Section 3.

State Immunity

Suability of State

1) The State cannot be sued without its consent.

2) When considered a suit against the State

a). The Republic is sued by name;

b). Suits against an un-incorporated government agency;

c). Suit is against a government official, but is such that ultimate liability shall devolve on the
government

i. When a public officer acts in bad faith, or beyond the scope of his authority, he
can be held personally liable for damages.

ii. BUT: If he acted pursuant to his official duties, without malice, negligence, or bad
faith, they are not personally liable, and the suit is really one against the
State.

3) This rule applies not only in favor of the Philippines but also in favor of foreign states.

4) The rule likewise prohibits a person from filing for interpleader, with the State as one of the
defendants being compelled to interplead.

Consent to be sued

A. Express consent:

1). The law expressly grants the authority to sue the State or any of its agencies.

2). Examples:

a). A law creating a government body expressly providing that such body “may sue or be
sued.”

b). Art. 2180 of the Civil Code, which creates liability against the State when it acts through a
special agent.

B. Implied consent:
 1). The State enters into a private contract.

a). The contract must be entered into by the proper officer and within the scope of
his authority.

b). UNLESS: The contract is merely incidental to the performance of a governmental

function.

2). The State enters into an operation that is essentially a business operation.

a). UNLESS: The operation is incidental to the performance of a governmental function

(e.g. arrastre services)

b). Thus, when the State conducts business operations through a GOCC, the latter can
generally be sued, even if its charter contains no express “sue or be sued” clause.

3). Suit against an incorporated government agency.

a) This is because they generally conduct propriety business operations and have charters which
grant them a separate juridical personality.

4). The State files suit against a private party.

UNLESS: The suit is entered into only to resist a claim.

Garnishment Of government funds:

1) GENERAL RULE: NO. Whether the money is deposited by way of general or special deposit, they
remain government funds and are not subject to garnishment.

2) EXCEPTION: A law or ordinance has been enacted appropriating a specific amount to pay a valid
government obligation, then the money can be garnished.

Consent to be sued is not equivalent to consent to liability:

1) The Fact that the State consented to being sued does not mean that the State will ultimately be
held liable.

2) Even if the case is decided against the State, an award cannot be satisfied by writs of execution or
garnishment against public funds. Reason: No money shall be paid out of the public treasury unless
pursuant to an appropriation made by law.