[ G. R. No.

L-18081, April 30, 1963 ]

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (PAFLU), PETITIONER, VS. THE HON. JUDGE E. SORIANO, ETC. ET
AL., RESPONDENTS.

BAUTISTA ANGELO, J.:

FACTS

The Social Security System Employees Association (PAPLU), composed of employees of the Social Security Commission,
transmitted on October 20, I960' to the latter a set of demands containing terms and conditions of employment
including a request for recognition as a collective bargaining agent. Instead of answering the demands, the Commission
filed on December 14, 1960 before the Court of First Instance of Manila a petition for declaratory relief wherein it asked
that the Social Security System which was created by Republic Act No. 1161 be declared as a governmental agency
performing governmental functions so that its employees may be prohibited from joining labor unions and from
compelling petitioner to enter into a collective bargaining agreement with them as well as from declaring strikes
detrimental to the System.

The union answered the petition with a counter-prayer that the SSS be declared as an agency of the government
exercising propietary functions. In the meantime, a conference wag held between the union and the SSC in connection
with the demands submitted by the former and sensing that the Commission was not disposed to enter into a collective
bargaining agreement with it, the union, filed before the Court of Industrial Relations a charge for unfair labor practice
against said Commission pursuant to Section 14, paragraph (b), of Republic Act 875. Two days later, or on February 16,
1961, the union went on strike and picketed the premises of the Social Security Commission.

Without losing time, the Commission filed on the very same date before the Court of First Instance of Manila an urgent
petition with preliminary injunction praying that an order be immediately issued requiring the union members to return
to work and desist from, picketing the premises of the Commission. The Court, presided over by Judge B. Soriano, issued
on the same date an ex parte preliminary injunction ordering the union members not only to desist from, picketing the
above premises but also to refrain from, doing any act of violence. As a consequence, the union filed before this Court a
petition ,for certiorari with preliminary injunction praying that respondent judge be restrained from enforcing his writ of
preliminary injunction, on the ground that he. had no jurisdiction to issue it ex yarte. This Court issued the injunction
prayed for. Respondents filed an urgent petition to dissolve the injunction, but the same was denied. After respondents
had filed their answer, hearing was held, and later the case was submitted for decision.

ISSUE:

The main issue to be determined is whether the SSS is a government agency exercising governmental functions, as
claimed by the respondents, or whether it exercises proprietary functions, as contended by petitioner, on which issue
will necessarily hinge whether respondent judge had acted in excess of his jurisdiction in issuing the ex parte wit of *
preliminary injunction subject, of the present petition for certioxari.

In Bacani vs. National Coconut Corporation, 100 Pihil., 468; 53 Off. Gaz., 2798, this Court said;

"* * * There are functions which our government is required to exercise to promote its objectives as expressed in our
Constitution and whiclh are exercised by it as an attribute of sovereignty, and those which it may exercise to promote
merely the welfare, progress and prosperity of the people To this latter class belongs the organization of these
corporations owned, or controlled by the government to promote certain aspects of the economic life of our people
such as the National Coconut Corporation. These are what we may call government-owned or controlled corporations
which may take tin form of private enterprise or one organized with powers arid formal characteristics of a private
corporation under the Corporation Law.
"The question that now arises is: Does the fact that thest corporations perform certain functions of the government
make f them a part of the Government of the Philippines?

"The answer is simple: they do not acquire that status for the simple reason that they do not come tinder the
classification of municipal or public corporations. Take for. Instaiict the National Coconut Corporation. * * * it was given
a corporate power separate anil 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 it may exercise are concerned (sections 2 and 4,
Commonwealth Act No. 518). It may sue and be sued in the same mannei as any other private corporations, and in this
sense it is an entity different from our Government.

****

"To recapitulate, we may mention that the term 'Government of the Republic of the Philippines' * * * refers only to that
government entity through which the functions of the government are exercised as an attribute of sovereignty, and in
these are included those arms through which political authority is made effective whether they be provincial, municipal
or other form of local government. These are what we call municipal corporations. They do not include government
entities which are given corporate personality separate and distinct from the government and which are governed by
the Corporation Law. Their powers, duties and liabilities have to be determined in the light oú that law and of their
corporate charters."

It appears that the National Coconut Corporation was declared to be an entity separate from the government or nor
exercising governmental functions because (1) it is not a municipal corporation, (2) its powers are not exercised as an
attribute of sovereignty, (3) it was given a separate personality and powers separate and distinct from the government,
and (4) it may sue and be sued as any other private corporations. As evidence of its having been endowed with powers
separate and distinct from those of the government is the fact that it is made subject to the provisions of the
Corporation Law. But to enjoy such powers, it is not, however, necessary that it be declared expressly that it is subject to
the provisions of the Corporation Law, because such may be inferred from the law creating it and its corporate charter.

It may now be asked: Do these reasons hold true with regard to the Social Security System?

To begin with, the System is not a municipal corporation. In its strict and proper sense, a municipal corporation is a body
politic established by law partly as an agency of the state to assist in the civil government of the country, chiefly to
regulate and administer the local and internal affairs of the city, town or district which is incorporated.[1] The Social
Security Commission does not regulate or administer the local affairs of a town, city, or district which is incorporated.

Again, the Social Security Commission or System has a personality of its own, by virtue of which it can sue and be sued.
This is clearly inferred from Section 4(k) of Republic Act No, 1161, as amended. In fact, it is endowed with practically the
same powers that are conferred by law upon any other private corporations. Hence, we may say that there is a
substantial similarity between the Social Security Commission or System and the National Coconut Corporation.

In this connection, it is interesting to note the nature of the functions that the government may exercise to accomplish
its objectives. These functions are two-fold, ,constituent and ministrant: the former constitutes the very bonds of society
and are compulsory in nature; the latter are those that are undertaken only by way of advancing the general interest of
society, and are merely optional. President Wilson enumerated the constituent functions as follows:
"(1) The keeping of order and providing for the protection of persons and property from violence and robbery.

"(2) The flxing 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 crime. '

"(4)' The determination of contract rights between individuals.

"(5) The definition and punishment of crimes.

"(6) The administration of justice in civil eases.

"(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. (Malcolm, The Government of the Philippine Islands, p. 19)" (Bacani vs.
National Coconut Corporation, supra)

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 determining 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 those things which by their
very nature it is better equipped to administer for the public welfare than is any private individual or group of individuals
(Bacani vs. National Coconut Corporation, supra,).

It is noteworthy to state that the main objective of the SSS is certainly not one of the constituent functions enumerated
above but one which merely aims at advancing the general interest of society which is optional. In effect, its main, aim is
to provide social security to a large group of employees who are not in the government service because as a rule private
capital cannot undertake it while the government by its very nature is better equipped to do so than any individual or
group of individuals. It may be true that social security is generally handled by the government, but it does not follow
that it cannot be exercised or performed by a private entity or individual, for, as a matter of fact, before the SSS was
established there were already many private systems adopted by private entities thru insurance companies and mutual
aid associations which served as forerunners of the SSS (International Labor Office, Social Security, p. 5).

It is without doubt that the state created the SSS in the exercise of its police power and that it was for a governmental
purpose, or the promotion of social justice, but it does not follow that the System should necessarily be a government
function or one in the exercise of its sovereign powers. In fact, the System is not so essential and indispensable that the
government cannot exist without it. History shows that our government, has existed for a long time before the creation
of the SSS. And this indicates that its creation is merely optional or a means of promoting the welfare and general
interest of society.

It is true that the SSS is a creation of Congress (Republic Act No. 1161) and its existence and operation is financed by it. It
is likewise true that under said Act the insurance is made compulsory in order that its coverage might be as universal as
possible. We may even say that the Commission is given by law quasi-judicial powers in order to have an expeditious
adjudication of the benefits of social insurance. But these government functions are merely incidental in the sense that
they are necessary to implement and carry out the objective of the law. The fact is that the main bulk of the operations
of the SSS is proprietary in nature judging from its main functions of investment and insurance, which are essentially
proprietary, without which its main objective cannot be carried out.

A factor that is noteworthy are the similarities between the Social Security System and the Government Service
Insurance System. One is as to their powers and duties. The Social Security Act gives to the System the power to adopt,
amend, and rescind such rules and regulations as may be necessary to carry out the provisions and purposes of the Act.
The same power is given to the GSIS by the law of its creation (Commonwealth Act No. 186, Section 17(a). The
Commission has the power to enter into agreements for such services and aid as may be needed. The same power is
given to the GSIS. The Commission has the power to establish branches whenever and wherever it may be necessary.
Similar power is given to the GSIS. The Commission is given the power to adopt a budget of its expenditures, including
the salaries of its personnel. Similar powers are given to the GSIS. The Commission has the power to acquire property,
real or personal, that may be necessary for the attainment of its purpose. The GSIS may also exercise similar powers. The
Commission can sue and be sued in court, so with the GSIS.

As to investments, the SSS is required to invest its funds (1) in interest-bearing bonds and securities of the Government
of the Philippines or bonds or securities for the payment of the interest and principal of which the faith and credit of the
Republic of the Philippines is pledged; (2) in interest-bearing deposits in any domestic bank doing business in the
Philippines provided that said bank shall have been designated as a depositary for this purpose by the President; (3) in
loans or advances to the national government for the construction of permanent toll bridges in accordance with law; (4)
in housing loans to members up to a maximum of 60% of the appraised, value of the properties; (5) in loans to
members, and (6) in other projects and investments subject to approval by the Insurance Commissioner. Similar powers
are given by law to the GSIS.

The appointment of the members of the governing bodies in both the SSC and the GSIS are the same: they are
appointed by the President of the Philippines, with the consent of the Commission on Appointments. Their tenure is the
same-three years. Their compensation is also the same-a per diem of P25.00 for each day actually attended by them.

Finally, the funds of the SSS are treated as special funds in the same manner as those of the GSIS. They are distinct and
separate from those of the government such that the government cannot dispose of them in any manner.

To recapitulate, all the above similarities as found in the charters of both entities cannot but point to one significant fact:
that it was the intention of Congress to pattern the SSS after that of the GSIS. Consequently, the two entities must
exercise functions of the same nature. These functions are proprietary as declared by this Court with regard to the
GSIS.[2]

Wherefore, petition is granted. The writ of preliminary injunction issued ex parte by respondent judge is hereby set
aside. The writ issued by this Court is made permanent. No costs.

Bengzon, C. J., Labrador, Concepcion, Barrera, Paredes, Regala, and Makalintal, JJ., concur.

FRANCISCO VS. HOUSE OF REPRESENTATIVES

G.R. NO. 160261. November 10, 2003

Facts:

1. On 28 November 2001, the 12th Congress of the House of Representatives adopted and approved the Rules of Procedure in
Impeachment Proceedings, superseding the previous House Impeachment Rules approved by the 11th Congress.
2. On 22 July 2002, the House of Representatives adopted a Resolution, which directed the Committee on Justice “to conduct
an investigation, in aid of legislation, on the manner of disbursements and expenditures by the Chief Justice of the Supreme
Court of the Judiciary Development Fund (JDF).
3. On 2 June 2003, former President Joseph E. Estrada filed an impeachment complaint (first impeachment complaint) against
Chief Justice Hilario G. Davide Jr. and seven Associate Justices of the Supreme Court for “culpable violation of the
Constitution, betrayal of the public trust and other high crimes.” The complaint was endorsed by House Representatives,
 and was referred to the House Committee on Justice on 5 August 2003 in accordance with Section 3(2) of Article XI of the
Constitution. The House Committee on Justice ruled on 13 October 2003 that the first impeachment complaint was
“sufficient in form,” but voted to dismiss the same on 22 October 2003 for being insufficient in substance.
4. The following day or on 23 October 2003, the second impeachment complaint was filed with the Secretary General of the
House by House Representatives against Chief Justice Hilario G. Davide, Jr., founded on the alleged results of the
legislative inquiry initiated by above-mentioned House Resolution. The second impeachment complaint was accompanied
by a “Resolution of Endorsement/Impeachment” signed by at least 1/3 of all the Members of the House of Representatives.
5. Various petitions for certiorari, prohibition, and mandamus were filed with the Supreme Court against the House of
Representatives, et. al., most of which petitions contend that the filing of the second impeachment complaint is
unconstitutional as it violates the provision of Section 5 of Article XI of the Constitution that “[n]o impeachment
proceedings shall be initiated against the same official more than once within a period of one year.”

