William Reagan vs Commissioner of Internal

HELD: No. The Philippines is independent and

Revenue

sovereign, its authority may be exercised over

30 SCRA 968 Political Law Sovereignty

William Reagan is a US citizen assigned at
Clark

Air

Base

to

help

provide

technical

assistance to the US Air Force (USAF). In April

1960 Reagan imported a 1960 Cadillac car
valued at $6,443.83. Two months later, he got
permission to sell the same car provided that
he would sell the car to a US citizen or a
member of the USAF. He sold it to Willie
Johnson, Jr. for $6,600.00 as shown by a Bill of
Sale. The sale took place within Clark Air Base.
As

result

of

this

transaction,

the

Commissioner of Internal Revenue calculated

the net taxable income of Reagan to be
at P17,912.34 and that his income tax would
be P2,797.00. Reagan paid the assessed tax
but at the same time he sought for a refund
because he claims that he is exempt. Reagan
claims that the sale took place in foreign soil
since Clark Air Base, in legal contemplation is a
base outside the Philippines. Reagan also cited

its entire domain. There is no portion thereof

This is a petition seeking to nullify the

that is beyond its power. Within its limits, its

Philippine ratification of the World Trade

decrees

are

paramount.

Its

supreme,
laws

its

govern

commands
therein,

and

Organization (WTO) Agreement. Petitioners

everyone to whom it applies must submit to its

question the concurrence of herein

terms. That is the extent of its jurisdiction, both

respondents acting in their capacities as

territorial and personal. On the other hand,

there

is

nothing

in

the

Military

Bases

Senators via signing the said agreement.

Agreement that lends support to Reagans

assertion. The Base has not become foreign

The WTO opens access to foreign markets,

soil or territory. This countrys jurisdictional

especially its major trading partners, through

rights therein, certainly not excluding the

power

to

Philippines

tax,

have

merely

been

consents

preserved,
that

the

the
US

exercise jurisdiction in certain cases this is

just

matter

of

comity,

courtesy

is employed by the USAF and his income is

derived from US source but the income derived
from the sale is not of US source hence
taxable.
TANADA v. ANGARA

the reduction of tariffs on its exports,

particularly agricultural and industrial products.
Thus, provides new opportunities for the

and

expediency. It is likewise noted that he indeed

that under the Military Bases Agreement, he,

by nature of his employment, is exempt from

Facts :

service sector cost and uncertainty associated

with exporting and more investment in the
country. These are the predicted benefits as
reflected in the agreement and as viewed by
the signatory Senators, a free market
espoused by WTO.

October 26, 2012 Leave a comment

Philippine taxation.

Petitioners on the other hand viewed the WTO

272 SCRA 18, May 2, 1997

ISSUE: Is the sale considered done in a foreign

agreement as one that limits, restricts and

soil not subject to Philippine income tax?

impair Philippine economic sovereignty and

legislative power. That the Filipino First policy

performed in good faith. A treaty is not a mere

alternative is isolation, stagnation if not

of the Constitution was taken for granted as it

moral obligation but creates a legally binding

economic self-destruction. Thus, the people be

gives foreign trading intervention.

obligation on the parties.

allowed, through their duly elected officers,

Through WTO the sovereignty of the state

make their free choice.

Issue : Whether or not there has been a grave

cannot in fact and reality be considered as

Petition is DISMISSED for lack of merit.

abuse of discretion amounting to lack or excess

absolute because it is a regulation of

REPUBLIC VS. VILLASOR

of jurisdiction on the part of the Senate in

commercial relations among nations. Such as

giving its concurrence of the said WTO

when Philippines joined the United Nations

agreement.

(UN) it consented to restrict its sovereignty

right under the concept of sovereignty as

Held:
In its Declaration of Principles and state
policies, the Constitution adopts the generally
accepted principles of international law as part
of the law of the land, and adheres to the
policy of peace, equality, justice, freedom,
cooperation and amity , with all nations. By the
doctrine of incorporation, the country is bound
by generally accepted principles of
international law, which are considered
automatically part of our own laws. Pacta sunt
servanda international agreements must be

autolimitation. What Senate did was a valid

exercise of authority. As to determine whether

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., Gavino
Unchuan,

and

International

Construction

such exercise is wise, beneficial or viable is

Corporation, and against the petitioner herein,

outside the realm of judicial inquiry and review.

Special Proceedings.

confirming the arbitration award subject of

The act of signing the said agreement is not a

legislative restriction as WTO allows withdrawal
of membership should this be the political
desire of a member. Also, it should not be

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

viewed as a limitation of economic sovereignty.

