1.

US VS REYES

The doctrine of state immunity is at the core of this controversy.

The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs. Court of Appeals, thus:

I. 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. 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. 45

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.

In the latter, even on the claim of diplomatic immunity — which Bradford does not in fact pretend to have in the
instant case as she is not among those granted diplomatic immunity under Article 16(b) of the 1953 Military
Assistance Agreement creating the JUSMAG 52 — this Court ruled:

Even Article 31 of the Vienna Convention on Diplomatic Relations admits of exceptions. It reads:

1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall
also enjoy immunity from its civil and administrative jurisdiction except in the case of:

xxx xxx xxx

(c) an action relating to any professional or commercial activity exercised by the

diplomatic agent in the receiving State outside his official functions (Emphasis
supplied).

There can be no doubt that on the basis of the allegations in the complaint, Montoya has a sufficient and viable
cause of action. Bradford's purported non-suability on the ground of state immunity is then a defense which may be
pleaded in the answer and proven at the trial.

2. THE HOLY SEE VS RTC

As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted principles
of International Law. Even without this affirmation, such principles of International Law are deemed incorporated as
part of the law of the land as a condition and consequence of our admission in the society of nations (United States
of America v. Guinto, 182 SCRA 644 [1990]).

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
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International Law
194 [1984]).

Some states passed legislation to serve as guidelines for the executive or judicial determination when an act may be
considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act of 1976, which defines
a commercial activity as "either a regular course of commercial conduct or a particular commercial transaction or
act." Furthermore, the law declared that the "commercial character of the activity shall be determined by reference to
the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose." The
Canadian Parliament enacted in 1982 an Act to Provide For State Immunity in Canadian Courts. The Act defines a
"commercial activity" as any particular transaction, act or conduct or any regular course of conduct that by reason of
its nature, is of a "commercial character."

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 imperii.

The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely
connected with the discharge of governmental functions. This is particularly true with respect to the Communist
states which took control of nationalized business activities and international trading.

This 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.
As held in United States of America v. Guinto, (supra):

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.

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.

In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and administrative
jurisdiction of the receiving state over any real action relating to private immovable property situated in the territory
of the receiving state which the envoy holds on behalf of the sending state for the purposes of the mission. If this
immunity is provided for a diplomatic envoy, with all the more reason should immunity be recognized as regards the
sovereign itself, which in this case is the Holy See.

The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental
character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose off the same because the
squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact
that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has
been admitted by private respondent in its complaint (Rollo, pp. 26, 27).

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). The determination of the executive arm of government that a state or instrumentality is
entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the courts (International
Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is recognized and
affirmed by the executive branch, it is the duty of the courts to accept this claim so as not to embarrass the executive
arm of the government in conducting the country's foreign relations (World Health Organization v. Aquino, 48
SCRA 242 [1972]). As in International Catholic Migration Commission and in World Health Organization, we
abide by the certification of the Department of Foreign Affairs.

Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing to establish the
facts alleged by petitioner in its motion. In view of said certification, such procedure would however be pointless
and unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994).

3. SEAFDEC VS NLRC

Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one
Director in the governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.)
and that its national laws and regulations shall apply only insofar as its contribution to SEAFDEC of "an agreed
amount of money, movable and immovable property and services necessary for the establishment and operation of
the Center" are concerned (Art. 11, ibid.). It expressly waived the application of the Philippine laws on the
disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).

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 there operations or even influence or control its policies and decisions of the organization;
besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially on behalf of its member-states. 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
from the host country is invariably among the first accorded. (See Jenks, Id.; See also Bowett, The Law of
International Institutions, pp. 284-1285).

Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel
does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by
law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a
tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs. Ramirez, this Court held:

A rule, that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that
the jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred
by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the
proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which it stemmed
principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding
in said case had been applied to situations which were obviously not contemplated therein. The exceptional
circumstances involved in Sibonghanoy which justified the departure from the accepted concept of non-
waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule,
virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by
waiver or by estoppel. (Calimlim vs. Ramirez, G.R. No. L-34362, 118 SCRA 399; [1982])

Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA 286 [1987]) to justify
its assumption of jurisdiction over SEAFDEC is misplaced. On the contrary, the Court in said case explained why it
took cognizance of the case. Said the Court:

We would note, finally, that the present petition relates to a controversy between two claimants to the same
position; this is not a controversy between the SEAFDEC on the one hand, and an officer or employee, or a
person claiming to be an officer or employee, of the SEAFDEC, on the other hand. There is before us no
question involving immunity from the jurisdiction of the Court, there being no plea for such immunity
whether by or on behalf of SEAFDEC, or by an official of SEAFDEC with the consent of SEAFDEC (Id.,
at 300; emphasis supplied).

4. CALLADO VS IRRI
Did the International Rice Research Institute (IRRI) waive its immunity from suit in this dispute which arose from
an employer-employee relationship?

We rule in the negative and vote to dismiss the petition.

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.

In the case of International Catholic Migration Commission v. Hon. Calleja, et al. and Kapisanan ng Manggagawa
at TAC sa IRRI v. Secretary of Labor and Employment and IRRI, 12 the Court upheld the constitutionality of the
aforequoted law. After the Court noted the letter of the Acting Secretary of Foreign Affairs to the Secretary of Labor
dated June 17, 1987, where the immunity of IRRI from the jurisdiction of the Department of Labor and Employment
was sustained, the Court stated that this opinion constituted "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. 13 We cited the Court's earlier pronouncement in WHO v. Hon. Benjamin Aquino, et al., 14 to wit:

It is a recognized principle of international law and under our system of separation of powers that
diplomatic immunity is essentially a political question and courts should refuse to look beyond a
determination by the executive branch of the government, and where the plea of diplomatic immunity is
recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty
of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of
the government . . . or other officer acting under his direction. Hence, in adherence to the settled principle
that courts may not so exercise their jurisdiction . . . as to embarass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that in such cases the judicial department of (this)
government follows the action of the political branch and will not embarrass the latter by assuming an
antagonistic jurisdiction. 15

Further, we held that "(t)he raison d'etre for these immunities is the assurance of unimpeded performance of their
functions by the agencies concerned.

The grant of immunity from local jurisdiction to . . . and IRRI is clearly necessitated by their international
character and respective purposes. The objective is to avoid the danger of partiality and interference by the
host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these
instances would defeat the very purpose of immunity, which is to shield the affairs of international
organizations, in accordance with international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and to ensure the unhampered the
performance of their functions. 16

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. Through counsel, the
Institute wrote the Labor Arbiter categorically informing him that 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 Memorandum reads, in part:

Time and again the Institute has reiterated that it will not use its immunity under P.D. 1620 for the purpose
of terminating the services of any of its employees. Despite continuing efforts on the part of IRRI to live up
to this undertaking, there appears to be apprehension in the minds of some IRRI employees. To help allay
 these fears the following guidelines will be followed hereafter by the Personnel/Legal Office while
handling cases of dismissed employees.

Waiving immunity under P.D. 1620

If the plaintiff's attorney or the arbiter, asks if IRRI will waive its immunity we may reply that the Institute will be
happy to do so, as it has in the past in the formal manner required thereby reaffirming our commitment to abide by
the laws of the Philippines and our full faith in the integrity and impartially of the legal system. 17 (Emphasis in this
paragraphs ours)

From the last paragraph of the foregoing quotation, it is clear that in cases involving dismissed employees, the
Institute may waive its immunity, signifying that such waiver is discretionary on its part.

We agree with private respondent IRRI that this memorandum cannot, by any stretch of the imagination, be
considered the express waiver by the Director-General. Respondent Commission has quoted IRRI's reply thus:

The 1983 . . . is an internal memo addressed to Personnel and Legal Office and was issued for its guidance
in handling those cases where IRRI opts to waive its immunity. It is not a declaration of waiver for all
cases. This is apparent from the use of the permissive term "may" rather than the mandatory term "shall"
in the last paragraph of the memo. Certainly the 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. It would be equally important to point out that the
Personnel and Legal Office has been non-existent since 1988 as a result of major reorganization of the
IRRI. Cases of IRRI before DOLE are handled by an external Legal Counsel as in this particular
case. 18 (Emphasis supplied)

The memorandum, issued by the former Director-General to a now-defunct division of the IRRI, 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.

