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, plaintiff-appellant,

learly, therefore, although said arrastre function may be deemed proprietary, it is a
necessary incident of the primary and governmental function of the Bureau of
Customs, so that engaging in the same does not necessarily render said Bureau
liable to suit. For otherwise, it could not perform its governmental function without
necessarily exposing itself to suit. Sovereign immunity, granted as to the end,
should not be denied as to the necessary means to that end.

From the provision authorizing the Bureau of Customs to lease arrastre operations
to private parties, We see no authority to sue the said Bureau in the instances
where it undertakes to conduct said operation itself. The Bureau of Customs, acting
as part of the machinery of the national government in the operation of the arrastre
service, pursuant to express legislative mandate and as a necessary incident of its
prime governmental function, is immune from suit, there being no statute to the


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.

The doctrine of state immunity from suit has
undergone further metamorphosis. The view evolved that the existence of a
contract does not, per se, mean that sovereign states may, at all times, be sued in
local courts. The complexity of relationships between sovereign states, brought
about by their increasing commercial activities, mothered a more restrictive
application of the doctrine.

As it stands now, the application of the doctrine of immunity
from suit has been restricted to sovereign or governmental activities (jure
imperii). The mantle of state immunity cannot be extended to commercial, private
and proprietary acts (jure gestionis

the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Government of the Philippine Islands. this Court held that an executive agreement is similar to a treaty. If the act is in pursuit of a sovereign activity. and (c) deals with a narrower range of subject matters. Section 3 of the Constitution. which states that "the State may not be sued without its consent. LA UNION. Such an act can only be the start of the inquiry." If the instant suit had been brought directly against the Federal Republic of Germany. Express consent may be embodied in a general law or a special law. (b) is usually less formal. A special law may be passed to enable a person to sue the government for an alleged quasi-delict. is reflected in Section 9. necessary as it is to avoid "unduly vexing the peace of nations. The standing consent of the State to be sued in case of money claims involving liability arising from contracts is found in Act No. The logical question is whether the foreign state is engaged in the activity in the regular course of business. JUDGE ROMEO N. as in Merritt v. especially when it is not undertaken for gain or profit. (b) it must be written. In Bayan Muna v. there would be no doubt that it is a suit brought against a State. Article XVI of the Constitution. then it is an act jure imperii. . Romulo. except that the former (a) does not require legislative concurrence. or an incident thereof. the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the local State. the following three requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement must be between states. petitioner vs." Stated in simple parlance. MUNICIPALITY OF SAN FERNANDO. the particular act or transaction must then be tested by its nature. The principle of state immunity from suit. The first and the third requisites do not obtain in the case at bar. 3083. the general rule is that the State may not be sued except when it gives consent to be sued. to wit: "the State may not be sued without its consent. [A]n international agreement concluded between States in written form and governed by international law. whether a local state or a foreign state. and (c) it must governed by international law. If the foreign state is not engaged regularly in a business or trade. Consent takes the form of express or implied consent. to be considered an executive agreement. HON." Who or what consists of "the State"? For one. FIRME The doctrine of non-suability of the State is expressly provided for in Article XVI. and the only necessary inquiry is whether said State had consented to be sued. whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.50 Despite these differences.

(Cruz. supra. p. In the other capacity the municipalities exercise a private. thus opening itself to a counterclaim. Their offi cers and agents in such capacity. p. arising from their existence as legal persons and not as public agencies. are nevertheless public functionaries performing a public service. agents. Philippine Political Law. and their functions are twofold. In one they exercise the right springing from sovereignty. Liability is not conceded by the mere fact that the state has allowed itself to be sued. The circumstance that a state is suable does not necessarily mean that it is liable. Nevertheless." (United States of America vs. for example. Guinto. and while in the performance of the duties pertaining thereto. "Suability depends on the consent of the state to be sued. proprietary or corporate right. liability on the applicable law and the established facts. When the state does waive its sovereign immunity. that the defendant is liable. . and also when the State files a complaint. if it can. Their offi cers and agents in the performance of such functions act in behalf of the municipalities in their corporate or individual capacity. 39) A distinction should first be made between suability and liability. they are subject to suit even in the performance of such functions because their charter provided that they can sue and be sued. though elected or appointed by them. and not for the state or sovereign power. 1987 Edition. like provinces and cities. and servants of the state. are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit.Consent is implied when the government enters into business contracts. on the other hand. it is only giving the plaintiff the chance to prove. thereby descending to the level of the other contracting party. it can never be held liable if it does not first consent to be sued. 659-660) Municipal corporations exist in a dual capacity. their acts are political and governmental. (Ibid) Municipal corporations. and as such they are offi cers.