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G.R. No. 171182 : August 23, 2012
University of the Philippines (UP) entered into a General Construction Agreement with respondent Stern
Builders Corporation (Stern Builders) for the construction and renovation of the buildings in the campus
of the UP in Los Bas. UP was able to pay its first and second billing. However, the third billing worth
P273,729.47 was not paid due to its disallowance by the Commission on Audit (COA). Thus, Stern
Builders sued the UP to collect the unpaid balance.
On November 28, 2001, the RTC rendered its decision ordering UP to pay Stern Builders. Then on
January 16, 2002, the UP filed its motion for reconsideration. The RTC denied the motion. The denial of
the said motion was served upon Atty. Felimon Nolasco (Atty.Nolasco) of the UPLB Legal Office on May
17, 2002. Notably, Atty. Nolasco was not the counsel of record of the UP but the OLS inDiliman, Quezon
Thereafter, the UP filed a notice of appeal on June 3, 2002. However, the RTC denied due course to the
notice of appeal for having been filed out of time. On October 4, 2002, upon motion of Stern Builders,
the RTC issued the writ of execution.
On appeal, both the CA and the High Court denied UPs petition. The denial became final and executory.
Hence, Stern Builders filed in the RTC its motion for execution despite their previous motion having
already been granted and despite the writ of execution having already issued. On June 11, 2003, the RTC
granted another motion for execution filed on May 9, 2003 (although the RTC had already issued the
writ of execution on October 4, 2002). Consequently, the sheriff served notices of garnishment to the
UPs depositary banks and the RTC ordered the release of the funds.
Aggrieved, UP elevated the matter to the CA. The CA sustained the RTC. Hence, this petition.
I. Whether or not the UPs funds can be validly garnished?
II. Whether or not the UPs appeal dated June 3, 2002 has been filed out of time?
HELD: The petition for review is meritorious.
FIRST ISSUE: UPs funds, being government funds, are not subject to garnishment.
POLITICAL LAW: garnishment of public funds; suability vs. liability of the State
Despite its establishment as a body corporate, the UP remains to be a "chartered institution" performing
a legitimate government function. Irrefragably, the UP is a government instrumentality, performing the
States constitutional mandate of promoting quality and accessible education. As a government
instrumentality, the UP administers special funds sourced from the fees and income enumerated under

Act No. 1870 and Section 1 of Executive Order No. 714, and from the yearly appropriations, to achieve
the purposes laid down by Section 2 of Act 1870, as expanded in Republic Act No. 9500. All the funds
going into the possession of the UP, including any interest accruing from the deposit of such funds in any
banking institution, constitute a "special trust fund," the disbursement of which should always be
aligned with the UPs mission and purpose, and should always be subject to auditing by the COA. The
funds of the UP are government funds that are public in character. They include the income accruing
from the use of real property ceded to the UP that may be spent only for the attainment of its
institutional objectives.
A marked distinction exists between suability of the State and its liability. As the Court succinctly stated
in Municipality of San Fernando, La Union v. Firme: A distinction should first be made between suability
and liability. "Suability depends on the consent of the state to be sued, liability on the applicable law and
the established facts. The circumstance that a state is suable does not necessarily mean that it is liable;
on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not
conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its
sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is
The Constitution strictly mandated that "no money shall be paid out of the Treasury except in pursuance
of an appropriation made by law." The execution of the monetary judgment against the UP was within
the primary jurisdiction of the COA. It was of no moment that a final and executory decision already
validated the claim against the UP.
Justice Cruz 1998
Sanders Special Services Director of NAVSTA (Naval Station)
Moreau Commanding Officer of the Subic Naval Base
Rossi and Wyer American Citizen employed as game room attendants in the special services
department of NAVSTA
Private Respondents employment had been converted from permanent full-time to part-time
Respondents filed protest and a recommendation report was made by the hearing officer
stipulating the reinstatement of both respondents plus back wages. Report on hearing
contained the observation that Special Services Management practices an autocratic form of
Sanders disagreed with recommendation report with the later containing statements that:
Mr. Rossi tends to alienate most co-workers and supervisors

Mr. Rossi and Wyers have proven, according to their immediate supervisors, to be
difficult employees to supervise.
Grievants placed the records in public places where other not involved in the case could
Moreau sent a letter to the Chief of Naval Personnel explaining the change of the private
respondents employment status and requesting concurrence therewith.
Filling of Case:
Respondents filed a case in Court of First Instance of Olongapo City a complaint for damages
against petitioners; plaintiffs claimed that letters contained libelous imputations.
Petitioners filed a motion to dismiss on grounds that acts complained of were performed by
them in their discharge of official duties; consequently, court has no jurisdiction over them
under the doctrine of state immunity.
Petitioners motion was denied on ground that petitioners had not presented any evidence that
their acts were official in nature and not personal torts.
An order issued a writ of preliminary attachment, conditioned upon the filling of a P10,000 bond
on plaintiffs, against properties of Moreau, who allegedly was then about to leave the
Moreau was declared in default.
Petitioners Motion to lift the default order was dismissed on ground that Moreaus failure to
appear at the pre-trial conference was the result of some understanding.
Motion for reconsideration of the denial motion was also dismissed.
Petition for Certiorari, Prohibition, and Preliminary Injunction was thereafter filed before this
W/N petitioners were performing their official duties when they did acts for which they have
been sued for damages by the private respondent.
Petition was granted. Challenged Orders were set aside. Respondent Court is directed to dismiss
the case.
Court held that he acts for which the petitioner are being called to account were performed by
them in the discharge of their official duties.
Sanders wrote the letter as a reply from Moreau for more information regarding the case of the
private respondents. Even without such request, he has the rights in reacting to the hearing
officers criticism.
Moreaus letter is clearly official in nature as the Commanding Chief of the Naval Base
answerable to the naval personnel in matters involving the special services department of

Court concludes that petitioners acted behalf of the government, within the scope of their
authority making the action a suit against the government without its consent.

Republic vs. Sandoval (Consti1)

Campos, Jr., March 19, 1993
Topic: Sovereignty - Suit not against the State - Beyond the Scope of Authority

The heirs of the deceased of the January 22, 1987 Mendiola massacre (background: Wiki),
together with those injured (Caylao group), instituted the petition, seeking the reversal and
setting aside of the orders of respondent Judge Sandoval (May 31 and Aug 8, 1988) in "Erlinda
Caylao, et al. vs. Republic of the Philippines, et al." which dismissed the case against the Republic
of the Philippines

May 31 order: Because the impleaded military officers are being charged in their
personal and official capacity, holding them liable, if at all, would not result in financial
responsibility of the government

Aug 8 order: denied the motions filed by both parties for reconsideration

In January 1987, farmers and their sympathizers presented their demands for what they called
"genuine agrarian reform"

The Kilusang Magbubukid ng Pilipinas (KMP), led by Jaime Tadeo, presented their problems and
demands such as:

giving lands for free to farmers

zero retention of lands by landlords

stop amortizations of land payments

Dialogue between the farmers and then Ministry of Agrarian Reform (MAR) began on January
15, 1987

On January 20, 1987, Tadeo met with MAR Minister Heherson Alvarez

Alvarez was only able to promise to do his best to bring the matter to the attention of then
President Cory Aquino during the January 21 Cabinet meeting

Tension mounted the next day

The farmers, on their 7th day of encampment, barricaded the MAR premises and prevented the
employees from going inside their offices

On January 22, 1987, following a heated discussion between Alvarez and Tadeo, Tadeo's group
decided to march to Malacanang to air their demands

On their march to Malacanang, they were joined by Kilusang Mayo Uno (KMU), Bagong
Alyansang Makabayan (BAYAN), League of Filipino Students (LFS), and Kongreso ng Pagkakaisa
ng Maralitang Lungsod (KPML)

Government intelligent reports were also received that the KMP was heavily infliltrated by
CPP/NPA elements, and that an insurrection was impending

Government anti-riot forces assembled at Mendiola

The marchers numbered about 10,000 to 15,000 at around 4:30 pm

From CM Recto, they proceeded toward the police lines. No dialogue took place;
"pandemonium broke loose"

After the clash, 12 marchers were officially confirmed dead (13 according to Tadeo)

39 were wounded by gunshots and 12 sustained minor injuries, all belonging to the group of

Of the police and military, 3 sustained gunshot wounds and 20 suffered minor physical injuries

The "Citizens' Mendiola Commission" submitted its report on the incident on February 27, 1987
as follows

The march did not have any permit

The police and military were armed with handguns prohibited by law

The security men assigned to protect the government units were in civilian attire
(prohibited by law)

There was unnecessary firing by the police and military

The weapons carried by the marchers are prohibited by law

It is not clear who started the firing

The water cannons and tear gas were not put into effective use to disperse the crowd;
the water cannons and fire trucks were not put into operation because:

there was no order to use them

they were incorrectly prepositioned

they were out of range of the marchers

The Commission recommended the criminal prosecution of four unidentified, uniformed

individuals shown either on tape or in pictures, firing at the direction of the marchers

The Commission also recommended that all the commissioned officers of both the Western
Police District (WPD) and Integrated National Police (INP) who were armed be prosecuted for
violation of par. 4(g) of the Public Assembly Act of 1985

Prosecution of the marchers was also recommended

It was also recommended that Tadeo be prosecuted both for holding the rally without permit
and for inciting sedition

Administrative sanctions were recommended for the following officers for their failure to make
effective use of their skill and experience in directing the dispersal operations in Mendiola:

Gen. Ramon E. Montao

Police Gen. Alfredo S. Lim

Police Gen. Edgar Dula Torres

Police Maj. Demetrio dela Cruz

Col. Cezar Nazareno

Maj. Filemon Gasmin

Last and most important recommendation: for the deceased and wounded victims to be
compensated by the government

It was this portion that petitioners (Caylao group) invoke in their claim for damages from
the government

No concrete form of compensation was received by the victims

On January, 1988, petitioners instituted an action for damages against the Republic of the
Philippines, together with the military officers, and personnel involved in the Mendiola incident

Solicitor general filed a Motion to Dismiss on the ground that the State cannot be sued
without its consent

Petitioners said that the State has waived its immunity from suit

Judge Sandoval dismissed the case on the ground that there was no such waiver

Motion for Reconsideration was also denied


Whether or not the State has waived its immunity from suit (i.e. Whether or not this is a suit
against the State with its consent)

Petitioners argue that by the recommendation made by the Commission for the
government to indemnify the heirs and victims, and by public addresses made by
President Aquino, the State has consented to be sued

2. Whether or not the case qualifies as a suit against the State

1. No.

This is not a suit against the State with its consent.

2. No.

1. Art. XIV, Sec. 3, 1987 Constitution: The State may not be sued without its consent

The recommendations by the Commission does not in any way mean that liability
automatically attaches to the State

The Commission was simply a fact-finding body; its findings shall serve only as cause of
action for litigation; it does not bind the State immediately

President Aquino's speeches are likewise not binding on the State; they are not
tantamount to a waiver by the State

2. Some instances when a suit against the State is proper:


When the Republic is sued by name;


When the suit is against an unincorporated government agency

When the suit is on its face against a government officer but the case is such that the ultimate
liability will belong not to the officer but to the government

Although the military officers and personnel were discharging their official functions
during the incident, their functions ceased to be official the moment they exceeded
their authority

There was lack of justification by the government forces in the use of firearms.

Their main purpose in the rally was to ensure peace and order, but they fired at the
crowd instead

petitioners, vs. HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO
DE GUZMAN & CO., INC., respondents.
En Banc
Doctrine: implied consent
Date: May 22, 1985
Ponente: Justice Abad-Santos


At times material to this case, the United States of America had a naval base in Subic, Zambales.
The base was one of those provided in the Military Bases Agreement between the Philippines
and the United States.

US invited the submission of bids for Repair offender system and Repair typhoon damages.
Eligio de Guzman & Co., Inc. responded to the invitation, submitted bids and complied with the
requests based on the letters received from the US.

In June 1972, a letter was received by the Eligio De Guzman & Co indicating that the company
did not qualify to receive an award for the projects because of its previous unsatisfactory
performance rating on a repair contract for the sea wall at the boat landings of the U.S. Naval
Station in Subic Bay.

The company sued the United States of America and Messrs. James E. Galloway, William I.
Collins and Robert Gohier all members of the Engineering Command of the U.S. Navy. The
complaint is to order the defendants to allow the plaintiff to perform the work on the projects
and, in the event that specific performance was no longer possible, to order the defendants to
pay damages. The company also asked for the issuance of a writ of preliminary injunction to
restrain the defendants from entering into contracts with third parties for work on the projects.

The defendants entered their special appearance for the purpose only of questioning the
jurisdiction of this court over the subject matter of the complaint and the persons of
defendants, the subject matter of the complaint being acts and omissions of the individual
defendants as agents of defendant United States of America, a foreign sovereign which has not
given her consent to this suit or any other suit for the causes of action asserted in the
complaint." (Rollo, p. 50.)

Subsequently the defendants filed a motion to dismiss the complaint which included an
opposition to the issuance of the writ of preliminary injunction. The company opposed the

The trial court denied the motion and issued the writ. The defendants moved twice to
reconsider but to no avail.

Hence the instant petition which seeks to restrain perpetually the proceedings in Civil Case No.
779-M for lack of jurisdiction on the part of the trial court.


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

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and
Civil Case No. is dismissed. Costs against the private respondent.


The traditional rule of State immunity exempts a State from being sued in the courts of another
State without its consent or waiver. This rule is a necessary consequence of the principles of
independence and equality of States. However, the rules of International Law are not petrified;
they are constantly developing and evolving. And because the activities of states have
multiplied, it has been necessary to distinguish them-between sovereign and governmental acts
(jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that
State immunity now extends only to acts jure imperil (sovereign & 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 or economic affairs.
Stated differently, a State may be said to have descended to the level of an individual and can
thus be deemed to have tacitly given its consent to be sued only when it enters into business
contracts. It does not apply where the contract relates to the exercise of its sovereign functions.
In this case the projects are an integral part of the naval base which is devoted to the defense of
both the United States and the Philippines, indisputably a function of the government of the
highest order; they are not utilized for nor dedicated to commercial or business purposes.

correct test for the application of State immunity is not the conclusion of a contract by a State
but the legal nature of the act

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 States 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
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.