Petitioner's allegation that he was denied due process is unfounded and has no basis.

It is not denied that he was informed of the findings and charges resulting from an investigation conducted of his
case in accordance with IRRI policies and procedures. He had a chance to comment thereon in a Memorandum he
submitted to the Manager of the Human Resource and Development Department. Therefore, he was given proper
notice and adequate opportunity to refute the charges and findings, hereby fulfilling the basic requirements of due
process.

5. DFA VS NLRC

The questions raised in the petition for certiorari are a few coincidental matters relative to the diplomatic immunity
extended to the Asian Development Bank ("ADB").

Article 50(1) of the Charter provides:

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. 3

Under Article 55 thereof —

All Governors, Directors, alternates, officers and employees of the Bank, including experts performing missions for
the Bank:
(1) shall be immune from legal process with respect of acts performed by them in their official capacity, except
when the Bank waives the immunity. 4

Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:

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. 5

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:

xxx xxx xxx

(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. 6

The above stipulations of both the Charter and Headquarters Agreement should be able, may well enough, to
establish 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. The Charter and the
Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments
voluntarily assumed by the Philippines government which must be respected.

In World Health Organization vs. Aquino. 7 we have declared:

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 . . . 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. Hence, in adherence to the settled principle that
courts may not so exercise their jurisdiction . . . as to embarrass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that in "such cases the judicial department of
government follows the action of the political branch and will not embarrass the latter by assuming an
antagonistic
jurisdiction." 8

To the same effect is the decision in International Catholic Migration Commission vs. Calleja, 9 which has similarly
deemed the Memoranda of the Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition
by the Executive Branch of Government that ICMC . . . enjoy(s) immunities accorded to international organizations"
and which determination must be held "conclusive upon the Courts in order not to embarrass a political department
of Government." In the instant case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance
of the government's own recognition of ADB's immunity.

Being an international organization that has been extended diplomatic status, the ADB is independent of the
municipal law. 10 In Southeast Asian Fisheries Development Center vs. Acosta. 11 The Court has cited with approval
the opinion 12 of the Minister of justice; thus —

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 subjection to local jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially behalf of its member-states. 13

Contrary to private respondent's assertion, the claim of immunity is not here being raised for the first time, it has
been invoked before the forum of origin through communications sent by petitioner and the ADB to the Labor
Arbiter, as well as before the NLRC following the rendition of the questioned judgment by the Labor Arbiter, but
evidently to no avail.

rivate respondent argues that, by centering into service contracts with different private companies, ADB has
descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of its immunity from
suit. In the case of Holy See vs. Hon. Rosario, Jr., 16 the Court has held:

There are two conflicting concept of sovereign immunity, each widely held and firmly established.
According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent
in the Courts of another sovereign. According to the newer or restrictive theory, the immunity of the
sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to
private act or acts jure gestionis.

xxx xxx xxx

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 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.

6. SAN FERNANDO VS FIRME

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.
(Cruz, Philippine Political Law, 1987 Edition, p. 39)

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." (United
States of America vs. Guinto, supra, p. 659-660)

7. FAROLAN VS CTA

On the third issue, we opine that the Bureau of Customs cannot be held liable for actual damages that the private
respondent sustained with regard to its goods. Otherwise, to permit private respondent'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.29

On this point, the political doctrine that "the state may not be sued without its consent," categorically applies. 30 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.

8. CITY OF ANGELES VS CTA

In theory, the cost of such demolition, and the reimbursement of the public funds expended in the construction
thereof, should be borne by the officials of the City Angeles who ordered and directed such construction. This Court
has time and again ruled that public officials are not immune from damages in their personal capacities arising from
acts done in bad faith. Otherwise stated, 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 .
In the instant case, the public officials concerned deliberately violated the law and persisted in their violations, going
so far as attempting to deceive the courts by their pretended change of purpose and usage for the enter, and "making
a mockery of the judicial system". Indisputably, said public officials acted beyond the scope of their authority and
jurisdiction and with evident bad faith. However, as noted by the trial court 21, the petitioners mayor and members of
the Sangguniang Panlungsod of Angeles City were sued only in their official capacities, hence, they could not be
held personally liable without first giving them their day in court. Prevailing jurisprudence holding that public
officials are personally liable for damages arising from illegal acts done in bad faith are premised on said officials
having been sued both in their official and personal capacities.

