Doctrine of State Immunity

Sanders v. Verdiano

Facts: Petitioner Sanders was, occurred, the special services director of the U.S. Naval Station Petitioner Moreau was
the commanding officer of the Subic Naval Base, which includes the said station.  Private respondents were both
employed as gameroom attendants in the special services department of the NAVSTA, the former having been hired
in 1971 and the latter in 1969. Private respondents were advised that their employment had been converted from
permanent full-time to permanent part-time their reaction was to protest this conversion and to institute grievance
proceedings conformably to the pertinent rules and regulations of the U.S. Department of Defense. The result was a
recommendation from the hearing officer who conducted the proceedings for the reinstatement of the private
respondents to permanent full-time status plus backwages. The report on the hearing contained the observation that
"Special Services management practices an autocratic form of supervision." 

Petitioner: Plaintiffs claimed that the letters contained libelous imputations that had exposed them to ridicule and
caused them mental anguish and that the prejudgment of the grievance proceedings was an invasion of their
personal and proprietary rights.

Respondnents: The private respondents made it clear that the petitioners were being sued in their private or personal
capacity. However, in a motion to dismiss filed under a special appearance, the petitioners argued that the acts
complained of were performed by them in the discharge of their official duties and that, consequently, the court had
no jurisdiction over them under the doctrine of state immunity.

Issue: whether the petitioners were acting officially or only in their private capacities when they did the acts for which
the private respondents have sued them for damages.

Held: 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. Given the official character of the above-described letters,
we have to conclude that the petitioners were, legally speaking, being sued as officers of the United States
government. As they have acted on behalf of that government, and within the scope of their authority, it is that
government, and not the petitioners personally, that is responsible for their acts. Assuming that the trial can proceed
and it is proved that the claimants have a right to the payment of damages, such award will have to be satisfied not
by the petitioners in their personal capacities but by the United States government as their principal. This will require
that government to perform an affirmative act to satisfy the judgment, viz, the appropriation of the necessary amount
to cover the damages awarded, thus making the action a suit against that government without its consent.

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 practical justification for the doctrine, as Holmes put it, is that
"there can be no legal right against the authority which makes the law on which the right depends. In the case of
foreign states, the rule is derived from the principle of the sovereign equality of states which wisely admonishes
that par in parem non habet imperium  and that a contrary attitude would "unduly vex the peace of nations." Our
adherence to this precept is formally expressed in Article II, Section 2, of our Constitution, where we reiterate from
our previous charters that the Philippines "adopts the generally accepted principles of international law as part of the
law of the land.

Notes:

It is stressed at the outset that the mere allegation that a government functionary is being sued in his personal
capacity will not automatically remove him from the protection of the law of public officers and, if appropriate, the
doctrine of state immunity. By the same token, the mere invocation of official character will not suffice to insulate him
from suability and liability for an act imputed to him as a personal tort committed without or in excess of his authority.
These well-settled principles are applicable not only to the officers of the local state but also where the person sued in
its courts pertains to the government of a foreign state, as in the present case.

All this is not to say that in no case may a public officer be sued as such without the previous consent of the state. To
be sure, there are a number of well-recognized exceptions. It is clear that a public officer may be sued as such to
compel him to do an act required by law, as where, say, a register of deeds refuses to record a deed of sale;  or to
restrain a Cabinet member, for example, from enforcing a law claimed to be unconstitutional;  or to compel the
national treasurer to pay damages from an already appropriated assurance fund;  or the commissioner of internal
revenue to refund tax over-payments from a fund already available for the purpose; in general, to secure a judgment
that the officer impleaded may satisfy by himself without the government itself having to do a positive act to assist
him. We have also held that where the government itself has violated its own laws, the aggrieved party may directly
implead the government even without first filing his claim with the Commission on Audit as normally required, as the
doctrine of state immunity "cannot be used as an instrument for perpetrating an injustice." 

Even under the law of public officers, the acts of the petitioners are protected by the presumption of good faith, which
has not been overturned by the private respondents. Even mistakes concededly committed by such public officers
are not actionable as long as it is not shown that they were motivated by malice or gross negligence amounting to
bad faith. This, to, is well settled .

Republic v. Sandoval

Facts: twelve (12) marchers were officially confirmed dead. Thirty-nine (39) were wounded by gunshots and twelve
(12) sustained minor injuries, all belonging to the group of the marchers. Of the police and military personnel, three
(3) sustained gunshot wounds and twenty (20) suffered minor physical injuries such as abrasions, contusions and the

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like.

Then President Corazon C. Aquino issued Administrative Order No. 11,\ which created the Citizens' Mendiola
Commission. From the results of the probe, the Commission recommended the criminal prosecution of four
unidentified, uniformed individuals, shown either on tape or in pictures, firing at the direction of the marchers. The last
and the most significant recommendation of the Commission was for the deceased and wounded victims of the
Mendiola incident to be compensated by the government. It was this portion that Caylao group invoke in their claim
for damages from the government.

Caylao group filed a formal letter of demand for compensation from the Government.  After almost a year Caylao
group were constrained to institute an action for damages against the Republic of the Philippines, together with the
military officers, and personnel involved in the Mendiola incident, before the trial court.

Petitioners opposed, maintaining that the State has waived its immunity from suit. Caylao group advance the
argument that the State has impliedly waived its sovereign immunity from suit. It is their considered view that by the
recommendation made by the Commission for the government to indemnify the heirs and victims of the Mendiola
incident and by the public addresses made by then President Aquino in the aftermath of the killings, the State has
consented to be sued.

Respondent: Solicitor General filed a Motion to Dismiss on the ground that the State cannot be sued without its
consent.

Issue:

Held: This is not a suit against the State with its consent. The recommendation made by the Commission regarding
indemnification of the heirs of the deceased and the victims of the incident by the government does not in any way
mean that liability automatically attaches to the State. the recommendation made by the Commission regarding
indemnification of the heirs of the deceased and the victims of the incident by the government does not in any way
mean that liability automatically attaches to the State. In effect, whatever may be the findings of the Commission, the
same shall only serve as the cause of action in the event that any party decides to litigate his/her claim. Therefore,
the Commission is merely a preliminary venue. The Commission is not the end in itself. Whatever recommendation it
makes cannot in any way bind the State immediately, such recommendation not having become final and, executory.
This is precisely the essence of it being a fact-finding body. Although consent to be sued may be given impliedly, still
it cannot be maintained that such consent was given considering the circumstances obtaining in the instant case.

Thirdly, the case does not qualify as a suit against the State.

Secondly, whatever acts or utterances that then President Aquino may have done or said, the same are not
tantamount to the State having waived its immunity from suit.

Notes:

Under our Constitution the principle of immunity of the government from suit is expressly provided in Article XVI,
Section 3. The principle is based on the very essence of sovereignty, and on the practical ground that there can be
no legal right as against the authority that makes the law on which the right depends.  It also rests on reasons of
public policy — that public service would be hindered, and the public endangered, if the sovereign authority could be
subjected to law suits at the instance of every citizen and consequently controlled in the uses and dispositions of the
means required for the proper administration of the government. 

Some instances when a suit against the State is proper are: 16

(1) When the Republic is sued by name;

(2) When the suit is against an unincorporated government agency;

(3) When the, suit is on its face against a government officer but the case is such that ultimate liability will belong not
to the officer but to the government.

While the Republic in this case is sued by name, the ultimate liability does not pertain to the government. Although
the military officers and personnel, then party defendants, were discharging their official functions when the incident
occurred, their functions ceased to be official the moment they exceeded their authority.

While it is true that nothing is better settled than the general rule that a sovereign state and its political subdivisions
cannot be sued in the courts except when it has given its consent, it cannot be invoked by both the military officers to
release them from any liability, and by the heirs and victims to demand indemnification from the government. The
principle of state immunity from suit does not apply, as in this case, when the relief demanded by the suit requires no
affirmative official action on the part of the State nor the affirmative discharge of any obligation which belongs to the
State in its political capacity, even though the officers or agents who are made defendants claim to hold or act only by

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virtue of a title of the state and as its agents and servants. 

Festejo v. Fernando
Facts: defendant, as Director of the Bureau of Public Works, without authority obtained first from the
Court of First Instance of Ilocos Sur, without obtaining first a right of way, and without the consent
and knowledge of the plaintiff, and against her express objection unlawfully took possession of
portions of the three parcels of land and caused an irrigation canal to be constructed on the portion of
the three parcels of land on to the damage and prejudice of the plaintiff.

Issue: Whether or not this is a suit against the state?

Held: No, the evidence and conceded facts in finding that in the trespass on plaintiff's land defendant
committed acts outside the scope of his authority. When he went outside the boundaries of the right
of way upon plaintiff's land and damaged it or destroyed its former condition and usefulness, he must
be held to have designedly departed from the duties imposed on him by law.

Ordinarily the officer or employee committing the tort is personally liable therefore, and may be sued
as any other citizen and held answerable for whatever injury or damage results from his tortuous act.
It is a general rule that an officer-executive, administrative quasi-judicial, ministerial, or otherwise
who acts outside the scope of his jurisdiction and without authorization of law may thereby render
himself amenable to personal liability in a civil suit. If he exceed the power conferred on him by law,
he cannot shelter himself by the plea that he is a public agent acting under the color of his office, and
not personally. In the eye of the law, his acts then are wholly without authority.

ART. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs,
defeats, violates or in any manner impedes or impairs any of the following rights and liberties of
another person shall be liable to the latter for damages: (6) The right against deprivation of property
without due process of law;

Notes:
US v. Guinto

Facts: Fabian Genove filed a complaint for damages against petitioners Anthony Lamachia, Wilfredo Belsa, Rose
Cartalla and Peter Orascion for his dismissal as cook in the U.S. Air Force Recreation Center at the John Hay Air
Station in Baguio City. It had been ascertained after investigation that Genove had poured urine into the soup stock
used in cooking the vegetables served to the club customers. Lamachia, as club manager, suspended him and
thereafter referred the case to a board of arbitrators conformably to the collective bargaining agreement between the
Center and its employees. The board unanimously found him guilty and recommended his dismissal. Genove's
reaction was to file Ms complaint in the Regional Trial Court of Baguio City against the individual petitioners. 

Respondent: Defendants, joined by the United States of America, moved to dismiss the complaint, alleging that
Lamachia, as an officer of the U.S. Air Force stationed at John Hay Air Station, was immune from suit for the acts
done by him in his official capacity. They argued that the suit was in effect against the United States, which had not
given its consent to be sued. This motion was denied

Issue:

Held:The petitioners cannot plead any immunity from the complaint filed by the private respondents in the court below.
the Court can assume that the restaurant services offered at the John Hay Air Station partake of the nature of a
business enterprise undertaken by the United States government in its proprietary capacity. Such services are not
extended to the American servicemen for free as a perquisite of membership in the Armed Forces of the United
States. Neither does it appear that they are exclusively offered to these servicemen; on the contrary, it is well known
that they are available to the general public as well, including the tourists in Baguio City, many of whom make it a
point to visit John Hay for this reason. All persons availing themselves of this facility pay for the privilege like all other
customers as in ordinary restaurants. Although the prices are concededly reasonable and relatively low, such
services are undoubtedly operated for profit, as a commercial and not a governmental activity.

The consequence of this finding is that the petitioners cannot invoke the doctrine of state immunity to justify the
dismissal of the damage suit against them by Genove. Such defense will not prosper even if it be established that
they were acting as agents of the United States when they investigated and later dismissed Genove. For that matter,
not even the United States government itself can claim such immunity. The reason is that by entering into the
employment contract with Genove in the discharge of its proprietary functions, it impliedly divested itself of its
sovereign immunity from suit.

Barbershops subject of the concessions granted by the United States government are commercial enterprises
operated by private person's. They are not agencies of the United States Armed Forces nor are their facilities
demandable as a matter of right by the American servicemen. These establishments provide for the grooming needs
of their customers and offer not only the basic haircut and shave (as required in most military organizations) but such
other amenities as shampoo, massage, manicure and other similar indulgences. And all for a fee. Interestingly, one of
the concessionaires, private respondent Valencia, was even sent abroad to improve his tonsorial business,
presumably for the benefit of his customers. No less significantly, if not more so, all the barbershop concessionaires
are under the terms of their contracts, required to remit to the United States government fixed commissions in

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consideration of the exclusive concessions granted to them in their respective areas.

Notes:

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.  In such a situation, the state may
move to dismiss the complaint on the ground that it has been filed without its consent.

doctrine is sometimes derisively called "the royal prerogative of dishonesty" because of the privilege it grants the
state to defeat any legitimate claim against it by simply invoking its non-suability. That is hardly fair, at least in
democratic societies, for the state is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the
doctrine is not absolute and does not say the state may not be sued under any circumstance. On the contrary, 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 state enters into a contract or it itself commences
litigation.

The general law waiving the immunity of the state from suit is found in Act No. 3083, under which the Philippine
government "consents and submits to be sued upon any moneyed claim involving liability arising from contract,
express or implied, which could serve as a basis of civil action between private parties." In Merritt v. Government of
the Philippine Islands,  a special law was passed to enable a person to sue the government for an alleged tort. When
the government enters into a contract, it is deemed to have descended to the level of the other contracting party and
divested of its sovereign immunity from suit with its implied consent.  Waiver is also implied when the government
files a complaint, thus opening itself to a counterclaim.

The above rules are subject to qualification. Express consent is effected only by the will of the legislature through the
medium of a duly enacted statute.  We have held that not all contracts entered into by the government will operate as
a waiver of its non-suability; distinction must be made between its sovereign and proprietary acts.  As for the filing of
a complaint by the government, suability will result only where the government is claiming affirmative relief from the
defendant. 

