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Basis: Constitution, Art XVI sec 3, Act no 3083; CA 327; Art 2180, 2189 NCC; PD 1807 Jan 16 1981

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. L-30671 November 28, 1973 REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I, THE PROVINCIAL SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE CITY OF MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P. J. KIENER CO., LTD., GAVINO UNCHUAN, AND INTERNATIONAL CONSTRUCTION CORPORATION, respondents. Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo for petitioner. Andres T. Velarde and Marcelo B. Fernan for respondents.

FERNANDO, J.: The Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of an order issued by respondent Judge Guillermo P. Villasor, then of the Court of First Instance of Cebu, Branch I, 1 declaring a decision final and executory and of an alias writ of execution directed against the funds of the Armed Forces of the Philippines subsequently issued in pursuance thereof, the alleged ground being excess of jurisdiction, or at the very least, grave abuse of discretion. As thus simply and tersely put, with the facts being undisputed and the principle of law that calls for application indisputable, the outcome is predictable. The Republic of the Philippines is entitled to the writs prayed for. Respondent Judge ought not to have acted thus. The order thus impugned and the alias writ of execution must be nullified. In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set forth thus: "7. On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation, and against the petitioner herein, confirming the arbitration award in the amount of P1,712,396.40, subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable Guillermo P. Villasor, issued an Order declaring the aforestated decision of July 3, 1961 final and executory, directing the Sheriffs of Rizal Province, Quezon City [as well as] Manila to execute the said decision. 9. Pursuant to the said Order dated June 24, 1969, the corresponding Alias Writ of Execution [was issued] dated June 26, 1969, .... 10. On the strength of the afore-mentioned Alias Writ of Execution dated June 26, 1969, the Provincial Sheriff of Rizal (respondent herein) served notices of garnishment dated June 28, 1969 with several Banks, specially on the "monies due the Armed Forces of the Philippines in the form of deposits sufficient to cover the amount mentioned in the said Writ of Execution";

the Philippine Veterans Bank received the same notice of garnishment on June 30, 1969 .... 11. The funds of the Armed Forces of the Philippines on deposit with the Banks, particularly, with the Philippine Veterans Bank and the Philippine National Bank [or] their branches are public funds duly appropriated and allocated for the payment of pensions of retirees, pay and allowances of military and civilian personnel and for maintenance and operations of the Armed Forces of the Philippines, as per Certification dated July 3, 1969 by the AFP Controller,..." 2. The paragraph immediately succeeding in such petition then alleged: "12. Respondent Judge, Honorable Guillermo P. Villasor, acted in excess of jurisdiction [or] with grave abuse of discretion amounting to lack of jurisdiction in granting the issuance of an alias writ of execution against the properties of the Armed Forces of the Philippines, hence, the Alias Writ of Execution and notices of garnishment issued pursuant thereto are null and void." 3 In the answer filed by respondents, through counsel Andres T. Velarde and Marcelo B. Fernan, the facts set forth were admitted with the only qualification being that the total award was in the amount of P2,372,331.40. 4 The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and prohibition proceeding. What was done by respondent Judge is not in conformity with the dictates of the Constitution. . It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well as its government is immune from suit unless it gives its consent. It is readily understandable why it must be so. In the classic formulation of Holmes: "A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends." 5 Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a recent decision, Providence Washington Insurance Co. v. Republic of the Philippines, 6 with its affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence of such a basic principle that constitutes such an effective obstacle, could very well be imagined." 7 This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein expressly provided: "The State may not be sued without its consent." 8 A corollary, both dictated by logic and sound sense from a basic concept is that public funds cannot be the object of a garnishment proceeding even if the consent to be sued had been previously granted and the state liability adjudged. Thus in the recent case ofCommissioner of Public Highways v. San Diego, 9 such a well-settled doctrine was restated in the opinion of Justice Teehankee: "The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of execution' and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. 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." 10 Such a principle applies even to an attempted garnishment of a salary that had accrued in favor of an employee. Director of Commerce and Industry v. Concepcion, 11 speaks to that effect. Justice Malcolm as ponente left no doubt on that score. Thus: "A rule which has never been seriously questioned, is that money in the hands of public officers, although it may be due government employees, is not liable to the creditors of these employees in the process of garnishment. One reason is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by express authorization by the Legislature, and to subject its officers to garnishment would be to permit indirectly what

is prohibited directly. Another reason is that moneys sought to be garnished, as long as they remain in the hands of the disbursing officer of the Government, belong to the latter, although the defendant in garnishment may be entitled to a specific portion thereof. And still another reason which covers both of the foregoing is that every consideration of public policy forbids it." 12 In the light of the above, it is made abundantly clear why the Republic of the Philippines could rightfully allege a legitimate grievance. WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside both the order of June 24, 1969 declaring executory the decision of July 3, 1961 as well as the alias writ of execution issued thereunder. The preliminary injunction issued by this Court on July 12, 1969 is hereby made permanent. Zaldivar (Chairman), Antonio, Fernandez and Aquino, JJ., concur. Barredo, J, took no part.

Footnotes 1 The other respondents are the Provincial Sheriff of Rizal, the Sheriff of Quezon City, the Sheriff of the City of Manila, the Clerk of Court, Court of First Instance of Cebu, P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation. 2 Petition, pars. 7-11. 3 Ibid, par. 12. 4 Answer, par. III. 5 Kawananakoa v. Polyblank 205 U.S. 349 (1907). 6 L-26386, September 30, 1969, 29 SCRA 598. 7 Ibid, 601-602. 8 Article XV, Sec. 16. 9 L-30098, February 8, 1970, SCRA 616. 10 Ibid, 625. The opinion cited among others the following decisions: Merritt v. Government, 34 Phil. 311 (1916); Visayan Refining Co. v. Camus, 40 Phil. 550 (1919); Director of Commerce v. Concepcion, 43 Phil. 384 (1922); Belleng Republic, L-19856, Sept. 16, 1963, 9 SCRA 6; Republic v. Palacio, L-20322, May 29, 1968, 23 SCRA 899. 11 43 Phil. 384 (1922). 12 Ibid, 386.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-35645 May 22, 1985 UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT GOHIER,petitioners, vs. HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN & CO., INC., respondents. Sycip, Salazar, Luna & Manalo & Feliciano Law for petitioners. Albert, Vergara, Benares, Perias & Dominguez Law Office for respondents.

ABAD SANTOS, J.: This is a petition to review, set aside certain orders and restrain the respondent judge from trying Civil Case No. 779M of the defunct Court of First Instance of Rizal. The factual background is as follows: At times material to this case, the United States of America had a naval base in Subic, Zambales. The base was one of those provided in the Military Bases Agreement between the Philippines and the United States. Sometime in May, 1972, the United States invited the submission of bids for 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. [In its complaint, the company alleges that the United States had accepted its bids because "A request to confirm a price proposal confirms the acceptance of a bid pursuant to defendant United States' bidding practices." (Rollo, p. 30.) The truth of this allegation has not been tested because the case has not reached the trial stage.]

In June, 1972, 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 herein. The letter said 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. In the abovementioned Civil Case No. 779-M, the company sued the 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. The complaint is to order the defendants to allow the plaintiff 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. The defendants entered their special appearance for the purpose only of questioning the jurisdiction of this court over the subject matter of the complaint and the persons of defendants, 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." (Rollo, p. 50.) Subsequently the defendants filed a motion to dismiss the complaint which included an opposition to the issuance of the writ of preliminary injunction. The company opposed the motion. The trial court denied the motion and issued the writ. The defendants moved twice to reconsider but to no avail. Hence the instant petition which seeks to restrain perpetually the proceedings in Civil Case No. 779-M for lack of jurisdiction on the part of the trial court. The petition is highly impressed with merit. The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. And because the activities of states have multiplied, it has been necessary to distinguish them-between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperil The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in western Europe. (See Coquia and Defensor Santiago, Public International Law, pp. 207-209 [1984].) The respondent judge recognized the restrictive doctrine of State immunity when he said in his Order denying the defendants' (now petitioners) motion: " A distinction should be made between a strictly governmental function of the sovereign state from its private, proprietary or non- governmental acts (Rollo, p. 20.) However, the respondent judge also said: "It is the Court's considered opinion that entering into a contract for the repair of wharves or shoreline is certainly not a governmental function altho it may partake of a public nature or character. As aptly pointed out by plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594 (1958)], and which this Court quotes with approval, viz.: It is however contended that when a sovereign state enters into a contract with a private person, the state can be sued upon the theory that it has descended to the level of an individual from which it can be implied that it has given its consent to be sued under the contract. ... xxx xxx xxx

We agree to the above contention, and considering that the United States government, through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay Area, a U.S. Naval Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political entity may assume under the contract. The trial court, therefore, has jurisdiction to entertain this case ... (Rollo, pp. 20-21.) The reliance placed on Lyons by the respondent judge is misplaced for the following reasons: In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff brought suit in the Court of First Instance of Manila to collect several sums of money on account of a contract between plaintiff and defendant. The defendant filed a motion to dismiss on the ground that the court had no jurisdiction over defendant and over the subject matter of the action. The court granted the motion on the grounds that: (a) it had no jurisdiction over the defendant who did not give its consent to the suit; and (b) plaintiff failed to exhaust the administrative remedies provided in the contract. The order of dismissal was elevated to this Court for review. In sustaining the action of the lower court, this Court said: It appearing in the complaint that appellant has not complied with the procedure laid down in Article XXI of the contract regarding the prosecution of its claim against the United States Government, or, stated differently, it has failed to first exhaust its administrative remedies against said Government, the lower court acted properly in dismissing this case.(At p. 598.) It can thus be seen that the statement in respect of the waiver of State immunity from suit was purely gratuitous and, therefore, obiter so that it has no value as an imperative authority. 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 is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased three apartment buildings to the United States of America for the use of its military officials. The plaintiffs sued to recover possession of the premises on the ground that the term of the leases had expired. They also asked for increased rentals until the apartments shall have been vacated. The defendants who were armed forces officers of the United States moved to dismiss the suit for lack of jurisdiction in the part of the court. The Municipal Court of Manila granted the motion to dismiss; sustained by the Court of First Instance, the plaintiffs went to this Court for review on certiorari. In denying the petition, this Court said: On the basis of the foregoing considerations we are of the belief and we hold that the real party defendant in interest is the Government of the United States of America; that any judgment for back or Increased rentals or damages will have to be paid not by defendants Moore and Tillman and their 64 co-defendants but by the said U.S. Government. On the basis of the ruling in the

case of Land vs. Dollar already cited, and on what we have already stated, the present action must be considered as one against the U.S. Government. It is clear hat the courts of the Philippines including the Municipal Court of Manila have no jurisdiction over the present case for unlawful detainer. The question of lack of jurisdiction was raised and interposed at the very beginning of the action. The U.S. Government has not , given its consent to the filing of this suit which is essentially against her, though not in name. Moreover, this is not only a case of a citizen filing a suit against his own Government without the latter's consent but it is of a citizen filing an action against a foreign government without said government's consent, which renders more obvious the lack of jurisdiction of the courts of his country. The principles of law behind this rule are so elementary and of such general acceptance that we deem it unnecessary to cite authorities in support thereof. (At p. 323.) In Syquia,the United States concluded contracts with private individuals but the contracts notwithstanding the States was not deemed to have given or waived its consent to be sued for the reason that the contracts were for jure imperii and not for jure gestionis. WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and Civil Case No. is dismissed. Costs against the private respondent. Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, * Escolin, Relova, Gutierrez, Jr., De la Fuente, Cuevas and Alampay, JJ., concur. Fernando, C.J., took no part.