After due consideration of the circumstances, we believe that the fairest and most equitable solution is to have the
City of Angeles, donee of the subject open space and, ostensibly, the main beneficiary of the construction and
operation of the proposed drug rehabilitation center, undertake the demolition and removal of said center, and if
feasible, recover the cost thereof from the city officials concerned.

9. VETERAN’S MANPOWER VS CA

"The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief in relation to the exercise
of a function sovereign in nature. 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. This was clearly enunciated in the case of United States of
America v. Ruiz where the Hon. Supreme Court held:jgc:chanrobles.com.ph

"‘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.’ (136 SCRA 487, 492.)

"In the instant case, the Memorandum of Agreement entered into by the PC Chief and PADPAO was intended to
professionalize the industry and to standardize the salaries of security guards as well as the current rates of security
services, clearly, a governmental function. The execution of the said agreement is incidental to the purpose of R.A.
5487, as amended, which is to regulate the organization and operation of private detective, watchmen or security
guard agencies. (Emphasis ours.)" (pp. 258-259, Rollo.)

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. Without such
consent, the trial court did not acquire jurisdiction over the public respondents.

The state immunity doctrine rests upon reasons of public policy and the inconvenience and danger which would
flow from a different rule. "It is obvious that public service would be hindered, and public safety endangered, if the
supreme authority could be subjected to suits at the instance of every citizen, and, consequently, controlled in the
use and disposition of the means required for the proper administration of the government" (Siren v. U.S. Wall, 152,
19 L. ed. 129, as cited in 78 SCRA 477). In the same vein, this Court in Republic v. Purisima (78 SCRA 470, 473)
rationalized:

"Nonetheless, a continued adherence to the doctrine of nonsuability is not to be deplored for as against the
inconvenience that may be cause [by] private parties, the loss of governmental efficiency and the obstacle to the
performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the
availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to
go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence
of such a basic principle that constitutes such an effective obstacles, could very well be imagined." (citing
Providence Washington Insurance Co. v. Republic, 29 SCRA 598.)

10. WYLIE VS RARANG

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.

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)

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:

"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.’

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

"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.

11. REPUBLIC VS FELICIANO

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." 4

Private respondent contends that the consent of petitioner may be read from the Proclamation itself, when it
established the reservation " subject to private rights, if any there be. " We do not agree. No such consent can be
drawn from the language of the Proclamation. The exclusion of existing private rights from the reservation
established by Proclamation No. 90 can not be construed as a waiver of the immunity of the State from suit. Waiver
of immunity, being a derogation of sovereignty, will not be inferred lightly. but must be construed in strictissimi
juris. 5 Moreover, 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.

Neither is there merit in respondent's submission, which the respondent appellate court sustained, on the basis of our
decision in the Begosa case, 6 that the present action is not a suit against the State within the rule of State immunity
from suit, because plaintiff does not seek to divest the Government of any of its lands or its funds. It is contended
that the complaint involves land not owned by the State, but private land belonging to the plaintiff, hence the
Government is not being divested of any of its properties. There is some sophistry involved in this argument, since
the character of the land sought to be recovered still remains to be established, and the plaintiff's action is directed
against the State precisely to compel the latter to litigate the ownership and possession of the property. In other
words, the plaintiff is out to establish that he is the owner of the land in question based, incidentally, on an
informacion posesoria of dubious value, and he seeks to establish his claim of ownership by suing the Republic of
the Philippines in an action in personam.
 12. MERRITT VS GOV’T

Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it also concede its
liability to the plaintiff? If only the former, then it cannot be held that the Act created any new cause of action in
favor of the plaintiff or extended the defendant's liability to any case not previously recognized.

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. As the consent of the Government to be sued by the
plaintiff was entirely voluntary on its part, it is our duty to look carefully into the terms of the consent, and render
judgment accordingly.

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.

