Municipality of Hagonoy, Bulacan v. Dumdum, Jr., G.R. No.

168289, March 22, 2010

The general rule spelled out in Section 3, Article XVI of the Constitution is that the state and its political
subdivisions may not be sued without their consent. Otherwise put, they are open to suit but only when
they consent to it. Consent is implied when the government enters into a business contract, as it then
descends to the level of the other contracting party; or it may be embodied in a general or special law
such as that found in Book I, Title I, Chapter 2, Section 22 of the Local Government Code of 1991, which
vests local government units with certain corporate powers —one of them 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

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.

Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the
right springing from sovereignty, and while in the performance of the duties pertaining thereto, their
acts are political and governmental. Their officers and agents in such capacity, though elected or
appointed by them, are nevertheless public functionaries performing a public service, and as such they
are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private,
proprietary or corporate right, arising from their existence as legal persons and not as public agencies.
Their officers and agents in the performance of such functions act in behalf of the municipalities in their
corporate or individual capacity, and not for the state or sovereign power." (112 N.E., 994-995) (Ibid, pp.
605-606.)

It has already been remarked that municipal corporations are suable because their charters grant them
the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by
them in the discharge of governmental functions and can be held answerable only if it can be shown
that they were acting in a proprietary capacity. In permitting such entities to be sued, the State merely
gives the claimant the right to show that the defendant was not acting in its governmental capacity
when the injury was committed or that the case comes under the exceptions recognized by law. Failing
this, the claimant cannot recover.

Angat River Irrigation System v. Angat River Workers’ Union, G.R. Nos. L-10943 and L-10944,
December 28, 1957

As ordinarily constituted, municipal corporations (and this may be said of the National Government)
have dual character the one governmental, legislative, or public; the other, proprietary or private. In
their public capacity a responsibility exist in the performance of acts for the public benefit, and in this
respect they are merely a part of the machinery of government of the sovereignty creating them, and
the authority of the state is supreme. But in their PROPRIETARY or private character their powers are
supposed to be conferred not from considerations of state, but for the private advatage of the particular
corporation as a distinct legal personality(Bouvier's Law Dictionary,, 3rd Revision, Vol. II, 2270).

In its governmental or public character, the corporation is made by the state, one of its instruments, or
the local depository of certain limited and prescribed political powers, to be good in behalf of the estate
rather than for itself. But its proprietary or private character, the theory is that the powers are supposed
not to be conferred primarily or chiefly from considerations connected with the government of the
estate at large, but for the private advantage of the compact community which is incorporated as a
distinct legal personality or corporate individual; and as to such powers, and to property acquired and
contracts made thereunder, the corporation is frequently regarded as having the rights and and
obligations of a private rather than those of a public, corporation (Trenton vs. New Jersey, 262 US 182,
67 L ed 937, 29 ALR 1471).

The governmental functions of a municipal corporation are those conferred or imposed upon it as a local
agency, to be exercised not only in the interest of its inhabitants, but also in the advancement of the
public good or welfare as affecting the public generally (37 Am. Jur. 727).
The distinction between acts in the performance of a governmental function and those in the
performance of a corporate or proprietary function is that in the case of the former, the municipal
corporation is executing the legislative mandate with respect to a public duty generally, while in the
other, it is exercising its private rights as a corporate body

DOH v. Phil Pharma Wealth, Inc., G.R. No 182358, February 20, 2013

The discussion of this Court in Department of Agriculture v. National Labor Relations Commission on the
doctrine of non-suability is enlightening.

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. x x x [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 nonsuability. 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 State’s
consent may be given either expressly or impliedly. Express consent may be made through a general law
or a special law. x x x 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, x x x 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 function and another which is
done in its proprietary capacity.

As a general rule, a state may not be sued. However, if it consents, either expressly or impliedly, then it
may be the subject of a suit. There is express consent when a law, either special or general, so provides.
On the other hand, there is implied consent when the state "enters into a contract or it itself
commences litigation." However, it must be clarified that when a state enters into a contract, it does not
automatically mean that it has waived its non-suability. The State "will be deemed to have impliedly
waived its non-suability [only] if it has entered into a contract in its proprietary or private capacity.
[However,] when the contract involves its sovereign or governmental capacity[,] x x x no such waiver
may be implied." "Statutory provisions waiving [s]tate immunity are construed in strictissimi juris. For,
waiver of immunity is in derogation of sovereignty."

An unincorporated government agency without any separate juridical personality of its own enjoys
immunity from suit because it is invested with an inherent power of sovereignty. Accordingly, a claim for
damages against the agency cannot prosper; otherwise, the doctrine of sovereign immunity is violated.
However, the need to distinguish between an unincorporated government agency performing
governmental function and one performing proprietary functions has arisen. The immunity has been
upheld in favor of the former because its function is governmental or incidental to such function; it has
not been upheld in favor of the latter whose function was not in pursuit of a necessary function of
government but was essentially a business.

As regards the other petitioners, to wit, Secretaries Romualdez and Dayrit, and Undersecretary Galon, it
must be stressed that the doctrine of state immunity extends its protective mantle also to complaints
filed against state officials for acts done in the discharge and performance of their duties. "The suability
of a government official depends on whether the official concerned was acting within his official or
jurisdictional capacity, and whether the acts done in the performance of official functions will result in a
charge or financial liability against the government." Otherwise stated, "public officials can be held
personally accountable for acts claimed to have been performed in connection with official duties where
they have acted ultra vires or where there is showing of bad faith." Moreover, "[t]he 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 x x x. In such a situation, the state may move to dismiss the
[C]omplaint on the ground that it has been filed without its consent."

Professional Video, Inc. v TESDA, G.R. No. 155504, June 26, 2009

The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI of the
1987 Constitution and has been an established principle that antedates this Constitution. It is as well a
universally recognized principle of international law that exempts a state and its organs from the
jurisdiction of another state. 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.

The proscribed suit that the state immunity principle covers takes on various forms, namely: a suit
against the Republic by name; a suit against an unincorporated government agency; a suit against a
government agency covered by a charter with respect to the agency’s performance of governmental
functions; and a suit that on its face is against a government officer, but where the ultimate liability will
fall on the government. In the present case, the writ of attachment was issued against a government
agency covered by its own charter. As discussed above, TESDA performs governmental functions, and
the issuance of certifications is a task within its function of developing and establishing a system of skills
standardization, testing, and certification in the country. From the perspective of this function, the core
reason for the existence of state immunity applies – i.e., the public policy reason that the performance
of governmental function cannot be hindered or delayed by suits, nor can these suits control the use
and disposition of the means for the performance of governmental functions. In Providence Washington
Insurance Co. v. Republic of the Philippines, we said:

[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.

City of Bacolod v. Phuture Visions Co., Inc., G.R. No. 190289, January 17, 2018

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court of the
Decision1 dated February 27, 2009 and the Resolution2 dated October 27, 2009 of the Court of Appeals
(CA) in CAG. R. SP No. 03322. The assailed rulings reversed the dismissal of respondent's Petition for
Mandamus and Damages with Prayer for Issuance of a Temporary Mandatory Order and/or Writ of
Preliminary Mandatory Injunction (Petition for Mandamus and Damages) by the Regional Trial Court of
Bacolod City, Branch 49.

The principle of immunity from suit is embodied in Section 3, Article XVI of the 1987 Philippine
Constitution which states that "[t]he State cannot be sued without its consent." The purpose behind this
principle is to prevent the loss of governmental efficiency as a result of the time and energy it would
require to defend itself against lawsuits. The State and its political subdivisions are open to suit only
when they consent to it.

Consent may be express or implied, such as when the government exercises its proprietary functions, or
where such is embodied in a general or special law. In the present case, respondent sued petitioners for
the latter's refusal to issue a mayor's permit for bingo operations and for closing its business on account
of the lack of such permit. However, while the authority of city mayors to issue or grant licenses and
business permits is granted by the Local Government Code (LGC), which also vests local government
units with corporate powers, one of which is the power to sue and be sued, this Court has held that the
power to issue or grant licenses and business permits is not an exercise of the government's proprietary
function. Instead, it is in an exercise of the police power of the State, ergo a governmental act. This is
clearly elucidated by the Court in Acebedo Optical Company, Inc. v. The Honorable Court of Appeals:

The Court of Appeals erred in adjudging subject business permit as having been issued
by respondent City Mayor in the performance of proprietary functions of Iligan City. As
hereinabove elaborated upon, the issuance of business licenses and permits by a
municipality or city is essentially regulatory in nature. The authority, which devolved
upon local government units to issue or grant such licenses or permits, is essentially in
the exercise of the police power of the State within the contemplation of the general
welfare clause of the Local Government Code. (emphasis supplied)

No consent to be sued and be liable for damages can thus be implied from the mere conferment and
exercise of the power to issue business permits and licences. Accordingly, there is merit in petitioners'
argument that they cannot be sued by respondent since the City's consent had not been secured for this
purpose. This is notwithstanding petitioners' failure to raise this exculpatory defense at the first instance
before the trial court or even before the appellate court.

As this Court has repeatedly held, waiver of immunity from suit, being in derogation of sovereignty, will
not be lightly inferred. Moreover, it deserves mentioning that the City of Bacolod as a government
agency or instrumentality cannot be estopped by the omission, mistake or error of its officials or agents.
Estoppel does not also lie against the government or any of its agencies arising from unauthorized or
illegal acts of public officers. Hence, we cannot hold petitioners estopped from invoking their immunity
from suit on account of having raised it only for the first time on appeal. On this score, Justice Barredo's
Opinion in Insurance Co. of North America v. Osaka Shosen Kaisha36 is particularly illuminating:

x x x [T]he real reason why, from the procedural point of view, a suit against the state
filed without its consent must be dismissed is because, necessarily, any such complaint
cannot state a cause of action, since, as the above decision confirms, "there can be no
legal right as against the authority that makes the law on which the right depends." x x x

The question that arises now is, may failure to state a cause of action be alleged as a
ground of dismissal for the first-time on appeal?

x x x The requirement that this defense should be raised at the trial is only to give the
plaintiff a chance to cure the defect of his complaint, but if, as in this case, the lack of
consent of the state cannot be cured because it is a matter of judicial notice that there is
no law allowing the present suit, (only Congress that can give such consent) the reason
for the rule cannot obtain, hence it is clear that such non-suability may be raised even
on appeal. After all, the record on appeal can be examined to find out if the consent of
the state is alleged in the complaint.

x x x It is plain, however, that as far as the date is concerned, this rule of waiver cannot
apply, for the simple reason that in the case of the state as already stated, the waiver
may not be made by anyone other than Congress, so any appearance in any form made
on its behalf would be ineffective and invalid if not authorized by a law duly passed by
Congress. Besides, the state has to act thru subalterns who are not always prepared to
act in the premises with the necessary capability, and instances there can be when thru
ignorance, negligence or malice, the interest of the state may not be properly protected
because of the erroneous appearance made on its behalf by a government lawyer or
some other officer, hence, as a matter of public policy, the law must be understood as
insulating the state from such undesirable contingencies and leaving it free to invoke its
sovereign attributes at any time and at any stage of a judicial proceeding, under the
principle that the mistakes and ommissions of its officers do not bind it.