KAWANANAKOA VS.
POLYBANK Hawaii cannot be sued since the territory itself is
205 US 349
Facts:
The case at bar is an appeal from a decree
affirming a decree of foreclosure and sale under a
mortgage executed by the appellants (Ballou) to
the appellee, Sister Albertina. After the execution
of the mortgage, part of the land was conveyed to
the Territory of Hawaii and it became a public
street. When a decree of foreclosure was made,
the decree did not include the sale of the land
conveyed to the Territory. The decree also
directed a judgment for the sum remaining in
case the proceeds from the sale was not sufficient
to cover the debt. The appellants argue that all
parts of the mortgage land must be joined and
that the deficiency judgment shouldn’t be entered
until the entire mortgage land is sold. To support
this they argue that the Territory of Hawaii can
also be liable to suit.
Issue:
Whether or not the territory of Hawaii is liable to
suit.
Ruling:
No. 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 against the authority that makes
a law on which the right depends. The territory of
where the rights derive their power. It could
waive its exemption, but in this case it did not
since the inability to join all parties and to sell the
land is not due to a conveyance by the mortgagor
directly or indirectly to the territory.
Garcia v. Chief of Staf
16 SCRA 120
Facts
December 1, 1961, the plaintiff-appellant,
Mariano E. Garcia, filed with the Court of First
Instance of Pangasinan an action to collect a sum
of money against the Chief of Staff and the
Adjutant General of the Armed Forces of the
Philippines, the Chairman of the Philippine
Veterans Board and /or the Auditor General. The
complaint alleged: that sometime in July, 1948,
the plaintiff suffered injuries while undergoing
the 10-month military training at Camp
Floridablanca, Pampanga.
He filed his claim under Commonwealth Act 400
and in April, 1957, he submitted some papers in
support of his claim to the Adjutant General's
Office later disallowing his claim for disability
benefits; after further demands of the the plaintiff
the Adjutant General's Office denied the said
claim, alleging that Commonwealth Act had
already been repealed by Republic Act 610 which
took effect on January 1, 1950; that by reason of
the injuries suffered by plaintiff he was deprived
of his sight or vision rendering him permanently
disabled; and that by reason of the unjustified
refusal by defendants of plaintiff's claim, the
latter was deprived of his disability pension from
July, 1948 totalling no less than P4,000 at the rate
of P20 a month and suffered thereby moral
damages and attorney's fees the amount of
P2,000.00.
The Philippine Veterans Administration and the
Chief of Staff of the Armed Forces filed separate
motions to dismiss the complaint on the grounds
that the court has no jurisdiction over the subject
matter of the complaint; that the plaintiff failed to
exhaust all administrative remedies before
coming to court; that the complaint states no
cause of action. Acting on the said motion, the
court rendered an order dismissing the complaint
on the ground that the action has prescribed.
Motion for reconsideration of the said order
having been denied, the plaintiff has interposed
this appeal.
Issue: Whether or not the Court of First Instance
has jurisdiction of the subject matter of the
complaint.
Rule:
No. We have to uphold the order of dismissal, that
the Court of First Instance has no jurisdiction
over the subject matter, it being a money claim
against the government.
This Court has already held (New Manila Lumber
Co. Inc. vs. Republic, G.R. No. L-14248, April 28,
1960) that a claim for the recovery of money
against the government should be filed with the
Auditor General, in line with the principle that
the State cannot be sued without its consent.
Commonwealth Act 327 provides:
SECTION 1. In all cases involving the settlement
of accounts or claims, other than those of
accountable officers, the Auditor General shall
act and decide the same within sixty days,
exclusive of Sundays and holidays, after their
presentation. . . .
SEC. 2. The party aggrieved by the final decision
of the Auditor General in the settlement of an
account or claim may, within thirty days from
receipt of the decision, take an appeal in writing:
The well established rule that no recourse to
court can be had until all administrative remedies
had been exhausted and that actions against
administrative officers should not be entertained
if superior administrative officers could grant
relief is squarely applicable to the present case.
In view therefor, the order dismissing the
complaint is hereby affirmed, without
pronouncement as to costs.
RUIZ vs CABAHUG
G.R. No. L-9990 (54 O.G 351)
Facts:
The Secretary of National Defense, defendant
Hon. Sotero B. Cabahug, accepted the bid of Allied
Technologists, Inc. on July 31, 1950 for the furnishing of
the architectural and engineering services in the
construction of the Veterans Hospital at the price of
P302,700.
The architectural requirements were submitted
by the Allied Technologies through Enrique Ruiz, Jose
Hererra and Pablo Panlillo and were approved by the
United States Veterans Administration and a contract
was signed due to the technical objection of the
Secretary of Justice.
The defendants allegedly took 15% of the sum
due to Allied Technologists, Inc. at the time of the
payment of their share of professional services and
their professional prestige and standing were to be
gravely damaged unless the defendants are prevented
from recognizing Panlillo as the sole architect.
Furthermore, the cause of action is Title II of the
contract where at any time prior to six months after
completion and acceptance of the work under Title I,
the Government may direct Allied Technologists, Inc. to
do the services stated in the said Title II yet
nevertheless the completion the government declined
to direct the plaintiffs to perform the job.
