DOCTRINE OF STATE IMMUNITY

I. Basis
CASE: Kawananakoa v. Polybank, 205 US 349

Mr. Justice Holmes delivered the opinion of the court:

This is an appeal from a decree affirming a decree of foreclosure and sale under a mortgage executed
by the appellants to the appellee, Sister Albertina. 17 Haw. 82. The defendants (appellants) pleaded to
the jurisdiction that after the execution of the mortgage a part of the mortgaged land had been
conveyed by them to one Damon, and by Damon to the territory of Hawaii, and was now part of a public
street. The bill originally made the territory a party, but the territory demurred and the plaintiffs
dismissed their bill as to it before the above plea was argued. Then the plea was overruled, and after
answer and hearing the decree of foreclosure was made, the appellants having saved their rights. The
decree excepted from the sale the land conveyed to the territory, and directed a judgment for the sum
remaining due in case the proceeds of the sale were insufficient to pay the debt. Eq. Rule 92.

The appellants contend that the owners of the equity of redemption in all parts of the mortgage land
must be joined, and that no deficiency judgment should be entered until all the mortgaged premises
have been sold. In aid of their contention they argue that the territory of Hawaii is liable to suit like a
municipal corporation, irrespective of the permission given by its statutes, which does not extend to this
case. They liken the territory to the District of Columbia (Metr- [205 U.S. 349, 353] opolitan R. Co. v.
District of Columbia, 132 U.S. 1 , 33 L. ed. 231, 10 Sup. Ct. Rep. 19), and point out that it has been a
party to suits that have been before this court (Damson v. Hawaii, 194 U.S. 154 , 48 L. ed. 916, 24 Sup.
Ct. Rep. 617; Carter v. Hawaii, 200 U.S. 255 , 50 L. ed. 470, 26 Sup. Ct. Rep. 248).

The territory, of course, could waive its exemption (Smith v. Reeves, 178 U.S. 436 , 44 L. ed. 1140, 20
Sup. Ct. Rep. 919), and it took no objection to the proceedings in the cases cited if it could have done
so. See act of April 30, 1900, chap. 339, 96. 31 Stat. at L. 141, 160. But in the case at bar it did object,
and the question raised is whether the plaintiffs were bound to yield. Some doubts have been
expressed as to the source of the immunity of a sovereign power from suit without its own permission,
but the answer has been public property since before the days of Hobbes. Leviathan, chap. 26, 2. 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. 'Car on peut bien recevoir loy d'autruy, mais il est impossible par nature de
se donner loy.' Bodin, Republique, 1, chap. 8, ed. 1629, p. 132; Sir John Eliot, De Jure Maiestatis,
chap. 3. Nemo suo statuto ligatur necessitative. Baldus, De Leg. et Const. Digna Vox, 2. ed. 1496, fol.
51b, ed. 1539, fol. 61.

As the ground is thus logical and practical, the doctrine is not confined to powers that are sovereign in
the full sense of juridical theory, but naturally is extended to those that, in actual administration,
originate and change at their will the law of contract and property, from which persons within the
jurisdiction derive their rights. A suit presupposes that the defendants are subject to the law invoked. Of
course it cannot be maintained unless they are so. But that is not the case with a territory of the United
States, because the territory itself is the fountain from which rights ordinarily flow. It is true that
Congress might intervene, just as, in the case of a state, the Constitution does, and the power that can
alter the Constitution might. But the rights that exist are not created by [205 U.S. 349, 354] Congress
or the Constitution, except to the extent of certain limitations of power. The District of Columbia is
different, because there the body of private rights is created and controlled by Congress, and not by a
legislature of the District. But for the territory of Hawaii it is enough to refer to the organic act. Act of
April 30, 1900, chap. 339, 6, 55. 31 Stat. at L. 141, 142, 150. Coffield v. Territory, 13 Haw. 478. See,
further, Territory v. Doty, 1 Pinney (Wis.) 396, 405; Langford v. King, 1 Mont. 33; Fisk v. Cuthbert, 2
Mont. 593, 598.

However it might be in a different case, when the inability to join all parties and to sell all the land is due
to a conveyance by the mortgagor directly or indirectly to the territory, the court is not thereby deprived
of ability to proceed.

Decree affirmed.

Mr. Justice Harlan concurs in the result.