Veterans Manpower v. CA
Facts: VMPSI assailed constitutionality of the following provisions of R.A. 5487 (otherwise known as the
"Private Security Agency Law"), as amended. VMPSI alleges that the provisions of R.A. No. 5487
violate the provisions of the 1987 Constitution against monopolies, unfair competition and
combinations in restraint of trade, and tend to favor and institutionalize the Philippine Association of
Detective and Protective Agency Operators, Inc. (PADPAO) which is monopolistic because it has an
interest in more than one security agency.  Odin Security Agency (Odin) filed a complaint with
PADPAO accusing VMPSI of cut-throat competition by undercutting its contract rate for security
services rendered to the Metropolitan Waterworks and Sewerage System (MWSS), charging said
customer lower than the standard minimum rates provided. PADPAO found VMPSI guilty of cut-throat
competition, hence, the PADPAO Committee on Discipline recommended the expulsion of VMPSI from
PADPAO and the cancellation of its license to operate a security agency. As a result, PADPAO refused
to issue a clearance/certificate of membership to VMPSI when it requested one. VMPSI wrote the PC
Chief, requesting him to set aside or disregard the findings of PADPAO and consider VMPSI’s
application for renewal of its license, even without a certificate of membership from PADPAO. As the
PC Chief did not reply, VMPSI field a civil case against the PC Chief. The court issued a restraining
order enjoining the PC Chief and PC-SUSIA "from committing acts that would result in the cancellation
or non-renewal of VMPSI’s license.
Respondent: PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the Issuance of Writ of
Preliminary Injunction, and Motion to Quash the Temporary Restraining Order," on the grounds that
the case is against the State which had not given consent thereto and that VMPSI’s license already
expired on March 31, 1988, hence, the restraining order or preliminary injunction would not serve any
purpose because there was no more license to be cancelled.
Issue:  whether or not VMPSI’s complaint against the PC Chief and PC-SUSIA is a suit against the State
without its consent.
Held: Yes.

The State may not be sued without its consent (Article XVI, Section 3, of the 1987 Constitution).
Invoking this rule, the PC Chief and PC-SUSIA contend that, being instrumentalities of the national
government exercising a primarily governmental function of regulating the organization and operation
of private detective, watchmen, or security guard agencies, said official (the PC Chief) and agency
(PC-SUSIA) may not be sued without the Government’s consent, especially in this case because
VMPSI’s complaint seeks not only to compel the public respondents to act in a certain way, but worse,
because VMPSI seeks actual and compensatory damages in the sum of P1,000,000.00, exemplary
damages in the same amount, and P200,000.00 as attorney’s fees from said public respondents. Even
if its action prospers, the payment of its monetary claims may not be enforced because the State did
not consent to appropriate the necessary funds for that purpose.

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Notes:
HE PHILIPPINE CONSTABULARY CHIEF AND THE PC-SUSIA MAY NOT BE SUED WITHOUT THE
CONSENT OF THE STATE. — The State may not be sued without its consent (Article XVI, Section 3, of
the 1987 Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being
instrumentalities of the national government exercising a primarily governmental function of
regulating the organization and operation of private detective, watchmen, or security guard agencies,
said official (the PC Chief) and agency (PC-SUSIA) may not be sued without the Government’s
consent, especially in this case because VMPSI’s complaint seeks not only to compel the public
respondents to act in a certain way, but worse, because VMPSI seeks actual and compensatory
damages in the sum of P1,000,000.00, exemplary damages in the same amount, and P200,000.00 as
attorney’s fees from said public respondents. Even if its action prospers, the payment of its monetary
claims may not be enforced because the State did not consent to appropriate the necessary funds for
that purpose.
PUBLIC OFFICIAL MAY BE SUED IN HIS PERSONAL CAPACITY IF HE ACTS, AMONG OTHERS BEYOND
THE SCOPE OF HIS AUTHORITY; CASE AT BAR. — A public official may sometimes be held liable in his
personal or private capacity if he acts in bad faith, or beyond the scope of his authority or jurisdiction
(Shauf v. Court of Appeals, supra), however, since the acts for which the PC Chief and PC-SUSIA are
being called to account in this case, were performed by them as part of their official duties, without
malice, gross negligence, or bad faith, no recovery may be had against them in their private
capacities.
CONSENT TO BE SUED MUST EMANATE FROM A LEGISLATIVE ACT. — Waiver of the State’s immunity
from suit, being a derogation of sovereignty, will not be lightly inferred, but must be construed
strictissimi juris (Republic v. Feliciano, 148 SCRA 424). The consent of the State to be sued must
emanate from statutory authority, hence, from a legislative act, not from a mere memorandum.
Without such consent, the trial court did not acquire jurisdiction over the public respondents.

public policy and the inconvenience and danger which would flow from a different rule. "It is obvious
that public service would be hindered, and public safety endangered, if the supreme authority could be
subjected to suits at the instance of every citizen, and, consequently, controlled in the use and
disposition of the means required for the proper administration of the government" (Siren v. U.S.
Wall, 152, 19 L. ed. 129, as cited in 78 SCRA 477).
The correct test for the application of state immunity is not the conclusion of a contract by the State
but the legal nature of the act. This was clearly enunciated in the case of United States of America v.
Ruiz where the Hon. Supreme Court held:jgc:chanrobles.com.ph

"‘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 a business contract. It
does not apply where the contract relates to the exercise of its functions.’
Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be lightly
inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA 424). The consent of
the State to be sued must emanate from statutory authority, hence, from a legislative act, not from a
mere memorandum. Without such consent, the trial court did not acquire jurisdiction over the public
respondents.
Merritt v. Government of the Philippine Islands

Facts: plaintiff, riding on a motorcycle, was going toward the western part of Calle Padre Faura, passing along the
west side thereof at a speed of ten to twelve miles an hour, upon crossing Taft Avenue and when he was ten feet
from the southwestern intersection of said streets, the General Hospital ambulance, upon reaching said avenue,
instead of turning toward the south, after passing the center thereof, so that it would be on the left side of said
avenue, as is prescribed by the ordinance and the Motor Vehicle Act, turned suddenly and unexpectedly and long
before reaching the center of the street, into the right side of Taft Avenue, without having sounded any whistle or
horn, by which movement it struck the plaintiff, who was already six feet from the southwestern point or from the post
place there. By reason of the resulting collision, the plaintiff was so severely injured. 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

Issues: Did the defendant, in enacting Act No. 2457 an Act, simply waive its immunity from suit or did it also concede
its liability to the plaintiff.

(2) Whether the Government is legally-liable for the damages resulting therefrom.

Held: The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility for the
collision between his motorcycle and the ambulance of the General Hospital and to determine the amount of the
damages, if any, to which Mr. E. Merritt is entitled on account of said collision. As to the scope of legislative
enactments permitting individuals to sue the state where the cause of action arises out of either fort or contract, the
rule is stated in 36 Cyc., 915, thus:

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 simply gives authority to commence suit for the purpose of settling plaintiff's controversies with the estate. Nowhere
in the act is there a whisper or suggestion that the court or courts in the disposition of the suit shall depart from well

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established principles of law, or that the amount of damages is the only question to be settled. The act opened the
door of the court to the plaintiff. It did not pass upon the question of liability, but left the suit just where it would be in
the absence of the state's immunity from suit. If the Legislature had intended to change the rule that obtained in this
state so long and to declare liability on the part of the state, it would not have left so important a matter to mere
inference, but would have done so in express terms

(2) the State (the Government of the Philippine Islands) is only liable for the acts of its agents, officers and employees
when they act as special agents within the meaning of paragraph 5 of article 1903, supra, and that the chauffeur of
the ambulance of the General Hospital was not such an agent. Whether the Government intends to make itself legally
liable for the amount of damages above set forth, which the plaintiff has sustained by reason of the negligent acts of
one of its employees, by legislative enactment and by appropriating sufficient funds therefor, we are not called upon
to determine. This matter rests solely with the Legislature and not with the courts.

