THE DOCTRINE OF STATE IMMUNITY Republic vs. Sandoval [G.R. No.

84607, March 19, 1993] CONCEPT OF STATE IMMUNITY. - Under our Constitution the principle of immunity of the government from suit is expressly provided in Article XVI, Section 3. The principle is based on the very essence of sovereignty, and on the practical ground that there can be no legal right as against the authority that makes the law on which the right depends. It also rests on reasons of public policy that public service would be hindered, and the public endangered, if the sovereign authority could be subjected to law suits at the instance of every citizen and consequently controlled in the uses and dispositions of the means required for the proper administration of the government. INSTANCES OF SUITS AGAINST THE STATE. - Some instances when a suit against the State is proper are: (1) (2) (3) When the Republic is sued by name; When the suit is against an unincorporated government agency; When the suit is on its face against a government officer but the case is such that ultimate liability will belong not to the officer but to the government.

While the Republic in this case is sued by name, the ultimate liability does not pertain to the government. Although the military officers and personnel, then party defendants, were discharging their official functions when the incident occurred, their functions ceased to be official the moment they exceeded their authority. Based on the Commission findings, there was lack of justification by the government forces in the use of firearms. Moreover, the members of the police and military crowd dispersal units committed a prohibited act under B.P. Blg. 880 as there was unnecessary firing by them in dispersing the marchers. While it is true that nothing is better settled than the general rule that a sovereign state and its political subdivisions cannot be sued in the courts except when it has given its consent, it cannot be invoked by both the military officers to release them from any liability, and by the heirs and victims to demand indemnification from the government. The principle of state immunity from suit does not apply, as in this case, when the relief demanded by the suit requires no affirmative official action on the part of the State nor the affirmative discharge of any obligation which belongs to the State in its political capacity, even though the officers or agents who are made defendants claim to hold or act only by virtue of a title of the state and as its agents and servants. This Court has made it quite clear that even a "high position in the government does not confer a license to persecute or recklessly injure another." THE STATE IMMUNITY IS NOT WAIVED ONLY FOR THE REASON THAT THE PRESIDENT CREATED A COMMISSION TO INVESTIGATE THE INCIDENT, OR BY THE PRESIDENTS ACT OF JOINING A RALLY OF THE

COMPLAINANTS. In effect, whatever may be the findings of the Commission, the same shall only serve as the cause of action in the event that any party decides to litigate his/her claim. Therefore, the Commission is merely a preliminary venue. The Commission is not the end in itself. Whatever recommendation it makes cannot in any way bind the State immediately, such recommendation not having become final and executory. This is precisely the essence of it being a fact-finding body. Secondly, whatever acts or utterances that then President Aquino may have done or said, the same are not tantamount to the State having waived its immunity from suit. The President's act of joining the marchers, days after the incident, does not mean that there was an admission by the State of any liability. In fact to borrow the words of petitioners (Caylao group), "it was an act of solidarity by the government with the people". Moreover, petitioners rely on President Aquino's speech promising that the government would address the grievances of the rallyists. By this alone, it cannot be inferred that the State has admitted any liability, much less can it be inferred that it has consented to the suit. Although consent to be sued may be given impliedly, still it cannot be maintained that such consent was given considering the circumstances obtaining in the instant case. Sanders vs. Veridiano [G.R. No. L-46930, June 10, 1988] ACTS COMMITTED BY THE OFFICERS IN THEIR OFFICIAL CAPACITY ARE COVERED BY STATE IMMUNITY. - It is stressed at the outset that the mere allegation that a government functionary is being sued in his personal capacity will not automatically remove him from the protection of the law of public officers and, if appropriate, the doctrine of state immunity. By the same token, the mere invocation of official character will not suffice to insulate him from suability and liability for an act imputed to him as a personal tort committed without or in excess of his authority. These well-settled principles are applicable not only to the officers of the local state but also where the person sued in its courts pertains to the government of a foreign state, as in the present case. It is abundantly clear in the present case that the acts for which the petitioners are being called to account were performed by them in the discharge of their official duties. Sanders, as director of the special services department of NAVSTA, undoubtedly had supervision over its personnel, including the private respondents, and had a hand in their employment, work assignments, discipline, dismissal and other related matters. It is not disputed that the letter written was in fact a reply to a request from his superior, the other petitioner, for more information regarding the case of the private respondents. Moreover, even in the absence of such request, he still was within his rights in reacting to the hearing officer's criticism in effect a direct attack against him that Special Services was practicing "an autocratic form of supervision."