II. Scope
CASE: Shell Philippines Exploration B.V. v. Jalos, G.R. No. 179918, September 8, 2010

Facts:
This case is about a question of jurisdiction over an action against a petroleum contractor,
whose pipeline operation has allegedly driven the fish away from coastal areas, inflicting loss
of earnings among fishermen.
On December 11, 1990 petitioner Shell Philippines Exploration B.V. (Shell) and the Republic of
the Philippines entered into Service Contract 38 for the exploration and extraction of petroleum
in northwestern Palawan.
Shell discovered natural gas in the
Camago-Malampaya area and pursued its development... of the well under the Malampaya
Natural Gas Project.
This entailed the construction and installation of a pipeline from Shell's production platform to
its gas processing plant in Batangas.
The pipeline spanned 504... kilometers and crossed the Oriental Mindoro Sea.
respondents Efren Jalos, Joven Campang, Arnaldo Mijares, and 75 other individuals (Jalos, et
al) filed a complaint for damages[1] against Shell before the Regional Trial Court (RTC),...
Branch 41, Pinamalayan, Oriental Mindoro.
claimed that they were all subsistence fishermen from the coastal barangay of Bansud,
Oriental Mindoro whose livelihood was adversely affected by the construction and operation of
Shell's natural gas pipeline.
alos, et al claimed that their fish catch became few after the construction of the pipeline.
As a result, their average net income per month fell
They said that "the pipeline greatly affected biogenically... hard-structured communities such
as coral reefs and led [to] stress to the marine life in the Mindoro Sea."
Instead of filing an answer, Shell moved for dismissal of the complaint.
It alleged that the trial court had no jurisdiction over the action, as it is a "pollution case" under
Republic Act (R.A.) 3931, as amended by Presidential Decree (P.D.) 984 or the Pollution
Control
Law.
Under these statutes, the Pollution Adjudication Board (PAB) has primary jurisdiction over
pollution cases and actions for related damages
Shell also claimed that it could not be sued pursuant to the doctrine of state immunity without
the State's consent.
Moreover, said Shell, the complaint failed to state a cause of action since it did not specify any
actionable wrong or particular act or omission on Shell's part that could have caused the
alleged injury to Jalos, et al.
RTC dismissed the complaint.
t ruled that the action was actually pollution-related, although denominated as one for
damages.  The complaint should thus be brought first before the PAB, the government agency
vested with jurisdiction over... pollution-related cases.
alos, et al assailed the RTC's order through a petition for certiorari[6] before the Court of
Appeals (CA).
In due course, the latter court reversed such order and upheld the jurisdiction of the RTC over
the action.
The CA also rejected Shell's assertion that the suit was actually against the State.  It observed
that the government was not even impleaded as party defendant.
The CA also held that the complaint sufficiently alleged an actionable wrong
Jalos, et al invoked their right to fish the sea and earn a living, which Shell had the correlative
obligation to respect.
Shell moved for reconsideration of the CA's decision but the same was denied.
Issues:
Whether or not the complaint is a pollution case that falls within the primary jurisdiction of the
PAB;
Whether or not the complaint sufficiently alleges a cause of action against Shell; and
Whether or not the suit is actually against the State and is barred under the doctrine of state
immunity.
Ruling:
First.
it is unmistakable based on their allegations that Shell's pipeline produced some kind of poison
or... emission that drove the fish away from the coastal areas.
While the complaint did not specifically attribute to Shell any specific act of "pollution," it
alleged that "the pipeline greatly affected biogenically hard-structured communities such as
coral reefs and led [to]... stress to the marine life in the Mindoro Sea."[10]  This constitutes
"pollution" as defined by law.
It is clear from this definition that the stress to marine life claimed by Jalos, et al is caused by
some kind of pollution emanating from Shell's natural gas pipeline.
The power and expertise needed to determine such issue lies with the PAB.
Executive Order 192 (1987) transferred to the PAB the powers and functions of the National
Pollution and Control Commission provided in R.A. 3931, as amended by P.D. 984.
These empowered the PAB to "[d]etermine the location, magnitude, extent,... severity, causes
and effects" of water pollution.
Among its functions is to "[s]erve as arbitrator for the determination of reparation, or restitution
of the damages and losses resulting from pollution."  In this regard, the PAB has... the power
to conduct hearings,[13] impose penalties for violation of P.D. 984,[14] and issue writs of
execution to enforce its orders and decisions.[1... he PAB's final decisions may be reviewed by
the CA... under Rule 43 of the Rules of Court.
Jalos, et al had, therefore, an administrative recourse before filing their complaint with the
regular courts.
Consequently, resort must... first be made to the PAB, which is the agency possessed of
expertise in determining pollution-related matters.
To this extent, the failure of Jalos, et al to allege in their complaint that they had first taken
resort to PAB before going to court means that they failed to state a cause of action that the
RTC could act on.  This warranted the dismissal of their... action.
Second.
As mentioned above, the complaint said that the natural gas pipeline's construction and
operation "greatly affected" the marine environment, drove away the fish, and resulted in
reduced income for Jalos, et al.
True, the complaint did not contain some scientific... explanation regarding how the
construction and operation of the pipeline disturbed the waters and drove away the fish from
their usual habitat as the fishermen claimed.
But lack of particulars is not a ground for dismissing the complaint.
Here, all the elements of a cause of action are present.
First, Jalos, et al undoubtedly had the right to the preferential use of marine and fishing
resources which is guaranteed by no less than the Constitution.[23]  Second, Shell had the...
correlative duty to refrain from acts or omissions that could impair Jalos, et al's use and
enjoyment of the bounties of the seas.  Lastly, Shell's construction and operation of the
pipeline, which is an act of physical intrusion into the marine environment, is said... to have
disrupted and impaired the natural habitat of fish and resulted in considerable reduction of fish
catch and income for Jalos, et al.
Thus, the construction and operation of the pipeline may, in itself, be a wrongful act that could
be the basis of Jalos, et al's cause of action.
Third.
Shell claims that it cannot be sued without the State's consent under the doctrine of state
immunity from suit.  But, to begin with, Shell is not an agent of the Republic of the Philippines
It is but a service contractor for the exploration and... development of one of the country's
natural gas reserves.
Consequently, Shell is not an agent of the Philippine government, but a provider of services,
technology and financing[31] for the Malampaya Natural Gas Project.
WHEREFORE, the Court GRANTS the petition and REVERSES the decision of the Court of
Appeals in CA-G.R. CV 82404 dated November 20, 2006.  Respondent Efren Jalos, et al's
complaint for damages against Shell Philippines Exploration B.V. in Civil
Case P-1818-03 of the Regional Trial Court, Branch 41, Pinamalayan, Oriental Mindoro is
ordered DISMISSED without prejudice to its refiling with the Pollution Adjudication Board or
PAB.
Principles:
Section 2(a) of P.D. 984 defines "pollution" as "any alteration of the physical, chemical and
biological properties of any water x x x as will or is likely to create or render such water x x x
harmful, detrimental or injurious to public health, safety or welfare or... which will adversely
affect their utilization for domestic, commercial, industrial, agricultural, recreational or other
legitimate purposes."
A cause of action is the wrongful act or omission committed by the defendant in violation of the
primary rights of the plaintiff.
Its elements consist of: (1) a right existing in favor of the plaintiff, (2)a duty on the part of the
defendant to... respect the plaintiff's right, and (3) an act or omission of the defendant in
violation of such right.
III. Concept of Restrictive State Immunity
IV. Classification of Suits Against the State
A. Suits Against Public Officials
1. Test: will require an affirmative act from the state
CASES:
Garcia v. Chief of Staff, 16 SCRA 120

Ruiz v. Cabahug, 102 Phil 110 (1957)

 Republic v. Sandoval, G.R. No. 84607, March 19, 1993

2. Effect when public officer acts without, or in excess of, jurisdiction

CASE: Festejo v. Fernando, GR No. L-5156, March 11, 1954 (NOTE: opinion is in
Spanish; read dissent of J. Concepcion and the discussion of Cruz to get an idea what
 the case is all about)

B. Suits Against Government Agencies

1. If incorporated
CASES:
Bermoy v. PNC, GR No. L-8670, May 18, 1956
 Arcega v. CA, 66 SCRA 229

ALICIA O. ARCEGA v. CA

GR No. L-20869

Facts:

● petitioner Alicia Arcega, doing business under the firm name "Fairmont Ice Cream
Company," filed a complaint against the respondents Central Bank of the Philippines
and PNB, for the refund of the total sum of P18,030.13 representing allegedly
unauthorized payments made by her in the concept of the 17% special excise tax on
foreign exchange levied under Section 1 of Republic Act 601, as amended by Republic
Acts 1175 and 1197.

● The PNB moved to dismiss the complaint on the ground that it does not state a
sufficient cause of action because, although the PNB is being sued as an agent of the
Central Bank, there is no allegation in the complaint that it had contracted in its own
name or exceeded its authority as such agent

● The Central Bank also moved to dismiss the complaint on the ground that the trial
court has no jurisdiction over the subject-matter of the action, because the judgment
sought will constitute a financial charge against the Government, and therefore the suit
is one against the Government, which cannot prosper without its consent, and in this
case no such consent has been given

● the trial court dismissed the complaint

● Petitioner Arcega filed a motion for reconsideration. However, it was denied by the
court.
 ● The Court of Appeals affirmed the dismissal of the complaint holding that the suit is
indirectly against the Republic of the Philippines which cannot be sued without its
consent. Hence, petitioner filed the present appeal by certiorari.

Issue: Whether a suit against the Central Bank for refund of the 17% foreign exchange tax
collected by it under Republic Act 601 is actually a suit against the State

Ruling:

No, a suit against Central Bank for refund of foreign exchange tax is not a suit against the state.
The suability of the Central Bank for the refund of taxes collected by it under Republic Act 601
was upheld in Central Azucarera Don Pedro vs. Central Bank of the Philippines where the court
rule that the Central Bank of the Philippines is an entity authorized by its charter to sue
and be sued. The consent of the State to be sued, therefore, has been given.

