Political Law Chapter 5 Notes

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1|Page – Political Law (Oral Recitation) -2nd Meeting

Chapter 4: Doctrine of State Immunity The complexity of relationships between


sovereign states, brought about by their
“The State cannot be sued without its
increasing commercial activities gave rise to
consent”
a more restrictive application of the
Basis: doctrine.

Indiscriminate suits against the State will


result in the impairment of its dignity, besides
Note: The Philippines adheres to this
being a challenge to its supposed infallibility.
restrictive theory.
Justice Holmes:
It is crucial to ascertain the legal
The doctrine of non-suability is based not on nature of the act involved whether the
“any formal conception or obsolete theory entity claiming immunity performs
but on the logical and practical ground that governmental as opposed to proprietary
there can be no legal right against the functions.
authority which makes the law on which the
Jure imperii – governmental activities
right depends”
Jure gestionis -proprietary acts
Another justification:

Practical consideration that the demands


and inconveniences of litigation will divert Unites States vs Ruiz
the time and resources of the state from the
Brief facts: US had a naval base in Subic, a
more pressing matters demanding attention,
base provided in the Military Bases
to the prejudice of the public welfare.
Agreement between the Philippines and the
Note: Doctrine of State Immunity available in US. The US invited the submission of bids for
Foreign States the repair of fender system, the typhoon
damage to the shoreline revetment and
• They are sought to be sued in the
repair to Leyte Wharf approach in NAVBASE
courts of local state.
Subic Bay. Eligio de Guzman & Co., Inc.
Principle of the sovereign equality of States: responded to the invitation and submitted
bids. Then, US sent 2 telegrams for the
• In which one State cannot assert confirmation of price proposals and for the
jurisdiction over another in violation name of its bonding company. The
of the maxim par in parem non company complied with its request.
habet imperium (To do so would Thereafter, the company received a letter
unduly vex the peace of nations) which was signed by the petitioners herein,
The letter said that the company did not
• Foreign states may be sued in the qualify to receive an award for the projects
host state if engaged regularly in because of its previous unsatisfactory
trade or business, or on the basis of performance rating on a repair contract for
its contracts in the host state which the sea wall at the boat landings of the U.S.
may be considered as purely Naval Station and that the projects had
commercial, private and proprietary been awarded to third parties.
acts.
The company sued the United States of
Note: But are immune from all suits if the America and Messrs. James E. Galloway,
contracts entered into by it as William I. Collins and Robert Gohier all
governmental or sovereign acts. members of the Engineering Command of
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the U.S. Navy. The complaint is to order the In this case, the projects are an integral part
defendants to allow the plaintiff to perform of the naval base which is devoted to the
the work on the projects and, in the event defense of both the United States and the
that specific performance was no longer Philippines, indisputably a function of the
possible, to order the defendants to pay government of the highest order; they are
damages. The company also asked for the not utilized for nor dedicated to commercial
issuance of a writ of preliminary injunction to or business purposes.
restrain the defendants from entering into
Note: That the correct test for the
contracts with third parties for work on the
application of State immunity is not the
projects.
conclusion of a contract by a State but the
The defendants entered their special legal nature of the act.
appearance “for the purpose only of
When a Foreign state enters into a contract
questioning the jurisdiction of this court over
with a private party:
the subject matter of the complaint and the
persons of defendants, the subject matter of 1. Determine the character of the
the complaint being acts and omissions of said contract, if its commercial in
the individual defendants as agents of nature and if the foreign state is
defendant United States of America, a engaged regularly in business or
foreign sovereign which has not given her trade (may be sued)
consent to this suit or any other suit for the
causes of action asserted in the complaint.” 2. legal nature of the act. (if the act
is Jure imperii – governmental
ISSUE:
activities, the foreign state
1. Whether or not the US naval base in cannot be sued, can invoke
bidding for said contracts exercise state immunity. However, if the
governmental functions to be able to invoke act is Jure gestionis -proprietary
state immunity. acts, may be sued)

