CONSTITUTION NOTES

State Immunity
SERVUS LEGIS

BBD
 III-B. State Immunity

I. Basis
(Article XVI, Section 3 , 1987 Constitution)1
Section 3. The State may not be sued without its consent.

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty that the
state as well as its government is immune from suit unless it gives its consent. It is readily understandable
why it must be so. In the classic formulation of Holmes: "A sovereign is exempt from suit, not
because of any formal conception or obsolete theory, but on the logical and practical ground that
there can be no legal right as against the authority that makes the law on which the right
depends." Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a recent
decision, Providence Washington Insurance Co. v. Republic of the Philippines, with its affirmation that "a
continued adherence to the doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental efficiency and the obstacle to
the performance of its multifarious functions are far greater if such a fundamental principle were
abandoned and the availability of judicial remedy were not thus restricted. With the well known propensity
on the part of our people to go to court, at the least provocation, the loss of time and energy required to
defend against law suits, in the absence of such a basic principle that constitutes such an effective
obstacle, could very well be imagined." (see Footnote 1.)

COROLLARY:

(EO 292: Admin Code) CHAPTER 3: State Immunity from Suit

SECTION 10. Non-suability of the State.—No suit shall lie against the State except with its
consent as provided by law.

SECTION 11. The State’s Responsibility for Acts of Agents.—(1) The State shall be legally bound
and responsible only through the acts performed in accordance with the Constitution and the laws by its
duly authorized representatives.

(2) The State shall not be bound by the mistakes or errors of its officers or agents in the exercise
of their functions.

A. Purpose 2
State's immunity may be validly invoked against the action as long as it can be shown that the suit really
affects the property, rights, or interests of the State. (see Footnote 2)

The public policy reason that the performance of governmental function cannot be hindered or delayed
by suits, nor can these suits control the use and disposition of the means for the performance of
governmental functions, hence the immunity from suit.

Practical considerations dictate the establishment of immunity from suit in favor of the State.
Otherwise, and the State is suable at the instance of every other individual, government service may be
severely obstructed and public safety endangered because of the number of suits that the State has to
defend against. (see ATO v Ramos infra).

Several justifications have been offered to support the adoption of the doctrine in the Philippines, but that
offered in Providence Washington Insurance Co. v. Republic of the Philippines is “the most acceptable
explanation,” according to Father Bernas, a recognized commentator on Constitutional Law, to wit:

A continued adherence to the doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental efficiency and the
obstacle to the performance of its multifarious functions are far greater if such a fundamental
principle were abandoned and the availability of judicial remedy were not thus restricted. With the
well-known propensity on the part of our people to go to court, at the least provocation, the loss of time
and energy required to defend against law suits, in the absence of such a basic principle that constitutes
such an effective obstacle, could very well be imagined. [see Bernas, The 1987 Constitution of the
Republic of the Philippines: A Commentary, 2003 Edition, p. 1269.]
II. Suit against State?
GROUP 1: D000 Republic v. Sandoval, GR 84607, 19 March 1993, En Banc, Campos Jr. [J] (
http://www.lawphil.net/judjuris/juri1993/mar1993/gr_84607_1993.html ) <

THE MENDIOLA MASSACRE.

Facts:
Farmers marched for 8 days from Jan. 15-22, 1987 and presented their demands for a genuine agrarian reform. 12
rallyists died and several others injured on Jan 22, 1987. The heirs of dead rallyists and those injured filed a complaint for
damages against the Republic of the Philippines. Judge Sandoval dismissed the case against the Republic on the ground
that there was no waiver by the State and denied the subsequent motions for reconsideration by the petitioners.

Issue: Whether the State has impliedly waived its immunity from suit

Ruling:
Under our Constitution the principle of immunity of the government from suit is expressly provided in Article XVI,
Section 3. The principle is based on the very essence of sovereignty and on the practical ground that there can be no
legal right as against the authority that makes the law on which the right depends. (Kawananakoa vs. Polyblank, 205 U.S.
349-353, 51 L. Ed. 834 [1907]). It also rests on reasons of public policy — that public service would be hindered, and the
public endangered, if the sovereign authority could be subjected to law suits at the instance of every citizen and
consequently controlled in the uses and dispositions of the means required for the proper administration of the
government. (The Siren vs. United States, 7 Wall. 152, 19 L. Ed. 129 [1869])

Although consent to be sued may be given impliedly, still it cannot be maintained that such consent was given considering
the circumstances obtaining in the instant case.

The case does not qualify as a suit against the State.

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

(1) When the Republic is sued by name;

(2) When the suit is against an unincorporated government agency;
(3) When the, suit is on its face against a government officer but the case is such that ultimate liability will belong not to
the officer but to the government.

While the Republic in this case is sued by name, the ultimate liability does not pertain to the government. Although the
military officers and personnel, then party defendants, were discharging their official functions when the incident occurred,
their functions ceased to be official the moment they exceeded their authority. Based on the Commission findings, there
was lack of justification by the government forces in the use of firearms.
The inescapable conclusion is that the State cannot be held civilly liable for the deaths that followed the incident. Instead,
the liability should fall on the named defendants in the lower court.

D001 Professional Video Inc. v. Technical Education and Skills Development Authority, GR 155504. 26 June 2009,
Second Division, Brion [J] (http://www.lawphil.net/judjuris/juri2009/jun2009/gr_155504_2009.html) <
PROVI v. TESDA

Facts
PROVI is an entity engaged in the sale of high technology equipment, information technology products and broadcast
devices, including the supply of plastic card printing and security facilities.

TESDA is an instrumentality of the government established under Republic Act (R.A.) No. 7796 (the TESDA Act of 1994)
and attached to the Department of Labor and Employment (DOLE) to "develop and establish a national system of skills
standardization, testing, and certification in the country."

On December 29, 1999, TESDA and PROVI signed and executed their "Contract Agreement Project: PVC ID Card
Issuance" for the provision of goods and services in the printing and encoding of PVC cards. Under this Contract
Agreement, PROVI was to provide TESDA with the system and equipment.

August 24, 2000, TESDA and PROVI executed an "Addendum to the Contract Agreement Project: PVC ID Card
Issuance."

PROVI alleged that out of TESDA’s liability of P39,475,000.00, TESDA paid PROVI only P3,739,500.00, leaving an
outstanding balance of P35,735,500.00. Despite the two demand letters the outstanding balance remained unpaid.

RTC Pasig directed the attachment/garnishment of TESDA’s properties amounting to 35 Million Pesos.
RTC Pasig denied the motion to quash writ of attachment.
CA nullified RTC’s decision after finding that:
(a) TESDA’s funds are public in nature and, therefore, exempt from garnishment;
(b) TESDA’s purchase of the PVC cards was a necessary incident of its governmental function; consequently, it ruled that
there was no legal basis for the issuance of a writ of preliminary attachment/garnishment.

Issue: Whether TESDA as an instrumentality of the state is immune from suit?

Ruling:
Yes. R.A. No. 7796 created the Technical Education and Skills Development Authority or TESDA under the declared
"policy of the State to provide relevant, accessible, high quality and efficient technical education and skills development in
support of the development of high quality Filipino middle-level manpower responsive to and in accordance with Philippine
development goals and priorities." TESDA is an unincorporated instrumentality of the government operating under its own
charter.

As an unincorporated instrumentality operating under a specific charter, it is equipped with both express and implied
powers and all State immunities fully apply to it. TESDA, as an agency of the State, cannot be sued without its consent.

The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI of the 1987 Constitution
and has been an established principle that antedates this Constitution. The principle is based on the very essence of
sovereignty and on the practical ground that there can be no legal right as against the authority that makes the law on
which the right depends. (see Republic v. Sandoval, G.R. No. 84645, March 19, 1993).

It also rests on reasons of public policy — that public service would be hindered, and the public endangered, if the
sovereign authority could be subjected to law suits at the instance of every citizen and, consequently, controlled in the
uses and dispositions of the means required for the proper administration of the government.(see Republic v. Sandoval,
G.R. No. 84645, March 19, 1993).

The proscribed suit that the state immunity principle covers takes on various forms, namely:
1. a suit against the Republic by name;
2. a suit against an unincorporated government agency;
3. a suit against a government agency covered by a charter with respect to the agency’s performance of
governmental functions; and
4. a suit that on its face is against a government officer, but where the ultimate liability will fall on the government.
In the present case, the writ of attachment was issued against a government agency covered by its own charter. From the
perspective of TESDA’s performing governmental functions, the core reason for the existence of state immunity applies –
i.e., the public policy reason that the performance of governmental function cannot be hindered or delayed by suits, nor
can these suits control the use and disposition of the means for the performance of governmental functions.

A. National government 3

D002 Republic of the Philippines v. Sandiganbayan, GR 88809, 10 July 1991, En Banc Resolution, Bidin [J]
(http://www.lawphil.net/judjuris/juri1991/jul1991/gr_88809_88858_1991.html) <

Danding Cojuangco (Background: Coco Levy Fund Scam during the Marcos Regime)

FACTS
The shares of private respondent Danding Cojuangco in the SMC have been sequestered by the PCGG.
Cojuangco requested to examine the corporate records of SMC but the latter advised Cojuangco to course the
request through PCGG. Cojuangco, as a stockholder, also requested to examine the corporate records of UCPB.
PCGG denied the requests of private respondent.

Thereafter, private respondent filed two separate petitions for prohibition and mandamus before the
Sandiganbayan seeking to enforce his stockholder's right to inspect the corporate records of SMC and the UCPB.

Sandiganbayan allowed Danding Cojuangco, as registered stockholder, to examine and copy the corporate
records of UCPB and SMC pursuant to Corporation Code and pertinent laws governing banking institutions.

ISSUE

Whether the petitions filed by private respondent before the Sandiganbayan is barred by the doctrine of state
immunity from suit?

RULING
The doctrine of state immunity cannot be properly invoked by petitioner in the case at bar. For one thing, the
petition filed by respondent Cojuangco, Jr., before the Sandiganbayan demanded no affirmative performance by
the State in its political capacity which would otherwise call for the application of immunity from suit. (See
Republic v. Sandiganbayan, 184 SCRA 382 [1990]).
D003 Department of Health v. Phil. Pharmawealth Inc., GR 169304, 13 March 2007, Second Division, Carpio
Morales [J] (http://www.lawphil.net/judjuris/juri2007/mar2007/gr_169304_2007.html) <

Penicillin G Benzathine

FACTS
On May 9, 2000 and May 29, 2000, respondent submitted to petitioner DOH a request for the inclusion of
additional items in its list of accredited drug products, including the antibiotic "Penicillin G Benzathine." Petitioner
did not respond to the request of the respondent.

In September 2000, petitioner DOH issued an Invitation for Bids for the procurement of 1.2 million units vials of
Penicillin G Benzathine.

On October 11, 2000, only two companies participated, with respondent submitting the lower bid at P82.24 per
unit, compared to Cathay/YSS Laboratories’ (YSS) bid of P95.00 per unit. In view, however, of the non-
accreditation of respondent’s Penicillin G Benzathine product, the contract was awarded to YSS.

Respondent thus filed a complaint for injunction, mandamus and damages with prayer for the issuance of a writ of
preliminary injunction and/or temporary restraining order with the Regional Trial Court of Pasig City praying, inter
alia, that the trial court:
1. "nullify the award of the Penicillin G Benzathine contract to YSS Laboratories, Inc.
2. direct defendant DOH, defendant Romualdez, defendant Galon and defendant Lopez to declare plaintiff
Pharmawealth as the lowest complying responsible bidder for the Benzathine contract, and that they
accordingly award the same to plaintiff company"
3. "adjudge defendants Romualdez, Galon and Lopez liable, jointly and severally to plaintiff, for damages."

Petitioners filed a motion to dismiss the complaint based on the doctrine of state immunity. RTC Pasig denied the
motion. CA affirmed the RTC’s decision.

ISSUE: Whether individual petitioners can invoke the doctrine of state immunity from suit at the case at bar?

RULING:

No. The suability of a government official depends on whether the official concerned 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 its complaint, respondent sufficiently imputes grave abuse of discretion against petitioners in their official
capacity. Since judicial review of acts alleged to have been tainted with grave abuse of discretion is guaranteed
by the Constitution, it necessarily follows that it is the official concerned who should be impleaded as defendant or
respondent in an appropriate suit.

As regards petitioner DOH, the defense of immunity from suit will not avail despite its being an unincorporated
agency of the government, for the only causes of action directed against it are preliminary injunction and
mandamus. Moreover, the defense of state immunity from suit does not apply in causes of action which do not
seek to impose a charge or financial liability against the State.

As regards individual petitioners’ suability for damages, the following discussion on the applicability of the
defense of state immunity from suit is relevant.

While the doctrine of state immunity (Section 3, Article XVI of the 1987 Constitution) appears to prohibit only
suits against the state without its consent, it is also applicable to complaints filed against officials of the
state for acts allegedly performed by them in the discharge of their duties. The suit is regarded as one
against the state where satisfaction of the judgment against the officials will require the state itself to perform a
positive act, such as the appropriation of the amount necessary to pay the damages awarded against them.

It is a different matter where the public official is made to account in his capacity as such for acts contrary to law
and injurious to the rights of plaintiff. Inasmuch as the State authorizes only legal acts by its officers,
unauthorized acts of government officials or officers are NOT acts of the State, and an action against the
officials or officers by one whose rights have been invaded or violated by such acts, for the protection of his rights,
is not a suit against the State within the rule of immunity of the State from suit. The rationale for this ruling is that
the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice. (See Shauf v. Court
of Appeals)

In the present case, suing individual petitioners in their personal capacities for damages in connection with their
alleged act of "illegally abusing their official positions to make sure that plaintiff Pharmawealth would not be
awarded the Benzathine" is permissible, in consonance with the foregoing principles. For an officer who exceeds
the power conferred on him by law cannot hide behind the plea of sovereign immunity and must bear the liability
personally.

