Rep ublic v.
F eli cian o When it was confirmed, PASI undertook preparations for the launching,
FACT S:
Petitioner seeks the review of the decision of the Intermediate Appellate
Court dated April 30, 1985 reversing the order of the Court of First
Instance of Camarines Sur, Branch VI, dated August 21, 1980, which
dismissed the complaint of respondent Pablo Feliciano for recovery of
ownership and possession of a parcel of land on the ground of non-
suability of the State.
On January 22, 1970, Feliciano filed a complaint with the then Court of
First Instance of Camarines Sur against the RP, represented by the Land
Authority, for the recovery of ownership and possession of a parcel of
land, consisting of four (4) lots with an aggregate area of 1,364.4177
hectares, situated in the Barrio of Salvacion, Municipality of Tinambac,
Camarines Sur. Feliciano alleged that he bought the property in question
from Victor Gardiola by virtue of a Contract of Sale dated May 31, 1952,
followed by a Deed of Absolute Sale on October 30, 1954; that Gardiola
had acquired the property by purchase from the heirs of Francisco
Abrazado whose title to the said property was evidenced by an
informacion posesoria that upon his purchase of the property, he took
actual possession of the same, introduced various improvements therein
and caused it to be surveyed in July 1952, which survey was approved by
the Director of Lands on October 24, 1954.
On November 1, 1954, President Ramon Magsaysay issued Proclamation
No. 90 reserving for settlement purposes, under the administration of the
National Resettlement and Rehabilitation Administration (NARRA), a tract
of land situated in the Municipalities of Tinambac and Siruma, Camarines
Sur, after which the NARRA and its successor agency, the Land Authority,
started sub-dividing and distributing the land to the settlers; that the
property in question, while located within the reservation established
under Proclamation No. 90, was the private property of Feliciano and
should therefore be excluded therefrom. Feliciano prayed that he be
declared the rightful and true owner of the property in question consisting
of 1,364.4177 hectares; that his title of ownership based on informacion
posesoria of his predecessor-in-interest be declared legal valid and
subsisting and that defendant be ordered to cancel and nullify all awards
to the settlers.
IS SU E: WON the State can be sued for recovery and possession of a
parcel of land
RU LING: NO
RATIONA LE:
A suit against the State, under settled jurisprudence is not permitted,
except upon a showing that the State has consented to be sued, either
expressly or by implication through the use of statutory language too
plain to be misinterpreted. It may be invoked by the courts sua sponte at
any stage of the proceedings.
Waiver of immunity, being a derogation of sovereignty, will not be inferred
lightly. but must be construed in strictissimi juris (of strictest right).
Moreover, the Proclamation is not a legislative act. The consent of the
State to be sued must emanate from statutory authority. Waiver of State
immunity can only be made by an act of the legislative body.
Addt’l: Worthy of note is the fact, as pointed out by the Solicitor General,
that the informacion posesoria registered in the Office of the Register of
Deed of Camarines Sur on September 23, 1952 was a "reconstituted"
possessory information; it was "reconstituted from the duplicate
presented to this office (Register of Deeds) by Dr. Pablo Feliciano,"
without the submission of proof that the alleged duplicate was authentic
or that the original thereof was lost. Reconstitution can be validly made
only in case of loss of the original. These circumstances raise grave
doubts as to the authenticity and validity of the "informacion posesoria"
relied upon by respondent Feliciano. Adding to the dubiousness of said
document is the fact that "possessory information calls for an area of only
100 hectares," whereas the land claimed by respondent Feliciano
comprises 1,364.4177 hectares, later reduced to 701-9064 hectares.
Courts should be wary in accepting "possessory information documents,
as well as other purportedly old Spanish titles, as proof of alleged
ownership of lands.
Ph il Agila Sa telli te v . Li ch au co
FACT S:
On June 6, 1994, a Memorandum of Understanding1 (MOU) was entered
into by a consortium of private telecommunications carriers and the
Department of Transportation and Communications (DOTC), they formed
a corporation and adopted the corporate name Philippine Agila Satellite,
Inc. (PASI). They requested the then DOTC Secretary Amado S.
Lagdameo, Jr. for official government confirmation of the assignment of
Philippine orbital slots 161ºE and 153ºE to PASI for its AGILA satellites by
a letter dated June 28, 1996.
operation and management of its satellites by, among other things,
obtaining loans, increasing its capital, conducting negotiations with its
business partners, and making an initial payment. When they requested
the Land bank’s confirmation of its participation in a club loan for the
government’s assignment to PASI of orbital slots 161ºE and 153ºE, DOTC
Undersecretary Josefina T. Lichauco sent a letter to the bank
controverting the said assignment, clearly stating that orbital slot 153°E
can no longer be assigned to PASI. She subsequently issued a Notice of
Offer for several orbital slots including 153ºE in December 1997.
PASI, claiming that the offer was without its knowledge and that it
subsequently came to learn that another company whose identity had not
been disclosed had submitted a bid and won the award for orbital slot
153ºE, filed on January 23, 1998 a complaint7 before the Regional Trial
Court (RTC) of Mandaluyong City against Lichauco and the "Unknown
Awardee," for injunction to enjoin the award of orbital slot 153ºE, declare
its nullity, and for damages.
PASI filed on February 23, 1998 a complaint before the Office of the
Ombudsman against Secretary Josefina Trinidad Lichauco. In his affidavit-
complaint, de Guzman charged Lichauco with gross violation of Section
3(e) of Republic Act No. 3019, otherwise known as the Anti-Graft and
Corrupt Practices Act, as amended, reading:
(e) Causing any undue injury to any party, including the
Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his
official, administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence.
This provision shall apply to officers and employees of officers
or government corporations charged with the grant of licenses
or permits or other concessions.
Because a prejudicial question was found by the Evaluation and
Preliminary Investigation Bureau (EPIB), the criminal suit was dismissed
and reconsideration was denied by Order dated July 17, 1998. Hence,
PASI is in petition for review on certiorari, arguing that the Ombudsman
erred in dismissing the complaint.
IS SU E: WON there exists a prejudicial question, and if in the affirmative,
whether or not the dismissal of the complaint on that account is in order
RU LING: Yes, there exists a prejudicial question because if the award to
the undisclosed bidder of the orbital lot 153°E is, in the civil case declared
valid for being within Lichauco’s scope of authority to thus free her from
liability for damages, there would be no prohibited act to speak of nor
would there be basis for undue injury claimed to have been suffered by
petitioner.
No, according to Yap v. Paras, Section 6, Rule 111 of the Rules of Court
directs that “the proceedings may only be suspended, not dismissed, and
that it may be made only upon petition, and not at the instance of the
judge alone or the investigating officer.” It would sanction the
extiguishment of the criminal liability, if there be any, through prescription
under Article 89 vis a vis Article 90 and 91 of the RPC.
The Order dismissing OMB Case No. 0-98-0416 dated July 17, 1998
against Lichauco was set aside. The Ombudsman was Ordered to
reinstate the case for further proceedings.
RATIONA LE: When a public officer acts without or in excess of
jurisdiction, any injury caused by him is his own personal liability and
cannot be imputed to the State. (p.34, Political Law, Isagani Cruz)
SAYS ON v . S ING SON
FACT S: "In January 1967, the Office of the District Engineer requisitioned
various items of spare parts for the repair of a D-8 bulldozer which was
signed by the District Engineer, Adventor Fernandez, and the
Requisitioning Officer (civil engineer), Manuel S. Lepatan. ... It was
approved by the Secretary of Public Works and Communications, Antonio
V. Raquiza. It is noted in the approval of the said requisition that "This is
an exception to the telegram dated Feb. 21, 1967 of the Secretary of
Public Works and Communications." ... So, a canvass or public bidding
was conducted on May 5, 1967 ... . The committee on award accepted
the bid of the Singkier Motor Service for the sum of P43,530.00. ...
Subsequently, it was approved by the Secretary of Public Works and
Communications; and on May 16, 1967 the Secretary sent a letter-order
to the Singkier Motor Service, Mandaue, Cebu requesting it to
immediately deliver the items listed therein for the lot price of
P43,530.00. ...
It would appear that a purchase order signed by the District Engineer, the
Requisitioning Officer and the Procurement Officer, was addressed to the
Singkier Motor Service. ... In due course the Voucher No. 07806 reached
the hands of Highway Auditor Sayson for pre-audit. He then made
inquiries about the reasonableness of the price. ... Thus, after finding
from the indorsements of the Division Engineer and the Commissioner of
Public Highways that the prices of the various spare parts are just and
reasonable and that the requisition was also approved by no less than the
Secretary of Public Works and Communications with the verification of
V.M. Secarro a representative of the Bureau of Supply Coordination,
Manila, he approved it for payment in the sum of P34,824.00, with the
retention of 20% equivalent to P8,706.00 to submit the voucher with the
supporting papers to the Supervising Auditor, which he did. ... The
voucher was paid on June 9, 1967 in the amount of P34,824.00 to
Singson. On June 10,1967, Highway Auditor Sayson received a telegram
from Supervising Auditor Fornier quoting a telegraphic message of the
General Auditing Office which states: "In view of excessive prices charge
for purchase of spare parts and equipment shown by vouchers already
submitted this Office direct all highway auditors refer General Office
payment similar nature for appropriate action." ... In the interim it would
appear that when the voucher and the supporting papers reached the
GAO, a canvass was made of the spare parts among the suppliers in
Manila, particularly, the USI (Phil.), which is the exclusive dealer of the
spare parts of the caterpillar tractors in the Philippines. Said firm thus
submitted its quotations at P2,529.64 only which is P40,000.00 less than
the price of the Singkier. ... In view of the overpricing the GAO took up
the matter with the Secretary of Public Works in a third indorsement of
July 18, 1967. ... The Secretary then circularized a telegram holding the
district engineer responsible for overpricing." What is more, charges for
malversation were filed against the district engineer and the civil engineer
involved. It was the failure of the Highways Auditor, one of the petitioners
before us, that led to the filing of the mandamus suit below, with now
respondent Singson as sole proprietor of Singkier Motor Service, being
adjudged as entitled to collect the balance of P8,706.00, the contract in
question having been upheld. Hence this appeal by certiorari.
IS SU E: WON the mandamus suit of the respondent (Singson) involving a
money claim against the government, predicated on a contract is valid
RU LING: No.
RATIONA LE: the claim is void for the cause or consideration is contrary
to law, morals or public policy, mandamus is not the remedy to enforce
the collection of such claim against the State but a ordinary action for
specific performance. the suit disguised as one for mandamus to compel
the Auditors to approve the vouchers for payment, is a suit against the
State, which cannot prosper or be entertained by the Court except with
the consent of the State ... . In other words, the respondent should have
filed his claim with the General Auditing Office, under the provisions of
Com. Act 327 which prescribe the conditions under which money claim
against the government may be
filed:
"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. If said accounts or claims need reference to other persons,
office or offices, or to a party interested, the period aforesaid shall be
counted from the time the last comment necessary to a proper decision is
received by him."
Thereafter, the procedure for appeal is indicated: "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: (a) To the President of the United States, pending the final and
complete withdrawal of her sovereignty over the Philippines, or (b) To the
President of the Philippines, or (c) To the Supreme Court of the
Philippines if the appellant is a private person or entity."
Once consent is secured, an action may be filed. There is nothing to
prevent the State, however, in such statutory grant, to require that certain
administrative proceedings be had and be exhausted. Also, the proper
forum in the judicial hierarchy can be specified if thereafter an appeal
would be taken by the party aggrieved. Here, there was no ruling of the
Auditor General. Even had there been such, the court to which the matter
should have been elevated is this Tribunal; the lower court could not
legally act on the matter.
Rep ublic v. Pur is ima
Fact s:
A motion to dismiss was filed on September 7, 1972 by defendant Rice
and Corn Administration in a pending civil suit in the sala of respondent
Judge for the collection of a money claim arising from an alleged breach
of contract, the plaintiff being private respondent Yellow Ball Freight
Lines, Inc. At that time, the leading case of Mobil Philippines Exploration,
Inc. v. Customs Arrastre Service, where Justice Bengzon stressed the lack
of jurisdiction of a court to pass on the merits of a claim against any
office or entity acting as part of the machinery of the national government
unless consent be shown, had been applied in 53 other decisions.
Respondent Judge Amante P. Purisima of the Court of First Instance of
Manila denied the motion to dismiss dated October 4, 1972. Hence, the
petition for certiorari and prohibition.
Issue:
WON the respondent’s decision is valid
Rul in g: No.
Ratio nale:
The position of the Republic has been fortified with the explicit affirmation
found in this provision of the present Constitution: "The State may not be
sued without its consent."
"The doctrine of non-suability recognized in this jurisdiction even prior to
the effectivity of the [1935] Constitution is a logical corollary of the
positivist concept of law which, to para-phrase Holmes, negates the
assertion of any legal right as against the state, in itself the source of the
law on which such a right may be predicated. Nor is this all, even if such
a principle does give rise to problems, considering the vastly expanded
role of government enabling it to engage in business pursuits to promote
the general welfare, it is not obeisance to the analytical school of thought
alone that calls for its continued applicability. Nor is injustice thereby
cause private parties. They could still proceed to seek collection of their
money claims by pursuing the statutory remedy of having the Auditor
General pass upon them subject to appeal to judicial tribunals for final
adjudication. We could thus correctly conclude as we did in the cited
Providence Washington Insurance decision: "Thus the doctrine of non-
suability of the government without its consent, as it has operated in
practice, hardly lends itself to the charge that it could be the fruitful
parent of injustice, considering the vast and ever-widening scope of state
activities at present being undertaken. Whatever difficulties for private
claimants may still exist, is, from an objective appraisal of all factors,
minimal. In the balancing of interests, so unavoidable in the
determination of what principles must prevail if government is to satisfy
the public weal, the verdict must be, as it has been these so many years,
for its continuing recognition as a fundamental postulate of constitutional
law." [Switzerland General Insurance Co., Ltd. v. Republic of the
Philippines]
***The consent, to be effective, must come from the State acting
through a duly enacted statute as pointed out by Justice Bengzon in
Mobil. Thus, whatever counsel for defendant Rice and Corn Administration
agreed to had no binding force on the government.
E. Me rit t v. Gov ern men t of the Ph ilippin e I sl and s
Fact s: This is an appeal by both parties from a judgment of the Court of
First Instance of the city of Manila in favor of the plaintiff for the sum of
P14,741, together with the costs of the cause.
The plaintiff, riding on a motorcycle, was going toward the western part
of Calle Padre Faura, passing along the west side thereof at a speed of
ten to twelve miles an hour, upon crossing Taft Avenue and when he was
ten feet from the southwestern intersection of said streets, the General
Hospital ambulance, upon reaching said avenue, instead of turning
toward the south, after passing the center thereof, so that it would be on
the left side of said avenue, as is prescribed by the ordinance and the
Motor Vehicle Act, turned suddenly and unexpectedly and long before
reaching the center of the street, into the right side of Taft Avenue,
without having sounded any whistle or horn, by which movement it struck
the plaintiff, who was already six feet from the southwestern point or
from the post place there.
By reason of the resulting collision, the plaintiff was so severely injured
that, according to Dr. Saleeby, who examined him on the very same day
that he was taken to the General Hospital, he was suffering from a
depression in the left parietal region, a wound in the same place and in
the back part of his head, while blood issued from his nose and he was
entirely unconscious. The patient apparently was slightly deaf, had a light
weakness in his eyes and in his mental condition. The plaintiff's mental
and physical condition prior to the accident was excellent, and that after
having received the injuries, his physical condition had undergone a
noticeable depreciation, for he had lost the agility, energy, and ability that
he had constantly displayed before the accident as one of the best
constructors of wooden buildings and he could not now earn even a half
of the income that he had secured for his work because he had lost 50
per cent of his efficiency. As a contractor, he could no longer, as he had
before done, climb up ladders and scaffoldings to reach the highest parts
of the building.
The two items which constitute a part of the P14,741 are (a) P5,000, the
award awarded for permanent injuries, and (b) the P2,666, the amount
allowed for the loss of wages during the time the plaintiff was
incapacitated from pursuing his occupation. Nothing was found in the
record which would justify increasing the amount of the first. As to the
second, the record shows, and the trial court so found, that the plaintiff's
services as a contractor were worth P1,000 per month. The court,
however, limited the time to two months and twenty-one days, which the
plaintiff was actually confined in the hospital. In this the Court thinks
there was error, because it was clearly established that the plaintiff was
wholly incapacitated for a period of six months. The mere fact that he
remained in the hospital only two months and twenty-one days while the
remainder of the six months was spent in his home, would not prevent
recovery for the whole time. The Court, therefore, find that the amount of
damages sustained by the plaintiff, without any fault on his part, is
P18,075.
The petitioner vis-à-vis Act No. 2457 effective February 3, 1915 was
authorized to bring suit against the Government of the Philippine Islands
and authorizing the Attorney-General to appear in said suit.
Issue: WON the scope of the Act authorizes the Court to hold that the
Government is legally liable for the said amount
Rul in g: No
Ratio nale: Plaintiff claims that by the enactment of this law the
legislature admitted liability on the part of the state for the acts of its
officers, and that the suit now stands just as it would stand between
private parties. It is difficult to see how the act does, or was intended to
do, more than remove the state's immunity from suit. It simply gives
authority to commence suit for the purpose of settling plaintiff's
controversies with the estate. Nowhere in the act is there a whisper or
suggestion that the court or courts in the disposition of the suit shall
depart from well established principles of law, or that the amount of
damages is the only question to be settled. The act opened the door of
the court to the plaintiff. It did not pass upon the question of liability, but
left the suit just where it would be in the absence of the state's immunity
from suit. If the Legislature had intended to change the rule that obtained
in this state so long and to declare liability on the part of the state, it
would not have left so important a matter to mere inference, but would
have done so in express terms. (Murdock Grate Co. vs. Commonwealth,
152 Mass., 28; 24 N.E., 854; 8 L. R. A., 399.)
Paragraph 5 of article 1903 of the Civil Code reads:
The state is liable in this sense when it acts through a special
agent, but not when the damage should have been caused by
the official to whom properly it pertained to do the act
performed, in which case the provisions of the preceding article
shall be applicable.
It follows therefrom that the state, by virtue of such provisions of law, is
not responsible for the damages suffered by private individuals in
consequence of acts performed by its employees in the discharge of the
functions pertaining to their office, because neither fault nor even
negligence can be presumed on the part of the state in the organization
of branches of public service and in the appointment of its agents; on the
contrary, we must presuppose all foresight humanly possible on its part in
order that each branch of service serves the general weal and that of
private persons interested in its operation. Between these latter and the
state, therefore, no relations of a private nature governed by the civil law
can arise except in a case where the state acts as a judicial person
capable of acquiring rights and contracting obligations. (Supreme Court of
Spain, January 7, 1898; 83 Jur. Civ., 24.)
According to paragraph 5 of article 1903 of the Civil Code and the
principle laid down in a decision, among others, of the 18th of May, 1904,
in a damage case, the responsibility of the state is limited to that which it
contracts through a special agent, duly empowered by a definite order or
commission to perform some act or charged with some definite purpose
which gives rise to the claim, and not where the claim is based on acts or
omissions imputable to a public official charged with some administrative
or technical office who can be held to the proper responsibility in the
manner laid down by the law of civil responsibility. Consequently, the trial
court in not so deciding and in sentencing the said entity to the payment
of damages, caused by an official of the second class referred to, has by
erroneous interpretation infringed the provisions of articles 1902 and 1903
of the Civil Code. (Supreme Court of Spain, July 30, 1911; 122 Jur. Civ.,
146.)
PNB v . CI R
Fact s:
Petitioner’s motion to quash a notice of garnishment was denied for lack
of merit. What was sought to be garnished was the money of the People's
Homesite and Housing Corporation deposited at petitioner's branch in
