Political Law Review: State Immunity from Suit

C. State Immunity from Suit

“The State cannot be sued without its consent.” [Sec. 3, Art. XVI].

1. Basis

• There can be no legal right against the authority which makes the law on which the right depends.

• Republic v. Villasor, G.R. No. L-30671, November 28, 1973

• The Republic of the Philippines challenged an order declaring a judgment final and executory, including an alias writ of execution garnishing the funds of the Armed Forces of the Philippines (AFP). The Court held that the State and its agencies are generally immune from suit and that public funds cannot be garnished without express legal consent. The Court explained that state immunity exists to protect governmental efficiency and prevent disruption of public services, and that even when the State consents to be sued, such consent does not extend to execution against public funds unless there is a lawful appropriation. 

• However, it may be sued if it gives consent, whether express or implied. 

• The doctrine is also known as the Royal Prerogative of Dishonesty.

• It grants the state the prerogative to defeat any legitimate claim against it by simply invoking its nonsuability.

2. Immunity is enjoyed by other States.

• Immunity is enjoyed by other States, consonant with the public international law principle of par in parem non habet imperium. 

• An equal has no power over an equal.

• The Head of State, who is deemed the personification of the State he heads, is inviolable, and thus enjoys immunity from suit.

[a] Diplomatic Agents

• The State's diplomatic agents, including consuls to a certain extent, are also exempt from the jurisdiction of local courts and administrative tribunals.

[i] A foreign agent, operating within a territory, can be cloaked with immunity from suit but only as long as it can be established that he is acting within the directives of the sending State. 

• The cloak of protection is removed the moment the foreign agent is sued in his individual capacity, as when he is sought to be made liable for whatever damage he may have caused by his act done with malice or in bad faith, or beyond the scope of his authority or jurisdiction.

• Minucher v. Court of Appeals, G.R. No. 142396, February 11, 2003:

• ✅ It was sufficiently established that respondent Arthur Scalzo, an agent of the U.S. Drug Enforcement Agency, was tasked to conduct surveillance on suspected drug activities within the country and, having ascertained the target, to inform the local law enforcers who would then be expected to make the arrest. In conducting this surveillance and later, acting as the poseur-buyer during the buy-bust operation, and then becoming a principal witness in the criminal case against Minucher, Scalzo can hardly be said to have acted beyond the scope of his official functions or duties. He should, therefore, be accorded diplomatic immunity.

• Khosrow Minucher was acquitted of drug charges and later sued U.S. DEA agent Arthur Scalzo for damages, alleging illegal arrest. Scalzo invoked diplomatic immunity, supported by U.S. Embassy diplomatic notes and DFA certifications confirming his status as part of the U.S. mission. The Supreme Court held that Scalzo, as an accredited U.S. official, enjoyed diplomatic immunity for acts performed in his official capacity.

• The Holy See vs. Hon. Rosario, Jr., G.R. No. 101949 December 1, 1994:

• ✅ The Holy See, through the Papal Nuncio, owned a parcel of land in Parañaque donated by the Archdiocese of Manila for the Apostolic Nunciature. Starbright Sales Enterprises, Inc. claimed to have agreed to purchase (with earnest money paid) the land together with adjacent lots from the Holy See and Philippine Realty Corporation, subject to clearing the property of squatters. When the lots were later sold to another party without notice, Starbright sued for specific performance and damages. The Supreme Court ruled that the Holy See is an international person enjoying immunity from suit, and held that the transaction was not a commercial act for profit but a governmental act related to the Apostolic Nunciature, thereby barring jurisdiction of Philippine courts.

• U.S. v. Ruiz, G.R. No. L-35645, May 22, 1985:

• ✅ Eligio de Guzman & Co., Inc. sued the United States and its naval officers after being disqualified from bidding on repair projects at the Subic Naval Base, claiming breach of contract and seeking damages. The U.S. invoked state immunity, arguing that the acts were undertaken in its sovereign capacity in connection with the operation and maintenance of a military base. The Supreme Court upheld the U.S.’s immunity, ruling that Philippine courts had no jurisdiction since the contracts were tied to sovereign, not commercial, functions.

[b] Warships and Government Vessels

• Warships and other government ships (of other States) operated for non-commercial purposes enjoy immunity from the jurisdiction of local courts and administrative tribunals, subject to the provisions of Arts. 30 and 31 of UNCLOS.

[i] Arigo v. Swift, G.R. No. 206510, September 16, 2014:

• In a suit filed against the U.S. naval officials to hold them liable for the damage caused to Tubbataha reefs by USS Guardian, a U.S. warship, the petitioners argued that there is a waiver of immunity from suit found in the Visiting Forces Agreement (VFA).

• The Supreme Court rejected this contention, stating that the waiver of State immunity under the VFA pertains only to criminal jurisdiction and not to special civil actions such as the petition for Writ of Kalikasan. 

• In any case, the application or non-application of criminal jurisdiction provisions of the VFA to personnel who may be found responsible for the grounding of USS Guardian would be premature and beyond the province of a petition for Writ of Kalikasan.

[c] United Nations and Specialized Agencies

• The United Nations, as well as its organs and specialized agencies, are likewise beyond the jurisdiction of local courts and local administrative tribunals [Convention on Privileges and Immunities of the United Nations; Convention on Privileges and Immunities of Specialized Agencies of the United Nations; World Health Organization v. Aquino, supra].

• World Health Organization v. Aquino:

• A local judge issued a search warrant against Dr. Leonce Verstuyft, a WHO official in the Philippines, despite the Department of Foreign Affairs (DFA) and the Solicitor General affirming his entitlement to diplomatic immunity. The Supreme Court nullified the search warrant. Diplomatic immunity is a principle of international law and a political question, binding courts to the executive’s recognition. Under RA 75, any writ or process against diplomatic officials or their property is void. The Philippines, as a party to the UN Convention on Privileges and Immunities of Specialized Agencies, must uphold treaty obligations.

[i] Lasco v. UNRFNRE (United Nations Revolving Fund for Natural Resources Exploration), G.R. Nos. 109095-109107, February 23, 1995: 

• ✅ The Supreme Court upheld the diplomatic immunity of private respondent as established by the letter of the Department of Foreign Affairs recognizing and confirming such immunity in accordance with the 1946 Convention on the Privileges and Immunities of the UN, of which the Philippines is a signatory.

[d] Other International Organizations and Agencies

• Even other international organizations or international agencies may be immune from the jurisdiction of local courts and local administrative tribunals.

[i] SEAFDEC (Southeast Asia Fisheries Development Center) v. NLRC, supra., and SEAFDEC v. Acosta, G.R. Nos. 97468-70, September 2, 1993:

• It was held that SEAFDEC, as an international agency, enjoys diplomatic immunity. It was established through an international agreement to which the Philippines became a signatory on January 16, 1968. The purpose of the Center is to contribute to the promotion of fisheries development in Southeast Asia by mutual cooperation among the member governments of the Center.

• The invocation by private respondents of the doctrine of estoppel is unavailing, because estoppel does not confer jurisdiction on a tribunal that has none over a cause of action. The Tijam v. Sibonghanoy, G.R. No. L-21450, April 15, 1968, ruling cannot apply to parties which enjoy foreign and diplomatic immunity [SEAFDEC-Aquaculture v. NLRC, supra.].

• [ii] Callado v. IRRI, G.R. No. 106483, May 22, 1995:

• The Court upheld anew the constitutionality of Sec. 3, P.D. 1620, which provides that the International Rice Research Institute (IRRI) shall enjoy immunity from any penal, civil, and administrative proceedings, except insofar as that immunity has been expressly waived by the Director General of the Institute or his authorized representative.

• Citing International Catholic Migration Commission v. Calleja (and Kapisanan ng Manggagawa at TAC sa IRRI v. Secretary of Labor), G.R. No. 85750, September 28, 1990, the Court stated that the letter of the Acting Secretary of Foreign Affairs to the Secretary of Labor and Employment constituted a categorical recognition by the Executive Branch of the Government that IRRI enjoys immunities accorded to international organizations, a determination held to be a political question conclusive upon the Courts in order not to embarrass a political department of the government.

3. Test to Determine if Suit is Against the State

• On the assumption that a decision is rendered against the public officer or agency impleaded, will the enforcement thereof require an affirmative act from the State, such as the appropriation of the needed amount to satisfy the judgment? If so, then it is a suit against the State.

• Sanders v. Veridiano, G.R. No. L-46930, June 10, 1988:

• The Supreme Court ruled that the acts of the petitioners U.S. Naval officers were performed in their official capacities, specifically in relation to personnel management and grievance proceedings within the U.S. Naval Station in Subic Bay. Because the relief sought would require the United States government to appropriate funds to satisfy any judgment, the suit was deemed one against the state, which had not consented to be sued

• Republic v. Feliciano, G.R. No. 70853, March 12, 1987.

• Pablo Feliciano sued the Republic of the Philippines (through the Land Authority) to recover land. The Supreme Court held that the action was barred by the doctrine of state immunity from suit, since Feliciano directly impleaded the Republic without any showing of its consent to be sued.  An action for recovery of property filed against the Republic is a suit against the State because, if judgment were rendered against it, enforcement would necessarily compel the State to perform an affirmative act, such as excluding the land from a reservation or recognizing private ownership. 

[a] Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983: 

• The Supreme Court said that State immunity from suit may be invoked as long as the suit really affects the property, rights, or interests of the State and not merely those of the officers nominally made party defendants.

• ✅ In this case, the Court said that the promotion of public welfare and the protection of the inhabitants near the public forest are property rights and interests of the State.

• The revocation of Tan’s timber license involved public interest and state property, specifically, a watershed forest reserve, making any judgment against the officials a direct imposition on the State itself. 

Veterans Manpower and Protective Services, Inc. v. Court of Appeals, G.R. No. 91359, September 25, 1992:

• ✅ The suit for damages filed against the PC Chief and the PC-SUSIA would require an affirmative act of appropriation should damages be awarded, and is, therefore, a suit against the State.

[b] Liwayway Vinzons-Chato v. Fortune Tobacco Corporation, G.R. No. 141309, December 23, 2008:

• It started when the petitioner, then Commissioner of Internal Revenue, issued Revenue Memorandum Circular (RMC) No. 37-93 without notice, hearing, and publication. 

• The Supreme Court, in Commissioner of Internal Revenue v. Court of Appeals, 261 SCRA 236, declared it to have fallen short of a valid and effective administrative issuance.

• On the basis of this decision, respondent filed suit for damages against the petitioner for tort, for impairment of rights and liberties, based on Article 32 of the Civil Code.

[i] Among the grounds used by the Supreme Court in dismissing the action filed by respondent was that under Sec. 227, R.A. 8324 (Tax Reform Act of 1997), when an action is brought against any Internal Revenue Officer to recover damages for an act done in the performance of official duty, any judgment damages or costs recovered in such action, if the same is paid by the person sued, shall be repaid or reimbursed to him.

[ii] In this case, since there was no imputation of negligence, bad faith, or willful oppression committed by the petitioner, any money judgment by the trial court against her would have to be assumed by the Republic of the Philippines. 

• ✅ As such, according to the Supreme Court, the complaint is in the nature of a suit against the State.

4. Suits against Government Agencies

[a] Incorporated

• An incorporated agency possesses a juridical personality independent of the State. 

• If its charter provides that the agency can sue and be sued, then suit will lie, including one for tort. 

• The provision in the charter constitutes express consent on the part of the State to be sued.

• PNB v. CIR, G.R. No. L-32667, January 31, 1978: 

• The Court of Industrial Relations issued a writ of execution and notice of garnishment against the People’s Homesite and Housing Corporation’s (PHHC) deposits with the Philippine National Bank to satisfy a judgment in favor of its employees. The Supreme Court ruled that since PHHC’s charter contained a “sue and be sued” clause, it constituted a waiver of immunity, allowing suits and execution of judgments against it. Thus, the public character of the funds did not shield them from garnishment since PHHC, as a GOCC with separate personality, could be treated like a private corporation.

• Rayo v. CFI of Bulacan, G.R. No. L-55273-83, December 19, 1981: 

• During Typhoon “Kading” in 1978, the National Power Corporation (NPC), through its superintendent, opened all three floodgates of the Angat Dam, causing massive flooding in Bulacan that killed about a hundred people and destroyed millions worth of property. Victims sued NPC and its superintendent for damages. The Supreme Court held that NPC, as a government-owned corporation with a charter expressly authorizing it to “sue and be sued,” has a distinct personality from the State and may be sued for tort claims, thus ordering the reinstatement of the victims’ complaints.

• SSS v. Court of Appeals, G.R. No. L-46058, December 14, 1987:

• In 1963, spouses David and Socorro Cruz obtained a real estate loan from the Social Security System (SSS), mortgaging their property in Pateros, but after defaulting, foreclosure proceedings ensued and a third party’s ownership claim caused them to lose the property. The spouses sued SSS for damages. The Supreme Court ruled that the “sue and be sued” clause constituted express consent by the State for SSS to be brought to court, making it liable for nominal damages and attorney’s fees, but not compensatory or moral damages. SSS is a distinct juridical entity with corporate powers separate from the Government.

[i] Municipal corporations are agencies of the State when they are engaged in governmental functions and, therefore, should enjoy sovereign immunity from suit. 

• However, they are subject to suit even in the performance of such functions because their respective charters provide that they can sue and be sued.

• One of the corporate powers of local government units under Sec. 22, Local Government Code, is the power to sue and be sued.

• Municipality of San Fernando, La Union v. Judge Firme, G.R. No. L-52179, April 8, 1991:

• A vehicular collision in 1965 involving a municipal dump truck driven by a regular employee of the Municipality of San Fernando, La Union resulted in the death of Laureano Banina Sr. His heirs filed a complaint for damages. The Supreme Court ruled that since the municipal employee was performing a governmental function (road repair), the municipality could not be held liable for damages. It further stressed that the driver was not a special agent of the municipality under Article 2180 of the Civil Code, and thus the municipality could not be made responsible for his negligence.

