Case 1:

UNITED STATES OF AMERICA and MAXINE BRADFORD, petitioners,

vs.
HON. LUIS R. REYES, as Presiding Judge of Branch 22, Regional Trial Court of Cavite,
and NELIA T. MONTOYA, respondents.
Facts:
Private respondent, hereinafter referred to as Montoya, is an American citizen who, at the time
material to this case, was employed as an identification (I.D.) checker at the U.S. Navy Exchange
(NEX) at the Joint United States Military Assistance Group (JUSMAG) headquarters in Quezon
City. She is married to one Edgardo H. Montoya, a Filipino-American serviceman employed by
the U.S. Navy and stationed in San Francisco, California. Petitioner Maxine Bradford,
hereinafter referred to as Bradford, is likewise an American citizen who was the activity
exchange manager at the said JUSMAG Headquarters.
As a consequence of an incident which occurred on 22 January 1987 whereby her body and
belongings were searched after she had bought some items from the retail store of the NEX
JUSMAG, where she had purchasing privileges, and while she was already at the parking area,
Montoya filed on 7 May 1987 a complaint with the Regional Trial Court of her place of
residence — Cavite — against Bradford for damages due to the oppressive and discriminatory
acts committed by the latter in excess of her authority as store manager of the NEX JUSMAG.
Montoya claimed that the search was conducted by another employee who told her that she had
to be searched because of the order of Bradford. Bradford allegedly told Montoya that the search
was necessary because on that day, searches were to be made on all JUSMAG employees.
Later, however, Montoya found out that she was the only one searched on that day. Thus, feeling
aggrieved, she filed a case against Bradford.
Bradford’s counsel filed a Motion to Dismiss saying that the suit is in effect a suit against the
USA, which is a foreign sovereign immune from suit without its consent. They contended that
Bradford, being a manager of the US Navy Exchange Branch at JUSMAG, she is also immune
from suit for the acts done by her in performance of her official functions under the Philippines-
United States Military Assistance Agreement of 1947 and Military Bases Agreement of 1947.
Under the agreement it states that, “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 and
operation and defense thereof or appropriate for the control thereof.” They further argued that
checking of purchases at the NEX is a routine procedure observed at base retail outlets to protect
and safeguard merchandise. Thus, Montoya’s suit will violate the agreement between the two
countries.
Montoya countered that the acts of Bradford were not in keeping with her functions and were
ultra vires. In effect, Bradford was acting in a personal capacity. Therefore, Bradford could not
claim state immunity. Montoya added the following contentions:
 1. Philippine courts are vested with jurisdiction over the case because Bradford is a civilian
employee who had committed the challenged act outside the U.S. Military Bases; such
act is not one of those exempted from the jurisdiction of Philippine courts; and
2. Philippine courts can inquire into the factual circumstances of the case to determine
whether or not Bradford had acted within or outside the scope of her authority.
Montoya added: “both the acts and person of Bradford are not exempt from the Philippine courts'
jurisdiction because (a) the search was conducted in a parking lot at Scout Borromeo, Quezon
City, outside the JUSMAG store and, therefore, outside the territorial control of the U.S. Military
Bases in the Philippines; (b) Bradford does not possess diplomatic immunity under Article 16(b)
of the 1953 Military Assistance Agreement creating the JUSMAG which provides that only the
Chief of the Military Advisory Group and not more than six (6) other senior members thereof
designated by him will be accorded diplomatic immunity; 35 and (c) the acts complained of do
not fall under those offenses where the U.S. has been given the right to exercise its jurisdiction
(per Article 13 of the 1947 Military Bases Agreement, as amended by the, Mendez-Blair Notes
of 10 August 1965).”
Issue: Can Bradford use the doctrine of State Immunity?
Ruling:
The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs. Court of
Appeals, 40 thus:
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. This latter provision
merely reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended
to manifest our resolve to abide by the rules of the international community.
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. 42 It must be noted, however, that
the rule is not so all-encompassing as to be applicable under all circumstances.
It is a different matter where the public official is made to account in his capacity as such for acts
contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar
in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al. 43 "Inasmuch as
the State authorizes only legal acts by its officers, unauthorized acts of government officials or
officers are not acts of the State, and an action against the officials or officers by one whose
rights have been invaded or violated by such acts, for the protection of his rights, is not a suit
against the State within the rule of immunity of the State from suit. In the same tenor, it has been
said that an action at law or suit in equity against a State officer or the director of a State
department on the ground that, while claiming to act or the State, he violates or invades the
personal and property rights of the plaintiff, under an unconstitutional act or under an assumption
of authority which he does not have, is not a suit against the State within the constitutional
provision that the State may not be sued without its consent." 44 The rationale for this ruling is
that the doctrinaire of state immunity cannot be used as an instrument for perpetrating an
injustice.
They state that the doctrine of immunity from suit will not apply and may not be invoked where
the public official is being sued in his private and personal capacity as an ordinary citizen. The
cloak of protection afforded the officers and agents of the government is removed the moment
they are sued in their individual capacity. This situation usually arises where the public official
acts without authority or in excess of the powers vested in him. It is a well-settled principle of
law that a public official may be liable in his personal private capacity for whatever damage he
may have caused by his act done with malice and in bad faith, or beyond the scope of his
authority or jurisdiction.
Case 2:
Holy See VS RTC
Facts: This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and
set aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court,
Branch 61, Makati, Metro Manila in Civil Case No. 90-183.
This petition arose from a controversy over a parcel of land consisting of 6,000 square meters
(Lot 5-A, Transfer Certificate of Title No. 390440) located in the Municipality of Parañaque,
Metro Manila and registered in the name of petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates of
Title Nos. 271108 and 265388 respectively and registered in the name of the Philippine Realty
Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent
to the sellers. Later, Licup assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose
as to who of the parties has the responsibility of evicting and clearing the land of squatters.
Complicating the relations of the parties was the sale by petitioner of Lot 5-A to Tropicana
Properties and Development Corporation (Tropicana)
Issue:
SC: Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as
the Holy See and not in the name of the Vatican City, one can conclude that in the Pope's own
view, it is the Holy See that is the international person.
The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The
Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the
Philippine government since 1957 (Rollo, p. 87). This appears to be the universal practice in
international relations
There are two conflicting concepts of sovereign immunity, each widely held and firmly
established. According to the classical or absolute theory, a sovereign cannot, without its
consent, be made a respondent in the courts of another sovereign. According to the newer or
restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or
acts jure imperii of a state, but not with regard to private acts or acts jure gestionis
The restrictive theory, which is intended to be a solution to the host of problems involving the
issue of sovereign immunity, has created problems of its own. Legal treatises and the decisions
in countries which follow the restrictive theory have difficulty in characterizing whether a
contract of a sovereign state with a private party is an act jure gestionis or an act jure imperiiThis
Court has considered the following transactions by a foreign state with private parties as acts jure
imperii: (1) the lease by a foreign government of apartment buildings for use of its military
officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of public bidding for the repair of
a wharf at a United States Naval Station (United States of America v. Ruiz, supra.); and (3) the
change of employment status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]).
On the other hand, this Court has considered the following transactions by a foreign state with
private parties as acts jure gestionis: (1) the hiring of a cook in the recreation center, consisting
of three restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at the John Hay
Air Station in Baguio City, to cater to American servicemen and the general public (United
States of America v. Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of
barber shops in Clark Air Base in Angeles City (United States of America v. Guinto, 182 SCRA
644 [1990]). The operation of the restaurants and other facilities open to the general public is
undoubtedly for profit as a commercial and not a governmental activity. By entering into the
employment contract with the cook in the discharge of its proprietary function, the United States
government impliedly divested itself of its sovereign immunity from suit.
In the absence of legislation defining what activities and transactions shall be considered
"commercial" and as constituting acts jure gestionis, we have to come out with our own
guidelines, tentative they may be.
Certainly, the mere entering into a contract by a foreign state with a private party cannot be the
ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the
foreign state is engaged in the activity in the regular course of business. If the foreign state is not
engaged regularly in a business or trade, the particular act or transaction must then be tested by
its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act
jure imperii, especially when it is not undertaken for gain or profit.
In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate
business, surely the said transaction can be categorized as an act jure gestionis. However,
petitioner has denied that the acquisition and subsequent disposal of Lot 5-A were made for
profit but claimed that it acquired said property for the site of its mission or the Apostolic
Nunciature in the Philippines. Private respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation
was made not for commercial purpose, but for the use of petitioner to construct thereon the
official place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire
property, real or personal, in a receiving state, necessary for the creation and maintenance of its
diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts.
20-22). This treaty was concurred in by the Philippine Senate and entered into force in the
Philippines on November 15, 1965
The issue of petitioner's non-suability can be determined by the trial court without going to trial
in the light of the pleadings, particularly the admission of private respondent. Besides, the
privilege of sovereign immunity in this case was sufficiently established by the Memorandum
and Certification of the Department of Foreign Affairs. As the department tasked with the
conduct of the Philippines' foreign relations (Administrative Code of 1987, Book IV, Title I, Sec.
3), the Department of Foreign Affairs has formally intervened in this case and officially certified
that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the
Philippines exempt from local jurisdiction and entitled to all the rights, privileges and immunities
of a diplomatic mission or embassy in this country (Rollo, pp. 156-157).
Case 3: SEAFDEC V. NLRC
FACTS OF THE CASE:
Two labor cases, docketed as RAB Case No. VI- 0156-86 and RAB case No. VI - 0214-86, were
filed by the herein private respondents against the petitioner, Southeast Asian Fisheries
