Leopoldo Bacani vs National Coconut Corporation

100 Phil. 468 Political Law Two-fold Function of the Government Constituent vs Ministrant Functions

Leopoldo Bacani and Mateo Matoto were court stenographers assigned in a court in Manila. During the pendency of a
particular case in said court, counsel for one of the parties, National Coconut Corporation or NACOCO, requested said
stenographers for copies of the transcript of the stenographic notes taken by them during the hearing. Bacani et al complied
with the request and sent 714 pages and thereafter submitted to said counsel their bills for the payment of their fees. The
National Coconut Corporation paid the amount of P564 to Bacani and P150 to Matoto for said transcripts at the rate of P1 per
page.

However, in January 1953, the Auditor General required Bacani et al to reimburse said amounts on the strength of a circular of
the Department of Justice. It was expressed that NACOCO, being a government entity, was exempt from the payment of the
fees in question. Bacani et al counter that NACOCO is not a government entity within the purview of section 16, Rule 130 of the
Rules of Court. NACOCO set up as a defense that the NACOCO is a government entity within the purview of section 2 of the
Revised Administrative Code of 1917 and, hence, it is exempt from paying the stenographers fees under Rule 130 of the Rules
of Court.

ISSUE: Whether or not NACOCO is a government entity.

HELD: No. Government owned and controlled corporations (GOCCs) do not acquire the status of being part of the
government because they do not come under the classification of municipal or public corporation. Take for instance the
NACOCO. While it was organized with the purpose of adjusting the coconut industry to a position independent of trade
preferences in the United States and of providing Facilities for the better curing of copra products and the proper utilization of
coconut by-products, a function which our government has chosen to exercise to promote the coconut industry, it was,
however, given a corporate power separate and distinct from our government, for it was made subject to the provisions of our
Corporation Law in so far as its corporate existence and the powers that it may exercise are concerned (sections 2 and 4,
Commonwealth Act No. 518 the law creating NACOCO). It may sue and be sued in the same manner as any other private
corporations, and in this sense it is an entity different from our government.

The Supreme Court also noted the constituent functions of the government. Constituent functions are those which constitute
the very bonds of society and are compulsory in nature. According to U.S. President Woodrow Wilson, they are as follows:

1. The keeping of order and providing for the protection of persons and property from violence and robbery.

2. The fixing of the legal relations between man and wife and between parents and children.

3. The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for debt or
for crime.

4. The determination of contract rights between individuals.

5. The definition and punishment of crime.

6. The administration of justice in civil cases.

7. The determination of the political duties, privileges, and relations of citizens.

8. Dealings of the state with foreign powers: the preservation of the state from external danger or encroachment and the
advancement of its international interests.

On the other hand, ministrant functions are those that are undertaken only by way of advancing the general interests of
society, and are merely optional. The most important of the ministrant functions are: public works, public education, public
charity, health and safety regulations, and regulations of trade and industry. The principles to consider whether or not a
government shall exercise certain of these optional functions are: (1) that a government should do for the public welfare those
things which private capital would not naturally undertake and (2) that a government should do these things which by its very
nature it is better equipped to administer for the public welfare than is any private individual or group of individuals.
Co Kim Chan v Valdez Tan Keh

Facts of the case: Co Kim Chan had a pending civil case, initiated during the Japanese occupation, with the Court of First
Instance of Manila. After the Liberation of the Manila and the American occupation, Judge Arsenio Dizon refused to continue
hearings on the case, saying that a proclamation issued by General Douglas MacArthur had invalidated and nullified all judicial
proceedings and judgments of the courts of the Philippines and, without an enabling law, lower courts have no jurisdiction to
take cognizance of and continue judicial proceedings pending in the courts of the defunct Republic of the Philippines (the
Philippine government under the Japanese).

The court resolved three issues:

1. Whether or not judicial proceedings and decisions made during the Japanese occupation were valid and remained valid even
after the American occupation;
2. Whether or not the October 23, 1944 proclamation MacArthur issued in which he declared that all laws, regulations and
processes of any other government in the Philippines than that of the said Commonwealth are null and void and without legal
effect in areas of the Philippines free of enemy occupation and control invalidated all judgments and judicial acts and
proceedings of the courts;
3. And whether or not if they were not invalidated by MacArthurs proclamation, those courts could continue hearing the cases
pending before them.

