DFA VS.

NLRC
G.R. No. 113191, September 18 1996
FACTS:
Private respondent NLRC initiated a case against for an alleged illegal dismissal by ADB and the latter's violation of the
"labor-only" contracting law. Two summonses were served, one sent directly to the ADB and the other through the
Department of Foreign Affairs (DFA), both with a copy of the complaint. Forthwith, the ADB and the DFA notified
respondent Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal
process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55
of the Agreement Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44
of the Agreement Between The Bank And The Government Of The Philippines Regarding The Bank's
Headquarters (the "Headquarters Agreement").
The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic
immunity from suit and rendered his decision declaring the complainant as a regular employee of respondent ADB and
his termination was illegal.
The ADB did not appeal the decision but instead, the DFA referred the matter to the National Labor Relations
Commission seeking a formal vacation of the void judgment.
Dissatisfied by the NLRCs response, the DFA lodged the instant petition for certiorari.
ISSUE:
Whether or not ADB enjoys a diplomatic immunity from suit.
HELD:
The petition for certiorari is granted, and the decision of the Labor Arbiter is vacated for being null and void. The
provisions stipulated by both the Charter and Headquarters Agreement should be able, nay well enough, to establish
that, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and
underwriting of securities, the ADB enjoys immunity from legal process of every form. The Banks officers, on their part,
enjoy immunity in respect of all acts performed by them in their official capacity. The Charter and the Headquarters
Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the
Philippine government which must be respected. Being an international organization that has been extended a
diplomatic status, the ADB is independent of the municipal law.

MUNICIPALITY OF SAN FERNANDO VS. JUDGE FIRME
G.R. No. L-52179, April 8 1991, 195 SCRA 692
FACTS:
On December 16, 1965, a collision occurred involving a passenger jeepney driven by Bernardo Balagot and owned by
the Estate of MacarioNieveras, a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino Velasquez
and a dump truck of the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to the impact, several
passengers of the jeepney including LaureanoBania Sr. died as a result of the injuries they sustained and four (4)
others suffered varying degrees of physical injuries.
The private respondents instituted a compliant for damages against the Estate of MacarioNieveras and Bernardo
Balagot, owner and driver, respectively, of the passenger jeepney in the Court of First Instance of La Union, Branch I,
San Fernando, La Union. However, the aforesaid defendants filed a Third Party Complaint against the petitioner and the
driver of a dump truck of petitioner.
Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent judge. The private
respondents amended the complaint wherein the petitioner and its regular employee, Alfredo Bislig were impleaded for
the first time as defendants.
Petitioner filed its answer and raised affirmative defenses such as lack of cause of action, non-suability of the State,
prescription of cause of action and the negligence of the owner and driver of the passenger jeepney as the proximate
cause of the collision.
ISSUE:
Whether or not the Municipality of San Fernando, La Union can enjoy the immunity from suit.
HELD:
The Court granted the petition and the decision of the respondent court is hereby modified, absolving the petitioner
municipality of any liability in favor of private respondents. Article XVI, Section 3 of the Constitution expressly provides
that "the State may not be sued without its consent." It is a general rule that the State may not be sued except when it
gives consent to be sued. Consent takes the form of express or implied consent.
Express consent may be embodied in a general law or a special law. A special law may be passed to enable a person
to sue the government for an alleged quasi-delict. While implied consent occurs when the government enters into
business contracts, thereby descending to the level of the other contracting party, and also when the State files a
complaint, thus opening itself to a counterclaim.
Municipal corporations, like provinces and cities, are agencies of the State when they are engaged in governmental
functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the
performance of such functions because their charter provided that they can sue and be sued. The municipal
corporations are suable because their charters grant them the competence to sue and be sued. Nevertheless, they are
generally not liable for torts committed by them in the discharge of governmental functions and can be held answerable
only if it can be shown that they were acting in a proprietary capacity.
In the absence of any evidence to the contrary, the regularity of the performance of official duty is presumed pursuant to
Section 3(m) of Rule 131 of the Revised Rules of Court.
Therefore, the Court ruled that the driver of the dump truck was performing duties or tasks pertaining to his office. The
municipality cannot be held liable for the torts committed by its regular employee, who was then engaged in the
discharge of governmental functions. Thus, the death of the passenger tragic and deplorable though it may be
imposed on the municipality no duty to pay monetary compensation.

FAROLAN VS. COURT OF TAX APPEALS
G.R. No. 42204, January 21 1993, 217 SCRA 298
FACTS:
On January 30, 1972, the vessel S/S "Pacific Hawk" arrived at the Port of Manila carrying, among others, 80 bales of
screen net consigned to BagongBuhay Trading (BagongBuhay). Said importation was declared through a customs
broker which was classified under Tariff Heading No. 39.06-B of the Tariff and Customs Code at 35% ad valorem. Since
the customs examiner found the subject shipment reflective of the declaration, BagongBuhay paid the duties and taxes
due which was paid through the Bank of Asia. Thereafter, the customs appraiser made a return of duty.
Acting on the strength of an information that the shipment consisted of "mosquito net" made of nylon, the Office of the
Collector of Customs ordered a re-examination of the shipment which revealed that the shipment consisted of 80 bales
of screen net, each bale containing 20 rolls or a total of 1,600 rolls. The value of the shipment was re-appraised.
Furthermore, the Collector of Customs determined the subject shipment as made of synthetic (polyethylene) woven
fabric classifiable under Tariff Heading No. 51.04-B at 100% ad valorem. Thus, BagongBuhay Trading was assessed
P272,600.00 as duties and taxes due on the shipment in question. Since the shipment was also misdeclared as to
quantity and value, the Collector of Customs forfeited the subject shipment in favor of the government which was also
affirmed by the Commissioner of Customs.
However, the Court of Tax Appeals reversed the decision of the Commissioner declaring that the latter erred in imputing
fraud upon private respondent because fraud is never presumed and thus concluded that the forfeiture of the articles in
question was not in accordance with law. As a consequence, several motions were filed and private respondent
demands that the Bureau of Customs be ordered to pay for damages
ISSUE:
Whether or not the Collector of Customs may be held liable.
HELD:
The Bureau of Customs cannot be held liable for actual damages that the private respondent sustained with regard to
its goods. Otherwise, to permit private respondent's claim to prosper would violate the doctrine of sovereign immunity.
Since it demands that the Commissioner of Customs be ordered to pay for actual damages it sustained, for which
ultimately liability will fall on the government, it is obvious that this case has been converted technically into a suit
against the state.
On this point, the political doctrine that "the state may not be sued without its consent," categorically applies. As an
unincorporated government agency without any separate juridical personality of its own, the Bureau of Customs enjoys
immunity from suit. Along with the Bureau of Internal Revenue, it is invested with an inherent power of sovereignty,
namely, taxation. As an agency, the Bureau of Customs performs the governmental function of collecting revenues
which is definitely not a proprietary function. Thus, private respondent's claim for damages against the Commissioner of
Customs must fail.

CITY OF ANGELES VS. COURT OF APPEALS
G.R. No. 97882, August 28 1996
FACTS:
In a Deed of Donation dated March 9, 1984, private respondent donated to the City of Angeles, 51 parcels of land
situated in Barrio Pampang, City of Angeles, with an aggregate area of 50,676 square meters, more or less, part of a
bigger area also belonging to private respondent. It was subsequently superseded by a Deed of Donation dated
September 27, 1984 and an Amended Deed of Donation dated November 26, 1984.
On July 19, 1988, petitioners started the construction of a drug rehabilitation center on a portion of the donated land.
Upon learning thereof, private respondent protested such action for being violative of the terms and conditions of the
amended deed and prejudicial to its interest and to those of its clients and residents. Private respondent also offered
another site for the rehabilitation center. However, petitioners ignored the protest, maintaining that the construction was
not violative of the terms of the donation. The alternative site was rejected because, according to petitioners, the site
was too isolated and had no electric and water facilities.
