C.

STATE IMMUNITY FROM SUIT

Suit Against Public Officers

PNB v. CIR

A writ of execution in favor of private respondent Gabriel V. Manansala had previously been issued. He
was the counsel of the prevailing party, the United Homesite Employees and Laborers Association. The
validity of the order assailed is challenged on two grounds:
That the appointment of respondent Gilbert P. Lorenzo as authorized deputy sheriff to serve the writ of
execution was contrary to law and That the funds subject of the garnishment “may be public in
character.” In thus denying the motion to quash, petitioner contended that there was on the part of
respondent Court a failure to abide by authoritative doctrines amounting to a grave abuse of discretion.
The Philippine National Bank (PNB) moves to quash the notice of garnishment is denied for the lack of
merit. PNB is therefore ordered to comply within five days from receipt with the ‘notice of Garnishment’
dated May 6, 1970. The petitioner filed a motion for reconsideration, but it was denied. Hence, this
certiorari petition.

Issues:Whether or not the order denying motion to quash a notice of garnishment can be stigmatized as
a grave abuse of discretion.

Discussions: According to the doctrine of state immunity, under suits against Government Agencies:
“An incorporated Agency has a charter of its own that invests it with a separate judicial personality. If
the agency is incorporated, the test of suability is found in its charter.”
From the opinion being penned by the great Chief Justice Marshall. As was pointed out by him: “It is, we
think, a sound principle, that when a government becomes a partner in any trading company, it divests
itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a
private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends
to a level with those with whom it associates itself, and takes the character which belongs to its
associates, and to the business which is to be transacted.

Rulings: No. Supreme Court ruled that there has not been a grave abuse of discretion. 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 stated in “National Shipyard and Steel Corporation v. Court of
Industrial Relations”, a government owned and controlled corporation has a personality of its own,
distinct and separate from that of the Government. It may sue and be sued and may be subjected to
court processes just like any other corporation. Justice Ozaeta held that it is well settled that when the
government enters into commercial business, it abandons its sovereign capacity and is to be treated like
any other corporation. By engaging in a particular business thru the instrumentality of a corporation, the
governmnent divests itself pro hac vice of its sovereign character, so as to render the corporation
subject to the rules of law governing private corporations

SSS v. CA

Spouses David and Socorro Cruz, applied and granted a real estate loan by the SSS withresidential lot
located at Pateros, Rizal as collateral. The spouses Cruz complied with their monthlypayments. When
delayed were incurred in their monthly payments SSS filed a petition for foreclosure of their real estate
mortgage executed by the spouses Cruz on the ground that the spouses Cruz defaultedin payment,
Pursuant for these application for foreclosure notices were published on the second noticethe counsel
for spouses Cruz sent a letter to SSS informing the latter that his clients are up to date intheir payment
of the monthly amortization and the SSS should discontinued the publication of thenotices of
foreclosure. This request remain unheaded, this spouses Cruz filed an action for damagesagainst SSS
before RTC in Rizal. SSS invoking its immunity from suit being an agency of the governmentperforming
government function. The trial court and court of appeal nevertheless awarded damages infavor of
spouses Cruz which was affirmed by court of appeal, Hence this petition.

ISSUE: Whether or not SSS is immune from suit.

HELD:Negative.. The SSS has a distinct legal personality and it can be sued for damages. The SSS doesnot
enjoy immunity from suit by express statutory consent.It has corporated power 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
immunityfrom suit as an entity performing governmental function, by virtue of the explicit provision of
theaforecited enabling law, the government must be deemed to have waived immunity in respect of
theSSS, although it does not thereby concede its liability that statutory law has given to the private
citizen aremedy for the enforcement and protection of his rights. The SSS thereby has been required to
submitto the jurisdiction of the court; subject to its right to interpose any lawful defense

Rayo v. CFI of Bulacan

FACTS: At the height of the infamous typhoon "Kading", the respondent opened simultaneously all the
three floodgates of the Angat Dam which resulted in a sudden, precipitate and simultaneous opening of
said floodgates several towns in Bulacan were inundated. The petitioners filed for damages against the
respondent corporation.Petitioners opposed the prayer of the respondents forn dismissal of the case
and contended that the respondent corporation is merely performing a propriety functions and that
under its own organic act, it can sue and be sued in court.

ISSUE: W/N the respondent performs governmental functions with respect to the management and
operation of the Angat Dam.W/N the power of the respondent to sue and be sued under its organic
charter includes the power to be sued for tort.

HELD: 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. As a government owned and controlled corporation, it has a
personality of its own, distinct and separate from that of the government. Moreover, the charter
provision that it can sue and be sued in any court.

Malong v. PNR

Facts: The Malong spouses alleged in their complaint that on October 30, 1977 their son, Jaime Aquino,
a paying passenger, was killed when he fell from a PNR train while it was between Tarlac and Capas. The
tragedy occurred because Jaime had to sit near the door of a coach. The train was overloaded with
passengers and baggage in view of the proximity of All Saints Day. The Malong spouses prayed that the
PNR be ordered to pay them damages totaling P136,370. Upon the Solicitor General's motion, the trial
court dismissed the complaint. It ruled that it had no jurisdiction because the PNR, being a government
instrumentality, the action was a suit against the State (Sec. 16, Art. XV of the Constitution).
The Malong spouses appealed to this Court pursuant to Republic Act No. 5440
R.A. No. 5440 changed the mode of appeal from courts of first instance (now Regional Trial Courts) to
the Supreme Court in cases involving only questions of law, or the constitutionality or validity of any
treaty, law, ordinance, etc. or the legality of any tax, impost, assessment or toll, etc., or the jurisdiction
of any inferior court, from ordinary appeal — i.e., by notice of appeal, record on appeal and appeal
bond, under Rule 41— to appeal by certiorari, under Rule 45

Issue/s: WON PNR is immune from suit.

WON the State acted in a sovereign capacity or in a corporate capacity when it organized the PNR for
the purpose of engaging in transportation
WON the State acted differently when it organized the PNR as successor of the Manila Railroad
Company

Held: No, PNR is NOT immune. 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
WHEREFORE, the order of dismissal is reversed and set aside. The case is remanded to the trial court for
further proceedings. Costs against the Philippine National Railways.
Ratio: The correct rule is that "not all government entities, whether corporate or non-corporate, are
immune from suits. Immunity from suit is determined by the character of the objects for which the
entity was organized." (Nat. Airports Corp. vs. Teodoro and Phil. Airlines, Inc., 91 Phil. 203, 206; Santos
vs, Santos, 92 Phil. 281, 285; Harry Lyons, Inc. vs. USA, 104 Phil. 593.)
Suits against State agencies with respect to matters in which they have assumed to act in a private or
non-governmental capacity are not suits against the State
Like any private common carrier, the PNR is subject to the obligations of persons engaged in that private
enterprise. It is not performing any governmental function
The point is that when the government enters into a commercial business it abandons its sovereign
capacity and is to be treated like any other private corporation (Bank of the U.S. vs. Planters' Bank, 9
Wheat. 904, 6 L. ed. 244, cited in Manila Hotel Employees Association vs. Manila Hotel Company, et al.,
73 Phil. 374, 388).
There is not one law for the sovereign and another for the subject, but when the sovereign engages in
business and the conduct of business enterprises, and contracts with individuals, whenever the contract
in any form comes before the courts, the rights and obligation of the contracting parties must be
adjusted upon the same principles as if both contracting parties were private persons. Both stand upon
equality before the law, and the sovereign is merged in the dealer, contractor and suitor (People vs.
Stephens, 71 N.Y. 549).
Justice Abad Santos (Separate Opinion) : All corporations organized by the government are its
instrumentality by the very reason of their creation. But that fact alone does not invest them with
immunity from suit.

Jesus Disini V. Hon. Sandiganbayan

FACTS:
· June 30, 2004 – Office of the OMB ➜ SB- 2 information against Herminio Disini – corruption of
public officials, Art 212 in rel. to Art 210 (RPC) and violation of RA 3019
➤ Conspiring together and confederating with former Pres. Marcos
➤ Taking advantage of close personal relation, intimacy and free access
· Aug. 2 – Disini ➜MTQ – crim actions has been extinguished by PRESCRIPTION and information do
not conform to the prescribed form ➜OPPOSED
· Sept. 16 – Disini ➜VOLUNTARY SUBMISSION for arraignment ➜ Plea of NOT GUILTY ➜to obtain
the SB’s favorable action on his Motion for permission to travel abroad
· Jan. 17, 2005 – SB ➜DENIED ➜DISINI ➜ MR ➜DENIED
· (Disini’s) ➜ challenged the jurisdiction of SB ➜ information did NOT allege that the charges were
being filed pursuant to and in connection with EO 1, 2, 14, 14-01; (2) allegations neither pertained to the
recovery of ill-gotten wealth nor involved sequestration cases; (3) cases filed by the OMB instead of
PCGG; (4) private individual, NOT charged as co-principal, accomplice, accessory of a public officers,
should be in regular courts.

HELD: SB has OEJ over the offense charged

· SG ➜ SB has jurisdiction over the offense charged because the crim cases were filed within the
purview of SEC. 4(C) of RA 8242 and both complaints were initially filed by the PCGG pursuant to its
mandate.
➤ He is involved in the same transaction, specifically the contacts awarded through his and Marcos’
intervention in favor of Burns and Rose to do engineering and architectural design, and Westinghouse to
do the construction of the PNPPP.
➤ Sec. 2, EO 1
· The offense have NOT yet prescribed
· In resolving the issue of prescription, the ff. must be considered:
1) The period of prescription for the offense;
2) The time when the period of prescriptions starts to run; and
3) The time when the prescriptive period is interrupted.

· GR: prescriptive period shall commence to run on the day the crime is committed.
ETR: “BLAMELESS IGNORANCE” DOCTRINE
(Incorporated in SEC. 2, ACT 3326)
- The statute of limitations runs only upon discovery of the fact of the invasion of a right which will
support a cause of action.
- In other words, the court would decline to apply the statute of limitations where the plaintiff does not
know or has no reasonable means of knowing the existence of the cause of action.

➤ Penalty of the offense charged = PRISION MAYOR

➤ Period of prescription = 15 YRS.
➤ Began to run = Discovery = 1986
➤ Interrupted from April 8, 1991 (transmission of the records from PCGG to OMB)

Dept. of Agriculture v. NLRC

The case is regarding money claim against Department of Agriculture (DA) as filed and requested by
National Labor Relations Commission (NLRC).
Petitioner Department of Agriculture and Sultan Security Agency entered into a contract for security
services to be provided by the latter to the said governmental entity. Pursuant to their arrangements,
guards were deployed by Sultan Security Agency in the various premises of the DA. Thereafter, several
guards filed a complaint for underpayment of wages, non-payment of 13th month pay, uniform
allowances, night shift differential pay, holiday pay, and overtime pay, as well as for damages against
the DA and the security agency.
The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the security agency
for the payment of money claims of the complainant security guards. The DA and the security agency
did not appeal the decision. Thus, the decision became final and executory. The Labor Arbiter issued a
writ of execution to enforce and execute the judgment against the property of the DA and the security
agency. Thereafter, the City Sheriff levied on execution the motor vehicles of the DA.
The petitioner charges the NLRC with grave abuse of discretion for refusing to quash the writ of
execution. The petitioner faults the NLRC for assuming jurisdiction over a money claim against the
Department, which, it claims, falls under the exclusive jurisdiction of the Commission on Audit. More
importantly, the petitioner asserts, the NLRC has disregarded the cardinal rule on the non-suability of
the State.
The private respondents, on the other hand, argue that the petitioner has impliedly waived its immunity
from suit by concluding a service contract with Sultan Security Agency.

Issues:
Whether or not the doctrine of non-suability of the State applies in the case.

Discussions:
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. However, the money claim should first be brought to
the Commission on Audit. Act 3083 stands 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.

Rulings:
No. The rule does not say that the State may not be sued under any circumstances. The State may at
times be sued. 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 claims involving
liability arising from contract, express or implied, which could serve as a basis of civil action between
private parties.”
In this case, The DA has not pretended to have assumed a capacity apart from its being a governmental
entity when it entered into the questioned contract; nor that it could have, in fact, performed any act
proprietary in character. But the claims of the complainant security guards clearly constitute money
claims.