This doctrine was reiterated in Philippine Acetylene Co. vs. Central Bank of the Philippines
where it was pointedly stated that "Sec. 5 of Republic Act No. 601 directs that refund of
taxes be made by the Central Bank."

The courts below, therefore, erred in dismissing the complaint on the ground that the Central
Bank was non-suable for the refund of taxes it had collected under the statute.

Rayo v. CFI, 110 SCRA 460

FACTS:

On October 26, 1978, typhoon “Kading” struck Bulacan. Due to this, the National Power Corporation (NPC),
through its plant superintendent Benjamin Chavez, simultaneously opened 3 floodgates of Angat Dam.

The opening of the floodgates caused several towns to be inundated (the town of Norzagaray was the most
affected one). It resulted to a hundred deaths and damage to properties that were worth over a million pesos.
Petitioners (victims) filed a complaint for damages against NPC, including plant superintendent Benjamin
Chavez.

Respondent filed counterclaims and put up a special and affirmative defense that “in the operation of the
Angat Dam,” it is “performing a purely governmental function”, hence it “cannot be sued without the express
consent of the State.”

Petitioners oppose the defense, contending that the NPC is not performing governmental but merely
proprietary functions and that under its own organic act, Section 3 (d) of Republic Act No. 6395, it can sue
and be sued in any court.

CFI dropped the NPC from the complaint and left Chavez as the sole party-defendant.

CFI RULING: Upon a motion for reconsideration, the CFI ruled that petitioners’ reliance on Sec. 3 of RA 6395
is not tenable since the same refer to such matters that are only within the scope of the other corporate
powers of said defendant and not matters of tort as in the instant cases.

Being an agency performing a purely governmental function in the operation of the Angat Dam, said
defendant was not given any right to commit wrongs upon individuals. To sue said defendant for tort may
require the express consent of the State. PETITION DISMISSED.

ISSUE/S:

Whether respondent National Power Corporation performs a governmental function with

respect to the management and operation of the Angat Dam;
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.

RULING:

SC reversed the CFI decision and GRANTED petitioners to reinstate their complaint against
the NPC.

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). 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.

PNR v. IAC, 217 SCRA 401

2. If unincorporated
CASES:
Bureau of Printing v. Bureau of Printing Employees Ass’n, 1 SCRA 340
G.R. No. L-15751, January 28, 1961

FACTS:
Respondents complained that petitioners 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, in
the exercise of their right to self-organization and discriminating in regard to hire and tenure of their
employment in order to discourage them from pursuing the union activities.

Petitioners denied said charges and invoked immunity against suit. Claiming that the Bureau of Printing has
no juridical personality to sue and be sued; that said Bureau of Printing is not an industrial concern engaged
for the purpose of gain but is an agency of the Republic performing government functions. For relief, they
prayed that the case be dismissed for lack of jurisdiction.

The trial court of the Industrial Court sustained the jurisdiction of the court on the theory that the functions of
the Bureau of Printing are "exclusively proprietary in nature," and, consequently, denied the prayer for
dismissal.

ISSUE: WON petitioner is performing government functions.

RULING: YES.

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 . . .." (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 (sec. 566, Rev. Adm. Code). As a
matter of administrative policy, the overtime compensation may be paid, but such payment is discretionary
with the head of the Bureau depending upon its current appropriations, so that it cannot be the basis for
holding that the functions of said Bureau are wholly proprietary in character.

Indeed, as an office of the Government, without any corporate or juridical personality, the Bureau of Printing
cannot be sued. Any suit, action or proceeding against it, if it were to produce any effect, would actually be a
suit, action or proceeding against the Government itself, and the rule is settled that the Government cannot
be sued without its consent, much less over its objection.

Mobil Phils. v. Customs Arrastre Service, 18 SCRA 1120

Facts:

Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville" sometime in November of
1962, consigned to Mobil Philippines Exploration, Inc., Manila. The shipment arrived at the Port of
Manila on April 10, 1963, and was discharged to the custody of the Customs Arrastre Service, the unit
of the Bureau of Customs then handling arrastre operations therein. The Customs Arrastre Service later
delivered to the broker of the consignee three cases only of the shipment.

On April 4, 1964 Mobil Philippines Exploration, Inc., filed suit in the Court of First Instance of Manila
against the Customs Arrastre Service and the Bureau of Customs to recover the value of the
undelivered case in the amount of P18,493.37 plus other damages.

On April 20, 1964 the defendants filed a motion to dismiss the complaint on the ground that not being
persons under the law, defendants cannot be sued.

After plaintiff opposed the motion, the court, on April 25, 1964, dismissed the complaint on the ground
that neither the Customs Arrastre Service nor the Bureau of Customs is suable. Plaintiff appealed to Us
from the order of dismissal.

Raised, therefore, in this appeal is the purely legal question of the defendants' suability under the facts
stated.
Appellant contends that not all government entities are immune from suit; that defendant Bureau of
Customs as operator of the arrastre service at the Port of Manila, is discharging proprietary functions
and as such, can be sued by private individuals.

Issue:

Whether or not the Bureau of Customs is immune from suit?

Ruling:

Yes, the Bureau of Customs is immune from suit since it is acting as part of the machinery of
the national government.

Jurisprudence provides 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.

In the case at bar, the 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.

Hence, the Bureau of Customs is immune from suit since it is acting as part of the machinery of
the national government.

Air Transportation Office v. Sps. Ramos, G.R. No. 159402, February 23, 2011

C. Suits Against Foreign States

 CASES:
Syquia v. Almeda Lopez, 84 Phil 312 (read also the dissent of Justice Perfecto)

