Lyons, Inc. v.

The United States of

America

FACTS:
Plaintiff (Harry Lyons, Inc.) - brought an action before
the CFI of manila to collect sums of money arising from
a contract entered into between plaintiff and defendant.
Defendant (USA - 651 US Naval Supply Depot, US Navy,
Philippines) filed a motion to dismiss.
the court has no jurisdiction over defendant and
the subject matter of the action.

 Plaintiff (Harry Lyons, Inc.) and defendant (USA)

entered contract for stevedoring service at the U.S. Naval
Base, Subic Bay, Philippines,
the contract to terminate on June 30, 1956.
entered pursuant to the provisions of
Section 2 (c) (1) of the Armed Services Procurement Act of
1947 of the USA (Public Law 413, 80th Congress)

The lower court sustained the motion to

dismiss
1. The court lacks jurisdiction over defendant.
It being a sovereign state which cannot be
sued without its content
2. Harry Lyons, Inc.- failed to exhaust the
administrative remedies provided for in Article
XXI of the contract.

 when a sovereign state enters into a contract with a private person the
state can be sued upon the theory that it has descended to the level of an
individual from which it can be implied that it has given its consent to be
sued under the contract.
If, where and when the state or its government enters into a contract,
through its officers or agents, .. pursuant to constitutional legislative
authority, whereby mutual or reciprocal benefits accrue and rights and
obligations arise from such contract ,
and if the law granting the authority to enter into such contract does not
provide for or name the officer against whom action may be brought in the
event of a breach thereof,

the state itself may be sued even without its consent, because by entering
into a contract the sovereign state has descended to the level of the
citizen and consent to be sued is implied from the very act entering into
such contract.

Supreme Court Ruling:

Agreed that the US Government, through its agency at Subic
Bay, entered into a contract with appellant for stevedoring and
miscellaneous labor services within the Subic Bay area, a U. S.
Navy Reservation,
It is evident that the plaintiff can bring an action before the
Court for any contractual liability that political entity may
assume under the contract.
The trial court, therefore, has jurisdiction to entertain this case
in so far as appellee is concerned.

BUT:
Assuming that the trial court has jurisdiction to entertain
this case, out

ISSUE:
Did said court err in dismissing the complaint on the
ground that plaintiff has failed to comply with the
condition prescribed in the contract before an action could
be taken in court against the U. S. Government?

APPLICABLE LAW
Article XXI Disputes of the contract provides:
any dispute . under this contract which is not
disposed of by agreement shall be decided by the
Contracting Officer, ...
the Contractor may appeal by mailing or otherwise
furnishing to the Contracting Officer a written appeal
addressed to the Secretary, .
. and the decision of the Secretary or his duly authorized
representative for the hearing of such appeals, shall,

 unless determined by a court of competent jurisdiction to

have been fraudulent, arbitrary, capricious, or so grossly
erroneous as necessary to imply bad faith,
be final and conclusive, provided that, if no such appeal is
taken, the decision of the Contracting Officer shall be final
and conclusive.
In connection with any appeal proceeding under this
clause, the Contractor shall be afforded an opportunity to
be heard and to offer evidence in support of its appeal.

Exhaustion of Administrative
Remedies
Plaintiff did not comply with the procedure laid down in
Article XXI of the contract regarding the prosecution of
its claim against the United States Government.
It has failed to first exhaust its administrative remedies
against said Government, the lower court acted
properly in dismissing this case.

MINUCHER v. CA

 petitioner filed with the Regional Trial Court (RTC) of

Manila a complaint for damages against private
respondent Arthur Scalzo, Jr.

FACTS
Petitioner (Khorsow Minucher) was the Labor Attach of
the Embassy of Iran in the Philippines.
On 13 May 1986, Minucher was introduced to private
respondent (Arthur Scalzo, Jr.), then connected with the
American Embassy by
one Jose Iigo, an informer
belonging to the military intelligence community.

 Scalzo was interested in buying Iranian products, namely caviar and

carpets.
On this same occasion, Minucher complained to Scalzo about his
problems with the American Embassy about the expired visas of his
wife and fellow Iranian, Abbas Torabian.
Scalzo offered to help and gave the Minucher a calling card
showing that the former is an agent of the Drug Enforcement Administration
(DEA), Department of Justice, of the United States of America assigned to the
American Embassy in Manila.

 Scalzo also expressed his intent to purchase two (2) kilos

of caviar worth P10,000.00
and informed Minucher that
he might have prospective buyers for these goods;
he further promised to arrange for the renewal of the
aforesaid visas for a $2,000.00 fee.

 In the evening of May 26 ,1986 - Scalzo came to Minuchers

residence
and asked to be entrusted with a pair of Persian silk carpets
with a floor Price of $24,000.00 each, for which he had a buyer.
The following day, Scalzo returned to Minuchers residence,
took the carpets and gave Minucher $24,000.00;
after about an hour, Scalzo returned, claimed that he had
already made arrangements with his contacts at the American
Embassy concerning the visas and asked for $2,000.00.

