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MERITT VS GOVERNMENT OF THE PHILIPPINE ISLANDS

4 Phil 311

Torts and Damages Liability of the State for acts of special agents FACTS: The facts of the case took place in the 1910s. Meritt was a constructor who was excellent at his work. One day, while he was riding his motorcycle along Calle Padre Faura, he was bumped by a government ambulance. The driver of the ambulance was proven to have been negligent. Because of the incident, Meritt was hospitalized and he was severely injured beyond rehabilitation so much so that he could never perform his job the way he used to and that he cannot even earn at least half of what he used to earn. In order for Meritt to recover damages, he sought to sue the government which later authorized Meritt to sue the government by virtue of Act 2457 enacted by the legislature (An Act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and authorizing the Attorney-General of said Islands to appear in said suit). The lower court then determined the amount of damages and ordered the government to pay the same. ISSUE: Whether or not the government is liable for the negligent act of the driver of the ambulance. HELD: No. 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. It follows therefrom that the state, by virtue of such provisions of law, is not responsible for the damages suffered by private individuals in consequence of acts performed by its employees in the discharge of the functions pertaining to their office, because neither fault nor even negligence can be presumed on the part of the state in the organization of branches of public service and in the appointment of its agents. The State can only be liable if it acts through a special agent (and a special agent, in the sense in which these words are employed, is one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official) so that in representation of the state and being bound to act as an agent thereof, he executes the trust confided to him. In the case at bar, the ambulance driver was not a special agent nor was a government officer acting as a special agent hence, there can be no liability from the government. The Government does not undertake to guarantee to any person the fidelity of the officers or agents whom it employs, since that would involve it in all its operations in endless embarrassments, difficulties and losses, which would be subversive of the public interest.

Republic vs Feliciano
148 SCRA 424 FACTS: Petitioner seeks the review of the decision of the Intermediate Appellate Court dated April 30, 1985 reversing the order of the Court of First Instance of Camarines Sur, Branch VI, dated August 21, 1980, which dismissed the complaint of respondent Pablo Feliciano for recovery of ownership and possession of a parcel of land on the ground of non-suability of the State. On January 22, 1970, Feliciano filed a complaint with the then Court of First Instance of Camarines Sur against the RP,represented by the Land Authority, for the recovery of ownership and possession of a parcel of land, consisting of four (4)lots with an aggregate area of 1,364.4177 hectares, situated in the Barrio of Salvacion, Municipality of Tinambac, Camarines Sur. Feliciano alleged that he bought the property in question from Victor Gardiola by virtue of a Contract of Sale dated May 31, 1952, followed by a Deed of Absolute Sale on October 30, 1954; that Gardiola had acquired the property by purchase from the heirs of Francisco Abrazado whose title to the said property was evidenced by an informacion posesoria that upon his purchase of the property, he took actual possession of the same, introduced various improvements therein and caused it to be surveyed in July 1952, which survey was approved by the Director of Lands on October 24, 1954.On November 1, 1954, President Ramon Magsaysay issued Proclamation No. 90 reserving for settlement purposes, under the administration of the National Resettlement and Rehabilitation Administration (NARRA), a tract of land situated in the Municipalities of Tinambac and Siruma, Camarines Sur, after which the NARRA and its successor agency, the Land Authority, started sub-dividing and distributing the land to the settlers; that the property in question, while located within the reservation established under Proclamation No. 90, was the private property of Feliciano and should therefore be excluded there from. Feliciano prayed that he be declared the rightful and true owner of the property in question consisting of 1,364.4177 hectares; that his title of ownership based on informacion posesoria of his predecessor-ininterest be declared legal valid and subsisting and that defendant be ordered to cancel and nullify all awards to the settlers. ISSUE: WON the State can be sued for recovery and possession of a parcel of land RULING: NO. A suit against the State, 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. It may be invoked by the courts sua sponte at any stage of the proceedings. Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly. but must be construed in strictissimi juris (of strictest right). Moreover, the Proclamation is not a legislative act. The consent of the State to be sued must emanate from statutory authority. Waiver of State immunity can only be made by an act of the legislative body. Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion posesoria registered in the Office of the Register of Deed of Camarines Sur on September 23, 1952 was a "reconstituted" possessory information; itwas "reconstituted from the duplicate presented to this office (Register of Deeds) by

Dr. Pablo Feliciano," without the submission of proof that the alleged duplicate was authentic or that the original thereof was lost. Reconstitution can be validly made only in case of loss of the original. These circumstances raise grave doubts as to the authenticity and validityof the "informacion posesoria" relied upon by respondent Feliciano. Adding to the dubiousness of said document is the fact that "possessory information calls for an area of only 100 hectares," whereas the land claimed by respondent Feliciano comprises 1,364.4177 hectares, later reduced to 701-9064 hectares. Courts should be wary in accepting "possessory information documents, as well as other purportedly old Spanish titles, as proof of alleged ownership of

EPG CONSTRUCTION VS VIGILAR


March 16, 2001 FACTS: (1983) The herein petitioners-contractors, under contracts with DPWH, constructed 145housing units but coverage of construction and funding under the said contracts was only for 2/3 of each housing unit. Through the verbal request and assurance of then DPWH Undersecretary Canlas,they undertook additional constructions for the completion of the project, but said additionalconstructions were not issued payment by DPWH.With a favorable recommendation from the DPWH Asst. Secretary for Legal Affairs, thepetitioners sent a demend letter to the DPWH Secretary. The DPWH Auditor did not object to thepayment subject to whatever action COA may adopt.(1992) Through the request of then DPWH Secretary De Jesus, the DBM released the amountfor payment but (1996) respondent DPWH Secreatry Vigilar denied the money claims promptingpetitioners to file a petition for mandamus before the RTC which said trial court denied. Hence, thispetition.Among others, respondent-secretary argues that the state may not be sued invoking theconstitutional doctrine of Non-suability of the State also known as the Royal Prerogative of Dishonesty. ISSUE: Whether or not the Principle of State Immunity is applicable in the case at bar? HELD: The principle of state immunity finds no application in this case. Under the circumstances,respondent may not validly invoke the Royal Prerogative of Dishonesty and hide under the states cloakof invincibility against suit. Considering that this principle yields to certain settled exceptions. The ruleis not absolute for it does not say that the state may not be sued under any circumstance. Thedoctrine of governmental immunity from suit cannot serve as an instrument for perpetrating aninjustice on a citizen. It is just as important that there be fidelity to legal norms on the part of officialdom if the rule of law is to be maintained. The ends of justice would be subverted if we were touphold, in this instance, the states immunity from suit.This court - as the staunch guardian of the citizens rights and welfare- cannot sanction aninjustice so patent on its face, and allow itself to be an instrument of perpetration thereof. Justice andequity sternly demand that the states cloak of invincibility against suit be shred in this particularinstance and that petitioners-contractors be duly compensated, on the basis of quantum meruit, forconstruction done on the public works housing project Petition GRANTED.