Issue:
Whether or not the government can be sued for
withholding the 15% of the sum and depriving the
plaintiffs of their share
Held:
NO. The case is not a suit against the
government, which could not be sued without its
consent. It was found that the government has already
allotted the full amount for the contract price; it was the
defendant-officials alone, where they are compelled to
act in accordance with the rights established by Ruiz
and Hererra or to desist them from paying and
recognizing the rights and interests in the funds
retained and the credit for the job finished.
The order of dismissal was reversed and set
aside and the case was remanded to the court a quo for
further proceedings with costs against the defendants.
Republic vs. Sandoval
G.R. No. 84607
Facts:
The heirs of the deceased of the January 22,
1987 Mendiola massacre together with those
injured (Caylao group), instituted the petition,
seeking the reversal and setting aside of the
orders of respondent Judge Sandoval (May 31
and Aug 8, 1988) in "Erlinda Caylao, et al. vs.
Republic of the Philippines, et al." which
dismissed the case against the Republic of the
Philippines.
May 31 order: Because the impleaded
military officers are being charged in their
personal and official capacity, holding them
liable, if at all, would not result in financial
responsibility of the government.
Aug 8 order: denied the motions filed by
both parties for reconsideration.
 In January 1987, farmers and their
sympathizers presented their demands for what
they called "genuine agrarian reform".
The Kilusang Magbubukid ng Pilipinas
(KMP), led by Jaime Tadeo, presented their
problems and demands such as:
-giving lands for free to farmers
-zero retention of lands by landlords
-stop amortizations of land payments
Dialogue between the farmers and then
Ministry of Agrarian Reform (MAR) began on
January 15, 1987
On January 20, 1987, Tadeo met with MAR
Minister Heherson Alvarez. Alvarez was only able
to promise to do his best to bring the matter to
the attention of then President Cory Aquino
during the January 21 Cabinet meeting. Tension
mounted the next day
The farmers, on their 7th day of
encampment, barricaded the MAR premises and
prevented the employees from going inside their
offices
On January 22, 1987, following a heated
discussion between Alvarez and Tadeo, Tadeo's
group decided to march to Malacanang to air
their demands
On their march to Malacanang, they were
joined by Kilusang Mayo Uno (KMU), Bagong
Alyansang Makabayan (BAYAN), League of
Filipino Students (LFS), and Kongreso ng
Pagkakaisa ng Maralitang Lungsod (KPML).
Government intelligent reports were also
received that the KMP was heavily infliltrated by
CPP/NPA elements, and that an insurrection was
impending
Government anti-riot forces assembled at
Mendiola. The marchers numbered about 10,000
to 15,000 at around 4:30 pm. From CM Recto,
they proceeded toward the police lines. No
dialogue took place; "pandemonium broke loose".
After the clash, 12 marchers were officially
confirmed dead (13 according to Tadeo). 39 were
wounded by gunshots and 12 sustained minor
injuries, all belonging to the group of marchers.
Of the police and military, 3 sustained gunshot
wounds and 20 suffered minor physical injuries
The "Citizens' Mendiola Commission" was
created by Pres. Aquino and tasked to investigate
the incident it submitted its report on the
incident on February 27, 1987 as follows:
-The march did not have any permit
-The police and military were armed with
handguns prohibited by law
-The security men assigned to protect the
government units were in civilian attire
(prohibited by law)
-There was unnecessary firing by the police and
military
-The weapons carried by the marchers are
prohibited by law
-It is not clear who started the firing
-The water cannons and tear gas were not put
into effective use to disperse the crowd; the
water cannons and fire trucks were not put into
operation because:
-there was no order to use them
-they were incorrectly prepositioned
-they were out of range of the marchers
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 Commission also recommended that all
the commissioned officers of both the Western
Police District (WPD) and Integrated National
Police (INP) who were armed be prosecuted for
violation of par. 4(g) of the Public Assembly Act of
1985.
Prosecution of the marchers was also
recommended.
It was also recommended that Tadeo be
prosecuted both for holding the rally without
permit and for inciting sedition
Administrative sanctions were
recommended for the following officers for their
failure to make effective use of their skill and
experience in directing the dispersal operations
in Mendiola:
-Gen. Ramon E. Montaño
-Police Gen. Alfredo S. Lim
-Police Gen. Edgar Dula Torres
-Police Maj. Demetrio dela Cruz
-Col. Cezar Nazareno
-Maj. Filemon Gasmin
Last and most important
recommendation: for the deceased and
wounded victims to be compensated by the
government.
It was this portion that petitioners
(Caylao group) invoke in their claim for
damages from the government.
No concrete form of compensation was received
by the victims.
On January, 1988, petitioners instituted an
action for damages against the Republic of the
Philippines, together with the military officers,
and personnel involved in the Mendiola incident
(Caylao vs. Republic).
Solicitor general filed a Motion to Dismiss
on the ground that the State cannot be sued
without its consent.
Petitioners said that the State has
waived its immunity from suit. Judge Sandoval
dismissed the case on the ground that there was
no such waiver. Motion for Reconsideration was
also denied.
