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Garcia v.

Chief of Staff
16 SCRA 120; Jan. 31, 1966
Facts: Sometime in July, 1948, the plaintiff suffered injuries while undergoing the 10-month
military training at Camp Florida blanca, Pampanga; that sometime thereafter he filed his claim
under Commonwealth Act 400 and in April, 1957, he submitted some papers in support of his
claim to the Adjutant General's Office upon the latter's request; that on May 2, 1957, he received
a letter from the said Adjutant General's office disallowing his claim for disability benefits; that
on November 24,1958, after further demands of the plaintiff, the Adjutant General's Office
denied the said claim, alleging that Commonwealth Act 400 had already been repealed by
Republic Act 610 which took effect on January 1, 1950; that by reason of the injuries suffered
by plaintiff he was deprived of his sight or vision rendering him permanently disabled; and that
by reason of the unjustified refusal by defendants of plaintiff's claim, the latter was deprived of
his disability pension from July, 1948 totaling no less than P4,000 at the rate of P20 a month
and suffered thereby moral damages and attorney's fees in the amount of P2,000.00. The
Philippine Veterans Administration and the Chief of Staff of the Armed Forces filed separate
motions to dismiss the complaint on the grounds that the court has no jurisdiction over the
subject matter of the complaint; that the plaintiff failed to exhaust all administrative remedies
before coming to court; that the complaint states no cause of action; and that the cause of action
is barred by the statute of limitations.
Issue: Whether or Not the CIF had jurisdiction over the claim of Garcia?
Held: Motion for reconsideration of the said order having been denied, the plaintiff has
interposed this appeal. Without need of discussing the various questions raised, We have to
uphold the order of dismissal, not necessarily on the same ground as found by the lower court,
but for the simple reason that the Court of First Instance has no jurisdiction over the subject
matter, it being a money claim against the government.
This Court has already held (New Manila Lumber Co. Inc. vs. Republic, 107 Phil., 824 that a
claim for the recovery of money against the government should be filed with the Auditor
General, in line with the principle that the State cannot be sued without its consent.
Commonwealth Act 327 provides:

"SECTION 1. In all cases involving the settlements of accounts of claims, other than those of
accountable officers, the Auditor General shall act and decide the same within sixty days,
exclusive of Sundays and holidays, after their presentation . . .
"SEC. 2. The party aggrieved by the final decision of the Auditor General in the settlement of
an account or claim may, within thirty days from receipt of the decision, take an appeal in
(c) To the Supreme Court of the Philippines, if the appellant is a private person or entity.
The well established rule that no recourse to court can be had until all administrative remedies
had been exhausted and that actions against administrative officers should not be entertained if
superior administrative officers could grant relief is squarely applicable to the present case.
FULL TITLE: MARIANO E. GARCIA, plaintiff-appellant, vs. THE CHIEF OF STAFF and
THE PHILIPPINES, defendants-appellees.
Amigable v. Cuenca
43 SCRA 360; February 29, 1972
Facts: Victoria Amigable, is the registered owner of Lot No. 639 as shown by Transfer
Certificate of Title No. T-18060, which superseded Transfer Certificate of Title No. RT-3272
(T-3435) issued to her by the Register of Deeds of Cebu. No annotation in favor of the
government of any right or interest in the property appears at the back of the certificate. Without
prior expropriation or negotiated sale, the government used a portion of said lot, with an area
of 6,167 square meters, for the construction of the Mango and Gorordo Avenues.
On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting
payment of the portion of her lot which had been appropriated by the government. The claim
was indorsed to the Auditor General, who disallowed it.

On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended
on April 17, 1959 upon motion of the defendants, against the Republic of the Philippines and
Nicolas Cuenca, in his capacity as Commissioner of Public Highways for the recovery of
ownership and possession of the 6,167 square meters of land traversed by the Mango and
Gorordo Avenues. She also sought the payment of compensatory damages for the illegal
occupation of her land, moral damages, attorney's fees in the sum of and the costs of the suit.
The defendants in their joint answer interposed the following defenses (1) that the action was
premature, the claim not having been filed first with the Office of the Auditor General; (2)
that the right of action for the recovery of any amount which might be due the plaintiff, if
any, had already prescribed; (3) that the action being a suit against the Government, the
claim for moral damages, attorney's fees and costs had no valid basis since as to these items
the Government had not given its consent to be sued; and (4) that inasmuch as it was the
province of Cebu that appropriated and used the area involved in the construction of Mango
Avenue, plaintiff had no cause of action against the defendants.
The trial court held that it had no jurisdiction over plaintiffs claim. The C.A upheld the trial
courts ruling.
Issue: Whether or not the appellant may properly sue the government under the facts of the
Held: the decision appealed from is hereby set aside and the case remanded to the court a quo
for the determination of compensation. It has been previously held that where the government
takes away property from a private landowner for public use without going through the legal
process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit
against the government without thereby violating the doctrine of governmental immunity from
suit without its consent. If the constitutional mandate that the owner be compensated for
property taken for public use 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. Considering that
no annotation in favor of the government appears at the back of her certificate of title and that
she has not executed any deed of conveyance of any portion of her lot to the government, the
appellant remains the owner of the whole lot. As registered owner, she could bring an action to
recover possession of the portion of land in question at anytime because possession is one of
the attributes of ownership. However, since restoration of possession of said portion by the

government is neither convenient nor feasible at this time because it is now and has been used
for road purposes, the only relief available is for the government to make due compensation
which it could and should have done years ago. To determine the due compensation for the
land, the basis should be the price or value thereof at the time of the taking
Commissioner of Public Highways and REPUBLIC OF THE PHILIPPINES, defendantsappellees.
Veterans Man Power v. Court of Appeals
214 SCRA 360; September 25, 1992
Facts: VMPSI alleges that the provisions of R.A. No. 5487 (Private Security Agency Law)
violate the provisions of the 1987 Constitution against monopolies, unfair competition and
combinations in restraint of trade, and tend to favor and institutionalize the Philippine
Association of Detective and Protective Agency Operators, Inc. (PADPAO) which is
monopolistic because it has an interest in more than one security agency. On May 12, 1986, a
Memorandum of Agreement was executed by PADPAO and the PC Chief, which fixed the
minimum monthly contract rate per guard for eight (8) hours of security service per day at P2,
255.00 within Metro Manila and P2, 215.00 outside of Metro Manila. On June 29, 1987, Odin
Security Agency (Odin) filed a complaint with PADPAO accusing VMPSI of cut-throat
competition by undercutting its contract rate for security services rendered to the Metropolitan
Waterworks and Sewerage System. The PADPAO and PC-SUSIA found VMPSI guilty as
charged. As a result, PADPAO refused to issue a clearance/certificate of membership to
VMPSI when it requested one. VMPSI wrote the PC Chief on March 10, 1988, requesting him
to set aside or disregard the findings of PADPAO and consider VMPSI's application for renewal
of its license, even without a certificate of membership from PADPAO. As the PC Chief did
not reply, and VMPSI's license was expiring on March 31, 1988, VMPSI filed Civil Case in the
RTC-Makati, Branch 135, on March 28, 1988 against the PC Chief and PC-SUSIA. On the
same date, the court issued a restraining order enjoining the PC Chief and PC-SUSIA "from
committing acts that would result in the cancellation or non-renewal of VMPSI's license. The
PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the Issuance of Writ of

Preliminary Injunction, and Motion to Quash the Temporary Restraining Order," on the
grounds that the case is against the State which had not given consent thereto
Issue: Whether or not VMPSI's complaint against the PC Chief and PC-SUSIA is a suit against
the State without its consent.
Held: The answer is yes. The petition for review is DENIED and the judgment appealed from
The State may not be sued without its consent (Article XVI, Section 3, of the 1987
Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being
instrumentalities of the national government exercising a primarily governmental function of
regulating the organization and operation of private detective, watchmen, or security guard
agencies, said official (the PC Chief) and agency (PC-SUSIA) may not be sued without the
Government's consent, especially in this case because VMPSI's complaint seeks not only to
compel the public respondents to act in a certain way, but worse, because VMPSI seeks actual
and compensatory damages in the sum of P1,000,000.00, exemplary damages in the same
amount, and P200,000.00 as attorney's fees from said public respondents. Even if its action
prospers, the payment of its monetary claims may not be enforced because the State did not
consent to appropriate the necessary funds for that purpose.
A public official may sometimes be held liable in his personal or private capacity if he acts in
bad faith, or beyond the scope of his authority or jurisdiction, however, since the acts for which
the PC Chief and PC-SUSIA are being called to account in this case, were performed by them
as part of their official duties, without malice, gross negligence, or bad faith, no recovery may
be had against them in their private capacities.
The Memorandum of Agreement dated May 12, 1986 does not constitute an implied consent
by the State to be sued. Waiver of the State's immunity from suit, being a derogation of
sovereignty, will not be lightly inferred, but must be construed strictissimi juris 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.


Festejo v. Fernando
50 O.G. 1556
Facts: The defendant, as Director of the Bureau of Public Works, without authority obtained
first from the Court of First Instance of Ilocos Sur, without obtaining first a right of way, and
without the consent and knowledge of the plaintiff, and against her express objection,
unlawfully took possession of portions of the three parcels of land described above, and caused
an irrigation canal to be constructed on the portion of the three parcels of land on or about the
month of February 1951 the aggregate area being 24,179 square meters to the damage and
prejudice of the plaintiff. The petioner now demands to return or cause to be returned the
possession of the portions of land unlawfully occupied and appropriated in the aggregate area
of 24,179 square meters and to return the land to its former condition.
Issue: Whether or Not the defendant may be held liable for the unlawful possession of the
Held: We think the evidence and conceded facts permitted the jury in finding that in the trespass
on plaintiff's land defendant committed acts outside the scope of his authority. When he went
outside the boundaries of the right of way upon plaintiff's land and damaged it or destroyed its
former condition and usefulness, he must be held to have designedly departed from the duties
imposed on him by law. There can be no claim that he thus invaded plaintiff's land southeasterly
of the right of way innocently. Surveys clearly marked the limits of the land appropriated for
the right of way of this trunk highway before construction began.
Ordinarily the officer or employee committing the tort is personally liable therefor, and
may be sued as any other citizen and held answerable for whatever injury or damage
results from his tortious act. If an officer, even while acting under color of his office,
exceeds the power conferred on him by law, he cannot shelter himself under the plea that
he is a public agent."

Art 32 of the Civil Code provides

collision was the negligence and imprudence of defendant PNR and its locomotive engineer,
Honorio Cirbado, in operating its passenger train in a busy intersection without any bars,
semaphores, signal lights, flagman or switchman to warn the public of approaching train that
would pass through the crossing. PNR in its Answer traversed the material allegation of the
Complaint and as affirmative defense alleged that the collision was caused by the negligence,
imprudence and lack of foresight of plaintiff's bus driver, Romeo Hughes. The trial court
rendered a judgement in favor of Baliwag transit on appeal it raised for the first time the defense
of immunity from suit. The appellate court affirmed the judgement of the trial court.

"ART. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights
and liberties of another person shall be liable to the latter for damages:

Issue: Whether or Not PNR is may claim immunity from suit by virtue of it being a government
owned and controlled corporation? Did the State acted in a sovereign capacity when it organized
the PNR for the purpose of engaging in transportation.

xxx xxx xxx.

Held: No, Petition dismissed the judgement of the respondent court is affirmed. The bone of
contention for exculpation is premised on the familiar maxim in political law that the State, by
virtue of its sovereign nature and as reaffirmed by constitutional precept, is insulated from suits
without its consent (Article 16, Section 3, 1987 Constitution). However, equally conceded is
the legal proposition that the acquiescence of the State to be sued can be manifested expressly
through a general or special law, or indicated implicitly, as when the State commences litigation
for the purpose of asserting an affirmative relief or when it enters into a contract. The Philippine
National Railways is not performing any governmental function. in the instant case the State
divested itself of its sovereign capacity when it organized the PNR which is no different from
its predecessor, the Manila Railroad Company. The PNR did not become immune from suit. It
did not remove itself from the operation of Articles 1732 to 1766 of the Civil Code on common
carriers. The correct rule is that not all government entities, whether corporate or non-corporate,
are immune from suits. Immunity from suit is determined by the character of the objects for
which the entity was organized. The point is that when the government enters into a commercial
business it abandons its sovereign capacity and is to be treated like any other private
corporation. By engaging in a particular business through the instrumentality of a corporation,
the government divests itself pro hac vice of its sovereign character, so as to render the
corporation subject to the rules of law governing private corporations. When the State acts in
its proprietary capacity, it is amenable to all the rules of law which bind private individuals.

"It is a general rule that an officer-executive, administrative quasi-judicial, ministerial,

or otherwise who acts outside the scope of his jurisdiction and without authorization of
law may thereby render himself amenable to personal liability in a civil suit. If he exceeds
the power conferred on him by law, he cannot shelter himself by the plea that he is a public
agent acting under color of his office, and not personally. In the eye of the law, his acts
then are wholly without authority

"(6) The right against deprivation of property without due process of law;
xxx xxx xxx.
"In any of the cases referred to in this article, whether or not the defendant's acts or omission
constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate
and distinct civil action for damages, and for other relief. Such civil action shall proceed
independently of any criminal prosecution (if the latter be instituted), and may be proved by a
preponderance of evidence.
FULL TITLE: CARMEN FESTEJO, demandante y apelante, contra ISAIAS FERNANDO,
Director de Obras Pblicas, demandado y apelado.
217 SCRA 401; January 22, 1993
Facts: In the afternoon of August 10, 1974 a passenger bus of Baliwag Transit, Inc. upon
reaching the railroad crossing at Barrio Balungao, Calumpit, Bulacan and was hit by PNRs
express train causing damages to the bus and its passengers, eighteen (18) of whom died and
fifty-three (53) others suffered physical injuries. Alleging that the proximate cause of the




Issue: Whether or not the Collector of Customs may be held liable for the 43,050 yards actually
lost by private respondent.

217 SCRA 298; January 21, 1993

Facts: On January 30, 1972, the vessel S/S "Pacific Hawk" arrived at the Port of Manila
carrying, among others, 80 bales of screen net consigned to Bagong Buhay Trading. Said
importation was declared as 80 bales of screen net of 500 rolls with a gross weight of 12,777
kilograms valued at $3,750.00 and classified under Tariff Heading No. 39.06-B of the Tariff
and Customs Code 2 at 35% ad valorem. Acting on the strength of an information that the
shipment consisted of "mosquito net" made of nylon dutiable under Tariff Heading No. 62.02
of the Tariff and Customs Code, the Office of the Collector of Customs ordered a reexamination of the shipment. The re-examination revealed that the shipment consisted of 80
bales of screen net, each bale containing 20 rolls or a total of 1,600 rolls. Re-appraised, the
shipment was valued at $37,560.00 or $10.15 per yard instead of $.075 per yard as previously
declared. The Collector of Customs determined the subject shipment as made of synthetic
(polyethylene) woven fabric classifiable under Tariff Heading No. 51.04-B at 100% ad
valorem., Bagong Buhay Trading was assessed P272,600.00 as duties and taxes due on the
shipment in question. Since the shipment was also misdeclared as to quantity and value, the
Collector of Customs forfeited the subject shipment in favor of the government.
Private respondent then appealed the decision of the Collector of Customs by filing a petition
for review with the Commissioner of Customs the Commissioner affirmed the Collector of
From the Commissioner of Customs, private respondent elevated his case before the Court of
Tax Appeals. Upon review, the Court of Tax Appeals reversed the decision of the
Commissioner of Customs. Thereafter, the Commissioner of Customs moved for
reconsideration, the Court of Tax Appeals denied said motion for reconsideration private
respondent posted a cash bond to secure the release of 64 bales out of the 80 bales originally
delivered on January 30, 1972. Sixteen bales remain missing. Private respondent alleges that of
the 143,454 yards (64 bales) released to Bagong Buhay, only 116,950 yards were in good
condition and the 26,504 yards were in bad condition. Consequently, private respondent
demands that the Bureau of Customs be ordered to pay for damages for the 43,050 yards it
actually lost.

Held: 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.
On this point, the political doctrine that "the state may not be sued without its consent,"
categorically applies. As an unincorporated government agency without any separate juridical
personality of its own, the Bureau of Customs enjoys immunity from suit. Along with the
Bureau of Internal Revenue, it is invested with an inherent power of sovereignty, namely,
taxation. As an agency, the Bureau of Customs performs the governmental function of
collecting revenues which is definitely not a proprietary function. Thus, private respondent's
claim for damages against the Commissioner of Customs must fail.
FULL TITLE: HON. RAMON J. FAROLAN, JR., in his capacity as Commissioner of
Bureau of Printing v. BOPEA
1 SCRA 340; January 28, 1961
Facts: upon complaint of the respondents Bureau of Printing Employees Association (NLU)
Pacifico Advincula, Roberto Mendoza, Ponciano Arganda and Teodulo Toleran filed by an
acting prosecutor of the Industrial Court against herein petitioner Bureau of Printing, Serafin
Salvador, the Acting Secretary of the Department of General Services, and Mariano Ledesma
the Director of the Bureau of Printing. The complaint alleged that Serafin Salvador and Mariano
Ledesma have been engaging in unfair labor practices by interfering with, or coercing the
employees of the Bureau of Printing particularly the members of the complaining association
petition, in the exercise of their right to self-organization an discriminating in regard to hire and
tenure of their employment in order to discourage them from pursuing the union activities.

Serafin Salvador and Mariano Ledesma denied the charges and, alleged, among other things;
that the Bureau of Printing has no juridical personality to sue and be sued; that said Bureau of
Printing is not an industrial concern engaged for the purpose of gain but is an agency of the
Republic performing government functions. For relief, they prayed that the case be dismissed
for lack of jurisdiction. The CIR upheld its jurisdiction over the case on the theory that the
functions of the Bureau of Printing are exclusively proprietary in nature hence this petition


TEODULO TOLERAN, respondents.

Issue: Whether or Not Bureau of Printing Bureau of Printing is not an industrial concern
engaged for the purpose of gain but is an agency of the Republic performing government
functions? If so does an action against it amount as a suit against the state?