REPUBLIC VS. VILLASOR, ET AL.


REPUBLIC VS. VILLASOR, ET AL. G.R. No. L-30671 November 28, 1973 Facts: On July 7, 1969, 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 petitioner confirming the arbitration award in the amount of P1,712,396.40.The award is for the satisfaction of a judgment against thePhlippine Government.On June 24, 1969, respondent Honorable Guillermo Villasor issued an Order declaring the decision final and executory. Villasor directed the Sheriffs of Rizal Province, Quezon City as well as Manila to execute said decision. The Provincial Sheriff of Rizal served Notices of Garnishment with several Banks, specially on Philippine Veterans Bank and PNB. The funds of the Armed Forces of the Philippines on deposit with Philippine Veterans Bank and PNB are public funds duly appropriated and allocated for the payment of pensions of retirees, pay and allowances of military and civilian personnel and for maintenance and operations of the AFP.Petitioner, on certiorari, filed prohibition proceedings against respondent Judge Villasor for acting in excess of jurisdiction with grave abuse of discretion amounting to lack of jurisdiction in granting the issuance of a Writ of Execution against the properties of the AFP, hence the notices and garnishment are null and void. Issue: Is the Writ of Execution issued by Judge Villasor valid? Held: 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. 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. The State may not be sued without its consent. A corollary, both dictated by logic and sound sense from a basic concept is that public funds cannot be the object of a garnishment proceeding even if the consent to be sued had been previously granted and the state liability adjudged. 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 claimants 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 the government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy .Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law.

US VS GUINTO
GR No. 76607 February 26, 1990 FACTS: 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 a certain Dizon. The respondents wanted to cancel the award to the bid winner because they claimed that Dizon had included in his bid an area not included in the invitation to bid, and subsequently, to conduct a rebidding. ISSUE: Is the doctrine of state immunity applicable in the cases at bar? HELD: A state may not be sued without its consent. This doctrine is not absolute and does not say the state may not be sued under any circumstance. The rule says that the state may not be sued without its consent, which clearly imports that it may be sued if it consents. The consent of the state to be sued may be manifested expressly or impliedly. Express consent may be embodied in a general law or a special law. Consent is implied when the sate enters into a contract or it itself commences litigation. When the government enters into a contract, it is deemed to have descended to the level of the other contracting party and divested itself of its sovereign immunity from suit with its implied consent. Waiver is also implied when the government files a complaint, thus opening itself to a counter claim. 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

Professional Video v. Technical and Educational Skills Development Authority [Tesda] G.R. No. 155504, June 26, 2009

FACTS: Professional Video (PROVI) entered a contract with Technical and Educational Skills Development Authority (TESDA) for the supply of PVC cards to be used as ID of TESDA trainees who passed TESDAs National Skills Certification Program the program that immediately serves TESDAs mandated functions of developing and establishing a national system of skills standardization, testing and certification in the country.

ISSUE: Whether or not TESDA can be sued and held liable for recovery of money and damages on the entered contract with PROVI.

HELD: The Supreme Court ruled that TESDA cannot be sued for recovery of sum of money and damages. TESDA performs a governmental function. TESDAs funds are still public in nature, and, thus, cannot be valid subject of a writ of garnishment or attachment. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and services rendered by the state cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law.

Amigable vs. Cuenca, 43 SCRA 360 (1972) Ponente:


J. Makalintal; en banc; unanimous Facts:

Appeal from CFI of Cebu, dismissing plaintiffs complaint Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad Estate in Cebu City No annotation in favor of the government of any right or interest in the property appears at the back of the transfer certificate of title of said lot 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 Amigable's counsel wrote the President of the Philippines, requesting payment of the portion of her lot which had been appropriated by the government; Auditor General disallowed it Amigable filed for recovery of ownership to said CFI, but denied on grounds primarily that government is immune from suit without its consent

Issue: Whether or not the appellant may properly sue thegovernmentunderthefactsofthecase Held: It is not immune from suit 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 (Ministerio vs. CFI of Cebu) Since 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. The only relief available (since Avenues have been constructed) is for the government to make due compensation. To determine due compensation for the land, the basis should be the price or value thereof atthetimeofthetaking. The plaintiff is entitled to damages in the form of legal interest on the price of the land from the time it was taken up to the time that payment is madebythegovernment. Government should payattorneysfees Notes: The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. payment is madebythegovernment. Government should pay attorneysfees

REPUBLIC VS SANDOVAL

220 SCRA 124

Facts: Farmer-rallyists marched to Malacanang calling for a genuine land reform program. There was a marchers-police confrontation which resulted in the death of 12 rallyists and scores were wounded. As a result, then Pres. Aquino issued AO 11 creating the Citizens Mendiola Commission for the purpose of conducting an investigation. The most significant recommendation of the Commission was for the heirs of the deceased and wounded victims to be compensated by the government. Based on such recommendation, the victims of Mendiola massacre filed an action for damages against the Republic and the military/police officers involved in the incident.

Issues: (1) Whether or not there is a valid waiver of immunity (2) Whether or not the State is liable for damages

Held: The Court held that there was no valid waiver of immunity as claimed by the petitioners. The recommendation made by the Commission to indemnify the heirs of the deceased and the victims does not in any way mean that liability attaches to the State. AO 11 merely states the purpose of the creation of the Commission and, therefore, whatever is the finding of the Commission only serves as the basis for a cause of action in the event any party decides to litigate the same. Thus, the recommendation of the Commission does not in any way bind the State. The State cannot be made liable because the military/police officers who allegedly were responsible for the death and injuries suffered by the marchers acted beyond the scope of their authority. It is a settled rule that the State as a person can commit no wrong. The military and police officers who were responsible for the atrocities can be held personally liable for damages as they exceeded their authority, hence, the acts cannot be considered official.

FROILAN VS. PAN ORIENTAL SHIPPING CO.


S e p t e m b e r 3 0 , 1 9 5 4 1 0 3 P H I L . 4 7 3 P A R A S , J . : Nature of the Case: Appeal from an Order of the CFI of M a n i l a . FACTS: Defendant Pan Oriental took possession of the vessel in question after it had been repossessed by the Shipping Administration and title thereto reacquired by the government, following the original purchaser, Fernando Froilans, default in his payment of the unpaid balan ce and insurance premiums for the said vessel. Pan Oriental chartered said vessel and operated the same after it had repaired the vessel and paid the stipulated initial payment, thereby exercising its option to purchase, pursuant to a bareboat charter cont ract entered between said company and the Shipping Corporation. 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 CFI of 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 pra ying for the possession of the in order that the chattel mortgage constituted there on may be foreclosed. ISSUE: Whether or not the counterclaims may prosper? HELD: Under the circumstances already had voted to, Pan Oriental cannot be considered a possessor in bad faith until after the institution of the instant case. However, since it is not disputed that said appellant is entitled to the refund of such expenses with the right to retain the vessel until he has been reimbursed therefore. As it is by the corrected acts of defendant and intervenor Republic of the Philippines that the appellant h a a lien far his expenses, appel ees Froilan, Compania Maratma, and the Republic of the Philippines are declared liable for their imbursement to appellant of its legitimate expenses, as allowed by law, with legal interest from the time of disbursement. governments motion to dismiss Pan Oriental

