I.

THE PHILIPPINES AS A STATE

A. Definition of a State. A community of persons, more or less numerous, permanently occupying a definite portion of
territory, independent of external control, and possessing a government to which a great body of inhabitants render
habitual obedience. See: Collector of Internal Revenue v. Campos Rueda, 42 SCRA
23.

1. Distinguished from Nation. State is a legal or juristic concept, while nation is an ethnic or racial concept.
2. Distinguished from Government. Government is merely an instrumentality of the State through which the will of the State
is implemented and realized.
B. Elements of a State.

1. People.
a) Different meanings as used in the Constitution: (i) Inhabitants [Sec. 2, Art. Ill; Sec. 1, Art. XIII]; (ii) Citizens [Preamble;
Secs. 1 & 4, Art. II; Sec. 7, Art. Ill]; (iii) Electors [Sec. 4, Art. VII].
b) As requisite for Statehood: Adequate number for self-sufficiency and defense; of both sexes for perpetuity.
2.

Territory [Art. I; R.A. 3046; R.A. 5446].

a) The National Territory: The national territory comprises the Philippine archipelago, with all the islands and waters
embraced therein, and all other territories over which the Philippines has sovereignty or jurisdiction, consisting of its
terrestrial, fluvial and aerial domains, including its territorial sea, the seabed, the subsoil, the insular shelves, and other
submarine areas [Sec. 1, Art. !].
b) Components: Terrestrial, Fluvial, Maritime and Aerial domains.
c)

The Philippine Archipelago: (i) Treaty of Paris, December 10, 1898 (Cession of the Philippine Islands by Spain to the
United States); (ii) Treaty between Spain and US at Washington, November 7, 1900 (Cagayan, Sulu & Sibuto); (iii)
Treaty between US and Great Britain, January 2, 1930 (Turtle & Mangsee Islands).

d) Other territories over which the Philippines exercises jurisdiction . (i) Batanes [1935 Constitution]; (ii) Those contemplated
in Art. I, 1973 Constitution [belonging to the Philippines by historic right or legal title]; (iii) PD 1596, June 11, 1978.
e) Archipelago Doctrine: The waters around, between and connecting the islands of the archipelago, regardless of their
breadth and dimensions, form part of the internal waters of the Philippines [2nd sentence, Sec. 1, Art II

i) This articulates the archipelagic doctrine of national territory, based on the principle that an archipelago, which consists of a
number of islands separated by bodies of water, should be treated as one integral unit.
ii) Straight baseline method: Imaginary straight lines are drawn joining the outermost points of outermost islands of the
archipelago, enclosing an area the ratio of which should not be more than 9:1 (water to land); provided that the drawing
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of baselines shall not depart, to any appreciable extent, from the general configuration of the archipelago. The waters
within the baselines shall be considered internal waters; while the breadth of the territorial sea shall then be measured
from the baselines.
iii) UN Convention on the Law of the Sea [April 30,1982; ratified by the Philippines in August, 1983] provides (i)
Contiguous Zone of 12 miles; (ii) Exclusive Economic Zone of 200 miles. Although the contiguous zone and most of the
exclusive economic zone may not, technically, be part of the territory of the
.State, nonetheless, the coastal State enjoys preferential rights over the marine resources found within these zones.
See also P.D. 1599, June 11, 1978.
3.
a)

Government

Defined. The agency or instrumentality through which the will of the State is formulated, expressed and realized. See U.S.
v. Dorr, 2 Phil 332. i)

i) Government
of the Philippines is the corporate governmental
entity through which the functions of government are exercised throughout the Philippines, including, save as the
contrary appears from the context, the various arms through which political authority is made effective in the
Philippines, whether pertaining to the autonomous regions, the provincial, city, municipal or barangay
subdivisions or other forms of local government" [Sec. 2 (1), Administrative Code of 1987].
b)Functions:
i) Traditionally, the functions of government have been classified into constituent, which are mandatory
for the Government to perform because they constitute the very bonds of society, such as the
maintenance of peace and order, regulation of property and property rights, the administration of
justice, etc; and ministrant, those intended to promote the welfare, progress and prosperity of the
people, and which are merely optional for Government to perform.

ii) In Romualdez-Yap v. Civil Service Commission, 225 SCRA 285, the Court declared that a distinction
can be made on the validity of the reorganization between a government bureau or office
performing constituent functions (like the Bureau of Customs) and a government-owned or
-controlled corporation performing ministrant functions (like the PNB). Commercial or universal
banking is, ideally, not a governmental, but a private sector, endeavor. It is an optional function of
government. [However, reorganization in either must meet a common test, the test of good faith.] In
Fontanilla v. Maliaman, 194 SCRA 486, the Supreme Court said that the functions of government are
classified into governmental or constituent and proprietary or ministrant. The former involves the
exercise of sovereignty and therefore compulsory; the latter connotes merely the exercise of
proprietary functions and thus considered as optional.

iii) In Shipside, Inc. v. Court of Appeals, G.R. No. 143377, February 20,2001, it was held that the Bases
Conversion Development Authority (BCDA), created under R.A. 7227, performs functions which are
basically proprietary in nature. The promotion of economic and social development of Central Luzon,
in particular, and the countrys goal for enhancement, in general, do not make BCDA equivalent to
Government. Other corporations, such as SSS, GSIS, NIA, although performing functions aimed at
promoting public interest and public welfare, are not invested with government attributes. [Thus, with
the transfer to BCDA of Camp Wallace, the government no longer had a right or interest to protect;
the real party in interest to recover the property is, thus, the BCDA, not the Republic of the
Philippines.]
iv) In PVTA v. CIR, 65 SCRA 416, the Court noted that the distinction between the two functions had
become blurred. See also Edu v. Ericta, 35 SCRA 481, where the Supreme Court declared that, as
early as the 1935 Constitution, we had already repudiated the laissez faire doctrine. The repudiation
of the laissez faire doctrine is reiterated in Association of Philippine Coconut Desiccators v.
Philippine Coconut Authority, G.R. No. 110526, February 10, 1998, where it was held that although the
1987 Constitution enshrines free
enterprise as a policy, it nevertheless reserves to the Government the power to intervene whenever necessary to
promote the general welfare, as reflected in Secs. 6 and 19, Art. XII.
c)Doctrine of Parens Patriae. Literally, parent of the people. As such, the Government may act as guardian of the rights
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of people who may be disadvantaged or suffering from some disability or misfortune. See Government of the Philippine
Islands v. Monte de Piedad, 35 SCRA 738; Cabanas v. Pilapil, 58 SCRA 94.
d) Classification:
i)

De jure vs. De facto. See: Co Kim Chan v. Tan Keh, 75 Phil. 113; Lawyers League for a Better
Philippines v. Aquino, supra..

ia) Kinds of de facto government: That which takes possession or control of, or usurps, by force or
by the voice of the majority, the rightful legal government and maintains itself against the will of the latter; that which is
established by the inhabitants of a territory who rise in insurrection against the parent state; and that which is established
by the invading forces of an enemy who occupy a territory in the course of war. The last is denominated a de facto
government of paramount force.
ii) Presidential vs. parliamentary government. The principal distinction is that in a presidential
government, there is separation of executive and legislative powers (the first is lodged in the
President, while the second is vested in Congress); while in a parliamentary government, there is
fusion of both executive and legislative powers in Parliament, although the actual exercise of the

executive powers is vested in a Prime Minister who is chosen by, and accountable to, Parliament.
iii) Unitary vs. federal government. A unitary government is a single, centralized government,
exercising powers over both the internal and external affairs of the State; while a federal
government consists of autonomous state (local) government units merged into a single State, with
the national government exercising a limited degree of power over the domestic affairs but
generally full direction of the external affairs of the State.
4.

Sovereignty

a)Defined: The supreme and uncontrollable power inherent in a State by which that State is governed.
b)Kinds:
i) Legal, which is the power to issue final commands; or
Political, which is the sum total of all the influences which lie behind the law.
ii) Internal, or the supreme power over everything within its territory; or External, also known as
independence, which is freedom from external control.
c)Characteristics: permanence, exclusiveness, comprehensiveimprescriptibility. See Laurel v. Misa, 77 Phil. 856.

ness,

absoluteness,

indivisibility,

inalienability,

d)Effects of change in sovereignty: Political laws are abrogated [People v. Perfecto, 43 Phil. 887; Macariola v. Asuncion,
114 SCRA 77]; municipal laws remain in force [Vilas v. City of Manila, 229 US 345].
e)Effects of belligerent occupation: No change in sovereignty. See: Peralta v. Director of Prisons, 75 Phil. 285; Alcantara v.
Director of Prisons, 75 Phil. 749;Ruffyv. Chief of Staff, 75 Phil. 875.
i)

However, political laws, except the law on treason, are suspended [Laurel v. Misa, 77 Phil. 856];
municipal laws remain in force unless repealed by the belligerent occupant. At the end of the
belligerent occupation, when the occupant is ousted from the territory, the political laws which had
been suspended during the occupation shall automatically become effective again, under the doctrine
of jus postliminium.

f) Dominium v. Imperium: Dominium refers to the capacity to own or acquire property, including lands held by the State in its
proprietary capacity; while Imperium is the authority possessed by the State embraced in the concept of sovereignty.
g)Jurisdiction
i)

Territorial: power of the State over persons and things within its territory. Exempt are: (a) Foreign
states, heads of state, diplomatic representatives, and consuls to a certain degree; (b) Foreign state
property, including embassies, consulates, and public vessels engaged in noncommercial activities;
(c) Acts of state; (d) Foreign merchant vessels exercising the rights of innocent passage or
involuntary entry, such as arrival under stress; (e) Foreign armies passing through or stationed in its
territory with its permission; and (f) Such other persons or property, including organizations like

the United Nations, over which it may, by agreement, waive jurisdiction. See: Convention on Privileges and
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/ REVIEWER IN
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LAW
Immunities of the United Nations; Convention
on Privileges
and
Immunities
of Specialized Agencies of the United
Nations; World Health Organization v. Aquino, 48 SCRA 242; Southeast Asian Fisheries Development Center v. NLRC,
206 SCRA 283.
ii) Personal: power of the State over its nationals, which may be exercised by the State even if the
individual is outside the territory of the State.
iii) Extraterritorial: power exercised by the State beyond its territory in the following cases: (a) Assertion of
its personal jurisdiction over its nationals abroad; or the exercise of its rights to punish certain
offenses committed outside its territory against its national interests even if the offenders are
nonresident aliens; (b) By virtue of its relations with other states or territories, as when it
establishes a colonial protectorate, or a condominium, or administers a trust territory, or occupies
enemy territory in the course of war; (c) When the local state waives its jurisdiction over persons and
things within its territory, as when a foreign army stationed therein remains under the jurisdiction of the
sending state; (d) By the principle of exterritoriality, as illustrated by the immunities of the head of
state in a foreign country; (e) Through enjoyment of easements or servitudes, such as the easement
of innocent passage or arrival under stress; (f) The exercise of jurisdiction by the state in the
high seas over its vessels; over pirates; in the exercise of the right to visit and search; and under

the doctrine of hot pursuit; (g) The exercise of limited jurisdiction over the contiguous zone and the
patrimonial sea, to prevent infringement of its customs, fiscal, immigration or sanitary regulations.
C. State Immunity from Suit. The State cannot be sued without its consent [Sec. 3, Art. XVI].
1.

Basis: There can be no legal right against the authority which makes the law on which the right depends [Republic v.
Villasor, 54 SCRA 83], However, it may be sued if it gives consent, whether express or implied. The doctrine is also
known as the Royal Prerogative of Dishonesty.

2.

Immunity is enjoyed by other States, consonant with the public international law principle of par in parem non habet
imperium. The Head of State, who is deemed the personification of the State, is inviolable, and thus, enjoys
immunity from suit.

a) The States diplomatic agents, including consuls to a certain extent, are also exempt from the jurisdiction of local courts
and admiinistraive tribunals. [See PUBLIC INTERNATIONAL LAW, infra.].
i) A foreign agent, operating within a territory, can be cloaked with immunity from suit but only as long as it can be
established that he is acting within the directives of the sending State. The cloak of protection is removed the moment the
foreign agent is sued in his individual capacity, as when he is sought to be made liable for whatever damage he may
have caused by his act done with malice or in bad faith or beyond the scope of his authority or jurisdiction. In
Minucherv. Court of Appeals, G.R. No. 142396, February 11, 2003, it was sufficiently established that respondent Arthur
Scalzo an agent of the US Drug Enforcement Agency, was tasked to conduct surveillance on suspected drug activities
within the country, and having ascertained the target, to inform the local law enforcers who would then be expected to
make the arrest. In conducting this surveillance and later, acting as the poseur- buyer during the buy-bust operation, and
then becoming a principal witness in the criminal case against Minucher, Scalzo can hardly be said to have acted
beyond the scope of his official functions or duties. He should, therefore, be accorded diplomatic immunity.
b) The United Nations, as well as its organs and specialized agencies, are likewise beyond the jurisdiction of local courts
[Convention on Privileges and Immunities of the United Nations; Convention on Privileges and Immunities of
Specialized Agencies of the United Nations; World Health Organization v. Aquino, supra.].
i) In Lasco v. UNRFNRE (United Nations Revolving Fund for Natural Resources Exploration), 241 SCRA 681, the Supreme
Court upheld the diplomatic immunity of private respondent as established by the letter of the Department of Foreign
Affairs recognizing and confirming such immunity in accordance with the 1946 Convention on the Privileges and
Immunities of the UN of which the Philippines is a signatory.
c)

Even other international organizations or international agencies may be immune from the jurisdiction of local courts and
local administrative tribunals. i)
In SEAFDEC (Southeast Asia Fisheries Development
i)
Center) v. NLRC, 241 SCRA 580, and SEAFDEC v. Acosta, G.R. Nos. 97468-70. September 02, 1993, it
was held that SEAFDEC, as an international agency, enjoys diplomatic immunity. It was established
through an international agreement to which the Philippines became a signatory on January 16, 1968. The
purpose of the Center is to contribute to the promotion of fisheries development in Southeast Asia by mutual
cooperation among the member governments of the Center. The invocation by private respondents of the
doctrine of estoppel is unavailing, because estoppel does not confer jurisdiction
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on a tribunal that has none over a cause of action. The Tijam v. Sibonghanoy, 23 SCRA 29, ruling cannot apply to parties
which enjoy foreign and diplomatic immunity [SEAFDEC-Aquaculture v. NLRC, 206 SCRA 283].
ii) In Callado v. IRRI, 244 SCRA 210, the Court upheld anew the constitutionality of Sec. 3, P.D. 1620,
which provides that the International Rice Research Institute (IRRI) shall enjoy immunity from any penal, civil and
administrative proceedings, except insofar as that immunity has been expressly waived by the Director General of the
Institute or his authorized representative. Citing International Catholic Migration Commission v. Calleja (and Kapisanan ng
Manggagawa at TAC sa IRRI v. Secretary of Labor), 190 SCRA 120, the Court stated that the letter of the Acting Secretary
of Foreign Affairs to the Secretary of Labor and Employment constituted a categorical recognition by the Executive
Branch of the Government that IRRI enjoys immunities accorded to international organizations, a determination held to be a
political question conclusive upon the Courts in order not to embarrass a political department of the government.
3.

Test to determine if suit is against the State: On the assumption that decision is rendered against the public officer or
agency impleaded, will the enforcement thereof require an affirmative act from the State, such as the appropriation of the
needed amount to satisfy the judgment? If so, then it is a suit against the State. See: Sanders v. Veridiano, 162 SCRA 88;
Republic v. Feliciano, 148 SCRA 424.

a) In Tan v. Director of Forestry, 125 SCRA 302, the Supreme Court said that State immunity from suit may be invoked as
long as the suit really affects the property, rights or interests of the State and not merely those of the officers nominally
made party defendants. In this case, the Court said that the promotion of public welfare and the protection of the
inhabitants near the public forest are property rights and interests of the State. In Veterans Manpower and Protective
Services, Inc. v. Court of Appeals, 214 SCRA 286, the suit for damages filed against the PC Chief and the PCSUSIA would require an affirmative act of appropriation should damages be awarded, and is, therefore, a suit against
the State.
4.

Suits against Government Agencies

a) Incorporated: If the charter provides that the agency can sue and be sued, then suit will lie, including one for tort. The
provision in the charter constitutes express consent on the part of the State to be sued. See: PNB v. CIR, 81 SCRA 314;
Rayo v. CFI of Bulacan, 110 SCRA 460; SSS v. Court of Appeals, 120 SCRA 707.

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Constitutional Law

i) Municipal corporations are agencies of the State when they are engaged in governmental functions and, therefore, should
enjoy the sovereign immunity from suit. However, they are subject to suit even in the performance of such functions because
their respective charters provide that they can sue and be sued [Municipality of San Fernando, La Union v. Judge Firme,
195 SCRA 692]. One of the corporate powers of local government units, as enumerated in Sec. 22, Local Government Code,
is the power to sue and be sued.
ii)In National Irrigation Administration v. Court of Appeals, 214 SCRA 35, the Supreme Court reiterated that NIAis a
corporate body performing proprietary functions, whose charter, P.D. 552, provides that it may sue and be sued.

iii)
In Philippine National Railways v. Intermediate Appellate Court, 217 SCRA 401, it was held that although the
charter of PNR is silent on whether it may sue or be sued, it had already been ruled in Malong v. PNR, 185 SCRA 63, that the
PNR is not performing any governmental function and may, therefore, be sued.
b) Unincorporated: Inquire into principal functions of the agency:
i) If governmental: NO suit without consent [Sanders v. Veridiano, supra.; Bureau of Printing v. Bureau of Printing Employees
Association, 1 SCRA 340]. In the Veterans Manpower case, the Court said that the PC Chief and PC-SUSIA are
instrumentalities of the national government exercising primarily governmental functions (regulating the organization and
operation of private detective, watchmen or security guard agencies), and thus may not be sued without consent. In Farolan
v. Court of Tax Appeals, 217 SCRA 298, the Supreme Court said that the Bureau of Customs, being an unincorporated agency
without a separate juridical personality, enjoys immunity from suit. It is invested with an inherent power of sovereignty, namely
the power of taxation; it performs governmental functions. In Mobil Philippines Exploration v. Customs Arrastre Service, 18
SCRA 1120, it was held that the Customs Arrastre Service is merely an adjunct of the Bureau of Customs. A suit against it
is, therefore, a suit against the Bureau of Customs, an unincorporated agency performing primarily governmental functions.
[NOTE: Even in the exercise of proprietary functions incidental to its primarily governmental functions, an unincorporated
agency still cannot be sued without its consent.]
ia) But in Department of Agriculture v. NLRC, 227 SCRA 693, because of the express consent contained in
Act No. 3038 (where the Philippine Government consents and submits to be sued upon any money
claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private
parties), the Department of Agriculture could be sued on the contract for security services entered into by it (subject to prior
filing of the claim with the Commission on Audit), despite it being an unincorporated agency performing primarily governmental
functions.

ii) If proprietary: suit will lie^ because when the State engages in principally proprietary functions, then it descends to the level
of a private individual, and may, therefore, be vulnerable to suit. See: National Airports Corporation v. Teodoro, 91 Phil. 207;
Civil Aeronautics Administration v. Court of Appeals, 167 SCRA 28.
5.

Suit against Public Officers. The doctrine of State immunity also applies to complaints filed against officials of the State for
acts performed by them in the discharge of their duties within the scope of their authority. Thus, in the Veterans Manpower
case, the suit against the PC Chief and PC-SUSIA was dismissed for being a suit against the state, since it was a suit
against public officers in the discharge of official functions which are governmental in character. Likewise, in Larkins v.
NLRC, 241 SCRA 598, it was noted that the private respondents were dismissed from their employment by Lt. Col.
Frankhauser acting for and in behalf of the US government which, by right of sovereign power, operated and maintained the
dormitories at the Clark Air Base for USAF members.
a) In Sanders v. Veridiano, 162 SCRA 88, the Supreme Court spoke of a number of well-recognized exceptions when a public
officer may be sued without the prior consent of the State, viz: (1) to compel him to do an act required by law;
(2) to restrain him from enforcing an act claimed to be unconstitutional; (3) to compel the payment of damages from an
already appropriated assurance fund or to refund tax over-payments from a fund already available for the purpose; (4) to
secure a judgment that the officer impleaded may satisfy by himself without the State having to do a positive act to assist
him; and (5) where the government itself has violated its own laws, because the doctrine of state immunity cannot be used to
perpetrate an injustice.
b) The unauthorized acts of government officials are not acts of state; thus, the public officer may be sued and held personally
liable in damages for such acts [Shauf v. Court of Appeals, 191 SCRA 713], Where a public officer has committed an
ultra vires act, or where there is a showing of bad faith, malice or gross negligence, the officer can be held personally
accountable, even if such acts are claimed to have been performed in connection with
official duties [Wylie v. Rarang, 209 SCRA 357]. Thus, the PCGG or any of its members, may be held civilly liable (for the
sale of an aircraft to Fuller Aircraft, which was void) if they did not act with good faith and within the scope of their

Constitutional Law

7
authority in the performance of official duties [Republic v. Sandiganbayan, G.R. No. 142476, March 20, 2001]. Likewise, in
U.S. v. Reyes, 219 SCRA 192, petitioner Bradford, Activity Exchange Manager at JUSMAG Headquarters, was held
personally liable, inasmuch as the search of respondent Montoya at the JUSMAG parking lot (which subjected respondent
to embarrassment) was held to be beyond the scope and even beyond the Managers official functions. Similarly, in Republic
v. Hon. Edilberto Sandoval, 220 SCRA 124, even as the Supreme Court dismissed the suit against the Republic of the
Philippines, the action for damages against the military personnel and the policemen responsible for the 1989 Mendiola
massacre was upheld, inasmuch as the initial findings of the Davide Commission (tasked by President Aquino to investigate
the incident) showed that there was, at least, negligence on their part when they fired their guns.

c) Where the public official is sued in his personal capacity, the doctrine of state immunity will not apply, even if the acts
complained of were committed while the public official was occupying a'public position. In Lansang v. Court of Appeals,
G.R. No. 102667, February 23, 2000, the petitioner was sued for allegedly personal motives in ordering the ejectment of
the General Assembly of the Blind, Inc. (GABI) from the Rizal Park; thus, the case was not deemed a suit against the State.

6.

a)

Need for consent. In order that suit may lie against the state, there must be consent, either express or implied. Where no
consent is shown, state immunity from suit may be invoked as a defense by the courts sua sponte at any stage of the
proceedings, because waiver of immunity, being in derogation of sovereignty, will not be inferred lightly and must be
construed in strictissimi juris. Accordingly, the complaint (or counterclaim) against the State must allege the existence of
such consent (and where the same is found), otherwise, the complaint may be dismissed [Republic v. Feliciano, 148 SCRA
424].
Express consent. Express consent can be given only by an act of the legislative body [Republic v. Feliciano, supra.], in a
general or a special law. i)
i) General Law. An example of a general law granting
consent is CA327, as amended by PD 1445, which requires that all money claims against the government must
first be filed with the Commission on Audit before suit is instituted in court. See: Sayson v. Singzon, 54 SCRA 282.
The Department
of Agriculture may be sued for money claims based on a contract entered into in its governmental capacity, because of the
express consent contained in Act No. 3038, provided that the claim be first brought to the Commission on Audit in accordance
with CA 327, as amended [Department of Agriculture v. NLRC, 227 SCRA 693].

ia) But in Amigable v. Cuenca, 43 SCRA 360, an action for the recovery of the value of the property taken
by the government and converted into a public street without payment of just compensation was allowed, despite the failure of
the property owner to file his claim with the Auditor General. Invoking Ministerio
v. City of Cebu, 40 SCRA 464, the Supreme Court said that suit may lie because the doctrine of State immunity cannot be
used to perpetrate an injustice. This ruling was reiterated in De los Santos v. Intermediate Appellate Court, 223 SCRA 11,
where it was held that the public respondents belief that the property is public, even if buttressed by statements of other
public officials, is no reason for the unjust taking of petitioners property; after all, the TCT was in the name of the petitioner.
See also Republic v. Sandiganbayan, 204 SCRA 212.

ib) In EPG Construction v. Secretary Vigilar, G.R. No. 131544, March 16, 2001, the ruling in Ministerio was
invoked when the respondent DPWH Secretary denied the money claims of petitioners even after the DPWH Auditor
interposed no objection to the payment and the DBM had ordered the release of the amount under a corresponding Advise of
Allotment it issued. Where in Ministerio, the Court said that the doctrine cannot serve as an instrument for perpetrating an
injustice on a citizen, in this case the Supreme Court declared that it is just as important, if not more so, that there be
fidelity to legal norms on the part of officialdom if the rule of law were to be maintained.
ic) In Santiago v. Republic, 87 SCRA 294, an action for the revocation of a donation because of the failure of
the defendant to comply with stipulated conditions was allowed, inasmuch as the action did not involve a money claim.
ri) Special Law. See: Merritt v. Government of the Philippines Islands, 34 Phil. 311. This form of consent must
be embodied in a statute and cannot be given by a mere counsel [Republic v. Purisima, 78 SCRA 470].
iia) By virtue of P.D. 1620, the grant of immunity to IRRI is clear and unequivocal, and an express waiver by its
Director General is the only way by which it may relinquish or abandon this immunity [Callado v. IRRI, supra.].
b) Implied Consent

i) When the State commences litigation, it becomes vulnerable to a counterclaim [See: Froilan v. Pan Oriental
ii)Shipping, G.R. No. L-6060, Sept. 30, 1950]. Intervention by the State would constitute commencement of litigation, except
when the State intervenes not for the purpose of asking for any affirmative relief, but only for the purpose of resisting the
claim precisely because of immunity from suit [Lim v. Brownell, 107 Phil. 345],
iii)
When the State enters into a business contract. See: U.S. v. Ruiz, 136 SCRA 487, where the Supreme
Court distinguished between contracts entered into by the State in jure imperii (sovereign acts) and in jure gestionis
(commercial or proprietary acts). Where the contract is in pursuit of a sovereign activity, there is no waiver of immunity, and
no implied consent may be derived therefrom.
iia) In U. S. v. Ruiz, it was held that the contract for the repair of wharves was a contract in jus imperii,
because the wharves were to be used in national defense, a governmental function. In JUSMAG Phil. v. NLRC, 239 SCRA
224, the engagement of the services of private respondent was held to be performance of a governmental function by
JUSMAG, on behalf of the United States. Accordingly, JUSMAG may not be sued under such a contract. In Republic of
Indonesia v. Vinzon, G.R. No. 154705, June 26, 2003, it was held that contracts entered into by a sovereign state in
connection with the establishment of a diplomatic mission, including contracts for the upkeep or maintenance of air
conditioning units, generator sets, electrical facilities, water heaters and water motor pumps of the embassy and the
Ambassadors residence, are contracts in jure imperii. The fact that the contract contains a provision that any legal action
arising out of the agreement shall be settled according to the laws of the Philippines and by a specified court of the
Philippines does not necessarily mean a waiver of the states sovereign immunity from suit.
iib) Conversely, in U.S. v. Guinto, 182 SCRA 644, the contract bidded out for barbershop facilities in the
Clark Field US Air Force Base was deemed commercial. Similarly, in a companion case, U.S. v. Rodrigo, a contract for
restaurant services within the Camp John Hay Air Station was likewise held commercial in character.
iic) Note, however, that in Republic v. Sandiganbayan, 204 SCRA 212, the Court held that even if, in
exercising the power of eminent domain, the State exercises a power jus imperii, as distinguished from its proprietary right of
jus gestionis, where property has been taken without just compensation being paid, the defense of immunity from suit cannot
be set up in an action for payment by the owner. See Amigable v. Cuenca, 43 SCRA 360.

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44

'

Constitutional Law

iid) In Republic (PCGG) v. Sandiganbayan, G.R. No. 129406, March 6, 2006, 227 shares in Negros Occidental Golf
and Country Club, Inc. (NOGCCI) owned and registered in the name of private respondent Benedicto were sequestered and
taken over by PCGG fiscal agents. In a suit for payment of dues of the sequestered shares, PCGG raised, among others, the
defense of immunity from suit. The Supreme Court held that by entering into a Compromise Agreement with Benedicto, the
Republic stripped itself of its immunity and placed itself in the same level as its adversary. When the State enters into a
contract through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional legislative
authority, whereby mutual or reciprocal benefits accruse and rights and obligations arise therefrom, the State may be sued
even without its express consent, precisely because by entering into a contract, the sovereign descends to the level of the
citizen.
7.

Scope of Consent. Consent to be sued does not include consent to the execution of judgment against it.

a) Such execution will require another waiver, because the power of the court ends when the judgment is rendered, since
government funds and properties may not be seized under writs of execution or garnishment, unless such disbursement is
covered by the corresponding appropriation as required by law [Republic v. Villasor, 54 SCRA 84; Department of Agriculture
v. NLRC, 227 SCRA 693]. Thus, in Larkins v. NLRC, 241 SCRA 598, considering that the employer of private respondents
was not Lt. Col. Frankhauser or the petitioner but the U.S. Government which, by right of sovereign power, operated and
maintained the dormitories at the Clark Air Base for USAF members, the awards (of monetary claims to the private
respondents) will have to be satisfied by the U.S. Government. Without its consent the properties of the U.S. Government
may not be subject to execution.
b) But funds belonging to government corporations (whose charters provide that they can sue and be sued) that are
deposited with a bank are not exempt from garnishment [Philippine National Bank v. Pabalan, 83 SCRA 595; Rizal
Commercial Bank v. De Castro, 168 SCRA 49]. In National Housing Authority
v. Heirs of Quivelondo, G.R. No. 154411, June 19, 2003, it was held that if the funds belong to a public corporation or a
government- owned or controlled corporation which is clothed with a personality of its own, then the funds are not exempt
from garnishment. This is so because when the government enters into commercial business, it abandons its sovereign
capacity and is to be treated like any other corporation. NHA is one such corporation; thus, its funds are not exempt from
garnishment or execution.

Constitutional Law

10

i) However, in Municipality of San Miguel, Bulacan v. Fernandez,

130 SCRA 56, it was held that funds of a municipality (although it is an incorporated agency whose charter provides that it
can sue and be sued) are public in character and may not be garnished unless there is a corresponding appropriation
ordinance duly passed by the Sangguniang Bayan. Thus, in City of Caloocan v. Allarde, G.R. No. 107271, September 10,
2003, the rule was reiterated that all government funds deposited with any official depositary bank of the Philippine
Government by any of its agencies or instrumentalities, whether by general or special deposit, remain government funds and
may not be subject to garnishment or levy in the absence of a corresponding appropriation as required by law. In this case,
the City of Caloocan had already approved and passed Ordinance No. 0134, Series of 1992, allocating the amount of
P439.377.14 for respondent Santiagos back salaries plus interest. Thus, this case fell squarely within the exception, and
the amount may therefore be garnished.
ia) Be that as it may, in Municipality of Makati v. Court of Appeals, 190 SCRA 206, it was held that where the
municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment rendered against it, the
claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation
ordinance and the corresponding disbursement of municipal funds to satisfy the money judgment.
c) In Pacific Products v. Ong, 181 SCRA 536, the Supreme Court said that by the process of garnishment, the plaintiff virtually
sues the garnishee for a debt due from the defendant. The debtor-stranger becomes a forced intervenor; when served with
the writ of attachment, he becomes a party to the action. Money in the hands of government agency (engaged in
governmental functions), even if due to a third party, is not liable to creditors of the third party through garnishment. To allow
this would be to allow a suit against the State without the latters consent.
8.

Suability not equated with outright liability. Liability will have to be determined by the Court on the basis of the evidence
and the applicable law.

a) In Merritt v. Government of the Philippine Islands, supra., while consent to be sued was granted through a special law, the
government was held not liable for damages, because under the attendant circumstances the government was not acting
through a special agent.
. b) In Fontanilla v. Maliaman, 194 SCRA 486, the Supreme Court said that the National Irrigation Administration is a
government agency with a

OUTLINE / REVIEWER IN POLITICAL LAW

juridical personality separate and distinct from the government; it is a corporate body performing
proprietary functions. Thus, the NIA may be held liable for damages caused by the negligent act of its
driver who was not a special agent. This was reiterated in National Irrigation Administration v. Court of
Appeals, 214 SCRA 35.