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

GR No. L-1648 August 17, 1949 PEDRO SYQUIA, GONZALO SYQUIA, AND LEOPOLDO SYQUIA,
PETITIONERS, V NATIVIDAD ALMEDA LOPEZ, JUDGE OF MUNICIPAL COURT OF MANILA, CONRADO
V. SANCHEZ, JUDGE OF COURT OF FIRST INSTANCE OF MANILA, GEORGE F. MOORE ET AL.,
RESPONDENTS. Facts The plaintiffs named Pedro, Gonzalo, and Leopoldo, all surnamed Syquia, are the
undivided joint owners of three apartment buildings situated in the City of Manila known as the North Syquia
Apartments, South Syquia Apartments and Michel Apartments located at 1131 M. H. del Pilar, 1151 M. H. del
Pilar and at 1188 A. Mabini streets, respectively. About the middle of the year 1945, said plaintiffs executed
three lease contracts in favor of the United States of America. The term or period for the three leases was to
be "for the duration of the war and six months thereafter, unless sooner terminated by the United States of
America." The apartment buildings were used for billeting and quartering officers of the U. S. armed forces
stationed in the Manila area. The petitioners filed before the Municipal Court of Manila an action for unlawful
detainer (desahucio) against Moore and Tillman and the 64 persons occupying apartments. The Municipal
Court dismissed the action with costs against the plaintiff on the ground that the matter included or involved in
the action should be a proper subject matter of representations between the Government of the United States
of America and the Philippines. The Court of First Instance of Manila affirmed the order of the municipal court
dismissing plaintiffs’ complaint on the ground that said suit must be regarded as one against the United States
Government itself, which cannot be sued without its consent, specially by the citizens of another country. The
Counsel for the petitioners insisted before the Supreme Court that the latter should render a decision, on the
merits, particularly on the question of jurisdiction of the Municipal Court over the original action, not only for the
satisfaction of the parties involved but also to serve as a guide in future cases involving cases of similar nature
such as contracts of lease entered into between the Government of the United States of America on one side
and Filipino citizens on the other regarding properties of the latter.
Issues
Whether or not the decision of NATIVIDAD ALMEDA LOPEZ, JUDGE OF MUNICIPAL COURT OF MANILA
and CONRADO V. SANCHEZ, JUDGE OF COURT OF FIRST INSTANCE OF MANILA constitutional or not.
Ruling
The Supreme Court found that the Municipal Court of Manila committed no error in dismissing the case for
lack of jurisdiction and that the Court of First Instance acted correctly in affirming the municipal court's order of
dismissal. Case dismissed, without pronouncements as to costs.
Ponente
Justice Montemayor

Sanders v. Veridiano, G.R. No. L-46930, June 10, 1988 (162 SCRA 88)

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

ISSUE:
1) Were the petitioners acting officially or only in their private capacities when they did the acts for which the
private respondents sued them for damages?
2) Does the court have jurisdiction over the case?

HELD:
It is abundantly clear in the present case that the acts for which the petitioner are being called to account were
performed by them in the discharge of their official duties. Given the official character of the letters, the
petitioners were, legally speaking, being sued as officers of the United States government. As such, the
complaint cannot prosper unless the government sought to be held ultimately liable has given its consent to be
 sued. The private respondents must pursue their claim against the petitioners in accordance with the laws of
the United States of which they are all citizens and under whose jurisdiction the alleged offenses were
committed for the Philippine courts have no jurisdiction over the case.

Holy See v. Rosario, 238 SCRA 524

Facts:
This is a petition for certiorari to reverse and set side a decision from the RTC of Makati. Petitioner is the
Holy See who exercises sovereignty over the Vatican City and is represented by the Papal Nuncio in the
Philippines. The petition arose from a controversy regarding a lot, Lot 5-A, of 6,000 square meters located in
the Municipality of Parañaque, registered in the name of the petitioner. Lot 5-A is contiguous to two other
lots, 5-B and 5-D. The three lots were sold to Ramon Licup, who later assigned his rights to the sale to the
private respondent, Starbright Sales Enterprises, Inc., involved in real estate. Informal settlers were squatting
in the property, and disputes arose as to who would evict them. The conflict intensified when the lot was sold
to Tropicana Properties and Development Corporation by the petitioner. The private respondent filed a
complaint before the RTC of Makati against the petitioner and three other defendants: Msgr. Domingo Cirilos,
who acted as agent to the sellers, the PRC and Tropicana. It prayed for: 1) annulment of the Deeds of Sale
between petitioner and the PRC on the one hand and Tropicana on the other; 2) the reconveyance of the lots
in question; 3) specific performance of the agreement to sell between it and the owners of the lots and; 4)
damages. The petitioners and Cirilos separately moved to dismiss the complaint: petitioners for lack of
jurisdiction based on sovereign immunity from suit and Cirilos for being an improper party. An opposition to
the motion was filed by private respondent. The trial court issued an order denying the petitioner’s motion to
dismiss, reason being that the petitioner can no longer be immune as they entered into a business contract.
Petitioner moved for reconsideration. They then filed a “Motion for Hearing for the Sole Purpose of
Establishing Factual Allegation for Claim of Immunity as a Jurisdictional Defense,” to facilitate the hearing in
its defense of sovereign immunity. Private respondents opposed the motion as well as the motion for
reconsideration. The trial court ordered the resolution be suspended until after trial on the merits and
directing the petitioner to file its answer. Petitioner elevated the matter to the Supreme Court. The petitioner
invoked its privilege of sovereign immunity only on its behalf and on behalf of its official representatives, the
Papal Nuncio. Eventually, the Department of Foreign Affairs filed for a Motion of Intervention claiming its
legal interest on the outcome of the case concerning the diplomatic immunity of the petitioner. It stated its
adoption upon the claim of the petitioner with regard to its claim for sovereign immunity from suit. This was
opposed by the private respondent.

Issue: Whether or not the Holy See can invoke its right to Sovereign Immunity to suit

Ruling:
The Supreme Court granted the petition and the complaint against the petitioner is dismissed. Generally,
there are two accepted concepts of sovereignty: a) classical or absolute theory, wherein a sovereign cannot
be made as respondent to courts of another sovereign without its consent and; b) restrictive theory, which
puts conditions on when to recognize immunity.
Under the restrictive theory, sovereign immunity is only recognized with regard to public acts or acts jure
imperii (or those in pursuant to governmental functions) . If the act is private or acts jure gestionis (those that
are for profit), then immunity cannot be invoked.
In this case, the petitioner had denied that the acquisition and subsequent disposal of the Lot 5-A were made
for profit. It claimed that it acquired the property for its mission or the Apostolic Nunciature in the Philippines.
The lot, allegedly, was acquired by donation from the Archdiocese of Manila for the purpose of building
official residence of Papal Nuncio. However, when the informal settlers refused to leave the property, the
petitioner decided to dispose the property, not for commercial purpose. The DFA intervened as they
established in a Memorandum and Certification the privilege of sovereign immunity of the petitioner, stating
that they are a duly accredited diplomatic mission to the Philippines exempt from local jurisdiction and has
title to all rights, privileges and immunities of a diplomatic mission or embassy in the country. When the plea
of immunity has been recognized by the executive department, such shall be conclusive to courts.

U.S. v. Guinto (and companion cases), 182 SCRA 644

FACTS:

1.    USA vs GUINTO (GR No. 76607)

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

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

RULING:

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

It bears stressing at this point that the aforesaid principle do not confer on the USA a blanket
immunity for all acts done by it or its agents in the Philippines. Neither may the other petitioners claim that
they are also insulated from suit in this country merely because they have acted as agents of the United
States in the discharge of their official functions.

There is no question that the USA, like any other state, will be deemed to have impliedly waived its
non-suability if it has entered into a contract in its proprietary or private capacity (commercial acts/jure
gestionis). It is only when the contract involves its sovereign or governmental capacity (governmental
acts/jure imperii) that no such waiver may be implied.

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

NOTE:
1.  A STATE MAY BE SAID TO HAVE DESCENDED TO THE LEVEL OF AN INDIVIDUAL AND CAN THUS
BE DEEMED TO HAVE TACITLY GIVEN ITS CONSENT TO BE SUED ONLY WHEN IT ENTERS INTO
BUSINESS CONTRACTS.
2. Jure Gestionis – by right of economic or business relations, may be sued. (US vs Guinto)

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

U.S. v. Ruiz, G.R. No. L-35645 May 22, 1985

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

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

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

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

Rulings:
Yes. The Supreme Court held that 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.