Issues:

1. Whether or not the offenses alleged in the Second impeachment complaint constitute valid impeachable offenses under the
Constitution.
2. Whether or not Sections 15 and 16 of Rule V of the Rules on Impeachment adopted by the 12th Congress are
unconstitutional for violating the provisions of Section 3, Article XI of the Constitution.
3. Whether the second impeachment complaint is barred under Section 3(5) of Article XI of the Constitution.

Rulings:

1. This issue is a non-justiciable political question which is beyond the scope of the judicial power of the
Supreme Court under Section 1, Article VIII of the Constitution.
1. Any discussion of this issue would require the Court to make a determination of what constitutes an
impeachable offense. Such a determination is a purely political question which the Constitution has left
to the sound discretion of the legislation. Such an intent is clear from the deliberations of the
Constitutional Commission.
2. Courts will not touch the issue of constitutionality unless it is truly unavoidable and is the very lis
mota or crux of the controversy.
2. The Rule of Impeachment adopted by the House of Congress is unconstitutional.
1. Section 3 of Article XI provides that “The Congress shall promulgate its rules on impeachment to
effectively carry out the purpose of this section.” Clearly, its power to promulgate its rules on
impeachment is limited by the phrase “to effectively carry out the purpose of this section.” Hence, these
rules cannot contravene the very purpose of the Constitution which said rules were intended to
effectively carry out. Moreover, Section 3 of Article XI clearly provides for other specific limitations on
its power to make rules.
2. It is basic that all rules must not contravene the Constitution which is the fundamental law. If as alleged
Congress had absolute rule making power, then it would by necessary implication have the power to
alter or amend the meaning of the Constitution without need of referendum.
3. It falls within the one year bar provided in the Constitution.
1. Having concluded that the initiation takes place by the act of filing of the impeachment complaint and
referral to the House Committee on Justice, the initial action taken thereon, the meaning of Section 3 (5)
of Article XI becomes clear. Once an impeachment complaint has been initiated in the foregoing
 manner, another may not be filed against the same official within a one year period following Article
XI, Section 3(5) of the Constitution.
2. Considering that the first impeachment complaint, was filed by former President Estrada against Chief
Justice Hilario G. Davide, Jr., along with seven associate justices of this Court, on June 2, 2003 and
referred to the House Committee on Justice on August 5, 2003, the second impeachment complaint filed
by Representatives Gilberto C. Teodoro, Jr. and Felix William Fuentebella against the Chief Justice on
October 23, 2003 violates the constitutional prohibition against the initiation of impeachment
proceedings against the same impeachable officer within a one-year period.

Hence, Sections 16 and 17 of Rule V of the Rules of Procedure in Impeachment Proceedings which were
approved by the House of Representatives on November 28, 2001 are unconstitutional. Consequently, the
second impeachment complaint against Chief Justice Hilario G. Davide, Jr. which was filed by Representatives
Gilberto C. Teodoro, Jr. and Felix William B. Fuentebella with the Office of the Secretary General of the House
of Representatives on October 23, 2003 is barred under paragraph 5, section 3 of Article XI of the Constitution.

Principles:

The separation of powers is a fundamental principle in our system of government. It obtains not through express provision but
by actual division in our Constitution. Each department of the government has exclusive cognizance of matters within its
jurisdiction,... and is supreme within its own sphere. But it does not follow from the fact that the three powers are to be kept
separate and distinct that the Constitution intended them to be absolutely unrestrained and independent of each other. The
Constitution has provided for an... elaborate system of checks and balances to secure coordination in the workings of the
various departments of the government. x x x And the judiciary in turn, with the Supreme Court as the final arbiter, effectively
checks the other departments in the exercise of its... power to determine the law, and hence to declare executive and legislative
acts void if violative of the Constitution.

Truly political questions are thus beyond judicial review, the reason for respect of the doctrine of separation of powers to be
maintained.

A Republican form of government rests on the conviction that sovereignty should reside in the people and that all government
authority must emanate from them. It abhors the concentration of power on one or a few, cognizant that power, when absolute,
can lead to abuse, but... it also shuns a direct and unbridled rule by the people, a veritable kindling to the passionate fires of
anarchy.
 Republic of Indonesia vs Vinzon

doctrine of sovereign immunity

REPUBLIC OF INDONESIA VS VINZON

G.R. No. 154705 405 SCRA 126 June 26, 2003

THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and MINISTER COUNSELLOR
AZHARI KASIM, petitioners,

vs.

JAMES VINZON, doing business under the name and style of VINZON TRADE AND SERVICES, respondent.

Facts:

This is a petition for review of the decision made by Court of Appeals in ruling that the Republic of Indonesia gave its consent
to be sued and voluntarily submitted itself to the laws and jurisdiction of Philippine courts and that petitioners Ambassador
Soeratmin and Minister Counsellor Kasim waived their immunity from suit.

Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a Maintenance Agreement with
respondent James Vinzon, sole proprietor of Vinzon Trade and Services. The equipment covered by the Maintenance
Agreement are air conditioning units and was to take effect in a period of four years.

When Indonesian Minister Counsellor Kasim assumed the position of Chief of Administration, 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, he filed a complaint against the
petitioners which opposed by invoking immunity from suit.

Issues:

1. Whether or not the Republic of Indonesia can invoke the doctrine of sovereign immunity from suit.
2. Whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be sued herein in their private
capacities.

Discussions:

The rule that a State may not be sued without its consent is a necessary consequence of the principles of independence and
equality of States. The practical justification for the doctrine of sovereign immunity is that there can be no legal right against
the authority that makes the law on which the right depends. In the case of foreign States, the rule is derived from the principle
of the sovereign equality of States, as expressed in the maxim par in parem non habet imperium. All states are sovereign equals
and cannot assert jurisdiction over one another.] A contrary attitude would “unduly vex the peace of nations”.

The rules of International Law, however, are not unbending or immune to change. The increasing need of sovereign States to
enter into purely commercial activities remotely connected with the discharge of their governmental functions brought about a
new concept of sovereign immunity. This concept, the restrictive theory, holds that the immunity of the sovereign is recognized
only with regard to public acts or acts jure imperii (public acts of the government of a state), but not with regard to private acts
or acts jure gestionis (the commercial activities of a state.)

Rulings:

1. The Supreme Court ruled that the republic of Indonesia cannot be deemed to have waived its immunity to suit. 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 juri imperii or juri gestionis. Such act is only the start of the inquiry. There is no dispute that the
establishment of a diplomatic mission is an act juri imperii. The state may enter into contracts with private entities to
maintain the premises, furnishings and equipment of the embassy. The Republic of Indonesia is acting in pursuit of a
sovereign activity when it entered into a contract with the respondent. The maintenance agreement was entered into by
the Republic of Indonesia in the discharge of its governmental functions. It cannot be deemed to have waived its
immunity from suit.
2. Article 31 of the Vienna Convention on Diplomatic Relations provides that a diplomatic agent shall enjoy immunity
from the criminal jurisidiction of the receiving State. He shall also enjoy immunity from its civil and administrative
jurisdiction, except in the case of:
o a real action relating to private immovable property situated in the territory of the receiving State, unless he
holds it on behalf of the sending State for the purposes of the mission;
o an action relating to succession in which the diplomatic agent is involved as executor, administrator, heir or
legatee as a private person and not on behalf of the sending State;
o an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving
State outside his official functions.

The Solicitor General believes that said act may fall under subparagraph (c) thereof, but said provision clearly applies only to a
situation where the diplomatic agent engages in any professional or commercial activity outside official functions, which is not
the case herein.
 Mobil Phil Inc vs Custom Arrastre Service
Immunity from Suit

MOBIL PHIL INC VS CUSTOM ARRASTRE SERVICE

G.R. No. L-23139 18 SCRA 1120 December 17, 1966
MOBIL PHILIPPINES EXPLORATION, INC., plaintiff-appellant,
vs.
CUSTOMS ARRASTRE SERVICE and BUREAU of CUSTOMS, defendants-appellees

Facts:
This case was filed by Mobil Phil Exploration Inc. against the Customs Arrastre Service and the Bureau of Customs to recover
the value of the undelivered case of rotary drill parts.

Four cases of rotary drill parts were shipped from abroad, consigned to Mobil Philippines Exploration, Inc. The shipment was
discharged to the custody of the Customs Arrastre Service, the unit of the Bureau of Customs then handling arrastre operations
therein. The Customs Arrastre Service later delivered to the broker of the consignee three cases only of the shipment. Mobil
Philippines Exploration, Inc filed suit in the Court of First Instance of Manila against the Customs Arrastre Service and the
Bureau of Customs to recover the value of the undelivered case plus other damages.

Defendants filed a motion to dismiss the complaint on the ground that not being persons under the law, defendants cannot be
sued. Appellant contends that not all government entities are immune from suit; that defendant Bureau of Customs as operator
of the arrastre service at the Port of Manila, is discharging proprietary functions and as such, can be sued by private individuals.

Issues:
Whether or not both Customs Arrastre Service and the Bureau of Customs can invoke state immunity.

Discussions:
The Bureau of Custom, is a part of Department of Finance. It does not have a separate juridical 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. As stated in the law, agencies of the government is not suable if it is
performing governmental functions and if it an unincorporated government entity without a separate juridical personality.

Rulings:
Yes. The Supreme Court ruled that the Bureau of Customs cannot be sued for recovery of money and damages involving
arrastre services, considering that said arrastre function may be deemed proprietary, because it is a necessary incident of the
primary and governmental function of the Bureau of Customs. The Court ruled that 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. The Supreme Court ruled that the 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.
 Republic vs Villasor
government funds are not subject to garnishment

REPUBLIC VS VILLASOR
G.R. No. L-30671 54 SCRA 83 November 28, 1973
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I, THE PROVINCIAL SHERIFF
OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE CITY OF MANILA, THE CLERK OF
COURT, Court of First Instance of Cebu, P. J. KIENER CO., LTD., GAVINO UNCHUAN, AND INTERNATIONAL
CONSTRUCTION CORPORATION, respondents

Facts:
The case was filed by the Republic of the Philippines requesting to nullify the ruling of The Court of First Instance in Cebu in
garnishing the public funds allocated for the Arm Forces of the Philippines.

A decision was rendered in Special Proceedings in favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and
International Construction Corporation, and against the petitioner herein, confirming the arbitration award in the amount of
P1,712,396.40, subject of Special Proceedings. The respondent Honorable Guillermo P. Villasor, issued an Order declaring the
said decision final and executory, directing the Sheriffs of Rizal Province, Quezon City and Manila to execute the said decision.
The corresponding Alia Writ of Execution was issued. On the strength of the aforementioned Alias Writ of Execution, the
Provincial Sheriff of Rizal served Notices of Garnishment with several Banks. The funds of the Armed Forces of the
Philippines on deposit with Philippine Veterans Bank and PNB are public funds duly appropriated and allocated for the
payment of pensions of retirees, pay and allowances of military and civilian personnel and for maintenance and operations of
the AFP.

