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Name: Michael John Calo

SUBJECT: CONSTITUTIONAL LAW 1

TOPIC: Sovereign Immunity

CITATION: REPUBLIC vs. VILLASOR 54 SCRA 83 G.R. NO. L-30671


DATE: November 28, 1973

FACTS:

The Republic of the Philippines in this certiorari and prohibition proceeding


challenges the validity of an order issued by respondent Judge Guillermo P.
Villasor, then of the Court of First Instance of Cebu, Branch I, declaring a
decision final and executory and of an alias writ of execution directed against
the funds of the Armed Forces of the Philippines subsequently issued in
pursuance thereof, the alleged ground being excess of jurisdiction, or at the
very least, grave abuse of discretion.

On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R


in favor of respondents P. J. Kiener Co., Ltd., GavinoUnchuan, and
International Construction Corporation, and against the petitioner, confirming
the arbitration award in the amount of P1,712,396.40, subject of Special
Proceedings. It was declared final and executory by Respondent Hon.
Guillermo P. Villasor, directing the Sheriffs of Rizal Province, Quezon City [as
well as] Manila to execute the said decision.

Pursuant to the said declaration, the corresponding Alias Writ of Execution


was issued. The Provincial Sheriff of Rizal served notices of garnishment with
several Banks, specially on the "monies due the Armed Forces of the
Philippines in the form of deposits sufficient to cover the amount mentioned
in the said Writ of Execution"; the Philippine Veterans Bank received the
same notice of garnishment.
The funds of the Armed Forces of the Philippines on deposit with the Banks
are public funds duly appropriated and allocated for the payment of pensions
of retirees, pay and allowances of military and civilian personnel and for
maintenance and operations of the Armed Forces of the Philippines.

The petitioner filed a petition against Villasor for acting in excess of


jurisdiction [or] with grave abuse of discretion amounting to lack of
jurisdiction in granting the issuance of an alias writ of execution against the
properties of the Armed Forces of the Philippines, hence, the Alias Writ of
Execution and notices of garnishment issued are null and void.

ISSUES:

1 Whether or not the Writ of Execution issued by Villasor is valid.

THE COURTS RULING:

The Republic of the Philippines, as mentioned at the outset, did right in filing
this certiorari and prohibition proceeding. What was done by respondent
Judge is not in conformity with the dictates of the Constitution.

It is a fundamental postulate of constitutionalism flowing from the juristic


concept of sovereignty that the state as well as its government is immune
from suit unless it gives its consent. It is readily understandable why it must
be so. In the classic formulation of Holmes: "A sovereign is exempt from suit,
not because of any formal conception or obsolete theory, but on the logical
and practical ground that there can be no legal right as against the authority
that makes the law on which the right depends."

A corollary, both dictated by logic and sound sense from a basic concept 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.

It is made clear why the Republic of the Philippines could rightfully allege a
legitimate grievance.

The writs of certiorari and prohibition are GRANTED, nullifying and setting
aside both the order of June 24, 1969 declaring executory the decision of July
3, 1961 as well as the alias writ of execution issued thereunder.

TOPIC: Sovereign Immunity


CITATION: REPUBLIC vs. FELICIANO 148 SCRA 424 G.R. No. 70853
DATE: March 12, 1987

FACTS:

Petitioner seeks the review of the decision of the Intermediate Appellate


Court dated April 30, 1985 reversing the order of the Court of First Instance
of Camarines Sur, Branch VI, dated August 21, 1980, which dismissed the
complaint of respondent Pablo Feliciano for recovery of ownership and
possession of a parcel of land on the ground of non-suability of the State.

On January 22, 1970, Feliciano filed a complaint with the then Court of First
Instance of Camarines Sur against the RP, represented by the
Land Authority, for the recovery of ownership and possession of a parcel
of land. The defendant, represented by the Land Authority, filed an answer,
raising by way of affirmative defenses lack of sufficient cause of action and
prescription.

On August 29, 1970, the trial court rendered a decision declaring Lot No. 1,
with an area of 701.9064 hectares, to be the private property of Feliciano.

A motion to intervene and to set aside the decision of August 29, 1970 was
filed by eighty-six (86) settlers. On January 25, 1971, the court a
quo reconsidered its decision, reopened the case and directed the
intervenors to file their corresponding pleadings and present their evidence
while plaintiff (Feliciano), as well as the Republic of the Philippines, could
present additional evidence.

The interveners did not appear on the day scheduled for the presentation of
evidence and submitted a motion for postponement instead which was
denied. Feliciano, on the other hand presented additional evidence.
Thereafter the case was submitted for decision and the court ruled in favor of
Feliciano.

The interveners filed a motion to dismiss on the ground that the Republic of
the Philippines cannot be sued without its consent hence the action cannot
prosper. The motion was opposed by Feliciano.

ISSUES:

1 Whether or not the state can be sued for recovery and possession of
a parcel of land

THE COURTS RULING:

A suit against the state is not permitted, except upon a showing that the
state has consented to be sued, either expressly of by implication through
the use of statutory language too plain to be misinterpreted.

Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly, but
must be construed in
strictissimi juris (of strictest right). Moreover, the Proclamation is not a
legislative act. The consent of the State to be sued must emanate from
statutory authority. The Waiver of State immunity can only be made by an
act of the legislative body
Worthy of note is the fact, as pointed out by the Solicitor General, that
the informacionposesoria registered in the Office of the Register of Deed of
Camarines Sur on September 23, 1952 was a "reconstituted" possessory
information; it was "reconstituted from the duplicate presented to this office
(Register of Deeds) by Dr. Pablo Feliciano," without the submission of proof
that the alleged duplicate was authentic or that the original thereof was lost.
Reconstitution can be validly made only in case of loss of the
original. 10 These circumstances raise grave doubts as to the authenticity
and validity of the "informacionposesoria" relied upon by respondent
Feliciano. Adding to the dubiousness of said document is the fact that
"possessory information calls for an area of only 100 hectares," 11 whereas
the land claimed by respondent Feliciano comprises 1,364.4177 hectares,
later reduced to 701-9064 hectares. Courts should be wary in accepting
"possessory information documents, as well as other purportedly old Spanish
titles, as proof of alleged ownership of lands.

Judgment was rendered reversing and setting aside the appealed decision of
the Intermediate Appellate Court, dated April 30, 1985, and affirming the
order of the court a quo, dated August 21, 1980, DISMISSING the complaint
filed by respondent Pablo Feliciano against the Republic of the Philippines.
TOPIC: Sovereign Immunity

CITATION: PNB vs. PABALAN 83 SCRA 314 G.R. No. L-33112


DATE: June 15, 1978

FACTS:

The reliance of petitioner Philippine National Bank in this certiorari and


prohibition proceeding against respondent Judge Javier Pabalan who issued a
writ of execution, followed thereafter by a notice of garnishment of the funds
of respondent Philippine Virginia Tobacco Administration, deposited with it, is
on the fundamental constitutional law doctrine of non-suability of a state, it
being alleged that such funds are public in character.

It is undisputed that the judgment against respondent Philippine Virginia


Tobacco Administration had reached the stage of finality. A writ of execution
was, therefore, in order. It was accordingly issued on December 17, 1970.
There was a notice of garnishment for the full amount mentioned in such writ
of execution.

