Bureau of Printing v Bureau of Printing Employees Association (NLU)

FACTS: There is a complaint by the respondents Bureau of Printing Employees Association

(NLU) filed by an acting prosecutor of the Industrial Court against herein petitioner Bureau of
Printing, Serafin Salvador, the Acting Secretary of the Department of General Services, and
Mariano Ledesma the Director of the Bureau of Printing.

The complaint alleged that Serafin Salvador and Mariano Ledesma have been engaging in unfair
labor practices by interfering with, or coercing the employees of the Bureau of Printing
particularly the members of the complaining association petition, in the exercise of their right to
self-organization an discriminating in regard to hire and tenure of their employment in order to
discourage them from pursuing the union activities.

Answering the complaint, the petitioners denied the charges of unfair labor practices and contend
that the Bureau of Printing has no juridical personality to sue and be sued; For relief, they prayed
that the case be dismissed for lack of jurisdiction. After hearing, the trial judge of the Industrial
Court in an order 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: Whether or not the CIR has jurisdiction over the case; Whether or not the Bureau of
printing may be sued

HELD: No & No. We find the petition to be meritorious.

The Bureau of Printing is an office of the Government created by the Administrative Code of 1916.
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. 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.

From what has been stated, it is obvious that the Court of Industrial Relations did not acquire
jurisdiction over the respondent Bureau of Printing, and is thus devoid of any authority to take
cognizance of the case. This Court has already held in a long line of decisions that the Industrial
Court has no jurisdiction to hear and determine the complaint for unfair labor practice filed
against institutions or corporations not organized for profit and, consequently, not an industrial
or business organization.
As an office of the Government, without any corporate or juridical personality, the Bureau of
Printing cannot be sued. (Sec. 1, Rule 3, Rules of Court). 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.

Department of Agriculture v. NLRC

FACTS: The Department of Agriculture (herein petitioner) and Sultan Security Agency entered
into a contract for security services to be provided by the latter to the said governmental entity.
Save for the increase in the monthly rate of the guards, the same terms and conditions were also
made to apply to another contract between the same parties. Pursuant to their arrangements,
guards were deployed by Sultan Agency in the various premises of the petitioner.

On 13 September 1990, several guards of the Sultan Security Agency filed a complaint for
underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift
differential pay, holiday pay and overtime pay, as well as for damages, before the Regional
Arbitration Branch X of Cagayan de Oro City against the Department of Agriculture and Sultan
Security Agency.

The Executive Labor Arbiter rendered a decision on 31 May finding herein petitioner and jointly
and severally liable with Sultan Security Agency for the payment of money claims, aggregating
P266,483.91, of the complainant security guards. The Labor Arbiter issued a writ of execution
commanding the City Sheriff to enforce and execute the judgment against the property of the two
respondents. The City Sheriff levied on execution the motor vehicles of the petitioner to be sold
at public auction or the final settlement of the case, whichever would come first.

A petition for injunction, prohibition and mandamus, with prayer for preliminary writ of
injunction was filed by the petitioner with the NLRC that the writ issued was effected without
the Labor Arbiter having duly acquired jurisdiction over the petitioner, and that, therefore, the
decision of the Labor Arbiter was null and void and all actions pursuant thereto should be
deemed equally invalid and of no legal, effect.

The petitioner faults the NLRC for assuming jurisdiction over a money claim against the
Department, which, it claims, falls under the exclusive jurisdiction of the Commission on Audit.
More importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on the non-
suability of the State.

ISSUE: Whether or not the Department of Agriculture may be sued in this case.

HELD: Yes. The basic postulate enshrined in the constitution that "(t)he State may not be sued
without its consent," reflects nothing less than a recognition of the sovereign character of the State
and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction of
courts. It is based on the very essence of sovereignty.
As has been aptly observed, by Justice 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. True,
the doctrine, not too infrequently, is derisively called "the royal prerogative of dishonesty"
because it grants the state the prerogative to defeat any legitimate claim against it by simply
invoking its non-suability.

The rule, in any case, is not really absolute for it does not say that the state may not be sued under
any circumstances. On the contrary, as correctly phrased, the doctrine only conveys, "the state
may not be sued without its consent;" its clear import then is that the State may at times be sued.
12 The States' consent may be given expressly or impliedly. Express consent may be made
through a general law13 or a special law. In this jurisdiction, the general law waiving the
immunity of the state from suit is found in Act No. 3083, where the Philippine government
"consents and submits to be sued upon any money claims involving liability arising from
contract, express or implied, which could serve as a basis of civil action between private
parties."

Because of the activities of states, it has been necessary to distinguish them between sovereign
and governmental acts ( jure imperii) and private, commercial and proprietary act ( jure
gestionisis). 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 this
be deemed to have actually given its consent to be sued only when it enters into business
contracts. It does not apply where the contracts relates to the exercise of its sovereign functions.

In the instant case, the Department of Agriculture has not pretended to have assumed a capacity
apart from its being a governmental entity when it entered into the questioned contract; nor that
it could have, in fact, performed any act proprietary in character.

But, be that as it may, the claims of private respondents, i.e. for underpayment of wages, holiday
pay, overtime pay and similar other items, arising from the Contract for Service, clearly constitute
money claims. Act No. 3083, aforecited, gives the consent of the State to be "sued upon any
moneyed claim involving liability arising from contract, express or implied, . . . Pursuant,
however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No.
1145, the money claim first be brought to the Commission on Audit.

When the state gives its consent to be sued, it does thereby necessarily consent to unrestrained
execution against it. tersely put, when the State waives its immunity, all it does, in effect, is to
give the other party an opportunity to prove, if it can, that the State has a liability.

WHEREFORE, the petition is GRANTED. The resolution, dated 27 November 1991, is hereby
REVERSED and SET ASIDE. The writ of execution directed against the property of the
Department of Agriculture is nullified, and the public respondents are hereby enjoined
permanently from doing, issuing and implementing any and all writs of execution issued
pursuant to the decision rendered by the Labor Arbiter against said petitioner.

Sanders v Veridiano

FACTS: Petitioner Sanders was, at the time the incident in question occurred, the special services
director of the U.S. Naval Station (NAVSTA) in Olongapo City. Petitioner Moreau was the
commanding officer of the Subic Naval Base, which includes the said station. Private respondent
Rossi is an American citizen with permanent residence in the Philippines, as so was private
respondent Wyer, who died two years ago. They were both employed as gameroom attendants
in the special services department of the NAVSTA.

On October 3, 1975, the private respondents were advised that their employment had been
converted from permanent full-time to permanent part-time. Their reaction was to protest this
conversion and to institute grievance proceedings conformably to the pertinent rules and
regulations of the U.S. Department of Defense. The result was a recommendation from the
hearing officer for the reinstatement of the private respondents to permanent full-time status plus
backwages.

In a letter addressed to petitioner Moreau, Sanders disagreed with the hearing officer's report and
asked for the rejection of the abovestated recommendation. The letter contained the statements
that: a ) "Mr. Rossi tends to alienate most co-workers and supervisors;" b) "Messrs. Rossi and
Wyers have proven, according to their immediate supervisors, to be difficult employees to
supervise;" and c) "even though the grievants were under oath not to discuss the case with
anyone, (they) placed the records in public places where others not involved in the case could
hear."

Before the start of the grievance hearings, a letter purportedly coming from petitioner Moreau as
the commanding general of the U.S. Naval Station in Subic Bay was sent to the Chief of Naval
Personnel explaining the change of the private respondent's employment status and requesting
concurrence therewith.