In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the Act of 1913, which
authorized the bringing of this suit, read:

SECTION 1. Authority is hereby given to George Apfelbacher, of the town of Summit, Waukesha County,
Wisconsin, to bring suit in such court or courts and in such form or forms as he may be advised for the purpose of
settling and determining all controversies which he may now have with the State of Wisconsin, or its duly
authorized officers and agents, relative to the mill property of said George Apfelbacher, the fish hatchery of the
State of Wisconsin on the Bark River, and the mill property of Evan Humphrey at the lower end of Nagawicka Lake,
and relative to the use of the waters of said Bark River and Nagawicka Lake, all in the county of Waukesha,
Wisconsin.

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. (Murdock Grate Co. vs. Commonwealth, 152 Mass., 28; 24
N.E., 854; 8 L. R. A., 399.)

13. FONTANILLA VS MALIAMAN

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.

14. REPUBLIC VS VILLASOR

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. It is readily understandable why it must be so.
In the classic formulation of Holmes: "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."5 Sociological jurisprudence supplies an answer not dissimilar. So it was
indicated in a recent decision, Providence Washington Insurance Co. v. Republic of the Philippines, with its
affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle to the
performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the
availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to
go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence
of such a basic principle that constitutes such an effective obstacle, could very well be imagined."

This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein
expressly provided: "The State may not be sued without its consent." A corollary, both dictated by logic and sound
sense from a basic concept is that 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. Thus in the recent case of Commissioner of
Public Highways v. San Diego,9 such a well-settled doctrine was restated in the opinion of Justice Teehankee: "The
universal rule that where the State gives its consent to be sued by private parties either by general or special law, it
may limit claimant's action 'only up to the completion of proceedings anterior to the stage of execution' and that the
power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized
under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public
policy. 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." Such a principle applies even to
an attempted garnishment of a salary that had accrued in favor of an employee. Director of Commerce and Industry
v. Concepcion, speaks to that effect. Justice Malcolm as ponente left no doubt on that score. Thus: "A rule which
has never been seriously questioned, is that money in the hands of public officers, although it may be due
government employees, is not liable to the creditors of these employees in the process of garnishment. One reason
is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by express authorization by
the Legislature, and to subject its officers to garnishment would be to permit indirectly what is prohibited directly.
Another reason is that moneys sought to be garnished, as long as they remain in the hands of the disbursing officer
of the Government, belong to the latter, although the defendant in garnishment may be entitled to a specific portion
thereof. And still another reason which covers both of the foregoing is that every consideration of public policy
forbids it."

In the light of the above, it is made abundantly clear why the Republic of the Philippines could rightfully allege a
legitimate grievance.

15. MUNICIPALITY OF SAN MIGUEL VS. FERNANDEZ

When the treasurers (provincial and municipal) failed to comply with the order of September 13, 1982,
respondent judge issued an order for their arrest and that they will be release only upon compliance thereof.

Hence, the present petition on the issue whether the funds of the Municipality of San Miguel, Bulacan, 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 in Civil Case No. 604-B.

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.

xxx xxx xxx

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.

Furthermore, Section 15, Rule 39 of the New Rules of Court, outlines the procedure for the enforcement of
money judgment:

(a) By levying on all the property of the debtor, whether real or personal, not otherwise exempt from
execution, or only on such part of the property as is sufficient to satisfy the judgment and accruing
cost, if he has more than sufficient property for the purpose;

(b) By selling the property levied upon;

(c) By paying the judgment-creditor so much of the proceeds as will satisfy the judgment and accruing costs;
and

(d) By delivering to the judgment-debtor the excess, if any, unless otherwise, directed by judgment or order of
the court.

The foregoing has not been followed in the case at bar.

16. MUNICIPALITY OF MAKATI VS CA

Because the petitioner has belatedly alleged only in this Court the existence of two bank accounts, it may fairly be
asked whether the second account was opened only for the purpose of undermining the legal basis of the assailed
orders of respondent RTC judge and the decision of the Court of Appeals, and strengthening its reliance on the
doctrine that public funds are exempted from garnishment or execution.

In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless otherwise
provided for by statute [Republic v. Palacio, supra.; The Commissioner of Public Highways v. San Diego, G.R. No.
L-30098, February 18, 1970, 31 SCRA 616]. 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 [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52
(1926): The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950); Municipality of San Miguel,
Bulacan v. Fernandez, G.R. No. 61744, June 25, 1984, 130 SCRA 56]. The foregoing rule finds application in the
case at bar. 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 dated June 4, 1987, less the sum
of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on the
public funds of petitioner deposited in Account No. S/A 263-530850-7.

