petitioner, vs. THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, represented by the Director, Bureau, of Plant Industry, and the Regional Director, Region IX, Zamboanga City, respondent. Constitutional Law; Actions; The state cannot be sued without its consent, such consent, however, need not be express and may be presumed as when the Government benefited by the taking of land and has not yet paid the compensation justly due.Fortunately, the constitutional provision itself allows a waiver. Where there is consent, a suit may be filed. Consent need not be express. It can be implied. So it was more than implied in Ministerio v. Court of First Instance of Cebu: The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. The fact that this decision arose from a suit against the Public Highways Commissioner and the Auditor General for failure of the government to pay for land necessary to widen a national highway, the defense of immunity without the consent proving unavailing, is not material. The analogy is quite obvious. Where the government ordinarily benefited by the taking of the land, the failure to institute the necessary condemnation proceedings should not be a bar to an ordinary action for the collection of the just compensation due. Here the alleged failure to abide by the conditions under which a donation was given should not prove an insuperable obstacle to a civil action, the consent likewise being presumed. This conclusion is strengthened by the fact that while a donation partakes of a contract, there is no money claim, and therefore reliance on Commonwealth Act No. 327 would be futile.

No. L-48214. December 19, 1978.*

Same; Same; A donor of land to the Government of the Philippines is entitled to go to court in case of an alleged breach of the conditions in the deed of donation. Consent to be sued is therein implied on grounds of equity.Our decision, it must be emphasized, goes no further than to rule that a donor, with the Republic or any of its agency being the donee, is entitled to go to court in case of an alleged breach of the conditions of such donation. He has the right to be heard. Under the circumstance, the fundamental postulate of non- suability cannot stand in the way. It is made to accommodate itself to the demands of procedural due process, which is the negation of arbitrariness and inequity. The government, in the final analysis, is the beneficiary. It thereby manifests its adherence to the highest ethical standards, which can only be ignored at the risk of losing the confidence of the people, the repository of the sovereign power. The judiciary under this circumstance has the grave responsibility of living up to the ideal of objectivity and impartiality, the very essence of the rule of law. Only by displaying the neutrality expected of an arbiter, even if it happens to be one of the departments of a litigant, can the decision arrived at, whatever it may be, command respect and be entitled to acceptance. PETITION for certiorari from the order of dismissal of the Court of First Instance of Zamboanga City. The facts are stated in the opinion of the Court. Ahmad D. Sahak for petitioner.

Solicitor General Estelito P. Mendoza, Assistant Solicitor General Octavio R. Ramirez and Solicitor Mariano M. Martinez for respondents. FERNANDO, J.: The first impression yielded by a perusal of this petition for certiorari is its inherent weakness considering the explicit provision in the present Constitution prohibiting a suit against the Republic without its consent.1 Here, petitioner Ildefonso Santiago2 filed on August 9, 1976 an action in the Court of First Instance of Zamboanga City naming as defendant the government of the Republic of the Philippines represented by the Director of the Bureau of Plant Industry.3 His plea was for the revocation of a deed of donation executed by him and his spouse in January of 1971,4 with the Bureau of Plant Industry as the donee. As alleged in such complaint, such Bureau, contrary to the terms of the donation, failed to install lighting facilities and water system on the property donated and to build an office building and parking [lot] thereon which should have been constructed and ready for occupancy on or before December 7, 1974.5 That led him to conclude that under the circumstances, he was exempt from compliance with such an explicit constitutional command. The lower court, in the order challenged in this petition, was of a different view. It sustained a motion to dismiss on the part of the defendant Republic of the Philippines, now named as one of the respondents, the other respondent being the Court of First Instance of Zamboanga City, Branch II. It premised such an order on the settled rule that the state cannot be sued without its consent. This is so, because the New Constitution of the Philippines expressly provides that the state may not be sued without its consent.6 Solicitor General

Estelito P. Mendoza,7 in the comment on the petition filed with this Court, is for the affirmance of the order of dismissal of respondent Court precisely to accord deference to the above categorical constitutional mandate. _______________ 1 According to Article XV, Section 16 of the Constitution: The State may not be sued without its consent. 2 He is represented by his attorney-in-fact, Alfredo T. Santiago. 3 Ildefonso Santiago v. Republic of the Philippines, Civil Case No. 249 of the Court of First Instance of Zamboanga City, Branch II. 4 The exact date is January 20, 1971. _________________ On its face, such a submission carries persuasion. Upon further reflection, this Tribunal is impressed with the unique aspect of this petition for certiorari, dealing as it does with a suit for the revocation of a donation to the Republic, which allegedly failed to conform with what was agreed to by the donee. If an order of dismissal would suffice, then the element of unfairness enters, the facts alleged being hypothetically admitted. It is the considered opinion of this Court then that to conform to the high dictates of equity and justice, the presumption of consent could be indulged in safely. That would serve to accord to petitioner as plaintiff, at the very least, the right to be heard. Certiorari lies. _______________

5 Record on Appeal attached in the Petition for Certiorari, Their Amended Complaint, par. 3, 40. 6 Order of October 20, 1977 by respondent Court, through District Judge Alberto V. Seeris, 1-2. This Order was included in the petition without counsel for petitioner taking the trouble of identifying it as one of the annexes. 7 He was assisted by Assistant Solicitor General Octavio R. Ramirez and Solicitor Mariano M. Martinez. _______________ 1. This is not to deny the obstacle posed by the constitutional provision. It is expressed in language plain and unmistakable: The State may not be sued without its consent.8 The Republic cannot be proceeded against unless it allows itself to be sued. Neither can a department, bureau, agency, office, or instrumentality of the government where the suit, according to the then Justice, now Chief Justice, Castro in Del Mar v. Philippine Veterans Administration,9 may result in adverse consequences to the public treasury, whether in the disbursements of funds or loss of property.10 Such a doctrine was reiterated in the following cases: Republic v. Villasor,11 Sayson v. Singson,12 Director of the Bureau of Printing v. Francisco,13 and Republic v. Purisima.14 2. It is contended by counsel for petitioner that the above constitutional provision would be given a retroactive application in this case if the suit for the revocation of donation were dismissed. That is not the case at all. In Republic v. Purisima, this Court made clear that such a basic postulate is part and parcel of the system of government implanted in the Philippines from the time of the

acquisition of sovereignty by the United States, and therefore, was implicit in the 1935 Constitution even in the absence of any explicit language to that effect. This it did in a citation from Switzerland General Insurance Co., Ltd, v. Republic of the Philippines:15 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 paraphrase 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 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.16 That is the teaching of the leading case of Mobil Philippines Exploration, Inc. v. Customs Arrastre Service,17 promulgated in December of 1966. As a matter of fact, the Switzerland General Insurance Co. decision was the thirty-seventh of its kind after Mobil. Clearly, then, the contention that to dismiss the suit would be to give the applicable constitutional provision a retroactive effect is, to put it at its mildest, untenable. ______________ 8 Article XV Section 16 of the Constitution. 9 L-27299, June 27, 1973, 51 SCRA 340. 10 Ibid, 345-346. The quotation Is from Begosa v. Chairman, Philippine Veterans Administration, L-25916, April 30, 1970, 32 SCRA 466. 11 L-30671, April 30, 1970, 32 SCRA 466.

12 L-30044, December 19, 1973, 54 SCRA 282. 13 L-31337, December 20, 1973, 54 SCRA 324. 14 L-36084, August 31, 1977, 78 SCRA 470. 15 L-27389, March 30, 1970, 32 SCRA 227. ________________ 3. Petitioners counsel invoked Santos v. Santos,18 a 1952 decision. A more thorough analysis ought to have cautioned him against reliance on such a case. It was therein clearly pointed out that the government entity involved was originally the National Airports Corporation. Thereafter, it was abolished by Executive Order No. 365, series of 1950, and in its place and stead the Civil Aeronautics Administration was created and took over all the assets and assumed all the liabilities of the abolished corporation. The Civil Aeronautics Administration, even if it is not a juridical entity, cannot legally prevent a party or parties from enforcing their proprietary rights under the cloak or shield of lack of juridical personality, because to took over all the powers and assumed all the obligations of the defunct corporation which had entered into the contract in question.19 Then came National Shipyard and Steel Corporation v. Court of Industrial Relations,20 a 1963 decision, where the then Justice, later Chief Justice, Concepcion, as ponente, stated that a government-owned and controlled corporation has a personality of its own distinct and separate from that of the government.* * * Accordingly, it may sue and be sued and may be subjected to court processes just like any other corporation. (Section 13, Act 1459, as amended).21 In three recent decisions, Philippine National Bank v. Court of Industrial Relations,22 Philippine National Bank v.