Ratio: Political and international law recognizes that all acts and proceedings of a de facto government are good and valid. The
Philippine Executive Commission and the Republic of the Philippines under the Japanese occupation may be considered de
facto governments, supported by the military force and deriving their authority from the laws of war.
Municipal laws and private laws, however, usually remain in force unless suspended or changed by the conqueror. Civil
obedience is expected even during war, for the existence of a state of insurrection and war did not loosen the bonds of
society, or do away with civil government or the regular administration of the laws. And if they were not valid, then it would not
have been necessary for MacArthur to come out with a proclamation abrogating them.
The second question, the court said, hinges on the interpretation of the phrase processes of any other government and
whether or not he intended it to annul all other judgments and judicial proceedings of courts during the Japanese military
occupation.
IF, according to international law, non-political judgments and judicial proceedings of de facto governments are valid and
remain valid even after the occupied territory has been liberated, then it could not have been MacArthurs intention to refer to
judicial processes, which would be in violation of international law.
A well-known rule of statutory construction is: A statute ought never to be construed to violate the law of nations if any other
possible construction remains.
Another is that where great inconvenience will result from a particular construction, or great mischief done, such construction
is to be avoided, or the court ought to presume that such construction was not intended by the makers of the law, unless
required by clear and unequivocal words.
Annulling judgments of courts made during the Japanese occupation would clog the dockets and violate international law,
therefore what MacArthur said should not be construed to mean that judicial proceedings are included in the phrase
processes of any other governments.
In the case of US vs Reiter, the court said that if such laws and institutions are continued in use by the occupant, they become
his and derive their force from him. The laws and courts of the Philippines did not become, by being continued as required by
the law of nations, laws and courts of Japan.
It is a legal maxim that, excepting of a political nature, law once established continues until changed by some competent
legislative power. IT IS NOT CHANGED MERELY BY CHANGE OF SOVEREIGNTY. Until, of course, the new sovereign by legislative
act creates a change.
Therefore, even assuming that Japan legally acquired sovereignty over the Philippines, and the laws and courts of the
Philippines had become courts of Japan, as the said courts and laws creating and conferring jurisdiction upon them have
continued in force until now, it follows that the same courts may continue exercising the same jurisdiction over cases pending
therein before the restoration of the Commonwealth Government, until abolished or the laws creating and conferring
jurisdiction upon them are repealed by the said government.
DECISION: Writ of mandamus issued to the judge of the Court of First Instance of Manila, ordering him to take cognizance of
and continue to final judgment the proceedings in civil case no. 3012.
Summary of ratio:
1. International law says the acts of a de facto government are valid and civil laws continue even during occupation unless
repealed.
2. MacArthur annulled proceedings of other governments, but this cannot be applied on judicial proceedings because such a
construction would violate the law of nations.
3. Since the laws remain valid, the court must continue hearing the case pending before it.
***3 kinds of de facto government: one established through rebellion (govt gets possession and control through force or the
voice of the majority and maintains itself against the will of the rightful government)
through occupation (established and maintained by military forces who invade and occupy a territory of the enemy in the
course of war; denoted as a government of paramount force)
through insurrection (established as an independent government by the inhabitants of a country who rise in insurrection
against the parent state)
Rosas v Montor

The Case: Jafar Taromsari and Jalai Shokr Ziveh, both Iranian nationals, arrived in the Philippines on December 7, 2004l; they
left the Philippines for Japan on December 14, 2004; however, upon arrival at Japan, immigration authorities thereat
discovered that both were using tampered passports: a Mexican passport under the name of Jaime Humberto Nenciares Garcia
for Ziveh, and an Italian passport under the name of Marco Rabiti for Taromsari. As a result, both were denied entry to Japan
and sent back to the Philippines, and detained at the Bureau of Immigration Cebu Detention Center. In a Memorandum
submitted to then BI Commissioner Alipio Fernandez, Geronimo S, Rosas (petitioner) reported that during the investigation
conducted by Special Prosecutor Atty. Serafin Abellon, both aliens admitted that they bought the Italian and Mexican passports
in Tehran, Iran and attached their respective pictures, paying for it with US$1,500.00 each. Their purpose was to travel in
comfort without the requirement of entry visa to Japam, and to work thereat. They both arrived in the Philippines for the first
time using the Mexican and Italian passports, but were denied entry to Japan and sent back to the Philippines. Rosas then
recommended that they be excluded for violations of the Philippine Immigration Act of 1940 under Section 29(a), and put into
the Blacklist. An Exclusion Order was thereupon issued on the grounds of Not Properly Documented and No Entry Visa.
Security guards Elmer Napilot and Jose Ramon Ugarte received written orders from Rosas to escort the two aliens from the
detention facility to the airport pursuant to the Exclusion Order for violation of Sec. 29 (a)(17) of CA 613. The two aliens were
then released from detention, escorted to the airport, and allowed to leave te country bound for Tehran, Iran via Kuala Lumpur.

Averring that the release of the two Iranian nationals were irregular as they should have gone deportation proceedings as the
two aliens were threats to national interest and security, and violated Section 37 (a)(9), Imra-Ali Sabdullah and Dilausan S.
Montor, empoyees of the BI Cebu, filed a complaint against Rosas, Napilot and Ugarte for violation of Section 3(e) of RA 3019,
grave misconduct and conduct prejudicial to the best interest of the service. In his defense, Rosas denied liability, asserting that
he should not be held liable for acts that do not fall within his area of responsibility; it is the immigration officers who are
charged with the primary inspection of incoming and outgoing passengers and the determination of whether they should be
excluded; and the management thereof pertain to the Head Supervisor, Mr. Casimiro Madarang III. Nevertheless, Rosas
contended that the two aliens were proper subjects of exclusion since they used Iranian passports without the required
Philippine entry visa, and explained that the counterfeit Italian and Mexican passports were confiscated by Japanese
immigration authorities. The use of the Iranian passports without visas served as they basis for their exclusion. He denied giving
preferential treatment to the two aliens citing his Memorandum to BI Commissioner Fernandez where he recommended that
they be put on the blacklist.

The Office of the Ombudsman rendered its decision on the case, finding substantial evidence of grave misconduct on the part
of Rosas on his act of releasing the two Iranian nationals where Rosas showed evident bad faith and gross inexcusable
negligence. It brushed aside Rosas allegation that he had no prior knowledge of the unlawful entry of the two aliens. Both
guards were exonerated of the charges.

The CA, on petition for review by Rosa, affirmed the OMB findings. It held that the case was not one that merely involved the
lack of entry visas but that petitioner had knowledge that the two Iranian nationals were excluded from Japan for using
fraudulent passports. Plainly, the results of the investigation provide sufficient basis for deportation proceedings. Their release
therefore were irregular. Rosas had the duty to initiate deportation proceedings against the Iranian nationals for violation of
Section 37(a)(9) of the PIA in relation to Sections 45 and 46.

The Issue: Whether or not Rosas should be held liable for grave misconduct.

The Ruling: We rule in the affirmative.

It is well-settled that findings of fact and conclusions by the Office of the Ombudsman are conclusive when supported by
substantial evidence[1]. Substantial evidence is more than a mere scintilla; it means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine
otherwise.[2] The factual findings of the Office of the Ombudsman are generally accorded great weight and respect, if not
finality by the courts, by reason of their special knowledge and expertise over matters falling under their jurisdiction[3].

We agree with the CA that there was sufficient basis to initiate deportation proceedings under Section 37(a)(9) in relation to
Section 45 of the PIA of 1940. We find no cogent reason to overturn the CAs findings the question of whether substantial
evidence being a question of fact which is beyond this Courts power of review for it is not a trier of facts.[4]
G.R. No. L-26994 November 28, 1969

CALTEX (Philippines), INC., plaintiff-appellee,

vs.
CUSTOMS ARRASTRE SERVICE and/or BUREAU OF CUSTOMS and/or REPUBLIC OF THE PHILIPPINES,defendants-appellants.

Ross, Selph, Salcedo, Del Rosario, Bito and Misa for plaintiff-appellee.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Frine' C. Zaballero, Solicitor Oscar C. Fernandez and
Felipe T. Cuison for defendants-appellants.

TEEHANKEE, J.:

In this appeal by the State from the adverse judgment of the Court of First Instance of Manila, we reaffirm the doctrine of the
State's immunity from suit with respect to its operation of the customs arrastre service in the Port of Manila.

Plaintiff, as consignee, filed this action on March 31, 1965 in the Court of First Instance of Manila against defendants for the
recovery of the value of eleven packages of assorted goods which were discharged from the vessel to the custody of the
customs arrastre service then operated by the Bureau of Customs, in the amount of P10,682.66. Plaintiff alleged that the eleven
packages were missing, but after the filing of its complaint in the case below, subsequent deliveries were made to it, thereby
reducing the total of non-delivered packages to only three, wit h an aggregate value of P795.67. The Court below rendered
judgment in favor of plaintiff for this latter amount, with interest at the legal rate, notwithstanding defendant's plea of the
State's immunity from suit. Hence, this appeal.

The sole issue of non-suability of the Republic with respect to its operation through the Bureau of Customs of the Arrastre
Service in the Port of Manila has already been settled in the case of Mobil Philippines Exploration, Inc. vs. Customs Arrastre
Service, et al.1 decided by this Court on December 17, 1966 and in a long line of subsequent decisions, reiterating the doctrine
first enunciated in the Mobil case.2 By virtue thereof, the judgment appealed from must be reversed. The decision in the Mobil
case indicates the remedy available to plaintiff-appellee and others similarly situated as follows:

Now, the fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result in
its being suable. If said non-governmental function, is undertaken as an incident to its governmental function, there is no
waiver thereby of the sovereign immunity from suit extended to such government entity. This is the doctrine recognized
in Bureau of Printing, et al. vs. Bureau of Printing Employees Association, et al., L-15751, January 28, 1961:

xxx xxx xxx . . . . The Bureau of Customs, to repeat, is part of the Department of Finance (Sec. 81, Rev. Adm. Code), with no
personality of its own apart from that of the national government. Its primary function is governmental, that of assessing and
collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties (Sec.
602, R.A. 1937). To this function, arrastre service is a necessary incident.

xxx xxx xxx Clearly, 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.

xxx xxx xxx Regardless of the merits of the claim against it, the State, for obvious reasons of public policy, cannot be sued
without its consent. Plaintiff should have filed its present claim to the General Auditing Office, it being for money under the
provisions of Commonwealth Act 327, which state the conditions under which money claims against the government may be
filed.

It must be remembered that statutory provisions waiving State immunity from suit are strictly construed and that waiver of
immunity, being in derogation of sovereignty, will not be lightly inferred. . . . 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 contrary.

ACCORDINGLY, the judgment appealed from is reversed and the complaint is dismissed, without pronouncement as to costs.
ACCFA v CUGCO G.R. No. L-21484. November 29, 1969.

J. Makalintal

Facts: (ACCFA) was a government agency created under Republic Act No. 821, as amended. Its administrative machinery was
reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land Reform Code (Republic Act No.
3844). On the other hand, the ACCFA Supervisors' Association (ASA) and the ACCFA Workers' Association (AWA), referred to as
the Unions, are labor organizations composed of the supervisors and the rank-and-file employees, respectively, in the ACCFA
(now ACA).