Separate Opinions

MAKASIAR, J., dissenting: The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to continue therein. In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch as ". . . the United States Government. through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political entity may assume under the contract." When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at bar by the unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bay should not be allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for violation of his rights committed by the agents of the foreign government professing to act in its name. Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325: Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals. Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the private citizens of another country, such foreign government cannot shield its non-performance or contravention of the terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the jurisdiction of the domestic courts is to give approval to the execution of unilateral contracts, graphically described in Spanish as 'contratos leoninos', because one party gets the lion's share to the detriment of the other. To give validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been entered into only by private individuals. Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from transacting business and entering into contracts with United States authorities or facilities in the Philippines whether naval, air or ground forces-because the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of the United States government, always, looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies with the various U.S. offices and agencies operating in the Philippines. The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good faith. One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private respondent on the other, was honored more in the breach than in the compliance The opinion of the majority will certainly open the floodgates of more violations of contractual obligations. American authorities or any foreign government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is disastrous to the Philippines. This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our Republic. The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464). Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic person. The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that "in the exercise of the abovementioned rights, powers and authority, the United States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis supplied). Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will assure equality of treatment of all employees ... and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both Governments, ... the United States Government agrees to accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968). Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S. Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations, " even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity under international law." Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases Agreement and, in particular, from any political activity in the Philippines. The United States shag take all measures within its authority to insure that they adhere to them (Emphasis supplied). The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social improvement of areas surrounding the bases, which directs that "moreover, the United

States Forces shall procure goods and services in the Philippines to the maximum extent feasible " (Emphasis supplied). Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of the principles of equality of treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the Republic of the Philippines" (Emphasis supplied) The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base Commander, " which is supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between their two countries. " The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base Commander and the American Base Commander shall be guided by full respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military operations on the other hand and that "they shall promote cooperation understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied).

Separate Opinions MAKASIAR, J., dissenting: The petition should be dismissed and the proceedings in Civil Case No. 779-M in the defunct CFI (now RTC) of Rizal be allowed to continue therein. In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract entered into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S. Government) involved stevedoring and labor services within the Subic Bay area, this Court further stated that inasmuch as ". . . the United States Government. through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is evident that it can bring an action before our courts for any contractual liability that that political entity may assume under the contract." When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private company for the repair of wharves or shoreline in the Subic Bay area, it is deemed to have entered into a contract and thus waived the mantle of sovereign immunity from suit and descended to the level of the ordinary citizen. Its consent to be sued, therefore, is implied from its act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the case at bar by the unilateral cancellation of the award for the project by the United States government, through its agency at Subic Bay should not be allowed to take undue advantage of a party who may have legitimate claims against it by seeking refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and without redress in his own country for violation of his rights committed by the agents of the foreign government professing to act in its name. Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325: Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice, such rule is inapplicable to cases in which the foreign government enters into private contracts with the citizens of the court's jurisdiction. A contrary view would simply run against all principles of decency and violative of all tenets of morals. Moral principles and principles of justice are as valid and applicable as well with regard to private individuals as with regard to governments either domestic or foreign. Once a foreign government enters into a private contract with the private citizens of another country, such foreign government cannot shield its non-performance or contravention of the terms of the contract under the cloak of non-jurisdiction. To place such foreign government beyond the jurisdiction of the domestic courts is to give approval to the execution of unilateral contracts, graphically described in Spanish as 'contratos leoninos', because one party gets the lion's share to the detriment of the other. To give validity to such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that all parties in a private contract, including governments and the most powerful of them, are amenable to law, and that such contracts are enforceable through the help of the courts of justice with jurisdiction to take cognizance of any violation of such contracts if the same had been entered into only by private individuals. Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges unduly upon our sovereignty and dignity as a nation. Its application will particularly discourage Filipino or domestic contractors from transacting business and entering into contracts with United States authorities or facilities in the Philippines whether naval, air or ground forces-because the difficulty, if not impossibility, of enforcing a validly executed contract and of seeking judicial remedy in our own courts for breaches of contractual obligation committed by agents of the United States government, always, looms large, thereby hampering the growth of Filipino enterprises and creating a virtual monopoly in our own country by United States contractors of contracts for services or supplies with the various U.S. offices and agencies operating in the Philippines. The sanctity of upholding agreements freely entered into by the parties cannot be over emphasized. Whether the parties are nations or private individuals, it is to be reasonably assumed and expected that the undertakings in the contract will be complied with in good faith. One glaring fact of modern day civilization is that a big and powerful nation, like the United States of America, can always overwhelm small and weak nations. The declaration in the United Nations Charter that its member states are equal and sovereign, becomes hollow and meaningless because big nations wielding economic and military superiority impose upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes with the interest of small nations, the American governmental agencies or its citizens invoke principles of international law for their own benefit.

In the case at bar, the efficacy of the contract between the U.S. Naval authorities at Subic Bay on one hand, and herein private respondent on the other, was honored more in the breach than in the compliance The opinion of the majority will certainly open the floodgates of more violations of contractual obligations. American authorities or any foreign government in the Philippines for that matter, dealing with the citizens of this country, can conveniently seek protective cover under the majority opinion. The result is disastrous to the Philippines. This opinion of the majority manifests a neo-colonial mentality. It fosters economic imperialism and foreign political ascendancy in our Republic. The doctrine of government immunity from suit cannot and should not serve as an instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40 SCRA 464). Under the doctrine of implied waiver of its non-suability, the United States government, through its naval authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic person. The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the original RP-US Military Bases Agreement of March 14, 1947, which states that "in the exercise of the abovementioned rights, powers and authority, the United States agrees that the powers granted to it will not be used unreasonably. . ." (Emphasis supplied). Nor is such posture of the petitioners herein in harmony with the amendment dated May 27, 1968 to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to promote and maintain sound employment practices which will assure equality of treatment of all employees ... and continuing favorable employer-employee relations ..." and "(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic institutions cherished by both Governments, ... the United States Government agrees to accord preferential employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May 27, 1968). Neither does the invocation by petitioners of state immunity from suit express fidelity to paragraph 1 of Article IV of the aforesaid amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing work for the U.S. Armed Forces shall be required by their contract or concession agreements to comply with all applicable Philippine labor laws and regulations, " even though paragraph 2 thereof affirms that "nothing in this Agreement shall imply any waiver by either of the two Governments of such immunity under international law." Reliance by petitioners on the non-suability of the United States Government before the local courts, actually clashes with No. III on respect for Philippine law of the Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military Bases Agreement, which stresses that "it is the duty of members of the United States Forces, the civilian component and their dependents, to respect the laws of the Republic of the Philippines and to abstain from any activity inconsistent with the spirit of the Military Bases Agreement and, in particular, from any political activity in the Philippines. The United States shag take all measures within its authority to insure that they adhere to them (Emphasis supplied). The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the economic and social improvement of areas surrounding the bases, which directs that "moreover, the United

States Forces shall procure goods and services in the Philippines to the maximum extent feasible " (Emphasis supplied). Under No. VI on labor and taxation of the said amendment of January 6, 1979 in connection with the discussions on possible revisions or alterations of the Agreement of May 27, 1968, "the discussions shall be conducted on the basis of the principles of equality of treatment, the right to organize, and bargain collectively, and respect for the sovereignty of the Republic of the Philippines" (Emphasis supplied) The majority opinion seems to mock the provision of paragraph 1 of the joint statement of President Marcos and Vice-President Mondale of the United States dated May 4, 1978 that "the United States re-affirms that Philippine sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base Commander, " which is supposed to underscore the joint Communique of President Marcos and U.S. President Ford of December 7, 1975, under which "they affirm that sovereign equality, territorial integrity and political independence of all States are fundamental principles which both countries scrupulously respect; and that "they confirm that mutual respect for the dignity of each nation shall characterize their friendship as well as the alliance between their two countries. " The majority opinion negates the statement on the delineation of the powers, duties and responsibilities of both the Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base Commander and the American Base Commander shall be guided by full respect for Philippine sovereignty on the one hand and the assurance of unhampered U.S. military operations on the other hand and that "they shall promote cooperation understanding and harmonious relations within the Base and with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, Emphasis supplied). Footnotes * He signed before he left.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 108813 December 15, 1994 JUSMAG PHILIPPINES, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION (Second Division) and FLORENCIO SACRAMENTO, Union President, JPFCEA, respondents.

Juan, Luces, Luna and Associates for petitioner. Galutera & Aguilar Law Offices for private respondent.

PUNO, J.: The immunity from suit of the Joint United States Military Assistance Group to the Republic of the Philippines (JUSMAG-Philippines) is the pivotal issue in the case at bench. JUSMAG assails the January 29, 1993 Resolution of the NATIONAL LABOR RELATIONS COMMISSION (public respondent), in NLRC NCR CASE NO. 00-03-02092-92, reversing the July 30, 1991 Order of the Labor Arbiter, and ordering the latter to assume jurisdiction over the complaint for illegal dismissal filed by FLORENCIO SACRAMENTO (private respondent) against petitioner. First, the undisputed facts. Private respondent was one of the seventy-four (74) security assistance support personnel (SASP) working at JUSMAG-Philippines. 1 He had been with JUSMAG from December 18, 1969, until his dismissal on April 27, 1992. When dismissed, he held the position of Illustrator 2 and was the incumbent President of JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES ASSOCIATION (JPFCEA), a labor organization duly registered with the Department of Labor and Employment. His services were terminated allegedly due to the abolition of his position. 2He was also advised that he was under administrative leave until April 27, 1992, although the same was not charged against his leave. On March 31, 1992, private respondent filed a complaint with the Department of Labor and Employment on the ground that he was illegally suspended and dismissed from service by JUSMAG. 3 He asked for his reinstatement. JUSMAG then filed a Motion to Dismiss invoking its immunity from suit as an agency of the United States. It further alleged lack of employer-employee relationship and that it has no juridical personality to sue and be sued. 4 In an Order dated July 30, 1991, Labor Arbiter Daniel C. Cueto dismissed the subject complaint " for want of jurisdiction." 5 Private respondent appealed 6 to the National Labor Relations Commission (public respondent), assailing the ruling that petitioner is immune from suit for alleged violation of our labor laws. JUSMAG filed its Opposition, 7 reiterating its immunity from suit for its non-contractual, governmental and/or public acts. In a Resolution, dated January 29, 1993, the NLRC 8 reversed the ruling of the Labor Arbiter as it held that petitioner had lost its right not to be sued. The resolution was predicated on two grounds: (1) the principle ofestoppel that JUSMAG failed to refute the existence of employer-employee relationship under the "control test"; and (2) JUSMAG has waived its right to immunity from suit when it hired the services of private respondent on December 18, 1969. The NLRC relied on the case of Harry Lyons vs. United States of America, 9 where the "United States Government (was considered to have) waived its immunity from suit by entering into (a) contract of stevedoring services, and thus, it submitted itself to the jurisdiction of the local courts."

Accordingly, the case was remanded to the labor arbiter for reception of evidence as to the issue on illegal dismissal. Hence, this petition, JUSMAG contends: I THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION A. IN REVERSING THE DECISION OF THE LABOR ARBITER AND IN NOT AFFIRMING THE DISMISSAL OF THE COMPLAINT IT BEING A SUIT AGAINST THE UNITED STATES OF AMERICA WHICH HAD NOT GIVEN ITS CONSENT TO BE SUED; AND B. IN FINDING WAIVER BY JUSMAG OF IMMUNITY FROM SUIT; II THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION A. WHEN IT FOUND AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN JUSMAG AND PRIVATE RESPONDENT; AND B. WHEN IT CONSIDERED JUSMAG ESTOPPED FROM DENYING THAT PRIVATE RESPONDENT IS ITS EMPLOYEE FOR FAILURE TO PRESENT PROOF TO THE CONTRARY. We find the petition impressed with merit. It is meet to discuss the historical background of the JUSMAG to determine its immunity from suit. JUSMAG was created pursuant to the Military Assistance Agreement 10 dated March 21, 1947, between the Government of the Republic of the Philippines and the Government of the United States of America. As agreed upon, JUSMAG shall consist of Air, Naval and Army group, and its primary task was to advise and assist the Philippines, on air force, army and naval matters. 11 Article 14 of the 1947 Agreement provides, inter alia, that "the cost of all services required by the Group, including compensation of locally employed interpreters, clerks, laborers, and other personnel, except personal servants, shall be borne by the Republic of the Philippines." This set-up was to change in 1991. In Note No 22, addressed to the Department of Foreign Affairs (DFA) of the Philippines, dated January 23, 1991, the United States Government, thru its Embassy, manifested its preparedness "to provide funds to cover the salaries of security assistance support personnel " and security guards, the rent of JUSMAG occupied buildings and housing, and the cost of utilities. 12 This offer was accepted by our Government, thru the DFA, in Note No. 911725, dated April 18, 1991. 13 Consequently, a Memorandum of Agreement 14 was forged between the Armed Forces of the Philippines and JUSMAG-Philippines, thru General Lisandro C. Abadia and U.S. Brigadier General Robert G. Sausser. The

Agreement delineated the terms of the assistance-in-kind of JUSMAG for 1991, the relevant parts of which read: a. The term salaries as used in this agreement include those for the security guards currently contracted between JUSMAG and A' Prime Security Services Inc., and the Security Assistance Support Personnel (SASP). . . . . b. The term Security Assistance Support Personnel (SASP) does not include active duty uniformed members of the Armed Forces of the Philippines performing duty at JUSMAG. c. It is understood that SASP are employees of the Armed Forces of the Philippines (AFP). Therefore,the AFP agrees to appoint, for service with JUSMAG, no more than 74 personnel to designated positions with JUSMAG. d. SASP are under the total operational control of the Chief, JUSMAG-Philippines. The term "Operational Control" includes, but is not limited to, all personnel administrative actions, such as: hiring recommendations; firing recommendations; position classification; discipline; nomination and approval of incentive awards; and payroll computation. Personnel administration will be guided by Annex E of JUSMAG-Philippines Memo 10-2. For the period of time that there is an exceptional funding agreement between the government of the Philippines and the United States Government (USG), JUSMAG will pay the total payroll costs for the SASP employees. Payroll costs include only regular salary; approved overtime, costs of living allowance; medical insurance; regular contributions to the Philippine Social Security System, PAG-IBIG Fund and Personnel Economic Relief Allowance (PERA); and the thirteenth-month bonus. Payroll costs do not include gifts or other bonus payments in addition to those previously defined above. Entitlements not considered payroll costs under this agreement will be funded and paid by the AFP. e. All SASP employed as of July 1, 1990 will continue their service with JUSMAG at their current rate of pay and benefits up to 30 June 1991, with an annual renewal of employment thereafter subject to renewal of their appointment with the AFP (employees and rates of pay are indicated at Enclosure 3). No promotion or transfer internal to JUSMAG of the listed personnel will result in the reduction of their pay and benefits. f. All SASP will, after proper classification, be paid salaries and benefits at established AFP civilian rates. Rules for computation of pay and allowances will be made available to the Comptroller, JUSMAG, by the Comptroller, GHQ, AFP. Additionally, any legally mandated changes in salary levels or methods of computation shall be transmitted within 48 hours of receipt by Comptroller, GHQ to Comptroller, JUSMAG. g. The AFP agrees not to terminate SASP without 60 days prior written notice to Chief, JUSMAGPhilippines. Any termination of these personnel thought to be necessary because of budgetary restrictions or manpower ceiling will be subject to consultations between AFP and JUSMAG to ensure that JUSMAG's mission of dedicated support to the AFP will not be degraded or harmed in any way. h. The AFP agrees to assume the severance pay/retirement pay liability for all appointed SASP . (Enclosure 3 lists the severance pay liability date for current SASP). Any termination of services, other than voluntary resignations or termination for cause, will result in immediate payments

of AFP of all termination pay to the entitled employee. Vouchers for severance/retirement pay and accrued bonuses and annual leave will be presented to the Comptroller, GHQ, AFP, not later than 14 calendar days prior to required date of payment. i. All SASP listed in Enclosure 3 will continue to participate in the Philippine Social Security System. A year later, or in 1992, the United States Embassy sent another note of similar import to the Department of Foreign Affairs (No. 227, dated April 8, 1992), extending the funding agreement for the salaries of SASP and security guards until December 31, 1992. From the foregoing, it is apparent that when JUSMAG took the services of private respondent, it was performing a governmental function on behalf of the United States pursuant to the Military Assistance Agreement dated March 21, 1947. Hence, we agree with petitioner that the suit is, in effect, one against the United States Government, albeit it was not impleaded in the complaint. Considering that the United States has not waived or consented to the suit, the complaint against JUSMAG cannot not prosper. In this jurisdiction, we recognize and adopt the generally accepted principles of international law as part of the law of the land. 15 Immunity of State from suit is one of these universally recognized principles. In international law, "immunity" is commonly understood as an exemption of the state and its organs from the judicial jurisdiction of another state. 16 This is anchored on the principle of the sovereign equality of states under which one state cannot assert jurisdiction over another in violation of the maxim par in parem non habet imperium (an equal has no power over an equal). 17 Under the traditional rule of State immunity, a state cannot be sued in the courts of another State, without its consent or waiver. However, in Santos, et al., vs. Santos, et al., 18 we recognized an exception to the doctrine of immunity from suit by a state, thus: . . . . Nevertheless, if, where and when the state or its government enters into a contract, through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations arise therefrom, and if the law granting the authority to enter into such contract does not provide for or name the officer against whom action may be brought in the event of a breach thereof, the state itself may be sued, even without its consent, because by entering into a contract, the sovereign state has descended to the level of the citizen and its consent to be sued is implied from the very act of entering into such contract. . . . . (emphasis ours) It was in this light that the state immunity issue in Harry Lyons, Inc., vs. United States of America 19 was decided. In the case of Harry Lyons, Inc., the petitioner entered into a contract with the United States Government for stevedoring services at the U.S. Naval Base, Subic Bay, Philippines. It then sought to collect from the US government sums of money arising from the contract. One of the issues posed in the case was whether or not the defunct Court of First Instance had jurisdiction over the defendant United States, a sovereign state which cannot be sued without its consent. This Court upheld the contention of Harry Lyons, Inc., that "when a sovereign state enters into a contract with a private person, the state can be sued upon the theory that it has descended to the level of an individual from which it can be implied that it has given its consent to be sued under the contract."

The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the existence of a contract does not, per se, mean that sovereign states may, at all times, be sued in local courts. The complexity of relationships between sovereign states, brought about by their increasing commercial activities, mothered a morerestrictive application of the doctrine. 20 Thus, in United States of America vs. Ruiz, 21 we clarified that our pronouncement in Harry Lyons, supra, with respect to the waiver of State immunity, was obiter and "has no value as an imperative authority." As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign orgovernmental activities ( jure imperii). 22 The mantle of state immunity cannot be extended to commercial, private and proprietary acts ( jure gestionis). As aptly stated by this Court (En banc) in US vs. Ruiz, supra: The restrictive application of State immunity is proper 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 thus can be deemed to have tacitly given its consent to be used only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions. (emphasis ours) We held further, that the application of the doctrine of state immunity depends on the legal nature of the act. Ergo, since a governmental function was involved the transaction dealt with the improvement of the wharves in the naval installation at Subic Bay it was held that the United States was not deemed to have waived its immunity from suit. Then came the case of United States vs. Hon. Rodrigo, et al. 23 In said case, Genove was employed as a cook in the Main Club located at U.S. Air Force Recreation Center, John Hay Air Station. He was dismissed from service after he was found to have polluted the stock of soup with urine. Genove countered with a complaint for damages. Apparently, the restaurant services offered at the John Hay Air Station partake of the nature of a business enterprise undertaken by the United States government in its proprietary capacity. The Court then noted that the restaurant is well known and available to the general public, thus, the services are operated for profit, as a commercial and not a governmental activity. Speaking through Associate Justice Isagani Cruz, the Court (En Banc) said: The consequence of this finding is that the petitioners cannot invoke the doctrine of state immunity to justify the dismissal of the damage suit against them by Genove. Such defense will not prosper even if it be established that they were acting as agents of the United States when they investigated and later dismissed Genove. For the matter, not even the United States government itself can claim such immunity. The reason is that by entering into the employment contract with Genove in the discharge of its proprietary functions, it impliedly divested itself of its sovereign immunity from suit. (emphasis ours) Conversely, if the contract was entered into in the discharge of its governmental functions, the sovereign state cannot be deemed to have waived its immunity from suit. 24 Such is the case at bench. Prescinding from this premise, we need not determine whether JUSMAG controls the employment conditions of the private respondent. We also hold that there appears to be no basis for public respondent to rule that JUSMAG is stopped from denying the existence of employer-employee relationship with private respondent. On the contrary, in its Opposition before the public respondent, JUSMAG consistently contended that the (74) SASP, including

private respondent, working in JUSMAG, are employees of the Armed Forces of the Philippines. This can be gleaned from: (1) the Military Assistance Agreement, supra, (2) the exchange of notes between our Government, thru Department of Foreign Affairs, and the United States, thru the US Embassy to the Philippines, and (3) the Agreement on May 21, 1991,supra between the Armed Forces of the Philippines and JUSMAG. We symphatize with the plight of private respondent who had served JUSMAG for more than twenty (20) years. Considering his length of service with JUSMAG, he deserves a more compassionate treatment. Unfortunately, JUSMAG is beyond the jurisdiction of this Court. Nonetheless, the Executive branch, through the Department of Foreign Affairs and the Armed Forces of the Philippines, can take the cudgel for private respondent and the other SASP working for JUSMAG, pursuant to the aforestated Military Assistance Agreement. IN VIEW OF THE FOREGOING, the petition for certiorari is GRANTED. Accordingly, the impugned Resolution dated January 29, 1993 of the National Labor Relations Commission is REVERSED and SET ASIDE. No costs. SO ORDERED. Narvasa, C.J., Regalado and Mendoza, JJ., concur.