ISSUE:
Whether or not the State has waived its
immunity from suit (i.e. Whether or not this is a
suit against the State with its consent)
Petitioners argue that by the recommendation
made by the Commission for the government to
indemnify the heirs and victims, and by public
addresses made by President Aquino, the State
has consented to be sued by way of waiver by the
President.
Holding:
No. This is not a suit against the State with its
consent.
Art. XVI, Sec. 3, 1987 Constitution: The State
may not be sued without its consent.
The recommendations by the Commission
does not in any way mean that liability
automatically attaches to the State
The Commission was simply a fact-finding
body; its findings shall serve only as cause of
action for litigation; it does not bind the State
immediately
President Aquino's speeches are likewise
not binding on the State; they are not tantamount
to a waiver by the State
Some instances when a suit against the
State is proper:
-When the Republic is sued by name;
-When the suit is against an unincorporated
government agency
-When the suit is on its face against a government
officer but the case is such that the ultimate
liability will belong not to the officer but to the
government
Although the military officers and personnel
were discharging their official functions during
the incident, their functions ceased to be official
the moment they exceeded their authority
There was lack of justification by the
government forces in the use of firearms. Their
main purpose in the rally was to ensure peace
and order, but they fired at the crowd instead
No reversible error by the respondent
Judge found. Petitions dismissed.
Sanders v. Veridiano
G.R. No. L-46930
FACTS:
Petitioner Sanders was the special services
director of the U.S. Naval Station. Petitioner
Moreau was the commanding officer of the Subic
Naval Base. Private respondent Rossi is an
American citizen with permanent residence in the
Philippines.
Private respondent Rossi and Wyer were both
employed as game room 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.
They instituted grievance proceedings to the
rules and regulations of the U.S. Department of
Defense. The hearing officer recommended for
reinstatement of their permanent full-time status.
However, in a letter addressed to petitioner
Moreau, Sanders disagreed with the hearing
officer's report. 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 from petitioner Moreau was sent to the
Chief of Naval Personnel explaining the change of
the private respondent's employment status.
So, private respondent filed for damages
alleging that the letters contained libelous
imputations and that the prejudgment of the
grievance proceedings was an invasion of
their personal and proprietary rights.
However, 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.
However, the motion was denied on the main
ground that the petitioners had not presented any
evidence that their acts were official in nature.
ISSUE: (in relation to our topic)
1. Whether or not a suit against the
petitioners (a public officials) is a suit
against the state. What is the test?
2. Whether or not a foreign state can be sued
without its consent.
RULING:
1. Yes. Given the official character of the
above-described letters, we have to
conclude that the petitioners were, legally
speaking, being sued as officers of the
United States government. As they have
acted on behalf of that government,
and within the scope of their authority,
it is that government, and not the
petitioners personally, that is
responsible for their acts. Assuming that
the trial can proceed and it is proved that
the claimants have a right to the payment
of damages, such award will have to be
satisfied not by the petitioners in their
personal capacities but by the United
States government as their principal.
(TEST)This will require that
government to perform an affirmative
act to satisfy the judgment, viz, the
appropriation of the necessary amount
to cover the damages awarded, thus
making the action a suit against that
government without its consent.
No. 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. In the case of foreign
states, the rule is derived from the principle
of the sovereign equality of states which
wisely admonishes that par in parem non
habet imperium and that a contrary attitude
would "unduly vex the peace of nations."
Our adherence to this precept is formally
expressed in Article II, Section 2, of our
Constitution, where we reiterate from our
previous charters that the Philippines
"adopts the generally accepted principles of
international law as part of the law of the
land.
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.
Carmen Festejo vs. Isaias Fernando
G.R. No. L-46930
Facts:
Isaias Fernando, Director of the Bureau of Public
Works, without obtaining authority from the
Court of First Instance of Ilocos Sur, without
obtaining first a right of way, and without the
consent and knowledge of the plaintiff, Carmen
Festajo, and against her express objection
unlawfully took possession of portions of the
three parcels of land, and caused an irrigation
canal to be constructed to the land on or about
the month of February 1951 the aggregate area
being 24,179 square meters.
In violation of Civil Code ART. 32 The right
against deprivation of property without due
process of law by a public officer, plaintiff
demanded relief for the return of the land and its
restoration to its former condition or otherwise
payment of a sum.
Issue:
Whether or not Isaias Fernando is immune from
liability as a public officer.
Ruling:
NO. The court held that the evidence and
conceded facts permitted the jury in finding that
in the trespass on plaintiff's land defendant
committed acts outside the scope of his authority.
When he went outside the boundaries of the right
of way upon plaintiff's land and damaged it or
destroyed its former condition and usefulness, he
must be held to have designedly departed from
the duties imposed on him by law. There can be
no claim that he thus invaded plaintiff's land
south easterly of the right of way innocently.
Surveys clearly marked the limits of the land
appropriated for the right of way of this trunk
highway before construction began.
It is a general rule that an officer-executive who
acts outside the scope of his jurisdiction and
without authorization of law may thereby render
himself amenable to personal liability in a civil
suit. If he exceed the power conferred on him by
law, he cannot shelter himself by the plea that he
is a public agent acting under the color of his
office, and not personally. In the eye of the law,
his acts then are wholly without authority.
