1. ROMUALDEZ-YAP v.

CSC and PNB (1993)

TOPIC: Constituent and Ministrant Functions

FACTS:
Petitioner Yap was working with the Philippine National Bank (PNB) as Senior Vice President assigned to the
Fund Transfer Department. Later, she was on leave due to medical reasons. While she was on leave, Executive Order No.
80 (Revised Charter of the PNB) was approved. Said executive order authorized the restructure/reorganization and
rehabilitation of PNB. Pursuant to the reorganization plan, the Fund Transfer Department was abolished and its
functions transferred to the International Department. Because of the reorganization, PNB gave separation pay and
other benefits to Yap.

HELD: VALID REORGANIZATION

1. Reorganization is made in good faith.
-Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. As a
general rule, a reorganization is carried out in "good faith" if it is for the purpose of economy or to make bureaucracy
more efficient.
The Reorganization of PNB is made in good faith.Executive Order No. 80 conferred upon the PNB the authority
to reorganize.

2. Constituent v. Ministrant Functions:

NOTE: PNB is a government-owned or controlled corporation performing ministrant functions

Constituent functions are those which constitute the very bonds of society and are compulsory in nature.

Ministrant functions are those undertaken by way of advancing the general interests of society, and are merely
optional. Commercial or universal banking is, ideally, not a governmental but a private sector, endeavor. It is an
optional function of government. These are functions which our government is required to exercise to promote
its objectives as expressed in our Constitution and which are exercised by it as an attribute of sovereignty, and
those which it may exercise to promote merely the welfare, progress and prosperity of the people. These are
what we call government-owned or controlled corporations which may take on the form of a private enterprise
or one organized with powers and formal characteristics of a private corporation under the Corporation Law.

The principles determining whether or not a government shall exercise ministrant functions are:
(1) that a government should do for the public welfare those things which private capital would not
naturally undertake and
(2) that a government should do those things which by its very, nature it is better equipped to
administer for the public welfare than is any private individual or group of individuals

2. Shipside, Inc. v. Court of Appeals

FACTS: An OCT was issued in favor of Rafael Galvez over four parcels of land two of which were conveyed by Rafael
Galvez in favor of Mamaril, et. al. Then, Mamaril, et al. sold them to Lepanto Consolidated Mining Company. Unknown
to Lepanto Consolidated Mining Company, the OCT of Rafael Galvez was declared null and void, and therefore,
cancelled. Thereafter, Lepanto sold the parcels of land to herein petitioner.

In the meantime, Rafael Galvez filed his motion for reconsideration against the order declaring his OCT null and
void. The motion was denied. The decision dated August 14, 1973 became final and executory on October 23, 1973.

Twenty four long years, thereafter, on January 14, 1999, the Office of the Solicitor General received a letter from
the Vice-President of John Hay Poro Point Development Corporation, claiming that the decision has not been executed
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by the Register of Deeds despite receipt of the writ of execution.

The Office of the Solicitor General filed a complaint for revival of judgment and cancellation of titles. Petitioner
Shipside, Inc. filed its Motion to Dismiss, on the grounds that the plaintiff is not the real party-in-interest because the
real property allegedly part of Camp Wallace (Wallace Air Station), is now under the ownership and administration of
the Bases Conversion Development Authority (BCDA) and plaintiff's cause of action is barred by prescription.

The Solicitor General, nonetheless, argues that the State's cause of action is imprescriptible because it is
included in Camp Wallace, which belongs to the government.

ISSUE: Whether or not the Republic of the Philippines can maintain the action for revival of judgment herein.

HELD: No. It is clear that the action for revival of judgment was instituted more than twenty-five (25) years after the
judgment had become final. Hence, the action is barred by extinctive prescription considering that such an action can be
instituted only within ten (10) years from the time the cause of action accrues.

The Solicitor Generals argument is misleading. While it is true that prescription does not run against the State,
the same may not be invoked by the government in this case since it is no longer interested in the subject matter.
While Camp Wallace may have belonged to the government at the time Rafael Galvez's title was ordered cancelled, the
same no longer holds true today.

With the transfer of Camp Wallace to the BCDA, the government no longer has a right or interest to protect.
Consequently, the Republic is not a real party in interest and it may not institute the instant action. Nor may it raise the
defense of imprescriptibility, the same being applicable only in cases where the government is a party in interest.

ADDITIONAL NOTE: It is contended that the transfer of the military reservations to the Conversion Authority does not
amount to an abdication on the part of the Republic of its interests. It is consequently asserted that the Republic
remains to be the real party in interest and the Conversion Authority merely its agent.

However, BCDA is an entity invested with a personality separate and distinct from the government. The
functions of government have been classified into governmental or constituent and proprietary or ministrant. While
public benefit and public welfare, particularly, the promotion of the economic and social development of Central Luzon,
may be attributable to the operation of the BCDA, yet it is certain that the functions performed by the BCDA are
basically proprietary in nature. It may thus be said that the BCDA is not a mere agency of the Government but a
corporate body performing proprietary functions.

Having the capacity to sue or be sued, it should thus be the BCDA which may file an action to cancel petitioner's
title, not the Republic, the former being the real party in interest.

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3. MELCHORA CABANAS v. FRANCISCO PILAPIL (1974)
FACTS:
The disputants in this appeal from a question of law from a lower court decision are the mother and the uncle of a minor
beneficiary of the proceeds of an insurance policy issued on the life of her deceased father. The dispute centers as to
who of them should be entitled to act as trustee thereof.

The judiciary pursuant to its role as an agency of the State as parens patriae, with an even greater stress on family unity
under the 1973 Constitution, did weigh in the balance the opposing claims and did come to the conclusion that the
welfare of the child called for the mother to be entrusted with such responsibility.

HELD

SC affirmed the lower courts decision. The insurance proceeds belong to the beneficiary. The beneficiary is a minor
under the custody and parental authority of her mother. The said minor lives with the mother. The said minor acquired
this property by lucrative title. Said property, therefore, belongs to the minor child in ownership, and in usufruct to her
mother. Since under our law the usufructuary is entitled to possession, the mother is entitled to possession of the
insurance proceeds.

The same decision is buttressed by its adherence to the concept that the judiciary, as an agency of the State acting
as parens patriae, is called upon whenever a pending suit of litigation affects one who is a minor to accord priority to his
best interest. This prerogative of parens patriae is inherent in the supreme power of every State, whether that power is
lodged in a royal person or in the legislature, and has no affinity to those arbitrary powers which are sometimes exerted
by irresponsible monarchs to the great detriment of the people and the destruction of their liberties.

4. Laurel vs. Misa 77 Phil 285

Facts:
A petition for habeas corpus was filed by Anastacio Laurel. He claims that a Filipino citizen who adhered to the enemy
giving the latter aid and comfort during the Japanese occupation cannot be prosecuted for the crime of treason defined
and penalized by the Article 114 of the Revised Penal Code on the grounds that the sovereignty of the legitimate
government in the Philippines and consequently the correlative allegiance of Filipino citizen thereto were then
suspended; and that there was a change of sovereignty over these Islands upon the proclamation of the Philippine
Republic.

Issues:
1. Whether the absolute allegiance of a Filipino citizen to the government becomes suspended during enemy occupation
2. Whether the petitioner is subject to Article 114 of the RPC

Ruling:
1. No. The absolute and permanent allegiance (Permanent allegiance is the unending allegiance owed by citizens or
subjects to their states. Generally, a person who owes permanent allegiance to a state is called a national.) of the
inhabitants of a territory occupied by the enemy of their legitimate government or sovereign is not abrogated (repealed)
or severed by the enemy occupation because the sovereignty of the government or sovereign de jure is not transferred
thereby to the occupier. It remains vested in the legitimate government. (Article II, section 1, of the Constitution
provides that "Sovereignty resides in the people and all government authority emanates from them.")

What may be suspended is the exercise of the rights of sovereignty with the control and government of the territory
occupied by the enemy passes temporarily to the occupant. The political laws which prescribe the reciprocal rights,
duties and obligation of government and citizens, are suspended in abeyance during military occupation.

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2. Yes. The petitioner is subject to the Revised Penal Code for the change of form of government does not affect the
prosecution of those charged with the crime of treason because it is an offense to the same government and same
sovereign people.

DISSENT:
During the long period of Japanese occupation, all the political laws of the Philippines were suspended. This is full
harmony with the generally accepted principles of the international law adopted by our Constitution [ Art. II, Sec. 3 ] as
part of law of the nation.

The inhabitants of the occupied territory should necessarily be bound to the sole authority of the invading power whose
interest and requirements are naturally in conflict with those of displaced government, if it is legitimate for the military
occupant to demand and enforce from the inhabitants such obedience as may be necessary for the security of his forces,
for the maintenance of the law and order, and for the proper administration of the country.

5. SANDERS v. VERIDIANO (1988)

Topic: State Immunity of Foreign State

FACTS:
Petitioner Sanders was 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
respondents were workers of NAVSTA who were employed as gameroom attendants in the special services department
of the NAVSTA.

Later on, petitioners advised the private respondents that their employment had been converted from
permanent full-time to permanent part-time. Private respondents disagreed and demanded that they should retain the
permanent full-time status plus backwages. The petitioners through a letter denied the plea and laid down the reasons
why private respondents should be part time employees only (example: difficult to supervise, alienation,etc).

Private respondents claimed that the statements of the petitioners were libellous and that the prejudgment of
the grievance proceedings was an invasion of their personal and proprietary rights.
Petitioners however contended that they cannot be sued because the acts complained of were performed by them in
the discharge of their official duties.

HELD: The Court has no jurisdiction, invoking the Doctrine of State Immunity.
It 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. This act is clearly official in nature.
The petitioners are 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.

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. 15

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 In the case of immunity 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.

6. SEAFDEC v. NLRC

FACTS: SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development
Center, organized through an agreement on December 28, 1967 by the governments of Malaysia, Singapore, Thailand,
Vietnam, Indonesia and the Philippines with Japan as the sponsoring country.

Juvenal Lazaga was employed as a Research Associate on a probationary basis by SEAFDEC-AQD. Lacanilao in his
capacity as Chief of SEAFDEC-AQD sent a notice of termination to Lazaga informing him that due to the financial
constraints being experienced by the department, his services shall be terminated. SEAFDEC-AQD's failure to pay Lazaga
his separation pay forced him to file a case with the NLRC. The Labor Arbiter and NLRC ruled in favor of Lazaga. Thus,
SEAFDEC-AQD appealed, claiming that the NLRC has no jurisdiction over the case since it is immune from suit owing to
its international character and the complaint is in effect a suit against the State which cannot be maintained without its
consent.

ISSUE: Whether NLRC has jurisdiction

HELD: No. 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 Indonesia, Japan, Kingdom of Laos,
Malaysia. Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and Republic of Vietnam. Being an
intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and
freedom from control of the state in whose territory its office is located.

ADDITIONAL NOTE: As stated by Senator Salonga, permanent international commissions and administrative bodies have
been created by the agreement of a considerable number of States for a variety of international purposes, economic or
social and mainly non-political. In so far as they are autonomous and beyond the control of any one State, they have a
distinct juridical personality independent of the municipal law of the State where they are situated. As such, according
to one leading authority "they must be deemed to possess a species of international personality of their own."

One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is
immune from the legal writs and processes issued by the tribunals of the country where it is found. The obvious reason
for this is that the subjection of such an organization to the authority of the local courts would afford a convenient
medium thru which the host government may interfere in there operations or even influence or control its policies and
decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to
discharge its responsibilities impartially on behalf of its member-states.

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7. KHOSROW MINUCHER v. CA and ARTHUR SCALZO (G.R. 142396) (2003)
Topic: A State agent acting within the scope of his duty is immune from suit.

Facts:
Minucher is an Iranian national who was appointed Labor Attache for the Iranian Embasies in Tokyo and Manila.

On the other hand, Scalzo was a special agent of the US Drugs Enforcement Agency. He conducts surveillance
operations on suspected drug dealers in the Philippines believed to be the source of prohibited drugs shipped to the US
and make the actual arrest.

Minucher was charged for a violation of Act. 6425 (Dangerous Drugs Act of 1972). Such criminal charge was
followed by a buy-bust operation conducted by the Philippine police narcotic agents to which Scalzo was a witness for
the prosecution. They were acquitted. Later on, Minucher filed a complaint for damages against Scalzo.