Petitioner, filed prohibition proceedings against respondent Judge Villasor for acting in excess of jurisdiction with grave abuse
of discretion amounting to lack of jurisdiction in granting the issuance of a Writ of Execution against the properties of the AFP,
hence the notices and garnishment are null and void.

Issues:
1. Whether or not the state can be sued without its consent.
2. Whether or not the notice of garnishment issued by Judge Villasor is valid.

Discussions:
1. The provision of Sec 3 Article XVI declares that “the State may not be sued without its consent”. This provision is
merely a recognition of the sovereign character of the State and express an affirmation of the unwritten rule insulating
it from the jurisdiction of the courts of justice. Another justification is the practical consideration that the demands and
inconveniences of litigation will divert time and resources of the State from the more pressing matters demanding its
attention, to the prejudice of the public welfare.
2. As a general rule, whether the money is deposited by way of general or special deposit, they remain government funds
and are not subject to garnishment. An exception of the rule is a law or ordinance that has been enacted appropriating a
specific amount to pay a valid government obligation.

Rulings:
1. It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well
as its government is immune from suit unless it gives its consent. A sovereign is exempt from suit, not because of any
formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against
the authority that makes the law on which the right depends. A continued adherence to the doctrine of non-suability is
not to be deplored for as against the inconvenience that may cause private parties, the loss of government efficiency
and the obstacle to the performance of its multifarious functions are far greater is such a fundamental principle were
abandoned and the availability of judicial remedy were not thus restricted.
2. What was done by respondent Judge is not in conformity with the dictates of the Constitution. From a logical and
sound sense from the basic concept of the non-suability of the State, public funds cannot be the object of a garnishment
proceeding even if the consent to be sued had been previously granted and the state liability adjudged. Disbursements
of public funds must be covered by the corresponding appropriation as required by law. The functions and public
services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from
their legitimate and specific objects, as appropriated by law.
 M. H. WYLIE and CAPT. JAMES WILLIAMS, Petitioners, v. AURORA I. RARANG and THE HONORABLE
INTERMEDIATE APPELLATE COURT, Respondents.

SYLLABUS

1. POLITICAL LAW; STATE IMMUNITY FROM SUIT; BASIS AND JUSTIFICATION FOR ENFORCEMENT OF
DOCTRINE. — In the case of United States of America v. Guinto (182 SCRA 644 [1990]), we discussed the principle of the
state immunity from suit as follows: "The rule that a state may not be sued without its consent, now expressed in Article XVI,
Section 3, of the 1987 Constitution, is one of the generally accepted principles of international law that we have adopted as part
of the law of our land under Article II, Section 2. . . . Even without such affirmation, we would still be bound by the generally
accepted principles of international law under the doctrine of incorporation. Under this doctrine, as accepted by the majority of
states, such principles are deemed incorporated in the law of every civilized state as a condition and consequence of its
membership in the society of nations. Upon its admission to such society, the state is automatically obligated to comply with
these principles in its relations with other states. As applied to the local state, the doctrine of state immunity is based on the
justification given by Justice Holmes that ‘there can be no legal right against the authority which makes the law on which the
right depends.’ (Kawanakoa v. Polybank, 205 U.S. 349) There are other practical reasons for the enforcement of the doctrine. In
the case of the foreign state sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par
in parem, non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another. A contrary
disposition would, in the language of a celebrated case, ‘unduly vex the peace of nations.’ (Da Haber v. Queen of Portugal, 17
Q.B. 171)

2. ID.; ID.; PROHIBITED SUITS; GENERAL RULE; EXCEPTIONS; QUALIFICATION OF RULES. — While the doctrine
appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the
state for acts allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials
will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to
pay the damages awarded against them, the suit must be regarded as against the state itself although it has not been formally
impleaded. (Garcia v. Chief of Staff, 16 SCRA 120) In such a situation, the state may move to dismiss the complaint on the
ground that it has been filed without its consent. The doctrine is sometimes derisively called ‘the royal prerogative of
dishonesty’ because of the privilege it grants the state to defeat any legitimate claim against it by simply invoking its non-
suability. That is hardly fair, at least in democratic societies, for the state is not an unfeeling tyrant unmoved by the valid claims
of its citizens. In fact, the doctrine is not absolute and does not say the state may not be sued under any circumstance. On the
contrary, the rule says that the state may not be sued without its consent, which clearly imports that it may be sued if it consents.
The consent of the state to be sued may be manifested expressly or impliedly. Express consent may be embodied in a general
law or a special law. Consent is implied when the state enters into a contract it itself commences litigation. . . . The above rules
are subject to qualification. Express consent is effected only by the will of the legislature through the medium of a duly enacted
statute. (Republic v. Purisima, 78 SCRA 470) We have held that not all contracts entered into by the government will operate as
a waiver of its non-suability; distinction must be made between its sovereign and proprietary acts. (United States of America v.
Ruiz, 136 SCRA 487) As for the filing of a complaint by the government, suability will result only where the government is
claiming affirmative relief from the defendant. (Lim v. Brownell, 107 Phil. 345)"

3. ID.; ID.; IMMUNITY FROM SUIT OF UNITED STATES AND ITS PERSONNEL STATIONED IN PHILIPPINE
TERRITORY; NATURE AND EXTENT; WAIVER OF IMMUNITY. — "In the case of the United States of America, the
customary rule of international law on state immunity is expressed with more specificity in the RP-US Bases Treaty. Article III
thereof provides as follows: ‘It is mutually agreed that the United States shall have the rights, power and authority within the
bases which are necessary for the establishment, use, operation and defense thereof or appropriate for the control thereof and all
the rights, power and authority within the limits of the territorial waters and air space adjacent to, or in the vicinity of, the bases
which are necessary to provide access to them or appropriate for their control.’." . . It bears stressing at this point that the above
observations do not confer on the United States of America a blanket immunity for all acts done by it or its agents in the
Philippines. Neither may the other petitioners claim that they are also insulated from suit in this country merely because they
have acted as agents of the United States in the discharge of their official functions. There is no question that the United States
of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its
proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver
may be implied. This was our ruling in United States of America v. Ruiz, (136 SCRA 487) where the transaction in question
dealt with the improvement of the wharves in the naval installation at Subic Bay. As this was a clearly governmental function,
we held that the contract did not operate to divest the United States of its sovereign immunity from suit.
4. ID.; ID.; ID.; MERE ASSERTION OF NON-SUABILITY NOT GROUND FOR SUMMARY DISMISSAL OF CHARGES.
— The other petitioners in the cases before us all aver they have acted in the discharge of their official functions as officers or
agents of the United States. However, this is a matter of evidence. The charges against them may not be summarily dismissed
on their mere assertion that their acts are imputable to the United States of America, which has not given its consent to be sued.
In fact, the defendants are sought to be held answerable for personal torts in which the United States itself is not involved. If
found liable, they and they alone must satisfy the judgment."cralaw virtua1aw library

5. ID.; ID.; ID.; TORTS AND CRIMES NOT COVERED BY IMMUNITY AGREEMENT. — Pursuing the question further,
does the grant of rights, power, and authority to the United States under the RP - US Bases Treaty cover immunity of its officers
from crimes and torts? Our answer is No. Killing a person in cold blood while on patrol duty, running over a child while driving
with reckless imprudence on an official trip, or slandering a person during office hours could not possibly be covered by the
immunity agreement. Our laws and, we presume, those of the United States do not allow the commission of crimes in the name
of official duty.

6. ID.; ID.; PUBLIC OFFICIALS PERSONALLY ACCOUNTABLE FOR ULTRA VIRES ACTS; IMMUNITY FROM SUIT
NOT GRANT OF PRIVILEGED STATUS. — The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991] gives the law on
immunity from suit of public officials: "The general rule is that public officials can be held personally accountable for acts
claimed to have been performed in connection with official duties where they have acted ultra vires or where there is showing
of bad faith. . . . "Moreover, the petitioner’s argument that the immunity proviso under Section 4(a) of Executive Order No. 1
also extends to him is not well-taken. A mere invocation of the immunity clause does not ipso facto result in the charges being
automatically dropped. . . . . "Immunity from suit cannot institutionalize irresponsibility and non-accountability nor grant a
privileged status not claimed by any other official of the Republic. "Where the petitioner exceeds his authority as Solicitor
General, acts in bad faith, or, as contended by the private respondent, ‘maliciously conspir(es) with the PCGG commissioners in
persecuting respondent Enrile by filing against him an evidently baseless suit in derogation of the latter’s constitutional rights
and liberties,’ there can be no question that a complaint for damages does not confer a license to persecute or recklessly injure
another. The actions governed by Articles 19, 20, 21, and 32 of the Civil Code on Human Relations may be taken against public
officers or private citizens alike. . . ."cralaw virtua1aw library

7. CIVIL LAW; DAMAGES; "FAULT" OR NEGLIGENCE INCLUDES CRIMINAL ACTS. — Article 2176 of the Civil
Code prescribes a civil liability for damages caused by a person’s act or omission constituting fault or negligence, to wit:
"Article 2176. Whoever by act or omission, causes damage to another, there being fault or negligence is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter." "Fault" or "negligence" in this Article covers not only acts "not
punishable by law" but also acts criminal in character, whether intentional or voluntary or negligent." (Andamo v. Intermediate
Appellate Court, 191 SCRA 195 [1990]).

8. ID.; ID.; MORAL DAMAGES RECOVERABLE IN CASE OF LIBEL, SLANDER OR OTHER DEFAMATION;
ALLEGATION OF FORGERY A DEFAMATION. — Article 2219(7) of the Civil Code provides that moral damages may be
recovered in case of libel, slander or any other form of defamation. In effect, the offended party in these cases is given the right
to receive from the guilty party moral damages for injury to his feelings and reputation in addition to punitive or exemplary
damages. (Occena v. Icamina, 181 SCRA 328 [1990]. In another case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72 [1963],
we ruled that the allegation of forgery of documents could be a defamation, which in the light of Article 2219(7) of the Civil
Code could by analogy be ground for payment of moral damages, considering the wounded feelings and besmirched reputation
of the defendants.

9. ID.; ID.; DEFAMATION ESTABLISHED IN CASE AT BAR. — Indeed the imputation of theft contained in the POD dated
February 3, 1978 is a defamation against the character and reputation of the private Respondent. Petitioner Wylie himself
admitted that the Office of the Provost Marshal explicitly recommended the deletion of the name Auring if the article were
published. The petitioners, however, were negligent because under their direction they issued the publication without deleting
the name "Auring." Such act or omission is ultra vires and cannot be part of official duty. It was a tortious act which ridiculed
the private Respondent.

DECISION

GUTIERREZ, JR., J.:

The pivotal issue in this petition centers on the extent of the "immunity from suit" of the officials of a United States Naval Base
inside Philippine territory.

In February, 1978, petitioner M. H. Wylie was the assistant administrative officer while petitioner Capt. James Williams was
the commanding officer of the U. S. Naval Base in Subic Bay, Olongapo City. Private respondent Aurora I. Rarang was an
employee in the Office of the Provost Marshal assigned as merchandise control guard.

