4 State Immunity

POLITICAL LAW REVIEW
Article XVI – General Provisions
Section 3. The State may not be sued without its consent.
Sanders vs. Veridiano

G.R. No. L-46930. June 10, 1988
Facts:
➔ Sanders was the special services director of the U.S. Naval Station (NAVSTA) in Olongapo City, while Petitioner Moreau was
the commanding officer of the Subic Naval Base, which includes the said station.
➔ Private respondents Rossi and Wyer are American citizens with permanent residence in the Philippines. They were both
employed as gameroom attendants in the special services department of the NAVSTA.
➔ On October 3, 1975, the private respondents were advised that their employment had been converted from permanent full-
time to permanent part-time. Their reaction was to protest this conversion and to institute grievance proceedings
conformably to the pertinent rules and regulations of the U.S. Department of Defense. They requested to be reinstated to
permanent full-time status plus backwages. Sanders disagreed with the protest. Hence, this case for damage.
➔ The private respondents made it clear that the petitioners were being sued in their private or personal capacity.
➔ The petitioners argued that the acts complained of were performed by them in the discharge of their official duties and that,
consequently, the court had no jurisdiction over them under the doctrine of state immunity.
Issue: W/N they are covered by the Immunity against Suit principle.
Held: Yes. Both Sanders and Moreau were acting in their official capacity; thus, they are covered by the Immunity of the State
doctrine. As for Sanders, as director of the special services department of NAVSTA, undoubtedly had supervision over its
personnel, including the private respondents, and had a hand in their employment, work assignments, discipline, dismissal and
other related matters. As for Moreau, the conversion of the private respondents' type of employment even before the grievance
proceedings had even commenced is clearly official in nature. It involves the special services department of NAVSTA. In fact, the
letter dealt with the financial and budgetary problems of the department and contained recommendations for their solution,
including the re-designation of the private respondents. There was nothing personal or private about it.
Given the official character of the letter, the petitioners were, legally speaking, being sued as officers of the United States
government. As they have acted on behalf of that government, and within the scope of their authority, it is that government, and
not the petitioners personally, that is responsible for their acts.
EFFECT IN CASE THE TRIAL WILL PROCEED

Assuming that the trial can proceed and it is proved that the claimants have a right to the payment of damages, such award will
have to be satisfied not by the petitioners in their personal capacities but by the United States government as their principal.
Consequently, that government should perform an affirmative act to satisfy the judgment, viz, the appropriation of the necessary
amount to cover the damages awarded, thus making the action a suit against that government without its consent.
The doctrine of state immunity as applicable is also to foreign states sought to be subjected to the jurisdiction of our courts.
JUSTIFICATION OF THE DOCTRINE

Justice Holmes said that "there can be no legal right against the authority which makes the law on which the right depends. In
the case of foreign states, the rule is derived from the principle of the sovereign equality of states which wisely admonishes that
par in parem non habet imperium and that a contrary attitude would "unduly vex the peace of nations." Our adherence to this
precept is formally expressed in Article II, Section 2, of our Constitution, where we reiterate from our previous charters that the
Philippines "adopts the generally accepted principles of international law as part of the law of the land.
However, the rule regarding suits against public officers is not absolute. The following exceptions are as follows:
➔ A public officer may be sued as such to compel him to do an act required by law.
➔ To restrain a Cabinet member, for example, from enforcing a law claimed to be unconstitutional.
➔ To compel the national treasurer to pay damages from an already appropriated assurance fund.
➔ To compel the commissioner of internal revenue to refund tax over-payments from a fund already available for the purpose.
➔ To secure a judgment, in general, that the officer impleaded may satisfy himself without the government itself having to do
a positive act to assist him.
➔ To implead the government by the aggrieved party, when the government itself has violated its own laws, even without first
filing his claim with the Commission on Audit as normally required, as the doctrine of state immunity "cannot be used as an
instrument for perpetrating an injustice."
POLI RECIT Qs / STATE IMMUNITY

KA-POLI NOTES 2020-2021
Lara Murallos / Tin Narne-Pedralvez / Fergie Villanueva
In the case at bar, to repeat, comes under the general rule and not under any of the recognized exceptions. The government of
the United States has not given its consent to be sued for the official acts of the petitioners, who cannot satisfy any judgment
that may be rendered against them. As it is the American government itself that will have to perform the affirmative act of
appropriating the amount that may be adjudged for the private respondents, the complaint must be dismissed for lack of
jurisdiction.
A final consideration is that since the questioned acts were done in the Olongapo Naval Base by the petitioners in the performance
of their official duties and the private respondents are themselves American citizens, it would seem only proper for the courts of
this country to refrain from taking cognizance of this matter.
JURISPRUDENCE CITED IN THE CASE

Festejo vs. Fernando – where the Court held that a Bureau Director could be sued for damages on a personal tort committed by
him when he acted without or in excess of authority in forcibly taking private property without paying just compensation,
therefore, although he did convert it into a public irrigation canal. It was not necessary to secure the previous consent of the
state, nor could it be validly impleaded as a party defendant, as it was not responsible for the defendant's unauthorized act.
Doctrine: The State may not be sued without its consent. But this is not an absolute rule.
ACTS COMMITTED BY THE OFFICERS IN THEIR OFFICIAL CAPACITY ARE COVERED BY STATE IMMUNITY
It is stressed at the outset that the mere allegation that a government functionary is being sued in his personal capacity will not
automatically remove him from the protection of the law of public officers and, if appropriate, the doctrine of state immunity. By
the same token, the mere invocation of official character will not suffice to insulate him from suability and liability for an act
imputed to him as a personal tort committed without or in excess of his authority. These well-settled principles are applicable
not only to the officers of the local state but also where the person sued in its courts pertains to the government of a foreign
state, as in the present case.
THE DOCTRINE OF STATE IMMUNITY APPLIES TO FOREIGN STATES SUED IN THIS JURISDICTION
There should be no question by now that such a complaint cannot prosper unless the government sought to be held ultimately
liable has given its consent to be sued. So we have ruled not only in Baer but in many other decisions where we upheld the
doctrine of state immunity as applicable not only to our own government but also to foreign states sought to be subjected to
the jurisdiction of our courts.
Republic of the Philippines vs. Sandoval

G.R. No. 84607. March 19, 1993
Facts:
➔ The farmers and their sympathizers presented their demands for what they called "genuine agrarian reform". The KMP, led
by its national president, Jaime Tadeo, presented their problems and demands, among which were: (a) giving lands for free
to farmers; (b) zero retention of lands by landlords; and (c) stop amortizations of land payments.
➔ There was no dialogue between the rallyists and the government forces. Upon approaching the intersections of Legarda and
Mendiola, the marchers began pushing the police lines and penetrated and broke through the first line of the CDC
contingent.
➔ As a result, 12 marchers were officially confirmed dead, although according to Tadeo, there were thirteen (13) dead, but he
was not able to give the name and address of said victim. Thirty-nine (39) were wounded by gunshots and twelve (12)
sustained minor injuries, all belonging to the group of the marchers.
➔ President Aquino issued Administrative Order No. 11 which created the Citizen’s Mendiola Commission for the purpose of
conducting an investigation for the disorders, death, and casualties that took place.
➔ The most significant recommendation of the commission was for the deceased and other victims of Mendiola Incident to be
compensated by the Government.
➔ Due to the recommendation, petitioners filed a formal letter of demand for compensation from the government to which
the latter did not take heed.
➔ The group then instituted an action for damages against the Republic of the Philippines together with military officers and
personnel involved in the Mendiola Incident.
➔ Respondent Judge Sandoval dismissed the complaint as against the Republic of the Philippines on the basis that there was
no waiver by the state.
Issue: W/N the State has waived its immunity from suit.
Held: No. This is not a suit against the State with its consent.
➔ Firstly, the recommendation made by the Commission regarding indemnification of the heirs of the deceased and the victims
of the incident by the government does not in any way mean that liability automatically attaches to the State.

A.O. 11 that the purpose of creating the Commission was to have a body that will conduct an "investigation of the disorder,
deaths and casualties that took place."
In the exercise of its functions, A.O. 11 provides guidelines, and what is relevant to Our discussion reads: Its conclusions
regarding the existence of probable cause for the commission of any offense and of the persons probably guilty of the same
shall be sufficient compliance with the rules on preliminary investigation and the charges arising therefrom may be filed
directly with the proper court.
In effect, whatever may be the findings of the Commission, the same shall only serve as the cause of action in the event that
any party decides to litigate his/her claim. Therefore, the Commission is merely a preliminary venue. The Commission is not
the end in itself. Whatever recommendation it makes cannot in any way bind the State immediately, such recommendation
not having become final and, executory. This is precisely the essence of it being a fact-finding body.
➔ Secondly, whatever acts or utterances that then President Aquino may have done or said, the same are not tantamount to
the State having waived its immunity from suit.
The President's act of joining the marchers, days after the incident, does not mean that there was an admission by the State
of any liability. In fact, to borrow the words of petitioners (Caylao group), "it was an act of solidarity by the government with
the people".
The speech of President Aquino that the government would address the grievances of the rallyists. By this alone, it cannot
be inferred that the State has admitted any liability, much less can it be inferred that it has consented to the suit.
➔ Thirdly, the case does not qualify as a suit against the State.
Some instances when a suit against the State is proper are:

➔ 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 ultimate liability will belong not to the
officer but to the government.
The Republic in this case may be sued by its name; however, the ultimate liability does not pertain to the government. Although
the military officers and personnel, then party defendants, were discharging their official functions when the incident occurred,
their functions ceased to be official the moment they exceeded their authority. Based on the Commission findings, there was lack
of justification by the government forces in the use of firearms. Moreover, the members of the police and military crowd dispersal
units committed a prohibited act under B.P. Blg. 880 as there was unnecessary firing by them in dispersing the marchers.
While it is true that nothing is better settled than the general rule that a sovereign state and its political subdivisions cannot be
sued in the courts except when it has given its consent, it cannot be invoked by both the military officers to release them from
any liability, and by the heirs and victims to demand indemnification from the government.
The principle of state immunity from suit does not apply, as in this case, when the relief demanded by the suit requires no
affirmative official action on the part of the State nor the affirmative discharge of any obligation which belongs to the State in its
political capacity, even though the officers or agents who are made defendants claim to hold or act only by virtue of a title of the
state and as its agents and servants. This Court has made it quite clear that even a "high position in the government does not
confer a license to persecute or recklessly injure another."
Under our Constitution the principle of immunity of the government from suit is expressly provided in Article XVI, Section 3.
The principle is based on the very essence of sovereignty, and on the practical ground that there can be no legal right as against
the authority that makes the law on which the right depends.
It also rests on reasons of public policy — that public service would be hindered, and the public endangered, if the sovereign
authority could be subjected to law suits at the instance of every citizen and consequently controlled in the uses and dispositions
of the means required for the proper administration of the government.
Doctrine: The principle of state immunity from suit does not apply when the relief demanded by the suit requires no affirmative
official action on the part of the State nor the affirmative discharge of any obligation which belongs to the State in its political
capacity, even though the officers or agents who are made defendants claim to hold or act only by virtue of a title of the state
and as its agents and servants.

What is the Doctrine of State Immunity or The Royal Prerogative of Dishonesty?
The doctrine 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.
The doctrine is derisively called “the royal prerogative of dishonesty” because it grants the prerogative to defeat any legitimate
claim against it by simply invoking its non-suability. It has been explained in its defense, however, that a continued adherence to
the doctrine of non-suability cannot be deplored, for the loss of governmental efficiency and the obstacle to the performance of
its multifarious functions would be far greater in severity than the inconvenience that may be caused private parties, if such
fundamental principle is to be abandoned and the availability of judicial remedy is not to be accordingly restricted.
What are the legal bases?

➔ In the Philippines – Article XVI, Section 3.
➔ Jurisprudential basis – Royal Prerogative of Dishonesty (by Justice Holmes) Justice Holmes said that 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. There can be no legal right against
the authority which makes the law on which the right depends
➔ Sociological basis – Providence vs. Republic, the propensity of the people to litigate; waste of time, money, and resources.
With the well-known propensity of the people to go to court at the least provocation, there will be loss of time and energy. If
people will not be restrained from initiating action against the state, the state will end up just appearing in court to defend itself
against multiple lawsuits.
The state cannot be sued without its consent is not based on any formal conception but rather on a practical and logical ground
that There can be no legal right against the authority which makes the law on which the right depends.
The principle on State immunity does not spring from any formal recognition by the constitutional system. It is nothing more and
nothing less than a recognition of the sovereignty of the state.
Is the Doctrine of State Immunity applicable to foreign States? On what ground?

Yes. Our courts have no jurisdiction against foreign sovereigns because they are treated as equals with our sovereign state. Under
par in parem non habet imperium (one cannot impose its will on another) a foreign state cannot kneel to our local courts because
as an equal, our courts have no authority over them.
In the case of Sanders vs Veridiano, the Supreme Court applied the doctrine of sovereign immunity not only to our own
government but also to foreign states sought to be subjected to the jurisdiction of our courts. The SC directed our courts not to
interfere because it involves a foreign sovereign even if the claimant is a citizen of that foreign state.
Is it absolute that the State cannot be sued?

No. As a rule, when the state files a suit, it becomes vulnerable to suits or counterclaims. But not if the State intervenes in a suit
not for the purpose of resisting the claim precisely because of State immunity.
Are all actions or cases filed against the State covered by the Doctrine of State Immunity?
No. When the State gives consent to be sued:
➔ Express Consent – It can be given only by an act of the legislative body, in a general or special law. Consent of the State to
be sued must be embodied in a duly enacted statute and may not be given by a mere counsel of the government.
♦ General Law – Money claims arising from contracts which could serve as a basis of civil action between private
parties must be first filed with the COA before a suit may be filed in court. The COA must act upon the claim within
60 days. Rejection of the claims authorizes the claimant to elevate the matter to the Supreme Court on
certiorari. LGUs have the power to sue and be sued.
♦ Special Law – By virtue of P.D. No,1620, the grant of immunity to International Rice Research Institute (IRR) is clear
and unequivocal, and expressed by its Director General is the only way by which it may relinquish or abandon this
immunity.
➔ Implied Consent –
When the State commences litigation, it becomes vulnerable to counterclaim.
♦ Exception – When the state intervenes not for the purpose of asking for any affirmative relief, but only for the
purposes of resisting the claim precisely because of immunity from suit.
When the State enters into a business contract in its proprietary capacity.
♦ Acts Jure Gestionis – By right of economic or business relations commercial or proprietary acts. The state may be
sued.
♦ Act Jure Imperii – By right of sovereign power and in the exercise of sovereign functions; there is no implied
consent to be sued.

♦ In exercising the power of eminent domain, the State exercises a power jus imperii, where property has been taken
without just compensation being paid. The defense of immunity from suit cannot be set up in an action for
payment by the owner.
When it would be inequitable for the State to claim immunity.
The powers of a municipal corporation are two-fold in character:

➔ Public Government
➔ Corporate Propriety – A municipal corporation can be held liable to third persons ex contractu or suit upon contracts and
its tort.
What are the three kinds of consent so that the State may be sued?
➔ The Republic is sued by name.
➔ Unincorporated Government agency.
➔ It is an official act but liability rests on the government, and not on the officer
Rules regarding Suits against Government agencies:

1. When Suit is against an incorporated Agency
a. An Incorporated Agency has a charter of its own and possesses a juridical personality independent of the State.
b. If its character provides that it has the right to sue and be sued, it is an express consent and it is suable. This
includes a suit for tort.
c. If its charter is silent, inquire into its function based on the purpose for which it was created.
i. Proprietary – If the purpose is to obtain special corporate benefits or earn pecuniary profit, suable;
ii. Government – If it is in the interest of health, safety and for the advancement of public good and welfare,
affecting the public in general, not suable.
2. When Suit is against an Unincorporated Agency
a. An Unincorporated Agency has no juridical personality independent of the State
b. When it primarily performs government functions: Not suable without State consent even if performing
proprietary function incidentally.
c. When it performs primarily proprietary functions.
i. General Rule: Suable
ii. Exceptions: When the proprietary functions are indispensable in the discharge of its governmental
functions, it is not suable.
Are there actions that can be filed against the State?

➔ To compel the performance of an action mandated by law
➔ To prevent an act in violation of the Constitution
➔ To compel the COA to release funds already disbursed
➔ To file against public officers, if the suit is personal against the public officers
➔ To demand for tax refunds
➔ If the State violates its own laws (perpetrate injustice)
Are these actions conclusive?

No.
Can it be controverted?
Yes, if the officers acted in excess of their authority.
What is the ultimate test to determine whether it is a suit against the State?
➔ W/N the action demands affirmative relief from the State
➔ W/N if the relief is granted, who will be ultimately liable
➔ Regardless of who is named as defendants, if it produces adverse consequences on the public treasury, whether in the
disbursement of funds of loss of property, the public official proceeded against not being liable in his personal capacity.
How can the State give its consent?

➔ Express Consent
➔ Implied Consent
Are the acts of the President considered implied consent?

No. Waiver of state immunity is legislative in nature, and therefore the same cannot be given by the President or other
administrative officers.

Whatever the acts or utterances that then President Corazon Aquino may have done or said, the same are not tantamount to the
State having waived its immunity from suit. The act of the President joining the marchers was just an act of solidarity by the
government with the people.
Does Consent to be sued or Waiver of Immunity mean that the state is admitting its liability?
No. By consenting to be sued, the State does not necessarily admit that is liable. It only means that the State is merely giving the
plaintiff a chance to prove that the State is liable but the State retains the rights to raise all lawful defenses.
Consent to be sued does not mean admission of liability, as this depends on evidence presented before the court. Consent to be
sued does not include consent to the execution of judgment against it.
What are the two concepts of sovereign immunity?
➔ Classical or Absolute Theory – A sovereign cannot, without its consent, be made a respondent in the courts of another
sovereign.
➔ Restrictive Theory – The immunity of the sovereign is recognized only with regard to public act or acts jure imperii of a state
but not with regard to private acts or acts jure gestionis.
The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions or
economic affairs.
A state may be said to have descended to the level of an individual and can thus be deemed to have tacitly an individual and can
thus be deemed to have tacitly given its consent to be sued only when it enters into a business contract.
It does not apply where the contract relates to the exercise of its sovereign.
Festejo vs. Fernando

G.R. No. L-5156. March 11, 1954
Facts:
➔ Plaintiff Carmen Festejo filed an action against defendant Isaias Fernando, Director of Bureau of Public Works for unlawfully
taking possession of a portion of her three parcels of land and causing the construction of an irrigation canal without
obtaining right of way and without her consent or knowledge.
➔ The lower court ruled in favor of plaintiff Festejo.
➔ On appeal, defendant Fernando invoked his being a public officer of the government of the Philippines and thus, enjoys
immunity from suit and should be absolved from liability for damages.
Issue: W/N defendant Fernando may invoke immunity from suit.
Held: No.
➔ The evidence and conceded facts found that, in the trespass on plaintiff's land, the defendant committed acts outside the
scope of his authority. When he went outside the boundaries of the right of way upon plaintiff's land and damaged it or
destroyed its former condition and usefulness, he must be held to have designedly departed from the duties imposed on
him by law.
➔ Ordinarily, the officer or employee committing the tort is personally liable and may be sued as any other citizen and be held
answerable for whatever injury.
➔ If an officer, even while acting under color of his office, exceeds the power conferred on him by law, he cannot shelter himself
under the plea that he is a public agent.
➔ It is a general rule that an officer-executive, administrative quasi-judicial, ministerial, or otherwise who acts outside the scope
of his jurisdiction and without authorization of law may thereby render himself amenable to personal liability in a civil suit.
➔ If he exceeds the power conferred on him by law, he cannot shelter himself by the plea that he is a public agent acting under
the color of his office, and not personally. In the eye of the law, his acts then are wholly without authority.
Doctrine: It is a general rule that an officer-executive, administrative quasi-judicial, ministerial, or otherwise who acts outside the
scope of his jurisdiction and without authorization of law may thereby render himself amenable to personal liability in a civil suit.
If he exceeds the power conferred on him by law, he cannot shelter himself by the plea that he is a public agent acting under the
color of his office, and not personally. In the eye of the law, his acts then are wholly without authority.
Do we follow specific procedures?

Yes. The doctrine of State immunity is also available to foreign States in so far as they are sought to be sued in the courts of the
local State. Submission by a foreign state to local jurisdiction must be clear and unequivocal. It must be given explicitly or by
necessary implication.
Does the Solicitor General have the capacity in determining the immunity of foreign States or officers?
No. The DFA is the highest executive department with competence and authority to determine the immunity of foreign state or
officers as held in the case of Holy See. It is a recognized principle of international law and under our system of separation of

powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by
the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government, it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the
principal law officer of the government, the Solicitor General in this case, or other officer acting under his direction.
Also as expressly enunciated in the case of Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that matter,
does not inspire the same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be
remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of such certification.
U.S. vs. Guinto

G.R. No. 76607. February 26, 1990
Facts:
➔ These cases have been consolidated because they all involve the doctrine of state immunity. The United States of America
was not impleaded in the complaints below but has moved to dismiss on the ground that they are in effect suits against it
to which it has not consented but for the purposes of this topic will discuss GR No. 76607 with regard barber service in the
US Base Airforce in Clair Air Base.
➔ In the first case, the private respondents are suing several officers of the US Airforce Stationed in Clark Air Base in connection
with the bidding conducted by them for contracts for barber services in the base.
➔ The private respondents are suing several officers of the U.S. Air Force stationed in Clark Air Base in connection with the
bidding conducted by them for contracts for barbering services in the said base.
➔ The bidding was won by Ramon Dizon, over the objection of the private respondents.
➔ The private respondents complained to the Philippine Area Exchange (PHAX). That Dizon was already operating this
concession.
➔ On June 30,1986, the private respondents filed a complaint in the court below to compel PHAX and the individual petitioners
to cancel the award to defendant Dizon, to conduct a rebidding for the barbershop concessions.
➔ From the pleadings the relationship between the plaintiffs as well as the defendants, including the US Government in that
prior to the bidding or solicitation in question, there was a binding contract between the plaintiffs as well as the defendants,
including the US Government.
➔ By virtue of said contract of concession, it is the Court’s understanding that neither the US Government nor the herein
principal defendants would become the employer/s of the plaintiffs but that the latter are the employers themselves of the
barbers, etc. with the employer, the plaintiffs herein, remitting the stipulated percentage of commissions to the Philippine
Area Exchange.
➔ The Court, further, is of the view that Article XVIII of the RP-US Bases Agreement does not cover such kind of services falling
under the concessionaire ship, such as a barber shop concession.
Issue: W/N the Doctrine of State Immunity applicable in the case at bar.
Held:
➔ The barbershops subject to the concessions granted by the United States government are commercial enterprises operated
by private persons.
➔ They are not agencies of the United States Armed Forces nor are their facilities demandable as a matter of right by the
American servicemen.
➔ These establishments provide for the grooming needs of their customers and offer not only the basic haircut and shave (as
required in most military organizations) but such other amenities as shampoo, massage, manicure and other similar
indulgences. And all for a fee.
➔ Interestingly, one of the concessionaires, private respondent Valencia, was even sent abroad to improve his tonsorial
business, presumably for the benefit of his customers. No less significantly, if not more so, all the barbershop concessionaires
are, under the terms of their contracts, required to remit to the United States government fixed commissions in consideration
of the exclusive concessions granted to them in their respective areas.
This being the case, the petitioners cannot plead any immunity from the complaint filed by the private respondents in the court
below. The contracts in question being decidedly commercial, the conclusion reached in the United States of America v. Ruiz case
cannot be applied here.

Doctrine: Under Generally Accepted Principles of International Law under the Doctrine of Incorporation. Under this doctrine, as
accepted by the majority of states, such principles are deemed incorporated in the law of every civilized state as a condition and
consequence of its membership in the society of nations. Upon its admission to such society, the state is automatically obligated
to comply with these principles in its relations with other states. In the case of the foreign state sought to be impleaded in the
local jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet imperium. All states are sovereign
equals and cannot assert jurisdiction over one another. A contrary disposition would, in the language of a celebrated case, "unduly
vex the peace of nations." 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.
In such a situation, the state may move to dismiss the complaint on the ground that it has been filed without its consent.
The doctrine is sometimes derisively called "the royal prerogative of dishonesty" because of the privilege it grants the state to
defeat any legitimate claim against it by simply invoking its non-suability.
In fact, the doctrine is not absolute and does not say the state may not be sued under any circumstance. On the contrary, the rule
says that the state may not be sued without its consent, which clearly imports that it may be sued if it consents.
WAIVER OF STATE IMMUNITY

➔ 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 state enters into a contract or it itself commences litigation.
➔ The general law waiving the immunity of the state from suit is found in Act No. 3083, under which the Philippine government
"consents and submits to be sued upon any moneyed claim involving liability arising from contract, express or implied,
which could serve as a basis of civil action between private parties."
➔ In Merritt v. Government of the Philippine Islands, a special law was passed to enable a person to sue the government for
an alleged tort. When the government enters into a contract, it is deemed to have descended to the level of the other
contracting party and divested 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 counterclaim.
➔ Express consent is effected only by the will of the legislature through the medium of a duly enacted statute. We have held
that not all contracts entered into by the government will operate as a waiver of its non-suability; distinction must be made
between its sovereign and proprietary acts.
➔ As for the filing of a complaint by the government, suability will result only where the government is claiming affirmative
relief from the defendant.
RESTRICTIVE THEORY OF STATE IMMUNITY

➔ 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.
➔ A 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.
➔ This was our ruling in United States of America v. Ruiz: where the transaction in question dealt with the improvement of the
wharves in the naval installation at Subic Bay. As this was a clearly governmental function, we held that the contract did not
operate to divest the United States of its sovereign immunity from suit.
➔ 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.
SUABILITY IS NOT SYNONYMOUS WITH LIABILITY

➔ The private respondent invokes Article 2180 of the Civil Code which holds the government liable if it acts through a special
agent. The argument, it would seem, is premised on the ground that since the officers are designated "special agents," the
United States government should be liable for their torts.
➔ 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.

➔ The said article establishes a rule of liability, not suability. The government may be held liable under this rule only if it first
allows itself to be sued through any of the accepted forms of consent.
➔ Moreover, the agent performing his regular functions is not a special agent even if he is so denominated, as in the case at
bar.
➔ No less important, the said provision appears to regulate only the relations of the local state with its inhabitants and, hence,
applies only to the Philippine government and not to foreign governments impleaded in our courts.
Veterans Manpower vs. CA

G.R. No. 91359. September 25, 1992
Facts:
➔ A suit was filed against the PC Chief for failure to act on the request by petitioner seeking to set aside the findings of
PADPAO expelling it from PADPAO and considering its application for renewal of its license even without a certificate of
membership from PADPAO.
➔ VMPSI filed a complaint in the Regional Trial Court at Makati, Metro Manila, praying the court to: "Declare null and void the
amendment of Section 4 of R.A. No. 5487, by PD No. 11 exempting organizations like PADPAO from the prohibition that no
person shall organize or have an interest in more than one agency.
➔ Memorandum of Agreement was executed by PADPAO and the PC Chief, which fixed the minimum monthly contract rate
per guard for eight (8) hours of security service per day.
➔ VMPSI wrote the PC Chief requesting him to consider VMPSI’s application for renewal of its license, even without a certificate
of membership from PADPAO.
➔ As the PC Chief did not reply. On the same date, the court issued a restraining order enjoining the PC Chief and PC-SUSIA
"from committing acts that would result in the cancellation or non-renewal of VMPSI’s license"
Issue: W/N VMPSI’s complaint against the PC Chief and PC-SUSIA is a suit against the State without its consent.
Held: Yes.
➔ The State may not be sued without its consent (Article XVI, Section 3, of the 1987 Constitution). Invoking this rule, the PC
Chief and PC-SUSIA contend that, being instrumentalities of the national government exercising a primarily governmental
function of regulating the organization and operation of private detective, watchmen, or security guard agencies, said official
(the PC Chief) and agency (PC-SUSIA) may not be sued without the Government’s consent.
➔ Especially in this case because VMPSI seeks actual and compensatory damages. Even if its action prospers, the payment of
its monetary claims may not be enforced because the State did not consent to appropriate the necessary funds for
that "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."
➔ A public official may sometimes be held liable in his personal or private capacity if he acts in bad faith, or beyond the scope
of his authority or jurisdiction (Shauf v. Court of Appeals, supra), however, since the acts for which the PC Chief and PC-
SUSIA are being called to account in this case, were performed by them as part of their official duties, without malice, gross
negligence, or bad faith, no recovery may be had against them in their private capacities.
➔ "The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief in relation to the exercise of a
function sovereign in nature.
➔ The correct test for the application of state immunity is not the conclusion of a contract by the State but the legal nature of
the act. This was clearly enunciated in the case of United States of America v. Ruiz where the Hon. Supreme Court held: "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 a
business contract. It does not apply where the contract relates to the exercise of its functions.”
➔ Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be lightly inferred, but must be
construed strictissimi juris (Republic v. Feliciano, 148 SCRA 424).
➔ The consent of the State to be sued must emanate from statutory authority, hence, from a legislative act, not from a mere
memorandum. Without such consent, the trial court did not acquire jurisdiction over the public respondents.
Doctrine: A Public Official may be sued in his personal capacity if he acts, among others beyond the scope of his authority.

Notes:
● Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be lightly inferred, but must be
construed strictissimi juris.
● Rationale of the Rules— The state immunity doctrine rests upon reasons of public policy and the inconvenience and danger
which would flow from a different rule.
Stipulation of Contracts?
Only the Congress can expressly waive immunity.
What are the two kinds of express consent?

➔ Consent of the State to be sued must be embodied in a duly enacted statute and may not be given by a mere counsel of
the government.
♦ General Law – Money claims arising from contracts which could serve as a basis of civil action between private
parties must be first filed with the COA before a suit may be filed in court. The COA must act upon the claim within
60 days. Rejection of the claims authorizes the claimant to elevate the matter to the Supreme Court on certiorari.
➔ LGUs have the power to sue and be sued.
♦ Special Law – By virtue of P.D. No,1620, the grant of immunity to International Rice Research Institute (IRR) is clear
and unequivocal, and expressed by its Director General is the only way by which it may relinquish or abandon this
immunity.
Is a memorandum of agreement an express waiver?

No. The Memorandum of Agreement entered into by the PC Chief and PADPAO was intended to professionalize the industry and
to standardize the salaries of security guards as well as the current rates of security services, clearly, a governmental function.
The execution of the said agreement is incidental to the purpose of R.A. 5487, as amended, which is to regulate the organization
and operation of private detective, watchmen or security guard agencies.
Merritt vs. Government of the Philippine Islands

G.R. No. 11154. March 21, 1916
Facts:
➔ E. Merritt, while riding his motorcycle, was hit by an ambulance owned by the Philippine General Hospital. A driver employed
by the hospital drove it.
➔ In order for Merritt to sue the Philippine government, Act No. 2457 was enacted by the Philippine Legislature authorizing
Merritt to bring suit against the Government of the Philippine Islands and authorizing the Attorney-General of said Islands
to appear in said suit.
➔ A claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for damages resulting
from a collision between his motorcycle and the ambulance of the General Hospital
➔ The trial court ruled that the collision between the plaintiff's motorcycle and the ambulance of the General Hospital was due
solely to the negligence of the chauffeur.
➔ Both parties appealed from the decision, plaintiff Merritt as to the amount of damages and defendant in rendering the
amount against the government.
Issue:
➔ Whether or not the defendant, the Government of the Philippines, waived its immunity from suit?
➔ Does it mean that the Government conceded its liability to the plaintiff when it enacted Act No. 2457
Held:
➔ YES. 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 stated in that:
 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 pre-existing liability
and submits itself to the jurisdiction of the court, subject to its right to interpose any lawful defense.
 It simply gives authority to commence suit for the purpose of settling plaintiff's controversies with the state
ACT NO. 2457 EXCEPTION: SPECIAL AGENT VS EXECUTIVE AGENT of the government?
➔ Act No. 2457 does not operate to extend the Government's liability to any cause not previously recognized, the defendant's
liability for the negligent acts of its officers, agents, and employees. Paragraph 5 of Article 1903 of the Civil Code reads
(Spanish Civil Code):
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◆ The state is liable in this sense when it acts through a special agent, but not when the damage should have been
caused by the official to whom properly it pertained to do the act performed, in which case the provisions of the
preceding article shall be applicable.
◆ The last paragraph of Article 1903, responsibility for acts of third persons ceases when the persons mentioned in
said article prove that they employed all the diligence of a good father of a family to avoid the damage, and
among these persons, called upon to answer in a direct and not a subsidiary manner, are found, in addition to the
mother or the father in a proper case, guardians and owners or directors of an establishment or enterprise, the
state, but not always, except when it acts through the agency of a special agent, doubtless because and only in
this case, the fault or negligence, which is the original basis of this kind of objections, must be presumed to lie
with the state.
◆ That the responsibility of the state is limited by article 1903 to the case wherein 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. ◆ This concept
does not apply to any executive agent who is an employee of the acting administration and who on his own
responsibility performs the functions which are inherent in and naturally pertain to his office and which are
regulated by law and the regulations."
◆ The responsibility of the state is limited to that which it contracts through a special agent, duly empowered by a
definite order or commission to perform some act or charged with some definite purpose which gives rise to the
claim, and not where the claim is based on acts or omissions imputable to a public official charged with some
administrative or technical office who can be held to the proper responsibility in the manner laid down by the law
of civil responsibility.
It is, therefore, evidence that the State (the Government of the Philippine Islands) is only liable for the acts of its agents, officers
and employees when they act as special agents within the meaning of paragraph 5 of Article 1903 of the Spanish Law and that
the chauffeur of the ambulance of the General Hospital was not such an agent.
Doctrine:
➔ When the State waives its immunity from suit does not concede its liability to any case of action, the commencement of suit
is only for the purposes of settling plaintiff’s controversies with the state.
➔ The responsibility of the state is limited to that which it contracts through a special agent, duly empowered by a definite
order or commission to perform some act or charged with some definite purpose which gives rise to the claim, and not
where the claim is based on acts or omissions imputable to a public official charged with some administrative or technical
office who can be held to the proper responsibility in the manner laid down by the law of civil responsibility.
What is Act No. 2457?
➔ Act No. 2457, effective February 3, 1915, reads:

◆ 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.
◆ Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E. Merritt, of Manila, for
damages resulting from a collision between his motorcycle and the ambulance of the General Hospital on March
twenty-fifth, nineteen hundred and thirteen;
◆ Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of damages,
if any, to which the claimant is entitled; and
◆ Whereas the Director of Public Works and the Attorney-General recommended that an Act be passed by the
Legislature authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order that said
questions may be decided: Now, therefore,
◆ By authority of the United States, be it enacted by the Philippine Legislature, that:
◆ SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of Manila against
the Government of the Philippine Islands in (1) order to fix the responsibility for the collision between his
motorcycle and the ambulance of the General Hospital, and (2) to determine the amount of the damages, if any,
to which Mr. E. Merritt is entitled on account of said collision, and (3) the Attorney-General of the Philippine Islands
is hereby authorized and directed to appear at the trial on the behalf of the Government of said Islands, to which
the defendant said Government at the same.
What incident is involved?

There was a collision between Mr. E. Merritt’s motorcycle and the ambulance of the General Hospital
Can general law be used by any person?

Yes. Applicable to all persons who might qualify to file an action against the government
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What are the 2 kinds of express waiver of immunity?
➔ Express waiver of immunity through a general law – applicable to all persons who might qualify to file an action against the
government
➔ Express waiver of immunity from a special law – only applicable to a specific person or group of persons specified in the law,
just like in the case of Merritt vs. Government of the Philippine Islands (Act No. 2457)
Do we have a general law where the State expresses its consent to be sued?
YES. Act No. 3083. The State consents to being sued upon any moneyed claim involving liability arising from contract, express or
implied, which could serve as a basis of civil action between private parties. If the COA does not act on the complaint within 60
days, the claimant can go directly to the court.
Does Act No. 3083 create a cause of action?

YES. Any moneyed claim involving liability arising from contract, expressed or implied, which could serve as a basis of civil action
between private parties.
What causes of action does Act No. 3083 cover where the State has expressly waived its immunity thru general law?
Any moneyed claim involving liability arising from contract, expressed or implied, which could serve as a basis of civil action
between private parties.
What is the exception to this Rule?

Yes. When we have to determine whether the contract was entered into in the exercise of Jure Imperii or Jure Gestioni. Jure
Gestionis, suable but when Jure imperii, no immunity applies. The cause of action is proprietary in character because of the clause
“that can serve as civil liability between private parties” so the effect of Act 3083 is that it only makes express what used to be
implied. We remove Act 3083, the same principle applies, we put in Act 3083 it only makes express the implied principle.
What is the effect of Act No. 3083?

Act No. 3083 imposes a limitation on the causes of action of party litigants which arises from contracts proprietary in nature.
When is there an implied waiver?

YES
➔ Commences litigation to seek affirmative relies
➔ Enters into a contract in its proprietary capacity
Does the State waive its immunity by entering into a contract?

No. Only as to contracts entered into which are proprietary in nature. BASIS? :From the phrase “which could serve as a basis of
civil action between private parties.”
ACT NO. 3083 - AN ACT DEFINING THE CONDITIONS UNDER WHICH THE GOVERNMENT OF THE PHILIPPINE ISLANDS MAY BE
SUED
➔ Section 1. Complaint against Government. – Subject to the provisions of this Act, the Government of the Philippine Islands
hereby consents and submits to be sued upon any moneyed claim involving liability arising from contract, expressed or
implied, which could serve as a basis of civil action between private parties.
➔ Sec. 2. A person desiring to avail himself of the privilege herein conferred must show that he has presented his claim to the
Insular Auditor 1 and that the latter did not decide the same within two months from the date of its presentation.
➔ Sec. 3. Venue. – Original actions brought pursuant to the authority conferred in this Act shall be instituted in the Court of
First Instance of the City of Manila or of the province were the claimant resides, at the option of the latter, upon which court
exclusive original jurisdiction is hereby conferred to hear and determine such actions.
➔ Sec. 4. Actions instituted as aforesaid shall be governed by the same rules of procedure, both original and appellate, as if
the litigants were private parties.
➔ Sec. 5. When the Government of the Philippine Island is plaintiff in an action instituted in any court of original jurisdiction,
the defendant shall have the right to assert therein, by way of set-off or counterclaim in a similar action between private
parties.
➔ Sec. 6. Process in actions brought against the Government of the Philippine Islands pursuant to the authority granted in this
Act shall be served upon the Attorney-General 2 whose duty it shall be to appear and make defense, either himself or
through delegates.
➔ Sec. 7. Execution. – No execution shall issue upon any judgment rendered by any court against the Government of the
Philippine Islands under the provisions of this Act; but a copy thereof duly certified by the clerk of the Court in which
judgment is rendered shall be transmitted by such clerk to the Governor-General, 3 within five days after the same becomes
final.
12

➔ Sec. 8. Transmittal of Decision. – The Governor-General, 4 at the commencement of each regular session of the Legislature,
5 shall transmit to that body for appropriate action all decisions so received by him, and if said body determine that payment
should be made, it shall appropriate the sum which the Government has been sentenced to pay, including the same in the
appropriations for the ensuing year.
➔ Sec. 9. This Act shall take effect on its approval.
Amigable vs. Cuenca

G.R. No. L-26400. February 29, 1972
Facts:
➔ Without prior expropriation or negotiated sale, the Government used a portion of Amigable’s lot in Banilad Estate in Cebu
for the construction of Mango and Gorodo Avenues.
➔ It appears that the said avenues were already existing in 1921 although they were in bad condition as they were very narrow,
unlike the wide and beautiful avenues they are now.
➔ Amigable’s counsel, thus, requested payment for the portion appropriated to the President of the Philippines. The claim was
later indorsed to the Auditor General, who disallowed it.
➔ Thus, Amigable filed a complaint against the Republic of the Philippines and Nicolas Cuenca, in his capacity as Commissioner
of Public Highways, for the recovery of ownership and possession of the 6,167 square meters of land traversed by the
avenues.
➔ However, the Republic (and Cuenca) denied the allegations of Amigable on the following grounds:
♦ The action was premature as it was not filed first with the Office of the Auditor General.
♦ That the right of action for recovery has already been prescribed.
♦ That it had no valid basis, being a suit against the Government, especially since the latter did not give consent.
♦ That Amigable had no cause of action against the Government.
➔ During the hearings, nobody appeared for the Government. However, the Court decided that they had no jurisdiction over
the cause of action on the ground that the Government cannot be sued without its consent.
➔ Unable to secure a reconsideration, the plaintiff appealed to the Court of Appeals, and subsequently to the Supreme Court.
Issue: W/N Amigable can sue the Government.
Held: Yes. According to the previous case of Ministerio vs. CFI, 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 claimed that they
may properly maintain a suit against the government without thereby violating the doctrine of governmental immunity. However,
the Supreme Court stated that the doctrine of governmental immunity cannot serve as an instrument for perpetrating injustice
on a citizen.
Considering that 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.
Here, Amigable, as the owner, could bring an action to recover possession of the portion of the land in question anytime because
possession is one of the attributes of ownership.
However, in this case, since restoration is neither convenient nor feasible, because it has been and is now being used for road
purposes, the only relief available is for the government to make due compensation which it could and should have done years
ago.
Doctrine: If there is no other relief possible but for the Government to make due compensation, the Doctrine of State Immunity
shall not ensue. In other words, the Government cannot hide behind the cloak of immunity if it acted against the Constitution.
Republic vs. Sandiganbayan

G.R. No. 90478. November 21, 1991
Facts:
➔ The PCGG filed with the Sandiganbayan a complaint for reconveyance, reversion, accounting, restitution, and damages
against private respondents Bienvenido Tantoco and Dominador Santiago, et al.
➔ Private respondents jointly moved “to strike out some portions of the complaint and for Bill of Particulars of other portions”,
which motion was opposed by the PCGG.
➔ The Sandiganbayan gave the PCGG 45 days to expand its complaint to make more specific allegations. Private respondents
then presented a “Motion to leave to file interrogatories under Rule 25 of the Rules of Court”.
➔ The Sandiganbayan denied private respondents’ motions.
➔ Private respondents filed an Answer with Compulsory Counterclaim.
➔ In response, the PCGG presented a “Reply to Counterclaim with Motion to Dismiss compulsory counterclaim.”
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➔ Private respondents filed a pleading denominated “Interrogatories to Plaintiff”, and “Amended Interrogatories to Plaintiff”
as well as a motion for production and inspection of documents.
➔ The Sandiganbayan admitted the Amended Interrogatories and granted the motion for production and inspection of
documents respectively. The PCGG moved for reconsideration, arguing that the documents are privileged in character since
they are intended to be used against the PCGG and/or its Commission in violation of Sec.4 of EO No.1, V12:
➔ a) No civil action shall lie against the Commission or any member thereof for anything done or omitted in the discharge of
the task contemplated by this order.
➔ b) No member or staff by the Commission shall be required to testify or produce evidence in any judicial, legislative or
administrative proceedings concerning
➔ The Sandiganbayan promulgated two Resolutions. The first, denying reconsideration of the Resolution allowing production
of the documents, and the second, reiterating, by implication the permission to serve the amended interrogatories on the
plaintiff.
Issue: W/N the PCGG immune from suit?
Held:
➔ NO. The state is of course immune from suit in the sense that it cannot, as a rule, be sued without its consent.
➔ But in filing an action, it divests itself of its sovereign character and sheds its immunity from suit, descending to the level of
an ordinary litigant.
➔ The PCGG cannot claim a superior or preferred status to the State, even while assuming an act for the State.
➔ The suggestion that the State makes no implied waiver of immunity by filing a suit except when in doing so it acts in, or in
matters concerning, its proprietary or non-governmental capacity,is unacceptable. It attempts a distinction without support
in principle or precedent.
➔ On the contrary, “the consent of the State to be sued may be given expressly or impliedly.” Express consent may be
manifested either through a general law or a special law. Implied consent is given when the State itself commences litigation
or when it enters into a contract.
➔ The immunity of the State from suits does not deprive it of the right to sue private parties in its own courts. The state as
plaintiff may avail itself of the different forms of actions open to private litigants.
➔ In short, by taking the initiative in an action against the private parties, the state surrenders its privileged position and comes
down to the level of the defendant.
➔ The latter automatically acquires, within certain limits, the right to set up whatever claims and other defenses he might have
against the state.
 It can hardly be doubted that in exercising the right of eminent domain, the State exercises its jus imperii, as
distinguished from its proprietary rights or jus gestionis. Yet, even in that area, it has been held that where private
property has been taken in expropriation without just compensation being paid, the defense of immunity from suit
cannot be set up by the State against an action for payment by the owner.
Doctrine: Suability vs. Liability

Suability Liability
Depends on the consent of the State to be sued, liability on Liability is not connected by the mere fact that the State has
the applicable law and the established facts. allowed itself to be sued.
The circumstance that a State is suable does not necessarily When the State does not waive its sovereign immunity, it is
mean that it is liable. It cannot be held liable if it does not first only giving the plaintiff the chance to prove, if it can, that the
consent to be sued. defendant is liable.
In the commencement of litigation, should there also be a qualification as to governmental or proprietal function?
No. When the state sues the private person in court, the court is open to counter actions. In filing action for reversion (by the
PCGG), cannot now invoke state immunity when the defendants filed a motion for modes for discovery. That would be unfair,
because while the state can require the defendants to disclose all evidence and facts known to them, the state can hide from its
cloak of immunity from not disclosing certain matters which are material to the controversy. (Subsequently, EO No. 1 was declared
unconstitutional because it insulates the officers of the PCGG from the power of the Congress to conduct inquiries in aid of
legislation. It makes the Commissioners of the PCGG a preferred class.)
Does that mean that in all instances when the state commences a litigation, it opens itself to counter-claims?
No. An exception would be when the state appears specifically to invoke the defense of nonsuability. In that regard, there is no
implied waiver of immunity.
Can the defendant in a case instituted by the state raise all counter claims?
No. Only compulsory counter-claims. Permissive counter-claims cannot be covered by the state immunity.
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Supposing the state is suing for Project No. 1, and the defendant filed a counter-claim for Project No. 2, is the counter-claim
allowed?
No. The counter-claim must only pertain to the subject matter of the suit instituted by the state.
Did the SC agree that officers of PCGG in the case of Republic vs Sandiganbayan, cannot be compelled to divulge information
through modes of discovery because they enjoy state immunity?
➔ No. although the charter of PCGG insulates them from legal actions, PCGG is the one who initiated the action thus, it is
deemed to have impliedly waived its immunity therefore the defendants may resort to modes of discovery in order to raise
their defenses.
➔ PCGG said that under the doctrine of restrictive theory the state is deemed to have impliedly waived its immunity when the
state enters into a commercial transaction, can the PCGG apply the same principle in the initiation of complaint? That if it
applies to contracts, that also applies to initiation of litigation and as such implied waiver of immunity shall only result when
a state commences a litigation in the pursuit of its commercial transaction and not when it initiates a governmental function.
Did the SC agree?
➔ No. when the state commences a litigation, it is deemed to have impliedly waived its immunity without qualification. So
whether it is initiated in its governmental or proprietary functions, implied waiver results. This is in compliance with the
principle of justice and fairness because if we will apply the doctrine the restrictive theory only in actions filed in commercial
capacity of the state, there will be an instance when the government will file an action against individual but the individual
cannot answer because that will be considered as a suit against the state.
➔ In raising defenses (by the private party), it may also setup counterclaims. These counterclaims are not covered by state
immunity because they should be allowed to setup their defenses up to the extent that they will raise counterclaims against
the government.
So, the defendant can raise counterclaims against the state. All kinds of counterclaims?
No. Only compulsory counter-claims. Permissive counter-claims cannot be covered by the state immunity.
Supposing the government filed a complaint against the supplier who is selling firearms to the government, the government filed
an action against the supplier because the items it delivered to the government were faulty. So, the government is claiming
damages against the supplier amounting to 5 Million. The defendant setup his defense that the government is liable to the
supplier for the firearms already delivered amounting to 10 million. The supplier said that by offsetting, the government still owes
him 5 Million. Is the counterclaim valid?
➔ No. The claim is for another item thus in essence that is a permissive counterclaim. Only compulsory counterclaims can be
set up by defendants sued by the state. permissive counterclaims are considered as separate actions, being separate actions,
it is not where the state has impliedly waive its immunity. It requires another waiver of immunity.
➔ Note: Implied waiver of immunity can only apply to the cause of action initiated by the government. if the cause of action is
the firearms, any counterclaim setup by the defendant will only be upto that cause of action. Other cause of action will be
covered by State immunity.
Whenever the state gives its consent to be sued, is it an automatic admission of liability?
No. The state only gives the plaintiff the right to prove his cause of action
What’s the difference between suability and liability?

Yes. 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
Which means that the question of suability can be determined by consent? Express of implied?
Yes.
While the question of liability?

➔ Depends on the established evidence
➔ So, even if the state consents to be sued, the state can still deny liability. It is still incumbent upon the plaintiff that liability
lies on the state whenever the state gives its consent to be sued.
15

China National Machinery vs. Santamaria
G.R. No. 185572. February 7, 2012
Facts:
➔ On September 14, 2002 - China National Machinery & Equipment Corp. (CNMEG) entered into a Memorandum of
Undertaking with North Luzon Railways Corporation (Northrail) to conduct a feasibility study on a possible railway line from
Manila to San Fernando, La Union.
➔ On August 30, 2003 - the Export Bank of China (EXIM Bank) and Department of Finance (DOF) entered into a MOU wherein
China agreed to extend Preferential Buyer’s Credit to PH. The Chinese government agreed to extend an amount not
exceeding USD 400M payable in 20 years, a 5year grace period and at a rate of 3% per annum.
➔ On October 01, 2003 - the Chinese Ambassador to PH, Wang Chungui wrote a letter to the DOF secretary informing him of
CNMEG’S designation as the Prime Contractor.
➔ On December 30, 2003 - CNMEG and Northrail executed a Contract Agreement for the Construction of the project.
➔ On February 26, 2004- the PH government and EXIM bank executed a Counterpart financial agreement - buyer credit loan
agreement (“the loan agreement”).
➔ On February 13, 2006 - respondents filed a Complaint for Annulment of Contract and Injunction with Urgent Motion for
Summary Hearing. Respondents alleged that the Contract and loan agreement is VOID for being contrary to : (1) the
constitution; (2) RA 9184 - Government Procurement Reform Act; (3) PD No. 1445 - Government Auditing Code and (4) EO
No. 292 - Administrative Code.
➔ CNMEG filed a Motion to Dismiss and argued that the trial court has no jurisdiction over its person as it is an agent of the
Chinese Government, making it immune from suit and the subject matter is a product of an executive agreement.
➔ RTC denied CNMEG’s motion. Subsequently, CNMEG filed a Motion for Reconsideration but it was denied.
➔ CNMEG filed a Petition for Certiorari with Prayer for Issuance of TRO with the CA, but it was dismissed. Hence, it filed a
motion for reconsideration which was denied.
➔ Hence this Petition for Review
Issues:
(1.) Whether CNMEG is entitled to immunity, precluding it from being sued before a local court.
(2.) Whether the Contract Agreement is an executive agreement, such that it cannot be questioned by or before a local court
Held:
(1.) No. Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it has not consented
to be sued under Chinese law. Thus, following this Court's ruling in Deutsche Gesellschaft, in the absence of evidence to the
contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an original charter. As a
result, it has the capacity to sue and be sued under Section 36 of the Corporation Code.
The use of the term "state corporation" to refer to CNMEG was only descriptive of its nature as a government-owned and/or -
controlled corporation, and its assignment as the Primary Contractor did not imply that it was acting on behalf of China in the
performance of the latter's sovereign functions. To imply otherwise would result in an absurd situation, in which all Chinese
corporations owned by the state would be automatically considered as performing governmental activities, even if they are clearly
engaged in commercial or proprietary pursuit
(2.) No. CNMEG is neither a government nor a government agency. It is engaged in a proprietary activity. The Contract Agreement
was not concluded between the Philippines and China, but between Northrail and CNMEG. Thus, both Northrail and CNMEG
entered into the Contract Agreement as entities with personalities distinct and separate from the Philippine and Chinese
governments, respectively. Hence, the contract is merely an ordinary commercial contract that can be questioned before the local
courts.
The Contract Agreement must not be read in isolation. Instead, it must be construed in conjunction with three other documents
executed in relation to the Northrail Project, namely: (a) the Memorandum of Understanding dated 14 September 2002 between
Northrail and CNMEG; 30 (b) the letter of Amb. Wang dated 1 October 2003 addressed to Sec. Camacho; 31 and (c) the Loan
Agreement.
(a) The MOU dated 14 September 2002 - shows that CNMEG sought the construction of Luzon Railways as a proprietary venture.
It was CNMEG that initiated the undertaking, and not the Chinese government. The Feasibility Study was conducted not
because of any diplomatic gratuity from or exercise of sovereign functions by the Chinese government, but was plainly a
business strategy employed by CNMEG with a view to securing this commercial enterprise.
(b) Letter dated 01 October 2003 - shows that CNMEG, and not the Chinese government, initiated the Northrail Project was
confirmed by Amb. Wang in his letter. The desire of CNMEG to secure the Northrail Project was in the ordinary or regular
course of its business as a global construction company. The implementation of the Northrail Project was intended to
generate profit for CNMEG.
(c) Loan Agreement - it was clear from the provisions that it was a purely commercial transaction and there was also an express
waiver of immunity. Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government,
while the Contract Agreement was between Northrail and CNMEG. Although the Contract Agreement is silent on the
16

classification of the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an inextricable
part of the entire undertaking, nonetheless reveal the intention of the parties to the Northrail Project to classify the whole
venture as commercial or proprietary in character.
Doctrine: The application of the doctrine of immunity from suit has been restricted to sovereign or governmental activities (jure
imperii). The mantle of state immunity cannot be extended to commercial, private and proprietary acts (jure gestionis) The
Philippines adheres to the restrictive theory.
Is an arbitration clause in a contract an implied waiver?

Yes. In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state immunity. In
the said law, the agreement to submit disputes to arbitration in a foreign country is construed as an implicit waiver of immunity
from suit. There is no similar law in the Philippines.
In the case at bar, the Contract Agreement provides that, if any dispute arises between Northrail and CNMEG. Both parties are
bound to submit the matter to the HKIAC for arbitration. In case the HKIAC makes an arbitral award in favor of Northrail, its
enforcement in the Philippines would be subject to the Special Rules on Alternative Dispute Resolution (Special Rules). Rule 13
thereof provides for the Recognition and Enforcement of a Foreign Arbitral Award. Hence, it is clear that CNMEG has agreed that
it will not be afforded immunity from suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of the
Contract Agreement.
Does China National Machinery have immunity from suit?

No. The CNMEG is not immune from suit. The desire of CNMEG to secure the Northrail Project was in the ordinary or regular
course of its business as a global construction company. Its assignment as the Primary Contractor for the Northrail project did
not imply that it was acting on behalf of China in the performance of the latter's sovereign functions.
Republic vs. Feliciano

G.R. No. 70853. March 12, 1987
Facts:
➔ 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 subdividing and distributing the land to the settlers.
➔ Herein respondent, then petitioner, Pablo Feliciano, alleged that he had bought the property in question, evidenced by an
informacion possessoria, and upon purchase he took possession of the property and introduced various improvements
therein.
➔ Thus, Feliciano prayed that he be declared the rightful and true owner of the property despite it being located within the
reservation established under Proclamation No. 90.
➔ The Land Authority asserted that Feliciano lacked sufficient cause of action and that his action has already prescribed.
➔ However, the trial court rendered a decision stating that Feliciano is the rightful and true owner of the property in question,
and thus, excluded from the NARRA settlement.
➔ Later, 86 settlers filed a motion to intervene alleging that they have been in possession of their lands for 20 years.
➔ The Court a quo reopened the case and directed the intervenors to show evidence. However, later on, the intervenors did
not appear. They simply just submitted a motion for postponement resetting of hearing, which was later denied by the trial
court.
➔ After numerous attempts for reconsideration despite being continuously denied by the trial court, the intervenors decided
to elevate their matter to the IAC on a petition for certiorari, but it was also denied.
➔ Thus, they filed a motion to dismiss on the ground that the Republic of the Philippines cannot be sued without its consent;
thus, the action cannot prosper. This motion was opposed by Feliciano.
Issue: W/N Feliciano may sue the Republic.
Held: No.
➔ Feliciano has impleaded the Republic of the Philippines as defendant in an action for recovery of ownership and possession
of a parcel of land, bringing the State to Court just like any private person who is claimed to be usurping a piece of property.
➔ A suit for recovery of property is not an action in rem, but an action in personam. It is an action directed against a specific
party or parties, and judgment therein binds only such party or parties.
➔ Under settled jurisprudence, suit against the State is not permitted except upon showing that the State has consented to
which, in this case, Feliciano failed to allege.
➔ The failure of Feliciano to assert the defense of immunity from suit when the case was tried before the court a quo, as alleged
by the private respondent, is not fatal. It is now settled that such defense may be invoked by the courts sua sponte at any
stage of the proceedings.
17

➔ Feliciano further asserted that the implied consent of suability may be read from the proclamation itself when it established
the reservation “subject to private rights, if any there be.” However, that is not it. No consent can be drawn from the language
of the Proclamation. The exclusion of existing private rights from the reservation established cannot be construed as an
implied waiver of immunity.
➔ A proclamation is not a legislative act. The consent of the State must stem from statutory authority. Waiver of State Immunity
can only be made by an act of the legislative body.
INFORMACION POSESORIA
The inscription in the property registry of an informacion posesoria under the Spanish Mortgage Law was a means provided by
the law then in force in the Philippines prior to the transfer of sovereignty from Spain to the US, to record a claimant’s actual
possession of a piece of land. Such inscription merely furnishes prima facie evidence of the fact that at the time the proceeding
was held, the claimant was in possession of the land under a claim of right. The possessory information could ripen into a record
of ownership after the lapse of 20 years (later reduced to 10), upon the fulfillment of the requisites prescribed in the Spanish
Mortgage Law.
➔ In the case at bar, there was no showing that the informacion posesoria had been converted into a record of ownership.
Such possessory information remained, at best, a mere prima facie evidence of possession. Using this, Feliciano could have
applied for judicial confirmation of imperfect title under the Public Land Act, which is an action in rem. However, it was
already late for him to do so.
Doctrine: Failure to allege the existence of the consent of the State in a suit against it is a fatal defect. On this basis alone, the
complaint may be dismissed.
Express vs. Implied consent
Express Consent Implied Consent
When the State commences litigation

It can be given only by an act of the legislative body, in a
general or special law. Consent of the State to be sued must When the State enters into a business contract
be embodied in a duly enacted statute and may not be
given by a mere counsel of the government. When it would be inequitable for the State to claim
immunity
When it would be inequitable for the State to claim immunity.

Inequitable situation that will result in a boxing match! Government can punch, but cannot be punched back.
Is a proclamation a waiver?
No. A proclamation is not a legislative act. The consent of the State must stem from statutory authority. Waiver of State Immunity
can only be made by an act of the legislative body.
Assuming the proclamation is in effect a law, is this, then, a waiver?

Assuming it is in effect a law, it would be a waiver. As the law provided that the consent of the State must stem from statutory
authority.
Did the SC consider it as a suit against the State?

No. Since Feliciano failed to allege the existence of the consent of the Land Authority in the case at bar.
How should the waiver to be sued be construed?

it much CONSTRUED STRICTISSIMI JURIS. Waiver of the State's immunity from suit, being a derogation of sovereignty, will not be
lightly inferred
What is the meaning of “unequivocal”?

clear, having one meaning or interpretation
What is “sua sponte” law?

Latin for "of one's own accord; voluntarily." Used to indicate that a court has taken notice of an issue on its own motion without
prompting or suggestion from either party. As a general rule, where grounds for dismissal exist, an action is subject to dismissal
on a court's own motion. A trial court has the power to dismiss an action sua sponte for want of prosecution, or failure to comply
with the rules of civil procedure or a court's orders. A court may sua sponte enter a motion to dismiss for want of jurisdiction
even though both parties have agreed to appear in the court.
18

Can the Court recognize the Doctrine of State Immunity sua sponte?
Yes. Where no consent is shown, state immunity from suit may be invoked as a defense by the courts sua sponte at any stage of
the proceedings, because waiver of immunity, being in derogation of sovereignty, will not be inferred lightly and must be
construed in strictissimi juris.
Can the immunity be invoked at any stage of the proceeding?

Yes. because waiver of immunity, being in derogation of sovereignty, will not be inferred lightly and must be construed in
strictissimi juris.
What is “consent”?
An act of permitting something to be done or of recognizing some authority.
After rendition of judgment, does the court cease to have jurisdiction?

Yes. In the case of Commissioner of Public Highways v. San Diego, 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.
Is there a requirement or consent to satisfy or fulfill liability or decision?

Yes. Execution will require another waiver, because the power of the court ends when the judgment is rendered, since government
funds and properties may not be seized under writs of execution or garnishment, unless such, disbursement is covered by the
corresponding appropriation as required by law
Is it mandatory to appropriate funds after judgment?

Yes. 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.
If the legislative does not appropriate, what is the effect?
What if the legislative says it has no funds?
Is the law-making function discretionary or ministerial? Can it be compelled?
U.S. vs. Ruiz

G.R. No. L-35646. May 22, 1985
Facts:
➔ The United States of America had a naval base in Subic, Zambales. The base was one of those provided in the Military Bases
Agreement.
➔ In May 1972, the US invited submission of bids for the following projects: (a) Repair Fender System; (b) Repair Typhoon
damage
➔ Eligio de Guzman & Co. (EDGC) responded to the invitation and submitted bids.
➔ Thereafter, the company received from the United States two telegrams requesting it to confirm its price proposals and for
the name of its bonding company. The company complied with the requests
➔ In June 1972, the company received a letter which was signed by William I. Collins, Director, Contracts Division. The letter
said 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 letter further said
that the projects had been awarded to third parties.
➔ Subsequently, EDGC sued the US and Messrs. James Galloway, William Colins and all members of the engineering command
to allow them 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.
➔ Defendants filed a motion to dismiss questioning the jurisdiction of the court over the subject matter and the persons of
the defendants and that the subject matter of the complaint are acts and omissions of the individual defendants as AGENTS
of USA, a foreign sovereign which has not given her consent to this suit.
➔ The trial court denied the motion.
➔ The defendants moved twice to reconsider but to no avail. Hence the instant petition.
Issue: Whether USA may be sued?
19

Held: No. The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent
or waiver. State immunity now extends only to acts jure imperii - 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 or economic affairs. 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.
The 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.
Doctrine: 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.
Is there a waiver?
None. 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
Dissenting opinion (Makasiar, J.):

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation — in the case at
bar by the unilateral cancellation of the award for the project by the United States government, through its agency at Subic
Bay — should not be allowed to take undue advantage of a party who may have legitimate claims against it by seeking
refuge behind the shield of non-suability. A contrary view would render a Filipino citizen, as in the instant case, helpless and
without redress in his own country for violation of his rights committed by the agents of the foreign government professing
to act in its name. Under the doctrine of implied waiver of its non-suability, the United States government, through its naval
authorities at Subic Bay, should be held amenable to lawsuits in our country like any other juristic person.
What is the nature of the transaction?
U.S. vs. Ruiz U.S. vs. Guinto Holy See vs. Rosario, Jr.
JURE IMPERII JURE IMPERII

The projects are an integral part of the JURE GESTIONIS The acquisition of the property is for
naval base which is devoted to the The bidding for the operation of the site of its mission or the Apostolic
defense of both the United States and barbershops subject to the concessions Nunciature in the Philippines
the Philippines, indisputably a function granted by the United States
of the government of the highest government are commercial
order; they are NOT utilized for nor enterprises operated by private
dedicated to commercial or business persons.
purposes.
The Holy See vs. Rosario, Jr.

G.R. No. 101949. December 1, 1994
BRIEF HISTORY:
→ In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized the exclusive dominion and
sovereign jurisdiction of the Holy See over the Vatican City.
→ It also recognized the right of the Holy See to receive foreign diplomats, to send its own diplomats to foreign countries,
and to enter into treaties according to International Law.
→ The Lateran Treaty established the statehood of the Vatican City "for the purpose of assuring to the Holy See absolute
and visible independence and of guaranteeing to it indisputable sovereignty also in the field of international relations".
Facts:
➔ Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is represented in the Philippines
by the Papal Nuncio.
➔ Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate business.
➔ This petition arose from a controversy over a parcel of land consisting of 6,000 square meters located in the Municipality of
Parañaque, Metro Manila and registered in the name of petitioner.
20

➔ The said lot is contiguous to lots 5-B and 5-D registered in the name of Philippine Realty Corporation (PRC). These three
lots were sold through an agent Msgr. Domingo Cirilos Jr. to Ramon Licup. Licup assigned his rights to private respondent
Starbright Sales Ent. Inc. (SSEI).
➔ A dispute arose due to the refusal of the squatters to vacate the lots.
➔ SSEI insisted that it should be petitioner who should clear the property but petitioner refused and proposed that either SSEI
undertake the eviction of that the earnest money amounting to Php 100,000 will just be returned to the former.
➔ Msgr. Cirilos returned the earnest money of P100,000.00 and wrote private respondent giving it seven days from receipt of
the letter to pay the original purchase price in cash.
➔ However, on March 30, 1989, without notice to SSEI, the petitioner sold the lots to Tropicana Properties and Development
Corporation (Tropicana).
➔ SSEI demanded rescission of the sale to Tropicana and the reconveyance of the lots but to no avail.
➔ Petitioner moved for the dismissal of the complaint for lack of jurisdiction based on sovereign immunity from suit and Msgr.
Cirilos for being an improper party.
➔ The trial court denied the motion to dismiss after finding that the petitioner “shed off” its immunity by entering into the
business contract in question.
➔ A motion for reconsideration was also denied. Hence, this special civil action.
➔ On December 19, 1991- Motion for Intervention was filed by the DFA, claiming its legal interest in the outcome of the case
as regards the diplomatic immunity of the Holy See that it "adopts by reference, the allegations contained in the petition of
the Holy See insofar as they refer to arguments relative to its claim of sovereign immunity from suit"
Issue: Did the Holy See properly invoke sovereign immunity for its non-suability?
Held: Yes. The mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can
only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course
of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be
tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially
when it is not undertaken for gain or profit.
The United States passed the Foreign Sovereign Immunities Act of 1976, which defines a commercial activity as "either a regular
course of commercial conduct or a particular commercial transaction or act." Furthermore, the law declared that the "commercial
character of the activity shall be determined by reference to the nature of the course of conduct or particular transaction or act,
rather than by reference to its purpose." The Canadian Parliament enacted in 1982 an Act to Provide For State Immunity In
Canadian Courts. The Act defines a "commercial activity" as any particular transaction, act or conduct or any regular course of
conduct that by reason of its nature, is of a "commercial character."
In the case at bench, if the petitioner has bought and sold lands in the ordinary course of a real estate business, surely the said
transaction can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and subsequent
disposal of Lot 5-A were made for profit but claimed that it acquired said property for the site of its mission or the Apostolic
Nunciature in the Philippines.
The Court has considered the following transactions by a The Court has considered the following transactions by a
foreign state with private parties as acts jure imperii foreign state with private parties as acts jure gestionis
The lease by a foreign government of apartment buildings for The hiring of a cook in the recreation center, consisting of
use of its military officers three restaurants, a cafeteria, a bakery, a store, and a coffee
The conduct of public bidding for the repair of a wharf at a and pastry shop at the John Hay Air Station in Baguio City, to
United States Naval Station cater to American servicemen and the general public
The Change of employment status of base employees. The bidding for the operation of barber shops in Clark Air
Base in Angeles City
Doctrine: There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the
classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign.
According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts
jure imperii of a state, but not with regard to private acts or acts jure gestionis.
Jure Gestionis Jure Imperii

Private acts of the State – Commercial and proprietary Public acts of the State – Sovereign and governmental
Is it conclusive that since the nature of the contract is commercial, the act itself is jure gestionis?
No. The mere entering into a contract by a foreign state with a private party CANNOT be the determining factor whether it is
engaged in business or not.
21

How do we determine if the contract is commercial or proprietary?
➔ Regularity of the transaction
➔ Objective or the purpose of transaction
Considerations:
➔ Nature of contract
➔ Pursuit of regular business or purpose
Conflicting theories of State Immunity?

➔ Absolute or Classical theory of State Immunity
➔ Restrictive theory of State Immunity
How does the State commence action?

As for the filing of a complaint by the government, suability will result only where the government is claiming affirmative relief
from the defendant.
Is there any counterclaim?

Yes. When the government files a complaint, it is opening itself to a counterclaim. Only compulsory counterclaims.
Why is it not permissive?

Permissive Counterclaims are considered separate actions; hence it is not where the state has impliedly waive its immunity. It thus
requires ANOTHER waiver.
Procedure when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court:
1. Public International law - requests the Foreign Office of the state where it is sued to convey to the court that said
defendant is entitled to immunity
2. USA - process of “suggestion” --> where the foreign state or the international organization sued in an American court
requests the Secretary of State to make a determination as to whether it is entitled to immunity.
3. Philippines - the foreign government or the international organization to first secure an executive endorsement of its
claim of sovereign or diplomatic immunity.
How does it convey its endorsement to the court?

1. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent
a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not
be sued because it enjoyed diplomatic immunity.
2. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a
telegram to that effect.
3. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a
"suggestion" to respondent Judge. The Solicitor General embodied the "suggestion" in a Manifestation and
Memorandum as amicus curiae.
Note: In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own
determination as to the nature of the acts and transactions involved.
Republic vs. Villasor

G.R. No. L-30671. November 28, 1973
Facts:
➔ On July 3, 1961 - Judge Villasor rendered a Decision in favor of P.J. Kiener Co., Ltd., Gavino Unchuan and International
Construction Corporation against the Republic confirming the arbitration award in the amount of Php 1, 712,396.40.
➔ On June 24, 1969 - Respondent Judge issued an Order declaring the aforestated Decision as final and executory, thus
directing the sheriff to execute the said Decision.
➔ On June 26, 2969 - the Sheriff served notices of garnishment with the banks- Philippine Veterans Bank and Philippine
National Bank.
➔ The funds in the said banks, as certified by the AFP Comptroller, are funds of the AFP with the said banks are public funds
for the pensions, pay, and allowances of its military and civilian personnel.
➔ On July 7, 1969- the Republic filed a petition for certiorari and prohibition challenging the validity of an order issued by
respondent Judge Guillermo Villasor.
22

Issue: May the funds of the government be subject to garnishment?
Held: No. Although the State may give its consent to be sued by private parties, there is corollary that public funds cannot be the
object of garnishment proceedings even if the consent to be sued has been previously granted and the state’s liability has been
adjudged.
Thus in the recent case of Commissioner of Public Highways v. San Diego, such a well-settled doctrine was restated in the opinion
of Justice Teehankee: "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.
Doctrine: FUNDS OF THE GOVERNMENT ARE NOT SUBJECT TO GARNISHMENT. Disbursements of public funds must be covered
by the corresponding appropriation as required by law.
Department of Agriculture vs. NLRC

G.R. No. 104269. November 11, 1993
Facts:
➔ The Department of Agriculture and Sultan Security Agency entered into a contract for security services.
➔ Save for the increase in the monthly rate of the guards, the same terms and conditions were also made to apply to another
contract. Pursuant to their arrangements, the guards were deployed by Sultan Agency in the various premises of DAR.
➔ Later, several guards filed a complaint for underpayment, non-payment of 13th month pay, uniform allowances, night shift
differential pay, holiday pay, overtime pay, and damages.
➔ The Executive Labor Arbiter rendered a decision finding DAR liable with Sultan Security Agency. Thus, the LA issued a writ
of execution commanding the City Sheriff to enforce and execute the judgment against the property of the two respondents.
For DAR: (1) one Toyota Hi-Ace; (2) one Toyota Mini Cruiser; and (3) one Toyota Crown.
➔ A petition for injunction, prohibition, and mandamus, with a prayer for preliminary writ of injunction was filed by DAR with
NLRC.
➔ DAR pointed out that the LA did not have jurisdiction over them, thus rendering the LA’s decision null and void. Further,
DAR alleged that the attachment or seizure of its property would hamper and jeopardize their governmental functions to
the prejudice of public good.
Issue: W/N DAR may be sued and its properties be awarded to the private respondents.
Held: Yes. The States’ consent may be given either expressly or impliedly. Express consent may be made through a general law
or a special law. In this jurisdiction, the general law waiving the immunity of the state from suit is found in Act No. 3083, where
the Philippine government "consents and submits to be sued upon any money claim involving liability arising from contract,
express or implied, which could serve as a basis of civil action between private parties." 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. 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 functions and another which is done
in its proprietary capacity.
In the instant case, the Department of Agriculture 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. When the State gives its consent to be sued, it does not thereby necessarily consent to an unrestrained execution
against it. Thus, 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 liability.
Doctrine: When the State gives its consent to be sued, it does not thereby necessarily consent to an unrestrained execution
against it.
23

PNB vs. Pabalan
G.R. No. L-33112. June 15, 1978
Facts:
➔ Judge Pabalan issued a writ of execution against the Philippine National Bank for garnishment of the funds deposited by
the Philippine Virginia Tobacco Administration.
➔ The Philippine National Bank objected to the decision and raised its “immunity from suit”, alleging that the funds deposited
by the Philippine Virginia Tobacco Administration were public in character.
Issue: W/N the Doctrine of State Immunity could bar a notice of garnishment.
Held: No. As a general rule, the doctrine of non-suability cannot be legally set forth as a bar or impediment to a notice of
garnishment. Funds of the government may not be garnished, attached, or levied upon as a GOCC has a personality of its own,
distinct and separate from that of the government.
However, as an exception, when the government enters into a commercial business, it abandons its sovereign capacity and is to
be treated like any other corporation. By engaging in a particular business thru the instrumentality of a corporation, the
government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law
governing private corporations.
Doctrine: As Justice Ozaeta said, when the government enters into a commercial business, it abandons its sovereign capacity.
Pro hac vice – “For this occasion only”
Rayo vs. CFI of Bulacan

G.R. No. L-55273-83. December 19, 1981
Facts:
➔ During the height of typhoon Kading, National Power Corporation (NPC), acting through its plant superintendent Chavez,
opened or caused to open all the three floodgates of Angat Dam. As a direct and immediate result, several towns in Bulacan
were inundated. Thus, hundreds of its residents died or were reported to have died. This flood was unprecedented in
Norzagaray.
➔ Thus, as victims, the petitioners filed a complaint against NPC.
➔ NPC answered and invoked that in the operation of the Angat Dam, it is performing purely governmental function, hence it
cannot be sued without the express consent of the state.
Issue: W/N the power of NPC to sue and be sued includes the power to be sued for tort.
Held: Yes. In organizing the National Power Corporation, the government has organized a private corporation, put money in it,
and has allowed it to sue and to be sued in any court under its Charter (RA 6395).
As a Government Owned and Controlled Corporation, it has a personality of its own, distinct and separate from that of the
Government. Moreover, the charter provision that the NPC can “sue and be sued in any court” is without qualification on the
cause of action and accordingly it can include a tort claim such as the one instituted by the petitioners.
Doctrine: Expressio unius est exclusio alterius or what is not included is deemed excluded.
Bureau of Printing vs. Bureau of Printing Employees Association

G.R. No. L-15751
Facts:
➔ The Bureau of Printing Employees Association (NLU) filed a complaint for unfair labor practice against the Bureau of Printing
(Bureau).
➔ NLU asserted that the Bureau was interfering with or coercing the employees to discourage them in pursuing union activities.
➔ Answering the complaint of NLU, the Bureau stated that the respondents were suspended pending the result of an
administrative investigation against them, for breach of Civil Service rules and regulations. Further, the Bureau asserted that
they don’t have a separate juridical personality to sue or be sued, adding that it is a mere agency of the Republic, which
performs governmental functions; thus, the Court of Industrial Relations (CIR) has no jurisdiction over the issue at hand.
➔ The motion of the Bureau was granted, but after the hearing, the judge of CIR sustained the theory that the functions of the
Bureau are exclusively propriety in nature and denied the prayer for dismissal.
Issue: W/N Bureau of Printing may be sued.
Held: No.
➔ The Bureau of Printing is an office of the Government created by the Administrative Code of 1916 (Act No. 2657). As such,
it operates under the direct supervision of the Executive Secretary, Office of the President, and is charged with the execution
24

of all printing and binding, including work incidental to those processes, required by the National Government. It has no
corporate existence, and its appropriations are provided for in the General Appropriations Act (GAA).
➔ Although the Bureau receives outside jobs and that many of its employees are paid for overtime work, this does not justify
the conclusion that its functions are exclusively proprietary in nature. As a matter of administrative policy, the OT
compensation may be paid; however, upon the discretion of the head of the Bureau depending on the GAA. So, it cannot
be the basis for holding that the functions are wholly proprietary in nature.
➔ The Bureau is the only one authorized to use the Government seal on bank checks and other documents.
➔ The volume of private jobs done, in comparison with government jobs, is only ½ of 1%.
➔ Although the Bureau is allowed to undertake private printing jobs, it cannot be pretended that it is an industrial or business
concerns as the additional work is merely incidental to its function since there is no showing that the employees performing
the said proprietary functions are separate and distinct from those employed with general governmental functions.
➔ As an office of the Government, without any corporate or juridical personality, the Bureau cannot be sued. Any suit, action,
or proceeding against it, if it were to produce any effect, would actually be a suit, action, or proceeding against the
Government, and the rule is settled that the Government cannot be sued without its consent, much less over its objection.
ON THE ISSUE OF THE JURISDICTION OF THE CIR OVER THE CASE:

The Court of Industrial Relations has no jurisdiction over the subject matter because the Industrial Peace Act was intended to
apply only to industrial employment, and to govern the relations between employers engaged in industry and occupations for
purposes of gain, and their industrial employees. In this case, the administrative charges for insubordination, grave misconduct,
and acts prejudicial to public service committed by the respondents must only be investigated and further petitioned with the
Heads of Departments and Bureaus authorized to institute and investigate administrative charges. Thus, for the CIR to take
cognizance of such matters is beyond its functions as an Industrial Court.
Doctrine: An office of the government without any corporate or juridical personality cannot be sued without its consent.
How much of the function is commercial?

The volume of private jobs done, in comparison with government jobs, is only ½ of 1%.
Mobil Philippines Exploration vs. Custom Arrastre Service

G.R. No. L-23139. December 17, 1966
Facts:
➔ 4 cases of rotary drill parts were shipped from abroad via S.S. Leoville. It was consigned to Mobil Philippines Exploration, Inc.
➔ The shipment arrived at the Port of Manila and was discharged to the custody of the Customs Arrastre Service, the unit of
the Bureau of Customs handling the arrastre operations.
➔ The Customs Arrastre Service, later, delivered to the broker of the consignee 3 cases only.
➔ Thus, Mobil filed a suit against the Customs Arrastre Service and the Bureau of Customs to recover the value of the
undelivered case.
➔ The defendants filed a motion to dismiss on the ground that it cannot be sued as per the law.
➔ The Court, then, dismissed the complaint on the ground that neither the Customs Arrastre Service nor the Bureau of Customs
is suable. Thus, this petition.
Issue: W/N Custom Arrastre Service may be sued.
Held: No. First of all, the Bureau of Customs, acting as part of the machinery of the National Government in the operation of the
arrastre service, pursuant to express legislative mandate and as a necessary incident of its prime governmental function, is immune
from suit, there being no statute to the contrary.
Further, although the said arrastre function may be deemed proprietary, such function is a necessary incident of the primary and
governmental function of the Bureau of Customs, so that engaging in the same does not necessarily render said Bureau liable to
suit. For otherwise, it could not perform its governmental function without necessarily exposing itself to suit. Sovereign immunity
granted as to the end, should not be denied as to t he necessary means to that end.
Doctrine: The fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result
in its being suable. If said non-governmental function is undertaken as an incident to its governmental function, there is no waiver
thereby of the sovereign immunity from suit extended to such government entity.
What is its function?

The Bureau of Customs has no personality of its own, apart from that of the national government. Its primary function is
governmental as it assesses and collects lawful revenues from imported articles and all other tariff and custom duties, fees,
charges, fines, and penalties. To this function, arrastre service is a necessary incident.
25

How many percent of its function is governmental?
0%
To be sued, a defendant in a civil suit must be?

➔ A natural person
➔ A juridical person
➔ An entity authorized by law to be sued
Civil Aeronautics Administration vs. CA

G.R. No. L-51808. November 8, 1988
Facts:
➔ Private respondent, Ernest E. Simke, is a naturalized Filipino citizen and at the time of the incident was the Honorary Consul
General of Israel in the Philippines.
➔ Simke, with several other persons, went to the Manila International Airport to meet his future son-in-law. In order to get a
better view, their group proceeded to the viewing deck or terrace of the airport.
➔ While walking on the terrace, Simke slipped over an elevation. As a result, he broke his thigh bone.
➔ After his operation, Simke filed an action for damages based on quasi-delict against the Civil Aeronautics Administration
(CAA) as the entity empowered to administer, operate, manage, control, maintain, and develop the Manila International
Airport.
➔ Judgment was rendered in favor of Simke. However, CAA’s motion to reconsideration on the ground of immunity of suit,
was denied by the trial court.
Issue: W/N CAA may be sued.
Held: Yes.
➔ Executive Order No. 365 – The law prevailing in the 1952 Teodoro case, which reorganized the CAA; thus, abolishing the
National Airports Corporation.
➔ Republic Act No. 776 – Or the Civil Aeronautics Act of the Philippines, did not alter the character of CAA’s objectives under
Executive Order No. 365, which led the Court to consider the CAA in the category of a private entity.
➔ From the foregoing, it can be seen that CAA is tasked with private or non-governmental functions which operate to remove
it from the purview of the rule on State Immunity from suit.
➔ Not all government entities, whether corporate or non-corporate, are immune from suits. Immunity from suit is determined
by the character of the objects for which the entity was organized.
➔ Suits against State agencies with relation to matters in which they have assumed to act in private or non-governmental
capacity, and various suits against certain corporations created by the State for public purposes, but to engage in matters
partaking more of the nature of ordinary business rather than a governmental or political character, are not regarded as
suits against the State.
Doctrine: If the power to sue and be sued has been granted without qualification, it can include a claim based on tort or quasi-
delict. Immunity from suit is determined by the character of the objects for which the entity was organized.
National Airports vs. Teodoro, Sr. – In this case, the Court held otherwise, stating that it can include a claim based on tort or quasi-
delict. Further, it was settled that CAA, as an agency, is not immune from suit as it is engaged in functions pertaining to a private
entity. To state, “CAA is engaged in an enterprise which, far from being the exclusive prerogative of the State, may, more than the
construction of public roads, be undertaken by private concerns.”
Can the CAA answer to damages?

Yes. The liability of CAA to answer for damages, whether actual, moral, or exemplary, cannot be seriously doubted in view of the
conferment of the power to sue and be sued upon it.
26

Air Transportation Administration vs. Sps. David
G.R. No. 159402. February 23, 2011
Facts:
➔ Sps. Ramos discovered that a portion of their land was being used as part of the runway and running shoulder of the Loakan
Airport, which was being operated by the Air Transportation Office (ATO).
➔ Subsequently, Sps. Ramos agreed to sell such property to ATO for a certain consideration.
➔ However, ATO failed to pay.
➔ Thus, Sps. Ramos filed an action for collection against ATO and some of its officials with the RTC.
➔ In their answer, ATO invoked as an affirmative defense the issuance of Proclamation No. 1358, whereby President Marcos
had reserved certain parcels of land for the use of the Loakan Airport—which unfortunately included Sps. Ramos land.
Further, ATO asserted that the RTC has no jurisdiction.
Issue: W/N the Doctrine of State Immunity be extended to ATO.
Held: No. In the previous case of Civil Aeronautics Association vs. CA, it was upheld that not all government entities, whether
corporate or non-corporate, are immune from suits. Immunity from suit is determined by the character of the objects for which
the entity was organized.
Suits against State agencies with relation to matters in which they have assumed to act in private or non-governmental capacity,
and various suits against corporation created by the State for public purposes, but to engaged in matters partaking more of the
nature of ordinary business rather than functions of a governmental or political character, are not regarded as suits against the
State.
In this case, ATO, as an agency of the Government not performing a purely governmental or sovereign function, but was instead
involved in the management and maintenance of the Loakan Airport, an activity that was not the exclusive prerogative of the
State in its sovereign capacity. Hence, ATO had no claim to the State’s Immunity from suit. Hence, the Doctrine of State Immunity
cannot be successfully invoked to defeat a valid claim for compensation arising from taking without just compensation and
without proper expropriation proceedings.
Republic Act No. 9497 – The Civil Aviation Authority Act of 2008 rendered the issue of whether or not ATO could be sued without
the State’s consent moot. Under its transitory provisions, RA 9497 was established in place of the ATO the Civil Aviation Authority
of the Philippines, which thereby assumed all of ATO’s powers, duties and rights, assets, real and personal properties, funds, and
revenues. With the CAAP having legally succeeded ATO, the obligations of ATO had incurred by virtue of deed of sale with the
Ramos spouses might now be enforced against the CAAP.
Doctrine: The Doctrine of State Immunity is not an instrument for perpetrating any injustice on a citizen.
Practical considerations for the immunity of suit according to Justice Holmes – 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. Practical considerations dictate the establishment of an immunity from
suit in favor of the State. Otherwise, if the State is suable at the instance of every other individual, government service may be
severely obstructed and public safety endangered because of the number of suits that the State has to defend against it.
Mun. of San Fernando vs. Firme

G.R. No. 52179. April 8, 1991
Facts:
➔ A collision occurred involving a passenger jeepney and a dump truck owned by the Municipality of San Fernando.
➔ Due to the impact, several passengers of the jeepney died, some sustained injuries, while others suffered physical injuries.
➔ Thus, the private respondent-victims filed a complaint for damages against the driver and owner of the jeepney.
➔ However, the said driver and owner of the jeepney filed a third party complaint against the Municipality of San Fernando
and the driver of the dump truck.
Issue: W/N the respondent court committed GADALEJ when it deferred and failed to resolve the defense of non-suability of the
State amounting to lack of jurisdiction in a motion to dismiss.
Held: The respondent judge did not commit grave abuse of discretion when in the exercise of its judgment it arbitrarily failed to
resolve the issue of non-suability of the State. However, said judge acted in excess of his jurisdiction when he held the
Municipality liable for the quasi-delict committed by its employee.
Express consent may be embodied in a general law or a special law. The standing consent of the State to be sued in case of
money claims involving liability arising from contracts is found in Act No. 3083. A special law may be passed to enable a person
to sue the government for an alleged quasi-delict. Consent is implied when the government enters into business contracts,
27

thereby descending to the level of the other contracting party, and also when the State files a complaint, thus opening itself to a
counterclaim.
Municipal corporations are agencies of the State when they are engaged in governmental functions and therefore should enjoy
the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their
charter provided that they can sue and be sued. Municipal corporations 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 character. 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.
In this case, 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.
Thus, the driver of the dump truck was performing duties or tasks pertaining to his office. This Court arrived at the conclusion
that the municipality cannot be held liable for torts committed by its regular employee, who was then engaged in the discharge
of governmental functions.
Doctrine: 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 character.
What is the function involved?

The driver in this case was performing his duties/tasks in the discharge of his governmental functions.
What is the primary consideration?

The primary consideration is the absence of any evidence to the contrary. If there is no evidence, there is a presumption that
there was regularity in the performance of official duty.
In incorporated agencies, will courts only look at the charter?

Yes, its suability depends upon whether its own organic act, specifically when it provides that it can sue and be sued in Court.
What do they need to look at in determining the liability of the government?

The Courts need to look into the function to determine the suability, and the charter as well, regardless of function.
Is it liable if it acts thru a special agent?

No. The State is generally not liable for torts committed by their agents in the discharge of governmental functions. However, as
an exception, if it can be shown that they were acting in a proprietary character, the State may be sued for the acts of their agents.
What is the suability of an unincorporated government office?

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

G.R. No. L-61744. June 25, 1984
Facts:
➔ Margarita Imperio filed a case against the Municipality of San Miguel and ordered the partial revocation of the Deed of
Donation signed by the deceased Carlos Imperio in favor of the Municipality of San Miguel.
➔ Further, Margarita ordered the Municipality of San Miguel to execute the corresponding Deed of Reconveyance and to pay
them on the proportion mentioned, which corresponds to the rentals it has collected from the occupants for their use and
occupation from 1970 to 1975.
➔ When the judgment became final, the Municipality filed an appeal, but it was dismissed due to failure to file on time.
➔ Later, the Municipality filed a Motion to Quash the writ of execution on the ground that the municipality’s property or funds
are all public funds exempt from execution. However, it was also denied.
Issue: W/N the funds of the Municipality of San Miguel exempt from execution for the satisfaction of the money judgment.
28

Held: Yes. Public funds are not subject to levy and execution as they are held in trust for the people, intended and used for the
accomplishment of the purposes for which municipal corporations are created, and that to subject said properties and public
funds to execution would materially impede, even defeat and in some instances destroy the said purpose.
Public property, taxes, and public revenues of such corporations cannot be seized under execution, either in the treasury or when
in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of the officers of the law, are not
subject to execution unless so declared by statute.
In this case, it is clear that all the funds of the petitioner-municipality in the possession of the Municipal Treasurer, as well as those
in the possession of the Provincial Treasurer, are also public funds and as such they are exempt from execution.
Presidential Decree No. 477 – Local government financial affairs, transactions, and operations shall be governed by the
fundamental principles set forth hereunder:
(a) 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 the Sangguniang
Bayan before any money of the Municipality may be paid out.
In this case, it has not been shown that the Sangguniang Bayan has passed an ordinance to this effect.
Doctrine: Public funds are not subject to levy and execution; thus, taxes are not subject to execution, unless so declared by statute.
Mun. of Makati vs. CA

G.R. No. 89898-99. October 1, 1990
Facts:
➔ A bank account was opened with PNB under the name of the Municipality of Makati.
➔ After due hearing, where the parties presented their appraisal reports regarding the value of the property, the RTC Judge
rendered a decision which fixed the appraised value of the property at P5,291,666 and ordering the Municipality to pay this
amount minus the advance payment of P338,160, which was earlier released to the private respondent.
➔ After this decision became final and executory, private respondent moved for the issuance of a writ of execution, which the
RTC Judge granted. Thus, a Notice of Garnishment was served by the respondent sheriff upon the manager of PNB.
➔ However, the respondent sheriff was informed that a hold code was placed on the account of the Municipality of Makati. As
a result, private respondent filed a motion directing PNB to deliver to respondent sheriff the unpaid balance of the
Municipality of Makati.
➔ Petitioner filed a motion for reconsideration, contending that its funds deposited with PNB could neither be garnished nor
levied upon execution, for to do so would result in the disbursement of public funds without the proper appropriation
required under the law.
Issue: W/N the funds of the Municipality of Makati exempt from garnishment and levy upon execution.
Held: Yes. The properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and
sold at execution sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licenses, and
market fees, which are intended primarily and exclusively for the purpose of financing the governmental activities and functions
of the municipality, are exempt from execution.
In this case, the Municipality has passed an ordinance appropriating from its public funds an amount corresponding to the balance
due under the RTC decision.
OTHER LEGAL RECOURSE

Where 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.
Doctrine: The State’s power of eminent domain should be exercised within the bounds of fair play and justice. Thus, it cannot
hide behind the mantle of the doctrine of State Immunity for such acts of injustice.
29

City of Caloocan vs. Judge Allarde
G.R. No. 107271. September 10, 2003
Facts:
➔ Samson, Mayor of Caloocan, through Ordinance No. 1749, abolished the position of Assistant City Administrator and 17
other positions from the plantilla of the local government of Caloocan.
➔ Then Assistant City Administrator, Santiago, assailed the legality of the abolition. The CFI declared the abolition illegal and
ordered the reinstatement of the dismissed employees and the payment of their backwages.
➔ The City of Caloocan appealed to the CA, but Santiago and the others moved for the dismissal for being dilatory and
frivolous. But the appellate court denied their motion. Thus, when it was elevated to the SC, the SC stated that the decision
was correct.
➔ Thus, the City of Caloocan paid Santiago P75,083.37 in partial payment of her backwages, leaving a balance of P530,761.91.
While, her other co-complainants were paid in full.
➔ A year later, the City of Caloocan appropriated funds for her unpaid back salaries. It was included in Supplemental Budget
No. 3 for the fiscal year 1987. However, the City refused to release the money to Santiago.
Issue: W/N Santiago may recover from the City of Caloocan.
Held: Yes. As a general rule, all government funds deposited in PNB or any other official depositary of the Philippine Government,
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 required by law. Further, 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, as an exception, when there is a corresponding appropriation as required by law, the rule on immunity of public funds
from seizure or garnishment does not apply.
In this case, the City Council of Caloocan has already approved and passed Ordinance No. 0134, Series of 1992, allocating the
amount of P439,377.14 for Santiago’s back salaries plus interest. For all intents and purposes, the above-mentioned ordinance
for Santiago was deemed automatically segregated from the other budgetary allocations of the City of Caloocan and earmarked
solely for the City’s monetary obligation to her.
Doctrine: Immunity of public funds from seizure or garnishment does not apply where the funds sought to be levied under
execution are already allocated by law specifically for the satisfaction of the money judgment against the government.
30


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4 State Immunity

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POLITICAL LAW REVIEW

Article XVI – General Provisions

Section 3. The State may not be sued without its consent.

Sanders vs. Veridiano

EFFECT IN CASE THE TRIAL WILL PROCEED

JUSTIFICATION OF THE DOCTRINE

POLI RECIT Qs / STATE IMMUNITY

JURISPRUDENCE CITED IN THE CASE

Republic of the Philippines vs. Sandoval

POLI RECIT Qs / STATE IMMUNITY

Some instances when a suit against the State is proper are:

POLI RECIT Qs / STATE IMMUNITY

What are the legal bases?

Is the Doctrine of State Immunity applicable to foreign States? On what ground?

Is it absolute that the State cannot be sued?

POLI RECIT Qs / STATE IMMUNITY

The powers of a municipal corporation are two-fold in character:

Rules regarding Suits against Government agencies:

Are there actions that can be filed against the State?

Are these actions conclusive?

How can the State give its consent?

Are the acts of the President considered implied consent?

POLI RECIT Qs / STATE IMMUNITY

Festejo vs. Fernando

Do we follow specific procedures?

POLI RECIT Qs / STATE IMMUNITY

U.S. vs. Guinto

POLI RECIT Qs / STATE IMMUNITY

WAIVER OF STATE IMMUNITY

RESTRICTIVE THEORY OF STATE IMMUNITY

SUABILITY IS NOT SYNONYMOUS WITH LIABILITY

POLI RECIT Qs / STATE IMMUNITY

Veterans Manpower vs. CA

POLI RECIT Qs / STATE IMMUNITY

What are the two kinds of express consent?

Is a memorandum of agreement an express waiver?

Merritt vs. Government of the Philippine Islands

POLI RECIT Qs / STATE IMMUNITY

What is Act No. 2457?

➔ Act No. 2457, effective February 3, 1915, reads:

What incident is involved?

Can general law be used by any person?

POLI RECIT Qs / STATE IMMUNITY

Does Act No. 3083 create a cause of action?

What is the exception to this Rule?

What is the effect of Act No. 3083?

When is there an implied waiver?

Does the State waive its immunity by entering into a contract?

POLI RECIT Qs / STATE IMMUNITY

Amigable vs. Cuenca

Republic vs. Sandiganbayan

POLI RECIT Qs / STATE IMMUNITY

Issue: W/N the PCGG immune from suit?

Doctrine: Suability vs. Liability

POLI RECIT Qs / STATE IMMUNITY

What’s the difference between suability and liability?

While the question of liability?

POLI RECIT Qs / STATE IMMUNITY

POLI RECIT Qs / STATE IMMUNITY

Is an arbitration clause in a contract an implied waiver?

Does China National Machinery have immunity from suit?

Republic vs. Feliciano

POLI RECIT Qs / STATE IMMUNITY