Quezon City, to satisfy a decision of respondent Court which had become
final and executory. A writ of execution in favor of private respondent
Gabriel V. Manansala had previously been issued. He was the counsel of
the prevailing party, the United Homesite Employees and Laborers
Association. The validity of the order assailed is challenged on two
grounds: (1) that the appointment of respondent Gilbert P. Lorenzo as
authorized deputy sheriff to serve the writ of execution was contrary to
law and (2) that the funds subject of the garnishment "may be public in
character."
The order of August 26, 1970 of respondent Court denying the motion to
quash, subject of this certiorari proceeding, reads as follows: "The
Philippine National Bank moves to quash the notice of garnishment served
upon its branch in Quezon City by the authorized deputy sheriff of this
Court. It contends that the service of the notice by the authorized deputy
sheriff of the court contravenes Section 11 of Commonwealth Act No.
105, as amended which reads:" 'All writs and processes issued by the
Court shall be served and executed free of charge by provincial or city
sheriffs, or by any person authorized by this Court, in the same manner
as writs and processes of Courts of First Instance.' Following the law, the
Bank argues that it is the Sheriff of Quezon City, and not the Clerk of this
Court who is its Ex-Officio Sheriff, that has the authority to serve the
notice of garnishment, and that the actual service by the latter officer of
said notice is therefore not in order. The Court finds no merit in this
argument. Republic Act No. 4201 has, since June 19, 1965, already
repealed Commonwealth Act No. 103, and under this law, it is now the
Clerk of this Court that is at the same time the Ex-Officio Sheriff. As such
Ex-Officio Sheriff, the Clerk of this Court has therefore the authority to
issue writs of execution and notices of garnishment in an area
encompassing the whole of the country, including Quezon City, since his
area of authority is coterminous with that of the Court itself, which is
national in nature. ... At this stage, the Court notes from the record that
the appeal to the Supreme Court by individual employees of PHHC which
questions the award of attorney's fees to Atty. Gabriel V. Manansala, has
already been dismissed and that the same became final and executory on
August 9, 1970. There is no longer any reason, therefore, for withholding
action in this case. [Wherefore], the motion to quash filed by the
Philippine National Bank is denied for lack of merit. The said Bank is
therefore ordered to comply within five days from receipt with the 'notice
of Garnishment' dated May 6, 1970." 5 There was a motion for
reconsideration filed by petitioner, but in a resolution dated September
22, 1970, it was denied. Hence, this certiorari petition.
Issue: WON the funds mentioned may be garnished
Rul in g: No
Ratio nale:
National Shipyard and Steel Corporation v. court of Industrial Relations 6 is
squarely in point. As was explicitly stated in the opinion of the then
Justice, later Chief Justice, Concepcion: "The allegation to the effect that
the funds of the NASSCO are public funds of the government, and that, as
such, the same may not be garnished, attached or levied upon, is
untenable for, as a government owned and controlled corporation. the
NASSCO has a personality of its own, distinct and separate from that of
the Government. It has pursuant to Section 2 of Executive Order No. 356,
dated October 23, 1950 ..., pursuant to which the NASSCO has been
established — 'all the powers of a corporation under the Corporation Law
...' Accordingly, it may sue and be sued and may be subjected to court
processes just like any other corporation (Section 13, Act No. 1459), as
amended."
In a 1941 decision, Manila Hotel Employees Association v. Manila Hotel
Company, 8 this Court, through Justice Ozaeta, held: "On the other hand,
it is well settled that when the government enters into commercial
business, it abandons its sovereign capacity and is to be treated like any
other corporation. (Bank of the United States v. Planters' Bank, 9 Wheat,
904, 6 L.ed. 244). By engaging in a particular business thru the
instrumentality of a corporation, the governmnent divests itself pro hac
vice of its sovereign character, so as to render the corporation subject to
the rules of law governing private corporations."
Both the Palacio and the Commissioner of Public Highways decisions,
insofar as they reiterate the doctrine that one of the coronaries of the
fundamental concept of non-suability is that governmental funds are
immune from garnishment. It is an entirely different matter if, according
to Justice Sanchez in Ramos v. Court of Industrial Relations, the office or
entity is "possessed of a separate and distinct corporate existence." Then
it can sue and be sued. Thereafter, its funds may be levied upon or
garnished.
SSS v. CA
Fact s:
Sometime in March, 1963 the spouses David B. Cruz and Socorro Concio
Cruz applied for and were granted a real estate loan by the SSS with their
residential lot located at Rizal covered by TCT No. 2000 of the Register of
Deeds of Rizal as collateral. Pursuant to this real estate ban said spouses
executed on March 26, 1963 the corresponding real estate mortgage
originally in the amount of P39,500.00 which was later increased to
P48,000.00 covering the aforementioned property as shown in their
mortgage contract. The plaintiffs complied with their monthly payments
although there were times when delays were incurred in their monthly
payments which were due every first five (5) days of the month. On July
9, 1968, defendant SSS filed an application with the Provincial Sheriff of
Rizal for the foreclosure of the real estate mortgage executed by the
plaintiffs on the ground that the conditions of the mortgage have been
broken since October, 1967 with the default on the part of the mortgagor
to pay in full the installments then due and payable on the principal debt
and the interest thereon, and, all of the monthly installments due and
payable thereafter up to the present date.
Pursuant to this application for foreclosure, the notice of the Sheriff's Sale
of the mortgaged property was initially published in the Sunday Chronicle
in its issue of July 14, 1968 announcing the sale at public auction of the
said mortgaged property. After this first publication of the notice, and
before the second publication of the notice, plaintiff herein thru counsel
formally wrote defendant SSS, a letter dated July 19, 1968 and received
on the same date by said entity demanding, among others, for SSS to
withdraw the foreclosure and discontinue the publication of the notice of
sale of their property claiming that plaintiffs were up-to-date in the
payment of their monthly amortizations. Nothing came out of the
telegraphic communications between the parties and the second and third
publications of the notice of foreclosure were published successively in the
Sunday Chronicle in its issues of July 21 and 28, 1968.
On July 24, 1968, the Cruz spouses, together with their daughter Lorna C.
Cruz, instituted before the Court of First Instance of Rizal an action for
damages and attorney's fees against the Social Security System (SSS) and
the Provincial Sheriff of Rizal alleging, that they had fully and religiously
paid their monthly amortizations and had not defaulted in any payment.
Trial Court rendered judgment in favor of the plaintiffs[(a) P2,500.00 as
actual damage;(b) P35,000.00 as moral damage;(c) P10,000.00 as
exemplary or corrective damages; and(d) P5,000.00 as attorney's fees].
The Court of Appeals affirmed the lower Court’s judgment but modified it
by deducting P5000 to total damages. SSS then filed a petition for review
on certiorari alleging:
I. Respondent Court of Appeals erred in not finding that under Condition
No. 10 of the Mortgage contract, which is a self-executing, automatic
acceleration clause, all amortizations and obligations of the mortgagors
become ipso jure due and demandable if they at any time fail to pay any
of the amortizations or interest when due;
II. Respondent Court of Appeals erred in holding that a previous notice to
the mortgagor was necessary before the mortgage could be foreclosed;
III. Respondent Court of Appeals erred in not holding that, assuming that
there was negligence committed by subordinate employees of the SSS in
staking 'Socorro C. Cruz' for 'Socorro J. Cruz' as the defaulting borrower,
the fault cannot be attributed to the SSS, much less should the SSS be
made liable for their acts done without its knowledge and authority;
IV. Respondent Court of Appeals erred in holding that there is no
extenuating circumstance to mitigate the liability of petitioner;
V. Respondent Court of Appeals erred in not holding that petitioner is not
liable for damages not being a profit-oriented governmental institution
but one performing governmental functions petitions.
Issue: WON SSS can be held liable for damages
Rul in g: Yes
Ratio nale: The amendability of the SSS to judicial action and legal
responsibility for its acts have come to the courts, there should be no
question considering that the 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. So that, even assuming that the SSS, as
it claims, enjoys immunity from suit as an entity performing governmental
functions, by virtue of the explicit provision of the aforecited enabling law,
the Government must be deemed to have waived immunity in respect of
the SSS, although it does not thereby concede its liability. That statutory
law has given to the private-citizen a remedy for the enforcement and
protection of his rights. The SSS thereby has been required to submit to
the jurisdiction of the Courts, subject to its right to interpose any lawful
defense. Whether the SSS performs governmental or proprietary functions
thus becomes unnecessary to belabor. 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.
As a government owned and controlled corporation, it has a personality of
its own, distinct and separate from that of the Government. (National
Shipyards and Steel Corp. vs. CIR, et al., L-17874, August 31, 1963).
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.
What is of paramount importance in this controversy is that an injustice is
not perpetrated and that when damage is caused a citizen, the latter
should have a right of redress particularly when it arises from a purely
private and contractual relationship between said individual and the
System.
Under the circumstances of the case, the SSS cannot be held liable for the
damages as awarded by the Trial Court and the Appellate Tribunal nor can
the SSS be held liable for moral and temperate damages. The filing alone
of the foreclosure application should not be a ground for an award of
moral damages in the same way that a clearly unfounded civil action is
not among the grounds for moral damages. With the ruling out of
compensatory, moral and temperate damages, the grant of exemplary or
corrective damages should also be set aside.
However, as found by both the Trial and Appellate Courts, there was clear
negligence on the part of SSS when they mistook the loan account of
Socorro J. Cruz for that of private respondent Socorro C. Cruz. Its
attention was called to the error, but it adamantly refused to acknowledge
its mistake. The SSS can be held liable for nominal damages. This type of
damages is not for the purpose of indemnifying private respondents for
any loss suffered by them but to vindicate or recognize their rights which
have been violated or invaded by petitioner SSS.
BEN IT O E . L IM , a s a dmi nis trator of the Int es ta te E st at e of
Ar se ni a E nr iqu ez , plaintiff-appellant,
vs.
HE RB ER T B ROWN EL L, JR ., A ttor ne y Ge ne ral of t he Uni ted
Sta te s, a nd AS AI CH I KAG AWA, d ef end an ts -appell ee , R EPUB LI C
OF T HE P HI LIP PINE S, int erv eno r-app ellee .
FACT S:
The property in dispute consists of four parcels of land situated in Tondo,
City of Manila. The lands were, after the last world war, found by the Alien
Property Custodian of the United States to be registered in the name of
Asaichi Kagawa, national of an enemy country, Japan. Alien Property
Custodian, issued a vesting order on the authority of the Trading with the
Enemy Act of the United States, as amended, vesting in himself the
ownership over two of the said lots, Lots Nos. 1 and 2.
On July, 6, 1948 The Philippine Alien Property Administrator (successor of
the Alien Property Custodian) under the authority of the same statute,
issued a supplemental vesting order, vesting in himself title to the
remaining Lots Nos. 3 and 4.
The Philippine Alien Property Administrator (acting on behalf of the
President of the United States) and the President of the Philippines,
executed two formal agreements, one referring to Lots 1 and 2 and the
other to Lots 3 and 4, whereby the said Administrator transferred all the
said four lots to the Republic of the Philippines .The transfer agreements
were executed.
On the theory that the lots in question still belonged to Arsenia Enriquez,
the latter's son Benito E. Lim filed a formal notice of claim to the property
with the Philippine Alien Property Administrator. The notice was
subsequently amended to permit Lim to prosecute the claim as
administrator of the intestate estate of the deceased Arsenia Enriquez,
thus, in effect, substituting the intestate estate as the claimant, it being
alleged that the lots were once the property of Arsenia Enriquez. The
claim was disallowed by the Vested Property Claims Committee of the
Philippine Alien Property Administrator.
The claimant Benito E. Lim filed a complaint in the Court of First Instance
of Manila against the Philippine Alien Property Administrator (later
substituted by the Attorney General of the United States) for the recovery
of the property in question with back rents. The complaint was later
amended to include Asaichi Kagawa as defendant. As amended, it alleged
that the lands in question formerly belonged to Arsenia Enriquez. He
stated some reasons in his allegations to prove that Arsenia is the owner
of the property.
Plaintiff, therefore, prayed that the sheriff's sale to Kagawa and the
vesting of the properties in the Philippine Alien Property Administrator and
the transfer thereof by the United States to the Republic of the Philippines
be declared null and void; that Arsenia Enriquez be adjudged owner of
the said properties and the Register of Deeds of Manila be ordered to
issue the corresponding transfer certificates of title to her.
The court ordered the complaint dismissed on the ground — as stated in
the dispositive part of the order — that the "court has no jurisdiction over
the subject matter of this action,
ISSUE:
Whether or not Lim has the right to sue or claim for damages against the
Republic and Attorney General of the United States.
RULING:
The immunity of the state from suit, however, cannot be invoked where
the action, as in the present case, is instituted by a person who is neither
an enemy or ally of an enemy for the purpose of establishing his right,
title or interest in vested property, and of recovering his ownership and
possession. Congressional consent to such suit has expressly been given
by the United States. (Sec. 3, Philippine Property Act of 1946; Philippine
Alien Property Administration vs. Castelo, et al., 89 Phil., 568.)
The order of dismissal, however, with respect to plaintiff's claim for
damages against the defendant Attorney General of the United States
must be upheld. The relief available to a person claiming enemy property
which has been vested by the Philippines Alien Property Custodian is
limited to those expressly provided for in the Trading with the Enemy Act,
which does not include a suit for damages for the use of such vested
property. That action, as held by this Court in the Castelo case just cited,
is not one of those authorized under the Act which may be instituted in
the appropriate courts of the Philippines under the provisions of section 3
of the Philippine Property Act of 1946. Congressional consent to such suit
has not been granted.
The claim for damages for the use of the property against the intervenor
defendant Republic of the Philippines to which is was transferred,
likewise, cannot be maintained because of the immunity of the state from
suit. The claim obviously constitutes a charge against, or financial liability
to, the Government and consequently cannot be entertained by the courts
except with the consent of said government.
Republic intervened in the case merely to unite with the defendant
Attorney General of the United States in resisting plaintiff's claims, and for
that reason asked no affirmative relief against any party in the answer in
intervention it filed. On the other hand, plaintiff in his original complaint
made no claim against the Republic and only asked for damages against it
for the use of the property when the complaint was amended.
In view of the foregoing, the order appealed from insofar as it dismisses
the complaint with respect to Lots 1 and 2 and the claim for damages
against the Attorney General of the United States and the Republic of the
Philippines, is affirmed,
FR ANC IS CO M AL ONG a nd ROS AL INA A QU INO MA LONG
petitioners,
vs.
PH IL IPP INE N ATIONA L R AI LWAYS a nd CO UR T OF F IR ST
IN ST ANC E O F P ANG AS INAN, L in ga yen B ranc h 1 1, respondents
FACTS:
The Malong spouses alleged in their complaint that on October 30, 1977
their son, Jaime Aquino, a paying passenger, was killed when he fell from
a PNR train while it was between Tarlac and Capas. The tragedy occurred
because Jaime had to sit near the door of a coach. The train was
overloaded with passengers and baggage in view of the proximity of All
Saints Day. The Malong spouses prayed that the PNR be ordered to pay
them damages.
Upon the Solicitor General's motion, the trial court dismissed the
complaint. It ruled that it had no jurisdiction because the PNR, being a
government instrumentality, the action was a suit against the State. The
Malong spouses appealed to the Court .
ISSUE:
Whether or not the PNR is cannot be sue or sued because it’s a
governmental instrument?
RULING:
The Manila Railroad Company, the PNR's predecessor, as a common
carrier, was not immune from suit.The PNR is a government
instrumentality under government ownership during its 50-year term.
The Corporation Code provides that every corporation has the power to
sue and be sued in its corporate name. The Corporation Law provides that
every corporation has the power to sue and be sued in any court.
We hold that in the instant case the State divested itself of its sovereign
capacity when it organized the PNR which is no different from its
predecessor, the Manila Railroad Company. The PNR did not become
immune from suit. It did not remove itself from the operation of articles
1732 to 1766 of the Civil Code on common carriers.
But the correct rule is that "not all government entities, whether
corporate or non-corporate, are immune from suits. Immunity from suit is
determined by the character of the objects for which the entity was
organized."
Suits against State agencies with respect to matters in which they have
assumed to act in a private or non-governmental capacity are not suits
against the State.
It would be unjust if the heirs of the victim of an alleged negligence of
the PNR employees could not sue the PNR for damages. Like any private
common carrier, the PNR is subject to the obligations of persons engaged
in that private enterprise. It is not performing any governmental function.
WHEREFORE, the order of dismissal is reversed and set aside. The case is
remanded to the trial court for further proceedings. Costs against the
Philippine National Railways.
SP OU SE S JO SE FON TAN ILL A a nd VI RG INI A F ON TAN IL LA,
petitioners,
vs.
HO NO RA BL E IN OC ENCI O D . MA LI AM AN a nd NA TI ON AL
IR RIGA TI ON AD MIN IS TR ATI ON , respondents
FACTS:
It appears that on August 21, 1976 at about 6:30 P.M., a pickup owned
and operated by respondent National Irrigation Administration, a
government agency bearing Plate No. IN-651, then driven officially by
Hugo Garcia, an employee of said agency as its regular driver, bumped a
bicycle ridden by Francisco Fontanilla, son of herein petitioners, and
Restituto Deligo, at Maasin, San Jose City along the Maharlika Highway.
As a result of the impact, Francisco Fontanilla and Restituto Deligo were
injured and brought to the San Jose City Emergency Hospital for
treatment. Fontanilla was later transferred to the Cabanatuan Provincial
Hospital where he died.
Garcia was then a regular driver of respondent National Irrigation
Administration who, at the time of the accident, was a licensed
professional driver and who qualified for employment as such regular
driver of respondent after having passed the written and oral
examinations on traffic rules and maintenance of vehicles given by
National Irrigation Administration authorities.
The within petition is thus an off-shot of the action (Civil Case No. SJC-56)
instituted by petitioners-spouses on April 17, 1978 against respondent NIA
before the then Court of First Instance of Nueva Ecija, Branch VIII at San
Jose City, for damages in connection with the death of their son resulting
from the aforestated accident.
After trial, the trial court rendered judgment on March 20, 1980 which
directed respondent National Irrigation Administration to pay damages
(death benefits) and actual expenses to petitioners. The dispositive
portion of the decision reads thus:
. . . . . Judgment is here rendered ordering the defendant National
Irrigation Administration to pay to the heirs of the deceased P12,000.00
for the death of Francisco Fontanilla; P3,389.00 which the parents of the
deceased had spent for the hospitalization and burial of the deceased
Francisco Fontanilla; and to pay the costs. (Brief for the petitioners
spouses Fontanilla, p. 4; Rollo, p. 132)
Respondent National Irrigation Administration filed on April 21, 1980, its
motion for reconsideration of the aforesaid decision which respondent trial
court denied in its Order of June 13, 1980. Respondent National Irrigation
Administration thus appealed said decision to the Court of Appeals (C.A.-
G.R. No. 67237- R) where it filed its brief for appellant in support of its
position.
Instead of filing the required brief in the aforecited Court of Appeals case,
petitioners filed the instant petition with this Court.
ISSUE:
Whether or not petitioners may be entitled to an award of moral and
exemplary damages and attorney's fees?
RULING:
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. (p. 961,
Civil Code of the Philippines; Annotated, Paras; 1986 Ed. ).
In this jurisdiction, the State assumes a limited liability for the damage
caused by the tortious acts or conduct of its special agent.
Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily
assumed liability for acts done through special agents. The State's agent,
if a public official, must not only be specially commissioned to do a
particular task but that such task must be foreign to said official's usual
governmental functions. If the State's agent is not a public official, and is
commissioned to perform non-governmental functions, then the State
assumes the role of an ordinary employer and will be held liable as such
for its agent's tort. Where the government commissions a private
individual for a special governmental task, it is acting through a special
agent within the meaning of the provision.
Certain functions and activities, which can be performed only by the
government, are more or less generally agreed to be "governmental" in
character, and so the State is immune from tort liability. On the other
hand, a service which might as well be provided by a private corporation,
and particularly when it collects revenues from it, the function is