Private respondent filed a complaint alleging a breach of the conditions imposed in the amended deed of donation and
sought the revocation of the donation and damages, with preliminary injunction and/or temporary restraining order to
halt the construction of the said center. But the construction was already completed by 40%.
ISSUE:
Whether or not petitioner is immune from suit.
HELD:
The Court ruled that public officials are not immune from damages in their personal capacities arising from acts done in
bad faith. In theory, the cost of such demolition, and the reimbursement of the public funds expended in the construction
thereof, should be borne by the officials of the City of Angeles who ordered and directed such construction. Otherwise
stated, a public official may be liable in his personal capacity for whatever damage he may have caused by his act done
with malice and in bad faith or beyond the scope of his authority or jurisdiction. In the instant case, the public officials
concerned deliberately violated the law and persisted in their violations, going so far as attempting to deceive the courts
by their pretended change of purpose and usage for the center, and making a mockery of the judicial system.
Indisputably, said public officials acted beyond the scope of their authority and jurisdiction and with evident bad faith.
However, as noted by the trial court, the petitioners mayor and members of the SangguniangPanlungsod of Angeles
City were sued only in their official capacities, hence, they could not be held personally liable without first giving them
their day in court. Prevailing jurisprudence holding that public officials are personally liable for damages arising from
illegal acts done in bad faith are premised on said officials having been sued both in their official and personal
capacities.

VETERANS MANPOWER AND PROTECTIVE SERVICES, INC. VS. COURT OF APPEALS
G.R. No. 91359, September 25 1992, 214 SCRA 286
FACTS:
Veterans Manpower and Protective Services, Inc. (VMPSI) alleges that the provisions under Section 4 and 17 of
Republic Act No. 5487 or the Private Security Agency Law violate 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.
Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph (g) of the Modifying Regulations on
the Issuance of License to Operate and Private Security Licenses and Specifying Regulations for the Operation of
PADPAO issued by then PC Chief Lt. Gen. Fidel V. Ramos, through Col. Sabas V. Edades, requiring that all private
security agencies/company security forces must register as members of any PADPAO Chapter organized within the
Region where their main offices are located.... As such membership requirement in PADPAO is compulsory in nature, it
allegedly violates legal and constitutional provisions against monopolies, unfair competition and combinations in
restraint of trade.
A Memorandum of Agreement was executed by PADPAO and the PC Chief, which fixed the minimum monthly contract
rate per guard for eight (8) hours of security service per day at P2,255.00 within Metro Manila and P2,215.00 outside of
Metro Manila.
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 in the Memorandum of Agreement dated May
12, 1986.
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. The PC-SUSIA
affirmed the findings and likewise recommended the cancellation of VMPSIs license. As a result, PADPAO refused to
issue a clearance/certificate of membership to VMPSI.
VMPSI made a request letter to the PC Chief to set aside or disregard the findings of PADPAO and consider VMPSIs
application for renewal of its license, even without a certificate of membership from PADPAO.
ISSUE:
Whether or not VMPSIs complaint against the PC Chief and PC-SUSIA is a suit against the State without its consent.
HELD:
Yes. 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, however, since the acts for which the PC Chief and PC-SUSIA are being called
to account in this case, were performed as part of their official duties, without malice, gross negligence, or bad faith, no
recovery may be had against them in their private capacities. Furthermore, the Supreme Court agrees with the Court of
Appeals that the Memorandum of Agreement dated May 12, 1986 does not constitute an implied consent by the State
to be sued. The consent of the State to be sued must emanate from statutory authority, hence, a legislative act, not
from a mere memorandum. Without such consent, the trial court did not acquired jurisdiction over the public
respondents.

WYLIE VS. RARANG
G.R. No. 74135, May 28 1992, 209 SCRA 357
FACTS:
Petitioner M. H. Wylie was the assistant administrative officer while petitioner Capt. James Williams was the
commanding officer of the U. S. Naval Base in Subic Bay, Olongapo City. Private respondent Aurora I. Rarang was an
employee in the office of the Provost Marshal assigned as merchandise control guard.
M. H. Wylie, in his capacity as assistant administrative officer of the U.S. Naval Station supervised the publication of the
"Plan of the Day" (POD) which was published daily by the US Naval Base station. The POD featured important
announcements, necessary precautions, and general matters of interest to military personnel. One of the regular
features of the POD was the "action line inquiry." On February 3, 1978, the POD made a publication, under the
"NAVSTA ACTION LINE INQUIRY" which mentioned a certain person named Auring who is described as a disgrace
to her division and to the Office of the Provost Marshal.
The private respondent was the only one who was named "Auring" in the Office of the Provost Marshal and was
subsequently proven that it was her being referred to when petitioner M. H. Wylie wrote her a letter of apology for the
"inadvertent" publication. The private respondent the filed an action for damages alleging that the article constituted
false, injurious, and malicious defamation and libel tending to impeach her honesty, virtue and reputation exposing her
to public hatred, contempt and ridicule; and that the libel was published and circulated in the English language and read
by almost all the U. S. Naval Base personnel.
The defendants however contended by filing a motion to dismiss based on the grounds that the defendants M. H. Wylie
and Capt. James Williams acted in the performance of their official functions as officers of the United States Navy and
are, therefore, immune from suit; and the United States Naval Base is an instrumentality of the US government which
cannot be sued without its consent.
ISSUE:
Whether or not the officials of the United States Naval Base are immune from suit.
Whether or not American naval officers who commit a crime or tortious act while discharging official functions are still
covered by the principle of state immunity from suit.
HELD:
The subject article in the US Newsletter POD dated February 3, 1978 mentions a certain "Auring" as ". .a disgrace to
her division and to the Office of the Provost Marshal." The same article explicitly implies that Auring was consuming and
appropriating for herself confiscated items like cigarettes and foodstuffs. There is no question that the Auring alluded to
in the Article was the private respondent as she was the only Auring in the Office of the Provost Marshal. Moreover, as
a result of this article, the private respondent was investigated by her supervisor. Before the article came out, the private
respondent had been the recipient of commendations by her superiors for honesty in the performance of her duties.
It may be argued that Captain James Williams as commanding officer of the naval base is far removed in the chain of
command from the offensive publication and it would be asking too much to hold him responsible for everything which
goes wrong on the base. This may be true as a general rule. In this particular case, however, the records show that the
offensive publication was sent to the commanding officer for approval and he approved it. The factual findings of the two
courts below are based on the records. The petitioners have shown no convincing reasons why our usual respect for
the findings of the trial court and the respondent court should be withheld in this particular case and why their decisions
should be reversed.
Article 2176 of the Civil Code prescribes a civil liability for damages caused by a person's act or omission constituting
fault or negligence, to wit:
Art. 2176. Whoever by act or omission, causes damage to another, there being fault or negligence is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called
a quasi-delict and is governed by the provisions of this Chapter.
"Fault" or "negligence" in this Article covers not only acts "not punishable by law" but also acts criminal in character,
whether intentional or voluntary or negligent."
Moreover, Article 2219(7) of the Civil Code provides that moral damages may be recovered in case of libel, slander or
any other form of defamation. In effect, the offended party in these cases is given the right to receive from the guilty
party moral damages for injury to his feelings and reputation in addition to punitive or exemplary damages.
Indeed the imputation of theft contained in the POD dated February 3, 1978 is a defamation against the character and
reputation of the private respondent. Petitioner Wylie himself admitted that the Office of the Provost Marshal explicitly
recommended the deletion of the name Auring if the article were published. The petitioners, however, were negligent
because under their direction they issued the publication without deleting the name "Auring." Such act or omission is
ultra vires and cannot be part of official duty. It was a tortious act which ridiculed the private respondent. As a result of
the petitioners' act, the private respondent, according to the record, suffered besmirched reputation, serious anxiety,
wounded feelings and social humiliation, specially so, since the article was baseless and false. The petitioners, alone, in
their personal capacities are liable for the damages they caused the private respondent.

REPUBLIC OF THE PHILIPPINES VS. FELICIANO
G.R. No. 70853, March 12 1987, 148 SCRA 424
FACTS:
Respondent Feliciano filed a complaint with the then CFI 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, consisting of four
(4) lots situated in the Barrio of Salvacion, Municipality of Tinambac, Camarines Sur.
