State Immunity

 Sanders vs. Veridiano, G.R. No. L-46930, June 10, 1988

Sanders v. Veridiano II

No. L-46930, 162 SCRA 88 [June 10, 1988]

Facts. Petitioner Sanders was the special services director of the U.S. Naval Station (NAVSTA) in Olongapo City while
petitioner Moreau was the commanding officer of the Subic Naval Base, which includes NAVSTA. Respondents Rossi
and Wyer were employed as gameroom attendants in the special services dept. of the NAVSTA. Their employment had
been converted from permanent full-time to permanent part-time. They instituted grievance proceedings. The hearing
officer recommended reinstatement plus backwages. Sanders disagreed and asked in a letter addressed to Moreau for
the rejection of the recommendation. Before the start of the grievance proceedings, Moreau as the commanding
general purportedly sent a letter to the Chief of Naval Station explaining the change of the respondents’ employment
status and requesting concurrence therewith. Respondents sued for damages claiming the letters contained libelous
imputations and that the prejudgment of the grievance proceedings was an invasion of their personal and proprietary
rights. They made it clear, however, that petitioners were being sued in their private or personal capacity. Petitioners
moved to dismiss arguing that the acts complained of were performed in the discharge of official duties and that the
court had no jurisdiction under the doctrine of state immunity.

Issues.

Were the petitioners acting officially when they did the acts for which private respondents have sued them for
damages?

Assuming they are acting in their official duties, is the complaint filed against them by respondents tantamount to a suit
against the U.S. govt without its consent?

Held.
Yes. It is abundantly clear that the acts for which the petitioners are being called to account were performed by them, in
the discharge of their official duties. xxx The mere allegation that a govt functionary is being sued in his personal
capacity will not automatically remove him from the protection of xxx the doctrine of state immunity. By the same token,
the mere invocation of official character will not suffice to insulate him from suability and liability for an act imputed to
him as personal tort committed without or in excess of his authority. These well-settled principles are applicable not only
to the officers of the local State but also where the person sued in its court pertains to the govt of a foreign state, as in
the present case.

Yes. Given the official character of the letters, we have to conclude that petitioners were, legally speaking, being sued
as officers of the U.S. govt. As they have acted on behalf of the gov’t, and within the scope of their authority, it is the
U.S. govt, and not the petitioners personally, that is responsible for their acts xxx thus making the action a suit against
the govt without its consent.24

The functions of govt officials cease to be official the moment they exceed their authority.

 Republic vs. Sandoval, G.R. No. 84607, March 19, 1993

Republic v. Sandoval

GR 84607, 220 SCRA 124 [Mar 19, 1993]

 Facts. Following the “Mendiola Massacre”25 in 1987, Pres. Aquino created the Citizen’s Mendiola Commission for the
purpose of conducting an investigation of the disorder. She also joined the farmers-marchers days after the ill-fated
incident as an “act of solidarity” and promised that the government would address the grievances of the rallyists. The
Mendiola Commission recommended, among others, that the victims be compensated by the government. Whereupon,
the petitioners filed a formal letter of demand for compensation. Due to the apparent inaction by the government, the
petitioners sued for damages against the Republic. The Solicitor General contends that this is a case of the State being
sued without its consent. Petitioners countered and maintained that the State consented to suit when the Commission
recommended that the victims be indemnified. They likewise contend that the actuations of Pres. Aquino following the
incident constitute a waiver of the State immunity. Judge Sandoval upheld the State.

Issues.
Did the State waive its immunity from suit?
Does this case qualify as a suit against the State?

Held.

No. The recommendation made by the Mendiola Commission regarding indemnification of the victims of the
incident by the gov’t does not in any way mean that liability automatically attaches to the State. Notably, A.O. No. 11
which created the Commission expressly states that its purpose was to conduct an “investigation of the disorder, deaths
and casualties that took place.” Evidently, it is only a fact-finding committee so that whatever may be its findings, the
same shall only serve as the cause of action in the event that any party decides to litigate his claim. Its
recommendations cannot in any way bind the State immediately, such recommendation not having been final and
executory. The President’s actuations likewise cannot be taken as a waiver of State immunity. The act of jointing the
marchers days after the incident, to borrow the words of the petitioners, was
but “an act of solidarity by the government with the people”. Her promise to address the rallyists’ grievances cannot in
itself give rise to the inference that the State has admitted any liability, much less can it be inferred therefrom that it has
consented to the suit.

No. While the Republic in this case is sued by name, the ultimate liability does not pertain to the govt. Although the
anti-riot forces were discharging their official functions when the incident occurred, their functions ceased to be official
the moment they exceeded their authority. Based on the Commission findings, there was lack of justification by the
government forces in the use of firearms. Moreover, the members of the anti-riot forces committed an unlawful act as
there was unnecessary firing by them in dispersing the marchers.26 An officer cannot shelter himself by the plea that he
is a public agent acting under the color of his office when his acts are wholly without authority.

An officer who acts outside the scope of his jurisdiction and without the authorization of law renders himself amenable
to personal liability in a civil suit. If he exceeds the power conferred on him by law, he cannot shelter himself by the plea
that he is a public agent acting under color of his office.

 United States vs. Guinto, G.R. No. 76607, February 26, 1990

United States of America v. Guinto

GR 76607, 182 SCRA 644 [Feb 26, 1990]

Facts. Here are 4 cases consolidated because they all involve the same issue on the doctrine of State immunity.27 In
the 1st case, private respondents, who had been concessionaire inside Clark Air Base, are suing several officers of the
U.S. Air Force stationed in Clark in connection with the bidding conducted by them for contracts for barbering services
in the said base.
The bidding was won by another over the objection of private respondents, who claimed that he made a bid for 4
facilities, including the Civil Engineering Area, which was not included in the invitation to bid. Private respondents sued
individual petitioners.

In the 2nd case, private respondent Genove filed a complaint for damages against petitioners for his dismissal as cook
in the U.S. Air Force Recreation Center at the John Hay Air Station in Baguio. It has been ascertained after
investigation that Genove had poured urine into the soup stock used in cooking the vegetables served to the club
customers whereupon, he was dismissed. Genove sued individual petitioners.

In the 3rd case, private respondent Bautista, a barracks boy in Camp O’Donnell, an extension of Clark Air Base, was
arrested following a buy-bust operation conducted by individual petitioners. Bautista was charged with violation
Dangerous Drugs Act whereupon Bautista was dismissed from his employment. Bautista sued individual petitioners.

In the 4th case, private respondents filed a complaint against petitioners (except the U.S.A.) for injuries sustained by the
plaintiffs as a result of the acts of the defendants. Accdg to plaintiffs, the defendants beat them up, and handcuffed
them and unleashed dogs on them which bit them in several parts of their body causing extensive injuries.

The United States, though not formally impleaded in the complaints, join all individual petitioners in moving to dismiss
on the ground that the cases are suits against the State to which it did not consent.

Issue. Are the 4 cases suits against the State without its consent?

Held. No, in the 1st case. The petitioners cannot plead any immunity from the complaint filed by the private
respondents. The barbershops subject of the concessions granted by the U.S. gov’t are commercial enterprises
operated by private persons. They are not agencies of the U.S. Armed Forces nor are their facilities demandable as a
matter of right by the American servicemen. xxx No less significantly, if not more so, all the barbershops
concessionaires are, under the terms of their contracts, required to remit to the U.S. gov’t fixed commissions.

No, in the 2nd case. This is a suit against the State with its consent. The restaurant services offered partake of the
nature of a business enterprise undertaken by the U.S. gov’t in its proprietary capacity. xxx All persons availing
themselves of this facility pay for the privilege like all other customers as in ordinary restaurants. Such services are
undoubtedly operated for profit, as a commercial and not governmental activity. Consequently, petitioners cannot
invoke the doctrine of state immunity for the reason that by entering into the employment contract with Genove, in
the discharge of its proprietary functions, it impliedly divested itself of its sovereign immunity from suit. But
considerations notwithstanding, [the Court] held that the complaint must still be dismissed. While suable, the petitioners
are nevertheless not liable, and the complaint for damages cannot be allowed on the strength of the evidence.

Yes, in the 3rd case. It is clear that the individually named petitioners were acting in the exercise of their official
functions when they conducted the buy-bust operation against complainant and thereafter testified against him at his
trial. Said petitioners were in fact connected with the Air Force Office of Special Investigators and were charged
precisely with the function of preventing the distribution, possession and use of prohibited
drugs and prosecuting those guilty of such acts.

No, in the 4th case. The contradictory factual allegations deserve a closer study of what actually happened to the
plaintiffs. The record is too meager to indicate if the defendants were really discharging their official duties or had
actually exceeded their authority when the incident in question occurred. Lacking this information, the Court cannot
directly decide the case.

Waiver of State’s immunity from suit, being a derogation of sovereignty, will not be lightly inferred, but must be
construed strictissimi juris.
 The consent of the State to be sued must emanate from statutory authority, hence, from a legislative act, not from a
mere memorandum.

 Veterans Manpower & Protective Services, Inc. vs. Court of Appeals, G.R. No. 91359, September 25, 1992

Veterans Manpower and Protective Services, Inc. v. Court of Appeals

GR 91359, 214 SCRA 286 [Sept 25, 1992]

Facts. A memorandum of agreement (MOA) was executed between Philippine Association of Detective and Protective
Agency Operators, Inc. (PADPAO) and the PC Chief, which fixed the monthly contract rate per guard for 8 hours of
security service per day at P2,250.00 within Metro Manila and P2,215.00 outside of Metro Manila. Thereafter, Odin
Security Agency (Odin) filed a complaint with PADPAO accusing petitioner Veterans Manpower and Protective
Services, Inc. (VMPSI) of cut-throat competition by undercutting its contract rate for security services rendered to the
Metropolitan Waterworks and Sewerage System (MWSS), to which the latter was found to be guilty by the former and
was recommended for expulsion from PADPAO and the cancellation of its license. As a result, VMPSI request for a
clearance/certificate of membership from PADPAO was denied. VMPSI wrote to the PC Chief requesting to set aside
the findings of PADPAO but to no avail. VMPSI filed a complaint against the PC Chief and PC-SUSIA but the latter filed
a motion to dismiss on the grounds that the case is against the State which had not given consent thereto.

Issue. Is the VMPSI’s complaint against the PC Chief and PC-SUSIA a suit against the State without its consent?

Held. Yes. The State may not be sued without its consent. The PC Chief and PC-SUSIA contend that, being
instrumentalities of the national govt exercising a primarily governmental function of regulating the organization and
operation of private detective, watchmen, or security guard agencies, said official (PC-Chief) and agency (PC-SUSIA)
may not be sued without the govt’s consent, especially in this case because VMPSI’s complaint seeks not only to
compel the public respondents to act in a certain way, but worse, because VMPSI seeks damages from said public
respondents. xxx A public official may sometimes be held liable in his personal or private capacity if he acts in bad faith,
or beyond the scope of his authority or jurisdiction, however, since the acts for which the PC Chief and PC-SUSIA are
being called to account in this case, were performed by them as part of their official duties, without malice, gross
negligence, or bad faith, no recovery may be had against them in their private capacities.

Consenting to suability does NOT mean conceding to liability. The liability of the State is limited to that which it
contracts through a special agent

 Merritt vs. Government of the Philippine Islands, G.R. No. 11154, March 21, 1916

Merritt v. Government of the Philippine Islands

No. 11154, 34 Phil 311 [Mar 21, 1916]

Facts. Petitioner Meritt was riding on a motorcycle along Calle Padre Faura when the General Hospital ambulance
struck the plaintiff. The chauffeur of the ambulance was employed by the Hospital. Meritt suffered severe injuries. The
Legislature passed Act No. 2457 authorizing Merritt to bring suit against the Govt of the Phils. The CFI found for Meritt.
In this appeal to the judgment rendered, the Govt claims that the CFI erred in holding that the State is liable for the
damages sustained by Meritt even if it be true that the collision was due to the negligence of the chauffeur.

Issue. Is the State not liable for the damages notwithstanding that it was due to the negligence of the chauffeur
employed by the State?
 Held. Yes. By consenting to be sued, a State simply waives its immunity from suit. It does not thereby concede its
liability. It merely gives a remedy to enforce a preexisting liability and submits itself to the jurisdiction of the court,
subject to its right to interpose any lawful defense. The responsibility of the state is limited to that which it contracts
through a special agent, duly empowered by a definite order or commission to 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 imputable to a
public official charged with some administrative or technical office who can be held to the proper responsibility in the
manner laid down by the law of civil responsibility. The negligent chauffer of the ambulance was not such special agent.

The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice on a
citizen.

 Amigable vs. Cuenca, G.R. No. L-26400, February 29, 1972

Amigable v. Cuenca

No. L-26400, 43 SCRA 360 [Feb 29, 1972]

Facts. Petitioner Amigable is the registered owner of a lot in Banilad Estate in Cebu City. Without expropriation or
negotiated sale, the govt used a portion of said lot for the construction of the Mango and Gorordo Avenues. Amigable
requested payment for the portion of her lot which had been appropriated by the govt but the Auditor general disallowed
it. Amigable thus sued the Republic. Defendants contended, among others, that the action was a suit against the State
without its consent. CFI upheld the State and dismissed the case.

Issue. Is this a case of a suit against the State without its consent?

Held. No. The doctrine of State immunity from suit cannot serve as an instrument for perpetrating an injustice on a
citizen. Had the government followed the procedure indicated by the law Amigable would not be in the sad plaint she is
now. It is unthinkable then that precisely because there was a failure to abide by what the law requires, the government
would stand to benefit. Needless to say, when the government takes any property for public use, it is conditioned upon
the payment of just compensation, which [in this jurisdiction] is to be judicially ascertained.28 It thereby makes manifest
that it submits to the jurisdiction of a court. There is no thought then that the Doctrine of immunity from suit could still be
appropriately invoked.

Implied consent is given when the State itself commences litigation [or when it enters into a contract].

 Republic of the Philippines vs. Sandiganbayan, G.R. No. 90478, November 21, 1991

Republic v. Sandiganbayan

GR 90478, 204 SCRA 212 [Nov 21, 1991]

Facts. Pursuant to EO 14 of Pres. Aquino, the PCGG filed an action against private respondents. On motion of private
respondents, Sandiganbayan ordered to allow amended interrogatories to the PCGG.29 PCGG refuses to answer the
interrogatories and now seeks to nullify the Order contending, among others, that none of its members may be
“required to testify or produce evidence in any judicial . . proceeding concerning matters within its official cognizance”,
suggesting an appeal to the Doctrine of non-suability of the State.
 Issue. Is the PCGG immune from suit?

Held. No. PCGG’s contention has no application to a judicial proceeding it has itself initiated. By filing suit, PCGG brings
itself within the operation and scope of all the rules governing civil actions, including the rights and duties under the
rules of discovery. Otherwise, the absurd would have to be conceded, that while the parties it has impleaded as
defendants may be required to "disgorge all the facts" within their knowledge and in their possession, it may not itself be
subject to a like compulsion. It is axiomatic that in filing an action, the State divests itself of its sovereign character and
shed its immunity from suit descending to the level of ordinary litigant.

The PCGG cannot claim a superior or preferred status to the State, even while assuming to represent or act for the
State.

[Express] consent of the State to be sued must emanate from statutory authority.

 Republic of the Philippines vs. Feliciano, G.R. No. 70853, March 12, 1987

Republic v. Feliciano

No. L-70853, 148 SCRA 424 [Mar 12, 1987]

Facts. Pres. Magsaysay issued Proclamation No. 90 reserving for settlement purposes, a tract of land situated in
Tinambac and Siruma, Camarines Sur. Pursuant thereto, the Land Authority started subdividing and distributing the
tract of land to the settlers. Respondent Feliciano, claiming to be the private owner of a parcel of land included within
that distributed to the settlers, filed a complaint against the petitioner Republic for the recovery of ownership and
possession thereof. The trial court ruled in his favor. The appellate court reversed it, dismissing his complaint on the
ground of non-suability of the State. Feliciano contends that the consent of the Republic may be read from Proclamation
No. 50 itself, when it established the reservation “subject to private rights, if any there be.”

Issue. Did the State consent to be sued?

Held. No. No such consent can be drawn from the language of the Proclamation. The exclusion of existing private rights
from the reservation established by Proclamation No. 90 cannot be construed as a waiver of the immunity of the State
from suit. Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly but must be construed in
strictissimi juris. Moreover, the Proclamation is not a legislative act. The consent of the State to be sued must emanate
from statutory authority. Waiver of State immunity can only be made by an act of the legislative body. Not having
consented, the State is still, in this case, immune from suit.

Restrictive Application of State immunity is now the rule – State immunity now extends only to acts jure imperii as
against jure gestionis.

 United States vs. Ruiz, G.R. No. L-35645, May 22, 1985

United States of America v. Ruiz

No. L-35645, 136 SCRA 487 [May 22, 1985]

Facts. Private respondent responded to the United States’ invitation to submit bids for the repair of the wharves or
shoreline of its Naval Stations. Subsequently, private respondent received from the U.S. 2 telegrams requesting it to
 confirm its price proposals and for the name of its bonding company to which they complied. This to them signifies that
the U.S. has accepted their bid. Later, private respondent was notified that it was not awarded the projects. Private
respondent sued U.S. Individual petitioners question the jurisdiction of the court on the ground of State immunity from
suit.

Issue. Is the U.S. immune from suit?

Held. Yes. The restrictive application of State immunity is now the rule, limiting it to proceedings that arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a
State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its
consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions.30 In this case, the projects—the repair of wharves or shoreline—are an integral part
of the naval base which is devoted to the defense of both the U.S. and the Phils., indisputably a function of the gov’t of
the highest order; they are not utilized for nor dedicated to commercial or business purposes.

The ultimate test to determine to whether the act is jure imperii or jure gestionis: whether the state is engaged in the
activity in the regular course of business. If not and it is in pursuit of a sovereign activity or an incident thereof, then it is
an act jure imperii.

Where the plea of immunity is affirmed by the executive branch, it is the duty of the courts to accept this claim so as not
to embarrass the executive arm of the govt in conducting the country’s foreign relation.

 The Holy See vs. Rosario, G.R. No. 101949, December 1, 1994

The Holy See v. Rosario, Jr.

GR 101949, 238 SCRA 524 [Dec 1, 1994]

Facts. The petition arose from a controversy over a parcel of land, Lot 5-A, located in the Municipality of Paranaque.
Said Lot 5-A is contiguous to Lots 5-B and 5-D registered in the name of Philippine Realty Corp. The three lots were
sold to Licup through an agent. Later, Licup assigned his rights to the sale to respondent Starbright Enterprises
(Starbright). In view of the refusal of the squatters to vacate said lots, a dispute arose as to who of the parties has the
responsibility of evicting and clearing the land of squatters. Thereafter, the Holy See (a foreign state exercising
sovereignty over the Vatican City31) through its Ambassador, the Papal Nuncio, sold Lot 5-A to a third person
(Tropicana Corp.). Lot 5-A was previously acquired by the Holy See by donation from the Archdiocese of Manila for
constructing thereon the official place of residence of the Papal Nuncio. In subsequently selling the lot, no profit was
intended. The Holy See merely wanted to dispose of the same because the squatters living thereon made it almost
impossible for them to use it.

Starbright filed a complaint against the Holy See who pled sovereign/diplomatic immunity. Starbright insists that the
doctrine of non-suability does not apply for the Holy See has divested itself of such cloak when, of its own free will, it
entered into a commercial transaction for the sale of parcel of land located in the Phils. The trial court upheld Starbright.
Hence this petition. Meanwhile, the DFA moved to intervene in behalf of the Holy See, and officially certified that the
Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the Phils exempt from local
jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic mission or embassy in this country.
Issue. Is the Holy See entitled to sovereign immunity?32

Held. Yes. The mere entering into a contract by a foreign state with a private party cannot be the ultimate test [as to
whether it is acting jure imperii or jure gestionis]. The logical question is whether the foreign state is engaged in the
activity in the regular course of business. If not, the particular act or transaction must then be tested by its nature. If the
 act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not
undertaken for gain or profit.

In the case at bench, the Holy See did not buy and sell the lot in the ordinary course of a real estate business. Lot 5-A
was in fact donated to it for constructing thereon the official place of residence of the Papal Nuncio [which is necessary
for the creation and maintenance of its diplomatic mission]. In subsequently selling the lot, no profit was intended.

Moreover, the privilege of sovereign immunity in this case was sufficiently established by the Certification of the DFA.
Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to accept this
claim so as not to embarrass the executive arm of the govt in conducting the country’s foreign relation.

Even if the State consented to be sued and its liability adjudged, its public funds may not be disbursed by judicial order.
There must be a corresponding law of appropriation.

 Republic vs. Villasor, G.R. No. L-30671, November 28, 1973

Republic v. Villasor

No. L-30671, 54 SCRA 83 [Nov 28, 1973]

Facts. A decision was rendered in a special proceeding against the petitioner Republic thereby confirming the
arbitration award in favor of respondent Corporation. Judge Villasor thereafter ordered a writ of execution and the sheriff
accordingly served notices of garnishment with several banks on the “monies due the AFP”. The Republic challenged
the validity of said Order as the funds were certified by the AFP comptroller as funds duly appropriated for the pensions,
pay and allowances of its military and civilian personnel among others.

Issue. May the funds of the AFP (public funds) be garnished?

Held. No. A corollary of [the Doctrine of sovereign immunity] is that public funds cannot be the object of a garnishment
proceeding even if the consent to be sued had been previously granted and the State liability adjudged. xxx The
universal rule is that where the State gives its consent to be sued by private parties either by general or special law, it
may limit claimant’s action “only up to the completion of proceedings anterior to the state of execution”. For obvious
considerations of public policy, the power of the courts ends when the judgment is rendered since govt funds and
properties may not be seized [or disbursed] under writs of execution or garnishment but by corresponding
appropriations authorized by law.

When the State waives its immunity, all it does is to give the other party an opportunity to prove, if it can, that the State
has a liability.

Held. No. A corollary of [the Doctrine of sovereign immunity] is that public funds cannot be the object of a garnishment
proceeding even if the consent to be sued had been previously granted and the State liability adjudged. xxx The
universal rule is that where the State gives its consent to be sued by private parties either by general or special law, it
may limit claimant’s action “only up to the completion of proceedings anterior to the state of execution”. For obvious
considerations of public policy, the power of the courts ends when the judgment is rendered since govt funds and
properties may not be seized [or disbursed] under writs of execution or garnishment but by corresponding
appropriations authorized by law.

When the State waives its immunity, all it does is to give the other party an opportunity to prove, if it can, that the State
has a liability.
 Department of Agriculture vs. NLRC, G.R. No. 104269, November 11, 1993

Department of Agriculture v. NLRC

GR 104269, 227 SCRA 693 [Nov 11, 1993]

Facts. The petitioner DA and Sultan Security Agency (SSA) entered into a contract for security services to be provided
by the latter to the said governmental entity. Pursuant thereto, guards were deployed by SSA in the various premises of
the DA. For underpayment of wages, nonpayment of the 13th month pay etc., several guards of the SSA filed a
complaint against the DA and SSA. The Executive Labor Arbiter rendered a decision finding the DA jointly and severally
liable with SSA for the payment of the money claims and a writ of execution was accordingly issued. The DA prayed to
quash the writ of execution with the NLRC which did not. The DA asserts State immunity.

Issue. May the writ of execution be directed against the properties of the DA to satisfy a final and executory judgment?
Held. No. When the State waives its immunity, all it does, in effect, is to give

the other party an opportunity to prove, if it can, that the State has a liability. The Court reiterated Republic v. Villasor:
“power of the Courts ends when the judgment is rendered, since government funds and properties may not be seized
under writs or execution or garnishment to satisfy such judgments. Disbursements of public funds must be covered by
the correspondent appropriation as required by law.”

Government-owned or controlled corporations have juridical personalities separate and distinct from the government,
and are thus not covered by State immunity from suit. Their funds are therefore not exempt from garnishment.

 PNB vs. Pabalan, G.R. No. L-33112, June 15, 1978

Philippine National Bank v. Pabalan

No. L-33112, 83 SCRA 595 [June 15, 1978]

Facts. Respondent Philippine Virginia Tobacco Administration (PVTA) is a government-owned and controlled
corporation.

Judgment was rendered against PVTA. Judge Pabalan issued a writ of execution followed by a notice of garnishment of
its funds deposited with petitioner PNB. PNB, invoking the doctrine of non-suability, claims that such funds are public in
character, and are therefore exempt from said garnishment.

Issue. May the funds of PVTA be garnished?

Held. Yes. If the funds appertained to one of the regular depts. or offices in the govt, then certainly, [the doctrine of
State immunity] would be a bar to garnishment. Such is not the case here. [It has been ruled and is settled that] funds of
public corporations [i.e. GOCCs] which can [thus] sue and be sued [for they are not covered by state immunity from
suit] are not exempt from garnishment. As PVTA is likewise a public corporation possessed of the same attributes, a
similar outcome is indicated. Garnishment would lie.

Even assuming that their functions are public, government-owned and controlled corporations are not covered by State
immunity from suit.

 Rayo vs. CFI of Bulacan, G.R. No. L-55273-83, December 19, 1981
 Rayo v. CFI of Bulacan

No. L-55273-83, 110 SCRA 456 [Dec 19, 1981]

Facts. During the height of a typhoon, the National Power Corp. (NPC), acting through its plant superintendent Chavez,
simultaneously opened or caused to be opened all the 3 floodgates of the Angat Dam. As a result, several towns in
Bulacan were flooded, and about a hundred died and properties worth millions of pesos were destroyed or washed
away. Petitioners, who are the victims of the man-caused flood, filed complaints against the NPC and Chavez. NPC
moved to dismiss averring 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. Petitioners maintained that NPC is performing merely
proprietary functions and that under its charter (RA 6395), it can “sue and be sued in any court.” The CFI upheld NPC.
Issue.
Is the NPC immune from suit?
Does the power of NPC to sue and be sued under its organic act include the power to be sued for tort?

Held.

No. It is not necessary to xxx [determine] whether or not the NPC performs a governmental function with respect to
the management and operation of the Angat Dam. It is sufficient to say that the govt has organized a private corporation
(the NPC), put money in it and has allowed it to sue and be sued in any court under its charter. As a government owned
and controlled corporation, NPC has a personality of its own, distinct and separate from that of the Govt.

Yes. The charter provision that the NPC can “sue and be sued in any court” is without qualification on the cause of
action and accordingly it can include a tort claim such as the one instituted by the petitioners.

A suit against an UNincorporated govt agency is a suit against the State because it has no separate personality apart
from the national govt. Thus, it is immune from suit without the State’s consent.

If an UNincorporated agency performs a proprietary function but it is undertaken as an incident to its governmental
function, there is NO waiver of non-suability.

 Bureau of Printing vs. Bureau of Printing Employees Assoc., G.R. No L-15751, January 28, 1961

Bureau of Printing v. Bureau of Printing Employees Association

No. L-15751, 1 SCRA 340 [Jan 28, 1961]

Facts. The petitioner Bureau of Printing (the Bureau) is an instrumentality of the Govt operating under the direct
supervision of the Executive Secretary. It is primarily a service bureau designed to meet the printing needs of the Govt.
It has been receiving outside jobs, such as printing greeting cards requested by govt officials and printing checks of
private banking institutions that require the govt seal and documentary stamps which only the Bureau is authorized to
use.

Respondents are suing the Bureau for alleged unfair labor practices. The Bureau in its defense alleges, among others,
that it has no juridical personality to sue and be sued as it is but an agency of the govt performing governmental
functions.
Issue. Is the Bureau of Printing immune from suit?
 Held. Yes. Though it receives private printing jobs deemed of proprietary character, such is merely incidental to its
function. It is obviously not engaged in business or occupation for pecuniary profit. Its appropriations are provided for in
the budget. It has no corporate existence and as such it cannot be sued. Any suit, action or proceeding against the
Bureau would actually be a suit, action or proceeding against the Govt itself which is immune therefrom without its
consent.

 Mobil Phils. Exploration vs. Customs Arrastre Service, G.R. No. L-23139, December 17, 1966

Mobil Philippines Exploration, Inc. v. Customs Arrastre Service

No. L-23139, 18 SCRA 1120 [Dec 17, 1966]

Facts. Respondent Bureau of Customs (the Bureau) is an unincorporated govt agency. Its primary function is to assess
and collect lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines, and
penalties. Respondent Customs Arrastre Service (the Service) is the unit of the Bureau handling arrastre operations.

Petitioner Mobil Philippines Exploration, Inc. (Mobil Phils.) is the consignee of four (4) cases of rotary drill parts shipped
from abroad. When the cases arrived at the Port of Manila, they were discharged to the Service. The Service, however,
delivered to the consignee only 3 cases. Mobil Phils. filed a complaint against respondents Customs Arrastre and the
Bureau of Customs to recover the value of the undelivered case. Respondents invoke nonsuability averring it has no
juridical personality. Mobil Phils. aver that the Bureau as operator of the Service, is discharging proprietary functions
and as such, is suable.
Issue. Is the Bureau immune from suit?

Held. Yes. The fact that a non-corporate govt entity performs a function proprietary in nature does not necessarily result
in its being suable. If said non-governmental function is undertaken as an incident to its governmental functions, there is
no waiver thereby of the sovereign immunity from suit extended to such govt entity. xxx The Bureau has no personality
of its own apart from that of the national govt. The primary function of the Bureau is governmental, and the arrastre
service is a necessary incident thereof.

Immunity from suit of an UNincorporated govt agency is determined by the character of the object for which the agency
was organized.

If an UNincorporated govt agency was organized to carry out private or non-governmental (proprietary) tasks, then it is
NOT immune from suit.

 Civil Aeronautics Administration vs. Court of Appeals, G.R. No. L-51806, November 08, 1988

Civil Aeronautics Administration v. Court of Appeals

No. L-51806, 167 SCRA 28 [Nov 8, 1988]

Facts. Petitioner Civil Aeronautics Administration (CAA) is an unincorporated govt agency. Under RA 776, it is tasked to
administer, operate, manage, control, maintain and develop the Manila International Airport (MIA) and all government-
owned aerodromes except those controlled or operated by the AFP. It is also tasked to determine x x x collect and
receive landing fees, parking space fees, royalties on sales or deliveries x x x to any aircraft for its use of aviation
gasoline, oil and lubricants, spare parts, accessories and supplies, tools, other royalties, fees or rentals for the use of
any of the property under its management and control. Its prime objective is the promotion of travel and the
convenience of the travelling public.
 While walking on the terrace of the MIA, private respondent slipped over an elevation and broke his thigh bone. He
sued for damages based on quasi-delict against CAA. CAA invokes non-suability.

Issue. Is the CAA immune from suit?

Held. No. From the provisions of RA 776, it can be gathered that the CAA is tasked with private or non-governmental
functions which operate to remove it from the purview of the rule on State immunity from suit. The CAA comes under
the category of a private entity. Although not a body corporate, it was created not to maintain a necessary function of
govt, but to run what is essentially a business, even if revenues be not its prime objective. It is engaged in an enterprise
which, far from being the exclusive prerogative of state, may be undertaken by private concerns. Immunity from suits is
determined by the character of the objects for which the entity was organized.

Municipal corporations are otherwise covered by State immunity from suit, but because their charter provides for it
(there is consent to suit), they can sue and be sued nevertheless.

However, municipal corporations are generally not liable for torts unless it can be shown that they were acting in a
proprietary capacity.

 Air Transportation Administration vs. Spouses David, G.R. No. 159402, February 23, 2011

FACTS: Respondent Spouses discovered that a portion of their registered land in Baguio City was being used as part of
the runway and running shoulder of the Loakan Airport being operated by petitioner Air Transportation Office (ATO).
The respondents agreed after negotiations to convey the affected portion by deed of sale to the ATO in consideration of
the amount of P778,150.00. However, the ATO failed to pay despite repeated verbal and written demands.

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

The RTC held in favor of the Spouses, ordering the ATO to pay the plaintiffs Spouses the amount of P778,150.00 being
the value of the parcel of land appropriated by the defendant ATO as embodied in the Deed of Sale, plus an annual
interest of 12% from August 11, 1995, the date of the Deed of Sale until fully paid; (2) The amount of P150,000.00 by
way of moral damages and P150,000.00 as exemplary damages; (3) the amount of P50,000.00 by way of attorneys
fees plus P15,000.00 representing the 10, more or less, court appearances of plaintiffs counsel; (4) The costs of this
suit.