Ministerio vs. Court of First Instance,


G.R. No. L-31635, August 31, 1971 FACTS: Petitioners as plaintiffs in a complaint filed with the Court of First Instance of Cebu, dated April 13, 1966, sought the payment of just compensation for a registered lot, containing an area of 1045 square meters, alleging that in 1927 the National Government through its authorized representatives took physical and material possession of it and used it for the widening of the Gorordo Avenue, a national road, Cebu City, without paying just compensation and without any agreement, either written or verbal. There was an allegation of repeated demands for the payment of its price or return of its possession, but defendants Public Highway Commissioner and the Auditor General refused to restore its possession. It was further alleged that on August 25, 1965, the appraisal committee of the City of Cebu approved Resolution No. 90, appraising the reasonable and just price of Lot No. 647-B at P50.00 per square meter or a total price of P52,250.00. Thereafter, the complaint was amended on June 30, 1966 in the sense that the remedy prayed for was in the alternative, either the restoration of possession or the payment of the just compensation. In the answer filed by defendants, now respondents, through the then Solicitor General, now Associate Justice, Antonio P. Barredo, the principal defense relied upon was that the suit in reality was one against the government and therefore should be dismissed, no consent having been shown. Then on July 11, 1969, the parties submitted a stipulation of facts to this effect: "That the plaintiffs are the registered owners of Lot 647B of the Banilad estate described in the Survey plan RS-600 GLRO Record No. 5988 and more particularly described in Transfer Certificate of Title No. RT-5963 containing an area of 1,045 square meters; That the National Government in 1927 took possession of Lot 647-B Banilad estate, and used the same for the widening of Gorordo Avenue; That the Appraisal Committee of Cebu City approved Resolution No. 90, Series of 1965 fixing the price of Lot No. 647-B at P50.00 per square meter; That Lot No. 647-B is still in the possession of the National Government the same being utilized as part of the Gorordo Avenue, Cebu City, and that the National Government has not as yet paid the value of the land which is being utilized for public use." The lower court dismissed the complaint on January 30, 1969 stating that the case is undoubtedly against the National Government and there is now showing that the Government has not consented to be sued in this case. The petitioners appealed by certiorari to review the decision and contended that they are entitled for just compensation under the Art III, Sec. 1 (2) of the Constitution. ISSUE: Whether or not, the decision of the CFI of Cebu to dismiss the complaint by reason Government immunity from suit correct? HELD: NO. The doctrine of governmental immunity from suit cannot be an instrument for perpetrating an injustice on a citizen. If there were an observance of procedural regularity, petitioners would not be in sad plaint they are now. It is unthinkable then that precisely there was a failure on what the law requires and the petitioners has the right to demand from the Government what is due to them. The Supreme Court decided that

the lower courts decision of dismissing the complaint is reversed and the case remanded to the lower court for proceedings in accordance with law.

PNB vs. Pabalan - Case Digest


G.R. No. L-33112 June 15, 1978 PHIL. NATIONAL BANK vs. JAVIER PABALAN

Issue: The petitioner is requesting for certiorari against the writ of execution authorized by the Hon Judge Pabalan regarding the transfer of funds amounting to P12,724.66 belonging to Philippine Virginia Tobacco Administration.

Facts: Philippine National Bank invoked the doctrine of non-suability in behalf of PVTA. It is to be admitted that under the present Constitution, what was formerly implicit as a fundamental doctrine in constitutional law has been set forth in express terms: "The State may not be sued without its consent." In addition, the amount held by said bank is subject to garnishment.

Held: The certiorari was dismissed without cost by the Supreme Court saying that the funds held by PNB is subject for garnishment, thus, the writ of execution be imposed immediately. The non-suability clause raised by PVTA being a government owned corporation was also denied citing previous decisions held by the Supreme Court specifically citing that of Manila Hotel Employees Association vs Manila Hotel Company and to quote 'it is well-settled that when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation.'

Department of Agriculture vs. NLRC G.R. No. 104269, November 11, 1993
Sunday, January 25, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law Facts: Petitioner Department of Agriculture (DA) 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, nonpayment 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.

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

Held: The basic postulate enshrined in the Constitution that the State may not be sued without its consent reflects nothing less than a 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. A sovereign is exempt from suit based 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.

The rule is not really absolute for it does not say that the State may not be sued under any circumstances. The State may at times be sued. The States consent may be given expressly or impliedly. Express consent may be

made through a general law or a special law. Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a counterclaim, or when it enters into a contract. In this situation, the government is deemed to have descended to the level of the other contracting party and to have divested itself of its sovereign immunity.

But not all contracts entered into by the government operate as a waiver of its non-suability; 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.

In the 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, be that as it may, the claims of the complainant security guards clearly constitute money claims. Act No. 3083 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 327, as amended by PD 1145, the money claim must first be brought to the Commission on Audit.

MUNICIPALITY OF SAN MIGUEL BULACAN VS FERNANDEZ


130 SCRA 56

FACTS: In civil case No. 604-B the then CFI of Bulacan rendered judgment holding herein petitioner municipality liable to respondents Imperio et.al. When the judgment became final, respondents judge issued a writ of execution to satisfy the same. Petitioner municipality filed a motion to quash the writ on the ground that the municipalitys property or funds are public funds exempt from execution. The motion was denied. Respondents judge issued another order requiring both the municipal and provincial treasurer to comply with the money judgment. When the treasurer failed to do so, respondent judge issued an order for their arrest and that they will be released only upon compliance, hence, the present petition. ISSUE: Whether the funds of the municipality in the hands of the provincial and municipal treasurers of Bulacan and San Miguel respectively, are public funds which are exempt from execution. HELD: Municipal Funds in possession of municipal and provincial treasurers are Public funds exempt from execution. Well settled is the rule that public funds are not subject to Levy and execution. The reason for those was explained in the case of municipality of Paoay versus Manaois. That they are held in the trust for the people, intended and used for the accomplishes of the purpose for which municipal corporations are created and that to subject said properties and public funds to execution would materially impede, even defeat and insome instances destroy said purpose. And in Tantoco VS Municipal Council of Iloilo it was held that it is the settled doctrine of the law that not only the public property but also the taxes and public revenues of such corporations cannot be seized under execution against them, either in the treasury or in transit to it. Judgment rendered for taxes and then proceeds of such judgment in the hands of the officer of the law are not subject to execution unless declared by statue. Thus it is clear that all the funds of petitioner municipality in the possession of the municipal treasurer of San Miguel as well as those in the possession of the provincial treasurer of Bulacan, are also public funds and as such they are exempt from execution. Besides PD no. 447 known as the decree of local fiscal administration provide in section 3 (a) that no money shall be paid out of the treasury except in pursuance of a lawful appropriation or other specific statutory authority. Otherwise stated, there must be a corresponding appropriation in the form of an ordinance duly passed by then Sangguniang Bayan before any money of the municipality maybe paid out. In the case at bar, it has not been shown that the Sangguniang Bayan has passed an ordinance to this effect. Furthermore, sec. 15 rule 39 of the new rule of court, outlines the procedure for the enforcement of money judgment. The foregoing has not been followed in the case at bar.

MUNICIPALITY OF MAKATI VS. COURT OF APPEALS


190 SCRA 206 FACTS: As expropriation proceeding was initiated by petitioner Municipality of Makati against private respondents Admiral Finance Creditors Consurtium Inc. Home Bldg., System and Realty Corp. and one Arceli P. Jo Involving a parcel of land and improvement thereon located at San Antonio Village, Makati. An action for eminent domain was filed. Attached to the petitionera complaint was a certification that a bank account had been opened with the PNB. After the decision has become final and executor, a writ of execution was issued and a notice of garnishment was served upon the manager of PNB, where the petitioner had bank accounts, However, the sheriff was informed that hold cold was placed on the account of the petitioner. The petitioner contended that its funds at the PNB cocked neither be garnished not levied upon execution for to do so would result in the disbursement of public funds without the proper appropriation required under the law. In the petition with the Court of Appeals petitioner alleges for the first time that it has actually two accounts with the PNB, one exclusively for the expropriation of subject property with an outstanding balance of P 99,743.94. The account was for the obligations and other purposes of the municipal government with a balance of P170, 098,421.72. ISSUE: Whether or not the bank account of a municipality may be levied on execution to satisfy a money judgment against it absent a showing that the municipal council has passed an ordinance appropriating from its funds an amount correspondingto the balance due to the RTC decision. HELD: Since the first PNB account was specifically opened for expropriation proceedings it has initiated over the subject property, there is no objection to the garnishment or levy under execution of funds therein amounting to P4,965,506.40, the funds garnished in excess of P99,743.94 which are public funds earmarked for the municipal government other statutory obligations are exempted from execution without the proper appropriation required under the law. The funds deposited in the second PNB account are public funds of the municipal government. The rule is well-settled that public funds are not subject to levy and execution, unless otherwise provided by statute. More particularly, the properties of a municipality, whether real or personal , which are necessary for public used cannot be attached and sold at execution sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licences and market fees, and which are intended primarily and exclusively for the purpose of financing and governmental activities and function of the

municipality are exempt from execution. The foregoing rule find application in the case at bar. Absent a showing that the municipal council of Makati passed an ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decision, less the sum P 99,743.94 may be validity effected on the public funds of petitioner deposited in its second account. Nevertheless, this is not to say that private respondents are left with no legal recourse. When a municipality fails or refuses without justifiable reason to effect payment of a final money judgment rendered against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance and the corresponding disbursement of municipal funds. The court will not condone petitioners blatant refusal to settle its obligation arising from exploration proceedings it has in fact initiated. Within the context of the states inherent power of eminent domain, just compensation means not only the correct determination of the amount to be paid to the owner of the land but also the payment of the land within a reasonable time from its taking. The States power of eminent domain should be exercised within the bounds of fair play and justice. In the case at bar, considering that valuable property has been taken the compensation to be paid fixed and the municipal has had more than reasonable time to play full compensation.

CITY OF CALOOCAN petitioners, vs. ALLARDE respondents.


G.R. No. 107271; September 10, 2003 FACTS: In 1972, Mayor Marcial Samson of Caloocan abolished the position of Assistant City Administrator and 17 other positions via Ordinance No. 1749. The affected employees assailed the legality of the abolition. The CFI in 1973 declared abolition illegal and ordered the reinstatement of all the dismissed employees and the payment of their back-wages and other emoluments. The City Government appealed the decision but such was dismissed. In 1986 the City paid Santiago P75,083.37 as partial payment of her back-wages. The others were paid in full. In 1987 the City appropriated funds for her unpaid back salaries (supplemental budget #3) but the City refused to release the money to Santiago. The City of Caloocan argued that Santiago was not entitled to back wages. On July 27, 1992 Sheriff Castillo levied and sold at public auction one of the motor vehicles of the City Government for P100,000. The amount was given to Santiago. The City Government questioned the validity of the motor vehicle; properties of the municipality were exempt from execution. Judge Allarde denied the motion and directed the sheriff to levy and schedule at public auction 3 more vehicles. On October 5, 1993 the City Council of Caloocan passed Ordinance No. 0134 which included the amount of P439,377.14 claimed by Santiago as back-wages, plus interest. Judge Allarde issued an order to the City Treasurer to release the check but the City Treasurer cant do so because the Mayor refuses to sign the check. On May 7,1993. Judge Allarde ordered the Sheriff to immediately garnish the funds of the City Government of Caloocan corresponding to the claim of Santiago. Notice of garnishment was forwarded to the PNB but the City Treasurer sent an advice letter to PNB that the garnishment was illegal and that it would hold PNB liable for any damages which may be caused by the withholding the funds of the city. ISSUE : Whether or not the funds of City of Caloocan, in PNB, may be garnished (i.e. exempt from execution), to satisfy Santiagos claim. HELD: Garnishment is considered a specie of attachment by means of which the plaintiff seeks to subject to his claim property of the defendant in the hands of a third person, or money owed by such third person or garnishee to the defendant. The rule is and has always been that all government funds deposited in the PNB or any other official depositary of the Philippine Government by any of its agencies or instrumentalities, whether by general or special deposit, remain government funds and may not be subject to garnishment or levy, in the absence of a corresponding appropriation as required by law. Even though the rule as to immunity of a state from suit is relaxed, the power of the courts ends when the judgment is rendered. Although the liability of the state has been judicially ascertained, the state is at liberty to determine for itself whether to pay the judgment or not, and execution cannot issue on a judgment against the state. Such statutes do not authorize a seizure of state property to satisfy judgments recovered, and only convey an implication that the legislature will recognize such

judgment as final and make provision for the satisfaction thereof. However, the rule is not absolute and admits of a well-defined exception, that is, when there is a corresponding appropriation as required by law. In such a case, the monetary judgment may be legally enforced by judicial processes. Herein, the City Council of Caloocan already approved and passed Ordinance No. 0134, Series of 1992, allocating the amount of P439,377.14for Santiagos back-wages plus interest. This case, thus, fell squarely within the exception. The judgment of the trial court could then be validly enforced against such funds.

NATIONAL HOUSING AUTHORITY, Petitioner, vs. HEIRS OF ISIDRO GUIVELONDO, Respondents.


G.R. No. 154411. June 19, 2003 FACTS: On February 23, 1999, petitioner National Housing Authority filed with the Regional Trial Court of Cebu City, Branch 11, an Amended Complaint for eminent domain against Associacion Benevola de Cebu, Engracia Urot and the Heirs of Isidro Guivelondo. On November 12, 1999, the Heirs of Isidro Guivelondo, respondents herein, filed a Manifestation stating that they were waiving their objections to petitioners power to expropriate their properties. Hence, the trial court declares that the plaintiff has a lawful right to expropriate the properties of the defendants who are heirs of Isidro Guivelondo. The appointment of commissioners who would ascertain and report to the Court the just compensation for said properties will be done as soon as the parties shall have submitted to the Court the names of persons desired by them to be appointed as such commissioners. On April 17, 2000, the Commissioners submitted their report wherein they recommended that the just compensation of the subject properties be fixed at P11,200.00 per square meter. 3 On August 7, 2000, the trial court rendered Partial Judgment fixing the just compensation of the lands of respondent Heirs of Isidro Guivelondo at P11,200.00 per square meter ISSUE: 1) WHETHER OR NOT THE STATE CAN BE COMPELLED AND COERCED BY THE COURTS TO EXERCISE OR CONTINUE WITH THE EXERCISE OF ITS INHERENT POWER OF EMINENT DOMAIN; 2) WHETHER OR NOT JUDGMENT HAS BECOME FINAL AND EXECUTORY AND IF ESTOPPEL OR LACHES APPLIES TO GOVERNMENT; 3) WHETHER OR NOT WRITS OF EXECUTION AND GARNISHMENT MAY BE ISSUED AGAINST THE STATE IN AN EXPROPRIATION WHEREIN THE EXERCISE OF THE POWER OF EMINENT DOMAIN WILL NOT SERVE PUBLIC USE OR PURPOSE HELD: The Order became final and may no longer be subject to review or reversal in any court. A final and executory decision or order can no longer be disturbed or reopened no matter how erroneous it may be. Although judicial determinations are not infallible, judicial error should be corrected through appeals, not through repeated suits on the same claim.

Furthermore, the SC held that the funds of petitioner NHA are not exempt from garnishment or execution. It is arbitrary and capricious for a government agency to initiate expropriation proceedings, seize a persons property, allow the judgment of the court to become final and executory and then refuse to pay on the ground that there are no appropriations for the property earlier taken and profitably used. We condemn in the strongest possible terms the cavalier attitude of government officials who adopt such a despotic and irresponsible stance. 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 claimants action only up to the completion of proceedings anterior to the stage of execution and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law. However, if the funds belong to a public corporation or a government-owned or controlled corporation which is clothed with a personality of its own, separate and distinct from that of the government, then its funds are not exempt from garnishment. This is so because when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation. In the case of petitioner NHA, the matter of whether its funds and properties are exempt from garnishment has already been resolved squarely against its predecessor, the Peoples Homesite and Housing Corporation (PHHC), to wit: The plea for setting aside the notice of garnishment was premised on the funds of the Peoples Homesite and Housing Corporation deposited with petitioner being public in character. There was not even a categorical assertion to that effect. It is only the possibility of its being public in character. The tone was thus irresolute, the approach diffident. The premise that the funds cold be spoken of as public in character may be accepted in the sense that the Peoples Homesite and Housing Corporation was a government-owned entity. It does not follow though that they were exempt from garnishment.

Lansang vs. CA
G.R. No. 102667, February 23, 2000 Facts: Private respondents General Assembly of the Blind, Inc. (GABI) and Jose Iglesias were allegedly awarded a verbal contract of lease in 1970 to occupy a portion of Rizal Park by the National Parks Development Committee (NPDC), a government initiated civic body engaged in the development of national parks. Private respondents were allegedly given office and library space as well as kiosks area selling food and drinks. Private respondent GABI was to remit to NPDC 40% of the profits derived from operating the kiosks. After the EDSA Revolution, petitioner Lansang, the new Chairman of the NPDC, sought to clean up Rizal Park. Petitioner terminated the so-called verbal agreement with GABI and demanded that the latter vacate the premises and the kiosks it ran privately within the public park. On the day of the supposed eviction, GABI filed an action for damages and injunction against petitioner. Issue: Whether or not the complaint filed against the petitioner is in reality a complaint against the State, which could not prosper without the States consent? Held: The doctrine of state immunity from suit applies to complaints filed against public officials for acts done in the performance of their duties. The rule is that the suit must be regarded as one against the state where satisfaction of the judgment against the public official concerned will require the state itself to perform a positive act, such as appropriation of the amount necessary to pay the damages awarded to the plaintiff. The rule does not apply where the public official is charged in his official capacity for acts that are unlawful and injurious to the rights of others. Public officials are not exempt, in their personal capacity, from liability arising from acts committed in bad faith. Neither does it apply where the public official is clearly being sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a public position. In the case, the petitioner is being sued not in his capacity as NPDC chairman but in his personal capacity. It is also evident the petitioner is sued allegedly for having personal motives in ordering the ejectment of GABI from Rizal Park. The important question to consider is whether or not petitioner abused his authority in ordering the ejectment of GABI. The Court found no evidence of such abuse of authority. Rizal Park is beyond the commerce of man and, thus, could not be the subject of lease contract. That private respondents were allowed to occupy office and kiosk spaces in the park was only a matter of accommodation by the previous administrator. This being so, petitioner may validly discontinue the accommodation extended to private respondents, who may be ejected from the park when necessary. Private respondents cannot and do not claim a vested right to continue to occupy Rizal Park.

NATIONAL HOUSING AUTHORITY v. HEIRS OF ISIDRO GUIVELONDO


FIRST DIVISION [G.R. No. 154411. June 19, 2003] PONENTE: J. YNARES-SANTIAGO FACTS: On February 23, 1999, petitioner National Housing Authority filed with the Regional Trial Court of Cebu City, Branch 11, an Amended Complaint for eminent domain against Associacion Benevola de Cebu, Engracia Urot and the Heirs of Isidro Guivelondo for the purpose of the public use of Socialized housing. On November 12, 1999, the Heirs of Isidro Guivelondo filed a Manifestation stating that they were waiving their objections to NHAs power to expropriate their properties. Thus an order of execution has been granted and the court already appointed commissioners to determine the amount for just compensation On April 17, 2000, the Commissioners submitted their report wherein they recommended that the just compensation of the subject properties be fixed at P11,200.00 per square meter wherein a partial judgment has been rendered. After the report on the just compensation has completed, both parties filed an MR on the amount for the just compensation stating that it has no adequate basis and support. Both MR was denied by the court. While the judgment has been rendered in the RTC and an entry of judgment and the motion for execution has been issued, NHA filed a petition for certiorari to the Court of Appeals. The CA denied the petition on the ground that the Partial Judgment and Omnibus Order became final and executory when petitioner failed to appeal the same. Wherefore, the Petitioner NHA filed an appeal to the Supreme Court. ISSUES: 1) WHETHER OR NOT THE STATE CAN BE COMPELLED AND COERCED BY THE COURTS TO EXERCISE OR CONTINUE WITH THE EXERCISE OF ITS INHERENT POWER OF EMINENT DOMAIN; 2) WHETHER OR NOT WRITS OF EXECUTION AND GARNISHMENT MAY BE ISSUED AGAINST THE STATE IN AN EXPROPRIATION WHEREIN THE EXERCISE OF THE POWER OF EMINENT DOMAIN WILL NOT SERVE PUBLIC USE OR PURPOSE 3) WHETHER OR NOT JUDGMENT HAS BECOME FINAL AND EXECUTORY AND IF ESTOPPEL OR LACHES APPLIES TO GOVERNMENT; HELD: The petition was denied and the judgment rendered by the lower court was affirmed. RATIO: On the first issue, the court held that, yes the state can be compelled and coerced by the court to continue exercise its inherent power of eminent domain, since the NHA does not exercise its right to appeal in the expropriation proceedings before the court has rendered the case final and executory. In the early case of City of Manila v. Ruymann and Metropolitan Water District v. De Los Angeles, an expropriation proceeding was explained. Expropriation proceedings consists of two stages: first, condemnation of the property after it is determined that its acquisition will be for a public purpose or public use and, second, the determination of just

