CIR V RUEDA42 SCRA 23 – Political Law – Definition of “State”FACTS:

1. In January 2, 1955, Maria Cerdeira (or Estrella Soriano Vda. De Cerdeira) died in Tangier, Morocco (an international zone [foreign country] in North Africa). At the time of her death, she was a Spanish citizen, by reason of her marriage to a Spanish citizen, and was a resident of Tangier. She however left some personal properties (shares of stocks and other intangibles) in the Philippines. The designated administrator of her estate here is Antonio Campos Rueda.

2. In the same year, the Collector of Internal Revenue (CIR) assessed the estate for deficiency tax amounting to about P161, 874.95. Campos Rueda refused to pay the assessed tax as he claimed that the estate is exempt from the payment of said taxes pursuant to section 122 of the National Internal Revenue Code which provides:

That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at the time of his death was a resident of a foreign country which at the time of his death did not impose a transfer tax or death tax of any character in respect of intangible person property of the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country.

3. Campos Rueda was able to prove that there is reciprocity between Tangier and the Philippines.

4. However, the CIR still denied any tax exemption in favor of the estate as it averred that (a) the law of Tangier is not reciprocal to Section 122 of the National Internal Revenue Code; and (b) Tangier is not a “foreign country” as contemplated by Section 122 of the same Code and that the Philippines does not recognize Tangier as a foreign country.

5. CA decided in favour of Campos Rueda, stating that ISSUE: 

1. WON the requisites of statehood, or at least so much thereof as may be necessary for the acquisition of an international personality, must be satisfied for a “foreign country” to fall within the exemption of Section 122 of the National Internal Revenue Code

2. WON Tangier is a “foreign country” as defined in the Section 122 of the National Internal Revenue Code

DECISION:1. Pound’s definition of the state must be followed2. Yes. For purposes of the Tax Code, Tangier is a foreign country.

REASON/ RATIO DECIDENDI:1. POUND’S DEFINITION OF THE STATE

A foreign country to be identified as a state must be a politically organized sovereign community independent of outside control bound by penalties of nationhood, legally supreme within its territory, acting through a government functioning under a regime of law. 

It is a sovereign person with the people composing it viewed as an organized corporate society under a government with the legal competence to exact obedience to its commands.

The stress is on its being a nation, its people occupying a definite territory, politically organized, exercising by means of its government its sovereign will over the individuals within it and maintaining its separate international personality.

2. RULING ON KIENE V CIR The Supreme Court noted that there is already an existing jurisprudence

(Kiene v CIR) which provides that even a tiny principality, that of Liechtenstein, hardly an international personality in the sense, did fall under the exempt category provided for in Section 22 of the Tax Code. Thus, recognition is not necessary. Hence, since it was proven that Tangier provides such exemption to personal properties of Filipinos found therein so must the Philippines honor the exemption as provided for by our tax law with respect to the doctrine of reciprocity.

CONCLUSION: CA decision affirmed; Campos Rueda not liable for the defrayment of deficiency taxes.

MUNICIPALITY OF SAN FERNANDO, LA UNION vs. FIRMEG.R. No. L-52179 April 8, 1991

FACTS:A collision occurred involving a passenger jeepney owned by the Estate of Macario Nieveras, 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 Laureano Baniña 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 complaint 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.After several denials of petition of motion for reconsideration filed by the municipality, Firme then advised them to appeal his decision before a higher court.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:

1. WON 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.

2. WON the Municipality of San Fernando, La Union is liable for the torts committed by its employees

DECISION:

1. No, BUT he acted in excess of his jurisdiction when he decided that the municipality is liable for quasi-delict (injury caused by fault/negligence or imprudence) committed by its regular employees

2. NO, because the injury was accidently inflicted in the exercise of its governmental function

REASON:

1. SEC. 3, ARTICLE XVI, 1987 CONSTITUTION: DOCTRINE OF 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:

a. Express – if consent is embodied in a general law or a special law

b. Implied – (1) when the government enters into business contracts, thereby descending to the level of the other contracting party

(2) when the State files a complaint, thus opening itself to a counterclaim

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.

2. TEST OF LIABILITY OF THE MUNICIPALITY

The driver insisted that he was on his way to the Naguilian River to get materials for the repair of San Fernando’s municipal streets. In the case of Palafox, et. al. v Province of Ilocos Norte, “construction or maintenance of roads in which the truck and the driver worked at the time of the accident are admittedly governmental activities.”

The test of liability of the municipality for the torts committed by its employee, depends on whether or not the driver, acting in behalf of the municipality, is performing governmental or proprietary functions. And it is a general rule that the municipality cannot be held liable for the torts committed by its regular employee, who was then engaged in the discharge of governmental functions.

CONCLUSION:

Petition granted; Petitioner absolved of any liability in favour of private respondents

NOTES:

1. DUAL CAPACITY OF LGU:

a. POLITICAL/GOVERNMENTAL - acts an agent of the State for the government of the territory and the inhabitants within the municipal limits.

b. PRIVATE/CORPORATE – acts as a business corporation, performing functions not strictly governmental or political. 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.

2. 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."

MUNICIPALITY OF SAN MIGUEL, BULACAN V FERNANDEZ

FACTS:

QUA CHEE GAN V. DEPORTATION BOARDGR L-10280SEPTEMBER 30, 1983

FACTS:- May 12, 1952 - Special Prosecutor Emilo Galang charged Qua Chee Gan et. al.

before the Deportation Board, having purchased US dollars in the sum of $130,000.00, without the necessary license from the Central Bank of the Philippines, which was then secretly remitted to Hong Kong

- Petitioners Qua Chee Gan and Chua Lim Pao alias Jose Chua and Basilio King attempted to bribe officers of the PHL and US governments (Antonio Laforteza, Chief of the Intelligence Division of the Central Bank, Capt. A.P. Charak of the OSI, US Air Force) to evade prosecution for the unauthorized purchase.

- A warrant of arrest of petitioners was issued by the presiding member of Deportation Board. They filed a surety bond of P10,000.00 and cash bond for P10,000.00, thereby provisionally setting them at liberty

- Sept 22, 1952 - Petitioners filed a joint motion to dismiss in the charges against them in the Deportation Board because the Board does not constitute legal ground for deportation of aliens, and that it has no jurisdiction to entertain such charges. Motion was denied by the Board.

- Petitioners then filed a petition for habeas corpus and/or prohibition to the Court, but made returnable to the Court of First Instance of Manila.

- After securing and filing a bond for P5,000.00 each, a writ of preliminary injunction was issued by the lower court, restraining the DB from hearing deportation charges against petitioners, pending final termination of the habeas corpus and/or prohibition proceedings.

- The DB then filed its answer to the original petition, saying as an authorized agent of the President, it has jurisdiction over the charges filed, and the authority to order their arrest. The Court upheld the validity of the delegation by the president to the Deportation Board of his power to conduct investigations. It also sustained the power of the DB to issue warrant of arrest and fix bonds for the alien’s temporary release pending investigation of charges against him, pursuant to Section 69 of the Revised Administrative Code.

ISSUES:1. WON the President has powers to deport aliens (specifically the petitioners)

2. WON the delegation to the DB of the power to order the arrest of the alien complained of (pursuant to EO No.398, series of 1951) is valid

DECISION:1. Yes. The President has the power to deport aliens. 2. No. Court declared EO No. 398, series of 1951 to be illegal

REASON/RATIO DECIDENDI:1. SEC 69 OF ACT NO. 2711 ( THE REVISED ADMINISTRATIVE CODE)

Under the present and existing laws, deportation of an undesirable alien may be effected in two ways:

a. By order of the President, after due investigation, pursuant to Sec 69 of the Revised Administrative Code

b. By the Commissioner of Immigration, upon recommendation by the Board of Commissioners, under Sec 37 of Commonwealth Act No. 613 as amended

SECTION 69, ACT NO. 2711, PROVIDES:

SEC. 69 Deportation of subject to foreign power. — A subject of a foreign power residing in the Philippines shall not be deported, expelled, or excluded from said Islands or repatriated to his own country by the President of the Philippines except upon prior investigation, conducted by said Executive or his authorized agent, of the ground upon which Such action is contemplated. In such case the person concerned shall be informed of the charge or charges against him and he shall be allowed not less than these days for the preparation of his defense. He shall also have the right to be heard by himself or counsel, to produce witnesses in his own behalf, and to cross-examine the opposing witnesses.