17. MINISTERIO VS CFI OF CEBU

1. 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.

So it has been categorically set forth in Syquia v. Almeda Lopez:5 "However, and this is important, where the
judgment in such a case would result not only in the recovery of possession of the property in favor of said citizen
but also in a charge against or financial liability to the Government, then the suit should be regarded as one against
the government itself, and, consequently, it cannot prosper or be validly entertained by the courts except with the
consent of said Government."6

2. 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."8

3. It would follow then that the prayer in the amended complaint of petitioners being in the alternative, the lower
court, instead of dismissing the same, could have passed upon the claim of plaintiffs there, now petitioners, for the
recovery of the possession of the disputed lot, since no proceeding for eminent domain, as required by the then Code
of Civil Procedure, was instituted.9 However, as noted in Alfonso v. Pasay City, 10 this Court speaking through
Justice Montemayor, restoration would be "neither convenient nor feasible because it is now and has been used for
road purposes." 11 The only relief, in the opinion of this Court, would be for the government "to make due
compensation, ..." 12 It was made clear in such decision that compensation should have been made "as far back as the
date of the taking." Does it result, therefore, that petitioners would be absolutely remediless since recovery of
possession is in effect barred by the above decision? If the constitutional mandate that the owner be compensated for
property taken for public use 13 were to be respected, as it should, then a suit of this character should not be
summarily dismissed. 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.
It is just as important, if not more so, that there be fidelity to legal norms on the part of officialdom if the rule of law
were to be maintained. It is not too much to say that when the government takes any property for public use, which
is conditioned upon the payment of just compensation, to be judicially ascertained, it makes manifest that it submits
to the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit could still be
appropriately invoked. 15

Accordingly, the lower court decision is reversed so that the court may proceed with the complaint and determine
the compensation to which petitioners are entitled, taking into account the ruling in the above Alfonso case: "As to
the value of the property, although the plaintiff claims the present market value thereof, the rule is that to determine
due compensation for lands appropriated by the Government, the basis should be the price or value at the time that it
was taken from the owner and appropriated by the Government."

18. ARIGO VS SWIFT

The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-suability of the State,
is expressly provided in Article XVI of the 1987 Constitution which states:

Section 3. The State may not be sued without its consent.

In United States of America v. Judge Guinto,18 we discussed the principle of 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. 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." [De 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 comp.taint on the ground that it has been filed
without its consent.19 (Emphasis supplied.)

Under the American Constitution, the doctrine is expressed in the Eleventh Amendment which reads:

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or
prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign
State.

In the case of Minucher v. Court of Appeals, 20 we further expounded on the immunity of foreign states from the
jurisdiction of local courts, as follows:

The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of customary
international law then closely identified with the personal immunity of a foreign sovereign from suit and, with the
emergence of democratic states, made to attach not just to the person of the head of state, or his representative, but
also distinctly to the state itself in its sovereign capacity. If the acts giving rise to a suit arc those of a foreign
government done by its foreign agent, although not necessarily a diplomatic personage, but acting in his official
capacity, the complaint could be barred by the immunity of the foreign sovereign from suit without its consent.
Suing a representative of a state is believed to be, in effect, suing the state itself. The proscription is not accorded for
the benefit of an individual but for the State, in whose service he is, under the maxim -par in parem, non habet
imperium -that all states are soverr~ign equals and cannot assert jurisdiction over one another. The implication, in
broad terms, is that if the judgment against an official would rec 1uire the state itself to perform an affirmative act to
satisfy the award, such as the appropriation of the amount needed to pay the damages decreed against him, the suit
must be regarded as being against the state itself, although it has not been formally impleaded. 21 (Emphasis
supplied.)