Notes:

Paragraph 5 of article 1903 of the Civil Code reads:

The state is liable in this sense when it acts through a special agent, but not when the damage should have
been caused by the official to whom properly it pertained to do the act performed, in which case the
provisions of the preceding article shall be applicable.

The supreme court of Spain in defining the scope of this paragraph said:

That the obligation to indemnify for damages which a third person causes to another by his fault or
negligence is based, as is evidenced by the same Law 3, Title 15, Partida 7, on that the person obligated, by
his own fault or negligence, takes part in the act or omission of the third party who caused the damage. 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; on the
contrary, we must presuppose all foresight humanly possible on its part in order that each branch of service
serves the general weal an that of private persons interested in its operation. Between these latter and the
state, therefore, no relations of a private nature governed by the civil law can arise except in a case where
the state acts as a judicial person capable of acquiring rights and contracting obligations. (Supreme Court of
Spain, January 7, 1898; 83 Jur. Civ., 24.)

That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault or
negligence; and whereas in the first article thereof. No. 1902, where the general principle is laid down that
where a person who by an act or omission causes damage to another through fault or negligence, shall be
obliged to repair the damage so done, reference is made to acts or omissions of the persons who directly or
indirectly cause the damage, the following articles refers to this persons and imposes an identical obligation
upon those who maintain fixed relations of authority and superiority over the authors of the damage,
because the law presumes that in consequence of such relations the evil caused by their own fault or
negligence is imputable to them. This legal presumption gives way to proof, however, because, as held in
the last paragraph of article 1903, responsibility for acts of third persons ceases when the persons
mentioned in said article prove that they employed all the diligence of a good father of a family to avoid the
damage, and among these persons, called upon to answer in a direct and not a subsidiary manner, are
found, in addition to the mother or the father in a proper case, guardians and owners or directors of an
establishment or enterprise, the state, but not always, except when it acts through the agency of a special
agent, doubtless because and only in this case, the fault or negligence, which is the original basis of this
kind of objections, must be presumed to lie with the state.

responsibility of the state is limited by article 1903 to the case wherein 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. This concept does not apply to any
executive agent who is an employee of the acting administration and who on his own responsibility performs the
functions which are inherent in and naturally pertain to his office and which are regulated by law and the regulations
That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a decision, among
others, of the 18th of May, 1904, in a damage case, the responsibility of the state is limited to that which it contracts
through a special agent, duly empowered by a definite order or commission to perform some act or charged with
some definite purpose which gives rise to the claim, and not where the claim is based on acts or omissions imputable
to a public official charged with some administrative or technical office who can be held to the proper responsibility in
the manner laid down by the law of civil responsibility. Consequently, the trial court in not so deciding and in
sentencing the said entity to the payment of damages, caused by an official of the second class referred to, has by
erroneous interpretation infringed the provisions of articles 1902 and 1903 of the Civil Code.
Amigable v. Cuenca
Facts: Victoria Amigable, is the registered owner of a lot in Cebu City. 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 filed in the court a quo a complaint, which was later amended on April 17, 1959 upon
motion of the defendants, against the Republic of the Philippines and Nicolas Cuenca, in his capacity as
Commissioner of Public Highways for the recovery of ownership, payment of compensatory damages, and moral
damages.
Respondents: the action being a suit against the Government, the claim for moral damages, attorney's fees and
costs had no valid basis since as to these items the Government had not given its consent to be sued
Issue: whether or not the appellant may properly sue the government under the facts of the case

6
Held: Yes, held that where the government takes away property from a private landowner for public use without going
through the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit
against the government without thereby violating the doctrine of governmental immunity from suit without its consent.
It is not too much to say that when the government takes any property for public use, which is conditioned upon the
payment of just compensation, to be judicially ascertained, it makes manifest that it submits to the jurisdiction of a
court. There is no thought then that the doctrine of immunity from suit could still be appropriately invoked.

Notes:
The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a
citizen
Republic v Sandigan
China v. Santamaria
Facts: petitioner China National Machinery & Equipment Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin,
entered into a Memorandum of Understanding with the North Luzon Railways Corporation (Northrail), represented by its
president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line from Manila to San Fernando, La
Union (t
Petitioner: CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that the trial court did not have jurisdiction over (a)
its person, as it was an agent of the Chinese government, making it immune from suit, and (b) the subject matter, as the
Northrail Project was a product of an executive agreement.15
Respondents: respondents alleged that the Contract Agreement and the Loan Agreement were void for being contrary to (a)
the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement Reform Act; (c)
Presidential Decree No. 1445, otherwise known as the Government Auditing Code; and (d) Executive Order No. 292, otherwise
known as the Administrative Code

Issue: Whether or not petitioner CNMEG is an agent of the sovereign People’s Republic of China.

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

Held: A threshold question that must be answered is whether CNMEG performs governmental or proprietary
functions. A thorough examination of the basic facts of the case would show that CNMEG is engaged in a proprietary
activity. Clearly, it was CNMEG that initiated the undertaking, and not the Chinese government. The Feasibility Study
was conducted not because of any diplomatic gratuity from or exercise of sovereign functions by the Chinese
government, but was plainly a business strategy employed by CNMEG with a view to securing this commercial
enterprise.

The desire of CNMEG to secure the Northrail Project was in the ordinary or regular course of its business as a global
construction company. The implementation of the Northrail Project was intended to generate profit for CNMEG, with
the Contract Agreement
The use of the term "state corporation" to refer to CNMEG was only descriptive of its nature as a government-owned
and/or -controlled corporation, and its assignment as the Primary Contractor did not imply that it was acting on behalf
of China in the performance of the latter’s sovereign functions. To imply otherwise would result in an absurd situation,
in which all Chinese corporations owned by the state would be automatically considered as performing governmental
activities, even if they are clearly engaged in commercial or proprietary pursuits

CNMEG claims immunity on the ground that the MOU on the financing of the Northrail Project was signed by the
Philippine and Chinese governments, and its assignment as the Primary Contractor meant that it was bound to
perform a governmental function on behalf of China. despite petitioner’s claim that the EXIM Bank extended financial
assistance to Northrail because the bank was mandated by the Chinese government, and not because of any
motivation to do business in the Philippines,38 it is clear from the foregoing provisions that the Northrail Project was a
purely commercial transaction.

Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government, while the
Contract Agreement was between Northrail and CNMEG. Although the Contract Agreement is silent on the
classification of the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an
inextricable part of the entire undertaking, nonetheless reveal the intention of the parties to the Northrail Project to
classify the whole venture as commercial or proprietary in character.

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

2. CNMEG as a "state corporation" and declared its designation as the Primary Contractor in the Northrail Project did
not mean it was to perform sovereign functions on behalf of China. That label was only descriptive of its nature as a
state-owned corporation, and did not preclude it from engaging in purely commercial or proprietary ventures. both
Northrail and CNMEG entered into the Contract Agreement as entities with personalities distinct and separate from
the Philippine and Chinese governments, respectively.

7
Notes:

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

The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely
connected with the discharge of governmental functions. This is particularly true with respect to the Communist states
which took control of nationalized business activities and international trading.

In JUSMAG v. National Labor Relations Commission, 25 this Court affirmed the Philippines’ adherence to the restrictive
theory as follows:

The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the existence
of a contract does not, per se, mean that sovereign states may, at all times, be sued in local courts. The complexity
of relationships between sovereign states, brought about by their increasing commercial activities, mothered a
more restrictive application of the doctrine.

