Municipality of Paoay vs Manaois

MUNICIPALITY OF PAOAY v. MANAOIS

G.R. No. L-3485, June 30, 1950

Facts:

The municipality of Paoay leased 6 fishery lots to Francisco V. Duque for a period of four years. However, Duque was not able to comply with the terms of the lease contract; hence, the municipality approved a resolution confiscating said fishery lots and advertised its lease for public bidding.

TeodoroManaois, being the highest bidder, was awarded the lease. However, Manaois was not able to exercise his right to possession because Duque continued to claim possession over the properties and despite the appeal of Manaois to the Municipality of Paoay to put him in possession and the efforts of the municipality to oust Duque, Duque succeeded in continuing in his possession and keeping Manaois and his men out.

Manaois brought an action against the Municipality of Paoay to recover the sum paid by him for the lease of the fishery lots plus damages. Court of First Instance of Pangasinan ruled in his favor. A writ of execution and attachment were issued to enforce the judgment. The municipality filed a petition asking for the dissolution of that attachment of levy of the properties which was denied by the CFI.

The municipality filed a petition for certiorari with the writ of preliminary injunction, asking that the order of the CFI be reversed and that the attachment of the properties of the municipality be dissolved. The municipality contended that the properties attached by the sheriff for purposes of execution are not subject to levy because they are properties for public use.

Issue:

WON fishery or municipal waters of the town of Paoay or its usufruct may be levied upon and subject to execution?

Held:

No. There can be no question that properties for public use held by municipal corporation are not subject to levy and execution. The authorities are unanimous on this point. This Court held that properties for public use like trucks used for sprinkling the streets, police patrol wagons, police stations, public markets, together with the land on which they stand are exempt from execution. Even public revenues of municipal corporations destined for the expenses of the municipality are also exempt from the execution. The reason behind this exemption extended to properties for public use, and public municipal revenues is that they are held in trust for the people, intended and used for the accomplishment of the purposes for which municipal corporations are created, and that to subject said properties and public funds to execution would materially impede, even defeat and in some instances destroy said purpose.

Property however, which is patrimonial and which is held by municipality in its proprietary capacity is treated by great weight of authority as the private asset of the town and may be levied upon and sold under an ordinary execution. The same rule applies to municipal funds derived from patrimonial properties, for instance, it has been held that shares of stocks held by municipal corporations are subject to execution. If this is true, with more reason should income or revenue coming from these shares of stock, in the form of interest or dividends, be subject to execution.

The fishery or municipal waters of the town of Paoay, Ilocos Norte, which had been parceled out or divided into lots and later let out to private persons for fishing purposes at an annual rental are clearly not subject to execution. In the first place, they do not belong to the municipality. They may well be regarded as property of State. What the municipality of Paoay hold is merely what may be considered the usufruct or the right to use said municipal waters, granted to it by section 2321 of the Revised Administrative Code.

Now, is this particular usufruct of the municipality of Paoay over its municipal waters, subject to execution to enforce a judgment against the town? No. First, it is not a usufruct based on or derived from an inherent right of the town. It is based merely on a grant made by the Legislature. These marine waters are ordinarily for public use, open to navigation and fishing by the people. The municipality of Paoay is not holding this usufruct or right of fishery in a permanent or absolute manner so as to enable it to dispose of it or to allow it to be taken away from it as its property through execution. The Legislature thru section 2321 of the Administrative Code, as already stated, saw fit to grant the usufruct of said marine waters for fishery purpose, to the towns bordering said waters. Said towns have no visited right over said marine waters. The Legislature, for reasons it may deem valid or as a matter of public policy, may at any time, repeal or modify said section 2321 and revoke this grant to coastal towns and open these marine waters to the public. Or the Legislature may grant the usufruct or right of fishery to the provinces concerned so that said provinces may operate or administer them by leasing them to private parties.All this only goes to prove that the municipality of Paoay is not holding this usufruct or right of fishery in a permanent or absolute manner so as to enable it to dispose of it or to allow it to be taken away from it as its property through execution.

