MERITT VS GOVERNMENT OF THE PHILIPPINE ISLANDS

4 Phil 311

Torts and Damages – Liability of the State for acts of special agents

FACTS:

The facts of the case took place in the 1910’s. Meritt was a constructor  who was
excellent at his work. One day, while he was riding his motorcycle along Calle Padre Faura, he
was bumped by a government ambulance. The driver of the ambulance was proven to have
been negligent. Because of the incident, Meritt was hospitalized and he was severely injured
beyond rehabilitation so much so that he could never perform his job the way he used to and
that he cannot even earn at least half of what he used to earn.

In order for Meritt to recover damages, he sought to sue the government which later
authorized Meritt to sue the government by virtue of Act 2457 enacted by the legislature (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). The lower court then
determined the amount of damages and ordered the government to pay the same.

ISSUE:

Whether or not the government is liable for the negligent act of the driver of the
ambulance.

HELD:

No. 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. It follows therefrom that the state, by virtue of such provisions of
law, is not responsible for the damages suffered by private individuals in consequence of acts
performed by its employees in the discharge of the functions pertaining to their office, because
neither fault nor even negligence can be presumed on the part of the state in the organization
of branches of public service and in the appointment of its agents. The State can only be liable if
it acts through a special agent (and a special agent, in the sense in which these words are
employed, is one who receives a definite and fixed order or commission, foreign to the exercise
of the duties of his office if he is a special official) so that in representation of the state and
being bound to act as an agent thereof, he executes the trust confided to him.

In the case at bar, the ambulance driver was not a special agent nor was a government
officer acting as a special agent hence, there can be no liability from the government. “The
Government does not undertake to guarantee to any person the fidelity of the officers or
agents whom it employs, since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest.”

Republic vs Feliciano

148 SCRA 424

FACTS:

Petitioner seeks the review of the decision of the Intermediate Appellate Court dated
April 30, 1985 reversing the order of the Court of First Instance of Camarines Sur, Branch VI,
dated August 21, 1980, which dismissed the complaint of respondent Pablo Feliciano for
recovery of ownership and possession of a parcel of land on the ground of non-suability of the
State. On January 22, 1970, Feliciano filed a complaint with the then Court of First Instance of
Camarines Sur against the RP,represented by the Land Authority, for the recovery of ownership
and possession of a parcel of land, consisting of four (4)lots with an aggregate area of
1,364.4177 hectares, situated in the Barrio of Salvacion, Municipality of Tinambac, Camarines
Sur.

Feliciano alleged that he bought the property in question from Victor Gardiola by virtue
of a Contract of Sale dated May 31, 1952, followed by a Deed of Absolute Sale on October 30,
1954; that Gardiola had acquired the property by purchase from the heirs of Francisco
Abrazado whose title to the said property was evidenced by an informacion posesoria that
upon his purchase of the property, he took actual possession of the same, introduced various
improvements therein and caused it to be surveyed in July 1952, which survey was approved by
the Director of Lands on October 24, 1954.On November 1, 1954, President Ramon Magsaysay
issued Proclamation No. 90 reserving for settlement purposes, under the administration of the
National Resettlement and Rehabilitation Administration (NARRA), a tract of land situated in
the Municipalities of Tinambac and Siruma, Camarines Sur, after which the NARRA and its
successor agency, the Land Authority, started sub-dividing and distributing the land to the
settlers; that the property in question, while located within the reservation established under
Proclamation No. 90, was the private property of Feliciano and should therefore be excluded
there from.

Feliciano prayed that he be declared the rightful and true owner of the property in
question consisting of 1,364.4177 hectares; that his title of ownership based on “informacion
posesoria “ of his predecessor-in-interest be declared legal valid and subsisting and that
defendant be ordered to cancel and nullify all awards to the settlers.

ISSUE:
WON the State can be sued for recovery and possession of a parcel of land
RULING:
NO.  A suit against the State, 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. It may be invoked by the courts
sua sponte  at any stage of the proceedings. Waiver of immunity, being a derogation of
sovereignty, will not be inferred lightly. but must be construed in strictissimi  juris (of strictest
right). 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.

Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion
posesoria  registered in the Office of the Register of Deed of Camarines Sur on September 23,
1952 was a "reconstituted" possessory information; itwas "reconstituted from the duplicate
presented to this office (Register of Deeds) by Dr. Pablo Feliciano," without the submission of
proof that the alleged duplicate was authentic or that the original thereof was lost.
Reconstitution can be validly made only in case of loss of the original.

These circumstances raise grave doubts as to the authenticity and validityof the
"informacion posesoria" relied upon by respondent Feliciano. Adding to the dubiousness of said
document is the fact that "possessory information calls for an area of only 100 hectares,"
whereas the land claimed by respondent Feliciano comprises 1,364.4177 hectares, later
reduced to 701-9064 hectares. Courts should be wary in accepting "possessory information
documents, as well as other purportedly old Spanish titles, as proof of alleged ownership of
 EPG CONSTRUCTION VS VIGILAR
March 16, 2001

FACTS:
(1983) The herein petitioners-contractors, under contracts with DPWH, constructed
145housing units but coverage of construction and funding under the said contracts was only
for 2/3 of each housing unit. Through the verbal request and assurance of then DPWH
Undersecretary Canlas,they undertook additional constructions for the completion of the
project, but said additionalconstructions were not issued payment by DPWH.With a favorable
recommendation from the DPWH Asst. Secretary for
Legal Affairs, thepetitioners sent a demend letter to the DPWH Secretary. The DPWH Auditor
did not object to thepayment subject to whatever action COA may adopt.(1992) Through the
request of then DPWH Secretary De Jesus, the DBM released the amountfor payment but
(1996) respondent DPWH Secreatry Vigilar denied the money claims promptingpetitioners to
file a petition for mandamus before the RTC which said trial court denied. Hence,
thispetition.Among others, respondent-secretary argues that the state may not be sued
invoking theconstitutional doctrine of Non-suability of the State also known as the Royal
Prerogative of Dishonesty.

ISSUE:
Whether or not the Principle of State Immunity is applicable in the case at bar?

HELD:
The principle of state immunity finds no application in this case. Under the
circumstances,respondent may not validly invoke the Royal Prerogative of Dishonesty and hide
under the states cloakof invincibility against suit. Considering that this principle yields to certain
settled exceptions. The ruleis not absolute for it does not say that the state may not be sued
under any circumstance. Thedoctrine of governmental immunity from suit cannot serve as an
instrument for perpetrating aninjustice on a citizen. It is just as important that there be fidelity
to legal norms on the part of officialdom if the rule of law is to be maintained. The ends of
justice would be subverted if we were touphold, in this instance, the states immunity from
suit.This court - as the staunch guardian of the citizens rights and welfare- cannot sanction
aninjustice so patent on its face, and allow itself to be an instrument of perpetration thereof.
Justice andequity sternly demand that the states cloak of invincibility against suit be shred in
this particularinstance and that petitioners-contractors be duly compensated, on the basis of
quantum meruit, forconstruction done on the public works housing project Petition GRANTED.

REPUBLIC VS. VILLASOR, ET AL.

REPUBLIC VS. VILLASOR, ET AL.
 G.R. No. L-30671 November 28, 1973

 Facts:
On July 7, 1969, a decision was rendered in Special Proceedings No. 2156-R in favor of
respondents P.J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation
and against petitioner confirming the arbitration award in the amount of P1,712,396.40.The
award is for the satisfaction of a judgment against thePhlippine Government.On June 24, 1969,
respondent Honorable Guillermo Villasor issued an Order declaring the decision final and
executory. Villasor directed the Sheriffs of Rizal Province, Quezon City as well as Manila to
execute said decision. The Provincial Sheriff of Rizal served Notices of Garnishment with several
Banks, specially on Philippine Veterans Bank and PNB. The funds of the Armed Forces of the
Philippines on deposit with Philippine Veterans Bank and PNB are public funds duly
appropriated and allocated for the payment of pensions of retirees, pay and allowances of
military and civilian personnel and for maintenance and operations of the AFP.Petitioner, on
certiorari, filed prohibition proceedings against respondent Judge Villasor for acting in excess of
jurisdiction with grave abuse of discretion amounting to lack of jurisdiction in granting the
issuance of a Writ of Execution against the properties of the AFP, hence the notices and
garnishment are null and void.
Issue:
Is the Writ of Execution issued by Judge Villasor valid?