On the basis of these antecedent facts, the private respondent filed in the Court of First Instance
of Olongapo City a for damages against the herein petitioners on November 8, 1976. The plaintiffs
claimed that the letters contained libelous imputations that had exposed them to ridicule and
caused them mental anguish and that the prejudgment of the grievance proceedings was an
invasion of their personal and proprietary rights. The private respondents made it clear that the
petitioners were being sued in their private or personal capacity.

However, in a motion to dismiss filed under a special appearance, the petitioners argued that the
acts complained of were performed by them in the discharge of their official duties and that,
consequently, the court had no jurisdiction over them under the doctrine of state immunity.

ISSUE: Whether or not Sanders and Moreau were acting officially or in their private capacity,
hence may be sued in this case.
HELD: Yes. It is stressed at the outset that the mere allegation that a government functionary is
being sued in his personal capacity will not automatically remove him from the protection of the
law of public officers and, if appropriate, the doctrine of state immunity. By the same token, the
mere invocation of official character will not suffice to insulate him from suability and liability
for an act imputed to him as a personal tort committed without or in excess of his authority.

It is abundantly clear in the present case that the acts for which the petitioners are being called to
account were performed by them in the discharge of their official duties. Sanders, as director of
the special services department of NAVSTA, undoubtedly had supervision over its personnel,
including the private respondents, and had a hand in their employment, work assignments,
discipline, dismissal and other related matters. It is not disputed that the letter he had written
was in fact a reply to a request from his superior, the other petitioner, for more information
regarding the case of the private respondents. Moreover, even in the absence of such request, he
still was within his rights in reacting to the hearing officer's criticismin effect a direct attack
against him-that Special Services was practicing "an autocratic form of supervision."

As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for
concurrence with the conversion of the private respondents' type of employment even before the
grievance proceedings had even commenced. Disregarding for the nonce the question of its
timeliness, this act is clearly official in nature, performed by Moreau as the immediate superior
of Sanders and directly answerable to Naval Personnel in matters involving the special services
department of NAVSTA.

Given the official character of the above-described letters, we have to conclude that the petitioners
were, legally speaking, being sued as officers of the United States government. As they have acted
on behalf of that government, and within the scope of their authority, it is that government, and
not the petitioners personally, that is responsible for their acts.

There should be no question by now that such complaint cannot prosper unless the government
sought to be held ultimately liable has given its consent to' be sued. So we have ruled not only in
Baer but in many other decisions where we upheld the doctrine of state immunity as applicable
not only to our own government but also to foreign states sought to be subjected to the
jurisdiction of our courts.

The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right
against the authority which makes the law on which the right depends.16 In the case of foreign
states, the rule is derived from the principle of the sovereign equality of states which wisely
admonishes that par in parem non habet imperium and that a contrary attitude would "unduly
vex the peace of nations." 17 Our adherence to this precept is formally expressed in Article II,
Section 2, of our Constitution, where we reiterate from our previous charters that the Philippines
"adopts the generally accepted principles of international law as part of the law of the land.

All this is not to say that in no case may a public officer be sued as such without the previous
consent of the state. To be sure, there are a number of well-recognized exceptions. It is clear
that a public officer may be sued as such:
 to compel him to do an act required by law, as where, say, a register of deeds refuses to
record a deed of sale;
to restrain a Cabinet member, for example, from enforcing a law claimed to be
unconstitutional;
to compel the national treasurer to pay damages from an already appropriated assurance
fund; 20 or the commissioner of internal revenue to refund tax over-payments from a fund
already available for the purpose; 21
to secure a judgment that the officer impleaded may satisfy by himself without the
government itself having to do a positive act to assist him.
We have also held that where the government itself has violated its own laws, the
aggrieved party may directly implead the government even without first filing his claim
with the Commission on Audit as normally required, as the doctrine of state immunity
"cannot be used as an instrument for perpetrating an injustice."

The case at bar, to repeat, comes under the rule and not under any of the recognized exceptions.
The government of the United States has not given its consent to be sued for the official acts of
the petitioners, who cannot satisfy any judgment that may be rendered against them. As it is the
American government itself that will have to perform the affirmative act of appropriating the
amount that may be adjudged for the private respondents, the complaint must be dismissed for
lack of jurisdiction.

WHEREFORE, the petition is GRANTED. The challenged orders dated March 8,1977, August
9,1977, and September 7, 1977, are SET ASIDE. The respondent court is directed to DISMISS Civil
Case No. 2077-O. Our Temporary restraining order of September 26,1977, is made PERMANENT.
No costs.

Republic v. Sandoval

FACTS: The massacre was the culmination of eight days and seven nights of encampment by
members of the militant Kilusang Magbubukid sa Pilipinas (KMP) at the then Ministry (now
Department) of Agrarian Reform (MAR) at the Philippine Tobacco Administration Building
along Elliptical Road in Diliman, Quezon City.

The farmers and their sympathizers presented their demands for what they called "genuine
agrarian reform". The KMP, led by its national president, Jaime Tadeo, presented their problems
and demands.

The dialogue between the farmers and the MAR officials began on January 15, 1987. The two days
that followed saw a marked increase in people at the encampment. On January 20, 1987, the
meeting was held at the MAR conference room. Tadeo demanded that the minimum
comprehensive land reform program be granted immediately. Minister Alvarez, for his part, can
only promise to do his best to bring the matter to the attention of then President Aquino, during
the cabinet meeting.
Tension mounted the following day. The farmers, now on their seventh day of encampment,
barricaded the MAR premises and prevented the employees from going inside their offices. They
hoisted the KMP flag together with the Philippine flag.

At around 6:30 p.m. of the same day, Minister Alvarez, in a meeting with Tadeo and his leaders,
advised the latter to instead wait for the ratification of the 1987 Constitution and just allow the
government to implement its comprehensive land reform program. Tadeo, however, countered
by saying that he did not believe in the Constitution and that a genuine land reform cannot be
realized under a landlord-controlled Congress. A heated discussion ensued between Tadeo and
Minister Alvarez.

On January 22, 1987, Tadeo's group instead decided to march to Malacaang to air their demands.
Before the march started, Tadeo talked to the press and TV media. He uttered fiery words, the
most telling of which were:

". . . inalis namin ang barikada bilang kahilingan ng ating Presidente, pero kinakailangan alisin
din niya ang barikada sa Mendiola sapagkat bubutasin din namin iyon at dadanak ang dugo . . .
."4

The farmers then proceeded to march to Malacaang, from Quezon Memorial Circle, at 10:00 a.m.
At around 1:00 p.m., the marchers reached Liwasang Bonifacio where they held a brief program.
It was at this point that some of the marchers entered the eastern side of the Post Office Building,
and removed the steel bars surrounding the garden. Thereafter, they joined the march to
Malacaang.

In anticipation of a civil disturbance, and acting upon reports received by the Capital Regional
Command (CAPCOM) that the rallyists would proceed to Mendiola to break through the police
lines and rush towards Malacaang, CAPCOM Commander General Ramon E. Montao
inspected the preparations and adequacy of the government forces to quell impending attacks.

OPLAN YELLOW (Revised) was put into effect. Task Force Nazareno under the command of
Col. Cesar Nazareno was deployed at the vicinity of Malacaang. The civil disturbance control
units of the Western Police District under Police Brigadier General Alfredo S. Lim were also
activated.

Intelligence reports were also received that the KMP was heavily infiltrated by CPP/NPA
elements and that an insurrection was impending. The threat seemed grave as there were also
reports that San Beda College and Centro Escolar University would be forcibly occupied.

The marchers, at around 4:30 p.m., numbered about 10,000 to 15,000. From C.M. Recto Avenue,
they proceeded toward the police lines. No dialogue took place between the marchers and the
anti-riot squad. It was at this moment that a clash occurred and, borrowing the words of the
Commission "pandemonium broke loose".