Second, if this were to be allowed and this right sold on execution, the buyer would immediately step into the shoes of the judgment-debtor municipality. Such buyer presumably buys only the right of the municipality. He does not buy the fishery itself nor the municipal waters because that belongs to the State. All that the buyer might do would be to let out or rent to private individuals the fishery rights over the lots into which the municipal waters had been parceled out or divided, and that is, after public bidding. Then, we shall have a situation rather anomalous to be sure, of a private individual conducting public bidding, renting to the highest bidders fishery lots over municipal waters which are property of the State, and appropriating the results to his own private use. The impropriety, if not illegality, of such a contingency is readily apparent. The situation imagined implies the deprivation of the municipal corporation of a source of a substantial income, expressly provide by law. Because of all this, we hold that the right or usufruct of the town of Paoay over its municipal waters is not subject to execution.

But we hold that the revenue or income coming from the renting of these fishery lots is certainly subject to execution. It may be profitable, if not necessary, to distinguish this kind of revenue from that derived from taxes, municipal licenses and market fees are provided for and imposed by the law, they are intended primarily and exclusively for the purpose of financing the governmental activities and functions of municipal corporations. Not so with the income derived from fisheries. In the first place, the usufruct over municipal waters was granted by the Legislature merely to help or bolster up the economy of municipal government. This kind of revenue is not indispensable for the performance of governmental functions. In the second place, the amount of this income is far from definite or fixed. It depends upon the amounts which prospective bidders or lessees are willing to pay. In other words, too many municipalities engaged in this business of letting out municipal waters for fishing purposes, it is a sort of sideline, so that even without it the municipality may still continue functioning and perform its essential duties as such municipal corporations.

We call this activity of municipalities in renting municipal waters for fishing purposes as a business for the reasons that the law itself allowed said municipalities to engage in it for profit. And it is but just that a town so engaged should pay and liquidate obligations contracted in connection with said fishing business, with the income derived therefrom.

In conclusion, we hold that the fishery lots numbering about forty in the municipality of Paoay, mentioned at the beginning of this decision are not subject to execution. For this reason, the levy and attachment made by the Provincial Sheriff of Ilocos Norte of theses fishery lots is void and the order of the Court of First Instance of Pangasinan insofar as it failed to dissolve the attachment made on these lots is reversed. However, the amount of P1,712.01 in the municipal treasury of Paoay representing the rental paid by Demetrio Tabije on fishery lots let out by the municipality of Paoay is a proper subject of levy, and the attachment made thereon by the Sheriff is valid.

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Thurman vs City of Torrington

THURMAN vs. CITY OF TORRINGTON

595 F.Supp. 1521, 53 USLW 2246

Facts:

Tracey Thurman repeatedly reported to the police that she and her son were being physically and emotionally abused by her husband Charles Thurman but the police continuously ignored her. There were instances that members of the police actually saw the abuse happening but did not intervene. Charles Thurman lived in Torrington and worked as a counterman and short order cook at Skie’s Diner. There he served many members of the Torrington Police Department, including some of the officers in this case. While at work, Charles Thurman boasted to the officers that he intended to “get” his wife and that he intended to kill her.

The situation escalated to the point that after being issued a restraining order, Charles Thurman nevertheless went to Tracey’s home and demanded to be let in. Tracey called the police and went outside to plead with Charles not to hurt their son. Charles suddenly stabbed Tracey repeatedly in the chest, neck, and throat. 25 minutes later, a single police officer arrived and saw Charles still holding the bloody knife. In the presence of the police officer, Charles kicked Tracey in the head then went inside the house and came back holding their son whom he dropped on top of Tracey. Charles kicked Tracey in the head a second time.

Soon, more police arrived but they permitted Charles to wander about the crowd and continue to threaten Tracey. Finally, upon approaching Tracey once again, this time while she was lying on a stretcher, Charles Thurman was arrested and taken into custody.

Held:

Tracey Thurman sued the city for the violations of her rights under the U.S. Constitution. The City brought a motion to dismiss her claims arguing that the equal protection clause [no state shall deny any person the equal protection of the laws] “only prohibits intentional discrimination that is racially motivated.” The City’s argument is clearly a misstatement of the law. The application of the equal protection clause is not limited to racial classifications or racially motivated discrimination. Classifications on the basis of gender will be held invalid under the equal protection clause unless they are substantially related to strike down classifications which are not rationally related to a legitimate governmental purpose.

City officials and police officers are under an affirmative duty to preserve law and order, and to protect the personal safety of persons in the community. This duty applies equally to women whose personal safety is threatened by individuals with whom they have or have had a domestic relationship as well as to all other persons whose personal safety is threatened, including women not involved in domestic relationships. If officials have notice of the possibility of attacks on women in domestic relationships or other persons, they are under an affirmative duty to take reasonable measures to protect the personal safety of such persons in the community. Failure to perform this duty would constitute a denial of equal protection of the laws. The City’s motion to dismiss is denied. 

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Tuzon and Mapagu vs Court of Appeals

TUZON AND MAPAGU vs. CA

G.R. No. 90107.  August 21, 1992

FACTS:

On 14 March 1977, Sangguniang Bayan of Camalaniugan, Cagayan, adopted Resolution No. 9 soliciting 1% donation of the palay threshed from the thresher operators who will apply for a permit to thresh. The proceeds will fund the construction of the Sports and Nutrition Center Bldg of the municipality. Petitioner Lope Mapagu (treasurer) prepared a document for signature of all thresher/ owner/ operators who applied for a mayor’s permit. Private respondent Jurado tried to pay the P285.00 license fee for thresher operators but it was refused on the ground that he must first get a mayor’ permit (by Mapagu) and second, the he did not sign the agreement to give 1% of the palay he produced (by Mayor Tuzon).

Jurado filed for an action for mandamus with the RTC in Aparri, Cagayan (CFI then) to compel the issuance of the mayor’s permit and license. He filed another petition for declaratory judgment against the resolution for being illegal either as a donation or as a tax measure. Named defendants were the same respondents and all the members of the Sangguniang Bayan of Camalaniugan

The trial court upheld the challenged measure. Jurado appealed to the Court of Appeals which affirmed the validity of Resolution No. 9 and the implementing agreement. Nevertheless, it found Tuzon and Mapagu liable to pay actual and moral damages for acting maliciously and in bad faith when they denied Jurado's application for the mayor's permit and license. As for the Resolution, it was passed by the Sanggunian in the lawful exercise of its legislative powers granted by Article XI, Section 5 of the 1973 Constitution which provided that each LGU shall have the power to create its own source revenue and to levy taxes, subject to such limitation as may be provided by law. And also under Article 4, Sec. 29, PD 231: The barrio council may solicit money, materials, and other contributions from private agencies and individuals.

ISSUES/HELD:

1: WON a resolution imposing a 1% donation is a valid exercise of the taxing power of an LGU.

NO. The implementing agency made the “donation” obligatory. Although again the validity of the resolution was not in issue, the SC observed that: it “seems to make the donation obligatory and a condition precedent to the issuance of the mayor's permit. This goes against the nature of a donation, which is an act of liberality and is never obligatory. If it is to be considered as a tax ordinance, it must be shown: 1. to have been enacted in accordance with the requirements of the Local Tax Code; 2. it would include the holding of a public hearing on the measure; and 3. its subsequent approval by the Secretary of Finance, in addition to the requisites for publication of ordinances in general.

2. WON petitioners are liable in damages to private respondent Jurado for having withheld from him the mayor's permit and license because of his refusal to comply with Resolution No. 9.

NO.Petitioners acted within the scope of their authority and in consonance with their honest interpretation of the resolution in question. It was not for them to rule on its validity. In the absence of a judicial decision declaring it invalid, its legality would have to be presumed. As executive officials of the municipality, they had the duty to enforce it as long as it had not been repealed by the Sangguniang Bayan or annulled by the courts. xxx As a rule, a pubic officer, whether, judicial, quasi-­‐judicial or executive, is not personally liable to one injured in consequence of an act performed within the scope of his official authority, and in line of his official duty. xxx It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith, that would entitle an aggrieved party to an award for damages. (Philippine Match Co. Ltd. v. City of Cebu)

The private respondent anchors his claim for damages on Article 27 of the New Civil Code, which reads:

Art. 27. Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken.

In the present case, it has not even been alleged that the Mayor Tuzon's refusal to act on the private respondent's application was an attempt to compel him to resort to bribery to obtain approval of his application. It cannot be said either that the mayor and the municipal treasurer were motivated by personal spite or were grossly negligent in refusing to issue the permit and license to Jurado.

It is no less significant that no evidence has been offered to show that the petitioners singled out the private respondent for persecution. Neither does it appear that the petitioners stood to gain personally from refusing to issue to Jurado the mayor's permit and license he needed. The petitioners were not Jurado's business competitors nor has it been established that they intended to favor his competitors. On the contrary, the record discloses that the resolution was uniformly applied to all the threshers in the municipality without discrimination or preference.