 Held:
What was done by respondent Judge is not in conformity with the dictates of the
Constitution.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. 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. The State may not be sued without
its consent. A corollary, both dictated by logic and sound sense from 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. 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 the 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.

US VS GUINTO

GR No. 76607
February 26, 1990

FACTS:
 
The private respondents are suing several officers of the US Air Force in Clark Air Base in
connection with the bidding conducted by them for contracts for barber services in the said
base which was won by a certain Dizon. The respondents wanted to cancel the award to the bid
winner because they claimed that Dizon had included in his bid an area not included in the
invitation to bid, and subsequently, to conduct a rebidding.
ISSUE:
Is the doctrine of state immunity applicable in the cases at bar?
 

HELD:
A state may not be sued without its consent. This doctrine is not absolute and does not
say the state may not be sued under any circumstance. The rule says that the state may not be
sued without its consent, which clearly imports that it may be sued if it consents. 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 sate enters into a
contract or it itself commences litigation. When the government enters into a contract, it is
deemed to have descended to the level of the other contracting party and divested itself 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 counter claim. The USA, 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

Professional Video v. Technical and Educational Skills Development Authority

[Tesda]

G.R. No. 155504, June 26, 2009

FACTS:

Professional Video (PROVI) entered a contract with Technical and Educational Skills
Development Authority (TESDA) for the supply of PVC cards to be used as ID of TESDA trainees who
passed TESDA’s National Skills Certification Program – the program that immediately serves TESDA’s
mandated functions of developing and establishing a national system of skills standardization, testing
and certification in the country.

ISSUE:

Whether or not TESDA can be sued and held liable for recovery of money and damages on the
entered contract with PROVI.

HELD:

The Supreme Court ruled that TESDA cannot be sued for recovery of sum of money and
damages. TESDA performs a governmental function. TESDA’s funds are still public in nature, and, thus,
cannot be valid subject of a writ of garnishment or attachment. Disbursements of public funds must be
covered by the corresponding appropriation as required by law. The functions and 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.

Amigable vs. Cuenca, 43 SCRA 360 (1972) Ponente:

J. Makalintal; en banc; unanimous

Facts:
 Appeal from CFI of Cebu, dismissing plaintiff’s complaint
 Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the
Banilad Estate in Cebu City
  No annotation in favor of the government of any right or interest in the property
appears at the back of the transfer certificate of title of said lot
 Without prior expropriation or negotiated sale, the government used a portion of said
lot, with an area of 6,167 square meters, for the construction of the Mango and
Gorordo Avenues
 Amigable's counsel wrote the President of the Philippines, requesting payment of the
portion of her lot which had been appropriated by the government; Auditor General
disallowed it
 Amigable filed for recovery of ownership to said CFI, but denied on grounds primarily
that government is immune from suit without its consent
Issue:
 Whether or not the appellant may properly sue thegovernmentunderthefactsofthecase
Held:
 It is not immune from suit
 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
(Ministerio vs. CFI of Cebu)
 Since no annotation in favor of the government appears at the back of her certificate of
title and that she has not executed any deed of conveyance of any portion of her lot to
the government, the appellant remains the owner of the whole lot.
 The only relief available (since Avenues have been constructed) is for the government to
make due compensation. To determine due compensation for the land, the basis should
be the price or value thereofat thetime of thetaking.
 The plaintiff is entitled to damages in the form of legal interest on the price of the land
from the time it was taken up to the time that payment is madeby thegovernment.
 Government should pay attorney’s fees
Notes:
 The doctrine of governmental immunity from suit cannot serve as an instrument for
perpetrating an injustice on a citizen. payment is madeby thegovernment.
 Government should pay attorney’s fees

REPUBLIC VS SANDOVAL
220 SCRA 124

Facts:

Farmer-rallyists marched to Malacanang calling for a genuine land reform program.

There was a marchers-police confrontation which resulted in the death of 12 rallyists and
scores were wounded. As a result, then Pres. Aquino issued AO 11 creating the Citizens
Mendiola Commission for the purpose of conducting an investigation. The most significant
recommendation of the Commission was for the heirs of the deceased and wounded victims to
be compensated by the government. Based on such recommendation, the victims of Mendiola
massacre filed an action for damages against the Republic and the military/police officers
involved in the incident.

Issues:
(1) Whether or not there is a valid waiver of immunity
(2) Whether or not the State is liable for damages

Held:

The Court held that there was no valid waiver of immunity as claimed by the petitioners.
The recommendation made by the Commission to indemnify the heirs of the deceased and the
victims does not in any way mean that liability attaches to the State. AO 11 merely states the
purpose of the creation of the Commission and, therefore, whatever is the finding of the
Commission only serves as the basis for a cause of action in the event any party decides to
litigate the same. Thus, the recommendation of the Commission does not in any way bind the
State.

The State cannot be made liable because the military/police officers who allegedly were
responsible for the death and injuries suffered by the marchers acted beyond the scope of their
authority. It is a settled rule that the State as a person can commit no wrong. The military and
police officers who were responsible for the atrocities can be held personally liable for damages
as they exceeded their authority, hence, the acts cannot be considered official.
 FROILAN VS. PAN ORIENTAL SHIPPING CO.

S e p t e m b e r 3 0 , 1 9 5 4 1 0 3 P H I L . 4 7 3 P A R A S , J . :  Nature of the Case: Appeal from

an Order of the CFI of M a n i l a .

FACTS:

D e f e n d a n t P a n O r i e n t a l t o o k p o s s e s s i o n o f t h e v e s s e l i n q u e s ti o n
a ft e r i t h a d b e e n r e p o s s e s s e d b y t h e S h i p p i n g A d m i n i s t r a ti o n a n d ti t l e
thereto reacquired by the government, following the original purchaser,
Fernando Froilan’s, default in his payment of the unpaid balance and
insurance premiums for the said vessel. Pan Oriental chartered said
v e s s e l a n d o p e r a t e d t h e s a m e a ft e r i t h a d r e p a i r e d t h e v e s s e l a n d p a i d
t h e s ti p u l a t e d i n i ti a l   p a y m e n t , t h e r e b y e x e r c i s i n g i t s o p ti o n t o
purchase, pursuant to a bareboat charter contract entered between said
c o m p a n y a n d t h e S h i p p i n g C o r p o r a ti o n . T h e C a b i n e t r e s o l v e d t o r e s t o r e
F r o i l a n t o h i s r i g h t s u n d e r t h e o r i g i n a l c o n t r a c t o f s a l e o n c o n d i ti o n t h a t
he shall pay a sum of money upon delivery of the vessel to him, that he
s h a l l c o n ti n u e p a y i n g t h e r e m a i n i n g i n s t a l l m e n t s d u e , a n d t h a t h e s h a l l
assume the expenses incurred for the repair and by docking of the vessel.
P a n O r i e n t a l p r o t e s t e d t o t h i s r e s t o r a ti o n o f F r o i l a n ’ s r i g h t s u n d e r t h e
contract of sale, for the reason that when the vessel was delivered to it,
t h e S h i p p i n g A d m i n i s t r a ti o n h a d a u t h o r i t y t o d i s p o s e o f s a i d a u t h o r i t y t o
the property, Froilan having already relinquished whatever rights he may
have thereon. Froilan paid the required cash of P10,000.00 and as Pan
O r i e n t a l r e f u s e d t o s u r r e n d e r     p o s s e s s i o n o f t h e v e s s e l , h e fi l e d a n a c ti o n
for in the CFI of Manila to recover possession thereof and have him
d e c l a r e d t h e r i g h tf u l o w n e r o f s a i d p r o p e r t y . T h e R e p u b l i c o f t h e
Philippines was allowed to intervene in said civil case praying for the
p o s s e s s i o n o f   t h e i n o r d e r t h a t t h e c h a tt e l m o r t g a g e c o n s ti t u t e d t h e r e o n
may be foreclosed.

ISSUE:

W h e t h e r o r n o t t h e g o v e r n m e n t ’ s m o ti o n t o d i s m i s s P a n O r i e n t a l
counterclaims may prosper?

HELD:

Under the circumstances already had voted to, Pan Oriental cannot be
c o n s i d e r e d a p o s s e s s o r i n b a d f a i t h u n ti l a ft e r t h e i n s ti t u ti o n o f t h e
instant case. However, since it is not disputed that said appellant is
e n ti t l e d t o t h e r e f u n d o f s u c h e x p e n s e s w i t h t h e r i g h t t o r e t a i n t h e v e s s e l
u n ti l h e h a s b e e n r e i m b u r s e d t h e r e f o r e . A s i t i s b y t h e c o r r e c t e d a c t s o f
defendant and intervenor Republic of the Philippines that the appellant
ha a lien far his expenses, appelees Froilan, Compania Maratma, and the
Republic of the Philippines are declared liable for their imbursement to
a p p e l l a n t o f i t s l e g i ti m a t e e x p e n s e s , a s a l l o w e d b y l a w , w i t h l e g a l
i n t e r e s t f r o m t h e ti m e o f   d i s b u r s e m e n t .

Ministerio vs. Court of First Instance,

G.R. No. L-31635, August 31, 1971

FACTS:

Petitioners as plaintiffs in a complaint filed with the Court of First Instance of Cebu,
dated April 13, 1966, sought the payment of just compensation for a registered lot, containing
an area of 1045 square meters, alleging that in 1927 the National Government through its
authorized representatives took physical and material possession of it and used it for the
widening of the Gorordo Avenue, a national road, Cebu City, without paying just compensation
and without any agreement, either written or verbal. There was an allegation of repeated
demands for the payment of its price or return of its possession, but defendants Public Highway
Commissioner and the Auditor General refused to restore its possession. It was further alleged
that on August 25, 1965, the appraisal committee of the City of Cebu approved Resolution No.
90, appraising the reasonable and just price of Lot No. 647-B at P50.00 per square meter or a
total price of P52,250.00. Thereafter, the complaint was amended on June 30, 1966 in the
sense that the remedy prayed for was in the alternative, either the restoration of possession or
the payment of the just compensation.

In the answer filed by defendants, now respondents, through the then Solicitor General, now
Associate Justice, Antonio P. Barredo, the principal defense relied upon was that the suit in
reality was one against the government and therefore should be dismissed, no consent having
been shown. Then on July 11, 1969, the parties submitted a stipulation of facts to this effect:
"That the plaintiffs are the registered owners of Lot 647-B of the Banilad estate described in the
Survey plan RS-600 GLRO Record No. 5988 and more particularly described in Transfer
Certificate of Title No. RT-5963 containing an area of 1,045 square meters; That the National
Government in 1927 took possession of Lot 647-B Banilad estate, and used the same for the
widening of Gorordo Avenue; That the Appraisal Committee of Cebu City approved Resolution
No. 90, Series of 1965 fixing the price of Lot No. 647-B at P50.00 per square meter; That Lot No.
647-B is still in the possession of the National Government the same being utilized as part of
the Gorordo Avenue, Cebu City, and that the National Government has not as yet paid the
value of the land which is being utilized for public use."
The lower court dismissed the complaint on January 30, 1969 stating that the case is
undoubtedly against the National Government and there is now showing that the Government
has not consented to be sued in this case. The petitioners appealed by certiorari to review the
decision and contended that they are entitled for just compensation under the Art III, Sec. 1 (2)
of the Constitution.

ISSUE:

Whether or not, the decision of the CFI of Cebu to dismiss the complaint by reason
Government immunity from suit correct?

HELD:

NO. The doctrine of governmental immunity from suit cannot be an instrument for
perpetrating an injustice on a citizen. If there were an observance of procedural regularity,
petitioners would not be in sad plaint they are now. It is unthinkable then that precisely there
was a failure on what the law requires and the petitioners has the right to demand from the
Government what is due to them. The Supreme Court decided that the lower court’s decision
of dismissing the complaint is reversed and the case remanded to the lower court for
proceedings in accordance with law.

 
 PNB vs. Pabalan - Case Digest

G.R. No. L-33112 June 15, 1978

PHIL. NATIONAL BANK vs. JAVIER PABALAN

Issue:

The petitioner is requesting for certiorari against the writ of execution authorized by the Hon
Judge Pabalan regarding the transfer of funds amounting to P12,724.66 belonging to Philippine
Virginia Tobacco Administration.

Facts:

Philippine National Bank invoked the doctrine of non-suability in behalf of PVTA. It is to be

admitted that under the present Constitution, what was formerly implicit as a fundamental
doctrine in constitutional law has been set forth in express terms: "The State may not be sued
without its consent." In addition, the amount held by said bank is subject to garnishment.
Held:

The certiorari was dismissed without cost by the Supreme Court saying that the funds held by
PNB is subject for garnishment, thus, the writ of execution be imposed immediately. The non-
suability clause raised by PVTA being a government owned corporation was also denied citing
previous decisions held by the Supreme Court specifically citing that of Manila Hotel Employees
Association vs Manila Hotel Company and to quote '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.'

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

Sunday, January 25, 2009 Posted by Coffeeholic Writes

Labels: Case Digests, Political Law

Facts:

Petitioner Department of Agriculture (DA) 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,
nonpayment 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.
Issue:

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

Held:

The basic postulate enshrined in the Constitution that “the 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. A sovereign is exempt from
suit based 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.

The rule is not really absolute for it does not say that the State may not be sued under any
circumstances. The State may at times be sued. The State’s consent may be given expressly or
impliedly. Express consent may be made through a general law or a special law. 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.

But 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. A State may be said to have
descended to the level of an individual and can this be deemed to have actually 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 the 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, be that as it may, the claims of the complainant security guards clearly constitute money
claims. Act No. 3083 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 327, as amended by PD 1145, the money claim must first be brought to the
Commission on Audit.

MUNICIPALITY OF SAN MIGUEL BULACAN

VS

FERNANDEZ
130 SCRA 56

FACTS:

In civil case No. 604-B the then CFI of Bulacan rendered judgment holding herein petitioner
municipality liable to respondents Imperio et.al. When the judgment became final, respondents judge
issued a writ of execution to satisfy the same. Petitioner municipality filed a motion to quash the writ on
the ground that the municipality’s property or funds are public funds exempt from execution. The
motion was denied. Respondents judge issued another order requiring both the municipal and provincial
treasurer to comply with the money judgment. When the treasurer failed to do so, respondent judge
issued an order for their arrest and that they will be released only upon compliance, hence, the present
petition.

ISSUE:

Whether the funds of the municipality in the hands of the provincial and municipal treasurers of
Bulacan and San Miguel respectively, are public funds which are exempt from execution.

HELD:

Municipal Funds in possession of municipal and provincial treasurers are Public funds exempt
from execution. Well settled is the rule that public funds are not subject to Levy and execution. The
reason for those was explained in the case of municipality of Paoay versus Manaois. “That they are held
in the trust for the people, intended and used for the accomplishes of the purpose for which municipal
corporations are created and that to subject said properties and public funds to execution would
materially impede, even defeat and insome instances destroy said purpose.” And in Tantoco VS
Municipal Council of Iloilo 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 in transit to it. Judgment rendered for taxes and then proceeds of
such judgment in the hands of the officer of the law are not subject to execution unless declared by
statue.” 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 PD no. 447 known as the “ decree of local fiscal administration” provide in section 3 (a)
that “no money shall be paid out of the treasury except in pursuance of a lawful appropriation or other
specific statutory authority.” Otherwise stated, there must be a corresponding appropriation in the form
of an ordinance duly passed by then Sangguniang Bayan before any money of the municipality maybe
paid out. In the case at bar, it has not been shown that the Sangguniang Bayan has passed an ordinance
to this effect.

Furthermore, sec. 15 rule 39 of the new rule of court, outlines the procedure for the
enforcement of money judgment. The foregoing has not been followed in the case at bar.

MUNICIPALITY OF MAKATI VS. COURT OF APPEALS

190 SCRA 206

FACTS:

As expropriation proceeding was initiated by petitioner Municipality of Makati against

private respondents Admiral Finance Creditors Consurtium Inc. Home Bldg., System and Realty
Corp. and one Arceli P. Jo Involving a parcel of land and improvement thereon located at San
Antonio Village, Makati.

An action for eminent domain was filed. Attached to the petitionera complaint was a
certification that a bank account had been opened with the PNB. After the decision has become
final and executor, a writ of execution was issued and a notice of garnishment was served upon
the manager of PNB, where the petitioner had bank accounts, However, the sheriff was
informed that hold cold was placed on the account of the petitioner.

The petitioner contended that its funds at the PNB cocked neither be garnished not
levied upon execution for to do so would result in the disbursement of public funds without the
proper appropriation required under the law.

In the petition with the Court of Appeals petitioner alleges for the first time that it has
actually two accounts with the PNB, one exclusively for the expropriation of subject property
with an outstanding balance of P 99,743.94. The account was for the obligations and other
purposes of the municipal government with a balance of P170, 098,421.72.

ISSUE:

Whether or not the bank account of a municipality may be levied on execution to satisfy
a money judgment against it absent a showing that the municipal council has passed an
ordinance appropriating from its funds an amount correspondingto the balance due to the RTC
decision.

HELD:

Since the first PNB account was specifically opened for expropriation proceedings it has
initiated over the subject property, there is no objection to the garnishment or levy under
execution of funds therein amounting to P4,965,506.40, the funds garnished in excess of
P99,743.94 which are public funds earmarked for the municipal government other statutory
obligations are exempted from execution without the proper appropriation required under the
law.

The funds deposited in the second PNB account are public funds of the municipal
government. The rule is well-settled that public funds are not subject to levy and execution,
unless otherwise provided by statute. More particularly, the properties of a municipality,
whether real or personal , which are necessary for public used cannot be attached and sold at
execution sale to satisfy a money judgment against the municipality. Municipal revenues
derived from taxes, licences and market fees, and which are intended primarily and exclusively
for the purpose of financing and governmental activities and function of the municipality are
exempt from execution. The foregoing rule find application in the case at bar. Absent a
showing that the municipal council of Makati passed an ordinance appropriating from its public
funds an amount corresponding to the balance due under the RTC decision, less the sum P
99,743.94 may be validity effected on the public funds of petitioner deposited in its second
account.

Nevertheless, this is not to say that private respondents are left with no legal recourse.
When 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. The court will not condone petitioner’s blatant
refusal to settle its obligation arising from exploration proceedings it has in fact initiated. Within
the context of the state’s inherent power of eminent domain, just compensation means not
only the correct determination of the amount to be paid to the owner of the land but also the
payment of the land within a reasonable time from its taking. The State’s power of eminent
domain should be exercised within the bounds of fair play and justice. In the case at bar,
considering that valuable property has been taken the compensation to be paid fixed and the
municipal has had more than reasonable time to play full compensation.
 CITY OF CALOOCAN
petitioners,
vs.
ALLARDE
respondents.

 G.R. No. 107271; September 10, 2003

 

 FACTS:
In 1972, Mayor Marcial Samson of Caloocan abolished the position of Assistant
City Administrator and 17 other positions via Ordinance No. 1749. The affected employees
assailed the legality of the abolition. The CFI in 1973 declared abolition illegal and ordered the
reinstatement of all the dismissed employees and the payment of their back-wages and other
emoluments. The City Government appealed the decision but such was dismissed.
In 1986 the City paid Santiago P75,083.37 as partial payment of her back-wages. The others
were paid in full.
In 1987 the City appropriated funds for her unpaid back salaries (supplemental budget #3) but
the City refused to release the money to Santiago. The City of Caloocan argued that Santiago
was not entitled to back wages. On July 27, 1992 Sheriff Castillo levied and sold at public
auction one of the motor vehicles of the City Government for P100,000. The amount was given
to Santiago. The City Government questioned the validity of the motor vehicle; properties of
the municipality were exempt from execution. Judge Allarde denied the motion and directed
the sheriff to levy and schedule at public auction 3 more vehicles. On October 5, 1993 the City
Council of Caloocan passed Ordinance No. 0134 which included the amount of P439,377.14
claimed by Santiago as back-wages, plus interest. Judge Allarde issued an order to the City
Treasurer to release the check but the City Treasurer can’t do so because the Mayor refuses to
sign the check. On May 7,1993. Judge Allarde ordered the Sheriff to immediately garnish the
funds of the City Government of Caloocan corresponding to the claim of Santiago. Notice of
garnishment was forwarded to the PNB but the City Treasurer sent an advice letter to PNB that
the garnishment was illegal and that it would hold PNB liable for any damages which may
be caused by the withholding the funds of the city.

ISSUE
: 
Whether or not the funds of City of Caloocan, in PNB, may be garnished (i.e. exempt from
execution), to satisfy Santiago”s claim.
 HELD:
 
Garnishment is considered a specie of attachment by means of which the plaintiff seeks to
subject to his claim property of the defendant in the hands of a third person, or money owed by
such third person or garnishee to the defendant. The rule is and has always been that all
government funds deposited in the PNB or any other official depositary of the Philippine
Government by any of its agencies or instrumentalities, whether by general or special deposit,
remain government funds and may not be subject to garnishment or levy, in the absence of a
corresponding appropriation as required by law. Even though the rule as to immunity of a state
from suit is relaxed, the power of the courts ends when the judgment is rendered. Although the
liability of the state has been judicially ascertained, the state is at liberty to determine for itself
whether to pay the judgment or not, and execution cannot issue on a judgment against the
state. Such statutes do not authorize a seizure of state property to satisfy judgments recovered,
and only convey an implication that the legislature will recognize such judgment as final and
make provision for the satisfaction thereof. 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.
In such a case, the monetary judgment may be legally enforced by judicial processes. Herein,
the City Council of Caloocan already approved and passed Ordinance No. 0134, Series of 1992,
allocating the amount of P439,377.14for Santiago”s back-wages plus interest. This case, thus,
fell squarely within the exception. The judgment of the trial court could then be
validly enforced against such funds.
 NATIONAL HOUSING AUTHORITY, Petitioner,

vs. 

HEIRS OF ISIDRO GUIVELONDO, Respondents.

G.R. No. 154411. June 19, 2003

FACTS:

On February 23, 1999, petitioner National Housing Authority filed with the Regional Trial
Court of Cebu City, Branch 11, an Amended Complaint for eminent domain against Associacion
Benevola de Cebu, Engracia Urot and the Heirs of Isidro Guivelondo.

On November 12, 1999, the Heirs of Isidro Guivelondo, respondents herein, filed a
Manifestation stating that they were waiving their objections to petitioner’s power to
expropriate their properties. Hence, the trial court declares that the plaintiff has a lawful right
to expropriate the properties of the defendants who are heirs of Isidro Guivelondo. The
appointment of commissioners who would ascertain and report to the Court the just
compensation for said properties will be done as soon as the parties shall have submitted to the
Court the names of persons desired by them to be appointed as such commissioners.

On April 17, 2000, the Commissioners submitted their report wherein they
recommended that the just compensation of the subject properties be fixed at P11,200.00 per
square meter. 3 On August 7, 2000, the trial court rendered Partial Judgment fixing the just
compensation of the lands of respondent Heirs of Isidro Guivelondo at P11,200.00 per square
meter

ISSUE:
1) WHETHER OR NOT THE STATE CAN BE COMPELLED AND COERCED BY THE COURTS TO
EXERCISE OR CONTINUE WITH THE EXERCISE OF ITS INHERENT POWER OF EMINENT DOMAIN;

2) WHETHER OR NOT JUDGMENT HAS BECOME FINAL AND EXECUTORY AND IF ESTOPPEL OR
LACHES APPLIES TO GOVERNMENT;

3) WHETHER OR NOT WRITS OF EXECUTION AND GARNISHMENT MAY BE ISSUED AGAINST THE
STATE IN AN EXPROPRIATION WHEREIN THE EXERCISE OF THE POWER OF EMINENT DOMAIN
WILL NOT SERVE PUBLIC USE OR PURPOSE

HELD:

The Order became final and may no longer be subject to review or reversal in any court.
A final and executory decision or order can no longer be disturbed or reopened no matter how
erroneous it may be. Although judicial determinations are not infallible, judicial error should be
corrected through appeals, not through repeated suits on the same claim.

Furthermore, the SC held that the funds of petitioner NHA are not exempt from
garnishment or execution. It is arbitrary and capricious for a government agency to initiate
expropriation proceedings, seize a persons property, allow the judgment of the court to
become final and executory and then refuse to pay on the ground that there are no
appropriations for the property earlier taken and profitably used. We condemn in the strongest
possible terms the cavalier attitude of government officials who adopt such a despotic and
irresponsible stance.

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 claimants 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.

However, if the funds belong to a public corporation or a government-owned or

controlled corporation which is clothed with a personality of its own, separate and distinct from
that of the government, then its funds are not exempt from garnishment. This is so because
when the government enters into commercial business, it abandons its sovereign capacity and
is to be treated like any other corporation.

In the case of petitioner NHA, the matter of whether its funds and properties are exempt from
garnishment has already been resolved squarely against its predecessor, the Peoples Homesite
and Housing Corporation (PHHC), to wit:
The plea for setting aside the notice of garnishment was premised on the funds of the Peoples
Homesite and Housing Corporation deposited with petitioner being public in character. There
was not even a categorical assertion to that effect. It is only the possibility of its being public in
character. The tone was thus irresolute, the approach diffident. The premise that the funds cold
be spoken of as public in character may be accepted in the sense that the Peoples Homesite
and Housing Corporation was a government-owned entity. It does not follow though that they
were exempt from garnishment.

Lansang vs. CA

G.R. No. 102667, February 23, 2000

Facts:
Private respondents General Assembly of the Blind, Inc. (GABI) and Jose Iglesias were
allegedly awarded a verbal contract of lease in 1970 to occupy a portion of Rizal Park by the
National Parks Development Committee (NPDC), a government initiated civic body engaged in
the development of national parks. Private respondents were allegedly given office and library
space as well as kiosks area selling food and drinks. Private respondent GABI was to remit to
NPDC 40% of the profits derived from operating the kiosks. After the EDSA Revolution,
petitioner Lansang, the new Chairman of the NPDC, sought to clean up Rizal Park. Petitioner
terminated the so-called verbal agreement with GABI and demanded that the latter vacate the
premises and the kiosks it ran privately within the public park. On the day of the supposed
eviction, GABI filed an action for damages and injunction against petitioner.

Issue:
Whether or not the complaint filed against the petitioner is in reality a complaint against
the State, which could not prosper without the State’s consent?

Held:
 The doctrine of state immunity from suit applies to complaints filed against public
officials for acts done in the performance of their duties. The rule is that the suit must be
regarded as one against the state where satisfaction of the judgment against the public official
concerned will require the state itself to perform a positive act, such as appropriation of the
amount necessary to pay the damages awarded to the plaintiff.
The rule does not apply where the public official is charged in his official capacity for acts that
are unlawful and injurious to the rights of others. Public officials are not exempt, in their
personal capacity, from liability arising from acts committed in bad faith.
Neither does it apply where the public official is clearly being sued not in his official capacity but
in his personal capacity, although the acts complained of may have been committed while he
occupied a public position. In the case, the petitioner is being sued not in his capacity as NPDC
chairman but in his personal capacity. It is also evident the petitioner is sued allegedly for
having personal motives in ordering the ejectment of GABI from Rizal Park.
The important question to consider is whether or not petitioner abused his authority in
ordering the ejectment of GABI. The Court found no evidence of such abuse of authority. Rizal
Park is beyond the commerce of man and, thus, could not be the subject of lease contract. That
private respondents were allowed to occupy office and kiosk spaces in the park was only a
matter of accommodation by the previous administrator. This being so, petitioner may validly
discontinue the accommodation extended to private respondents, who may be ejected from
the park when necessary. Private respondents cannot and do not claim a vested right to
continue to occupy Rizal Park.

NATIONAL HOUSING AUTHORITY v. HEIRS OF ISIDRO GUIVELONDO

FIRST DIVISION
[G.R. No. 154411. June 19, 2003]
PONENTE: J. YNARES-SANTIAGO

FACTS:
• On February 23, 1999, petitioner National Housing Authority filed with the Regional Trial
Court of Cebu City, Branch 11, an Amended Complaint for eminent domain against Associacion
Benevola de Cebu, Engracia Urot and the Heirs of Isidro Guivelondo for the purpose of the
public use of Socialized housing.
• On November 12, 1999, the Heirs of Isidro Guivelondo filed a Manifestation stating that they
were waiving their objections to NHA’s power to expropriate their properties. Thus an order of
execution has been granted and the court already appointed commissioners to determine the
amount for just compensation
• On April 17, 2000, the Commissioners submitted their report wherein they recommended
that the just compensation of the subject properties be fixed at P11,200.00 per square meter
wherein a partial judgment has been rendered.
• After the report on the just compensation has completed, both parties filed an MR on the
amount for the just compensation stating that it has no adequate basis and support. Both MR
was denied by the court.
• While the judgment has been rendered in the RTC and an entry of judgment and the motion
for execution has been issued, NHA filed a petition for certiorari to the Court of Appeals. The CA
denied the petition on the ground that the
Partial Judgment and Omnibus Order became final and executory when petitioner failed to
appeal the same.
• Wherefore, the Petitioner NHA filed an appeal to the Supreme Court.

ISSUES:
1) WHETHER OR NOT THE STATE CAN BE COMPELLED AND COERCED BY THE COURTS TO
EXERCISE OR CONTINUE WITH THE EXERCISE OF ITS INHERENT POWER OF EMINENT DOMAIN;
2) WHETHER OR NOT WRITS OF EXECUTION AND GARNISHMENT MAY BE ISSUED AGAINST THE
STATE IN AN EXPROPRIATION WHEREIN THE EXERCISE OF THE POWER OF EMINENT DOMAIN
WILL NOT SERVE PUBLIC USE OR PURPOSE
3) WHETHER OR NOT JUDGMENT HAS BECOME FINAL AND EXECUTORY AND IF ESTOPPEL OR
LACHES APPLIES TO GOVERNMENT;

HELD:
The petition was denied and the judgment rendered by the lower court was affirmed.

RATIO:
· On the first issue, the court held that, yes the state can be compelled and coerced by the court
to continue exercise its inherent power of eminent domain, since the NHA does not exercise its
right to appeal in the expropriation proceedings before the court has rendered the case final
and executory. In the early case of City of Manila v. Ruymann and Metropolitan Water District
v. De Los Angeles, an expropriation proceeding was explained.
· Expropriation proceedings consists of two stages: first, condemnation of the property after it is
determined that its acquisition will be for a public purpose or public use and, second, the
determination of just compensation to be paid for the taking of private property to be made by
the court with the assistance of not more than three commissioners.
· The first is concerned with the determination of the authority of the plaintiff to exercise the
power of eminent domain and the propriety of its exercise in the context of the facts involved
in the suit. It ends with an order, if not of dismissal of the action, “of condemnation declaring
that the plaintiff has a lawful right to take the property sought to be condemned, for the public
use or purpose described in the complaint, upon the payment of just compensation to be
determined as of the date of the filing of the complaint.” An order of dismissal, if this be
ordained, would be a final one, of course, since it finally disposes of the action and leaves
nothing more to be done by the Court on the merits. So, too, would an order of condemnation
be a final one, for thereafter, as the Rules expressly state, in the proceedings before the Trial
Court, “no objection to the exercise of the right of condemnation (or the propriety thereof)
shall be filed or heard.”
· The second phase of the eminent domain action is concerned with the determination by the
Court of “the just compensation for the property sought to be taken.” This is done by the Court
with the assistance of not more than three (3) commissioners. The order fixing the just
compensation on the basis of the evidence before, and findings of, the commissioners would be
final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be
done by the Court regarding the issue. Obviously, one or another of the parties may believe the
order to be erroneous in its appreciation of the evidence or findings of fact or otherwise.
Obviously, too, such a dissatisfied party may seek a reversal of the order by taking an appeal
there from.
· On the second issue, the court held that a socialized housing is always for the public used and
that the public purpose of the socialized housing project is not in any way diminished by the
amount of just compensation that the court has fixed.
· On the third issue, the court ruled that in this case the doctrine of state immunity cannot be
applied to the NHA, although it is “public in character”, it is only public in character since it is
government-owned, having a juridical personality separate and distinct from the government,
the funds of such government-owned and controlled corporations and non-corporate agency,
although considered public in character, are not exempt from garnishment.
Notes:
Important Discussion in the case:
When does the Doctrine of State Immunity not applied in the government agencies?
1. The universal rule that where the State gives its consent to be sued by private parties either
by general or special law
2. If the funds belong to a public corporation or a government-owned or controlled corporation
which is clothed with a personality of its own, separate and distinct from that of the
government, then its funds are not exempt from garnishment. This is so because when the
government enters into commercial business, it abandons its sovereign capacity and is to be
treated like any other corporation.

GARNISMENT AS DEFINED BY BLACK LAW DICTIONARY:

Garnishment
- A judicial proceeding in which a creditor (or a potential creditor) asks the court to order a third
party who is indebted to or is bailee for the debtor to turn over to the creditor any of the
debtor’s property (such as wages or bank accounts) held by that third party.
- A person can initiate a garnishment action as means of either prejudgment seizure or post
judgment collection.
- In short, it only means whether the Heirs of Guivelendo can file a case to NHA to compel the
latter to give to them the amount of the just compensation as rendered by the court .
 BENITO LIM VS HERBERT BROWNELL

FACTS:

The property in dispute consists of four parcels of land situated in Tondo, Manila. The
lands were, after the last world war, found by the Alien Property Custodian of the United States
to be registered in the name of Asaichi Kagawa, national of an enemy country, Japan. Alien
Property Custodian, issued a vesting order on the authority of the Trading with the Enemy Act
of the United States, as amended, vesting in himself the ownership over two of the said lots,
Lots Nos. 1 and 2. On July 6, 1948, the
Philippine Alien Property Administrator (successor of the Alien Property Custodian) under the
authority of the same statute, issued a supplemental vesting order, vesting in himself title to
the remaining Lots Nos. 3 and 4. The Philippine Alien Property Administrator (acting on behalf
of the President of the US) and the President of the Philippines executed two formal
agreements, one referring to Lots 1 and 2 and the other to Lots 3 and 4, whereby the said
Administrator transferred all the said four lots to the Republic of the Philippines. The transfer
agreements were executed. On the theory that the lots in question still belonged to Arsenia
Enriquez, the latter‘s son Benito Lim filed a formal notice of claim to the property with the
Philippine AlienProperty Administrator.
The notice was subsequently amended to permit Lim to prosecute the claim as
administrator of the intestate estate of the deceased Arsenia Enriquez, thus, in effect,
substituting the inestate estate as the claimant, it being alleged that the lots were once the
property of Arsenia Enriquez. The claim was disallowed by the Vested Property Claims
Committee of the Philippine Alien Property Administrator. The claimant Benito Lim filed a
complaint in the Court of First Instance of Manila against Philippine Alien Property
Administrator (later substituted by the Atty General of the United States) for the recovery of
the property in question with back rents. The complaint was later amended to include Asaichi
Kagawa as defendant.
As amended, it alleged that the lands in question formerly belonged to Arsenia Enriquez. He
stated some reasons in his allegations to prove that Arsenia is the owner of the property.
Plaintiff, therefore, prayed that the sheriff‘s sale to Kagawa and the vesting of the properties in
the Philippine Alien Property Administrator and the transfer thereof by the United States to the
Republic of the Philippines be declared null and void; that Arsenia Enriquez be adjudged owner
of the said properties and the Register of the Deeds of Manila be ordered to issue the
corresponding transfer certificates of title to her. The Court ordered the complaint dismissed on
the ground - as stated in the dispositive part of the order - that the 􀊕court has no jurisdiction
over the subject matter of this action.

ISSUE:

Whether or not Lim has the right to sue or claim for damages against the Republic and Attorney
General of the United States?
HELD:

The immunity of the state from suit, however cannot be invoked where the action, as in the
present case, is instituted by a person who is neither an enemy or ally of an enemy for the
purpose of establishing his right, title or interest in vested property, and of recovering his
ownership and possession. Congressional consent to such suit has expressly been given by the
United States. The
order of dismissal, however, with respect to plaintiff‘s claim for damages against the defendant
Attorney General of the US must be upheld. The relief available to a person claiming enemy
property which has been vested by the Philippines Alien Property Custodian is limited to those
expressly provided for in the Trading with the Enemy Act, which does not include a suit for
damages for the use of such vested property. That action, as held by this Court in the Castelo
case just cited, is not one of those authorized under the act which may be instituted in the
appropriate courts of the Philippines under the provisions of section 3 of the Philippine
Property Act of 1946. Congressional consent to such suit has not been granted. The claim for
damages for the use of the property against the intervenor defendant Republic of the
Philippines, to which it was transferred, likewise, cannot be maintained because of the
immunity of the state from suit. The claim obviously constitutes a charge against, or financial
liability to, the Government and consequently cannot be entertained by the courts except with
he consent of said government
 US VS. RUIZ

FACTS:

The USA had a naval base in Subic, Zambales. The base was one of those provided in the
military bases agreement between Phililppines and the US. Respondent alleges that it won in
the bidding conducted by the US for the construction of wharves in said base that was merely
awarded to another group. For this reason, a suit for specific performance was filed by him
against the US.

ISSUE:

Whether the US naval base in bidding for said contracts exercise governmental
functions to be able to invoke state immunity.

HELD:

The traditional role of the state immunity exempts a state from being sued in the courts
of another state without its consent or waiver. This rule is necessary consequence of the
principle of independence and equality of states. However, the rules of international law are
not petrified; they are continually and evolving and because the activities of states have
multiplied. It has been necessary to distinguish them between sovereign and governmental acts
and private, commercial and proprietary acts. The result is that state immunity now extends
only to sovereign and governmental acts. The restrictive application of state immunity is proper
only when the proceedings arise out of commercial transactions of the foreign sovereign. Its
commercial activities of economic affairs. A state may be 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 contracts
relates the exercise of its sovereign function. In this case, the project are integral part of the
naval base which is devoted to the defense of both US and Philippines, indisputably, a function
of the government of highest order, they are not utilized for, nor dedicated to commercial or
business purposes.

SANTIAGO VS REPUBLIC OF THE PHILIPPINES

FACTS:

On 20 Jan 1971, Santiago gratuitously donated a parcel of land to the Bureau of Plant
Industry. The terms of the donation are; that the Bureau should construct a building on the said
lot and that the building should be finished by December 7, 1974, that the Bureau should install
lighting facilities on the said lot. However, come 1976 there were still no improvements on the
lot. This prompted Santiago to file a case pleading for the revocation of such contract of
donation. The trial court dismissed the petition claiming that it is a suit against the government
and should not prosper without the consent of the government.

ISSUE:

Whether or not the state has not waived its immunity from suit?

HELD:

The government has waived its immunity and such waiver is implied by virtue of the
terms provided in the deed of donation. The government is a beneficiary of the terms of the
donation. But the government through the Bureau has breached the terms of the deed by not
complying with such, therefore, the donor Santiago has the right to have his day in court and be
heard. Further, to not allow the donor to be heard would be unethical and contrary to equity
which the government so advances. Case should prosper
 JUSMAG PHILIPPINES, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (Second Division) and
FLORENCIO SACRAMENTO, Union
President, JPFCEA, respondents.

G.R. No. 108813 December 15, 1994

Facts:
Private respondent sued private petitioner for damages due to the oppressive and
discriminatory acts done by the latter in excess of her authority as store manager of NEX
JUSMAG. Private petitioner contends that case should be dismissed since she is clothed with
diplomatic immunity. The trial court decided in favor of the private respondent and petitioner
appealed. She contends that even if she was acting ultra vires of her official capacities, she is
still immune from suit since the law that public employees and officials sued in personal
capacity for ultra vires and tortuous acts is municipal and not international law.