The restrictive application of state immunity is proper only when the proceedings arise out of commercial
transactions of the foreign sovereign. Its commercial activities of economic affairs. A state may be
descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued.
Only when it enters into business contracts.

V. Waiver of Immunity: Consent to be Sued

A. Express consent
1. Thru general law
2. Thru special law
CASES:
Merritt v. Government of the Phil. Islands, 34 Phil 311

Merritt vs GPI
Waiver of Sovereign Immunity
 

MERRITT VS GPI

G.R. No. L-11154         34 Phil 311    March 21, 1916

MERRITT, plaintiff-appellant,
vs.
GOVERNMENT OF THE PHILIPPINE ISLANDS, defendant-appellant.

Facts:

The case is an appeal by both parties from a judgment of the Court of First Instance of the city of Manila
in favor of the plaintiff for the sum of P14,741, together with the costs of the cause.

Prior to this appeal, Plaintiff E. Meritt, a contractor, had a collision with the General Hospital Ambulance
which turned suddenly and unexpectedly without having sounded any whistle or horn. Merrit was
severely injured. His condition had undergone depreciation and his efficiency as a contractor was
affected. The plaintiff is seeking a certain amount for permanent injuries and the loss of wages during he
was incapacitated from pursuing his occupation. In order for Merritt to recover damages, he sought to
sue the government which later authorized the plaintiff to bring suit against the GPI and authorizing the
Attorney- General to appear in said suit.

On this appeal, Counsel for the plaintiff insists that the trial court erred:

 “in limiting the general damages which the plaintiff suffered to P5,000, instead of P25,000 as
claimed in the complaint,” and
 “in limiting the time when plaintiff was entirely disabled to two months and twenty-one days and
fixing the damage accordingly in the sum of P2,666, instead of P6,000 as claimed by plaintiff in his
complaint.”

On the other hand, the Attorney-General on behalf of the defendant urges that the trial court erred:

 in finding that the collision between the plaintiff’s motorcycle and the ambulance of the General
Hospital was due to the negligence of the chauffeur, who is an alleged agent or employee of the
Government;
 in holding that the Government of the Philippine Islands is liable for the damages sustained by
the plaintiff as a result of the collision, even if it be true that the collision was due to the negligence
of the chauffeur; and
 in rendering judgment against the defendant for the sum of P14,741.

Issues:

 Whether or not the Government is legally liable to the plaintiff by allowing a lawsuit to
commence against it.
 Whether or not the ambulance driver is considered as an employee of the government.

Discussions:

The waiver of immunity of the State does not mean concession of its liability. When the State allows
itself to be sued, all it does in effect is to give the other party an opportunity to prove, if it can, that the
State is liable.

Art. 1903, Par. 5 of the Civil Code reads that “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 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.

 
 

Rulings:

 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 pre-existing liability and
submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense.
 In the case at bar, the ambulance driver was not a special agent nor was a government officer
acting as a special agent. Hence, there can be no liability from the government. As stated by Justice
Story of United States “The Government does not undertake to guarantee to any person the fidelity
 of the officers or agents whom it employs, since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest.”

CASE DIGEST II

 FACTS: Merrit was riding a motorcycle along Padre Faura Street when he was bumped by
the ambulance of the General Hospital. Merrit sustained severe injuries rendering him
unable to return to work. The legislature later enacted Act 2457 authorizing Merritt to file a
suit 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 he is entitled. After trial, the lower court held that the collision
was due to the negligence of the driver of the ambulance. It then determined the amount of
damages and ordered the government to pay the same. 

 ISSUES: 

1. Did the Government, in enacting the Act 2457, simply waive its immunity from suit or
did it also concede its liability to the plaintiff?

2. Is the Government liable for the negligent act of the driver of the ambulance?

 HELD:

1. 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.

2. Under the Civil Code, the state is liable 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. A special agent 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. 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. The driver of the
ambulance of the General Hospital was not a special agent; thus the Government is not
liable. (Merritt vs Government of the Philippine Islands, G.R. No. L-11154, March 21 1916,
34 Phil. 311)

NOTE:

■ The State is responsible in like manner when it acts through a special agent; but not when
the damage has been caused by the official to whom the task done properly pertains. (Art.
2180 par. 6, Civil Code)

■ The state 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. (Merritt vs. Government of the Philippine Islands)
 ■ The State is not liable for the torts committed by its officers or agents whom it employs,
except when expressly made so by legislative enactment. The government does not
undertake to guarantee to any person the fidelity of the officers or agents whom it employs
since that would involve it in all its operations in endless embarrassments, difficulties and
losses, which would be subversive of the public interest. (Merritt vs. Government of the
Philippine Islands)
 Lim v. Brownell, G.R. No. L-8587, March 24, 1960

Lim, etc. vs. Brownell, Jr., etc., G.R. No. L-8587

FACTS:
This is an appeal from an order of the Court of First Instance of Manila, dismissing plaintiff's
action for the recovery of real property for lack of jurisdiction over the subject matter. The
property in dispute consists of four parcels of land situated in Tondo, City of Manila, with a
total area of 29,151 square meters. The lands were, after the last world war, found by the
Alien Property Custodian of the United States to be registered in the name of Asaichi Kagawa,
national of an enemy country, Japan, as evidenced by Transfer Certificates of Title Nos. 64904
to 65140, On March 14, 1946, issued a vesting order on the authority of the Trading with the
Enemy Act of the United States, as amended, vesting in himself the ownership over two of the
said lots, Lots Nos. 1 and 2 On July, 6, 1948, the Philippine Alien Property Administrator
(successor of the Alien Property Custodian) under the authority of the same statute issued a
supplemental vesting order, vesting in himself title to the remaining Lots Nos. 3 and 4. On
August 3, 1948, the Philippine Alien Property Administrator (acting on behalf of the President
of the United States) and the President of the Philippines, executed two formal agreements,
one referring to Lots 1 and 2 and the other to Lots 3 and 4, whereby the said Administrator
transferred all the said four lots to the Republic of the Philippines upon the latter's
undertaking fully to indemnify the United States for all claims in relation to the property
transferred, which claims are payable by the United States of America or the Philippine Alien
Property Administrator of the United States under the Trading with the Enemy Act, as
amended, and for all such costs and expenses of administration as may by law be charged
against the property or proceeds thereof hereby transferred. On November 15, 1948, the
latter's son Benito E. Lim filed a formal notice of claim to the property with the Philippine
Alien Property Administrator On the theory that the lots in question still belonged to Arsenia
Enriquez. that they were mortgaged by her to the Mercantile Bank of China; that the mortgage
having been foreclosed, the property was sold at public auction during the war to the Japanese
Asaichi Kagawa, who, by means of threat and intimidation succeeded in preventing Arsenia
Enriquez from exercising her right of redemption; and that Kagawa never acquired any valid
title to the property because he was ineligible under the Constitution to acquire residential
land in the Philippines by reason of alien age.
On March 7, 1950, the claim was disallowed by the Vested Property Claims Committee of the
Philippine Alien Property Administrator, and copy of the decision disallowing the claim was
received by claimant's counsel on the 15th of that month On November 13, 1950, the claimant
Benito E. Lim, as administrator of the intestate estate of Arsenia Enriquez, filed a complaint in
the Court of First Instance of Manila against the Philippine Alien Property Administrator (later
substituted by the Attorney General of the United States) for the recovery of the property in
question with back rents. The complaint was later amended to include Asaichi Kagawa as
defendant.
ISSUE: 1. Whether or not Intervenor-Appellee (Republic of the Philippines) be sued?
HELD: 1. No suit or claim for the return of said properties pursuant to Section 9 or 32 (a) of
the Trading with the Enemy Act was filed by Plaintiff within two years from the date of
vesting, the “later” date and the last on which suit could be brought. A condition precedent to
a suit for the return of property vested under Trading with the Enemy Act is that it should be
filed not later than April 30, 1949, or within two years from the date of vesting, whichever is
later, but in computing the two years, the period during which there was pending a suitor
claim for the return of the property of the Act shall be excluded.
The court states that In view of the foregoing, the order appealed from insofar as it dismisses
the complaint with respect to Lots 1 and 2 and the claim for damages against the Attorney
General of the United States and the Republic of the Philippines, is affirmed, but revoked
insofar as it dismisses the complaint with respect to Lots 3 and 4, as to which the case is
hereby remand ed to the court below for further proceedings.

