In this case, the projects are an integral part of
83. UNITED STATES OF AMERICA V. RUIZ
136 SCRA 487
FACTS:
Sometime in May 1972, the United States
invited the submission of bids for certain naval
projects. Eligio de Guzman & Co. Inc.
responded to the invitation and submitted bids.
Subsequently, the company received two
telegrams requesting it to confirm its price. In
June 1972, the company received a letter
which said that the company did not qualify to
receive an award for the projects. The
company then sued the United States of
America and individual petitioners demanding
that the company perform the work on the
projects, or for the petitioners to pay damages
and to issue a writ of preliminary injunction to
restrain the petitioners from entering into
contracts with third parties concerning the
project.
ISSUE:
Does the court have jurisdiction over the case?
RULING:
No, the court has no jurisdiction over the case.
The rule of State immunity exempts a State
from being sued in the courts of another state
without its consent or waiver. This is a
necessary consequence of the principles of
independence and equality of states. However,
state immunity now extends only to
governmental acts of the state. 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. The restrictive application of State
immunity is proper only when the proceedings
arise out of commercial transactions of the
foreign sovereign. 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.
the naval base which is devoted to the defense
of the USA and Philippines which is,
indisputably, a function of the government. As
such, by virtue of state immunity, the courts of
the Philippines have no jurisdiction over the
case for the US government has not given
consent to the filing of this suit.
84. U.S V. GUINTO, 182 SCRA 944
FACTS:
The cases have been consolidated because
they all involve the doctrine of state immunity.
In GR No. 76607, private respondents
regarding suing several officers of the US Air
Force in connection with the bidding for
barbering services in Clark Air Base. In GR No.
80018, Luis Bautista was arrested following a
buy-bust operation for a violation of the
Dangerous Drugs Act. Bautista then filed a
complaint for damages claiming that because
of the acts of the respondents, he lost his job.
In GR No. 79470, Fabian Genove filed a
complaint for damages against petitioner for
his dismissal as cook in the US Air Force. In GR
No. 80258, complaint for damage was filed by
the respondents against petitioners for injuries
allegedly sustained by plaintiffs. All cases
invoke the doctrine of state immunity as a
ground to dismiss the same.
ISSUE:
Are the petitioners immune from suit?
RULING:
It is clear that the petitioners in GR No. 80018
were acting in the exercise of their official
functions. They cannot be directly impleaded
for the US government has not given its
consent to be sued. In GR No. 79470,
petitioners are not immune because
restaurants are commercial enterprises,
however, the claim of damages by Genove
cannot be allowed on the strength of the
evidence presented. Barber shops are also
commercial enterprises operated by private
persons, thus, petitioners in GR No. 76607
cannot plead any immunity from the complaint
filed. In GR No. 80258, the respondent court
will have to receive the evidence of the alleged
irregularity in the grant of the barbershop
concessions before it can be known in what
capacity the petitioners were acting at the time
of the incident.
There is no question that the United States of
America, like any other state, will be deemed
to have impliedly waived its non-suability if it
has entered into a contract in its proprietary or
private capacity. It is only when the contract
involves its sovereign or governmental capacity
that no such waiver may be implied. 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.
SCOPE AGAINST PROHIBITION
85. ALVAREZ V. COMMONWEALTH OF THE
PHILIPPINES. 65 PHIL 302, 313
FACTS:
Plaintiff commenced a complaint of
interpleader alleging that they are in
possession and cultivated agricultural lands
within San Pedro Tunasan, and they will pay
rents as the court may determine to the
following parties that would be adjudged as
owner of the subject property: to
Commonwealth of the Philippines by Virtue of
Escheat, Provincial of Laguna may have
interest of the Hacienda, to Municipality of San
pedro by virtue of escheat, to the Colegio de
san Jose also claims to be the owner of the
land and Carlos young also claims to be the
owner of the land. Plaintiffs conclude by asking
that the court order the defendants or
interpleaders to litigate among themselves
