DOCTRINE OF STATE IMMUNITY

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

There can be no legal right against the authority which makes the law on which the right depends (Republic vs. Villasor,
GRN L30671, November 28, 1973). However, it may be sued if it gives consent, whether express or implied.

Express consent of the State may be manifested through general or special law. Solicitor General cannot validly
waive immunity from suit. Only the Congress can (Republic v. Purisima, G.R. No. L36084, Aug.31, 1977).

Implied consent is given when the State itself commences litigation or when it enters into a contract. There is an implied
consent when the state enters into a business contract. (US v. Ruiz, G.R. No. L35645 May 22, 1985). However, this rule
is not absolute.

Not all contracts entered into by the government operate as a waiver of its nonsuability. Distinction must still be made
between one which is executed in the exercise of its sovereign function and another which is done in its proprietary
capacity. A State may be said to have descended to the level of an individual and can this be deemed to have actually
given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to
the exercise of its sovereign functions. (Department of Agriculture vs. NLRC G.R. No. 104269, November 11, 1993)

A suit considered as suit against the State under the following instances:

1. When the Republic is sued by name;

2. When the suit is against an unincorporated government agency;

3. When the suit is on its face against a government officer but the case is such.

While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints
filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The rule is that if
the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as
the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as
against the state itself, although it has not been formally impleaded.

It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and
injurious to the rights of plaintiff. Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of
govt. officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have
been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule
of immunity of the State from suit. The doctrine of stateimmunity cannot be used as an instrument for perpetrating an
injustice.

The cloak of immunity is removed from the moment the public official is sued in his individual capacity such as where he
acts without authority or in excess of the powers vested in him. A public official may be liable in his personal capacity for
whatever damage he may have caused by his act done with malice and in bad faith, or beyond the scope of his authority
or jurisdiction. In this case, the officers are liable for damages.

The doctrine is also available to foreign States insofar as they are sought to be sued in the courts of the local State. The
added basis in this case is the principle of the sovereign equality of States, under w/c one State cannot assert jurisdiction
over another in violation of the maxim par in parem non habet imperium. To do so would "unduly vex the peace of
nations."

REPUBLIC VS. VILLASOR, ET AL.

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

DEPT OF AGRICULTURE VS NLRC

G.R. No. 104269 November 11, 1993

DEPARTMENT OF AGRICULTURE, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.

Facts:

The case is regarding money claim against Department of Agriculture (DA) as filed and requested by National Labor
Relations Commission (NLRC).

Petitioner Department of Agriculture and Sultan Security Agency entered into a contract for security services to be
provided by the latter to the said governmental entity. Pursuant to their arrangements, guards were deployed by Sultan
Security Agency in the various premises of the DA. Thereafter, several guards filed a complaint for underpayment
of wages, non-payment of 13th month pay, uniform allowances, night shift differential pay, holiday pay, and overtime
pay, as well as for damages against the DA and the security agency.

The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the security agency for the
payment of money claims of the complainant security guards. The DA and the security agency did not appeal the
decision. Thus, the decision became final and executory. The Labor Arbiter issued a writ of execution to enforce and
execute the judgment against the property of the DA and the security agency. Thereafter, the City Sheriff levied on
execution the motor vehicles of the DA.
The petitioner charges the NLRC with grave abuse of discretion for refusing to quash the writ of execution. The
petitioner faults the NLRC for assuming jurisdiction over a money claim against the Department, which, it claims, falls
under the exclusive jurisdiction of the Commission on Audit. More importantly, the petitioner asserts, the NLRC has
disregarded the cardinal rule on the non-suability of the State.

The private respondents, on the other hand, argue that the petitioner has impliedly waived its immunity from suit by
concluding a service contract with Sultan Security Agency.

Issues:

Whether or not the doctrine of non-suability of the State applies in the case.

Discussions:

Act No. 3083, aforecited, gives the consent of the State to be sued upon any moneyed claim involving liability arising
from contract, express or implied. However, the money claim should first be brought to the Commission on Audit. Act
3083 stands as the general law waiving the States immunity from suit, subject to its general limitation expressed in
Section 7 thereof that no execution shall issue upon any judgment rendered by any Court against the Government of
the (Philippines), and that the conditions provided in Commonwealth Act 327 for filing money claims against the
Government must be strictly observed.

Rulings:

No. The rule does not say that the State may not be sued under any circumstances. The State may at times be sued. The
general law waiving the immunity of the state from suit is found in Act No. 3083, where the Philippine government
consents and submits to be sued upon any money claims involving liability arising from contract, express or implied,
which could serve as a basis of civil action between private parties.

In this case, The DA has not pretended to have assumed a capacity apart from its being a governmental entity when it
entered into the questioned contract; nor that it could have, in fact, performed any act proprietary in character. But the
claims of the complainant security guards clearly constitute money claims.

PROFESSIONAL VIDEO, INC.

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

Facts:

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

TESDA to fulfill its mandate, sought to issue security-printed certification and/or identification polyvinyl
(PVC) cards to trainees who have passed the certification process.
TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public biddings but it failed.
So, PBAC recommended TESDA to negotiate and make a contract with PROVI.

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

TESDA and PROVI executed an "Addendum to the Contract Agreement Project: PVC ID Card Issuance"
(Addendum).

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

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

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

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

Issue:

Whether or not TESDA is covered by the principle of State Immunity?

Held:

TESDA, as an agency of the State, cannot be sued without its consent.

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

USA VS RUIZ
G.R. No. L-35645 136 scra 487 May 22, 1985
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT
GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN
& CO., INC., respondents.

Facts:
This is a petition to review, set aside certain orders and restrain perpetually the proceedings done by Hon. Ruiz
for lack of jurisdiction on the part of the trial court.

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

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

Discussions:
The traditional role of the state immunity exempts a state from being sued in the courts of another state without
its consent or waiver. This rule is necessary consequence of the principle of independence and equality of states.
However, the rules of international law are not petrified; they are continually and evolving and because the
activities of states have multiplied. It has been necessary to distinguish them between sovereign and
governmental acts (jure imperii) and private, commercial and proprietary acts (juregestionis). The result is that
State immunity now extends only to acts jure imperil. The restrictive application of State immunity is now the
rule in the United States, the United Kingdom and other states in western Europe.

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

waiver of sovereign immunity

FROILAN VS PAN ORIENTAL SHIPPING

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

Facts:
Plaintiff, Fernando Froilan filed a complaint against the defendant-appellant, Pan Oriental Shipping Co.,
alleging that he purchased from the Shipping Commission the vessel for P200,000, paying P50,000 down and
agreeing to pay the balance in instalments. To secure the payment of the balance of the purchase price, he
executed a chattel mortgage of said vessel in favor of the Shipping Commission. For various reasons, among
them the non-payment of the installments, the Shipping Commission tool possession of said vessel and
considered the contract of sale cancelled. The Shipping Commission chartered and delivered said vessel to the
defendant-appellant Pan Oriental Shipping Co. subject to the approval of the President of the Philippines.
Plaintiff appealed the action of the Shipping Commission to the President of the Philippines and, in its meeting
the Cabinet restored him to all his rights under his original contract with the Shipping Commission. Plaintiff had
repeatedly demanded from the Pan Oriental Shipping Co. the possession of the vessel in question but the latter
refused to do so.

Plaintiff, prayed that, upon the approval of the bond accompanying his complaint, a writ of replevin be issued
for the seizure of said vessel with all its equipment and appurtenances, and that after hearing, he be adjudged to
have the rightful possession thereof . The lower court issued the writ of replevin prayed for by Froilan and by
virtue thereof the Pan Oriental Shipping Co. was divested of its possession of said vessel.

Pan Oriental protested to this restoration of Plaintiff s rights under the contract of sale, for the reason that when
the vessel was delivered to it, the Shipping Administration had authority to dispose of said authority to the
property, Plaintiff having already relinquished whatever rights he may have thereon. Plaintiff paid the required
cash of P10,000.00 and as Pan Oriental refused to surrender possession of the vessel, he filed an action to
recover possession thereof and have him declared the rightful owner of said property. The Republic of the
Philippines was allowed to intervene in said civil case praying for the possession of the in order that the chattel
mortgage constituted thereon may be foreclosed.
Issues:
Whether or not the Court has jurisdiction over the intervenor with regard to the counterclaim.

Discussions:
When the government enters into a contract, for the State is then deem to have divested itself of the mantle of
sovereign immunity and descended to the level of the ordinary individual. Having done so, it becomes subject
to judicial action and processes.

Rulings:
Yes. The Supreme Court held that the government impliedly allowed itself to be sued when it filed a complaint
in intervention for the purpose of asserting claim for affirmative relief against the plaintiff to the recovery of the
vessel. The immunity of the state from suits does not deprive it of the right to sue private parties in its own
courts. The state as plaintiff may avail itself of the different forms of actions open to private litigants. In short,
by taking the initiative in an action against a private party, the state surrenders its privileged position and comes
down to the level of the defendant. The latter automatically acquires, within certain limits, the right to set up
whatever claims and other defenses he might have against the state.

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

G.R. No. L-8587

FACTS:

This is an appeal from an order of the Court of First Instance of Manila, dismissing plaintiff's action for the recovery of
real property for lack of jurisdiction over the subject matter.

The property in dispute consists of four parcels of land situated in Tondo, City of Manila, with a total area of 29,151
square meters. The lands were, after the last world war, found by the Alien Property Custodian of the United States to
be registered in the name of Asaichi Kagawa, national of an enemy country, Japan, as evidenced by Transfer Certificates
of Title Nos. 64904 to 65140,

On March 14, 1946, issued a vesting order on the authority of the Trading with the Enemy Act of the United States, as
amended, vesting in himself the ownership over two of the said lots, Lots Nos. 1 and 2

On July, 6, 1948, the Philippine Alien Property Administrator (successor of the Alien Property Custodian) under the
authority of the same statute issued a supplemental vesting order, vesting in himself title to the remaining Lots Nos. 3
and 4.

On August 3, 1948, the Philippine Alien Property Administrator (acting on behalf of the President of the United States)
and the President of the Philippines, executed two formal agreements, one referring to Lots 1 and 2 and the other to
Lots 3 and 4, whereby the said Administrator transferred all the said four lots to the Republic of the Philippines upon the
latter's undertaking fully to indemnify the United States for all claims in relation to the property transferred, which
claims are payable by the United States of America or the Philippine Alien Property Administrator of the United States
under the Trading with the Enemy Act, as amended, and for all such costs and expenses of administration as may by law
be charged against the property or proceeds thereof hereby transferred.
On November 15, 1948, the latter's son Benito E. Lim filed a formal notice of claim to the property with the Philippine
Alien Property Administrator On the theory that the lots in question still belonged to Arsenia Enriquez. that they were
mortgaged by her to the Mercantile Bank of China; that the mortgage having been foreclosed, the property was sold at
public auction during the war to the Japanese Asaichi Kagawa, who, by means of threat and intimidation succeeded in
preventing Arsenia Enriquez from exercising her right of redemption; and that Kagawa never acquired any valid title to
the property because he was ineligible under the Constitution to acquire residential land in the Philippines by reason of
alien age.

