ARTICLE 16

Section 3. The State may not be sued without its consent.

SANDERS V. VERIDIANO

Petitioner Dale Sanders was the special services of the US Naval Station (NAVSTA) in Olongapo city. Private respondents
Anthony Rossi and Ralph Wyers are American citizens permanently residing in the Philippines and who were employed as
game room attendants in the special services department of NAVSTA. On October 3, 1975, the respondents were advised
that their employment had been converted from permanent full-time to permanent part-time. In a letter addressed to
petitioner Moreau, Sanders disagreed with the hearing officer’s report of the reinstatement of private respondents to
permanent full-time status plus backwages. Respondents allege that the letters contained libelous imputations which caused
them to be ridiculed and thus filed for damages against petitioners.

ISSUE:

1) Were the petitioners acting officially or only in their private capacities when they did the acts for which the private
respondents sued them for damages?
2) Does the court have jurisdiction over the case?

HELD:

It is abundantly clear in the present case that the acts for which the petitioner are being called to account were performed
by them in the discharge of their official duties. Given the official character of the letters, the petitioners were, legally
speaking, being sued as officers of the United States government. As such, the complaint cannot prosper unless the
government sought to be held ultimately liable has given its consent to be sued. The private respondents must pursue their
claim against the petitioners in accordance with the laws of the United States of which they are all citizens and under whose
jurisdiction the alleged offenses were committed for the Philippine courts have no jurisdiction over the case.

USA V. GUINTO

The cases have been consolidated because they all involve the doctrine of state immunity. In GR No. 76607, private
respondents regarding suing several officers of the US Air Force in connection with the bidding for barbering services in
Clark Air Base. In GR No. 80018, Luis Bautista was arrested following a buy-bust operation for a violation of the Dangerous
Drugs Act. Bautista then filed a complaint for damages claiming that because of the acts of the respondents, he lost his job.
In GR No. 79470, Fabian Genove filed a complaint for damages against petitioner for his dismissal as cook in the US Air
Force. In GR No. 80258, complaint for damage was filed by the respondents against petitioners for injuries allegedly
sustained by plaintiffs. All cases invoke the doctrine of state immunity as a ground to dismiss the same.

ISSUE:

Are the petitioners immune from suit?

HELD:

It is clear that the petitioners in GR No. 80018 were acting in the exercise of their official functions. They cannot be directly
impleaded for the US government has not given its consent to be sued. In GR No. 79470, petitioners are not immune
because restaurants are commercial enterprises, however, the claim of damages by Genove cannot be allowed on the
strength of the evidence presented. Barber shops are also commercial enterprises operated by private persons, thus,
petitioners in GR No. 76607 cannot plead any immunity from the complaint filed. In GR No. 80258, the respondent court will
have to receive the evidence of the alleged irregularity in the grant of the barbershop concessions before it can be known in
what capacity the petitioners were acting at the time of the incident.

DAYRIT et al. v. PHIL. PHARMAWEALTH, INC. 518 SCRA 240 (2007)

Defense of state immunity does not apply where the public official is charged in his official capacity for acts that are
unauthorized or unlawful and injurious to the rights of others neither does it apply where the public official is clearly being
sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed
while he occupied a public position. Secretary of Health Alberto G. Romualdez, Jr. issued an Administrative Order providing
for additional guidelines for accreditation of drug suppliers aimed at ensuring that only qualified bidders can transact
business with petitioner Department of Health (DOH). Respondent Phil. Pharmawealth, Inc. (Pharmawealth) submitted to

1
DOH a request for the inclusion of additional items in its list of accredited drug products, including the antibiotic ―Penicillin
G Benzathine. Petitioner DOH issued an Invitation for Bids for the procurement of 1.2 million units vials of Penicillin G
Benzathine. Despite the lack of response from DOH regarding Pharmawealth‘s request for inclusion of additional items in its
list of accredited products, the latter submitted its bid for the Penicillin G Benzathine contract and gave the lowest bid
thereof. . In view, however, of the non- accreditation of respondent‘s Penicillin G Benzathine product, the contract was
awarded to Cathay/YSS Laboratories‘ (YSS). Respondent Pharmawealth filed a complaint for injunction, mandamus and
damages with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order with the
Regional Trial praying, inter alia, that the trial court ―nullify the award of the Penicillin G Benzathine contract to YSS
Laboratories, Inc. and direct petitioners DOH et al. to declare Pharmawealth as the lowest complying responsible bidder for
the Benzathine contract, and that they accordingly award the same to plaintiff company‖ and ―adjudge defendants
Romualdez, Galon and Lopez liable, jointly and severally to plaintiff. Petitioners DOH et al. subsequently filed a motion to
dismiss praying for the dismissal of the complaint based on the doctrine of state immunity. The trial court, however, denied
the motion to dismiss. The Court of Appeals (CA) denied DOH‘s petition for review which affirmed the order issued Regional
Trial Court of Pasig City denying petitioners‘ motion to dismiss the case.

ISSUE:

Whether or not the charge against the public officers acting in their official capacity will prosper.

HELD:

The suability of a government official depends on whether the official concerned was acting within his official or
jurisdictional capacity, and whether the acts done in the performance of official functions will result in a charge or financial
liability against the government. In its complaint, DOH sufficiently imputes grave abuse of discretion against petitioners in
their official capacity. Since judicial review of acts alleged to have been tainted with grave abuse of discretion is guaranteed
by the Constitution, it necessarily follows that it is the official concerned who should be impleaded as defendant or
respondent in an appropriate suit. As regards petitioner DOH, the defense of immunity from suit will not avail despite its
being an unincorporated agency of the government, for the only causes of action directed against it are preliminary
injunction and mandamus. Under Section 1, Rule 58 of the Rules of Court, preliminary injunction may be directed against a
party or a court, agency or a person. Moreover, the defense of state immunity from suit does not apply in causes of action
which do not seek to impose a charge or financial liability against the State.

Hence, the rule does not apply where the public official is charged in his official capacity for acts that are unauthorized or
unlawful and injurious to the rights of others. Neither does it apply where the public official is clearly being sued not in his
official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a
public position. In the present case, suing individual petitioners in their personal capacities for damages in connection with
their alleged act of ―illegally abusing their official positions to make sure that plaintiff Pharmawealth would not be awarded
the Benzathine contract [which act was] done in bad faith and with full knowledge of the limits and breadth of their powers
given by law is permissible, in consonance with the foregoing principles. For an officer who exceeds the power conferred on
him by law cannot hide behind the plea of sovereign immunity and must bear the liability personally.

