[Syllabus]

FIRST DIVISION

[G.R. No. 113191. September 18, 1996]

DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER
NIEVES V. DE CASTRO and JOSE C. MAGNAYI, respondents.

DECISION

VITUG, J.:

The questions raised in the petition for certiorari are a few coincidental matters relative to the diplomatic immunity extended to the Asian
Development Bank ("ADB").

On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for his alleged illegal dismissal by ADB and the
latter's violation of the "labor-only" contracting law. Two summonses were served, one sent directly to the ADB and the other through
the Department of Foreign Affairs ("DFA"), both with a copy of the complaint. Forthwith, the ADB and the DFA notified respondent
Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal process except for
borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian
Development Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank And The Government
Of The Philippines Regarding The Bank's Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit. In
time, the Labor Arbiter rendered his decision, dated 31 August 1993, that concluded:

"WHEREFORE, above premises considered, judgment is hereby rendered declaring the complainant as a regular employee of
respondent ADB, and the termination of his services as illegal. Accordingly, respondent Bank is hereby ordered:

"1. To immediately reinstate the complainant to his former position effective September 16, 1993;

"2. To pay complainant full backwages from December 1, 1992 to September 15, 1993 in the amount of P42,750.00 (P4,500.00 x 9
months);

"3. And to pay complainants other benefits and without loss of seniority rights and other privileges and benefits due a regular employee
of Asian Development Bank from the time he was terminated on December 31, 1992;

"4. To pay 10% attorney's fees of the total entitlements."[1]

The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred the matter to the National Labor Relations
Commission ("NLRC"); in its referral, the DFA sought a "formal vacation of the void judgment." Replying to the letter, the NLRC
Chairman, wrote:

"The undersigned submits that the request for the 'investigation' of Labor Arbiter Nieves de Castro, by the National Labor Relations
Commission, has been erroneously premised on Art. 218(c) of the Labor Code, as cited in the letter of Secretary Padilla, considering
that the provision deals with 'a question, matter or controversy within its (the Commission) jurisdiction' obviously referring to a labor
dispute within the ambit of Art. 217 (on jurisdiction of Labor Arbiters and the Commission over labor cases).

"The procedure, in the adjudication of labor cases, including raising of defenses, is prescribed by law. The defense of immunity could
have been raised before the Labor Arbiter by a special appearance which, naturally, may not be considered as a waiver of the very
defense being raised. Any decision thereafter is subject to legal remedies, including appeals to the appropriate division of the
Commission and/or a petition for certiorari with the Supreme Court, under Rule 65 of the Rules of Court. Except where an appeal is
seasonably and properly made, neither the Commission nor the undersigned may review, or even question, the propriety of any
decision by a Labor Arbiter. Incidentally, the Commission sits en banc (all fifteen Commissioners) only to promulgate rules of procedure
or to formulate policies (Art. 213, Labor Code).

"On the other hand, while the undersigned exercises 'administrative supervision over the Commission and its regional branches and all
its personnel, including the Executive Labor Arbiters and Labor Arbiters' (penultimate paragraph, Art. 213, Labor Code), he does not
have the competence to investigate or review any decision of a Labor Arbiter. However, on the purely administrative aspect of the
decision-making process, he may cause that an investigation be made of any misconduct, malfeasance or misfeasance, upon
complaint properly made.

"If the Department of Foreign Affairs feels that the action of Labor Arbiter Nieves de Castro constitutes misconduct, malfeasance or
misfeasance, it is suggested that an appropriate complaint be lodged with the Office of the Ombudsman.

"Thank you for your kind attention."[2]

Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's resolution of 31 January 1994, respondents were required
to comment. Petitioner was later constrained to make an application for a restraining order and/or writ of preliminary injunction following
the issuance, on 16 March 1994, by the Labor Arbiter of a writ of execution. In a resolution, dated 07 April 1994, the Court issued the
temporary restraining order prayed for.
The Office of the Solicitor General (OSG), in its comment of 26 May 1994, initially assailed the claim of immunity by the ADB.
Subsequently, however, it submitted a Manifestation (dated 20 June 1994) stating, among other things, that "after a thorough review of
the case and the records," it became convinced that ADB, indeed, was correct in invoking its immunity from suit under the Charter and
the Headquarters Agreement.

The Court is of the same view.

Article 50(1) of the Charter provides:

The Bank shall enjoy immunity from every form of legal process, except in cases arising out of or in connection with the exercise of its
powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities.[3]

Under Article 55 thereof -

All Governors, Directors, alternates, officers and employees of the Bank, including experts performing missions for the Bank:

(1) shall be immune from legal process with respect of acts performed by them in their official capacity, except when the Bank waives
the immunity.[4]

Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:

"The Bank shall enjoy immunity from every form of legal process, except in cases arising out of, or in connection with, the exercise of its
powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities. [5]

And, with respect to certain officials of the bank, Section 44 of the agreement states:

Governors, other representatives of Members, Directors, the President, Vice-President and executive officers as may be agreed upon
between the Government and the Bank shall enjoy, during their stay in the Republic of the Philippines in connection with their official
duties with the Bank:

xxxxxxxxx

(b) Immunity from legal process of every kind in respect of words spoken or written and all acts done by them in their official capacity.[6]

The above stipulations of both the Charter and Headquarters Agreement should be able, nay well enough, to establish that, except in
the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities, the ADB
enjoys immunity from legal process of every form. The Banks officers, on their part, enjoy immunity in respect of all acts performed by
them in their official capacity. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty
covenants and commitments voluntarily assumed by the Philippine government which must be respected.

In World Health Organization vs. Aquino,[7] we have declared:

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a
political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the
plea of diplomatic immunity is recognized and affirmed by the executive branch of the government x x x it is then the duty of the courts
to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government, x x x or other officer acting
under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction x x x as to embarrass
the executive arm of the government in conducting foreign relations, it is accepted doctrine that `in such cases the judicial department
of government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction.'"[8]

To the same effect is the decision in International Catholic Migration Commission vs. Calleja,[9] which has similarly deemed the
Memoranda of the Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by the Executive Branch of
Government that ICMC x x x enjoy(s) immunities accorded to international organizations" and which determination must be held
"conclusive upon the Courts in order not to embarrass a political department of Government. In the instant case, the filing of the petition
by the DFA, in behalf of ADB, is itself an affirmance of the government's own recognition of ADB's immunity.

Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law. [10] In
Southeast Asian Fisheries Development Center vs. Acosta, [11] the Court has cited with approval the opinion [12] of the then Minister of
Justice; thus -

"One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs
and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that
the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host
government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such
subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its
member-states."[13]

Contrary to private respondent's assertion, the claim of immunity is not here being raised for the first time; it has been invoked before
the forum of origin through communications sent by petitioner and the ADB to the Labor Arbiter, as well as before the NLRC following
the rendition of the questioned judgment by the Labor Arbiter, but evidently to no avail.

In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has advised the NLRC:
"Respectfully returned to the Honorable Domingo B. Mabazza, Labor Arbitration Associate, National Labor Relations Commission,
National Capital Judicial Region, Arbitration Branch, Associated bank Bldg., T.M. Kalaw St., Ermita, Manila, the attached Notice of
Hearing addressed to the Asian Development Bank, in connection with the aforestated case, for the reason stated in the Department's
1st Indorsement dated 23 March 1993, copy attached, which is self-explanatory.