considered a "proprietary" one, as to which 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,
Indubitably, the NIA is a government corporation with juridical personality
and not a mere agency of the government. Since it is a corporate body
performing non-governmental functions, it now becomes liable for the
damage caused by the accident resulting from the tortious act of its
driver-employee. In this particular case, the NIA assumes the
responsibility of an ordinary employer and as such, it becomes answerable
for damages.
This assumption of liability, however, is predicated upon the existence of
negligence on the part of respondent NIA. The negligence referred to
here is the negligence of supervision.
At this juncture, the matter of due diligence on the part of respondent
NIA becomes a crucial issue in determining its liability since it has been
established that respondent is a government agency performing
proprietary functions and as such, it assumes the posture of an ordinary
employer which, under Par. 5 of Art. 2180, is responsible for the damages
caused by its employees provided that it has failed to observe or exercise
due diligence in the selection and supervision of the driver.
Considering the foregoing, respondent NIA is hereby directed to pay
herein petitioners-spouses the amounts of P12,000.00 for the death of
Francisco Fontanilla; P3,389.00 for hospitalization and burial expenses of
the aforenamed deceased; P30,000.00 as moral damages; P8,000.00 as
exemplary damages and attorney's fees of 20% of the total award.
Sa nti ago vs R ep ubli c
Facts:
January 1971 – plaintiff Ildefonso Santiago executed a deed of donation
to the Bureau of Plant Industry with terms of the donation, to "install
lighting facilities and water system on the property donated and to build
an office building and parking [lot] thereon which should have been
constructed and ready for occupancy on or before December 7, 1974.
August 9, 1976 – Plaintiff Santiago filed a petition with the Court of first
instance of Zamboanga for revocation of the property donated because
the donee failed to comply with the terms and conditions aforementioned.
Respondents asked for the dismissal of the case in lieu with the principle
that the state may not be sued without its consent. The court decided in
favor of the accused and dismissed the case.
Issue:
Whether or not state can claim immunity if it violated the
conditions of a donation.
Ruling:
No, the state cannot claim immunity if it violated the conditions
of a donation.
Rationale:
The doctrine of governmental immunity from suit cannot serve as an
instrument for perpetrating an injustice on a citizen. Here, the alleged
failure to abide by the conditions under which a donation was given
should not prove an insuperable obstacle to a civil action, the consent
likewise being presumed.
Our decision, it must be emphasized, goes no further than to rule that a
donor, with the Republic or any of its agency being the donee, is entitled
to go to court in case of an alleged breach of the conditions of such
donation. He has the right to be heard. Under the circumstances, the
fundamental postulate of non-suability cannot stand in the way. It is
made to accommodate itself to the demands of procedural due process,
which is the negation of arbitrariness and inequity. The government, in
the final analysis, is the beneficiary. It thereby manifests its adherence to
the highest ethical standards, which can only be ignored at the risk of
losing the confidence of the people, the repository of the sovereign
power.
Decision of lower court is reversed and set aside.
Amig able vs C ue nc a
Facts:
Victoria Amigable, the appellant herein, is the registered owner of Lot No.
639 of the Banilad Estate in Cebu City. No annotation in favor of the
government of any right or interest in the property appears at the back of
the certificate. Without prior expropriation or negotiated sale, the
government used a portion of said lot for the construction of the Mango
and Gorordo Avenues.
said avenues were already existing in 1921 although "they were in bad
condition and very narrow, unlike the wide and beautiful avenues that
they are now," and "that the tracing of said roads was begun in 1924, and
the formal construction in 1925."
March 27, 1958 Amigable's counsel wrote the President of the Philippines,
requesting payment of the portion of her lot which had been appropriated
by the government. The claim was indorsed to the Auditor General, who
disallowed it in his 9th Indorsement dated December 9, 1958. A copy of
said indorsement was transmitted to Amigable's counsel by the Office of
the President on January 7, 1959.
Petitioner filed a complaint against the Republic of the Philippines and
Nicolas Cuenca, in his capacity as Commissioner of Public Highways. The
lower court decided in favor of the defendant and further stated that It
did not have jurisdiction over said claim because the government had not
given its consent to be sued.
Issue:
Whether or not the state is immune from the suit charged.
Ruling:
No, the state is not immune with regards to the suit charged.
Rationale:
Ministerio vs. Court of First Instance of Cebu,
…where the government takes away property from a private landowner
for public use without going through the legal process of expropriation or
negotiated sale, the aggrieved party may properly maintain a suit against
the government without thereby violating the doctrine of governmental
immunity from suit without its consent.
Considering that no annotation in favor of the government appears at the
back of her certificate of title and that she has not executed any deed of
conveyance of any portion of her lot to the government, the appellant
remains the owner of the whole lot. As registered owner, she could bring
an action to recover possession of the portion of land in question at
anytime because possession is one of the attributes of ownership.
However, since restoration of possession of said portion by the
government is neither convenient nor feasible at this time because it is
now and has been used for road purposes, the only relief available is for
the government to make due compensation which it could and should
have done years ago. To determine the due compensation for the land,
the basis should be the price or value thereof at the time of the taking.
Judgement is set reversed and set aside.
Torio vs Fon ta nilla
Facts:
Municipality of Malasiqui passed resolution number 159 to manage the
1959 town fiesta. Jose macaraeg was appointed as chairman of the
committee concerning the entertainment and construction of stage for the
said event. The committee constructed two stages for the event, one for
the sarzuela and the other for cancionan, bamboo were used for the
construction of both.
The "zarzuela" entitled "Midas Extravaganza" was donated by an
association of Malasiqui employees of the Manila Railroad Company in
Caloocan, Rizal. The troupe for the performance and one of the members
of the group was Vicente Fontanilla. The program started at about 10:15
o'clock that evening with some speeches, and many persons went up the
stage. The "zarzuela" then began but before the dramatic part of the play
was reached, the stage collapsed and Vicente Fontanilla who was at the
rear of the stage was pinned underneath. Fontanilia was taken to tile San
Carlos General Hospital where he died in the afternoon of the following
day.
Heirs of the deceased filed a complaint against the municipality of
malasiqui, municipal council and all the members thereof. Answering the
complaint defendant municipality invoked inter alia the principal defense
that as a legally and duly organized public corporation it performs
sovereign functions and the holding of a town fiesta was an exercise of its
governmental functions from which no liability can arise to answer for the
negligence of any of its agents.
Trial court ruled that the defendants exercised diligence of a good father
of a family and therefore they are not liable for damages as the
undertaking was not for profit. Appellate court reversed the trial court's
decision and ordered all the defendants-appellees to pay jointly and
severally the heirs of Vicente Fontanill.
Issue:
Whether or not the municipality and its councilors are liable for
damages for the death of Fontanilla.
Ruling:
 The municipality is liable for the death of Fontanilla, however
the councilors acted as mere agents of the municipality thus are not
liable.
Rationale:
We hold that of the town fiesta in 1959 by the municipality of
Malsiqui Pangasinan was an exercise of a private or proprietary function
of the municipality. It follows that under the doctrine of respondent
superior, petitioner-municipality is to be held liable for damages for the
death of Vicente Fontaniliaif that was attributable to the negligence of the
municipality's officers, employees, or agents.
“The rule of law is a general one, that the superior or employer
must answer civilly for the negligence or want of skill of its agent or
servant in the course or fine of his employment, by which another, who is
free from contributory fault, is injured. Municipal corporations under the
conditions herein stated, fall within the operation of this rule of law, and
are liable, accordingly, to civil actions for damages when the requisite
elements of liability co-exist. “
Art. 2176, Civil Code: Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage
done. . .
Art. 2180, Civil Code: The obligation imposed by article 2176 is
demandable not only for one's own acts or omission, but also for those of
persons for whom one is responsible. . .
When it is sought to render a municipal corporation liable for
the act of servants or agents, a cardinal inquiry is, whether they are the
servants or agents of the corporation. If the corporation appoints or elects
them, can control them in the discharge of their duties, can continue or
remove the can hold them responsible for the manner in which they
discharge their trust, and if those duties relate to the exercise of
corporate powers, and are for the benefit of the corporation in its local or
special interest, they may justly be regarded as its agents or servants,
and the maxim of respondent superior applies."
The Holy Se e vs Hon . R osar io Jr.
Facts:
Parcel of Land was donated by the archdiocese of Manila to the
Holy See for the Construction of a residence of the Pope located in the
Municipality of Parañaque, Metro Manila and registered in the name of
petitioner. The said parcel of land was adjacent to the parcel of lands
registered to the Philippine Realty Corporation (PRC).
April 17, 1988 - Msgr. Cirilos, Jr., on behalf of petitioner and the PRC,
agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of
P1,240.00 per square meters with the condition that earnest money of
P100,000.00 be paid by Licup to the sellers, and that the sellers clear the
said lots of squatters who were then occupying the same.
Licup paid the earnest money to Msgr. Cirilo and assigned his
rights over the property to Star Bright Sales Enterprises, inc and informed
the sellers of the said assignment. Thereafter, private respondent
demanded from Msgr. Cirilos that the sellers fulfill their undertaking and
clear the property of squatters; however, Msgr. Cirilos informed private
respondent of the squatters' refusal to vacate the lots, proposing instead
either that private respondent undertake the eviction or that the earnest
money be returned to the latter.
Private respondent counter proposed that if it would undertake
the eviction of the squatters, the purchase price of the lots should be
reduced from P1,240.00 to P1,150.00 per square meter. Msgr. Cirilos
returned the earnest money of P100,000.00 and wrote private respondent
giving it seven days from receipt of the letter to pay the original purchase
price in cash.
Private respondent sent the earnest money back to the sellers,
but later discovered that on March 30, 1989, petitioner and the PRC,