PROFESSIONAL VIDEO INC. VS. TESDA

FACTS:

In 1999, TESDA, an instrumentality of the government established under R.A. No. 7796 (the TESDA Act of 1994) and
attached to the DOLE to develop and establish a national system of skills standardization, testing, and certification in the
country.

To fulfill this mandate, it sought to issue security-printed certification and/or identification polyvinyl (PVC) cards to trainees
who have passed the certification process.

Professional Video Inc. (PROVI) signed and executed the “Contract Agreement Project PVC ID Card issuance” for the
provision of goods and services in the printing and encoding of the PVC cards. PROVI was to provide TESDA with the system
and equipment compliant with the specifications defined in the proposal. In return, TESDA would pay PROVI a specified sum
of money after TESDA’s acceptance of the contracted goods and services. PPOVI alleged that TESDA has still an outstanding
balance and still remains unpaid.

TESDA claims that it entered the Contract Agreement and Addendum in the performance of its governmental function to
develop and establish a national system of skills standardization, testing, and certification; in the performance of this
governmental function, TESDA is immune from suit.

ISSUE:

2
Can TESDA be sued without its consent?

RULING:

TESDA, as an agency of the State, cannot be sued without its consent. The rule that a state may not be sued without its
consent is embodied in Section 3, Article XVI of the 1987 Constitution and has been an established principle that antedates
this Constitution. It is as well a universally recognized principle of international law that exempts a state and its organs from
the jurisdiction of another state.

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. 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 lawsuits 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.

The proscribed suit that the state immunity principle covers takes on various forms, namely: a suit against the Republic by
name; a suit against an unincorporated government agency; a suit against a government agency covered by a charter with
respect to the agencies performance of governmental functions; and a suit that on its face is against a government officer,
but where the ultimate liability will fall on the government. In the present case, the writ of attachment was issued against a
government agency covered by its own charter.

As discussed above, TESDA performs governmental functions, and the issuance of certifications is a task within its function
of developing and establishing a system of skills standardization, testing, and certification in the country. From the
perspective of this function, the core reason for the existence of state immunity applies i.e., the public policy reason that the
performance of governmental function cannot be hindered or delayed by suits, nor can these suits control the use and
disposition of the means for the performance of governmental functions.

ATCI OVERSEAS CORPORATION V. JOSEFA ECHIN

FACTS:

Josefina Echin was hired by petitioner ATCI Overseas Corporation in behalf of its principal-co-petitioner, the Ministry of
Public Health of Kuwait, for the position of medical technologist under a two-year contract, denominated as a MOA.

Under the MOA, all newly hired employees undergo a probationary period of one year. Respondent was deployed on
February 17, 2000 but was terminated from employment on February 11, 2001, she not having allegedly passed the
probationary period. Respondent filed with the NLRC a complaint for illegal dismissal against ATCI as the local recruitment
agency, represented by Amalia Ikdal, and the Ministry, as the foreign principal. The Labor Arbiter held that respondent was
illegally dismissed and accordingly ordered petitioners to pay her US$3,600.00, representing her salary for the three months
unexpired portion of her contract.

The NLRC affirmed the Labor Arbiter’s decision. Petitioners appealed to the CA, contending that their principal, the Ministry,
being a foreign government agency, is immune from suit and, as such, the immunity extended to them; and that
respondent was validly dismissed for her failure to meet the performance rating within the one-year period as required
under Kuwaits Civil Service Laws. The CA affirmed the NLRC Resolution

ISSUE:

Whether or not petitioner is liable for the illegal dismissal of respondent.

RULING:

Petitioner ATCI, as a private recruitment agency, cannot evade responsibility for the money claims of OFWs which it deploys
abroad by the mere expediency of claiming that its foreign principal is a government agency clothed with immunity from
suit, or that such foreign principals liability must first be established before it, as agent, can be held jointly and solidarily
liable.

The imposition of joint and solidary liability is in line with the policy of the state to protect and alleviate the plight of the
working class. Verily, to allow petitioners to simply invoke the immunity from suit of its foreign principal or to wait for the
judicial determination of the foreign principals liability before petitioner can be held liable renders the law on joint and
solidary liability inutile.

As to petitioners contentions that Philippine labor laws on probationary employment are not applicable since it was expressly
provided in respondents employment contract, which she voluntarily entered into, that the terms of her engagement shall

3
be governed by prevailing Kuwaiti Civil Service Laws and Regulations as in fact POEA Rules accord respect to such rules,
customs and practices of the host country, the same was not substantiated.

It is hornbook principle, however, that the party invoking the application of a foreign law has the burden of proving the law,
under the doctrine of processual presumption which, in this case, petitioners failed to discharge. The Philippines does not
take judicial notice of foreign laws, hence, they must not only be alleged; they must be proven. To prove a foreign law, the
party invoking it must present a copy thereof and comply with the Rules of Court. These documents submitted by
petitioners do not sufficiently prove that respondent was validly terminated as a probationary employee under Kuwaiti civil
service laws.

Respecting Ikdal’s joint and solidary liability as a corporate officer, the same is in order too following the express provision
of R.A. 8042: The liability of the principal/employer and the recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be
a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided
by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be,
shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages.

PCGG and MAGTANGGOL C. GUNIGUNDO, CHAIRMAN vs. SANDIGANBAYAN and OFFICECO HOLDING

Facts:

On 7 April 1986, in connection with criminal proceedings initiated in the Philippines to locate, sequester and seek restitution
of alleged ill-gotten wealth amassed by the Marcoses and other accused from the Philippine Government,1 the Office of the
Solicitor General (OSG) wrote the Federal Office for Police Matters in Berne, Switzerland, requesting assistance for the latter
office to: (a) ascertain and provide the OSG with information as to where and in which cantons the ill-gotten fortune of the
Marcoses and other accused are located, the names of the depositors and the banks and the amounts involved; and (b) take
necessary precautionary measures, such as sequestration, to freeze the assets in order to preserve their existing value and
prevent any further transfer thereof (herein referred to as the IMAC request).2

On 29 May 1986, the Office of the District Attorney in Zurich, pursuant to the OSG’s request, issued an Order directing the
Swiss Banks in Zurich to freeze the accounts of the accused in PCGG I.S. No. 1 and in the "List of Companies and
Foundations."3 In compliance with said Order, Bankers Trust A.G. (BTAG) of Zurich froze the accounts of Officeco Holdings,
N.V. (Officeco).

Officeco appealed the Order of the District Attorney to the Attorney General of the Canton of Zurich. The Attorney General
affirmed the Order of the District Attorney.5 Officeco further appealed to the Swiss Federal Court which likewise dismissed
the appeal on 31 May 1989.

Petitioners claim that Civil Case No. 0164 in effect seeks a judicial review of the legality or illegality of the acts of the Swiss
government since the Sandiganbayan would inevitably examine and review the freeze orders of Swiss officials in resolving
the case. This would be in violation of the "act of state" doctrine which states that courts of one country will not sit in
judgment on the acts of the government of another in due deference to the independence of sovereignty of every sovereign
state.

Act of State Doctrine

The classic American statement of the act of state doctrine, which appears to have taken root in England as early as
1674,36 and began to emerge in American jurisprudence in the late eighteenth and early nineteenth centuries, is found in
Underhill v. Hernandez,37 where Chief Justice Fuller said for a unanimous Court:

Every sovereign state is bound to respect the independence of every other state, and the courts of one country will not sit in
judgment on the acts of the government of another, done within its territory. Redress of grievances by reason of such acts
must be obtained through the means open to be availed of by sovereign powers as between themselves.38

The act of state doctrine is one of the methods by which States prevent their national courts from deciding disputes which
relate to the internal affairs of another State, the other two being immunity and non-justiciability.39 It is an avoidance
technique that is directly related to a State’s obligation to respect the independence and equality of other States by not
requiring them to submit to adjudication in a national court or to settlement of their disputes without their consent.40 It
requires the forum court to exercise restraint in the adjudication of disputes relating to legislative or other governmental
acts which a foreign State has performed within its territorial limits.

It is petitioners’ contention that the Sandiganbayan "could not grant or deny the prayers in [Officeco’s] complaint without
first examining and scrutinizing the freeze order of the Swiss officials in the light of the evidence, which however is in the

4
possession of said officials" and that it would therefore "sit in judgment on the acts of the government of another
country."42 We disagree.

The parameters of the use of the act of state doctrine were clarified in Banco Nacional de Cuba v. Sabbatino.43 There, the
U.S. Supreme Court held that international law does not require the application of this doctrine nor does it forbid the
application of the rule even if it is claimed that the act of state in question violated international law. Moreover, due to the
doctrine’s peculiar nation-to-nation character, in practice the usual method for an individual to seek relief is to exhaust local
remedies and then repair to the executive authorities of his own state to persuade them to champion his claim in diplomacy
or before an international tribunal.

Even assuming that international law requires the application of the act of state doctrine, it bears stressing that the
Sandiganbayan will not examine and review the freeze orders of the concerned Swiss officials in Civil Case No. 0164. The
Sandiganbayan will not require the Swiss officials to submit to its adjudication nor will it settle a dispute involving said
officials. In fact, as prayed for in the complaint, the Sandiganbayan will only review and examine the propriety of
maintaining PCGG’s position with respect to Officeco’s accounts with BTAG for the purpose of further determining the
propriety of issuing a writ against the PCGG and the OSG. Everything considered, the act of state doctrine finds no
application in this case and petitioners’ resort to it is utterly mislaid.

VICTORY TRANSPORT, INC. V. COMISARÍA GENERAL

United States Court of Appeals for the Second Circuit

Facts

The Comisaría General of Spain (defendant) was a branch of the Spanish Ministry of Commerce. The Comisaría General
chartered a vessel owned by Victory Transport, Inc. (plaintiff) to ship wheat purchased in the United States to Spain. Victory
sued the Comisaría General for breach of contract. The Comisaría General claimed that as an arm of the Spanish
government it had sovereign immunity. The district court held that the Comisaría General did not have sovereign immunity.
The Comisaría General appealed.

SOVEREIGN IMMUNITY

Appellant's primary contention is that as an arm of the soverign Government of Spain, it cannot be sued in the courts of the
United States without its consent, which it declines to accord in this case. There is certainly a great deal of impressive
precedent to support this contention, for the doctrine of the immunity of foreign sovereigns from the jurisdiction of our
courts was early entrenched in our law by Chief Justice Marshall's historic decision in The Schooner Exchange v. McFaddon,
7 Cranch 116, 3 L.Ed. 287 (U.S. 1812). The doctrine originated in an era of personal sovereignty, when kings could
theoretically do no wrong and when the exercise of authority by one sovereign over another indicated hostility or
superiority. With the passing of that era, sovereign immunity has been retained by the courts chiefly to avoid possible
embarrassment to those responsible for the conduct of the nation's foreign relations. See Comment, The Jurisdictional
Immunity of Foreign Sovereigns, 63 YALE L.J. 1148 (1954). However, because of the dramatic changes in the nature and
functioning of sovereigns, particularly in the last half century, the wisdom of retaining the doctrine has been cogently
questioned. See, e.g., Lauterpacht, The Problem of Jurisdictional Immunities of Foreign States, 28 BRIT. Y.B. INT'L L. 220
(1951). Growing concern for individual rights and public morality, coupled with the increasing entry of governments into
what had previously been regarded as private pursuits, has led a substantial number of nations to abandon the absolute
theory of sovereign immunity in favor of a restrictive theory. See Dralle v. Rep. of Czechoslovakia, 17 Int.L.Rep. 155 (Sup.
Ct. of Austria 1950); SUCHARITKUL, STATE IMMUNITIES AND TRADING ACTIVITIES IN INTERNATIONAL LAW (1959);
Lauterpacht, supra.

Meeting in Brussels in 1926, representatives of twenty nations, including all the major powers except the United States and
Russia, signed a convention limiting sovereign immunity in the area of maritime commerce to ships and cargoes employed
exclusively for public and non-commercial purposes. After World War II the United States began to restrict immunity by
negotiating treaties obligating each contracting party to waive its sovereign immunity for state-controlled enterprises
engaged in business activities within the territory of the other party. Fourteen such treaties were negotiated by our State
Department in the decade 1948 to 1958. Setser, The Immunity Waiver for State-Controlled Business Enterprises in United
States Commercial Treaties, Proceedings of Am.Soc.Int'l L. 89 (1961). And in 1952 our State Department, in a widely
publicized letter from Acting Legal Adviser Jack B. Tate to the Acting Attorney General Philip B. Perlman, announced that the
Department would generally adhere to the restrictive theory of sovereign immunity, recognizing immunity for a foreign
state's public or sovereign acts ( jure imperii) but denying immunity to a foreign state's private or commercial acts ( jure
gestionis). 26 Dept. State Bull. 984 (1952).
5
International Convention for the Unification of Certain Rules Concerning the Immunities of State Ships. The French text of
the Convention is set out in HARVARD RESEARCH IN INTERNATIONAL LAW, 426-429 (1931). An English translation
prepared by the Department of State may be found in ALLEN, THE POSITION OF FOREIGN STATES BEFORE NATIONAL
COURTS, 303-308 (1933).