"In view of the fact that the Asian Development Bank (ADB) invokes its immunity which is sustained by the Department of Foreign
Affairs, a continuous hearing of this case erodes the credibility of the Philippine government before the international community, let
alone the negative implication of such a suit on the official relationship of the Philippine government with the ADB.

"For the Secretary of Foreign Affairs

(Sgd.)

"SIME D. HIDALGO

Assistant Secretary"[14]

The Office of the President, likewise, has issued on 18 May 1993 a letter to the Secretary of Labor, viz:

"Dear Secretary Confesor,

"I am writing to draw your attention to a case filed by a certain Jose C. Magnayi against the Asian Development Bank and its President,
Kimimasa Tarumizu, before the National Labor Relations Commission, National Capital Region Arbitration Board (NLRC NCR Case No.
00-01690-93).

"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de Castro, addressed a Notice of Resolution/Order to the Bank
which brought it to the attention of the Department of Foreign Affairs on the ground that the service of such notice was in violation of the
RP-ADB Headquarters Agreement which provided, inter-alia, for the immunity of the Bank, its President and officers from every form of
legal process, except only, in cases of borrowings, guarantees or the sale of securities.

"The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V. de Castro of this fact by letter dated March 22, copied to
you.

"Despite this, the labor arbiter in question persisted to send summons, the latest dated May 4, herewith attached, regarding the
Magnayi case.

"The Supreme Court has long settled the matter of diplomatic immunities. In WHO vs. Aquino, SCRA 48, it ruled that courts should
respect diplomatic immunities of foreign officials recognized by the Philippine government. Such decision by the Supreme Court forms
part of the law of the land.

"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that ignorance of the law is a ground for dismissal.

"Very truly yours,

(Sgd.)

JOSE B. ALEJANDRINO

Chairman, PCC-ADB"[15]

Private respondent argues that, by entering into service contracts with different private companies, ADB has descended to the level of
an ordinary party to a commercial transaction giving rise to a waiver of its immunity from suit. In the case of Holy See vs. Hon. Rosario,
Jr.,[16] the Court has held:

There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or
absolute theory, a sovereign cannot, without its consent, be made a respondent in the Courts of another sovereign. According to the
newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but
not with regard to private act or acts jure gestionis.

xxxxxxxxx

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be
the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If
the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain
or profit.[17]

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

With regard to the issue of whether or not the DFA has the legal standing to file the present petition, and , we hold both in the
affirmative.

The DFA's function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities,
a determination which, when challenged, entitles it to seek relief from the court so as not to seriously impair the conduct of the country's
foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of
the Philippine government before the international community. When international agreements are concluded, the parties thereto are
deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task
falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the
international arena.[18] In Holy See vs. Hon. Rosario, Jr.,[19] this Court has explained the matter in good detail; viz:

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

"In the United States, the procedure followed is the process of 'suggestion,' where the foreign state or the international organization
sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the
Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a
'suggestion' that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a
certification to that effect instead of submitting a 'suggestion' (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of
Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).

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

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

"In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private
counsels (Raquiza vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of
America vs. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the
courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved." [20]

Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special circumstances, so allowed and
entertained such a petition when (a) the questioned order or decision is issued in excess of or without jurisdiction,[21] or (b) where the
order or decision is a patent nullity,[22] which, verily, are the circumstances that can be said to obtain in the present case. When an
adjudicator is devoid of jurisdiction on a matter before him, his action that assumes otherwise would be a clear nullity.

WHEREFORE, the petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August 1993 is VACATED for
being NULL AND VOID. The temporary restraining order issued by this Court on 07 April 1994 is hereby made permanent. No costs.

SO ORDERED.

Bellosillo, Kapunan, and Hermosisima, Jr., JJ., concur.

Padilla, (Chairman), J., no part.

[1] Rollo, pp. 34-35.

[2] Rollo, pp. 36-37.
[3] Rollo, p. 170.
[4] Rollo, p. 171.
[5] Rollo, p. 45.
[6] Rollo, pp. 51-52.
[7] 48 SCRA 242.
[8] At pp. 248-249.
[9] 190 SCRA 130.
 Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 98084 October 18, 1993

NEMESIO C. VIDAD, EXUPERIO BANTOTO, CRISTITO TEVES and LLOYD SIEGFRIED SIA, petitioners,

vs.

REGIONAL TRIAL COURT OF NEGROS ORIENTAL, BRANCH 42, SOLICITOR GENERAL'S OFFICE, MARCELO M. MONTES,
GENEROSO CAPUYAN and TEOFILO GOMEZ, respondents.

G.R. No. 98922 October 18, 1993

DR. TEOFILO E. GOMEZ, MARCELO BACALSO, NIEVA MONTES and GENEROSO CAPUYAN, petitioners,

vs.

HON. JESUS TABILON, Presiding Judge of Branch 42, RTC-Dumaguete; NEMESIO VIDAD, EXUPERIO BANTOTO, CRISTETA
TEVES, and LLOYD SIEGFRIED SIA, respondents.

G.R. Nos. 100300-03 October 18, 1993

DR. TEOFILO E. GOMEZ, MARCELO BACALSO, NIEVA MONTES and GENEROSO CAPUYAN, petitioners.

vs.

HON. JESUS TABILON, Presiding Judge of Branch 42, RTC - Dumaguete City, MARILYN S. NOBLE, ASTERIA R. ABLIR, ANITA R.
EUMAGUE, LOVELLA E. UY, ELLUMINADA C. TAWING, REYNALDO CALLORA, JOSEFINA E. VILLAREAL, CECILIA P.
ARBOLADO, ET AL., respondents.

Francisco D. Yap for petitioners.

VITUG, J.:

A group of public school teachers in Negros Oriental held, starting 19 September 1990 and lasting until 21 September 1990, a must
action, or a strike from their school classes, to demand the release of their salaries by the Department of Budget. The teachers also
assailed alleged corruption in the Department of Education, Culture and Sports (DECS). 1

A return-to-work order was promptly issued by DECS Regional Director Teofilo Gomez with a warning that if the "striking" school
teachers were not to resume their classes within twenty-four hours, administrative charges will be filed. 2 The order not having been
heeded, administrative complaints against the teachers concerned were thereupon filed. The teachers were each given five days from
receipt of said complaints within which to submit their respective answers and supporting documents. Constituted to look into the cases
was an investigation panel composed of three DECS lawyers, namely, Marcelo Baclaso, Nieva Montes and Generoso Capuyan. 3

On 13 November 1990, a group of school teachers, who were administratively charged, filed with the Regional Trial Court of
Dumaguete a complaint for injunction, prohibition and damages, with a prayer for preliminary injunction, against the aforenamed DECS
officials. A temporary restraining order, prohibiting the defendants from continuing with the administrative investigation, was forthwith
granted by the court. 4

The defendants filed their answer, later followed by a motion to dismiss. The school teachers, on their part, moved to strike out the
appearance of the Office of the Solicitor General and to accordingly declare the defendants in default. Both motions of the plaintiffs and
the defendants were denied by the court in its Order of 10 April 1991, viz:

In the light of the foregoing, plaintiffs' motion to declare defendants in default, dated January 7, 1991 and defendants' motion to dismiss
dated January 23, 1991, are all denied for lack of merit.