Holy See v. Rosario

Held: Petition is meritorious. The Bureau of Printing is an office of the Government created by
the Administrative Code of 1916 (Act No. 2657). As such instrumentality of the Government,
it operates under the direct supervision of the Executive Secretary, Office of the President, and
is "charged with the execution of all printing and binding, including work incidental to those
processes, required by the National Government and such other work of the same character. It
has no corporate existence, and its appropriations are provided for in the General
Appropriations Act. Designed to meet the printing needs of the Government, it is primarily a
service bureau and obviously, not engaged in business or occupation for pecuniary profit. It is
true, as stated in the order complained of, that the Bureau of Printing receives outside jobs and
that many of its employees are paid for overtime work on regular working days and on holidays,
but these facts do not justify the conclusion that its functions are "exclusively proprietary in
Clearly, while the Bureau of Printing is allowed to undertake private printing jobs, it cannot be
pretended that it is thereby an industrial or business concern. The additional work it executes
for private parties is merely incidental to its function, and although such work may be deemed
proprietary in character, there is no showing that the employees performing said proprietary
function are separate and distinct from those employed in its general governmental functions.
As an office of the Government, without any corporate or juridical personality, the Bureau of
Printing cannot be sued. (Sec. 1, Rule 3, Rules of Court). Any suit, action or proceeding against
it, if it were to produce any effect, would actually be a suit, action or proceeding against the
Government itself, and the rule is settled that the Government cannot be sued without its consent


238 SCRA 524; December 1, 1994

Facts: On April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner and the PRC, agreed to sell
to Ramon Licup Lots 5-A, 5-B and 5-D at the price of P1,240.00 per square meters. The
agreement to sell was made on the condition that earnest money of P100, 000.00 be paid by
Licup to the sellers, and that the sellers clear the said lots of squatters who were then occupying
the same; Licup paid the earnest money to Msgr. Cirilos; in the same month, Licup assigned
his rights to starbright enterprises.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute
arose as to who of the parties has the responsibility of evicting and clearing the land of squatters.
Complicating the relations of the parties was the sale by petitioner of Lot 5-A to Tropicana
Properties and Development Corporation.
Private respondent sued specific performance of the agreement to sell between it and the owners
of the lots; and damages.
Petitioner and Msgr. Cirilos separately moved to dismiss the complaint petitioner for lack
of jurisdiction based on sovereign immunity from suit, and Msgr. Cirilos for being an improper
party. An opposition to the motion was filed by private respondent.
The trial court issued an order denying, among others, petitioner's motion to dismiss after
finding that petitioner "shed off [its] sovereign immunity by entering into the business contract
in question. the trial court issued an order deferring the resolution on the motion for
reconsideration until after trial on the merits and directing petitioner to file its answer

Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of
sovereign immunity only on its own behalf and on behalf of its official representative, the Papal


Issue: Whether or Not the Holy See is immune from suit by entering into a business transaction
of selling the lots in question?

G.R. No. 142396; February 11, 2003

Held: Petiton is granted. the complaint against petitioner is DISMISSED. According to the
newer or restrictive theory, the immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis.
The mere entering into a contract by a foreign state with a private party cannot be the ultimate
test. Such an act can only be the start of the inquiry. The logical question is whether the foreign
state is engaged in the activity in the regular course of business. If the foreign state is not
engaged regularly in a business or trade, the particular act or transaction must then be tested by
its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act
jure imperii, especially when it is not undertaken for gain or profit.
In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real
estate business, surely the said transaction can be categorized as an act jure gestionis. However,
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
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.
as Presiding Judge of the Regional Trial Court of Makati, Branch 61 and STARBRIGHT

Minucher v. CA

Facts: Petitioner Khosrow Minucher, an Iranian national, was charged for violation of Section
4 of Republic Act No. 6425, otherwise known as the "Dangerous Drugs Act of 1972." The
narcotic agents who raided the house of Minucher were accompanied by private respondent
Arthur Scalzo. Minucher was acquitted by the trial court of the charges. Minucher filed a civil
case before the Regional Trial Court of Manila for damages on account of what he claimed to
have been trumped-up charges of drug trafficking made by Arthur Scalzo. Scalzo filed a motion
to dismiss the complaint on the ground that, being a special agent of the United States Drug
Enforcement Administration, he was entitled to diplomatic immunity. The trial court denied the
motion to dismiss. Scalzo filed a petition for certiorari with injunction with the Court, asking
that the complaint be ordered dismissed. The case was referred to the Court of Appeals. The
appellate court promulgated its decision sustaining the diplomatic immunity of Scalzo and
ordering the dismissal of the complaint against him. Minucher filed a petition for review with
the Court, appealing the judgment of the Court of Appeals. The Supreme Court reversed the
decision of the appellate court and remanded the case to the lower court. The Manila RTC
continued with its hearings on the case. After trial, the court rendered a decision in favor of
petitioner Khosrow Minucher and adjudged private respondent Arthur Scalzo liable in actual
and compensatory damages of P520,000.00; moral damages in the sum of P10 million;
exemplary damages in the sum of P100,000.00; attorney's fees in the sum of P200,000.00 plus
costs. On appeal, the Court of Appeals reversed the decision of the trial court and sustained the
defense of Scalzo that he was sufficiently clothed with diplomatic immunity during his term of
duty and thereby immune from the criminal and civil jurisdiction of the "Receiving State"
pursuant to the terms of the Vienna Convention. Hence, the present petition for review.
Issue: Whether or Not Arthur Scalzo as an Agent of United States Drug Enforcement
Administration be entitled to diplomatic immunity?
Held: Petition is denied. According to the Court, a foreign agent, operating within a territory,
can be cloaked with immunity from suit but only as long as it can be established that he is acting
within the directives of the sending state. The consent of the host state is an indispensable
requirement of basic courtesy between the two sovereigns. The official exchanges of

communication between agencies of the government of the two countries, certifications from
officials of both the Philippine Department of Foreign Affairs and the United States Embassy,
as well as the participation of members of the Philippine Narcotics Command in the "buy-bust
operation" conducted at the residence of Minucher at the behest of Scalzo, may be inadequate
to support the "diplomatic status" of the latter, but they give enough indication that the
Philippine government has given its imprimatur, if not consent, to the activities within
Philippine territory of agent Scalzo of the United States Drug Enforcement Agency. The job
description of Scalzo has tasked him to conduct surveillance on suspected drug suppliers and,
after having ascertained the target, to inform local law enforcers who would then be expected
to make the arrest. In conducting surveillance activities on Minucher, later acting as the poseurbuyer during the buy-bust operation, and then becoming a principal witness in the criminal case
against Minucher, Scalzo hardly can be said to have acted beyond the scope of his official
function or duties. All told, this Court is constrained to rule that respondent Arthur Scalzo, an
agent of the United States Drug Enforcement Agency allowed by the Philippine government to
conduct activities in the country to help contain the problem on the drug traffic, is entitled to
the defense of state immunity from suit
ARTHUR SCALZO, respondents.
Callado v. IRRI
244 SCRA 210; May 22, 1995
Facts: Ernesto Callado, petitioner, was employed as a driver at the IRRI from April 11, 1983
to December 14, 1990. On February 11, 1990, while driving an IRRI vehicle on an official trip
to the Ninoy Aquino International Airport and back to the IRRI, petitioner got involved an
accident. He was dismissed on the charges of driving under influence of alcohol, failure to
report a car battery problem for 6 hours amounting to serious misconduct, gross habitual neglect
of duties. Thereafter, petitioner filed a complaint on December 19, 1990 before the Labor
Arbiter for illegal dismissal, illegal suspension and indemnity pay with moral and exemplary
damages and attorney's fees.

IRRI, through counsel, 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. IRRI likewise wrote in the same tenor to the
Regional Director of the Department of Labor and Employment. While admitting IRRI's
defense of immunity, the Labor Arbiter, nonetheless, cited an Order issued by the Institute on
August 13, 1991 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 Labor arbiter ordered IRRI to reinstate Callado plus payment of
backwages. 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. It is contended that the immunity of the IRRI as an international
organization granted by Article 3 of Presidential Decree No. 1620 may not be invoked in the
case at bench inasmuch as it waived the same by virtue of its Memorandum on "Guidelines on
the handling of dismissed employees in relation to P.D. 1620.
Issue: Whether or Not IRRI waived its immunity from suit by entering into an employeremployee relationship?
Held: the petition for certiorari is DISMISSED. IRRI's immunity from suit is undisputed.
Presidential Decree No. 1620, Article 3 provides that 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
grant of immunity to IRRI is clear and unequivocal and an express waiver by its DirectorGeneral is the only way by which it may relinquish or abandon this immunity. Petitioners
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. 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. 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.

(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 performance of their functions."
277 SCRA 693; November 11, 1993
Facts: The Department of Agriculture (herein petitioner) and Sultan Security Agency entered
into a contract on for security services to be provided by the latter to the said governmental
entity. Save for the increase in the monthly rate of the guards, the same terms and conditions
were also made to apply to another contract, between the same parties. Pursuant to their
arrangements, guards were deployed by Sultan Agency in the various premises of the petitioner.
Several guards of the Sultan Security Agency 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, before the Regional Arbitration Branch X of Cagayan
de Oro City, The Executive Labor Arbiter rendered a decision, finding herein petitioner jointly
and severally liable with sultan Security Agency for the payment of the money claims,
aggregating P266,483.91, of the complainant security guards. The petitioner and Sultan
Security Agency did not appeal the decision of the Labor Arbiter. Thus, the decision became
final and executory. The Labor Arbiter issued a writ of execution, commanding the City Sheriff
to enforce and execute the judgment against the property of the two respondents. A petition for
injunction, prohibition and mandamus, with prayer for preliminary writ of injunction, was filed
by the petitioner with the National Labor Relations Commission ("NLRC"), Cagayan de Oro,
alleging, inter alia, that the writ issued was effected without the Labor Arbiter having duly

acquired jurisdiction over the petitioner, and that, therefore, the decision of the Labor Arbiter
was null and void and all actions pursuant thereto should be deemed equally invalid and of no
legal effect. The petitioner also pointed out that the attachment or seizure of its property would
hamper and jeopardize petitioner's governmental functions to the prejudice of the public good.
NLRC refused to quash the execution. In this petition the DA 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.
Issue: May the department of agriculture invoke the doctrine of non-suablity? Did the state
divest itself of its sovereign immunity when the DA entered into a contract with the SSA?
Held: Petition is granted. 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 contracts relates to the exercise of its sovereign
functions. In the instant case, the Department of Agriculture has not pretended to have assumed
a capacity apart from its being a governmental entity when it entered into the contract on
security services; nor that it could have, in fact, performed any act proprietary in character. But,
be that as it may, the claims of private respondents, i.e., for underpayment of wages, holiday
pay, overtime pay and similar other items, arising from the Contract for Security Services,
clearly constitute money claims., gives the consent of the State to be sued upon any moneyed
claim involving liability arising from contract, express or implied, Pursuant, however, to
Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No. 1445,
the money claim should first be brought to the Commission on Audit. When the State gives its
consent to be sued, it does not thereby necessarily consent to an unrestrained execution against
it. Tersely put, when the State waives its immunity, all it does, in effect, is to give the other
party an opportunity to prove, if it can, that the State has a liability. 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.