Bermoy v. PNC
GR No. L – 8670
Facts:
Twenty employees of the Philippine Normal
College who worked as cooks, waiters,
dishwasher, and in various other capacities in its
dormitory known as Normal Hall, filed an action
in the Court of First Instance of Manila against
Philippine Normal College for the recovery of
salary differentials and overtime pay.
However, the defendant moved to dismiss the
case, contending that the action was against the
State inasmuch as the college was a public
agency engaged in a governmental function.
The court ordered it dismissed on the ground that
neither one of the defendants was a corporation
or a juridical entity with capacity to be sued.
Plaintiffs took this appeal to the Supreme Court
for reconsideration.
Issue:
Whether or not PNC as a government corporation
be sued.
Ruling:
Yes, it can be sued.
There are tests used to determine whether a suit
against a government agency be dismissed or not.
It is to know whether it is incorporated or
unincorporated. An incorporated agency has a
charter of its own that invests it with a separate
juridical personality. If it is incorporated, the
simple rule is that, it is suable if the charter says
so.
In this case, PNS having been converted to PNC
through RA 416, also known as PNC Charter,
specifically states under Section 6 that “All
process against the Board of Trustees shall be
served on the president or secretary thereof”.
This proves that PNC has a juridical personality.
Moreover, it was endowed with the general
powers set out in Section 13 of the amended Act
1455 (Corporate Law), under Paragraph 2, which
states that the power of every corporation is “To
sue and be sued in any court”, such that even
assuming that the function involved was public,
the important thing was that charter provided
that it could sue and be sued. Thus, the State
waived its immunity.
ARCEGA vs. COURT OF APPEALS
66 SCRA 229
ALICIA O. ARCEGA, assisted by her husband RAF.
L. ARCEGA, doing business under the firm name
of “FAIRMONT ICE CREAM CO.,” petitioner,
Vs.
THE COURT OF APPEALS, THE CENTRAL BANK
OF THE PHILIPPINES, and THE PHILIPPINE
NATIONAL BANK, respondents.
Facts:
The petitioner Alicia O. Arcega, doing
business under the firm name “Fairmont Ice
Cream Company,” filed a complaint with the
Court of First Instance of Manila, Branch I,
against the respondents Central Bank of the
Philippines and Philippine National Bank, for the
refund from allegedly unauthorized payments
made by her in the concept of the 17% special
excise tax on foreign exchange.
The refund prayed for involves purchases of
foreign exchange from the Philippine National
Bank to cover the costs and transportation and
other charges incident to the importation into the
Philippines. The Central Bank moved to dismiss
the complaint on the grounds, among others, that
the trial court has no jurisdiction over the
subject-matter of the action, because the
judgment sought will constitute a financial charge
against the Government, and therefore the suit is
one against the Government, which cannot
prosper without its consent, and in this case no
such consent has been given.
The petitioner Arcega filed a motion for
reconsideration of the resolution to which an
opposition was filed by the Central Bank. Then,
the Central Bank’s Chief Accountant submitted a
certification that the balance of the collected
special excise tax on sales of foreign exchange
was turned over to the Treasurer of the
Philippines. The court denied the petitioner’s
motion for reconsideration. As a result, Arcega
appealed to the Court of Appeals.
Holding that the suit is indirectly against
the Republic of the Philippines, which cannot be
sued without its consent, the Court of Appeals
affirmed the dismissal of the complaint.
The petitioner interposed the present
appeal by certiorari.
Issue:
Whether a suit against the Central Bank a
suit against the State
.
Held:
YES. The suit is brought against the
Central Bank of the Philippines, an entity
authorized by its charter to sue and be sued. The
consent of the State to thus be sued, therefore,
has been given.

Notes:
Suability of Central Bank in civil cases only
- The Central Bank is a government corporation
created principally to administer the monetary
and banking system of the Republic. It is not a
prosecution agency like the fiscal’s office. The
Central Bank is limited to its statutory powers.
Its power to sue and be sued refers to civil cases
only.
Rayo v. CFI
110 SCRA 460
FACTS:
1.) On October 26, 1978, typhoon “Kading”
struck Bulacan. Due to this, the National
Power Corporation (NPC), through its plant
superintendent Benjamin Chavez,
simultaneously opened 3 floodgates of
Angat Dam.
2.) The opening of the floodgates caused
several towns to be inundated (the town of
Norzagaray was the most affected one). It
resulted to a hundred deaths and damage
to properties that were worth over a million
pesos.
3.) Petitioners (victims) filed a complaint for
damages against NPC, including plant
superintendent Benjamin Chavez.
4.) Respondent filed counterclaims and put up
a special and affirmative defense that "in
the operation of the Angat Dam," it is
"performing a purely governmental
function", hence it "cannot be sued without
the express consent of the State."
5.) Petitioners oppose the defense, contending
that the NPC is not performing
governmental but merely proprietary
functions and that under its own organic
act, Section 3 (d) of Republic Act No. 6395,
it can sue and be sued in any court.
6.) CFI dropped the NPC from the complaint
and left Chavez as the sole party-defendant.
CFI RULING: Upon a motion for reconsideration,
the CFI ruled that petitioners’ reliance on Sec. 3
of RA 6395 is not tenable since the same refer to
such matters that are only within the scope of the
other corporate powers of said defendant and not
matters of tort as in the instant cases.
Being an agency performing a purely
governmental function in the operation of the
Angat Dam, said defendant was not given any
right to commit wrongs upon individuals. To sue
said defendant for tort may require the express
consent of the State. PETITION DISMISSED.
ISSUES:
1. Whether respondent National Power
Corporation performs a governmental function
with respect to the management and operation of
the Angat Dam; and
2. Whether the power of respondent National
Power Corporation to sue and be sued under its
organic charter includes the power to be sued for
tort.
SC RULING: SC reversed the CFI decision and
GRANTED petitioners to reinstate their complaint
against the NPC.
It is sufficient to say that the government has
organized a private corporation, put money in it
and has allowed it to sue and be sued in any court
under its charter. (R.A. No. 6395). As a
government owned and controlled corporation, it
has a personality of its own, distinct and separate
from that of the Government. Moreover, the
charter provision that the NPC can "sue and be
sued in any court" is without qualification on the
cause of action and accordingly it can include a
tort claim such as the one instituted by the
petitioners.
PNR v. IAC
GR No. 70547; January 22, 1993
FACTS:
The passenger express train of Philippine
National Railways (PNR) and a passenger bus of
Baliwag Transit Inc. collided at the railroad
crossing at Barrio Balungao, Calumpit Bulacan at
1:30 in the afternoon of August 10, 1947 causing
damage to the bus and its passengers, 18 of
whom died and 53 suffered physical injuries.
Plaintiff alleges that the collision was due to the
negligence and imprudence of PNR and its
engineer Honorio Cirbado in operating in a busy
intersection without any bars, semaphores, signal
lights, flagman or switchman.
ISSUE:
1) Who between the petitioner and respondent
was negligent?
2) Is PNR immune from suit?
HELD:
There is no admissible evidence to show that the
bus driver did not take necessary precaution in
traversing the track. Contributory negligence
may not be ascribed to the bus driver for he had
taken necessary precautions before passing over
the railway track. The failure of PNR, on the
other hand, to put a cross bar, or signal light,
flagman, or switchman or semaphores is evidence
of negligence on their part.
By the doctrine of implied powers, the power to
sue and be sued is implicit from the faculty to
transact private business. PNR is not exercising
governmental powers, as such it is not immune
from suit.
BOP v BPEA
1 SCRA, 340
Facts:
BPEA (respondents) filed a complaint by an
acting prosecutor of the Industrial Court against
petitioners BOP (secretary of Department of
General Services and Director of BOP). The
complaint alleged that both the secretary of DOG
and the director of BOP have been engaging in
unfair labor practices.
Answering the complaint, the petitioners
(BOP), denied the charges of unfair labor
practices attributed to them and alleged that the
BPEA complainants were suspended pending
result of administrative investigation against
them for breach of Civil Service rules and
regulations; that the BOP is not an industrial
concern engaged for the purpose of gain but of
the republic performing governmental functions.
For relief, they prayed that the case be
dismissed for lack of jurisdiction. But later on
January 27, 1959, the trial judge of Industrial
Court sustained the jurisdiction of the court on
the theory that the functions of the BOP are
“exclusively proprietary in nature,” since they
receives outside jobs and that many of its
employees are paid for overtime work on regular
working days and holidays, therefore
consequently denied the prayed for dismissal,
which brought the petitioners (BOP) to present
petition for certiorari and prohibition.
Issue:
Whether or not the BOP can be sued.
Held:
NO. As an office of the Government,
without any corporate or juridical personality, the
BOP cannot be sued (Sec.1, Rule 33, Rules of
court).
It is true that BOP receives outside jobs and
that many of its employees are paid for overtime
work on regular working days and holidays, but
these facts do not justify the conclusion that its
functions are “exclusively proprietary in nature”.
Overtime work in the BOP is done only when the
interest of the service so requires. As a matter of
administrative policy, the overtime compensation
may be paid, but such payment is discretionary
with the head of the Bureau depending upon its
current appropriations, so that it cannot be the
basis for holding that the functions of said Bureau
are wholly proprietary in character.
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 jurisdiction.
Disposition:
The petition for a writ of prohibition is
granted. The orders complained of are set aside
and the complaint for unfair labor practice
against the petitioners is dismissed, with costs
against respondents other than the respondent
court.

MOBIL PHIL INC VS CUSTOM ARRASTRE
SERVICE
G.R. No. L-23139
MOBIL PHILIPPINES EXPLORATION, INC.,
plaintiff-appellant,
vs.
CUSTOMS ARRASTRE SERVICE and BUREAU of
CUSTOMS, defendants-appellees
Facts:
This case was filed by Mobil Phil
Exploration Inc. against the Customs Arrastre
Service and the Bureau of Customs to recover the
value of the undelivered case of rotary drill parts.
