THE DOCTRINE OF STATE IMMUNITY

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and

ROBERT GOHIER vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE
GUZMAN & CO., INC.

G.R. No. L-35645 May 22, 1985

FACTS:

The United States had a naval base in Subic, Zambales and invited the submission of bids for the repair of
wharves and shorelines. Eligio de Guzman & Co. Inc responded to the invitation.

The company sued the the United States of America and all members of the Engineering Command of
the US Navy for failure of the latter to award to them the contract of service, despite compliance with the
submission of bids.

The defendant (now Petitioner) moved to dismiss the case on the ground that the court has no
jurisdiction over the subject matter of the complaint and the person of the defendant.

The subject matter of the complaint being acts and omission of individuals who are agents of the
defendant (now Petitioner) USA, a foreign sovereign which has not given her consent to the suit or any
other suit for the cause of action asserted in the complaint.

The respondent judge denied the motion to dismiss, although he recognizes the restrictive doctrine of
State Immunity, a distinction should be made between a strictly government function of the soverign
state from its propreitary or non government acts. In his considered opinion, entering a contract for
repair of wharves and shoreline is certainly not a government function although it may partake of a
public nature or character.

Hence, this petition.

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

RULING:

The traditional rule of State immunity exempts a State from being sued in the courts of another State
without its consent or waiver.

Yes, In this case the projects are an integral part of the naval base which is devoted to the defense of both
the United States and the Philippines, indisputably a function of the government of the highest order;
they are not utilized for nor dedicated to commercial or business purposes.

The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated
differently, a State may be said to have descended to the level of an individual and can thus be deemed to
have tacitly given its consent to be sued only when it enters into business contracts. It does not apply
where the contract relates to the exercise of its sovereign functions.

The correct test for the application of State immunity is not the conclusion of a contract by a State but the
legal nature of the act.
 THE DOCTRINE OF STATE IMMUNITY

DALE SANDERS, AND A.S. MOREAU, JR

vs.
HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of Zambales,
Olongapo City, ANTHONY M. ROSSI and RALPH L. WYERS, respondents.

G.R. No. L-46930 June 10, 1988

FACTS:

Petitioner Dale Sanders was the special services director of the US Naval Station (NAVSTA) in Olongapo
City. Private respondents, Anthony Rossi and Ralph Wyers, are American citizens permanently residing
in the Philippines and were employed as game room attendants in the special services department of
NAVSTA. On October 3, 1975, the respondents were advised that their employment had been converted
from permanent full-time to permanent part-time. In a letter addressed to petitioner Moreau, Sanders
disagreed with the hearing officer’s report of the reinstatement of private respondents to permanent part-
time plus back wages. Respondents allege that the letters contained libelous imputations which caused
them to be ridiculed and, thus, filed for damages against petitioners.

ISSUE: Whether the petitioners were performing their official duties when they did the acts for which
they have been sued for damages.

RULING:

It is abundantly clear in the present case that the acts for which the petitioners are being called to account
were performed by them in the discharge of their official duties. Sanders, as director of the special
services department of NAVSTA, undoubtedly had supervision over its personnel and had a hand in
their employment, work assignments, discipline, dismissal and other related matters. The same can be
said for Moreau. Given the official character of the above-described letters, it can be concluded that the
petitioners were being sued as officers of the United States government. There should be no question by
now that such complaint cannot prosper unless the government sought to be held ultimately liable has
given its consent to be sued. The private respondents must pursue their claim against the petitioners in
accordance with the laws of the Unites States of which they are all citizens and under whose jurisdiction
the alleged offenses were committed for the Philippine courts have no jurisdiction over the case.
 THE DOCTRINE OF STATE IMMUNITY

ENRIQUE J. L. RUIZ and JOSE V. HERRERA

vs.
HON. SOTERO B. CABAHUG, Secretary of National Defense, Col. NICOLAS JIMENEZ, Head of the
Engineer Group, Office of the Secretary of National Defense, THE FINANCE OFFICER of the
Department of National Defense, the AUDITOR of the Department of the National Defense, PABLO
D. PANLILIO and ALLIED TECHNOLOGISTS INC.

G.R. No. L-9990 September 30, 1957

FACTS:

The Secretary of National Defense, defendant Hon. Sotero B. Cabahug, accepted the bid of Allied
Technologists, Inc. on July 31, 1950 for the furnishing of the architectural and engineering services in the
construction of the Veterans Hospital at the price of Php 302, 700. The architectural requirements were
submitted by Allied Technologies through Enrique Ruiz, Jose Herrera and Pablo Panlilio and were
approved by the United States Veterans Administration and a contract was signed due to the technical
objection to the capacity of the said company in the practice of architecture and upon the advice of the
Secretary of Justice. The defendants allegedly took 15% of the sum due to Allied Technologies, Inc. at the
time of the payment of the contract price for the reason that Panlilio asserted that he is the sole architect
of the Veterans Hospital, excluding Ruiz and Herrera, the assertion of which was abetted by defendant
Jimenez (the first cause of action). The plaintiffs were to be deprived of their share of professional
services and their professional prestige and standing were to be gravely damaged unless the defendants
are prevented from recognizing Panlilio as the sole architect. Furthermore, the second cause of action is
Title II of the contract where at any time prior to six months after completion and acceptance of the work
under Title I, the Government may direct Allied Technologists, Inc. to do the services stated in said Title
II yet nevertheless the completion the government declined to direct the plaintiffs to perform the job.

ISSUE:

Whether or not the government can be sued for withholding the 15% of the sum and depriving the
plaintiffs of their share.

RULING:

The case is a not a suit against the government, which could not be sued without its consent. It was found
that the government has already allotted the full amount for the contract price; it was the defendant-
officials which were responsible for the allegation. This was to be directed to the officials alone, where
they are compelled to act in accordance with the rights established by Ruiz and Herrera or to desist them
from paying and recognizing the rights and interests in the funds retained and the credit for the job
finished. The order of dismissal was reversed and set aside and the case was remanded to the court a quo
for further proceedings with costs against the defendants.
 THE DOCTRINE OF STATE IMMUNITY

UNITED STATES OF AMERICA, FREDERICK M. SMOUSE AND YVONNE REEVES

vs.
HON. ELIODORO B. GUINTO, Presiding Judge, Branch LVII, Regional Trial Court, Angeles City,
ROBERTO T. VALENCIA, EMERENCIANA C. TANGLAO, AND PABLO C. DEL PILAR

G.R. No. 76607 February 26, 1990

FACTS:

Private respondents, Roberto T. Valencia, Emerenciana C. Tanglao, and Pablo C. del Pilar sued several
officers of the US Air Force stationed in Clark Air Base in connection with the bidding conducted for
contracts for barber services in the base. A certain Ramon Dizon won the bidding against the four (4)
respondents and respondents claimed that he had made a bid for 4 facilities, including the Civil
Engineering Area which was not included in the invitation to bid.

Respondents then filed a complaint in the court to compel Philippine Area Exchange to cancel the award
to Dizon, to conduct rebidding and to allow them to continue operating the concessions pending
litigation by a writ of preliminary injunction

ISSUE: Whether or not the action was in effect a suit against United States of America which has not
waived its non-suability.

RULING:

The barbershop, which is the subject to the concessions granted by the US government, is a private and
commercial transaction operated by private persons and are not agencies of the United Armed Forces. In
fact, they are into grooming services and offer other amenities such as shampoo, massage, manicure and
etc. Thus, the petitioners cannot plead any immunity from the complaint filed by the private respondents.
In the case at bar, the court ruled that the petition be dismissed.
 THE DOCTRINE OF STATE IMMUNITY

THE HOLY SEE,

vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati,
Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents.

G.R. No. 101949 December 1, 1994

FACTS:

This petition arose from a controversy over a parcel of land consisting of 6,000 square meters located in
the Municipality of Paranaque. Said lot was contiguous with two other lots. These lots were sold to
Ramon Licup. In view of the refusal of the squatters to vacate the lots sold, a dispute arose as to who
of the parties has the responsibility of evicting and clearing the land of squatters. Complicating the
relations of the parties was the sale by petitioner of the lot of concern to Tropicana.

ISSUE: Whether the Holy See is immune from suit insofar as its business relations regarding selling a lot
to a private entity.

RULING:

As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted
principles of International Law. Even without this affirmation, such principles of International Law are
deemed incorporated as part of the law of the land as a condition and consequence of our admission in
the society of nations. In the present case, if petitioner has brought and sold lands in the ordinary course
of real estate business, surely the said transaction can be categorized as an act jure gestionis. However,
petitioner has denied that the acquisition and subsequent disposal of the lot were made for profit but
claimed that it acquired said property for the site of its mission for the Apostolic Nunciature in the
Philippines. The Holy See is immune from suit for the act of selling the lot of concern is non-proprietary
in nature. The lot was acquired by petitioner as a donation from the Archdiocese of Manila. The donation
was made not for commercial purpose, but for the use of petitioner to construct thereon the official place
of residence of the Papal Nuncio. The decision to transfer the property and the subsequent disposal
thereof are likewise clothed with a governmental character. Petitioner did not sell the lot for profit or
gain. It merely wanted to dispose of the same because the squatters living thereon made it almost
impossible for petition to use it for the purpose of the donation.
 THE DOCTRINE OF STATE IMMUNITY

German Agency for Technical Cooperation (GTC) vs. Honorable Court of Appeals

G.R. No. 152318, April 16, 2009

FACTS:

On 7 September 1971, the governments of the Federal Republic of Germany and the Republic of the
Philippines ratified and Agreement concerning Technical Co-operation (Agreement) in Bonn, West
Germany. The Agreement affirmed the countries common interest in promoting the technical and
economic development of their States. While the Agreement provided for a limited term of effectivity of
five years, on 10 December 1999, the Philippine and the German governments agreed to an Arrangement
in furtherance of the 1971 Agreement as provide therewith. Such Arrangement affirmed the common
commitment of both governments to promote jointly a project called Social Health Insurance Networking
and Empowerment (SHINE) stating therewith the objectives and various obligations of both
governments. The Philippine government named the Department of Health (DOH) and the Philippine
Health Insurance Corporation (Philhealth), and for their part, the German government charge the
Deustche Gesellschaft fr Technische Zusammenarbeit (GTC) with the implementation of SHINE and of
their respective contributions.

Private respondents were engaged as contract employees hired to work for SHINE on various dates
between December of 1998 to September of 1990. Such employment of private respondents specified Dr.
Rainer Tollkotter, identified adviser of GTC, as the employer.

On September of 1999, Ann Nicolay, a Belgian national, assumed the post of SHINE Project Manager.
Disagreements eventually arose between Nicolay and the private respondents. Disputes were raised by
the private respondents to Nicolay and exchanges of letters arose answering one dispute over the other,
which resulted to the pre-termination of the private respondents’ contracts. Negotiations were made but
to naught.

On 21 August 2000, the private respondents filed a compliant for illegal dismissal with the NLRC. GTC
filed a Motion to Dismiss on the ground that the Labor Arbiter had no jurisdiction over the case.
However the Labor Arbiter denied the motion and cited, among others, that GTC was a private
corporation which entered into an employment contract; and that GTC had failed to secure the DFA a
certification as to its diplomatic status. A subsequent Reiterating Motion to Dismiss was filed by GTC
with the Labor Arbiter praying that the Motion to Dismiss be granted on the jurisdictional ground, and
reprising the arguments for dismissal it had earlier raised. The Labor Arbiter rendered a
Decision[21] granting the complaint for illegal dismissal.

GTC assailed the decision by way of a special civil action for certiorari filed with the Court of Appeals.
On 10 December 2001, the Court of Appeals promulgated a Resolution dismissing GTCs petition, finding
that judicial recourse at this stage of the case is uncalled for, the appropriate remedy of the petitioners -
an appeal to the NLRC xxx. Thus, the present petition for review under Rule 45, assailing the decision
and resolutions of the Court of Appeals and of the Labor Arbiter.

The court required the Office of the Solicitor General (OSG) to file a Comment on the petition. The OSG
took the side of GTC, with the prayer that the petition be granted on the ground that GTC was immune
from suit, citing in particular its assigned functions in implementing the SHINE program joint
undertaking of the Philippine and German governments which was neither proprietary nor commercial
in nature. The Court of Appeals had premised the dismissal of GTCs petition on its procedural misstep.

The arguments raised by GTC and the OSG are rooted in several indisputable facts. The SHINE project
was implemented pursuant to the bilateral agreements between the Philippine and German
governments. GTC was tasked, under the 1991 agreement, with the implementation of the contributions
of the German government. The activities performed by GTC pertaining to the SHINE project are
governmental in nature, related as they are to the promotion of health insurance in the Philippines. The
fact that GTC entered into employment contracts with the private respondents did not disqualify it from
invoking immunity from suit.

ISSUE: Whether or not GTC is immune from suit.

 THE DOCTRINE OF STATE IMMUNITY

RULING:

The Court of Appeals is correct in pronouncing the general rule that the proper resourse from the
decision of the Labor Arbiter is to first appeal the same to the NLRC. The Court therein noted that on
account of the failure to correctly appeal the decision of the Labor Arbiter to the NLRC, such judgment
consequently became final and executory.

The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section 9,
Article XVI of the Constitution, which states that the State may not be sued without its consent. If the
instant suit had been brought directly against the Federal Republic of Germany, there would be no doubt
that it is a suit brought against a State, and the only necessary inquiry is whether said State had
consented to be sued. However, the present suit was brought against GTC. It is necessary to understand
what precisely the parameters of the legal personality of GTC are.

State immunity from suit may be waived by general or special law. The special law can take the form of
the original charter of the incorporated government agency.

Is GTC an incorporated agency of the German government? Neither GTC nor the OSG go beyond the
claim that petitioner is the implementing agency of the Government of the Federal Republic of Germany.
There is no doubt that the 1991 Agreement designated GTC as the implementing agency in behalf of the
German government. Yet the catch is that such term has no precise definition that is responsive to our
concerns. Inherently, an agent acts in behalf of a principal, and the GTC can be said to act in behalf of the
German state. But that is as far as implementing agency could take us. The term by itself does not supply
whether GTC is incorporated or unincorporated, x x x.

GTCs own website elicits that petitioner is federally owned, a federal enterprise, and founded in 1975 as a
company under private law. GTC clearly has a very meaningful relationship with the Federal Republic of
Germany, which apparently owns it. At the same time, it appears that GTC was actually organized not
through a legislative public charter, but under private law, x x x.

The Federal Republic of Germany, in its own official website also makes reference to GTC and describes
it in this manner:

x x x Going by the principle of sustainable development, the German Technical Cooperation (Deutsche
Gesellschaft fr Technische Zusammenarbeit GmbH, GTC) takes on non-profit projects in international
technical cooperation. The GTC is a private company owned by the Federal Republic of Germany.

Taking the description on face value, the apparent equivalent under Philippine law is that of a
corporation organized under the Corporation Code but owned by the Philippine government, or a
government-owned or controlled corporation without original charter. And it bears notice that Section 36
of the Corporate Code states that [e]very corporation incorporated under this Code has the power and
capacity x x x to sue and be sued in its corporate name.

It is entirely possible that under German law, an entity such as GTC or particularly GTC itself has not
been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the
proceedings below and before this Court, GTC has failed to establish that under German law, it has not
consented to be sued despite it being owned by the Federal Republic of Germany. We
adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are
presumed to be the same as those of the Philippines, and following the most intelligent assumption we
can gather, GTC is akin to a governmental owned or controlled corporation without original charter
which, by virtue of the Corporation Code, has expressly consented to be sued.

It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for
petitioners to secure from the Department of Foreign Affairs a certification of respondents diplomatic
status and entitlement to diplomatic privileges including immunity from suits. The requirement might
not necessarily be imperative. However, had GTC obtained such certification from the DFA, it would
have provided factual basis for its claim of immunity that would, at the very least, establish a disputable
evidentiary presumption that the foreign party is indeed immune which the opposing party will have to
overcome with its own factual evidence.

The Court thus holds and so rules that GTC consistently has been unable to establish with satisfaction
that it enjoys the immunity from suit generally enjoyed by its parent country, the Federal Republic of
Germany. Consequently, both the Labor Arbiter and the Court of Appeals acted within proper bounds
when they refused to acknowledge that GTC is so immune by dismissing the complaint against it. The
Court findings has additional ramifications on the failure of GTC to properly appeal the Labor Arbiters
decision to the NLRC.
 THE DOCTRINE OF STATE IMMUNITY

E. MERRITT vs. GOVERNMENT OF THE PHILIPPINE ISLANDS

G.R. No. L-11154, March 21, 1916

FACTS:

E. Merritt, the plaintiff, was riding his motorcycle toward Calle Padre Faura when a government
ambulance turned unexpectedly and struck him. He sustained serious injuries which rendered him
physically and mentally incapable of earning even half of what he used to. Merritt later sought to sue the
Government in an attempt to recover damages. The Government then enacted Act 2457 which authorized
E. Merritt to sue against the Government of the Philippine Islands and authorize the Attorney-General to
appear in behalf of the defendant. The lower court held that the ambulance chauffer was indeed
negligent and ordered the Government to pay the determined amount of damages.

ISSUE/S:

1. Whether or not the Government conceded liability to the plaintiff by Act 2457.
2. Whether or not the Government is legally liable for the negligent act of its employee.

RULING:

1. NO. By enacting Act 2457, the State simply waives its immunity from suit. This does not mean that the
State concedes liability to the plaintiff. Nor does this create cause of action in favor of the plaintiff or
extend any liability to any cause not previously recognized. It simply means that the State submits itself
to the jurisdiction of the court. If the Act were to declare liability, it would have been clearly expressed
and not left to inference.

2. NO. The State is only held liable for the acts of its agents/officers/employees when they are special
agents. A special agent is one who receives a definite and fixed order foreign to his duties. This does not
apply to the ambulance chauffer in this case since he was performing his inherent functions.
 THE DOCTRINE OF STATE IMMUNITY

REPUBLIC OF THE PHILIPPINES vs.

HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I, THE
PROVINCIAL SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE
CITY OF MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P. J. KIENER CO.,
LTD., GAVINO UNCHUAN, AND INTERNATIONAL CONSTRUCTION CORPORATION

G.R. NO. L-30671. NOVEMBER 28, 1973

FACTS:

On July 3, 1961, a decision was rendered in Special Proceedings in favor of respondents P.J. Kiener Co.,
Ltd., Gavino Unchuan, and International Construction Corporation and against the petitioner herein,
conforming the arbitration award in the amount of P 1,712,396.40.

On June 24, 1969, respondent Judge Guillermo Villasor issued an order declaring the aforestated decision,
final and executory, directing the Sheriffs of Rizal Province, Quezon City, and Manila to execute the said
order. Pursuant to the said order, the corresponding Alias Writ of Execution was issued, which the
Provincial Sheriff of Rizal served NOTICES OF GARNISHMENT with several banks.

The funds of the Armed Forces of the Philippines (AFP) on deposit with the banks, particularly in the
Philippine Veterans Bank and PNB are public funds duly appropriated and allocated for the payment of
pensions, pay and allowances of military and civilian personnel, and for maintenance and operations of
the AFP.

The Republic of the Philippines filed a petition case to nullify the Writ of Execution issued by the
respondent Judge Villasor, directing against the funds of AFP. Thus challenging the validity of the order
on the ground that the respondent Judge acted in excess of jurisdiction, or at the very least, grave abuse
of discretion.

ISSUE: Whether or not the Writ of Execution issued by respondent Judge Villasor valid.

RULING:

No, What was done by respondent Judge is not in conformity with the dictates of the Constitution. It is a
fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state
as well as its government is immune from suit unless it gives its consent. It is readily understandable why
it must be so. In the classic formulation of Holmes: "A sovereign is exempt from suit, not because of any
formal conception or obsolete theory, but on the logical and practical ground that there can be no legal
right as against the authority that makes the law on which the right depends."

This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter.
It is therein expressly provided: "The State may not be sued without its consent." A corollary, both
dictated by logic and sound sense from a basic concept is that public funds cannot be the object of a
garnishment proceeding even if the consent to be sued had been previously granted and the state liability
adjudged.
 THE DOCTRINE OF STATE IMMUNITY

UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA, RAUL P. DE GUZMAN, RUBEN P.