• Torio vs. Fontanilla, 85 SCRA 99 (1978):

• In 1959, the Municipality of Malasiqui held a town fiesta and appropriated for the construction of two stages. During the performance of a “zarzuela,” the stage collapsed, fatally injuring Vicente Fontanilla. His heirs filed a complaint for damages. The Court held that the celebration of a town fiesta is proprietary in nature, meaning the municipality cannot invoke immunity from suit, and thus it was liable for negligence through its agents, while the councilors were absolved from personal liability absent bad faith or gross negligence.

[ii] Air Transportation Office v. Spouses David & Elisea Ramos, G.R. No. 159402, February 23, 2011:

• ❌ The Court said that the Air Transportation Office (ATO) is an agency of government not performing a purely governmental or sovereign function, but is instead involved in the management and maintenance of the Loakan Airport, an activity that is not the exclusive prerogative of the State in its sovereign capacity. Thus, it cannot invoke State immunity from suit.

[iii] National Electrification Administration v. Morales, G.R. No. 154200, July 24, 2007:

• ❌ The National Electrification Administration (NEA) is a government-owned or controlled corporation, a juridical person separate and distinct from the government, with capacity to sue and be sued.

Lockheed Detective & Watchman Agency v. University of the Philippines, G.R. No. 185918, April 18, 2012:

• ❌ Like NEA, the University of the Philippines (UP) is a juridical person, with a personality separate and distinct from the government, with the capacity to sue and be sued.

[iv] National Irrigation Administration v. Court of Appeals, G.R. No. 129169, November 17, 1999:

• ❌ The Supreme Court reiterated that National Irrigation Administration (NIA) is a corporate body performing proprietary functions, whose charter, P.D. 552, provides that it may sue and be sued.

• Philippine National Railways v. Intermediate Appellate Court, G.R. No. 70547, January 22, 1993:

• ❌ It was held that although the charter of Philippine National Railways (PNR) is silent on whether it may sue or be sued, it had already been ruled in Malong v. PNR, G.R. No. L-49930, August 7, 1985, that the PNR "is not performing any governmental function" and may, therefore, be sued.

• Malong v. PNR, G.R. No. L-49930, August 7, 1985:

• Spouses Francisco Malong and Rosalina Aquino-Malong filed a complaint for damages after their son, Jaime Aquino, a paying passenger, fell from an overcrowded PNR train and died. The Court held that PNR, though a government entity, operates as a common carrier in a proprietary capacity and is therefore subject to liability like private carriers.

[b] Unincorporated

• An unincorporated agency has no juridical personality independent of the Government.

• To determine its suability, one has to inquire into the principal functions of the agency:

• [i] If governmental: NO suit without consent. 

✅ IMMUNE from suit.

• Sanders v. Veridiano, supra; 

• Bureau of Printing v. Bureau of Printing Employees Association, G.R. No. L-15751, January 28, 1961;

• Veterans Manpower and Protective Services, Inc. v. Court of Appeals, G.R. No. 91359, September 25, 1992:

• ✅ The Court said that the PC Chief and PC-SUSIA are instrumentalities of the national government exercising primarily governmental functions (regulating the organization and operation of private detective, watchmen or security guard agencies), and thus may not be sued without consent.

• Faroian v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993:

• ✅ The Supreme Court said that the Bureau of Customs, being an unincorporated agency without a separate juridical personality, enjoys immunity from suit. It is invested with an inherent power of sovereignty, namely the power of taxation; it performs governmental functions.

• Bagong Buhay Trading sought damages for goods allegedly lost or damaged while in the custody of the Bureau of Customs after its shipment was seized and re-appraised. The Supreme Court rejected the claim, ruling that the Bureau of Customs, being an unincorporated agency of the government, has no separate juridical personality. Since it performs the sovereign function of revenue collection, any claim for damages against it is barred by the doctrine of state immunity from suit.

• Mobil Philippines Exploration v. Customs Arrastre Service, G.R. No. L-23139, December 17, 1966:

• ✅ It was held that the Customs Arrastre Service is merely an adjunct of the Bureau of Customs. A suit against it is, therefore, a suit against the Bureau of Customs, an unincorporated agency performing primarily governmental functions.

❗NOTE: Even in the exercise of proprietary functions incidental to its primarily governmental functions, an unincorporated agency still cannot be sued without its consent.

• [ia] Department of Agriculture v. NLRC, G.R. No. 104269, November 11, 1993:

• ❌ Because of the express consent contained in Act No. 3038 (where the Philippine Government "consents and submits to be sued upon any money claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties"), the Department of Agriculture could be sued on the contract for security services entered into by it (subject to prior filing of the claim with the Commission on Audit), despite it being an unincorporated agency performing primarily governmental functions.

• [ii] If proprietary: 

• Suit will lie, because when the State engages in principally proprietary functions, then it descends to the level of a private individual, and may, therefore, be vulnerable to suit.

• ❌ NOT IMMUNE FROM SUIT

• Civil Aeronautics Administration v. Court of Appeals, G.R. No. L-51806, November 8, 1988:

5. Suit against Public Officers

• The doctrine of State immunity also applies to complaints filed against officials of the State for acts performed by them in the discharge of their duties within the scope of their authority. 

• This principle was upheld recently in Department of Health v. Philippine Pharmawealth, G.R. No. 182358, February 20, 2013.

• Department of Health v. Philippine Pharmawealth, G.R. No. 182358, February 20, 2013:

• Veterans Manpower and Protective Services, Inc. v. Court of Appeals, G.R. No. 91359, September 25, 1992:

• ✅ The suit against the PC Chief and PC-SUSIA was dismissed for being a suit against the State, since it was a suit against public officers in the discharge of official functions which are governmental in character. 

• Larkins v. NLRC, G.R. No. 92432, February 23, 1995:

• It was noted that the private respondents were dismissed from their employment by Lt. Col. Frankhauser acting for and in behalf of the U.S. government which, by right of sovereign power, operated and maintained the dormitories at the Clark Air Base for USAF members.

• Animos v. PVAO, 174 SCRA 214 (1989):

• Isidro Animos, a World War II veteran, suffered permanent injuries in line of duty and applied for pension benefits under R.A. No. 65, but was granted only a partial disability pension despite the law entitling permanently incapacitated veterans to full benefits. He filed a petition for mandamus. The Court held that a suit against public officers to compel the performance of a ministerial duty is not a suit against the State. The doctrine of state immunity does not apply when the public officer is sued in his official capacity for acts that are alleged to be unlawful or in excess of authority.

[a] Arigo v. Swift, supra: 

• ✅ The U.S. respondents were sued in their official capacity as commanding officers of the U.S. Navy who had control and supervision over the USS Guardian and its crew.

• The alleged act or omission resulting in the unfortunate grounding of the USS Guardian on the Tubbataha Reef National Park was committed while they were performing official military duties. 

• Considering that the satisfaction of a judgment against said officials will require remedial actions and appropriation of funds by the U.S. Government, the suit is deemed to be one against the U.S. itself. 

• The doctrine of State immunity bars the exercise of jurisdiction by this Court over the persons of respondents Swift, Rice, and Robling.

[b] Sanders v. Veridiano, G.R. No. L-46930, June 10, 1988:

• The Supreme Court spoke of a number of well-recognized exceptions when a public officer may be sued without the prior consent of the State, viz: CRCS-V

1. To compel him to do an act required by law;

2. To restrain him from enforcing an act claimed to be unconstitutional;

3. To compel the payment of damages from an already appropriated assurance fund or to refund tax over-payments from a fund already available for the purpose;

4. To secure a judgment that the officer impleaded may satisfy by himself without the State having to do a positive act to assist him; and

5. Where the government itself has violated its own laws, because the doctrine of state immunity "cannot be used to perpetrate an injustice."

[c] The unauthorized acts of government officials are not acts of State.

• The public officer may be sued and held personally liable in damages for such acts.

• Shauf v. Court of Appeals, G.R. No. 90314, November 27, 1990:

• ❌ Loida Shauf and her husband filed a complaint for damages against Don E. Detwiler and Anthony Persi, U.S. Air Force officials at Clark Air Base, alleging employment discrimination based on her marriage to an American. The Court held that the doctrine of state immunity does not apply to public officers who commit unauthorized acts, acts done with malice or bad faith, or acts beyond the scope of their authority.  Such acts are not considered acts of the State, and the public officer may be sued and held personally liable for damages.

• Wylie v. Rarang, G.R. No. 74135, May 28, 1992:

• ❌ Where a public officer has committed an ultra vires act, or where there is a showing of bad faith, malice, or gross negligence, the officer can be held personally accountable, even if such acts are claimed to have been performed in connection with official duties.

• Republic v. Sandiganbayan, G.R. No. 142476, March 20, 2001:

• ❌ Thus, the PCGG or any of its members may be held civilly liable (for the sale of an aircraft to Fuller Aircraft, which was void) if they did not act with good faith and within the scope of their authority in the performance of official duties.

• U.S. v. Reyes, G.R. No. 79253, March 1, 1993: 

• ❌ Petitioner Bradford, Activity Exchange Manager at JUSMAG Headquarters, was held personally liable, inasmuch as the search of respondent Montoya at the JUSMAG parking lot (which subjected respondent to embarrassment) was held to be beyond the scope and even beyond the Manager's official functions.

• Montoya, a Filipino-American employee at the U.S. Navy Exchange (JUSMAG), sued Bradford, the store manager, for damages after being subjected to a discriminatory and public search of her person and belongings outside the store, claiming humiliation and racial bias. Bradford and the U.S. government invoked state and official immunity under the Military Assistance and Bases Agreements, but the Supreme Court held that such immunity does not apply when a public official acts ultra vires or beyond the scope of authority, especially in a personal capacity.

• Republic v. Hon. Edilberto Sandoval, G.R. No. 84607, March 19, 1993:

• ❌ Even as the Supreme Court dismissed the suit against the Republic of the Philippines, the action for damages against the military personnel and the policemen responsible for the 1989 Mendiola massacre was upheld, inasmuch as the initial findings of the Davide Commission (tasked by President Aquino to investigate the incident) showed that there was, at least, negligence on their part when they fired their guns.

• The Mendiola massacre on January 22, 1987, resulted in the deaths and injuries of protesters and prompted a complaint for damages against the Republic of the Philippines and the involved military and police officers. The Supreme Court affirmed the dismissal of the suit against the Republic, upholding state immunity due to the absence of an express waiver, but allowed the action to proceed against the individual officers. The Court held that military and police personnel could be held personally liable for acts done in excess of their authority or with negligence.

[d] Where the public official is sued in his personal capacity, the doctrine of State immunity will not apply, even if the acts complained of were committed while the public official was occupying a public position.

• Lansang v. Court of Appeals, G.R. No. 102667, February 23, 2000:

• ❌ The petitioner was sued for allegedly "personal motives" in ordering the ejectment of the General Assembly of the Blind, Inc. (GABI) from the Rizal Park; thus, the case was not deemed a suit against the State.

• Amado J. Lansang, NPDC Chairman, ordered the eviction of GABI from Rizal Park, allegedly violating a verbal lease. GABI sued him for damages claiming personal motives of revenge and ill-will. The Court held that Lansang was sued in his personal capacity, not as an official representative of the State. However, the Supreme Court found no evidence of bad faith or malice on Lansang’s part and no basis for awarding damages to GABI or Iglesias.

• Department of Health Secretary Dayrit v. Phil Pharmawealth, Inc., G.R. No. 169304, March 13, 2007: 

• ❌ It was held that the public officer who exceeds the power conferred on him by law cannot hide behind the plea of sovereign immunity and must bear the liability personally.

6. Need for Consent

• In order that suit may lie against the State, there must be consent, either express or implied. 

• Where no consent is shown, state immunity from suit may be invoked as a defense by the courts sua sponte at any stage of the proceedings, because waiver of immunity, being in derogation of sovereignty, will not be inferred lightly and must be construed in strictissimi juris.

• sua sponte – on its own motion

• Republic v. Feliciano, G.R. No. 70853, March 12, 1987:

• Accordingly, the complaint (or counterclaim) against the State must allege the existence of such consent (and where the same is found), otherwise, the complaint may be dismissed.

[a] Express Consent

• Express consent can be given only by an act of the legislative body, in a general or a special law.

• Republic v. Feliciano, supra.

[i] General Law.

• An example of a general law granting consent is CA 327, as amended by PD 1445, which requires that all money claims against the government must first be filed with the Commission on Audit before suit is instituted in court.

• Sayson v. Singzon, G.R. No. L-30044, December 19, 1973:

• Felipe Singson filed a mandamus to recover payment for supplying spare parts to the Bureau of Public Highways, but the Supreme Court held that his claim was a money claim against the State. Under the doctrine of non-suability, such actions cannot prosper without consent. Commonwealth Act No. 327, as amended by PD 1445, requires all money claims against the government to first be filed with the Commission on Audit. Since Singson bypassed this procedure and went directly to court, his suit was dismissed.

• Department of Agriculture v. NLRC, G.R. No. 104269, November 11, 1993:

• The Department of Agriculture may be sued for money claims based on a contract it may have entered into in its governmental capacity, because of the express consent contained in Act No. 3038, provided that the claim must first be brought to the Commission on Audit in accordance with CA 327, as amended.

• Amigable v. Cuenca, G.R. No. L-26400, February 29, 1972:

• An action for the recovery of the value of the property taken by the government and converted into a public street without payment of just compensation was allowed, despite the failure of the property owner to file his claim with the Auditor General. Invoking Ministerio v. City of Cebu, G.R. No. L-31635, August 31, 1971, the Supreme Court said that suit may lie because the doctrine of State immunity cannot be used to perpetrate an injustice.

• Victoria Amigable’s land in Cebu was taken by the government and converted into public roads without expropriation proceedings or payment of just compensation. The Supreme Court ruled that the owner may directly file an action in court for just compensation, and that the State cannot invoke immunity to evade its constitutional duty to pay for property taken for public use.

• De los Santos v. Intermediate Appellate Court, G.R. No. L-71998-99, June 2, 1993:

• It was held that the “public respondents' belief that the property is public, even if buttressed by statements of other public officials, is no reason for the unjust taking of petitioner's property”; after all, the TCT was in the name of the petitioner.

• EPG Construction v. Secretary Vigilar, G.R. No. 131544, March 16, 2001: 

• The ruling in Ministerio was invoked when the respondent DPWH Secretary denied the money claims of petitioners even after the DPWH Auditor interposed no objection to the payment and the DBM had ordered the release of the amount under a corresponding Advise of Allotment it issued. Where in Ministerio, the Court said that the doctrine cannot serve as an instrument for perpetrating an injustice on a citizen, in this case the Supreme Court declared that it is just as important, if not more so, that there be fidelity to legal norms on the part of officialdom if the rule of law were to be maintained.

• Santiago v. Republic, G.R. No. L-48214, December 19, 1978: 

• An action for the revocation of a donation because of the failure of the defendant to comply with stipulated conditions was allowed, inasmuch as the action did not involve a money claim.

• Ildefonso Santiago donated property to the Republic of the Philippines with conditions, but when the Republic allegedly failed to comply, he sought revocation of the donation and recovery of the property. The Supreme Court ruled that the action could proceed despite the doctrine of state immunity, since the case did not involve a money claim but the enforcement of contractual obligations arising from the donation. It held that state immunity is not absolute and cannot be used to perpetrate injustice.

[ii] Special Law.

• This form of consent must be embodied in a statute and cannot be given by a mere counsel.

• Merritt v. Government of the Philippine Islands, 34 Phil. 311:

• (Torts committed by special agents - NCC Article 2180)

• E. Merritt was injured in an accident caused by a government-owned ambulance, and a special law (Act No. 2457) was passed to allow him to sue the government despite the doctrine of state immunity. The Supreme Court ruled that while legislative consent permitted the suit, it did not amount to an admission of liability. Since the negligent driver was a regular employee and not a “special agent,” the government was not held liable for Merritt’s injuries.

• Republic v. Purisima, G.R. No. L-36084, December 31, 1977:

• (Money claims arising from contract)

• Yellow Ball Freight Lines sued the Rice and Corn Administration (RCA) for unpaid freight charges, but RCA invoked state immunity from suit. The Supreme Court held that under the 1973 Constitution, the State may not be sued without its consent, and such consent must be embodied in a statute enacted by Congress. It ruled that government counsel cannot waive immunity by appearance or agreement in court, since the authority to waive belongs exclusively to the legislature.

• Callado v. IRRI:

• By virtue of P.D. 1620, the grant of immunity to IRRI is clear and unequivocal, and an express waiver by its Director General is the only way by which it may relinquish or abandon this immunity.

[b] Implied Consent

[i] When the State commences litigation.

• When the State commences litigation, it becomes vulnerable to a counterclaim, except when the State intervenes not for the purpose of asking for any affirmative relief, but only for the purpose of resisting the claim precisely because of immunity from suit.

• Froilan v. Pan Oriental Shipping, G.R. No. L-6060, September 30, 1950:

• Fernando A. Froilan bought vessel FS-197 from the Shipping Commission, and mortgaged it to secure the balance. When he failed to pay the installments, the Shipping Commission repossessed the vessel and chartered it to Pan Oriental Shipping Co., but Froilan successfully appealed to the President, who restored his rights under the original contract. Froilan then filed a replevin case against Pan Oriental, which lost possession of the vessel, prompting the Republic to intervene to recover the vessel and foreclose the mortgage. The Supreme Court held that since the Republic voluntarily intervened, it waived its immunity from suit with respect to counterclaims directly related to its intervention, as it had descended to the level of a private litigant.

• Lim v. Brownell, 107 Phil. 345:

• Four parcels of land in Tondo, originally owned by a Japanese national, were vested in the U.S. Alien Property Custodian after the war and later transferred to the Republic of the Philippines, with the Republic agreeing to indemnify the U.S. for any related claims. When Benito Lim sued to recover the properties and claim damages for back rents, the Republic intervened in the case but only to resist the claims and assert state immunity. The Court ruled that such intervention did not amount to a waiver of immunity since the Republic did not seek affirmative relief but merely defended itself, and claims for damages against the State could not be maintained without its consent.

[ii] When the State enters into a business contract.

• U.S. v. Ruiz, G.R. No. L-35645, May 22, 1985:

• The Supreme Court distinguished between contracts entered into by the State in jure imperii (sovereign acts) and jure gestionis (commercial or proprietary acts).

• Where the contract is in pursuit of a sovereign activity, there is no waiver of immunity, and no implied consent may be derived therefrom.

• It was held that the contract for the repair of wharves was a contract in jure imperii, because the wharves were to be used for national defense, a governmental function.

• Eligio de Guzman & Co., Inc. sued the United States and its naval officers after being disqualified from bidding on repair projects at the Subic Naval Base, claiming breach of contract and seeking damages. The U.S. invoked state immunity, arguing that the acts were undertaken in its sovereign capacity in connection with the operation and maintenance of a military base. The Supreme Court upheld the U.S.’s immunity, ruling that Philippine courts had no jurisdiction since the contracts were tied to sovereign, not commercial, functions.

• JUSMAG Phil. v. NLRC, G.R. No. 108813, December 15, 1994: 

• The engagement of the services of private respondent was held to be performance of a governmental function by JUSMAG, on behalf of the United States. Accordingly, JUSMAG may not be sued under such a contract.

• Republic of Indonesia v. Vinzon, G.R. No. 154705, June 26, 2003: 

• It was held that contracts entered into by a sovereign state in connection with the establishment of a diplomatic mission, including contracts for the upkeep or maintenance of air conditioning units, generator sets, electrical facilities, water heaters and water motor pumps of the embassy and the Ambassador's residence, are contracts in jure imperii.

• The fact that the contract contains a provision that any legal action arising out of the agreement shall be settled according to the laws of the Philippines and by a specified court of the Philippines does not necessarily mean a waiver of the State's sovereign immunity from suit.

• Indonesia, through its embassy officials, entered into a maintenance contract with Vinzon, which it later terminated for unsatisfactory service. Vinzon sued, arguing that Indonesia waived immunity by submitting to Philippine law and courts, but the Supreme Court held that maintaining embassy premises is a sovereign act (jure imperii), not a commercial one. Thus, no waiver of immunity was made, and the case was dismissed, with embassy officials also protected by diplomatic immunity under the Vienna Convention.

• U.S. v. Guinto, G.R. No. 76607, February 26, 1990: 

• The contract bidded out for barbershop facilities in the Clark Field US Air Force Base was deemed commercial. Similarly, in a companion case, U.S. v. Rodrigo, a contract for restaurant services within the Camp John Hay Air Station was held commercial in character.

• G.R. No. 79470 (Dismissal as Cook)

• Fabian Genove sued petitioners for wrongful dismissal after being accused of pouring urine into the soup stock in the U.S. Air Force Recreation Center at John Hay Air Station. The U.S. government operated restaurant services at John Hay Air Station in a commercial capacity. Since these services were profit-based and open to the public, the doctrine of state immunity does not apply. Despite suability, the petitioners are not liable for damages as Genove's dismissal was based on an investigation confirming his act of contaminating soup, which was upheld by a board of arbitrators.

• G.R. No. 76607 (Barber Service Contracts)

• Private respondents filed a complaint after losing the bid for barber services at Clark Air Base to Ramon Dizon. Barbershops operating on U.S. bases are commercial enterprises with contracts that remit fees to the U.S. government. The doctrine of state immunity does not apply to these profit-driven activities.

• Republic v. Sandiganbayan, supra.:

• The Court held that even if, in exercising the power of eminent domain, the State exercises a power jure imperii, as distinguished from its proprietary right of jure gestionis, where property has been taken without just compensation being paid, the defense of immunity from suit cannot be set up in an action for payment by the owner. See Amigable v. Cuenca, G.R. No. L-26400, February 29, 1972.

• Republic (PCGG) v. Sandiganbayan, G.R. No. 129406, March 6, 2006: 

• 227 shares in Negros Occidental Golf and Country Club, Inc. (NOGCCI) owned and registered in the name of private respondent Benedicto were sequestered and taken over by PCGG fiscal agents.

• In a suit for payment of dues of the sequestered shares, PCGG raised, among others, the defense of immunity from suit. 

• The Supreme Court held that by entering into a Compromise Agreement with Benedicto, the Republic stripped itself of its immunity and placed itself in the same level as its adversary.

• When the State enters into a contract through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations arise therefrom, the State may be sued even without its express consent, precisely because by entering into a contract, the sovereign descends to the level of the citizen.

7. Scope of Consent

• Consent to be sued does not include consent to the execution of judgment against it.

[a] Such execution will require another waiver, because the power of the court ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment, unless such disbursement is covered by the corresponding appropriation as required by law.

• Republic v. Villasor, G.R. No. L-30671, November 28, 1973; 

• AFP Fund

• Department of Agriculture v. NLRC, supra:

• Larkins v. NLRC, G.R. No. 92432, February 23, 1995: 

• Considering that the employer of private respondents was not Lt. Col. Frankhauser or the petitioner but the U.S. Government which, by right of sovereign power, operated and maintained the dormitories at the Clark Air Base for USAF members, the awards (of monetary claims to the private respondents) will have to be satisfied by the U.S. Government. 

• Without its consent the properties of the U.S. Government may not be subject to execution.

[b] But funds belonging to government corporations (whose charters provide that they can sue and be sued) that are deposited with a bank are not exempt from garnishment.

• Philippine National Bank v. Pabalan, G.R. No. L-33112, June 15, 1978:

• A judgment was rendered in favor of Agoo Tobacco Planters Association, Inc. against the Philippine Virginia Tobacco Administration (PVTA), a government-owned and controlled corporation (GOCC), and a writ of execution with a notice of garnishment was issued against PVTA’s funds deposited with PNB. PNB objected, arguing that the funds were public in character and thus exempt from garnishment under the doctrine of non-suability of the State. The Supreme Court ruled that GOCCs with separate juridical personalities, like PVTA, are not automatically immune from garnishment, even if their funds are governmental in nature, and may be subjected to court processes like any private corporation.

• National Housing Authority v. Heirs of Quivelondo, G.R. No. 154411, June 19, 2003:

• It was held that if the funds belong to a public corporation or a government-owned or controlled corporation which is clothed with a personality of its own, then the funds are not exempt from garnishment. 

• This is so because when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation. 

• NHA is one such corporation; thus, its funds are not exempt from garnishment or execution.

• National Electrification Administration v. Morales, supra and as reiterated in Lockheed Detective & Watchman Agency v. University of the Philippines, supra:

• The Supreme Court said that the NEA, being possessed of a juridical personality independent of the Government, has the capacity to sue and be sued.

• Thus, it cannot avoid execution, but before execution may proceed against it, a claim for payment of the judgment award must first be filed with the Commission on Audit. 

• Under P.D. 1445, amending C.A. 327, it is the Commission on Audit (COA) that has primary jurisdiction to examine, audit and settle "all debts and claims of any sort" due from or owing the Government or any of its subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries.

• Lockheed Detective & Watchman Agency v. University of the Philippines, supra: 

• The Court added that with respect to money claims arising from the implementation of R.A. 6758 (Compensation and Position Classification Act of 1989), their allowance or disallowance is for COA to decide, subject only to the remedy of appeal by petitioner for certiorari to the Supreme Court.

• University of the Philippines v. Hon. Dizon, G.R. No. 171182, August 23, 2012: 

• The Court reiterated that the execution of the monetary judgment against the University of the Philippines (UP) is within the primary jurisdiction of the Commission on Audit (COA), pursuant to P.D. 1445. 

• It is of no moment that a final and executory decision of the RTC had already validated the claim against UP. 

• The settlement of the monetary claim is still subject to the primary jurisdiction of COA; as such, claimants have no alternative except to first seek the approval of their monetary claim by COA.

• In the same case, the Supreme Court declared that the funds of the UP are government funds that are public in character. 

• Thus, the garnishment of its funds to satisfy the RTC judgment awards of actual and moral damages (including attorney's fees) was not validly made if there was no special appropriation by Congress to cover the liability.

• Indeed, an appropriation by Congress was required before the judgment that rendered UP liable for moral and actual damages (including attorney's fees) would be satisfied, considering that such monetary liabilities were not covered by the "appropriation earmarked for the project" (which covered merely the basic project contract amount).

• Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. L-61744, June 25, 1984:

• It is also noteworthy that in, it was held that funds of a municipality (although it is an incorporated agency whose charter provides that it can sue and be sued) are public in character and may not be garnished unless there is a corresponding appropriation ordinance duly passed by the Sangguniang Bayan.

• The Municipality of San Miguel, Bulacan, was ordered to partially revoke a deed of donation and pay damages, but when respondents sought to enforce the money judgment, the municipality argued that its funds and properties, being public in character, are exempt from execution. The Court reaffirmed that municipal funds are held in trust for the people and are generally exempt from garnishment or execution. No disbursement from the municipal treasury can be made without a corresponding appropriation ordinance passed by the Sangguniang Bayan or other specific statutory authority. Even though municipalities can sue and be sued, their funds remain public and cannot be levied upon unless lawfully appropriated for the purpose.

• City of Caloocan v. Allarde, G.R. No. 107271, September 10, 2003:

• The rule was reiterated that all government funds deposited with any official depositary bank of the Philippine Government by any of its agencies or instrumentalities, whether by general or special deposit, remain government funds and may not be subject to garnishment or levy in the absence of a corresponding appropriation as required by law.

• In this case, the City of Caloocan had already approved and passed Ordinance No. 0134, Series of 1992, allocating the amount of P439,377.14 for respondent Santiago's back salaries plus interest. Thus, this case fell squarely within the exception, and the amount may therefore be garnished.

• Delfina H. Santiago, a judge, had a claim for backwages against the City of Caloocan covering 1983–1986, and after 21 years of litigation. The City repeatedly resisted payment and challenged the garnishment of its funds, arguing that public funds are generally exempt from execution. The Supreme Court upheld the garnishment, explaining that while government funds are generally immune from execution to protect public services, this immunity does not apply when there is a specific appropriation by law or ordinance for payment of a government obligation. Since Ordinance No. 0134, Series of 1992, earmarked the exact amount for Santiago’s back salaries, the funds were validly garnished. 

• Municipality of Makati v. Court of Appeals, G.R. No. 89898-99, October 1, 1990:

• When there is no appropriation ordinance, a remedy is suggested in (this case), where it was held that if the municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment rendered against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance and the corresponding disbursement of municipal funds to satisfy the money judgment.