without notice to private respondent, sold the lots to Tropicana.
Tropicana induced petitioner and the PRC to sell the lots to it
and thus enriched itself at the expense of private respondent. Private
respondent demanded the rescission of the sale to Tropicana and the
reconveyance of the lots, to no avail; and private respondent is willing
and able to comply with the terms of the contract to sell and has actually
made plans to develop the lots into a townhouse project, but in view of
the sellers' breach, it lost profits of not less than P30,000.000.00.
Petitioner filed a motion to dismiss and asserts its sovereign
immunity from suit but the trial court issued an order denying, among
others, petitioner's motion to dismiss after finding that petitioner "shed off
[its] sovereign immunity by entering into the business contract in
question"
Issue:
Whether or not petitioner is correct in claiming sovereign
immunity being a foreign state and on behalf of the Papal Nuncio.
Ruling:
Yes, petitioner has sovereign immunity from suit.
Rationale:
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
There are two conflicting concepts of sovereign immunity, each widely
held and firmly established. According to the classical or absolute theory,
a sovereign cannot, without its consent, be made a respondent in the
courts of another sovereign. According to the newer or restrictive theory,
the immunity of the sovereign is recognized only with regard to public
acts or acts jure imperii of a state, but not with regard to private acts or
acts jure gestionis
Thi s Co ur t h as con sid er ed t he f ollowing trans ac tio ns by a
forei gn st at e wi th pr iv at e pa rt ies as a ct s jure impe rii :
(1) the lease by a foreign government of apartment buildings for use of
its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]
(2) the conduct of public bidding for the repair of a wharf at a United
States Naval Station (United States of America v. Ruiz, supra.); (3) the
change of employment status of base employees (Sanders v. Veridiano,
162 SCRA 88 [1988]).
Thi s Co ur t h as con sid er ed t he f ollowing trans ac tio ns by a
forei gn st at e wi th pr iv at e pa rt ies as a ct s jure ge stio ni s :
(1) the hiring of a cook in the recreation center, consisting of three
restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at
the John Hay Air Station in Baguio City, to cater to American servicemen
and the general public (United States of America v. Rodrigo, 182 SCRA
644 [1990])
(2) the bidding for the operation of barber shops in Clark Air Base in
Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]).
– The operation of the restaurants and other facilities open to the
general public is undoubtedly for profit as a commercial and not
a governmental activity. By entering into the employment
contract with the cook in the discharge of its proprietary
function, the United States government impliedly divested itself
of its sovereign immunity from suit.
Certainly, the mere entering into a contract by a foreign state with a
private party cannot be the ultimate test. Such an act can only be the
start of the inquiry. The logical question is whether the foreign state is
engaged in the activity in the regular course of business. If the foreign
state is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a
sovereign activity, or an incident thereof, then it is an act jure imperii,
especially when it is not undertaken for gain or profit.
The land in question 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 right of a foreign sovereign to
acquire property, real or personal, in a receiving state, necessary for the
creation and maintenance of its diplomatic mission, is recognized in the
1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty
was concurred in by the Philippine Senate and entered into force in the
Philippines on November 15, 1965.
The decision to transfer the property and the subsequent disposal
thereof are likewise clothed with a governmental character. Petitioner did
not sell the land for profit or gain. It merely wanted to dispose off the
same because the squatters living thereon made it almost impossible for
petitioner to use it for the purpose of the donation. The fact that
squatters have occupied and are still occupying the lot, and that they
stubbornly refuse to leave the premises, has been admitted by private
respondent in its complaint
Petition is granted and decision of the lower court is set aside. The
Petitioner has sovereign immunity.
U.S .A vs Rui z
Facts:
Sometime in May, 1972, the United States invited the submission of bids
for the following projects
1. Repair offender system, Alava Wharf at the U.S. Naval Station Subic
Bay, Philippines.
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage
to shoreline revetment, NAVBASE Subic; and repair to Leyte Wharf
approach, NAVBASE Subic Bay, Philippines.
Eligio de Guzman & Co., Inc. responded to the invitation and submitted
bids. Subsequent thereto, the company received from the United States
two telegrams requesting it to confirm its price proposals and for the
name of its bonding company. The company complied with the requests.
The company received a letter which was signed by Wilham I. Collins,
Director, Contracts Division, Naval Facilities Engineering Command,
Southwest Pacific, Department of the Navy of the United States, who is
one of the petitioners stating that the company did not qualify to receive
an award for the projects because of its previous unsatisfactory
performance rating on a repair contract for the sea wall at the boat
landings of the U.S. Naval Station in Subic Bay. The letter further said that
the projects had been awarded to third parties
The said company filed a suit against United States of America and
Messrs. James E. Galloway, William I. Collins and Robert Gohier all
members of the Engineering Command of the U.S. Navy to order the
latter to allow the company to perform the work on the projects and, in
the event that specific performance was no longer possible, to order the
defendants to pay damages. The company also asked for the issuance of
a writ of preliminary injunction to restrain the defendants from entering
into contracts with third parties for work on the projects.
Herein petitioner raised the question of jurisdiction for the subject matter
of the complaint being acts and omissions of the individual defendants as
agents of defendant United States of America, a foreign sovereign which
has not given her consent to this suit or any other suit for the causes of
action asserted in the complaint. They also filed a motion to dismiss the
case.
The lower court denied the motion and issued the writ prayed by edigio
de Guzman & Co., inc.
Issue:
Whether or not the defendant-appellant U.S.A has immunity
from suit.
Ruling:
Yes, the U.S.A has immunity from suit in the said case.
Rationale:
The traditional rule of State immunity exempts a State from
being sued in the courts of another State without its consent or waiver.
This rule is a necessary consequence of the principles of independence
and equality of States. However, the rules of International Law are not
petrified; they are constantly developing and evolving. And because the
activities of states have multiplied, it has been necessary to distinguish
them-between sovereign and governmental acts (jure imperii) and
private, commercial and proprietary acts (jure gestionis). The result is
that State immunity now extends only to acts jure imperil The restrictive
application of State immunity is now the rule in the United States, the
United Kingdom and other states in western Europe.
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.
That the correct test for the application of State immunity is not the
conclusion of a contract by a State but the legal nature of the act
Judgment of lower court is reversed and set aside.
U.S .A vs Guin to
Facts:
Several cases have been consolidated because they all involve the
doctrine of state immunity. The United States of America was not
impleaded in the complaints below but has moved to dismiss on the
ground that they are in effect suits against it to which it has not
consented. It is now contesting the denial of its motions by the
respondent judges.
In G.R. No. 76607, the private respondents are suing several officers of
the U.S. Air Force stationed in Clark Air Base in connection with the
bidding conducted by them for contracts for barber services in the said
base.
In G.R. No. 79470, Fabian Genove filed a complaint for damages against
petitioners Anthony Lamachia, Wilfredo Belsa, Rose Cartalla and Peter
Orascion for his dismissal as cook in the U.S. Air Force Recreation Center
at the John Hay Air Station in Baguio City. It had been ascertained after
investigation, from the testimony of Belsa Cartalla and Orascion, that
Genove had poured urine into the soup stock used in cooking the
vegetables served to the club customers. Lamachia, as club manager,
suspended him and thereafter referred the case to a board of arbitrators
conformably to the collective bargaining agreement between the Center
and its employees. The board unanimously found him guilty and
recommended his dismissal. This was effected on March 5, 1986, by Col.
David C. Kimball, Commander of the 3rd Combat Support Group, PACAF
Clark Air Force Base. Genove's reaction was to file Ms complaint in the
Regional Trial Court of Baguio City against the individual petitioners.
In G.R. No. 80018, Luis Bautista, who was employed as a barracks boy in
Camp O' Donnell, an extension of Clark Air Base, was arrested following a
buy-bust operation conducted by the individual petitioners herein, namely,
Tomi J. King, Darrel D. Dye and Stephen F. Bostick, officers of the U.S. Air
Force and special agents of the Air Force Office of Special Investigators
(AFOSI). On the basis of the sworn statements made by them, an
information for violation of R.A. 6425, otherwise known as the Dangerous
Drugs Act, was filed against Bautista in the Regional Trial Court of Tarlac.
The above-named officers testified against him at his trial. As a result of
the filing of the charge, Bautista was dismissed from his employment. He
then filed a complaint for damages against the individual petitioners
herein claiming that it was because of their acts that he was removed.
In G.R. No. 80258, a complaint for damages was filed by the private
respondents against the herein petitioners (except the United States of
America), for injuries allegedly sustained by the plaintiffs as a result of the
acts of the defendants. 9 There is a conflict of factual allegations here.
According to the plaintiffs, the defendants beat them up, handcuffed them
and unleashed dogs on them which bit them in several parts of their
bodies and caused extensive injuries to them. The defendants deny this
and claim the plaintiffs were arrested for theft and were bitten by the
dogs because they were struggling and resisting arrest, The defendants
stress that the dogs were called off and the plaintiffs were immediately
taken to the medical center for treatment of their wounds.
Issue:
Whether or not the doctrine of state immunity is applicable on
the said cases.
Ruling:
The answer depends on each and every case involved.
Rationale:
As applied to the local state, the doctrine of state immunity is
based on the justification given by Justice Holmes that "there can be no
legal right against the authority which makes the law on which the right
depends." 12 There are other practical reasons for the enforcement of the
doctrine. In the case of the foreign state sought to be impleaded in the
local jurisdiction, the added inhibition is expressed in the maxim par in
parem, non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another. A contrary disposition would, in the
language of a celebrated case, "unduly vex the peace of nations." 13
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
state 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, such as