RULING: In classical or absolute theory, a sovereign


cannot, without its consent, be made
1. Yes. Not every contract is deemed to
respondent in the courts of another
be a waiver. Only those falling under ACTA
sovereign.
JURE GESTIONIS may subject the State to
suits. While in Restrictive theory, the immunity is
recognized only with regard to public acts
Note: The restrictive application of State
or acts jure imperii of a state but not with
immunity is proper only when the
regard to private acts or acts jure gestionis.
proceedings arise out of commercial
transactions of the foreign sovereign, its Note: Not all acts jure imperii may exempt a
commercial activities or economic affairs. State from suit, as in the case of its exercise
Stated differently, a State may be said to of its power of eminent domain, when done
have descended to the level of an without payment of just compensation.
individual and can thus be deemed to have
Case Principle: State immunity from suit is
tacitly given its consent to be sued only
one which focuses on the particular
when it enters into business contracts. It
functions exercised by the party and
does not apply where the contract relates
determines whether these are proprietary or
to the exercise of its sovereign functions.
sovereign in nature. The nature of the acts
performed by an entity invoking immunity
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remains the most important barometer for functions. Its designation as the Primary
testing whether the privilege of State contractor does not automatically grant it
immunity from suit should apply. At the same immunity. Although it claims to be a
time, our Constitution stipulates that a State government-owned corporation, it failed to
immunity from suit is conditional on its present evidence that it has not consented
withholding of consent; hence, the laws and to be sued under Chinese Law. In the
circumstances pertaining to the creation absence of evidence to the contrary,
and legal personality of an instrumentality or CNMEG is to be presumed to be a
agency invoking immunity remain relevant. government-owned and -controlled
Consent to be sued, as exhibited in this corporation without an original charter. As a
decision, is often conferred by the very result, it has the capacity to sue and be
same statute or general law creating the sued under Section 36 of the Corporation
instrumentality or agency. Code.

German Agency for Technical Cooperation Note: The use of “State Corporation” was
vs CA only descriptive of its nature as a
government-owned/or -controlled
Facts: The petitioner moved to dismiss a
corporation and its assignment as the
complaint for illegal dismissal filed against it
Primary Contractor did not imply that it was
before the National Labor Relations
acting in behalf of China in the
Commission, contending that the Labor
performance of the latter’s sovereign
Arbiter has no jurisdiction over it, as it was
functions.
“the implementing agency of the
Government of the Federal Republic of • Despite the petitioners’ claim the
Germany. The Supreme Court rejected EXIM bank extended financial
those contentions stating that the petitioner assistance to North Rail as it was
did not present sufficient evidence to mandated by the Chinese govt and
establish that it enjoys the immunity from suit not because it intends to do business
generally enjoyed by its parent country, the in Phil., it is quite evident that the
Federal Republic of Germany. Assuming project was a purely commercial
that characterization is correct, it does not transaction.
automatically invest GTZ with the ability to
invoke State immunity from suit. • The loan agreement is between EXIM
The distinction lies in whether the agency is bank and Phil. Govt. (which is an
incorporated or unincorporated. inextricable part of the entire
undertaking, reveal the intention of
China National Machinery & Equipment
the parties to the project, if the whole
Corporation vs. Sta. Maria
venture is commercial or proprietary
Facts: The petitioner, designated by the in nature)
Republic of China as its prime contractor for
the North Rail Project of the Republic of the • Contract agreement is between
Philippines, as certified by its Chinese Northrail and CNMEG (classifications
Ambassador, claimed sovereign immunity in of the legal nature of the contract
connection with a suit against it based on its cannot be determined)
Memorandum of Understanding with the
Even assuming arguendo that CNMEG
North Luzon Railways Corporation.
performs governmental functions, such
Ruling: The Supreme Court rejected its claim. claim does not automatically vest it with
CNMEG cannot claim immunity from suit immunity. This view finds support in Malong
even it contends to perform governmental v. Philippine National Railways, in which this
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Court held that “immunity from suit is Given the official character of the above-
determined by the character of the objects described letters, we have to conclude that
for which the entity was organized.” the petitioners were, legally speaking, being
sued as officers of the United States
Application
government. As they have acted on behalf
• The usual practice is to file such of that government, and within the scope of
claims not against the state itself but, their authority, it is that government, and not
as to avoid its involvement, against the petitioners personally, that is responsible
the officer of the government who for their acts. Assuming that the trial can
failed to perform his/her duties or proceed and it is proved that the claimants
responsibilities. have a right to the payment of damages,
• It is essential to ascertain if the State such award will have to be satisfied not by
is the real party in interest. That is, the petitioners in their personal capacities
that the claim if proved will be direct but by the United States government as their
liability of the State and not merely principal. This will require that government to
of the officer impleaded. perform an affirmative act to satisfy the
judgment, viz, the appropriation of the
Sanders vs Veridiano necessary amount to cover the damages
awarded, thus making the action a suit
Brief facts: 2 Americans employees of the
against that government without its consent.
Subic Naval Base sued its commanding
general and the director of special services UP vs Dizon
for damages for allegedly defamatory
remarks made by the defendants. Brief Facts:

These 2 American’s employment were The secretary of National defense, in his


advised to be converted from full-time to official capacity, failed to pay the actual
part-time. They instituted grievance amount to the architect’s professional fees
proceedings and the hearing officer in which it was already earmarked by the
recommended for reinstatement of their Government.
permanent full-time status. However,
As far as the State is concerned, it has
Sanders, who is the director of special
already rendered its obligation. Therefore,
services sent a letter to the commanding
the action was properly filed against the
general which contains his disagreement
officer and not the state. No waiver of its
with the officer’s report and statements
immunity was necessary.
about the employees involved that are
defamatory in nature. The commanding Note: A public officer in his official capacity
general, before the grievance proceeding, may be impleaded without the necessity of
sent a letter to the Chief of Naval Personnel obtaining the consent of the State to be
explaining the change of the private sued. Thus, the officer is obliged to do the
respondents’ employment status. Thereafter, duty required by law or restrain him from
the respondents filed for damages alleging doing an act alleged to be unconstitutional
that the letters contained libelous or illegal or to recover from him taxes
imputations. unlawfully assessed and collected.

Issue: Whether or not the state can be sued Note: As for Accrued rentals, where there is
without its consent. additional claim for recovery of damages,
inasmuch as its allowance would require the
government to appropriate the necessary
Ruling:
5|Page – Political Law (Oral Recitation) -2nd Meeting

amount for the satisfaction of the - 2nd Case : private Genove


judgement. respondent filed complaint for
damages against petitioners
Note: If such appropriation of an amount is
for his dismissal as cook in the US Air
needed to satisfy the judgement, insofar as
Force Recreation Center.
the impleaded public officer is concerned,
the State may render its affirmative act and
- 3rd Case : private respondent
appropriate what is required. If it does, the
Bautista, a barracks boy in Clark air
suit is one against the State and its inclusion
base, was arrested by the petitioners
as party defendant.
in a buy-bust operation and was
Note: If the impleaded officer can comply charged with violation of Dangerous
with the court’s decision, without the Drugs Act whereupon was dimissed
necessity of involving the state, then the suit from employment. He then sued
can prosper against him. individual petitioners.

Note: Any injury caused by the impleaded - 4th Case: private respondents filed a
public officer who acts without or in excess complaint against petitioners for
of jurisdiction, is his own personal liability and injuries sustained by then. According
cannot be imputed to the State. to the plaintiffs, the defendants beat
them up, handcuffed them and
Fejesto vs Fernando
unleashed dogs on them.
Brief Facts: The Director of Public works took
The US, though not formally impleaded in
over without authority property belonging to
the complaints, join all individual petitioners
the plaintiff and constructed thereon a
in moving to dismiss on the ground that the
public irrigation canal.
cases are suits against the State to which it
Ruling: The Supreme Court held that the did not consent.
action was properly filed against the
Ruling: The supreme court declared that
defendant in his personal capacity and was
other petitioners in the cases all have acted
therefore not covered by the doctrine of
in the discharge of their official functions as
State immunity.
officers of the United States. However, the
USA vs. Guinto matter of evidence must be considered. The
charges against them may not be
Brief Facts: There are 4 consolidated cases summarily dismissed on their mere assertion
involving the same issue on the doctrine of that their acts are imputable to the US which
State Immunity. has not given its consent to be sued. In fact,
- The 1st case : Several officers of US Air defendants are sought to be held
Force in Clark Airbase are being answerable for personal torts (wrongdoings)
sued in connection with the bidding in which the US itself is not involved. If found
conducted by them for contracts for liable, they alone must satisfy the judgment.
barbering services in the said base. The Court then could not directly decide this
The bidding was won by another case and ruled that the required inquiry
over the objection of the private must first be made by the lower court to
respondents, who claimed that he assess and resolve the conflicting claims of
made a bid for 4 facilities, in which the parties based on the evidence yet to be
one of them was not included in the
presented at the trial. The Court will
invitation to bid. determine, if it is still necessary, if the
doctrine of state immunity is applicable only
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after the determination of what capacity Express Consent Examples:


the petitioners were acting at the time of • Act No. 3083 (General Law)
the incident in question. “The govt. of the Phil. Islands
hereby consents and submits
The Holy See v Rosario
to be sued upon any
Case Summary: moneyed claim involving
liability arising from contract,
A civil complaint was dismissed against the epress or implied, which
petitioner after DFA had “officially certified could serve as a basis of civil
that the Embassy of Holy See is a duly action between private
accredited diplomatic mission to the parties."
Republic of the Philippines exempt from
local jurisdiction and entitled to all rights, How to sue State when it gives consent:
privileges and immunities of a diplomatic
• Under C.A. No. 327 as
mission or embassy in this country.”
amended by P.D. no. 1445, a
It was further affirmed that: claim against the
government must first be filed
- "the determination of the executive with the COA, which must
arm of the government that a state act upon it within 60 days.
or instrumentality is entitled to Rejection of the claim will
sovereign or diplomatic immunity is a authorize the claimant to
political question that is conclusive elevate the matter to the
upon the courts. Where the plea of Supreme Court on certiorari
immunity is recognized and affirmed and in effect sue the State
by the executive branch, it is the with its consent.
duty of the courts to accept this
claim so as not to embarrass the • Special law enacted by the
executive arm of the government in Philippine legislature
conducting the country's foreign authorizing an individual to
relations." sue the Philippine
Government for injuries he
Waiver of Immunity
had sustained when his
Although Doctrine of Immunity is sometimes motorcycle collided with a
called “the royal prerogative of dishonesty,” government ambulance.
it must observed in fairness.

Note: The state must not often avail of this NOTE: Express consent of the state to be
rule to take undue advantage of parties sued must be embodied in a duly enacted
that may have legitimate claims against it. statute and may not be given by a mere
The State may, if it so desires, waive its counsel of the government. (Example:
immunity and voluntarily open itself to suit. Republic vs Purisima)