# Footnotes 1 See Enclosure No. 3, marked as Annex "E"; Rollo, p. 47. 2 Memorandum dated March 27, 1992. 3 Annex "G" of Petition; Rollo, p. 51. 4 Annex "H" of Petition; Rollo, p. 52 5 Rollo, pp. 86-88. 6 Annex "J" of Petition; Rollo, p. 89. 7 Annex "K" of Petition; Rollo, p. 121. 8 Second Division 9 No. L-11786, September 26, 1958, 104 Phil. 593. 10 The Republic of the Philippines was represented by then President MANUEL ROXAS, while the United States of America was represented by its Ambassador Extraordinary and Plenipotentiary to the Republic of the Philippines, PAUL MCNUTT. 11 Annex "A" of Petition; Rollo, p. 32. 12 Annex "B" of Petition; Rollo, p. 38

13 Annex "C" of Petition; Rollo, p. 40. 14 Annex "D" of Petition; Rollo, p. 42. 15 Section 2, Article II of the 1987 Constitution. 16 Henkin, Pugh, Schachter, Smit, International Law, Cases and Materials, Second Edition, p. 898. 17 Cruz, Philippine Political Law, 1991 ed., p. 29. 18 No. L-4699, November 26, 1952, 92 Phil 281. 19 Op cit. 20 See US vs. Ruiz , infra. 21 G.R. No. L-35645, May 22, 1985, 136 SCRA 487, 490. 22 The restrictive application of immunity from suit is also adopted in other countries, such as Belgium, Italy, Egypt, Switzerland (Henkin, Pugh, Schachter, Smit, International Law, Cases and Materials, Second Edition, p. 906). 23 G.R. No. 79470, February 26, 1990, 182 SCRA 644, 660. 24 Unites States vs. Ruiz, supra.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 79253 March 1, 1993 UNITED STATES OF AMERICA and MAXINE BRADFORD, petitioners, vs. HON. LUIS R. REYES, as Presiding Judge of Branch 22, Regional Trial Court of Cavite, and NELIA T. MONTOYA, respondents. Luna, Sison & Manas for petitioners. Evelyn R. Dominguez for private respondent.

DAVIDE, JR., J.: This is a petition for certiorari and prohibition under Rule 65 of the Rules of Court. Petitioners would have Us annul and set aside, for having been issued with grave abuse of discretion amounting to lack of jurisdiction, the Resolution of 17 July 1987 of Branch 22 of the Regional Trial Court (RTC) of Cavite in Civil Case No. 224-87. The said resolution denied, for lack of merit, petitioners' motion to dismiss the said case and granted the private respondent's motion for the issuance of a writ of preliminary attachment. Likewise sought to be set aside is the writ of attachment subsequently issued by the RTC on 28 July 1987. The doctrine of state immunity is at the core of this controversy. The readings disclose the following material operative facts: Private respondent, hereinafter referred to as Montoya, is an American citizen who, at the time material to this case, was employed as an identification (I.D.) checker at the U.S. Navy Exchange (NEX) at the Joint United States Military Assistance Group (JUSMAG) headquarters in Quezon City. She is married to one Edgardo H. Montoya, a Filipino-American serviceman employed by the U.S. Navy and stationed in San Francisco, California. Petitioner Maxine Bradford, hereinafter referred to as Bradford, is likewise an American citizen who was the activity exchange manager at the said JUSMAG Headquarters. As a consequence of an incident which occurred on 22 January 1987 whereby her body and belongings were searched after she had bought some items from the retail store of the NEX JUSMAG, where she had purchasing privileges, and while she was already at the parking area, Montoya filed on 7 May 1987 a complaint 1 with the Regional Trial Court of her place of residence Cavite against Bradford for damages due to the oppressive and discriminatory acts committed by the latter in excess of her authority as store manager of the NEX JUSMAG. The complaint, docketed as Civil Case No. 224-87 and subsequently raffled off to Branch 22 at Imus, Cavite, alleges the following, material operative facts: xxx xxx xxx 3. That on January 22, 1987, after working as the duty ID checker from 7:45 to 11:45 a.m., plaintiff went shopping and left the store at l2:00 noon of that day; 4. That on the way to her car while already outside the store, Mrs. Yong Kennedy, also an ID checker, upon the instruction of the store manager, Ms. Maxine Bradford, approached plaintiff and informed her that she needed to search her bags; 5. That plaintiff went to defendant, who was then outside the store talking to some men, to protest the search but she was informed by the defendant that the search is to be made on all Jusmag employees that day; 6. That the search was thereafter made on the person, car and bags of the plaintiff by Mrs. Yong Kennedy in the presence of the defendant and numerous curious onlookers; 7. That having found nothing irregular on her person and belongings, plaintiff was allowed to leave the premises;

8. That feeling aggrieved, plaintiff checked the records and discovered that she was the only one whose person and belonging was (sic) searched that day contrary to defendant's allegation as set forth in par. 5 hereof and as evidenced by the memorandum dated January 30, 1987 made by other Filipino Jusmag employees, a photocopy of which is hereto attached as ANNEX "A" and made integral (sic) part hereof: 9. That moreover, a check with Navy Exchange Security Manager, R.L. Roynon on January 27, 1987 was made and she was informed by Mr. Roynon that it is a matter of policy that customers and employees of NEX Jusmag are not searched outside the store unless there is a very strong evidence of a wrongdoing; 10. That plaintiff knows of no circumstances sufficient to trigger suspicion of a wrongdoing on her part but on the other hand, is aware of the propensity of defendant to lay suspicion on Filipinos for theft and/or shoplifting; 11. That plaintiff formally protested the illegal search on February 14, 1987 in a letter addressed to Mr. R.L. Roynon, a photocopy of which is hereto attached as ANNEX "B" and made integral (sic) part hereof; but no action was undertaken by the said officer; 12. That the illegal search on the person and belongings of the plaintiff in front of many people has subjected the plaintiff to speculations of theft, shoplifting and such other wrongdoings and has exposed her to contempt and ridicule which was caused her undue embarrassment and indignity; 13. That since the act could not have been motivated by other (sic) reason than racial discrimination in our own land, the act constitute (sic) a blow to our national pride and dignity which has caused the plaintiff a feeling of anger for which she suffers sleepless nights and wounded feelings; 14. That considering the above, plaintiff is entitled to be compensated by way of moral damages in the amount of P500,000.00; 15. That to serve as a deterrent to those inclined to follow the oppressive act of the defendant, exemplary damages in the amount of P100,000.00 should also be awarded. 2 She then prayed for judgment ordering Bradford to pay her P500,000.00 as moral damages, P100,000.00 as exemplary damages and reasonable attorney's fees plus the costs of the suit. 3 Summons and a copy of the complaint were served on Bradford on 13 May 1987. In response thereto, she filed two (2) motions for extension of time to file her Answer which were both granted by the trial court. The first was filed through Atty. Miguel Famularcano, Jr., who asked for a 20-day extension from 28 May 1987. The second, filed through the law firm of Luna, Sison and Manas, sought a 15-day extension from 17 June 1987. 4 Thus, Bradford had up to 1 July 1987 to file her Answer. Instead of doing so, however, she, together with the government of the United States of America (hereinafter referred to as the public petitioner), filed on 25 June 1987, also through the law firm of Luna, Sison and Manas, a Motion to Dismiss 5 based on the following grounds: 1) (This) action is in effect a suit against the United States of America, a foreign sovereign immune from suit without its consent for the cause of action pleaded in the complaint; and

2) Defendant, Maxine Bradford, as manager of the US Navy Exchange Branch at JUSMAG, Quezon City, is immune from suit for act(s) done by her in the performance of her official functions under the Philippines-United States Military Assistance Agreement of 1947 and Military Bases Agreement of 1947, as amended. 6 In support of the motion, the petitioners claimed that JUSMAG, composed of an Army, Navy and Air Group, had been established under the Philippine-United States Military Assistance Agreement entered into on 21 March 1947 to implement the United States' program of rendering military assistance to the Philippines. Its headquarters in Quezon City is considered a temporary installation under the provisions of Article XXI of the Military Bases Agreement of 1947. Thereunder, "it is mutually agreed that the United States shall have the rights, power and authority within the bases which are necessary for the establishment, use and operation and defense thereof or appropriate for the control thereof." The 1979 amendment of the Military Bases Agreement made it clear that the United States shall have "the use of certain facilities and areas within the bases and shall have effective command and control over such facilities and over United States personnel, employees, equipment and material." JUSMAG maintains, at its Quezon City headquarters, a Navy Exchange referred to as the NEX-JUSMAG. Checking of purchases at the NEX is a routine procedure observed at base retail outlets to protect and safeguard merchandise, cash and equipment pursuant to paragraphs 2 and 4(b) of NAVRESALEACT SUBIC INST. 5500.1. 7 Thus, Bradford's order to have purchases of all employees checked on 22 January 1987 was made in the exercise of her duties as Manager of the NEX-JUSMAG. They further claimed that the Navy Exchange (NAVEX), an instrumentality of the U.S. Government, is considered essential for the performance of governmental functions. Its mission is to provide a convenient and reliable source, at the lowest practicable cost, of articles and services required for the well-being of Navy personnel, and of funds to be used for the latter's welfare and recreation. Montoya's complaint, relating as it does to the mission, functions and responsibilities of a unit of the United States Navy, cannot then be allowed. To do so would constitute a violation of the military bases agreement. Moreover, the rights, powers and authority granted by the Philippine government to the United States within the U.S. installations would be illusory and academic unless the latter has effective command and control over such facilities and over American personnel, employees, equipment and material. Such rights, power and authority within the bases can only be exercised by the United States through the officers and officials of its armed forces, such as Bradford. Baer vs. Tizon 8 and United States of America vs. Ruiz 9 were invoked to support these claims. On 6 July 1987, Montoya filed a motion for preliminary attachment 10 on the ground that Bradford was about to depart from the country and was in the process of removing and/or disposing of her properties with intent to defraud her creditors. On 14 July 1987, Montoya filed her opposition to the motion to dismiss 11 alleging therein that the grounds proffered in the latter are bereft of merit because (a) Bradford, in ordering the search upon her person and belongings outside the NEX JUSMAG store in the presence of onlookers, had committed an improper, unlawful and highly discriminatory act against a Filipino employee and had exceeded the scope of her authority; (b) having exceeded her authority, Bradford cannot rely on the sovereign immunity of the public petitioner because her liability is personal; (c) Philippine courts are vested with jurisdiction over the case because Bradford is a civilian employee who had committed the challenged act outside the U.S. Military Bases; such act is not one of those exempted from the jurisdiction of Philippine courts; and (d) Philippine courts can inquire into the factual circumstances of the case to determine whether or not Bradford had acted within or outside the scope of her authority. On 16 July 1987, public petitioner and Bradford filed a reply to Montoya's opposition and an opposition to the motion for preliminary attachment. 12