B. Government instrumentalities, agencies, GOCCs

D004 Philippine Rock Industries Inc. v. Board of Liquidators, GR 84992, 15 December 1989, First Division,
Grino-Aquino [J] (http://www.lawphil.net/judjuris/juri1989/dec1989/gr_84992_1989.html) <

REPACOM

FACTS: On July 30, 1982, PHILROCK filed in the Regional Trial Court of Manila a complaint against the Board
of Liquidators praying that the defective rock pulverizing machinery which it purchased from REPACOM be
replaced with a new one in good and operable condition according to the specifications of their contract, or, in the
alternative, to refund the value of the defective rock pulverizing machinery at 31 % of its contract price. On April
23, 1987, the trial court rendered a decision in favor of PHILROCK. On May 5, 1987, PHILROCK filed an urgent
motion for execution pending appeal. On May 14, 1987, the Solicitor General, on behalf of the State, filed a notice
of appeal and an opposition to the "Motion for Execution Pending Appeal" on the ground that the funds sought to
be garnished by PHILROCK are public funds, hence, exempt from attachment and execution On May 19, 1987,
Judge Natividad Adduru-Santillan issued a Writ of Execution. An order of Garnishment was served to PNB
against the funds of REPACOM (P34,894,607.45) in favor of PHILROCK. On May 25, 1987, the Board filed a
petition for certiorari and prohibition in the Court of Appeals. On March 21, 1988, the Court of Appeals set aside
the trial court's order of execution. PHILROCK filed a petition for review.

ISSUE: Whether the funds of REPACOM in the account of the Board of Liquidators in the Philippine National
Bank may be garnished to satisfy a money judgment against the BOARD?

RULING: No. The Board of Liquidators is a government agency under the direct supervision of the President of
the Republic created by EO 372, dated November 24, 1950. It is tasked with the specific duty of administering the
assets and paying the liabilities of the defunct REPACOM. It was not created for profit or to engage in business.
Hence, when a suit is directed against said unincorporated government agency which, because it is
unincorporated, possesses no juridical personality of its own, the suit is against the agency's principal, i.e., the
State.

If the Government conducts a business through either a government-owned and controlled corporation or a non-
corporate agency set up primarily for a business purpose, the entity enjoys no immunity from suit even if there is
no express grant of authority to "sue or be sued." Having a juridical personality separate and distinct from the
government, the funds of such government-owned and controlled corporation and non-corporate agency,
although considered public in character, are not exempt from garnishment.

The sale of the rock pulverizing plant to PHILROCK by the Board of liquidators, although proprietary in nature was
merely incidental to the performance of the Board's primary and governmental function of settling and closing the
affairs of the REPACOM. Hence, its funds in the Philippine National Bank are public funds which are exempt from
garnishment.

All government funds deposited with PNB by any agency or instrumentality of the government, whether by way of
general or special deposit, remain government funds, since such government agencies or instrumentalities do not
have any non-public or private funds of their own. They are not subject to garnishment or levy; even assuming
that the funds become commingled with other funds of the bank, this does not remove the character of the fund
as a credit representing government funds thus deposited. (Commission of public Highways vs. San Diego)

ADDENDUM (Ruling on whether the State which consented to be sued can be enforced by a writ
execution to satisfy the judgment against it.)
It should be mentioned that when the State consents to be sued, it does not necessarily concede its liability.
By consenting to be sued, it waives its immunity from suit, but it does not waive its lawful defenses to the action
(Meritt vs. Government, 31 SCRA 311, 318). Even when the government has been adjudged liable in a suit to
which it has consented, it does not necessarily follow that the judgment can be enforced by execution against its
hands for every disbursement of public funds must be covered by a corresponding appropriation passed by the
Legislature:

... 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 state of execution' and that the powers
of the Courts ends when the judgment is rendered, since government funds and properties may not be seized
under writs of execution or garnishment to satisfy such judgments. ... 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. (Republic vs. Villasor, 54 SCRA 84)
A judgment against the State, in a case where it consents to be sued, simply implies that the Legislature will
recognize the judgment as final and make provision for its satisfaction. The decision of this Court in Republic vs.
Palacio, 23 SCRA 899 is relevant:

The pump irrigation trust fund, deposited with the Philippine National Bank in the account of the Irrigation Service
Unit, may not be garnished to satisfy a money-judgment against the latter.

Even though the rule as to immunity of a state from suit is relaxed, the power of the courts ends when the
judgment is rendered. Although the liability of the state has been judicially ascertained, the state is at liberty to
determine for itself whether to pay the judgment or not, and execution cannot issue on a judgment
against the state. Such statutes do not authorize a seizure of state property to satisfy judgments recovered, and
only convey an implication that the legislature will recognize such judgment as final and make provision for the
satisfaction thereof (49 Am. Jur., Sec. 104, pp. 312-320).

1. Government instrumentalities and agencies i 4

D005 Pacific Products Inc. v. Ong, GR L-33777, 30 January 1990, First Division, Medialdea [J]
(http://www.lawphil.net/judjuris/juri1990/jan1990/gr_l_33777_1990.html) <
This is an appeal by certiorari from the decision of the Court of Appeals

FACTS:
On February 15, 1963, Vicente Ong filed an action for damages against Macario Ofilada in his capacity
as Sheriff of Manila, the Pacific Products, Inc., and the First Quezon City Insurance, with the Court of First
Instance of Manila. The complaint prayed for damages as a result of defendants' refusal to favorably
consider his third party claim filed with the Sheriff of Manila.
Pacific Products, Inc. filed an action for sum of money against Hilarion D. Labrador, "doing business
under the name and style of BML Trading and Supply," with the Court of First Instance of Manila. Upon
Motion of Pacific, an order was issued directing the Sheriff of Manila to attach the properties of the
defendant.
Meanwhile, BML Trading and Supply won in a bid to supply the Bureau of Telecommunications with
15,000 pounds of bluestone copper sulfate worth P10,500.00. H.D. Labrador, as agent of BML Trading
delivered the compound. Before the Bureau could release the payment to BML Trading, the Sheriff of
Manila garnished P9,111.70 of P10,500.00 on October 17,1962.
Unknown to Pacific, BML Trading, through its attorney in-fact, H.D. Labrador assigned its rights over the
P10,500.00 to herein respondent, Vicente S. Ong on October 19,1962. It appears that it was Vicente Ong
who advanced the necessary funds to purchase the copper sulfate and the parties agreed that the profits
will be shared by BML Trading and Vicente Ong on a 40-60 percent basis. It was also their agreement
that BML Trading will waive its share in the net profits which may be realized from the transaction should
it fail to secure the release of the payment from the Bureau of Telecommunications within seven (7) days
from the delivery of the compound. Pacific learned about the assignment only when a copy of the third
party claim filed by Vicente Ong with the Office of the Sheriff of Manila was served on them on November
19,1962.
On November 29,1962, Pacific filed a motion to strike out the third party claim of Vicente Ong, but the
same was denied for lack of merit.
H.D. Labrador was declared in default and was ordered to pay Pacific the sum of P 9,111.70 in a decision
which was rendered by the trial court on December 21, 1962. H.D. Labrador is sentenced to pay plaintiff
the sum of P9,111.70 with interest thereon at 6% per annum from April 12, 1962 when the complaint was
filed and until the decision in this case is fully complied with plus attorney's fees which the Court fixes in
the sum of P500,000 plus cost.
The corresponding writ of execution was issued and the Sheriff of Manila further garnished Pl,181.65 of
the P10,500.00 in the possession of the Bureau.
Ong's third party claim was frustrated when Pacific filed an Indemnity Bond with the Office of the Sheriff.
Thus, the action for damages against the Sheriff, Pacific Products and First Quezon City Insurance filed
by Ong on February 14, 1963 to vindicate his claim on the amount garnished.
On February 21, 1964, judgment was rendered by the trial court, dismissing the complaint.
Ong filed a notice of appeal on March 20, 1964. On May 7, 1971, the Court of Appeals reversed the
decision of the trial court. CA ordered the defendants, the Pacific Products, Inc., and the First Quezon
City Insurance Co., Inc., to pay jointly and severally, the plaintiff-appellant the sum of ten thousand two
hundred ninety three pesos and thirty-five centavos (P10,293.35), with legal interest from November 19,
1962, the date of the filing of the third party claim and the costs.
Pacific filed a Motion for Reconsideration which was denied on July 2, 1971.
ISSUE: Whether the money in the hands of a Government agency (here Bureau of Telecommunications)
although payable to another entity can be garnished, (a virtual suing of the Government agency)?
RULING:
The writ of garnishment issued against the P10,500.00 payable to BML Trading while still in the
possession of the Bureau of Telecommunications is illegal and therefore, null and void. In view of the
assignment and waiver by BML Trading of the said amount in favor of Vicente Ong, the latter became the
rightful owner thereof.
It is noted that the notice of garnishment served upon the Bureau of Telecommunications was made
pursuant to an order of attachment issued by the trial court in the case for sum of money against H.D.
Labrador.
At the time of such service, the amount against which the notice was issued was still in the possession
and control of the Bureau. It was held, thus:
... By the process of garnishment, the plaintiff virtually sues the garnishee for a debt due to the
defendant. The debtor stranger becomes a forced intervenor. The Director of the Bureau of
Commerce and Industry, an officer of the Government of the Philippine Islands, when served with the writ
of attachment, thus became a party to the action. (Tayabas Land Co. vs. Sharruf (1921), 41 Phil. 382).
A rule, which has never been seriously questioned, is that money in the hands of public officers,
although it may be due government employees, is not liable to the creditors of these employees in
the process of garnishment. One reason is, that the State, by virtue of its sovereignty may not be
sued in its own courts except by express authorization by the Legislature, and to Subject its
officers to garnishment would be to permit indirectly what is prohibited directly. Another reason is
that moneys sought to be garnished, as long as it remains in the hands of the disbursing officer of
the Government, belong to the latter, although the defendant in garnishment may be entitled to a
specific portion thereof. And still another reason which covers both of the foregoing is that every
consideration of public policy forbids it. (Director of Commerce and Industry v. Concepcion. 43
Phil. 386;)
ADDENDUM (Ruling on whether the government agency [Bureau of Telecommunications] is immune
from suit?)
It is now "a well-established doctrine that when the Government engages in business, it abdicates part of
its sovereign prerogatives and ascends to the level of a citizen" (Price Stabilization Corporation v. Court
of Industrial Relations, G.R. L-9797 and L-9834. November 29. 1957).
Suability would follow only if the contract entered into by the government is in the exercise of a
proprietary as distinguished from a governmental function (see U.S.A vs. Ruiz, L-35645, May 22,
1985). The Bureau of Telecommunications is a service bureau and is not engaged in business. There is
also nothing in the records of this case from which it could be concluded that in the purchase of the
15,000 pounds of bluestone copper sulfate, the Bureau was engaging in business.
Likewise, petitioner contends that in this case, where the Bureau is authorized to enter into a contract, the
government "may sue and be sued and may be subjected to court processes just like any other
person," as was held in the case of National Shipyards and Steel Corporation (NASSCO) vs. CIR, et al.,
G.R. L-17874, August 31, 1963, 8 SCRA 781.
The Bureau of Telecommunications is a government agency created under Section 78 of Executive Order
No. 94, Series of 1947. It has no charter and no distinct personality of its own. Being a government
agency, the doctrine of State immunity from suit applies.
D006 Farolan v. Court of Tax Appeals, GR 42204, 21 January 1993, Third Division, Romero [J]
(http://www.lawphil.net/judjuris/juri1993/jan1993/gr_42204_1993.html) <

BAGONG BUHAY

FACTS: 80 bales of imported screen net were consigned to Bagon Buhay. The shipment arrived on Jan.
30, 1972. Bagong Buhay relying on the shipping documents provided by foreign supplier or shipper
erroneously declared the quantity and value of the imported shipment. So the collector of Customs
forfeited the shipment in favor of the Government due to fraud. The Commissioner affirmed the decision
of the Collector of Customs. On August 20, 1976 (4 years after), Bagong Buhay petitioned for release of
the questioned shipment. On June 2, 1986 (14 years after the arrival of the shipment) after posting a cash
bond of 49+ thousand, the shipment was released. Out of 80 bales only 64 bales (or 143, 454 yards)
were released and out of it only 116,950 yards were in good condition. There was a total of 43,050 yards
damaged or lost.

ISSUE: Whether the Bureau of Customs can be sued for damages of 43, 050 yd of screen net?

RULING: We opine that the Bureau of Customs cannot be held liable for actual damages that the
private respondent sustained with regard to its goods. Otherwise, to permit private respondent's claim to
prosper would violate the doctrine of sovereign immunity. Since it demands that the Commissioner of
Customs be ordered to pay for actual damages it sustained, for which ultimately liability will fall on the
government, it is obvious that this case has been converted technically into a suit against the state.

On this point, the political doctrine that "the state may not be sued without its consent,"
categorically applies. As an unincorporated government agency without any separate juridical
personality of its own, the Bureau of Customs enjoys immunity from suit. Along with the Bureau of Internal
Revenue, it is invested with an inherent power of sovereignty, namely, taxation. As an agency, the
Bureau of Customs performs the governmental function of collecting revenues which is definitely
not a proprietary function. Thus, private respondent's claim for damages against the Commissioner of
Customs must fail.
GROUP 2: D007 Republic of the Philippines v. Nolasco, GR 155108, 27 April 2005, Second Division,
Tinga [J] (http://www.lawphil.net/judjuris/juri2005/apr2005/gr_155108_2005.html) <

AGNO RIVER FLOOD CONTROL

FACTS
BAC was constituted by DPWH to conduct international bidding for the Agno River Flood Control Project
(ARFCP)-Phase II, Package II (Guide Channel to Bayambang) in Pangasinan.

Six (6) pre-qualified contractors submitted their bids for the project, among them the present intervenors
Daewoo Engineering and Construction Co., Ltd. (Daewoo), and China International Water and Electric
Corp. (China International)

Respondent filed a petition at RTC for TRO and preliminary injunction. He averred that Daewoo’s bid is
unacceptable and the award to Daewoo would cause injustice to him as a taxpayer. (Nolasco based this
petition on a letter he received from a resident in Bayambang Pangasinan and a confidential report from
an unnamed DPWH consultant).

RTC Judge Nabong issued the TRO and later on lifted the TRO in view of RA 8975 (which only grants the
SC to issue TRO’s, preliminary injunctions or preliminary mandatory injunction against the government or
any of its agencies or officials except when the matter is of extreme urgency involving constitutional issue,
then the lower courts may issue such TRO’s etc.). The legal grounds of lifting the TRO are:
1. Nolasco’s interest as taxpayer was not sufficient to establish direct injury to him.
2. The petition was a suit against the State.

Nolasco motioned for reconsideration and presented witnesses on factual issues. RTC considered the
motion for reconsideration based on factual issues where it dismissed the petition earlier based on legal
issues, locus standi and immunity from suit of the State.

Nolasco motioned to dismiss his petition. Yet he asserted that Daewoo was not qualified and said that
Chinal International won the project.

ISSUE: Whether the dismissal of the taxpayer-plaintiff Nolasco’s petition on the ground that it was a suit
against the State is correct?

RULING: Yes. There is no error on the part of the RTC in regarding Nolasco’s petition as a suit against
the State without the latter’s consent. An unincorporated Government agency such as DPWH is without
any separate juridical personality of its own and hence enjoys immunity from suit. Even in the exercise of
proprietary functions incidental to its primary governmental functions, an unincorporated agency cannot
be sued by entering into a contract, for at the time the petition was filed by Nolasco, the DPWH had not
yet entered into a contract with respect to the project.

a. Government Agencies exercising proprietary functions 5

D008 Civil Aeronautics Administration v. Court of Appeals, GR L-51806, 8 November 1988,
Third Division, Cortes [J] (http://www.lawphil.net/judjuris/juri1988/nov1988/gr_l_51806_1988.html)
<
CHONGANGANG FUTURE FATHER-IN-LAW (Consul General of Israel in the Philippines)

FACTS
Private respondent is a naturalized Filipino citizen and at the time of the incident was the
Honorary Consul General of Israel in the Philippines. He went to MIA to meet his future son-in-
law. While walking on the terrace, private respondent slipped over an elevation about four (4)
inches high at the far end of the terrace. As a result, private respondent fell on his back and broke
his thigh bone.
Private respondent then filed an action for damages based on quasi-delict against petitioner Civil
Aeronautics Administration or CAA. Judgment was rendered in favor of private respondent.
Petitioner appealed to the Court of Appeals. CA affirmed the trial court's decision.
ISSUES:
1. The Court of Appeals gravely erred in not holding that the present the CAA is really a suit
against the Republic of the Philippines which cannot be sued without its consent, which was not
given in this case.
RULING
1. Invoking the rule that the State cannot be sued without its consent, petitioner contends that
being an agency of the government, it cannot be made a party-defendant in this case.
This Court has already held otherwise in the case of National Airports Corporation v. Teodoro, Sr.
[91 Phil. 203 (1952)].
It has already been settled in the Teodoro case that the CAA as an agency is not immune from
suit, it being engaged in functions pertaining to a private entity.
The Civil Aeronautics Administration comes under the category of a private entity. Although not
a body corporate it was created, like the National Airports Corporation, not to maintain a
necessary function of government, but to run what is essentially a business, even if revenues be
not its prime objective but rather the promotion of travel and the convenience of the travelling
public. It is engaged in an enterprise which, far from being the exclusive prerogative of state,
may, more than the construction of public roads, be undertaken by private concerns. [National
Airports Corp. v. Teodoro, supra, p. 207.]
Republic Act No. 776 (Civil Aeronautics Act of the Philippines) led the Court to consider the CAA
in the category of a private entity.
CAA is tasked with private or non-governmental functions which operate to remove it from
the purview of the rule on State immunity from suit.
Not all government entities, whether corporate or non-corporate, are immune from suits. Immunity
from suits is determined by the character of the objects for which the entity was organized. The
rule is thus stated in Corpus Juris: Suits against State agencies with relation to matters in
which they have assumed to act in private or non-governmental capacity, and various
suits against certain corporations created by the state for public purposes, but to engage
in matters partaking more of the nature of ordinary business rather than functions of a
governmental or political character, are not regarded as suits against the state. The latter
is true, although the state may own stock or property of such a corporation for by
engaging in business operations through a corporation, the state divests itself so far of its
sovereign character, and by implication consents to suits against the corporation. (59 C.J.,
313) [National Airport Corporation v. Teodoro, supra, pp. 206-207; Emphasis supplied.]
Accordingly, as the CAA was created to undertake the management of airport operations which
primarily involve proprietary functions, it cannot avail of the immunity from suit accorded to
government agencies performing strictly governmental functions.
D009 Philippine National Railways v. Intermediate Appellate Court, GR 70547, 22 January
1993, Third Division, Melo [J]
(http://www.lawphil.net/judjuris/juri1993/jan1993/gr_70547_1993.html) <

TRAIN-BUS COLLISION AT BULACAN (1974)

FACTS
The case arose from a collision of a passenger express train of Philippine National Railways,
(PNR) coming from San Fernando, La Union and bound for Manila and a passenger bus of
Baliwag Transit, Inc. which was on its way to Hagonoy, Bulacan, from Manila, but upon reaching
the railroad crossing at Barrio Balungao, Calumpit, Bulacan at about 1:30 in the afternoon of
August 10, 1974, got stalled and was hit by express train causing damages to plaintiff's bus and
its passengers, eighteen (18) of whom died and fifty-three (53) others suffered physical injuries.

Baliwag Transit Inc alleging that the proximate cause of the collision was the negligence and
imprudence of PNR and its locomotive engineer, Honorio Cirbado, in operating its passenger
train in a busy intersection without any bars, semaphores, signal lights, flagman or switchman to
warn the public of approaching train that would pass through the crossing, filed the instant action
for Damages against PNR.

ISSUE: Whether PNR enjoys immunity from suit?

RULING: The bone of contention for exculpation is premised on the familiar maxim in political law
that the State, by virtue of its sovereign nature and as reaffirmed by constitutional precept, is
insulated from suits without its consent (Article 16, Section 3, 1987 Constitution).
However, equally conceded is the legal proposition that the acquiescence of the State to be sued
can be manifested expressly when the State commences litigation for the purpose of asserting an
affirmative relief or when it enters into a contract.
When the State participates in a covenant, it is deemed to have descended from its superior
position to the level of an ordinary citizen and thus virtually opens itself to judicial process. The
Court qualified this form of consent only to those contracts concluded in a proprietary capacity
and therefore immunity will attach for those contracts entered into in a governmental capacity.
The case of Malong vs. Philippine National Railways (138 SCRA 63, [1985]) was categorical
enough to specify that the Philippine National Railways "is not performing any
governmental function".
In Malong, Justice Aquino declared: The Manila Railroad Company, the PNR's predecessor, as a
common carrier, was not immune from suit under Act No. 1510, its charter.
To the pivotal issue of whether the State acted in a sovereign capacity when it organized the PNR
for the purpose of engaging in transportation, Malong continued to hold that:
. . . in the instant case 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.
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.
Immunity from suit is determined by the character of the objects for which the entity was
organized. Suits against State agencies with respect to matters in which they have assumed to
act in a private or nongovernmental capacity are not suits against the State.
(On State Immunity from Suit)
N.B. (ALWAYS CITED) A sovereign is exempt from suit, not because of any formal
conception or obsolete theory, but on the logical and practical ground that there can be no
legal right as against the authority that makes the law on which the right depends (Justice
Holmes in Kawananakoa vs. Polyblank, 205 U.S. 353, 51 L. 3d 834).
The public service would be hindered, and public safety endangered, if the supreme authority
could be subjected to suit at the instance of every citizen and, consequently, controlled in the use
and disposition of the means required for the proper administration of the Government (The Siren
vs. U.S., 7 Wall. 152, 19 L. ed. 129). (at pp.65-66).
Suits against State agencies with relation to matters in which they have assumed to act in a
private or nongovernmental capacity, and various suits against certain corporations created by
the State for public purposes, but to engage in matters partaking more of the nature of ordinary
business rather than functions of a governmental or political character, are not regarded as suits
against the State.
The latter is true, although the State may own the stock or property of such a corporation, for by
engaging in business operations through a corporation the State divests itself so far of its
sovereign character, and by implicating consents to suits against the corporation.
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.
When the State acts in its proprietary capacity, it is amenable to all the rules of law which bind
private individuals.
There is not one law for the sovereign and another for the subject, but when the sovereign
engages in business and the conduct of business enterprises, and contracts with individuals,
whenever the contract in any form comes before the courts, the rights and obligation of the
contracting parties must be adjusted upon the same principles as if both contracting parties were
private persons. Both stand upon equality before the law, and the sovereign is merged in the
dealer, contractor and suitor (People vs. Stephens, 71 N.Y. 549).
Other government agencies not enjoying immunity from suit are the Social Security System
(Social Security System vs. Court of Appeals, L-41299, February 21, 1983, 120 SCRA 707) and
the Philippine National Bank (Republic vs. Philippine National Bank, 121 Phil. 26). (at pp. 66-
68).

D00AAir Transportation Office v. Ramos, GR 159402, 23 February 2011, Third Division

Resolution, Bersamin [J] (http://www.lawphil.net/judjuris/juri2011/feb2011/gr_159402_2011.html)
<
FACTS:
• Spouses David and Elisea Ramos (respondents) discovered that a portion of their land
registered in the Baguio City was being used as part of the runway and running shoulder of the
Loakan Airport being operated by petitioner Air Transportation Office (ATO).

• The respondents (Spouses Ramos) agreed after negotiations to convey the affected
portion by deed of sale to the ATO in consideration of the amount of P778,150.00 However, the
ATO failed to pay despite repeated verbal and written demands.

• The respondents filed an action for collection against the ATO and some of its officials in
the RTC

• In their answer, the ATO and its co-defendants invoked as an affirmative defense the
issuance of Proclamation No. 1358, whereby President Marcos had reserved certain parcels of
land that included the respondents’ affected portion for use of the Loakan Airport. They asserted
that the RTC had no jurisdiction to entertain the action without the State’s consent considering
that the deed of sale had been entered into in the performance of governmental functions.

• The RTC rendered its decision on the merits, ORDERING the defendant Air
Transportation Office to pay the plaintiffs DAVID and ELISEA RAMOS

ISSUE: Whether ATO is immune from suit?

Suits against State agencies with relation to matters in which they have assumed to act in private
or non-governmental capacity, and various suits against certain corporations created by the state
 for public purposes, but to engage in matters partaking more of the nature of ordinary business
rather than functions of a governmental or political character, are not regarded as suits against
the state. The latter is true, although the state may own stock or property of such a corporation for
by engaging in business operations through a corporation, the state divests itself so far of its
sovereign character, and by implication consents to suits against the corporation. (59 C.J., 313)
[National Airports Corporation v. Teodoro, supra, pp. 206-207; Italics supplied.]

This doctrine has been reaffirmed in the recent case of Malong v. Philippine National Railways
[G.R. No. L-49930, August 7, 1985, 138 SCRA 63], where it was held that the Philippine National
Railways, although owned and operated by the government, was not immune from suit as it does
not exercise sovereign but purely proprietary and business functions. Accordingly, as the CAA
was created to undertake the management of airport operations which primarily involve
proprietary functions, it cannot avail of the immunity from suit accorded to government agencies
performing strictly governmental functions.15

In our view, the CA thereby correctly appreciated the juridical character of the ATO as an agency
of the Government not performing a purely governmental or sovereign function, but was instead
involved in the management and maintenance of the Loakan Airport, an activity that was not the
exclusive prerogative of the State in its sovereign capacity. Hence, the ATO had no claim to the
State’s immunity from suit. We uphold the CA’s aforequoted holding.

We further observe the doctrine of sovereign immunity cannot be successfully invoked to defeat a
valid claim for compensation arising from the taking without just compensation and without the
proper expropriation proceedings being first resorted to of the plaintiffs’ property.16 Thus, in De
los Santos v. Intermediate Appellate Court,17 the trial court’s dismissal based on the doctrine of
non-suability of the State of two cases (one of which was for damages) filed by owners of
property where a road 9 meters wide and 128.70 meters long occupying a total area of 1,165
square meters and an artificial creek 23.20 meters wide and 128.69 meters long occupying an
area of 2,906 square meters had been constructed by the provincial engineer of Rizal and a
private contractor without the owners’ knowledge and consent was reversed and the cases
remanded for trial on the merits. The Supreme Court ruled that the doctrine of sovereign immunity
was not an instrument for perpetrating any injustice on a citizen. In exercising the right of eminent
domain, the Court explained, the State exercised its jus imperii, as distinguished from its
proprietary rights, or jus gestionis; yet, even in that area, where private property had been taken
in expropriation without just compensation being paid, the defense of immunity from suit could not
be set up by the State against an action for payment by the owners.

Lastly, the issue of whether or not the ATO could be sued without the State’s consent has been
rendered moot by the passage of Republic Act No. 9497, otherwise known as the Civil Aviation
Authority Act of 2008.
b. Statute provides for capacity to sue and to be sued 6

2. Government Owned and Controlled Corporation 7

D00B Laurel v. Desierto, GR 145368, 12 April 2002, First Division, Kapunan [J]
(http://www.lawphil.net/judjuris/juri2002/apr2002/gr_145368_2002.html) <

NCC & EXPOCORP

FACTS:
On June 13, 1991, President Corazon C. Aquino issued Administrative Order No.233 “constituting a
Committee for the preparation of the National Centennial Celebration in 1998”, mandated “to take charge
of the nationwide preparations for the National Celebration of the Philippine Centennial of the Declaration
of Philippine Independence and the Inauguration of the Malolos Congress.” The Committee was renamed
the “National Centennial Commission” (NCC) through President Fidel V. Ramos' issue of Executive Order
No.128, “reconstituting the Committee for the preparation of the National Centennial Celebrations.”

Appointed as chairman of the commission was petitioner Vice-President Salvador H. Laurel with
Presidents Diosdado M. Macapagal and Corazon C. Aquino as Honorary Chairpersons.

Petitioner was also Chief Executive Officer of a corporation named Philippine Centennial Expo '98
(Expocorp) which was an organization tasked to the Freedom Ring Project, which was related to the
centennial celebration.

The Senate Blue Ribbon Committee investigated anomalies in the constructions and operations over the
centennial projects, recommending the prosecution of the petitioner by the Ombudsman.

Petitioner questioned the authority of the Ombudsman as he claims that he is not a public officer.
ISSUE: Whether EXPOCORP is a GOCC?

RULING: No, as a public office is the right, authority, and duty created and conferred by law, by which, for
a given period, either fixed by law or enduring at the pleasure of the creating power, an individual is
invested with some portion of the sovereign functions of the government, to be exercised by him for the
benefit of the public.

Also, “Public Officials” include elective and appointive officials and employees, permanent or temporary,
whether in career or non-career service including military and police personnel, whether or not they
receive compensation, regardless of amount.

The NCC performs with sovereign functions, therefore, must be identified as a public office. Since the
petitioner chairs this public office, he must be identified as a public officer.

Having arrived at the conclusion that the NCC performs executive functions and is, therefore, a
public office, we need no longer delve at length on the issue of whether Expocorp is a private or a
public corporation. Even assuming that Expocorp is a private corporation, petitioner’s position as
Chief Executive Officer (CEO) of Expocorp arose from his Chairmanship of the NCC.
Consequently, his acts or omissions as CEO of Expocorp must be viewed in the light of his
powers and functions as NCC Chair.

D00CHome Development Mutual Fund v. Commission on Audit, GR 142297, 15 June 2004, En Banc,
Azcuna [J] (http://www.lawphil.net/judjuris/juri2004/jun2004/gr_142297_2004.html) <

HDMF’s PRODUCTIVITY INCENTIVE BONUS

FACTS
• Republic Act No. 6971, "An Act to Encourage Productivity and Maintain Industrial Peace by
Providing Incentives to Both Labor and Capital," was approved on November 22, 1990, and took effect on
December 9, 1990. Section 3 of said Act states:

Sec. 3. Coverage.-- This Act shall apply to all business enterprises with or without existing and duly
recognized or certified labor organizations, including government-owned and controlled corporations
performing proprietary functions. It shall cover all employees and workers including casual, regular,
supervisory and managerial employees

• On June 4, 1991, the Secretary of Labor and Employment and the Secretary of Finance
promulgated the Rules Implementing Republic Act No. 6971. Rule II of said implementing rules provides:

Section 1. Coverage. These Rules shall apply to:

(a) All business enterprises with or without existing duly recognized or certified labor organizations,
including government-owned and controlled corporations performing proprietary functions;

(b) All employees and workers including casual, regular, rank-and-file, supervisory and managerial
employees.

• On November 21, 1991, petitioner HDMF granted Productivity Incentive Bonus equivalent to one
month salary plus allowance to all its personnel pursuant to Republic Act No. 6971, and its Implementing
Rules despite the advice on August 26, 1991 of Undersecretary Salvador Enriquez of the Department of
Budget and Management (DBM) to all government-owned and controlled corporations (GOCCs) and
government financial institutions (GFIs) with original charters performing proprietary functions to defer
payment of the productivity incentive bonus to their employees, pending the issuance of a definite ruling
by the Office of the President on the matter.

• On December 27, 1991, the Department of Labor and Employment and the Department of Finance
issued the Supplemental Rules Implementing Republic Act No. 6971, which provides that paragraph (a)
Section 1, Rule II of the Rules Implementing RA 6971, shall be amended to read as follows:

“(a) All business enterprises with or without existing duly certified labor organizations including
government-owned and controlled corporations performing proprietary functions which are
established solely for business or profit or gain and accordingly EXCLUDING those created,
maintained or acquired in pursuance of a policy of the state, enunciated in the constitution or by law, and
those whose officers and employees are covered by the Civil Service. (Emphasis supplied.)”

• On November 29, 1996, the grant of productivity incentive bonus to the HDMF personnel was
disallowed in audit under notice of disallowance. The disallowance was based on COA Decision No. 96-
288, dated June 4, 1996, stating that R.A. No. 6971 does not apply to government-owned or controlled
corporations or to government financial institutions with original charters performing proprietary functions,
such as the HDMF.

• In a letter-request, HDMF, through its President and Chief Executive Officer, Zorayda Amelia C.
Alonzo, requested for the lifting of the disallowance. Alonzo argued that R.A. No. 6971 applies to the
employees of HDMF since the coverage of the said law includes government-owned and controlled
corporations performing proprietary functions, and the supplemental rules excluding it from coverage was
issued after the HDMF had already granted the productivity incentive bonus to its employees.

• The COA affirmed the audit disallowance in a later decision stating that it finds the HDMF’s
argument, that the supplemental rules should not be given retroactive effect, untenable. It must be noted
that the grant of the Productivity Incentive Bonus was made on November 21, 1991 or after receipt of the
advice of the Department of Budget and Management Undersecretary dated August 26, 1991 to defer
payment of Productivity Incentive Bonus to all GOCCs/GFIs with original charters performing proprietary
functions, pending definite ruling of the Office of the President. Despite the said notice, management
proceeded with the payment.

• HDMF filed a motion for reconsideration that was denied by the Commission on Audit in Resolution
No. 2000-086 dated March 7, 2000.

Issue/s:
Whether or not the Commission on Audit acted in excess of its jurisdiction or with grave abuse of
discretion amounting to lack of jurisdiction in affirming the audit disallowance.

Ruling:
No, Commission on Audit did not commit grave abuse of discretion amounting to lack of jurisdiction in
affirming the audit disallowance.

Petitioner is a government-owned and controlled corporation performing proprietary functions with original
charter or created by special law, specifically Presidential Decree (PD) No. 1752, amending PD No. 1530.
As such, petitioner HDMF is covered by the Civil Service pursuant to Article IX, Section 2(1) of the 1987
Constitution, and, therefore, excluded from the coverage of Republic Act No. 6971.

Since Republic Act No. 6971 intended to cover only government-owned and controlled corporations
incorporated under the general corporation law, the power of administrative officials to promulgate rules in
the implementation of the statute is necessarily limited to what is intended and provided for in the
legislative enactment. Hence, the Supplemental Rules clarified that government-owned and controlled
corporations performing proprietary functions which are "created, maintained or acquired in pursuance of
a policy of the state, enunciated in the constitution or by law, and those whose officers and employees
are covered by the Civil Service" are excluded from the coverage of Republic Act No. 6971.

Therefore, even if petitioner HDMF granted the Productivity Incentive Bonus before the Supplemental
Rules were issued clarifying that petitioner was excluded from the coverage of Republic Act No. 6971, the
employees of HDMF did not acquire a vested right over said bonus because they were not entitled to it
under Republic Act No. 6971.

Moreover, the DBM advised petitioner herein, HDMF, on August 26, 1991, to defer payment of the
productivity incentive bonus to their employees, pending the issuance of a definite ruling by the Office of
the President on the matter. Despite said advice, the Board of Trustees of HDMF opted to grant the said
bonus on a voluntary basis as stated in its Resolution No. 91-549, Series of 1991. It expressed its
"concern over the welfare of the officers and employees of the Fund rather than adhering to the stringent
technicality of the law." The Board, therefore, was aware that possibly HDMF may not be covered by
 Republic Act No. 6971. It should have exercised prudence by awaiting the definite ruling on the coverage
to prevent legal problems.
__________________________
1 See Switzerland General Insurance Company Ltd. v. Republic of the Philippines, GR L-27389, 30 March 1970, En
Banc,
Fernando [J] () <; Republic of the Philippines v. Villasor, GR L-30671, 28 November 1973, Second Division, Fernando
[J]
(http://www.lawphil.net/judjuris/juri1973/nov1973/gr_30671_1973.html) <; Republic of the Philippines v. Purisima, GR
L-
36084, 31 August 1977, Second Division, Fernando [CJ]
(http://www.lawphil.net/judjuris/juri1977/aug1977/gr_36084_1977.html) <;
2 See Tan v. Director of Forestry, GR L-24548, 27 October 1983, Second Division, Makasiar [J]
(http://www.lawphil.net/judjuris/juri1983/oct1983/gr_l_24548_1983.html) <;
3 See Ruiz v. Cabahug, GR L-9990, 30 September 1957, En Banc, Labrador [J]
(http://www.lawphil.net/judjuris/juri1957/sep1957/gr_l-9990_1957.html) <; Philippine Resources Development
Corporation v. Republic of the Philippines, GR L-20063, 31 March 1965, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1965/mar1965/gr_l-20063_1965.html) <;
4 Others: See Angat River Irrigation System v. Angat River Workers' Union (PLUM), GRs L-10943 & L-10944, 28
December
1957, En Banc, Felix [J] (http://www.lawphil.net/judjuris/juri1957/dec1957/gr_l-10943-10944_1957.html) <; Republic of
the
Philippines v. Presiding Judge, Branch XV, Court of First Instance of Rizal, GR L-35919, 11 September 1980, First
Division, de Castro [J] (http://www.lawphil.net/judjuris/juri1980/sep1980/gr_35919_1980.html) <;
5 See Santos v. Santos, GR L-4699, 26 November 1952, En Banc, Padilla [J]
(http://www.lawphil.net/judjuris/juri1952/nov1952/gr_l-4699_1952.html) <; Malong v. Philippine National Railways, GR
L-
49930, 7 August 1985, En Banc, Aquino [J] (http://www.lawphil.net/judjuris/juri1985/aug1985/gr_l49930_1985.html) <;
6 See Arcega v. Court of Appeals, GR L-20869, 28 August 1975, First Division, Castro [J]
(http://www.lawphil.net/judjuris/juri1975/aug1975/gr_20869_1975.html) <; Social Security System v. Court of Appeals,
GR L- 41299, 21 February 1983, En Banc, Melencio-Herrera [J]
(http://www.lawphil.net/judjuris/juri1983/feb1983/gr_l_41299_1983.html) <;
7 See Rayo v. Court of First Instance of Bulacan, GRs L-55273-83, 19 December 1981, Second Division, Abad Santos
[J] (http://www.lawphil.net/judjuris/juri1981/dec1981/gr_55273-83_1981.html) <; Philippine National Railways v. Court
of Appeals, GR L-55347, 4 October 1985, Second Division, Escolin [J]
(http://www.lawphil.net/judjuris/juri1985/oct1985/gr_l55347_1985.html) <;
C. Municipal Corporations 8
D00D City of Manila v. Intermediate Appellate Court, GR 71159, 15 November 1989, Second Division, Paras
[J] (http://www.lawphil.net/judjuris/juri1989/nov1989/gr_71159_1989.html) <

D00EMunicipality of San Fernando La Union v. Firme, GR L-52179, 8 April 1991, First Division, Medialdea [J]
(http://www.lawphil.net/judjuris/juri1991/apr1991/gr_l_52179_1991.html) <

xxxx Osmena v. Commission on Audit, GR 110045, 29 November 1994, En Banc, Narvasa [CJ]
(http://www.lawphil.net/judjuris/juri1994/nov1994/gr_110045_1994.html) <

D00F City Government of Tagaytay v. Guerrero, GRs 140743 & 140745, 17 September 2009, Third Division,
Nachura [J] (http://www.lawphil.net/judjuris/juri2009/sep2009/gr_140743_2009.html) <

FACTS: Tagaytay-Taal Tourist Development Corp. (TTTDC) is the registered owner of 2 parcels of land. It
incurred real estate tax liabilities on the said properties for the tax years 1976 to 1983. For failure of the TTTDC to
settle its delinquent real estate tax obligations, the City Government of Tagaytay offered the properties for sale at
a public auction. Being the only bidder, a Certificate of Sale was executed in favor of the City of Tagaytay and
was correspondingly inscribed on the titles of the properties. The City of Tagaytay filed an unnumbered petition
for entry of new Cert of Titles in its favor before the RTC of Cavite. RTC granted the petition. The TTTDC
appealed to the CA. The subject properties were later purchased by Ameurfina Melencio Herrera, et. al. for the
amount equivalent to the taxes and penalties due to the same. During the pendency of the case before the CA,
TTTDC filed a petition for nullification of the public auction involving the disputed properties on the ground that the
properties were not within the jurisdiction of the City of Tagaytay and thus beyond its taxing authority. The City of
Tagaytay averred that based on its charter, said properties are within its territorial jurisdiction. The motion was
denied by the RTC.
ISSUE: Whether the City of Tagytay is liable for damages when it levied real estate taxes on the subject
properties
HELD: Yes, it is basic that before the City of Tagaytay may levy a certain property for sale due to tax delinquency,
the subject property should be under its jurisdiction. The failure of the of city officials to verify if the property is
within its jurisdiction before levying taxes on the same constitutes gross negligence . The City of Tagaytay is liable
for all the necessary and natural consequences of the negligent acts of its city officials and is liable for the tortious
acts committed by its agents who sold the properties to the Melencios despite the clear mandate of RA 1418
separating Barrio Birinayan from its jurisdiction and transferring the same to the Province of Batangas. The
decision was affirmed with modification.

D. Entities related to sovereign principal

D010 Shell Philippines Exploration BV v. Jalo, GR 179918, 8 September 2010, Second Division, Abad [J]
(http://www.lawphil.net/judjuris/juri2010/sep2010/gr_179918_2010.html) <

FACTS: Shell contracted with the Republic of the Philippines for exploration and extraction of petroleum in
Palawan. It was able to discover natural gas deposit in Malampaya. In order to extract the natural gas and
process it in its plant located in Batangas, Shell constructed pipe. The creation of pipe greatly affected the
respondents in this case who are fishermen as the pipe drove away fishes. From almost 5k income from fishing, it
lowered down to P573. Shell contended that it cannot be sued being an agent or instrument of the government to
carry out its project.
ISSUE: Whether Shell is an entity related to State and therefore cannot be sued?
RULING: No. Consequently, Shell is not an agent of the Philippine government, but a provider of services,
technology and financing for the Malampaya Natural Gas Project. It is not immune from suit and may be sued for
claims even without the State’s consent. Notably, the Philippine government itself recognized that Shell could be
sued in relation to the project. This is evident in the stipulations agreed upon by the parties under Service
Contract.
Article II, paragraph 8, Annex "B" of Service Contract 3832 states that legal expenses, including "judgments
obtained against the Parties or any of them on account of the Petroleum Operations", can be recovered by Shell
as part of operating expenses to be deducted from gross proceeds. Article II, paragraph 9B of the same
document allows a similar recovery for "[a]ll actual expenditures incurred and paid by CONTRACTOR [Shell] in
settlement of any and all losses, claims, damages, judgments, and any other expenses not covered by insurance,
including legal services." This signifies that the State itself acknowledged the suability of Shell. Since payment of
claims and damages pursuant to a judgment against Shell can be deducted from gross proceeds, the State will
not be required to perform any additional affirmative act to satisfy such a judgment.

D011 ATCI Overseas Corporation v. Echin, GR 178551, 11 October 2010, Third Division, Carpio Morales [J]
(http://www.lawphil.net/judjuris/juri2010/oct2010/gr_178551_2010.html) <

FACTS:
Respondent Echin was hired as med tech by the petitioner in behalf of Ministry of Public Health of Kuwait under a
2yr contract in which the 1st year will be probationary. She was deployed on Feb17,2000 but terminated on
Feb11,2001 for failing the probation. She returned to the Philippines and paid for her fare. She filed a suit and
NLRC ruled in favor of her, hence this petition where the petitioner contended that the immunity from suit of its
principal Ministry of Kuwait is extended to it.
ISSUE: Whether the immunity from suit of the Ministry extended to ATCI?
RULING: No. Petitioner ATCI, as a private recruitment agency, cannot evade responsibility for the money claims
of Overseas Filipino workers (OFWs) which it deploys abroad by the mere expediency of claiming that its foreign
principal is a government agency clothed with immunity from suit, or that such foreign principal’s liability must first
be established before it, as agent, can be held jointly and solidarily liable.
II. Consent of the State is effected only by the will of the legislature through the medium of a
duly enacted statute. Consent may be embodied either in a:
1. General Law
e.g. CA 327: an act fixing the time within which the Auditor General should should render his decision and
prescribing the manner of appeal
2. Special Law
e.g. Act 2189: Provinces, cities and municipalities shall be liable for damages for the death or injuries
suffered by any person by reason of the defective conditions of roads, streets, public buildings and other
public works under their control and supervision

A. Express Consent
1. Authority providing consent
D100 Republic of the Philippines v. Feliciano, GR 70853, 12 March 1987, First Division, Yap [J]
(http://www.lawphil.net/judjuris/juri1987/mar1987/gr_70853_1987.html) <

2. Money claims 9
a. Arising from contract 10 (See Act 3083 ; See Commonwealth Act 327 as amended by
Presidential Decree 1445 )

b. Compensation claim 11
D101 Department of Agriculture v. National Labor Relations Commission, GR 104269, 11
November 1993, Third Division, Vitug [J]
(http://www.lawphil.net/judjuris/juri1993/nov1993/gr_104269_1993.html) <

c. Money claim incorporated in other claims

D102 Africa v. Presidential Commission on Good Government, GR 83831, 9 January 1992,
En Banc, Regalado [J] (http://www.lawphil.net/judjuris/juri1992/feb1992/gr_83831_1992.html) <

3. Torts committed by special agents 12 (See Republic Act 386, Article 2180 )
D103 Fontanilla v. Maliaman, GR L-55963, 1 December 1989, Second Division, Paras [J]
(http://www.lawphil.net/judjuris/juri1989/dec1989/gr_55963_1989.html) <

D104 Fontanilla v. Maliaman, GRs L-55963 & 61045, 27 February 1991, En BancResolution, Paras [J]
(http://www.lawphil.net/judjuris/juri1991/feb1991/gr_l_55963_%2061045_1991.html) <

D105 Government Service Insurance System v. Labung-Deang, GR 135644, 17 September 2001,

First Division, Pardo [J] (http://www.lawphil.net/judjuris/juri2001/sep2001/gr_135644_2001.html) <

B. Implied Consent
(When the State enters into a business contract or itself commences litigation.)
- State may only be liable for proprietary acts, jure gestioni, and not for sovereign acts, jure imperii.
- When state files complaint, suability will result only where the government is claiming affirmative relief
from the defendant
(When it would be inequitable for the State to invoke its immunity)
(when the State takes private property for public use or purpose.)

1. Government submits itself to the court’s jurisdiction 13

D200 Republic of the Philippines v. Sandiganbayan, GR 85284, 28 February 1990, En Banc
Resolution, Padilla [J] (http://www.lawphil.net/judjuris/juri1990/feb1990/gr_85284_1990.html) <

a. Expropriation 14

2. The State itself files a complaint 15

D201 Republic of the Philippines v. Sandiganbayan, GR 88537, 17 April 1990, En Banc, Bidin [J]
(http://www.lawphil.net/judjuris/juri1990/apr1990/gr_88537_1990.html) <

D202 Republic of the Philippines v. Sandiganbayan, GR 90478, 21 November 1991, En Banc,

Narvasa [J] (http://www.lawphil.net/judjuris/juri1991/nov1991/gr_90478_1991.html) <

D203 Republic of the Philippines v. Sandiganbayan, GR 129406, 6 March 2006, Second Division,
Garcia [J] (http://www.lawphil.net/judjuris/juri2006/mar2006/gr_129406_2006.html) <
__________________________________

8 See Zobel v. City of Manila, GR L-22201, 12 January 1925, En Banc, Street [J]
(http://www.lawphil.net/judjuris/juri1925/jan1925/gr_l-22201_1925.html) <; Torio v. Fontanilla, GR L-29993, 23 October
1978,
First Division, Munoz Palma [J] (http://www.lawphil.net/judjuris/juri1978/oct1978/gr_29993_1978.html) <;
9 See Insurance Company of North America v. Republic of the Philippines, GR L-27516, 19 October 1967, En Banc,
Sanchez [J] (http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l-27516_1967.html) <;
10 See Pinero v. Hechanova, GR L-22562, 22 October 1966, En Banc, Reyes JBL [J]
(http://www.lawphil.net/judjuris/juri1966/oct1966/gr_l-22562_1966.html) <; Insurance Company of North America v.
Republic of the Philippines, GR L-27515, 5 September 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/sep1967/gr_l-27515_1967.html) <; Sayson v. Singson, GR L-30044, 19
December
1973, Second Division, Fernando [J] (http://www.lawphil.net/judjuris/juri1973/dec1973/gr_30044_1973.html) <;
11 See Belleng v. Republic of the Philippines, GR L-19856, 16 September 1963, En Banc, Reyes JBL [J]
(http://www.lawphil.net/judjuris/juri1963/sep1963/gr_l-19856_1963.html) <;
12 See Merritt v. Government of the Philippine Islands, GR L-11154, 21 March 1916, En Banc, Trent [J]
(http://www.lawphil.net/judjuris/juri1916/mar1916/gr_l-11154_1916.html)
It should be mentioned that when the State consents to be sued, it does not necessarily concede its
liability. By consenting to be sued, it waives its immunity from suit, but it does not waive its lawful
defenses to the action
<; Roseta v. Auditor General, GR L-1120, 31 August
1948, En Banc, Feria [J] (http://www.lawphil.net/judjuris/juri1948/aug1948/gr_l-1120_1948.html) <;
13 See Lim v. Brownell, GR L-8587, 24 March 1960, En Banc, Gutierrez David [J]
(http://www.lawphil.net/judjuris/juri1960/mar1960/gr_l-8587_1960.html) <;
14 See Visayan Refining Company v. Camus, GR L-15870, 3 December 1919, En Banc, Street [J]
(http://www.lawphil.net/judjuris/juri1919/dec1919/gr_l-15870_1919.html) <; Commissioner of Public Highways v. San
Diego,
GR L-30098, 18 February 1970, En Banc, Teehankee [J]
(http://www.lawphil.net/judjuris/juri1970/feb1970/gr_30098_1970.html)
All government funds deposited with PNB by any agency or instrumentality of the government, whether
by way of general or special deposit, remain government funds, since such government agencies or
instrumentalities do not have any non-public or private funds of their own. They are not subject to
garnishment or levy; even assuming that the funds become commingled with other funds of the bank, this
does not remove the character of the fund as a credit representing government funds thus deposited. <;
15 See Froilan v. Pan Oriental Shipping Co., GR L-6060, 30 September 1954, En Banc, Paras [CJ]
(http://www.lawphil.net/judjuris/juri1954/sep1954/gr_l-6060_1954.html) <
3. Government entering into business contracts
D204 Blaquera v. Alcala, GR 109406, 11 September 1998, En Banc, Purisima [J]
(http://www.lawphil.net/judjuris/juri1998/sep1998/gr_109406_1998.html) <

D205 Philippine Tourism Authority v. Philippine Golf Development & Equipment Inc., GR 176628,
19 March 2012, Second Division Resolution, Brion [J]
(http://lawphil.net/judjuris/juri2012/mar2012/gr_176628_2012.html) <

4. Government acquires properties from donation 16

D206 Department of Education, Division of Albay v. Onate, GR 161758, 8 June 2007, Second
Division, Velasco Jr. [J] (http://www.lawphil.net/judjuris/juri2007/jun2007/gr_161758_2007.html) <
FACTS: Celso Onate claims ownership of a disputed land occupies by Bagumbayan Elementary School
of Daraga since 1940. In 1991 ownership was vested upon Celso Onate by virtue of a Deed of
Extrajudicial Settlement of Estate and Cession executed by him and his three (3) sisters, namely: Melba
O. Napil, Cielo O. Lardizabal, and Maria Visia O. Maldo, who waived their successional rights in favor of
respondent Celso Oñate. Considering this circumstance,respondent proposed to petitioner DECS that it
purchase Lot No. 6849-A at the Fair Market Value (FMV) of PhP 400 per square meter and also
requested for reasonable rentals from 1960. In reply to the demand of the respondent,Engr. Orlando
Roces, District Engineer, Albay Engineering District informed that petitioner DECS is the owner of the
school site having acquired the disputed lot by virtue of a Deed of Donation executed by the Municipality
of Daraga, Albay in favor of petitioner. Thus, Onate filed for the Annulment of the Deed of Donation. The
RTC ruled in favor of the respondent, and so the annulment of the Deed of Donation, also the Court of
Appeals affirmed the said decision of RTC. Thus, this Petition for Review on Certiorari.
ISSUES:
A. WHETHER THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER MAY BE SUED IN
VIOLATION OF THE STATE’S IMMUNITY FROM SUIT.
B. WHETHER THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER MAY BE SUED
INDEPENDENTLY OF THE REPUBLIC OF THE PHILIPPINES.
RULING: The Court ruled that petitioner DECS can be sued without its permission as a result of its being
privy to the Deed of Donation executed by the Municipality of Daraga, Albay over the disputed property.
When it voluntarily gave its consent to the donation, any dispute that may arise from it would necessarily
bring petitioner DECS down to the level of an ordinary citizen of the State vulnerable to a suit by an
interested or affected party. It has shed off its mantle of immunity and relinquished and forfeited its armor
of non-suability of the State.

5. When Inequitable for government to claim immunity 17

D207 De Los Santos v. Intermediate Appellate Court, GRs L-71998-99, 2 June 1993, Third Division,
Romero [J] (http://www.lawphil.net/judjuris/juri1993/jun1993/gr_71998_99_1993.html) <

D208 EPG Construction Co. v. Vigilar, GR 131544, 16 March 2001, Second Division, Buena [J]
(http://www.lawphil.net/judjuris/juri2001/mar2001/gr_131544_2001.html) <

Facts:

The Ministry of Human Settlement has entered into a Memorandum of Agreement with DPWH for the
construction of 145 housing units.

Through this Memorandum of Agreement, DPWH have forged individual contracts with EPG
Construction, Septa Construction, Ciper Electric and Engineering, and etc. The scope of the said contract
only covers 2/3 of the funding for the housing project. DPWH Undersecretary Canlas had verbal
agreement with the petitioners that the remaining appropriations for the additional constructions will be
available and forthcoming. Petitioners agreed and complied with the said agreement despite having
deficiency of the fund.

Petitioners then received payment for the construction covered by the individual written contracts, thereby
leaving an amount of P5,918,315.63 which represents the expenses for “additional constructions.”

DBM has released funds for the payment of petitioner’s claims which was based on quantum meruit. On
the latter part, an indorsement was referred to DPWH Sec. Vigilar regarding the money claims so as to
vest on agency heads the prerogative to exercise fiscal responsibility thereon.
 This case has been brought to the Court which then the respondent incidentally argued that as a
government body and so as a part of the State, he said that they cannot be sued invoking the
constitutional doctrine of Non-suability of the State.

ISSUE: Whether the respondent may validly invoke the constitutional doctrine of Non-suability of the
State.

HELD: No. Under this case, respondent may not validly invoke the constitutional doctrine of Non-
Suability of the State and conveniently hide under the State’s cloak of invincibility against suit considering
that this principle yield to certain exceptions.

As decided by the Court “as a staunch guardian of the citizens’ rights and welfare, it cannot sanction an
injustice so patent on its face, and allow itself to be an instrument in the perpetration thereof. Justice and
equity sternly demand that the Immunity of the State against suit be shred in this particular instance and
that the petitioners be duly compensated on the basis of quantum meruit for the construction on the public
works housing project.”

D209 Republic of the Philippines v. Lacap, GR 158253, 2 March 2007, Third Division, Austria-Martinez
[J] (http://www.lawphil.net/judjuris/juri2007/mar2007/gr_158253_2007.html) <

xxxx Republic of the Philippines v. Unimex Micro-Electronics GmBH, GRs 155309-10, 9 March 2007,
First Division, Corona [J] (http://www.lawphil.net/judjuris/juri2007/mar2007/gr_166309_2007.html) <

D20ARepublic of the Philippines v. Hidalgo, GR 161657, 4 October 2007, First Division, Garcia [J]
(http://www.lawphil.net/judjuris/juri2007/oct2007/gr_161657_2007.html) <

xxxx Heirs of Pidacan v. Air Transportation Office, GR 186192, 25 August 2010, Second Division,
Nachura [J] (http://www.lawphil.net/judjuris/juri2010/aug2010/gr_186192_2010.html) <

(N.B. When this immunity is used as an instrument for perpetrating injustice,

justice and equity sternly demand that the State's cloak of invincibility against suit
be shred.)

FACTS
In 1935, spouses Mateo Pidacan and Romana Bigo, acquired a parcel of land with an area of about
22 hectares, situated in San Jose, Occidental Mindoro. In 1948, ATO used a portion of the
property as an airport. In 1988, Transfer Certificate of Title was issued in favor of the petitioners-heirs.
Despite this development, ATO still refused to pay petitioners. Petitioners filed a complaint with the
RTC against ATO for payment of the value of the property and rentals due thereon. In 1994, the
RTC promulgated a decision, ordering ATO to pay rentals and the value of the land at P89.00 per square
meter. ATO appealed to the (CA) which remanded the case to the RTC for further proceedings. The CA
also held that just compensation should have been determined as of the time the property was taken for
public use.

On remand, the RTC ruled again in favor of petitioners, ordering ATO, among others, to pay
petitioners the amount of P 65,584,048.00, and to pay monthly rentals for the use and occupation
for a total amount of P 6,249,645.40. ATO went to the CA, which again remanded the case to the RTC
for the determination of just compensation on the basis of the market value prevailing in 1948.
Petitioners moved for reconsideration, but the motion was denied.

On June 15, 2007, SC ruled in favor of petitioners, holding that ATO's act of converting petitioners'
private property into an airport came within the purview of eminent domain and as a consequence,
petitioners were completely deprived of the beneficial use and enjoyment of their property. We declared
that justice and fairness dictate that the appropriate reckoning point for the valuation of
petitioners' property was when the RTC made its order of expropriation in 2001. However, we
deleted the RTC's award of rental payments for lack of evidence. Thus, we disposed of the case in this
wise:
1. The actual area occupied by respondent ATO covered by Transfer Certificate of Title No. T-7160, totaling
215,737 square meters is declared expropriated in favor of the ATO.
2. The ATO is ordered to pay petitioners the amount of P304.39 per square meter for the area expropriated,
or a total of P65,668,185.43 with interest at the rate of 6% per annum from February 1, 2001, until the
same is fully paid.
 On February 20, 2008, petitioners filed a Motion for Execution before the RTC. On June 23, 2008,
the RTC issued an Order denying petitioners' Motion for Execution on the ground that the
prosecution, enforcement, or satisfaction of State liability must be pursued in accordance with the rules
and procedures laid down in Commonwealth Act No. 327,10 as amended by Presidential Decree
(P.D.) No. 1445. The RTC also relied on this Court's Administrative Circular No. 10-2000, dated
October 25, 2000, which enjoined all judges to observe utmost caution, prudence, and judiciousness in
the issuance of writs of execution to satisfy money judgments against government agencies and local
government units.

ISSUES: WHETHER THE FINAL DECISION OF THIS HONORABLE COURT CANNOT BE EXECUTED
BY THE TRIAL COURT IN THE LIGHT OF:
1. ADMINISTRATIVE CIRCULAR NO. 10-2000 in accordance with PARAGRAPH 4, SECTION 6 OF P.D.
NO. 1445 and RULE VIII OF THE 1997 COA REVISED RULES OF PROCEDURE
2. STATE IMMUNITY FROM SUIT

RULINGS:
1. (On ADMINISTRATIVE CIRCULAR No.10-2000 in view of PD No. 1445 and Rule VIII of the 1997
COA Revised Rules of Procedure)

No, the trial court can issue a writ of execution in just compensation in eminent domain cases.

Although the RTC faithfully complied with Administrative Circular No. 10-2000 by not indiscriminately
issuing any writ of execution to enforce money claims against the government in accordance with existing
jurisprudence and the provisions of P.D. No. 1445. Section 2619 of P.D. No. 1445 provides that all
money claims against the government or any of its subdivisions, agencies, and instrumentalities must be
filed with the COA.

However, well-settled in this jurisdiction that the determination of just compensation is a judicial
prerogative. The determination of "just compensation" in eminent domain cases is a judicial function.

The executive department or the legislature may make the initial determinations but when a party claims
a violation of the guarantee in the Bill of Rights that private property may not be taken for public use
without just compensation, no statute, decree, or executive order can mandate that its own
determination shall prevail over the court's findings. Much less can the courts be precluded from
looking into the "just-ness" of the decreed compensation.

In view of this mandate, this Court has declared the property to be expropriated in favor of ATO
and ordering the latter to pay petitioners just compensation. This ruling had already become final
and executory. Our Decision is clear and unambiguous. Nothing is left to be done, save for its
execution.

2. (On State Immunity from Siut)

Our ruling in EPG Construction Co. v. Hon. Vigilar, citing Amigable v. Cuenca, etc., et al. and Ministerio,
et al. v. CFI of Cebu, etc., et al., is instructive:
To our mind, it would be the apex of injustice and highly inequitable for us to defeat petitioners-
contractors' right to be duly compensated for actual work performed and services rendered, where both
the government and the public have, for years, received and accepted benefits from said housing project
and reaped the fruits of petitioners-contractors' honest toil and labor.

Incidentally, respondent likewise argues that the State may not be sued in the instant case,
invoking the constitutional doctrine of Non-suability of the State, otherwise known as the Royal
Prerogative of Dishonesty. Respondent's argument is misplaced inasmuch as the Principle of
State Immunity finds no application in the case before us.

Under these circumstances, respondent may not validly invoke the Royal Prerogative of Dishonesty
and conveniently hide under the State's cloak of invincibility against suit, considering that this
principle yields to certain settled exceptions. True enough, the rule, in any case, is not absolute for it
does not say that the state may not be sued under any circumstance.
Thus, in Amigable v. Cuenca, this Court, in effect, shred the protective shroud which shields the
State from suit, reiterating our decree in the landmark case of Ministerio v. CFI of Cebu that "the
doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an
injustice on a citizen." It is just as important, if not more so, that there be fidelity to legal norms on the
part of officialdom if the rule of law were to be maintained.

Although the Amigable and Ministerio cases generously tackled the issue of the State's immunity from
suit vis-a-vis the payment of just compensation for expropriated property, this Court nonetheless finds the
doctrine enunciated in the aforementioned cases applicable to the instant controversy, considering
that the ends of justice would be subverted if we were to uphold, in this particular instance, the State's
immunity from suit.

To be sure, this Court — as the staunch guardian of the citizens' rights and welfare — cannot sanction an
injustice so patent on its face, and allow itself to be an instrument in the perpetration thereof. Justice and
equity sternly demand that the State's cloak of invincibility against suit be shred in this particular
instance, and that petitioners-contractors be duly compensated — on the basis of quantum meruit — for
construction done on the public works housing project.

ADDEDUM (On Execution of SC’s Final Decision)

It is almost trite to say that EXECUTION is the fruit and the end of the suit and is the life of the law. A
judgment, if left unexecuted, would be nothing but an empty victory for the prevailing party.
Litigation must end sometime and somewhere. An effective and efficient administration of justice
requires that, once a judgment has become final, the winning party be not deprived of the fruits of the
verdict. Courts must, therefore, guard against any scheme calculated to bring about that result.
Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong
them. Petitioners have been deprived of the beneficial use and enjoyment of their property for a
considerable length of time. Now that they prevailed before this Court, it would be highly unjust and
inequitable under the particular circumstances that payment of just compensation be withheld from them.

D20B Vigilar v. Aquino, GR 180388, 18 January 2011, En Banc, Sereno

[J](http://www.lawphil.net/judjuris/juri2011/jan2011/gr_180388_2011.html) <

D20CCommissioner of Customs v. AGFHA Inc., GR 187425, 28 March 2011, Second Division,

Mendoza [J] (http://www.lawphil.net/judjuris/juri2011/mar2011/gr_187425_2011.html) <

6. Estoppel
D20D Southeast Asian Fisheries Development Center v. National Labor Relations Commission,
GR 82631, 23 February 1995, First Division, Quiason [J]
(http://www.lawphil.net/judjuris/juri1995/feb1995/gr_82631_1995.html) <

FACTS:

This case is a petition for review (on certiorari) of NLRC’s 1.) decision affirming the Labor Arbiter’s ruling
on the complaint filed by respondent Yong Chan Kim against petitioner SEAFDEC regarding illegal
dismissal; and, 2.) resolution denying the petitioner’s motion for reconsideration after NLRC affirmed the
decision of Labor Arbiter ordering petitioner to reinstate respondent to his former position with full back
wages and increased moral damages to PhP200,000 (from PhP50,000) adding another PhP50,000.00 as
exemplary damages and awarded 10% of the total monetary awards as attorney's fees.

On May 9, 1988, petitioner filed an urgent motion for the issuance of an order restraining NLRC from
issuing a writ of execution in connection with its August 20, 1987 Decision.

In a resolution dated May 12, 1988, this Court, without giving due course to the petition, issued a
temporary restraining order.

On July 12, 1989, we resolved to give due course to the petition and required the parties to submit their
respective memoranda.

On February 14, 1992, this Court, in Southeast Asian Fisheries Development Center-Aquaculture
Department v. National Labor Relations Commission, 206 SCRA 283 (1992) held that NLRC had no
jurisdiction over petitioner, the latter being "an international agency beyond the jurisdiction of the courts or
local agencies of the Philippine Government."
By reason of this Court's pronouncement in the aforementioned case, petitioner filed a supplemental
petition on May 16, 1992, raising the issue of lack of jurisdiction on the part of NLRC to hear and decide
the case.

In opposition to the supplemental petition, private respondent Yong argued that petitioner was precluded
from raising the issue of jurisdiction in view of the latter's failure to do so before the Labor Arbiter or even
before the Commission. In support of his argument, he invoked the doctrine of estoppel in Tijam v.
Sibonghanoy, 23 SCRA 29 (1968), which justified the departure from the accepted concept of non-
waivability of objection to jurisdiction.

ISSUE:

Whether the doctrine of estoppel may be applied to give NLRC or a local court jurisdiction over
SEAFDEC

RULING:

NO. Petition granted. Restraining order is made permanent. “In Southeast Asian Fisheries Development
Center-Aquaculture Department v. Danilo Acosta, Resolution, 226 SCRA 49 (1993), [the Court] we
reiterated our rulings in Southeast Asia Center, supra, and Lacanilao v. de Leon, 147 SCRA 286 (1987)
that SEAFDEC, as an international agency, enjoys diplomatic immunity.

In Opinion No. 139, Series of 1984, the Minister of Justice explained the concept of the immunity of
international organizations from the jurisdiction of local courts, thus:

1. 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 court where it is found. (See Jenks; Id., pp. 37-44) 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. In the case at bar, for instance, the entertainment by the National
Labor Relations Commission of Mr. Madamba's reinstatement cases would amount to
interference by the Philippine Government in the management decisions of the SEARCA
governing board; even worse, it could compromise the desired impartiality of the
organization since it will have to suit its actuations to the requirements of Philippine law,
which may not necessarily coincide with the interests of the other member-states. It is
precisely to forestall these possibilities that in cases where the extent of the immunity is specified
in the enabling instruments of international organizations, (jurisdictional immunity, is specified in
the enabling instruments of international organizations) jurisdictional immunity from the host
country is invariably among the first accorded. (See Jenks, Id; See Bowett. The Law of
International Institutions, pp. 284-285).

Private respondent Yong's invocation of estoppel is unavailing. The issue of estoppel on the part of
petitioner to timely raise the question of jurisdiction has been squarely passed upon in Southeast Asian
Fisheries Development Center-Aquaculture Department v. National Labor Relations Commission, 206
SCRA 283 (1992). In said case, we reiterated the general rule that estoppel does not apply to confer
jurisdiction to a tribunal that has none over a cause of action. As we explained in, Calimlim v.
Ramirez, 118 SCRA 399 (1982), there were exceptional circumstances involved in the Tijam case which
justified the exception to the general rule enunciated therein. In the Tijam case, a complaint for the
collection of P1,908.00 was filed on July 19, 1948 in the Court of First Instance of Cebu when under the
Judiciary Act of 1948, it was the Municipal Court that had jurisdiction thereof. It was only in 1963 or long
after the decision of the trial court had become final and executory that a motion to dismiss the complaint
was filed.

At any rate, we rule that the Tijam case applies only to ordinary litigants and not to parties which enjoy
sovereign or diplomatic immunity. With respect to foreign states and international organizations, the
immunity from suit or the jurisdiction of local courts can only be waived expressly by said entities
and not by the employees or agents (Salonga and Yap, Public International Law 114-115 [5th ed.];
Akehurst, A Modern Introduction to International Law 118 [5th ed.]).

D20E Newsounds Broadcasting Network Inc. v. Dy, GRs 170270 & 179411, 2 April 2009, Second
Division, Tinga [J] (http://www.lawphil.net/judjuris/juri2009/apr2009/gr_170270_2009.html) <
IV. Suits against Foreign States and International Agencies
A. Suits against Foreign States 18

D300 United States of America v. Guinto, GR 76607, 26 February 1990, En Banc, Cruz [J]
(http://www.lawphil.net/judjuris/juri1990/feb1990/gr_76607_1990.html) <

FACTS: On February 24, 1986, the Eastern Pacific Contracting Office, Okinawa Area Exchange, U.S. Air Force,
solicited buds for contracts for barber services in the Clark Air Base. The bidding was won by Ramon Dizon.
Private respondents included in the bidding sued several officers of the U.S. Air Force in Clark Air Base, claiming
that the winner made a bid for four facilities, including the Civil Engineering Area, which was not included in the
invitation to bid.
ISSUE: Whether the defendants are immune from suit or not.
HELD: The Barbershops were identified as commercial enterprises operated by private persons and are not
agencies of the United States Armed Forces nor are their facilities demandable as a matter of right by the
American servicemen.
The petitioners cannot plead any immunity from the complaint filed by the private respondents in the court below.
The contracts in question being decidedly commercial, the conclusion reached in the United States of America V.
Ruiz cannot be applied here.
The court would have directly resolved the claims against the defendants if not for the paucity of the record in the
case at hand. The case was remanded to the court below for further proceedings.

D301 Holy See v. Rosario, GR 101949, 1 December 1994, En Banc, Quiason [J]
(http://www.lawphil.net/judjuris/juri1994/dec1994/gr_101949_1994.html) <

D302 JUSMAG Philippines v. National Labor Relations Commission, GR 108813, 15 December 1994,
Second Division, Puno [J]
(http://www.lawphil.net/judjuris/juri1994/dec1994/gr_108813_1994.html) <
D303 Republic of Indonesia v. Vinzon, GR 154705, 26 June 2003, En Banc, Azcuna [J]
(http://www.lawphil.net/judjuris/juri2003/jun2003/gr_154705_2003.html) <

D304 Deutsche Gesselschaft Fur Technische Zusammenarbeit v. Court of Appeals, GR 152318, 16 April
2009, Second Division, Tinga [J] (http://www.lawphil.net/judjuris/juri2009/apr2009/gr_152318_2009.html) <

D305 China National Machinery & Equipment Corp. v. Santa Maria, GR 185572, 7 February 2012, En Banc,
Sereno [J] (http://lawphil.net/judjuris/juri2012/feb2012/gr_185572_2012.html) <

B. Suits against International Agencies

D306 Southeast Asian Fisheries Development Center v. Acosta, GRs 97468-70, 2 September 1993, Third
Division, Vitug [J] (http://www.lawphil.net/judjuris/juri1993/sep1993/gr_97468_70_1993.html) <

D307 Lasco v. United Nations Revolving Fund for Natural Resources Exploration (UNRFNRE), GRs
109096-109107, 23 February 1995, First Division, Quiason [J]
(http://www.lawphil.net/judjuris/juri1995/feb1995/gr_109095_109107_1995.html) <

_______________________________________
16 See Santiago v. Government of the Repubic of the Philippines, GR L-48214, 19 December 1978, Second Division,
Fernando [J] (http://www.lawphil.net/judjuris/juri1978/dec1978/gr_48214_1978.html) <
17 See Caltex (Philippines) Inc. v. Customs Arrastre Service, GR L-26632, 29 May 1970, En Banc, Fernando [J]
(http://www.lawphil.net/judjuris/juri1970/may1970/gr_26632_1970.html) <; Ministerio v. Court of First Instance of Cebu,
GR
L-31635, 31 August 1971, Fernando [J] (http://www.lawphil.net/judjuris/juri1971/aug1971/gr_31635_1971.html) <;
Amigable v.
Cuenca, GR L-26400, 29 February 1972, En Banc, Makalintal [J]
(http://www.lawphil.net/judjuris/juri1972/feb1972/gr_l_26400_1972.html) <
18 See Baer v. Tizon, GR L-24294, 3 May 1974, Second Division, Fernando [J]
(http://www.lawphil.net/judjuris/juri1974/may1974/gr_l_24294_1974.html) <; Baer v. Tizon, GR L-24294, 15 July 1974,
Second
Division, Fernando [J] (http://www.lawphil.net/judjuris/juri1974/jul1974/gr_l_24294_1974.html) <; United States of the
America
v. Ruiz, GR L-35645, 22 May 1985, En Banc, Abad Santos [J]
(http://www.lawphil.net/judjuris/juri1985/may1985/gr_l35645_1985.html) <;
xxxx Southeast Asian Fisheries Development Center v. National Labor Relations Commission (1995,
supra. D20D )

D308 Ebro v. National Labor Relations Commission, GR 110187, 4 September 1996, Second Division,
Mendoza [J] (http://www.lawphil.net/judjuris/juri1996/sep1996/gr_110187_1996.html) <

D309 Department of Foreign Affairs v. National Labor Relations Commission, GR 113191, 18 September
1996, First Division, Vitug [J] (http://www.lawphil.net/judjuris/juri1996/sep1996/gr_113191_1996.html) <

D30ACallado v. International Rice Research Institute, GR 106483, 22 May 1995, Third Division, Romero [J]
(http://www.lawphil.net/judjuris/juri1995/may1995/gr_106483_1995.html) <
V. Suits against Public Officers
A. Philippines 19
D400 Genson v. Adarle, GR 73928, 31 August 1987, Third Division, Gutierrez Jr. [J] ()
D401 Aberca v. Fabian-Ver, GR L-69866, 15 April 1988, En Banc, Yap [J]
(http://www.lawphil.net/judjuris/juri1988/apr1988/gr_l_69866_1988.html) <

D402 Republic of the Philippines v. Court of Appeals, GR 86147, 26 February 1990, Second Division,
Melencio-Herrera [J] (http://www.lawphil.net/judjuris/juri1990/feb1990/gr_86147_1990.html) <

D403 Chavez v. Sandiganbayan, GR 91391, 24 January 1991, En Banc, Gutierrez Jr. [J]
(http://www.lawphil.net/judjuris/juri1991/jan1991/gr_91391_1991.html) <

D404 Vital-Gozon v. Court of Appeals, GR 129132, 8 July 1998, First Division, Davide Jr. [J]
(http://www.lawphil.net/judjuris/juri1998/jul1998/gr_129132_1998.html) <

D405 Lansang v. Court of Appeals, GR 102667, 23 February 2000, Second Division, Quisumbing [J]
(http://www.lawphil.net/judjuris/juri2000/feb2000/gr_102667_2000.html) <

FACTS: Private respondent Gen. Assembly of the Blind (GABI) were allegedly awarded a verbal contract
of lease in Rizal Park by the National park Development Committee (NPDC). However this verbal contract
accommodation was unclear because there was no document or instrument involved. With the change of
government, the new chairman of NPDC, petitioner Amado Lansang sought to clean up Rizal Park and
terminated the said verbal agreement with GABI and demanded that they vacate the area. The notice
was signed by the President of GABI, private respondent Jose Iglesias allegedly to indicate his conformity
to its contents but later on claimed that he was deceived into signing the notice. On the day of the
suppopsed eviction, GABI filed an action for damages and injunction before the RTC against the
petitioner but it was dismissed ruling that the complaint was actually directed against the STATE which
could not be sued without its consent. On appeal the CA reversed the decision of the trial court and ruled
that a government official being sued in his official capacity is not enough to protest such official from
liability for acts done without or in excess of his authority.
ISSUES:
1)Whether or not private respondents complaint against petitioner Lansang as chairman of the NPDC is
in effect a suit against the state which cannot be sued without its consent.
HELD:
1) No, the complaint is not a suit against the state; 2) No, Lansang did not abuse his authority
The doctrine of immunity from suit applies to complaints filed against public officials for acts done in the
performance of their duties. This rule is that that suit must be regarded as one against the state where
satisfactory of judgment against the public official concerned will require the state itself to perform a
positive act.
Lansang was sued not in his capacity as NDDC chairman but in his personal capacity. From the
complaint Lansang was sued alelgedly for having personal motives in ordering ejectment of GABI from
Rizal Park.
There was no evidence of abuse of authority

D406 Calub v. Court of Appeals, GR 115634, 27 April 2000, Second Division, Quisumbing [J]
(http://www.lawphil.net/judjuris/juri2000/apr2000/gr_115634_2000.html) <
FACTS: Petitioners, who were officers of the Department of Environment and Natural Resources
seized two motor vehicles for transporting illegally cut lumber. The owner and the driver filed a case
against them for the recovery of the possession of the motor vehicle.

ISSUE: Whether replevin in this case is a suit against the State

RULING: Yes. This suit is not valid because the State may not be sued without its consent or when the public
official acted in bad faith in the discharge of his duties. It has been established that the DENR acted within its
authority. Hence, its action is the action of the State.

D407 Philippine Agila Satellite Inc. v. Trinidad-Lichauco, GR 142362, 3 May 2006, Third Division, Tinga [J]
(http://www.lawphil.net/judjuris/juri2006/may2006/gr_142362_2006.html) <

D408 Department of Health v. Phil Pharma Wealth Inc., GR 182358, 20 February 2013, Second Division, del
Castillo [J] (http://www.lawphil.net/judjuris/juri2013/feb2013/gr_182358_2013.html) <

1. Mistake by public officers 20

2. Presidential Commission on Good Government
D409 Presidential Commission on Good Government v. Pena, GR 77663, 12 April 1988, En Banc,
Teehankee [CJ] () <

D40AOlaguer v. Regional Trial Court, GR 81385, 21 February 1989, En Banc, Gancayco [J]
(http://www.lawphil.net/judjuris/juri1989/feb1989/gr_81385_1989.html) <

D40B Presidential Commission on Good Government v. Nepomuceno, GR 78750, 20 April 1990, En

Banc, Paras [J] (http://www.lawphil.net/judjuris/juri1990/apr1990/gr_78750_1990.html) <

B. Foreign States 21
D40C Sanders v. Veridiano, GR L-46930, 10 June 1988, First Division, Cruz [J]
(http://www.lawphil.net/judjuris/juri1988/jun1988/gr_l_46930_1988.html) <

D40D Shauf v. Court of Appeals, GR 90314, 27 November 1990, Second Division, Regalado [J]

D40EWylie v. Rarang, GR 74135, 28 May 1992, Third Division, Gutierrez Jr [J]

(http://www.lawphil.net/judjuris/juri1992/may1992/gr_74135_1992.html) <

D40F United States of America v. Reyes, GR 79253, 1 March 1993, En Banc, Davide Jr. [J]
(http://www.lawphil.net/judjuris/juri1993/mar1993/gr_79253_1993.html) <

D410 Minucher v. Court of Appeals, GR 142396, 11 February 2003, First Division, Vitug [J]
(http://www.lawphil.net/judjuris/juri2003/feb2003/gr_142396_2003.html) <

C. International Agencies or Organizations 22

D411 Liang v. People of the Philippines, GR 125865, 26 March 2001, First Division Resolution, Ynares-
Santiago [J] (http://www.lawphil.net/judjuris/juri2001/mar2001/gr_125865_2001.html) <
VI. Suability vs. Liability
D500 Republic of the Philippines v. National Labor Relations Commission, GR 120385, 17
October 1996, First Division, Vitug [J]
(http://www.lawphil.net/judjuris/juri1996/oct1996/gr_120385_1996.html) <

D501 Municipality of Hagonoy Bulacan v. Dumdum, GR 168289, 22 March 2010, Third Division, Peralta [J]
(http://www.lawphil.net/judjuris/juri2010/mar2010/gr_168289_2010.html) <

D502 University of the Philippines v. Dizon, GR 171182, 23 August 2012, First Division, Bersamin [J]
(http://www.lawphil.net/judjuris/juri2012/aug2012/gr_171182_2012.html) <
_______________________________________

19 See Mindanao Realty Corporation v. Kintanar, GR L-17152, 30 November 1962, En Banc, Barrera [J]
(http://www.lawphil.net/judjuris/juri1962/nov1962/gr_l-17152_1962.html) <;
20 See Lewin v. Galang, GR L-15253, 31 October 1960, En Banc, Labrador [J]
(http://www.lawphil.net/judjuris/juri1960/oct1960/gr_l-15253_1960.html) <;
21 See Igo v. National Abaca & Other Fibres Corporation, GR L-13208, 18 May 1960, En Banc, Bautista Angelo [J]
(http://www.lawphil.net/judjuris/juri1960/may1960/gr_l-13208_1960.html) <
22 See World Health Organization v. Aquino, GR L-35131, 29 November 1972, En Banc, Teehankee [J]
(http://www.lawphil.net/judjuris/juri1972/nov1972/gr_l_35131_1972.html) <;
VII. Consent to execution 23 / Immediate order to pay
A. State
1. Ordinary circumstances
xxxx Department of Agriculture v. National Labor Relations Commission ([1993] supra., D101)

D600 Republic of the Philippines v. Hidalgo, AM RTJ-05-1959, 9 December 2005, Second Division,
Chico-Nazario [J] (http://www.lawphil.net/judjuris/juri2005/dec2005/am_rtj-05-1959_2005.html) <

FACTS: Sometime on July 1975, a group of armed men who represented themselves as the PSG of then
President Ferdinand Marcos forcibly entered the residence of Tarcila Mendoza in Arlegui Street, San
Miguel, Manila and ordered her to turn over the copy of the TCT (TCT No. 118527) and compelled her
and her family to vacate the property.

24 Years later or on June1999, Mendoza filed a suit in RTC Manila for the reconveyance and declaration
of nullity of the supposed deed of sale which provided for the instrumentation toward the issuance of TCT
118911 in the name of Republic. She also asked for the reinstatement of her TCT 118527.

The RTC, on July 23, 2003 declared Republic as represented by OSG in default, for not seasonably filing
its answer and allowed the private respondent to present evidence ex parte.

On August 27, 2003, the RTC handed down its judgment declaring the deed of sale as null and void and
ordered the defendant Republic to pay Mendoza her just compensation amounting to P 143, 600,000.00
plus interest and ordering the Republic as well to pay P1,480,627,688.00 representing the rental fees for
the said property commencing July 1975 up to July 2003.

ISSUES: Whether the RTC had gravely abuse its discretion amounting to excess or lack of jurisdiction
when it proceeded to hear the case, declared the Republic in default when it did not timely filed its answer
and eventually awarded the private respondent staggering amount without giving the republic opportunity
to present its case.

Whether the writ of execution issued by the trial court against the Republic is valid.

RULING: No. The petitioner may have indeed been deprived of such hearing, but this does not mean
that its right to due process had been violated. For, consequent to being declared in default, the
defaulting defendant is deemed to have waived his right to be heard or to take part in the trial. The
handling solicitors simply squandered the Republic’s opportunity to be heard. But more importantly, the
law itself imposes such deprivation of the right to participate as a form of penalty against one unwilling
without justification to join issue upon the allegations tendered by the plaintiff.

No. The assailed trial court’s issuance of the writ of execution against government funds to satisfy its
money judgment is nullified. It is basic that government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments. Republic v. Palacio teaches that a judgment
against the State generally operates merely to liquidate and establish the plaintiff’s claim in the absence
of express provision; otherwise, they can not be enforced by processes of law.

However, consistent with the basic tenets of justice, fairness and equity, petitioner Republic, thru the
Office of the President, is hereby strongly enjoined to take the necessary steps, and, with reasonable
dispatch, make the appropriate budgetary arrangements to pay private respondent Tarcila L. Mendoza or
her assigns the amount adjudged due her under this disposition.

D601 Lockheed Detective and Watchman Agency Inc. v. University of the Philippines, GR 185918,
18 April 2012, First Division, Villarama Jr. [J]
(http://www.lawphil.net/judjuris/juri2012/apr2012/gr_185918_2012.html) <

a. Notice of garnishment 24
D602 City of Caloocan v. Allarde, GR 107271, 10 September 2003, Third Division, Corona [J]
(http://www.lawphil.net/judjuris/juri2003/sep2003/gr_107271_2003.html) <

2. Urgent circumstances
D603 Philippine Veterans Affairs Office v. Tamayo, GR 74322, 29 July 1988, Third Division, Fernan
[CJ] (http://www.lawphil.net/judjuris/juri1988/jul1988/gr_74322_1988.html) <

D604 Animos v. Philippine Veterans Affairs Office, GR 79156, 22 June 1989, En Banc, Sarmiento [J]
(http://www.lawphil.net/judjuris/juri1989/jun1989/gr_79156_1989.html) <

3. Refusal to appropriate
 D605 Nessia v. Fermin, GR 102918, 30 March 1993, First Division, Bellosillo [J]
(http://www.lawphil.net/judjuris/juri1993/mar1993/gr_102918_1993.html) <

(N.B. If the municipal mayor fails or refuses to make the necessary appropriation,
petitioner may bring an action against the municipality for the recovery of what is
due him/her.)

FACTS

Article 27 of the Civil Code accords judicial relief to "[a]ny person suffering material or moral loss because
a public servant or employee refuses or neglects, without just cause, to perform his official duty." This the
trial court applied in finding respondent Jesus M. Fermin, Mayor of Victorias, Negros Occidental, liable for
damages for maliciously refusing to act on the vouchers of petitioner Jose V. Nessia covering the latter's
claim for reimbursement of travel expense allowances. The Court of Appeals dismissed the case for lack
of cause of action.

ISSUES

Whether a public official, Mayor Fermin in this case, may be sued for malicious inaction and be held liable
for damages for refusal to appropriate?

RULING

(1) Yes. On the defense of lack of appropriation, while it is true that Fermin may not be compelled by
mandamus to approve vouchers because they exceeded the budgetary appropriations, he may,
nevertheless, be held liable for damages under Art. 27 for malicious inaction because he did not act on
the vouchers.

This provision against official inaction finds its ally in Sec. 3, par. (f), of R.A. 3019, as amended, otherwise
known as the "Anti-Graft and Corrupt Practices Act," which criminalizes "neglecting or refusing, after due
demand or request, without sufficient justification, to act within a reasonable time on any matter pending
before him for the purpose of . . . discriminating against any interested party."

It is apparent that public officials are called upon to act expeditiously on matters pending before them. For
only in acting thereon either by signifying approval or disapproval may the plaintiff continue on to the next
step of the bureaucratic process.

In Baldivia v. Lota, we made the following pronouncement:

"Indeed, respondent could have, and should have, either included the claim of petitioners herein
in the general budget he is bound to submit, pursuant to section 2295 of the Revised Administrative
Code, or prepared a special budget for said claim, and urged the municipal council to appropriate the sum
necessary therefor. In any event, if the municipal mayor fails or refuses to make the necessary
appropriation, petitioners may bring an action against the municipality for the recovery of what is
due them and after securing a judgment therefor, seek a writ of mandamus against the municipal
council and the municipal mayor to compel the enactment and approval of the appropriation
ordinance necessary therefor (19 R.C.L. 1951-1052; 34 Am. Jur., 950-951; 35 Am. Jur., 21)."

B. Public Officer 25
________________________________________________

23 See Carabao Inc. v. Agricultural Productivity Commission, GR L-29304, 30 September 1970, En Banc,
Teehankee [J]
(http://www.lawphil.net/judjuris/juri1970/sep1970/gr_29304_1970.html) <;
24 See Philippine National Bank v. Pabalan, GR L-33112, 15 June 1978, Second Division, Fernando [Acting CJ]
(http://www.lawphil.net/judjuris/juri1978/jun1978/gr_33112_1978.html) <; Philippine National Bank v. Court of
Industrial
Relations, GR L-32667, 31 January 1978, Second Division, Fernando [J]
(http://www.lawphil.net/judjuris/juri1978/jan1978/gr_32667_1978.html) <; Philippine National Railways v. Union de
Maquinistas, Fogoneros y Motormen, GR L-31948, 25 July 1978, Second Division, Fernando [J]
(http://www.lawphil.net/judjuris/juri1978/jul1978/gr_31948_1978.html) <;
25 See Director of the Bureau of Printing v. Francisco, GR L-31337, 20 December 1973, First Division, Teehankee [J]
(http://www.lawphil.net/judjuris/juri1973/dec1973/gr_31337_1973.html) <;
i Bureau of Customs: See Mobil v. Customs Arrastre Service, GR L-23139, 17 December 1966, En Banc, Bengzon JP
[J]
(http://www.lawphil.net/judjuris/juri1966/dec1966/gr_23139_1966.html) <; North British and Mercantile Insurance Co.
Ltd. v.
Isthmian Lines Inc., GR L-26237, 10 July 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/jul1967/gr_l-
26237_1967.html) <; Insurance Company of North America v. Republic of the Philippines, GR L-24520, 11 July
1967, En Banc,
Bengzon JP [J] (http://www.lawphil.net/judjuris/juri1967/jul1967/gr_l-24520_1967.html) <; Manila Electric Company v.
Customs
Arrastre Service, GR L-25515, 24 July 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/jul1967/gr_l-
25515_1967.html) <; American Insurance Company v. Macondray, GR L-24031, 19 August 1967, En Banc, Angeles [J]
(http://www.lawphil.net/judjuris/juri1967/aug1967/gr_l-24031_1967.html) <; Equitable Insurance and Casualty Co. Inc.
v. Smith Bell and Co. (Philippines) Inc., GR L-24383, 26 August 1967, En Banc, Sanchez [J]
(http://www.lawphil.net/judjuris/juri1967/aug1967/gr_l-
24383_1967.html) <; Philippine First Insurance Company Inc. v. Customs Arrastre Service, GR L-26951, 12
September 1967, En Banc, Bengzon JP [J] (http://www.lawphil.net/judjuris/juri1967/sep1967/gr_l-26951_1967.html) <;
Insurance Company of North America v. Republic of the Philippines, GR L-27517, 15 September 1967, En Banc,
Bengzon JP [J] (http://www.lawphil.net/judjuris/juri1967/sep1967/gr_l-27517_1967.html) <; Fireman's Fund Insurance
Company v. Republic of the Philippines, GR L-25844, 23 October 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l- 25844_1967.html) <; Fireman's Fund Insurance Company v.
Republic of the Philippines, GR L-26618, 23 October 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l-26618_1967.html) <; Northern Assurance Company Ltd. v.
Republic of the Philippines, GR L-27077, 23 October 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l-27077_1967.html) <; Hartford Fire Insurance Co. v. Customs
Arrastre Service, GR L-25362, 23 October 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l-25362_1967.html) <; American Insurance Company v. Republic
of the Philippines, GR L-25478, 23 October 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l-25478_1967.html) <; Insurance Company of North America v.
Warner Barnes and Co. Ltd., GR L-24106, 31 October 1967, En Banc, Macalintal [J]
(http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l- 24106_1967.html) <; Insurance Company of North America v.
Republic of the Philippines, GR -26794, 15 November 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/nov1967/gr_l-26794_1967.html) <; Atlantic Mutual Insurance Company v.
Republic of the Philippines, GR L-25663, 15 November 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/nov1967/gr_l-25663_1967.html) <; Royal Insurance Company v. American
Pioneer Line, GR L-25323, 15 November 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/nov1967/gr_l-25323_1967.html) <; Home Insurance Company v. United States
Lines Co., GR L-25593, 15 November 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/nov1967/gr_l-25593_1967.html) <; Hartford Fire Insurance Company v. PD
Marchessini &Co. (New York) Inc., GR L-24544, 15 November 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/nov1967/gr_l- 24544_1967.html) <; Caltex (Philippines) Inc. v. Customs
Arrastre Service, GR L-25947, 26 December 1967, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1967/dec1967/gr_26947_1967.html) <; Wise & Company Inc. v. Republic of the
Philippines, GR L-26934, 19 February 1968, En Banc, Bengzon JP [J]
(http://www.lawphil.net/judjuris/juri1968/feb1968/gr_l-26934_1968.html) <; Domestic Insurance Company of the
Philippines v. American Pioneer Line, GR L-28651, 27 February 1968, En Banc, Castro [J]
(http://www.lawphil.net/judjuris/juri1968/feb1968/gr_l-28651_1968.html) <; American Insurance Company v. Republic
of the Philippines, GR L-24955, 29 July 1968, En Banc, Reyes JBL [J]
(http://www.lawphil.net/judjuris/juri1968/jul1968/gr_l-24955_1968.html) <; Domestic Insurance Company of the
Philippines v. Republic of the Philippines, GR L-29362, 27 September 1968, En Banc, Castro [J]
(http://www.lawphil.net/judjuris/juri1968/sep1968/gr_l-29362_1968.html) <; Insurance Company of North America v.
Osaka Shoseb Kaisha (OSK-Line), GR L-22784, 28 March 1969, En Banc, Barredo [J]
(http://www.lawphil.net/judjuris/juri1969/mar1969/gr_l- 22784_1969.html) <; Union Insurance Society of Canton Ltd. v.
Republic of the Philippines, GR L-25338, 28 March 1969, En Banc, Reyes JBL [J]
(http://www.lawphil.net/judjuris/juri1969/mar1969/gr_l-25338_1969.html) <; Fireman's Fund Insurance Company v.
Maersk Line Far East Service, GR L-2189, 28 March 1969, En Banc, Castro [J]
(http://www.lawphil.net/judjuris/juri1969/mar1969/gr_l-27189_1969.html) <; Rizal Surety & Insurance Company v.
Customs Arrastre Service, GR L-25709, 25 April 1969, En Banc, Teehankee [J]
(http://www.lawphil.net/judjuris/juri1969/apr1969/gr_l-25709_1969.html) <; Insurance Company of North America v.
Republic of the Philippines, GR L-26979, 29 May 1969, En Banc, Teehankee [J]
(http://www.lawphil.net/judjuris/juri1969/may1969/gr_l-26979_1969.html) <; Providence Washington Insurance Co. v.
Republic of the Philippines, GR L-26386, 30 September 1969, En Banc, Fernando [J]
(http://www.lawphil.net/judjuris/juri1969/sep1969/gr_l- 26386_1969.html) <; Phoenix Assurance Company v. Republic
of the Philippines, GR L-26531, 31 October 1969, En Banc, Fernando [J]
(http://www.lawphil.net/judjuris/juri1969/oct1969/gr_l-26531_1969.html) <; Hanover Insurance Company v. United
States Lines Company, GR L-26919, 25 November 1969, En Banc, Reyes JBL [J]
(http://www.lawphil.net/judjuris/juri1969/nov1969/gr_l-26919_1969.html) <; Providence Washington Insurance
Company v. Republic of the Philippines, GR L-26978, 28 November 1969, En Banc, Teehankee [J]
(http://www.lawphil.net/judjuris/juri1969/nov1969/gr_l- 26978_1969.html) <; Caltex (Philippines) Inc. v. Customs
Arrastre-Service, GR L-26994, 28 November 1969, En Banc, Teehankee [J]
(http://www.lawphil.net/judjuris/juri1969/nov1969/gr_l-26994_1969.html) <; Fireman's Fund Insurance Company v.
United States Lines Company, GR L-26533, 30 January 1970, En Banc, Fernando [J]
(http://www.lawphil.net/judjuris/juri1970/jan1970/gr_26533_1970.html) <; Domestic Insurance Company of the
Philippines v. Everet Siam Line, GR L-23878, 31 July 1970, En Banc, Castro [J]
(http://www.lawphil.net/judjuris/juri1970/jul1970/gr_23878_1970.html) <; Gloren Inc. v. Republic of the Philippines, GR
L-26811, 31 July 1970, En Banc, Castro [J] (http://www.lawphil.net/judjuris/juri1970/jul1970/gr_26811_1970.html) <;
Champion Auto Supply Co. Inc. v. Bureau of Customs, GR L-26287, 27 April 1972, En Banc, Makalintal [J]
(http://www.lawphil.net/judjuris/juri1972/apr1972/gr_l_26287_1972.html) <; Rizal Surety & Insurance Company v.
American Steamship Agencies, GR L-26554, 18 May 1972, En Banc, Barredo [J]
(http://www.lawphil.net/judjuris/juri1972/may1972/gr_l_26554_1972.html) <; Federal Insurance Company v. Republic of
the Philippines, GR L-26480, 15 June 1972, En Banc, Makalintal [J]
(http://www.lawphil.net/judjuris/juri1972/jun1972/gr_l_26480_1972.html) <; Union Insurance Society of Canton Ltd. v.
Republic of the Philippines, GR L-26409, 31 July 1972, En Banc, Concepcion [CJ]
(http://www.lawphil.net/judjuris/juri1972/jul1972/gr_l_26409_1972.html) <; Travelers Indemnity Company v. Barber
Steamship Lines Inc., GR L-27019, 6 May 1977, Second Division, Aquino [J]
(http://www.lawphil.net/judjuris/juri1977/may1977/gr_27019_1977.html) <; Wise & Company Inc. v. Customs Arrastre
Service, GR L-27127, 7 June 1977, Second Division, Aquino [J]
(http://www.lawphil.net/judjuris/juri1977/jun1977/gr_27127_1977.html) <; Shell Company of the Philippines Limited v.
Nedlloyd Lines, GR L-25087, 21 July 1978, First Division, Guerrero [J]
(http://www.lawphil.net/judjuris/juri1978/jul1978/gr_25087_1978.html) <; Malayan Insurance Company v. Smith Bell &
Co. (Phil.) Inc., GR L-26823, 17 November 1980, Second Division, Fernando [CJ]
(http://www.lawphil.net/judjuris/juri1980/nov1980/gr_26823_1980.html) <;