Honorable Judge Pabalan,23 and Philippine National Railways v. Union de Maquinistas,24 this constitutional provision on nonsuability was unavailing in view of the suit being against a government-owned or controlled corporation. That point apparently escaped the attention of counsel for petitioner. Hence Santos v. Santos is hardly controlling. 4. It is to be noted further that the trend against the interpretation sought to be fastened in the broad language of Santos v. Santos is quite discernible. Not long after, in Araneta v. Hon. M. Gatmaitan,25 decided in 1957, it was held that an action [against] Government officials, is essentially one against the Government, * * * .26 In the same year, this Court, in Angat River Irrigation System v. Angat River Workers Union,27 after referring to the basic and fundamental principle of the law that the Government cannot be sued before courts of justice without its consent, pointed out that this privilege of non-suability of the Government covers with the mantle of its protection an entity, in this case, the Angat River Irrigation System.28 Then, in 1960, came Lim v. Brownell, Jr.,29 where there was a reaffirmation of the doctrine that a claim [constituting] a charge against, or financial liability to, the Government cannot be entertained by the courts except with the consent of said government.30 Bureau of Printing v. Bureau of Printing Employees Association31 came a year later; it reiterated such a doctrine. It was not surprising therefore that in 1966, Mobil Philippines Exploration, Inc. was decided the way it was. The remedy, where the liability is based on contract, according to this Court, speaking through Justice J. P. Bengzon, is for plaintiff to file a claim with the general office in accordance with the controlling statute, Commonwealth Act No. 327.32 To repeat, that doctrine has

been adhered to ever since. The latest case in point is Travelers Indemnity Company v. Barber Steamship Lines, Inc.33 Justice Aquinos opinion concluded with this paragraph: It is settled that the Bureau of Customs, acting as part of the machinery of the national government in the operation of the arrastre service, is immune from suit under the doctrine of non-suability of the State. The claimants remedy to recover the loss or damage to the goods under the custody of the customs arrastre service is to file a claim with the Commission in Audit as contemplated in Act No. 3083 and Commonwealth Act No. 327.34 With the explicit provision found in the present Constitution, the fundamental principle of non-suability becomes even more exigent in its command. 5. The reliance on Santos v. Santos as a prop for this petition having failed, it would ordinarily follow that this suit cannot prosper. Nonetheless, as set forth at the outset, there is a novel aspect that suffices to call for a contrary conclusion. It would be manifestly unfair for the Republic, as donee, alleged to have violated the conditions under which it received gratuitously certain property, thereafter to put as a barrier the concept of non-suitability. That would be a purely one-sided arrangement offensive to ones sense of justice. Such conduct, whether proceeding from an individual or governmental agency, is to be condemned. As a matter of fact, in case it is the latter that is culpable, the affront to decency is even more manifest. The government, to paraphrase Justice Brandeis, should set the example. If it is susceptible to the charge of having acted dishonorably, then it forfeits public trustand rightly so. 6. Fortunately, the constitutional provision itself allows a waiver. Where there is consent, a suit may be filed. Consent need not be express. It can be implied. So it was more than implied in Ministerio

v. Court of First Instance of Cebu:35 The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen.36 The fact that this decision arose from a suit against the Public Highways Commissioner and the Auditor General for failure of the government to pay for land necessary to widen a national highway, the defense of immunity without the consent proving unavailing, is not material. The analogy is quite obvious. Where the government ordinarily benefited by the taking of the land, the failure to institute the necessary condemnation proceedings should not be a bar to an ordinary action for the collection of the just compensation due. Here, the alleged failure to abide by the conditions under which a donation was given should not prove an insuperable obstacle to a civil action, the consent likewise being presumed. This conclusion is strengthened by the fact that while a donation partakes of a contract, there is no money claim, and therefore reliance on Commonwealth Act No. 327 would be futile. 7. Our decision, it must be emphasized, goes no further than to rule that a donor, with the Republic or any of its agency being the donee, is entitled to go to court in case of an alleged breach of the conditions of such donation. He has the right to be heard. Under the circumstances, the fundamental postulate of non-suability cannot stand in the way. It is made to accommodate itself to the demands of procedural due process, which is the negation of arbitrariness and inequity. The government, in the final analysis, is the beneficiary. It thereby manifests its adherence to the highest ethical standards, which can only be ignored at the risk of losing the confidence of the people, the repository of the sovereign power. The judiciary under this circumstance has the grave responsibility of

living up to the ideal of objectivity and impartiality, the very essence of the rule of law. Only by displaying the neutrality expected of an arbiter, even if it happens to be one of the departments of a litigant, can the decision arrived at, whatever it may be, command respect and be entitled to acceptance. WHEREFORE, the writ of certiorari prayed for is granted and the order of dismissal of October 20, 1977 is nullified, set aside and declared to be without force and effect. The Court of First Instance of Zamboanga City, Branch II, is hereby directed to proceed with this case, observing the procedure set forth in the Rules of Court. No costs. Barredo, Antonio, Aquino, Concepcion Jr., and Santos, JJ., concur. Writ granted and order nullified, set aside and declared to be without force and effect. Notes.A judgment rendered against the State cannot be enforced by execution. (Republic vs. Villasor, 54 SCRA 83.) A suit against the Philippine Veterans Administration is not a suit against the Government. (Del Mar vs. Philippine Veterans Administration, 51 SCRA 340.) The doctrine of State immunity from suit cannot be used as an instrument for perpetuating an injustice on a citizen. (Amigable vs. Cuenca, 43 SCRA 360.) The principle of state immunity from suit extends and is applicable to public officials where it will result in financial responsibility to the government. (Ministerio vs. CFI of Cebu, 40 SCRA 464.)

The doctrine of governmental immunity from suit may not be allowed to serve, however, as an instrument for the perpetration of an injustice on a citizen. (Amigable vs. Cuenca, 43 SCRA 360.) A direct suit against the state cannot be maintained without its consent. (Insurance Company of North America vs. Republic, 20 SCRA 1159; Firemans Fund Insurance Co. vs. Maersk Line Far East Service, 27 SCRA 519; Rizal Surety and Insurance Co. vs. Customs Arrastre Service, 27 SCRA 1016.) Statutory provisions waiving state immunity from suits are strictly construed and waiver of immunity, being in derogation of sovereignty, will not be lightly inferred. (Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service, 18 SCRA 1120.)

budget. It is not subject to the jurisdiction of the Court of Industrial Relations. Sam; Acceptance of outside work and payment of overtime compensation does not make work of Bureau of Printing proprietary.Overtime work in the Bureau of Printing is done only when the interest of the service so requires. The payment of overtime compensation is discretionary with the Director, depending upon the Bureau's current appropriations. The additional work, which it executes for private persons, is done upon request. It is not solicited. It is accepted only as the requirements of the Government Jobs would permit. It is merely incidental to its governmental function. Same; lndustrial Peace Act; Jurisdiction of Court of Industrial Retetions.The Industrial Court has no jurisdiction to hear and determine the complaint for unfair labor practice filed against institutions or corporations not organized for profit and, consequently, are not industrial or business organizations. The Industrial Peace Act was intended to apply only to industrial employment and to govern the relations between employers engaged in industry and occupations for purposes of gain, and their industrial employees. Same; Bureau of Printing cannot be sued.As a Government office, without any juridical personality, the Bureau of Printing cannot be sued. Same; Constitutional law; Actions; Immunity from suit.Any suit, action or proceeding against the Bureau of Printing would actually be a suit, action or proceeding against the Government itself. The

No. L-15761. January 28, 1961. BUREAU OF PRINTING, SERAFIN SALVADOR and MARIANO LEDESMA, petitioners, vs. THE BUREAU OF PRINTING EMPLOYEES ASSOCIATION (NLU), PACIFICO ADVINCULA, ROBERTO MENDOZA, PONCIANO ARGANDA and TEODULO TOLERAN. respondents.
Bureau of Printing; Work is governmental in character; Court of Industrial Relations; No jurisdiction over employees of the Bureau of Printing.The Bureau of Printing is an instrumentality of the Government. It operates under the direct supervision of the Executive Secretary. It is designed to meet the printing needs of the Government. It is primarily a service bureau. It is obviously not engaged in business or occupation for pecuniary profit. It has no corporate existence. Its appropriations are provided for in the

Government cannot be sued without its consent, much less over its objection. Administrative law; Civil Service Law; Public officers; Court of Industrial Relations cannot interfere with the disciplining of government employees.Where the filing of administrative charges against some officers of the Bureau of Printing Employees' Association for insubordination, grave misconduct and acts prejudicial to the public service, by inciting the employees of the Bureau to walk out of their jobs against the order of the duly constituted officials, sparked the filing in the Industrial Court of the charge of unfair labor practice against the Director of Printing and the Secretary of General Services, the Industrial Court has no jurisdiction over the case. Heads of Departments and Bureaus are authorized to institute and investigate administrative charges against erring subordinates. For the Industrial Court to take cognizance of the case would constitute an interference with the discharge of said officials duties in connection with the discipline of government employees under them. ORIGINAL ACTION in the Supreme Court. Certiorari and prohibition. The facts are stated in the opinion of the Court. Solicitor General for petitioners. Eulogio R. Lerum for respondents. GUTIERREZ DAVID, J.: This is a petition for certiorari and prohibition with preliminary injunction to annul certain orders of the respondent Court of

Industrial Relations and to restrain it from further proceeding in the action for unfair labor practice pending before it on the ground of lack of jurisdiction. Giving due course to the petition, this Court ordered the issuance of the writ of preliminary injunction prayed for without bond. The action in question wasupon. complaint of the respondents Bureau of Printing Employees Association (NLU), Pacifico Advincula, Roberto Mendoza, Ponciano Arganda and Teodulo Toleranfiled by an acting prosecutor of the Industrial Court against herein petitioners Bureau of Printing, Serafin Salvador, the Acting Secretary of the Department of General Services, and Mariano Ledesma, the Director of the Bureau of Printing. The complaint alleged that Serafin Salvador and Mariano Ledesma have been engaging in unfair labor practices by interfering with, or coercing the employees of the Bureau of Printing, particularly the members of the complaining association, in the exercise of their right to self-organization and discriminating in regard to hire and tenure of their employment in order to discourage them from pursuing their union activities. Answering the complaint, the petitioners Bureau of Printing, Serafin Salvador and Mariano Ledesma denied the charges of unfair labor practices attributed to them and, by way of affirmative defenses, alleged, among other things, that respondents Pacifico Advincula, Roberto Mendoza, Ponciano Arganda and Teodulo Toleran were suspended pending result of an administrative investigation against them for breach of Civil Service rules and regulations; that the Bureau of Printing has no juridical personality to sue and be sued; that said Bureau of Printing is not an industrial concern engaged for the purpose of gain but is an agency of the Republic performing governmental functions. For relief, they prayed that the case be

dismissed for lack of jurisdiction. Thereafter, before the case could be heard, petitioners filed an "Omnibus Motion" asking for a preliminary hearing on the question of jurisdiction raised by them in their answer and for suspension of the trial of the case on the merits pending the determination of such jurisdictional question. The motion was granted, but after hearing, the trial judge of the Industrial Court in an order dated January 27, 1959 sustained the jurisdiction of' the court on the theory that the functions of the Bureau of Printing are "exclusively proprietary in nature," and, consequently, denied the prayer for dismissal. Reconsideration of this order having been also denied by the court en banc, the petitioners brought the case to this Court through the present petition for certiorari and prohibition. We find the petition to be meritorious. The Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act No. 2657). As such instrumentality of the Government, it operates under the direct supervision of the Executive Secretary, Office of the President, and is "charged with the execution of all printing and binding, including work incidental to those processes, required by the National Government and such other work of the same character as said Bureau may, by law or by order of the (Secretary of Finance) Executive Secretary, be authorized to undertake x x x." (Sec. 1644, Rev. Adm. Code). It has no corporate existence, and its appropriations are provided for in the General Appropriations Act. Designed to meet the printing needs of the Government, it is primarily a service bureau and, obviously, not engaged in business or occupation for pecuniary profit.

It is true, as stated in the order complained of, that the Bureau of Printing receives outside jobs and that many of its employees are paid for overtime work on regular working days and on holidays, but these facts do not justify the conclusion that its functions are "exclusively proprietary in nature." Overtime work in the Bureau of Printing is done only when the interest of the service so requires (sec. 566, Rev. Adm. Code). As a matter of administrative policy, the overtime compensation may be paid, but such payment is discretionary with the head of the Bureau depending upon its current appropriations, so that it cannot be the basis for holding that the functions of said Bureau are wholly proprietary in character. Anent the additional work it executes for private persons, we find that such work is done upon request, as distinguished from those solicited, and only "as the requirements of Government work will permit" (sec. 1654, Rev. Adm. Code), and "upon terms fixed by the Director of Printing, with the approval of the Department Head" (sec. 1655, id.). As shown by the uncontradicted evidence of the petitioners, most of these works consist of orders for greeting cards during christmas from government officials, and for printing of checks of private banking institutions. On those greeting cards, the Government seal, of which only the Bureau of Printing is authorized to use, is embossed, and on the bank checks, only the Bureau of Printing can print the reproduction of the official documentary stamps appearing thereon. The volume of private jobs done, in comparison with government jobs, is only one-half of 1 per cent, and in computing the costs for work done for private parties, the Bureau does not include profit because it is not allowed to make any. Clearly, while the Bureau of Printing is allowed to undertake private printing jobs, it cannot be pretended that it is thereby an industrial or business concern. The additional work it executes for

private parties is merely incidental to its function, and although such work may be deemed proprietary in character, there is no showing that the employees performing said proprietary function are separate and distinct from those employed in its general governmental functions. From what has been stated, it is obvious that the Court of Industrial Relations did not acquire jurisdiction over the respondent Bureau of Printing, and is thus devoid of any authority to take cognizance of the case. This Court has already held in a long line of decisions that the Industrial Court has no jurisdiction to hear and determine the complaint for unfair labor practice filed against institutions or corporations not organized for profit and, consequently, not an industrial or business.organization. This is so because the Industrial Peace Act was intended to apply only to industrial employment, and to govern the relations between employers engaged in industry and occupations for purposes of gain, and their industrial employees. (University of the Philippines, et al. vs. CIR, et al., G.R. No. L15416, April 28, 1960; University of Sto. Tomas vs. Villanueva, et al., G.R. No. L-13748, October 30, 1959; La Consolacion College vs. CIR, G.R. No. L-13282, April 22, 1960; See also the cases cited therein.) Indeed, as an office of the Government, without any corporate or juridical personality, the Bureau of Printing cannot be sued. (Sec. 1, Rule 3, Rules of Court). Any suit, action or proceeding against it, if it were to produce any effect, would actually be a suit, action or proceeding against the Government itself, and the rule is settled that the Government cannot be sued without its consent, much less over its objection. (See Metran vs. Paredes, 45 Off. Gaz. 2835; Angat River Irrigation System, et al. vs. Angat River Workers' Union, et al., G.R. Nos. L-10943-44, December 28, 1957).

The record also discloses that the instant case arose from the filing of administrative charges against some officers of the respondent Bureau of Printing Employees' Association by the Acting Secretary of General Services. Said administrative charges are for insubordination, grave misconduct and acts prejudicial to public service committed by inciting the employees of the Bureau of Printing to walk out of their jobs against the order of the duly constituted officials. Under the law, the Heads of Departments and Bureaus are authorized to institute and investigate administrative charges against erring subordinates. For the Industrial Court now to take cognizance of the case filed before it, which is in effect a review of the acts of executive officials having to do with the discipline of government employees under them, would be to interfere with the discharge of such functions by said officials. WHEREFORE, the petition for a writ of prohibition is granted. The orders complained of are set aside and the complaint for unfair labor practice against the petitioners is dismissed, with costs against respondents other than the respondent court. Bengzon, Bautista Angelo, Labrador, Paredes and Dizon, JJ., concur. Reyes, J.B.L., J., concurs in the result. Petition granted. Notes.As to the jurisdiction of Industrial Court, see Quiason's annotation under Rheem of the Philippines, Inc. vs. Ferrer, L-22979, Jan. 27, 1967. 1.9 Supreme Court Reports Annotated 130, 136 and Department of Public Services Labor Union vs. Court of Industrial Relations, L15458, Jan. 28, 1961, ante.

As to immunity of the government from suit, see Department of Public Services Labor Unions vs. Court of Indus-trial Relations, ante, and Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service, L-23139, Dec. 17, 1966, 18 Supreme Court Reports Annotated 1120. [Bureau of Printing vs. Bureau of Printing Employees Association, 1 SCRA 340(1961)]

No. L-29993. October 23, 1978.* LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON TULAGAN, all Members of the Municipal Council of Malasiqui in 1959, Malasiqui, Pangasinan, petitioners, vs. ROSALINA. ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE HONORABLE COURT OF APPEALS, respondents. No. L-30183. October 23, 1978.* MUNICIPALITY OF MALASIQUI, petitioner, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and the Honorable COURT OF APPEALS, respondents. Damages; Municipal corporations; In the absence of a statutory law, municipal corporations are not liable for damages for acts done in

the performance of governmental functions.If the injury is caused in the course of the performance of a governmental function or duty no recovery, as a rule, can be had from the municipality unless there is an existing statute on the matter, nor from its officers, so long as they performed their duties honestly and in good faith or that they did not act wantonly and maliciously. In Palafox, et al. v. Province of Ilocos Norte, et al., 1958, a truck driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox in the course of his work at the construction of a road. The Supreme Court in affirming the trial courts dismissal of the complaint for damages held that the province could not be made liable because its employee was in the performance of a governmental function the construction and maintenance of roadsand however tragic and deplorable it may be, the death of Palafox imposed on the province no duty to pay monetary consideration. Same; Same; The rule is otherwise where it is engaged in the exercise of proprietary functions.With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third persons ex contractu or ex delicto. Municipal corporations are subject to be sued upon contracts and in tort. Same; Same; The holding of a town fiesta by a municipality is an exercise of a private function of the municipality.Coming to the case before Us, and applying the general tests given above, We hold that the holding of the town fiesta in 1959 by the Municipality of Malasiqui, Pangasinan, was an exercise of a private or proprietary function of the municipality. Same; Same.This provision (Section 2282, RAC) simply gives authority to the municipality to celebrate a yearly fiesta but it does

not impose upon it a duty to observe one. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed, was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for the town, nonetheless it is a private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service. Same; Same; Under the doctrine of respondent superior, a municipality may be held liable for the acts of Us agent relative to the exercise thereof of acts proprietary in character.Lastly, petitioner or appellant Municipality cannot evade responsibility and/or liability under the claim that it was Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed, Macaraeg as chairman of the sub-committee on entertainment and in charge of the construction of the zarzuela stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its agent acting within his assigned tasks. Same; Same; Article 27 of the Civil Code providing indemnification for damages where a public servant refuses or neglects, without just cause, to perform his official duty covers a case of nonfeasance as distinguished from negligence or misfeasance in carrying out official duties. Municipal councilors found negligent in supervising safe use of a stage used in a town fiesta are not liable

under this article of the Civil Code.In their Petition for review the municipal councilors allege that the Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function and that there was negligence on their part for not maintaining and supervising the safe use of the stage, in applying Article 27 of the Civil Code against them, and in not holding Jose Macaraeg liable for the collapse of the stage and the consequent death of Vicente Fontanilla. We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against them, for this particular article covers a case of non-feasance or non-performance by a public officer of his official duty; it does nof apply to a case of negligence or misfeasance in carrying out an official duty. Same; Same; A municipal corporation exercising proprietary functions is on the same footing as a private corporation. Its governing board or municipal council is not liable solidarily for acts committed by its employees unless there is bad faith or wanton negligence on their part.The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. It is an elementary principle that a corporation has a personality, separate and distinct from its officers, directors, or persons composing it and the latter are not as a rule co-responsible in an action for damages for tort or negligence (culpa aquiliana) committed by the corporations employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part.

Attorneys; Same; Award of attorneys fees justified where municipal officers gave assurances of relief to heirs of deceased, but later failed to do so.Under paragraph 11, Art. 2208 of the Civil Code attorneys fees and expenses of litigation may be granted when the court deems it just and equitable. In this case of Vicente Fontanilla, although respondent appellate court failed to state the grounds for awarding attorneys tees, the records show however that attempts were made by plaintiffs, now private respondents, to secure an extrajudicial compensation from the municipality; that the latter gave promises and assurances of assistance but failed to comply; and it was only eight months after the incident that the bereaved family of Vicente Fontanilla was compelled to seek relief from the courts to ventilate what was believed to be a just cause. We hold, therefore, that there is no error committed in the grant of attorneys fees which after all is a matter of judicial discretion. The amount of P1,200.00 is fair and reasonable. PETITIONS for review of the decisions of the Court of Appeals. The facts are stated in the opinion of the Court. Julian M. Armas, Assistant Provincial Fiscal for petitioners. Isidoro L. Padilla for respondents. MUOZ PALMA, J.: These Petitions for review present the issue of whether or not the celebration of a town fiesta authorized by a municipal council under Sec. 2282 of the Municipal Law as embodied in the Revised Administrative Code is a governmental or a corporate or proprietary function of the municipality.

A resolution of that issue will lead to another, viz: the civil liability for damages of the Municipality of Malasiqui, and the members of the Municipal Council of Malasiqui, province of Pangasinan, for a death which occurred during the celebration of the town fiesta on January 22, 1959, and which was attributed to the negligence of the municipality and its council members. The following facts are not in dispute: On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 whereby it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959. Resolution No. 182 was also passed creating the 1959 Malasiqui Town Fiesta Executive Committee which in turn organized a subcommittee on entertainment and stage, with Jose Macaraeg as Chairman. The council appropriated the amount of P100.00 for the construction of 2 stages, one for the zarzuela and another for the cancionan. Jose Macaraeg supervised the construction of the stage and as constructed the stage for the zarzuela was 5-1/2 meters by 8 meters in size, had a wooden floor high at the rear and was supported by 24 bamboo posts4 in a row in front, 4 in the rear and 5 on each sidewith bamboo braces.1 The zarzuela entitled Midas Extravanganza was donated by an association of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The troupe arrived in the evening of January 22 for the performance and one of the members of the group was Vicente Fontanilla. The program started at about 10:15 oclock that evening with some speeches, and many persons went up the stage. The zarzuela then began but before the dramatic part of the play

was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilla was taken to the San Carlos General Hospital where he died in the afternoon of the following day. The heirs of Vicente Fontanilla filed a complaint with the Court of First Instance of Manila on September 11, 1959 to recover damages. Named party-defendants were the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the individual members of the Municipal Council in 1959. Answering the complaint defendant municipality invoked inter alia the principal defense that as a legally and duly organized public corporation it performs sovereign functions and the molding of a town fiesta was an exercise of its governmental functions from which no liability can arise to answerfor the negligence of any of its agents. The defendant councilors in turn maintained that they merely acted as agents of the municipality in carrying out the municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not one for profit; furthermore, they had exercised due care and diligence in implementing the municipal ordinance.2 After trial, the Presiding Judge, Hon. Gregorio T. Lantin, narrowed the issue to whether or not the defendants exercised due diligence in the construction of the stage. From his findings he arrived at the conclusion that the Executive Committee appointed by the municipal council had exercised due diligence and care like a good

father of the family in selecting a competent man to construct a stage strong enough for the occasion and that if it collapsed that was due to forces beyond the control of the committee on entertainment, consequently, the defendants were not liable for damages for the death of Vicente Fontanilla. The complaint was accordingly dismissed in a decision dated July 10, 1962.3 The Fontanillas appealed to the Court of Appeals. In a decision promulgated on October 31, 1968, the Court of Appeals through its Fourth Division composed at the time of Justices Salvador V. Esguerra, Nicasio A. Yatco and Eulogio S. Serrano reversed the trial courts decision and ordered all the defendants-appellees to pay jointly and severally the heirs of Vicente Fontanilla the sums of P12,000.00 by way of moral and actual damages: P1,200.00 as attorneys fees; and the costs.4 The case is now before Us on various assignments of errors all of which center on the proposition stated at the opening sentence of this Opinion and which We repeat. Is the celebration of a town fiesta an undertaking in the exercise of a municipalitys governmental or public function or is it of a private or proprietary character? 1. Under Philippine laws municipalities are political bodies corporate and as such as endowed with the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law, and in their proper corporate name, they may, inter alia, sue and be sued, and contract and be contracted with.5