Article I of the Convention provided:

"Seagoing vessels owned or operated by States, cargoes owned by them, and cargoes and passengers carried on
Government vessels, and the States owning or operating such vessels, or owning such cargoes, are subject in respect of
claims relating to the operation of such vessels or the carriage of such cargoes, to the same rules of liability and to the same
obligations as those applicable to private vessels, cargoes, and equipment."

Article II provided that these liabilities and obligations may be enforced by the same rules and procedure applied to private
ships and cargoes, while Article III excepted from the application of the first articles "ships of war, Government yachts,
patrol vessels, hospital ships, auxiliary vessels, supply ships, and other craft owned or operated by a State and used at the
time a cause of action arises exclusively on Governmental and noncommercial service * * *" However, Article III did provide
for certain remedies before the courts of the sovereign owning or operating a vessel as a public activity.

In delineating the scope of a doctrine designed to avert possible embarrassment to the conduct of our foreign relations, the
courts have quite naturally deferred to the policy pronouncements of the State Department. National City Bank of New York
v. Republic of China, 348 U.S. 356, 360-361, 75 S.Ct. 423, 99 L.Ed. 389 (1955). See generally, Cardozo, Judicial Deference
to State Department Suggestions: Recognition of Prerogative or Abdication to Usurper, 48 CORN.L.Q. 461 (1963). The
Supreme Court's dictum in Republic of Mexico v. Hoffman, 324 U.S. 30, 35, 65 S.Ct. 530, 533, 89 L.Ed. 729 (1945) — "It is
therefore not for the courts to deny an immunity which our government has seen fit to allow, or to allow an immunity on
new grounds which the government has not seen fit to recognize" — has been variously construed, but we think it means at
least that the courts should deny immunity where the State Department has indicated, either directly or indirectly, that
immunity need not be accorded. It makes no sense for the courts to deny a litigant his day in court and to permit the
disregard of legal obligations to avoid embarrassing the State Department if that agency indicates it will not be
embarrassed. Cf. National City Bank v. Republic of China, supra, 348 U.S. at 360-361, 75 S.Ct. 423 (1955). Moreover,
"recognition by the courts of an immunity upon principles which the political department of government has not sanctioned
may be equally embarrassing to it in securing the protection of our national interests and their recognition by other nations."
Republic of Mexico v. Hoffman, supra, 324 U.S. at 36, 65 S.Ct. at 533.

This is not to say that the courts will never grant immunity unless the State Department specifically requests it. A claim of
sovereign immunity may be presented to the court by either of two procedures. The foreign sovereign may request its claim
of immunity be recognized by the State Department, which will normally present its suggestion to the court through the
Attorney General or some law officer acting under his direction. Alternatively, the accredited and recognized representative
of the foreign sovereign may present the claim of sovereign immunity directly to the court. Ex parte Muir, 254 U.S. 522, 41
S.Ct. 185, 65 L.Ed. 383 (1921). In some situations the State Department may find it expedient to make no response to a
request for immunity. Where, as here, the court has received no communication from the State Department concerning the
immunity of the Comisaria General, the court must decide for itself whether it is the established policy of the State
Department to recognize claims of immunity of this type. Republic of Mexico v. Hoffman, supra, 324 U.S. at 36, 65 S.Ct.
530.

CONGRESO DEL PARTIDO

Early in 1973 a Cuban state enterprise, Cubazucar, agreed to sell to a Chilean company a quantity of sugar to be delivered
in monthly instalments between January and October 1973. The August instalment was despatched on two ships, the Playa
Larga and the Marble Islands. Both ships were under voyage charter to Cubazucar from Mambisa, another Cuban state
enterprise, which was substantially under the control of the Cuban government. Mambisa was described in the charterparty
as the owner of the Playa Larga and the demise charterer of the Marble Islands. On 11 September, while the Playa Larga
was in the course of discharging her cargo at Valparaiso, Chile, and the Marble Islands was still on the high seas bound for
Chile, the government of President Allende in Chile, which had been on friendly terms with the Cuban government, was
overthrown and replaced by a new government formed by President Pinochet. The Cuban government found the new
regime in Chile politically repugnant. It decided to have no further commercial dealings with Chile and diplomatic relations
between the two countries were severed. The Cuban government ordered the Playa Larga to leave Valparaiso immediately
and the Marble Islands not to go to Chile. The Playa Larga returned to Cuba with the remainder of her cargo and the Marble
Islands went to North Vietnam. The cargo on both ships was then disposed of by Mambisa. In September 1975 Mambisa,
acting on behalf of the Republic of Cuba, took delivery at Sunderland of a new ship, the Congreso. She was an ordinary
trading ship registered in the name of the Republic of Cuba. She was operated and managed by Mambisa within limits
permitted by the Cuban government. After Mambisa had taken delivery of her, the owners of the cargo lately laden on
board the Marble Islands brought an action in rem against the owners of the Congreso claiming, inter alia, damages for

6
conversion and/or breach of contract for non-delivery of the cargo. The affidavit in support of the warrant of arrest
identified Mambisa as the defendant and, after stating that the action was1169 brought pursuant to s 3(4)a of the
Administration of Justice Act 1956, claimed that Mambisa was at the time the cause of action arose the disponent owner or
charterer or in possession or control of the Marble Islands and would be liable to the cargo owners in an action in personam,
and further claimed that Mambisa was at the date of the issue of the writ the beneficial owner of the Congreso as respects
all the shares therein. The Congreso was arrested at Sunderland. Thereafter two notices of motion were issued seeking an
order that the writ and all subsequent proceedings be set aside. The first notice of motion was issued by the Republic of
Cuba alleging that the Congreso was the property of the republic, a recognised foreign independent state, and that the
English courts should not implead a foreign sovereign state by permitting the arrest of an ordinary trading ship in its
ownership where the claim on which the arrest was based either arose from an exercise of sovereign or public or
governmental power, prerogative or right, or had no substantial connection with the territorial jurisdiction of the English
courts. The second notice of motion was issued by Mambisa, alleging that the Congreso was not beneficially owned by it as
respects all the shares therein, within the meaning of s 3(4) of the 1956 Act. The owners of the cargo lately laden on board
the Marble Islands brought a second action in rem against the owners of the Congreso similar to the first action but omitting
the claim for breach of contract and alleging that the Republic of Cuba would be liable to them in an action in personam.
The Republic of Cuba issued a notice of motion in the same terms as that issued in the first action. The owners of the cargo
lately laden on board the Playa Larga brought an action in rem against the owners of the Congreso claiming, inter alia,
damages for conversion and/or breach of contract, and alleging that either Mambisa or the Republic of Cuba would be liable
to them in an action in personam. Notices of motion were issued in respect of that action by the Republic of Cuba and by
Mambisa in the same terms as those issued in the earlier actions. At the hearing of the motions, the cargo owners
contended, inter alia, that in the circumstances the Republic of Cuba was not entitled to rely on the doctrine of sovereign
immunity.