SO ORDERED. 5

From this denial, both parties filed with this Court their respective petitions for Certiorari, Prohibition and Mandamus under Rule 65 of
the Rules of Court. The teachers' petition, that likewise impleaded as respondent, along with the DECS officials, the Office of the
Solicitor General, was docketed as G.R. No. 98084 and that of the DECS officials as G.R. No. 98922. These cases were consolidated
in this Court's resolution of 28 May 1991. 6

Four other cases, raising like issues, were later also filed with the court below by other public school teachers concerned. The DECS
officials, again represented by the Solicitor General, filed motions to dismiss, which the court similarly denied. A joint petition for
certiorari, prohibition and mandamus was thence filed with this Court, docketed as G.R. No. 100300-03. This Court later resolved the
petition to be likewise consolidated with G.R. No. 98084 and G.R. No. 98922 in its Resolution of 04 July 1991. 7

The issues raised in these consolidated cases are —

(1) Whether or not the Office of the Solicitor General may properly represent the defendants in the Regional Trial Court cases ; 8
nd

(2) Whether or not the Regional Trial Court should have dismissed outright the said cases. 9

It should be conceded that the various complaints against the DECS officials have prescinded from the administrative actions taken,
and contemplated to be yet taken, against public school teachers, the plaintiffs in the cases pending with the court a quo. The said
complaints charge the defendants, all government officials, with having illegally withheld their salaries, having wrongfully filed
administrative charges against the plaintiffs, having unjustifiably refused to inform the latter of the nature and accuse of accusation
upon which the charges were initiated, having inexcusably violated elemental due process, and having erroneously applied the law. The
school teachers pray for actual and moral damages, plus attorney's fees, as well as for an order restraining the defendants from further
proceeding with the administrative investigations.

The contention of the school teachers that the DECS officials are being sued solely in their private capacity certainly is not borne out by
their above allegations and prayers. The root of the cases filed below deals, in fact, on the performance of official functions by the
DECS officials. Whether the actions they have taken were proper or improper, or whether they have acted in good faith or bad faith,
cannot, pending a full hearing that would aptly afford all parties an opportunity to ventilate their respective contentions, be yet
determined. Until then, we must presume that official duties have been regularly

performed. 10

Presidential Decree 478, in part, provides:

1) The Office of the Solicitor General shall represent the Government of the Philippines, its agencies and instrumentalities and its
officials and agents in any litigation, proceeding, investigation or matter requiring the services of a lawyer. When authorized by the
President of head of office concerned, it shall also represent government-owned or controlled corporations. The Office of the Solicitor
General shall constitute the law office of the Government, and as such, shall discharge duties requiring the services of a lawyer. It shall
have the following specific powers and functions:

a) Represent the government in the Supreme Court and the Court of Appeals in all criminal proceedings represent the
Government and its officers in the Supreme Court, the Court of Appeals, and all other courts or tribunals in all civil actions and special
proceedings in which the Government or any officer thereof in his official capacity is a party (stress supplied).

xxx xxx xxx

The above provisions are basically reiterated in the Administrative Code of 1987. 11

We accordingly hold that the Solicitor General did not act improperly in deciding to represent the DECS officials in the above cases.

The defendants' motion to dismiss the complaints have likewise been precipitately sought, and we see no reversible error in the denial
thereof by the lower court. The various complaints filed by the public school teachers allege bad faith on the part of the DECS officials.
It cannot be pretended this early that the same could be impossible of proof. On the assumption that the plaintiffs are able to establish
their allegations of bad faith, a judgment for damages can be warranted. Public officials are certainly not immune from damages in their
personal capacities arising from the acts done in bad faith; in these and similar cases, the public officials may not be said to have acted
within the scope of their official authority, and no longer are they protected by the mantle of immunity for official actions. 12

It was, nonetheless, inopportune for the lower court to issue the restraining orders. The authority of the DECS Regional Director to
issue the return to work memorandum, to initiate the administrative charges and to constitute the investigating panel can hardly be
disputed. 13

We see the court cases and the administrative matters to be closely interrelated, if not, indeed, interlinked. While no prejudicial question
strictly arises where one is a civil case and the other is an administrative proceeding, in the interest of good order, it behooves the court
to suspend its action on the cases before it pending the final outcome of the administrative proceedings. The doctrine of primary
jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially
lodged with an administrative body of special competence. We see, in these petitions before us, no cogent reason to deviate from the
rule.

WHEREFORE —

(1) The Petition in G.R. No. 98084 is DISMISSED;

(2) In G.R. No. 98922 (a) the Order of 10 April 1991, appealed from is AFFIRMED; (b) the writ of preliminary injunction issued by
the lower court is DISSOLVED; and (c) the lower court is DIRECTED to suspend further hearings in its Civil Case No. 9789, until after a
final determination on the administrative proceedings would have been made;

(3) In G.R. No. 100300 — No. 100303, inclusive, (a) the Joint Order of 28 May 1991, denying the motions to dismiss Civil Case
No. 9877, No. 9879, No. 9882 and No. 9883 is AFFIRMED; (b) the writ of preliminary injunction issued by the lower court in said civil
cases is DISSOLVED; and (c) the lower court is DIRECTED to suspend further hearings in the above numbered civil cases, until after a
final determination would have been made on the administrative proceedings.

No costs.

SO ORDERED.
Narvasa, C.J., Cruz, Feliciano, Bidin, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo, Quiason and Puno, JJ., concur.

Padilla and Griño-Aquino, JJ., are on leave.

# Footnotes

1 G.R. No. 98084, Rollo 3, 81.

2 G.R. No. 98084, Annex "1" Comment, 82.

3 Ibid., Memorandum for Petitioners in G.R. No. 98084 and Respondents in G.R. No. 98912 and 100300-03, 146.

4 G.R. No. 98084, Annex "3", Comment, 96.

5 Ibid., Annex "k", Petition, 54-60.

6 G.R. No. 98922, Rollo, 48.

7 G.R. Nos. 100300-03, Rollo, 133.

8 G.R. No. 98084.

9 G.R. No. 98922 and G.R. No. 100300-03.

10 Section 5 (m), Rule 131, Rules of Court.

11 Section 35 (i), Chapter 12, Title III, Book IV, Executive Order No. 292, as amended by Republic Act. No. 6733.

12 Rama v. Court of Appeals, G.R. No. L-44484, 14 March 1987; Correa v. GFI;

L-46096, 30 July 1979.

13 See Section 38, Presidential Decree No. 807.

 Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 110187 September 4, 1996

JOSE G. EBRO III, petitioner,

vs.

NATIONAL LABOR RELATIONS COMMISSION, INTERNATIONAL CATHOLIC MIGRATION COMMISSION, JON DARRAH, ALEX
DY-REYES, CARRIE WILSON, and MARIVIC SOLIVEN, respondents.

MENDOZA, J.:

This is a petition for certiorari to set aside the order dated October 13, 1992 and the resolution dated March 3, 1993 of the National
Labor Relations Commission (NLRC). 1

The antecedent facts are as follows:

Private respondent International Catholic Migration Commission (ICMC) is a non-profit agency engaged in international humanitarian
and voluntary work. It is duly registered with the United National Economic and Social Council (ECOSOC) and enjoys Consultative
Status, Category II. It was one of the agencies accredited by the Philippine Government to operate the refugee processing center at
Sabang, Morong, Bataan.