On 17 July 1987, 13 the trial court 14 resolved both the motion to dismiss and the motion for preliminary attachment in this wise: On the motion to dismiss, the grounds and arguments interposed for the dismissal of this case are determined to be not indubitable. Hence, the motion is denied for lack of merit. The motion for preliminary attachment is granted in the interest of justice, upon the plaintiff's filing of a bond in the sum of P50,000.00. Upon Montoya's filing of the required bond, the trial court issued on 28 July 1987 an Order 15 decreeing the issuance of a writ of attachment and directing the sheriff to serve the writ immediately at the expense of the private respondent. The writ of attachment was issued on that same date. 16 Instead of filing a motion to reconsider the last two (2) orders, or an answer insofar as Bradford is concerned both the latter and the public petitioner filed on 6 August 1987 the instant petition to annul and set aside the above Resolution of 17 July 1987 and the writ of attachment issued pursuant thereto. As grounds therefor, they allege that: 10. The respondent judge committed a grave abuse of discretion amounting to lack of jurisdiction in denying the motion to dismiss the complaint in Civil Case No. 224-87 "for lack of merit." For the action was in effect a suit against the United States of America, a foreign sovereign immune from suit without its consent for the cause of action pleaded in the complaint, while its co-petitioner was immune from suit for act(s) done by her in the performance of her official functions as manager of the US Navy Exchange Branch at the Headquarters of JUSMAG, under the Philippines-United States Military Assistance Agreement of 1947 and Military Bases Agreement of 1947, as amended. 17 On 5 August 1987, the trial court set Civil Case No. 224-87 for pre-trial and trial on 27 August 1987 at 9:30 a.m. 18 On 12 August 1987, this Court resolved to require the respondents to comment on the petition. 19 On 19 August 1987, petitioners filed with the trial court a Motion to Suspend Proceedings 20 which the latter denied in its Order of 21 August 1987. 21 In the meantime, however, for failure to file an answer, Bradford was declared in default in Civil Case No. 22487 and Montoya was allowed to present her evidence ex-parte. 22 She thus took the witness stand and presented Mrs. Nam Thi Moore and Mrs. Miss Yu as her witnesses. On 10 September 1987, the trial court rendered its decision 23 in Civil Case No. 224-87, the dispositive portion of which reads: Prescinding from the foregoing, it is hereby determined that the unreasonable search on the plaintiff's person and bag caused (sic) done recklessly and oppressively by the defendant, violated, impaired and undermined the plaintiff's liberty guaranteed by the Constitution, entitling her to moral and exemplary damages against the defendant. The search has unduly subjected the plaintiff to intense humiliation and indignities and had consequently ridiculed and embarrassed publicly said plaintiff so gravely and immeasurably.

WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant Maxine Bradford assessing the latter to pay unto the former the sums of P300,000.00 for moral damages, P100,000.00 for exemplary damages and P50,000.00 for actual expenses and attorney's fees. No costs. SO ORDERED. 24 Bradford received a copy of the decision on 21 September 1987. On that same date, she and the public petitioner filed with this Court a Petition for Restraining Order 25 which sought to have the trial court's decision vacated and to prevent the execution of the same; it was also prayed that the trial court be enjoined from continuing with Civil Case No. 224-87. We noted this pleading in the Resolution of 23 September 1987. 26 In the meantime, since no motion for reconsideration or appeal had been interposed by Bradford challenging the 10 September 1987 Decision which she had received on 21 September 1987, respondent Judge issued on 14 October 1987 an order directing that an entry of final judgment be made. A copy thereof was received by Bradford on 21 October, 1987. 27 Also on 14 October 1987, Montoya filed her Comment with Opposition to the Petition for Restraining Order. 28Respondent Judge had earlier filed his own Comment to the petition on 14 September 1987. 29 On 27 October 1987, Montoya filed before the trial court a motion for the execution of the Decision of 10 September 1987 which petitioners opposed on the ground that although this Court had not yet issued in this case a temporary restraining order, it had nevertheless resolved to require the respondents to comment on the petition. It was further averred that execution thereof would cause Bradford grave injury; moreover, enforcement of a writ of execution may lead to regrettable incidents and unnecessarily complicate the situation in view of the public petitioner's position on the issue of the immunity of its employees. In its Resolution of 11 November 1987, the trial court directed the issuance of a writ of execution. 30 Consequently, the petitioners filed on 4 December 1987, a Manifestation and Motion reciting the foregoing incidents obtaining before the trial court and praying that their petition for a restraining order be resolved. 31 On 7 December 1987, this Court issued a Temporary Restraining Order "ENJOINING the respondents and the Provincial Sheriff of Pasig, Metro Manila, from enforcing the Decision dated September 10, 1987, and the Writs of Attachment and Execution issued in Civil Case No. 224-87." 32 On 28 November 1988, after the private respondent filed a Rejoinder to the Consolidated Reply to the Comments filed by the petitioners, this Court gave due course to the petition and required the parties to submit their respective memoranda-Petitioners filed their Memorandum on 8 February 1989 33 while private respondent filed her Memorandum on 14 November 1990. 34 The kernel issue presented in this case is whether or not the trial court committed grave abuse of discretion in denying the motion to dismiss based on the following grounds: (a) the complaint in Civil Case No. 224-87 is in effect a suit against the public petitioner, a foreign sovereign immune from suit which has not given consent to such suit and (b) Bradford is immune from suit for acts done by her in the performance of her official functions as manager of the U.S. Navy Exchange of JUSMAG pursuant to the Philippines-United States Military Assistance Agreement of 1947 and the Military Bases Agreement of 1947, as amended.

Aside from maintaining the affirmative view, the public petitioner and Bradford even go further by asserting that even if the latter's act were ultra vires she would still be immune from suit for the rule that public officers or employees may be sued in their personal capacity for ultra vires and tortious acts is "domestic law" and not applicable in International Law. It is claimed that the application of the immunity doctrine does not turn upon the lawlessness of the act or omission attributable to the foreign national for if this were the case, the concept of immunity would be meaningless as inquiry into the lawlessness or illegality of the act or omission would first have to be made before considering the question of immunity; in other words, immunity will lie only if such act or omission is found to be lawful. On the other hand, Montoya submits that Bradford is not covered by the protective mantle of the doctrine of sovereign immunity from suit as the latter is a mere civilian employee of JUSMAG performing nongovernmental and proprietary functions. And even assuming arguendo that Bradford is performing governmental functions, she would still remain outside the coverage of the doctrine of state immunity since the act complained of is ultra vires or outside the scope of her authority. What is being questioned is not the fact of search alone, but also the manner in which the same was conducted as well as the fact of discrimination against Filipino employees. Bradford's authority to order a search, it is asserted, should have been exercised with restraint and should have been in accordance with the guidelines and procedures laid down by the cited "NAVRESALEACT, Subic Inst." Moreover, ultra vires acts of a public officer or employee, especially tortious and criminal acts, are his private acts and may not be considered as acts of the State. Such officer or employee alone is answerable for any liability arising therefrom and may thus be proceeded against in his personal capacity. Montoya further argues that both the acts and person of Bradford are not exempt from the Philippine courts' jurisdiction because (a) the search was conducted in a parking lot at Scout Borromeo, Quezon City, outside the JUSMAG store and, therefore, outside the territorial control of the U.S. Military Bases in the Philippines; (b) Bradford does not possess diplomatic immunity under Article 16(b) of the 1953 Military Assistance Agreement creating the JUSMAG which provides that only the Chief of the Military Advisory Group and not more than six (6) other senior members thereof designated by him will be accorded diplomatic immunity; 35 and (c) the acts complained of do not fall under those offenses where the U.S. has been given the right to exercise its jurisdiction (per Article 13 of the 1947 Military Bases Agreement, as amended by the, Mendez-Blair Notes of 10 August 1965). 36 Finally, Montoya maintains that at the very least, Philippine courts may inquire into the factual circumstances of the case to determine whether petitioner Bradford is immune from suit or exempt from Philippine jurisdiction. To rule otherwise would render the Philippine courts powerless as they may be easily divested of their jurisdiction upon the mere invocation of this principle of immunity from suit. A careful review of the records of this case and a judicious scrutiny of the arguments of both parties yield nothing but the weakness of the petitioners' stand. While this can be easily demonstrated, We shall first consider some procedural matters. Despite the fact that public petitioner was not impleaded as a defendant in Civil Case No. 224-87, it nevertheless joined Bradford in the motion to dismiss on the theory that the suit was in effect against it without, however, first having obtained leave of court to intervene therein. This was a procedural lapse, if not a downright improper legal tack. Since it was not impleaded as an original party, the public petitioner could, on its own volition, join in the case only by intervening therein; such intervention, the grant of which is discretionary upon the court, 37 may be allowed only upon a prior motion for leave with notice to all the parties in the action. Of course, Montoya could have also impleaded the public petitioner as an additional defendant by amending the complaint if she so believed that the latter is an indispensible or necessary party.

Since the trial court entertained the motion to dismiss and the subsequent pleadings filed by the public petitioner and Bradford, it may be deemed to have allowed the public petitioner to intervene. Corollarily, because of its voluntary appearance, the public petitioner must be deemed to have submitted itself to the jurisdiction of the trial court. Moreover, the said motion does not specify any of the grounds for a motion to dismiss enumerated in Section 1, Rule 16 of the Rules of Court. It merely recites state immunity on the part of the public petitioner and immunity on the part of Bradford for the reason that the act imputed to her was done in the performance of her official functions. The upshot of this contention is actually lack of cause of action a specific ground for dismissal under the aforesaid Rule because assuming arguendo that Montoya's rights had been violated by the public petitioner and Bradford, resulting in damage or injury to the former, both would not be liable therefor, and no action may be maintained thereon, because of the principle of state immunity. The test of the sufficiency of the facts to constitute a cause of action is whether or not, admitting the facts alleged in the complaint, the court could render a valid judgment upon the same, in accordance with the prayer in the complaint. 38 A motion to dismiss on the ground of failure to state a cause of action hypothetically admits the truth of the allegations in the complaint. In deciding a motion to dismiss, a court may grant, deny, allow amendments to the pleadings or defer the hearing and determination of the same if the ground alleged does not appear to be indubitable. 39 In the instant case, while the trial court concluded that "the grounds and arguments interposed for the dismissal" are not "indubitable," it denied the motion for lack of merit. What the trial court should have done was to defer there solution on the motion instead of denying it for lack of merit. In any event, whatever may or should have been done, the public petitioner and Bradford were not expected to accept the verdict, making their recourse to this Court via the instant petition inevitable. Thus, whether the trial court should have deferred resolution on or denied outright the motion to dismiss for lack of merit is no longer pertinent or relevant. The complaint in Civil Case No. 224-87 is for damages arising from what Montoya describes as an "illegal search" on her "person and belongings" conducted outside the JUSMAG premises in front of many people and upon the orders of Bradford, who has the propensity for laying suspicion on Filipinos for theft or shoplifting. It is averred that the said search was directed only against Montoya. Howsoever viewed, it is beyond doubt that Montoya's cause of action is premised on the theory that the acts complained of were committed by Bradford not only outside the scope of her authority or more specifically, in her private capacity but also outside the territory where she exercises such authority, that is, outside the NEX-JUSMAG particularly, at the parking area which has not been shown to form part of the facility of which she was the manager. By their motion to dismiss, public petitioner and Bradford are deemed to have hypothetically admitted the truth of the allegation in the complaint which support this theory. The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs. Court of Appeals, 40 thus: I. The rule that a state may not be sued without its consent, now expressed in Article XVI Section 3, of the 1987 Constitution, is one of the generally accepted principles of international law that we have adopted as part of the law of our land under Article II, Section 2. This latter

provision merely reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended to manifest our resolve to abide by the rules of the international community. 41 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. 42 It must be noted, however, that the rule is not so all-encompassing as to be applicable under all circumstances. It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al. 43 "Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the State from suit. In the same tenor, it has been said that an action at law or suit in equity against a State officer or the director of a State department on the ground that, while claiming to act or the State, he violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under an assumption of authority which he does not have, is not a suit against the State within the constitutional provision that the State may not be sued without its consent." 44 The rationale for this ruling is that the doctrinaire of state immunity cannot be used as an instrument for perpetrating an injustice. 45 In the case of Baer, etc. vs. Tizon, etc., et al., 46 it was ruled that: There should be no misinterpretation of the scope of the decision reached by this Court. Petitioner, as the Commander of the United States Naval Base in Olongapo, does not possess diplomatic immunity. He may therefore be proceeded against in his personal capacity, or when the action taken by him cannot be imputed to the government which he represents. Also, in Animos, et al. vs. Philippine Veterans Affairs Office, et al., 47 we held that: . . . it is equally well-settled that where a litigation may have adverse consequences on the public treasury, whether in the disbursements of funds or loss of property, the public official proceeded against not being liable in his personal capacity, then the doctrine of non-suability may appropriately be invoked. It has no application, however, where the suit against such a functionary had to be instituted because of his failure to comply with the duty imposed by statute appropriating public funds for the benefit of plaintiff or petitioner. . . . . The aforecited authorities are clear on the matter. They state that 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 or jurisdiction. 48 The agents and officials of the United States armed forces stationed in Clark Air Base are no exception to this rule. In the case of United States of America, et al. vs. Guinto, etc., et al., ante, 49 we declared: It bears stressing at this point that the above observations do not confer on the United States of America Blanket immunity for all acts done by it or its agents in the Philippines. Neither may the other petitioners claim that they are also insulated from suit in this country merely because they have acted as agents of the United States in the discharge of their official functions. Since it is apparent from the complaint that Bradford was sued in her private or personal capacity for acts allegedly done beyond the scope and even beyond her place of official functions, said complaint is not then vulnerable to a motion to dismiss based on the grounds relied upon by the petitioners because as a consequence of the hypothetical admission of the truth of the allegations therein, the case falls within the exception to the doctrine of state immunity. In the recent cases of Williams vs. Rarang 50 and Minucher vs. Court of Appeals, 51 this Court reiterated this exception. In the former, this Court observed: There is no question, therefore, that the two (2) petitioners actively participated in screening the features and articles in the POD as part of their official functions. Under the rule that U.S. officials in the performance of their official functions are immune from suit, then it should follow that petitioners may not be held liable for the questioned publication. It is to be noted, however, that the petitioners were sued in their personal capacities for their alleged tortious acts in publishing a libelous article. The question, therefore, arises are American naval officers who commit a crime or tortious act while discharging official functions still covered by the principle of state immunity from suit? Pursuing the question further, does the grant of rights, power, and authority to the United States under the RP-US Bases Treaty cover immunity of its officers from crimes and torts? Our answer is No. In the latter, even on the claim of diplomatic immunity which Bradford does not in fact pretend to have in the instant case as she is not among those granted diplomatic immunity under Article 16(b) of the 1953 Military Assistance Agreement creating the JUSMAG 52 this Court ruled: Even Article 31 of the Vienna Convention on Diplomatic Relations admits of exceptions. It reads:

1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall also enjoy immunity from its civil and administrative jurisdiction except in the case of: xxx xxx xxx (c) an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions(Emphasis supplied). There can be no doubt that on the basis of the allegations in the complaint, Montoya has a sufficient and viable cause of action. Bradford's purported non-suability on the ground of state immunity is then a defense which may be pleaded in the answer and proven at the trial. Since Bradford did not file her Answer within the reglementary period, the trial court correctly declared her in default upon motion of the private respondent. The judgment then rendered against her on 10 September 1987 after the ex parte reception of the evidence for the private respondent and before this Court issued the Temporary Restraining Order on 7 December 1987 cannot be impugned. The filing of the instant petition and the knowledge thereof by the trial court did not prevent the latter from proceeding with Civil Case No. 224-87. "It is elementary that the mere pendency of a special civil action for certiorari, commenced in relation to a case pending before a lower Court, does not interrupt the course of the latter when there is no writ of injunction restraining it." 53 WHEREFORE, the instant petition is DENIED for lack of merit. The Temporary Restraining Order of 7 December 1987 is hereby LIFTED. Costs against petitioner Bradford. SO ORDERED. Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo and Campos, Jr., JJ., concur. Quiason, J., took no part. Gutierrez, Jr., J., is on leave.

# Footnotes 1 Annex "A" of Petition; Rollo, 26-29. 2 Rollo, 26-28. 3 Id., 28. 4 Rollo, 118.

5 Annex "D" of Petition; Id., 39-51. 6 Id., 39. 7 Annex "2" of the motion. 8 57 SCRA [1974]. 9 136 SCRA 487 [1985]. 10 Annex "C-1" of Petition; Rollo, 34-38. 11 Annex "E", Id.; Id., 67-77. 12 Annex "F" of Petition; Rollo, 82. 13 Annex "A", Id.; Id., 24. 14 Per Judge Luis R. Reyes. 15 Annex "G" of Petition, op. cit.; Rollo, op. cit., 88. 16 Annex "B", Id.; Id., 25. 17 Rollo, 6. 18 Id., 101. 19 Id., 89. 20 Annex "B" of Petition for Restraining Order; Id., 101-104. 21 Annex "C", Id.; Id., 105. 22 Rollo, 110. 23 Annex "A" of Petition for Restraining Order; Id., 97-99; Annex "A" of Supplement to Petition for Restraining Order; Id., 110-112. 24 Id., 99. 25 Rollo, 92-95. 26 Id., 106. 27 Id., 139. 28 Id., 117-136. 29 Id., 115.

30 Rollo, 146-147. 31 Id., 142-149. 32 Id., 152-154. 33 Id., 204-232. 34 Id., 249-267. 35 Rollo, 265. A member of the Military Advisory Group is defined in the Agreement as a member of the U.S. Military on active duty. 36 Rollo, 265-266. 37 Section 2, Rule 12, Rules of Court. 38 Paminsan vs. Costales, 28 Phil. 487 [1914]; Adamos vs. J.M. Tuason & Co., Inc., 25 SCRA 529 [1968], citing Garcon vs. Redemptorist Fathers, 123 Phil. 1192 [1966]; Republic Bank vs. Cuaderno, 125 Phil. 1076 [1967]; and Virata vs. Sandiganbayan, 202 SCRA 680 [1991]. 39 Mendoza vs. Court of Appeals, 201 SCRA 343 [1991]. 40 191 SCRA 713, 726-728 [1990]. 41 Citing United States of America vs. Guinto, 182 SCRA 644 [1990]. 42 Id. 43 33 SCRA 368 [1970]. 44 Citing Ministerio vs. CFI of Cebu, 40 SCRA 464 [1971]. 45 Citing Sanders vs. Veridiano, 162 SCRA 88 [1988]. 46 57 SCRA 1 [1974]. 47 174 SCRA 214 [1989]. 48 Citing Dumlao vs. Court of Appeals, 114 SCRA 247 [1982]. 49 Supra. 50 G.R. No. 74135, 28 May 1992. 51 G.R. No. 97765, 24 September 1992. 52 Rollo, 265. 53 Peza vs. Alikpala, 160 SCRA 31 [1988].

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 84607 March 19, 1993 REPUBLIC OF THE PHILIPPINES, GEN. RAMON MONTANO, GEN. ALFREDO LIM, GEN. ALEXANDER AGUIRRE, COL. EDGAR DULA TORRES, COL. CEZAR NAZARENO, MAJ. FILEMON GASMEN, PAT. NICANOR ABANDO, PFC SERAFIN CEBU, JR., GEN. BRIGIDO PAREDES, COL. ROGELIO MONFORTE, PFC ANTONIO LUCERO, PAT. JOSE MENDIOLA, PAT. NELSON TUASON, POLICE CORPORAL PANFILO ROGOS, POLICE LT. JUAN B. BELTRAN, PAT. NOEL MANAGBAO, MARINE THIRD CLASS TRAINEE (3CT) NOLITO NOGATO, 3CT ALEJANDRO B. NAGUIO, JR., EFREN ARCILLAS, 3CT AGERICO LUNA, 3CT BASILIO BORJA, 3CT MANOLITO LUSPO, 3CT CRISTITUTO GERVACIO, 3CT MANUEL DELA CRUZ, JR., MARINE (CDC) BN., (CIVIL DISTURBANCE CONTROL), MOBILE DISPERSAL TEAM (MDT), LT. ROMEO PAQUINTO, LT. LAONGLAANG GOCE, MAJ. DEMETRIO DE LA CRUZ, POLICE CAPTAIN RODOLFO NAVAL, JOHN DOE, RICHARD DOE, ROBERTO DOE AND OTHER DOES, petitioners, vs. HON. EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch IX, ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM, PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES AND CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO BAUTISTA, DANTE EVANGELIO, ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES, RONILO DOMUNICO) respectively; and (names of sixtytwo injured victims) EDDIE AGUINALDO, FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA, ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO LABAMBA, JR., EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA, LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS, TOMAS VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS MENDOZA, VICTORIANO QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES, RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO, ARMANDO MATIENZO, CARLO MEDINA, LITO NOVENARIO, and ROSELLA ROBALE, respondents. G.R. No. 84645 March 19, 1993 ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM, PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES AND CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in their capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY" PEREZ, DIONESIO GRAMPA,

ANGELITO GUTIERREZ, BERNABE LAKINDANUM, ROBERTO YUMUL, LEOPOLDO ALONZO, ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES, RONILO DOMUNICO) respectively; and (names of sixty-two injured victims) EDDIE AGUINALDO, FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA, ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO LABAMBA, JR. EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA, LUISITO DACO, BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA, CARLOS SIRAY, JOSE PERRAS TOMAS VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS, FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA, ELVIS MENDOZA, VICTORINO QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO, FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES, RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO, ARMANDO MATIENZO, CARLO MEDINA, LITO NOVENARIO, ROSELLA ROBALE, petitioners, vs. REPUBLIC OF THE PHILIPPINES, and HONORABLE EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch 9, respondents. The Solicitor General for the Republic of the Philippines. Structural Alternative Legal Assistance for Grassroots for petitioners in 84645 & private respondents in 84607.