In view of the objection, however, by petitioner Philippine National Bank on


the above ground, coupled with an inquiry as to whether or not respondent
Philippine Virginia Tobacco Administration had funds deposited with
petitioners La Union branch, it was not until January 25, 1971 that the order
sought to be set aside in this certiorari proceeding was issued by respondent
Judge.

Its dispositive portion reads as follows: Conformably with the foregoing, it is


now ordered, in accordance with law, that sufficient funds of the Philippine
Virginia Tobacco Administration now deposited with the Philippine National
Bank, La Union Branch, shall be garnished and delivered to the plaintiff
immediately to satisfy the Writ of Execution for one-half of the amount
awarded in the decision of November 16, 1970.
ISSUES:

1 Whether or not the funds are public in character, thus immune from
suit

THE COURTS RULING:

It is to be admitted that under the present Constitution, what was formerly


implicit as a fundamental doctrine in constitutional law has been set forth in
express terms: The State may not be sued without its consent. If the funds
appertained to one of the regular departments or offices in the government,
then, certainly, such provision would be a bar to garnishment. Such is not the
case here.

It is well-settled that when the government enters into commercial business,


it abandons its sovereign capacity and is to be treated like any other
corporation. By engaging in a particular business through the instrumentality
of a corporation, the government divests itself pro hac vice of its sovereign
character, so as to render the corporation subject to the rules of law
governing private corporations.

The non-suability clause raised by PVTA being a government owned


corporation was also denied citing previous decisions held by the Supreme
Court specifically citing that of Manila Hotel Employees Association vs Manila
Hotel Company and to quote 'it is well-settled that when the government
enters into commercial business, it abandons its sovereign capacity and is to
be treated like any other corporation.'

This petition for certiorari and prohibition was DISMISSED. No costs


TOPIC: Sovereign Immunity

CITATION: DEPARTMENT OF AGRICULTURE vs. NLRC, et al G.R. No.


104269

DATE: November 11, 1993

FACTS:
Petitioner DOA and Sultan Security Agency and Sultan Security Agency
entered into a contract for security services to be provided to the said
government entity. In September 13, 1990, several security guards of the
Sultan Security Agency filed a complaint for underpayment of wages, non-
payment of 13th month pay, uniform allowances, night shift differential pay,
holiday pay and overtime pay, as well as for damages against the DOA and
the Sultan Security Agency before the Regional Arbitration Branch in
Cagayan De Oro City.
The Labor Arbiter rendered a decision finding the DOA jointly and severally
liable with the security agency for the payment of money claims of the
complainant security guards. The DA and the security agency did not appeal
the decision. Thus, the decision became final and executory. The Labor
Arbiter issued a writ of execution to enforce and execute the judgment
against the property of the DA and the security agency.

Petitioner DOA filed a petition for injunction, prohibition and mandamus,


with prayer for preliminary injunction with the NRC Cagayan De Oro. It
argued that the writ of exection was effected without the Labor Arbiter
hacing acquired jurisdiction over the DOA. Hence, its decision was null and
void. It also pointed out that the attachment of its property would jeopardize
its governmental functions to the prejudice of the public good.

NLRC dismissed the petition for injunction for lack of basis. The writ of
preliminary injunction previously issued is Lifted and Set Aside and in lieu
thereof, a Temporary Stay of Execution is issued for a period of two (2)
months but not extending beyond the last quarter of calendar year 1991.

In this petition for certiorari, the petitioner [DOA] charges the NLRC with
grave abuse of discretion for refusing to quash the writ of execution. It
argued that money claims against the Department falls under the exclusive
jurisdiction of the Commission on Audit. More importantly, the petitioner
asserts, the NLRC has disregarded the cardinal rule on the non-suability of
the State.
The private respondents, on the other hand, argue that the petitioner has
impliedly waived its immunity from suit by concluding a service contract with
Sultan Security Agency.
NLRC, on the other hand, argue that the petitioner has impliedly waived its
immunity from suit by concluding service contract with Sultan Security
Agency.

ISSUES:
1 Whether or not the Department of Agriculture can be sued

THE COURTS RULINGS:

The basic postulate enshrined in the Constitution that the State may not be
sued without its consent reflects nothing less than recognition of the
sovereign character of the State and an express affirmation of the unwritten
rule effectively insulating it from the jurisdiction of courts. It is based on the
very essence of sovereignty. A sovereign is exempt from suit based on the
logical and practical ground that there can be no legal right as against the
authority that makes the law on which the right depends.

The rule, in any case, is not really absolute for it does not say that the state
may not be sued under any circumstances. On the contrary, as correctly
phrased, the doctrine only conveys, "the state may not be sued without its
consent;" its clear import then is that the State may be sued at times. The
States consent may be given expressly or impliedly. Express consent may be
made through a general law or a special law. Implied consent, on the other
hand, is conceded when the State itself commences litigation, thus opening
itself to a counterclaim, or when it enters into a contract. In this situation, the
government is deemed to have descended to the level of the other
contracting party and to have divested itself of its sovereign immunity.

But not all contracts entered into by the government operate as a waiver of
its non-suability; distinction must still be made between one which is
executed in the exercise of its sovereign function and another which is done
in its proprietary capacity. A State may be said to have descended to the
level of an individual and can this be deemed to have actually given its
consent to be sued only when it enters in to business contracts. It does not
apply where the contract relates to the exercise of its sovereign functions.

In the case, the DA has not pretended to have assumed a capacity apart
from its being a governmental entity when it entered into the questioned
contract; nor that it could have, in fact, performed any act proprietary in
character.

But, be that as it may, the claims of private respondents, i.e. for


underpayment of wages, holiday pay, overtime pay and similar other items,
arising from the Contract for Service, clearly constitute money claims. Act
No. 3083, aforecited, gives the consent of the State to be "sued upon any
moneyed claim involving liability arising from contract, express or implied.
Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by
Presidential Decree ("P.D.") No. 1145, the money claim must first be brought
to the Commission on Audit.

The petition was GRANTED.

The resolution, dated 27 November 1991, is hereby REVERSED and SET


ASIDE. The writ of execution directed against the property of the Department
of Agriculture is nullified, and the public respondents are hereby enjoined
permanently from doing, issuing and implementing any and all writs of
execution issued pursuant to the decision rendered by the Labor Arbiter
against said petitioner.

TOPIC: Sovereign Immunity

CITATION: MOBIL PHILIPPINES EXPLORATION, INC. vs. CUSTOMS


ARRASTRE SERVICE and BUREAU of CUSTOMS 18 SCRA 1120 G.R.
No. L-23139

DATE: December 17, 1966

FACTS:
Four cases of rotary drill parts were shipped from abroad on S.S. "Leoville",
sometime in November of 1962, consigned to Mobil Philippines Exploration,
Inc., Manila. The shipment arrived at the Port of Manila on April 10, 1963, and
was discharged to the custody of the Customs Arrastre Service, the unit of
the Bureau of Customs handling arrastre operations. The Customs Arrastre
Service later delivered to the broker of the consignee three cases only of the
shipment.