The private respondent complains that as a result of the petitioners' acts, he was prevented from operating his business all this time and earning substantial profit therefrom, as he had in previous years. But as the petitioners correctly observed, he could have taken the prudent course of signing the agreement under protest and later challenging it in court to relieve him of the obligation to "donate." Pendente lite, he could have continued to operate his threshing business and thus avoided the lucrocesante that he now says was the consequence of the petitioners' wrongful act. He could have opted for the less obstinate but still dissentient action, without loss of face, or principle, or profit.

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Viuda de Tan Toco vs. Municipal Council of Iloilo

VIUDA DE TAN TOCO vs. MUN. COUNCIL OF ILOILO

G.R. No. L-24950, March 25, 1926, 49 Phil. 52

FACTS:

The widow of Tan Toco sued the Municipality of Iloilo for the amount of P42,966.40 representing the purchase price of a strip of land which was taken by the Municipality to widen a public street. When the municipality was unable to pay the judgment, the widow obtained a writ of execution by virtue of which the sheriff attached two auto trucks used for street sprinkling, one police patrol automobile, two police stations, and two markets, including the lots on which they had been constructed. The provincial fiscal  filed a motion praying that the attachment on the said property be dissolved as being illegal and violative of the rights of the defendant municipality. CFI granted the motion. Hence this appeal.

ISSUE:

Whether or not the property levied upon is exempt from execution

HELD:

No. Movable and immovable property of a municipality, necessary for governmental purpose, may not be attached and sold for the payment of a judgment against the municipality. The supreme reason for this rule is the character of the public use to which such kind of property is devoted. The necessity for government service justifies that the property of public of the municipality be exempt from execution just as it is necessary to exempt certain property of private individuals in accordance with section 452 of the Code of Civil Procedure.

Even the municipal income, according to the above quoted authorities, is exempt from levy and execution. In volume 1, page 467, Municipal Corporations by Dillon we find that:

Municipal corporations are instituted by the supreme authority of a state for the public good. They exercise, by delegation from the legislature, a portion of the sovereign power. The main object of their creation is to act as administrative agencies for the state, and to provide for the police and local government of certain designated civil divisions of its territory. To this end they are invested with certain governmental powers and charged with civil, political, and municipal duties. To enable them beneficially to exercise these powers and discharge these duties, they are clothed with the authority to raise revenues, chiefly by taxation, and subordinately by other modes as by licenses, fines, and penalties. The revenue of the public corporation is the essential means by which it is enabled to perform its appointed work. Deprived of its regular and adequate supply of revenue, such a corporation is practically destroyed and the ends of its erection thwarted. Based upon considerations of this character, it is the settled doctrine of the law that only the public property but also the taxes and public revenues of such corporations cannot be seized under execution against them, either in the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of officers of the law, are not subject to execution unless so declared by statute. The doctrine of the inviolability of the public revenues by the creditor is maintained, although the corporation is in debt, and has no means of payment but the taxes which it is authorized to collect.

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Merritt vs Government

MERRITT vs. GOVERNMENT

G.R. No. L-11154, March 21, 1916

Facts:

Merritt was riding on a motorcycle towards the western part of Calle Padre Faura 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 Merritt, who was already six feet from the southwestern point or from the post place there. As a result, Merritt was so severely injured. By authority of the United States, Act 2457 was enacted, authorizing the Merritt to bring suit against the Government of the Philippine Islands and authorizing Attorney-General of said Islands to appear in said court.

Issue:

Whether or not the Government is legally liable

Held:

Government is not liable. 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 is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable for the acts of its agents, officers and employees when they act as special agents within the meaning of paragraph 5 of article 1903, supra, and that the chauffeur of the ambulance of the General Hospital was not such an agent.

● While consent to be sued was granted through a special law, the government was not held liable for damages, because under the attendant circumstances the government was not acting through a special agent.

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City of Caloocan vs Allarde

CITY OF CALOOCAN vs. ALLARDE

G.R. No. 107271, September 10, 2003

Facts:

In 1972, Mayor Marcial Samson of Caloocan abolished the position of Assistant City Administrator and 17 other positions via Ordinance No. 1749. The affected employees assailed the legality of the abolition. The CFI in 1973 declared abolition illegal and ordered the reinstatement of all the dismissed employees and the payment of their back-wages and other emoluments. The City Government appealed the decision but such was dismissed.