compensation to be paid for the taking of private property to be made by the court with the assistance of not more than three commissioners. The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint. An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter, as the Rules expressly state, in the proceedings before the Trial Court, no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard. The second phase of the eminent domain action is concerned with the determination by the Court of the just compensation for the property sought to be taken. This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. Obviously, one or another of the parties may believe the order to be erroneous in its appreciation of the evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek a reversal of the order by taking an appeal there from. On the second issue, the court held that a socialized housing is always for the public used and that the public purpose of the socialized housing project is not in any way diminished by the amount of just compensation that the court has fixed. On the third issue, the court ruled that in this case the doctrine of state immunity cannot be applied to the NHA, although it is public in character, it is only public in character since it is government-owned, having a juridical personality separate and distinct from the government, the funds of such government-owned and controlled corporations and non-corporate agency, although considered public in character, are not exempt from garnishment. Notes: Important Discussion in the case: When does the Doctrine of State Immunity not applied in the government agencies? 1. The universal rule that where the State gives its consent to be sued by private parties either by general or special law 2. If the funds belong to a public corporation or a government-owned or controlled corporation which is clothed with a personality of its own, separate and distinct from that of the government, then its funds are not exempt from garnishment. This is so because when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation. GARNISMENT AS DEFINED BY BLACK LAW DICTIONARY: Garnishment - A judicial proceeding in which a creditor (or a potential creditor) asks the court to order a third party who is indebted to or is bailee for the debtor to turn over to the creditor any of the debtors property (such as wages or bank accounts) held by that third party. - A person can initiate a garnishment action as means of either prejudgment seizure or post judgment collection. - In short, it only means whether the Heirs of Guivelendo can file a case to NHA to compel the latter to give to them the amount of the just compensation as rendered by the court.

BENITO LIM VS HERBERT BROWNELL


FACTS: The property in dispute consists of four parcels of land situated in Tondo, Manila. 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. Alien Property Custodian, 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. The Philippine Alien Property Administrator (acting on behalf of the President of the US) 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. The transfer agreements were executed. On the theory that the lots in question still belonged to Arsenia Enriquez, the latters son Benito Lim filed a formal notice of claim to the property with the Philippine AlienProperty Administrator. The notice was subsequently amended to permit Lim to prosecute the claim as administrator of the intestate estate of the deceased Arsenia Enriquez, thus, in effect, substituting the inestate estate as the claimant, it being alleged that the lots were once the property of Arsenia Enriquez. The claim was disallowed by the Vested Property Claims Committee of the Philippine Alien Property Administrator. The claimant Benito Lim filed a complaint in the Court of First Instance of Manila against Philippine Alien Property Administrator (later substituted by the Atty 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. As amended, it alleged that the lands in question formerly belonged to Arsenia Enriquez. He stated some reasons in his allegations to prove that Arsenia is the owner of the property. Plaintiff, therefore, prayed that the sheriffs sale to Kagawa and the vesting of the properties in the Philippine Alien Property Administrator and the transfer thereof by the United States to the Republic of the Philippines be declared null and void; that Arsenia Enriquez be adjudged owner of the said properties and the Register of the Deeds of Manila be ordered to issue the corresponding transfer certificates of title to her. The Court ordered the complaint dismissed on the ground - as stated in the dispositive part of the order - that the court has no jurisdiction over the subject matter of this action. ISSUE: Whether or not Lim has the right to sue or claim for damages against the Republic and Attorney General of the United States? HELD: The immunity of the state from suit, however cannot be invoked where the action, as in the present case, is instituted by a person who is neither an enemy or ally of an enemy for the purpose of establishing his right, title or interest in vested property, and of recovering his ownership and possession. Congressional consent to such suit has expressly been given by the United States. The order of dismissal, however, with respect to plaintiffs claim for damages against the defendant Attorney General of the US must be upheld. The relief available to a person claiming enemy property which has been vested by the Philippines Alien Property Custodian is limited to those expressly provided for in the Trading

with the Enemy Act, which does not include a suit for damages for the use of such vested property. That action, as held by this Court in the Castelo case just cited, is not one of those authorized under the act which may be instituted in the appropriate courts of the Philippines under the provisions of section 3 of the Philippine Property Act of 1946. Congressional consent to such suit has not been granted. The claim for damages for the use of the property against the intervenor defendant Republic of the Philippines, to which it was transferred, likewise, cannot be maintained because of the immunity of the state from suit. The claim obviously constitutes a charge against, or financial liability to, the Government and consequently cannot be entertained by the courts except with he consent of said government

US VS. RUIZ
FACTS: The USA had a naval base in Subic, Zambales. The base was one of those provided in the military bases agreement between Phililppines and the US. Respondent alleges that it won in the bidding conducted by the US for the construction of wharves in said base that was merely awarded to another group. For this reason, a suit for specific performance was filed by him against the US. ISSUE: Whether the US naval base in bidding for said contracts exercise governmental functions to be able to invoke state immunity. HELD: 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 and private, commercial and proprietary acts. The result is that state immunity now extends only to sovereign and governmental acts. The restrictive application of state immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign. Its commercial activities of economic affairs. A state may be 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 the exercise of its sovereign function. In this case, the project are integral part of the naval base which is devoted to the defense of both US and Philippines, indisputably, a function of the government of highest order, they are not utilized for, nor dedicated to commercial or business purposes.