On June 24, 1985, private respondent ICMC employed petitioner Jose G. Ebro III to teach "English as a Second Language and Cultural
Orientation Training Program" at the refugee processing center. The employment contract provided in pertinent part:

Salary: Your monthly salary for the first 6 months probationary period is P3,155.00 inclusive of cost of living allowance. Upon being
made regular after successful completion of the six (6) months probationary period your monthly salary will be adjusted to P3,445.00
inclusive of cost of living allowance

xxx xxx xxx

Termination of Employment: Employment may be terminated by ICMC in any of the following situations:

a A cessation or reduction in program operations, by Department of State order,

b. Unsuccessful completion of probationary period, at any time during that period,

c For due cause, in cases of violation of provisions detailed in ICMC Personnel Policies and administrative regulations,

d. For just and authorized causes expressly provided for or authorized by law,

e. For reasons of inadequate or deficient professional performance based on relevant guidelines and procedures relating to the
position,

f. In cases where, as a member of the PRPC community, ICMC is directed to take action.

If either party wishes to terminate employment, a notice of two (2) weeks should be given in writing to the party.

After six months, ICMC notified petitioner that effective December 21, 1985, the latter's services were terminated for his failure to meet
the requirements of "1. classroom performance . . . up to the standards set in the Guide for Instruction; 2. regular attendance in the
mandated teacher training, and in the schedule team meetings, one-on-one conferences with the supervisor, etc.; and 3. compliance
with ICMC and PRPC policies and procedures."

On February 4, 1986, petitioner filed a complaint for illegal dismissal, unfair labor practice, underpayment of wages, accrued leave pay,
14th month pay, damages, attorney's fees., and expenses of litigation. The complaint was filed against private respondents ICMC and
its Project Director Jon Darrah, Personnel Officer Alex Dy-Reyes, Program Officer of the Cultural Orientation Program Carrie Wilson,
and Supervisor of the Cultural Orientation Program Marivic Soliven. Petitioner alleged that there was no objective evaluation of his
performance to warrant his dismissal and that he should have been considered a regular employee from the start because ICMC failed
to acquaint him with the standards under which he must qualify as such. He prayed for reinstatement with backwages; P3,155.00 for
probationary and P3,445.00 for regular salary adjustments; value of lodging or dormitory privileges; cost of insurance coverage for
group life, medical, death, dismemberment and disability benefits; moral, and exemplary, and nominal damages plus interest on the
above claims with attorney's fees.
Answering the complaint, ICMC claimed that petitioner failed to quality for regular employment because he showed no interest in
improving his professional performance both in and out of the classroom after he had been periodically evaluated (observation
summary from August 20 to October 2, 1985 and evaluation summary of December 14, 1985); that petitioner was paid his salary up to
December 31, 1985, two weeks pay in lieu of notice, and 14th month pay pro-rata; and that his accrued leave balance already been
converted to cash.

After the parties had formally offered their evidence, private respondents submitted their memorandum on July 31, 1989 in which,
among other things, they invoked ICMC's diplomatic immunity on the basis of the Memorandum of Agreement signed on July 15, 1988
between the Philippines government and ICMC.

The Labor Arbiter held that petitioner's legal immunity under the Memorandum could not be given retroactive effect since "[that would]
deprive complainant's property right without due process and impair the obligation of contract of employment." In addition, he
expressed doubt about petitioner's legal immunity on the ground that it was provided for by agreement and not through an act of
Congress. Accordingly, the Labor Arbiter ordered ICMC to reinstate petitioner as regular teacher without loss of seniority rights and to
pay him one year backwages, other benefits, and ten percent attorney's fees for a total sum of P70,944.85.

Both parties appealed to the NLRC. On August 13, 1990, petitioner moved to dismiss private respondent's appeal because of the
latter's failure to post a cash/surety bond. In its order of October 13, 1992, however, the NLRC ordered the case dismissed on the
ground that, under the Memorandum of Agreement between the Philippine government and ICMC, the latter was immune from suit.

Petitioner moved for reconsideration, arguing among other things, that the Memorandum of Agreement could not be given retroactive
effect and that in any case ICMC had waived its immunity by consenting to be sued.
2
However, petitioner's motion was denied by the NLRC in its resolution dated March 4, 1993. Hence this petitioner presenting the
following issues:

a) Whether private respondents have perfected their appeal and whether public respondent may, on appeal, entertain or review
private respondents' claim of immunity;

b) Whether a mere Memorandum of Agreement entered into by the Secretary of Foreign Affairs with respondent International
Catholic Migration Commission, which is not a law, can divest the Labor Arbiter and the National Labor Relations Commission of their
jurisdiction over the subject matter and over the persons of respondents in the pending case;

c) Whether the Memorandum of Agreement may be given retroactive effect;

d) Whether the dismissal of the based on the claim of immunity will deprive petitioner of his property without due process of law;

e) Whether the dismissal of the case based on the claim of immunity will result in the impairment of the obligations assumed by
respondent International Catholic Migration Commission under its contract of employment with petitioner;

f) Assuming for the sake of argument that the Memorandum of Agreement has validly conferred immunity on private
respondent's whether they may be considered as having waived such immunity;

g) Upon the same consideration, whether private respondents may be considered estopped from claiming immunity.

The basic issue in this case is whether the Memorandum of Agreement executed on July 15, 1988 ICMC immunity from suit. The Court
holds it did. Consequently, both the Labor Arbiter and the NLRC had no jurisdiction over the case.

First. Petitioner's contention that the Memorandum of Agreement is not an act of Congress which is needed to "repeal or supersede"
the provision of the Labor Code on the jurisdiction of the NLRC and of the Labor Arbiter is untenable. The grant of immunity to ICMC is
in virtue of the Convention on the Privileges and Immunities of Specialized Agencies of the United Nations, adopted by the UN General
Assembly on November 21, 1947, and concurred in by the Philippine Senate on May 17, 1949. This Convention has the force and
effect of law, considering that under the Constitution, the Philippines adopts the generally accepted principles of international law as
part of the law of the land. 3 The Memorandum of Agreement in question merely carries out the Philippine government's obligation
under the Convention. In International Catholic Migration Commission v. Calleja, 4 this Court explained the grant of immunity to ICMC in
this wise:

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

Second. Petitioner argues that in any case ICMC's immunity can not apply because this case was filed below before the signing of the
Memorandum on July 15, 1988. Petitioner cites in support the statement of this Court in the aforesaid case of International Catholic
Migration Commission v. Calleja, 5 distinguishing that case from an earlier case 6 also involving ICMC, wherein the NLRC, as well as
the Court, took cognizance of a complaint against ICMC for payment of salary for the unexpired portion of a six-month probationary.
The Court held: 7

[N]ot only did the facts of said controversy [ICMC v. NLRC, 169 SCRA 606 (1989)] occur between 1983-1985, or before the grant to
ICMC on 15 July 1988 of the status of a specialized agency with corresponding immunities, but also because ICMC in that case did not
invoke its immunity and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly
recognized as enjoying such immunity.
Here, according to petitioner, his employment and subsequent dismissal by ICMC took place in 1985, prior to the execution of the
Memorandum of Agreement on July 15, 1988 and, therefore, like in the 1989 ICMC case, the Memorandum should not be made to
apply to him.

This Court did not really reject ICMC's invocation of immunity for causes of action accruing prior to the execution of the Memorandum. It
left open the possibility that ICMC may have been tacitly enjoying diplomatic immunity beforehand. It is important to note that in the
1989 case ICMC did not invoke its immunity notwithstanding the fact that the Memorandum took effect while the case was pending
before the Court. 8

Moreover, in the 1990 ICMC case, ICMC's immunity was in fact upheld despite the fact that at the case arose, the Memorandum
recognizing ICMC's status as a specialized agency had not yet been signed. In that case, the petition for certification election among its
rank and file employees was filed on July 14, 1986 and the order directing a certification election was made when ICMC's request for
recognition as a specialized agency was still pending in the Department of Foreign Affairs. Yet this Court held that the subsequent
execution of the Memorandum was a bar to the granting of the petition for certification election.