Republic v. Feliciano
148 SCRA 424; March 12, 1987
Facts: On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First
Instance of Camarines Sur against the Republic of the Philippines, represented by the Land
Authority, for the recovery of ownership and possession of a parcel of land, consisting of four
(4) lots,. The trial court rendered a decision declaring Lot No. 1 to be the private property of
the plaintiff. The rest of the property claimed by plaintiff reverted to the public domain. The
court a quo, reopened the case and directed the intervenors to file their corresponding pleadings
and present their evidence; additional evidence on July 30, 1971 and the case was set for hearing
for the reception of intervenors' evidence on August 30 and August 31, 1971. intervenors did
not appear but submitted a motion for postponement and resetting of the hearing The trial court
denied the motion for postponement and allowed plaintiff to offer his evidence "en ausencia,"
after which the case would be deemed submitted for decision. The trial court re-iterated its
previous decision.
A motion for reconsideration was immediately filed by the intervenors. But before this motion
was acted upon, plaintiff filed a motion for execution, the lower court, this time through Judge
Miguel Navarro, issued an order denying the motion for execution and setting aside the order
denying intervenors' motion for postponement. The case was reopened to allow intervenors to
present their evidence. Unable to secure a reconsideration of Judge Navarro's order, the plaintiff
went to the Intermediate Appellate Court on a petition for certiorari.
A motion for reconsideration was immediately filed by the intervenors. But before this motion
was acted upon, plaintiff filed a motion for execution, dated November 18, 1971. On December
10, 1971, the lower court, this time through Judge Miguel Navarro, issued an order denying the
motion for execution and setting aside the order denying intervenors' motion for postponement.
The case was reopened to allow intervenors to present their evidence. Unable to secure a
reconsideration of Judge Navarro's order, the plaintiff went to the Intermediate Appellate Court
on a petition for certiorari.

Said petition was, however, denied by the Intermediate Appellate Court, and petitioners brought
the matter to this Court intervenors filed a motion to dismiss, principally on the ground that the
Republic of the Philippines cannot be sued without its consent and hence the action cannot
prosper the case was remanded to the court a quo for further proceedings. The trial court,
through Judge Esteban Lising, issued the questioned order dismissing the case for lack of
jurisdiction. Respondent moved for reconsideration, while the Solicitor General, on behalf of
the Republic of the Philippines filed its opposition thereto, maintaining that the dismissal was
proper on the ground of non-suability of the State.
Upon denial of the motion for reconsideration, plaintiff again went to the Intermediate
Appellate Court on petition for certiorari, the respondent appellate court rendered its decision
reversing the order of Judge Lising and remanding the case to the court a quo for further
proceedings. Hence this petition.
Issue: Whether or not the state can be sued for recovery and possession of a parcel of land.
Held: We find the petition meritorious. The doctrine of non-suability of the State has proper
application in this case. The plaintiff has impleaded the Republic of the Philippines as defendant
in an action for recovery of ownership and possession of a parcel of land, bringing the State to
court just like any private person who is claimed to be usurping a piece of property. A suit for
the recovery of property is not an action in rem, but an action in personam. 1 It is an action
directed against a specific party or parties, and any judgment therein binds only such party or
parties. The complaint filed by plaintiff, the private respondent herein, is directed against the
Republic of the Philippines, represented by the Land Authority, a governmental agency created
by Republic Act No. 3844.
By its caption and its allegation and prayer, the complaint is clearly a suit against the State,
which under settled jurisprudence is not permitted, except upon a showing that the State has
consented to be sued, either expressly or by implication through the use of statutory language
too plain to be misinterpreted. 2 There is no such showing in the instant case. Worse, the
complaint itself fails to allege the existence of such consent. This is a fatal defect, 3 and on this
basis alone, the complaint should have been dismissed.

Republic vs. Purisima
78 SCRA 470; August 31, 1977
Facts: A motion to dismiss was filed on September 7, 1972 by defendant Rice and Corn
Administration in a pending civil suit inthe 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 meritsof a claim against any office or entity acting as part
of the machinery of the national government unless consent beshown, 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
Issue: Whether or Not the denial of the motion to dismiss was proper despite the fact that it is
a suit against the government?
Held: the petition for certiorari is granted and the resolution of October 4, 1972 denying the
motion to dismiss filed by the Rice and Corn Administration nullified and set aside and the
petition for prohibition is likewise granted restraining respondent Judge from acting on Civil
Case pending in his sala except for the purpose of ordering its dismissal for lack of jurisdiction
There is thus more than sufficient basis for an allegation of jurisdictional infirmity against the
order of respondent Judge denying the motion to dismiss dated October 4, 1972. 4 What is
more, 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.
Apparently respondent Judge was misled by the terms of the contract between the private
respondent, plaintiff in his sala, and defendant Rice and Corn Administration which, according

to him, anticipated the case of a breach of contract within the parties and the suits that may
thereafter arise. 13 The consent, to be effective though, 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.
That was clearly beyond the scope of his authority.
P. PURISIMA, the Presiding Judge of the Court of First Instance of Manila (Branch VII), and
Meritt v. Govt of the Philippine Islands
18 SCRA 1120; March 21, 1916
Facts: Plaintiff, riding on a motorcycle, collided with an ambulance of the General Hospital By
reason of the resulting collision, the plaintiff was so severely injured that, according to Dr.
Saleeby, who examined him on the very same day that he was taken to the General Hospital,
he was suffering from a depression in the left parietal region, a wound in the same place and in
beck part of his head, while blood issued from his nose and he was entirely unconscious. As a
consequence of the loss the plaintiff suffered in the efficiency of his work as a contractor, he
had to dissolve the partnership he had formed with the engineer, Wilson, because he was
incapacitated from making mathematical calculations on account of the condition of his leg and
of his mental faculties, and he had to give up a contract he had for the construction of the Uy
Chaco building. Act No. 2457, effective February 3, 1915 authorizing Meritt to sue the
Government. The Court of First Instance of the city of Manila ruled in favor of the plaintiff for
the sum of P14, 741, together with the costs of the cause
The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in finding
that the collision between the plaintiff's motorcycle and the ambulance of the General Hospital
was due to the negligence of the chauffeur; (b) in holding that the Government of the Philippine
Islands is liable for the damages sustained by the plaintiff as a result of the collision, even if it
be true that collision was due to the negligence of the chauffeur; and (c) in rendering judgment
against the defendant for the sum of P14,741.

Issue: Whether or not the Government is legally-liable for the damages incurred by the
Held: No. The Judgement of trial court is reversed. 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
The rule that the state is not liable for the torts committed by its officers or agents whom it
employs, except when expressly made so by legislative enactment, is well settled. "The
Government," says Justice Story, "does not undertake to guarantee to any person the fidelity of
the officers or agents whom it employs, since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest.
That the state can be made liable for injuries arising from the negligence of its agents or
servants, only by force of some positive statute assuming such liability The state is liable in this
sense when it acts through a special agent, but not when the damage should have been caused
by the official to whom properly it pertained to do the act performed
It is, therefore, evident that the State (the Government of the Philippine Islands) is only liable
for the acts of its agents, officers and employees when they act as special agents within the
meaning of paragraph 5 of article 1903, supra, and that the chauffeur of the ambulance of the
General Hospital was not such an agent.
ISLANDS, defendant-appellant.
Froilan v. Pan Oriental
G.R. No. L-11897. October 31, 1964
Facts: On March 7, 1947, Fernando A. Froilan purchased from the Shipping Administration a
boat described as MV/FS-197 P200,000.00, with a down payment of P50,000.00 to secure
payment of the unpaid balance of the purchase price, a mortgage was constituted on the vessel

in favor of the Shipping Administration. Froilan appeared to have defaulted in spite of demand
Thereafter, Froilan asked for a reconsideration of the action taken by the Shipping
Administration. Again, Froilan failed to settle his accounts. the General Manager directed its
officers, Capt. Laconico and others, to take immediate possession of the vessel and to suspend
the unloading of all cargoes on the same until the owners thereof made the corresponding
arrangement with the Shipping Administration. Pursuant to these instructions, the boat was, not
only actually repossessed, but the title thereto was registered again in the name of the Shipping
Administration, thereby re-transferring the ownership thereof to the government. Pan Oriental
Shipping Co., hereinafter referred to as Pan Oriental, offered to charter said vessel FS-197 for
a monthly rent. Because the government was then spending for the guarding of the boat and
subsistence of the crew-members since repossession, the Shipping Administration, accepted
Pan Oriental's offer "in principle" subject to the condition that the latter shall cause the repair
of the vessel, advancing the cost of labor and drydocking thereof, and the Shipping
Administration to furnish the necessary spare parts. In accordance with this charter contract,
the vessel was delivered to the possession of Pan Oriental. The Cabinet resolved to restore
Froilan to his rights under the original contract of sale on condition that he shall pay a sum of
money upon delivery of the vessel to him, that he shall continue paying the remaining
installments due, and that he shall assume the expenses incurred for the repair and by docking
of the vessel. Pan Oriental protested to this restoration of Froilans 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, Froilan having already relinquished
whatever rights he may have thereon. Froilan paid the required cash of P10,000.00 and as Pan
Oriental refused to surrender possession of the vessel, he filed an action for in the CIF Manila
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.
Issue: Whether or not the Court has jurisdiction over the intervenor with regard to the
Held: 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. 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.
COMPAIA MARITIMA, intervenors-appellees.
Republic vs. Sandiganbayan
204 SCRA 212;
Facts: On July 17, 1987, petitioner Republic of the Philippines, represented by the Philippine
Commission for Good Government, filed before the Sandiganbayan a complaint for "Reversion,
Reconveyance, Restitution, Accounting and Damages he complaint alleged that defendant
Ferdinand E. Marcos, former President of the Philippines, and his wife Imelda, in violation of
the Constitution and in fraud of the Filipino people, embarked on a systematic plan
accumulating wealth during their term as President and First Lady of the Republic; that part of
this plan was an agreement with herein private respondent Lucio C. Tan whereby Mr. Marcos
would own sixty per cent (60%) of Shareholdings, Inc., a holding company which beneficially
held and controlled substantial shares in corporations owned by Mr. Tan such as Fortune
Tobacco, Asia Brewery, Allied Banking Corporation and Foremost Farms; that in addition to
this agreement, Mr. Tan, from 1980 to 1986, paid Mr. Marcos sums of money as bribes and
commissions in consideration of the government's continued support for Mr. Tan's diversified
business ventures; that to prevent disclosure of these transactions, Mr. Marcos and Mr. Tan
used the other defendants named in the complaint as their incorporators, directors, board
members and/or stockholders of corporations held and/or controlled by the two; that Mr. Tan,
without sufficient collateral and consideration but through the assistance of then Central Bank
Governor Gregorio Licaros, acquired control of the General Bank and Trust Company which
eventually became Allied Banking Corporation; that the Marcos spouses and Mr. Tan caused
losses in millions of pesos to the Development Bank of the Philippines (DBP) by unlawfully
selling DBP's controlling interest in Century Park Sheraton Hotel Manila to a company grossly

undercapitalized but beneficially held and controlled by Mr. Tan, and that this transaction was
facilitated by defendant Don Harry, then Vice-Chairman of DBP, and defendant Harry Tan.
Petitioner prayed for reconveyance of all funds and property or payment of the value of such
funds and property, for accounting and damages.
Petitioner filed a "Motion for Leave To Take the Deposition of Rolando C. Gapud Upon Oral
Examination in the Crown Colony of Hongkong." Petitioner alleged that Mr. Rolando C.
Gapud, former financial adviser of President Marcos and his wife, was willing to testify on
matters relevant to the subject of the case; that Mr. Gapud executed three (3) sworn statements
in Hongkong in 1987 setting forth the various business activities of the former President, the
manner in which these businesses were conducted and managed, and identifying respondent
Lucio Tan and thirty (30) other principal business associates of the former President; that these
affidavits were used by petitioner in filing civil and criminal cases against the defendants; that
Mr. Gapud's testimony is indispensable to establish the intricate unlawful business activities of
the Marcoses and their principal business associates or cronies, including Mr. Tan; that in view
of the nature of his testimony and the personal risks Mr. Gapud was facing in assisting the
government in the recovery of ill-gotten wealth, his testimony would be given only by
deposition upon oral examination. Petitioner prayed that the court allow the taking of the
testimony by deposition upon oral examination of Mr. Gapud before the Philippine Consulate
in Hongkong, or in any other Philippine Foreign Office, and on such dates and time as may be
agreed upon by the parties. Sandiganbayan denied petitioner's "Motion for Leave to Take
Deposition of Rolando C. Gapud Upon Oral Examination in the Crown Colony of Hongkong."
Respondent court held that the taking of deposition is premature because not all defendants
have been summoned or have filed their answers to the complaint, and no special circumstances
existed that warranted the taking of the deposition before service of answers.
Issue: Whether or Not respondent Sandiganbayan did not commit grave abuse of discretion
when it denied the Motion for Leave to Take Deposition.
Held: Petition is denied. In the case at bar, petitioner alleges that the taking of Mr. Gapud's
deposition in lieu of his testimony is necessary because the allegations in the complaint are
based mainly on his disclosures regarding the business activities of President Marcos and Lucio
Tan; that although Mr. Gapud was granted immunity by President Aquino from criminal, civil
and administrative suits, he has been out of the country since 1987 and has no intention of
returning, fearing for his safety; that this fear arose from his damaging disclosures on the illicit
activities of the cronies and business associates of former President Marcos which therefore

renders him unable to testify at the trial. Petitioner has not cited any fact other than Mr. Gapud's
cooperation with the Philippine government in the recovery of ill-gotten wealth that would
support the deponent's claim of fear for his safety. No proof, much less any allegation, has been
presented to show that there exists a real threat to Mr. Gapud's life once he returns to the
Philippines and that adequate security cannot be provided by petitioner for such a vital witness.
There is no question that the trial court has the power to direct, in its discretion, that a deposition
shall not be taken, if there are valid reasons for so ruling. 34 Petitioner's reasons do not amount
to an "exceptional" or "unusual" case for us to grant leave and reverse respondent court.
Petitioner has not sufficiently shown the necessity for taking Mr. Gapud's deposition at this
point in time before the other defendants, particularly the individual defendants, have served
their answers. Petitioner has not alleged that Mr. Gapud is old, sick or infirm as to necessitate
the taking of his deposition. Indeed, no urgency has been cited and no ground given that would
make it prejudicial for petitioner to await joinder of issues.
Mobil Phil. v. Customs Arrastre Service
18 SCRA 1120
Facts: Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville" sometime
in November of 1962, consigned to Mobil Philippines Exploration, Inc., Manila. The shipment
arrived at the Port of Manila on April 10, 1963, and was discharged to the custody of the
Customs Arrastre Service, the unit of the Bureau of Customs then handling arrastre operations
therein. The Customs Arrastre Service later delivered to the broker of the consignee three cases
only of the shipment.
On April 4, 1964 Mobil Philippines Exploration, Inc., filed suit in the Court of First Instance of
Manila against the Customs Arrastre Service and the Bureau of Customs to recover the value
of the undelivered case in the amount of P18, 493.37 plus other damages.

On April 20, 1964 the defendants filed a motion to dismiss the complaint on the ground that not
being persons under the law, defendants cannot be sued. After plaintiff opposed the motion, the
court, on April 25, 1964, dismissed the complaint on the ground that neither the Customs
Arrastre Service nor the Bureau of Customs is suable. Plaintiff appealed to Us from the order
of dismissal. Raised, therefore, in this appeal is the purely legal question of the defendants'
suability under the facts stated. Appellant contends that not all government entities are immune
from suit; that defendant Bureau of Customs as operator of the arrastre service at the Port of
Manila, is discharging proprietary functions and as such can be sued by private individuals.
Issue: Whether or Not the Customs Arrastre Service is juridical person that can be sued?
Held: The order of dismissal is affirmed. Rules of Court, in Section 1, Rule 3, provide:
"SECTION 1. Who may be parties. only natural or juridical persons or entities authorized
by law may be parties in a civil action." accordingly, a defendant in a civil suit must be (1) a
natural person; (2) a juridical person or (3) an entity authorized by law to be sued. Neither the
Bureau of Customs nor its function unit, the Customs Arrastre Service, is a person. They are
merely parts of the machinery of Government. The Bureau of Customs is a bureau under the
Department of Finance (Sec. 81, Revised Administrative Code); and as stated, the Customs
Arrastre Service is a unit of the Bureau of Customs, set up under Customs Administrative Order
No. 8-62 of November 9, 1962. It follows that the defendants herein cannot be sued under the
first two above-mentioned categories of natural or juridical persons.
Now, the fact that a non-corporate government entity performs a function proprietary in nature
does not necessarily result in its being suable. If said non-governmental function is undertaken
as an incident to its governmental function, there is no waiver thereby of the sovereign
immunity from suit extended to such government entity. The Bureau of Customs, to repeat, is
part of the Department of Finance Its primary function is governmental, that of assessing and
collecting lawful revenues from imported articles and all other tariff and customs duties, fees,
charges, fines and penalties. To this function, arrastre service is a necessary incident. For
practical reasons said revenues and customs duties can not be assessed and collected by simply
receiving the importer's or ship agent's or consignee's declaration of merchandise being
imported and imposing the duty provided in the Tariff law. Customs authorities and officers
must see to it that the declaration tallies with the merchandise actually landed. And this
checking up requires that the landed merchandise be hauled from the ship's side to a suitable
place in the customs premises to enable said customs officers to make it, that is, it requires
arrastre operation.



Issue: Is the writ of execution valid?

Held: No, the writs of certiorari and prohibition are granted.