Development Center (SEAFDEC), before the National Labor Relations Commission (NLRC),
Regional Arbitration Branch, Iloilo City. In these cases, the private respondents claim having
been wrongfully terminated from their employment by the petitioner.
The petitioner, contending to be an international inter-government organization, composed of
various Southeast Asian countries, filed a Motion to Dismiss, challenging the jurisdiction of the
public respondent in taking cognizance of the above cases.
The public respondent issued the assailed order denying the Motion to Dismiss. In due course, a
Motion for Reconsideration was interposed but the same, in an order, dated 07 January 1991,
was likewise denied.
Hence, the instant petition.
The private respondents, as well as respondent labor arbiter, allege that the petitioner is not
immune from suit and assuming that if, indeed, it is an international organization, it has,
however, impliedly, if not expressly, waived its immunity by belatedly raising the issue of
jurisdiction.
ISSUE:
Whether the petitioner is immune from suit. If yes, whether it is an international organization
that has impliedly, if not expressly, waived its immunity by belatedly raising the issue of
jurisdiction.
RULING OF THE SUPREME COURT:
We rule for the petitioner.
It is beyond question that petitioner SEAFDEC is an international agency enjoying diplomatic
immunity. This, we have already held in Southeast Asian Fisheries Development Center-
Aquaculture Department vs. National Labor Relations Commission, G.R. No. 86773.
Note from the said case : Petitioner Southeast Asian Fisheries Development
Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the
jurisdiction of public respondent NLRC.
It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia,
Japan, Kingdom of Laos, Malaysia, Republic of the Philippines, Republic of Singapore,
Kingdom of Thailand and Republic of Vietnam . . . .
ilalagay ko lang baka tanungin ni atty. libiran:
The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over
SEAFDEC-AQD in Opinion No. 139, Series of 1984 —
4. One of the basic immunities of an international organization is immunity from local
jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of
the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that the
subjection of such an organization to the authority of the local courts would afford a convenient
medium thru which the host government may interfere in their operations or even influence or
control its policies and decisions of the organization; besides, such objection to local jurisdiction
would impair the capacity of such body to discharge its responsibilities impartially on behalf of
its member-states. In the case at bar, for instance, the entertainment by the National Labor
Relations Commission of Mr. Madamba's reinstatement cases would amount to interference by
the Philippine Government in the management decisions of the SEARCA governing board; even
worse, it could compromise the desired impartiality of the organization since it will have to suit
its actuations to the requirements of Philippine law, which may not necessarily coincide with the
interests of the other member-states. It is precisely to forestall these possibilities that in cases
where the extent of the immunity is specified in the enabling instruments of international
organizations (jurisdictional immunity, is specified in the enabling instruments of international
organizations), jurisdictional immunity from the host country is invariably among the first
accorded.
Anent the issue of waiver of immunity, suffice it to say at the moment that the petitioner has
timely raised the issue of jurisdiction. While the petitioner did not question the public
respondent's lack of jurisdiction at the early stages of the proceedings, it, nevertheless, did so
before it rested its case and certainly well before the proceedings thereat had terminated.
Case 4:
Callado v IRRI
FACTS: Ernesto Callado, petitioner, was employed as a driver at the IRRI. One day while
driving an IRRI vehicle on an official trip to the NAIA and back to the IRRI, petitioner figured
in an accident.
Petitioner was informed of the findings of a preliminary investigation conducted by the IRRI's
Human Resource Development Department Manager. In view of the findings, he was charged
with:
1) Driving an institute vehicle while on official duty under the influence of liquor;
2) Serious misconduct consisting of failure to report to supervisors the failure of the vehicle
to start because of a problem with the car battery, and
3) Gross and habitual neglect of duties.
Petitioner submitted his answer and defenses to the charges against him. However, IRRI issued a
Notice of Termination to petitioner.
Thereafter, petitioner filed a complaint before the Labor Arbiter for illegal dismissal, illegal
suspension and indemnity pay with moral and exemplary damages and attorney's fees.
IRRI wrote the Labor Arbiter to inform him that the Institute enjoys immunity from legal process
by virtue of Article 3 of Presidential Decree No. 1620, 5 and that it invokes such diplomatic
immunity and privileges as an international organization in the instant case filed by petitioner,
not having waived the same.
While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an Order
issued by the Institute to the effect that "in all cases of termination, respondent IRRI waives its
immunity," and, accordingly, considered the defense of immunity no longer a legal obstacle in
resolving the case.
The NLRC found merit in private respondent's appeal and, finding that IRRI did not waive its
immunity, ordered the aforesaid decision of the Labor Arbiter set aside and the complaint
dismissed.
In this petition petitioner contends that the immunity of the IRRI as an international organization
granted by Article 3 of Presidential Decree No. 1620 may not be invoked in the case at bench
inasmuch as it waived the same by virtue of its Memorandum on "Guidelines on the handling of
dismissed employees in relation to P.D. 1620.
ISSUE: Whether IRRI waive its immunity from suit in this dispute which arose from an
employer-employee relationship.
RESOLUTION: No. IRRI's immunity from suit is undisputed.
Presidential Decree No. 1620, Article 3 provides:
Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil
and administrative proceedings, except insofar as that immunity has been expressly waived by
the Director-General of the Institute or his authorized representatives.
The Court upheld the constitutionality of the aforequoted law. A categorical recognition by the
Executive Branch of the Government that IRRI enjoy(s) immunities accorded to international
organizations, which determination has been held to be a political question conclusive upon the
Courts in order not to embarass a political department of Government.
The raison d'etre for these immunities is the assurance of unimpeded performance of their
functions by the agencies concerned.
The grant of immunity to IRRI is clear and unequivocal and an express waiver by its Director-
General is the only way by which it may relinquish or abandon this immunity.
On the matter of waiving its immunity from suit, IRRI had, early on, made its position clear the
Institute will not waive its diplomatic immunity. In the second place, petitioner's reliance on the
Memorandum with "Guidelines in handling cases of dismissal of employees in relation to P.D.
1620" dated July 26, 1983, is misplaced.
The cited 1983 memorandum is not a declaration of waiver for all cases. Certainly, said memo
cannot be considered as the express waiver by the Director General as contemplated by P.D.
1620, especially since the memo was issued by a former Director-General. At the very least, the
express declaration of the incumbent Director-general supersedes the 1983 memo and should be
accorded greater respect.
The memorandum, issued by the former Director-General, was meant for internal circulation and
not as a pledge of waiver in all cases arising from dismissal of employees. Moreover, the IRRI's
letter to the Labor Arbiter in the case at bench made in 1991 declaring that it has no intention of
waiving its immunity, at the very least, supplants any pronouncement of alleged waiver issued in
previous cases.
Case 5:
DFA v NLRC
The private respondent was dismissed by Asian Development Bank (ADB) for supposedly
conducting labor only contracting and in response, he filed a case for illegal dismissal before a
labor arbiter who ruled in favor of him and order his reinstatement and payment of back wages.
This decision was not appealed by ADB but instead referred the matter to DFA who then sought
the formal vacation of the judgment with the NLRC. The claim it primarily relied upon is lack of
jurisdiction due to ADB being granted immunity from suits in its charter and headquarters
agreement. The OSG ultimately commented that ADB was in fact immune and correct in
invoking its immunity.
The said charter states:
The Bank shall enjoy immunity from every form of legal process, except in cases arising out of,
or in connection with, the exercise of its powers to borrow money, to guarantee obligations, or to
buy and sell or underwrite the sale of securities.
And, with respect to certain officials of the bank, Section 44 of the agreement states:
Governors, other representatives of Members, Directors, the president, Vice-President and
executive officers as may be agreed upon between the Government and the Bank shall enjoy,
during their stay in the Republic of the Philippines in connection with their official duties with
the Bank:
(b) Immunity from legal process of every kind in respect of words spoken or written and all acts
done by them in their official capacity.
The above stipulations show that, except in the specified cases of borrowing and guarantee
operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys
immunity from legal process of every form. The Bank's officers, on their part, enjoy immunity in
respect of all acts performed by them in their official capacity.
Private respondent then argues that, by centering into service contracts, namely by contracting
him, ADB has descended to the level of an ordinary party to a commercial transaction giving rise
to a waiver of its immunity from suit.
Issue: Whether the judgment against ADB should not prosper by reason of its immunity?
Ruling:
It is a recognized principle of international law and under our system of separation of powers that
diplomatic immunity is essentially a political question and courts should refuse to look beyond a
determination by the executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the government then it is then
the duty of the courts to accept the claim of immunity upon appropriate suggestion by the
principal law officer of the government or other officer acting under his direction.
In view of the fact that the Asian Development Bank’s immunity being sustained by the
Department of Foreign Affairs, a continuous hearing of this case erodes the credibility of the
Philippine government before the international community.
The contention of the private respondent is also not tenable since entering into service contracts
cannot by itself be considered as not governmental, official, or public. The mere entering into a
private contract is only a test as to whether an inquiry shall be conducted rather the logical
question is whether the foreign state is engaged in the activity in regular course of business. If
the foreign state is not engaged regularly in a business or trade, the particular act or transaction
must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident
thereof, then it is an act jure imperit, especially when it is not undertaken for gain or profit.
The service contracts referred to by private respondent have not been intended by the ADB for
profit or gain but are official acts over which a waiver of immunity would not attack.
Procedural matters mentioned in the decision regarding invoking state immunity:
In Public International Law, when a state or international agency wishes to plead sovereign or
diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued
to convey to the court that said defendant is entitled to immunity.
In the Philippines, the practice is for the foreign government or the international organization to
first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But the
endorsement itself varies it can be requesting the Solicitor General to make suggestion to the
appropriate court that there is immunity on the part of the one immune or in short a member of
the executive must confirm to the courts that that particular party enjoys state immunity.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs
moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the
said Department to file its memorandum in support of petitioner's claim of sovereign immunity.