Issue:
 Whether or not Bradford’s diplomatic immunity constitutes a bar for her to be sued by
private respondent?

Held:

The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs
Court of Appeals,40
thus:
I. 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.
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. It must be noted, however,
that the rule is not so all-encompassing as to be applicable under all circumstances. It is a
different matter where the public official is made to account in his capacity as such for acts
contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar
in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al. “Inasmuch as the
State authorizes only legal acts by its officers, unauthorized acts of government officials or
officers are not acts
of the State, and an action against the officials or officers by one whose rights have been
invaded or violated by such acts, for the protection of his rights, is not a suit against the State
within the rule of immunity of the State from suit. In the same tenor, it hasbeen said that an
action at law or suit in equity against a State officer or the director of a State department on the
ground that,while claiming to act or the State, he violates or invades the personal and property
rights of the plaintiff, under an unconstitutional act or under an assumption of authority which
he does not have, is not a suit against the State within the constitutional provision that the
State may not be sued without its consent.”
The rationale for this ruling is that the doctrinaire of state immunity cannot be used as an
instrument for perpetrating aninjustice. Bradford was sued in her private or personal capacity
for acts allegedly done beyond the scope and even beyond her place of official functions, said
complaint is not then vulnerable to a motion to dismiss based on the grounds relied upon by
the petitioners because as a consequence of the hypothetical admission of the truth of the
allegations therein, the case falls within the exception to the doctrine of state immunity.
THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and
MINISTER
COUNSELLOR AZHARI KASIM, petitioners, vs. JAMES VINZON

FACTS:

Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered

into a Maintenance Agreement in August 1995 with respondent James Vinzon, sole proprietor
of Vinzon Trade and Services. The equipment covered by the Maintenance Agreement are air
conditioning units and was to take effect in a period of four years. When Indonesian Minister
Counsellor Kasim assumed the position of Chief of Administration in March 2000, he allegedly
found respondent’s work and services unsatisfactory and not in compliance with the standards
set in the Maintenance Agreement. Hence, the Indonesian Embassy terminated the agreement
in a letter dated August 31, 2000. Respondent filed a complaint claiming that the aforesaid
termination was arbitrary and unlawful. Petitioners filed a Motion to Dismiss assailing that
Republic of Indonesia, as a foreign sovereign State, has sovereign immunity from suit and
cannot be sued as a party-defendant in the Philippines.

ISSUE:

Whether or not the Court of Appeals erred in sustaining the trial court’s decision that
petitioners have waived their immunity from suit by using as its basis the abovementioned
provision in the Maintenance Agreement.

RULING:

The SC GRANTED the petition. The rule that a State may not be sued without its consent
is a necessary consequence of the principles of independence and equality of States. The mere
entering into a contract by a foreign State with a private party cannot be construed as the
ultimate test of whether or not it is an act jure imperii or jure gestionis. Such act is only the
start of the inquiry. A sovereign State does not merely establish a diplomatic mission and leave
it at that; the establishment of a diplomatic mission encompasses its maintenance and upkeep.
Hence, the State may enter into contracts with private entities to maintain the premises,
furnishings and equipment of the embassy and the living quarters of its agents and officials. It is
therefore clear that petitioner Republic of Indonesia was acting in pursuit of a sovereign activity
when it entered into a contract with respondent for the upkeep or maintenance of the air
conditioning units, generator sets, electrical facilities, water heaters, and water motor pumps of
the Indonesian Embassy and the official residence of the Indonesian ambassador.

Republic v. Purisima

Facts:
 A motion to dismiss was filed on September 7, 1972 by defendant Rice and Corn
Administration in a pending civil suit in the sala of respondent Judge for the collection of a
money claim arising from an alleged breach of contract, the plaintiff being private respondent
Yellow Ball Freight Lines, Inc. At that time, the leading case of Mobil Philippines Exploration, Inc.
v. Customs Arrastre Service, where Justice Bengzon stressed the lack of jurisdiction of a court to
pass on the merits of a claim against any office or entity acting as part of the machinery of the
national government unless consent be shown, had been applied in 53 other decisions.
Respondent Judge Amante P. Purisima of the Court of First Instance of Manila denied the
motion to dismiss dated October 4, 1972. Hence, the petition for certiorari and prohibition.

Issue:

WON the respondent’s decision is valid

Ruling:
No.

Rationale:

The position of the Republic has been fortified with the explicit affirmation found in this
provision of the present Constitution: “The State may not be sued without its consent.” “The
doctrine of non-suability recognized in this jurisdiction even prior to the effectivity of the [1935]
Constitution is a logical corollary of the positivist concept of law which, to para-phrase Holmes,
negates the assertion of any legal right as against the state, in itself the source of the law on
which such a right may be predicated. Nor is this all, even if such a principle does give rise to
problems, considering the vastly expanded role of government enabling it to engage in business
pursuits to promote the general
welfare, it is not obeisance to the analytical school of thought alone that calls for its continued
applicability. Nor is injustice thereby cause private parties. They could still proceed to seek
collection of their money claims by pursuing the statutory remedy of having the Auditor
General pass upon them subject to appeal to judicial tribunals for final adjudication. We could
thus correctly conclude as we did in the cited Providence Washington Insurance decision: “Thus
the doctrine of non-suability of the government without its consent, as it has operated in
practice, hardly lends itself to the charge that it could be the fruitful parent of injustice,
considering the vast and everwidening scope of state activities at present being undertaken.
Whatever difficulties for private claimants may still exist, is, from an objective appraisal of all
factors, minimal. In the balancing of interests, so unavoidable in the determination of what
principles must prevail if government is to satisfy the public weal, the verdict must be, as it has
been these so many years, for
its continuing recognition as a fundamental postulate of constitutional law.” [Switzerland
General Insurance Co., Ltd. v. Republic of the Philippines]
***The consent, to be effective, must come from the State acting through a duly enacted
statute as pointed out by Justice Bengzon in Mobil. Thus, whatever counsel for defendant Rice
and Corn Administration agreed to had no binding force on the government

CONSTITUTIONAL LAW I
FONTANILLA V. MALIAMAN

G.R. No. L-55963, February 27, 1991

Petitioners: Spouses Jose Fontanilla and Virginia Fontanilla
Respondents: Hon. Inocencio D. Maliaman and National Irrigation Administration (NIA)

FACTS:
On December 1, 1989, the Court rendered a decision declaring National Irrigation
Administration (NIA), a government agency performing proprietary functions. Like an ordinary
employer, NIA was held liable for the injuries, resulting in death, of Francisco Fontanilla, son of
petitioner spouses Jose and Virginia Fontanilla, caused by the fault and/or negligence of NIA’s
driver employee Hugo Garcia; and NIA was ordered to pay the petitioners the amounts of P
12,000 for the death of the victim; P3,389 for hospitalization and burial expenses; P30,000 as
moral damages; P8,000 as exemplary damages, and attorney’s fees of 20% of the total award.
The National Irrigation Administration (NIA) maintains, however, that it does not perform solely
and primarily proprietary functions, but is an agency of the government tasked with
governmental functions, and is therefore not liable for the tortuous act of its driver Garcia, who
was not its special agent. For this, they have filed a motion for reconsideration on January 26,
1990. NIA believes this bases this on:
PD 552 – amended some provisionsof RA 3601 (the law which created the NIA)The case
of Angat River Irrigation System v. Angat River Workers’ Union Angat Case: Although the
majority opinion declares that the Angat System, like the NIA, exercised a governmental
function because the nature of its powers and functions does not show that it was intended to
“bring to the Government any special corporate benefit or pecuniary profit”, a strong dissenting
opinion held that Angat River system is a government entity exercising proprietary functions.
The Angat dissenting opinion: Alegre protested the announced termination of his employment.
He argued that although his contract did stipulate that the same would terminate on July 17,
1976, since his services were necessary and desirable in the usual business of his employer, and
his employment had lasted for five years, he had acquired the status of regular employee and
could not be removed except for valid cause.
The employment contract of 1971 was executed when the Labor Code of the Philippines
had not yet been promulgated, which came into effect some 3 years after the perfection of the
contract.