________________________________________

a Section 3(4) so far as material, provides: 'In the case of any ... claim arising in connection with a ship, where the person
who would be liable on the claim in an action in personam was, when the cause of the action arose, the owner or charterer
of, or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court ... may (whether the claim gives
rise to a maritime lien on the ship or not) be invoked by an action in rem against-(a) that ship, if at the time when the
action is brought it is beneficially owned as respects all the shares therein by that person; or (b) any other ship which, at
the time when the action is brought, is beneficially owned as aforesaid.'

________________________________________

Held - (i) Where a foreign sovereign state claimed immunity from the court's jurisdiction on the ground of its alleged interest
in the property which was the subject of the proceedings it did not have to prove its title to the property even in the case of
the arrest of an ordinary trading vessel; it need only show that its claim was not merely illusory nor founded on a title
manifestly defective. On the evidence the republic's claim to ownership was not illusory or manifestly defective: the republic
had been at all material times the owner of the Congreso. Accordingly, since the republic was at the time when the first
action was brought the owner of the Congreso and since no claim in personam was advanced against it, it was entitled to
have the writ and all subsequent proceedings in the first action set aside (see p 1185 g to p 1186 c, p 1187 j to p 1188 a
and p 1189 h j, post); Juan Ysmael & Co Inc v Government of the Republic of Indonesia [1954] 3 All ER 236 applied.

(ii) In international law a foreign sovereign state was entitled to invoke the doctrine of sovereign immunity in cases where
an action in rem was brought against an ordinary trading ship owned by it if the act as a result of which the claims in the
action arose was of its own character a governmental act, notwithstanding that it had occurred in the context of a
commercial transaction. Since international law was part1170 of English law, by virtue of the doctrine of incorporation, it
had to be applied by the court. On the evidence the claims of the cargo owners arose from the governmental acts of the
Republic of Cuba in preventing, on grounds of foreign policy, the delivery to the cargo owners of the cargo on board the
Marble Islands and the balance of the cargo on board the Playa Larga. It followed that the republic was entitled to invoke
the doctrine of sovereign immunity in all three actions and to have the writs and all subsequent proceedings set aside (see p
1184 g to j, p 1190 e, p 1192 j, p 1194 c d f, p 1195 d and p 1196 g to j, post); The owners of the ship Philippine Admiral v
Wallen Shipping (Hong Kong) Ltd [1976] 1 All ER 78 and Trendtex Trading Corpn Ltd v Central Bank of Nigeria [1977] 1 All
ER 881 applied: The Porto Alexandre [1918-19] All ER Rep 615 not followed.

(iii) On the true construction of s 3(4) of the 1956 Act, the words 'beneficially owned as respects all the shares therein'
referred only to equitable ownership, whether or not it was accompanied by legal ownership; they did not include
possession and control, without ownership, however full and complete such possession and control might be. It followed

7
that, since Mambisa was not the legal or equitable owner of the Congreso at the time when the first and the third actions
were brought but was merely in possession of her as operator and manager subject to control by the Cuban government,
the cargo owners were not entitled to invoke the Admiralty jurisdiction of the High Court by actions in rem against her in
which Mambisa was identified as the defendant under s 3(4). Accordingly the writ and all subsequent proceedings in those
two actions would be set aside on Mambisa's motions (see p 1189 a to c, p 1200 b, p 1201 b to e p 1202 f and p 1204 b c g
and h, post); The Andrea Ursula [1971] 1 All ER 821 not followed.

Per Curiam. It is difficult to accept that, in an appropriate case, the English courts should not assert jurisdiction by an
action in rem against a state-owned ordinary trading ship where the claim on which the arrest is based has no substantial
connection with the territorial jurisdiction of the English courts, e g in a case arising from a collision with another foreign
ship on the high seas or in a case concerned with the carriage of cargo pursuant to a contract which has no connection with
the territorial jurisdiction of the English courts. Jurisdiction asserted by means of an arrest of a ship is not an exorbitant
jurisdiction. By allowing his ships to trade, a foreign sovereign must be taken to have exposed his ships to the possibility of
arrest (see p 1197 g to p 1198 a, post); dicta of Lord Denning in Rahimtoola v Nizam of Hyderabad [1957] 3 All ER at 461,
464 and in Thai-Europe Tapioca Service Ltd v Government of Pakistan [1975] 3 All ER at 966, 967 considered.

TRENDTEX TRADING CORPORATION V CENTRAL BANK OF NIGERIA

Ratio: The court considered the developing international jurisdiction over commercial activities of state bodies which might
enjoy state immunity, and sought to ascertain whether or not the Central Bank of Nigeria was entitled to immunity from
suit.

Held: The key questions are those of ‘governmental control’ and ‘governmental functions’ and that these are to be
determined as a matter of English law, although the English courts may have regard to the position under the law where the
body is incorporated and account can be taken of the view of the government concerned.

International law was incorporated into domestic law unless it was in conflict with statutory provision. This enabled domestic
law to respond to changes in international law rather than it being bound by the interpretation of international law upon a
particular point when it was first decided, if international law had later evolved. Domestic law could evolve as the
incorporated international law evolved.

Lord Denning MR said: ‘Seeing that the rules of international law have changed – and do change – and that the courts have
given effect to the changes without any Act of Parliament, it follows to my mind inexorably that the rules of international
law, as existing from time to time, do form part of our English law.’ and ‘we should give effect to those changes and not be
bound by any idea of stare decisis in international law’ and ‘Governments everywhere engage in activities which although
incidental in one way or another to the business of government are in themselves essentially commercial in their nature.’

Lord Denning MR said that it was necessary to look to all the evidence to see whether the organisation in question was
under government control and exercised governmental functions in order to determine whether it was part of the State.