There was an explosion followed by throwing of pillboxes, stones and bottles. Steel bars, wooden
clubs and lead pipes were used against the police. The police fought back with their shields and
truncheons. The police line was breached. Suddenly shots were heard. The demonstrators
disengaged from the government forces and retreated towards C.M. Recto Avenue. But sporadic
firing continued from the government forces.

After the clash, twelve (12) marchers were officially confirmed dead, although according to
Tadeo, there were thirteen (13) dead, but he was not able to give the name and address of said
victim. Thirty-nine (39) were wounded by gunshots and twelve (12) sustained minor injuries, all
belonging to the group of the marchers.

Of the police and military personnel, three (3) sustained gunshot wounds and twenty (20)
suffered minor physical injuries such as abrasions, contusions and the like.

In the aftermath of the confrontation, then President Corazon C. Aquino issued Administrative
Order No. 11 (A.O. 11, for brevity) dated January 22, 1987, which created the Citizens' Mendiola
Commission for the purpose of conducting an investigation of the disorder, deaths, and casualties
that took place in the vicinity of Mendiola Bridge and Mendiola Street and Claro M. Recto
Avenue, Manila, in the afternoon of January 22, 1987".

From the results of the probe, the Commission recommended the criminal prosecution of four
unidentified, uniformed individuals, shown either on tape or in pictures, firing at the direction
of the marchers. The last and the most significant recommendation of the Commission was for
the deceased and wounded victims of the Mendiola incident to be compensated by the
government. It was this portion that petitioners (Caylao group) invoke in their claim for damages
from the government.

Notwithstanding such recommendation, no concrete form of compensation was received by the

victims. After almost a year, petitioners (Caylao group) were constrained to institute an action for
damages against the Republic of the Philippines, together with the military officers, and
personnel involved in the Mendiola incident, before the trial court. The Solicitor General filed a
Motion to Dismiss on the ground that the State cannot be sued without its consent. Petitioners
opposed said motion maintaining that the State has waived its immunity from suit and that the
dismissal of the instant action is contrary to both the Constitution and the International Law on
Human Rights.

Respondent Judge Sandoval dismissed the complaint as against the Republic of the Philippines
on the ground that there was no waiver by the State.

ISSUE: Whether or not the State has waived its immunity from suit.

HELD: This is not a suit against the State with its consent.

Firstly, the recommendation made by the Commission regarding indemnification of the heirs of
the deceased and the victims of the incident by the government does not in any way mean that
liability automatically attaches to the State. It is important to note that A.O. 11 expressly states
that the purpose of creating the Commission was to have a body that will conduct an
"investigation of the disorder, deaths and casualties that took place." 14

In effect, whatever may be the findings of the Commission, the same shall only serve as the cause
of action in the event that any party decides to litigate his/her claim. Therefore, the Commission
is merely a preliminary venue. The Commission is not the end in itself. Whatever
recommendation it makes cannot in any way bind the State immediately, such recommendation
not having become final and, executory. This is precisely the essence of it being a fact-finding
body.

The case does not qualify as a suit against the State. Some instances when a suit against the State
is proper are:

(1) When the Republic is sued by name;

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

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

While the Republic in this case is sued by name, the ultimate liability does not pertain to the
government. Although the military officers and personnel, then party defendants, were
discharging their official functions when the incident occurred, their functions ceased to be
official the moment they exceeded their authority. Based on the Commission findings, there
was lack of justification by the government forces in the use of firearms. 17 Moreover, the
members of the police and military crowd dispersal units committed a prohibited act under
B.P. Blg. 880 as there was unnecessary firing by them in dispersing the marchers.

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

US v Ruiz

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.

Sometime in May, 1972, the United States invited the submission of bids for the following projects

1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines.

2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline
revetment, NAVBASE Subic; and repair to Leyte Wharf approach, NAVBASE Subic Bay,
Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. The company later
received a letter which was signed by Wilham I. Collins, Director, Contracts Division, Naval
Facilities Engineering Command, Southwest Pacific, Department of the Navy of the United States,
who is one of the petitioners herein. The letter said 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 letter
further said that the projects had been awarded to third parties.

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 any other suit for the causes of action asserted in the complaint."

ISSUE: Whether or not Defendants may be sued in this case.

HELD: No. 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 imperil

The restrictive application of State immunity is now the rule in the United States, the United
Kingdom and other states in western Europe.

A distinction should be made between a strictly governmental function of the sovereign state
from its private, proprietary or non- governmental acts. However, the respondent judge also said:
"It is the Court's considered opinion that entering into a contract for the repair of wharves or
shoreline is certainly not a governmental function altho it may partake of a public nature or
character. As aptly pointed out by plaintiff's counsel in his reply citing the ruling in the case of
Lyons, Inc.,

The reliance placed on Lyons by the respondent judge is misplaced for the following reasons:

In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court
of First Instance of Manila to collect several sums of money on account of a contract between
plaintiff and defendant. The defendant filed a motion to dismiss on the ground that the court had
no jurisdiction over defendant and over the subject matter of the action. The court granted the
motion on the grounds that: (a) it had no jurisdiction over the defendant who did not give its
consent to the suit; and (b) plaintiff failed to exhaust the administrative remedies provided in the
contract. The order of dismissal was elevated to this Court for review.

In sustaining the action of the lower court, this Court said:

It appearing in the complaint that appellant has not complied with the procedure laid down in
Article XXI of the contract regarding the prosecution of its claim against the United States
Government, or, stated differently, it has failed to first exhaust its administrative remedies against
said Government, the lower court acted properly in dismissing this case.(At p. 598.)

It can thus be seen that the statement in respect of the waiver of State immunity from suit was
purely gratuitous and, therefore, obiter so that it has no value as an imperative authority.

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.

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.

RCBC v De Castro

FACTSL: In a Civil Case of the Court of First Instance of Rizal, Quezon City Branch entitled
"Badoc Planters, Inc. versus Philippine Virginia Tobacco Administration, et al.," which was an
action for recovery of unpaid tobacco deliveries, an Order (Partial Judgment) was issued by the
Hon. Lourdes P. San Diego (This is my grandmother btw ), then Presiding Judge, ordering the
defendants therein to pay jointly and severally, the plaintiff Badoc Planters, Inc. within 48 hours
the aggregate amount of P206,916.76, with legal interests thereon.

On January 26,1970, BADOC filed an Urgent Ex-Parte Motion for a Writ of Execution of the said
Partial Judgment which was granted on the same day by the herein respondent judge who acted
in place of the Hon. Judge San Diego who had just been elevated as a Justice of the Court of
Appeals.

Accordingly, the Branch Clerk of Court on the very same day, issued a Writ of Execution
addressed to Special Sheriff Faustino Rigor, who then issued a Notice of Garnishment addressed
to the General Manager and/or Cashier of Rizal Commercial Banking Corporation (RCBC), the
petitioner in this case, requesting a reply within five (5) days to said garnishment as to any
property which the Philippine Virginia Tobacco Administration (hereinafter referred to as
"PVTA") might have in the possession or control of petitioner or of any debts owing by the
petitioner to said defendant. Upon receipt of such Notice, RCBC notified PVTA thereof to enable
the PVTA to take the necessary steps for the protection of its own interest.

Upon an Urgent Ex-Parte Motion filed by BADOC, the respondent Judge issued an Order
granting the Ex-Parte Motion and directing the herein petitioner "to deliver in check the amount
garnished to Sheriff Faustino Rigor and Sheriff Rigor in turn is ordered to cash the check and
deliver the amount to the plaintiff's representative and/or counsel on record." In compliance with
said Order, petitioner delivered to Sheriff Rigor a certified check in the sum of P 206,916.76.