As to when a certain activity is governmental and when proprietary or private, that is generally a difficult matter to determine. The evolution of the municipal law in American Jurisprudence, for instance, has shown that none of the tests which have evolved and are stated in textbooks have set down a conclusive principle or rule, so that each case will have to be determined on the basis of attending circumstances. The powers of a municipality are twofold in characterpublic, governmental, or political on the one hand, and corporate, private, or proprietary on the other. Governmental powers are those exercised by the corporation in administering the powers of the state and promoting the public welfare and they include the legislative, judicial, public, and political. Municipal powers on the other hand are exercised for the special benefit and advantage of the community and include those which are ministerial, private and corporate.6 In McQuillin on Municipal Corporations, the rule is stated thus: A municipal corporation proper has . . . . a public character as regards the state at large insofar as it is its agent in government, and private (so-called) insofar as it is to promote local necessities and conveniences for its own community.7 Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme Court, of Indiana in 1916, thus: _______________ 5 Sec. 2125, Art. 1, Municipal Law as embodied in the Revised Administrative Code.

6 Mendoza v. de Leon, 33 Phil. 508; 56 Am Jur 2d 254, sec. 199; Martin on the Revised Administrative Code, 1963 ed., pp. 482-483, citing Cooleys Municipal Corporation, pp. 136-137. 7 2nd Ed. Vol. 1, Sec. 126, p. 381, cited in Dept. of Treasury v. City of Evansville, Sup. Ct. of Indiana, 60 N.E. 2nd 952, 954. _______________ Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental. Their officers and agents in such capacity, though elected or appointed by them, are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private, proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or individual capacity, and not for the state or sovereign power. (112 N. E., 994-995) 2. This distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. In the early Philippine case of Mendoza v. de Leon, 1916, the Supreme Court, through Justice Grant T. Trent, relying mainly on American Jurisprudence classified certain activities of the municipality as governmental, e.g.: regulations against fire, disease, preservation of public peace, maintenance of municipal prisons, establishment of schools, post-

offices, etc. while the following are corporate or proprietary in character, viz: municipal waterwork, slaughterhouses, markets, stables, bathing establishments, wharves, ferries, and fisheries.8 Maintenance of parks, golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of a proprietary character.9 If the injury is caused in the course of the performance of a governmental function or duty no recovery, as a rule, can be had from the municipality unless there is an existing statute on the matter,10 nor from its officers, so long as they performed their duties honestly and in good faith or that they did not act wantonly and maliciously.11 In Palafox, et al. v. Province of Ilocos Norte, et al., 1958, a truck driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox in the course of his work at the construction of a road. The Supreme Court in affirming the trial courts dismissal of the complaint for damages held that the province could not be made liable because its employee was in the performance of a governmental functionthe construction and maintenance of roadsand however tragic and deplorable it may be, the death of Palafox imposed on the province no duty to pay monetary consideration,12 ______________ 8 supra, p. 509 9 Dept. of Treasury v. City of Evansville supra, p. 956 10 For instance, Art. 2189, Civil Code provides

Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision. ____________ With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third persons ex contractu13 or ex delicto.14 Municipal corporations are subject to be sued upon contracts and in tort. xx xx xx xx xx

The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or line of his employment, by which another, who is free from contributory fault, is injured. Municipal corporations under the conditions herein stated, fall within the operation of this rule of law, and are liable, accordingly, to civil actions for damages when the requisite elements_ of liability coexist. xx xx _______________ 11 Mendoza v. de Leon, supra, p. 513. In Palma v. Graciano, the City of Cebu, et al., 99 Phil. 72, the Court held that although the prosecution of crimes is a governmental function and as a rule the province and City of Cebu are not civilly liable by reason thereof, nonetheless when a public official goes beyond the scope of his duty, particularly when acting tortiously, he is not entitled to

protection on account of his office but is liable for his acts like any private individual.

12 L-10659, January 31, 1958, Unrep., 102 Phil. 1186 13 Municipality of Paoay, Ilocos Norte v. Manaois, et al., 86 Phil. 629; Municipality of Moncada v. Cajuigan, et al., 21 Phil. 184 14 Mendoza v. de Leon, supra, p. 513 (Dillon on Municipal Corporations, 5th ed. Secs. 1610, 1647, cited in Mendoza v. de Leon, supra, 514) ____________________________ 3. Coming to the case before Us, and applying the general tests given above, We hold that the holding of the town fiesta in 1959 by the municipality of Malasiqui, Pangasinan, was an exercise of a private or proprietary function of the municipality. Section 2282 of the Chapter on Municipal Law of the Revised Administrative Code provides: Section 2282. Celebration of fiesta.A fiesta may be held in each municipality not oftener than once a year upon a date fixed by the municipal council. A fiesta shall not be held upon any other date than that lawfully fixed therefor, except when, for weighty reasons, such as typhoons, inundations, earthquakes, epidemics, or other public calamities, the fiesta cannot be held in the date fixed, in which case it may be held at a later date in the same year, by resolution of the council.

This provision simply gives authority to the municipality to accelebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed, was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for the town, nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service. As stated earlier, there can be no hard and fast rule for purposes of determining the true nature of an undertaking or function of a municipality; the surrounding circumstances of a particular case are to be considered and will be decisive. The basic element, however beneficial to the public the undertaking may be, is that it is governmental in essence, otherwise, the function becomes private or proprietary in character. Easily, no governmental or public policy of the state is involved in the celebration of a town fiesta.15 _________________ 15 We came across an interesting case which shows that surrounding circumstances plus the political, social, and cultural backgrounds may have a decisive bearing on this question. The case of Pope v. City of New Haven, et al., was an action to recover damages for personal injuries caused during a Fourth of July fireworks display resulting in the death of a bystander alleged to

have been caused by defendants negligence. The defendants demurred to the complaint invoking the defense that the city was engaged in the performance of a public governmental duty from which it received no pecuniary benefit and for negligence in the performance of which no statutory liability is imposed. This demurrer was sustained by the Superior Court of New Haven Country. Plaintiff sought to amend his complaint to allege that the celebration was for the corporate advantage of the city. This was denied. In affirming the order, the Supreme Court of Errors of Connecticut held inter alia: Municipal corporations are exempt from liability for the negligent performance of purely public governmental duties, unless made liable by statute. . . A municipal corporation, which under permissive authority of its charter or of statute, conducted a public Fourth of July celebration, including a display of fireworks, and sent up a bomb intended to explode in the air, but which failed to explode until it reached the ground, and then killed a spectator, was engaged in the performance of a governmental duty. (99 A.R. 51) This decision was concurred in by three Judges while two dissented. At any rate the rationale of the Majority Opinion is evident from this excerpt: July 4th, or, when that date falls upon Sunday, July 5th, is made a public holiday, called Independence Day, by our statutes. All or nearly all of the other states have similar statutes. While there is no United States statute making a similar provision, the different departments of the government recognize, and have recognized

since the government was established, July 4th as a national holiday. Throughout the country it has been recognized and celebrated as such. These celebrations, calculated to entertain and instruct the people. _______________ 4. It follows that under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilla if that was attributable to the negligence of the municipalitys officers, employees, or agents. Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. x x x Art. 2180, Civil Code: The obligation imposed by article 2176 is demandable not only for ones own acts or omission, but also for those of persons for whom one is responsible. x x x On this point, the Court of Appeals found and held that there was negligence. The trial court gave credence to the testimony of Angel Novado, a witness of the defendants (now petitioners), that a member of the extravaganza troupe removed two principal braces located on the front portion of the stage and used them to hang the screen or telon, and that when many people went up the stage the latter collapsed. This testimony was not believed however by respondent appellate court, and rightly so. According to said defendants, those two braces were mother or principal braces located semidiagonally from the front ends of the stage to the front posts of the

ticket booth located at the rear of the stage and were fastened with a bamboo twine.16 That being the case, it becomes incredible that any person in his right mind would remove those principal braces and leave the front portion of the stage practically unsupple generally and to arouse and stimulate patriotic sentiments and love of country, frequently take the form of literary exercises consisting of patriotic speeches and the reading of the Constitution, accompanied by a musical program including patriotic airs, sometimes preceded by the firing of cannon and followed by fireworks. That such celebrations are of advantage to the general public and their promotion a proper subject of legislation can hardly be questioned. x x x (ibid., p. 52) ported. Moreover, if that did happen, there was indeed negligence as there was lack of supervision over the use of the stage to prevent such an occurrence. At any rate, the guitarist who was pointed to by Novado as the person who removed the two bamboo braces denied having done so. The Court of Appeals said: Amor by himself alone could not have removed the two braces which must be about ten meters long and fastened them on top of the stage for the curtain. The stage was only five and a half meters wide. Surely, it would be impractical and unwieldy to use a ten meter bamboo pole, much more two poles, for the stage curtain.17 The appellate court also found that the stage was not strong enough considering that only P100.00 was appropriate for the construction of two stages and while the floor of the zarzuela stage was of wooden planks, the posts and braces used were of bamboo material. We likewise observe that although the stage was

described by the petitioners as being supported by 24 posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on each side. Where were the rest? The Court of Appeals thus concluded: The court a quo itself attributed the collapse of the stage to the great number of onlookers who mounted the stage. The municipality and/or its agents had the necessary means within its command to prevent such an occurrence. Having failed to take the necessary steps to maintain the safety of the stage for the use of the participants in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing nonparticipants or spectators from mounting and accumulating on the stage which was not constructed to meet the additional weight, the defendants-appellees were negligent and are liable for the death of Vicente Fontanilla. (pp. 30-31, rollo, L-29993) The findings of the respondent appellate court that the facts as presented to it establish negligence as a matter of law and that the Municipality failed to exercise the due diligence of a good father of the family, will not disturbed by Us in the absence of a clear showing of an abuse of discretion or a gross misapprehension of facts.18 Liability rests on negligence which is the want of such care as a person of ordinary prudence would exercise under the circumstances of the case.19 Thus, private respondents argue that the Midas Extravaganza which was to be performed during the town fiesta was a donation offered by an association of Malasiqui employees of the Manila

Railroad Co. in Caloocan, and that when the Municipality of Malasiqui accepted the donation of services and constructed precisely a zarzuela stage for the purpose, the participants in the stage show had the right to expect that the Municipality through its Committee on entertainment and stage would build or put up a stage or platform strong enough to sustain the weight or burden of the performance and take the necessary measures to insure the personal safety of the participants.20 We agree. Quite relevant to that argument is the American case of Sanders v. City of Long Beach, 1942, which was an action against the city for injuries sustained from a fall when plaintiff was descending the steps of the city auditorium. The city was conducting a Know your City Week and one of the features was the showing of a motion picture in the city auditorium to which the general public was invited and plaintiff Sanders was one of those who attended. In sustaining the award for damages in favor of plaintiff, the District Court of Appeal, Second district, California, held inter alia that the Know your City Week was a proprietary activity and not a governmental one of the city, that defendant owed to plaintiff, an invitee, the duty of exercising ordinary care for her safety, and plaintiff was entitled to assume that she would not be exposed to a danger (which in this case consisted of lack of sufficient illumination of the premises) that would come to her through a violation of defendants duty.21 _____________ 18 De Gala-Sison v. Manalo, 8 SCRA 595; Ramos v. Pepsi-Cola Bottling Co., 19 SCRA 289; Tan v. Court of Appeals, et al., 20 SCRA 54; Chan v. Court of Appeals, et al., 33 SCRA 737, among others.

19 19 Cal. Jur., p. 543; Corliss v. Manila Railroad Co., 27 SCRA 674 20 Respondents brief, p. 70, rollo L-29993 _____________ We can say that the deceased Vicente Fontanilla was similarly situated as Sanders. The Municipality of Malasiqui resolved to celebrate the town fiesta in January of 1959; it created a committee in charge of the entertainment and stage; an association of Malasiqui residents responded to the call for the festivities and volunteered to present a stage show; Vicente Fontanilla was one of the participants who like Sanders had the right to expect that he would be exposed to danger on that occasion. Lastly, petitioner or appellent Municipality cannot evade responsibility and/or liability under the claim that it was Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed Macaraeg as chairman of the sub-committee on entertainment and in charge of the construction of the zarzuela stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its agent acting within his assigned tasks.22 x x x when it is sought to render a municipal corporation liable for the act of servants or agents, a cardinal inquiry is, whether they are the servants or agents of the corporation. If the corporation appoints or elects them, can control them in the discharge of their duties, can continue or remove them, can hold them responsible for the manner in which they discharge their trust, and if those duties relate to the exercise of corporate powers, and are for the peculiar

benefit of the corporation in its local or special interest, they may justly be regarded as its agents or servants, and the maxim of respondent superior applies. x x x (Dillon on Municipal Corporations, 5th Ed., Vol. IV, p. 2879) 5. The remaining question to be resolved centers on the liability of the municipal councilors who enacted the ordinance and created the fiesta committee. The Court of Appeals held the councilors jointly and solidarily liable with the municipality for damages under Article 27 of the Civil Code which provides that any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter.23 In their Petition for review the municipal councilors allege that the Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function and that there was negligence on their part for not maintaining and supervising the safe use of the stage, in applying Article 27 of the Civil Code against them, and in not holding Jose Macaraeg liable for the collapse of the stage and the consequent death of Vicente Fontanlla.24 We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against them, for this particular article covers a case of non-feasance or non-performance by a public officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying out an official duty. If We are led to set aside the decision of the Court of Appeals insofar as these petitioners are concerned, it is because of a plain

error committed by respondent court which however is not invoked in petitioners brief. In Miguel v. The Court of Appeals, et al., the Court, through Justice, now Chief Justice, Fred Ruiz Castro, held that the Supreme Court is vested with ample authority to review matters not assigned as errors in an appeal if it finds that their consideration and resolution are indispensable or necessary in arriving at a just decision in a given case, and that this is authorized under Sec. 7, Rule 51 of the Rules of Court.25 We believe that this pronouncement can well be applied in the instant case. The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. It is an elementary principle that a corporation has a personality, separate and distinct from its officers, directors, or persons composing it26 and the latter are not as a rule co-responsible in an action for damages for tort or negligence (culpa aquiliana) committed by the corporations employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part.27 xx xx xx

The ordinary doctrine is that a director, merely by reason of his office is not personally liable for the torts of his corporation; he must be shown to have personally voted for or otherwise

participated in them. xx xx xx (Fletcher Cyclopedia Corporations, Vol. 3A, Chapt. 11, p. 207) Officers of a corporation are not held liable for the negligence of the corporation merely because of their official relation to it, but because of some wrongful or negligent act by such officer amounting to a breach of duty which resulted in an injury . . . To make an officer of a corporation liable for the negligence of the corporation there must have been upon his part such a breach of duty as contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the wrongful act. xx xx xx (pp. 207-208, ibid) xx xx xx

attorneys fees, the records show however that attempts were made by plaintiffs, now private respondents, to secure an extrajudicial compensation from the municipality; that the latter gave promises and assurances of assistance but failed to comply; and it was only eight months after the incident that the bereaved family of Vicente Fontanilla was compelled to seek relief from the courts to ventilate what was believed to be a just cause.28 We hold, therefore, that there is no error committed in the grant of attorneys fees which after all is a matter of judicial discretion. The amount of P1,200.00 is fair and reasonable. PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of Appeals insofar as the Municipality of Malasiqui is concerned (L-30183), and We absolve the municipal councilors from liability and SET ASIDE the judgment against them (L-29993). Without pronouncement as to costs. SO ORDERED. Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.