the appropriation of the amount needed to pay the damages awarded
against them, the suit must be regarded as against the state itself
although it has not been formally impleaded. 14 In such a situation, the
state may move to dismiss the complaint on the ground that it has been
filed without its consent.
The doctrine is sometimes derisively called "the royal prerogative of
dishonesty" because of the privilege it grants the state to defeat any
legitimate claim against it by simply invoking its non-suability. That is
hardly fair, at least in democratic societies, for the state is not an
unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the
doctrine is not absolute and does not say the state may not be sued
under any circumstance. On the contrary, the rule says that the state may
not be sued without its consent, which clearly imports that it may be sued
if it consents.
The general law waiving the immunity of the state from suit is found in
Act No. 3083, under which the Philippine government "consents and
submits to be sued upon any moneyed claim involving liability arising
from contract, express or implied, which could serve as a basis of civil
action between private parties.
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. 16 Waiver is also
implied when the government files a complaint, thus opening itself to a
counterclaim.
There is no question that the United States of America, 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. It is only
when the contract involves its sovereign or governmental capacity that no
such waiver may be implied.
The other petitioners in the cases before us all aver they have acted in
the discharge of their official functions as officers or agents of the United
States. However, this is a matter of evidence. The charges against them
may not be summarily dismissed on their mere assertion that their acts
are imputable to the United States of America, which has not given its
consent to be sued. In fact, the defendants are sought to be held
answerable for personal torts in which the United States itself is not
involved. If found liable, they and they alone must satisfy the judgment.
WHEREFORE, after considering all the above premises, the Court hereby
renders judgment as follows:
1. In G.R. No. 76607, the petition is DISMISSED and the respondent
judge is directed to proceed with the hearing and decision of Civil Case
No. 4772. The temporary restraining order dated December 11, 1986, is
LIFTED.
2. In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829-
R(298) is DISMISSED.
3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C-
87 is DISMISSED. The temporary restraining order dated October 14,
1987, is made permanent.
4. In G.R. No. 80258, the petition is DISMISSED and the respondent court
is directed to proceed with the hearing and decision of Civil Case No.
4996. The temporary restraining order dated October 27, 1987, is LIFTED.
Min uc her Vs C. A
Facts:
Khosrow Minucher is an Iranian national. He came to the
Philippines to study in the University of the Philippines in 1974. In 1976,
under the regime of the Shah of Iran, he was appointed Labor Attaché for
the Iranian Embassies in Tokyo, Japan and Manila, Philippines. When the
Shah of Iran was deposed by Ayatollah Khomeini, plaintiff became a
refugee of the United Nations and continued to stay in the Philippines. He
headed the Iranian National Resistance Movement in the Philippines.
May 13, 1986 – Minucher came to know Arthur Scalzo private defendant
which expressed his interest in buying caviar. Selling caviar, aside from
that of Persian carpets, pistachio nuts and other Iranian products was the
business of Minucher after Khoemeni government cut his pensions.
Upon knowing that defendant was working in the US embassy in the
Philippines as special agent of Drug Enforcement Administration
expressed his desire to obtain a US Visa for his wife and the wife of a
countryman. The defendant told him that he [could] help plaintiff for a
fee of $2,000.00 per visa.
May 26, 1986 - defendant visited plaintiff again at the latter's residence
for 18 years at Kapitolyo, Pasig.
May 27, 1986 – defendant visited petitioner for the payment for the visa.
A while later the defendant was with a few Americans and arrested
petitioner for drug trafficking.
The petitioner’s arrest as heroin trafficker was well publicized throughout
the world, in various newspapers, particularly in Australia, America,
CentralAsia and in the Philippines. He was identified in the papers as an
international drug trafficker. The arrest of defendant was likewise on
television, not only in the Philippines, but also in America and in Germany.
His friends in said places informed him that they saw him on TV with said
news.
Minucher filed a case in the RTC for damages on account of what he
claimed to have been trumped-up charges of drug trafficking made by
Arthur Scalzo. Scalzo filed a motion to set aside the order of default and
to admit his answer to the complaint. Granting the motion, the trial court
set the case for pre-trial. Scalzo filed a motion to dismiss the complaint on
the ground that, being a special agent of the United States Drug
Enforcement Administration, he was entitled to diplomatic immunity. RTC
denied the motion.
Scalzo filed a petition for certiorari with injunction in this court(SC) but
was referred to the C.A. asking that the complaint by minucher be
dismissed. C.A. sustained diplomatic immunity of Scalzo and ordering the
dismissal of the complaint against him. S.C reversed the decision of C.A.
and ordered the continuance of the trial and ordered the trial court to
decide on the case.
RTC ruled he should still be liable for the damages although he is an
agent entitled to immunity for it is committed outside his official duties.
C.A. reversed the decision of the trial court and sustained the defense of
Scalzo that he was sufficiently clothed with diplomatic immunity during his
term of duty and thereby immune from the criminal and civil jurisdiction
of the "Receiving State" pursuant to the terms of the Vienna Convention.
Issue:
Whether or not whether or not Arthur Scalzo is indeed entitled
to diplomatic immunity.
Ruling:
Yes, Scalzo is entitled to diplomatic immunity.
Rationale:
Vesting a person with diplomatic immunity is a prerogative of the
executive branch of the government. The Court has recognized that, in
such matters, the hands of the courts are virtually tied. The State
Department policy is to only concede diplomatic status to a person who
possesses an acknowledged diplomatic title and "performs duties of
diplomatic nature
The pre cep t t ha t a S tat e c an no t b e s ue d i n t he co ur ts of a
forei gn st at e is a long-standing rule of customary international law then
closely identified with the personal immunity of a foreign sovereign from
suit20 and, with the emergence of democratic states, made to attach not
just to the person of the head of state, or his representative, but also
distinctly to the state itself in its sovereign capacity.
If the acts giving rise to a suit are those of a foreign government done by
its foreign agent, although not necessarily a diplomatic personage, but
acting in his official capacity, the complaint could be barred by the
immunity of the foreign sovereign from suit without its consent. Suing a
representative of a state is believed to be, in effect, suing the state itself.
under the maxim - par in parem, non habet imperium - that all states are
sovereign equals and cannot assert jurisdiction over one another.22 The
implication, in broad terms, is that if the judgment against an official
would require the state itself to perform an affirmative act to satisfy the
award, such as the appropriation of the amount needed to pay the
damages decreed against him, the suit must be regarded as being against
the state itself, although it has not been formally impleaded
While the doctrine (of state immunity) appears to prohibit only suits
against the state without its consent, it is also applicable to complaints
filed against officials of the state for acts allegedly performed by them in
the discharge of their duties. 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. The cloak of
protection afforded the officers and agents of the government is removed
the moment they are sued in their individual capacity.
This situation usually arises where the public official acts without authority
or in excess of the powers vested in him. It is a well-settled principle of
law that a public official may be liable in his personal private capacity for
whatever damage he may have caused by his act done with malice and in
bad faith or beyond the scope of his authority and jurisdiction.
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 official exchanges of communication between agencies of the
government of the two countries, certifications from officials of both the
Philippine Department of Foreign Affairs and the United States Embassy,
as well as the participation of members of the Philippine Narcotics
Command in the "buy-bust operation" conducted at the residence of
Minucher at the behest of Scalzo, may be inadequate to support the
"diplomatic status" of the latter but they give enough indication that the
Philippine government has given its imprimatur, if not consent, to the
activities within Philippine territory of agent Scalzo of the United States
Drug Enforcement Agency.
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, Scalzo hardly can
be said to have acted beyond the scope of his official function or duties.
Decision of C.A. is affirmed. Defendant has immunity.
Republ ic of I ndo ne sia vs Vi ns on
Facts:
Petitioner, Republic of Indonesia, represented by its Counsellor, Siti
Partinah, entered into a Maintenance Agreement in August 1995 with
respondent James Vinzon, sole proprietor of VinzonTrade and Services.
The Maintenance Agreement stated that respondent shall, for a
consideration, maintain specified equipment at the Embassy Main
Building, Embassy Annex Building and the Wisma Duta, the official
residence of petitioner Ambassador Soeratmin. The equipment covered
by the Maintenance Agreement are air conditioning units, generator sets,
electrical facilities, water heaters, and water motor pumps. It is likewise
stated therein that the agreement shall be effective for a period of four
years and will renew itself automatically unless cancelled by either party
by giving thirty days prior written notice from the date of expiry.
Petitioners informed respondents that the renewal of the agreement shall
be at the discretion of the incoming Chief of Administration, Minister
Counsellor Azhari Kasim, who was expected to arrive in February 2000.
When Minister Counsellor Kasimassumed the position of Chief of
Administration in March 2000, he allegedly found respondent’s work and
services unsatisfactory and not in compliance with the standards set in
the Maintenance Agreement. Hence, the Indonesian Embassy terminated
the agreement in a letter dated August 31, 2000.
xxx
1. A diplomatic agent shall enjoy immunity from the criminal jurisidictionof
the receiving State. He shall also enjoy immunity from its civil and
administrative jurisdiction, except in the case of:
(a) a real action relating to private immovable property situated in the
territory of the receiving State, unless he holds it on behalf of the sending
State for the purposes of the mission;
(b) an action relating to succession in which the diplomatic agent is
involved as executor, administrator, heir or legatee as a private person
and not on behalf of the sending State;
(c) an action relating to any professional or commercial activity exercised
by the diplomatic agent in the receiving State outside his official
functions.
The Solicitor General believes that said act may fall under subparagraph
(c) thereof, but said provision clearly applies only to a situation where the
diplomatic agent engages in any professional or commercial activity
outside official functions, which is not the case herein.