Shaw LJ stated that whether a particular organisation is to be accorded the status of a department of government or not
must depend upon its constitution, its powers and duties and its activities. There could be no intermediate hybrid status
occupied by the bank where it was regarded as a government department for certain purposes and as an ordinary
commercial or financial institution for different purposes.

MINUCHER vs. HON. COURT OF APPEALS and ARTHUR SCALZO

Facts

Violation of the “Dangerous Drugs Act of 1972,” was filed against Minucher following a “buy-bust operation” conducted by
Philippine police narcotic agents accompanied by Scalzo in the house of Minucher, an Iranian national, where heroin was
said to have been seized. Minucher was later acquitted by the court.Minucher later on filed for damages due to trumped-up
charges of drug trafficking made by Arthur Scalzo.Scalzo on his counterclaims that he had acted in the discharge of his
official duties as being merely an agent of the Drug Enforcement Administration of the United States Department of Justice.

Scalzo subsequently filed a motion to dismiss the complaint on the ground that, being a special agent of the United States
Drug Enforcement Administration, he was entitled to diplomatic immunity. He attached to his motion Diplomatic Note of the
United States Embassy addressed to DOJ of the Philippines and a Certification of Vice Consul Donna Woodward, certifying
that the note is a true and faithful copy of its original. Trial court denied the motion to dismiss.

ISSUE

Whether or not Arthur Scalzo is indeed entitled to diplomatic immunity.RULING

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YES.A foreign agent, operating within a territory, can be cloaked with immunity from suit as long as it can be established
that he is acting within the directives of the sending state.

The consent or imprimatur of the Philippine government to the activities of the United States Drug Enforcement Agency,
however, can be gleaned from the undisputed facts in the case.

The official exchanges of communication between agencies of the government of the two countries

Certifications from officials of both the Philippine Department of Foreign Affairs and the United States Embassy

Participation of members of the Philippine Narcotics Command in the “buy-bust operation” conducted at the residence of
Minucher at the behest of Scalzo

These may be inadequate to support the “diplomatic status” of the latter but they give enough indication that the Philippine
government has given its imprimatur, if not consent, to the activities within Philippine territory of agent Scalzo of the United
States Drug Enforcement Agency.

The job description of Scalzo has tasked him to conduct surveillance on suspected drug suppliers and, after having
ascertained the target, to inform local law enforcers who would then be expected to make the arrest.

In conducting surveillance activities on Minucher, later acting as the poseur-buyer during the buy-bust operation, and then
becoming a principal witness in the criminal case against Minucher,

Scalzo hardly can be said to have acted beyond the scope of his official function or duties.

REPUBLIC OF INDONESIA VS VINZON

Facts:

This is a petition for review of the decision made by Court of Appeals in ruling that the Republic of Indonesia gave its
consent to be sued and voluntarily submitted itself to the laws and jurisdiction of Philippine courts and that petitioners
Ambassador Soeratmin and Minister Counsellor Kasim waived their immunity from suit.

Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a Maintenance Agreement with
respondent James Vinzon, sole proprietor of Vinzon Trade and Services. The equipment covered by the Maintenance
Agreement are air conditioning units and was to take effect in a period of four years.

When Indonesian Minister Counsellor Kasim assumed the position of Chief of Administration, he allegedly found
respondent’s work and services unsatisfactory and not in compliance with the standards set in the Maintenance Agreement.
Hence, the Indonesian Embassy terminated the agreement.

The respondent claims that the aforesaid termination was arbitrary and unlawful. Hence, he filed a complaint against the
petitioners which opposed by invoking immunity from suit.

Issues:

1. Whether or not the Republic of Indonesia can invoke the doctrine of sovereign immunity from suit.
2. Whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be sued herein in their
private capacities.

Discussions:

The rule that a State may not be sued without its consent is a necessary consequence of the principles of independence and
equality of States. The practical justification for the doctrine of sovereign immunity is that there can be no legal right against
the authority that makes the law on which the right depends. In the case of foreign States, the rule is derived from the
principle of the sovereign equality of States, as expressed in the maxim par in parem non habet imperium. All states are
sovereign equals and cannot assert jurisdiction over one another.] A contrary attitude would “unduly vex the peace of
nations”.

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The rules of International Law, however, are not unbending or immune to change. The increasing need of sovereign States
to enter into purely commercial activities remotely connected with the discharge of their governmental functions brought
about a new concept of sovereign immunity. This concept, the restrictive theory, holds that the immunity of the sovereign is
recognized only with regard to public acts or acts jure imperii (public acts of the government of a state), but not with
regard to private acts or acts jure gestionis (the commercial activities of a state.)

PALACIOS

The accused, a member of the diplomatic staff of the Nicaraguan Embassy in Ottawa, was charged with five criminal
offences, including possession of cocaine for the purpose of trafficking. He claimed diplomatic immunity. He was charged 16
days after the Embassy advised the Canadian Department of External Affairs that the accused's duties at the Embassy had
ended. In the meantime the accused visited the United States for a week. It was agreed that he had not had a reasonable
time to remove himself and his family form Canada. Article 39(2) of the Vienna Convention on Diplomatic Relations provided
that diplomatic immunity "shall normally cease at the moment when he leaves the country, or on expiry of a reasonable
period in which to do so".

The Ontario Provincial Court ruled that the accused was entitled to diplomatic immunity, holding that the immunity did not
cease until the accused permanently left Canada, which he did not do by visiting the United States temporarily.

The Ontario High Court dismissed the Crown's application for mandamus. The Crown appealed.

The Ontario Court of Appeal dismissed the appeal and affirmed that the accused's diplomatic immunity did not cease with
his visit to the United States.

International Law - Topic 9304

Diplomatic officers - Privileges and immunity - Termination - Leaving country - What constitutes - Article 39(2) of the Vienna
Convention on Diplomatic Relations, 1961, provided that a diplomatic officer's immunity "shall normally cease at the moment
when he leaves the country, or on expiry of a reasonable period in which to do so" - A diplomatic official of the Nicaraguan
Embassy in Ottawa finished his duties on July 12 - On July 16 he visited the U.S. for a week - Within a week of his return to
Ottawa he was charged with criminal offences - It was agreed that he had not had reasonable time to remove himself and
his family from Canada - The Ontario Court of Appeal held that that official was entitled to diplomatic immunity, because
loss of immunity occurred upon permanently leaving and not upon the temporary visit to the U.S. - See paragraphs 6 to 24.