Four cases of rotary drill parts were
shipped from abroad, consigned to Mobil
Philippines Exploration, Inc. The shipment was
discharged to the custody of the Customs
Arrastre Service, the unit of the Bureau of
Customs then handling arrastre operations
therein. The Customs Arrastre Service later
delivered to the broker of the consignee three
cases only of the shipment. Mobil Philippines
Exploration, Inc filed suit in the Court of First
Instance of Manila against the Customs Arrastre
Service and the Bureau of Customs to recover the
value of the undelivered case plus other damages.
Defendants filed a motion to dismiss the
complaint on the ground that not being persons
under the law, defendants cannot be sued.
Appellant contends that not all government
entities are immune from suit; that defendant
Bureau of Customs as operator of the arrastre
service at the Port of Manila, is discharging
proprietary functions and as such, can be sued by
private individuals.
Issues:
Whether or not both Customs Arrastre
Service and the Bureau of Customs can invoke
state immunity.
Rulings:
Yes. The Supreme Court ruled that the
Bureau of Customs cannot be sued for recovery of
money and damages involving arrastre services,
considering that said arrastre function may be
deemed proprietary, because it is a necessary
incident of the primary and governmental
function of the Bureau of Customs. The Court
ruled that the fact that a non-corporate
government entity performs a function
proprietary in nature does not necessarily result
in its being suable. If said non-governmental
function is undertaken as an incident to its
governmental function, there is no waiver
thereby of the sovereign immunity from suit
extended to such government entity. The
Supreme Court ruled that the plaintiff should
have filed its present claim to the General
Auditing Office, it being for money under the
provisions of Commonwealth Act 327, which state
the conditions under which money claims against
the Government may be filed.

Discussions:
The Bureau of Custom, is a part of
Department of Finance. It does not have a
separate juridical personality of its own apart
from that of the national government. Its primary
function is governmental, that of assessing and
collecting lawful revenues from imported articles
and all other tariff and customs duties, fees,
charges, fines and penalties (Sec. 602, R.A.
1937). To this function, arrastre service is a
necessary incident. As stated in the law, agencies
of the government is not suable if it is performing
governmental functions and if it an
unincorporated government entity without a
separate juridical personality.
Air Transportation Ofice (ATO) v. Sps. David
and Elisea Ramos
G.R. No. 159402
February 23, 2011
Facts
Sps. Ramos discovered that a portion of
their land (somewhere in Baguio) was being used
as part of the runway and running shoulder of the
Loakan Airport which is operated by ATO.
Sometime in 1995, respondents agreed to
convey the subject portion by deed of sale to ATO
in consideration of the amount of Php778,150.00.
However, ATO failed to pay despite repeated
verbal and written demands. Thus, an action for
collection against ATO was filed by the
respondents before the RTC.
ATO’s primary contention was that the deed
of sale was entered into the performance of
governmental functions. RTC ruled in favor of the
respondents. CA affirmed RTC. Hence, the
petition.
Issue/s
Whether ATO could be sued without the
State’s consent
Ruling/s
NO. SC dismissed the petition for lack of
merit. The State’s immunity from suit does not
extend to the petitioner (ATO) because it is an
agency of the State engaged in an enterprise that
is far from being the State’s exclusive
prerogative.
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 State’s immunity from suit.
The SC further observes that 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 plaintiff’s property.
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.
R.A. No. 9497 abolished the ATO and u nder
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 properties,
funds, and revenues. Section 23 of R.A. No. 9497
enumerates the corporate powers vested in the
CAAP, including the power to sue and be sued, to
enter into contracts of every class, kind and
description, to construct, acquire, own, hold,
operate, maintain, administer and lease personal
and real properties, and to settle, under such
terms and conditions most advantageous to it,
any claim by or against it. With the CAAP having
legally succeeded the ATO pursuant to R.A. No.
9497, the obligations that the ATO had incurred
by virtue of the deed of sale with the Ramos
spouses might now be enforced against the CAAP.
Syquia v. Lopez
G.R. No. L-1648, August 17, 1949
Facts:
 The Syquia’s are the undivided joint owners
of 3 apartment buildings in Manila, namely
the North Syquia, South Syquia, and Michel
Apartment. In 1945, they executed leasing
contracts for United States of America, for
billeting and quartering officers of the US
armed forces with the term being until the
war (with Japan) has ended, and six months
after, or unless terminated sooner by US.
 Chief of the Real Estate Division to the US
Army, Erland Tillman, who was under the
Commanding General of the US Army,
George Moore, was the one in control of the
apartment buildings and had authority in
the name of USA to assign officers of the
army to the buildings or order them to
vacate the same.
 When Japan surrendered on September 2,
1945, the lease would be terminated six
months after. The petitioners approached
the Moore and Tillman and requested the
buildings to be returned to them, as per
contract agreement. However, they were
advised that the US Army wanted to
continue their occupancy of the buildings,
and refused to execute new leases but
advised that they will vacate the premises
before February 1, 1947, not the original
terms of the contract agreement. Still fail to
vacate on the agreed date, petitioner-
 plaintiffs sued before the Municipal Court
of Manila with the demand to get the
properties as their agreement supposedly
expired, and furthermore asked for
increased rentals until the premises were
vacated.