On April 4, 1964 Mobil Philippines Exploration, Inc., filed suit in the Court of
First Instance of Manila against the Customs Arrastre Service and the Bureau
of Customs to recover the value of the undelivered case in the amount of
P18,493.37 plus other damages.

On April 20, 1964 the defendants filed a motion to dismiss the complaint on
the ground that not being persons under the law, defendants cannot be
sued.

After plaintiff opposed the motion, the court, on April 25, 1964, dismissed the
complaint on the ground that neither the Customs Arrastre Service nor the
Bureau of Customs is suable. Plaintiff appealed to Us from the order of
dismissal.

Raised, therefore, in this appeal is the purely legal question of the


defendants' suability under the facts stated. Appellant contends that not all
government entities are immune from suit; that defendant Bureau of
Customs as operator of the arrastre service at the Port of Manila, is
discharging proprietary functions and as such, can be sued by private
individuals.

ISSUES:

1 Whether or not the defendants can invoke state immunity.


THE COURTS RULING:

The Rules of Court, in Section 1, Rule 3, provide:

SECTION 1. Who may be parties.Only natural or juridical persons or


entities authorized by law may be parties in a civil action.

Accordingly, a defendant in a civil suit must be (1) a natural person; (2) a


juridical person or (3) an entity authorized by law to be sued. Neither the
Bureau of Customs nor (a fortiori) its function unit, the Customs Arrastre
Service, is a person. They are merely parts of the machinery of Government.
The Bureau of Customs is a bureau under the Department of Finance (Sec.
81, Revised Administrative Code); and as stated, the Customs Arrastre
Service is a unit of the Bureau of Custom, set up under Customs
Administrative Order No. 8-62 of November 9, 1962 (Annex "A" to Motion to
Dismiss, pp. 13-15, Record an Appeal). It follows that the defendants herein
cannot he sued under the first two abovementioned categories of natural or
juridical persons.

Nonetheless it is urged that by authorizing the Bureau of Customs to engage


in arrastre service, the law thereby impliedly authorizes it to be sued as
arrastre operator, for the reason that the nature of this function (arrastre
service) is proprietary, not governmental. Thus, insofar as arrastre operation
is concerned, appellant would put defendants under the third category of
"entities authorized by law" to be sued. Stated differently, it is argued that
while there is no law expressly authorizing the Bureau of Customs to sue or
be sued, still its capacity to be sued is implied from its very power to render
arrastre service at the Port of Manila, which it is alleged, amounts to the
transaction of a private business.

The Bureau of Customs, to repeat is part of the Department of Finance with


no personality of its own apart from that of the national government.
Its primary function is governmental, that of assessing and collecting
lawful revenues from imported articles and all other tariff and customs
duties, fees, charges, fi nes and penalties. To this function,
arrastreservice is a necessary incident.

The order of dismissal appealed from was affirmed, with costs against
appellant.

TOPIC: Sovereign Immunity


CITATION: NATIONAL AIRPORTS CORP vs. TEODORO 91 PHIL 203

DATE: April 30, 1952

FACTS:

The National Airports Corporation was organized under Republic Act No. 224,
which expressly made the provisions of the Corporation Law applicable to the
said corporation. On November 10, 1950, the National Airports Corporation
was abolished by Executive Order No. 365 and to take its place the Civil
Aeronautics Administration was created. Before the abolition, the Philippine
airlines, Inc. paid the National Airports Corporation P65, 245 as fees for
landing and parking on Bacolod Airport No. 2 for the period up to and
including July 31, 1948.

These fees are said to have been due and payable to the Capitol Subdivision,
Inc. which owned the land used by the National Airports Corporation as
airport, and the owner commenced an action in the Court of First Instance of
Negros Occidental against the Philippine Airlines, Inc. In 1951 to recover the
above amount, The Philippine Airlines, Inc. countered with a third-party
complaint against the National Airports Corporation, which by that time had
been dissolved, and served summons on the Civil Aeronautics
Administration.

T h e t h i r d p a r t y p l a i n t i ff alleged that it had paid to the


National Airports Corporation the fees claimed by the
C a p i t o l S u b d i v i s i o n , I n c . " o n t h e b e l i e f a n d assumption that the
third party defendant was the lessee of the lands subject of the
complaint and that the third party defendant and its predecessors in interest
were the operators and maintainers of said Bacolod Airport No. 2The Solicitor
General, after answering the third party complaint, filed a motion to dismiss
on the ground that the court lacks jurisdiction to entertain the third-
party complaint, fi r s t , because the National Airports
Corporation "has lost its juridical personality," and, second,
because agency of the Re p u b l i c of the Philippines,
unincorporated and not possessing juridical personality under the law, is
incapable of suing and being sued."

ISSUES:

1 Whether or not government corporate agency may be sued

2 Whether or not the Civil Aeronautics Administration can be sued

THE COURTS RULING:

As a general rule, state cannot be sued withou t its consent and


there can be no l e g a l b a s i s a g a i n s t t h e a u t h o r i t y t h a t f o r m u l a t e
t h e l a w a n d w h i c h t h e l a w depends. But the exemptions are the
unincorporated type of government and functioning for proprietary. Not all
government entities, whether corporate or non-c o r p o r a t e , a r e i m m u n e t o
s u i t s . I m m u n i t y f r o m s u i t s i s d e t e r m i n e d b y t h e character of the
objects for which the entity was organized. however contended that when a
sovereign state enters into a contract with a private person, the state can be sued
upon the theory that it has descended to the level of an individual from
which 'it can be implied that it has given its consent to be sued under
thecontract2 . A m o n g t h e g e n e r a l p o w e r s o f t h e C i v i l Ae ro n a u t i c s
A d m i n i s t r a t i o n a re , u n d e r s e c t i o n 3 o f E xe c u t i v e O rd e r N o.
3 6 5 , t o e xe c u t e c o n t r a c t s o f a n y k i n d , t o p u r c h a s e p r o p e r t y ,
and to grant concession rights, and under section 4, to
charge landing fees, royalties on sales to aircraft of
a v i a t i o n g a s o l i n e , accessories and supplies, and rentals for. the
use of any property under its management. These provisions confer upon 'the
Civil Aeronautics Administration the power to sue and be sued, which is implied from
the power to transact private business. And if it has the power to sue and
be sued on its behalf, the Civil Aeronautics Administration with greater
reason should have the power to prosecute and defend suits for and against
the National Airports Corporation, having acquired all the properties, funds
and choses in action and assumed all the liabilities of the latter.

The petition was denied with costs against the Civil Aeronautics
Administration.

TOPIC: Sovereign Immunity

CITATION: PNB vs. CIR 81 SCRA 314


Facts:

Petitioners motion to quash a notice of garnishment was denied for lack of


merit. What was sought to be garnished was the money of the People's
Home site and Housing Corporation deposited at petitioner's branch in
Quezon City, to satisfy a decision of respondent Court which had become
final and executory. A writ of execution in favor of private respondent Gabriel
V. Manansala had previously been issued. He was the counsel of the
prevailing party, the United Homesite Employees and Laborers Association.
The validity of the order assailed is challenged on two grounds: (1) that the
appointment of respondent Gilbert P. Lorenzo as authorized deputy sheriff to
serve the writ of execution was contrary to law and (2) that the funds subject
of the garnishment "may be public in character."

