DOCTRINE OF STATE IMMUNITY

Under this doctrine, the State cannot be sued without its consent. (Sec. 3, Art. XVI, 1987
Constitution). It reflects nothing less than recognition of the sovereign character of the State and an
express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. It is
based on the very essence of sovereignty. (Department of Agriculture v. NLRC, G.R. No. 104269,
November 11, 1993)

There can be no legal right against the authority which makes the law on which the right depends
(Republic vs. Villasor, GRN L‐30671,   November 28, 1973). However, it may be sued if it gives
consent, whether express or implied. 

Express consent of the State may be manifested through general or special law. Solicitor General
cannot validly waive immunity from suit. Only the Congress can (Republic v. Purisima, G.R. No.  L‐
36084, Aug.31, 1977). 

Implied consent is given when the State itself commences litigation or when it enters into a contract.
There is an implied consent when the state enters into a business contract. (US v. Ruiz, G.R. No. L‐
35645 May 22, 1985). However, this rule is not absolute.  

Not all contracts entered into by the government operate as a waiver of its nonsuability. Distinction
must still be made between one which is executed in the exercise of its sovereign function and
another which is done in its proprietary capacity. A State may be said to have descended to the level
of an individual and can this be deemed to have actually 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. (Department of Agriculture vs. NLRC G.R. No. 104269, November 11, 1993) 

A suit considered as suit against the State under the following instances:
1. When the Republic is sued by name; 
2. When the suit is against an unincorporated government agency; 
3. When the suit is on its face against a government officer but the case is such.

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 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. Inasmuch as the State authorizes only legal acts
by its officers, unauthorized acts of govt. 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. The doctrine of stateimmunity cannot be used as an instrument for perpetrating an injustice.

The cloak of immunity is removed from the moment the public official is sued in his individual capacity
such as where he acts without authority or in excess of the powers vested in him. 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 this case, the officers
are liable for damages.
The doctrine is also available to foreign States insofar as they are sought to be sued in the courts of
the local State. The added basis in this case is the principle of the sovereign equality of States, under
w/c one State cannot assert jurisdiction over another in violation of the maxim par in parem non habet
imperium. To do so would "unduly vex the peace of nations." 

REPUBLIC VS. VILLASOR, ET AL.

G.R. No. L-30671 November 28, 1973

DEPT OF AGRICULTURE VS NLRC

G.R. No. 104269 November 11, 1993

FACTS:
The case is regarding money claim against Department of Agriculture (DA) as filed and requested by
National Labor Relations Commission (NLRC).
 
Petitioner Department of Agriculture and Sultan Security Agency entered into a contract for security
services to be provided by the latter to the said governmental entity. Pursuant to their arrangements,
guards were deployed by Sultan Security Agency in the various premises of the DA. Thereafter,
several guards filed a complaint for underpayment of wages, non-payment of 13th month pay,
uniform allowances, night shift differential pay, holiday pay, and overtime pay, as well as for damages
against the DA and the security agency.
 
The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the security
agency for the payment of money claims of the complainant security guards. The DA and the security
agency did not appeal the decision. Thus, the decision became final and executory. The Labor Arbiter
issued a writ of execution to enforce and execute the judgment against the property of the DA and the
security agency. Thereafter, the City Sheriff levied on execution the motor vehicles of the DA.
 
The petitioner charges the NLRC with grave abuse of discretion for refusing to quash the writ of
execution. The petitioner faults the NLRC for assuming jurisdiction over a money claim against the
Department, which, it claims, falls under the exclusive jurisdiction of the Commission on Audit. More
importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on the non-suability of
the State.
 
The private respondents, on the other hand, argue that the petitioner has impliedly waived its
immunity from suit by concluding a service contract with Sultan Security Agency.
 
ISSUES:
Whether or not the doctrine of non-suability of the State applies in the case.
 
DISCUSSIONS:
Act No. 3083, aforecited, gives the consent of the State to be “sued upon any moneyed claim
involving liability arising from contract, express or implied. However, the money claim should first be
brought to the Commission on Audit. Act 3083 stands as the general law waiving the State’s immunity
from suit, subject to its general limitation expressed in Section 7 thereof that ‘no execution shall issue
upon any judgment rendered by any Court against the Government of the (Philippines), and that the
conditions provided in Commonwealth Act 327 for filing money claims against the Government must
be strictly observed.
RULINGS:
No. The rule does not say that the State may not be sued under any circumstances. The State may at
times be sued. The general law waiving the immunity of the state from suit is found in Act No. 3083,
where the Philippine government “consents and submits to be sued upon any money claims involving
liability arising from contract, express or implied, which could serve as a basis of civil action between
private parties.”
In this case, The DA has not pretended to have assumed a capacity apart from its being a
governmental entity when it entered into the questioned contract; nor that it could have, in fact,
performed any act proprietary in character. But the claims of the complainant security guards clearly
constitute money claims.

PROFESSIONAL VIDEO, INC. 

vs.
TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY
G.R. No. 155504
June 26, 2009

FACTS:
Professional Video, Inc.  (PROVI) is an entity engaged in the sale of high technology equipment,
information technology products and broadcast devices. Technical Education and Skills Development
Authority (TESDA) was established under RA 7796 or TESDA Act of 1994 as an instrumentality of the
government.

TESDA to fulfill its mandate, sought to issue security-printed certification and/or identification polyvinyl
(PVC) cards to trainees who have passed the certification process.

TESDA’s Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public biddings but it
failed. So, PBAC recommended TESDA to negotiate and make a contract with PROVI.

TESDA and PROVI signed and executed their "Contract Agreement Project: PVC ID Card Issuance"
(the Contract Agreement) for the provision of goods and services in the printing and encoding of PVC
cards which cost P39,475,000.
 
TESDA and PROVI executed an "Addendum to the Contract Agreement Project: PVC ID Card
Issuance" (Addendum).

TESDA in paid PROVI thirty percent (30%) of the total cost of the supplies within thirty (30) days after
receipt and acceptance of the contracted supplies, with the balance payable within thirty (30) days
after the initial payment.

TESDA failed to pay its outstanding balance of P35,735,500 to PROVI despite its two demand letters.
Thus, PROVI filed a petition against TESDA to the Regional Trial Court.

RTC ruled in favour of PROVI and ordered the manager of the Land Bank of the Philippines to
produce TESDA’s bank statement for the garnishment of the covered amount.

TESDA filed a petition to the Court of Appeals and it set aside the RTC’s orders ruling that TESDA’s
funds are public in nature and, therefore, exempt from garnishment; and TESDA’s purchase of the
PVC cards was a necessary incident of its governmental function.

ISSUE:
Whether or not TESDA is covered by the principle of State Immunity?
Held:
TESDA, as an agency of the State, cannot be sued without its consent.
The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI of the
1987 Constitution and has been an established principle that antedates this Constitution. It is as well
a universally recognized principle of international law that exempts a state and its organs from the
jurisdiction of another state. The principle is based on the very essence of sovereignty, and on the
practical ground that there can be no legal right as against the authority that makes the law on which
the right depends. It also rests on reasons of public policy — that public service would be hindered,
and the public endangered, if the sovereign authority could be subjected to law suits at the instance
of every citizen and, consequently, controlled in the uses and dispositions of the means required for
the proper administration of the government.

USA VS RUIZ
G.R. No. L-35645       136 scra 487   May 22, 1985
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and
ROBERT GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO
DE GUZMAN & CO., INC., respondents.
  