CAMPOS, JR., J.: People may have already forgotten the tragedy that transpired on January 22, 1987. It is quite ironic that then, some journalists called it a Black Thursday, as a grim reminder to the nation of the misfortune that befell twelve (12) rallyists. But for most Filipinos now, the Mendiola massacre may now just as well be a chapter in our history books. For those however, who have become widows and orphans, certainly they would not settle for just that. They seek retribution for the lives taken that will never be brought back to life again. Hence, the heirs of the deceased, together with those injured (Caylao group), instituted this petition, docketed as G.R. No. 84645, under Section 1 of Rule 65 of the Rules of Court, seeking the reversal and setting aside of the Orders of respondent Judge Sandoval, 1 dated May 31 and August 8, 1988, dismissing the complaint for damages of herein petitioners against the Republic of the Philippines in Civil Case No. 88-43351. Petitioner, the Republic of the Philippines, through a similar remedy, docketed as G.R. No. 84607, seeks to set aside the Order of respondent Judge dated May 31, 1988, in Civil Case No. 88-43351 entitled "Erlinda Caylao, et al. vs. Republic of the Philippines, et al." The pertinent portion of the questioned Order 2 dated May 31, 1988, reads as follows: With respect however to the other defendants, the impleaded Military Officers, since they are being charged in their personal and official capacity, and holding them liable, if at all, would not result in financial responsibility of the government, the principle of immunity from suit can not conveniently and correspondingly be applied to them.

WHEREFORE, the case as against the defendant Republic of the Philippines is hereby dismissed. As against the rest of the defendants the motion to dismiss is denied. They are given a period of ten (10) days from receipt of this order within which to file their respective pleadings. On the other hand, the Order 3, dated August 8, 1988, denied the motions filed by both parties, for a reconsideration of the abovecited Order, respondent Judge finding no cogent reason to disturb the said order. The massacre was the culmination of eight days and seven nights of encampment by members of the militant Kilusang Magbubukid sa Pilipinas (KMP) at the then Ministry (now Department) of Agrarian Reform (MAR) at the Philippine Tobacco Administration Building along Elliptical Road in Diliman, Quezon City. The farmers and their sympathizers presented their demands for what they called "genuine agrarian reform". The KMP, led by its national president, Jaime Tadeo, presented their problems and demands, among which were: (a) giving lands for free to farmers; (b) zero retention of lands by landlords; and (c) stop amortizations of land payments. The dialogue between the farmers and the MAR officials began on January 15, 1987. The two days that followed saw a marked increase in people at the encampment. It was only on January 19, 1987 that Jaime Tadeo arrived to meet with then Minister Heherson Alvarez, only to be informed that the Minister can only meet with him the following day. On January 20, 1987, the meeting was held at the MAR conference room. Tadeo demanded that the minimum comprehensive land reform program be granted immediately. Minister Alvarez, for his part, can only promise to do his best to bring the matter to the attention of then President Aquino, during the cabinet meeting on January 21, 1987. Tension mounted the following day. The farmers, now on their seventh day of encampment, barricaded the MAR premises and prevented the employees from going inside their offices. They hoisted the KMP flag together with the Philippine flag. At around 6:30 p.m. of the same day, Minister Alvarez, in a meeting with Tadeo and his leaders, advised the latter to instead wait for the ratification of the 1987 Constitution and just allow the government to implement its comprehensive land reform program. Tadeo, however, countered by saying that he did not believe in the Constitution and that a genuine land reform cannot be realized under a landlord-controlled Congress. A heated discussion ensued between Tadeo and Minister Alvarez. This notwithstanding, Minister Alvarez suggested a negotiating panel from each side to meet again the following day. On January 22, 1987, Tadeo's group instead decided to march to Malacaang to air their demands. Before the march started, Tadeo talked to the press and TV media. He uttered fiery words, the most telling of which were: ". . . inalis namin ang barikada bilang kahilingan ng ating Presidente, pero kinakailangan alisin din niya ang barikada sa Mendiola sapagkat bubutasin din namin iyon at dadanak ang dugo . . . ." 4 The farmers then proceeded to march to Malacaang, from Quezon Memorial Circle, at 10:00 a.m. They were later joined by members of other sectoral organizations such as the Kilusang Mayo Uno (KMU), Bagong Alyansang Makabayan (BAYAN), League of Filipino Students (LFS) and Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML). At around 1:00 p.m., the marchers reached Liwasang Bonifacio where they held a brief program. It was at this point that some of the marchers entered the eastern side of the Post Office Building, and removed the steel

bars surrounding the garden. Thereafter, they joined the march to Malacaang. At about 4:30 p.m., they reached C.M. Recto Avenue. In anticipation of a civil disturbance, and acting upon reports received by the Capital Regional Command (CAPCOM) that the rallyists would proceed to Mendiola to break through the police lines and rush towards Malacaang, CAPCOM Commander General Ramon E. Montao inspected the preparations and adequacy of the government forces to quell impending attacks. OPLAN YELLOW (Revised) was put into effect. Task Force Nazareno under the command of Col. Cesar Nazareno was deployed at the vicinity of Malacaang. The civil disturbance control units of the Western Police District under Police Brigadier General Alfredo S. Lim were also activated. Intelligence reports were also received that the KMP was heavily infiltrated by CPP/NPA elements and that an insurrection was impending. The threat seemed grave as there were also reports that San Beda College and Centro Escolar University would be forcibly occupied. In its report, the Citizens' Mendiola Commission (a body specifically tasked to investigate the facts surrounding the incident, Commission for short) stated that the government anti-riot forces were assembled at Mendiola in a formation of three phalanges, in the following manner: (1) The first line was composed of policemen from police stations Nos. 3, 4, 6, 7, 8, 9 and 10 and the Chinatown detachment of the Western Police District. Police Colonel Edgar Dula Torres, Deputy Superintendent of the Western Police District, was designated as ground commander of the CDC first line of defense. The WPD CDC elements were positioned at the intersection of Mendiola and Legarda Streets after they were ordered to move forward from the top of Mendiola bridge. The WPD forces were in khaki uniform and carried the standard CDC equipment aluminum shields, truncheons and gas masks. (2) At the second line of defense about ten (10) yards behind the WPD policemen were the elements of the Integrated National Police (INP) Field Force stationed at Fort Bonifacio from the 61st and 62nd INP Field Force, who carried also the standard CDC equipment truncheons, shields and gas masks. The INP Field Force was under the command of Police Major Demetrio dela Cruz. (3) Forming the third line was the Marine Civil Disturbance Control Battalion composed of the first and second companies of the Philippine Marines stationed at Fort Bonifacio. The marines were all equipped with shields, truncheons and M-16 rifles (armalites) slung at their backs,under the command of Major Felimon B. Gasmin. The Marine CDC Battalion was positioned in line formation ten (10) yards farther behind the INP Field Force. At the back of the marines were four (4) 6 x 6 army trucks, occupying the entire width of Mendiola street, followed immediately by two water cannons, one on each side of the street and eight fire trucks, four trucks on each side of the street. The eight fire trucks from Fire District I of Manila under Fire Superintendent Mario C. Tanchanco, were to supply water to the two water cannons. Stationed farther behind the CDC forces were the two Mobile Dispersal Teams (MDT) each composed of two tear gas grenadiers, two spotters, an assistant grenadier, a driver and the team leader.

In front of the College of the Holy Spirit near Gate 4 of Malacaang stood the VOLVO Mobile Communications Van of the Commanding General of CAPCOM/INP, General Ramon E. Montao. At this command post, after General Montao had conferred with TF Nazareno Commander, Colonel Cezar Nazareno, about the adequacy and readiness of his forces, it was agreed that Police General Alfredo S. Lim would designate Police Colonel Edgar Dula Torres and Police Major Conrado Francisco as negotiators with the marchers. Police General Lim then proceeded to the WPD CDC elements already positioned at the foot of Mendiola bridge to relay to Police Colonel Torres and Police Major Francisco the instructions that the latter would negotiate with the marchers. 5(Emphasis supplied) The marchers, at around 4:30 p.m., numbered about 10,000 to 15,000. From C.M. Recto Avenue, they proceeded toward the police lines. No dialogue took place between the marchers and the anti-riot squad. It was at this moment that a clash occurred and, borrowing the words of the Commission "pandemonium broke loose". The Commission stated in its findings, to wit: . . . There was an explosion followed by throwing of pillboxes, stones and bottles. Steel bars, wooden clubs and lead pipes were used against the police. The police fought back with their shields and truncheons. The police line was breached. Suddenly shots were heard. The demonstrators disengaged from the government forces and retreated towards C.M. Recto Avenue. But sporadic firing continued from the government forces. After the firing ceased, two MDTs headed by Lt. Romeo Paquinto and Lt. Laonglaan Goce sped towards Legarda Street and lobbed tear gas at the remaining rallyist still grouped in the vicinity of Mendiola. After dispersing the crowd, the two MDTs, together with the two WPD MDTs, proceeded to Liwasang Bonifacio upon order of General Montao to disperse the rallyists assembled thereat. Assisting the MDTs were a number of policemen from the WPD, attired in civilian clothes with white head bands, who were armed with long firearms. 6 (Emphasis ours) After the clash, twelve (12) marchers were officially confirmed dead, although according to Tadeo, there were thirteen (13) dead, but he was not able to give the name and address of said victim. Thirty-nine (39) were wounded by gunshots and twelve (12) sustained minor injuries, all belonging to the group of the marchers. Of the police and military personnel, three (3) sustained gunshot wounds and twenty (20) suffered minor physical injuries such as abrasions, contusions and the like. In the aftermath of the confrontation, then President Corazon C. Aquino issued Administrative Order No. 11, 7 (A.O. 11, for brevity) dated January 22, 1987, which created the Citizens' Mendiola Commission. The body was composed of retired Supreme Court Justice Vicente Abad Santos as Chairman, retired Supreme Court Justice Jose Y. Feria and Mr. Antonio U. Miranda, both as members. A.O. 11 stated that the Commission was created precisely for the "purpose of conducting an investigation of the disorder, deaths, and casualties that took place in the vicinity of Mendiola Bridge and Mendiola Street and Claro M. Recto Avenue, Manila, in the afternoon of January 22, 1987". The Commission was expected to have submitted its findings not later than February 6, 1987. But it failed to do so. Consequently, the deadline was moved to February 16, 1987 by Administrative Order No. 13. Again, the Commission was unable to meet this deadline. Finally, on February 27, 1987, it submitted its report, in accordance with Administrative Order No. 17, issued on February 11, 1987. In its report, the Commission recapitulated its findings, to wit:

(1) The march to Mendiola of the KMP led by Jaime Tadeo, together with the other sectoral groups, was not covered by any permit as required under Batas Pambansa Blg. 880, the Public Assembly Act of 1985, in violation of paragraph (a) Section 13, punishable under paragraph (a), Section 14 of said law. (2) The crowd dispersal control units of the police and the military were armed with .38 and .45 caliber handguns, and M-16 armalites, which is a prohibited act under paragraph 4(g), Section 13, and punishable under paragraph (b), Section 14 of Batas Pambansa Blg. 880. (3) The security men assigned to protect the WPD, INP Field Force, the Marines and supporting military units, as well as the security officers of the police and military commanders were incivilian attire in violation of paragraph (a), Section 10, Batas Pambansa 880. (4) There was unnecessary firing by the police and military crowd dispersal control units in dispersing the marchers, a prohibited act under paragraph (e), Section 13, and punishable under paragraph (b), Section 14, Batas Pambansa Blg. 880. (5) The carrying and use of steel bars, pillboxes, darts, lead pipe, wooden clubs with spikes, and guns by the marchers as offensive weapons are prohibited acts punishable under paragraph (g), Section 13, and punishable under paragraph (e), Section 14 of Batas Pambansa Blg. 880. (6) The KMP farmers broke off further negotiations with the MAR officials and were determined to march to Malacaang, emboldened as they are, by the inflammatory and incendiary utterances of their leader, Jaime Tadeo "bubutasin namin ang barikada . . Dadanak and dugo . . . Ang nagugutom na magsasaka ay gagawa ng sariling butas. . . (7) There was no dialogue between the rallyists and the government forces. Upon approaching the intersections of Legarda and Mendiola, the marchers began pushing the police lines and penetrated and broke through the first line of the CDC contingent. (8) The police fought back with their truncheons and shields. They stood their ground but the CDC line was breached. There ensued gunfire from both sides. It is not clear who started the firing. (9) At the onset of the disturbance and violence, the water cannons and tear gas were not put into effective use to disperse the rioting crowd. (10) The water cannons and fire trucks were not put into operation because (a) there was no order to use them; (b) they were incorrectly prepositioned; and (c) they were out of range of the marchers. (11) Tear gas was not used at the start of the disturbance to disperse the rioters. After the crowd had dispersed and the wounded and dead were being carried away, the MDTs of the police and the military with their tear gas equipment and components conducted dispersal operations in the Mendiola area and proceeded to Liwasang Bonifacio to disperse the remnants of the marchers. (12) No barbed wire barricade was used in Mendiola but no official reason was given for its absence.8

From the results of the probe, the Commission recommended 9 the criminal prosecution of four unidentified, uniformed individuals, shown either on tape or in pictures, firing at the direction of the marchers. In connection with this, it was the Commission's recommendation that the National Bureau of Investigation (NBI) be tasked to undertake investigations regarding the identities of those who actually fired their guns that resulted in the death of or injury to the victims of the incident. The Commission also suggested that all the commissioned officers of both the Western Police District and the INP Field Force, who were armed during the incident, be prosecuted for violation of paragraph 4(g) of Section 13, Batas Pambansa Blg. 880, the Public Assembly Act of 1985. The Commission's recommendation also included the prosecution of the marchers, for carrying deadly or offensive weapons, but whose identities have yet to be established. As for Jaime Tadeo, the Commission said that he should be prosecuted both for violation of paragraph (a), Section 13, Batas Pambansa Blg. 880 for holding the rally without a permit and for violation of Article 142, as amended, of the Revised Penal Code for inciting to sedition. As for the following officers, namely: (1) Gen. Ramon E. Montao; (2) Police Gen. Alfredo S. Lim; (3) Police Gen. Edgar Dula Torres; (4) Police Maj. Demetrio dela Cruz; (5) Col. Cezar Nazareno; and (5) Maj. Felimon Gasmin, for their failure to make effective use of their skill and experience in directing the dispersal operations in Mendiola, administrative sanctions were recommended to be imposed. The last and the most significant recommendation of the Commission was for the deceased and wounded victims of the Mendiola incident to be compensated by the government. It was this portion that petitioners (Caylao group) invoke in their claim for damages from the government. Notwithstanding such recommendation, no concrete form of compensation was received by the victims. Thus, on July 27, 1987, herein petitioners, (Caylao group) filed a formal letter of demand for compensation from the Government. 10 This formal demand was indorsed by the office of the Executive Secretary to the Department of Budget and Management (DBM) on August 13, 1987. The House Committee on Human Rights, on February 10, 1988, recommended the expeditious payment of compensation to the Mendiola victims. 11 After almost a year, on January 20, 1988, petitioners (Caylao group) were constrained to institute an action for damages against the Republic of the Philippines, together with the military officers, and personnel involved in the Mendiola incident, before the trial court. The complaint was docketed as Civil Case No. 88-43351. On February 23, 1988, the Solicitor General filed a Motion to Dismiss on the ground that the State cannot be sued without its consent. Petitioners opposed said motion on March 16, 1988, maintaining that the State has waived its immunity from suit and that the dismissal of the instant action is contrary to both the Constitution and the International Law on Human Rights. Respondent Judge Sandoval, in his first questioned Order, dismissed the complaint as against the Republic of the Philippines on the ground that there was no waiver by the State. Petitioners (Caylao group) filed a Motion for Reconsideration therefrom, but the same was denied by respondent judge in his Order dated August 8, 1988. Consequently, Caylao and her co-petitioners filed the instant petition. On the other hand, the Republic of the Philippines, together with the military officers and personnel impleaded as defendants in the court below, filed its petition for certiorari. Having arisen from the same factual beginnings and raising practically identical issues, the two (2) petitions were consolidated and will therefore be jointly dealt with and resolved in this Decision. The resolution of both petitions revolves around the main issue of whether or not the State has waived its immunity from suit.

Petitioners (Caylao group) advance the argument that the State has impliedly waived its sovereign immunity from suit. It is their considered view that by the recommendation made by the Commission for the government to indemnify the heirs and victims of the Mendiola incident and by the public addresses made by then President Aquino in the aftermath of the killings, the State has consented to be sued. Under our Constitution the principle of immunity of the government from suit is expressly provided in Article XVI, Section 3. The principle is based on the very essence of sovereignty, and on the practical ground that there can be no legal right as against the authority that makes the law on which the right depends. 12 It also rests on reasons of public policy that public service would be hindered, and the public endangered, if the sovereign authority could be subjected to law suits at the instance of every citizen and consequently controlled in the uses and dispositions of the means required for the proper administration of the government. 13 This is not a suit against the State with its consent. Firstly, the recommendation made by the Commission regarding indemnification of the heirs of the deceased and the victims of the incident by the government does not in any way mean that liability automatically attaches to the State. It is important to note that A.O. 11 expressly states that the purpose of creating the Commission was to have a body that will conduct an "investigation of the disorder, deaths and casualties that took place." 14 In the exercise of its functions, A.O. 11 provides guidelines, and what is relevant to Our discussion reads: 1 Its conclusions regarding the existence of probable cause for the commission of any offense and of the persons probably guilty of the same shall be sufficient compliance with the rules on preliminary investigation and the charges arising therefrom may be filed directly with the proper court. 15 In effect, whatever may be the findings of the Commission, the same shall only serve as the cause of action in the event that any party decides to litigate his/her claim. Therefore, the Commission is merely a preliminary venue. The Commission is not the end in itself. Whatever recommendation it makes cannot in any way bind the State immediately, such recommendation not having become final and, executory. This is precisely the essence of it being a fact-finding body. Secondly, whatever acts or utterances that then President Aquino may have done or said, the same are not tantamount to the State having waived its immunity from suit. The President's act of joining the marchers, days after the incident, does not mean that there was an admission by the State of any liability. In fact to borrow the words of petitioners (Caylao group), "it was an act of solidarity by the government with the people". Moreover, petitioners rely on President Aquino's speech promising that the government would address the grievances of the rallyists. By this alone, it cannot be inferred that the State has admitted any liability, much less can it be inferred that it has consented to the suit. Although consent to be sued may be given impliedly, still it cannot be maintained that such consent was given considering the circumstances obtaining in the instant case. Thirdly, the case does not qualify as a suit against the State. Some instances when a suit against the State is proper are: 16 (1) When the Republic is sued by name;

(2) When the suit is against an unincorporated government agency; (3) When the, suit is on its face against a government officer but the case is such that ultimate liability will belong not to the officer but to the government. While the Republic in this case is sued by name, the ultimate liability does not pertain to the government. Although the military officers and personnel, then party defendants, were discharging their official functions when the incident occurred, their functions ceased to be official the moment they exceeded their authority. Based on the Commission findings, there was lack of justification by the government forces in the use of firearms. 17 Moreover, the members of the police and military crowd dispersal units committed a prohibited act under B.P. Blg. 880 18 as there was unnecessary firing by them in dispersing the marchers.19 As early as 1954, this Court has pronounced that an officer cannot shelter himself by the plea that he is a public agent acting under the color of his office when his acts are wholly without authority. 20 Until recently in 1991, 21 this doctrine still found application, this Court saying that immunity from suit cannot institutionalize irresponsibility and non-accountability nor grant a privileged status not claimed by any other official of the Republic. The military and police forces were deployed to ensure that the rally would be peaceful and orderly as well as to guarantee the safety of the very people that they are duty-bound to protect. However, the facts as found by the trial court showed that they fired at the unruly crowd to disperse the latter. While it is true that nothing is better settled than the general rule that a sovereign state and its political subdivisions cannot be sued in the courts except when it has given its consent, it cannot be invoked by both the military officers to release them from any liability, and by the heirs and victims to demand indemnification from the government. The principle of state immunity from suit does not apply, as in this case, when the relief demanded by the suit requires no affirmative official action on the part of the State nor the affirmative discharge of any obligation which belongs to the State in its political capacity, even though the officers or agents who are made defendants claim to hold or act only by virtue of a title of the state and as its agents and servants. 22 This Court has made it quite clear that even a "high position in the government does not confer a license to persecute or recklessly injure another." 23 The inescapable conclusion is that the State cannot be held civilly liable for the deaths that followed the incident. Instead, the liability should fall on the named defendants in the lower court. In line with the ruling of this court in Shauf vs. Court of Appeals, 24 herein public officials, having been found to have acted beyond the scope of their authority, may be held liable for damages. WHEREFORE, finding no reversible error and no grave abuse of discretion committed by respondent Judge in issuing the questioned orders, the instant petitions are hereby DISMISSED. SO ORDERED. Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo and Quiason, JJ., concur. Gutierrez, Jr., J., is on leave.

# Footnotes

1 Judge Edilberto G. Sandoval was the presiding judge of Branch 9 of Regional Trial Court, Manila. 2 Rollo of G.R. No. 84607, p. 65. 3 Ibid., pp. 73-76. 4 Ibid., p. 80. 5 Ibid., pp. 82-84. 6 Ibid., pp. 84-85. 7 Ibid., p. 158. 8 Ibid., pp. 102-103. 9 Ibid., pp. 107-109. 10 Rollo, G.R. No. 84645, pp. 36-38. 11 Ibid., pp. 125-126. 12 Kawananakoa vs. Polyblank, 205 U.S. 349-353, 51 L. Ed. 834 (1907). 13 The Siren vs. United States, 7 Wall. 152, 19 L. Ed. 129 (1869). 14 Supra, note 7. 15 Ibid. 16 J.G. BERNAS, CONSTITUTIONAL STRUCTURE AND POWERS OF GOVERNMENT, NOTES AND CASES 414 (1st ed., 1991). 17 Rollo of G.R. No. 84607, pp. 196-197. 18 Sec. 13. Prohibited Acts. The following shall constitute violations of this Act: xxx xxx xxx (e) The unnecessary firing of firearms by a member of any law enforcement agency or any person to disperse the public assembly; xxx xxx xxx 19 Supra, note 17 at p. 102. 20 Festejo vs. Fernando, 94 Phil. 504 (1954) citing 43 Am. Jur. 86-90. 21 Chavez vs. Sandiganbayan, 193 SCRA 282 (1991).

22 Ruiz vs. Cabahug, 102 Phil. 110 (1957). 23 Supra, note 19. 24 191 SCRA 713 (1990).