In 1986 the City paid respondent Santiago P75,083.37 as partial payment of her back-wages. The others were paid in full. In 1987 the City appropriated funds for her unpaid back salaries but the City refused to release the money to Santiago.

On July 27, 1992 Sheriff Castillo levied and sold at public auction one of the motor vehicles of the City Government for P100,000. The amount was given to Santiago in partial satisfaction of her claim. The City Government questioned the validity of the auction sale, alleging that the properties of the municipality were exempt from execution. Judge Allarde denied the motion and directed the sheriff to levy and schedule at public auction 3 more vehicles of the City.

On October 5, 1993 the City Council of Caloocan passed Ordinance No. 0134 which included the amount of P439,377.14 claimed by Santiago as back-wages, plus interest. Then Caloocan Mayor Macario A. Asistio, Jr., however, refused to sign the check intended as payment for respondent Santiago’s claims.  This, despite the fact that he was one of the signatories of the ordinance authorizing such payment.

Thus, on May 7, 1993. Judge Allarde ordered the Sheriff to immediately garnish the funds of the City Government of Caloocan corresponding to the claim of Santiago. Notice of garnishment was forwarded to the PNB but the City Treasurer sent an advice letter to PNB that the garnishment was illegal with a warning that it would hold PNB liable for any damages which may be caused by the withholding the funds of the city. PNB opted to comply with the order of Judge Allarde and released to the Sheriff a manager’s check amounting to P439,378.00.

Issue:

Whether or not the funds of City of Caloocan, in PNB, may be garnished (i.e. exempt from execution), to satisfy Santiago’s claim.

Held:

Garnishment is considered a specie of attachment by means of which the plaintiff seeks to subject to his claim property of the defendant in the hands of a third person, or money owed by such third person or garnishee to the defendant.

The rule is and has always been that all government funds deposited in the PNB or any other official depositary of the Philippine Government by any of its agencies or instrumentalities, whether by general or special deposit, remain government funds and may not be subject to garnishment or levy, in the absence of a corresponding appropriation as required by law:

Even though the rule as to immunity of a state from suit is relaxed, the power of the courts ends when the judgment is rendered. Although the liability of the state has been judicially ascertained, the state is at liberty to determine for itself whether to pay the judgment or not, and execution cannot issue on a judgment against the state. Such statutes do not authorize a seizure of state property to satisfy judgments recovered, and only convey an implication that the legislature will recognize such judgment as final and make provision for the satisfaction thereof.

The rule is based on obvious considerations of public policy. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law.

However, the rule is not absolute and admits of a well-defined exception, that is, when there is a corresponding appropriation as required by law. Otherwise stated, the rule on the immunity of public funds from seizure or garnishment does not apply where the funds sought to be levied under execution are already allocated by law specifically for the satisfaction of the money judgment against the government. In such a case, the monetary judgment may be legally enforced by judicial processes.

In the instant case, the City Council of Caloocan already approved and passed Ordinance No. 0134, Series of 1992, allocating the amount of P439,377.14 for respondent Santiago’s back salaries plus interest. Thus this case fell squarely within the exception. For all intents and purposes, Ordinance No. 0134, Series of 1992, was the “corresponding appropriation as required by law.” The sum indicated in the ordinance for Santiago were deemed automatically segregated from the other budgetary allocations of the City of Caloocan and earmarked solely for the City’s monetary obligation to her. The judgment of the trial court could then be validly enforced against such funds.

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DFA vs NLRC

DFA vs. NLRC

G.R. No. 113191, 18 September 1996

Facts:

On 27 January 1993, private respondent Magnayi filed an illegal dismissal case against ADB.  Two summonses were served, one sent directly to the ADB and the other through the Department of Foreign Affairs ("DFA").  ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank And The Government Of The Philippines Regarding The Bank's Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit and, in time, rendered a decision in favour Magnayi.  

The ADB did not appeal the decision.  Instead, on 03 November 1993, the DFA referred the matter to the NLRC; in its referral, the DFA sought a "formal vacation of the void judgment." When DFA failed to obtain a favorable decision from the NLRC, it filed a petition for certiorari.