• The Municipality of Makati initiated expropriation proceedings against private respondents, and the court fixed the just compensation in a decision that became final and executory. A writ of execution was issued, and the sheriff served a notice of garnishment on Makati’s accounts with PNB, but the municipality failed to pay the judgment. Private respondents sought to garnish the accounts, which included an expropriation account and general municipal funds, but Makati argued that public funds are exempt from execution without an appropriation ordinance. The Supreme Court held that public funds of a municipality are generally immune from garnishment to satisfy money judgments. The Court also clarified that if a municipality unjustifiably refuses to pay a final judgment, the creditor may seek a writ of mandamus to compel the enactment of an appropriation ordinance and the disbursement of funds to satisfy the judgment.

• Be that as it may, in light of recent decisions, it would appear that the settlement of the monetary claim would still be subject to the primary jurisdiction of COA, i.e., the claimants must seek the prior approval of COA before execution of the money judgment.

[c] Pacific Products v. Ong, G.R. No. L-33777, January 30, 1990:

• The Supreme Court said that by the process of garnishment, the plaintiff virtually sues the garnishee for a debt due from the defendant. 

• The debtor-stranger becomes a forced intervenor; when served with the writ of attachment, he becomes a party to the action. 

• Money in the hands of a government agency (engaged in governmental functions), even if due to a third party, is not liable to creditors of the third party through garnishment. 

• To allow this would be to allow a suit against the State without the latter's consent.

• Government funds, even if due to private parties, are exempt from garnishment because it amounts to an indirect suit against the State, which requires its consent.

• Nessia vs. Fermin, 220 SCRA 615 (1993):

• Jose Nessia filed a complaint against Mayor Fermin and the Municipality for failing to act on his vouchers, claiming damages under Article 27 of the Civil Code. The trial court ruled in Nessia’s favor, holding Fermin liable for malicious inaction. The Municipality did not appeal. The Court of Appeals dismissed Nessia’s complaint, giving relief to the Municipality even though the Municipality did not appeal. The Supreme Court clarified that the appellate court cannot grant relief to a non-appellant, and the dismissal by the Court of Appeals did not erase Fermin’s liability. Fermin’s deliberate failure to act on Nessia’s vouchers was not consent to execution but a malicious refusal to perform his official duty, making him personally liable for damages under Article 27 of the Civil Code.

8. Suability Not Equated with Outright Liability

• Liability will have to be determined by the Court on the basis of the evidence and the applicable law.

[a] Merritt v. Government of the Philippine Islands, supra.: 

• While consent to be sued was granted through a special law, the government was held not liable for damages, because under the attendant circumstances the government was not acting through a special agent.

[b] Fontanilla v. Maliaman, G.R. No. L-55963, December 1, 1989: 

• The Supreme Court said that the National Irrigation Administration is a government agency with a juridical personality separate and distinct from the government; it is a corporate body performing proprietary functions.

• Thus, the NIA may be held liable for damages caused by the negligent act of its driver who was not a special agent. This was reiterated in National Irrigation Administration v. Court of Appeals, G.R. No. 129169, November 17, 1999.

Syllabus

V. DOCTRINE OF STATE IMMUNITY

1. Basis - Article XVI, Section 3

2. Suit against a State determined

1. Republic vs. Feliciano, 148 5CRA 424 (1987)

• Pablo Feliciano filed a complaint for recovery of ownership and possession of a parcel of land against the Republic of the Philippines, represented by the Land Authority.

• The land was included in a NARRA settlement reservation under Proclamation No. 90 (1954), but Feliciano argued it was private property and should be excluded.

• The Republic, through the Solicitor General, moved to dismiss the case, invoking the doctrine of state immunity from suit.

• CFI: Dismissed the case for lack of jurisdiction.

• CA: Reversed and remanded the case for further proceedings.

• Whether the doctrine of state immunity from suit bars the suit against the Republic of the Philippines for recovery of land.

• ✅ The doctrine of non-suability of the State applies.

• The complaint was directed against the Republic, making it a suit against the State.

• The State cannot be sued without its consent, which must be shown either expressly or by necessary implication through statutory language.

• No such consent was shown in this case; the complaint itself failed to allege the existence of such consent, which is a fatal defect.

• The defense of state immunity can be invoked by the courts at any stage of the proceedings, even if not raised earlier by the State.

• The Court clarified that waiver of state immunity must be strictly construed and can only be made by legislative act.

• "On the assumption that decision is rendered against the public officer or agency impleaded, will the enforcement thereof require an affirmative act from the State, such as the appropriation of the needed amount to satisfy the judgment? If so, then it is a suit against the State."

3. Express Consent

a. Money claims arising from contract - Act. No. 3083; C.A. No. 327 as amended by P.D. No. 1445

1. Sayson vs. Singson, 54 SCRA 282 (1973)

• Felipe Singson supplied spare parts to the Bureau of Public Highways.

• He sought payment for the balance allegedly due from the government.

• Instead of filing a claim with the General Auditing Office (now Commission on Audit or COA), Singson filed a mandamus suit in the Court of First Instance to compel the auditors to approve payment.

• CFI: Ruled in favor of Singson.

• Whether a money claim against the government can be directly filed in court without first filing with the General Auditing Office/COA.

• A money claim against the government is a suit against the State, which cannot prosper without consent.

• Commonwealth Act No. 327, as amended by Presidential Decree No. 1445, is a general law granting consent for the government to be sued for money claims, but with a specific procedure.

• All money claims against the government must first be filed with the Commission on Audit (formerly General Auditing Office).

• Only after the COA has rendered a decision, and if the claim is denied, may the aggrieved party appeal to the Supreme Court on certiorari.

• Filing a suit in court without first exhausting the remedy before the COA is a fatal procedural misstep.

• Even if the State consents to be sued, it may set conditions and procedures for such suits.

2. Republic vs. Purisima, 78 SCRA 470 (1977)

• Yellow Ball Freight Lines filed a civil action for collection of a sum of money from an alleged breach of contract of carriage, claiming Rice and Corn Administration (RCA) failed to pay freight charges for services rendered in transporting rice and/or corn.

• RCA, through the Solicitor General, filed a Motion to Dismiss invoking the doctrine of State immunity from suit, arguing that RCA, as part of the national government, could not be sued without statutory consent.

• Judge Amante P. Purisima of CFI-Manila: Denied the motion, reasoning that RCA’s counsel had effectively submitted to the court’s jurisdiction.

• The Republic filed a petition for certiorari and prohibition before the Supreme Court.

• At the time, the 1973 Constitution had just been ratified, expressly stating: “The State may not be sued without its consent.”

• Whether the government can be sued in the absence of its consent, and if such consent can be given by government counsel or must be embodied in a statute.

• The Court reaffirmed the doctrine of state immunity from suit unless the State gives its consent.

• Consent to be sued must be embodied in a statute (special law) enacted by the legislature.

• Consent cannot be given by mere agreement or appearance of government counsel in court.

• The authority to waive immunity is a legislative, not executive or administrative, prerogative.

• “The consent, to be effective though, must come from the State acting through a duly enacted statute as pointed out by Justice Bengzon in Mobil. Thus, whatever counsel for defendant Rice and Corn Administration agreed to had no binding force on the government. That was clearly beyond the scope of his authority.”

b. Torts committed by special agents - NCC Article 2180

1. Meritt vs Government, 34 Phil. 311 (1916)

• E. Merritt, a contractor, was riding his motorcycle along Calle Padre Faura.

• He was struck by a government-owned ambulance driven negligently by a hospital employee.

• Merritt sustained severe injuries, rendering him permanently incapacitated and unable to earn his previous income.

• At the time, the doctrine of state immunity barred suits against the government.

• To allow Merritt to sue, the Philippine Legislature enacted Act No. 2457, a special law expressly authorizing Merritt to bring suit against the Government and empowering the Attorney-General to appear in the case.

• Whether the Government of the Philippine Islands, by enacting a special law authorizing suit, thereby conceded liability to Merritt for damages caused by a government ambulance.

• The Supreme Court held that the Government of the Philippine Islands cannot be sued without its consent.

• Consent to be sued must be granted by statute, not by mere representation or appearance of counsel.

• Act No. 2457 constituted valid legislative consent, allowing the suit to proceed.

• However, consent to be sued ≠ admission of liability. 

• It merely waives immunity and allows judicial determination.

• The government is not liable for acts of its agents unless such agents are “special agents”—those acting under a specific, fixed commission outside their regular duties.

• The ambulance driver was a regular employee, not a special agent; thus, the government was not liable for his negligence.

c. Incorporated Government Agencies

(Note: Unincorporated Agencies exercising principally proprietary functions may be sued)

1. PNB vs. CIR, 81 SCRA 314 (1978)

• The People's Homesite and Housing Corporation (PHHC), a government-owned and controlled corporation (GOCC), had funds deposited with the Philippine National Bank (PNB).

• A final and executory judgment was rendered by the Court of Industrial Relations (CIR) in favor of the United Homesite Employees and Laborers Association, represented by their counsel, Gabriel V. Manansala.

• To satisfy the judgment, a writ of execution and notice of garnishment were issued against the PHHC’s funds deposited with PNB.

• PNB filed a motion to quash the notice of garnishment, arguing that the funds were "public in character" and thus exempt from garnishment.

• CIR: Denied the motion to quash.

• Whether the garnishment of funds deposited by a government-owned corporation (People’s Homesite and Housing Corporation) in PNB may proceed, despite the doctrine of state immunity from suit.

• On the "Sue and Be Sued" Clause:

• The Supreme Court held that when a government agency’s charter expressly provides that it can "sue and be sued," this constitutes an express waiver of the State’s immunity from suit, including actions for tort and execution of judgments.

• The PHHC, as a GOCC with such a charter provision, can be sued and its funds subjected to garnishment and execution.

• The Court cited the doctrine in National Shipyard and Steel Corporation v. Court of Industrial Relations, emphasizing that a GOCC has a personality separate from the government and may be subjected to court processes just like any private corporation.

• On the Nature of Funds:

• The mere fact that the funds are "public in character" does not automatically exempt them from garnishment if they belong to a GOCC with a "sue and be sued" clause.

• The Court rejected the argument that the funds’ public character made them immune, reiterating that the PHHC’s separate juridical personality allows its funds to be garnished.

• On Technicality in Execution:

• The Court acknowledged a possible technical defect in the appointment of the special deputy sheriff but held that this did not amount to grave abuse of discretion.

• The overriding concern is the execution of a final judgment to achieve justice, and technicalities should not defeat substantive rights, especially when the error was committed in good faith.

2. SSS vs. CA. 120, SCRA 707 (1983)

• In 1963, spouses David B. Cruz and Socorro Concio Cruz applied for a real estate loan from the Social Security System (SSS), a government-created entity with corporate powers.

• To secure the loan, the couple mortgaged their residential property located in Pateros, Rizal.

• After failing to meet their loan obligations, the SSS initiated foreclosure proceedings on the mortgaged property.

• During the foreclosure process, a third party asserted ownership over the property, leading to litigation that ultimately resulted in the loss of the property for the Cruz spouses.

• The spouses filed a civil case for damages against the SSS, alleging negligence and bad faith in the handling of the foreclosure and protection of their rights.

• SSS argued that it was performing governmental functions and, as such, was immune from suit unless the State expressly consented.

• RTC & CA: Rejected the immunity claim, citing the SSS charter which explicitly states that it may “sue and be sued.”

• Whether the SSS can be sued for damages arising from its contractual dealings, given its claim of immunity as a government agency performing governmental functions.

• The Supreme Court modified the lower courts’ rulings, holding that SSS was not liable for compensatory, moral, and temperate damages, but was liable for nominal damages and attorney’s fees.

• SSS is a juridical entity with corporate powers separate and distinct from the Government.

• Its organic act expressly provides that it can “sue and be sued” in court.

• These words embrace all civil processes incident to a legal action, including suits for tort or contractual liability.

• Even if SSS performs governmental functions, the explicit statutory provision constitutes express consent by the State to be sued.

• Such consent does not automatically admit liability—SSS may still raise lawful defenses.

• If a government agency’s charter expressly provides that it can “sue and be sued,” this constitutes the State’s express consent to be sued, including for torts.

• “We come now to the amenability of the SSS to judicial action and legal responsibility for its acts. To our minds, there should be no question on this score considering that the SSS is a juridical entity with a personality of its own. It has corporate powers separate and distinct from the Government. SSS' own organic act specifically provides that it can sue and be sued in Court. These words 'sue and be sued' embrace all civil process incident to a legal action. So that, even assuming that the SSS, as it claims, enjoys immunity from suit as an entity performing governmental functions, by virtue of the explicit provision of the aforecited enabling law, the Government must be deemed to have waived immunity in respect of the SSS, although it does not thereby concede its liability. That statutory law has given to the private citizen a remedy for the enforcement and protection of his rights. The SSS thereby has been required to submit to the jurisdiction of the Courts, subject to its right to interpose any lawful defense.”

• Even if the SSS is not primarily profit-oriented, it acts for profit in contractual loan agreements with private parties, as it charges interest and other fees.

• The argument that liability would deplete benefit funds is unavailing; SSS funds are also used for salaries and other expenses.

3. Rayo v. CFI, 110 SCRA 450 (1981)

• On October 26, 1978, during the height of Typhoon Kading, the National Power Corporation (NPC)—through its plant superintendent Benjamin Chavez—ordered the simultaneous opening of all three floodgates of the Angat Dam.

• This sudden release of water caused catastrophic flooding in several towns in Bulacan, with Norzagaray being the hardest hit. Around 100 residents died, and millions of pesos worth of property were destroyed.

• Multiple victims, including Gaudencio Rayo and others, filed eleven separate complaints for damages against NPC and its plant superintendent.

• NPC argued that in operating the Angat Dam, it was performing a purely governmental function and therefore could not be sued without the State’s express consent.

• CFI: Dismissed the complaints.

• Whether the National Power Corporation can be sued for damages arising from its operation of the Angat Dam, despite its claim of immunity as a government entity performing governmental functions.

