III.

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.

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 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.

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.

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.

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

3.Government

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. !].

a)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)

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)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

Page 1 of 8

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, February20,2001,
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 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 aState by which that
State is governed.
b)Kinds:
i)Legal, which is the power to issue final commands; orPolitical, 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, comprehensive-ness, absoluteness,
indivisibility, inalienability, imprescriptibility. See Laurel v. Misa, 77 Phil. 856.
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 post liminium.

Page 2 of 8

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 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 administrative 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 poseurbuyer 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
forNatural 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 maybe
immune from the jurisdiction of local courts and local administrative tribunals.
i)In SEAFDEC (Southeast Asia Fisheries DevelopmentCenter) 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

Page 3 of 8

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 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 PC-SUSIA 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.
i)Municipal corporations are agencies of the State when they
areengaged 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,
214SCRA 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

Page 4 of 8

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 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.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].

Page 5 of 8

a)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)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 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],
ii)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

Page 6 of 8

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.

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.
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

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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 saidthat by the process of
garnishment, the plaintiff virtually sues the garnishee
for a debt due from the defendant. The debtorstranger 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 bedetermined by
the Court on the basis of the evidence and the applicable law.
a)In Merritt v. Government of the Philippine Islands, supra., whileconsent
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
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.

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