On March 7, 1950, the claim was disallowed by the Vested Property Claims Committee of the Philippine Alien Property
Administrator, and copy of the decision disallowing the claim was received by claimant's counsel on the 15th of that
month

On November 13, 1950, the claimant Benito E. Lim, as administrator of the intestate estate of Arsenia Enriquez, filed a
complaint in the Court of First Instance of Manila against the Philippine Alien Property Administrator (later substituted
by the Attorney General of the United States) for the recovery of the property in question with back rents. The
complaint was later amended to include Asaichi Kagawa as defendant.

ISSUE:

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

HELD:

1. No suit or claim for the return of said properties pursuant to Section 9 or 32 (a) of the Trading with the Enemy
Act was filed by Plaintiff within two years from the date of vesting, the later date and the last on which suit
could be brought. A condition precedent to a suit for the return of property vested under Trading with the
Enemy Act is that it should be filed not later than April 30, 1949, or within two years from the date of vesting,
whichever is later, but in computing the two years, the period during which there was pending a suitor claim for
the return of the property of the Act shall be excluded.

The court states that In view of the foregoing, the order appealed from insofar as it dismisses the complaint with respect
to Lots 1 and 2 and the claim for damages against the Attorney General of the United States and the Republic of the
Philippines, is affirmed, but revoked insofar as it dismisses the complaint with respect to Lots 3 and 4, as to which the
case is hereby remanded to the court below for further proceedings.

ACT NO. 3083

ACT NO. 3083 AN ACT DEFINING THE CONDITIONS UNDER WHICH THE GOVERNMENT OF THE PHILIPPINE ISLANDS
MAY BE SUED

Section 1. Complaint against Government. Subject to the provisions of this Act, the Government of the Philippine
Islands hereby consents and submits to be sued upon any moneyed claim involving liability arising from contract,
expressed or implied, which could serve as a basis of civil action between private parties.

Sec. 2. A person desiring to avail himself of the privilege herein conferred must show that he has presented his claim to
the Insular Auditor 1 and that the latter did not decide the same within two months from the date of its presentation.
Sec. 3. Venue. Original actions brought pursuant to the authority conferred in this Act shall be instituted in the Court of
First Instance of the City of Manila or of the province were the claimant resides, at the option of the latter, upon which
court exclusive original jurisdiction is hereby conferred to hear and determine such actions.

Sec. 4. Actions instituted as aforesaid shall be governed by the same rules of procedure, both original and appellate, as if
the litigants were private parties.

Sec. 5. When the Government of the Philippine Island is plaintiff in an action instituted in any court of original
jurisdiction, the defendant shall have the right to assert therein, by way of set-off or counterclaim in a similar action
between private parties.

Sec. 6. Process in actions brought against the Government of the Philippine Islands pursuant to the authority granted in
this Act shall be served upon the Attorney-General 2 whose duty it shall be to appear and make defense, either himself
or through delegates.

Sec. 7. Execution. No execution shall issue upon any judgment rendered by any court against the Government of the
Philippine Islands under the provisions of this Act; but a copy thereof duly certified by the clerk of the Court in which
judgment is rendered shall be transmitted by such clerk to the Governor-General, 3 within five days after the same
becomes final.

Sec. 8. Transmittal of Decision. The Governor-General, 4 at the commencement of each regular session of the
Legislature, 5 shall transmit to that body for appropriate action all decisions so received by him, and if said body
determine that payment should be made, it shall appropriate the sum which the Government has been sentenced to
pay, including the same in the appropriations for the ensuing year.

Sec. 9. This Act shall take effect on its approval.

Approved: March 16, 1923.

USA vs. GUINTO, 182 SCRA 644 Case Digest

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

FACTS:

1. USA vs GUINTO (GR No. 76607)

The private respondents are suing several officers of the US Air Force in Clark Air Base in connection with the bidding
conducted by them for contracts for barber services in the said base, which was won by Dizon. The respondents wanted
to cancel the award because they claimed that Dizon had included in his bid an area not included in the invitation to bid,
and also, to conduct a rebidding.

2. USA vs RODRIGO (GR No. 79470)

Genove filed a complaint for damages for his dismissal as cook in the US Air Force Recreation Center at Camp John Hay
Air Station. It had been ascertained after investigation that Genove had poured urine into the soup stock used in cooking
the vegetables served to the club customers. The club manager suspended him and thereafter referred the case to a
board of arbitrators, which unanimously found him guilty and recommended his dismissal.

3. USA vs CEBALLOS (GR No. 80018)

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

4. USA vs VERGARA (GR No. 80258)

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

ISSUE:

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

RULING:

The rule that a State may not be sued without its consent is one of the generally accepted principles of international law
that were have adopted as part of the law of our land. Even without such affirmation, we would still be bound by the
generally accepted principles of international law under the doctrine of incorporation. Under this doctrine, as accepted
by the majority of the states, such principles are deemed incorporated in the law of every civilized state as a condition
and consequence of its membership in the society of nations. All states are sovereign equals and cannot assert
jurisdiction over one another. While the doctrine appears to prohibit only suits against the state without its consent, it is
also applicable to complaints filed against officials of the states for acts allegedly performed by them in the discharge of
their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative
act to satisfy the same, the suit must be regarded as against the state although it has not been formally impleaded.
When the government enters into a contract, it is deemed to have descended to the level of the other contracting party
and divested of its sovereign immunity from suit with its implied consent.