M. H. Wylie, in his capacity as assistant administrative officer of the U.S. Naval Station supervised the publication of the "Plan
of the Day" (POD) which was published daily the US Naval Base station. The POD featured important announcements,
necessary precautions, and general matters of interest to military personnel. One of the regular features of the POD was the
"action line inquiry." On February 3, 1978, the POD published, under the "NAVSTA ACTION LINE INQUIRY" the
following:jgc:chanrobles.com.ph

"Question: I have observed that Merchandise Control inspector/inspectress are (sic) consuming for their own benefit things they
have confiscate from Base Personnel. The observation is even more aggravated by consuming such confiscated items as
cigarettes and food stuffs PUBLICLY. This is not to mention ‘Auring’ who is in herself, a disgrace to her division and to the
Office of the Provost Marshal. In lieu of this observation, may I therefore, ask if the head of the Merchandise Control Division
is aware of this malpractice?chanrobles.com : virtual law library

Answer: Merchandise Control Guards and all other personnel are prohibited from appropriating confiscated items for their own
consumption or use. Two locked containers are installed at the Main Gate area for deposit of confiscated items and the OPM
evidence custodian controls access to these containers.

Merchandise Control Guards are permitted to eat their meals at their worksite due to heavy workload. Complaints regarding
merchandise control guards procedure or actions may be made directly at the Office of the Provost Marshal for immediate and
necessary action. Specific dates and time along with details of suspected violations would be most appreciated. Telephone 4-
3430/4-3234 for further information or to report noted or suspected irregularities. Exhibits E & E-1." (Rollo, pp. 11-12)

The private respondent was the only one who was named "Auring" in the Office of the Provost Marshal. That the private
respondent was the same "Auring" referred to in the POD was conclusively proven when on February 7, 1978, petitioner M. H.
Wylie wrote her a letter of apology for the "inadvertent" publication. The private respondent then commenced an action for
damages in the Court of First Instance of Zambales (now Regional Trial Court) against M. H. Wylie, Capt. James Williams and
the U. S. Naval Base. She alleged that the article constituted false, injurious, and malicious defamation and libel tending to
impeach her honesty, virtue and reputation exposing her to public hatred, contempt and ridicule; and that the libel was published
and circulated in the English language and read by almost all the U. S. Naval Base personnel. She prayed that she be awarded
P300,000.00 as moral damages exemplary damages which the court may find proper; and P50,000.00 as attorney’s fees.

In response to the complaint, the defendants filed a motion to dismiss anchored on three grounds:chanrobles.com : virtual law
library

"1. Defendants M. H. Wylie and Capt. James Williams acted in the performance of their official functions as officers of the
United States Navy and are, therefore, immune from suit;

2. The United States Naval Base is an instrumentality of the US government which cannot be sued without its consent; and

3. This Court has no jurisdiction over the subject matter as well as the parties in this case." (Record on Appeal, pp. 133-134)

The motion was, however, denied.

In their answer, the defendants reiterated the lack of jurisdiction of the court over the case.

In its decision, the trial court ruled that the acts of defendants M. H. Wylie and Capt. James Williams were not official acts of
the government of the United States of America in the operation and control of the Base but personal and tortious acts which are
exceptions to the general rule that a sovereign country cannot be sued in the court of another country without its consent. In
short, the trial court ruled that the acts and omissions of the two US officials were not imputable against the US government but
were done in the individual and personal capacities of the said officials. The trial court dismissed the suit against the US Naval
Base. The dispositive portion of the decision reads as follows:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants jointly and severally, as
follows:chanrob1es virtual 1aw library

1) Ordering defendants M. H. Wylie and Capt. James Williams to pay the plaintiff Aurora Rarang the sum of one hundred
thousand (100,000.00) pesos by way of moral and exemplary damages;

2) Ordering defendants M. H. Wylie and Capt. James Williams to pay the plaintiff the sum of thirty thousand (P30,000.00)
pesos by way of attorney’s fees and expenses of litigation; and

3) To pay the costs of this suit.

Counterclaims are dismissed.

Likewise, the suit against the U. S. Naval Base is ordered dismissed." (Record on Appeal, p. 154)

On appeal, the petitioners reiterated their stance that they are immune from suit since the subject publication was made in their
official capacities as officers of the U. S. Navy. They also maintained that they did not intentionally and maliciously cause the
questioned publication.cralawnad

The private respondent, not satisfied with the amount of damages awarded to her, also appealed the trial court’s decision.

Acting on these appeals, the Intermediate Appellate Court, now Court of Appeals, modified the trial court’s decision, to
wit:jgc:chanrobles.com.ph

"WHEREFORE, the judgment of the court below is modified so that the defendants are ordered to pay the plaintiff, jointly and
severally, the sum of P175,000.00 as moral damages and the sum of P60,000.00 as exemplary damages. The rest of the
judgment appealed from is hereby affirmed in toto. Costs against the defendants-appellants." (Rollo, p. 44)

The appellate court denied a motion for reconsideration filed by the petitioners.

Hence, this petition.

In a resolution dated March 9, 1987, we gave due course to the petition.

The petitioner persist that they made the questioned publication in the performance of their official functions as administrative
assistant, in the case of M. H. Wylie, and commanding officer, in the case of Capt. James Williams of the US Navy assigned to
the U. S. Naval Station, Subic Bay, Olongapo City and were, therefore, immune from suit for their official actions.

In the case of United States of America v. Guinto (182 SCRA 644 [1990]), we discussed the principle of the state immunity
from suit as follows:jgc:chanrobles.com.ph

"The rule that a state may not be sued without its consent, now expressed in Article XVI, Section 3, of the 1987 Constitution, is
one of the generally accepted principles of international law that we have adopted as part of the law of our land under Article II,
Section 2."cralaw virtua1aw library
x x x

Even without such affirmation, we would still be bound by the generally accepted principles of international law under the
doctrine of incorporation. Under this doctrine, as accepted by the majority of states, such principles are deemed incorporated in
the law of every civilized state as a condition and consequence of its membership in the society of nations. Upon its admission
to such society, the state is automatically obligated to comply with these principles in its relations with other states.

As applied to the local state, the doctrine of state immunity is based on the justification given by Justice Holmes that ‘there can
be no legal right against the authority which makes the law on which the right depends.’ ((Kawanakoa v. Polybank, 205 U.S.
349) There are other practical reasons for the enforcement of the doctrine. In the case of the foreign state sought to be
impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet imperium. All states
are sovereign equals and cannot assert jurisdiction over one another. a contrary disposition would, in the language of a
celebrated case, ‘unduly vex the peace of nations.’ (Da Haber v. Queen of Portugal, 17 Q. B. 171)

While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed
against officials of the state for acts allegedly performed by them in the discharge of their duties. the rule is that if the judgment
against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of
the amount needed to pay the damages awarded against them, the suit must be regarded as against the state itself although it has
not been formally impleaded. (Garcia v. Chief of Staff, 16 SCRA 120) In such a situation, the state may move to dismiss the
complaint on the ground that it has been filed without its consent.

The doctrine is sometimes derisively called ‘the royal prerogative of dishonesty’ because of the privilege it grants the state to
defeat any legitimate claim against it by simply invoking its non-suability. That is hardly fair, at least in democratic societies,
for the state is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine is not absolute and does
not say the state may not be sued under any circumstance. On the contrary, the rule says that the state may not be sued without
its consent, which clearly imports that it may be sued if it consents.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

The consent of the state to be sued may be manifested expressly or impliedly. Express consent may be embodied in a general
law or a special law. Consent is implied when the state enters into a contract it itself commences litigation.
x x x

The above rules are subject to qualification. Express consent is effected only by the will of the legislature through the medium
of a duly enacted statute. (Republic v. Purisima, 78 SCRA 470) We have held that not all contracts entered into by the
government will operate as a waiver of its non-suability; distinction must be made between its sovereign and proprietary acts.
(United States of America v. Ruiz, 136 SCRA 487) As for the filing of a complaint by the government, suability will result only
where the government is claiming affirmative relief from the defendant. (Lim v. Brownell, 107 Phil. 345)" (at pp. 652-655).

In the same case we had opportunity to discuss extensively the nature and extent of immunity from suit of United States
personnel who are assigned and stationed in Philippine territory, to wit:jgc:chanrobles.com.ph

"In the case of the United States of America, the customary rule of international law on state immunity is expressed with more
specificity in the RP-US Bases Treaty. Article III thereof provides as follows:chanrob1es virtual 1aw library

‘It is mutually agreed that the United States shall have the rights, power and authority within the bases which are necessary for
the establishment, use, operation and defense thereof or appropriate for the control thereof and all the rights, power and
authority within the limits of the territorial waters and air space adjacent to, or in the vicinity of, the bases which are necessary
to provide access to them or appropriate for their control.’

The petitioners also rely heavily on Baer v. Tizon, (57 SCRA 1) along with several other decisions, to support their position that
they are not suable in the cases below, the United States not having waived its sovereign immunity from suit. It is emphasized
that in Baer, the Court held:chanrob1es virtual 1aw library

‘The invocation of the doctrine of immunity from suit of a foreign state without its consent is appropriate. More specifically,
insofar as alien armed forces is concerned, the starting point is Raquiza v. Bradford, a 1945 decision. In dismissing a habeas
corpus petition for the release of petitioners confined by American army authorities, Justice Hilado, speaking for the Court,
cited Coleman v. Tennessee, where it was explicitly declared: ‘It is well settled that a foreign army, permitted to march through
a friendly country or to be stationed in it, by permission of its government or sovereign, is exempt from the civil and criminal
jurisdiction of the place.’ Two years later, in Tubb and Tedrow v. Griess, this Court relied on the ruling in Raquiza v. Bradford
and cited in support thereof excepts from the works of the following authoritative writers: Vattel, Wheaton, Hall, Lawrence,
Oppenheim, Westlake, Hyde, and McNair and Lauterpacht. Accuracy demands the clarification that after the conclusion of he
Philippine-American Military Bases Agreement, the treaty provisions should control on such matter, the assumption being that
there was a manifestation of the submission to jurisdiction on the part of the foreign power whenever appropriate. More to the
point is Syquia v. Almeda Lopez, where plaintiffs as lessors sued the Commanding General of the United States Army in the
Philippines, seeking the restoration to them of the apartment buildings they owned leased to the United States armed forces
station in the Manila area. a motion to dismiss on the ground of non-suability was filed and upheld by respondent Judge. The
matter was taken to this Court in a mandamus proceeding. It failed. It was the ruling that respondent Judge acted correctly
considering that the ‘action must be considered as one against the U.S. Government.’ The opinion of Justice Montemayor
continued: ‘It is clear that the courts of he Philippines including the Municipal Court of Manila have no jurisdiction over the
present case for unlawful detainer. The question of lack of jurisdiction was raised and interposed at the very beginning of the
action. The U.S. Government has not given its consent to the filing of this suit which is essentially against her, though not in
name. Moreover, this is not only a case of a citizen filing a suit against his own Government without the latter’s consent but it is
of a citizen filing an action against a foreign government without said government’s consent, which renders more obvious the
lack of jurisdiction of the courts of his country. The principles of law behind this rule are so elementary and of such general
acceptance that we deem it unnecessary to cite authorities in support thereof.’
x x x

It bears stressing at this point that the above observations do not confer on the United States of America a blanket immunity for
all acts done by it or its agents in the Philippines. Neither may the other petitioners claim that they are also insulated from suit in
this country merely because they have acted as agents of the United States in the discharge of their official functions.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-
suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign
or governmental capacity that no such waiver may be implied. This was our ruling in United States of America v. Ruiz, (136
SCRA 487) where the transaction in question dealt with the improvement of the wharves in the naval installation at Subic Bay.
As this was a clearly governmental function, we held that the contract did not operate to divest the United States of its sovereign
immunity from suit. In the words of Justice Vicente Abad Santos:chanrob1es virtual 1aw library

‘The traditional rule of immunity excepts 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 imperii. The
restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in Western
Europe.
x x x

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 concent 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
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.’

