Malong vs. PNR, G.R. No.

L-49930
G.R. No. L-49930 August 7, 1985

FRANCISCO MALONG and ROSALINA AQUINO-MALONG petitioners,

vs.
PHILIPPINE NATIONAL RAILWAYS and COURT OF FIRST INSTANCE OF PANGASINAN, Lingayen
Branch 11, respondents.

Ponente: AQUINO, J.

Facts
 The Petitioners, Malong spouses alleged in their complaint that on October 30, 1977 their son, Jaime
Aquino, a paying passenger, was killed when he fell from a PNR train while it was between Tarlac City
and Capas. The said train was overloaded with passengers and baggage in view of the proximity of All
Saints Day. The Malong spouses prayed that the PNR be ordered to pay them damages totalling
P136,370.
 The trial court dismissed the complaint, ruling that it had no jurisdiction because the PNR, being a
government instrumentality, the action was a suit against the State.
 The petitioners appealed to SC pursuant to RA No. 5440.

Issue
 W/N the PNR is immune from suit? NO.
o Although the PNR is a government instrumentality under Republic Act No. 4156, as amended by Republic
Act No. 6366 and Presidential Decree No. 741, it was held that the State divested itself of its sovereign
capacity when it organized the PNR which is no different from its predecessor, the Manila Railroad
Company. The PNR did not become immune from suit. It did not remove itself from the operation of
articles 1732 to 1766 of the Civil Code on common carriers.
o However, as held in precedents, the correct rule is that "not all government entities, whether corporate or
non-corporate, are immune from suits. Immunity from suit is determined by the character of the”
objectives “for which the entity was organized.”
o The Manila Hotel case also relied on the following rulings: “By engaging in a particular business through
the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character,
so as to render the corporation subject to the rules of law governing private corporations.”
GR # 55963 and 61045, Feb. 27, 1991 (Constitutional Law – Government Agency, Proprietary Functions)

FACTS: National Irrigation Administration (NIA), a government agency, was held liable for damages resulting to the
death of the son of herein petitioner spouses caused by the fault and/or negligence of the driver of the said agency.
NIA maintains that it is not liable for the act of its driver because the former does not perform primarily proprietorship
functions but governmental functions.
ISSUE: Whether or not NIA may be held liable for damages caused by its driver.

HELD: Yes. NIA is a government agency with a corporate personality separate and distinct from the government,
because its community services are only incidental functions to the principal aim which is irrigation of lands, thus,
making it an agency with proprietary functions governed by Corporation Law and is liable for actions of their
employees.

A pick up owned by the National Irrigation Administration and driven officially by its
regular driver, Hugo Garcia, bumped a bicycle ridden by Francisco Fontanilla, which
resulted in the latter's death. The parents of Francisco filed a suit for damages against
Garcia and the NIA, as Garcia's employer. After trial, the court awarded actual, moral
and exemplary damages to Spouses Fontanilla. NIA appealed. The Solicitor General
contends that the NIA does not perform solely and primarily proprietary functions but is
an agency of the government tasked with governmental functions, and is therefore not
liable for the tortious act of its driver Hugo Garcia, who was not its special agent.

ISSUE:

May NIA, a government agency, be held liable for the damages caused by the negligent
act of its driver who was not its special agent?

HELD:

Yes. NIA is a government agency with a juridical personality separate and distinct from
the government. It is not a mere agency of the government but a corporate body
performing proprietary functions. Therefore, it may be held liable for the damages
caused by the negligent act of its driver who was not its special agent. (Fontanilla vs.
Maliaman, G.R. Nos. L-55963 & 61045, February 27, 1991)

RATIO:

■ Section 1 of RA No. 3601 tells us that NIA is a government agency invested with a
corporate personality separate and distinct from the government, thus is governed by
the Corporation Law. Section 2, subsection f of PD 552 provides that NIA also has its
own assets and liabilities and has corporate powers to be exercised by a Board of
Directors. Section 2, subsection b of PD 552 provides that NIA may sue and be sued in
court.