 Respondent-defendants were part of the
armed forces of the US, moved to dismiss
the suit for lack of jurisdiction on the part
of the court. The Municipal Court of Manila
granted the motion to dismiss the suit,
sustained by the Court of First Instance of
Manila, hence the petition for certiorari.
Issues:
 Who is the real party in interest?
 Does the court have jurisdiction to hear and try
the case?
Held:
The Court is convinced that the real party in
interest as defendant in the original case is the
US Government. The lessee in each of the three
lease agreements was the United States of
America and the lease agreement themselves
were executed in her name by her officials acting
as her agents. The considerations or rental was
always paid by the US Government. The original
action in the Municipal Court was brought on the
basis of these three lease contracts and it is
obvious in the opinion of this court that any back
rentals or increased rentals will have to be paid
by the US Government not only because the
contracts were entered into by such Government
but also because the premises were used by
officers of her armed forces during the war and
immediately after the terminations of hostilities.
Case Digest: The Holy See vs. Rosario, Jr.
G.R. No. 101949
01 December 1994
FACTS:
This petition arose from a controversy over
a parcel of land consisting of 6,000 square meters
located in the Municipality of Paranaque. Said lot
was contiguous with two other lots. These lots
were sold to Ramon Licup.
In view of the refusal of the squatters to
vacate the lots sold, a dispute arose as to who of
the parties has the responsibility of evicting and
clearing the land of squatters. Complicating the
relations of the parties was the sale by petitioner
of the lot of concern to Tropicana.
ISSUE:
Whether the Holy See is immune from suit
insofar as its business relations regarding selling
a lot to a private entity
RULING:

YES. As expressed in Section 2 of Article II
of the 1987 Constitution, we have adopted the
generally accepted principles of International
Law. Even without this affirmation, such
principles of International Law are deemed
incorporated as part of the law of the land as a
condition and consequence of our admission in
the society of nations.
In the present case, if petitioner has bought
and sold lands in the ordinary course of real
estate business, surely the said transaction can
be categorized as an act jure gestionis. However,
petitioner has denied that the acquisition and
subsequent disposal of the lot were made for
profit but claimed that it acquired said property
for the site of its mission or the Apostolic
Nunciature in the Philippines.
The Holy See is immune from suit for the
act of selling the lot of concern is non-proprietary
in nature. The lot was acquired by petitioner as a
donation from the Archdiocese of Manila. The
donation was made not for commercial purpose,
but for the use of petitioner to construct thereon
the official place of residence of the Papal
Nuncio. The decision to transfer the property
and the subsequent disposal thereof are likewise
clothed with a governmental character.
Petitioner did not sell the lot for profit or gain. It
merely wanted to dispose of the same because
the squatters living thereon made it almost
impossible for petitioner to use it for the purpose
of the donation.
USA v. Guinto (and companion cases)
182 SCRA 644
These are cases that have been consolidated
because they all involve the doctrine of state
immunity. The United States of America was not
impleaded in the case at bar but has moved to
dismiss on the ground that they are in effect suits
against it to which it has not consented.
FACTS:
1. USA vs GUINTO (GR No. 76607)
The private respondents are suing several officers
of the US Air Force in Clark Air Base in
connection with the bidding conducted by them
for contracts for barber services in the said base,
which was won by Dizon. The respondents
wanted to cancel the award because they claimed
that Dizon had included in his bid an area not
included in the invitation to bid, and also, to
conduct a rebidding.
2. USA vs RODRIGO (GR No. 79470)
Genove filed a complaint for damages for his
dismissal as cook in the US Air Force Recreation
Center at Camp John Hay Air Station. It had been
ascertained after investigation that Genove had
poured urine into the soup stock used in cooking
the vegetables served to the club customers. The
club manager suspended him and thereafter
referred the case to a board of arbitrators, which
unanimously found him guilty and recommended
his dismissal.
3. USA vs CEBALLOS (GR No. 80018)
Bautista, a barracks boy in Camp O’ Donnell, was
arrested following a buy-bust operation
conducted by petitioners, who were USAF
officers and special agents of the Air Force Office.
An information was filed against Bautista and at
the trial, petitioners testified against him. As a
result of the charge, Bautista was dismissed from
his employment. He then filed for damages
against petitioners claiming that it was because
of the latter’s acts that he lost his job.
4. USA vs VERGARA (GR No. 80258)
A complaint for damages was filed by private
respondents against petitioners (US military
officers) for injuries allegedly sustained by the
former when defendants beat them up,
handcuffed them and unleashed dogs on them.
The petitioners deny this and claim that
respondents were arrested for theft but resisted
arrest, thus incurring the injuries.
ISSUE:
Whether or not the defendants were immune
from suit under the RP-US Bases Treaty for acts
done by them in the performance of their official
duties.