In his defense, Scalzo asserted that he acted within the scope of his duty. Scalzo contends that the Vienna
Convention on Diplomatic Relations, to which the Philippines is a signatory, grants him absolute immunity from suit,
describing his functions as an agent of the United States Drugs Enforcement Agency. Scalzo asserted that he was an
Assistant Attach of the United States diplomatic mission and was accredited as such by the Philippine Government.

HELD:

1. Is Scalzo a diplomatic agent? NO.

Scalzo is an attach. Attaches assist a chief of mission in his duties and are administratively under him, but their main
function is to observe, analyze and interpret trends and developments in their respective fields in the host country and
submit reports to their own ministries or departments in the home government. These officials are not generally
regarded as members of the diplomatic mission, nor are they normally designated as having diplomatic rank.

NOTE: The Convention lists the classes of heads of diplomatic missions to include (a) ambassadors or
nuncios accredited to the heads of state, (b) envoys, ministers or internuncios accredited to the heads of
states; and (c) charges d' affairs accredited to the ministers of foreign affairs. Comprising the "staff of the
(diplomatic) mission" are the diplomatic staff, the administrative staff and the technical and service staff.
Only the heads of missions, as well as members of the diplomatic staff, excluding the members of the
administrative, technical and service staff of the mission, are accorded diplomatic rank. Even while the
Vienna Convention on Diplomatic Relations provides for diplomatic immunity from civil and criminal suits to
the members of diplomatic missions, it applies only to "diplomatic agents.
The Convention defines "diplomatic agents" as the heads of missions or members of the
diplomatic staff. Indeed, the main yardstick in ascertaining whether a person is a diplomat entitled to
immunity is the determination of whether or not he performs duties of diplomatic nature.

2. Is Scalzo immune from suits? YES.

The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of customary
international law then closely identified with the personal immunity of a foreign sovereign from suit. If the acts giving
rise to a suit are acts done in official capacity, diplomatic immunity applies. Suing a representative of a state is believed
to be suing the state itself. The proscription is not accorded for the benefit of an individual but for the State, in whose
service he is, under the maxim - par in parem, non habet imperium - that all states are sovereign equals and cannot
assert jurisdiction over one another.
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 However, unauthorized acts of government officials or officers are not acts of the State. The doctrine of immunity
from suit will not apply and may not be invoked where the public official is being sued in his private and personal
capacity as an ordinary citizen.
A foreign agent, operating within a territory, can be cloaked with immunity from suit but only as long as it can be
established that he is acting within the directives of the sending state. The job description of Scalzo has tasked him to
conduct surveillance on suspected drug suppliers and, after having ascertained the target, to inform local law enforcers
who would then be expected to make the arrest. In conducting surveillance activities on Minucher, later acting as the
poseur-buyer during the buy-bust operation, and then becoming a principal witness in the criminal case against
Minucher. With all of these, Scalzo has acted within the scope of his official function or duties.

In addition, the documents show that Philippines has given its imprimatur, if not consent, to the activities within
Philippine territory of agent Scalzo of the United States Drug Enforcement Agency.

8. Callado vs IRRI 244 SCRA 210

Facts:
Petitioner Ernesto Callado, the driver of IRRI, figured in an accident while driving an IRRI vehicle on an official trip to
NAIA and back to the IRRI. IRRI issued a Notice of Termination to Callado. Callado then filed a complaint for illegal
dismissal before the Labor Arbiter. IRRI invoked its immunity from suit by virtue of Article 3, PD 1620 and its diplomatic
immunity as an international organization. However, the Labor Arbiter contended that IRRI has waived its immunity by
virtue of an Order issued by IRRI on Aug 13, 1991 which provides that in all cases of termination, respondent IRRI
waives its immunity.

The Labor Arbiter decided in favor of Callado and ordered his reinstatement. However, the NLRC set aside the Labor
Arbiters decision and contended that IRRI has not waived its immunity.

Issue: Whether IRRIs immunity from suit stands

Ruling:
Yes. IRRIs immunity from suit is undisputed. The grant of immunity to IRRI is clearly necessitated by their international
character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country
in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the
very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international
practice, from political pressure or control by the host country to the prejudice of member States of the organization,
and to ensure the unhampered the performance of their functions.