• NPC, though government-owned, is a juridical entity with a personality separate and distinct from the State.

• NPC’s charter explicitly states that it may “sue and be sued in any court.” 

• This provision constitutes an express waiver of immunity by the State.

• The Court clarified that the “sue and be sued” clause is unqualified—it covers all causes of action, including tort claims arising from negligence or wrongful acts.

• Whether NPC was performing a governmental or proprietary function was deemed irrelevant. The presence of the charter provision was sufficient to allow the suit.

4. Farolan v. CTA, 217 SCRA 298 (1993)

• Bagong Buhay Trading brought in a shipment of screen net, declared as 500 rolls weighing 12,777 kg.

• The Collector of Customs, acting on information that the shipment was actually "mosquito net" made of nylon (a different tariff heading), ordered a re-examination.

• The re-examination revealed the shipment was actually 1,600 rolls, weighing 13,600 kg, and made of synthetic (polyethylene) woven fabric.

• Collector of Customs: Re-appraised the shipment, resulting in a higher valuation and assessment of duties and taxes (P272,600.00). Also ordered forfeiture of the shipment for misdeclaration as to quantity and value.

• Commissioner of Customs: Affirmed the Collector’s decision.

• Court of Tax Appeals: Reversed the customs authorities, ordered the release of the goods, and denied the Commissioner’s motion for reconsideration.

• The importer also claimed damages for lost and damaged goods during customs custody.

• Whether the Bureau of Customs could be held liable for damages.

• The Supreme Court affirmed the CTA’s decision on the classification and computation of duties.

• On the claim for damages, the Supreme Court categorically ruled that the Bureau of Customs cannot be held liable for actual damages suffered by the importer.

• The Bureau of Customs, as an unincorporated government agency without separate juridical personality, enjoys immunity from suit.

• The Bureau performs governmental functions, specifically the collection of revenues (taxation), which is an inherent sovereign function.

• Allowing a claim for damages against the Bureau would violate the doctrine of state immunity from suit.

• Importers cannot claim damages against the Bureau of Customs for losses incurred while goods are in customs custody, as this would amount to a suit against the State.

• “As an unincorporated government agency without any separate juridical personality of its own, the Bureau of Customs enjoys immunity from suit. Along with the Bureau of Internal Revenue, it is invested with an inherent power of sovereignty, namely, taxation. As an agency, the Bureau of Customs performs the governmental function collecting revenues which is definitely not a proprietary function. Thus, private respondent's claim for damages against the Commissioner of Customs must fail.”

4. Implied Consent

a. Government submits itself to the court’s jurisdiction

b. The State itself files a complaint

1. RP vs. Sandiganbayan, G.R. No. 85384, Feb. 28, 1990

• On July 29, 1987, the Republic, through the Presidential Commission on Good Government (PCGG), filed a complaint before the Sandiganbayan against Ferdinand Marcos and associates for reconveyance, reversion, accounting, restitution, and damages.

• The complaint included properties such as lots and shares of stock in Bacolod Real Estate Development Corporation (BREDCO), allegedly part of the Marcoses’ ill-gotten wealth.

• Simplicio Palanca and other BREDCO stockholders filed a motion to intervene, asserting:

• They had legal interest in the properties listed.

• The complaint did not allege any wrongdoing by BREDCO.

• The listed properties were registered in BREDCO’s name, not in the names of the defendants.

•  Sandiganbayan Resolutions

• June 3, 1988: Allowed intervention and admitted the Answer-in-Intervention.

• August 25, 1988: Denied the Republic’s motion for reconsideration.

• The Republic sought to annul the Sandiganbayan’s resolutions, arguing that the intervention was improper and would delay proceedings.

• Whether the State, through the PCGG, waives its immunity from suit and from the rules of discovery when it initiates litigation.

• The Supreme Court held that when the State commences litigation, it waives its immunity from suit and subjects itself to the court’s jurisdiction, including the rules of procedure and discovery.

• When the State files a case in court, it waives its immunity from suit with respect to that case and is bound by the same procedural rules, including discovery, as any private litigant.

• The Court emphasized that the State, as a litigant, must observe the same rules as private parties to ensure fairness and due process.

• The Court cited the principle that the modes of discovery are designed to ensure mutual knowledge of all relevant facts, prevent surprise, and facilitate a fair trial.

• The PCGG, by filing the complaint, cannot claim immunity from the procedural rules that govern all litigants.

• The Sandiganbayan did not abuse its discretion in allowing intervention, especially since the intervenors were not accused of wrongdoing and had a direct stake in the outcome.

2. Froilan vs. Pan Oriental Shipping Co., 95 Phil. 905 (1954)

• Fernando A. Froilan bought vessel FS-197 from the Shipping Commission for ₱200,000, paid ₱50,000 down, and mortgaged the vessel to secure the balance.

• Due to non-payment of installments, the Shipping Commission repossessed the vessel and chartered it to Pan Oriental Shipping Co.

• Froilan appealed to the President, who restored his rights under the original contract.

• Froilan demanded the vessel’s return from Pan Oriental Shipping Co., which refused.

• Froilan filed a complaint for replevin (recovery of possession) against Pan Oriental Shipping Co.

• CFI: Issued a writ of replevin, and Pan Oriental Shipping Co. lost possession of the vessel.

• The Republic of the Philippines (through the Shipping Commission) intervened, claiming Froilan still owed the balance and sought possession of the vessel to foreclose the mortgage.

• Pan Oriental Shipping Co. filed a counterclaim against the Republic, seeking delivery of the vessel if the government recovered it from Froilan, based on their charter contract.

• CFI: Dismissed Pan Oriental Shipping Co.’s counterclaim, reasoning it was barred by prior judgment and that the government was immune from suit.

• Whether the Republic of the Philippines may invoke immunity from suit to avoid a counterclaim after it voluntarily intervened in a private litigation.

• The Supreme Court held that when the State voluntarily intervenes in a case, it waives its immunity from suit for matters arising from that intervention.

• The State, by filing a complaint in intervention, descends to the level of an ordinary litigant and becomes subject to counterclaims related to the same transaction or occurrence.

• The opposing party (Pan Oriental) acquired the right to assert defenses and counterclaims.

• The waiver is not absolute—it applies only to claims directly connected to the subject matter of the State’s action.

• The Supreme Court reversed the lower court’s dismissal of the counterclaim and remanded the case for further proceedings.

• “The State, by filing an action against an individual, divests itself of its sovereign character thereby submitting itself open to any counterclaim... After descending to the level of an ordinary citizen, the State cannot unilaterally ascend back to its privileged position of non-suability behind the cloak of sovereign immunity in the face of a counter suit the origin of which the State itself initiated.”

3. Lim vs. Brownell, 107 Phil. 344 (1960)

• Four parcels of land in Tondo, Manila, originally registered in the name of Asaichi Kagawa, a Japanese national.

• After the war, the Alien Property Custodian of the United States vested ownership of the properties in himself under the Trading with the Enemy Act.

• The Philippine Alien Property Administrator, acting for the U.S. President, later transferred the properties to the Republic of the Philippines, with the Republic agreeing to indemnify the U.S. for any claims related to the property.

• Benito Lim, as administrator of the intestate estate of Arsenia Enriquez, filed a complaint in the Court of First Instance of Manila to recover the properties and claim back rents/damages.

• The Republic of the Philippines intervened, not to claim any affirmative relief, but to resist Lim’s claims and assert state immunity from suit.

• Whether the intervention by the State in a case constitutes a waiver of its immunity from suit, particularly when the State intervenes only to resist a claim and not to seek affirmative relief.

• General Rule: The State cannot be sued without its consent.

• Exception: The State may be deemed to have waived immunity if it commences litigation or seeks affirmative relief.

• "The claim for damages for the use of the property against the intervenor defendant Republic of the Philippines to which it was transferred, likewise, cannot be maintained because of the immunity of the state from suit. The claim obviously constitutes a charge against, or financial liability to, the Government and consequently cannot be entertained by the courts except with the consent of said government... Clearly, this is not a case where the state takes the initiative in an action against a private party by filing a complaint in intervention, thereby surrendering its privileged position and coming down to the level of the defendant... but one where the state, as one of the defendants merely resisted a claim against it precisely on the ground, among others, of its privileged position which exempts it from suit." 

• The Republic’s intervention was solely to resist the claim and assert its immunity, not to seek any affirmative relief. 

• Thus, it did not amount to a waiver of immunity from suit.

• Intervention by the State does not automatically mean waiver of immunity. 

• Only when the State seeks affirmative relief or initiates litigation does it waive immunity.

• If the State intervenes to claim affirmative relief, it waives immunity.

• If it intervenes only to resist a claim, immunity remains.

c. Government entering into business contracts

1. US vs. Ruiz, 186 SCRA 487

• The United States of America (US) entered into a contract with a private company for the repair of wharves at the US Naval Base in Subic Bay, Philippines.

• The contract was part of the US military’s operations and maintenance of its naval facilities, which were used for national defense purposes.

• Eligio de Guzman & Co., Inc. submitted bids, confirmed its proposals, and claimed its bids were accepted under U.S. bidding practices.

• The U.S., through its Navy contracts division, later informed the company that it was disqualified due to unsatisfactory past performance, and the projects were awarded to others. 

• The company then filed a civil case against the U.S. and its officers, seeking specific performance or damages, plus an injunction.

• The US, invoking the doctrine of state immunity from suit, moved to dismiss the case, arguing that it could not be sued in Philippine courts without its consent.

• CFI: Denied the motion, reasoning that by entering into a contract, the US had impliedly consented to be sued.

• Whether the United States of America, by entering into a contract for the repair of wharves at a military base, impliedly waived its immunity from suit in the Philippines.

• The Supreme Court dismissed the civil case against the US.

• The Court distinguished between acts jure imperii (sovereign/governmental acts) and acts jure gestionis (commercial/proprietary acts) of a state.

• Jure imperii — Contracts entered into by a state in the exercise of its sovereign functions do not constitute a waiver of immunity from suit.

• Jure gestionis — Contracts entered into in a commercial or proprietary capacity may be deemed a waiver of immunity, allowing the state to be sued.

• The doctrine of state immunity from suit applies only to acts jure imperii.

• When a state enters into a contract in pursuit of a sovereign function (e.g., national defense), it does not waive its immunity, and no implied consent to be sued arises.

• In this case, the contract for the repair of wharves was in pursuit of a sovereign activity (national defense), thus an act jure imperii.

• The Supreme Court held that no implied consent to be sued arises from contracts entered into by the state in the exercise of its sovereign functions.

• The restrictive doctrine of state immunity applies: immunity is recognized only for sovereign or public acts, not for private or commercial acts.

• "The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent or waiver. ... And because the activities of states have multiplied, it has been necessary to distinguish them — between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperii."

2. Malong v. PNR, 138 SCRA 63 (1985);

• Spouses Francisco Malong and Rosalina Aquino-Malong filed a complaint after their son, Jaime Aquino, a paying passenger, was killed in a PNR train accident.

• On October 30, 1977, Jaime Aquino fell from a PNR train between Tarlac and Capas. The train was overcrowded due to All Saints’ Day, forcing Jaime to sit near the door.

• The Malong spouses sought damages totaling P136,370 from PNR for the death of their son.

• CFI: Dismissed the complaint, holding that PNR, as a government instrumentality, was immune from suit.

• Whether the Philippine National Railways (PNR) is immune from suit as a government instrumentality, or may be sued for damages as a common carrier not performing a governmental function.

• The Supreme Court reversed the trial court’s dismissal and remanded the case for further proceedings, allowing the suit against PNR to proceed.

• PNR, though a government instrumentality, was organized to operate as a common carrier and engage in business, not to perform a governmental function.

• Not all government entities are immune from suit. 

• Immunity depends on whether the entity is performing governmental (sovereign) or proprietary (business) functions.

• The PNR, by operating as a common carrier, acts in a proprietary capacity. Thus, it is subject to the same obligations and liabilities as private common carriers.

• "We hold that in the instant case the State divested itself of its sovereign capacity when it organized the PNR which is no different from its predecessor, the Manila Railroad Company. The PNR did not become immune from suit. It did not remove itself from the operation of articles 1732 to 1766 of the Civil Code on common carriers."

3. Fontanilla v. Maliaman, 194 SCRA 486 (1991)

• Spouses Jose and Virginia Fontanilla sued the National Irrigation Administration (NIA) for damages to their crops, allegedly caused by water seeping and escaping from NIA’s irrigation canal.

• The NIA argued it was not liable for damages because it was performing governmental functions and its driver was not a special agent.

• CFI-Nueva Ecija: Ruled in favor of the Fontanillas, awarding them damages.

• NIA appealed, insisting its functions were governmental and thus immune from suit for torts committed by its employees.

• Whether or not the NIA is performing governmental or proprietary functions in the operation of its irrigation canals.

• The Supreme Court held that the NIA, in constructing and operating irrigation canals, is performing proprietary functions, not governmental functions.

• The Court explained the distinction:

• Governmental (Constituent) Functions: Involve the exercise of sovereignty (e.g., administration of justice, maintenance of peace and order, defense). These are compulsory for the State.

•  Proprietary (Ministrant) Functions: Involve activities that are optional and for the benefit of the community (e.g., business-like services such as water supply, irrigation, public utilities).

•  The Court cited previous rulings, emphasizing that even if the purpose is public welfare, the nature of the activity (business-like, optional) makes it proprietary.

• As a result, the NIA can be held liable for damages arising from the negligent operation of its irrigation canals.

• “It may not be amiss to state at this point that the functions of government have been classified into governmental or constituent and proprietary or ministrant. The former involves the exercise of sovereignty and considered as compulsory; the latter connotes merely the exercise of proprietary functions and thus considered as optional.”

d. When Inequitable for government to claim immunity

1. Santiago vs. Republic, 87 SCRA 294 (1978)

• Ildefonso Santiago donated property to the Republic of the Philippines, subject to certain conditions.

• The Republic, as donee, allegedly failed to comply with the conditions attached to the donation.

• Santiago filed a petition for certiorari seeking to revoke the donation and recover the property.

• CFI: Dismissed the case, invoking the constitutional doctrine of state immunity from suit.