Respondent PVTA filed a Motion for Reconsideration dated February 26,1970 which was granted
in an Order dated April 6,1970, setting aside the Orders of Execution and of Payment and the
Writ of Execution and ordering petitioner and BADOC "to restore, jointly and severally, the
account of PVTA with the said bank in the same condition and state it was before the issuance of
the aforesaid Orders by reimbursing the PVTA of the amount of P 206, 916.76

ISSUE: Whether or not PVTA funds are public funds not subject to garnishment;

HELD: Are the PVTA funds public funds exempt from garnishment? The Court holds that they
are not.

Republic Act No. 2265 created the PVTA as an ordinary corporation with all the attributes of a
corporate entity subject to the provisions of the Corporation Law. Hence, it possesses the
power "to sue and be sued" and "to acquire and hold such assets and incur such liabilities
resulting directly from operations authorized by the provisions of this Act or as essential to
the proper conduct of such operations." [Section 3, Republic Act No. 2265.]

Among the specific powers vested in the PVTA are: 1) to buy Virginia tobacco grown in the
Philippines for resale to local bona fide tobacco manufacturers and leaf tobacco dealers [Section
4(b), R.A. No. 2265]; 2) to contracts of any kind as may be necessary or incidental to the attainment
of its purpose with any person, firm or corporation, with the Government of the Philippines or
with any foreign government, subject to existing laws [Section 4(h), R.A. No. 22651; and 3)
generally, to exercise all the powers of a corporation under the Corporation Law, insofar as they
are not inconsistent with the provisions of this Act [Section 4(k), R.A. No. 2265.]

From the foregoing, it is clear that PVTA has been endowed with a personality distinct and
separate from the government which owns and controls it. Accordingly, this Court has heretofore
declared that the funds of the PVTA can be garnished since "funds of public corporation which
can sue and be sued were not exempt from garnishment"

Accordingly, as emphatically expressed by this Court in a 1978 decision, "garnishment was the
appropriate remedy for the prevailing party which could proceed against the funds of a corporate
entity even if owned or controlled by the government" inasmuch as "by engaging in a particular
business thru the instrumentality of a corporation, the government divests itself pro hac vice of
its sovereign character, so as to render the corporation subject to the rules of law governing
private corporations"

Furthermore, in the case of PVTA, the law has expressly allowed it funds to answer for various
obligations, including the one sought to be enforced by plaintiff BADOC in this case (i.e. for
unpaid deliveries of tobacco). Republic Act No. 4155, which discounted the erstwhile support
given by the Central Bank to PVTA, established in lieu thereof a "Tobacco Fund" to be collected
from the proceeds of fifty per centum of the tariff or taxes of imported leaf tobacco and also fifty
per centum of the specific taxes on locally manufactured Virginia type cigarettes.

Inasmuch as the Tobacco Fund, a special fund, was by law, earmarked specifically to answer
obligations incurred by PVTA in connection with its proprietary and commercial operations
authorized under the law, it follows that said funds may be proceeded against by ordinary
judicial processes such as execution and garnishment. If such funds cannot be executed upon or
garnished pursuant to a judgment sustaining the liability of the PVTA to answer for its
obligations, then the purpose of the law in creating the PVTA would be defeated. For it was
declared to be a national policy, with respect to the local Virginia tobacco industry, to encourage
the production of local Virginia tobacco of the qualities needed and in quantities marketable in
both domestic and foreign markets, to establish this industry on an efficient and economic basis,
and to create a climate conducive to local cigarette manufacture of the qualities desired by the
consuming public, blending imported and native Virginia leaf tobacco to improve the quality of
locally manufactured cigarettes.

Municipality of Makati v Court of Appeals

FACTS: It appears that the action for eminent domain was filed on May 20, 1986. Attached to
petitioner's complaint was a certification that a bank account (Account No. S/A 265-537154-3)
had been opened with the PNB Buendia Branch under petitioner's name containing the sum of
P417,510.00, made pursuant to the provisions of Pres. Decree No. 42. After due hearing where the
parties presented their respective appraisal reports regarding the value of the property,
respondent RTC judge rendered a decision on June 4, 1987, fixing the appraised value of the
property at P5,291,666.00, and ordering petitioner to pay this amount minus the advanced
payment of P338,160.00 which was earlier released to private respondent.

After this decision became final and executory, private respondent moved for the issuance of a
writ of execution. This motion was granted by respondent RTC judge. After issuance of the writ
of execution, a Notice of Garnishment was served by respondent sheriff Silvino R. Pastrana upon
the manager of the PNB Buendia Branch. However, respondent sheriff was informed that a "hold
code" was placed on the account of petitioner. As a result of this, private respondent filed a
motion dated January 27, 1988 praying that an order be issued directing the bank to deliver to
respondent sheriff the amount equivalent to the unpaid balance.

Pending resolution of the above motions, petitioner filed a "Manifestation" informing the court
that private respondent was no longer the true and lawful owner of the subject property because
a new title over the property had been registered in the name of Philippine Savings Bank, Inc.
PSB filed a manifestation informing the court that it had consolidated its ownership over the
property as mortgagee/purchaser at an extrajudicial foreclosure sale. After several conferences,
PSB and private respondent entered into a compromise agreement whereby they agreed to divide
between themselves the compensation due from the expropriation proceedings.

Respondent trial judge subsequently issued an order dated September 8, 1988 which: (1)
approved the compromise agreement; (2) ordered PNB Buendia Branch to immediately release
to PSB the sum of P4,953,506.45 which corresponds to the balance of the appraised value of the
subject property under the RTC decision dated June 4, 1987, from the garnished account of
petitioner; and, (3) ordered PSB and private respondent to execute the necessary deed of
conveyance over the subject property in favor of petitioner.

Petitioner contended that its funds at the PNB Buendia Branch could neither be garnished nor
levied upon execution, for to do so would result in the disbursement of public funds without
the proper appropriation required under the law, citing the case of Republic of the Philippines
v. Palacio.

Respondent trial judge issued an order dated December 21, 1988 denying petitioner's motion for
reconsideration on the ground that the doctrine enunciated in Republic v. Palacio did not apply
to the case because petitioner's PNB Account No. S/A 265-537154-3 was an account specifically
opened for the expropriation proceedings of the subject property pursuant to Pres. Decree No.
42.

Petitioner for the first time that it has actually two accounts with the PNB Buendia Branch, to wit:

(1) Account No. S/A 265-537154-3 exclusively for the expropriation of the subject
property, with an outstanding balance of P99,743.94.

(2) Account No. S/A 263-530850-7 for statutory obligations and other purposes of the
municipal government, with a balance of P170,098,421.72, as of July 12, 1989.

Admitting that its PNB Account No. S/A 265-537154-3 was specifically opened for expropriation
proceedings it had initiated over the subject property, petitioner poses no objection to the
garnishment or the levy under execution of the funds deposited therein amounting to P99,743.94.
However, it is petitioner's main contention that inasmuch as the assailed orders of respondent
RTC judge involved the net amount of P4,965,506.45, the funds garnished by respondent sheriff
in excess of P99,743.94, which are public funds earmarked for the municipal government's other
statutory obligations, are exempted from execution without the proper appropriation required
under the law.

There is merit in this contention. The funds deposited in the second PNB Account No. S/A 263-
530850-7 are public funds of the municipal government. In this jurisdiction, well-settled is the
rule that public funds are not subject to levy and execution, unless otherwise provided for by
statute. The foregoing rule finds application in the case at bar. Absent a showing that the
municipal council of Makati has passed an ordinance appropriating from its public funds an
amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the
sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be
validly effected on the public funds of petitioner deposited in Account No. S/A 263-530850-7.
Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse.
Where a municipality fails or refuses, without justifiable reason, to effect payment of a final
money judgment rendered against it, the claimant may avail of the remedy of mandamus in
order to compel the enactment and approval of the necessary appropriation ordinance, and the
corresponding disbursement of municipal funds therefor.