Republic v. Villasor
54 SCRA 84; November 28, 197
Facts: On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor of
respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction
Corporation, and against the petitioner herein, confirming the arbitration award in the amount
of P1,712,396.40, subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable
Guillermo P. Villasor, issued an Order declaring the aforestated decision of July 3, 1961 final
and executory, directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila to
execute the said decision. 9. Pursuant to the said Order dated June 24, 1969, the corresponding
Alias Writ of Execution [was issued] dated June 26, 1969, . . . 10. On the strength of the aforementioned Alias Writ of Execution dated June 26, 1969, the Provincial Sheriff of Rizal
(respondent herein) served notices of garnishment dated June 28, 1969 with several Banks,
specially on the `monies due the Armed Forces of the Philippines in the form of deposits,
sufficient to cover the amount mentioned in the said Writ of Execution'; the Philippine Veterans
Bank received the same notice of garnishment on June 30, 1969 . . . 11. The funds of the Armed
Forces of the Philippines on deposit with the Banks, particularly, with the Philippine Veterans
Bank and the Philippine National Bank [or] their branches are public funds duly appropriated
and allocated for the payment of pensions of retirees, pay and allowances of military and
civilian personnel and for maintenance and operations of the Armed Forces of the Philippines,
as per Certification dated July 3, 1969 by the AFP Comptroller, . . ." 2 The paragraph
immediately succeeding in such petition then alleged: "12. Respondent Judge, Honorable
Guillermo P. Villasor, acted in excess of jurisdiction [or] with grave abuse of discretion
amounting to lack of jurisdiction in granting the issuance of an alias writ of execution against
the properties of the Armed Forces of the Philippines, hence, the Alias Writ of Execution and
notices of garnishment issued pursuant thereto are null and void." 3 In the answer filed by
respondents, through counsel Andres T. Velarde and Marcelo B. Fernan, the facts set forth were
admitted with the only qualification being that the total award was in the amount of
P2,372,331.40. .

What was done by respondent Judge is not in conformity with the dictates of the Constitution.
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." Sociological jurisprudence supplies an answer not
dissimilar. So it was indicated in a recent decision, Providence Washington Insurance Co. v.
Republic of the Philippines, 6 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
OF MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P.J. KIENER CO.,
PNB vs. Pabalan
83 SCRA 595; June 15, 1978
Facts: On December 17, 1970 A Judgment was rendered against Philippine Virginia Tobacco
Administration. Judge Pabalan issued a writ of execution, followed thereafter by a notice of
garnishment of funds for the full amount mentioned in the writ, was issued by respondent judge.

Petitioner Philippine National Bank, with whose La Union Branch has funds to be garnished
are deposited, objected and raised the doctrine of non-suablity of the state, alleging that such
funds are public in character. Failing to have the order set aside, petitioner instituted this present
Issue: Whether Or Not the funds subject of the writ of execution maybe garnished? Is the
contention of PNB that the same funds are public in character?
Held: No, this petition for certiorari and prohibition is dismissed he doctrine of non-suability
cannot be legally set forth as a bar or impediment to a notice of garnishment. The doctrine of
non-suability cannot be legally set forth as a bar or impediment to a notice of garnishment. In
National Shipyard and Steel Corporation v. Court of Industrial Relations, 118 Phil. 782 (1963),
it was explicitly stated: "That allegation to the effect that the funds of the NASSCO are public
funds of the government, and that, as such the same may not be garnished, attached or levied
upon, is untenable for, as a government owned and controlled corporation, the NASSCO has a
personality of its own, distinct and separate from that of the Government. It has pursuant to
Section 2 of Executive Order No. 356, dated October 23, 1950 . . ., pursuant to which the
NASSCO has been established "all the powers of a corporation under the Corporation Law
. . . " Accordingly, it may sue and be sued and may be subjected to court processes just like any
other corporation (Section 13, Act No. 1459, as amended.)"
When the government enters into commercial business, it abandons its sovereign capacity and
is to be treated like any other corporation. By engaging in a particular business thru the
instrumentality of a corporation, the government divests itself pro hac vice of its sovereign
character, so as to render the corporation subject to the rules of law governing private
To repeat, the ruling was the appropriate remedy for the prevailing party which could proceed
against the funds of a corporate entity even if owned or controlled by the government.
PABALAN, Judge of the Court of First Instance, Branch III, La Union, AGOO TOBACCO
ADMINISTRATION, and PANFILO P. JIMENEZ, Deputy Sheriff, La Union, respondents.

Syquia vs. Almeda Lopez

84 PHIL 312; August 17, 1949
Facts: The plaintiffs named Pedro, Gonzalo, and Leopoldo, all surnamed Syquia, are the
undivided joint owners of three apartment buildings situated in the City of Manila known as the
North Syquia Apartments, South Syquia Apartments and Michel Apartments located at 1131
M. H. del Pilar, 1151 M. H. del Pilar and 1188 A. Mabini Streets, respectively. said plaintiffs
executed three lease contracts, one for each of the three apartments, in favor of the United States
of America. The apartment buildings were used for billeting and quartering officers of the U.
S. armed forces stationed in the Manila area. Plaintiffs sometime in March, 1946, approached
the predecessors in office of defendants Moore and Tillman and requested the return of the
apartment buildings to them, but they were advised that the U. S. Army wanted to continue
occupying the premises. On May 11, 1946, said plaintiffs requested the predecessors in office
of Moore and Tillman to renegotiate said leases, execute lease contracts for a period of three
years and to pay a reasonable rental higher than those payable under the old contracts. The
predecessor in office of Moore in a letter dated June 6, 1946, refused to execute new leases but
advised that "it is contemplated that the United States Army will vacate subject properties prior
to 1 February 1947." Not being in conformity with the continuance of the old leases because of
the alleged comparatively low rentals being paid thereunder, plaintiffs formally requested
Tillman to cancel said three leases and to release the apartment buildings on June 28, 1946.
Tillman refused to comply with the request. Because of the alleged representation and assurance
that the U. S. Government would vacate the premises before February 1, 1947. Because of the
failure to comply with the alleged representation and assurance that the three apartment
buildings will be vacated prior to February 1, 1947, plaintiffs on February 17, 1947, served
formal notice upon defendants Moore and Tillman and 64 other army officers or members of
the United States Armed Forces who were then occupying apartments in said three buildings,
demanding (a) cancellation of said leases; (b) increase in rentals to P300 per month per
apartment effective thirty days from notice; (c) execution of new leases for the three or any one
or two of the said apartment buildings for a definite term, otherwise, (d) release of said
apartment buildings within thirty days of said notice in the event of the failure to comply with
the foregoing demands. The thirty-day period having expired without any of the defendants
having complied with plaintiffs' demands, the plaintiffs commenced the present action in the
Municipal Court of Manila in the form of an action for unlawful detainer (desahucio) against
Moore and Tillman and the 64 persons occupying apartments in the three buildings for the
purpose of having them vacate the apartments, each occupant to pay P300 a month for his

particular apartment from January 1, 1947 until each of said particular defendant had vacated
said apartment; to permit plaintiffs access to said apartment buildings for the purpose of
appraising the damages sustained as the result of the occupancy by defendants; that defendants
be ordered to pay plaintiffs whatever damages may have been actually caused on said property;
and that in the event said occupants are unable to pay said P300 a month and/or the damages
sustained by said property, the defendants Moore and Tillman jointly and severally be made to
pay said monthly rentals of P300 per month per apartment from January 1, 1947 to March 19,
1947, inclusive, and/or the damages sustained by said apartments, and that defendants Moore
and Tillman be permanently.
Philippine Ryukus Command filed a motion to dismiss on the ground that the court had no
jurisdiction over the defendants and over the subject matter of the action, because the real party
in interest was the U. S. Government and not the individual defendants named in the complaint.
The MTC dismissed the complaint. The CIF of Manila also did the same upon appeal.
Issue: Whether or Not the unlawful detainer case may prosper? Is The U.S. a party in interest?
Held: the Municipal Court of Manila committed no error in dismissing the case for lack of
jurisdiction and that the Court of First Instance acted correctly in affirming the municipal court's
order of dismissal. Case dismissed.
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 courts may entertain such a suit although
the Government itself is not included as a party-defendant.
But where the judgment in the suit by the private citizen against the officers and agents of the
government would result not only in the recovery of possession of 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
entertained by courts except with the consent of said government
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 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
petitioners, vs. NATIVIDAD ALMEDA LOPEZ, Judge of Municipal Court of Manila,
CONRADO V. SANCHEZ, Judge of Court of First Instance of Manila, GEORGE F. MOORE
ET AL., respondents.
U.S. vs. Ruiz
136 SCRA 497; May 22, 1985
Facts: 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 the
following projects:
1. Repair fender system, Alava Wharf at the U.S. Naval Station Subic Bay,
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline
revetment, NAVBASE Subic; and repair to Leyte Wharf approach, NAVBASE Subic
Bay, Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent
thereto, the company received from the United States two telegrams requesting it to confirm its
price proposals and for the name of its bonding company. The company complied with the
requests. In June, 1972, the company received a letter which was signed by William I. Collins,
Director, Contracts Division, Naval Facilities Engineering Command, Southwest Pacific,
Department of the Navy of the United States, who is one of the petitioners herein. The letter
said that the company did not qualify to receive an award for the projects because of its previous
unsatisfactory performance rating on a repair contract for the sea wall at the boat landings of
the U.S. Naval Station in Subic Bay. The letter further said that the projects had been awarded
to third parties.