• Whether an action for the revocation of a donation due to the donee’s failure to comply with stipulated conditions may be filed against the Republic of the Philippines, despite the doctrine of state immunity from suit.

• The Supreme Court allowed the action for revocation of the donation to proceed against the Republic.

• The Court held that state immunity from suit is not absolute; the government may be sued if it gives consent, which can be express or implied.

• In this case, the Court found that consent was implied because the action did not involve a money claim but rather the revocation of a donation due to non-compliance with its conditions.

• The Court emphasized that the doctrine of state immunity should not be used to perpetrate injustice or shield the government from accountability for its contractual obligations.

• The order of dismissal was nullified, and the lower court was directed to proceed with the case.

• “The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen... Here, the alleged failure to abide by the conditions under which a donation was given should not prove an insuperable obstacle to a civil action, the consent likewise being presumed. This conclusion is strengthened by the fact that while a donation partakes of a contract, there is no money claim, and therefore reliance on Commonwealth Act No. 327 would be futile.”

2. Amigable vs. Cuenca, 43 SCRA 360 (1972)

• Victoria Amigable was the registered owner of Lot No. 639 of the Banilad Estate in Cebu City.

• The government, through the Commissioner of Public Highways, occupied a portion of Amigable’s land and constructed Mango and Gorordo Avenues, converting it into a public street.

• No expropriation proceedings were initiated, nor was there a negotiated sale or payment of just compensation to Amigable.

• Amigable filed a complaint for recovery of the value of the property taken, as well as damages and attorney’s fees, against the Republic of the Philippines and the Commissioner of Public Highways.

• CFI: Dismissed the complaint, ruling it had no jurisdiction, reasoning that Amigable should have first filed her claim with the Auditor General (now COA) and that the State is immune from suit without its consent.

• Whether a property owner whose land was taken by the government and converted into a public street without just compensation may directly file an action in court for payment, despite not having first filed a claim with the Auditor General (now Commission on Audit), and whether the State may invoke immunity from suit in such a case.

• The Supreme Court reversed the trial court’s dismissal and allowed Amigable’s action for recovery of the value of her property.

• The Court held that where the government takes private property for public use without just compensation and without following expropriation procedures, the property owner may directly file an action in court for payment.

• Filing a claim with the Auditor General (now COA) is not required in such cases of taking in the constitutional sense.

• The doctrine of state immunity from suit cannot be invoked to defeat a valid claim for just compensation. 

• The government, by taking property for public use, submits itself to the jurisdiction of the court for the determination and payment of just compensation.

• The Court emphasized that the constitutional mandate of just compensation must be respected and that the doctrine of immunity from suit should not be used to perpetrate injustice.

• “If the constitutional mandate that the owner be compensated for property taken for public use were to be respected, as it should, then a suit of this character should not be summarily dismissed. The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a citizen. ... It is not too much to say that when the government takes any property for public use, which is conditioned upon the payment of just compensation, to be judicially ascertained, it makes manifest that it submits to the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit could still be appropriately invoked.”

5. Suits against Municipal Corporations

1. Torio vs. Fontanilla, 85 SCRA 99 (1978)

• The Municipality of Malasiqui, Pangasinan, through its municipal council, managed and organized the 1959 town fiesta.

• The council passed resolutions to manage the fiesta and created an executive committee, which included a subcommittee on entertainment and stage.

• The council appropriated funds for the construction of two stages for the fiesta events.

• Jose Macaraeg, appointed as chairman of the subcommittee, supervised the construction of the stage for a "zarzuela" (a musical play).

• During the fiesta, a zarzuela performance was held on the stage, which was attended by many people, including members of the performing group.

• The stage collapsed during the performance, resulting in the death of Vicente Fontanilla, a member of the zarzuela troupe.

• The heirs of Fontanilla filed a complaint for damages against the Municipality, the municipal council, and its individual members.

• The Municipality argued that the holding of a town fiesta was a governmental function, thus exempting it from liability.

• The councilors claimed they acted only as agents of the municipality and exercised due diligence.

• Whether the holding of a town fiesta by a municipality is a governmental or proprietary function.

• The Supreme Court held that the holding of a town fiesta is a proprietary (corporate/private) function of the municipality, not a governmental one.

• “We hold that the holding of the town fiesta in 1959 by the Municipality of Malasiqui, Pangasinan, was an exercise of a private or proprietary function of the municipality.”

• The municipality was held liable for damages under the doctrine of respondeat superior, as the negligence of its agents (in the construction and supervision of the stage) was attributable to it.

• “It follows that under the doctrine of respondeat superior, petitioner municipality is to be held liable for damages for the death of Vicente Fontanilla if that was attributable to the negligence of the municipality's officers, employees, or agents.”

• The municipal councilors were absolved of personal liability. 

• The Court found that they acted within their official capacity and did not personally participate in the negligent act.

2. Mun. of San Fernando vs. Judge Firme, 195 SCRA 692

• On December 16, 1965, a collision occurred involving:

• A passenger jeepney (driven by Balagot, owned by Nieveras)

• A gravel and sand truck (driven by Manandeg, owned by Velasquez)

• A dump truck owned by the Municipality of San Fernando, La Union (driven by Alfredo Bislig)

• The accident resulted in the death of Laureano Baniña Sr. and injuries to other passengers.

• The heirs of the deceased filed a complaint for damages against the jeepney owner and driver.

• The latter filed a third-party complaint against the municipality and its driver.

• CFI: Ordered the municipality and its driver to pay damages, funeral expenses, and attorney’s fees.

• The municipality invoked the doctrine of state immunity from suit, arguing it cannot be held liable for acts done in the performance of governmental functions.

• Whether a municipal corporation may be held liable for damages arising from a tort committed by its employee while performing a governmental function, considering the doctrine of state immunity and the "sue and be sued" clause in its charter.

• The Supreme Court absolved the municipality of liability for damages arising from the accident.

• Municipalities act in two capacities:

• Governmental: Performing duties as agents of the State (e.g., public service, road repair)

• Proprietary: Engaging in activities for private or corporate benefit

• Municipal corporations, as agencies of the State, generally enjoy immunity from suit when performing governmental functions.

• However, they are subject to suit—even for governmental acts—because their charters expressly provide that they can "sue and be sued."

• Municipal corporations are suable by virtue of their charters, but are not automatically liable for torts committed in the performance of governmental functions.

• Liability for quasi-delicts attaches only if the act was done in a proprietary capacity or through a special agent as required by Article 2180 of the Civil Code.

• "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 provides that they can sue and be sued."

• Distinction Between Suability and Liability:

• Suability: Depends on the State’s consent to be sued (express or implied, e.g., via charter)

• Liability: Depends on the applicable law and facts; being suable does not automatically mean being liable.

• "A distinction should first be made between suability and liability. '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.'"

• The municipality’s dump truck was being used for road repair—a governmental function.

• The municipality is suable because its charter allows it, but it is not automatically liable for torts committed in the discharge of governmental functions.

• Liability attaches only if the act was done in a proprietary capacity or if the law provides an exception (e.g., through a "special agent" under Article 2180 of the Civil Code).

• In this case, the driver was not a special agent; thus, the municipality is not liable.

6. Suits against Foreign States

1. The Holy See vs. Hon. Rosario, Jr., G.R. No. 101949 December 1, 1994

• The Holy See, represented by the Papal Nuncio, owned a parcel of land (Lot 5-A, 6,000 sq. m.) in Parañaque, Metro Manila, donated by the Archdiocese of Manila for the Apostolic Nunciature.

• Starbright Sales Enterprises, Inc. (private respondent) claimed to have entered into an agreement to purchase Lot 5-A (and adjacent lots) from the Holy See and Philippine Realty Corporation (PRC), with earnest money paid.

• The agreement was subject to the sellers clearing the property of squatters.

• Starbright later discovered that the Holy See and PRC sold the lots to another party without notice.

• Starbright filed a complaint for specific performance and damages against the Holy See and PRC.

• The Holy See moved to dismiss, invoking sovereign immunity from suit.

• RTC: denied the motion, holding that by entering into a business contract, it “shed” sovereign immunity.

• Whether the Holy See, as a foreign sovereign, is immune from the jurisdiction of Philippine courts in a suit involving the sale of a parcel of land located in the Philippines.

• The Supreme Court granted the Holy See’s petition, recognizing its immunity from suit and dismissing the complaint.

• It held that the Holy See possesses all the elements of statehood:

• People: Less than 1,000 individuals.

• Territory: 108.7 acres (Vatican City).

• Government: The Pope as head of state.

• Independence: Established by the Lateran Treaty of February 11, 1929, which constituted Vatican City as a territory under the sovereignty of the Holy See.

• The Holy See is recognized as an international person, distinct from Vatican City, and has maintained diplomatic relations with the Philippines since 1957.

• It also enjoys all rights of a state, including diplomatic intercourse and immunity from foreign jurisdiction.

• The Court clarified that the Holy See is the international person, while Vatican City is its territorial base.

• The sale of the land was not a commercial transaction for profit but was governmental in character, as the property was intended for the Apostolic Nunciature.

• The Holy See did not waive its immunity because the transaction was not for profit (not an act jure gestionis), but for governmental purposes (act jure imperii).

• The Supreme Court granted the Holy See’s petition, recognizing its immunity from suit and dismissing the complaint.

2. U.S.A. vs. Ruiz, 136 SCRA 487 (1985)

• U.S. maintained a naval base in Subic Bay under the Philippines–U.S. Military Bases Agreement.

• In May 1972, U.S. invited bids for:

• Repair of fender system, Alava Wharf, U.S. Naval Station, Subic Bay.

• Repair of typhoon damage to NAS Cubi shoreline, shoreline revetment, and Leyte Wharf approach.

• Eligio de Guzman & Co., Inc. submitted bids; U.S. requested confirmation of price proposals and bonding company details.

• U.S. later informed the company it was not qualified due to prior unsatisfactory performance; contracts awarded to others.

• The Company filed for specific performance and sought a writ of preliminary injunction to stop U.S. from contracting with others.

• The United States invoked the doctrine of state immunity, arguing that it could not be sued in Philippine courts without its consent.

• Whether the United States of America, by entering into a contract for the repair of wharves at a naval base in the Philippines, waived its immunity from suit under the doctrine of state immunity.

• The Supreme Court granted the petition of the United States, set aside the trial court's orders, and dismissed the civil case for lack of jurisdiction.

• The Court distinguished between:

• Jure imperii: Acts done by the State in the exercise of sovereign functions (e.g., national defense, public administration).

• Jure gestionis: Acts done by the State in a private, commercial, or proprietary capacity (e.g., business contracts, commercial transactions).

• The Court held that state immunity from suit applies to acts jure imperii. The mere fact that a State enters into a contract does not automatically mean it waives its immunity.

• The test is the nature of the act, not the existence of a contract.

• The nature of the act, not the mere existence of a contract, determines whether state immunity applies.

• In this case, the contract for the repair of wharves was directly related to national defense, a sovereign function. Thus, it was an act jure imperii.

• No waiver of immunity could be implied from the contract, and the Philippine courts had no jurisdiction over the suit.

• "The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In this case the projects are an integral part of the naval base which is devoted to the defense of both the United States and the Philippines, indisputably a function of the government of the highest order; they are not utilized for nor dedicated to commercial or business purposes."

3. U.S.A. vs. Guinto, G.R. No. 76609, Feb. 26, 1990

• Several cases were consolidated as they all involved the doctrine of state immunity.

• The United States government, through its military authorities, operated military bases in the Philippines, including Clark Air Base and John Hay Air Station.

• At Clark Air Base, the U.S. Air Force, through the Philippine Area Exchange (PHAX), conducted bidding for contracts to operate barbershop concessions inside the base.

• Private respondents (Valencia, Tanglao, del Pilar) had been long-time concessionaires.

• A new bidding was held, and the contract was awarded to another party (Dizon), which the respondents contested.

• Respondents filed a complaint to cancel the award and to allow them to continue operating pending litigation.

• At John Hay Air Station, a cook (Genove) was dismissed from the U.S. Air Force Recreation Center after being found guilty of misconduct.

• Genove filed a complaint for damages against U.S. Air Force officers involved in his dismissal.

• In both cases, the U.S. government and its officers invoked state immunity, arguing that the suits were in effect against the United States, which had not consented to be sued.

• Whether the doctrine of state immunity from suit applies to contracts entered into by the United States government for barbershop and restaurant services within U.S. military bases in the Philippines.

• The Supreme Court clarified that foreign states are not immune from suit in the Philippines when they engage in commercial or proprietary activities, as opposed to sovereign or governmental acts.

• The test is whether the activity is undertaken in the regular course of business and for profit, not merely the fact of entering into a contract.

• The Court found that:

• The operation of barbershop concessions at Clark Air Base and restaurant services at John Hay Air Station were commercial activities.

• These services were not provided as a governmental function but as business enterprises, often open to the general public and operated for profit.

• By engaging in these commercial activities, the United States government impliedly waived its immunity from suit for disputes arising from such contracts.

• "The contracts in question being decidedly commercial, the conclusion reached in the United States of America v. Ruiz case cannot be applied here."

• The Court held that the doctrine of state immunity does not apply when a foreign state enters into commercial transactions, as it acts in a proprietary capacity.

4. Minucher v. CA, G.R. No. 142396, February 11, 2003

• In May 1986, Khosrow Minucher, an Iranian national, was charged with violation of the Dangerous Drugs Act (RA 6425) after a buy-bust operation at his residence in Pasig City.

• The operation was conducted by Philippine police narcotic agents, with  Arthur Scalzo, agent of the U.S. Drug Enforcement Agency (DEA), acting as poseur-buyer and later as a principal witness for the prosecution.

• Minucher was acquitted of the criminal charge in January 1988.

• On August 3, 1988, Minucher filed a civil case for damages against Scalzo, alleging he was framed for drug trafficking.

• Scalzo moved to dismiss the civil case, invoking diplomatic immunity.

• RTC: Denied the motion.

• CA: Reversed, upholding Scalzo’s immunity.

• Whether Arthur Scalzo, a U.S. Drug Enforcement Agency (DEA) agent, is entitled to diplomatic or state immunity from suit for acts committed during a buy-bust operation in the Philippines.