The other petitioners in the cases before us all aver they have acted in the discharge of their official functions as officers or
agents of the United States. However, this is a matter of evidence. The charges against them may not be summarily dismissed
on their mere assertion that their acts are imputable to the United States of America, which has not given its consent to be sued.
In fact, the defendants are sought to be held answerable for personal torts in which the United States itself is not involved. If
found liable, they and they alone must satisfy the judgment." (At pp. 655-658)

In the light of these precedents, we proceed to resolve the present case.

The POD was published under the direction and authority of the commanding officer, U.S. Naval Station Subic Bay. The
administrative assistant, among his other duties, is tasked to prepare and distribute the POD. On February 3, 1978, when the
questioned article was published in the POD, petitioner Capt. James Williams was the commanding officer while petitioner
M.H. Wylie was the administrative assistant of the US Naval Station of Subic bay.

The NAVSTA ACTION LINE INQUIRY is a regular feature of the POD. It is a telephone answering device in the office of the
Administrative Assistant. The Action Line is intended to provide personnel access to the Commanding Officer on matters they
feel should be brought to his attention for correction or investigation. The matter of inquiry may be phoned in or mailed to the
POD. (TSN, September 9, 1980, pp. 12-13, Jerry Poblon) According to M. H. Wylie, the action line naming "Auring" was
received about three (3) weeks prior to its being published in the POD on February 3, 1978. It was forwarded to Rarang’s office
of employment, the Provost Marshal, for comment. The Provost Marshal office’s response." . . included a short note stating that
if the article was published, to remove the name." (Exhibit 8-A, p. 5) The Provost Marshal’s response was then forwarded to the
executive officer and to the commanding officer for approval. The approval of the commanding officer was forwarded to the
office of the Administrative Assistant for inclusion in the POD. A certain Mrs. Dologmodin, a clerk typist in the office of the
Administrative Assistant prepared the smooth copy of the POD. Finally, M. H. Wylie, the administrative assistant signed the
smooth copy of the POD but failed to notice the reference to "Auring" in the action line inquiry. (Exh. 8-A, pp. 4-5, Questions
Nos. 14-15)
There is no question, therefore, that the two (2) petitioners actively participated in screening the features and articles in the POD
as part of their official functions. Under the rule that U.S. officials in the performance of their official functions are immune
from suit, then it should follow that the petitioners may not be held liable for the questioned publication.

It is to be noted, however, that the petitioners were sued in their personal capacities for their alleged tortious acts in publishing a
libelous article.

The question, therefore, arises - are American naval officers who commit a crime or tortious act while discharging official
functions still covered by the principle of state immunity from suit? Pursuing the question further, does the grant of rights,
power, and authority to the United States under the RP-US Bases Treaty cover immunity of its officers from crimes and torts?
Our answer is No.

Killing a person in cold blood while on patrol duty, running over a child while driving with reckless imprudence on an official
trip, or slandering a person during office hours could not possibly be covered by the immunity agreement. Our laws and, we
presume, those of the United States do not allow the commission of crimes in the name of official duty.

The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991] gives the law on immunity from suit of public
officials:jgc:chanrobles.com.ph

"The general rule is that public officials can be held personally accountable for acts claimed to have been performed in
connection with official duties where they have acted ultra vires or where there is showing of bad faith.chanrobles law library
x x x

"Moreover, the petitioner’s argument that the immunity proviso under Section 4(a) of Executive Order No. 1 also extends to
him is not well-taken. A mere invocation of the immunity clause does not ipso facto result in the charges being automatically
dropped.

"In the case of Presidential Commission on Good Government v. Peña (159 SCRA 556 [1988] then Chief Justice Claudio
Teehankee, added a clarification of the immunity accorded PCGG officials under Section 4(a) of Executive Order No. 1 as
follows:jgc:chanrobles.com.ph

"‘With respect to the qualifications expressed by Mr. Justice Feliciano in his separate opinion, I just wish to point out two
things: First, the main opinion does not claim absolute immunity for he members of the Commission. The cited section of
Executive Order No. 1 provides the Commission’s members immunity from suit thus: ‘No civil action shall lie against the
Commission or any member thereof for anything done or omitted in the discharge of the task contemplated by this order.’ No
absolute immunity like that sought by Mr. Marcos in his Constitution for himself and his subordinates is herein involved. It is
understood that the immunity granted the members of the Commission by virtue of the unimaginable magnitude of its task to
recover the plundered wealth and the State’s exercise of police power was immunity from liability for damages in the official
discharge of the task granted the members of the Commission much in the same manner that judges are immune from suit in the
official discharge of the functions of their office. . . . (at pp. 581-582).
x x x

"Immunity from suit cannot institutionalize irresponsibility and non-accountability nor grant a privileged status not claimed by
any other official of the Republic. (id., at page 586)

"Where the petitioner exceeds his authority as Solicitor General, acts in bad faith, or, as contended by the private respondent,
‘maliciously conspir(es) with the PCGG commissioners in persecuting respondent Enrile by filing against him an evidently
baseless suit in derogation of the latter’s constitutional rights and liberties’ (Rollo, p. 417), there can be no question that a
complaint for damages does not confer a license to persecute or recklessly injure another. The actions governed by Articles 19,
20, 21 and 32 of the Civil Code on Human Relations may be taken against public officers or private citizens alike. . . ." (pp.
289-291).

We apply the same ruling to this case.

The subject article in US Newsletter POD dated February 3, 1978 mentions a certain "Auring" as." . . a disgrace to her division
and to the Office of the Provost Marshal." The same article explicitly implies that Auring was consuming and appropriating for
herself confiscated items like cigarettes and foodstuffs. There is no question that the Auring alluded to in the Article was the
private respondent as she was the only Auring in the Office of the Provost Marshal. Moreover, as a result of this article, the
private respondent was investigated by her supervisor. Before the article came out, the private respondent had been the recipient
of commendations by her superiors for honesty in the performance of her duties.

It may be argued that Captain James Williams as commanding officer of the naval base is far removed in the chain of command
from the offensive publication and it would be asking too much to hold him responsible for everything which goes wrong on the
base. This may be true as a general rule. In this particular case, however, the records show that the offensive publication was
sent to the commanding officer for approval and he approved it. The factual findings of the two courts below are based on the
records. The petitioners have shown no convincing reasons why our usual respect for the findings of the trial court and the
respondent court should be withheld in this particular case and why their decisions should be reversed.

Article 2176 of the Civil Code prescribes a civil liability for damages caused by a person’s act or omission constituting fault or
negligence, to wit:jgc:chanrobles.com.ph

"Article 2176. Whoever by act or omission, causes damage to another, there being fault or negligence is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter."cralaw virtua1aw library

"Fault" or "negligence" in this Article covers not only acts "not punishable by law" but also acts criminal in character, whether
intentional or voluntary or negligent." (Andamo v. Intermediate Appellate Court, 191 SCRA 195 [1990]).

Moreover, Article 2219(7) of the Civil Code provides that moral damages may be recovered in case of libel, slander or any
other form of defamation. In effect, the offended party in these cases is given the right to receive from the guilty party moral
damages for injury to his feeling and reputation in addition to punitive or exemplary damages. (Occena v. Icamina, 181 SCRA
328 [1990]. In another case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72 [1963], we ruled that the allegation of forgery of
documents could be a defamation, which in the light of Article 2219(7) of the Civil Code could by analogy be ground for
payment of moral damages, considering the wounded feelings and besmirched reputation of the defendants.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

Indeed the imputation of theft contained in the POD dated February 3, 1978 is a defamation against the character and reputation
of the private Respondent. Petitioner Wylie himself admitted that the Office of the Provost Marshal explicitly recommended the
deletion of the name Auring if the article were to be published. The petitioners, however, were negligent because under their
direction they issued the publication without deleting the name "Auring." Such act or omission is ultra vires and cannot be part
of official duty. it was a tortious act which ridiculed the private Respondent. As a result of the petitioner’s act, the private
respondent, according to the record, suffered besmirched reputation, serious anxiety, wounded feeling and social humiliation,
specially so, since the article was baseless and false. The petitioners, alone, in their personal capacities are liable for the
damages they caused the private Respondent.

WHEREFORE, the petition is hereby DISMISSED. The questioned decision and resolution of the then Intermediate Appellate
Court, now Court of Appeals, are AFFIRMED.

USA vs Ruiz
Doctrine of Immunity from Suit

USA VS RUIZ
G.R. No. L-35645 136 scra 487 May 22, 1985
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.

Facts:
This is a petition to review, set aside certain orders and restrain perpetually the proceedings done by Hon. Ruiz for lack of
jurisdiction on the part of the trial court.
The United States of America had a naval base in Subic, Zambales. The base was one of those provided in the Military Bases
Agreement between the Philippines and the United States. Sometime in May, 1972, the United States invited the submission of
bids for a couple of repair projects. Eligio de Guzman land Co., Inc. responded to the invitation and submitted bids. Subsequent
thereto, the company received from the US two telegrams requesting it to confirm its price proposals and for the name of its
bonding company. The company construed this as an acceptance of its offer so they complied with the requests. The company
received a letter which was signed by William I. Collins of Department of the Navy of the United States, also one of the
petitioners herein informing that the company did not qualify to receive an award for the projects because of its previous
unsatisfactory performance rating in repairs, and that the projects were awarded to third parties. For this reason, a suit for
specific performance was filed by him against the US.

Issues:
Whether or not the US naval base in bidding for said contracts exercise governmental functions to be able to invoke state
immunity.

Discussions:
The traditional role of the state immunity exempts a state from being sued in the courts of another state without its consent or
waiver. This rule is necessary consequence of the principle of independence and equality of states. However, the rules of
international law are not petrified; they are continually 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. The restrictive
application of State immunity is now the rule in the United States, the United Kingdom and other states in western Europe.

Rulings:
Yes. The Supreme Court held that 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.

The restrictive application of state immunity is proper only when the proceedings arise out of commercial transactions of the
foreign sovereign. Its commercial activities of economic affairs. A state may be 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.

PHILIPPINE NATIONAL RAILWAYS v. IAC, GR No. 70547, 1993-01-22

Facts:
a collision of a passenger express train of defendant Philippine National Railways, (PNR)... and a passenger bus of
Baliwag Transit, Inc... upon reaching the railroad crossing at Barrio Balungao, Calumpit, Bulacan... g... ot stalled and was
hit by defendant's express train causing damages to plaintiff's bus and its passengers, eighteen (18) of whom died and
fifty-three (53) others suffered physical injuries.
Plaintiff alleging that the proximate cause of the collision was the negligence and imprudence of defendant PNR and its
locomotive engineer, Honorio Cirbado, in operating its passenger train in a busy intersection without any bars,...
semaphores, signal lights, flagman or switchman to warn the public of approaching train that would pass through the
crossing The defendants, in their Answer traversed the material allegation of the Complaint and as... affirmative defense
alleged that the collision was caused by the negligence, imprudence and lack of foresight of plaintiff's bus driver, Romeo
Hughes. At the pre-trial conference... on a partial stipulation of facts and issues
1. That plaintiff is a duly constituted corporation registered with the Securities and Exchange Commission engaged
in the business of transportation and operating public utility buses for the public
2. That defendant Philippine National Railways is a purely government owned and controlled corporation duly
registered and existing by virtue of Presidential Decree No. 741, with capacity to sue and be sued, and is likewise
engaged in transporting passengers and cargoes by... trains and buses
Issues:
whether the Philippine National Railways enjoys immunity from suit
Ruling:
Section 4 of Republic Act No. 4156 as amended by Republic Act No. 6366:
"SEC. 4. General Powers -- The Philippine National Railways shall have the following general powers:
(a) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to
the attainment of the purpose of the corporation; and
(b) Generally, to exercise all powers of a railroad corporation under the Corporation law."... in conjunction with Section
2(b) of Presidential Decree No. 741:
"(b) To own or operate railroad transways, bus lines, trucklines, subways, and other kinds of land transportation, vessels,
and pipelines, for the purpose of transporting for consideration, passengers, mail and property between any points in
the Philippines;"

Thus, respondent court utilized the doctrine of implied powers announced in National Airports Corporation vs. Teodoro,
Sr. and Philippine Airlines, Inc. (91 Phil. 203 [1952]), to the effect that the power to sue and be sued is implicit from the
faculty to transact private... business. At any rate, respondent court characterized the railroad company as a private
entity created not to discharge a governmental function but, among other things, to operate a transport service which is
essentially a business concern, and thus barred from invoking immunity... from suit.
respondent court agreed with the conclusion reached by the trial court that the absence of a crossing bar, signal light,
flagman or switchman to warn the public of an approaching train constitutes negligence per the pronouncement of this
Court in Lilius vs. Manila Railroad Company (59 Phil 758 [1934]).