As for Moreau, what he is claimed to have done was write the Chief of Naval Personnel for concurrence with the conversion of the private respondents' type of employment even before the grievance proceedings had even commenced. Disregarding for the nonce the question of its timeliness, this act is clearly official in nature, performed by Moreau as the immediate superior of Sanders and directly answerable to Naval Personnel in matters involving the special services department of NAVSTA. In fact, the letter dealt with the financial and budgetary problems of the department and contained recommendations for their solution, including the re-designation of the private respondents. There was nothing personal or private about it. Given the official character of the above-described letters, we have to conclude that the petitioners were, legally speaking, being sued as officers of the United States government. As they have acted on behalf of that government, and within the scope of their authority, it is that government, and not the petitioners personally, that is responsible for their acts. Assuming that the trial can proceed and it is proved that the claimants have a right to the payment of damages, such award will have to be satisfied not by the petitioners in their personal capacities but by the United States government as their principal. This will require that government to perform an affirmative act to satisfy the judgment, viz., the appropriation of the necessary amount to cover the damages awarded, thus making the action a suit against that government without its consent. THE DOCTRINE OF STATE IMMUNITY APPLIES TO FOREIGN STATES SUED IN THIS JURISDICTION. - There should be no question by now that such complaint cannot prosper unless the government sought to be held ultimately liable has given its consent to be sued. So we have ruled not only in Baer but in many other decisions where we upheld the doctrine of state immunity as applicable not only to our own government but also to foreign states sought to be subjected to the jurisdiction of our courts. The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right against the authority which makes the law on which the right depends." In the case of foreign states, the rule is derived from the principle of the sovereign equality of states which wisely admonishes that par in parem non habet imperium and that a contrary attitude would "unduly vex the peace of nations." Our adherence to this precept is formally expressed in Article II, Section 2, of our Constitution, where we reiterate from our previous charters that the Philippines "adopts the generally accepted principles of international law as part of the law of the land. par in parem non habet imperium (meaning, an equal has no authority over an equal) Festejo vs. Fernando [G.R. No. L-5156, March 11, 1954]

ACTS COMMITTED BY OFFICIALS OUTSIDE THEIR AUTHORITY WILL NOT GIVE RISE TO THE CONCEPT OF STATE IMMUNITY. Ordinarily the officer or employee committing the tort is personally liable therefor, and may be sued as any other citizen and held answerable for whatever injury or damage results from his tortious act." 49 Am. Jur. 289. . . If an officer, even while acting under color of his office, exceeds the power conferred on him by law, he cannot shelter himself under the plea that he is a public agent." 43 Am. Jur. 86. It is a general rule that an officer-executive, administrative quasi-judicial, ministerial, or otherwise who acts outside the scope of his jurisdiction and without authorization of law may thereby render himself amenable to personal liability in a civil suit. If he exceeds the power conferred on him by law, he cannot shelter himself by the plea that he is a public agent acting under color of his office, and not personally. In the eye of the law, his acts then are wholly without authority." 43 Am. Jur. 89-90. United States vs. Guinto [G.R. No. 76607, February 26, 1990] CONCEPT OF STATE IMMUNITY. - The rule that a state may not be sued without its consent, now expressed in Article XVI, Section 3, of the 1987 Constitution, is one of the generally accepted principles of international law that we have adopted as part of the law of our land under Article II, Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended to manifest our resolve to abide by the rules of the international community. Even without such affirmation, we would still be bound by the generally accepted principles of international law under the doctrine of incorporation. Under this doctrine, as accepted by the majority of states, such principles are deemed incorporated in the law of every civilized state as a condition and consequence of its membership in the society of nations. Upon its admission to such society, the state is automatically obligated to comply with these principles in its relations with other states. As applied to the local state, the doctrine of state immunity is based on the justification given by Justice Holmes that "there can be no legal right against the authority which makes the law on which the right depends." There are other practical reasons for the enforcement of the doctrine. In the case of the foreign state sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another. A contrary disposition would, in the language of a celebrated case, "unduly vex the peace of nations." While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state itself although it has

not been formally impleaded. In such a situation, the state may move to dismiss the complaint on the ground that it has been filed without its consent. The doctrine is sometimes derisively called "the royal prerogative of dishonesty" because of the privilege it grants the state to defeat any legitimate claim against it by simply invoking its non-suability. That is hardly fair, at least in democratic societies, for the state is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine is not absolute and does not say the state may not be sued under any circumstance. On the contrary, the rule says that the state may not be sued without its consent, which clearly imports that it may be sued if it consents. WAIVER OF STATE IMMUNITY. The consent of the state to be sued may be manifested expressly or impliedly. Express consent may be embodied in a general law or a special law. Consent is implied when the state enters into a contract or it itself commences litigation. The general law waiving the immunity of the state from suit is found in Act No. 3083, under which the Philippine government "consents and submits to be sued upon any moneyed claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties." In Merritt v. Government of the Philippine Islands, a special law was passed to enable a person to sue the government for an alleged tort. When the government enters into a contract, it is deemed to have descended to the level of the other contracting party and divested of its sovereign immunity from suit with its implied consent. Waiver is also implied when the government files a complaint, thus opening itself to a counterclaim. The above rules are subject to qualification. Express consent is effected only by the will of the legislature through the medium of a duly enacted statute. We have held that not all contracts entered into by the government will operate as a waiver of its non-suability; distinction must be made between its sovereign and proprietary acts. As for the filing of a complaint by the government, suability will result only where the government is claiming affirmative relief from the defendant. RESTRICTIVE THEORY OF STATE IMMUNITY. - There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied. This was our ruling in United States of America v. Ruiz, where the transaction in question dealt with the improvement of the wharves in the naval installation at Subic Bay. As this was a clearly governmental function, we held that the contract did not operate to divest the United States of its sovereign immunity from suit. In the words of Justice Vicente Abad Santos:

The traditional rule of immunity exempts a State from being sued in the courts of another State without its consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. 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. The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in Western Europe. xxx xxx xxx

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. SUABILITY IS NOT SYNONYMOUS WITH LIABILITY. - The private respondent invokes Article 2180 of the Civil Code which holds the government liable if it acts through a special agent. The argument, it would seem, is premised on the ground that since the officers are designated "special agents," the United States government should be liable for their torts. There seems to be a failure to distinguish between suability and liability and a misconception that the two terms are synonymous. 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 said article establishes a rule of liability, not suability. The government may be held liable under this rule only if it first allows itself to be sued through any of the accepted forms of consent.

Moreover, the agent performing his regular functions is not a special agent even if he is so denominated, as in the case at bar. No less important, the said provision appears to regulate only the relations of the local state with its inhabitants and, hence, applies only to the Philippine government and not to foreign governments impleaded in our courts. Veterans Manpower & Protective Services, Inc. vs. CA [G.R. No. 91359, September 25, 1992] WAIVER OF STATE IS CONSTRUED STRICTISSIMI JURIS. - Waiver of the State's immunity from suit, being a derogation of sovereignty, will not be lightly inferred, but must be construed strictissimi juris (Republic vs. Feliciano, 148 SCRA 424). The consent of the State to be sued must emanate from statutory authority, hence, from a legislative act, not from a mere memorandum. Without such consent, the trial court did not acquire jurisdiction over the public respondents. We agree with the observation of the Court of Appeals that the Memorandum of Agreement dated May 12, 1986 does not constitute an implied consent by the State to be sued: "The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief in relation to the exercise of a function sovereign in nature. The correct test for the application of state immunity is not the conclusion of a contract by the State but the legal nature of the act. This was clearly enunciated in the case of United States of America vs. Ruiz where the Hon. Supreme Court held: "'The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into a business contract. It does not apply where the contract relates to the exercise of its functions.' (136 SCRA 487, 492.) "In the instant case, the Memorandum of Agreement entered into by the PC Chief and PADPAO was intended to professionalize the industry and to standardize the salaries of security guards as well as the current rates of security services, clearly, a governmental function. The execution of the said agreement is incidental to the purpose of R.A. 5487, as amended, which is to regulate the organization and operation of private detective, watchmen or security guard agencies. (Emphasis Ours.)" (pp. 258-259, Rollo.) The state immunity doctrine rests upon reasons of public policy and the inconvenience and danger which would flow from a different rule. "It is obvious that public service would be hindered, and public safety

endangered, if the supreme authority could be subjected to suits at the instance of every citizen, and, consequently, controlled in the use and disposition of the means required for the proper administration of the government" (Siren vs. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA 477). In the same vein, this Court in Republic vs. Purisima (78 SCRA 470, 473) rationalized: "Nonetheless, a continued adherence to the doctrine of nonsuability is not to be deplored for as against the inconvenience that may be cause [by] private parties, the loss of governmental efficiency and the obstacle to the performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence of such a basic principle that constitutes such an effective obstacles, could very well be imagined." (citing Providence Washington Insurance Co. vs. Republic, 29 SCRA 598.)

Merritt vs. Government of Philippine Islands [G.R. No. 11154, March 21, 1916] SPECIAL LAW WAIVING STATE IMMUNITY. - Act No. 2457, effective February 3, 1915, reads: "An act authorizing E. Merritt to bring suit against the Government of the Philippine Islands and authorizing the Attorney-General of said Islands to appear in said suit. "Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for damages resulting from a collision between his motorcycle and the ambulance of the General Hospital on March twentyfifth, nineteen hundred and thirteen; "Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of damages, if any, to which the claimant is entitled; and "Whereas the Director of Public Works and the AttorneyGeneral recommend that an act be passed by the Legislature authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order that said questions may be decided: Now, therefore,

"By authority of the United States, be it enacted by the Philippine Legislature, that: "SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against the Government of the Philippine Islands in order to fix the responsibility for the collision between his motorcycle and the ambulance of the General Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and the attorney-General of the Philippine Islands is hereby authorized and directed to appear at the trial on the behalf of the Government of said Islands, to defend said Government at the same. "SEC. 2. This Act shall take effect on its passage.

"Enacted, February 3, 1915." Did the defendant, in enacting the above quoted act, simply waive its immunity from suit or did it also concede its liability to the plaintiff? If only the former, then it cannot be held that the Act created any new cause of action in favor of the plaintiff or extended the defendant's liability to any case not previously recognized. All admit that the Insular Government (the defendant) cannot be sued by an individual without its consent. It is also admitted that the instant case is one against the Government. As the consent of the Government to be sued by the plaintiff was entirely voluntary on its part, it is our duty to look carefully into the terms of the consent, and render judgment accordingly. The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility for the collision between his motorcycle and the ambulance of the General Hospital and to determine the amount of the damages, if any, to which Mr. E. Merritt is entitled on account of said collision, . . . ." These were the two questions submitted to the court for determination. The Act was passed "in order that said questions may be decided." We have "decided" that the accident was due solely to the negligence of the chauffeur, who was at the time an employee of the defendant, and we have also fixed the amount of damages sustained by the plaintiff as a result of the collision. Does the Act authorize us to hold that the Government is legally liable for that amount? If not, we must look elsewhere for such authority, if it exists. SUABILITY VS. LIABILITY. - As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out of either tort or contract, the rule is stated in 36 Cyc., 915, thus: "By consenting to be sued a state simply waives its immunity from suit. It does not thereby concede its liability to plaintiff, or create any cause of action in his favor, or extend its liability to any cause not previously recognized. It merely

gives a remedy to enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense." In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the Act of 1913, which authorized the bringing of this suit, read: "SECTION 1. Authority is hereby given to George Apfelbacher, of the town of Summit, Waukesha County, Wisconsin, to bring suit in such court or courts and in such form or forms as he may be advised for the purpose of settling and determining all controversies which he may now have with the State of Wisconsin, or its duly authorized officers and agents, relative to the mill property of said George Apfelbacher, the fish hatchery of the State Wisconsin on the Bark River, and the mill property of Evan Humphrey at the lower end of Nagawicka Lake, and relative to the use of the waters of said Bark River and Nagawicka Lake, all in the county of Waukesha, Wisconsin." In determining the scope of this act, the court said; "Plaintiff claims that by the enactment of this law the legislature admitted liability on the part of the state for the acts of its officers, and that the suit now stands just as it would stand between private parties. It is difficult to see how the act does, or was intended to do, more than remove the state's immunity from suit. It simply gives authority to commence suit for the purpose of settling plaintiff's controversies with the state. Nowhere in the act is there a whisper or suggestion that the court or courts in the disposition of the suit shall depart from well established principles of law, or that the amount of damages is the only question to be settled. The act opened the door of the court to the plaintiff. It did not pass upon the question of liability, but left the suit just where it would be in the absence of the state's immunity from suit. If the Legislature had intended to change the rule that obtained in this state so long and to declare liability on the part of the state, it would not have left so important a matter to mere inference but would have done so in express terms. (Murdoc Grate Co. vs. Commonwealth, 152 Mass., 28; 24 N. E., 854; 8 L. R.A., 399) It being quite clear that Act No. 2457 does not operate to extend the Government's liability to any cause not previously recognized, we will now examine the substantive law touching the defendant's liability for the negligent acts of its officers, agents, and employees. Paragraph 5 of article 1903 of the civil Code reads:

"The state is liable in this sense when it acts through a special agent, but not when the damage should have been caused by the official to whom properly it pertained to do the act performed, in which case the provisions of the preceding article shall be applicable." Amigable vs. Cuenca [G.R. No. L-26400, February 29, 1972] THE DOCTRINE OF STATE IMMUNITY CANNOT BE USED TO PERPETRATE INJUSTICE. - In the case of Ministerio vs. Court of First Instance of Cebu, 1 involving a claim for payment of the value of a portion of land used for the widening of the Gorordo Avenue in Cebu City, this Court, through Mr. Justice Enrique M. Fernando, held that where the government takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the government without thereby violating the doctrine of governmental immunity from suit without its consent. We there said: ". . . 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. Had the government followed the procedure indicated by the governing law at the time, a complaint would have been filed by it, and only upon payment of the compensation fixed by the judgment, or after tender to the party entitled to such payment of the amount fixed, may it have the right to enter in and upon the land so condemned, to appropriate the same to the public use defined in the judgment.' If there were an observance of procedural regularity, petitioners would not be in the sad plaint they are now. It is unthinkable then that precisely because there was a failure to abide by what the law requires, the government would stand to benefit. 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. 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." Republic vs. Sandiganbayan [G.R. No. 90478, November 21, 1991] STATE IMPLIEDLY WAIVES ITS IMMUNITY WHEN IT COMMENCES LITIGATION. - So, too, the PCGG's postulation that none of its members may be "required to testify or produce evidence in any judicial . . . proceeding concerning matters within its official cognizance," has no

application to a judicial proceeding it has itself initiated. As just suggested, the act of bringing suit must entail a waiver of the exemption from giving evidence; by bringing suit it brings itself within the operation and scope of all the rules governing civil actions, including the rights and duties under the rules of discovery. Otherwise, the absurd would have to be conceded, that while the parties it has impleaded as defendants may be required to "disgorge all the facts" within their knowledge and in their possession, it may not itself be subject to a like compulsion. The State is, of course, immune from suit in the sense that it cannot, as a rule, be sued without its consent. But it is axiomatic that in filing an action, it divests itself of its sovereign character and sheds its immunity from suit, descending to the level of an ordinary litigant. The PCGG cannot claim a superior or preferred status to the State, even while assuming to represent or act for the State. The suggestion that the State makes no implied waiver of immunity by filing suit except when in so doing it acts in, or in matters concerning, its proprietary or non-governmental capacity, is unacceptable; it attempts a distinction without support in principle or precedent. On the contrary "The consent of the State to be sued may be given expressly or impliedly. Express consent may be manifested either through a general law or a special law. Implied consent is given when the State itself commences litigation or when it enters into a contract." "The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state as plaintiff may avail itself of the different forms of actions open to private litigants. In short, by taking the initiative in an action against the private parties, the state surrenders its privileged position and comes down to the level of the defendant. The latter automatically acquires, within certain limits, the right to set up whatever claims and other defenses he might have against the state. . . . (Sinco, Philippine Political Law, Tenth E., pp. 36-37, citing U.S. vs. Ringgold, 8 Pet. 150, 8 L.ed. 899)'" 51 It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private property has been taken in expropriation without just compensation being paid, the defense of immunity from suit cannot be set up by the State against an action for payment by the owner. Republic vs. Feliciano [G.R. No. 70853, March 12, 1987] We find the petition meritorious. The doctrine of non-suability of the State has proper application in this case. The plaintiff has impleaded the Republic of the Philippines as defendant in an action for recovery of ownership and possession of a parcel of land, bringing the State to court

just like any private person who is claimed to be usurping a piece of property. A suit for the recovery of property is not an action in rem, but an action in personam. It is an action directed against a specific party or parties, and any judgment therein binds only such party or parties. The complaint filed by plaintiff, the private respondent herein, is directed against the Republic of the Philippines, represented by the Land Authority, a governmental agency created by Republic Act No. 3844. By its caption and its allegation and prayer, the complaint is clearly a suit against the State, which under settled jurisprudence is not permitted, except upon a showing that the State has consented to be sued, either expressly or by implication through the use of statutory language too plain to be misinterpreted. There is no such showing in the instant case. Worse, the complaint itself fails to allege the existence of such consent. This is a fatal defect, and on this basis alone, the complaint should have been dismissed. THE STATE IMMUNITY MAY BE INVOKED AT ANY STAGE OF THE PROCEEDINGS. - The failure of the petitioner to assert the defense of immunity from suit when the case was tried before the court a quo, as alleged by private respondent, is not fatal. It is now settled that such defense "may be invoked by the courts sua sponte at any stage of the proceedings." EXPRESS WAIVER OF IMMUNITY MUST BE THROUGH LEGISLATIVE ACT. Private respondent contends that the consent of petitioner may be read from the Proclamation itself, when it established the reservation "subject to private rights, if any there be." We do not agree. No such consent can be drawn from the language of the Proclamation. The exclusion of existing private rights from the reservation established by Proclamation No. 90 can not be construed as a waiver of the immunity of the State from suit. Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly, but must be construed in strictissimi juris. Moreover, the Proclamation is not a legislative act. The consent of the State to be sued must emanate from statutory authority. Waiver of State immunity can only be made by an act of the legislative body. Neither is there merit in respondent's submission. which the respondent appellate court sustained, on the basis of our decision in the Begosa case, that the present action is not a suit against the State within the rule of State immunity from suit, because plaintiff does not seek to divest the Government of any of its lands or its funds. It is contended that the complaint involves land not owned by the State, but private land belonging to the plaintiff, hence the Government is not being divested of any of its properties. There is some sophistry involved in this argument, since the character of the land sought to be recovered still remains to be established, and the plaintiff's action is directed against the State precisely to compel the latter to litigate the ownership and possession of the property. In other words, the plaintiff is out to establish that he is the owner of the land in question based, incidentally, on an informacion posesoria of dubious value, and he seeks to establish his claim of

ownership by suing the Republic of the Philippines in an action in personam. United States vs. Ruiz [G.R. No. L-35645, May 22, 1985] RESTRICTIVE THEORY OF STATE IMMUNITY. The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. 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. The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in western Europe. (See Coquia and Defensor-Santiago, Public International Law, pp. 207209 [1984].) 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. That the correct test for the application of State immunity is not the conclusion of a contract by a State but the legal nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased three apartment buildings to the United States of America for the use of its military officials. The plaintiffs sued to recover possession of the premises on the ground that the term of the leases had expired, They also asked for increased rentals until the apartments shall have been vacated. The Holy See vs. Rosario [G.R. No. 101949, December 1, 1994] PROCEDURE IN INVOKING STATE IMMUNITY BY FOREIGN STATES. - In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. In the United States, the procedure followed is the process of "suggestion," where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of

State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a "suggestion" that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]). In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae. TWO CONFLICTING CONCEPTS OF SOVEREIGN IMMUNITY. - There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis (United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International Law 194 [1984]). In the absence of legislation defining what activities and transactions shall be considered "commercial" and as constituting acts jure gestionis, we have to come out with our own guidelines, tentative they may be. Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit. REMEDY OF THE COMPLAINANTS WHEN THE STATE IMMUNITY IS INVOKED. - Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign

sovereign can ask his own government to espouse his cause through diplomatic channels. Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of its espousal on the relations between the Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign States, Selected Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the Philippine government decides to espouse the claim, the latter ceases to be a private cause. According to the Permanent Court of International Justice, the forerunner of the International Court of Justice: "By taking up the case of one of its subjects and by reporting to diplomatic action or international judicial proceedings on his behalf, a State is in reality asserting its own rights its right to ensure, in the person of its subjects, respect for the rules of international law (The Mavrommatis Palestine Concessions, 1 Hudson, World Court Reports 293, 302 [1924]). Republic vs. Villasor [G.R. No. L-30671, November 28, 1973] FUNDS OF THE GOVERNMENT ARE NOT SUBJECT TO GARNISHMENT. It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the state as well as its government is immune from suit unless it gives its consent. It is readily understandable why it must be so. In the classic formulation of Holmes: "A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends." Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a recent decision, Providence Washington Insurance Co. v. Republic of the Philippines, with its affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle to the performance of its multifarious functions are far greater if such a fundamental principle were abandoned and the availability of judicial remedy were not thus restricted. With the well known propensity on the part of our people to go to court, at the least provocation, the loss of time and energy required to defend against law suits, in the absence of such a basic principle that constitutes such an effective obstacle, could very well be imagined." This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised charter. It is therein expressly provided: "The State may not be sued without its consent." A corollary, both dictated by logic