SANTIAGO VS REPUBLIC OF THE PHILIPPINES


FACTS: On 20 Jan 1971, Santiago gratuitously donated a parcel of land to the Bureau of Plant Industry. The terms of the donation are; that the Bureau should construct a building on the said lot and that the building should be finished by December 7, 1974, that the Bureau should install lighting facilities on the said lot. However, come 1976 there were still no improvements on the lot. This prompted Santiago to file a case pleading for the revocation of such contract of donation. The trial court dismissed the petition claiming that it is a suit against the government and should not prosper without the consent of the government. ISSUE: Whether or not the state has not waived its immunity from suit? HELD: The government has waived its immunity and such waiver is implied by virtue of the terms provided in the deed of donation. The government is a beneficiary of the terms of the donation. But the government through the Bureau has breached the terms of the deed by not complying with such, therefore, the donor Santiago has the right to have his day in court and be heard. Further, to not allow the donor to be heard would be unethical and contrary to equity which the government so advances. Case should prosper

JUSMAG PHILIPPINES, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION (Second Division) and FLORENCIO SACRAMENTO, Union President, JPFCEA, respondents.
G.R. No. 108813 December 15, 1994 Facts: Private respondent sued private petitioner for damages due to the oppressive and discriminatory acts done by the latter in excess of her authority as store manager of NEX JUSMAG. Private petitioner contends that case should be dismissed since she is clothed with diplomatic immunity. The trial court decided in favor of the private respondent and petitioner appealed. She contends that even if she was acting ultra vires of her official capacities, she is still immune from suit since the law that public employees and officials sued in personal capacity for ultra vires and tortuous acts is municipal and not international law. Issue: Whether or not Bradfords diplomatic immunity constitutes a bar for her to be sued by private respondent? Held: The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs Court of Appeals,40 thus: I. The rule that a state may not be sued without its consent, now expressed in Article XVI Section 3, of the 1987 Constitution, is one of the generally accepted principles of international law that we have adopted as part of the law of our land under Article II, Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended to manifest our resolve to abide by the rules of the international community. While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state itself although it has not been formally impleaded. It must be noted, however, that the rule is not so all-encompassing as to be applicable under all circumstances. It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al. Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the State from suit. In the same tenor, it hasbeen said that an action at law or suit in equity against a State officer or the director of a State department on the ground that,while claiming to act or the State, he violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under an assumption

of authority which he does not have, is not a suit against the State within the constitutional provision that the State may not be sued without its consent. The rationale for this ruling is that the doctrinaire of state immunity cannot be used as an instrument for perpetrating aninjustice. Bradford was sued in her private or personal capacity for acts allegedly done beyond the scope and even beyond her place of official functions, said complaint is not then vulnerable to a motion to dismiss based on the grounds relied upon by the petitioners because as a consequence of the hypothetical admission of the truth of the allegations therein, the case falls within the exception to the doctrine of state immunity.

THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and MINISTER COUNSELLOR AZHARI KASIM, petitioners, vs. JAMES VINZON
FACTS: Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a Maintenance Agreement in August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade and Services. The equipment covered by the Maintenance Agreement are air conditioning units and was to take effect in a period of four years. When Indonesian Minister Counsellor Kasim assumed the position of Chief of Administration in March 2000, he allegedly found respondents work and services unsatisfactory and not in compliance with the standards set in the Maintenance Agreement. Hence, the Indonesian Embassy terminated the agreement in a letter dated August 31, 2000. Respondent filed a complaint claiming that the aforesaid termination was arbitrary and unlawful. Petitioners filed a Motion to Dismiss assailing that Republic of Indonesia, as a foreign sovereign State, has sovereign immunity from suit and cannot be sued as a partydefendant in the Philippines. ISSUE: Whether or not the Court of Appeals erred in sustaining the trial courts decision that petitioners have waived their immunity from suit by using as its basis the abovementioned provision in the Maintenance Agreement. RULING: The SC GRANTED the petition. The rule that a State may not be sued without its consent is a necessary consequence of the principles of independence and equality of States. The mere entering into a contract by a foreign State with a private party cannot be construed as the ultimate test of whether or not it is an act jure imperii or jure gestionis. Such act is only the start of the inquiry. A sovereign State does not merely establish a diplomatic mission and leave it at that; the establishment of a diplomatic mission encompasses its maintenance and upkeep. Hence, the State may enter into contracts with private entities to maintain the premises, furnishings and equipment of the embassy and the living quarters of its agents and officials. It is therefore clear that petitioner Republic of Indonesia was acting in pursuit of a sovereign activity when it entered into a contract with respondent for the upkeep or maintenance of the air conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps of the Indonesian Embassy and the official residence of the Indonesian ambassador.

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 everwidening 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

CONSTITUTIONAL LAW I FONTANILLA V. MALIAMAN


G.R. No. L-55963, February 27, 1991 Petitioners: Spouses Jose Fontanilla and Virginia Fontanilla Respondents: Hon. Inocencio D. Maliaman and National Irrigation Administration (NIA) FACTS: On December 1, 1989, the Court rendered a decision declaring National Irrigation Administration (NIA), a government agency performing proprietary functions. Like an ordinary employer, NIA was held liable for the injuries, resulting in death, of Francisco Fontanilla, son of petitioner spouses Jose and Virginia Fontanilla, caused by the fault and/or negligence of NIAs driver employee Hugo Garcia; and NIA was ordered to pay the petitioners the amounts of P 12,000 for the death of the victim; P3,389 for hospitalization and burial expenses; P30,000 as moral damages; P8,000 as exemplary damages, and attorneys fees of 20% of the total award. The National Irrigation Administration (NIA) maintains, however, that it does not perform solely and primarily proprietary functions, but is an agency of the government tasked with governmental functions, and is therefore not liable for the tortuous act of its driver Garcia, who was not its special agent. For this, they have filed a motion for reconsideration on January 26, 1990. NIA believes this bases this on: PD 552 amended some provisionsof RA 3601 (the law which created the NIA)The case of Angat River Irrigation System v. Angat River Workers Union Angat Case: Although the majority opinion declares that the Angat System, like the NIA, exercised a governmental function because the nature of its powers and functions does not show that it was intended to bring to the Government any special corporate benefit or pecuniary profit, a strong dissenting opinion held that Angat River system is a government entity exercising proprietary functions. The Angat dissenting opinion: Alegre protested the announced termination of his employment. He argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status of regular employee and could not be removed except for valid cause. The employment contract of 1971 was executed when the Labor Code of the Philippines had not yet been promulgated, which came into effect some 3 years after the perfection of the contract. ISSUE: Whether or not NIA is a government agency with a juridical personality separate and distinct from the government, thereby opening it up to the possibility that it may be held liable for the damages caused by its driver, who was not its special agent HELD: YES Reasoning the functions of government have been classified into governmental or constituent and proprietary or ministrant. The former involves the exercise of sovereignty and considered as compulsory; the latter connotes merely the exercise of proprietary functions and thus considered as optional. The National Irrigation Administration was not created for purposes of local government. While it may be true that the NIA was essentially a service agency of the government aimed at promoting public interest and public welfare, such fact does not make the NIA essentially and purely a government-function corporation. NIA was created for the