B. Implied consent
1. When state commences litigation
 CASES:
Froilan v. Pan Oriental Shipping Co., GR No. L-6060, Sept. 30, 1950

Facts: Plaintiff, Fernando Froilan filed a complaint against the defendant-appellant, Pan Oriental
Shipping Co., alleging that he purchased from the Shipping Commission the vessel for P200,000,
paying P50,000 down and agreeing to pay the balance in instalments. To secure the payment of
the balance of the purchase price, he executed a chattel mortgage of said vessel in favor of the
Shipping Commission. For various reasons, among them the non-payment of the installments, the
Shipping Commission tool possession of said vessel and considered the contract of sale cancelled.
The Shipping Commission chartered and delivered said vessel to the defendant-appellant Pan
Oriental Shipping Co. subject to the approval of the President of the Philippines. Plaintiff appealed
the action of the Shipping Commission to the President of the Philippines and, in its meeting the
Cabinet restored him to all his rights under his original contract with the Shipping Commission.
Plaintiff had repeatedly demanded from the Pan Oriental Shipping Co. the possession of the vessel
in question but the latter refused to do so.
Plaintiff, prayed that, upon the approval of the bond accompanying his complaint, a writ of replevin
be issued for the seizure of said vessel with all its equipment and appurtenances, and that after
hearing, he be adjudged to have the rightful possession thereof . The lower court issued the writ of
replevin prayed for by Froilan and by virtue thereof the Pan Oriental Shipping Co. was divested of
its possession of said vessel.
Pan Oriental protested to this restoration of Plaintiff ‘s rights under the contract of sale, for the
reason that when the vessel was delivered to it, the Shipping Administration had authority to
dispose of said authority to the property, Plaintiff having already relinquished whatever rights he
may have thereon. Plaintiff paid the required cash of P10,000.00 and as Pan Oriental refused to
surrender possession of the vessel, he filed an action to recover possession thereof and have him
declared the rightful owner of said property. The Republic of the Philippines was allowed to
intervene in said civil case praying for the possession of the in order that the chattel mortgage
constituted thereon may be foreclosed.
Issues:
Whether or not the Court has jurisdiction over the intervenor with regard to the counterclaim.
Discussions:
When the government enters into a contract, for the State is then deemed to have divested itself of
the mantle of sovereign immunity and descended to the level of the ordinary individual. Having
done so, it becomes subject to judicial action and processes.
Rulings:
Yes. The Supreme Court held that the government impliedly allowed itself to be sued when it filed
a complaint in intervention for the purpose of asserting claim for affirmative relief against the
plaintiff to the recovery of the vessel. The immunity of the state from suits does not deprive it of the
right to sue private parties in its own courts. The state as plaintiff may avail itself of the different
forms of actions open to private litigants. In short, by taking the initiative in an action against a
private party, the state surrenders its privileged position and comes down to the level of the
defendant. The latter automatically acquires, within certain limits, the right to set up whatever
claims and other defenses he might have against the state.

Lim v. Brownell, supra (see Lim v. Brownell, G.R. No. L-8587, March 24, 1960)

Ministerio v. CFI, G.R. No. L-31635, August 31, 1971 (40 SCRA 464)

Facts: Petitioners filed a complaint which sought for the payment of just compensation for a registered
lot alleged to have been taken by the National Government without just compensation for road widening
in a national road (Gorordo Ave., Cebu City). The defendants, Public Highway Commissioner and the
Auditor General, refused to restore its possession. The defendants relied on the defense that the suit in
reality was one against the government, which carries with it the benefit of immunity from suits, and
therefore should be dismissed.

Issue: Whether or not the petitioners may sue Public Highway Commissioner and the Auditor General
for the taking of their property without just compensation.
Held: Yes. As a general rule, the government is immune from suit without its consent. Jurisprudence
teaches us that even if cases are filed against public officials, if it can be proven that a litigation would
only result in a financial responsibility for the government and that the liability of the official sued is not
personal, the defense of non-suability may be interposed.

However, the Court in this case held that the court may proceed with the complaint and determine the
compensation to which petitioners are entitled. The Court wanted to put in this case that the laws of the
land must be respected. Failure to abide by the law does not necessarily mean that the government
would stand to benefit. Since the taking of the property is conditioned upon the payment of just
compensation, it makes manifest that it submits to the jurisdiction of a court.

The dismissal of the petitioner's complaint by the lower court was reversed and the case was remanded
to the latter for proceedings in accordance with law.

Amigable v. Cuenca, G.R. No. L-26400, February 29, 1972, 43 SCRA 360
2. When state enters into a proprietary contract
CASES:
US v. Ruiz, 136 SCRA 487

USA vs Ruiz
Doctrine of Immunity from Suit
 

Caption:       USA VS RUIZ

G.R. No. L-35645       136 scra 487   May 22, 1985

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT
GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN
& CO., INC., respondents.

Facts:

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

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

Issues:

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

Discussions:

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

Rulings:

Yes. The Supreme Court held that 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.

The restrictive application of state immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign. Its commercial activities of economic affairs. A state
may be descended to the level of an individual and can thus be deemed to have tacitly given its consent
to be sued. Only when it enters into business contracts.

US v. Guinto, 182 SCRA 644

U.S.A. vs Guinto, 182 SCRA 644
TITLE: USA et. al. vs. Hon. Guinto, et. al. G.R. No. 76607. February 26 1990

USA et. al. vs. Hon. Rodrigo et. al. G.R. No. 79470 February 26 1990

USA et. al. vs. Hon. Ceballos et. al. G.R. No. 80018 February 26 1990

USA et. al. vs. Hon. Vergara et. al. G.R. No. 80258 February 26 1990

FACTS: The cases brought before the Supreme Court are consolidated for they are issues on immunity of the
state from being sued.

In G.R. No. 76607 (U.S.A et. al vs. Guinto et. al. Feb. 26, 1990), the private respondents sued several officers
of the US Air Force regarding a bidding for barbering services contract. A bid from Okinawa Area Exchange
was solicited through James Shaw, a contracting officer. Private respondents and concessionaires inside
the Clark Air Base, Roberto T. Valencia, Emerenciana C. Tanglao and Pablo C. del Pilar, were among the
bidders, however, Ramon Dizon won the bidding. The private respondents complained with the contention
that Dizon also bid for the Civil Engineering (CE) area which was not included in the bidding invitation.
PHAX or the Philippine Area Exchange, to whom the respondents complained to, represented by petitioners
Yvonne Reeves and Frederick Smouse clarified that the CE area is yet to be awarded to Dizon because of a
previous solicitation. Dizon was already operating the NCO club concession, however, and the contract
expiry of the CE barbershop was extended only until the end of June 1986. Hence, the respondents filed a
petition, with a prayer to compel PHAX and the individual petitioners to revoke the award to Dizon, and
conduct a rebidding to allow the private respondents to continue operating their concessions by a writ of
preliminary injunction pending litigation. To maintain status quo, Respondent court issued an ex parte
order to the petitioners. Petitioners filed a motion for dismissal and petition to oppose the preliminary
injunction. They contended that the action was in effect a suit against the US Force. Both were denied by the
trial court. A petition for certiorari and prohibition for preliminary injunction were filed before the
Supreme Court and a TRO was issued.

In G.R. No. 79470, Fabian Genove filed a complaint for damages against petitioners Anthony Lamachia,
Wilfredo Belsa, Rose Crtalla and Peter Orascion for his dismissal as a cook in the US Air Force Recreation
Center. Belsa, Cartalla and Orascion testified that Genova poured urine into the soup stock that was served
to customers. Lamachia suspended him and referred the case to a board of arbitrators who found Genove
guilty and recommended his dismissal. Genove then filed an MS complaint in the RTC of Baguio against the
individual petitioners, who moved to dismiss the case in the basis that Lamachia was immune from suit as
per acts done in his official capacity as an officer of the US Air Force. The motion was denied by the RTC, so
the petitioners filed a petition for Certiorari and prohibition with preliminary injunction before the
Supreme Court.

In G.R. No. 80018, the respondent, Louis Bautista, was arrested pursuant to RA 6425 (Dangerous Drugs Act)
in a buy-bust operation conducted by the petitioners, Tomi J. King, Darrel D. Dye and Stephen F. Bostick,
who were officers and special agents of the US Air Force and Air Force Office of Special Investigators. He
was charged before the RTC which caused his dismissal as a barracks boy in Camp O’Donnell, an extension
of Clark Air base. Bautista then filed a complaint against the petitioners. The petitioners, in defense, filed a
motion to dismiss the case with the contention that they were acting in official capacity when the acts were
committed, hence the suit against them is, in effect, a suit against the US. The motion was denied by the
judge, with the contention that the immunity covers only civil cases that are not criminal under the Military
Bases Agreement. Ergo, the petitioners filed a petition for certiorari and prohibition for preliminary
injunction. A TRO was issued.

In G.R. No. 80258, the private respondents, Ricky Sanchez, et. al., filed a complaint for damages against the
respondents, Major General Michael Carns, et. al., for the extensive injuries allegedly sustained by the
petitioners, who beat them up, handcuffed and unleashed dogs on them who bit them. The petitioners
denied the accusation and instead said that the respondents were bitten by dogs because they resisted
arrest when they committed theft, and they were brought to the medical center for treatment thereafter.
The petitioners, USA together with Carns et. al., contended that they are immune against this suit, invoking
their right under the RP-US Bases Treaty, as they acted in the performance of their official functions. The
matter was brought before the Supreme Court after their motion was denied, wherein they filed a petition
for certiorari and prohibition with preliminary injunction. A TRO was issued.

ISSUE: Whether or not the petitioners can use State Immunity (Art. XVI, Sec. 3, 1987 Constitution) as
defense.

RULING: The Supreme Court rendered judgment as follows:

1. In , the petition is DISMISSED and the respondent judge is directed to proceed with the hearing and
decision of Civil Case No. 4772. The temporary restraining order was LIFTED.

2. In G.R. No.79470, the petition is GRANTED and the Civil Case No.0829-R(298) is DISMISSED.

3. In G.R. No80018, the petition is GRANTED and the Civil Case No. 115-C-87 is DISMISSED. The
temporary restraining order is made permanent.

4. In G.R. No. 80258, the petition is DISMISSED and the respondent judge is directed to proceed with
the hearing and decision of Civil Case No. 4996. The temporary restraining order was LIFTED.

Reason: Under Art. XVI, Sec. 3, 1987 Constitution, “The State may not be sued without its consent.” However,
this does not mean that at all times, the State may not be sued. There needs to be a consideration on if they
were indeed acting within the capacity of their duties, or if they enter into a contract with a private party.

In G.R. No. 76607, the barbershops, subject of the bidding awarded were commercial enterprises, operated
by private persons, therefore they are not agencies of the US Armed Forces nor part of their facilities.
Although the barbershops provide service to the military, they were for a fee. State Immunity cannot be
invoked by the petitioners for the fact that they entered into a contract with a private party, commercial in
nature. In G.R. No. 79470, it is in the same principle as in the first case. The petitioner, Lamachia, is a
manager of a privately operated service which generate an income. The court assumed that they are an
individual entity, and the service they offer partake the nature of a business entered by US in its proprietary
capacity. Despite this, the court ruled in favor of the petitioners as the claim for damages cannot be allowed
on the strength of evidence before the court. It ruled that the dismissal of the private respondent was
justifiable under the circumstance. Further, the Supreme Court declared that the petitioners in the other
cases above, stating that they acted in performance of their duties, need evidence. The SC was able to make
certain that the petitioners in G.R. No. 80018 were indeed acting in their official capacity, as the state they
represent, USA, has not given its consent to be sued. As such, they cannot be sued for acts imputable to their
state. However in G.R. No. 80258, more evidence is needed as the factual allegations were contradictory.
There needs to be clear, and sufficient evidence that they were in the vestige of their duty, and did not
exceed it. In the foregoing, the Supreme Court had decided to make the case be investigated further by the
lower court before proceeding and the final judgment can be rendered.

3. Others
CASE: Santiago v. Republic, 87 SCRA 294

Case Digest II

Santiago v Republic, 87 SCRA 294

By Unknown - April 25, 2014
Facts: On August 9, 1976, Ildefonso Santiago through his counsel filed an action
for revocation of a Deed of Donation executed by him and his spouse in January of
1971, with the Bureau of Plant Industry as the Donee, in the Court of First
Instance of Zamboanga City. Mr. Santiago alleged that the Bureau, contrary to the
terms of donation, failed to install lighting facilities and water system on the
property and to build an office building and parking lot thereon which should have
been constructed and ready for occupancy on before December7, 1974. That
because of the circumstances, Mr. Santiago concluded that he was exempt from
 compliance with an explicit constitutional command, as invoked in the Santos v
Santos case, a 1952 decision which is similar. The Court of First Instance
dismissed the action in favor of the respondent on the ground that the state
cannot be sued without its consent, and Santos v Santos case is discernible. The
Solicitor General, Estelito P. Mendoza affirmed the dismissal on ground of
constitutional mandate. Ildefonso Santiago filed a petition for certiorari to the
Supreme Court.

Issue: Whether or not the state can be sued without its consent.

Held: The Supreme Court rules, that the constitutional provision shows a waiver.
Where there is consent, a suit may be filed. Consent need not to be express. It
can be implied. In this case it must be emphasized, goes no further than a rule
that a donor, with the Republic or any of its agency being a Donee, is entitle to go
to court in case of an alleged breach of the conditions of such donation.

The writ of  Certiorari prayed is granted and the order of dismissal of October 20,
1977 is nullified, set aside and declare to be without force and effect. The Court of
First Instance of Zamboanga City, Branch II, is hereby directed to proceed with
this case, observing the procedure set forth in the rules of court. No cost.

VI. Suability vs. Liability

CASES:
US v. Rodrigo, G.R. No. 79470, February 26, 1990

2.    USA vs RODRIGO (GR No. 79470)

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

ISSUE:

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

RULING:

The rule that a State may not be sued without its consent is one of the generally accepted principles
of international law that were have adopted as part of the law of our land. Even without such affirmation, we
would still be bound by the generally accepted principles of international law under the doctrine of
incorporation. Under this doctrine, as accepted by the majority of the states, such principles are deemed
incorporated in the law of every civilized state as a condition and consequence of its membership in the
society of nations. All states are sovereign equals and cannot assert jurisdiction over one another. While the
doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints
filed against officials of the states for acts allegedly performed by them in the discharge of their duties. The
rule is that if the judgment against such officials will require the state itself to perform an affirmative act to
satisfy the same, the suit must be regarded as against the state although it has not been formally impleaded.
When the government enters into a contract, it is deemed to have descended to the level of the other
contracting party and divested of its sovereign immunity from suit with its implied consent.
 It bears stressing at this point that the aforesaid principle do not confer on the USA a blanket
immunity for all acts done by it or its agents in the Philippines. Neither may the other petitioners claim that
they are also insulated from suit in this country merely because they have acted as agents of the United
States in the discharge of their official functions.

There is no question that the USA, like any other state, will be deemed to have impliedly waived its
non-suability if it has entered into a contract in its proprietary or private capacity (commercial acts/jure
gestionis). It is only when the contract involves its sovereign or governmental capacity (governmental
acts/jure imperii) that no such waiver may be implied.

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

Merritt v. Government of the Phil. Islands, supra

VII. Consent to be Sued not Consent to Execution of Judgment; Exception
CASES:
G.R. No. L-30671 November 28, 1973 REPUBLIC OF THE PHILIPPINES vs.HON.
GUILLERMO P. VILLASOR, ET. AL-Villamor
FACTS: In the petition filed by the Republic of the Philippines, a summary of facts was set
forth thus: A decision was rendered in favor of respondents P. J. Kiener Co., Ltd.,
GavinoUnchuan, and International ConstructionCorporation, and against the petitioner
herein, confirming the arbitration award in the amount of P1, 712,396.40, subject of Special
Proceedings. Respondent Judge Villasor, issued an Order declaring the foretasted decision
final and executory, directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila
to execute the said decision. Pursuant to the said Order, the corresponding Alias Writ of
Execution [was issued]. On the strength of the afore-mentioned Alias Writ of Execution, the
Provincial Sheriff of Rizal (respondent herein) served notices of garnishment with several
Banks, especially on the monies due the Armed Forces of the Philippines in the form of
deposits sufficient to cover the amount mentioned in the said Writ of Execution. The
Philippine Veterans Bank received the same notice of garnishment. The funds of the Armed
Forces of the Philippines on deposit with the Banks, particularly, with the Philippine Veterans
Bank and the Philippine National Bank [or] their branches are public funds duly
appropriated and allocated for the payment of pensions of retirees, pay and allowances of
military andcivilian personnel and for maintenance andoperations of the Armed Forces of
the Philippines.
ISSUE: WON the Republic can invoke state immunity from suit.
HELD: YES, 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.

PNB v. Pabalan, 83 SCRA 595

Facts: The case was filed by petitioner requesting for certiorari against the writ of execution
authorized by the Hon Judge Pabalan regarding the transfer of funds amounting to
P12,724.66 belonging to Philippine Virginia Tobacco Administration (PVTA). Philippine
National Bank (PNB) of La Union filed an administrative complaint against Judge Pabalan
for grave abuse of discretion, alleging that the latter failed to recognize that the questioned
 funds are of public character and therefore may not be garnished, attached or levied upon.
The PNB La Union Branch invoked the doctrine of non-suability, putting a bar on the notice
of garnishment.

Issues: Whether or not Philippine National Bank can be sued. Whether or not the notice of
garnishment of funds of Philippine Virginia Tobacco deposited with the petitioner bank is
valid.

Discussions: The consent of the state to be sued may be given expressly or impliedly. In this
case, Consent to be sued was given impliedly when the State enters into a commercial
contract. When the State enters into a contract, the State is deemed to have divested itself of
the mantle of sovereign immunity and descended to the level of the ordinary individual.
Hence, Funds of public corporations could properly be made the object of a notice of
garnishment.

Rulings: PVTA is also a public corporation with the same attributes, a similar outcome is
attributed. The government has entered with them into a commercial business hence it has
abandoned its sovereign capacity and has stepped down to the level of a corporation.
Therefore, it is subject to rules governing ordinary corporations and in effect can be sued.
Therefore, the petition of PNB La Union is denied. The Supreme Court ruled that the funds
held by PNB is subject for garnishment. Funds of public corporations which can sue and be
sued are not exempt from garnishment. Thus, the writ of execution be imposed immediately.

Palafox v. Ilocos Norte, G.R. No. L-10659, January 31, 1958

Facts:

Sabas Torralba was employed as a truck driver of the provincial government of Ilocos Norte.
While driving his truck, he ran over Proceto Palafox, resulting to the latter’s death.
Sabas was prosecuted for homicide through reckless imprudence to which he pleaded
guilty. The heirs of Palafox instituted a civil case against him and the Province.

Issue:

Can the Province of Ilocos Norte be held liable for the death of Palafox?

Held:

NO. The general rule is that local government units are not liable for negligent acts of its
employees while they are performing governmental functions or duties. In this case, the
driver was involved in the construction or maintenance of roads which was a
governmental duty. Therefore, the province cannot be held liable for his negligent act.
However tragic and deplorable it may be, the death of Palafox imposed on the province
no duty to pay monetary consideration. (Palafox vs. Province of Ilocos Norte, 102 Phil
1186)