and sound sense from such a basic concept is that public funds cannot be the object of a garnishment proceeding even if the consent to be sued had been previously granted and the state liability adjudged. Thus in the recent case of Commissioner of Public Highways v. San Diego, such a well-settled doctrine was restated in the opinion of Justice Teehankee: "The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action `only up to the completion of proceedings anterior to the stage of execution' and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law." Such a principle applies even to an attempted garnishment of a salary that had accrued in favor of an employee. Director of Commerce and Industry v. Concepcion, speaks to that effect. Justice Malcolm as ponente left no doubt on that score. Thus: "A rule, which has never been seriously questioned, is that money in the hands of public officers, although it may be due government employees, is not liable to the creditors of these employees in the process of garnishment. One reason is, that the State, by virtue of its sovereignty, may not be sued in its own courts except by express authorization by the Legislature, and to subject its officers to garnishment would be to permit indirectly what is prohibited directly. Another reason is that moneys sought to be garnished, as long as they remain in the hands of the disbursing officer of the Government, belong to the latter, although the defendant in garnishment may be entitled to a specific portion thereof. And still another reason which covers both of the foregoing is that every consideration of public policy forbids it." Department of Agriculture vs. NLRC [G.R. No. 104269, November 11, 1993] FORMS OF WAIVER OF IMMUNITY. - The basic postulate enshrined in the constitution that "(t)he State may not be sued without its consent," reflects nothing less than a recognition of the sovereign character of the State and an express affirmation of the unwritten rule effectively insulating it from the jurisdiction of courts. It is based on the very essence of sovereignty. As has been aptly observed, by Justice Holmes, a sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends. True, the doctrine, not too infrequently, is derisively called "the royal prerogative of dishonesty" because it grants the state the prerogative to defeat any legitimate claim against it by simply invoking its non-suability. We have had occasion to explain in its defense, however, that a continued adherence to the doctrine of non-suability cannot be deplored, for the loss of governmental efficiency and the obstacle to the performance of its multifarious functions would be far greater in severity than the inconvenience that may be caused private parties, if such

fundamental principle is to be abandoned and the availability of judicial remedy is not to be accordingly restricted. The rule, in any case, is not really absolute for it does not say that the state may not be sued under any circumstance. On the contrary, as correctly phrased, the doctrine only conveys, "the state may not be sued without its consent;" its clear import then is that the State may at times be sued. The States' consent may be given either expressly or impliedly. Express consent may be made through a general law or a special law. In this jurisdiction, the general law waiving the immunity of the state from suit is found in Act No. 3083, 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." Implied consent, on the other hand, is conceded when the State itself commences litigation, thus opening itself to a counterclaim or when it enters into a contract. In this situation, the government is deemed to have descended to the level of the other contracting party and to have divested itself of its sovereign immunity. This rule, relied upon by the NLRC and the private respondents, is not, however, without qualification. Not all contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made between one which is executed in the exercise of its sovereign functions and another which is done in its proprietary capacity. PROCEDURE IN ENFORCING THE LIABILITY OF THE STATE. - But, be that as it may, the claims of private respondents, i.e., for underpayment of wages, holiday pay, overtime pay and similar other items, arising from the Contract for Security Services, clearly constitute money claims. Act No. 3083, aforecited, gives the consent of the State to be "sued upon any moneyed claim involving liability arising from contract, express or implied, . . ." Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No. 1445, the money claim should first be brought to the Commission on Audit. Thus, in Carabao, Inc., vs. Agricultural Productivity Commission, we ruled: "(C)laimants have to prosecute their money claims against the Government under Commonwealth Act 327, stating that Act 3083 stands now merely as the general law waiving the State's immunity from suit, subject to its general limitation expressed in Section 7 thereof that 'no execution shall issue upon any judgment rendered by any Court against the Government of the (Philippines), and that the conditions provided in Commonwealth Act 327 for filing money claims against the Government must be strictly observed.' " We fail to see any substantial conflict or inconsistency between the provisions of C.A. No. 327 and the Labor Code with respect to money claims against the State. The Labor Code, in relation to Act No. 3083, provides the legal basis for the State liability but the prosecution, enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in C.A. No. 327, as amended by P.D. 1445.

When the State gives its consent to be sued, it does not thereby necessarily consent to an unrestrained execution against it. Tersely put, when the State waives its immunity, all it does, in effect, is to give the other party an opportunity to prove, if it can, that the State has a liability. In Republic vs. Villasor, this Court, in nullifying the issuance of an alias writ of execution directed against the funds of the Armed Forces of the Philippines to satisfy a final and executory judgment, has explained, thus The universal rule that where the State gives its consent to be sued by private parties either by general or special law, it may limit claimant's action "only up to the completion of proceedings anterior to the stage of execution" and that the power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is based on obvious considerations of public policy. Disbursements of public funds must be covered by the corresponding appropriation as required by law. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated by law. PNB vs. Pabalan [G.R. No. L-33112, June 15, 1978] DOCTRINE OF STATE IMMUNITY FROM SUIT; A GOVERNMENT OWNED AND CONTROLLED CORPORATION HAS DISTINCT PERSONALITY OF ITS OWN; FUNDS OF THE CORPORATE ENTITY MAY BE PROCEEDED AGAINST. The doctrine of non-suability cannot be legally set forth as a bar or impediment to a notice of garnishment. In National Shipyard and Steel Corporation v. Court of Industrial Relations, 118 Phil. 782 (1963), it was explicitly stated: "That allegation to the effect that the funds of the NASSCO are public funds of the government, and that, as such the same may not be garnished, attached or levied upon, is untenable for, as a government owned and controlled corporation, the NASSCO has a personality of its own, distinct and separate from that of the Government. It has pursuant to Section 2 of Executive Order No. 356, dated October 23, 1950 . . ., pursuant to which the NASSCO has been established "all the powers of a corporation under the Corporation Law . . . " Accordingly, it may sue and be sued and may be subjected to court processes just like any other corporation (Section 13, Act No. 1459, as amended.) 1981] Rayo vs. CFI of Bulacan [G.R. No. L-55273-83, December 19,

