THE CONCEPT OF THE STATE organized by common consent for mutual defense and mutual safety and

to promote the general welfare. Correctly has it been described by Esmein

COLLECTOR OF INTERNAL REVENUE V. CAMPOS RUEDA (G.R. as "the juridical personification of the nation." This is to view it in the light
No. L-13250, Oct. 29, 1971) its historical development. The stress is on its being a nation, its people
occupying a definite territory, politically organized, exercising by means of
FACTS: its government its sovereign will over the individuals within it and
This is an appeal interposed by petitioner Antonio Campos Rueda, maintaining its separate international personality. Laski could speak of it
administrator of the estate of the deceased Doña Maria de la Estrella then as a territorial society divided into government and subjects, claiming
Soriano Vda. de Cerdeira, from the decision of the respondent Collector of within its allotted area a supremacy over all other institutions. McIver
Internal Revenue, assessing against and demanding from the former the similarly would point to the power entrusted to its government to maintain
sum P161,874.95 as deficiency state and inheritance taxes, including within its territory the conditions of a legal order and to enter into
interests and penalties, on the transfer of intangible personal properties international relations. With the latter requisites satisfied,
situated in the Philippines and belonging to said Maria de la Estrella international law does not exact independence as a condition of
Soriano Vda. de Cerdeira. Maria de la Estrella Soriano Vda. de Cerdeira statehood. So Hyde did opine.
(Maria Cerdeira for short) is a Spanish national, by reason of her marriage
to a Spanish citizen and was a resident of Tangier, Morocco from 1931 up Even on the assumption then that Tangier is bereft of international
to her death on January 2, 1955. At the time of her demise she left, personality petitioner has not successfully made out a case. It bears repeating
among others, intangible personal properties in the Philippines." Then that four days after the filing of this petition on January 6, 1958 in Collector
came this portion: "On September 29, 1955, petitioner filed a provisional of Internal Revenue v. De Lara, it was specifically held by us: "Considering
estate and inheritance tax return on all the properties of the late Maria the State of California as a foreign country in relation to section 122 of our
Cerdeira. On the same date, respondent, pending investigation, issued an Tax Code we believe and hold, as did the Tax Court, that the Ancilliary
assessment for estate and inheritance taxes which tax liabilities were paid Administrator is entitled to exemption from the inheritance tax on the
by petitioner. intangible personal property found in the Philippines." There can be no doubt
On November 17, 1955, an amended return was filed . . . where that California as a state in the American Union was lacking in the alleged
intangible personal properties with were claimed as exempted from taxes. requisite of international personality. Nonetheless, it was held to be a foreign
On November 23, 1955, respondent, pending investigation, issued another country within the meaning of Section 122 of the National Internal Revenue
assessment for estate and inheritance taxes. In a letter dated January 11, Code.
1956, respondent denied the request for exemption on the ground that the
law of Tangier is not reciprocal to Section 122 of the National Internal
Revenue Code. Hence, respondent demanded the payment OF deficiency BACANI V. NACOCO
estate and inheritance taxes including ad valorem penalties, surcharges, [GRN L-9657 NOVEMBER 29, 1956]
interests and compromise penalties . . . . In a letter dated February 8,
1956, and received by respondent on the following day, petitioner BAUTISTA ANGELO, J.:
requested for the reconsideration of the decision denying the claim for tax FACTS:
1

exemption of the intangible personal properties and the imposition of the The plaintiffs are court stenographers assigned in Branch VI of the
25% and 5% ad valorem penalties. However, respondent denied this Court of First Instance of Manila. During the pendency of Civil Case No. 2293
request, in his letter dated May 5, 1956 . . . and received by petitioner on of said court, entitled Francisco Sycip vs. National Coconut Corporation,
May 21, 1956. Respondent premised the denial on the grounds that there Assistant Corporate Counsel Federico Alikpala, counsel for defendant,
was no reciprocity [with Tangier, which was moreover] a mere principality, requested said stenographers for copies, of the transcript of the stenographic
not a foreign country. Consequently, respondent demanded the payment notes taken by them during the hearing. Plaintiffs complied with the request
of deficiency estate and inheritance taxes including surcharges, interests by delivering to Counsel Alikpala the needed transcript containing 714 pages
and compromise penalties and thereafter submitted to him their bills for the payment of their fees. The
National Coconut Corporation paid the amount of P564 to Leopoldo T. Bacani
ISSUE: and P150 to Mateo A. Matoto for said transcript at the rate of P1 per page.
Is Tangier a foreign country? Upon inspecting the books of this corporation, the Auditor General
disallowed the payment of these fees and sought the recovery of the amounts
HELD: paid. The respondents argue that National Coconut Corporation may be
Yes. It does not admit of doubt that if a foreign country is to be identified considered as included in the term "Government of the Republic of the
with a state, it is required in line with Pound's formulation that it be a Philippines" for the purposes of the exemption of the legal fees provided for in
politically organized sovereign community independent of outside control Rule 1-30 of the Rules of Court.
bound by ties of nationhood, legally supreme within its territory, acting
through a government functioning under a regime of law. 9 It is thus a ISSUE: Whether or not NACOCO is a part of the Government of the
sovereign person with the people composing it viewed as an organized Philippines by virtue of its performance of government functions.
corporate society under a government with the legal competence to exact
obedience its commands. It has been referred to as a body-politic HELD:
 No, NACOCO does not acquire that status for the simple reason that 288.)
it does not come under the classification of municipal or public corporation. To Phil Virginia Tabaco Adm VS.CIR
resolve the issue in this case requires a little digression on the nature and [GRN L-32052 JULY 25, 1975]
functions of our government as instituted in our Constitution. To begin with,
FACTS:
we state that the term "Government" may be defined as "that institution or
Private respondents filed with the CIR a petition, alleging their
aggregate of institutions by which an independent society makes and carries employment relationship, the overtime services in excess of the regular
out those rules of action which are necessary to enable men to live in a social eight hours a day rendered by them, and the failure to pay them overtime
state, or which are imposed upon the people forming that society by those compensation in accordance with Commonwealth Act No. 444. Their
who possess the power or authority of prescribing them" (U.S. vs. Dorr, 2 prayer was for the differential between the aFmount actually paid to them
Phil., 332). This institution, when referring to the national government, has and the amount allegedly due them. Petitioner Philippine Virginia Tobacco
reference to what our Constitution has established composed of three great Administration denied the allegations. The then Presiding Judge Arsenio T.
Martinez of respondent Court sustained the claims of private respondents
departments, the legislative, executive, and the judicial, through which the
for overtime services from December 23, 1963 up to the date the decision
powers and functions of government are exercised. These functions are was rendered on March 21, 1970, and directing petitioner to pay the same,
twofold: constitute and ministrant. The former are those which constitute the minus what it had already paid. Petitioner claims that the matter is beyond
very bonds of society and are compulsory in nature; the latter are those that the jurisdiction of the CIR as it is exercising governmental functions and
are undertaken only by way of advancing the general interests of society, and that it is exempt from the operation of C.A. 444, invoking the doctrine
are merely optional. announced in the leading Agricultural Credit and Cooperative Financing
To this latter class belongs the organization of those corporations Administration decision, and the distinction between constituent and
ministrant functions of governments as set forth in Bacani v. National
owned or controlled by the government to promote certain aspects of the
Coconut Corporation.
economic life of our people such as the National Coconut Corporation. These
are what we call government-owned or controlled corporations which may ISSUE: Whether or not the traditional classification of function of
take on the form of a private enterprise or one organized with powers and government as ministrant and constituent applicable in the case at bar.
formal characteristics of a private corporation under the Corporation Law.
But while NACOCO was organized for the ministrant function of HELD:
No. The irrelevance of such a distinction considering the needs of
promoting the coconut industry, however, it was given a corporate power
the times was clearly pointed out by the present Chief Justice. Under this
separate and distinct from our government, for it was made subject to the
traditional classification, such constituent functions are exercised by the
provisions of our Corporation Law in so far as its corporate existence and the State as attributes of sovereignty, and not merely to promote the welfare,
powers that it may exercise are concerned (sections 2 and 4, Commonwealth progress and prosperity of the people - these latter functions being
Act No. 518). ministrant, the exercise of which is optional on the part of the
“Government of the Republic of the Philippines" used in section 2 of government."
2