RULING:
The rule that a State may not be sued without its
consent is one of the generally accepted
principles of international law that were have
adopted as part of the law of our land. Even
without such affirmation, we would still be bound
by the generally accepted principles of
international law under the doctrine of
incorporation. Under this doctrine, as accepted
by the majority of the states, such principles are
deemed incorporated in the law of every civilized
state as a condition and consequence of its
membership in the society of nations. All states
are sovereign equals and cannot assert
jurisdiction over one another. While the doctrine
appears to prohibit only suits against the state
without its consent, it is also applicable to
complaints filed against officials of the states for
acts allegedly performed by them in the
discharge of their duties. The rule is that if the
judgment against such officials will require the
state itself to perform an affirmative act to satisfy
the same, the suit must be regarded as against
the state although it has not been formally
impleaded. When the government enters into a
contract, it is deemed to have descended to the
level of the other contracting party and divested
of its sovereign immunity from suit with its
implied consent.
It bears stressing at this point that the aforesaid
principle do not confer on the USA a blanket
immunity for all acts done by it or its agents in
the Philippines. Neither may the other petitioners
claim that they are also insulated from suit in this
country merely because they have acted as
agents of the United States in the discharge of
their official functions.
There is no question that the USA, like any other
state, will be deemed to have impliedly waived its
non-suability if it has entered into a contract in its
proprietary or private capacity (commercial
acts/jure gestionis). It is only when the contract
involves its sovereign or governmental capacity
(governmental acts/jure imperii) that no such
waiver may be implied.
In US vs GUINTO, the court finds the
barbershops subject to the concessions granted
by the US government to be commercial
enterprises operated by private persons. The
Court would have directly resolved the claims
against the defendants as in USA vs RODRIGO,
except for the paucity of the record as the
evidence of the alleged irregularity in the grant
of the barbershop concessions were not available.
Accordingly, this case was remanded to the court
below for further proceedings.
In US vs RODRIGO, the restaurant services
offered at the John Hay Air Station partake of the
nature of a business enterprise undertaken by the
US government in its proprietary capacity, as
they were operated for profit, as a commercial
and not a governmental activity. Not even the US
government can claim such immunity because by
entering into the employment contract with
Genove in the discharge of its proprietary
functions, it impliedly divested itself of its
sovereign immunity from suit. But, the court still
dismissed the complaint against petitioners on
the ground that there was nothing arbitrary
about the proceedings in the dismissal of Genove,
as the petitioners acted quite properly in
terminating Genove’s employment for his
unbelievably nauseating act.
In US vs CEBALLOS, it was clear that the
petitioners were acting in the exercise of their
official functions when they conducted the buy-
bust operation and thereafter testified against the
complainant. For discharging their duties as
agents of the United States, they cannot be
directly impleaded for acts imputable to their
principal, which has not given its consent to be
sued.
In US vs VERGARA, the contradictory factual
allegations in this case need a closer study of
what actually happened. The record was too
meager to indicate if the defendants were really
discharging their official duties or had actually
exceeded their authority when the incident
occurred. The needed inquiry must first be made
by the lower court so it may assess and resolve
the conflicting claims of the parties.
NOTE:
1. A STATE MAY BE SAID TO HAVE
DESCENDED TO THE LEVEL OF AN
INDIVIDUAL AND CAN THUS BE DEEMED
TO HAVE TACITLY GIVEN ITS CONSENT TO
BE SUED ONLY WHEN IT ENTERS INTO
BUSINESS CONTRACTS.
2. Jure Gestionis – by right of economic or
business relations, may be sued. (US vs Guinto)
3. Jure Imperii – by right of sovereign power, in
the exercise of sovereign functions. No implied
consent. (US v. Ruiz, 136 SCRA 487)
USA VS RUIZ
G.R. No. L-35645 136 scra 487
May 22, 1985
UNITED STATES OF AMERICA, CAPT. JAMES E.
GALLOWAY, WILLIAM I. COLLINS and ROBERT
GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV,
Court of First Instance of Rizal and ELIGIO DE
GUZMAN & CO., INC., respondents.
Facts:
This is a petition to review, set aside certain
orders and restrain perpetually the proceedings
done by Hon. Ruiz for lack of jurisdiction on the
part of the trial court.
The United States of America had a naval
base in Subic, Zambales. The base was one of
those provided in the Military Bases Agreement
between the Philippines and the United States.
Sometime in May, 1972, the United States invited
the submission of bids for a couple of repair
projects. Eligio de Guzman land Co., Inc.
responded to the invitation and submitted bids.
Subsequent thereto, the company received from
the US two telegrams requesting it to confirm its
price proposals and for the name of its bonding
company.
The company construed this as an
acceptance of its offer so they complied with the
requests. The company received a letter which
was signed by William I. Collins of Department of
the Navy of the United States, also one of the
petitioners herein informing that the company did
not qualify to receive an award for the projects
because of its previous unsatisfactory
performance rating in repairs, and that the
projects were awarded to third parties. For this
reason, a suit for specific performance was filed
by him against the US.
Issues:
Whether or not the US naval base in
bidding for said contracts exercise governmental
functions to be able to invoke state immunity.
Rulings:
Yes. The Supreme Court held that the
contract relates to the exercise of its sovereign
functions. In this case the projects are an integral
part of the naval base which is devoted to the
defense of both the United States and the
Philippines, indisputably a function of the
government of the highest order, they are not
utilized for nor dedicated to commercial or
business purposes.

The restrictive application of state

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