Sovereign Immunity
With the well-known
 Basis: Section 3, Article XVI – The State may not be sued without its consent.
 REPUBLIC V. VILLASOR, 54 SCRA 83 (1973)
CASE DIGEST
FACTS:
Respondent Judge Guillermo P. Villasor issued an order declaring final and executory a
decision rendered in a special proceeding confirming an arbitration award in the amount of
P1,712,396.40 against the funds of the Armed Forces of the Philippines (AFP), thereby
directing the Sheriffs of Rizal Province, Quezon City, and Manila to execute the said
decision through a corresponding Alias Writ of Execution. Notices of garnishment were
served to several banks to cover the said amount. Among those served with a notice of
garnishment were the Philippine Veterans Bank and the Philippine National Bank where
funds therein are appropriated for the payment of pensions of retirees, pay and allowances
of military and civilian personnel, and for the maintenance and operations of the AFP.
The Republic of the Philippines alleged that the said act of Villasor was not in conformity
with the Constitution.
ISSUE:
WHETHER OR NOT the act of Villasor is in conformity with Constitution?
HELD:
NO. By virtue of the juristic concept of sovereignty, the state as well as its government is
immune from suit unless it gives its consent.
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.
It was held in Providence Washington Insurance Co. v. Republic of the Philippines 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.
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.
Public funds cannot be the object of a garnishment proceeding even if the consent to be
sued had been previously granted and the state liability adjudged.
The basis of the rule that government funds and properties may not be seized under writs
of execution or garnishment to satisfy judgments is based on obvious considerations of
public policy. Disbursements of public funds must be covered by the corresponding
appropriation as required by law. The functions and public services rendered by the
State cannot be allowed to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects, as appropriated by law.
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.
 ANNOTATION – IMMUNITY OF GOVERNMENT AGENCY, 591 SCRA
104 (2009)
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.
Providence Washington Insurance Co. v. Republic of the Philippines:
[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.