The scope of immunity of the ICMC contained in the Convention on the Privileges and Immunities of the Specialized Agencies of the
United Nations is instructive. Art. III, §4 of the Convention provides for immunity from "every form of legal process." Thus, even if private
respondents had been served summons and subpoenas prior to the execution of the Memorandum, they, as officers of ICMC, can
claim immunity under the same in order to prevent enforcement of an adverse judgment, since a writ of execution is "a legal process"
within the meaning of Article III, §4. 9

Third. Another question is whether ICMC can invoke its immunity because it only did so in its memorandum before the Labor Arbiter. It
is contended that ICMC waived its immunity in any event. Art III §4 of the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations requires, however, that the waiver of the privilege must be express. There was no such
waiver of immunity in this case. Nor can ICMC be estopped from claiming diplomatic immunity since estoppel does not operate to
confer jurisdiction to a tribunal that has none over a cause of action. 10

Fourth. Finally, neither can it be said that recognition of ICMC's immunity from suit deprives petitioner of due process. As pointed out in
International Catholic Commission v. Calleja, 11 petitioner is not exactly without remedy for whatever violation of rights it may have
suffered for the following reason:

Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations provides that "each
specialized agency shall make provision for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of
private character to which the specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement
between ICMC and the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw
the privileges and immunities accorded. Thus:

Article IV. Cooperation with Government Authorities. —1. The Commission shall cooperate at all times with the appropriate
authorities of the Government to ensure the observance of Philippine laws, rules and regulations, facilitate the proper administration of
justice and prevent the occurrences of any abuse of the privileges and immunities granted is officials and alien employees in Article III
of this Agreement of the Commission.

2. In the event that the Government determines that there has been an abuse of the privileges and immunities granted under this
Agreement, consultations shall be held between the Government and the Commission to determine whether any such abuse has
occurred and, if so, the Government shall withdraw the privileges and immunities granted the Commission and its officials.

WHEREFORE, the petitioner is DISMISSED for lack of merit.

SO ORDERED.

Regalado, Romero, Puno and Torres, Jr., JJ., concur.

Footnotes

1 Per Presiding Commissioner Edna Bonto-Perez and concurred in by Commissioners Domingo H. Zapanta Rogelio I. Rayala.

2 Rollo, p. 105.

3 CONST., Art. II, §2.

4 190 SCRA 130, 143 (1990).

5 Id. at 145-146.

6 International Catholic Migration Commission v. NLRC, 169 SCRA 606 (1989).

7 Supra note 5.

8 Perhaps ICMC did not see the need to invoke the same since, as things turned out, the case was resolved in ICMC's favor.

9 A judicial process is defined as a writ, warrant, subpoena, or other formal writing issued by authority by authority of law; also
the means of accomplishing an end, including judicial proceedings, or all writs, warrants, summonses, and orders of courts of courts of
justice or judicial officers. It is likewise held to include a writ, summons, or order issued in a judicial proceeding to acquire jurisdiction of
a person or his property, to expedite the cause or enforce the judgement, or a writ, warrant, mandate, or other process issuing from a
court of justice. Malaloan v. Court of Appeals, 232 SCRA 249, 257 (1994). (Emphasis added)

10 Southeast Asian Fisheries Development Center-Aquaculture Department v. National Labor Relations Commission, 206 SCRA
283 (1992).

11 190 SCRA 130, 144 (1990).

 Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 70853 March 12, 1987

REPUBLIC OF THE PHILIPPINES, petitioner-appellee,

vs.

PABLO FELICIANO and INTERMEDIATE APPELLATE COURT, respondents-appellants.

YAP, J.:

Petitioner seeks the review of the decision of the Intermediate Appellate Court dated April 30, 1985 reversing the order of the Court of
First Instance of Camarines Sur, Branch VI, dated August 21, 1980, which dismissed the complaint of respondent Pablo Feliciano for
recovery of ownership and possession of a parcel of land on the ground of non-suability of the State.

The background of the present controversy may be briefly summarized as follows:

On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First Instance of Camarines Sur against the
Republic of the Philippines, represented by the Land Authority, for the recovery of ownership and possession of a parcel of land,
consisting of four (4) lots with an aggregate area of 1,364.4177 hectares, situated in the Barrio of Salvacion, Municipality of Tinambac,
Camarines Sur. Plaintiff alleged that he bought the property in question from Victor Gardiola by virtue of a Contract of Sale dated May
31, 1952, followed by a Deed of Absolute Sale on October 30, 1954; that Gardiola had acquired the property by purchase from the heirs
of Francisco Abrazado whose title to the said property was evidenced by an informacion posesoria that upon plaintiff's purchase of the
property, he took actual possession of the same, introduced various improvements therein and caused it to be surveyed in July 1952,
which survey was approved by the Director of Lands on October 24, 1954; that on November 1, 1954, President Ramon Magsaysay
issued Proclamation No. 90 reserving for settlement purposes, under the administration of the National Resettlement and Rehabilitation
Administration (NARRA), a tract of land situated in the Municipalities of Tinambac and Siruma, Camarines Sur, after which the NARRA
and its successor agency, the Land Authority, started sub-dividing and distributing the land to the settlers; that the property in question,
while located within the reservation established under Proclamation No. 90, was the private property of plaintiff and should therefore be
excluded therefrom. Plaintiff prayed that he be declared the rightful and true owner of the property in question consisting of 1,364.4177
hectares; that his title of ownership based on informacion posesoria of his predecessor-in-interest be declared legal valid and subsisting
and that defendant be ordered to cancel and nullify all awards to the settlers.

The defendant, represented by the Land Authority, filed an answer, raising by way of affirmative defenses lack of sufficient cause of
action and prescription.

On August 29, 1970, the trial court, through Judge Rafael S. Sison, rendered a decision declaring Lot No. 1, with an area of 701.9064
hectares, to be the private property of the plaintiff, "being covered by a possessory information title in the name of his predecessor-in-
interest" and declaring said lot excluded from the NARRA settlement reservation. The court declared the rest of the property claimed by
plaintiff, i.e. Lots 2, 3 and 4, reverted to the public domain.

A motion to intervene and to set aside the decision of August 29, 1970 was filed by eighty-six (86) settlers, together with the barrio
council of Pag-asay, alleging among other things that intervenors had been in possession of the land in question for more than twenty
(20) years under claim of ownership.

On January 25, 1971, the court a quo reconsidered its decision, reopened the case and directed the intervenors to file their
corresponding pleadings and present their evidence; all evidence already presented were to remain but plaintiff, as well as the Republic
of the Philippines, could present additional evidence if they so desire. The plaintiff presented additional evidence on July 30, 1971, and
the case was set for hearing for the reception of intervenors' evidence on August 30 and August 31, 1971.

On August 30, 1971, the date set for the presentation of the evidence for intervenors, the latter did not appear but submitted a motion
for postponement and resetting of the hearing on the next day, August 31, 1971. The trial court denied the motion for postponement
and allowed plaintiff to offer his evidence "en ausencia," after which the case would be deemed submitted for decision. On the following
day, August 31, 1971, Judge Sison rendered a decision reiterating his decision of August 29, 1970.