■ Of equal importance is the case of National Waterworks and Sewerage Authority

(NAWASA) vs. NWSA Consolidated Unions, 11 SCRA 766, which propounds the thesis
that "the NAWASA is not an agency performing governmental functions; rather it
performs proprietary functions . . . ." The functions of providing water supply and
sewerage service are regarded as mere optional functions of government even though
the service rendered caters to the community as a whole and the goal is for the general
interest of society.

Like the NAWASA, the National Irrigation Administration was not created for purposes
of local government. While it may be true that the NIA was essentially a service agency
of the government aimed at promoting public interest and public welfare, such fact does
not make the NIA essentially and purely a "government-function" corporation. NIA was
created for the purpose of "constructing, improving, rehabilitating, and administering all
national irrigation systems in the Philippines, including all communal and pump irrigation
projects." Certainly, the state and the community as a whole are largely benefited by the
services the agency renders, but these functions are only incidental to the principal aim
of the agency, which is the irrigation of lands.

NOTES:
TORIO v. FONTANILLA
GR No. L-29993; October 23, 1978

FACTS:
On October 21, 1978, the Municipal Council of Malasiqui, Pangasinan passed Resolution No. 156
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 town fiesta committee with Jose Macaraeg as
Chairman. The amount of P100.00 was also appropriated for the construction of two stages, one for the
zarzuela and the other for the cancionan. On January 22, while in the midst of the zarzuela, the stage
collapsed, pinning Vicente Fontanilla who died thereafter. The heirs of Fontanilla filed a petition for
recovery of damages. Defendant councilors contend that they are merely acting as agents of the
municipality.

ISSUE:
1) Is the celebration of a town fiesta authorized by a municipal council a governmental or a corporate
function of the municipality?
2) Are the councilors liable for the death of Fontanilla?

HELD:
The holding of the town fiesta in 1959 by the municipality was an exercise of a private or proprietary
function of municipality. The provision on Section 2282 of the Revised Administrative Code simply gives
authority to the municipality to celebrate a yearly fiesta but it does not impose upon it a duty to observe
one. It follows that under the doctrine of respondent-superior, the municipality is held liable for damages
for the death of Fontanilla. Since it is established that the municipality was acting a proprietary function, it
follows that it stands on the same footing as an ordinary private corporation where officers are not held
liable for the negligence of the corporation merely because of their official relation to it. Thus, the
municipal councilors are absolved from any criminal liability for they did not directly participated in the
defective construction of the stage.

Torio vs. Fontanilla, L-29993 (October

23, 1978)
Posted on October 3, 2012

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.
Fontanilla’s heirs filed a complaint to recover damages against the Municipality of Malasiqui, its
Municipal Council and all the Council’s 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 municipality’s 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
court’s 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
attorney’s 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.
he Holy See vs. Rosario, 238 SCRA 524
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.
Facts: This is a petition for certiorari to reverse and set side a decision from the RTC of Makati. Petitioner is the
Holy See who exercises sovereignty over the Vatican City and is represented by the Papal Nuncio in the Philippines.
The petition arose from a controversy regarding a lot, Lot 5-A, of 6,000 square meters located in the Municipality of
Parañaque, registered in the name of the petitioner. Lot 5-A is contiguous to two other lots, 5-B and 5-D. The three
lots were sold to Ramon Licup, who later assigned his rights to the sale to the private respondent, Starbright Sales
Enterprises, Inc., involved in real estate. Informal settlers were squatting in the property, and dispute arose as to who
would evict them. The conflict intensified when the lot was sold to Tropicana Properties and Development
Corporation by the petitioner. The private respondent filed a complaint before the RTC of Makati against the
petitioner and three other defendants: Msgr. Domingo Cirilos, who acted as agent to the sellers, the PRC and
Tropicana. It prayed for: 1) 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. The petitioners and Cirilos separately moved to dimiss the
complaint: petitioners for lack of jurisdiction based on soverign immunity from suit and Cirilos for being an
improper party. An opposition to the motion was filed by private respondent. The trial court issued an order denying
the petitioner’s motion to dismiss, reason being that the petitioner can no longer be immune as they entered into a
business contract. Petitioner moved for reconsideration. They then filed a “Motion for Hearing for the Sole Purpose
of Establishing Factual Allegation for Claim of Immunity as a Jurisdictional Defense,” to facilitate the hearing in its
defense of sovereign immunity. Private repondents opposed the motion as well as the motion for reconsideration.
The trial court ordered the resolution be suspended until after trial on the marits and directing the petitioner to file its
answer. Petitioner elevated the matter to the Supreme Court. The petitioner invoked its privilege of sovereign
immunity only on its behalf and on behalf of its official representatives, the Papal Nuncio. Eventually, the
Department of Foreign Affairs filed for a Motion of Intervention caliming its legal interest on the outcome of the
case concerning the diplomatic immunity of the petitioner. It stated its adoption upon the claim of the petitioner with
regard to its claim for soeverign immunity from suit. This was opposed by the private respondent.