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is
essentially a political question and courts should refuse to look beyond a determination by the executive branch of the
government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate
suggestion by the principal law officer of the government

The grant of immunity to IRRI is clear and unequivocal and an express waiver by its Director-General is the only way by
which it may relinquish or abandon this immunity.

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9. SSS v. CA and CRUZ (1983)
Topic: To check if immune or not, look at the enabling law.

FACTS:

Spouses Cruz applied for and were granted a real estate loan by the SSS. Their residential lot was made as
collateral. The spouses Cruz complied with their monthly payments. Thereafter, SSS filed a petition for foreclosure of
their real estate mortgage. Pursuant for the application for foreclosure, notices were published. On the second notice,
the counsel for spouses Cruz sent a letter to SSS informing SSS that his clients are up to date in their payment of the
monthly amortization and the SSS should discontinue the publication of the notices of foreclosure. This request remains
unheeded. Thats why, spouses Cruz filed an action for damages against SSS.

SSS invoked its immunity from suit being an agency of the government performing government function.

HELD: SSS does not enjoy state immunity.SSS is a juridical entity with a personality of its own. It has corporate powers
separate and distinct from the Government.

SSS' own organic act specifically provides that it can sue and be sued in Court. These words "sue and be sued"
embrace all civil process incident to a legal action. Even if SSS, as claimed, is an entity performing governmental
functions, the explicit provision of the aforecited enabling law shows that the Government deemed to have waived
immunity in respect of the SSS. Whether the SSS performs governmental or proprietary functions thus becomes
unnecessary to belabour. For by that waiver, a private citizen may bring a suit against it for varied objectives, such as, in
this case, to obtain compensation in damages arising from contract and even for tort.

SIDENOTE: Constituent-Ministrant Criterion. WE held in the ACCFA case, :

The growing complexities of modern society have rendered this traditional classification of the functions
of government quite unrealistic, not to say obsolete.

10. Bureau of Printing v. BOPEA (1961)

FACTS:
Bureau of Printing Employees Association and other employees filed an action against Bureau of Printing and
other officers thereof. The complaint alleged that the officers have been engaging in unfair labor practices by interfering
with, or coercing the employees of the Bureau of Printing in the exercise of their right to self-organization.

Bureau of Printing contended that it has no juridical personality to sue and be sued; that said Bureau of Printing
is not an industrial concern engaged for the purpose of gain but is an agency of the Republic performing government
functions. However, the respondents alleged that the Bureau is proprietary in nature as it receives outside and
additional works.

HELD: The Bureau of Printing CANNOT BE SUED. As an office of the Government, without any corporate or juridical
personality, the Bureau of Printing cannot be sued. 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.

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 The Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act No.
2657). 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. 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." The additional work it executes for private parties is
merely incidental to its function, and although such work may be deemed proprietary in character, there is no showing
that the employees performing said proprietary function are separate and distinct from those employed in its general
governmental functions.

From what has been stated, it is obvious that the Court of Industrial Relations did not acquire jurisdiction over
the respondent Bureau of Printing.

11. Department of Agriculture vs. NLRC 277 SCRA 293

Facts:
Sultan Security Agency (SSA) entered into a contract for security services with the Department of Agriculture (DA).
Pursuant to their contract, guards were deployed by SSA in the various premises of DA. Several guards 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 for damages before the Regional Arbitration Branch against the DA and SSA. The Labor
Arbiter ruled in favour of the guards and the DA and SSA did not appeal the decision.

The Labor Arbiter issued a writ of execution to enforce and execute the judgment against the property of DA and SSA.
DA filed a petition for injunction, prohibition and mandamus with the NLRC on the ground that the Labor Arbiter failed
to acquire jurisdiction over the DA hence its decision was null and void. The NLRC dismissed its petition for lack of basis.
DA then filed a petition for certiorari charging the NLRC with grave abuse of discretion for refusing to quash the writ of
execution on the ground that it disregarded the cardinal rule on the non-suability of the State. The NLRC, on the other
hand, argued that the DA has impliedly waived its immunity from suit by entering into a service contract with SSA.