A motion for reconsideration was immediately filed by the intervenors. But before this motion was acted upon, plaintiff filed a motion for
execution, dated November 18, 1971. On December 10, 1971, the lower court, this time through Judge Miguel Navarro, issued an order
denying the motion for execution and setting aside the order denying intervenors' motion for postponement. The case was reopened to
allow intervenors to present their evidence. Unable to secure a reconsideration of Judge Navarro's order, the plaintiff went to the
Intermediate Appellate Court on a petition for certiorari. Said petition was, however, denied by the Intermediate Appellate Court, and
petitioners brought the matter to this Court in G.R. No. 36163, which was denied on May 3, 1973 Consequently, the case was
remanded to the court a quo for further proceedings.
On August 31, 1970, intervenors filed a motion to dismiss, principally on the ground that the Republic of the Philippines cannot be sued
without its consent and hence the action cannot prosper. The motion was opposed by the plaintiff.

On August 21, 1980, the trial court, through Judge Esteban Lising, issued the questioned order dismissing the case for lack of
jurisdiction. Respondent moved for reconsideration, while the Solicitor General, on behalf of the Republic of the Philippines filed its
opposition thereto, maintaining that the dismissal was proper on the ground of non-suability of the State and also on the ground that the
existence and/or authenticity of the purported possessory information title of the respondents' predecessor-in-interest had not been
demonstrated and that at any rate, the same is not evidence of title, or if it is, its efficacy has been lost by prescription and laches.

Upon denial of the motion for reconsideration, plaintiff again went to the Intermediate Appellate Court on petition for certiorari. On April
30, 1985, the respondent appellate court rendered its decision reversing the order of Judge Lising and remanding the case to the court
a quo for further proceedings. Hence this petition.

We find the petition meritorious. The doctrine of non-suability of the State has proper application in this case. The plaintiff has
impleaded the Republic of the Philippines as defendant in an action for recovery of ownership and possession of a parcel of land,
bringing the State to court just like any private person who is claimed to be usurping a piece of property. A suit for the recovery of
property is not an action in rem, but an action in personam. 1 It is an action directed against a specific party or parties, and any
judgment therein binds only such party or parties. The complaint filed by plaintiff, the private respondent herein, is directed against the
Republic of the Philippines, represented by the Land Authority, a governmental agency created by Republic Act No. 3844.

By its caption and its allegation and prayer, the complaint is clearly a suit against the State, which under settled jurisprudence is not
permitted, except upon a showing that the State has consented to be sued, either expressly or by implication through the use of
statutory language too plain to be misinterpreted. 2 There is no such showing in the instant case. Worse, the complaint itself fails to
allege the existence of such consent. This is a fatal defect, 3 and on this basis alone, the complaint should have been dismissed.

The failure of the petitioner to assert the defense of immunity from suit when the case was tried before the court a quo, as alleged by
private respondent, is not fatal. It is now settled that such defense "may be invoked by the courts sua sponte at any stage of the
proceedings." 4

Private respondent contends that the consent of petitioner may be read from the Proclamation itself, when it established the reservation
" subject to private rights, if any there be. " We do not agree. No such consent can be drawn from the language of the Proclamation.
The exclusion of existing private rights from the reservation established by Proclamation No. 90 can not be construed as a waiver of the
immunity of the State from suit. Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly. but must be construed
in strictissimi juris. 5Moreover, the Proclamation is not a legislative act. The consent of the State to be sued must emanate from
statutory authority. Waiver of State immunity can only be made by an act of the legislative body.

Neither is there merit in respondent's submission, which the respondent appellate court sustained, on the basis of our decision in the
Begosa case, 6 that the present action is not a suit against the State within the rule of State immunity from suit, because plaintiff does
not seek to divest the Government of any of its lands or its funds. It is contended that the complaint involves land not owned by the
State, but private land belonging to the plaintiff, hence the Government is not being divested of any of its properties. There is some
sophistry involved in this argument, since the character of the land sought to be recovered still remains to be established, and the
plaintiff's action is directed against the State precisely to compel the latter to litigate the ownership and possession of the property. In
other words, the plaintiff is out to establish that he is the owner of the land in question based, incidentally, on an informacion posesoria
of dubious value, and he seeks to establish his claim of ownership by suing the Republic of the Philippines in an action in personam.

The inscription in the property registry of an informacion posesoria under the Spanish Mortgage Law was a means provided by the law
then in force in the Philippines prior to the transfer of sovereignty from Spain to the United States of America, to record a claimant's
actual possession of a piece of land, established through an ex parte proceeding conducted in accordance with prescribed rules. 7 Such
inscription merely furnishes, at best, prima facieevidence of the fact that at the time the proceeding was held, the claimant was in
possession of the land under a claim of right as set forth in his application. 8 The possessory information could ripen into a record of
ownership after the lapse of 20 years (later reduced to 10 years), upon the fulfillment of the requisites prescribed in Article 393 of the
Spanish Mortgage Law.

There is no showing in the case at bar that the informacion posesoria held by the respondent had been converted into a record of
ownership. Such possessory information, therefore, remained at best mere prima facie evidence of possession. Using this possessory
information, the respondent could have applied for judicial confirmation of imperfect title under the Public Land Act, which is an action in
rem. However, having failed to do so, it is rather late for him to pursue this avenue at this time. Respondent must also contend, as the
records disclose, with the fact admitted by him and stated in the decision of the Court a quo that settlers have been occupying and
cultivating the land in question since even before the outbreak of the war, which puts in grave doubt his own claim of possession.

Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion posesoria registered in the Office of the Register
of Deed of Camarines Sur on September 23, 1952 was a "reconstituted" possessory information; it was "reconstituted from the
duplicate presented to this office (Register of Deeds) by Dr. Pablo Feliciano," without the submission of proof that the alleged duplicate
was authentic or that the original thereof was lost. Reconstitution can be validly made only in case of loss of the original. 10 These
circumstances raise grave doubts as to the authenticity and validity of the "informacion posesoria" relied upon by respondent Feliciano.
Adding to the dubiousness of said document is the fact that "possessory information calls for an area of only 100 hectares," 11 whereas
the land claimed by respondent Feliciano comprises 1,364.4177 hectares, later reduced to 701-9064 hectares. Courts should be wary
in accepting "possessory information documents, as well as other purportedly old Spanish titles, as proof of alleged ownership of lands.

WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed decision of the Intermediate Appellate Court,
dated April 30, 1985, and affirming the order of the court a quo, dated August 21, 1980, dismissing the complaint filed by respondent
Pablo Feliciano against the Republic of the Philippines. No costs.
SO ORDERED.

Narvasa, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.

Melencio-Herrera, J., is on leave.

Footnotes

1 Ang Lam v. Rosenosa 86 Phil. 447.

2 Providence Washington Insurance Co. v. Republic of the Philippines, 29 SCRA 598, 601.

3 Insurance Company of North America v. Republic of the Philippines, 20 SCRA 627.

4 Insurance Company of North America v. Osaka Shosen Kaisha 27 SCRA 780.

5 Mobil Philippines Exploration, nn. v. Customs Arrastre Service, 18 SCRA 1120; Insurance Company of North America v.
Warner, 21 SCRA 766.

6 Begosa v. Philippine Veterans Administration 32 SCRA 466.

7 Alfonso v. Commanding General 7 Phil. 600, 615.

8 Bishop of Segovia v. Mun. of Bantay, 28 Phil. 347, 351.

9 Querol and Flores v. Querol, 48 Phil. 90, 98-99.

10 Republic of the Philippines vs. Court of Appeals, 94 SCRA 865.

11 Government of the Philippines v. Heirs of Abella, 49 Phil. 374, 379.

 FIRST DIVISION

[G.R. No. 91359. September 25, 1992.]