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

Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the act involved –
whether the entity claiming immunity performs governmental, as opposed to proprietary, functions. As held in United
States of America v. Ruiz

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
function

Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it
with immunity. This view finds support in Malong v. Philippine National Railways, in which this Court held that
"(i)mmunity from suit is determined by the character of the objects for which the entity was organized."

the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can
only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the
regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then
it is an act jure imperii, especially when it is not undertaken for gain or profit.

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." Who or what consists of "the
State"? For one, the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the
local State, necessary as it is to avoid "unduly vexing the peace of nations."

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. Jurisprudence is replete with examples of incorporated government
agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting
their consent to be sued.

determination by the Executive that an entity is entitled to sovereign or diplomatic immunity is a political question
conclusive upon the courts, to wit:

In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in
a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is
entitled to immunity.

In the Philippines, the practice is for the foreign government or the international organization to first secure an
executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office
conveys its endorsement to the courts varies

An agreement to submit any dispute to arbitration may be construed as an implicit waiver of immunity from suit.

In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state
immunity. In the said law, the agreement to submit disputes to arbitration in a foreign country is construed as an
implicit waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason to apply the

8
legal reasoning behind the waiver in this case.

an executive agreement is similar to a treaty, except that the former (a) does not require legislative concurrence; (b)
is usually less formal; and (c) deals with a narrower range of subject matters.50

Despite these differences, to be considered an executive agreement, the following three requisites provided under
the Vienna Convention must nevertheless concur: (a) the agreement must be between states; (b) it must be written;
and (c) it must governed by international law. The first and the third requisites do not obtain in the case at bar.

Republic v. Feliciano
Facts: which survey was approved by the Director of Lands on October 24, 1954; that 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 plaintiff and should therefore be
excluded therefrom. Plaintiff 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-in-
interest be declared legal valid and subsisting and that defendant be ordered to cancel and nullify all awards to the
settlers. respondent Feliciano filed a complaint with the then Court of First Instance of Camarines Sur against the
Republic of the Philippines, represented by the Land Authority, for the recovery of ownership and possession of a
parcel of land. A motion to intervene and to set aside the decision of August 29, 1970 was filed by eighty-six (86)
settlers, together with the barrio council of Pag-asay, alleging among other things that intervenors had been in
possession of the land in question for more than twenty (20) years under claim of ownership.
On January 25, 1971, the court a quo reconsidered its decision, reopened the case and directed the intervenors to
file their corresponding pleadings and present their evidence; all evidence already presented were to remain but
plaintiff, as well as the Republic of the Philippines, could present additional evidence if they so desire.
Petitioner:
Respondent: the Solicitor General, on behalf of the Republic of the Philippines filed its opposition thereto, maintaining that the
dismissal was proper on the ground of non-suability of the State and also on the ground that the existence and/or authenticity
of the purported possessory information title of the respondents' predecessor-in-interest had not been demonstrated and that
at any rate, the same is not evidence of title, or if it is, its efficacy has been lost by prescription and laches.
intervenors filed a motion to dismiss, principally on the ground that the Republic of the Philippines cannot be sued
without its consent and hence the action cannot prosper. The motion was opposed by the plaintiff.
Issue:

Held: The doctrine of non-suability of the State has proper application in this case. The plaintiff has impleaded the
Republic of the Philippines as defendant in an action for recovery of ownership and possession of a parcel of land,
bringing the State to court just like any private person who is claimed to be usurping a piece of property. A suit for the
recovery of property is not an action in rem, but an action in personam. .

By its caption and its allegation and prayer, the complaint is clearly a suit against the State, which under settled
jurisprudence is not permitted, except upon a showing that the State has consented to be sued, either expressly or by
implication through the use of statutory language too plain to be misinterpreted.
Notes:
The failure of the petitioner to assert the defense of immunity from suit when the case was tried before the court  a
quo, as alleged by private respondent, is not fatal. It is now settled that such defense "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.  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.

Begosa case, that the present action is not a suit against the State within the rule of State immunity from suit, because plaintiff
does not seek to divest the Government of any of its lands or its funds. It is contended that the complaint involves land not
owned by the State, but private land belonging to the plaintiff, hence the Government is not being divested of any of its
properties. There is some sophistry involved in this argument, since the character of the land sought to be recovered still
remains to be established, and the plaintiff's action is directed against the State precisely to compel the latter to litigate the
ownership and possession of the property. In other words, the plaintiff is out to establish that he is the owner of the land in
question based, incidentally, on an informacion posesoria of dubious value, and he seeks to establish his claim of ownership by
suing the Republic of the Philippines in an action in personam.
US v. Ruiz
Facts: United States of America had a naval base in Subic, Zambales. The base was one of those provided in the Military Bases
Agreement between the Philippines and the United States.
the United States invited the submission of bids for the following projects
1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines.
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline revetment, NAVBASE Subic; and repair to
Leyte Wharf approach, NAVBASE Subic Bay, Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the company received from
the United States two telegrams requesting it to confirm its price proposals and for the name of its bonding company. The
company complied with the requests. In its complaint, The complaint is to order the defendants to allow the plaintiff to
perform the work on the projects and, in the event that specific performance was no longer possible, to order the defendants
to pay damages. The company also asked for the issuance of a writ of preliminary injunction to restrain the defendants from
entering into contracts with third parties for work on the projects.
Petitioner: The company alleges that the United States had accepted its bids because "A request to confirm a price proposal
confirms the acceptance of a bid pursuant to defendant United States' bidding practices." the company did not qualify to

9
receive an award for the projects because of its previous unsatisfactory performance rating on a repair contract for the sea wall
at the boat landings of the U.S. Naval Station in Subic Bay.
Respondent: defendants entered their special appearance for the purpose only of questioning the jurisdiction of this court over
the subject matter of the complaint and the persons of defendants, the subject matter of the complaint being acts and
omissions of the individual defendants as agents of defendant United States of America, a foreign sovereign which has not
given her consent to this suit or any other suit for the causes of action asserted in the complaint

Issue:
Held:
Notes: traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent or
waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of
International Law are not petrified; they are constantly developing and evolving. And because the activities of states have
multiplied, it has been necessary to distinguish them-between sovereign and governmental acts (jure imperii) and private,
commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperil
The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the
foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the
level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business
contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In this case the projects are an
integral part of the naval base which is devoted to the defense of both the United States and the Philippines, indisputably a
function of the government of the highest order; they are not utilized for nor dedicated to commercial or business purposes.
That the correct test for the application of State immunity is not the conclusion of a contract by a State but the legal nature of
the act
The Holy See v. Rosario

Facts: This petition arose from a controversy over a parcel of land. three lots were sold to Ramon Licup, through Msgr.
Domingo A. Cirilos, Jr., acting as agent to the sellers. Later, Licup assigned his rights to the sale to private
respondent. In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to
who of the parties has the responsibility of evicting and clearing the land of squatters. private respondent filed a
complaint with the Regional Trial Court, Branch 61, Makati, Metro Manila for annulment of the sale of the three
parcels of land, and specific performance and damages against petitioner, represented by the Papal Nuncio, and
three other defendants namely, Msgr. Domingo A. Cirilos, Jr., the PRC and Tropicana. trial court issued an order
denying, among others, petitioner's motion to dismiss after finding that petitioner "shed off [its] sovereign immunity by
entering into the business contract in question". Motion for Intervention was filed before us by the Department of
Foreign Affairs, claiming that it has a legal interest in the outcome of the case as regards the diplomatic immunity of
petitioner, and that it "adopts by reference, the allegations contained in the petition of the Holy See insofar as they
refer to arguments relative to its claim of sovereign immunity from suit

Petitioner: petitioner and Msgr. Cirilos separately moved to dismiss the complaint — petitioner for lack of jurisdiction
based on sovereign immunity from suit, and Msgr. Cirilos for being an improper party. An opposition to the motion
was filed by private respondent.