Issue:
Whether the DA has waived its immunity from suit when it entered into a service contract with the SSA

Ruling:
No. 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.
The States' consent may be given expressly or impliedly. Express consent may be made through a general law or a
special law. Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening
itself to a counterclaim or when it enters into a contract. In this situation, the government is deemed to have descended
to the level of the other contracting party and to have divested itself of its sovereign immunity. However, not all
contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made

9
between one which is executed in the exercise of its sovereign function and another which is done in its proprietary
capacity.

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.

12. Republic vs. Sandoval

Facts:
Facts:
Farmer-rallyists marched to the Malacanang calling for a genuine agrarian reform program. The clash between the
rallyists and the anti-riot squad resulted in the death of 12 marchers, 39 wounded with gunshots and 12 with minor
injuries. (aka Mendiola Massacre). President Cory Aquino issued AO 11 creating the Citizens Mendiola Commission to
conduct an investigation on the Mendiola incident. The Commission recommended the deceased and the wounded
victims to be compensated by the government.

Despite such recommendation, no concrete form of compensation was received by the victims. The petitioners, the
Caylao group, therefore instituted an action for damages against the Republic of the Philippines. The SolGen filed a
Motion to Dismiss on the ground that the state cannot be sued without its consent. The petitioners opposed said motion
maintaining that the State has impliedly waived its immunity from suit when the President created the Commission to
investigate the incident and by its recommendation to compensate the victims and that the dismissal of the action is
contrary to the Constitution and International Law on Human Rights.

Judge Sandoval dismissed the petition on the ground that there was no waiver by the state. Hence, this petition for
certiorari was filed.

Issue: Whether the State has waived its immunity from suit

Ruling:
No. This is not a suit against the state with its consent.

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. 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.

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.

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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. 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.

As a conclusion the State cannot be held civilly liable for the deaths followed by the incident. Instead, liability should fall
on the named defendants who have acted beyond the scope of their authority.

13. UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT GOHIER
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN & CO., INC.,

FACTS:

US invited the submission of bids for a repair project and the Guzman & Co responded to the invitation. Guzman was
later told to confirm its price proposals and its bonding company. However, they were subsequently rejected because of
its previous unsatisfactory performance. Guzman & Co protested through the trial court to compel US to allow Guzman
& Co to perform the project or, if impossible, to pay Guzman & Co damages.

During the trial, US 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. They moved for the dismissal of the case which
was denied. They appealed the decision of the TC to the SC.

HELD

The petition is highly impressed with merit.

The traditional rule of State immunity exempts a State from being sued in the courts of another State without its
consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States.
However, the rules of International Law are not petrified; they are constantly developing and evolving. And because the
activities of states have multiplied, it has been necessary to distinguish them-between sovereign and governmental acts
(jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now
extends only to acts jure imperii. The restrictive application of State immunity is now the rule in the United States, the
United Kingdom and other states in western Europe. (See Coquia and Defensor Santiago, Public International Law, pp.
207-209 [1984].)

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.

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14. RIZAL COMMERCIAL BANKING CORPORATION v. THE HONORABLE PACIFICO P. DE CASTRO and PHILIPPINE
VIRGINIA TOBACCO ADMINISTRATION

FACTS:

The crux of the instant controversy dwells on the liability of a bank for releasing its depositor's funds upon orders of the
court, pursuant to a writ of garnishment. If in compliance with the court order, the bank delivered the garnished amount
to the sheriff, who in turn delivered it to the judgment creditor, but subsequently, the order of the court directing
payment was set aside by the same judge, should the bank be held solidarily liable with the judgment creditor to its
depositor for reimbursement of the garnished funds? The Court does not think so.

A favorable decision was given to BADOC for the recovery of unpaid tobacco deliveries. BADOC filed a Motion for a Writ
of Execution which was granted. The Writ of Execution was issued to the Rizal Commercial Banking Corporation (RCBC),
requesting a reply to the garnishment of any property of Philippine Virginia Tobacco Administration (PVTA) in RCBCs
possession. RCBC informed PVTA to take the necessary steps to protect its own interest. The Judge issued an order
granting the Motion and directed RCBC to deliver in check the amount garnished.