ASPIRAS, EMMANUEL P. BELLO, WILFREDO P. DAVID, CASIANO S. ABRIGO, and JOSEFINA R.
LICUANA vs.
HON. AGUSTIN S. DIZON, his capacity as Presiding Judge of the Regional Trial Court of Quezon
City, Branch 80, STERN BUILDERS, INC., and SERVILLANO DELA CRUZ

G.R. No. 171182 August 23, 2012

FACTS:

UP entered into a General Construction Agreement with Stern Builders Corporation for the construction
of the extension building and the renovation of the College of Arts and Sciences Building in UP Los
Baños. Stern Builders submitted tree progress billings but UP paid only two of the billings prompting
Stern Builders to sue UP for the collection of the unpaid billing and to recover various damages. The
court of first instance rendered its decision to the plaintiff, awarding actual damages, moral damages,
attorney’s fees and the cost of the suit. Up averred that the respondent judge erred in its decision and
committed grave abuse of discretion amounting to lack of jurisdiction. UP argued that the government
fund and properties could not be seized by virtue of garnishment, citing that revenue funds shall not be
paid out of any public treasury except in pursuance of an appropriation law. CA issued a writ of TRO
upon application of UP but after it lapsed Stern Builders amended their petition and still UP opposed the
amended petition. The court of first instance allowed the check payment to be deposited in the garnishee
bank only to earn interest and should not be encashed or withdrawn. CA, dismissed the petition of
certiorari of UP, ruling that the garnished funds could be the proper subject of garnishment because they
had been already earmarked for the project. UP assailed the denial of due course to its appeal through a
petition for certiorari in the Court of Appeals (CA), but was then dismissed upon finding that the UP’s
notice of appeal had been filed late. UP took a number of legal actions but the decision of the CA is
always reiterated. Hence, this petition.

ISSUES:

1. Whether or not UP funds should be subjected for garnishment.

2. Whether or not garnishment is final and executory once judgment has been rendered.

3. Whether or not Period of appeal did not start without effective service of decision upon counsel of
record can be given retroactive application.

4. Whether or not awarding of damages be enough without any factual and legal bases.

RULING:

1. The UP funds should not be subject for garnishment. The funds of the UP are government funds that
are public in character. The adverse judgment rendered against the UP in a suit to which it had
impliedly consented was not immediately enforceable by execution against the UP, because suability
of the State did not necessarily mean its liability. Liability is not conceded by the mere fact that the
state has allowed itself to be used. 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.
2. The garnishment lacks a requirement provided by law. The execution of the monetary judgement
against the UP was within the primary jurisdiction of the COA as expressly provided in PD No.
1445. All money claims against the Government must first be fled with the Commission on Audit. It
 THE DOCTRINE OF STATE IMMUNITY

was of no moment that a final executory decision already validated the claim against the UP. The
settlement of the monetary claim was still subject to the primary jurisdiction of the COA despite the
final decision of the RTC having already validated the claim.
3. Yes, it is without effect. 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. The rule is that it is on the counsel and not the client that the service
should be made. The retroactive application of the fresh-period rule is impervious to any serious
challenge. This is because there are no vested rights in rules of procedure. A law or regulation is
procedural when it prescribes rules and forms of procedure in order that courts may be able to
administer justice.
4. No, the cause for such award of damages should have been supported with statement of facts and
not mere conclusion of law. The reason in that regard are obviously to inform the parties why they
win or lose, and what their rights and obligations are. Only thereby is the demand of due process
met as to the parties.

SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA, vs.

HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION ADMINISTRATION,

G.R. No. L-55963, December 1, 1989

FACTS:

A pick up owned by the National Irrigation Administration and driven officially by its regular driver,
Hugo Garcia, bumped a bicycle ridden by Francisco Fontanilla, which resulted in the latter's death. The
parents of Francisco filed a suit for damages against Garcia and the NIA, as Garcia's employer. After trial,
the court awarded actual, moral and exemplary damages to Spouses Fontanilla. NIA appealed. The
Solicitor General contends that the NIA 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
tortious act of its driver Hugo Garcia, who was not its special agent.

ISSUE:

Whether or not the award of moral damages, exemplary damages and attorney's fees is legally proper in
a complaint for damages based on quasi-delict which resulted in the death of the son of herein
petitioners.

RULING:

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.

The decision of the trial court had made an impression that respondent National Irrigation
Administration acted with gross negligence because of the accident and the subsequent failure of the
National Irrigation Administration personnel including the driver to stop in order to give assistance to
the, victims. Thus, by reason of the gross negligence of respondent, petitioners become entitled to
exemplary damages under Arts. 2231 and 2229 of the New Civil Code.

Petitioners are entitled to an award of attorney's fees, the amount of which (20%) had been sufficiently
established.