Issue: Whether or not the Holy See can invoke its right to Sovereign Immunity to suit.

Ruling: The Supreme Court granted the petition and the complaint against the petitioner is dismissed.

Reason: Generally, there are two accepted concepts of sovereignty: a) classical or absolute theory, wherein a
sovereign cannot be made as respondent to courts of another sovereign without its consent and; b) restrictive theory,
which puts conditions on when to recognize immunity.
Under the restrictive theory, sovereign immunity is only recognized with regard to public acts or acts jure imperii (or
those in pursuant to governmental functions) . If the act is private or acts jure gestionis (those that are for profit),
then immunity cannot be invoked.
In this case, the petitioner had denied that the acquisition and subsequent disposal of the Lot 5-A were made for
profit. It claimed that it acquired the property for its mission or the Apostolic Nunciature in the Philippines. The lot,
allegedly, was acquired by donation from the Archdiocese of Manila for the purpose of building official residence of
Papal Nuncio. However, when the informal settlers refused to leave the property, the petitioner decided to dispose
the property, not for commercial purpose. The DFA intervened as they established in a Memorandum and
Certification the privilege of sovereign immunity of the petitioner, stating that they are a duly accredited diplomatic
mission to the Philippines exempt from local jurisdiction and has title to all rights, privileges and immunities of a
diplomatic mission or embassy in the country. When the plea of immunity has been recognized by the executive
department, such shall be conclusive to courts.
Case Digest: KHOSROW MINUCHER vs.
HON. COURT OF APPEALS and ARTHUR
SCALZO (G.R. No. 142396 February
11, 2003)
Facts

Violation of the “Dangerous Drugs Act of 1972,” was filed against

Minucher following a “buy-bust operation” conducted by Philippine police
narcotic agents accompanied by Scalzo in the house of Minucher, an
Iranian national, where heroin was said to have been seized. Minucher
was later acquitted by the court.

Minucher later on filed for damages due to trumped-up charges of drug

trafficking made by Arthur Scalzo.

Scalzo on his counterclaims that he had acted in the discharge of his

official duties as being merely an agent of the Drug Enforcement
Administration of the United States Department of Justice.

Scalzo subsequently filed a motion to dismiss the complaint on the

ground that, being a special agent of the United States Drug
Enforcement Administration, he was entitled to diplomatic immunity. He
attached to his motion Diplomatic Note of the United States Embassy
addressed to DOJ of the Philippines and a Certification of Vice Consul
Donna Woodward, certifying that the note is a true and faithful copy of its
original. Trial court denied the motion to dismiss.

ISSUE

Whether or not Arthur Scalzo is indeed entitled to diplomatic immunity.

RULLING

YES.
A foreign agent, operating within a territory, can be cloaked with
immunity from suit as long as it can be established that he is acting
within the directives of the sending state.

The consent or imprimatur of the Philippine government to the activities

of the United States Drug Enforcement Agency, however, can be
gleaned from the undisputed facts in the case.
 The official exchanges of communication between agencies of the
government of the two countries
 Certifications from officials of both the Philippine Department of
Foreign Affairs and the United States Embassy
 Participation of members of the Philippine Narcotics Command in the
“buy-bust operation” conducted at the residence of Minucher at the
behest of Scalzo

These may be inadequate to support the “diplomatic status” of the latter

but they give enough indication that the Philippine government has given
its imprimatur, if not consent, to the activities within Philippine territory of
agent Scalzo of the United States Drug Enforcement Agency.

The job description of Scalzo has tasked him to conduct surveillance on

suspected drug suppliers and, after having ascertained the target, to
inform local law enforcers who would then be expected to make the
arrest.

In conducting surveillance activities on Minucher, later acting as the

poseur-buyer during the buy-bust operation, and then becoming a
principal witness in the criminal case against Minucher,

Scalzo hardly can be said to have acted beyond the scope of his official
function or duties.
G.R. No. 142396, 2003 February 11

FACTS

Sometime in May 1986, an information for violation of the Dangerous Drugs Act was filed against petitioner
Khosrow Minucher with the RTC. The criminal charge followed a "buy-bust operation" concluded by the Philippine
police narcotic agent in the house if Minucher where a quantity of heroin, a prohibited drug, was said to have been
seized. The narcotic agents were accompanied by private respondent Arthur Scalzo who would, in due time, become
one of the principal witnesses for the prosecution. On January 1988, Presiding Judge Migrino rendered a decision
acquitting the accused. Minucher filed Civil Case before the RTC for damages on account of what he claimed to
have been trumped-up charges of drug trafficking made by Arthur Scalzo.

ISSUES

1. Whether or not Arthur Scalzo is entitled to diplomatic immunity

2. Whether the Doctrine of State Immunity from suit is applicable herein

RULING

1. Scalzo contends that the Vienna Convention on Diplomatic Relations, to which the Philippines is a signatory,
grants him absolute immunity from suit being an agent of the US Drugs Enforcement Agency. However, the main
yardstick in ascertaining whether a person is a diplomat entitled to immunity is the determination of whether or not
he performs duties of diplomatic nature. The Vienna Convention lists the classes of heads of diplomatic missions to
include (a) ambassadors or nuncios accredited to the heads of state, (b) envoys, ministers or inter nuncios accredited
to the head of states, and (c) charges d' affairs accredited to the ministers of foreign affairs. The Convention defines
"diplomatic agents" as the heads of missions or members of the diplomatic staff, thus impliedly withholding the
same privileges from all others. Scalzo asserted that he was an Assistant Attache of the US diplomatic mission.
Attaches assist a chief of mission in his duties and are administratively under him. These officials are not generally
regarded as members of the diplomatic mission, nor they normally designated as having diplomatic rank.

2. While the diplomatic immunity of Scalzo might thus remain contentions, it was sufficiently established that,
indeed, he worked for the USDEA. If it should be ascertained that Scalzo was acting well within his assigned
functions when he committed the acts allegedly complained of, the present controversy could then be resolved under
the related doctrine of State Immunity from Suit. While the doctrine appears to prohibit only suits against against the
State without its consent, it is also applicable to complaints filed against officials of the State for acts allegedly
performed by them in the discharge of their duties. The official exchanges of communication, certifications from
officials, as well as participation of members of the Philippine Narcotics Command may be inadequate to support to
support the diplomatic status of Scalzo but they give enough indication that the Philippine government has given its
imprimatur to the activities of Scalzo. It can hardly be said that he acted beyond the scope of his official function or
duties. All told, Scalzo is entitled to the defense os state immunity from suit.

REPUBLIC OF INDONESIA VS. VINZON

G.R. No. 154705, 2003 June 26

FACTS

Petitioner, Republic of Indonesia, represented by its Counsellor, entered into Maintenance Agreement with
respondent. The agreement stated that the respondent shall, for a consideration, maintain specified equipment at the
Embassy buildings and the official residence of petitioner. Petitioners claim that sometime prior to the date of
expiration of the said argument, they informed respondent that the renewal of the agreement shall be of the
discretion of the incoming Chief of Administration, Minister Consellor Azhari Kasim. When the latter assumed the
position, he allegedly found respondent's work and services unsatisfactory and not in compliance with the standards
set in the Maintenance Agreement, Hence, the Indonesian embassy terminated the agreement, The respondent claims
that the aforesaid termination was arbitrary and unlawful, hence, filing a complaint before the RTC.

ISSUE

1. Whether the petitioners have waived their immunity from suit by using as its basis the Maintenance Agreement
2. Whether the actual physic maintenance of the premises of the diplomatic mission is no longer a sovereign
function of the State

3. Whether the petitioners may be sued herein in their private capacities

RULING

1. No. The mere entering into a contract by a foreign State with a private party cannot be construed as the ultimate
test of whether or not it is an act jure imperii or jure gestionis. If the foreign State is not engaged regularly in a
business or commercial activity, and in this case it has not been shown to be engaged, 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. Hence, the existence alone of a paragraph in a contract stating that any legal action
arising out of the agreement shall be settled according tot he laws of the Philippines and by a specified court is not
necessarily a waiver of sovereign immunity from suit. Submission of a foreign state must be clear and equivocal. It
must be given explicitly or by necessary implication, The Court finds no such waiver herein.

2. No. There is no dispute that the establishment of a diplomatic mission is an act jure imperii. A sovereign State
establishes a diplomatic mission which necessarily include its maintenance and upkeep. Hence, the State may enter
into contracts with private entities for the same purpose. It is therefore clear that the petitioner was acting in pursuit
of a sovereign activity when it entered into contract with respondent.

3. Under Article 31 of the Vienna Convention on Diplomatic Relations, a diplomat shall enjoy immunity from
criminal jurisdiction, except in case of: (a) a real action relating to private immovable property situated in the
territory of the recovering State; (b) an action relating to succession which the diplomatic agent is involved as
executor, administrator, heir or legatee as a private person; or (c) action relating to any professional or commercial
activity exercised by the diplomatic agent in the receiving State outside his official functions. The act of the
petitioners in terminating the Maintenance Agreement is not covered by the exceptions.
Facts:

Dr. Leonce Verstuyft was assigned by WHO to its regional office in Manila as Acting
Assistant Director of Health Services. His personal effects, contained in twelve
(12) crates, were allowed free entry from duties and taxes. Constabulary Offshore
Action Center (COSAC) suspected that the crates “contain large quantities of highly
dutiable goods” beyond the official needs of Verstuyft. Upon application of the COSAC
officers, Judge Aquino issued a search warrant for the search and seizure of the
personal effects of Verstuyft.

Secretary of Foreign Affairs Carlos P. Romulo advised Judge Aquino that Dr. Verstuyft is
entitled to immunity from search in respect for his personal baggage as accorded to
members of diplomatic missions pursuant to the Host Agreement and requested that
the search warrant be suspended. The Solicitor General accordingly joined Verstuyft for
the quashal of the search warrant but respondent judge nevertheless summarily denied
the quashal. Verstuyft, thus, filed a petition for certiorari and prohibition with the
SC. WHO joined Verstuyft in asserting diplomatic immunity.

Issue:

Whether or not personal effect of Verstuyft can be exempted from search and seizure
under the diplomatic immunity.
Held:

Yes. The executive branch of the Phils has expressly recognized that Verstuyft is
entitled to diplomatic immunity, pursuant to the provisions of the Host Agreement. The
DFA formally advised respondent judge of the Philippine Government's official position.
The Solicitor General, as principal law officer of the gorvernment, likewise expressly
affirmed said petitioner's right to diplomatic immunity and asked for the quashal of the
search warrant.

It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should refuse to look
beyond a determination by the executive branch of the government, and where the
plea of diplomatic immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal law officer of the government,
the Solicitor General in this case, or other officer acting under his discretion. Courts
may not so exercise their jurisdiction by seizure and detention of property, as
to embarass the executive arm of the government in conducting foreign relations.

The Court, therefore, holds the respondent judge acted without jurisdiction and with
grave abuse of discretion in not ordering the quashal of the search warrant issued by
him in disregard of the diplomatic immunity of petitioner Verstuyft. (World Health
Organization vs. Aquino, G.R. No. L-35131, November 29, 1972, 48 SCRA 243)
DFA vs. NLRC
G.R. No. 113191, 18 September 1996

Facts:

On 27 January 1993, private respondent Magnayi filed an illegal dismissal case against
ADB. Two summonses were served, one sent directly to the ADB and the other through the
Department of Foreign Affairs ("DFA"). ADB and the DFA notified respondent
Labor Arbiter that the ADB, as well as its President and Officers, were covered by an
immunity from legal process except for borrowings, guaranties or the sale of securities
pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian
Development Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement
Between The Bank And The Government Of The Philippines Regarding
The Bank's Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had
waived its diplomatic immunity from suit and, in time, rendered a decision in favour
Magnayi.

The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred the
matter to the NLRC; in its referral, the DFA sought a "formal vacation of the void
judgment." When DFA failed to obtain a favorable decision from the NLRC, it filed a petition
for certiorari.

Issues:
1. Whether or not ADB is immune from suit

2. Whether or not by entering into service contracts with different private companies, ADB
has descended to the level of an ordinary party to a commercial transaction giving rise to a
waiver of its immunity from suit

3. Whether or not the DFA has the legal standing to file the present petition

4. Whether or not the extraordinary remedy of certiorari is proper in this case

Held:

1. Under the Charter and Headquarters Agreement, the ADB enjoys immunity from legal
process of every form, except in the specified cases of borrowing and guarantee operations,
as well as the purchase, sale and underwriting of securities. The Bank’s officers, on their
part, enjoy immunity in respect of all acts performed by them in their official capacity. The
Charter and the Headquarters Agreement granting these immunities and privileges are
treaty covenants and commitments voluntarily assumed by the Philippine government which
must be respected.

Being an international organization that has been extended a diplomatic status, the ADB
is independent of the municipal law.

"One of the basic immunities of an international organization is immunity from local

jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals
of the country where it is found. The obvious reason for this is that the subjection of such
an organization to the authority of the local courts would afford a convenient medium thru
which the host government may interfere in their operations or even influence or control its
policies and decisions of the organization; besides, such subjection to local jurisdiction
would impair the capacity of such body to discharge its responsibilities impartially on behalf
of its member-states."

2. No. The ADB didn't descend to the level of an ordinary party to a commercial transaction,
which should have constituted a waiver of its immunity from suit, by entering into service
contracts with different private companies. “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 act or acts jure gestionis.

“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.”

The service contracts referred to by private respondent have not been intended by the ADB
for profit or gain but are official acts over which a waiver of immunity would not attach.
3. Yes. The DFA's function includes, among its other mandates, the determination of
persons and institutions covered by diplomatic immunities, a determination which, when
challenged, entitles it to seek relief from the court so as not to seriously impair the conduct
of the country's foreign relations. The DFA must be allowed to plead its case whenever
necessary or advisable to enable it to help keepthe credibility of the Philippine government
before the international community. When international agreements are concluded, the
parties thereto are deemed to have likewise accepted the responsibility of seeing to it that
their agreements are duly regarded. In our country, this task falls principally on the DFA as
being the highest executive department with the competence and authority to so act in this
aspect of the international arena. In Holy See vs. Hon. Rosario, Jr., this Court has explained
the matter in good detail; viz:

"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 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 vs. 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 vs. Aquino, 48 SCRA 242
(1972), the Secretary of Foreign Affairs sent the trial court a telegram to that
effect. In Baervs. 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 petitioner's 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. 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."

4. Yes. Relative to the propriety of the extraordinary remedy of certiorari, the Court has,
under special circumstances, so allowed and entertained such a petition when (a) the
questioned order or decision is issued in excess of or without jurisdiction, or (b) where the
order or decision is a patent nullity, which, verily, are the circumstances that can be said to
obtain in the present case. When an adjudicator is devoid of jurisdiction on a matter before
him, his action that assumes otherwise would be a clear nullity.

Petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August
1993 is VACATED for being NULL AND VOID.

vs. Court of Appeals (Consti1)

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.
 Facts: On the evening of August 21, 1971, two grenades were thrown at the miting the
avance of the Liberal Party killing 8 persons and injuring many. Thus, on August 23 then
President Marcos issued proclamation 889, the suspension of the writ of habeas corpus.
 Herein petitioners were apprehended by members of the Philippine Constabulary having
invoked the said proclamation. In effect the proclamation implies that the authority to
decide whether the exigency has arisen requiring suspension of the writ belongs to the
President and it expressly states that such declaration is deemed “final and conclusive
upon the courts and all other persons”
 ・ August 30: the president issued proclamation 889-A, amending the previous
proclamation.
 ・ September 18: proclamation 889-B issued; lifting the suspension on selected
provinces/cities.
 ・ September 25: proclamation 889-C issued; lifting the suspension on selected
provinces/cities.
 ・ October 4: proclamation 889-D issued; same as 889-C on selected areas.
 In view thereof, 18 provinces, 2 sub-provinces and 18 cities are still under the
suspension of writ of habeas corpus

 Issue: Whether the court would adhere to its previous decision in Barcelon vs. Baker
and Montenegro vs. Castaneda?

 Held: First, Proclamation 889-A superseded the original proclamation and that flaws
attributed thereto are formal in nature. Which actually emphasize the actuality of the
intent to rise in arms. Second, The court intervention: In Sterling vs. Constantin, Chief
Justice Hughes declared that “when there is a substantial showing that the exertion of
state power has overridden private rights secured by the Constitution, the subject is
necessarily one for judicial review”. Thus, the grant of power to suspend the privilege of
writ is neither absolute or unqualified
 The declaration of a rebellion as argued by the petitioners need not to be a wide-scale
event, it may be declared even if it only involves a small part of the country. The
president decision to suspend the writ was by fact constitutional hence VALID, as he has
three available courses to suppress rebellion. First, to call out the military, second to
suspend the privilege of writ and lastly to declare martial law.

 Petitions DENIED; the CFI is directed to conduct preliminary investigations
Shauf v. CA
Loida Q. Shauf & Jacob Shauf, petitioners v. Hon. CA, Don E. Detwiler & Anthony Persi, respondents

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

Facts:
 Loida Shauf, a Filipino by origin and married to an American who is a member of the US Air
Force, was rejected for a position of Guidance Counselor in the Base Education Office at Clark Air Base,
for which she is eminently qualified.
 By reason of her non-selection, she filed a complaint for damages and an equal employment
opportunity complaint against private respondents, Don Detwiler (civillian personnel officer) and Anthony
Persi (Education Director), for alleged discrimination by reason of her nationality and sex.
 Shauf was offered a temporary position as a temporary Assistant Education Adviser for a 180-day
period with the condition that if a vacancy occurs, she will be automatically selected to fill the vacancy.
But if no vacancy occurs after 180 days, she will be released but will be selected to fill a future vacancy if
she’s available. Shauf accepted the offer. During that time, Mrs. Mary Abalateo’s was about to vacate her
position. But Mrs. Abalateo’s appointment was extended thus, Shauf was never appointed to said
position. She claims that the Abalateo’s stay was extended indefinitely to deny her the appointment as
retaliation for the complaint that she filed against Persi. Persi denies this allegation. He claims it was a
joint decision of the management & it was in accordance of with the applicable regulation.
 Shauf filed for damages and other relief in different venues such as the Civil Service Commission,
Appeals Review Board, Philippine Regional Trial Court, etc.
 RTC ruled in favor of Shauf ordering defendants to pay $39,662.49 as actual damages + 20% of
such amount as attorney’s fees + P100k as moral & exemplary damages.
 Both parties appealed to the CA. Shauf prayed for the increase of the damages to be collected
from defendants. Defendants on the other hand, continued using the defense that they are immune from
suit for acts done/statements made by them in performance of their official governmental functions
pursuant to RP-US Military Bases Agreement of 1947. They claim that the Philippines does not have
jurisdiction over the case because it was under the exclusive jurisdiction of a US District Court. They
likewise claim that petitioner failed to exhaust all administrative remedies thus case should be dismissed.
CA reversed RTC decision. According to the CA, defendants are immune from suit.
 Shauf claims that the respondents are being sued in their private capacity thus this is not a suit
against the US government which would require consent.
 Respondents still maintain their immunity from suit. They further claim that the rule allowing suits
against public officers & employees for criminal & unauthorized acts is applicable only in the Philippines &
is not part of international law.
 Hence this petition for review on certiorari.