• The Supreme Court clarified:

• If a foreign agent’s acts are within the scope of official functions and with the host government’s consent, immunity applies.

• If acts are outside official functions or the evidence of official capacity is insufficient, immunity may not be granted.

• The Court found that Scalzo was indeed a DEA agent authorized by the U.S. and allowed by the Philippine government to conduct surveillance on suspected drug activities in the country.

• His role included conducting surveillance, acting as poseur-buyer, and informing local law enforcement for arrests.

• The acts performed by Scalzo—surveillance, participation in the buy-bust, and testifying—were within the scope of his official functions as a DEA agent.

• The Court held that since Scalzo acted within his official functions, he was entitled to the defense of state immunity from suit.

• The Philippine government’s consent to his activities, as shown by official communications and the participation of local law enforcement, further supported this immunity.

• In the earlier case, the Supreme Court allowed the suit to proceed because the evidence of official function (i.e., the diplomatic note) was belated and unsubstantiated.

• In the present case, the evidence sufficiently established that Scalzo’s acts were within his official duties, justifying immunity.

• "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.

• All told, this Court is constrained to rule that respondent Arthur Scalzo, an agent of the United States Drug Enforcement Agency allowed by the Philippine government to conduct activities in the country to help contain the problem on the drug traffic, is entitled to the defense of state immunity from suit."

5. Rep. of Indonesia v. Vinzon, G.R. 154705, June 26, 2003

• The Republic of Indonesia, through its embassy in the Philippines, entered into a Maintenance Agreement with James Vinzon for the upkeep of embassy equipment (air conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps) at the embassy and the ambassador’s official residence.

• The agreement was for four years, automatically renewable unless cancelled with 30 days’ notice.

• The contract included a clause stating that any legal action arising from the agreement would be settled according to Philippine laws and by the proper court in Makati City.

• The Indonesian embassy terminated the agreement. Vinzon sued the Republic of Indonesia, the ambassador, and the minister counsellor for breach of contract.

• Indonesia moved to dismiss, invoking sovereign immunity from suit. Vinzon argued that the contract’s jurisdiction clause constituted a waiver of immunity.

• RTC: Denied the motion to dismiss.

• CA: Affirmed the RTC’s ruling.

• Whether the Republic of Indonesia, by entering into a maintenance contract for its embassy and including a clause submitting disputes to Philippine law and courts, waived its sovereign immunity from suit.

• The Supreme Court granted the petition, set aside the decisions of the lower courts, and dismissed the complaint against the Republic of Indonesia and its diplomatic officials.

• Contracts for the maintenance and upkeep of embassy premises and equipment are acts jure imperii (sovereign acts), not commercial or proprietary acts (jure gestionis).

• The establishment and maintenance of a diplomatic mission, including its physical upkeep, are sovereign functions.

• A clause in a contract stating that disputes shall be settled according to Philippine law and by a Philippine court does not, by itself, constitute a waiver of sovereign immunity.

• Waiver of immunity must be clear and unequivocal, either explicitly or by necessary implication.

• The provision in the contract was interpreted as a stipulation on venue and applicable law in the event of a waiver, not as an actual waiver.

• The ambassador and minister counsellor, as diplomatic agents, are also immune from suit under the Vienna Convention on Diplomatic Relations.

7. Suits against Public Officers

1. Animos v. PVAO, 174 SCRA 214 (1989) [Wala ata sa book???]

• Isidro Animos served in WWII; sustained a gunshot wound in line of duty.

• Medical exam: partial permanent disability; awarded 25% disability pension (₱12.50/month) effective Nov. 18, 1947 under R.A. 65.

• Legislative changes:

• R.A. 1920 (1957): Increased life pension to ₱100 + ₱10 per unmarried minor child.

• R.A. 5373 (1969): Increased to ₱200 + ₱30 for wife and each unmarried child <18.

• Animos filed a claim for disability benefits with the Philippine Veterans Affairs Office (PVAO).

• The claim was denied by PVAO.

• Petitioners (Isidro Animos and his heirs) filed mandamus to compel PVAO to pay full pension benefits retroactive to 1947.

• The PVAO and its officials argued that the suit was, in effect, a suit against the State, which is barred by the doctrine of state immunity from suit.

• Whether a suit filed against public officers to compel the performance of an alleged ministerial duty is a suit against the State, and thus barred by the doctrine of state immunity from suit.

• The Supreme Court remanded the case to the lower court for further proceedings on the merits.

• It held that a suit against public officers to compel the performance of a ministerial duty is not a suit against the State.

• The doctrine of state immunity does not apply when the public officer is sued in his official capacity for acts that are alleged to be unlawful or in excess of authority.

• The Court clarified that when a public officer’s act is alleged to be illegal or contrary to law, the suit is not against the State, even if the officer claims to be acting for the State.

2. U.S.A. vs. Reyes, G.R. No. 79253, March 1, 1993

• Nelia T. Montoya, an American citizen, I.D. checker at the same NEX, married to a Filipino-American serviceman.

• On January 22, 1987, Montoya, after her shift as I.D. checker, shopped at the NEX JUSMAG store.

• Upon leaving, she was searched by Bradford (store manager) outside the store, in public view.

• Montoya felt the search was oppressive, discriminatory, and beyond Bradford’s authority.

• Montoya filed a complaint for damages.

• Bradford and the U.S. government moved to dismiss, invoking state immunity and arguing Bradford acted in her official capacity.

• Montoya countered that Bradford exceeded her authority and thus could be sued personally.

• RTC: Denied the motion to dismiss and allowed the case to proceed.

• Petitioners sought certiorari and prohibition from the Supreme Court, arguing the suit was in effect against the U.S. and that Bradford was immune for acts done in her official capacity.

• Whether a suit for damages against a public officer (here, a U.S. civilian employee) for acts allegedly done in excess of authority is a suit against the State and thus barred by the doctrine of state immunity from suit.

• The petition was denied for lack of merit; the Temporary Restraining Order was lifted.

• The doctrine of state immunity does not apply when a public officer is sued in his/her personal capacity for acts done beyond the scope of authority or for tortious acts.

• General Rule: A suit against a public officer for acts done in the performance of official duties is, in effect, a suit against the State if the judgment would require the State to perform an affirmative act (e.g., pay damages).

• Exception: If the public officer is sued for acts that are illegal, done in excess of authority, or in violation of the plaintiff’s rights, the suit is not against the State but against the officer personally.

• The complaint against Bradford was not a suit against the U.S. government, but a personal action for damages for acts allegedly done in excess of her authority.

• "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."

3. Lansang v. CA, G.R. No. 102667, February 23, 2000

• Amado J. Lansang was the Chairman of the National Parks Development Committee (NPDC), which administered Rizal Park.

• The General Assembly of the Blind, Inc. (GABI), led by Jose Iglesias, had occupied a portion of Rizal Park for nearly 20 years, allegedly under a "verbal contract of lease" with the NPDC.

• In 1988, Lansang ordered the eviction of GABI from Rizal Park, citing violation of the verbal agreement.

• GABI and Iglesias filed a complaint for damages and injunction, alleging that Lansang acted out of "personal motives"—specifically, revenge and ill-will—because Iglesias had supported striking NPDC workers and reported alleged graft in the NPDC.

• RTC: Dismissed the complaint, ruling it was effectively a suit against the State, which cannot be sued without its consent, and that GABI failed to prove entitlement to damages.

• CA: Reversed the RTC, holding Lansang personally liable for damages, finding that he acted with malice and bad faith, and that the suit was not against the State but against Lansang in his personal capacity.

• Whether the suit against Lansang, as NPDC Chairman, for ordering the ejectment of GABI from Rizal Park, is a suit against the State, or a personal suit for acts allegedly done with personal motives.

• The Supreme Court granted Lansang’s petition and affirmed the dismissal of the complaint.

• The Court held that Lansang was sued in his personal capacity, not as an official representative of the State.

• The complaint specifically alleged that Lansang acted out of personal motives (revenge, ill-will, personal resentment), not in the lawful performance of official duty.

• However, the Supreme Court found no evidence of bad faith or malice on Lansang’s part and no basis for awarding damages to GABI or Iglesias.

• The Court clarified that public officials are not immune from suit in their personal capacity for acts done in bad faith, but in this case, such bad faith was not proven.

• The doctrine of state immunity does not apply where a public official is sued in his personal capacity for acts allegedly done with malice or personal motives, even if the acts were committed while in office.

• "We are convinced that petitioner is being sued not in his capacity as NPDC chairman but in his personal capacity. The complaint filed by private respondents in the RTC merely identified petitioner as chairman of the NPDC, but did not categorically state that he is being sued in that capacity... petitioner was sued allegedly for having personal motives in ordering the ejectment of GABI from Rizal Park."

4. Shauf v. Court of Appeals, 191 SCRA 713 (1990) 

• Respondents: Don E. Detwiler and Anthony Persi, officials of the U.S. Air Force at Clark Air Base, Philippines.

• Loida Shauf (Filipino) applied for a position at Clark Air Base but was denied employment allegedly due to discrimination based on her being married to an American, Jacob Shauf.

• Complaint: The Shaufs filed a complaint for damages against Detwiler and Persi, alleging discrimination and violation of their rights.

• Defense: Respondents claimed immunity from suit, arguing that their acts were official functions as U.S. military officials and thus protected by the doctrine of state immunity.

• Lower Court Ruling: The trial court ruled in favor of the Shaufs, awarding damages. The Court of Appeals reversed this, dismissing the complaint on grounds of immunity.

• Whether public officers may be sued and held personally liable for damages for unauthorized acts, or whether such acts are protected by the doctrine of state immunity.

• The Supreme Court set aside the Court of Appeals' decision and reinstated the trial court's award of damages to the Shaufs.

• The Court held that the doctrine of state immunity does not apply to public officers who commit unauthorized acts, acts done with malice or bad faith, or acts beyond the scope of their authority. 

• Such acts are not considered acts of the State, and the public officer may be sued and held personally liable for damages.

• "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. ... 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." 

5. Republic v. Sandoval, G.R. No. 48607, March 19, 1993

• The case arose from the Mendiola massacre on January 22, 1987, where a protest rally by farmers and their supporters ended in violence near Mendiola Bridge, Manila.

• The incident resulted in the deaths of at least 12 marchers and injuries to dozens more, both among protesters and police/military personnel.

• The Citizens' Mendiola Commission (Davide Commission) was created to investigate the incident and recommended, among others, the criminal prosecution of certain police and military personnel, administrative sanctions for some officers, and compensation for the victims.

• Heirs and injured victims (Caylao group) filed a complaint for damages against the Republic of the Philippines and the military/police officers involved.

• The government, through the Solicitor General, moved to dismiss the complaint against the Republic, invoking state immunity from suit.

• RTC (Judge Sandoval): Dismissed the complaint against the Republic, holding that the State had not waived its immunity from suit, but allowed case vs. individual officers.

• Whether the military and police officers involved may be held personally liable for their actions.

• The Supreme Court dismissed the suit against the Republic of the Philippines, affirming the doctrine of state immunity from suit, as there was no express waiver by the State, but allowed the action for damages to proceed against the military and police officers involved.

• The Court upheld the action for damages against the military and police personnel involved, ruling that they could be held personally liable for acts done in excess of their authority or with negligence.

• Public officers are not shielded from liability for acts done in excess of authority or with negligence, even if performed in the course of official duties.

• The Court cited the findings of the Davide Commission, which showed at least negligence on the part of the military and police when they fired their guns at the protesters.

• The recommendation of the Davide Commission for compensation did not amount to a waiver of state immunity or create a binding obligation on the part of the government.

8. Consent to execution

1. PNB vs. Pabalan, 83 SCRA 595 (1978)

• A judgment was rendered in favor of Agoo Tobacco Planters Association, Inc. against the Philippine Virginia Tobacco Administration (PVTA), a government-owned and controlled corporation (GOCC).

• To satisfy the judgment, a writ of execution and notice of garnishment were issued against PVTA’s funds deposited with PNB.

• PNB objected, arguing that the funds were public in character and thus exempt from garnishment, invoking the doctrine of non-suability of the State.

• Whether funds belonging to a government corporation deposited with a bank are exempt from garnishment on the ground that they are public funds.

• The Supreme Court dismissed the petition.

• Funds of government corporations that can sue and be sued are not exempt from garnishment, even if such funds are public in character.

• The doctrine of non-suability of the State does not automatically extend to government-owned and controlled corporations with a separate juridical personality and the capacity to sue and be sued.

• The Court cited previous cases (e.g., National Shipyard and Steel Corporation v. Court of Industrial Relations) affirming that such corporations’ funds may be subjected to court processes like garnishment.

• "It does not suffice for the constitutional principle of non-suability to come into play just because the funds are governmental in character... The premise that the funds could be spoken of as public in character may be accepted in the sense that the People's Homesite and Housing Corporation was a government-owned entity. It does not follow though that they were exempt from garnishment... as a government-owned and controlled corporation, the NASSCO has a personality of its own, distinct and separate from that of the Government... Accordingly, it may sue and be sued and may be subjected to court processes just like any other corporation..."

2. Municipality of Makati vs. CA. 190 SCRA 206 (1990)

• The Municipality of Makati initiated expropriation proceedings against private respondents (Admiral Finance Creditors Consortium, Inc., Home Building System & Realty Corporation, and Arceli P. Jo).

• The court rendered a decision fixing the appraised value of the expropriated property.

• Fixed just compensation at ₱5,291,666.00, less the ₱338,160.00 already released to the owners.

• Decision became final and executory.

• Writ of execution issued; sheriff served notice of garnishment on PNB Buendia Branch where Makati had accounts.

• The Municipality failed to pay the just compensation as ordered by the court.

• Private respondents sought to enforce the judgment by garnishing the municipality’s bank account.

• PNB reported a “hold code” on the account.

• The RTC judge issued an order for the garnishment of the municipality’s public funds.

• The Municipality of Makati challenged the garnishment, arguing that public funds are exempt from execution.

• Claimed public funds cannot be garnished without an appropriation ordinance.

• Revealed two accounts:

• Expropriation account — ₱99,743.94 balance, earmarked for the property.

• General municipal funds — ₱170M+ for other obligations.