It bears stressing at this point that the aforesaid principle do not confer on the USA a blanket immunity for all acts done
by it or its agents in the Philippines. Neither may the other petitioners claim that they are also insulated from suit in this
country merely because they have acted as agents of the United States in the discharge of their official functions.
There is no question that the USA, like any other state, will be deemed to have impliedly waived its non-suability if it has
entered into a contract in its proprietary or private capacity (commercial acts/jure gestionis). It is only when the contract
involves its sovereign or governmental capacity (governmental acts/jure imperii) that no such waiver may be implied.

In US vs GUINTO, the court finds the barbershops subject to the concessions granted by the US government to be
commercial enterprises operated by private persons. The Court would have directly resolved the claims against the
defendants as in USA vs RODRIGO, except for the paucity of the record as the evidence of the alleged irregularity in the
grant of the barbershop concessions were not available. Accordingly, this case was remanded to the court below for
further proceedings.

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

In US vs CEBALLOS, it was clear that the petitioners were acting in the exercise of their official functions when they
conducted the buy-bust operation and thereafter testified against the complainant. For discharging their duties as
agents of the United States, they cannot be directly impleaded for acts imputable to their principal, which has not given
its consent to be sued.

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

NOTE:

1. A STATE MAY BE SAID TO HAVE DESCENDED TO THE LEVEL OF AN INDIVIDUAL AND CAN THUS BE DEEMED TO HAVE
TACITLY GIVEN ITS CONSENT TO BE SUED ONLY WHEN IT ENTERS INTO BUSINESS CONTRACTS.

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

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

Municipality of San Fernando vs. Firme

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

ISSUES:

1. Are municipal corporations suable?

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

HELD:

1. Municipal corporations, like provinces and cities, are agencies of the State when they are engaged in governmental
functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in
the performance of such functions because their charter provided that they can sue and be sued.

2. Municipal corporations are suable because their charters grant them the competence to sue and be sued.
Nevertheless, they are generally not liable for torts committed by them in the discharge of governmental functions and
can be held answerable only if it can be shown that they were acting in a proprietary capacity. In permitting such entities
to be sued, the State merely gives the claimant the right to show that the defendant was not acting in its governmental
capacity when the injury was committed or that the case comes under the exceptions recognized by law. Failing this, the
claimant cannot recover.

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

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

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

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

On November 28, 2001, the RTC rendered its decision ordering UP to pay Stern Builders. Then on January 16, 2002, the
UP filed its motion for reconsideration. The RTC denied the motion. The denial of the said motion was served upon
Atty. Felimon Nolasco (Atty.Nolasco) of the UPLB Legal Office on May 17, 2002. Notably, Atty. Nolasco was not the
counsel of record of the UP but the OLS inDiliman, Quezon City.
Thereafter, the UP filed a notice of appeal on June 3, 2002. However, the RTC denied due course to the notice of appeal
for having been filed out of time. On October 4, 2002, upon motion of Stern Builders, the RTC issued the writ of
execution.

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

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

ISSUES:

I. Was UP's funds validly garnished?

II. Has the UP's appeal dated June 3, 2002 been filed out of time?

HELD: UP's funds, being government funds, are not subject to garnishment. (Garnishment of public funds; suability vs.
liability of the State)

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

A marked distinction exists between suability of the State and its liability. As the Court succinctly stated in Municipality
of San Fernando, La Union v. Firme: A distinction should first be made between suability and liability. "Suability depends
on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a
state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first
consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the
state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is
liable.
The Constitution strictly mandated that "no money shall be paid out of the Treasury except in pursuance of an
appropriation made by law." The execution of the monetary judgment against the UP was within the primary jurisdiction
of the COA. It was of no moment that a final and executory decision already validated the claim against the UP.

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

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

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

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

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

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

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

LARRY J. JOHNSON, plaintiff-appellee,

vs.
MAJ. GEN. HOWARD M. TURNER, ET AL., defendants-appellants.

Sixto F. Santiago for appellants.

Quintin F. Pidel for appellee.

MONTEMAYOR, J.:

This is an appeal by the defendants from a decision of the Court of First Instance of Manila ordering them or their
successors or representatives to return to plaintiff or his authorized representatives the confiscated Military Payment
Certificates (Scrip Money) in the reconverted or new series, amounting to $3.713. For purposes of the present appeal
the pertinent facts not disputed are as follows:

Plaintiff Larry J. Johnson, an American citizen, was formerly employed by the U.S. Army at Okinawa up to August 5, 1950,
when he resigned, supposedly in violation of his employment contract. In the same month he returned to the Philippines
as an American citizen, bringing with him Military Payment Certificates (Scrip Money) in the amount of $3,713 which
sum he claims to have earned while at Okinawa. About five months later, that is, on January 15, 1951, he went to the
U.S. Military Port of Manila and while there tried to convert said scrip money into U.S. dollars, allegedly for the purpose
of sending into the United States. Defendant Capt. Wilford H. Hudson Jr., Provost Marshal of the Military duties and
claiming that said act of Johnson in keeping scrip money and in trying to convert it into dollars was a violation of military
circulars, rules and regulations, confiscated said scrip money, gave a receipt thereof and later delivered the scrip money
to the military authorities. Johnson made a formal claim for the return of his scrip money and upon failure of the military
authorities to favorably act upon his claim, on July 3, 1951, he commenced the present action in the Court of First
Instance of Manila against Major General Howard M. Turner as Commanding General, Philippine Command (Air Force)
and 13th Air Force with office at Clark Field; Major Torvald B. Thompson as Finance Officer, Provost Marshal, 13th Air
Force with office at Clark Field; and Captain Wilford H. Hudson Jr., as Provost Marshal attached to the Manila Military
Port Area, to recover the said amount of $3,713 "at the reconverted or new series and to the same full worth and
value." It may be stated in this connection that shortly after the confiscation of the scrip money in Manila on January 15,
1951, an order was issued by the U.S. Military authorities for the conversion of all scrip money then outstanding into a
new series, thereby rendering valueless and of no use the old series of which the scrip confiscated from Johnson formed
a part, and that was the reason why the prayer contained in Johnson's complaint is for the return not of the very same
scrip money (old series) confiscated, but of the sum "at the reconverted or new series and to the same full worth and
value."