On October 30, 1962 the Unions, together with its mother union, the Confederation of Unions in Government Corporations and
Offices (CUGCO), filed a complaint with the Court of Industrial Relations against the ACCFA for having allegedly committed acts
of unfair labor practice, namely: violation of the collective bargaining agreement in order to discourage the members of the
Unions in the exercise of their right to self-organization, discrimination against said members in the matter of promotions, and
refusal to bargain.

The ACCFA moved to reconsider but was turned down in a resolution dated April 25, 1963 of the CIR en banc. Hence this
appeal.

During the pendency of the case, the union filed a petition for certification election with the Court of Industrial Relations
praying that they be certified as the exclusive bargaining agents for the supervisors and rank-and-file employees, respectively,
in the ACA.Trial court agreed with this move.

However, the ACA filed for a stay of execution which the trial court granted.

Issue: WON the CIR has jurisdiction to entertain the petition of the Unions for certification election given that the mother
company (ACA) is engaged in governmental functions

Held: The Unions are not entitled. Decision modified

Ratio: Under Section 3 of the Agricultural Land Reform Code the ACA was established, among other governmental agencies, to
extend credit and similar assistance to agriculture.

According to the Land Reform Code, the administrative machinery of the ACCFA shall be reorganized to enable it
to align itsactivities with the requirements and objective of this Code and shall be known as the Agricultural Credit
Administration. These include powers non really accorded to non-government entities such as tax exemptions, registration of
deeds, notarial services, and prosecution of officials.

The power to audit the operations of farmers' cooperatives and otherwise inquire into their affairs, as given by Section 113, is
in the nature of the visitorial power of the sovereign, which only a government agency specially delegated to do so by the
Congress may legally exercise.

Moreover, the ACA was delegated under the Land Reform Project Administration , a government agency tasked t implement
land reform.

Moreover, the appointing authority for officials was the President himself.

The considerations set forth above militate quite strongly against the recognition of collective bargaining powers in the
respondent Unions within the context of Republic Act No. 875, and hence against the grant of their basic petition for
certification election as proper bargaining units. The ACA is a government office or agency engaged in governmental, not
proprietary functions.

These functions may not be strictly what President Wilson described as "constituent" (as distinguished from "ministrant"), such
as those relating to the maintenance of peace and the prevention of crime, those regulating property and property rights, those
relating to the administration of justice and the determination of political duties of citizens, and those relating to national
defense and foreign relations. Under this traditional classification, such constituent functions are exercised by the State as
attributes of sovereignty, and not merely to promote the welfare, progress and prosperity of the people these letter
functions being ministrant, he exercise of which is optional on the part of the government.
The growing complexities of modern society, however, have rendered this traditional classification of the functions of
government quite unrealistic, not to say obsolete. The areas which used to be left to private enterprise and initiative and which
the government was called upon to enter optionally, and only "because it was better equipped to administer for the public
welfare than is any private individual or group of individuals." continue to lose their well-defined boundaries and to
beabsorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social
challenges of the times.

It was in furtherance of such policy that the Land Reform Code was enacted and the various agencies, the ACA among them,
established to carry out its purposes. There can be no dispute as to the fact that the land reform program contemplated in the
said Code is beyond the capabilities of any private enterprise to translate into reality. It is a purely governmental function, no
less than, say, the establishment and maintenance of public schools and public hospitals.

Given these, the respondent Unions are not entitled to the certification election sought in the Court below. Such certification is
admittedly for purposes of bargaining in behalf of the employees with respect to terms and conditions of employment,
including the right to strike as a coercive economic weapon, as in fact the said unions did strike in 1962 against the ACCFA.

This is contrary to Section 11 of Republic Act No. 875, which provides:

"SEC. 11. Prohibition Against Strike in the Government. The terms and conditions of employment in the Government,
including any political subdivision or instrumentality thereof, are governed by law and it is declared to be the policy of this Act
that employees therein shall not strike for the purposes of securing changes or modification in their terms and conditions of
employment. Such employees may belong to any labor organization which does not impose the obligation to strike or to join in
strike: Provided, However, that this section shall apply only to employees employed in governmental functions of the
Government including but not limited to governmental corporations."

William Reagan vs Commissioner of Internal Revenue

30 SCRA 968 Political Law Sovereignty

William Reagan is a US citizen assigned at Clark Air Base to help provide technical assistance to the US Air Force (USAF). In April
1960 Reagan imported a 1960 Cadillac car valued at $6,443.83. Two months later, he got permission to sell the same car
provided that he would sell the car to a US citizen or a member of the USAF. He sold it to Willie Johnson, Jr. for $6,600.00 as
shown by a Bill of Sale. The sale took place within Clark Air Base. As a result of this transaction, the Commissioner of Internal
Revenue calculated the net taxable income of Reagan to be at P17,912.34 and that his income tax would be P2,797.00. Reagan
paid the assessed tax but at the same time he sought for a refund because he claims that he is exempt. Reagan claims that the
sale took place in foreign soil since Clark Air Base, in legal contemplation is a base outside the Philippines. Reagan also cited
that under the Military Bases Agreement, he, by nature of his employment, is exempt from Philippine taxation.