purpose of constructing, improving, rehabilitating, and administering all national irrigation systems in the Philippines, including all communal and pump irrigation projects. Certainly, the state and the community as a whole are largely benefited by the services the agency renders, but these functions are only incidental to the principal aim of the agency, which is the irrigation of lands. NIA is a government agency invested with a corporate personality separate and distinct from the government, thus is governed by the Corporation Law. Section 1 of Republic Act No. 3601 provides: Sec. 1. Name and Domicile A body corporate is hereby created which shall be known as the National Irrigation Administration. . . . which shall be organized immediately after the approval of this Act. It shall have its principal seat of business in the City of Manila and shall have representatives in all provinces, for the proper conduct of its business. (Emphasis for emphasis). Besides, Section 2, subsection b of P.D. 552 provides that: b) To charge and collect from the beneficiaries of the water from all irrigation systems constructed by or under its administration, such fees or administration charges as may be necessary to cover the cost of operation, maintenance and insurance, and to recover the cost of construction within a reasonable period of time to the extent consistent with government policy; to recover funds or portions thereof expended for the construction and/or rehabilitation of communal irrigation systems which funds shall accrue to a special fund for irrigation development under section 2 hereof; Unpaid irrigation fees or administration charges shall be preferred liens first, upon the land benefited, and then on the crops raised thereon, which liens shall have preference over all other liens except for taxes on the land, and such preferred liens shall not be removed until all fees or administration charges are paid or the property is levied upon and sold by the National Irrigation Administration for the satisfaction thereof. . . . The same section also provides that NIA may sue and be sued in court. It has its own assets and liabilities. It also has corporate powers to be exercised by a Board of Directors. Section 2, subsection (f): . . . and to transact such business, as are directly or indirectly necessary, incidental or conducive to the attainment of the above powers and objectives, including the power to establish and maintain subsidiaries, and in general, to exercise all the powers of a corporation under the Corporation Law, insofar as they are not inconsistent with the provisions of this Act. DISPOSITION: The court concluded that the National Irrigation Administration is a government agency with a juridical personality separate and distinct from the government. It is not a mere agency of the government but a corporate body performing proprietary functions. Therefore, it may be held liable for the damages caused by the negligent act of its driver who was not its special agent. ACCORDINGLY, the Motion for Reconsideration dated January 26, 1990 is DENIED WITH FINALITY. The decision of this Court in G.R. No. 55963 and G.R. No. 61045 dated December 1, 1989 is hereby AFFIRMED. DISSENTING: PADILLA: to say that NIA has opened itself to suit is one thing; to say that it is liable for damages arising from tort committed by its employees, is still another thing. The state or a government agency performing governmental functions may be held liable for tort committed by its employees only when it acts through a special agent.

PROVINCIAL GOVT OF MARINDUQUE, Plaintiff-Appellant, vs. PLACER DOME, INC.; &Barrick Gold Corp., Defendants-Appellees.
No. 07-16306. Respondent, suing in both its sovereign capacity and in its capacity as parens patriae to all Marinduquenos, id. at 117a, alleges that between 1964 and 1997, Placer Dome operated copper mines in Marinduque, and that those operations caused severe pollution and other environmental damage to Marinduques land and waters. The court reasoned that it would have federal-question jurisdiction if the allegations in Plaintiffs Complaint require the Court to evaluate any act of state or apply any principle of international law before it can assert jurisdiction. In the course of its decision on the forum non conveniens issue, the district court stated in passing that the case presented a complex question of subject matter jurisdiction that the court could avoid by addressing forum non conveniens first. The court of appeals first rejected petitioners contention that the district court had dismissed this case on forum non conveniens grounds without resolving the issue of subject-matter jurisdiction, and that the district courts asserted sequencing precluded the court of appeals from addressing subject-matter jurisdiction. ...Dole Food Co., 251 F.3d 795, 803 (9th Cir. 2001), affd in part on other grounds, cert. dismissed in part, 538 U.S. 468 (2003), it had rejected an approach, followed by certain other courts of appeals, that permitted federal-question jurisdiction over any case that might affect foreign relations regardless of whether federal law is raised in the complaint. DISCUSSION Petitioners challenge the court of appeals decision to review the district courts ruling on subjectmatter jurisdiction without first addressing the district courts ruling on forum non conveniens, as well as the court of appeals holding that the district court lacked subject- matter jurisdiction. I. The Court Of Appeals Decision To Address The District Courts Subject-Matter Jurisdiction Is Consistent With This Courts Precedents And Does Not Merit Review Petitioners contend (Pet. 11-14) that this Court should grant a writ of certiorari because the court of appeals decision to review the district courts subjectmatter jurisdiction ruling before its forum non conveniens ruling was inconsistent with Sinochem, 549 U.S. at 436. In Sinochem, the district court had chosen to dismiss the case on forum non conveniens grounds before it determined whether it would have had personal jurisdiction, because it had found that the personal jurisdiction question could not be resolved without discovery. ...This Court reversed, holding that because forum non conveniens is a threshold inquiry that does not involve adjudication of the merits, a court may bypass difficult jurisdictional questions in order to dismiss on forum non conveniens grounds when doing so would be the less burdensome course. Petitioner also questions (Pet. 13) the relevance of the court of appeals observation that unlike a forum non conveniens dismissal, a determination that removal was improper for lack of jurisdiction results in a remand to state court. ... This Court recognized in Ruhrgas, 526 U.S. at 586-587, that in a removed case, a court may properly consider the consequences that might flow from its issuesequencing decision, as well as any resulting comity and judicial economy concerns, in exercising its discretion as to which threshold issue to address first.

II. The Court Of Appeals Conclusion That It Lacked Subject- Matter Jurisdiction Over This Suit Is Correct And Does Not Merit ThisCourts Review. The court of appeals correctly rejected petitioners contention that respondents claims for alleged violations of Philippine law give rise to federal-question jurisdiction because they implicate the validity of a foreign sovereigns act of state. ...contends that the courts decision reinforces a conflict among the courts of appeals as to whether federal-question jurisdiction exists over claims that more generally implicate a foreign sovereigns vital economic or sovereign interests, this case presents no occasion to consider that question. The act of state doctrine would come into the case, if at all, only as a defense: petitioners, for example, might contend that the actions of Placer Dome and Marcopper were lawful because they were approved by the Philippine government through the issuance of permits or otherwise, and might invoke the act-of-state doctrine to assert that the district court must take the governments actions as valid. The Second Circuit also has suggested that the implications of * * * an action for United States foreign relations could give rise to federal jurisdiction, but that conclusion was not necessary to the courts holding, as in any event the claims at issue raise[d], as a necessary element, the question whether to honor a foreign governments. CONCLUSION The Provinces complaint does not present a federal question based upon the act of state doctrine. The district court therefore lacked subject-matter jurisdiction over this suit and removal from state court was improper. We reverse, vacate the forum non conveniens dismissal, and remand with instructions to remand to the state court. REVERSED AND REMANDED.