the Revised Administrative Code refers only to that government. entity Nonetheless, as he explained so persuasively: "The growing
complexities of modern society, however, have rendered this traditional
through which the functions of the government are exercised as an attribute
classification of the functions of government quite unrealistic, not to say
of sovereignty, and in this are included those arms through which political obsolete. The areas which used to be left to private enterprise and
authority is made effective whether they be provincial, municipal or other initiative and which the government was called upon to enter optionally,
form of local government. These are what we call municipal corporations. and only 'because it was better equipped to administer for the public
They do not include government entities which are given a corporate welfare than is any private individual or group of individuals,' continue to
personality. separate and distinct from the government and 'which are lose their well-defined boundaries and to be absorbed within activities that
governed by the Corporation Law. Their powers, duties and liabilities have to the government must undertake in its sovereign capacity if it is to meet
the increasing social challenges of the times. Here as almost everywhere
be determined in the light of that law and of their corporate charters.
else the tendency is undoubtedly towards a greater socialization of
As this Court has aptly said, "The mere fact that the Government economic forces. Here of course this development was envisioned, indeed
happens to be a majority stockholder does not make it a public corporation" adopted as a national policy, by the Constitution itself in its declaration of
(National Coal Co. vs. Collector of Internal Revenue, principle concerning the promotion of social justice."
46 Phil., 586-597). "By becoming a stockholder in the National Coal Thus was laid to rest the doctrine in Bacani v. National Coconut
Company, the Government divested itself of its sovereign character so far as Corporation, based on the Wilsonian classification of the tasks incumbent
respects the transactions of the corporation. Unlike the Government, the on government into constituent and ministrant in accordance with the
laissez faire principle.
corporation may be sued without its consent, and is subject to taxation. Yet
WHEREFORE, the appealed Order of March 21, 1970 and the Resolution of
the National Coal Company remains an agency or instrumentality of respondent Court, denying a motion for reconsideration are hereby affirmed.
government." (Government of the Philippine Islands vs. Springer, 50 Phil.,
 doctrine of parens patriae.
GOVERNMENT OF THE PHIL. ISLANDS V. MONTE DE PIEDAD Whether or not the Philippine Government is bound by the statute of
(G.R. NO. L-9959, DECEMBER 13, 1916) limitations.

TRENT, J.: FACTS:

HELD:
About $400,000, were subscribed and paid into the treasury of
1. No.Documentary evidence shows that Monte de Piedad, after setting forth
the Philippine Islands by the inhabitants of the Spanish Dominions of the
in its petition to the Governor-General its financial condition and its absolute
relief of those damaged by the earthquake which took place in the
necessity for more working capital, asked that out of the sum of
Philippine Islands on June 3, 1863. Subsequent thereto a central relief
$100,000 held in the Treasury of the Philippine Islands, there be transferred
board was appointed to distribute the moneys thus voluntarily contributed
to it the sum of $80,000. The Monte de Piedad agreed that if the transfer of
and allotted $365,703.50 to the various sufferers named in its resolution.
these funds should not be approved by the Government of Spain, the same
By order of the Governor-General of the Philippine Islands, a list of these
would be returned forthwith. It did not ask that the
allotments, together with the names of those entitled thereto, was
$80,000 be given to it as a donation.
published in the Official Gazette of Manila. These were later distributed up
The Department of Finance, acting under the orders of the Governor-
to the sum of $30,299.65, leaving a balance of $365,403.85.
General, understood that the $80,000 was transferred to the Monte de Piedad
Upon the petition of the governing body of the Monte de Piedad,
well knew that it received this sum as a loan interest." Furthermore, the
the Philippine Government, by order, directed its treasurer to turn over to
Monte de Piedad recognized and considered as late as March 31, 1902, that it
the former the sum of $80,000 of the relief fund in installments of
received the $80,000 "as a returnable loan, and without interest." Thus, there
$20,000 each and were received on the following dates: February 15,
cannot be the slightest doubt the fact that the Monte de Piedad received the
March 12, April 14, and June 2, 1883, and are still in the possession of the
$80,000 as a mere loan or deposit and not as a donation.
Monte de Piedad. On account of various petitions of the persons, and heirs
of others to whom the above-mentioned allotments were made, the
2. No. Court ruled that if legal provisions are in conflict with the political
Philippine Islands filed a suit against the Monte de Piedad a recover,
character, constitution or institutions of the new sovereign, they became
"through the Attorney-General and in representation of the Government of
inoperative or lost their force upon the cession of the Philippine Islands to the
the Philippine Islands," the $80.000, together with interest. After due trial,
United States, but if they are among "that great body of municipal law which
judgment was entered in favor of the plaintiff. Defendant appealed and
regulates private and domestic rights," they continued in force and are still in
made the following contentions:
force unless they have been repealed by the present Government.
that the $80,000, given to the Monte de Piedad y Caja de Ahorros,
From the nature and class of the subject matter, it is clear that it
were so given as a donation, and that said donation had been
falls within the latter class. They are laws which are not political in any sense
cleared;
of the word. They conferred upon the Spanish Government the right and duty
3

that the Government of the Philippine Islands has not subrogated the
to supervise, regulate, and to some extent control charities and charitable
Spanish Government in its rights, as regards an important sum of
institutions. The present sovereign, in exempting "provident institutions,
money abovementioned;
savings banks, etc.," all of which are in the nature of charitable institutions,
that the only persons who could claim to be damaged by this
from taxation, placed such institutions, in so far as the investment in
payment to the Monte, if it was unlawful, are the donors or the
securities are concerned, under the general supervision of the Insular
cestuis que trustent, thus, the plaintiff is not the proper party to
Treasurer.
bring the action;
that the court erred in holding in its decision that there is no title for the
3. Yes.The ground upon which the right of the Government to maintain the
prescription of this suit brought by the Insular Government against
action rests on the fact that the money, being given to a charity became a
the defendant appellant.
public property, only applicable to the specific purposes to which it was
intended to be devoted. It is but within those limits consecrated to the public
ISSUES:
use, and became part of the public resources for promoting the happiness and
welfare of the Philippine Government. To deny the Government's right to
Whether or not the $80,000 received by Monte de Piedad was in form of
maintain this action would be contrary to sound public policy.
donation Whether or not the obligation on the part of the Monte de
The Supreme Court of the United States in Sohier vs. Mass. General
Piedad to return the $80,000 to the Government, even considering it a
Hospital, ruled that: “insane persons and person not known, or not in being,
loan, was wiped out on the change of sovereignty.
apply to the beneficiaries of charities, who are often in capable of vindicating
Whether or not the Government is a proper party to the case under the
their rights, and justly look for protection to the sovereign authority, acting as
 parens patriae. They show that this beneficient functions has not ceased to building permits is predicated upon the general welfare clause. Its scope is
exist under the change of government from a monarchy to a republic; but wide, well-nigh all embracing, covering every aspect of public health, public
that it now resides in the legislative department, ready to be called into morals, public safety, and the well being and good order of the community.
exercise whenever required for the purposes of justice and right, and is a
2. YES, the municipal corporation retains its administrative jurisdiction
clearly capable of being exercised in cases of charities as in any other cases over the said area. By the agreement, the Philippine Government merely
whatever.” consents that the United States exercise jurisdiction in certain cases. This
Chancelor Kent says: In this country, the legislature or government of the consent was given purely as a matter of comity, courtesy or expediency.
State, as parens patriae, has the right to enforce all charities of public nature, The Philippine Government has not abdicated its sovereignty over the bases
by virtue of its general superintending authority over the public interests, as part of the Philippine territory or divested itself completely of jurisdiction
where no other person is entrusted with it. (4 Kent Com., 508, note.) over offenses committed therein. Under the terms of the treaty, the United
States Government has prior or preferential but not exclusive jurisdiction of
such offenses. The Philippine jurisdiction retains not only jurisdictional
4. No. In 25 Cyc., 1006, the rule, supported by numerous authorities, is stated rights not granted, but also such ceded rights as the United States Military
as follows: authorities for reasons of their own decline to make use of.
In the absence of express statutory provision to the contrary, statute of Moreover, the concept of sovereignty as auto-limitation, is the
limitations do not as a general rule run against the sovereign or government, property of a state-force due to which it has the exclusive
whether state or federal. But the rule is otherwise where the mischief to be capacity of legal self-determination and self-restriction. x x x A
remedied are of such a nature that the state must necessarily be included, state is not precluded from allowing another power to participate
where the state goes into business in concert or in competition with her in the exercise of jurisdictional right over certain portions of its
citizens, or where a party seeks to enforces his private rights by suit in the territory. If it does so, it by no means follows that such areas
name of the state or government, so that the latter is only a nominal party. become impressed with an alien character. They retain their
In the instant case the Philippine Government is not a mere nominal status as native soil. They are still subject to its authority. Its
party because it, in bringing and prosecuting this action, is exercising its jurisdiction may be dimished, but it does not disappear. So it is
sovereign functions or powers and is seeking to carry out a trust developed with the bases under lease to the American armed forces by
upon it when the Philippine Islands were ceded to the United States. For the virtue of the military bases agreement of 1947. they are not and
foregoing reasons the judgment appealed from is affirmed. cannot be foreign territory.

PEOPLE V. GOZO LAUREL V. MISA

53 SCRA 476, OCTOBER 26, 1973 77 PHIL 856, JANUARY 30, 1947

FERNANDO, J: FACTS:
FACTS: Sometime in May 1945, Anastacio Laurel, herein petitioner, a Filipino
Loreta Gozo bought a house and lot located inside the US Naval
4

citizen, was arrested by the US Army and was interned, under a commitment
Reservation within the territorial jurisdiction of Olangapo City. She order “for his active collaboration with the Japanese during the Japanese
demolished the house and built another one in its place without securing a occupation”. He was charged with treason as defined and penalized by Art.
building permit from the City Mayor of Olangapo City. The City Court of 114 of the Penal Code. But in September 1945, he was turned over to the
Olangapo found her guilty of violating a municipal ordinance that requires Commonwealth government and since then he has been under the custody of
permit from the municipal mayor for construction of building as well as any the Director of Prisons.
modification, repairs or demolition thereof. Petitioner then filed a petition for habeas corpus mainly asserting that he
On appeal with the Court of Appeals, Gozo put in issue the validity of cannot be prosecuted for the crime of treason for the reason (1) that the
such ordinance by invoking due process. She likewise questioned the sovereignty of the legitimate government in the Philippines and, consequently,
applicability of the ordinance to her in view of the location of her dwelling the correlative allegiance of Filipino citizens thereto was then suspended; and
within the naval base leased to the American Armed Forces; she contended (2) that there was a change of sovereignty over these Islands upon the
that the municipal government cannot exercise therein administrative proclamation of the Philippine Republic.
jurisdiction.
ISSUES:
ISSUES: 1. Whether the sovereignty of the legitimate government in the
1. Whether municipal ordinance is valid? Philippines and, consequently, the correlative allegiance of Filipino
2. Whether the municipal corporation retains its administrative citizens were suspended during the Japanese occupation.
jurisdiction over the area where Gozo’s house was located? 2. Whether the petitioner can be prosecuted for the crime of treason
by giving aid and support to the enemy during the Japanese
HELD: occupation.
1. YES, the municipal ordinance is valid. The authority to require
HELD: suspended and in abeyance during such belligerent occupation. He also
1. NO. The absolute and permanent allegiance of the inhabitants of assailed the constitutionality of 93d Article of War which provides that “any
a territory occupied by the enemy to their legitimate government or person subject to military law who commits murder in the time of war
sovereign is not abrogated or severed by the enemy’s occupation, should suffer death or imprisonment for life, as the court martial may
because the sovereignty of the government or sovereign de jure is not direct.” Petitioner argued that the said law was in violation of Article VII,
transferred thereby to the occupier and if its is not transferred to the section 2 of the Constitution since 93d of Article of War fails to allow a
occupant it must necessarily remain vested in the legitimate review by the Supreme Court of judgments of courts martial imposing
government; that the sovereignty vested in the titular government death or life imprisonment.
must be distinguished from the exercise of the rights inherent thereto,
and may be destroyed, or severed and transferred to another, but it ISSUES:
cannot be suspended because the existence of sovereignty cannot be 1. Whether petitioner was subject to military law at the time the
suspended without putting it out of existence or divesting the alleged offense was committed.
possessor thereof at least during the so-called period of suspension; 2. Whether 93d of Articles of War was constitutional.
that what may be suspended is the exercise of the rights of
sovereignty with the control and government of the territory occupied
by the enemy passes temporarily to the occupant; x x x and that as a HELD:
corollary of the conclusion that the sovereignty itself is not suspended 1. YES, petitioner was subject to military law at the time the alleged
and subsists during the enemy occupation, the allegiance of the offense was committed. The rule that laws of political nature or affecting
inhabitants to their legitimate government or sovereign subsists, and political relations are considered superseded or in abeyance during the
therefore there is no such thing as suspended allegiance. military occupation, is intended for the governing of the civil inhabitants
of the occupied territory. It is not intended for and does not bind the
2. YES. Article 114 of the Revised Penal Code was applicable to enemies in arms.
treason committed against the national security of the legitimate By the occupation of the Philippines by Japanese forces, the officers and
government because the inhabitants of the occupied territory were men of the Philippine army did not cease to be fully in the service, though,
still bound by their allegiance to the latter during the enemy’s in a measure, only in measure, they were not subject to the military
occupation. jurisdiction, if they were not in active duty. In the latter case, like officers
Just as a citizen or subject of a government or sovereign may and soldiers on leave of absence or held as prisoners of war, they could not
be prosecuted for and convicted of treason committed in a foreign be held guilty of breach of the discipline of the command or of a neglect of
country, in the same way a inhabitant of a territory occupied by the duty x x x; but for an act unbecoming of a gentleman or an act which
military forces of the enemy may commit treason against his own constitutes an offense of the class specified in the 95 th Article of War, they
legitimate or sovereign if he adheres to the enemies of the latter by may in general be legally held subject to military jurisdiction and trial.
giving them aid and comfort. Moreover, petitioners, by their acceptance of appointments as officers
in the Bolo Area from the General Headquarters of the 6 th Military District,
RUFFY VS. CHIEF OF STAFF 75 PHIL 875,
they became members of the Philippine Army amenable to the Articles of
5

AUGUST 20, 1946

War. x x x As officers in the Bolo Area and the 6th Military District, the
TUASON, J: FACTS: petitioners operated under the orders of a duly established and duly
During the Japanese occupation, herein petitioner, Ramon Ruffy, appointed commanders of the United States Army and thus covered by
a Provincial Commander of the Philippine Constabulary, retreated in the Article 2 of the Articles of War which provides for persons subject to
mountains instead of surrendering to the enemy. He organized and led a military law.
guerrilla outfit known as Bolo Combat Team or Bolo Area. The said Bolo
2. YES, 93d of the Articles of War was constitutional. It does not violate
Area was a contingent of the 6 th Military District, which has been
Article VII, section 2 of the Constitution which provides that “the National
recognized and placed under the operational control of the US Army in the
Assembly may not deprive the Supreme Court of its original jurisdiction
South Pacific.
over all criminal cases in which the penalty imposed is death or life
Sometime later, Col. Jurado effected a change of command in the
imprisonment”. Court Martial are agencies of executive character, and one
Bolo Area. Major Ruffy who was then acting as Commanding Officer for the
of the authorities “for ordering of courts martial has been held to be
Bolo Area was relieved of his position. Later on or on October 19, 1944,
attached to the constitutional functions of the President as Commander in
Lieut. Col Jurado was slain allegedly by the petitioners. It was this murder
Chief, independently of legislation”. Unlike courts of law, they are not a
which gave rise to petitioner’s trial.
portion of the judiciary.
The trial court convicted petitioner and he now filed this instant
x x x court martial are in fact simply instrumentalities of the
petition with the contention that he was not subject to military law at the
executive power, provided by Congress for the President as Commander
time the offense for which he had been placed on trial was committed.
in Chief, to aid him in properly commanding the army and navy and
Petitioners contended that by the enemy occupation of the Philippines, the
enforcing discipline therein, and utilized under his orders or those of his
National Defense Act and all laws and regulations creating and governing
authorized military representatives.
the existence of the Philippine Army including the Articles of War, were
 it enacted Act No. 2457

DOCTRINE OF STATE IMMUNITY HELD:

NO. By consenting to be sued, a state simply waives its immunity
SECTION 3, ARTICLE XVI, 1987 PHILIPPINE CONSTITUTION from suit. It does not thereby concede its liability to the plaintiff, or create
VETERANS MANPOWER AND PROTECTIVE SERVICE, INC. VS CA any cause of action in his favor, or extend its liability to any cause not
(G.R. NO. 91359, SEPTEMBER 25, 1992) previously recognized. It merely gives a remedy to enforce a pre-existing
FACTS: liability and submit itself to the jurisdiction of the court, subject to its right
A suit was filed against the PC Chief for failure to act on the request to interpose any lawful defense.
by petitioner seeking to set aside the findings of PADPAO expelling it from The Government of the Philippines Islands is only liable, for the
PADPAO and considering its application for renewal of its license even without acts of its agents, officers and employees when they act as special agents.
a certificate of membership from PADPAO. A Motion to Dismiss was filed A special agent is one who receives a definite and fixed order or
invoking that it is a suit against the State which had not given its consent. commission, foreign to the exercise of the duties of his office if he is a
special official. The special agent acts in representation of the state and
being bound to act as an agent thereof, he executes the trust confided to
ISSUES: him. This concept does not apply to any executive agent who is an
Whether or not the action taken by the petitioners is a suit against the employee of the acting administration and who on his own responsibility
State. performs the functions which are inherent in and naturally pertain to his
Whether of not the PC Chief and PC-SUSIA are liable in their private office and which are regulated by law and the regulations. The
capacities. responsibility of the state is limited to that which it contracts through a
Whether or not the Memorandum of Agreement constitute as an implied special agent, duly empowered by a definite order or commission to
consent of the State to be sued perform some act or charged with some definite purpose which gives rise
to the claim, and not where the claim is based on acts or omissions
HELD: imputable to a public official charged with some administrative or technical
Yes, it is a suit against the State, the PC Chief and PC-SUSIA being office who can be held to the proper responsibility in the manner laid down
instrumentalities of the State exercising the governmental function of by the law of civil responsibility. The chauffeur of the ambulance of the
regulating the organization and operation of private detective watchmen or General Hospital was not such an agent.
security guard agencies. 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 the purpose. AMIGABLE VS. CUENCA
(G.R. NO. L-26400 FEBRUARY 29, 1972)
No, since the acts for which the PC Chief and PC-SUSIA are being called to
account in this case, were performed by them as part of their official duties, FACTS:
without malice, gross negligence or bad faith, no recovery may be held Amigable is the registered owner of a lot covered by a Transfer
6

against them in their private capacities. Certificate of Title, where no annotation in favor of the government of any
right or interest in the property appears at the back of the certificate.
Without prior expropriation or negotiated sale, the government used a
MERRITT vs. GOVERNMENT OF THE PHILIPPINES portion of said lot for the construction of the Mango and Gorordo Avenues.
(G.R. NO. L-11154, MARCH 21, 1916) It appears that said avenues already existed since 1921. In 1958,
Amigable's counsel wrote the President of the Philippines, requesting
TRENT, J. FACTS: payment of the portion of her lot which had been appropriated by the
Merritt, while riding his motorcycle was hit by an ambulance government. The claim was indorsed to the Auditor General, who
owned by the Philippine General Hospital. A driver employed by the disallowed it. Amigable then filed in the court a quo a complaint against
hospital drove it. In order for Merritt to sue the Philippine government, Act the Republic of the Philippines and Nicolas Cuenca, in his capacity as
No. 2457 was enacted by the Philippine Legislature authorizing Merritt to Commissioner of Public Highways for the recovery of ownership and
bring suit against the Government of the Philippine Islands and authorizing possession of the land traversed by the Mango and Gorordo Avenues. She
the Attorney-General of said Islands to appear in said suit. A suit was also sought the payment of compensatory damages for the illegal
then filed before the CFI of Manila, which fixed the responsibility for the occupation of her land, moral damages, attorney's fees and the costs of
collision solely on the ambulance driver and determined the amount of the suit. The Government had not given its consent to be sued.
damages to be awarded to Merritt. Both parties appealed from the
decision, plaintiff Merritt as to the amount of damages and defendant in ISSUE: Whether or not the appellant may properly sue the government
rendering the amount against the government. under the facts of the case

ISSUE: Whether or not defendant, Government of the Philippines, waived HELD:

its immunity from suit as well as conceded its liability to the plaintiff when YES. Where the government takes away property from a private
landowner for public use without going through the legal process of its official cognizance.
expropriation or negotiated sale, the aggrieved party may properly The Sandiganbayan promulgated two Resolutions. The first, denying
maintain a suit against the government without thereby violating the reconsideration of the Resolution allowing production of the documents, and
doctrine of governmental immunity from suit without its consent. The doctrine the second, reiterating, by implication the permission to serve the amended
of governmental immunity from suit cannot serve as an instrument for interrogatories on the plaintiff.
perpetrating an injustice on a citizen. Had the government followed the
procedure indicated by the governing law at the time, a complaint would have ISSUE: Is the PCGG immune from suit?
been filed by it, and only upon payment of the compensation fixed by the
judgment, or after tender to the party entitled to such payment of the amount HELD:
fixed, may it "have the right to enter in and upon the land so condemned, to NO. The state is of course immune from suit in the sense that it cannot, as a
appropriate the same to the public use defined in the judgment." If there were rule, be sued without its consent. But it is axiomatic that in filing an action, it
an observance of procedural regularity, petitioners would not be in the sad divests itself of its sovereign character and sheds its immunity from suit,
plaint they are now. It is unthinkable then that precisely because there was a descending to the level of an ordinary litigant. The PCGG cannot claim a
failure to abide by what the law requires, the government would stand to superior or preferred status to the State, even while assuming of an act for
benefit. It is not too much to say that when the government takes any the State. The suggestion that the State makes no implied waiver of immunity
property for public use, which is conditioned upon the payment of just by filing a suit except when in doing so it acts in, or in matters concerning, its
compensation, to be judicially ascertained, it makes manifest that it submits proprietary or non-governmental capacity, is unacceptable. It attempts a
to the jurisdiction of a court. There is no thought then that the doctrine of distinction without support in principle or precedent. On the contrary, “the
immunity from suit could still be appropriately invoked. consent of the State to be sued may be given expressly or impliedly.” Express
consent may be manifested either through a general law or a special law.
Implied consent is given when the State itself commences litigation or when it
REPUBLIC VS. SANDIGANBAYAN enters into a contract
204 SCRA 212
(1991)
REPUBLIC OF THE PHILIPPINES VS. PABLO FELICIANO AND
FACTS: INTERMEDIATE APPELLATE COURT
The PCGG filed with the Sandiganbayan a complaint for G.R. NO. 70853; MARCH 12, 1987
reconveyance, reversion, accounting, restitution, and damages against FACTS:
private respondents Bienvenido Tantoco and Dominador Santiago, et al.
Private respondents jointly moved “to strike out some portions of the Petitioner seeks the review of the decision of the Intermediate
complaint and for bill of particulars of other portions”, which motion was Appellate Court dated April 30, 1985, which dismissed the complaint of
opposed by the PCGG. The Sandiganbayan gave the PCGG 45 days to expand respondent Pablo Feliciano for recovery of ownership and possession of a
its complaint to make more specific certain allegations. parcel of land on the ground of non-suability of the State. On January 22,
Private respondents then presented a “Motion to leave to file 1970, Feliciano filed a complaint with then Court of First Instance of
7

interrogatories under Rule 25 of the Rules of Court”. Camarines Sur against the RP, represented by the Land Authority, for the
The Sandiganbayan denied private respondents’ motions. Private recovery of ownership and possession of a parcel of land,
respondents filed an Answer to with Compulsory Counterclaim. In consisting of four (4) lots with an aggregate
response, the PCGG presented a “Reply to Counterclaim with Motion area of 1,364.4177 hectares, situated in the Barrio of Salvacion,
to Dismiss compulsory counterclaim.” Municipality of Tinambac, Camarines Sur. Feliciano alleged that he bought
Private respondents filed a pleading denominated “Interrogatories to the property in question from Victor Gardiola by virtue of a Contract of
Plaintiff”, and “Amended Interrogatories to Plaintiff” as well as a motion for Sale dated May 31, 1952, followed by a Deed of Absolute Sale on October
production and inspection of documents. 30, 1954; that Gardiola had acquired the property by purchase from the
The Sandiganbayan admitted the Amended Interrogatories and heirs of Francisco Abrazado whose title to the said property was evidenced
granted the motion for production and inspection of documents respectively. by an informacion posesoria that upon his purchase of the property, he
The PCGG moved for reconsideration, arguing that the documents took actual possession of the same, introduced various improvements
are privileged in character since they are intended to be used against the therein and caused it to be surveyed in July 1952, which survey was
PCGG and/or its Commission in violation of Sec.4 of EO No. 1, V12: approved by the Director of Lands on October 24,1954.
a) No civil action shall lie against the On November 1, 1954, President Ramon Magsaysay issued
Commission or any member thereof for Proclamation No. 90 reserving for settlement purposes, under the
anything done or omitted in the discharge of administration of the National Resettlement and Rehabilitation
the task contemplated by this Order. Administration (NARRA), a tract of land situated in the Municipalities of
b) No member or staff by the Commission shall Tinambac and Siruma, Camarines Sur, after which the NARRA and its
be required to testify or produce evidence in successor agency, the Land Authority, started sub-dividing and distributing
any judicial, legislative or administrative the land to the settlers; that the property in question, while located within
proceedings concerning matter within the reservation established under Proclamation No. 90, was the private
property of Feliciano and should therefore be excluded therefrom. Feliciano defendants as agents of the defendant United States of America,
prayed that he be declared the rightful and true owner of the property in a foreign sovereign which has not given its consent to this suit or any
question consisting of 1,364.4177 hectares; that his title of ownership other suit for the cause of action asserted in the complaint.
based on informacion posesoria of his predecessor-in-interest be declared US filed a motion to dismiss and opposed the writ. The trial court
legally valid and subsisting and that defendant be ordered to cancel and denied the motion and issued a writ.
nullify all awards to the settlers.
ISSUE: Whether the US may be sued?
ISSUE:
Whether or not the State can be sued for recovery and HELD:
possession of a parcel of land No. The traditional rule of State immunity exempts a State from being sued
HELD: in the courts of another State without its consent or waiver. This rule is a
A suit against the State, under settled jurisprudence is not permitted, except necessary consequence of the principles of independence and equality of
upon a showing that the State hasconsented to be sued, either expressly or by States. However, the rules of International Law are not petrified; they are
implication through the use of statutory language too plain to be constantly developing and evolving. And because the activities of states have
misinterpreted. It may be invoked by the courts sua sponte at any stage of multiplied, it has been necessary to distinguish them — between sovereign
the proceedings. Waiver of immunity, being a derogation of sovereignty, will and governmental acts (jure imperii) and private, commercial and
not be inferred lightly, but must be construed instrictissimi juris (of strictest proprietary acts (jure gestionis). The result is that State immunity now
right). Moreover, the Proclamation is not a legislative act. The consent of the extends only to acts jure imperii. The restrictive application of State
State to be sued must emanate from statutory authority. Waiver of State immunity is now the rule in the United States, the United Kingdom and other
immunity can only be made by an act of the legislative body. Also, it is states in western Europe. (See Coquia and Defensor-Santiago, Public
noteworthy, that as pointed out by the Solicitor General, that the informacion International Law, pp. 207-209 [1984].)
posesoria registered in the Office of the Register of Deed of Camarines Sur on The restrictive application of state immunity is proper only
September 23, 1952 was a "reconstituted" possessory information; it was when the proceedings arise out of commercial transactions of the
"reconstituted from the duplicate presented to this office (Register of Deeds) foreign sovereign, its commercial activities or economic affairs. Stated
by Dr. Pablo Feliciano," without the submission of proof that the alleged differently, a state may be said to have descended to the level of an
duplicate was authentic or that the original thereof was lost. Reconstitution individual and can be thus deemed to have tacitly given its consent to be
can be validly made only in case of loss of the original. These circumstances sued only when the contract relates to the exercise of its sovereign functions.
raise grave doubts as to the authenticity and validity of the "informacion In this case, the projects are an integral part of the naval base which is
posesoria" relied upon by respondent Feliciano. Adding to the dubiousness of devoted to the defense of both the US and the Philippines, undisputed a
said document is the fact that "possessory information calls for an area of only function of the government of the highest order, they are not utilized for nor
100 hectares," whereas the land claimed by respondent Feliciano comprises dedicated to commercial or business purposes. The correct test for the
8

1,364.4177 hectares, later reduced to 701-9064 hectares. application of State immunity is not the conclusion of a contract by a
State but the legal nature of the act is shown in Syquia vs. Lopez, 84
UNITED STATES OF AMERICA VS. RUIZ
Phil. 312 (1949). In that case the plaintiffs leased three apartment
136 SCRA 487 (1985)
buildings to the United States of America for the use of its military officials.
FACTS: The plaintiffs sued to recover possession of the premises on the ground that
Petitioner invited the submission of bids for repair of its wharves the term of the leases had expired, They also asked for increased rentals
and shoreline in the Subic Bay Area. Eligion and Co. responded to the until the apartments shall have been vacated.
invitation and submitted bids. Said company was requested by telegram to
confirm its price proposals and for the name of its bonding company, and THE HOLY SEE VS. DEL ROSARIO JR
from which it complied. 238 SCRA 524 (1994)
Later, the United States, through its agents, informed said
company that it was not qualified to receive an award at the project for FACTS:
the poorly completed projects it awarded to third parties. The company Lot 5-A is registered under the name of the petitioner The Holy See.
sued petitioner for specific performance and if no longer possible, for This lot is contiguous to lots 5-B and 5-D registered in the name of Philippine
damages. It also asked for a writ of preliminary injunction to restrain the Realty Corporation (PRC). These three lots were sold through an agent Msgr.
defendants from entering into contracts with others. Domingo Cirilos Jr. to Ramon Licup. Licup assigned his rights to private
The United States entered a special appearance for the purpose respondent Starbright Sales Ent. Inc. (SSEI).
only of questioning the jurisdiction of the court over the subject matter of Due to refusal of the squatters to vacate the lots, a dispute arose as
the complaint and the persons of the defendants, the subject matter of the to who of the parties has the responsibility of eviction and clearing the land.
complaint being acts and omissions of the individual
SSEI insists that petitioner should clear the property of the squatters. On the other hand, this Court has considered the following
Petitioner refused and proposed that either SSEI undertake the eviction or transactions by a foreign state with private parties as acts jure
that the earnest money be returned. Msgr. Cirilos returned the P100,000.00 gestionis:
earnest money, and the property was sold to Tropicana Properties and
Development Corporation (Tropicana). (1) the hiring of a cook in the recreation center, consisting of three
SSEI filed suit for annulment of sale, specific performance and restaurants, a cafeteria, a bakery, a store, and a coffee and pastry shop at
damages against Msgr. Cirilos, PRC, and Tropicana. the John Hay Air Station in Baguio City, to cater to American servicemen
The petitioner and Msgr. Cirilos moved to dismiss for lack of and the general public (United States of America v. Rodrigo, 182 SCRA
jurisdiction based on sovereign immunity from suit. It was denied on the 644 [1990]); and (2) the bidding for the operation of barber shops in Clark
ground that petitioner “shed off its sovereign immunity by entering into the Air Base in Angeles City (United States of America v. Guinto, 182 SCRA
business contract” in question. 644 [1990]). The operation of the restaurants and other facilities open to
A motion for reconsideration was also denied. Hence, this special the general public is undoubtedly for profit as a commercial and not a
civil action for certiorari. governmental activity. By entering into the employment contract with the
cook in the discharge of its proprietary function, the United States
ISSUE: Did the Holy See properly invoke sovereign immunity for its non- government impliedly divested itself of its sovereign immunity from suit.
suability? In the absence of legislation defining what activities and
transactions shall be considered "commercial" and as constituting acts jure
HELD: gestionis, we have to come out with our own guidelines, tentative they
YES. In the case at bar, lot 5-A was acquired as a donation from the may be.
archdiocese of Manila for the site of its mission or the Apostolic Nuniciature in Certainly, the mere entering into a contract by a foreign state
the Philippines. The subsequent disposal was made because the squatters with a private party cannot be the ultimate test. Such an act can only be
living thereon made it impossible for petitioner to use it for the purpose of the start of the inquiry. The logical question is whether the foreign state is
the donation. Petitioner did not sell lot 5-A for profit or gain. engaged in the activity in the regular course of business. If the foreign
There are two conflicting concepts of sovereign immunity, each widely held state is not engaged regularly in a business or trade, the particular act or
and firmly established. According to the classical or absolute theory, a transaction must then be tested by its nature. If the act is in pursuit of a
sovereign cannot, without its consent, be made a respondent in the courts of sovereign activity, or an incident thereof, then it is an act jure imperii,
another sovereign. According to the newer or restrictive theory, the especially when it is not undertaken for gain or profit.
immunity of the sovereign is recognized only with regard to public acts or acts As held in United States of America v. Guinto, (supra): "There is
jure imperii of a state, but not with regard to private acts or acts jure no question that the United States of America, like
gestionis (United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia any other state, will be deemed to have impliedly waived its non-suability
and Defensor-Santiago, Public International Law 194 [1984]). if it has entered into a contract in its proprietary or private capacity. It is
The restrictive theory, which is intended to be a solution to the only when the contract involves its sovereign or governmental capacity
9

host of problems involving the issue of sovereign immunity, has created that no such waiver may be implied."
problems of its own. Legal treatises and the decisions in countries which In the case at bench, if petitioner has bought and sold lands in
follow the restrictive theory have difficulty in characterizing whether a the ordinary course of a real estate business, surely the said transaction
contract of a sovereign state with a private party is an act jure gestionis or an can be categorized as an act jure gestionis. However, petitioner has denied
act jure imperii. that the acquisition and subsequent disposal of Lot 5-A were made for
The restrictive theory came about because of the entry of sovereign profit but claimed that it acquired said property for the site of its mission
states into purely commercial activities remotely connected with the discharge or the Apostolic Nunciature in the Philippines. Private respondent failed to
of governmental functions. This is particularly true with respect to the dispute said claim.
Communist states which took control of nationalized business activities and Under Art.31(A) of the 1961 Vienna Convention on Diplomatic
international trading. Relations, a diplomatic envoy is granted immunity from the civil and
administrative jurisdiction of the receiving state over any real action
This Court has considered the following transactions by a foreign relating to private immovable property situated in the territory of the
state with private parties as acts jure imperii: receiving state which the envoy holds on behalf of the sending state for
(1) the lease by a foreign government of apartment buildings for use the purposes of the mission. If this immunity is provided for a diplomatic
of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct envoy with all the more reason should immunity be recognized as regards
of public bidding for the repair of a wharf at a United States Naval Station
the sovereign itself, which in this case is the Holy See.
(United States of America v. Ruiz, supra.); and (3) the change of employment
status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]). Moreover the Department of the Foreign Affairs has formally
intervened and officially certified that the Embassy of the Holy See is a
 duly accredited diplomatic missionary to the Republic of the Philippines DEPARTMENT OF AGRICULTURE VS. NLRC
and as such is exempt from local jurisdiction and entitled to all the rights, 227 SCRA 693 (1993)
privileges and immunities of a diplomatic mission or embassy in this court.
FACTS:
The determination of the executive arm of the government that a
The DAR and Sultan Security Agency entered into a contract for
state or instrumentality is entitled to sovereign or diplomatic immunity is a security services to be provided by the latter to the said governmental entity.
political question that is conclusive upon the courts. Where the plea of Several guards of the agency assigned to the petitioner’s premises filed a
immunity is reacquired and affirmed by the executive branch, it is the duty complaint for underpayment of wages, non-payment of 13 th month pay,
of the courts to accept this claim so as not to embarrass the executive arm uniform allowances, night shift differential pay, holiday pay, and overtime pay
of the government in conducting the country’s foreign relations. as well as for damages, before the Regional Arbitration, against the petitioner
and the agency. The Executive Labor arbiter rendered a decision finding the
REPUBLIC VS. VILLASOR petitioner and the agency jointly and severally liable for the payment of the
54 SCRA 84 (1973) money claims. The decision became final and executory. The Labor Arbiter
then issued a writ of execution which resulted in the property of the petitioner
FACTS: being levied. The petitioner asserts the rule of non-suability of the State.
A decision was rendered in a Special Proceeding against the Republic of the
Philippines thereby confirming the arbitration award of P1,712,396.40 in ISSUE:
favor of respondent corporation. After the decision became final and Can the Department of Agriculture be sued under the contract entered with
executory, respondent judge issued an order directing the sheriff to execute the agency?
the said decision, and the corresponding alias writ of execution was thus
issued. HELD:
Hence the sheriff served notices of garnishment with several banks YES. The basic postulate under Art. X section 3 of the Constitution
especially the monies due to the AFP in the form of deposits sufficient to that “the State may not be sued without its consent” is not absolute for it
cover the amount mentioned in the writ. PNB and Philippine Veterans Bank does not say that the State may not be sued under any circumstances. On the
received such notice. As certified by the AFP Comptroller, these funds of the contrary, as correctly phrased, the doctrine only conveys “that the State may
AFP with the said banks are public funds for the pensions, pay, and
not be sued without its consent.” Its import then is that the State may at
allowances of its military and civilian personnel.
The petitioner, in this certiorari and prohibition proceedings, times be sued. The State’s consent may be given either expressly or
challenges the validity of the Order issued by Judge Villasor declaring the impliedly. Express consent may be made through a general law waiving the
decision final and executory and subsequently issuing an alias writ of immunity of the State from suit which is found in Act 3083, where the
execution directed against the funds of the AFP in pursuance thereof. Philippine government “consents and submits to be sued upon any money
claim involving liability arising from contract, express or implied, which could
ISSUE: serve as basis of civil action between private parties.” Implied consent on the
May the writs of execution and notices of garnishment be sued against
10

other hand, is conceded when the State itself commences litigation, thus
public funds?
opening itself to counterclaim or when it enters into a contract.
HELD: In this situation, the government is deemed to have descended to the level of
NO. Although the State may give its consent to be sued by private the other contracting party and to have divested itself of its sovereign immunity.
parties, there is corollary that public funds cannot be the object of The rule relied upon by the NLRC is not, however, without qualification. Not all
garnishment proceedings even if the consent to be sued has been previously contracts entered into by the government operate as a waiver of its non-
granted and the state’s liability has been adjudged. Thus in the case of suability. Distinction must still be made between one which was executed in the
Commission of Public Highways vs. San Diego, such a well-settled doctrine
exercise of its sovereign function and another which is done in its proprietary
was restated in the opinion of Justice Teehankee. The universal rule that
where the state gives its consent to be sued by private parties either by capacity. In the instant case, the petitioner has not pretended to have assumed a
general or special law, it may limit claimant’s action only up to the completion capacity apart from its being a governmental entity when it entered into the
of proceedings anterior to the stage of execution and that the power of the questioned contract, not that it could have in fact performed any act proprietary
courts ends when the judgment is rendered, since the government funds and in character, but be that as it may, the claims of private respondents arising
properties may not be seized under writs of execution or garnishment to from the contract for security services clearly constitute money claims for which
satisfy such judgment, is based on obvious considerations of public policy.
Act 3083 gives the consent of the state to be sued. However, when the State
Disbursement of public funds must be covered by the corresponding
gives its consent to be sued, it does not thereby necessarily consent to an
appropriations as required by law. The functions and public services rendered
by the State cannot be allowed to be paralyzed or disrupted by diversion of unrestricted execution against it. When the State waives immunity, all it does, in
public funds from their legitimate and specific object is appropriated by law. effect, is to give the other party an opportunity to prove, if it can, that the state
has any liability.
 in any court under its charter. As a government owned and controlled
corporation, it has personality of its own, distinct and separate from that of
PNB VS. PABALAN the government. Moreover, the charter provision that the NPC can sue and
83 SCRA 595 (1978) be sued in any court is without qualification on the cause of action as the one
instituted by the petitioners.
FACTS:
A judgment was rendered against Philippine Virginia Tobacco BUREAU OF PRINTING VS. BUREAU OF PRINTING EMPLOYEES
Administration (PVTA). Judge Javier Pabalan issued a writ of execution ASSOCIATION
followed thereafter by a notice of garnishment of the funds of respondent 1 SCRA 340 (1961)
PVTA which were deposited with the Philippine National Bank (PNB). PNB
objected on the constitutional law doctrine of non-suability of a state. It FACTS:
alleged that such funds are public in character. Bureau of Printing Employees Association filed a case against
herein petitioners Bureau of Printing, Serafin Salvador, and Mariano
ISSUE: Was the contention of PNB correct? Ledesma. The complaint alleged that Salvador and Ledesma have been
engaging in unfair labor practices by interfering with, or coercing the
HELD: employees of the Bureau of Printing, particularly the members of the
NO. It is to be admitted that under the present Constitution, what was formerly complaining association, in the exercise of their right to self-organization,
implicit as a fundamental doctrine in constitutional law has been set forth in and by discriminating in regard to hiring and tenure of their employment in
express terms: “The State may not be sued without its consent.” If the funds order to discourage them from pursuing their union activities. Answering
appertained to one of the regular departments or offices in the government, the complaint, Salvador and Ledesma denied the charges, and contended
then, certainly such a provision would lie a bar that the Bureau of Printing has no juridical personality to sue and be sued.
to garnishment. Such is not the case here. Garnishment would lie. The
Supreme Court, in a case brought by the same petitioner precisely ISSUE: Can the Bureau of Printing be sued?
invoking such doctrine, left no doubt that the funds of a public corporation
could properly be made the object of a notice of garnishment. HELD:
It is well settled that when the government enters into commercial business, its NO. As a government office, without any juridical capacity, it
abandons its sovereign capacity and is to be treated like any other corporation. cannot be sued.
(Manila Hotel Employees Association vs. Manila Hotel Company) The Bureau of Printing is an instrumentality of the government; it
operates under the direct supervision of the Executive Secretary. It is
designed to meet the printing needs of the government. It is primarily a
RAYO VS. CFI OF BULACAN service bureau. It is obviously not engaged in business or occupation for
110 SCRA 460 (1981) pecuniary profit. It has no corporate existence. Its appropriations are
FACTS: provided for in the budget. It is not subject to the jurisdiction of the Court
During the height of the infamous typhoon Kading, the NPC, acting of Industrial Relations.
11

through its plant superintendent, Benjamin Chavez, opened or caused to Any suit, action or proceeding against the Bureau of Printing
be opened simultaneously all the three floodgates of the Angat Dam. The would actually be a suit, action or proceeding against the government
many unfortunate victims of the man-caused flood filed with the itself. The government cannot be sued without its consent, much less over
respondent court eleven complaints for damages against the NPC and its objection.
Benjamin Chavez. NPC filed separate answers to each of the eleven
complaints and invoked in each answer a special and affirmative defense
that in the operation of the Angat Dam, it is performing a purely
governmental function. Hence, it cannot be sued without the express
consent of the State. The respondent court dismissed the case on the MOBIL PHILS. EXPLORATION, INC. VS. CUSTOMS ARRASTRE
grounds that said defendant performs a purely governmental function in SERVICE
the operation of the Angat Dam and cannot therefore be sued for damages 18 SCRA 1120 (1966)
in the instant cases in connection therewith.
FACTS:
ISSUE: Was the NPC performing a governmental function with respect to Four cases of rotary drill parts were shipped from abroad consigned to Mobil
the management and operation of the Angat Dam? Philippines. The Customs Arrastre later delivered to the broker of the
consignee three cases only of the shipment. Mobil Philippines Exploration Inc.
HELD: filed suit in the CFI against the Customs Arrastre Service and the Bureau of
YES. However, it is not necessary to determine whether NPC performs a Customs to recover the value of the undelivered cases plus other damages.
governmental function with respect to the management and operation of the The defendants filed a motion to dismiss the complaint on the
Angat Dam. It is sufficient to say that the government has organized a ground that not being a person under the law, defendants cannot be sued.
private corporation, put money in it and has allowed itself to sue and be sued After the plaintiff opposed the motion, the court dismissed the
 complaint on the ground that neither the Customs Arrastre Service nor the
Bureau of Customs is suable. FACTS:
Petitioner Municipality of San Fernando, La Union, is a municipality
ISSUE: Can the Customs Arrastre Service or the Bureau of corporation. Respondent Judge Romeo N. Firme is impleaded in his official
Customs be sued? capacity as the presiding judge, while private respondents are heirs of the
HELD: NO. The Bureau of Customs, acting as part of the machinery of the deceased Laureano Banina, Sr.
national government in the operations of arrastre service, pursuant to
On December 16, 1965, a collision occurred involving a passenger
express legislative mandate and a necessary incident of its prime
governmental function, is immune from suit, there being no statute to the jeep, a gravel and sand truck, and a dump truck of the Municipality of San
contrary. Fernando, La Union which was driven by Alfredo Bislig. Due to the impact,
several passengers of the jeep including Banina, Sr. died.
The Bureau of Customs has no personality of its own apart from that of the The heir of Banina, Sr. instituted a complaint for damages against
government. Its primary function is governmental, that of assessing and the owner and driver of the passenger jeep. However, the aforesaid
collecting lawful revenues from imported articles and all other tariff and customs
defendant filed a third party complaint against the petitioner and the driver of
duties, fees, charges, fines, and penalties. To this function, arrastre is a
the dump truck of the petitioner.
necessary incident. Although said arrastre function is deemed proprietary, it is
necessarily an incident of the primary and governmental function of the Bureau Thereafter, the private respondents amended the complaint wherein
of Customs, so that engaging in the same does not necessarily render said the petitioner and its regular employee Alfredo Bislig were impleaded for the
Bureau liable to suit. For otherwise, it could not perform its governmental first time as defendants. Petitioner filed its answer and raised affirmative
function without necessarily exposing itself to suit. Sovereign immunity granted defenses such as lack of cause of action, non-suability of the state,
as to the end should not be denied as to the necessary means to that end. prescription of cause of action, and the negligence of the owner and driver of
the passenger jeep as the proximate cause of the collision.
CIVIL AERONAUTICS ADMINISTRATION VS COURT OF APPEALS 167 On October 10, 1979, the trial court rendered a decision for the
SCRA 28 (1988) plaintiffs, and defendants Municipality of san Fernando, La Union and
FACTS: Alfredo Bislig are ordered to pay jointly and severally the plaintiffs. The
Ernest Simke went to Manila International Airport to meet his future complaint against the driver and the owner of the passenger jeep was
son-in-law. While walking towards the viewing deck or the terrace to get a dismissed.
better view of the incoming passengers, he slipped over an elevation about Petitioner filed a motion for reconsideration and for a new trial.
four inches high, and he fell on his back and broke his thigh bone.
However, respondent judge issued another order denying the motion for
He filed an action for damages based on quasi-delict with the CFI of Rizal
against the Civil Aeronautics Administration or CAA as the entity empowered reconsideration of the order for having been filed out of time. Hence, this
to administer, operate, manage, control, maintain, and develop the MIA. petition.
Judgment was rendered in his favor, and on appeal to the Court of Appeals,
12

judgment was affirmed. ISSUE: Whether the municipality is liable for the tort committed by its
employee?

ISSUE: Whether the CAA, being an agency of the government, can be made a
party defendant? HELD: NO. The test of liability of the municipality depends on whether or
not the driver acting in behalf of the municipality is performing
HELD: governmental or proprietary functions. It has already been remarked that
YES. Not all government entities whether corporate or not are municipal corporations are suable because their charters grant them the
immune from suits. Immunity from suits is determined by the character of competence to sue and be sued. Nevertheless, they are generally not
the objects for which the entity was organized. The CAA is not immune from liable for torts committed by them in the discharge of governmental
suit it being engaged in functions pertaining to a private entity. It is engaged
functions and can be held answerable only if it can be shown that they
in an enterprise which, far from being the exclusive prerogative of the state,
may more than the construction of public roads, be undertaken by private were acting in a proprietary capacity. In permitting such entities to be
concerns. The CAA was created not to maintain a necessity of the sued, the state merely gives the claimants the right to show the defendant
government, but to run what is essentially a business even if the revenues be was not acting in its governmental capacity when the injury was inflicted
not its prime objective but rather the promotion of travel and the convenience or that the case comes under the exceptions recognized by law. Failing
of the traveling public. this, the claimants cannot recover.
In the case at bar, the driver of the dump truck of the
municipality insists that he was on his way to Naguilan River to get a load
MUN. OF SAN FERNANDO, LA UNION VS. JUDGE FIRME 195
SCRA 692 (1991) of sand and gravel for the repair of the San Fernando municipal street.
 In the absence of any evidence to the contrary, the regularity of Bayan has passed any ordinance to this effect.
the performance of official duty is presumed. Hence, the driver of the
dump truck was performing duties or tasks pertaining to his office. MUNICIPALITY OF MAKATI VS. COURT OF APPEALS 190
After careful examination of existing laws and jurisprudence, we arrive at the SCRA 206 (1990)
conclusion that the municipality cannot be held liable for the torts committed by FACTS:
its regular employee, who was then engaged in the discharge of governmental An expropriation proceeding was initiated by petitioner
functions. Hence, the death of the passenger, tragic and deplorable though, it Municipality of Makati against private respondent Admiral Finance
may be imposed on the municipality no duty to pay the monetary Creditors Consortium Inc., Home Building System and Reality Corp., and
compensation. Arceli P. Jo involving a parcel of land and improvements thereon located at
San Antonio Village, Makati.
MUNICIPALITY OF SAN MIGUEL, BULACAN VS. FERNANDEZ An action for eminent domain was filed. Attached to the petitioner’s
(130 SCRA 56 (1984) complaint was a certification that a bank account had been opened with the
PNB. After the decision has become final and executory, a writ of execution
FACTS:
In Civil Case No. 604-B, the then CFI of Bulacan rendered judgment was issued and a notice of garnishment was served upon the manager of PNB
holding herein petitioner municipality liable to respondents Imperio, et al. where the petitioner had bank accounts. However, the sheriff was informed
When the judgment became final, respondent judge issued a writ of that a hold code was placed on the account of the petitioner.
execution to satisfy the same. Petitioner municipality filed a motion to The petitioner contended that its funds at the PNB cocked neither be
quash the writ on the ground that the municipality’s property or funds are garnished nor levied upon execution for to do so would result in the
public exempt from execution. The motion was denied. The respondent disbursement of public funds without the proper appropriation required under
judge issued another order requiring both the municipal and provincial the law.
treasurer to comply with the money judgment. When the treasurers failed In a petition with the Court of Appeals, petitioner alleges for the first
to do so, respondent judge issued an order for their arrest and that they time that it has actually two accounts with the PNB, one exclusively for the
will be released upon compliance, hence the present petition. expropriation of the subject property with the outstanding balance of P99,
743. 94. The other account was for the obligations and other purposes of the
municipal government with a balance of P170,098,421.72.
ISSUE: Whether the funds of the municipality in the hands of the
Provincial and Municipal Treasurers of Bulacan and San Miguel,
respectively are public funds which are exempt from execution? ISSUE: Whether the bank account of a municipality may be levied on
execution to satisfy a money judgment against it absent showing that the
HELD: municipal council has passed an ordinance appropriating from its public funds
YES. Municipal funds in possession of municipal and provincial an amount corresponding to the balance due to the RTC decision?
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treasurers are public funds exempt from execution. The reason for those
was explained in the case of Municipality of Paoay vs. Manaois ‘that are HELD:
held in trust for the people intended and used for the accomplices of the YES. Since the first PNB account was specifically opened for
purposes for which municipal corporations are created and that to subject expropriation proceedings it has initiated over the subject property, there is
said properties and public funds to execution would materially impede, no objection to the garnishment or levy under execution of funds therein
even defeat and in some instance destroy said purpose.” Thus it is clear amounting to P4,965,506.40, the funds garnished in excess of P99,743.94,
that all the funds of petitioner municipality in the possession of the which are public funds earmarked for the municipal government. Other
Municipal Treasurer of San Miguel as well as those in the possession of the statutory obligations are exempted from execution without the proper
Provincial Treasurer of Bulacan are also public funds and as such they are appropriation required under the law.
exempt from execution. The funds deposited in the 2nd PNB account are public funds of the
Besides PD 447, known as the Decree on Local Fiscal municipal government. The rule is well-settled that public funds are not
Administration, provides in section 3 (a) that “no money shall be paid out subject to levy and execution, unless otherwise provided by the statute. More
of the treasury except in pursuance of a lawful appropriation or other particularly, the properties of a municipality, whether real or personal, which
specific statutory authority.” Otherwise stated, there must be a are necessary for public use cannot be attached and sold on execution sale to
corresponding appropriation in the form of an ordinance duly passed by satisfy a money judgment against the municipality. Municipal revenues
the Sangguniang Bayan before any money of the municipality may be paid derived from taxes, licenses and market fees, and which are intended
out. In the case at bar, it has not been shown that the Sangguniang primarily and exclusively for the purpose of financing governmental activities
and functions of the municipality are exempt from execution. The foregoing
 rule finds application in the case at bar. that the garnishment was illegal and that it would hold PNB liable for any
This is not to say that private respondents are left with no legal damages which may be caused by the withholding the funds of the city.
recourse. When a municipality fails or refuses without justifiable reason to
effect payment of a final money judgment rendered against it, the ISSUE:
claimant may avail of the remedy of mandamus in order to compel the Whether or not the funds of City of Caloocan, in PNB, may be
enactment and approval of the necessary appropriation ordinance and the garnished (i.e. exempt from execution), to satisfy Santiago’s claim.
corresponding disbursement of municipal funds. The court will not condone
petitioner’s blatant refusal to settle its obligation arising from an HELD:
expropriation proceeding it has in fact initiated. Within the context of the Garnishment is considered a specie of attachment by means of
state’s inherent power of eminent domain, just compensation means not which the plaintiff seeks to subject to his claim property of the defendant
only the correct determination of the amount to be paid to the owner of in the hands of a third person, or money owed by such third person or
the land but also the payment of the land within a reasonable time from its garnishee to the defendant. The rule is and has always been that all
taking. The state’s power of eminent domain should be exercised within government funds deposited in the PNB or any other official depositary of
the bounds of fair play and justice. In the case at bar, considering that the Philippine Government by any of its agencies or instrumentalities,
valuable property has been taken, the compensation to be paid is fixed, whether by general or special deposit, remain government funds and may
and the municipal has had more than reasonable time to pay full not be subject to garnishment or levy, in the absence of a corresponding
compensation. appropriation as required by law. Even though the rule as to immunity of a
state from suit is relaxed, the power of the courts ends when the judgment
is rendered. Although the liability of the state has been judicially
CITY OF CALOOCAN VS. ALLARDE ascertained, the state is at liberty to determine for itself whether to pay
G.R. NO. 107271; SEPTEMBER 10, 2003 the judgment or not, and execution cannot issue on a judgment against
the state. Such statutes do not authorize a seizure of state property to
FACTS: satisfy judgments recovered, and only convey an implication that the
In 1972, Mayor Marcial Samson of Caloocan abolished the legislature will recognize such judgment as final and make provision for
position of Assistant City Administrator and 17 other positions via the satisfaction thereof. However, the rule is not absolute and admits of a
Ordinance No. 1749. The affected employees assailed the legality of the well- defined exception, that is, when there is a corresponding
abolition. The CFI in 1973 declared abolition illegal and ordered the appropriation as required by law. In such a case, the monetary judgment
reinstatement of all the dismissed employees and the payment of their may be legally enforced by judicial processes. Herein, the City Council of
back-wages and other emoluments. The City Government appealed the Caloocan already approved and passed Ordinance No. 0134, Series of
decision but such was dismissed. In 1986 the City paid Santiago 1992, allocating the amount of P439,377.14 for Santiago’s back-wages
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P75,083.37 as partial payment of her back-wages. The others were paid plus interest. This case, thus, fell squarely within the exception. The
in full. In 1987 the City appropriated funds for her unpaid back salaries judgment of the trial court could then be validly enforced against such
(supplemental budget #3) but the City refused to release the money to funds.
Santiago. The City of Caloocan argued that Santiago was not entitled to
back wages. On July 27, 1992 Sheriff Castillo levied and sold at public
auction one of the motor vehicles of the City Government for P100,000.
The amount was given to Santiago. The City Government questioned the
validity of the sale of motor vehicle; properties of the municipality were
exempt from execution. Judge Allarde denied the motion and directed the
sheriff to levy and schedule at public auction 3 more vehicles. On October
5, 1993 the City Council of Caloocan passed Ordinance No. 0134 which
included the amount of P439,377.14 claimed by Santiago as back-wages,
plus interest. Judge Allarde issued an order to the City Treasurer to release
the check but the City Treasurer can’t do so because the Mayor refuses to
sign the check. On May 7, 1993. Judge Allarde ordered the Sheriff to
immediately garnish the funds of the City Government of Caloocan
corresponding to the claim of Santiago. Notice of garnishment was
forwarded to the PNB but the City Treasurer sent an advice letter to PNB