ISSUE: Is the sale considered done in a foreign soil not subject to Philippine income tax?

HELD: No. The Philippines is independent and sovereign, its authority may be exercised over its entire domain. There is no
portion thereof that is beyond its power. Within its limits, its decrees are supreme, its commands paramount. Its laws govern
therein, and everyone to whom it applies must submit to its terms. That is the extent of its jurisdiction, both territorial and
personal. On the other hand, there is nothing in the Military Bases Agreement that lends support to Reagans assertion. The
Base has not become foreign soil or territory. This countrys jurisdictional rights therein, certainly not excluding the power to
tax, have been preserved, the Philippines merely consents that the US exercise jurisdiction in certain cases this is just a matter
of comity, courtesy and expediency. It is likewise noted that he indeed is employed by the USAF and his income is derived from
US source but the income derived from the sale is not of US source hence taxable.
Amado J. Lansang, petitioner, vs. Court of Appeals, General Assembly of the Blind, Inc., and Jose Iglesias, respondents.

February 23, 2000

Quisumbing, J:

Facts:

Private respondent General Assembly of the Blind (GABI) were allegedly awarded a verbal contract of lease in Rizal
Park by the National Parks Development Committee (NPDC). However, this verbal contract accommodation was
unclear because there was no document or instrument involved.

With the change of government, the new Chairman of NPDC, petitioner Amado J. Lansang, sought to clean up Rizal
Park and terminated the said verbal agreement with GABI and demanded that they vacate the area.

The notice was signed by the president of GABI, private respondent Jose Iglesias, allegedly to indicate his conformity
to its contents but later on claimed that he was deceived into signing the notice.

On the day of the supposed eviction, GABI filed an action for damages and injunction in the RTC against the petitioner
but it was dismissed, ruling that the complaint was actually directed against the state which could not be sued
without its consent.

On appeal, the Court of Appeals reversed the decision of the trial court and ruled that a government official being
sued in his official capacity is not enough to protest such official from liability for acts done without or in excess of his
authority.

Issues:

Whether or not private respondents' complaint against petitioner Lansang, as Chairman of NPDC, is in effect a suit
against the state which cannot be sued without its consent.

Whether or not petitioner Lansang abused his authority in ordering the ejectment of private respondents from Rizal
Park.

Held:

No, the complaint is not a suit against the state.

No, Lansang did not abuse his authority.

Ratio:

The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in the
performance of their duties. The rule is that the suit must be regarded as one against the state where satisfaction of
the judgment against the public official concerned will require the state itself to perform a positive act.

Lansang was sued not in his capacity as NPDC Chairman but in his personal capacity. It is evident from the
complaint that Lansang was sued allegedly for having personal motives in ordering the ejectment of GABI
from Rizal Park.

There was no evidence of abuse of authority.

Merritt vs Government of the Philippine Islands

34 Phil 311 Civil Law Torts and Damages Liability of the State for acts of special agents
Political Law Non-Suability of the State Waiver of Non-Suability is Not Admission of Liability

The facts of the case took place in the 1910s. E. Merritt was a constructor who was excellent at his
work. One day, while he was riding his motorcycle along Calle Padre Faura, he was bumped by a
government ambulance. The driver of the ambulance was proven to have been negligent. Because of
the incident, Merritt was hospitalized and he was severely injured beyond rehabilitation so much so that
he could never perform his job the way he used to and that he cannot even earn at least half of what he
used to earn.

In order for Merritt to recover damages, he sought to sue the government which later authorized
Merritt to sue the government by virtue of Act 2457 enacted by the legislature (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). The lower court then determined the amount of damages
and ordered the government to pay the same.

ISSUE: Whether or not the government is liable for the negligent act of the driver of the ambulance.

HELD: No. 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. It follows
therefrom that the state, by virtue of such provisions of law, is not responsible for the damages suffered
by private individuals in consequence of acts performed by its employees in the discharge of the
functions pertaining to their office, because neither fault nor even negligence can be presumed on the
part of the state in the organization of branches of public service and in the appointment of its agents.
The State can only be liable if 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.

In the case at bar, the ambulance driver was not a special agent nor was a government officer acting as a
special agent hence, there can be no liability from the government. The Government does not
undertake to guarantee to any person the fidelity of the officers or agents whom it employs, since that
would involve it in all its operations in endless embarrassments, difficulties and losses, which would be
subversive of the public interest.
Sanders and Moreau, Jr. vs. Veridiano II

10 June 1988 G.R. No. L-56930

FACTS:

Rossi and Wyer were advised that their employment had been converted from permanent full-time to
permanent part-time. Their reaction was to protest this conversion and to institute grievance
proceedings conformably to the pertinent rules and regulations of the US DoD. Moreau sent to the
Chief of Naval Personnel explaining the change of employment status of the two from which Rossi and
Wyer filed in the Court of First Instance of Olongapo City a complaint for damages against the herein
petitioners claiming that the letters contained libellous imputations against the two. Due to the failure
to appear in the court, Moreau and Sanders were declared in default.

ISSUE:

Whether the petitioners were performing their official duties when they did the acts for which they have
been sued for damages.