On appeal, the CA affirmed the RTCs decision withmodification deleting the awarded cost, and reducing the moral and
exemplary damage to P30,000.00 each, and attorneys fees is lowered to P10,000.00.

ISSUE: Could ATO be sued without the State's consent?

HELD: An unincorporated government agency without any separate juridical personality of its own enjoys immunity from
suit because it is invested with an inherent power of sovereignty. Accordingly, a claim for damages against the agency
cannot prosper; otherwise, the doctrine of sovereign immunity is violated. However, the need to distinguish between an
 unincorporated government agency performing governmental function and one performing proprietary functions has
arisen. The immunity has been upheld in favor of the former because its function is governmental or incidental to such
function; it has not been upheld in favor of the latter whose function was not in pursuit of a necessary function of
government but was essentially a business. National Airports Corporation v. Teodoro, Sr. and Phil. Airlines Inc., 91 Phil.
203 (1952)

Civil Aeronautics Administration vs. Court of Appeals (167 SCRA 28 [1988]),the Supreme Court, reiterating the
pronouncements laid down in Teodoro, declared that the CAA (predecessor of ATO) is an agency not immune from
suit, it being engaged in functions pertaining to a private entity.

The Civil Aeronautics Administration comes under the category of a private entity. Although not a body corporate it was
created, like the National Airports Corporation, not to maintain a necessary function of government, but to run what is
essentially a business, even if revenues be not its prime objective but rather the promotion of travel and the
convenience of the travelling public. It is engaged in an enterprise which, far from being the exclusive prerogative of
state, may, more than the construction of public roads, be undertaken by private concerns. National Airports Corp. v.
Teodoro, 91 Phil. 203 (1952)

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

The doctrine of sovereign immunity cannot be successfully invoked to defeat a valid claim for compensation arising
from the taking without just compensation and without the proper expropriation proceedings being first resorted to of the
plaintiffs property.Republic v. Sandiganbayan, G.R. No. 90478, Nov. 2, 1991. DENIED.

 Mun. of San Fernando vs. Firme, G.R. No. 52179, April 08, 1991

Municipality of San Fernando, La Union v. Firme

GR 52179, 195 SCRA 692 [Apr 8, 1991]

Facts. A dump truck of the Municipality of San Fernando was allegedly on its way to get a load of sand and gravel for
the repair of the municipal streets when it collided with a passenger jeepney. Due to the impact, several passengers
died and 4 others suffered physical injuries. The victims, private respondents herein, sued for damages against the
Municipality and the driver of the dump truck. The Municipality invokes non-suability.

Issue. Is the Municipality of San Fernando, La Union immune from suit?

Held. No. Municipal corporations, like provinces and cities, are agencies of the State when they engaged in
governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to
suit even in the performance of such functions because their charter provided that they can sue and be sued. xxx [While
municipal corporations are suable because their charters grant them the competence to sue and be sued] they are
generally not liable33 for torts committed by them in the discharge of governmental functions and can be held
answerable only if it can be shown that they were acting in a proprietary capacity; and We rule that the driver of the
dump truck was performing duties or tasks pertaining to his office [as he was on his way to get materials for the repair
of the municipal streets].
 Municipal funds are public funds exempt from execution. There must be a corresponding appropriation in the form of an
ordinance before any money of the municipality may be paid out.

 City of Caloocan vs. Judge Allarde, G.R. No. 107271, September 10, 2003

City of Caloocan v. Hon. Allarde

GR 107271 [Sept 10, 2003]

Facts. In a suit questioning the legality of the abolition by the Caloocan City Mayor of the position of Asst. City
Administrator, among others, petitioner City of Caloocan (the City) was ordered, among others, to pay respondent
Santiago (who was then the Asst. City Administrator) her back salaries and other emoluments. Judgment lapsed into
finality. The City only made partial payment. Respondent RTC Judge Allarde issued a writ of execution for the payment
of the balance due Santiago. Subsequently, the City Council passed an ordinance which included the remaining claim
of Santiago. With the City Mayor refusing to sign the check representing the payment due Santiago, the funds of the
City with PNB were garnished and Santiago was finally settled in full. The City assails the legality of the garnishment
arguing that public funds are beyond the reach of garnishment even with the appropriation passed by the City Council
where the Mayor has not authorized its release.

Issue. Are the funds of the City exempt from garnishment?

Held. No. The rule on the immunity of public funds from seizure or garnishment does not apply where the funds sought
to be levied under execution are already allocated by law specifically for the satisfaction of the money judgment against
the government. In such a case, the monetary judgment may be legally enforced by judicial processes.34 In the case at
bar, the City Council has already approved and passed an ordinance allocating for Santiago’s claims.

It is when judgment against the govt officials charges financial liability in the State that the action is a suit against the
State. Defense of State Immunity is not available to a govt official in a motion to dismiss an action for damages for
alleged tortuous acts done by him in the performance of duties.