Case 6:
Municipality of San Fernando v. Judge Firme
A collision occurred involving a passenger jeepney, a gravel and sand truck and a dump truck of
the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to the impact,
several passengers of the jeepney including Laureano Baniña Sr. died as a result of the injuries
they sustained and four (4) others suffered varying degrees of physical injuries.
A Third Party Complaint against the petitioner and the driver of a dump truck of petitioner.
Petitioner raised affirmative defenses such as lack of cause of action, non-suability of the State,
prescription of cause of action and the negligence of the owner and driver of the passenger
jeepney as the proximate cause of the collision.
The respondent judge held the Municipality of San Fernando liable without resolving the issue
on state immunity

Issues:
1. Whether Local Government Units are suable.
2. Whether the Municipality of San Fernando should be held liable for damages.
Resolution:
1.
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of
the Constitution, to wit: "the State may not be sued without its consent”. The general rule is that
the State may not be sued except when it gives consent to be sued. Consent takes the form of
express or implied consent.
Express consent may be embodied in a general law or a special law. The standing consent of the
State to be sued in case of money claims involving liability arising from contracts is found in Act
No. 3083. A special law may be passed to enable a person to sue the government for an alleged
quasi-delict.
Consent is implied when the government enters into business contracts, thereby descending to
the level of the other contracting party, and also when the State files a complaint, thus opening
itself to a counterclaim.
Municipal corporations, for example, like provinces and cities, are agencies of the State when
they are engaged in governmental functions and therefore should enjoy the sovereign immunity
from suit. Nevertheless, they are subject to suit even in the performance of such functions
because their charter provided that they can sue and be sued. The Local Government Code (RA
7160) expressly provides that a local government unit can sue and be sued.

2.
A distinction should first be made between suability and liability. "Suability depends on the
consent of the state to be sued, liability on the applicable law and the established facts. The
circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it
can never be held liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does waive its sovereign
immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable."
For the torts committed by its employee, the test of liability of the municipality depends on
whether or not the driver, acting in behalf of the municipality, is performing governmental or
proprietary functions. The distinction of powers becomes important for purposes of determining
the liability of the municipality for the acts of its agents which result in an injury to third persons.
Although municipal corporations are suable because their charters grant them the
competence to sue and be sued they are generally not liable for torts committed by them in the
discharge of governmental functions and can be held answerable only if it can be shown that they
were acting in a proprietary capacity. In permitting such entities to be sued, the State merely
gives the claimant the right to show that the defendant was not acting in its governmental
capacity when the injury was committed or that the case comes under the exceptions recognized
by law. Failing this, the claimant cannot recover.
We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte,"the construction
or maintenance of roads in which the truck and the driver worked at the time of the accident are
admittedly governmental activities." In the absence of any evidence to the contrary, the
regularity of the performance of official duty is presumed. We rule that the driver of the dump
truck was performing duties or tasks pertaining to his office.
We arrive at the conclusion that the municipality cannot be held liable for the torts committed by
its regular employee, who was then engaged in the discharge of governmental functions.
Case 7:
Farolan v CTA

FACTS:

Bagong Buhay Trading imported 80 bales of screen net. The importation was declared through a
customs broker as 80 bales of screen net of 500 rolls with a gross weight of 12,777 kilograms
valued at $3,750.00 and classified under Tariff Heading No. 39.06-B of the Tariff and Customs
Code at 35% ad valorem. Since the customs examiner found the subject shipment reflective of
the declaration, Bagong Buhay paid the duties and taxes due in the amount of P11,350.00 which
was paid through the Bank of Asia under Official Receipt No. 042787 dated February 1, 1972.
Thereafter, the customs appraiser made a return of duty.