Concerning the exercise of diligence normally expected of an employer in the selection and supervision of its employees,
respondent court expressed the view that PNR was remiss on this score since it allowed Honorio Cabardo, who finished
only primary education and became an... engineer only through sheer experience, to operate the locomotive, not to
mention the fact that such plea in avoidance was not asserted in the answer and was thus belatedly raised on appeal.
"The Manila Railroad Company, the PNR's predecessor, as a common carrier, was not immune from suit under Act No.
1510, its charter.

The PNR Charter, Republic Act No. 4156, as amended by Republic Act No. 6366 and Presidential Decree No. 741,
provides that the PNR is a government instrumentality under government ownership during its 50-year term, 1964 to
2014. It is under the Office of the President of the Philippines. Republic Act No. 6366 provides:

'SECTION 1-a. Statement of policy. - The Philippine National Railways, being a factor for socio-economic development
and growth, shall be a part of the infrastructure program of the government and as such shall remain in and under
government ownership during its... corporate existence. The Philippine National Railways must be administered with the
view of serving the interests of the public by providing them the maximum of service and, while aiming at its greatest
utility by the public, the economy of operation must be ensured so that... service can be rendered at the minimum
passenger and freight prices possible.'

A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and
practical ground that there can be no legal right as against the authority that makes the law on which the right depends'
The correct rule is that 'not all government entities, whether corporate or noncorporate, are immune from suits.
Immunity from suit is determined by the character of the objects for which the entity was organized
The point is that when the government enters into a commercial business it abandons its sovereign capacity and is to be
treated like any other private corporation... cited in Manila Hotel Employees Association vs.
Manila Hotel Company, et al., 73 Phil. 374, 388). 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.'
'When the State acts in its proprietary capacity, it is amenable to all the rules of law which bind private individuals.'
'There is not one law for the sovereign and another for the subject, but when the sovereign engages in business and the
conduct of business enterprises, and contracts with individuals, whenever the contract in any form comes before the
courts, the rights and obligation of the... contracting parties must be adjusted upon the same principles as if both
contracting parties were private persons. Both stand upon equality before the law, and the sovereign is merged in the
dealer, contractor and suitor'
G.R. No. 73919

NOCON, J.:
This is a petition for review on certiorari to annul and set aside the decision of the then
Intermediate Appellate Court dated February 27, 1986[1] affirming the decision of the
then Court of First Instance of Nueva Ecija, Fourth Judicial District, Branch VII in Civil
Case No. 6244 dated November 25, 1981[2] in ordering petitioners to pay private
respondents damages, attorney's fees and the costs.
It appears on record that private respondents Andres Ventura, Antonio Fajardo,
Marcelo Fajardo, Alfonso Ventura and Florentino Ventura are leasehold tenants of a
parcel of land consisting of about five (5) hectares of riceland situated at Sitio Dagat-
dagatan, Sto. Rosario, Sta. Rosa, Nueva Ecija.
Sometime in 1967, petitioner National Irrigation Administration (NIA for brevity)
constructed an irrigation canal on the property of Isabel and Virginia Tecson which
passed through the private respondents' landholdings as said irrigation canal traverses
the Cinco-Cinco Creek which abuts said landholding. The irrigation canal has two (2)
outlets which provide private respondents' landholdings with water coming from said
canal and at the same time serve to drain the excess water of said landholdings.
On February 13, 1975, private respondents filed a complaint for the abatement of
nuisance with damages against petitioners NIA and/or the Administrator of the
National Irrigation Administration alleging that the two (2) outlets constructed on both
sides of the irrigation canal were not provided with gates to regulate the flow of water
from the canal to their landholdings which resulted to the inundation of said
landholdings causing the former to sustain damages consisting in the destruction of the
planted palay crops and also prevented them from planting on their landholdings.
After trial on the merits, a decision was rendered by the court below on November 25,
1981, the pertinent portion of which reads as follows:
"In view of the foregoing, the Court finds the complaint meritorious. However, since
there were typhoons and plant pests that reduced the harvests of the plaintiffs and that
there were benefits that accrued to the plaintiffs by reason of said irrigation canal, the
civil liability of the defendant should naturally be reduced.
"WHEREFORE, judgement is hereby entered: 1) Ordering the defendant to pay to the
plaintiffs the sum of P35,000.00 representing damages; 2) Ordering defendant to pay
P5,000.00 for attorney's fees and the cost of the suit."[3]
Not satisfied with said decision, petitioners elevated the matter to the appellate court
which rendered a decision on February 27, 1986 affirming in toto the decision of the
trial court.
Hence, this petition. It is petitioners' position that the respondent appellate court erred
in affirming the decision of the trial court because NIA is immune from suit for quasi-
delict or tort and assuming NIA could be sued, it is not liable for tort since it did not act
through a special agent as required under paragraph 6, Article 2180 of the Civil Code of
the Philippines.
Petitioners are in error. As correctly ruled by the court below, the NIA "is not immune
from suit, by virtue of the express provision of P.D. No. 552."[4]
A reading of Section 2, sub-paragraph (f) of P.D. No. 552,[5] amending Republic Act No.
3601 shows the granting to NIA the power "to exercise all the powers of a corporation
under the Corporation Law, insofar as they are not inconsistent with the provisions of
this Act." Paragraph 4 of said law also provide that petitioner NIA may sue and be sued
in court for all kind of actions, whether contractual or quasi-contractual, in the
recovery of compensation and damages as in the instant case considering that private
respondents' action is based on damages caused by the negligence of petitioners. This
Court had previously held that "the National Irrigation Administration 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"[6] as it has its own assets and liabilities as well as its own corporate powers
to be exercised by a Board of Directors.
Paragraph 6, Article 2180 of the Civil Code of the Philippines states that:
"The State is responsible in like manner when it acts through a special agent; but not
when the damage has been caused by the official to whom the task done properly
pertains, in which case what is provided in article 2176 shall be applicable."
Article 2176 of said Code provides that:
"Whoever by act or omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter."
Thus, petitioners are liable for the damages caused by their negligent act. Said the trial
court:
"On the issue of negligence, plaintiffs through the testimonies of Andres Ventura,
Florentino Ventura and Prudencio Martin showed that the NIA constructed irrigation
canals on the landholding[s] of the plaintiffs by scrapping away the surface of the
landholding[s] to raise the embankment of the canal. As a result of the
said construction, in 1967 the landholdings of the plaintiffs were inundated with water.
Although it cannot be denied that the irrigation canal of the NIA is a boon to the
plaintiffs, the delay of almost 7 years in installing the safety measures such as check
gates, drainage[s], ditches and paddy drains has caused substantial damage to the
annual harvest of the plaintiffs. In fact, Engineer Garlitos, witness for the defendant
declared that these improvements were made only after the settlement of the claim of
Mrs. Virginia Tecson, which was sometime in 1976 or 1977, while the irrigation canal
was constructed in 1976 [1967]. The testimonies of the plaintiffs essentially
corroborated by a disinterested witness in the person of Barangay Captain
Prudencio Martin, proved that the landholdings of the complainants were inundated
when the NIA irrigation canal was constructed without safety devises thereby reducing
their annual harvest of 30 cavans per hectare (portions flooded). The failure [,]
therefore, of the NIA to provide the necessary safeguards to prevent the inundation of
plaintiffs' landholding[s] is the proximate cause of the damages to the poor farmers. On
the other hand, the defendant maintains that the cause of inundation of plaintiffs'
landholdings was the check gate of the Cinco-cinco creek known as Tombo check gate.
However, evidence showed that this check gate existed long before the NIA irrigation
canal was constructed and there were no complaints from the plaintiffs until the canal
of the NIA was built. The uncontested testimony of barrio captain Prudencio Martin
that the former name of the sitio where the plaintiffs' landholdings were located was
"Hilerang Duhat" but was changed to Sitio Dagat-dagatan because of the inundation
was not without justification."[7]
With regard to petitioners' contention that the respondent appellate court erred in
awarding damages to private respondents, We find said court's decision in accordance
with the evidence and the law. As correctly held by the appellate court:
"It has been established that the plaintiffs' landholdings were actually inundated. The
testimonies by all the plaintiffs with respect to the amount of the loss they suffered
were not impugned by any contradictory evidence of the defendant. To Our mind, these
testimonies are sufficient proof to make the grant of damages valid and proper.
Besides, the amount awarded by the lower court is but just and reasonable considering
the circumstances of the case."[8]
WHEREFORE, this petition for review on certiorari is hereby DENIED for lack of
merit.
SO ORDERED.
SECOND DIVISION

[G.R. No. 111357. June 17, 1997]

TRADERS ROYAL BANK, Petitioner, v. INTERMEDIATE APPELLATE COURT and HEIRS OF THE LATE JOSE C. TAYENGCO,
Respondents.

RESOLUTION

ROMERO, J.:

The factual aspects of this case have already been resolved by this Court in G.R. No. 63855,1 wherein we ruled the
deceased spouses Jose and Salvacion Tayengco to be the lawful owners of the properties under receivership, and G.R.
No. 60076,2 where we affirmed the validity of the appointment of petitioner Traders Royal Bank (TRB) as receiver
pendente lite.

In view of these rulings, the receivership proceeding was duly terminated. Thus, TRB rendered its final accounting of the
funds under receivership wherein it retained the amount of P219,016.24 as its receiver's fee, instead of turning over the
entire fund to the Tayengcos. The Regional Trial Court of Iloilo, Branch 5, in an order dated July 5, 1988, approved the
final accounting submitted by TRB, including the deduction of its fee from the fund under receivership.
The Tayengcos assailed said order before the Court of Appeals,3 contending that TRB's compensation should have been
charged against the losing party and not from the funds under receivership.

In resolving this issue the Court of Appeals,4 in its decision dated February 12, 1993, ruled that TRB cannot deduct its fee
from the funds under its receivership since this must be shouldered by the losing party or equally apportioned among
the parties-litigants. Consequently, TRB was ordered to return the P219,016.24 to the Tayengcos, and the losing parties,
Cu Bie, et al., were held solely liable for TRB's compensation.5 TRB filed a motion for reconsideration, but this was
denied by the appellate court in its resolution dated August 17, 1993.6chanroblesvirtuallawlibrary

In this appeal, TRB raises the following errors allegedly committed by the Court of Appeals:

1. The Hon. IAC (should be CA) erred when it rendered the judgment and Resolution ordering the return by TRB of
Receiver's Fee of P219,016.24 to the heirs of Jose Tayengco, as it reversed the Decision of the Supreme Court in the case
of Jose Tayengco vs. Hon. Ilarde, TRB, et al., GR. No. 60076, which ordered the Trial Court to "settle the account of the
receiver, TRB" to thereafter discharge the receiver and charged as cost against the losing party;

2. The Hon. IAC had no jurisdiction in CA-GR. 21423 and erred in knowingly taking cognizance and rendering the
judgment and resolution on the issue of the payment of receiver's fee to TRB since the same subject matter was already
within the jurisdiction of the Supreme Court in GR. No. 60076;

3. The Hon. IAC erred when it rendered the judgment and Resolution which reversed the final Supreme Court Decision in
GR. No. 60076 on the payment of the receiver's fee to TRB as it violated the Rule on "Bar by Final
Judgment".7(Underscoring supplied)

TRB's assignment of errors submits for resolution two vital issues: (1) Is the Court of Appeals decision dated February 12,
1993 barred by res judicata by virtue of our ruling in G.R. No. 60076 recognizing the propriety of TRB's appointment as
receiver? (2) Who is responsible for TRB's receiver's fee?

With respect to the first assigned error, we are not persuaded.

The elements of res judicata are: (1) The previous judgment has become final; (2) the prior judgment was rendered by a
court having jurisdiction over the matter and parties; (3) the first judgment was made on the merits; and (4) there was
substantial identity of parties, subject matter, and cause of action, as between the prior andsubsequent
actions.8chanroblesvirtuallawlibrary

The difference between the two causes of action is unmistakable. In G.R. No. 60076, the petition was for the annulment
of the trial court's order requiring Tayengco to render and submit an accounting of the rental of the buildings and
apartments, while C.A. G. R. CV No. 21423 was an appeal questioning the order of the trial court authorizing the
deduction by TRB of its compensation from the receivership funds. There is clearly no identity of causes of action here.
Clearly, the last element of res judicata is absent in the case at bar.

Procedural obstacles aside, we now answer the principal query posed in the instant petition.

Nobody questions the right of TRB to receive compensation. Section 8, Rule 59 of the Rules of Court, however, explicitly
provides for the manner in which it shall be paid for its services, to wit:

"SEC. 8. Termination of receivership; compensation of receiver.- Whenever the court, of its own motion or on that of
either party, shall determine that the necessity for a receiver no longer exists, it shall, after due notice to all interested
parties and hearing, settle the accounts of the receiver, direct the delivery of the funds and other property in his hands
to the persons adjudged entitled to receive them, and order the discharge of the receiver from further duty as such. The
court shall allow the receiver such reasonable compensation as the circumstances of the case warrant, to be taxed as
costs against the defeated party, or apportioned, as justice requires." (Underscoring supplied)
It is, therefore, clear that when the services of a receiver who has been properly appointed terminates, his
compensation is to be charged against the defeated party, or the prevailing litigant may be made to share the expense,
as justice requires. Consequently, the trial court's order approving TRB's compensation to be charged solely against the
funds under its receivership is without legal justification; hence, it was correctly reversed by the Court of Appeals.

IN VIEW OF THE FOREGOING, the decision appealed from is AFFIRMED. Costs against petitioner.

SO ORDERED.

Regalado, (Chairman), Mendoza, and Torres Jr., JJ., concur.

Puno, J., no part, due to relationship.

EN BANC
[ G.R. No. 94125, March 03, 1993 ]
MAYOR JESUS MIGUEL YULO, REPRESENTING THE MUNICIPALITY OF
CALAMBA, LAGUNA, PETITIONER, VS. THE CIVIL SERVICE
COMMISSION, APOLONIO A. ELASIGUE, AND TEOFILO G. MAMPLATA,
ET AL.,** RESPONDENTS.
DECISION
BIDIN, J.:
This petition seeks to set aside Resolution No. 89-939 dated December 7, 1989 and
Resolution No. 90-472 dated May 23, 1990 of respondent Civil Service Commission directing
petitioner Mayor Jesus Miguel Yulo of Calamba, Laguna to reinstate private respondents
Teofilo Mamplata, et al., and to pay their backwages.
On November 24, 1986, private respondent Apolonio A. Elasigue, Officer in-Charge of the
Municipality of Calamba, Laguna terminated the services of private respondents Mamplata
and forty three (43) other employees of said municipality based on the reorganizaton and
approval of the new staffing pattern thereof (Annex "A", p. 1; Rollo, p. 17).
Private respondents Mamplata and the other separated employees assailed the action of
respondent Elasigue before the Inter-Agency Review Committee created under Executive
Order No. 17 of the then President Corazon Aquino. Since the private respondents were not
removed pursuant to Executive Order No. 17 and there is no showing that the reorganization
was undertaken to circumvent the said statute, the Committee referred the case to the Merit
Systems Protection Board (MSPB) of respondent Civil Service Commission. Pending
disposition of the case by the MSPB, Elasigue lost in the mayoralty election in 1988 to
petitioner Yulo.
The MSPB, finding that there was no sufficient evidence to prove the guilt of private
respondents, ordered the reinstatement of Mamplata and twenty eight (28) other employees
and the payment of their backwages by the municipality (Rollo, p. 18).
Petitioner Yulo, as the elected mayor of Calamba, Laguna, filed a Motion for Reconsideration
but to no avail. On appeal, respondent Commission affirmed the decision of the MSPB. The
Motion for Reconsideration filed later on by petitioner was denied by respondent Commission
which upheld its earlier ruling but reduced the number of employees to be reinstated to
twenty one (21) (CSC Resolution No. 90-472, dated May 23, 1992), namely:
1. Teofilo Mamplata 12. Felipe Lazareto
2. Isagani Fameronag 13. Silvino Canillas
1/10/2020 [ G.R. No. 94125, March 03, 1993 ]
elibrary.judiciary.gov.ph/elibsearch 2/5
3. Teresita Ancheta 14. Leoncio Edrozo
4. Lourdes Coro 15. Benigno Alcantara
5. Elvira Arevale 16. Danilo Salustiano
6. Rodolfo Adato 17. Saturnino Centeno, Sr.*
7. Gertrudes Terzol 18. Fernando Ustaris
8. Maxima Palema 19. Elpidio Garcia
9. Lourdes Belolo 20. Ricardo Ferrer
10. Arturo Samiano 21. Rafael Alcantara
11. Bayas Bacobe
the reason being that during the pendency of the case before the MSPB and respondent
Commission, some were re-employed while two of the dismissed employees, Cresencia
Belarmino and Marcial Manila died. Their untimely death notwithstanding, respondent
Commission ordered the payment of their backwages up to the time of their respective
demise.
Hence, this petition.
The issue in this case is whether the removal of private respondents Mamplata, et al. from
office due to the reorganization and approval of a new staffing pattern of the
municipal government of Calamba is valid.

Petitioner maintains that the separation of private respondents was valid and in consonance
with Section 2, Article III of the Freedom Constitution which provides that:

"All elective and appointive officials under the 1973 Constitution shall continue in
office until otherwise provided by proclamation or executive order or upon the
designation or appointment and qualification of their successors, if such
appointment is made within the period of one year from February 25, 1986."

To further support this contention, petitioner cites this Court's ruling in Dario vs. Mison (176
SCRA 84 [1989]) wherein We held that:
"By its terms, the authority to remove public officials under the Provisional
Constitution ended on February 25, 1987, advanced by jurisprudence to February
2, 1987 xxx"
Therefore, petitioner argues, the removal of respondents Mamplata, et al., on November 24,
1986 was valid because the same was effected before the expiration of the period above
cited.
The argument is devoid of merit. In his narration of facts, petitioner himself admitted that
private respondents' services were terminated pursuant to the reorganization and approval
of the new staffing pattern of Calamba on November 3, 1986 (Rollo, pp. 4-5). Petitioner's
argument to the effect that respondents were separated from the service by virtue of the
Freedom Constitution or Executive Order No. 17 is palpably an afterthought. That is why
when the respondents appealed their dismissal to the Inter-Agency Review Committee
created under Executive Order No. 17, said Committee refused to take cognizance of said
appeal on the ground that the dismissal was not made pursuant to the Freedom Constitution
or Executive Order No. 17 and instead referred the case on appeal to the MSPB.
It is thus crystal clear that private respondents were not separated from the service based
on Section 2, Article III of the Freedom Constitution or Executive Order No. 17 implementing
the then basic law. On the contrary, their services were terminated as a "result of the
reorganization and approval of the new staffing pattern of the municipality of Calamba on
November 3, 1986" stated in the individual notices of termination served upon them by the
then OIC Mayor.
It is thus crystal clear that private respondents were not separated from the service based
on Section 2, Article III of the Freedom Constitution or Executive Order No. 17 implementing
the then basic law. On the contrary, their services were terminated as a "result of the
reorganization and approval of the new staffing pattern of the municipality of Calamba on
November 3, 1986" stated in the individual notices of termination served upon them by the
then OIC Mayor.
As aptly explained by the respondent Commission:
"The first ground, raised by appellant Yulo is devoid of merit. He argued that the
separation of said employees was in accordance with the Freedom Constitution of
1986 and the existing laws and jurisprudence on reorganization. It may be
reiterated here that the main reason why the then inter-agency Review
Committee refused to take cognizance of the instant case was because Mamplata
et al. were not removed pursuant to Executive Order No. 17. Said Executive Order
prescribed the rules and guidelines for the implementation of Section 2, Article III
of the Freedom Constitution. This declaration on the part of the Committee, in
essence, meant that said municipal employees were not separated from the
service under the Freedom Constitution thereby negating the very foundation of
Mayor Yulo's argument. Although, admittedly, there was a reorganization of the
Municipal Government of Calamba, Laguna, reorganization per se does not serve
as a license for the local chief executive to separate career municipal officials and
employees whimsically and indiscriminately. ‘Reorganization is improper or invalid
when effected without observing the prescribed priorities in retention and
separation, and without making a fair, just and correct evaluation of the personnel
concerned taking into account the relevant factors given’ [ABACA, Sisinio, et al.,
CSC Resolution dated September 20, 1988]" (CSC Resolution No. 89-939, p. 2;
Rollo, p. 18; underscoring supplied).
Petitioner Yulo's argument that private respondents were separated by virtue of the Freedom
Constitution is therefore erroneous.
Not only that. As records further indicate, the MSPB found that there was no sufficient
evidence to prove the guilt of private respondents. As to what were the charges levelled
against the dismissed employees, petitioner Yulo could merely insinuate that some of said
employees were of "questionable integrity". In support thereof, petitioner submitted sworn
statements to that effect (Exhs. "F" to "M"; Rollo, pp. 42-56), belatedly dated either Janury
24 or 30, 1990.
It is glaringly obvious, therefore, that at the time private respondents were dismissed from
the service on November 24, 1986, there was no evidence to substantiate the claim of
questionable integrity. Simply stated, respondents were removed without cause.
As this Court held in Dario v. Mison (supra ):
"At this point, we must distinguish removals from separations arising from
abolition of office (not by virtue of the Constitution) as a result of reorganization
carried out by reason of economy or to remove redundancy of operations. In the
1/10/2020 [ G.R. No. 94125, March 03, 1993 ]
elibrary.judiciary.gov.ph/elibsearch 4/5
latter case, the Government is obliged to prove good faith. In case of removal
undertaken to comply with clear and explicit constitutional mandates, the
Government is not hard put to prove anything, plainly and simply because the
Constitution allows it. (citing Ginson v. Municipality of Murcia, 157 SCRA 1 [1988]
and other cases)
Aside from petitioner's unproven allegation of "questionable integrity", neither has he shown
that respondents herein were removed for cause much less that the supposed reorganization
was undertaken on the ground of economy or redundancy. While there may be a decrease in
the number of positions, i.e., from 285 to 266 as a result of the reorganization, the number
of regular employees, on the other hand, increased from 231 to 263 brought about by the
appointment of forty-eight (48) new employees. As found by the MSPB, the separated
employees were holding permanent appointments at the time of their removal and as such,
they enjoy preference in reappointment to a similar position in the new staffing pattern
(Rollo, p. 21, citing CSC MC 5, s. 1988).
Be that as it may, it is undeniable that private respondents' employment with the
municipality was unlawfully terminated. On this score alone, the dismissed employees ought
to and must be reinstated. Illegal removal of career civil service employees in violation of
their constitutional right to security of tenure will not be condoned under the guise of
reorganization (Pari-an v. Civil Service Commission, 202 SCRA 772 [1991]).
Neither can we sustain petitioner's claim that the overt acts of Mamplata, et al. in filing their
separation clearances and accepting terminal leave benefits estop them from further claiming
reinstatement.
Incidentally, petitioner presented no evidence before the respondent Commission to prove
that private respondents have actually received their separation benefits. It is only at this
late instance when it opted to do so (Rollo, pp. 208-225).
In any event, receipt by private respondents of their separation benefits does not preclude
them from assailing the termination of their services and praying for their reinstatements
(Urgelio v. Osmeña, Jr., 10 SCRA 253 [1964]).
Petitioner finally argues that if the separation of Mamplata, et al. be declared illegal, the
consequent damage in the form of backwages among others, should be the personal liability
of private respondent Elasigue and not the innocent taxpayers of Calamba, Laguna.
Petitioner's argument cannot be sustained. It is a rule in this jurisdiction that the
government, whether national, provincial or municipal, shall be liable for the acts of its
officers or agents only when such officers or agents had acted strictly within the scope of
their authority as created, conferred and defined by law (See Mechem, Public Off. & Officers,
Secs. 82, 829, 830, 834). However, a public official may be liable in his personal 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 (Dumlao v. Court of Appeals, 114 SCRA 247
[1982]).
It is worth noting that respondent Elasigue terminated the subject employees as a result of
the reorganization and approval of the new staffing pattern of the municipality by the
Sangguniang Bayan of Calamba. Otherwise stated, Elasigue in terminating the services of
respondent employees acted in his official capacity in the performance of his official duty. In
the absence of any proof that a public officer has acted with malice or bad faith, he cannot
be charged with personal liability for damages that may thereafter result (Mabutol v. Pascual,
124 SCRA 867 [1983]). Indeed, municipal officers are liable for damages if they act
maliciously or wantonly, and if the work which they perform is done to injure an individual
rather than to discharge a public duty (Rama v. Court of Appeals, 148 SCRA 496 [1987]).
Such malice or bad faith on the part of a public officer in the performance of his duties must
be shown persuasively.
WHEREFORE, the petition is DISMISSED for lack of merit. Accordingly, the Municipality of
Calamba, Laguna is hereby ordered to REINSTATE the twenty (20) personnel named in CSC
Resolution No. 90-472 and pay their backwages equivalent to five (5) years (Cristobal v.
Melchor, 78 SCRA 175 [1977]; Ginzon v. Municipality of Murcia, 158 SCRA 1 [1988]) less the
amount of terminal pay received, it appearing from private respondents manifestation dated
January 11, 1993 that they are still jobless from the time of their removal from the service
up to the present.
SO ORDERED.
Narvasa, C.J., Cruz, Feliciano, Padilla, Griño-Aquino, Regalado, Davide, Jr., Romero

[CASE DIGEST] CIR v. CA and COMASERCO (G.R. No. 125355)

March 30, 2000

Commissioner of Internal Revenue, petitioner

CA and Commonwealth Management and Services Corporation, respondents

FACTS:

1. Commonwealth Management and Services Corp. (COMASERCO) is a corporation duly organized and existing under the
laws of the Philippines. It is an affiliate of Philippine American Life Insurance Co. (Philamlife), organized by the latter
to perform collection, consultative and other technical services, including functioning as an internal auditor, of
Philamlife and its other affiliates.
2. On January 24, 1992, the BIR issued an assessment to Commonwealth Management and Services Corp. (COMASERCO)
for deficiency value-added tax (VAT) amounting to P351,851.01, for taxable year 1988

3. On February 10, 1992, COMASERCO filed with the BIR, a letter-protest objecting to the latter's finding of deficiency
VAT. On August 20, 1992, the Commissioner of Internal Revenue sent a collection letter to COMASERCO demanding
payment of the deficiency VAT.

4. On September 29,1992, COMASERCO filed with the CTA a petition for review contesting the Commissioner's
assessment. Its arguments are as follows:

 The services it rendered to Philamlife and its affiliates, relating to collections, consultative and other technical
assistance, including functioning as an internal auditor, were on a "no-profit, reimbursement-of-cost-only" basis;
 That it was not engaged in the business of providing services to Philamlife and its affiliates and that it was
established to ensure operational orderliness and administrative efficiency of Philamlife and its affiliates, and not in
the sale of services; and
 That it was not profit-motivated, thus not engaged in business. In fact, it did not generate profit but suffered a
net loss in taxable year 1988. Since it was not engaged in business, it was not liable to pay VAT.

CTA: Denied COMASERCO's petition. Affirmed the Commissioner's deficiency VAT assessment for the year 1988.

CA: Reversed CTA ruling. Cancelled the assessment for deficiency VAT for the year 1988. The basis for the CA's ruling
was a prior ruling it made in another case involving COMASERCO, where it was held that COMASERCO was not liable to
pay fixed and contractor's tax for services rendered to Philamlife and its affiliates and as such was not engaged in
business of providing services to Philamlife and its affiliates.

Hence, the instant petition for review on certiorari by the Commissioner.

ISSUE:

Whether COMASERCO was engaged in the sale of services, and thus liable to pay VAT thereon.

HELD:

Petition granted. Reversed CA ruling. Reinstated CTA ruling. COMASERCO ordered to pay deficiency VAT as per the
assessment issued by the Commissioner for the taxable year 1988.

1. Who are the persons liable for VAT?

"Section 99, NIRC. Persons liable. - Any person who, in the course of trade or business, sells, barters or exchanges
goods, renders services, or engages in similar transactions and any person who imports goods shall be subject to the
value-added tax (VAT) imposed in Sections 100 to 102 of this Code.""

2. What does "in the course of trade or business" mean?

COMASERCO: The term "in the course of trade or business" requires that the "business" is carried on with a view to
profit or livelihood. In other words, the activities of the entity must be profit-oriented.

SC: Under Sec. 105 (Persons Liable) of R.A. No. 7716, or the Expanded VAT Law (EVAT), the phrase "in the course of
trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions
incidental thereto, by any person regardless of whether or not the person engaged therein is a nonstock, nonprofit
organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members of
their guests), or government entity.

This definition applies to all transactions even to those made prior to the enactment of the EVAT Law, which merely
stresses that even a nonstock, nonprofit organization or government entity is liable to pay VAT for the sale of goods
and services.

3. Are non-stock, nonprofit organizations or government entities (such as COMASERCO) liable to pay VAT for the sale
of goods and services?
COMASERCO: No, profit motive is material in ascertaining who to tax for purposes of determining liability for VAT.

SC: Yes, even a non-stock, non-profit, organization or government entity, is liable to pay VAT on the sale of goods or
services.

It is immaterial whether the primary purpose of a corporation indicates that it receives payments for services rendered
to its affiliates on a reimbursement-on-cost basis only, without realizing profit, for purposes of determining liability for
VAT on services rendered. As long as the entity provides service for a fee, remuneration or consideration, then the
service rendered is subject to VAT.

This contention finds support in BIR Ruling No. 010-98 issued by the Commissioner on February 5, 1998, which provides
that a domestic corporation that provided technical, research, management and technical assistance to its affiliated
companies and received payments on a reimbursement-of-cost basis, without any intention of realizing profit, was
subject to VAT on services rendered. In fact, even if such corporation was organized without any intention of realizing
profit, any income or profit generated by the entity in the conduct of its activities, was subject to income tax.

4. Is COMASERCO liable to pay VAT?

COMASERCO: Because COMASERCO is not motivated by profit, as defined by its primary purpose in the articles of
incorporation, stating that it is operating "only on reimbursement-of-cost basis, without any profit," it couldn't be said
that it is performing acts in the course of trade or business. Hence, it is not liable for the payment of VAT.

SC: The services rendered by COMASERCO to Philamlife and its affiliates are subject to VAT. The performance of all
kinds of services for others for a fee, remuneration or consideration is considered as sale of services subject to VAT.
(See items 1-3 in ratio.)

5. Can the CA's ruling in a prior case involving COMASERCO be made applicable in the instant case?

SC: No. The issue in the first case (i.e., whether COMASERCO is engaged in business to determine liability for the
payment of fixed and percentage taxes), is different from the present case, which involves COMASERCO's liability for
VAT.

Bacani vs Nacoco
Nonsuability doctrine

BACANI VS NACOCO
G.R. No. L-9657 100 Phil 471 November 29, 1956
LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs–Appellees,
NATIONAL COCONUT CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION and BOARD OF
LIQUIDATORS, Defendants–Appellants.

Facts:
Plaintiffs Bacani and Matto are both court stenographers assigned in Branch VI of the Court of First Instance of Manila.

During the pendency of a civil case in the said court, Francisco Sycip vs. National Coconut Corporation, Assistant Corporate
Counsel Federico Alikpala, counsel for Defendant, requested said stenographers for copies of the transcript of the stenographic
notes taken by them during the hearing. Plaintiffs complied with the request by delivering to Counsel Alikpala the needed
transcript containing 714 pages and thereafter submitted to him their bills for the payment of their fees.
The National Coconut Corporation (NACOCO) paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo A. Matoto
for said transcript at the rate of P1 per page. But the Auditor General required the plaintiffs to reimburse said amounts by virtue
of a Department of Justice circular which stated that NACOCO, being a government entity, was exempt from the payment of
the fees in question. For reimbursement to take place, it was further ordered that the amount of P25 per payday be deducted
from the salary of Bacani and P10 from the salary of Matoto.

Petitioners filed an action in Court countering that NACOCO is not a government entity within the purview of section 16, Rule
130 of the Rules of Court. On the other hand, the defendants set up a defense that NACOCO is a government entity within the
purview of section 2 of the Revised Administrative Code of 1917 hence, it is exempted from paying the stenographers’ fees
under Rule 130 of the Rules of Court.

Issues:
Whether or not National Coconut Corporation (NACOCO), which performs certain functions of government, make them a part
of the Government of the Philippines.

Discussions:
NACOCO is not considered a government entity and is not exempted from paying the stenographers’ fees under Rule 130 of the
Rules of Court.

Sec. 2 of the Revised Administrative Code defines the scope of the term “Government of the Republic of the Philippines”. The
term “Government” may be defined as “that institution or aggregate of institutions by which an independent society makes and
carries out those rules of action which are necessary to enable men to live in a social state, or which are imposed upon the
people forming that society by those who possess the power or authority of prescribing them” (U.S. vs. Dorr, 2 Phil., 332). This
institution, when referring to the national government, has reference to what our Constitution has established composed of three
great departments, the legislative, executive, and the judicial, through which the powers and functions of government are
exercised. These functions are twofold: constitute and ministrant. The former are those which constitute the very bonds of
society and are compulsory in nature; the latter are those that are undertaken only by way of advancing the general interests of
society, and are merely optional.
Rulings:
No. NACOCO do not acquire that status for the simple reason that they do not come under the classification of municipal or
public corporation. While NACOCO was organized for 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 given a corporate power separate and distinct from the government, as it was made subject to the provisions of the
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). 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.