over the ownership or dominion of the
hacienda and thereafter determine by
judgment who is the rightful owner thereof
entitled to collect the rental from them
Issue
May the Commonwealth of the Philippines be
impleaded as defendant in a case of
interpleader?
Ruling:
No, it cannot be impleaded as a defendant.
Speaking of the intervention of the
Commonwealth of the Philippines, there is little
to be said. The question raised is already
settled in this jurisdiction. It is a fundamental
principle that the Government of the
Philippines, now the Commonwealth of the
Philippines, as the supreme authority which
represents in this country the existing
sovereignty, cannot be sued without its
consent. The prohibition holds true both in
case where it is joined as a defendant as well
as in that where, as in the present, it is being
compelled to litigate against other persons
without its consent. There is no substantial
difference between making it defend itself
against it will in a case where it is a defendant
and compelling it, without its consent, to
interplead in an action commenced by another
person. In one and the other case it is
compelled, without its consent, to maintain a
suit or litigation, and this is what the legal
principal prohibits.
86. MUNICIPALITY OF SAN FERNANDO, LA
UNION, V. FIRME, 195 SCRA 692
FACTS:
 A passenger jeepney, a sand truck and a
dump truck of the Municipality of San
Fernando, La Union collided. Due to the
impact, several passengers of the jeepney
including Laureano Baniña Sr. died. The heirs
of Baniña filed a complaint for damages
against the owner and driver of the jeepney,
who, in turn, filed a Third Party Complaint
against the Municipality and its dump truck
driver, Alfredo Bislig. Municipality filed its
answer and raised the defense of non-suability
of the State. After trial, the court ruled in favor
of the plaintiffs and ordered Municipality and
Bislig to pay jointly and severally the heirs of
Baniña.
ISSUES:
Is the municipal corporation Liable?
RULING:
The petitioner cannot be held liable. It has
already been remarked that municipal
corporations are suable because their charters
grant them the competence to sue and be
sued. Nevertheless, they are generally not
liable for torts committed by them in the
discharge of governmental functions and can
be held answerable only if it can be shown that
they were acting in a proprietary capacity. In
permitting such entities to be sued, the State
merely gives the claimant the right to show
that the defendant was not acting in its
governmental capacity when the injury was
committed or that the case comes under the
exceptions recognized by law. Failing this, the
claimant cannot recover. The circumstance that
a state is suable does not necessarily mean
that it is liable; on the other hand, it can never
be held liable if it does not first consent to be
sued. Liability is not conceded by the mere fact
that the state has allowed itself to be sued.
When the state does waive its sovereign
immunity, it is only giving the plaintiff the
chance to prove, if it can, that the defendant is
liable
In the case at bar, the driver of the dump truck
of the municipality insists that "he was on his
way to the Naguilian river to get a load of sand
and gravel for the repair of San Fernando's
municipal streets." In the absence of any
evidence to the contrary, the regularity of the
performance of official duty is presumed
pursuant to Section 3(m) of Rule 131 of the
Revised Rules of Court. Hence, We rule that
the driver of the dump truck was performing
duties or tasks pertaining to his office.
87. UP V. DIZON GR NO. 171182, 679
SCRA 54, 23 AUGUST 2012, 1ST DIVISION
FACTS:  FACTS:
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. The RTC rendered
its decision ordering UP to pay Stern Builders.
Stern Builders filed in the RTC its motion for
execution. Consequently, the sheriff served
notices of garnishment to the UPs depositary
banks and the RTC ordered the release of the
funds.
ISSUE
May the funds of UP be validly garnished?
RULING:
No, UP's funds, being government funds,
are not subject to garnishment.  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. Hence, the funds subject of this
action could not be validly made the subject of
writ of execution or garnishment. The adverse
judgment rendered against the UP in a suit to
which it had impliedly consented was not
immediately enforceable by execution against
the UP, because suability of the State did not
necessarily mean its liability.
88. MERITT V. GOVERNMENT, 31 SCRA
311
 Merrit was riding a motorcycle along Padre