Acting on the strength of an information that the shipment consisted of "mosquito net" made of
nylon dutiable under Tariff Heading No. 62.02 of the Tariff and Customs Code, the Office of the
Collector of Customs ordered a re-examination of the shipment. A report on the re-examination
revealed that the shipment consisted of 80 bales of screen net, each bale containing 20 rolls or a
total of 1,600 rolls. Re-appraised, the shipment was valued at $37,560.00 or $10.15 per yard
instead of $.075 per yard as previously declared. Furthermore, the Collector of Customs
determined the subject shipment as made of synthetic (polyethylene) woven fabric classifiable
under Tariff Heading No. 51.04-B at 100% ad valorem. Thus, Bagong Buhay Trading was
assessed P272,600.00 as duties and taxes due on the shipment in question. Since the shipment
was also misdeclared as to quantity and value, the Collector of Customs forfeited the subject
shipment in favor of the government.

Bagong Buhay filed a petition asking for the release of the questioned goods which this Court
denied. After several motions for the early resolution of this case and for the release of goods and
in view of the fact that the goods were being exposed to the natural elements, we ordered the
release of the goods on June 2, 1986. Consequently, on July 26, 1986, Bagong Buhay posted a
cash bond of P149,443.36 to secure the release of 64 bales out of the 80 bales originally
delivered on January 30, 1972. Sixteen bales remain missing.

Bagong Buhay alleges that of the 143,454 yards (64 bales) released to Bagong Buhay, only
116,950 yards were in good condition and the 26,504 yards were in bad condition. Consequently,
it demands that the Bureau of Customs be ordered to pay for damages for the 43,050 yards it
actually lost.

ISSUE: May the Collector of Customs be held liable for actual damages that Bagong Buhay
sustained?

RESOLUTION: No, the Collector of Customs cannot be held liable for actual damages that
Bagong Buhay sustained with regard to its goods. Otherwise, to permit Bagong Buhay’s claim to
prosper would violate the doctrine of sovereign immunity. Since it demands that the
Commissioner of Customs be ordered to pay for actual damages it sustained, for which
ultimately liability will fall on the government, it is obvious that this case has been converted
technically into a suit against the state.
On this point, the political doctrine that "the state may not be sued without its consent,"
categorically applies. As an unincorporated government agency without any separate juridical
personality of its own, the Bureau of Customs enjoys immunity from suit. Along with the Bureau
of Internal Revenue, it is invested with an inherent power of sovereignty, namely, taxation. As an
agency, the Bureau of Customs performs the governmental function of collecting revenues which
is definitely not a proprietary function.

Thus, private respondent's claim for damages against the Commissioner of Customs must fail.

Case 8: City of Angeles v CA

Facts:

Timog Silangan Devt. Corporation donated 5% of the gross area of its medium-density
subdivision in favor of City of Angeles. This donation is pursuant to PD 1216 which requires the
subdivision developer to donate a portion of its subdivision to the city or municipality where it is
located. This donated property is to be devoted for non-buildable open spaces (parks,
playgrounds) for the benefit of the public, and outside the commerce of men. Under PD 1216,
Timog Silangan is obliged to donate 7% of its property to City of Angeles since its subdivision is
considered as medium-density.

In the Deed of Donation, Timog Silangan imposed the condition that the city government
should construct a sports complex thereon. Failure to observe this condition will cause the donor
to revoke said donation and recover the donated property with its improvements thereon.

City of Angeles constructed a drug rehabilitation facility instead. So, Timog Silangan
sued for revocation of the donation.

According to the City of Angeles, since the donor is mandated by law to donate a portion
of its subdivision to the city or municipality concerned, it has no right to impose the condition to
construct a sports complex thereon. It cannot prescribe any condition as to the use of the area
donated because the use of the open spaces is already governed by PD 1216. Therefore, said
condition is deemed not written.

Issue 1: Can the donor impose conditions on the said donation?

Held: YES, because the general law on donations does not prohibit the imposition of conditions
on a donation so long as the conditions are not illegal or impossible. Conditions may be imposed
so long as they are not contrary to law, morals, good customs, public order or public policy.
Also, the special law involved does not provide that donations made by the subdivision in favor
of the city or municipality should be unconditional.
 
Issue 2: Was the condition imposed valid?

Held: No, the condition was not valid. Timog Silangan was mandated by PD 1216 to donate 7%
of its subdivision to the city government to be designated as non-buildable open spaces (for
parks and playgrounds), but it only donated 5% of its area. As there is actually a deficiency in the
area donated, the whole property should be reserved for said parks and playgrounds; the sports
complex cannot be constructed thereon. Said sports complex could only be built if Timog
Silangan donated more than 7% of its gross area to the city government.
 
So, the donation is valid and subsisting, except for the condition to construct a sports complex on
the donated land. The condition was considered void.
 
(The SC ordered the demolition of the drug rehabilitation facility and to devote such property for
parks, playgrounds or other recreational use.)
 
Issue 3: Can Timog Silangan revoke the donation for the breach committed by City of Angeles?
Held: No.
 
Timog Silangan and the City of Angeles are considered in pari delicto because:
* Timog Silangan donated less than that required by law, and for agreeing to construct a sports
complex on such non-buildable area; and
*City of Angeles constructed a drug rehabilitation center on such non-buildable area.
 
Since the condition to construct a sports complex on the donated land is contrary to law (see
Issue 2), revokation of the donation and the recovery of the property cannot be done because:
*there was no valid stipulation that was breached; and
*the donated property was considered by PD 1216 as property beyond the commerce of men and
property of public dominion.

Notes:

PRESIDENTIAL DECREE NO. 1216

Defining "Open Space" In Residential Subdivisions And Amending Section 31 Of Presidential

Decree No. 957 Requiring Subdivision Owners To Provide Roads, Alleys, Sidewalks And
Reserve Open Space For Parks Or Recreational Use

Sec. 1. For purposes of this Decree, the term "open apace" shall mean an area reserved
exclusively for parks, playgrounds, recreational uses, schools, roads, places of worship,
hospitals, health centers, barangay centers and other similar facilities and amenities.
Case 9: Veterans Manpower v CA
FACTS:
RA. 5487("Private Security Agency Law") provides
SECTION 4. Who may Organize a Security or Watchman Agency. — Any Filipino citizen or a
corporation, partnership, or association, with a minimum capital of five thousand pesos, one
hundred per cent of which is owned and controlled by Filipino citizens may organize a security
or watchman agency: Provided, That no person shall organize or have an interest in, more than
one such agency except those which are already existing at the promulgation of this Decree: . . ."
(As amended by P.D. Nos. 11 and 100.)