The order of August 26, 1970 of respondent Court denying the motion to
quash, subject of this certiorari proceeding, reads as follows: "The Philippine
National Bank moves to quash the notice of garnishment served upon its
branch in Quezon City by the authorized deputy sheriff of this Court. It
contends that the service of the notice by the authorized deputy sheriff of
the court contravenes Section 11 of Commonwealth Act No. 105, as
amended which reads:" 'All writs and processes issued by the Court shall be
served and executed free of charge by provincial or city sheriffs, or by any
person authorized by this Court, in the same manner as writs and processes
of Courts of First Instance.' Following the law, the Bank argues that it is the
Sheriff of Quezon City, and not the Clerk of this Court who is its Ex-Officio
Sheriff, that has the authority to serve the notice of garnishment, and that
the actual service by the latter officer of said notice is therefore not in order.
The Court finds no merit in this argument. Republic Act No. 4201 has, since
June 19, 1965, already repealed Commonwealth Act No. 103, and under this
law, it is now the Clerk of this Court that is at the same time the Ex-Officio
Sheriff. As such Ex-Officio Sheriff, the Clerk of this Court has therefore the
authority to issue writs of execution and notices of garnishment in an area
encompassing the whole of the country, including Quezon City, since his area
of authority is coterminous with that of the Court itself, which is national in
nature. ... At this stage, the Court notes from the record that the appeal to
the Supreme Court by individual employees of PHHC which questions the
award of attorney's fees to Atty. Gabriel V. Manansala, has already been
dismissed and that the same became final and executory on August 9, 1970.
There is no longer any reason, therefore, for withholding action in this case.
[Wherefore], the motion to quash filed by the Philippine National Bank is
denied for lack of merit. The said Bank is therefore ordered to comply within
5
five days from receipt with the 'notice of Garnishment' dated May 6, 1970."
There was a motion for reconsideration filed by petitioner, but in a resolution
dated September 22, 1970, it was denied. Hence, this certiorari petition.

Issue: WON the funds mentioned may be garnished

Ruling: No

Rationale:

National Shipyard and Steel Corporation v. court of Industrial Relations 6is


squarely in point. As was explicitly stated in the opinion of the then Justice,
later Chief Justice, Concepcion: "The allegation to the effect that the funds of
the NASSCO are public funds of the government, and that, as such, the same
may not be garnished, attached or levied upon, is untenable for, as a
government owned and controlled corporation. the NASSCO has a
personality of its own, distinct and separate from that of the Government. It
has pursuant to Section 2 of Executive Order No. 356, dated October 23,
1950 ..., pursuant to which the NASSCO has been established 'all the
powers of a corporation under the Corporation Law ...' Accordingly, it may
sue and be sued and may be subjected to court processes just like any other
corporation (Section 13, Act No. 1459), as amended."

In a 1941 decision, Manila Hotel Employees Association v. Manila Hotel


8
Company, this Court, through Justice Ozaeta, held: "On the other hand, it is
well settled that when the government enters into commercial business, it
abandons its sovereign capacity and is to be treated like any other
9
corporation. (Bank of the United States v. Planters' Bank, Wheat, 904, 6
L.ed. 244). By engaging in a particular business thru the instrumentality of a
corporation, the governmnent divests itself pro hac vice of its sovereign
character, so as to render the corporation subject to the rules of law
governing private corporations."

Both the Palacio and the Commissioner of Public Highways decisions, insofar
as they reiterate the doctrine that one of the coronaries of the fundamental
concept of non-suability is that governmental funds are immune from
garnishment. It is an entirely different matter if, according to Justice Sanchez
in Ramos v. Court of Industrial Relations, the office or entity is "possessed of
a separate and distinct corporate existence." Then it can sue and be sued.
Thereafter, its funds may be levied upon or garnished.

TOPIC: Sovereign Immunity

CITATION: MUNICIPALITY OF SAN FERNANDO, LA UNION vs. HON.


JUDGE ROMEO N. FIRME G.R. No. L-52179
DATE: April 8, 1991

FACTS:
This is a petition for certiorari with prayer for the issuance of a writ of
preliminary mandatory injunction seeking the nullification or modification of
the proceedings and the orders issued by the respondent Judge Romeo N.
Firme in Civil Case No. 107-BG, entitled "Juana Rimando Bania, et al. vs.
MacarioNieveras, et al.", decision dated October 10, 1979 ordering
defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay,
jointly and severally, the plaintiffs for funeral expenses, actual damages
consisting of the loss of earning capacity of the deceased, attorney's fees
and costs of suit and dismissing the complaint against the Estate of
MacarioNieveras and Bernardo Balagot.

On October 10, 1979 the trial court rendered a decision, the dispositive
portion is hereunder quoted as follows:

IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby


rendered for the plaintiffs, and defendants Municipality of San
Fernando, La Union and Alfredo Bislig are ordered to pay jointly
and severally, plaintiffs Juana Rimando-Bania, Mrs. Priscilla B.
Surell, LaureanoBania Jr., Sor Marietta Bania, Mrs. Fe B.
Soriano, Montano Bania, OrjaBania and Lydia B. Bania the
sums of P1,500.00 as funeral expenses and P24,744.24 as the
lost expected earnings of the late LaureanoBania Sr.,
P30,000.00 as moral damages, and P2,500.00 as attorney's fees.
Costs against said defendants.

The Complaint is dismissed as to defendants Estate of


MacarioNieveras and Bernardo Balagot.

Petitioner filed a motion for reconsideration and for a new trial without
prejudice to another motion which was then pending. Motion was first
denied. Finally, the respondent judge issued an order dated December 3,
1979 providing that if defendants municipality and Bislig further wish to
pursue the matter disposed of in the order of July 26, 1979, such should be
elevated to a higher court in accordance with the Rules of Court. Hence, this
petition.

Petitioner maintains that the respondent judge committed grave abuse of


discretion amounting to excess of jurisdiction in issuing the aforesaid orders
and in rendering a decision. Furthermore, petitioner asserts that while appeal
of the decision maybe available, the same is not the speedy and adequate
remedy in the ordinary course of law.

On the other hand, private respondents controvert the position of the


petitioner and allege that the petition is devoid of merit, utterly lacking the
good faith which is indispensable in a petition for certiorari and prohibition.

The controversy boils down to the main issue of whether or not the
respondent court committed grave abuse of discretion when it deferred and
failed to resolve the defense of non-suability of the State amounting to lack
of jurisdiction in a motion to dismiss.

Issues:

1 Whether or not the judge committed grave abuse of discretion


amounting to lack of jusrisdiction for failing to resolve defense of
non-suability and holding Municipality liable

The Courts Ruling:

In the case at bar, the judge deferred the resolution of the defense of non-
suability of the State until trial.
However, the judge failed to resolve such defense, proceeded with the trial
and then rendered a decision against the municipality and its driver. The
judge did not commit GAD when it arbitrarily failed to resolve the issue of
non-suability of the State in the guise of the municipality. However, the judge
acted in excess of his jurisdiction when in his decision he held the
municipality liable for the quasi-delict committed by its regular employee.