In the same case we also mentioned that in the case of diplomatic immunity, the privilege is not an immunity from
the observance of the law of the territorial sovereign or from ensuing legal liability; it is, rather, an immunity from
the exercise of territorial jurisdiction.22

In United States of America v. Judge Guinto,23 one of the consolidated cases therein involved a Filipino employed at
Clark Air Base who was arrested following a buy-bust operation conducted by two officers of the US Air Force, and
was eventually dismissed from his employment when he was charged in court for violation of R.A. No. 6425. In a
complaint for damages filed by the said employee against the military officers, the latter moved to dismiss the case
on the ground that the suit was against the US Government which had not given its consent. The RTC denied the
motion but on a petition for certiorari and prohibition filed before this Court, we reversed the RTC and dismissed the
complaint. We held that petitioners US military officers were acting in the exercise of their official functions when
they conducted the buy-bust operation against the complainant and thereafter testified against him at his trial. It
follows that for discharging their duties as agents of the United States, they cannot be directly impleaded for acts
imputable to their principal, which has not given its consent to be sued.

This traditional rule of State immunity which exempts a State from being sued in the courts of another State without
the former's consent or waiver has evolved into a restrictive doctrine which distinguishes sovereign and
governmental acts (Jure imperil") from private, commercial and proprietary acts (Jure gestionis). Under the
restrictive rule of State immunity, State immunity extends only to acts Jure imperii. 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.24

In Shauf v. Court of Appeals,25 we discussed the limitations of the State immunity principle, thus:

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 JustiGe Zaldivar in Director of the Bureau of
Telecommunications, et al. vs. Aligaen, etc., et al. : "Inasmuch as the State authorizes only legal acts by its officers,
unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or
officers by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit
against the State within the rule of immunity of the State from suit. In the same tenor, it has been said that an action
at law or suit in equity against a State officer or the director of a State department on the ground that, while claiming
to act for the State, he violates or invades the personal and property rights of the plaintiff, under an unconstitutional
act or under an assumption of authority which he does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its consent." The rationale for this ruling is that the
doctrine of state immunity cannot be used as an instrument for perpetrating an injustice.

xxxx

The aforecited authorities are clear on the matter. 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. (Emphasis supplied.) In this case, the US respondents were sued in
their official capacity as commanding officers of the US Navy who had control and supervision over the USS
Guardian and its crew. The alleged act or omission resulting in the unfortunate grounding of the USS Guardian on
the TRNP was committed while they we:re performing official military duties. Considering that the satisfaction of a
judgment against said officials will require remedial actions and appropriation of funds by the US government, the
suit is deemed to be one against the US itself. The principle of State immunity therefore bars the exercise of
jurisdiction by this Court over the persons of respondents Swift, Rice and Robling.

Petitioners argue that there is a waiver of immunity from suit found in the VFA. Likewise, they invoke federal
statutes in the US under which agencies of the US have statutorily waived their immunity to any action. Even under
the common law tort claims, petitioners asseverate that the US respondents are liable for negligence, trespass and
nuisance.

We are not persuaded.

The VFA is an agreement which defines the treatment of United States troops and personnel visiting the Philippines
to promote "common security interests" between the US and the Philippines in the region. It provides for the
guidelines to govern such visits of military personnel, and further defines the rights of the United States and the
Philippine government in the matter of criminal jurisdiction, movement of vessel and aircraft, importation and
exportation of equipment, materials and supplies. 36 The invocation of US federal tort laws and even common law is
thus improper considering that it is the VF A which governs disputes involving US military ships and crew
navigating Philippine waters in pursuance of the objectives of the agreement.

As it is, the waiver of State immunity under the VF A pertains only to criminal jurisdiction and not to special civil
actions such as the present petition for issuance of a writ of Kalikasan. In fact, it can be inferred from Section 17,
Rule 7 of the Rules that a criminal case against a person charged with a violation of an environmental law is to be
filed separately.

19. USA VS RUIZ

The traditional rule of State immunity exempts a State from being sued in the courts of another State without its
consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States.
However, the rules of International Law are not petrified; they are constantly developing and evolving. And because
the activities of states have multiplied, it has been necessary to distinguish them-between sovereign and
governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that
State immunity now extends only to acts jure imperil The restrictive application of State immunity is now the rule in
the United States, the United Kingdom and other states in western Europe. (See Coquia and Defensor Santiago,
Public International Law, pp. 207-209 [1984].)