Faura Street when he was bumped by the
ambulance of the General Hospital. Merrit
sustained severe injuries rendering him unable
to return to work. The legislature later enacted
Act 2457 authorizing Merritt to file a suit
against the Government in order to fix the
responsibility for the collision between his
motorcycle and the ambulance of the General
Hospital, and to determine the amount of the
damages, if any, to which he is entitled. After
trial, the lower court held that the collision was
due to the negligence of the driver of the
ambulance. It then determined the amount of
damages and ordered the government to pay
the same. 
ISSUES: 
Did the Government, in enacting the Act 2457,
simply waive its immunity from suit or did it
also concede its liability to the plaintiff?
HELD:
No, the government did not waive its liability
upon enacting 2457. As to the scope of
legislative enactments permitting individuals to
sue the state where the cause of action arises
out of either fort or contract, the rule is
“By consenting to be sued a state simply
waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or
create any cause of action in his favor, or
extend its liability to any cause not previously
recognized. It merely gives a remedy to
enforce a preexisting liability and submits itself
to the jurisdiction of the court, subject to its
right to interpose any lawful defense”
In the case at bar, The plaintiff was authorized
to bring this action against the Government "in
order to fix the responsibility for the collision
between his motorcycle and the ambulance of
the General Hospital and to determine the
amount of the damages. The government did
not extends its liability under 2457. Hence, the
government is not liable
88. REPUBLIC V. VILLASOR SCRA 84
FACTS:
The decision that was rendered in favor of
respondents P.J. Kiener Co., Ltd, Gavino
Unchuan and International Construction
Corporation was declared final and executory.
Pursuant to the said declaration, the
corresponding Alias Writ of Execution was
issued. And for the strength of this writ, the
provincial sheriff served notices of garnishment
with several banks, specially on the 'monies
due the Armed Forces of the Philippines in the
form of deposits; the Philippines Veterans Bank
received the same notice of garnishment. The
funds of the AFP on deposit with the banks are
public funds duly appropriated and allocated
for the payment of pensions of retireees, pay
and allowances of military and civillian
personnel and for maintenance and operations
of AFP.
ISSUE:
Is the writ of execution valid?
RULING:
No, the writ of execution is not valid. It is a
fundamental postulate of constitutionalism
flowing from the juristic concept of sovereignty
that the state and its government is immune
from suit unless it gives 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
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. Therefore, in light of the
foregoing it is proper to nullify the writ of
execution 
SUABILITY V. LIABILITY
89. REPUBLIC V. NLRC GR NO.120385.
OCTOBER 17, 1996
FACTS
Some time in January, 1988, the sequestration
order against PNEI was lifted to give way to
the sale of its sale by the Asset Privatization
Trust which, in the meanwhile, had taken over
the management of the company. Yet, PNEI
was still continuing to suffer deterioration of its
financial condition. As a cost saving measure,
the management committee recommended for
retrenchment .This resulted to various labor
complaints filed against PNEI. NLRC rendered a
decision holding PNEI and APT liable. In an
alias writ of execution, it served a notice of
garnishment on the Land bank of the
Philippines upon all credits, interest, bank
deposits belonging to APT. The land bank
responded that since the funds of Apt, a
government owned and controlled agency,
were considered public in nature, they could
not be subject to garnishment.
ISSUE:
Can the Apt be liable for the obligations of the
PNEI?
RULING:
No, the APT cannot be liable for the obligations
of PNEI. Under our jurisdiction, he State may
not be sued without its consent is not really
absolute for it does not say that the state may
not be sued under any circumstance. In this
case, the law creating APT provides that it may
“sue or be sued”.
Nonetheless, we have likewise since explained
that suability does not necessarily mean
liability on the part of the particular
instrumentality or agency of the government;
hence When the State gives its consent to be
sued, it does not thereby necessarily consent
to an unrestrained execution against it. Tersely
put, when the State waives its immunity, all it
does, in effect, is to give the other party an
opportunity to prove, if it can, that the State
has a liability. The universal rule that where
the State gives its consent to be sued by
private parties either by general law or special
law, it may limit claimant's action only up to
the completion of proceedings anterior to the
stage of execution' and that the power of the
Courts ends when the judgment is rendered,
since government funds and properties may
not be seized under writs of execution or
garnishment to satisfy such judgments, is
based on obvious considerations of public
policy. Disbursements of public funds must be
covered by the correspondent 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.
90. MUNICIPALITY OF HAGONOY
BULACAN V. DUMDUM GR. NO. 168289
Facts
It was alleged that sometime in the middle of
the year 2000, respondent, doing business as
KD Surplus was contacted by petitioner Ople.
Respondent had entered into an agreement
with petitioner municipality through Ople for
the delivery of motor vehicles, which were
supposedly needed to carry out certain
developments for the delivery of the Motor
Vehicles. Respondent agreed to deliver from
her principal place of business in Cebu City
twenty-one motor vehicles. However, despite
having made several deliveries, Ople allegedly
did not heed respondent’s claim for payment.
The trial court issued the Writ of Preliminary
Attachment directing the sheriff "to attach the
estate, real and personal properties" of
petitioners. Petitioners also filed a Motion to
Dissolve and/or Discharge the Writ of
Preliminary Attachment Already Issued,
invoking immunity of the state from suit.
ISSUE
May the writ of preliminary Attachment be
discharged?
RULING
Yes, the writ of preliminary attachment may be
discharged.
Be that as it may, a difference lies between
suability and liability. As held in City of
Caloocan v. Allarde, where the suability of the
state is conceded and by which liability is
ascertained judicially, the state is at liberty to
determine for itself whether to satisfy the
judgment or not. Execution may not issue upon
such judgment, because statutes waiving non-
suability do not authorize the seizure of
property to satisfy judgments recovered from
the action. These statutes only convey an
implication that the legislature will recognize
such judgment as final and make provisions for
its full satisfaction. Thus, where consent to be
sued is given by general or special law, the
implication thereof is limited only to the
resultant verdict on the action before execution
of the judgment. The universal rule that where
the State gives its consent to be sued by
private parties either by general or special law,
it may limit claimant’s action "only up to the
completion of proceedings anterior to the stage
of execution" and that the power of the Courts
ends when the judgment is rendered, since
government funds and properties may not be
seized under writs of execution or garnishment
to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements
of public funds must be covered by the
corresponding appropriations 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.

91. UP V. DIZON GR NO. 171182, 679

SCRA 54, 23 AUGUST 2012, 1ST DIVISION

FACTS: 
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. The RTC rendered
its decision ordering UP to pay Stern Builders.
Stern Builders filed in the RTC its motion for
execution. Consequently, the sheriff served
notices of garnishment to the UPs depositary
banks and the RTC ordered the release of the
funds.

ISSUE
May the funds of UP be validly garnished?

RULING
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.
Hence, the funds subject of this action could
not be validly made the subject of the RTC’s
writ of execution or garnishment. The adverse
judgment rendered against the UP in a suit to
which it had impliedly consented was not
immediately enforceable by execution against
the UP, because suability of the State did not
necessarily mean its liability. A marked
distinction exists between suability of the State
and its liability.

A distinction should first be made between

suability and liability. "Suability depends on the
consent of the state to be sued, liability on the
applicable law and the established facts. The
circumstance that a state is suable does not
necessarily mean that it is liable; on the other
hand, it can never be held liable if it does not
first consent to be sued. Liability is not
conceded by the mere fact that the state has
allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving
the plaintiff the chance to prove, if it can, that
the defendant is liable.