RULING:

It is abundantly clear in the present case that the acts for which the petitioners are being called to
account were performed by them in the discharge of their official duties. Sanders, as director of the
special services department of NAVSTA, undoubtedly had supervision over its personnel and had a hand
in their employment, work assignments, discipline, dismissal and other related matters. The same can
be said for Moreau. Given the official character of the above-described letters, it can be concluded that
the petitioners were being sued as officers of the United States government. There should be no
question by now that such complaint cannot prosper unless the government sought to be held
ultimately liable has given its consent to be sued.
Torio vs. Fontanilla, L-29993 (October 23, 1978)

G.R. No. L-29993; 85 SCRA 399

October 23, 1978
____________________

Facts:

The Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 to manage the 1959 Malasiqui town
fiesta celebration The 1959 Malasiqui Town Fiesta Executive Committee was created, which, in turn,
organized a sub-committee on entertainment and stage.
A zarzuela troupe, of which Vicente Fontanilla was a member, arrived for their performance on January 22.
During the zarzuela, the stage collapsed and Fontanilla was pinned underneath. He was immediately
hospitalized, but died the following day.
Fontanillas heirs filed a complaint to recover damages against the Municipality of Malasiqui, its Municipal Council
and all the Councils individual members.
The municipality invoked inter alia the defense that as a legally and duly organized public corporation it performs
sovereign functions and the holding of a town fiesta was an exercise of its governmental functions from which no
liability can arise to answer for the negligence of any of its agents.
The councilors maintained that they merely acted as the municipalitys agents in carrying out the municipal
ordinance 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.
After trial, the RTC dismisses the complaint, concluding that the Executive Committee had exercised due diligence
and care in selecting a competent man for the construction of the stage, and the collapse was due to forces
beyond the control of the committee. Consequently, the defendants were not liable for the death of Vicente
Fontanilla. Upon appeal, the Court of Appeals 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:P1200.00 its attorneys fees; and the costs.

Issue:
Whether or not the Municipality of Malasiqui may be held liable.

Held:
Yes.
Under Philippine laws, municipalities are political bodies 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.
The powers of a municipality are two-fold in character: public, 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. These include the legislative, judicial
public, and political. Municipal powers, on the other hand, are exercised for the special benefit and advantage of
the community. These include those which are ministerial, private and corporate.
This distinction of powers are necessary in determining the liability of the municipality for the acts of its agents
which result in injury to third persons.
If the injury is caused in the course of the performance of a governmental function/duty, no recovery 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.
With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third
persons ex contract or ex delicto. They may also be subject to suit upon contracts and its tort.
REPUBLIC OF THE PHILIPPINES, petitioner
vs.
SANDIGANBAYAN
This is a petition for certiorari to annul and set aside the resolution of the Sandiganbayan (Third Division), dated 3 June 1988,
granting the private respondents' motion to intervene in Civil Case No. 0025 and admitting their answer in intervention, as well
as its resolution, dated 25 August 1988, denying the petitioner's motion for reconsideration; PROHIBITION to order the
respondent court to cease and desist from proceeding with the intervention filed with it; and alternatively, mandamus to
compel the respondent court to dismiss the intervention case.

The antecedents are as follows:

On 29 July 1987, the Republic of the Philippines, as Plaintiff, through its governmental instrumentality the Presidential
Commission on Good Government (PCGG) filed with the respondent Sandiganbayan a complaint against Ferdinand E. Marcos,
et al. for reconveyance, reversion, accounting, restitution and damages, docketed therein as Civil Case No. 0025 (PCGG No.
26). 1

On or about 3 September 1987, before the said Civil Case No. 0025 could be set for hearing, private respondent Simplicio A.
Palanca in his own behalf as a stockholder of Bacolod Real Estate Development Corporation (BREDCO) and other stockholders
similarly situated, filed with the respondent Sandiganbayan a "Motion For Leave To Intervene" 2 attaching thereto their
"Answer in Intervention ." 3

In their motion, private respondents alleged that they be

... allowed to intervene in the present action and to file the Answer in intervention hereto attached as Annex 'A', the said
stockholders having a legal interest in the matter in litigation and in the disposition of the properties listed in Annex 'A' of the
Complaint as BREDCO LOTS and shares of stock in Bacolod Real Estate Development Corporation.

In justification, it is further respectfully alleged that.

1. Close examination of the Complaint, in particular par. 12 thereto under 'V. SPECIFIC AVERMENTS OF DEFENDANTS' ILLEGAL
ACTS', makes no mention at all about BREDCO being the subject of any anomalous transaction engaged in by any of the
defendants, in consequence of which the listed BREDCO lots could have been gotten illegally. It is to be observed, on the other
hand, that the titles mentioned in aforesaid Annex of the complaint covering the lots in question are not registered in the
names of any of the defendants but in the name of Bacolod Real Estate Development Corporation.

2. Similarly, the shares of stock in Bacolod Real Estate Development Corporation appealing under PERSONAL PROPERTY on page
two of Annex A of the complaint t are ' carried not in the names of any of the defendants, but in the name of Marsteel
Consolidated Inc. and were acquired under the circumstances averred more in detail in the accompanying Answer in
Intervention by reason of which detail shares should not be involved in the present action.