While it does not expressly confer on the President the authority to deport these aliens, the fact that such a procedure was provided for before the President can deport an alien is a clear indication of such power. The President may order their deportation if after investigation, they are shown to have committed the act charged.

2. SEC 2, ART III, BILL OF RIGHTS

PROVIDES:The right of the People to be secure in their persons, houses, papers and effects against unreasonable searches and seizures shall not be violated, and no warrants shall

issue but upon probable cause, to be determined by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched, and the persons or things to be seized.

Under our Constitution, such provision is declared a popular right of the people and, indisputably it equally applies to both citizens and foreigners in this country. Under the express terms of our Constitution, it is, therefore, even doubtful whether the arrest of an individual may be ordered by any authority other than the judge if the purpose is merely to determine the existence of a probable cause, leading to an administrative investigation. In fact, the Constitution does not distinguish between warrants in a criminal case and administrative warrant in administrative proceedings.

CONCLUSION:Order of arrest is declared null and void

REPUBLIC V VILLASOR

FACTS:

1. July 3, 1961 – a decision was rendered in Special Proceedings No. 2156-R in favour of three entities (P.J. Kiener Co., Ltd., Gavino Unchuan, and Internation Construction Corporation) and against AFP. The latter was directed to pay the former entities that arbitration award amounting PHP 1,712,396.40.

2. June 24, 1969 – Judge Villasor issued order declaring the decision final and executory. Two days later, Villasor issued the corresponding alias writ of execution, directing Sheriffs of Rizal Province, Quezon City, and Manila to serve notices of garnishment with several banks, specially on the “monies due the AFP in the form of deposits sufficient to cover the aforementioned amount.

3. The funds of the AFP on deposit with the banks (Philippine Veterans Bank and PNB) are public funds duly appropriated and allocated for the payment of pensions of retireees, pay and allowances of military and civillian personnel and for maintenance and operations of AFP.

4. Petitioner, on certiorari, filed prohibition proceedings against respondent JudgeVillasor for acting in excess of jurisdiction with grave abuse of discretion amounting tolack of jurisdiction in grantingthe issuance of a Writ of Execution against the propertiesof the AFP, hence the notices and garnishment arenull and void.

ISSUE/S:

1. WON the alias writ of execution and notices of garnishment is valid

DECISION/S:

1. No. Both are null and void. What was done by Villasor is not in conformity with the dictates of the Constitution.

REASON/RATIO DECIDENDI:

1. DOCTRINE OF NON-SUABILITY

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well as its government is immune from suit unless it gives its consent. In the classic formulation of Holmes: "A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends." Also, 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

1. This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein expressly provided: "The State may not be sued without its consent." A corollary, both dictated by logic and sound sense from such a basic concept is that public funds cannot be the object of a garnishment proceeding even if the consent to be sued had been previously granted and the state liability adjudged. This is because disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law.

CONCLUSION:

Writs of certiorari and prohibition are granted; order, decision, and alias writ of execution are null and void.

NOTE:

Garnishment

a. an American legal order for collecting a monetary judgment on behalf of a plaintiff from a defendant.

b. A court order directing a third party to make such property available.

SHAUF V CA

FACTS:1. Loida Shauf, a Filipino by origin and married to an American who is a member

of the US Air Force, was rejected for a position of Guidance Counselor in the Base Education Office at Clark Air Base, for which she is eminently qualified.

2. By reason of her non-selection, she filed a complaint for damages and an equal employment opportunity complaint against private respondents, Don Detwiler (civillian personnel officer) and Anthony Persi (Education Director), for alleged discrimination by reason of her nationality and sex.3. Shauf was offered a temporary position as a temporary Assistant Education Adviser for a 180-day period with the condition that if a vacancy occurs, she will be automatically selected to fill the vacancy. But if no vacancy occurs after 180 days, she will be released but will be selected to fill a future vacancy if she’s available. Shauf accepted the offer. During that time, Mrs. Mary Abalateo’s was about to vacate her position. But Mrs. Abalateo’s appointment was extended thus, Shauf was never appointed to said position. She claims that the Abalateo’s stay was extended indefinitely to deny her the appointment as retaliation for the complaint that she filed against Persi. Persi denies this allegation. He claims it was a joint decision of the management & it was in accordance of with the applicable regulation.4. Shauf filed for damages and other relief in different venues such as the Civil Service Commission, Appeals Review Board, Philippine Regional Trial Court, etc.5. RTC ruled in favor of Shauf ordering defendants to pay $39,662.49 as actual damages + 20% of such amount as attorney’s fees + P100k as moral & exemplary damages.6. Both parties appealed to the CA. Shauf prayed for the increase of the damages to be collected from defendants. Defendants on the other hand, continued using the defense that they are immune from suit for acts done/statements made by them in performance of their official governmental functions pursuant to RP-US Military Bases Agreement of 1947. They claim that the Philippines does not have jurisdiction over the case because it was under the exclusive jurisdiction of a US District Court. They likewise claim that petitioner