"SECTION 17. Rules and Regulations by Chief, Philippine Constabulary. — The Chief of the
Philippine Constabulary (PC CHIEF), in consultation with the Philippine Association of
Detective and Protective Agency Operators, Inc. (PADPAO) and subject to the provision of
existing laws, is hereby authorized to issue the rules and regulations necessary to carry out the
purpose of this Act."
a Memorandum of Agreement was executed by PADPAO and the PC Chief, fixing the minimum
monthly contract rate per guard for eight (8) hours of security service per day at P2,255.00
within Metro Manila and P2,215.00 outside of Metro Manila.
A complaint was then filed with PADPAO accusing petitioner VETERANS of cut-throat
competition by undercutting its contract rate for security services rendered to the Metropolitan
Waterworks and Sewerage System (MWSS), charging said customer lower than the standard
minimum rates provided in the Memorandum of Agreement
PADPAO found VETERANS found guilty of cut-throat competition, hence, the PADPAO
Committee on Discipline recommended the expulsion of VMPSI from PADPAO and the
cancellation of its license to operate a security agency. The Philippine Constabulary Supervisor
Unit for Security and Investigation Agencies (PC-SUSIA) made similar findings and likewise
recommended the cancellation of VMPSI’s license.
As a result, PADPAO refused to issue a clearance/certificate of membership to VMPSI when it
requested one.
VETERANS then wrote the PC Chief requesting him to set aside or disregard the findings of
PADPAO and consider its application for renewal of its license, even without a certificate of
membership from PADPAO.
As the PC Chief did not reply, and VETERANS license was expiring, it filed a complaint against
the PC Chief and PC-SUSIA praying for the issuance a TRO to preserve the status quo,
enjoining the defendants, or any one acting in their place or stead, to refrain from committing
acts that would result in the cancellation or non-renewal of its license
ISSUE:
1. Whether or not VETERANS complaint against the PC Chief and PC-SUSIA is a suit
against the State without its consent?
YES. The State may not be sued without its consent (Article XVI, Section 3, of the 1987
Constitution).
"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." (Shauf vs CA)
2. Whether A public official may sometimes be held liable in his personal or private capacity?
YES. If he acts in bad faith, or beyond the scope of his authority or jurisdiction (Shauf v. Court
of Appeals, supra), however, since the acts for which the PC Chief and PC-SUSIA are being
called to account in this case, were performed by them as part of their official duties, without
malice, gross negligence, or bad faith, no recovery may be had against them in their private
capacities.
NOTES:
The correct test for the application of state immunity is not the conclusion of a contract by the
State but the legal nature of the act.
The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs.
Stated differently, a State may be said to have descended to the level of an individual and can
thus be deemed to have tacitly given its consent to be sued only when it enters into a BUSINESS
CONTRACT. It does not apply where the contract relates to the exercise of its functions.
Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be lightly
inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA 424). The
consent of the State to be sued must emanate from statutory authority, hence, from a legislative
act, not from a mere memorandum. MEMORANDUM DOES NOT CONSTITUTE AN
IMPLIED CONSENT BY THE STATE TO BE SUED.
Case 10:
M. H. WYLIE and CAPT. JAMES WILLIAMS, Petitioners, v. AURORA I. RARANG and
THE HONORABLE INTERMEDIATE APPELLATE COURT, Respondents.
Facts:
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”
"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?”
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.
The petitioners in this case then moved for the dismissal of the suit on the ground that they acted
in the performance of their duties and that the US Naval Base is an instrumentality of the US
government which cannot be sued without its consent. Therefore, they are immune from suit.
Issue: Are the petitioners of the case immune from suit?
Ruling:
The SC said that the principle of state immunity from suit is incorporated in the domestic laws of
the Philippines.
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.
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. The SC cited
many cases and concluded that the observations in the cases 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, 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.
Case 11: Republic v Feliciano
Facts:
On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First Instance
of Camarines Sur against the Republic of the Philippines, represented by the Land Authority, for
the recovery of ownership and possession of a parcel of land, consisting of four (4) lots with an
aggregate area of 1,364.4177 hectares, situated in the Barrio of Salvacion, Municipality of
Tinambac, Camarines Sur. Plaintiff alleged that he bought the property in question from Victor
Gardiola by virtue of a Contract of Sale dated May 31, 1952, followed by a Deed of Absolute
Sale on October 30, 1954; that Gardiola had acquired the property by purchase from the heirs of
Francisco Abrazado whose title to the said property was evidenced by an informacion posesoria
that upon plaintiff's purchase of the property, he took actual possession of the same, introduced
various improvements therein and caused it to be surveyed in July 1952, which survey was
approved by the Director of Lands on October 24, 1954; that on November 1, 1954, President
Ramon Magsaysay issued Proclamation No. 90 reserving for settlement purposes, under the
administration of the National Resettlement and Rehabilitation Administration (NARRA), a tract
of land situated in the Municipalities of Tinambac and Siruma, Camarines Sur, after which the
NARRA and its successor agency, the Land Authority, started sub-dividing and distributing the
land to the settlers; that the property in question, while located within the reservation established
under Proclamation No. 90, was the private property of plaintiff and should therefore be
excluded therefrom. Plaintiff prayed that he be declared the rightful and true owner of the
property in question consisting of 1,364.4177 hectares; that his title of ownership based on
informacion posesoria of his predecessor-in-interest be declared legal valid and subsisting and
that defendant be ordered to cancel and nullify all awards to the settlers
Issue: WON the Doctrine of Non-suability applies in this case.
SC: No. the doctrine is not applicable in this case. The plaintiff has impleaded the Republic of
the Philippines as defendant in an action for recovery of ownership and possession of a parcel of
land, bringing the State to court just like any private person who is claimed to be usurping a
piece of property. A suit for the recovery of property is not an action in rem, but an action in
personam.
By its caption and its allegation and prayer, the complaint is clearly a suit against the State,
which under settled jurisprudence is not permitted, except upon a showing that the State has
consented to be sued, either expressly or by implication through the use of statutory language too
plain to be misinterpreted.2 There is no such showing in the instant case. Worse, the complaint
itself fails to allege the existence of such consent. This is a fatal defect, 3 and on this basis alone,
the complaint should have been dismissed.
The failure of the petitioner to assert the defense of immunity from suit when the case was tried
before the court a quo, as alleged by private respondent, is not fatal. It is now settled that such
defense "may be invoked by the courts sua sponte at any stage of the proceedings
Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly. but
must be construed in strictissimi juris. 5Moreover, the Proclamation is not a legislative act. The
consent of the State to be sued must emanate from statutory authority. Waiver of State immunity
can only be made by an act of the legislative body.
Case 12: Meritt v Government of the Philippines
FACTS OF THE CASE:
Merrit was riding a motorcycle along Padre Faura Street when he collided with the ambulance of
the General Hospital. Merrit sustained severe injuries rendering him unable to return to work.
The legislature later enacted Act 2457 authorizing Merritt to file a suit against the Government in
order to fix the responsibility for the collision between his motorcycle and the ambulance of the
General Hospital, and to determine the amount of the damages, if any, to which he is entitled. As
the negligence which caused the collision is a tort committed by an agent or employee of the
Government, the inquiry at once arises whether the Government is legally-liable for the damages
resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
An Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and
authorizing the Attorney-General of said Islands to appear in said suit.
Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E.
Merritt, of Manila, for damages resulting from a collision between his motorcycle and the
ambulance of the General Hospital on March twenty-fifth, nineteen hundred and thirteen;
Whereas it is not known who is responsible for the accident nor is it possible to determine the
amount of damages, if any, to which the claimant is entitled; and
Whereas the Director of Public Works and the Attorney-General recommended that an Act be
passed by the Legislature authorizing Mr. E. Merritt to bring suit in the courts against the
Government, in order that said questions may be decided: Now, therefore,
By authority of the United States, be it enacted by the Philippine Legislature, that:
SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city
of Manila against the Government of the Philippine Islands in order to fix the responsibility for
the collision between his motorcycle and the ambulance of the General Hospital, and to
determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of
said collision, and the Attorney-General of the Philippine Islands is hereby authorized and
directed to appear at the trial on the behalf of the Government of said Islands, to defendant said
Government at the same.
SEC. 2. This Act shall take effect on its passage.
Enacted, February 3, 1915.
ISSUES:
1. Did the Government, in enacting the Act 2457, simply waive its immunity from suit or did it
also concede its liability to the plaintiff?
2. Is the Government liable for the negligent act of the driver of the ambulance?
HELD:
1. All admit that the Insular Government (the defendant) cannot be sued by an individual without
its consent. It is also admitted that the instant case is one against the Government. The consent of
the Government to be sued by the plaintiff was entirely voluntary on its part.
As to the scope of legislative enactments permitting individuals to sue the state where the cause
of action arises out of either fort or contract, the rule is stated in 36 Cyc., 915, thus: By
consenting to be sued a state simply waives its immunity from suit. It does not thereby concede
its liability to plaintiff, or create any cause of action in his favor, or extend its liability to any
cause not previously recognized. It merely gives a remedy to enforce a preexisting liability and
submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense.
2. Chief Justice Ruger remarks: "It must be conceded that the state can be made liable for
injuries arising from the negligence of its agents or servants, only by force of some positive
statute assuming such liability."
Under the Civil Code, the state is liable when it acts through a special agent, but not when the
damage should have been caused by the official to whom properly it pertained to do the act
performed. A special agent is one who receives a definite and fixed order or commission, foreign
to the exercise of the duties of his office if he is a special official. This concept does not apply to
any executive agent who is an employee of the acting administration and who on his own
responsibility performs the functions which are inherent in and naturally pertain to his office and
which are regulated by law and the regulations. The driver of the ambulance of the General
Hospital was not a special agent; thus the Government is not liable.
NOTE:
■ 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. (Art. 2180 par.
6, Civil Code)
■ The state is not responsible for the damages suffered by private individuals in consequence of
acts performed by its employees in the discharge of the functions pertaining to their office,
because neither fault nor even negligence can be presumed on the part of the state in the
organization of branches of public service and in the appointment of its agents. (Merritt vs.
Government of the Philippine Islands)
■ The State is not liable for the torts committed by its officers or agents whom it employs, except
when expressly made so by legislative enactment. The government does not undertake to
guarantee to any person the fidelity of the officers or agents whom it employs since that would
involve it in all its operations in endless embarrassments, difficulties and losses, which would be
subversive of the public interest.
*In determining the scope of this act, the court said:
Plaintiff claims that by the enactment of this law the legislature admitted liability on the part of
the state for the acts of its officers, and that the suit now stands just as it would stand between
private parties. It is difficult to see how the act does, or was intended to do, more than remove
the state's immunity from suit. It simply gives authority to commence suit for the purpose of
settling plaintiff's controversies with the estate. Nowhere in the act is there a whisper or
suggestion that the court or courts in the disposition of the suit shall depart from well established
principles of law, or that the amount of damages is the only question to be settled. The act
opened the door of the court to the plaintiff. It did not pass upon the question of liability, but left
the suit just where it would be in the absence of the state's immunity from suit. If the Legislature
had intended to change the rule that obtained in this state so long and to declare liability on the
part of the state, it would not have left so important a matter to mere inference, but would have
done so in express terms.
*And the court said:
This statute has been considered by this court in at least two cases, arising under different facts,
and in both it was held that said statute did not create any liability or cause of action against the
state where none existed before, but merely gave an additional remedy to enforce such liability
as would have existed if the statute had not been enacted.
*The statute we are discussing disclose no intention to create against the state a new and
heretofore unrecognized class of liabilities, but only an intention to provide a judicial tribunal
where well recognized existing liabilities can be adjudicated.
CONCLUSION:
It is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable
for the acts of its agents, officers and employees when they act as special agents and that the
chauffeur of the ambulance of the General Hospital was not such an agent.
Case 13: Froilan v Pan Oriental Shipping
FACTS:
On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a complaint against the
defendant-appellant, Pan Oriental Shipping Co., alleging that he purchased from the Shipping
Commission the vessel FS-197 for P200,000, paying P50,000 down and agreeing to pay the
balance in installments.
To secure the payment of the balance of the purchase price, he executed a chattel mortgage of
said vessel in favor of the Shipping Commission. However, for various reasons, among them the
non-payment of the installments, the Shipping Commission took possession of said vessel and
considered the contract of sale cancelled. The Shipping Commission chartered and delivered said
vessel to the defendant-appellant Pan Oriental Shipping Co. subject to the approval of the
President of the Philippines.
Froilan appealed the action of the Shipping Commission to the President of the Philippines and,
in its meeting on August 25, 1950, the Cabinet restored him to all his rights under his original
contract with the Shipping Commission. He had repeatedly demanded from the Pan Oriental
Shipping Co. the possession of the vessel in question but the latter refused to do so.
He, therefore, prayed that, upon the approval of the bond accompanying his complaint, a writ of
replevin be issued for the seizure of said vessel with all its equipment and appurtenances, and
that after hearing, he be adjudged to have the rightful possession thereof.
On February 3, 1951, the lower court issued the writ of replevin prayed for by Froilan and by
virtue thereof the Pan Oriental Shipping Co. was divested of its possession of said vessel. On
March 1, 1951, Pan Oriental Shipping Co. filed its answer denying the right of Froilan to the
possession of the said vessel; it alleged that the action of the Cabinet on August 25, 1950,
restoring Froilan to his rights under his original contract with the Shipping Commission was null
and void for Froilan had not complied with the condition precedent imposed by the Cabinet for
the restoration of his rights to the vessel under the original contract.
On November 10, 1951, after the leave of the lower court had been obtained, the intervenor-
appellee, Government of the Republic of the Philippines, filed a complaint in intervention
alleging that Froilan had failed to pay to the Shipping Commission (which name was later
changed to Shipping Administration) the balance due on the purchase price of the vessel in
question.
It, therefore, prayed that Froilan be declared to be without any rights on said vessel and the
amounts he paid thereon forfeited or alternately that the said vessel be delivered to the Board of
Liquidators in order that the intervenor may have its chattel mortgage extrajudicially foreclosed
in accordance with the provisions of the Chattel Mortgage Law; and that pending the hearing on
the merits, the said vessel be delivered to its owner.
On November 29, 1951, the Pan Oriental Shipping Co. filed an answer to the complaint in
intervention alleging that the Government of the Republic of the Philippines was obligated to
deliver the vessel in question to it by virtue of a contract of bareboat charter with option to
purchase executed on June 16, 1949, by the latter in favor of the former; it also alleged that it had
made necessary and useful expenses of the vessel and claimed the right of retention of the vessel.
It, therefore, prayed that, if the Republic vessel, to comply with its obligations of delivering to
it(Pan Oriental Shipping Co.) or causing its delivery by recovering it from Froilan.
ISSUE: Whether the Government of the Philippines is immune from suit.
HELD:By filing its complaint in intervention the Government in effect waived its right of
nonsuability.
"The immunity of the state from the suits does not deprive it of the right to sue private parties in
its own courts. The state as plaintiff may avail itself of the different forms of actions open to
private litigants. In short, by taking the initiative in an action against a private party, the state
surrenders its privileged position and comes down to the level of the defendant. The latter
automatically acquires, within certain limits, the right to set up whatever claims and other
defense he might have against the state.