 It turned out - that Scalzo had prepared an elaborate plan to

frame-up the Minucher and Abbas Torabian for alleged heroin
trafficking;
Both were falsely arrested by Scalzo and were taken to Camp
Crame in their underwear.
Scalzo took Minuchers 3 suitcases containing documents, his
wallet as well as the $24,000.00 which Scalzo had earlier
delivered to him.

 Minucher and Torabian were handcuffed for 3 days and were

not given food and water;
They were asked to confess to the possession of heroin or
else they would be jailed or even executed by Iranian
terrorists.
The two were charged for the violation of Section 4 of R.A.
No. 6425 (Dangerous Drugs Act of 1972) before the RTC of
Pasig.
They were, - acquitted by the said court on Jan 8, 1988.

Petitioner

Alleges

that Scalzo falsely testified against him in the criminal case.

that charges of unlawful arrest, robbery and estafa or

swindling have already been filed against Scalzo.

Prays

damages of not less than P480,000,00

($24,000.00) - the fair market value of the
Persian silk carpet;
$2,000.00 representing the refund of the amount
he had given for the visas;
moral damages in the amount of P5 million;
exemplary damages in the sum of P100,000.00 ;
and
attys fees of at least P200,000.00

Scalzos counsel filed a Special Appearance and Motion

alleging that since Scalzo is an agent of the DEA of the
USA, and the acts and omissions complained of were
performed by him in the performance of official functions,
the case is now under study by the Dept. of State and
Justice in Washington, D.C. for the purpose of determining
what defenses would be appropriate;

Scalzos counsel filed

a Special Appearance to Quash Summons

alleging that: "The action being a personal action for damages arising
from an alleged tort,
the defendant being outside the Philippines and not being a resident of
the Philippines, Defendant is beyond the processes of this court,"
The trial court denied the motion
Unsatisfied with the said order, Scalzo filed a petition forcertiorariwith
the Court of Appeals.
the Court of Appeals dismissed the petition for lack of merit.

 thus sought a review of the said decision by filing a

petition with the Supreme Court (SC)
Said petition was dismissed by the SC
failed to show that the Court of Appeals had committed
any reversible error in the questioned judgment.

ISSUE:
May a complaint for damages be dismissed on the sole
basis of a statement contained in a Diplomatic Note,
belatedly issued after an answer to the said complaint had
already been filed, that the defendant was a member of
the diplomatic staff of the United States Diplomatic
Mission in the Philippines at the time the cause of action
accrued?

the core issue the alleged diplomatic immunity of the

privateRespondent
it took private respondent (1) year, eight (8) months and (17) days
before he could secure the Diplomatic Note from the U.S. Embassy in Manila,
and even granting for the sake of argument that such note is authentic, the
complaint for damages filed by the petitioner still cannot be peremptorily
dismissed.
said complaint contains sufficient allegations which indicate that the Scalzo
committed the imputed acts in his personal capacity and outside the scope
of his official duties and functions.

 Whether such claim arises from criminal acts or from

tort, there can be no question that Scalzo was sued in
his personal capacity for acts committed outside his
official functions and duties.

APPLICABLE LAW

Article 31 of the Vienna Convention on Diplomatic Relations

1. A diplomatic agent shall enjoy immunity from the

criminal jurisdiction of the receiving State. He shall
also enjoy immunity from its civil and administrative
jurisdiction except in the case of:
xxx
(c) an action relating to any professional or
commercial activity exercised by the diplomatic agent
in the receiving State outside his official
functions.

 Insofar as the records are concerned, Scalzo did not come

forward with evidence to prove that he had acted in his
official capacity.
It does not appear that an actual hearing on the motion
to dismiss was conducted and that Scalzo offered evidence
in support thereof.

Holy See v. Rosario, Jr

FACTS:
Petition arose from a controversy over a parcel of land.
Lot 5-A, registered under the name Holy See, was
contiguous to Lot 5-B and 5-D under the name of
Philippine Realty Corporation (PRC).
The land was donated by the Archdiocese of Manila to the
Papal Nuncio, which represents the Holy See, who exercises
sovereignty over the Vatican City, Rome, Italy, for his
residence.

 Said lots were sold through an agent to Ramon Licup who assigned his
rights to respondents Starbright Sales Enterprises, Inc.
When the squatters refuse to vacate the lots, a dispute arose between
the two parties because both were unsure whose responsibility was it to
evict the squatters from said lots.
Starbright Sales Enterprises Inc - insists that Holy See should clear the
property
While Holy See states - that respondent corporation should do it or the
earnest money will be returned. With this, Msgr. Cirilios, the agent,
subsequently returned the P100,000 earnest money.
The lots were then sold to Tropicana Properties and Development
Corporation.