 When is a suit against the State?
 PROFESSIONAL VIDEO V. TESDA, 591 SCRA 83 (1973)
CASE DIGEST
FACTS:
 Technical Education and Skills Development Authority (TESDA) entered into a
negotiated contract with Professional Video, Inc. (PROVI) for the provision of
goods and services in the printing of PVC cards for the purposes of issuing a
certification for trainees who passed the TESDA’s National Skills Certification
Program;
 TESDA failed to pay the outstanding remaining balance within the period
prescribed;
 PROVI filed with the RTC a complaint for sum of money with damages and
additionally prayed for the issuance of a writ of preliminary
attachment/garnishment against TESDA to which the RTC granted;
 Allegedly, TESDA went to the level of an ordinary private citizen when it entered
into a purely commercial contract with PROVI and could no longer use the defense
of state immunity from suit.
 TESDA then filed a Motion to Discharge/Quash the Writ of Attachment, arguing
mainly that public funds cannot be the subject of garnishment. The RTC denied the
said motion.
 TESDA then filed a Petition for Certiorari with the CA to question the RTC’s
orders and its issuance of a writ of preliminary attachment against TESDA’s public
funds.
 The CA then set aside the RTC’s orders on the grounds that:
 TESDA’s funds are public in nature and and, therefore, exempt from
garnishment;
 TESDA’s purchase of the PVC cards was a necessary incident of its
governmental function;
 Subsequently, CA denied PROVI’s motion for reconsideration, hence the present
petition.
ISSUE:
1. WHETHER OR NOT TESDA can invoke state immunity from suit;
2. Granting that TESDA is indeed immuned from suit, WHETHER OR NOT the writ
of attachment issued against TESDA and its funds is valid;
HELD:
1. Yes.
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. (2 and 3 is
applicable to the present case)
TESDA is an unincorporated instrumentality of the government, directly
attached to the Department of Labor and Employment (DOLE). 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 performs governmental functions, and the issuance of certifications is a
task within its function of developing and establishing a system of skills
standardization, testing, and certification in the country. From the perspective of
this function, 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.
Providence Washington Insurance Co. v. Republic of the Philippines:
[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.
2. No. The writ of attachment is not valid for the following reasons:
 Public funds cannot be the object of garnishment proceedings even if
the consent to be sued had been previously granted and the state liability
adjudged;
 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. (Emphasis in the opinion of Justice Teehankee in
Commissioner of Public Highways vs. San Diego)
 In Traders Royal Bank v. Intermediate Appellate Court, the Court said:
Being public funds, the deposits are not within the reach of any
garnishment or attachment proceedings.
 HEIRS OF MATEO PIDACAN V. ATO, 629 SCRA 451 (2010)
CASE DIGEST
FACTS:
 Air Transportation Office (ATO) used a portion of the property of petitioners for
the San Jose Airport;
 Petitioners demanded for payment of the value and rentals of the said property in a
complaint filed with the RTC;
 The RTC ruled in favor of the petitioners. Further, the Supreme Court held that
ATO’s act of converting petitioner’s property into an airport came within the
purview of eminent domain. The property was expropriated to ATO and the SC
ordered that ATO should pay petitioners just compensation.
 The petitioners then filed with the RTC a Motion for Execution but was denied,
hence the instant case;
 In the instant case, ATO invoked the constitutional doctrine of Non-Suability of
the State, otherwise known as the Royal Prerogative of Dishonesty.
ISSUE:
WHETHER OR NOT the Principle of State Immunity is applicable in the present case.
HELD:
NO. In the cases of Amigable and Ministerio, the Court held that the doctrine of
governmental immunity from suit cannot serve as an instrument for perpetrating an
injustice to a citizen. Justice and equity sternly demand that the State’s cloak of
invincibility against suit be shred in this particular case. Petitioners have been deprived of
the beneficial use and enjoyment of their property for a considerable length of time and it
would be highly unjust and inequitable that payment of just compensation be withheld
from them.
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.
 ATO V. RAMOS, 644 SCRA 36 (2011)
CASE DIGEST
FACTS:
 Spouses David and Elisea Ramos discovered that a portion of their land was being
used as part of the runway and running shoulder of the Loakan Airport being
operated by the Air Transportation Office (ATO);
  The respondents agreed after negotiations to convey the affected portion by a deed
of sale to the ATO; however, ATO failed to pay the stipulated amount despite
repeated and verbal demands;
 The respondents then filed an action for collection against the ATO and some of its
officials in the RTC. The ATO 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 ruled in favor of the respondents, and the CA thereafter confirmed the
RTC’s decision with certain modifications, hence the appeal by the petitioner ATO
for review on certiorari.
ISSUE:
WHETHER OR NOT the doctrine of sovereignty immunity or non-suability of the State be
extended to the ATO?
HELD:
NO. The management and maintenance of airport operations in the case at bar is
proprietary in nature and not in pursuit of a necessary function of government. The agency
being engaged in functions pertaining to a private entity, removes it from the purview of
the rule on State immunity from suit.
Further, the doctrine of sovereign immunity cannot be successfully invoked to defeat a
valid claim for compensation for a private property taken in expropriation without just
compensation being paid (arising from the taking without just compensation and without
the proper expropriation proceedings being first resorted to on the concerned property) and
is not an instrument for perpetrating any injustice on a citizen.
Also, the ATO has been already legally succeeded by the Civil Aviation Authority of the
Philippines (CAAP) pursuant to R.A. 9497. The question of whether or not ATO could
be sued without its consent is already moot. The obligations that the ATO had incurred
by virtue of the deed of sale with the Ramos spouses should now be enforced against the
CAAP.
 CHINA NATIONAL V. SANTA MARIA, 665 SCRA 189 (2012)
CASE DIGEST
FACTS:
Petitioner China National Machinery & Equipment Corp. (CNMEG) and the North Luzon
Railways Corporation (Northrail) entered into a Contract of Agreement to initiate the
Northrail Project. Thereafter, the Export Import Bank of China (EXIM Bank) and the
Philippine Government entered into a loan agreement wherein EXIM Bank agreed to
extend an amount in favor of the Philippine Government in order to finance the said
project.
Respondents then filed a complaint before the RTC alleging that the Contract of Agreement
and the Loan of Agreement were void for being contrary to the (a) the Constitution; (b)
Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement
Reform Act; (c) Presidential Decree No. 1445, otherwise known as the Government
Auditing Code; and (d) Executive Order No. 292, otherwise known as the Administrative
Code.
CNMEG then filed a Motion to Dismiss arguing that the trial court did not have
jurisdiction over (a) its person, as it was an agent of the Chinese government, making
it immune from suit, and (b) the subject matter, as the Northrail Project was a product of
an executive agreement.
ISSUE:
WHETHER OR NOT CNMEG is entitled to immunity from suit.
HELD:
NO.
There are two conflicting concepts of sovereign immunity, each widely held and firmly
established. According to the classical or absolute theory, a sovereign cannot, without its
consent, be made a respondent in the courts of another sovereign. According to the
newer or restrictive theory, the immunity of the sovereign is recognized only with
regard to public acts or acts jure imperii of a state, but not with regard to private acts
or acts jure gestionis.
The restrictive application of State immunity is proper only when the proceedings arise out
of commercial transactions of the foreign sovereign, its commercial activities or economic
affairs. Stated differently, a State may be said to have descended to the level of an
individual and can thus be deemed to have tacitly given its consent to be sued only when it
enters into business contracts. It does not apply where the contract relates to the exercise of
its sovereign functions.
It is then crucial to ascertain the legal nature of the act involved - whether the entity
claiming immunity performs governmental, as opposed to proprietary, functions.
Upon scrutiny of the documents executed in relation to the Northrail Project, it was
determined that the Northrail Project was a commercial transaction and that
CNMEG initiated the undertaking, not the Chinese government.
On another note, state immunity from suit may be waived by general or special law. The
special law can take the form of the original charter of the incorporated government
agency.
Although CNMEG claims to be a government-owned corporation, it failed to adduce
evidence that it has not consented to be sued under Chinese law. In the absence of evidence
to the contrary, CNMEG cannot be presumed to be immuned from suit.
Also, in Public International Law, when a state or international agency wishes to plead
sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the
state where it is sued to convey to the court that said defendant is entitled to
immunity.
In the case at bar, CNMEG offers the Certification from the Economic and Commercial
Office of the Embassy of China, stating that the Northrail Project is in pursuit of a
sovereign activity; however, this is not the kind of certification that can establish
CNMEG’s entitlement to immunity from suit, as the determination should be of the
Department of Foreign Affairs of the Philippines.
Even with a DFA certification, however, it must be remembered that this Court is not
precluded from making an inquiry into the intrinsic correctness of such certification.
From all the foregoing, it is clear that CNMEG cannot be afforded immunity from suit.
 “The doctrine of state immunity from suit has undergone further metamorphosis.
The view evolved that the existence of a contract does not, per se, mean that
sovereign states may, at all times, be sued in local courts. The complexity of
relationships between sovereign states, brought about by their increasing
commercial activities, mothered a more restrictive application of the doctrine.”
 "Immunity from suit is determined by the character of the objects for which the
entity was organized."
 “If the foreign state is not engaged regularly in a business or trade, the particular
act or transaction must then be tested by its nature. If the act is in pursuit of a
sovereign activity, or an incident thereof, then it is an act jure imperii, especially
when it is not undertaken for gain or profit.”
 “The principle of state immunity from suit, whether a local state or a foreign state,
is reflected in Section 9, Article XVI of the Constitution, which states that "the
State may not be sued without its consent." Who or what consists of "the State"?
For one, the doctrine is available to foreign States insofar as they are sought to be
sued in the courts of the local State, necessary as it is to avoid "unduly vexing the
peace of nations.”
 HEIRS OF GAMBOA V. TEVES, 682 SCRA 397 (2012)
FACTS:
This resolves the motions for reconsideration of the 28 June 2011 Decision filed by (1) the
Philippine Stock Exchange's President, (2) Manuel V. Pangilinan, (3) Napoleon L.
Nazareno, and (4) the Securities and Exchange Commission (collectively, movants).
Movants contend that the term "capital" in Section 11, Article XII of the Constitution has
long been settled and defined to refer to the total outstanding shares of stock, whether
voting or non-voting. In fact, movants claim that the SEC, which is the administrative
agency tasked to enforce the 60-40 ownership requirement in favor of Filipino citizens in
the Constitution and various statutes, has consistently adopted this particular definition in
its numerous opinions. Movants point out that with the 28 June 2011 Decision, the Court in
effect introduced a "new" definition or "midstream redefinition"9 of the term "capital" in
Section 11, Article XII of the Constitution.
ISSUE:
How should the term “capital” be construed?
HELD:
Pursuant to the express mandate of Section 11, Article XII of the 1987 Constitution,
Congress enacted Republic Act No. 7042 or the Foreign Investments Act of 1991 (FIA), as
amended, which defined a "Philippine national" as follows:
SEC. 3. Definitions. - As used in this Act:
The term "Philippine national" shall mean a citizen of the Philippines; or a
domestic partnership or association wholly owned by citizens of the Philippines; or
a corporation organized under the laws of the Philippines of which at least
sixty percent (60%) of the capital stock outstanding and entitled to vote is
owned and held by citizens of the Philippines; or a corporation organized abroad
and registered as doing business in the Philippines under the Corporation Code of
which one hundred percent (100%) of the capital stock outstanding and entitled to
vote is wholly owned by Filipinos or a trustee of funds for pension or other
employee retirement or separation benefits, where the trustee is a Philippine
national and at least sixty percent (60%) of the fund will accrue to the benefit of
Philippine nationals: Provided, That where a corporation and its non-Filipino
stockholders own stocks in a Securities and Exchange Commission (SEC)
registered enterprise, at least sixty percent (60%) of the capital stock outstanding
and entitled to vote of each of both corporations must be owned and held by
citizens of the Philippines and at least sixty percent (60%) of the members of the
Board of Directors of each of both corporations must be citizens of the Philippines,
in order that the corporation, shall be considered a "Philippine national."
Thus, the FIA clearly and unequivocally defines a "Philippine national" as a Philippine
citizen, or a domestic corporation at least "60% of the capital stock outstanding and
entitled to vote" is owned by Philippine citizens.
The Constitution expressly declares as State policy the development of an economy
"effectively controlled" by Filipinos. Consistent with such State policy, the Constitution
explicitly reserves the ownership and operation of public utilities to Philippine nationals,
who are defined in the Foreign Investments Act of 1991 as Filipino citizens, or
corporations or associations at least 60 percent of whose capital with voting rights belongs
to Filipinos. The FIA’s implementing rules explain that "for stocks to be deemed owned
and held by Philippine citizens or Philippine nationals, mere legal title is not enough to
meet the required Filipino equity. Full beneficial ownership of the stocks, coupled with
appropriate voting rights is essential." In effect, the FIA clarifies, reiterates and confirms
the interpretation that the term "capital" in Section 11, Article XII of the 1987 Constitution
refers to shares with voting rights, as well as with full beneficial ownership. This is
precisely because the right to vote in the election of directors, coupled with full beneficial
ownership of stocks, translates to effective control of a corporation.
Any other construction of the term "capital" in Section 11, Article XII of the Constitution
contravenes the letter and intent of the Constitution. Any other meaning of the term
"capital" openly invites alien domination of economic activities reserved exclusively to
Philippine nationals. Therefore, respondents’ interpretation will ultimately result in
handing over effective control of our national economy to foreigners in patent violation of
the Constitution, making Filipinos second-class citizens in their own country.
Note:
The FIA is the basic law governing foreign investments in the Philippines, irrespective of
the nature of business and area of investment. It spells out the procedures by which non-
Philippine nationals can invest in the Philippines.
 DOH V. PHIL. PHARMA, 691 SCRA 421 (2013)
 On December 22, 1998, Administrative Order (AO) No. 27 series of 1995 was
issued by then Department of Health Secretary Alfredo G. Romualdez. AO 27 sets
the guidelines and procedure for accreditation of government suppliers of
pharmaceutical products for sale or distribution to the public, such accreditation to
be valid for three years but subject to annual review;
 On January 25, 2000, Secretary Romualdez issued AO 10 series of 2006 which
amended AO 27. Under Sec 7 of AO 10, accreditation period for government
suppliers of pharmaceutical products was reduced to 2 years. Also, accreditation of
Pharmaceutical companies may be recalled, suspended or revoked after due
deliberation and proper notice by the DOH Accreditation Committee, through its
Chairman;
 Sec 7 of AO 10 was later amended by AO 66 series of 2008 which stated that the 2
year accreditation may be recalled, suspended or revoked only after due
deliberation, hearing and notice by the DOH Accreditation Committee, through its
Chairman;
 On August 28, 2000, the DOH issued Memorandum No. 171-C which provided for
a list and category of sanctions to be imposed on accredited government suppliers.
 In line with Memorandum No. 171-C, the DOH, through former Undersecretary
Ma. Margarita M. Galon, issued Memorandum No. 209 series of 2000 inviting
representatives of 24 accredited drug companies, including herein respondent Phil
Pharmawealth, Inc. (PPI) to a meeting on October 27, 2000;
 During the meeting, Undersecretary Galon handed them copies of a document
entitled “Report on Violative Products” issued by the Bureau of Food and Drugs
(BFAD), which detailed violations or adverse findings relative to these accredited
drug companies’ products. PPI’s products were included as BFAD found that PPI’s
products sold to the public were unfit for human consumption;
 The companies were directed to submit their respective explanations on the
findings within 10 days. PPI did not submit its reply on time. Instead, it submitted
a letter stating that it is referring the matter to its lawyers for preparation of a reply
but with no indicated date of compliance which DOH Usec Galon found untenable,
thus, she informed PPI thru a letter that its accreditation had been suspended for
two years in accordance with AO 10 and Memorandum No. 171-C. PPI thru a
letter, demanded that Usec Galon cease and desist from enforcing the suspension
under pain of legal redress;
 PPI then filed a complaint to declare certain DOH issuances (AO 10,
Memorandum No. 171-C, Usec Galon’s suspension order, and AO 14, Series of
2001) null and void for being in violation of Section 26(d), Republic Act 3720,
with prayer for injunction and damages against Usec Galon and later DOH
Secretary Dayrit. It claimed that its accreditation was suspended without due
notice and hearing. It prayed that it be awarded moral damages, attorney’s fees and
costs of suit;
 The respondent DOH officials filed a motion to dismiss, alleging that it gave PPI
the opportunity to explain but it did not do so in a timely manner. The suspension
was necessary to stop the distribution and sale of substandard products. In a
Manifestation and Motion, the DOH officials further moved to dismiss the case as
it was a suit against the State; the complaint was improperly verified; and the
corporate officer lacked the authority to file the suit. The Regional Trial Court
dismissed the case, holding that the suit is against the State, thus the principle of
immunity from suit is applicable;
 On appeal to the CA by the PPI, however, the latter reversed and set aside the RTC
decision. According to the CA, it was premature for the RTC to have dismissed the
case, as the cause of action was sufficiently alleged in the complaint. It added that
it was apparent from the Complaint that petitioners were being sued in their private
and personal capacities for acts done beyond the scope of their official functions.
Thus, the issue of whether the suit is against the State could best be threshed out
during trial on the merits, rather than in proceedings covering a motion to dismiss.
 Thus, the DOH officials, herein petitioners, elevated the case to the Supreme
Court, arguing that PPI’s prayer for damages should be considered a suit against
the State for it would require the needed appropriation to satisfy PPI’s claim for
damages should it win. In issuing the assailed DOH issuances, they acted within
the scope of their authority, hence should not be made to account individually.
Petition was granted.
ISSUE:
WHETHER OR NOT DOH, in this circumstance, is under the mantle of state immunity.
RULING (3 Reasons):
YES.
1. In this case, DOH, being an unincorporated agency of the government which
performs functions of governmental character has not consented, either
expressly or impliedly, to be sued.
As a general rule, a state may not be sued. However, if it consents, either expressly
or impliedly, then it may be the subject of a suit. There is express consent when a
law, either special or general, so provides. On the other hand, there is implied
consent when the state "enters into a contract or it itself commences litigation."
However, it must be clarified that when a state enters into a contract, it does not
automatically mean that it has waived its non-suability. The State "will be
deemed to have impliedly waived its non-suability [only] if it has entered into
a contract in its proprietary or private capacity. [However,] when the contract
involves its sovereign or governmental capacity[,] x x x no such waiver may be
implied. "Statutory provisions waiving [s]tate immunity are construed in
strictissimi juris. For, waiver of immunity is in derogation of sovereignty."
“The State’s consent may be given either expressly or impliedly. Express consent may be
made through a general law or a special law. x x x Implied consent, on the other hand, is
conceded when the State itself commences litigation, thus opening itself to a counterclaim
or when it enters into a contract. In this situation, the government is deemed to have
descended to the level of the other contracting party and to have divested itself of its
sovereign immunity. This rule, x x x is not, however, without qualification. Not all
contracts entered into by the government operate as a waiver of its non-suability;
distinction must still be made between one which is executed in the exercise of its
sovereign function and another which is done in its proprietary capacity.”
The ruling in Air Transportation Office v. Ramos is relevant, viz:
“An unincorporated government agency without any separate juridical personality of its
own enjoys immunity from suit because it is invested with an inherent power of
sovereignty. Accordingly, a claim for damages against the agency cannot prosper;
otherwise, the doctrine of sovereign immunity is violated. However, the need to distinguish
between an unincorporated government agency performing governmental function and one
performing proprietary functions has arisen. The immunity has been upheld in favor of the
former because its function is governmental or incidental to such function; it has not been
upheld in favor of the latter whose function was not in pursuit of a necessary function of
government but was essentially a business.”
2. Also, the Complaint seeks to "impose a charge or financial liability against the
state," which then the defense of non-suability may be properly invoked.
In the event that PPI succeeds in its suit, the government or the state through the
DOH would become vulnerable to an imposition or financial charge in the form of
damages. This would require an appropriation from the national treasury
which is precisely the situation which the doctrine of state immunity aims to
protect the state from.
3. Lastly, it must be stressed that the mantle of non-suability extends to complaints
filed against public officials for acts done in the performance of their official
functions.
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. If yes, the state may move to dismiss the complaint on the
ground that it has been filed without its consent.
Otherwise stated, "public officials can be held personally accountable for acts
claimed to have been performed in connection with official duties where they
have acted ultra vires or where there is showing of bad faith."
 ARIGO V. SWIFT, 735 SCRA 102 (2014)
FACTS
 Tubbataha was declared a National Marine Park by virtue of Proclamation No. 306
issued by President Corazon C. Aquino on 11 August 1988.
 In 1993, Tubbataha was inscribed by the United Nations Educational Scientific and
Cultural Organization (UNESCO) as a World Heritage Site. It was recognized as
one of the Philippines’ oldest ecosystems.
 On 6 April 2010, Congress passed R.A. No. 10067 (RA 10067), otherwise known
as the “Tubbataha Reefs Natural Park (TRNP) Act of 2009”, to ensure protection
and conservation of the Tubbataha Reefs into perpetuity for the enjoyment of
present and future generations.
 Under the “no take” policy, entry into the waters of the TRNP is strictly regulated
and many human activities are prohibited, penalized or fined, including fishing,
gathering, destroying and disturbing the resources within the TRNP.
 In December 2012, the US Embassy in the Philippines requested diplomatic
clearance for the USS Guardian (the ship) “to enter and exit the territorial waters
of the Philippines and to arrive at the port of Subic Bay for the purpose of routine
ship replenishment, maintenance, and crew liberty.”
 On 6 January 2013, the ship left Sasebo, Japan for Subic Bay, arriving on 13
January 2013. Two days later, it departed Subic Bay for its next port of call in
Makassar, Indonesia.
 On 17 January 2013, while transiting the Sulu Sea, the ship ran aground on the
northwest side of South Shoal of the Tubbataha Reefs. No one was injured in the
incident and there have been no reports of leaking fuel or oil.
 On 20 January 2013, US 7th Fleet Commander, Vice Admiral Scott Swift expressed
regret for the incident in a press statement.
 On 4 February 2013, US Ambassador to the Philippine Harry Thomas, Jr. met with
Department of Foreign Affairs Secretary Albert del Rosario regarding the
compensation for damage to the reef caused by the ship.
 By 30 March 2013, the US Navy-led salvage team had finished removing the last
piece of the grounded ship from the coral reef.
 On 17 April 2013, petitioners Arigo, et.al. on their behalf and in representation of
their respective sector/organization and others, including minors or generations yet
unborn filed a petition for the issuance of a Writ of Kalikasan with prayer for the
 issuance of a Temporary Environmental Protection Order (TEPO) under the Rules
of Procedure for Environmental Cases. Their contentions are:
- The grounding, salvaging and post-salvaging operations of the ship cause
and continue to cause environmental damage of such magnitude as to
affect the provinces of Palawan, Antiques, Aklan, Guimaras, Iloilo, Negros
Occidental, Negros Oriental, Zamboaga del Norte, Basilan, Sulu and Taw-
Tawi which events violate their constitutional rights to a balanced and
healthful ecology
- There should be a directive from the Supreme Court for the institution of
civil, administrative and criminal suits for acts committed in violation of
environmental laws and regulations in connection with the grounding
incident
- US respondents committed the following violations under RA 10067:
unauthorized entry; non-payment of conservation fees; obstruction of law
enforcement officer; damages to the reef; and destroying and disturbing
resources
- The VFA provides for a waiver of immunity from suit
 The respondents consist of the following: Scott Swift in his capacity as
Commander of the US 7th Fleet; Mark Rice as the Commanding Officer of the
ship; President Benigno Aquino III as the Commander-in-Chief of the Armed
Forces of the Philippines; Hon. Albert del Rosario as the DFA Secretary; Hon.
Paquito Ochoa as the Executive Secretary; Hon. Ramon Paje as the DENR
Secretary; Vice Admiral Jose Luis Alano as the Philippine Navy Flag Officer in
Command; Admiral Rodolfo Isorena as Commandant of the Philippine Coast
Guard, Commodore Enrico Efren Evangelista as the Philippine Coast Guard
Palawan, Major Gen. Virgilio Domingo as Commandant of the AFP and Lt. Gen.
Terry Robling as Co-Director of the US Marine Corps. Forces. The Philippine
respondents contend that:
- The grounds relied upon by petitioners for the issuance of TEPO or writ of
Kalikasan have become fait accompli as the salvage operations on the ship
were already completed
- The petition is defective in form and in substance
- The petition improperly raises issues involving VFA between Philippines
and USA
- The determination of the extent of responsibility of the US Government
regarding the damage to the Tubbataha Reefs rests exclusively with the
executive branch
ISSUES
1. WON the Court has jurisdiction over the US respondents;
2. WON the waiver of immunity provisions of the VFA applies;
3. WON the petition has become moot; and
4. WON the Court can determine the extent of responsibility of the US Government
RULING
1. None. The US respondents were sued in their official capacity as commanding
officers of the US Navy who had control and supervision over the USS Guardian
and its crew. The alleged act or omission resulting in the unfortunate grounding of
the USS Guardian on the TRNP was committed while they were performing
official military duties. Considering that the satisfaction of a judgment against said
officials will require remedial actions and appropriation of funds by the US
government, the suit is deemed to be one against the US itself. The principle of
State immunity therefore bars the exercise of jurisdiction by the Court over the
persons of respondents Swift, Rice and Robling.
It is worthy to note that during the deliberations, Justice Antonio Carpio
took the position that the conduct of the US in this case, when its warship entered a
restricted area in violation of RA 10067 and caused damage to the TRNP reef
system, brings the matter within the ambit of Article 31 of the United Nations
Convention on the Law of the Sea (UNCLOS).
While historically, warships enjoy sovereign immunity from suit as
extensions of their flag State, Art. 31 of UNCLOS creates an exception to this rule
in cases where they fail to comply with the rules and regulations of the coastal
State regarding passage through the latter’s internal waters and the territorial sea.
Although the US to date has not ratified the UNCLOS, as a matter of long-
standing policy, the US considers itself bound by customary international rules on
the “traditional uses of the oceans” as codified in UNCLOS.
The Court concurs with Justice Carpio’s view that non-membership in the
UNCLOS does not mean that the US will disregard the rights of the Philippines as
a Coastal State over its internal waters and territorial sea. The Court thus expects
 the US to bear “international responsibility under Art. 31 of UNCLOS in
connection with the USS Guardian grounding which adversely affected the
Tubbataha reefs.
2. No. The waiver of State immunity under the VFA pertains only to criminal
jurisdiction and not to special civil actions such as the present petition for issuance
of a writ of Kalikasan.
In fact, it can be inferred from Section 17, Rule 7 of the Rules of
Procedure for Environmental Cases that a criminal case against a person charged
with a violation of an environmental law is to be filed separately:
“SEC. 17. Institution of separate actions. – The filing of a petition
for the issuance of the writ of kalikasan shall not preclude the
filing of separate civil, criminal or administrative actions.”
A ruling on the application or non-application of criminal jurisdiction
provisions of the VFA to US personnel who may be found responsible for the
grounding of the USS Guardian, would be premature and beyond the province of a
petition for a writ of Kalikasan. The Court found it unnecessary to determine
whether such waiver of State immunity is indeed absolute.
In the same vein, the Court cannot grant damages which have resulted
from the violation of environmental laws. Section 15, Rule 7 of the Rules of
Procedure for Environmental Cases enumerates the reliefs which may be granted
in a petition for issuance of a writ of Kalikasan, to wit:
Section 15. Judgment. - Within sixty (60) days from the time the
petition is submitted for decision, the court shall render judgment
granting or denying the privilege of the writ of kalikasan.
The reliefs that may be granted under the writ are the following:
(a) Directing respondent to permanently cease and desist from
committing acts or neglecting the performance of a duty in
violation of environmental laws resulting in environmental
destruction or damage;
(b) Directing the respondent public official, government agency,
private person or entity to protect, preserve, rehabilitate or restore
the environment;
(c) Directing the respondent public official, government agency,
private person or entity to monitor strict compliance with the
decision and orders of the court;
(d) Directing the respondent public official, government agency, or
private person or entity to make periodic reports on the execution
of the final judgment; and
(e) Such other reliefs which relate to the right of the people to a
balanced and healthful ecology or to the protection, preservation,
rehabilitation or restoration of the environment, except the award
of damages to individual petitioners. (Emphasis supplied)
3. Yes, in the sense that the salvage operation sought to be enjoined or restrained had
already been accomplished. However, insofar as the directives to Philippine
respondents to protect and rehabilitate the coral reef structure and marine habitat
adversely affected by the grounding incident are concerned, petitioners are entitled
to these reliefs notwithstanding the completion of the removal of the USS
Guardian from the coral reef.
The Court is mindful of the fact that the US and Philippine governments
both expressed readiness to negotiate and discuss the matter of compensation for
the damage caused by the USS Guardian. After all, exploring avenues for
settlement of environmental cases is not proscribed by the Rules of Procedure for
Environmental Cases.
4. No. The Court deferred to the Executive Branch the matter of compensation and
rehabilitation measures through diplomatic channels. Resolution of these issues
impinges on our relations with another State in the context of common security
interests under the VFA.
It is settled that the conduct of the foreign relations of our government is
committed by the Constitution to the executive and legislative – “the political”
departments of the government, and the propriety of what may be done in the
exercise of this political power is not subject to judicial inquiry or decision.
 NHA V. ROXAS, 773 SCRA 358 (2015)
 Consent to be Sued

 How Consent is Given
 VETERANS MANPOWER V. CA, 214 SCRA 286 (1992)
CASE DIGEST
FACTS:
 The Veterans Manpower and Protective Services, Inc. (VMPSI) filed a complaint
with the RTC praying for the issuance of a temporary restraining order and in due
time, a writ of preliminary injunction to enjoin the Chief of Philippine
Constabulary (PC) and Philippine Constabulary Supervisor Unit for Security and
Investigation Agencies (PC-SUSIA) from committing acts that would result in the
non-renewal of VMPSI’s license.
 Further, VMPSI demanded for awards on actual and compensatory damages,
exemplary damages, attorney’s fees and expenses of litigation, among others.
 The RTC issued a preliminary injunction in favor of the petitioner but was later on
lifted by the CA, hence VMPSI’s petition for review in the SC.
ISSUE:
WHETHER OR NOT VMPSI’s complaint against the PC Chief and PC-SUSIA is a suit
against the State without its consent?
YES.
VMPSI’s complaint seeks not only to compel the public respondents to act in a certain
way, but worse, seeks for actual and compensatory damages, exemplary damages, and
payment for attorney’s fees from said public respondents. Even if its action prospers, the
payment of its monetary claims may not be enforced because the State did not consent to
appropriate the necessary funds for that purpose.
Also, the acts of the PC Chief and PC-SUSIA were performed by them as part of their
official duties, without malice, gross negligence, or bad faith, hence, no recovery may be
had against them in their private capacities.
The Court held in Shauf v. Court of Appeals, 191 SCRA 713:
"While the doctrine appears to prohibit only suits against the state without its consent, it is
also applicable to complaints filed against officials of the state for acts allegedly performed
by them in the discharge of their duties. The rule is that if the judgment against such
officials will require the state itself to perform an affirmative act to satisfy the same,
such as the appropriation of the amount needed to pay the damages awarded against
them, the suit must be regarded as against the state itself although it has not been
formally impleaded."
Waiver of the State’s immunity from suit, being a derogation of sovereignty, will not be
lightly inferred, but must be construed strictissimi juris (Republic v. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority,
hence, from a legislative act. Without such consent, the trial court did not acquire
jurisdiction over the public respondents.
The state immunity doctrine rests upon reasons of public policy and the inconvenience and
danger which would flow from a different rule. "It is obvious that public service would be
hindered, and public safety endangered, if the supreme authority could be subjected to suits
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."
 DA V. NLRC, 227 SCRA 693 (1993)
CASE DIGEST
FACTS:
Petitioner Department of Agriculture (DA) and Sultan Security Agency entered into a
contract for security services to be provided by the latter to the said governmental entity.
Pursuant to their arrangements, guards were deployed by Sultan Security Agency in the
various premises of the DA. Thereafter, several guards filed a complaint for underpayment
of wages, nonpayment of 13th month pay, uniform allowances, night shift differential pay,
holiday pay, and overtime pay, as well as for damages against the DA and the security
agency.
The Labor Arbiter rendered a decision finding the DA jointly and severally liable with the
security agency for the payment of money claims of the complainant security guards. The
DA and the security agency did not appeal the decision. Thus, the decision became final
and executory. The Labor Arbiter issued a writ of execution to enforce and execute the
judgment against the property of the DA and the security agency.
DA then filed a petition for injunction, prohibition, and mandamus, with prayer for a
preliminary writ of injunction with the NLRC, alleging, among others, that the writ issued
was effected without the Labor Arbiter having duly acquired jurisdiction over the
petitioner, and that that the attachment or seizure of its property would hamper and
jeopardize petitioner's governmental functions to the prejudice of the public good.
The private respondents, on the other hand, argue that the petitioner has impliedly waived
its immunity from suit by concluding a service contract with Sultan Security Agency.
The NLRC did not quash the writ of execution, thus, the present petition for certiorari.
ISSUE:
WHETHER OR NOT the doctrine of non-suability of the State applies in the case.
HELD:
Act No. 3083 provides that the Philippine government "consents and submits to be sued
upon any money claims involving liability arising from contract, express or implied…”
While the DA has not pretended to have assumed a capacity apart from its being a
governmental entity when it entered into the questioned contract, the claims of the
complainant security guards clearly constitute money claims involving liability arising
from the said contract.
It must be noted, however, that money claims, pursuant to Commonwealth Act 327, as
amended by PD 1145, must first be brought to the Commission on Audit.
In Carabao, Inc., vs. Agricultural Productivity Commission, the Court ruled:
(C)laimants have to prosecute their money claims against the Government under
Commonwealth Act 327, stating that Act 3083 stands now merely as the general
law waiving the State's immunity from suit, subject to the general limitation
expressed in Section 7 thereof that "no execution shall issue upon any judgment
rendered by any Court against the Government of the (Philippines), and that the
conditions provided in Commonwealth Act 327 for filing money claims against the
Government must be strictly observed."
It must be further noted that when the State gives its consent to be sued by private parties
either by general or special law, claimant's action may be limited "only up to the
completion of proceedings anterior to the stage of execution" and that the power of the
Courts ends when the judgment is rendered, since government funds and properties may
not be seized under writs or execution or garnishment to satisfy such judgments.
Disbursements of public funds must be covered by the correspondent appropriation as
required by law. The functions and public services rendered by the State cannot be allowed
to be paralyzed or disrupted by the diversion of public funds from their legitimate and
specific objects, as appropriated by law.
Act No. 3083, provides the legal basis for the State liability but the prosecution,
enforcement or satisfaction thereof must still be pursued in accordance with the rules and
procedures laid down in C.A. No. 327, as amended by P.D. 1445.
The States' consent may be given expressly or impliedly. Express consent may be made
through a general law or a special law. In this jurisdiction, the general law waiving the
immunity of the state from suit is found in Act No. 3083, where the Philippine government
"consents and submits to be sued upon any money claims involving liability arising from
contract, express or implied, which could serve as a basis of civil action between private
parties." Implied consent, on the other hand, is conceded when the State itself commences
litigation, thus opening itself to a counterclaim or when it enters into a contract. In this
situation, the government is deemed to have descended to the level of the other contracting
party and to have divested itself of its sovereign immunity. Not all contracts entered into by
the government operate as a waiver of its non-suability; distinction must still be made
between one which is executed in the exercise of its sovereign function and another
which is done in its proprietary capacity.
When the state gives its consent to be sued, it does thereby necessarily consent to
unrestrained execution against it. Tersely put, when the State waives its immunity, all it
does, in effect, is to give the other party an opportunity to prove, if it can, that the State has
a liability.
1. Express Consent
o Money Claims Arising from Contract:
i. Commonwealth Act No. 3083
 ACT NO. 3083 Government has been sentenced to pay, including the same in the appropriations
AN ACT DEFINING THE CONDITIONS UNDER WHICH THE GOVERNMENT for the ensuing year.
OF THE PHILIPPINE ISLANDS MAY BE SUED
Sec. 9. This Act shall take effect on its approval.
Sec. 1. Complaint against Government. — Subject to the provisions of this Act,
the Government of the Philippine Islands hereby consents and submits to be sued Approved: March 16, 1923.
upon any moneyed claim involving liability arising from contract, expressed or
implied, which could serve as a basis of civil action between private parties. Footnotes
1. Now Auditor-General.
Sec. 2. A person desiring to avail himself of the privilege herein conferred must 2. Now Solicitor-General.
show that he has presented his claim to the Insular Auditor 1 and that the latter did 3. Now President of the Philippines.
not decide the same within two months from the date of its presentation. 4. Id.
5. Now Congress.
Sec. 3. Venue. — Original actions brought pursuant to the authority conferred in
this Act shall be instituted in the Court of First Instance of the City of Manila or of
the province were the claimant resides, at the option of the latter, upon which court
exclusive original jurisdiction is hereby conferred to hear and determine such
actions.

Sec. 4. Actions instituted as aforesaid shall be governed by the same rules of

procedure, both original and appellate, as if the litigants were private parties.

Sec. 5. When the Government of the Philippine Island is plaintiff in an action

instituted in any court of original jurisdiction, the defendant shall have the right to ii. Commonwealth Act No. 327
assert therein, by way of set-off or counterclaim in a similar action between private
parties. COMMONWEALTH ACT NO. 327

Sec. 6. Process in actions brought against the Government of the Philippine Islands
pursuant to the authority granted in this Act shall be served upon the Attorney-
General 2 whose duty it shall be to appear and make defense, either himself or
through delegates.
Sec. 7. Execution. — No execution shall issue upon any judgment rendered by
any court against the Government of the Philippine Islands under the provisions of
this Act; but a copy thereof duly certified by the clerk of the Court in which
judgment is rendered shall be transmitted by such clerk to the Governor-General, 3
within five days after the same becomes final.
Sec. 8. Transmittal of Decision. — The Governor-General, 4 at the
commencement of each regular session of the Legislature, 5 shall transmit to that
body for appropriate action all decisions so received by him, and if said body
determine that payment should be made, it shall appropriate the sum which the
AN ACT FIXING THE TIME WITHIN WHICH THE AUDITOR GENERAL
SHALL RENDER HIS DECISIONS AND PRESCRIBING THE MANNER OF
APPEAL THEREFROM
Section 1. In all cases involving the settlement of accounts or claims, other than those of
accountable officers, the Auditor General shall act and decide the same within sixty days,
exclusive of Sundays and holidays, after their presentation. If said accounts or claims need
reference to other persons, office or offices, or to a party interested, the period aforesaid
shall be counted from the time the last comment necessary to a proper decision is received
by him. With respect to the accounts of accountable officers, the Auditor General shall act
on the same within one hundred days after their submission, Sundays and holidays
excepted.
In case of accounts or claims already submitted to but still pending decision by the Auditor
General on or before the approval of this Act, the periods provided in this section shall
commence from the date of such approval.
Section2. The party aggrieved by the final decision of the Auditor General in the settlement
of an account for claim may, within thirty days from receipt of the decision, take an appeal
in writing:
(a) To the President of the United States, pending the final and complete withdrawal of her
sovereignty over the Philippines, or
(b) To the President of the Philippines, or
(c) To the Supreme Court of the Philippines if the appellant is a private person or entity.
If there are more than one appellant, all appeals shall be taken to the same authority
resorted to by the first appellant.
From a decision adversely affecting the interests of the Government, the appeal may be
taken by the proper head of the department or in case of local governments by the head of
the office or branch of the Government immediately concerned.
The appeal shall specifically set forth the particular action of the Auditor General to which
exception is taken with the reasons and authorities relied on for reversing such decision.
Section3. This Act shall take effect upon its approval.
Approved: June 18. 1938.
iii. P.D. No. 1415
MALACAÑANG
Manila
PRESIDENTIAL DECREE No. 1415
DEFINING THE POWERS AND FUNCTIONS OF THE OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL, ADJUSTING THE COMPENSATION
OF PERSONNEL AND FOR OTHER PURPOSES
WHEREAS, government-owned or controlled corporations including their subsidiaries
have consistently expanded their activities and multiplied in number through the years,
with total resources reaching billions of pesos;
WHEREAS, the Office of the Government Corporate Counsel, as the principal law office
of government-owned or controlled corporations, plays an important role in safeguarding
the legal interests of and in the successful discharge of the functions, duties and
responsibilities of government-owned or controlled corporations including their
subsidiaries;
WHEREAS, the increase in number and broadening of fields or scope of activities of
government-owned or controlled corporations have resulted in corresponding increase in
volume, complexity and importance of the work of the Office of the Government
Corporate Counsel;
WHEREAS, there is an imperative need to integrate and strengthen the existing legal
provisions affecting the Office of the Government Corporate Counsel, to make them more
responsive to the legal assistance needed by government-owned or controlled corporations;
WHEREAS, increase in personal and adjustments in their compensation, are necessary to
maintain the effectiveness of the Office of the Government Corporate Counsel as the
principal law office of all government- owned or controlled corporations.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the
Philippines, by virtue of the powers in me vested by the Constitution, do hereby decree and
order:
OFFICE OF THE GOVERNMENT CORPORATE COUNSEL
Section 1. The Office of the Government Corporate Counsel shall be the principal law
office of all government-owned or controlled corporations, without exception, including
their subsidiaries.
Section 2. The Office of the Government Corporate Counsel shall be headed by the
Government Corporate Counsel whose rank, qualifications for appointment, emoluments
and privileges, without prejudice to special orders of the President relative thereto, shall be
the same as those of an Associate Justice of the Court of Appeals. He shall be assisted by
six (6) Assistant Government Corporate Counsels who shall have the same rank,
qualifications for appointment, emoluments and privileges of Judges of Courts of First
Instance. In case of disability of the Government Corporate Counsel to perform the duties The incumbent Government Corporate Counsel, Assistant Government Corporate
of, or in case of vacancy in, the office, one of the six (6) Assistant Government Corporate Counsels, Corporate Attorneys, Trial Attorneys and Research Attorneys of the Office of the
Counsel shall be designated by the Secretary of Justice to temporarily perform the Government Corporate Counsel as presently constituted, shall each receive, without the
functions of said Office. The Government Corporate Counsel, the Assistant Government necessity of a new appointment, the salary rates provided herein, upon the recommendation
Corporate Counsels and State Corporate Attorneys shall be appointed by the President of of the Government Corporate Counsel and approval of the Secretary of Justice.
the Philippines.
Section 4. The funds necessary for the operation and maintenance of the Office of the
A State Corporate Attorney must be a member of the Philippine Bar and must have at least Government Corporate Counsel shall be assessed on its client corporations. The
five (5) years experience in the practice of law. A trial or research attorney must be a assessments to be determined annually by the Government Corporate Counsel and
member of the Philippine Bar and must have at least one year experience in the practice of approved by the Office of the President, upon the recommendation by the Secretary of
law. Justice shall be remitted by said corporations within the first quarter of every calendar year,
provided that such sums as maybe necessary and required hereunder shall be advanced
Section 3. The Government Corporate Counsel shall organize his staff in such manner as from the General Fund.
he may deem proper to promote the efficiency of the service. The positions and
emoluments of the personnel of the legal staff of the Office of the Government Corporate The Government Corporate Counsel is hereby authorized to make special assessment upon
Counsel shall be as follows: government-owned or controlled corporations serviced by his Office, to meet
contingencies, obligations and undertakings, necessary to maintain and promote the
efficiency and interests of the service.
Number of Position Position Annual Salary
Section 5. All laws, decrees, executive orders or instructions, and particularly government
1 Government Corporate Counsel P 52,400.00 corporation charters, or provisions thereof, inconsistent herewith, are hereby repealed.
6 Asst. Government Corporate Counsels 42,400.00
Section 6. This Decree shall take effect immediately.
5 State Corporate Attorneys 32,040.00
Done in the City of Manila, this 9th day of June, in the year of Our Lord nineteen hundred
5 State Corporate Attorneys 27,480.00
and seventy-eight.
5 State Corporate Attorneys 25,980.00
5 State Corporate Attorneys 22,980.00  SAYSON V. SINGSON, 54 SCRA 282 (1973)
5 Trial Attorneys 19,992.00
5 Trial Attorneys 18,492.00 CASE DIGEST
1 Senior Research Attorney 17,000.00
FACTS:
5 Research Attorneys 15,000.00
On January 1967, the Office of the District Engineer requisitioned various items of spare
parts for the repair of a D-8 bulldozer. A public bidding was conducted on 05 May 1967
and the bid of the Singkier Motor Service [owned by respondent Felipe Singson] at the
sum of P43,530.00 was accepted to which was thereafter approved by the Secretary of
Public Works and Communications.
Highway Auditor Sayson then conducted a pre-audit on the subsequent purchase orders.
He found the prices of the various spare parts just and reasonable and approved the
payment but withheld 20% thereof until supporting documents for the transaction were
submitted to the Supervising Auditor for review.
Upon review of the General Auditing Office, the transactions were found to be overpriced
by P 40,000.00 based on the canvass done among spare parts suppliers in Manila.
Malversation charges were then filed against the district and civil engineers involved.
Consequently, a mandamus suit was filed by Singson compelling the government auditors
to approve the collection of the 20% balance. The CFI ruled in favor of Singson, thus the
petition for certiorari by Sayson and the other petitioners in the present case.
ISSUE:
WHETHER OR NOT collection by the respondents is valid through a mandamus suit filed
against Sayson and the other petitioners.
HELD:
NO. The suit disguised as mandamus is actually a suit against the State which cannot be
entertained by the Court except when the State renders its consent.
Singson’s cause of action is a money claim against the government for the payment of the
balance withheld in the purchase of spare parts. Even if the claim is valid, mandamus is not
the remedy to enforce the collection of such claim, but an ordinary action for specific
performance. Singson should have filed his claim with the General Auditing Office under
the provisions of Commonwealth Act 327 which prescribes the conditions under which
money claims against the government may be filed. It is therein provided:
"In all cases involving the settlement of accounts or claims, other than those of accountable
officers, the Auditor General shall act and decide the same within sixty days, exclusive of
Sundays and holidays, after their presentation. If said accounts or claims need reference to
other persons, office or offices, or to a party interested, the period aforesaid shall be
counted from the time the last comment necessary to a proper decision is received by
him."
Thereafter, the procedure for appeal is indicated:
"The party aggrieved by the final decision of the Auditor General in the settlement of an
account or claim may, within thirty days from receipt of the decision, take an appeal in
writing: (a) To the President of the United States, pending the final and complete
withdrawal of her sovereignty over the Philippines, or (b) To the President of the
Philippines, or (c) To the Supreme Court of the Philippines if the appellant is a private
person or entity."
The appeal by the aggrieved party can only be brought to the judiciary only after consent
has been made. However, in the case at bar, there was no ruling from the Auditor General.
Also, even if a ruling has been obtained, the proper court for the appeal should have been
the Supreme Court. The CFI has no jurisdiction on the matter.
While it is true that an action may be filed once consent is secured, there is nothing to
prevent the State, however, to require that certain administrative proceedings be exhausted
first.
o Incorporation of Government Owned and/or Controlled
Corporations (GOCCS)
 NHA V. HEIRS GUIVELONDO, 404 SCRA 389 (2003)
FACTS:
On February 23, 1999 the NHA called the alleged claimants of the the land they intend to
develop as a socialized housing project, namely the Heirs of Isidro Guivelondo.
On November 12, 1999, the Heirs of Isidro Guivelondo (respondents) filed a Manifestation
stating that they were waiving their objections to petitioner’s power to expropriate their
properties. The plaintiff has a lawful right to expropriate the properties of the defendants
who are heirs of Isidro Guivelondo and the court appointed three Commissioners to
ascertain the just compensations.
Commisioners submitted their reports amounting to P11,200.00 per square meter. Both
parties filed a motion for reconsideration about the compensation but was denied by court.
A motion for execution was filed by the respondents and was then granted by the court.
On July 16, 2001, The petitioner filed with the trial court a Motion to Dismiss Civil Case
No. CEB-23386, complaint for eminent domain, alleging that the implementation of its
socialized housing project was rendered impossible by the unconscionable value of the
land sought to be expropriated, which the intended beneficiaries can’t afford.
The Motion was on the ground that the Partial Judgment had already become final and
executory and there was no just and equitable reason to warrant the dismissal of the case.
ISSUES:
1. WHETHER OR NOT the state can be compelled and coerced by the courts to
exercise or continue with the exercise of its inherent power of eminent domain;
2. WHETHER OR NOT judgment has become final and executory and if estoppel or
laches applies to government; and
3. WHETHER OR NOT writs of execution and garnishment may be issued against
the state in an expropriation wherein the exercise of the power of eminent domain
will not serve public use or purpose.
RULING:
WHEREFORE, in view of the foregoing, the instant petition for review is DENIED. The
decision of the Court of Appeals in CA-G.R. SP No. 68670, affirming the trial court’s
Order denying petitioner’s Motion to Dismiss the expropriation proceedings in Civil Case
No. CEB-23386, is AFFIRMED. Petitioner’s prayer for injunctive relief against the levy
and garnishment of its funds and personal properties is DENIED. The Temporary
Restraining Order dated January 22, 2003 is LIFTED.
HELD:
1. Yes. The right of the plaintiff to dismiss an action with the consent of the court is
universally recognized with certain well-defined exceptions. If the plaintiff
discovers that the action which he commenced was brought for the purpose of
enforcing a right or a benefit, the advisability or necessity of which he later
discovers no longer exists, or that the result of the action would be different from
what he had intended, then he should be permitted to withdraw his action, subject
to the approval of the court.
2. Yes. Expropriation proceedings consists of two stages: first, condemnation of the
property after it is determined that its acquisition will be for a public purpose
or public use and, second, the determination of just compensation to be paid
for the taking of private property to be made by the court with the assistance
of not more than three commissioners. Both of the stages are final yet still
appealable. An order of condemnation or dismissal is final, resolving the question
of whether or not the plaintiff has properly and legally exercised its power of
eminent domain. Once the first order becomes final and no appeal thereto is taken,
the authority to expropriate and its public use can no longer be questioned. In the
case at bar, petitioner did not appeal the Order of the trial court dated December
10, 1999, which declared that it has a lawful right to expropriate the properties of
respondent Heirs of Isidro Guivelondo. Hence, the Order became final and may no
longer be subject to review or reversal in any court. A final and executory decision
or order can no longer be disturbed or reopened no matter how erroneous it may
be. Although judicial determinations are not infallible, judicial error should be
corrected through appeals, not through repeated suits on the same claim.
3. Yes. Court is satisfied that "socialized housing" falls with the confines of "public
use". The public purpose of the socialized housing project is not in any way
diminished by the amount of just compensation that the court has fixed. It was also
stated that the funds of such government-owned and controlled corporations and
non-corporate agency, although considered public in character, are not exempt
from garnishment. This is so because when the Government enters into
commercial business, it abandons its sovereign capacity and is to be treated like
any other corporation.
2. Implied Consent
o Government enters into Business Contracts
 PTA V. PGDEI, 668 SCRA 406 (2012)
FACTS:
Philippine Tourism Authority (PTA), an agency of the Department of Tourism, whose main
function is to bolster and promote tourism, entered into a contract with Atlantic Erectors, Inc.
(AEI) for the construction of the Intramuros Golf Course Expansion Projects. Since AEI was
incapable of constructing the golf course aspect of the project, it entered into a sub-contract
agreement with PHILGOLF, a duly organized domestic corporation, to build the golf course.
The sub-contract agreement also provides that PHILGOLF shall submit its progress billings
directly to PTA and, in turn, PTA shall directly pay PHILGOLF.
PHILGOLF filed a collection suit against PTA plus interest, for the construction of the golf
course. PTA failed to answer the complaint. Hence, the RTC rendered a judgment of default.
PTA then filed a petition for annulment of judgment under Rule 47 of the Rules of Court. The
said petition was premised on the argument that the gross negligence of PTA’s counsel
prevented the presentation of evidence before the RTC. The CA dismissed the petition for
annulment of judgment for lack of merit.
ISSUE:
WHETHER OR NOT PTA is immune from suit.
RULING:
PTA erred in invoking state immunity simply because it is a government entity. The
application of state immunity is proper only when the proceedings arise out of sovereign
transactions and not in cases of commercial activities or economic affairs. The State, in
entering into a business contract, descends to the level of an individual and is deemed to have
tacitly given its consent to be sued. Since the Intramuros Golf Course Expansion Projects
partakes of a proprietary character entered into between PTA and PHILGOLF, PTA cannot
avoid its financial liability by merely invoking immunity from suit.
o When it is inequitable to claim immunity
 EPG CONSTRUCTION V. VIGILAR, 354 SCRA 566
FACTS:
In 1983, the Ministry of Human Settlement, through the BLISS Development Corporation,
initiated a housing project. The Department of Public Works and Highways (DPWH) forged
individual contracts with herein petitioners-contractors for the construction of the housing
units.
After complying with the terms of said contracts, and by reason of the verbal request and
assurance of then DPWH Undersecretary Aber Canlas that additional funds would be
available and forthcoming, petitioners agreed to undertake and perform “additional
constructions” for the completion of the housing units, despite the absence of appropriations
and written contracts to cover subsequent expenses for the “additional constructions.”
Petitioners then received payment for the construction work duly covered by the individual
written contracts, thereby leaving an unpaid balance of P5,918,315.63, which amount
represents the expenses for the “additional constructions” for the completion of the existing
housing units. On 14 November 1988, petitioners sent a demand letter to the DPWH
Secretary. The money claims were then referred to COA which returned the same to the
DPWH Auditor for auditorial action. On the basis of the Inspection Report of the Auditor’s
Technical Staff, the DPWH Auditor interposed no objection to the payment of the money
claims subject to whatever action the COA may adopt.
The COA returned the documents to the DPWH, stating that funds should first be made
available before COA could pass upon and act on the money claims. Then DPWH Secretary
Jose De Jesus requested the Secretary of Budget and Management to release public funds for
the payment of petitioners’ money claims. P5,819,316.00 was then released for the payment
of petitioners’ money claims.
In a letter dated 26 August 1996, respondent DPWH Secretary Gregorio Vigilar denied the
subject money claims prompting herein petitioners to file before the Regional Trial Court of
Quezon City a Petition for Mandamus praying that herein respondent be ordered to pay.
ISSUE:
1. WHETHER OR NOT petitioners-contractors have the right to be compensated for a
public works housing project.
2. WHETHER OR NOT DPWH is immune from suit.
RULING:
1. YES. Respondents posits that the “existence of appropriations and availability of
funds as certified to and verified by the proper accounting officials are conditions
sine qua non for the execution of government contracts.” According to
respondent, “sans showing of certificate of availability of funds, the implied
contracts are considered fatally defective and considered inexistent and void ab
initio.” Respondent concludes that “inasmuch as the additional work done was
pursued in violation of the mandatory provisions of the laws concerning contracts
involving expenditure of public funds and in excess of the public official’s
contracting authority, the same is not binding on the government and impose no
liability therefor.”
We find the instant petition laden with merit and uphold, in the interest of
substantial justice, petitioners-contractors’ right to be compensated for the
"additional constructions" on the public works housing project, applying the
principle of quantum meruit. The peculiar circumstances present in the instant
case buttress petitioners’ claim for compensation for the additional constructions,
despite the illegality and void nature of the “implied contracts” forged between
the DPWH and petitioners-contractors. On this matter, it bears stressing that the
illegality of the subject contracts proceeds from an express declaration or
prohibition by law, and not from any intrinsic illegality.

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.
2. NO. 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. “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.
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.
 REPUBLIC V. UNIMEX, 518 SCRA 19 (2007)
FACTS:
Respondent Unimex Micro-Electronics GmBH (Unimex) shipped a 40-foot container and
171 cartons of Atari game computer cartridges, duplicators, expanders, remote controllers,
parts and accessories to Handyware Phils., Inc. After the shipment arrived in the Port of
Manila on July 9, 1985, the Bureau of Customs (BOC) agents discovered that it did not
tally with the description appearing on the cargo manifest. As a result, BOC instituted
seizure proceedings against Handyware and later issued a warrant of seizure and detention
against the shipment. The Collector of Customs issued a default order against Handyware
for failing to appear. The Collector then forfeited the goods in favor of the government.
Respondent filed a petition for review against petitioner Commissioner of Customs (BOC
Commissioner) in the Court of Tax Appeals (CTA). The CTA reversed the forfeiture decree
and ordered the release of the subject shipment to respondent subject to the payment of
customs duties. The CTA decision became final and executory. Unfortunately, however,
respondent’s counsel failed to secure a writ of execution to enforce the CTA decision.
Respondent filed in the CTA a petition for the revival of its June 15, 1992 decision. It
prayed for the immediate release by BOC of its shipment or, in the alternative, payment of
the shipment’s value plus damages.
BOC informed the court that the subject shipment could no longer be found at its
warehouses. The CTA declared that its June 15, 1992 decision could no longer be executed
due to the loss of respondent’s shipment so it ordered the BOC Commissioner to pay
respondent the commercial value of the goods based on the prevailing exchange rate at the
time of their importation. The dispositive portion of the decision read: “xxx payment shall
be taken from the sale or sales of the goods or properties seized or forfeited by the Bureau
of Customs.” BOC appealed. The CA held that the BOC Commissioner was liable for the
value of the subject shipment as the same was lost while in its custody.
ISSUE:
1. WHETHER OR NOT the state is liable for the loss;
2. WHETHER OR NOT government funds can be charged with respondent’s
claim without a corresponding appropriation.
HELD:
Yes and yes. Petitioner argues that a money judgment or any charge against the
government requires a corresponding appropriation and cannot be decreed by mere judicial
order. Although it may be gainsaid that the satisfaction of respondent’s demand will
ultimately fall on the government, and that, under the political doctrine of “state
immunity,” it cannot be held liable for governmental acts (jus imperii), we still hold that
petitioner cannot escape its liability. The circumstances of this case warrant its exclusion
from the purview of the state immunity doctrine.
The Court cannot turn a blind eye to BOC’s ineptitude and gross negligence in the
safekeeping of respondent’s goods.
The situation does not allow us the rejection of respondent’s claim on the mere invocation
of the doctrine of state immunity. Succinctly, the doctrine must be fairly observed and the
State should not avail itself of this prerogative to take undue advantage of parties that may
have legitimate claims against it. Justice and equity now demand that the State’s cloak of
invincibility against suit and liability be shredded.
Accordingly, the lower courts’ directive is affirmed that, upon payment of the necessary
customs duties by respondent, petitioner’s “payment shall be taken from the sale or sales
of goods or properties seized or forfeited by the Bureau of Customs.”(no appropriation
needed)
o When Government initiates a Complaint it is open to a
Counterclaim
 FROILAN V. PAN ORIENTAL, 95 PHIL. 905 (1950)
FACTS:
On February 3, 1951, Froilan filed a complaint against Pan Oriental Shipping Co., alleging
that: Foilan purchased from the Shipping Commission the vessel FS-197 for P200T, paying
P50T down and agreeing to pauy the balance in installments; that, Foroilan mortgaged said
vessel in favor of the Shipping Commission to secure the pauyment of the balance; for
failure to pay the installments, the Shipping Commission took possession of the vessel and
cancelled the contract of sale; that Shipping Commission chartered and delivered the vessel
to Part Oriental; that Foilan appealed to the President and the Cabinet restored him to his
rights under the original contract of sale with the Shipping Commission; that Pan Orental
refused to deliver the vessel to Froilan; Froilan prayed that a writ of replevin be issued for
the seizure of said vessel and that he be adjudged to have the rightful possession thereof.
The lower court issued the writ of replevin and Pan Oriental was divested of its possession
of the vessel. On November 10, 1951, the Government of the Republic of the Philippines
filed a complaint-in-intervention alleging that: Froilan failed to pay to the Shipping
Commission; that Pan Oriental refused to deliver the vessel to Froilan; Froilan prayed that
a writ of replevin be issued for the seizure of said vessel and that he be adjudicated to have
the rightful possession thereof. The lower court issued the writ of replevin and Pan Oriental
was divested of its possession of the vessel. On March 21, 1951, the latter filed its answer
denying the right of Froilan to the possession of said vessel.
On November 10, 1951, the government filed a complaint-in-intervention alleging that:
Froilan failed to pay to the Shipping Commission the balance due on the purchase price of
the vessel; the Intervenor was entitled to the possession of the vessel either under the terms
of the original contract or in order that it may cause the extrajudicial sale thereof under the
Chattel Mortgage Law. Intervenor prayed that Froilan be ordered to deliver the vessel to
the Board of Liquidators.
On Novemeber 29, 1951, Pan Oriental filed an Answer to the complainant-in-intervention
alleging that: The Republic was obligated to deliver the vessel to it vy virtue of a contract
of bareboat charter with option to purchase executed on June 16, 1949 by the Republic in
favor of Pan Oriental; that Pan Oriental had made necessary and useful expenses on the
vessel and claimed the right of retention; that Pan Oriental prayed that, if the Republic
succeeded in obtaining possession of said vessel, the Republic must comply with its
obligation of delivering to the former or causing its delivery by recovering it from Froilan.
The Republic filed a motion to dismiss the counterclaim of Pan Oriental on the ground that
its purpose was to compel the government to deliver the vessel to Pan Oriental in the event
that the government recovers the vessel from Froilan. It was also alleged that moven was
not subject to the jurisdiction of the court in connection with the counterclaim. The lower
court granted the motion and dismissed the counterclaim. It is from this order that Pan
Oriental filed the present appeal.
ISSUE:
WHETHER OR NOT the lower court erred in dismissing the counterclaim on the ground
that the state is immune from suit.
HELD:
This is untenable because by filing its complaint-in-intervention, the Government in effect
waived its right of non-suability. Hence, the appealed order is reversed and set aside and
the case remanded to the lower court for further proceedings. The immunity of the State
from suits does not deprive it of the right to sue private parties in its own courts. The State
as plaintiff may avail itself of the different forms of actions open to private litigants. In
short, by taking the initiative in an action against a private party, the state surrenders its
privileged position and comes down to the level of the defendant. The latter automatically
acquires, within certain limits, the right to set up whatever claims and other defenses he
might have against the State.
 REPUBLIC V. SANDIGANBAYAN, 484 SCRA 119 (2006)
FACTS:
Civil Case No. 0034 entitled Republic of the Philippines, plaintiff, v. Roberto S. Benedicto, et
al., defendants, is a complaint for reconveyance, reversion, accounting, reconstitution and
damages. The case is one of several suits involving ill-gotten or unexplained wealth that
petitioner Republic, through the PCGG, filed with the Sandiganbayan against private
respondent Roberto S. Benedicto.
PCGG issued writs placing under sequestration all business enterprises, entities and other
properties, real and personal, owned or registered in the name of private respondent
Benedicto, or of corporations in which he appeared to have controlling or majority interest.
Among the properties thus sequestered and taken over by PCGG fiscal agents were the 227
shares in NOGCCI owned by private respondent Benedicto and registered in his name or
under the names of corporations he owned or controlled.
Following the sequestration process, PCGG representatives sat as members of the Board of
Directors of NOGCCI. As sequestrator of the 227 shares of stock in question, PCGG did not
pay the corresponding monthly membership due thereon totalingP2,959,471.00. On account
thereof, the 227 sequestered shares were declared delinquent to be disposed of in an auction
sale. PCGG filed a complaint for injunction with the Regional Trial Court. The complaint,
however, was dismissed, paving the way for the auction sale for the delinquent 227 shares of
stock. On August 5, 1989, an auction sale was conducted.
On November 3, 1990, petitioner Republic and private respondent Benedicto entered into a
Compromise Agreement in Civil Case No. 0034. The agreement contained a general release
clause whereunder petitioner Republic agreed and bound itself to lift the sequestration on the
227 NOGCCI shares, among other Benedicto’s properties, petitioner Republic
acknowledging that it was within private respondent Benedicto’s capacity to acquire the same
shares out of his income from business and the exercise of his profession.
The Sandiganbayan approved the Compromise Agreement and accordingly rendered
judgment in accordance with its terms and subsequently ordered the return of the sequestered
shares or in default thereof, to pay their value which can be deducted from the Republic’s
cash share in the Compromise Agreement.
Owing to PCGG’s failure to comply with the above directive, Benedicto filed in Civil Case
No. 0034 a Motion for Compliance.
PCGG filed a motion for reconsideration which the SB denied. Hence, this recourse before
the SC.
ISSUE:
WHETHER OR NOT the PCGG is liable? Can it invoke immunity from suit?
HELD:
PCGG itself does not dispute its being considered as a receiver insofar as the sequestered 227
NOGCCI shares of stock are concerned. PCGG also acknowledges that as such receiver, one
of its functions is to pay outstanding debts pertaining to the sequestered entity or property, in
this case the 227 NOGCCI shares in question. It contends, however, that membership dues
owing to a golf club cannot be considered as an outstanding debt for which PCGG, as
receiver, must pay. Petitioner Republic, through the PCGG, invokes state immunity from suit.
But, as private respondent Benedicto correctly countered, the PCGG fails to take stock of one
of the exceptions to the state immunity principle, i.e., when the government itself is the
suitor, as in Civil Case No. 0034.
Where, as here, the State itself is no less the plaintiff in the main case, immunity from suit
cannot be effectively invoked. For, as jurisprudence teaches, when the State, through its duly
authorized officers, takes the initiative in a suit against a private party, it thereby descends to
the level of a private individual and thus opens itself to whatever counterclaims or defenses
the latter may have against it. Petitioner Republic’s act of filing its complaint in Civil Case
No. 0034 constitutes a waiver of its immunity from suit. Being itself the plaintiff in that case,
petitioner Republic cannot set up its immunity against private respondent Benedicto’s prayers
in the same case.
In fact, by entering into a Compromise Agreement with private respondent Benedicto,
petitioner Republic thereby stripped itself of its immunity from suit and placed itself in the
same level of its adversary. When the State enters into contract, through its officers or agents,
in furtherance of a legitimate aim and purpose and pursuant to constitutional legislative
authority, whereby mutual or reciprocal benefits accrue and rights and obligations arise
therefrom, the State may be sued even without its express consent, precisely because by
entering into a contract the sovereign descends to the level of the citizen. Its consent to be
sued is implied from the very act of entering into such contract, breach of which on its part
gives the corresponding right to the other party to the agreement.
3. Scope of Consent
o Under Act No. 3083
 ACT NO. 3083
AN ACT DEFINING THE CONDITIONS UNDER WHICH THE GOVERNMENT
OF THE PHILIPPINE ISLANDS MAY BE SUED
Sec. 1. Complaint against Government. — Subject to the provisions of this Act,
the Government of the Philippine Islands hereby consents and submits to be sued
upon any moneyed claim involving liability arising from contract, expressed or
implied, which could serve as a basis of civil action between private parties.
Sec. 2. A person desiring to avail himself of the privilege herein conferred must
show that he has presented his claim to the Insular Auditor 1 and that the latter did
not decide the same within two months from the date of its presentation.
Sec. 3. Venue. — Original actions brought pursuant to the authority conferred in
this Act shall be instituted in the Court of First Instance of the City of Manila or of
the province were the claimant resides, at the option of the latter, upon which court
exclusive original jurisdiction is hereby conferred to hear and determine such
actions.
Sec. 4. Actions instituted as aforesaid shall be governed by the same rules of
procedure, both original and appellate, as if the litigants were private parties.
Sec. 5. When the Government of the Philippine Island is plaintiff in an action
instituted in any court of original jurisdiction, the defendant shall have the right to
assert therein, by way of set-off or counterclaim in a similar action between private
parties.
Sec. 6. Process in actions brought against the Government of the Philippine Islands
pursuant to the authority granted in this Act shall be served upon the Attorney-
General 2 whose duty it shall be to appear and make defense, either himself or
through delegates.
Sec. 7. Execution. — No execution shall issue upon any judgment rendered by
any court against the Government of the Philippine Islands under the provisions of
this Act; but a copy thereof duly certified by the clerk of the Court in which
judgment is rendered shall be transmitted by such clerk to the Governor-General, 3
within five days after the same becomes final.
Sec. 8. Transmittal of Decision. — The Governor-General, 4 at the
commencement of each regular session of the Legislature, 5 shall transmit to that
body for appropriate action all decisions so received by him, and if said body
determine that payment should be made, it shall appropriate the sum which the
Government has been sentenced to pay, including the same in the appropriations
for the ensuing year.
Sec. 9. This Act shall take effect on its approval.
Approved: March 16, 1923.
Footnotes
1. Now Auditor-General.
2. Now Solicitor-General.
3. Now President of the Philippines.
4. Id.
5. Now Congress.
 COMMISSIONER V. SAN DIEGO, 31 SCRA 616 (1970)
FACTS:
On 1940, the Government of the Philippines filed a complaint for eminent domain for the
expropriation of a parcel of land belonging to N. T. Hashim, needed to construct a public
road, now known as Epifanio de los Santos Avenue.
The parties thereafter worked out a compromise agreement, respondent estate having
proposed on April 28, 1966, the total amount of P209,076.00, equivalent to the land's total
assessed value, which was confirmed, ratified and approved in November, 1966 by the
Commissioner of Public Highways and the Secretary of Public Works and
Communications.
On the same date, October 14, 1968, respondent Garcia, as special sheriff, forthwith served
a Notice of Garnishment, on respondent Philippine National Bank, notifying said bank that
levy was thereby made upon funds of petitioners Bureau of Public Highways and the
Auditor General on deposit, with the bank to cover the judgment of P209,076.00 in favor
of respondent estate.

ISSUE:
WHETHER OR NOT government funds maybe garnished to satisfy a money claim arising
from an expropriation proceeding?
HELD:
NO. The Court holds that respondent Court's two questioned orders are null and void on
the fundamental ground that government funds are not subject to execution or garnishment.
As early as 1919, the Court has pointed out that although the Government, as plaintiff in
expropriation proceedings, submits itself to the jurisdiction of the Court and thereby
waives its immunity from suit, the judgment that is thus rendered requiring its payment of
the award determined as just compensation for the condemned property as a condition
precedent to the transfer to the title thereto in its favor, cannot be realized upon execution.
The Court there added that it is incumbent upon the legislature to appropriate any
additional amount, over and above the provisional deposit, that may be necessary to pay
the award determined in the judgment, since the Government cannot keep the land and
dishonor the judgment.
The universal rule that where the State gives its consent to be sued by private parties either
by general or special law, it may limit claimant's action "only up to the completion of
proceedings anterior to the stage of execution" and that the power of the Courts ends when
the judgment is rendered, since government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments, is based on obvious
considerations of public policy.
Disbursements of Public funds must be covered by the corresponding 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.
This doctrine was again stressed by. the Court in Republic vs. Palacio, setting aside as null
and void the order of garnishment issued by the sheriff pursuant to the lower Court's writ
of execution on funds of the Pump Irrigation Trust Fund in the account of the
Government's Irrigation Service Unit with the Philippine National Bank. The Court
emphasized then and re-emphasizes now that judgments against the State or its agencies
and instrumentalities in cases where the State has consented to be sued, operate merely to
liquidate and establish the plaintiff's claim; such judgments may not be enforced by writs
of execution or garnishment and it is for the legislature to provide for their payment
through the corresponding appropriation, as indicated in Act 3083.
o Under a Charter
 PNB V. CIR, 81 SCRA 314 (1978)
FACTS:
What was sought to be garnished was the money of the People's Homesite and Housing
Corporation deposited at petitioner's branch in Quezon City, to satisfy a decision of
respondent Court which had become final and executory. A writ of execution in favor of
private respondent Gabriel V. Manansala had previously been issued. He was the counsel
of the prevailing party, the United Homesite Employees and Laborers Association, in the
aforementioned case. The validity of the order assailed is challenged on the ground that the
funds subject of the garnishment "may be public in character."
ISSUE:
WHETHER OR NOT the funds of People's Homesite and Housing Corporation (a
government owned entity) may be garnished.
HELD:
YES. The premise that the funds could be spoken of as public in character may be accepted
in the sense that the People's Homesite and Housing Corporation was a government-owned
entity. It does not follow though that they were exempt from garnishment. National
Shipyard and Steel Corporation v. court of Industrial Relations is squarely in point. As was
explicitly stated in the opinion of the then Justice, later Chief Justice, Concepcion: "The
allegation to the effect that the funds of the NASSCO are public funds of the government,
and that, as such, the same may not be garnished, attached or levied upon, is untenable for,
as a government owned and controlled corporation. The NASSCO has a personality of its
own, distinct and separate from that of the Government. It has pursuant to Section 2 of
Executive Order No. 356, dated October 23, 1950 ..., pursuant to which the NASSCO has
been established — 'all the powers of a corporation under the Corporation Law ...'
Accordingly, it may sue and be sued and may be subjected to court processes just like any
other corporation (Section 13, Act No. 1459), as amended.
In a 1941 decision, Manila Hotel Employees Association v. Manila Hotel Company, this
Court, through Justice Ozaeta, held: "On the other hand, it is well settled that when the
government enters into commercial business, it abandons its sovereign capacity and is to
be treated like any other corporation. By engaging in a particular business thru the
instrumentality of a corporation, the governmnent divests itself pro hac vice of its
sovereign character, so as to render the corporation subject to the rules of law governing
private corporations."
The invocation of Republic v. Palacio, as well as Commissioner of Public Highways v. San
Diego, did not help the cause of petitioner at all The decisions are not applicable. The
funds appertained to a governmental office, not to a government-owned or controlled
corporation with a separate juridical personality. In neither case therefore was there an
entity with the capacity to sue and be sued, the funds of which could thereafter be held
liable to execution and garnishment in the event of an adverse judgment.
Both the Palacio and the Commissioner of Public Highways decisions, insofar as they
reiterate the doctrine that one of the coronaries of the fundamental concept of non-suability
is that governmental funds are immune from garnishment, refer to Merritt v. Insular
Government, a 1916 decisio. Since then such a principle has been followed with
undeviating rigidity, the latest case in point being Republic v. Villasor, promulgated in
1973. It is an entirely different matter if, according to Justice Sanchez in Ramos v. Court of
Industrial Relations, the office or entity is "possessed of a separate and distinct corporate
existence." Then it can sue and be sued. Thereafter, its funds may be levied upon or
garnished. That is what happened in this case.
o Execution
 DFA V. NLRC, 262 SCRA 39 (1996)
FACTS:
On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for
his alleged illegal dismissal by ADB and the latter's violation of the "labor-only"
contracting law. Forthwith, the ADB and the DFA notified respondent Labor Arbiter that
the ADB, as well as its President and Officers, were covered by an immunity from legal
process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1)
and Article 55 of the Agreement Establishing the Asian Development Bank.
The Labor Arbiter took cognizance of the complaint on the impression that the ADB had
waived its diplomatic immunity from suit. The ADB did not appeal the decision.. Petitioner
was later constrained to make an application for a restraining order and/or writ of
preliminary injunction following the issuance, on 16 March 1994, by the Labor Arbiter of a
writ of execution.
ISSUE:
WHETHER OR NOT the writ of execution is enforceable against ADB?
HELD:
No. Article 50(1) of the Charter provides:
"The Bank shall enjoy immunity from every form of legal process, except in cases arising
out of or in connection with the exercise of its powers to borrow money, to guarantee
obligations, or to buy and sell or underwrite the sale of securities.”
The above stipulations of both the Charter and Headquarters Agreement should be able,
nay well enough, to establish that, except in the specified cases of borrowing and guarantee
operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys
immunity from legal process of every form. The Banks officers, on their part, enjoy
immunity in respect of all acts performed by them in their official capacity. The Charter
and the Headquarters Agreement granting these immunities and privileges are treaty
covenants and commitments voluntarily assumed by the Philippine government which
must be respected.
"It is a recognized principle of international law and under our system of separation of
powers that diplomatic immunity is essentially a political question and courts should refuse
to look beyond a determination by the executive branch of the government, and where the
plea of diplomatic immunity is recognized and affirmed by the executive branch of the
government x x x it is then the duty of the courts to accept the claim of immunity upon
appropriate suggestion by the principal law officer of the government, x x x or other officer
acting under his direction. Hence, in adherence to the settled principle that courts may not
so exercise their jurisdiction x x x as to embarrass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that `in such cases the judicial
department of government follows the action of the political branch and will not embarrass
the latter by assuming an antagonistic jurisdiction.”
Being an international organization that has been extended a diplomatic status, the ADB is
independent of the municipal law.
"One of the basic immunities of an international organization is immunity from local
jurisdiction, i.e., that it is immune from the legal writs and processes issued by the
tribunals of the country where it is found. (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.”
The Supreme Court has long settled the matter of diplomatic immunities. In WHO vs.
Aquino, SCRA 48, it ruled that courts should respect diplomatic immunities of foreign
officials recognized by the Philippine government. Such decision by the Supreme Court
forms part of the law of the land.
  REPUBLIC V. HIDALGO, 477 SCRA 32 (2005) Rafferty that no costs shall be allowed against the government of the Philippine Islands where
the government is the unsuccessful party. This was reiterated in the case of Philippines
Veterans Affairs Office v. Anover and The Philippine Veterans Affairs Office v. Tamayo,
FACTS: when we ruled that court costs are not recoverable from a government agency.

On 02 June 1999, Tarcila Laperal Mendoza filed an action for the annulment or declaration of
nullity of the title and deed of sale, reconveyance and/or recovery of ownership and
possession of a four thousand nine hundred twenty-four-square meter (4,924.60 sq. m. to be
exact) property against the Republic of the Philippines (in whose name the title to the
property was transferred and registered. The property in question is located at 1440 Arlegui
Street, San Miguel, Manila.
It is settled that when the State gives its consent to be sued, it does not thereby necessarily
consent to an unrestrained execution against it. Tersely put, when the State waives its
immunity, all it does, in effect, is to give the other party an opportunity to prove, if it can, that
the state has a liability. In Republic v. Villasor this Court, in nullifying the issuance of an alias
writ of execution directed against the funds of the Armed Forces of the Philippines to satisfy
a final and executory judgment, has explained:

On 27 August 2003, Judge Hidalgo rendered a decision in favor of plaintiff Mendoza. A
certificate of finality of judgment was issued by the Branch Clerk of Court, Atty. Michael B.
Robles, on 27 November 2003. On 10 December 2003, respondent issued an order directing
the issuance of a writ of execution. On 07 January 2004, Sheriff Cachero further directed the
National Treasurer to cause payment of P1,942,576,312.45.
ISSUE:
1. WHETHER OR NOT the writ of execution can be enforced against the state? – NO
2. WHETHER OR NOT the state can be held liable for attorney’s fees? - NO
The universal rule that where the State gives its consent to be sued by private parties
either by general or special law, it may limit claimant’s action “only up to the
completion of proceedings anterior to the stage of execution” and that the power of
the Courts ends when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy. Disbursements of
public funds must be covered by the correspondent appropriation as required by law.
The functions and public services rendered by the State cannot be allowed to
paralyzed or disrupted by the diversion of public funds from their legitimate and
specific objects, as appropriated by law.

HELD:

In the present case, respondent Judge patently committed two inexcusable procedural errors –
the pronouncement of costs against the government and the subsequent issuance of the writ of
execution, in violation of settled rules and jurisprudence.

In the decision dated 27 August 2003, respondent Judge declared the Republic liable for
payment of attorney’s fees and cost of suit, pertinent portion of which reads:

Ordering the defendant Republic of the Philippines to pay the plaintiff attorney’s fee,
in an amount equivalent to FIFTEEN (15%) PER CENT of the amount due to the
plaintiff.

In declaring the government answerable to the attorney’s fees of the plaintiff and other costs
of the suit, the respondent utterly disregarded the well-established rule that costs of suit are
not recoverable against the government (Section 1, Rule 142, Rules of Court). As early as 15
November 1918, we ruled in the case of Hong Kong and Shanghai Banking Corporation v.
Ø t) Fundamental equality before the law women and men (Section 14)
4. Suability versus Liability u) Right to health (Section 15)
o Quasi-Delict committed by Special Agent: Article 2180, v) Right to a balanced and healthful ecology (Section 16)
New Civil Code of the Philippines w) Priority to education, science and technology, arts, culture, and sports (Section 17)
Ø MERRIT V. GOVERNMENT, 34 PHIL. 311 (1916) x) Labor as a primary social economic force (Section 18)
Ø MUNICIPALITY OF SAN FERNANDO, LA UNION y) Self-reliant and independent national economy (Section 19)
V. JUDGE FIRME, 195 SCRA 692 (1991) z) Indispensable role of private sector (Section 20)
Ø MUNICIPALITY OF HAGONOY V. DUMDUM, 616 aa) Comprehensive rural development and agrarian reform (Section 21)
SCRA 1 (2010) bb) Recognition and promotion of rights of indigenous cultural communities
5. Diplomatic Immunity (Section 22)
Ø ANNOTATION – ON DIPLOMATIC IMMUNITY, 323 cc) Encouragement of non-governmental, community-based, or sectoral
SCRA 699 (2000) organizations (Section 23)
D. Government dd) Role of communication and information in nation-building (Section 24)
a. “Government” in General ee) Autonomy of local governments (Section 25)
b. “Government of the Philippines”: Section 2(1), Administrative Code of 1987 ff) Equal access for public service and prohibition of political dynasties (Section 26)
c. De Jure and De Facto Governments gg) Honesty and integrity in public service (Section 27)
V. PRINCIPLES AND POLICIES hh) Policy of full public disclosure (Section 28)
A. ARTICLE II – DECLARATION OF PRINCIPLES AND STATE POLICIES B. SEPARATION OF POWERS
a) The Philippines is a democratic and republican State (Section 1) Ø ANGARA V. ELECTORAL COMMISSION, G.R. NO.
b) Renunciation of war (Section 2) 45081, 15 JULY 1936, 63 PHIL. 139.
c) Adoption of generally-accepted principles of international law (Section 2) C.CHECKS AND BALANCE
d) Adherence to a policy of peace, freedom, and amity with all nations (Section 2) 11
e) Civilian supremacy (Section 3) a. Congressional oversight: (i) Scrutiny; (ii) Investigation and monitoring of
f) Role of the armed forces: (a) Protector of the people and State; (b) to secure the implementation of laws
sovereignty of the State and the integrity of the national territory (Section 3) Ø ABAKADA PARTYLIST V. PURISIMA, G.R. NO.
g) Compulsory military and civil service, under conditions provided by law (Section 166715, 14 AUGUST 2008, 562 SCRA 251
4) b. Legislative veto
h) Maintenance of peace and order, promotion of general welfare (Section 5) Ø ABAKADA PARTYLIST V. PURISIMA, G.R. NO.
i) Recognition of hierarchy of rights (Section 5) 166715, 14 AUGUST 2008, 562 SCRA 251
j) Separation of Church and State (Section 6) c. Other cases:
k) Independent foreign policy (Section 7) Ø BELGICA V. OCHOA, G.R. NO. 208566, 19
l) Freedom from nuclear weapons (Section 8) NOVEMBER 2013, 710 SCRA 1
10 Ø GONZALES III V. OFFICE OF THE PRESIDENT, G.R.
m) Promote a just and dynamic social order (Section 9) NO. 196231, 28 JANUARY 2014, 714 SCRA 611
n) Promote social justice in all phases of national development (Section 10) THE STRUCTURE AND POWERS OF THE NATIONAL
o) Personal dignity and human rights (Section 11) GOVERNMENT
p) Family as basic social institution, and natural and primary right and duty of VI. THE LEGISLATIVE DEPARTMENT
parents in the rearing of the youth (Section 12) A. Composition, Qualifications, and Term of Office
q) Protection of the life of the mother and the life of the unborn from conception a. Senate: Sections 2 to 4, Article VI
(Section 12) b. House of Representatives: (i) Sections 5 to 6, Article VI; (ii) Sections 6 to 8,
r) Vital role of youth in nation-building (Section 13) Article IX-C; (iii) Section 7, XVIII; (iv) Fair Elections Act or R.A. No. 9006
s) Role of women in nation-building (Section 14) Ø SABILI V. COMELEC, 670 SCRA 664 (2012)
Ø ALDOVINO V. COMELEC, 609 SCRA 636 (2009)
Ø TALAGA V. COMELEC, 683 SCRA 602 (2012)
Ø QUINTO V. COMELEC, 606 SCRA 258 (2009) AND
613 SCRA 385 (2010)
Ø MITRA V. COMELEC, 622 SCRA 749 (2010)
Ø ASISTIO V. AGUIRRE, 619 SCRA 518 2010)
Ø CABALLERO V. COMELEC, 771 SCRA 213 (2015)
Ø POE V. COMELEC, 786 SCRA 1 (2016)
Ø ANNOTATION – ON RESIDENCY, 691 SCRA 385
(2013)
o Apportionment/Districts
Ø SEMA V. COMELEC, 558 SCRA 700 (2008)
Ø ALDABA V. COMELEC, 611 SCRA 137 (2009) AND
613 SCRA 385 (2010)
Ø NAVARRO V. ERMITA, 612 SCRA 131 (2009)
Ø AQUINO III V. COMELEC, 617 SCRA 623 (2010)
Ø UMALI V. COMELEC, 723 SCRA 170 (2014)
Ø NAVAL V. COMELEC, 729 SCRA 299 (2014)
o Party List System: R.A. No. 7941 (3 March 1995)
Ø BANAT V. COMELEC, 586 SCRA 210 (2009)
Ø ABAYON V. HRET, 612 SCRA 375 (2010)
Ø ANG LADLAD V. COMELEC, 618 SCRA 32 (2010)
Ø LOKIN, JR. V. COMELEC, 621 SCRA 285 (2010) AND
674 SCRA 538 (2012)