Case 14: USA v Ruiz

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. It
opened bidding for repairing the damage on the offender system and shorelines caused by a
typhoon. Eligio de Guzman & Co., Inc. Participated on said bidding and received from the
United States two telegrams requesting it to confirm its price proposals and for the name of its
bonding company. The company complied with the requests.
Later on, the company received a letter which was signed by Wilham I. Collins, Director,
Contracts Division, Naval Facilities Engineering Command, Southwest Pacific, Department of
the Navy of the United States, who is one of the petitioners herein. The letter said that the
company did not qualify to receive an award for the projects because of its previous
unsatisfactory performance rating on a repair contract for the sea wall at the boat landings of the
U.S. Naval Station in Subic Bay and for that reason the project shall be referred to a third party.
This prompted the company to file a civil action for damages and that it be allowed to perform
the project. In response, the defendants in the civil action entered its special appearance and
alleges lack of jurisdiction by claiming that as a sovereign nation it cannot be sued since it did
not give its consent. The local court ruled that consent was given when USA entered into a
private contract with the company as a result of the bidding and this resolution prompted USA to
file a petition for certiorari.
Issue: Whether consent to be sued was given in case at bar?
Ruling:
No. It is first necessary to distinguish between sovereign and governmental acts (jure imperii)
and private, commercial and proprietary acts (jure gestionis). State immunity extends only to acts
jure imperil. That the repairing of wharves may not constitute as a governmental function but it
may still be public in nature or character and the respondent judge in lower courts based his
resolution that when a sovereign state enters into a contract with a private person, the state can be
sued upon the theory that it has descended to the level of an individual from which it can be
implied that it has given its consent to be sued under the contract which is a contention the
Supreme court agrees with, however, it is incorrect to rely on here since:
The State may be said to have descended to the level of an individual and can thus be deemed to
have tacitly given its consent to be sued only when it enters into business contracts. It does not
apply where the contract relates to the exercise of its sovereign functions. In this case the
projects are an integral part of the naval base which is devoted to the defense of both the United
States and the Philippines, indisputably a function of the government of the highest order; they
are not utilized for nor dedicated to commercial or business purposes.
The correct test for the application of State immunity is not the conclusion of entering into a
contract if it is governmental and public or commercial and proprietary but rather by the legal
nature of the act shows that it is for a governmental or public purpose or not..
Case 16: Fontanilla v Maliaman
FACTS:
A pickup owned and operated by the National Irrigation Administration, a government agency
bearing Plate No. IN-651, then driven officially by Hugo Garcia, an employee of said agency as
its regular driver, bumped a bicycle ridden by Francisco Fontanilla, and Restituto Deligo, at
Maasin, San Jose City along the Maharlika Highway. As a result of the impact, Francisco
Fontanilla and Restituto Deligo were injured and brought to the San Jose City Emergency
Hospital for treatment. Fontanilla was later transferred to the Cabanatuan Provincial Hospital
where he died.
Garcia was then a regular driver of the National Irrigation Administration who, at the time of the
accident, was a licensed professional driver and who qualified for employment as such regular
driver of respondent after having passed the written and oral examinations on traffic rules and
maintenance of vehicles given by National Irrigation Administration authorities.
The parents of Fontanilla instituted an action for damages against the NIA, as Garcia’s employer.
ISSUE: Can NIA, a government agency, be held liable for the damages caused by the negligent
act of Garcia who is not a special agent?
RESOLUTION: Yes, NIA can be held liable for the damages caused by the negligent act of
Garcia.
The NIA is an agency of the government exercising proprietary functions, by express provision
of Rep. Act No. 3601. Section 1 of said Act provides:
Section 1. Name and domicile.-A body corporate is hereby created which shall be known as the
National Irrigation Administration, hereinafter called the NIA for short, which shall be organized
immediately after the approval of this Act. It shall have its principal seat of business in the City
of Manila and shall have representatives in all provinces for the proper conduct of its business.
Section 2 of said law spells out some of the NIA's proprietary functions. Thus-
Sec. 2. Powers and objectives.-The NIA shall have the following powers and objectives:
(a) x x x x x x x x x x x x x x x x x x
(b) x x x x x x x x x x x x x x x x x x
(c) To collect from the users of each irrigation system constructed by it such fees as may be
necessary to finance the continuous operation of the system and reimburse within a certain
period not less than twenty-five years cost of construction thereof; and
(d) To do all such other tthings and to transact all such business as are directly or indirectly
necessary, incidental or conducive to the attainment of the above objectives.
Indubitably, the NIA is a government corporation with juridical personality and not a mere
agency of the government. Since it is a corporate body performing non-governmental functions,
it now becomes liable for the damage caused by the accident resulting from the tortious act of its
driver-employee. In this particular case, the NIA assumes the responsibility of an ordinary
employer and as such, it becomes answerable for damages.
RATIO: Under Par. 6 of Art. 2180 of the Civil Code, the State is responsible 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 Art. 2176 shall be applicable.
The liability of the State has two aspects. namely:
1. Its public or governmental aspects where it is liable for the tortious acts of special agents only.
2. Its private or business aspects (as when it engages in private enterprises) where it becomes liable as an
ordinary employer. (p. 961, Civil Code of the Philippines; Annotated, Paras; 1986 Ed. ).