GOVERNMENT OWNED AND CONTROLLED CORPORATION HAS A SEPARATE PERSONALITY INDEPENDENT OF THE GOVERNMENT, AND THUS, THE QUESTION OF SUABILITY MAY BE DETERMINED FROM ITS CHARTER. - It is not necessary to write an extended dissertation on whether or not the NPC performs a governmental function with respect to

the management and operation of the Angat Dam. It is sufficient to say that the government has organized a private corporation, put money in it and has allowed it to sue and be sued in any court under its charter. (R.A. No. 6395, Sec. 3[d].) As a government owned and controlled corporation, it has a personality of its own, distinct and separate from that of the Government. (See National Shipyards and Steel Corp. vs. CIR, et al., L17874, August 31, 1963, 8 SCRA 781.) Moreover, the charter provision that the NPC can "sue and be sued in any court" is without qualification on the cause of action and accordingly it can include a tort claim such as the one instituted by petitioners. Bureau of Printing vs. Bureau of Printing Employees Ass. [G.R. No. L-15751, January 28, 1961] GOVERNMENTAL ENTITIES, THOUGH INCEDENTALLY PERFORMING PROPRIETARY FUNCTIONS, ARE ENTITLED TO STATE IMMUNITY. - The Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act No. 2657). As such instrumentality of the Government, it operates under the direct supervision of the Executive Secretary, Office of the President, and is "charged with the execution of all printing and binding, including work incidental to those processes, required by the National Government and such other work of the same character as said Bureau may, by law or by order of the (Secretary of Finance) Executive Secretary, be authorized to undertake . . .." (Sec. 1644, Rev. Adm. Code.) It has no corporate existence, and its appropriations are provided for in the General Appropriations Act. Designed to meet the printing needs of the Government, it is primarily a service bureau and is obviously, not engaged in business or occupation for pecuniary profit. Indeed, as an office of the Government, without any corporate or juridical personality, the Bureau of Printing cannot be sued. (Sec. 1, Rule 3, Rules of Court.) Any suit, action or proceeding against it, if it were to produce any effect, would actually be a suit, action or proceeding against the Government itself, and the rule is settled that the Government cannot be sued without its consent, much less over its objection. (See Metran vs. Paredes, 45 Off. Gaz., 2835; Angat River Irrigation System, et al. vs. Angat River Workers' Union, et al., G.R. Nos. L-10943-44, December 28, 1957). It is true, as stated in the order complained of, that the Bureau of Printing receives outside jobs and that many of its employees are paid for overtime work on regular working days and on holidays, but these facts do not justify the conclusion that its functions are "exclusively proprietary in nature." Overtime work in the Bureau of Printing is done only when the interest of the service so requires (sec. 566, Rev. Adm. Code). As a matter of administrative policy, the overtime compensation may be paid, but such payment is discretionary with the head of the Bureau depending upon its current appropriations, so that it cannot be the basis for holding that the functions of said Bureau are wholly proprietary in character. Anent the additional work it executes for private persons, we find that

such work is done upon request, as distinguished from those solicited, and only "as the requirements of Government work will permit" (sec. 1654, Rev. Adm. Code), and "upon terms fixed by the Director of Printing, with the approval of the Department Head" (sec. 1665, id.). As shown by the uncontradicted evidence of the petitioners, most of these works consist of orders for greeting cards during Christmas from government officials, and for printing of checks of private banking institutions. On those greeting cards, the Government seal, of which only the Bureau of Printing is authorized to use, is embossed, and on the bank checks, only the Bureau of Printing can print the reproduction of the official documentary stamps appearing thereon. The volume of private jobs done, in comparison with government jobs, is only one-half of 1 percent, and in computing the costs for work done for private parties, the Bureau does not include profit, because it is not allowed to make any. Clearly, while the Bureau of Printing is allowed to undertake private printing jobs, it cannot be pretended that it is thereby an industrial or business concern. The additional work it executes for private parties is merely incidental to its function, and although such work may be deemed proprietary in character, there is no showing that the employees performing said proprietary function are separate and distinct from those employed in its general governmental functions. Mobil Phils. Exploration vs. Customs Arrastre Service [G.R. No. L23139, December 17, 1966] PROPRIETARY FUNCTIONS NECESSARY TO THE GOVERNMENTAL PURPOSES OF THE GOVERNMENT ENTITY ARE COVERED BY THE DOCTRINE OF STATE IMMUNITY. - The situation here is not materially different. The Bureau of Customs, to repeat, is part of the Department of Finance (Sec. 81, Rev. Adm. Code), with no personality of its own apart from that of the national government. Its primary function is governmental, that of assessing and collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties (Sec. 602, R. A. 1937). To this function, arrastre service is a necessary incident. For practical reasons said revenues and customs duties can not be assessed and collected by simply receiving the importer's or ship agent's or consignee's declaration of merchandise being imported and imposing the duty provided in the Tariff law. Customs authorities and officers must see to it that the declaration tallies with the merchandise actually landed. And this checking up requires that the landed merchandise be hauled from the ship's side to a suitable place in the customs premises to enable said customs officers to make it, that is, it requires arrastre operation. Clearly, therefore, although said arrastre function may be deemed proprietary, it is a necessary incident of the primary and governmental function of the Bureau of Customs, so that engaging in the same does not necessarily render said Bureau liable to suit. For otherwise, it could not perform its governmental function without necessarily exposing itself to suit. Sovereign immunity, granted as to the end, should not be denied as to the necessary means to that end. Civil Aeronautics Administration vs. CA [G.R. No. L-51806, November 8, 1988]

THE DOCTRINE OF STATE IMMUNITY DOES NOT APPLY TO GOVERNMENT OWNED AND CONTROLLED CORPORATIONS. - This doctrine has been reaffirmed in the recent case of Malong v. Philippine National Railways [G.R. No. L-49930, August 7, 1985, 138 SCRA 63], where it was held that the Philippine National Railways, although owned and operated by the government, was not immune from suit as it does not exercise sovereign but purely proprietary and business functions. Accordingly, as the CAA was created to undertake the management of airport operations which primarily involve proprietary functions, it cannot avail of the immunity from suit accorded to government agencies performing strictly governmental functions. Mun. of San Fernando vs. Firme [G.R. No. 52179, April 8, 1991] THE SUABILITY OF MUNICIPAL CORPORATIONS IS DETERMINED THROUGH THEIR CHARTER. - Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provided that they can sue and be sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39) 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." (United States of America v. Guinto, supra, p. 659-660). Anent the issue of whether or not the municipality is liable for the torts committed by its employee, the test of liability of the municipality depends on whether or not the driver, acting in behalf of the municipality, is performing governmental or proprietary functions. As emphasized in the case of Torio v. Fontanilla (G.R. No. L-29993, October 23, 1978. 85 SCRA 599, 606), the distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. 1984] Mun. of San Miguel vs. Fernandez [G.R. No. L-61744, June 25,

FUNDS OF THE MUNICIPAL CORPORATIONS ARE EXEMPT FROM EXECUTION. - In Tantoco vs. Municipal Council of Iloilo, 49 Phil. 52, it was held that "it is the settled doctrine of the law that not only the public property but also the taxes and public revenues of such corporations cannot be seized under execution against them, either in the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of

such judgments in the hands of officers of the law, are not subject to execution unless so declared by statute. Thus, it is clear that all the funds of petitioner municipality in the possession of the Municipal Treasurer of San Miguel, as well as those in the possession of the Provincial Treasurer of Bulacan, are also public funds and as such they are exempt from execution. Besides, there must be, pursuant to Section 2(a) of Presidential Decree No. 477, known as "The Decree on Local Fiscal Administration," a corresponding appropriation in the form of an ordinance duly passed by the Sangguniang Bayan before any money of the municipality may be paid out. In the case at bar, it has not been shown that the Sangguniang Bayan has passed an ordinance to this effect. Furthermore, the procedure outlined by Section 15, Rule 39 of the New Rules of Court has not been followed. Mun. of Makati vs. CA [G.R. Nos. 89898-99, October 1, 1990] REMEDY TO ENFORCE THE LIABILITY OF THE MUNICIPAL CORPORATION There is merit in this contention. The funds deposited in the second PNB Account No. S/A 263-530850-7 are public funds of the municipal government. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless otherwise provided for by statute [Republic v. Palacio, supra.; The Commissioner of Public Highways v. San Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616]. More particularly, the properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and sold at execution sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licenses and market fees, and which are intended primarily and exclusively for the purpose of financing the governmental activities and functions of the municipality, are exempt from execution [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil. 52 (1926); The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950); Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25, 1984, 130 SCRA 56]. The foregoing rule finds application in the case at bar. Absent a showing that the municipal council of Makati has passed an ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of petitioner deposited in Account No. S/A 263-530850-7. Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. 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 [See Viuda De Tan Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco v. Gonzales, 108 Phil. 247 (1960)].

City of Caloocan vs. Judge Allarde [G.R. No. 107271, September 10, 2003] GOVERNMENT FUNDS APPROPRIATED FOR A PURPOSE MAY BE GARNISHED TO SATISFY THAT PURPOSE. - 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 such a case, the monetary judgment may be legally enforced by judicial processes. Thus, in the similar case of Pasay City Government, et al. vs. CFI of Manila, Br. X, et al., where petitioners challenged the trial court's order garnishing its funds in payment of the contract price for the construction of the City Hall, we ruled that, while government funds deposited in the PNB are exempt from execution or garnishment, this rule does not apply if an ordinance has already been enacted for the payment of the City's obligations Upon the issuance of the writ of execution, the petitionerappellants moved for its quashal alleging among other things the exemption of the government from execution. This move on the part of petitioner-appellants is at first glance laudable for 'all government funds deposited with the Philippine National Bank by any agency or instrumentality of the government, whether by way of general or special deposit, remain government funds and may not be subject to garnishment or levy.' But inasmuch as an ordinance has already been enacted expressly appropriating the amount of P613,096.00 as payment to the respondent-appellee, then the herein case is covered by the exception to the general rule