The defendants through counsel moved for the dismissal of the complaint on the ground of lack jurisdiction over their
persons and over the subject-matter for the reason that they were being sued as defendants in their respective official
capacities as officers of the U. S. Air Force and the action was based on their official actuations, and that the U. S.
Government had not given its consent to be sued. The motion for dismissal was denied and the case was heard, after
which, the trial court found and held that it had jurisdiction because the claim was for the return of plaintiff's scrip
money and not for the recovery of a sum of money as damages arising from any civil liability of the defendants; and that
the confiscatory act of the defendants is contrary to the provisions of the Philippine Constitution prohibiting deprivation
of one's property without due process of law.

Pursuant to rules and regulations as well as the practice in U.S. military establishments in Okinawa and the Philippines,
military payment certificates popularly known as "scrip money" is issued to military and authorized personnel for use
exclusively within said military establishments and as a sole medium of exchange in lieu of U.S. dollars, the issuance of
said scrip money being restricted to those authorized to purchase tax free merchandise at the tax-free agencies of the
U.S. Government within its military installations. It is said to be intended as a control measure and to assure that the
economy of the Republic of the Philippines will be duly protected.

The confiscation of Johnson's scrip money is allegedly based on Circular No. 19, Part I, par. 7 (a) of the GHQ, Far East
Command, APO 500, dated March 15, 1949, the pertinent provisions of which read thus:

7. Disposition of Military Payment Certificates. a. Personnel authorized to hold and use military payment certificates
prior to departing on leave, temporary duty, or permanent change of status from a military payment certificate area to
areas where military payment certificates are not in authorized use will dispose of their military payment certificates
holding prior to departure. Similarly authorized personnel who lose their authorized status are required at the time of
such loss to dispose of their military payment or certificate holdings.

It is the claim of the defendants that Johnson should have disposed of or converted his scrip money into dollars upon his
resignation as employee of the U. S. Government when he lost his authorized status, and prior to his departure from
Okinawa, and that his possession of said scrip money in the Philippines, particularly in the Manila Military Post Area was
illegal, hence the confiscation.

Believing that the main and most important question involved in the appeal is that of jurisdiction, we shall confine our
considerations to the same. In the case of Syquia vs. Lopez, et al., 47 Off. Gaz., 665, where an action was brought against
U. S. Army officers not only for the recovery of possession of certain apartments occupied by military personnel under a
contract of lease, but also to collect back rents and rents at increased rates including damages, we held:

We shall concede as correctly did the Court of First Instance that following the doctrine laid down in the cases of U.S. vs.
Leeand U. S. vs. Tindal, supra, a private citizen claiming title and right of possession of a certain property may, to recover
possession of said property, sue as individuals, officers, and agents of the Government who are said to be illegally
withholding the same from him, though in doing so, said officers and agents claim that they are acting for the
Government and the court may entertain such a suit although the government itself is not bound or concluded by the
decision. The philosophy of this ruling is that unless the courts are permitted to take cognizance and to assume
jurisdiction over such a case, a private citizen would be helpless and without redress and protection of his rights which
may have been invaded by the officers of the Government professing to act in its name. In such a case the officials or
agents asserting rightful possession must prove and justify their claims before the courts, where it is made to appear in
the suit against them that the title and right of possession is in the private citizen. However, and this is important, where
the judgment in such a case would result not only in the recovery of possession of the property in favor of said citizen
but also a charge against or financial liability to the Government, then the suit should be regarded as one against the
government itself, and consequently, it cannot prosper or be validly entertained by the courts except with the consent
of said Government.

In the present case, if the action were merely for the return of the scrip money confiscated from plaintiff Johnson, it
might yet be said that the action was for the recovery of property illegally withheld by officers and agents of a
government professing to have acted as its agents. However, as already stated, the present action is for the recovery not
of the very scrip in the new series of military payment certificates, and this was the relief granted by the lower court.
Furthermore, if the relief is to be of any benefit to plaintiff and since has already lost his authorized status to possess
and use said scrip money, he will have to be given the equivalent of said scrip money in dollars. It is, therefore, evident
that the claim and the judgment will be a charge against and a financial liability to the U.S. Government because the
defendants had undoubtedly acted in their official capacities as agents of said Government, to say nothing of the fact
that said defendants had long left the Philippines possibly for other assignments; that was the reason the decision
appealed from directs the return of the scrip money by the defendants or their successors. Consequently, the present
suit should be regarded as an action against the United States Government.

It is not disputed that the U.S. Government has not given its consent to be sued. Therefore, the suit cannot be
entertained by the trial court for lack of jurisdiction.