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

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

Ratio:
 They state that the doctrine of immunity from suit will not apply and may not be invoked where the
public official is being sued in his private and personal capacity as an ordinary citizen. The cloak of
protection afforded the officers and agents of the government is removed the moment they are sued in
their individual capacity. This situation usually arises where the public official acts without authority or in
excess of the powers vested in him.
 It is a well-settled principle of law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done with malice and in bad faith, or
beyond the scope of his authority or jurisdiction
 Director of the Bureau of Telecommunications vs. Aligaen Inasmuch as the State authorizes
only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the
State, and an action against the officials or officers by one whose rights have been invaded or violated by
such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the
State from suit. In the same tenor, it has been said that an action at law or suit in equity against a State
officer or the director of a State department on the ground that, while claiming to act for the State, he
violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under
an assumption of authority which he does not have, is not a suit against the State within the constitutional
provision that the State may not be sued without its consent."The rationale for this ruling is that the
doctrine of state immunity cannot be used as an instrument for perpetrating an injustice
 In the case at bar, there is nothing in the record which suggests any arbitrary, irregular or abusive
conduct or motive on the part of the trial judge in ruling that private respondents committed acts of
discrimination for which they should be held personally liable.
 There is ample evidence to sustain plaintiffs' complaint that plaintiff Loida Q. Shauf was
refused appointment as Guidance Counselor by the defendants on account of her sex, color and origin.
 She received a Master of Arts Degree from the University of Santo Tomas, Manila, in
1971 and has completed 34 semester hours in psychology?guidance and 25 quarter hours in human
behavioral science. She has also completed all course work in human behavior and counselling
psychology for a doctoral degree. She is a civil service eligible. More important, she had functioned as a
Guidance Counselor at the Clark Air Base at the GS-1710-9 level for approximately four years at the time
she applied for the same position in 1976.
 In filling the vacant position of Guidance Counselor, defendant Persi did not even
consider the application of plaintiff Loida Q. Shauf, but referred the vacancy to CORRO which appointed
Edward B. Isakson who was not eligible to the position.

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

 Respondents alleged that petitioner Loida Q. Shauf failed to avail herself of her remedy under the
United States federal legislation on equality of opportunity for civilian employees, which is allegedly
exclusive of any other remedy under American law, let alone remedies before a foreign court and under a
foreign law such as the Civil Code of the Philippines.
 SC: Petitioner Loida Q. Shauf is not limited to these remedies, but is entitled as a matter of plain
and simple justice to choose that remedy, not otherwise proscribed, which will best advance and protect
her interests. There is, thus, nothing to enjoin her from seeking redress in Philippine courts which should
not be ousted of jurisdiction on the dubious and inconclusive representations of private respondents on
that score.
Pnb vs pabaan
Facts:
The case was filed by petitioner requesting for certiorari against the writ of execution authorized by the Hon
Judge Pabalan regarding the transfer of funds amounting to P12,724.66 belonging to Philippine Virginia
Tobacco Administration (PVTA).

Philippine National Bank (PNB) of La Union filed an administrative complaint against Judge Pabalan for
grave abuse of discretion, alleging that the latter failed to recognize that the questioned funds are of public
character and therefore may not be garnished, attached or levied upon. The PNB La Union Branch invoked the
doctrine of non-suability, putting a bar on the notice of garnishment.

Issues:

1. Whether or not Philippine National Bank can be sued.

2. Whether or not the notice of garnishment of funds of Philippine Virginia Tobacco deposited with the
petitioner bank is valid.

Discussions:
The consent of the state to be sued may be given expressly or impliedly. In this case, Consent to be sued was
given impliedly when the State enters into a commercial contract. When the State enters into a contract, the
State is deemed to have divested itself of the mantle of sovereign immunity and descended to the level of the
ordinary individual. Hence, Funds of public corporations could properly be made the object of a notice of
garnishment.

Rulings:

1. PVTA is also a public corporation with the same attributes, a similar outcome is attributed. The
government has entered with them into a commercial business hence it has abandoned its sovereign
capacity and has stepped down to the level of a corporation. Therefore, it is subject to rules governing
ordinary corporations and in effect can be sued. Therefore, the petition of PNB La Union is denied.
2. The Supreme Court ruled that the funds held by PNB is subject for garnishment. Funds of public
corporations which can sue and be sued are not exempt from garnishment. Thus, the writ of execution be
imposed immediately.