Issues:

1. Whether or not ADB is immune from suit

2. Whether or not by entering into service contracts with different private companies, ADB has descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of its immunity from suit

3. Whether or not the DFA has the legal standing to file the present petition

4. Whether or not the extraordinary remedy of certiorari is proper in this case

Held:

1. Under the Charter and Headquarters Agreement, the ADB enjoys immunity from legal process of every form, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities.  The Bank’s officers, on their part, enjoy immunity in respect of all acts performed by them in their official capacity.  The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected.

  

Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law.

"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 their 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."

2. No. The ADB didn't descend to the level of an ordinary party to a commercial transaction, which should have constituted a waiver of its immunity from suit, by entering into service contracts with different private companies. “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 act or acts jure gestionis.

 “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 service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would not attach.

3. Yes. The DFA's function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenged, entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations.  The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community.  When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded.  In our country, this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena. In Holy See vs. Hon. Rosario, Jr., this Court has explained the matter in good detail; viz:

"In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity.

"In the United States, the procedure followed is the process of 'suggestion,' where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity.  If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a 'suggestion' that the defendant is entitled to immunity.  

"In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity.  But how the Philippine Foreign Office conveys its endorsement to the courts varies.  In International Catholic Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity.  In World Health Organization vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect.  In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in  behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a 'suggestion' to respondent Judge.  The Solicitor General embodied the 'suggestion' in a manifestation and memorandum as amicus curiae.

"In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity.

"In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels.  In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved."

4. Yes. Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special circumstances, so allowed and entertained such a petition when (a) the questioned order or decision is issued in excess of or without jurisdiction, or (b) where the order or decision is a patent nullity, which, verily, are the circumstances that can be said to obtain in the present case.  When an adjudicator is devoid of jurisdiction on a matter before him, his action that assumes otherwise would be a clear nullity.

Petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID.  

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Republic of Indonesia vs Vinzon

REPUBLIC OF INDONESIA vs. VINZON

G.R. No. 154705.  June 26, 2003

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 Vinzon Trade 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 equipments 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.

When Indonesian Minister Counsellor Kasim assumed 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.

Respondent filed a complaint claiming that the aforesaid termination was arbitrary and unlawful. Petitioners filed a Motion to Dismiss assailing that Republic of Indonesia, as a foreign sovereign State, has sovereign immunity from suit and cannot be sued as a party-defendant in the Philippines.

In turn, respondent filed an Opposition to the said motion alleging that the Republic of Indonesia has expressly waived its immunity from suit based on 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.

ISSUE:

1. Whether or not Republic of Indonesia is immune from suit

2. Whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be sued herein in their private capacities

HELD:

1. Yes. International law is founded largely upon the principles of reciprocity, comity, independence, and equality of States which were adopted as part of the law of our land under Article II, Section 2 of the 1987 Constitution. The rule that a State may not be sued without its consent is a necessary consequence of the principles of independence and equality of States. The practical justification for the doctrine of sovereign immunity is that there can be no legal right against the authority that makes the law on which the right depends.  In the case of foreign States, the rule is derived from the principle of the sovereign equality of States, as expressed in the maxim par in parem non habet imperium.  All states are sovereign equals and cannot assert jurisdiction over one another. A contrary attitude would “unduly vex the peace of nations.”

The rules of International Law, however, are neither unyielding nor impervious to change.  The increasing need of sovereign States to enter into purely commercial activities remotely connected with the discharge of their governmental functions brought about a new concept of sovereign immunity.  This concept, the restrictive theory, holds that the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii, but not with regard to private acts or acts jure gestionis.

In United States v. Ruiz, for instance, we held that the conduct of public bidding for the repair of a wharf at a United States Naval Station is an act jure imperii.  On the other hand, we considered as an act jure gestionis the hiring of a cook in the recreation center catering to American servicemen and the general public at the John Hay Air Station in Baguio City, as well as the bidding for the operation of barber shops in Clark Air Base in Angeles City.

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. The aforesaid provision contains language not necessarily inconsistent with sovereign immunity.  On the other hand, such provision may also be meant to apply where the sovereign party elects to sue in the local courts, or otherwise waives its immunity by any subsequent act.  The applicability of Philippine laws must be deemed to include Philippine laws in its totality, including the principle recognizing sovereign immunity.  Hence, the proper court may have no proper action, by way of settling the case, except to dismiss it.

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.