ISSUE:
 Whether or not NIA is a government agency with a juridical personality separate and
distinct from the government, thereby opening it up to the possibility that it may be held liable
for the damages caused by its driver, who was not its special agent

HELD:

YES
Reasoning the functions of government have been classified into governmental or constituent
and proprietary or ministrant. The former involves the exercise of sovereignty and considered
as compulsory; the latter connotes merely the exercise of proprietary functions and thus
considered as optional. The National Irrigation Administration was not created for purposes of
local government. While it may be true that the NIA was essentially a service agency of the
government aimed at promoting public interest and public welfare, such fact does not make
the NIA essentially and purely a “government-function” corporation. NIA was created for the
purpose of “constructing, improving, rehabilitating, and administering all national irrigation
systems in the Philippines, including all communal and pump irrigation projects.” Certainly, the
state and the community as a whole are largely benefited by the services the agency renders,
but these functions are only incidental to the principal aim of the agency, which is the irrigation
of lands. NIA is a government agency invested with a corporate personality separate and
distinct from the government, thus is governed by the Corporation Law. Section 1 of Republic
Act No. 3601 provides: Sec. 1. Name and Domicile — A body corporate is hereby created which
shall be known as the National Irrigation Administration. . . . which shall be organized
immediately after the approval of this Act. It shall have its principal seat of business in the City
of Manila and shall have representatives in all provinces, for the proper conduct of its business.
(Emphasis for emphasis). Besides, Section 2, subsection b of P.D. 552 provides that: b) To
charge and collect from the beneficiaries of the water from all irrigation systems constructed by
or under its administration, such fees or administration charges as may be necessary to cover
the cost of operation, maintenance and insurance, and to recover the cost of construction
within a reasonable period of time to the extent consistent with government policy; to recover
funds or portions thereof expended for the construction and/or rehabilitation of communal
irrigation systems which funds shall accrue to a special fund for irrigation development under
section 2 hereof; Unpaid irrigation fees or administration charges shall be preferred liens first,
upon the land benefited, and then on the crops raised thereon, which liens shall have
preference over all other liens except for taxes on the land, and such preferred liens shall not
be removed until all fees or administration charges are paid or the property is levied upon and
sold by the National Irrigation Administration for the satisfaction thereof. . . . The same section
also provides that NIA may sue and be sued in court. It has its own assets and liabilities. It also
has corporate powers to be exercised by a Board of Directors. Section 2, subsection (f): . . . and
to transact such business, as are directly or indirectly necessary, incidental or conducive to the
attainment of the above powers and objectives, including the power to establish and maintain
subsidiaries, and in general, to exercise all the powers of a corporation under the Corporation
Law, insofar as they are not inconsistent with the provisions of this Act.

DISPOSITION:
 The court concluded that the National Irrigation Administration is a government agency
with a juridical
personality separate and distinct from the government. It is not a mere agency of the
government but a corporate body performing proprietary functions. Therefore, it may be held
liable for the damages caused by the negligent act of its driver who was not its special agent.

ACCORDINGLY, the Motion for Reconsideration dated January 26, 1990 is DENIED WITH
FINALITY. The decision of this Court in G.R. No. 55963 and G.R. No. 61045 dated December 1,
1989 is hereby AFFIRMED.
DISSENTING: PADILLA: to say that NIA has opened itself to suit is one thing; to say that it is
liable for damages arising from tort committed by its employees, is still another thing.
The state or a government agency performing governmental functions may be held liable for
tort committed by its employees only when it acts through a special agent.

PROVINCIAL GOV’T OF MARINDUQUE, Plaintiff-Appellant,

vs.
PLACER DOME, INC.; &Barrick Gold Corp., Defendants-Appellees.

No. 07-16306.

Respondent, suing “in both its sovereign capacity and in its capacity as parens patriae to
all Marinduquenos,” id. at 117a, alleges that between 1964 and 1997, Placer Dome operated
copper mines in Marinduque, and that those operations caused severe pollution and other
environmental damage to Marinduque’s land and waters.
The court reasoned that it would have federal-question jurisdiction if “the allegations in
Plaintiff’s Complaint require the Court to evaluate any act of state or apply any principle of
international law before it can assert jurisdiction.”
In the course of its decision on the forum non conveniens issue, the district court stated in
passing that the case
presented “a complex question of subject matter jurisdiction” that the court could avoid by
addressing forum non conveniens first. The court of appeals first rejected petitioners’
contention that the district court had “dismissed this case on forum non conveniens grounds
without resolving the issue of subject-matter jurisdiction,” and that the district court’s asserted
sequencing precluded the court of appeals from addressing subject-matter jurisdiction.
...Dole Food Co., 251 F.3d 795, 803 (9th Cir. 2001), aff’d in part on other grounds, cert.
dismissed in part, 538 U.S. 468 (2003), it had rejected an approach, followed by certain other
courts of appeals, that permitted “federal-question jurisdiction over any case that might affect
foreign relations regardless of whether federal law is raised in the complaint.”

DISCUSSION
Petitioners challenge the court of appeals’ decision to review the district court’s ruling
on subject-matter jurisdiction without first addressing the district court’s ruling on forum non
conveniens, as well as the court of appeals’ holding that the district court lacked subject-
matter jurisdiction.

I. The Court Of Appeals’ Decision To Address The District Court’s Subject-Matter Jurisdiction Is
Consistent With This Court’s Precedents And Does Not Merit Review Petitioners contend (Pet.
11-14) that this Court should grant a writ of certiorari because the court of appeals’ decision to
review the district court’s subject-matter jurisdiction ruling before its forum non conveniens
ruling was inconsistent with Sinochem, 549 U.S. at 436. In Sinochem, the district court had
chosen to dismiss the case on forum non conveniens grounds before it determined whether it
would have had personal jurisdiction, because it had found that the personal jurisdiction
question could not be resolved without
discovery. ...This Court reversed, holding that because forum non conveniens is a threshold
inquiry that does not involve adjudication of the merits, a court may bypass difficult
jurisdictional questions in order to dismiss on forum non conveniens grounds when doing so
would be the “less burdensome course.”
Petitioner also questions (Pet. 13) the relevance of the court of appeals’ observation
that unlike a forum non conveniens dismissal, a determination that removal was improper for
lack of jurisdiction results in a remand to state court. ... This Court recognized in Ruhrgas, 526
U.S. at 586-587, that in a removed case, a court may properly consider the consequences that
might flow from its issuesequencing decision, as well as any resulting comity and judicial
economy concerns, in exercising its discretion as to which threshold issue to address first.

II. The Court Of Appeals’ Conclusion That It Lacked Subject- Matter Jurisdiction Over This Suit Is
Correct And Does Not Merit ThisCourt’s Review. The court of appeals correctly rejected
petitioners’ contention that respondent’s claims for alleged violations of Philippine law give rise
to federal-question jurisdiction because they implicate the validity of a foreign sovereign’s act
of state. ...contends that the court’s decision reinforces a conflict among the courts of appeals
as to whether federal-question jurisdiction exists over claims that more generally implicate a
foreign sovereign’s “vital economic or sovereign interests,” this case presents no occasion to
consider that question. The act of state doctrine would come into the case, if at all, only as a
defense: petitioners, for example, might contend that the actions
of Placer Dome and Marcopper were lawful because they were approved by the Philippine
government through the issuance of permits or otherwise, and might invoke the act-of-state
doctrine to assert that the district court must take the government’s actions as valid. The
Second Circuit also has suggested that the “implications of * * * an action for United States
foreign relations” could give rise to federal jurisdiction, but that conclusion was not necessary
to the court’s holding, as “in any event” the claims at issue “raise[d], as a necessary element,
the question whether to honor” a foreign government’s.
CONCLUSION
The Province’s complaint does not present a federal question based upon the act of state
doctrine. The district court therefore lacked
subject-matter jurisdiction over this suit and removal from state court was improper. We
reverse, vacate the forum non conveniens
dismissal, and remand with instructions to remand to the state court.
REVERSED AND REMANDED.