3. If intervention is allowed, intervenors are prepared to prove that if ever any of the defendants through Marsteel
Consolidated, Inc. and Marsteel Corporation came to have any interest in Bacolod Real Estate Development Corporation, it was
only by way of accommodation on the part of BREDCO stockholders who transferred their shareholdings aggregating 70% of
the subscribed capital to enable Marsteel Consolidated to secure adequate financing for the reclamation and port development
project .4

The foregoing allegations were further expanded and elaborated in the private respondents' Answer in Intervention.

On 2 December 1987, petitioner filed its Reply 5 to Answer In Intervention, while private respondents filed a "Rejoinder to Reply
With Motion To Release BREDCO Lots 6 and also a "Motion To Calendar For Hearing" the motion to release BREDCO lots. 7

On 22 January 1988, respondent court promulgated a resolution 8 holding in abeyance action on the private respondents'
"Rejoinder to Reply with Motion to Release BREDCO lots", and set the Motion for Leave to Intervene for hearing on 2 February
1988.
On 11 March 1988, respondent court issued an order 9 giving petitioner fifteen (1 5) days from 11 March 1988 within which to
file its opposition and/or comment on the motion to intervene and giving the private respondents in turn ten (10) days within
which to file their reply thereto.

On 23 March 1988, petitioner filed its Motion to Dismiss "Answer In Intervention," on the grounds that; (1) respondent court
lacks jurisdiction and (2) intervenors have no legal interest in the matter in litigation, 10 which the private respondents
opposed. 11

On 6 June 1988, respondent court promulgated a Resolution dated 3 June 1988 12 granting the private respondents' motion to
intervene and admitting their Answer in Intervention.

Petitioner moved for reconsideration but this was denied by respondent court in its resolution of 25 August 1989

In the present case, the private respondents intervened in Civil Case No. 0025 merely to unite with the defendants therein in
resisting the claims of petitioner, as plaintiff, and for that reason asked for no affirmative relief against any party in their answer
in intervention. In other words, this is not a case where the private respondents take the initiative in an action against
petitioner by filing a complaint in intervention or a complaint. As observed by respondent Sandiganbayan:

In intervening, Palanca and his co-stockholders have for their purpose to exclude the BREDCO lots and stocks or, at least, their
35% interest in the BREDCO project from any possible judgment directing reconveyance of the alleged ill-gotten wealth to the
plaintiff. They do not pray for damages against the latter. In effect, they occupy a defensive position as regards those shares of
stock or interest. The fact that they interjected themselves into his litigation at their own initiative does not alter the essential
nature of their intervention." 24

Private respondents' action for intervention in Civil Case No. 0025 is not, therefore, a suit or counter-suit against petitioner
Republic of the Philippines.

Having arrived at the above conclusions, the Court finds no need to further discuss the petitioner's pretense that the private
respondents' claims are claims as between and/or among Ferdinand and Imelda Marcos, et al., and that the same is not
cognizable by respondent Sandiganbayan but by the regular courts. It suffices to state that, as already stated, in intervening in
Civil Case No. 0025, private respondents merely joined the defendants therein in resisting the claims of petitioner, as plaintiff,
and that they asked no affirmative relief against any party in their answer in intervention. They do not appear to have any
controversy with the defendants, Ferdinand and Imelda Marcos, et al.

ACCORDINGLY, the petition in the present case is hereby DISMISSED.

Lim, etc. vs. Brownell, Jr., etc.,

G.R. No. L-8587

FACTS: This is an appeal from an order of the Court of First Instance of Manila, dismissing plaintiff's action for the recovery of
real property for lack of jurisdiction over the subject matter.

The property in dispute consists of four parcels of land situated in Tondo, City of Manila, with a total area of 29,151 square
meters. The lands were, after the last world war, found by the Alien Property Custodian of the United States to be registered in
the name of Asaichi Kagawa, national of an enemy country, Japan, as evidenced by Transfer Certificates of Title Nos. 64904 to
65140,

On March 14, 1946, issued a vesting order on the authority of the Trading with the Enemy Act of the United States, as
amended, vesting in himself the ownership over two of the said lots, Lots Nos. 1 and 2

On July, 6, 1948, the Philippine Alien Property Administrator (successor of the Alien Property Custodian) under the authority of
the same statute issued a supplemental vesting order, vesting in himself title to the remaining Lots Nos. 3 and 4.

On August 3, 1948, the Philippine Alien Property Administrator (acting on behalf of the President of the United States) and the
President of the Philippines, executed two formal agreements, one referring to Lots 1 and 2 and the other to Lots 3 and 4,
whereby the said Administrator transferred all the said four lots to the Republic of the Philippines upon the latter's undertaking
fully to indemnify the United States for all claims in relation to the property transferred, which claims are payable by the United
States of America or the Philippine Alien Property Administrator of the United States under the Trading with the Enemy Act, as
amended, and for all such costs and expenses of administration as may by law be charged against the property or proceeds
thereof hereby transferred.

On November 15, 1948, the latter's son Benito E. Lim filed a formal notice of claim to the property with the Philippine Alien
Property Administrator On the theory that the lots in question still belonged to Arsenia Enriquez. that they were mortgaged by
her to the Mercantile Bank of China; that the mortgage having been foreclosed, the property was sold at public auction during
the war to the Japanese Asaichi Kagawa, who, by means of threat and intimidation succeeded in preventing Arsenia Enriquez
from exercising her right of redemption; and that Kagawa never acquired any valid title to the property because he was
ineligible under the Constitution to acquire residential land in the Philippines by reason of alien age.