the company sued the United States of America and Messrs. James E. Galloway, William I.
Collins and Robert Gohier all members of the Engineering Command of the U.S. Navy. The
complaint is to order the defendants to allow the plaintiff to perform the work on the projects
and, in the event that specific performance was no longer possible, to order the defendants to
pay damages. The company also asked for the issuance of a writ of preliminary injunction to
restrain the defendants from entering into contracts with third parties for work on the projects.
The defendants entered their special appearance "for the purpose only of questioning the
jurisdiction of this court over the subject matter of the complaint and the persons of defendants,
the subject matter of the complaint being acts and omissions of the individual defendants as
agents of defendant United States of America, a foreign sovereign which has not given her
consent to this suit or any other suit for the causes of action asserted in the complaint
Subsequently the defendants filed a motion to dismiss the complaint which included an
opposition to the issuance of the writ of preliminary injunction. The company opposed the
motion. The trial court denied the motion and issued the writ. The defendants moved twice to
reconsider but to no avail. Hence the instant petition which seeks to restrain perpetually the
proceedings in Civil Case for lack of jurisdiction on the part of the trial court.
Issue: Whether or Not the trial court erred in issuing a writ of PI against the respondent officers
of the Engineering command of the U.S. navy?
Held: the petition is granted; the questioned orders of the respondent judge are set aside and
Civil Case No. 779-M is dismissed. 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 imperii. The
restrictive application of State immunity is now the rule in the United States, the United
Kingdom and other states in Western Europe. 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.
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.,
Sanders v. Veridiano II
162 SCRA 88; June 10, 1988
Facts: Sanders was, at the time the incident in question occurred, the special services director
of the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the
commanding officer of the Subic Naval Base, which includes the said station. 2 Private
respondent Rossi is an American citizen with permanent residence in the Philippines, 3 as so
was private respondent Wyer, who died two years ago. 4 They were both employed as
gameroom attendants in the special services department of the NAVSTA, the former having
been hired in 1971 and the latter in 1969. 5 On October 3, 1975, the private respondents were
advised that their employment had been converted from permanent full-time to permanent parttime, effective October 18, 1975. Their reaction was to protest this conversion and to institute
grievance proceedings conformably to the pertinent rules and regulations of the U.S.
Department of Defense. The result was a recommendation from the hearing officer who
conducted the proceedings for the reinstatement of the private respondents to permanent fulltime status plus backwages. The report on the hearing contained the observation that "Special
Services management practices an autocratic form of supervision."
On November 7, 1975, before the start of the grievance hearings, a letter (Annex "B" of the
complaint) purportedly coming from petitioner Moreau as the commanding general of the U.S.
Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining the change of
the private respondent's employment status and requesting concurrence therewith. The letter

did not carry his signature but was signed by W.B. Moore, Jr. "by direction," presumably of
Moreau. On the basis of these antecedent facts, the private respondent filed in the Court of First
Instance of Olongapo City a complaint for damages against the herein petitioners on November
8, 1976. 8 The plaintiffs claimed that the letters contained libelous imputations that had exposed
them to ridicule and caused them mental anguish and that the prejudgment of the grievance
proceedings was an invasion of their personal and proprietary rights. The private respondents
made it clear that the petitioners were being sued in their private or personal capacity. However,
in a motion to dismiss filed under a special appearance, the petitioners argued that the acts
complained of were performed by them in the discharge of their official duties and that,
consequently, the court had no jurisdiction over them under the doctrine of state immunity.
After extensive written arguments between the parties, the motion was denied in an order dated
March 8, 1977, 9 on the main ground that the petitioners had not presented any evidence that
their acts were official in nature and not personal torts, moreover, the allegation in the complaint
was that the defendants had acted maliciously and in bad faith.

Given the official character of the above-described letters, we have to conclude that the
petitioners were, legally speaking, being sued as officers of the United States government. As
they have acted on behalf of that government, and within the scope of their authority, it is that
government, and not the petitioners personally, that is responsible for their acts. Assuming that
the trial can proceed and it is proved that the claimants have a right to the payment of damages,
such award will have to be satisfied not by the petitioners in their personal capacities but by the
United States government as their principal. This will require that government to perform an
affirmative act to satisfy the judgment, viz., the appropriation of the necessary amount to cover
the damages awarded, thus making the action a suit against that government without its consent
T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of Zambales,
Olongapo City, ANTHONY M. ROSSI and RALPH L. WYERS, respondents.

Issue: Whether or Not whether or not the petitioners were performing their official duties when
they did the acts for which they have been sued for damages by the private respondents
Held: Petition is Granted. it is abundantly clear in the present case that the acts for which the
petitioners are being called to account were performed by them in the discharge of their official
duties. Sanders, as director of the special services department of NAVSTA, undoubtedly had
supervision over its personnel, including the private respondents, and had a hand in their
employment, work assignments, discipline, dismissal and other related matters. It is not
disputed that the letter he had written was in fact a reply to a request from his superior, the other
petitioner, for more information regarding the case of the private respondents. 14 Moreover,
even in the absence of such request, he still was within his rights in reacting to the hearing
officer's criticism in effect a direct attack against him that Special Services was practicing
"an autocratic form of supervision." As for Moreau, what he is claimed to have done was write
the Chief of Naval Personnel for concurrence with the conversion of the private respondents'
type of employment even before the grievance proceedings had even commenced. Disregarding
for the nonce the question of its timeliness, this act is clearly official in nature, performed by
Moreau as the immediate superior of Sanders and directly answerable to Naval Personnel in
matters involving the special services department of NAVSTA. In fact, the letter dealt with the
financial and budgetary problems of the department and contained recommendations for their
solution, including the re-designation of the private respondents. There was nothing personal
or private about it.

US vs. Rodrigo, US vs. Guinto

G.R. No. 76607; February 26, 1990
Rodrigo Case:
Facts: Fabian Genove filed a complaint for damages against petitioners Anthony Lamachia,
Wilfredo Belsa, Rose Cartalla and Peter Orascion for his dismissal as cook in the U.S. Air Force
Recreation Center at the John Hay Air Station in Baguio City. It had been ascertained after
investigation, from the testimony of Belsa, Cartalla and Orascion, that Genove had poured urine
into the soup stock used in cooking the vegetables served to the club customers. Lamachia, as
club manager, suspended him and thereafter referred the case to a board of arbitrators
conformably to the collective bargaining agreement between the Center and its employees. The
board unanimously found him guilty and recommended his dismissal. This was effected on
March 5, 1986, by Col. David C. Kimball, Commander of the 3rd Combat Support Group,
PACAF Clark Air Force Base. Genove's reaction was to file his complaint in the Regional Trial
Court of Baguio City against the individual petitioners.

On March 13, 1987, the defendants, joined by the United States of America, moved to dismiss
the complaint, alleging that Lamachia, as an officer of the U.S. Air Force stationed at John Hay
Air Station, was immune from suit for the acts done by him in his official capacity. They argued
that the suit was in effect against the United States, which had not given its consent to be sued.
Cdpr This motion was denied by the respondent judge on June 4, 1987, in an order which read
in part: It is the understanding of the Court, based on the allegations of the complaint which
have been hypothetically admitted by defendants upon the filing of their motion to dismiss
that although defendants acted initially in their official capacities, their going beyond what their
functions called for brought them out of the protective mantle of whatever immunities they may
have had in the beginning. Thus, the allegation that the acts complained of were "illegal," done,
with "extreme bad faith" and with "pre-conceived sinister plan to harass and finally dismiss"
the plaintiff, gains significance.
Issue: Whether or Not the petitioners are entitled to invoke the immunity of state from suit? If
so is it liable?
Held: Petition Granted. From the circumstances, the Court can assume that the restaurant
services offered at the John Hay Air Station partake of the nature of a business enterprise
undertaken by the United States government in its proprietary capacity. Such services are not
extended to the American servicemen for free as a perquisite of membership in the Armed
Forces of the United States. Neither does it appear that they are exclusively offered to these
servicemen; on the contrary, it is well known that they are available to the general public as
well, including the tourists in Baguio City, many of whom make it a point to visit John Hay for
this reason. All persons availing themselves of this facility pay for the privilege like all other
customers as in ordinary restaurants. Although the prices are concededly reasonable and
relatively low, such services are undoubtedly operated for profit, as a commercial and not a
governmental activity. The consequence of this finding is that the petitioners cannot invoke the
doctrine of state immunity to justify the dismissal of the damage suit against them by Genove.
Such defense will not prosper even if it be established that they were acting as agents of the
United States when they investigated and later dismissed Genove. For that matter, not even the
United States government itself can claim such immunity. The reason is that 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 these considerations notwithstanding,
we hold that the complaint against the petitioners in the court below must still be dismissed.
While suable, the petitioners are nevertheless not liable. It is obvious that the claim for damages
cannot be allowed on the strength of the evidence before us, which we have carefully examined.

The dismissal of the private respondent was decided upon only after a thorough investigation
where it was established beyond doubt that he had polluted the soup stock with urine. The
investigation, in fact, did not stop there. Despite the definitive finding of Genove's guilt, the
case was still referred to the board of arbitrators provided for in the collective bargaining
agreement. This board unanimously affirmed the findings of the investigators and
recommended Genove's dismissal. There was nothing arbitrary about the proceedings. The
petitioners acted quite properly in terminating the private respondent's employment for his
unbelievably nauseating act. It is surprising that he should still have the temerity to file his
complaint for damages after committing his utterly disgusting offense.
Guinto Case:
Facts: The private respondents are suing several officers of the U.S. Air Force stationed in
Clark Air Base in connection with the bidding conducted by them for contracts for barbering
services in the said base. On February 24, 1986, the Western Pacific Contracting Office,
Okinawa Area Exchange, U.S. Air Force, solicited bids for such contracts through its
contracting officer, James F. Shaw. Among those who submitted their bids were private
respondents Roberto T. Valencia, Emerenciana C. Tanglao, and Pablo C. del Pilar. Valencia
had been a concessionaire inside Clark for 34 years; del Pilar for 12 years; and Tanglao for 50
years. The bidding was won by Ramon Dizon, over the objection of the private respondents,
who claimed that he had made a bid for four facilities, including the Civil Engineering Area,
which was not included in the invitation to bid. The private respondents complained to the
Philippine Area Exchange (PHAX). The latter, through its representatives, petitioners Yvonne
Reeves and Frederic M. Smouse, explained that the Civil Engineering concession had not been
awarded to Dizon as a result of the February 24, 1986 solicitation. Dizon was already operating
this concession, then known as the NCO club concession, and the expiration of the contract had
been extended from June 30, 1986 to August 31, 1986. They further explained that the
solicitation of the CE barbershop would be available only by the end of June and the private
respondents would be notified. Cdpr On June 30,1986, the private respondents filed a complaint
in the court below to compel PHAX and the individual petitioners to cancel the award to
defendant Dizon, to conduct a rebidding for the barbershop concessions and to allow the private
respondents by a writ of preliminary injunction to continue operating the concessions pending

Upon the filing of the complaint, the respondent court issued an ex parte order directing the
individual petitioners to maintain the status quo.
On July 22, 1986, the petitioners filed a motion to dismiss and opposition to the petition for
preliminary injunction on the ground that the action was in effect a suit against the United States
of America, which had not waived its non-suability. The individual defendants, as
officials/employees of the U.S. Air Force, were also immune from suit.
On the same date, July 22, 1986, the trial court denied the application for a writ of
On October 10, 1988, the trial court denied the petitioners' motion to dismiss, holding in part
as follows:
From the pleadings thus far presented to this Court by the parties, the Court's attention is called
by the relationship between the plaintiffs as well as the defendants, including the US
Government in that prior to the bidding or solicitation in question, there was a binding contract
between the plaintiffs as well as the defendants, including the US Government. By virtue of
said contract of concession, it is the Court's understanding that neither the US Government nor
the herein principal defendants would become the employer/s of the plaintiffs but that the latter
are the employers themselves of the barbers, etc. with the employer, the plaintiffs herein,
remitting the stipulated percentage of commissions to the Philippine Area Exchange. The same
circumstance would become m effect when the Philippine Area Exchange opened for bidding
or solicitation the questioned barber shop concessions. To this extent, therefore, indeed a
commercial transaction has been entered, and for purposes of the said solicitation, would
necessarily be entered between the plaintiffs as well as the defendants.
The Court, further, is of the view that Article XVIII of the RP-US Bases Agreement does not
cover such kind of services falling under the concessionaireship, such as a barber shop
concession. 2

On December 11, 1986, following the filing of the herein petition for certiorari and prohibition
with preliminary injunction, we issued a temporary restraining order against further
proceedings in the court below.
Issue: Whether or Not the petitioners may invoke state immunity from suit with respect to the
contracts pertaining to barbershops
Held: Petition Denied. We also find that the barbershops subject of the concessions granted by
the United States government are commercial enterprises operated by private persons. They are
not agencies of the United States Armed Forces nor are their facilities demandable as a matter
of right by the American servicemen. This being the case, the petitioners cannot plead any
immunity from the complaint filed by the private respondents in the court below. The contracts
in question being decidedly commercial, the conclusion reached in the United States of America
v. Ruiz case cannot be applied here.
RODRIGO, as Presiding Judge of Branch 7, Regional Trial Court (BAGUIO CITY), La
Trinidad, Benguet and FABIAN GENOVE, respondents.
petitioners, vs. HON. ELIODORO B. GUINTO, Presiding Judge, Branch LVII, Regional Trial
PABLO C. DEL PILAR, respondents.
Torio vs. Fontanilla
85 SCRA 399; October 23, 1978
Facts: the Municipal Council of Malasiqui, Pangasinan, resolved to celebrate the town fiesta
and created a "Town Fiesta Executive Committee" to undertake, manage and supervise the
festivities. The Executive Committee created a sub-committee on "Entertainment and Stage",
which constructed two stages, one for the "zarzuela" and another for "cancionan." During the

program people went up the "zarzuela" stage and before the play was over the stage collapsed,
pinning underneath one of the performers, resulting in his death. The heirs of the deceased sued
the municipality and the councilors for damages. The municipality invoked inter alia the
principal defense that the holding of a town fiesta was an exercise of its governmental function
from which no liability can arise to answer for the negligence of any of its agents. The
councilors maintained that they merely acted as agents of the municipality in carrying out the
municipal ordinance. The trial court dismissed the complaint of a finding that the petitioners
exercised due diligence and care of a good father of a family in selecting a competent man to
construct the stage and if it collapsed it was due to forces beyond the control of the committee
on entertainment and stage. The Court of Appeals reversed the decision stating that petitioners
were guilty of negligence when they failed to take the necessary measures to prevent the
mounting of onlookers on the stage resulting in the collapse thereof.
Issue: Whether or not the Municipality of Malasiqui may be held liable.
Held: We AFFIRM in toto the decision of the Court of Appeals insofar as the Municipality of
Malasiqui is concerned (L-30183), and We absolve the municipal councilors from liability and
SET ASIDE the judgment against them under Philippine laws municipalities are political bodies
corporate and as such are endowed with the faculties of municipal corporations to be exercised
by and through their respective municipal governments in conformity with law, and in their
proper corporate name, they may inter alia, sue and be sued, and contract and be contracted
Municipal corporations exist in a dual capacity and their powers are twofold in character
public, governmental or political on the one hand, corporate private, or proprietary on the other
hand. Governmental powers are those exercised by the corporation in administering the powers
of the state and promoting the public welfare and they include the legislative, judicial, public,
and political. Municipal powers on the other hand are exercised for the special benefit and
advantage of the community and include those which are ministerial, private and corporate.
A municipal corporation proper has a public character as regards the state at large insofar as it
is its agent in government, and private insofar as it is to promote local necessities and
conveniences for its own community (McQuillin on Municipal Corporations). Stated
differently, "Municipal corporations exist in a dual capacity and their functions are twofold. In
one way they exercise the right springing from sovereignty, and while in the performance of
the duties pertaining thereto, their acts are political and governmental. Their officers and agents

in such capacity, though elected or appointed by them, are nevertheless public functionaries
performing a public service, and as such they are officers, agents, and servants of the state. In
the other capacity the municipalities exercise a private, proprietary or corporate right, arising
from their existence as legal persons and not as public agencies. Their officers and agents in the
performance of such functions act in behalf of the municipalities in their corporate or individual
capacity, and not for the state or sovereign power
if the injury is caused in the course of the performance of a governmental function or duty no
recovery, as a rule, can be had from the municipality unless there is an existing statute on the
matter, nor from its officers, so long as they performed their duties honestly and in good faith
or that they did not act wantonly and maliciously. With respect to proprietary functions, the
settled rule is that a municipal corporation can be held liable to third persons ex contractu or ex
delicto. The rule of law is a general one, that the superior or employer must answer civilly for
the negligence or want of skill of his agent or servant in the course or line of his employment,
by which another, who is free from contributory fault, is injured. Municipal corporations under
the conditions herein stated, fall within the operation of this rule of law, and are liable,
accordingly, to civil actions for damages when the requisite elements of liability coexist (Dillion
on Municipal Corporations). There can be no hard and fast rule for purposes of determining the
true nature of an undertaking or function of a municipality; the surrounding circumstances of a
particular case are to be considered and will be decisive. The basic element, however beneficial
to the public the undertaking may be, is that it is governmental in essence, otherwise the
function becomes private or proprietary in character.
Section 2282 of the Revised Administrative Code simply gives authority to the municipality to
celebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding a fiesta
even if the purpose is to commemorate a religious or historical event of the town is in essence
an act for the special benefit of the community and not for the general welfare of the public
performed in pursuance of a policy of the state. It is an exercise of a private proprietary function.
The mere fact that the celebration was not to secure profit or gain but merely to provide
entertainment to the town inhabitants is not a conclusive test that the same is governmental in
The municipality cannot evade responsibility for the death of a stage performer arising from
faulty construction of the stage by the chairman of the entertainment and stage committee
appointed by the municipal council, in connection with a town fiesta, because under the doctrine

of respondeat superior, a municipality is responsible or liable for the negligence of its agent
acting within his assigned tasks.
The celebration of a town fiesta by a municipality is not a governmental function. The legal
consequence is that the municipality stands on the same footing as an ordinary private
corporation with the municipal council acting as its board of directors. It is an elementary
principle that a corporation has a personality separate and distinct from its officers, directors,
or persons composing it and the latter are not as a rule co-responsible in an action for damages
for tort or negligence (culpa acquiliana) committed by the corporation's employees or agents
unless there is a showing of bad faith or gross or wanton negligence on their part.
Municipal Council of Malasiqui in 1959, Malasiqui, Pangasinan, petitioners, vs. ROSALINA,
Palafox vs. Province of Ilocos Norte
L-10659; January 31, 1958



Sabas Torralba was employed as the driver of Ilocos Norte and detailed
to the Office of the District Engineer
While driving his truck, he ran over Proceto Palafox and the victim died.
Sabas was prosecuted for homicide through reckless imprudence to
which he pleaded guilty.
The heirs of Palafox instituted a civil case against the Province, District
Engineer, Provincial Treasurer and Sabas Torralba.
WON the Province of Ilocos Norte can be held liable? NO

This case highlights the general rule that local government units are not liable for
negligent acts of its employees while they are performing governmental functions or
duties. In this case, the driver Torralba was involved in the construction or
maintenance of roads which was a governmental duty. Therefore, the province
cannot be held liable for his negligent act.