DEPARTMENT OF FOREIGN AFFAIRS VS. NATIONAL LABOR RELATIONS BOARD

FACTS

On January 27, 1993, private respondent initiated NLRC-NCR Case for his alleged illegal dismissal by Asian Development
Bank and the latter's violation of the "labor-only" contracting law. Two summonses were served, one to the ADB and the
other through the DFA. Forthwith, the ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its
President and Office, were covered by an immunity from legal processes except for borrowing, guaranties or the sale of
securities pursuant to the Agreement Establishing the Asian Development Bank (the "Charter") and the Agreement Between
the Bank and the Government of the Philippines regarding the Banker'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. The ADB did not appeal the decision. Instead, the DFA referred the matter to the NLRC; in its referral, the DFA sought
a "formal vacation of the void jugdgment".

ISSUES

1. Whether the ADB is correct in invoking its immunity from suit

RULING

1. Yes. The stipulations of both the Charter and the Headquarter's Agreement 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 Bank's officers, on their part, enjoy immunity in respect of all acts performed by them
in their official capacity. The granting of these immunities and privileges are treaty covenants ans commitments voluntarily
assumed by the Philippine Government. Being an international organization that has been extended diplomatic status, the
ADB is independent of the municipal law.

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2. No. 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 attack.

3. Yes. The DFA's function includes 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 to keep the credibility of the Philippine government before the international community.

LASCO V UN

Facts: Petitioners were dismissed from their employment with private respondent, the United Nations Revolving Fund for
Natural Resources Exploration (UNRFNRE), which is a special fund and subsidiary organ of the United Nations. The
UNRFNRE is involved in a joint project of the Philippine Government and the United Nations for exploration work in Dinagat
Island. Petitioners are the complainants for illegal dismissal and damages. Private respondent alleged that respondent Labor
Arbiter had no jurisdiction over its personality since it enjoyed diplomatic immunity.

Issue: WON specialized agencies enjoy diplomatic immunity

Held: Petition is dismissed. This is not to say that petitioner have no recourse. Section 31 of the Convention on the
Privileges and Immunities of the Specialized Agencies of the United Nations states that ³each specialized agency shall makea
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.´ Private respondent is not engaged in a commercial venture in the Philippines. Its
presence is by virtue of a joint project entered into by the Philippine Government and the United Nations for mineral
exploration in Dinagat Island.

WHO V AQUINO

Facts:

Dr. Leonce Verstuyft was assigned by WHO to its regional office in Manila as Acting Assistant Director of Health Services. His
personal effects, contained in twelve (12) crates, were allowed free entry from duties and taxes. Constabulary Offshore
Action Center (COSAC) suspected that the crates “contain large quantities of highly dutiable goods” beyond the official
needs of Verstuyft. Upon application of the COSAC officers, Judge Aquino issued a search warrant for the search and seizure
of the personal effects of Verstuyft.

Secretary of Foreign Affairs Carlos P. Romulo advised Judge Aquino that Dr. Verstuyft is entitled to immunity from search in
respect for his personal baggage as accorded to members of diplomatic missions pursuant to the Host Agreement and
requested that the search warrant be suspended. The Solicitor General accordingly joined Verstuyft for the quashal of the
search warrant but respondent judge nevertheless summarily denied the quashal. Verstuyft, thus, filed a petition for
certiorari and prohibition with the SC. WHO joined Verstuyft in asserting diplomatic immunity.

Issue:

Whether or not personal effect of Verstuyft can be exempted from search and seizure under the diplomatic immunity.

Held:

Yes. The executive branch of the Phils has expressly recognized that Verstuyft is entitled to diplomatic immunity, pursuant
to the provisions of the Host Agreement. The DFA formally advised respondent judge of the Philippine Government's official
position. The Solicitor General, as principal law officer of the gorvernment, likewise expressly affirmed said petitioner's right
to diplomatic immunity and asked for the quashal of the search warrant.

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is
essentially a political question and courts should refuse to look beyond a determination by the executive branch of the
government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate
suggestion by the principal law officer of the government, the Solicitor General in this case, or other officer acting under his
discretion. Courts may not so exercise their jurisdiction by seizure and detention of property, as to embarass the executive
arm of the government in conducting foreign relations.

The Court, therefore, holds the respondent judge acted without jurisdiction and with grave abuse of discretion in not
ordering the quashal of the search warrant issued by him in disregard of the diplomatic immunity of petitioner Verstuyft.

ICMC VS. CALLEJA

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FACTS: ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in
Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a non-profit agency involved in
international humanitarian and voluntary work.

IRRI on the other hand was intended to be an autonomous, philanthropic, tax-free, non-profit, non-stock organization
designed to carry out the principal objective of conducting “basic research on the rice plant, on all phases of rice production,
management, distribution and utilization with a view to attaining nutritive and economic advantage or benefit for the people
of Asia and other major rice-growing areas through improvement in quality and quantity of rice.”

The labor organizations in each of the above-mentioned agencies filed a petition for certification election, which was
opposed by both, invoking diplomatic immunity.

ISSUE: Are the claim of immunity by the ICMC and the IRRI from the application of Philippine labor laws valid?

HELD: YES There are basically three propositions underlying the grant of international immunities to international
organizations. These principles, contained in the ILO Memorandum are stated thus:

1) international institutions should have a status which protects them against control or interference by any one
government in the performance of functions for the effective discharge of which they are responsible to
democratically constituted international bodies in which all the nations concerned are represented;
2) no country should derive any national financial advantage by levying fiscal charges on common international funds;
and
3) the international organization should, as a collectivity of States members, be accorded the facilities for the conduct
of its official business customarily extended to each other by its individual member States.

The theory behind all three propositions is said to be essentially institutional in character. “It is not concerned with the
status, dignity or privileges of individuals, but with the elements of functional independence necessary to free international
institutions from national control and to enable them to discharge their responsibilities impartially on behalf of all their
members. The raison d’etre for these immunities is the assurance of unimpeded performance of their functions by the
agencies concerned.

ICMC’s and IRRI’s immunity from local jurisdiction by no means deprives labor of its basic rights, which are guaranteed by
our Constitution.

For, ICMC employees are not without recourse whenever there are disputes to be settled. 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 the the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to
withdraw the privileges and immunities accorded.

Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had been
organized a forum for better management-employee relationship as evidenced by the formation of the Council of IRRI
Employees and Management (CIEM) wherein “both management and employees were and still are represented for purposes
of maintaining mutual and beneficial cooperation between IRRI and its employees.”

The term “international organization” is generally used to describe an organization set up by agreement between two or
more states. Under contemporary international law, such organizations are endowed with some degree of international
legal personality such that they are capable of exercising specific rights, duties and powers. They are organized mainly as a
means for conducting general international business in which the member states have an interest. The United Nations, for
instance, is an international organization dedicated to the propagation of world peace.

“Specialized agencies” are international organizations having functions in particular fields.

LIANG VS PEOPLE

FACTS:

Petitioner is an economist working with the Asian Development Bank (ADB). Sometime in 1994, for allegedly uttering
defamatory words against fellow ADB worker Joyce Cabal, he was charged before the MeTC of Mandaluyong City with two
counts of oral defamation. Petitioner was arrested by virtue of a warrant issued by the MeTC. After fixing petitioner’s bail,
the MeTC released him to the custody of the Security Officer of ADB. The next day, the MeTC judge received an “office of
protocol” from the DFA stating that petitioner is covered by immunity from legal process under section 45 of the Agreement
between the ADB and the Philippine Government regarding the Headquarters of the ADB in the country. Based on the said

12
protocol communication that petitioner is immune from suit, the MeTC judge without notice to the prosecution dismissed the
criminal cases. The latter filed a motion for reconsideration which was opposed by the DFA. When its motion was denied,
the prosecution filed a petition for certiorari and mandamus with the RTC of Pasig City which set aside the MeTC rulings and
ordered the latter court to enforce the warrant of arrest it earlier issued. After the motion for reconsideration was denied,
the petitioner elevated the case to the SC via a petition for review arguing that he is covered by immunity under the
Agreement and that no preliminary investigation was held before the criminal case.

ISSUES:

(1) Whether or not the petitioner’s case is covered with immunity from legal process with regard to Section 45 of the
Agreement between the ADB and the Philippine Gov’t.

(2) Whether or not the conduct of preliminary investigation was imperative.

HELD:

(1) NO. The petitioner’s case is not covered by the immunity. Courts cannot blindly adhere to the communication from the
DFA that the petitioner is covered by any immunity. It has no binding effect in courts. The court needs to protect the right
to due process not only of the accused but also of the prosecution. Secondly, the immunity under Section 45 of the
Agreement is not absolute, but subject to the exception that the acts must be done in “official capacity”. Hence, slandering a
person could not possibly be covered by the immunity agreement because our laws do not allow the commission of a crime,
such as defamation, in the name of official duty.

(2) NO. Preliminary Investigation is not a matter of right in cases cognizable by the MeTC such as this case. Being purely a
statutory right, preliminary investigation may be invoked only when specifically granted by law. The rule on criminal
procedure is clear that no preliminary investigation is required in cases falling within the jurisdiction of the MeTC. Hence, SC
denied the petition.

SPS. RODRIGO LACIERDA, et al. v. DR. ROLANDO PLATON, et al.

Petitioners Rodrigo Lacierda, Erlinda Cruz-Lacierda, Jessica and Renan Saliente, Ruby Salde and Armniel Sim (Lacierda, et
al.) were all employees/officers of Southeast Asian Fisheries Development Center (SEAFDEC), an international agency which
is immune from suits, it being clothed with diplomatic immunity. Meanwhile, respondents Rolando Platon, Agnes Lacuesta,
Dan Baliao, Amelita Subosa, Merlita Junion, Teresita Hilado, Demetrio Estenor, Salvador Rex Tillo, Teresita Natividad, Teresa
Mallare, Jocelyn Coniza and Nelda Ebron (Platon, et al.) are officers and with the management of SEAFDEC, Aqua Culture
Development (AQC), an international organization composed of governments of Southeast Asia created by virtue of a treaty
of which the Philippines is a signatory.

Japan International Cooperation Agency (JICA) and SEAFDEC entered into a Memorandum of Agreement (MOA) where the
former has found the Department of Agriculture (DA) through SEAFDEC to be qualified in providing the necessary services
and in implementing JICA‘s Third Country Training Programme on Responsible Aquaculture Development (training program).
Regarding the liquidation, such shall be made by submitting a statement of expenditures containing the itemized breakdown
of all expenses incurred, attaching therewith all copies of supporting documents and evidences and receipts certifying the
said expenditures (original copies will be kept by SEAFDEC). In case there will be an excess in the amount consigned, the
excess amount will be returned to JICA.

Lacierda, et al. were selected by SEAFDEC to take part in the training program. After such was concluded, Lacierda, et al.
submitted to SEAFDEC documents in support of their liquidation of cash advances and claim for reimbursement of expenses
but an audit of the same showed that “hotel receipts submitted were much higher that the actual amount that they paid on
accommodation.” Thus, Lacierda, et al. were terminated for cause ―on the ground of misrepresentation or false statements
with intent to gain or take advantage and fraudulent machination for financial gain.

More than a year later, Lacierda, et al. filed a complaint against Platon, et al. alleging that they are suing them in their
individual and personal capacities for their commission of malicious, oppressive and inequitable actionable acts. This was
dismissed by the Regional Trial Court (RTC) of Iloilo for want of jurisdiction over the subject matter thereof and the person
of Platon, et al., it holding that assailed acts could only be performed by them in their official functions as administrators of
SEAFDEC. Also, Lacierda, et al. prayed to be restored and returned to their respective work/positions in SEAFDEC; to be
given the salaries, benefits and other privileges; to be awarded actual damages by reason of the deprivation of the salaries
and benefits they should have received; and to be paid moral damages. Such allegations and reliefs clearly indicate that
their cause/s of action arose out of employer-employee relationship which is under the original and exclusive jurisdiction of
the Labor Arbiter and not the RTC.

ISSUE:

13
Whether or not the RTC has jurisdiction over the subject matter of Lacierda, et al. ‘s complaint

HELD:

A court cannot be divested of jurisdiction by the ingenuous omission by a plaintiff of any reference to a matter which clearly
shows that said court has jurisdiction, nor can a court be conferred with jurisdiction where it has none by a contrived
wording by a plaintiff‘s allegations in the complaint in order to impress that it is within said court‘s jurisdiction.

Lacierda, et al.‘s primary prayer — for the Platon, et al. to be ordered “to restore and return Lacierda, et al. to their
respective work/positions in SEAFDEC and to all the salaries, benefits and other privileges appurtenent thereto without loss
of seniority, diminution of ranks or pay to continue during the pendency of this case,” betrays their cause of action,
however. If Platon, et al. were sued in their personal capacity as emphatically stressed by Lacierda, et al., for tort and
damages, they would under no circumstance, power or authority be able to carry out such primary prayer.

14