PVTA filed for a MR which set aside the Orders of Execution and of Payment as well as ordered BADOC to restore the
account of PVTA through reimbursing PVTA. (In short, pinabalik yung na-garnish).

ISSUE:

1) Whether or not PVTA funds are public funds not subject to garnishment; and

2) Whether or not the respondent Judge correctly ordered the herein petitioner to reimburse the amount paid

HELD:

Government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgment.
The funds involved were government funds covered by the rule on exemption from execution.

First, the PVTA funds are not public funds exempt from garnishment. 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."

The rationale in vesting it with a separate personality: when the government enters into commercial business, it
abandons its sovereign capacity and is to be treated like any other corporation.

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.

RCBC cannot therefore be compelled to make restitution solidarily with the plaintiff BADOC. It is not a party to the case
and therefore had not right to inquire as to the legality and propriety of the Writ of Execution and Notice of
Garnishment. Plaintiff BADOC alone was responsible for the issuance of the Writ of Execution and Order of Payment and
so, the plaintiff alone should bear the consequences of a subsequent annulment of such court orders; hence, only the
plaintiff can be ordered to restore the account of the PVTA.

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15. Municipality of Makati vs. CA

Facts:
The Municipality of Makati expropriated a portion of land owned by Admiral Finance Creditors Consortium, Inc. After
hearing, the RTC fixed the appraised value of the property at P5,291,666.00. and ordered the Makati to pay this amount
minus the advance payment of P338, 160.00 which was earlier given to the owner.

The court then issued a writ of execution accompanied with a writ of garnishment of funds of Makati which was
deposited in PNB. Makati filed a motion for reconsideration on the ground that its funds at the PNB could neither be
garnished nor levied upon execution, for to do so would result in the disbursement of public funds without proper
appropriation under the law. The RTC denied the motion. The CA affirmed, hence, this petition for review was filed for
the SC.

Issues:

1. Whether the funds of the Municipality of Makati are exempt from garnishment and levy upon execution

2. If so, what is the remedy of the owner?

Ruling:

1. Yes. In our jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless
otherwise provided by statute. The properties of a municipality, whether real or personal, which are necessary for
public use cannot be attached and sold at execution sale to satisfy a money judgment against the municipality.
Municipal revenues derived from taxes, licenses and market fees, and which are intended primarily and exclusively for
the purpose of financing the governmental activities and functions of the municipality, are exempt from execution.
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, no levy under execution may be validly effected on
the public funds of petitioner.

2. 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.

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. Makati has benefited from its possession of the
property since the same has been the site of Makati West High School since the school year 1986-1987. This Court will
not condone petitioner's blatant refusal to settle its legal obligation arising from expropriation proceedings it had in fact
initiated. The State's power of eminent domain should be exercised within the bounds of fair play and justice.

16. SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA v. HONORABLE INOCENCIO D. MALIAMAN and NATIONAL
IRRIGATION ADMINISTRATION NATIONAL IRRIGATION ADMINISTRATION vs.SPOUSES JOSE FONTANILLA and VIRGINIA
FONTANILLA

FACTS:

A pickup owned and operated by NIA, driven by their regular driver, bumped a bicycle ridden by Fontanilla. Both were
injured and brought to a hospital. Fontanilla was transferred to another Hospital where he died. The trial court rendered
judgment against NIA and ordered NIA to pay the heirs of Fontanilla.
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ISSUE:

Whether the award of moral damages, exemplary damages and attorney's fees is legally proper in a complaint for
damages based on quasi-delict

HELD:

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. 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.

Governmental function functions and activities which can only be performed by the government and results to the
immunity of the State from tort liability.

Proprietary function - a service which might as well be provided by a private corporation, and particularly when it
collects revenues from it and there may be liability for the torts of agents within the scope of their employment.

The National Irrigation Administration is an agency of the government exercising proprietary functions. Since it is a
corporate body performing non-governmental functions, it is 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.

However, there must first be the existence of negligence on the part of NIA through failure to observe or exercise due
diligence in the selection and supervision of the driver. Evidence shows that there was negligence in the supervision
because the driver was travelling at a high speed within the city limits yet the Supervisor, who was also in the vehicle,
failed to caution the driver to observe the city speed limit.

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