On March 7, 1950, the claim was disallowed by the Vested Property Claims Committee of the Philippine Alien Property
Administrator, and copy of the decision disallowing the claim was received by claimant's counsel on the 15th of that month

On November 13, 1950, the claimant Benito E. Lim, as administrator of the intestate estate of Arsenia Enriquez, filed a
complaint in the Court of First Instance of Manila against the Philippine Alien Property Administrator (later substituted by the
Attorney General of the United States) for the recovery of the property in question with back rents. The complaint was later
amended to include Asaichi Kagawa as defendant.

ISSUE: Whether or not Intervenor-Appellee (Republic of the Philippines) be sued?

HELD: No suit or claim for the return of said properties pursuant to Section 9 or 32 (a) of the Trading with the Enemy Act was
filed by Plaintiff within two years from the date of vesting, the later date and the last on which suit could be brought. A
condition precedent to a suit for the return of property vested under Trading with the Enemy Act is that it should be filed not
later than April 30, 1949, or within two years from the date of vesting, whichever is later, but in computing the two years, the
period during which there was pending a suitor claim for the return of the property of the Act shall be excluded.

The court states that In view of the foregoing, the order appealed from insofar as it dismisses the complaint with respect to Lots
1 and 2 and the claim for damages against the Attorney General of the United States and the Republic of the Philippines, is
affirmed, but revoked insofar as it dismisses the complaint with respect to Lots 3 and 4, as to which the case is hereby
remanded to the court below for further proceedings.
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.

En Banc

Doctrine: implied consent

Date: May 22, 1985

Ponente: Justice Abad-Santos

Facts:

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

US invited the submission of bids for Repair offender system and Repair typhoon damages. Eligio de Guzman & Co.,
Inc. responded to the invitation, submitted bids and complied with the requests based on the letters received from
the US.

In June 1972, a letter was received by the Eligio De Guzman & Co indicating that the company did not qualify to
receive an award for the projects because of its previous unsatisfactory performance rating on a repair contract for
the sea wall at the boat landings of the U.S. Naval Station in Subic Bay.

The company sued the United States of America and Messrs. James E. Galloway, William I. Collins and Robert Gohier
all members of the Engineering Command of the U.S. Navy. The complaint is to order the defendants to allow the
plaintiff to perform the work on the projects and, in the event that specific performance was no longer possible, to
order the defendants to pay damages. The company also asked for the issuance of a writ of preliminary injunction to
restrain the defendants from entering into contracts with third parties for work on the projects.

The defendants entered their special appearance for the purpose only of questioning the jurisdiction of this court
over the subject matter of the complaint and the persons of defendants, the subject matter of the complaint being
acts and omissions of the individual defendants as agents of defendant United States of America, a foreign sovereign
which has not given her consent to this suit or any other suit for the causes of action asserted in the complaint."
(Rollo, p. 50.)

Subsequently the defendants filed a motion to dismiss the complaint which included an opposition to the issuance of
the writ of preliminary injunction. The company opposed the motion.

The trial court denied the motion and issued the writ. The defendants moved twice to reconsider but to no avail.

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

Issue/s:

WON the US naval base in bidding for said contracts exercise governmental functions to be able to invoke state
immunity

Held:

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

Ratio:

The traditional rule of State immunity exempts a State from being sued in the courts of another State without its
consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States.
However, the rules of International Law are not petrified; they are constantly developing and evolving. And because
 the activities of states have multiplied, it has been necessary to distinguish them-between sovereign and
governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State
immunity now extends only to acts jure imperil (sovereign & governmental acts)

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

correct test for the application of State immunity is not the conclusion of a contract by a State but the legal nature of
the act

USA v. GUINTO
182 SCRA 644

FACTS:
The cases have been consolidated because they all involve the doctrine of state immunity. In GR No. 76607, private
respondents re suing several officers of the US Air Force in connection with the bidding for barbering services in Clark Air Base.
In GR No. 80018, Luis Bautista was arrested following a buy-bust operation for violation of the Dangerous Drugs Act. Bautista
then filed a complaint for damages claiming that because of the acts of the respondents, he lost his job. In GR No. 79470,
Fabian Genove filed a complaint for damages against petitioner for his dismissal as cook in the US Air Force. In GR No. 80258,
complaint for damage was filed by the respondents against petitioners for injuries allegedly sustained by plaintiffs. All cases
invoke the doctrine of state immunity as ground to dismiss the same.

ISSUE:
Are the petitioners immune from suit?

HELD:
It is clear that the petitioners in GR No. 80018 were acting in the exercise of their official functions. They cannot be directly
impleaded for the US government has not given its consent to be sued. In GR No. 79470, petitioners are not immune for
restaurants are commercial enterprises, however, claim of damages by Genove cannot be allowed on the strength of the
evidence presented. Barber shops are also commercial enterprises operated by private persons, thus, petitioners in GR No.
76607 cannot plead any immunity from the complaint filed. In GR No. 80258, the respondent court will have to receive the
evidence of the alleged irregularity in the grant of the barbershop concessions before it can be known in what capacity the
petitioners were acting at the time of the incident.