failed to exhaust all administrative remedies thus case should be dismissed. CA reversed RTC decision. According to the CA, defendants are immune from suit.7. Shauf claims that the respondents are being sued in their private capacity thus this is not a suit against the US government which would require consent.8. Respondents still maintain their immunity from suit. They further claim that the rule allowing suits against public officers & employees for criminal & unauthorized acts is applicable only in the Philippines & is not part of international law.9. Hence this petition for review on certiorari.

Issue: WON private respondents are immune from suit being officers of the US Armed Forces

Held:No they are not immune.WHEREFORE, the challenged decision and resolution of respondent Court of Appeals in CA-G.R. CV No. 17932 are hereby ANNULLED and SET ASIDE.  Private respondents are hereby ORDERED, jointly and severally, to pay petitioners the sum of P100,000.00 as moral damages,  P20,000.00 as and for attorney's fees, and the costs of suit.

Ratio: They state that the doctrine of immunity from suit will not apply and may not be invoked where the public official is being sued in his private and personal capacity as an ordinary citizen.  The cloak of protection afforded the officers and agents of the government is removed the moment they are sued in their individual capacity.  This situation usually arises where the public official acts without authority or in excess of the powers vested in him.  It is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith, or beyond the scope of his authority or jurisdiction Director of the Bureau of Telecommunications vs. Aligaen  Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the State from suit.  In the same tenor, it has been said that an action at law or suit in equity against a State officer or the director of a State department on the ground that, while claiming to act for the State, he violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under an assumption of authority which he does not have, is not a suit against the State within the constitutional provision that the State may not be sued without its consent."The rationale for this ruling is that the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice

In the case at bar, there is nothing in the record which suggests any arbitrary, irregular or abusive conduct or motive on the part of the trial judge in

ruling that private respondents committed acts of discrimination for which they should be held personally liable. There is ample evidence to sustain plaintiffs' complaint that plaintiff Loida Q. Shauf was refused appointment as Guidance Counselor by the defendants on account of her sex, color and origin. She received a Master of Arts Degree from the University of Santo Tomas, Manila, in 1971 and has completed 34 semester hours in psychology?guidance and 25 quarter hours in human behavioral science.  She has also completed all course work in human behavior and counselling psychology for a doctoral degree.  She is a civil service eligible.  More important, she had functioned as a Guidance Counselor at the Clark Air Base at the GS-1710-9 level for approximately four years at the time she applied for the same position in 1976. In filling the vacant position of Guidance Counselor, defendant Persi did not even consider the application of plaintiff Loida Q. Shauf, but referred the vacancy to CORRO which appointed Edward B. Isakson who was not eligible to the position.

Article XIII, Section 3, of the 1987 Constitution provides that the State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.  This is a carry-over from Article II, Section 9, of the 1973 Constitution ensuring equal work opportunities regardless of sex, race, or creed.. There is no doubt that private respondents Persi and Detwiler, in committing the acts complained of have, in effect, violated the basic constitutional right of petitioner Loida Q. Shauf to earn a living which is very much an integral aspect of the right to life.  For this, they should be held accountable

Respondents alleged that petitioner Loida Q. Shauf failed to avail herself of her remedy under the United States federal legislation on equality of opportunity for civilian employees, which is allegedly exclusive of any other remedy under American law, let alone remedies before a foreign court and under a foreign law such as the Civil Code of the Philippines. SC: Petitioner Loida Q. Shauf is not limited to these remedies, but is entitled as a matter of plain and simple justice to choose that remedy, not otherwise proscribed, which will best advance and protect her interests.  There is, thus, nothing to enjoin her from seeking redress in Philippine courts which should not be ousted of jurisdiction on the dubious and inconclusive representations of private respondents on that score.