Forms of Consent Brief Facts: Judge Purisima denied the


motion to dismiss filed by Rice and Corn
1. Express -may be manifested either Administration in connection with a pending
thru general law or a special law civil suit for the collection of money claim
2. Implied – is given when the State arising from an alleged breach of contract
itself commences litigation or when it with the plaintiff, Yellow Ball Freight lines, Inc.
enters into a contract.
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The waiver made by the lawyer for the Rice Similar to De los Santos vs Intermediate
and Corn Administration, an agency of the Appellate Court, the Supreme court
government, was held by the Supreme reversed the trial court’s dismissal, on the
Court as not binding upon the State. ground of state immunity of complaint for
damages filed by the plaintiff on whose
• The consent, to be effective, must property was constructed by government,
come from the State acting through through provincial engineer of Rizal, an
a duly enacted statute. Thus, artificial creek without his knowledge or
whatever counsel for defendant consent, declaring that "doctrine of
Rice and Corn Administration sovereign immunity was not an instrument
agreed to had no binding force on perpetrating any injustice on a citizen."
the government
• Solicitor General cannot validly Supreme Court stressed in Republic v
waive immunity from suit. Only the Sandiganbayan:
Congress can "The doctrine of sovereign immunity cannot
be successfully invoked to defeat a valid
Amigable vs Cuenca claim for compensation arising from the
taking without just compensation and
Brief Facts: The question raised was the right without the property appropriation
of the plaintiff to sue the government for proceedings being first restored to the
recovery of the value of property which had plaintiffs' property."
been converted into public streets without
payment to her of just compensation. Santiago v Republic
Although it was shown that she had not The plaintiff sued the government for
previously filed her claim with the Auditor revocation of a donation on the ground of
General as normally required. The Supreme failure of the defendant to comply with the
Court decided in her favor, reiterating the stipulated conditions.
following pronouncement in the earlier case The defendant moved to dismiss for lack of
of Ministerio v. City of Cebu. its consent to be sued. The Supreme Court
denied the motion, holding that the suit
“If the constitutional mandate that the could prosper because it did not involve a
owner be compensated for property taken money claim against the State. As what the
for public use were to be respected, as it plaintiff was seeking was the return only of th
should, then a suit of this character should properties donated, he did not even filed his
no be summarily dismissed. The doctrine of claim first with the Commission on Audit
governmental immunity from uit cannot under the provisions of C.A No. 326.
serve as an instrument for perpetrating an
injustice on a citizen. IMPLIED CONSENT
Froilan v. Pan Oriental Shipping Co., where it
It is important that there be fidelity to legal was held that the government impliedly
norms on the part of officialdom if the rule of allowed itself to be sued when it filed a
law were to be maintained. complaint in intervention for the purpose of
When a government takes any property for asserting a claim for affirmative relief against
public use, which is conditioned upon the plaintiff, to wit recovery of a vessel.
payment of just compensation to be
judicially ascertained, it makes manifest that But a similar conclusion was not reached in
it submits to the jurisdiction of a court. There Lim v. Brownell, where the Philippine Govt.,
is no thought then that the doctrine of as a successor in interest of the United States
immunity from suit could still be to the properties being claimed from the
appropriately invoked.” latter, filed a complaint in intervention to join
the defendant in invoking the doctrine of
State immunity to secure the dismissal of the
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action. As the Philippine Government was such execution will require another waiver,
not asking for any affirmative relief from the lacking which the
plaintiff but had intervened for the purpose decision cannot be enforced against the
of resisting his claim, the Supreme Court held State. The judge in this case had issued a
that had no implied waiver of immunity writ of execution against the funds of the
could be assumed. AFP to satisfy a
judgement rendered against the Philippine
The ruling was reiterated in the case of Govt. (Obvious considerations of Public
Republic v Sandiganbayan policy)

Noted: Such an assumption is justified, The Supreme Court declared the writ
however, when the government enters into unlawful and made the following remarks:
a contract, for the State is then deemed to
have divested itself of the mantle of “That public funds cannot be the object of
sovereign immunity and descended to the garnishment proceedings even if the
level of the ordinary individual. Having done consent to be sued had been previously
so, it becomes subject to judicial action and granted and the state liability adjudged.”
processes.
• The universal rule that where the
United States V. Ruiz State gives its consent to be sued by
• In this case, the projects are an private parties either by general or
integral part of the naval base which special law, it may limit claimant's
is devoded to the defense and the action 'only up to the completion of
Philippines, undisputably a function proceedings anterior to the stage of
of the governmentof the highest execution' and that the power of the
order, they are not utilized for nor courts ends when the judgment is
dedicated to commercial or rendered.
business purposes.
• The functions and public services
Note: Suability would follow only if the rendered by the State cannot be
contract is entered into by the government allowed to be paralyzed or disrupted
in its proprietary capacity. Governmental by the diversion of public funds from
contracts do not result in implied waiver of their legitimate and specific objects,
the immunity of the State from suit. as appropriated by law.