• Whether public funds of a municipality may be garnished or levied upon to satisfy a final money judgment against the municipality, and if not, what remedy is available to the judgment creditor.

• The Supreme Court ruled in favor of the Municipality of Makati, holding that public funds are generally exempt from execution or garnishment to satisfy a money judgment against a municipality.

• However, the Court clarified that the judgment creditor is not left without recourse. 

• If a municipality fails or refuses, without justifiable reason, to pay a final money judgment, the claimant may file a petition for mandamus to compel the enactment and approval of the necessary appropriation ordinance and the corresponding disbursement of municipal funds to satisfy the judgment.

• “Where a municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment rendered against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance, and the corresponding disbursement of municipal funds therefor.”

3. Nessia vs. Fermin, 220 SCRA 615 (1993) [Wala rin ata to???]

• Jose V. Nessia was the Deputy Municipal Assessor of Victorias, Negros Occidental.

• Nessia incurred expenses in the performance of his official duties and sought reimbursement by submitting vouchers to Mayor Jesus M. Fermin.

• Fermin did not act on the vouchers, allegedly due to lack of appropriation and other procedural issues.

• Nessia sent follow-up letters, but Fermin still failed to act.

• Nessia filed a complaint for damages and reimbursement against Fermin and the Municipality.

• The trial court found Fermin liable for damages for malicious inaction and awarded Nessia less than what he prayed for.

• Both Nessia (seeking higher damages) and Fermin (seeking exoneration) appealed to the Court of Appeals (CA). The Municipality did not appeal.

• The CA reversed the trial court, dismissing Nessia’s complaint for lack of cause of action, reasoning that Fermin had acted on the vouchers by denying them, and that there was no appropriation.

• Whether the actions (or inaction) of Fermin constituted consent to execution or liability for damages.

• The Supreme Court reinstated the trial court’s decision and held Fermin liable for damages.

• The Court ruled that Fermin’s inaction on the vouchers, despite follow-up letters, was malicious and made him liable for damages.

• It emphasized that a non-appellant (the Municipality) cannot seek affirmative relief on appeal; only the party who appeals may obtain such relief.

• The Court clarified that the trial court’s findings, especially on factual matters, are given great respect and weight.

• The SC did not find that Fermin’s inaction amounted to consent to execution, but rather to malicious refusal, which is actionable under the law.

• "[A]n appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below (Alba vs. Santander, et al. 160 SCRA 8 [1988]). He cannot impugn the correctness of a judgment not appealed from by him. He cannot assign such errors as are designed to have the judgment modified. All that said appellee can do is to make a counter-assignment of errors or to argue on issues raised at the trial only for the purpose of sustaining the judgment in his favor, even on grounds not included in the decision of the court a quo nor raised in the appellant's assignment of errors or arguments.”

4. Caloocan City v. Allarde, G.R. No. 107271, Sept. 10, 2003

• Delfina H. Santiago, a judge, had a claim for backwages against the City Government of Caloocan, covering the years 1983–1986.

• After a protracted 21-year legal battle, the trial court ordered the issuance of an alias writ of execution to satisfy Santiago’s claim.

• The City Government of Caloocan repeatedly resisted payment, filing motions to reconsider, quash the writ, and vacate the auction sale of a city-owned vehicle.

• The trial court denied these motions and ordered the sheriff to levy and auction three more city vehicles.

• The City Mayor refused to sign the check for payment, despite being a signatory to the ordinance authorizing it.

• The trial court then ordered the garnishment of the City’s funds deposited with the Philippine National Bank (PNB).

• The City Treasurer protested, claiming the garnishment was illegal as public funds are exempt from execution.

• The City Council of Caloocan had already enacted Ordinance No. 0134, Series of 1992, appropriating P439,377.14 for Santiago’s back salaries plus interest.

• The City filed a petition for certiorari, arguing that public funds and city vehicles necessary for public use are exempt from execution and garnishment.

• Whether government funds deposited in an official depository bank may be garnished to satisfy a money judgment against a local government unit, when there is a specific appropriation for such payment.

• The Supreme Court dismissed the petition and upheld the trial court’s orders.

• General rule: government funds deposited in official depository banks are exempt from execution or garnishment to prevent disruption of public services.

• Exception: If there is a corresponding appropriation by law or ordinance specifically for the payment of the government’s obligation, the funds may be garnished.

• “The rule is and has always been that all government funds deposited in the PNB or any other official depositary of the Philippine Government by any of its agencies or instrumentalities, whether by general or special deposit, remain government funds and may not be subject to garnishment or levy, in the absence of a corresponding appropriation as required by law... However, the rule is not absolute and admits of a well-defined exception, that is, when there is a corresponding appropriation as required by law. Otherwise stated, the rule on the immunity of public funds from seizure or garnishment does not apply where the funds sought to be levied under execution are already allocated by law specifically for the satisfaction of the money judgment against the government.”

• In this case, since Ordinance No. 0134, Series of 1992, appropriated the exact amount for Santiago’s back salaries, the funds were deemed segregated and earmarked for that purpose.

• Thus, the garnishment of the City’s funds was valid and fell within the exception to the general rule.

• The Court also noted that the City’s persistent refusal to pay, despite the appropriation and court orders, justified the enforcement measures taken.

• The government cannot evade lawful obligations by invoking immunity when it has already appropriated funds for payment.

5. Mun. of San Miguel, Bulacan vs. Fernandez, 130 SCRA 56

• The Municipality of San Miguel, Bulacan, was held liable in a civil case and ordered to partially revoke a deed of donation and pay damages to private respondents.

• The judgment became final.  Respondents sought a writ of execution to enforce the money judgment.

• The municipality moved to quash the writ, arguing that its funds and properties are public and exempt from execution.

• The trial court ordered the municipal and provincial treasurers to comply with the judgment. When they failed, the judge ordered their arrest, to be lifted only upon compliance.

• Whether the funds of a municipality, being public in character, may be garnished or subjected to execution to satisfy a money judgment, absent a corresponding appropriation ordinance duly passed by the Sangguniang Bayan.

• The Supreme Court granted the petition.

• The Court set aside the orders granting the writ of execution and the arrest of the treasurers. The respondents were enjoined from implementing the writ of execution.

• Municipal funds are public in character and are exempt from execution or garnishment.

• "Well settled is the rule that public funds are not subject to levy and execution. The reason for this was explained in the case of Municipality of Paoay vs. Manaois, 86 Phil. 629 'that they are held in trust for the people, intended and used for the accomplishment of the purposes for which municipal corporations are created, and that to subject said properties and public funds to execution would materially impede, even defeat and in some instances destroy said purpose.”

• No money shall be paid out of the municipal treasury except in pursuance of a lawful appropriation or other specific statutory authority.

• There must be a corresponding appropriation ordinance passed by the Sangguniang Bayan before any municipal funds may be disbursed to satisfy a judgment.

• Even if a municipality is an incorporated agency that can sue and be sued, its funds remain public and cannot be garnished or executed upon unless there is a lawful appropriation.

Cases

1. Basis

1. Republic v. Villasor, G.R. No. L-30671, November 28, 1973

2.  Immunity is enjoyed by other States.

1. Minucher v. Court of Appeals, G.R. No. 142396, February 11, 2003

2. Arigo v. Swift, G.R. No. 206510, September 16, 2014

3. World Health Organization v. Aquino (supra)

4. Lasco v. UNRFNRE, G.R. Nos. 109095-109107, February 23, 1995

5. SEAFDEC v. NLRC (supra)

6. SEAFDEC v. Acosta, G.R. Nos. 97468-70, September 2, 1993

7. Tijam v. Sibonghanoy, G.R. No. L-21450, April 15, 1968

8. SEAFDEC-Aquaculture v. NLRC (supra)

9. Callado v. IRRI, G.R. No. 106483, May 22, 1995

10. International Catholic Migration Commission v. Calleja, G.R. No. 85750, September 28, 1990

11. Kapisanan ng Manggagawa at TAC sa IRRI v. Secretary of Labor (cited with Calleja)

3. Test to Determine if Suit is Against the State

1. Sanders v. Veridiano, G.R. No. L-46930, June 10, 1988

2. Republic v. Feliciano, G.R. No. 70853, March 12, 1987

3. Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983

4. Veterans Manpower and Protective Services, Inc. v. Court of Appeals, G.R. No. 91359, September 25, 1992

5. Liwayway Vinzons-Chato v. Fortune Tobacco Corporation, G.R. No. 141309, December 23, 2008

6. Commissioner of Internal Revenue v. Court of Appeals, 261 SCRA 236

4. Suits against Government Agencies

(a) Incorporated

1. PNB v. CIR, G.R. No. L-32667, January 31, 1978

2. Rayo v. CFI of Bulacan, G.R. No. L-55273-83, December 19, 1981

3. SSS v. Court of Appeals, G.R. No. L-46058, December 14, 1987

4. Municipality of San Fernando, La Union v. Judge Firme, G.R. No. L-52179, April 8, 1991

5. Air Transportation Office v. Spouses Ramos, G.R. No. 159402, February 23, 2011

6. National Electrification Administration v. Morales, G.R. No. 154200, July 24, 2007

7. Lockheed Detective & Watchman Agency v. University of the Philippines, G.R. No. 185918, April 18, 2012

8. National Irrigation Administration v. Court of Appeals, G.R. No. 129169, November 17, 1999

9. Philippine National Railways v. Intermediate Appellate Court, G.R. No. 70547, January 22, 1993

10. Malong v. PNR, G.R. No. L-49930, August 7, 1985

(b) Unincorporated

11. Sanders v. Veridiano, G.R. No. L-46930, June 10, 1988

12. Bureau of Printing v. Bureau of Printing Employees Association, G.R. No. L-15751, January 28, 1961

13. Veterans Manpower and Protective Services, Inc. v. Court of Appeals, G.R. No. 91359, September 25, 1992

14. Faroian v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993

15. Mobil Philippines Exploration v. Customs Arrastre Service, G.R. No. L-23139, December 17, 1966

16. Department of Agriculture v. NLRC, G.R. No. 104269, November 11, 1993

17. Civil Aeronautics Administration v. Court of Appeals, G.R. No. L-51806, November 8, 1988

5. Suits against Public Officers

1. Department of Health v. Philippine Pharmawealth, G.R. No. 182358, February 20, 2013

2. Larkins v. NLRC, G.R. No. 92432, February 23, 1995

3. Arigo v. Swift, G.R. No. 206510, September 16, 2014 (supra reference)

4. Sanders v. Veridiano, G.R. No. L-46930, June 10, 1988 (also cited here)

5. Shauf v. Court of Appeals, G.R. No. 90314, November 27, 1990

6. Wylie v. Rarang, G.R. No. 74135, May 28, 1992

7. Republic v. Sandiganbayan, G.R. No. 142476, March 20, 2001

8. U.S. v. Reyes, G.R. No. 79253, March 1, 1993

9. Republic v. Sandoval, G.R. No. 84607, March 19, 1993

10. Lansang v. Court of Appeals, G.R. No. 102667, February 23, 2000

11. DOH Secretary Dayrit v. Phil. Pharmawealth, Inc., G.R. No. 169304, March 13, 2007

6. Need for Consent

1. Republic v. Feliciano, G.R. No. 70853, March 12, 1987

2. Sayson v. Singzon, G.R. No. L-30044, December 19, 1973

3. Department of Agriculture v. NLRC, G.R. No. 104269, November 11, 1993

4. Amigable v. Cuenca, G.R. No. L-26400, February 29, 1972

5. Ministerio v. City of Cebu, G.R. No. L-31635, August 31, 1971

6. De los Santos v. Intermediate Appellate Court, G.R. Nos. L-71998-99, June 2, 1993

7. EPG Construction v. Secretary Vigilar, G.R. No. 131544, March 16, 2001

8. Santiago v. Republic, G.R. No. L-48214, December 19, 1978

9. Merritt v. Government of the Philippine Islands, 34 Phil. 311 (1916)

10. Republic v. Purisima, G.R. No. L-36084, December 31, 1977

11. Callado v. IRRI, G.R. No. 106483, May 22, 1995 (supra reference)

12. U.S. v. Ruiz, G.R. No. L-35645, May 22, 1985

13. Froilan v. Pan Oriental Shipping, G.R. No. L-6060, September 30, 1950

14. Lim v. Brownell, 107 Phil. 345

15. JUSMAG Phil. v. NLRC, G.R. No. 108813, December 15, 1994

16. Republic of Indonesia v. Vinzon, G.R. No. 154705, June 26, 2003

17. U.S. v. Guinto, G.R. No. 76607, February 26, 1990

18. U.S. v. Rodrigo, companion case of U.S. v. Guinto (same date, 1990)

19. Republic v. Sandiganbayan, (supra reference)

20. Amigable v. Cuenca, G.R. No. L-26400, February 29, 1972 (reiterated)

21. Republic (PCGG) v. Sandiganbayan, G.R. No. 129406, March 6, 2006

7. Scope of Consent

1. Republic v. Villasor, G.R. No. L-30671, November 28, 1973

2. Department of Agriculture v. NLRC, (supra.)

3. Larkins v. NLRC, G.R. No. 92432, February 23, 1995

4. Philippine National Bank v. Pabalan, G.R. No. L-33112, June 15, 1978

5. National Housing Authority v. Heirs of Quivelondo, G.R. No. 154411, June 19, 2003

6. National Electrification Administration v. Morales, (supra.)

7. Lockheed Detective & Watchman Agency v. University of the Philippines, (supra.)

8. University of the Philippines v. Hon. Dizon, G.R. No. 171182, August 23, 2012

9. Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. L-61744, June 25, 1984

10. City of Caloocan v. Allarde, G.R. No. 107271, September 10, 2003

11. Municipality of Makati v. Court of Appeals, G.R. No. 89898-99, October 1, 1990

12. Pacific Products v. Ong, G.R. No. L-33777, January 30, 1990

8. Suability not equated with outright liability

1. Merritt v. Government of the Philippine Islands, 34 Phil. 311 (supra.)

2. Fontanilla v. Maliaman, G.R. No. L-55963, December 1, 1989

3. National Irrigation Administration v. Court of Appeals, G.R. No. 129169, November 17, 1999