WTO remains as the only viable structure for
multilateral trading and the veritable forum for

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

the development of international trade law. Its

notices

of garnishment with severalBanks,

specially on the `monies due the Armed Forces

HELD:

of the Philippines in the form of deposits,

The Republic of the Philippines did right in filing

sufficient to cover the amount mentioned in

this certiorari and prohibition proceeding. What

the said Writ of Execution; the Philippine

was done by respondent Judge is not in

Veterans Bank received the same notice of

conformity

garnishment. The funds of the Armed Forces of

Constitution.

with

the

dictates

of

the

the Philippines on deposit with the Banks,

particularly, with the Philippine Veterans Bank

It

and

constitutionalism

the

Philippine National

their branches are

public

Bank[or]

fundamental
flowing

postulate
from

the

of

juristic

duly

concept of sovereignty that the state as well as

appropriated and allocated for the payment of

its government is immune from suit unless it

pensions of retirees, pay and allowances of

gives its consent. It is readily understandable

military

why

and civilian

funds

is

personnel and

for

it

must

be

so.
"A

In

the

maintenance and operations of the Armed

classicformulation of Holmes:

Forces of the Philippines.

is exempt from suit, not because of any formal

sovereign

conception or obsolete theory, but on the

logical and practical ground that there can be
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

no legal right as against the authority that

makes the law on which the right depends."
Sociological jurisprudence supplies an answer
not dissimilar.

Forces of the Philippines, hence, the Alias Writ

of Execution and notices of garnishment issued
pursuant thereto are null and void."

This fundamental postulate underlying the

1935 Constitution is now made explicit in the
revised charter. It is therein expressly provided:

and sound sense from such a basic concept is

In the answer filed by respondents, the facts

that public funds cannot be the object of a

set

only

garnishment proceeding even if the consent to

qualification being that the total award was in

be sued had been previously granted and the

the amount of P2,372,331.40.

state liability adjudged.

admitted

with

the

ISSUE:
Whether or not the notices of garnishment are
null and void.

What are the various forms of state immunity

from suit?

"The State may not be sued without its

consent." A corollary, both dictated by logic

were

The rule that a state may not be sued without

its consent is embodied in Section 3, Article XVI
of the 1987 Constitution and has been an
established principle that antedates this
Constitution.27 It is as well a universally
recognized principle of international law that
exempts a state and its organs from the
jurisdiction of another state.28 The principle is
based on the very essence of sovereignty, and
on the practical ground that there can be no
legal right as against the authority that makes
the law on which the right depends.29 It also
rests on reasons of public policy that public
service would be hindered, and the public
endangered, if the sovereign authority could be
subjected to law suits at the instance of every
citizen and, consequently, controlled in the
uses and dispositions of the means required for
the proper administration of the government.30

of

execution against the properties of the Armed

forth

TESDA, as an agency of the State, cannot be

sued without its consent.
TESDA, as an agency of the State, cannot be
sued without its consent.

The proscribed suit that the state immunity

principle covers takes on various forms,
namely:
a suit against the Republic by name;
a suit against an unincorporated government
agency;
a suit against a government agency covered by
a charter with respect to the agencys
performance of governmental functions;

and a suit that on its face is against a

government officer, but where the ultimate
liability will fall on the government.

In the present case, the writ of attachment

was issued against a government agency
covered by its own charter. As discussed
above, TESDA performs governmental
functions, and the issuance of certifications is a
task within its function of developing and
establishing a system of skills standardization,
testing, and certification in the country. From
the perspective of this function, the core
reason for the existence of state immunity
applies i.e., the public policy reason that the
performance of governmental function cannot
be hindered or delayed by suits, nor can these
suits control the use and disposition of the
means for the performance of governmental
functions. In Providence Washington Insurance
Co. v. Republic of the Philippines,31 we said:
[A] continued adherence to the doctrine of nonsuability is not to be deplored for as against
the inconvenience that may be caused private
parties, the loss of governmental efficiency and
the obstacle to the performance of its
multifarious functions are far greater if such a
fundamental principle were abandoned and the
availability of judicial remedy were not thus
restricted. With the well known propensity on
the part of our people to go to court, at the
least provocation, the loss of time and energy
required to defend against law suits, in the
absence of such a basic principle that
constitutes such an effective obstacle, could
very well be imagined.
PROVI argues that TESDA can be sued because
it has effectively waived its immunity when it
entered into a contract with PROVI for a

commercial purpose. According to PROVI, since

the purpose of its contract with TESDA is to
provide identification PVC cards with security
seal which TESDA will thereafter sell to TESDA
trainees, TESDA thereby engages in
commercial transactions not incidental to its
governmental functions.

the Philippines cannot be sued without its

TESDAs response to this position is to point

out that it is not engaged in business, and
there is nothing in the records to show that its
purchase of the PVC cards from PROVI is for a
business purpose. While TESDA admits that it
will charge the trainees with a fee for the PVC
cards, it claims that this fee is only to recover
their costs and is not intended for profit.

filed a complaint with the Court of First

consent.

Prior to this appeal, respondent Pablo Feliciano

Instance 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 lots. The
trial court rendered a decision declaring Lot No.
1 to be the private property of Feliciano and
the rest of the property, Lots 2, 3 and 4,
reverted to the public domain.

SECOND DIVISION
G.R. No. 155504
June 26, 2009
PROFESSIONAL VIDEO, INC., Petitioner,
vs.
TECHNICAL EDUCATION AND SKILLS
DEVELOPMENT AUTHORITY, Respondent.

The trial court reopened the case due to the

filing of a motion to intervene and to set aside
the decision of the trial court by 86 settlers,
alleging that they had been in possession of
the land for more than 20 years under claim of
ownership. The trial court ordered the settlers

Republic vs Feliciano

to present their evidence but they did not

appear at the day of presentation of evidence.

doctrine of non-suability of the State

Feliciano, on the other hand, presented

additional evidence. Thereafter, the case was

Facts:

submitted for decision and the trial court ruled

in favor of Feliciano.

The appeal was filed by 86 settlers of Barrio of

Salvacion, representing the Republic of the
Philippines to dismiss the complaint filed by
Feliciano, on the ground that the Republic of

The settlers immediately filed a motion for

courts sua sponte at any stage of the

reconsideration. The case was reopened to

proceedings.

allow them to present their evidence. But

The complaint is clearly a suit against the

before this motion was acted upon, Feliciano

State, which under settled jurisprudence is not

filed a motion for execution with the Appellate

permitted, except upon a showing that the

Waiver of immunity, being a derogation of

State has consented to be sued, either

sovereignty, will not be inferred lightly. but

expressly or by implication through the use of

must be construed in strictissimi juris (of

statutory language too plain to be

strictest right). Moreover, the Proclamation is

misinterpreted. There is no such showing in the

The settlers filed a motion to dismiss on the

not a legislative act. The consent of the State

instant case. Worse, the complaint itself fails to

ground that the Republic of the Philippines

to be sued must emanate from statutory

allege the existence of such consent.

cannot be sued without its consent and hence

authority. Waiver of State immunity can only be

the action cannot prosper. The motion was

made by an act of the legislative body.

Court but it was denied.

opposed by Feliciano.
Ruling/s:
No. The doctrine of non-suability of the State
Issue/s:

has proper application in this case. The plaintiff

has impleaded the Republic of the Philippines

Whether or not the state can be sued for

as defendant in an action for recovery of

recovery and possession of a parcel of land.

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

Discussions:
A suit against the State, under settled
jurisprudence is not permitted, except upon a
showing that the State has consented to be
sued, either expressly or by implication
through the use of statutory language too plain
to be misinterpreted. It may be invoked by the

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.

PNB v. CIRFacts:
Petitioners motion to quash a notice of
garnishment was denied for lack of merit. What
was sought to be garnished was the money
of the People's Homesite and Housing
Corporation deposited at petitioner's branch in
Quezon City, to satisfy a decision of
respondentCourt which had become final
and executory. A writ of execution in favor of
private respondent Gabriel V. Manansala had
previouslybeen issued. He was the counsel of
the prevailing party, the United Homesite
Employees and Laborers Association. The
validity of theorder assailed is challenged on
two grounds: (1) that the appointment
of respondent Gilbert P. Lorenzo as authorized
deputy sheriff toserve the writ of execution was
contrary to law and (2) that the funds subject
of the garnishment "may be public
in character."The order of August 26, 1970 of
respondent Court denying the motion to quash,
subject of this certiorari proceeding, reads as
follows:"The Philippine National Bank moves to
quash the notice of garnishment served upon
its branch in Quezon City by the
authorizeddeputy sheriff of this Court. It
contends that the service of the notice by the
authorized deputy sheriff of the court
contravenes Section11 of Commonwealth Act
No. 105, as amended which reads:" 'All writs
and processes issued by the Court shall
be served and executedfree of charge by

provincial or city sheriffs, or by any person

authorized by this Court, in the same manner
as writs and processes of Courts of First
Instance.' Following the law, the Bank argues
that it is the Sheriff of Quezon City, and not the
Clerk of this Court who isits Ex-Officio Sheriff,
that has the authority to serve the notice of
garnishment, and that the actual service by the
latter officer of saidnotice is therefore not
in order. The Court finds no merit in
this argument. Republic Act No. 4201 has,
since June 19, 1965, alreadyrepealed
Commonwealth Act No. 103, and under this
law, it is now the Clerk of this Court that is at
the same time the Ex-OfficioSheriff. As such
Ex-Officio Sheriff, the Clerk of this Court has
therefore the authority to issue writs of
execution and notices of garnishment in an
area encompassing the whole of the country,
including Quezon City, since his area of
authority is coterminous withthat of the Court
itself, which is national in nature. ... At this
stage, the Court notes from the record that the
appeal to the SupremeCourt by individual
employees of PHHC which questions the award
of attorney's fees to Atty. Gabriel V. Manansala,
has already beendismissed and that the same
became final and executory on August 9, 1970.
There is no longer any reason, therefore, for
withholdingaction in this case. [Wherefore], the
motion to quash filed by the Philippine National
Bank is denied for lack of merit. The said Bank
istherefore ordered to comply within five days
from receipt with the 'notice of Garnishment'
dated May 6, 1970."
5
There was a motionfor reconsideration filed by
petitioner, but in a resolution dated September
22, 1970, it was denied. Hence, this certiorari
petition.
Issue:
WON the funds mentioned may be garnished
Ruling:
No
Rationale:
National Shipyard and Steel Corporation v. court of
Industrial Relations
6

is squarely in point. As was explicitly stated in

the opinion of the then Justice, later Chief
Justice, Concepcion: "The allegation to the
effect that the funds of the NASSCO are public
funds of thegovernment, and that, as such,
the same may not be garnished, attached
or levied upon, is untenable for, as a
government owned andcontrolled corporation.
the NASSCO has a personality of its own,
distinct and separate from that of the
Government. It has pursuant toSection 2 of
Executive Order No. 356, dated October 23,
1950 ..., pursuant to which the NASSCO has
been established 'all thepowers of a
corporation under the Corporation Law ...'
Accordingly, it may sue and be sued and may
be subjected to court processes just like any
other corporation (Section 13, Act No. 1459), as
amended."In a 1941 decision,
Manila Hotel Employees Association v. Manila
Hotel Company
,
8
this Court, through Justice Ozaeta, held: "On
theother hand, it is well settled that when the
government enters into commercial business, it
abandons its sovereign capacity and is to
betreated like any other corporation. (Bank of
the United States v. Planters' Bank,
9
Wheat, 904, 6 L.ed. 244). By engaging in a
particularbusiness thru the instrumentality of a
corporation, the governmnent divests itself pro
hac vice of its sovereign character, so as
to renderthe corporation subject to the rules of
law governing private corporations."Both the
Palacio and the Commissioner of Public
Highways decisions, insofar as they reiterate
the doctrine that one of the coronaries of the
fundamental concept of non-suability is that
governmental funds are immune
from garnishment. It is an entirely different
matter if,according to Justice
Sanchez in Ramos v. Court of Industrial Relations
, the office or entity is "possessed of a separate
and distinct corporate existence." Then it can

sue and be sued. Thereafter, its funds may be

levied upon or garnished.
1.

AIR TRANSPORTATION OFFICE VS

SPOUSES DAVID AND ELISEA RAMOS
GR. NO. 159402

FACTS:Spouses David and Elisea Ramos

(respondents) discovered that a portion of their
land registered under Transfer Certificate of
Title No. T-58894 of the Baguio City land
records with an area of 985 square meters,
more or less, was being used as part of the
runway and running shoulder of
the Loakan Airport being operated by petitioner
Air Transportation Office (ATO). On August 11,
1995, the respondents agreed after
negotiations to convey the affected portion by
deed of sale to the ATO in consideration of the
amount ofP778,150.00. However, the ATO
failed to pay despite repeated verbal and
written demands.

Thus, on April 29, 1998, the

respondents filed an action for collection
against the ATO and some of its officials in the
RTC (docketed as Civil Case No. 4017-R and
entitled Spouses David and Elisea Ramos v. Air

of P778,150.00 being the value

of the parcel of land
appropriated by the defendant
ATO as embodied in the Deed
of Sale, plus an annual interest
of 12% from August 11, 1995,
the date of the Deed of Sale
until fully paid; (2) The amount
of P150,000.00 by way of moral
damages and P150,000.00 as
exemplary damages; (3) the
amount of P50,000.00 by way
of attorneys fees
plus P15,000.00 representing
the 10, more or less, court
appearances of plaintiffs
counsel; (4) The costs of this
suit.

Transportation Office, Capt. PanfiloVillaruel,

Gen. Carlos Tanega, and Mr. Cesar de Jesus).

In their answer, the ATO and its codefendants invoked as an affirmative defense
the issuance of Proclamation No. 1358,
whereby President Marcos had reserved certain
parcels of land that included the respondents
affected portion for use of the Loakan Airport.
They asserted that the RTC had no jurisdiction
to entertain the action without the States

Hence, this appeal by petition for

review on certiorari.

ISSUE:Whether or not the Air Transportation

Office can be sued without the States consent.

Should the doctrine of sovereignty immunity or

non-suability of the State be extended to the
ATO?

consent considering that the deed of sale had

been entered into in the performance of
governmental functions.

In due course, the ATO appealed to the CA,

which affirmed the RTCs decision on May 14,

On November 10, 1998, the RTC denied

2003;

the ATOs motion for a preliminary hearing of

the affirmative defense.
Subsequently, February 21, 2001, the RTC
rendered its decision on the merits,
[4]

disposing:

WHEREFORE, the judgment is

rendered ORDERING the
defendant Air Transportation
Office to pay the plaintiffs
DAVID and ELISEA RAMOS the
following: (1) The amount

IN VIEW OF ALL THE

FOREGOING, the appealed
decision is hereby AFFIRMED,
with MODIFICATION that the
awarded cost therein
is deleted, while that of moral
and exemplary damages is
reduced to P30,000.00 each,
and attorneys fees is lowered
to P10,000.00.
No cost.
SO ORDERED.

HELD:In our view, the CA thereby correctly

appreciated the juridical character of the ATO
as an agency of the Government not
performing a purely governmental or sovereign
function, but was instead involved in the
management and maintenance of
the Loakan Airport, an activity that was not the
exclusive prerogative of the State in its
sovereign capacity. Hence, the ATO had no
claim to the States immunity from suit.

We further observe the doctrine of sovereign

immunity cannot be successfully invoked to
defeat a valid claim for compensation arising
from the taking without just compensation and
without the proper expropriation proceedings
being first resorted to of the plaintiffs property

Private respondent General Assembly

of the Blind (GABI) were allegedly awarded a
verbal contract of lease in Rizal Park by the
National
Parks
Development
Committee
(NPDC).
However,
this
verbal
contract
accommodation was unclear because there
was no document or instrument involved.

With the change of government, the

new Chairman of NPDC, petitioner Amado J.
Lansang, sought to clean up Rizal Park and
terminated the said verbal agreement with
GABI and demanded that they vacate the area.

The notice was signed by the president

of GABI, private respondent Jose Iglesias,
allegedly to indicate his conformity to its
contents but later on claimed that he was
deceived into signing the notice.

Lastly, the issue of whether or not the

ATO could be sued without the States consent
has been rendered moot by the passage of
Republic Act No. 9497, otherwise known as
the Civil Aviation Authority Act of 2008. Under
its Transitory Provisions, R.A. No. 9497
established in place of the ATO the Civil
Aviation Authority of the Philippines (CAAP),
which thereby assumed all of the ATOs powers,
duties and rights, assets, real and personal

On the day of the supposed eviction,

GABI filed an action for damages and injunction
in the RTC against the petitioner but it was
dismissed, ruling that the complaint was
actually directed against the state which could
not be sued without its consent.

On appeal, the Court of Appeals

reversed the decision of the trial court and
ruled that a government official being sued in
his official capacity is not enough to protest
such official from liability for acts done without
or in excess of his authority.
Issues:
Whether or not private respondents'
complaint against petitioner Lansang, as
Chairman of NPDC, is in effect a suit against
the state which cannot be sued without its
consent.

properties, funds, and revenues.

WHEREFORE, the Court denies the

petition for review on certiorari, and affirms the
decision promulgated by the Court of Appeals.
Lansang vs. Court of Appeals (Consti1)
Amado J. Lansang, petitioner, vs. Court of
Appeals, General Assembly of the Blind, Inc.,
and Jose Iglesias, respondents.

February 23, 2000

Quisumbing, J:

Facts:

The doctrine of state immunity from

suit applies to complaints filed against public
officials for acts done in the performance of
their duties. The rule is that the suit must be
regarded as one against the state where
satisfaction of the judgment against the public
official concerned will require the state itself to
perform a positive act.

Lansang was sued not in his

capacity as NPDC Chairman but in his personal
capacity. It is evident from the complaint that
Lansang was sued allegedly for having
personal motives in ordering the ejectment of
GABI from Rizal Park.

There was no evidence of abuse of

authority.

Shell Philippines Exploration vs. Efren

Jalos, et. Al. G.R. No. 179918,
September 8,2010

ABAD, J.:

Facts:

In
1990,
Shell
and
the
Philippine government entered into
Service Contract 38 for the exploration
and
extraction
of
petroleum in
northwestern Palawan. After two years,
Shell discovered Natural Gas in the
Camago-Malampaya and pursued its
development of the well under the
Malampaya Natural Gas project. This
led to the construction of pipelines
from Shells production platform to its
gas processing palnt in Batangas that
spanned 504 kilometers and crossed
the Oriental Mindoro Sea.

In 2003, fishermen Efren Jalos,

Joven Campang, Arnaldo Mijares, and

Whether or not petitioner Lansang

abused his authority in ordering the ejectment
of private respondents from Rizal Park.
Held:
No, the complaint is not a suit against
the state.
No,
authority.
Ratio:

Lansang

did

not

abuse

his

75 others filed a complaint for

damages before the Pinamalayan
Mindoro regional trial court, saying that
due to the construction of the pipeline,
the sea became polluted and their
income per month fell from P4,848 to
P573.

Shell Philippines moved for

dismissal of the complaint on the
grounds that first, 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.
Second, Shell
claimed that they could not be sued,
citing state immunity because they are
agents of the Philippine government
under Service Contract 38 in the
development
of
the
Malampaya
project. Third, the complaint failed to
state a cause of action since it did not
specify any actionable wrong or
particular act or omission on Shells
part that could have caused the
alleged injury to Jalos, et al.
RTC's Decision: In 2004, RTC
dismissed the complaint 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. Jalos, Et/ al assailed the RTC's
order through a petition for certiorari

before the court of appeals (CA).

CA's Decision: CA reversed the

order of the RTC and upheld the
jurisdiction of the RTC over the action.
It said that shell was not being sued for
committing
pollution,
but
for
constructing and operating a natural
gas pipeline that caused fish decline
and considerable reduction in the
fishermens income. The claim for
damages was based on a quasi-delict
which has jurisdiction. The CA also
rejected Shells assertion that the suit
was actually against the State. It
observed that the government was not
even impleaded as party defendant. It
gave short shrift to Shells insistence
that, under the service contract, the
government was solidarily liable with
Shell for damages caused to third
persons. Besides, the State should be
deemed to have given its consent to be
sued when it entered into the contract
with Shell. 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. Failure to observe
such obligation resulted in a violation
of the fishermens rights and thus gave
rise to a cause of action for damages.
Finally, the CA held that Jalos, et al
substantially
complied
with
the
technical requirements for filing the
action.

Issues:

(1) WON the complaint is a pollution

case that falls within the primary
jurisdiction of the PAB; (2) WON the
complaint sufficiently alleges a cause
of action against Shell; and (3) WON
the suit is actually against the State
and is barred under the doctrine of
state immunity.

Ruling:

The Supreme Court has ruled

that fishermen from Northwestern
Palawan could sue Shell Philippines
Exploration
for
possible
physical
disruption of marine environment
resulting in the pollution and decline of
their livelihood.

There was sufficient cause of

action. All the elements of a cause of
action
were
present.
First,
the
fishermen undoubtedly had the right to
the preferential use of marine and
fishing resources which is guaranteed
by no less than the Constitution.
Second, Shell had the correlative duty
to refrain from acts or omissions that
could impair the fishermen use and
enjoyment of the bounties of the seas.
Lastly,
Shells
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 the fishermen. A valid
judgement can be made in favor of the
fishermen if the said construction and
operation indeed caused fish decline

that led to their loss of income.

However, SC said the fishermen should
have filed their complaint with the
Pollution Adjudication Board (PAB), over
which it has primary jurisdiction over
pollution cases and actions for related
damages.

10

The
Supreme
Court
also
pointed out that Shell has no state
immunity because it was not an agent
of the Philippine government, but a
provider of services, technology and
financing for the Malampaya Natural
Gas Project. It is not immune from suit
and may be sued for claims even
without the States consent. Notably,
the
Philippine
government
itself
recognized that Shell could be sued in
relation to the project. This is evident in
the stipulations agreed upon by the
parties under Service Contract 38
committed only to develop and
manage petroleum operations on
behalf of the State. The state itself
acknowledged the suability of Shell
when it was stated in the Service
Contract that payments of claims and
damages pursuant to a judgement
against Shell can be deducted from its
gross proceeds, the state will not be
required to perform any additional
affirmative act to satisfy such a
judgment.
WHEREFORE,
the
Court
GRANTS the petition and REVERSES the
decision of the Court of Appeals in CAG.R. CV 82404 dated November 20,
2006. Respondent Efren Jalos, et als
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.
DOH vs PHIL. PHARMAWEALTH INC. Case Digest

THE DEPARTMENT OF HEALTH et al. v. PHIL.

PHARMAWEALTH, INC.
518 SCRA 240 (2007),
(Carpio Morales, J.)

SECOND

DIVISION

Defense of state immunity does not apply

where the public official is charged in his
official capacity for acts that are unauthorized
or unlawful and injurious to the rights of others
neither does it apply where the public official is
clearly being sued not in his official capacity
but in his personal capacity, although the acts
complained of may have been committed while
he occupied a public position.

FACTS: Secretary
of
Health
Alberto
G.
Romualdez, Jr. issued an Administrative Order
providing
for
additional
guidelines
for
accreditation of drug suppliers aimed at
ensuring that only qualified bidders can
transact business with petitioner Department
of
Health
(DOH).
Respondent
Phil.
Pharmawealth, Inc. (Pharmawealth) submitted
to DOH a request for the inclusion of additional
items in its list of accredited drug products,
including
the
antibiotic
Penicillin
G
Benzathine.

Petitioner DOH issued an Invitation for Bids for

the procurement of 1.2 million units vials of
Penicillin G Benzathine. Despite the lack of
response from DOH regarding Pharmawealths
request for inclusion of additional items in its
list of accredited products, the latter submitted
its bid for the Penicillin G Benzathine contract
and gave the lowest bid thereof. . In view,
however,
of
the
non-accreditation
of
respondents Penicillin G Benzathine product,
the contract was awarded to Cathay/YSS
Laboratories (YSS).

Respondent Pharmawealth filed a complaint for

injunction, mandamus and damages with
prayer for the issuance of a writ of preliminary
injunction and/or temporary restraining order
with the Regional Trial praying, inter alia, that
the trial court nullify the award of the
Penicillin G Benzathine contract to YSS
Laboratories, Inc. and direct petitioners DOH et
al. to declare Pharmawealth as the lowest
complying
responsible
bidder
for
the
Benzathine contract, and that they accordingly
award the same to plaintiff company and
adjudge defendants Romualdez, Galon and
Lopez liable, jointly and severally to plaintiff.
Petitioners DOH et al. subsequently filed a
motion to dismiss praying for the dismissal of
the complaint based on the doctrine of state
immunity. The trial court, however, denied the
motion to dismiss. The Court of Appeals (CA)
denied DOHs petition for review which
affirmed the order issued Regional Trial Court
of Pasig City denying petitioners motion to
dismiss the case.

ISSUE: Whether or not the charge against the

public officers acting in their official capacity
will prosper

HELD: The suability of a government official

depends on whether the official concerned was
acting within his official or jurisdictional
capacity, and whether the acts done in the
performance of official functions will result in a
charge or financial liability against the
government. In its complaint, DOH sufficiently
imputes grave abuse of discretion against
petitioners in their official capacity. Since
judicial review of acts alleged to have been
tainted with grave abuse of discretion is
guaranteed by the Constitution, it necessarily
follows that it is the official concerned who
should be impleaded as defendant or
respondent in an appropriate suit.

As regards petitioner DOH, the defense of

immunity from suit will not avail despite its
being an unincorporated agency of the
government, for the only causes of action
directed against it are preliminary injunction
and mandamus. Under Section 1, Rule 58 of
the Rules of Court, preliminary injunction may
be directed against a party or a court, agency
or a person. Moreover, the defense of state
immunity from suit does not apply in causes of
action which do not seek to impose a charge or
financial liability against the State.

Hence, the rule does not apply where the

public official is charged in his official capacity
for acts that are unauthorized or unlawful and
injurious to the rights of others. Neither does it

11

apply where the public official is clearly being

sued not in his official capacity but in his
personal
capacity,
although
the
acts
complained of may have been committed while
he occupied a public position.

In the present case, suing individual petitioners

in their personal capacities for damages in
connection with their alleged act of illegally
abusing their official positions to make sure
that plaintiff Pharmawealth would not be
awarded the Benzathine contract [which act
was] done in bad faith and with full knowledge
of the limits and breadth of their powers given
by law is permissible, in consonance with the
foregoing principles. For an officer who exceeds
the power conferred on him by law cannot hide
behind the plea of sovereign immunity and
must bear the liability personally.
Dept. of Education, Albay vs. OnateFacts:
Spouses Claro Onate and Gregoria Los Banos
ownsthe disputed lot Lot No. 6849 (27,907
sqm) registered underthe Torrens System of
land registration with an OriginalCertificate of
Title (OCT). This lot was already settled through
aDeed of Extrajudicial Settlement of Estate and
Cession in 1991,in favor of respondent as his
three sisters waived their rightsto the
property.It turns out that the same land was
where the DaragaNorth Central Elementary
School was built and had beenoperating since
1940, then named
Bagumbayan ElementarySchool of Daraga. The
Municipality of Daraga gave that land toDept.
of Education, Culture and Sports (DECS), now
Dept. ofEducation (DepEd) through a Deed of
Donation, confident thatthe municipality owned
the land through buying it from Claro
Onate, the respondents grandfather,
sometime in 1940.
Respondent testified that he only knew of the
dispute on1973, from which he took possession
of the lot the same year

That he knew only of the schools accupation

on a portion of the land on 1991 and knew of
the Deed of Donation on 1992.The petitioner
then claimed that respondent was guilty
oflaches.Issue:Is the respondent guilty of
laches? Will it be applied tohim in this case?Is
the State immune from this case? Can DECS be
suedindependently from the State?Ruling:
YES.
Laches is defined as the failure or neglect, or
anunreasonable and unexplained length of
time, to do that whichcould or should have
been done earlier. Elements of lacheshave set
in: 1) disputed land has been used for
publiceducation since 1940, 2) respondent
failed to prove that himand his predecessors
undertook steps to regain the use oftheir land,
to protest the building of the school as early
as1940, 3) petitioner DECS did not anticipate
that theiroccupancy of the land would be later
questioned, and 4)preliminary facts show grave
prejudice to the petitioner DECSas they have
made major changes in construction
andexpansion of the school. The laches,
however, apply only todisputed Lot No. 6849-A.
By virtue of laches, respondentOnate cannot
claim Lot No. 6849-A anymore.
NO
. DECS can be sued as a result of being privy to
theDeed of Donation executed by the
Municipality of Daraga (asits recipient) over
disputed property. By giving its consent tothe
donation, it brings DECS down to level of
ordinary citizen.
YES
, DECS can be sued independently from the
State as it gaveits authority to continue with
the donation, which carries withit the full
responsibility of suing or being sued.
Therefore, DepEd (formerly DECS) now has the
rights ofpossession and property over Lot No.
6849-A. Onarte cannotsell, mortgage or
encumber said Lot while still being used by
DepEd. The lots rights will be returned to
respondents the

moment DECS no longer needs it. DECS being

nonsuable has become moot.

said Islands to appear in said suit). The lower

to the exercise of the duties of his office if he is

court then determined the amount of damages

a special official) so that in representation of

and ordered the government to pay the same.

the state and being bound to act as an agent

Merritt vs Government of the Philippine Islands

thereof, he executes the trust confided to him.

ISSUE: Whether or not the government is

34 Phil 311 Civil Law Torts and Damages

Liability of the State for acts of special agents

liable for the negligent act of the driver of the

In the case at bar, the ambulance driver was

ambulance.

not a special agent nor was a government

Political Law Non-Suability of the State

officer acting as a special agent hence, there

Waiver of Non-Suability is Not Admission of

HELD: No. By consenting to be sued a state

can be no liability from the government. The

Liability

simply waives its immunity from suit. It does

Government does not undertake to guarantee

not thereby concede its liability to plaintiff, or

to any person the fidelity of the officers or

create any cause of action in his favor, or

agents whom it employs, since that would

extend its liability to any cause not previously

involve it in all its operations in endless

recognized. It merely gives

embarrassments, difficulties and losses, which

The facts of the case took place in the 1910s.

E. Merritt was a constructor who was excellent
at his work. One day, while he was riding his
motorcycle along Calle Padre Faura, he was
bumped by a government ambulance. The
driver of the ambulance was proven to have
been negligent. Because of the incident, Merritt
was hospitalized and he was severely injured
beyond rehabilitation so much so that he could
never perform his job the way he used to and
that he cannot even earn at least half of what
he used to earn.
In order for Merritt to recover damages, he
sought to sue the government which later
authorized Merritt to sue the government by
virtue of Act 2457 enacted by the legislature
(An Act authorizing E. Merritt to bring suit
against the Government of the Philippine
Islands and authorizing the Attorney-General of

12

a remedy to

enforce a preexisting liability and submits itself

would be subversive of the public interest.

to the jurisdiction of the court, subject to its

right to interpose any lawful defense. It follows
therefrom that the state, by virtue of such
provisions of law, is not responsible for the

US v. Ruiz (Consti1)

damages suffered by private individuals in

consequence

of

acts

performed

by

employees in the discharge of the functions

pertaining to their office, because neither fault
nor even negligence can be presumed on the
part

of

branches

the
of

state
public

in the

organization

service

and

in

US v. Ruiz

its

of
the

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.

appointment of its agents. The State can only

En Banc

be liable if it acts through a special agent (and

Doctrine: implied consent

a special agent, in the sense in which these

words are employed, is one who receives a
definite and fixed order or commission, foreign

Date: May 22, 1985

Ponente: Justice Abad-Santos

any other suit for the causes of action asserted

in the complaint." (Rollo, p. 50.)
Facts:

At times material to this case, 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.

US invited the submission of bids for

Repair offender system and Repair typhoon
damages. Eligio de Guzman & Co., Inc.
responded to the invitation, submitted bids and
complied with the requests based on the
letters received from the US.

In June 1972, a letter was received by

the Eligio De Guzman & Co indicating 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.

The company sued the United States of

America and Messrs. James E. Galloway,
William I. Collins and Robert Gohier all
members of the Engineering Command of the
U.S. Navy. The complaint is to order the
defendants to allow the plaintiff to perform the
work on the projects and, in the event that
specific performance was no longer possible, to
order the defendants to pay damages. The
company also asked for the issuance of a writ
of preliminary injunction to restrain the
defendants from entering into contracts with
third parties for work on the projects.
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

13

Subsequently the defendants filed a

motion to dismiss the complaint which included
an opposition to the issuance of the writ of
preliminary injunction. The company opposed
the motion.

The trial court denied the motion and

issued the writ. The defendants moved twice to
reconsider but to no avail.

Hence the instant petition which seeks

to restrain perpetually the proceedings in Civil
Case No. 779-M for lack of jurisdiction on the
part of the trial court.
Issue/s:

WON the US naval base in bidding for

said contracts exercise governmental functions
to be able to invoke state immunity

immunity now extends only to acts jure imperil

(sovereign & governmental acts)

The restrictive application of State

immunity is proper only when the proceedings
arise out of commercial transactions of the
foreign sovereign, its commercial activities 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.

correct test for the application of State

immunity is not the conclusion of a contract by
a State but the legal nature of the act

Held:
WHEREFORE, the petition is granted; the
questioned orders of the respondent judge are
set aside and Civil Case No. is dismissed. Costs
against the private respondent.

Ratio:

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

Commissioner of Public Highways vs. Burgos

(Consti1)
Commissioner of Public Highways, petitioner,
vs. Hon. Francisco P. Burgos, in his capacity as
Judge of the Court of First Instance of Cebu
City,
Branch II, and Victor Amigable,
respondents.

March 31, 1980

De Castro, J:

Facts:

taking was P2.37 per square meter. Amigable,

on the other hand, presented a newspaper
showing that the price was P6.775.

On 1924, the government took private

respondent Victor Amigable's land for roadright-of-way purpose.
On 1959, Amigable filed in the Court of
First Instance a complaint to recover the
ownership and possession of the land and for
damages for the alleged illegal occupation of
the land by the government (entitled Victor
Amigable vs. Nicolas Cuenco, in his capacity as
Commissioner of Public Highways and Republic
of the Philippines).

Amigable's complaint was dismissed on

the grounds that the land was either donated
or sold by its owners to enhance its value, and
that in any case, the right of the owner to
recover the value of said property was already
barred by estoppel and the statute of
limitations. Also, the non-suability of the
government was invoked.

In the hearing, the government proved

that the price of the property at the time of

14

The public respondent Judge ruled in

favor of Amigable and directed the Republic of
the Philippines to pay Amigable the value of
the property taken with interest at 6% and the
attorney's fees.

Ratio:

Article 1250 of the NCC provides that

the value of currency at the time of the
establishment of the obligation shall be the
basis of payment which would be the value of
peso at the time of taking of the property when
the obligation of the government to pay arises.
It is only when there is an agreement that the
inflation will make the value of currency at the
time of payment, not at the time of the
establishment, the basis for payment.

The correct amount of compensation

would be P14,615.79 at P2.37 per square
meter, not P49,459.34, and the interest in the
sum of P145,410.44 at the rate of 6% from
1924 up to the time respondent court rendered
its decision as was awarded by the said court
should accordingly be reduced.

Issue:
Whether or not the provision of Article
1250 of the New Civil Code is applicable in
determining the amount of compensation to be
paid to private respondent Amigable for the
property taken.
Held:
Not applicable.