Guinto Case
• Operation in Barbershops & But in Philippine National Bank vs Pabalan
restaurants at Camp John Hay, (foregoing doctrine was not applied)
being open to public for fee are • writ of execution was issued against
proprietary in nature. the Phil. Virginia Tobacco
Administration, pursuant to which its
Note: An agreement to submit any dispute funds on deposit with the petitioner
to arbitration may be construed as an were garnished. On the contention
implicit waiver of immunity from suit. that such funds were public in
character and therefore could not
Note: It should be observed that when the be garnished.
State gives its consent to be sued, it does
not thereby also consent to the execution of • In accordance with the court ruling
the judgment against it. in cases National Shipyard and Steel
Corporation and Manila Hotel
The rule as reiterated, in the case of Company, Funds of public
Republic of the Philippines vs Villasor, is that corporations which can sue and be
9|Page – Political Law (Oral Recitation) -2nd Meeting

sued were not exempt from before execution may be had, a


garnishment. claim for payment of the judgment
award must be first filed with the
• As respondent Philippine Virginia COA.
Tobacco Administration is likewise a • Under Commonwealth Act No. 327,
public corporation possessed of the as amended by Section 26 of P.D.
same attributes, similar outcome is No. 1445 (COA jurisdiction to
indicated. examine, audit and settle all debts of
any sort due or owing from
government or any of its subdivisions,
• In this case, consent to be sued was agencies and instrumentalities,
given impliedly when the State including government-owned or
enters into a contract, the State is controlled corporations and their
deemed to have divested itself of subsidiaries.
the mantle of sovereign immunity
and descended to the level of the
ordinary individual. UP v Dizon

Fundamental Rule: government


• The government has entered with
agencies are not subject to levy and
them into a commercial business
execution.
hence it has abandoned its
sovereign capacity and has stepped
1. Properties held for public purposes –
down to the level of a corporation.
ARE NOT subject to levy and sale
Therefore, it is subject to the rules
under execution against such
governing ordinary corporation.
corporation. Same rule applies to
funds of a public officer and taxes
National Electrication Administration v
due to a municipal corporation.
Morales
• proprietary of the order of
2. Municipal corporation in its
garnishment issued by a court
proprietary capacity, not used for
against the funds of the petitioner in
public purpose - such property may
connection with a money claim
be seized and sold under execution
awarded in favor of the plaintiff, in
against the corporation.
the light of the constitutional
authority of the COA to review
3. If the public use is wholly
money claims against the
abandoned, such property becomes
government.
subject to execution.
• COA had exclusive jurisdiction to
decide on the allowance of
disallowance of money claims arising Suit against Government Agencies
from the implementation of Republic
Act No. 6758 Note: Suit against one of Government's
• Similar ruling in Lockheed Detective entities:
and Watchman Agency, Inc. v
University of the Philippines. 1. It must be ascertained whether or
• Ruling: Like NEA, UP is a juridical not the State, as the principal may
personality separate and distinct ultimately be held liable, has given its
from the government and has the consent to be sued.
capacity to sue and be sued. Like 2. This ascertainment will depend in
NEA, it cannot evade execution and whether the government agency
its funds may be subjected to impleaded is incorporated or
garnishment or levy. However, unincorporated.
10 | P a g e – P o l i t i c a l L a w ( O r a l R e c i t a t i o n ) - 2 n d M e e t i n g

Incorporated vs Unincorporated charged fees for the use of its facilities,


should be regarded as engaged in private
Incorporated agency - has a charter of its functions and therefore subject to suit.
own that invests it with a separate juridical
personality. Ruling: The SC said that it was, describing its
Ex: SSS, UP and City of Manila business as “an enterprise which, far from
being the exclusive prerogative of the State,
Unincorporated agency - it has no separate may, more often than the construction of
juridical personality but is merged in the public roads, may be undertaken by private
general machinery of the government. concerns.” (Performing proprietary function,
Ex: DOJ , Bureau of Mines and the therefore, is suable)
Government Printing Office
This ruling was affirmed in:
TEST OF SUABILITY Air Transportation Office vs. Ramos

Incorporated agency - test of its suability is Ruling: The SC held that the petitioner was
found in its charter. The simple rule is that it is “an agency of the Government not
suable if its charter says so regardless of the performing a purely governmental or
functions it is performing. sovereign function, but was instead involved
in the management and maintenance of
Unincorporated agency – there is no charter the Loakan Airport, an activity that was not
to consult since it has no separate juridical the exclusive prerogative of the State in its
personality, any suit filed against it is sovereign capacity.”
necessarily an action against
the Philippine Government of which it is a Non-suability of unincorporated
part. It is necessary to determine the nature Bureau of Printing v. Bureau of Printing
of the functions in which the agency is Employees Association (Cannot be sued,
engaged so as to hold it suable if they are the propriety function it discharged is merely
governmental. The test in every case is the incidental )
nature of the primary nature being
discharged. • The Bureau of Printing is an office of
the Government created by the
Cases example -Incorporated Administrative Code of 1916 (Act No.
2657).
Bemoy v. Philippine Normal College, suit
was filed by the personnel of the defendant • it operates under the direct
corporation for recovery of salary supervision of the Executive
differentials and overtime pay. Secretary, Office of the President

Note: Important thing was that the charter • is 'charged with the execution of all
of the college provided that it could sue printing and binding, including work
and be sued regardless if the public agency incidental to those processes,
engaged in a governmental function. required by the National
Government
Cases example -Unincorporated
• It has no corporate existence, and its
National Airports Corporation v. Teodoro appropriations are provided for in
the General Appropriations Act.
Issue: Whether or not the Civil Aeronautics
Administration, an unincorporated agency
of the government undertaking the • Designed to meet the printing needs
operations of airports and authorized to of the Government, it is primarily a
service bureau and, obviously, not
11 | P a g e – P o l i t i c a l L a w ( O r a l R e c i t a t i o n ) - 2 n d M e e t i n g

engaged in business or occupation the ownership of which was subsequently


for pecuniary profit. transferred to the government in a
compromise agreement. It is therefore
Note: The additional work it executes for crystal clear that BBC's function is purely
private parties is merely incidental to its commercial or proprietary and not
function, and although such work may be governmental. As such, BBC cannot be
deemed proprietary in character, there is no deemed entitled to an exemption from the
showing that the employees performing said posting of an appeal bond."
proprietary function are separate and
distinct from those employed in its general
governmental functions. the Supreme Court clarified that this
exemption does not, as a general rule,
The non-suability of the Bureau of Customs apply to government-owned or controlled
was affirmed in the case of Farolan v. Court corporations because they have legal
of Tax Appeals personalities distinct from their shareholders.
Thus, "while a GOCC's majority stockholder,
In Shell Philippines Exploration B.V. v. Jalos, the State, will always be presumed solvent,
the presumption does not necessarily
Facts: the petitioner invoked the doctrine of extend to the GOCC itself.
state immunity in asking for the dismissal of a
complaint against it, claiming that it should However, when a GOCC becomes a
be considered an agent of the Republic of 'government machinery to carry out a
the Philippines by reason of its appointment declared government policy,' it becomes
by the latter as the exclusive party to similarly situated as its majority stockholder
conduct petroleum operations in a certain as there is the assurance that the
area, and that said operations were under government will necessarily fund its primary
the full control and supervision of the State. functions. Thus, a GOCC that is sued in
relation to its governmental functions may
Ruling: The Supreme Court rejected this be, under appropriate circumstances,
contention, stating that these facts do not exempted from the payment of appeal
mean that it had become the State's "agent' fees.
within the meaning of the law." The Court
considered the petitioner to be but "a National Power Corporation & Government
service contractor for the exploration and Service Insurance system are NOT EXEMPT
development of one of the country's natural from paying filing fees.
gas reserves."
Note: Neither can the State generally be
Exemption from Legal Requirements asked to pay the legal fees prescribed in the
Rules of Court or the costs of the suit.
General Rule: When the State litigates, either
directly or through its authorized officers, it is Land Bank of the Philippines, in the
not required to put up a bond for damages, performance of its governmental functions in
or an appeal bond, since it can be agrarian reform proceedings, has been
assumed that it is always solvent. considered exempt from the payment of
costs of the suit, as provided for in Section 1
Banahaw Broadcasting Corporation v. of Rule 142 of the Rules of Court."
Pacana
Note: GOCC stands for Government-owned Note: INTEREST is also NOT chargeable
and controlled corporation. against it EXCEPT when it has EXPRESSLY
STIPULATED TO PAY IT or when interest is
Facts: BBC was organized as a private allowed by an act of the legislature OR in
corporation, sequestered in the 1980's and eminent domain cases where damages
12 | P a g e – P o l i t i c a l L a w ( O r a l R e c i t a t i o n ) - 2 n d M e e t i n g

sustained by the owner TAKE THE FORM of State can never be held liable if it does not
interest at the legal rate. first consent to be sued. Liability is not
conceded by the mere fact that the state
Note: It has also been held that statutes of has allowed itself to be sued. When the state
limitation do not run against the State unless does waive its sovereign immunity, it is only
the contrary is expressly provided by law, giving the plaintiff the chance to prove, if it
although this rule is not observed where the can, that the defendant is liable."
State is engaged in private business.
Merritt v. Government of the Philippine
Republic v. Garcia Islands

Ruling: it was held that the government " the plaintiff was allowed to sue by virtue of
could not be assessed one-half of the fees a special law but was unable to hold the
paid to the commissioner who determined defendant liable when it was shown at the
the just compensation for the property trial that the injuries sustained by him were
under expropriation. caused by a regular driver of the
government. The law applied was what is
Suability vs. Liability now Article 2180 of the Civil Code, which
provides that the State shall be responsible
General Rule: The mere fact that the State is for torts only when it acts through a special
suable does not mean that it is liable; or to agent and not when the damage has been
put it another way, waiver of immunity by caused by the official or employee to whom
the State does not mean concession of its the task done properly pertains.
liability.
Note: Municipal corporations ARE SUABLE
Suability - is the result of the express or because their charters grant them the
implied consent of the State to be sued. competence to sue and be sued. But they
ARE NOT liable for torts committed by them
Liability -is determined after hearing on the in the discharge of governmental functions
basis of the relevant laws and the and can be held answerable only if it can
established facts. When, therefore, the State be shown that they were acting in a
allows itself to be sued, all it does in effect is proprietary capacity.
to give the other party an opportunity to
prove, if it can, that the State is liable. The In permitting such entities to be sued, the
State, in many cases, may be suable but not State merely gives the claimant the right to
liable. show that the defendant was not acting in
its governmental capacity when the injury
University of the Philippines v. Dizon was committed or that the case comes
under the exceptions recognized by law.
Held: the Supreme Court, citing Municipality Failing this, the claimant cannot recover.
of San Fernando, La Union v. Firme, stressed
that a "marked distinction exists between In one case, for example, a claim for
suability of the State and its liability." recovery of damages against a provincial
government failed when it was shown that
Distinction between suability of the State the injury complained of occurred in
and its liability connection with the repair of streets then
being undertaken by the defendant
Suability depends on the consent of the through its regular agents. This was clearly a
state to be sued, governmental function. By contrast, a
municipality was held liable in another case
liability on the applicable law and the for forcibly and illegally ejecting a lessee
established facts.
13 | P a g e – P o l i t i c a l L a w ( O r a l R e c i t a t i o n ) - 2 n d M e e t i n g

from certain fishponds belonging to the As such, GSIS cannot claim immunity from
former in its proprietary capacity. the enforcement of the final and executory
judgment against it."
Torio v. Fontanilla

Ruling: The SC held a municipality liable for a


tort committed in connection with the
celebration of a town fiesta, which was
considered a proprietary function.

University of the Philippines v. Dizon

Ruling: The SC, citing the earlier case of


Republic v. National Labor Relations
Commission," explained that:

• the "funds of the UP are


GOVERNMENT FUNDS THAT ARE
PUBLIC IN CHARACTER.

• They include the income accruing


from the use of real property ceded
to the UP that may be spent only for
the attainment of its institutional
objectives.

• Hence, the funds subject of this


action COULD NOT be validly made
the subject of the RTC's writ of
execution or garnishment. The
adverse judgment rendered against
the UP in a suit to which it had
impliedly consented was not
immediately enforceable by
execution against the UP, because
suability of the State did not
necessarily mean its liability."

In contrast,
GSIS v. Group Management Corporation

the "GSIS should not be allowed to hide


behind such immunity especially since its
obligation arose from its own wrongful
action in a business transaction.

In this case, the monetary judgments


against GSIS arose from its failure to comply
with its private and contractual obligation to
GMC.

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