Plaintiff alleged:
that he bought the property in question from Victor Gardiola by virtue of a Contract of Sale followed by a Deed of
Absolute Sale;
that Gardiola had acquired the property by purchase from the heirs of Francisco Abrazado whose title to the said
property was evidenced by an informacionposesoria that upon plaintiff's purchase of the property, he took actual
possession of the same, introduced various improvements therein and caused it to be surveyed in July 1952, which
survey was approved by the Director of Lands;
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; 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.
The trial court rendered its decision declaring Lot No. 1 be the private property of the plaintiff, "being covered by a
possessory information title in the name of his predecessor-in-interest" and declaring said lot excluded from the NARRA
settlement reservation, while rest of the property be reverted to the public domain.
After several motions filed, the Solicitor General, on behalf of the Republic of the Philippines filed its opposition,
assailed the 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.
ISSUE:
Whether or not the State is immune from suit.
HELD:
The Court finds the petition meritorious. 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. It is an action
directed against a specific party or parties, and any judgment therein binds only such party or parties. The complaint
filed by plaintiff, the private respondent herein, is directed against the Republic of the Philippines, represented by the
Land Authority, a governmental agency created by Republic Act No. 3844.
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. There is no such showing in the instant
case. Worse, the complaint itself fails to allege the existence of such consent. This is a fatal defect, and on this basis
alone, the complaint should have been dismissed.
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
suasponte at any stage of the proceedings."

MERRITT VS. GOVERNMENT OF THE PHILIPPINE ISLANDS
G.R. No. L-11154, March 21 1916, 34 Phil. 311
FACTS:
Plaintiff was involved in an accident concerning him and a General Hospital ambulance resulting in him being
incapacitated. He sustained severe injuries rendering him unable to return to work. Act No. 2457 was enacted in his
favor which reads:
"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.
"Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for
damages resulting from a collision between his motorcycle and the ambulance of the General Hospital on March
twenty-fifth, nineteen hundred and thirteen;
"Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of damages, if
any , to which the claimant is entitled; and
"Whereas the Director of Public Works and the Attorney-General recommend that an act be passed by the Legislature
authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order that said questions may be
decided: Now, therefore,
"By authority of the United States, be it enacted by the Philippine Legislature, that:
"SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the
Government of the Philippine Islands 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, and the attorney-General of the Philippine Islands is hereby authorized and directed
to appear at the trial on the behalf of the Government of said Islands, to defend said Government at the same.
"SEC. 2. This Act shall take effect on its passage. "Enacted, February 3, 1915."
ISSUE: Whether or not the State is immune from suit.
HELD:
The accident was due to the negligence of the ambulances chauffeur. As the negligence was committed by an agent or
employee of the government involving tort, the inquiry arises whether the government is legally liable for damages. 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. By consenting to be sued, a state simply waives its immunity
from suit. It does not thereby concede its liability or create any cause of action in his favor, or extend his 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. 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 negligence can be presumed on the part of the state in the
organization of branches in the public service and in the appointment of its agents. 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.
FROILAN V. PAN ORIENTAL SHIPPING
UNITED STATES OF AMERICA VS. RUIZ
G.R. No. L-35645, May 22 1985, 136 SCRA 487
FACTS:
The United States of America had a naval base in Subic, Zambales provided under the Military Bases Agreement
between the Philippines and the United States. Sometime in May, 1972, the United States invited the submission of
bids for some projects. Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. But the United
States inform the company that the company did not qualify to 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 and that the projects had been awarded to third parties.
The 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:
Whether or not the US naval base can invoke the state immunity.
HELD:
The 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 imperii. The restrictive application of State immunity is now the rule in the United States, the United
Kingdom and other states in western Europe.
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.

FONTANILLA V. MALIAMAN
REPUBLIC VS. VILLASOR
G.R. No. L-30671, November 28 1973, 54 SCRA 84
FACTS:
On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor of respondents P. J. Kiener Co.,
Ltd., GavinoUnchuan, and International Construction Corporation, and against the petitioner herein, confirming the
arbitration award subject of Special Proceedings.
On June 24, 1969, respondent Honorable Guillermo P. Villasor, issued an Order declaring the aforestated decision of
July 3, 1961 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 respondent 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; 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 and civilian personnel and for
maintenance and operations of the Armed Forces of the Philippines.
Petitioner then alleged that 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."
In the answer filed by respondents, the facts set forth were admitted with the only qualification being that the total award
was in the amount of P2,372,331.40.
ISSUE:
Whether or not the notices of garnishment are null and void.
HELD:
The Republic of the Philippines did right in filing this certiorari and prohibition proceeding. What was done by
respondent Judge is not in conformity with the dictates of the Constitution.
It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well as
its government is immune from suit unless it gives its consent. It is readily understandable why it must be so. In the
classic formulation of Holmes: "A sovereign is exempt from suit, not because of any formal conception or obsolete
theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the
law on which the right depends." Sociological jurisprudence supplies an answer not dissimilar.
This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein
expressly provided: "The State may not be sued without its consent." A corollary, both dictated by logic and sound
sense from such a basic concept is that public funds cannot be the object of a garnishment proceeding even if the
consent to be sued had been previously granted and the state liability adjudged.
MUNICIPALITY OF SAN MIGUEL V. FERNANDEZ
MUNICIPALITY OF MAKATI V. CA
MINISTERIO VS. CFI OF CEBU
G.R. No. L-31635, August 31 1971, 40 SCRA 464
FACTS:
Petitioners as plaintiffs in a complaint filed with the Court of First Instance of Cebu, sought the payment of just
compensation for a registered lot, alleging that in 1927 the National Government through its authorized representatives
took physical and material possession of it and used it for the widening of the Gorordo Avenue, a national road, Cebu
City, without paying just compensation and without any agreement, either written or verbal. There was an allegation of
repeated demands for the payment of its price or return of its possession, but defendants Public Highway
Commissioner and the Auditor General refused to restore its possession. It was further alleged that the appraisal
committee of the City of Cebu approved Resolution No. 90, appraising the reasonable and just price of Lot No. 647-B at
P50.00 per square meter or a total price of P52,250.00. Thereafter, the complaint was amended on June 30, 1966 in
the sense that the remedy prayed for was in the alternative, either the restoration of possession or the payment of the
just compensation.
Respondents, through the then Solicitor General, the principal defense relied upon was that the suit in reality was one
against the government and therefore should be dismissed, no consent having been shown.
ISSUE:
Whether or not plaintiffs can sue defendants Public Highway Commissioner and the Auditor General, in their capacity
as public officials without thereby violating the principle of government immunity from suit without its consent.
HELD:
Yes. The lower court decision is reversed so that the court may proceed with the complaint and determine the
compensation to which petitioners are entitled.
In Alfonso v. Pasay City, it noted that: "neither convenient nor feasible because it is now and has been used for road
purposes." The only relief would be for the government "to make due compensation," It was made clear in such decision
that compensation should have been made "as far back as the date of the taking." Does it result, therefore, that
petitioners would be absolutely remediless since recovery of possession is in effect barred by the above decision? If the
constitutional mandate that the owner be compensated for property taken for public use were to be respected, as it
should, then a suit of this character should not be summarily dismissed. The doctrine of governmental immunity from
suit cannot serve as an instrument for perpetrating an injustice on a citizen. Had the government followed the procedure
indicated by the governing law at the time, a complaint would have been filed by it, and only upon payment of the
compensation fixed by the judgment, or after tender to the party entitled to such payment of the amount fixed, may it
"have the right to enter in and upon the land so condemned" to appropriate the same to the public use defined in the
judgment."
If there were an observance of procedural regularity, petitioners would not be in the sad plaint they are now. It is
unthinkable then that precisely because there was a failure to abide by what the law requires, the government would
stand to benefit. It is just as important, if not more so, that there be fidelity to legal norms on the part of officialdom if the
rule of law were to be maintained. 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.