Directors who merely employ one to give a fireworks exhibition on the corporate grounds are not personally liable for the negligent acts of the exhibitor. (p. 211, ibid.) On these principles We absolve the municipal councilors from any liability for the death of Vicente Fontanilla. The records do not show that said petitioners directly participated in the defective construction of the zarzuela stage or that they personally permitted spectators to go up the platform. 6. One last point We have to resolve is on the award of attorneys fees by respondent court. Petitioner-municipality assails the award. Under paragraph 11, Art. 2208 of the Civil Code attorneys fees and expenses of litigation may be granted when the court deems it just and equitable. In this case of Vicente Fontanilla, although respondent appellate court failed to state the grounds for awarding

Decision affirmed and judgment set aside. Notes.The renting by the City of its private property is a patrimonial activity or proprietary function, and, in this sphere, the city like any private owner, in free to charge such seems as it may deem best, regardless of the reasonableness of the amount fixed, for the prospective lessees are free to enter into the corresponding

contract of lease, if they are agreeable to the terms thereof, or otherwise, not to enter into such contract. (Chamber of Filipino Retailers, Inc. vs. Villegas, 44 SCRA 405). In the absence of title deed to any land claimed by the City of Manila as its own showing that it was acquired with its private or corporate funds, the presumption is that such land come from the state upon the creation of the municipality. (Salas vs. Jarencio, 46 SCRA 734). A city ordinance prohibiting the admission of two or more persons in amusement places with the use of only one ticket is a valid regulatory police measure. (Samson vs. Mayor of Bacolod City, 60 SCRA 267). Except as otherwise provided by law, municipal funds should be devoted exclusively to local public purposes. Municipal funds cannot be appropriated for the maintenance of provincial prisoners. (Bernad vs. Catolico, 20 SCRA 497). Municipal corporation may be held liable for the backwages of employees illegally dismissed from the service, including those involving primarily governmental functions. (Guillergan vs. Ganzon, 17 SCRA 257; Enciso vs. Remo, 29 SCRA 580). Municipal corporations perform twin function. Firstly, they serve as an instrumentality of the State in carrying out the function of government. Secondly, they act as an agency of the community in the administration of local affairs. It is in the latter character that they are a separate entity acting for their own purposes and not a subdivision of the State. (Lidusan vs. Commission on Elections, 21

SCRA 496; Surigao Electric Co., Inc. vs. Municipality of Surigao, 24 SCRA 898.) Local governments are subject, not to the control, but merely to the general supervision of the President; it is, to say the least, doubtful that the latter could have made compliance with said circular obligatory. (Serafica vs. Treasurer of Ormoc City, 27 SCRA 1108.) The authority of local governments to execute provincial, city and municipal public works project under Section 3 of Republic Act No. 2264 refers to public works projects financed by the provincial, city and municipal funds or any other fund borrowed from or advanced by private third parties, and has no application to the management and operation of engineering districts which are concerned with national roads and highways. (Province of Pangasinan vs. Secretary of Public Works and Communications, 30 SCRA 134.) Municipal corporations may be held liable for the back pay or wages of employees or laborers illegally separated from the service, including those involving primarily governmental functions. (Guillergan vs. Ganzon, 17 SCRA 257; Enrico v. Remo, 29 SCRA 580.) A valid and binding contract of a municipal corporation is protected by the Constitution. (City of Zamboanga vs. Alvarez, 68 SCRA 142.) o0o [Torio vs. Fontanilla, 85 SCRA 599(1978)] NATIONAL AIRPORTS CORPORATION, petitioner, vs. JOSE TEODORO SR., as Judge of the Court of First Instance of Negros Occidental and PHILIPPINE AIRLINES, INC., respondents.

1. PLEADING AND PRACTICE; ACTIONS AGAINST THE STATE; WHEN MAY BE SUED WITHOUT ITS CONSENT.Not all government entities, whether corporate or non-corporate, are immune to suits. Immunity from suits is determined by the character of the objects for which the entity was organized. "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 implication consents to suits against the corporation." (59 C. J., 313.) 2. ID.; ID.; ID.; CIVIL AERONAUTICS ADMINISTRATION.Among the general powers of the Civil Aeronautics Administration are, under section 3 of Executive Order No. 365, to execute contracts of any kind, to purchase property, and to grant concession rights, and under section 4, to charge landing fees, royalties on sales to aircraft of aviation gasoline, accessories and supplies, and rentals for the use of any property under its management. These provisions confer upon the Civil Aeronautics Administration the power to sue and be sued, which 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.

3. ID.; ID.; ID.; ID.; NATIONAL AIRPORTS CORPORATION.The National Airports Corporation is abolished for all purposes; it can not be regarded as still in existence even for the limited object of winding up its affairs. No trustees, assignees or receivers have been designated to make a liquidation thereof and, what is more, there is nothing to liquidate, as everything the National Airports Corporation had, has been taken over by the Civil Aeronautics Administration. To all legal intents and practical purposes, said corporation is dead and the Civil Aeronautics Administration is its heir or legal representative, acting by the law of its creation upon its own rights and in its own name. ORIGINAL ACTION in the Supreme Court. Certiorari and prohibition with preliminary injunction. The facts are stated in the opinion of the Court. Solicitor General Pompeyo Diaz and Solicitor Augusto M. Luciano f or petitioner. Ozaeta, Roxas, Lichauco & Picazo f or respondents. TUASON, J.: 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." The Solicitor-General, after answering the third-party complaint, filed a motion to dismiss on the ground that the court lacks jurisdiction to entertain the third-party complaint, first, because 'the National Airports Corporation "has lost its juridical personality," and, second, because the Civil Aeronautics Administration "being an office or agency of the Republic of the Philippines, unincorporated and not possessing juridical personality under the law, is incapable of suing and being sued." Section 7 of Executive Order No. 365 reads: "All records, properties, equipment, assets, rights, choses in action, obligations, liabilities and contracts of the National Airports

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." Among the general powers of the Civil Aeronautics Administration are, under Section 3, to execute contracts of any kind, to purchase property, and to grant concession rights, and under Section 4, to charge landing fees, royalties on sales to aircraft of aviation gasoline, accessories and supplies, and rentals f or the use of any property under its management. 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. But repudiation of the National Airports Corporation's obligations was far from the intention in its dissolution and the setting up of the Civil Aeronautics Administration. Nor would such scheme work even

if 'the executive order had so expressly provided.

Not all government entities, whether corporate or noncorporate, are immune from suits. Immunity from suits is determined by the character of the objects for which the entity was organized. The rule is thus stated in Cor pus Juris: "Suits against state agencies with relation to matters in which they have assumed to act in private or nongovernmental 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." (59 C. J., 313.) This rule has been applied to such government agencies as State Dock Commissions carrying on business relating to pilots, terminals and transportation (Standard Oil Co. of New Jersey vs. U. S., 26 Fed. (2d) 480), and State Highway Commissions created to build public roads, and given appropriations in advance to discharge obligations incurred in that behalf (Arkansas State Highway Commission vs. Dodge, 26 S W (2d) 879; State Highway Commission of Missouri vs. Bates, 269, S W 418.) The Civil Aeronautics Administration comes under the category of a private entity. Although not a body corporate it was created, like

the National Airports Corporation, not to maintain a necessary function of government, but to run what is essentially a business, even if revenues be not its prime objective but rather the promotion of travel and the convenience of the travelling public. It is engaged in an enterprise which, far from being the exclusive prerogative of state, may, more than the construction of public roads, be undertaken by private concerns. In the light of a well-established precedents, and as a matter of simple justice to the parties who dealt with the National Airports Corporation on the faith of equality in the enforcement of their mutual commitments, the Civil Aeronautics Administration may not, and should not, claim for itself the privileges and immunities of the sovereign state. The case of National Airports Corporation vs. Hon. V. Jimenez Yanzon et al., (89 Phil. 745), relied upon by counsel, is not controlling. That was a labor dispute and can be distinguished from the case at bar in at least one fundamental respect. Involving labor demands and labor-management relations, any decision in that case would, if given force and effect, operate prospectively and for an indefinite period against the Civil Aeronautics Administration whose rights and obligations with respect to its officers and employees were regulated by the general law on civil service. Moreover, some of the petitioners might already have ceased. By Sections 5 and 3. of Executive Order No. 365 all employees of the National Airports Corporation were, upon the latter's dissolution, automatically separated from the service, and the part of the personnel whose employment was "necessary and convenient" to the Civil Aeronautics Administration would have

to be reappointed and, what was more important, "in accordance with the Civil Service rules and regulations." If the petitioners in that case had been absorbed into the Civil Aeronautics Administration, the matters raised in their petition were outside the jurisdiction of the Court of Industrial Relations, and of this Court on Appeal, to entertain. Their rights, privileges, hours of work, and rates of compensation were already governed by the Civil Service Law.

Pars, C. J., Feria, Pablo, Bengzon, Montemayor, Reyes and Bautista Angelo, JJ., concur. Petition denied. No. L-35645. May 22, 1985.*EN BANC. 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. Actions; Public Corporations; Constitutional Law; Contracts; In suits against a foreign government, a distinction must he made between acts jure imperil and acts jure gestionis. As to the former, the State immunity prevails.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 thembetween 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 imperii. 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. 207209 [1984]).

The Philippine Airlines' third-party complaint is premised on the assumption that the National Airports Corporation is still in existence, at least for 'the limited object of winding up its affairs under Section 77 of the Corporation Law. Our opinion is that by its abolition that corporation stands abolished for all purposes. No trustees, assignees or receivers have been designated to make a liquidation and, what is more, there is nothing to liquidate. Everything the National Airports Corporation had, has been taken over by the Civil Aeronautics Administration. To all legal intents and practical purposes, the National Airports Corporation is dead and the Civil Aeronautics Administration is its heir or legal representative, acting by the law of its creation upon its own rights and in its own name. The better practice then should have been to make the Civil Aeronautics Administration the third-party defendant instead of the National Airports Corporation. The error, however, is purely procedural, not put in issue, and may be corrected by amendment of the pleadings if deemed necessary. Wherefore, the petition is denied with costs against the Civil Aeronautics Administration.

Judgments; An obiter has no value as an imperative authority.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. Actions; Public Corporations; Constitutional Law; Contracts; States may be sued only when the proceedings arise out of commercial transactions. Infrastructure projects of U.S. Naval Base in Subic involve governmental functions.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. MAKASIAR, J., dissenting: Actions; Public Corporations; Contracts; After U.S. Naval authorities accepted the bid for repair of the wharves at Subic Bay Naval Base, it waived the mantle of State immunity from suits.When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign immunity from

suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284). Same; Same; Same; Same; Military Bases; Treaties; The majority opinion seems to mock the joint statement of Pres. Marcos and Vice-President Mondale that Philippine sovereignty extends to U.S. bases here.The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and VicePresident Mondale of the United States dated May 4, 1978 that the United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base Commander, which is supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under which they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and that they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between their two countries. PETITION to review the orders of the Court of First Instance of Rizal, Br. XV. Ruiz, J. The facts are stated in the opinion of the Court. Sycip, Salazar, Luna & Manalo & Feliciano Law Office for petitioners. 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. 779-M 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 fender 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, NAV-BASE Subic; and repair to Leyte Wharf approach, NAV-BASE 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 William I. Collins, Director, Contracts Division, Naval Facilities Engineering Command, Southwest Pacific, Department of the Navy of the United States, who is one of the 489 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 in 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 thembetween 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 imperii. 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 Courts 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 plaintiffs 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. x x x. x x x 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 x x x. (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 adndnistrative 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 on 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 that 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 latters consent but it is of a citizen filing an action against a foreign government without said governments 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 United 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. 779-M is dismissed. Costs against the private respondent. SO ORDERED. Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana,**He signed before he left. Escolin, Relova, Gutierrez, Jr., De la Fuente, Cuevas and Alampay, JJ., concur. Fernando, C.J., did not take part. Makasiar, J., see dissent. MAKASIAR, J., dissents: The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to continue therein.

In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch as x x x the United States Government, through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political entity may assume under the contract. When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284). Justice and fairness dictate that a foreign government that commits a breach of its contractual obligationin the case at bar by the unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bayshould not be allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for violation of his rights committed by the agents of the foreign government professing to act in its name.

Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325: Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is inapplicable to cases in which the foreign government enters into private contracts with the citizens of the courts jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals. Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the private citizens of another country, such foreign government cannot shield its nonperformance or contravention of the terms of the contract under the cloak of non jurisdiction. To place such foreign government beyond the jurisdition of the domestic courts is to give approval to the execution of unilateral contracts, graphically described in Spanish as Contratos leoninos, because one party gets the lions share to the detriment of the other. To give validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been entered into only by private individuals. Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our

sovereignty and dignity as a nation, Its application will particularly discourage Filipino or domestic contractors from transacting business and entering into contracts with United States authorities or facilities in the Philippineswhether naval, air or ground forces because the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of the United States government, always looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies with the various U.S. offices and agencies operating in the Philippines. The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good faith. One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private respondent on the other, was honored more in the breach than in the compliance. The opinion of the majority will certainly open the floodgates of more violations of contractual obligations, American authorities or any foreign government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is disastrous to the Philippines. This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our Republic. The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464). Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic person. The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that in the exercise of the above-mentioned rights, powers and authority, the United States agrees that the powers granted to it will not be used unreasonably. x x x (italics supplied).

Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which recognizes the need to promote and maintain sound employment practices which will assure equality of treatment of all employees x x x and continuing favorable employeremployee relations x x x and (B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both Governments, x x x the United States Government agrees to accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino citizens, etc. (Par. 1, Art. I of the Amendment of May 27, 1968). Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 27, 1968 which directs that contractors and concessionaires performing work for the U.S. Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations, even though paragraph 2 thereof affirms that nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity under International law. Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which stresses that it is the duty of members of the United States Forces, the civilian component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases Agreement

and, in particular, from any political activity in the Philippines. The United States shall take all measures within its authority to insure that they adhere to them (italics supplied). The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social improvement of areas surrounding the bases, which directs that moreover, the United States Forces shall procure goods and services in the Philippines to the maximum extent feasible (italics supplied). Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions or alterations of the Agreement of May 27, 1968, the discussions shall be conducted on the basis of the principles of equality of treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the Republic of the Philippines (italics supplied) The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that the United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base Commander, which is supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under which they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and that they confirm that mutual respect for the dignity

of each nation shall characterize their friendship as well as the alliance between their two countries. The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and American Base Commanders that in the performance of their duties, the Philippine Base Commander and the American Base Commander shall be guided by full respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military operations on the other hand; and that they shall promote cooperation, understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W, Murphy and Minister of Foreign Affairs Carlos P. Romulo, italics supplied). Petition granted; orders set aside. Notes.The principle that the state or its government cannot be sued without its consent has its root in the juridical and practical notion that the state can do no wrong. Demandable and enforceable obligations which may be the subject of judicial action come into being either by law, contract, quasi-contracts, acts or omissions punishable by law, acts which do not constitute or amount to a crime or a misdemeanor known at common law as torts and in civil law as culpa aquiliana or extra contractual. An obligation or liability of the state created by statute is enforceable against the officer or agent charged with the duty to execute the law. If there should be anything demandable which had been paid or delivered to or collected by officers or agents of the state without the authority of law, the action would not be against the state but

against the responsible officers or agents who received what was not due the state or made the unauthorized collection, Punishable acts or omissions committed by officers or agents of the state are crimes and violations of law are perpetrated by such officers or agents and not by the state. The same postulate may be applied to torts committed by officers or agents of the State. Nevertheless, if, where and when the state or its government enters into a contract, through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional or legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations arise therefrom, and if the law granting the authority to enter into such contract does not provide for or name the officer against whom action may be brought in the event of a breach thereof, the state itself may be sued even without its consent, because by entering into a contract the sovereign state has descended to the level of the citizen and its consent to be sued is implied from the very act of entering into such contract. If the dignity of the state, the sacredness of the institution, the respect for the government are to be preserved and the dragging of its name in a suit to be prevented, the legislative department should name the officer or agent against whom the action may be brought in the event of breach of the contract entered into under its name and authority. And the omission or failure of the legislative department to do so is no obstacle or impediment for an individual or citizen, who is aggrieved by the breach of the contract, to bring an action against the state itself for the reasons already adverted to, to wit: the descent of the sovereign state to the level of the individual or citizen with whom it entered into a contract and its consent to be sued implied from the act of entering into such contract. (See

Santos vs. Santos, L-4699, Nov. 26, 1952; Moreno vs. Macadaeg, 7 SCRA 700; Ruiz vs. Cabahug, 54 O.G. 351.) The Court of Claims of the United States made a similar ruling to the effect that, when the United States, through their duly authorized agents and officers, enter into contract arrangements and stipulations with their citizens, in matters pertaining to the public service, and in the mode provided by law, they, pro hoc vice relinquish their sovereign charter and subject themselves to those rules of justice and right which all just governments administer and enforce between man and man. (Mann vs. United States, 3 Ct. Cl. 404, 411; Wentworth vs. United States, 5 Ct. Cl. 302.) o0o