Another point may be mentioned, though incidentally, namely, that before the decision was rendered by the lower
court the plaintiff filed his claim for the same amount of $3,713 with the Claims Division, General Accounting Office,
Washington, D.C. However, the record fails to show the action taken, if any, on said claim.

In conclusion, we find and hold that the present action because of its nature is really a suit against the Government of
the United States, and because said Government has not given its consent thereto, the courts, particularly the trial court
have no jurisdiction to entertain the same. Because of this, we deem it unnecessary to discuss and rule upon the
propriety and legality of the confiscation made by the defendants, particularly Capt. Wilford H. Hudson, of the scrip
money from the plaintiff, and whether or not the latter's filing of his claim with the U.S. Government through its Claims
Division, constitutes an abandonment of his claim or suit with the Philippine court.

In view of the foregoing, the decision appealed from is hereby reversed and the complaint is dismissed. No
pronouncement as to costs.

189JUSMAG vs. NLRC (Art. XVI Sec. 3)

Oct 1, 2005

JUSMAG Philippines vs. NLRC (Article XVI Sec. 3) (Foreign

Government)

Facts: Florencio Sacramento (private respondent) was one of the 74

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

Held: Yes. When JUSMAG took the services of private respondent, it

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

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

Facts of the Case:

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

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

The said lots were sold to Ramon Licup who assigned his rights to respondents Starbright Sales, Inc.
When the squatters refused to vacate the lots, a dispute arose between these two parties because both were unsure as
to whose responsibility was it to evict the squatters from the said lots. Respondent Starbright insists that the Holy See
should clear the property while Holy See says that Starbright should do it or the earnest money will be returned.

Since Starbright refused to clear the property, Msgr. Cirilios, the agent, returned P100k earnest money. The same lots
were sold to Tropicana Properties.

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

Issue:

Can the Holy See invoke sovereign immunity?

Court Ruling:

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

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

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

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

Arigo vs Swift
Case Digest GR 206510 Sept 14, 2014
Facts:

In 2013, the USS Guardian of the US Navy ran aground on an area near the Tubbataha Reefs, a marine habitat of which
entry and certain human activities are prevented and afforded protection by a Philippine law. The grounding incident
prompted the petitioners to seek for issuance of Writ of Kalikasan with TEPO from the SC.

Among those impleaded are US officials in their capacity as commanding officers of the US Navy. As petitioners argued,
they were impleaded because there was a waiver of immunity from suit between US and PH pursuant to the VFA terms.

Petitioners claimed that the grounding, salvaging and post-salvaging operations of the USS Guardian violated their
constitutional rights to a balanced and healthful ecology since these events caused and continue to cause environmental
damage of such magnitude as to affect other provinces surrounding the Tubbataha Reefs. Aside from damages, they
sought a directive from the SC for the institution of civil, administrative and criminal suits for acts committed in violation
of environmental laws and regulations in connection with the grounding incident. They also prayed for the annulment of
some VFA provisions for being unconstitutional.

Issue 1: W/N the US Government has given its consent to be sued through the VFA

No. The general rule on states immunity from suit applies in this case.

First, any waiver of State immunity under the VFA pertains only to criminal jurisdiction and not to special civil actions
such as for the issuance of the writ of kalikasan. Hence, contrary to petitioners claim, the US government could not be
deemed to have waived its immunity from suit.

Second, the US respondents were sued in their official capacity as commanding officers of the US Navy who have control
and supervision over the USS Guardian and its crew. Since the satisfaction of any judgment against these officials would
require remedial actions and the appropriation of funds by the US government, the suit is deemed to be one against the
US itself. Thus, the principle of State Immunity in correlation with the principle of States as sovereign equals par in
parem non habet non imperium bars the exercise of jurisdiction by the court over their persons.

Issue 2: W/N the US government may still be held liable for damages caused to the Tubbataha Reefs

Yes. The US government is liable for damages in relation to the grounding incident under the customary laws of
navigation.

The conduct of the US in this case, when its warship entered a restricted area in violation of RA 10067 and caused
damage to the TRNP reef system, brings the matter within the ambit of Article 31 of the UNCLOS. While historically,
warships enjoy sovereign immunity from suit as extensions of their flag State, Art. 31 of the UNCLOS creates an
exception to this rule in cases where they fail to comply with the rules and regulations of the coastal State regarding
passage through the latters internal waters and the territorial sea.

Although the US to date has not ratified the UNCLOS, as a matter of long-standing policy, the US considers itself bound
by customary international rules on the traditional uses of the oceans, which is codified in UNCLOS.

As to the non-ratification by the US, it must be noted that the US refusal to join the UNCLOS was centered on its
disagreement with UNCLOS regime of deep seabed mining (Part XI) which considers the oceans and deep seabed
commonly owned by mankind. Such has nothing to do with the acceptance by the US of customary international rules
on navigation. (Justice Carpio)

Hence, non-membership in the UNCLOS does not mean that the US will disregard the rights of the Philippines as a
Coastal State over its internal waters and territorial sea. It is thus expected of the US to bear international
responsibility under Art. 31 in connection with the USS Guardian grounding which adversely affected the Tubbataha
reefs. ##

Other Issues
Claim for Damages Caused by Violation of Environmental Laws Must be Filed Separately

The invocation of US federal tort laws and even common law is improper considering that it is the VFA which governs
disputes involving US military ships and crew navigating Philippine waters in pursuance of the objectives of the
agreement.