VETERANS MANPOWER AND PROTECTIVE SERVICES, INC., Petitioner, v. THE COURT OF APPEALS, THE CHIEF OF
PHILIPPINE CONSTABULARY and PHILIPPINE CONSTABULARY SUPERVISORY UNIT FOR SECURITY AND INVESTIGATION
AGENCIES (PC-SUSIA), Respondents.

Franciso A. Lava, Jr. and Andresito X. Fornier for Petitioner.

SYLLABUS

1. POLITICAL LAW; IMMUNITY FROM SUIT; THE PHILIPPINE CONSTABULARY CHIEF AND THE PC-SUSIA MAY NOT BE
SUED WITHOUT THE CONSENT OF THE STATE. — The State may not be sued without its consent (Article XVI, Section 3, of the
1987 Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being instrumentalities of the national government
exercising a primarily governmental function of regulating the organization and operation of private detective, watchmen, or security
guard agencies, said official (the PC Chief) and agency (PC-SUSIA) may not be sued without the Government’s consent, especially in
this case because VMPSI’s complaint seeks not only to compel the public respondents to act in a certain way, but worse, because
VMPSI seeks actual and compensatory damages in the sum of P1,000,000.00, exemplary damages in the same amount, and
P200,000.00 as attorney’s fees from said public respondents. Even if its action prospers, the payment of its monetary claims may not
be enforced because the State did not consent to appropriate the necessary funds for that purpose.

2. ID.; ID.; PUBLIC OFFICIAL MAY BE SUED IN HIS PERSONAL CAPACITY IF HE ACTS, AMONG OTHERS BEYOND THE
SCOPE OF HIS AUTHORITY; CASE AT BAR. — A public official may sometimes be held liable in his personal or private capacity if he
acts in bad faith, or beyond the scope of his authority or jurisdiction (Shauf v. Court of Appeals, supra), however, since the acts for
which the PC Chief and PC-SUSIA are being called to account in this case, were performed by them as part of their official duties,
without malice, gross negligence, or bad faith, no recovery may be had against them in their private capacities.

3. ID.; ID.; CONSENT TO BE SUED MUST EMANATE FROM A LEGISLATIVE ACT. — Waiver of the State’s immunity from suit,
being a derogation of sovereignty, will not be lightly inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority, hence, from a legislative act, not from a mere
memorandum. Without such consent, the trial court did not acquire jurisdiction over the public respondents.

4. ID.; ID.; REASONS BEHIND. — The state immunity doctrine rests upon reasons of public policy and the inconvenience and
danger which would flow from a different rule. "It is obvious that public service would be hindered, and public safety endangered, if the
supreme authority could be subjected to suits at the instance of every citizen, and, consequently, controlled in the use and disposition
of the means required for the proper administration of the government" (Siren v. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA
477).

DECISION

GRIÑO-AQUINO, J.:

This is a petition for review on certiorari of the decision dated August 11, 1989, of the Court of Appeals in CA-G.R. SP No. 15990,
entitled "The Chief of Philippine Constabulary (PC) and Philippine Constabulary Supervisor Unit for Security and Investigation Agencies
(PC-SUSIA) v. Hon. Omar U. Amin and Veterans Manpower and Protective Services, Inc. (VMPSI)," lifting the writ of preliminary
injunction which the Regional Trial Court had issued to the PC-SUSIA enjoining them from committing acts that would result in the
cancellation or non-renewal of the license of VMPSI to operate as a security agency.chanrobles virtual lawlibrary

On March 28, 1988, VMPSI filed a complaint in the Regional Trial Court at Makati, Metro Manila, praying the court
to:jgc:chanrobles.com.ph

"A. Forthwith issue a temporary restraining order to preserve the status quo, enjoining the defendants, or any one acting in their
place or stead, to refrain from committing acts that would result in the cancellation or non-renewal of VMPSI’s license;

"B. In due time, issue a writ of preliminary injunction to the same effect;

"C. Render decision and judgment declaring null and void the amendment of Section 4 of R.A. No. 5487, by PD No. 11 exempting
organizations like PADPAO from the prohibition that no person shall organize or have an interest in more than one agency, declaring
PADPAO as an illegal organization existing in violation of said prohibition, without the illegal exemption provided in PD No. 11;
declaring null and void Section 17 of R.A. No. 5487 which provides for the issuance of rules and regulations in consultation with
PADPAO, declaring null and void the February 1, 1982 directive of Col. Sabas V. Edadas, in the name of the then PC Chief, requiring
all private security agencies/security forces such as VMPSI to join PADPAO as a prerequisite to secure/renew their licenses, declaring
that VMPSI did not engage in ‘cut-throat competition’ in its contract with MWSS, ordering defendants PC Chief and PC-SUSIA to renew
the license of VMPSI; ordering the defendants to refrain from further harassing VMPSI and from threatening VMPSI with cancellations
or non-renewal of license, without legal and justifiable cause; ordering the defendants to pay to VMPSI the sum of P1,000,000.00 as
actual and compensatory damages, P1,000,000.00 as exemplary damages, and P200,000.00 as attorney’s fees and expenses of
litigation; and granting such further or other reliefs to VMPSI as may be deemed lawful, equitable and just." (pp. 55-56, Rollo.)

The constitutionality of the following provisions of R.A. 5487 (otherwise known as the "Private Security Agency Law"), as amended, is
questioned by VMPSI in its complaint:chanrobles.com.ph : virtual law library

"SECTION 4. Who may Organize a Security or Watchman Agency. — Any Filipino citizen or a corporation, partnership, or
association, with a minimum capital of five thousand pesos, one hundred per cent of which is owned and controlled by Filipino citizens
may organize a security or watchman agency: Provided, That no person shall organize or have an interest in, more than one such
agency except those which are already existing at the promulgation of this Decree: . . ." (As amended by P.D. Nos. 11 and 100.)

"SECTION 17. Rules and Regulations by Chief, Philippine Constabulary. — The Chief of the Philippine Constabulary, in consultation
with the Philippine Association of Detective and Protective Agency Operators, Inc. and subject to the provision of existing laws, is
hereby authorized to issue the rules and regulations necessary to carry out the purpose of this Act."cralaw virtua1aw library

VMPSI alleges that the above provisions of R.A. No. 5487 violate the provisions of the 1987 Constitution against monopolies, unfair
competition and combinations in restraint of trade, and tend to favor and institutionalize the Philippine Association of Detective and
Protective Agency Operators, Inc. (PADPAO) which is monopolistic because it has an interest in more than one security agency.

Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph (g) of the Modifying Regulations on the Issuance of
License to Operate and Private Security Licenses and Specifying Regulations for the Operation of PADPAO issued by then PC Chief
Lt. Gen. Fidel V. Ramos, through Col. Sabas V. Edades, requiring that "all private security agencies/company security forces must
register as members of any PADPAO Chapter organized within the Region where their main offices are located . . ." (pp. 5-6, Complaint
in Civil Case No. 88-471). As such membership requirement in PADPAO is compulsory in nature, it allegedly violates legal and
constitutional provisions against monopolies, unfair competition and combinations in restraint of trade.chanrobles.com : virtual law
library

On May 12, 1986, a Memorandum of Agreement was executed by PADPAO and the PC Chief, which fixed the minimum monthly
contract rate per guard for eight (8) hours of security service per day at P2,255.00 within Metro Manila and P2,215.00 outside of Metro
Manila (Annex B, Petition).
On June 29, 1987, Odin Security Agency (Odin) filed a complaint with PADPAO accusing VMPSI of cut-throat competition by
undercutting its contract rate for security services rendered to the Metropolitan Waterworks and Sewerage System (MWSS), charging
said customer lower than the standard minimum rates provided in the Memorandum of Agreement dated May 12, 1986.

PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO Committee on Discipline recommended the expulsion of
VMPSI from PADPAO and the cancellation of its license to operate a security agency (Annex D, Petition).

The PC-SUSIA made similar findings and likewise recommended the cancellation of VMPSI’s license (Annex E, Petition).

As a result, PADPAO refused to issue a clearance/certificate of membership to VMPSI when it requested one.

VMPSI wrote the PC Chief on March 10, 1988, requesting him to set aside or disregard the findings of PADPAO and consider VMPSI’s
application for renewal of its license, even without a certificate of membership from PADPAO (Annex F, Petition).

As the PC Chief did not reply, and VMPSI’s license was expiring on March 31, 1988, VMPSI filed Civil Case No. 88-471 in the RTC-
Makati, Branch 135, on March 28, 1988 against the PC Chief and PC-SUSIA. On the same date, the court issued a restraining order
enjoining the PC Chief and PC-SUSIA "from committing acts that would result in the cancellation or non-renewal of VMPSI’s license"
(Annex G, Petition).

The PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the Issuance of Writ of Preliminary Injunction, and Motion to
Quash the Temporary Restraining Order," on the grounds that the case is against the State which had not given consent thereto and
that VMPSI’s license already expired on March 31, 1988, hence, the restraining order or preliminary injunction would not serve any
purpose because there was no more license to be cancelled (Annex H, Petition). Respondent VMPSI opposed the motion.

On April 18, 1988, the lower court denied VMPSI’s application for a writ of preliminary injunction for being premature because it "has up
to May 31, 1988 within which to file its application for renewal pursuant to Section 2 (e) of Presidential Decree No. 199, . . ." (p. 140,
Rollo.).chanrobles.com : virtual law library

On May 23, 1988, VMPSI reiterated its application for the issuance of a writ of preliminary injunction because PC-SUSIA had rejected
payment of the penalty for its failure to submit its application for renewal of its license and the requirements therefor within the
prescribed period in Section 2(e) of the Revised Rules and Regulations Implementing R.A. 5487, as amended by P.D. 1919 (Annex M,
Petition).

On June 10, 1998, the RTC-Makati issued a writ of preliminary injunction upon a bond of P100,000.00, restraining the defendants, or
any one acting in their behalf, from cancelling or denying renewal of VMPSI’s license, until further orders from the court.

The PC Chief and PC-SUSIA filed a Motion for Reconsideration of the above order, but it was denied by the court in its Order of August
10, 1988 (Annex R, Petition).

On November 3, 1988, the PC Chief and PC-SUSIA sought relief by a petition for certiorari in the Court of Appeals.

On August 11, 1989, the Court of Appeals granted the petition. The dispositive portion of its decision reads:jgc:chanrobles.com.ph

"WHEREFORE, the petition for certiorari filed by petitioners PC Chief and PC-SUSIA is hereby GRANTED, and the RTC-Makati,
Branch 135, is ordered to dismiss the complaint filed by respondent VMPSI in Civil Case No. 88-471, insofar as petitioners PC Chief
and PC-SUSIA are concerned, for lack of jurisdiction. The writ of preliminary injunction issued on June 10, 1988, is dissolved." (pp. 295-
296, Rollo.)
VMPSI came to us with this petition for review.

The primary issue in this case is whether or not VMPSI’s complaint against the PC Chief and PC-SUSIA is a suit against the State
without its consent.

The answer is yes.

The State may not be sued without its consent (Article XVI, Section 3, of the 1987 Constitution). Invoking this rule, the PC Chief and
PC-SUSIA contend that, being instrumentalities of the national government exercising a primarily governmental function of regulating
the organization and operation of private detective, watchmen, or security guard agencies, said official (the PC Chief) and agency (PC-
SUSIA) may not be sued without the Government’s consent, especially in this case because VMPSI’s complaint seeks not only to
compel the public respondents to act in a certain way, but worse, because VMPSI seeks actual and compensatory damages in the sum
of P1,000,000.00, exemplary damages in the same amount, and P200,000.00 as attorney’s fees from said public respondents. Even if
its action prospers, the payment of its monetary claims may not be enforced because the State did not consent to appropriate the
necessary funds for that purpose.chanroblesvirtualawlibrary

Thus did we hold in Shauf v. Court of Appeals, 191 SCRA 713:jgc:chanrobles.com.ph

"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." (Emphasis supplied.)

A public official may sometimes be held liable in his personal or private capacity if he acts in bad faith, or beyond the scope of his
authority or jurisdiction (Shauf v. Court of Appeals, supra), however, since the acts for which the PC Chief and PC-SUSIA are being
called to account in this case, were performed by them as part of their official duties, without malice, gross negligence, or bad faith, no
recovery may be had against them in their private capacities.

We agree with the observation of the Court of Appeals that the Memorandum of Agreement dated May 12, 1986 does not constitute an
implied consent by the State to be sued:jgc:chanrobles.com.ph

"The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief in relation to the exercise of a function
sovereign in nature. The correct test for the application of state immunity is not the conclusion of a contract by the State but the legal
nature of the act. This was clearly enunciated in the case of United States of America v. Ruiz where the Hon. Supreme Court
held:jgc:chanrobles.com.ph

"‘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 a business contract. It does not
apply where the contract relates to the exercise of its functions.’ (136 SCRA 487, 492.)

"In the instant case, the Memorandum of Agreement entered into by the PC Chief and PADPAO was intended to professionalize the
industry and to standardize the salaries of security guards as well as the current rates of security services, clearly, a governmental
function. The execution of the said agreement is incidental to the purpose of R.A. 5487, as amended, which is to regulate the
organization and operation of private detective, watchmen or security guard agencies. (Emphasis ours.)" (pp. 258-259, Rollo.)

Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be lightly inferred, but must be construed strictissimi
juris (Republic v. Feliciano, 148 SCRA 424). The consent of the State to be sued must emanate from statutory authority, hence, from a
legislative act, not from a mere memorandum. Without such consent, the trial court did not acquire jurisdiction over the public
respondents.
The state immunity doctrine rests upon reasons of public policy and the inconvenience and danger which would flow from a different
rule. "It is obvious that public service would be hindered, and public safety endangered, if the supreme authority could be subjected to
suits at the instance of every citizen, and, consequently, controlled in the use and disposition of the means required for the proper
administration of the government" (Siren v. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA 477). In the same vein, this Court in
Republic v. Purisima (78 SCRA 470, 473) rationalized:jgc:chanrobles.com.ph

"Nonetheless, a continued adherence to the doctrine of nonsuability is not to be deplored for as against the inconvenience that may be
cause [by] 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 obstacles, could very well be imagined."
(citing Providence Washington Insurance Co. v. Republic, 29 SCRA 598.)cralawnad

WHEREFORE, the petition for review is DENIED and the judgment appealed from is AFFIRMED in toto. No costs.

SO ORDERED.

Medialdea and Bellosillo, JJ., concur.