 Starbright Sales Enterprises, Inc. filed a suit for

annulment of the sale,
specific performance and damages
against Msgr. Cirilios,
PRC
as well as TropicanaProperties and Development Corporation.

The Holy See and Msgr. Cirilos

moved to dismiss the petition
lack of jurisdiction based on sovereign immunity from suit.
RTC denied the motion on ground that petitioner already
"shed off" its sovereign immunity by entering into a business
contract.
The subsequent Motion for Reconsideration was also denied
hence this special civil action for certiorari was forwarded to
the Supreme Court.

ISSUE:

Can Holy See invoke sovereign immunity?

RULING:
Holy See may properly invoke sovereign immunity for its nonsuability

APPLICABLE LAW(S):
. As expressed in Sec. 2 Art II of the 1987
Constitution, generally accepted principles of
International Law are adopted by our Courts and thus
shall form part of the laws of the land as a condition and
consequence of our admission in the society of nations.

Article 31(A) of the 1961 Vienna Convention on Diplomatic Relations

diplomatic envoy shall be granted immunity from civil and

administrative jurisdiction of the receiving state over any
real action relating to private immovable property.

The Department of Foreign Affairs (DFA) certified that

the Embassy of the Holy See is a duly accredited
diplomatic missionary to the Republic of the Philippines
and is thus exempted from local jurisdiction and is
entitled to the immunity rights of a diplomatic mission
or embassy in this Court.

in the case at bar,

the petitioner - bought and sold lands in the ordinary
course of real estate business, surely, the said
transaction can be categorized as an actjure 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 because the act of selling the
lot of concern isnon-propriety in nature.
The lot was acquired through a donation from the Archdiocese
of Manila, not for a commercial purpose, but for the use of
petitioner to construct the official place of residence of the
Papal Nuncio thereof.
The transfer of the property and its subsequent disposal are
likewise clothed with a governmental (non-proprietal) character
as petitioner sold the lot not for profit or gain rather because it
merely cannot evict the squatters living in said property.

SOUTHEAST ASIAN FISHERIES DEVELOPMENT

CENTER
v.
ACOSTA

FACTS
Two labor cases, were filed by the private respondents
against the petitioner, Southeast Asian Fisheries
Development Center (SEAFDEC), before the National Labor
Relations Commission (NLRC), Regional Arbitration Branch,
Iloilo City.
In these cases, the private respondents claim having been
wrongfully terminated from their employment by the
petitioner.

 On 22 August 1990 - SEAFDEC filed a Motion to Dismiss,

challenging the jurisdiction of the public respondent in
taking cognizance of the above cases.
contends to be an international inter-government
organization

 The private respondents, as well as respondent labor

arbiter, allege that the petitioner is not immune from suit
and assuming that if, indeed, it is an international
organization, it has impliedly, if not expressly, waived its
immunity by belatedly raising the issue of jurisdiction.

RULING
The Court ruled for the petitioner.
It is beyond question that petitioner SEAFDEC is an
international agency enjoying diplomatic immunity.

Philippine Jurisprudence
Petitioner (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public
respondent NLRC.
It was established by the Governments of Burma, Kingdom of Cambodia, Republic of
the Philippines. . .
The Republic of the Philippines became a signatory to the Agreement establishing
SEAFDEC on January 16, 1968.

Southeast Asian Fisheries Development Center-Aquaculture Department vs. National Labor Relations Commission, G.R. No. 86773, 206 SCRA 283/1992;

Lacanilao v. de Leon,G.R. No. 76532, 147 SCRA, 286/1987/

Purpose

to contribute to the promotion of the fisheries

development in Southeast Asia by mutual co-operation
among the member governments of the Center, ...

APPLICABLE LAW
Pursuant to its being a signatory to the Agreement, the Republic of the
Philippines agreed to be represented by one Director in governing SEAFDEC
Council (Agreement Establishing SEAFDEC, Art. 5, Par.

1,. . .),

and that its national laws and regulations shall apply only insofar as its
contributions to SEAFDEC of "an agreed amount of money, movable and
immovable property and services necessary for the establishment and
operation of the Center" are concerned
It expressly waived the application of the Philippine laws on the disbursement
of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).

 One of the basic immunities of an international

organization is immunity from local jurisdiction
REASON: the subjection of such an organization to the
authority of the local courts . may interfere in their
operations or even influence or control its policies and
decisions of the organization;
such objection to local jurisdiction would impair the
capacity of such body to discharge its responsibilities
impartially on behalf of its member-states.

Anent the issue of waiver of immunity, suffice it to say at the moment

that the petitioner has timely raised the issue of jurisdiction.

While the petitioner did not question the public

respondent's lack of jurisdiction at the early stages of
the proceedings, it, nevertheless, did so before it rested
its case and certainly well before the proceedings
thereat had terminated.