The doctrine of non-suability of the State is expressly provided for in Article


XVI, Section 3 of the Consti, to wit: "the State may not be sued without its
consent." Express consent may be embodied in a general law or a special
law. The standing consent of the State to be sued in case of money claims
involving liability arising from contracts is found in Act No. 3083. A special
law may be passed to enable a person to sue the government for an alleged
quasi-delict. Consent is implied when the government enters into business
contracts, thereby descending to the level of the other contracting party, and
also when the State files a complaint, thus opening itself to a counterclaim.

Municipal corporations are agencies of the State when they are 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.

A distinction should first be made between suability and liability. "Suability


depends on the consent of the state to be sued, liability on the applicable
law and the established facts. The circumstance that a state is suable does
not necessarily mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not conceded by the
mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable."
Anent the issue of whether or not the municipality is liable for the torts
committed by its employee, the test of liability of the municipality depends
on whether or not the driver, acting in behalf of the municipality, is
performing governmental or proprietary functions.

t has already been remarked that municipal corporations are suable because
their charters grant them the competence to sue and be sued. Nevertheless,
they are generally not liable 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.

In the case at bar, the driver of the dump truck of the municipality insists
that "he was on his way to the Naguilian river to get a load of sand and
gravel for the repair of San Fernando's municipal streets." In the absence of
any evidence to the contrary, the regularity of the performance of official
duty is presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules
of Court. Hence, We rule that the driver of the dump truck was performing
duties or tasks pertaining to his office. We already stressed in the case of
Palafox, et. al. vs. Province of Ilocos Norte, the District Engineer, and the
Provincial Treasurer that "the construction or maintenance of roads in which
the truck and the driver worked at the time of the accident are admittedly
governmental activities."

After a careful examination of existing laws and jurisprudence, We arrive at


the conclusion that the municipality cannot be held liable for the torts
committed by its regular employee, who was then engaged in the discharge
of governmental functions. Hence, the death of the passenger tragic and
deplorable though it may be imposed on the municipality no duty to pay
monetary compensation.

All premises considered, the Court is convinced that the respondent judge's
dereliction in failing to resolve the issue of non-suability did not amount to
grave abuse of discretion. But said judge exceeded his jurisdiction when it
ruled on the issue of liability.

ACCORDINGLY, the petition is GRANTED and the decision of the respondent


court is hereby modified, absolving the petitioner municipality of any liability
in favor of private respondents.

TOPIC: Sovereign Immunity

CITATION: MERRIT vs. GOVERNMENT OF THE PHILIPPINE ISLANDS G.R.


No. L-11154

DATE: March 21, 1916

FACTS:
It is a fact not disputed by counsel for the defendant that when the plaintiff,
riding on a motorcycle, when an ambulance of the General Hospital struck
the plaintiff in an intersection. By reason of the resulting collusion, the
plaintiff was so severely injured that, according to Dr. Saleeby, he was
suffering from a depression in the left parietal region, a wound in the same
place and in the back part of his head, while blood issued from his nose and
he was entirely unconscious. The marks revealed that he had one or more
fractures of the skull and that the grey matter and brain had suffered
material injury.

Upon recovery the doctor noticed that the plaintiffs leg showed a
contraction of an inch and a half and a curvature that made his leg very
weak and painful at the point of the fracture. Examination of his head
revealed a notable readjustment of the functions of the brain and nerves.
The damages that the plaintiff got from the collision disabled him to do this
work as a contractor and forced him to give up contracts he recently had.

As the negligence which cause the collision is a tort committed by an agent


or employee of the Government, the inquiry at once arises whether the
Government is legally-liable for the damages resulting therefrom. The
Philippine Legislature made an Act (Act No. 2457) that authorizes the plaintiff
to bring suit against the GPI and authorizing the Attorney- General to appear
in said suit.

ISSUE:
1 Whether or not the Government is legally liable for the damages
incurred by the plaintiff

RULING:
It is quite clear that Act. No. 2457 does not operate to extend the
Governments liability to any cause not previously recognized.
According to paragraph 5 of Article 1903 of the Civil Code and the principle
laid down in a decision, among others, of the May 18, 1904, in a damage
case, 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. Consequently, the trial court in not so
deciding and in sentencing the said entity to the payment of damages,
caused by an official of the second class referred to, has by erroneous
interpretation infringed the provisions of Articles 1902 and 1903 of the Civil
Code.

It is, therefore, evidence that the State (GPI) is only liable, according to the
above quoted decisions of the Supreme Court of Spain, for the acts of its
agents, officers and employees when they act as special agents within the
meaning of paragraph 5 of Article 1903, supra, and that the chauffeur of the
ambulance of the General Hospital was not such an agent.

For the foregoing reasons, the judgment appealed from must be reversed,
without costs in this instance. Whether the Government intends to make
itself legally liable for the amount of damages above set forth, which the
plaintiff has sustained by reason of the negligent acts of one of its
employees, be legislative enactment and by appropriating sufficient funds
therefore, we are not called upon to determine. This matter rests solely with
the Legislature and not with the courts.
TOPIC: Sovereign Immunity

CITATION: USA vs. GUINTO G.R. No. 76607

DATE: February 26, 1990

Facts:
The private respondents are suing several officers of the U.S. Air Force
stationed in Clark Air Base in connection with the bidding conducted by them
for contracts for barber services in the said base.
On February 24, 1986, the Western Pacific Contracting Office, Okinawa Area
Exchange, U.S. Air Force, solicited bids for such contracts through its
contracting officer, James F. Shaw. The bidding was won by Ramon Dizon,
over the objection of the private respondents, who claimed that he had made
a bid for four facilities, including the Civil Engineering Area, which was not
included in the invitation to bid.

The private respondents complained to the Philippine Area Exchange (PHAX).


The latter, through its representatives, petitioners Yvonne Reeves and
Frederic M. Smouse explained that the Civil Engineering concession had not
been awarded to Dizon as a result of the February 24, 1986 solicitation.
Dizon was already operating this concession, then known as the NCO club
concession, and the expiration of the contract had been extended from June
30, 1986 to August 31, 1986. They further explained that the solicitation of
the CE barbershop would be available only by the end of June and the private
respondents would be notified.

On June 30, 1986, the private respondents filed a complaint in the court to
compel PHAX and the individual petitioners to cancel the award to defendant
Dizon, to conduct a rebidding for the barbershop concessions and to allow
the private respondents by a writ of preliminary injunction to continue
operating the concessions pending litigation.

Upon the filing of the complaint, the respondent court issued an ex


parte order directing the individual petitioners to maintain the status quo.

On July 22, 1986, the petitioners filed a motion to dismiss and opposition to
the petition for preliminary injunction on the ground that the action was in
effect a suit against the United States of America, which had not waived its
non-suability. The individual defendants, as official employees of the U.S. Air
Force, were also immune from suit.

On the same date, July 22, 1986, the trial court denied the application for a
writ of preliminary injunction.
On October 10, 1988, the trial court denied the petitioners' motion to
dismiss, holding in part as follows:

From the pleadings thus far presented to this Court by the parties, the
Court's attention is called by the relationship between the plaintiffs as well as
the defendants, including the US Government, in that prior to the bidding or
solicitation in question, there was a binding contract between the plaintiffs as
well as the defendants, including the US Government. By virtue of said
contract of concession it is the Court's understanding that neither the US
Government nor the herein principal defendants would become the
employer/s of the plaintiffs but that the latter are the employers themselves
of the barbers, etc. with the employer, the plaintiffs herein, remitting the
stipulated percentage of commissions to the Philippine Area Exchange. The
same circumstance would become in effect when the Philippine Area
Exchange opened for bidding or solicitation the questioned barber shop
concessions. To this extent, therefore, indeed a commercial transaction has
been entered, and for purposes of the said solicitation, would necessarily be
entered between the plaintiffs as well as the defendants.

Issues:
1 Whether or not the defendants were immune from suit under the
RP-US Bases Treaty for acts done by them in the performance if
their official duties

The Courts Ruling:

A state may not be sued without its consent. This doctrine is not absolute
and does not say the state may not be sued under any circumstance.

The rule says that the state may not be sued without its consent, which
clearly imports that it may be sued if it consents.
The consent of the state to be sued may be manifested expressly or
impliedly. Express consent may be embodied in a general law or a special
law. Consent is implied when the state enters into a contract or it itself
commences litigation. When the government enters into a contract, it is
deemed to have descended to the level of the other contracting party and
divested itself of its sovereign immunity from suit with its implied
consent. Waiver is also implied when the government files a complaint, thus
opening itself to a counterclaim.

The USA, like any other state, will be deemed to have impliedly waived its
non-suability if it has entered into a contract in its proprietary or private
capacity.

The barbershops concessions are commercial enterprises operated by


private persons. They are not agencies of the US Armed forces.

Therefore, petition to plead immunity was DENIED. Case should be remanded


to the lower court.
TOPIC: Sovereign Immunity

CITATION: REPUBLIC of INDONESIA vs. VINZON G.R. NO. 154705

DATE: June 26, 2003

FACTS:

This is a petition for review on certiorari to set aside the Decision of the
Court of Appeals dated May 30, 2002 and its Resolution dated August 16,
2002, in CA-G.R. SP No. 66894 entitledThe Republic of Indonesia, His
Excellency Ambassador Soeratmin and Minister Counselor AzhariKasim v.
Hon. Cesar Santamaria, Presiding Judge, RTC Branch 145, Makati City, and
James Vinzon, doing business under the name and style of Vinzon Trade and
Services.

Petitioner, Republic of Indonesia, entered into a Maintenance Agreement in


August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade
and Services. The agreement stated that respondent shall, for a
consideration, maintain specified equipment at the Embassy Main Building,
Embassy Annex Building and the Wisma Duta, the official residence of
petitioner Ambassador Soeratmin. The equipments covered by the
agreement are air conditioning units, generator sets, electrical facilities,
water heaters, and water motor pumps. The agreement shall be effective for
a period of four years and will renew itself automatically unless cancelled by
either party by giving thirty days prior written notice from the date of expiry.

Petitioners claim that sometime prior to the date of expiration of the said
agreement, they informed respondent that the renewal of the agreement
shall be at the discretion of the incoming Chief of Administration, who
allegedly found respondents work and services unsatisfactory and not in
compliance with the standards set in the Agreement. Hence, the Indonesian
Embassy terminated the agreement. Petitioners claim that they had earlier
verbally informed respondent of their decision to terminate the agreement.

On the other hand, respondent claims that the aforesaid termination was
arbitrary and unlawful.

Hence, respondent filed a complaint in the (RTC) of Makati. Petitioners filed a


Motion to Dismiss, alleging that the Republic of Indonesia, as a foreign
sovereign State, has sovereign immunity from suit and cannot be sued as a
party-defendant in the Philippines. The said motion further alleged
that Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic
agents as defined under the Vienna Convention on Diplomatic Relations and
therefore enjoy diplomatic immunity. In turn, respondent filed on March 20,
2001, an Opposition to the said motion alleging that the Republic of
Indonesia has expressly waived its immunity from suit. He based this claim
upon the following provision in the Maintenance Agreement:

a Any legal action arising out of this Maintenance Agreement shall be


settled according to the laws of the Philippines and by the proper
court of Makati City, Philippines.
Respondents Opposition likewise alleged that Ambassador Soeratmin and
Minister Counsellor Kasim can be sued and held liable in their private
capacities for tortuous acts done with malice and bad faith. The trial court
denied herein petitioners Motion to Dismiss. It likewise denied the Motion for
Reconsideration subsequently filed.

The trial courts denial of the Motion to Dismiss was brought up to the Court
of Appeals by herein petitioners in a petition for certiorari and prohibition.
The said petition alleged that the trial court gravely abused its discretion in
ruling that the Republic of Indonesia gave its consent to be sued and
voluntarily submitted itself to the laws and jurisdiction of Philippine courts
and that petitioners Ambassador Soeratmin and Minister Counsellor Kasim
waived their immunity from suit.

Issues:

1 Whether or not the Court of Appeals erred in sustaining the trial


courts decision that petitioners have waived their immunity from
suit by using as its basis the abovementioned provision in the
Maintenance Agreement.

RULING:

The petition is impressed with merit. International law is founded largely


upon the principles of reciprocity, comity, independence, and equality of
States which were adopted as part of the law of our land under Article II,
Section 2 of the 1987 Constitution. The rule that a State may not be sued
without its consent is a necessary consequence of the principles of
independence and equality of States. Annunciated in Sanders v. Veridiano II,
the practical justification for the doctrine of sovereign immunity is that there
can be no legal right against the authority that makes the law on which the
right depends. In the case of foreign States, the rule is derived from the
principle of the sovereign equality of States, as expressed in the maxim par
in parem non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another. A contrary attitude would unduly vex the
peace of nations. The rules of International Law, however, are neither
unyielding nor impervious to change. The increasing need of sovereign
States to enter into purely commercial activities remotely connected with the
discharge of their governmental functions brought about a new concept of
sovereign immunity. This concept, the restrictive theory, holds that the
immunity of the sovereign is recognized only with regard to public acts or
acts jure imperii, but not with regard to private acts. In United States of
America v. Ruiz, for instance, we held that the conduct of public bidding for
the repair of a wharf at a United States Naval Station is an act jure imperii.
On the other hand, we considered as an act jure gestionis the hiring of a
cook in there creation center catering to American servicemen and the
general public at the John Hay Air Station in Baguio City, as well as the
bidding for the operation of barber shops in Clark Air Base in Angeles City.

The petition is hereby GRANTED. The decision and resolution of the Court of
Appeals in CA G.R. SP No. 66894 are REVERSED and SET ASIDE and the
complaint in Civil Case No. 18203 against petitioners is DISMISSED.
TOPIC: Sovereign Immunity

CITATION: U.S.A. vs. RUIZ 136 SCRA 487


DATE: May 22, 1985

FACTS:

The United States of America had a naval base in Subic, Zambales. The base
was one of those provided in the Military Bases Agreement between the
Philippines and the United States. US invited the submission of bids for
Repair offender system and Repair typhoon damages. Eligio de Guzman &
Co., Inc. responded to the invitation, submitted bids and complied with the
requests based on the letters received from the U.S.

A letter was received by the Eligio De Guzman & Co in June 1972 indicating
that the company did not qualify to receive an award for the projects
because of its previous unsatisfactory performance rating on a repair
contract for the sea wall at the boat landings of the U.S. Naval Station in
Subic Bay. The company sued the United States of America and Messrs.
James E. Galloway, William I. Collins and Robert Gohier all members of the
Engineering Command of the U.S. Navy.
The complaint is to order the defendants to allow the plaintiff to perform the
work on the projects and, in the event that specific performance was no
longer possible, to order the defendants to pay damages. The company also
asked for the issuance of a writ of preliminary injunction to restrain the
defendants from entering into contracts with third parties for work on the
projects.

The defendants entered their special appearance for the purpose only of
questioning the jurisdiction of this court over the subject matter of the
complaint and the persons of defendants, the subject matter of the
complaint being acts and omissions of the individual defendants as agents of
defendant United States of America, a foreign sovereign which has not given
her consent to this suit or any other suit for the causes of action asserted in
the complaint.

Subsequently the defendants filed a motion to dismiss the complaint which


included an opposition to the issuance of the writ of preliminary injunction.
The company opposed the motion. The trial court denied the motion and
issued the writ. The defendants moved twice to reconsider but to no avail.

Hence the instant petition which seeks to restrain perpetually the


proceedings in Civil Case No. 779-M for lack of jurisdiction on the part of the
trial court.

ISSUES:

1 Whether or not the US naval base in bidding for said contracts exercise
governmental functions to be able to invoke state immunity.

THE COURTS RULING:


The traditional rule of State immunity exempts a State from being sued in
the courts of another State without its consent or waiver. This rule is a
necessary consequence of the principles of independence and equality of
States. However, the rules of International Law are not petrified; they are
constantly developing and evolving. And because the activities of states
have multiplied, it has been necessary to distinguish them-between
sovereign and governmental acts (jure imperii) and private, commercial and
proprietary acts (jure gestionis). The result is that State immunity now
extends only to acts jure imperil (sovereign & governmental acts).

The restrictive application of State immunity is proper only when the


proceedings 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. In this case the projects are an integral part of the naval
base which is devoted to the defense of both the United States and the
Philippines, indisputably a function of the government of the highest order;
they are not utilized for nor dedicated to commercial or business purposes.
Correct test for the application of State immunity is not the conclusion of a
contract by a State but the legal nature of the act.

The petition was granted; the questioned orders of the respondent judge are
set aside and Civil Case No. is dismissed. Costs against the private
respondent.
TOPIC: Sovereign Immunity

CITATION: FROILAN vs. PAN ORIENTAL SHIPPING G.R. No. L 6060


DATE: September 30, 1954

FACTS:

On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a complaint


against the defendant-appellant, Pan Oriental Shipping Co., alleging that he
purchased a vessel from the Shipping Commission and agreeing to pay the
balance in installments; that to secure the payment of the balance of the
purchase price, he executed a chattel mortgage of said vessel in favor of the
Shipping Commission; that for various reason, among them the non-payment
of the installments, the Shipping Commission took possession of said vessel
and considered the contract of sale cancelled; that the Shipping Commission
chartered and delivered said vessel to the defendant-appellant Pan Oriental
Shipping Co. subject to the approval of the President of the Philippines; that
he appealed the action of the Shipping Commission to the President of the
Philippines and, in its meeting on August 25, 1950, the Cabinet restored him
to all his rights under his original contract with the Shipping Commission;
that he had repeatedly demanded from the Pan Oriental Shipping Co. the
possession of the vessel in question but the latter refused to do so. He,
therefore, prayed that, upon the approval of the bond accompanying his
complaint, a writ of replevin be issued for the seizure of said vessel with all
its equipment and appurtenances, and that after hearing, he be adjudged to
have the rightful possession thereof.

On February 3, 1951, the lower court issued the writ of replevin prayed for by
Froilan and by virtue thereof the Pan Oriental Shipping Co. was divested of its
possession of said vessel. The defendant filed its answer denying the right of
Froilan to the possession of the said vessel. After the leave of the lower court
had been obtained, the intervenor-appellee, Government of the Republic f
the Philippines, filed a complaint in intervention alleging that Froilan failed to
pay the Shipping Commission the balance due on the purchase price of the
vessel in question.

The Pan Oriental Shipping Co. filed an answer to the complaint in


intervention alleging that the Government of the Republic of the Philippines
was obligated to deliver the vessel in question to it by virtue of a contract of
bare-boat charter with option to purchase executed on June 16, 1949, by the
latter in favor of the former; it also alleged that it had made necessary and
useful expenses on the vessel and claimed the right of retention of the
vessel. It, therefore, prayed that, if the Republic of the Philippines succeeded
in obtaining possession of the said vessel, to comply with its obligations of
delivering to it (Pan Oriental Shipping co.) or causing its delivery by
recovering it from Froilan.

A motion to dismiss the counterclaim interposed by the defendant in its


answer to the complaint in intervention was filed.

ISSUES:
1 Whether or not the Court has jurisdiction over the intervenor
government of the Republic of the Philippines in connection with the
counterclaim of the defendant Pan Oriental Shipping Co.

THE COURTS RULING:

The lower court erred as the intervenor had not made any claim against the
defendant, the latter's counterclaim had no foundation. The complaint in
intervention sought to recover possession of the vessel in question from the
plaintiff, and this claim is logically adverse to the position assumed by the
defendant that it has a better right to said possession than the plaintiff who
alleges in his complaint that he is entitled to recover the vessel from the
defendant. At any rate a counterclaim should be judged by its own
allegations, and not by the averments of the adverse party. It should be
recalled that the defendant's theory is that the plaintiff had already lost his
rights under the contract with the Shipping Administration and that, on the
other hand, the defendant is relying on the charter contract executed in its
favor by the intervenor which is bound to protect the defendant in its
possession of the vessel. In other words, the counterclaim calls for specific
performance on the part of the intervenor. As to whether this counterclaim is
meritorious is another question which is not now before us.

The defendant's counterclaim was dismissed for the reason that the State is
immune from suit. This is untenable, because by filing its complaint in
intervention the Government in effect waived its right of non-suability.

The immunity of the state from suits does not deprive it of the right to sue
private parties in its own courts. The state as plaintiff may avail itself of the
different forms of actions open to private litigants. In short, by taking the
initiative in an action against a private party, the state surrenders its
privileged position and comes down to the level of the defendant. The latter
automatically acquires, within certain limits, the right to set up whatever
claims and other defenses he might have against the state. The United
States Supreme Court thus explains:

"No direct suit can be maintained against the United States. But when an
action is brought by the United States to recover money in the hands of a
party who has a legal claim against them, it would be a very rigid principle to
deny to him the right of setting up such claim in a court of justice, and turn
him around to an application to Congress." (Sinco, Philippine Political Law,
Tenth Ed., pp. 36-37, citing U. S. vs. Ringgold, 8 Pet. 150, 8 L. ed. 899.)