In this jurisdiction, the State assumes a limited liability for the damage caused by the tortious
acts or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed liability for
acts done through special agents. The State's agent, if a public official, must not only be specially
commissioned to do a particular task but that such task must be foreign to said official's usual
governmental functions. If the State's agent is not a public official, and is commissioned to
perform non-governmental functions, then the State assumes the role of an ordinary employer
and will be held liable as such for its agent's tort. Where the government commissions a private
individual for a special governmental task, it is acting through a special agent within the meaning
of the provision.
Certain functions and activities, which can be performed only by the government, are more or
less generally agreed to be "governmental" in character, and so the State is immune from tort
liability. On the other hand, a service which might as well be provided by a private corporation,
and particularly when it collects revenues from it, the function is considered a "proprietary" one,
as to which there may be liability for the torts of agents within the scope of their employment.
This assumption of liability, however, is predicated upon the existence of negligence on the part
of respondent NIA. The negligence referred to here is the negligence of supervision.
At this juncture, the matter of due diligence on the part of respondent NIA becomes a crucial
issue in determining its liability since it has been established that respondent is a government
agency performing proprietary functions and as such, it assumes the posture of an ordinary
employer which, under Par. 5 of Art. 2180, is responsible for the damages caused by its
employees provided that it has failed to observe or exercise due diligence in the selection and
supervision of the driver.
Case 17: Republic v Villasor
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:
Whether or not the state can be sued without its consent.
Whether or not the notice of garnishment issued by Judge Villasor is valid.
Discussions:
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.
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:
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.
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.
Case 18: Municipality of San Miguel v Fernandez
FACTS:
In a previous civil case entitled "Margarita D. Vda. de Imperio, et al. vs. Municipal Government
of San Miguel, Bulacan, et al.", the then CFI of Bulacan rendered judgment holding herein
petitioner MUNICIPALITY liable to private respondents ordering them among others to pay a
sum of money. When the judgment became final, a writ of execution was issued upon request by
the private respondents.
MUNICIPALITY then filed a Motion to Quash the writ of execution on the ground that the
municipality's property or funds are all public funds exempt from execution.
ISSUE:
Whether the funds of the MUNICIPALITY, in the hands of the provincial and municipal
treasurers of Bulacan and San Miguel, respectively, are public funds which are exempt from
execution for the satisfaction of the money judgment?
NO. Well settled is the rule that public funds are not subject to levy and execution. The reason
for this was explained in the case of Municipality of Paoay vs. Manaois, 86 Phil. 629 "that they
are held in trust for the people, intended and used for the accomplishment of the purposes for
which municipal corporations are created, and that to subject said properties and public funds to
execution would materially impede, even defeat and in some instances destroy said purpose."
And, in Tantoco vs. Municipal Council of Iloilo, 49 Phil. 52, it was held that "it is the settled
doctrine of the law that not only the public property but also the taxes and public revenues of
such corporations Cannot be seized under execution against them, either in the treasury or when
in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of
officers of the law, are not subject to execution unless so declared by statute." Thus, it is clear
that all the funds of petitioner municipality in the possession of the Municipal Treasurer of San
Miguel, as well as those in the possession of the Provincial Treasurer of Bulacan, are also public
funds and as such they are exempt from execution.
Besides, Presidential Decree No. 477, known as "The Decree on Local Fiscal Administration",
Section 2 (a), provides:
SEC. 2. Fundamental Principles. — Local government financial affairs, transactions, and
operations shall be governed by the fundamental principles set forth hereunder:
(a) No money shall be paid out of the treasury except in pursuance of a lawful appropriation or
other specific statutory authority.
Otherwise stated, there must be a corresponding appropriation in the form of an ordinance duly
passed by the Sangguniang Bayan before any money of the municipality may be paid out. In the
case at bar, it has not been shown that the Sangguniang Bayan has passed an ordinance to this
effect.
Case 19:
MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as
Judge RTC of Makati, Branch CXLII ADMIRAL FINANCE CREDITORS
CONSORTIUM, INC., and SHERIFF SILVINO R. PASTRANA, respondents.
***Guys nakuha ko lang tong digest sa net pero eto din naman nasa case. Bale hindi
naman state immunity na as in from suit pero immunity in the sense na exempt ang local
government unit from garnishment and levy upon execution. Please correct me if I am
wrong. 
Facts:
Petitioner Municipality of Makati expropriated a portion of land owned by private respondent
Admiral Finance Creditors Consortium, Inc. After hearing, the RTC fixed the appraised value of
the property at P5,291,666.00, and ordered petitioner to pay this amount minus the advanced
payment of P338,160.00 which was earlier released to private respondent. It then issued the
corresponding writ of execution accompanied with a writ of garnishment of funds of the
petitioner which was deposited in PNB. Petitioner filed a motion for reconsideration, contending
that its funds at the PNB could neither be garnished nor levied upon execution, for to do so
would result in the disbursement of public funds without the proper appropriation required under
the law. The RTC denied the motion. CA affirmed; hence, petitioner filed a petition for review
before the SC.
Issue:
1. Are the funds of the Municipality of Makati exempt from garnishment and levy upon
execution?
2. If so, what then is the remedy of the private respondents?
Held:
1. Yes. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and
execution, unless otherwise provided for by statute. More particularly, the properties of a
municipality, whether real or personal, which are necessary for public use cannot be attached and
sold at execution sale to satisfy a money judgment against the municipality. Municipal revenues
derived from taxes, licenses and market fees, and which are intended primarily and exclusively
for the purpose of financing the governmental activities and functions of the municipality, are
exempt from execution. Absent a showing that the municipal council of Makati has passed an
ordinance appropriating from its public funds an amount corresponding to the balance due under
the RTC decision, no levy under execution may be validly effected on the public funds of
petitioner.
2. Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse.
Where a municipality fails or refuses, without justifiable reason, to effect payment of a final
money judgment rendered against it, the claimant may avail of the remedy of mandamus in order
to compel the enactment and approval of the necessary appropriation ordinance, and the
corresponding disbursement of municipal funds therefor.
For three years now, petitioner has enjoyed possession and use of the subject property
notwithstanding its inexcusable failure to comply with its legal obligation to pay just
compensation. Petitioner has benefited from its possession of the property since the same has
been the site of Makati West High School since the school year 1986-1987. This Court will not
condone petitioner's blatant refusal to settle its legal obligation arising from expropriation
proceedings it had in fact initiated. The State's power of eminent domain should be exercised
within the bounds of fair play and justice.

Case 20: Ministerio v CFI of Cebu

Facts: What is before this Court for determination in this appeal by certiorari to review a
decision of the Court of First Instance of Cebu is the question of whether or not plaintiffs, now
petitioners, seeking the just compensation to which they are entitled under the Constitution for
the expropriation of their property necessary for the widening of a street, no condemnation
proceeding having been filed, could sue defendants Public Highway Commissioner and the
Auditor General, in their capacity as public officials without thereby violating the principle of
government immunity from suit without its consent. The lower court, relying on what it
considered to be authoritative precedents, held that they could not and dismissed the suit. The
matter was then elevated to us. After a careful consideration and with a view to avoiding the
grave inconvenience, not to say possible injustice contrary to the constitutional mandate, that
would be the result if no such suit were permitted, this Court arrives at a different conclusion,
and sustains the right of the plaintiff to file a suit of this character
Issue: Non-suability of the state
SC: The government is immune from suit without its consent.3 Nor is it indispensable that it
be the party proceeded against. If it appears that the action, would in fact hold it liable, the
doctrine calls for application. It follows then that even if the defendants named were public
officials, such a principle could still be an effective bar. This is clearly so where a litigation
would result in a financial responsibility for the government, whether in the disbursements of
funds or loss of property. Under such circumstances, the liability of the official sued is not
personal. The party that could be adversely affected is government. Hence the defense of non-
suability may be interposed.
It is a different matter where the public official is made to account in his capacity as such for acts
contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar
in Director of the Bureau of Telecommunications v. Aligean:7 "Inasmuch as the State authorizes
only legal acts by its officers, unauthorized acts of government officials or officers are not acts of
the State, and an action against the officials or officers by one whose rights have been invaded or
violated by such acts, for the protection of his rights, is not a suit against the State within the rule
of immunity of the State from suit. In the same tenor, it has been said that an action at law or suit
in equity against a State officer or the director of a State department on the ground that, while
claiming to act for the State, he violates or invades the personal and property rights of the
plaintiff, under an unconstitutional act or under an assumption of authority which he does not
have, is not a suit against the State within the constitutional provision that the State may not be
sued without its consent.
The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating
an injustice on a citizen. Had the government followed the procedure indicated by the governing
law at the time, a complaint would have been filed by it, and only upon payment of the
compensation fixed by the judgment, or after tender to the party entitled to such payment of the
amount fixed, may it "have the right to enter in and upon the land so condemned" to appropriate
the same to the public use defined in the judgment." 14 If there were an observance of procedural
regularity, petitioners would not be in the sad plaint they are now. It is unthinkable then that
precisely because there was a failure to abide by what the law requires, the government would
stand to benefit.