As it is, the waiver of State immunity under the VFA pertains only to criminal jurisdiction and not to special civil actions.
Since jurisdiction cannot be had over the respondents for being immuned from suit, there is no way damages which
resulted from violation of environmental laws could be awarded to petitioners.

In any case, the Rules on Writ of Kalikasan provides that a criminal case against a person charged with a violation of an
environmental law is to be filed separately. Hence, a ruling on the application or non-application of criminal jurisdiction
provisions of the VFA to a US personnel who may be found responsible for the grounding of the USS Guardian, would be
premature and beyond the province of a petition for a writ of Kalikasan.

Challenging the Constitutionality of a Treaty Via a Petition for the Issuance of Writ of Kalikasan is Not Proper

The VFA was duly concurred in by the Philippine Senate and has been recognized as a treaty by the US as attested and
certified by the duly authorized representative of the US government. The VFA being a valid and binding agreement, the
parties are required as a matter of international law to abide by its terms and provisions. A petition under the Rules on
Writ of Kalikasan is not the proper remedy to assail the constitutionality of its provisions.

MINUCHER VS. COURT OF APPEALS

G.R. No. 142396, 2003 February 11

FACTS

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

ISSUES

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

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

RULING

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

2. While the diplomatic immunity of Scalzo might thus remain contentions, it was sufficiently established that, indeed,
he worked for the USDEA. If it should be ascertained that Scalzo was acting well within his assigned functions when he
committed the acts allegedly complained of, the present controversy could then be resolved under the related doctrine
of State Immunity from Suit. While the doctrine appears to prohibit only suits against against the State without its
consent, it is also applicable to complaints filed against officials of the State for acts allegedly performed by them in the
discharge of their duties. The official exchanges of communication, certifications from officials, as well as participation of
members of the Philippine Narcotics Command may be inadequate to support to support the diplomatic status of Scalzo
but they give enough indication that the Philippine government has given its imprimatur to the activities of Scalzo. It can
hardly be said that he acted beyond the scope of his official function or duties. All told, Scalzo is entitled to the defense
os state immunity from suit.

China National Machinery v. Santamaria

Facts: On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group) (CNMEG), represented
by its chairperson, Ren Hongbin, entered into a Memorandum of Understanding with the North Luzon Railways
Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a
possible railway line from Manila to San Fernando, La Union (the Northrail Project).

On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the Philippines
(DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein China agreed to extend Preferential
Buyers Credit to the Philippine government to finance the Northrail Project.3 The Chinese government designated EXIM
Bank as the lender, while the Philippine government named the DOF as the borrower. Under the Aug 30 MOU, EXIM
Bank agreed to extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in 20 years, with a 5-year
grace period, and at the rate of 3% per annum.

On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang), wrote a letter to DOF
Secretary Jose Isidro Camacho (Sec. Camacho) informing him of CNMEGs designation as the Prime Contractor for the
Northrail Project.

On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of
the North Luzon Railway System from Caloocan to Malolos on a turnkey basis (the Contract Agreement).7 The contract
price for the Northrail Project was pegged at USD 421,050,000.
On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart financial agreement Buyer
Credit Loan Agreement No. BLA 04055 (the Loan Agreement). In the Loan Agreement, EXIM Bank agreed to extend
Preferential Buyers Credit in the amount of USD 400,000,000 in favor of the Philippine government in order to finance
the construction of Phase I of the Northrail Project.

On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with Urgent Motion for
Summary Hearing to Determine the Existence of Facts and Circumstances Justifying the Issuance of Writs of Preliminary
Prohibitory and Mandatory Injunction and/or TRO against CNMEG, the Office of the Executive Secretary, the DOF, the
Department of Budget and Management, the National Economic Development Authority and Northrail. The case was
filed before the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC Br. 145). In the
Complaint, respondents alleged that the Contract Agreement and the Loan Agreement were void for being contrary to
(a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement
Reform Act; (c) Presidential Decree No. 1445, otherwise known as the Government Auditing Code; and (d) Executive
Order No. 292, otherwise known as the Administrative Code.

On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion to Dismiss and setting the case for
summary hearing to determine whether the injunctive reliefs prayed for should be issued. CNMEG then filed a Motion
for Reconsideration, which was denied by the trial court in an Order dated 10 March 2008. Thus, CNMEG filed before the
CA a Petition for Certiorari with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008.

the appellate court dismissed the Petition for Certiorari. Subsequently, CNMEG filed a Motion for Reconsideration, which
was denied by the CA in a Resolution dated 5 December 2008.

Petitioners Argument: Petitioner claims that the EXIM Bank extended financial assistance to Northrail because the bank
was mandated by the Chinese government, and not because of any motivation to do business in the Philippines, it is
clear from the foregoing provisions that the Northrail Project was a purely commercial transaction.

Respondents Argument: respondents alleged that the Contract Agreement and the Loan Agreement were void for being
contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government
Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as the Government Auditing Code; and (d)
Executive Order No. 292, otherwise known as the Administrative Code.

Issues: Whether or not petitioner CNMEG is an agent of the sovereign Peoples Republic of China.

Whether or not the Northrail contracts are products of an executive agreement between two sovereign states.

Ruling: The instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp. (Group) is not entitled
to immunity from suit, and the Contract Agreement is not an executive agreement. CNMEGs prayer for the issuance of a
TRO and/or Writ of Preliminary Injunction is DENIED for being moot and academic.

The Court explained the doctrine of sovereign immunity in Holy See v. Rosario, to wit:

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

As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign or governmental
activities (jure imperii). The mantle of state immunity cannot be extended to commercial, private and proprietary acts
(jure gestionis).

Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the act involved
whether the entity claiming immunity performs governmental, as opposed to proprietary, functions. As held in United
States of America v. Ruiz
Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government, while the
Contract Agreement was between Northrail and CNMEG. Although the Contract Agreement is silent on the classification
of the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an inextricable part of
the entire undertaking, nonetheless reveal the intention of the parties to the Northrail Project to classify the whole
venture as commercial or proprietary in character.

Thus, piecing together the content and tenor of the Contract Agreement, the Memorandum of Understanding dated 14
September 2002, Amb. Wangs letter dated 1 October 2003, and the Loan Agreement would reveal the desire of CNMEG
to construct the Luzon Railways in pursuit of a purely commercial activity performed in the ordinary course of its
business.

Lasco vs UNRFNRE

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

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

Issue:WON specialized agencies enjoy diplomatic immunity

Held:Petition is dismissed. This is not to say that petitioner have no recourse.Section 31 of the Convention on the
Privileges and Immunitiesof the SpecializedAgencies of the United Nations states that each specialized agency shall
makea provision for appropriate modes of settlement of (a) disputes arising out of contracts or other disputes of private
character to which thespecialized agencyisa party. Private respondent is not engaged in a commercial venture in
thePhilippines.Its presence is by virtue of a joint project entered into by thePhilippine Government and theUnited
Nations for mineral exploration in DinagatIsland

SEAFDEC V NLRC

FACTS: SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development
Center, organized through an agreement in 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam,
Indonesia and the Philippines with Japan as the sponsoring country.

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

ISSUES:

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

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

1. SEAFDEC-AQD is an international agency beyond the jurisdiction of public respondent NLRC. Being an
intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and
freedom from control of the state in whose territory its office is located.

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

One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune
from the legal writs and processes issued by the tribunals of the country where it is found. The obvious reason for this is
that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru
which the host government may interfere in there operations or even influence or control its policies and decisions of
the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially on behalf of its member-states.

2. Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel
does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by law.
Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a tribunal not
vested with appropriate jurisdiction is null and void. (SEAFDEC-AQD vs NLRC, G.R. No. 86773, February 14, 1992)

ERNESTO CALLADO vs. INTERNATIONAL RICE RESEARCH INSTITUTE (IRRI)

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

Facts: Ernesto Callado, petitioner, was employed as a driver at the IRRI. One day while driving an IRRI vehicle on an
official trip to the NAIA and back to the IRRI, petitioner figured in an accident.

Petitioner was informed of the findings of a preliminary investigation conducted by the IRRI's Human Resource
Development Department Manager. In view of the findings, he was charged with:

(1) Driving an institute vehicle while on official duty under the influence of liquor;

(2) Serious misconduct consisting of failure to report to supervisors the failure of the vehicle to start because of a
problem with the car battery, and

(3) Gross and habitual neglect of duties.

Petitioner submitted his answer and defenses to the charges against him. However, IRRI issued a Notice of Termination
to petitioner.
Thereafter, petitioner filed a complaint before the Labor Arbiter for illegal dismissal, illegal suspension and indemnity
pay with moral and exemplary damages and attorney's fees.

IRRI wrote the Labor Arbiter to inform him that the Institute enjoys immunity from legal process by virtue of Article 3 of
Presidential Decree No. 1620, 5 and that it invokes such diplomatic immunity and privileges as an international
organization in the instant case filed by petitioner, not having waived the same.

While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an Order issued by the Institute to the
effect that "in all cases of termination, respondent IRRI waives its immunity," and, accordingly, considered the defense
of immunity no longer a legal obstacle in resolving the case.

The NLRC found merit in private respondent's appeal and, finding that IRRI did not waive its immunity, ordered the
aforesaid decision of the Labor Arbiter set aside and the complaint dismissed.

In this petition petitioner contends that the immunity of the IRRI as an international organization granted by Article 3 of
Presidential Decree No. 1620 may not be invoked in the case at bench inasmuch as it waived the same by virtue of its
Memorandum on "Guidelines on the handling of dismissed employees in relation to P.D. 1620."

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

Held: No.

P.D. No. 1620, Article 3 provides:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as that immunity has been expressly waived by the Director-General of the Institute or his
authorized representatives.

The SC upholds the constitutionality of the aforequoted law. There is in this case "a categorical recognition by the
Executive Branch of the Government that IRRI enjoys immunities accorded to international organizations, which
determination has been held to be a political question conclusive upon the Courts in order not to embarass a political
department of Government.

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity
is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the
government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate
suggestion by the principal law officer of the government or other officer acting under his direction.
The raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies
concerned.

The grant of immunity to IRRI is clear and unequivocal and an express waiver by its Director-General is the only way by
which it may relinquish or abandon this immunity.

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

World Health Organization v. Aquino 48 SCRA 243

Facts:

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

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

Issue:

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

Ruling:

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

It recognized principle of international law and under our system of separation of powers that diplomatic immunity is
essentially a political question and courts should refuse to look beyond a determination by the executive branch of
government, and where the plea of diplomatic immunity is recognized by the executive branch of the government as in
the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the
principal law officer of the government, the Solicitor General in this case, or other officer acting under his discretion.
Courts may not so exercise their jurisdiction by seizure and detention of property, as to embarass the executive arm of
the government in conducting foreign relations.

The Court, therefore, holds the respondent judge acted without jurisdiction and with grave abuse of discretion in not
ordering the quashal of the search warrant issued by him in disregard of the diplomatic immunity of petitioner Verstuyft.