Respondent concedes that the establishment of a diplomatic mission is a sovereign function.  On the other hand, he argues that the actual physical maintenance of the premises of the diplomatic mission, such as the upkeep of its furnishings and equipment, is no longer a sovereign function of the State.

We disagree.  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.

The Solicitor General, in his Comment, submits the view that, “the Maintenance Agreement was entered into by the Republic of Indonesia in the discharge of its governmental functions.  In such a case, it cannot be deemed to have waived its immunity from suit.” As to the paragraph in the agreement relied upon by respondent, the Solicitor General states that it “was not a waiver of their immunity from suit but a mere stipulation that in the event they do waive their immunity, Philippine laws shall govern the resolution of any legal action arising out of the agreement and the proper court in Makati City shall be the agreed venue thereof.

2. No. Article 31 of the Vienna Convention on Diplomatic Relations provides:

1. A diplomatic agent shall enjoy immunity from the criminal jurisidiction of 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.

x x x

The act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim in terminating the Maintenance Agreement is not covered by the exceptions provided in the abovementioned provision.

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Municipality of Makati vs CA

MUNICIPALITY OF MAKATI vs. COURT OF APPEALS

G.R. Nos. 89898-99. October 1, 1990

Facts:

Petitioner Municipality of Makati expropriated a portion of land owned by private respondents, Admiral Finance Creditors Consortium, Inc. Attached to petitioner's complaint was a certification that a bank account (Account No. S/A 265-537154-3) had been opened with the PNB Buendia Branch under petitioner's name containing the sum of P417,510.00, made pursuant to the provisions of Pres. Decree No. 42.

After due hearing, the RTC rendered a decision fixing the appraised value of the property at P5,291,666.00, and ordering petitioner to pay this amount minus the advanced payment of P338,160.00 which was earlier released to private respondent.

A writ of execution was issued and a Notice of Garnishment was served by respondent sheriff upon the manager of the PNB Buendia Branch. However, respondent sheriff was informed that a "hold code" was placed on the account of petitioner.

Private respondent then filed a motion praying for the court to order the bank to deliver to the sheriff the unpaid balance, while petitioner also filed a motion to lift the garnishment.

While these motions are pending, however, a “Manifestation” was filed, informing the court that private respondent was no longer the owner of the subject property and that ownership to this has been transferred to Philippine Savings Bank, Inc. A compromise agreement was made between private respondent and Philippine Savings Bank, Inc., which was then approved by the court.

The court further ordered PNB Buendia Branch to immediately release to PSB the sum of P4,953,506.45 which corresponds to the balance of the appraised value of the subject property from the garnished account of petitioner.

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

The RTC dismissed such motion, which was appealed to the Court of Appeals; the latter affirmed said dismissal and petitioner now filed this petition for review.

While the case was in the Supreme Court, petitioner raised for the first time that it had two accounts with PNB Buendia Branch: one was made exclusively for the expropriation of the subject property (Account No. S/A 265-537154-3), and the other is for statutory obligations and other purposes of the municipal government (Account No. S/A 263-530850-7).

Issue:

WON the balance of the appraised value of the subject property may be levied upon the second account of petitioner municipality, which is earmarked for the municipal government’s other statutory obligations.

Held:

No. The funds deposited in the second PNB Account No. S/A 263-530850-7 are public funds of the municipal government. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless otherwise provided for by statute. More particularly, 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. The foregoing rule finds application in the case at bar. Absent a showing that the municipal council of Makati has passed an ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of petitioner deposited in Account No. S/A 263-530850-7.

Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. Where a municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment rendered against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance, and the corresponding disbursement of municipal funds therefor.

In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner. No appeal was taken therefrom. For three years now, petitioner has enjoyed possession and use of the subject property notwithstanding its inexcusable failure to comply with its legal obligation to pay just compensation. This Court will not condone petitioner's blatant refusal to settle its legal obligation arising from expropriation proceedings it had in fact initiated. It cannot be over-emphasized that, within the context of the State's inherent power of eminent domain,

. . . just compensation means not only the correct determination of the amount to be paid to the owner of the land but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered "just" for the property owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss [Cosculluela v. The Honorable Court of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA 393, 400. See also Provincial Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037, August 27, 1987, 153 SCRA 291].

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

Municipality of Makati was ordered to immediately pay PS Bank and private respondent the amount of P4,953,506.45.

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