FACTS:
This is a petition to review, set aside certain orders and restrain perpetually the proceedings done by
Hon. Ruiz for lack of jurisdiction on the part of the trial court.
 
The United States of America had a naval base in Subic, Zambales. The base was one of those
provided in the Military Bases Agreement between the Philippines and the United States. Sometime
in May, 1972, the United States invited the submission of bids for a couple of repair projects. Eligio de
Guzman land Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the
company received from the US two telegrams requesting it to confirm its price proposals and for the
name of its bonding company. The company construed this as an acceptance of its offer so they
complied with the requests. The company received a letter which was signed by William I. Collins of
Department of the Navy of the United States, also one of the petitioners herein informing that the
company did not qualify to receive an award for the projects because of its previous unsatisfactory
performance rating in repairs, and that the projects were awarded to third parties. For this reason, a
suit for specific performance was filed by him against the US.
 
ISSUES:
Whether or not the US naval base in bidding for said contracts exercise governmental functions to be
able to invoke state immunity.
 
DISCUSSIONS:
The traditional role of the state immunity exempts a state from being sued in the courts of another
state without its consent or waiver. This rule is necessary consequence of the principle of
independence and equality of states. However, the rules of international law are not petrified; they are
continually and evolving and because the activities of states have multiplied. It has been necessary to
distinguish them between sovereign and governmental acts (jure imperii) and private, commercial and
proprietary acts (juregestionis). 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.
 

Republic v. Purisima
Facts:
A motion to dismiss was filed on September 7, 1972 by defendant Rice and Corn Administration in a
pending civil suit in the sala of respondent Judge for the collection of a money claim arising from an
alleged breach of contract, the plaintiff being private respondent Yellow Ball Freight Lines, Inc. At that
time, the leading case of Mobil Philippines Exploration, Inc. v. Customs Arrastre Service, where
Justice Bengzon stressed the lack of jurisdiction of a court to pass on the merits of a claim against
any office or entity acting as part of the machinery of the national government unless consent be
shown, had been applied in 53 other decisions. Respondent Judge Amante P. Purisima of the Court
of First Instance of Manila denied the motion to dismiss dated October 4, 1972. Hence, the petition for
certiorari and prohibition.
Issue:
WON the respondent’s decision is valid
Ruling: No.
Rationale:
The position of the Republic has been fortified with the explicit affirmation found in this provision of
the present Constitution: "The State may not be sued without its consent."
"The doctrine of non-suability recognized in this jurisdiction even prior to the effectivity of the [1935]
Constitution is a logical corollary of the positivist concept of law which, to para-phrase Holmes,
negates the assertion of any legal right as against the state, in itself the source of the law on which
such a right may be predicated. Nor is this all, even if such a principle does give rise to problems,
considering the vastly expanded role of government enabling it to engage in business pursuits to
promote the general welfare, it is not obeisance to the analytical school of thought alone that calls for
its continued applicability. Nor is injustice thereby cause private parties. They could still proceed to
seek collection of their money claims by pursuing the statutory remedy of having the Auditor General
pass upon them subject to appeal to judicial tribunals for final adjudication. We could thus correctly
conclude as we did in the cited Providence Washington Insurance decision: "Thus the doctrine of
non-suability of the government without its consent, as it has operated in practice, hardly lends itself
to the charge that it could be the fruitful parent of injustice, considering the vast and ever-widening
scope of state activities at present being undertaken. Whatever difficulties for private claimants may
still exist, is, from an objective appraisal of all factors, minimal. In the balancing of interests, so
unavoidable in the determination of what principles must prevail if government is to satisfy the public
weal, the verdict must be, as it has been these so many years, for its continuing recognition as a
fundamental postulate of constitutional law." [Switzerland General Insurance Co., Ltd. v. Republic of
the Philippines]
***The consent, to be effective, must come from the State acting through a duly enacted statute as
pointed out by Justice Bengzon in Mobil. Thus, whatever counsel for defendant Rice and Corn
Administration agreed to had no binding force on the government.

waiver of sovereign immunity

 
 FROILAN VS PAN ORIENTAL SHIPPING
G.R. No. L-6060             September 30, 1954
FERNANDO A. FROILAN, plaintiff-appellee,
vs.
PAN ORIENTAL SHIPPING CO., defendant-appellant,
REPUBLIC OF THE PHILIPPINES, intervenor-appellee.
 
 

FACTS:
Plaintiff, Fernando Froilan filed a complaint against the defendant-appellant, Pan Oriental Shipping
Co., alleging that he purchased from the Shipping Commission the vessel for P200,000, paying
P50,000 down and agreeing to pay the balance in instalments. 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. For various reasons, among them the non-payment of the installments, the Shipping
Commission tool 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. Plaintiff appealed the action
of the Shipping Commission to the President of the Philippines and, in its meeting the Cabinet
restored him to all his rights under his original contract with the Shipping Commission. Plaintiff had
repeatedly demanded from the Pan Oriental Shipping Co. the possession of the vessel in question
but the latter refused to do so.
 
Plaintiff, 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 . 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.
 
Pan Oriental protested to this restoration of Plaintiff ‘s rights under the contract of sale, for the reason
that when the vessel was delivered to it, the Shipping Administration had authority to dispose of said
authority to the property, Plaintiff having already relinquished whatever rights he may have thereon.
Plaintiff paid the required cash of P10,000.00 and as Pan Oriental refused to surrender possession of
the vessel, he filed an action to recover possession thereof and have him declared the rightful owner
of said property. The Republic of the Philippines was allowed to intervene in said civil case praying for
the possession of the in order that the chattel mortgage constituted thereon may be foreclosed.
 
ISSUES:
Whether or not the Court has jurisdiction over the intervenor with regard to the counterclaim.
 
DISCUSSIONS:
When the government enters into a contract, for the State is then deem to have divested itself of the
mantle of sovereign immunity and descended to the level of the ordinary individual. Having done so, it
becomes subject to judicial action and processes.
  
RULINGS:
Yes. The Supreme Court held that the government impliedly allowed itself to be sued when it filed a
complaint in intervention for the purpose of asserting claim for affirmative relief against the plaintiff to
the recovery of the vessel. The immunity of the state from 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 defenses he
might have against the state.

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

G.R. No. L-8587

FACTS:
This is an appeal from an order of the Court of First Instance of Manila, dismissing plaintiff's action for
the recovery of real property for lack of jurisdiction over the subject matter.
The property in dispute consists of four parcels of land situated in Tondo, City of Manila, with a total
area of 29,151 square meters. The lands were, after the last world war, found by the Alien Property
Custodian of the United States to be registered in the name of Asaichi Kagawa, national of an enemy
country, Japan, as evidenced by Transfer Certificates of Title Nos. 64904 to 65140,
On March 14, 1946, issued a vesting order on the authority of the Trading with the Enemy Act of the
United States, as amended, vesting in himself the ownership over two of the said lots, Lots Nos. 1
and 2
On July, 6, 1948, the Philippine Alien Property Administrator (successor of the Alien Property
Custodian) under the authority of the same statute issued a supplemental vesting order, vesting in
himself title to the remaining Lots Nos. 3 and 4. 
On August 3, 1948, the Philippine Alien Property Administrator (acting on behalf of the President of
the United States) and the President of the Philippines, executed two formal agreements, one
referring to Lots 1 and 2 and the other to Lots 3 and 4, whereby the said Administrator transferred all
the said four lots to the Republic of the Philippines upon the latter's undertaking fully to indemnify the
United States for all claims in relation to the property transferred, which claims are payable by the
United States of America or the Philippine Alien Property Administrator of the United States under the
Trading with the Enemy Act, as amended, and for all such costs and expenses of administration as
may by law be charged against the property or proceeds thereof hereby transferred.
On November 15, 1948, the latter's son Benito E. Lim filed a formal notice of claim to the property
with the Philippine Alien Property Administrator On the theory that the lots in question still belonged to
Arsenia Enriquez. that they were mortgaged by her to the Mercantile Bank of China; that the
mortgage having been foreclosed, the property was sold at public auction during the war to the
Japanese Asaichi Kagawa, who, by means of threat and intimidation succeeded in preventing
Arsenia Enriquez from exercising her right of redemption; and that Kagawa never acquired any valid
title to the property because he was ineligible under the Constitution to acquire residential land in the
Philippines by reason of alien age.
On March 7, 1950, the claim was disallowed by the Vested Property Claims Committee of the
Philippine Alien Property Administrator, and copy of the decision disallowing the claim was received
by claimant's counsel on the 15th of that month
On November 13, 1950, the claimant Benito E. Lim, as administrator of the intestate estate of Arsenia
Enriquez, filed a complaint in the Court of First Instance of Manila against the Philippine Alien
Property Administrator (later substituted by the Attorney General of the United States) for the
recovery of the property in question with back rents. The complaint was later amended to include
Asaichi Kagawa as defendant.

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

HELD:
1. No suit or claim for the return of said properties pursuant to Section 9 or 32 (a) of the Trading
with the Enemy Act was filed by Plaintiff within two years from the date of vesting, the “later”
date and the last on which suit could be brought. A condition precedent to a suit for the return
of property vested under Trading with the Enemy Act is that it should be filed not later than
April 30, 1949, or within two years from the date of vesting, whichever is later, but in computing
the two years, the period during which there was pending a suitor claim for the return of the
property of the Act shall be excluded.
The court states that In view of the foregoing, the order appealed from insofar as it dismisses the
complaint with respect to Lots 1 and 2 and the claim for damages against the Attorney General of the
United States and the Republic of the Philippines, is affirmed, but revoked insofar as it dismisses the
complaint with respect to Lots 3 and 4, as to which the case is hereby remanded to the court below
for further proceedings.

ACT NO. 3083

ACT NO. 3083 – AN ACT DEFINING THE CONDITIONS UNDER WHICH THE GOVERNMENT OF
THE PHILIPPINE ISLANDS MAY BE SUED
Section 1. Complaint against Government. – Subject to the provisions of this Act, the Government of
the Philippine Islands hereby consents and submits to be sued upon any moneyed claim involving
liability arising from contract, expressed or implied, which could serve as a basis of civil action
between private parties.
Sec. 2. A person desiring to avail himself of the privilege herein conferred must show that he has
presented his claim to the Insular Auditor 1 and that the latter did not decide the same within two
months from the date of its presentation.
Sec. 3. Venue. – Original actions brought pursuant to the authority conferred in this Act shall be
instituted in the Court of First Instance of the City of Manila or of the province were the claimant
resides, at the option of the latter, upon which court exclusive original jurisdiction is hereby conferred
to hear and determine such actions.
Sec. 4. Actions instituted as aforesaid shall be governed by the same rules of procedure, both original
and appellate, as if the litigants were private parties.
Sec. 5. When the Government of the Philippine Island is plaintiff in an action instituted in any court of
original jurisdiction, the defendant shall have the right to assert therein, by way of set-off or
counterclaim in a similar action between private parties.
Sec. 6. Process in actions brought against the Government of the Philippine Islands pursuant to the
authority granted in this Act shall be served upon the Attorney-General 2 whose duty it shall be to
appear and make defense, either himself or through delegates.
Sec. 7. Execution. – No execution shall issue upon any judgment rendered by any court against the
Government of the Philippine Islands under the provisions of this Act; but a copy thereof duly certified
by the clerk of the Court in which judgment is rendered shall be transmitted by such clerk to the
Governor-General, 3 within five days after the same becomes final.
Sec. 8. Transmittal of Decision. – The Governor-General, 4 at the commencement of each regular
session of the Legislature, 5 shall transmit to that body for appropriate action all decisions so received
by him, and if said body determine that payment should be made, it shall appropriate the sum which
the Government has been sentenced to pay, including the same in the appropriations for the ensuing
year.
Sec. 9. This Act shall take effect on its approval.
Approved: March 16, 1923.

USA vs. GUINTO, 182 SCRA 644 Case Digest

These are cases that have been consolidated because they all involve the doctrine of state immunity.
The United States of America was not impleaded in the case at bar but has moved to dismiss on the
ground that they are in effect suits against it to which it has not consented.

FACTS:

1.    USA vs GUINTO (GR No. 76607)

The private respondents are suing several officers of the US Air Force in Clark Air Base in connection
with the bidding conducted by them for contracts for barber services in the said base, which was won
by Dizon. The respondents wanted to cancel the award because they claimed that Dizon had
included in his bid an area not included in the invitation to bid, and also, to conduct a rebidding.
2.    USA vs RODRIGO (GR No. 79470)
Genove filed a complaint for damages for his dismissal as cook in the US Air Force Recreation
Center at Camp John Hay Air Station. It had been ascertained after investigation that Genove had
poured urine into the soup stock used in cooking the vegetables served to the club customers. The
club manager suspended him and thereafter referred the case to a board of arbitrators, which
unanimously found him guilty and recommended his dismissal.

3.    USA vs CEBALLOS (GR No. 80018)

Bautista, a barracks boy in Camp O’ Donnell, was arrested following a buy-bust operation conducted
by petitioners, who were USAF officers and special agents of the Air Force Office. An information was
filed against Bautista and at the trial, petitioners testified against him. As a result of the charge,
Bautista was dismissed from his employment. He then filed for damages against petitioners claiming
that it was because of the latter’s acts that he lost his job.

4.    USA vs VERGARA (GR No. 80258)

A complaint for damages was filed by private respondents against petitioners (US military officers) for
injuries allegedly sustained by the former when defendants beat them up, handcuffed them and
unleashed dogs on them. The petitioners deny this and claim that respondents were arrested for theft
but resisted arrest, thus incurring the injuries.

ISSUE:

Whether or not the defendants were immune from suit under the RP-US Bases Treaty for acts done
by them in the performance of their official duties.

RULING:

The rule that a State may not be sued without its consent is one of the generally accepted principles
of international law that were have adopted as part of the law of our land. 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 the 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. All states are sovereign equals and cannot assert
jurisdiction over one another. 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 states 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, the suit must
be regarded as against the state although it has not been formally impleaded. When the government
enters into a contract, it is deemed to have descended to the level of the other contracting party and
divested of its sovereign immunity from suit with its implied consent.

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

There is no question that the USA, 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 (commercial acts/jure
gestionis). It is only when the contract involves its sovereign or governmental capacity (governmental
acts/jure imperii) that no such waiver may be implied.
In US vs GUINTO, the court finds the barbershops subject to the concessions granted by the US
government to be commercial enterprises operated by private persons. The Court would have directly
resolved the claims against the defendants as in USA vs RODRIGO, except for the paucity of the
record as the evidence of the alleged irregularity in the grant of the barbershop concessions were not
available. Accordingly, this case was remanded to the court below for further proceedings.