It is however, contended for the intervenor that, if there was at all any
waiver, it was in favor of the plaintiff against whom the complaint in
intervention was directed. This contention is untenable. As already stated,
the complaint in intervention was in a sense in derogation of the defendant's
claim over the possession of the vessel in question. The appealed order was
reversed and set aside and the case remanded to the lower court for further
proceedings. So ordered, without costs.
TOPIC: Sovereign Immunity

CITATION: AMIGABLE vs. CUENCA 43 SCRA 360


DATE: February 29, 1972

FACTS:

The appellant herein, Victoria Amigable, is the registered owner of Lot No.
639 of the Banilad Estate in Cebu City. At the back of her Transfer Certificate
of Title (1924), there was no annotation in favor of the government of any
right or interest in the property.

Without prior expropriation or negotiated sale, the government used a


portion of the lot, with an area of 6,167 square meters, for the construction
of the Mango and Gorordo Avenues.

On March 27, 1958 Amigable's counsel wrote the President of the Philippines,
requesting payment of the portion of her lot which had been appropriated by
the government. The claim was indorsed to the Auditor General, who
disallowed it in his 9th Indorsement dated December 9, 1958. A copy of said
indorsement was transmitted to Amigable's counsel by the Office of the
President on January 7, 1959.
On February 6, 1959 Amigable filed in the court a quo a complaint, which
was later amended on April 17, 1959 upon motion of the defendants, against
the Republic of the Philippines and Nicolas Cuenca, in his capacity as
Commissioner of Public Highways for the recovery of ownership and
possession of the 6,167 square meters of land traversed by the Mango and
Gorordo Avenues. She also sought the payment of compensatory damages in
the sum of P50,000.00 for the illegal occupation of her land, moral damages
in the sum of P25,000.00, attorney's fees in the sum of P5,000.00 and the
costs of the suit.

On July 29, 1959 said court rendered its decision holding that it had no
jurisdiction over the plaintiff's cause of action for the recovery of possession
and ownership of the portion of her lot in question on the ground that the
government cannot be sued without its consent; that it had neither original
nor appellate jurisdiction to hear, try and decide plaintiff's claim for
compensatory damages in the sum of P50,000.00, the same being a money
claim against the government; and that the claim for moral damages had
long prescribed, nor did it have jurisdiction over said claim because the
government had not given its consent to be sued. Accordingly, the complaint
was dismissed.

Amigable appealed to the Court of Appeals, Unable to secure


reconsideration, which subsequently certified the case to us, there being no
question of fact involved.

ISSUES:

(1)Whether or not the appellant, Amigable may properly sue the


government under the facts of the case.

THE COURTS RULING:


Ministerio vs. Court of First Instance of Cebu: where the government takes
away property from a private landowner for public use without going through
the legal process of expropriation or negotiated sale, the aggrieved party
may properly maintain a suit against the government without thereby
violating the doctrine of governmental immunity from suit without its
consent

Considering that no annotation in favor of the government appears at the


back of her certificate of title and that she has not executed any deed of
conveyance of any portion of her lot to the government, the appellant
remains the owner of the whole lot.

As registered owner, she could bring an action to recover possession of the


portion of land in question at any time because possession is one of the
attributes of ownership.

However, since restoration of possession of said portion by the government


is neither convenient nor feasible at this time because it is now and has been
used for road purposes, the only relief available is for the government to
make due compensation which it could and should have done years ago. To
determine the due compensation for the land, the basis should be the price
or value thereof at the time of the taking

The plaintiff is entitled thereto in the form of legal interest on the price of the
land from the time it was taken up to the time that payment is made by the
government. The government should pay for attorney's fees, the amount of
which should be fixed by the trial court after hearing.

The government is NOT immune to the suit.


The decision appealed from was set aside and the case remanded to the
court a quo for the determination of compensation, including attorney's fees,
to which the appellant is entitled as above indicated. No pronouncement as
to costs.

TOPIC: Sovereign Immunity

CITATION: Tan v Director of Forestry, 152 SCRA 302

FACTS:

Sometime in April 1961, the Bureau of Forestry issued notice advertising


for public bidding a certain tract of public forest land situated in Olongapo,
Zambales consisting of 6,420 hectares, within the former U.S. Naval
Reservation comprising 7,252 hectares of timberland, which was turned over
by the US Government to the Philippine Government. Wenceslao Tan with
nine others submitted their application in due form.

The area was granted to the petitioner. On May 30, 1963, Secretary
Gozon of Agriculture and Natural Resources issued a general memorandum
order authorizing Dir. Of Forestry to grant new Ordinary Timber Licenses
(OTL) subject to some conditions stated therein (not exceeding 3000
hectares for new OTL and not exceeding 5000 hectares for extension)

Thereafter, Acting Secretary of Agriculture and Natural Resources


Feliciano (replacing Gozon) promulgated on December 19, 1963 a
memorandum revoking the authority delegated to the Director of Forestry to
grant ordinary timber licenses. On the same date, OTL in the name of Tan,
was signed by then Acting Director of Forestry, without the approval of the
Secretary of Agriculture and Natural Resources. On January 6, 1964, the
license was released by the Director of Forestry .

Ravago Commercial Company wrote a letter to the Secretary of ANR


praying that the OTL of Tan be revoked. On March 9, 1964, The Secretary of
ANR declared Tans OTL null and void (but the same was not granted to
Ravago). Petitioner-appellant moved for a reconsideration of the order, but
the Secretary of Agriculture and Natural Resources denied the motion.

ISSUES:
I. Whether or not petitioners timber license is valid (No)
II. Whether or not petitioner had exhausted administrative remedies
available (No)

RULING:

Petitioners timber license was signed and released without authority and is
therefore void ab initio. In the first place, in the general memorandum dated
May 30, 1963, the Director of Forestry was authorized to grant a new
ordinary timber license only where the area covered thereby was not more
than 3,000 hectares; the tract of public forest awarded to the petitioner
contained 6,420 hectares In the second place, at the time it was released to
the petitioner, the Acting Director of Forestry had no more authority to grant
any license. (The license was released to the petitioner on January 6, 1964
while on the other hand, the authority of the Director of Forestry to issue
license was revoked on December 19, 1963). In view thereof, the Director of
Forestry had no longer any authority to release the license on January 6,
1964, and said license is therefore void ab initio. What is of greatest
importance is the date of the release or issuance. Before its release, no right
is acquired by the licensee.

Granting arguendo, that petitioner-appellant's timber license is valid, still


respondents-appellees can validly revoke his timber license. "A license is
merely a permit or privilege to do what otherwise would be unlawful, and is
not a contract between the authority, federal, state, or municipal, granting it
and the person to whom it is granted; neither is it property or a property
right, nor does it create a vested right; nor is it taxation

The welfare of the people is the supreme law. Thus, no franchise or right can
be availed of to defeat the proper exercise of police power.

II

Petitioner did not exhaust administrative remedy in this case. He did not
appeal the order of the respondent Secretary of Agriculture and Natural
Resources to the President of the Philippines. Considering that the President
has the power to review on appeal the orders or acts of the respondents, the
failure of the petitioner-appellant to take that appeal is failure on his part to
exhaust his administrative remedies.