Petition is granted. Decision of lower court is reversed and set aside.

Respondents claim that the termination was arbitrary and unlawful. Hence
respondent filed a complaint. Petitonerbeing the accused at that time filed
a motion to dismiss the case on the ground that the Republic of
Indonesia, as a foreign sovereign State, has sovereign immunity from suit
and cannot be sued as a party-defendant in the Philippines. The said
motion further alleged that Ambassador Soeratmin and Minister
Counsellor Kasim are diplomatic agents as defined under the Vienna
Convention on Diplomatic Relations and therefore enjoy diplomatic
immunity

In turn, respondent filed on March 20, 2001, an Opposition to the said

motion alleging that the Republic of Indonesia has expressly waived its
immunity from suit. He based this claim upon the following provision in
the Maintenance Agreement:

“Any legal action arising out of this Maintenance Agreement shall be

settled according to the laws of the Philippines and by the proper court of
Makati City, Philippines.”

Respondent’s opposition likewise alleged that Ambassador Soeratmin and

Minister Counsellor Kasim can be sued and held liable in their private
capacities for tortious acts done with malice and bad faith.

Trial court denied the motion to dismiss. C.A. affirmed the trial court’s
decision.

Issue:
Whether or a stipulation in a Maintenance Agreement can waive
the state’s immunity from suit.

Ruling:
No, the stipulation in an agreement cannot be a waiver of
immunity from suit.

Rationale:

Apropos the present case, the mere entering into a contract by a foreign
State with a private party cannot be construed as the ultimate test of
whether or not it is an act jure imperii or jure gestionis. Such act is only
the start of the inquiry. Is the foreign State engaged in the regular
conduct of a business? If the foreign State is not engaged regularly in a
business or commercial activity, and in this case it has not been shown to
be so engaged, the particular act or transaction must then be tested by
its nature. If the act is in pursuit of a sovereign activity, or an incident
thereof, then it is an act jure imperii.

Hence, the existence alone of a paragraph in a contract stating that any

legal action arising out of the agreement shall be settled according to the
laws of the Philippines and by a specified court of the Philippines is not
necessarily a waiver of sovereign immunity from suit.

Submission by a foreign state to local jurisdiction must be clear and

unequivocal. It must be given explicitly or by necessary implication. We
find no such waiver in this case.
There is no dispute that the establishment of a diplomatic mission is an
act jure imperii. A sovereign State does not merely establish a diplomatic
mission and leave it at that; the establishment of a diplomatic mission
encompasses its maintenance and upkeep. Hence, the State may enter
into contracts with private entities to maintain the premises, furnishings
and equipment of the embassy and the living quarters of its agents and
officials.

It is therefore clear that petitioner Republic of Indonesia was acting in

pursuit of a sovereign activity when it entered into a contract with
respondent for the upkeep or maintenance of the air conditioning units,
generator sets, electrical facilities, water heaters, and water motor pumps
of the Indonesian Embassy and the official residence of the Indonesian
ambassador.

Article 31 of the Vienna Convention on Diplomatic Relations provides: