STSTATE IMMUNITY FROM SUIT allowances of military and civilian personnel and
for maintenance and operations of the AFP.
1. Republic v. Villasor, 54 SCRA 83
G.R. No. L-30671 November 28, 1973 acting in excess of jurisdiction with grave abuse of
Facts:
On July 7, 1969, a decision was rendered in
Special Proceedings No. 2156-R infavor of
respondents P.J. Kiener Co., Ltd., Gavino Unchuan,
and International Construction Corporation and
against petitioner confirming the arbitration
award in the amount of P1,712,396.40. The award
is for the satisfaction of a judgment against the
Phlippine Government. On June 24, 1969,
respondent Honorable Guillermo Villasor issued an
Order declaring the decision final and executory.
Villasor directed the Sheriffs of Rizal Province,
Quezon City as well as Manila to execute said
decision. The Provincial Sheriff of Rizal served
Notices of Garnishment with several Banks,
especially on Philippine Veterans Bank and PNB.
The funds of the Armed Forces of the Philippines
on deposit with Philippine Veterans Bank and PNB
are public funds duly appropriated and allocated
for the payment of pensions of retirees, pay and
Petitioner, on certiorari, filed prohibition
proceedings against respondent Judge Villasor for
discretion amounting to lack of jurisdiction in
granting the issuance of a Writ of Execution against
the properties of the AFP, hence the notices and
garnishment are null and void.
Issue:
Whether or not the Writ of Execution issued by
Judge Villasor valid?
Decision:
No.
What was done by respondent Judge is not in
conformity with the dictates of the Constitution. It
is a fundamental postulate of constitutionalism
flowing from the juristic concept of sovereignty
that the stateas well as its government is immune
from suit unless it gives its consent. A sovereign is
exempt from suit, not because of any forma
conception or obsolete theory, but on the logical
and practical ground that there can be no legal
right as against the authority that makes the law
on which the right depends. The State may not be
sued without its consent. A corollary, both dictated
by logic and sound sense from a basic concept is
that public funds cannot be the object of a
garnishment proceeding even if the consent to be
sued had been previously granted and the state
liability adjudged. The universal rule that where
the State gives its consent to be sued by private
parties either by general or special law, it may limit
claimant’s action only up to the completion of
proceedings anterior to the stage of execution and
that the power of the Courts ends when the
judgment is rendered, since the government funds
and properties may not be seized under writs of
execution or garnishment to satisfy such
judgments, is based on obvious considerations of
public policy. Disbursements of public funds must
be covered by the corresponding appropriation as
required by law. The functions and public services
rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects, as
appropriated by law.
2. Lasco vs. UNRFNRE
G.R. Nos. 109095-109107 February 23, 1995
FACTS:
Petitioners filed a complaint for illegal
dismissal and damages after being dismissed from
their employment with the United Nations
Revolving Fund for Natural Resources Exploration
(UNRFNRE) which was involved in a joint project
of the Philippine Government and the United
Nations for exploration work in Dinagat Island.
The UNRFNRE filed a Motion to Dismiss and
alleged that respondent Labor Arbiter had no
jurisdiction over its personality since
the UNRFNRE enjoyed diplomatic immunity
pursuant to the 1946 Convention on the Privileges
and Immunities of the United Nations.
The respondent attached a letter from the
Department of Foreign Affairs acknowledging its
immunity from suit, prompting the Labor Arbiter
to issue an order dismissing the complaints.
Petitioners filed a motion for reconsideration
which was denied.
ISSUE:
 Did the private respondent waive its character to which the specialized agency is a
diplomatic immunity when it engaged in party."
exploration work and entered into a contract of
employment with the petitioners?
HELD:
No.
The Supreme Court dismissed the petition,
stating that the presence of the private respondent
in the Philippines was not because of a commercial
venture but because of a joint project entered into
by the Philippine Government and the United
Nations for mineral exploration in Dinagat Island.
The mission of the UNRFNRE was not to exploit
our natural resources and gain monetarily but to
help improve the quality of life of the people which
included that of the petitioners.
However, this is not to say that petitioner
have no recourse. Section 31 of the Convention on 3. SEAFDEC v. NLRC, 241 SCRA 580
the Privileges and Immunities of the Specialized
Agencies of the United Nations states that "each
specialized agency shall make a provision for FACTS: SEAFDEC-AQD is a department of an
appropriate modes of settlement of: (a) disputes international organization, the Southeast Asian
arising out of contracts or other disputes of private Fisheries Development Center, organized through
an agreement in 1967 by the governments of
Malaysia, Singapore, Thailand, Vietnam, Indonesia
and the Philippines with Japan as the sponsoring
country.
Juvenal Lazaga was employed as a Research
Associate on a probationary basis by SEAFDEC-
AQD. Lacanilao in his capacity as Chief of
SEAFDEC-AQD sent a notice of termination
to Lazaga informing him that due to the financial
constraints being experienced by the department,
his services shall be terminated. SEAFDEC-AQD's
failure to pay Lazaga his separation pay forced him
to file a case with the NLRC.  The Labor Arbiter and
NLRC ruled in favor of Lazaga. Thus SEAFDEC-AQD
appealed, claiming that the NLRC has no
jurisdiction over the case since it is immune from
suit owing to its international character and the
complaint is in effect a suit against the State which
cannot be maintained without its consent.
ISSUES:  leading authority "they must be deemed to possess
1. Does the NLRC have jurisdiction over SEAFDEC-
AQD?
2. Is SEAFDEC-AQD estopped for its failure to raise
the issue of jurisdiction at the first instance?
HELD:
1. SEAFDEC-AQD is an international agency
beyond the jurisdiction of public respondent NLRC.
Being an intergovernmental organization,
SEAFDEC including its Departments (AQD), enjoys
functional independence and freedom from control
of the state in whose territory its office is located.
Permanent international commissions and
administrative bodies have been created by the
agreement of a considerable number of States for a
variety of international purposes, economic or
social and mainly non-political. In so far as they are
autonomous and beyond the control of any one
State, they have a distinct juridical personality
independent of the municipal law of the State
where they are situated. As such, according to one
a species of international personality of their own."
One of the basic immunities of an international
organization is immunity from local jurisdiction,
i.e., that it is immune from the legal writs and
processes issued by the tribunals of the country
where it is found. The obvious reason for this is
that the subjection of such an organization to the
authority of the local courts would afford a
convenient medium thru which the host
government may interfere in their operations or
even influence or control its policies and decisions
of the organization; besides, such subjection to
local jurisdiction would impair the capacity of such
body to discharge its responsibilities impartially
on behalf of its member-states.
2. Respondent Lazaga's invocation of estoppel with
respect to the issue of jurisdiction is unavailing
because estoppel does not apply to confer
jurisdiction to a tribunal that has none over a cause
of action. Jurisdiction is conferred by law. Where
there is none, no agreement of the parties can
provide one. Settled is the rule that the decision of
a tribunal not vested with appropriate jurisdiction
is null and void.
4. ERNESTO CALLADO vs. INTERNATIONAL
RICE RESEARCH INSTITUTE (IRRI)
G.R. No. 106483 May 22, 1995
Facts:
Ernesto Callado, petitioner, was employed as
a driver at the IRRI. One day while driving an IRRI
vehicle on an official trip to the NAIA and back to
the IRRI, petitioner figured in an accident.
Petitioner was informed of the findings of a
preliminary investigation conducted by the IRRI's
Human Resource Development Department
Manager. In view of the findings, he was charged
with: (1) Driving an institute vehicle while on
official duty under the influence of liquor; (2)
Serious misconduct consisting of failure to report
to supervisors the failure of the vehicle to start
because of a problem with the car battery, and (3)
Gross and habitual neglect of duties.
Petitioner submitted his answer and
defenses to the charges against
him. However,  IRRI issued a Notice of Termination
to petitioner. Thereafter, he filed a complaint
before the Labor Arbiter for illegal dismissal, illegal
suspension and indemnity pay with moral and
exemplary damages and attorney's fees.
IRRI wrote the Labor Arbiter to inform him that
the Institute enjoys immunity from legal process
by virtue of Article 3 of Presidential Decree No.
1620, 5 and that it invokes such diplomatic
immunity and privileges as an international
organization in the instant case filed by petitioner,
not having waived the same. While admitting
IRRI's defense of immunity, the Labor Arbiter,
nonetheless, cited an Order issued by the Institute
to the effect that "in all cases of termination,
respondent IRRI waives its immunity," and,
accordingly, considered the defense of immunity
no longer a legal obstacle in resolving the case.
The NLRC found merit in private respondent's
appeal and, finding that IRRI did not waive its
immunity, ordered the aforesaid decision of the
Labor Arbiter set aside and the complaint
dismissed.
In this petition petitioner contends that the
immunity of the IRRI as an international
organization granted by Article 3 of Presidential
Decree No. 1620 may not be invoked in the case at
bench inasmuch as it waived the same by virtue of
its Memorandum on "Guidelines on the handling of
dismissed employees in relation to P.D. 1620."
Issue: whether or not (IRRI) waive its immunity
from suit in this dispute which arose from an
employer-employee relationship?
Held:  No.
P.D. No. 1620, Article 3 provides: Art. 3. Immunity
from Legal Process. The Institute shall enjoy
immunity from any penal, civil and administrative
proceedings, except insofar as that immunity has
been expressly waived by the Director-General of the
Institute or his authorized representatives.
The SC upholds the constitutionality of the
aforequoted law. There is in this case "a categorical
recognition by the Executive Branch of the
Government that IRRI enjoys immunities accorded
to international organizations, which
determination has been held to be a political
question conclusive upon the Courts in order not
to embarass a political department of Government.
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 as in the case
at bar, 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 or
other officer acting under his direction.
The raison d'etre for these immunities is the
assurance of unimpeded performance of their
functions by the agencies concerned. The grant of
immunity to IRRI is clear and unequivocal and an
express waiver by its Director-General is the only
way by which it may relinquish or abandon this
immunity. In cases involving dismissed employees,
the Institute may waive its immunity, signifying
that such waiver is discretionary on its part.
5. Begosa v. PVA
G.R. No. L-25916. April 30, 1970
Facts:
Plaintiff sought the aid of the judiciary to
obtain the benefits to which he believed he was
entitled under the Veterans’ Bill of Rights.
He filed his claim for disability pension on March
4, 1955 but was erroneously disapproved on June
21, 1955 due to his dishonorable discharge from
the army.
The Board of Administrators of PVA finally
approved his claim on September 2, 1964, entitling
him with a pension of P30 a month, to take effect
on October 5 of that year. Believing that his
pension should have taken effect back in 1955
when his claim was disapproved, and that he is
entitled to a higher pension of P50 (RA No. 1362
amending Section 9 of RA No. 65) as a permanently
incapacitated person, which was increased toP100
a month when RP 1362 was amended by RA
No. 1920 on June 22, 1957, Begosa filed a case
against PVA in the Court of First Instance.
CFI ruled in favor plaintiff. Defendants
claim that the plaintiff has not exhausted all
administrative remedies before resorting to funds for the benefit of plaintiff. Also, where there
court action and that the plaintiff’s claim is in is a stipulation of facts, the question before the
reality a suit against lower court being s o l e l y o n e o f l a w a n d o n
t h e   G o v e r n m e n t   w h i c h   cannot be entertained  t h e f a c e o f t h e d ec i s i o n , t h e a c t u a t i o n o f
by the Court for lack of jurisdiction because the a p p e l l a n t s b e i n g patently illegal, the doctrine
Government has not given its consent. of exhaustion of administrative remedies certainly
does not come into play.
Issue:
WON the SC can entertain the suit against PVA.

Held:
Yes.
Where a litigation may have adverse
consequences on the public treasury, whether in
the disbursements of funds or loss of property, the 6. Del Mar v. PVA
public official proceeded against not being liable
G.R. L-27299 June 27, 1973
in his personal capacity, then the doctrine of
non-suitability may appropriately be invoked. Facts:
Del Mar, the petitioner, was was relieved
with honorable discharge with permanent total
However, it has no application where the suit
physical disability. Philippine Veterans
against such a functionary had t o b e i n s t i t u t e d
administration granted him pension but was soon
because of his failure to comply with the
discontinued because he received the same
d u t y i m p o s e d b y statute appropriating public
pension under the United States Veterans
Administration.
Issue:
The PVA decided that:
(1) Petitioner is barred from receiving any pension
from the Philippine Veterans Administration.
“The PVA reiterated its contention that del Mar’s
receipt of a similar pension from the United States
Government effectively barred him from claiming
and receiving from the Philippine Government the
monthly life pension granted him as well as the
monthly allowances he claimed for his five living
unmarried minor children below eighteen years of
age.”
(2) The filing of the case is premature.
“the action of del Mar was premature because of his
failure to exhaust administrative remedies before
invoking judicial intervention”
(3) The case is a suit against the state.
“the court a quo was without jurisdiction to try the
case as del Mar demand partakes of a money claim
against the PVA — a mere agency of the Philippine
Government — and, in effect, of a suit against the
Government which is not suitable without its
consent.”
(4) It was discretionary on the part of PVA to
discontinue pension.
Held: (1) When a case is a suit against the state:
“As a general proposition, the rule — well-settled in
this jurisdiction — on the immunity of the
Government from suit without its consent holds true
in all actions resulting in “adverse consequences on
the public treasury, whether in the disbursements of
funds or loss of property.”
(2) Suits against the state must be dismissed
(3) When a case is not a suit against the state:
“where a claimant institutes an action against a
functionary who fails to comply with his statutory
duty to release the amount claimed from the public
funds already appropriated by statute for the
benefit of the said claimant.”
(4) The case is not premature. Administrative
liability is not required.
“Suffice it to state that where a case as in the
present controversy — involves a question solely of
a legal nature, there arises no need for the litigant
to resort to all administrative remedies available to
him before seeking judicial relief.”
(5) The act committed by the PVA, in suspending a
provision of law, is against the constitution.
“… the Constitution limits the authority of the
President, in whom all executive power resides, to
take care that the laws be faithfully executed. No
lesser administrative executive office or agency
then can, contrary to the express language of the
Constitution, assert for itself a more extensive
prerogative. Necessarily, it is bound to observe the
constitutional mandate. There must be strict
compliance with the legislative enactment. Its
terms must be followed. The statute requires
adherence to, not departure from, its provisions.
No deviation is allowable.”
7. Veterans Manpower v. CA
G.R. No. 91359, September 25, 1992
FACTS:
Veterans Manpower and Protective Services,
Inc. (VMPSI) alleges that the provisions under
Section 4 and 17 of Republic Act No. 5487 or the
Private Security Agency Law violate the 1987
Constitution against monopolies, unfair
competition and combinations in restraint of trade,
and tend to favor and institutionalize the
Philippine Association of Detective and Protective
Agency Operators, Inc. (PADPAO) which is
monopolistic because it has an interest in more
than one security agency.
Respondent VMPSI likewise questions the
validity of paragraph 3, subparagraph (g) of the
Modifying Regulations on the Issuance of License
to Operate and Private Security Licenses and
Specifying Regulations for the Operation of
PADPAO issued by then PC Chief Lt. Gen. Fidel V.
Ramos, through Col. Sabas V. Edades, requiring
that “all private security agencies/company
security forces must register as members of any
PADPAO Chapter organized within the Region
where their main offices are located...”. As
such membership requirement in PADPAO is
compulsory in nature, it allegedly violates legal and
constitutional provisions against monopolies,
unfair competition and combinations in restraint
of trade.
 A Memorandum of Agreement was executed
by PADPAO and the PC Chief, which fixed the
VMPSI made a request letter to the PC Chief
minimum monthly contract rate per guard for
to set aside or disregard the findings of PADPAO
eight (8) hours of security service per day at
and consider VMPSI’s application for renewal of its
P2,255.00 within Metro Manila and P2,215.00
license, even without a certificate
outside of Metro Manila.
of membership from PADPAO.

Odin Security Agency (Odin) filed a ISSUE:

complaint with PADPAO accusing VMPSI of cut-
throat competition by undercutting its contract
rate for security services rendered to the
Metropolitan Waterworks and Sewerage System
(MWSS), charging said customer lower than the
standard minimum rates provided in
the Memorandum of Agreement dated May 12,
1986.
PADPAO found VMPSI guilty of cut-throat
competition, hence, the PADPAO Committee on
Discipline recommended the expulsion of VMPSI
from PADPAO and the cancellation of its license to
operate a security agency. The PC-SUSIA affirmed
the findings and likewise recommended
the cancellation of VMPSI’s license. As a result,
PADPAO refused to issue a clearance/certificate
of membership to VMPSI.
Whether or not VMPSI’s complaint against
the PC Chief and PC-SUSIA is a suit against the
State without its consent.
HELD:
Yes.
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, however, since the acts for which the
PC Chief and PC-SUSIA are being called to account
in this case, were performed as part of their official
duties, without malice, gross negligence, or bad
faith, no recovery may be had against them in their
private capacities. Furthermore, the Supreme
Court agrees with the Court of Appeals that
the Memorandum of Agreement dated May 12,
1986 does not constitute an implied consent by the
State to be sued. The consent of the State to be
sued must emanate from statutory authority,
hence, a legislative act, not from a deputy sheriff to serve the writ of execution was
mere memorandum. Without such consent, the
trial court did not acquired jurisdiction over the
public respondents. Petition for review is denied
and the judgment appealed from is affirmed in
toto.
8. PNB v. CIR
81 SCRA 314
Facts:
Petitioner’s motion to quash a notice of
garnishment was denied for lack of merit. What
was sought to be garnished was the money of the
People's Homesite and Housing Corporation
deposited at petitioner's branch in Quezon City, to
satisfy a decision of respondent Court which had
become final and executory. A writ of execution
in favor of private respondent Gabriel V.
Manansala had previously been issued. He was the
counsel of the prevailing party, the United
Homesite Employees and Laborers Association.
The validity of the order assailed is challenged on
two grounds: (1) that the appointment
of respondent Gilbert P. Lorenzo as authorized
contrary to law and (2) that the funds subject of
the garnishment "may be public in character. "The
order of August 26, 1970 of respondent Court
denying the motion to quash, subject of this
certiorari proceeding, reads as follows: "The
Philippine National Bank moves to quash the
notice of garnishment served upon its branch in
Quezon City by the authorized deputy sheriff of
this Court. It contends that the service of the
notice by the authorized deputy sheriff of the court
contravenes Section11 of Commonwealth Act
No. 105, as amended which reads:" 'All writs and
processes issued by the Court shall be served and
executed free of charge by provincial or city
sheriffs, or by any person authorized by this Court,
in the same manner as writs and processes
of Courts of First Instance.' Following the law, the
Bank argues that it is the Sheriff of Quezon City,
and not the Clerk of this Court who is its Ex-Officio
Sheriff, that has the authority to serve the notice of
garnishment, and that the actual service by the
latter officer of said notice is therefore not
in order. The Court finds no merit in this argument.
Republic Act No. 4201 has, since June 19,
1965, already repealed Commonwealth Act No.
103, and under this law, it is now the Clerk of this
Court that is at the same time the Ex-Officio Sheriff.
As such Ex-Officio Sheriff, the Clerk of this Court
has therefore the authority to issue writs of
execution and notices of garnishment in an area
encompassing the whole of the country, including
Quezon City, since his area of authority
is coterminous with that of the Court itself, which
is national in nature. ... At this stage, the Court
notes from the record that the appeal to the
Supreme Court by individual employees of
PHHC which questions the award of attorney's fees
to Atty. Gabriel V. Manansala, has already been
dismissed and that the same became final and
executory on August 9, 1970. There is no longer
any reason, therefore, for withholding action in
this case. [Wherefore], the motion to quash filed by
the Philippine National Bank is denied for lack of
merit. The said Bank is therefore ordered to
comply within five days from receipt with the
'notice of Garnishment' dated May 6, 1970."
There was a motion for reconsideration filed
by petitioner, but in a resolution dated September
22, 1970, it was denied. Hence, this certiorari
petition.
Issue:
WON the funds mentioned may be garnished
Held:
No.
The SC decided in the case of National Shipyard and
Steel Corporation v. court of Industrial Relations 
explicitly stated in the opinion of the then Justice,
later Chief Justice, Concepcion: "The allegation to
the effect that the funds of the NASSCO are public
funds of the government, and that, as such,
the same may not be garnished, attached or levied
upon, is untenable for, as a government owned and
controlled corporation. The NASSCO has a
personality of its own, distinct and separate from
that of the Government. It has pursuant to Section
2 of Executive Order No. 356, dated October 23,
1950 ..., pursuant to which the NASSCO has been
established — 'all the powers of a corporation Then it can sue and be sued. Thereafter, its funds
under the Corporation Law ...' Accordingly, it may may be levied upon or garnished.
sue and be sued and may be subjected to court
processes just like any other corporation (Section
13, Act No. 1459), as amended.
"In a 1941 decision,Manila Hotel Employees
Association v. Manila Hotel  Company the SC also,
held: "On the other hand, it is well settled that
when the government enters into commercial
business, it abandons its sovereign capacity and is
to be treated like any other corporation. By
engaging in a particular rbusiness thru the
instrumentality of a corporation, the government
divests itself pro hac vice of its sovereign
character, so as to render the corporation subject 9. SSS v. CA 120 SCRA 707
to the rules of law governing private corporations.
"Both the Palacio and the Commissioner of Public FACTS:
Highways decisions, insofar as they reiterate the Spouses David and Socorro Cruz, applied
doctrine that one of the coronaries of the and granted a real estate loan by the SSS with
fundamental concept of non-suability is that residential lot located at Pateros, Rizal as
governmental funds are immune collateral. The spouses Cruz complied with their
from garnishment. It is an entirely different matter monthly payments. When delayed were incurred in
if, according to Justice Sanchez in Ramos v. Court of their monthly payments SSS filed a petition for
Industrial Relations, the office or entity is "possessed foreclosure of their real estate mortgage executed
of a separate and distinct corporate existence." by the spouses Cruz on the ground that the
spouses Cruz defaulted in payment, Pursuant for incident to a legal action. So that even assuming
these application for foreclosure notices were that the SSS, as it claims, enjoys immunity from suit
published on the second notice the counsel for as an entity performing governmental function, by
spouses Cruz sent a letter to SSS informing the virtue of the explicit provision of the aforecited
latter that his clients are up to date in their enabling law, the government must be deemed to
payment of the monthly amortization and the SSS have waived immunity in respect of the SSS,
should discontinued the publication of the notices although it does not thereby concede its liability
of foreclosure. This request remain unheaded, this that statutory law has given to the private citizen a
spouses Cruz filed an action for damages against remedy for the enforcement and protection of his
SSS before RTC in Rizal. SSS invoking its immunity rights. The SSS thereby has been required to
from suit being an agency of the government submit to the jurisdiction of the court; subject to its
performing government function. The trial court right to interpose any lawful defense.
and court of appeal nevertheless awarded damages
in favor of spouses Cruz which was affirmed by
court of appeal, Hence this petition.
ISSUE: Whether or not SSS is immune from suit.
HELD:
No.
The SSS has a distinct legal personality and it
can be sued for damages. The SSS does not enjoy
immunity from suit by express statutory consent. It
has corporate power separate and distinct from
the government. SSS own organic act specifically
provides that it can sue and be sued in court. These
words “sue and be sued” embrace all civil process

10. Rayo v. CFI of Bulacan
G.R. No. L-55273-83 December 19, 1981
FACTS:
At the height of the infamous typhoon
"Kading", the respondent opened simultaneously
all the three floodgates of the Angat Dam which
resulted in a sudden, precipitate and simultaneous
opening of said floodgates several towns in
Bulacan were inundated. The petitioners filed for
damages against the respondent corporation.
Petitioners opposed the prayer of the
respondents forn dismissal of the case and
contended that the respondent corporation is
merely performing a propriety functions and that
under its own organic act, it can sue and be sued in
court.
ISSUE:
W/N the respondent performs governmental
functions with respect to the management and
operation of the Angat Dam.
W/N the power of the respondent to sue and be
sued under its organic charter includes the power
to be sued for tort.
HELD:
The government has organized a private
corporation, put money in it and has allowed it to
sue and be sued in any court under its charter.
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 it can sue and
be sued in any court.

11. and 26. Malong v. PNR
Facts:
The Petitioners, Malong spouses alleged in their
complaint that on October 30, 1977 their son,
Jaime Aquino, a paying passenger, was killed when
he fell from a PNR train while it was between
Tarlac City and Capas. The said train was
overloaded with passengers and baggage in view
of the proximity of All Saints Day. The Malong
spouses prayed that the PNR be ordered to pay
them damages totalling P136,370.
The trial court dismissed the complaint, ruling that
it had no jurisdiction because the PNR, being a
government instrumentality, the action was a suit
against the State. The petitioners appealed to SC
pursuant to RA No. 5440.
Issue:
W/N the PNR is immune from suit?
Held:
NO.
Although the PNR is a government
instrumentality under Republic Act No. 4156, as
amended by Republic Act No. 6366 and
Presidential Decree No. 741, it was held that the
State divested itself of its sovereign capacity when
it organized the PNR which is no different from its
predecessor, the Manila Railroad Company. The
PNR did not become immune from suit. It did not
remove itself from the operation of articles 1732 to
1766 of the Civil Code on common carriers.
However, as held in precedents, the correct
rule is that "not all government entities, whether
corporate or non-corporate, are immune from
suits. Immunity from suit is determined by the
character of the” objectives “for which the entity
was organized.”
The Manila Hotel case also relied on the
following rulings: “By engaging in a particular
business through 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.”
Furthermore, it would be unjust if the heirs
of the victim of an alleged negligence of the PNR
employees could not sue the PNR for damages.
Like any private common carrier, the PNR is
subject to the obligations of persons engaged in
that private enterprise. It is not performing any
governmental function.
12. Jesus P. Disini v. The Hon.
Sandiganbayan, et. al.,
G.R. No. 180564; June 22, 2010
Facts:
On 16 February 1989, the Republic of the
Philippines (Republic) and Jesus P. Disini (Disini)
entered into an Immunity Agreement (the
Immunity Agreement) under which Disini
undertook to testify for the Republic and provide
its lawyers with the information, affidavits, and
documents they needed in its case against
Westinghouse Electric Corporation before the
United States District Court of New Jersey and in
the arbitration case that Westinghouse
International Projects Company and others filed
against the Republic before the International
Chamber of Commerce Court of Arbitration. Disini
worked for his second cousin, Herminio T. Disini
(Herminio), as an executive in the latter’s
companies from 1971 to 1984. The Republic
believed that the Westinghouse contract for the
construction of the Bataan Nuclear Power Plant,
brokered by one of Herminio’s companies, had
been attended by anomalies.
 In the Immunity Agreement, the Republic
guaranteed that, apart from the two Westinghouse
cases, it would not compel Disini to testify in any
other domestic or foreign proceeding brought by
the Republic against Herminio.
Disini complied with his undertaking but 18
years later, upon the Republic’s application, the
Sandiganbayan issued a subpoena against Disini,
commanding him to testify and produce
documents before that court in an action that the
Republic filed against Herminio. Disini moved to
quash the subpoena, invoking the Immunity
Agreement. The Sandiganbayan ignored the
motion and issued a new subpoena directing him
to testify before it.
Subsequently, the PCGG revoked and
nullified the Immunity Agreement insofar as it
prohibited the Republic from requiring Disini to
testify against Herminio. Later on, the
Sandiganbayan denied Disini’s motion to quash the
subpoena. Disini, thus, brought the matter to the
Supreme Court.
The Republic maintained that the PCGG’s
power to grant immunity under Section 5 of
Executive Order 14 covered only immunity from
civil or criminal prosecution and did not cover
immunity from providing evidence in court. The
Republic argued that Disini’s immunity from
testifying against Herminio contravened the state’s
policy to recover ill-gotten wealth acquired under
the regime of former President Marcos.
The Republic further argued that under the
last sentence of paragraph 3 of the Immunity
Agreement which reads: “Nothing herein shall
affect Jesus P. Disini’s obligation to provide truthful
information or testimony,” Disini, despite the
immunity given him against being compelled to
testify in other cases, was to “provide truthful
information or testimony” in such other cases.
For his part, Disini argued that the Republic,
through the PCGG, was estopped from revoking the
questioned immunity as it had made him believe
that it had the authority to provide such guarantee.
The Republic countered by invoking Section 15,
Article XI of the 1987 Constitution which provides
that “(t)he right of the State to recover properties
unlawfully acquired by public officials or
employees from them or from their nominees, or
transferees, shall not be barred by prescription,
laches or estoppel.”
Issues: (as defined by the Supreme Court):
(1) Whether or not the PCGG acted within its
authority when it revoked and nullified the
Immunity Agreement; and
(2) Whether or not the Sandiganbayan gravely
abused its discretion when it denied Disini’s
motion to quash the subpoena.
Held:
The language of Section 5, Executive Order
14 affords latitude to the PCGG in determining the
extent of the criminal immunity it may grant. It has
discretion to grant appropriate levels of criminal
immunity depending on the situation of the
witness and his relative importance to the
prosecution of ill-gotten wealth cases. It can even
agree, as in this case, to conditions expressed by
the witness as sufficient to induce cooperation.
Trusting in the Government’s honesty and fidelity,
Disini agreed and fulfilled his part of the bargain.
Surely, the principle of fair play, which is the
essence of due process, should hold the Republic
on to its promise. If Disini refuses to testify in those
other cases as ordered by Sandiganbayan, it was
certain to result in prosecution for criminal
contempt (a conduct directed against the authority
and dignity of the court or a judge acting judicially;
an act obstructing the administration of justice
which tends to bring the court into disrepute or
disrespect), punishable by a fine or imprisonment
or both. In criminal contempt, the proceedings are
regarded as criminal and the rules of criminal
procedure apply. The grant, therefore, of immunity
to Disini against being compelled to testify was
ultimately a grant of immunity from criminal
prosecution, something that fell within the express
coverage of the immunity given him. The
questioned immunity did not contravene the
state’s public policy respecting the recovery of
illegally acquired wealth under the regime of
former President Marcos. The authority that
adopted such policy, former President Corazon C.
Aquino, was the same authority that gave the PCGG
the power to grant immunity to witnesses whom it
might use to recover illegally acquired wealth
during that regime. In the case of Tanchanco vs.
Sandiganbayan, the Court regarded as valid and
binding on the government the immunity it gave
former National Food Authority Administrator,
Jesus Tanchanco, for all “culpable acts of his during
his service in the Marcos government,” which
would include possible prosecution for any illegal
wealth that he might himself have acquired during
that service. The Court did not regard such
immunity in contravention of the state policy on
recovery of ill-gotten wealth under the auspices of
the Marcos regime. The last sentence in paragraph
3 of the Immunity Agreement that enjoined Disini
to “provide truthful information or testimony,”
despite the guarantee not to be compelled to
testify against Herminio, merely emphasized the
fact that such concessions did not affect his
obligation to “provide truthful information or
testimony” in the two Westinghouse cases. The
grant of immunity to Disini against being
compelled to testify in “other cases” against
Herminio was quite clear and did not need any
interpretation. The estoppel Disini invoked did not
have the effect, if recognized, of denying the state
its right to recover whatever ill-gotten wealth
Herminio may have acquired under the Marcos
regime. The action against Herminio could
continue, hampered only by the exclusion of
Disini’s testimony. And there are other ways of
proving the existence of ill-gotten wealth. Although
the government cannot be barred by estoppel
based on unauthorized acts of public officers, such
principle cannot apply to this case since PCGG
acted within its authority when it provided Disini
with a guarantee against having to testify in other
cases. A contract is the law between the parties; it
cannot be withdrawn except by their mutual
consent. This applies with more reason in this case
where Disini already complied with the terms of
the Immunity Agreement. To allow the Republic to
revoke the Immunity Agreement at this late stage
would run afoul of the rule that a party to a
compromise cannot ask for a rescission after it had
enjoyed its benefits. The Court should not allow
the Republic, to put it bluntly, to double cross
Disini. The Immunity Agreement was the result of
a long drawn out process of negotiations with each
party trying to get the best concessions out of it.
The Republic did not have to enter into that
agreement; it was free not to. But when it did, it
needed to fulfill its obligations honorably as Disini
did. More than any one, the government should be
fair. PCGG’s revocation of the questioned immunity
and Sandiganbayan’s denial of Disini’s motion to
quash the subpoena were both annulled.
 13. and 22. Department of Agriculture
vs. NLRC
G.R. No. 104269, November 11, 1993
Facts:
Petitioner Department of Agriculture (DA)
and Sultan Security Agency entered into a contract
for security services to be provided by the latter to
the said governmental entity. Pursuant to
their arrangements,guards were deployed by
Sultan Security Agency in the various premises of
the DA. Thereafter, several guards filed a complaint
for underpayment of wages, nonpayment of 13th
month pay, uniform allowances, night shift
differential pay, holiday pay, and overtime pay, as
well as for damages against the DA and the
security agency.
The Labor Arbiter rendered a decision
finding the DA jointly and severally liable with the
security agency for the payment of
money claims of the complainant security guards.
The DA and the security agency did not appeal the
decision. Thus, the decision became final and
executory. The Labor Arbiter issued a writ of
execution to enforce and execute the judgment
against the property of the DA and the security
agency. Thereafter, the City Sheriff levied on
execution the motor vehicles of the DA.
Issue:
Whether or not the doctrine of non-suability
of the State applies in the case
Held:
The basic postulate enshrined in the
Constitution that “the State may not be sued
without its consent” reflects nothing less than a
recognition of the sovereign character of the State
and an express affirmation of the unwritten rule
effectively insulating it from the jurisdiction of
courts. It is based on the very essence of
sovereignty. A sovereign is exempt from suit based
on the logical and practical ground that there can
be no legal right as against the authority that
makes the law on which the right depends.
The rule is not really absolute for it does not say
that the State may not be sued under any
circumstances. The State may at times be sued. The
State’s consent may be given expressly or
impliedly. Express consent may be made through a performed any act proprietary in character.
general law or a special law. Implied consent, on
the other hand, is conceded when the State itself But, be that as it may, the claims of the
commences litigation, thus opening itself to a complainant security guards clearly constitute
counterclaim, or when it enters into a contract. In money claims. Act No. 3083 gives the consent of
this situation, the government is deemed to have the State to be sued upon any moneyed claim
descended to the level of the other contracting involving liability arising from contract, express or
party and to have divested itself of its sovereign implied. Pursuant, however, to
immunity. Commonwealth Act 327, as amended by PD 1145,
the money claim must first be brought to the
But not all contracts entered into by the Commission on Audit.
government operate as a waiver of its non-
suability; distinction must still be made between
one which is executed in the exercise of its
sovereign function and another which is done in its
proprietary capacity. A State may be said to have
descended to the level of an individual and can this
be deemed to have actually given its consent to be
sued only when it enters into business contracts. It
does not apply where the contract relates to the
exercise of its sovereign functions.

In the case, the DA has not pretended to have

assumed a capacity apart from its being
a governmental entity when it entered into the
questioned contract; nor that it could have, in fact,
 security forces must register as members of any
14. Veterans Manpower and Protective PADPAO Chapter organized within the Region
Services, Inc. v. CA where their main offices are located...”. As
G.R. No. 91359, September 25, 1992 such membership requirement in PADPAO is
compulsory in nature, it allegedly violates legal and
constitutional provisions against monopolies,
FACTS: unfair competition and combinations in restraint
of trade.
Veterans Manpower and Protective Services,
Inc. (VMPSI) alleges that the provisions under
Section 4 and 17 of Republic Act No. 5487 or the
A Memorandum of Agreement was executed
Private Security Agency Law violate the 1987
by PADPAO and the PC Chief, which fixed the
Constitution against monopolies, unfair
minimum monthly contract rate per guard for
competition and combinations in restraint of trade,
eight (8) hours of security service per day at
and tend to favor and institutionalize the
P2,255.00 within Metro Manila and P2,215.00
Philippine Association of Detective and Protective
outside of Metro Manila.
Agency Operators, Inc. (PADPAO) which is
monopolistic because it has an interest in more
than one security agency. Odin Security Agency (Odin) filed a
complaint with PADPAO accusing VMPSI of cut-
throat competition by undercutting its contract
Respondent VMPSI likewise questions the
rate for security services rendered to the
validity of paragraph 3, subparagraph (g) of the
Metropolitan Waterworks and Sewerage System
Modifying Regulations on the Issuance of License
(MWSS), charging said customer lower than the
to Operate and Private Security Licenses and
standard minimum rates provided in
Specifying Regulations for the Operation of
the Memorandum of Agreement dated May 12,
PADPAO issued by then PC Chief Lt. Gen. Fidel V.
1986.
Ramos, through Col. Sabas V. Edades, requiring
that “all private security agencies/company
 PADPAO found VMPSI guilty of cut-throat
competition, hence, the PADPAO Committee on
Discipline recommended the expulsion of VMPSI
from PADPAO and the cancellation of its license to
operate a security agency. The PC-SUSIA affirmed
the findings and likewise recommended
the cancellation of VMPSI’s license. As a result,
PADPAO refused to issue a clearance/certificate
of membership to VMPSI.
VMPSI made a request letter to the PC Chief
to set aside or disregard the findings of PADPAO
and consider VMPSI’s application for renewal of its
license, even without a certificate
of membership from PADPAO.
ISSUE:
Whether or not VMPSI’s complaint against the PC
Chief and PC-SUSIA is a suit against the State
without its consent.
HELD:
Yes.
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, however, since the acts for which the
PC Chief and PC-SUSIA are being called to account
in this case, were performed as part of their official
duties, without malice, gross negligence, or bad
faith, no recovery may be had against them in their
private capacities. Furthermore, the Supreme
Court agrees with the Court of Appeals that
the Memorandum of Agreement dated May 12,
1986 does not constitute an implied consent by the
State to be sued. The consent of the State to be
sued must emanate from statutory authority,
hence, a legislative act, not from a
mere memorandum. Without such consent, the
trial court did not acquired jurisdiction over the
public respondents. Petition for review is denied
and the judgment appealed from is affirmed in
toto.
15. LARKINS VS. NLRC
Facts: erson because no summons or copies of the compl
aints, bothoriginal and amended, were ever served
On August 12, 1988, private respondents
on her. In her "Supplemental Memorandum to
filed a complaint with the Regional Arbitration
Memorandum of Appeal," petitioner argued that
Branch No. III of the NLRC, San Fernando,
the attempts to serve her with notices of hearing
Pampanga, against petitioner Larkins, a member
were not in accordance with the provisions of the
of the United States Air Force (USAF) assigned to
RP-US Military Bases Agreement of 1947.
oversee the dormitories of the Third Aircraft
Generation Squadron (3 AGS) at Clark Air Base,
Pampanga., Lt. Col.Frankhauser, and Cunanan (the
Issue:
new contractor ) for illegal dismissal and
underpaymentof wages. Petitioner and Lt. Col. WON the questioned resolutions are null and void.
Frankhauser failed to answer the complaint and to
appear at the hearings. They, likewise, failed to
submit their position paper, which the Labor Held:
Arbiter deemed a waiver on their part to do so.On
the basis of private respondents' position paper
and supporting documents, the Labor Arbiter No, jurisdiction was never acquired by the
rendered a decision granting all the claims of Labor Arbiter over the case and the person of
private respondents. He found both Lt. Col. petitioner and the judgment rendered is null and
Frankhauser and petitioner "guilty of illegal void.
dismissal" and ordered them to reinstate private Summons and other processes issued by Philippine 
respondents with full back wages, or if that is no courts and administrativeagencies for United State
longer possible, to pay private respondents' s
separation pay. Armed Forces personnel within any U.S. base in the
Petitioner appealed to the NLRC claiming that the L Philippines could be served therein only with the
abor Arbiter never acquired jurisdiction over her p
permission of the Base Commander. If he
withholds giving his permission, he should instead
designate another person to serve the process, and
obtain the server's affidavit for filing with the
appropriate court. Respondent Labor Arbiter did
not follow said procedure. He instead, addressed
the summons to Lt. Col. Frankhauser and not the
Base Commander. Respondents do not dispute
petitioner's claim that no summons was ever
issued and served on her. They contend, however,
that they sent notices of the hearings to herNotices
of hearing are not summonses. The provisions and
prevailing jurisprudence in Civil Procedure may be
applied by analogy to NLRC proceedings (Revised
Rules of the NLRC, Rule I, Sec. 3). It is basic that the
Labor Arbiter cannot acquire jurisdiction over the
person of the respondent without the latter being
served with summons. In the absence of service of
summons or a valid waiver thereof, the hearings
and judgment rendered by the Labor Arbiter are
null and void. Petitioner, in the case at bench,
appealed to the NLRC and participated in the oral
argument before the said body. This, however,
does not constitute a waiver of the lackof summons
and a voluntary submission of her person to the
jurisdiction of the Labor Arbiter. She may have
raised in her pleadings grounds other than lack of
jurisdiction, but these grounds were discussed in
relation to and as a result of the issue of the lackof
jurisdiction. In effect, petitioner set forth only one
issue and that is the absence
of jurisdiction over her person. If an appearance be
fore the NLRC is precisely to questionthe jurisdicti
on of the said agency over the person of the defend
ant, then thisappearance is not equivalent to
service of summons. Be that as it may, on the
assumption that petitioner validly waived service
of summons on her, still the case could not
prosper. There is no allegation from the pleadings
filed that Lt. Col. Frankhauser and petitioner were
being sued in their personal capacities for tortious
acts. However, private respondents named 3 AGS
as one of the respondents in their complaint.
Private respondents were dismissed from their
employment by Lt. Col. Frankhauser acting for and
in behalf of the U.S. Government. The employer of
private respondents was neither Lt. Col.
Frankhauser nor petitioner. The employer of
private respondents, as found by NLRC, was the
U.S. Government which, by right of sovereign
power, operated and maintained the dormitories
at Clark Air Base for members of the USAF. Indeed,
assuming that jurisdiction was acquired over the
United States Government
andthe monetary claims of private respondents pr
oved, such awards will have to besatisfied not by
Lt. Col. Frankhauser and petitioner in their
personal capacities, but by the United States
government.
16.Shauf v. CA
FACTS:
Petitioner, Loida Shauf, a Filipino by origin and
married to an American who is a member of the
US Air Force, was rejected for a position of
Guidance Counselor in the Base Education
Office at Clark Air Base. She boasts of related
working experience and being a qualified
dependent locally available. By reason of her
non-selection, she filed a complaint for damages
and an equal employment opportunity
complaint against private respondents, Don
Detwiler (civillian personnel officer) and
Anthony Persi (Education Director), for alleged
discrimination by reason of her sex (female),
color (brown) and national origin (Filipino by
birth). Shauf was offered a temporary position
as a temporary Assistant Education Adviser for
a 180-day period with the condition that if a
vacancy occurs, she will be automatically
selected to fill the vacancy. But if no vacancy
occurs after 180 days, she will be released but
will be selected to fill a future vacancy if she’s
available. Shauf accepted the offer. During that
time, Mrs. Mary Abalateo’s was about to vacate
her position. But Mrs. Abalateo’s appointment
was extended thus, Shauf was never appointed
to said position. She claims that the Abalateo’s
stay was extended indefinitely to deny her the
appointment as retaliation for the complaint
that she filed against Persi. Persi denies this
allegation. He claims it was a joint decision of
the management & it was in accordance of with
the applicable regulation.
Shauf filed for damages and other relief in
different venues such as the Civil Service
Commission, Appeals Review Board, Philippine
Regional Trial Court, etc. RTC ruled in favor of
Shauf . Both parties appealed to the CA. Shauf
prayed for the increase of the damages to be
collected from defendants. Defendants on the
other hand, continued using the defense that
they are immune from suit for acts
done/statements made by them in performance
of their official governmental functions
pursuant to RP-US Military Bases Agreement of
1947. They claim that the Philippines does not
have jurisdiction over the case because it was
under the exclusive jurisdiction of a US District
Court. They likewise claim that petitioner failed
to exhaust all administrative remedies thus case
should be dismissed. CA reversed RTC decision.
According to the CA, defendants are immune
from suit.  Shauf claims that the respondents
are being sued in their private capacity thus this
is not a suit against the US government w/c
would require consent. Respondents still
maintain their immunity from suit. They further
claim that the rule allowing suits against public
officers & employees for criminal &
unauthorized acts is applicable only in the
Philippines & is not part of international law.  personal capacity as an ordinary citizen.
ISSUE:  WON private respondents are immune
from suit being officers of the US Armed Forces
HELD: 
No, the respondents cannot rely on the US
blanket of diplomatic immunity for all its acts or
the acts of its agents in the Phils. Private
respondents are personally liable in
indemnifying petitioner Shauf.
While the doctrine of immunity is also
applicable to complaints filed against state
officials, it only contemplates acts done in their
official capacity. This does not cover acts
contrary to law & injurious to the rights of the
plaintiff. When an official acts in a manner that
invades or violates the personal & property
rights of another, the aggrieved party may sue
the official & such suit will not be a suit against
the state. (Director of the Bureau of
Telecommunications vs. Aligaen) The doctrine
of immunity from suit will not apply where the
public official is being sued in his private &
 
The discrimination is very evident. Shauf
was not considered for the position even if she
was previously employed as a Guidance
Counselor at the Clark Airbase. She was not
granted an interview. The person appointed
was not even qualified for that position and that
person kept the position despite orders from
the US Civil Service Commission for his removal.
Extension of Abalateo’s services is another
proof. She was not appointed even if US officials
found her highly qualified for the position
(letters from the Director of the US Civil Service
Commission, Staff Judge Advocate of the
Department of Air Force). Shauf has proven that
discrimination did occur whereas respondents
merely denied allegations. 
proper procedure in seeking relief for the
defendants’ discriminatory acts. The
Department of Air Force in Washington told her
that one of her appeal rights would be to file a
civil action if a final decision has not been
rendered after 180 days from the dated of the
initial appeal to the Commission. The appeal
was lodged on Sept. 30, 1978 and it has not
been decided up to the time SC has decided.
Shauf is entitled to choose the remedy, not
otherwise prohibited, which will best advance &
protect her interests.

The US Constitution assures everyone of

equality in employment & work opportunities
regardless of sex, race, or creed. The Philippine
Constitution has a similar provision. Persi &
Detwiler violated Shauf’s constitutional right to
earn a living, an integral aspect of her right to
life. Thus, they should be accountable. Though
Shauf is entitled to damages, she should not be
paid for the supposedly unearned income had
she been hired as a Guidance Counselor. She
never acquired rights over that amount because
she was never appointed.  Shauf followed the

16. Republic v. Hon. Edilberto
Facts:
Farmer-rallyists marched to Malacanang
calling for a genuine land reform program. There
was a marchers-police confrontation which
resulted in the death of 12 rallyists and scores
were wounded. As a result, thenPres. Aquino
issued AO 11 creating the Citizens Mendiola
Commission for the purpose of conducting an
investigation. The most significant
recommendation of the Commission was for the
heirs of the deceased and wounded victims to be
compensated by the government. Based on such
recommendation, the victims of Mendiola
massacre filed an action for damages against the
Republic and the military/police officers involved
in the incident.  the marchers acted beyond the scope of their
Issues:
(1) Whether or not there is a valid waiver of
immunity
(2) Whether or not the State is liable for damages
Held:
The Court held that there was no valid waiver of
immunity as claimed by the petitioners. The
recommendation made by the Commission to
indemnify the heirs of the deceased and the victims
does not in any way mean that liability attaches to
the State. AO 11 merely states the purpose of the
creation of the Commission and, therefore,
whatever is the finding of the Commission
only serves as the basis for a cause of action in the
eventany party decides to litigate the same. Thus,
the recommendation of the Commission does not
in any way bind the State. 
The State cannot be made liable because the
military/police officers who allegedly were
responsible for the death and injuries suffered by
authority. It is a settled rule that the State as a
person can commit no wrong. The military
and police officers who were responsible for the
atrocities can be held personally liable for damages
as they exceeded their authority, hence, the acts
cannot be considered official.
17. COMMONWEALTH ACT NO. 327
COMMONWEALTH ACT NO. 327 - AN ACT
FIXING THE TIME WITHIN WHICH THE
AUDITOR GENERAL SHALL RENDER HIS
DECISIONS AND PRESCRIBING THE MANNER OF
APPEAL THEREFROM
Section 1. In all cases involving the settlement of
accounts or claims, other than those of
accountable officers, the Auditor General shall act
and decide the same within sixty days, exclusive of
Sundays and holidays, after their presentation. If
said accounts or claims need reference to other
persons, office or offices, or to a party interested,
the period aforesaid shall be counted from the
time the last comment necessary to a proper
decision is received by him. With respect to the
accounts of accountable officers, the Auditor
General shall act on the same within one hundred
days after their submission, Sundays and holidays
excepted.   
In case of accounts or claims already submitted to
but still pending decision by the Auditor General
on or before the approval of this Act, the periods
provided in this section shall commence from the
date of such approval.
Section2. The party aggrieved by the final decision
of the Auditor General in the settlement of an
account for claim may, within thirty days from
receipt of the decision, take an appeal in writing:
(a) To the President of the United States, pending
the final and complete withdrawal of her
sovereignty over the Philippines, or
(b) To the President of the Philippines, or
(c) To the Supreme Court of the Philippines if the
appellant is a private person or entity.
If there are more than one appellant, all appeals
shall be taken to the same authority resorted to by
the first appellant.
From a decision adversely affecting the interests
of the Government, the appeal may be taken by the
proper head of the department or in case of local
governments by the head of the office or branch of
the Government immediately concerned.
The appeal shall specifically set forth the
particular action of the Auditor General to which
exception is taken with the reasons and
authorities relied on for reversing such decision.
FUNDS THEREFOR, AND TO HOLD HARMLESS,
INDEMNIFY, AND DEFEND THE DESIGNER,
MANUFACTURER, CONTRACTOR AND/OR
SUPPLIER THAT SHALL UNDERTAKE TO
DESIGN, MANUFACTURE, FURNISH AND/OR
SUPPLY THE REACTOR FACILITY AND
EQUIPMENT FOR THE PHILIPPINE NUCLEAR
RESEARCH REACTOR PROJECT AND OTHER
SIMILAR PROJECTS FROM LIABILITY ARISING
FROM NUCLEAR INCIDENTS, AND FOR OTHER
PURPOSES

Section3. This Act shall take effect upon its

approval.   

Approved:  June 18. 1938.

18. REPUBLIC ACT NO. 3083

REPUBLIC ACT NO. 3083 - AN ACT TO

REGULATE THE FILING, PROCESSING AND
SETTLEMENT OF DAMAGE CLAIMS RESULTING
FROM NUCLEAR INCIDENTS, TO APPROPRIATE
23. and 34. Meritt v. Govt. of the Phil. Islands
G.R. No. L-11154, March 21 1916, 34 Phil. 311
FACTS:
E. Merritt was a constructor who was
excellent at his work. One day, while he was riding
his motorcycle along Calle Padre Faura, he was
bumped by a government ambulance. The driver of
the ambulance was proven to have been negligent.
Because of the incident, Merritt was hospitalized
and he was severely injured beyond rehabilitation
so much so that he could never perform his job the
way he used to and that he cannot even earn at
least half of what he used to earn.
In order for Merritt to recover damages, he sought
to sue the government which later authorized
Merritt to sue the government by virtue of Act
2457 enacted by the legislature (An Act
authorizing E. Merritt to bring suit against the
Government of the Philippine Islands and
authorizing the Attorney-General of said Islands to
appear in said suit). The lower court then
determined the amount of damages and ordered
the government to pay the same.
ISSUE:
Whether or not the government is liable for the
negligent act of the driver of the ambulance.
HELD:
No.
By consenting to be sued a state simply
waives its immunity from suit. It does not thereby
concede its liability to plaintiff, or create any cause
of action in his favor, or extend its liability to any
cause not previously recognized. It merely gives a
remedy to enforce a preexisting liability and
submits itself to the jurisdiction of the court,
subject to its right to interpose any lawful defense.
It follows therefrom that the state, by virtue of
such provisions of law, is not responsible for the
damages suffered by private individuals in
consequence of acts performed by its employees in
the discharge of the functions pertaining to their
office, because neither fault nor even negligence
can be presumed on the part of the state in the
organization of branches of public service and in
the appointment of its agents. The State can only
be liable if it acts through a special agent (and a
special agent, in the sense in which these words
are employed, is one who receives a definite and
fixed order or commission, foreign to the exercise
of the duties of his office if he is a special official)
so that in representation of the state and being
bound to act as an agent thereof, he executes the
trust confided to him.
In the case at bar, the ambulance driver was
not a special agent nor was a government officer
acting as a special agent hence, there can be no
liability from the government. “The Government
does not undertake to guarantee to any person the
fidelity of the officers or agents whom it employs,
since that would involve it in all its operations in
endless embarrassments, difficulties and losses,
which would be subversive of the public interest.”
24. Republic v. Purisima 78
SCRA 470
Facts:
A motion to dismiss was filed on September 7,
1972 by defendant Rice and Corn Administration
in a pending civil suit inthe sala of respondent
Judge for the collection of a money claim arising
from an alleged breach of contract, the
plaintiff being private respondent Yellow Ball
Freight Lines, Inc. At that time, the leading case
of Mobil Philippines Exploration,Inc. v. Customs
Arrastre Service, where Justice Bengzon stressed the
lack of jurisdiction of a court to pass on the
meritsof a claim against any office or entity acting
as part of the machinery of the national
government unless consent beshown, had been
applied in 53 other decisions. Respondent
Judge Amante P. Purisima of the Court of First
Instance of Manila denied the motion to dismiss
dated October 4, 1972. Hence, the petition for
certiorari and prohibition.
Issue:
WON the respondent’s decision is valid.
Held:
No.
The position of the Republic has been fortified with
the explicit affirmation found in this provision of
the present Constitution: "The State may not be
sued without its consent. "The doctrine of non-
suability recognized in this jurisdiction even prior
to the effectivity of the [1935] Constitution is a appraisal of all factors, minimal. In the balancing of
logical corollary of the positivist concept of law interests, so unavoidable in the determination
which, to para-phrase Holmes, negates the of what principles must prevail if government is to
assertion of any legal right as against the state, in satisfy the public weal, the verdict must be, as it
itself the source of the law on which such a right has been these so many years, for its continuing
may be predicated. Nor is this all, even if such a recognition as a fundamental postulate of
principle does give rise to problems, considering constitutional law." [Switzerland General Insurance
the vastly expanded role of government enabling it Co.,Ltd. v. Republic of the Philippines]
to engage in business pursuits to promote the
general welfare, it is not obeisance to the analytical
school of thought alone that calls for its continued ***The consent, to be effective, must come from the
applicability. Nor is injustice thereby cause private State acting through a duly enacted statute as
parties. They could still proceed to seek collection pointed out by Justice Bengzon in Mobil. Thus,
of their money claims by pursuing the statutory whatever counsel for defendant Rice and Corn
remedy of having the Auditor General pass upon Administration agreed to had no binding force on
them subject to appeal to judicial tribunals for final the government.
adjudication. We could thus correctly conclude as
we did in the cited Providence Washington
Insurance decision: "Thus the doctrine of non-
suability of the government without its consent, as
it has operated in practice, hardly lends itself to the
charge that it could be the fruitful parent of
injustice, considering the vast and ever-widening
scope of state activities at present being
undertaken. Whatever difficulties for private
claimants may still exist, is, from an objective

25. U.S. v. Ruiz
136 SCRA 487
GR No. L-35645; May 22, 1985
FACTS:
Sometime in May 1972, the United States
invited the submission of bids for certain naval
projects. Eligio de Guzman & Co. Inc. responded to
the invitation and submitted bids. Subsequently,
the company received two telegrams requesting it
to confirm its price. In June 1972, the copany
received a letter which said that the company did
not qualify to receive an award for the projects.
The company then sued the United States of
America and individual petitioners demanding that
the company perform the work on the projects, or
for the petitioners to pay damages and to issue a
writ of preliminary injunction to restrain the
petitioners from entering into contracts with third
parties concerning the project.
ISSUE:
1)   Do the petitioners exercise governmental or
proprietary functions?
2)   Does the Court have jurisdiction over the case?
HELD:
The rule of State immunity exempts a State
from being sued in the courts of another state
without its consent or waiver. This is a necessary
consequence of the principles of independence and
equality of states. However, state immunity now
extends only to governmental acts of the state. The
restrictive application of State immunity is proper
only when the proceedings arise out of commercial
transactions of the foreign sovereign. In this case,
the projects are integral part of the naval base
which is devoted to the defense of the USA and
Philippines which is, indisputably, a function of the
government. As such, by virtue of state immunity,
the courts of the Philippines have no jurisdiction
over the case for the US government has not given
consent to the filing of this suit.
27. THE DEPARTMENT OF HEALTH vs.PHIL. procurement of 1.2 million units vials
PHARMAWEALTH, INC. 0f Penicillin G Benzathine. Despite the lack of respo
nse from petitioner DOH regardingrespondent’s
G.R. No. 169304 March13, 2007
request for inclusion of additional
items in its list of accredited products, respondent
FACTS: submitted its bid for the
Penicillin GBenzathine contract. Only two compani
Respondent Phil. Pharmawealth, Inc. is es participated, the respondent being the lower
a domestic corporation engaged in thebusiness of  bidder. In view, however, of the non-accreditation
manufacturing and supplyingpharmaceutical prod of respondent’s Penicillin G Benzathine product,
ucts to governmenthospitals in the the contract was awarded to the other company.
Philippines. Then Secretary Hence, respondent filed
of Health Alberto G. Romualdez, Jr. issued a complaint injunction, mandamus and damages
Administrative against DOH.
Order (A.O.) No. 27 outliningthe guidelines and pro
cedures on theaccreditation of government supplie
rs for pharmaceutical products. A.O. No. 27 was ISSUE:
later amended by providing for additional
WON DOH can invoke immunity from suit.
guidelines for accreditation of drug suppliers
aimed at ensuring that only qualified bidders can
transact business with petitioner.
HELD:
Respondent submitted to petitioner DOH a
request for the inclusion of additional items in NO.
its list of accredited drug products, The suability of a government
including the antibiotic "Penicillin G Benzathine." officialdepends on whether the official concerned
DOH issued an Invitation for Bidsfor the was acting within his official or jurisdictional
capacity, and whether the acts done in the
performance of official functions will result in a
charge or financial liability against the
government. In the first case, the Constitution
itself assures the availability of judicial
review, and it is the official concerned  who should
be impleaded as the proper party. As
regards petitioner DOH, the defense of immunity fr
om suit will not avail despite it
being an unincorporated agency of thegovernment,  Assistance Group to the Philippines (JUSMAG-
for the only  causes of action directed against it are
preliminary injunction and mandamus.
28. JUSMAG Phil. V. NLRC
239 SCRA 224
Facts:
Florento Sacramento (private respondent) was one
of the 74 security assistance support personnel
(SASP) working at the Joint United States Military
Phils.). He had been with JUSMAG from 1969-
1992. When dismissed, he held the position of
illustrator 2 and incumbent Pres. of JUSMAG Phils.-
Filipino Civilian Employees Association, a labor
org. duly registered with DOLE. His services were
terminated allegedly due to the abolition of his
position.
Sacramento filed a complaint with DOLE on the
ground that he was illegally suspended and
dismissed from service by JUSMAG. He asked for
reinstatement. JUSMAG filed a Motion to Dismiss
invoking immunity from suit. The Labor Arbiter in
an Order, dismissed the complaint for want of
jurisdiction. Sacramento appealed to the NLRC
which reversed the decision of the Labor Arbiter
and held that the petitioner had lost his right not to
be sued because (1) the principle of estoppel- consent of the latter to the suit, the complaint
JUSMAG failed to refute the existence of employer- against JUSMAG cannot prosper.
employee relationship (2) Jusmag has waived its
Immunity of State from suit is one of these
right to immunity from suit when it hired the
universally recognized principles. In international
services to private respondent. Hence, this
law, "immunity" is commonly understood as an
petition.
exemption of the state and its organs from the
judicial jurisdiction of another state.  This is
anchored on the principle of the sovereign equality
Issue:
of states under which one state cannot assert
Whether or not JUSMAG has immunity from suit. jurisdiction over another in violation of the
maxim  par in parem non habet imperium  (an equal
has no power over an equal).
Held:
As it stands now, the application of the
Yes. doctrine of immunity from suit has been restricted
When JUSMAG took the services of the to sovereign or governmental activities and does
private respondent, it was performing a not extend to commercial, private and proprietary
governmental function in behalf of the United acts.
States pursuant to the Military Assistance
Agreement between the Phils. and the US. JUSMAG
consists of Air, Naval and Army group and its
primary task was to advise and assist the Phils. on
air force, army and naval matters. A suit against
JUSMAG is one against the United States
government, and in the absence of any waiver or
 and Santos v Santos case is discernible. The
Solicitor General, Estelito P. Mendoza affirmed the
dismissal on ground of constitutional mandate.
29. Santiago v. Republic Ildefonso Santiago filed a petition for certiorari to
the Supreme Court.
87 SCRA 284

Issue:
Facts:
Whether or not the state can be sued without its
On August 9, 1976, Ildefonso Santiago consent.
through his counsel filed an action for revocation
of a Deed of Donation executed by him and his
spouse in January of 1971, with the Bureau of Plant Held:
Industry as the Donee, in the Court of First
Instance of Zamboanga City. Mr. Santiago alleged The Supreme Court rules, that the
that the Bureau, contrary to the terms of donation, constitutional provision shows a waiver. Where
failed to install lighting facilities and water system there is consent, a suit may be filed. Consent need
on the property and to build an office building and not to be express. It can be implied. In this case it
parking lot thereon which should have been must be emphasized, goes no further than a rule
constructed and ready for occupancy on before that a donor, with the Republic or any of its agency
December7, 1974. That because of the being a Donee, is entitle to go to court in case of an
circumstances, Mr. Santiago concluded that he was alleged breach of the conditions of such donation.
exempt from compliance with an explicit
constitutional command, as invoked in the Santos
v Santos case, a 1952 decision which is similar.
The Court of First Instance dismissed the action in
favor of the respondent on the ground that the
state cannot be sued without its consent,

30. FROILAN VS PAN ORIENTAL SHIPPING
G.R. No. L-6060             September 30, 1954
Facts:
Plaintiff, Fernando Froilan filed a complaint
against the defendant-appellant, Pan Oriental
Shipping Co., alleging that he purchased from the
Shipping Commission the vessel for P200,000,
paying P50,000 down and agreeing to pay the
balance in instalments. To secure the payment of
the balance of the purchase price, he executed a
chattel mortgage of said vessel in favor of the
Shipping Commission. For various reasons, among
them the non-payment of the installments, the
Shipping Commission tool possession of said vessel
and considered the contract of sale cancelled. The
Shipping Commission chartered and delivered said
vessel to the defendant-appellant Pan Oriental
Shipping Co. subject to the approval of the
President of the Philippines. Plaintiff appealed the
action of the Shipping Commission to the President
of the Philippines and, in its meeting the Cabinet
restored him to all his rights under his original
contract with the Shipping Commission. Plaintiff
had repeatedly demanded from the Pan Oriental
Shipping Co. the possession of the vessel in
question but the latter refused to do so.
Plaintiff, prayed that, upon the approval of the
bond accompanying his complaint, a writ of
replevin be issued for the seizure of said vessel
with all its equipment and appurtenances, and that
after hearing, he be adjudged to have the rightful
possession thereof . The lower court issued the
writ of replevin prayed for by Froilan and by virtue
thereof the Pan Oriental Shipping Co. was divested
of its possession of said vessel.
Pan Oriental protested to this restoration of
Plaintiff ‘s rights under the contract of sale, for the
reason that when the vessel was delivered to it, the
Shipping Administration had authority to dispose
of said authority to the property, Plaintiff having
already relinquished whatever rights he may have
thereon. Plaintiff paid the required cash of
P10,000.00 and as Pan Oriental refused to
surrender possession of the vessel, he filed an
action to recover possession thereof and have him
declared the rightful owner of said property. The
Republic of the Philippines was allowed to
intervene in said civil case praying for the
possession of the in order that the chattel
mortgage constituted thereon may be foreclosed.
Issue:
Whether or not the Court has jurisdiction over the
intervenor with regard to the counterclaim.
Held:
When the government enters into a contract,
for the State is then deem to have divested itself of
the mantle of sovereign immunity and descended
to the level of the ordinary individual. Having done
so, it becomes subject to judicial action and
processes.
Yes. The Supreme Court held that the
government impliedly allowed itself to be sued
when it filed a complaint in intervention for the
purpose of asserting claim for affirmative relief
against the plaintiff to the recovery of the vessel.
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 a private party, 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.
31. RCBC v. De Castro,
168 SCRA 49
Facts:
On January 26,1970, BADOC filed an Urgent
Ex-Parte Motion for a Writ of Execution of the said
Partial Judgment which was granted on the same
day by the herein respondent judge who acted in
place of the Hon. Judge San Diego who had just
been elevated as a Justice of the Court of Appeals.
Accordingly, the Branch Clerk of Court on the very
same day, issued a Writ of Execution addressed to
Special Sheriff Faustino Rigor, who then issued a
Notice of Garnishment addressed to the General
Manager and/or Cashier of Rizal Commercial
Banking Corporation (hereinafter referred to as
RCBC) requesting a reply within five (5) days to
said garnishment as to any property which the
Philippine Virginia Tobacco Administration.
Upon receipt of such Notice, RCBC notified
PVTA thereof to enable the PVTA to take the
necessary steps for the protection of its own
interest. Upon an Urgent Ex-Parte Motion dated
January 27, 1970 filed by BADOC, the respondent
Judge issued an Order granting the Ex-Parte
Motion and directing the herein petitioner "to
deliver in check the amount garnished to Sheriff
Faustino Rigor and Sheriff Rigor in turn is ordered
to cash the check and deliver the amount to the
plaintiff's representative and/or counsel on record.
In compliance with said Order, petitioner
delivered to Sheriff Rigor a certified check in the
sum of P 206,916.76.
Respondent PVTA filed a Motion for
Reconsideration dated February 26,1970 which
was granted in an Order dated April 6,1970, setting
aside the Orders of Execution and of Payment and
the Writ of Execution and ordering petitioner and
BADOC "to restore, jointly and severally, the
account of PVTA with the said bank in the same
condition and state it was before the issuance of
the aforesaid Orders by reimbursing the PVTA of
the amount of P 206, 916.76 with interests at the
legal rate from January 27, 1970 until fully paid to
the account of the PVTA.
The Motion for Reconsideration of the said
Order of April 6, 1970 filed by herein petitioner
was denied in the Order of respondent judge dated
June 10, 1970 and on June 19, 1970.
Issue:
1. Whether or not PVTA funds are public funds
not subject to garnishment; and
2. Whether or not the respondent Judge
correctly ordered the herein petitioner to
reimburse the amount paid to the Special
Sheriff by virtue of the execution issued
pursuant to the Order/Partial Judgment
dated January 15, 1970.
Held:
It must be noted that the Order of respondent
Judge dated April 6, 1970 directing the plaintiff to
reimburse PVTA t e amount of P206,916.76 with
interests became final it should be pointed out that
RCBC did not deliver the amount on the strength
solely of a Notice of Garnishment; rather, the
release of the funds was made pursuant to the
aforesaid Order of January 27, 1970. The bank had
already filed a reply to the Notice of Garnishment
stating that it had in its custody funds belonging to
the PVTA, which, in fact was the basis of the
plaintiff in filing a motion to secure delivery of the
garnished amount to the sheriff. The bank, upon WHEREFORE, the petition is hereby granted
the receipt of the Notice of Garnishment, duly and the petitioner is ABSOLVED from any liability
informed PVTA thereof to enable the latter to take to respondent PVTA for reimbursement of the
the necessary steps for the protection of its own funds garnished. The questioned Order of the
interest. That the sheriff, upon delivery of the respondent Judge ordering the petitioner, jointly
check to him by RCBC encashed it and turned over and severally with BADOC, to restore the account
the proceeds thereof to the plaintiff was no longer of PVTA are modified accordingly.
the concern of RCBC as the responsibility over the
garnished funds passed to the court. Thus, no
breach of trust or dereliction of duty can be
attributed to RCBC in delivering its depositor's funds
pursuant to a court order which was merely in the
exercise of its power of control over such funds.
As stated earlier, the order directing the
bank to deliver the amount to the sheriff was
distinct and separate from the order directing the
sheriff to encash the said check. The bank had no
choice but to comply with the order demanding
delivery of the garnished amount in check. The very
tenor of the order called for immediate compliance
therewith. On the other hand, the bank cannot be
held liable for the subsequent encashment of the
check as this was upon order of the court. To expose
garnishees to risks for obeying court orders and
processes would only undermine the administration
of justice.

32. Mun. of San Miguel, Bulacan v. Fernandez
130 SCRA 556
In Civil Case No. 604-B, entitled "Margarita D. Vda.
de Imperio, et al. vs. Municipal Government of San
Miguel, Bulacan, et al.", the then Court of First
Instance of Bulacan, on April 28, 1978, rendered
judgment holding herein petitioner municipality
liable to private respondents, as follows:
WHEREFORE, premises considered,
judgment is hereby rendered in favor of the
plaintiffs and against the defendant
Municipal Government of San Miguel Bulacan,
represented by Mayor Mar Marcelo G. Aure and its
Municipal Treasurer:
1. ordering the partial revocation of the Deed of
Donation signed by the deceased Carlos Imperio in
favor of the
Municipality of San Miguel Bulacan, dated October
27, 1947 insofar as Lots Nos. 1, 2, 3, 4 and 5, Block
11 of Subdivision Plan Psd-20831 are concerned,
with an aggregate total area of 4,646 square
meters, which lots are among those covered and
described under TCT No. T-1831 of the Register of
Deeds of Bulacan in the name of the Municipal
Government of San Miguel Bulacan,
2. ordering the defendant to execute the
corresponding Deed of Reconveyance over the
aforementioned five lots in favor of the plaintiffs in
the proportion of the undivided one-half (½) share
in the name of plaintiffs Margarita D. Vda. de
Imperio,Adoracion, Rodolfo, Conrado, Ernesto,
Alfredo, Carlos, Jr. and Juan, all surnamed Imperio,
and the remaining undivided one-half (½) share in
favor of plaintiffs uses Marcelo E. Pineda and Lucila
Pongco;
3. ordering the defendant municipality to pay to
the plaintiffs in the proportion mentioned in the
immediately preceding paragraph the sum of
P64,440.00 corresponding to the rentals it has
collected from the occupants for their use and
occupation of the premises from 1970 up to and
including 1975, plus interest thereon at the legal
rate from January 1970 until fully paid;
4. ordering the restoration of ownership and
possession over the five lots in question in favor of
the plaintiffs in the same proportion
aforementioned;
5. ordering the defendant to pay the plaintiffs the
sum of P3,000.00 for attomey's fees; and to pay the
cost of suit.
The counterclaim of the defendant is hereby
ordered dismissed for lack of evidence presented
to substantiate the same.
SO ORDERED. (pp. 11-12, Rollo)
The foregoing judgment became final when herein
petitioner's appeal was dismissed due to its failure
to file the record on appeal on time. The dismissal
was affirmed by the then Court of Appeals in CA-
G.R. No. SP-12118 and by this Court in G.R. No.
59938. Thereafter, herein private respondents
moved for issuance of a writ of execution for the
satisfaction of the judgment. Respondent judge, on
July 27, 1982, issued an order, to wit: Considering
that an entry of judgment had already been made
on June 14, 1982 in G. R. No. L-59938 and;
Considering further that there is no opposition to
plaintiffs' motion for execution dated July 23,
1983; Let a writ of execution be so issued, as
prayed for in the aforestated motion. (p. 10, Rollo)
Petitioner, on July 30, 1982, 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. The said motion to
quash was, however, denied by the respondent
judge in an order dated August 23, 1982 and the
alias writ of execution stands in full force and
effect.
On September 13, 1982, respondent judge
issued an order which in part, states: It is clear and
evident from the foregoing that defendant has
more than enough funds to meet its judgment
obligation. Municipal Treasurer Miguel C, Roura of
San Miguel, Bulacan and Provincial Treasurer of
Bulacan Agustin O. Talavera are
therefore hereby ordered to comply with the
money judgment rendered by Judge Agustin C.
Bagasao against said
municipality. In like manner, the municipal
authorities of San Miguel, Bulacan are likewise
ordered to desist from plaintiffs' legal possession
of the property already returned to plaintiffs by
virtue of the alias writ of execution.
Finally, defendants are hereby given an
inextendible period of ten (10) days from receipt
of a copy of this order by the Office of the
Provincial Fiscal of Bulacan within which to submit
their written compliance, (p. 24, Rollo)
When the treasurers (provincial and municipal)
failed to comply with the order of September 13,
1982, respondent judge issued an order for their
arrest and that they will be release only upon
compliance thereof.Hence, the present petition on
the issue whether the funds of the Municipality of
San Miguel, Bulacan, in the hands of the
provincial and municipal treasurers of Bulacan and
San Miguel, respectively, are public funds which
are exempt from execution for the satisfaction of
the money judgment in Civil Case No. 604-B.Well
settled is the rule that public funds are not subject
to levy and execution. The reason for this was
explained in the case of Municipality of Paoay vs.
Manaois, 86 Phil. 629 "that 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 said purpose." And,
in Tantoco vs. Municipal Council of Iloilo, 49 Phil.
52, it was held that "it is the settled doctrine of the
law that not only the public property but also the
taxes and public revenues of such corporations
Cannot be seized under execution against them,
either in the treasury or when in transit to it.
Judgments rendered for taxes, and the proceeds of
such judgments in the hands of officers of the law,
are not subject to execution unless so declared by
statute." Thus, it is clear that all the funds of
petitioner municipality in the possession of the
Municipal Treasurer of San Miguel, as well as those
in the possession of the Provincial Treasurer of
Bulacan, are also public funds and as such they are
exempt from execution.Besides, Presidential
Decree No. 477, known as "The Decree on Local
Fiscal Administration", Section 2 (a), provides:
SEC. 2. Fundamental Principles. — 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 (d) By delivering to the judgment-debtor the
except in pursuance of a lawful appropriation or excess, if any, unless otherwise, directed by
other specific statutory authority. judgment or order of the court.
xxx xxx xxx The foregoing has not been followed in the case at
bar.
Otherwise stated, there must be a
corresponding appropriation in the form of an ACCORDINGLY, the petition is granted and the
ordinance duly passed by the Sangguniang Bayan order of respondent judge, dated July 27, 1982,
before any money of the municipality may be paid granting issuance of a writ of execution; the alias
out. In the case at bar, it has not been shown that writ of execution, dated July 27, 1982; and the
the Sangguniang Bayan has passed an ordinance to order of respondent judge, dated September 13,
this effect.Furthermore, Section 15, Rule 39 of the 1982, directing the Provincial Treasurer of Bulacan
New Rules of Court, outlines the procedure for the and the Municipal Treasurer of San Miguel,
enforcement of money judgment: Bulacan to comply with themoney judgments, are
SET ASIDE; and respondents are hereby enjoined
(a) By levying on all the property of the debtor,
from implementing the writ of execution.
whether real or personal, not otherwise exempt
from execution, or only on such part of the
property as is sufficient to satisfy the judgment and
accruing cost, if he has more than sufficient
property for the purpose;
(b) By selling the property levied upon;
(c) By paying the judgment-creditor so much of the
proceeds as will satisfy the judgment and accruing
costs; and

33. Municipality of Makati vs. Court of Appeals
G.R. Nos. 89898-99 October 1, 1990
Facts:
Petitioner Municipality of Makati
expropriated a portion of land owned by private
respondents, Admiral Finance Creditors
Consortium, Inc. After proceedings, the RTC of
Makati determined the cost of the said land which
the petitioner must pay to the private respondents
amounting to P5,291,666.00 minus the advanced
payment of P338,160.00. It issued the
corresponding writ of execution accompanied with
a writ of garnishment of funds of the petitioner
which was deposited in PNB. However, such order
was opposed by petitioner through a motion for
reconsideration, contending that its funds at the
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, citing the
case of Republic of the Philippines v. Palacio.The
RTC dismissed such motion, which was appealed
to the Court of Appeals; the latter affirmed said
dismissal and petitioner now filed this petition for
review.
Issue: Whether or not funds of the Municipality of
Makati are exempt from garnishment and levy
upon execution.
Held:
It is petitioner's main contention that the
orders of respondent RTC judge involved the net
amount of P4,965,506.45, wherein the funds
garnished by respondent sheriff are in excess of
P99,743.94, which are public fund and thereby are
exempted from execution without the proper
appropriation required under the law. There is
merit in this contention. In this jurisdiction, well-
settled is the rule that public funds are not subject
to levy and execution, unless otherwise provided
for by statute. Municipal revenues derived from
taxes, licenses and market fees, and which are
intended primarily and exclusively for the purpose
of financing the governmental activities and
functions of the municipality, are exempt from
execution. Absent a showing that the municipal
council of Makati has passed an ordinance
appropriating the said amount from its public
funds deposited in their PNB account, no levy
under execution may be validly effected. However,
this court orders petitioner to pay for the said land
which has been in their use already. This Court will
not condone petitioner's blatant refusal to settle its
legal obligation arising from expropriation of land
they are already enjoying. The State's power of
eminent domain should be exercised within the
bounds of fair play and justice.