Respondent: doctrine of non-suability is not anymore absolute and that petitioner has divested itself of such a cloak
when, of its own free will, it entered into a commercial transaction for the sale of a parcel of land located in the
Philippines.

Issue: burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a foreign state
enjoying sovereign immunity

Held: In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this
Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its
memorandum in support of petitioner's claim of sovereign immunity.

The Vatican City fits into none of the established categories of states, and the attribution to it of "sovereignty" must be
made in a sense different from that in which it is applied to other states (Fenwick, International Law 124-125 [1948];
Cruz, International Law 37 [1991]). In a community of national states, the Vatican City represents an entity organized
not for political but for ecclesiastical purposes and international objects. Despite its size and object, the Vatican City
has an independent government of its own, with the Pope, who is also head of the Roman Catholic Church, as the
Holy See or Head of State, in conformity with its traditions, and the demands of its mission in the world. Indeed, the
world-wide interests and activities of the Vatican City are such as to make it in a sense an "international state"
(Fenwick, supra., 125; Kelsen, Principles of International Law 160 [1956]).

One authority wrote that the recognition of the Vatican City as a state has significant implication — that it is possible
for any entity pursuing objects essentially different from those pursued by states to be invested with international
personality (Kunz, The Status of the Holy See in International Law, 46 The American Journal of International Law 308
[1952]).

Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and not in the
name of the Vatican City, one can conclude that in the Pope's own view, it is the Holy See that is the international
person.

The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through
its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government since 1957

if petitioner has bought and sold lands in the ordinary course of a real estate business, surely the said transaction can
be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and subsequent disposal
of Lot 5-A were made for profit but claimed that it acquired said property for the site of its mission or the Apostolic

10
Nunciature in the Philippines. Private respondent failed to dispute said claim.

Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not for
commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal
Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the
creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic
Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in the Philippines
on November 15, 1965. Besides, the privilege of sovereign immunity in this case was sufficiently established by the
Memorandum and Certification of the Department of Foreign Affairs.

In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil and administrative jurisdiction
of the receiving state over any real action relating to private immovable property situated in the territory of the
receiving state which the envoy holds on behalf of the sending state for the purposes of the mission. If this immunity
is provided for a diplomatic envoy, with all the more reason should immunity be recognized as regards the sovereign
itself, which in this case is the Holy See.

The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental
character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost
impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied and are still
occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by private respondent in
its complaint.

Notes:

In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in
a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is
entitled to immunity.

In the United States, the procedure followed is the process of "suggestion," where the foreign state or the
international organization sued in an American court requests the Secretary of State to make a determination as to
whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn,
asks the Attorney General to submit to the court a "suggestion" that the defendant is entitled to immunity. In England,
a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a
"suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign
Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).

In the Philippines, the practice is for the foreign government or the international organization to first secure an
executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office
conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA
130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment,
informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World
Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to
that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request
the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City,
Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation
and Memorandum as amicus curiae
In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents
through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command,
80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases
where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own
determination as to the nature of the acts and transactions involved.

Sovereign Immunity

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

the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can
only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the
regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then
it is an act jure imperii, especially when it is not undertaken for gain or profit.

Under both Public International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign
sovereign can ask his own government to espouse his cause through diplomatic channels.

Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the
Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its claims.
Of course, the Foreign Office shall first make a determination of the impact of its espousal on the relations between
the Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign States,
Selected Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the Philippine
government decides to espouse the claim, the latter ceases to be a private cause.

11
Republic v. Villasor

Facts: a decision was rendered in Special Proceedings No. 2156-R in favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan,
and International Construction Corporation, and against the petitioner herein, confirming the arbitration award in the amount
of P1,712,396.40, subject of Special Proceedings. respondent Honorable Guillermo P. Villasor, issued an Order declaring
decision of final and executory, directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila to execute the said
decision. 9. corresponding Alias Writ of Execution was issued. On the strength of the afore-mentioned Alias Writ of Execution,
the Provincial Sheriff of Rizal served notices of garnishment \ with several Banks, specially on the "monies due the Armed
Forces of the Philippines in the form of deposits sufficient to cover the amount mentioned in the said Writ of Execution".
Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of an order issued by
respondent Judge Guillermo P. Villasor, then of the Court of First Instance of Cebu, Branch I, 1 declaring a decision
final and executory and of an alias writ of execution directed against the funds of the Armed Forces of the Philippines
subsequently issued in pursuance thereof, the alleged ground being excess of jurisdiction, or at the very least, grave
abuse of discretion. As thus simply and tersely put, with the facts being undisputed and the principle of law that calls
for application indisputable, the outcome is predictable. The Republic of the Philippines is entitled to the writs prayed
for. Respondent Judge ought not to have acted thus. The order thus impugned and the alias writ of execution must
be nullified.

Petitioner: Respondent Judge, Honorable Guillermo P. Villasor, acted in excess of jurisdiction [or] with grave abuse of
discretion amounting to lack of jurisdiction in granting the issuance of an alias writ of execution against the properties
of the Armed Forces of the Philippines, hence, the Alias Writ of Execution and notices of garnishment issued
pursuant thereto are null and void
Respondent:
Issue:

Held: nullify the issuance of an alias writ of execution directed against the funds of the Armed Forces of the
Philippines to satisfy a final and executory judgment, has explained, thus —

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 the claimant's action "only up to the completion of proceedings anterior to the stage of execution"
and that the power of the Courts ends when the judgment is rendered, since government funds and properties may
not be seized under writs or execution or garnishment to satisfy such judgments, is based on obvious considerations
of public policy. Disbursements of public funds must be covered by the correspondent 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.

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well
as its government is immune from suit unless it gives its consent. It is readily understandable why it must be so. In
the classic formulation of Holmes: "A sovereign is exempt from suit, not because of any formal conception or obsolete
theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the
law on which the right depends. Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a
recent decision, Providence Washington Insurance Co. v. Republic of the Philippines,6 with its affirmation that "a
continued adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience that may
be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its multifarious
functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were
not thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation,
the loss of time and energy required to defend against law suits, in the absence of such a basic principle that
constitutes such an effective obstacle, could very well be imagined."
Commissioner of Public Highways v. San Diego,9 such a well-settled doctrine was restated in the opinion of Justice
Teehankee: "The universal rule that where the State gives its consent to be sued by private parties either by general
or special law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of
execution' and that the power of the Courts ends when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or garnishment to satisfy such judgments, 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."  Such a
principle applies even to an attempted garnishment of a salary that had accrued in favor of an employee. Director of
Commerce and Industry v. Concepcion,  speaks to that effect. Justice Malcolm as ponente left no doubt on that
score. Thus: "A rule which has never been seriously questioned, is that money in the hands of public officers,
although it may be due government employees, is not liable to the creditors of these employees in the process of
garnishment. One reason is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by
express authorization by the Legislature, and to subject its officers to garnishment would be to permit indirectly what
is prohibited directly. Another reason is that moneys sought to be garnished, as long as they remain in the hands of
the disbursing officer of the Government, belong to the latter, although the defendant in garnishment may be entitled
to a specific portion thereof. And still another reason which covers both of the foregoing is that every consideration of
public policy forbids it."

It is made abundantly clear why the Republic of the Philippines could rightfully allege a legitimate grievance.

Dept. of Agriculture v. NLRC

Facts: Department of Agriculture (herein petitioner) and Sultan Security Agency entered into a contract for security services to
be provided by the latter to the said governmental entity. Save for the increase in the monthly rate of the guards, the same
terms and conditions were also made to apply to another contract. several guards of the Sultan Security Agency filed a
complaint for underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift differential pay,
holiday pay and overtime pay, as well as for damages against the Department of Agriculture and Sultan Security Agency.
Executive Labor Arbiter rendered a decision on 31 May finding herein petitioner and jointly and severally liable with Sultan
Security Agency for the payment of money claims. The petitioner and Sultan Security Agency did not appeal the decision of the

12
Labor Arbiter. Thus, the decision became final and executory.
the Labor Arbiter issued a writ of execution commanding the City Sheriff to enforce and execute the judgment against the
property of the two respondents. petition for injunction, prohibition and mandamus, with prayer for preliminary writ of
injunction was filed by the petitioner with the National Labor Relations Commission
Petitioner: writ issued was effected without the Labor Arbiter having duly acquired jurisdiction over the petitioner, and that,
therefore, the decision of the Labor Arbiter was null and void and all actions pursuant thereto should be deemed equally invalid
and of no legal, effect. The petitioner also pointed out that the attachment or seizure of its property would hamper and
jeopardize petitioner's governmental functions to the prejudice of the public good. The petitioner faults the NLRC for assuming
jurisdiction over a money claim against the Department, which, it claims, falls under the exclusive jurisdiction of the
Commission on Audit. More importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on the non-suability
of the State.
Respondent: The private respondents, on the other hand, argue that the petitioner has impliedly waived its immunity from suit
by concluding a service contract with Sultan Security Agency.
Issue:

Held: The rule, in any case, is not really absolute for it does not say that the state may not be sued under any
circumstances. On the contrary, as correctly phrased, the doctrine only conveys, "the state may not be sued without
its consent;" its clear import then is that the State may at times be sued. 12 The States' consent may be given
expressly or impliedly. Express consent may be made through a general law 13 or a special law. In this jurisdiction, the
general law waiving the immunity of the state from suit is found in Act No. 3083, where the Philippine government
"consents and submits to be sued upon any money claims involving liability arising from contract, express or implied,
which could serve as a basis of civil action between private parties."  , the Department of Agriculture 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.

Notes:
the doctrine, not too infrequently, is derisively called "the royal prerogative of dishonesty" because it grants the state
the prerogative to defeat any legitimate claim against it by simply invoking its non-suability.
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.
When the state gives its consent to be sued, it does thereby necessarily consent to unrestrained execution against it.
tersely put, when the State waives its immunity, all it does, in effect, is to give the other party an opportunity to prove,
if it can, that the State has a liability.
PNB v. Pabalan
Facts: The reliance of petitioner Philippine National Bank in this certiorari and prohibition proceeding against
respondent Judge Javier Pabalan who issued a writ of execution, followed thereafter by a notice of garnishment of
the funds of respondent Philippine Virginia Tobacco Administration, deposited with it, is on the fundamental
constitutional law doctrine of non-suability of a state, it being alleged that such funds are public in character. This is
not the first time petitioner raised that issue. It did so before in Philippine National Bank v. Court of industrial
Relations, 3 decided only last January. It did not meet with success, this Court ruling in accordance with the two
previous cases of National Shipyard and Steel Corporation 4 and Manila Hotel Employees Association v. Manila
Hotel Company, that funds of public corporations which can sue and be sued were not exempt from garnishment. As
respondent Philippine Virginia Tobacco Administration is likewise a public corporation possessed of the same
attributes,6 a similar outcome is indicated. This petition must be dismissed
Petitioner:
Respondent:
Issue:
Held: The reliance of petitioner Philippine National Bank in this certiorari and prohibition proceeding against
respondent Judge Javier Pabalan who issued a writ of execution,  followed thereafter by a notice of garnishment of
the funds of respondent Philippine Virginia Tobacco Administration,  deposited with it, is on the fundamental
constitutional law doctrine of non-suability of a state, it being alleged that such funds are public in character. This is
not the first time petitioner raised that issue. It did so before in Philippine National Bank v. Court of industrial
Relations,  decided only last January. It did not meet with success, this Court ruling in accordance with the two
previous cases of National Shipyard and Steel Corporation 4 and Manila Hotel Employees Association v. Manila Hotel
Company,5 that funds of public corporations which can sue and be sued were not exempt from garnishment. As
respondent Philippine Virginia Tobacco Administration is likewise a public corporation possessed of the same
attributes,6 a similar outcome is indicated. This petition must be dismissed. The alleged grave abuse of discretion, the
basis of this certiorari proceeding, was sought to be justified on the failure of respondent Judge to set aside the notice
of garnishment of funds belonging to respondent Philippine Virginia Tobacco Administration. This excerpt from the
aforecited decision of Philippine National Bank v. Court of Industrial Relations  makes manifest why such an
argument is far from persuasive. "The premise that the funds could be spoken as public character may be accepted
in the sense that the People Homesite and Housing Corporation was a government-owned entity. It does not follow
though that they were exempt. from garnishment. National Shipyard and Steel Corporation v. Court of Industrial
Relations is squarely in point. As was explicitly stated in the opinion of the then Justice, later Chief Justice,
Concepcion: "The allegation to the effect that the funds of the NASSCO are public funds of the government, and that,
as such, the same may not be garnished, attached or levied upon, is untenable for, as a government owned and
controlled corporation, the NASSCO has a personality of its own. distinct and separate from that of the Government.
It has — pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 ... , pursuant to which The
NASSCO has been established — all the powers of a corporation under the Corporation Law ... ." Accordingly, it may
be sue and be sued and may be subjected to court processes just like any other corporation (Section 13, Act No.
1459, as amended.)" ... To repeat, the ruling was the appropriate remedy for the prevailing party which could proceed
against the funds of a corporate entity even if owned or controlled by the government." 

2. The National Shipyard and Steel Corporation decision was not the first of its kind. The ruling therein could be
inferred from the judgment announced in Manila Hotel Employees Association v. Manila Hotel Company, decided as
far back as 1941.  In the language of its ponente Justice Ozaeta "On the other hand, 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. (Bank of the United States v. Planters' Bank, 9 Wheat. 904, 6 L.ed. 244). By engaging in a particular
business thru the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign
character, so as to render the corporation subject to the rules of law governing private corporations."  It is worth

13
mentioning that Justice Ozaeta could find support for such a pronouncement from the leading American Supreme
Court case of united States v. Planters' Bank,  with the opinion coming from the illustrious Chief Justice Marshall. It
was handed down more than one hundred fifty years ago, 1824 to be exact. It is apparent, therefore, that petitioner
Bank could it legally set forth as a bar or impediment to a notice of garnishment the doctrine of non-suability/

Notes:
Rayo vs CFI of Bulacan
Facts: During the height of that infamous typhoon "KADING" the respondent corporation, acting through its plant
superintendent, Benjamin Chavez, opened or caused to be opened simultaneously all the three floodgates of the
Angat Dam. And as a direct and immediate result of the sudden, precipitate and simultaneous opening of said
floodgates several towns in Bulacan were inundated. Hardest-hit was Norzagaray. About a hundred of its residents
died or were reported to have died and properties worth million of pesos destroyed or washed away. Petitioners, who
were among the many unfortunate victims of that man-caused flood, filed with the respondent Court eleven
complaints for damages against the respondent corporation and the plant superintendent of Angat Dam, Benjamin
Chavez. Petitioners received a copy of the questioned order of the respondent Court dated December 21, 1979
dismissing all their complaints as against the respondent corporation thereby leaving the superintendent of the Angat
Dam, Benjamin Chavez, as the sole party-defendant. .

Respondents: respondent corporation invoked in each answer a special and affirmative defense that "in the operation
of the Angat Dam," it is "performing a purely governmental function", hence it "can not be sued without the express
consent of the State. To sue said defendant for tort may require the express consent of the State

Issues: Whether respondent National Power Corporation performs a governmental function with respect to the
management and operation of the Angat Dam
(2) Whether the power of respondent National Power Corporation to sue and be sued under its organic charter
includes the power to be sued for tort.
Held: It is not necessary to write an extended dissertation on whether or not the NPC performs a governmental
function with respect to the management and operation of the Angat Dam. It is sufficient to say that the government
has organized a private corporation, put money in it and has allowed it to sue and be sued in any court under its
charter. (R.A. No. 6395, Sec. 3 (d).) As a government owned and controlled corporation, it has a personality of its
own, distinct and separate from that of the Government. Moreover, the charter provision that the NPC can "sue and
be sued in any court" is without qualification on the cause of action and accordingly it can include a tort claim such as
the one instituted by the petitioners
Bureau of Printing v. Bureau of Printing Employees
Facts: respondents Bureau of Printing Employees Association (NLU) Pacifico Advincula, Roberto Mendoza, Ponciano Arganda
and Teodulo Toleran — filed by an acting prosecutor of the Industrial Court against herein petitioner Bureau of Printing, Serafin
Salvador, the Acting Secretary of the Department of General Services, and Mariano Ledesma the Director of the Bureau of
Printing. The complaint alleged that Serafin Salvador and Mariano Ledesma have been engaging in unfair labor practices by
interfering with, or coercing the employees of the Bureau of Printing particularly the members of the complaining association
petition, in the exercise of their right to self-organization an discriminating in regard to hire and tenure of their employment in
order to discourage them from pursuing the union activities
Petitioner: Answering the complaint, the petitioners Bureau of Printing, Serafin Salvador and Mariano Ledesma denied the
charges of unfair labor practices attributed to the and, by way of affirmative defenses, alleged, among other things, that
respondents Pacifico Advincula, Roberto Mendoza Ponciano Arganda and Teodulo Toleran were suspended pending result of an
administrative investigation against them for breach of Civil Service rules and regulations petitions; that the Bureau of Printing
has no juridical personality to sue and be sued; that said Bureau of Printing is not an industrial concern engaged for the purpose
of gain but is an agency of the Republic performing government functions.
Respondent:
Issue:
Held: Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act No. 2657). As such
instrumentality of the Government, it operates under the direct supervision of the Executive Secretary, Office of the President,
and is "charged with the execution of all printing and binding, including work incidental to those processes, required by the
National Government and such other work of the same character as said Bureau may, by law or by order of the (Secretary of
Finance) Executive Secretary, be authorized to undertake . . .." (See. 1644, Rev. Adm. Code). It has no corporate existence, and
its appropriations are provided for in the General Appropriations Act. Designed to meet the printing needs of the Government,
it is primarily a service bureau and obviously, not engaged in business or occupation for pecuniary profit.
It is true, as stated in the order complained of, that the Bureau of Printing receives outside jobs and that many of its employees
are paid for overtime work on regular working days and on holidays, but these facts do not justify the conclusion that its
functions are "exclusively proprietary in nature." Overtime work in the Bureau of Printing is done only when the interest of the
service so requires
Notes:
Court of Industrial Relations did not acquire jurisdiction over the respondent Bureau of Printing, and is thus devoid of
any authority to take cognizance of the case. This Court has already held in a long line of decisions that the Industrial
Court has no jurisdiction to hear and determine the complaint for unfair labor practice filed against institutions or
corporations not organized for profit and, consequently, not an industrial or business organization. This is so because
the Industrial Peace Act was intended to apply only to industrial employment, and to govern the relations between
employers engaged in industry and occupations for purposes of gain, and their industrial employees.
Mobil Phil
Facts: Mobil Philippines Exploration, Inc., filed suit in the Court of First Instance of Manila against the Customs Arrastre Service
and the Bureau of Customs to recover the value of the undelivered case in the amount of P18,493.37 plus other damages.
Petitioner: Appellant contends that not all government entities are immune from suit; that defendant Bureau of Customs as
operator of the arrastre service at the Port of Manila, is discharging proprietary functions and as such, can be sued by private
individuals. They are merely parts of the machinery of Government. The Bureau of Customs is a bureau under the Department
of Finance
Respondents: the defendants filed a motion to dismiss the complaint on the ground that not being persons under the law,
defendants cannot be sued.

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Issue: whether BOC is suable
Held: Bureau of Customs, to repeat, is part of the Department of Finance (Sec. 81, Rev. Adm. Code), with no
personality of its own apart from that of the national government. Its primary function is governmental, that of
assessing and collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges,
fines and penalties (Sec. 602, R.A. 1937). To this function, arrastre service is a necessary incident. Although said
arrastre function may be deemed proprietary, it is a necessary incident of the primary and governmental function of the Bureau
of Customs, so that engaging in the same does not necessarily render said Bureau liable to suit. For otherwise, it could not
perform its governmental function without necessarily exposing itself to suit. Sovereign immunity, granted as to the end,
should not be denied as to the necessary means to that end.
Notes:
fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result in its being
suable. If said non-governmental function is undertaken as an incident to its governmental function, there is no waiver thereby
of the sovereign immunity from suit extended to such government entity. This is the doctrine recognized in Bureau of Printing,
et al. vs. Bureau of Printing Employees Association, et al., L-15751, January 28, 1961:
The Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act No. 2657). As such
instrumentality of the Government, it operates under the direct supervision of the Executive Secretary, Office of the President,
and is "charged with the execution of all printing and binding, including work incidental to those processes, required by the
National Government and such other work of the same character as said Bureau may, by law or by order of the (Secretary of
Finance) Executive Secretary, be authorized to undertake . . . ." (Sec. 1644, Rev. Adm. Code.) It has no corporate existence, and
its appropriations are provided for in the General Appropriations Act. Designed to meet the printing needs of the Government,
it is primarily a service bureau and, obviously, not engaged in business or occupation for pecuniary profit.
Civil Aeronautics
Facts:
Issue:
Held
Notes:

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