In US vs RODRIGO, the restaurant services offered at the John Hay Air Station partake of the nature
of a business enterprise undertaken by the US government in its proprietary capacity, as they were
operated for profit, as a commercial and not a governmental activity. Not even the US government
can claim such immunity because by entering into the employment contract with Genove in the
discharge of its proprietary functions, it impliedly divested itself of its sovereign immunity from suit.
But, the court still dismissed the complaint against petitioners on the ground that there was nothing
arbitrary about the proceedings in the dismissal of Genove, as the petitioners acted quite properly in
terminating Genove’s employment for his unbelievably nauseating act.

In US vs CEBALLOS, it was clear that the petitioners were acting in the exercise of their official
functions when they conducted the buy-bust operation and thereafter testified against the
complainant. 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.

In US vs VERGARA, the contradictory factual allegations in this case need a closer study of what
actually happened. The record was too meager to indicate if the defendants were really discharging
their official duties or had actually exceeded their authority when the incident occurred. The needed
inquiry must first be made by the lower court so it may assess and resolve the conflicting claims of
the parties.

NOTE:
1.  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.
2. Jure Gestionis – by right of economic or business relations, may be sued. (US vs Guinto)

   Jure Imperii – by right of sovereign power, in the exercise of sovereign functions. No implied
consent. (US v. Ruiz, 136 SCRA 487)

MUNICIPALITY OF SAN FERNANDO VS. FIRME

FACTS: A passenger jeepney, a sand truck and a dump truck of the Municipality of San Fernando,
La Union collided. Due to the impact, several passengers of the jeepney including Laureano Baniña
Sr. died. The heirs of Baniña filed a complaint for damages against the owner and driver of the
jeepney, who, in turn, filed a Third Party Complaint against the Municipality and its dump truck driver,
Alfredo Bislig. Municipality filed its answer and raised the defense of non-suability of the State. After
trial, the court ruled in favor of the plaintiffs and ordered Municipality and Bislig to pay  jointly and
severally the heirs of Baniña.
ISSUES: 

1. Are municipal corporations suable?

2. Is the Municipality liable for the torts committed by its employee who was then engaged in the
discharge of governmental functions?

HELD:
1. Municipal corporations, 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.

2. Municipal corporations are suable because their charters grant them the competence to sue and
be sued. Nevertheless, 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.

In this case, the driver of the dump truck of the municipality insists that "he was on his way to the
Naguilian river to get a load of sand and gravel for the repair of San Fernando's municipal streets." In
the absence of any evidence to the contrary, the regularity of the performance of official duty is
presumed. Hence, the driver of the dump truck was performing duties or tasks pertaining to his office.

Decision of the lower court modified. Petitioner municipality was absolved of any liability.  (Municipality
of San Fernando vs. Firme,  No. L-52179, April 8, 1991)

UP v. Dizon (G.R. No. 171182; August 23, 2012)

FACTS: University of the Philippines (UP) entered into a General Construction Agreement with
respondent Stern Builders Corporation (Stern Builders) for the construction and renovation of the
buildings in the campus of the UP in Los Bas. UP was able to pay its first and second billing.
However, the third billing worth P273,729.47 was not paid due to its disallowance by the Commission
on Audit (COA). Thus, Stern Builders sued the UP to collect the unpaid balance.

On November 28, 2001, the RTC rendered its decision ordering UP to pay Stern Builders. Then on
January 16, 2002, the UP filed its motion for reconsideration. The RTC denied the motion. The denial
of the said motion was served upon Atty. Felimon Nolasco (Atty.Nolasco) of the UPLB Legal Office on
May 17, 2002. Notably, Atty. Nolasco was not the counsel of record of the UP but the OLS inDiliman,
Quezon City.

Thereafter, the UP filed a notice of appeal on June 3, 2002. However, the RTC denied due course to
the notice of appeal for having been filed out of time. On October 4, 2002, upon motion of Stern
Builders, the RTC issued the writ of execution.

On appeal, both the CA and the High Court denied UPs petition. The denial became final
and executory. Hence, Stern Builders filed in the RTC its motion for execution despite their previous
motion having already been granted and despite the writ of execution having already issued. On June
11, 2003, the RTC granted another motion for execution filed on May 9, 2003 (although the RTC had
already issued the writ of execution on October 4, 2002). Consequently, the sheriff served notices of
garnishment to the UPs depositary banks and the RTC ordered the release of the funds.

Aggrieved, UP elevated the matter to the CA. The CA sustained the RTC. Hence, this petition.

ISSUES:

I.  Was UP's funds validly garnished?

II. Has the UP's appeal dated June 3, 2002 been filed out of time?
HELD: UP's funds, being government funds, are not subject to garnishment. (Garnishment of
public funds; suability vs. liability of the State)

Despite its establishment as a body corporate, the UP remains to be a "chartered institution"

performing a legitimate government function. Irrefragably, the UP is a government instrumentality,
performing the States constitutional mandate of promoting quality and accessible education. As a
government instrumentality, the UP administers special funds sourced from the fees and income
enumerated under Act No. 1870 and Section 1 of Executive Order No. 714, and from the yearly
appropriations, to achieve the purposes laid down by Section 2 of Act 1870, as expanded in Republic
Act No. 9500. All the funds going into the possession of the UP, including any interest accruing from
the deposit of such funds in any banking institution, constitute a "special trust fund," the disbursement
of which should always be aligned with the UPs mission and purpose, and should always be subject
to auditing by the COA. The funds of the UP are government funds that are public in character. They
include the income accruing from the use of real property ceded to the UP that may be spent only for
the attainment of its institutional objectives.

A marked distinction exists between suability of the State and its liability. As the Court succinctly
stated in Municipality of San Fernando, La Union v. Firme: 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.

The Constitution strictly mandated that "no money shall be paid out of the Treasury except in
pursuance of an appropriation made by law." The execution of the monetary judgment against the UP
was within the primary jurisdiction of the COA. It was of no moment that a final
and executory decision already validated the claim against the UP.

HELD: The period of appeal did not start without effective service of decision upon counsel of
record. (The doctrine of immutability of a final judgment; service of judgments; fresh-period
rule; computation of time)

At stake in the UPs plea for equity was the return of the amount of P16,370,191.74  illegally garnished
from its trust funds. Obstructing the plea is the finality of the judgment based on the supposed
tardiness of UPs appeal, which the RTC declared on September 26, 2002. It is true that a decision
that has attained finality becomes immutable and unalterable, and cannot be modified in any respect,
even if the modification is meant to correct erroneous conclusions of fact and law, and whether the
modification is made by the court that rendered it or by this Court as the highest court of the land. But
the doctrine of immutability of a final judgment has not been absolute, and has admitted several
exceptions, among them: (a) the correction of clerical errors; (b) the so-called nunc pro tunc entries
that cause no prejudice to any party; (c) void judgments; and (d) whenever circumstances transpire
after the finality of the decision that render its execution unjust and inequitable. We rule that the UPs
plea for equity warrants the Courts exercise of the exceptional power to disregard the declaration of
finality of the judgment of the RTC for being in clear violation of the UPs right to due process.

Firstly, the service of the denial of the motion for reconsideration upon Atty. Nolasco of the UPLB
Legal Office was invalid and ineffectual because he was admittedly not the counsel of record of the
UP. Verily, the service of the denial of the motion for reconsideration could only be validly made upon
the OLS in Diliman, and no other. It is settled that where a party has appeared by counsel, service
must be made upon such counsel. This is clear enough from Section 2, second paragraph, of Rule
13, Rules of Court, which explicitly states that: "If any party has appeared by counsel, service upon
him shall be made upon his counsel or one of them, unless service upon the party himself is ordered
by the court. Where one counsel appears for several parties, he shall only be entitled to one copy of
any paper served upon him by the opposite side."

Secondly, even assuming that the service upon Atty. Nolasco was valid and effective, such that the
remaining period for the UP to take a timely appeal would end by May 23, 2002, it would still not be
correct to find that the judgment of the RTC became final and immutable thereafter due to the notice
of appeal being filed too late on June 3, 2002. In so declaring the judgment of the RTC as final
against the UP, the CA and the RTC applied the rule contained in the second paragraph of Section 3,
Rule 41 of the Rules of Court to the effect that the filing of a motion for reconsideration interrupted the
running of the period for filing the appeal; and that the period resumed upon notice of the denial of the
motion for reconsideration. For that reason, the CA and the RTC might not be taken to task for strictly
adhering to the rule then prevailing.

However, equity calls for the retroactive application in the UPs favor of the fresh-period rule that the
Court first announced in mid-September of 2005 through its ruling in Neypes v. Court of Appeals, viz:
"to standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file
the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion
for a new trial or motion for reconsideration." The retroactive application of the fresh-period rule, a
procedural law that aims "to regiment or make the appeal period uniform, to be counted from receipt
of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any
final order or resolution," is impervious to any serious challenge. This is because there are no vested
rights in rules of procedure.

Consequently, even if the reckoning started from May 17, 2002, when Atty. Nolasco received the
denial, the UPs filing on June 3, 2002 of the notice of appeal was not tardy within the context of the
fresh-period rule. For the UP, the fresh period of 15-days counted from service of the denial of the
motion for reconsideration would end on June 1, 2002, which was a Saturday. Hence, the UP had
until the next working day, or June 3, 2002, a Monday, within which to appeal, conformably with
Section 1 of Rule 22, Rules of Court, which holds that: "If the last day of the period, as thus
computed, falls on a Saturday, a Sunday, or a legal holiday in the place where the court sits, the time
shall not run until the next working day.

G.R. No. L-6118             April 26, 1954

LARRY J. JOHNSON, plaintiff-appellee, 
vs.
MAJ. GEN. HOWARD M. TURNER, ET AL., defendants-appellants.
Sixto F. Santiago for appellants.
Quintin F. Pidel for appellee.

MONTEMAYOR, J.:
This is an appeal by the defendants from a decision of the Court of First Instance of Manila ordering
them or their successors or representatives to return to plaintiff or his authorized representatives the
confiscated Military Payment Certificates (Scrip Money) in the reconverted or new series, amounting
to $3.713. For purposes of the present appeal the pertinent facts not disputed are as follows:
Plaintiff Larry J. Johnson, an American citizen, was formerly employed by the U.S. Army at Okinawa
up to August 5, 1950, when he resigned, supposedly in violation of his employment contract. In the
same month he returned to the Philippines as an American citizen, bringing with him Military Payment
Certificates (Scrip Money) in the amount of $3,713 which sum he claims to have earned while at
Okinawa. About five months later, that is, on January 15, 1951, he went to the U.S. Military Port of
Manila and while there tried to convert said scrip money into U.S. dollars, allegedly for the purpose of
sending into the United States. Defendant Capt. Wilford H. Hudson Jr., Provost Marshal of the Military
duties and claiming that said act of Johnson in keeping scrip money and in trying to convert it into
dollars was a violation of military circulars, rules and regulations, confiscated said scrip money, gave
a receipt thereof and later delivered the scrip money to the military authorities. Johnson made a
formal claim for the return of his scrip money and upon failure of the military authorities to favorably
act upon his claim, on July 3, 1951, he commenced the present action in the Court of First Instance of
Manila against Major General Howard M. Turner as Commanding General, Philippine Command (Air
Force) and 13th Air Force with office at Clark Field; Major Torvald B. Thompson as Finance Officer,
Provost Marshal, 13th Air Force with office at Clark Field; and Captain Wilford H. Hudson Jr., as
Provost Marshal attached to the Manila Military Port Area, to recover the said amount of $3,713 "at
the reconverted or new series and to the same full worth and value." It may be stated in this
connection that shortly after the confiscation of the scrip money in Manila on January 15, 1951, an
order was issued by the U.S. Military authorities for the conversion of all scrip money then
outstanding into a new series, thereby rendering valueless and of no use the old series of which the
scrip confiscated from Johnson formed a part, and that was the reason why the prayer contained in
Johnson's complaint is for the return not of the very same scrip money (old series) confiscated, but of
the sum "at the reconverted or new series and to the same full worth and value."
The defendants through counsel moved for the dismissal of the complaint on the ground of lack
jurisdiction over their persons and over the subject-matter for the reason that they were being sued as
defendants in their respective official capacities as officers of the U. S. Air Force and the action was
based on their official actuations, and that the U. S. Government had not given its consent to be sued.
The motion for dismissal was denied and the case was heard, after which, the trial court found and
held that it had jurisdiction because the claim was for the return of plaintiff's scrip money and not for
the recovery of a sum of money as damages arising from any civil liability of the defendants; and that
the confiscatory act of the defendants is contrary to the provisions of the Philippine Constitution
prohibiting deprivation of one's property without due process of law.
Pursuant to rules and regulations as well as the practice in U.S. military establishments in Okinawa
and the Philippines, military payment certificates popularly known as "scrip money" is issued to
military and authorized personnel for use exclusively within said military establishments and as a sole
medium of exchange in lieu of U.S. dollars, the issuance of said scrip money being restricted to those
authorized to purchase tax free merchandise at the tax-free agencies of the U.S. Government within
its military installations. It is said to be intended as a control measure and to assure that the economy
of the Republic of the Philippines will be duly protected.
The confiscation of Johnson's scrip money is allegedly based on Circular No. 19, Part I, par. 7 ( a) of
the GHQ, Far East Command, APO 500, dated March 15, 1949, the pertinent provisions of which
read thus:
7. Disposition of Military Payment Certificates. a. Personnel authorized to hold and use military
payment certificates prior to departing on leave, temporary duty, or permanent change of status from
a military payment certificate area to areas where military payment certificates are not in authorized
use will dispose of their military payment certificates holding prior to departure. Similarly authorized
personnel who lose their authorized status are required at the time of such loss to dispose of their
military payment or certificate holdings.
It is the claim of the defendants that Johnson should have disposed of or converted his scrip money
into dollars upon his resignation as employee of the U. S. Government when he lost his authorized
status, and prior to his departure from Okinawa, and that his possession of said scrip money in the
Philippines, particularly in the Manila Military Post Area was illegal, hence the confiscation.
Believing that the main and most important question involved in the appeal is that of jurisdiction, we
shall confine our considerations to the same. In the case of Syquia vs. Lopez, et al., 47 Off. Gaz.,
665, where an action was brought against U. S. Army officers not only for the recovery of possession
of certain apartments occupied by military personnel under a contract of lease, but also to collect
back rents and rents at increased rates including damages, we held:
We shall concede as correctly did the Court of First Instance that following the doctrine laid down in
the cases of U.S. vs. Leeand U. S. vs. Tindal, supra, a private citizen claiming title and right of
possession of a certain property may, to recover possession of said property, sue as individuals,
officers, and agents of the Government who are said to be illegally withholding the same from him,
though in doing so, said officers and agents claim that they are acting for the Government and the
court may entertain such a suit although the government itself is not bound or concluded by the
decision. The philosophy of this ruling is that unless the courts are permitted to take cognizance and
to assume jurisdiction over such a case, a private citizen would be helpless and without redress and
protection of his rights which may have been invaded by the officers of the Government professing to
act in its name. In such a case the officials or agents asserting rightful possession must prove and
justify their claims before the courts, where it is made to appear in the suit against them that the title
and right of possession is in the private citizen. 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 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.
In the present case, if the action were merely for the return of the scrip money confiscated from
plaintiff Johnson, it might yet be said that the action was for the recovery of property illegally withheld
by officers and agents of a government professing to have acted as its agents. However, as already
stated, the present action is for the recovery not of the very scrip in the new series of military payment
certificates, and this was the relief granted by the lower court. Furthermore, if the relief is to be of any
benefit to plaintiff and since has already lost his authorized status to possess and use said scrip
money, he will have to be given the equivalent of said scrip money in dollars. It is, therefore, evident
that the claim and the judgment will be a charge against and a financial liability to the U.S.
Government because the defendants had undoubtedly acted in their official capacities as agents of
said Government, to say nothing of the fact that said defendants had long left the Philippines possibly
for other assignments; that was the reason the decision appealed from directs the return of the scrip
money by the defendants or their successors. Consequently, the present suit should be regarded as
an action against the United States Government.
It is not disputed that the U.S. Government has not given its consent to be sued. Therefore, the suit
cannot be entertained by the trial court for lack of jurisdiction.
Another point may be mentioned, though incidentally, namely, that before the decision was rendered
by the lower court the plaintiff filed his claim for the same amount of $3,713 with the Claims Division,
General Accounting Office, Washington, D.C. However, the record fails to show the action taken, if
any, on said claim.
In conclusion, we find and hold that the present action because of its nature is really a suit against the
Government of the United States, and because said Government has not given its consent thereto,
the courts, particularly the trial court have no jurisdiction to entertain the same. Because of this, we
deem it unnecessary to discuss and rule upon the propriety and legality of the confiscation made by
the defendants, particularly Capt. Wilford H. Hudson, of the scrip money from the plaintiff, and
whether or not the latter's filing of his claim with the U.S. Government through its Claims Division,
constitutes an abandonment of his claim or suit with the Philippine court.
In view of the foregoing, the decision appealed from is hereby reversed and the complaint is
dismissed. No pronouncement as to costs.

JUSMAG vs. NLRC (Art. XVI Sec. 3)

Oct 1, 2005
JUSMAG Philippines vs. NLRC (Article XVI Sec. 3) (Foreign 
Government)

Facts:
Florencio Sacramento (private respondent) was one of the 74 security assistance support personnel
(SASP) working at the Joint United States Military Assistance Group to the Philippines (JUSMAG-
Phils.). He had been with JUSMAG from 1969-1992. When dismissed, he held the position of
Illustrator 2 and incumbent Pres. of JUSMAG Phils.- Filipino Civilian Employees Assoc., a labor org.
duly registered with DOLE. His services were terminated allegedly due to the abolition of his position.
Sacramento filed complaint w/ DOLE on the ground that he was illegally suspended and dismissed
from service by JUSMAG. He asked for reinstatement. JUSMAG filed Motion to Dismiss
invoking immunity from suit. Labor arbiter Cueto in an Order dismissed the complaint "for want of
jurisdiction". Sacramento appealed to NLRC. NLRC reversed the ruling of the labor arbiter and held
that petitioner had lost its right not to be sued bec. (1) the principle of estoppel-that JUSMAG failed to
refute the existence of employer- employee rel. (2)JUSMAG has waived its right to immunity from
suit  when it hired the services of private respondent. Hence, this petition.

Issue:W/N JUSMAG has immunity from suit

Held: Yes. When JUSMAG took the services of private respondent, it was performing a governmental
function on behalf of the United States pursuant to the Military Assistance Agreement between the 
Phils. and America* JUSMAG consists of Air, Naval and Army group and its primary task was to
advise and assist the Phils. on air force, army and naval matters. A suit against JUSMAG is one
against the United States government, and in the absence of any waiver or consent of the latter to the
suit, the complaint against JUSMAG cannot prosper.Immunity of State from suit is one of the
universally recognized principles of international law that the Phils. recognizes and adopts as part of
the law of the land. Immunity is commonly understood as the exemption of the state and its organs 
from the judicial jurisdiction of another state and anchored on the principle of the sovereign equality of
states under which one state cannot assert jurisdiction over another in violation of the maxim 
par in parem non habeat imperium (an equal has no power over an equal) As it stands now, the
application of the doctrine of immunity from suit has been restricted to sovereign or governmental 
activities and does not extend to commercial, private and proprietary acts.

Holy See vs. Rosario G.R. 101949 (1994)

Facts of the Case: 

Petitioner in this case is the Holy See (who exercises sovereignty over the Vatican City in Rome Italy
and is represented in the Philippines by the Papal Nuncio. Respondent in this case is Hon. Edilberto
Rosario in his capacity as the Presiding Judge of RTC Makati, Branch 61 and Starbright Sales
Enterprises, a domestic corporation engaged in the real estate business. 

The petition started from a controversy over a parcel of land. Lot 5A registered under the name of the
Holy See, is connected to Lot 5B and 5D under the name of Philippine Realty Corporation. The land
was donated by the Archdiocese of Manila to the Papal Nuncio which represented the Holy See who
exercises sovereignty over the Vatican City, Rome Italy for his residence. 

The said lots were sold to Ramon Licup who assigned his rights to respondents Starbright Sales, Inc. 

When the squatters refused to vacate the lots, a dispute arose between these two parties because
both were unsure as to whose responsibility was it to evict the squatters from the said lots.
Respondent Starbright insists that the Holy See should clear the property while Holy See says that
Starbright should do it or the earnest money will be returned. 
Since Starbright refused to clear the property, Msgr. Cirilios, the agent, returned P100k earnest
money. The same lots were sold to Tropicana Properties. 

Starbright filed a suit for annulment of sale, specific performance and damages against Msgr. Cirilios,
Philippine Realty Corporation and Tropicana. The Holy See moved to dismiss the petition for lack of
jurisdiction based on sovereign immunity of suit. The RTC denied the motion on the ground that the
petitioner already shed off its sovereign immunity by entering into a business contract. 

Issue: 

Can the Holy See invoke sovereign immunity? 

Court Ruling: 

YES. The Court held that the Holy See may properly invoke sovereign immunity for its non-suability.
In Article 31 (A) of the 1961 Vienna Convention on Diplomatic Relations, diplomatic envoy (a
representative government who is sent on a special diplomatic mission) shall be granted immunity
from civil and administrative jurisdiction of the receiving state over any real action relating to private
immovable property. 

The DFA certified that the Embassy of the Holy See is a duly accredited diplomatic missionary to the
Republic of the Philippines and is thus exempted from local jurisdiction and is entitled to immunity
rights of a diplomatic mission or embassy in this Court. 

While the said lot was acquired and bought in the ordinary cause of real estate business, its
acquisition and disposal were not made for profit but claimed that it acquired the said property for its
mission or the Apostolic Nunciature of the Philippines. 

Besides, the act of selling the land concerned is non-proprietary in nature, or is not covered by a
patent or trademark. The transfer and disposal of property are likewise clothed with a governmental
character as the petitioner did not buy and sell the land for gain but merely because they cannot evict
the said squatters in the property. 

Arigo vs Swift
Case Digest GR 206510 Sept 14, 2014

Facts:
In 2013, the USS Guardian of the US Navy ran aground on an area near the Tubbataha Reefs, a
marine habitat of which entry and certain human activities are prevented and afforded protection by a
Philippine law. The grounding incident prompted the petitioners to seek for issuance of Writ of
Kalikasan with TEPO from the SC.
Among those impleaded are US officials in their capacity as commanding officers of the US Navy. As
petitioners argued, they were impleaded because there was a waiver of immunity from suit between
US and PH pursuant to the VFA terms.
Petitioners claimed that the grounding, salvaging and post-salvaging operations of the USS Guardian
violated their constitutional rights to a balanced and healthful ecology since these events caused and
continue to cause environmental damage of such magnitude as to affect other provinces surrounding
the Tubbataha Reefs. Aside from damages, they sought a directive from the SC for the institution of
civil, administrative and criminal suits for acts committed in violation of environmental laws and
regulations in connection with the grounding incident. They also prayed for the annulment of some
VFA provisions for being unconstitutional.
Issue 1: W/N the US Government has given its consent to be sued through the VFA
No. The general rule on state’s immunity from suit applies in this case.
First, any waiver of State immunity under the VFA pertains only to criminal jurisdiction and not to
special civil actions such as for the issuance of the writ of kalikasan. Hence, contrary to petitioners’
claim, the US government could not be deemed to have waived its immunity from suit.
Second, the US respondents were sued in their official capacity as commanding officers of the US
Navy who have control and supervision over the USS Guardian and its crew. Since the satisfaction of
any judgment against these officials would require remedial actions and the appropriation of funds by
the US government, the suit is deemed to be one against the US itself. Thus, the principle of State
Immunity – in correlation with the principle of States as sovereign equals “par in parem non habet non
imperium” – bars the exercise of jurisdiction by the court over their persons.
Issue 2: W/N the US government may still be held liable for damages caused to the Tubbataha Reefs
Yes. The US government is liable for damages in relation to the grounding incident under the
customary laws of navigation.
The conduct of the US in this case, when its warship entered a restricted area in violation of RA
10067 and caused damage to the TRNP reef system, brings the matter within the ambit of Article 31
of the UNCLOS. While historically, warships enjoy sovereign immunity from suit as extensions of their
flag State, Art. 31 of the UNCLOS creates an exception to this rule in cases where they fail to comply
with the rules and regulations of the coastal State regarding passage through the latter’s internal
waters and the territorial sea.
Although the US to date has not ratified the UNCLOS, as a matter of long-standing policy, the US
considers itself bound by customary international rules on the “traditional uses of the oceans”, which
is codified in UNCLOS.
As to the non-ratification by the US, it must be noted that the US’ refusal to join the UNCLOS was
centered on its disagreement with UNCLOS’ regime of deep seabed mining (Part XI) which considers
the oceans and deep seabed commonly owned by mankind. Such has nothing to do with the
acceptance by the US of customary international rules on navigation. (Justice Carpio)
Hence, non-membership in the UNCLOS does not mean that the US will disregard the rights of the
Philippines as a Coastal State over its internal waters and territorial sea. It is thus expected of the US
to bear “international responsibility” under Art. 31 in connection with the USS Guardian grounding
which adversely affected the Tubbataha reefs. ##
Other Issues
Claim for Damages Caused by Violation of Environmental Laws Must be Filed Separately
The invocation of US federal tort laws and even common law is improper considering that it is the
VFA 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 VFA pertains only to criminal jurisdiction and not to
special civil actions. Since jurisdiction cannot be had over the respondents for being immuned from
suit, there is no way damages which resulted from violation of environmental laws could be awarded
to petitioners.
In any case, the Rules on Writ of Kalikasan provides that a criminal case against a person charged
with a violation of an environmental law is to be filed separately. Hence, a ruling on the application or
non-application of criminal jurisdiction provisions of the VFA to a US personnel who may be found
responsible for the grounding of the USS Guardian, would be premature and beyond the province of
a petition for a writ of Kalikasan.
Challenging the Constitutionality of a Treaty Via a Petition for the Issuance of Writ of Kalikasan is Not
Proper
The VFA was duly concurred in by the Philippine Senate and has been recognized as a treaty by the
US as attested and certified by the duly authorized representative of the US government. The VFA
being a valid and binding agreement, the parties are required as a matter of international law to abide
by its terms and provisions. A petition under the Rules on Writ of Kalikasan is not the proper remedy
to assail the constitutionality of its provisions.
MINUCHER VS. COURT OF APPEALS
G.R. No. 142396, 2003 February 11

FACTS

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

ISSUES

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

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

RULING

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

2. While the diplomatic immunity of Scalzo might thus remain contentions, it was sufficiently
established that, indeed, he worked for the USDEA. If it should be ascertained that Scalzo was acting
well within his assigned functions when he committed the acts allegedly complained of, the present
controversy could then be resolved under the related doctrine of State Immunity from Suit. While the
doctrine appears to prohibit only suits against against the State without its consent, it is also
applicable to complaints filed against officials of the State for acts allegedly performed by them in the
discharge of their duties. The official exchanges of communication, certifications from officials, as well
as participation of members of the Philippine Narcotics Command may be inadequate to support to
support the diplomatic status of Scalzo but they give enough indication that the Philippine government
has given its imprimatur to the activities of Scalzo. It can hardly be said that he acted beyond the
scope of his official function or duties. All told, Scalzo is entitled to the defense os state immunity from
suit.
China National Machinery v. Santamaria
Facts: On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group)
(CNMEG), represented by its chairperson, Ren Hongbin, entered into a Memorandum of
Understanding with the North Luzon Railways Corporation (Northrail), represented by its president,
Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line from Manila to San
Fernando, La Union (the Northrail Project).
On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of
the Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein China
agreed to extend Preferential Buyer’s Credit to the Philippine government to finance the Northrail
Project.3 The Chinese government designated EXIM Bank as the lender, while the Philippine
government named the DOF as the borrower. Under the Aug 30 MOU, EXIM Bank agreed to extend
an amount not exceeding USD 400,000,000 in favor of the DOF, payable in 20 years, with a 5-year
grace period, and at the rate of 3% per annum.
On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang), wrote
a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho) informing him of CNMEG’s
designation as the Prime Contractor for the Northrail Project.
On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the construction of
Section I, Phase I of the North Luzon Railway System from Caloocan to Malolos on a turnkey basis
(the Contract Agreement).7 The contract price for the Northrail Project was pegged at USD
421,050,000.
On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart financial
agreement – Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement). In the Loan
Agreement, EXIM Bank agreed to extend Preferential Buyer’s Credit in the amount of USD
400,000,000 in favor of the Philippine government in order to finance the construction of Phase I of
the Northrail Project.
On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with
Urgent Motion for Summary Hearing to Determine the Existence of Facts and Circumstances
Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO
against CNMEG, the Office of the Executive Secretary, the DOF, the Department of Budget and
Management, the National Economic Development Authority and Northrail. The case was filed before
the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC Br. 145). In
the Complaint, respondents alleged that the Contract Agreement and the Loan Agreement were void
for being contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known
as the Government Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as
the Government Auditing Code; and (d) Executive Order No. 292, otherwise known as the
Administrative Code.
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEG’s Motion to Dismiss and
setting the case for summary hearing to determine whether the injunctive reliefs prayed for should be
issued. CNMEG then filed a Motion for Reconsideration, which was denied by the trial court in an
Order dated 10 March 2008. Thus, CNMEG filed before the CA a Petition for Certiorari with Prayer for
the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008.
the appellate court dismissed the Petition for Certiorari. Subsequently, CNMEG filed a Motion for
Reconsideration, which was denied by the CA in a Resolution dated 5 December 2008.
Petitioners Argument: Petitioner claims that the EXIM Bank extended financial assistance to
Northrail because the bank was mandated by the Chinese government, and not because of any
motivation to do business in the Philippines, it is clear from the foregoing provisions that the Northrail
Project was a purely commercial transaction.
Respondents Argument: respondents alleged that the Contract Agreement and the Loan
Agreement were void for being contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No.
9184), otherwise known as the Government Procurement Reform Act; (c) Presidential Decree No.
1445, otherwise known as the Government Auditing Code; and (d) Executive Order No. 292,
otherwise known as the Administrative Code.
Issues: Whether or not petitioner CNMEG is an agent of the sovereign People’s Republic of China.
Whether or not the Northrail contracts are products of an executive agreement between two
sovereign states.
Ruling: The instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp.
(Group) is not entitled to immunity from suit, and the Contract Agreement is not an executive
agreement. CNMEG’s prayer for the issuance of a TRO and/or Writ of Preliminary Injunction is
DENIED for being moot and academic.
The Court explained the doctrine of sovereign immunity in Holy See v. Rosario, to wit:
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. (Emphasis supplied; citations
omitted.)
As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign
or governmental activities (jure imperii). The mantle of state immunity cannot be extended to
commercial, private and proprietary acts (jure gestionis).
Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the
act involved – whether the entity claiming immunity performs governmental, as opposed to
proprietary, functions. As held in United States of America v. Ruiz
Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine
government, while the Contract Agreement was between Northrail and CNMEG. Although the
Contract Agreement is silent on the classification of the legal nature of the transaction, the foregoing
provisions of the Loan Agreement, which is an inextricable part of the entire undertaking, nonetheless
reveal the intention of the parties to the Northrail Project to classify the whole venture as commercial
or proprietary in character.
Thus, piecing together the content and tenor of the Contract Agreement, the Memorandum of
Understanding dated 14 September 2002, Amb. Wang’s letter dated 1 October 2003, and the Loan
Agreement would reveal the desire of CNMEG to construct the Luzon Railways in pursuit of a purely
commercial activity performed in the ordinary course of its business.

Lasco vs UNRFNRE
Case Digest_Eldepio Lasco et al v United Nations Revolving Fund For Natural Resources Exploration
(UNRFNRE)
G.R. Nos. 109095-109107 February 23, 1995

Facts: Petitioners were dismissed from their employment with privaterespondent, the United Nations
Revolving Fund for NaturalResourcesExploration (UNRFNRE), which is a special fund and subsidiary
organ of theUnited Nations.The UNRFNRE is involved in a joint project of thePhilippineGovernment
and the United Nations for exploration work in Dinagat Island.Petitioners are thecomplainants for
illegal dismissal and damages.Private respondent alleged that respondent Labor Arbiter had no
jurisdiction over its personality since itenjoyed diplomatic immunity.

Issue:WON specialized agencies enjoy diplomatic immunity

Held:Petition is dismissed. This is not to say that petitioner have no recourse.Section 31 of the
Convention on the Privileges and Immunitiesof the SpecializedAgencies of the United Nations states
that ³each specialized agency shall makea provision for appropriate modes of settlement of (a)
disputes arising out of contracts or other disputes of private character to which thespecialized
agencyisa party.´ Private respondent is not engaged in a commercial venture in thePhilippines.Its
presence is by virtue of a joint project entered into by thePhilippine Government and theUnited
Nations for mineral exploration in DinagatIsland
SEAFDEC V NLRC
FACTS: SEAFDEC-AQD is a department of an international organization, the Southeast Asian
Fisheries Development Center, organized through an agreement in 1967 by the governments of
Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring
country.

Juvenal Lazaga was employed as a Research Associate on a probationary basis by SEAFDEC-AQD.

Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to Lazaga informing
him that due to the financial constraints being experienced by the department, his services shall be
terminated. SEAFDEC-AQD's failure to pay Lazaga his separation pay forced him to file a case with
the NLRC.  The Labor Arbiter and NLRC ruled in favor of Lazaga. Thus SEAFDEC-AQD appealed,
claiming that the NLRC has no jurisdiction over the case since it is immune from suit owing to its
international character and the complaint is in effect a suit against the State which cannot be
maintained without its consent.
ISSUES: 

1. Does the NLRC have jurisdiction over SEAFDEC-AQD?

2. Is SEAFDEC-AQD estopped for its failure to raise the issue of jurisdiction at the first instance?
HELD:

1. SEAFDEC-AQD is an international agency beyond the jurisdiction of public respondent NLRC.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys
functional independence and freedom from control of the state in whose territory its office is located.

Permanent international commissions and administrative bodies have been created by the agreement
of a considerable number of States for a variety of international purposes, economic or social and
mainly non-political. In so far as they are autonomous and beyond the control of any one State, they
have a distinct juridical personality independent of the municipal law of the State where they are
situated. As such, according to one leading authority "they must be deemed to possess a species of
international personality of their own."

One of the basic immunities of an international organization is immunity from local jurisdiction, i.e.,
that it is immune from the legal writs and processes issued by the tribunals of the country where it is
found. The obvious reason for this is that the subjection of such an organization to the authority of the
local courts would afford a convenient medium thru which the host government may interfere in 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.

2. 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. (SEAFDEC-AQD vs NLRC, G.R. No. 86773,  February 14, 1992)

ERNESTO CALLADO vs. INTERNATIONAL RICE RESEARCH INSTITUTE (IRRI)

G.R. No. 106483 May 22, 1995/ ROMERO, J.:

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: Did the (IRRI) waive its immunity from suit in this dispute which arose from an employer-
employee relationship?

Held: No.

P.D. 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 SC upholds the constitutionality of the aforequoted law. There is in this case "a categorical
recognition by the Executive Branch of the Government that IRRI enjoys 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. 
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.

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.

In cases involving dismissed employees, the Institute may waive its immunity, signifying that such
waiver is discretionary on its part.

World Health Organization v. Aquino 48 SCRA 243

Facts:

Herein petitioner, in behalf of Dr. Verstuyft, was allegedly suspected by the Constabulary Offshore
Action Center (COSAC) officers of carrying dutiable goods under the Customs and Tariff Code of the
Philippines. Respondent Judge then issued a search warrant at the instance of the COSAC officers
for the search and seizure of the personla effects of Dr. Verstuyft notwithstanding his being entitled to
diplomatic immunity, as duly recognized by the Executive branch of the government.

The Secretary of Foreign Affairs Carlos P. Romulo advised the respondent judge that Dr. Verstuyft is
entitled to immunity from search in respect for his personal baggage as accorded to members of
diplomatic missions pursuant to the Host Agreement and further requested for the suspension of the
search warrant. The Solicitor General accordingly joined the petitioner for the quashal of the search
warrant but respondent judge nevertheless summarily denied the quashal.

Issue:

Whether or not personal effect of WHO Officer Dr. Verstuyft can be exempted from search and
seizure under the diplomatic immunity.

Ruling:

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

It 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 government, and where the plea of diplomatic immunity is
recognized by the executive branch of the government as in the case at bar, it is then the duty of the
courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the
government, the Solicitor General in this case, or other officer acting under his discretion. Courts may
not so exercise their jurisdiction by seizure and detention of property, as to embarass the executive
arm of the government in conducting foreign relations.
The Court, therefore, holds the respondent judge acted without jurisdiction and with grave abuse of
discretion in not ordering the quashal of the search warrant issued by him in disregard of the
diplomatic immunity of petitioner Verstuyft.