In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner.
No appeal was taken therefrom. For three years now, petitioner has enjoyed possession and use
of the subject property notwithstanding its inexcusable failure to comply with its legal obligation
to pay just compensation.

The State's power of eminent domain should be exercised within the bounds of fair play and
justice. In the case at bar, considering that valuable property has been taken, the compensation to
be paid fixed and the municipality is in full possession and utilizing the property for public
purpose, for three (3) years, the Court finds that the municipality has had more than reasonable
time to pay full compensation.

Fontanilla v Maliaman

FACTS: It appears that a pickup owned and operated by respondent National Irrigation
Administration, a government agency bearing Plate No. IN-651, then driven officially by Hugo
Garcia, an employee of said agency as its regular driver, bumped a bicycle ridden by Francisco
Fontanilla, son of herein petitioners, along the Maharlika Highway. As a result of the impact,
Francisco Fontanilla and Restituto Deligo were injured and brought to the San Jose City
Emergency Hospital for treatment. Fontanilla was later transferred to the Cabanatuan Provincial
Hospital where he died.

Garcia was then a regular driver of respondent National Irrigation Administration who, at the
time of the accident, was a licensed professional driver and who qualified for employment as
such regular driver of respondent after having passed the written and oral examinations on traffic
rules and maintenance of vehicles given by National Irrigation Administration authorities.

After trial, the trial court rendered judgment directinh respondent National Irrigation
Administration to pay damages (death benefits) and actual expenses to petitioners. P12,000.00 for
the death of Francisco Fontanilla; P3,389.00 which the parents of the deceased had spent for the
hospitalization and burial of the deceased Francisco Fontanilla; and to pay the costs.

Petitioners allege: The award of moral damages is specifically allowable. under paragraph 3 of
Article 2206 of the New Civil Code which provides that the spouse, legitimate and illegitimate
descendants and ascendants of the deceased may demand moral damages for mental anguish by
reason of the death of the deceased.

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

The Solicitor General, taking up the cudgels for public respondent National Irrigation
Administration, contends thus: Respondents do not assail petitioners' claim to moral and
exemplary damages by reason of the shock and subsequent illness they suffered because of the
death of their son. Respondent National Irrigation Administration, however, avers that it cannot
be held liable for the damages because it is an agency of the State performing governmental
functions and driver Hugo Garcia was a regular driver of the vehicle, not a special agent who
was performing a job or act foreign to his usual duties. Hence, the liability for the tortious act
should. not be borne by respondent government agency but by driver Garcia who should answer
for the consequences of his act.

ISSUE: Whether or not petitioners may be entitled to an award of moral and exemplary damages

HELD: Yes. The liability of the State has two aspects. namely:

1. Its public or governmental aspects where it is liable for the tortious acts of special agents
only.

2. Its private or business aspects (as when it engages in private enterprises) where it becomes
liable as an ordinary employer.

In this jurisdiction, the State assumes a limited liability for the damage caused by the tortious acts
or conduct of its special agent.

Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed liability for acts
done through special agents. The State's agent, if a public official, must not only be specially
commissioned to do a particular task but that such task must be foreign to said official's usual
governmental functions. If the State's agent is not a public official, and is commissioned to
perform non-governmental functions, then the State assumes the role of an ordinary employer
and will be held liable as such for its agent's tort. Where the government commissions a private
individual for a special governmental task, it is acting through a special agent within the meaning
of the provision.

The National Irrigation Administration is an agency of the government exercising proprietary

functions, by express provision of Rep. Act No. 3601. Section 1 of said Act provides:

Section 1. Name and domicile.-A body corporate is hereby created which shall be known as the
National Irrigation Administration, hereinafter called the NIA for short, which shall be organized
immediately after the approval of this Act. It shall have its principal seat of business in the City
of Manila and shall have representatives in all provinces for the proper conduct of its business.

Section 2 of said law spells out some of the NIA's proprietary functions. Thus-

(c) To collect from the users of each irrigation system constructed by it such fees as may be
necessary to finance the continuous operation of the system and reimburse within a certain period
not less than twenty-five years cost of construction thereof; and
(d) To do all such other things and to transact all such business as are directly or indirectly
necessary, incidental or conducive to the attainment of the above objectives.

Indubitably, the NIA is a government corporation with juridical personality and not a mere
agency of the government. Since it is a corporate body performing non-governmental
functions, it now becomes liable for the damage caused by the accident resulting from the
tortious act of its driver-employee. In this particular case, the NIA assumes the responsibility
of an ordinary employer and as such, it becomes answerable for damages. NIA is a government
agency with a personality separate and distinct from the government. It is a corporate body
performing proprietary

This assumption of liability, however, is predicated upon the existence of negligence on the part
of respondent NIA. The negligence referred to here is the negligence of supervision.

At this juncture, the matter of due diligence on the part of respondent NIA becomes a crucial
issue in determining its liability since it has been established that respondent is a government
agency performing proprietary functions and as such, it assumes the posture of an ordinary
employer which, under Par. 5 of Art. 2180, is responsible for the damages caused by its employees
provided that it has failed to observe or exercise due diligence in the selection and supervision of
the driver.

It should be emphasized that the accident happened along the Maharlika National Road within
the city limits of San Jose City, an urban area. Considering the fact that the victim was thrown 50
meters away from the point of impact, there is a strong indication that driver Garcia was driving
at a high speed. This is confirmed by the fact that the pick-up suffered substantial and heavy
damage as above-described and the fact that the NIA group was then "in a hurry to reach the
campsite as early as possible", as shown by their not stopping to find out what they bumped as
would have been their normal and initial reaction.

Evidently, there was negligence in the supervision of the driver for the reason that they were
travelling at a high speed within the city limits and yet the supervisor of the group, Ely Salonga,
failed to caution and make the driver observe the proper and allowed speed limit within the city.
Under the situation, such negligence is further aggravated by their desire to reach their
destination without even checking whether or not the vehicle suffered damage from the object it
bumped, thus showing imprudence and reckelessness on the part of both the driver and the
supervisor in the group.

Considering the foregoing, respondent NIA is hereby directed to pay herein petitioners-spouses
the amounts of P12,000.00 for the death of Francisco Fontanilla; P3,389.00 for hospitalization and
burial expenses of the aforenamed deceased; P30,000.00 as moral damages; P8,000.00 as
exemplary damages and attorney's fees of 20% of the total award.
Province of North Cotabato vs. GRP Peace Panel

Facts: On 8 August 2008, the Government of the Republic of the Philippines (GRP), represented
by the GRP Peace Panel and the Presidential Adviser on the Peace Process (PAPP), and the Moro
Islamic Liberation Front (MILF) were scheduled to sign the Memorandum of Agreement on the
Ancestral Domain (MOA-AD) Aspect of the previous GRP-MILF Tripoli Agreement on Peace of
2001 in Kuala Lumpur, Malaysia.

The MOA-AD included, among others, a stipulation that creates the Bangsamoro Juridical Entity
(BJE), to which the GRP grants the authority and jurisdiction over the ancestral domain and
ancestral lands of the Bangsamorodefined as the present geographic area of the ARMM
constituted by Lanao del Sur, Maguindanao, Sulu, Tawi-Tawi, Basilan, and Marawi City, as well
as the municipalities of Lanao del Norte which voted for inclusion in the ARMM in the 2001
plebiscite. The BJE is then granted the power to build, develop, and maintain its own institutions.
The MOA-AD also described the relationship of the GRP and the BJE as associative,
characterized by shared authority and responsibility. It further provides that its provisions
requiring amendments to the existing legal framework shall take effect upon signing of a
Comprehensive Compact.

Before the signing, however, the Province of North Cotabato sought to compel the respondents
to disclose and furnish it with complete and official copies of the MOA-AD, as well as to hold a
public consultation thereon, invoking its right to information on matters of public concern. A
subsequent petition sought to have the City of Zamboanga excluded from the BJE. The Court then
issued a Temporary Restraining Order (TRO) on 4 August 2008, directing the public respondents
and their agents to cease and desist from formally signing the MOA-AD.

Issues: Whether or not the MOA-AD is constitutional.

HELD: No. The MOA-AD is inconsistent with the Constitution and laws as presently worded.

In general, the objections against the MOA-AD center on the extent of the powers conceded
therein to the BJE. Petitioners assert that the powers granted to the BJE exceed those granted to
any local government under present laws, and even go beyond those of the present ARMM.
Before assessing some of the specific powers that would have been vested in the BJE, however, it
would be useful to turn first to a general idea that serves as a unifying link to the different
provisions of the MOA-AD, namely, the international law concept of association. Significantly,
the MOA-AD explicitly alludes to this concept, indicating that the Parties actually framed its
provisions with it in mind.

Association is referred to in paragraph 3 on TERRITORY, paragraph 11 on RESOURCES, and

paragraph 4 on GOVERNANCE. It is in the last mentioned provision, however, that the MOA-
AD most clearly uses it to describe the envisioned relationship between the BJE and the Central
Government.

The relationship between the Central Government and the Bangsamoro juridical entity shall be
associative characterized by shared authority and responsibility with a structure of governance
based on executive, legislative, judicial and administrative institutions with defined powers and
functions in the comprehensive compact. A period of transition shall be established in a
comprehensive peace compact specifying the relationship between the Central Government and
the BJE. (Emphasis and underscoring supplied)

The nature of the associative relationship may have been intended to be defined more precisely
in the still to be forged Comprehensive Compact. Nonetheless, given that there is a concept of
association in international law, and the MOA-AD by its inclusion of international law
instruments in its TOR placed itself in an international legal context, that concept of association
may be brought to bear in understanding the use of the term associative in the MOA-AD.

Keitner and Reisman state that

[a]n association is formed when two states of unequal power voluntarily establish durable links.
In the basic model, one state, the associate, delegates certain responsibilities to the other, the
principal, while maintaining its international status as a state. Free associations represent a
middle ground between integration and independence. x x x[150] (Emphasis and underscoring
supplied)

For purposes of illustration, the Republic of the Marshall Islands and the Federated States of
Micronesia (FSM), formerly part of the U.S.-administered Trust Territory of the Pacific
Islands,[151] are associated states of the U.S. pursuant to a Compact of Free Association. The
currency in these countries is the U.S. dollar, indicating their very close ties with the U.S., yet they
issue their own travel documents, which is a mark of their statehood. Their international legal
status as states was confirmed by the UN Security Council and by their admission to UN
membership.

According to their compacts of free association, the Marshall Islands and the FSM generally have
the capacity to conduct foreign affairs in their own name and right, such capacity extending to
matters such as the law of the sea, marine resources, trade, banking, postal, civil aviation, and
cultural relations. The U.S. government, when conducting its foreign affairs, is obligated to
consult with the governments of the Marshall Islands or the FSM on matters which it (U.S.
government) regards as relating to or affecting either government.

Back to the MOA-AD, it contains many provisions which are consistent with the international
legal concept of association, specifically the following: the BJEs capacity to enter into economic
and trade relations with foreign countries, the commitment of the Central Government to ensure
the BJEs participation in meetings and events in the ASEAN and the specialized UN agencies,
and the continuing responsibility of the Central Government over external defense. Moreover,
the BJEs right to participate in Philippine official missions bearing on negotiation of border
agreements, environmental protection, and sharing of revenues pertaining to the bodies of water
adjacent to or between the islands forming part of the ancestral domain, resembles the right of
the governments of FSM and the Marshall Islands to be consulted by the U.S. government on any
foreign affairs matter affecting them.

These provisions of the MOA indicate, among other things, that the Parties aimed to vest in the
BJE the status of an associated state or, at any rate, a status closely approximating it.
The concept of association is not recognized under the present Constitution

No province, city, or municipality, not even the ARMM, is recognized under our laws as having
an associative relationship with the national government. Indeed, the concept implies powers
that go beyond anything ever granted by the Constitution to any local or regional government. It
also implies the recognition of the associated entity as a state. The Constitution, however, does
not contemplate any state in this jurisdiction other than the Philippine State, much less does it
provide for a transitory status that aims to prepare any part of Philippine territory for
independence.

Even the mere concept animating many of the MOA-ADs provisions, therefore, already requires
for its validity the amendment of constitutional provisions, specifically the following provisions
of Article X:

SECTION 1. The territorial and political subdivisions of the Republic of the Philippines are the
provinces, cities, municipalities, and barangays. There shall be autonomous regions in Muslim
Mindanao and the Cordilleras as hereinafter provided.

SECTION 15. There shall be created autonomous regions in Muslim Mindanao and in the
Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing
common and distinctive historical and cultural heritage, economic and social structures, and
other relevant characteristics within the framework of this Constitution and the national
sovereignty as well as territorial integrity of the Republic of the Philippines.

The BJE is a far more powerful entity than the autonomous region recognized in the Constitution

It is not merely an expanded version of the ARMM, the status of its relationship with the national
government being fundamentally different from that of the ARMM. Indeed, BJE is a state in all
but name as it meets the criteria of a state laid down in the Montevideo Convention,[154] namely,
a permanent population, a defined territory, a government, and a capacity to enter into relations
with other states.

Even assuming arguendo that the MOA-AD would not necessarily sever any portion of
Philippine territory, the spirit animating it which has betrayed itself by its use of the concept of
association runs counter to the national sovereignty and territorial integrity of the Republic.

The defining concept underlying the relationship between the national government and the BJE
being itself contrary to the present Constitution, it is not surprising that many of the specific
provisions of the MOA-AD on the formation and powers of the BJE are in conflict with the
Constitution and the laws.

Article X, Section 18 of the Constitution provides that [t]he creation of the autonomous region
shall be effective when approved by a majority of the votes cast by the constituent units in a
plebiscite called for the purpose, provided that only provinces, cities, and geographic areas voting
favorably in such plebiscite shall be included in the autonomous region. (Emphasis supplied)
 As reflected above, the BJE is more of a state than an autonomous region. But even assuming that
it is covered by the term autonomous region in the constitutional provision just quoted, the MOA-
AD would still be in conflict with it. Under paragraph 2(c) on TERRITORY in relation to 2(d) and
2(e), the present geographic area of the ARMM and, in addition, the municipalities of Lanao del
Norte which voted for inclusion in the ARMM during the 2001 plebiscite Baloi, Munai,
Nunungan, Pantar, Tagoloan and Tangkal are automatically part of the BJE without need of
another plebiscite, in contrast to the areas under Categories A and B mentioned earlier in the
overview. That the present components of the ARMM and the above-mentioned municipalities
voted for inclusion therein in 2001, however, does not render another plebiscite unnecessary
under the Constitution, precisely because what these areas voted for then was their inclusion in
the ARMM, not the BJE.

Nicolas v Romulo

FACTS: Respondent Lance Corporal (L/CPL) Daniel Smith is a member of the United States
Armed Forces. He was charged with the crime of rape committed against a Filipina, petitioner
herein, sometime on November 1, 2005. That on or about the First (1st) day of November 2005,
inside the Subic Bay Freeport Zone, Olongapo City and within the jurisdiction of this Honorable
Court, the above-named accuseds (sic), being then members of the United States Marine Corps,
except Timoteo L. Soriano, Jr., conspiring, confederating together and mutually helping one
another, with lewd design and by means of force, threat and intimidation, with abuse of superior
strength and taking advantage of the intoxication of the victim, did then and there willfully,
unlawfully and feloniously sexually abuse and have sexual intercourse with or carnal knowledge
of one Suzette S. Nicolas, a 22-year old unmarried woman inside a Starex Van with Plate No.
WKF-162, owned by Starways Travel and Tours, with Office address at 8900 P. Victor St.,
Guadalupe, Makati City, and driven by accused Timoteo L. Soriano, Jr., against the will and
consent of the said Suzette S. Nicolas, to her damage and prejudice.

Pursuant to the Visiting Forces Agreement (VFA) between the Republic of the Philippines and
the United States, entered into on February 10, 1998, the United States, at its request, was granted
custody of defendant Smith pending the proceedings.

On December 4, 2006, the RTC of Makati, following the end of the trial, rendered its Decision,
finding defendant Smith guilty.

Pursuant to Article V, paragraph No. 10, of the Visiting Forces Agreement entered into by the
Philippines and the United States, accused L/CPL. DANIEL J. SMITH shall serve his sentence in
the facilities that shall, thereafter, be agreed upon by appropriate Philippine and United States
authorities. Pending agreement on such facilities, accused L/CPL. DANIEL J. SMITH is hereby
temporarily committed to the Makati City Jail.

As a result, the Makati court ordered Smith detained at the Makati jail until further orders.

On December 29, 2006, however, defendant Smith was taken out of the Makati jail by a contingent
of Philippine law enforcement agents and brought to a facility for detention under the control of
the United States government, provided for under new agreements between the Philippines and
the United States, referred to as the Romulo-Kenney Agreement of December 19, 2006 which
states:

The Government of the Republic of the Philippines and the Government of the United States of
America agree that, in accordance with the Visiting Forces Agreement signed between our two
nations, Lance Corporal Daniel J. Smith, United States Marine Corps, be returned to U.S. military
custody at the U.S. Embassy in Manila.

Petitioners contend that the Philippines should have custody of defendant L/CPL Smith because,
first of all, the VFA is void and unconstitutional.

ISSUE: Whether or not the VFA is unconstitutional

HELD: No. This issue had been raised before, and this Court resolved in favor of the
constitutionality of the VFA. This was in Bayan v. Zamora,[4] brought by Bayan, one of petitioners
in the present cases.

The reason for this provision lies in history and the Philippine experience in regard to the United
States military bases in the country.

It will be recalled that under the Philippine Bill of 1902, which laid the basis for the Philippine
Commonwealth and, eventually, for the recognition of independence, the United States agreed
to cede to the Philippines all the territory it acquired from Spain under the Treaty of Paris, plus a
few islands later added to its realm, except certain naval ports and/or military bases and facilities,
which the United States retained for itself.

Accordingly, the Philippines had no jurisdiction over these bases except to the extent allowed by
the United States. Furthermore, the RP-US Military Bases Agreement was never advised for
ratification by the United States Senate, a disparity in treatment, because the Philippines regarded
it as a treaty and had it concurred in by our Senate.

First, as held in Bayan v. Zamora,[5] the VFA was duly concurred in by the Philippine Senate and
has been recognized as a treaty by the United States as attested and certified by the duly
authorized representative of the United States government.

The second reason has to do with the relation between the VFA and the RP-US Mutual Defense
Treaty of August 30, 1951. This earlier agreement was signed and duly ratified with the
concurrence of both the Philippine Senate and the United States Senate.

The joint RP-US military exercises for the purpose of developing the capability to resist an armed
attack fall squarely under the provisions of the RP-US Mutual Defense Treaty. The VFA, which
is the instrument agreed upon to provide for the joint RP-US military exercises, is simply an
implementing agreement to the main RP-US Military Defense Treaty.

Accordingly, as an implementing agreement of the RP-US Mutual Defense Treaty, it was not
necessary to submit the VFA to the US Senate for advice and consent, but merely to the US
Congress under the CaseZablocki Act within 60 days of its ratification. It is for this reason that
the US has certified that it recognizes the VFA as a binding international agreement, i.e., a treaty,
and this substantially complies with the requirements of Art. XVIII, Sec. 25 of our
Constitution.[10]

The provision of Art. XVIII, Sec. 25 of the Constitution, is complied with by virtue of the fact that
the presence of the US Armed Forces through the VFA is a presence allowed under the RP-US
Mutual Defense Treaty. Since the RP-US Mutual Defense Treaty itself has been ratified and
concurred in by both the Philippine Senate and the US Senate, there is no violation of the
Constitutional provision resulting from such presence.

The VFA being a valid and binding agreement, the parties are required as a matter of international
law to abide by its terms and provisions.

The VFA provides that in cases of offenses committed by the members of the US Armed Forces
in the Philippines, the following rules apply:

Article V

Criminal Jurisdiction

6. The custody of any United States personnel over whom the Philippines is to exercise
jurisdiction shall immediately reside with United States military authorities, if they so request,
from the commission of the offense until completion of all judicial proceedings.

Petitioners contend that these undertakings violate another provision of the Constitution,
namely, that providing for the exclusive power of this Court to adopt rules of procedure for all
courts in the Philippines (Art. VIII, Sec. 5[5]). They argue that to allow the transfer of custody of
an accused to a foreign power is to provide for a different rule of procedure for that accused,
which also violates the equal protection clause of the Constitution (Art. III, Sec. 1.).

Again, this Court finds no violation of the Constitution.

The equal protection clause is not violated, because there is a substantial basis for a different
treatment of a member of a foreign military armed forces allowed to enter our territory and all
other accused.[11]

It is clear that the parties to the VFA recognized the difference between custody during the trial
and detention after conviction, because they provided for a specific arrangement to cover
detention. And this specific arrangement clearly states not only that the detention shall be carried
out in facilities agreed on by authorities of both parties, but also that the detention shall be by
Philippine authorities. Therefore, the Romulo-Kenney Agreements of December 19 and 22, 2006,
which are agreements on the detention of the accused in the United States Embassy, are not in
accord with the VFA itself because such detention is not by Philippine authorities.

Respondents should therefore comply with the VFA and negotiate with representatives of the
United States towards an agreement on detention facilities under Philippine authorities as
mandated by Art. V, Sec. 10 of the VFA.

Next, the Court addresses the recent decision of the United States Supreme Court in Medellin v.
Texas ( 552 US ___ No. 06-984, March 25, 2008), which held that treaties entered into by the United
States are not automatically part of their domestic law unless these treaties are self-executing or
there is an implementing legislation to make them enforceable.

First, the VFA is a self-executing Agreement, as that term is defined in Medellin itself, because
the parties intend its provisions to be enforceable, precisely because the Agreement is intended
to carry out obligations and undertakings under the RP-US Mutual Defense Treaty. As a matter
of fact, the VFA has been implemented and executed, with the US faithfully complying with its
obligation to produce L/CPL Smith before the court during the trial.

The framers of the Constitution were aware that the application of international law in domestic
courts varies from country to country.

As Ward N. Ferdinandusse states in his Treatise, DIRECT APPLICATION OF

INTERNATIONAL CRIMINAL LAW IN NATIONAL COURTS, some countries require
legislation whereas others do not.

It was not the intention of the framers of the 1987 Constitution, in adopting Article XVIII, Sec. 25,
to require the other contracting State to convert their system to achieve alignment and parity with
ours. It was simply required that the treaty be recognized as a treaty by the other contracting
State. With that, it becomes for both parties a binding international obligation and the
enforcement of that obligation is left to the normal recourse and processes under international
law.

Furthermore, as held by the US Supreme Court in Weinberger v. Rossi,[13] an executive

agreement is a treaty within the meaning of that word in international law and constitutes
enforceable domestic law vis--vis the United States. Thus, the US Supreme Court in Weinberger
enforced the provisions of the executive agreement granting preferential employment to Filipinos
in the US Bases here.

Accordingly, there are three types of treaties in the American system:

1. Art. II, Sec. 2 treaties These are advised and consented to by the US Senate in accordance
with Art. II, Sec. 2 of the US Constitution.

2. ExecutiveCongressional Agreements: These are joint agreements of the President and

Congress and need not be submitted to the Senate.

3. Sole Executive Agreements. These are agreements entered into by the President. They
are to be submitted to Congress within sixty (60) days of ratification under the provisions of the
Case-Zablocki Act, after which they are recognized by the Congress and may be implemented.

As regards the implementation of the RP-US Mutual Defense Treaty, military aid or assistance
has been given under it and this can only be done through implementing legislation. The VFA
itself is another form of implementation of its provisions.

WHEREFORE, the petitions are PARTLY GRANTED. The Visiting Forces Agreement (VFA)
between the Republic of the Philippines and the United States, entered into on February 10, 1998,
is UPHELD as constitutional, but the Romulo-Kenney Agreements of December 19 and 22, 2006
are DECLARED not in accordance with the VFA, and respondent Secretary of Foreign Affairs is
hereby ordered to forthwith negotiate with the United States representatives for the appropriate
agreement on detention facilities under Philippine authorities as provided in Art. V, Sec. 10 of the
VFA, pending which the status quo shall be maintained until further orders by this Court.

National Housing Authority v Roxas

FACTS: The National Housing Authority (NHA), a government-owned and -controlled

corporation created and existing under Presidential Decree No. 757,1 may sue and be sued.
However, no court should issue a writ of execution upon any monetary judgment rendered
against the NHA unless such monetary judgment is first submitted to and passed upon by the
Commission on Audit (COA).

The NHA is charged, among others, with the development of the Dagat-dagatan Development
Project (project) situated in Navotas, Metro Manila. Roxas applied for commercial lots in the
project, particularly Lot 9 and Lot 10 in Block 11, Area 3, Phase III A/B, with an area of 176 square
meters, for the use of his business of buying and selling gravel, sand and cement products. The
NHA approved his application, and issued the order of payment respecting the lots. The NHA
issued the notice of award for the lots in favor of Roxas, at P1,500.00/square meter.9 On the basis
of the order of payment and the notice of award, Roxas made his downpayment of P79,200.00.10
A relocation/reblocking survey resulted in the renumbering of Lot 9 to Lot 5 and Lot 10 to Lot 6
(subject lots).11 He completed his payment for the subject lots.

In the meanwhile, the NHA conducted a final subdivision project survey, causing the increase in
the area of the subject lots from 176 to 320 square meters. The NHA informed Roxas about the
increase in the area of the subject lots, and approved the award of the additional area of 144 square
meters to him at P3,500.00/square meter. Although manifesting his interest in acquiring the
additional area, he appealed for the reduction of the price pointing out that Lot 5 and Lot 6 were
a substitution unilaterally imposed by the NHA that resulted in the increase of 144 square meters
and that although he desired to purchase the increased area, the purchase must be in accordance
with the terms and conditions contained in the order of payment and notice of award issued to
him. After the NHA rejected his appeal, he commenced in the RTC this action for specific
performance and damages, with prayer for the issuance of a writ of preliminary injunction. He
amended the complaint15 to compel the NHA to comply with the terms and conditions of the
order of payment and the notice of award.

The RTC rendered judgment against the NHA,17 decreeing:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff Ernesto

Roxas and against defendant NHA, represented by its General Manager and its Dagat-dagatan
Development Project Manager, as follows:

1. Declaring plaintiff Ernesto Roxas the legal awardee of subject lots 5 and 6 in the full total area
thereof of 320 sq. meters;
2. Ordering defendant NHA to execute the corresponding Contract to Sell for the entire area of
subject lots 5 and 6 totaling to 320 sq. meters at the cost of PI,500.00 per sq. meter

3. Ordering defendant NHA to pay plaintiff P30,000.00 by way of reasonable Attorney's Fees.

Roxas filed his motion for the issuance of the writ of execution, which the RTC granted.

The NHA insists that the judgment of the RTC did not lie against it because its submission to the
litigation did not necessarily imply that the Government had thereby given its consent to liability;
and that the money judgment awarded to Roxas could not be recovered by motion for execution
but should have been first filed in the COA.

ISSUE: Whether or not the NHA may be sued; Whether or not the motion for execution must be
filed in the COA first

HELD: The appeal is partly meritorious.

First of all, the mantle of the State's immunity from suit did not extend to the NHA despite its
being a government-owned and -controlled corporation. Under Section 6(i) of Presidential Decree
No. 757, which was its charter, the NHA could sue and be sued. As such, the NHA was not
immune from the suit of Roxas.

And, secondly, for purposes of the implementation of the writ of execution, it is necessary to
distinguish between, on the one hand, the main relief adjudicated in the judgment of July 15,
1994, which was the decree of specific performance as to the right of Roxas to acquire the subject
lots at Pl,500.00/square meter as stated in the original agreement between the parties, and, on the
other, the secondary relief for the attorney's fees of P30,000.00 to be paid by the NHA to Roxas.

Section 12 of Presidential Decree No. 757 has authorized the NHA to "determine, establish and
maintain the most feasible and effective program for the management or disposition of specific
housing or resettlement projects undertaken by [it]", and "[u]nless otherwise decided by the
Board, completed housing or resettlement projects shall be managed and administered by [it]."
The execution of the contract to sell by the NHA conformably with the main relief under the
judgment would be in the ordinary course of the management or disposition of the Dagat-
dagatan Development Project undertaken by the NHA. In other words, the NHA possessed the
legal competence and authority to directly afford the main relief without Roxas needing to first
submit to the COA the contract to sell for review and approval. To maintain otherwise is to
unconstitutionally grant to the COA the power of judicial review in respect of the decision of a
court of law.

However, settling or paying off the secondary relief for the attorney's fees of 30,000.00, being a
monetary obligation of the NHA, would not be in the usual course of the activities of the NHA
under its charter. That such relief was the consequence of the suit that granted the main relief did
not matter. Pursuant to Section 26 of Presidential Decree No. 1445, Roxas should first bring it to
the COA prior to its enforcement against the NHA.25 Indeed, Section 26 specifically vested in the
COA the power, authority and duty to examine, audit and settle "all debts and claims of any sort"
due from or owing to the Government, or any of its subdivisions, agencies, or instrumentalities,
including government-owned and controlled corporations with original charters.

There is no question that the NHA could sue or be sued, and thus could be held liable under the
judgment rendered against it. But the universal rule remains to be that the State, although it gives
its consent to be sued either by general or special law, may limit the claimant's action only up to
the completion of proceedings anterior to the stage of execution. In other words, the power of the
court ends when the judgment is rendered because government funds and property may not be
seized pursuant to writs of execution or writs of garnishment to satisfy such judgments. The
functions and public services of the State cannot be allowed to be paralyzed or disrupted by the
diversion of public fund from their legitimate and specific objects, and as appropriated by law.
The rule is based on obvious considerations of public policy. Indeed, the disbursements of public
funds must be covered by the corresponding appropriation as required by law.28

WHEREFORE, the Court PARTLY GRANTS the petition for review on certiorari; and MODIFIES
the writ of execution dated February 24, 2003 by enjoining the respondent to file his claim for
attorney's fees with the Commission on Audit pursuant to Presidential Decree No. 1445.