DFA vs NLRC

Facts:On 27 January 1993, private respondent Magnayi filed an illegal dismissal case against Asian Development Bank. Two summonses were served, one sent directly to the ADB and the other through the Department of Foreign Affairs. ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank and The Government Of The Philippines Regarding The Bank's Headquarters (the "Headquarters Agreement").The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit and, in time, rendered a decision in favor Magnayi.The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred the matter to the NLRC; in its referral, the DFA sought a "formal vacation of the void judgment." When DFA failed to obtain a favorable decision from the NLRC, it filed a petition for certiorari.Issues:1. Whether or not ADB is immune from suit2. Whether or not by entering into service contracts with different private companies, ADB has descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of its immunity from suit3. Whether or not the DFA has the legal standing to file the present petition4. Whether or not the extraordinary remedy of certiorari is proper in this caseHeld:1.Under the Charter and Headquarters Agreement, the ADB enjoys immunity from legal process of every form, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities. The 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.Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law."One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states."2.No. The ADB didn't descend to the level of an ordinary party to a commercial transaction, which should have constituted a waiver of its immunity from suit, by entering into service contracts with different private companies. There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the Courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard topublic acts or acts jure imperiiof a state, but not with regard toprivate act or acts jure gestionis.Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit.The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would not attach.3.Yes. The DFA's function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenged, entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena. In Holy See vs. Hon. Rosario, Jr., this Court has explained the matter in good detail; viz:"In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity."In the United States, the procedure followed is the process of 'suggestion,' where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a 'suggestion' that the defendant is entitled to immunity. "In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a 'suggestion' to respondent Judge. The Solicitor General embodied the 'suggestion' in a manifestation and memorandum as amicus curiae."In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity."In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels. In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved."4.Yes. Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special circumstances, so allowed and entertained such a petition when (a) the questioned order or decision is issuedin excess of or without jurisdiction, or (b) where the order or decision is apatent nullity, which, verily, are the circumstances that can be said to obtain in the present case. When an adjudicator is devoid of jurisdiction on a matter before him, his action that assumes otherwise would be a clear nullity.Petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID. (DFA vs NLRC,G.R. No. 113191, 18 September 1996)Municipality of San Fernando vs Judge FirmeMUNICIPALITY OF SAN FERNANDO, LA UNION vs. FIRME

G.R. No. L-52179 April 8, 1991

Facts:

A collision occurred involving a passenger jeepney owned by the Estate of MacarioNieveras, a gravel and sand truck owned by Tanquilino Velasquez and a dump truck of the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to the impact, several passengers of the jeepney including LaureanoBania Sr. died as a result of the injuries they sustained and four (4) others suffered varying degrees of physical injuries.

On December 11, 1966, the private respondents instituted a compliant for damages against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of the passenger jeepney. However, the aforesaid defendants filed a Third Party Complaint against the petitioner and the driver of a dump truck of petitioner.

Petitioner filed its answer and raised affirmative defenses such as lack of cause of action, non-suability of the State, prescription of cause of action and the negligence of the owner and driver of the passenger jeepney as the proximate cause of the collision.

Respondent Judge Romeo N. Firme ordered defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and severally, the plaintiffs for funeral expenses.

Private respondents stress that petitioner has not considered that every court, including respondent court, has the inherent power to amend and control its process and orders so as to make them conformable to law and justice.Issue: Whether or not the respondent court committed grave abuse of discretion when it deferred and failed to resolve the defense of non-suability of the State amounting to lack of jurisdiction in a motion to dismiss.

Ruling:

Non-suability of the state.

The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the Constitution, to wit: "the State may not be sued without its consent."Consent takes the form of express or implied consent.

Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provided that they can sue and be sued.

"Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable."

Anent the issue of whether or not the municipality is liable for the torts committed by its employee, the test of liability of the municipality depends on whether or not the driver, acting in behalf of the municipality, is performing governmental or proprietary functions.

Dual capacity of LGU.

Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental. Their officers and agents in such capacity, though elected or appointed by them, are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private, proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or individual capacity, and not for the state or sovereign power."

It has already been remarked that municipal corporations are suable because their charters grant them the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by them in the discharge of governmental functions and can be held answerable only if it can be shown that they were acting in a proprietary capacity.

In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way to the Naguilianriver to get a load of sand and gravel for the repair of San Fernando's municipal streets."

In the absence of any evidence to the contrary, the regularity of the performance of official duty is presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule that the driver of the dump truck was performing duties or tasks pertaining to his office.

We already stressed in the case ofPalafox, et.al.vs.Province of IlocosNorte, the District Engineer, and the Provincial Treasurer (102 Phil 1186) that "the construction or maintenance of roads in which the truck and the driver worked at the time of the accident are admittedly governmental activities."

After a careful examination of existing laws and jurisprudence, We arrive at the conclusionthat the municipality cannot be held liable for the torts committed by its regular employee, who was then engaged in the discharge of governmental functions.

MUNICIPALITY OF HAGONOY vs. DUMDUM, JR.

G.R. No. 168289, March 22, 2010, Peralta,J:p

FACTS: A complaint was filed by Lim Chao against the Municipality of Hagonoy, Bulacan for collection of sum of money and damages. The complaint alleged that a contract was entered into by Lim Chao and the Municipality for the delivery of motor vehicles, which supposedly were needed to carry out certain developmental undertakings in the municipality. Lim Chao then delivered to the Municipality of Hagonoy 21 motor vehicles amounting to P5,820,000.00. However, despite having made several deliveries, the Municipality allegedly did not heed Lim Chaos claim for payment. Thus, she filed a complaint for full payment of the said amount, with interest and damages and prayed for the issuance of a writ of preliminary attachment against the Municipality. The trial court issued the Writ of Preliminary Attachment directing the sheriff "to attach the estate, real and personal properties" of the Municipality.

The Municipality filed a Motion to Dismiss on the ground that the claim on which the action had been brought was unenforceable under the statute of frauds, pointing out that there was no written contract or document that would evince the supposed agreement they entered into with respondent. It also filed a Motion to Dissolve and/or Discharge the Writ of Preliminary Attachment already issued, invoking, among others, immunity of the state from suit. The Municipality argued that as a municipal corporation, it is immune from suit, and that its properties are by law exempt from execution and garnishment. Lim Chao on her part, counters that, the Municipalitys claim of immunity from suit is negated by the Local Government Code, which vests municipal corporations with the power to sue and be sued. The Court of Appeals affirmed the trial courts order.

ISSUE: W/N the issuance of the Writ of Preliminary Attachment against the Municipality of Hagonoy is valid.

HELD: No. The universal rule is that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimants action "only up to the completion of proceedings anterior to the stage of execution" and that the power of the Courts ends when the judgment is rendered. Since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriations as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects.