Collector of Internal Revenue vs Antonio Campos Rueda

42 SCRA 23 Political Law Definition of State

In January 1955, Maria Cerdeira died in Tangier, Morocco (an international zone [foreign
country] in North Africa). At the time of her death, she was a Spanish citizen and was a resident
of Tangier. She however left some personal properties (shares of stocks and other intangibles)
in the Philippines. The designated administrator of her estate here is Antonio Campos Rueda.

In the same year, the Collector of Internal Revenue (CIR) assessed the estate for deficiency tax
amounting to about P161k. Campos Rueda refused to pay the assessed tax as he claimed that
the estate is exempt from the payment of said taxes pursuant to section 122 of the Tax
Code which provides:

That no tax shall be collected under this Title in respect of intangible personal property (a) if the
decedent at the time of his death was a resident of a foreign country which at the time of his
death did not impose a transfer tax or death tax of any character in respect of intangible person
property of the Philippines not residing in that foreign country, or (b) if the laws of the foreign
country of which the decedent was a resident at the time of his death allow a similar exemption
from transfer taxes or death taxes of every character in respect of intangible personal property
owned by citizens of the Philippines not residing in that foreign country.

Campos Rueda was able to prove that there is reciprocity between Tangier and the Philippines.

However, the CIR still denied any tax exemption in favor of the estate as it averred that Tangier
is not a state as contemplated by Section 22 of the Tax Code and that the Philippines does not
recognize Tangier as a foreign country.

ISSUE: Whether or not Tangier is a state.

HELD: Yes. For purposes of the Tax Code, Tangier is a foreign country.

A foreign country to be identified as a state must be a politically organized sovereign community

independent of outside control bound by penalties of nationhood, legally supreme within its
territory, acting through a government functioning under a regime of law. The stress is on its
being a nation, its people occupying a definite territory, politically organized, exercising by
means of its government its sovereign will over the individuals within it and maintaining its
separate international personality.

Further, the Supreme Court noted that there is already an existing jurisprudence (Collector vs
De Lara) which provides that even a tiny principality, that of Liechtenstein, hardly an
international personality in the sense, did fall under the exempt category provided for in
Section 22 of the Tax Code. Thus, recognition is not necessary. Hence, since it was proven that
Tangier provides such exemption to personal properties of Filipinos found therein so must the
Philippines honor the exemption as provided for by our tax law with respect to the doctrine of
reciprocity.
SHIGENORI KURODA vs. Major General RAFAEL JALANDONI (83 Phil 171) Case Digest

Facts:
Shigenori Kuroda, formerly a Lieutenant-General of the Japanese Army and Commanding
General of the Japanese Imperial Forces in the Philippines is charged before the military
commission with war crimes. The petitioner tenders that National War Crimes Office established
by Executive Order 68 has no jurisdiction over his case since the Philippines is not a signatory
of the Hague Convention. He also claimed that Melville Hussey and Robert Port are not
attorneys authorized to practice law in the Philippines and that they do not have personality as
prosecution since the United Stated is not a party in interest in the case.

Issue:
Is Executive Order No. 68 illegal on the ground that the Philippines is not a signatory of the
Hague Convention?

Ruling:
The Supreme Court held that the order is valid and constitutional in pursuant to Section 3 Article
2 of the Constitution.

It cannot be denied that the rules and regulation of the Hague and Geneva conventions form
part and are wholly based on generally accepted principles of international law. Such rules and
procedures therefore form part of the law of our nation even if the Philippines was not a
signatory to the conventions.

Furthermore when the crimes charged against petitioner were allegedly committed in the
Philippines was under the sovereignty of the United States and thus were equally bound
together with the United States and with Japan to the right and obligation contained in the
treaties between the belligerent countries. This rights and obligations were not erased by the
assumption of full sovereignty.
Military Commission is a special military tribunal governed by special law and not by the rules of
court. There is nothing in the said executive order which requires that counsel appearing before
the said commission must be attorneys qualified to practice law in the Philippines.

Petition is DENIED.

Agustin v Edu (1979) 88 SCRA 195

Facts:
Leovillo Agustin, the owner of a Beetle, challenged the constitutionality of Letter of Instruction
229 and its implementing order No. 1 issued by LTO Commissioner Romeo Edu. His car
already had warning lights and did not want to use this.
The letter was promulgation for the requirement of an early warning device installed on a vehicle
to reduce accidents between moving vehicles and parked cars.
The LTO was the issuer of the device at the rate of not more than 15% of the acquisition cost.
The triangular reflector plates were set when the car parked on any street or highway for 30
minutes. It was mandatory.
Petitioner: 1. LOI violated the provisions and delegation of police power, equal protection, and
due process/
2. It was oppressive because the make manufacturers and car dealers millionaires at the
expense f car owners at 56-72 pesos per set.
Hence the petition.
The OSG denied the allegations in par X and XI of the petition with regard to the
unconstitutionality and undue delegation of police power to such acts.
The Philippines was also a member of the 1968 Vienna convention of UN on road signs as a
regulation. To the petitioner, this was still an unlawful delegation of police power.

Issue:
Is the LOI constitutional? If it is, is it a valid delegation of police power?

Held: Yes on both. Petition dismissed.

Ratio:
Police power, according to the case of Edu v Ericta, which cited J. Taney, is nothing more or less
than the power of government inherent in every sovereignty.
The case also says that police power is state authority to enact legislation that may interfere
with personal liberty or property to promote the general welfare.
Primicias v Fulgoso- It is the power to describe regulations to promote the health, morals,
peace, education, good order, and general welfare of the people.
J. Carazo- government limitations to protect constitutional rights did not also intend to enable a
citizen to obstruct unreasonable the enactment of measures calculated to insure communal
peace.
There was no factual foundation on petitioner to refute validity.
Ermita Malate Hotel-The presumption of constitutionality must prevail in the absence of factual
record in over throwing the statute.
Brandeis- constitutionality must prevail in the absence of some factual foundation in
overthrowing the statute.
Even if the car had blinking lights, he must still buy reflectors. His claims that the statute was
oppressive was fantastic because the reflectors were not expensive.
SC- blinking lights may lead to confusion whether the nature and purpose of the driver is
concerned.
Unlike the triangular reflectors, whose nature is evident because its installed when parked for
30 minutes and placed from 400 meters from the car allowing drivers to see clearly.
There was no constitutional basis for petitioner because the law doesnt violate any
constitutional provision.
LOI 229 doesnt force motor vehicle owners to purchase the reflector from the LTO. It only
prescribes rge requirement from any source.
The objective is public safety.
The Vienna convention on road rights and PD 207 both recommended enforcement
for installation of ewds. Bother possess relevance in applying rules with the decvlaration of
principles in the Constitution.
On the unlawful delegation of legislative power, the petitioners have no settled legal doctrines.

11 phil 115 (no case pa)

People of the Philippines vs Tranquilino Lagman

66 Phil. 13 Political Law Defense of State

In 1936, Tranquilino Lagman reached the age of 20. He is being compelled by Section 60 of
Commonwealth Act 1 (National Defense Law) to join the military service. Lagman refused to do
so because he has a father to support, has no military leanings and he does not wish to kill or
be killed. Lagman further assailed the constitutionality of the said law.

ISSUE: Whether or not the National Defense Law is constitutional.

HELD: Yes. The duty of the Government to defend the State cannot be performed except
through an army. To leave the organization of an army to the will of the citizens would be to
make this duty of the Government excusable should there be no sufficient men who volunteer to
enlist therein. Hence, the National Defense Law, in so far as it establishes
compulsory military service, does not go against this constitutional provision but is, on the
contrary, in faithful compliance therewith. The defense of the State is a prime duty of
government, and in the fulfillment of this duty all citizens may be required by law to render
personal military or civil service.

Aglipay v. Ruiz - GR 45459, 13 March 1937 (64 Phil 201)

Facts:

In May 1936, the Director of Posts announced in the dailies of Manila that he would order the
issuance of postage stamps commemorating the celebration in the City of Manila of the 33rd
International Eucharistic Congress, organized by the Roman Catholic Church. The petitioner,
Mons. Gregorio Aglipay, Supreme Head of the Philippine Independent Church, in the fulfillment
of what he considers to be a civic duty, requested Vicente Sotto, Esq., member of the Philippine
Bar, to denounce the matter to the President of the Philippines. In spite of the protest of the
petitioners attorney, the Director of Posts publicly announced having sent to the United States
the designs of the postage for printing. The said stamps were actually issued and sold though
the greater part thereof remained unsold. The further sale of the stamps was sought to be
prevented by the petitioner.

Issue:
Whether the issuance of the postage stamps was in violation of the Constitution.

Held / Ruling:

There has been no constitutional infraction in the case at bar, Act No. 4052 grants the Director
of Posts, with the approval of the Secretary of Public Works and Communications, discretion to
misuse postage stamps with new designs. Even if we were to assume that these officials made
use of a poor judgment in issuing and selling the postage stamps in question still, the case of
the petitioner would fail to take in weight. Between the exercise of a poor judgment and the
unconstitutionality of the step taken, a gap exists which is yet to be filled to justify the court in
setting aside the official act assailed as coming within a constitutional inhibition.
The court resolved that petition for a writ of prohibition is hereby denied, without pronouncement
as to costs.

Estrella OndoyvsVirgilio Ignacio

Art II Sec 10 of the Constitution of the Philippines : The State shall promote social justice in all
phases of national development.

Facts:

Jose Ondoy, son of Estrella Ondoy, drowned while in the employ of Virgilio Ignacio. According to
thechief engineer and oiler, Jose Ondoy was aboard the ship as part of the workforce. He was
invited byfriends to a drinking spree, left the vessel, and thereafter was found dead. Therefore,
Estrella wasasking for compensation from the death of her son while in the respondents
employ. However, thestatement given by the chief engineer and oiler was ignored by the
hearing officer and thereforedismissed the claim for lack of merit. Even when a motion for
reconsideration was filed, this was alsodenied by the Secretary of Labor for the same reason,
that is, lack of merit.

Issue:

Whether or not the compensation for the death of Jose Ondoy is constitutional; is
social justiceapplicable in this case?

Ruling:

Yes. Firstly, there was no due diligence in the fact finding of the Department of Labor. It merely
disregarded the statements made by the chief engineer and oiler. Secondly, the principle of
social justice applied in this case is a matter of protection, not equality. The Court recognized
the right of the petitioner to the claim of compensation because her son was shown to have died
while in the actual performance of his work. To strengthen the constitutional scheme of
social justice and protection to labor, The Court quoted another case as between a laborer,
usually poor and unlettered, and the employer, who has resources to secure able legal advice,
the law has reason to demand from the latter the stricter compliance.
Salonga vs. Farrales

Facts

1. Farrales was the titled owner of a parcel of residential land that was leased.

2.Prior to the acquisition by Farrales of the aforesaid land, Salonga was already a
lessee of some portion of the land. She had built a house and paid rental sthereon.

3.Sometime prior to November 1968, Farrales filed an ejectment case(one of theold

forms of action for recovery of the possession of real property) for non-payment of
rentals against Salonga. The lower court rendered a decision in favor of Farrales and
ordered Salonga and the other lessees (Pascual et al.) tovacate the portion occupied
by them and to pay rentals in arrears, attorneysfees and costs.4.Even before the
rendition of the decision of the lower court, Farrales sold toPascual et al. (the other
lessees of Farrales) the areas occupied by them.5.Salonga offered to purchase from
Farrales the portion of land that Salonga was leasing. Farrales persistently refused
the offer and insisted to execute the judgment rendered in the ejectment case.
Hence if Salongas offer to purchase was persistently refused by Farrales, it is
obvious that no meeting of the mind stook place and no contract was ever
perfected between them. It was revealed that Farrales wanted the payment of the
portion of land under consideration to be in cash but Salonga did not have any
money for that purpose that is why Farrales persistently refused to sell the portion
of the leased land to the lessee.

Issue: WON the lower court erred in dismissing the complaint of Salonga on the
groundthat no legal contract exists between Farrales and Salonga.

Held:

Contracts are only enforceable from the moment of perfection. In the case atbar,
Farrales rejected and did not accept the offer of Salonga to buy the land inquestion.
There being no consent there is, therefore, no contract to sell tospeak of. In the case
of the other lessees (Pascual et al.) who were able to buythe portion of land that
they occupy, there was an existing contract betweenthem and Farrales, unlike
Salonga who does not have the right to buy the landin question because the
contract between her and Farrales is non-existent. Section 10, Article II states that
The State shall promote social justice in all phases of national development. The
aforementioned provision is applicable tothe case at bar. The social justice cannot
be invoked to trample on the rights of property owners who are also entitled for
protection under our Constitution. The social justice consecrated in our Constitution
was not intended to take away rights from a person and give them to another who
is not entitled thereto. The plea for social justice cannot nullify the law on
obligations and contracts.
Meyer v. Nebraska addressed the constitutionality of a state law that prohibited the teaching of
any foreign languages in any private, denominational, parochial, or public school to any child
who had not completed the eighth grade. The petitioner, an instructor at a private school, was
tried and convicted of unlawfully teaching German to a ten-year-old child. The statute at issue
provided that [n]o person, individually or as a teacher, shall, in any private, denominational,
parochial or public school, teach any subject to any person in any language other than the
English language (262 U.S. at 396). A conviction under this statute would result in a fine or
confinement in a jail for up to thirty days. Enacted in the wake of World War I, the apparent
purpose of the statute was to prevent the inculcation of ideas and sentiments foreign to the best
interests of the United States.

The Court considered whether the statute, as construed and applied, unreasonably infringed on
the liberty guaranteed by the Fourteenth Amendment. In finding the statute unconstitutional, the
Court first considered the meaning of liberty. Liberty denotes not merely the freedom from
bodily restraint but also the right of the individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry, and generally to enjoy those
privileges long recognized at common law as essential to the orderly pursuit of happiness (262
U.S. at 398). Thus, at issue were the right of teachers to teach, the right of students to acquire
desired knowledge, and the right of parents to control the education of their children.

The due-process doctrine established by the Court holds that this liberty may not be interfered
with, under the guise of protecting the public interest, by legislative action which is arbitrary or
without reasonable relation to some purpose within the competency of the State to effect (262
U.S. at 399400). Indeed, as the Court explained, mere knowledge of a foreign language
cannot reasonably be regarded as harmful. It recognized that the state may go very far in order
to improve the quality of its citizens, physically, mentally and morally, including prescribing a
school curriculum, compelling school attendance, and requiring that instruction be given in
English. The Court nevertheless stated that the fundamental rights of the individual must be
respected (262 U.S. at 401). While the states purported purposeuniversal understanding of
English and the promotion of civic developmentmay be desirable, it cannot be promoted by
prohibited means.

Meyer v. Nebraska is significant for many reasons. It was the first time the Supreme Court
invoked the substantive due-process doctrine to protect noneconomic personal liberties. In so
doing, it opened the door for the recognition of numerous other personal liberties and paved the
way for the process of incorporation of the Bill of Rights into the Fourteenth Amendment (Gitlow
v. New York, 268 U.S. 652, 666, 1925). Meyer was the first case to recognize parents due-
process liberty interest in raising and educating their children and it continues to be followed
today (Troxel v. Granville, 530 U.S. 57, 63, 2000; the liberty interest at issue in this casethe
interest of parents in the care, custody, and control of their childrenis perhaps the oldest of the
fundamental liberty interests recognized by this Court). Along with Pierce v. Society of Sisters,
268 U.S. 510 (1925), Meyer set the precedent for the right to privacy cases beginning in the
1960sfor example, Griswold v. Connecticut (381 U.S. 479, 1965, penumbra or zone of privacy
includes married couples right to use contraceptives) and Roe v. Wade (410 U.S. 113, 1973,
invalidating antiabortion statute on right to privacy grounds).
Not only is the Meyer case significant for its farreaching impact on personal liberties, but it also
continues to be relevant in cases involving parental rights and education. The Supreme Court
continues to recognize that the state may control the classroom curriculum, subject to certain
constitutional limits (for example, Epperson v. Arkansas, 393 U.S. 97, 1968, invalidating a law
prohibiting the teaching of Darwinian theory). Indeed, it remains the only Supreme Court case
involving school curriculum, other than cases involving issues of religion, such as school prayer
and Bible recitations.

Pierce v. Society of Sisters addressed the constitutionality of a state statute requiring childrens
attendance in public schools. The Oregon law required every parent or guardian of a child
between eight and sixteen years to send that child to a public school. Under this law, a parent or
guardian would be guilty of a misdemeanor for each day a student failed to attend public school.
The plaintiffs, a Catholic school serving orphans and a military academy, argued that the state
was depriving them of property and their ability to remain in business, and thus sought a
preliminary injunction barring enforcement of the statute. The two schools taught the same
subjects traditionally pursued in the public schools with some additional instruction. In a
unanimous decision, the Supreme Court held that the Oregon law was unconstitutional because
it exceeded the type of reasonable regulation of education under the states police powers.
Relying on the due process clause of the Fourteenth Amendment, the Court held that the statute
deprived private schools of their property interests to remain in business and the parents of their
liberty interest in deciding how best to raise their children:

No question is raised concerning the power of the State reasonably to regulate all schools, to
inspect, supervise and examine them, their teachers and pupils; to require that all children of
proper age attend some school, ... and that nothing be taught which is manifestly inimical to the
public welfare (268 U.S. at 534).

The Court rejected the states argument that the statute was required to effectuate compulsory
education, noting that private and public schools can, and have, existed in harmony. Following
Meyer v. Nebraska, 262 U.S. 390 (1923), the Court found that the Oregon statute unreasonably
interfered with the liberty of parents, individually and as a group, to guide their children
intellectually and religiously (Pierce, 268 U.S. at 534). Thus, as in Meyer, the Court applied a
mere rationality test rather than any type of strict scrutiny to invalidate the statute. The states
power to legislate in the area of education did not give it the right to prohibit and suppress
private schools that are qualified to provide students with an education. The state does not have
the power to standardize its children, by forcing public instruction on them (268 U.S. at 535).
Nevertheless, the Court recognized that states, in their interest in developing an educated
citizenry, could regulate private schools, requiring them to meet minimum standards of
instruction also required of public schools.

The Pierce case has been cited in most cases concerning compulsory school attendance,
where nonpublic school attendance or home schooling is involved, and in cases involving
government interference with the family realm. Together with Meyer v. Nebraska, states cannot
interfere with private school practices unless such practices are harmful to the public welfare.
The case is also significant for its early use of the substantive due-process doctrine in the area
of noneconomic rights (parental rights).
Oposa v. Factoran

Different Compilation of Digests

FACTS:

A taxpayers class suit was initiated by the Philippine Ecological Network Incorporated (PENI)
together with the minors Oposa and their parents. All were duly represented. They claimed that
as taxpayers they have the right to the full benefit, use and enjoyment of the natural resources
of the countrys rainforests. They prayed that a judgment be rendered ordering Honorable
Factoran Jr, his agents, representatives and other persons acting in his behalf to cancel all
existing timber license agreements in the country and cease and desist from receiving,
accepting, processing, renewing or approving new timber license agreements.

ISSUE: Whether or not petitioners have a cause of action?

HELD: Yes, petitioners have a cause of action. The case at bar is of common interest to all
Filipinos. The right to a balanced and healthy ecology carries with it the correlative duty to
refrain from impairing the environment. The said right implies the judicious management of the
countrys forests. This right is also the mandate of the government through DENR. A denial or
violation of that right by the other who has the correlative duty or obligation to respect or protect
the same gives rise to a cause of action. All licenses may thus be revoked or rescinded by
executive action.
--------------------------------------------------

FACTS:
The petitioners, all minors duly represented and joined by their respective parents, filed a
petition to cancel all existing timber license agreements (TLAs) in the country and to cease and
desist from receiving, accepting, processing, renewing or approving new timber license
agreements. This case is filed not only on the appellants right as taxpayers, but they are also
suing in behalf of succeeding generations based on the concept of intergenerational
responsibility in so far as the right to a balanced and healthful ecology is concerned.

Together with the Philippine Ecological Network, Inc. (PENI), the petitioners presented scientific
evidence that deforestation have resulted in a host of environmental tragedies. One of these is
the reduction of the earths capacity to process carbon dioxide, otherwise known as the
greenhouse effect.

Continued issuance by the defendant of TLAs to cut and deforest the remaining forest stands
will work great damage and irreparable injury to the plaintiffs. Appellants have exhausted all
administrative remedies with the defendants office regarding the plea to cancel the said TLAs.
The defendant, however, fails and refuses to cancel existing TLAs.

ISSUES:
Whether or not the petitioners have legal standing on the said case
Admitting that all facts presented are true, whether or not the court can render a valid judgement
in accordance to the prayer of the complaints
Whether or not the TLAs may be revoked despite the respondents standing that these
cancellation of these TLAs are against the non-impairment clause of the Constitution

HELD:
The petitioners have locus standi (legal standing) on the case as a taxpayers (class) suit. The
subject matter of complaint is of common and general interest to all the citizens of the
Philippines. The court found difficulty in ruling that the appellants can, for themselves, and for
others file a class suit.
The right of the petitioners to a balanced and healthful ecology has been clearly stated. A denial
or violation of that right by the other who has the correlative duty or obligation to respect or
protect the same gives rise to a cause of action. The granting of the TLAs, as the petitioners
claim to be done with grave abuse of discretion, violated their right to a balanced and healthful
ecology hence, the full protection thereof requires that no TLAs should be renewed or granted.
The appellants have also submitted a document with the sub-header CAUSE OF ACTION which
is adequate enough to show, prima facie, the violation of their rights. On this basis, these
actions must therefore be granted, wholly or partially.
Despite the Constitutions non-impairment clause, TLAs are not contracts, rather licenses; thus,
the said clause cannot be invoked. Even if these are protected by the said clause, these can be
revoked if the public interest so required as stated in Section 20 of the Forestry Reform Code
(P.D. No. 705). Furthermore, Section 16 of Article II of the 1987 Constitution explicitly provides
that: The State shall protect the right of the people to a balanced and healthful ecology in
accord with the rhythm and harmony of nature. The right to a balanced and healthful ecology
carries with it the correlative duty to refrain from impairing the government. The said right is also
clear as the DENRs duty under its mandate and by virtue of its powers and functions under
Executive Order No. 192 and the Administrative Code of 1987 to protect and advance the said
right.Needless to say, all licenses may thus be revoked or rescinded. It is not a contract,
property or property right protected by the due process clause of the Constitution.

Basco vs PAGCOR GR 91649 (May 14, 1991)

197 SCRA 52, 65

FACTS:
Petitioners seek to annul the PAGCOR charter PD 1869 for being allegedly contrary to
morals, public policy and order, monopolistic & tends toward crony economy, waiving the
Manila City governments right to impose taxes & license fees, and violating the equal protection
clause, local autonomy and other state policies in the Constitution.

ISSUES:
Whether PD 1869 is valid.

HELD:
Every law has in its favor the presumption of constitutionality. For a law to be nullified, it must
be shown that there is a clear & unequivocal breach of the Constitution. The grounds for nullity
must be clear and beyond reasonable doubt. The question of wether PD 1869 is a wise
legislation is up for Congress to determine.

The power of LGUs to regulate gambling through the grant of franchises, licenses or
permits was withdrawn by PD 771, and is now vested exclusively on the National Government.
Necessarily, the power to demand/collect license fees is no longer vested in the City of Manila.

LGUs have no power to tax Government instrumentalities. PAGCOR, being a GOCC, is

therefore exempt from local taxes. The National Government is supreme over local
governments. As such, mere creatures of the State cannot defeat national policies using the
power to tax as a tool for regulation. The power to tax cannot be allowed to defeat an
instrumentality of the very entity which has the inherent power to wield it. The power of LGUs to
impose taxes & fees is always subject to limitation provided by Congress.

The principle of local autonomy does not make LGUs sovereign within a state, it simply
means decentralization.

A law doesnt have to operate in equal force on all persons/things. The equal protection clause
doesnt preclude classification of individuals who may be accorded different treatment under the
law as long as the classification is not unreasonable/arbitrary. The mere fact that some
gambling activities are legalized under certain conditions, while others are prohibited, does not
render the applicable laws unconstitutional.

Municipality of San Fernando, La Union vas Firme, 195 SCRA 692, 91

Facts: Municipals dump truck on way to the Naguilian River to get gravel and sands for the
repair of roads (a governmental function) collided with a passenger jeep resulting the death of
passenger of the latter vehicle. Civil action was filed against the Municipality.

Held: Municipalities being agencies of the State, when performing governmental functions
enjoy sovereignty and thus immune from suit unless it is shown that they are performing
proprietary function.

However, they may be held liable if it can be shown acting thru a special agent. The
Municipalitys driver is not a special agent and so the Municipal is not liable, only the driver.

THE SUABILITY OF MUNICIPAL CORPORATIONS IS DETERMINED THROUGH THEIR

CHARTER. - Municipal corporations, for example, like provinces and cities, 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. (Cruz, Philippine
Political Law, 1987 Edition, p. 39)

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."
(United States of America v. Guinto, supra, p. 659-660).

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. As emphasized in
the case of Torio v. Fontanilla (G.R. No. L-29993, October 23, 1978. 85 SCRA 599, 606), the
distinction of powers becomes important for purposes of determining the liability of the
municipality for the acts of its agents which result in an injury to third persons.

Mun. of San Miguel vs. Fernandez [G.R. No. L-61744, June 25, 1984]

FUNDS OF THE MUNICIPAL CORPORATIONS ARE EXEMPT FROM EXECUTION. - In

Tantoco vs. Municipal Council of Iloilo, 49 Phil. 52, it was held that "it is the settled doctrine of
the law that not only the public property but also the taxes and public revenues of such
corporations cannot be seized under execution against them, either in the treasury or when in
transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of
officers of the law, are not subject to execution unless so declared by statute.

Thus, it is clear that all the funds of petitioner municipality in the possession of the Municipal
Treasurer of San Miguel, as well as those in the possession of the Provincial Treasurer of
Bulacan, are also public funds and as such they are exempt from execution. Besides, there
must be, pursuant to Section 2(a) of Presidential Decree No. 477, known as "The Decree on
Local Fiscal Administration," a corresponding appropriation in the form of an ordinance duly
passed by the Sangguniang Bayan before any money of the municipality may be paid out. In the
case at bar, it has not been shown that the Sangguniang Bayan has passed an ordinance to this
effect. Furthermore, the procedure outlined by Section 15, Rule 39 of the New Rules of Court
has not been followed.

Municipality of Makati vs CA 190 SCRA 206

Facts

An expropriation proceeding was filed by the Municipality of Makati, herein petitioner, against
the private property of Arceli Jo. In compliance to PD 42, the petitioner opened an account
under its name at PNB depositing an amount of P417,510.00. The court fixed the appraised
value of the expropriated property at P5,291,666.00 and an advanced payment was made in the
amount of P338,160 leaving abalance of P4,953,506. After the decision becomes final and
executory, the private respondent moved for the issuance of a writ of execution. A notice of
garnishment was thereafter issued by the court to the PNB account. A manifestation was filed by
the petitioner informing the court that the private respondent was no longer the true owner of the
expropriated property. The court consolidated the ownership of the property to PSB as a
mortgagee/purchaser. The private respondent and PSB agreed to divide the compensation due
from the expropriation proceeding. The judge ordered PNB to immediately release to them the
sum of P4,953.506 corresponding to the balanceof the appraised value of the expropriated
property. The PNB bank manager refused as he is waiting for the approval of their head office.
The Municipality of Makati contends that its fund with DBP could neither be be garnished or
levied upon execution for to do so would result to the disbursement of public funds without the
proper appropriation required under the law. The lower court denied the motion for
reconsideration of the petitioner ruling that the account with DBP of the petitioner was an
account specifically opened for the expropriationproceeding. Petitioner filed a petition for
certiorari to the Court of Appeals which affirmed the lower courts decision. A petition
for reviewwith a prayer for preliminary injunction was filed to the S.C. A temporary restraining
order was issued by the S.C.

Issue

Whether or not the PNB funds may be levied in the expropriation proceeding ?

Held

The petitioner belatedly informed the court that there are two existing accounts with PNB.
Account A was the one intended for theexpropriation proceeding and account B is primarily
intended for financing governmental functions and activities. Because account A has a fund that
is insufficient to meet the remaining amount of its balance for the expropriation proceeding, it is
unlawful to get the remainingbalance from Account B without an ordinance appropriating said
funds for expropriation purpose. Thus the court ruled that account A maybe levied but not
account B. The respondents are without recourse however should the petitioner refuse to pay its
remaining obligation. Where a municipality refuses without justifiable reason to effect payment
of a final money judgment rendered against it, the claimant may avail the remedy of mandamus
in order to compel the enactment and approval of the necessary appropriation ordinance and
the corresponding disbursement of municipal funds for such purpose.