The respondent judge recognized the restrictive doctrine of State immunity when he said in his Order denying the
defendants' (now petitioners) motion: " A distinction should be made between a strictly governmental function of the
sovereign state from its private, proprietary or non- governmental acts (Rollo, p. 20.) However, the respondent judge
also said: "It is the Court's considered opinion that entering into a contract for the repair of wharves or shoreline is
certainly not a governmental function altho it may partake of a public nature or character. As aptly pointed out by
plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594 (1958)], and which this
Court quotes with approval, viz.:

It is however contended 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. ...

xxx xxx xxx

We agree to the above contention, and considering that the United States government, through its agency at Subic
Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay
Area, a U.S. Naval Reservation, it is evident that it can bring an action before our courts for any contractual liability
that that political entity may assume under the contract. The trial court, therefore, has jurisdiction to entertain this
case ... (Rollo, pp. 20-21.)

The reliance placed on Lyons by the respondent judge is misplaced for the following reasons:
In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court of First Instance of
Manila to collect several sums of money on account of a contract between plaintiff and defendant. The defendant
filed a motion to dismiss on the ground that the court had no jurisdiction over defendant and over the subject matter
of the action. The court granted the motion on the grounds that: (a) it had no jurisdiction over the defendant who did
not give its consent to the suit; and (b) plaintiff failed to exhaust the administrative remedies provided in the
contract. The order of dismissal was elevated to this Court for review.

In sustaining the action of the lower court, this Court said:

It appearing in the complaint that appellant has not complied with the procedure laid down in Article XXI
of the contract regarding the prosecution of its claim against the United States Government, or, stated
differently, it has failed to first exhaust its administrative remedies against said Government, the lower
court acted properly in dismissing this case.(At p. 598.)

It can thus be seen that the statement in respect of the waiver of State immunity from suit was purely gratuitous and,
therefore, obiter so that it has no value as an imperative authority.

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

That the correct test for the application of State immunity is not the conclusion of a contract by a State but the legal
nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased three apartment
buildings to the United States of America for the use of its military officials. The plaintiffs sued to recover
possession of the premises on the ground that the term of the leases had expired. They also asked for increased
rentals until the apartments shall have been vacated.

The defendants who were armed forces officers of the United States moved to dismiss the suit for lack of
jurisdiction in the part of the court. The Municipal Court of Manila granted the motion to dismiss; sustained by the
Court of First Instance, the plaintiffs went to this Court for review on certiorari. In denying the petition, this Court
said:

On the basis of the foregoing considerations we are of the belief and we hold that the real party defendant
in interest is the Government of the United States of America; that any judgment for back or Increased
rentals or damages will have to be paid not by defendants Moore and Tillman and their 64 co-defendants
but by the said U.S. Government. On the basis of the ruling in the case of Land vs. Dollar already cited, and
on what we have already stated, the present action must be considered as one against the U.S. Government.
It is clear hat the courts of the 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. (At p. 323.)

In Syquia,the United States concluded contracts with private individuals but the contracts notwithstanding the States
was not deemed to have given or waived its consent to be sued for the reason that the contracts were for jure imperii
and not for jure gestionis.

20. BUISAN VS COA

The fundamental law of the land provides that the State cannot be sued without its consent. 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. The rule, in any case, is not absolute for it does not say
that the State may not be sued under any circumstances. The doctrine only conveys that "the state may not be sued
without its consent;" its clear import then is that the State may at times be sued. Suits filed against government
agencies may either be against incorporated or unincorporated agencies. In case of incorporated agencies, its
suability depends upon whether its own organic act specifically provides that it can sue and be sued in Court.

As the State's engineering and construction arm, the DPWH exercises governmental functions that effectively
insulate it from any suit, much less from any monetary liability. The construction of the Project which was for the
purpose of minimizing the perennial problem of flood in the area of Tunggol, Montawal, Maguindanao, is well
within the powers and functions of the DPWH as mandated by the Administrative Code of 1997.

Hence, the Doctrine of Non-Suability clothes the DPWH from being held responsible for alleged damages it
performed in consonance with its mandated duty. Nowhere does it appear in the petition that the State has given its
consent, expressly or impliedly, to be sued before the courts. The failure to allege the existence of the State's consent
to be sued in the complaint is a fatal defect, and on this basis alone, should cause the dismissal of the complaint.